UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-

(Mark One)

[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2014

 

[  ]           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

1‑32663

 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

                                        Delaware                                                                                               86-0812139 

                       (State or other jurisdiction of                                                        (I.R.S. Employer Identification No.)

                      incorporation or organization)

 

                              200 East Basse Road                                                                                         78209

                               San Antonio, Texas                                                                                     (Zip Code)

             (Address of principal executive offices)

 

(210) 832-3700

(Registrant’s telephone number, including area code)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   [  ]       Accelerated filer   [X]    Non-accelerated filer   [  ]       Smaller reporting company     [  ]

 

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

 

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 July 16, 2014

- - - - - - - - - - - - - - - - - - - - - - - - - -

Class A Common Stock, $.01 par value

Class B Common Stock, $.01 par value

44,621,953

315,000,000

1

 

 


 

 

 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC.

 

INDEX

 

 

 

Page No.

Part I -- Financial Information

 

Item 1.        Financial Statements

1

Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013

1

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2014 and 2013

2

Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013

3

Notes to Consolidated Financial Statements

4

Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.        Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.        Controls and Procedures

33

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

36

Item 5.        Other Information

36

Item 6.        Exhibits

37

Signatures

38

 

 


 

PART I -- FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share data)

June 30,

  

  

  

  

  

2014 

  

December 31,

  

  

(Unaudited)

  

2013 

CURRENT ASSETS

  

  

  

  

  

Cash and cash equivalents

$

 225,974 

  

$

 314,545 

Accounts receivable, net of allowance of $33,986 in 2014 and $33,127 in 2013

  

 741,682 

  

  

 710,529 

Prepaid expenses

  

 142,900 

  

  

 145,021 

Other current assets

  

 74,581 

  

  

 68,333 

  

Total Current Assets

  

 1,185,137 

  

  

 1,238,428 

PROPERTY, PLANT AND EQUIPMENT

  

  

  

  

  

Structures, net

  

 1,710,144 

  

  

 1,765,510 

Other property, plant and equipment, net

  

 297,773 

  

  

 315,588 

INTANGIBLE ASSETS AND GOODWILL

  

  

  

  

  

Indefinite-lived intangibles

  

 1,067,891 

  

  

 1,067,783 

Other intangibles, net

  

 456,006 

  

  

 487,926 

Goodwill

  

 850,914 

  

  

 850,134 

OTHER ASSETS

  

  

  

  

  

Due from Clear Channel Communications

  

 950,172 

  

  

 879,108 

Other assets

  

 151,757 

  

  

 154,915 

  

Total Assets

$

 6,669,794 

  

$

 6,759,392 

  

  

  

  

  

  

  

CURRENT LIABILITIES

  

  

  

  

  

Accounts payable

$

 69,909 

  

$

 85,882 

Accrued expenses

  

 534,533 

  

  

 563,766 

Deferred income

  

 151,856 

  

  

 107,943 

Current portion of long-term debt

  

 15,062 

  

  

 15,999 

  

Total Current Liabilities

  

 771,360 

  

  

 773,590 

Long-term debt

  

 4,919,635 

  

  

 4,919,377 

Deferred tax liability

  

 629,850 

  

  

 656,150 

Other long-term liabilities

  

 245,651 

  

  

 250,167 

Commitments and contingent liabilities (Note 5)

  

  

  

  

  

SHAREHOLDERS’ EQUITY

  

  

  

  

  

Noncontrolling interest

  

 198,510 

  

  

 202,046 

Preferred stock, $.01 par value, 150,000,000 shares authorized, no shares issued and outstanding

  

  

  

Class A common stock, $.01 par value, 750,000,000 shares authorized, 44,731,645 and

   44,117,843 shares issued in 2014 and 2013, respectively

  

 448 

  

  

 441 

Class B common stock, $.01 par value, 600,000,000 shares authorized, 315,000,000 shares

   issued and outstanding

  

 3,150 

  

  

 3,150 

Additional paid-in capital

  

 4,337,029 

  

  

 4,332,045 

Accumulated deficit

  

 (4,208,808) 

  

  

 (4,162,975) 

Accumulated other comprehensive loss

  

 (226,004) 

  

  

 (213,572) 

Cost of shares held in treasury

  

 (1,027) 

  

  

 (1,027) 

  

Total Shareholders’ Equity

  

 103,298 

  

  

 160,108 

  

Total Liabilities and Shareholders’ Equity

$

 6,669,794 

  

$

 6,759,392 

See Notes to Consolidated Financial Statements

1

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

(In thousands, except per share data)

Three Months Ended

  

Six Months Ended

  

  

  

  

June 30,

  

June 30,

  

  

  

  

2014 

  

2013 

  

2014 

  

2013 

Revenue

$

 781,205 

  

$

 766,871 

  

$

 1,416,456 

  

$

 1,417,081 

Operating expenses:

  

  

  

  

  

  

  

  

  

  

  

  

Direct operating expenses (excludes depreciation and amortization)

  

 413,144 

  

  

 399,558 

  

  

 794,657 

  

  

 785,749 

  

Selling, general and administrative expenses (excludes depreciation and

   amortization)

  

 140,271 

  

  

 133,020 

  

  

 273,221 

  

  

 272,581 

  

Corporate expenses (excludes depreciation and amortization)

  

 33,333 

  

  

 33,892 

  

  

 64,030 

  

  

 61,716 

  

Depreciation and amortization

  

 98,726 

  

  

 97,566 

  

  

 197,467 

  

  

 197,893 

  

Other operating income, net

  

 247 

  

  

 3,697 

  

  

 2,901 

  

  

 5,800 

Operating income

  

 95,978 

  

  

 106,532 

  

  

 89,982 

  

  

 104,942 

Interest expense

  

 88,212 

  

  

 88,063 

  

  

 177,473 

  

  

 176,156 

Interest income on Due from Clear Channel Communications

  

 15,227 

  

  

 12,496 

  

  

 29,900 

  

  

 24,416 

Equity in earnings (loss) of nonconsolidated affiliates

  

