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 MARCH 31, 2017
 
[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                           TO                            
 
Commission File Number
001‑32663
 
CLEAR CHANNEL OUTDOOR HOLDINGS, INC.
(Exact name of registrant as specified in its charter) 
 
Delaware
 
86-0812139
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
200 East Basse Road, Suite 100
San Antonio, Texas
 
78209
(Address of principal executive offices)
 
(Zip Code)
 
(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   [  ] Emerging growth company [ ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ] No [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 May 1, 2017
- - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - -
Class A Common Stock, $.01 par value
47,509,562
Class B Common Stock, $.01 par value
315,000,000




CLEAR CHANNEL OUTDOOR HOLDINGS, INC.
 
INDEX
 
 
 
Page No.
Part I -- Financial Information
 
Item 1.
 
 
 
 
Item 2.
Item 3.
Item 4.
Part II -- Other Information
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 





PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
 
(In thousands, except share data)
March 31, 2017
 
December 31,
2016
 
(Unaudited)
 
CURRENT ASSETS
 

 
 

Cash and cash equivalents
$
200,621

 
$
541,995

Accounts receivable, net of allowance of $21,706 in 2017 and $22,398 in 2016
560,771

 
593,070

Prepaid expenses
152,994

 
111,569

Assets held for sale

 
55,602

Other current assets
50,178

 
39,199

Total Current Assets
964,564

 
1,341,435

PROPERTY, PLANT AND EQUIPMENT
 
 
 
Structures, net
1,181,997

 
1,196,676

Other property, plant and equipment, net
216,819

 
216,157

INTANGIBLE ASSETS AND GOODWILL
 
 
 
Indefinite-lived intangibles
986,010

 
960,966

Other intangibles, net
297,352

 
299,617

Goodwill
699,830

 
696,263

OTHER ASSETS
 
 
 
Due from iHeartCommunications
915,147

 
885,701

Other assets
124,644

 
122,013

Total Assets
$
5,386,363

 
$
5,718,828

CURRENT LIABILITIES
 
 
 
Accounts payable
$
70,575

 
$
86,870

Accrued expenses
433,715

 
480,872

Deferred income
113,709

 
67,005

Current portion of long-term debt
6,678

 
6,971

Total Current Liabilities
624,677

 
641,718

Long-term debt
5,112,858

 
5,110,020

Deferred tax liability
622,316

 
638,705

Other long-term liabilities
261,051

 
259,311

Commitments and Contingent liabilities (Note 4)

 

STOCKHOLDERS’ DEFICIT
 
 
 
Noncontrolling interest
145,140

 
149,886

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

 

Class A common stock, par value $.01 per share, authorized 750,000,000 shares, issued 48,128,489 and 47,947,123 shares in 2017 and 2016, respectively
481

 
479

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
3,152,132

 
3,432,121

Accumulated deficit
(4,154,799
)
 
(4,125,798
)
Accumulated other comprehensive loss
(376,183
)
 
(386,658
)
Cost of shares (706,316 in 2017 and 633,851 in 2016) held in treasury
(4,460
)
 
(4,106
)
Total Stockholders’ Deficit
(1,234,539
)
 
(930,926
)
Total Liabilities and Stockholders’ Deficit
$
5,386,363

 
$
5,718,828

 

See Notes to Consolidated Financial Statements

1



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
(UNAUDITED)
 
(In thousands, except per share data)
Three Months Ended
 
 
March 31,
 
 
2017
 
2016
 
Revenue
$
544,726

 
$
589,014

 
Operating expenses:
 
 
 
 
Direct operating expenses (excludes depreciation and amortization)
327,931

 
341,987

 
Selling, general and administrative expenses (excludes depreciation and amortization)
115,774

 
126,801

 
Corporate expenses (excludes depreciation and amortization)
34,540

 
28,224

 
Depreciation and amortization
77,494

 
85,395

 
Other operating income, net
32,611

 
284,774

 
Operating income
21,598

 
291,381

 
Interest expense
92,633

 
93,873

 
Interest income on Due from iHeartCommunications
14,807

 
12,713

 
Equity in loss of nonconsolidated affiliates
(472
)
 
(415
)
 
Other income (expense), net
3,867

 
(5,803
)
 
Income (loss) before income taxes
(52,833
)
 
204,003

 
Income tax benefit (expense)
21,837

 
(62,917
)
 
Consolidated net income (loss)
(30,996
)
 
141,086

 
Less amount attributable to noncontrolling interest
(1,995
)
 
976

 
Net income (loss) attributable to the Company
$
(29,001
)
 
$
140,110

 
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustments
9,653

 
27,264

 
Unrealized holding loss on marketable securities
(57
)
 
(36
)
 
Reclassification adjustments
(1,644
)
 

 
Other comprehensive income
7,952

 
27,228

 
Comprehensive income (loss)
(21,049
)
 
167,338

 
Less amount attributable to noncontrolling interest
(2,523
)
 
2,419

 
Comprehensive income (loss) attributable to the Company
$
(18,526
)
 
$
164,919

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

 
 

 
Basic
$
(0.08
)
 
$
0.39

 
Weighted average common shares outstanding – Basic
360,754

 
359,915

 
Diluted
$
(0.08
)
 
$
0.39

 
Weighted average common shares outstanding – Diluted
360,754

 
360,904

 
 
 
 
 
 
Dividends declared per share
$
0.78

 
$
1.49

 
 
See Notes to Consolidated Financial Statements

2



CONSOLIDATED STATEMENTS OF CASH FLOWS
CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
(UNAUDITED)
(In thousands)
Three Months Ended March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Consolidated net income (loss)
$
(30,996
)
 
$
141,086

Reconciling items:
 
 
 
Depreciation and amortization
77,494

 
85,395

Deferred taxes
(15,579
)
 
52,654

Provision for doubtful accounts
521

 
2,018

Amortization of deferred financing charges and note discounts, net
2,683

 
2,613

Share-based compensation
2,359

 
2,370

Gain on disposal of operating and other assets
(33,322
)
 
(285,519
)
Equity in loss of nonconsolidated affiliates
472

 
415

Other reconciling items, net
(5,012
)
 
4,957

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
Decrease in accounts receivable
37,052

 
80,033

Increase in prepaid expenses and other current assets
(54,808
)
 
(19,331
)
Decrease in accrued expenses
(59,481
)
 
(64,020
)
Decrease in accounts payable
(15,506
)
 
(18,190
)
Increase in accrued interest
4,835

 
3,069

Increase in deferred income
44,232

 
25,151

Changes in other operating assets and liabilities
(5,091
)
 
3,469

Net cash provided by (used for) operating activities
$
(50,147
)
 
$
16,170

Cash flows from investing activities:
 

 
 

Purchases of property, plant and equipment
(36,344
)
 
(47,202
)
Proceeds from disposal of assets
53,279

 
586,690

Purchases of other operating assets
(1,064
)
 
(1,573
)
Change in other, net
404

 
(14,371
)
Net cash provided by investing activities
$
16,275

 
$
523,544

Cash flows from financing activities:
 

 
 

Payments on credit facilities
(375
)
 
(577
)
Payments on long-term debt
(163
)
 
(517
)
Net transfers from (to) iHeartCommunications
(29,448
)
 
290,711

Dividends and other payments from (to) noncontrolling interests
826

 
(789
)
Dividends paid
(281,673
)
 
(754,217
)
Change in other, net
(257
)
 
(1,079
)
Net cash used for financing activities
$
(311,090
)
 
$
(466,468
)
Effect of exchange rate changes on cash
3,588

 
3,652

Net increase (decrease) in cash and cash equivalents
(341,374
)
 
76,898

Cash and cash equivalents at beginning of period
541,995

 
412,743

Cash and cash equivalents at end of period
$
200,621

 
$
489,641

SUPPLEMENTAL DISCLOSURES:
 

 
 

Cash paid for interest
86,759

 
85,959

Cash paid for income taxes
17,193

 
14,632

 
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
All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to Clear Channel Outdoor Holdings, Inc. and its consolidated subsidiaries.  Our reportable segments are Americas outdoor advertising (“Americas”) and International outdoor advertising (“International”). The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations.  Management believes that the disclosures made are adequate to make the information presented not misleading.  Due to seasonality and other factors, the results for the interim periods may not be 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 2016 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, iHeartCommunications, Inc. (“iHeartCommunications”).  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% to 50% of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method.  All significant intercompany transactions are eliminated in the consolidation process.  Certain prior-period amounts have been reclassified to conform to the 2017 presentation. 
New Accounting Pronouncements
During the third quarter of 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date . This update provides a one-year deferral of the effective date for ASU No. 2014-09, Revenue from Contracts with Customers .  ASU No. 2014-09 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, 2017. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company expects to utilize the full retrospective method. The Company has substantially completed its evaluation of the potential changes from adopting the new standard on its future financial reporting and disclosures which included reviews of contractual terms for all of the Company’s significant revenue streams and the development of an implementation plan. The Company continues to execute on its implementation plan, including detailed policy drafting and training of segment personnel. Based on its evaluation, the Company does not expect material changes to its 2016 or 2017 consolidated revenues, operating income or balance sheets as a result of the implementation of this standard.
During the first quarter of 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The new leasing standard presents significant changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard which was issued in the third quarter of 2015. The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2018.  The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
During the second quarter of 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) . This update changes the accounting for certain aspects of share-based payments to employees. Income tax effects of share-based payment awards will be recognized in the income statement with the vesting or settlement of the awards and the record keeping for additional paid-in capital pools will no longer be necessary. Additionally, companies can make a policy election to either estimate forfeitures or recognize them as they occur. The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2016.  The Company adopted this standard in the first quarter of 2017. The retrospective adoption of this guidance did not result in material changes to the Company's consolidated financial statements.
During the first quarter of 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) . This update eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Entities will

4



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019. The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
NOTE 2 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL
Dispositions
In January 2017, Americas sold its Indianapolis, Indiana market to Fairway Media Group, LLC in exchange for certain assets in Atlanta, Georgia with a fair value of $39.6 million , plus approximately $43.0 million in cash, net of closing costs. The assets acquired as part of the transaction consisted of $9.9 million in fixed assets, $29.5 million in intangible assets (including $2.3 million in goodwill) and $0.2 million in other assets. The Company recognized a net gain of $28.6 million related to the sale, which is included within Other operating income, net.
Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2017 and December 31, 2016 , respectively:
(In thousands)
March 31,
2017
 
December 31,
2016
 
 
Land, buildings and improvements
$
153,833

 
$
152,775

Structures
2,720,902

 
2,684,673

Furniture and other equipment
153,473

 
148,516

Construction in progress
60,212

 
58,585

 
3,088,420

 
3,044,549

Less: accumulated depreciation
1,689,604

 
1,631,716

Property, plant and equipment, net
$
1,398,816

 
$
1,412,833

 
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 primarily include 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.


5



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of March 31, 2017 and December 31, 2016 , respectively:

(In thousands)
March 31, 2017
 
December 31, 2016
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
Transit, street furniture and other outdoor
   contractual rights
$
569,114

 
$
(437,297
)
 
$
563,863

 
$
(426,752
)
Permanent easements
162,893

 

 
159,782

 

Other
4,558

 
(1,916
)
 
4,536

 
(1,812
)
Total
$
736,565

 
$
(439,213
)
 
$
728,181

 
$
(428,564
)
 
Total amortization expense related to definite-lived intangible assets for the three months ended March 31, 2017 and 2016 was $7.0 million and $9.8 million , respectively.

As acquisitions and dispositions occur in the future, amortization expense may vary.  The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:

(In thousands)
 
2018
$
19,684

2019
$
15,590

2020
$
13,289

2021
$
12,887

2022
$
11,410

 
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
 
Consolidated
Balance as of December 31, 2015
$
534,683

 
$
223,892

 
$
758,575

Impairment

 
(7,274
)
 
(7,274
)
Dispositions
(6,934
)
 
(30,718
)
 
(37,652
)
Foreign currency
(1,998
)
 
(5,051
)
 
(7,049
)
Assets held for sale
(10,337
)
 

 
(10,337
)
Balance as of December 31, 2016
$
515,414

 
$
180,849

 
$
696,263

Impairment

 

 

Acquisitions
2,252

 

 
2,252

Dispositions

 
(1,817
)
 
(1,817
)
Foreign currency
583

 
2,460

 
3,043

Assets held for sale
89

 

 
89

Balance as of March 31, 2017
$
518,338

 
$
181,492

 
$
699,830



6



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 3 – LONG-TERM DEBT

Long-term debt outstanding as of March 31, 2017 and December 31, 2016 consisted of the following:

(In thousands)
March 31,
2017
 
December 31,
2016
 
 
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 (1)

 

Clear Channel International B.V. Senior Notes Due 2020
225,000

 
225,000

Other debt
14,660

 
14,798

Original issue discount
(6,468
)
 
(6,738
)
Long-term debt fees
(38,656
)
 
(41,069
)
Total debt
$
5,119,536

 
$
5,116,991

Less: current portion
6,678

 
6,971

Total long-term debt
$
5,112,858

 
$
5,110,020


(1)
 The Senior revolving credit facility provides for borrowings up to $75.0 million (the revolving credit commitment). As of March 31, 2017 , we had $67.3 million of letters of credit outstanding, and $7.7 million of availability, under the senior revolving credit facility.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $5.3 billion and $5.2 billion at March 31, 2017 and December 31, 2016 , 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.
 
Surety Bonds, Letters of Credit and Guarantees
As of March 31, 2017 , the Company had $68.5 million and $34.9 million in letters of credit and bank guarantees outstanding, respectively. Bank guarantees of $18.6 million were backed by cash collateral. Additionally, as of March 31, 2017 , iHeartCommunications had outstanding commercial standby letters of credit and surety bonds of $1.4 million and $51.7 million , respectively, held on behalf of the Company.  These surety bonds, letters of credit and bank guarantees relate to various operational matters, including insurance, bid and performance bonds, as well as other items.

NOTE 4 – COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.  It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings.  Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations. 
Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial disputes; misappropriation of likeness and right of publicity claims; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.

7



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


International Outdoor Investigation
On April 21, 2015, inspections were conducted at the premises of Clear Channel in Denmark and Sweden as part of an investigation by Danish competition authorities.  Additionally, on the same day, Clear Channel UK received a communication from the UK competition authorities, also in connection with the investigation by Danish competition authorities. Clear Channel and its affiliates are cooperating with the national competition authorities.
Stockholder Litigation
On May 9, 2016, a stockholder of the Company filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management Inc. v. iHeartMedia Inc. et al., C.A. No. 12312-VCS. The complaint names as defendants iHeartCommunications, Inc. (“iHeartCommunications”), the Company’s indirect parent company, iHeartMedia, Inc. (“iHeartMedia”), the parent company of iHeartCommunications, Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (together, the “Sponsor Defendants”), iHeartMedia’s private equity sponsors and majority owners, and the members of the Company’s board of directors. The Company also is named as a nominal defendant. The complaint alleges that the Company has been harmed by the intercompany agreements with iHeartCommunications, the Company’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of iHeartMedia, iHeartCommunications and the Sponsor Defendants to the detriment of the Company and its minority stockholders. Specifically, the complaint alleges that the defendants have breached their fiduciary duties by causing the Company to: (i) continue to loan cash to iHeartCommunications under the intercompany note at below-market rates; (ii) abandon its growth and acquisition strategies in favor of transactions that would provide cash to iHeartMedia and iHeartCommunications; (iii) issue new debt in the CCIBV note offering (the “CCIBV Note Offering”) to provide cash to iHeartMedia and iHeartCommunications through a dividend; and (iv) effect the sales of certain outdoor markets in the U.S. (the “Outdoor Asset Sales”) to provide cash to iHeartMedia and iHeartCommunications through a dividend. The complaint also alleges that iHeartMedia, iHeartCommunications and the Sponsor Defendants aided and abetted the directors’ breaches of their fiduciary duties. The complaint further alleges that iHeartMedia, iHeartCommunications and the Sponsor Defendants were unjustly enriched as a result of these transactions and that these transactions constituted a waste of corporate assets for which the defendants are liable to the Company. The plaintiff is seeking, among other things, a ruling that the defendants breached their fiduciary duties to the Company and that iHeartMedia, iHeartCommunications and the Sponsor Defendants aided and abetted the board of directors’ breaches of fiduciary duty, rescission of payments to iHeartCommunications and its affiliates pursuant to dividends declared in connection with the CCIBV Note Offering and Outdoor Asset Sales, and an order requiring iHeartMedia, iHeartCommunications and the Sponsor Defendants to disgorge all profits they have received as a result of the alleged fiduciary misconduct.
On July 20, 2016, the defendants filed a motion to dismiss plaintiff's verified stockholder derivative complaint for failure to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants’ motion to dismiss all claims brought by the plaintiff.  On December 19, 2016, the plaintiff filed a notice of appeal of the ruling.
NOTE 5 — RELATED PARTY TRANSACTIONS
The Company records net amounts due from iHeartCommunications as “Due from iHeartCommunications” on the consolidated balance sheets.  The accounts represent the revolving promissory note issued by the Company to iHeartCommunications and the revolving promissory note issued by iHeartCommunications to the Company 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 iHeartCommunications.  As a part of these services, the Company maintains collection bank accounts swept daily into accounts of iHeartCommunications (after satisfying the funding requirements of the Trustee Accounts under the CCWH Senior Notes and the CCWH Subordinated Notes).  In return, iHeartCommunications 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 iHeartCommunications” account.
As of March 31, 2017 and December 31, 2016 , the asset recorded in “Due from iHeartCommunications” on the consolidated balance sheet was $915.1 million and $885.7 million , respectively.  As of March 31, 2017 , the fixed interest rate on the “Due from iHeartCommunications” account was 6.5% , which is equal to the fixed interest rate on the CCWH Senior Notes.  The net interest income for the three months ended March 31, 2017 and 2016 was $14.8 million and $12.7 million , respectively.

