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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2014, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to _________.
Commission File Number 001-09645
IHEARTCOMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas
74-1787539
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
200 East Basse Road
San Antonio, Texas
78209
(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: None
Securities registered pursuant to Section 12(g) of the Act: None
CLEAR CHANNEL COMMUNICATIONS, INC.
(former name, former address and former fiscal year, if changed since last report)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [ ] NO [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YES [ ] NO [X]
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 [ ]
The registrant meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K as, among other things, all of the registrant’s equity
securities are owned indirectly by iHeartMedia, Inc., which is a reporting company under the Securities Exchange Act of 1934 and which has filed
with the SEC all materials required to be filed pursuant to Section 13, 14 or 15(d) thereof, and the registrant is therefore filing this Form 10-K with a
reduced disclosure format.
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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 [ ] Non-accelerated filer [X] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). YES [ ] NO [X]
The registrant has no voting or nonvoting equity held by non-affiliates.
On February 11, 2015, there were 500,000,000 outstanding shares of common stock.
DOCUMENTS INCORPORATED BY REFERENCE
None.

Table of contents

  • Page 1
    ... _____ to _____. Commission File Number 001-09645 IHEARTCOMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Texas (State or other jurisdiction of incorporation or organization) 200 East Basse Road San Antonio, Texas (Address of principal executive offices) (210) 822-2828 74...

  • Page 2
    ...Financial Data...27 Management's Discussion and Analysis of Financial Condition and Results of Operations ...28 Quantitative and Qualitative Disclosures About Market Risk ...68 Financial Statements and Supplementary Data ...69 Changes in and Disagreements with Accountants on Accounting and Financial...

  • Page 3
    ... offices in New York, New York. Our headquarters are located at 200 East Basse Road, San Antonio, Texas 78209 (telephone: 210-822-2828). On September 16, 2014, CC Media Holdings, Inc., the parent company of the Company, issued a press release that announced a change of its name to "iHeartMedia...

  • Page 4
    ... audiences. Our iHM strategy also focuses on continuing to improve the operations of our stations by providing valuable programming and promotions, as well as sharing best practices across our stations in marketing, distribution, sales and cost management. Promote Broadcast Radio Media Spending...

  • Page 5
    ... 31, 2014, 2013 and 2012, respectively. The primary source of revenue in our iHM segment is the sale of commercials on our radio stations for local and national advertising. Our iHeartRadio mobile application and website, our station websites, national live events and Total Traffic & Weather Network...

  • Page 6
    ... to operate our radio stations. The following table provides the number of owned radio stations in the top 25 Nielsen-ranked markets within our iHM segment. Nielsen Market Rank(1) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Market New York, NY Los Angeles, CA Chicago, IL San...

  • Page 7
    ...our mobile and digital applications and our traffic business, compete for listeners and advertising revenues directly with other radio stations within their respective markets, as well as with other advertising media, including broadcast and cable television, online, print media, outdoor advertising...

  • Page 8
    ... we have deployed more than 1,100 digital billboards in 37 markets in the United States. Sources of Revenue Americas outdoor generated 20%, 21% and 20% of our revenue in 2014, 2013 and 2012, respectively. Americas outdoor revenue is derived from the sale of advertising copy placed on our traditional...

  • Page 9
    ... effects. The majority of our spectaculars are located in Times Square in New York City, the Gardiner Expressway in Toronto, and the Fashion Show Mall and Miracle Mile Shops in Las Vegas. Client contracts for spectaculars typically have terms of one year or longer. A wallscape is a display that...

  • Page 10
    ... strategy as we remain committed to the digital development of out-of-home communication solutions internationally. Through our international digital brand, Clear Channel Play, we are able to offer networks of digital displays in multiple formats and multiple environments including bus shelters...

  • Page 11
    ... out-of-home advertising displays. The following table shows the approximate percentage of revenue derived from each inventory category of our International outdoor segment: Year Ended December 31, 2014 2013 2012 49% 48% 46% 22% 23% 26% 9% 9% 8% 20% 100% 20% 100% 20% 100% Street furniture displays...

  • Page 12
    ... spot and online advertising. National spot advertising is commercial airtime sold to advertisers on behalf of radio and television stations. Katz Media represents its media clients pursuant to media representation contracts, which typically have terms of up to ten years in length. Employees As of...

