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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2009



| ̈ | 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 1-32663





CLEAR CHANNEL OUTDOOR
HOLDINGS, INC.

(Exact name of registrant as specified in its charter)







|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 86-0812139         
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         | 
|200 East Basse Road 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    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 definition of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  | x |  | Accelerated filer         |  |  ̈
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  |  ̈

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 August 10, 2009
|Class A Common Stock, $.01 par value |  |                                |  | 40,659,322 |  | 
|Class B Common Stock, $.01 par value |  | 315,000,000                   









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CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

INDEX



|                                                                                                |  |         
|----------------------------------------------------------------------------------------------- |  | --------
|                                                                                                | 
|                                                                                                |  | Page No.
|Part I  Financial Information                                                                  |  |         
|                                                                                                | 
|Item 1. Unaudited Financial Statements                                                          |  |         
|                                                                                                | 
|Consolidated Balance Sheets at June 30, 2009 and December 31, 2008                              |  | 3       
|                                                                                                | 
|Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008 |  | 5       
|                                                                                                | 
|Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008 |  | 6       
|                                                                                                | 
|Notes to Consolidated Financial Statements                                                      |  | 7       
|                                                                                                | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations   |  | 22      
|                                                                                                | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                              |  | 44      
|                                                                                                | 
|Item 4. Controls and Procedures                                                                 |  | 44      
|                                                                                                | 
|Part II  Other Information                                                                     |  |         
|                                                                                                | 
|Item 1. Legal Proceedings                                                                       |  | 45      
|                                                                                                | 
|Item 1A. Risk Factors                                                                           |  | 45      
|                                                                                                | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                             |  | 45      
|                                                                                                | 
|Item 3. Defaults Upon Senior Securities                                                         |  | 45      
|                                                                                                | 
|Item 4. Submission of Matters to a Vote of Security Holders                                     |  | 45      
|                                                                                                | 
|Item 5. Other Information                                                                       |  | 46      
|                                                                                                | 
|Item 6. Exhibits                                                                                |  | 46      
|                                                                                                | 
|Signatures                                                                                      |  | 47      





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##### Table of Contents

PART I



|Item 1. | UNAUDITED FINANCIAL STATEMENTS
|------- | ------------------------------

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

(In thousands)



|                                                                                                 |  |                         |           |                                |   |          
|------------------------------------------------------------------------------------------------ |  | ----------------------- | --------- | ------------------------------ | - | ---------
|                                                                                                 |  | June 30,2009(Unaudited) |           | December 31,2008(As adjusted)*
|Current Assets                                                                                   |  |                         |           |                                |   |          
|Cash and cash equivalents                                                                        |  | $                       | 104,611   |                                | $ | 94,812   
|Accounts receivable, less allowance of $51,679 at June 30, 2009 and $48,600 at December 31, 2008 |  |                         | 762,699   |                                |   | 806,553  
|Due from Clear Channel Communications                                                            |  |                         |          |                                |   | 431,641  
|Prepaid expenses                                                                                 |  |                         | 85,568    |                                |   | 69,817   
|Other current assets                                                                             |  |                         | 178,864   |                                |   | 144,700  
|Income taxes receivable                                                                          |  |                         | 10,452    |                                |   | 7,129    
|                                                                                                 |  |                         |           |                                |   |          
|Total Current Assets                                                                             |  |                         | 1,142,194 |                                |   | 1,554,652
|                                                                                                 |  |                        
|Property, Plant and Equipment                                                                    |  |                         |           |                                |   |          
|Land, buildings and improvements                                                                 |  |                         | 208,630   |                                |   | 201,210  
|Structures                                                                                       |  |                         | 2,443,210 |                                |   | 2,355,776
|Furniture and other equipment                                                                    |  |                         | 64,120    |                                |   | 60,476   
|Construction in progress                                                                         |  |                         | 51,193    |                                |   | 85,791   
|                                                                                                 |  |                         |           |                                |   |          
|                                                                                                 |  |                         | 2,767,153 |                                |   | 2,703,253
|Less accumulated depreciation                                                                    |  |                         | 261,794   |                                |   | 116,533  
|                                                                                                 |  |                         |           |                                |   |          
|                                                                                                 |  |                         | 2,505,359 |                                |   | 2,586,720
|                                                                                                 |  |                        
|Intangible Assets                                                                                |  |                         |           |                                |   |          
|Definite-lived intangibles, net                                                                  |  |                         | 867,585   |                                |   | 1,000,485
|Indefinite-lived intangibles  permits                                                           |  |                         | 1,135,826 |                                |   | 1,529,068
|Goodwill                                                                                         |  |                         | 838,368   |                                |   | 1,180,141
|                                                                                                 |  |                        
|Other Assets                                                                                     |  |                         |           |                                |   |          
|Due from Clear Channel Communications                                                            |  |                         | 488,248   |                                |   |         
|Notes receivable                                                                                 |  |                         | 2,824     |                                |   | 3,140    
|Investments in, and advances to, nonconsolidated affiliates                                      |  |                         | 30,348    |                                |   | 51,812   
|Other assets                                                                                     |  |                         | 114,549   |                                |   | 122,231  
|Other investments                                                                                |  |                         | 14,365    |                                |   | 22,512   
|                                                                                                 |  |                         |           |                                |   |          
|Total Assets                                                                                     |  | $                       | 7,139,666 |                                | $ | 8,050,761
|                                                                                                 |  |                         |           |                                |   |          



|* | As adjusted for the adoption of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB
No. 51 (ASC 810-10-45). This guidance is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parents shareholders equity, in the consolidated statement of
financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements



-3-



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##### Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS EQUITY

(In thousands)



|                                                |  |                         |            |   |                                |   |            |  
|----------------------------------------------- |  | ----------------------- | ---------- | - | ------------------------------ | - | ---------- | -
|                                                |  | June 30,2009(Unaudited) |            |   | December 31,2008(As adjusted)* |  
|Current Liabilities                             |  |                         |            |   |                                |   |            |  
|Accounts payable                                |  | $                       | 86,163     |   |                                | $ | 118,290    |  
|Accrued expenses                                |  |                         | 460,778    |   |                                |   | 494,250    |  
|Accrued interest                                |  |                         | 354        |   |                                |   | 292        |  
|Deferred income                                 |  |                         | 147,136    |   |                                |   | 109,511    |  
|Current portion of long-term debt               |  |                         | 66,911     |   |                                |   | 69,522     |  
|                                                |  |                         |            |   |                                |   |            |  
|Total Current Liabilities                       |  |                         | 761,342    |   |                                |   | 791,865    |  
|                                                |  |                        
|Long-term debt                                  |  |                         | 31,442     |   |                                |   | 32,332     |  
|Debt with Clear Channel Communications          |  |                         | 2,500,000  |   |                                |   | 2,500,000  |  
|Other long-term liabilities                     |  |                         | 196,730    |   |                                |   | 178,875    |  
|Deferred tax liability                          |  |                         | 833,927    |   |                                |   | 1,003,866  |  
|                                                |  |                        
|Commitments and contingent liabilities (Note 4) |  |                         |            |   |                                |   |            |  
|                                                |  |                        
|Shareholders Equity                            |  |                         |            |   |                                |   |            |  
|Noncontrolling interest                         |  |                         | 209,813    |   |                                |   | 211,813    |  
|Class A common stock                            |  |                         | 407        |   |                                |   | 407        |  
|Class B common stock                            |  |                         | 3,150      |   |                                |   | 3,150      |  
|Additional paid-in capital                      |  |                         | 6,672,898  |   |                                |   | 6,676,714  |  
|Retained deficit                                |  |                         | (3,795,615 | ) |                                |   | (3,018,637 | )
|Accumulated other comprehensive loss            |  |                         | (274,348   | ) |                                |   | (329,580   | )
|Cost of shares held in treasury                 |  |                         | (80        | ) |                                |   | (44        | )
|                                                |  |                         |            |   |                                |   |            |  
|Total Shareholders Equity                      |  |                         | 2,816,225  |   |                                |   | 3,543,823  |  
|                                                |  |                         |            |   |                                |   |            |  
|Total Liabilities and Shareholders Equity      |  | $                       | 7,139,666  |   |                                | $ | 8,050,761  |  
|                                                |  |                         |            |   |                                |   |            |  



|* | As adjusted for the adoption of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB
No. 51 (ASC 810-10-45). This guidance is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parents shareholders equity, in the consolidated statement of
financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements



-4-



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##### Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except per share data)



|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|------------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ---------------------------- | - | ------- | --------------- |  | - | ---------------------------- | - |  | - | --------- | -
|                                                                                      |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30,     |  
|                                                                                      |  | 2009Post-Merger            |          |   | 2008Pre-Merger(As adjusted)* |   |         | 2009Post-Merger |  |   | 2008Pre-Merger(As adjusted)* |  
|Revenue                                                                               |  | $                          | 692,117  |   |                              | $ | 914,808 |                 |  | $ | 1,274,333                    |   |  | $ | 1,690,387 |  
|Operating expenses:                                                                   |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Direct operating expenses (excludes depreciation and amortization)                    |  |                            | 392,309  |   |                              |   | 490,244 |                 |  |   | 771,917                      |   |  |   | 961,078   |  
|Selling, general and administrative expenses (excludes depreciation and amortization) |  |                            | 121,342  |   |                              |   | 151,034 |                 |  |   | 239,106                      |   |  |   | 295,644   |  
|Depreciation and amortization                                                         |  |                            | 114,808  |   |                              |   | 104,764 |                 |  |   | 216,716                      |   |  |   | 209,854   |  
|Corporate expenses (excludes depreciation and amortization)                           |  |                            | 15,653   |   |                              |   | 17,819  |                 |  |   | 29,899                       |   |  |   | 34,053    |  
|Impairment Charge                                                                     |  |                            | 812,390  |   |                              |   |        |                 |  |   | 812,390                      |   |  |   |          |  
|Other operating income  net                                                          |  |                            | 4,353    |   |                              |   | 6,100   |                 |  |   | 8,965                        |   |  |   | 8,472     |  
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Operating income (loss)                                                               |  |                            | (760,032 | ) |                              |   | 157,047 |                 |  |   | (786,730                     | ) |  |   | 198,230   |  
|Interest expense on debt with Clear Channel Communications                            |  |                            | 36,835   |   |                              |   | 36,953  |                 |  |   | 73,810                       |   |  |   | 72,956    |  
|Interest expense                                                                      |  |                            | 1,362    |   |                              |   | 1,314   |                 |  |   | 3,274                        |   |  |   | 3,409     |  
|Interest income on Due from Clear Channel Communications                              |  |                            | 111      |   |                              |   | 686     |                 |  |   | 225                          |   |  |   | 2,160     |  
|Equity in earnings (loss) of nonconsolidated affiliates                               |  |                            | (21,755  | ) |                              |   | 1,666   |                 |  |   | (24,048                      | ) |  |   | 79,709    |  
|Other income (expense)  net                                                          |  |                            | (2,612   | ) |                              |   | (2,249  | )               |  |   | (5,780                       | ) |  |   | 10,298    |  
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Income (loss) before income taxes                                                     |  |                            | (822,485 | ) |                              |   | 118,883 |                 |  |   | (893,417                     | ) |  |   | 214,032   |  
|Income tax benefit (expense):                                                         |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Current                                                                               |  |                            | (10,479  | ) |                              |   | (30,264 | )               |  |   | (13,150                      | ) |  |   | (25,363   | )
|Deferred                                                                              |  |                            | 143,603  |   |                              |   | (9,723  | )               |  |   | 125,851                      |   |  |   | (22,524   | )
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Income tax benefit (expense)                                                          |  |                            | 133,124  |   |                              |   | (39,987 | )               |  |   | 112,701                      |   |  |   | (47,887   | )
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Consolidated net income (loss)                                                        |  |                            | (689,361 | ) |                              |   | 78,896  |                 |  |   | (780,716                     | ) |  |   | 166,145   |  
|Amount attributable to noncontrolling interest                                        |  |                            | (263     | ) |                              |   | (1,451  | )               |  |   | (3,738                       | ) |  |   | (3,108    | )
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Net income (loss) attributable to the Company                                         |  | $                          | (689,098 | ) |                              | $ | 80,347  |                 |  | $ | (776,978                     | ) |  | $ | 169,253   |  
|Other comprehensive income (loss), net of tax:                                        |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Foreign currency translation adjustments                                              |  |                            | 114,405  |   |                              |   | 3,097   |                 |  |   | 68,916                       |   |  |   | 95,194    |  
|Foreign currency reclassification adjustment for sale of foreign subsidiary           |  |                            | (513     | ) |                              |   |        |                 |  |   | (513                         | ) |  |   | 2,588     |  
|Unrealized gain (loss) on marketable securities                                       |  |                            | 6,581    |   |                              |   | (25,085 | )               |  |   | (9,150                       | ) |  |   | (25,092   | )
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Comprehensive income (loss)                                                           |  |                            | (568,625 | ) |                              |   | 58,359  |                 |  |   | (717,725                     | ) |  |   | 241,943   |  
|Amount attributable to noncontrolling interest                                        |  |                            | 6,471    |   |                              |   | 3,833   |                 |  |   | 4,021                        |   |  |   | 15,018    |  
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Comprehensive income (loss) attributable to the Company                               |  |                            | (575,096 | ) |                              | $ | 54,526  |                 |  | $ | (721,746                     | ) |  | $ | 226,925   |  
|                                                                                      |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Net income (loss) per common share attributable to the Company:                       |  |                            |          |   |                              |   |         |                 |  |   |                              |   |  |   |           |  
|Basic                                                                                 |  | $                          | (1.94    | ) |                              | $ | .23     |                 |  | $ | (2.19                        | ) |  | $ | .48       |  
|Weighted average common shares outstanding  Basic                                    |  |                            | 355,370  |   |                              |   | 355,239 |                 |  |   | 355,351                      |   |  |   | 355,159   |  
|Diluted                                                                               |  | $                          | (1.94    | ) |                              | $ | .23     |                 |  | $ | (2.19                        | ) |  | $ | .48       |  
|Weighted average common shares outstanding  Diluted                                  |  |                            | 355,370  |   |                              |   | 355,746 |                 |  |   | 355,351                      |   |  |   | 355,770   |  



|* | As adjusted for the adoption of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB
No. 51 (ASC 810-10-45). This guidance is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parents shareholders equity, in the consolidated statement of
financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements



-5-



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##### Table of Contents

CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)



|                                                                                             |  |                          |          |   |                              |   |          |  
|-------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | - | ---------------------------- | - | -------- | -
|                                                                                             |  | Six Months EndedJune 30, |         
|                                                                                             |  | 2009Post-Merger          |          |   | 2008Pre-Merger(As adjusted)* |  
|Cash flows provided by (used in) operating activities:                                       |  |                          |          |   |                              |   |          |  
|Consolidated net income (loss)                                                               |  | $                        | (780,716 | ) |                              | $ | 166,145  |  
|                                                                                             |  |                         
|Reconciling items:                                                                           |  |                          |          |   |                              |   |          |  
|Impairment charge                                                                            |  |                          | 812,390  |   |                              |   |         |  
|Depreciation and amortization                                                                |  |                          | 216,716  |   |                              |   | 209,854  |  
|Deferred taxes                                                                               |  |                          | (125,851 | ) |                              |   | 22,524   |  
|Provision for doubtful accounts                                                              |  |                          | 7,679    |   |                              |   | 6,539    |  
|Gain on sale of operating and fixed assets                                                   |  |                          | (8,965   | ) |                              |   | (8,472   | )
|Equity in (earnings) loss of nonconsolidated affiliates                                      |  |                          | 24,048   |   |                              |   | (79,709  | )
|Other reconciling items, net                                                                 |  |                          | 6,799    |   |                              |   | 5,712    |  
|Changes in operating assets and liabilities, net of effects of acquisitions and dispositions |  |                          | (12,449  | ) |                              |   | (76,474  | )
|                                                                                             |  |                          |          |   |                              |   |          |  
|Net cash provided by operating activities                                                    |  |                          | 139,651  |   |                              |   | 246,119  |  
|                                                                                             |  |                         
|Cash flows provided by (used in) investing activities:                                       |  |                          |          |   |                              |   |          |  
|Change in notes receivable, net                                                              |  |                          | 228      |   |                              |   | 153      |  
|Change in investments in, and advances to nonconsolidated affiliates  net                   |  |                          | (3,454   | ) |                              |   | 9,704    |  
|Purchases of property, plant and equipment                                                   |  |                          | (66,822  | ) |                              |   | (173,289 | )
|Proceeds from disposal of assets                                                             |  |                          | 8,455    |   |                              |   | 34,786   |  
|Acquisition of operating assets, net of cash acquired                                        |  |                          | (5,097   | ) |                              |   | (83,592  | )
|Change in other  net                                                                        |  |                          | 5,578    |   |                              |   | (5,460   | )
|                                                                                             |  |                          |          |   |                              |   |          |  
|Net cash used in investing activities                                                        |  |                          | (61,112  | ) |                              |   | (217,698 | )
|                                                                                             |  |                         
|Cash flows provided by (used in) financing activities:                                       |  |                          |          |   |                              |   |          |  
|Draws on credit facilities                                                                   |  |                          | 444      |   |                              |   | 70,658   |  
|Payments on credit facilities                                                                |  |                          | (5,999   | ) |                              |   | (158,614 | )
|Proceeds from long-term debt                                                                 |  |                          |         |   |                              |   | 3,746    |  
|Payments on long-term debt                                                                   |  |                          | (310     | ) |                              |   | (4,599   | )
|Net transfers (to) from Clear Channel Communications                                         |  |                          | (45,538  | ) |                              |   | (1,626   | )
|Payments for purchase of noncontrolling interest                                             |  |                          | (12,952  | ) |                              |   |         |  
|Proceeds from exercise of stock options                                                      |  |                          |         |   |                              |   | 4,261    |  
|Other, net                                                                                   |  |                          | (36      | ) |                              |   | (262     | )
|                                                                                             |  |                          |          |   |                              |   |          |  
|Net cash used in financing activities                                                        |  |                          | (64,391  | ) |                              |   | (86,436  | )
|                                                                                             |  |                         
|Effect of exchange rate changes on cash                                                      |  |                          | (4,349   | ) |                              |   | 4,795    |  
|                                                                                             |  |                          |          |   |                              |   |          |  
|Net increase (decrease) in cash and cash equivalents                                         |  |                          | 9,799    |   |                              |   | (53,220  | )
|                                                                                             |  |                         
|Cash and cash equivalents at beginning of period                                             |  |                          | 94,812   |   |                              |   | 134,897  |  
|                                                                                             |  |                          |          |   |                              |   |          |  
|Cash and cash equivalents at end of period                                                   |  | $                        | 104,611  |   |                              | $ | 81,677   |  
|                                                                                             |  |                          |          |   |                              |   |          |  



|* | As adjusted for the adoption of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB
No. 51 (ASC 810-10-45). This guidance is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parents shareholders equity, in the consolidated statement of
financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements



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CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1: BASIS OF PRESENTATION AND NEW ACCOUNTING STANDARDS

Preparation of Interim Financial Statements

The consolidated financial statements were prepared by Clear Channel
Outdoor Holdings, Inc. (the Company) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of management, include all adjustments (consisting of normal recurring accruals
and adjustments necessary for adoption of new accounting standards) 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 are not necessarily indicative of results for the full year. The financial statements contained herein should be read in conjunction with the consolidated and
combined financial statements and notes thereto included in the Companys 2008 Annual Report on Form 10-K. The Company has evaluated subsequent events through August 10, 2009, the date that these financial statements were issued.

The consolidated financial statements include the accounts of the Company and its subsidiaries and give effect to allocations of expenses from Clear
Channel Communications, Inc. (Clear Channel Communications). 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. Significant intercompany transactions have been eliminated in consolidation. Investments in nonconsolidated affiliates are accounted for using the equity method of accounting.

Clear Channel Communications Merger

Clear
Channel Communications consummated its merger with a wholly-owned subsidiary of CC Media Holdings, Inc. (CC Media Holdings) on July 30, 2008 (the merger) and accounted for the merger as a purchase business combination in
conformity with Statement of Financial Accounting Standards No. 141, Business Combinations, and Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout Transactions. Staff Accounting Bulletin No. 54, Push Down
Basis of Accounting Required in Certain Limited Circumstances(ASC 805-50-S99-1), requires the application of push down accounting in situations where the ownership of an entity has changed. As a result, the post-merger financial statements of
the Company reflect the new basis of accounting. Accordingly, the financial statements as of June 30, 2009 reflect Clear Channel Communications fair value basis resulting from the merger that has been pushed down to the Company. A portion
of the consideration paid by Clear Channel Communications has been allocated to the assets and liabilities acquired at their respective fair values at July 30, 2008. The remaining portion was recorded at the continuing shareholders basis, due
to the fact that certain shares of Clear Channel Communications were exchanged for shares of CC Media Holdings Class A common stock. Excess consideration after this allocation was recorded as goodwill. The purchase price allocation
was materially complete as of June 30, 2009.