8



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


In its Quarterly Report on Form 10-Q filed with the SEC on May 4, 2017 , iHeartCommunications stated that its forecast of future cash flows indicates that such cash flows would not be sufficient for it to meet its obligations, including payment of the outstanding receivables based credit facility balance at maturity on December 24, 2017 and payment of the 10% Senior Notes due January 15, 2018, as they become due in the ordinary course of business for a period of 12 months following May 4, 2017 . iHeartCommunications further stated that management has determined that there is substantial doubt as to iHeartCommunications’ ability to continue as a going concern for a period of 12 months following May 4, 2017 .
If iHeartCommunications was to become insolvent, the Company would be an unsecured creditor of iHeartCommunications.  In such event, the Company would be treated the same as other unsecured creditors of iHeartCommunications and, if the Company were not entitled to amounts outstanding under the receivable from iHeartCommunications, or could not obtain such cash on a timely basis, the Company could experience a liquidity shortfall. 
The Company provides advertising space on its billboards for iHeartMedia, Inc. and for radio stations owned by iHeartMedia, Inc. For the three months ended March 31, 2017 and 2016 , the Company recorded $1.8 million and $0.3 million , respectively, in revenue for these advertisements.
Under the Corporate Services Agreement between iHeartCommunications and the Company, iHeartCommunications 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 iHeartCommunications based on headcount, revenue or other factors on a pro rata basis. For the three months ended March 31, 2017 and 2016 , the Company recorded $16.2 million and $9.3 million , respectively, as a component of corporate expenses for these services. In February 2017, the Company and its indirect parent company, iHeartMedia, Inc., entered into an agreement related to the potential purchase of the Clear Channel registered trademarks and domain names. The agreements provide that CCOH will pay a license fee to iHeartMedia, Inc. in 2017 based on revenues of entities using the Clear Channel name. Included within the management services expense recognized in the three months ended March 31, 2017 is an additional expense of $7.8 million related to this license. Financial distress at iHeartCommunications could impact its ability to provide these services to us, and if iHeartCommunications was to become insolvent or file a bankruptcy petition, such event could cause significant uncertainties and disrupt our operations and/or adversely affect our rights under the Corporate Services Agreement and the other intercompany agreements.

Pursuant to the Tax Matters Agreement between iHeartCommunications and the Company, the operations of the Company are included in a consolidated federal income tax return filed by iHeartCommunications.  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 iHeartCommunications 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 basis and tax basis 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 iHeartCommunications’ employee benefit plans, including employee medical insurance and a 401(k) retirement benefit plan.  For the three months ended March 31, 2017 and 2016 , the Company recorded $2.4 million and $2.3 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
(UNAUDITED)


NOTE 6 – INCOME TAXES

Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) for the three months ended March 31, 2017 and 2016 , respectively, consisted of the following components:
(In thousands)
Three Months Ended March 31,
 
 
2017
 
2016
 
Current tax benefit (expense)
$
6,258

 
$
(10,263
)
 
Deferred tax benefit (expense)
15,579

 
(52,654
)
 
Income tax benefit (expense)
$
21,837

 
$
(62,917
)
 
 
The effective tax rate for the three months ended March 31, 2017 was 41.3% . The effective rate for the three months ended March 31, 2017 was primarily impacted by the Company's inability to benefit from losses in certain foreign jurisdictions due to uncertainty regarding the ability to utilize those losses in future periods.
 
The effective tax rate for the three months ended March 31, 2016 was 30.8% . The effective rate was primarily impacted by the reversal of the valuation allowance recorded in 2015 against net operating losses in U.S. federal and state jurisdictions due to taxable gains from the dispositions of nine outdoor markets during the period. Additionally, we were unable to benefit from losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future periods.

10



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT)
 
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 stockholders’ equity (deficit) 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 as of January 1, 2017
$
(1,080,812
)
 
$
149,886

 
$
(930,926
)
Net loss
(29,001
)
 
(1,995
)
 
(30,996
)
Dividends declared
(282,486
)
 

 
(282,486
)
Payments from noncontrolling interests

 
826

 
826

Share-based compensation
2,230

 
129

 
2,359

Disposal of noncontrolling interest

 
(1,046
)
 
(1,046
)
Foreign currency translation adjustments
12,176

 
(2,523
)
 
9,653

Unrealized holding loss on marketable securities
(57
)
 

 
(57
)
Reclassification adjustments
(1,644
)
 

 
(1,644
)
Other, net
(85
)
 
(137
)
 
(222
)
Balances as of March 31, 2017
$
(1,379,679
)
 
$
145,140

 
$
(1,234,539
)
 
 
 
 
 
 
Balances as of January 1, 2016
$
(755,599
)
 
$
187,775

 
$
(567,824
)
Net income
140,110

 
976

 
141,086

Dividends declared
(540,016
)
 

 
(540,016
)
Dividends and other payments to noncontrolling interests

 
(789
)
 
(789
)
Share-based compensation
2,370

 

 
2,370

Foreign currency translation adjustments
24,845

 
2,419

 
27,264

Unrealized holding loss on marketable securities
(36
)
 

 
(36
)
Other, net
(1,863
)
 
1,225

 
(638
)
Balances as of March 31, 2016
$
(1,130,189
)
 
$
191,606

 
$
(938,583
)

The Company has granted restricted stock, restricted stock units and options to purchase shares of its class A common stock to certain key individuals.
COMPUTATION OF LOSS PER SHARE
(In thousands, except per share data)
Three Months Ended
March 31,
 
 
2017
 
2016
 
NUMERATOR:
 
 
 
 
Net income (loss) attributable to the Company – common shares
$
(29,001
)
 
$
140,110

 
 
 
 
 
 
DENOMINATOR:
 

 
 

 
Weighted average common shares outstanding - basic
360,754

 
359,915

 
Stock options and restricted stock (1)

 
989

 
Weighted average common shares outstanding - diluted
360,754

 
360,904

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

 
 

 
Basic
$
(0.08
)
 
$
0.39

 
Diluted
$
(0.08
)
 
$
0.39

 

11



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)



(1)  
Outstanding equity awards of 7.2 million and 6.1 million for the three months ended March 31, 2017 and 2016 , respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 8 — OTHER INFORMATION
Other Comprehensive Income (Loss)
There was no change in deferred income tax liabilities resulting from adjustments to comprehensive loss for the three months ended March 31, 2017 and 2016 .
 
NOTE 9 – 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, Canada and Latin America and the International segment primarily includes operations in Europe and Asia.  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 months ended March 31, 2017 and 2016 :
(In thousands)
Americas
 
International
 
Corporate and other reconciling items
 
Consolidated
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
Revenue
$
279,420

 
$
265,306

 
$

 
$
544,726

Direct operating expenses
140,473

 
187,458

 

 
327,931

Selling, general and administrative expenses
56,086

 
59,688

 

 
115,774

Corporate expenses

 

 
34,540

 
34,540

Depreciation and amortization
45,295

 
30,673

 
1,526

 
77,494

Other operating income, net

 

 
32,611

 
32,611

Operating income (loss)
$
37,566

 
$
(12,513
)
 
$
(3,455
)
 
$
21,598

 
 
 
 
 
 
 
 
Capital expenditures
$
14,104

 
$
21,824

 
$
416

 
$
36,344

Share-based compensation expense
$

 
$

 
$
2,359

 
$
2,359

 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
Revenue
$
282,528

 
$
306,486

 
$

 
$
589,014

Direct operating expenses
138,012

 
203,975

 

 
341,987

Selling, general and administrative expenses
55,329

 
71,472

 

 
126,801

Corporate expenses

 

 
28,224

 
28,224

Depreciation and amortization
46,116

 
37,880

 
1,399

 
85,395

Other operating income, net

 

 
284,774

 
284,774

Operating income (loss)
$
43,071

 
$
(6,841
)
 
$
255,151

 
$
291,381

 
 
 
 
 
 
 
 
Capital expenditures
$
11,292

 
$
34,913

 
$
997

 
$
47,202

Share-based compensation expense
$

 
$

 
$
2,370

 
$
2,370



12



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)



NOTE 10 – 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 Clear Channel Worldwide Holdings, Inc. ("CCWH" or 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)
March 31, 2017
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
42,225

 
$

 
$
16,594

 
$
141,802

 
$

 
$
200,621

Accounts receivable, net of allowance

 

 
171,029

 
389,742

 

 
560,771

Intercompany receivables

 
627,297

 
2,741,198

 
94,763

 
(3,463,258
)
 

Prepaid expenses
2,893

 
3,433

 
69,242

 
77,426

 

 
152,994

Other current assets
(2,148
)
 
(1,107
)
 
11,753

 
41,680

 

 
50,178

Total Current Assets
42,970

 
629,623

 
3,009,816

 
745,413

 
(3,463,258
)
 
964,564

Structures, net

 

 
733,948

 
448,049

 

 
1,181,997

Other property, plant and equipment, net

 

 
123,655

 
93,164

 

 
216,819

Indefinite-lived intangibles

 

 
976,395

 
9,615

 

 
986,010

Other intangibles, net

 

 
259,335

 
38,017

 

 
297,352

Goodwill

 

 
507,819

 
192,011

 

 
699,830

Due from iHeartCommunications
915,147

 

 

 

 

 
915,147

Intercompany notes receivable
182,026

 
4,887,354

 

 

 
(5,069,380
)
 

Other assets
259,682

 
402,568

 
1,278,853

 
68,956

 
(1,885,415
)
 
124,644

Total Assets
$
1,399,825

 
$
5,919,545

 
$
6,889,821

 
$
1,595,225

 
$
(10,418,053
)
 
$
5,386,363

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$

 
$
7,861

 
$
62,714

 
$

 
$
70,575

Intercompany payable
2,741,198

 

 
722,060

 

 
(3,463,258
)
 

Accrued expenses
1,904

 

 
73,484

 
358,327

 

 
433,715

Deferred income

 

 
47,814

 
65,895

 

 
113,709

Current portion of long-term debt

 

 
104

 
6,574

 

 
6,678

Total Current Liabilities
2,743,102

 

 
851,323

 
493,510

 
(3,463,258
)
 
624,677

Long-term debt

 
4,888,510

 
1,908

 
222,440

 

 
5,112,858

Intercompany notes payable

 
5,000

 
5,027,480

 
36,900

 
(5,069,380
)
 

Deferred tax liability
772

 
1,367

 
671,952

 
(51,775
)
 

 
622,316

Other long-term liabilities
1,427

 

 
134,304

 
125,320

 

 
261,051

Total stockholders' equity (deficit)
(1,345,476
)
 
1,024,668

 
202,854

 
768,830

 
(1,885,415
)
 
(1,234,539
)
Total Liabilities and Stockholders'
   Equity (Deficit)
$
1,399,825

 
$
5,919,545

 
$
6,889,821

 
$
1,595,225

 
$
(10,418,053
)
 
$
5,386,363


 

13



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
December 31, 2016
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
300,285

 
$

 
$
61,542

 
$
180,168

 
$

 
$
541,995

Accounts receivable, net of allowance

 

 
193,474

 
399,596

 

 
593,070

Intercompany receivables

 
687,043

 
2,694,094

 
99,431

 
(3,480,568
)
 

Prepaid expenses
1,363

 
3,433

 
51,751

 
55,022

 

 
111,569

Assets held for sale

 

 
55,602

 

 

 
55,602

Other current assets

 

 
6,873

 
32,326

 

 
39,199

Total Current Assets
301,648

 
690,476

 
3,063,336

 
766,543

 
(3,480,568
)
 
1,341,435

Structures, net

 

 
746,877

 
449,799

 

 
1,196,676

Other property, plant and equipment, net

 

 
124,138

 
92,019

 

 
216,157

Indefinite-lived intangibles

 

 
951,439

 
9,527

 

 
960,966

Other intangibles, net

 

 
259,915

 
39,702

 

 
299,617

Goodwill

 

 
505,478

 
190,785

 

 
696,263

Due from iHeartCommunications
885,701

 

 

 

 

 
885,701

Intercompany notes receivable
182,026

 
4,887,354

 

 

 
(5,069,380
)
 

Other assets
280,435

 
418,658

 
1,320,838

 
65,589

 
(1,963,507
)
 
122,013

Total Assets
$
1,649,810

 
$
5,996,488

 
$
6,972,021

 
$
1,613,964

 
$
(10,513,455
)
 
$
5,718,828

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$

 
$
14,897

 
$
71,973

 
$

 
$
86,870

Intercompany payable
2,694,094

 

 
786,474

 

 
(3,480,568
)
 

Accrued expenses
2,223

 
58,652

 
35,509

 
384,488

 

 
480,872

Dividends payable

 


 


 


 


 

Deferred income

 

 
33,471

 
33,534

 

 
67,005

Current portion of long-term debt

 

 
89

 
6,882

 

 
6,971

Total Current Liabilities
2,696,317

 
58,652

 
870,440

 
496,877

 
(3,480,568
)
 
641,718

Long-term debt

 
4,886,318

 
1,711

 
221,991

 

 
5,110,020

Intercompany notes payable

 
5,000

 
5,027,681

 
36,699

 
(5,069,380
)
 

Deferred tax liability
772

 
1,367

 
685,780

 
(49,214
)
 

 
638,705

Other long-term liabilities
1,055

 

 
135,094

 
123,162

 

 
259,311

Total stockholders' equity (deficit)
(1,048,334
)
 
1,045,151

 
251,315

 
784,449

 
(1,963,507
)
 
(930,926
)
Total Liabilities and Stockholders' Equity (Deficit)
$
1,649,810

 
$
5,996,488

 
$
6,972,021

 
$
1,613,964

 
$
(10,513,455
)
 
$
5,718,828


 

 






14



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Three Months Ended March 31, 2017
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$

 
$

 
$
252,986

 
$
291,740

 
$

 
$
544,726

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 

Direct operating expenses

 

 
124,892

 
203,039

 

 
327,931

Selling, general and administrative expenses

 

 
48,471

 
67,303

 

 
115,774

Corporate expenses
3,927

 

 
22,281

 
8,332

 

 
34,540

Depreciation and amortization

 

 
43,517

 
33,977

 

 
77,494

Other operating income (expense), net
(103
)
 

 
32,603

 
111

 

 
32,611

Operating income (loss)
(4,030
)
 

 
46,428

 
(20,800
)
 

 
21,598

Interest (income) expense, net
(301
)
 
88,331

 
(637
)
 
5,240

 

 
92,633

Interest income on Due from iHeartCommunications
14,807

 

 

 

 

 
14,807

Intercompany interest income
4,065

 
85,102

 
15,018

 

 
(104,185
)
 