  • Page 13
    ... over 15% of the licensee station's total weekly programming, or has an attributable broadcast or newspaper interest in the same market (the "EDP Rule"). An entity that owns one or more radio stations in a market and programs more than 15% of the broadcast time, or sells more than 15% per week...

  • Page 14
    ...to the public via periodic reports filed with the FCC or placed in stations' public files and websites. Broadcasters could be sanctioned for noncompliance. Technical Rules Numerous FCC rules govern the technical operating parameters of radio stations, including permissible operating frequency, power...

  • Page 15
    ... and held to apply to radio broadcasting or Internet simulcasting, it could impede our ability to broadcast or stream pre-72 recordings and/or increase our licensing and negotiating costs of doing so. The rates at which we pay royalties to copyright owners are privately negotiated or set pursuant to...

  • Page 16
    ... significant new programming and operational requirements designed to increase local community-responsive programming and enhance public interest reporting requirements. Regulation of our Americas and International Outdoor Advertising Businesses The outdoor advertising industry in the United States...

  • Page 17
    ...reasonable estimates and used appropriate assumptions to calculate the fair value of our licenses, billboard permits and reporting units, it is possible a material change could occur. If actual market conditions and operational performance for the respective reporting units underlying the intangible...

  • Page 18
    ... outdoor advertising businesses, as well as with other media, such as newspapers, magazines, television, direct mail, portable digital audio players, mobile devices, satellite radio, Internet-based services and live entertainment, within their respective markets. Audience ratings and market shares...

  • Page 19
    ..., may limit our radio broadcasting and other iHeartMedia operations or adversely affect our business and financial results Congress and several federal agencies, including the FCC, extensively regulate the domestic radio industry. For example, the FCC could impact our profitability by imposing...

  • Page 20
    ... our broadcast radio station websites and our iHeartRadio digital platform collect personal information as users register for our services, fill out their listener profiles, post comments, use our social networking features, participate in polls and contests and sign-up to receive email newsletters...

  • Page 21
    ...in our direct revenues from such advertisements and an increase in the available space on the existing inventory of billboards in the outdoor advertising industry. Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations As the owner or operator of...

  • Page 22
    ... to ongoing agency and court proceedings. Future changes could restrict our ability to acquire new radio assets or businesses. Significant equity investors control us and may have conflicts of interest with us in the future Private equity funds sponsored by or co-investors with Bain Capital and THL...

  • Page 23
    ... increase the cost of such financing. If compliance with the debt obligations materially hinders our ability to operate our business and adapt to changing industry conditions, we may lose market share, our revenue may decline and our operating results may suffer. The terms of our credit facilities...

  • Page 24
    ...capital markets and our financial condition at such time. Any refinancing of the debt could be at higher interest rates and increase debt service obligations and may require us and our subsidiaries to comply with more onerous covenants, which could further restrict our business operations. The terms...

  • Page 25
    ...requirements; fluctuations in operating costs; technological changes and innovations; changes in labor conditions, including on-air talent, program hosts and management; capital expenditure requirements; risks of doing business in foreign countries; fluctuations in exchange rates and currency values...

  • Page 26
    ... 2. PROPERTIES Corporate Our corporate headquarters are located in San Antonio, Texas, where we own space in an executive office building and lease a data and administrative service center. In addition, certain of our executive and other operations are located in New York, New York, Phoenix, Arizona...

  • Page 27
    ...act of the City, and nullified its existence. After further proceedings, 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 Clear Channel Outdoor, Inc...

  • Page 28
    ... to pay dividends. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Sources of Capital" and Note 5 to the Consolidated Financial Statements. Sales of Unregistered Securities We did not sell any equity securities during 2014...

  • Page 29
    ...our consolidated financial statements and the related notes thereto located within Item 8 of Part II of this Annual Report on Form 10-K. (In thousands) 2014 Results of Operations Data: Revenue Operating expenses: Direct operating expenses (excludes depreciation and amortization) Selling, general and...

  • Page 30
    ... advertisers. We also provide streaming content via the Internet, mobile and other digital platforms which reach national, regional and local audiences and derive revenues primarily from selling advertising time with advertising contracts similar to those used by our radio stations. iHM management...

  • Page 31
    .... The terms of our site leases and revenue-sharing or minimum guaranteed contracts generally range from one to 20 years. Americas Outdoor Advertising Our advertising rates are based on a number of different factors including location, competition, type and size of display, illumination, market and...

