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iHeartMedia, Inc. - Quarter Report: 2020 June (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO __________
Commission File Number
001-38987
IHEARTMEDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware26-0241222
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer Identification No.)
20880 Stone Oak Parkway
San Antonio, Texas78258
(Address of principal executive offices)(Zip Code)
(210) 822-2828
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common StockIHRTThe Nasdaq Stock Market LLC
Series A Preferred Stock Purchase RightsIHRTThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at August 3, 2020
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Class A Common Stock, $.001 par value62,229,135  
Class B Common Stock, $.001 par value6,900,475  


IHEARTMEDIA, INC.
INDEX
Page No.
Part I – Financial Information
Item 1.

Item 2.
Item 3.
Item 4.
Part II – Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)Successor Company
June 30,
2020		December 31,
2019
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents$517,684  $400,300  
Accounts receivable, net of allowance of $26,201 in 2020 and $12,629 in 2019
570,117  902,908  
Prepaid expenses86,003  71,764  
Other current assets35,745  41,376  
Total Current Assets1,209,549  1,416,348  
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net819,259  846,876  
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses1,775,723  2,277,735  
Other intangibles, net2,047,954  2,176,540  
Goodwill2,101,657  3,325,622  
OTHER ASSETS
Operating lease right-of-use assets840,797  881,762  
Other assets110,920  96,216  
Total Assets$8,905,859  $11,021,099  
CURRENT LIABILITIES  
Accounts payable$114,400  $117,282  
Current operating lease liabilities82,430  77,756  
Accrued expenses138,817  240,151  
Accrued interest71,324  83,768  
Deferred revenue156,047  139,529  
Current portion of long-term debt30,061  8,912  
Total Current Liabilities593,079  667,398  
Long-term debt5,807,061  5,756,504  
Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2020 and 2019
60,000  60,000  
Noncurrent operating lease liabilities771,013  796,203  
Deferred income taxes539,294  737,443  
Other long-term liabilities69,770  58,110  
Commitments and contingent liabilities (Note 7)
STOCKHOLDERS’ EQUITY
Noncontrolling interest9,123  9,123  
Preferred stock, par value $.001 per share, 100,000,000 shares authorized, no shares issued and outstanding
—  —  
Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 61,432,341 and 57,776,204 shares in 2020 and 2019, respectively
61  58  
Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 6,900,195 and 6,904,910 shares in 2020 and 2019, respectively
7  7  
Special Warrants, 78,038,412 and 81,046,593 issued and outstanding in 2020 and 2019, respectively
—  —  
Additional paid-in capital2,835,005  2,826,533  
Retained earnings (Accumulated deficit)(1,774,974) 112,548  
Accumulated other comprehensive loss(562) (750) 
Cost of shares (232,623 in 2020 and 128,074 in 2019) held in treasury
(3,018) (2,078) 
Total Stockholders' Equity1,065,642  2,945,441  
Total Liabilities and Stockholders' Equity$8,905,859  $11,021,099  

See Notes to Consolidated Financial Statements
1

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In thousands, except per share data)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
202020192019
Revenue$487,648  $635,646  $277,674  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)249,866  198,772  98,310  
Selling, general and administrative expenses (excludes depreciation and amortization)261,219  220,231  102,296  
Corporate expenses (excludes depreciation and amortization)26,419  26,818  14,506  
Depreciation and amortization103,347  59,383  14,544  
Impairment charges5,378  —  —  
Other operating income (expense), net(506) 3,246  (127) 
Operating income (loss)(159,087) 133,688  47,891  
Interest expense (income), net81,963  69,711  (400) 
Gain on investments, net1,280  —  —  
Equity in loss of nonconsolidated affiliates(31) (24) (59) 
Other income (expense), net(1,258) (9,157) 150  
Reorganization items, net—  —  9,497,944  
Income (loss) from continuing operations before income taxes(241,059) 54,796  9,546,326  
Income tax benefit (expense)43,742  (16,003) (100,289) 
Income (loss) from continuing operations(197,317) 38,793  9,446,037  
Income from discontinued operations, net of tax—  —  1,854,677  
Net income (loss)(197,317) 38,793  11,300,714  
Less amount attributable to noncontrolling interest—  —  2,190  
Net income (loss) attributable to the Company$(197,317) $38,793  $11,298,524  
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments292  (328) (3,493) 
Other comprehensive income (loss), net of tax292  (328) (3,493) 
Comprehensive income (loss)(197,025) 38,465  11,295,031  
Less amount attributable to noncontrolling interest—  —  (788) 
Comprehensive income (loss) attributable to the Company$(197,025) $38,465  $11,295,819  
Net income (loss) attributable to the Company per common share:
Basic net income (loss) per share
From continuing operations$(1.35) $0.27  $110.28  
From discontinued operations—  —  21.63  
Basic net income (loss) per share$(1.35) $0.27  $131.91  
Weighted average common shares outstanding - Basic145,963  145,275  85,652  
Diluted net income (loss) per share
From continuing operations$(1.35) $0.27  $110.28  
From discontinued operations—  —  21.63  
Diluted net income (loss) per share$(1.35) $0.27  $131.91  
Weighted average common shares outstanding - Diluted145,963  145,298  85,652  

See Notes to Consolidated Financial Statements
2

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In thousands, except per share data)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Revenue$1,268,282  $635,646  $1,073,471  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)551,498  198,772  381,184  
Selling, general and administrative expenses (excludes depreciation and amortization)605,360  220,231  427,230  
Corporate expenses (excludes depreciation and amortization)66,368  26,818  53,647  
Depreciation and amortization200,115  59,383  52,834  
Impairment charges1,733,235  —  91,382  
Other operating income (expense), net(1,572) 3,246  (154) 
Operating income (loss)(1,889,866) 133,688  67,040  
Interest expense (income), net172,052  69,711  (499) 
Loss on investments, net(8,675) —  (10,237) 
Equity in loss of nonconsolidated affiliates(595) (24) (66) 
Other income (expense), net(9,118) (9,157) 23  
Reorganization items, net—  —  9,461,826  
Income (loss) from continuing operations before income taxes(2,080,306) 54,796  9,519,085  
Income tax benefit (expense)194,253  (16,003) (39,095) 
Income (loss) from continuing operations(1,886,053) 38,793  9,479,990  
Income from discontinued operations, net of tax—  —  1,685,123  
Net income (loss)(1,886,053) 38,793  11,165,113  
Less amount attributable to noncontrolling interest—  —  (19,028) 
Net income (loss) attributable to the Company$(1,886,053) $38,793  $11,184,141  
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments188  (328) (1,175) 
Other comprehensive income (loss), net of tax188  (328) (1,175) 
Comprehensive income (loss)(1,885,865) 38,465  11,182,966  
Less amount attributable to noncontrolling interest—  —  2,784  
Comprehensive income (loss) attributable to the Company$(1,885,865) $38,465  $11,180,182  
Net income (loss) attributable to the Company per common share:
Basic net income (loss) per share
From continuing operations$(12.94) $0.27  $109.92  
From discontinued operations—  —  19.76  
Basic net income (loss) per share$(12.94) $0.27  $129.68  
Weighted average common shares outstanding - Basic145,788  145,275  86,241  
Diluted net income (loss) per share
From continuing operations$(12.94) $0.27  $109.92  
From discontinued operations—  —  19.76  
Diluted net income (loss) per share$(12.94) $0.27  $129.68  
Weighted average common shares outstanding - Diluted145,788  145,298  86,241  

See Notes to Consolidated Financial Statements
3

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest		Common
Stock		Additional
Paid-in
Capital		Accumulated DeficitAccumulated
Other
Comprehensive
Loss		Treasury
Stock
Class A
Shares		Class B
Shares		Special WarrantsTotal
Balances at
March 31, 2020 (Successor)
59,930,396  6,899,611  78,919,386  $9,123  $67  $2,830,788  $(1,577,657) $(854) $(2,165) $1,259,302  
Net loss—  —  —  (197,317) —  —  (197,317) 
Vesting of restricted stock and other
624,537  —  1  (23) —  —  (853) (875) 
Share-based compensation —  —  4,240  —  —  —  4,240  
Conversion of Special Warrants to Class A and Class B Shares
877,263  729  (877,992) —  —  —  —  —  —  —  
Conversion of Class B Shares to Class A Shares
145  (145) —  —  —  —  —  —  —  
Cancellation of Special Warrants(2,982) —  —  —  —  —  —  —  
Other comprehensive income
—  —  —  —  292  —  292  
Balances at
June 30, 2020 (Successor)
61,432,341  6,900,195  78,038,412  $9,123  $68  $2,835,005  $(1,774,974) $(562) $(3,018) $1,065,642  

(1) The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020.
See Notes to Consolidated Financial Statements




















4

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest		Common
Stock		Additional
Paid-in
Capital		Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive
Loss		Treasury
Stock
Class A SharesClass B
Shares		Class C SharesSpecial WarrantsTotal
Balances at
March 31, 2019 (Predecessor)
32,247,361  555,556  58,967,502  —  $11,437  $92  $2,075,025  $(13,330,821) $(319,284) $(2,562) $(11,566,113) 
Net income2,190  —  —  11,298,524  —  —  11,300,714  
Non-controlling interest - Separation(13,199) —  —  —  —  —  (13,199) 
Accumulated other comprehensive loss - Separation—  —  —  —  307,813  —  307,813  
Issuance of restricted stock
132  —  —  —  —  —  132  
Forfeitures of restricted stock
(64,750) —  —  —  —  —  —  —  
Share-based compensation
—  —  1,635  —  —  —  1,635  
Share-based compensation - discontinued operations
614  —  —  —  —  —  614  
Other
—  —  —  —  1  —  1  
Other comprehensive loss
(788) —  —  —  (2,705) —  (3,493) 
Cancellation of Predecessor equity
(32,182,611) (555,556) (58,967,502) (386) (92) (2,076,660) 2,059,998  14,175  2,562  (403) 
Issuance of Successor common stock and warrants
56,861,941  6,947,567  81,453,648  8,943  64  2,770,108  (27,701) —  —  2,751,414  
Balances at
May 1, 2019 (Predecessor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
Balances at
May 2, 2019 (Successor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
Net income
—  —  —  38,793  —  —  38,793  
Vesting of restricted stock
11,841  —  —  —  —  —  —  —  
Share-based compensation
—  —  3,039  —  —  —  3,039  
Dividends declared
(571) —  —  —  —  —  (571) 
Other comprehensive loss
—  —  —  —  (328) —  (328) 
Balances at
June 30, 2019 (Successor)
56,873,782  6,947,567  —  81,453,648  $8,372  $64  $2,773,147  $38,793  $(328) $—  $2,820,048  
(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019. The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2019.
See Notes to Consolidated Financial Statements
5

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(In thousands, except share data)Controlling Interest
Common Shares(1)
Non-
controlling
Interest		Common
Stock		Additional
Paid-in
Capital		Retained Earnings (Accumulated
Deficit)		Accumulated
Other
Comprehensive
Loss		Treasury
Stock
Class A
Shares		Class B
Shares		Special WarrantsTotal
Balances at
December 31, 2019 (Successor)
57,776,204  6,904,910  81,046,593  $9,123  $65  $2,826,533  $112,548  $(750) $(2,078) $2,945,441  
Net loss
—  —  —  (1,886,053) —  —  (1,886,053) 
Vesting of restricted stock and other
646,223  —  3  (25) —  —  (940) (962) 
Share-based compensation—  —  8,497  —  —  —  8,497  
Conversion of Special Warrants to Class A Shares and Class B Shares
3,003,854  1,345  (3,005,199) —  —  —  —  —  —  —  
Conversion of Class B Shares to Class A Shares
6,060  (6,060) —  —  —  —  —  —  —  
Cancellation of Special Warrants(2,982) —  —  —  —  —  —  —  
Other
—  —  —  (1,469) —  —  (1,469) 
Other comprehensive income
—  —  —  —  188  —  188  
Balances at
June 30, 2020 (Successor)
61,432,341  6,900,195  78,038,412  $9,123  $68  $2,835,005  $(1,774,974) $(562) $(3,018) $1,065,642  

(1) The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020 or 2019.

See Notes to Consolidated Financial Statements


















6

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share data)Controlling Interest
Common Shares(1)Non- controlling InterestCommon StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossTreasury Stock
Class A SharesClass B SharesClass C SharesSpecial WarrantsTotal
Balances at
December 31, 2018 (Predecessor)
32,292,944  555,556  58,967,502  —  $30,868  $92  $2,074,632  $(13,345,346) $(318,030) $(2,558) $(11,560,342) 
Net income (loss)(19,028) —  —  11,184,141  —  —  11,165,113  
Non-controlling interest - Separation(13,199) —  —  —  —  —  (13,199) 
Accumulated other comprehensive loss - Separation—  —  —  —  307,813  —  307,813  
Adoption of ASC 842, Leases—  —  —  128,908  —  —  128,908  
Issuance of restricted stock196  —  —  —  —  (4) 192  
Forfeitures of restricted stock(110,333) —  —  —  —  —  —  —  
Share-based compensation—  —  2,028  —  —  —  2,028  
Share-based compensation - discontinued operations2,449  —  —  —  —  —  2,449  
Payments to non-controlling interests(3,684) —  —  —  —  —  (3,684) 
Other—  —  —  —  1  —  1  
Other comprehensive income (loss)2,784  —  —  —  (3,959) —  (1,175) 
Cancellation of Predecessor equity(32,182,611) (555,556) (58,967,502) (386) (92) (2,076,660) 2,059,998  14,175  2,562  (403) 
Issuance of Successor common stock and warrants56,861,941  6,947,567  —  81,453,648  8,943  64  2,770,108  (27,701) —  —  2,751,414  
Balances at
May 1, 2019 (Predecessor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
Balances at
May 2, 2019 (Successor)
56,861,941  6,947,567  —  81,453,648  $8,943  $64  $2,770,108  $—  $—  $—  $2,779,115  
Net income—  —  —  38,793  —  —  38,793  
Vesting of restricted stock11,841  —  —  —  —  —  —  —  
Share-based compensation—  —  3,039  —  —  —  3,039  
Other(571) —  —  —  —  —  (571) 
Other comprehensive loss—  —  —  —  (328) —  (328) 
Balances at
June 30, 2019 (Successor)
56,873,782  6,947,567  —  81,453,648  $8,372  $64  $2,773,147  $38,793  $(328) $—  $2,820,048  
(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019 or 2018. The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2019.

