August 7, 2020 - 10-Q: Quarterly report pursuant to Section 13 or 15(d) | Clear Channel Outdoor Holdings, Inc. (CCO)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED 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

001-32663

CLEAR CHANNEL OUTDOOR HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

88-0318078

(State or other jurisdiction of incorporation or organization)

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

4830 North Loop 1604 West,

Suite 111

San Antonio,

Texas

78249

(Address of principal executive offices)

(Zip Code)

(210)

547-8800

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, $0.01 par value per share	CCO	New York Stock Exchange
Preferred Stock Purchase Rights		New York Stock Exchange

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 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.


Class			Outstanding at August 4, 2020
- - - - - - - - - - - - - - - - - - - - - - - - - -			- - - - - - - - - - - - - - - - - - - - - - - - - -
Common Stock, $0.01 par value per share			467,328,864

CLEAR CHANNEL OUTDOOR HOLDINGS, INC.

TABLE OF CONTENTS


		Page Number

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34

PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37

Signatures		37

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLEAR CHANNEL OUTDOOR HOLDINGS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page Number
Financial Statements:
Consolidated Balance Sheets			3
Consolidated Statements of Comprehensive Loss			4
Consolidated Statements of Changes in Stockholders' Deficit			5
Consolidated Statements of Cash Flows			7
Condensed Notes to Consolidated Financial Statements:
Note 1. Basis of Presentation			8
Note 2. Segment Data			9
Note 3. Revenue			10
Note 4. Long-Term Debt			12
Note 5. Commitments and Contingencies			13
Note 6. Income Taxes			14
Note 7. Property , Pl ant and Equipment			14
Note 8. Intangible Assets and Goodwill			15
Note 9. Related Party Tran sactions			15
Note 10. Net Loss Per Share			16
Note 11. Other Information			16
Note 1 2 . Disposition			16

Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share data)	June 30, 2020		December 31, 2019
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	662,088	$	398,858
Accounts receivable	393,958		733,471
Less: Allowance for credit losses	(24,680)		(23,786)
Accounts receivable, net	369,278		709,685
Prepaid expenses	57,535		60,593
Other current assets	29,788		32,755

Total Current Assets	1,118,689		1,201,891
PROPERTY, PLANT AND EQUIPMENT
Structures, net	712,723		953,545
Other property, plant and equipment, net	208,464		257,609
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived permits	843,846		965,863
Other intangible assets, net	302,877		326,665
Goodwill	702,457		704,158
OTHER ASSETS
Operating lease right-of-use assets	1,601,221		1,885,482
Other assets	73,562		98,075
Total Assets	$	5,563,839	$	6,393,288
CURRENT LIABILITIES
Accounts payable	$	112,498	$	94,588
Accrued expenses	363,144		503,939
Current operating lease liabilities	329,683		387,882
Deferred revenue	84,383		84,035
Accrued interest	106,926		89,786
Current portion of long-term debt	20,665		20,294

Total Current Liabilities	1,017,299		1,180,524
NON-CURRENT LIABILITIES
Long-term debt	5,257,138		5,063,724
Mandatorily-redeemable preferred stock	—		44,912
Non-current operating lease liabilities	1,304,490		1,559,743
Deferred tax liability	410,255		416,066
Other long-term liabilities	182,512		183,025
Total Liabilities	8,171,694		8,447,994

Commitments and Contingencies (Note 5)

STOCKHOLDERS’ DEFICIT
Noncontrolling interest	11,424		152,814
Common stock, par value $0.01 per share: 2,350,000,000 shares authorized; 468,367,036 shares issued as of June 30, 2020; 466,744,939 shares issued as of December 31, 2019	4,684		4,667
Additional paid-in capital	3,496,641		3,489,593
Accumulated deficit	(5,771,481)		(5,349,611)
Accumulated other comprehensive loss	(346,400)		(349,552)
Treasury stock (1,082,635 shares held as of June 30, 2020; 504,650 shares held as of December 31, 2019)	(2,723)		(2,617)
Total Stockholders' Deficit	(2,607,855)		(2,054,706)
Total Liabilities and Stockholders' Deficit	$	5,563,839	$	6,393,288

See Notes to Consolidated Financial Statements

Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)


(In thousands, except per share data)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
Revenue	$	314,906	$	698,015	$	865,715	$	1,285,131
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	254,553		363,029		604,822		710,856
Selling, general and administrative expenses (excludes depreciation and amortization)	99,688		134,721		223,392		257,687
Corporate expenses (excludes depreciation and amortization)	32,665		38,907		69,003		67,521
Depreciation and amortization	66,192		80,174		141,945		155,250
Impairment charges	—		—		123,137		—