  • Page 32
    ... exchange impacts, consolidated revenue increased $98.2 million over 2013. iHM revenue increased $29.9 million during 2014 compared to 2013 primarily driven by increased revenues from political advertising, our traffic and weather business, and core national broadcast radio. Americas outdoor revenue...

  • Page 33
    .... Excluding the impact of foreign exchange movements, direct operating expenses in our International outdoor segment increased $22.6 million primarily as a result of higher variable costs associated with new contracts. Years Ended December 31, 2014 2013 $ 6,318,533 $ 6,243,044 2,534,365 1,687...

  • Page 34
    ...other costs incurred in connection with streamlining our businesses. Of the strategic revenue and efficiency costs, $13.0 million are reported within direct operating expenses, $23.6 million are reported within SG&A and $34.0 million are reported within corporate expense. In 2013, such costs totaled...

  • Page 35
    ...June 2013 exchange offer of a portion of 10.75% Senior Cash Pay Notes due 2016 and 11.00%/11.75% Senior Toggle Notes due 2016 for newly-issued 14.0% Senior Notes due 2021 and in connection with the senior secured credit facility amendments discussed elsewhere in the MD&A, all of which were accounted...

  • Page 36
    ... the year as a result of increased advertising on our iHeartRadio platform. Partially offsetting these increases was a decrease in core local broadcast radio and syndication revenues. Direct operating expenses decreased $21.6 million during 2014, primarily resulting from lower costs in our national...

  • Page 37
    ...) Revenue Direct operating expenses SG&A expenses Depreciation and amortization Operating income $ Years Ended December 31, 2014 2013 1,708,069 $ 1,655,738 1,041,274 1,028,059 336,550 322,840 207,431 203,927 122,814 $ 100,912 % Change 3% 1% 4% 2% 22% $ International outdoor revenue increased...

  • Page 38
    ...2012. iHM direct operating expenses increased $59.9 million, primarily due to higher promotional and sponsorship costs for events such as the iHeartRadio Music Festival and Jingle Balls and an increase in digital expenses related to our iHeartRadio digital platform including higher digital streaming...

  • Page 39
    ... in foreign exchange compared to 2012. iHM SG&A expenses increased $27.0 million primarily due to compensation expenses and amounts related to our variable compensation plans including commissions, which were higher for the 2013 period in connection with increasing national and digital revenues. SG...

  • Page 40
    ...June 2013 exchange offer of a portion of 10.75% Senior Cash Pay Notes due 2016 and 11.00%/11.75% Senior Toggle Notes due 2016 for newly-issued 14.0% Senior Notes due 2021 and in connection with the senior secured credit facility amendments discussed elsewhere in the MD&A, all of which were accounted...

  • Page 41
    ... entertainment, as well as growth in digital advertising revenue as a result of increased listenership on our iHeartRadio platform, with total listening hours increasing 29%. Promotional and sponsorship revenues were also higher driven by events, such as the iHeartRadio Music Festival, Jingle Balls...

  • Page 42
    ...) Revenue Direct operating expenses SG&A expenses Depreciation and amortization Operating income $ Years Ended December 31, 2013 2012 1,655,738 $ 1,667,687 1,028,059 1,021,152 322,840 363,417 203,927 205,258 100,912 $ 77,860 % Change (1%) 1% (11%) (1%) 30% $ International outdoor revenue decreased...

  • Page 43
    ... the years ended December 31, 2014, 2013 and 2012, respectively. On October 22, 2012, Parent granted 1.8 million restricted shares of its Class A common stock (the "Replacement Shares") in exchange for 2.0 million stock options granted under the Clear Channel 2008 Executive Incentive Plan pursuant...

  • Page 44
    ... compensation payments in 2012 associated with our employee incentive programs based on 2011 operating performance compared to such payments made in 2011 based on 2010 performance. Investing Activities 2014 Cash used for investing activities of $88.7 million in 2014 primarily reflected capital...

  • Page 45
    ..., borrowings under its receivables based credit facility, and cash on hand. Other cash used for financing activities included payments to holders of 10.75% Senior Cash Pay Notes due 2016 and 11.00%/11.75% Senior Toggle Notes due 2016 in connection with exchange offers in June 2013 of $32.5 million...

  • Page 46
    ... EBITDA limitation contained in our senior secured credit facilities. We believe our long-term plans, which include promoting spending in our industries and capitalizing on our diverse geographic and product opportunities, including the continued investment in our media and entertainment initiatives...