The accompanying consolidated statements of operations and statements of cash flows are presented for
two periods: post-merger and pre-merger. Purchase accounting adjustments pursuant to the aforementioned standards were pushed down to the opening balance sheet of the Company on July 31, 2008, as the merger occurred at the close of business on
July 30, 2008. The merger resulted in a new basis of accounting beginning on July 31, 2008 and the financial reporting periods are presented as follows:



| |  |  | The three and six month periods ended June 30, 2009 reflect the post-merger period of the Company, including the purchase accounting adjustments related to the
merger that were pushed down to the Company.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The three and six month periods ended June 30, 2008 reflect the pre-merger period of the Company. The consolidated financial statements for all pre-merger
periods were prepared using the historical basis of accounting for the Company. As a result of the merger and the associated purchase accounting, the consolidated financial statements of the post-merger periods are not comparable to periods
preceding the merger.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The opening balance sheet reflected the preliminary fair value adjustments pushed down to the Company, based on
available information and certain assumptions management believed were reasonable. During the first six months of 2009, the Company decreased the initial fair value estimate of its permits, contracts and site leases in its Americas segment by $109.6
million based on additional information received, which resulted in an increase to goodwill of $64.7 million and a decrease to deferred taxes of $44.9 million.



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Relationship with Clear Channel Communications

There are several agreements which govern the Companys relationship with Clear Channel Communications, including the Corporate Services Agreement, Employee Matters
Agreement and Tax Matters Agreement. Clear Channel Communications has the right to terminate these agreements in various circumstances as long as such termination or amendment complies with restrictions contained in Clear Channel
Communications credit agreements, where applicable. As of the date of the filing of this report, no notice of termination of any of these agreements has been received from Clear Channel Communications. The terms and conditions of the
Companys agreements with Clear Channel Communications have not changed following the consummation of the merger of Clear Channel Communications. See Note 5 for further discussion.

Liquidity

The Companys primary source of
liquidity is cash flow from operations, which has been adversely affected by the global economic downturn. The risks associated with the Companys businesses become more acute in periods of a slowing economy or recession, which may be
accompanied by a decrease in advertising. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. The current global economic downturn has resulted in a decline in advertising and
marketing services among the Companys customers, resulting in a decline in its advertising revenues across its businesses. This reduction in advertising revenues has had an adverse effect on the Companys revenue, profit margins, cash
flow and liquidity. The continuation of the global economic downturn may continue to adversely impact the Companys revenue, profit margins, cash flow and liquidity.

In January 2009, CC Media Holdings announced that it commenced a restructuring program targeting a reduction of fixed costs. The Company recognized approximately $10.1 million and $17.0 million of expenses related to
its restructuring program during the three and six months ended June 30, 2009, respectively.

As of June 30, 2009, based on the Companys
current and anticipated levels of operations and conditions in its markets, it believes that cash on hand, cash flows from operations and borrowing under the cash management note with Clear Channel Communications will enable it to meet its working
capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.

Upon the maturity of the $2.5 billion note to
Clear Channel Communications on August 2, 2010, if the Companys cash flow and capital resources are insufficient to service its debt obligations, it may be forced to sell assets, seek additional equity or debt capital or restructure its
indebtedness. On June 2, 2009, the Company announced that it is actively pursuing alternatives to address the maturity of the $2.5 billion note to Clear Channel Communications. The alternatives may include an offering of new senior or senior
subordinated notes for cash or an exchange of new senior or subordinated notes for outstanding indebtedness, with the intention of any such transaction being to refinance the $2.5 billion note to Clear Channel Communications. However, given the
current economic climate, these measures might be unsuccessful or inadequate in permitting the Company to meet scheduled debt obligations. In light of the current credit environment, the Company may be unable to restructure or refinance its
obligations and obtain additional equity financing or sell assets on satisfactory terms or at all. As a result, the Companys inability to meet its debt obligations could cause it to default on those obligations. A default under any debt
instrument could, in turn, result in defaults under other debt instruments. Any such defaults could materially impair the Companys financial condition, liquidity and results of operations.

The Company expects to be in compliance with the covenants governing its indebtedness in 2009. However, the Companys anticipated results are subject to significant
uncertainty and there can be no assurance that actual results will be in compliance with the covenants. In addition, the Companys ability to comply with the covenants governing its indebtedness may be affected by events beyond the
Companys control, including prevailing economic, financial and industry conditions.

Furthermore, in its Quarterly Report on Form 10-Q filed with the
SEC on August 10, 2009, CC Media Holdings, the Companys indirect parent, stated that it expects to be in compliance with the covenants under Clear Channel Communications senior secured credit facilities in 2009. CC Media Holdings
similarly stated in such Quarterly Report that its anticipated results are also subject to significant uncertainty and there can be no assurance that actual results will be in compliance with the covenants. Moreover, CC Media Holdings stated in such
Quarterly Report that its ability to comply with the covenants in Clear Channel Communications financing agreements may be affected by events beyond CC Media Holdings control, including prevailing economic, financial and industry
conditions. As discussed therein, the breach of any covenants set forth in Clear Channel Communications 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 due and payable prior to maturity. Moreover, as discussed therein, the lenders under the revolving credit facility under Clear Channel Communications senior secured credit facilities would
have the option to terminate their commitments to make further extensions of revolving credit thereunder. In addition, CC Media Holdings stated in such Quarterly Report that if CC Media Holdings is unable to repay Clear Channel Communications
obligations under any senior secured credit facilities or the receivables based credit facility, the lenders under such senior secured credit facilities or receivables based credit



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##### Table of Contents

facility could proceed against any assets that were pledged to secure such senior secured credit facilities or receivables based credit facility. Finally, CC
Media Holdings stated in such Quarterly Report that a default or acceleration under any of Clear Channel Communications financing agreements could cause a default under other obligations that are subject to cross-default and cross-acceleration
provisions.

The Companys ability to fund its working capital needs, debt service and other obligations depends on its future operating performance
and cash flow and Clear Channel Communications ability to meet its obligations with respect to the Due from Clear Channel Communications account and to lend under the cash management note, which are in turn subject to prevailing
economic conditions and other factors, many of which are beyond the Companys and Clear Channel Communications control. If future operating performance does not meet the Companys expectations or its plans materially change in an
adverse manner or prove to be materially inaccurate, the Company may need additional financing. Continuing adverse securities and credit market conditions could significantly affect the availability of credit. In addition, the $2.5 billion note and
Master Agreement with Clear Channel Communications include restrictive covenants that, among other things, restrict the Companys ability to incur additional indebtedness.

For so long as Clear Channel Communications maintains significant control over the Company, a deterioration in the financial condition of Clear Channel Communications could have the effect of increasing the
Companys borrowing costs or impairing the Companys access to capital markets. Clear Channel Communications ability to meet its obligation with respect to the Due from Clear Channel Communications account depends on its
working capital needs, debt service obligations and its future operating performance and cash flow, which are in turn subject to prevailing economic conditions and other factors, many of which are beyond its control. The inability of Clear Channel
Communications to meet its obligations with respect to the Due from Clear Channel Communications account could have a material adverse effect on the Companys financial condition and on the Companys ability to meet its
obligations. Neither the $2.5 billion term note payable to Clear Channel Communications nor the Due from Clear Channel Communications note contain in their terms a right of offset. As of June 30, 2009, Clear Channel Communications
had $1.5 billion recorded as Cash and cash equivalents on its consolidated balance sheets.

Clear Channel Communications corporate credit
and issue-level ratings were downgraded on June 8, 2009 by Standard & Poors Rating Services. Clear Channel Communications corporate credit rating was lowered to CCC from B-. These ratings were removed
from credit watch, where they were placed with negative implications on May 4, 2009. This recent downgrade had no impact on Clear Channel Communications borrowing costs under the credit agreements.

Impairment Charges

The Company performed an interim
impairment test on its indefinite-lived intangible assets as of June 30, 2009 as a result of the current global economic downturn and its negative impact on the Companys business. The estimated fair value of the Companys permits was
below their carrying values, which resulted in a non-cash impairment charge of $345.4 million. See Note 2 for further discussion.

The Company also
performed an interim goodwill impairment test as of June 30, 2009. The estimated fair value of the reporting units was below their carrying values, which required the Company to compare the implied fair value of each reporting units
goodwill with its carrying value. As a result, the Company recognized a non-cash impairment charge of $419.5 million to reduce goodwill. See Note 2 for further discussion.

Additionally, the Company impaired certain contracts in its Americas outdoor and International outdoor segments by $38.8 million. See Note 2 for further discussion.

Share-based Compensation Cost

Share-based
compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. The following table details compensation costs related to share-based payments for
the three and six months ended June 30, 2009 and 2008:



|                                             |  |                            |       |                          |   |                 |  |                |       |  |   |      
|-------------------------------------------- |  | -------------------------- | ----- | ------------------------ | - | --------------- |  | -------------- | ----- |  | - | -----
|                                             |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|(In thousands)                               |  | 2009Post-Merger            |       | 2008Pre-Merger           |   | 2009Post-Merger |  | 2008Pre-Merger
|Direct operating expenses                    |  | $                          | 1,935 |                          | $ | 2,537           |  | $              | 4,004 |  | $ | 3,957
|Selling, general and administrative expenses |  |                            | 706   |                          |   | 913             |  |                | 1,461 |  |   | 1,423
|Corporate expenses                           |  |                            | 207   |                          |   | 331             |  |                | 429   |  |   | 509  
|                                             |  |                            |       |                          |   |                 |  |                |       |  |   |      
|Total share-based payments                   |  | $                          | 2,848 |                          | $ | 3,781           |  | $              | 5,894 |  | $ | 5,889
|                                             |  |                            |       |                          |   |                 |  |                |       |  |   |      

As of June 30, 2009, there was $20.2 million of total unrecognized compensation cost, net of estimated
forfeitures, related to unvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of approximately two years.



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New Accounting Pronouncements

Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTMand the Hierarchy of Generally Accepted Accounting Principles(Statement
No. 168), was issued in June 2009. Statement No. 168 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP in the United States. Statement No. 168 establishes the codification as the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Statement No. 168 shall be
effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company adopted the provisions of Statement No. 168 on July 1, 2009 and has updated its references to specific GAAP
literature parenthetically to reflect the codification.

Statement of Financial Accounting Standards No. 167, Amendments to FASB
Interpretation No. 46(R)(Statement No. 167), was issued in June 2009. Statement No. 167 shall be effective as of the beginning of each reporting entitys first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. Statement No. 167 amends Financial Accounting Standards Board
Interpretation No. 46(R), Consolidation of Variable Interest Entities (Interpretation No. 46(R) or ASC 810-10-25), to replace the quantitative-based risks and rewards calculation for determining which enterprise, if any,
has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entitys
economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is expected to be primarily qualitative will be more effective for identifying which
enterprise has a controlling financial interest in a variable interest entity. Statement No. 167 requires an additional reconsideration event when determining whether an entity is a variable interest entity when any changes in facts and
circumstances occur such that the holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entitys
economic performance. It also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity. These requirements will provide more relevant and timely information to users of financial statements.
Statement No. 167 amends Interpretation No. 46(R) to require additional disclosures about an enterprises involvement in variable interest entities, which will enhance the information provided to users of financial statements. The
Company will adopt Statement No. 167 on January 1, 2010 and is currently evaluating the impact of adoption.

Statement of Financial Accounting
Standards No. 165, Subsequent Events (Statement No. 165 or ASC Topic 855), was issued in May 2009. Statement No. 165 is effective for interim and annual periods ending after June 15, 2009 and is intended to
establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity
has evaluated subsequent events and the basis for that datethat is, whether that date represents the date the financial statements were issued or were available to be issued. This disclosure should alert all users of financial statements that
an entity has not evaluated subsequent events after that date in the set of financial statements being presented. In accordance with the provisions of Statement No. 165, the Company currently evaluates subsequent events through the date the
financial statements are issued.

The Company retrospectively adopted the provisions of Financial Accounting Standards Board Staff Position Emerging Issues
Task Force 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities(FSP EITF 03-6-1 or ASC 260-10-45), on January 1, 2009. FSP EITF 03-6-1 clarifies that unvested
share-based payment awards with a right to receive nonforfeitable dividends are participating securities. Guidance is also provided on how to allocate earnings to participating securities and compute basic earnings per share using the two-class
method. All prior-period earnings per share data presented shall be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of FSP EITF 03-6-1. There was no
impact of adopting FSP EITF 03-6-1 to previously reported earnings per share for the three or six months ended June 30, 2008.

Statement of Financial
Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No. 51(Statement No. 160 or ASC 810-10-45), was issued in December 2007. Statement No. 160
clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under this
guidance, noncontrolling interests are considered equity and should be reported as an element of consolidated equity, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of
the income statement of the attribution of that income between the controlling and noncontrolling interests, and increases and decreases in the noncontrolling ownership interest amount will be accounted for as equity transactions. The provisions of
Statement No. 160 are effective for the first annual reporting period beginning on or after December 15, 2008, and earlier application is prohibited. Guidance is required to be adopted prospectively, except for reclassifying noncontrolling
interests to equity, separate from the parents shareholders equity, in the consolidated statement of financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and
noncontrolling interests, both of which are required to be adopted retrospectively. The Company adopted the provisions of Statement No. 160 on January 1, 2009, which resulted in a reclassification of approximately $211.8 million of
noncontrolling interests to shareholders equity.



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Statement No. 160 requires a reconciliation at the beginning and the end of the period of the carrying amount of
total equity, equity attributable to the Company and equity attributable to the noncontrolling interests. The following table presents the changes in equity attributable to the Company and equity attributable to the noncontrolling interests for the
six months ended June 30, 2009 and 2008.



|                                                 |  |             |           |   |                         |   |         |              |  |   |           |  
|------------------------------------------------ |  | ----------- | --------- | - | ----------------------- | - | ------- | ------------ |  | - | --------- | -
|(In thousands)                                   |  | The Company |           |   | NoncontrollingInterests |   |         | Consolidated | 
|Balances at January 1, 2009                      |  | $           | 3,332,010 |   |                         | $ | 211,813 |              |  | $ | 3,543,823 |  
|Net loss                                         |  |             | (776,978  | ) |                         |   | (3,738  | )            |  |   | (780,716  | )
|Foreign currency translation adjustments         |  |             | 64,895    |   |                         |   | 4,021   |              |  |   | 68,916    |  
|Unrealized holding loss on marketable securities |  |             | (9,150    | ) |                         |   |        |              |  |   | (9,150    | )
|Other - net                                      |  |             | (4,365    | ) |                         |   | (2,283  | )            |  |   | (6,648    | )
|                                                 |  |             |           |   |                         |   |         |              |  |   |           |  
|Balances at June 30, 2009                        |  | $           | 2,606,412 |   |                         | $ | 209,813 |              |  | $ | 2,816,225 |  
|                                                 |  |             |           |   |                         |   |         |              |  |   |           |  
|                                                 |  |             |          
|(In thousands)                                   |  | The Company |           |   | NoncontrollingInterests |   |         | Consolidated | 
|Balances at January 1, 2008                      |  | $           | 1,982,730 |   |                         | $ | 215,864 |              |  | $ | 2,198,594 |  
|Net income                                       |  |             | 169,253   |   |                         |   | (3,108  | )            |  |   | 166,145   |  
|Foreign currency translation adjustments         |  |             | 80,176    |   |                         |   | 15,018  |              |  |   | 95,194    |  
|Unrealized holding loss on marketable securities |  |             | (25,092   | ) |                         |   |        |              |  |   | (25,092   | )
|Other - net                                      |  |             | 12,245    |   |                         |   | (6,393  | )            |  |   | 5,852     |  
|                                                 |  |             |           |   |                         |   |         |              |  |   |           |  
|Balances at June 30, 2008                        |  | $           | 2,219,312 |   |                         | $ | 221,381 |              |  | $ | 2,440,693 |  
|                                                 |  |             |           |   |                         |   |         |              |  |   |           |  

Financial Accounting Standards Board Staff Position No. FAS 157-4, Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly(FSP No. FAS 157-4 or ASC 820-10), was issued in April 2009. FSP No. FAS 157-4 provides additional guidance
for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. FSP No. FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. This guidance
shall be effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before
March 15, 2009 is not permitted. The Company adopted the provisions of FSP No. FAS 157-4 on April 1, 2009 with no material impact to its financial position or results of operations.

Financial Accounting Standards Board Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments(FSP FAS 115-2 and FAS 124-2 or ASC 320-10-35), was issued in April 2009. It amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the
presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2 does not amend existing recognition and measurement guidance related to other-than-temporary
impairments of equity securities. This guidance shall be effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Earlier adoption for periods
ending before March 15, 2009 is not permitted. The Company adopted the provisions of FSP FAS 115-2 and FAS 124-2 on April 1, 2009 with no material impact to its financial position or results of operations.

Financial Accounting Standards Board Staff Position No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies (FSP No. FAS 141(R)-1 or ASC 805-20), was issued in April 2009. FSP No. FAS 141(R)-1 addresses application issues raised by preparers, auditors, and members of the legal profession on initial recognition and
measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance shall be effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of FSP No. FAS 141(R)-1 on accounting for contingencies in a business combination
is dependent upon the nature of future acquisitions.

Financial Accounting Standards Board Staff Position No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments(FSP No. FAS 107-1 and APB 28-1 or ASC 825-10-50), was issued in April 2009. FSP No. FAS 107-1 and APB 28-1 amends prior authoritative guidance to require disclosures about fair
value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The provisions of FSP No. FAS 107-1 and APB 28-1 shall be effective for interim reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company adopted the disclosure requirements of FSP No. FAS 107-1 and APB 28-1 on April 1, 2009.



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Financial Accounting Standards Board Staff Position Emerging Issues Task Force 08-6, Equity Method Investment
Accounting Considerations (FSP EITF 08-6 or ASC 323-10-35), was issued in November 2008. FSP EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. This guidance
is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years and shall be applied prospectively. The Company adopted the provisions of FSP EITF 08-6 on January 1, 2009 with no
material impact to its financial position or results of operations.

Note 2: INTANGIBLE ASSETS AND GOODWILL

Definite-lived Intangibles

The Company has
definite-lived intangible assets which consist primarily of transit and street furniture contracts and other contractual rights. The Company also has permanent easements that provide the Company access to certain of its outdoor displays.
Definite-lived intangible assets 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. The
following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at June 30, 2009 and December 31, 2008:



|                                                        |  |                     |         |                         |   |                     |  |                         |           |  |   |       
|------------------------------------------------------- |  | ------------------- | ------- | ----------------------- | - | ------------------- |  | ----------------------- | --------- |  | - | ------
|(In thousands)                                          |  | June 30, 2009       |         | December 31, 2008      
|                                                        |  | GrossCarryingAmount |         | AccumulatedAmortization |   | GrossCarryingAmount |  | AccumulatedAmortization
|Transit, street furniture, and other contractual rights |  | $                   | 796,755 |                         | $ | 98,671              |  | $                       | 883,130   |  | $ | 49,818
|Other                                                   |  |                     | 169,842 |                         |   | 341                 |  |                         | 169,007   |  |   | 1,834 
|                                                        |  |                     |         |                         |   |                     |  |                         |           |  |   |       
|Total                                                   |  | $                   | 966,597 |                         | $ | 99,012              |  | $                       | 1,052,137 |  | $ | 51,652
|                                                        |  |                     |         |                         |   |                     |  |                         |           |  |   |       

Total amortization expense from continuing operations related to definite-lived intangible assets for the six
months ended June 30, 2009 was $47.5 million.

During the first six months of 2009, the Company decreased the initial fair value estimate of its
permits, contracts and site leases in its Americas segment by $109.6 million based on additional information received, which resulted in a credit to amortization expense of approximately $6.9 million.

The Company reviews its definite-lived tangibles for impairment when events and circumstances indicate that amortizable long-lived assets might be impaired and the
undiscounted cash flows estimated to be generated from those assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market
value.

The Company uses various assumptions in determining the current fair market value of these assets, including future expected cash flows, industry
growth rates and discount rates. Impairment loss calculations require management to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in
future cash flows.