 327 

  

  

 169 

  

  

 (409) 

  

  

 (316) 

Other income (expense), net

  

 11,983 

  

  

 (310) 

  

  

 13,880 

  

  

 (1,217) 

Income (loss) before income taxes

  

 35,303 

  

  

 30,824 

  

  

 (44,120) 

  

  

 (48,331) 

Income tax benefit (expense)

  

 24,820 

  

  

 (12,094) 

  

  

 7,875 

  

  

 (7,088) 

Consolidated net income (loss)

  

 60,123 

  

  

 18,730 

  

  

 (36,245) 

  

  

 (55,419) 

  

Less amount attributable to noncontrolling interest

  

 9,086 

  

  

 9,822 

  

  

 9,588 

  

  

 9,951 

Net income (loss) attributable to the Company

$

 51,037 

  

$

 8,908 

  

$

 (45,833) 

  

$

 (65,370) 

Other comprehensive income (loss), net of tax:

  

  

  

  

  

  

  

  

  

  

  

  

Foreign currency translation adjustments

  

 (12,025) 

  

  

 (21,111) 

  

  

 (16,562) 

  

  

 (45,136) 

  

Unrealized gain (loss) on marketable securities

  

 (405) 

  

  

 241 

  

  

 679 

  

  

 216 

  

Other adjustments to comprehensive income (loss)

  

 - 

  

  

 - 

  

  

 - 

  

  

 (998) 

Other comprehensive income (loss)

  

 (12,430) 

  

  

 (20,870) 

  

  

 (15,883) 

  

  

 (45,918) 

Comprehensive income (loss)

  

 38,607 

  

  

 (11,962) 

  

  

 (61,716) 

  

  

 (111,288) 

  

Less amount attributable to noncontrolling interest

  

 (554) 

  

  

 (6,737) 

  

  

 (3,451) 

  

  

 (6,830) 

Comprehensive income (loss) attributable to the Company

$

 39,161 

  

$

 (5,225) 

  

$

 (58,265) 

  

$

 (104,458) 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Net income (loss) attributable to the Company per common share:

  

  

  

  

  

  

  

  

  

  

  

  

  

Basic

$

 0.14 

  

$

 0.02 

  

$

 (0.13) 

  

$

 (0.19) 

  

  

Weighted average common shares outstanding – Basic

  

 358,453 

  

  

 357,501 

  

  

 358,425 

  

  

 357,427 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Diluted

$

 0.14 

  

$

 0.02 

  

$

 (0.13) 

  

$

 (0.19) 

  

  

Weighted average common shares outstanding – Diluted

  

 359,832 

  

  

 358,766 

  

  

 358,425 

  

  

 357,427 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Dividends declared per share

$

 - 

  

$

 - 

  

$

 - 

  

$

 - 

See Notes to Consolidated Financial Statements

2

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

(In thousands)

Six Months Ended June 30,

  

  

2014 

  

2013 

Cash flows from operating activities:

  

  

  

  

  

Consolidated net loss

$

 (36,245) 

  

$

 (55,419) 

Reconciling items:

  

  

  

  

  

  

Depreciation and amortization

  

 197,467 

  

  

 197,893 

  

Deferred taxes

  

 (27,723) 

  

  

 (29,491) 

  

Provision for doubtful accounts

  

 4,143 

  

  

 3,459 

  

Share-based compensation

  

 4,250 

  

  

 3,995 

  

Gain on sale of operating assets

  

 (2,901) 

  

  

 (5,800) 

  

Amortization of deferred financing charges and note discounts, net

  

 4,325 

  

  

 4,261 

  

Other reconciling items, net

  

 (14,212) 

  

  

 1,236 

Changes in operating assets and liabilities, net of effects of acquisitions and

   dispositions:

  

  

  

  

  

  

(Increase) decrease in accounts receivable

  

 (33,857) 

  

  

 33,199 

  

Increase in deferred income

  

 43,277 

  

  

 13,463 

  

Decrease in accrued expenses

  

 (30,071) 

  

  

 (43,399) 

  

Decrease in accounts payable

  

 (18,495) 

  

  

 (23,251) 

  

Changes in other operating assets and liabilities

  

 (9,432) 

  

  

 3,729 

Net cash provided by operating activities

  

 80,526 

  

  

 103,875 

Cash flows from investing activities:

  

  

  

  

  

  

Purchases of property, plant and equipment

  

 (92,967) 

  

  

 (80,105) 

  

Purchases of other operating assets

  

 (175) 

  

  

 (480) 

  

Proceeds from disposal of assets

  

 6,888 

  

  

 9,586 

  

Change in other, net

  

 (1,305) 

  

  

 (585) 

Net cash used for investing activities

  

 (87,559) 

  

  

 (71,584) 

Cash flows from financing activities:

  

  

  

  

  

  

Draws on credit facilities

  

 820 

  

  

 637 

  

Payments on credit facilities

  

 (1,675) 

  

  

 (1,344) 

  

Payments on long-term debt

  

 (23) 

  

  

 (4,788) 

  

Payments to repurchase noncontrolling interests

  

 - 

  

  

 (61,143) 

  

Dividends and other payments to noncontrolling interests

  

 (9,673) 

  

  

 (4,476) 

  

Net transfers to Clear Channel Communications

  

 (71,045) 

  

  

 (121,662) 

  

Change in other, net

  

 695 

  

  

 1,030 

Net cash used for financing activities

  

 (80,901) 

  

  

 (191,746) 

Effect of exchange rate changes on cash

  

 (637) 

  

  

 (3,819) 

Net decrease in cash and cash equivalents

  

 (88,571) 

  

  

 (163,274) 

Cash and cash equivalents at beginning of period

  

 314,545 

  

  

 561,979 

Cash and cash equivalents at end of period

$

 225,974 

  

$

 398,705 

See Notes to Consolidated Financial Statements

3

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 – BASIS OF PRESENTATION

Preparation of Interim Financial Statements

The accompanying consolidated financial statements were prepared by Clear Channel Outdoor Holdings, Inc. (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.  Due to seasonality and other factors, the results for the interim periods are not necessarily indicative of results for the full year.  The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2013 Annual Report on Form 10-K.