  • Page 47
    ... 2014 and 2013, we had the following debt outstanding, net of cash and cash equivalents: December 31, (In millions) Senior Secured Credit Facilities: Term Loan B Facility Due 2016 Term Loan C - Asset Sale Facility Due 2016 Term Loan D Facility Due 2019 Term Loan E Facility Due 2019 Receivables Based...

  • Page 48
    ... of Term Loans and subject to customary credits; 100% of the net cash proceeds of sales or other dispositions of specified assets being marketed for sale (including casualty and condemnation events), subject to certain exceptions; 100% (which percentage may be reduced to 75% and 50% based upon...

  • Page 49
    ... any time without premium or penalty, other than customary "breakage" costs with respect to Eurocurrency rate loans. Amendments On October 25, 2012, we amended the terms of our senior secured credit facilities (the "Amendments"). The Amendments, among other things: (i) permit exchange offers of Term...

  • Page 50
    ... notes; and a lien on the accounts receivable and related assets securing our receivables based credit facility that is junior to the lien securing our obligations under such credit facility. ï,· Certain Covenants and Events of Default The senior secured credit facilities require us to comply on...

  • Page 51
    ... provided by operating activities for the year ended December 31, 2014: (In Millions) Consolidated EBITDA (as defined by our senior secured credit facilities) Less adjustments to consolidated EBITDA (as defined by our senior secured credit facilities): Costs incurred in connection with the closure...

  • Page 52
    ... 31, 2014, there were no borrowings outstanding under our receivables based credit facility. The receivables based credit facility provides revolving credit commitments of $535.0 million, subject to a borrowing base. The borrowing base at any time equals 90% of the eligible accounts receivable of...

  • Page 53
    ... 2019, a pro rata share of any recovery received on account of the principal properties, subject to certain terms and conditions. We may redeem the Priority Guarantee Notes due 2019 at our option, in whole or part, at any time prior to July 15, 2015, at a price equal to 100% of the principal amount...

  • Page 54
    ... securing our receivables based credit facility junior in priority to the lien securing our obligations thereunder, subject to certain exceptions. We may redeem the Priority Guarantee Notes due 2021 at our option, in whole or part, at any time prior to March 1, 2016, at a price equal to 100% of the...

  • Page 55
    ...the third quarter of 2013, CCOH entered into a five-year senior secured revolving credit facility with an aggregate principal amount of $75.0 million. The revolving credit facility may be used for working capital needs, to issue letters of credit and for other general corporate purposes. At December...

  • Page 56
    ...ours). The senior notes due 2018 mature on January 15, 2018 and bear interest at a rate of 10.0% per annum, payable semi-annually on January 15 and July 15 of each year, which began on July 15, 2014. The senior notes due 2018 are senior, unsecured obligations that are effectively subordinated to our...

  • Page 57
    ... Notes are guaranteed by CCOH, Clear Channel Outdoor, Inc. ("CCOI") and certain of CCOH's direct and indirect subsidiaries. The CCWH Senior...year, which began on May 15, 2013. At any time prior to November 15, 2017, CCWH may redeem the CCWH Senior Notes, in whole or in part, at a price equal to 100...

  • Page 58
    ... exceptions that allow CCOH to pay dividends, including (i) $525.0 million of dividends made pursuant to general restricted payment baskets and (ii) dividends made using proceeds received upon a demand by CCOH of amounts outstanding under the revolving promissory note issued by us to CCOH. CCWH...

  • Page 59
    ... in aggregate principal amount of 10.0% Senior Notes due 2018 in a private offer. On June 6, 2014, CCU Escrow Corporation merged into us, and we assumed CCU Escrow Corporation's obligations under the Senior Notes due 2018. Using the proceeds from the issuance of the 10.0% Senior Notes due 2018...

  • Page 60
    ...to make applicable high yield discount obligation catch-up payments beginning in May 2018 with respect to the new Term Loan D and any notes issued in connection with our exchange of our outstanding 10.75% senior cash pay notes due 2016 and 11.00%/11.75% senior toggle notes due 2016. During June 2013...

  • Page 61
    ... on sale of marketable securities." 2012 During 2012, our International outdoor segment sold its international neon business and its outdoor advertising business in Romania, resulting in an aggregate gain of $39.7 million included in "Other operating income, net." Uses of Capital Debt Repurchases...

