Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 7, 2020

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        FOR THE QUARTERLY PERIOD ENDED 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) 
cco-20200630_g1.jpg
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.
Item 2.
Item 3.
Item 4.
PART II—OTHER INFORMATION  
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
1


PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

CLEAR CHANNEL OUTDOOR HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page Number
Financial Statements:
Condensed Notes to Consolidated Financial Statements:
2

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
3

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
4

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
5

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
6

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