See Notes to Consolidated Financial Statements

7

IHEARTMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Cash flows from operating activities:
Net income (loss)$(1,886,053) $38,793  $11,165,113  
Income from discontinued operations—  —  (1,685,123) 
Reconciling items:
Impairment charges1,733,235  —  91,382  
Depreciation and amortization200,115  59,383  52,834  
Deferred taxes(197,689) 13,056  115,839  
Provision for doubtful accounts18,210  3,081  3,268  
Amortization of deferred financing charges and note discounts, net1,033  216  512  
Non-cash Reorganization items, net—  —  (9,619,236) 
Share-based compensation8,497  3,039  498  
(Gain) Loss on disposal of operating and other assets426  (3,960) (143) 
Loss on investments8,675  —  10,237  
Equity in loss of nonconsolidated affiliates595  24  66  
Barter and trade income(5,244) (1,934) (5,947) 
Other reconciling items, net887  73  (65) 
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable314,515  (108,613) 117,263  
Increase in prepaid expenses and other current assets(12,720) (14,773) (24,044) 
Increase in other long-term assets(654) (1,591) (7,098) 
Increase (decrease) in accounts payable and accrued expenses(90,103) 21,001  (156,885) 
Increase (decrease) in accrued interest(12,099) 69,294  256  
Increase in deferred income8,281  4,745  13,377  
Increase (decrease) in other long-term liabilities13,002  1,367  (79,609) 
Cash provided by (used in) operating activities from continuing operations102,909  83,201  (7,505) 
Cash used for operating activities from discontinued operations—  —  (32,681) 
Net cash provided by (used in) operating activities102,909  83,201  (40,186) 
Cash flows from investing activities:
Purchases of investments(9,964) (500) (226) 
Purchases of property, plant and equipment(39,546) (17,435) (36,197) 
Change in other, net(1,171) 148  (2,355) 
Cash used for investing activities from continuing operations(50,681) (17,787) (38,778) 
Cash used for investing activities from discontinued operations—  —  (222,366) 
Net cash used for investing activities(50,681) (17,787) (261,144) 
Cash flows from financing activities:
Proceeds from long-term debt and credit facilities350,000  —  269  
Payments on long-term debt and credit facilities(283,335) —  (8,294) 
Proceeds from Mandatorily Redeemable Preferred Stock—  —  60,000  
Settlement of intercompany related to discontinued operations—  —  (159,196) 
Change in other, net(1,153) (684) (5) 
Cash provided by (used for) financing activities from continuing operations65,512  (684) (107,226) 
Cash provided by financing activities from discontinued operations—  —  51,669  
Net cash provided by (used for) financing activities65,512  (684) (55,557) 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(325) 11  562  
Net increase (decrease) in cash, cash equivalents and restricted cash117,415  64,741  (356,325) 
Cash, cash equivalents and restricted cash at beginning of period411,618  74,009  430,334  
Cash, cash equivalents and restricted cash of continuing operations at end of period$529,033  $138,750  $74,009  
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest$185,364  $430  $137,042  
Cash paid for income taxes1,745  1,549  22,092  
Cash paid for Reorganization items, net443  13,049  183,291  
See Notes to Consolidated Financial Statements
8


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – BASIS OF PRESENTATION
Preparation of Interim Financial Statements
All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to iHeartMedia, Inc. and its consolidated subsidiaries. The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. As described below, as a result of the application of fresh start accounting and the effects of the implementation of the Company's Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below), are not comparable with the consolidated financial statements on or before that date. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K.
The Company’s reportable segments are:
▪Audio, which provides media and entertainment services via broadcast and digital delivery, and also includes the Company’s events and national syndication businesses and  
▪Audio & Media Services, which provides other audio and media services, including the Company’s media representation business, Katz Media Group (“Katz Media”) and the Company's provider of scheduling and broadcast software, Radio Computing Services (“RCS”).
The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling financial interest or is the primary beneficiary. Investments in companies in which the Company owns 20% to 50% of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.
Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations. Certain of the Company's operations have been presented as discontinued. The Company presents businesses that represent components as discontinued operations when the components meet the criteria for held for sale, are sold, or spun-off and their disposal represents a strategic shift that has, or will have, a major effect on its operations and financial results. See Note 2, Discontinued Operations.
COVID-19
Our business has been adversely impacted by the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions. On March 26, 2020, the Company announced that it was withdrawing its previously issued financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to COVID-19. In addition, iHeartCommunications borrowed $350.0 million principal amount under its $450.0 million senior secured asset-based revolving credit facility (the “ABL Facility”) as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of this uncertainty. In the second quarter of 2020, the Company repaid $115.0 million of the amounts borrowed under the ABL Facility. As of June 30, 2020, the ABL Facility had a borrowing base of $289.4 million and utilization of $235.0 million in outstanding borrowings and $41.2 million of outstanding letters of credit, resulting in $13.2 million of availability, such availability being subject to further restrictions contained within the credit agreement governing the ABL Facility.
In July 2020, iHeartCommunications issued $450.0 million of incremental term loans pursuant to an amendment (the “Amendment No. 2”) to the credit agreement (as amended, the “Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”) and used a portion of the proceeds to repay the $235.0 million outstanding balance under the ABL Facility. The remaining proceeds will be available if needed to fund iHeartCommunications' future working capital requirements or other general corporate purposes.

9


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company's revenue in the latter half of the month ended March 31, 2020 and in the three months ended June 30, 2020 was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19, and the Company's management took proactive actions to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.  The Company continues to examine the impacts the CARES Act may have on its business. For more information on the expected benefits of the CARES Act on the Company's income tax liabilities, see Note 8, Income Taxes.
As of June 30, 2020, the Company had approximately $517.7 million in cash, which includes the $235.0 million borrowed under the ABL Facility that was subsequently repaid in July 2020 using the proceeds of the $450.0 million issuance of incremental term loans.  While the Company expects COVID-19 to negatively impact the results of operations, cash flows and financial position of the Company, the related financial impact cannot be reasonably estimated at this time. Based on the plans that the Company has put in place, it expects to be able to meet its obligations as they become due over the coming year.

As a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company was required to perform interim impairment tests on its long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of the Company's Federal Communication Commission (“FCC”) licenses of $502.7 million and a non-cash impairment charge of $1.2 billion to reduce goodwill.
Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s weighted average cost of capital (“WACC”) and other economic factors, additional interim impairment testing of the Company's intangible assets and indefinite-lived intangible was not required as of June 30, 2020. For more information, see Note 5, Property, Plant and Equipment, Intangible Assets and Goodwill.
Voluntary Filing under Chapter 11
As previously disclosed, on March 14, 2018, the Company, iHeartCommunications, Inc. ("iHeartCommunications") and certain of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court"). On April 28, 2018, the Company and the other Debtors filed a plan of reorganization (as amended, the “Plan of Reorganization”) and a related disclosure statement with the Bankruptcy Court. On January 22, 2019, the Plan of Reorganization was confirmed by the Bankruptcy Court. On May 1, 2019 (the “Effective Date”), the Company emerged from Chapter 11 and effectuated a series of transactions through which Clear Channel Outdoor Holdings, Inc. ("CCOH"), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “Separation”). All of the Company's equity existing as of the Effective Date was canceled on such date pursuant to the Plan of Reorganization.
Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the consolidated financial statements on or before that date.
References to “Successor” or “Successor Company” relate to the financial position and results of operations of the Company after the Effective Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of the Company on or before the Effective Date.
During the Predecessor period, the Company applied Accounting Standards Codification (“ASC”) 852 - Reorganizations (“ASC 852”) in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during 2019 related
10


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
to the Chapter 11 Cases, including professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the Predecessor period.
Reclassifications
Certain prior period amounts have been reclassified to conform to the 2020 presentation. In the first quarter of 2020, in connection with a reorganization of the Company’s management structure after the Separation and emergence from the Chapter 11 cases, the Company reevaluated the classification of certain expenses to determine whether such expenses should be included within Direct operating expenses, Selling, general & administrative (“SG&A”) expenses or Corporate expenses. As a result, certain expenses were reclassified from Corporate expenses to Direct operating or SG&A expenses. In addition, certain expenses were reclassified from SG&A expenses to Direct operating expenses. The reclassifications had no impact on the Company's Operating Income (Loss) or Net Income (Loss). Accordingly, the Company recast the corresponding amounts in the prior period to conform to the current expense classifications. The corresponding current and prior period segment disclosures were recast to reflect the current expense classifications. See Note 10, Segment Data.
Restricted Cash 
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows:
(In thousands)Successor Company
June 30,
2020		December 31,
2019
Cash and cash equivalents$517,684  $400,300  
Restricted cash included in:
  Other current assets11,349  11,318  
Total cash, cash equivalents and restricted cash in the Statement of Cash Flows$529,033  $411,618  
Certain Relationships and Related Party Transactions
From time to time, certain companies in which the Company holds minority equity interests, purchase advertising in the ordinary course. None of these ordinary course transactions have a material impact on the Company.
New Accounting Pronouncements Recently Adopted
During the second quarter of 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and finalized amendments to FASB ASC Subtopic 825-15, Financial Instruments-Credit Losses ("ASC 326").  The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.  The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses.  ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate.  Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down.  The Company adopted the updated guidance in the first quarter of 2020 utilizing the modified retrospective approach, which resulted in the recognition of estimated credit loss reserves against certain available-for-sale debt securities from third-parties held by the Company.
11


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Upon adoption, the Company recognized a $1.5 million cumulative-effect adjustment to opening retained earnings to reflect expected credit losses in relation to notes receivable held by the Company. In addition, the Company evaluated the potential impact of the COVID-19 pandemic on the collectability of its notes receivable from third-parties. To develop an estimate of the present value of expected cash flows of notes receivable, the Company used a probability-weighted discounted cash flow model. As a result of this analysis, the Company recognized an additional credit loss reserve against available-for-sale debt securities of $5.6 million, which was recognized within Loss on investments, net in the Company's Statement of Comprehensive Loss for the six months ended June 30, 2020. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses

The FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences.  It also clarifies and simplifies other aspects of the accounting for income taxes.  For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.  Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period.  Additionally, entities that elect early adoption must adopt all the amendments in the same period.  Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings.  The Company early adopted this standard, which did not have significant impact on our financial position, results of operations or cash flows.

New Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The effects of this standard on our financial position, results of operations and cash flows are not expected to be material.

NOTE 2 - DISCONTINUED OPERATIONS
Discontinued operations relate to our domestic and international outdoor advertising businesses and were previously reported as the Americas outdoor and International outdoor segments prior to the Separation. Revenue, expenses and cash flows for these businesses are separately reported as Income from discontinued operations, net of tax and cash flows from discontinued operations in the Company's financial statements for all periods presented.

12


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Financial Information for Discontinued Operations

Income Statement Information

The following shows the revenue and income (loss) from discontinued operations and gain on disposal of the Predecessor Company's discontinued operations for the periods presented:
(In thousands)Predecessor Company
Period from April 1, 2019 through May 1,Period from January 1, 2019 through May 1,
20192019
Revenue$217,450  $804,566  
Loss from discontinued operations before income taxes$(21,684) $(133,475) 
  Income tax benefit (expense)50,830  (6,933) 
Income (loss) from discontinued operations, net of taxes$29,146  $(140,408) 
Gain on disposals before income taxes$1,825,531  $1,825,531  
  Income tax expense—  —  
Gain on disposals, net of taxes$1,825,531  $1,825,531  
Income from discontinued operations, net of taxes$1,854,677  $1,685,123  

In connection with the Separation, the Company and its subsidiaries entered into the agreements described below.
Transition Services Agreement
On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into a transition services agreement (the “Transition Services Agreement”), pursuant to which iHM Management Services has agreed to provide, or cause the Company and its subsidiaries to provide CCOH with certain administrative and support services and other assistance which CCOH will utilize in the conduct of its business as such business was conducted prior to the Separation, for one year from the Effective Date (subject to certain rights of CCOH to extend up to one additional year, as described below).
The allocation of cost is based on various measures depending on the service provided, which measures include relative revenue, employee headcount, number of users of a service or other factors. As of June 30, 2020, most of these services have been successfully transitioned to CCOH. CCOH has requested extensions of the term for certain individual services, primarily related to information systems, for one-month periods through August 31, 2020 and may request further one-month extensions of such services up to May 1, 2021.
CCOH may terminate the Transition Services Agreement with respect to all or any individual service, in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently.
New Tax Matters Agreement
In connection with the Separation, the Company entered into the New Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.
The New Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against certain tax claims related to the Separation. In addition, the New Tax Matters Agreement requires that CCOH indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of CCOH and its subsidiaries.
13


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 – REVENUE
Disaggregation of Revenue
The following table shows revenue streams for the Successor Company for the periods presented:
Successor Company
(In thousands)AudioAudio and Media ServicesEliminationsConsolidated
Three Months Ended June 30, 2020
Revenue from contracts with customers:
  Broadcast Radio(1)
$244,035  $—  $—  $244,035  
  Digital(2)
93,227  —  —  93,227  
  Networks(3)
96,330  —  —  96,330  
  Sponsorship and Events(4)
14,809  —  —  14,809  
  Audio and Media Services(5)
—  39,251  (1,779) 37,472  
  Other(6)
1,544  —  (168) 1,376  
     Total449,945  39,251  (1,947) 487,249  
Revenue from leases(7)
399  —  —  399  
Revenue, total$450,344  $39,251  $(1,947) $487,648  
Period from May 2, 2019 through June 30, 2019
Revenue from contracts with customers:
  Broadcast Radio(1)
$390,540  $—  $—  $390,540  
  Digital(2)
64,238  —  —  64,238  
  Networks(3)
105,426  —  —  105,426  
  Sponsorship and Events(4)
31,790  —  —  31,790  
  Audio and Media Services(5)
—  40,537  (1,009) 39,528  
  Other(6)
3,957  —  (112) 3,845  
     Total 595,951  40,537  (1,121) 635,367  
Revenue from leases(7)
279  —  —  279  
Revenue, total$596,230  $40,537  $(1,121) $635,646  
Six Months Ended June 30, 2020
Revenue from contracts with customers:
  Broadcast Radio(1)
$705,695  $—  $—  $705,695  
  Digital(2)
186,003  —  —  186,003  
  Networks(3)
230,907  —  —  230,907  
  Sponsorship and Events(4)
44,157  —  —  44,157  
  Audio and Media Services(5)
—  99,478  (3,590) 95,888  
  Other(6)
5,103  —  (335) 4,768  
     Total1,171,865  99,478  (3,925) 1,267,418  
Revenue from leases(7)
864  —  —  864  
Revenue, total$1,172,729  $99,478  $(3,925) $1,268,282  

(1)Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations.
(2)Digital revenue is generated through the sale of streaming and display advertisements on digital platforms, subscriptions to iHeartRadio streaming services, podcasting and the dissemination of other digital content.
(3)Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.
(4)Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.
14


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(5)Audio and media services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.
(6)Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.
(7)Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases.