 

The consolidated financial statements include the accounts of the Company and its subsidiaries and give effect to allocations of expenses from the Company’s indirect parent entity, Clear Channel Communications, Inc. (“Clear Channel Communications”).  These allocations were made on a specifically identifiable basis or using relative percentages of headcount or other methods management considered to be a reasonable reflection of the utilization of services provided.  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 percent to 50 percent 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.  Certain prior-period amounts have been reclassified to conform to the 2014 presentation.

 

Adoption of New Accounting Standards

During the first quarter of 2014, the Company adopted the Financial Accounting Standards Board's (“FASB”) ASU No. 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.  This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. The amendments are effective for fiscal years (and interim periods within) beginning after December 15, 2013 and are to be applied retrospectively to all prior periods presented for such obligations that exist at the beginning of an entity’s fiscal year of adoption.  The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

 

During the first quarter of 2014, the Company adopted the FASB’s ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity of an Investment in a Foreign Entity. The amendments are effective prospectively for the fiscal years (and interim periods within) beginning after December 15, 2013 and provide clarification guidance for the release of the cumulative translation adjustment under current U.S. GAAP. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

 

During the first quarter of 2014, the Company adopted the FASB’s ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update requires unrecognized tax benefits to be offset against a deferred tax asset for a net operating loss carryforward, similar tax loss or tax credit carryforward in certain situations.  The amendments are effective prospectively for the fiscal years (and interim periods within) beginning after December 15, 2013.  The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements

During the second quarter of 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This new standard provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under U.S. GAAP.  The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016.  The Company is currently evaluating the impact of the provisions of this new standard on its financial position and results of operations.

4

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

NOTE 2 – 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 at June 30, 2014 and December 31, 2013, respectively:

 

(In thousands)

June 30, 2014

  

December 31, 2013

Structures

$

 3,064,825 

  

$

 3,021,152 

Less: accumulated depreciation

  

 1,354,681 

  

  

 1,255,642 

Structures, net

$

 1,710,144 

  

$

 1,765,510 

  

  

  

  

  

  

Land, buildings and improvements

$

 211,154 

  

$

 213,670 

Furniture and other equipment

  

 161,791 

  

  

 147,768 

Construction in progress

  

 69,358 

  

  

 83,891 

  

  

 442,303 

  

  

 445,329 

Less: accumulated depreciation

  

 144,530 

  

  

 129,741 

Other property, plant and equipment, net

$

 297,773 

  

$

 315,588 

 

Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets consist primarily of billboard permits in its Americas segment.  Due to significant differences in both business practices and regulations, billboards in the International segment are subject to long-term, finite contracts unlike the Company’s permits in the United States and Canada.  Accordingly, there are no indefinite-lived intangible assets in the International segment

 

Other Intangible Assets

Other intangible assets include definite-lived intangible assets and permanent easements.  The Company’s definite-lived intangible assets consist primarily of transit and street furniture contracts, site-leases 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 the assets are expected to contribute directly or indirectly to the Company’s future cash flows.  Permanent easements are indefinite-lived intangible assets which include certain rights to use real property not owned by the Company.  The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.  These assets are recorded at cost.  

 

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets at June 30, 2014 and December 31, 2013, respectively:

 

(In thousands)

June 30, 2014

  

December 31, 2013

  

Gross Carrying Amount

  

Accumulated Amortization

  

Gross Carrying Amount

  

Accumulated Amortization

Transit, street furniture and other contractual rights

$

 777,431 

  

$

 (497,061) 

  

$

 777,521 

  

$

 (464,548) 

Permanent easements

  

 174,597 

  

  

 - 

  

  

 173,753 

  

  

 - 

Other

  

 2,826 

  

  

 (1,787) 

  

  

 2,832 

  

  

 (1,632) 

Total

$

 954,854 

  

$

 (498,848) 

  

$

 954,106 

  

$

 (466,180) 

 

Total amortization expense related to definite-lived intangible assets for the three months ended June 30, 2014 and 2013 was $17.0 million and $17.4 million, respectively.  Total amortization expense related to definite-lived intangible assets for the six months ended June 30, 2014 and 2013 was $34.1 million and $36.0 million, respectively.

 

5

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

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)

2015 

$

 53,385 

2016 

  

 43,442 

2017 

  

 33,110 

2018 

  

 24,665 

2019 

  

 18,250 

 

Goodwill

The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments.

 

(In thousands)

Americas

  

International

  

Total

Balance as of December 31, 2012

$

 571,932 

  

$

 290,316 

  

$

 862,248 

  

Impairment

  

 - 

  

  

 (10,684) 

  

  

 (10,684) 

  

Foreign currency

  

 - 

  

  

 (974) 

  

  

 (974) 

  

Dispositions

  

 - 

  

  

 (456) 

  

  

 (456) 

Balance as of December 31, 2013

  

 571,932 

  

$

 278,202 

  

$

 850,134 

  

Foreign currency

  

 - 

  

  

 780 

  

  

 780 

Balance as of June 30, 2014

$

 571,932 

  

$

 278,982 

  

$

 850,914 

 

NOTE 3 – LONG-TERM DEBT

Long-term debt at June 30, 2014 and December 31, 2013, respectively, consisted of the following:

 

(In thousands)

June 30, 2014

  

December 31, 2013

Clear Channel Worldwide Holdings Senior Notes:

  

  

  

  

  

  

6.5% Series A Senior Notes Due 2022

$

 735,750 

  

$

 735,750 

  

6.5% Series B Senior Notes Due 2022

  

 1,989,250 

  

  

 1,989,250 

Clear Channel Worldwide Holdings Senior Subordinated Notes:

  

  

  

  

  

  

7.625% Series A Senior Subordinated Notes Due 2020

  

 275,000 

  

  

 275,000 

  

7.625% Series B Senior Subordinated Notes Due 2020

  

 1,925,000 

  

  

 1,925,000 

Senior revolving credit facility due 2018

  

 - 

  

  

 - 

Other debt

  

 16,169 

  

  

 17,133 

Original issue discount

  

 (6,472) 

  

  

 (6,757) 

Total debt

  

 4,934,697 

  

  

 4,935,376 

Less: current portion

  

 15,062 

  

  

 15,999 

Total long-term debt

$

 4,919,635 

  

$

 4,919,377 

 

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $5.3 billion and $5.1 billion at June 30, 2014 and December 31, 2013, respectively. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as Level 1.