During the second quarter of 2009, the Company recorded a $21.3 million impairment to taxi contracts in its Americas segment and a
$17.5 million impairment primarily related to street furniture and billboard contracts in its International segment. The Company determined fair values using a discounted cash flow model. The decline in fair value of the contracts was primarily
driven by a decline in the revenue projections. The decline in revenue related to taxi contracts and street furniture and billboard contracts was in the range of 10% to 15%. The balance of these taxi contracts and street furniture and billboard
contracts after the impairment charges, for the contracts that were impaired, was $3.3 million and $16.0 million, respectively.



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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) |  |  
|2010           |  | $ | 93,042
|2011           |  |   | 91,837
|2012           |  |   | 80,623
|2013           |  |   | 75,736
|2014           |  |   | 68,646

As acquisitions and dispositions occur in the future and as purchase price allocations are finalized, amortization
expense may vary.

Indefinite-lived Intangibles

The Companys indefinite-lived intangibles consist of billboard permits. The Companys billboard permits are issued in perpetuity by state and local governments and are transferable or renewable at little or no cost. Permits
typically include the location which allows the Company the right to operate an advertising structure. The Companys permits are located on either owned or leased land. In cases where the Companys permits are located on leased land, the
leases are typically from 10 to 20 years and renew indefinitely, with rental payments generally escalating at an inflation based index. If the Company loses its lease, the Company will typically obtain permission to relocate the permit or bank it
with the municipality for future use.

The Company does not amortize its billboard permits. The Company tests these indefinite-lived intangible assets for
impairment at least annually using a direct valuation method. This direct valuation method assumes that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived
intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the
discounted cash flows model which results in value that is directly attributable to the indefinite-lived intangible assets.

The Company performed an
interim impairment test on its billboard permits as of December 31, 2008, which resulted in a non-cash impairment charge of $722.6 million. The Companys cash flows during the first six months of 2009 were below those in the discounted
cash flow model used to calculate the impairment at December 31, 2008. As a result, the Company performed an interim impairment test as of June 30, 2009 on its billboard permits.

The fair value of the permits was determined using the direct valuation method as prescribed in Topic No. D-108, Use of the Residual Method to Value Acquired
Assets Other Than Goodwill(D-108 or ASC 805-20-S99). Under the direct valuation method, the fair value of the permits was calculated at the market level as prescribed by Emerging Issues Task Force 02-07, Unit of Accounting for
Testing Impairment of Indefinite-Lived Intangible Assets(EITF 02-07 or ASC 350-30-35). The Company utilized Mesirow Financial Consulting, LLC (Mesirow Financial), a third-party valuation firm, to assist it in the
development of the assumptions and the determination of the fair value of its permits. The impairment test consisted of a comparison of the fair value of the permits at the market level with their carrying amount. If the carrying amount of the
permits exceeded its fair value, an impairment loss was recognized equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the permits is its new accounting basis.

The application of the direct valuation method attempts to isolate the income that is properly attributable to the permit alone (that is, apart from tangible and
identified intangible assets and goodwill). It is based upon modeling a hypothetical greenfield build up to a normalized enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been
paid for (or added) as part of the build-up process. The Company forecasted revenue, expenses, and cash flows over a ten-year period for each of its markets in its application of the direct valuation method. The Company also calculated a
normalized residual year which represents the perpetual cash flows of each market. The residual year cash flow was capitalized to arrive at the terminal value of the permits in each market.

Management uses its internal forecasts to estimate industry normalized information as it believes these forecasts are similar to what a market participant would expect
to generate. This is due to the pricing structure and demand for outdoor signage in a market being relatively constant regardless of the owner of the operation. Management also relied on its internal forecasts because there is nominal public data
available for each of its markets.

The build-up period represents the time it takes for the hypothetical start-up operation to reach normalized operations
in terms of achieving a mature market revenue share and profit margin. Management believes that a one-year build-up period is required for a start-up operation to erect the necessary structures and obtain advertisers in order achieve mature market
revenue share. It is estimated that a start-up operation would be able to obtain 10% of the potential revenues in the first year of operations and 100% in the second year. Management assumed industry revenue growth of negative 16% during the
build-up period. However, the cost structure is expected to reach the normalized level over three years due to the time required to recognize the synergies and cost savings associated with the ownership of the permits within the market.



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For the normalized operating margin in the third year, management assumed a hypothetical business would operate at the
lower of the operating margin for the specific market or the industry average margin of 45% based on an analysis of comparable companies. For the first and second year of operations, the operating margin was assumed to be 50% of the
normalized operating margin. The first and second-year expenses include the non-recurring start-up costs necessary to build the operation (i.e. development of customers, workforce, etc.).

In addition to cash flows during the projection period, a normalized residual cash flow was calculated based upon industry-average growth of 3% beyond the
discrete build-up projection period. The residual cash flow was then capitalized to arrive at the terminal value.

The present value of the cash flows is
calculated using an estimated required rate of return based upon industry-average market conditions. In determining the estimated required rate of return, management calculated a discount rate using both current and historical trends in the
industry.

The Company calculated the discount rate as of the valuation date and also one-year, two-year, and three-year historical quarterly averages. The
discount rate was calculated by weighting the required returns on interest-bearing debt and common equity capital in proportion to their estimated percentages in an expected capital structure. The capital structure was estimated based on the
quarterly average data for publicly traded companies in the outdoor advertising industry.

The calculation of the discount rate required the rate of return
on debt, which was based on a review of the credit ratings for comparable companies (i.e. market participants). Management used the yield on an S&P B rated corporate bond for the pre-tax rate of return on debt and tax-effected such yield based
on applicable tax rates.

The rate of return on equity capital was estimated using a modified Capital Asset Pricing Model (CAPM). Inputs to
this model included the yield on long-term U.S. Treasury bonds, forecast betas for comparable companies, calculation of a market risk premium based on research and empirical evidence and calculation of a size premium derived from historical
differences in returns between small companies and large companies using data published by Ibbotson Associates.

The concluded discount rate used in the
discounted cash flow models to determine the fair value of the permits was 10%. Applying the discount rate, the present value of cash flows during the discrete projection period and terminal value were added to estimate the fair value of the
hypothetical start-up operation. The initial capital investment was subtracted to arrive at the value of the permits. The initial capital investment represents the fixed assets needed to erect the necessary advertising structures.

The discount rate used in the impairment model increased approximately 50 basis points over the discount rate used to value the permits at December 31, 2008.
Industry revenue forecasts declined 8% through 2013 compared to the forecasts used in the 2008 impairment test. These market driven changes were primarily responsible for the decline in fair value of the billboard permits below their carrying value.
As a result, the Company recognized a non-cash impairment charge in all but five of its markets in the United States and Canada, which totaled $345.4 million. The fair value of the permits was $1.1 billion at June 30, 2009.



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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 |   |          | Total | 
|Pre-merger                                                            |  |          |            |   |               |   |          |       |  |   |            |  
|Balance as of December 31, 2007                                       |  | $        | 688,336    |   |               | $ | 474,253  |       |  | $ | 1,162,589  |  
|Acquisitions                                                          |  |          |           |   |               |   | 12,341   |       |  |   | 12,341     |  
|Foreign currency translation                                          |  |          | (293       | ) |               |   | 28,596   |       |  |   | 28,303     |  
|Adjustments                                                           |  |          | (970       | ) |               |   |         |       |  |   | (970       | )
|                                                                      |  |          |            |   |               |   |          |       |  |   |            |  
|Balance as of July 30, 2008                                           |  |          | 687,073    |   |               |   | 515,190  |       |  |   | 1,202,263  |  
|                                                                      |  |          |           
|Post-merger                                                           |  |          |            |   |               |   |          |       |  |   |            |  
|Preliminary fair value adjustment resulting from push-down accounting |  |          | 2,118,707  |   |               |   | 88,522   |       |  |   | 2,207,229  |  
|Net adjustments to push-down accounting                               |  |          | 438,025    |   |               |   | (76,116  | )     |  |   | 361,909    |  
|Dispositions                                                          |  |          |           |   |               |   | (542     | )     |  |   | (542       | )
|Foreign currency translation                                          |  |          | (29,605    | ) |               |   | (63,519  | )     |  |   | (93,124    | )
|Impairment                                                            |  |          | (2,321,602 | ) |               |   | (173,435 | )     |  |   | (2,495,037 | )
|Adjustments                                                           |  |          |           |   |               |   | (2,557   | )     |  |   | (2,557     | )
|                                                                      |  |          |            |   |               |   |          |       |  |   |            |  
|Balance as of December 31, 2008                                       |  |          | 892,598    |   |               |   | 287,543  |       |  |   | 1,180,141  |  
|Acquisitions                                                          |  |          | 2,250      |   |               |   | 110      |       |  |   | 2,360      |  
|Foreign currency translation                                          |  |          | 15,809     |   |               |   | 7,016    |       |  |   | 22,825     |  
|Impairment                                                            |  |          | (389,828   | ) |               |   | (29,722  | )     |  |   | (419,550   | )
|Net adjustments to push-down accounting                               |  |          | 53,304     |   |               |   |         |       |  |   | 53,304     |  
|Adjustments                                                           |  |          | (712       | ) |               |   |         |       |  |   | (712       | )
|                                                                      |  |          |            |   |               |   |          |       |  |   |            |  
|Balance as of June 30, 2009                                           |  | $        | 573,421    |   |               | $ | 264,947  |       |  | $ | 838,368    |  
|                                                                      |  |          |            |   |               |   |          |       |  |   |            |  

The Company performed an interim impairment test as of December 31, 2008 which resulted in a non-cash
impairment charge of $2.5 billion to reduce its goodwill. The goodwill impairment test is a two-step process. The first step, used to screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including
goodwill. The second step, if applicable and used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill.

The Companys U.S. outdoor advertising markets are components. The U.S. outdoor advertising markets are aggregated into a single reporting unit for purposes of the
goodwill impairment test using the guidance in Emerging Issues Task Force Topic No. D-101, Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement No. 142(ASC 350-20-55). The Company also determined that in its
Americas segment, Canada, Mexico, Peru, and Brazil constitute separate reporting units and each country in its International segment constitutes a separate reporting unit.

The Companys reporting units are valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a
risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires the Company to make estimates and assumptions about sales, operating margins, growth rates and
discount rates based on its budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and managements judgment in applying these factors. The
Company utilizes Mesirow Financial, a third-party valuation firm, to assist the Company in the development of these assumptions and the Companys determination of the fair value of its reporting units.

The Company tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. The Companys cash flows during the
first six months of 2009 were below those used in the discounted cash flow model used to calculate the impairment at December 31, 2008. Additionally, the fair value of the Companys debt and equity at June 30, 2009 declined from the
values at December 31, 2008. As a result of these indicators, the Company performed an interim goodwill impairment test as of June 30, 2009.

The
discounted cash flow model indicated that the Company failed the first step of the impairment test for certain of its reporting units, which required it to compare the implied fair value of each reporting units goodwill with its carrying
value.



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The discounted cash flow approach the Company uses for valuing goodwill involves estimating future cash flows expected to
be generated from the related assets, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value.

The Company forecasted revenue, expenses, and cash flows over a ten-year period for each of its reporting units. In projecting future cash flows, the Company considers a variety of factors including its historical
growth rates, macroeconomic conditions, advertising sector and industry trends as well as Company-specific information. Historically, revenues in its industries have been highly correlated to economic cycles. Based on these considerations, the
assumed 2009 revenue growth rates were negative followed by assumed revenue growth with an anticipated economic recovery in 2010. To arrive at the projected cash flows and resulting growth rates, the Company evaluated its historical operating
results, current management initiatives and both historical and anticipated industry results to assess the reasonableness of the operating margin assumptions. The Company also calculated a normalized residual year which represents the
perpetual cash flows of each reporting unit. The residual year cash flow was capitalized to arrive at the terminal value of the reporting unit.

The
Company calculated the weighted average cost of capital (WACC) as of June 30, 2009 and also one-year, two-year, and three-year historical quarterly averages for each of its reporting units. WACC is an overall rate based upon the
individual rates of return for invested capital (equity and interest bearing debt). The WACC is calculated by weighting the required returns on interest-bearing debt and common equity capital in proportion to their estimated percentages in an
expected capital structure. The capital structure was estimated based on the quarterly average data for publicly traded companies in the outdoor advertising industry. The calculation of the WACCs considered both current industry WACCs and historical
trends in the industry.

The calculation of the WACC requires the rate of return on debt, which was based on a review of the credit ratings for comparable
companies (i.e. market participants) and the indicated yield on similarly rated bonds.

The rate of return on equity capital was estimated using a modified
CAPM. Inputs to this model included the yield on long-term U.S. Treasury bonds, forecast betas for comparable companies, calculation of a market risk premium based on research and empirical evidence and calculation of a size premium derived from
historical differences in returns between small companies and large companies using data published by Ibbotson Associates.

In-line with advertising
industry trends, the Companys operations and expected cash flow are subject to significant uncertainties about future developments, including timing and severity of the recessionary trends and customers behaviors. To address these risks,
the Company included company-specific risk premiums for each of the reporting units in the estimated WACC. Based on this analysis company-specific risk premiums of 250 basis points and 350 basis points were included for Americas and International,
respectively, resulting in WACCs of 12.5% and 13.5% for each of the reporting units in the Americas and International segments, respectively. Applying these WACCs, the present value of cash flows during the discrete projection period and terminal
value were added to estimate the fair value of the reporting units.

The discount rate utilized in the valuation of the permits as of June 30, 2009
excludes the company-specific risk premiums that were added to the industry WACCs used in the valuation of the reporting units. Management believes the exclusion of this premium is appropriate given the difference between the nature of the
billboard permits and reporting unit cash flow projections. The cash flow projections utilized under the direct valuation method for the permits are derived from utilizing industry "normalized" information for the existing portfolio of
permits. Given that the underlying cash flow projections are based on industry normalized information, application of an industry average discount rate is appropriate. Conversely, the cash flow projections for the overall reporting unit
are based on its internal forecasts for each business and incorporate future growth and initiatives unrelated to the existing permit portfolio. Additionally, the projections for the reporting unit include cash flows related to non-permit based
assets. In the valuation of the reporting unit, the company-specific risk premiums were added to the industry WACCs due to the risks inherent in achieving the projected cash flows of the reporting unit.

The Company also utilized the market approach to provide a test of reasonableness to the results of the discounted cash flow model. The market approach indicates the
fair value of the invested capital of a business based on a companys market capitalization (if publicly traded) and a comparison of the business to comparable publicly traded companies and transactions in its industry. This approach can be
estimated through the quoted market price method, the market comparable method, and the market transaction method.

One indication of the fair value of a
business is the quoted market price in active markets for the debt and equity of the business. The quoted market price of equity multiplied by the number of shares outstanding yields the fair value of the equity of a business on a marketable,
noncontrolling basis. A premium for control is then applied and added to the estimated fair value of interest-bearing debt to indicate the fair value of the invested capital of the business on a marketable, controlling basis.



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The market comparable method provides an indication of the fair value of the invested capital of a business by comparing
it to publicly traded companies in similar lines of business. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. An analysis of the market multiples
of companies engaged in similar lines of business yields insight into investor perceptions and, therefore, the value of the subject business. These multiples are then applied to the operating results of the subject business to estimate the fair
value of the invested capital on a marketable, noncontrolling basis. The Company then applies a premium for control to indicate the fair value of the business on a marketable, controlling basis.

The market transaction method estimates the fair value of the invested capital of a business based on exchange prices in actual transactions and on asking prices for
controlling interests in similar companies recently offered for sale. This process involves comparison and correlation of the subject business with other similar companies that have recently been purchased. Considerations such as location, time of
sale, physical characteristics, and conditions of sale are analyzed for comparable businesses.

The three variations of the market approach indicated that
the fair value determined by its discounted cash flow model was within a reasonable range of outcomes.

The revenue forecasts for 2009 declined 7% and 9%
for certain reporting units compared to the forecasts used in the 2008 impairment test primarily as a result of the revenues realized during the first six months of 2009. These market driven changes were primarily responsible for the decline in fair
value of the Companys reporting units below their carrying value. As a result, the Company recognized a non-cash impairment charge to reduce its goodwill of $419.5 million.

Note 3: OTHER DEVELOPMENTS

Acquisitions

During the six months ended June 30, 2009, the Companys Americas segment paid $5.0 million, primarily for the acquisition of land and buildings. The
Companys International segment paid $0.1 million, primarily related to the acquisition of additional equity interests in outdoor companies and the acquisition of advertising structures. Additionally, the Companys Americas segment
purchased the remaining 15% interest in its fully consolidated subsidiary, Paneles Napsa S.A. for $13.0 million.

During the six months ended June 30,
2008, the Companys Americas segment paid $45.9 million for the acquisition of advertising structures and the final earnout payments for Interspace Airport Advertising, which the Company acquired in July 2006. The Companys International
segment paid $37.7 million primarily related to the acquisition of additional equity interests in outdoor companies and the acquisition of advertising structures.

Disposition of Assets

During the six months ended June 30, 2009, the Company sold international assets for $4.9
million resulting in a gain of $5.0 million included in Other operating income  net. In addition, the Company sold assets for $3.6 million in the Americas and recorded a gain of $2.9 million in Other operating income 
net.

The Company sold its 50% interest in Clear Channel Independent, a South African outdoor advertising company, in the first six months of 2008
and recognized a gain of $75.6 million in Equity in earnings of nonconsolidated affiliates based on the fair value of the equity securities received. The Company classified these equity securities as available-for-sale on its
consolidated balance sheet in accordance with Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities(Statement No. 115 or ASC Topic 320). The sale of Clear
Channel Independent was structured as a tax-free disposition, thereby resulting in no current tax expense recognized on the sale.

Effective Tax Rates

The Companys effective tax rate for the three and six months ended June 30, 2009 was 16.2% and 12.6%,
respectively. The 2009 effective rates were impacted primarily due to the impairment charge on permanent goodwill. In addition, the Company did not record tax benefits on net losses generated in the current period. Due to uncertainty on future
taxable income and limitations on net operating loss carryback claims allowed, the Company cannot realize deferred tax assets which arose in the three and six months ended June 30, 2009 and may arise as a result of future period net operating
losses. Pursuant to the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (Statement No. 109 or ASC 740-10-30), deferred tax valuation allowances are required on those
deferred tax assets.



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For the three and six months ended June 30, 2008, the tax expense recorded was at an effective tax rate of 33.6% and
22.4%, respectively. The effective rate for the six months ended June 30, 2008 was favorably impacted by the nonrecognition of tax on the $75.6 million book gain recognized from the sale of the Companys 50% interest in Clear Channel
Independent, a South African outdoor advertising company.

Legal Proceedings

The Company is currently involved in certain legal proceedings arising in the ordinary course of business and, as required, has accrued its estimate of the probable costs
for the resolution of these claims. 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.

Available-for-sale Marketable Equity Securities

The
Company holds available-for-sale marketable equity securities classified in accordance with Statement No. 115. These marketable equity securities are measured at fair value on each reporting date using quoted prices in active markets.
Due to the fact that the inputs used to measure the marketable equity securities at fair value are observable, the Company has categorized the fair value measurements of the securities as Level 1. The Company records its investments in these
available-for-sale marketable equity securities on the balance sheet as Other Investments.

The unamortized cost, unrealized holding gains or
losses, and fair value of the Companys investments at June 30, 2009 and December 31, 2008 are as follows:



|                   |  |               |        |                   |   |                 |  |      |   |           |   |                  |  |                 |        |      |   |   |  |   |   |  |   |       
|------------------ |  | ------------- | ------ | ----------------- | - | --------------- |  | ---- | - | --------- | - | ---------------- |  | --------------- | ------ | ---- | - | - |  | - | - |  | - | ------
|(In thousands)     |  | June 30, 2009 |        | December 31, 2008
|Investments        |  | FairValue     |        | UnrealizedLosses  |   | UnrealizedGains |  | Cost |   | FairValue |   | UnrealizedLosses |  | UnrealizedGains |        | Cost
|Available-for-sale |  | $             | 13,362 |                   | $ | 9,150           |  | $    |  |           | $ | 22,512           |  | $               | 22,512 |      | $ |  |  | $ |  |  | $ | 22,512

The Companys available-for-sale investments include investments that have been in an unrealized loss
position for a period of less than one year.

The Companys available-for-sale security, Independent News and Media PLC (INM), was in an
unrealized loss position as of June 30, 2009. INM is currently in negotiations with its bondholders regarding a refinancing, Uncertainty related to the ability of INM to refinance its obligations is one factor impacting its share price. The
Company will determine, after resolution of the negotiations, if an other-than-temporary decline in its INM investment has occurred.