The following table shows revenue streams from continuing operations for the Predecessor Company. The presentation of amounts in the Predecessor period has been revised to conform to the Successor period presentation.
Predecessor Company
(In thousands)
Audio(1)
Audio and Media Services(1)
EliminationsConsolidated
Period from April 1, 2019 through May 1, 2019
Revenue from contracts with customers:
  Broadcast Radio170,632  $—  $—  $170,632  
  Digital26,840  —  —  26,840  
  Networks50,889  —  —  50,889  
  Sponsorship and Events10,617  —  —  10,617  
  Audio and Media Services—  17,970  (701) 17,269  
  Other1,197  —  (56) 1,141  
     Total 260,175  17,970  (757) 277,388  
Revenue from leases286  —  —  286  
Revenue, total$260,461  $17,970  $(757) $277,674  
Period from January 1, 2019 through May 1, 2019
Revenue from contracts with customers:
  Broadcast Radio$657,864  $—  $—  $657,864  
  Digital102,789  —  —  102,789  
  Networks189,088  —  —  189,088  
  Sponsorship and Events50,330  —  —  50,330  
  Audio and Media Services—  69,362  (2,325) 67,037  
  Other5,910  —  (243) 5,667  
     Total1,005,981  69,362  (2,568) 1,072,775  
Revenue from leases696  —  —  696  
Revenue, total$1,006,677  $69,362  $(2,568) $1,073,471  
(1)Due to a re-evaluation of the Company’s internal segment reporting upon the effectiveness of the Plan of Reorganization, the Company’s RCS business is included in the Audio & Media Services results for all periods presented.
15


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Trade and Barter
Trade and barter transactions represent the exchange of advertising spots for merchandise, services, advertising and promotion or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. Trade and barter revenues and expenses from continuing operations, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:
Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
(In thousands)202020192019
  Trade and barter revenues$19,753  $29,699  $10,349  
  Trade and barter expenses17,075  28,023  8,474  
Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
(In thousands)202020192019
Trade and barter revenues$72,431  $29,699  $65,934  
Trade and barter expenses72,073  28,023  58,330  
The Successor Company recognized barter revenue of $0.2 million, $1.9 million and $5.2 million in the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020, respectively, in connection with investments made in companies in exchange for advertising services. The Predecessor Company recognized barter revenue of $0.9 million and $5.9 million in the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019, respectively, in connection with investments made in companies in exchange for advertising services.

Deferred Revenue
The following tables show the Company’s deferred revenue balance from contracts with customers, excluding discontinued operations:
Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
(In thousands)202020192019
Deferred revenue from contracts with customers:
  Beginning balance(1)
$175,321  $151,475  $155,114  
    Impact of fresh start accounting—  298  —  
    Revenue recognized, included in beginning balance(59,155) (59,018) (43,172) 
    Additions, net of revenue recognized during period, and other61,864  66,997  39,533  
  Ending balance$178,030  $159,752  $151,475  

16


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
(In thousands)202020192019
Deferred revenue from contracts with customers:
  Beginning balance(1)
$162,068  $151,475  $148,720  
    Impact of fresh start accounting—  298  —  
    Revenue recognized, included in beginning balance(76,053) (59,018) (76,473) 
    Additions, net of revenue recognized during period, and other92,015  66,997  79,228  
Ending balance$178,030  $159,752  $151,475  
(1) Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized.

The Company’s contracts with customers generally have terms of one year or less; however, as of June 30, 2020, the Company expects to recognize $226.6 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years. Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.
Revenue from Leases
As of June 30, 2020, the future lease payments to be received by the Successor Company are as follows:
(In thousands)
2020$774  
20211,259  
2022860  
2023795  
2024695  
Thereafter10,021  
  Total$14,404  

NOTE 4 – LEASES
The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets ("ROU assets") and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.
The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt.
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.
17


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company tests for impairment of right of use assets whenever events and circumstances indicate that such assets might be impaired. During the three months ended June 30, 2020, the Company recognized a non-cash impairment charge of $5.4 million related to a decision by management to abandon and sublease one of its operating leases.
The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."
The following table provides supplemental cash flow information related to leases for the periods presented:
Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1
(In thousands)202020192019
Cash paid for amounts included in measurement of operating lease liabilities$64,940  $23,400  $44,888  
Lease liabilities arising from obtaining right-of-use assets(1)
$18,047  $3,194  $913,598  

(1) Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during the six months ended June 30, 2020 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the period from May 2, 2019 through June 30, 2019 (Successor).
The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows.

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL
Property, Plant and Equipment
The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2020 and December 31, 2019, respectively:
(In thousands)Successor Company
June 30,
2020		December 31,
2019
Land, buildings and improvements$388,096  $385,017  
Towers, transmitters and studio equipment160,955  156,739  
Furniture and other equipment390,680  361,527  
Construction in progress28,624  21,287  
968,355  924,570  
Less: accumulated depreciation149,096  77,694  
Property, plant and equipment, net$819,259  $846,876  

Indefinite-lived Intangible Assets
The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment.
The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.
18


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the trading values of the Company’s publicly-traded debt and equity and on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses.
For purposes of initial recording in fresh start accounting and for annual impairment testing purposes, our FCC licenses are valued using the direct valuation approach, with the key assumptions being forecasted market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.
In estimating the fair value of its FCC licenses, the Company obtained the most recent broadcast radio industry revenue projections which consider the impact of COVID-19 on future broadcast radio advertising revenue. Such projections reflect a significant and negative impact from COVID-19. In addition to using these broadcast radio industry revenue projections, the Company used various sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of March 31, 2020. As a result of COVID-19, the United States economy is undergoing a period of economic disruption and uncertainty, which has caused, among other things, lower consumer and business spending. The uncertainty surrounding the demand for advertising negatively impacted the key assumptions used in the discounted cash flow models used to value the Company's FCC licenses. Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors. As a result of the Company’s assessment the estimated fair value of FCC licenses was determined to be below their carrying values as of March 31, 2020. As a result, during the three months ended March 31, 2020, the Successor Company recognized a non-cash impairment charge of $502.7 million on its FCC licenses.
Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's indefinite-lived intangible was required as of June 30, 2020.
During the six months ended June 30, 2019, the Predecessor Company recognized non-cash impairment charges of $91.4 million in relation to indefinite-lived FCC licenses as a result of an increase in the weighted average cost of capital used in performing the annual impairment test.
Other Intangible Assets
Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows.  The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.  These assets are recorded at amortized cost.
The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed interim impairment tests as of March 31, 2020 on its other intangible assets. Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to be recoverable, and no impairment was recognized.
19


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2020 and December 31, 2019, respectively:
(In thousands)Successor Company
June 30, 2020December 31, 2019
Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Customer / advertiser relationships1,625,376  (199,991) 1,629,236  (114,280) 
Talent and other contracts375,400  (59,026) 375,399  (33,739) 
Trademarks and tradenames321,977  (37,907) 321,977  (21,661) 
Other25,251  (3,126) 21,394  (1,786) 
Total$2,348,004  $(300,050) $2,348,006  $(171,466) 
Total amortization expense related to definite-lived intangible assets for the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 was $64.3 million, $42.5 million and $128.6 million, respectively. Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 was $3.0 million and $12.7 million, respectively.
As acquisitions and dispositions occur in the future, amortization expense may vary.  The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:
(In thousands)
2021$256,650  
2022255,870  
2023247,517  
2024246,827  
2025209,042  
20


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Goodwill
The following table presents the changes in the carrying amount of goodwill:
(In thousands)AudioAudio & Media ServicesConsolidated
Balance as of December 31, 2018 (Predecessor)$3,330,922  $81,831  $3,412,753  
Acquisitions—  2,767  2,767  
Foreign currency—  (28) (28) 
Balance as of May 1, 2019 (Predecessor)$3,330,922  $84,570  $3,415,492  
Impact of fresh start accounting(111,712) 19,585  (92,127) 
Balance as of May 2, 2019 (Successor)$3,219,210  $104,155  $3,323,365  
     Acquisitions4,637  —  4,637  
     Dispositions(9,466) —  (9,466) 
     Foreign currency—  (1) (1) 
     Other7,087  —  7,087  
Balance as of December 31, 2019 (Successor)$3,221,468  $104,154  $3,325,622  
Impairment(1,224,374) —  (1,224,374) 
Acquisitions404  —  404  
Foreign currency—  5  5  
Balance as of June 30, 2020 (Successor)$1,997,498  $104,159  $2,101,657  
Goodwill Impairment
At least annually, the Company performs its impairment test for each reporting unit’s goodwill.  The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.
As described in Note 1, the economic disruption as a result of COVID-19 had a significant impact to the trading values of the Company’s publicly-traded debt and equity and on the Company's results in the latter half of the month ended March 31, 2020. In addition, the Company expects that the pandemic will continue to impact the operating and economic environment of our customers and will impact the near-term spending decisions of advertisers. As a result, the Company performed an interim impairment test on its indefinite-lived intangible assets as of March 31, 2020.
The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. As with the impairment testing performed on the Company’s FCC licenses described above, the significant deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of the Company’s reporting units for purposes of performing the interim goodwill impairment test. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
As discussed above, the carrying values of the Company’s reporting units were based on estimated fair values determined upon our emergence from bankruptcy on May 1, 2019, and the rapid deterioration in economic conditions resulting from the COVID-19 pandemic resulted in lower estimated fair values determined in connection with our interim goodwill impairment testing as of March 31, 2020. The estimated fair value of one of the Company's reporting units was below its carrying value, including goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model. As a result, the Company recognized a non-cash impairment charge of $1.2 billion in the first quarter of 2020 to reduce goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model.
21


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's reporting units was required as of June 30, 2020.
While management believes the estimates and assumptions utilized to calculate the fair value of the Company's tangible and intangible long-lived assets, indefinite-lived FCC licenses and reporting units are reasonable, it is possible a material change could occur to the estimated fair value of these assets. Uncertainty regarding the full extent of the economic downturn as a result of COVID-19, as well as the timing of any recovery, may result in the Company's actual results not being consistent with its estimates, and the Company could be exposed to future impairment losses that could be material to its results of operations.

NOTE 6 – LONG-TERM DEBT
Long-term debt outstanding for the Successor Company as of June 30, 2020 and December 31, 2019 consisted of the following:
(In thousands)Successor Company
June 30, 2020December 31, 2019
Term Loan Facility due 2026(1)(4)
$2,090,765  $2,251,271  
Asset-based Revolving Credit Facility due 2023(2)(4)
235,000  —  
6.375% Senior Secured Notes due 2026
800,000  800,000  
5.25% Senior Secured Notes due 2027
750,000  750,000  
4.75% Senior Secured Notes due 2028
500,000  500,000  
Other secured subsidiary debt(3)
23,632  20,992  
Total consolidated secured debt4,399,397  4,322,263  
8.375% Senior Unsecured Notes due 2027
1,450,000  1,450,000  
Other unsecured subsidiary debt6,312  12,581  
Long-term debt fees(18,587) (19,428) 
Total debt5,837,122  5,765,416  
Less: Current portion30,061  8,912  
Total long-term debt$5,807,061  $5,756,504  
(1)On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.
(2)On March 13, 2020, iHeartCommunications borrowed $350.0 million under the ABL Facility, the proceeds of which were invested as cash on the Balance Sheet. During the three months ended June 30, 2020, iHeartCommunications voluntarily repaid $115.0 million principal amount drawn under the ABL Facility. As of June 30, 2020, the ABL Facility had a borrowing base of $289.4 million and $235.0 million of outstanding borrowings and $41.2 million of outstanding letters of credit, resulting in $13.2 million of availability. Amounts available under the ABL Facility are calculated using a borrowing base calculated by reference to our outstanding accounts receivable. To the extent decreases in our accounts receivable result in the borrowing base decreasing to an amount below the amount drawn, we may be required to make a partial repayment of amounts outstanding under our ABL Facility.
(3)Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2021 through 2045.
(4)On July 16, 2020, iHeartCommunications issued $450.0 million of incremental term loans under the Amendment No. 2, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding on the Company's ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.

The Successor Company’s weighted average interest rate was 5.3% and 6.4% as of June 30, 2020 and December 31, 2019, respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $5.5 billion and $6.1 billion as of June 30, 2020 and December 31, 2019, respectively. The trading value of the Company’s publicly traded debt decreased significantly in March 2020 as a result of the market’s reaction to COVID-19. While trading values have increased as of June 30, 2020 and the date of this filing, prices have not fully recovered to levels
22


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
prior to the initial impact of COVID-19. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Successor Company’s debt is classified as either Level 1 or Level 2.
On February 3, 2020, iHeartCommunications entered into an amendment to the Credit Agreement governing its Term Loan Facility due 2026. The amendment reduces the interest rate to LIBOR plus a margin of 3.00% (from LIBOR plus a margin of 4.00%), or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% (from Base Rate plus a margin of 3.00%) and modifies certain covenants contained in the Credit Agreement.
On July 16, 2020, iHeartCommunications entered into Amendment No. 2 to issue $450.0 million of incremental term loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. The incremental term loans issued pursuant to Amendment No. 2 have an interest rate of 4.00% for Eurocurrency Rate Loans and 3.00% for Base Rate Loans (subject to a LIBOR floor of 0.75% and Base Rate floor of 1.75%). Amendment No. 2 also modifies certain other provisions of the Credit Agreement.
In connection with the Term Loan Facility amendment in February 2020, iHeartCommunications also prepaid at par $150.0 million of borrowings outstanding under the Term Loan Facility with cash on hand. Under the terms of the Credit Agreement, iHeartCommunications made quarterly payments of $5.25 million during each of the three months ended March 31, 2020 and three months ended June 30, 2020. Under the terms of Amendment No. 2, iHeartCommunications is required to make quarterly payments of $6.4 million beginning in the third quarter of 2020.
Mandatorily Redeemable Preferred Stock
On the Effective Date, in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $60.0 million for a cash purchase price of $60.0 million. The iHeart Operations Preferred Stock was purchased by a third party investor. As of June 30, 2020, the liquidation preference of the iHeart Operations Preferred Stock was $60.0 million. As further described below, the iHeart Operations Preferred Stock is mandatorily redeemable for cash at a date certain and therefore is classified as a liability in the Company's balance sheet.
Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly. Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day). During the three and six months ended June 30, 2020 the Company recognized $2.4 million and $4.2 million of interest expense related to dividends on mandatorily redeemable preferred stock.
Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock. Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium. At any time on or after the third anniversary of the issue date, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share.
The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date.
On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference.
Surety Bonds, Letters of Credit and Guarantees
As of June 30, 2020, the Successor Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $19.8 million and $41.2 million, respectively. These surety bonds and letters of credit relate to various operational matters including insurance, lease and performance bonds as well as other items.