6

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

NOTE 4 – SUPPLEMENTAL DISCLOSURES

Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) for the three and six months ended June 30, 2014 and 2013, respectively, consisted of the following components:

 

(In thousands)

Three Months Ended June 30,

  

Six Months Ended June 30,

  

2014 

  

2013 

  

2014 

  

2013 

Current tax benefit (expense)

$

 19,563 

  

$

 (18,550) 

  

$

 (19,848) 

  

$

 (36,579) 

Deferred tax benefit

  

 5,257 

  

  

 6,456 

  

  

 27,723 

  

  

 29,491 

Income tax benefit (expense)

$

 24,820 

  

$

 (12,094) 

  

$

 7,875 

  

$

 (7,088) 

 

The effective tax rates for the three and six months ended June 30, 2014 were (70.3)% and 17.8%, respectively. The effective rates were primarily impacted by the Company’s inability to record tax benefits on tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future years. In addition, the effective tax rates were impacted by the timing and mix of earnings in the various jurisdictions in which the Company operates.

 

The effective tax rates for the three and six months ended June 30, 2013 were 39.2% and (14.7)%, respectively.  The effective rates for the three and six months ended June 30, 2013 were primarily impacted by the Company’s inability to record tax benefits on tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future years.

 

Supplemental Cash Flow Information

During the six months ended June 30, 2014 and 2013, cash paid for interest and income taxes, net of income tax refunds of $0.2 million and $1.2 million, respectively, was as follows:

 

(In thousands)

Six Months Ended June 30,

  

2014 

  

2013 

Interest

$

 176,217 

  

$

 174,401 

Income taxes

  

 16,823 

  

  

 24,712 

 

NOTE 5 – COMMITMENTS, CONTINGENCIES AND GUARANTEES

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; employment and benefits related claims; governmental fines; and tax disputes.

 

Los Angeles Litigation

In 2008, Summit Media, LLC, one of the Company’s competitors, sued the City of Los Angeles (the “City”), Clear Channel Outdoor, Inc. and CBS Outdoor in Los Angeles Superior Court (Case No. BS116611) challenging the validity of a settlement agreement that had been entered into in November 2006 among the parties. Pursuant to the settlement agreement, Clear Channel Outdoor, Inc. had taken down existing billboards and converted 83 existing signs from static displays to digital displays pursuant to modernization permits issued through an administrative process of the City. The Los Angeles Superior Court ruled in January 2010 that the settlement agreement constituted an ultra vires act of the City and nullified its existence, but did not invalidate the modernization permits issued to Clear Channel Outdoor, Inc. and CBS. All parties appealed the ruling by the Los Angeles Superior Court to the

7

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

Court of Appeal for the State of California, Second Appellate District, Division 8. On December 10, 2012, the Court of Appeal issued an order upholding the Superior Court’s finding that the settlement agreement was ultra vires and remanding the case to the Superior Court for the purpose of invalidating the modernization permits issued to Clear Channel Outdoor, Inc. and CBS for the digital displays that were the subject of the settlement agreement. On January 22, 2013, Clear Channel Outdoor, Inc. filed a petition with the California Supreme Court requesting its review of the matter, and the Supreme Court denied that petition on February 27, 2013. On April 12, 2013, the Los Angeles Superior Court invalidated 82 digital modernization permits issued to Clear Channel Outdoor, Inc. (77 of which displays were operating at the time of the ruling) and 13 issued to CBS and ordered that the companies turn off the electrical power to affected digital displays by the close of business on April 15, 2013. Clear Channel Outdoor, Inc. has complied with the order. On April 16, 2013, the Court conducted further proceedings during which it held that it was not invalidating two additional digital modernization permits that Clear Channel Outdoor, Inc. had secured through a special zoning plan and confirmed that its April 12 order invalidated only digital modernization permits – no other types of permits the companies may have secured for the signs at issue. Summit Media, LLC filed a further motion requesting that the Court order the demolition of the 82 sign structures on which the now-invalidated digital signs operated, as well as the invalidation of several other permits for traditional signs allegedly issued under the settlement agreement. At a hearing held on November 22, 2013, the Court denied Summit Media, LLC’s demolition motion by allowing the 82 sign structures and their LED faces to remain intact, thus allowing Clear Channel Outdoor, Inc. to seek permits under the existing City sign code to either wrap the LED faces with vinyl or convert the LED faces to traditional static signs. The Court further confirmed the invalidation of all permits issued under the settlement agreement. In anticipation of this order, Clear Channel Outdoor, Inc. had removed six static billboard facings solely permitted under the settlement agreement. At a hearing held on January 21, 2014, the Court denied Summit Media, LLC’s motion for attorney’s fees on the basis that Summit Media, LLC had a substantial financial interest in the outcome of the litigation and, therefore, was not entitled to fees under California’s private attorney general statute.  On March 12, 2014, Summit Media, LLC filed notices of appeal of the orders denying Summit Media, LLC’s fee petition and denying in part Summit Media, LLC’s demolition motion.

 

Guarantees

As of June 30, 2014, the Company had $65.8 million in letters of credit outstanding, of which $0.2 million of letters of credit were cash secured. Additionally, as of June 30, 2014, Clear Channel Communications had outstanding commercial standby letters of credit and surety bonds of $1.5 million and $42.7 million, respectively, held on behalf of the Company.  These letters of credit and surety bonds relate to various operational matters, including insurance, bid and performance bonds, as well as other items. Letters of credit in the amount of $2.0 million are collateral in support of surety bonds and these amounts would only be drawn under the letter of credit in the event the associated surety bonds were funded and the Company did not honor its reimbursement obligation to the issuers.

