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AUDACY, INC. - Quarter Report: 2022 September (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
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:        001-14461
Audacy, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
23-1701044
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
2400 Market Street, 4th Floor
Philadelphia, Pennsylvania 19103
(Address of principal executive offices and zip code)
(610) 660-5610
(Registrant’s telephone number, including area code)
(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 No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer
Emerging growth company
Non-accelerated filer

Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act and Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $.01 per shareAUDNew York Stock Exchange
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class A common stock, $0.01 par value – 141,006,643 Shares Outstanding as of October 31, 2022
Class B common stock, $0.01 par value – 4,045,199 Shares Outstanding as of October 31, 2022
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AUDACY, INC.
INDEX
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Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this report contains statements by us with regard to our expectations as to financial results and other aspects of our business that involve risks and uncertainties and may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are presented for illustrative purposes only and reflect our current expectations concerning future results and events. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, without limitation, any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
You can identify forward-looking statements by our use of words such as “anticipates,” “believes,” “continues,” “expects,” “intends,” “likely,” “may,” “opportunity,” “plans,” “potential,” “project,” “will,” “could,” “would,” “should,” “seeks,” “estimates,” “predicts” and similar expressions which identify forward-looking statements, whether in the negative or the affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. These forward-looking statements are subject to risks, uncertainties and other factors, some of which are beyond our control, which could cause actual results to differ materially from those forecasted or anticipated in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this report. We undertake no obligation to update these statements or publicly release the result of any revision(s) to these statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.



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PART I
FINANCIAL INFORMATION
ITEM 1.     Financial Statements
AUDACY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
SEPTEMBER 30, 2022DECEMBER 31,
2021
ASSETS:
Cash
$36,422 $59,439 
Accounts receivable, net of allowance of $11,863 in 2022 and $15,084 in 2021
266,245 276,044 
Prepaid expenses, deposits and other
83,825 68,146 
Total current assets
386,492 403,629 
Investments
3,005 3,005 
Net property and equipment343,362 376,028 
Operating lease right-of-use assets
204,108 229,607 
Radio broadcasting licenses
2,088,077 2,251,546 
Goodwill
63,916 82,176 
Assets held for sale
8,299 1,033 
Other assets, net of accumulated amortization139,803 74,865 
TOTAL ASSETS
$3,237,062 $3,421,889 
LIABILITIES:
Accounts payable
$18,585 $18,897 
Accrued expenses
57,053 68,423 
Other current liabilities
80,444 84,130 
Operating lease liabilities
38,688 39,598 
Long-term debt, current portion— 22,727 
Total current liabilities
194,770 233,775 
Long-term debt, net of current portion1,865,122 1,782,131 
Operating lease liabilities, net of current portion
191,776 217,281 
Net deferred tax liabilities453,165 487,665 
Other long-term liabilities
25,218 48,832 
Total long-term liabilities
2,535,281 2,535,909 
Total liabilities
2,730,051 2,769,684 
CONTINGENCIES AND COMMITMENTS

SHAREHOLDERS' EQUITY:
Class A common stock $0.01 par value; voting; authorized 200,000,000 shares; issued and outstanding 141,322,193 and 140,060,355 shares at September 30, 2022 and December 31, 2021, respectively
1,413 1,401 
Class B common stock $0.01 par value; voting; authorized 75,000,000 shares; issued and outstanding 4,045,199 shares at September 30, 2022 and December 31, 2021
40 40 
Class C common stock $0.01 par value; non voting; authorized 50,000,000 shares; no shares issued and outstanding
— — 
Additional paid-in capital
1,675,404 1,671,195 
Accumulated deficit
(1,172,755)(1,020,142)
Accumulated other comprehensive income (loss)
2,909 (289)
Total shareholders' equity
507,011 652,205 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$3,237,062 $3,421,889 

See notes to condensed consolidated financial statements.
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AUDACY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except share and per share data)
(unaudited)

THREE MONTHS ENDEDNINE MONTHS ENDED
SEPTEMBER 30,
2022202120222021
NET REVENUES$316,969 $329,443 $911,703 $874,672 
OPERATING EXPENSE:
Station operating expenses260,031 260,972 746,936 718,924 
Depreciation and amortization expense18,345 12,477 47,455 38,690 
Corporate general and administrative expenses21,160 24,176 72,774 71,470 
Restructuring charges4,216 2,300 6,118 4,219 
Impairment loss176,784 26 180,075 1,371 
Refinancing expenses— — — 473 
Net gain on sale or disposal(10,665)(4)(13,228)(3,731)
Change in fair value of contingent consideration(1,098)— (8,802)— 
Other expenses72 245 474 566 
Total operating expense468,845 300,192 1,031,802 831,982 
OPERATING INCOME (LOSS)(151,876)29,251 (120,099)42,690 
NET INTEREST EXPENSE28,113 22,771 76,113 66,484 
Net loss on extinguishment of debt— — — 8,168 
Other income— — (238)(446)
OTHER (INCOME) EXPENSE— — (238)7,722 
INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT)(179,989)6,480 (195,974)(31,516)
INCOME TAX (BENEFIT) EXPENSE(39,014)11,241 (43,153)(6,534)
NET LOSS(140,975)(4,761)(152,821)(24,982)
NET LOSS PER SHARE - BASIC$(1.01)$(0.04)$(1.10)$(0.18)
NET LOSS PER SHARE - DILUTED$(1.01)$(0.04)$(1.10)$(0.18)
WEIGHTED AVERAGE SHARES:
Basic139,361,261 135,893,823 139,246,393 135,857,127 
Diluted139,361,261 135,893,823 139,246,393 135,857,127 
See notes to condensed consolidated financial statements.
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AUDACY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
(unaudited)
THREE MONTHS ENDED
NINE MONTHS ENDED
September 30,
2022202120222021
NET LOSS$(140,975)$(4,761)$(152,821)$(24,982)
OTHER COMPREHENSIVE INCOME, NET OF TAXES:
Net unrealized gain on derivatives,
net of taxes
1,422 170 3,198 929 
COMPREHENSIVE LOSS$(139,553)$(4,591)$(149,623)$(24,053)
See notes to condensed consolidated financial statements.

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AUDACY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(amounts in thousands, except share data)
(unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Class AClass B
SharesAmountSharesAmount
Balance, December 31, 2021140,060,355 $1,401 4,045,199 $40 $1,671,195 $(1,020,142)$(289)$652,205 
Net loss— — — — — (11,073)— (11,073)
Compensation expense related to granting of stock awards(59,352)(1)— — 2,699 — — 2,698 
Issuance of common stock related to the Employee Stock Purchase Plan ("ESPP")61,009 — — 176 — — 177 
Purchase of vested employee restricted stock units(621,876)(6)— — (1,833)— — (1,839)
Payment of dividends on common stock— — — — (174)— — (174)
Dividend equivalents, net of forfeitures— — — — — 202 — 202 
Net unrealized gain (loss) on derivatives— — — — — — 1,223 1,223 
Balance, March 31, 2022139,440,136 $1,395 4,045,199 $40 $1,672,063 $(1,031,013)$934 $643,419 
Net loss— — — — — (773)— (773)
Compensation expense related to granting of stock awards1,738,025 17 — — 2,464 — — 2,481 
Issuance of common stock related to the ESPP141,187 — — 131 — — 132 
Purchase of vested employee restricted stock units(22,814)— — — (51)— — (51)
Payment of dividends on common stock— — — — (4)— — (4)
Dividend equivalents, net of forfeitures— — — — — — 
Net unrealized gain (loss) on derivatives— — — — — — 553 553 
Balance, June 30, 2022141,296,534 $1,413 4,045,199 $40 $1,674,603 $(1,031,782)$1,487 $645,761 
Net loss— — — — — (140,975)— (140,975)
Compensation expense related to granting of stock awards(168,167)(2)— — 728 — — 726 
Issuance of common stock related to the ESPP198,188 — — 75 — — 77 
Purchase of vested employee restricted stock units(4,362)— — — (2)— — (2)
Payment of dividends on common stock— — — — — — — — 
Dividend equivalents, net of forfeitures— — — — — — 
Net unrealized gain (loss) on derivatives— — — — — — 1,422 1,422 
Balance, September 30, 2022141,322,193 $1,413 4,045,199 $40 $1,675,404 $(1,172,755)$2,909 $507,011 

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AUDACY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(amounts in thousands, except share data)
(unaudited)
Common StockAdditional
Paid-in
Capital
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Total
Class AClass B
SharesAmountSharesAmount
Balance, December 31, 2020136,913,375 $1,369 4,045,199 $40 $1,662,155 $(1,017,037)$(1,789)$644,738 
Net loss— — — — — (21,648)— (21,648)
Compensation expense related to granting of stock awards291,347 — — 2,575 — — 2,578 
Exercise of stock options47,535 — — — 15 — — 15 
Purchase of vested employee restricted stock units(347,607)(3)— — (1,908)— — (1,911)
Payment of dividends on common stock— — — — (386)— — (386)
Dividend equivalents, net of forfeitures— — — — — 386 — 386 
Net unrealized gain (loss) on derivatives— — — — — — 553 553 
Balance, March 31, 2021136,904,650 $1,369 4,045,199 $40 $1,662,451 $(1,038,299)$(1,236)$624,325 
Net income — — — — — 1,426 — 1,426 
Compensation expense related to granting of stock awards412,243 — — 2,441 — — 2,445 
Exercise of stock options38,399 — — — 17 — — 17 
Purchase of vested employee restricted stock units(20,317)— — — (98)— — (98)
Payment of dividends on common stock— — — — (194)— — (194)
Dividend equivalents, net of forfeitures— — — — — 201 — 201 
Net unrealized gain (loss) on derivatives— — — — — — 206 206 
Balance, June 30, 2021137,334,975 $1,373 4,045,199 $40 $1,664,617 $(1,036,672)$(1,030)$628,328 
Net loss— — — — — (4,761)— (4,761)
Compensation expense related to granting of stock awards(94,466)(1)— — 3,326 — — 3,325 
Issuance of common stock related to the ESPP38,782 — — — 142 — — 142 
Exercise of stock options28,800 — — 12 — — 13 
Purchase of vested employee restricted stock units(9,227)— — — (31)— — (31)
Payment of dividends on common stock— — — — (1)— — (1)
Dividend equivalents, net of forfeitures— — — — — — 
Net unrealized gain (loss) on derivatives— — — — — — 170 170 
Balance, September 30, 2021137,298,864 $1,373 4,045,199 $40 $1,668,065 $(1,041,424)$(860)$627,194 
See notes to condensed consolidated financial statements.
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AUDACY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)

NINE MONTHS ENDED SEPTEMBER 30,
20222021
OPERATING ACTIVITIES:
Net loss$(152,821)$(24,982)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
47,455 38,690 
Net amortization of deferred financing costs (net of original issue discount and debt premium)
3,064 2,249 
Net deferred taxes (benefit) and other
(37,362)8,692 
Provision for bad debts
1,006 1,967 
Net (gain) loss on sale or disposal(13,228)(3,731)
Non-cash stock-based compensation expense
5,905 8,349 
Net loss on extinguishment of debt
— 8,168 
Deferred compensation
(5,835)2,787 
Impairment loss
180,075 1,371 
Change in fair value of contingent consideration(8,802)— 
Changes in assets and liabilities (net of effects of acquisitions, and dispositions):
Accounts receivable
8,793 2,286 
Prepaid expenses and deposits
(15,679)(18,317)
Accounts payable and accrued liabilities
(18,808)24,577 
Other assets935 (134)
Accrued interest expense
(1,383)1,902 
Other long-term liabilities(12,944)(8,253)
Net cash provided by (used in) operating activities
(19,629)45,621 
INVESTING ACTIVITIES:
Additions to property, equipment and software(72,541)(39,267)
Proceeds from sale of property, equipment, intangibles and other assets18,604 1,162 
Purchases of businesses and audio assets(5,040)(15,297)
Net cash used in investing activities(58,977)(53,402)
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AUDACY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)

NINE MONTHS ENDED SEPTEMBER 30,
20222021
FINANCING ACTIVITIES:
Borrowing under the revolving senior debt90,000 52,000 
Borrowing under the accounts receivable facility— 75,000 
Proceeds from issuance of long-term debt— 540,000 
Payments of long-term debt— (77,044)
Payments of revolving senior debt(22,727)(124,000)
Retirement of notes(10,000)(400,000)
Payment for debt issuance costs— (9,364)
Payment of call premium and other fees— (14,500)
Proceeds from issuance of employee stock plan386 142 
Proceeds from the exercise of stock options— 45 
Purchase of vested employee restricted stock units(1,892)(2,040)
Payment of dividend equivalents on vested restricted stock units(178)(581)
Net cash provided by financing activities55,589 39,658 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(23,017)31,877 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR59,439 30,964 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$36,422 $62,841 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest$71,439 $62,217 
Income taxes$(14,779)$(304)
See notes to condensed consolidated financial statements.
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AUDACY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
1.    BASIS OF PRESENTATION AND SIGNIFICANT POLICIES
Audacy, Inc. (formerly Entercom Communications Corp.) was formed as a Pennsylvania corporation in 1968. On April 9, 2021, the Company changed its name to Audacy, Inc. and changed its New York Stock Exchange ticker symbol from "ETM" to "AUD."
The interim unaudited condensed consolidated financial statements included herein have been prepared by Audacy, Inc. and its subsidiaries (collectively, the “Company”) in accordance with: (i) generally accepted accounting principles (“U.S. GAAP”) for interim financial information; and (ii) the instructions of the Securities and Exchange Commission (the “SEC”) for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal and recurring nature. The Company’s results are subject to seasonal fluctuations and, therefore, the results shown on an interim basis are not necessarily indicative of results for a full year.
This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021, and filed with the SEC on March 1, 2022, as part of the Company’s Annual Report on Form 10-K (the "2021 Annual Report"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
There have been no material changes from Note 2, Significant Accounting Policies, as described in the notes to the Company’s consolidated financial statements contained in the 2021 Annual Report.
Liquidity and Capital Resources
In December 2019, a novel strain of coronavirus ("COVID-19") surfaced which resulted in an outbreak of infections throughout the world, which has affected operations and global supply chains. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The pandemic has had, and may continue to have, a material impact on the Company and its recovery. While the full impact of this pandemic is not yet known, the Company has taken proactive actions in an effort to mitigate its effects and is continually assessing its effects on the Company's business, including how it has and will continue to impact advertisers, professional sports and live events.
The COVID-19 pandemic and current macroeconomic conditions have created, and may continue to create, significant uncertainty in operations, including disrupted supply chains, rising inflation and interest rates, and significant volatility in financial markets, which have had, and are expected to continue to have, a material impact on the Company's business operations, financial position, cash flows, liquidity, and capital resources and results of operations. Therefore, the results for the nine months ended September 30, 2022, may not be indicative of the results for the year ending December 31, 2022. The full extent to which the current macroeconomic conditions impact the Company's business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be accurately estimated at this time, but the Company believes the impact could be material if conditions persist.

The Company continues to critically review its liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 pandemic and current macroeconomic conditions. Based on the Company’s cash and cash equivalents balance, the current maturities of its existing debt facilities, its current business plan and revenue prospects, the Company believes that it will have sufficient cash resources and anticipated cash flows to fund its operations and meet its covenant requirements for at least the next 12 months. Due to the impact of the macroeconomic conditions on the Company, management continues to execute on cash management and strategic operational plans including evaluation of contractual obligations, workforce reductions, management of operating expenses, and divesting non-strategic assets of the Company along with other cash and debt management plans for the benefit of the covenant calculation, as permitted under the credit agreement related to both its Credit Facility and Accounts Receivable Facility (as such terms are defined in Note 8 below). However, the Company is unable to predict with certainty the impact of the COVID-19 pandemic and current macroeconomic conditions will have on its ability to maintain compliance with the debt covenants contained in the credit agreement related to both its Credit Facility and Accounts Receivable Facility (as such terms are defined in Note 8 below), including financial covenants. The Company was in compliance with such covenants at September 30, 2022. Failure to meet the covenant requirements in the
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future could cause the Company to be in default and the maturity of the related debt could be accelerated and become immediately payable. This may require the Company to obtain waivers or amendments in order to maintain compliance and there can be no certainty that any such waiver or amendment would be available, or what the cost of such waiver or amendment, if obtained, would be.

If the Company is unable to obtain necessary waivers or amendments and the debt is accelerated, the Company would be required to obtain replacement financing at prevailing market rates, which may not be favorable to the Company. There is no guarantee that the Company would be able to satisfy its obligations if any of its indebtedness is accelerated.

In the event revenues in future quarters are lower than we currently anticipate, we may be forced to take remedial actions which could include, among other things (and where allowed by the lenders): (i) implementing further cost reductions; (ii) seeking replacement financing; (iii) raising funds through the issuance of additional equity or debt securities or incurring additional borrowings; or (iv) disposing of certain assets or businesses. Such remedial actions, which may not be available on favorable terms or at all, could have a material adverse impact on our business.
Consolidated VIE - Accounts Receivable Facility
On July 15, 2021, the Company and certain of its subsidiaries entered into a $75.0 million accounts receivable securitization facility (the "Receivables Facility") to provide additional liquidity, to reduce the Company's cost of funds and to repay outstanding indebtedness under the Company's Credit Facility (as defined in Note 8, Long-Term Debt, below).
The documentation for the Receivables Facility includes (i) a Receivables Purchase Agreement (the “Receivables Purchase Agreement”) entered into by and among Audacy Operations, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Audacy Operations”), Audacy Receivables, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company, as seller (“Audacy Receivables”), the investors party thereto (the “Investors”), and DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main, as agent (“DZ BANK”); (ii) a Sale and Contribution Agreement (the “Sale and Contribution Agreement”), by and among Audacy Operations, Audacy New York, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Audacy NY”), and Audacy Receivables; and (iii) a Purchase and Sale Agreement (the “Purchase and Sale Agreement,” and together with the Receivables Purchase Agreement and the Sale and Contribution Agreement, the “Agreements”) by and among certain wholly-owned subsidiaries of the Company (together with Audacy NY, the “Originators”), Audacy Operations and Audacy NY.
Audacy Receivables is considered a special purpose vehicle ("SPV") as it is an entity that has a special, limited purpose and it was created to sell accounts receivable, together with customary related security and interests in the proceeds thereof, to the Investors in exchange for cash investments.
The SPV is a bankruptcy remote, limited liability company wholly owned by Audacy NY and its assets are not available to creditors of the Company, Audacy Operations or Audacy NY. Pursuant to the Receivables Facility, Audacy NY sells certain of its receivables and certain related rights to payment and obligations of Audacy NY with respect to such receivables, and certain other related rights to Audacy Receivables, LLC which, in turn, obtains loans secured by the receivables from financial institutions (the “Lenders”). Amounts received from the Lenders, the pledged receivables and the corresponding debt are included in Accounts receivable and Long-term debt, respectively, on the Condensed Consolidated Balance Sheets. The aggregate principal amount of the loans made by the Lenders cannot exceed $75.0 million outstanding at any time. The Receivables Facility will expire on July 15, 2024, unless earlier terminated or subsequently extended.
The SPV is considered a Variable Interest Entity ("VIE") because its equity capitalization is insufficient to support its operations. The most significant activities that impact the economic performance of the SPV are decisions made to manage receivables. Audacy NY is considered the primary beneficiary and consolidates the SPV as it makes these decisions. No additional financial support was provided to the SPV during the nine months ended September 30, 2022 or is expected to be provided in the future that was not previously contractually required. As of September 30, 2022, the SPV has $221.5 million of net accounts receivable and has outstanding borrowings of $75.0 million under the Receivables Facility.

