FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2024

Fair Value of Financial Instruments Subject to Fair Value Measurements

Recurring Fair Value Measurements

The following table sets forth the Company's financial assets and/or liabilities that were accounted for at fair value on a recurring basis and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value and its placement within the fair value hierarchy levels. During the periods presented, there were no transfers between fair value hierarchical levels.


	Fair Value Measurements At June 30, 2024
Description	Balance at June 30, 2024		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3		Measured at Net Asset Value as a Practical Expedient (1)
	(amounts in thousands)
Liabilities
Deferred compensation plan liabilities (1)(2)	$	18,694	$	18,694	$	—	$	—	$	—

Contingent Consideration (3)	$	—	$	—	$	—	$	—	$	—


	Fair Value Measurements At December 31, 2023
Description	Balance at December 31, 2023		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3		Measured at Net Asset Value as a Practical Expedient (1)
	(amounts in thousands)
Liabilities
Deferred compensation plan liabilities (1) (2)	$	21,045	$	16,923	$	—	$	—	$	4,122

Contingent Consideration (3)	$	31	$	—	$	—	$	31	$	—

(1)The fair value of underlying investments in collective trust funds is determined using the net asset value (“NAV”) provided by the administrator of the fund as a practical expedient. The NAV is determined by each fund’s trustee based upon the fair value of the underlying assets owned by the fund, less liabilities, divided by outstanding units. In accordance with appropriate accounting guidance, these investments have not been classified in the fair value hierarchy.

(2)The Company’s deferred compensation liability, which is included in other long-term liabilities, is recorded at fair value on a recurring basis.

(3)In connection with the Podcorn acquisition, the Company recorded a liability for contingent consideration payable based upon the achievement of certain annual performance benchmarks over 2 years. This contingent consideration arrangement expired in 2024 and no payments were required. The fair value of the liability was estimated using

probability-weighted, discounted future cash flows at current tax rates using a scenario based model, and was remeasured quarterly. The significant unobservable inputs (Level 3) used to estimate the fair value included the projected Adjusted EBITDA values for 2022 and 2023, as defined in the purchase agreement, and the discount rate.

Non-Recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

During the three and six months ended June 30, 2024, the Company completed an interim impairment assessment for its long-lived assets associated with BetQL as a result of a decision to wind down certain operations. As a result of this interim impairment assessment, the Company determined that the assets level cash flows no longer supported the software and intangible asset carrying values associated with BetQL. Accordingly, the Company recorded an impairment loss of $5.4 million during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2024, there were no events or changes in circumstances which indicated the Company’s investments, broadcasting licenses, Goodwill, ROU assets, or assets held for sale may not be recoverable.

During the three and six months ended June 30, 2023, there were no events or changes in circumstances which indicated the Company’s investments, property and equipment, ROU assets, other intangible assets or assets held for sale may not be recoverable.

During the three and six months ended June 30, 2023, the Company conducted interim impairment assessments on its broadcasting licenses. As a result of the second quarter 2023 interim impairment assessment, the Company determined the fair values of the broadcasting licenses were less than their respective carrying values. Accordingly, the Company recorded impairment loss of $124.8 million in the second quarter of 2023.

During the three months ended March 31, 2023, there were no events or changes in circumstances which indicated the Company’s Goodwill may not be recoverable. During the three months ended June 30, 2023, the Company conducted interim impairment assessments on the Goodwill of its podcast reporting unit. As a result of this impairment assessment, the Company determined the fair value of the goodwill related to its podcast unit was greater than its respective carrying value.

During the three months ended March 31, 2023, the Company recorded a $5.1 million impairment loss related to abandoned studio space in San Francisco and abandoned office space in Houston. As a result, the Company wrote off the ROU asset carrying value of each space. During the three months ended June 30, 2023, the Company recorded a $0.5 million impairment loss in connection with the termination of leases. There were no other events or changes in circumstances which indicated the Company’s investments, property and equipment, ROU assets, other intangible assets, or assets held for sale may not be recoverable during the six months ended June 30, 2023.

Fair Value of Financial Instruments Subject to Disclosures

The carrying amounts of the following assets and liabilities approximate fair value due to the short maturity of these instruments: (i) cash and cash equivalents; (ii) accounts receivable; and (iii) accounts payable, including accrued liabilities.

The following table presents the carrying value of financial instruments and, where practicable, the fair value as of the dates indicated:


	June 30, 2024				December 31, 2023
Financial Instrument	Carrying Value		Fair Value		Carrying Value		Fair Value
	(amounts in thousands)
DIP Facility(1)	$	32,000	n/a		n/a		n/a
Old Term B-2 Loans (2)	$	632,415	$	303,559	$	632,415	$	309,747
Old Revolver (3)	$	220,126	$	220,126	$	220,126	$	220,126

Old 2029 Notes (4)	$	540,000	$	18,225	$	540,000	$	10,125
Old 2027 Notes (4)	$	460,000	$	15,525	$	460,000	$	8,625
Accounts receivables facility, as amended(1)	$	75,000	n/a		$	75,000	n/a

The following methods and assumptions were used to estimate the fair value of financial instruments:

(1)The Company does not believe it is practicable to estimate the fair value of the DIP Facility, the Old Receivables Facility and the New Receivables Facility.

(2)The Company utilizes a Level 2 valuation input based upon the market trading price of the Old Term B-2 Loan to compute the fair value as the Old Term B-2 Loan is traded in the debt securities market. The fair value of the Old Term B-2 Loan is considered a Level 2 measurement as the pricing inputs are other than quoted prices in active markets.

(3)The fair value of the Old Revolver was considered to approximate the carrying value as the interest payments are based on SOFR rates that reset periodically. The Old Revolver is considered a Level 2 measurement as the pricing inputs are other than quoted prices in active markets.

(4)The Company utilizes a Level 2 valuation input based upon the market trading prices of the Old 2029 Notes and Old 2027 Notes to compute the fair value as these Old 2029 Notes and Old 2027 Notes are traded in the debt securities market. The Old 2029 Notes and Old 2027 Notes are considered a Level 2 measurement as the pricing inputs are other than quoted prices in active markets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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+ Details

AUDACY, INC. 10-Q