UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from
to
Commission File Number: 001-36367
OUTFRONT Media Inc.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
405 Lexington Avenue, 17th Floor
New York, NY
(Address of principal executive offices)
46-4494703
(I.R.S. Employer
Identification No.)
10174
(Zip Code)
(212) 297-6400
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of Each Class
Common Stock, $0.01 par value
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
No
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.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§232.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Yes
Yes
No
No
Large accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
No
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30, 2017, the last business
day of the registrant's most recently completed second fiscal quarter, was $3.2 billion based upon the closing price reported for such date on
the New York Stock Exchange.
As of February 26, 2018, the number of shares outstanding of the registrant’s common stock was 139,119,495.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated herein by reference into Part III of
this Annual Report on Form 10-K where indicated. Such proxy statement will be filed with the Securities and Exchange Commission within
120 days after the end of the registrant's fiscal year ended December 31, 2017.
OUTFRONT Media Inc.
Table of Contents
Cautionary Statement Regarding Forward-Looking Statements
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationship and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
Exhibit Index
SIGNATURES
4
6
17
32
32
32
32
33
36
40
65
67
111
111
111
112
112
112
112
112
112
116
117
121
Except as otherwise indicated or unless the context otherwise requires, all references in this Annual Report on Form 10-K to (i)
“OUTFRONT Media,” “the Company,” “we,” “our,” “us” and “our company” mean OUTFRONT Media Inc., a Maryland
corporation, and unless the context requires otherwise, its consolidated subsidiaries, and (ii) the “25 largest markets in the
U.S.,” “140 markets in the U.S. and Canada” and “Nielsen Designated Market Areas” are based, in whole or in part, on
Nielsen Media Research’s Designated Market Area rankings as of January 1, 2018.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made statements in this Annual Report on Form 10-K that are forward-looking statements within the meaning of the
federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify forward-looking
statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “would,” “may,” “might,” “will,”
“should,” “seeks,” “likely,” “intends,” “plans,” “projects,” “predicts,” “estimates,” “forecast” or “anticipates” or the negative of
these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not
relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or
intentions related to our capital resources, portfolio performance and results of operations.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future
events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be
able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will
happen at all). The following factors, among others, could cause actual results and future events to differ materially from those
set forth or contemplated in the forward-looking statements:
• Declines in advertising and general economic conditions;
• Competition;
• Government regulation;
• Our inability to increase the number of digital advertising displays in our portfolio;
• Our ability to implement our digital display platform and deploy digital advertising displays to our transit franchise
partners;
Seasonal variations;
• Taxes, fees and registration requirements;
• Our ability to obtain and renew key municipal contracts on favorable terms;
• Decreased government compensation for the removal of lawful billboards;
• Content-based restrictions on outdoor advertising;
• Environmental, health and safety laws and regulations;
•
• Acquisitions and other strategic transactions that we may pursue could have a negative effect on our results of operations;
• Dependence on our management team and other key employees;
• The ability of our board of directors to cause us to issue additional shares of stock without stockholder approval;
• Certain provisions of Maryland law may limit the ability of a third party to acquire control of us;
• Our rights and the rights of our stockholders to take action against our directors and officers are limited;
• Our substantial indebtedness;
• Restrictions in the agreements governing our indebtedness;
•
•
• Our ability to generate cash to service our indebtedness;
• Cash available for distributions;
• Hedging transactions;
• Diverse risks in our Canadian business;
• A breach of our security measures;
• Changes in regulations and consumer concerns regarding privacy, information security and data, or any failure or
Incurrence of additional debt;
Interest rate risk exposure from our variable-rate indebtedness;
perceived failure to comply with these regulations or our internal policies;
• Asset impairment charges for goodwill;
• Our failure to remain qualified to be taxed as a real estate investment trust (“REIT”);
• REIT distribution requirements;
• Availability of external sources of capital;
• We may face other tax liabilities even if we remain qualified to be taxed as a REIT;
• Complying with REIT requirements may cause us to liquidate investments or forgo otherwise attractive opportunities;
• Our ability to contribute certain contracts to a taxable REIT subsidiary (“TRS”);
• Our planned use of TRSs may cause us to fail to remain qualified to be taxed as a REIT;
• REIT ownership limits;
4
• Complying with REIT requirements may limit our ability to hedge effectively;
•
• Even if we remain qualified to be taxed as a REIT, and we sell assets, we could be subject to tax on any unrealized net
Failure to meet the REIT income tests as a result of receiving non-qualifying income;
built-in gains in the assets held before electing to be treated as a REIT;
• The Internal Revenue Service (the “IRS”) may deem the gains from sales of our outdoor advertising assets to be subject to
a 100% prohibited transaction tax;
• Establishing operating partnerships as part of our REIT structure; and
• U.S. federal tax reform legislation could affect us in ways that are difficult to anticipate.
While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-
looking statements in this Annual Report on Form 10-K apply as of the date of this report or as of the date they were made and,
except as required by applicable law, we disclaim any obligation to publicly update or revise any forward-looking statement to
reflect changes in underlying assumptions or factors of new information, data or methods, future events or other changes. For a
further discussion of these and other factors that could impact our future results, performance or transactions, see “Item 1A.
Risk Factors” in this Annual Report on Form 10-K. You should understand that it is not possible to predict or identify all such
factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
5
Item 1. Business.
Overview
PART I
OUTFRONT Media is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home
advertising structures and sites in the United States (the “U.S.”) and Canada. We are one of the largest providers of advertising
space on out-of-home advertising structures and sites across the U.S. and Canada. Our inventory consists of billboard displays,
which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas
(“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities
across the U.S. and Canada. We also have marketing and multimedia rights agreements with colleges, universities and other
educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities,
media rights and experiential entertainment at sports events. In total, we have displays in all of the 25 largest markets in the
U.S. and 140 markets in the U.S. and Canada. Our top market, high profile location focused portfolio includes sites such as the
Bay Bridge in San Francisco, various locations along Sunset Boulevard in Los Angeles, and sites in and around both Grand
Central Station and Times Square in New York. The breadth and depth of our portfolio provides our customers with a range of
options to address their marketing objectives, from national, brand-building campaigns to hyper-local campaigns that drive
customers to the advertiser’s website or retail location “one mile down the road.”
Using Geopath, the out-of-home advertising industry’s audience measurement system, we provide advertisers with the size and
demographic composition of the audience that is exposed to individual displays or a complete campaign. As part of our ON
Smart Media platform, we are developing hardware and software solutions for enhanced demographic and location targeting,
and engaging ways to connect with consumers on-the-go. Additionally, our OUTFRONT Mobile Network allows our
customers to further leverage location targeting with interactive mobile advertising that uses geofence technology to push
mobile ads to consumers within a pre-defined radius around a corresponding billboard display or other designated advertising
location.
We believe out-of-home advertising continues to be an attractive form of advertising, as our displays are ALWAYS ON™, are
always viewable and cannot be turned off, skipped, blocked or fast-forwarded. Further, out-of-home advertising can be an
effective “stand-alone” medium, as well as an integral part of a campaign to reach audiences using multiple forms of media,
including television, radio, print, online, mobile and social media advertising platforms. We provide our customers with a
differentiated advertising solution at an attractive price point relative to other forms of advertising. In addition to leasing
displays, we provide other value-added services to our customers, such as pre-campaign category research, consumer insights,
creative design support, print production and post-campaign tracking and analytics, as well as use of a real-time mobile
operations reporting system that facilitates proof of performance to customers for substantially all of our business.
We generally (i) own the physical billboard structures on which we display advertising copy for our customers, (ii) hold the
legal permits to display advertising thereon and (iii) lease the underlying sites. These lease agreements have terms varying
between one month and multiple years, and usually provide renewal options. We estimate that approximately 75% of our
billboard structures in the United States are “legal nonconforming” billboards, meaning they were legally constructed under
laws in effect at the time they were built, but could not be constructed under current laws. These structures are often located in
areas where it is difficult or not permitted to build additional billboards under current laws, which enhances the value of our
portfolio. We have a highly diversified portfolio of advertising sites. As of December 31, 2017, we had approximately 21,500
lease agreements with approximately 17,300 different landlords in the U.S. A substantial number of these lease agreements
allow us to abate rent and/or terminate the lease agreement in certain circumstances, which may include where the structure is
obstructed, where there is a change in traffic flow and/or where the advertising value of the sign structure is otherwise
impaired, providing us with flexibility in renegotiating the terms of our leases with landlords in those circumstances.
We currently manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in
our U.S. Media reportable segment, (2) International and (3) Sports Marketing. International and Sports Marketing do not meet
the criteria to be a reportable segment and accordingly, are both included in Other (see Note 17. Segment Information to the
Consolidated Financial Statements). Prior to April 1, 2016, our International segment included our advertising businesses in
Canada and Latin America. On April 1, 2016, we sold all of our equity interests in certain of our subsidiaries (the
“Disposition”), which held all of the assets of our outdoor advertising business in Latin America (see Note 11. Acquisitions and
Dispositions: Dispositions to the Consolidated Financial Statements).
6
U.S. Media. Our U.S. Media segment generated 23% of its revenues in the New York City metropolitan area in 2017, 25% in
2016 and 27% in 2015, and generated 16% in the Los Angeles metropolitan area in each of 2017 and 2016, and 15% in 2015.
Our U.S. Media segment generated Revenues of $1,406.5 million in 2017, $1,393.8 million in 2016 and $1,344.3 million in
2015, and Operating income before Depreciation, Amortization, Net (gain) loss on dispositions, Stock-based compensation,
Restructuring charges and Loss on real estate assets held for sale (“Adjusted OIBDA”) of $478.1 million in 2017, $473.8
million in 2016 and $451.1 million in 2015.
Other (includes International and Sports Marketing). Other generated Revenues of $114.0 million in 2017, $120.1 million in
2016 and $169.5 million in 2015, and Adjusted OIBDA of $8.4 million in 2017, $17.8 million in 2016, and $24.3 million in
2015.
For additional information regarding our revenues, profits and assets by segment and by geographic area, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements
and Supplementary Data.”
History
Our corporate history can be traced back to companies that helped to pioneer the growth of out-of-home advertising in the
United States, such as Outdoor Systems, Inc., 3M National, Gannett Outdoor and TDI Worldwide Inc. In 1996, a predecessor of
CBS Corporation (“CBS”) acquired TDI Worldwide Inc., which specialized in transit advertising. Three years later, a
predecessor of CBS acquired Outdoor Systems, Inc., which represented the consolidation of the outdoor advertising assets of
large national operators such as 3M National, Gannett Outdoor (and its Canadian assets held in the name Mediacom) and
Vendor (a Mexican outdoor advertising company) and many local operators in the United States, Canada and Mexico. In 2008,
CBS acquired International Outdoor Advertising Holdings Co., which operated outdoor advertising assets in Argentina, Brazil,
Chile and Uruguay.
On April 2, 2014, the Company completed an initial public offering (the “IPO”) of its common stock under the name “CBS
Outdoor Americas Inc.” On July 16, 2014, CBS completed a registered offer to exchange 97,000,000 shares of our common
stock that were owned by CBS for outstanding shares of CBS Class B common stock (“the Exchange Offer”). In connection
with the Exchange Offer, CBS disposed of all of its shares of our common stock and as of July 16, 2014, we were separated
from CBS (the “Separation”) and were no longer a subsidiary of CBS. On July 16, 2014, in connection with the Separation, we
ceased to be a member of the CBS consolidated tax group, and on July 17, 2014, we began operating as a REIT for U.S. federal
income tax purposes.