Note 4: COMMITMENTS
AND CONTINGENCIES

Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the
financial performance of the acquired companies. For acquisitions completed prior to the adoption of Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (Statement No. 141R or ASC
805-10), the Company will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if
performance targets are met, would not significantly impact the financial position or results of operations of the Company. For acquisitions completed following the adoption of Statement No. 141R, the Company accounts for these payments based
on the guidance in FSP No. FAS 141(R)-1.

As discussed in Note 3, there are various lawsuits and claims pending against the Company. Based on current
assumptions, the Company has accrued its estimate of the probable costs for the resolution of these claims. 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.

As of June 30, 2009, Clear Channel Communications had
outstanding commercial standby letters of credit and surety bonds of $62.6 million and $44.7 million, respectively, held on behalf of the Company. These letters of credit and surety bonds relate to various operational matters, including insurance,
bid and performance bonds, as well as other items.



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Note 5: RELATED PARTY TRANSACTIONS

As part of the day-to-day cash management services provided by Clear Channel Communications, the Company maintains accounts that represent net amounts due to or from Clear Channel Communications, which is recorded as Due from/to Clear
Channel Communications on the consolidated balance sheet. The accounts represent the revolving promissory note issued by the Company to Clear Channel Communications and the revolving promissory note issued by Clear Channel Communications 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. Interest on the cash management note owed by the Company accrues on the daily net negative cash position based upon LIBOR plus a margin. Interest on the cash management note owed by Clear Channel Communications accrues on the daily net
positive cash position based upon the average one-month generic treasury bill rate. Included in the accounts are the net activities resulting from day-to-day cash management services provided by Clear Channel Communications. As a part of these
services, the Company maintains collection bank accounts swept daily into accounts of Clear Channel Communications. In return, Clear Channel Communications 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 Clear Channel Communications account. The Company
is an unsecured creditor of Clear Channel Communications with respect to the revolving promissory note issued by Clear Channel Communications to the Company. At June 30, 2009 and December 31, 2008, the asset recorded in Due from
Clear Channel Communications on the consolidated balance sheet was $488.2 million and $431.6 million, respectively.

The cash management note the
Company has recorded as Due from Clear Channel Communications is an unsecured obligation of Clear Channel Communications. There is no observable market data on which to estimate the fair value of the cash management note.

The net interest income for the three and six months ended June 30, 2009 was $0.1 million and $0.2 million, respectively. The net interest income for the three
and six months ended June 30, 2008 was $0.7 million and $2.2 million, respectively. At June 30, 2009 and 2008, the interest rate on the Due from Clear Channel Communications account was 0.09% and 1.69%, respectively, which
represents the average one-month generic treasury bill rate as described above.

The Company met its liquidity needs during the six months ended
June 30, 2009, primarily through its cash flows from operations, with the balance in the Due from Clear Channel Communications account increasing over the balance at December 31, 2008. The Company is evaluating its short-term
liquidity and capital expenditure needs as well as its long-term financing needs relating to the maturity of the $2.5 billion Debt with Clear Channel Communications discussed below. As a result of this process, the Company has determined
that classification of the Due from Clear Channel Communications account as a long term asset is appropriate at June 30, 2009. The terms and conditions of the revolving promissory note issued by Clear Channel Communications to the
Company have not changed.

The Company has a note in the original principal amount of $2.5 billion to Clear Channel Communications which matures on
August 2, 2010, and may be prepaid in whole at any time, or in part from time to time. This note accrues interest at a variable per annum rate equal to the weighted average cost of debt for Clear Channel Communications, calculated on a monthly
basis. This note is mandatorily payable upon a change of control of the Company (as defined in the note) and, subject to certain exceptions, all net proceeds from debt or equity raised by the Company must be used to prepay such note. At
June 30, 2009, the interest rate on the $2.5 billion note was 5.7%.

The Companys $2.5 billion note payable to Clear Channel Communications is
intercompany indebtedness and neither it nor the Company has public debt ratings or observable market pricing information. As a result, the Company is not able to estimate the fair value of the note. Were the Company to obtain its own financing
independent of Clear Channel Communications, it believes that the rate of interest on such indebtedness would be higher than its current rate.

On
June 2, 2009, the Company announced that it is actively pursuing alternatives to address the maturity of the $2.5 billion note to Clear Channel Communications. The alternatives may include an offering of new senior or senior subordinated notes
for cash or an exchange of new senior or subordinated notes for outstanding indebtedness, with the intention of any such transaction being to refinance the $2.5 billion note to Clear Channel Communications.

For so long as Clear Channel Communications maintains significant control over the Company, a deterioration in the financial condition of Clear Channel Communications
could have the effect of increasing the Companys borrowing costs or impairing the Companys access to capital markets. Clear Channel Communications ability to meet its obligations with respect to the Due from Clear Channel
Communications account depends on its working capital needs, debt service obligations and its future operating performance and cash flow, which are in turn subject to prevailing economic conditions and other factors, many of which are beyond



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its control. The inability of Clear Channel Communications to meet its obligations with respect to the Due from Clear Channel Communications
account could have a material adverse effect on the Companys financial condition and on the Companys ability to meet its obligations. Neither the $2.5 billion term note payable to Clear Channel Communications nor the Due from Clear
Channel Communications note contain in their terms a right of offset. As of June 30, 2009, Clear Channel Communications had $1.5 billion recorded as Cash and cash equivalents on its consolidated balance sheets.

Clear Channel Communications has a $2.0 billion multi-currency revolving credit facility with a maturity in July 2014 which includes a $150.0 million sub-limit that
certain of the Companys International subsidiaries may borrow against to the extent Clear Channel Communications has not already borrowed against this capacity and is compliant with its covenants under the revolving credit facility. On
February 6, 2009, Clear Channel Communications borrowed the remaining availability under its $2.0 billion revolving credit facility, including the remaining availability under the $150.0 million sub-limit.

The Company provides advertising space on its billboards for radio stations owned by Clear Channel Communications. For the three months ended June 30, 2009 and
2008, the Company recorded $1.2 million and $2.5 million, respectively, in revenue for these advertisements. For the six months ended June 30, 2009 and 2008, the Company recorded $1.3 million and $4.2 million, respectively, in revenue for these
advertisements.

Under the Corporate Services Agreement between Clear Channel Communications and the Company, Clear Channel Communications provides
management services to the Company, which include, among other things: (i) treasury, payroll and other financial related services; (ii) 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 Clear Channel Communications based on headcount, revenue or other factors on a pro rata basis. For the three months ended June 30, 2009 and 2008, the Company recorded $7.9
million and $5.6 million, respectively, as a component of corporate expenses for these services. For the six months ended June 30, 2009 and 2008, the Company recorded $14.2 million and $12.1 million, respectively, as a component of corporate
expenses for these services.

Pursuant to the Tax Matters Agreement between Clear Channel Communications and the Company, the operations of the Company are
included in a consolidated federal income tax return filed by Clear Channel Communications. 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 Clear Channel Communications 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 Statement No. 109, as if the Company was a separate taxpayer.
Deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases 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 and following the consummation of the merger of Clear Channel Communications, the Companys employees
participate in CC Media Holdings employee benefit plans, including employee medical insurance and a 401(k) retirement benefit plan. These costs are recorded as a component of selling, general and administrative expenses and were approximately
$2.3 million and $2.9 million for the three months ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009 and 2008, the Company recorded approximately $5.0 million and $5.8 million, respectively, as a component
of selling, general and administrative expenses for these services.

Note 6: SEGMENT DATA

The Company has two reportable segments, which it believes best reflects how the Company is currently managed  Americas and International. The Americas segment primarily includes operations in the United States,
Canada and Latin America, and the International segment includes operations in primarily Europe, Asia and Australia. Share-based payments are recorded by each segment in direct operating expenses and selling, general and administrative expenses.



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The following table presents the Companys operating segment results for the post-merger three and six months ended
June 30, 2009, and the pre-merger three and six months ended June 30, 2008:



|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|-------------------------------------------- |  | -------- | --------- | ------------- | - | --------- | ----------------------------------- |  | - | ------------ | - |  | - | --------- | -
|(In thousands)                               |  | Americas |           | International |   |           | Corporate,and otherreconcilingitems |  |   | Consolidated |  
|(Post-merger)                                |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Three months ended June 30, 2009             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Revenue                                      |  | $        | 315,553   |               | $ | 376,564   |                                     |  | $ |             |   |  | $ | 692,117   |  
|Direct operating expenses                    |  |          | 148,755   |               |   | 243,554   |                                     |  |   |             |   |  |   | 392,309   |  
|Selling, general and administrative expenses |  |          | 51,398    |               |   | 69,944    |                                     |  |   |             |   |  |   | 121,342   |  
|Depreciation and amortization                |  |          | 57,860    |               |   | 56,948    |                                     |  |   |             |   |  |   | 114,808   |  
|Corporate expenses                           |  |          |          |               |   |          |                                     |  |   | 15,653       |   |  |   | 15,653    |  
|Impairment charge                            |  |          |          |               |   |          |                                     |  |   | 812,390      |   |  |   | 812,390   |  
|Other operating income - net                 |  |          |          |               |   |          |                                     |  |   | 4,353        |   |  |   | 4,353     |  
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Operating income (loss)                      |  | $        | 57,540    |               | $ | 6,118     |                                     |  | $ | (823,690     | ) |  | $ | (760,032  | )
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Share-based payments                         |  | $        | 2,028     |               | $ | 613       |                                     |  | $ | 207          |   |  | $ | 2,848     |  
|                                             |  |          |           |              
|(Post-merger)                                |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Six months ended June 30, 2009               |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Revenue                                      |  | $        | 585,740   |               | $ | 688,593   |                                     |  | $ |             |   |  | $ | 1,274,333 |  
|Direct operating expenses                    |  |          | 293,635   |               |   | 478,282   |                                     |  |   |             |   |  |   | 771,917   |  
|Selling, general and administrative expenses |  |          | 100,237   |               |   | 138,869   |                                     |  |   |             |   |  |   | 239,106   |  
|Depreciation and amortization                |  |          | 104,510   |               |   | 112,206   |                                     |  |   |             |   |  |   | 216,716   |  
|Corporate expenses                           |  |          |          |               |   |          |                                     |  |   | 29,899       |   |  |   | 29,899    |  
|Impairment charge                            |  |          |          |               |   |          |                                     |  |   | 812,390      |   |  |   | 812,390   |  
|Other operating income - net                 |  |          |          |               |   |          |                                     |  |   | 8,965        |   |  |   | 8,965     |  
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Operating income (loss)                      |  | $        | 87,358    |               | $ | (40,764   | )                                   |  | $ | (833,324     | ) |  | $ | (786,730  | )
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Identifiable assets                          |  | $        | 4,353,936 |               | $ | 2,272,665 |                                     |  | $ | 513,065      |   |  | $ | 7,139,666 |  
|Capital expenditures                         |  | $        | 34,297    |               | $ | 32,525    |                                     |  | $ |             |   |  | $ | 66,822    |  
|Share-based payments                         |  | $        | 4,196     |               | $ | 1,269     |                                     |  | $ | 429          |   |  | $ | 5,894     |  
|                                             |  |          |           |              
|(Pre-merger)                                 |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Three months ended June 30, 2008             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Revenue                                      |  | $        | 384,978   |               | $ | 529,830   |                                     |  | $ |             |   |  | $ | 914,808   |  
|Direct operating expenses                    |  |          | 161,020   |               |   | 329,224   |                                     |  |   |             |   |  |   | 490,244   |  
|Selling, general and administrative expenses |  |          | 60,057    |               |   | 90,977    |                                     |  |   |             |   |  |   | 151,034   |  
|Depreciation and amortization                |  |          | 49,273    |               |   | 55,491    |                                     |  |   |             |   |  |   | 104,764   |  
|Corporate expenses                           |  |          |          |               |   |          |                                     |  |   | 17,819       |   |  |   | 17,819    |  
|Other operating income - net                 |  |          |          |               |   |          |                                     |  |   | 6,100        |   |  |   | 6,100     |  
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Operating income (loss)                      |  | $        | 114,628   |               | $ | 54,138    |                                     |  | $ | (11,719      | ) |  | $ | 157,047   |  
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Share-based payments                         |  | $        | 2,763     |               | $ | 687       |                                     |  | $ | 331          |   |  | $ | 3,781     |  
|                                             |  |          |           |              
|(Pre-merger)                                 |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Six months ended June 30, 2008               |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Revenue                                      |  | $        | 718,340   |               | $ | 972,047   |                                     |  | $ |             |   |  | $ | 1,690,387 |  
|Direct operating expenses                    |  |          | 317,265   |               |   | 643,813   |                                     |  |   |             |   |  |   | 961,078   |  
|Selling, general and administrative expenses |  |          | 118,432   |               |   | 177,212   |                                     |  |   |             |   |  |   | 295,644   |  
|Depreciation and amortization                |  |          | 99,372    |               |   | 110,482   |                                     |  |   |             |   |  |   | 209,854   |  
|Corporate expenses                           |  |          |          |               |   |          |                                     |  |   | 34,053       |   |  |   | 34,053    |  
|Other operating income - net                 |  |          |          |               |   |          |                                     |  |   | 8,472        |   |  |   | 8,472     |  
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Operating income (loss)                      |  | $        | 183,271   |               | $ | 40,540    |                                     |  | $ | (25,581      | ) |  | $ | 198,230   |  
|                                             |  |          |           |               |   |           |                                     |  |   |              |   |  |   |           |  
|Identifiable assets                          |  | $        | 2,920,321 |               | $ | 2,784,482 |                                     |  | $ | 420,013      |   |  | $ | 6,124,816 |  
|Capital expenditures                         |  | $        | 71,818    |               | $ | 101,471   |                                     |  | $ |             |   |  | $ | 173,289   |  
|Share-based payments                         |  | $        | 4,301     |               | $ | 1,079     |                                     |  | $ | 509          |   |  | $ | 5,889     |  

Revenue of $401.1 million and $558.9 million derived from the Companys foreign operations is included in the
data above for the three months ended June 30, 2009 and 2008, respectively. Revenue of $736.6 million and $1.0 billion and identifiable assets of $2.5 billion and $3.0 billion derived from the Companys foreign operations are included in
the data above for the six months ended June 30, 2009 and 2008, respectively.



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|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

INTRODUCTION

Managements discussion and analysis of our financial condition and results of
operations is provided as a supplement to the unaudited interim financial statements and accompanying notes thereto to help provide an understanding of our financial condition, changes in our financial condition and results of our operations. The
information included herein should be read in conjunction with the quarterly and annual financial statements. Our reportable operating segments are Americas outdoor advertising (Americas) and International outdoor advertising
(International).

Clear Channel Communications Merger

On July 30, 2008, Clear Channel Communications, our parent company, completed its merger with a subsidiary of CC Media Holdings, a company formed by
private equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. Clear Channel Communications is now an indirect wholly-owned subsidiary of CC Media Holdings. The merger was accounted for as a purchase business
combination in conformity with Statement of Financial Accounting Standards No. 141, Business Combinations(Statement No. 141), and Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout Transactions.
Staff Accounting Bulletin No. 54, Push Down Basis of Accounting Required in Certain Limited Circumstances(ASC 805-50-S99-1), requires the application of push down accounting in situations where the ownership of an entity has changed. As
a result, the post-merger financial statements reflect a new basis of accounting. Accordingly, the financial statements as of June 30, 2009 reflect Clear Channel Communications estimated fair value basis resulting from the merger that has
been pushed down to us. A portion of the consideration paid was allocated to the assets and liabilities acquired at their respective fair values at July 30, 2008. The remaining portion was recorded at the continuing shareholders basis, due to
the fact that certain shares of Clear Channel Communications common stock were exchanged for shares of CC Media Holdings Class A common stock. Excess consideration after this preliminary allocation was recorded as goodwill. The
purchase price allocation was materially complete as of June 30, 2009.

Impairment Charges

Impairment to Definite-lived Intangibles

We review our definite-lived intangibles for impairment when events and circumstances indicate that amortizable long-lived assets might be impaired and the undiscounted cash flows estimated to be generated from those
assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.

We use various assumptions in determining the current fair market value of these assets, including future expected cash flows, industry growth rates and
discount rates. Impairment loss calculations require management to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.

During the second quarter of 2009, we recorded a $21.3 million impairment to taxi contracts in our Americas segment and a $17.5 million
impairment primarily related to street furniture and billboard contracts in our International segment. We determined fair values using a discounted cash flow model. The decline in fair value of the contracts was primarily driven by a decline in the
revenue projections. The decline in revenue related to taxi contracts and street furniture and billboard contracts was in the range of 10% to 15%. The balance of these taxi contracts and street furniture and billboard contracts after the impairment
charges, for the contracts that were impaired, was $3.3 million and $16.0 million, respectively.

Impairment to Billboard Permits

We have approximately 36,000 billboard permits in our Americas segment. Our billboard permits are effectively issued in perpetuity
by state and local governments as they are transferable or renewable at little or no cost. Permits typically include the location which permit us to operate an advertising structure. Due to significant differences in both business practices and
regulations, billboards in our International segment are subject to long-term, finite contracts versus permits in the United States and Canada. Accordingly, there are no indefinite-lived assets in our International segment.

We performed an interim impairment test on our billboard permits as of December 31, 2008, which resulted in a non-cash impairment charge of $722.6
million. Our cash flows during the first six months of 2009 were below those in the discounted cash flow model used to calculate the impairment at December 31, 2008. As a result, we performed an interim impairment test as of June 30, 2009
on our billboard permits.



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The fair value of the permits was determined using the direct valuation method as prescribed in Topic
No. D-108, Use of the Residual Method to Value Acquired Assets Other Than Goodwill(D-108 or ASC 805-20-S99). Under the direct valuation method, the fair value of the permits was calculated at the market level as prescribed
by EITF 02-07, Unit of Accounting for Testing Impairment of Indefinite-Lived Intangible Assets(EITF 02-07 or ASC 350-30-35). We utilized Mesirow Financial, a third-party valuation firm, to assist us in the development of
the assumptions and our determination of the fair value of our permits. Our impairment test consisted of a comparison of the fair value of the permits at the market level with their carrying amount. If the carrying amount of the permits exceeded its
fair value, an impairment loss was recognized equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the permit is its new accounting basis.

Our application of the direct valuation method attempts to isolate the income that is properly attributable to the permit alone (that is, apart from
tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical greenfield build up to a normalized enterprise that, by design, lacks inherent goodwill and whose only other assets have
essentially been paid for (or added) as part of the build-up process. We forecasted revenue, expenses, and cash flows over a ten-year period for each of our markets in our application of the direct valuation method. We also calculated a
normalized residual year which represents the perpetual cash flows of each market. The residual year cash flow was capitalized to arrive at the terminal value of the permits in each market.

Our key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up
period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average billboard permit
within a market.

Management uses its internal forecasts to estimate industry normalized information as it believes these forecasts are
similar to what a market participant would expect to generate. This is due to the pricing structure and demand for outdoor signage in a market being relatively constant regardless of the owner of the operation. Management also relied on its internal
forecasts because there is nominal public data available for each of its markets.

The build-up period represents the time it takes for the
hypothetical start-up operation to reach normalized operations in terms of achieving a mature market revenue share and profit margin. Management believes that a one-year build-up period is required for a start-up operation to erect the necessary
structures and obtain advertisers in order achieve mature market revenue share. It is estimated that a start-up operation would be able to obtain 10% of the potential revenues in the first year of operations and 100% in the second year. Management
assumed industry revenue growth of negative 16% during the build-up period. However, the cost structure is expected to reach the normalized level over three years due to the time required to recognize the synergies and cost savings associated with
the ownership of the permits within the market.

For the normalized operating margin in the third year, management assumed a hypothetical
business would operate at the lower of the operating margin for the specific market or the industry average margin of 45% based on an analysis of comparable companies. For the first and second year of operations, the operating margin was assumed to
be 50% of the normalized operating margin. The first and second-year expenses include the non-recurring start-up costs necessary to build the operation (i.e. development of customers, workforce, etc.).

In addition to cash flows during the projection period, a normalized residual cash flow was calculated based upon industry-average growth of
3% beyond the discrete build-up projection period. The residual cash flow was then capitalized to arrive at the terminal value.

The
present value of the cash flows is calculated using an estimated required rate of return based upon industry-average market conditions. In determining the estimated required rate of return, management calculated a discount rate using both current
and historical trends in the industry.

We calculated the discount rate as of the valuation date and also one-year, two-year, and
three-year historical quarterly averages. The discount rate was calculated by weighting the required returns on interest-bearing debt and common equity capital in proportion to their estimated percentages in an expected capital structure. The
capital structure was estimated based on the quarterly average data for publicly traded companies in the outdoor advertising industry.