 

In addition, as of June 30, 2014, the Company had outstanding bank guarantees of $59.5 million related to international subsidiaries, of which $15.8 million were backed by cash collateral.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

The Company records net amounts due to or from Clear Channel Communications as “Due from/to Clear Channel Communications” on the consolidated balance sheets.  The accounts represent the revolving promissory note issued by the Company to Clear Channel Communications and the Due from Clear Channel Communications Note, in the face amount of $1.0 billion, or if more or less than such amount, the aggregate unpaid principal amount of all advances.  The accounts accrue interest pursuant to the terms of the promissory notes and are generally payable on demand or when they mature on December 15, 2017.

 

Included in the accounts are the net activities resulting from day-to-day cash management services provided by Clear Channel Communications.  As a part of these services, the Company maintains collection bank accounts swept daily into accounts of Clear Channel Communications (after satisfying the funding requirements of the Trustee Accounts under the Clear Channel Worldwide Holdings, Inc. (“CCWH”) senior notes and the CCWH subordinated notes).  In return, Clear Channel Communications funds the Company’s controlled disbursement accounts as checks or electronic payments are presented for payment.  The Company’s claim in relation to cash transferred from its concentration account is on an unsecured basis and is limited to the balance of the “Due from Clear Channel Communications” account.  At June 30, 2014 and December 31, 2013, the asset recorded in “Due from Clear Channel Communications” on the consolidated balance sheets was $950.2 million and $879.1 million, respectively.

 

The net interest income for the three months ended June 30, 2014 and 2013 was $15.2 million and $12.5 million, respectively.  The net interest income for the six months ended June 30, 2014 and 2013 was $29.9 million and $24.4 million, respectively.  At June 30, 2014 and December 31, 2013, the fixed interest rate on the “Due from Clear Channel Communications” account was 6.5%, which is equal to the fixed interest rate on the CCWH senior notes.

 

8

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

The Company provides advertising space on its billboards for radio stations owned by Clear Channel Communications.  For the three months ended June 30, 2014 and 2013, the Company recorded $1.1 million and $0.1 million, respectively, in revenue for these advertisements. For the six months ended June 30, 2014 and 2013, the Company recorded $2.1 million and $0.2 million, respectively, in revenue for these advertisements.

 

Under the Corporate Services Agreement between Clear Channel Communications and the Company, Clear Channel Communications provides management services to the Company, which include, among other things: (i) treasury, payroll and other financial related services; (ii) certain executive officer services; (iii) human resources and employee benefits services; (iv) legal and related services; (v) information systems, network and related services; (vi) investment services; (vii) procurement and sourcing support services; and (viii) other general corporate services.  These services are charged to the Company based on actual direct costs incurred or allocated by Clear Channel Communications based on headcount, revenue or other factors on a pro rata basis.  For the three months ended June 30, 2014 and 2013, the Company recorded $7.1 million and $9.3 million, respectively, as a component of corporate expenses for these services.  For the six months ended June 30, 2014 and 2013, the Company recorded $16.3 million and $18.7 million, respectively, as a component of corporate expenses for these services.

 

Pursuant to the Tax Matters Agreement between Clear Channel Communications and the Company, the operations of the Company are included in a consolidated federal income tax return filed by Clear Channel Communications.  The Company’s provision for income taxes has been computed on the basis that the Company files separate consolidated federal income tax returns with its subsidiaries.  Tax payments are made to Clear Channel Communications on the basis of the Company’s separate taxable income.  Tax benefits recognized on the Company’s employee stock option exercises are retained by the Company.

 

The Company computes its deferred income tax provision using the liability method in accordance with the provisions of ASC 740-10, as if the Company was a separate taxpayer.  Deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled.  Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not some portion or all of the asset will not be realized.

 

Pursuant to the Employee Matters Agreement, the Company’s employees participate in Clear Channel Communications’ employee benefit plans, including employee medical insurance and a 401(k) retirement benefit plan.  These costs are recorded as a component of selling, general and administrative expenses and were approximately $2.7 million and $2.7 million for the three months ended June 30, 2014 and 2013, respectively.  For the six months ended June 30, 2014 and 2013, the Company recorded approximately $5.3 million and $5.4 million, respectively, as a component of selling, general and administrative expenses for these services.

9

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

NOTE 7 – SHAREHOLDERS’ EQUITY AND COMPREHENSIVE LOSS

The Company reports its noncontrolling interests in consolidated subsidiaries as a component of equity separate from the Company’s equity.  The following table shows the changes in shareholders’ equity attributable to the Company and the noncontrolling interests of subsidiaries in which the Company has a majority, but not total ownership interest:

 

(In thousands)

The Company

  

Noncontrolling

Interests

  

Consolidated

Balances at January 1, 2014

$

 (41,938) 

  

$

 202,046 

  

$

 160,108 

Net income (loss)

  

 (45,833) 

  

  

 9,588 

  

  

 (36,245) 

Dividends and other payments to noncontrolling interests

  

 - 

  

  

 - 

  

  

 - 

Foreign currency translation adjustments

  

 (13,111) 

  

  

 (3,451) 

  

  

 (16,562) 

Unrealized holding gain on marketable securities

  

 679 

  

  

 - 

  

  

 679 

Other adjustments to comprehensive loss

  

 - 

  

  

 - 

  

  

 - 

Other, net

  

 4,991 

  

  

 (9,673) 

  

  

 (4,682) 

Balances at June 30, 2014

$

 (95,212) 

  

$

 198,510 

  

$

 103,298 

  

  

  

  

  

  

  

  

  

Balances at January 1, 2013

$

 198,155 

  

$

 247,934 

  

$

 446,089 

Net income (loss)

  

 (65,370) 

  

  

 9,951 

  

  

 (55,419) 

Foreign currency translation adjustments

  

 (38,306) 

  