Consolidated VIE - Qualified Intermediary
Periodically, the Company enters into like-kind exchange agreements upon the disposition or acquisition of certain properties. Pursuant to the terms of these agreements, the proceeds from the sales are placed into an escrow account administered by a third party qualified intermediary ("QI") and are unavailable for the Company's use until released. The proceeds are recorded as restricted cash on the condensed consolidated balance sheets and released: (i) if they are utilized as
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part of a like-kind exchange agreement, (ii) if the Company does not identify a suitable replacement property within 45 days after the agreement date, or (iii) when a like-kind exchange agreement is not completed within the remaining allowable time period.
During 2022, the Company entered into an agreement with a third party QI, under which the Company entered into an exchange of real property held for productive use or investment. This agreement relates to the sale of real property and identification and acquisition of replacement property.
The QI is considered a VIE because its equity capitalization is insufficient to support its operations. The most significant activity that impacts the economic performance of the QI is its holding of proceeds from the sale of real property in an interest bearing account. The Company is considered the primary beneficiary as it has the right to direct the activities that were most significant to the VIE and the Company has the obligation to absorb losses or the right to receive returns that would be significant to the VIE during the period of the agreement.
The use of a QI in a like-kind exchange will enable the Company to reduce its current tax liability in connection with certain asset dispositions. Under Section 1031 of the Internal Revenue Code (the “Code”), the property to be exchanged in the like-kind exchange is required to be received by the Company within 180 days.
Total results of operations of the VIE for the nine months ended September 30, 2022 were not significant. Restrictions on cash balances held by the VIE lapsed during the third quarter of 2022. As a result, the Company does not present restricted cash at September 30, 2022. The VIE had no other assets or liabilities as of September 30, 2022. The assets of the Company’s consolidated VIE could only be used to settle the obligations of the VIE. There was a lack of recourse by the creditors of the VIE against the Company’s general creditors. Refer to Note 15, Contingencies And Commitments, for additional information.
Recent Accounting Pronouncements
All new accounting pronouncements that are in effect that may impact the Company’s financial statements have been implemented. The Company does not believe that there are any other new accounting pronouncements that have been issued (other than those included in the notes to the Company’s consolidated financial statements contained in its 2021 Annual Report) that might have a material impact on the Company’s financial position, results of operations or cash flows.
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2.    BUSINESS COMBINATIONS AND EXCHANGES
The Company records acquisitions under the acquisition method of accounting, and allocates the purchase price to the assets and liabilities based upon their respective fair values as determined as of the acquisition date. Merger and acquisition costs are excluded from the purchase price as these costs are expensed as incurred for book purposes and amortized for tax purposes.
2021 WideOrbit Streaming Acquisition
On October 20, 2021, the Company completed an acquisition of WideOrbit's digital audio streaming technology and the related assets and operations of WideOrbit Streaming for approximately $40.0 million (the "WideOrbit Streaming Acquisition"), which included certain employees. The assets acquired included $31.5 million of developed technology and $8.0 million of intangible licenses. The Company determined this acquisition was a business combination. The Company operates WideOrbit Streaming under the name AmperWave ® ("AmperWave"). The Company funded this acquisition through a draw on its revolving credit facility (the "Revolver"). Based upon the timing of the WideOrbit Streaming Acquisition, the Company's condensed consolidated financial statements for the period ended September 30, 2022, reflect the results of AmperWave. The Company's condensed consolidated financial statements for the period ended September 30, 2021 do not reflect the results of AmperWave.
The Company's fair value analysis contains assumptions based on past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. Using a residual method, any excess between the consideration paid and the fair value of net assets acquired was recorded as goodwill. The Company recorded goodwill on its books. Management believes that this acquisition provides the Company with an opportunity to benefit from acquired technology, technical knowledge and trade secrets.
The allocations presented in the table below are based upon management's estimate of the fair values using valuation techniques including income, cost and market approaches. The following table reflects the final allocation of the purchase price to the assets acquired.
Final Value
(amounts in thousands)
Assets
Operating lease right-of-use assets$142 
Net property and equipment38 
Other assets, net of accumulated amortization39,532 
Goodwill386 
Total intangible and other assets39,918 
Operating lease liabilities(142)
Deferred tax asset134 
Preliminary fair value of net assets acquired$40,090 
2021 Urban One Exchange
On April 20, 2021, the Company completed a transaction with Urban One, Inc. ("Urban One") under which the Company exchanged its four station cluster in Charlotte, North Carolina for one station in St. Louis, Missouri, one station in Washington, D.C., and one station in Philadelphia, Pennsylvania (the "Urban One Exchange"). The Company and Urban One began programming the respective stations under local marketing agreements ("LMAs") on November 23, 2020. During the period of the LMAs, the Company's consolidated financial statements excluded net revenues and station operating expenses associated with the four station cluster in Charlotte, North Carolina (the "Divested Stations") and included net revenues and station operating expenses associated with the stations in St. Louis, Missouri, Washington, D.C., and Philadelphia, Pennsylvania (the "Acquired Stations").
Upon completion of the Urban One Exchange, the Company: (i) removed from its condensed consolidated balance sheet the assets of the Divested Stations, which were previously classified as assets held for sale; (ii) recorded the assets of the Acquired Stations at fair value; and (iii) recognized a gain on the exchange of approximately $4.0 million. Based upon the timing of the Urban One Exchange, the Company's condensed consolidated financial statements for the nine months ended
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September 30, 2022: (a) reflect the results of the Acquired Stations; and (b) do not reflect the results of the Divested Stations. The Company's condensed consolidated financial statements for the nine months ended September 30, 2021: (i) reflect the results of the Acquired Stations for the entire period in which the LMAs were in effect and after the completion of the Urban One Exchange; and (ii) do not reflect the results of the Divested Stations.
The allocations presented in the table below are based upon management's estimate of the fair values using valuation techniques including income, cost and market approaches. The following table reflects the final allocation of the purchase price to the assets acquired.
Final Value
(amounts in thousands)
Assets
Net property and equipment$2,254 
Total tangible property2,254 
Radio broadcasting licenses23,233 
Total intangible assets$23,233 
Total assets$25,487 
2021 Podcorn Acquisition
On March 9, 2021, the Company completed the acquisition of podcast influencers marketplace, Podcorn Media, Inc. ("Podcorn") for $14.6 million in cash and a performance-based earnout over the next two years (the "Podcorn Acquisition"). The Company's condensed consolidated financial statements for the nine months ended September 30, 2022 reflect the results of Podcorn. The Company's condensed consolidated financial statements for the nine months ended September 30, 2021 reflect the results of Podcorn for the portion of the period after the completion of the Podcorn Acquisition.
The Podcorn Acquisition includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to Podcorn based upon the achievement of certain annual performance benchmarks over a two-year period. A portion of the contingent consideration could be paid out in 2023 and a portion of the contingent consideration could be paid out in 2024. The timing of the payment of the contingent consideration is dependent upon Adjusted EBITDA values for 2022 and 2023, as defined in the purchase agreement. The range of the total undiscounted amounts the Company could pay under the contingent consideration agreement over the two-year period is between $0 and $45.2 million. The fair value of the contingent consideration recognized on the acquisition date of $7.7 million was estimated by applying probability-weighted, discounted future cash flows at current tax rates. The significant unobservable inputs (Level 3) used to estimate the fair value include the projected Adjusted EBITDA values, as defined in the purchase agreement, for 2022 and 2023, and the discount rate. Since the acquisition date, fluctuation in the market-based inputs used to develop the discount rate resulted in an increase in the discount rate, which resulted in a lower expected present value of the contingent consideration. Additionally, reduction in projected Adjusted EBITDA values for 2022 and 2023 resulted in a lower expected present value of the contingent consideration. As a result, the fair value of the contingent consideration at September 30, 2022 decreased $8.8 million to $0.1 million. Changes in the fair value of the contingent consideration are recorded to the Station Operating Expenses line item on the Statement of Operations.
The Company's fair value analysis contains assumptions based on past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. Using a residual method, any excess between the consideration paid and the fair value of net assets acquired was recorded as goodwill. Management believes that this acquisition provides the Company with an opportunity to benefit from customer relationships, technical knowledge and trade secrets.
The allocations presented in the table below are based upon management's estimate of the fair values using valuation techniques including income, cost and market approaches. The following table reflects the final allocation of the purchase price to the assets acquired and liabilities assumed.
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Final Value
(amounts in thousands)
Assets
Cash$702 
Prepaid expenses, deposits and other18 
Other assets, net of accumulated amortization2,545 
Goodwill19,637 
Deferred tax asset72 
Net working capital63 
Preliminary fair value of net assets acquired$23,037 
Unaudited Pro Forma Summary of Financial Information
The following unaudited pro forma information for the nine and three months ended September 30, 2021 assumes that the acquisitions in 2021 had occurred as of January 1, 2021.
Refer to information within this Note 2, Business Combinations, and to the consolidated financial statements and related notes included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021, and filed with the SEC on March 1, 2022, for a description of the Company’s acquisition and disposition activities.
The unaudited pro forma information presented gives effect to certain adjustments, including: (i) depreciation and amortization of assets; (ii) change in the effective tax rate; (iii) merger and acquisition costs; and (iv) interest expense on any debt incurred to fund the acquisitions which would have been incurred had such acquisitions been consummated as of January 1, 2021.
This unaudited pro forma information has been prepared based on estimates and assumptions, which management believes are reasonable. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of that date or results which may occur in the future.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
(amounts in thousands except share and per share data)
ActualPro FormaActualPro Forma
Net revenues$316,969 $330,242 $911,703 $878,275 
Net loss$(140,975)$(6,573)$(152,821)$(30,252)
Net loss per common share - basic$(1.01)$(0.05)$(1.10)$(0.22)
Net loss per common share - diluted$(1.01)$(0.05)$(1.10)$(0.22)
Weighted shares outstanding basic139,361,261 135,893,823 139,246,393 135,857,127 
Weighted shares outstanding diluted139,361,261 135,893,823 139,246,393 135,857,127 

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3.    RESTRUCTURING CHARGES
Restructuring Charges
The following table presents the components of restructuring charges.
Nine Months Ended
September 30,
20222021
(amounts in thousands)
Workforce reduction
5,300 4,131 
Other restructuring costs818 88 
Total restructuring charges
$6,118 $4,219 
Three Months Ended
September 30,
20222021
(amounts in thousands)
Workforce reduction$3,649 $2,263 
Other restructuring costs567 37 
Total restructuring charges$4,216 $2,300 
Restructuring Plan
During the first quarter of 2020, the Company initiated a restructuring plan to help mitigate the adverse impact that the COVID-19 pandemic is having on financial results and business operations. During the third quarter of 2022, the Company initiated a restructuring plan to help mitigate the adverse impact that the current macroeconomic conditions are having on financial results and business operations. The Company continues to evaluate what, if any, further actions may be necessary related to the COVID-19 pandemic and current macroeconomic conditions. The restructuring plans primarily included workforce reduction charges that included one-time termination benefits and related costs to mitigate the adverse impacts of the COVID-19 pandemic and current macroeconomic conditions.
The estimated amount of unpaid restructuring charges as of September 30, 2022 includes amounts in accrued expenses that are expected to be paid in less than one year.
Nine Months Ended September 30, 2022Twelve Months Ended December 31, 2021
(amounts in thousands)
Restructuring charges, beginning balance$2,623 $2,988 
Additions6,118 5,671 
Payments(5,152)(6,036)
Restructuring charges unpaid and outstanding3,589 2,623 
Restructuring charges - noncurrent portion(110)— 
Restructuring charges - current portion$3,479 $2,623 
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4.    REVENUE
Spot Revenues
The Company sells air-time to advertisers and broadcasts commercials at agreed upon dates and times. The Company's performance obligations are broadcasting advertisements for advertisers at specifically identifiable days and dayparts. The amount of consideration the Company receives and revenue it recognizes is fixed based upon contractually agreed upon rates. The Company recognizes revenue at a point in time when the advertisements are broadcast and the performance obligations are satisfied. Revenues are recorded on a net basis, after the deduction of advertising agency fees by the advertising agencies.
Digital Revenues
The Company provides targeted advertising through the sale of streaming and display advertisements on its national platforms, audacy.com and eventful.com, the Audacy ® app, and its station websites. Performance obligations include delivery of advertisements over the Company's platforms or delivery of targeted advertisements directly to consumers. The Company recognizes revenue at a point in time when the advertisements are delivered and the performance obligations are satisfied. Revenues are recorded on a net basis, after the deduction of advertising agency fees by the advertising agencies.
Through its podcast studio, Cadence 13, LLC. ("Cadence13"), the Company embeds advertisements in its owned and operated podcasts and other on-demand content. Performance obligations include delivery of advertisements. The Company recognizes revenue at a point in time when the advertisements are delivered and the performance obligations are satisfied. Revenues are recorded on a net basis, after the deduction of advertising agency fees by the advertising agencies.
Through its podcast studio, Pineapple Street Media LLC ("Pineapple"), the Company creates podcasts, for which it earns production fees. Performance obligations include the delivery of episodes. These revenues are fixed based upon contractually agreed upon terms. The Company recognizes revenue over the term of the production contract.
Network Revenues
The Company sells air-time on the Company's Audacy Audio Network. The amount of consideration the Company receives and revenue it recognizes is fixed based upon contractually agreed upon rates. The Company recognizes revenue at a point in time when the advertisements are broadcast and the performance obligations are satisfied. Revenues are recorded on a net basis, after the deduction of advertising agency fees by the advertising agencies.
Sponsorship and Event Revenues
The Company sells advertising space at live and local events hosted by the Company across the country. The Company also earns revenues from attendee-driven ticket sales and merchandise sales. Performance obligations include the presentation of the advertisers' branding in highly visible areas at the event. These revenues are recognized at a point in time, when the event occurs and the performance obligations are satisfied.
The Company also sells sponsorships including, but not limited to, naming rights related to its programs or studios. Performance obligations include the mentioning or displaying of the sponsors' name, logo, product information, slogan or neutral descriptions of the sponsors' goods or services in acknowledgement of their support. These revenues are fixed based upon contractually agreed upon terms. The Company recognizes revenue over the length of the sponsorship agreement based upon the fair value of the deliverables included.
Other Revenues
The Company earns revenues from on-site promotions and endorsements from talent. Performance obligations include the broadcasting of such endorsement at specifically identifiable days and dayparts or at various local events. The Company recognizes revenue at a point in time when the performance obligations are satisfied.
The Company earns trade and barter revenue by providing advertising broadcast time in exchange for certain products, supplies, and services. The Company includes the value of such exchanges in both net revenues and station operating expenses. Trade and barter value is based upon management's estimate of the fair value of the products, supplies and services received.