The
calculation of the discount rate required the rate of return on debt, which was based on a review of the credit ratings for comparable companies (i.e. market participants). We used the yield on an S&P B rated corporate bond for the pre-tax rate
of return on debt and tax-effected such yield based on applicable tax rates.



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The rate of return on equity capital was estimated using a modified Capital Asset Pricing Model
(CAPM). Inputs to this model included the yield on long-term U.S. Treasury bonds, forecast betas for comparable companies, calculation of a market risk premium based on research and empirical evidence and calculation of a size premium
derived from historical differences in returns between small companies and large companies using data published by Ibbotson Associates.

Our concluded discount rate used in the discounted cash flow models to determine the fair value of the permits was 10%. Applying the discount rate, the present value of cash flows during the discrete projection period and terminal value
were added to estimate the fair value of the hypothetical start-up operation. The initial capital investment was subtracted to arrive at the value of the permits. The initial capital investment represents the fixed assets needed to erect the
necessary advertising structures.

The discount rate used in the impairment model increased approximately 50 basis points over the discount
rate used to value the permits at December 31, 2008. Industry revenue forecasts declined 8% through 2013 compared to the forecasts used in the 2008 impairment test. These market driven changes were primarily responsible for the decline in fair
value of the billboard permits below their carrying value. As a result, we recognized a non-cash impairment charge in all but five of our markets in the United States and Canada, which totaled $345.4 million. The fair value of our permits was $1.1
billion at June 30, 2009.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the
fair value of our permits, it is possible a material change could occur. If our future actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. The
following table shows the decline in the fair value of our billboard permits of a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate
assumption, respectively:



|                            |  |                     |         |               |   |                |  |   |        
|--------------------------- |  | ------------------- | ------- | ------------- | - | -------------- |  | - | -------
|(in thousands)              |  |                     |         |               |   |               
|Indefinite-lived intangible |  | Revenue growth rate |         | Profit margin |   | Discount rates
|Billboard permits           |  | $                   | 386,700 |               | $ | 73,300         |  | $ | 408,300

The following table shows the increase to the billboard permit impairment that would have occurred
using hypothetical percentage reductions in fair value, had the hypothetical reductions in fair value existed at the time of our impairment testing:



|                             |  |  |  |                      |        
|---------------------------- |  |  |  | -------------------- | -------
|(in thousands)               |  |  |  |                     
|Percent change in fair value |  |  |  | Change to impairment
|5%                           |  |  |  | $                    | 55,776 
|10%                          |  |  |  | $                    | 111,782
|15%                          |  |  |  | $                    | 167,852

Impairment to Goodwill

We performed an interim impairment test as of December 31, 2008 which resulted in a non-cash impairment charge of $2.5 billion to reduce our
goodwill. Our goodwill impairment test is a two-step process. The first step, used to screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The second step, if applicable and
used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. We utilize Mesirow Financial to assist us in the development of the assumptions and our
determination of the fair value of our reporting units.

Each of our U.S. outdoor advertising markets are components. Our U.S. outdoor
advertising markets are aggregated into a single reporting unit for purposes of the goodwill impairment test using the guidance in Emerging Issues Task Force Topic No. D-101, Clarification of Reporting Unit Guidance in Paragraph 30 of FASB
Statement No. 142(ASC 350-20-55). We also determined that in our Americas segment, Canada, Mexico, Peru, and Brazil constitute separate reporting units and each country in our International segment constitutes a separate reporting unit.

We test goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. Our cash flows during
the first six months of 2009 were below those used in the discounted cash flow model used to calculate the impairment at December 31, 2008. Additionally, the fair value of our debt and equity at June 30, 2009 was below the carrying amount
of our reporting units at June 30, 2009. As a result of these indicators, we performed an interim goodwill impairment test as of June 30, 2009.

The discounted cash flow model indicated that we failed the first step of the impairment test for substantially all reporting units, which required us to compare the implied fair value of each reporting units
goodwill with its carrying value.



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The discounted cash flow approach we use for valuing goodwill involves estimating future cash flows
expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value.

We forecasted revenue, expenses, and cash flows over a ten-year period for each of our reporting units. In projecting future cash flows, we consider a
variety of factors including our historical growth rates, macroeconomic conditions, advertising sector and industry trends as well as Company-specific information. Historically, revenues in our industries have been highly correlated to economic
cycles. Based on these considerations, our assumed 2009 revenue growth rates were negative followed by assumed revenue growth with an anticipated economic recovery in 2010. To arrive at our projected cash flows and resulting growth rates, we
evaluated our historical operating results, current management initiatives and both historical and anticipated industry results to assess the reasonableness of our operating margin assumptions. We also calculated a normalized residual
year which represents the perpetual cash flows of each reporting unit. The residual year cash flow was capitalized to arrive at the terminal value of the reporting unit.

We calculated the weighted average cost of capital (WACC) as of June 30, 2009 and also one-year, two-year, and three-year historical quarterly averages for each of our reporting units. WACC is an
overall rate based upon the individual rates of return for invested capital (equity and interest bearing debt). The WACC is calculated by weighting the required returns on interest-bearing debt and common equity capital in proportion to their
estimated percentages in an expected capital structure. The capital structure was estimated based on the quarterly average data for publicly traded companies in the outdoor advertising industry. Our calculation of the WACC considered both current
industry WACCs and historical trends in the industry.

The calculation of the WACC requires the rate of return on debt, which was based on
a review of the credit ratings for comparable companies (i.e. market participants) and the indicated yield on similarly rated bonds.

The
rate of return on equity capital was estimated using a modified CAPM. Inputs to this model included the yield on long-term U.S. Treasury bonds, forecast betas for comparable companies, calculation of a market risk premium based on research and
empirical evidence and calculation of a size premium derived from historical differences in returns between small companies and large companies using data published by Ibbotson Associates.

In-line with advertising industry trends, our operations and expected cash flow are subject to significant uncertainties about future developments,
including timing and severity of the recessionary trends and customers behaviors. To address these risks, the Company included company-specific risk premiums for each of our reporting units in the estimated WACC. Based on this analysis,
company-specific risk premiums of 250 basis points and 350 basis points were included for the Americas and International segments, respectively, resulting in WACCs of 12.5% and 13.5% for each of our reporting units in the Americas and International
segments, respectively. Applying these WACCs, the present value of cash flows during the discrete projection period and terminal value were added to estimate the fair value of the reporting units.

The discount rate utilized in the valuation of the outdoor permits as of June 30, 2009 excludes the company-specific risk premiums that were added
to the industry WACCs used in the valuation of the reporting units. Management believes the exclusion of this premium is appropriate given the difference between the nature of the billboard permits and reporting unit cash flow
projections. The cash flow projections utilized under the direct valuation method for the permits are derived from utilizing industry normalized information for the existing portfolio of permits. Given that the underlying cash
flow projections are based on industry normalized information, application of an industry average discount rate is appropriate. Conversely, our cash flow projections for the overall reporting unit are based on our internal forecasts for each
business and incorporate future growth and initiatives unrelated to the existing permit portfolio. Additionally, the projections for the reporting unit include cash flows related to non-permit based assets. In the valuation of the
reporting unit, the company-specific risk premiums were added to the industry WACCs due to the risks inherent in achieving the projected cash flows of the reporting unit.

We also utilized the market approach to provide a test of reasonableness to the results of the discounted cash flow model. The market approach indicates the fair value of the invested capital of a business based on a
companys market capitalization (if publicly traded) and a comparison of the business to comparable publicly traded companies and transactions in its industry. This approach can be estimated through the quoted market price method, the market
comparable method, and the market transaction method.

One indication of the fair value of a business is the quoted market price in active
markets for the debt and equity of the business. The quoted market price of equity multiplied by the number of shares outstanding yields the fair value of the equity of a business on a marketable, noncontrolling basis. We then apply a premium for
control and add the estimated fair value of interest-bearing debt to indicate the fair value of the invested capital of the business on a marketable, controlling basis.



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The market comparable method provides an indication of the fair value of the invested capital of a
business by comparing it to publicly traded companies in similar lines of business. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. An analysis
of the market multiples of companies engaged in similar lines of business yields insight into investor perceptions and, therefore, the value of the subject business. These multiples are then applied to the operating results of the subject business
to estimate the fair value of the invested capital on a marketable, noncontrolling basis. We then apply a premium for control to indicate the fair value of the business on a marketable, controlling basis.

The market transaction method estimates the fair value of the invested capital of a business based on exchange prices in actual transactions and on
asking prices for controlling interests in similar companies recently offered for sale. This process involves comparison and correlation of the subject business with other similar companies that have recently been purchased. Considerations such as
location, time of sale, physical characteristics, and conditions of sale are analyzed for comparable businesses.

The three variations of
the market approach indicated that the fair value determined by our discounted cash flow model was within a reasonable range of outcomes.

Our revenue forecasts for 2009 declined 7% and 9% for Americas and International, respectively, compared to the forecasts used in the 2008 impairment test primarily as a result of our revenues realized during the first six months of 2009.
These market driven changes were primarily responsible for the decline in fair value of our reporting units below their carrying value. As a result, we recognized a non-cash impairment charge to reduce our goodwill of $419.5 million.

A rollforward of our goodwill balance from December 31, 2008 through June 30, 2009 by reporting unit is as follows:



|                              |  |                                |           |              |   |              |  |                 |   |  |            |        |   |             |   |          |                            |  |   |        |   |  |   |        
|----------------------------- |  | ------------------------------ | --------- | ------------ | - | ------------ |  | --------------- | - |  | ---------- | ------ | - | ----------- | - | -------- | -------------------------- |  | - | ------ | - |  | - | -------
|(In thousands)                |  | Balances as ofDecember 31,2008 |           | Acquisitions |   | Dispositions |  | ForeignCurrency |   |  | Impairment |        |   | Adjustments |   |          | Balances asof June 30,2009
|United States Outdoor Markets |  |                                | 824,730   |              |   | 2,250        |  |                 |  |  |            |       |   |             |   | (324,893 | )                          |  |   | 57,513 |   |  |   | 559,600
|Switzerland                   |  |                                | 56,885    |              |   |             |  |                 |  |  |            | (1,214 | ) |             |   | (7,827   | )                          |  |   |       |   |  |   | 47,844 
|Ireland                       |  |                                | 14,285    |              |   |             |  |                 |  |  |            | 131    |   |             |   | (10,360  | )                          |  |   |       |   |  |   | 4,056  
|Baltics                       |  |                                | 10,629    |              |   |             |  |                 |  |  |            |       |   |             |   | (10,235  | )                          |  |   |       |   |  |   | 394    
|Americas  Mexico             |  |                                | 8,729     |              |   |             |  |                 |  |  |            | 6,938  |   |             |   | (10,085  | )                          |  |   | (1     | ) |  |   | 5,581  
|Americas  Chile              |  |                                | 3,964     |              |   |             |  |                 |  |  |            | 4,435  |   |             |   | (7,834   | )                          |  |   |       |   |  |   | 565    
|Americas  Peru               |  |                                | 45,284    |              |   |             |  |                 |  |  |            |       |   |             |   | (37,609  | )                          |  |   |       |   |  |   | 7,675  
|Americas  Brazil             |  |                                | 4,971     |              |   |             |  |                 |  |  |            | 4,436  |   |             |   | (9,407   | )                          |  |   |       |   |  |   |       
|All Others - International    |  |                                | 205,744   |              |   | 110          |  |                 |  |  |            | 8,099  |   |             |   | (1,300   | )                          |  |   |        |   |  |   | 212,653
|Americas  Canada             |  |                                | 4,920     |              |   |             |  |                 |  |  |            |       |   |             |   |         |                            |  |   | (4,920 | ) |  |   |       
|                              |  |                                |           |              |   |              |  |                 |   |  |            |        |   |             |   |          |                            |  |   |        |   |  |   |        
|                              |  | $                              | 1,180,141 |              | $ | 2,360        |  | $               |  |  | $          | 22,825 |   |             | $ | (419,550 | )                          |  | $ | 52,592 |   |  | $ | 838,368
|                              |  |                                |           |              |   |              |  |                 |   |  |            |        |   |             |   |          |                            |  |   |        |   |  |   |        

While we believe we had made reasonable estimates and utilized appropriate assumptions to
calculate the fair value of our reporting units, it is possible a material change could occur. If future results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future. The following table shows
the decline in the fair value of each of our reportable segments of a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption,
respectively:



|                      |  |                     |         |               |   |                |  |   |        
|--------------------- |  | ------------------- | ------- | ------------- | - | -------------- |  | - | -------
|(in thousands)        |  |                     |         |               |   |               
|Reportable segment    |  | Revenue growth rate |         | Profit margin |   | Discount rates
|Americas Outdoor      |  | $                   | 320,000 |               | $ | 90,000         |  | $ | 300,000
|International Outdoor |  | $                   | 140,000 |               | $ | 100,000        |  | $ | 120,000



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The following table shows the increase to the goodwill impairment that would have occurred using
hypothetical percentage reductions in fair value, had the hypothetical reduction in fair value existed at the time of our impairment testing:



|                      |  |    |         |     |   |         |  |   |        
|--------------------- |  | -- | ------- | --- | - | ------- |  | - | -------
|(In thousands)        |  |    |         |     |   |        
|Reportable segment    |  | 5% |         | 10% |   | 15%    
|Americas Outdoor      |  | $  | 164,950 |     | $ | 329,465 |  | $ | 493,915
|International Outdoor |  | $  | 7,207   |     | $ | 18,452  |  | $ | 33,774 

Restructuring Program

On January 20, 2009, CC Media Holdings announced that it had commenced a restructuring program targeting a reduction of fixed costs. For the three months ended June 30, 2009, we had recognized approximately
$8.1 million, $0.1 million and $1.9 million as components of direct operating expenses, selling, general and administrative (SG&A) expenses and corporate expenses, respectively, related to the restructuring program. For the six
months ended June 30, 2009, we had recognized approximately $13.0 million, $1.0 million and $3.0 million as components of direct operating expenses, SG&A expenses and corporate expenses, respectively, related to the restructuring program.

Format of Presentation

The
accompanying consolidated statements of operations and statements of cash flows are presented for two periods: post-merger and pre-merger. Preliminary purchase accounting adjustments, including goodwill, were pushed down to the opening balance sheet
on July 31, 2008 as Clear Channel Communications merger occurred at the close of business on July 30, 2008. The merger resulted in a new basis of accounting beginning on July 31, 2008 and the financial reporting periods are
presented as follows:



| |  |  | The three and six month periods ended June 30, 2009 reflect the post-merger period of the Company, including the purchase accounting adjustments related to the
merger that were pushed down to the Company.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The three and six month periods ended June 30, 2008 reflect the pre-merger period of the Company. The consolidated financial statements for all pre-merger
periods were prepared using the historical basis of accounting for the Company. As a result of the merger and the associated purchase accounting, the consolidated financial statements of the post-merger periods are not comparable to periods
preceding the merger.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There are several agreements which govern our relationship with Clear Channel Communications,
including the Corporate Services Agreement, Employee Matters Agreement and Tax Matters Agreement. Clear Channel Communications has the right to terminate these agreements in various circumstances. As of the date of the filing of this Quarterly
Report, no notice of termination of any of these agreements has been received from Clear Channel Communications. The terms and conditions of our agreements with Clear Channel Communications have not changed following the consummation of the merger
of Clear Channel Communications.

Description of Business

Our outdoor advertising business has been, and may continue to be, adversely impacted by the difficult economic conditions currently present in the United States and other countries in which we operate. The continuing
weakening economy has, among other things, adversely affected our clients need for advertising and marketing services, resulting in increased cancellations and non-renewals by our clients, thereby reducing our occupancy levels and could
require us to lower our rates in order to remain competitive, thereby reducing our yield, or affect our clients solvency. Any one or more of these effects could materially affect our business, financial condition and results of operations.

Our revenue is derived from selling advertising space on displays owned or operated by us, consisting primarily of billboards, street
furniture and transit displays. We own the majority of our advertising displays, which typically are located on sites that we either lease or own or for which we have acquired permanent easements. Our advertising contracts with clients typically
outline the number of displays reserved, the duration of the advertising campaign and the unit price per display.

Our advertising rates
are based on a number of different factors including location, competition, size of display, illumination, market and gross ratings points. Gross ratings points are the total number of impressions delivered by a display or group of displays,
expressed as a percentage of a market population. The number of impressions delivered by a display is measured by the number of people passing the site during a defined period of time and, in some international markets, is weighted to account for
such factors as illumination, proximity to other displays and the speed and viewing angle of approaching traffic. Management typically monitors our business by reviewing the average rates, average revenue per display, or yield, occupancy and
inventory levels of each of our display types by market. In addition, because a significant portion of our advertising operations are conducted in foreign markets, the largest being France and the United Kingdom, management reviews the operating
results from our foreign operations on a constant dollar basis. A constant dollar basis allows for comparison of operations independent of foreign exchange movements.



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The significant expenses associated with our operations include (i) direct production, maintenance
and installation expenses, (ii) site lease expenses for land under our displays and (iii) revenue-sharing or minimum guaranteed amounts payable under our billboard, street furniture and transit display contracts. Our direct production,
maintenance and installation expenses include costs for printing, transporting and changing the advertising copy on our displays, the related labor costs, the vinyl and paper costs and the costs for cleaning and maintaining our displays. Vinyl and
paper costs vary according to the complexity of the advertising copy and the quantity of displays. Our site lease expenses include lease payments for use of the land under our displays, as well as any revenue-sharing arrangements or minimum
guaranteed amounts payable that we may have with the landlords. The terms of our site leases and revenue-sharing or minimum guaranteed contracts generally range from one to 20 years.

In our International business, normal market practice is to sell billboards and street furniture advertising as network packages with contract terms
typically ranging from one to two weeks, compared to contract terms typically ranging from four weeks to one year in the United States. In addition, competitive bidding for street furniture and transit display contracts, which constitute a larger
portion of our International business, and a different regulatory environment for billboards, result in higher site lease cost in our International business compared to our Americas business. As a result, our margins are typically less in our
International business than in the Americas.

Our street furniture and transit display contracts, the terms of which range from three to 20
years, generally require us to make upfront investments in property, plant and equipment. These contracts may also include upfront lease payments and/or minimum annual guaranteed lease payments. We can give no assurance that our cash flows from
operations over the terms of these contracts will exceed the upfront and minimum required payments.

Relationship with Clear Channel Communications

We became a publicly traded company on November 11, 2005, through an initial public offering (IPO), in which we sold 10%
of our common stock, or 35.0 million shares of our Class A common stock. Prior to our IPO, we were an indirect wholly-owned subsidiary of Clear Channel Communications. Clear Channel Communications currently owns all of our outstanding
shares of Class B common stock, representing approximately 89% of the outstanding shares of our common stock and approximately 99% of the total voting power of our common stock.

In accordance with the Master Agreement, our branch managers follow a corporate policy allowing Clear Channel Communications to use, without charge,
Americas displays they believe would otherwise be unsold. Our sales personnel receive partial revenue credit for that usage for compensation purposes. This partial revenue credit is not included in our reported revenue. Clear Channel
Communications bears the cost of producing the advertising and we bear the costs of installing and removing this advertising. We estimated this discounted revenue would have been less than 1% of our Americas revenue for the three and six months
ended June 30, 2009 and 2008.

Under the Corporate Services Agreement, Clear Channel Communications provides management services to
us. These services are charged to us based on actual direct costs incurred or allocated by Clear Channel Communications based on headcount, revenue or other factors on a pro rata basis. For further discussion of these services, see Note 5 to the
consolidated financial statements in Item 1 of Part 1 of this Quarterly Report on Form 10-Q. For the three months ended June 30, 2009 and 2008, we recorded approximately $7.9 million and $5.6 million, respectively, as a component of
corporate expenses for these services. For the six months ended June 30, 2009 and 2008, we recorded approximately $14.2 million and $12.1 million, respectively, as a component of corporate expenses for these services.