  

 (6,830) 

  

  

 (45,136) 

Unrealized holding gain on marketable securities

  

 216 

  

  

 - 

  

  

 216 

Other adjustments to comprehensive loss

  

 (998) 

  

  

 - 

  

  

 (998) 

Other, net

  

 2,306 

  

  

 (8,835) 

  

  

 (6,529) 

Balances at June 30, 2013

$

 96,003 

  

$

 242,220 

  

$

 338,223 

 

On July 21, 2014, in accordance with the terms of its charter, a committee of the Company’s board of directors (1) provided notice of its intent to demand $175 million outstanding under the revolving promissory note with Clear Channel Communications on August 11, 2014 and (2) declared a special cash dividend in aggregate amount equal to $175 million, the payment of which is conditioned upon the satisfaction by Clear Channel Communications of such demand, payable on August 11, 2014 to the Company’s stockholders of record as of August 4, 2014.  Following satisfaction of the demand, the balance outstanding under the note will be reduced by $175 million.

10

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

NOTE 8 – SEGMENT DATA

The Company has two reportable segments, which it believes best reflect how the Company is currently managed – Americas and International.  The Americas segment consists of operations primarily in the United States and Canada, and the International segment primarily includes operations in Europe, Asia, Australia and Latin America.  The Americas and International display inventory consists primarily of billboards, street furniture displays and transit displays.  Corporate includes infrastructure and support including information technology, human resources, legal, finance and administrative functions of each of the Company’s reportable segments, as well as overall executive, administrative and support functions.  Share-based payments are recorded in corporate expenses.

 

The following table presents the Company’s reportable segment results for the three and six months ended June 30, 2014 and 2013:

 

(In thousands)

  

  

  

  

  

  

Corporate and other

  

  

  

  

Americas

  

International

  

reconciling items

  

Consolidated

Three months ended June 30, 2014

Revenue

$

 319,147 

  

$

 462,058 

  

$

 - 

  

$

 781,205 

Direct operating expenses

  

 139,734 

  

  

 273,410 

  

  

 - 

  

  

 413,144 

Selling, general and

   administrative expenses

  

 52,420 

  

  

 87,851 

  

  

 - 

  

  

 140,271 

Corporate expenses

  

 - 

  

  

 - 

  

  

 33,333 

  

  

 33,333 

Depreciation and amortization

  

 47,523 

  

  

 50,214 

  

  

 989 

  

  

 98,726 

Other operating income, net

  

 - 

  

  

 - 

  

  

 247 

  

  

 247 

Operating income (loss)

$

 79,470 

  

$

 50,583 

  

$

 (34,075) 

  

$

 95,978 

  

  

  

  

  

  

  

  

  

  

  

  

Capital expenditures

$

 17,190 

  

$

 36,269 

  

$

 880 

  

$

 54,339 

Share-based compensation expense

$

 - 

  

$

 - 

  

$

 2,240 

  

$

 2,240 

  

  

  

  

  

  

  

  

  

  

  

  

Three months ended June 30, 2013

Revenue

$

 335,025 

  

$

 431,846 

  

$

 - 

  

$

 766,871 

Direct operating expenses

  

 141,813 

  

  

 257,745 

  

  

 - 

  

  

 399,558 

Selling, general and

   administrative expenses

  

 55,121 

  

  

 77,899 

  

  

 - 

  

  

 133,020 

Corporate expenses

  

 - 

  

  

 - 

  

  

 33,892 

  

  

 33,892 

Depreciation and amortization

  

 47,041 

  

  

 49,930 

  

  

 595 

  

  

 97,566 

Other operating income, net

  

 - 

  

  

 - 

  

  

 3,697 

  

  

 3,697 

Operating income (loss)

$

 91,050 

  

$

 46,272 

  

$

 (30,790) 

  

$

 106,532 

  

  

  

  

  

  

  

  

  

  

  

  

Capital expenditures

$

 16,756 

  

$

 22,792 

  

$

 1,116 

  

$

 40,664 

Share-based compensation expense

$

 - 

  

$

 - 

  

$

 2,334 

  

$

 2,334 

  

  

  

  

  

  

  

  

  

  

  

  

Six Months Ended June 30, 2014

Revenue

$

 587,904 

  

$

 828,552 

  

$

 - 

  

$

 1,416,456 

Direct operating expenses

  

 273,022 

  

  

 521,635 

  

  

 - 

  

  

 794,657 

Selling, general and

   administrative expenses

  

 103,532 

  

  

 169,689 

  

  

 - 

  

  

 273,221 

Corporate expenses

  

 - 

  

  

 - 

  

  

 64,030 

  

  

 64,030 

Depreciation and amortization

  

 95,121 

  

  

 100,658 

  

  

 1,688 

  

  

 197,467 

Other operating income, net

  

 - 

  

  

 - 

  

  

 2,901 

  

  

 2,901 

Operating income (loss)

$

 116,229 

  

$

 36,570 

  

$

 (62,817) 

  

$

 89,982 

  

  

  

  

  

  

  

  

  

  

  

  

Capital expenditures

$

 29,410 

  

$

 61,355 

  

$

 2,202 

  

$

 92,967 

Share-based compensation expense

$

 - 

  

$

 - 

  

$

 4,250 

  

$

 4,250 

  

  

  

  

  

  

  

  

  

  

  

  

Six Months Ended June 30, 2013

Revenue

$

 621,486 

  

$

 795,595 

  

$

 - 

  

$

 1,417,081 

Direct operating expenses

  

 278,704 

  

  

 507,045 

  

  

 - 

  

  

 785,749 

Selling, general and

   administrative expenses

  

 109,493 

  

  

 163,088 

  

  

 - 

  

  

 272,581 

Corporate expenses

  

 - 

  

  

 - 

  

  

 61,716 

  

  

 61,716 

Depreciation and amortization

  

 95,726 

  

  

 100,923 

  

  

 1,244 

  

  

 197,893 

Other operating income, net

  

 - 

  

  

 - 

  

  

 5,800 

  