On October 1, 2014, we completed the acquisition of certain outdoor advertising businesses of Van Wagner Communications,
LLC, for a total purchase price of approximately $690.0 million in cash, plus working capital adjustments (the “Acquisition”).
On November 20, 2014, the Company changed its legal name to “OUTFRONT Media Inc.”, and its common stock began
trading on the New York Stock Exchange under the ticker symbol “OUT.”
Acquisition and Disposition Activity
We regularly evaluate potential acquisitions, ranging from small transactions to larger acquisitions.
On April 1, 2016, we completed the Disposition and received $82.0 million in cash plus working capital, which was subject to
post-closing adjustments.
On June 13, 2017, certain subsidiaries of OUTFRONT Media Inc. acquired the equity interests of certain subsidiaries of All
Vision LLC (“All Vision”), which hold substantially all of All Vision’s existing outdoor advertising assets in Canada, and
effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”). In connection
with the Transaction, we paid approximately $94.4 million for the assets, comprised of $50.0 million in cash and $44.4 million,
or 1,953,407 shares, of Class A equity interests of a subsidiary of the Company that controls its Canadian business (“Outfront
Canada”), subject to post-closing adjustments (upward or downward) for closing date working capital and indebtedness, and
for the achievement of certain operating income before depreciation and amortization targets relating to the acquired assets in
2017 and 2018.
7
For additional information regarding our acquisition and disposition activity, see “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Item 8. Financial
Statements and Supplementary Data.”
Tax Status
Our qualification to be taxed as a REIT is dependent on our ability to meet various complex requirements under the Internal
Revenue Code of 1986, as amended (the “Code”), related to, among other things, the sources of our gross income, the
composition and values of our assets and the diversity of ownership of our shares. See “Item 1A. Risk Factors—Risks Related
to Our Status as a REIT.” As long as we remain qualified to be taxed as a REIT, we generally will not be subject to U.S. federal
income tax on REIT taxable income that we distribute to stockholders. To maintain REIT status, we must meet a number of
organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least
90% of our REIT taxable income, determined without regard to the dividends-paid deduction and excluding any net capital
gains. To the extent that we satisfy this distribution requirement and qualify for taxation as a REIT but distribute less than
100% of our REIT taxable income, determined with the above modifications, we will be subject to U.S. federal income tax on
our undistributed net taxable income. In addition, we will be subject to a nondeductible 4% excise tax if the amount that we
actually distribute to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.
We intend to pay regular quarterly distributions to our stockholders in an amount not less than 100% of our REIT taxable
income (determined before the deduction for dividends paid).
We believe we are organized in conformity with the requirements for qualification and taxation as a REIT under the Code and
that our manner of operation will enable us to continue to meet those requirements. If we fail to qualify to be taxed as a REIT in
any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at
regular corporate rates and will be precluded from re-electing REIT status for the subsequent four taxable years. Despite our
status as a REIT, we will be subject to certain U.S. federal, state and local taxes on our income or property and the income of
our taxable REIT subsidiaries (“TRSs”) will be subject to taxation at regular corporate rates.
Prior to the Separation, we were a member of CBS’s consolidated tax group and were taxable as a regular domestic C
corporation for U.S. federal income tax purposes (i.e., we were subject to taxation at regular corporate rates). Pursuant to the
tax matters agreement that we entered into with CBS, we are liable to pay CBS for any taxes imposed on or related to us while
we were a member of the CBS consolidated tax group. In addition, CBS is liable to pay us for any reductions in taxes paid
related to us while we were a member of the CBS consolidated tax group.
Growth Strategy
Continue Increasing the Number of Digital Displays in our Portfolio. Increasing the number of digital displays in our most
heavily trafficked locations is an important element of our organic growth strategy, as digital displays have the potential to
attract additional business from both new and existing customers. We believe digital displays are attractive to our customers
because they allow for the development of richer and more visually engaging messages, provide our customers with the
flexibility both to target audiences by time of day and to quickly launch new advertising campaigns, and eliminate or greatly
reduce production costs. In addition, digital displays enable us to run multiple advertisements on each display. Digital billboard
displays generate approximately four times more revenue per display on average than traditional static billboard displays.
Digital billboard displays also incur, on average, approximately two to four times more costs, including higher variable costs
associated with the increase in revenue than traditional static billboard displays. As a result, digital billboard displays generate
higher profits and cash flows than traditional static billboard displays. The majority of our digital billboard displays were
converted from traditional static billboard displays. In 2017, we commenced deployment of state-of-the-art digital transit
displays in connection with several transit franchises and are planning to increase deployments significantly over the coming
years. Once the digital transit displays have been deployed at scale, we expect that revenue generated on digital transit displays
will be a multiple of the revenue generated on comparable static transit displays. We intend to incur significant equipment
deployment costs and capital expenditures in the coming years to continue increasing the number of digital displays in our
portfolio. See “—Renovation, Improvement and Development.”
Drive Enhanced Revenue Management. We focus heavily on inventory management and advertising rate pricing to improve
revenue yield over time across our portfolio of advertising structures and sites. By carefully managing our pricing on a market-
by-market and display-by-display basis, we aim to improve profitability. We believe that closely monitoring pricing and
improving pricing discipline will provide strong potential revenue enhancement. We also explore alternative uses of our
billboard locations as they arise to drive site profitability, including wireless attachment placement opportunities on our leased
and owned assets.
8
Mobile Technology and Social Media Engagement. We believe there is potential for growth in the reach, effectiveness and
amplification of-out-home advertising through mobile technology and social media engagement. For example, the
OUTFRONT Mobile Network creates opportunities for advertisers to reach their target audience by enabling them to bundle
geofenced mobile advertising with an out-of-home advertising display campaign. Consumer dependence on mobile devices,
especially while out-of-home, makes out-of-home advertising displays and mobile advertising a natural fit for advertiser brand
messaging, allowing consumer mobile activities such as search, social and e-commerce to be primed by the out-of-home
advertising display. Additionally, we are in the early stages of incorporating social influence as an add-on component of our
out-of-home advertising display campaigns.
Consider Selected Acquisition Opportunities. As part of our growth strategy, we frequently evaluate strategic opportunities to
acquire new businesses and assets. Consistent with this strategy, we regularly evaluate potential acquisitions, ranging from
small transactions to larger acquisitions. See “—Acquisition and Disposition Activity.” There can be no assurances that any
transactions currently being evaluated will be consummated or, if consummated, that such transactions would prove beneficial
to us. Further, our national footprint in the United States and significant presence in Canada provide us with an attractive
platform on which to add additional advertising structures and sites. Our scale gives us advantages in driving additional
revenues and reducing operating costs from acquired billboards. We believe that there is significant opportunity for additional
industry consolidation, and we will evaluate opportunities to acquire additional advertising businesses and structures and sites
on a case-by-case basis.
Continued Adoption & Refinement of Audience Measurement Systems; Utilization of Data/Analytics. We believe the continued
adoption and refinement of the out-of-home advertising industry’s audience measurement system, Geopath, will enhance the
value of the out-of-home medium by providing customers with improved audience measurement and the ability to target by
gender, age, ethnicity and income. New refinements, including the impact of speed (i.e. how quickly a vehicle passes an
individual billboard unit), and the inclusion of transit metrics, are making the measurement system more robust. Additionally,
as part of our ON Smart Media platform, we are developing hardware and software solutions for enhanced demographic and
location targeting. By providing a consistent and standardized audience measurement metric, and overlaying increasingly
available and reliable third-party data, we will be able to help advertisers target increasingly mobile audiences with effective
media plans in the out-of-home environment for both static and digital displays.
Our Portfolio of Outdoor Advertising Structures and Sites
Diversification by Customer
For the year ended December 31, 2017, no individual customer represented more than 2.5% of U.S. Media segment revenues.
Therefore, we do not consider detailed information about any individual customer to be meaningful.
9
Diversification by Industry
The following table sets forth information regarding the diversification of U.S. Media segment revenues earned among different
industries for 2017, 2016 and 2015. For 2017, as a result of our diverse base of customers in the United States, no single
industry contributed more than 8% of our U.S. Media segment revenues.
Industry
Retail
Healthcare/Pharmaceuticals
Television
Entertainment
Professional Services
Computers/Internet
Restaurants/Fast Food
Automotive
Movies
Financial Services
Telecom/Utilities
Beer/Liquor
Casinos/Lottery
Food/Non-Alcoholic Beverages
Travel/Leisure
Education
Real Estate Brokerage
Other(a)
Total
(a) No single industry in “Other” individually represents more than 2% of total revenues.
Percentage of Total U.S. Media Segment Revenues for the
Year Ended December 31,
2017
2016
2015
8%
9%
10%
8
8
7
7
6
5
5
4
4
4
4
4
4
4
3
2
7
8
6
6
5
6
6
5
4
5
4
4
4
4
3
2
7
8
6
6
6
5
5
5
5
6
3
4
3
4
4
2
13
100%
12
100%
11
100%
10
Diversification by Geography
Our advertising structures and sites are geographically diversified across 34 states, Washington D.C. and Canada. The
following table sets forth information regarding the geographic diversification of our advertising structures and sites, which are
listed in order of contributions to total revenue.
Percentage of Total Revenues for the
Year Ended
December 31, 2017
Number of Displays as of December 31, 2017(a)
Location (Metropolitan Area)
Billboard
New York, NY
Los Angeles, CA
Miami, FL
State of New Jersey
San Francisco, CA
Houston, TX
Washington D.C.
Atlanta, GA
Dallas, TX
Chicago, IL
Boston, MA
Detroit, MI
Tampa, FL
Phoenix, AZ
Orlando, FL
All other United States
Sports marketing and other
Total United States
Canada
Total
Transit
and Other
47%
12
4
<1
2
<1
9
3
1
<1
7
<1
—
<1
—
2
9
97
3
Total
Billboard
Displays
Transit
and Other
Displays
Total
Displays
Percentage
of Total
Displays
22%
15
4
3
3
3
3
3
3
3
3
2
2
2
2
19
3
95
5
420
259,055
259,475
51%
4,676
1,021
3,821
1,300
1,135
22
2,134
740
1,020
115
2,240
1,525
1,701
1,466
19,094
—
47,086
17,738
90
12,132
188
44,360
20,617
586
802
38,204
11,514
—
670
—
3,110
1,280
51,762
18,759
3,911
13,432
1,323
44,382
22,751
1,326
1,822
38,319
13,754
1,525
2,371
1,466
22,204
1,280
42,430
457,432
499,862
5,687
3,947
9,634
10
4
<1
3
<1
9
4
<1
<1
8
3
<1
<1
<1
4
<1
98
2
10%
16
5
5
4
4
<1
3
3
4
1
3
3
3
3
27
—
94
6
100%
100%
100%
48,117
461,379
509,496
100%
Total revenues (in millions)
$1,059.0
$ 461.5
$1,520.5
(a) All displays, including those reserved for transit agency use.
The New York and Los Angeles metropolitan areas contributed 51% and 13%, respectively, of total transit and other revenues
in 2016 and 53% and 11%, respectively, of total transit and other revenues in 2015. Los Angeles contributed 15% of total
billboard revenues in 2016 and 14% of total billboard revenues in 2015. New York contributed 12% of total billboard revenues
in 2016 and 13% of total billboard revenues in 2015.
For additional information regarding revenues for our billboard displays and transit and other displays, by segment, for the
years ended December 31, 2017, 2016 and 2015, see “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.”
11
Renovation, Improvement and Development
The following table sets forth information regarding our digital displays.
