Clear Channel Outdoor Holdings, Inc. - 8-K filing on 2018-12-21

REVENUES

12 Months Ended

Dec. 31, 2017

Revenue from Contract with Customer [Abstract]

The Company generates revenue primarily from the sale of advertising space on printed and digital out-of-home advertising displays. Certain of these revenue transactions are considered leases, for accounting purposes, as the agreements convey to customers the right to use the Company’s advertising structures for a stated period of time. In order for a transaction with a customer to qualify as a lease, the arrangement must be dependent on the use of a specified advertising structure, and the customer must have almost exclusive use of that structure during the term of the arrangement. Therefore, arrangements that do not involve the use of an advertising structure, where the Company can substitute the advertising structure that is used to display the customer’s advertisement, or where the advertising structure displays advertisements for multiple customers throughout the day are not leases. The Company accounts for revenue from leases, which are all classified as operating leases, in accordance with the lease accounting guidance (Topic 840). All of the Company’s revenue transactions that do not qualify as a lease are accounted for as revenue from contracts with customers (Topic 606).

Disaggregation of Revenue

The following table shows, by segment, revenue from contracts with customers disaggregated by geographical region, revenue from leases and total revenue for the years ended December 31, 2017, 2016 and 2015:



(In thousands)	Americas⁽¹⁾		International⁽¹⁾		Consolidated
Year Ended December 31, 2017
Revenue from contracts with customers:
United States	$	429,475	$	—	$	429,475
Other Americas	10,927		57,738		68,665
Europe	—		771,893		771,893
Asia-Pacific and other	578		9,966		10,544
Total	440,980		839,597		1,280,577
Revenue from leases	720,079		588,046		1,308,125
Revenue, total	$	1,161,059	$	1,427,643	$	2,588,702

Year Ended December 31, 2016
Revenue from contracts with customers:
United States	$	418,378	$	—	$	418,378
Other Americas	19,191		47,313		66,504
Europe	—		714,477		714,477
Asia-Pacific and other	842		117,251		118,093
Total	438,411		879,041		1,317,452
Revenue from leases	748,769		613,601		1,362,370
Revenue, total	$	1,187,180	$	1,492,642	$	2,679,822

Year Ended December 31, 2015
Revenue from contracts with customers:
United States	$	444,371	$	—	$	444,371
Other Americas	22,647		43,903		66,550
Europe	—		717,156		717,156
Asia-Pacific and other	994		128,870		129,864
Total	468,012		889,929		1,357,941
Revenue from leases	797,255		651,008		1,448,263
Revenue, total	$	1,265,267	$	1,540,937	$	2,806,204

(1) Due to a re-evaluation of the Company’s segment reporting in 2018, its operations in Latin America are included in the International segment results for all periods presented. See Note 1, Summary of Significant Accounting Policies.

All of the Company’s advertising structures are used to generate revenue. Such revenue may be classified as revenue from contracts with customers or revenue from leases depending on the terms of the contract, as previously described.

Revenue from Contracts with Customers

The following tables show the changes in the Company’s contract balances from contracts with customers for the years ended December 31, 2017, 2016 and 2015 and provide a reconciliation of the ending balances to the Consolidated Balance Sheets:



	Years Ended December 31,
(In thousands)	2017			2016			2015
Accounts receivable from contracts with customers:
Beginning balance, net of allowance	$	292,863		$	354,422		$	364,082
Additions (collections), net, and other	54,307			(57,920		)	(3,118		)
Bad debt, net of recoveries	(2,740		)	(3,639		)	(6,542		)
Ending balance, net of allowance	344,430			292,863			354,422
Accounts receivable from leases, net of allowance	315,033			300,207			343,161
Total accounts receivable, net of allowance	$	659,463		$	593,070		$	697,583


	Years Ended December 31,
(In thousands)	2017			2016			2015
Deferred income from contracts with customers:
Beginning balance	$	28,067		$	38,096		$	37,119
Revenue recognized, included in beginning balance	(27,094		)	(35,933		)	(34,480		)
Additions, net of revenue recognized during period, and other	26,948			25,904			35,457
Ending balance	27,921			28,067			38,096
Deferred income from leases	38,514			41,587			53,420
Total deferred income	66,435			69,654			91,516
Less: Non-current portion, included in other long-term liabilities	7,257			2,649			105
Total deferred income, current portion	$	59,178		$	67,005		$	91,411

The large decrease in deferred income from contracts with customers during 2016 was primarily driven by fewer advance billings in some of our International operations, as well as the sale of our businesses in Australia and Turkey.

As part of the transition to the new revenue standard, the Company is not required to disclose information about remaining performance obligations for periods prior to the date of initial application.

Revenue from Leases

As of December 31, 2017, the Company’s future minimum rentals under non-cancelable operating leases were as follows:



(In thousands)
2018	$	280,940
2019	34,395
2020	17,155
2021	12,004
2022	8,552
Thereafter	7,197
Total minimum future rentals	$	360,243