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Contract Balances
Refer to the table below for information about receivables, contract assets and contract liabilities from contracts with customers. Accounts receivable balances in the table below exclude other receivables that are not generated from contracts with customers. These amounts are $1.4 million and $2.8 million as of September 30, 2022 and December 31, 2021, respectively.
Description
September 30,
2022
December 31,
2021
(amounts in thousands)
Receivables, net, included in Accounts receivable net of allowance for doubtful accounts$264,840 $273,217 
Unearned revenue - current
17,261 10,638 
Unearned revenue - noncurrent
420 474 
Changes in Contract Balances
The timing of revenue recognition, billings and cash collections results in accounts receivable (billed or unbilled), and customer advances and deposits (unearned revenue) on the Company’s condensed consolidated balance sheets. At times, however, the Company receives advance payments or deposits from its customers before revenue is recognized, resulting in contract liabilities. The contract liabilities primarily relate to consideration received in advance from customers on certain contracts. For these contracts, revenue is recognized upon satisfaction of the underlying performance obligations. The contract liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each respective reporting period within other current liabilities and other long-term liabilities.
Significant changes in the contract liabilities balances during the period are as follows:
Nine Months Ended
September 30, 2022
DescriptionUnearned Revenue
(amounts in thousands)
Beginning balance on January 1, 2022$11,112 
Revenue recognized during the period that was included in the beginning balance of contract liabilities(11,112)
Additions, net of revenue recognized during period17,681 
Ending balance$17,681 
Disaggregation of Revenue
The following table presents the Company’s revenues disaggregated by revenue source:
Nine Months Ended
September 30,
20222021
Revenue by Source(amounts in thousands)
Spot revenues$584,363 $577,561 
Digital revenues190,024 169,746 
Network revenues66,592 61,626 
Sponsorships and event revenues35,724 32,021 
Other revenues35,000 33,718 
Net revenues$911,703 $874,672 
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Three Months Ended
September 30,
20222021
Revenue by Source(amounts in thousands)
Spot revenues$204,742 $220,562 
Digital revenues62,685 61,378 
Network revenues23,663 23,453 
Sponsorships and event revenues13,760 12,093 
Other revenues12,119 11,957 
Net revenues$316,969 $329,443 
5.    LEASES
Leasing Guidance
The Company recognizes the assets and liabilities that arise from leases on the commencement date of the lease. The Company recognizes the liability to make lease payments as a lease liability as well as a right-of-use ("ROU") asset representing the right to use the underlying asset for the lease term, on the condensed consolidated balance sheet.
Lease Expense
The components of lease expense were as follows:
Lease CostNine Months Ended
September 30,
20222021
(amounts in thousands)
Operating lease cost
$37,957 $36,728 
Variable lease cost
8,395 8,876 
Total lease cost
$46,352 $45,604 
Three Months Ended
September 30,
Lease Cost20222021
(amounts in thousands)
Operating lease cost
$12,605 $12,113 
Variable lease cost3,122 2,861 
Total lease cost
$15,727 $14,974 
Supplemental Cash Flow
Supplemental cash flow information related to leases was as follows:
Nine Months Ended September 30,
Description20222021
(amounts in thousands)
Cash paid for amounts included in measurement of lease liabilities
Operating cash flows from operating leases$41,072 $40,567 
Right-of-use assets obtained in exchange for lease obligations
Operating leases
$22,227 $14,898 
As of September 30, 2022, the Company has not entered into any leases that have not yet commenced.
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6.    INTANGIBLE ASSETS AND GOODWILL
Goodwill and certain intangible assets are not amortized for book purposes. They may, however, be amortized for tax purposes. The Company accounts for its acquired broadcasting licenses as indefinite-lived intangible assets and, similar to goodwill, these assets are reviewed at least annually for impairment. At the time of each review, if the fair value is less than the carrying value of the reporting unit, then a charge is recorded to the results of operations.
The following table presents the changes in the carrying value of broadcasting licenses. Refer to Note 2, Business Combinations, and Note 14, Assets Held For Sale, for additional information.
Broadcasting Licenses
Carrying Amount
September 30,
2022
December 31,
2021
(amounts in thousands)
Broadcasting licenses balance as of January 1,$2,251,546 $2,229,016 
Acquisitions (See Note 2)— 23,233 
Loss on impairment(159,089)— 
Assets held for sale (See Note 14)(4,380)(703)
Ending period balance$2,088,077 $2,251,546 
The following table presents the changes in goodwill. Refer to Note 2, Business Combinations, for additional information.
Goodwill Carrying Amount
September 30,
2022
December 31,
2021
(amounts in thousands)
Goodwill balance before cumulative loss on impairment as of January 1,$1,062,723 $1,042,762 
Accumulated loss on impairment as of January 1,(980,547)(980,547)
Goodwill beginning balance after cumulative loss on impairment as of January 1,82,176 62,215 
Loss on impairment(18,126)— 
Acquisitions (See Note 2)— 20,099 
Measurement period adjustments to acquired goodwill (See Note 2)(134)(138)
Ending period balance$63,916 $82,176 
Interim Impairment Assessment
In evaluating whether events or changes in circumstances indicate that an interim impairment assessment is required, management considers several factors in determining whether it is more likely than not that the carrying value of the Company’s broadcasting licenses or goodwill exceeds the fair value of the Company’s broadcasting licenses or goodwill. The analysis considers: (i) macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets; (ii) industry and market considerations such as deterioration in the environment in which the Company operates, an increased competitive environment, a change in the market for the Company’s products or services, or a regulatory or political development; (iii) cost factors such as increases in labor or other costs that have a negative effect on earnings and cash flows; (iv) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; (v) other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, bankruptcy, or litigation; (vi) events affecting a reporting unit such as a change in the composition or carrying amount of the Company’s net assets; and (vii) a sustained decrease in the Company’s share price.
The Company evaluates the significance of identified events and circumstances on the basis of the weight of evidence along with how they could affect the relationship between the carrying value of the Company’s broadcasting licenses and goodwill and their respective fair value amounts, including positive mitigating events and circumstances.
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Subsequent to the annual impairment test conducted during the fourth quarter of 2021, the Company continued to monitor these factors listed above. Due to a sustained decrease in the Company's share price, the increase in interest rates and related impact on the weighted average cost of capital, a contraction in the expected future economic and market conditions utilized in the annual impairment test conducted in the fourth quarter of 2021, and a reduction in projected operating performance at the QLGG reporting unit, the Company determined that the changes in circumstances warranted an interim impairment assessment on its broadcasting licenses and goodwill during the third quarter of the current year. Due to changes in facts and circumstances, the Company revised its estimates with respect to projected operating performance and discount rates used in the interim impairment assessments.
Broadcasting Licenses Impairment Test
During the fourth quarter of 2021, the Company completed its annual impairment test for broadcasting licenses and determined that the fair value of its broadcasting licenses was greater than the amount reflected in the balance sheet for each of the Company's markets and, accordingly, no impairment was recorded.
During the third quarter of the current year, the Company completed an interim impairment assessment for its broadcasting licenses at the market level using the Greenfield method. As a result of this interim impairment assessment, the Company determined that the fair value of its broadcasting licenses was less than the amount reflected in the balance sheet for certain of the Company's markets and, accordingly, recorded an impairment loss of $159.1 million ($116.7 million, net of tax).
Each market’s broadcasting licenses are combined into a single unit of accounting for purposes of testing impairment, as the broadcasting licenses in each market are operated as a single asset. The Company determines the fair value of the broadcasting licenses in each of its markets by relying on a discounted cash flow approach (a 10-year income model) assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. These assumptions include, but are not limited to: (i) the discount rate; (ii) the profit margin of an average station within a market, based upon market size and station type; (iii) the forecast growth rate of each radio market; (iv) the estimated capital start-up costs and losses incurred during the early years; (v) the likely media competition within the market area; (vi) the tax rate; and (vii) future terminal values.
The methodology used by the Company in determining its key estimates and assumptions was applied consistently to each market. Of the seven variables identified above, the Company believes that the assumptions in items (i) through (iii) above are the most important and sensitive in the determination of fair value.
Assumptions and Results - Broadcasting Licenses
The following table reflects the estimates and assumptions used in the interim and annual broadcasting licenses impairment assessments of each year.
Estimates And Assumptions
Third Quarter 2022Fourth Quarter 2021
Discount rate9.5 %8.5 %
Operating profit margin ranges for average stations in markets where the Company operates
19.6% to 32.9%
19.6% to 33.3%
Forecasted growth rate (including long-term growth rate) range of the Company's markets
0.0% to 0.6%
0.0% to 0.6%
The Company believes it has made reasonable estimates and assumptions to calculate the fair value of its broadcasting licenses. These estimates and assumptions could be materially different from actual results.
If actual market conditions are less favorable than those projected by the industry or the Company, or if events occur or circumstances change that would reduce the fair value of the Company’s broadcasting licenses below the amount reflected in the condensed consolidated balance sheet, the Company may be required to conduct an interim test and possibly recognize impairment charges, which may be material, in future periods. The current macroeconomic conditions increase the uncertainty with respect to such market and economic conditions and, as such, increases the risk of future impairment. The Company will conduct its annual impairment test for broadcast licenses during the fourth quarter of 2022.
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Goodwill Impairment Test
In March 2021, the Company completed the Podcorn Acquisition. Cadence13, Pineapple and Podcorn represent a single podcasting division one level beneath the single operating segment. Since the operations are economically similar, Cadence13, Pineapple and Podcorn were aggregated into a single podcasting reporting unit for the quantitative impairment assessment conducted in the fourth quarter of 2021.
During the fourth quarter of 2021, the Company completed its annual impairment test for its podcasting reporting unit and determined that the fair value of its podcast reporting unit was greater than the carrying value and, accordingly, no impairment was recorded. During the fourth quarter of 2021, the Company completed its annual impairment test for its QLGG reporting unit and determined that the fair value of its QLGG reporting unit was greater than the carrying value and, accordingly, no impairment was recorded.

In October 2021, the Company completed the WideOrbit Streaming Acquisition. AmperWave represents a separate division one level beneath the single operating segment and its own reporting unit. For the goodwill acquired in the WideOrbit Streaming Acquisition, similar valuation techniques that were applied in the valuation of goodwill under purchase price accounting were also used in the annual impairment testing process. The valuation of the acquired goodwill approximated fair value.
During the third quarter of the current year, the Company completed an interim impairment assessment for its goodwill at the podcast reporting unit and the QLGG reporting unit. As a result of this interim impairment assessment, the Company determined that the fair value of its podcast reporting unit was greater than the carrying value, and accordingly, no impairment was recorded. As a result of this interim impairment assessment, the Company determined that the fair value of its QLGG reporting unit was less than the amount reflected in the balance sheet and, accordingly, recorded an impairment loss of $18.1 million. As a result of this impairment assessment, the Company no longer has any goodwill attributable to the QLGG reporting unit.
The Company elected to bypass the qualitative assessment for the interim impairment tests of its podcast reporting unit and QLGG reporting unit and proceeded directly to the quantitative goodwill impairment test by using a discounted cash flow approach (a 5-year income model). Potential impairment is identified by comparing the fair value of each reporting unit to its carrying value. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. The cash flow projections for the reporting units include significant judgments and assumptions relating to the revenue, operating expenses, projected operating profit margins, and the discount rate. Changes in the Company's estimates of the fair value of these assets could result in material future period write-downs of the carrying value of the Company's goodwill.
Assumptions and Results - Goodwill
The following table reflects the estimates and assumptions used in the interim and annual goodwill impairment assessments of each year:
Estimates And Assumptions
Third Quarter 2022Fourth Quarter 2021
Discount rate - podcast reporting unit11.0 %9.5%
Discount rate - QLGG reporting unit13.0 %12.0%
The Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units. These estimates and assumptions could be materially different from actual results.
If actual market conditions are less favorable than those projected by the industry or the Company, or if events occur or circumstances change that would reduce the fair value of the Company’s goodwill below the amount reflected in the condensed consolidated balance sheet, the Company may be required to conduct an interim test and possibly recognize impairment charges, which could be material, in future periods. The current macroeconomic conditions increase the uncertainty with respect to such market and economic conditions and, as such, increases the risk of future impairment. The Company will conduct its annual impairment test for goodwill during the fourth quarter of 2022.
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7.    OTHER CURRENT LIABILITIES
Other current liabilities consist of the following as of the periods indicated:
Other Current Liabilities
September 30,
2022
December 31,
2021
(amounts in thousands)
Accrued compensation$24,946 $35,917 
Accounts receivable credits5,239 2,506 
Advertiser obligations5,664 2,504 
Accrued interest payable13,279 14,662 
Unearned revenue17,261 10,638 
Unfavorable sports liabilities885 4,492 
Accrued benefits7,232 6,894 
Non-income tax liabilities1,876 1,897 
Other4,062 4,620 
Total other current liabilities$80,444 $84,130 

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8.    LONG-TERM DEBT
Long-term debt was comprised of the following as of the periods indicated:
Long-Term Debt
September 30,
2022
December 31,
2021
(amounts in thousands)
Credit Facility
Revolver$165,000 $97,727 
Term B-2 Loan, due November 17, 2024632,415 632,415 
Plus unamortized premium1,186 1,397 
798,601 731,539 
2027 Notes
6.500% notes due May 1, 2027
460,000 470,000 
Plus unamortized premium3,406 3,964 
463,406 473,964 
2029 Notes
6.750% notes due March 31, 2029
540,000 540,000 
540,000 540,000 
Accounts receivable facility75,000 75,000 
Other debt782 764 
Total debt before deferred financing costs1,877,789 1,821,267 
Current amount of long-term debt— (22,727)
Deferred financing costs (excludes the revolving credit)(12,667)(16,409)
Total long-term debt, net of current debt$1,865,122 $1,782,131 
Outstanding standby letters of credit$6,069 $6,069 
(A) Senior Debt
The 2027 Notes
During 2019, the Company and its finance subsidiary, Audacy Capital Corp., issued $425.0 million in aggregate principal amount of senior secured second-lien notes due May 1, 2027 (the "Initial 2027 Notes"). Interest on the Initial 2027 Notes accrues at the rate of 6.500% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year. The Initial 2027 Notes are governed by an indenture dated as of April 30, 2019 (the "Base Indenture"), as supplemented by a first supplemental indenture dated December 13, 2019 (the "First Supplemental Indenture"), (collectively, the "Indenture").
A portion of the Initial 2027 Notes was issued at premium. As of any reporting period, the unamortized premium on the Initial 2027 Notes is reflected on the balance sheet as an addition to the Initial 2027 Notes.
During the fourth quarter of 2021, Audacy Capital Corp., issued $45.0 million of additional 6.500% senior secured second-lien notes due 2027 (the "Additional 2027 Notes"). The Additional 2027 Notes were issued as additional notes under the Indenture. The Additional 2027 Notes are treated as a single series with the Initial 2027 Notes (collectively, the "2027 Notes") and have substantially the same terms as the Initial 2027 Notes. The Additional 2027 Notes were issued at a price of 100.750% of their principal amount.
During the nine months ended September 30, 2022, the Company repurchased $10.0 million of its 2027 Notes through open market purchases. This repurchase activity generated a gain on retirement of the 2027 Notes in the amount of
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$0.6 million. As of any reporting period, the unamortized premium on the 2027 Notes is reflected on the balance sheet as an addition to the $460.0 million 2027 Notes.
The Credit Facility
The Company's credit agreement (the "Credit Facility"), as amended, is comprised of a $250.0 million Revolver and a term B-2 loan (the "Term B-2 Loan").
The Credit Facility has usual and customary covenants including, but not limited to, a net first lien leverage ratio, restricted payments and the incurrence of additional debt. Specifically, the Credit Facility requires the Company to comply with a certain financial covenant which is a defined term within the agreement, including a maximum Consolidated Net First-Lien Leverage Ratio that cannot exceed 4.0 times at September 30, 2022. In certain circumstances, if the Company consummates additional acquisition activity permitted under the terms of the Credit Facility, the Consolidated Net First-Lien Leverage Ratio will be increased to 4.5 times for a one year period following the consummation of such permitted acquisition. As of September 30, 2022, the Company’s Consolidated Net First Lien Leverage Ratio was 3.8 times.
Failure to comply with the Company’s financial covenant or other terms of its Credit Facility and any subsequent failure to negotiate and obtain any required relief from its lenders could result in a default under the Company’s Credit Facility. Any event of default could have a material adverse effect on the Company’s business and financial condition. The acceleration of the Company’s debt repayment could have a material adverse effect on its business. The Company may seek from time to time to amend its Credit Facility or obtain other funding or additional funding, which may result in higher interest rates.
As of September 30, 2022, the Company is in compliance with the financial covenant and all other terms of the Credit Facility in all material respects. The Company’s ability to maintain compliance with its covenant is highly dependent on its results of operations. The cash available from the Revolver is dependent on the Company’s Consolidated Net First-Lien Leverage Ratio at the time of such borrowing. Refer to Note 1, Basis of Presentation And Significant Policies - Liquidity and Capital Resources, for additional information.
The 2029 Notes
During the first quarter of 2021, the Company and its finance subsidiary, Audacy Capital Corp., issued $540.0 million in aggregate principal amount of senior secured second-lien notes due March 31, 2029 (the "2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.750% per annum and is payable semi-annually in arrears on March 31 and September 30 of each year.
The Company used net proceeds of the offering, along with cash on hand, to: (i) repay $77.0 million of existing indebtedness under the Term B-2 Loan; (ii) repay $40.0 million of drawings under the Revolver; and (iii) fully redeem all of its $400.0 million aggregate principal amount of 7.250% senior notes due 2024 (the "Senior Notes") and to pay fees and expenses in connection with the redemption.
In connection with this activity, during the first quarter of 2021, the Company: (i) recorded $6.6 million of new debt issuance costs attributable to the 2029 Notes; and (ii) $0.4 million of debt issuance costs attributable to the Revolver which will be amortized over the remaining term of the Revolver on a straight line basis. The Company also incurred $0.5 million of costs which were classified within refinancing expenses.
The Credit Facility - Amendment No. 5
On July 20, 2020, Audacy Capital Corp. entered into an amendment ("Amendment No. 5") to the Credit Agreement dated October 17, 2016 (as previously amended, the "Existing Credit Agreement" and, as amended by Amendment No. 5, the "Credit Agreement"), with the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent. Amendment No. 5, among other things:
(a) amended the Company's financial covenants under the Credit Agreement by: (i) suspending the testing of the Consolidated Net First Lien Leverage Ratio (as defined in the Credit Agreement) through the Test Period (as defined in the Credit Agreement) ending December 31, 2020; (ii) adding a new minimum liquidity covenant of $75.0 million until December 31, 2021, or such earlier date as the Company may elect (the "Covenant Relief Period"); and (iii) imposing certain restrictions during the Covenant Relief Period, including among other things, certain limitations on incurring additional indebtedness and liens, making restricted payments or investments, redeeming notes and entering into certain sale and lease-back transactions;
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(b) increased the interest rate and/or fees under the Credit Agreement during the Covenant Relief Period applicable to: (i) 2024 Revolving Credit Loans (as defined in the Credit Agreement) to (x) in the case of Eurodollar Rate Loans (as defined in the Credit Agreement), a customary Eurodollar rate formula plus a margin of 2.50% per annum, and (y) in the case of Base Rate Loans (as defined in the Credit Agreement), a customary base rate formula plus a margin of 1.50% per annum, and (ii) Letter of Credit (as defined in the Credit Agreement) fees to 2.50% times the daily maximum amount available to be drawn under any such Letter of Credit; and
(c) modified the definition of Consolidated EBITDA by setting fixed amounts for the fiscal quarters ending June 30, 2020, September 30, 2020, and December 31, 2020, for purposes of testing compliance with the Consolidated Net First Lien Leverage Ratio financial covenant during the Covenant Relief Period, which fixed amounts correspond to the Borrower's Consolidated EBITDA as reported under the Existing Credit Agreement for the Test Period ended March 31, 2020, for the fiscal quarters ending June 30, 2019, September 30, 2019, and December 31, 2019, respectively.
The Credit Facility - Amendment No. 6
On March 5, 2021, Audacy Capital Corp. entered into an amendment ("Amendment No. 6") to the Credit Agreement dated October 17, 2016 (as previously amended, the “Existing Credit Agreement” and, as amended by Amendment No. 6, the “Credit Agreement”), with the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
Under the Existing Credit Agreement, during the Covenant Relief Period the Company was subject to a $75.0 million limitation on investments in joint ventures, Affiliates, Unrestricted Subsidiaries and Non-Guarantor Subsidiaries (each as defined in the Existing Credit Agreement) (the “Covenant Relief Period Investment Limitation”). Amendment No. 6, among other things, excludes from the Covenant Relief Period Investment Limitation any investments made in connection with a permitted receivables financing facility. The Covenant Relief Period ended in the fourth quarter of 2021.
Accounts Receivable Facility
On July 15, 2021, the Company and certain of its subsidiaries entered into a $75.0 million Receivables Facility to provide additional liquidity, to reduce the Company's cost of funds and to repay outstanding indebtedness under the Credit Facility.
The documentation for the Receivables Facility includes (i) a Receivables Purchase Agreement entered into by and among Audacy Operations, Audacy Receivables as seller, the Investors, and DZ BANK, as agent; (ii) a Sale and Contribution Agreement, by and among Audacy Operations, Audacy NY, and Audacy Receivables; and (iii) a Purchase and Sale Agreement and together with the Receivables Purchase Agreement and the Sale and Contribution Agreement, the “Agreements”) by and among certain wholly-owned subsidiaries of the Company (together with Audacy NY, the “Originators”), Audacy Operations and Audacy NY.
Pursuant to the Purchase and Sale Agreement, the Originators (other than Audacy NY) have sold, and will continue to sell on an ongoing basis, their accounts receivable, together with customary related security and interests in the proceeds thereof, to Audacy NY. Pursuant to the Sale and Contribution Agreement, Audacy NY has sold and contributed, and will continue to sell and contribute on an ongoing basis, its accounts receivable, together with customary related security and interests in the proceeds thereof, to Audacy Receivables. Pursuant to the Receivables Purchase Agreement, Audacy Receivables has sold and will continue to sell on an ongoing basis such accounts receivable, together with customary related security and interests in the proceeds thereof, to the Investors in exchange for cash investments.
Yield is payable to Investors under the Receivables Purchase Agreement at a variable rate based on either the Secured Overnight Financing Rate ("SOFR") or commercial paper rates plus a margin. Collections on the accounts receivable: (x) will be used to either: (i) satisfy the obligations of Audacy Receivables under the Receivables Facility; or (ii) purchase additional accounts receivable from the Originators; or (y) may be distributed to Audacy NY, the sole member of Audacy Receivables. Audacy Operations acts as the servicer under the Agreements.