23


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.
Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
Alien Ownership Restrictions and FCC Petition for Declaratory Ruling
The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership is in the public interest (the “Foreign Ownership Rule”). Under the Plan of Reorganization, the Company committed to file a Petition for Declaratory Ruling ("PDR") requesting the FCC to permit up to 100% of the Company's voting and equity to be owned by non-U.S. individuals and entities, but the FCC’s granting the PDR was not a condition to the Company's emergence. 
The equity allocation mechanism (“Equity Allocation Mechanism”) set forth in the Plan of Reorganization was intended to enable the Company to comply with the Foreign Ownership Rule and other FCC ownership restrictions in connection with emergence. The Equity Allocation Mechanism imposed an obligation on each of the Company's former claimholders in connection with the Chapter 11 Cases (the "Claimholders") to provide written certification sufficient for the Company to determine whether issuance of common stock to such Claimholders would cause the Company to violate the Foreign Ownership Rule, and restricted the Company from issuing common stock to Claimholders such that it would cause the Company to exceed an aggregate alien ownership or voting percentage of 22.5 percent (the “22.5 Percent Threshold”). 
After emerging from bankruptcy, the Company discovered that a group of Claimholders that had certified to having no foreign ownership or voting control in connection with the Equity Allocation Mechanism had subsequently undergone a separate merger transaction without our knowledge or control. As a result of this merger, these Claimholders’ interests in iHeartMedia (amounting to approximately nine percent of the Company's issued and outstanding Class A common stock) can be voted by a U.S. subsidiary of a foreign parent. The Company notified the FCC of this development in writing promptly after discovering and confirming it. The FCC responded to the Company's notification on July 9, 2019, indicating that (1) the FCC has not determined that this development is contrary to the public interest, and (2) the FCC has deemed the Company to be in compliance with the FCC’s foreign ownership reporting rules, pending its decision on the Company's PDR. On July 25, 2019 the Company filed the PDR. The FCC requested public comment on the PDR, which comment period closed on March 26, 2020.  The FCC subsequently referred the PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues. On June 29, 2020, Team Telecom indicated its consent to the grant by the FCC of the PDR.  The Company cannot predict whether the FCC will issue a ruling granting the PDR, the amount of foreign equity and voting rights any such a ruling will allow us to have, or how long it will take to obtain such a ruling.
24


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8 – INCOME TAXES
Income Tax Benefit (Expense)
The Company’s income tax benefit (expense) from continuing operations for the three and six months ended June 30, 2020 (Successor) the period from May 2, 2019 through June 30, 2019 (Successor), the period from April 1, 2019 through May 1, 2019 (Predecessor) and the period from January 1, 2019 through May 1, 2019 (Predecessor), respectively, consisted of the following components:
(In thousands)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
202020192019
Current tax benefit (expense)$(1,731) $(2,947) $6,950  
Deferred tax benefit (expense)45,473  (13,056) (107,239) 
Income tax benefit (expense)$43,742  $(16,003) $(100,289) 

(In thousands)Successor CompanyPredecessor Company
Six Months Ended June 30, 2020Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Current tax benefit (expense)$(3,436) $(2,947) $76,744  
Deferred tax benefit (expense)197,689  (13,056) (115,839) 
Income tax benefit (expense)$194,253  $(16,003) $(39,095) 

The effective tax rate from continuing operations for the Successor Company for the three and six months ended June 30, 2020 was 18.1% and 9.3%, respectively. The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 1. The deferred tax benefit primarily consists of $125.5 million related to the FCC license impairment charges recorded during the period.
The effective tax rate for the Successor Company for the Period from May 2, 2019 through June 30, 2019 was 29.2%. The effective tax rate for continuing operations of the Predecessor Company for Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) was 1.1% and 0.4%, respectively. The income tax expense for the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.

On March 27, 2020 the CARES Act, which included numerous tax provisions, was signed into law.  While the Company is continuing to evaluate the impact of the enacted tax provisions as additional guidance is provided, upon the Company's initial review the provision with the most significant impact on the Company’s income taxes is the increase to the Section 163(j) interest deduction limitation and the ability to elect to use the Company’s 2019 Adjusted Taxable Income (as defined under Section 163(j)) for purposes of calculating the 2020 Section 163(j) limitation. There were several other tax provisions included in the CARES Act allowing companies more flexibility in carrying back net operating losses generated in 2018, 2019 or 2020,
25


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
temporarily eliminating the provision limiting net operating losses utilization to 80% of taxable income and the acceleration of refunds available from alternative minimum tax credits.  The Company does not expect to benefit from any of these provisions.  In addition to the income tax provisions mentioned above, the CARES Act also included provisions impacting employment taxes allowing companies to defer the payment of the employee portion of certain employment taxes that would be due from the enactment date through January 1, 2021.  The amounts deferred are due fifty percent by December 31, 2021 and fifty percent by December 31, 2022.  The Company has deferred $11.3 million in employment taxes as of June 30, 2020. In addition, the CARES Act included a provision providing an Employee Retention tax credit, which would offset employment taxes, for qualified companies and wages.  The Company has recorded approximately $0.7 million in credits during the period ended June 30, 2020.

NOTE 9 – STOCKHOLDER'S EQUITY
Pursuant to the Company's 2019 Equity Incentive Plan, the Company has granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.
Share-based Compensation
Share-based compensation expenses are recorded in corporate expenses and were $4.2 million, $3.0 million and $8.8 million for the Successor Company for three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020, respectively. Share-based compensation expenses for the Predecessor Company were $0.1 million and $0.5 million for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019, respectively.
As of June 30, 2020, there was $48.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 3 years.
Successor Common Stock and Special Warrants
The Company is authorized to issue 2,100,000,000 shares, consisting of (a) 1,000,000,000 shares of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”), (b) 1,000,000,000 shares of Class B Common Stock, par value $0.001 per share (the “Class B Common Stock”), and (c) 100,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).
The following table presents the Successor Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of June 30, 2020:
June 30,
2020
(Unaudited)
Successor Class A Common Stock, par value $.001 per share, 1,000,000,000 shares authorized
61,432,341  
Successor Class B Common Stock, par value $.001 per share, 1,000,000,000 shares authorized
6,900,195  
Successor Special Warrants78,038,412  
  Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued146,370,948  
During the three and six months ended June 30, 2020, stockholders converted 145 and 6,060 shares of the Class B common stock into Class A common stock, respectively.
Special Warrants
Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Successor Class A common stock or Successor Class B common stock at an exercise price of $0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Successor Company's outstanding Class A common stock, (b) more than 22.5 percent of the Successor Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the  Company exceeding any foreign ownership threshold set by the FCC pursuant to a declaratory ruling or specific approval requirement or (d) the Company violating any provision of the Communications Act or restrictions
26


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement.  The Communications Act and FCC regulations prohibit foreign entities or individuals from indirectly (i.e., through a parent company) owning or voting more than 25 percent of a licensee’s equity, unless the FCC determines that greater indirect foreign ownership is in the public interest.  As described further in Note 7 above, on July 25, 2019, the Company filed a PDR requesting FCC consent to exceed the 25 percent foreign ownership and voting benchmarks that currently apply to us, on which the FCC has requested public comment.  The public comment period closed on March 26, 2020.  The FCC referred our PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.  On June 29, 2020, Team Telecom indicated its consent to the grant by the FCC of the PDR. We cannot predict whether the FCC will issue a ruling granting the PDR, the amount of foreign equity and voting rights any such a ruling will allow us to have, or how long it will take to obtain such a ruling.

During the three and six months ended June 30, 2020, stockholders exercised 877,263 and 3,003,854 Special Warrants for an equivalent number of shares of Class A common stock, respectively. During the three and six months ended June 30, 2020, stockholders exercised 729 and 1,345 Special Warrants for an equivalent number of shares of Class B common stock, respectively.
Stockholder Rights Plan
On May 5, 2020, the Company’s Board of Directors (the “Board”) approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”) in order to protect the best interests of all Company stockholders during the current period of high equity-market volatility and price disruption.

Pursuant to the stockholder rights plan, the Board has declared a dividend distribution of one right on each outstanding share of the Company’s Class A common stock, share of Class B common stock and special warrant issued in connection with the Plan of Reorganization. The record date for such dividend distribution was May 18, 2020.

Under the Stockholder Rights Plan, subject to certain exceptions, the rights will generally be exercisable only if, in a transaction not approved by the Board, a person or group acquires beneficial ownership of 10% or more of the Company’s Class A common stock (or 20% in the case of certain passive investors), including through such person’s ownership of the convertible Class B common stock and/or special warrants, as further detailed in the Stockholder Rights Plan. In that situation, each holder of a right (other than the acquiring person or group) will have the right to purchase, upon payment of the exercise price, a number of shares of the Company’s Class A common stock, Class B common stock or special warrants, as applicable, having a market value of twice such price. In addition, the Stockholder Rights Plan contains a similar provision if the Company is acquired in a merger or other business combination after an acquiring person acquires beneficial ownership of 10% or more of the Company’s Class A common stock (or 20% in the case of certain passive investors).

The Stockholder Rights Plan has a duration of less than one year, expiring on May 5, 2021. The Stockholder Rights Plan may also be terminated, or the rights may be redeemed, by action of the Company prior to the scheduled expiration date under certain circumstances, including if the Board determines that market and other conditions warrant, which the Board intends to monitor. The adoption of the Stockholder Rights Plan will not be a taxable event and will not have any impact on the Company’s financial reporting.
27


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Computation of Income (Loss) per Share
(In thousands, except per share data)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
 202020192019
NUMERATOR:  
Net income (loss) attributable to the Company – common shares$(197,317) $38,793  $11,298,524  
Exclude:
  Income from discontinued operations, net of
tax		$—  $—  $1,854,677  
  Noncontrolling interest from discontinued operations, net of tax - common shares
—  —  (2,190) 
Total income from discontinued operations, net of tax - common shares
$—  $—  $1,852,487  
Income (loss) from continuing operations$(197,317) $38,793  $9,446,037  
DENOMINATOR(1):
 
Weighted average common shares outstanding - basic145,963  145,275  85,652  
  Stock options and restricted stock(2):
—  23  —  
Weighted average common shares outstanding - diluted145,963  145,298  85,652  
Net income (loss) attributable to the Company per common share: 
From continuing operations - Basic$(1.35) $0.27  $110.28  
From discontinued operations - Basic$—  $—  $21.63  
From continuing operations - Diluted$(1.35) $0.27  $110.28  
From discontinued operations - Diluted$—  $—  $21.63  

28


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In thousands, except per share data)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
NUMERATOR:
Net income (loss) attributable to the Company – common shares$(1,886,053) $38,793  $11,184,141  
Exclude:
Income from discontinued operations, net of tax$—  $—  $1,685,123  
  Noncontrolling interest from discontinued operations, net of tax - common shares
—  —  19,028  
Total income from discontinued operations, net of tax - common shares$—  $—  $1,704,151  
Income (loss) from continuing operations$(1,886,053) $38,793  $9,479,990  
DENOMINATOR(1):
Weighted average common shares outstanding - basic145,788  145,275  86,241  
Stock options and restricted stock(2):
—  23  —  
Weighted average common shares outstanding - diluted145,788  145,298  86,241  
Net income (loss) attributable to the Company per common share:
From continuing operations - Basic$(12.94) $0.27  $109.92  
From discontinued operations - Basic$—  $—  $19.76  
From continuing operations - Diluted$(12.94) $0.27  $109.92  
From discontinued operations - Diluted$—  $—  $19.76  
(1)All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020.
(2)Outstanding equity awards representing 7.7 million, 1.3 million and 7.9 million shares of Class A common stock of the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 were not included in the computation of diluted earnings per share because to do so would have been antidilutive. Outstanding equity awards representing 5.9 million shares of Class A common stock of the Predecessor Company for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 10 – SEGMENT DATA
The Company’s primary business is included in its Audio segment. Revenue and expenses earned and charged between Audio, Corporate and the Company's Audio & Media Services businesses are eliminated in consolidation.  The Audio segment provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses.  The Audio & Media Services business provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS).  Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses. Share-based payments are recorded in corporate expense.
In connection with a reorganization of the Company’s management structure after the Separation and emergence from the Chapter 11 Cases, the Company revised its segment reporting, as discussed in Note 1 and all prior periods have been restated to conform to this presentation.
29