  

 5,800 

Operating income (loss)

$

 137,563 

  

$

 24,539 

  

$

 (57,160) 

  

$

 104,942 

  

  

  

  

  

  

  

  

  

  

  

  

Capital expenditures

$

 29,651 

  

$

 48,700 

  

$

 1,754 

  

$

 80,105 

Share-based compensation expense

$

 - 

  

$

 - 

  

$

 3,995 

  

$

 3,995 

11

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

NOTE 9 – GUARANTOR SUBSIDIARIES

The Company and certain of the Company’s direct and indirect wholly-owned domestic subsidiaries (the “Guarantor Subsidiaries”) fully and unconditionally guarantee on a joint and several basis certain of the outstanding indebtedness of CCWH (the “Subsidiary Issuer”).  The following consolidating schedules present financial information on a combined basis in conformity with the SEC’s Regulation S-X Rule 3-10(d):

 

(In thousands)

As of June 30, 2014

  

  

Parent

  

Subsidiary

  

Guarantor

  

Non-Guarantor

  

  

  

  

  

  

  

  

Company

  

Issuer

  

Subsidiaries

  

Subsidiaries

  

Eliminations

  

Consolidated

Cash and cash equivalents

$

 35,121 

  

$

 - 

  

$

 7,203 

  

$

 183,650 

  

$

 - 

  

$

 225,974 

Accounts receivable, net of allowance

  

 - 

  

  

 - 

  

  

 216,108 

  

  

 525,574 

  

  

 - 

  

  

 741,682 

Intercompany receivables

  

 - 

  

  

 189,985 

  

  

 1,604,536 

  

  

 - 

  

  

 (1,794,521) 

  

  

 - 

Prepaid expenses

  

 1,327 

  

  

 - 

  

  

 63,297 

  

  

 78,276 

  

  

 - 

  

  

 142,900 

Other current assets

  

 65 

  

  

 6,850 

  

  

 22,108 

  

  

 45,558 

  

  

 - 

  

  

 74,581 

  

Total Current Assets

  

 36,513 

  

  

 196,835 

  

  

 1,913,252 

  

  

 833,058 

  

  

 (1,794,521) 

  

  

 1,185,137 

Structures, net

  

 - 

  

  

 - 

  

  

 1,100,054 

  

  

 610,090 

  

  

 - 

  

  

 1,710,144 

Other property, plant and equipment, net

  

 - 

  

  

 - 

  

  

 161,635 

  

  

 136,138 

  

  

 - 

  

  

 297,773 

Indefinite-lived intangibles

  

 - 

  

  

 - 

  

  

 1,055,890 

  

  

 12,001 

  

  

 - 

  

  

 1,067,891 

Other intangibles, net

  

 - 

  

  

 - 

  

  

 335,459 

  

  

 120,547 

  

  

 - 

  

  

 456,006 

Goodwill

  

 - 

  

  

 - 

  

  

 571,932 

  

  

 278,982 

  

  

 - 

  

  

 850,914 

Due from Clear Channel Communications

  

 950,172 

  

  

 - 

  

  

 - 

  

  

 - 

  

  

 - 

  

  

 950,172 

Intercompany notes receivable

  

 182,026 

  

  

 4,996,551 

  

  

 - 

  

  

 - 

  

  

 (5,178,577) 

  

  

 - 

Other assets

  

 346,863 

  

  

 853,396 

  

  

 1,355,744 

  

  

 63,847 

  

  

 (2,468,093) 

  

  

 151,757 

  

Total Assets

$

 1,515,574 

  

$

 6,046,782 

  

$

 6,493,966 

  

$

 2,054,663 

  

$

 (9,441,191) 

  

$

 6,669,794 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Accounts payable

$

 - 

  

$

 - 

  

$

 6,422 

  

$

 63,487 

  

$

 - 

  

$

 69,909 

Intercompany payable

  

 1,601,604 

  

  

 - 

  

  

 189,985 

  

  

 2,932 

  

  

 (1,794,521) 

  

  

 - 

Accrued expenses

  

 534 

  

  

 (1,130) 

  

  

 94,029 

  

  

 441,100 

  

  

 - 

  

  

 534,533 

Deferred income

  

 - 

  

  

 - 

  

  

 61,388 

  

  

 90,468 

  

  

 - 

  

  

 151,856 

Current portion of long-term debt

  

 - 

  

  

 - 

  

  

 53 

  

  

 15,009 

  

  

 - 

  

  

 15,062 

  

Total Current Liabilities

  

 1,602,138 

  

  

 (1,130) 

  

  

 351,877 

  

  

 612,996 

  

  

 (1,794,521) 

  

  

 771,360 

Long-term debt

  

 - 

  

  

 4,918,528 

  

  

 1,107 

  

  

 - 

  

  

 - 

  

  

 4,919,635 

Intercompany notes payable

  

 - 

  

  

 - 

  

  

 5,034,451 

  

  

 144,126 

  

  

 (5,178,577) 

  

  

 - 

Deferred tax liability

  

 186 

  

  

 85 

  

  

 614,501 

  

  

 15,078 

  

  

 - 

  

  

 629,850 

Other long-term liabilities

  

 - 

  

  

 - 

  

  

 145,104 

  

  

 100,547 

  

  

 - 

  

  

 245,651 

Total shareholders' equity

  

 (86,750) 

  

  

 1,129,299 

  

  

 346,926 

  

  

 1,181,916 

  

  

 (2,468,093) 

  

  

 103,298 

  

Total Liabilities and Shareholders'

   Equity

$

 1,515,574 

  

$

 6,046,782 

  

$

 6,493,966 

  

$

 2,054,663 

  

$

 (9,441,191) 

  

$

 6,669,794 

 

13

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

 

(In thousands)

As of December 31, 2013

  

  

Parent

  

Subsidiary

  

Guarantor

  

Non-Guarantor

  

  

  

  

  

  

  

  

Company

  

Issuer

  

Subsidiaries

  

Subsidiaries

  

Eliminations

  