Intercompany interest expense
14,807

 
57

 
89,167

 
154

 
(104,185
)
 

Equity in loss of nonconsolidated affiliates
(32,636
)
 
(21,289
)
 
(25,700
)
 
(875
)
 
80,028

 
(472
)
Other income (expense), net
5,447

 

 
(1,457
)
 
(123
)
 

 
3,867

Loss before income taxes
(26,853
)
 
(24,575
)
 
(54,241
)
 
(27,192
)
 
80,028

 
(52,833
)
Income tax benefit (expense)
(2,148
)
 
(1,107
)
 
21,605

 
3,487

 

 
21,837

Consolidated net loss
(29,001
)
 
(25,682
)
 
(32,636
)
 
(23,705
)
 
80,028

 
(30,996
)
Less amount attributable to noncontrolling interest

 

 

 
(1,995
)
 

 
(1,995
)
Net loss attributable to the Company
$
(29,001
)
 
$
(25,682
)
 
$
(32,636
)
 
$
(21,710
)
 
$
80,028

 
$
(29,001
)
Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

 
 

 
 

Foreign currency translation adjustments

 

 
(226
)
 
9,879

 

 
9,653

Unrealized holding loss on marketable securities

 

 

 
(57
)
 

 
(57
)
Reclassification adjustments

 

 

 
(1,644
)
 

 
(1,644
)
Equity in subsidiary comprehensive income
10,475

 
5,199

 
10,701

 

 
(26,375
)
 

Comprehensive loss
(18,526
)
 
(20,483
)
 
(22,161
)
 
(13,532
)
 
53,653

 
(21,049
)
Less amount attributable to noncontrolling interest

 

 

 
(2,523
)
 

 
(2,523
)
Comprehensive loss attributable to the Company
$
(18,526
)
 
$
(20,483
)
 
$
(22,161
)
 
$
(11,009
)
 
$
53,653

 
$
(18,526
)

15



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Three Months Ended March 31, 2016
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$

 
$

 
$
253,079

 
$
335,935

 
$

 
$
589,014

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 

Direct operating expenses

 

 
120,460

 
221,527

 

 
341,987

Selling, general and administrative expenses

 

 
48,727

 
78,074

 

 
126,801

Corporate expenses
3,339

 

 
14,418

 
10,467

 

 
28,224

Depreciation and amortization

 

 
44,550

 
40,845

 

 
85,395

Other operating income (expense), net
(116
)
 

 
289,897

 
(5,007
)
 

 
284,774

Operating income (loss)
(3,455
)
 

 
314,821

 
(19,985
)
 

 
291,381

Interest expense, net
(330
)
 
88,078

 
436

 
5,689

 

 
93,873

Interest income on Due from iHeartCommunications
12,713

 

 

 

 

 
12,713

Intercompany interest income
4,033

 
85,451

 
13,203

 

 
(102,687
)
 

Intercompany interest expense
12,713

 

 
89,484

 
490

 
(102,687
)
 

Equity in earnings (loss) of nonconsolidated affiliates
138,911

 
(33,187
)
 
(38,509
)
 
(777
)
 
(66,853
)
 
(415
)
Other income (expense), net
629

 

 
(1,322
)
 
(5,110
)
 

 
(5,803
)
Income (loss) before income taxes
140,448

 
(35,814
)
 
198,273

 
(32,051
)
 
(66,853
)
 
204,003

Income tax benefit (expense)
(338
)
 
958

 
(59,314
)
 
(4,223
)
 

 
(62,917
)
Consolidated net income (loss)
140,110

 
(34,856
)
 
138,959

 
(36,274
)
 
(66,853
)
 
141,086

Less amount attributable to noncontrolling interest

 

 
48

 
928

 

 
976

Net income (loss) attributable to the Company
$
140,110

 
$
(34,856
)
 
$
138,911

 
$
(37,202
)
 
$
(66,853
)
 
$
140,110

Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

 
 

 
 

Foreign currency translation adjustments

 

 
(5,664
)
 
32,928

 

 
27,264

Unrealized holding loss on marketable securities

 

 

 
(36
)
 

 
(36
)
Equity in subsidiary comprehensive income
24,809

 
24,425

 
30,473

 

 
(79,707
)
 

Comprehensive income (loss)
164,919

 
(10,431
)
 
163,720

 
(4,310
)
 
(146,560
)
 
167,338

Less amount attributable to noncontrolling interest

 

 

 
2,419

 

 
2,419

Comprehensive income (loss) attributable to the Company
$
164,919

 
$
(10,431
)
 
$
163,720

 
$
(6,729
)
 
$
(146,560
)
 
$
164,919



16



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Three Months Ended March 31, 2017
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Consolidated net loss
$
(29,001
)
 
$
(25,682
)
 
$
(32,636
)
 
$
(23,705
)
 
$
80,028

 
$
(30,996
)
Reconciling items:
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization

 

 
43,517

 
33,977

 

 
77,494

Deferred taxes

 

 
(13,828
)
 
(1,751
)
 

 
(15,579
)
Provision for doubtful accounts

 

 
649

 
(128
)
 

 
521

Amortization of deferred financing charges and note discounts, net

 
2,192

 

 
491

 

 
2,683

Share-based compensation

 

 
2,038

 
321

 

 
2,359

Gain on disposal of operating assets, net

 

 
(32,609
)
 
(713
)
 

 
(33,322
)
Equity in loss of nonconsolidated affiliates
32,636

 
21,289

 
25,700

 
875

 
(80,028
)
 
472

Other reconciling items, net

 

 
(1,294
)
 
(3,718
)
 

 
(5,012
)
Changes in operating assets and liabilities, net
   of effects of acquisitions and dispositions:
 
 
 
 
 
 
 
 
 
 
 
Decrease in accounts receivable

 

 
21,796

 
15,256

 

 
37,052

Increase in prepaids and other current assets
(1,530
)
 

 
(29,598
)
 
(23,680
)
 

 
(54,808
)
Increase (decrease) in accrued expenses
1,422

 
(57,545
)
 
42,311

 
(45,669
)
 

 
(59,481
)
Decrease in accounts payable

 

 
(7,038
)
 
(8,468
)
 

 
(15,506
)
Increase in accrued interest

 

 
6

 
4,829

 

 
4,835

Increase in deferred income

 

 
12,211

 
32,021

 

 
44,232

Changes in other operating assets and liabilities

 

 
(1,811
)
 
(3,280
)
 

 
(5,091
)
Net cash provided by (used for) operating activities
$
3,527

 
$
(59,746
)
 
$
29,414

 
$
(23,342
)
 
$

 
$
(50,147
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment

 

 
(13,880
)
 
(22,464
)
 

 
(36,344
)
Proceeds from disposal of assets

 

 
51,914

 
1,365

 

 
53,279

Purchases of other operating assets

 

 

 
(1,064
)
 

 
(1,064
)
Change in other, net

 

 
(1
)
 
405

 

 
404

Net cash provided by (used for) investing activities
$

 
$

 
$
38,033

 
$
(21,758
)
 
$

 
$
16,275

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on credit facilities

 

 

 
(375
)
 

 
(375
)
Payments on long-term debt

 

 
(22
)
 
(141
)
 

 
(163
)
Net transfers to iHeartCommunications
(29,448
)
 

 

 

 

 
(29,448
)
Dividends and other payments to noncontrolling interests

 

 

 
826

 

 
826

Dividends paid
(281,673
)
 

 

 

 

 
(281,673
)
Intercompany funding
49,791

 
59,746

 
(112,373
)
 
2,836

 

 

Change in other, net
(257
)
 

 

 

 

 
(257
)
Net cash provided by (used for) financing activities
(261,587
)
 
59,746

 
(112,395
)
 
3,146

 

 
(311,090
)
Effect of exchange rate changes on cash 

 

 

 
3,588

 

 
3,588

Net decrease in cash and cash equivalents
(258,060
)
 

 
(44,948
)
 
(38,366
)
 

 
(341,374
)
Cash and cash equivalents at beginning of year
300,285

 

 
61,542

 
180,168

 

 
541,995

Cash and cash equivalents at end of  year
$
42,225

 
$

 
$
16,594

 
$
141,802

 
$

 
$
200,621


17



CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Three Months Ended March 31, 2016
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
$
140,110

 
$
(34,856
)
 
$
138,959

 
$
(36,274
)
 
$
(66,853
)
 
$
141,086

Reconciling items:
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization

 

 
44,550

 
40,845

 

 
85,395

Deferred taxes

 

 
53,232

 
(578
)
 

 
52,654

Provision for doubtful accounts

 

 
1,497

 
521

 

 
2,018

Amortization of deferred financing
   charges and note discounts, net

 
1,873

 
308

 
432

 

 
2,613

Share-based compensation

 

 
1,016

 
1,354

 

 
2,370

(Gain) loss on sale of operating and fixed assets

 

 
(290,091
)
 
4,572

 

 
(285,519
)
Equity in (earnings) loss of nonconsolidated affiliates
(138,911
)
 
33,187

 
38,509

 
777

 
66,853

 
415

Other reconciling items, net

 

 
4,957

 

 

 
4,957

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
 
 
 
 
 
 
 
 
Decrease in accounts receivable

 

 
25,782

 
54,251

 

 
80,033

(Increase) decrease in prepaids and other current assets
(1,402
)
 

 
377

 
(18,306
)
 

 
(19,331
)
Decrease in accrued expenses
(615
)
 
(251
)
 
(25,577
)
 
(37,577
)
 

 
(64,020
)
Decrease in accounts payable

 

 
(5,741
)
 
(12,449
)
 

 
(18,190
)
Increase (decrease) in accrued interest

 
6,632

 
(3,432
)
 
(131
)
 

 
3,069

Increase in deferred income

 

 
11,277

 
13,874

 

 
25,151

Changes in other operating assets and liabilities

 

 
2,830

 
639

 

 
3,469

Net cash provided by (used for) operating activities
$
(818
)
 
$
6,585

 
$
(1,547
)
 
$
11,950

 
$

 
$
16,170

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment

 

 
(11,023
)
 
(36,179
)
 

 
(47,202
)
Proceeds from disposal of assets

 

 
351,470

 
235,220

 

 
586,690

Purchases of other operating assets

 

 
(1,357
)
 
(216
)
 

 
(1,573
)
Decrease in intercompany notes receivable, net

 
2,000

 

 

 
(2,000
)
 

Dividends from subsidiaries

 

 
234,554

 

 
(234,554
)
 

Change in other, net

 

 
1

 
(14,372
)
 

 
(14,371
)
Net cash provided by investing activities
$

 
$
2,000

 
$
573,645

 
$
184,453

 
$
(236,554
)
 
$
523,544

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on credit facilities

 

 

 
(577
)
 

 
(577
)
Payments on long-term debt

 

 
(15
)
 
(502
)
 

 
(517
)
Net transfers to iHeartCommunications
290,711

 

 

 

 

 
290,711

Dividends and other payments to noncontrolling interests

 

 

 
(789
)
 

 
(789
)
Dividends paid
(754,217
)
 

 

 
(234,554
)
 
234,554

 
(754,217
)
Increase (decrease) in intercompany notes payable, net

 

 
(3,781
)
 
1,781

 
2,000

 

Intercompany funding
576,608

 
(8,585
)
 
(579,735
)
 
11,712

 

 

Change in other, net
(959
)
 

 

 
(120
)
 

 
(1,079
)
Net cash provided by (used for) financing activities
112,143

 
(8,585
)
 
(583,531
)
 
(223,049
)
 
236,554

 
(466,468
)
Effect of exchange rate changes on cash

 

 

 
3,652

 

 
3,652

Net increase (decrease) in cash and cash equivalents
111,325

 

 
(11,433
)
 
(22,994
)
 

 
76,898

Cash and cash equivalents at beginning of year
218,701

 

 
18,455

 
175,587

 

 
412,743

Cash and cash equivalents at end of  year
$
330,026

 
$

 
$
7,022

 
$
152,593

 
$

 
$
489,641


18


ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Format of Presentation
Management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Item 1 of this Quarterly Report on Form 10-Q.  Our discussion is presented on both a consolidated and segment basis.  All references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” refer to Clear Channel Outdoor Holdings, Inc. and its consolidated subsidiaries.  Our reportable segments are Americas outdoor advertising (“Americas”) and International outdoor advertising (“International”).  Our Americas and International segments provide outdoor advertising services in their respective geographic regions using various digital and traditional display types. Certain prior period amounts have been reclassified to conform to the 2017 presentation.
 
We manage our operating segments by focusing primarily on their operating income, while Corporate expenses, Other operating income (expense), net, Interest expense, Interest income on the Revolving Promissory Note issued by iHeartCommunications to the Company (the “Due from iHeartCommunications Note”), Equity in earnings (loss) of nonconsolidated affiliates, Other income, net and Income tax benefit (expense) are managed on a total company basis and are, therefore, included only in our discussion of consolidated results.
 
Management typically monitors our businesses by reviewing the average rates, average revenue per display, occupancy and inventory levels of each of our display types by market.  Our advertising revenue is derived from selling advertising space on the displays we own or operate in key markets worldwide, consisting primarily of billboards, street furniture and transit displays.  Part of our long-term strategy is to pursue the technology of digital displays, including flat screens, LCDs and LEDs, as additions to traditional methods of displaying our clients’ advertisements.  We are currently installing these technologies in certain markets, both domestically and internationally.
 
Advertising revenue for our segments is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP, both domestically and internationally.  Internationally, our results are impacted by fluctuations in foreign currency exchange rates as well as economic conditions in the foreign markets in which we have operations.
 
Executive Summary
The key developments that impacted our business during the three months ended March 31, 2017 are summarized below:
Consolidated revenue decreased $44.3 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding a $12.8 million impact from movements in foreign exchange rates, consolidated revenue decreased $31.5 million during the three months ended March 31, 2017 compared to the same period of 2016 .
In January 2017, we sold our Indianapolis, Indiana market in exchange for certain assets in Atlanta, Georgia, plus $43.0 million in cash, net of closing costs. A net gain of $28.6 million was recognized related to the sale. In 2016, we sold nine non-strategic U.S. markets and our businesses in Turkey and Australia.
On February 23, 2017, we paid a special dividend of $282.5 million using a portion of the cash proceeds from the sales of certain non-strategic U.S. outdoor markets and of our Australia outdoor business.

Revenues and expenses “excluding the impact of foreign exchange movements” in this Management’s Discussion & Analysis of Financial Condition and Results of Operations are presented because management believes that viewing certain financial results without the impact of fluctuations in foreign currency rates facilitates period to period comparisons of business performance and provides useful information to investors.  Revenues and expenses “excluding the impact of foreign exchange movements” are calculated by converting the current period’s revenues and expenses in local currency to U.S. dollars using average foreign exchange rates for the prior period. 


19


RESULTS OF OPERATIONS

Consolidated Results of Operations

The comparison of our historical results of operations for the three months ended March 31, 2017 to the three months ended March 31, 2016 is as follows:
(In thousands)
Three Months Ended March 31,
 
%
 
 
2017
 
2016
 
Change
 
Revenue
$
544,726

 
$
589,014

 
(7.5)%
 
Operating expenses:
 
 
 
 
 
 
Direct operating expenses (excludes depreciation and amortization)
327,931

 
341,987

 
(4.1)%
 
Selling, general and administrative expenses (excludes depreciation and amortization)
115,774

 
126,801

 
(8.7)%
 
Corporate expenses (excludes depreciation and amortization)
34,540

 
28,224

 
22.4%
 
Depreciation and amortization
77,494

 
85,395

 
(9.3)%
 
Other operating income (expense), net
32,611

 
284,774

 
 
 
Operating income
21,598

 
291,381

 
 
 
Interest expense
92,633

 
93,873

 
 
 
Interest income on Due from iHeartCommunications
14,807

 
12,713

 
 
 
Equity in loss of nonconsolidated affiliates
(472
)
 
(415
)
 
 
 
Other income (expense), net
3,867

 
(5,803
)
 
 
 
Income (loss) before income taxes
(52,833
)
 
204,003

 
 
 
Income tax benefit (expense)
21,837

 
(62,917
)
 
 
 
Consolidated net income (loss)
(30,996
)
 
141,086

 
 
 
Less amount attributable to noncontrolling interest
(1,995
)
 
976

 
 
 
Net income (loss) attributable to the Company
$
(29,001
)
 
$
140,110

 
 
 
 
Consolidated Revenue
Consolidated revenue decreased $44.3 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding a $12.8 million impact from movements in foreign exchange rates, consolidated revenue decreased $31.5 million during the three months ended March 31, 2017 compared to the same period of 2016 . The decrease in consolidated revenue is primarily due to the sale of certain non-strategic outdoor markets and international businesses which generated $42.0 million in revenue in 2016 and $1.5 million in 2017. This decrease was partially offset by revenue growth from new digital assets and new contracts.