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table presents the Company's segment results for the Successor Company for the periods presented:
Successor Company
(In thousands)AudioAudio & Media ServicesCorporate and other reconciling itemsEliminationsConsolidated
Three Months Ended June 30, 2020
Revenue$450,344  $39,251  $—  $(1,947) $487,648  
Direct operating expenses243,976  7,304  —  (1,414) 249,866  
Selling, general and administrative expenses
229,245  32,510  —  (536) 261,219  
Corporate expenses—  —  26,416  3  26,419  
Depreciation and amortization
94,898  5,838  2,611  —  103,347  
Impairment charges—  —  5,378  —  5,378  
Other operating expense, net
—  —  (506) —  (506) 
Operating loss$(117,775) $(6,401) $(34,911) $—  $(159,087) 
Intersegment revenues$168  $1,779  $—  $—  $1,947  
Capital expenditures $14,198  $961  $2,723  $—  $17,882  
Share-based compensation expense
$—  $—  $4,218  $—  $4,218  
Period from May 2, 2019 through June 30, 2019
Revenue596,230  40,537  —  (1,121) 635,646  
Direct operating expenses193,952  4,872  —  (52) 198,772  
Selling, general and administrative expenses
196,834  24,458  —  (1,061) 220,231  
Corporate expenses—  —  26,826  (8) 26,818  
Depreciation and amortization
54,692  3,619  1,072  —  59,383  
Other operating income, net
—  —  3,246  —  3,246  
Operating income (loss)$150,752  $7,588  $(24,652) $—  $133,688  
Intersegment revenues$112  $1,009  $—  $—  $1,121  
Capital expenditures$13,554  $830  $3,051  $—  $17,435  
Share-based compensation expense
$—  $—  $3,039  $—  $3,039  
Six Months Ended June 30, 2020
Revenue$1,172,729  $99,478  $—  $(3,925) $1,268,282  
Direct operating expenses538,763  15,507  —  (2,772) 551,498  
Selling, general and administrative expenses
539,301  67,184  —  (1,125) 605,360  
Corporate expenses—  —  66,396  (28) 66,368  
Depreciation and amortization
183,699  11,534  4,882  —  200,115  
Impairment charges—  —  1,733,235  —  1,733,235  
Other operating expense, net
—  —  (1,572) —  (1,572) 
Operating income (loss)$(89,034) $5,253  $(1,806,085) $—  $(1,889,866) 
Intersegment revenues $335  $3,590  $—  $—  $3,925  
Capital expenditures$32,800  $1,623  $5,123  $—  $39,546  
Share-based compensation expense
$—  $—  $8,843  $—  $8,843  

30


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table presents the Company's segment results for the Predecessor Company for the periods presented. The presentation of prior period amounts has been restated to conform to the presentation of the Successor period.
Predecessor Company
(In thousands)AudioAudio and Media ServicesCorporate and other reconciling itemsEliminationsConsolidated
Period from April 1, 2019 through May 1, 2019
Revenue$260,461  $17,970  $—  $(757) $277,674  
Direct operating expenses95,983  2,549  —  (222) 98,310  
Selling, general and administrative expenses
91,551  11,276  —  (531) 102,296  
Corporate expenses—  —  14,510  (4) 14,506  
Depreciation and amortization
11,749  1,204  1,591  —  14,544  
Other operating expense, net
—  —  (127) —  (127) 
Operating income (loss)
$61,178  $2,941  $(16,228) $—  $47,891  
Intersegment revenues$56  $701  $—  $—  $757  
Capital expenditures$11,137  $576  $1,531  $—  $13,244  
Share-based compensation expense
$—  $—  $105  $—  $105  
Period from January 1, 2019 through May 1, 2019
Revenue$1,006,677  $69,362  $—  $(2,568) $1,073,471  
Direct operating expenses371,989  9,559  —  (364) 381,184  
Selling, general and administrative expenses
383,342  46,072  —  (2,184) 427,230  
Corporate expenses53,667  (20) 53,647  
Depreciation and amortization
41,233  5,266  6,335  —  52,834  
Impairment charges—  —  91,382  —  91,382  
Other operating expense, net
—  —  (154) —  (154) 
Operating income (loss)
$210,113  $8,465  $(151,538) $—  $67,040  
Intersegment revenues$243  $2,325  $—  $—  $2,568  
Capital expenditures$31,177  $1,263  $3,757  $—  $36,197  
Share-based compensation expense
$—  $—  $498  $—  $498  

31


IHEARTMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 11 – REORGANIZATION ITEMS, NET
Reorganization items incurred as a result of the Chapter 11 Cases are presented separately in the accompanying statements of operations for the periods presented and were as follows:
(In thousands)Successor CompanyPredecessor Company
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,
202020192019
Professional fees and other bankruptcy related costs$—  $—  $(121,374) 
Net gain on settlement of Liabilities subject to compromise—  —  7,192,379  
Impact of fresh start adjustments—  —  2,430,944  
Other items, net —  —  (4,005) 
Reorganization items, net$—  $—  $9,497,944  
Cash payments for Reorganization items, net$26  $13,049  $149,346  

(In thousands)Successor CompanyPredecessor Company
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,
202020192019
Professional fees and other bankruptcy related costs$—  $—  $(157,487) 
Net gain on settlement of Liabilities subject to compromise—  —  7,192,374  
Impact of fresh start adjustments—  —  2,430,944  
Other items, net—  —  (4,005) 
Reorganization items, net$—  $—  $9,461,826  
Cash payments for Reorganization items, net$443  $13,049  $183,291  
Professional fees included in Reorganization items, net represent fees for post-petition expenses related to the Chapter 11 Cases.
The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $1.9 million, $9.1 million and $4.5 million for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and six months ended June 30, 2020, respectively, which are included within Other income (expense), net in the Company's Consolidated Statements of Comprehensive Income (Loss).

32

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Format of Presentation
Management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Item 1 of this Quarterly Report on Form 10-Q. 
Our primary business provides media and entertainment services via broadcast and digital delivery, including our networks businesses, through our Audio segment. We also operate businesses that provide audio and media services, through our Audio and Media Services segment, including our full-service media representation business, Katz Media Group (“Katz Media”) and our provider of scheduling and broadcast software and services, Radio Computing Services ("RCS").
Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms including podcasting, networks and live events. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience. We believe that our ability to generate cash flow from operations from our business initiatives and our current cash on hand will provide sufficient resources to fund and operate our business, fund capital expenditures and other obligations and make interest payments on our long-term debt for at least the next 12 months.
Description of our Business
Our Audio strategy centers on delivering entertaining and informative content where our listeners want to find us across multiple platforms, including broadcast, digital and live mobile, as well as events. Our primary source of revenue is derived from selling local and national advertising time on our radio stations, with contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics. We work closely with our advertising and marketing partners to develop tools and leverage data to enable advertisers to effectively reach their desired audiences. We continue to expand the choices for listeners and we deliver our content and sell advertising across multiple distribution channels, including digitally via our iHeartRadio mobile application and other digital platforms which reach national, regional and local audiences. We also generate revenue from network syndication, our nationally recognized live events, our station websites and other miscellaneous transactions.
Our advertising revenue is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP.  A recession or downturn in the U.S. economy may have a significant impact on the Company’s ability to generate revenue. In light of the novel coronavirus pandemic (“COVID-19”) and the resulting recession impacting the U.S. economy, our revenue for the six months ended June 30, 2020 has declined significantly compared to the comparable period in 2019 and we expect our full year 2020 revenue to decline compared to 2019, largely as a result of a decline in consumer and business spending and the related impact to the demand for advertising and pricing pressure resulting from greater competition for available advertising dollars. Beginning in March 2020 and continuing in the three months ended June 30, 2020, we saw a sharp decline in each of our Broadcast radio, Networks, and Sponsorships revenue streams. We also saw a sharp decline in revenues from our Audio and Media Services, particularly in Katz Media, as a result of lower advertising spending. This decrease was partially offset by a $1.7 million increase in political revenue.
When the business environment recovers, we expect that the traditional promotional use of radio to be a strong benefit to us. As businesses reopen both nationally and locally, we believe that we are advantaged by our unparalleled reach and the live and local trusted voices that advertisers need to get their messages out quickly.
In the first quarter of 2020, we announced our modernization initiatives, which will take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. We anticipate to incur approximately $50 million of restructuring costs related to achieving our cost savings in 2020. Our investments in modernization are expected to deliver annualized run-rate cost savings of approximately $100 million by mid-year 2021, and we expect to achieve approximately 50% of our anticipated run-rate savings in 2020. In addition, in response to the COVID-19 pandemic, we have taken significant steps to significantly reduce our capital and operating expenditures for the remainder of 2020. These initiatives are expected to generate approximately $200 million in operating cost savings in 2020. For more information, please see the Liquidity and Capital Resources - Anticipated Cash Requirements section below.
On March 26, 2020, we announced the withdrawal of our previously issued financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to COVID-19. As a precautionary measure to preserve financial flexibility in light of this uncertainty, we borrowed $350.0 million principal amount under our senior secured asset-
33

based revolving credit facility (the “ABL Facility”). During the three months ended June 30, 2020, we repaid $115.0 million principal amount drawn under our ABL Facility, resulting in a balance outstanding of $235.0 million as of June 30, 2020.
In July 2020, iHeartCommunications issued $450.0 million of incremental term loans pursuant to an amendment (the “Amendment No. 2”) to the credit agreement (as amended, the “Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”), resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds was used to repay the remaining balance outstanding on our ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. For more information please refer to the “Liquidity and Capital Resources section” in this MD&A.

Impairment Charges
As a result of uncertainty related to COVID-19 and its negative impact on our business and the public trading values of our debt and equity, we were required to perform interim impairment tests on our long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020. The interim impairment tests resulted in a non-cash impairment of our Federal Communication Commission (“FCC”) licenses of $502.7 million and a non-cash impairment charge of $1.2 billion to reduce goodwill during the three months ended March 31, 2020.
Based on management’s forecasted future cash flows and assessment of market values of our debt and equity securities, market interest rates affecting our weighted average cost of capital (WACC) and other economic factors, additional interim impairment testing of our intangible assets and indefinite-lived intangible was not required as of June 30, 2020. For more information, see Note 5, Property, Plant and Equipment, Intangible Assets and Goodwill to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description of the impairment charges.
While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our long-lived assets, indefinite-lived FCC licenses and reporting units, it is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding the magnitude of the economic downturn caused by the COVID-19 pandemic, as well as the timing of any recovery. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.
Emergence from Bankruptcy
On March 14, 2018, iHeartMedia, Inc. (the “Company,” "iHeartMedia," "we" or "us"), iHeartCommunications, Inc. (“iHeartCommunications”) and certain of the Company's direct and indirect domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”). On April 28, 2018, the Debtors filed a plan of reorganization and a related disclosure statement (as amended, the “Disclosure Statement”) with the Bankruptcy Court, which was subsequently amended by filing the second, third, fourth and fifth amended Plan of Reorganization and amended versions of the Disclosure Statement. On January 22, 2019, the Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of iHeartMedia, Inc. and Its Debtor Affiliates (as further modified, the “Plan of Reorganization”) was confirmed by the Bankruptcy Court.
On May 1, 2019 (the “Effective Date”), the “Debtors emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which Clear Channel Outdoor Holdings, Inc. (“CCOH”), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims (“Claimholders”) in connection with the Chapter 11 Cases was effected. The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million ABL Facility and (B) issuing to certain Claimholders, on account of their claims, the approximately $3.5 billion aggregate principal amount Term Loan Facility, approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “6.375% Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications’ Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc. (“iHeart Operations”) in connection with the Separation.
34

All of the existing equity of the Company was canceled on the Effective Date pursuant to the Plan of Reorganization. 
Beginning on the Effective Date, the Company applied fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after May 1, 2019 are not comparable with the consolidated financial statements on or prior to that date.
Combined Results
Our financial results for the periods from April 1, 2019 through May 1, 2019 and from January 1, 2019 through May 1, 2019 are referred to as those of the “Predecessor” period. Our financial results for the period from May 2, 2019 through June 30, 2019, the three months ended June 30, 2020 and the six months ended June 30, 2020 are referred to as those of the “Successor” period. Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although GAAP requires that we report on our results for the period from April 1, 2019 through May 1, 2019, from January 1, 2019 through May 1, 2019 and the period from May 2, 2019 through June 30, 2019 separately, management views the Company’s operating results for the three and six months ended June 30, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison to our results in the three and six months ended June 30, 2020.

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

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

Executive Summary
As 2020 began, we saw strong growth across our revenue streams in January and February, particularly from digital and from political advertising. However, while digital and political revenue continued to grow, the economic downturn as a result of the COVID-19 pandemic had a significant and negative impact on our other revenue streams beginning in March 2020 and continuing through the second quarter of 2020, including broadcast radio which is our largest revenue stream. A significant decline in advertising spend and the postponement or cancellation of certain tent-pole events drove an overall decrease in revenue for the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019. The extent of the economic downturn and the timing of recovery, as well as the future impact on our operations, are subject to significant uncertainty. In an effort to further strengthen the Company's financial flexibility and efficiently manage through the COVID-19 pandemic, we implemented measures to cut costs and preserve cash. For additional information on these actions, see the Liquidity and Capital Resources - Anticipated Cash Requirements section below.
The key developments that impacted our business during the quarter are summarized below:
•Effects of the COVID-19 pandemic significantly adversely impacted revenue for all revenue streams, with the exception of digital and political revenue, which increased during the quarter.
•Revenue of $487.6 million decreased 46.6% during the quarter ended June 30, 2020 compared to Revenue of $913.3 million in the same period in 2019.
•Operating loss of $159.1 million was down from Operating income of $181.6 million in the prior year’s quarter.
•Net loss of $197.3 million decreased from Net income of $11,339.5 million in the prior year's quarter.
•Adjusted EBITDA(1) of $(29.3) million, was down from $262.9 million year-over-year.
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•Cash flows provided by operating activities from continuing operations of $11.4 million increased from Cash flows used for operating activities of $61.0 million in the same period in 2019.
•Free cash flow(2) (used for) continuing operations of $(6.5) million decreased from $(91.6) million in the same period in 2019.
•Repaid $115.0 million of principal amount drawn under our ABL Facility, resulting in a balance outstanding of $235.0 million as of June 30, 2020.
•On July 16, 2020, we issued $450.0 million of incremental Term Loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.


The table below presents a summary of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,%
2020201920192019Change
Revenue$487,648  $635,646  $277,674  $913,320  (46.6)%
Operating income (loss)$(159,087) $133,688  $47,891  $181,579  NM
Net income (loss)$(197,317) $38,793  $11,300,714  $11,339,507  NM
Cash provided by (used for) operating activities from continuing operations$11,369  $83,201  $(144,171) $(60,970) NM
Adjusted EBITDA(1)
$(29,283) $194,753  $68,097  $262,850  NM
Free cash flow from (used for) continuing operations(2)
$(6,513) $65,766  $(157,415) $(91,649) NM
(1) For a definition of Adjusted EBITDA and a reconciliation to Operating income (loss), the most closely comparable GAAP measure, and to Net income (loss), please see "Reconciliation of Operating Income to Adjusted EBITDA" and "Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA" in this MD&A.
(2) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations” in this MD&A.