Other operating income (expense), net	69,600		1,270		63,579		(2,252)
Operating income (loss)	(68,592)		82,454		(233,005)		91,565
Interest expense, net	88,742		107,971		178,884		222,834
Loss on Due from iHeartCommunications	—		(5,778)		—		(5,778)
Loss on extinguishment of debt	—		—		—		(5,474)
Other expense, net	(4,490)		(9,203)		(23,379)		(9,768)
Loss before income taxes	(161,824)		(40,498)		(435,268)		(152,289)
Income tax benefit (expense)	19,221		29,093		3,442		(28,670)
Consolidated net loss	(142,603)		(11,405)		(431,826)		(180,959)
Less amount attributable to noncontrolling interest	(5,405)		(466)		(17,137)		(5,853)
Net loss attributable to the Company	$	(137,198)	$	(10,939)	$	(414,689)	$	(175,106)

Other comprehensive income (loss):
Foreign currency translation adjustments	$	10,442	$	172	$	(5,979)	$	2,721
Other adjustments to comprehensive income, net of tax	(19)		2,592		(19)		2,592

Other comprehensive income (loss)	10,423		2,764		(5,998)		5,313
Comprehensive loss	(126,775)		(8,175)		(420,687)		(169,793)
Less amount attributable to noncontrolling interest	350		(3,021)		(1,901)		563
Comprehensive loss attributable to the Company	$	(127,125)	$	(5,154)	$	(418,786)	$	(170,356)

Net loss attributable to the Company per share of common stock	$	(0.30)	$	(0.03)	$	(0.89)	$	(0.48)

See Notes to Consolidated Financial Statements

Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)


(In thousands, except share data)
	Three Months Ended June 30, 2020
	Common Shares Issued	Non-controlling Interest		Controlling Interest												Total
						Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
Balances at March 31, 2020	466,914,142	$	138,755	$	4,669	$	3,493,369	$	(5,634,283)	$	(363,722)	$	(2,331)	$	(2,363,543)

Net loss		(5,405)		—		—		(137,198)		—		—		(142,603)
Exercise of stock options and release of stock awards	1,452,894	—		15		(6)		—		—		(392)		(383)
Share-based compensation		8		—		3,098		—		—		—		3,106

Payments to noncontrolling interests		(80)		—		—		—		—		—		(80)
Clear Media divestiture		(122,204)		—		183		—		7,249		—		(114,772)
Other comprehensive income		350		—		—		—		10,073		—		10,423
Other		—		—		(3)		—		—		—		(3)
Balances at June 30, 2020	468,367,036	$	11,424	$	4,684	$	3,496,641	$	(5,771,481)	$	(346,400)	$	(2,723)	$	(2,607,855)


(In thousands, except share data)
	Six Months Ended June 30, 2020
				Controlling Interest												Total
	Common Shares Issued	Non-controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
Balances at December 31, 2019	466,744,939	$	152,814	$	4,667	$	3,489,593	$	(5,349,611)	$	(349,552)	$	(2,617)	$	(2,054,706)
Adoption of ASU 2016-13, Credit Losses		—		—		—		(7,181)		—		—		(7,181)
Net loss		(17,137)		—		—		(414,689)		—		—		(431,826)
Exercise of stock options and release of stock awards	1,622,097	—		17		32		—		—		(106)		(57)
Share-based compensation		50		—		6,833		—		—		—		6,883

Payments to noncontrolling interests		(198)		—		—		—		—		—		(198)

Clear Media divestiture		(122,204)		—		183		—		7,249		—		(114,772)


Other comprehensive loss		(1,901)		—		—		—		(4,097)		—		(5,998)

Balances at June 30, 2020	468,367,036	$	11,424	$	4,684	$	3,496,641	$	(5,771,481)	$	(346,400)	$	(2,723)	$	(2,607,855)

See Notes to Consolidated Financial Statements

Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)


(In thousands, except share data)
	Three Months Ended June 30, 2019
	Pre-Separation			Post-Separation		Non-controlling Interest			Controlling Interest														Total
	Class A Common Shares Issued	Class B Common Shares Issued	Common Shares Issued					Common Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock
Balances at March 31, 2019	51,709,760	315,000,000	—	$	155,027	$	3,667		$	3,088,061		$	(5,150,474)		$	(345,524)		$	(6,587)		$	(2,255,830)