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Share-Based Payments

As of June 30, 2009, there was $20.2 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This cost is expected to be
recognized over a weighted average period of approximately two years. The following table details compensation costs related to share-based payments for the three and six months ended June 30, 2009 and 2008:



|                                             |  |                            |       |                          |   |                 |  |                |       |  |   |      
|-------------------------------------------- |  | -------------------------- | ----- | ------------------------ | - | --------------- |  | -------------- | ----- |  | - | -----
|                                             |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|(In thousands)                               |  | 2009Post-merger            |       | 2008Pre-merger           |   | 2009Post-merger |  | 2008Pre-merger
|Direct operating expenses                    |  | $                          | 1,935 |                          | $ | 2,537           |  | $              | 4,004 |  | $ | 3,957
|Selling, general and administrative expenses |  |                            | 706   |                          |   | 913             |  |                | 1,461 |  |   | 1,423
|Corporate expenses                           |  |                            | 207   |                          |   | 331             |  |                | 429   |  |   | 509  
|                                             |  |                            |       |                          |   |                 |  |                |       |  |   |      
|Total share-based payments                   |  | $                          | 2,848 |                          | $ | 3,781           |  | $              | 5,894 |  | $ | 5,889
|                                             |  |                            |       |                          |   |                 |  |                |       |  |   |      

RESULTS OF OPERATIONS

Consolidated Results of Operations

The comparison of the Three and Six Months Ended June 30, 2009 to the Three and Six
Months Ended June 30, 2008 is as follows:



|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ------------------------ | - | ------- | ------- |  | --- | --------------- |  | - | -------------- | - |  | ------- | --------- | - |  | --- | --
|                                                                                |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30, |  
|(In thousands)                                                                  |  | 2009Post-merger            |          |   | 2008Pre-merger           |   |         | %Change |  |     | 2009Post-merger |  |   | 2008Pre-merger |   |  | %Change |          
|Revenue                                                                         |  | $                          | 692,117  |   |                          | $ | 914,808 |         |  | (24 | %)              |  | $ | 1,274,333      |   |  | $       | 1,690,387 |   |  | (25 | %)
|Operating expenses:                                                             |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Direct operating expenses                                                       |  |                            | 392,309  |   |                          |   | 490,244 |         |  | (20 | %)              |  |   | 771,917        |   |  |         | 961,078   |   |  | (20 | %)
|Selling, general and administrative expenses                                    |  |                            | 121,342  |   |                          |   | 151,034 |         |  | (20 | %)              |  |   | 239,106        |   |  |         | 295,644   |   |  | (19 | %)
|Depreciation and amortization                                                   |  |                            | 114,808  |   |                          |   | 104,764 |         |  | 10  | %               |  |   | 216,716        |   |  |         | 209,854   |   |  | 3   | % 
|Corporate expenses                                                              |  |                            | 15,653   |   |                          |   | 17,819  |         |  | (12 | %)              |  |   | 29,899         |   |  |         | 34,053    |   |  | (12 | %)
|Impairment charge                                                               |  |                            | 812,390  |   |                          |   |        |         |  |     |                 |  |   | 812,390        |   |  |         |          |   |  |     |   
|Other operating income - net                                                    |  |                            | 4,353    |   |                          |   | 6,100   |         |  |     |                 |  |   | 8,965          |   |  |         | 8,472     |   |  |     |   
|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Operating income (loss)                                                         |  |                            | (760,032 | ) |                          |   | 157,047 |         |  |     |                 |  |   | (786,730       | ) |  |         | 198,230   |   |  |     |   
|Interest expense (including interest on debt with Clear Channel Communications) |  |                            | 38,086   |   |                          |   | 37,581  |         |  |     |                 |  |   | 76,859         |   |  |         | 74,205    |   |  |     |   
|Equity in earnings (loss) of nonconsolidated affiliates                         |  |                            | (21,755  | ) |                          |   | 1,666   |         |  |     |                 |  |   | (24,048        | ) |  |         | 79,709    |   |  |     |   
|Other income (expense)  net                                                    |  |                            | (2,612   | ) |                          |   | (2,249  | )       |  |     |                 |  |   | (5,780         | ) |  |         | 10,298    |   |  |     |   
|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Income (loss) before income taxes                                               |  |                            | (822,485 | ) |                          |   | 118,883 |         |  |     |                 |  |   | (893,417       | ) |  |         | 214,032   |   |  |     |   
|Income tax benefit (expense):                                                   |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Current                                                                         |  |                            | (10,479  | ) |                          |   | (30,264 | )       |  |     |                 |  |   | (13,150        | ) |  |         | (25,363   | ) |  |     |   
|Deferred                                                                        |  |                            | 143,603  |   |                          |   | (9,723  | )       |  |     |                 |  |   | 125,851        |   |  |         | (22,524   | ) |  |     |   
|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Income tax benefit (expense)                                                    |  |                            | 133,124  |   |                          |   | (39,987 | )       |  |     |                 |  |   | 112,701        |   |  |         | (47,887   | ) |  |     |   
|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Consolidated net income (loss)                                                  |  | $                          | (689,361 | ) |                          | $ | 78,896  |         |  |     |                 |  | $ | (780,716       | ) |  | $       | 166,145   |   |  |     |   
|Amount attributable to noncontrolling interest                                  |  |                            | (263     | ) |                          |   | (1,451  | )       |  |     |                 |  |   | (3,738         | ) |  |         | (3,108    | ) |  |     |   
|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   
|Net income (loss) attributable to the Company                                   |  | $                          | (689,098 | ) |                          | $ | 80,347  |         |  |     |                 |  | $ | (776,978       | ) |  | $       | 169,253   |   |  |     |   
|                                                                                |  |                            |          |   |                          |   |         |         |  |     |                 |  |   |                |   |  |         |           |   |  |     |   

Revenue

Our revenue decreased $222.7 million during the second quarter of 2009 as compared to the second quarter of 2008. Our International revenue declined $153.3 million, with approximately $58.9 million from movements in
foreign exchange. Our Americas revenue declined $69.4 million, primarily from a decline in bulletin, poster and airport revenue.

Our
revenue decreased $416.1 million during the first six months of 2009 as compared to the same period of 2008. Our International revenue decreased $283.5 million, with approximately $119.8 million from movements in foreign exchange. Our Americas
revenue decreased $132.6 million primarily from a decline in bulletin, poster and airport revenue.



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##### Table of Contents

Direct Operating Expenses

Our direct operating expenses decreased $97.9 million during the second quarter of 2009 as compared to the second quarter of 2008. Direct operating expenses in the second quarter of 2009 include $8.1 million related
to restructuring. Our International segment contributed $85.7 million of the overall decrease, of which $38.7 million related to movements in foreign exchange. Americas direct operating expenses decreased $12.3 million primarily driven by decreased
site lease expenses.

Our direct operating expenses decreased $189.2 million during the first six months of 2009 as compared to the
same period of 2008. Direct operating expenses in the first six months of 2009 include $13.0 million related to restructuring. Our International segment contributed $165.5 million of the overall decrease, of which $84.0 million related to movements
in foreign exchange and the remainder of the decrease was driven by a decrease in site lease expenses. Americas direct operating expenses decreased $23.6 million primarily driven by decreased site lease expenses.

Selling, General and Administrative Expenses

Our SG&A expenses decreased $29.7 million during the second quarter of 2009 as compared to the same period of 2008. Our International SG&A expenses decreased $21.0 million primarily attributable to $10.9 million from movements in
foreign exchange. SG&A expenses decreased $8.7 million in our Americas segment, primarily related to a decline in sales commissions.

Our SG&A expenses decreased $56.5 million during the first six months of 2009 as compared to the same period of 2008. Our International SG&A expenses decreased $38.3 million primarily attributable to $25.1 million from movements in
foreign exchange. SG&A expenses decreased $18.2 million in our Americas segment primarily related to a decline in sales commissions.

Depreciation and Amortization

Depreciation and amortization increased $10.0 million during the three months ended
June 30, 2009 as compared to the same period of 2008. The increase was primarily due to a $9.0 million increase in accelerated depreciation related to the removal of various structures and $4.5 million related to the preliminary fair value
adjustments pushed down to us, partially offset by $6.0 million related to movements in foreign exchange.

Depreciation and amortization
increased $6.9 million during the six months ended June 30, 2009 as compared to the same period of 2008. The increase was primarily due to a $14.5 million increase in accelerated depreciation related to the removal of various structures and
$13.8 million related to the preliminary fair value adjustments pushed down to us, partially offset by $11.6 million related to movements in foreign exchange and a $6.9 million adjustment to amortization related to a change in the preliminary fair
value adjustment of transit and street furniture contracts.

Corporate Expenses

Corporate expenses decreased $2.2 million and $4.2 million during the three and six months ended June 30, 2009, respectively, as compared to the same
periods of 2008. Corporate expenses for the respective periods include $1.9 million and $3.0 million in restructuring charges. Offsetting the increase in expenses are declines in bonus expenses of $0.4 million and $1.5 million, respectively, and
favorable foreign exchange movements of $0.7 million and $1.9 million, respectively.

Other Operating Income  Net

The $4.4 million gain in other operating income  net for the three months ended June 30, 2009 primarily relates to a $1.3 million gain on the
sale of International assets. The $6.1 million gain for the three months ended June 30, 2008 consists of a $4.0 million gain on sale of office buildings in France and miscellaneous other items.

Other operating income  net for the six months ended June 30, 2009 was $9.0 million and primarily relates to items discussed above in addition
to a $3.2 million gain on the sale of International assets. During the first six months of 2008, we recorded a $4.0 million gain on sale of an office building in France and a $2.6 million gain on the exchange of Americas assets.

Interest Expense (Including Interest on Debt with Clear Channel Communications)

Interest expense increased $0.5 million and $2.7 million during the three and six months ended June 30, 2009, respectively, as compared to the same
periods of 2008. Interest expense is a function of the rate on the $2.5 billion note to Clear Channel Communications. The interest rate is based on Clear Channel Communications weighted average cost of debt, which fluctuated from 5.9% to 5.7%
in 2009 and from 5.6% to 5.9% in 2008. The weighted average interest rate was 5.7% and 5.9% at June 30, 2009 and 2008, respectively.



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Equity in Earnings (Loss) of Nonconsolidated Affiliates

Equity in earnings of nonconsolidated affiliates decreased $23.4 million and $103.8 million during the three and during the six months ended June 30,
2009, respectively, compared to the same periods of 2008. Included in equity in loss for the three and six months ended June 30, 2009 is a $19.7 million impairment of equity investments in our International segment.

Included in equity in earnings of nonconsolidated affiliates in the first six months of 2008 is a $75.6 million gain on the sale of Clear Channel
Communications 50% interest in Clear Channel Independent, a South African outdoor advertising company.

Other Income (Expense)  Net

Other income (expense)  net recorded in the three and six months ended June 30, 2009 primarily relates to foreign
exchange transaction gains/losses on short-term intercompany accounts.

Income Taxes

Three Months

Current tax expense for
the three months ended June 30, 2009 decreased $19.8 million compared to the same period of 2008, primarily due to a decrease in income (loss) before income taxes of $129.0 million, before considering the impairment charge of $812.4 million
recorded during the three months ended June 30, 2009. The effective tax rate for the three months ended June 30, 2009 decreased to 16.2% as compared to 33.6% for the same period of 2008, primarily due to the impairment charge on permanent
goodwill.

Deferred tax benefits of $143.6 million were recorded for the second quarter of 2009 as compared to deferred tax expense of $9.7
million for the same period of 2008 primarily due to deferred tax benefits of $143.6 million recorded in the second quarter of 2009 related to the impairment of certain indefinite-lived intangibles.

Six Months

Current tax expense for
the six months ended June 30, 2009 decreased $12.2 million compared to the same period of 2008 primarily due to a decrease in income (loss) before income taxes of $295.1 million, before considering the impairment charge of $812.4 million
recorded during the three months ended June 30, 2009. In addition, the Company recorded a valuation allowance of $22.0 million during the six months ended June 30, 2009 as a result of our inability to record tax benefits on net losses
generated in the current period. Due to the uncertainty of the future taxable income and limitations on net operating loss carryback claims allowed, we cannot realize tax assets which arose in the six months ended June 30, 2009 and may arise as
a result of future period net operating losses. Pursuant to the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (ASC 740-10-30), deferred tax valuation allowances would be required on those
tax assets. The effective tax rate for the six months ended June 30, 2009 decreased to 12.6% as compared to 22.4% for the same period of 2008, primarily due to the impairment charge on permanent goodwill.

Deferred tax benefits of $125.9 million were recorded for the six months ended June 30, 2009 as compared to deferred tax expense of $22.5 million for the
same period of 2008, primarily due to deferred tax benefits of $143.6 million recorded in the second quarter of 2009 related to the impairment of certain indefinite-lived intangibles.

Americas Results of Operations



|                                             |  |                            |         |                |   |         |                          |     |                |  |   |         |  |   |         |  |     |   
|-------------------------------------------- |  | -------------------------- | ------- | -------------- | - | ------- | ------------------------ | --- | -------------- |  | - | ------- |  | - | ------- |  | --- | --
|                                             |  | Three Months EndedJune 30, |         | %Change        |   |         | Six Months EndedJune 30, |     | %Change        | 
|(In thousands)                               |  | 2009Post-merger            |         | 2008Pre-merger |   |         | 2009Post-merger          |     | 2008Pre-merger | 
|Revenue                                      |  | $                          | 315,553 |                | $ | 384,978 |                          | (18 | %)             |  | $ | 585,740 |  | $ | 718,340 |  | (18 | %)
|Direct operating expenses                    |  |                            | 148,755 |                |   | 161,020 |                          | (8  | %)             |  |   | 293,635 |  |   | 317,265 |  | (7  | %)
|Selling, general and administrative expenses |  |                            | 51,398  |                |   | 60,057  |                          | (14 | %)             |  |   | 100,237 |  |   | 118,432 |  | (15 | %)
|Depreciation and amortization                |  |                            | 57,860  |                |   | 49,273  |                          | 17  | %              |  |   | 104,510 |  |   | 99,372  |  | 5   | % 
|                                             |  |                            |         |                |   |         |                          |     |                |  |   |         |  |   |         |  |     |   
|Operating income                             |  | $                          | 57,540  |                | $ | 114,628 |                          | (50 | %)             |  | $ | 87,358  |  | $ | 183,271 |  | (52 | %)
|                                             |  |                            |         |                |   |         |                          |     |                |  |   |         |  |   |         |  |     |   



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Three Months

Revenue declined approximately $69.4 million during the second quarter of 2009 compared to the same period of 2008 driven by a decline in bulletin, poster and airport revenues. The decline in bulletin, poster and
airport revenues was driven primarily by a decline in both occupancy and rate compared to the second quarter of 2008.

Direct operating
expenses decreased $12.3 million during the second quarter of 2009 compared to the same period of 2008 primarily from a $10.2 million decrease in site-lease expenses associated with our cost savings program and the decline in revenues, partially
offset by $2.9 million related to restructuring. SG&A expenses decreased $8.7 million during the second quarter of 2009 compared to the same period of 2008 mainly from a $3.5 million decline in commissions and a $2.4 million decline in
administrative expenses.

Depreciation and amortization increased $8.6 million primarily due to a $9.0 million increase in accelerated
depreciation related to the removal of various structures, partially offset by $0.4 million of various miscellaneous decreases.

Six
Months

Revenue declined approximately $132.6 million during the six months ended June 30, 2009 compared to the same period of 2008
driven by a decline in bulletin, poster and airport revenues. The decline in bulletin, poster and airport revenues was driven primarily by a decline in both occupancy and rate compared to the same period of 2008.

Direct operating expenses decreased $23.6 million during the six months ended June 30, 2009 compared to the same period of 2008 primarily from an
$18.5 million decrease in site-lease expenses associated with our cost savings program and the decline in revenues, partially offset by $4.6 million related to restructuring. SG&A expenses decreased $18.2 million during the six months ended
June 30, 2009 compared to the same period of 2008 mainly from a $7.1 million decline in commissions and a $6.7 million decline in administrative expenses, partially offset by $1.0 million related to restructuring.

Depreciation and amortization increased $5.1 million primarily due to a $14.5 million increase in accelerated depreciation related to the removal of
various structures, partially offset by a $6.9 million adjustment to amortization related to a change in the preliminary fair value adjustment of transit and street furniture contracts.

International Results of Operations



|                                             |  |                            |         |                |   |         |                           |     |         |                |   |         |   |  |   |         |  |      |   
|-------------------------------------------- |  | -------------------------- | ------- | -------------- | - | ------- | ------------------------- | --- | ------- | -------------- | - | ------- | - |  | - | ------- |  | ---- | --
|                                             |  | Three Months EndedJune 30, |         | %Change        |   |         | Six Months Ended June 30, |     | %Change |               
|(In thousands)                               |  | 2009Post-merger            |         | 2008Pre-merger |   |         | 2009Post-merger           |     |         | 2008Pre-merger |  
|Revenue                                      |  | $                          | 376,564 |                | $ | 529,830 |                           | (29 | %)      |                | $ | 688,593 |   |  | $ | 972,047 |  | (29  | %)
|Direct operating expenses                    |  |                            | 243,554 |                |   | 329,224 |                           | (26 | %)      |                |   | 478,282 |   |  |   | 643,813 |  | (26  | %)
|Selling, general and administrative expenses |  |                            | 69,944  |                |   | 90,977  |                           | (23 | %)      |                |   | 138,869 |   |  |   | 177,212 |  | (22  | %)
|Depreciation and amortization                |  |                            | 56,948  |                |   | 55,491  |                           | 3   | %       |                |   | 112,206 |   |  |   | 110,482 |  | 2    | % 
|                                             |  |                            |         |                |   |         |                           |     |         |                |   |         |   |  |   |         |  |      |   
|Operating income (loss)                      |  | $                          | 6,118   |                | $ | 54,138  |                           | (89 | %)      |                | $ | (40,764 | ) |  | $ | 40,540  |  | (201 | %)
|                                             |  |                            |         |                |   |         |                           |     |         |                |   |         |   |  |   |         |  |      |   

Three Months

Revenue decreased approximately $153.3 million during the second quarter of 2009 compared to the same period of 2008, including the negative impact of foreign exchange of $58.9 million. The revenue decline occurred
across most countries, with the most significant declines due to the challenging advertising markets in France and the U.K. of $18.5 million and $13.2 million, respectively.

Direct operating expenses decreased $85.7 million primarily from a decrease of $38.7 million from movements in foreign exchange. The remaining decline
was primarily attributable to a $25.0 million due to the impact of the cost reduction program and the decline in revenues, and was partially offset by $5.2 million related to restructuring. SG&A expenses decreased $21.0 million principally from
$10.9 million related to movements in foreign exchange and $4.8 million related to a decline in compensation expense.



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Six Months

Revenue decreased approximately $283.5 million during the six months ended June 30, 2009 compared to the same period of 2008, including the negative impact of foreign exchange of $119.8 million. The revenue
decline occurred across most countries, with the most significant decline in France of $46.9 million, primarily from the loss of a contract for advertising on railway land, and lower revenues in Italy and the U.K due to challenging advertising
markets.

Direct operating expenses decreased $165.5 million primarily from a decrease of $84.0 million from movements in foreign exchange.
The remaining decline was primarily attributable to a $52.2 million decline in site-lease expenses partially as a result of the loss of the rail contract discussed above as well as the decline in revenues, and was partially offset by $8.4 million
related to restructuring. SG&A expenses decreased $38.3 million principally from $25.1 million related to movements in foreign exchange and $7.9 million related to a decline in compensation expense.

Reconciliation of Segment Operating Income (Loss)



|                                     |  |                            |          |   |                          |   |         |                 |  |   |                |   |  |   |         |  
|------------------------------------ |  | -------------------------- | -------- | - | ------------------------ | - | ------- | --------------- |  | - | -------------- | - |  | - | ------- | -
|                                     |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30, |  
|(In thousands)                       |  | 2009Post-merger            |          |   | 2008Pre-merger           |   |         | 2009Post-merger |  |   | 2008Pre-merger |  
|Americas                             |  | $                          | 57,540   |   |                          | $ | 114,628 |                 |  | $ | 87,358         |   |  | $ | 183,271 |  
|International                        |  |                            | 6,118    |   |                          |   | 54,138  |                 |  |   | (40,764        | ) |  |   | 40,540  |  
|Corporate expenses                   |  |                            | (15,653  | ) |                          |   | (17,819 | )               |  |   | (29,899        | ) |  |   | (34,053 | )
|Impairment charge                    |  |                            | (812,390 | ) |                          |   |        |                 |  |   | (812,390       | ) |  |   |        |  
|Other operating income  net         |  |                            | 4,353    |   |                          |   | 6,100   |                 |  |   | 8,965          |   |  |   | 8,472   |  
|                                     |  |                            |          |   |                          |   |         |                 |  |   |                |   |  |   |         |  
|Consolidated operating income (loss) |  | $                          | (760,032 | ) |                          | $ | 157,047 |                 |  | $ | (786,730       | ) |  | $ | 198,230 |  
|                                     |  |                            |          |   |                          |   |         |                 |  |   |                |   |  |   |         |  

LIQUIDITY AND CAPITAL RESOURCES

Clear Channel Communications Merger

Clear Channel Communications capitalization,
liquidity and capital resources substantially changed due to the consummation of its merger on July 30, 2008. Upon the closing of the merger, Clear Channel Communications incurred additional debt and became highly leveraged. We are not a
borrower under Clear Channel Communications credit agreements other than for direct borrowings by certain of our International subsidiaries under the $150.0 million sub-limit included in Clear Channel Communications $2.0 billion
revolving credit facility and we are not a guarantor of Clear Channel Communications debt. As of June 30, 2009, the outstanding balance on the sub-limit was approximately $150.0 million of which $30 million was drawn by us and the
remaining amount drawn by Clear Channel Communications.