The Agreements contain representations, warranties and covenants that are customary for bankruptcy-remote securitization transactions, including covenants requiring Audacy Receivables to be treated at all times as an entity separate from the Originators, Audacy Operations, the Company or any of its other affiliates and that transactions entered into between Audacy Receivables and any of its affiliates shall be on arm’s-length terms. The Receivables Purchase Agreement also contains customary default and termination provisions which provide for acceleration of amounts owed under the Receivables Purchase Agreement upon the occurrence of certain specified events with respect to Audacy Receivables, Audacy Operations, the Originators, or the Company, including, but not limited to: (i) Audacy Receivables’ failure to pay yield and other amounts due;
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(ii) certain insolvency events; (iii) certain judgments entered against the parties; (iv) certain liens filed with respect to assets; and (v) breach of certain financial covenants and ratios.

The Company has agreed to guarantee the performance obligations of Audacy Operations and the Originators under the Receivables Facility documents. The Company has not agreed to guarantee any obligations of Audacy Receivables or the collection of any of the receivables and will not be responsible for any obligations to the extent the failure to perform such obligations by Audacy Operations or any Originator results from receivables being uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness or other financial inability to pay of the related obligor.

In general, the proceeds from the sale of the accounts receivable are used by the SPV to pay the purchase price for accounts receivable it acquires from Audacy NY and may be used to fund capital expenditures, repay borrowings on the Credit Facility, satisfy maturing debt obligations, as well as fund working capital needs and other approved uses.

Although the SPV is a wholly owned consolidated subsidiary of Audacy NY, the SPV is legally separate from Audacy NY. The assets of the SPV (including the accounts receivable) are not available to creditors of Audacy NY, Audacy Operations or the Company, and the accounts receivable are not legally assets of Audacy NY, Audacy Operations or the Company. The Receivables Facility is accounted for as a secured financing.
The Receivables Facility has usual and customary covenants including, but not limited to, a net first lien leverage ratio, a required minimum tangible net worth, and a minimum liquidity requirement (the "financial covenants"). Specifically, the Receivables Facility requires the Company to comply with a certain financial covenant which is a defined term within the agreement, including a maximum Consolidated Net First-Lien Leverage Ratio that cannot exceed 4.0 times at September 30, 2022. As of September 30, 2022, the Company’s Consolidated Net First Lien Leverage Ratio was 3.8 times. The Receivables Facility also requires the Company to maintain a minimum tangible net worth, as defined within the agreement, of at least $300.0 million. Additionally, the Receivables Facility requires the Company to maintain liquidity of $75.0 million. As of September 30, 2022, the Company was compliant with the financial covenants.
The Receivables Facility will expire on July 15, 2024, unless earlier terminated or subsequently extended pursuant to the terms of the Receivables Purchase Agreement. The pledged receivables and the corresponding debt are included in Accounts receivable, net and Long-term debt, net of current portion, respectively, on the Condensed Consolidated Balance Sheet. At September 30, 2022, the Company had outstanding borrowings of $75.0 million under the Receivables Facility. Refer to Note 1, Basis of Presentation And Significant Policies - Liquidity and Capital Resources, for additional information.
(B) Senior Unsecured Debt
The Senior Notes
Simultaneously with entering into a business combination and assuming the Credit Facility on November 17, 2017, the Company also assumed the 7.250% unsecured senior notes (the “Senior Notes”) that were subsequently modified and were set to mature on November 1, 2024 in the amount of $400.0 million. The Senior Notes were originally issued by CBS Radio Inc. (now Audacy Capital Corp.) on October 17, 2016.
Interest on the Senior Notes accrued at the rate of 7.250% per annum and was payable semi-annually in arrears on May 1 and November 1 of each year.
In connection with the redemption of the Senior Notes during the first quarter of 2021, the Company wrote off the following amounts to gain/loss on extinguishment of debt: (i) $14.5 million in prepayment premiums for the early retirement of the Senior Notes; (ii) $8.7 million of unamortized premium attributable to the Senior Notes; (iii) $1.0 million of unamortized debt issuance costs attributable to the Senior Notes; and (iv) $1.3 million of unamortized debt issuance costs attributable to the Term B-2 Loan.
(C) Net Interest Expense
The components of net interest expense are as follows:
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Net Interest Expense
Nine Months Ended
September 30,
20222021
(amounts in thousands)
Interest expense$73,119 $64,285 
Amortization of deferred financing costs3,832 3,580 
Amortization of original issue premium of senior notes(768)(1,331)
Interest income and other investment income(70)(50)
Total net interest expense$76,113 $66,484 
Net Interest Expense
Three Months Ended
September 30,
20222021
(amounts in thousands)
Interest expense$27,076 $21,668 
Amortization of deferred financing costs1,293 1,342 
Amortization of original issue premium of senior notes(256)(241)
Interest income and other investment income— 
Total net interest expense$28,113 $22,771 
9.    DERIVATIVE AND HEDGING ACTIVITIES
The Company from time to time enters into derivative financial instruments, such as interest rate collar agreements (“Collars”), to manage its exposure to fluctuations in interest rates under the Company’s variable rate debt.
Hedge Accounting Treatment
As of September 30, 2022, the Company had the following derivative outstanding, which was designated as a cash flow hedge that qualified for hedge accounting treatment:
Type
Of
Hedge
Notional
Amount
Effective
Date
CollarFixed
LIBOR
Rate
Expiration
Date
Notional
Amount
Decreases
Amount
After
Decrease
(amounts
 in millions)
(amounts
in millions)
Cap2.75%
Collar$220.0 Jun. 25, 2019Floor0.402%Jun. 28, 2024Jun. 28, 2023$90.0 
Total$220.0 
For the nine months ended September 30, 2022, the Company recorded the net change in the fair value of this derivative as a gain of $3.2 million (net of tax benefit of $1.2 million as of September 30, 2022) to the condensed consolidated statement of comprehensive income (loss). The fair value of this derivative was determined using observable market-based inputs (a Level 2 measurement) and the impact of credit risk on a derivative’s fair value (the creditworthiness of the Company for liabilities). As of September 30, 2022, the fair value of these derivatives was an asset of $4.0 million, and is recorded within other assets, net of accumulated amortization on the condensed consolidated balance sheet. The Company does not expect to reclassify any of this amount to the condensed consolidated statement of operations over the next twelve months.
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The following table presents the accumulated derivative gain (loss) recorded in other comprehensive income (loss) as of September 30, 2022 and December 31, 2021:
Accumulated Derivative Gain (Loss)
DescriptionSeptember 30,
2022
December 31,
2021
(amounts in thousands)
Accumulated derivative unrealized gain (loss)$2,909 $(289)
The following tables present the accumulated net derivative gain (loss) recorded in other comprehensive income (loss) for the nine and three months ended September 30, 2022 and September 30, 2021:
Other Comprehensive Income (Loss)
Net Change in Accumulated Derivative Unrealized Gain (Loss)Net Amount of Accumulated Derivative Gain (Loss) Reclassified to the Consolidated Statement of Operations
Nine Months Ended September 30,
2022202120222021
(amounts in thousands)
$3,198 $929 $232 $912 
Other Comprehensive Income (Loss)
Net Change in Accumulated Derivative Unrealized Gain (Loss)Net Amount of Accumulated Derivative Gain (Loss) Reclassified to the Condensed Consolidated Statement of Operations
Three Months Ended September 30,
2022202120222021
(amounts in thousands)
$1,422 $170 $— $263 

Undesignated Derivatives

The Company is subject to equity market risks due to changes in the fair value of the notional investments selected by its employees as part of its non-qualified deferred compensation plans. During the quarter ended June 30, 2020, the Company entered into a Total Return Swap ("TRS") in order to manage the market risks associated with its non-qualified deferred compensation plan liabilities. The Company pays a floating rate, based on the SOFR, on the notional amount of the TRS. The TRS is designed to substantially offset changes in its non-qualified deferred compensation plan's liabilities due to changes in the value of the investment options made by employees. As of September 30, 2022, the notional investments underlying the TRS amounted to $22.8 million. The contract term of the TRS is through March 2023 and is settled on a monthly basis, therefore limiting counterparty performance risk. The Company did not designate the TRS as an accounting hedge. Rather, the Company records all changes in the fair value of the TRS to earnings to offset the market value changes of its non-qualified deferred compensation plan liabilities.

For the nine months ended September 30, 2022, the Company recorded the net change in the fair value of the TRS in station operating expenses and corporate, general and administrative expenses in the amount of a $5.8 million expense. Of this amount, a $1.9 million expense was recorded in corporate, general and administrative expenses and a $3.9 million expense was recorded in station operating expenses.
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10.    NET INCOME (LOSS) PER COMMON SHARE
The following tables present the computations of basic and diluted net income (loss) per share from continuing operations:

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
(amounts in thousands except per share data)
Basic (Loss) Per Share
Numerator
Net loss $(140,975)$(4,761)$(152,821)$(24,982)
Denominator
Basic weighted average shares outstanding139,361 135,894 139,246 135,857 
Net loss per share - Basic$(1.01)$(0.04)$(1.10)$(0.18)
Diluted (Loss) Per Share
Numerator
Net loss $(140,975)$(4,761)$(152,821)$(24,982)
Denominator
Basic weighted average shares outstanding139,361 135,894 139,246 135,857 
Effect of RSUs and options under the treasury stock method— — — — 
Diluted weighted average shares outstanding139,361 135,894 139,246 135,857 
Net loss per share - Diluted$(1.01)$(0.04)$(1.10)$(0.18)
Disclosure of Anti-Dilutive Shares
The following table presents those shares excluded as they were anti-dilutive:
Three Months Ended
September 30,
Nine Months Ended
September 30,
Impact Of Equity Issuances2022202120222021
(amounts in thousands, except per share data)
Shares excluded as anti-dilutive under the treasury stock method:
Options609 588 609 588 
Price range of options: from$3.54 $4.88 $3.54 $4.88 
Price range of options: to$13.98 $13.98 $13.98 $13.98 
RSUs with service conditions836 1,411 816 429 
RSUs excluded with service and market conditions as market conditions not met825 — 825 — 
Excluded shares as anti-dilutive when reporting a net loss891 1,626 1,677 2,171 

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11.    SHARE-BASED COMPENSATION
Under the Company's equity compensation plan (the “Plan”), the Company is authorized to issue share-based compensation awards to key employees, directors and consultants.
Restricted Stock Units (“RSUs”) Activity
The following is a summary of the changes in RSUs under the Plan during the current period:
Period EndedNumber of Restricted Stock UnitsWeighted Average Purchase PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value as of September 30,
2022
(amounts in thousands)
RSUs outstanding as of:December 31, 20217,342 
RSUs awardedSeptember 30, 20221,776 
RSUs releasedSeptember 30, 2022(2,239)
RSUs forfeitedSeptember 30, 2022(274)
RSUs outstanding as of:September 30, 20226,605 $— 1.0$2,594 
RSUs vested and expected to vest as of:September 30, 20226,605 $— 1.0$2,594 
RSUs exercisable (vested and deferred) as of:September 30, 2022$— 0.0$
Weighted average remaining recognition period in years1.6
Unamortized compensation expense$5,921 
RSUs with Service and Market Conditions
The Company issued RSUs with service and market conditions that are included in the table above.
Option Activity
The following table provides summary information related to the exercise of stock options:
Nine Months Ended
September 30,
Option Exercise Data20222021
(amounts in thousands)
Intrinsic value of options exercised$— $497 
Tax benefit from options exercised $— $133 
Cash received from exercise price of options exercised$— $45 

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The following table presents the option activity during the current period under the Plan:
Period EndedNumber of OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Intrinsic Value as of September 30
2022
(amounts in thousands)
Options outstanding as of:December 31, 2021609 $11.33 
Options exercisedSeptember 30, 2022— — 
Options outstanding as of:September 30, 2022609 $11.33 2.1$— 
Options vested and expected to vest as of:September 30, 2022609 $11.33 2.1$— 
Options vested and exercisable as of:September 30, 2022609 $11.33 2.1$— 
Weighted average remaining recognition period in years0.0
Unamortized compensation expense$— 
The following table summarizes significant ranges of outstanding and exercisable options as of the current period:
Options OutstandingOptions Exercisable
(amounts in thousands)
Range of
Exercise Prices
Number of Options Outstanding September 30,
2022
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Number of Options Exercisable September 30,
2022
Weighted
Average
Exercise
Price
FromTo
$3.54 7.01 67 6.75.40 67 $5.40 
$9.66 13.98 542 1.512.06 542 $12.06 
$3.54 13.98 609 2.111.33 609 $11.33 
Recognized Non-Cash Stock-Based Compensation Expense
The following non-cash stock-based compensation expense, which is related primarily to RSUs, is included in each of the respective line items in the Company’s statement of operations:
Nine Months Ended
September 30,
20222021
(amounts in thousands)
Station operating expenses$2,989 $3,054 
Corporate general and administrative expenses3,956 6,726 
Stock-based compensation expense included in operating expenses6,945 9,780 
Income tax benefit (1)
1,404 2,219 
After-tax stock-based compensation expense$5,541 $7,561 
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Three Months Ended
September 30,
20222021
(amounts in thousands)
Station operating expenses$828 $937 
Corporate general and administrative expenses24 3,491 
Stock-based compensation expense included in operating expenses852 4,428 
Income tax benefit (1)
50 1,054 
After-tax stock-based compensation expense$802 $3,374 
(1) Amounts exclude impact from any compensation expense subject to Section 162(m) of the Code, which is nondeductible for income tax purposes.
12.    INCOME TAXES
Tax Rate for the Nine and Three Months Ended September 30, 2022
The Company recognized an income tax benefit at an effective income tax rate of 22.0% and 21.7% for the nine and three months ended September 30, 2022, respectively. The effective income tax rate was determined using a forecasted tax rate based upon projected taxable income for the year. The effective income tax rate for the period was impacted by permanent items, state tax expense, discrete income tax expense items related to stock based compensation, a valuation allowance for certain state net operating losses, adjustments related to amended federal income tax returns for 2018 and 2019, and interest and penalties associated with uncertain tax positions.
On March 27, 2020, the United States enacted the CARES Act. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effects of the COVID-19 pandemic. The CARES Act includes significant business tax provisions that, among other things, includes the removal of certain limitations on utilization of net operating losses, increases the loss carry back period for certain losses to five years, and increases the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company was able to carryback its 2020 federal income tax loss to prior tax years and file a refund claim with the IRS for $15.2 million, which it received in the first quarter of 2022. During the third quarter of 2022, the Company filed amended federal income tax returns for 2018 and 2019, in which it requested a refund of $5.5 million for 2018.
Tax Rate for the Nine and Three Months Ended September 30, 2021
The Company recognized an income tax benefit at an effective income tax rate of 20.7% and 173.5% for the nine and three months ended September 30, 2021, respectively, which was determined using a forecasted rate based upon projected taxable income for the full year.
Net Deferred Tax Assets and Liabilities
The income tax accounting process to determine the deferred tax liabilities involves estimating all temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income. The Company estimated the current exposure by assessing the temporary differences and computing the provision for income taxes by applying the estimated effective tax rate to income.
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13.    FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments Subject to Fair Value Measurements
Recurring Fair Value Measurements
The following table sets forth the Company's financial assets and/or liabilities that were accounted for at fair value on a recurring basis and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value and its placement within the fair value hierarchy levels. During the periods presented, there were no transfers between fair value hierarchical levels.
Fair Value Measurements At Reporting Date
Description
Balance at September 30,
2022
Quoted prices
in active
markets
Level 1
Significant
other observable
inputs
Level 2
Significant
unobservable
inputs
Level 3
Measured at
Net Asset Value
as a Practical
Expedient (2)
(amounts in thousands)
Assets
Interest Rate Cash Flow Hedge (3)
$3,967 $— $3,967 $— $— 
Liabilities
Deferred compensation plan liabilities (1)
$22,473 $18,157 $— $— $4,316 
Contingent Consideration (4)
$30 $— $— $30 $— 
Description
Balance at December 31,
2021
Quoted prices
in active
markets
Level 1
Significant
other observable
inputs
Level 2
Significant
unobservable
inputs
Level 3
Measured at
Net Asset Value
as a Practical
Expedient (2)
(amounts in thousands)
Liabilities
Deferred compensation plan liabilities (1)
$32,730 $26,839 $— $— $5,891 
Interest Rate Cash Flow Hedge (3)
$394 $— $394 $— $— 
Contingent Consideration (4)
$8,783 $— $— $8,783 $— 
(1)The Company’s deferred compensation liability, which is included in other long-term liabilities, is recorded at fair value on a recurring basis. The unfunded plan allows participants to hypothetically invest in various specified investment options.
(2)The fair value of underlying investments in collective trust funds is determined using the net asset value (“NAV”) provided by the administrator of the fund as a practical expedient. The NAV is determined by each fund’s trustee based upon the fair value of the underlying assets owned by the fund, less liabilities, divided by outstanding units. In accordance with appropriate accounting guidance, these investments have not been classified in the fair value hierarchy.
(3)The Company’s interest rate collar, which is included in other long-term liabilities at December 31, 2021 and other assets, net of accumulated amortization at September 30, 2022, is recorded at fair value on a recurring basis. The derivatives are not exchange listed and therefore the fair value is estimated using models that reflect the contractual terms of the derivative, yield curves, and the credit quality of the counterparties. The models also incorporate the Company’s creditworthiness in order to appropriately reflect non-performance risk. Inputs are generally observable and do not contain a high level of subjectivity.
(4)In connection with the Podcorn Acquisition, the Company recorded a liability for contingent consideration payable based upon the achievement of certain annual performance benchmarks over 2 years. The fair value of the liability is estimated using probability-weighted, discounted future cash flows at current tax rates using a scenario based model, and remeasured quarterly. The significant unobservable inputs (Level 3) used to estimate the fair value include the
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projected Adjusted EBITDA values for 2022 and 2023, as defined in the purchase agreement, and the discount rate. Using an initial discount rate of 10.5%, the fair value of the contingent consideration was $7.7 million at the acquisition date. Due to fluctuation in the market-based inputs used to develop the discount rate, the discount rate increased to 11.0% at September 30, 2022. Additionally, a reduction in projected Adjusted EBITDA values for 2022 resulted in a lower expected present value of the contingent consideration. As a result, the fair value of the contingent consideration at September 30, 2022 decreased $8.8 million to $0.1 million. This balance is included in other long-term liabilities.
Non-Recurring Fair Value Measurements
The Company has certain assets that are measured at fair value on a non-recurring basis and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.
During the three months ended September 30, 2022 and 2021, there were no events or changes in circumstances which indicated the Company’s investments, property and equipment, ROU assets, other intangible assets, or assets held for sale may not be recoverable. As discussed above, the Company conducted an interim impairment assessment on its broadcasting licenses and goodwill during the third quarter of 2022. Refer to Note 6, Intangible Assets And Goodwill, for additional information.
Fair Value of Financial Instruments Subject to Disclosures
The carrying amounts of the following assets and liabilities approximate fair value due to the short maturity of these instruments: (i) cash and cash equivalents; (ii) accounts receivable; and (iii) accounts payable, including accrued liabilities.
The following table presents the carrying value of financial instruments and, where practicable, the fair value as of the dates indicated:
September 30,
2022
December 31,
2021
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
(amounts in thousands)
Term B Loans (1)
$632,415 $531,229 $632,415 $626,881 
Revolver (2)
$165,000 $165,000 $97,727 $97,727 
2029 Notes (3)
$540,000 $132,975 $540,000 $527,850 
2027 Notes (3)
$460,000 $116,150 $470,000 $460,600 
Accounts receivable facility (4)
$75,000 $75,000 
Other debt (4)
$782 $764 
Letters of credit (4)
$6,069 $6,069 
The following methods and assumptions were used to estimate the fair value of financial instruments:
(1)The Company utilizes a Level 2 valuation input based upon the market trading price of the Term B-2 Loan to compute the fair value as the Term B-2 Loan is traded in the debt securities market. The fair value of the Term B-2 Loan is considered a Level 2 measurement as the pricing inputs are other than quoted prices in active markets.
(2)The fair value of the Revolver was considered to approximate the carrying value as the interest payments are based on LIBOR rates that reset periodically. The Revolver is considered a Level 2 measurement as the pricing inputs are other than quoted prices in active markets.
(3)The Company utilizes a Level 2 valuation input based upon the market trading prices of the 2029 Notes and 2027 Notes to compute the fair value as these 2029 Notes and 2027 Notes are traded in the debt securities market. The 2029 Notes and 2027 Notes are considered a Level 2 measurement as the pricing inputs are other than quoted prices in active markets.
(4)The Company does not believe it is practicable to estimate the fair value of the accounts receivable facility, other debt or the outstanding standby letters of credit.