Location
December 31, 2017:
United States
Canada
Total
December 31, 2016:
United States
Canada
Latin America
Total
December 31, 2015:
United States
Canada
Latin America
Total
Digital Revenues (in millions)
for the Year Ended
Number of Digital Displays(a) as of
Digital
Billboard
Digital
Transit
and Other
Total
Digital
Revenues
Digital
Billboard
Displays
Digital
Transit
and Other
Displays
Total
Digital
Displays
Percentage
of Total
Digital
Displays
$
$
159.1
14.6
173.7
$
$
44.8
0.2
45.0
$
$
203.9
14.8
218.7
$
149.0
$
38.0
$
187.0
6.5
0.4
0.2
—
6.7
0.4
$
155.9
$
38.2
$
194.1
$
127.6
$
40.0
$
167.6
4.5
1.9
0.3
—
4.8
1.9
$
134.0
$
40.3
$
174.3
822
160
982
713
68
—
781
604
56
17
677
871
63
934
712
64
—
776
488
56
—
544
1,693
223
1,916
1,425
132
—
88 %
12
100 %
92 %
8
—
1,557
100 %
1,092
112
17
90 %
9
1
1,221
100 %
(a) Digital display amounts (1) include displays reserved for transit agency use and (2) exclude: (i) all displays under our multimedia rights agreements with
colleges, universities and other educational institutions; (ii) 1,650 MetroCard vending machine digital screens in 2017 and 1,601 in 2016; and (iii) in-train
advertising displays of 317 in each of 2017 and 2016, and 1,039 in 2015 which are scheduled to be taken out of service permanently. Our number of
digital displays is impacted by acquisitions, dispositions, management agreements, the net effect of new and lost billboards, and the net effect of won and
lost franchises in the period.
Most of our non-maintenance capital expenditures are directed towards new revenue-generating projects, such as the
conversion of traditional static billboard displays to digital, the building of new digital displays and the enhancement of our
billboard structures to enable us to charge premium rates. In 2017, we commenced deployment of state-of-the-art digital transit
displays in connection with several transit franchises and are planning to increase deployments significantly over the coming
years. We intend to incur significant equipment deployment costs and capital expenditures in coming years to continue
increasing the number of digital displays in our portfolio. See “—Growth Strategy.”
We have built or converted 65 digital billboard displays in the United States and 21 in Canada in 2017, compared to 65 digital
billboard displays in the United States and 11 in Canada in 2016, and 100 digital billboard displays in the United States, 23 in
Canada and 2 in Latin America in 2015. Additionally, in 2017, we entered into marketing arrangements to sell advertising on 36
digital billboard displays in the U.S. and 26 in Canada. In 2017, we have built, converted or replaced 238 digital transit and
other displays in the United States. Our total number of digital displays is impacted by acquisitions, dispositions, management
agreements and the net effect of new and lost billboards and the net effect of won and lost franchises. As of December 31,
2017, our average initial investment required for a digital billboard display is approximately $240,000.
In 2016, we initiated a multi-year project to improve the quality of the illumination of our static billboard displays and to
reduce our utility costs through the use of the most current LED lighting technology. As of December 31, 2017, we completed
26 out of 45 markets planned for conversion to the most current LED lighting technology.
We routinely invest capital in the maintenance and repair of our billboard and transit structures. This includes safety initiatives
and replaced displays, as well as new billboard components such as panels, sections, catwalks, lighting and ladders. Our
maintenance capital expenditures were $19.9 million in 2017, $18.5 million in 2016 and $25.6 million in 2015.
In the opinion of management, our outdoor advertising sites and structures are adequately covered by insurance.
12
Contract Expirations
We derive revenues primarily from providing advertising space to customers on our advertising structures and sites. Our
contracts with customers generally cover periods ranging from four weeks to one year and are generally billed every four
weeks. Since contract terms are short-term in nature, revenues by year of contract expiration are not considered meaningful.
Our transit businesses require us to obtain and renew contracts with municipalities and other governmental entities. When these
contracts expire, we generally must participate in highly competitive bidding processes in order to obtain or renew contracts.
On December 8, 2017, a subsidiary of the Company entered into a definitive transit advertising and communications
concession agreement for subway, commuter rail and buses with the New York Metropolitan Transportation Authority (the
“MTA”), effective as of November 1, 2017. The agreement is for a 10-year term, with an additional 5-year extension at our
option, during which time we will be the exclusive seller of advertising on the MTA subway, commuter rail and buses. For
further information about our agreement with the MTA, see “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and the Company’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission (the “SEC”) on December 13, 2017.
For information about the property lease contracts relating to our advertising structures and sites, see “Item 2. Properties.”
Competition
The outdoor advertising industry is fragmented, consisting of a few companies operating on a national basis, including our
company, Clear Channel Outdoor, Lamar, JCDecaux and Intersection, as well as hundreds of smaller regional and local
companies operating a limited number of displays in a single or a few local geographic markets. We compete with these
companies for both customers and structure and display locations. We also compete with other media, including online, mobile
and social media advertising platforms (such as Facebook, Alphabet and Amazon) and traditional advertising platforms (such as
television, radio, print and direct mail marketers). In addition, we compete with a wide variety of out-of-home media, including
advertising in shopping centers, airports, movie theaters, supermarkets and taxis. Advertisers compare relative costs of
available media, including average cost per thousand impressions or “CPMs”, particularly when delivering a message to
customers with distinct demographic characteristics. In competing with other media, the outdoor advertising industry relies on
its relative cost efficiency and its ability to reach specific markets, geographic areas and/or demographics.
Seasonality
Our revenues and profits may fluctuate due to seasonal advertising patterns and influences on advertising markets. Typically,
our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as
advertisers cut back on spending following the holiday shopping season. We expect this trend to continue in the future.
Employees
As of December 31, 2017, we had 2,192 employees, of which 766 were sales personnel in the U.S. and 70 were Canadian sales
personnel. As of December 31, 2017, 2,159 of our employees were full-time employees and 33 were part-time employees.
Some of these employees are represented by labor unions and are subject to collective bargaining agreements.
Regulation
The outdoor advertising industry is subject to governmental regulation and enforcement at the federal, state and local levels in
the United States and Canada. These regulations have a significant impact on the outdoor advertising industry and our business.
The descriptions that follow are summaries and should be read in conjunction with the texts of the regulations described herein,
which are subject to change. The descriptions do not purport to describe all present and proposed regulations affecting our
businesses.
In the United States, the federal Highway Beautification Act of 1965 (the “HBA”) establishes a framework for the regulation of
outdoor advertising on primary and interstate highways built with federal financial assistance. As a condition to federal
highway assistance, the HBA requires states to restrict billboards on such highways to commercial and industrial areas, and
imposes certain size, spacing and other requirements associated with the installation and operation of billboards. The HBA also
requires the development of state standards, promotes the expeditious removal of illegal signs and requires just compensation
for takings, on affected roadways. These state restrictions and standards, or their local and municipal counterparts, may be
13
modified over time in response to legal challenges or otherwise, which could have an adverse effect on our business, financial
condition and results of operations.
Municipal and county governments generally also have sign controls as part of their zoning laws and building codes, and many
have adopted standards more restrictive than the federal requirements. Some state and local government regulations prohibit
construction of new billboards and some allow new construction only to replace existing structures. Other state and local laws
and regulations in the United States and Canada prohibit the relocation or modification of existing billboards, limit the ability
to rebuild, replace, repair, maintain and upgrade “legal nonconforming” structures (billboards which conformed with applicable
zoning regulations when built but which no longer conform to current zoning regulations), and impose restrictions on the
construction, repair, maintenance, lighting, operation, upgrading, height, size, spacing and location of outdoor structures, and
the use of new technologies such as digital signs. In addition, from time to time, third parties or local governments commence
proceedings in which they assert that we own or operate structures that are not properly permitted or otherwise in strict
compliance with applicable law.
Governmental regulation of advertising displays also limits our installation of additional advertising displays, restricts
advertising displays to governmentally controlled sites or permits the installation of advertising displays in a manner that
benefits our competitors disproportionately, any of which could have an adverse effect on our business, financial condition and
results of operations.
Although state and local government authorities from time to time use the power of eminent domain to remove billboards, U.S.
law requires payment of compensation if a state or political subdivision compels the removal of a lawful billboard along a
primary or interstate highway that was built with federal financial assistance. Additionally, many states require similar
compensation (or relocation) with regard to compelled removals of lawful billboards in other locations, although the
methodology used to determine such compensation varies by jurisdiction. Some local governments have attempted to force
removal of billboards after a period of years under a concept called amortization. Under this concept the governmental body
asserts that just compensation has been earned by continued operation of the billboard over a period of time. In Canada,
billboards may be expropriated for public purposes with compensation (or relocation) determined on a case-by-case basis. Thus
far, we have generally been able to obtain satisfactory compensation for our billboards purchased or removed as a result of
governmental action, although there is no assurance that this will continue to be the case in the future.
From time to time, legislation has been introduced in both the United States and Canada attempting to impose taxes on revenue
from outdoor advertising or for the right to use outdoor advertising assets. Several jurisdictions have already imposed such
taxes based on a percentage of our outdoor advertising revenue in that jurisdiction. In addition, some jurisdictions have taxed
our personal property and leasehold interests in outdoor advertising locations using various other valuation methodologies. We
expect the United States and Canada to continue to try to impose such taxes as a way of increasing their revenue. In recent
years, outdoor advertising also has become the subject of other targeted taxes and fees.
These laws may affect prevailing competitive conditions in our markets in a variety of ways. Such laws may reduce our
expansion opportunities or may increase or reduce competitive pressure from other members of the outdoor advertising
industry. No assurance can be given that existing or future laws or regulations, and the enforcement thereof, will not materially
and adversely affect the outdoor advertising industry. However, we contest laws and regulations that we believe unlawfully
restrict our constitutional or other legal rights and may adversely impact the growth of our outdoor advertising business.
A number of federal, state and local governments in the United States and Canada have implemented taxes (including taxes on
revenues from outdoor advertising or for the right to use outdoor advertising assets), fees and registration requirements in an
effort to decrease or restrict the number of outdoor advertising structures and sites or raise revenues, or both.
Restrictions on outdoor advertising of certain products, services and content are or may be imposed by federal, state and local
laws and regulations, as well as contracts with municipalities and transit franchise partners. For example, tobacco products
have been effectively banned from outdoor advertising in all of the jurisdictions in which we currently do business.
As the owner or operator of various real properties and facilities, we must comply with various federal, state and local
environmental, health and safety laws and regulations in the United States and Canada. We and our properties are subject to
such laws and regulations related to the use, storage, disposal, emission and release of hazardous and nonhazardous substances
and employee health and safety. Historically, with the exception of safety upgrades, we have not incurred significant
expenditures to comply with these laws.
We intend to expand the deployment of digital billboards that display static digital advertising copy from various advertisers
that change up to several times per minute. We have encountered some existing regulations in the United States and Canada
14
that restrict or prohibit these types of digital displays. Furthermore, as digital advertising displays are introduced into the
market on a large scale, existing regulations that currently do not apply to digital advertising displays by their terms could be
revised to impose specific restrictions on digital advertising displays due to alleged concerns over, among other things,
aesthetics or driver safety.
Policies with Respect to Certain Activities
The following is a discussion of certain of our investment, financing and other policies. We intend to conduct our business in a
manner such that we are not treated as an “investment company” under the Investment Company Act of 1940, as amended. In
addition, we intend to conduct our business in a manner that is consistent with maintaining our qualification to be taxed as a
REIT. These policies may be amended or revised from time to time at the discretion of our board of directors without a vote of
our stockholders.