Our Company and our consolidated subsidiaries are restricted subsidiaries under
Clear Channel Communications credit agreements and are therefore subject to various restrictions contained therein. The interest rate we pay on our $2.5 billion promissory note is based on Clear Channel Communications weighted average
cost of debt, which was impacted due to the consummation of Clear Channel Communications merger. As such, our future interest expense would be effected by, among other events, another change in Clear Channel Communications
capitalization, liquidity and capital resources. To the extent we cannot pass on our increased borrowing costs to our clients, our profitability, and potentially our ability to raise capital, could be materially affected.

Under our Master Agreement with Clear Channel Communications and the $2.5 billion note payable to Clear Channel Communications, we are limited in our
indebtedness from third parties to no more than $400.0 million. Certain of our International subsidiaries have access to borrowings under a $150.0 million sub-limit included in Clear Channel Communications multicurrency $2.0 billion revolving
credit facility with a maturity in July 2014, to the extent Clear Channel Communications has not already borrowed against this capacity and is in compliance with its covenants under the revolving credit facility. The obligations of these
International subsidiaries that are borrowers under the revolving credit facility are guaranteed by certain of our material wholly-owned subsidiaries, and secured by substantially all of the assets of such borrowers and guarantors, subject to
permitted liens and other exceptions.

The interest rate on outstanding balances under the revolving credit facility is based upon LIBOR
or, for Euro denominated borrowings, EURIBOR, plus, in each case, a margin, which margin is generally higher than the margin under Clear Channel Communications credit facility terminated in connection with the merger. See the discussion below
under Sources of Capital 



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Credit Facility. A deterioration in the financial condition of Clear Channel Communications or borrowings by Clear Channel Communications under the
$150.0 million sub-limit could also further increase our borrowing costs or impair our access to capital markets because of our reliance on Clear Channel Communications for availability under this revolving credit facility.

Also, so long as Clear Channel Communications maintains a significant interest in us, pursuant to the Master Agreement between Clear Channel
Communications and us, Clear Channel Communications will have the option to limit our ability to incur debt or issue equity securities, which could adversely affect our ability to meet our liquidity needs.

Clear Channel Communications corporate credit and issue-level ratings were downgraded on June 8, 2009 by Standard & Poors
Ratings Services. Clear Channel Communications corporate credit rating was lowered to CCC from B-. These ratings were removed from credit watch, where they were placed with negative implications on May 4,
2009. This recent downgrade had no impact on Clear Channel Communications borrowing costs under the credit agreements.

In
addition, Clear Channel Communications long-term corporate credit rating was downgraded on August 4, 2009 by Standard & Poors Ratings Services. Clear Channel Communications corporate credit rating was lowered to
CC from CCC. This recent downgrade had no impact on Clear Channel Communications borrowing costs under the credit agreements.

We have a revolving promissory note issued by Clear Channel Communications to us in the amount of $488.2 million as of June 30, 2009 described more fully below. We are an unsecured creditor of Clear Channel
Communications with respect to the revolving promissory note.

Cash Flows

The following table summarizes our historical cash flows:



|                            |  |                           |         |   |                |   |          |  
|--------------------------- |  | ------------------------- | ------- | - | -------------- | - | -------- | -
|                            |  | Six Months Ended June 30, |        
|(In thousands)              |  | 2009Post-merger           |         |   | 2008Pre-merger |  
|Cash provided by (used in): |  |                           |         |   |                |   |          |  
|Operating activities        |  | $                         | 139,651 |   |                | $ | 246,119  |  
|Investing activities        |  | $                         | (61,112 | ) |                | $ | (217,698 | )
|Financing activities        |  | $                         | (64,391 | ) |                | $ | (86,436  | )

Operating Activities:

Net cash provided by operating activities of $139.7 million for the six months ended June 30, 2009 reflects a consolidated net loss of $780.7 million
adjusted for non-cash impairment charges of $812.4 million related to goodwill and intangible assets and depreciation and amortization of $216.7 million. In addition, we recorded a $24.0 million loss in equity of nonconsolidated affiliates primarily
due to a $19.7 million impairment of equity investments in our International segment. Net cash provided by operating activities was partially offset by deferred taxes of $125.9 million.

Net cash provided by operating activities of $246.1 million for the six months ended June 30, 2008 principally reflected net income of $166.1
million and depreciation and amortization of $209.9 million. In addition, in 2008 we recorded a $75.6 million gain in equity in earnings of nonconsolidated affiliates related to the sale of our 50% interest in Clear Channel Independent based on the
fair value of the equity securities received as consideration.

Investing Activities:

For the six months ended June 30, 2009, we spent $34.3 million in our Americas segment for the purchase of property, plant and equipment mostly
related to the construction of new billboards. We spent $32.5 million in our International segment for the purchase of property, plant and equipment related to new billboard and street furniture contracts and renewals of existing contracts. Our
Americas segment paid $5.0 million, primarily for the acquisition of land and buildings. Our International segment paid $0.1 million primarily related to the acquisition of additional equity interests in outdoor companies and the acquisition of
advertising structures. We also received proceeds of $4.9 million from the sale of international assets and $3.6 million from the sale of Americas assets.

For the six months ended June 30, 2008, we spent $71.8 million in our Americas segment for the purchase of property, plant and equipment mostly related to the construction of new billboards. We spent $101.5
million in our International segment for the purchase of property, plant and equipment related to new billboard and street furniture contracts and renewals of existing contracts.



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Our Americas segment paid $45.9 million for the acquisition of advertising structures and the final earnout payments for Interspace Airport Advertising,
which we acquired in July 2006. Our International segment paid $37.7 million primarily related to the acquisition of additional equity interests in outdoor companies and the acquisition of advertising structures. We also received proceeds of $30.3
million from the sale of international assets and $4.5 million from the sale of Americas assets.

Financing Activities:

Net cash used in financing activities of $64.4 million for the six months ended June 30, 2009 reflects a net reduction in debt and credit
facilities of $5.9 million and net transfers of cash to Clear Channel Communications of $45.5 million. The net transfers of cash to Clear Channel Communications represent the activity in the Due from/to Clear Channel Communications
account. This activity primarily relates to working capital and settlement of interest on the cash management notes and the $2.5 billion note payable to Clear Channel Communications. In addition, we purchased the remaining 15% interest in our fully
consolidated subsidiary, Paneles Napsa S.A., for $13.0 million.

Net cash used in financing activities of $86.4 million for the six months
ended June 30, 2008 reflected a net reduction in debt of $88.8 million and net transfers of cash to Clear Channel Communications of $1.6 million. The net transfers of cash to Clear Channel Communications represent the activity in the Due
from/to Clear Channel Communications account. This activity primarily relates to working capital and settlement of interest on the cash management notes and the $2.5 billion note payable to Clear Channel Communications.

Anticipated Cash Requirements

Our
primary source of liquidity is cash flow from operations, which has been adversely affected by the global economic downturn. The risks associated with our businesses become more acute in periods of a slowing economy or recession, which may be
accompanied by a decrease in advertising. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. The current global economic downturn has resulted in a decline in advertising and
marketing services among our customers, resulting in a decline in our advertising revenues across our businesses. This reduction in advertising revenues has had an adverse effect on our revenue, profit margins, cash flow and liquidity. The
continuation of the global economic downturn may continue to adversely impact our revenue, profit margins, cash flow and liquidity.

As of
June 30, 2009, based on our current and anticipated levels of operations and conditions in our markets, we believe that cash on hand, cash flows from operations and borrowing under the cash management note with Clear Channel Communications will
enable us to meet our working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months. Clear Channel Communications ability to meet its obligations with respect to the Due from Clear
Channel Communications account depends on its working capital needs, debt service obligations and its future operating performance and cash flow, which are in turn subject to prevailing economic conditions and other factors, many of which are
beyond its control. The inability of Clear Channel Communications to meet its obligations with respect to the Due from Clear Channel Communications account could have a material adverse effect on the Companys financial condition
and on the Companys ability to meet its obligations.

Upon the maturity of the $2.5 billion note to Clear Channel Communications on
August 2, 2010, if our cash flow and capital resources are insufficient to service our debt obligations, we may be forced to sell assets, seek additional equity or debt capital or restructure our indebtedness. On June 2, 2009, we announced that
we are actively pursuing alternatives to address the maturity of the $2.5 billion note to Clear Channel Communications. The alternatives may include an offering of new senior or senior subordinated notes for cash or an exchange of new senior or
subordinated notes for outstanding indebtedness, with the intention of any such transaction being to refinance the $2.5 billion note to Clear Channel Communications. However, given the current economic climate, these measures might be unsuccessful
or inadequate in permitting us to meet scheduled debt obligations. In light of the current credit environment, we may be unable to restructure or refinance our obligations and obtain additional equity financing or sell assets on satisfactory terms
or at all. As a result, our inability to meet our debt obligations could cause us to default on those obligations. A default under any debt instrument could, in turn, result in defaults under other debt instruments. Any such defaults could
materially impair our financial condition, liquidity and results of operations.

We expect to be in compliance with the covenants governing
our indebtedness in 2009. However, our anticipated results are subject to significant uncertainty and there can be no assurance that actual results will be in compliance with the covenants. In addition, our ability to comply with the covenants
governing our indebtedness may be affected by events beyond our control, including prevailing economic, financial and industry conditions.

Furthermore, in its Quarterly Report on Form 10-Q filed with the SEC on August 10, 2009, CC Media Holdings, our indirect parent, stated that it expects to be in compliance with the covenants under Clear Channel Communications
senior secured credit facilities in 2009. CC Media Holdings similarly stated in such Quarterly Report that its anticipated results are also subject to significant uncertainty and there can be no assurance that actual results will be in compliance
with the covenants. Moreover, CC



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Media Holdings stated in such Quarterly Report that its ability to comply with the covenants in Clear Channel Communications financing agreements may
be affected by events beyond CC Media Holdings control, including prevailing economic, financial and industry conditions. As discussed therein, the breach of any covenants set forth in Clear Channel Communications 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 due and payable prior to maturity. Moreover, as discussed therein, the lenders
under the revolving credit facility under Clear Channel Communications senior secured credit facilities would have the option to terminate their commitments to make further extensions of revolving credit thereunder. In addition, CC Media
Holdings stated in such Quarterly Report that if CC Media Holdings is unable to repay Clear Channel Communications obligations under any senior secured credit facilities or the receivables based credit facility, the lenders under such senior
secured credit facilities or receivables based credit facility could proceed against any assets that were pledged to secure such senior secured credit facilities or receivables based credit facility. Finally, CC Media Holdings stated in such
Quarterly Report that a default or acceleration under any of Clear Channel Communications financing agreements could cause a default under other obligations that are subject to cross-default and cross-acceleration provisions.

Our ability to fund our working capital needs, debt service and other obligations depends on our future operating performance and cash flow and Clear
Channel Communications ability to meet its obligations with respect to the Due from Clear Channel Communications account and to lend under the cash management note, which are in turn subject to prevailing economic conditions and
other factors, many of which are beyond our and Clear Channel Communications control. 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. Continuing adverse securities and credit market conditions could significantly affect the availability of credit. In addition, the $2.5 billion note and Master Agreement with Clear Channel Communications include
restrictive covenants that, among other things, restrict our ability to incur additional indebtedness.

For so long as Clear Channel
Communications maintains significant control over us, a deterioration in the financial condition of Clear Channel Communications could have the effect of increasing our borrowing costs or impairing our access to capital markets. Clear Channel
Communications ability to meet its obligations with respect to the Due from Clear Channel Communications account depends on its working capital needs, debt service obligations and its future operating performance and cash flow,
which are in turn subject to prevailing economic conditions and other factors, many of which are beyond its control. The inability of Clear Channel Communications to meet its obligations with respect to the Due from Clear Channel
Communications account could have a material adverse effect on our financial condition and on our ability to meet our obligations. Neither the $2.5 billion term note payable to Clear Channel Communications nor the Due from Clear Channel
Communications note contain in their terms a right of offset. As of June 30, 2009, Clear Channel Communications had $1.5 billion recorded as Cash and cash equivalents on its consolidated balance sheets.

SOURCES OF CAPITAL

As of June 30, 2009 and December 31,
2008, we had the following debt outstanding, cash and cash equivalents and amounts due from Clear Channel Communications:



|                                                                                                                       |  |              |         |                  |   |        
|---------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|(In millions)                                                                                                          |  | June 30,2009 |         | December 31,2008
|Credit facility ($150.0 million sub-limit within Clear Channel Communications $2.0 billion revolving credit facility) |  | $            | 30.0    |                  | $ | 30.0   
|Debt with Clear Channel Communications                                                                                 |  |              | 2,500.0 |                  |   | 2,500.0
|Other debt                                                                                                             |  |              | 68.4    |                  |   | 71.9   
|                                                                                                                       |  |              |         |                  |   |        
|Total debt                                                                                                             |  |              | 2,598.4 |                  |   | 2,601.9
|Less: Cash and cash equivalents                                                                                        |  |              | 104.6   |                  |   | 94.8   
|Less: Due from Clear Channel Communications                                                                            |  |              | 488.2   |                  |   | 431.6  
|                                                                                                                       |  |              |         |                  |   |        
|                                                                                                                       |  | $            | 2,005.6 |                  | $ | 2,075.5
|                                                                                                                       |  |              |         |                  |   |        

The Company may from time to time repay its outstanding debt or seek to purchase its outstanding equity
securities. Such transactions, if any, will depend on prevailing market conditions, the Companys liquidity requirements, contractual restrictions and other factors.



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Credit Facility ($150 million sub-limit within Clear Channel Communications $2.0 billion revolving credit
facility)

In addition to net cash flows from operations, another source of liquidity is through borrowings under a $150.0 million
sub-limit included in Clear Channel Communications multicurrency $2.0 billion revolving credit facility with a maturity in July 2014. Certain of our International subsidiaries may borrow under the sub-limit to the extent Clear Channel
Communications has not already borrowed against this capacity and is in compliance with its covenants under the revolving credit facility. The obligations of these International subsidiaries that are borrowers under the revolving credit facility are
guaranteed by certain of our material wholly-owned subsidiaries, and secured by substantially all of the assets of such borrowers and guarantors, subject to permitted liens and other exceptions.

The interest rate on outstanding balances under the revolving credit facility is equal to an applicable margin plus, at Clear Channel
Communications option, either (i) a base rate determined by reference to the higher of (A) the prime lending rate publicly announced by the administrative agent and (B) the federal funds effective rate from time to time plus
0.50%, or (ii) a Eurocurrency rate determined by reference to the costs of funds for deposits for the interest period relevant to such borrowing adjusted for certain additional costs. The applicable margin percentage is 2.40% in the case of
base rate loans, and 3.40% in the case of Eurocurrency rate loans, subject to downward adjustments based upon Clear Channel Communications leverage ratio. At June 30, 2009, the interest rate on borrowings under the revolving credit
facility was 3.8%. At August 7, 2009, the outstanding balance on this sub-limit was $30.0 million, and no amount was available for future borrowings, due to the fact that Clear Channel Communications has borrowed the remaining amount available
under this facility.

Debt with Clear Channel Communications

As part of the day-to-day cash management services provided by Clear Channel Communications, we maintain accounts that represent net amounts due to or from Clear Channel Communications, which is recorded as Due
from/to Clear Channel Communications on the consolidated balance sheet. The accounts represent the revolving promissory note issued by us to Clear Channel Communications and the revolving promissory note issued by Clear Channel Communications
to us 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 and are generally payable on demand. Interest on the cash management note owed by us
accrues on the daily net negative cash position based upon LIBOR plus a margin. Interest on the cash management note owed by Clear Channel Communications accrues on the daily net positive cash position based upon the average one-month generic
treasury bill rate. Included in the accounts are the net activities resulting from day-to-day cash management services provided by Clear Channel Communications. As a part of these services, we maintain collection bank accounts swept daily into
accounts of Clear Channel Communications. In return, Clear Channel Communications funds our controlled disbursement accounts as checks or electronic payments are presented for payment. Our claim in relation to cash transferred from our concentration
account is on an unsecured basis and is limited to the balance of the Due from Clear Channel Communications account. If Clear Channel Communications were to become insolvent, we would be an unsecured creditor of Clear Channel
Communications with respect to the revolving promissory note issued by Clear Channel Communications to us. At June 30, 2009 and December 31, 2008, the asset recorded in Due from Clear Channel Communications on the consolidated
balance sheet was $488.2 million and $431.6 million, respectively. At June 30, 2009, we had no borrowings under the cash management note to Clear Channel Communications.

The net interest income for the three months ended June 30, 2009 and 2008 was $0.1 million and $0.7 million, respectively. The net interest income
for the six months ended June 30, 2009 and 2008 was $0.2 million and $2.2 million, respectively. At June 30, 2009 and 2008, the interest rate on the Due from Clear Channel Communications account was 0.09% and 1.69%,
respectively, which represents the average one-month generic treasury bill rate as described above.

We met our liquidity needs during the
first six months of 2009 primarily through our cash flows from operations, with the balance in the Due from Clear Channel Communications account increasing over the balance at December 31, 2008. We are evaluating our short-term
liquidity and capital expenditure needs as well as our long-term financing needs relating to the maturity of the $2.5 billion Debt with Clear Channel Communications discussed below. As a result of this process, we determined that
classification of the Due from Clear Channel Communications account as a long term asset is appropriate at June 30, 2009. The terms and conditions of the revolving promissory note issued by Clear Channel Communications to us have
not changed.

Unlike the management of cash from our U.S. based operations, the amount of cash, if any, which is transferred from our
foreign operations to Clear Channel Communications is determined on a basis mutually agreeable to us and Clear Channel Communications, and not on a pre-determined basis. In arriving at such mutual agreement, the reasonably foreseeable cash needs of
our foreign operations are evaluated before a cash amount is considered as an excess or surplus amount for transfer to Clear Channel Communications.

We have a note in the original principal amount of $2.5 billion to Clear Channel Communications which matures on August 2, 2010 and may be prepaid in whole at any time, or in part from time to time. The note
accrues interest at a variable per annum rate equal to Clear Channel Communications weighted average cost of debt, calculated on a monthly basis. This note is mandatorily payable upon our change of control (as defined in the note) and, subject
to certain exceptions, all net proceeds from debt or equity raised by us must be used to prepay such note. At June 30, 2009, the interest rate on the $2.5 billion note was 5.7%.



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Upon the maturity of such note with Clear Channel Communications, if our cash flow and capital resources
are insufficient to service our debt obligations, we may be forced to sell assets, seek additional equity or debt capital or restructure our indebtedness. On June 2, 2009, we announced that we are actively pursuing alternatives to address the
maturity of the $2.5 billion note to Clear Channel Communications. The alternatives may include an offering of new senior or senior subordinated notes for cash or an exchange of new senior or subordinated notes for outstanding indebtedness, with the
intention of any such transaction being to refinance the $2.5 billion note to Clear Channel Communications. However, given the current economic climate, these measures might be unsuccessful or inadequate in permitting us to meet scheduled debt
service obligations. In light of the current credit environment, we may be unable to restructure or refinance our obligations and obtain additional equity financing or sell assets on satisfactory terms or at all. As a result, our inability to meet
our debt obligations could cause us to default on those obligations. A default under any debt instrument could, in turn, result in defaults under other debt instruments. Any such defaults could materially impair our financial condition, liquidity
and results of operations.

Our working capital requirements and capital for general corporate purposes, including acquisitions and capital
expenditures, may be provided to us by Clear Channel Communications, in its sole discretion, pursuant to a cash management note issued by us to Clear Channel Communications. Without the opportunity to obtain financing from Clear Channel
Communications, we may need to obtain additional financing from banks, or through public offerings or private placements of debt, strategic relationships or other arrangements at some future date. As stated above, we may be unable to successfully
obtain additional debt or equity financing on satisfactory terms or at all.