Consolidated Direct Operating Expenses
Consolidated direct operating expenses decreased $14.1 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding a $9.1 million impact from movements in foreign exchange rates, consolidated direct operating expenses decreased $4.9 million during the three months ended March 31, 2017 compared to the same period of 2016 . Lower direct operating expenses was primarily due to the sale of certain non-strategic outdoor markets and international businesses.
 
Consolidated Selling, General and Administrative (“SG&A”) Expenses
Consolidated SG&A expenses decreased $11.0 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding a $2.6 million impact from movements in foreign exchange rates, consolidated SG&A expenses decreased $8.5 million during the three months ended March 31, 2017 compared to the same period of 2016 . SG&A expenses were lower primarily due to the sale of certain non-strategic outdoor markets and international businesses.

Corporate Expenses
Corporate expenses increased $6.3 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $1.1 million impact from movements in foreign exchange rates, corporate expenses increased $7.4 million

20


during the three months ended March 31, 2017 compared to the same period of 2016 primarily due to the $7.8 million trademark license fee paid to iHeartMedia, Inc. (see Note 5 to our Consolidated Financial Statements located in Part I of this Quarterly Report on Form 10-Q).

Strategic Revenue and Efficiency Initiatives
Included in the amounts for direct operating expenses, SG&A and corporate expenses discussed above are expenses incurred in connection with our strategic revenue and efficiency initiatives. These costs consist primarily of severance related to workforce initiatives, consolidation of locations and positions, consulting expenses and other costs incurred in connection with improving our businesses. These costs are expected to provide benefits in future periods as the initiative results are realized.

Strategic revenue and efficiency costs were $3.9 million during the three months ended March 31, 2017 . Of these costs, $0.6 million was incurred by our Americas segment, $2.9 million was incurred by our International segment, and $0.4 million was incurred by Corporate. Of these expenses, $0.7 million are reported within direct operating expenses, $2.8 million are reported within SG&A and $0.4 million are reported within corporate expenses.

Strategic revenue and efficiency costs were $2.3 million during the three months ended March 31, 2016 . Of these costs, $1.1 million was incurred by our Americas segment, $0.9 million was incurred by our International segment and $0.3 million was incurred by Corporate. Of these expenses, $0.7 million are reported within direct operating expenses, $1.3 million are reported within SG&A and $0.3 million are reported within corporate expenses.

Depreciation and Amortization
Depreciation and amortization decreased $7.9 million during the three months ended March 31, 2017 , compared to the same period in 2016 primarily due to assets becoming fully depreciated or fully amortized and the disposal of assets related to the sale of our Indianapolis market in 2017 and the sale of nine non-strategic U.S. markets and our businesses in Turkey and Australia in 2016.
Other operating income (expense), net
Other operating expense, net was $32.6 million for the three months ended March 31, 2017 primarily due to the sale of the Americas' Indianapolis market for certain assets in Atlanta, Georgia, plus $43.0 million in cash, net of closing costs, resulting in a net gain of $28.6 million
Other operating income was $284.8 million for the three months ended March 31, 2016, which primarily related to the sale of nine non-strategic outdoor markets at the beginning of the year. In the first quarter of 2016, Americas outdoor sold nine non-strategic outdoor markets including Cleveland and Columbus, Ohio, Des Moines, Iowa, Ft. Smith, Arkansas, Memphis, Tennessee, Portland, Oregon, Reno, Nevada, Seattle, Washington and Wichita, Kansas for net proceeds of $592.3 million in cash and certain advertising assets in Florida. The Company recognized a net gain of $281.7 million.
Interest Expense
Interest expense decreased $1.2 million during the three months ended March 31, 2017 compared to the same period of 2016 .
 
Interest Income on Due from iHeartCommunications
Interest income increased $2.1 million during the three months ended March 31, 2017 compared to the same period of 2016 due to a higher average outstanding balance on the Due from iHeartCommunications note.
 
Other income (expense), net
Other income , net of $3.9 million for the three months ended March 31, 2017 related primarily to net foreign exchange gains recognized in connection with intercompany notes denominated in foreign currencies.

Other expense, net of $5.8 million for the three months ended March 31, 2016 related primarily to net foreign exchange losses recognized in connection with intercompany notes denominated in foreign currencies.

 

21


Income tax expense
Our operations are included in a consolidated income tax return filed by iHeartMedia.  However, for our financial statements, our provision for income taxes was computed as if we file separate consolidated federal income tax returns with our subsidiaries.
 
The effective tax rate for the three months ended March 31, 2017 was 41.3% . The effective rate was primarily impacted by the Company's inability to benefit from losses in certain foreign jurisdictions due to uncertainty regarding the ability to utilize those losses in future periods.
 
The effective tax rate for the three months ended March 31, 2016 was 30.8% and was primarily impacted by the reversal of the valuation allowance recorded in 2015 against net operating losses in U.S. federal and state jurisdictions due to taxable gains from the dispositions of nine outdoor markets during the period. In addition, we were unable to record benefits on losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future periods.
  
Americas Outdoor Advertising Results of Operations
 
Our Americas outdoor operating results were as follows:

(In thousands)
Three Months Ended March 31,
 
%
 
 
2017
 
2016
 
Change
 
Revenue
$
279,420

 
$
282,528

 
(1.1)%
 
Direct operating expenses
140,473

 
138,012

 
1.8%
 
SG&A expenses
56,086

 
55,329

 
1.4%
 
Depreciation and amortization
45,295

 
46,116

 
(1.8)%
 
Operating income
$
37,566

 
$
43,071

 
(12.8)%
 
 
Americas revenue decreased $3.1 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $1.4 million impact from movements in foreign exchange rates, Americas revenue decreased $4.5 million during the three months ended March 31, 2017 compared to the same period of 2016 . The decrease in revenue is due to the $5.2 million impact of the sale of non-strategic outdoor markets and a decrease in Spectacolor revenue from lower inventory. This was partially offset by increased revenues from new airport contracts, as well as, digital billboards from new deployments and higher occupancy on existing digital billboards.
 
Americas direct operating expenses increased $2.5 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $0.9 million impact from movements in foreign exchange rates, Americas direct operating expenses increased $1.6 million during the three months ended March 31, 2017 compared to the same period of 2016 . The increase in direct operating expenses was driven by higher site lease expenses related to new airport contracts and printed displays, partially offset by the $2.0 million impact of the sale of non-strategic outdoor markets. Americas SG&A expenses increased $0.7 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $0.5 million impact from movements in foreign exchange rates, Americas SG&A expenses increased $0.2 million during the three months ended March 31, 2017 compared to the same period of 2016 .


22


International Outdoor Advertising Results of Operations

Our International operating results were as follows:

(In thousands)
Three Months Ended March 31,
 
%
 
 
2017
 
2016
 
Change
 
Revenue
$
265,306

 
$
306,486

 
(13.4)%
 
Direct operating expenses
187,458

 
203,975

 
(8.1)%
 
SG&A expenses
59,688

 
71,472

 
(16.5)%
 
Depreciation and amortization
30,673

 
37,880

 
(19.0)%
 
Operating income
$
(12,513
)
 
$
(6,841
)
 
82.9%
 

International revenue decreased $41.2 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $14.2 million impact from movements in foreign exchange rates, International revenue decreased $27.0 million during the three months ended March 31, 2017 compared to the same period of 2016 . The decrease in revenue is primarily due to a $35.4 million decrease in revenue resulting from the sale of our businesses in Turkey and Australia in 2016. This was partially offset by growth across other markets including Spain, the United Kingdom and Switzerland, primarily from new contracts and digital expansion.
 
International direct operating expenses decreased $16.5 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $10.0 million impact from movements in foreign exchange rates, International direct operating expenses decreased $6.5 million during the three months ended March 31, 2017 compared to the same period of 2016 . The decrease was driven by a $22.5 million decrease in direct operating expenses resulting from the 2016 sales of our businesses in Turkey and Australia, partially offset by higher site lease and production expenses in countries experiencing revenue growth. International SG&A expenses decreased $11.8 million during the three months ended March 31, 2017 compared to the same period of 2016 . Excluding the $3.1 million impact from movements in foreign exchange rates, International SG&A expenses decreased $8.7 million during the three months ended March 31, 2017 compared to the same period of 2016 . The decrease in SG&A expenses was primarily due to a $6.7 million decrease resulting from the sale of our businesses in Turkey and Australia.

Reconciliation of Segment Operating Income to Consolidated Operating Income
(In thousands)
Three Months Ended March 31,
 
 
2017
 
2016
 
Americas Outdoor Advertising
$
37,566

 
$
43,071

 
International Outdoor Advertising
(12,513
)
 
(6,841
)
 
Other operating income (loss), net
32,611

 
284,774

 
Corporate and other (1)
(36,066
)
 
(29,623
)
 
Consolidated operating income
$
21,598

 
$
291,381

 

(1)
Corporate and other includes expenses related to Americas and International as well as overall executive, administrative and support functions.

Share-Based Compensation Expense
We have granted restricted stock, restricted stock units and options to purchase shares of our Class A common stock to certain key individuals under our equity incentive plans. Certain employees receive equity awards pursuant to our equity incentive plans.  As of March 31, 2017 , there was $10.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on service conditions.  This cost is expected to be recognized over a weighted average period of approximately 2.4 years. 
 
Share-based compensation expenses are recorded in corporate expenses and were $2.4 million and $2.4 million for the three months ended March 31, 2017 and 2016 , respectively.

23



LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following discussion highlights cash flow activities during the three months ended March 31, 2017 and 2016:
  (In thousands)
Three Months Ended March 31,
 
2017
 
2016
Cash provided by (used for):
 
 
 
Operating activities
$
(50,147
)
 
$
16,170

Investing activities
$
16,275

 
$
523,544

Financing activities
$
(311,090
)
 
$
(466,468
)
 
Operating Activities
Cash used for operating activities was $50.1 million during the three months ended March 31, 2017  compared to $16.2 million of cash provided by operating activities during the three months ended March 31, 2016 .  The decrease in cash provided by operating activities is primarily attributable to changes in working capital balances, particularly accounts payable and accrued expenses, which was driven primarily by the timing of payments.
Investing Activities
Cash provided by investing activities of $16.3 million during the three months ended March 31, 2017 primarily reflected net cash proceeds from the sale of our outdoor Indianapolis market of $43.0 million . Those sale proceeds were partially offset by our capital expenditures of $36.3 million .  We spent $14.1 million in our Americas segment primarily related to the construction of new advertising structures such as digital displays, $21.8 million in our International segment primarily related to street furniture and transit advertising structures and $0.4 million in Corporate primarily related to equipment and software purchases.
 Cash provided by investing activities of $523.5 million during the three months ended March 31, 2016 primarily reflected net cash proceeds from the sale of nine non-strategic outdoor markets including Cleveland and Columbus, Ohio, Des Moines, Iowa, Ft. Smith, Arkansas, Memphis, Tennessee, Portland, Oregon, Reno, Nevada, Seattle, Washington and Wichita, Kansas for net proceeds of $592.3 million in cash and certain advertising assets in Florida. Those sale proceeds were partially offset by our capital expenditures of $47.2 million. We spent $11.3 million in our Americas segment primarily related to the construction of new advertising structures such as digital displays and $34.9 million in our International segment primarily related to new advertising structures such as billboards and street furniture and renewals of existing contracts.
 
Financing Activities
Cash used for financing activities of $311.1 million during the three months ended March 31, 2017 primarily reflected a cash dividend of $282.5 million and net transfers of $29.4 million in cash to iHeartCommunications, which represents the activity in the “Due from iHeartCommunications” account.
 
Cash used for financing activities of $466.5 million during the three months ended March 31, 2016 primarily reflected two cash dividends paid in the aggregate amount of $754.2 million, partially offset by net transfers of $290.7 million in cash from iHeartCommunications, which represents the activity in the “Due from/to iHeartCommunications” account.
 
Anticipated Cash Requirements
Our primary sources of liquidity are cash on hand, cash flow from operations, the revolving promissory note with iHeartCommunications and our senior revolving credit facility, and, to the extent we use cash to support iHeartCommunications’ liquidity needs in the future, cash from liquidity-generating transactions.  As of March 31, 2017 , we had $200.6 million of cash on our balance sheet, including $141.8 million of cash held outside the U.S. by our subsidiaries, a portion of which is held by non-wholly owned subsidiaries or is otherwise subject to certain restrictions and not readily accessible to us.  We have the ability and intent to indefinitely reinvest the undistributed earnings of consolidated subsidiaries based outside of the United States.  If any excess cash held by our foreign subsidiaries were needed to fund operations in the United States, we could presently repatriate available funds without a requirement to accrue or pay U.S. taxes.  This is a result of significant deficits, as calculated for tax law purposes, in our foreign earnings and profits, which gives us flexibility to make future cash distributions as non-taxable returns of capital.

24



Our primary uses of liquidity are for our working capital, capital expenditure, debt service, special dividend and other funding requirements.  Based on our current and anticipated levels of operations and conditions in our markets, we believe that cash on hand, cash flows from operations, repayment of amounts outstanding under the revolving promissory note with iHeartCommunications and borrowing capacity under our senior revolving credit facility will enable us to meet our working capital, capital expenditure, debt service, special dividend and other funding requirements, including the debt service on the CCWH Senior Notes, the CCWH Subordinated Notes and the CCIBV Senior Notes, for at least the next 12 months.  We believe our long-term plans, which include promoting outdoor media spending, capitalizing on our diverse geographic and product opportunities and the continued deployment of digital displays, will enable us to continue generating cash flows from operations sufficient to meet our liquidity and funding requirements long term.  However, our anticipated results are subject to significant uncertainty. Our ability to fund our working capital, capital expenditures, debt service, special dividend and other obligations depends on our future operating performance and cash from operations.  If our future operating performance does not meet our expectations or our plans materially change in an adverse manner or prove to be materially inaccurate, we may need additional financing.  We may not be able to secure any such additional financing on terms favorable to us or at all.