Investment Policies
Investment in Real Estate or Interests in Real Estate. Our investment objective is to maximize income. We intend to achieve
this objective by developing our existing advertising structures and sites, including through the digital modernization of such
advertising structures and sites, and by building and acquiring new advertising structures and sites. We currently intend to
invest in advertising structures and sites located primarily in major metropolitan areas. Future development or investment
activities will not be limited to any specific percentage of our assets or to any geographic area or type of advertising structure
or site. While we may diversify in terms of location, size and market, we do not have any limit on the amount or percentage of
our assets that may be invested in any one property or any one geographic area. In addition, we may purchase or lease
properties for long-term investment, improve the properties we presently own or other acquired properties, or lease such
properties, in whole or in part, when circumstances warrant.
We may enter into multi-year contracts with municipalities and transit operators for the exclusive right to display advertising
copy on the interior and exterior of rail and subway cars, buses, benches, trams, trains, transit shelters, street kiosks and transit
platforms. We may also enter into marketing and multimedia rights agreements with colleges, universities and other educational
institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media
rights and experiential entertainment at sports events. In addition, we may participate with third parties in property ownership
through joint ventures or other types of co-ownership. We will not, however, enter into a joint venture or other partnership
arrangement to make an investment that would not otherwise meet our investment policies.
Investments in acquired advertising structures and sites, directly or in connection with joint ventures, may be subject to existing
mortgage financing and other indebtedness or to new indebtedness that may be incurred in connection with acquiring or
refinancing these properties. We do not currently have any restrictions on the number or amount of mortgages that may be
placed on any one advertising site or structure. Debt service on such financing or indebtedness will have a priority over any
distributions with respect to our common stock.
Investments in Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers. We have
and may in the future invest in securities or interests of other issuers, including REITs and entities engaged in real estate
activities, directly or in connection with joint ventures or other strategic transactions. However, because we must comply with
various requirements under the Code in order to maintain our qualification to be taxed as a REIT, including restrictions on the
types of assets we may hold, the sources of our income and accumulation of earnings and profits, our ability to engage in
certain acquisitions, such as acquisitions of C corporations, may be limited. We have not and do not currently anticipate
investing in securities of other issuers for the purpose of exercising control over such entities, acquiring any investments
primarily for sale in the ordinary course of business, or holding any investments with a view to making short-term gains from
their sale, but we may engage in these activities in the future.
Investments in Other Securities. We may in the future invest in additional securities such as bonds, preferred stock and common
stock. We have no present intention to make any such investments, except for investments in cash equivalents in the ordinary
course of business. Future investment activities in additional securities will not be limited to any specific percentage of our
assets or to any specific type of securities or industry group.
Acquisitions and Dispositions. From time to time in the ordinary course of business, we have both acquired and disposed of
advertising structures and sites in order to optimize our portfolio, and we intend to continue to do so in the future. See “—
Acquisition and Disposition Activity” and “—Growth Strategy.”
15
Investments in Real Estate Mortgages. We have not invested in, nor do we have any present intention to invest in, real estate
mortgages, although we are not prohibited from doing so.
Financing and Leverage Policy
We may, when appropriate, employ leverage and use debt as a means to refinance existing debt, to provide additional funds to
distribute to stockholders, and/or for corporate purposes, including asset acquisitions. On January 31, 2014, our subsidiaries,
Outfront Media Capital LLC (“Finance LLC”) and Outfront Media Capital Corporation (“Finance Corp.” and together with
Finance LLC, the “Borrowers”) borrowed $800.0 million under a term loan due in 2021, and entered into a $425.0
million revolving credit facility maturing in 2019. On January 31, 2014, the Borrowers also issued $400.0 million aggregate
principal amount of 5.250% Senior Unsecured Notes due 2022 and $400.0 million aggregate principal amount
of 5.625% Senior Unsecured Notes due 2024 (together, the “Formation Notes”) in a private placement. In addition, on
October 1, 2014, the Borrowers issued $150.0 million aggregate principal amount of additional 5.250% Senior Unsecured
Notes due 2022 and $450.0 million aggregate principal amount of 5.875% Senior Unsecured Notes due 2025 (together, the
“Acquisition Notes”) in a private placement. On March 30, 2015, the Borrowers issued $100.0 million aggregate principal
amount of additional 5.625% Senior Unsecured Notes due 2024 (the “Add-on Notes” and, collectively, with the Formation
Notes and the Acquisition Notes, the “Notes”) in a private placement. On March 16, 2017, the Company, along with the
Borrowers, and other guarantor subsidiaries party thereto, entered into an amendment (the “Amendment”) to its credit
agreement and its related security agreement, each dated January 31, 2014 (together, and as amended, supplemented or
otherwise modified, the “Credit Agreement”) providing for, among other things, (i) the extension of the maturity date of the
Borrowers’ existing revolving credit facility (the “Revolving Credit Facility”) from January 31, 2019, to March 16, 2022, (ii)
the extension of the maturity date of the Borrowers’ existing term loan (the “Term Loan” and together with the Revolving
Credit Facility, the “Senior Credit Facilities”) from January 31, 2021, to March 16, 2024, (iii) an increase to the Revolving
Credit Facility by $5.0 million to $430.0 million, and (iv) the incurrence of a $10.0 million incremental term loan primarily to
cover transaction fees and expenses. In addition, on June 30, 2017, certain subsidiaries of the Company entered into a three-
year $100.0 million revolving accounts receivable securitization facility (the “AR Facility”). We have, and from time to time
we may, draw funds from the Revolving Credit Facility and/or the AR Facility for specific or general corporate purposes. For
more information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources.” Other than as described above, we have not borrowed any money from third parties during
the past three years.
The Company’s Charter (our “charter”) and the Company’s Amended and Restated Bylaws (our “bylaws”) do not limit the
amount or percentage of indebtedness that we may incur, nor have we adopted any policies addressing this. The Credit
Agreement, the agreements governing the AR Facility and the indentures governing the Notes contain, and any future debt
agreements may contain, covenants that place restrictions on us and our subsidiaries. Our board of directors may limit our debt
incurrence to be more restrictive than our debt covenants allow and from time to time may modify these restrictions in light of
then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general conditions
in the market for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition
opportunities and other factors. If these restrictions are relaxed, we could become more highly leveraged, resulting in an
increased risk of default on our obligations and a related increase in debt service requirements. See “Item 1A. Risk Factors—
Risks Related to Our Business and Operations.”
Lending Policies
We do not intend to engage in significant lending activities, although we do not have a policy limiting our ability to make loans
to third parties. We may consider offering purchase money financing in connection with the sale of properties. Other than loans
to joint ventures in which we participate and loans to joint venture partners, subject to applicable laws, which we have made,
and may continue to make, we have not made any loans to third parties.
Company Securities Policies
In the future, we may issue debt securities (including senior securities), offer common stock, preferred stock, convertible
securities or options to purchase common stock in exchange for property, and/or repurchase or otherwise reacquire our common
stock or other securities in the open market or otherwise. Except in connection with the IPO, the Exchange Offer, our earnings
and profits purging distribution, the Notes and related exchanges of publicly registered Notes for privately issued Notes, equity
private placements relating to a license and development agreement, the Transaction, the ATM Program (as defined in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”)
and stock-based employee compensation, in the past four years, we have not offered or issued debt securities, common stock,
preferred stock, convertible securities, options to purchase common stock or any other securities in exchange for property or
16
any other purpose. Our board of directors has the authority, without further stockholder approval, to amend our charter to
increase the number of authorized shares of our common stock or preferred stock and to authorize us to issue additional shares
of common stock or preferred stock, in one or more series, including senior securities, in any manner, and on the terms and for
the consideration it deems appropriate, subject to applicable laws and regulations. We have not engaged in trading,
underwriting or agency distribution or sale of securities of other issuers and do not intend to do so.
We make available to our stockholders our Annual Report on Form 10-K, including our audited financial statements, and other
required periodic reports filed with the SEC. See “—Available Information.”
Conflict of Interest Policies
Policies Applicable to All Directors and Officers. The Company has adopted a Code of Conduct that applies to all executive
officers, employees and directors of the Company. In addition, the Company has adopted a Supplemental Code of Ethics
applicable to our principal executive officer, principal financial officer and principal accounting officer and controller or
persons performing similar functions. The Code of Conduct and Supplemental Code of Ethics are designed to promote honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between our employees, officers
and directors and us. However, there can be no assurance that these policies or provisions of law will always be successful in
eliminating the influence of such conflicts.
Interested Director and Officer Transactions. Pursuant to the Maryland General Corporation Law (the “MGCL”), a contract or
other transaction between us and any of our directors or between us and any other corporation or other entity in which any of
our directors is a director or has a material financial interest is not void or voidable solely on the grounds of such common
directorship or interest, the presence of such director at the meeting of the board of directors or committee of the board of
directors at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor
thereof, provided that: (1) the fact of the common directorship or interest is disclosed or known to our board of directors or a
committee of our board, and our board or committee authorizes, approves or ratifies the transaction or contract by the
affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; (2) the
fact of the common directorship or interest is disclosed or known to our stockholders entitled to vote thereon, and the
transaction or contract is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote
other than the votes of shares owned of record or beneficially owned by the interested director or corporation, firm or other
entity; or (3) the transaction or contract is fair and reasonable to us.
Available Information
Our website address is www.outfrontmedia.com. We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and file or furnish reports, proxy statements, and other information with the
SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. Such reports and other
information filed by the Company with the SEC are available free of charge in the Investor Relations section of our website as
soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The public may read
and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580,
Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of the websites referred to
above are not incorporated into this filing.
Item 1A. Risk Factors.
You should carefully consider the following risks, together with all of the other information in this Annual Report on Form 10-
K, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our
consolidated financial statements and the notes thereto in “Item 8. Financial Statements and Supplementary Data,” before
investing in the Company. The occurrence of any of the following risks might cause you to lose all or a part of your investment.
Certain statements in the following risk factors constitute forward-looking statements. See “Cautionary Statement Regarding
Forward-Looking Statements.”
17
Risks Related to Our Business and Operations
Our business is sensitive to a decline in advertising expenditures, general economic conditions and other external events
beyond our control.
We derive our revenues from providing advertising space to customers on out-of-home advertising structures and sites. Our
contracts with our customers generally cover periods ranging from four weeks to one year. A decline in the economic prospects
of advertisers, the economy in general or the economy of any individual geographic market or industry, particularly a market or
industry in which we conduct substantial business, such as the New York, Los Angeles and Miami metropolitan areas, and the
retail, television and healthcare/pharmaceuticals industries, could alter current or prospective advertisers’ spending priorities.
Disasters, acts of terrorism, political uncertainty, extraordinary weather events, hostilities and power outages could interrupt our
ability to display advertising on our advertising structures and sites and lead to a reduction in economic certainty and
advertising expenditures. Any reduction in advertising expenditures could harm our business, financial condition or results of
operations. In addition, advertising expenditures by companies in certain sectors of the economy represent a significant portion
of our revenues. See “Item 1. Business—Our Portfolio of Outdoor Advertising Structures and Sites.” Any political, economic,
social or technological change resulting in a reduction in these sectors’ advertising expenditures could adversely affect our
business, financial condition and results of operations. Further, advertising expenditure patterns may be impacted by any of
these factors; for example, advertisers’ expenditures may be made with less advance notice and may become difficult to
forecast from period to period.
We operate in a highly competitive industry.