Net loss				(466)		—			—			(10,939)			—			—			(11,405)
Exercise of stock options and release of stock awards	36,993		797,340	—		8			223			—			—			(2,423)			(2,192)
Share-based compensation				(113)		—			8,674			—			—			—			8,561
Payments to noncontrolling interests				(5,864)		—			—			—			—			—			(5,864)
Recapitalization of equity	(51,746,753)	(315,000,000)	365,618,611	—		(11)			(6,575)			—			—			6,586			—
Capital contributions				—		—			114,967			—			—			—			114,967
Distributions				—		—			(65,936)			—			—			—			(65,936)

Other comprehensive income (loss)				(3,021)		—			—			—			5,785			—			2,764
Other				—		—			10			—			—			—			10
Balances at June 30, 2019	—	—	366,415,951	$	145,563	$	3,664		$	3,139,424		$	(5,161,413)		$	(339,739)		$	(2,424)		$	(2,214,925)


(In thousands, except share data)
	Six Months Ended June 30, 2019
	Pre-Separation			Post-Separation		Non-controlling Interest			Controlling Interest														Total
	Class A Common Shares Issued	Class B Common Shares Issued	Common Shares Issued					Common Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock
Balances at December 31, 2018	51,559,633	315,000,000	—	$	160,362	$	3,666		$	3,086,307		$	(5,000,920)		$	(344,489)		$	(6,578)		$	(2,101,652)
Adoption of ASC 842, Leases				—		—			—			14,613			—			—			14,613
Net loss				(5,853)		—			—			(175,106)			—			—			(180,959)
Exercise of stock options and release of stock awards	187,120		797,340	—		9			295			—			—			(2,432)			(2,128)
Share-based compensation				39		—			10,356			—			—			—			10,395
Payments to noncontrolling interests				(9,548)		—			—			—			—			—			(9,548)

Recapitalization of equity	(51,746,753)	(315,000,000)	365,618,611	—		(11)			(6,575)			—			—			6,586			—
Capital contributions				—		—			114,967			—			—			—			114,967
Distributions				—		—			(65,936)			—			—			—			(65,936)
Other comprehensive income				563		—			—			—			4,750			—			5,313
Other				—		—			10			—			—			—			10
Balances at June 30, 2019	—	—	366,415,951	$	145,563	$	3,664		$	3,139,424		$	(5,161,413)		$	(339,739)		$	(2,424)		$	(2,214,925)

See Notes to Consolidated Financial Statements

Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(In thousands)	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Consolidated net loss	$	(431,826)	$	(180,959)
Reconciling items:
Depreciation and amortization	141,945		155,250
Impairment charges	123,137		—


Loss (gain) on disposal of operating and other assets, net	(71,100)		2,090
Foreign exchange transaction loss	22,731		3,625
Deferred taxes	(21,242)		(15,143)
Credit losses	11,886		4,417
Share-based compensation	6,883		10,395
Amortization of deferred financing charges and note discounts, net	5,116		5,230
Loss on Due from iHeartCommunications	—		5,778
Loss on extinguishment of debt	—		5,474
Other reconciling items, net	(2,682)		(2,787)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease in accounts receivable	203,235		44,823
Increase in prepaid expenses	(2,303)		(29,272)
Increase in other current assets	(7,067)		(5,674)
Increase (decrease) in accounts payable	30,275		(3,364)
Decrease in accrued expenses	(56,475)		(25,190)
Increase in accrued interest	20,754		55,632
Increase in deferred revenue	20,502		10,539
Changes in other operating assets and liabilities, net	(18,191)		14,271
Net cash provided by (used for) operating activities	(24,422)		55,135
Cash flows from investing activities:
Proceeds from disposal of assets, net	217,023		2,518
Purchases of property, plant and equipment	(63,171)		(79,281)
Purchases of concession rights	(3,792)		—
Other investing activities, net	(484)		76
Net cash provided by (used for) investing activities	149,576		(76,687)
Cash flows from financing activities:
Draws on credit facilities	150,000		—

Proceeds from long-term debt	—		2,235,197
Payments on long-term debt	(10,145)		(2,200,113)
Debt issuance costs	(1,202)		(26,795)
Proceeds from issuance of mandatorily-redeemable preferred stock	—		43,798
Net transfers from iHeartCommunications	—		43,399
Proceeds from settlement of Due from iHeartCommunications	—		115,798



Other financing activities, net	(261)		(2,956)
Net cash provided by financing activities	138,392		208,328
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7,271)		159
Net increase in cash, cash equivalents and restricted cash

Form: 10-Q

Documents