During the fourth quarter of 2016, we sold our business in Australia for cash proceeds of $195.7 million , net of cash retained by the purchaser and closing costs. In January 2017, we sold our Indianapolis, Indiana outdoor market in exchange for certain assets in Atlanta, Georgia, plus approximately $43.0 million in cash, net of closing costs. On February 23, 2017, we paid a special cash dividend to our stockholders of $282.5 million using proceeds from the sales of certain non-strategic U.S. markets and of our business in Australia. iHeartCommunications received 89.9% or approximately $254.0 million, of the dividend, with the remaining 10.1%, or approximately $28.5 million, paid to our public stockholders. The payment of these special dividends reduces the amount of cash available to us for future working capital, capital expenditure, debt service and other funding requirements. Future special cash dividends will be dependent upon, among other things, our having sufficient available cash.
We frequently evaluate strategic opportunities both within and outside our existing lines of business.  We expect from time to time to dispose of certain businesses and may pursue acquisitions.  These dispositions or acquisitions could be material.
In addition to any special dividends that our board of directors may declare using the proceeds of any liquidity-generating transactions or other available cash, we may declare special dividends using the proceeds of payments from iHeartCommunications under the Due from iHeartCommunications note.  Our board of directors has established a committee that has the non-exclusive authority to demand payments under the Due from iHeartCommunications note under certain specified circumstances tied to iHeartCommunications’ liquidity or the amount outstanding under the Due from iHeartCommunications note, as long as our board of directors declares a simultaneous dividend equal to the amount so demanded.  Any future repayments and dividends would further reduce the amount of the Due from iHeartCommunications note asset that is available to us as a source of liquidity for ongoing working capital, capital expenditure, debt service, special dividend and other funding requirements.
As our controlling stockholder, iHeartCommunications may request and may exert pressure on us to engage in transactions for the purpose of supporting its liquidity needs, such as financings or asset sales, which may negatively affect our business operations or our capital structure.  In its Quarterly Report on Form 10-Q filed with the SEC on May 4, 2017 , iHeartCommunications stated that its forecast of future cash flows indicates that such cash flows would not be sufficient for it to meet its obligations, including payment of the outstanding receivables based credit facility balance at maturity on December 24, 2017 and payment of the 10% Senior Notes due January 15, 2018, as they become due in the ordinary course of business for a period of 12 months following May 4, 2017 . iHeartCommunications further stated that management has determined that there is substantial doubt as to iHeartCommunications’ ability to continue as a going concern for a period of 12 months following May 4, 2017 .
iHeartCommunications provides the day-to-day cash management services for our cash activities and balances in the U.S. We do not have any material committed external sources of capital other than iHeartCommunications, and iHeartCommunications is not required to provide us with funds to finance our working capital or other cash requirements. We have no access to the cash transferred from us to iHeartCommunications under the cash management arrangement other than our right to demand payment by iHeartCommunications of the amounts owed to us under the Due from iHeartCommunications note. As of March 31, 2017 , iHeartCommunications had $365.0 million recorded as “Cash and cash equivalents” on its consolidated balance sheets, of which $200.6 million was held by us and our subsidiaries, and we had $915.1 million due to us from iHeartCommunications under the Due from iHeartCommunications note.  Further deterioration in the financial condition or liquidity of iHeartCommunications could result in its inability to repay amounts due to us under the Due from iHeartCommunications note when demanded or at maturity, and could also have the effect of increasing our borrowing costs or impairing our access to capital markets. If iHeartCommunications was to become insolvent or file for bankruptcy, we would be an unsecured creditor of iHeartCommunications.  In that event, we would be treated the same as other unsecured creditors of iHeartCommunications and, if we were not repaid or otherwise entitled to amounts outstanding or previously paid under the

25


revolving promissory note, could not obtain cash previously transferred to iHeartCommunications on a timely basis or retain cash previously received from iHeartCommunications, we could experience a liquidity shortfall.
We were in compliance with the covenants contained in our material financing agreements as of March 31, 2017 .  Our ability to comply with the maintenance covenant in our senior secured credit facility may be affected by events beyond our control, including prevailing economic, financial and industry conditions.
In its Quarterly Report on Form 10-Q filed with the SEC on May 4, 2017 , iHeartCommunications stated that it was in compliance with the covenants contained in its material financing agreements as of March 31, 2017 , other than a payment default on notes held by a subsidiary of iHeartCommunications that has informed iHeartCommunications it does not currently intend to collect the principal amount due or exercise or request enforcement of any remedy with respect to the payment default under the applicable indenture.  iHeartCommunications stated that this payment default is below the $100.0 million cross-default threshold in iHeartCommunications' debt documents. iHeartCommunications similarly stated in its Quarterly Report that its future results are subject to significant uncertainty and there can be no assurance it will be able to maintain compliance with these covenants.  iHeartCommunications stated in its Quarterly Report that these covenants include a requirement in its senior secured credit facilities that it receive an opinion from its auditors in connection with its year-end audit that is not subject to a "going concern" or like qualification or exception. Moreover, iHeartCommunications stated in its Quarterly Report that its ability to comply with the covenants in its material financing agreements may be affected by events beyond its control, including the uncertainties described under "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Anticipated Cash Requirements" in its Quarterly Report and prevailing economic, financial and industry conditions.  As discussed therein, the breach of any covenants set forth in iHeartCommunications’ financing agreements would result in a default thereunder, and an event of default would permit the lenders under a defaulted financing agreement to declare all indebtedness thereunder to be immediately due and payable. In addition, iHeartCommunications stated in its Quarterly Report that if iHeartCommunications is unable to repay its obligations under any secured credit facility, the lenders could proceed against any assets that were pledged to secure such facility.  Finally, iHeartCommunications stated in its Quarterly Report that a default or acceleration under any of its material financing agreements could cause a default under other obligations that are subject to cross-default and cross-acceleration provisions.
Sources of Capital
As of March 31, 2017 and December 31, 2016 , we had the following debt outstanding, cash and cash equivalents and amounts due from iHeartCommunications:
(In millions)
March 31, 2017
 
December 31, 2016
Clear Channel Worldwide Holdings Senior Notes due 2022
$
2,725.0

 
$
2,725.0

Clear Channel Worldwide Holdings Senior Subordinated Notes due 2020
2,200.0

 
2,200.0

Senior Revolving Credit Facility due 2018 (1)

 

Clear Channel International B.V. Senior Notes due 2020
225.0

 
225.0

Other debt
14.7

 
14.8

Original issue discount
(6.5
)
 
(6.7
)
Long-term debt fees
(38.7
)
 
(41.1
)
Total debt
5,119.5

 
5,117.0

Less:  Cash and cash equivalents
200.6

 
542.0

Less:  Due from iHeartCommunications
915.1

 
885.7

 
$
4,003.8

 
$
3,689.3

  (1) The senior revolving credit facility provides for borrowings up to $75.0 million (the revolving credit commitment). As of March 31, 2017 , we had $67.3 million of letters of credit outstanding, and $7.7 million of availability, under the senior revolving credit facility.
We may from time to time repay our outstanding debt or seek to purchase our outstanding equity securities.  Such transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

26


Promissory Notes with iHeartCommunications
We maintain accounts that represent net amounts due to or from iHeartCommunications, which are recorded as “Due from iHeartCommunications” on our consolidated balance sheets.  The accounts represent our revolving promissory note issued by us to iHeartCommunications and the revolving promissory note issued by iHeartCommunications to us, in each case 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 iHeartCommunications.  Such day-to-day cash management services relate only to our cash activities and balances in the U.S. and exclude any cash activities and balances of our non-U.S. subsidiaries.  As of March 31, 2017 and December 31, 2016 , the asset recorded in “Due from iHeartCommunications” on our consolidated balance sheet was $915.1 million and $885.7 million , respectively.  As of March 31, 2017 , we had no borrowings under the revolving promissory note to iHeartCommunications.
In accordance with the terms of the settlement for the derivative litigation filed by our stockholders regarding the Due from iHeartCommunications note, as previously disclosed, we established a committee of our board of directors, consisting of our independent and disinterested directors, for the specific purpose of monitoring the Due from iHeartCommunications note.  This committee has the non-exclusive authority to demand payments under the Due from iHeartCommunications note under certain specified circumstances tied to iHeartCommunications’ liquidity or the amount outstanding under the Due from iHeartCommunications note, as long as our board of directors declares a simultaneous dividend equal to the amount so demanded.  The committee last made a demand under the Due from iHeartCommunications note on August 11, 2014.  If future demands are made in accordance with the terms of the committee charter, we will declare a simultaneous dividend equal to the amount so demanded, which would further reduce the amount of the “Due from iHeartCommunications” asset that is available to us as a source of liquidity for ongoing working capital, capital expenditure, debt service and other funding requirements.
The net interest income for the three months ended March 31, 2017 and 2016 was $14.8 million and $12.7 million , respectively. At March 31, 2017 and December 31, 2016 , the fixed interest rate on the “Due from iHeartCommunications” account was 6.5%, which is equal to the fixed interest rate on the CCWH Senior Notes. If the outstanding balance on the Due from iHeartCommunications note exceeds $1.0 billion and under certain other circumstances tied to iHeartCommunications’ liquidity, the rate will be variable but will in no event be less than 6.5% nor greater than 20%.
Our working capital requirements and capital for general corporate purposes, including acquisitions and capital expenditures, may be provided to us by iHeartCommunications, in its sole discretion, pursuant to the revolving promissory note issued by us to iHeartCommunications or pursuant to repayment of the revolving promissory note issued by iHeartCommunications to us.  If we are unable to obtain financing from iHeartCommunications, we may need to obtain additional financing from banks or other lenders, or through public offerings or private placements of debt or equity, strategic relationships or other arrangements at some future date.  We may be unable to successfully obtain additional debt or equity financing on satisfactory terms or at all.
As long as iHeartCommunications maintains a significant interest in us, pursuant to the Master Agreement between iHeartCommunications and us, iHeartCommunications will have the option to limit our ability to incur debt or issue equity securities, among other limitations, which could adversely affect our ability to meet our liquidity needs.  Under the Master Agreement with iHeartCommunications, we are limited in our borrowings from third parties to no more than $400.0 million at any one time outstanding, without the prior written consent of iHeartCommunications.
  Clear Channel Worldwide Holdings Senior Notes
As of March 31, 2017 , CCWH senior notes represented $2.7 billion aggregate principal amount of indebtedness outstanding, which consisted of $735.75 million aggregate principal amount of 6.5% Series A Senior Notes due 2022 (the “Series A CCWH Senior Notes”) and $1,989.25 million aggregate principal amount of 6.5% Series B CCWH Senior Notes due 2022 (the “Series B CCWH Senior Notes” and, together with the Series A CCWH Senior Notes, the “CCWH Senior Notes”). The CCWH Senior Notes are guaranteed by us, Clear Channel Outdoor, Inc. (“CCOI”) and certain of our direct and indirect subsidiaries.
 The Series A CCWH Senior Notes indenture and Series B CCWH Senior Notes indenture restrict our ability to incur additional indebtedness but permit us to incur additional indebtedness based on an incurrence test. Under this test, in order to incur additional indebtedness, our debt to adjusted EBITDA ratios (as defined by the indentures) must be lower than 7.0:1 and 5.0:1 for total debt and senior debt, respectively, and in order to incur additional indebtedness that is subordinated to the CCWH Senior Notes, our debt to adjusted EBITDA ratios (as defined by the indentures) must be lower than 7.0:1. The indentures contain certain other exceptions that allow us to incur additional indebtedness. The Series B CCWH Senior Notes indenture also restricts our ability to pay dividends, but permits us to pay dividends from the proceeds of indebtedness or the proceeds from asset sales if our debt to adjusted EBITDA ratios (as defined by the indenture) are lower than 7.0:1 and 5.0:1 for total debt and senior debt, respectively. The Series B CCWH Senior Notes indenture also contains certain other exceptions that allow us to pay dividends,

27


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 us of amounts outstanding under the Due from iHeartCommunications note. The Series A CCWH Senior Notes indenture does not limit our ability to pay dividends. 
Our consolidated leverage ratio, defined as total debt divided by EBITDA (as defined by the CCWH Senior Notes indentures) for the preceding four quarters was 8.2 :1 as of March 31, 2017 , and senior leverage ratio, defined as senior debt divided by EBITDA (as defined by the CCWH Senior Notes indentures) for the preceding four quarters was 4.3 :1 as of March 31, 2017 . As required by the definition of EBITDA in the CCWH Senior Notes indentures, our EBITDA for the preceding four quarters of $632.6 million is calculated as operating income (loss) before depreciation, amortization, impairment charges and gains and losses on acquisitions and divestitures plus share-based compensation and is further adjusted for the following: (i) costs incurred in connection with severance, the closure and/or consolidation of facilities, retention charges, consulting fees and other permitted activities; (ii) extraordinary, non-recurring or unusual gains or losses or expenses; (iii) non-cash charges; and (iv) various other items. Because our consolidated leverage ratio exceeded the limit in the incurrence tests described above, we are not currently permitted to incur additional indebtedness using the incurrence test in the Series A CCWH Senior Notes indenture and the Series B CCWH Senior Notes indenture, and we are not currently permitted to pay dividends from the proceeds of indebtedness or the excess proceeds from asset sales under the Series B CCWH Senior Notes indenture. There are other exceptions in these indentures that allow us to incur additional indebtedness and pay dividends.
The following table reflects a reconciliation of EBITDA (as defined by the CCWH Senior Notes indentures) to operating income and net cash provided by operating activities for the four quarters ended March 31, 2017 :
 
Four Quarters Ended
(In millions) 
March 31, 2017
EBITDA  (as defined by the CCWH Senior Notes indentures)
$
632.6

Less adjustments to EBITDA (as defined by the CCWH Senior Notes indentures):
 
Costs incurred in connection with severance, the closure and/or consolidation of facilities, retention charges, consulting fees and other permitted activities
(15.3
)
Extraordinary, non-recurring or unusual gains or losses or expenses (as referenced in the definition of EBITDA in the CCWH Senior Notes indentures)
(9.8
)
Non-cash charges
(5.6
)
Other items
16.7

Less: Depreciation and amortization, Impairment charges, Gains and losses on acquisitions and divestitures and Share-based compensation expense
(250.8
)
Operating income
367.8

Plus: Depreciation and amortization, Impairment charges, Gain (loss) on disposal of operating and fixed assets and Share-based compensation expense
242.4

Less: Interest expense
(373.7
)
Plus: Interest income on Due from iHeartCommunications
52.4

Less: Current income tax expense
(28.8
)
Plus: Other income, net
(60.9
)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities (including Provision for doubtful accounts, Amortization of deferred financing charges and note discounts, net and Other reconciling items, net)
79.2

Change in assets and liabilities, net of assets acquired and liabilities assumed
(35.4
)
Net cash provided by operating activities
$
243.0

Clear Channel Worldwide Holdings Senior Subordinated Notes
As of March 31, 2017 , CCWH Subordinated Notes represented $2.2 billion aggregate principal amount of indebtedness outstanding, which consist of $275.0 million aggregate principal amount of 7.625% Series A Senior Subordinated Notes due 2020 (the “Series A CCWH Subordinated Notes”) and $1,925.0 million aggregate principal amount of 7.625% Series B Senior Subordinated Notes due 2020 (the “Series B CCWH Subordinated Notes”).
 The Series A CCWH Subordinated Notes indenture and Series B CCWH Subordinated Notes indenture restrict our ability to incur additional indebtedness but permit us to incur additional indebtedness based on an incurrence test. In order to incur

28


additional indebtedness under this test, our debt to adjusted EBITDA ratio (as defined by the indentures) must be lower than 7.0:1. The indentures contain certain other exceptions that allow us to incur additional indebtedness. The Series B CCWH Subordinated Notes indenture also permits us to pay dividends from the proceeds of indebtedness or the proceeds from asset sales if our debt to adjusted EBITDA ratio (as defined by the indenture) is lower than 7.0:1. Because our debt to adjusted EBITDA ratio exceeded the thresholds in the indentures as of March 31, 2017 , we are not currently permitted to incur additional indebtedness using the incurrence test in the Series A CCWH Subordinated Notes Indenture and the Series B CCWH Subordinated Notes indenture, and we are not currently permitted to pay dividends from the proceeds of indebtedness or the excess proceeds from asset sales under the Series B CCWH Subordinated Notes indenture. The Series B CCWH Subordinated Notes indenture contains certain other exceptions that allow us to incur indebtedness and 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 us of amounts outstanding under the Due from iHeartCommunications note.  The Series A CCWH Subordinated Notes indenture does not limit our ability to pay dividends.
Senior Revolving Credit Facility Due 2018
During the third quarter of 2013, we 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.  As of March 31, 2017 , there were no amounts outstanding under the revolving credit facility, and $67.3 million of letters of credit under the revolving credit facility which reduce availability under the facility. The revolving credit facility contains a springing covenant that requires us to maintain a secured leverage ratio (as defined in the revolving credit facility) of not more than 1.5:1 that is tested at the end of a quarter if availability under the facility is less than 75% of the aggregate commitments under the facility.  We were in compliance with the secured leverage ratio covenant as of March 31, 2017 .
CCIBV Senior Notes
During the fourth quarter of 2015, Clear Channel International B.V., an international subsidiary of ours, issued $225.0 million aggregate principal amount outstanding of its 8.75% Senior Notes due 2020 (“CCIBV Senior Notes”).
The indenture governing the CCIBV Senior Notes contains covenants that limit Clear Channel International B.V.’s ability and the ability of its restricted subsidiaries to, among other things: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) create liens on assets; (v) engage in certain transactions with affiliates; (vi) create restrictions on dividends or other payments by the restricted subsidiaries; and (vii) merge, consolidate or sell substantially all of CCIBV’s assets.
Other Debt
Other debt consists primarily of capital leases and loans with international banks.  As of March 31, 2017 , approximately $14.7 million was outstanding as other debt.
iHeartCommunications’ Debt Covenants
iHeartCommunications’ senior secured credit facilities contain a significant financial covenant which must be tested quarterly and requires iHeartCommunications to limit the ratio of its consolidated secured debt, net of cash and cash equivalents, to consolidated EBITDA (as defined by iHeartCommunications’ senior secured credit facilities) for the preceding four quarters.  The maximum ratio permitted under this financial covenant was 8.75:1 for the four quarters ended March 31, 2017 .  In its Quarterly Report on Form 10-Q filed with the SEC on May 4, 2017 , iHeartCommunications stated that it was in compliance with this covenant as of March 31, 2017 .
Disposals
In January 2017, we sold our Indianapolis, Indiana market in exchange for certain assets in Atlanta, Georgia, plus approximately $43.0 million in cash, net of closing costs. A net gain of $28.6 million was recognized related to the sale.
Uses of Capital
Special Dividends
On February 23, 2017, we paid a special cash dividend to our stockholders of $282.5 million, using proceeds from the sales of certain non-strategic U.S. markets and of our business in Australia. iHeartCommunications received 89.9%, or approximately $254.0 million, with the remaining 10.1%, or approximately $28.5 million, paid to our public stockholders. The payment of these special dividends reduces the amount of cash available to us for future working capital, capital expenditure, debt service and other funding requirements.