The outdoor advertising industry is fragmented, consisting of a few companies operating on a national basis, such as our
company, Clear Channel Outdoor, Lamar, JCDecaux and Intersection, as well as hundreds of smaller regional and local
companies operating a limited number of displays in a single or a few local geographic markets. We compete with these
companies for both customers and display locations. If our competitors offer advertising displays at rates below the rates we
charge our customers, we could lose potential customers and could be pressured to reduce our rates below those currently
charged to retain customers, which could have an adverse effect on our business, financial condition and results of operations.
A majority of our display locations are leased, and a significant portion of those leases are month-to-month or have a short
remaining term. If our competitors offer to lease display locations at rental rates higher than the rental rates we offer, we could
lose display locations and could be pressured to increase rental rates above those we currently pay to site landlords, which
could have an adverse effect on our business, financial condition and results of operations.
We also compete with other media, including online, mobile and social media advertising platforms (such as Facebook,
Alphabet and Amazon) and traditional platforms (such as television, radio, print and direct mail marketers). In addition, we
compete with a wide variety of out-of-home media, including advertising in shopping centers, airports, movie theaters,
supermarkets and taxis. Advertisers compare relative costs of available media, including the average cost per thousand
impressions or “CPM,” particularly when delivering a message to customers with distinct demographic characteristics. In
competing with other media, the outdoor advertising industry relies on its relative cost efficiency and its ability to reach
specific markets, geographic areas and/or demographics. If we are unable to compete on these terms, we could lose potential
customers and could be pressured to reduce rates below those we currently charge to retain customers, which could have an
adverse effect on our business, financial condition and results of operations.
Further, as digital advertising technology continues to develop, our competitors may be able to offer products that are, or that
are seen to be, substantially similar to or better than ours. This may force us to compete in different ways and incur additional
costs and/or expend resources in order to remain competitive. If our competitors are more successful than we are in developing
digital advertising products or in attracting and retaining customers, our business, financial condition and results of operations
could be adversely affected.
Government regulation of outdoor advertising may restrict our outdoor advertising operations.
The outdoor advertising industry is subject to governmental regulation and enforcement at the federal, state and local levels in
the United States and Canada. These regulations have a significant impact on the outdoor advertising industry and our business.
See “Item 1. Business—Regulation.” Regulations and proceedings have made it increasingly difficult to develop new outdoor
advertising structures and sites. If there are changes in laws and regulations affecting outdoor advertising at any level of
government, if there is an increase in the enforcement of regulations or allegations of noncompliance or if we are unable to
resolve allegations, our structures and sites could be subject to removal or modification. If we are unable to obtain acceptable
arrangements or compensation in circumstances in which our structures and sites are subject to removal or modification, it
could have an adverse effect on our business, financial condition and results of operations. In addition, governmental regulation
18
of advertising displays could limit our installation of additional advertising displays, restrict advertising displays to
governmentally controlled sites or permit the installation of advertising displays in a manner that benefits our competitors
disproportionately, any of which could have an adverse effect on our business, financial condition and results of operations.
Our inability to increase the number of advertising displays in our portfolio could have an adverse effect on our business,
financial condition and results of operations.
Our ability to increase the number of digital advertising displays in our portfolio is subject to governmental laws and
regulations. For example, in January 2013, Scenic America, Inc., a nonprofit membership organization, filed a lawsuit against
the U.S. Department of Transportation and the Federal Highway Administration alleging, among other things, that the Federal
Highway Administration exceeded its authority when, in 2007, the Federal Highway Administration issued guidance to assist
its division offices in evaluating state regulations that authorize the construction and operation of digital billboards. That case
has reached a final, non-appealable decision, but if the Federal Highway Administration guidance is ever vacated as a result of
a similar challenge or revised by the Federal Highway Administration, it could have an adverse effect on our business, financial
condition and results of operations.
Any new governmental restrictions on digital advertising displays could limit our installation of additional digital advertising
displays, restrict digital advertising displays to governmentally controlled sites or permit the installation of digital advertising
displays in a manner that benefits our competitors disproportionately, any of which could have an adverse effect on our
business, financial condition and results of operations. Furthermore, as digital advertising displays are introduced into the
market on a large scale, new or revised regulations could impose specific restrictions on the installation or use of such displays.
See “Item 1. Business-Regulation.”
In addition, implementation of digital advertising displays by us or our competitors at a rate that exceeds the ability of the
market to derive new revenues from those displays could also have an adverse effect on our business, financial condition and
results of operations.
Implementing our digital display platform and the deployment of digital advertising displays to our transit franchise
partners, may be more difficult, costly or time consuming than expected and the anticipated benefits may not be fully
realized.
The success of the digital display platform we are currently developing for our customers and the deployment of digital
advertising displays to our transit franchise partners, such as the Washington Metropolitan Area Transit Authority, the
Massachusetts Bay Transportation Authority, and the MTA, and the realization of any anticipated benefits, will depend, in part,
on our ability to finalize and demonstrate the value-added capabilities of our digital display platform to our customers, and our
ability to deliver and install digital displays to our transit franchise partners in satisfaction of our contractual obligations,
including delivery and installation to scale and within complex transit infrastructures. If we fail to satisfy our contractual
obligations and/or the digital display platform and/or the digital advertising displays that we provide to our customers and
transit franchise partners do not meet their expectations or are found to be defective, or if we are unable to realize the
anticipated benefits of these products due to reduced market demand for these products or digital advertising generally, then we
may incur financial liability, which could have an adverse effect on our business, financial condition and results of operation.
Implementing our digital display platform and deploying digital advertising displays to our transit franchise partners in
satisfaction of our contractual obligations requires the Company to incur significant costs, which the Company may not be able
to recover from its customer sales or transit franchise partners. See “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity and Capital Resources.” Any costs currently anticipated may
significantly increase if we incur cost overruns due to technical difficulties, the increased costs of data, digital displays,
materials and labor, delays in construction caused by us, our subcontractors and/or our transit franchise partners, insurance,
bonding and litigation expenses or other factors beyond our control, which could have an adverse effect on our business,
financial condition and results of operations, including cash flow timing and negative publicity. We currently expect to utilize
third-party financing to fund these costs, which could subject the Company to additional costs, liabilities and risks. See
—“Despite our substantial indebtedness level, we and our subsidiaries may be able to incur substantially more indebtedness,
including secured indebtedness. This could further exacerbate the risks to our financial condition described above.”
Further, we rely on third parties to manufacture and transport digital displays, and if we are not able to engage third parties on
reasonable pricing or other terms, due to the insufficient capacity of a particular manufacturer, market-wide supply shortages¸
logistics disruptions or otherwise, or if the third parties that we engage fail to meet their obligations to us, we may be unable to
deploy digital advertising displays to our transit franchise partners in a timely manner or at all, and may fail to satisfy our
contractual obligations, which could have an adverse effect on our business, financial condition and results of operations.
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We may incur material losses and costs as a result of product liability, warranty, and recall and intellectual property claims
that may be brought against us.
We may be exposed to product liability and warranty claims in the event that our digital displays actually or allegedly fail to
perform as expected, or the use of our digital displays results, or is alleged to result, in death, bodily injury, and/or property
damage, which could have an adverse effect on our business, financial condition and results of operations. In addition, if any of
our digital displays become subject to a recall, our customers may hold us responsible for some or all of the repair or
replacement costs of these digital displays under our contractual obligations, which could have an adverse effect on our
business, financial condition and results of operations, including negative publicity.
Further, we face the risk of claims that we have infringed third parties’ intellectual property rights with respect to our digital
display platform and digital displays, which could be expensive and time consuming to defend, could require us to alter our
digital display platform and/or digital displays, prevent us from selling advertising on our digital displays, and/or could require
us to pay license, royalty or other fees to third parties in order to continue using our digital display platform and/or digital
displays.
Taxes, fees and registration requirements may reduce our profits or expansion opportunities.
A number of federal, state and local governments in the United States and Canada have implemented or initiated taxes
(including taxes on revenue from outdoor advertising or for the right to use outdoor advertising assets), fees and registration
requirements in an effort to decrease or restrict the number of outdoor advertising structures and sites or raise revenue, or both.
For example, a tax was imposed on the outdoor advertising industry in Toronto. These efforts may continue, and, if we are
unable to pass on the cost of these items to our customers, the increased imposition of these measures could have an adverse
effect on our business, financial condition and results of operations.
The success of our transit advertising business is dependent on obtaining and renewing key municipal contracts on
favorable terms.
Our transit businesses require us to obtain and renew contracts with municipalities and other governmental entities. All of these
contracts have fixed terms and generally provide for payments to the governmental entity of a revenue share and/or a
guaranteed minimum annual payment, and some may require us to incur capital expenditures. When these contracts expire, we
generally must participate in highly competitive bidding processes in order to obtain a new contract. Our inability to
successfully obtain or renew these contracts on favorable economic terms or at all could have an adverse effect on our financial
condition and results of operations. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Overview—Business Environment.” In addition, the loss of a key municipal contract in one location could
adversely affect our ability to compete in other locations by reducing our scale and ability to offer customers multi-regional and
national advertising campaigns. These factors could have an adverse effect on our business, financial condition and results of
operations.
Government compensation for the removal of lawful billboards could decrease.
Although federal, state and local government authorities from time to time use the power of eminent domain to remove
billboards, U.S. law requires payment of compensation if a government authority compels the removal of a lawful billboard
along a primary or interstate highway that was built with federal financial assistance. Additionally, many states require similar
compensation (or relocation) with regard to compelled removals of lawful billboards in other locations, although the
methodology used to determine such compensation varies by jurisdiction. Some local governments have attempted to force
removal of billboards after a period of years under a concept called amortization. Under this concept, the governmental body
asserts that just compensation has been earned by continued operation of the billboard over a period of time. Thus far, we have
generally been able to obtain satisfactory compensation for our billboards purchased or removed as a result of governmental
action, although there is no assurance that this will continue to be the case in the future, and, if it does not continue to be the
case, there could be an adverse effect on our business, financial condition and results of operations.
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Content-based restrictions on outdoor advertising may further restrict the categories of customers that can advertise using
our structures and sites.
Restrictions on outdoor advertising of certain products, services or other content are or may be imposed by federal, state and
local laws and regulations, as well as contracts with municipalities and transit franchise partners. For example, tobacco
products have been effectively banned from outdoor advertising in all of the jurisdictions in which we currently do business. In
addition, state and local governments in some cases limit outdoor advertising of alcohol, which represented 4% of our U.S.
Media segment revenues in each of 2017 and 2016, and 3% in 2015. Further, certain municipalities and transit franchise
partners limit issue-based outdoor advertising. Content-based restrictions could cause a reduction in our revenues from leasing
advertising space on outdoor advertising displays that display such advertisements and a simultaneous increase in the available
space on the existing inventory of displays in the outdoor advertising industry, which could have an adverse effect on our
business, financial condition and results of operations.
Environmental, health and safety laws and regulations may limit or restrict some of our operations.
As the owner or operator of various real properties and facilities, we must comply with various federal, state and local
environmental, health and safety laws and regulations in the United States and Canada. We and our properties are subject to
such laws and regulations related to the use, storage, disposal, emission and release of hazardous and nonhazardous substances
and employee health and safety. Historically, with the exception of safety upgrades, we have not incurred significant
expenditures to comply with these laws. However, additional laws that may be passed in the future, or a finding of a violation
of or liability under existing laws, could require us to make significant expenditures and otherwise limit or restrict some of our
operations, which could have an adverse effect on our business, financial condition and results of operations.
Our operating results are subject to seasonal variations and other factors.