As long as Clear Channel Communications maintains a
significant interest in us, pursuant to the Master Agreement between Clear Channel Communications and us, Clear Channel Communications will have the option to limit our ability to incur debt or issue equity securities, which could adversely affect
our ability to meet our liquidity needs. In addition, the $2.5 billion note requires us to prepay it in full upon a change of control (as defined in the note) and, upon our issuances of equity and incurrence of debt, subject to certain exceptions,
to prepay the note in the amount of net proceeds received from such events. Under the Master Agreement with Clear Channel Communications and the $2.5 billion note, we are limited in our borrowing from third parties to no more than $400.0 million
(including borrowings under the $150.0 million sub-limit of Clear Channel Communications $2.0 billion revolving credit facility). As a result of current borrowings and commitments, we were limited to approximately $171.6 million in additional
external borrowings as of June 30, 2009.

Other Debt

Other debt consists primarily of loans with international banks. At June 30, 2009, approximately $68.4 million was outstanding as other debt.

Debt Covenants

The $2.5 billion note requires us to comply with various negative covenants,
including restrictions on the following activities: incurring consolidated funded indebtedness (as defined in the note), excluding intercompany indebtedness, in a principal amount in excess of $400.0 million at any one time outstanding;
creating liens; making investments; entering into sale and leaseback transactions (as defined in the note), which when aggregated with consolidated funded indebtedness secured by liens, will not exceed an amount equal to 10% of our total
consolidated shareholders equity (as defined in the note) as shown on our most recently reported annual audited consolidated balance sheet; disposing of all or substantially all of our assets; entering into mergers and consolidations;
declaring or making dividends or other distributions; making certain repurchases of our equity; and entering into transactions with our affiliates.

In addition, the note requires us to prepay it in full upon a change of control. The note defines a change of control to occur when Clear Channel Communications ceases to control (i) directly or indirectly, more than 50% of the
aggregate voting equity interests of us, our operating subsidiary or our respective successors or assigns, or (ii) the ability to elect a majority of our Board of Directors, or the Board of Directors of our operating subsidiary or our
respective successors or assigns. Upon our issuances of equity and incurrences of debt, subject to certain exceptions, we are also required to prepay the note in the amount of the net proceeds received by us from such events.

Clear Channel Communications senior secured credit facilities, of which the $2.0 billion revolving credit facility comprises a part, requires Clear
Channel Communications to comply on a quarterly basis with a maximum consolidated senior secured net debt to adjusted EBITDA (as calculated in accordance with the senior secured credit facilities) ratio (maximum of 9.5:1). This financial covenant
becomes more restrictive over time beginning in the second quarter of 2013. In its Quarterly Report on Form 10-Q filed with the SEC on August 10, 2009, CC Media Holdings stated that its secured leverage, defined as secured debt, net of cash,
divided by the trailing 12-month consolidated EBITDA (as calculated in accordance with the senior secured credit facilities) was 8.1:1 at June 30, 2009.



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There are no significant covenants or events of default contained in the cash management note issued by
Clear Channel Communications to us or the cash management note issued by us to Clear Channel Communications.

At June 30, 2009, we
were in compliance with all debt covenants.

Dispositions and Other

During the six months ended June 30, 2009, we sold international assets for $4.9 million resulting in a gain of $5.0 million. In addition, we sold
assets for $3.6 million in the Americas and recorded a gain of $2.9 million in Other operating income  net.

USES OF CAPITAL

Acquisitions

During the six
months ended June 30, 2009, our Americas segment paid $5.0 million in cash for the acquisition of land and buildings. In addition, our International segment paid $0.1 million, primarily related to the acquisition of additional equity interests
in an outdoor company and the acquisition of advertising structures. Additionally, our Companys Americas segment purchased the remaining 15% interest in our fully consolidated subsidiary, Paneles Napsa S.A., for $13.0 million.

Capital Expenditures

Our capital expenditures
have consisted of the following:



|                           |  |                           |      |                |   |      
|-------------------------- |  | ------------------------- | ---- | -------------- | - | -----
|                           |  | Six Months Ended June 30,
|(In millions)              |  | 2009Post-merger           |      | 2008Pre-merger
|Non-revenue producing      |  | $                         | 17.7 |                | $ | 43.4 
|Revenue producing          |  |                           | 49.1 |                |   | 129.9
|                           |  |                           |      |                |   |      
|Total capital expenditures |  | $                         | 66.8 |                | $ | 173.3
|                           |  |                           |      |                |   |      

We define non-revenue producing capital expenditures as those expenditures required on a recurring
basis. Revenue producing capital expenditures are discretionary capital investments for new revenue streams, similar to an acquisition.

Commitments,
Contingencies and Guarantees

From time to time, we are involved in legal proceedings arising in the ordinary course of business.
Under our agreements with Clear Channel Communications, we have assumed and will indemnify Clear Channel Communications for liabilities related to our business. Other than as described in our Annual Report on Form 10-K for the year ended
December 31, 2008 and Note 3 of the Notes to the Consolidated Financial Statements in Item 1 of Part 1 of this Quarterly Report on Form 10-Q, we do not believe there is any litigation pending that would have, individually or in the
aggregate, a material adverse effect on our financial position, results of operations or cash flow.

Certain agreements relating to
acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired company generally over a one to five-year period. We will continue to accrue additional amounts related to
such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets are met, would not significantly impact our financial position,
results of operations or cash flow.

Seasonality

Typically, both our Americas and International segments experience their lowest financial performance in the first quarter of the calendar year, with International typically experiencing a loss from operations in this
period. Our Americas segment typically experiences consistent performance in the remainder of our calendar year. Our International segment typically experiences its strongest performance in the second and fourth quarters of our calendar year. We
expect this trend to continue in the future.



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Inflation

Inflation is a factor in the economies in which we do business and we continue to seek ways to mitigate its effect. Although the exact impact of inflation is indeterminable, to the extent permitted by competition, we
pass increased costs on to our customers by increasing our effective advertising rates over time.

MARKET RISK

We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates, equity security prices and foreign
currency exchange rates.

Interest Rate Risk

We had approximately $2.6 billion total debt outstanding as of June 30, 2009, of which $2.5 billion is debt with Clear Channel Communications. The debt with Clear Channel Communications accrues interest at a
variable per annum rate equal to the weighted average cost of debt for Clear Channel Communications, calculated on a monthly basis. Furthermore, in its Quarterly Report on Form 10-Q filed with the SEC on August 10, 2009 CC Media Holdings stated
that 46% of its debt was variable based on market interest rates. Each 50 basis point increase or decrease in interest rates would have resulted in a corresponding increase or decrease in our interest expense and cash outlay for the six months ended
June 30, 2009 of approximately $3.1 million. This potential increase or decrease is based on the simplified assumption that the level of floating rate debt remained constant as of June 30, 2009. An increase or decrease to interest rates is
then assumed and applied to that floating rate debt balance to determine the per annum effect. This potential increase or decrease does not include any adjustment for a change in the fixed rate debt of Clear Channel Communications, which currently
constitutes 54% of its total debt.

Equity Price Risk

The carrying value of our available-for-sale equity securities is affected by changes in their quoted market prices. It is estimated that a 20% change in the market prices of these securities would change their
carrying value and comprehensive loss at June 30, 2009 by $2.7 million. For a further discussion of our available-for-sale equity securities, see Note 3 to the Consolidated Financial Statements in Item 1 of Part 1 of this Quarterly Report
on Form 10-Q.

Foreign Currency Exchange Rate Risk

We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies, except in the hyper-inflationary countries in which we operate. 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 operate. 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 approximately $192.2 million for the six months ended June 30, 2009. We estimate a 10% change
in the value of the U.S. dollar relative to foreign currencies would have changed our net loss for the six months ended June 30, 2009, by approximately $19.2 million.

Our earnings are also affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies as a result of our equity method
investments in various countries. It is estimated that the result of a 10% fluctuation in the value of the dollar relative to these foreign currencies at June 30, 2009 would change our equity in earnings of nonconsolidated affiliates by $2.4
million and would change our net loss by approximately $1.5 million for the six months ended June 30, 2009.

This analysis does not
consider the implications such currency fluctuations could have on the overall economic activity that could exist in such an environment in the United States or the foreign countries or on the results of operations of these foreign entities.

New Accounting Pronouncements

Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTMand the Hierarchy of Generally Accepted Accounting Principles(Statement
No. 168), was issued in June 2009. Statement No. 168 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP in the United States. Statement No. 168 establishes the codification as the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Statement No. 168 shall be
effective for financial statements issued for interim and annual periods ending after September 15, 2009. We adopted the provisions of Statement No. 168 on July 1, 2009 and have updated its references to specific GAAP literature
parenthetically to reflect the codification.

Statement of Financial Accounting Standards
No. 167, Amendments to FASB Interpretation No. 46(R)(Statement No. 167), was issued in June 2009. Statement No. 167 shall be effective as of the beginning of each reporting entitys first annual reporting
period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. Statement No. 167 amends Financial
Accounting Standards Board



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Interpretation No. 46(R), Consolidation of Variable Interest Entities (Interpretation No. 46(R) or ASC 810-10-25), to replace
the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the
activities of a variable interest entity that most significantly impact the entitys economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is
expected to be primarily qualitative will be more effective for identifying which enterprise has a controlling financial interest in a variable interest entity. Statement No. 167 requires an additional reconsideration event when determining
whether an entity is a variable interest entity when any changes in facts and circumstances occur such that the holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct
the activities of the entity that most significantly impact the entitys economic performance. It also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity. These requirements will
provide more relevant and timely information to users of financial statements. Statement No. 167 amends Interpretation No. 46(R) to require additional disclosures about an enterprises involvement in variable interest entities, which
will enhance the information provided to users of financial statements. We will adopt Statement No. 167 on January 1, 2010 and are currently evaluating the impact of adoption.

Statement of Financial Accounting Standards No. 165, Subsequent Events (Statement No. 165 or ASC Topic 855), was issued in
May 2009. Statement No. 165 is effective for interim and annual periods ending after June 15, 2009 and is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that datethat is, whether that date represents the date the
financial statements were issued or were available to be issued. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. In
accordance with the provisions of Statement No. 165, we are currently evaluating subsequent events through the date the financial statements are issued.

We retrospectively adopted the provisions of Financial Accounting Standards Board Staff Position Emerging Issues Task Force 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities(FSP EITF 03-6-1 or ASC 260-10-45), on January 1, 2009. FSP EITF 03-6-1 clarifies that unvested share-based payment awards with a right to receive nonforfeitable dividends are participating securities.
Guidance is also provided on how to allocate earnings to participating securities and compute basic earnings per share using the two-class method. All prior-period earnings per share data presented shall be adjusted retrospectively (including
interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of FSP EITF 03-6-1. There was no impact of adopting FSP EITF 03-6-1 to previously reported earnings per share for the three or six
months ended June 30, 2008.

Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51(Statement No. 160 or ASC 810-10-45), was issued in December 2007. Statement No. 160 clarifies the classification of noncontrolling interests in consolidated
statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under this guidance, noncontrolling interests are considered equity and should be
reported as an element of consolidated equity, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the income statement of the attribution of that income between the
controlling and noncontrolling interests, and increases and decreases in the noncontrolling ownership interest amount will be accounted for as equity transactions. The provisions of Statement No. 160 are effective for the first annual reporting
period beginning on or after December 15, 2008, and earlier application is prohibited. Guidance is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parents
shareholders equity, in the consolidated statement of financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to
be adopted retrospectively. We adopted the provisions of Statement No. 160 on January 1, 2009, which resulted in a reclassification of approximately $211.8 million of noncontrolling interests to shareholders equity.

Financial Accounting Standards Board Staff Position No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly(FSP No. FAS 157-4 or ASC 820-10), was issued in April 2009. FSP No. FAS 157-4 provides additional guidance for estimating fair value when the
volume and level of activity for the asset or liability have significantly decreased. FSP No. FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. This guidance shall be effective for interim and
annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before March 15, 2009 is not permitted.
We adopted the provisions of FSP No. FAS 157-4 on April 1, 2009 with no material impact to our financial position or results of operations.



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Financial Accounting Standards Board Staff Position No. FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments(FSP FAS 115-2 and FAS 124-2 or ASC 320-10-35), was issued in April 2009. It amends the other- than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance
more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2 does not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. This guidance shall be effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.
Earlier adoption for periods ending before March 15, 2009 is not permitted. We adopted the provisions of FSP FAS 115-2 and FAS 124-2 on April 1, 2009 with no material impact to our financial position or results of operations.

Financial Accounting Standards Board Staff Position No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business
Combination That Arise from Contingencies (FSP No. FAS 141(R)-1 or ASC 805-20), was issued in April 2009. FSP No. FAS 141(R)-1 addresses application issues raised by preparers, auditors, and members of the legal profession on initial
recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance shall be effective for assets or liabilities arising from contingencies
in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of FSP No. FAS 141(R)-1 on accounting for contingencies in a business
combination is dependent upon the nature of future acquisitions.

Financial Accounting Standards Board Staff Position No. FAS 107-1 and APB
28-1, Interim Disclosures about Fair Value of Financial Instruments(FSP No. FAS 107-1 and APB 28-1 or ASC 825-10-50), was issued in April 2009. FSP No. FAS 107-1 and APB 28-1 amends prior authoritative guidance to require
disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The provisions of FSP No. FAS 107-1 and APB 28-1 shall be effective for interim reporting
periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We adopted the disclosure requirements of FSP No. FAS 107-1 and APB 28-1 on April 1, 2009.

Financial Accounting Standards Board Staff Position Emerging Issues Task Force 08-6, Equity Method Investment Accounting Considerations (FSP
EITF 08-6 or ASC 323-10-35), was issued in November 2008. FSP EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. This guidance is effective for fiscal years beginning
on or after December 15, 2008, and interim periods within those fiscal years, and shall be applied prospectively. We adopted the provisions of FSP EITF 08-6 on January 1, 2009 with no material impact to our financial position or results of
operations.

Risks Regarding 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, the future levels of cash flow from operations and availability of capital resources and the terms thereof. Management
believes that all statements expressing expectations and projections with respect to future matters, including our ability to negotiate contracts having more favorable terms and the availability of capital resources, 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 financial 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 business performance. There can be no assurance, however, that managements expectations will
necessarily come to pass. 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:



| |  |  | risks associated with the current global economic crisis and its impact on capital markets and liquidity;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | the impact of the global economic downturn, which has adversely affected advertising revenues across our businesses and 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;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our cost-saving initiatives may not be entirely successful;
| | - |  | -----------------------------------------------------------



| |  |  | the impact of the geopolitical environment;
| | - |  | -------------------------------------------



| |  |  | access to capital markets and borrowed indebtedness;
| | - |  | ----------------------------------------------------



| |  |  | shifts in population and other demographics;
| | - |  | --------------------------------------------



| |  |  | industry conditions, including competition;
| | - |  | -------------------------------------------



| |  |  | fluctuations in operating costs;
| | - |  | --------------------------------



| |  |  | technological changes and innovations;
| | - |  | --------------------------------------



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| |  |  | changes in labor conditions;
| | - |  | ----------------------------



| |  |  | fluctuations in exchange rates and currency values;
| | - |  | ---------------------------------------------------



| |  |  | capital expenditure requirements;
| | - |  | ---------------------------------



| |  |  | the outcome of pending and future litigation settlements;
| | - |  | ---------------------------------------------------------



| |  |  | legislative or regulatory requirements;
| | - |  | ---------------------------------------



| |  |  | changes in interest rates;
| | - |  | --------------------------



| |  |  | the effect of leverage on our financial position and earnings;
| | - |  | --------------------------------------------------------------



| |  |  | taxes;
| | - |  | ------



| |  |  | our ability to integrate the operations of recently acquired companies;
| | - |  | -----------------------------------------------------------------------



| |  |  | the impact of the above and similar factors on Clear Channel Communications, our primary direct or indirect external source of capital; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain other factors set forth in our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative,
but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.



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|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Required information is presented under MARKET RISK within Item 2 of this Part I.



|Item 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

The Company, under the
supervision and with the participation of management, including our principal executive and principal financial officers evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on that evaluation, the principal executive and principal financial officers concluded that the
Companys disclosure controls and procedures were effective as of June 30, 2009 to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act, is (i) recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and (ii) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the three
months ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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Part II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

We are currently 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 these claims. 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 the Companys financial condition or results of operations.



|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, 2008. There have not been any material changes in the risk factors disclosed in the 2008 Annual Report on Form 10-K.

Additional information relating to risk factors is described in Managements Discussion and Analysis of Financial Condition and Results of
Operations under Risks Regarding Forward-Looking Statements.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



| | (c) | Purchases of Equity Securities by the Issuer and Affiliated Purchases
| | --- | ---------------------------------------------------------------------

The following table sets forth the Companys purchases of its Class A common stock registered pursuant to Section 12 of the Exchange Act that occurred during the quarter ended June 30, 2009:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                    |  |                                |      |                                                                              |   |                                                                             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- |  | ------------------------------ | ---- | ---------------------------------------------------------------------------- | - | --------------------------------------------------------------------------- | -
|Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | Total Numberof SharesPurchased (1) |  | Average PricePaid perShare (2) |      | Total Number ofShares Purchased asPart of PubliclyAnnounced Plans
orPrograms |   | Maximum Number ofShares that May Yet BePurchased Under thePlans or
Programs
|April 1 through April 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                   |  |                                |     |                                                                              |  |                                                                             | 
|May 1 through May 31                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 9,476                              |  | $                              | 3.71 |                                                                              |  |                                                                             | 
|June 1 through June 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                   |  |                                |     |                                                                              |  |                                                                             | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                    |  |                                |      |                                                                              |   |                                                                             |  
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 9,476                              |  | $                              | 3.71 |                                                                              |  |                                                                             | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(1)    The shares indicated consist of shares tendered by employees to the
Company during the three months ended June 30, 2009, to satisfy the employees tax withholding obligations in connection with the vesting and release of restricted shares, which are repurchased by the Company based on their fair market
value on the date the relevant transaction occurs.  (2)    The calculation of the average price paid per share does not give effect to any fees, commissions or other costs associated with the repurchase of such shares.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

Our Annual Meeting of Stockholders was held on May 27, 2009. Margaret W. Covell, Mark P. Mays and Dale W. Tremblay were elected as directors and each will serve a three-year term or until his or her successor has been elected and
qualified, subject to earlier resignation or removal.



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The results of voting at the Annual Meeting of Stockholders were as follows:

Proposal No. 1

(Election of Directors)



|                   |  |               |  |           
|------------------ |  | ------------- |  | ----------
|Nominee            |  | For           |  | Withheld  
|Margaret W. Covell |  | 6,311,130,402 |  | 25,658,431
|Mark P. Mays       |  | 6,311,394,887 |  | 25,393,946
|Dale W. Tremblay   |  | 6,335,643,893 |  | 1,144,940 



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------



|               |  |                                                                                                                                                                                                                                           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                               
|3.1            |  | Amended and Restated Certificate of Incorporation of Clear Channel Outdoor Holdings, Inc. (incorporated herein by reference to Exhibit 3.1 to the Companys Annual Report on Form 10-K filed
March 31, 2006).                             
|               | 
|3.2            |  | Amended and Restated Bylaws of Clear Channel Outdoor Holdings, Inc., as amended (incorporated herein by reference to Exhibit 3.2 to the Companys Annual Report on Form 10-K filed February
14, 2008).                                    
|               | 
|4.1            |  | Form of Specimen Class A Common Stock certificate of Clear Channel Outdoor Holdings, Inc. (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (File No.
333-127375 (the Registration Statement)).
|               | 
|4.2            |  | Form of Specimen Class B Common Stock certificate of Clear Channel Outdoor Holdings, Inc. (incorporated herein by reference to Exhibit 4.2 to the Registration Statement).                                                                
|               | 
|10.1           |  | Form of Independent Director Indemnification Agreement (incorporated herein by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed June 3, 2009).                                                                 
|               | 
|10.2           |  | Form of Affiliate Director Indemnification Agreement (incorporated herein by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed June 3, 2009).                                                                   
|               | 
|11*            |  | Statement re: Computation of Per Share Earnings.                                                                                                                                                                                          
|               | 
|31.1*          |  | Certification of Chief Executive Officer 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 of Chief Financial Officer 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 of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                        
|               | 
|32.2**         |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                        



|* | Filed herewith
|- | --------------



|** | Furnished herewith
|-- | ------------------



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##### Table of Contents

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.                                   
|                |  | 
|August 10, 2009 |  |  |  | /s/ Randall T. Mays                                                    
|                |  |  |  | Randall T. Mays Chief Financial
Officer                                
|                |  | 
|August 10, 2009 |  |  |  | /s/ Herbert W. Hill, Jr.                                               
|                |  |  |  | Herbert W. Hill, Jr. Senior Vice President and Chief
Accounting Officer



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