29


Commitments, Contingencies and Guarantees
We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.  It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.  Please refer to “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.
Seasonality
Typically, both our Americas and International segments experience their lowest financial performance in the first quarter of the calendar year, with International historically experiencing a loss from operations in that period.  Our International 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.  Due to this seasonality and certain other factors, the results for the interim periods may not be indicative of results for the full year.
MARKET RISK
We are exposed to market risks arising from changes in market rates and prices, including movements in equity security prices and foreign currency exchange rates.
On June 23, 2016, the United Kingdom (the “U.K.”) held a referendum in which voters approved an exit from the European Union (the “E.U.”), commonly referred to as “Brexit”. Our International segment is currently headquartered in the U.K. and transacts business in many key European markets.  The announcement of Brexit caused the British pound currency rate to weaken against the U.S. dollar.  Further, Brexit may create global economic uncertainty, which may cause our customers to closely monitor their costs and reduce the amount they spend on advertising.  Any of these effects of Brexit, among others, could adversely affect our business, financial condition, operating results and cash flows.
Foreign Currency Exchange Rate Risk
We have operations in countries throughout the world.  Foreign operations are measured in their local currencies.  As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations.  We believe we mitigate a small portion of our exposure to foreign currency fluctuations with a natural hedge through borrowings in currencies other than the U.S. dollar.  Our foreign operations reported a net loss of $25.4 million for three months ended March 31, 2017 .  We estimate a 10% increase in the value of the U.S. dollar relative to foreign currencies would have decreased our net loss for the three months ended March 31, 2017 by $2.5 million.  A 10% decrease in the value of the U.S. dollar relative to foreign currencies during the three months ended March 31, 2017 would have increased our net loss by a corresponding amount.
This analysis does not consider the implications that such currency fluctuations could have on the overall economic activity that could exist in such an environment in the U.S. or the foreign countries or on the results of operations of these foreign entities. 
Inflation
Inflation is a factor in the economies in which we do business and we continue to seek ways to mitigate its effect.  Inflation has affected our performance in terms of higher costs for wages, salaries and equipment.  Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our outdoor display faces.

30



CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf.  Except for the historical information, this report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, our ability to comply with the covenants in the agreements governing our indebtedness and the availability of capital and the terms thereof.  Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our future performance.  These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance.  There can be no assurance, however, that management’s expectations will necessarily come to pass.  Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements.  We do not intend, nor do we undertake any duty, to update any forward-looking statements.
A wide range of factors could materially affect future developments and performance, including but not limited to:
risks associated with weak or uncertain global economic conditions and their impact on the capital markets;
other general economic and political conditions in the United States and in other countries in which we currently do business, including those resulting from recessions, political events and acts or threats of terrorism or military conflicts;
industry conditions, including competition;
the level of expenditures on advertising;
legislative or regulatory requirements;
fluctuations in operating costs;
technological changes and innovations;
changes in labor conditions and management;
capital expenditure requirements;
risks of doing business in foreign countries;
fluctuations in exchange rates and currency values;
the outcome of pending and future litigation;
taxes and tax disputes;
changes in interest rates;
shifts in population and other demographics;
access to capital markets and borrowed indebtedness;
our ability to implement our business strategies;
the risk that we may not be able to integrate the operations of acquired businesses successfully;
the risk that our strategic revenue and efficiency initiatives may not be entirely successful or that any cost savings achieved from such strategic revenue and efficiency initiatives may not persist;
the impact of our substantial indebtedness, including the effect of our leverage on our financial position and earnings;
our ability to generate sufficient cash from operations or liquidity-generating transactions and our need to allocate significant amounts of our cash to make payments on our indebtedness, which in turn could reduce our financial flexibility and ability to fund other activities;
our relationship with iHeartCommunications, including its ability to elect all of the members of our Board of Directors and its ability as our controlling stockholder to determine the outcome of matters submitted to our stockholders and certain additional matters governed by intercompany agreements between us;
the impact of the above and similar factors on iHeartCommunications, our primary direct or indirect external source of capital, which has significant need for capital; and
certain other factors set forth in our other filings with the SEC.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive.  Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is presented under “Market Risk” within Item 2 of this Part I.
 

31



ITEM 4.  CONTROLS AND PROCEDURES
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report.  Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in reports that are filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified by the SEC.  Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2017 at the reasonable assurance level. 
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

32



PART II -- OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS
We currently are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.  It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.  Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our financial condition or results of operations. 
Although we are involved in a variety of legal proceedings in the ordinary course of business, a large portion of our litigation arises in the following contexts: commercial disputes; misappropriation of likeness and right of publicity claims; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.
Stockholder Litigation

On May 9, 2016, a stockholder of the Company filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management Inc. v. iHeartMedia Inc. et al., C.A. No. 12312-VCS. The complaint names as defendants iHeartCommunications, Inc. (“iHeartCommunications”), the Company’s indirect parent company, iHeartMedia, Inc. (“iHeartMedia”), the parent company of iHeartCommunications, Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (together, the “Sponsor Defendants”), iHeartMedia’s private equity sponsors and majority owners, and the members of the Company’s board of directors. The Company also is named as a nominal defendant. The complaint alleges that the Company has been harmed by the intercompany agreements with iHeartCommunications, the Company’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of iHeartMedia, iHeartCommunications and the Sponsor Defendants to the detriment of the Company and its minority stockholders. Specifically, the complaint alleges that the defendants have breached their fiduciary duties by causing the Company to: (i) continue to loan cash to iHeartCommunications under the intercompany note at below-market rates; (ii) abandon its growth and acquisition strategies in favor of transactions that would provide cash to iHeartMedia and iHeartCommunications; (iii) issue new debt in the CCIBV note offering (the “CCIBV Note Offering”) to provide cash to iHeartMedia and iHeartCommunications through a dividend; and (iv) effect the sales of certain outdoor markets in the U.S. (the “Outdoor Asset Sales”) to provide cash to iHeartMedia and iHeartCommunications through a dividend. The complaint also alleges that iHeartMedia, iHeartCommunications and the Sponsor Defendants aided and abetted the directors’ breaches of their fiduciary duties. The complaint further alleges that iHeartMedia, iHeartCommunications and the Sponsor Defendants were unjustly enriched as a result of these transactions and that these transactions constituted a waste of corporate assets for which the defendants are liable to the Company. The plaintiff is seeking, among other things, a ruling that the defendants breached their fiduciary duties to the Company and that iHeartMedia, iHeartCommunications and the Sponsor Defendants aided and abetted the board of directors’ breaches of fiduciary duty, rescission of payments to iHeartCommunications and its affiliates pursuant to dividends declared in connection with the CCIBV Note Offering and Outdoor Asset Sales, and an order requiring iHeartMedia, iHeartCommunications and the Sponsor Defendants to disgorge all profits they have received as a result of the alleged fiduciary misconduct.
On July 20, 2016, the defendants filed a motion to dismiss plaintiff's verified stockholder derivative complaint for failure to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants’ motion to dismiss all claims brought by the plaintiff.  On December 19, 2016, the plaintiff filed a notice of appeal of the ruling.
International Outdoor Investigation
On April 21, 2015, inspections were conducted at the premises of Clear Channel in Denmark and Sweden as part of an investigation by Danish competition authorities.  Additionally, on the same day, Clear Channel UK received a communication from the UK competition authorities, also in connection with the investigation by Danish competition authorities. Clear Channel and its affiliates are cooperating with the national competition authorities.


33



ITEM 1A.  RISK FACTORS
For information regarding our risk factors, please refer to Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2016 (the "Annual Report") and our Quarterly Reports on Form 10-Q. There have not been any material changes in the risk factors disclosed in our Annual Report and Quarterly Reports, except that we are updating the risk factor entitled "Our agreements with iHeartCommunications impose obligations on, and iHeartCommunications' financing agreements effectively impose restrictions on, our ability to finance operations and capital needs, make acquisitions and engage in other business activities" to replace a portion of that risk factor with a new risk factor entitled "If iHeartCommunications was to become insolvent or file a bankruptcy petition, it could cause significant uncertainties and risks for our operations and our liquidity" as set forth below:
Our agreements with iHeartCommunications impose obligations on, and iHeartCommunications' financing agreements effectively impose restrictions on, our ability to finance operations and capital needs, make acquisitions and engage in other business activities
We have entered into a Master Agreement, a Corporate Services Agreement, an Employee Matters Agreement, a Tax Matters Agreement, a Trademark License Agreement and a number of other agreements with iHeartCommunications setting forth various matters governing our relationship with iHeartCommunications while it remains a significant stockholder in us. These agreements allow iHeartCommunications to retain control over many aspects of our operations, in addition to iHeartCommunications' ability to control us through its controlling ownership of our common stock. We are not able to terminate these agreements or amend them in a manner we deem more favorable so long as iHeartCommunications continues to own shares of our common stock representing more than 50% of the total voting power of our common stock. iHeartCommunications' financing agreements also impose a number of restrictions on us.
In addition, the Master Agreement and, in some cases, iHeartCommunications' financing agreements, include restrictive covenants that, among other things, restrict our ability to:
issue any shares of capital stock or securities convertible into capital stock;
incur additional indebtedness;
make certain acquisitions and investments;
repurchase our stock;
dispose of certain assets; and
merge or consolidate.

The rights of iHeartCommunications under these agreements, in addition to iHeartCommunications' ability to control us through its controlling ownership of our common stock, may allow iHeartCommunications to delay or prevent an acquisition of us that our other stockholders may consider favorable. In addition, the restrictions contained in these agreements limit our ability to finance operations and capital needs, make acquisitions or engage in other business activities, including our ability to grow and increase our revenue or respond to competitive changes.
If iHeartCommunications was to become insolvent or file a bankruptcy petition, it could cause significant uncertainties and risks for our operations and our liquidity
Pursuant to the Corporate Services Agreement, we are obligated to use various corporate services provided by iHeartCommunications and its affiliates, including treasury, payroll and other financial services, certain executive officer services, human resources and employee benefit services, legal services, information systems and network services and procurement and sourcing support. Financial distress at iHeartCommunications could impact its ability to provide these services to us, and if iHeartCommunications was to become insolvent or file a bankruptcy petition, such event could cause significant uncertainties and disrupt our operations and/or adversely affect our rights under the Corporate Services Agreement and the other intercompany agreements.
Also pursuant to the Corporate Services Agreement, substantially all of the cash generated from our domestic Americas operations is transferred daily into accounts of iHeartCommunications (after satisfying our controlled disbursement accounts and the funding requirements of the trustee accounts under the senior notes and the senior subordinated notes issued by Clear Channel Worldwide Holdings, Inc., an indirect, wholly-owned subsidiary of ours), where funds of ours and of iHeartCommunications are commingled, and recorded as "Due from/to iHeartCommunications" on the consolidated balance sheet. Net amounts owed between us and iHeartCommunications are evidenced by revolving promissory notes. We do not have any material committed external sources of capital independent from iHeartCommunications, and iHeartCommunications is not required to provide us with funds to finance our working capital or other cash requirements. In addition, we have no access to the cash transferred from us to iHeartCommunications other than our right to demand payment by iHeartCommunications of the amounts owed to us under the revolving promissory note.

34



The "Due from iHeartCommunications" note previously was the subject of derivative litigation filed by our stockholders in the Delaware Court of Chancery. Pursuant to the terms of the settlement, our board of directors established a committee for the specific purpose of monitoring the Due from iHeartCommunications note. That committee has the non-exclusive authority to demand payments under the Due from iHeartCommunications note under certain specified circumstances tied to iHeartCommunications' liquidity or the amount outstanding under the Due from iHeartCommunications note as long as our board of directors declares a simultaneous dividend equal to the amount so demanded. Any future repayments and simultaneous dividends would further reduce the amount of the Due from iHeartCommunications note asset that is available to us as a source of liquidity for ongoing working capital, capital expenditure, debt service, special dividend and other funding requirements.
If iHeartCommunications was to become insolvent or file a bankruptcy petition, we would be an unsecured creditor of iHeartCommunications. In such event, if we were not repaid or otherwise entitled to the full amounts outstanding under the Due from iHeartCommunications note, or could not obtain such amounts on a timely basis, we could experience a liquidity shortfall. In addition, any repayments that we receive on the note during the applicable preference period prior to the filing of an iHeartCommunications bankruptcy petition may potentially be avoidable as a preference and subject to recovery by the iHeartCommunications bankruptcy estate, which could further exacerbate any liquidity shortfall. At March 31, 2017 , the asset recorded in "Due from iHeartCommunications" on the consolidated balance sheet was $915.1 million .

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the purchases of shares of our Class A common stock made during the quarter ended March 31, 2017 by or on behalf of us or an affiliated purchaser:

Period
Total Number of Shares Purchased (1)
 
Average Price Paid per Share (1)
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 through January 31

 
$

 

 
$

February 1 through February 28

 

 

 

March 1 through March 31
72,465

 
4.87

 

 

Total
72,465

 
$
4.87

 

 
$

 
(1)
The shares indicated consist of shares of our class A common stock tendered by employees to us during the three months ended March 31, 2017 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted shares, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
None.
 
ITEM 4.  MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5.  OTHER INFORMATION
None.


35



ITEM 6.  EXHIBITS
 
Exhibit
Number
 
Description
 
 
 
10.1*
 
Binding Option and Letter of Intent, dated February 9, 2017, between iHeartMedia, Inc. and Clear Channel Outdoor Holdings, Inc.
31.1*
 
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.2*
 
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1**
 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
32.2**
 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
101*
 
Interactive Data Files.
__________________
*              Filed herewith.
**           Furnished herewith.


36



Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
CLEAR CHANNEL OUTDOOR HOLDINGS, INC.
 
 
 
May 4, 2017
 
  /s/ SCOTT D. HAMILTON                   
 
 
Scott D. Hamilton
 
 
Senior Vice President, Chief Accounting Officer and
 
 
Assistant Secretary
 
 


37


EXHIBIT 10.1 - BINDING OPTION AND LETTER OF INTENT, DATED FEBRUARY 9, 2017, BETWEEN IHEARTMEDIA, INC. AND CLEAR CHANNEL OUTDOOR HOLDINGS, INC.

February 9, 2017

David Sailer, Chief Financial Officer - Americas
Clear Channel Outdoor Holdings, Inc.
200 East Basse Road, Suite 100
San Antonio, TX 78209

RE: Binding Option and Letter of Intent

Dear Mr. Sailer,

This Binding Option and Letter of Intent (the “ Letter of Intent ”) sets forth certain agreements between iHeartMedia, Inc., a Delaware corporation (“ IHM ”), and Clear Channel Outdoor Holdings, Inc. a Delaware corporation (“ CCOH ”), on behalf of themselves and their respective subsidiaries, related to a potential cash dividend proposed to be declared and paid by CCOH in the amount of $282.5 million (the “ Dividend ”).