Our business has experienced and is expected to continue to experience seasonality due to, among other things, seasonal
advertising patterns and seasonal influences on advertising markets. Typically, our revenues and profits are highest in the fourth
quarter, during the holiday shopping season, and lowest in the first quarter, as advertisers cut back on spending following the
holiday shopping season. The effects of such seasonality make it difficult to estimate future operating results based on the
previous results of any specific quarter, which may make it difficult to plan capital expenditures and expansion, could affect
operating results and could have an adverse effect on our business, financial condition and results of operations.
Acquisitions and other strategic transactions that we may pursue could have a negative effect on our results of operations.
We frequently evaluate strategic opportunities both within and outside our existing lines of business. We expect from time to
time to pursue additional acquisitions of business and/or assets and other strategic transactions, including technology
investments and/or the disposition of certain businesses and/or assets. These acquisitions or transactions could be material, and
involve numerous risks, including:
•
•
acquisitions or other strategic transactions may prove unprofitable and fail to generate anticipated cash flows or gains;
integrating acquired businesses and/or assets may be more difficult, costly or time consuming than expected and the
anticipated benefits and costs savings of such acquisitions or transactions may not be fully realized, for example:
we may need to recruit additional senior management, as we cannot be assured that senior management of
acquired businesses and/or assets will continue to work for us, and we cannot be certain that our recruiting efforts
will succeed;
unforeseen difficulties could divert significant time, attention and effort from management that could otherwise be
directed at developing existing business;
we may encounter difficulties expanding corporate infrastructure to facilitate the integration of our operations and
systems with those of acquired businesses and/or assets, which may cause us to lose the benefits of any
expansion; and/or
we may lose billboard leases, franchises or advertisers in connection with such acquisitions or transactions, which
could disrupt our ongoing businesses;
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• we may not be aware of all of the risks associated with any acquired businesses and/or assets and certain of our
assumptions with respect to these acquired businesses and/or assets may prove to be inaccurate, which could result in
unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes due, a
loss of anticipated tax benefits or other adverse effects on our business, operating results or financial condition;
• we may not be able to obtain financing necessary to fund potential acquisitions or strategic transactions;
• we may face increased competition for acquisitions of businesses and assets from other outdoor advertising
companies, some of which may have greater financial resources than we do, which may result in higher prices for
those businesses and assets;
• we may enter into markets and geographic areas where we have limited or no experience; and
•
because we must comply with various requirements under the Code in order to maintain our qualification to be taxed
as a REIT, including restrictions on the types of assets we may hold, the sources of our income and accumulation of
earnings and profits, our ability to engage in certain acquisitions or strategic transactions, such as acquisitions of C
corporations, may be limited. See “—Risks Related to Our Status as a REIT—Complying with REIT requirements
may cause us to liquidate investments or forgo otherwise attractive opportunities.”
Further, acquisitions and dispositions by us may require antitrust review by U.S. federal antitrust agencies and may require
review by foreign antitrust agencies under the antitrust laws of foreign jurisdictions. We can give no assurances that the U.S.
Department of Justice, the U.S. Federal Trade Commission or foreign antitrust agencies will not seek to bar us from the
acquisition or disposition of additional advertising businesses in any market.
We are dependent on our management team, and the loss of senior executive officers or other key employees could have an
adverse effect on our business, financial condition and results of operations.
We believe our future success depends on the continued service and skills of our existing management team and other key
employees with experience and business relationships within their respective roles, including landlord and customer
relationships. The loss of one or more of these key personnel could have an adverse effect on our business, financial condition
and results of operations because of their skills, knowledge of the market, years of industry experience and the difficulty of
finding qualified replacement personnel. If any of these personnel were to leave and compete with us, it could have an adverse
effect on our business, financial condition and results of operations.
Our board of directors has the power to cause us to issue additional shares of stock without stockholder approval.
Our charter authorizes us to issue additional authorized but unissued shares of common or preferred stock. In addition, our
charter permits a majority of our entire board of directors to, without stockholder approval, amend our charter to increase or
decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority
to issue. Our charter also permits our board of directors to classify or reclassify any unissued shares of common or preferred
stock and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our board of directors
will be able to establish a series of shares of common or preferred stock that could delay or prevent a transaction or a change in
control that might involve a premium price for outstanding shares of stock or otherwise be in the best interests of our
stockholders.
Certain provisions of Maryland law may limit the ability of a third party to acquire control of us.
Certain provisions of the MGCL may have the effect of delaying or preventing a transaction or a change in control of us that
might involve a premium price for shares of our stock or otherwise be in the best interests of our stockholders, including:
•
“business combination” provisions that, subject to certain exceptions, prohibit certain business combinations between
a Maryland corporation and an “interested stockholder” (defined generally as any person who beneficially owns,
directly or indirectly, 10% or more of the voting power of a corporation’s outstanding voting stock or an affiliate or
associate of a corporation who, at any time during the two-year period immediately prior to the date in question, was
the beneficial owner of 10% or more of the voting power of the then-outstanding stock of the corporation) or an
affiliate of such an interested stockholder for five years after the most recent date on which the stockholder becomes
an interested stockholder, and thereafter imposes two super-majority stockholder voting requirements on these
combinations; and
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•
“control share” provisions that provide that, subject to certain exceptions, holders of “control shares” of a Maryland
corporation (defined as voting shares of stock that, if aggregated with all other shares of stock owned or controlled by
the acquirer, would entitle the acquirer to exercise voting power in the election of directors within one of three
increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and
outstanding “control shares,” subject to certain exceptions) have no voting rights except to the extent approved by its
stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding
all interested shares.
Additionally, under Title 3, Subtitle 8 of the MGCL, our board of directors is permitted, without stockholder approval and
regardless of what is provided in our charter or bylaws, to implement certain takeover defenses.
Our board of directors has by resolution exempted from the provisions of the Maryland Business Combination Act, as
described above, all business combinations between us and any other person, provided that such business combination is first
approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person). In
addition, our bylaws contain a provision opting out of the Maryland Control Share Acquisition Act, as described above.
Moreover, our charter provides that vacancies on our board may be filled only by a majority of the remaining directors, and that
any directors elected by the board to fill vacancies will serve for the remainder of the full term of the class of directors in which
the vacancy occurred and until a successor is elected and qualifies. Our charter provides that, subject to the rights, if any, of
holders of any class or series of preferred stock to elect or remove one or more directors, members of our board of directors
may be removed only for cause (as defined in our charter), and then only by the affirmative vote of at least two-thirds of the
votes entitled to be cast generally in the election of directors. Our bylaws provide that our board of directors has the exclusive
power to adopt, alter or repeal any provision of our bylaws and to make new bylaws. There can be no assurance that these
exemptions or provisions will not be amended or eliminated at any time in the future.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Our charter contains a provision that eliminates the liability of our directors and officers to the maximum extent permitted by
Maryland law. In addition, our charter authorizes us, and our bylaws obligate us, to the maximum extent permitted by Maryland
law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:
•
•
any present or former director or officer who is made or threatened to be made a party to, or witness in, a proceeding
by reason of his or her service in that capacity; and
any individual who, while a director or officer of our company and at our request, serves or has served as a director,
officer, trustee or manager of another corporation, REIT, limited liability company, partnership, joint venture, trust,
employee benefit plan or any other enterprise and who is made or threatened to be made a party to, or witness in, the
proceeding by reason of his or her service in that capacity.
Our charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of ours in
any of the capacities described above and to any employee of our company or a predecessor of our company.
The indemnification and payment or reimbursement of expenses provided by the indemnification provisions of our charter and
bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification, or
payment or reimbursement of expenses may be or may become entitled under any statute, bylaw, resolution, insurance,
agreement, vote of stockholders or disinterested directors or otherwise.
In addition, we have entered into separate indemnification agreements with each of our directors. Each indemnification
agreement provides, among other things, for indemnification as provided in the agreement and otherwise to the fullest extent
permitted by law and our charter and bylaws against judgments, fines, penalties, amounts paid in settlement and reasonable
expenses, including attorneys’ fees. The indemnification agreements provide for the advancement or payment of expenses to
the indemnitee and for reimbursement to us if it is found that such indemnitee is not entitled to such advancement.
Accordingly, in the event that any of our directors or officers are exculpated from, or indemnified against, liability but whose
actions impede our performance, we and our stockholders’ ability to recover damages from that director or officer will be
limited.
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We have substantial indebtedness that could adversely affect our financial condition.
As of December 31, 2017, we had total indebtedness of approximately $2.3 billion (consisting of the Term Loan, the Notes and
the AR Facility with outstanding aggregate principal balances of $670.0 million, $1.5 billion and $80.0 million, respectively),
and undrawn commitments under the Revolving Credit Facility of $430.0 million, excluding $88.6 million of letters of credit
issued against the Revolving Credit Facility. See “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources.”
Our level of debt could have important consequences, including:
• making it more difficult for us to satisfy our obligations with respect to the Notes and our other debt;
•
•
•
•
•
•
requiring us to dedicate a substantial portion of our cash flow from operations to payments on indebtedness, thereby
reducing the availability of cash flow to fund acquisitions, working capital, capital expenditures, and strategic business
development efforts and other corporate purposes;
increasing our vulnerability to and limiting our flexibility in planning for, or reacting to, changes in the business, the
industries in which we operate, the economy and governmental regulations;
restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
exposing us to the risk of increased interest rates as borrowings under the Senior Credit Facilities and the AR Facility
are expected to be subject to variable rates of interest;
placing us at a competitive disadvantage compared to our competitors that have less debt; and
limiting our ability to borrow additional funds.
The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability
to incur debt that we may need to fund initiatives in response to changes in our business, the industries in which we operate,
the economy and governmental regulations.
The Credit Agreement and the indentures governing the Notes contain a number of restrictive covenants that impose significant
operating and financial restrictions on us and our subsidiaries and limit our ability to engage in actions that may be in our long-
term best interests, including restrictions on our and our subsidiaries’ ability to:
•
•
incur additional indebtedness;
pay dividends on, repurchase or make distributions in respect of our capital stock (other than dividends or distributions
necessary for us to maintain our REIT status, subject to certain conditions);
• make investments or acquisitions;
•
•
•
•
•
•
•
•
sell, transfer or otherwise convey certain assets;
change our accounting methods;
create liens;
enter into sale/leaseback transactions;
enter into agreements restricting the ability to pay dividends or make other intercompany transfers;
consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries’ assets;
enter into transactions with affiliates;
prepay certain kinds of indebtedness;
24
•
•
issue or sell stock of our subsidiaries; and
change the nature of our business.
The agreements governing the AR Facility also contain affirmative and negative covenants with respect to our wholly-owned
SPV (as defined below) holding our accounts receivables.
In addition, the Credit Agreement (and under certain circumstances, the agreements governing the AR Facility) has a financial
covenant that requires us to maintain a Consolidated Net Secured Leverage Ratio (as described in “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”). Our ability to
meet this financial covenant may be affected by events beyond our control.
As a result of all of these restrictions, we may be:
•
•
•
limited in how we conduct our business;
unable to raise additional debt or equity financing to operate during general economic or business downturns; or
unable to compete effectively or to take advantage of new business opportunities.
These restrictions could hinder our ability to grow in accordance with our strategy or inhibit our ability to adhere to our
intended distribution policy and, accordingly, may cause us to incur additional U.S. federal income tax liability beyond current
expectations.