  • Page 62
    ... date. During October 2012, we consummated a private exchange offer of $2.0 billion aggregate principal amount of term loans under its senior secured credit facilities for a like principal amount of newly issued Priority Guarantee Notes due 2019. The exchange offer was available only to eligible...

  • Page 63
    ... this transaction the Company received 28 radio stations. One radio station was placed into the Brunswick Station Trust, LLC in order to comply with FCC media ownership rules where it is being marketed for sale, and the Company is the beneficiary of this trust. The exchange was accounted for at fair...

  • Page 64
    ...We lease office space, certain broadcast facilities, equipment and the majority of the land occupied by our outdoor advertising structures under long-term operating leases. Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price...

  • Page 65
    ... from operations in that period. Our International outdoor segment typically experiences its strongest performance in the second and fourth quarters of the calendar year. We expect this trend to continue in the future. MARKET RISK We are exposed to market risks arising from changes in market rates...

  • Page 66
    ... higher costs by increasing the effective advertising rates of most of our broadcasting stations and outdoor display faces in our iHM, Americas outdoor, and International outdoor operations. NEW ACCOUNTING PRONOUNCEMENTS During the first quarter of 2014, the Company adopted the Financial Accounting...

  • Page 67
    ... the purchase price to all of our assets and liabilities at estimated fair values, including our FCC licenses and our billboard permits. Indefinite-lived intangible assets, such as our FCC licenses and our billboard permits, are reviewed annually for possible impairment using the direct valuation...

  • Page 68
    ... method are 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 riskadjusted discount rate and terminal values. This data is populated using industry normalized...

  • Page 69
    ... our business plans for the periods 2014 through 2018. Our cash flow assumptions are based on detailed, multi-year forecasts performed by each of our operating segments, and reflect the advertising outlook across our businesses. Cash flows beyond 2018 are projected to grow at a perpetual growth rate...

  • Page 70
    ... to its original condition. Due to the high rate of lease renewals over a long period of time, our calculation assumes all related assets will be removed at some period over the next 50 years. An estimate of third-party cost information is used with respect to the dismantling of the structures and...

  • Page 71
    ... the Public Company Accounting Oversight Board (United States) and, accordingly, they have expressed their professional opinion on the financial statements in their report included herein. The Board of Directors meets with the independent registered public accounting firm and management periodically...

  • Page 72
    ...'s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the...

  • Page 73
    ..., INC. AND SUBSIDIARIES (In thousands) CURRENT ASSETS Cash and cash equivalents Accounts receivable, net of allowance of $39,698 in 2014 and $48,401 in 2013 Prepaid expenses Other current assets Total Current Assets PROPERTY, PLANT AND EQUIPMENT Structures, net Other property, plant and...

  • Page 74
    ... STATEMENTS OF COMPREHENSIVE LOSS OF IHEARTCOMMUNICATIONS, INC. AND SUBSIDIARIES (In thousands) 2014 Revenue Operating expenses: Direct operating expenses (excludes depreciation and amortization) Selling, general and administrative expenses (excludes depreciation and amortization) Corporate...

  • Page 75
    ... STATEMENTS OF CHANGES ...2013 Net income (loss) Issuance (forfeiture) of restricted stock Amortization of share-based compensation Dividend declared and paid to noncontrolling interests Purchases of additional noncontrolling interest Other Other comprehensive loss Balances at December 31, 2014 Total...

  • Page 76
    ...and amortization Deferred taxes Provision for doubtful accounts Amortization of deferred financing charges and note discounts, net Share-based compensation Gain on disposal of operating and fixed assets (Gain) loss on marketable securities Equity in (earnings) loss of nonconsolidated affiliates Loss...

  • Page 77
    ...the Company was no longer a public company. The Company's reportable operating segments are iHeartMedia ("iHM"), Americas outdoor advertising ("Americas outdoor"), and International outdoor advertising ("International outdoor"). The iHM segment provides media and entertainment services via broadcast...

  • Page 78
    ... is limited due to the large number and the geographic diversification of its customers. Business Combinations The Company accounts for its business combinations under the acquisition method of accounting. The total cost of an acquisition is allocated to the underlying identifiable net assets, based...

  • Page 79
    .... The Company performs its annual impairment test for its FCC licenses and permits using a direct valuation technique as prescribed in ASC 805-20-S99. The Company engages Mesirow Financial Consulting LLC ("Mesirow Financial"), a third party valuation firm, to assist the Company in the development of...