The parties are entering into this Letter of Intent to provide for a binding option for CCOH to purchase the registered trademarks and domain names owned by IHM and its subsidiaries (including iHM Identity, Inc., a Texas corporation (“ IHM Identity ”)) that incorporate one or more of the words “Clear” and/or “Channel,” and any translations or derivations of any of the foregoing, including without limitation those incorporating the terms “Clara” and “CC,” together with any goodwill associated therewith, including those set forth on Exhibit A attached hereto (the “ CCOH IP ” and such purchase, the “ CCOH IP Sale ”).

Subject to the terms and conditions set forth herein, IHM hereby grants to CCOH (or a subsidiary thereof designated by CCOH) a binding option (the “ Option ”), exercisable in CCOH’s sole and absolute discretion at any time between (a) the date of the first anniversary of the payment of the Dividend (the “ Option Period Start Date ”) and (b) the later of (i) the date of the second anniversary of the payment of the Dividend (the “ Second Anniversary Date ”) and (ii) if CCOH has notified IHM in writing of its election to select an Independent Appraiser (as defined below) on or prior to the Second Anniversary Date, the date that is 90 days following the date that the Purchase Price (as defined below) is determined by the Independent Appraiser (the later of (i) and (ii), the “ Expiration Date ”), to purchase the CCOH IP from IHM and its applicable subsidiaries.

In consideration for the purchase of the CCOH IP and exercise of the Option, CCOH shall pay to IHM (or its applicable subsidiary) a purchase price (the “ Purchase Price ”) equal to the fair market value of the CCOH IP, as determined by an independent appraisal or investment banking firm or consultant mutually agreed and selected by IHM and CCOH (an “ Independent Appraiser ”). At any time prior to the Second Anniversary Date, CCOH may give notice to IHM that it intends to select an Independent Appraiser, and the parties shall reasonably cooperate and act in good faith to jointly select such Independent Appraiser within no more than 10 days following such notice. CCOH may exercise the Option at any time from the Option Period Start Date until the Expiration Date; provided that if such exercise occurs more than 90 days following determination of the Purchase Price by such Independent Appraiser, exercise of the Option will require a new determination of the Purchase Price by an Independent Appraiser, selected by the parties in accordance with this paragraph. The fees and expenses of any Independent Appraiser shall be shared equally by each of CCOH and IHM.






The closing of the CCOH IP Sale and all other related transactions (the “ Closing ”) shall take place no later than 45 days following exercise of the Option by CCOH. At the Closing, the following events shall take place: (i) IHM shall, and shall cause each of its applicable subsidiaries to, execute and deliver any documents that are reasonably necessary to carry out the purchase by CCOH of the CCOH IP, and to transfer and assign to CCOH or its designated subsidiaries, all of their right, title and interest in, to and under the CCOH IP, which documents will contain customary representations and warranties, including with respect to title to the CCOH IP; and (ii) CCOH shall pay the Purchase Price to IHM (or its applicable subsidiary). Following the Closing, IHM shall, and shall cause each of its applicable subsidiaries to, cooperate with CCOH to effect the transfer and assignment to CCOH (or any subsidiary of CCOH) of any CCOH IP.

Notwithstanding any of the foregoing, the parties agree that CCOH shall be responsible for and shall cause Outdoor Management Services, Inc., a Nevada corporation (“ OMS ”) to pay the royalty fee due to IHM Identity in respect of the year ended December 31, 2017, pursuant to Section 3 of the Amended and Restated License Agreement, dated November 10, 2005 and amended as of January 1, 2011, by and between IHM Identity and OMS.

From the date of this Letter of Intent until the Closing, IHM shall (and shall cause its subsidiaries to) use commercially reasonable efforts to (i) preserve in all respects the CCOH IP, (ii) comply in all material respects with all laws applicable to the CCOH IP, (iii) promptly pay and fully satisfy all filing fees and any other obligations relating to or as are necessary to preserve the CCOH IP in the ordinary and usual course, (iv) not take, or fail to take, any action which could reasonably be expected to result in a failure to consummate the CCOH IP Sale, (v) not incur, create, assume or permit the incurrence, creation or assumption of any lien with respect to the CCOH IP, and (vi) not dispose of any of the CCOH IP, or waive, release, grant, license, permit to lapse, abandon, fail to assert or transfer any right, title or interest in or to any CCOH IP.

IHM and CCOH each, on their own behalf and each respectively on behalf of their subsidiaries (other than, in the case of IHM, CCOH and any of CCOH’s subsidiaries), hereby represent and warrant that (a) such party has the requisite corporate power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Letter of Intent and to consummate the CCOH IP Sale and all other transactions contemplated hereby; (b) this Letter of Intent has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof; and (c) such party’s execution and delivery of, and performance under, this Letter of Intent (including the exercise of the Option and the Closing), do not and will not (i) contravene its or any of its subsidiaries’ organizational documents, any court decree or order binding on or affecting it or any of its subsidiaries, or any law or regulation binding on or affecting such party or any of its subsidiaries, (ii) result in or require the creation or imposition of any lien on any of the CCOH IP or (iii) conflict with or result in a default under any contract, agreement, or instrument binding on or affecting such party or any of its subsidiaries or the CCOH IP.

No provisions of this Letter of Intent shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom such waiver, amendment, supplement or modification is sought to be enforced. The parties hereby agree that approval by a vote of a majority of the members of the board of directors of CCOH who have been determined to be “independent directors” under applicable stock exchange listing and corporate governance rules will be (a) sufficient and required for the making of any decision or taking of any action by CCOH hereunder, including to exercise the Option, enforce rights or require performance hereunder; and (b) required prior to CCOH agreeing to amend, supplement or modify, or waive any provision under, this Letter of Intent.






This Letter of Intent shall be interpreted in accordance with the laws of the State of Delaware, regardless of any conflicts of laws provisions thereof or under the laws of any other jurisdiction which would require the application of the laws of another jurisdiction. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Letter of Intent, the party or parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its or their rights under this Letter of Intent, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss arising as a result thereof and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the parties.

This Letter of Intent may be executed in one or more counterparts (including by facsimile or electronic transmission in .pdf, .tiff or any similar format), all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. This Letter of Intent shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns; provided that no party may assign its respective rights or delegate its respective obligations under this Letter of Intent without the express prior written consent of the other party, except that each party may assign its rights and delegate its obligations under this Letter of Intent to any of its subsidiaries ( provided that no such assignment or delegation shall release such party from any liability or obligation under this Letter of Intent). If any provision of this Letter of Intent is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.
[ Remainder of page intentionally left blank; signature page follows ]






IN WITNESS WHEREOF, the parties have caused this Binding Option and Letter of Intent to be executed on the date first written above by their respective duly authorized officers.
IHEARTMEDIA, INC.,
a Delaware corporation
By: /s/ Juliana F. Hill     
Name:     Juliana F. Hill
Title:     SVP - Liquidity and Asset Management

Agreed and acknowledged:
CLEAR CHANNEL OUTDOOR HOLDINGS, INC.,
a Delaware corporation
By: /s/ David Sailer     
Name:     David Sailer
Title:     CFO - Americas









[ Signature Page - Binding Option and Letter of Intent ]






EXHIBIT A
CCOH IP
Trademarks
Mark Name
Country
Current Owner
Status
Application Date
Application Number
Registration Date
Registration Number
C & Design
Australia
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
Bermuda
CLEAR CHANNEL IDENTITY, INC.
Registered
10/18/2007
Not Available
10/18/2014
47372
C & DESIGN
Brazil
CLEAR CHANNEL IDENTITY, INC.
Registered
04/05/2002
824474449
03/11/2008
824474449
C & DESIGN
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
03/28/2002
1135728
12/01/2010
783818
C & DESIGN
Community Trademark
CLEAR CHANNEL IDENTITY, INC.
Registered
04/14/2005
004388377
04/30/2015
004388377
C & DESIGN
Hong Kong
CLEAR CHANNEL IDENTITY, INC.
Registered
03/13/2008
301071008
09/11/2008
301071008
C & DESIGN
India
CLEAR CHANNEL IDENTITY, L.P.
Registered
01/14/2008
1641373
12/23/2011
1641373
C & DESIGN
International
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
Japan
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
04/17/2002
543417
05/29/2002
749474
C & DESIGN
New Zealand
CLEAR CHANNEL IDENTITY, INC.
Registered
10/11/2002
666201
07/07/2003
666201
C & DESIGN
Norway
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
04/03/2002
148661
07/08/2012
29788
C & DESIGN
Russian Federation
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
Singapore
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
T0901756C
C & DESIGN
South Africa
CLEAR CHANNEL INDEPENDENT (PROPRIETARY) LIMITED
Registered
05/21/2002
2002/07017
05/21/2002
2002/07017
C & DESIGN
Switzerland
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
Thailand
CLEAR CHANNEL IDENTITY, INC.
Registered
07/05/2013
899720
07/05/2013
Bor66382





C & DESIGN
Turkey
CLEAR CHANNEL IDENTITY, INC.
Registered
09/29/2008
991556
09/29/2008
991556
C & DESIGN
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
03/22/2002
76/386,225
06/10/2003
2,723,643
C & DESIGN (CLEAR CHANNEL INDEPENDENT)
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
05/21/2002
2002/07015
05/21/2002
2002/07015
C & DESIGN (CLEAR CHANNEL INDEPENDENT)
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
05/21/2002
2002/07013
05/21/2002
2002/07013
C & DESIGN (CLEAR CHANNEL INDEPENDENT)
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
05/21/2002
2002/07016
05/21/2002
2002/07016
C & DESIGN (CLEAR CHANNEL INDEPENDENT)
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
05/21/2002
2002/07014
05/21/2012
2002/07014
C & DESIGN (COLOR)
France
CLEAR CHANNEL FRANCE
Registered
12/04/2001
013134999
05/10/2002
013134999
C & DESIGN (SERIES)
Great Britain
CLEAR CHANNEL IDENTITY, INC.
Registered
03/06/2008
2481620
09/12/2008
2481620
C CLEAR CHANNEL & DESIGN
Swaziland
CLEAR CHANNEL IDENTITY, INC.
Registered
02/28/2013
63/2013
09/06/2004
295/2003
CLEAR CHANNEL
Argentina
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
3223871
02/28/2013
2581624
CLEAR CHANNEL
Australia
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
Australia
CLEAR CHANNEL IDENTITY, INC.
Registered
09/09/1998
772568
09/09/1998
772568
CLEAR CHANNEL
Australia
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
900488
01/16/2002
900488
CLEAR CHANNEL
Brazil
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
824271289
12/02/2008
824271289
CLEAR CHANNEL
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
08/20/1998
0888009
02/19/2003
TMA575950
CLEAR CHANNEL
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
1127836
07/09/2009
743181
CLEAR CHANNEL
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
09/01/1998
9800099895
02/07/2000
1362333
CLEAR CHANNEL
Community Trademark
CLEAR CHANNEL IDENTITY, INC.
Registered
01/15/2002
002534980
07/08/2004
002534980





CLEAR CHANNEL
Community Trademark
CLEAR CHANNEL IDENTITY, INC.
Registered
04/14/2005
004388336
04/30/2015
004388336
CLEAR CHANNEL
Community Trademark
CLEAR CHANNEL IDENTITY, L.P.
Registered
08/20/1998
000911842
12/21/1999
000911842
CLEAR CHANNEL
Czech Republic
CLEAR CHANNEL IDENTITY, INC.
Registered
09/15/1998
O-135964
04/19/2000
223871
CLEAR CHANNEL
Estonia
CLEAR CHANNEL IDENTITY, INC.
Registered
08/19/1998
9801968
06/22/2000
31353
CLEAR CHANNEL
Great Britain
CLEAR CHANNEL IDENTITY, INC.
Registered
03/06/2008
2481618
09/12/2008
2481618
CLEAR CHANNEL
Hong Kong
CLEAR CHANNEL IDENTITY, INC.
Registered
03/13/2008
301071026
09/11/2008
301071026
CLEAR CHANNEL
Hong Kong
CLEAR CHANNEL IDENTITY, INC.
Registered
08/25/1998
98/11244
08/25/2015
B06228/2000
CLEAR CHANNEL
India
CLEAR CHANNEL IDENTITY, L.P.
Registered
01/21/2008
1643787
01/21/2008
1643787
CLEAR CHANNEL
India
CLEAR CHANNEL IDENTITY, L.P.
Registered
08/20/1998
815525
08/20/1998
815525
CLEAR CHANNEL
International
CLEAR CHANNEL IDENTITY, INC.
Registered
 
Not Available
04/01/2008
999753
CLEAR CHANNEL
International
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
Japan
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
10/27/1998
352173
11/30/1998
595617
CLEAR CHANNEL
Mozambique
CLEAR CHANNEL IDENTITY, INC.
Registered
11/25/2002
06643/2002
11/25/2002
06643/2002
CLEAR CHANNEL
New Zealand
CLEAR CHANNEL IDENTITY, INC.
Registered
03/11/2008
785678
06/11/2009
785678
CLEAR CHANNEL
Norway
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
Norway
CLEAR CHANNEL IDENTITY, INC.
Registered
08/20/1998
199807468
09/28/2000
204932
CLEAR CHANNEL
Norway
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2012
200200236
12/05/2012
216829
CLEAR CHANNEL
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
142583
12/12/2013
34066
CLEAR CHANNEL
Russian Federation
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
Singapore
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
T0905324A
CLEAR CHANNEL
Switzerland
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753





CLEAR CHANNEL
Switzerland
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
00337/2002
08/30/2002
499175
CLEAR CHANNEL
Taiwan
CLEAR CHANNEL IDENTITY, INC.
Registered
08/28/1998
87042556
11/01/1999
116842
CLEAR CHANNEL
Turkey
CLEAR CHANNEL IDENTITY, INC.
Registered
04/01/2008
999753
04/01/2008
999753
CLEAR CHANNEL
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
07/16/2001
76/285,461
09/07/2004
2,882,210
CLEAR CHANNEL
Zambia
CLEAR CHANNEL IDENTITY, INC.
Registered
12/06/2002
697/2002
12/06/2002
697/2002
CLEAR CHANNEL & DESIGN
Argentina
CLEAR CHANNEL IDENTITY, INC.
Registered
01/28/2013
3223875
02/28/2013
2581620
CLEAR CHANNEL & DESIGN
Australia
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
900487
01/16/2002
900487
CLEAR CHANNEL & DESIGN
Bahamas
CLEAR CHANNEL IDENTITY, L.P.
Registered
04/05/2007
30,454
11/11/2013
30454
CLEAR CHANNEL & DESIGN
Bermuda
CLEAR CHANNEL IDENTITY, INC.
Registered
10/18/2007
Not Available
10/18/2014
47371
CLEAR CHANNEL & DESIGN
Brazil
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
824271220
11/25/2008
824271220
CLEAR CHANNEL & DESIGN
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
1127838
10/10/2008
TMA725831
CLEAR CHANNEL & DESIGN
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
12/07/2010
8470455
02/14/2013
8470455
CLEAR CHANNEL & DESIGN
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
12/07/2010
8470452
12/14/2013
8470452
CLEAR CHANNEL & DESIGN
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
12/07/2010
8470453
12/14/2013
8470453
CLEAR CHANNEL & DESIGN
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
12/07/2010
8470454
04/07/2014
8470454
CLEAR CHANNEL & DESIGN
Community Trademark
CLEAR CHANNEL IDENTITY, INC.
Registered
04/14/2005
004388351
04/30/2015
004388351
CLEAR CHANNEL & DESIGN
Community Trademark
CLEAR CHANNEL IDENTITY, L.P.
Registered
01/15/2002
002535250
07/22/2004
002535250
CLEAR CHANNEL & DESIGN
Ghana
CLEAR CHANNEL IDENTITY, INC.
Registered
11/21/2003
33868
11/21/2010
33868
CLEAR CHANNEL & DESIGN
Kenya
CLEAR CHANNEL INDEPENDENT (PROPRIETARY) LIMITED
Registered
11/11/2002
SMA3032
11/11/2012
SMA3032
CLEAR CHANNEL & DESIGN
Latvia
CLEAR CHANNEL IDENTITY, INC.
Registered
10/03/2003
M031658
08/20/2004
M53715
CLEAR CHANNEL & DESIGN
Malawi
CLEAR CHANNEL IDENTITY, INC.
Registered
12/04/2002
534/2002
12/04/2002
534/2002
CLEAR CHANNEL & DESIGN
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
528009
11/15/2002
768550





CLEAR CHANNEL & DESIGN
Mozambique
CLEAR CHANNEL IDENTITY, INC.
Registered
11/25/2002
06644/2002
11/25/2002
06644/2002
CLEAR CHANNEL & DESIGN
Norway
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
200200236
05/12/2002
216830
CLEAR CHANNEL & DESIGN
O.A.P.I
CLEAR CHANNEL IDENTITY, INC.
Registered
12/24/2003
49154
12/24/2013
49154
CLEAR CHANNEL & DESIGN
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
142590
07/23/2002
29929
CLEAR CHANNEL & DESIGN
Russian Federation
CLEAR CHANNEL BALTICS AND RASJA
Registered
06/13/2002
2002711722
06/13/2012
250932
CLEAR CHANNEL & DESIGN
Russian Federation
CLEAR CHANNEL BALTICS AND RASJA
Registered
06/13/2002
2002711723
06/13/2012
250933
CLEAR CHANNEL & DESIGN
Switzerland
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
00338/2002
08/30/2002
499218
CLEAR CHANNEL & DESIGN
Turkey
CLEAR CHANNEL IDENTITY, INC.
Registered
12/28/2001
2001/27613
12/28/2001
2001/27613
CLEAR CHANNEL & DESIGN
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
07/16/2001
76/285,469
09/14/2004
2,884,665
CLEAR CHANNEL & DESIGN
Zambia
CLEAR CHANNEL IDENTITY, L.P.
Registered
12/06/2002
698/2002
12/06/2002
698/2002
CLEAR CHANNEL & DESIGN (Series Logo)
New Zealand
CLEAR CHANNEL IDENTITY, INC.
Registered
12/05/2002
669773
10/06/2003
669773
CLEAR CHANNEL & DEVICE
Zimbabwe
INTER AFRICA ADVERTISING ZIMBABWE (Pvt.) LIMITED
Registered
01/01/2003
10/2003
01/01/2003
10/2003
CLEAR CHANNEL (Chinese Characters)
China P.R.
CLEAR CHANNEL IDENTITY, INC.
Registered
01/21/1999
9900007354
05/28/2000
1403657
CLEAR CHANNEL (Chinese Characters)
Hong Kong
CLEAR CHANNEL IDENTITY, INC.
Registered
01/27/1999
99/988
01/18/2001
200100825
CLEAR CHANNEL (Chinese Characters)
Taiwan
CLEAR CHANNEL IDENTITY, INC.
Registered
01/20/1999
88002361
01/16/2000
124785
CLEAR CHANNEL ADSHEL
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
04/03/2002
148665
11/28/2012
31264
CLEAR CHANNEL AIRPORTS
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
03/28/2002
1135729
11/09/2004
TMA625066
CLEAR CHANNEL AIRPORTS
France
CLEAR CHANNEL IDENTITY, L.P.
Registered
01/18/2002
023142391
01/18/2002
023142391
CLEAR CHANNEL AIRPORTS
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
03/11/2002
76/380,663
01/14/2003
2,674,768
CLEAR CHANNEL ATTITUDE
France
CLEAR CHANNEL IDENTITY, L.P.
Registered
03/29/2004
043282644
03/29/2014
043282644





CLEAR CHANNEL CONNECT
Benelux
HILLENAAR OUTDOOR ADVERTISING BV
Registered
04/03/2014
1287233
08/28/2014
0959148
CLEAR CHANNEL CONNECT
Great Britain
CLEAR CHANNEL UK LIMITED
Registered
11/23/2006
2439329
08/03/2007
2439329
CLEAR CHANNEL CONNECT
Ireland
CLEAR CHANNEL IDENTITY, L.P.
Registered
05/21/2007
2007/01223
05/21/2007
237217
CLEAR CHANNEL CREATE
Community Trademark
iHM Identity, Inc.
Registered
09/15/2015
014563886
01/26/2016
014563886
CLEAR CHANNEL CREATE
Singapore
iHM Identity, Inc.
Filed
03/16/2016
40201604738Y
 
 
CLEAR CHANNEL EMOTION
France
CLEAR CHANNEL FRANCE
Registered
09/08/2009
D093674797
02/12/2010
093674797
CLEAR CHANNEL INDEPENDENT & DESIGN
Botswana
CLEAR CHANNEL IDENTITY, INC.
Registered
06/21/2002
2002/00314
06/21/2012
2002/00314
CLEAR CHANNEL INDEPENDENT & DESIGN
Lesotho
CLEAR CHANNEL IDENTITY, INC.
Registered
07/05/2002
LS/M/2002/00209
07/05/2012
LS/M/2002/00209
CLEAR CHANNEL INDEPENDENT & DESIGN
Mauritius
CLEAR CHANNEL IDENTITY, INC.
Registered
12/17/2002
1191/12/2002
12/17/2012
278/2005
CLEAR CHANNEL INDEPENDENT & DESIGN
Namibia
CLEAR CHANNEL IDENTITY, INC.
Registered
06/14/2002
2002/0715
06/14/2002
2002/0715
CLEAR CHANNEL INDEPENDENT & DESIGN
Nigeria
CORPCOM AIRPORT ADVERTISING (NIGERIA) LIMITED
Filed
06/14/2002
TP65197
 
 
CLEAR CHANNEL INDEPENDENT & DESIGN
Uganda
CLEAR CHANNEL IDENTITY, INC.
Registered
05/05/2003
25673
05/05/2004
35062
CLEAR CHANNEL INTERSPACE AIRPORTS
Louisiana
IN-TER-SPACE SERVICES, INC.
Registered
 
Not Available
07/14/2008
NA
CLEAR CHANNEL INTERSPACE AIRPORTS
Nebraska
IN-TER-SPACE SERVICES, INC.
Registered
 
Not Available
10/14/2008
10116170
CLEAR CHANNEL INTERSPACE AIRPORTS
Wisconsin
IN-TER-SPACE SERVICES, INC.
Registered
 
Not Available
06/11/2008
5802227
CLEAR CHANNEL MALLS
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
03/28/2002
1135730
11/10/2004
TMA625287
CLEAR CHANNEL MALLS
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
03/11/2002
76/380,575
01/21/2003
2,677,525





CLEAR CHANNEL OUTDOOR
Canada
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
1127837
08/31/2005
TMA647002
CLEAR CHANNEL OUTDOOR
Chile
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
555645
01/16/2007
777495
CLEAR CHANNEL OUTDOOR
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
148664
07/17/2002
29867
CLEAR CHANNEL OUTDOOR
Turkey
CLEAR CHANNEL IDENTITY, INC.
Registered
12/28/2001
2001/27604
12/28/2001
2001/27604
CLEAR CHANNEL OUTDOOR
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
07/16/2001
76/285,468
01/20/2004
2,807,051
CLEAR CHANNEL OUTDOOR & DESIGN
Brazil
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
824271203
03/11/2008
824271203
CLEAR CHANNEL OUTDOOR & DESIGN
Lithuania
CLEAR CHANNE LIETUVA
Registered
12/02/2002
20022272
04/09/2004
47798
CLEAR CHANNEL OUTDOOR & DESIGN
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
528013
07/30/2002
757042
CLEAR CHANNEL OUTDOOR & DESIGN
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
01/16/2002
142580
07/17/2002
29860
CLEAR CHANNEL OUTDOOR & DESIGN
United States
CLEAR CHANNEL IDENTITY, INC.
Registered
07/16/2001
76/285,470
12/30/2003
2,799,665
CLEAR CHANNEL PLAY
Singapore
iHM Identity, Inc.
Filed
03/15/2016
40201604736V
 
 
CLEAR CHANNEL RUSSIA
Russian Federation
CLEAR CHANNEL IDENTITY, INC.
Registered
08/29/2011
2011728106
08/29/2013
492024
CLEAR CHANNEL RUSSIA & DESIGN
Russian Federation
CLEAR CHANNEL IDENTITY, INC.
Registered
08/29/2011
2011728107
08/29/2013
492025
CLEAR CHANNEL SMARTBIKE
Argentina
CLEAR CHANNEL IDENTITY, INC.
Registered
03/12/2008
2809476
09/12/2012
2525042
CLEAR CHANNEL SMARTBIKE
Argentina
CLEAR CHANNEL IDENTITY, INC.
Registered
03/12/2008
2809474
09/12/2012
2525041
CLEAR CHANNEL SMARTBIKE
Brazil
CLEAR CHANNEL IDENTITY, INC.
Registered
06/05/2008
900892250
10/02/2012
900892250
CLEAR CHANNEL SMARTBIKE
Chile
CLEAR CHANNEL IDENTITY, INC.
Registered
05/07/2008
818875
08/13/2009
857636
CLEAR CHANNEL SMARTBIKE
Chile
CLEAR CHANNEL IDENTITY, INC.
Registered
05/07/2008
818872
08/13/2009
857635
CLEAR CHANNEL SMARTBIKE
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
10/24/2008
969786
10/29/2009
1128435





CLEAR CHANNEL SMARTBIKE
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
10/24/2008
969785
10/29/2009
1128434
CLEAR CHANNEL SMARTBIKE
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
10/24/2008
969781
10/29/2009
1128433
CLEAR CHANNEL SMARTBIKE
Mexico
CLEAR CHANNEL IDENTITY, INC.
Registered
10/24/2008
969788
10/29/2009
1128436
CLEAR CHANNEL SMARTBIKE
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
06/23/2008
358008-2008
04/13/2010
00163842
CLEAR CHANNEL SMARTBIKE
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
06/23/2008
358006
04/13/2010
00061674
CLEAR CHANNEL SMARTBIKE
Peru
CLEAR CHANNEL IDENTITY, INC.
Registered
06/23/2008
358007
04/13/2010
00163841
CLEAR CHANNEL SPECTACOLOR
United States
iHM Identity, Inc.
Registered
08/26/2005
78/701,289
08/15/2006
3,129,523
CLEAR CHANNEL STAGE EXPERIENCE & DESIGN
Great Britain
CLEAR CHANNEL IDENTITY, L.P.
Registered
05/14/2005
2391947
05/14/2015
2391947
CLEAR CHANNEL VISUEL & DESIGN
Mauritius
CLEAR CHANNEL IDENTITY, INC.
Registered
12/17/2002
1190/12/2002
12/17/2002
279/2005
CLEARCHANNEL INDEPENDENT
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
04/11/2002
2002/04918
03/01/2011
2002/04918
CLEARCHANNEL INDEPENDENT
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
04/11/2002
2002/04914
10/14/2010
2002/04914
CLEARCHANNEL INDEPENDENT
South Africa
CLEAR CHANNEL IDENTITY, INC.
Registered
04/11/2002
2002/04917
10/14/2010
2002/04917
CLEARCHANNEL INDEPENDENT
South Africa
CLEAR CHANNEL INDEPENDENT (PROPRIETARY) LIMITED
Registered
04/11/2002
2002/04915
10/14/2010
2002/04915
CLEARCHANNEL INDEPENDENT
South Africa
CLEAR CHANNEL INDEPENDENT (PROPRIETARY) LIMITED
Registered
04/11/2002
2002/04916
10/14/2010
2002/04916
CLEARVISION
Canada
CLEAR CHANNEL OUTDOOR, INC.
Registered
10/01/2012
1,596,443
09/15/2015
914,084
CLEARVISION
Community Trademark
CLEAR CHANNEL OUTDOOR, INC.
Registered
10/02/2012
011234135
02/13/2013
011234135
CLEARVISION
United States
CLEAR CHANNEL OUTDOOR, INC.
Registered
05/03/2012
85/615,311
09/18/2012
4,210,205





CLEARVISION DIGITAL NETWORKS
United States
CLEAR CHANNEL OUTDOOR, INC.
Registered
02/16/2012
85/545,140
10/09/2012
4,221,413
NEWSSTAND MEDIA CLEAR CHANNEL
Brazil
CLEAR CHANNEL INTERNATIONAL LIMITED
Registered
12/15/2004
827.004.869
10/30/2007
827.004.869
NEWSSTAND MEDIA CLEAR CHANNEL
Brazil
CLEAR CHANNEL INTERNATIONAL LIMITED
Registered
12/15/2004
827.004.877
10/30/2007
827.004.877
NEWSSTAND MEDIA CLEAR CHANNEL
Brazil
CLEAR CHANNEL INTERNATIONAL LIMITED
Registered
12/15/2004
827.004.885
10/30/2007
827.004.885
LA OPCION ES CLARA
Mexico
CLEAR CHANNEL OUTDOOR, INC.
Registered
04/17/2002
543419
11/27/2002
770701
LE CHOICE C'EST CLEAR
Canada
CLEAR CHANNEL OUTDOOR, INC.
Registered
03/28/2002
1135732
04/01/2004
TMA606874

Domain Names
Domain Name
ccaadportal.com
ccablackbox.com
ccadportal.com
ccaomni.com
ccaproducts.com
ccaproducts.net
ccf1.fr
cch.lv
cc-int.net
cci-play.com
ccnfc.co.uk
ccnfc.com
ccnfc.nl
ccodigital.com
ccooh.com
ccoutdoor.com
ccplay.es
ccx.es
clearchannel.asia
clearchannel.at
clearchannel.be
clearchannel.biz
clearchannel.ca
clearchannel.ch
clearchannel.co.jp
clearchannel.co.kr
clearchannel.co.nz
clearchannel.co.uk
clear-channel.co.uk
clearchannel.co.za
clearchannel.com.au





clearchannel.com.cn
clearchannel.com.es
clearchannel.com.hk
clearchannel.com.pl
clearchannel.com.sg
clearchannel.com.tr
clearchannel.com.tw
clearchannel.cz
clearchannel.dk
clearchannel.ee
clearchannel.es
clearchannel.eu
clear-channel.eu
clearchannel.fi
clearchannel.fr
clearchannel.hk
clearchannel.hu
clearchannel.ie
clearchannel.io
clearchannel.it
clearchannel.jp
clearchannel.kr
clearchannel.lt
clearchannel.lv
clearchannel.nl
clearchannel.pl
clearchannel.ru
clearchannel.se
clearchannel.tw
clearchannel.no
clearchanneladshel.com
clearchanneladshelmalls.com
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clearchannelinternational.biz





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All other trademarks, domain names, and registrations thereof owned by IHM or its subsidiaries that contain the terms “Clear” and/or “Channel,” or any translations or derivations of any of the foregoing, including without limitation those incorporating the terms “Clara” and “CC” and specifically including:
All trademark rights in and to, and domain names containing, “Clear Channel Outdoor” and translations or derivations thereof throughout the world, including without limitation Norway, Switzerland, China, and Singapore.





EXHIBIT 31.1 -   CERTIFICATION PURSUANT TO RULES 13A-14(A) AND 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Robert W. Pittman, certify that:
1.        I have reviewed this Quarterly Report on Form 10-Q of Clear Channel Outdoor Holdings, Inc.;
2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.        The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)      Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)      Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.        The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee  of the registrant's board of directors (or persons performing the equivalent functions):
(a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 4, 2017
 
 
 
/s/ ROBERT W. PITTMAN
Robert W. Pittman
Chief Executive Officer





EXHIBIT 31.2 -   CERTIFICATION PURSUANT TO RULES 13A-14(A) AND 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Richard J. Bressler, certify that:
1.        I have reviewed this Quarterly Report on Form 10-Q of Clear Channel Outdoor Holdings, Inc.;
2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.        The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)      Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)      Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.        The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee  of the registrant's board of directors (or persons performing the equivalent functions):
(a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 4, 2017
 
 
 
/s/ RICHARD J. BRESSLER             
Richard J. Bressler
Chief Financial Officer





EXHIBIT 32.1 –  CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”) of Clear Channel Outdoor Holdings, Inc. (the “Company”).  The undersigned hereby certifies that to his knowledge, the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Dated:  May 4, 2017
 
 
By:         /s/ ROBERT W. PITTMAN
Name:    Robert W. Pittman
Title:       Chief Executive Officer





EXHIBIT 32.2 – CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”) of Clear Channel Outdoor Holdings, Inc. (the “Company”). The undersigned hereby certifies that to his knowledge, the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Dated:  May 4, 2017
 
 
By:         /s/ RICHARD J. BRESSLER           
Name:    Richard J. Bressler
Title:       Chief Financial Officer