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14.    ASSETS HELD FOR SALE
Assets Held for Sale
Long-lived assets to be sold are classified as held for sale in the period in which they meet all the criteria for the disposal of long-lived assets. The Company measures assets held for sale at the lower of their carrying amount or fair value less cost to sell. Additionally, the Company determined that these assets comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company.
During the fourth quarter of 2020, the Company announced that it had entered into an exchange agreement with Urban One, pursuant to which the Company would exchange its four station cluster in Charlotte, North Carolina for one station in St. Louis, Missouri, one station in Washington, D.C., and one station in Philadelphia, Pennsylvania (the "Urban One Exchange"). The Company conducted an analysis and determined the assets met the criteria to be classified as held for sale at December 31, 2020. In aggregate, these assets had a carrying value of $21.4 million.
Upon the closing of the Urban One Exchange on April 20, 2021, the Company: (i) removed the assets which had been classified as assets held for sale; (ii) recorded the assets of the acquired stations at fair value; and (iii) recognized a gain on the exchange of approximately $4.0 million. Refer to Note 2, Business Combinations, for additional information.
During the second quarter of 2021, the Company entered into an agreement with a third party to dispose of land and land improvements and equipment. The Company conducted an analysis and determined the assets met the criteria to be classified as held for sale. In aggregate, these assets had a carrying value of approximately $0.5 million. In the fourth quarter of 2021, the Company completed this sale. The Company recognized a gain on the sale, net of commissions and other expenses, of approximately $4.6 million.
During the fourth quarter of 2021, the Company entered into an agreement with a third party to dispose of land, equipment and an FCC license in connection with a sale of a station in San Francisco, California. The Company conducted an analysis and determined the assets met the criteria to be classified as held for sale. In aggregate, these assets had a carrying value of approximately $1.0 million. In the second quarter of 2022, the Company completed this sale. The Company recognized a loss on the sale, net of commissions and other expenses, of approximately $0.5 million.
During the second quarter of 2022, the Company entered into an agreement with a third party to dispose of land, and equipment in Houston, Texas. The Company conducted an analysis and determined the assets met the criteria to be classified as held for sale. In aggregate, these assets had a carrying value of approximately $4.2 million. In the third quarter of 2022, the Company completed this sale. The Company recognized a gain on the sale, net of commissions and other expenses, of approximately $10.6 million.
During the third quarter of 2022, the Company entered into an agreement with a third party to dispose of land, equipment and an FCC license in Las Vegas, Nevada. The Company conducted an analysis and determined the assets met the criteria to be classified as held for sale. In aggregate, these assets have a carrying value of approximately $8.3 millions.
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This is considered a Level 3 measurement.
The major categories of these assets held for sale are as follows as of the dates indicated:
Assets Held for Sale
September 30, 2022December 31, 2021
(amounts in thousands)
Net property and equipment3,919 330 
Radio broadcasting licenses4,380 703 
Net assets held for sale$8,299 $1,033 
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15.    SHAREHOLDERS’ EQUITY
Dividend Equivalents
The following table presents the amounts accrued and unpaid dividends on unvested RSUs as of the dates indicated:
Dividend Equivalent Liabilities
Balance Sheet
Location
September 30,
2022
December 31,
2021
(amounts in thousands)
Short-term
Other current liabilities
$235 $351 
Long-term
Other long-term liabilities
92 
Total
$236 $443 
Employee Stock Purchase Plan
The Company temporarily suspended the ESPP following the purchase of shares under the ESPP for the first quarter of 2020. The ESPP resumed on July 1, 2021. The following table presents the amount of shares purchased and non-cash compensation expense recognized in connection with the ESPP as of the periods indicated:
Nine Months Ended
September 30,
20222021
(amounts in thousands)
Number of shares purchased400 39 
Non-cash compensation expense recognized$58 $21 
Share Repurchase Program
During the nine months ended September 30, 2022, the Company did not repurchase any shares under the 2017 Share Repurchase Program. As of September 30, 2022, $41.6 million is available for future share repurchases under the 2017 Share Repurchase Program.
Shareholder Rights Agreement
On April 20, 2020, the Company entered into a Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (as amended from time to time, the "Rights Agreement"), which was previously approved by the Board of Directors of the Company. The Rights Agreement expired on April 20, 2021.
16.    CONTINGENCIES AND COMMITMENTS
Contingencies
The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial position, results of operations or cash flows. There were no material changes from the contingencies listed in the Company’s Form 10-K, filed with the SEC on March 1, 2022.
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17.    SUBSEQUENT EVENTS
Events occurring after September 30, 2022, and through the date that these condensed consolidated financial statements were issued, were evaluated to ensure that any subsequent events that met the criteria for recognition have been included and are as follows:
Sale of Assets Held for Sale
On November 2, 2022, the Company completed the sale of land and equipment in Las Vegas, Nevada for $40.0 million. These assets were reflected as assets held for sale at September 30, 2022. The Company is expected to recognize a gain on the sale, net of commissions and other expenses, of approximately $35.3 million.
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ITEM 2.    Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
In preparing the discussion and analysis contained in this Item 2, we presume that readers have read or have access to the discussion and analysis contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2022. In addition, you should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report. The following results of operations include a discussion of the nine and three months ended September 30, 2022 as compared to the comparable periods in the prior year. Our results of operations during the relevant periods represent the operations of the radio stations owned or operated by us.
The following discussion and analysis contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. You should not place undue reliance on any of these forward-looking statements. In addition, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which the statement is made, to reflect the occurrence of unanticipated events or otherwise, except as required by law. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Results of Operations for the Year-To-Date
The following significant factors affected our results of operations for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021:
COVID-19 Pandemic and Current Macroeconomic Conditions
In December 2019, a novel strain of coronavirus ("COVID-19") surfaced which resulted in an outbreak of infections throughout the world, which has affected operations and global supply chains. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The pandemic has had, and may continue to have, a material impact on the Company and its recovery. While the full impact of this pandemic is not yet known, we have taken proactive actions in an effort to mitigate its effects and are continually assessing its effects on our business, including how it has and will continue to impact advertisers, professional sports and live events.
In March 2020, we began to experience adverse effects due to the pandemic. During the second quarter of 2020, we experienced significant declines in revenue performance. April revenues were most significantly impacted and we began to experience sequential month over month improvement in our revenue performance in May through December of 2020.
Due to the seasonality of the business, the month over month improvement in net revenues did not continue into the first quarter of 2021. However, net revenues in each month from March 2021 to December 2021 exceeded net revenues in each month from March 2020 to December 2020. Again, due to the seasonality of the business, the month over month improvement in net revenues did not continue into the first quarter of 2022. However, net revenues in each month from January 2022 to June 2022 exceeded net revenues in each month from January 2021 to June 2021. While we experienced sequential growth in net revenues month-over-month through June 2022, the pace of such growth began to slow down in June 2022. Due to the current macroeconomic conditions, the month-over-month improvement in net revenues did not continue into the third quarter of 2022. However, sequential month-over-month revenues increased in the third quarter of 2022, with September 2022 representing the highest monthly revenues recorded in 2022 thus far.
We are currently unable to predict the extent of the impact that the current macroeconomic conditions will have on our financial condition, results of operations and cash flows in future periods due to numerous uncertainties, but we believe the impact could be material if conditions persist.
The extent to which the current macroeconomic conditions impact our business, operations and financial results is inherently uncertain and will depend on numerous evolving factors that we may not be able to accurately predict. Therefore, the results for the nine months ended September 30, 2022, may not be indicative of the results for the year ending December 31, 2022.


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WideOrbit Streaming Acquisition

On October 20, 2021, we completed an acquisition of WideOrbit's digital audio streaming technology and the related assets and operations of WideOrbit Streaming for approximately $40.0 million (the "WideOrbit Streaming Acquisition"). We operate WideOrbit Streaming under the name AmperWave ® ("AmperWave"). We funded this acquisition through a draw on our revolving credit facility (the "Revolver"). Based upon the timing of the WideOrbit Streaming Acquisition, our condensed consolidated financial statements for the nine months ended September 30, 2022, reflect the results of AmperWave. Our condensed consolidated financial statements for the nine months ended September 30, 2021 do not reflect the results of AmperWave.
Urban One Exchange
In April 2021, we completed a transaction with Urban One, Inc. ("Urban One") under which we exchanged our four station cluster in Charlotte, North Carolina for one station in St. Louis, Missouri, one station in Washington, D.C., and one station in Philadelphia, Pennsylvania (the "Urban One Exchange"). We began programming the respective stations under local marketing agreements ("LMAs") on November 23, 2020. Based on the timing of this transaction, our condensed consolidated financial statements for the nine months ended September 30, 2022: (i) reflect the results of the acquired stations; and (ii) do not reflect the results of the divested stations. Our condensed consolidated financial statements for the nine months ended September 30, 2021: (i) reflect the results of the acquired stations for the entire period in which the LMAs were in effect; and (ii) do not reflect the results of the divested stations.
Podcorn Acquisition
In March 2021, we completed an acquisition of podcast influencers marketplace, Podcorn Media, Inc. ("Podcorn") for $14.6 million in cash and a performance-based earn out which is based upon the achievement of certain annual performance benchmarks over a two year period (the "Podcorn Acquisition"). Based on the timing of this transaction, our condensed consolidated financial statements for the nine months ended September 30, 2022, reflect the results of Podcorn. Our condensed consolidated financial statements for the nine months ended September 30, 2021, reflect the results of Podcorn for the portion of the period after the completion of the Podcorn Acquisition.
Restructuring Charges
In connection with the CBS Radio business acquisition in November 2017, the COVID-19 pandemic, and in response to the current macroeconomic conditions, we incurred restructuring charges, including workforce reductions and other restructuring costs of $6.1 million and $4.2 million during the nine months ended September 30, 2022 and September 30, 2021, respectively. Amounts were expensed as incurred and are included in restructuring charges.
Note Issuance - The 2029 Notes
During the first quarter of 2021, we issued $540.0 million in aggregate principal amount of senior secured second-lien notes due March 31, 2029 (the "2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.750% per annum and is payable semi-annually in arrears on March 31 and September 30 of each year.
We used net proceeds of the offering, along with cash on hand, to: (i) repay $77.0 million of existing indebtedness under our term B-2 loan (the "Term B-2 Loan"); (ii) repay $40.0 million of drawings under our revolving credit facility (the "Revolver"); and (iii) fully redeem all of our $400.0 million aggregate principal amount of 7.250% senior notes due 2024 (the "Senior Notes") and to pay fees and expenses in connection with the redemption.
In connection with this activity, during the first quarter of 2021, we: (i) recorded $6.6 million of new debt issuance costs attributable to the 2029 Notes; and (ii) $0.4 million of debt issuance costs attributable to the Revolver. We also incurred $0.5 million of costs which were classified within refinancing expenses.
In connection with the redemption of the Senior Notes during the first quarter of 2021, we wrote off the following amounts to gain/loss on extinguishment of debt: (i) $14.5 million in prepayment premiums for the early retirement of the Senior Notes; (ii) $8.7 million of unamortized premium attributable to the Senior Notes; (iii) $1.0 million of unamortized debt issuance costs attributable to the Senior Notes; and (iv) $1.3 million of unamortized debt issuance costs attributable to the Term B-2 Loan.

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Note Issuance - The 2027 Notes
During 2019, we, issued $425.0 million in aggregate principal amount of senior secured second-lien notes due May 1, 2027 (the "Initial 2027 Notes"). Interest on the Initial 2027 Notes accrues at the rate of 6.500% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year. The Initial 2027 Notes are governed by an indenture dated as of April 30, 2019 (the "Base Indenture"), as supplemented by a first supplemental indenture dated December 13, 2019 (the "First Supplemental Indenture"), (collectively, the "Indenture").
During the fourth quarter of 2021, we issued $45.0 million of additional 6.500% senior secured second-lien notes due 2027 (the "Additional 2027 Notes"). The Additional 2027 Notes are treated as a single series with the Initial 2027 Notes. We used net proceeds of the Additional 2027 Notes offering to repay $44.6 million of existing indebtedness under the Term B-2 Loan. Increases in our interest expense occurred due to the issuance of the Additional 2027 Notes which have a higher interest rate than the Term B-2 Loan. In connection with this note issuance: (i) we incurred third party costs of approximately $1.1 million, of which approximately $0.8 million was capitalized and approximately $0.4 million was captured as refinancing expenses.
During the nine months ended September 30, 2022, we repurchased $10.0 million of our 2027 Notes through open market purchases. This repurchase activity generated a gain on retirement of the 2027 Notes in the amount of $0.6 million.
Impairment Loss
The impairment loss incurred during the nine months ended September 30, 2022 includes: (i) $159.1 million related to an interim impairment assessment of our FCC broadcasting licenses; (ii) $18.1 million related to an interim impairment assessment of our goodwill at the QLGG reporting unit; and (iii) $3.2 million related to an early termination of leases in several markets. The impairment loss incurred during the nine months ended September 30, 2021 includes a $0.8 million write down of property and equipment and $0.5 million related to an early termination of certain leases.
Net (Gain) Loss on Sale or Disposal
During the nine months ended September 30, 2022, we entered into an agreement with a third party Qualified Intermediary, under which we entered into an exchange of real property held for productive use or investment. This agreement relates to the sale of real property and identification and acquisition of replacement property. Total proceeds from the sale resulted in a gain of approximately $2.5 million. During the nine months ended September 30, 2022, we finalized: (i) the sale of assets in San Francisco, California, which had previously been classified within assets held for sale and recognized a loss of approximately $0.5 million; and (ii) the sale of assets in Houston, Texas which has previously been classified within assets held for sale and recognized a gain of approximately $10.6 million. Additionally, we also recognized a gain of $0.6 million in connection with the bond repurchase activity discussed above. During the nine months ended September 30, 2021, we recognized: (i) a gain of $4.0 million from the Urban One Exchange; and (ii) a gain of $0.8 million from the liquidation of one of our investments. These gains were partially offset by a $1.1 million loss on disposal of property, plant and equipment.