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Results of Operations
The tables below present the comparison of our historical results of operations for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Revenue$487,648  $635,646  $277,674  $913,320  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)
249,866  198,772  98,310  297,082  
Selling, general and administrative expenses (excludes depreciation and amortization)
261,219  220,231  102,296  322,527  
Corporate expenses (excludes depreciation and amortization)
26,419  26,818  14,506  41,324  
Depreciation and amortization103,347  59,383  14,544  73,927  
Impairment charges5,378  —  —  —  
Other operating income (expense), net(506) 3,246  (127) 3,119  
Operating income (loss)(159,087) 133,688  47,891  181,579  
Interest expense (income), net81,963  69,711  (400) 69,311  
Gain on investments, net1,280  —  —  —  
Equity in loss of nonconsolidated affiliates(31) (24) (59) (83) 
Other income (expense), net(1,258) (9,157) 150  (9,007) 
Reorganization items, net—  —  9,497,944  9,497,944  
Income (loss) from continuing operations before income taxes(241,059) 54,796  9,546,326  9,601,122  
Income tax benefit (expense)43,742  (16,003) (100,289) (116,292) 
Income (loss) from continuing operations(197,317) 38,793  9,446,037  9,484,830  
Income from discontinued operations, net of tax—  —  1,854,677  1,854,677  
Net income (loss)(197,317) 38,793  11,300,714  11,339,507  
Less amount attributable to noncontrolling interest
—  —  2,190  2,190  
Net income (loss) attributable to the Company
$(197,317) $38,793  $11,298,524  $11,337,317  


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(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Revenue$1,268,282  $635,646  $1,073,471  $1,709,117  
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)
551,498  198,772  381,184  579,956  
Selling, general and administrative expenses (excludes depreciation and amortization)
605,360  220,231  427,230  647,461  
Corporate expenses (excludes depreciation and amortization)
66,368  26,818  53,647  80,465  
Depreciation and amortization200,115  59,383  52,834  112,217  
Impairment charges1,733,235  —  91,382  91,382  
Other operating income (expense), net(1,572) 3,246  (154) 3,092  
Operating income (loss)(1,889,866) 133,688  67,040  200,728  
Interest expense (income), net172,052  69,711  (499) 69,212  
Loss on investments, net(8,675) —  (10,237) (10,237) 
Equity in loss of nonconsolidated affiliates(595) (24) (66) (90) 
Other income (expense), net(9,118) (9,157) 23  (9,134) 
Reorganization items, net—  —  9,461,826  9,461,826  
Income (loss) from continuing operations before income taxes(2,080,306) 54,796  9,519,085  9,573,881  
Income tax benefit (expense)194,253  (16,003) (39,095) (55,098) 
Income (loss) from continuing operations(1,886,053) 38,793  9,479,990  9,518,783  
Income from discontinued operations, net of tax—  —  1,685,123  1,685,123  
Net income (loss)(1,886,053) 38,793  11,165,113  11,203,906  
Less amount attributable to noncontrolling interest
—  —  (19,028) (19,028) 
Net income (loss) attributable to the Company
$(1,886,053) $38,793  $11,184,141  $11,222,934  

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The tables below present the comparison of our revenue streams for the periods presented:
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,%
2020201920192019Change
Broadcast Radio$244,035  $390,540  $170,632  $561,172  (56.5)%
Digital 93,227  64,238  26,840  91,078  2.4 %
Networks96,330  105,426  50,889  156,315  (38.4)%
Sponsorship and Events14,809  31,790  10,617  42,407  (65.1)%
Audio and Media Services39,251  40,537  17,970  58,507  (32.9)%
Other1,943  4,236  1,483  5,719  (66.0)%
Eliminations(1,947) (1,121) (757) (1,878) 
  Revenue, total
$487,648  $635,646  $277,674  $913,320  (46.6)%


(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,%
2020201920192019Change
Broadcast Radio$705,695  $390,540  $657,864  $1,048,404  (32.7)%
Digital186,003  64,238  102,789  167,027  11.4 %
Networks230,907  105,426  189,088  294,514  (21.6)%
Sponsorship and Events44,157  31,790  50,330  82,120  (46.2)%
Audio and Media Services99,478  40,537  69,362  109,899  (9.5)%
Other5,967  4,236  6,606  10,842  (45.0)%
Eliminations(3,925) (1,121) (2,568) (3,689) 
  Revenue, total
$1,268,282  $635,646  $1,073,471  $1,709,117  (25.8)%

Consolidated results for the three months ended June 30, 2020 compared to the combined results for the three months ended June 30, 2019 and consolidated results for the six months ended June 30, 2020 compared to the combined results for the six months ended June 30, 2019 were as follows:

Revenue
Revenue decreased $425.7 million during the three months ended June 30, 2020 compared to the same period of 2019. The decrease in Revenue is primarily attributable to the effects of COVID-19, which began to unfold into a global pandemic in early March of 2020, resulting in a significant economic downturn due to the shut-down of non-essential businesses and shelter-in-place orders. The impact continued through the second quarter of 2020, resulting in significant revenue declines impacting most of our revenue streams primarily as a result of a decrease in broadcast radio advertising spend. Broadcast revenue decreased $317.1 million, driven by a $188.7 million decrease in Local spot revenue and a $103.7 million decrease in National spot revenue. Revenue from our Network businesses, including both Premiere and Total Traffic & Weather, was also impacted by the downturn, resulting in a decrease of $60.0 million. Revenue from Sponsorship and Events decreased by $27.6 million, primarily as a result of the postponement or cancellations of events in response to the COVID-19 pandemic. Digital revenue increased $2.1 million, driven by continued growth in podcasting. Audio and Media Services revenue decreased $19.3 million primarily due to the effects of COVID-19 on advertising spend. This decrease was partially offset by a $1.7 million increase in political revenue as a result of 2020 being a presidential election year.
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Revenue decreased $440.8 million during the six months ended June 30, 2020 compared to the same period of 2019. The decrease in Revenue is primarily attributable to the effects of COVID-19, which began to unfold into a global pandemic in early March of 2020, resulting in a significant economic downturn due to the shut-down of non-essential businesses and shelter-in-place orders. Strong Revenue growth in January and February was followed by a sharp decline in revenue in March, which continued through the second quarter of 2020, resulting in significant revenue declines impacting most of our revenue streams, primarily as a result of a decrease in broadcast radio advertising spend. Broadcast revenue decreased $342.7 million, driven by a $214.7 million decrease in Local spot revenue and a $121.9 million decrease in National spot revenue. The decrease in Broadcast revenue was offset by a $15.5 million increase in political revenue as a result of 2020 being a presidential election year. Revenue from our Network businesses, including both Premiere and Total Traffic & Weather, was also impacted by the downturn, resulting in a decrease of $63.6 million. Revenue from Sponsorship and Events decreased by $38.0 million, primarily as a result of the postponement or cancellations of events in response to the COVID-19 pandemic. Digital revenue increased $19.0 million, driven by continued growth in podcasting. Audio and Media Services revenue decreased $10.4 million primarily due to the effects of COVID-19 on advertising spend. This decrease was offset by an $8.9 million increase in political revenue.

Direct Operating Expenses
Direct operating expenses decreased $47.2 million during the three months ended June 30, 2020 compared to the same period of 2019. The decrease in Direct operating expenses was driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. In addition, variable operating expenses, including music license and performance royalty fees, decreased in relation to lower revenue recognized during the period. Variable expenses related to events also decreased as a result of the postponement or cancellation of events in response to the COVID-19 pandemic.
Direct operating expenses decreased $28.5 million during the six months ended June 30, 2020 compared to the same period of 2019. The decrease in Direct operating expenses was driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. In addition, variable operating expenses, including music license and performance royalty fees, decreased in relation to lower revenue recognized during the period. Variable expenses related to events also decreased as a result of the postponement or cancellation of events in response to the COVID-19 pandemic. The decrease in Direct operating expenses was partially offset by severance payments and other costs specific to our modernization initiatives, which were incurred mainly in January and February, as well as higher content costs from higher podcasting and digital subscription revenue.

Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses decreased $61.3 million during the three months ended June 30, 2020 compared to the same period of 2019. The decrease in SG&A expenses was driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic, along with lower sales commissions, which were impacted by the decrease in revenue. Trade and barter expenses also decreased primarily driven by lower Local trade expenses, which declined in line with lower Trade revenue. The decrease in SG&A expenses was partially offset by higher bad debt expense.
SG&A expenses decreased $42.1 million during the six months ended June 30, 2020 compared to the same period of 2019. The decrease in SG&A expenses was driven primarily by lower employee compensation expenses resulting from cost reduction initiatives taken in response to the COVID-19 pandemic, along with lower sales commissions, which were impacted by the decrease in revenue. Trade and barter expenses also decreased primarily driven by lower Local trade expenses, which declined in line with lower Trade revenue. The decrease in SG&A expenses was partially offset by costs incurred in relation to our modernization initiatives announced in the first quarter of 2020 and higher bad debt expense.
Corporate Expenses
Corporate expenses decreased $14.9 million during the three months ended June 30, 2020 compared to the same period of 2019, as a result of lower employee compensation, including variable incentive expenses and employee benefits, resulting from cost reduction initiatives taken in response to the COVID-19 pandemic.
Corporate expenses decreased $14.1 million during the six months ended June 30, 2020 compared to the same period of 2019, as a result of lower employee compensation, including variable incentive expenses and employee benefits, resulting from cost reduction initiatives taken in response to the COVID-19 pandemic. The decrease in Corporate expenses was partially offset by costs incurred to support our modernization initiatives in January and February, as well as higher share-based compensation expense, which increased $5.3 million as a result of our new post-emergence equity compensation plan.

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Depreciation and Amortization
Depreciation and amortization increased $29.4 million and $87.9 million during the three and six months ended June 30, 2020, compared to the same periods of 2019, respectively, primarily as a result of the application of fresh start accounting, which resulted in significantly higher values of our tangible and intangible long-lived assets.
Impairment Charges
We perform our annual impairment test on our goodwill and FCC licenses as of July 1 of each year. In addition, we test for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.  As discussed above, as a result of the assumed potential adverse effects caused by the COVID-19 pandemic on estimated future cash flows, we recognized non-cash impairment charges to our indefinite-lived intangible assets and goodwill of $1.7 billion in the six months ended June 30, 2020.
We recognized non-cash impairment charges of $91.4 million in the six months ended June 30, 2019 on our indefinite-lived FCC licenses as a result of an increase in our weighted average cost of capital. See Note 5, Property, Plant and Equipment, Intangible Assets and Goodwill, to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description of the impairment charges.
Other Operating Income (Expense), Net
Other operating expense, net of $0.5 million and Other operating income, net of $3.1 million for the three months ended June 30, 2020 and 2019, respectively, and Other operating expense, net of $1.6 million and Other operating income, net of $3.1 million for the six months ended June 30, 2020 and 2019, respectively, relate to net gains and losses recognized on asset disposals.
Interest Expense
Interest expense increased $12.7 million and $102.8 million during the three and six months ended June 30, 2020, respectively, compared to the same periods of 2019 as a result of the interest recognized on the new debt issued in connection with our emergence from the Chapter 11 Cases. During the period from March 14, 2018 to May 1, 2019, while the Company was a debtor-in-possession, no interest expense was recognized on pre-petition debt.

In the Predecessor periods, we ceased to accrue interest expense on long-term debt, which was reclassified as Liabilities subject to compromise as of March 14, 2018 (the “Petition Date”), resulting in $135.9 million and $533.4 million in contractual interest not being accrued in the three and six months ended June 30, 2019, respectively.

Gain (Loss) on Investments, net
During the three and six months ended June 30, 2020, we recognized a gain on investments, net of $1.3 million and a loss on investments of $8.7 million, respectively. The gain on investments, net recognized during the quarter primarily related to a gain on one of our marketable equity securities. The loss on investments, net recognized during the six months ended June 30, 2020 was primarily in connection with estimated credit losses and declines in the value of our investments.

During the six months ended June 30, 2019, we recognized a loss of $10.2 million, primarily in connection with declines in the value of our investments. We did not recognize any gain or loss on investments during the three months ended June 30, 2019.

Other Income (Expense), Net
Other expense, net was $1.3 million and $9.1 million for the three and six months ended June 30, 2020, respectively, which related to costs incurred to refinance our Term Loan Facility and professional fees incurred in connection with the Chapter 11 Cases in the Successor period. Such expenses were included within Reorganization items, net in the Predecessor period while the Company was a debtor-in-possession.

Other expense, net was $9.0 million and $9.1 million for the three and six months ended June 30, 2019, respectively. Amounts in the six months ended June 30, 2019 related primarily to professional fees incurred directly in connection with the Chapter 11 Cases before the Petition Date. Such expenses were included within Reorganization items, net in the post-petition period while the Company was a debtor-in-possession.

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Reorganization Items, Net

        During the three and six months ended June 30, 2019, we recognized Reorganization items, net of $9,497.9 million and $9,461.8 million related to the Chapter 11 Cases, which consisted primarily of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities. In addition, Reorganization items, net included professional fees recognized between the Petition Date and the Effective Date in connection with the Chapter 11 Cases.

Income Tax Benefit (Expense)

        The effective tax rate for the Successor Company for the three and six months ended June 30, 2020 was 18.1% and 9.3%, respectively. The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the impairment charges discussed above. The deferred tax benefit primarily consists of $125.5 million related to the FCC license impairment charges recorded during the period.

The effective tax rate for the Successor Company for the Period from May 2, 2019 through June 30, 2019 was 29.2%. The effective tax rate for continuing operations of the Predecessor Company for Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) was 1.1% and 0.4%, respectively. The income tax expense for the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss carryforwards from the cancellation of debt income realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.

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Income from Discontinued Operations, Net

        During the three and six months ended June 30, 2019, we recognized Income from discontinued operations, net of tax of $1,854.7 million and $1,685.1 million, respectively, related to the separation of our domestic and international outdoor advertising businesses, which were previously reported as the Americas outdoor and International outdoor segments prior to the Separation.