Consolidated

Cash and cash equivalents

$

 83,185 

  

$

 - 

  

$

 5,885 

  

$

 225,475 

  

$

 - 

  

$

 314,545 

Accounts receivable, net of allowance

  

 - 

  

  

 - 

  

  

 207,753 

  

  

 502,776 

  

  

 - 

  

  

 710,529 

Intercompany receivables

  

 - 

  

  

 186,659 

  

  

 1,592,228 

  

  

 - 

  

  

 (1,778,887) 

  

  

 - 

Prepaid expenses

  

 1,390 

  

  

 - 

  

  

 72,006 

  

  

 71,625 

  

  

 - 

  

  

 145,021 

Other current assets

  

 3 

  

  

 6,850 

  

  

 20,333 

  

  

 41,147 

  

  

 - 

  

  

 68,333 

  

Total Current Assets

  

 84,578 

  

  

 193,509 

  

  

 1,898,205 

  

  

 841,023 

  

  

 (1,778,887) 

  

  

 1,238,428 

Structures, net

  

 - 

  

  

 - 

  

  

 1,142,094 

  

  

 623,416 

  

  

 - 

  

  

 1,765,510 

Other property, plant and equipment, net

  

 - 

  

  

 - 

  

  

 178,149 

  

  

 137,439 

  

  

 - 

  

  

 315,588 

Indefinite-lived intangibles

  

 - 

  

  

 - 

  

  

 1,055,728 

  

  

 12,055 

  

  

 - 

  

  

 1,067,783 

Other intangibles, net

  

 - 

  

  

 - 

  

  

 344,178 

  

  

 143,748 

  

  

 - 

  

  

 487,926 

Goodwill

  

 - 

  

  

 - 

  

  

 571,932 

  

  

 278,202 

  

  

 - 

  

  

 850,134 

Due from Clear Channel Communications

  

 879,108 

  

  

 - 

  

  

 - 

  

  

 - 

  

  

 - 

  

  

 879,108 

Intercompany notes receivable

  

 182,026 

  

  

 5,002,517 

  

  

 - 

  

  

 - 

  

  

 (5,184,543) 

  

  

 - 

Other assets

  

 408,083 

  

  

 871,363 

  

  

 1,373,504 

  

  

 61,626 

  

  

 (2,559,661) 

  

  

 154,915 

  

Total Assets

$

 1,553,795 

  

$

 6,067,389 

  

$

 6,563,790 

  

$

 2,097,509 

  

$

 (9,523,091) 

  

$

 6,759,392 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Accounts payable

$

 - 

  

$

 - 

  

$

 11,742 

  

$

 74,140 

  

$

 - 

  

$

 85,882 

Intercompany payable

  

 1,586,370 

  

  

 - 

  

  

 186,659 

  

  

 5,858 

  

  

 (1,778,887) 

  

  

 - 

Accrued expenses

  

 725 

  

  

 1,342 

  

  

 105,909 

  

  

 455,790 

  

  

 - 

  

  

 563,766 

Deferred income

  

 - 

  

  

 - 

  

  

 42,591 

  

  

 65,352 

  

  

 - 

  

  

 107,943 

Current portion of long-term debt

  

 - 

  

  

 - 

  

  

 47 

  

  

 15,952 

  

  

 - 

  

  

 15,999 

  

Total Current Liabilities

  

 1,587,095 

  

  

 1,342 

  

  

 346,948 

  

  

 617,092 

  

  

 (1,778,887) 

  

  

 773,590 

Long-term debt

  

 - 

  

  

 4,918,243 

  

  

 1,134 

  

  

 - 

  

  

 - 

  

  

 4,919,377 

Intercompany notes payable

  

 - 

  

  

 - 

  

  

 5,025,497 

  

  

 159,046 

  

  

 (5,184,543) 

  

  

 - 

Deferred tax liability

  

 175 

  

  

 85 

  

  

 638,141 

  

  

 17,749 

  

  

 - 

  

  

 656,150 

Other long-term liabilities

  

 - 

  

  

 - 

  

  

 143,925 

  

  

 106,242 

  

  

 - 

  

  

 250,167 

Total shareholders' equity

  

 (33,475) 

  

  

 1,147,719 

  

  

 408,145 

  

  

 1,197,380 

  

  

 (2,559,661) 

  

  

 160,108 

  

Total Liabilities and Shareholders'

   Equity

$

 1,553,795 

  

$

 6,067,389 

  

$

 6,563,790 

  

$

 2,097,509 

  

$

 (9,523,091) 

  

$

 6,759,392 

 

14

 


 

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

  

 

(In thousands)

Three Months Ended June 30, 2014

  

  

Parent

  

Subsidiary

  

Guarantor

  

Non-Guarantor

  

  

  

  

  

  

  

  

Company

  

Issuer

  

Subsidiaries

  

Subsidiaries

  

Eliminations

  

Consolidated

Revenue

$

 - 

  

$

 - 

  

$

 295,190 

  

$

 486,015 

  

$

 - 

  

$

 781,205 

Operating expenses:

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Direct operating expenses

  

 - 

  

  

 - 

  

  

 123,377 

  

  

 289,767 

  

  

 - 

  

  

 413,144 

  

Selling, general and administrative expenses

  

 - 

  

  

 - 

  

  

 48,493 

  

  

 91,778 

  

  

 - 

  

  

 140,271 

  

Corporate expenses

  

 2,769 

  

  

 - 

  

  

 16,016 

  

  

 14,548 

  

  

 - 

  

  

 33,333 

  

Depreciation and amortization

  

 - 

  

  

 - 

  

  

 47,466 

  

  

 51,260 

  

  

 - 

  

  

 98,726 

  

Other operating income (expense), net

  

 (142) 

  

  

 - 

  

  

 814 

  

  

 (425) 

  

  

 - 

  

  

 247 

Operating income (loss)

  

 (2,911) 

  

  

 - 

  

  

 60,652 

  

  

 38,237 

  

  

 - 

  

  

 95,978 

Interest (income) expense, net

  

 (2)