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Nine Months Ended September 30, 2022 As Compared To The Nine Months Ended September 30, 2021

NINE MONTHS ENDED SEPTEMBER 30,
20222021% Change
(dollars in millions)
NET REVENUES$911.7 $874.7 %
OPERATING EXPENSE:
Station operating expenses746.9 718.9 %
Depreciation and amortization expense47.5 38.7 23 %
Corporate general and administrative expenses72.8 71.5 %
Restructuring charges6.1 4.2 45 %
Impairment loss180.1 1.3 13,754 %
Net gain on sale or disposal(13.2)(3.7)257 %
Refinancing expenses— 0.5 (100)%
Change in fair value of contingent consideration(8.8)— 100 %
Other expenses0.4 0.6 (33)%
Total operating expense1,031.8 832.0 24 %
OPERATING INCOME (LOSS)(120.1)42.7 (381)%
INTEREST EXPENSE76.1 66.5 14 %
Net loss on extinguishment of debt— 8.2 (100)%
Other income(0.2)(0.5)(60)%
OTHER INCOME (EXPENSE)(0.2)7.7 -100
LOSS BEFORE INCOME TAX BENEFIT(196.0)(31.5)522 %
INCOME TAX BENEFIT(43.2)(6.5)565 %
NET LOSS$(152.8)$(25.0)511 %
Net Revenues
Revenues increased compared to prior year primarily due to economic recovery and improvements across all segments of our business from the depressed levels of the prior year. Prior year revenues were negatively impacted from the economic slowdown triggered by the COVID-19 pandemic. In the current year, we continued to report sequential growth in net revenues month-over-month through June 2022. Due to current macroeconomic conditions, this trend did not continue and revenues declined in the third quarter.
Net revenues were also positively impacted by: (i) growth in our spot revenues; (ii) growth in our digital revenues; and (iii) the operations of AmperWave for the full period;
Net revenues increased the most for our stations located in the Chicago and Philadelphia markets. Net revenues decreased the most for our stations located in the Los Angeles and Sacramento markets.
Station Operating Expenses
Station operating expenses increased compared to prior year primarily due to: (i) an increase in payroll and related expenses in the current year; (ii) an increase in digital expenses related to user acquisition, content licenses and podcast host and talent fees; and (iii) an increase in 2022 revenues which resulted in a corresponding increase in variable sales-related expenses.
Station operating expenses include non-cash compensation expense of $3.0 million and $3.1 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.
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Depreciation and Amortization Expense
Depreciation and amortization expense increased primarily due to an increase in amortization of intangible assets in 2022 relative to 2021. The increase in amortization is due to the addition of amortizable intangible assets in the WideOrbit Streaming Acquisition and the Podcorn Acquisition. Additionally, depreciation and amortization expense increased due to an increase in capital expenditures in 2022 relative to 2021.
Corporate General and Administrative Expenses
Corporate general and administrative expenses increased primarily as a result of an increase in payroll and related expenses in the current year. This increase was partially offset by a decrease in corporate rebranding costs in connection with our corporate name change in 2021, which is nonrecurring in nature.
Corporate general and administrative expenses include non-cash compensation expense of $4.0 million and $6.7 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.
Restructuring Charges
We incurred restructuring charges in 2022 and 2021 primarily in response to the COVID-19 pandemic and the current macroeconomic conditions. These costs primarily included workforce reduction charges.
Impairment Loss
The impairment loss incurred during the nine months ended September 30, 2022 consists of: (i) a $159.1 million impairment charge as a result of an interim impairment assessment on our FCC broadcasting licenses; (ii) an $18.1 million impairment charge as a result of an interim impairment assessment on our Goodwill; and (iii) a $3.2 million charge related to an early termination of certain leases. The impairment loss incurred during the nine months ended September 30, 2021 includes a $0.8 million write down of property and equipment and $0.5 million related to an early termination of certain leases.
Net Gain on Sale or Disposal
During the nine months ended September 30, 2022, we recognized: (i) a gain of approximately $2.5 million on the sale of a land easement in San Francisco, California; (ii) a gain on bond repurchases of $0.6 million; and (iii) a gain of approximately $10.6 million on the sale of assets in Houston, Texas. These gains were partially offset by a loss on sale of a station in San Francisco, California of $0.5 million. During the nine months ended September 30, 2021, we recognized; (i) a gain of approximately $4.0 million from the Urban One Exchange; and (ii) a gain of approximately $0.8 million from the liquidation of one of our investments. These gains were partially offset by a $1.1 million loss on disposal of property, plant and equipment.
Refinancing Expenses
We incurred $0.5 million of costs in connection with the issuance of the 2029 Notes during 2021.
Change in Fair Value of Contingent Consideration
In connection with the Podcorn Acquisition, we recorded a contingent consideration liability during the first quarter of 2021, which is subject to fair value remeasurements. Due to fluctuation in the market-based inputs used to develop the discount rate, the discount rate has increased during the nine months ended September 30, 2022. Additionally, a reduction in projected Adjusted EBITDA values resulted in a lower expected present value of the contingent consideration. As a result, the fair value of the contingent consideration decreased $8.8 million during the nine months ended September 30, 2022.
Interest Expense
During the nine months ended September 30, 2022, we incurred an additional $9.6 million in interest expense as compared to the nine months ended September 30, 2021.
This increase in interest expense was primarily attributable to an increase in the outstanding fixed-rate indebtedness and variable-rate indebtedness upon which interest is computed coupled with an increase in variable interest rates.

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Income Tax Benefit
Tax Rate for the Nine Months Ended September 30, 2022
We recognized an income tax benefit at an effective income tax rate of 22.0% for the nine months ended September 30, 2022. The effective income tax rate was determined using a forecasted tax rate based upon projected taxable income for the year. The effective income tax rate for the period was impacted by permanent items, state tax expense, discrete income tax expense items related to stock based compensation, a valuation allowance for certain state net operating losses, adjustments related to amended federal income tax returns for 2018 and 2019, and interest and penalties associated with uncertain tax positions.
On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effects of the COVID-19 pandemic. The CARES Act includes significant business tax provisions that, among other things, includes the removal of certain limitations on utilization of net operating losses ("NOLs"), increases the loss carry back period for certain losses to five years, and increases the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. We were able to carryback our 2020 federal income tax loss to prior tax years and file a refund claim with the Internal Revenue Service ("IRS") for $15.2 million, which we received in the first quarter of 2022. During the third quarter of 2022, we filed amended federal income tax returns for 2018 and 2019, in which we requested a refund of $5.5 million for 2018.
On December 27, 2020, the United States enacted the Consolidated Appropriations Act, 2021 (the "Appropriations Act"), an additional stimulus package providing financial relief for individuals and small businesses. The Appropriations Act contains a variety of tax provisions, including full expensing of business meals in 2021 and 2022, and expansion of the employee retention tax credit. We do not currently expect the Appropriations Act to have a material tax impact.
Tax Rate for the Nine Months Ended September 30, 2021
We recognized an income tax benefit at an effective income tax rate of 20.7% for the nine months ended September 30, 2021, which was determined using a forecasted rate based upon projected taxable income for the year.
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Three Months Ended September 30, 2022 As Compared To The Three Months Ended September 30, 2021
THREE MONTHS ENDED SEPTEMBER 30,
20222021% Change
(dollars in millions)
NET REVENUES$316.9 $329.4 (4)%
OPERATING EXPENSE:
Station operating expenses260.0 260.9 — %
Depreciation and amortization expense18.3 12.5 46 %
Corporate general and administrative expenses21.2 24.2 (12)%
Restructuring charges4.2 2.3 83 %
Impairment loss176.8 — 100 %
Net gain on sale or disposal(10.7)— 100 %
Change in fair value of contingent consideration(1.1)— 100 %
Other expenses0.1 0.2 (50)%
Total operating expense468.8 300.1 56 %
OPERATING INCOME (LOSS)(151.9)29.3 (618)%
INTEREST EXPENSE28.1 22.8 23 %
OTHER INCOME — — — %
INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT)(180.0)6.5 (2,869)%
INCOME TAX (BENEFIT) EXPENSE(39.0)11.2 (448)%
NET LOSS$(141.0)$(4.7)2,900 %
Net Revenues
Revenues decreased compared to prior year primarily due to the current macroeconomic conditions. In the current year, we reported sequential growth in net revenues month-over-month. This trend may not continue in future periods due to the current macroeconomic conditions.
Net revenues were positively impacted by: (i) growth in our spot revenues; (ii) growth in our digital revenues; and (iii) the operations of AmperWave for the full period.
Net revenues increased the most for our stations located in the Chicago and Norfolk markets. Net revenues decreased the most for our stations located in the Los Angeles and New York City markets.
Station Operating Expenses
Station operating expenses decreased compared to prior year primarily due to a decrease in 2022 revenues which resulted in a corresponding decrease in variable sales-related expenses. These reductions were partially offset by an increase in payroll and related expenses in the current year and an increase in digital expenses related to user acquisition, content licenses and podcast host and talent fees;
Station operating expenses include non-cash compensation expense of $0.8 million and $0.9 million for the three months ended September 30, 2022 and September 30, 2021, respectively.
Depreciation and Amortization Expense
Depreciation and amortization expense increased primarily due to an increase in amortization of intangible assets in 2022 relative to 2021. The increase in amortization is due to the addition of amortizable intangible assets in the WideOrbit Streaming Acquisition and the Podcorn Acquisition. Additionally, depreciation and amortization expense increased due to an increase in capital expenditures in 2022 relative to 2021.
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Corporate General and Administrative Expenses
Corporate general and administrative expenses decreased primarily as a result of a decrease in non-cash compensation expense. This reduction was attributable to the reversal of performance-based compensation expense upon reassessment.
Corporate general and administrative expenses include non-cash compensation expense of $0.1 million and $3.5 million for the three months ended September 30, 2022 and September 30, 2021, respectively.
Restructuring Charges
We incurred restructuring charges in 2022 and 2021 primarily in response to the COVID-19 pandemic and the current macroeconomic conditions. These costs primarily included workforce reduction charges and were expensed as incurred.
Impairment Loss
The impairment loss incurred during the three months ended September 30, 2022 primarily consists of: (i) a $159.1 million impairment charge as a result of an interim impairment assessment on our FCC broadcasting licenses; and (ii) a $18.1 million impairment charge as a result of an interim impairment assessment on our goodwill.
Net Gain on Sale or Disposal
During the three months ended September 30, 2022, we recognized a gain of approximately $10.6 million on the sale of assets in Houston, Texas.
Change in Fair Value of Contingent Consideration
In connection with the Podcorn Acquisition, we recorded a contingent consideration liability during the first quarter of 2021, which is subject to fair value remeasurements. Due to fluctuation in the market-based inputs used to develop the discount rate, the discount rate has increased during the three months ended September 30, 2022. Additionally, a reduction in projected Adjusted EBITDA values resulted in a lower expected present value of the contingent consideration. As a result, the fair value of the contingent consideration decreased $1.1 million during the three months ended September 30, 2022.
Interest Expense
During the three months ended September 30, 2022, we incurred an additional $5.3 million in interest expense as compared to the three months ended September 30, 2021.
This increase in interest expense was primarily attributable to an increase in the outstanding fixed-rate and variable-rate indebtedness upon which interest is computed coupled with an increase in variable interest rates.
Income Tax Benefit
For the three months ended September 30, 2022, the effective income tax rate was 21.7%. The effective income tax rate for the quarter was impacted by permanent items, state tax expense, discrete income tax expense items related to stock based compensation, a valuation allowance for certain state net operating losses, and interest and penalties associated with uncertain tax positions.
For the three months ended September 30, 2021, the effective income tax rate was 173.5%, which was determined using a forecasted rate based upon projected taxable income for the full year along with the impact of discrete items for the quarter.
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Liquidity and Capital Resources
Liquidity
The COVID-19 pandemic and current macroeconomic conditions have created, and may continue to create, significant uncertainty in operations, including disrupted supply chains, rising inflation and interest rates, and significant volatility in financial markets, which have had, and are expected to continue to have a material impact on our business operations, financial position, cash flows, liquidity, and capital resources and results of operations. We anticipate that our business will continue to generate sufficient cash flow from operating activities and that these cash flows, together with our existing cash and cash equivalents and our ability to draw on current credit facilities, will be sufficient for us to meet our current liquidity, capital requirements and meet our covenant requirements for at least the next twelve months. However, our ability to maintain adequate liquidity is dependent upon a number of factors, including our revenue, macroeconomic conditions, the length and severity of business disruptions, our ability to contain costs and to collect accounts receivable, and various other factors, many of which are beyond our control. Moreover, if current macroeconomic conditions continue to create higher inflation and interest rates and significant disruptions in the credit or financial markets, or impact our credit ratings, it could adversely affect our ability to access capital on attractive terms, if at all. We also expect the timing of certain priorities to be impacted, such as the pace of our debt reduction efforts and the delay of certain capital projects.

We continue to execute on cash management and strategic operational plans including evaluation of contractual obligations, workforce reductions, management of operating expenses, and divesting non-strategic assets along with other cash and debt management plans for the benefit of the covenant calculation, as permitted under the credit agreement related to both our Credit Facility and Accounts Receivable Facility. We are unable to predict with certainty the impact of the COVID-19 pandemic and current macroeconomic conditions on our ability to maintain compliance with the debt covenants contained in the credit agreement related to both our Credit Facility and Accounts Receivable Facility. While we were in compliance with such financial covenants through September 30, 2022, failure to meet the covenant requirement in the future would cause us to be in default and the maturity of the related debt could be accelerated and become immediately payable. This may require us to obtain waivers or amendments in order to maintain compliance and there can be no certainty that any such waiver or amendment would be available, or what the cost of such waiver or amendment, if obtained, would be. If we are unable to obtain necessary waivers or amendments and the debt is accelerated, we would be required to obtain replacement financing at prevailing market rates, which may not be favorable to us. There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated. This could adversely affect our ability to meet our long-term liquidity and capital requirements.

In the event revenues in future quarters are lower than we currently anticipate, we may be forced to take remedial actions which could include, among other things (and where allowed by the lenders): (i) implementing further cost reductions; (ii) seeking replacement financing; (iii) raising funds through the issuance of additional equity or debt securities or incurring additional borrowings; or (iv) disposing of certain assets or businesses. Such remedial actions, which may not be available on favorable terms or at all, could have a material adverse impact on our business.
The Credit Facility, as amended, is comprised of the $250.0 million Revolver and the Term B-2 Loan. As of September 30, 2022, we had $632.4 million outstanding under the Term B-2 Loan and $165.0 million outstanding under the Revolver. In addition, we had $6.0 million in outstanding letters of credit. During the nine months ended September 30, 2022, we repaid $22.7 million outstanding under our Revolver and borrowed an additional $90.0 million under our Revolver.
During the nine months ended September 30, 2022, we repurchased $10.0 million of our 2027 Notes through open market purchases. This repurchase activity generated a gain on retirement of the 2027 Notes in the amount of $0.6 million.
As of September 30, 2022, total liquidity was $115.4 million, which was comprised of $79.0 million available under the Revolver and $36.4 million in cash, cash equivalents and restricted cash. For the nine months ended September 30, 2022, we increased our outstanding debt by $60.3 million due to the previously discussed revolver pay down and borrowing activity and the bond repurchase activity against the 2027 Notes.
As of September 30, 2022, our Consolidated Net First Lien Leverage Ratio was 3.8 times as calculated in accordance with the terms of our Credit Facility, which place restrictions on the amount of cash, cash equivalents and restricted cash that can be subtracted in determining consolidated first lien net debt.

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Amendment and Repricing – CBS Radio Inc. (Now Audacy Capital Corp.) Indebtedness
In connection with the CBS Radio business acquisition in November 2017 (the "Merger"), we assumed CBS Radio Inc.'s (now Audacy Capital Corp.’s) indebtedness outstanding under: (i) a credit agreement (the “Credit Facility”) among CBS Radio Inc. (now Audacy Capital Corp.), the guarantors named therein, the lenders named therein, and JPMorgan Chase Bank, N.A., as administrative agent; and (ii) the Senior Notes (described below).
The 2027 Notes
During 2019, we and our finance subsidiary, Audacy Capital Corp., issued $425.0 million in aggregate principal amount of senior secured second-lien notes due May 1, 2027 (the "Initial 2027 Notes"). Interest on the Initial 2027 Notes accrues at the rate of 6.500% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year. The Initial 2027 Notes are governed by an indenture dated as of April 30, 2019 (the "Base Indenture"), as supplemented by a first supplemental indenture dated December 13, 2019 (the "First Supplemental Indenture), (collectively, the "Indenture").
A portion of the Initial 2027 Notes was issued at a premium. As of any reporting period, the unamortized premium on the Initial 2027 Notes is reflected on the balance sheet as an addition to the Initial 2027 Notes.
We used net proceeds of the offering, along with cash on hand and amounts borrowed under our Revolver, to repay $521.7 million of existing indebtedness under our term loan component previously outstanding (the "Term B-1 Loan"). Contemporaneous with this partial pay-down of the Term B-1 Loan, we replaced the remaining amount outstanding under the Term B-1 Loan with the Term B-2 Loan.
During the fourth quarter of 2021, Audacy Capital Corp. issued $45.0 million of additional 6.500% senior secured second-line notes due 2027 (the "Additional 2027 Notes"). The Additional 2027 Notes were issued as additional notes under the Indenture. The Additional 2027 Notes are treated as a single series with the Initial 2027 Notes (collectively, the "2027 Notes") and have substantially the same terms as the Initial 2027 Notes. The Additional 2027 Notes were issued at a price of 100.750% of their principal amount. As of any reporting period, the unamortized premium on the 2027 Notes is reflected on the balance sheet as an addition to the $460.0 million 2027 Notes.
The 2027 Notes are fully and unconditionally guaranteed on a senior secured second-lien basis by most of the direct and indirect subsidiaries of Audacy Capital Corp. The 2027 Notes and the related guarantees are secured on a second-lien priority basis by liens on substantially all of the assets of Audacy Capital Corp. and the guarantors.
A default under the 2027 Notes could cause a default under the Credit Facility and/or the 2029 Notes. Any event of default, therefore, could have a material adverse effect on our business and financial condition.
The 2027 Notes are not a registered security and there are no plans to register the 2027 Notes as a security in the future. As a result, Rule 3-10 of Regulation S-X promulgated by the SEC is not applicable and no separate financial statements are required for the guarantor subsidiaries.
The Credit Facility
The Term B-2 Loan requires mandatory prepayments equal to a percentage of Excess Cash Flow, subject to incremental step-downs, depending on the Consolidated Net Secured Leverage Ratio. The Excess Cash Flow payment is based on the Excess Cash Flow and the Consolidated Net Secured Leverage Ratio for the prior year. We made our first Excess Cash Flow payment in the first quarter of 2020.
As of September 30, 2022, we were in compliance with the financial covenant then applicable and all other terms of the Credit Facility in all material respects. Our ability to maintain compliance with our financial covenant under the Credit Facility is highly dependent on our results of operations. Currently, given the impact of COVID-19 and current macroeconomic conditions, the outlook is highly uncertain.
Failure to comply with our financial covenant or other terms of our Credit Facility and any subsequent failure to negotiate and obtain any required relief from our lenders could result in a default under the Credit Facility. We will continue to monitor our liquidity position and covenant obligations and assess the impact of the COVID-19 pandemic and current macroeconomic conditions on our ability to comply with the covenants under the Credit Facility.
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Any event of default could have a material adverse effect on our business and financial condition. We may seek from time to time to amend our Credit Facility or obtain other funding or additional funding, which may result in higher interest rates on our debt. However, we may not be able to do so on terms that are acceptable or to the extent necessary to avoid a default, depending upon conditions in the credit markets, the length and depth of the market reaction to the COVID-19 pandemic and current macroeconomic conditions our ability to compete in this environment.
The Credit Facility - Amendment No. 5
On July 20, 2020, Audacy Capital Corp. entered into an amendment ("Amendment No. 5") to the Credit Agreement dated October 17, 2016 (as previously amended, the "Existing Credit Agreement" and, as amended by Amendment No. 5, the "Credit Agreement"), with the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent. Amendment No. 5, among other things:
(a) amended our financial covenants under the Credit Agreement by: (i) suspending the testing of the Consolidated Net First Lien Leverage Ratio (as defined in the Credit Agreement) through the Test Period (as defined in the Credit Agreement) ending December 31, 2020; (ii) adding a new minimum liquidity covenant of $75.0 million until December 31, 2021 (the "Covenant Relief Period"); and (iii) imposing certain restrictions during the Covenant Relief Period, including among other things, certain limitations on incurring additional indebtedness and liens, making restricted payments or investments, redeeming notes and entering into certain sale and lease-back transactions;
(b) increased the interest rate and/or fees under the Credit Agreement during the Covenant Relief Period applicable to: (i) 2024 Revolving Credit Loans (as defined in the Credit Agreement) to (x) in the case of Eurodollar Rate Loans (as defined in the Credit Agreement), a customary Eurodollar rate formula plus a margin of 2.50% per annum, and (y) in the case of Base Rate Loans (as defined in the Credit Agreement), a customary base rate formula plus a margin of 1.50% per annum, and (ii) Letter of Credit (as defined in the Credit Agreement) fees to 2.50% times the daily maximum amount available to be drawn under any such Letter of Credit; and
(c) modified the definition of Consolidated EBITDA by setting fixed amounts for the fiscal quarters ending June 30, 2020, September 30, 2020, and December 31, 2020, for purposes of testing compliance with the Consolidated Net First Lien Leverage Ratio financial covenant during the Covenant Relief Period, which fixed amounts correspond to the Borrower's Consolidated EBITDA as reported under the Existing Credit Agreement for the Test Period ended March 31, 2020, for the fiscal quarters ending June 30, 2019, September 30, 2019, and December 31, 2019, respectively.
The Credit Facility - Amendment No. 6
On March 5, 2021, Audacy Capital Corp. entered into an amendment ("Amendment No. 6") to the Credit Agreement dated October 17, 2016 (as previously amended, the “Existing Credit Agreement” and, as amended by Amendment No. 6, the “Credit Agreement”), with the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
Under the Existing Credit Agreement, during the Covenant Relief Period the Company was subject to a $75.0 million limitation on investments in joint ventures, Affiliates, Unrestricted Subsidiaries and Non-Guarantor Subsidiaries (each as defined in the Existing Credit Agreement) (the “Covenant Relief Period Investment Limitation”). Amendment No. 6, among other things, excludes from the Covenant Relief Period Investment Limitation any investments made in connection with a permitted receivables financing facility. The Covenant Relief Period ended in the fourth quarter of 2021.
Accounts Receivable Facility
On July 15, 2021, we and certain of our subsidiaries entered into a $75.0 million accounts receivable securitization facility (the "Receivables Facility") to provide additional liquidity, to reduce our cost of funds and to repay outstanding indebtedness under the Credit Facility.
The documentation for the Receivables Facility includes (i) a Receivables Purchase Agreement (the “Receivables Purchase Agreement”) entered into by and among Audacy Operations, Inc., a Delaware corporation and our wholly-owned subsidiary (“Audacy Operations”), Audacy Receivables, LLC, a Delaware limited liability company and our wholly-owned subsidiary, as seller (“Audacy Receivables”), the investors party thereto (the “Investors”), and DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main, as agent (“DZ BANK”); (ii) a Sale and Contribution Agreement (the “Sale and Contribution Agreement”), by and among Audacy Operations, Audacy New York, LLC, a Delaware limited liability company and our wholly-owned subsidiary (“Audacy NY”), and Audacy Receivables; and (iii) a Purchase and Sale Agreement (the
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“Purchase and Sale Agreement,” and together with the Receivables Purchase Agreement and the Sale and Contribution Agreement, the “Agreements”) by and among certain of our wholly-owned subsidiaries (together with Audacy NY, the “Originators”), Audacy Operations and Audacy NY.
Audacy Receivables is considered a special purpose vehicle ("SPV") as it is an entity that has a special, limited purpose and it was created to sell accounts receivable, together with customary related security and interest in the proceeds thereof, to the Investors in exchange for cash investments.
Yield is payable to Investors under the Receivables Purchase Agreement at a variable rate based on either one-month LIBOR or commercial paper rates plus a margin. Collections on the accounts receivable: (x) will be used to: (i) satisfy the obligations of Audacy Receivables under the Receivables Facility; or (ii) purchase additional accounts receivable from the Originators; or (y) may be distributed to Audacy NY, the sole member of Audacy Receivables. Audacy Operations acts as the servicer under the Agreements.

The Agreements contain representations, warranties and covenants that are customary for bankruptcy-remote securitization transactions, including covenants requiring Audacy Receivables to be treated at all times as an entity separate from the Originators, Audacy Operations, the Company or any of its other affiliates and that transactions entered into between Audacy Receivables and any of its affiliates shall be on arm’s-length terms. The Receivables Purchase Agreement also contains customary default and termination provisions which provide for acceleration of amounts owed under the Receivables Purchase Agreement upon the occurrence of certain specified events with respect to Audacy Receivables, Audacy Operations, the Originators, or the Company, including, but not limited to: (i) Audacy Receivables’ failure to pay yield and other amounts due; (ii) certain insolvency events; (iii) certain judgments entered against the parties; (iv) certain liens filed with respect to assets; and (v) breach of certain financial covenants and ratios.

We have agreed to guarantee the performance obligations of Audacy Operations and the Originators under the Receivables Facility documents. We have not agreed to guarantee any obligations of Audacy Receivables or the collection of any of the receivables and will not be responsible for any obligations to the extent the failure to perform such obligations by Audacy Operations or any Originator results from receivables being uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness or other financial inability to pay of the related obligor.

In general, the proceeds from the sale of the accounts receivable are used by the SPV to pay the purchase price for accounts receivable it acquires from Audacy NY and may be used to fund capital expenditures, repay borrowings on the Credit Facility, satisfy maturing debt obligations, as well as fund working capital needs and other approved uses.

Although the SPV is a wholly owned consolidated subsidiary of Audacy NY, the SPV is legally separate from Audacy NY. The assets of the SPV (including the accounts receivable) are not available to creditors of Audacy NY, Audacy Operations or the Company, and the accounts receivable are not legally assets of Audacy NY, Audacy Operations or the Company. The Receivables Facility is accounted for as a secured financing. The pledged receivables and the corresponding debt are included in Accounts receivable and Long-term debt, respectively, on the Consolidated Balance Sheets.
The Receivables Facility has usual and customary covenants including, but not limited to, a net first lien leverage ratio, a required minimum tangible net worth, and a minimum liquidity requirement (the "financial covenants"). Specifically, the Receivables Facility requires the Company to comply with a certain financial covenant which is a defined term within the agreement, including a maximum Consolidated Net First-Lien Leverage Ratio that cannot exceed 4.0 times at September 30, 2022. As of September 30, 2022, the Company’s Consolidated Net First Lien Leverage Ratio was 3.8 times. The Receivables Facility also requires the Company to maintain a minimum tangible net worth, as defined within the agreement, of at least $300.0 million. Additionally, the Receivables Facility requires the Company to maintain liquidity of $75.0 million. As of September 30, 2022, the Company was compliant with the financial covenants.
The Receivables Facility will expire on July 15, 2024, unless earlier terminated or subsequently extended pursuant to the terms of the Receivables Purchase Agreement. The pledged receivables and the corresponding debt are included in Accounts receivable, net and Long-term debt, net of current portion, respectively, on the Condensed Consolidated Balance Sheet. At September 30, 2022, we had outstanding borrowings of $75.0 million under the Receivables Facility.
The 2029 Notes
During the first quarter of 2021, we and our finance subsidiary, Audacy Capital Corp., issued $540.0 million in aggregate principal amount of senior secured second-lien notes due March 31, 2029 (the "2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.750% per annum and is payable semi-annually in arrears on March 31 and September 30 of each year.
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We used net proceeds of the offering, along with cash on hand, to: (i) repay $77.0 million of existing indebtedness under the Term B-2 Loan; (ii) repay $40.0 million of drawings under the Revolver; and (iii) fully redeem all of our $400.0 million aggregate principal amount of 7.250% senior notes due 2024 (the "Senior Notes") and to pay fees and expenses in connection with the redemption.
In connection with this activity, during the first quarter of 2021, we: (i) recorded $6.6 million of new debt issuance costs attributable to the 2029 Notes; and (ii) $0.4 million of debt issuance costs attributable to the Revolver which will be amortized over the remaining term of the Revolver on a straight line basis. We also incurred $0.5 million of costs which were classified within refinancing expenses.
The 2029 Notes are fully and unconditionally guaranteed on a senior secured second priority basis by each of the direct and indirect subsidiaries of Audacy Capital Corp. A default under the 2029 Notes could cause a default under our Credit Facility or the 2027 Notes. Any event of default, therefore, could have a material adverse effect on our business and financial condition.
The 2029 Notes are not a registered security and there are no plans to register the 2029 Notes as a security in the future. As a result, Rule 3-10 of Regulation S-X promulgated by the SEC is not applicable and no separate financial statements are required for the guarantor subsidiaries.
The Senior Notes
Simultaneously with entering into the Merger and assuming the Credit Facility on November 17, 2017, we also assumed the Senior Notes that were set to mature on November 1, 2024 in the amount of $400.0 million (the “Senior Notes”). The Senior Notes, which were originally issued by CBS Radio Inc. (now Audacy Capital Corp.) on October 17, 2016, were valued at a premium as part of the fair value measurement on the date of the Merger. The premium on the Senior Notes was amortized over the term under the effective interest rate method. As of any reporting period, the unamortized premium on the Senior Notes was reflected on the balance sheet as an addition to the $400.0 million liability.
As discussed above, during the nine months ended September 30, 2021, we issued a call notice to redeem our Senior Notes with an effective date of April 10, 2021. We incurred interest on the Senior Notes until the redemption date. In connection with the redemption, we deposited the following funds to satisfy our obligations under the Senior Notes and discharge the Indenture governing the Senior Notes: (i) $400.0 million to redeem the Senior Notes in full; (ii) $14.5 million for a call premium for the early retirement of the Senior Notes; and (iii) $12.8 million for accrued and unpaid interest through April 10, 2021. As a result of the refinancing, we recorded an $8.2 million loss on extinguishment of debt that included the call premium, the write off of unamortized debt issuance costs, and the write off of unamortized premium on the Senior Notes.
Operating Activities
Net cash flows used in operating activities were $19.6 million for the nine months ended September 30, 2022. Net cash flows provided by operating activities were $45.6 million for the nine months ended September 30, 2021.
The cash flows provided by operating activities decreased primarily due to: (i) an increase in net investment in working capital of $41.1 million; (ii) an increase in net gain on disposals of assets of $9.5 million; (iii) an increase in gain on remeasurement of contingent consideration of $8.8 million; (iv) a decrease in net gains on deferred compensation of $8.6 million; and (iv) a decrease in loss on extinguishment of debt of $8.2 million.
These decreases in cash flows provided by operating activities were partially offset by a decrease in net loss, as adjusted for certain non-cash charges and income tax benefits of $4.8 million and an increase in depreciation and amortization of $8.8 million.
The increase in investment in working capital is primarily due to the timing of: (i) settlements of accounts payable and accrued liabilities; (ii) collections of accounts receivable; (iii) settlements of other long-term liabilities; (iv) settlements of accrued interest expense; and (v) settlements of prepaid expenses.
The decrease in net loss, as adjusted for certain non-cash charges and income tax benefits is primarily attributable to an increase in net loss of $127.8 million which is offset by: (i) an increase in impairment loss of $178.7 million; and (ii) an increase in deferred tax benefits of $46.1 million.
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Investing Activities
Net cash flows used in investing activities were $59.0 million and $53.4 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.
During 2022, net cash flows used in investing activities increased primarily due to an increase in additions to tangible and intangible assets of $33.3 million in connection with investments in our A2 platform. This increase in cash flows used in financing activities was partially offset by: (i) an increase in proceeds from the sale of property, equipment, intangibles and other assets of $17.4 million; and (ii) a decrease in purchases of business and audio assets of $10.3 million.
Financing Activities
Net cash flows provided by financing activities were $55.6 million and $39.7 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.
During 2022, net cash flows provided by financing activities increased primarily due to: (i) a decrease in cash outflows related to the redemption of fixed rate debt of $390.0 million; (ii) a decrease in payments against the Revolver of $101.3 million; (iii) a decrease of payments of long-term debt of $77.0 million; (iv) an increase in borrowing under the Revolver of $38.0 million; (v) a decrease in payments of call premiums and other fees of $14.5 million; and (vi) a decrease in payments for debt issuance costs of $9.4 million. These increases in cash flows provided by financing activities were partially offset by: (i) a decrease in proceeds from issuance of long term debt of $540.0 million; and (ii) a reduction in proceeds from the borrowing under the Receivables Facility of $75.0 million.
Dividends
We presently do not pay a dividend. Any future dividends will be at the discretion of the Board based upon the relevant factors at the time of such consideration, including, without limitation, compliance with the restrictions set forth in our Credit Facility, the 2027 Notes and the 2029 Notes.
Share Repurchase Program
During the nine months ended September 30, 2022, we did not repurchase any shares under our share repurchase program (the "2017 Share Repurchase Program"). As of September 30, 2022, $41.6 million is available for future share repurchases under the 2017 Share Repurchase Program.
Income Taxes
Under the CARES Act, we were able to carry back our 2020 federal income tax loss to prior tax years and file a refund claim with the IRS for $15.2 million. During the nine months ended September 30, 2022, we received a federal tax refund of approximately $15.2 million. We do not anticipate making any federal income tax payments in 2022 primarily as a result of the availability of NOLs to offset federal tax due.
For federal income tax purposes, the acquisition of CBS Radio was treated as a reverse acquisition which caused us to undergo an ownership change under Section 382 of the Internal Revenue Code ("Code"). This ownership change will limit the utilization of our NOLs for post-acquisition tax years. We may need to make additional state estimated tax payments during the remainder of the year.
Capital Expenditures
Capital expenditures, including amortizable intangibles, for the nine months ended September 30, 2022 were $72.5 million. We anticipate that total capital expenditures in 2022 will be approximately $80 million as we increase our investment in the rapidly growing digital audio advertising market.
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Contractual Obligations
As of September 30, 2022, there have been no net material changes in the total amount from the contractual obligations listed in our Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 1, 2022, other than as described below.
As discussed above in the liquidity section, during the nine months ended September 30, 2022, we made a voluntary prepayment against our Revolver of $22.7 million. We borrowed an additional $90.0 million under our Revolver, and also made opportunist repurchases under our 2027 Notes in the amount of $10.0 million. As a result of this activity, the amounts outstanding under our long-term debt obligations increased by $60.3 million during the nine months ended September 30, 2022.
Off-Balance Sheet Arrangements
As of September 30, 2022, we did not have any material off-balance sheet transactions, arrangements or obligations, including contingent obligations.
During 2022, we disposed of certain property that we considered as surplus to our operations and that resulted in a gain of approximately $2.5 million. In order to minimize the tax impact on a certain portion of these taxable gains, we created an entity that serves as a qualified intermediary (“QI”) for tax purposes and that held the net sales proceeds of $2.5 million from this transaction. We used a portion of these funds in a tax-free exchange by using the net sales proceeds from relinquished property for the purchase of replacement property. This entity was treated as a variable interest entity (“VIE”) and was included in our consolidated financial statements as we were considered the primary beneficiary.

The use of a QI in a like-kind exchange enabled us to effectively minimize our tax liability in connection with certain asset dispositions. As discussed in Note 1, Basis of Presentation and Significant Policies, we sold real property in San Francisco, California for net proceeds of $2.5 million. During the second quarter of 2022, we used a portion of these proceeds to repurchase replacement property in the amount of $2.4 million. These net sales proceeds were deposited into the account of the QI to comply with requirements under Section 1031 of the Code to execute a like-kind exchange.

All restrictions on these deposits have lapsed as of September 30, 2022. As a result, there is no restricted cash on our condensed consolidated balance sheet as of September 30, 2022.
We do not have any other relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements or other contractually narrow or limited purposes as of September 30, 2022. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
Critical Accounting Policies
There have been no material changes to our critical accounting policies from the information provided in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 1, 2022.
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Goodwill Interim Impairment Test
As of September 30, 2022, we evaluated whether the facts and circumstances and available information result in the need for an impairment assessment for any goodwill, particularly the results of operations, increase in interest rates and related impact on the weighted average cost of capital and changes in stock price, and concluded and interim impairment assessment was warranted.
During the third quarter of 2022, we completed an interim impairment test for our goodwill at the podcast reporting unit and the QLGG reporting unit. As a result of this interim impairment assessment, we determined that the fair value of our podcasting reporting unit was greater than the amount reflected in the balance sheet and, accordingly, no impairment was recorded for the podcast reporting unit. However, we determined that the fair value of our QLGG reporting unit was less than the amount reflected in the balance sheet and, accordingly, recorded an impairment loss of $18.1 million. As a result of this impairment loss, we no longer have any goodwill attributable to the QLGG reporting unit.
We elected to bypass the qualitative assessment for the interim impairment tests of our podcast reporting unit and QLGG reporting unit and proceeded directly to the quantitative goodwill impairment test by using a discounted cash flow approach (a 5-year income model). Potential impairment is identified by comparing the fair value of each reporting unit to its carrying value. Our fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. The cash flow projections for the reporting units include significant judgments and assumptions relating to the revenue, operating expenses, projected operating profit margins, and the discount rate. Changes in our estimates of the fair value of these assets could result in material future period write-downs of the carrying value of our goodwill.
Assumptions and Results - Goodwill
The following table reflects the estimates and assumptions used in the annual goodwill impairment assessments of each year:
Estimates And Assumptions
Third Quarter 2022Fourth Quarter 2021
Discount rate - podcast reporting unit11.0 %9.5%
Discount rate - QLGG reporting unit13.0 %12.0%
We believe we have made reasonable estimates and assumptions to calculate the fair value of our podcast reporting unit and QLGG reporting unit. These estimates and assumptions could be materially different from actual results.
If actual market conditions are less favorable than those projected by the industry or us, or if events occur or circumstances change that would reduce the fair value of our goodwill below the amount reflected in the condensed consolidated balance sheet, we may be required to conduct an interim test and possibly recognize impairment charges, which could be material, in future periods. The current macroeconomic conditions increase the uncertainty with respect to such market and economic conditions and, as such, increases the risk of future impairment.
Goodwill Valuation Risk
We no longer have any goodwill attributable to the broadcast reporting unit or the QLGG reporting unit. Our remaining goodwill as of September 30, 2022 is limited to the goodwill acquired in the Cadence13 Acquisition and Pineapple Acquisition in 2019, and the goodwill acquired in the Podcorn Acquisition and WideOrbit Streaming Acquisition in 2021.
Future impairment charges may be required on our goodwill, as the discounted cash flow model is subject to change based upon our performance, peer company performance, overall market conditions, and the state of the credit markets. We continue to monitor these relevant factors to determine if an interim impairment assessment is warranted.
A deterioration in our forecasted financial performance, an increase in discount rates, a reduction in long-term growth rates, a sustained decline in our stock price, or a failure to achieve analyst expectations could all be potential indicators of an impairment to the remaining goodwill, which could be material, in future periods. Due to the uncertainty of the current market and economic conditions, there is an increased risk of future impairment.
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We will continue to evaluate the impacts of the current macroeconomic conditions on our business, including the impacts of overall economic conditions, which could result in the recognition of an impairment charge, which could be material, in the future.
Sensitivity of Key Goodwill Assumptions
If we were to assume changes in certain of our key assumptions used to determine the fair value of our podcasting reporting unit, we would not be required to record an impairment charge.
Sensitivity Analysis (1)
Percentage Decrease in Reporting Unit Carrying Value
Increase the discount rate from 11.0% to 12.0%— %
Reduction in forecasted growth rate (including long-term growth rate) to 0% — %
Reduction in operating profit margin by 10%— %

(1)    Each assumption used in the sensitivity analysis is independent of the other assumptions.

If overall market conditions or the performance of the economy deteriorates, advertising expenditures and radio industry results could be negatively impacted, including expectations for future growth. This could result in future impairment charges for our podcast reporting unit or other of our units of accounting, which could be material. Due to the uncertainty of the current market and economic conditions, there is an increased risk of future impairment.
We will continue to evaluate the impacts of the current macroeconomic conditions on our business, including the impacts of overall economic conditions, which could result in the recognition of an impairment charge, which could be material, in the future.
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Broadcasting Licenses Interim Impairment Test
As of September 30, 2022, we evaluated whether the facts and circumstances and available information result in the need for an impairment assessment for our FCC broadcasting licenses, particularly the results of operations, increase in interest rates and related impact on the weighted average cost of capital and changes in stock price, and concluded and interim impairment assessment was warranted.
During the third quarter of the current year, we completed an interim impairment assessment for our broadcasting licenses at the market level using the Greenfield method. As a result of this interim impairment assessment, we determined that the fair value of our broadcasting licenses was less than the amount reflected in the balance sheet for certain of our markets and, accordingly, recorded an impairment loss of $159.1 million ($116.7 million, net of tax).
Each market’s broadcasting licenses are combined into a single unit of accounting for purposes of testing impairment, as the broadcasting licenses in each market are operated as a single asset. We determine the fair value of the broadcasting licenses in each of our markets by relying on a discounted cash flow approach (a 10-year income model) assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. Our fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. These assumptions include, but are not limited to: (i) the discount rate; (ii) the profit margin of an average station within a market, based upon market size and station type; (iii) the forecast growth rate of each radio market; (iv) the estimated capital start-up costs and losses incurred during the early years; (v) the likely media competition within the market area; (vi) the tax rate; and (vii) future terminal values.
The methodology used by us in determining our key estimates and assumptions was applied consistently to each market. Of the seven variables identified above, we believe that the assumptions in items (i) through (iii) above are the most important and sensitive in the determination of fair value.
Assumptions and Results - Broadcasting Licenses
The following table reflects the estimates and assumptions used in the interim and annual broadcasting licenses impairment assessments of each year.
Estimates And Assumptions
Third Quarter 2022Fourth Quarter 2021
Discount rate9.5 %8.5 %
Operating profit margin ranges for average stations in markets where the Company operates
19.6% to 32.9%
19.6% to 33.3%
Forecasted growth rate (including long-term growth rate) range of the Company's markets
0.0% to 0.6%
0.0% to 0.6%
We believes we have made reasonable estimates and assumptions to calculate the fair value of our broadcasting licenses. These estimates and assumptions could be materially different from actual results.
If actual market conditions are less favorable than those projected by the industry or us, or if events occur or circumstances change that would reduce the fair value of our broadcasting licenses below the amount reflected in the condensed consolidated balance sheet, we may be required to conduct an interim test and possibly recognize impairment charges, which may be material, in future periods. The current macroeconomic conditions increase the uncertainty with respect to such market and economic conditions and, as such, increases the risk of future impairment.
Broadcasting License Valuation Risk
The table below presents the percentage within a range by which the fair value exceeded the carrying value of our broadcasting licenses as of September 30, 2022. Rather than presenting the percentage separately for each unit of accounting, our opinion is that this table in summary form is more meaningful to the reader in assessing the recoverability of the broadcasting licenses. In addition, the units of accounting are not disclosed with the specific market name as such disclosure could be competitively harmful to us.
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After the interim impairment test conducted on our broadcasting licenses in the third quarter of 2022, the results indicated that there were 41 units of accounting where the fair value exceeded their carrying value by 10% or less. In aggregate, these 41 units of accounting had a carrying value of $2,019.5 million at September 30, 2022. As discussed above, as a result of the interim impairment assessment conducted in the third quarter of 2022, we wrote down the carrying value of our broadcasting licenses in 38 markets.
Units of Accounting as of September 1, 2022
Based Upon the Valuation as of September 1, 2022
Percentage Range by Which Fair Value Exceeds the Carrying Value
0% To
5%
Greater
Than 5%
To 10%
Greater
Than 10%
To 15%
Greater
Than
15%
Number of units of accounting4111
Carrying value (in thousands)$2,019,531 $— $4,174 $63,783 
Sensitivity of Key Broadcasting Licenses Assumptions
If we were to assume changes in certain of our key assumptions used to determine the fair value of our broadcasting licenses, the following would be the incremental impact:
Sensitivity Analysis (1)
Percentage Decrease in Broadcasting Licenses Carrying Value
Increase the discount rate from 9.5% to 10.5%12.6 %
Reduction in forecasted growth rate (including long-term growth rate) to 0% for all markets3.3 %
Reduction in operating profit margin by 10%11.6 %

(1)    Each assumption used in the sensitivity analysis is independent of the other assumptions.
If overall market conditions or the performance of the economy deteriorates, advertising expenditures and radio industry results could be negatively impacted, including expectations for future growth. This could result in future impairment charges for these or other of our units of accounting, which could be material. Due to the uncertainty of the current market and economic conditions, there is an increased risk of future impairment.
We will continue to evaluate the impacts of the current macroeconomic conditions on our business, including the impacts of overall economic conditions, which could result in the recognition of an impairment charge, which could be material, in the future.
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ITEM 3.    Quantitative And Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates on our variable-rate senior indebtedness (the Term B-2 Loan and Revolver). From time to time, we may seek to limit our exposure to interest rate volatility through the use of derivative rate hedging instruments.
As of September 30, 2022, if the borrowing rates under LIBOR were to increase 1% above the current rates, our interest expense on: (i) our Term B-2 Loan would increase $4.1 million on an annual basis, including any increase or decrease in interest expense associated with the use of derivative rate hedging instruments as described below; and (ii) our Revolver would increase by $2.5 million, assuming our entire Revolver was outstanding as of September 30, 2022.
We may seek from time to time to amend our Credit Facility or obtain additional funding, which may result in higher interest rates on our indebtedness and could increase our exposure to variable-rate indebtedness.
During the quarter ended June 30, 2019, we entered into the following derivative rate hedging transaction in the notional amount of $560.0 million to hedge our exposure to fluctuations in interest rates on our variable-rate debt. This rate hedging transaction is tied to the one-month LIBOR interest rate.
Type
Of
Hedge
Notional
Amount
Effective
Date
CollarFixed
LIBOR
Rate
Expiration
Date
Notional
Amount
Decreases
Amount
After
Decrease
(amounts
(in millions)
(amounts
(in millions)
Cap2.75%
Collar$220.0Jun. 25, 2019Floor0.402%Jun. 28, 2024Jun. 28, 2023$90.0 
Total$220.0
The fair value (based upon current market rates) of the rate hedging transaction is included as derivative instruments in other assets, net of accumulated amortization at September 30, 2022 as the maturity dates on this instrument are greater than one year. The fair value of the hedging transaction is affected by a combination of several factors, including the change in the one-month LIBOR rate. Any increase in the one-month LIBOR rate results in a more favorable valuation, while any decrease in the one-month LIBOR rate results in a less favorable valuation.
Our credit exposure under our hedging agreement, or similar agreements we may enter into in the future, is the cost of replacing such agreements in the event of nonperformance by our counterparty. To minimize this risk, we select high credit quality counterparties. We do not anticipate nonperformance by such counterparties, but could recognize a loss in the event of nonperformance. Our derivative instrument asset as of September 30, 2022 was $4.0 million.
From time to time, we invest all or a portion of our cash in cash equivalents, which are money market instruments consisting of short-term government securities and repurchase agreements that are fully collateralized by government securities. When such investments are made, we do not believe that we have any material credit exposure with respect to these assets. As of September 30, 2022, we did not have any investments in money market instruments.
Our credit exposure related to our accounts receivable does not represent a significant concentration of credit risk due to the quantity of advertisers, the minimal reliance on any one advertiser, the multiple markets in which we operate and the wide variety of advertising business sectors.
In recent months, inflation has continued to increase significantly, resulting in rising wages and other costs. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations or financial condition.
See also additional disclosures regarding liquidity and capital resources made under Liquidity and Capital Resources in Part 1, Item 2, above.
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ITEM 4.    Controls And Procedures
Evaluation of Controls and Procedures
We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) that are designed to provide reasonable assurance that: (i) information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our President/Chief Executive Officer and Executive Vice President/Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
ITEM 1.     Legal Proceedings
We currently and from time to time are involved in litigation incidental to the conduct of our business. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial position, results of operations or cash flows. There were no material developments relating to the legal proceedings described in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the "SEC") on March 1, 2022. Refer to Note 16, Contingencies And Commitments, for additional information.
ITEM 1A    Risk Factors
Except as set forth below, there have been no material changes to the risk factors associated with our business previously described in our Annual Report on Form 10-K filed with the SEC on March 1, 2022. The risk factors set forth below update, and should be read together with, the risk factors described in "Item 1A, Risk Factors," in our Annual Report on Form 10-K filed with the SEC on March 1, 2022.
If we are not in compliance with the continued listing standards of the New York Stock Exchange, our common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock.
Our common stock is listed on the New York Stock Exchange ("NYSE"). On August 1, 2022, we were notified that we were not in compliance with the NYSE's continued listing requirements relating to the minimum average closing price per share of our common stock, because the average closing price of our common stock over a consecutive 30 trading-day period was below $1.00 per share.
We have timely notified the NYSE of our intent to regain compliance with the minimum price condition within a six-month cure period provided by NYSE rules. We can regain compliance at any time within the cure period if, on the last trading day of any calendar month during the cure period, our common stock has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month. If we fail to regain compliance with the NYSE's minimum price condition by the end of the cure period, our common stock will be subject to the NYSE’s suspension and delisting procedures.

We intend to consider available alternatives, including, but not limited to, a reverse stock split, subject to shareholder approval no later than at our next annual meeting of shareholders, if necessary, to regain compliance. Under the NYSE’s rules, if we determine that we will regain compliance by taking an action that will require shareholder approval at our next annual meeting of shareholders, the cure period is extended to the date of the next annual meeting of shareholders.

During this time, our common stock will continue to be listed on the NYSE, subject to our compliance with other NYSE continued listing requirements. However, there can be no assurance about our ability to regain compliance with the NYSE's minimum price condition within the applicable cure periods.
If our average global market capitalization over a consecutive 30 trading-day period falls below $50.0 million and, at the same time, our shareholders’ equity is less than $50.0 million, we will not be in compliance with the NYSE's continued listing financial criteria requirements. If the Company’s average global market capitalization over a consecutive 30 trading-day period drops below $15.0 million, the NYSE will promptly initiate suspension and delisting proceedings. Given our current market capitalization, there is no guarantee that we will be in compliance with these financial criteria requirements in future periods.

We must comply with the covenants in our debt agreements, which restrict our operational flexibility.

The Credit Facility contains provisions which, under certain circumstances: (i) limit our ability to borrow money; (ii) make acquisitions, investments or restricted payments, including without limitation dividends and the repurchase of stock; (iii) swap or sell assets; or (iv) merge or consolidate with another company. To secure the indebtedness under our Credit Facility, we have pledged substantially all of our assets, including the stock or equity interests of our subsidiaries.

The Credit Facility requires us to maintain compliance with a financial covenant, including a maximum Consolidated Net First Lien Leverage Ratio (as defined in the Credit Facility) that cannot exceed 4.0 times. Under certain limited circumstances, the Consolidated Net First Lien Leverage Ratio can increase to 4.5 times for a limited period of time. Our ability to comply
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with this financial covenant may be affected by operating performance or other events beyond our control such as the COVID-19 pandemic and current macroeconomic conditions. There can be no assurance that we will comply with these covenants. A default under the Credit Facility could have a material adverse effect on our business.

From time to time, we may not be in compliance with such covenants or other terms governing the Credit Facility and Accounts Receivable Facility and we may be required to obtain waivers or amendments from our lenders in order to maintain compliance and there can be no certainty that any such waiver or amendment will be available, or what the cost of such waiver or amendment, if obtained, would be. If we are unable to obtain necessary waivers and the debt is accelerated, we would be required to obtain replacement financing at prevailing market rates, which may not be available or favorable to us.
The Receivables Facility has usual and customary covenants including, but not limited to, a net first lien leverage ratio, a required minimum tangible net worth, and a minimum liquidity requirement (the "financial covenants"). Specifically, the Receivables Facility requires the Company to comply with a certain financial covenant which is a defined term within the agreement, including a maximum Consolidated Net First-Lien Leverage Ratio that cannot exceed 4.0 times at September 30, 2022. As of September 30, 2022, the Company’s Consolidated Net First Lien Leverage Ratio was 3.8 times. The Receivables Facility also requires the Company to maintain a minimum tangible net worth, as defined within the agreement, of at least $300.0 million. Additionally, the Receivables Facility requires the Company to maintain liquidity of $75.0 million. As of September 30, 2022, the Company was compliant with the financial covenants.

Failure to comply with our financial covenant or other terms of these financial instruments and the failure to negotiate and obtain any required relief from our lenders could result in the acceleration of the maturity of our outstanding indebtedness and our lenders could proceed against our assets, including the equity interests of our subsidiaries. Under these circumstances, the acceleration of our indebtedness could have a material adverse effect on our business.

A breach of the covenants under the Indentures or under the Credit Facility could result in an event of default under the applicable agreement. Such a default would allow the lenders under the Credit Facility and/or the holders of the 2027 Notes and the 2029 Notes to accelerate the repayment of such indebtedness and may result in the acceleration of the repayment of any other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, an uncured event of default under the Credit Facility would also permit the lenders under the Credit Facility to terminate all other commitments to extend additional credit under the Credit Facility.

Furthermore, if we are unable to repay the amounts due and payable under the Credit Facility, those lenders could seek to foreclose on the collateral that secures such indebtedness. In the event that creditors accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness.

We may be adversely affected by the effects of inflation.

Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.
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ITEM 2.     Unregistered Sales Of Equity Securities And Use Of Proceeds
The following table provides information on our repurchases during the quarter ended September 30, 2022:
Period (1)(2)
(a)
Total
Number
Of Shares
Purchased
(b)
Average
Price
Paid
Per Share
(c)
Total
Number Of
Shares
Purchased
As
Part Of
Publicly
Announced
Plans Or
Programs
(d)
Maximum
Approximate
Dollar Value
Of
Shares That
May Yet Be
Purchased
Under
The Plans
Or Programs
July 1, 2022 - July 31, 2022— $— $41,578,230 
August 1, 2022 - August 31, 20221,899 $0.54 $41,578,230 
September 1, 2022 - September 30, 20222,463 $0.52 $41,578,230 
Total4,362 
(1)We withheld shares upon the vesting of RSUs in order to satisfy employees’ tax obligations. As a result, we are deemed to have purchased: (i) 1,899 shares at an average price of $0.54 in August 2022; and (ii) 2,463 shares at an average price of $0.52 in September 2022. These shares are included in the table above.
(2)
On November 2, 2017, our Board announced a share repurchase program (the “2017 Share Repurchase Program”) to permit us to purchase up to $100.0 million of our issued and outstanding shares of Class A common stock through open market purchases. In connection with the 2017 Share Repurchase Program, we did not repurchase any shares during the three months ended September 30, 2022.

ITEM 3.    Defaults Upon Senior Securities
None.
ITEM 4.    Mine Safety Disclosures
Not applicable.
ITEM 5.    Other Information
None.
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ITEM 6.    Exhibits
Exhibit NumberDescription
3.1 #
Amended and Restated Articles of Incorporation of Audacy, Inc. (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K as filed on May 19, 2021).
3.2 #
Amended and Restated Bylaws of Audacy, Inc. (Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K as filed on May 19, 2021).
4.1 #
4.2 #
Form of 6.500% Senior Secured Second-Lien Notes due 2027 (included in Exhibit 4.1) (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on May 1, 2019
4.3 #
4.4 #
4.5 #
Form of 6.750% Senior Secured Second-Lien Note due 2029 (included in Exhibit 4.1) (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on March 29, 2021
4.6 #
31.1 *
31.2 *
32.1 **
32.2 **
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
*Filed Herewith
#Incorporated by reference.
**Furnished herewith. Exhibit is “accompanying” this report and shall not be deemed to be “filed” herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AUDACY, INC.
(Registrant)
Date: November 9, 2022
/S/ David J. Field
Name: David J. Field
Title: Chairman, Chief Executive Officer and President
(principal executive officer)
Date: November 9, 2022
/S/ Richard J. Schmaeling
Name: Richard J. Schmaeling
Title: Executive Vice President - Chief Financial Officer (principal financial officer)

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