Net Income (Loss) Attributable to the Company

        Net loss attributable to the Company decreased $11,534.6 million to $197.3 million during the three months ended June 30, 2020 compared to Net income attributable to the Company of $11,337.3 million during the three months ended June 30, 2019, primarily as a result of the $9.5 billion gain from Reorganization items net related to the Chapter 11 Cases in the 2019 period, the $1.9 billion gain on disposal of our Outdoor business in the 2019 period and due to the other factors discussed above.

Net loss attributable to the Company decreased $13,109.0 million to $1,886.1 million during the six months ended June 30, 2020 compared to Net income attributable to the Company of $11,222.9 million during the six months ended June 30, 2019, primarily as a result of the $9.5 billion gain from Reorganization items net related to the Chapter 11 Cases in the 2019 period, the $1.7 billion gain on disposal of our Outdoor business in the 2019 period and due to the other factors discussed above.
Reconciliation of Operating Income (Loss) to Adjusted EBITDA
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Operating income (loss)$(159,087) $133,688  $47,891  $181,579  
Depreciation and amortization(1)
103,347  59,383  14,544  73,927  
Impairment charges5,378  —  —  —  
Other operating (income) expense, net506  (3,246) 127  (3,119) 
Share-based compensation expense(2)
4,218  3,039  105  3,144  
Restructuring and reorganization expenses
16,355  1,889  5,430  7,319  
Adjusted EBITDA(3)
$(29,283) $194,753  $68,097  $262,850  

(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Operating income (loss)$(1,889,866) $133,688  $67,040  $200,728  
Depreciation and amortization(1)
200,115  59,383  52,834  112,217  
Impairment charges1,733,235  —  91,382  91,382  
Other operating (income) expense, net1,572  (3,246) 154  (3,092) 
Share-based compensation expense(2)
8,843  3,039  498  3,537  
Restructuring and reorganization expenses
57,157  1,889  13,241  15,130  
Adjusted EBITDA(3)
$111,056  $194,753  $225,149  $419,902  
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Reconciliation of Net (Income) Loss to EBITDA and Adjusted EBITDA
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Net income (loss)$(197,317) $38,793  $11,300,714  $11,339,507  
Income from discontinued operations, net of tax
—  —  (1,854,677) (1,854,677) 
Income tax (benefit) expense
(43,742) 16,003  100,289  116,292  
Interest expense (income), net
81,963  69,711  (400) 69,311  
Depreciation and amortization(1)
103,347  59,383  14,544  73,927  
EBITDA $(55,749) $183,890  $9,560,470  $9,744,360  
Reorganization items, net
—  —  (9,497,944) (9,497,944) 
Gain on investments, net
(1,280) —  —  —  
Other expense (income), net
1,258  9,157  (150) 9,007  
Equity in loss of nonconsolidated affiliates
31  24  59  83  
Impairment charges
5,378  —  —  —  
Other operating (income) expense, net
506  (3,246) 127  (3,119) 
Share-based compensation expense(2)
4,218  3,039  105  3,144  
Restructuring and reorganization expenses
16,355  1,889  5,430  7,319  
Adjusted EBITDA(3)
$(29,283) $194,753  $68,097  $262,850  

(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Net income (loss)$(1,886,053) $38,793  $11,165,113  $11,203,906  
Income from discontinued operations, net of tax
—  —  (1,685,123) (1,685,123) 
Income tax (benefit) expense
(194,253) 16,003  39,095  55,098  
Interest expense (income), net
172,052  69,711  (499) 69,212  
Depreciation and amortization(1)
200,115  59,383  52,834  112,217  
EBITDA$(1,708,139) $183,890  $9,571,420  $9,755,310  
Reorganization items, net
—  —  (9,461,826) (9,461,826) 
Loss on investments, net
8,675  —  10,237  10,237  
Other (income) expense, net
9,118  9,157  (23) 9,134  
Equity in loss of nonconsolidated affiliates
595  24  66  90  
Impairment charges
1,733,235  —  91,382  91,382  
Other operating (income) expense, net
1,572  (3,246) 154  (3,092) 
Share-based compensation expense(2)
8,843  3,039  498  3,537  
Restructuring and reorganization expenses
57,157  1,889  13,241  15,130  
Adjusted EBITDA(3)
$111,056  $194,753  $225,149  $419,902  
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(1)Increase in Depreciation and amortization is driven by the application of fresh start accounting, resulting in significantly higher value of our tangible and intangible assets.
(2)Increase in Share-based compensation expense is due to our new equity compensation plan entered into in connection with our Plan of Reorganization.
(3)We define Adjusted EBITDA as consolidated Operating income (loss) adjusted to exclude restructuring and reorganization expenses included within Direct operating expenses, SG&A expenses, Corporate expenses and share-based compensation expenses included within Corporate expenses, as well as the following line items presented in our Statements of Operations: Depreciation and amortization, Impairment charges and Other operating income (expense), net. Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude (Income) loss from discontinued operations, net of tax, Income tax (benefit) expense, Interest expense (income), net, Depreciation and amortization, Reorganization items, net, (Gain) Loss on investments, net, Other (income) expense, net, Equity in loss of nonconsolidated affiliates, net, Impairment charges, Other operating (income) expense, net, Share-based compensation expense, and restructuring and reorganization expenses. Restructuring expenses primarily include severance expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. Reorganization expenses primarily include the amortization of retention bonus amounts paid or payable to certain members of management directly as a result of the Reorganization. We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry. Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net income (loss) as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs. Because it excludes certain financial information compared with operating income and compared with consolidated net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations
(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Three Months Ended June 30,Period from May 2, 2019 through June 30,Period from April 1, 2019 through May 1,Three Months Ended June 30,
2020201920192019
Cash provided by (used for) operating activities from continuing operations$11,369  $83,201  $(144,171) $(60,970) 
Purchases of property, plant and equipment by continuing operations
(17,882) (17,435) (13,244) (30,679) 
Free cash flow from (used for) continuing operations(1)
$(6,513) $65,766  $(157,415) $(91,649) 

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(In thousands)Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Cash provided by (used for) operating activities from continuing operations$102,909  $83,201  $(7,505) $75,696  
Purchases of property, plant and equipment by continuing operations
(39,546) (17,435) (36,197) (53,632) 
Free cash flow from (used for) continuing operations(1)
$63,363  $65,766  $(43,702) $22,064  
(1)We define Free cash flow from (used for) continuing operations ("Free Cash Flow") as Cash provided by (used for) operating activities from continuing operations less capital expenditures, which is disclosed as Purchases of property, plant and equipment by continuing operations in the Company's Consolidated Statements of Cash Flows. We use Free Cash Flow, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow. We believe that Free Cash Flow is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. In addition, we believe that Free Cash Flow helps improve investors' ability to compare our liquidity with other companies. Since Free Cash Flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, Cash provided by operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.

Share-Based Compensation Expense
Historically, we had granted restricted shares of the Company's Class A common stock to certain key individuals. In connection with the effectiveness of our Plan of Reorganization, all unvested restricted shares were canceled.
Pursuant to the new equity incentive plan (the "Post-Emergence Equity Plan") we adopted in connection with the effectiveness of our Plan of Reorganization, we have granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.
Share-based compensation expenses are recorded in corporate expenses and were $4.2 million and $3.1 million for the three months ended June 30, 2020 and 2019, respectively, and $8.8 million and $3.5 million for the six months ended June 30, 2020 and 2019, respectively.
As of June 30, 2020, there was $48.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 3 years.
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LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following discussion highlights cash flow activities during the periods presented:
(In thousands) Successor CompanySuccessor CompanyPredecessor CompanyNon-GAAP Combined
Six Months Ended June 30,Period from May 2, 2019 through June 30,Period from January 1, 2019 through May 1,Six Months Ended June 30,
2020201920192019
Cash provided by (used for):
Operating activities$102,909  $83,201  $(40,186) $43,015  
Investing activities$(50,681) $(17,787) $(261,144) $(278,931) 
Financing activities$65,512  $(684) $(55,557) $(56,241) 
Free Cash Flow(1)
$63,363  $65,766  $(43,702) $22,064  

(1) For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations” in this MD&A.
Operating Activities
Cash provided by operating activities for the six months ended June 30, 2020 was $102.9 million compared to $43.0 million of cash provided by operating activities in the six months ended June 30, 2019. 
Cash provided by operating activities from continuing operations increased from $75.7 million in the six months ended June 30, 2019 to $102.9 million in the six months ended June 30, 2020 primarily as a result of changes in working capital balances, particularly accounts receivable, as well as accounts payable and accrued expenses, which were affected by the timing of payments. In addition, we paid $196.3 million during the six months ended June 30, 2019 in relation to Reorganization items, net. The increase in cash provided by operating activities was offset by a decrease in Revenue driven by the decline in advertising spend resulting from the economic slow-down impacted by the COVID-19 pandemic. In addition, cash interest payments made by continuing operations increased $181.2 million as a result of interest payments on our debt issued upon our emergence compared to pre-petition interest payments made in the prior year.  The Company ceased paying interest on long-term debt classified as Liabilities subject to compromise after the March 14, 2018 petition date. 

Investing Activities

Cash used for investing activities of $50.7 million during the six months ended June 30, 2020 primarily reflects $39.5 million in cash used for capital expenditures. We spent $32.8 million for capital expenditures in our Audio segment primarily related to IT infrastructure, $1.6 million in our Audio & Media Services segment, primarily related to acquired software and $5.1 million in Corporate primarily related to equipment and software purchases.
Cash used for investing activities of $278.9 million during the six months ended June 30, 2019 primarily reflects $222.4 million in cash used for investing activities from discontinued operations. In addition, we used $53.6 million for capital expenditures. We spent $44.7 million for capital expenditures in our Audio segment primarily related to IT infrastructure, $2.1 million in our Audio & Media Services segment, primarily related to acquired software and $6.8 million in Corporate primarily related to equipment and software purchases.

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Financing Activities
Cash provided by financing activities of $65.5 million during the six months ended June 30, 2020 primarily resulted from the $350.0 million draw on our ABL Facility, partially offset by the $150.0 million prepayment on our Term Loan Facility and repayments of $115.0 million of amounts drawn under the ABL Facility.
Cash used for financing activities was $56.2 million during the six months ended June 30, 2019 primarily resulted from the payment by iHeartCommunications to CCOH as CCOH's recovery of its claims under the Due from iHeartCommunications Note, partially offset by $60.0 million in proceeds received from the issuance of the iHeart Operations Preferred Stock.
Anticipated Cash Requirements
Our primary sources of liquidity are cash on hand, which consisted of $517.7 million as of June 30, 2020, cash flow from operations and borrowing capacity under our $450.0 million ABL Facility. On March 13, 2020, iHeartCommunications, Inc. (“iHeartCommunications”), our indirect wholly-owned subsidiary, borrowed $350.0 million principal amount under our $450.0 million ABL Facility as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of the uncertainty in the global economy resulting from the COVID-19 pandemic. During the three months ended June 30, 2020, we repaid $115.0 million principal amount drawn under our ABL Facility. As of June 30, 2020, iHeartCommunications had a borrowing base of $289.4 million and utilization of $235.0 million in outstanding borrowings and $41.2 million in outstanding letters of credit, resulting in $13.2 million of availability, such availability being subject to further restrictions contained within the credit agreement governing the ABL Facility.

In July 2020, the Company issued $450.0 million of incremental term loans, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. Following the repayment of all outstanding borrowings under the ABL Facility, due to restrictions contained primarily in our mandatorily redeemable preferred stock agreements, we had the ability to borrow approximately $160 million under the ABL Facility. Our cash balance was $517.7 million as of June 30, 2020. Together with our adjusted cash balance1 as of June 30, 2020 of approximately $708 million and our borrowing capacity under the ABL Facility, our total available liquidity2 was approximately $868 million. We will have the option to redeem the preferred stock beginning on May 1, 2022, or at an earlier date under certain circumstances in accordance with the documents governing the preferred stock instrument. We cannot determine the full extent of COVID-19’s impact on our business at this time and we are monitoring this rapidly evolving situation closely. While the challenges that COVID-19 has created for advertisers and consumers have had a significant impact on our revenue for the three and six months ended June 30, 2020 and has created a business outlook that is less clear in the near term, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months.

We expect that our primary anticipated uses of liquidity will be to fund our working capital, make interest payments, fund capital expenditures and maintain operations in light of the COVID-19 pandemic and other obligations. These other obligations include dividend payments to be due to the holder of iHeart Operations Preferred Stock, the terms of which are further described in Note 6, Long-term Debt to our financial statements included herein. We anticipate that we will have approximately $84 million of cash interest payments in the third quarter of 2020 and approximately $170 million of cash interest payments in the remainder of 2020.

As a result of certain favorable tax provisions in the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, we expect our 2020 cash income tax payments to be insignificant. As a result of the provisions regarding interest deductions and the deferral of certain employment taxes into future periods, cash tax payments in 2020 are expected to be approximately $100 million lower than they would been absent these favorable provisions.

Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms, including podcasting, networks and live events. Early in the first quarter of 2020, we implemented our modernization initiatives to take advantage of the significant investments we have made in new technologies to build an operating infrastructure that provides better quality and newer products and delivers new cost efficiencies. We have also invested in numerous technologies and businesses to increase the competitiveness of our inventory with our advertisers and our audience.

1 Adjusted for the impact of the amendment entered into in July 2020 to issue $450.0 million of incremental term loan commitments, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.
2 Total available liquidity defined as cash and cash equivalents plus available borrowings under the ABL Facility. We use total available liquidity to evaluate our capacity to access cash to meet obligations and fund operations.
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In response to the COVID-19 pandemic, in an effort to further strengthen the Company's financial flexibility and efficiently manage through the period of economic slowdown and uncertainty, the Company is continuing to take the following measures, which are expected to generate approximately $200 million in operating cost savings in 2020:
•Substantial reduction in certain operating expenses, such as suspension of new employee hiring, travel and entertainment expenses, 401(k) matching expenses, consulting fees and other discretionary expenses.
•Reduction in planned capital expenditures to a level that we believe will still enable the Company to make key investments to continue our strategic initiatives related to Smart Audio and Digital, including podcasting.
•Reduction in compensation for senior management and other employees of the Company, including a 100% reduction of the Company's Chief Executive Officer's annual base salary and bonus.
•Implementation of a furlough for certain employees that are non-essential at this time.
In addition, as a result of the decrease in revenue as a result of the COVID-19 pandemic, certain variable expenses including event production costs and sales commissions, as well as other variable compensation, showed a corresponding decrease.
We believe that our cash balance, our cash flow from operations and availability under our ABL Facility provide us with sufficient liquidity to fund our core operations, maintain key personnel and meet our other material obligations. In addition, none of our long-term debt includes maintenance covenants that could trigger early repayment. We fully appreciate the unprecedented challenges posed by the COVID-19 pandemic, however, we remain confident in our business, our employees and our strategy. We believe that our ability to generate cash flow from operations from our business initiatives, our current cash on hand and availability under the ABL Facility will provide sufficient resources to fund and operate our business, fund capital expenditures and other obligations and make interest payments on our long-term debt for at least the next 12 months. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms or at all in the future.
On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.

On July 16, 2020, iHeartCommunications entered into an additional amendment to the Credit Facility (“Amendment No. 2”) to provide for $450.0 million, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes. The incremental term loans issued pursuant to Amendment No. 2 have an interest rate of 4.00% for Eurocurrency Rate Loans and 3.00% for Base Rate Loans (subject to a LIBOR floor of 0.75% and Base Rate floor of 1.75%). Amendment No. 2 also modifies certain other provisions of the Credit Agreement.

In connection with the Separation and Reorganization, we entered into the following transactions which may require ongoing capital commitments:
Transition Services Agreement
Pursuant to the Transition Services Agreement between us, iHeartMedia Management Services, Inc. (“iHM Management Services”), iHeartCommunications and CCOH, for one year from the Effective Date, we have agreed to provide, CCOH with certain administrative and support services and other assistance which CCOH will utilize in the conduct of its business as such business was conducted prior to the Separation. As of June 30, 2020, most of these services have been successfully transitioned to CCOH. The Company continues to provide certain information systems and other limited support services. CCOH has requested extensions of the term for certain individual services, primarily related to information systems, for one-month periods through August 31, 2020 and may request further one-month extensions of such services up to May 1, 2021.
CCOH may terminate the Transition Services Agreement with respect to all or any individual service, in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently. For
49

additional information, see Note 2, Discontinued Operations to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description.
New Tax Matters Agreement
In connection with the Separation, we entered into the New Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.
The New Tax Matters Agreement requires that iHeartMedia and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against certain tax claims related to the Separation. In addition, the New Tax Matters Agreement requires that CCOH indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of CCOH and its subsidiaries.
Sources of Capital
As of June 30, 2020 and December 31, 2019, we had the following debt outstanding, net of cash and cash equivalents:
(In millions)Successor Company
June 30, 2020December 31, 2019
Term Loan Facility due 2026(1)(3)
$2,090.8  $2,251.3  
Asset-based Revolving Credit Facility due 2023(2)(3)
235.0  —  
6.375% Senior Secured Notes due 2026800.0  800.0  
5.25% Senior Secured Notes due 2027750.0  750.0  
4.75% Senior Secured Notes due 2028500.0  500.0  
Other Secured Subsidiary Debt23.6  21.0  
Total Secured Debt4,399.4  4,322.3  
8.375% Senior Unsecured Notes due 20271,450.0  1,450.0  
Other Subsidiary Debt6.3  12.5  
Long-term debt fees(18.6) (19.4) 
Total Debt5,837.1  5,765.4  
Less: Cash and cash equivalents517.7  400.3  
$5,319.4  $5,365.1  
(1)On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00%, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.
(2)On March 13, 2020, iHeartCommunications borrowed $350.0 million under the ABL Facility, the proceeds of which were invested as cash on the Balance Sheet. During the three months ended June 30, 2020, iHeartCommunications voluntarily repaid $115.0 million principal amount drawn under the ABL Facility. As of June 30, 2020, the ABL Facility had a borrowing base of $289.4 million and $235.0 million of outstanding borrowings and $41.2 million of outstanding letters of credit, resulting in $13.2 million of availability. Amounts available under the ABL Facility are calculated using a borrowing base calculated by reference to our outstanding accounts receivable. To the extent decreases in our accounts receivable result in the borrowing base decreasing to an amount below the amount drawn, we may be required to make a partial repayment of amounts outstanding under our ABL Facility.
(3)On July 16, 2020, iHeartCommunications issued $450.0 million of incremental term loans under the Amendment No. 2, resulting in net proceeds of $425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance was used to repay the remaining balance outstanding on the Company's ABL Facility of $235.0 million, with the remaining $190.6 million of the proceeds available for general corporate purposes.

For additional information regarding our debt refer to Note 6, Long-Term Debt.

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Supplemental Financial Information under Debt Agreements and Certificate of Designation Governing the iHeart Operations Preferred Stock
Pursuant to iHeartCommunications' material debt agreements, Capital I, the parent guarantor and a subsidiary of iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand. Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a wholly-owned direct subsidiary of iHeartMedia and the parent of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the three and six months ended June 30, 2020, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same periods.
        According to the certificate of designation governing the iHeart Operations Preferred Stock, iHeart Operations is required to provide certain supplemental financial information of iHeart Operations in comparison to the Company and its consolidated subsidiaries.  iHeart Operations and its subsidiaries comprised 86.3% of the Company's consolidated assets as of June 30, 2020. For the three and six months ended June 30, 2020, iHeart Operations and its subsidiaries comprised 83.6% and 85.0% of the Company's consolidated revenue, respectively.
Commitments, Contingencies and Guarantees
We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.  Please refer to “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.

SEASONALITY
Typically, the Audio segment experiences its lowest financial performance in the first quarter of the calendar year. We expect this trend to continue in the future. Due to this seasonality and certain other factors, the results for the interim periods may not be indicative of results for the full year.  In addition, our Audio segment and our Audio and media representation business are impacted by political cycles and generally experience higher revenues in congressional election years, and particularly in presidential election years. This cyclicality may affect comparability of results between years.

MARKET RISK
We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates and inflation.
Interest Rate Risk
A significant amount of our long-term debt bears interest at variable rates. Accordingly, our earnings will be affected by changes in interest rates. As of June 30, 2020, approximately 41% of our aggregate principal amount of long-term debt bore interest at floating rates. Assuming the current level of borrowings and assuming a 50% change in LIBOR, it is estimated that our interest expense for the six months ended June 30, 2020 would have changed by $6.6 million.
In the event of an adverse change in interest rates, management may take actions to mitigate our exposure.  However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions.  Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.
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Inflation

Inflation is a factor in the economies in which we do business and we continue to seek ways to mitigate its effect.  Inflation has affected our performance in terms of higher costs for wages, salaries and equipment.  Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our broadcasting stations in our Audio operations.
Critical Accounting Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. There have been no significant changes to our critical accounting policies and estimates disclosed in “Critical Accounting Estimates” of Item 7, Management’s Discussion and Analysis of our Annual Report on Form 10-K for the year ended December 31, 2019 except as disclosed in Note 1, Basis of Presentation to our consolidated financial statements.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf.  This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, the anticipated impacts of the COVID-19 pandemic on our business, financial position and results of operations, our Rights Plan, our expected costs, savings and timing of our modernization initiatives and other capital and operating expense reduction initiatives, our business plans, strategies and initiatives, our expectations about certain markets, our expectations regarding our FCC petition for declaratory ruling and our anticipated financial performance and liquidity.  Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our future performance.  These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance.  There can be no assurance, however, that management’s expectations will necessarily come to pass.  Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements.  We do not intend, nor do we undertake any duty, to update any forward-looking statements.
A wide range of factors could materially affect future developments and performance, including but not limited to:
•risks associated with weak or uncertain global economic conditions and their impact on the level of expenditures for advertising;
•the impact of the COVID-19 pandemic on our business, financial position and results of operations;
•intense competition including increased competition from alternative media platforms and technologies;
•dependence upon the performance of on-air talent, program hosts and management as well as maintaining or enhancing our master brand;
•fluctuations in operating costs;
•technological changes and innovations;
•shifts in population and other demographics;
•the impact of our substantial indebtedness;
•the impact of future acquisitions, dispositions and other strategic transactions;
•legislative or regulatory requirements;
•the impact of legislation or ongoing litigation on music licensing and royalties;
•regulations and consumer concerns regarding privacy and data protection, and breaches of information security measures;
•risks associated with our recent emergence from the Chapter 11 Cases;
•risks related to our Class A common stock, including our significant number of outstanding warrants;
•regulations impacting our business and the ownership of our securities; and
•certain other factors set forth in our other filings with the SEC.
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This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive.  Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is presented under “Market Risk” within Item 2 of this Part I.

ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
        In designing and evaluating our disclosure controls and procedures, 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. In addition, the design of disclosure controls and procedures must reflect that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
        Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2020. 
Changes in Internal Control over Financial Reporting
        There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2020 that have materially affected, or are 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 are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our financial condition or results of operations.
We are involved in a variety of legal proceedings in the ordinary course of business and a large portion of our litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
Alien Ownership Restrictions and FCC Petition for Declaratory Ruling
The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership is in the public interest (the “Foreign Ownership Rule”). Under our Plan of Reorganization, we committed to file a Petition for Declaratory Ruling ("PDR") requesting the FCC to permit up to 100% of the Company's voting and equity to be owned by non-U.S. individuals and entities, but the FCC’s granting our PDR was not a condition to our emergence. 
The equity allocation mechanism (“Equity Allocation Mechanism”) set forth in the Plan of Reorganization was intended to enable us to comply with the Foreign Ownership Rule and other FCC ownership restrictions in connection with our emergence. The Equity Allocation Mechanism imposed an obligation on each of the Company's Claimholders to provide written certification sufficient for us to determine whether issuance of common stock to such Claimholder would cause us to violate the Foreign Ownership Rule, and restricted us from issuing common stock to Claimholders such that it would cause us to exceed an aggregate alien ownership or voting percentage of 22.5 percent (the “22.5 Percent Threshold”). 
After emerging from bankruptcy, we discovered that a group of Claimholders that had certified to having no foreign ownership or voting control in connection with the Equity Allocation Mechanism had subsequently undergone a separate merger transaction without our knowledge or control. As a result of this merger, these Claimholders’ interests in iHeartMedia (amounting to approximately nine percent of our issued and outstanding Class A common stock) can be voted by a U.S. subsidiary of a foreign parent. We notified the FCC of this development in writing promptly after discovering and confirming it. The FCC responded to our notification on July 9, 2019, indicating that (1) the FCC has not determined that this development is contrary to the public interest, and (2) the FCC has deemed us to be in compliance with the FCC’s foreign ownership reporting rules, pending its decision on our PDR. On July 25, 2019 we filed our PDR. The FCC requested public comment on the PDR, which comment period closed on March 26, 2020.  The FCC subsequently referred our PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.  On June 29, 2020, Team Telecom indicated its consent to the grant by the FCC of the PDR. We cannot predict whether the FCC will issue a ruling granting the PDR, the amount of foreign equity and voting rights any such a ruling will allow us to have, or how long it will take to obtain such a ruling.

ITEM 1A.  RISK FACTORS
Except for the risk factors disclosed in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which are hereby incorporated by reference into this Part II, Item IA of this Form 10-Q, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, except as discussed below. 
The COVID-19 pandemic has adversely impacted, and is expected to continue to adversely impact, our business, results of operations and financial position.
        In December 2019, a strain of novel coronavirus disease, COVID-19, was identified in Wuhan, China. This virus has been declared a pandemic and has spread around the world, including throughout the United States. The outbreak and
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government measures taken in response have also had a significant impact, both direct and indirect, on our businesses and the economy generally, as supply chains have been disrupted; facilities and production have been suspended; and demand for many goods and services has fallen. In response to the spread of COVID-19, including shelter-in-place and stay-at-home orders, we implemented a work-from-home policy that remains in place for most of our employees and have restricted on-site activities.

        As a result of the COVID-19 pandemic, we have experienced and may continue to experience disruptions that have adversely impacted our business, results of operations and financial position. The extent of future disruptions will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be predicted, and could result in significantly more severe impacts in the future, including:

•reduced ad budgets and spend, order cancellations and increased competition for advertising revenue;
•the effect of the outbreak on our customers and other business partners and vendors;
•changes in how we conduct operations, including our events;
•increased competition with alternative media platforms and technologies;
•the inability of customers to pay amounts owed to the Company, or delays in collections of such amounts;
•additional goodwill or other impairment charges;
•limitations on our employee resources, including because of work-from-home, stay-at-home and shelter-in-place orders from federal or state governments, employee furloughs, or sickness of employees or their families;
•diversion of management resources to focus on mitigating the impacts of the COVID-19 pandemic;
•reduced capital expenditures; and
•impacts from prolonged remote work arrangements, including increased cybersecurity risks.

        These disruptions have negatively impacted our revenue, results of operations and financial position for the three and six months ended June 30, 2020 and we expect these disruptions to continue to have a negative impact for the remainder of 2020.

        The COVID-19 pandemic continues to evolve. The extent to which the outbreak continues to impact our business, liquidity and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, stay-at-home and shelter-in-place orders, travel restrictions and social distancing throughout the United States, the duration and extent of business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease. If we or our customers continue to experience prolonged shutdowns or other business disruptions beyond current expectations, our ability to conduct our business in the manner and within planned timelines could be materially and adversely impacted, and our business, liquidity and financial results will be adversely affected. Additionally, concerns over the economic impact of the COVID-19 pandemic caused extreme volatility in financial and other capital markets, which has adversely affected our stock price and credit rating and could impact our ability to access the capital markets in the future.
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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth our purchases of shares of our Class A common stock made during the quarter ended June 30, 2020:
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 through April 30—  $—  —  $—  
May 1 through May 3188,738  8.70  —  —  
June 1 through June 3010,846  7.46  —  —  
Total99,584  $8.57  —  $—  
(1)The shares indicated consist of shares of our Class A common stock tendered by employees to us during the three months ended June 30, 2020 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted stock, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
        Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5.  OTHER INFORMATION
        None.


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ITEM 6. EXHIBITS
Exhibit
Number		Description
2.1

3.1

3.2

3.3

3.4

4.1

10.1

10.2

10.3

31.1*
31.2*
32.1**
32.2**
101.INS*Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
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101.DEF*Inline XBRL Taxonomy Extension Definition Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
____________
* Filed herewith.
** Furnished 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.
IHEARTMEDIA, INC.
August 6, 2020/s/ SCOTT D. HAMILTON
Scott D. Hamilton
Senior Vice President, Chief Accounting Officer and Assistant Secretary
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