  • Page 80
    ... ratably over the term of the contract. Advertising revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for the Company's media and entertainment and outdoor operations. Payments received in advance of...

  • Page 81
    ... of the Company receive equity awards from Parent's equity incentive plan or CCOH's equity incentive plan. Foreign Currency Results of operations for foreign subsidiaries and foreign equity investees are translated into U.S. dollars using the average exchange rates during the year. The assets...

  • Page 82
    ... ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This new standard clarifies that a performance target in a share-based compensation award that could be achieved after an employee...

  • Page 83
    ... method are 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...

  • Page 84
    ... definite-lived intangible assets: (In thousands) 2015 2016 2017 2018 2019 $ 236,019 219,485 197,061 127,730 42,274 Annual Impairment Test to Goodwill The Company performs its annual impairment test on October 1 of each year. Each of the Company's U.S. radio markets and outdoor advertising markets...

  • Page 85
    ..., operating margins, growth rates and discount rates based on its budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management's judgment in applying these factors. In 2014, the Company...

  • Page 86
    ... cost is capitalized as part of the related long-lived assets' carrying value. Due to the high rate of lease renewals over a long period of time, the calculation assumes that all related assets will be removed at some period over the next 50 years. An estimate of third-party cost information is used...

  • Page 87
    ... Pay Notes Due 2016 11.00%/11.75% Senior Toggle Notes Due 2016 14.0% Senior Notes Due 2021 Legacy Notes 10.0% Senior Notes Due 2018 Subsidiary Senior Notes Other Subsidiary Debt Purchase accounting adjustments and original issue discount Less: current portion Total long-term debt December 31, 2014...

  • Page 88
    ...Company's capital stock; make investments, loans, or advances; prepay certain junior indebtedness; engage in certain transactions with affiliates; amend material agreements governing certain junior indebtedness; and change lines of business. Receivables Based Credit Facility As of December 31, 2014...

  • Page 89
    ... guarantors of the Company's senior secured credit facilities. All obligations under the receivables based credit facility, and the guarantees of those obligations, are secured by a perfected security interest in all of the Company's and all of the guarantors' accounts receivable and related assets...

  • Page 90
    IHEARTCOMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) • change lines of business. Priority Guarantee Notes As of December 31, 2014, the Company had outstanding Priority Guarantee Notes consisting of: (In thousands) Maturity Date 9.0% Priority Guarantee...

  • Page 91
    ...the third quarter of 2013, CCOH entered into a five-year senior secured revolving credit facility with an aggregate principal amount of $75.0 million. The revolving credit facility may be used for working capital needs, to issue letters of credit and for other general corporate purposes. At December...

  • Page 92
    ... As of December 31, 2014, the Company's subsidiary, Clear Channel Worldwide Holdings, Inc. ("CCWH") had outstanding notes consisting of: (In thousands) Maturity Date CCWH Senior Notes: 6.5% Series A Senior Notes Due 2022 11/15/2022 Interest Rate 6.5% Interest Payment Terms Payable to the trustee...

  • Page 93
    ... Debt Future maturities of long-term debt at December 31, 2014 are as follows: (in thousands) 2015 2016 2017 2018 2019 Thereafter Total (1) (1) $ 3,604 1,126,920 8,208 909,272 8,300,043 10,212,868 20,560,915 $ Excludes purchase accounting adjustments and original issue discount of $234.9 million...

  • Page 94
    ... land occupied by its outdoor advertising structures under long-term operating leases. The Company accounts for these leases in accordance with the policies described above. The Company's contracts with municipal bodies or private companies relating to street furniture, billboards, transit and malls...

  • Page 95
    ...act of the City, and nullified its existence. After further proceedings, 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 Clear Channel Outdoor, Inc...

  • Page 96
    ... faces to traditional static signs, and has obtained a number of such permits. Clear Channel Outdoor, Inc. is also pursuing a new ordinance to permit digital signage in the City. NOTE 8 - GUARANTEES As of December 31, 2014, the Company had outstanding surety bonds and commercial standby letters of...

  • Page 97
    ... deductible goodwill or sells its FCC licenses or permits. As the Company continues to amortize its tax basis in its FCC licenses, permits and tax deductible goodwill, the deferred tax liability will increase over time. At December 31, 2014, the Company had recorded net operating loss carryforwards...

  • Page 98
    ... operating losses as opposed to being recorded in "Other long-term liabilities" at December 31, 2014 and 2013, respectively. The total amount of unrecognized tax benefits at December 31, 2014 and 2013 that, if recognized, would impact the effective income tax rate is $68.8 million and $100.1 million...

  • Page 99
    ... of limitations Balance at end of period Years Ended December 31, 2014 2013 129,375 $ 138,437 13,848 12,004 6,003 13,163 (9,764) (21,928) (8,181) (1,113) (24,367) (11,188) 106,914 $ 129,375 $ $ The Company and its subsidiaries file income tax returns in the United States federal jurisdiction...

  • Page 100
    ... predetermined performance targets are met. The equity incentive plan contains antidilutive provisions that permit an adjustment of the number of shares of Parent's common stock represented by each option for any change in capitalization. The Company accounts for its share-based payments using the...

  • Page 101
    ...years ended December 31, 2013 and 2014. Non-cash compensation expense has not been recorded with respect to 0.6 million shares as the vesting of these options is subject to performance conditions that have not yet been determined probable to meet. A summary of Parents's unvested options and changes...

  • Page 102
    ..., December 31, 2014 CCOH Share-Based Awards CCOH Stock Options The Company's subsidiary, CCOH, has granted options to purchase shares of its Class A common stock to employees and directors of CCOH and its affiliates under its equity incentive plan at no less than the fair market value of the...

  • Page 103
    ... unit awards to its employees and affiliates under its equity incentive plan. The restricted stock awards represent shares of Class A common stock that hold a legend which restricts their transferability for a term of up to five years. The restricted stock units represent the right to receive shares...

  • Page 104
    ...stock option exchange program on November 19, 2012 and exchanged 2.0 million stock options granted under the Clear Channel 2008 Executive Incentive Plan for 1.8 million replacement restricted share awards with different service and performance conditions. Parent accounted for the exchange program as...

  • Page 105
    ... INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 - OTHER INFORMATION The following table discloses the components of "Other income (expense)" for the years ended December 31, 2014, 2013 and 2012, respectively: (In thousands) 2014 Foreign exchange gain (loss) Debt...

  • Page 106
    ..., 2014 2013 (291,520) $ (188,920) 1,397 1,101 (18,467) (8,254) (308,590) $ (196,073) $ NOTE 13 - SEGMENT DATA The Company's reportable segments, which it believes best reflect how the Company is currently managed, are iHM, Americas outdoor advertising and International outdoor advertising. Revenue...

  • Page 107
    IHEARTCOMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table presents the Company's reportable segment results for the years ended December 31, 2014, 2013 and 2012. 105

  • Page 108
    ... operating income, net Operating income (loss) Intersegment revenues Segment assets Capital expenditures 1,020,097 262,136 906,718 $ - $ 7,933,564 $ 75,742 $ $ $ $ $ Share-based compensation expense $ - $ Year Ended December 31, 2012 Revenue $ 3,084,780 $ Direct operating expenses 882,785 Selling...

  • Page 109
    ... from the Company's U.S. operations are included in the data above for the years ended December 31, 2014, 2013 and 2012, respectively. NOTE 14 - QUARTERLY RESULTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Revenue Operating expenses: Direct operating expenses Selling, general...

  • Page 110
    ... and financial advisory services until 2018. These agreements require management fees to be paid to such affiliates of the Sponsors for such services at a rate not greater than $15.0 million per year, plus reimbursable expenses. For the years ended December 31, 2014, 2013 and 2012, the Company...

  • Page 111
    ..., management determined that we maintained effective internal control over financial reporting as of December 31, 2014, based on those criteria. Ernst & Young LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on...

  • Page 112
    ... express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable...

  • Page 113
    ITEM 9B. OTHER INFORMATION Not Applicable 111

  • Page 114
    ... Business Conduct and Ethics (the "Code of Conduct") applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct is publicly available on our internet website at www.iheartmedia...

  • Page 115
    ... 31, 2014, 2013 and 2012 and related report of independent auditors is filed as part of this report and should be read in conjunction with the consolidated financial statements. Schedule II Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting...

  • Page 116
    ... of period $ $ $ 63,098 55,917 48,401 $ $ $ Charges to Costs, Expenses and other 11,715 20,242 14,167 $ $ $ Description Year ended December 31, 2012 Year ended December 31, 2013 Year ended December 31, 2014 (1) Write-off of Accounts Receivable 14,082 28,492 20,368 $ $ $ Other (1) (4,814) $ 734...

  • Page 117
    ... in the period in which, based on the weight of available evidence, it is more-likely-than-not that the deferred tax asset will be realized. During 2012, 2013 and 2014, the Company adjusted certain valuation allowances as a result of changes in tax rates in certain jurisdictions and as a result...

  • Page 118
    ... the iHeartCommunications, Inc. Current Report on Form 8-K filed on March 1, 2013). Indenture, dated as of June 21, 2013, among iHeartCommunications, Inc., iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, Law Debenture Trust Company of New York, as trustee, and Deutsche...

  • Page 119
    ..., Inc. Current Report on Form 8-K filed on June 6, 2014). 4.19 Third Supplemental Indenture, dated as of August 22, 2014, by and among iHeartCommunications, Inc., iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, and Law Debenture Trust Company of New York, as trustee...

  • Page 120
    ...Number Description Current Report on Form 8-K filed on September 29, 2014). Amended and Restated Credit Agreement, dated as of February 23, 2011, by and among iHeartCommunications, Inc., the subsidiary co-borrowers and foreign subsidiary revolving borrowers party thereto, iHeartMedia Capital I, LLC...

  • Page 121
    ...Form 10-K for the year ended December 31, 2009). Corporate Services Agreement dated November 16, 2005 between Clear Channel Outdoor Holdings, Inc. and iHeartMedia Management Services, L.P. (Incorporated by reference to Exhibit 10.3 to the Clear Channel Outdoor Holdings, Inc. Annual Report on Form 10...

  • Page 122
    ... January 13, 2014 by and between FalconAgain Inc. and iHeartMedia + Entertainment, Inc. (Incorporated by reference to Exhibit 10.24 to the iHeartMedia, Inc. Annual Report on Form 10-K for the year ended December 31, 2013). Clear Channel 2008 Executive Incentive Plan (the "CC Executive Incentive Plan...

  • Page 123
    ... Inc. Registration Statement on Form S-8 (File No. 333-130229) filed on December 9, 2005). Form of Restricted Stock Unit Award Agreement under the CCOH Stock Incentive Plan (Incorporated by reference to Exhibit 10.16 to the Clear Channel Outdoor Holdings, Inc. Annual Report on Form 10-K for the year...

  • Page 124
    ... 13, 2014, by and between John Hogan and iHeartMedia + Entertainment, Inc. (Incorporated by reference to Exhibit 10.3 to the iHeartMedia, Inc. Form 8K filed on January 13, 2014). Employment Agreement, effective as of January 24, 2012, between C. William Eccleshare and Clear Channel Outdoor Holdings...

  • Page 125
    ...to the Clear Channel Outdoor Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2012). Form of Amendment to Senior Executive Option Agreement under the CC Executive Incentive Plan, dated as of October 14, 2008 (Incorporated by reference to Exhibit 10.56 to the iHeartMedia, Inc...

  • Page 126
    .... Annual Report on Form 10-K for the year ended December 31, 2010). Form of Restricted Stock Unit Agreement under the CCOH Stock Incentive Plan, dated March 26, 2012, between Robert H. Walls, Jr. and Clear Channel Outdoor Holdings, Inc. (Incorporated by reference to Exhibit 10.3 to the iHeartMedia...

  • Page 127
    ... (Incorporated by reference to Exhibit 10.1 to the Clear Channel Outdoor Holdings, Inc. Current Report on Form 8-K filed on July 9, 2013). Employment Agreement by and between iHeartMedia Management Services, Inc. and Scott D. Hamilton, dated May 20, 2014 (Incorporated by reference to Exhibit 10.1 to...

  • Page 128
    ...this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title Date /s/ Robert W. Pittman Robert W. Pittman Chairman, Chief Executive Officer (Principal Executive Officer) and Director February 19, 2015 /s/ Richard...

  • Page 129
    Name Title Date /s/ John P. Connaughton John P. Connaughton Director February 19, 2015 /s/ Julia B. Donnelly Julia B. Donnelly Director February 19, 2015 /s/ Matthew J. Freeman Matthew J. Freeman Director February 19, 2015 /s/ Blair E. Hendrix Blair E. Hendrix Director February 19, ...