A breach of the covenants under the Credit Agreement or either of the indentures governing the Notes, as well as a breach of
the covenants under the agreements governing the AR Facility, including the inability to repay any amounts due and payable,
could result in an event of default or termination event under the applicable agreement. Such a default or termination event
would allow the lenders under the Senior Credit Facilities, the Purchasers (as defined below) under the AR Facility and the
holders of the Notes to accelerate the repayment of such debt and may result in the acceleration of the repayment of any other
debt to which a cross-acceleration or cross-default provision applies. In the event our creditors accelerate the repayment of our
borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. An event of default or
termination event under the Credit Agreement and the agreements governing the AR Facility would also permit the applicable
lenders, Purchasers and any other secured creditors to proceed against the collateral that secures such indebtedness, and
terminate all other commitments to extend additional credit to us. Any of these events could have an adverse effect on our
business, financial condition and results of operations.
Despite our substantial indebtedness level, we and our subsidiaries may be able to incur substantially more indebtedness,
including secured indebtedness. This could further exacerbate the risks to our financial condition described above.
We and our subsidiaries may incur significant additional indebtedness in the future, including secured indebtedness. Although
the indentures governing the Notes and the Credit Agreement contain restrictions on the incurrence of additional indebtedness
and additional liens, these restrictions will be subject to a number of qualifications and exceptions, and the additional
indebtedness, including secured indebtedness, incurred in compliance with these restrictions could be substantial. If we incur
any additional indebtedness that ranks equally with the Notes and/or our Senior Credit Facilities, subject to collateral
arrangements, the holders of that debt will be entitled to share ratably with existing holders of our debt in any proceeds
distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our business. This
may have the effect of reducing the amount of proceeds paid to existing shareholders. These restrictions also will not prevent us
from incurring obligations that do not constitute indebtedness. If new debt is added to our current debt levels, the related risks
that we now face would increase.
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Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
significantly.
Borrowings under the Senior Credit Facilities and the AR Facility are at variable rates of interest and expose us to interest rate
risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the
amount borrowed remains the same, and our net income and cash flows will correspondingly decrease. At our level of
indebtedness, as of December 31, 2017, each 1/4% change in interest rates on our variable rate Term Loan and AR Facility
would have resulted in a $1.7 million and $0.2 million, respectively, change in annual estimated interest expense. Our
aggregate annual estimated interest expense will increase if we make any borrowings under our Revolving Credit Facility. In
the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order
to reduce future interest rate volatility. However, we may not elect to maintain such interest rate swaps with respect to any of
our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.
To service our indebtedness, we require a significant amount of cash and our ability to generate cash depends on many
factors beyond our control.
Our ability to make cash payments on and to refinance our indebtedness, including the Notes, and to fund planned capital
expenditures will depend on our ability to generate significant operating cash flow in the future. Our ability to generate such
cash flow is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our
control. In addition, our ability to generate cash flow may be affected by our REIT compliance obligations and any
consequences of failing to remain qualified as a REIT. See “—Risks Related to Our Status as a REIT.”
Our business may not generate cash flow from operations in an amount sufficient to enable us to pay our indebtedness,
including the Notes, or to fund our other liquidity needs. If we cannot service our indebtedness, we may have to take actions
such as refinancing or restructuring our indebtedness, selling assets or reducing or delaying capital expenditures, strategic
acquisitions and investments. Such actions, if necessary, may not be effected on commercially reasonable terms or at all. Our
ability to refinance or restructure our debt will depend on the condition of the capital markets and our financial condition at the
applicable time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous
covenants, which could further restrict our business operations. Further, the Credit Agreement and the indentures governing the
Notes restrict our ability to undertake or use the proceeds from such measures.
Our cash available for distribution to stockholders may not be sufficient to make distributions at expected levels, and we
may need to borrow in order to make such distributions or may not be able to make such distributions in full.
Distributions that we make will be authorized and determined by our board of directors in its sole discretion out of funds
legally available therefor. While we anticipate maintaining relatively stable distribution(s) during each year, the amount, timing
and frequency of distributions will be at the sole discretion of our board of directors and will be declared based upon various
factors, including, but not limited to: future taxable income, limitations contained in our debt instruments (such as restrictions
on distributions in excess of the minimum amount required to maintain our status as a REIT and on the ability of our
subsidiaries to distribute cash to the Company), debt service requirements, our results of operations, our financial condition, our
operating cash inflows and outflows, including capital expenditures and acquisitions, limitations on our ability to use cash
generated in the TRSs to fund distributions and applicable law. We may need to increase our borrowings in order to fund our
intended distributions. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities—Dividend Policy” and “—Despite our substantial indebtedness level, we and our subsidiaries may be able
to incur substantially more indebtedness, including secured indebtedness. This could further exacerbate the risks to our
financial condition described above.”
Hedging transactions could have a negative effect on our results of operations.
We may enter into hedging transactions, including without limitation, with respect to interest rate exposure and foreign
currency exchange rates and on one or more of our assets or liabilities. The use of hedging transactions involves certain risks,
including: (1) the possibility that the market will move in a manner or direction that would have resulted in a gain for us had a
hedging transaction not been utilized, in which case our performance would have been better had we not engaged in the
hedging transaction; (2) the risk of an imperfect correlation between the risk sought to be hedged and the hedging transaction
used; (3) the potential illiquidity for the hedging instrument used, which may make it difficult for us to close out or unwind a
hedging transaction; (4) the possibility that our counterparty fails to honor its obligations; and (5) the possibility that we may
have to post collateral to enter into hedging transactions, which we may lose if we are unable to honor our obligations. In
addition, as a REIT, we have limitations on our income sources, and the hedging strategies available to us will be more limited
26
than those available to companies that are not REITs. See “—Risks Related to Our Status as a REIT—Complying with REIT
requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.”
We face diverse risks in our Canadian business, which could adversely affect our business, financial condition and results
of operations.
Our Canadian business contributed approximately $73.2 million to total revenues in 2017, approximately $67.3 million to total
revenues in 2016 and approximately $71.7 million to total revenues in 2015. Inherent risks in our Canadian business activities
could decrease our Canadian sales and have an adverse effect on our business, financial condition and results of operations.
These risks include potentially unfavorable Canadian economic conditions, political conditions or national priorities, Canadian
government regulation and changes in such regulation, violations of applicable anti-corruption laws or regulations, potential
expropriation of assets by the Canadian government, the failure to bridge cultural differences and limited or prohibited access
to our Canadian operations and the support they provide. We may also have difficulty repatriating profits or be adversely
affected by exchange rate fluctuations in our Canadian business.
If our security measures are breached, our services may be perceived as not being secure, users and customers may curtail
or stop using our services, and we may incur significant legal and financial exposure.
Although we have implemented physical and electronic security measures and crisis management procedures designed to
protect against the loss, misuse and alteration of our websites, digital assets and proprietary business information as well as
consumer, business partner and advertiser personally identifiable information, no security measures are perfect and
impenetrable and we may be unable to prevent unauthorized access. Further, because techniques used to obtain unauthorized
access and degrade or disable systems change frequently and often are not recognized until launched against a target, we may
be unable to anticipate these techniques or implement adequate preventative measures. A security breach could occur due to the
acts or omissions of third parties, employee error, malfeasance, system errors or vulnerabilities, or otherwise. If an actual or
perceived breach of our security occurs, we could lose competitively sensitive business information or suffer disruptions to our
business operations. In addition, the public perception of the effectiveness of our security measures or services could be
harmed, we could lose business partners and advertisers, and we could suffer significant legal and financial exposure in
connection with remediation efforts, investigations and legal proceedings and changes in our security and system protection
measures.
Changes in regulations and consumer concerns regarding privacy, information security and data, or any failure or
perceived failure to comply with these regulations or our internal policies, could negatively impact our business.
We collect and utilize demographic and other information from and about consumers, business partners, advertisers and website
users. We are subject to numerous federal, state, local and foreign laws, rules and regulations as well as industry standards and
regulations regarding privacy, information security, data and consumer protection, among other things. Many of these laws and
industry standards and regulations are still evolving and changes in the nature of the data that we purchase and/or collect, and
the ways that data is permitted to be collected, stored, used and/or shared may negatively impact the way that we are able to
conduct business. In addition, changes in consumer expectations and demands regarding privacy, information security and data
may result in further restrictions on the nature of the data that we purchase and/or collect, and the ways we collect, use, disclose
and derive economic value from data that we purchase and/or collect, and may limit our ability to offer targeted advertising
opportunities to our business partners and advertisers. Although we monitor regulatory changes and have implemented internal
policies and procedures designed to comply with all applicable laws, rules, industry standards and regulations, any failure or
perceived failure by us to comply with applicable regulatory requirements or our internal policies related to privacy,
information security, data and/or consumer protection could result in a loss of confidence, a loss of goodwill, damage to our
brand, loss of business partners and advertisers, adverse regulatory proceedings and/or civil litigation, which could negatively
impact our business.
We could suffer losses due to asset impairment charges for goodwill.
A significant portion of our assets consists of goodwill. We test goodwill for impairment during the fourth quarter of each year
and between annual tests if events or circumstances require an interim impairment assessment. A downward revision in the
estimated fair value of a reporting unit could result in a non-cash impairment charge. Any such impairment charge could have a
material adverse effect on our reported net income. See “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.”
27
Risks Related to Our Status as a REIT
If we fail to remain qualified as a REIT, we will be subject to U.S. federal income tax as a regular corporation and could
face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders.
Qualification to be taxed as a REIT involves the application of highly technical and complex Code provisions for which only
limited judicial and administrative authorities exist. Even a technical or inadvertent failure to comply with these provisions
could jeopardize our REIT qualification. Our ability to remain qualified to be taxed as a REIT will depend on our satisfaction
of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In
addition, our ability to satisfy the requirements to remain qualified to be taxed as a REIT may depend in part on the actions of
third parties over which we have no control or only limited influence.
In addition, the rules dealing with U.S. federal income taxation are continually under review by persons involved in the
legislative process and by the IRS and the U.S. Department of the Treasury (the “Treasury”). Although the IRS has issued a
private letter ruling with respect to certain issues relevant to our ability to qualify to be taxed as a REIT, no assurance can be
given that the IRS will not challenge our qualification to be taxed as a REIT in the future. Changes to the tax laws or
interpretations thereof, or the IRS’s position with respect to our private letter ruling, with or without retroactive application,
could materially and negatively affect our ability to qualify to be taxed as a REIT.
If we were to fail to remain qualified to be taxed as a REIT in any taxable year, we would be subject to U.S. federal income tax,
including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our
stockholders would not be deductible by us in computing our taxable income. Any resulting corporate tax liability could be
substantial and would reduce the amount of cash available for distribution to holders of our common stock, which in turn could
have an adverse impact on the value of our common stock and may require us to incur indebtedness or liquidate certain
investments in order to pay such tax liability. Unless we were entitled to relief under certain Code provisions, we would also be
disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to
be taxed as a REIT.
REIT distribution requirements could adversely affect our ability to execute our business plan.
To maintain REIT status, we must meet a number of organizational and operational requirements, including a requirement that
we annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the
dividends-paid deduction and excluding any net capital gains. To the extent that we satisfy this distribution requirement and
qualify for taxation as a REIT but distribute less than 100% of our REIT taxable income, determined without regard to the
dividends-paid deduction and including any net capital gains, we will be subject to U.S. federal income tax on our undistributed
net taxable income. In addition, we will be subject to a nondeductible 4% excise tax if the amount that we actually distribute to
our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. We intend to pay
regular quarterly distributions to our stockholders in an amount not less than 100% of our REIT taxable income (determined
before the deduction for dividends paid).
From time to time, we may generate taxable income greater than our cash flow as a result of differences in timing between the
recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of
reserves or required debt or amortization payments. If we do not have other funds available in these situations, we could be
required to borrow funds on unfavorable terms, sell assets at disadvantageous prices or distribute amounts that would otherwise
be invested in future acquisitions to make distributions sufficient to enable us to pay out enough of our taxable income to
satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These
alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may impact our ability
to grow, which could adversely affect the value of our common stock.
28
To fund our growth strategy and refinance our indebtedness, we may depend on external sources of capital, which may not
be available to us on commercially reasonable terms or at all.
As a result of the REIT organizational and operational requirements described above, we may not be able to fund future capital
needs, including any necessary acquisition financing, solely from operating cash flows. Consequently, we expect to rely on
third-party capital market sources for debt or equity financing to fund our business strategy. In addition, we will likely need
third-party capital market sources to refinance our indebtedness at maturity. Turbulence in the United States or international
financial markets and economies could adversely impact our ability to replace or renew maturing liabilities on a timely basis or
access the capital markets to meet liquidity and capital expenditure requirements and may result in adverse effects on our
business, financial condition and results of operations. As such, we may not be able to obtain financing on favorable terms or at
all. Our access to third-party sources of capital also depends, in part, on:
•
•
•
•
the market’s perception of our growth potential;
our then-current levels of indebtedness;
our historical and expected future earnings, cash flows and cash distributions; and
the market price per share of our common stock.
In addition, our ability to access additional capital may be limited by the terms of our outstanding indebtedness, which may
restrict our incurrence of additional debt. See “—Risks Related to Our Business and Operations—Despite our substantial
indebtedness level, we and our subsidiaries may be able to incur substantially more indebtedness, including secured
indebtedness. This could further exacerbate the risks to our financial condition described above.” If we cannot obtain capital
when needed, we may not be able to acquire or develop properties when strategic opportunities arise or refinance our debt,
which could have an adverse effect on our business, financial condition and results of operations.
Even if we remain qualified to be taxed as a REIT, we may face other tax liabilities that reduce our cash flow.
Even if we remain qualified for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our
income and assets, including taxes on any undistributed income and state or local income, property and transfer taxes. For
example, in order to meet the REIT qualification requirements, we may hold some of our assets or conduct certain of our
activities through one or more TRSs or other subsidiary corporations that will be subject to foreign, federal, state and local
corporate-level income taxes as regular C corporations. In addition, we may incur a 100% excise tax on transactions with a
TRS if the transactions are not conducted on an arm’s-length basis. Any of these taxes would decrease cash available for
distribution to holders of our common stock.
Complying with REIT requirements may cause us to liquidate investments or forgo otherwise attractive opportunities.
To remain qualified to be taxed as a REIT for U.S. federal income tax purposes, we must ensure that, at the end of each
calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and “real estate
assets” (as defined in the Code), including certain mortgage loans and securities. The remainder of our investments (other than
government securities, qualified real estate assets and securities issued by a TRS) generally cannot include more than 10% of
the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one
issuer. In addition, in general, no more than 5% of the value of our total assets (other than government securities, qualified real
estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 20% of the value
of our total assets can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end
of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain
statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may
be required to liquidate or forgo otherwise attractive investments. These actions could have the effect of reducing our income
and amounts available for distribution to holders of our common stock.
In addition to the assets tests set forth above, to remain qualified to be taxed as a REIT for U.S. federal income tax purposes,
we must continually satisfy tests concerning, among other things, the sources of our income, the amounts we distribute to our
stockholders and the ownership of our stock. We may be unable to pursue investments that would be otherwise advantageous to
us in order to satisfy the source-of-income or asset-diversification requirements for qualifying to be taxed as a REIT.
Accordingly, compliance with the REIT requirements may hinder our ability to make certain attractive investments.
29
Complying with REIT requirements may depend on our ability to contribute certain contracts to a taxable REIT subsidiary.
Our ability to satisfy certain REIT requirements may depend on us contributing to a TRS certain contracts, or portions of
certain contracts, with respect to outdoor advertising assets that do not qualify as real property for purposes of the REIT asset
tests. Moreover, our ability to satisfy the REIT requirements may depend on us properly allocating between us and our TRS the
revenue or cost, as applicable, associated with the portion of any such contract contributed to the TRS. There can be no
assurance that the IRS will not determine that such contribution was not a true contribution between us and our TRS or that we
did not properly allocate the applicable revenues or costs. Were the IRS successful in such a challenge, it could adversely
impact our ability to qualify to be taxed as a REIT or our effective tax rate and tax liability.
Our planned use of taxable REIT subsidiaries may cause us to fail to qualify to be taxed as a REIT.
The net income of our TRSs is not required to be distributed to us, and income that is not distributed to us generally will not be
subject to the REIT income distribution requirement. However, there may be limitations on our ability to accumulate earnings
in our TRSs and the accumulation or reinvestment of significant earnings in our TRSs could result in adverse tax treatment. In
particular, if the accumulation of cash in our TRSs causes the fair market value of our securities in our TRSs and certain other
non-qualifying assets to exceed 20% of the fair market value of our assets, we would fail to remain qualified to be taxed as a
REIT for U.S. federal income tax purposes.
The ownership limitations that apply to REITs, as prescribed by the Code and by our charter, may inhibit market activity in
the shares of our common stock and restrict our business combination opportunities.
In order for us to qualify to be taxed as a REIT, not more than 50% in value of the outstanding shares of our stock may be
owned, beneficially or constructively, by five or fewer individuals, as defined in the Code to include certain entities, at any time
during the last half of each taxable year after the first year for which we elect to qualify to be taxed as a REIT. Additionally, at
least 100 persons must beneficially own our stock during at least 335 days of a taxable year (other than the first taxable year for
which we elect to be taxed as a REIT). Subject to certain exceptions, our charter authorizes our board of directors to take such
actions as are necessary and desirable to preserve our qualification to be taxed as a REIT. Our charter also provides that, unless
exempted by the board of directors, no person may own more than 9.8% in value or in number, whichever is more restrictive,
of the outstanding shares of our common stock or 9.8% in value of the aggregate outstanding shares of all classes and series of
our stock. A person that did not acquire more than 9.8% of our outstanding stock may nonetheless become subject to our
charter restrictions in certain circumstances, including if repurchases by us cause a person’s holdings to exceed such
limitations. The constructive ownership rules are complex and may cause shares of stock owned directly or constructively by a
group of related individuals to be constructively owned by one individual or entity. These ownership limits could delay or
prevent a transaction or a change in control of our company that might involve a premium price for shares of our stock or
otherwise be in the best interests of our stockholders.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code substantially limit our ability to hedge our assets and liabilities. Any income from a hedging
transaction that we enter into primarily to manage risk of interest rate changes or to manage risk of currency fluctuations with
respect to borrowings made or to be made or to acquire or carry real estate assets does not constitute “gross income” for
purposes of the 75% or 95% gross income tests that apply to REITs, provided that certain identification requirements are met.
To the extent that we enter into other types of hedging transactions or fail to properly identify such a transaction as a hedge, the
income is likely to be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules,
we may be required to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could
increase the cost of our hedging activities because our TRS may be subject to tax on gains or expose us to greater risks
associated with changes in interest rates that we would otherwise choose to bear. In addition, losses in our TRS will generally
not provide any tax benefit, except that such losses could theoretically be carried back or forward against past or future taxable
income in the TRS.
If we fail to meet the REIT income tests as a result of receiving non-qualifying rental income, we would be required to pay a
penalty tax in order to retain our REIT status.
Certain income we receive could be treated as non-qualifying income for purposes of the REIT requirements. Even if we have
reasonable cause for a failure to meet the REIT income tests as a result of receiving non-qualifying income, we would
nonetheless be required to pay a penalty tax in order to retain our REIT status.
30
Even if we remain qualified to be taxed as a REIT, we could be subject to tax on any unrealized net built-in gains in the
assets held before electing to be treated as a REIT.
Following our REIT election, we owned appreciated assets that were held by a C corporation and were acquired by us in a
transaction in which the adjusted tax basis of the assets in our hands was determined by reference to the adjusted tax basis of
the assets in the hands of the C corporation. If we dispose of any such appreciated assets in a taxable transaction during the 5-
year period following our acquisition of the assets from the C corporation (i.e., during the 5-year period ending July 17, 2019),
we will be subject to tax at the highest corporate tax rates on any gain from such assets to the extent of the excess of the fair
market value of the assets on the date that they were acquired by us (i.e., at the time that we became a REIT) over the adjusted
tax basis of such assets on such date, which are referred to as built-in gains. We would be subject to this tax liability even if we
maintain our status as a REIT. Any recognized built-in gain will retain its character as ordinary income or capital gain and will
be taken into account in determining REIT taxable income and our distribution requirement for the year such gain is
recognized. Any tax on the recognized built-in gain will reduce REIT taxable income. We may choose not to sell in a taxable
transaction appreciated assets that we might otherwise sell during the 5-year period in which the built-in gain tax applies in
order to avoid the built-in gain tax. However, there can be no assurances that such a taxable transaction will not occur. If we
sell such assets in a taxable transaction, the amount of corporate tax that we will pay will vary depending on the actual amount
of net built-in gain present in those assets as of the time we became a REIT. The amount of tax could be significant.
The IRS may deem the gains from sales of our outdoor advertising assets to be subject to a 100% prohibited transaction tax.
From time to time, we may sell outdoor advertising assets. The IRS may deem one or more sales of our outdoor advertising
assets to be “prohibited transactions” (generally, sales or other dispositions of property that is held as inventory or primarily for
sale to customers in the ordinary course of a trade or business). If the IRS takes the position that we have engaged in a
“prohibited transaction,” the gain we recognize from such sale would be subject to a 100% tax. We do not intend to hold
outdoor advertising assets as inventory or for sale in the ordinary course of business; however, whether property is held as
inventory or “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and
circumstances and there is no assurance that our position will not be challenged by the IRS especially if we make frequent sales
or sales of outdoor advertising assets in which we have short holding periods.
We may establish operating partnerships as part of our REIT structure, which could result in conflicts of interests between
our stockholders and holders of our operating partnership units and could limit our liquidity or flexibility.
As part of our REIT structure, we have established a “DownREIT” operating partnership, and we may in the future establish an
“UPREIT” and additional “DownREIT” operating partnerships, whereby we acquire certain assets by issuing units in an
operating partnership (or a subsidiary) in exchange for an asset owner contributing such assets to the partnership (or
subsidiary). If we enter into such transactions, in order to induce the contributors of such assets to accept units in our operating
partnerships, rather than cash, in exchange for their assets, it may be necessary for us to provide them additional incentives. For
instance, the operating partnership’s limited partnership or limited liability company agreement may provide that any
unitholder of the operating partnership may be entitled to receive cash or equity distributions on its units, as well as exchange
units for cash equal to the value of an equivalent number of shares of our common stock or, at our option, for shares of our
common stock on a one-for-one basis. We may also enter into additional contractual arrangements with asset contributors under
which we would agree to repurchase a contributor’s units for shares of our common stock or cash, at the option of the
contributor, at set times.
In connection with these transactions, persons holding operating partnership units (or similar securities) may have the right to
vote on certain amendments to the partnership agreements of such operating partnerships, as well as on certain other matters.
Unitholders holding these voting rights may be able to exercise them in a manner that conflicts with the interests of our
stockholders. As the sole member of the general partner of the operating partnerships or as the managing member, we would
have fiduciary duties to the unitholders of the operating partnerships that may conflict with duties that our officers and directors
owe to the Company.
In addition, if a holder of operating partnership units (or similar securities) received cash distributions on its units and/or
required us to repurchase the units for cash, it would limit our liquidity and thus our ability to use cash to make other
investments, distributions to stockholders, debt service payments, or satisfy other obligations. