Business Context and Reporting Period
This Form 8-K is filed by CC Media Holdings, Inc. (the Registrant) on December 10, 2009. The filing primarily addresses two events: a debt offering by a subsidiary and the retroactive recasting of historical financial statements due to new accounting standards. The Registrant is the parent company of Clear Channel Communications, Inc. and Clear Channel Outdoor Holdings, Inc.
Key Financial Metrics and Debt Offering
Debt Offering: Clear Channel Worldwide Holdings, Inc., an indirect wholly-owned subsidiary, announced an offering of senior notes with an aggregate principal amount of $750,000,000. This includes:
- $600,000,000 in Series A Senior Notes due 2017.
- $150,000,000 in Series B Senior Notes due 2017.
Clear Channel Communications Estimates (Q4 and Full Year 2009):
- Q4 2009 Revenue: Estimated between $1,470 million and $1,500 million.
- Full Year 2009 Revenue: Estimated between $5,510 million and $5,540 million.
- Q4 2009 Operating Expenses: Estimated between $1,060 million and $1,075 million (excluding restructuring and non-cash compensation charges).
- Full Year 2009 Operating Expenses: Estimated between $4,059 million and $4,074 million.
Revenue Growth Rates (vs. Prior Year):
| Segment | Oct 2009 (Actual) | Nov 2009 (Est.) | Dec 2009 (Est.) |
|---|---|---|---|
| Americas Outdoor | -4% | 0% | 0% |
| International Outdoor | -8% | -4% | -8% |
| Radio Segment | -19% | -8% | -1% |
| Consolidated | -13% | -5% | -3% |
Liquidity and Covenants: Clear Channel Communications expects to remain in compliance with covenants under its senior secured credit facilities for the remainder of 2009 and through 2010.
Material Changes and Accounting Recasts
The Registrant adopted Statement of Financial Accounting Standards No. 160 (Noncontrolling Interests) and FASB Staff Position EITF 03-6-1 (Participating Securities) effective January 1, 2009. Consequently, the Registrant is retroactively recasting historical financial statements and disclosures included in its 2008 Form 10-K. This filing includes revised Selected Financial Data, Management's Discussion and Analysis, Financial Statements, and related exhibits to reflect these accounting changes.
Guidance, Risks, and Unusual Items
Forward-Looking Statements: The filing contains forward-looking statements regarding the debt offering and Clear Channel Communications' financial projections. Management notes that actual results may differ materially due to risks including competition for advertising dollars, operating performance changes, audit adjustments, and foreign exchange fluctuations.
Unusual Items: The revenue growth estimates for November and December 2009 are based on monthly average foreign exchange rates, which may differ materially from actual annual revenue percentages determined using annual average rates.
Offering Restrictions: The senior notes are being offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S. This report does not constitute an offer to sell securities.
Investor Verification Checklist
- Verify the final terms and pricing of the $750 million senior notes offering in the final Offering Circular.
- Review the revised 2008 Form 10-K financial statements (Exhibit 99.2) to understand the impact of FAS 160 and EITF 03-6-1 on historical comparability.
- Monitor the actual Q4 2009 revenue and expense results against the provided ranges ($1,470-$1,500M revenue; $1,060-$1,075M expenses).
- Assess the impact of foreign exchange rate fluctuations on the final full-year 2009 revenue growth rates compared to the monthly estimates.
- Confirm continued compliance with senior secured credit facility covenants in subsequent quarterly reports.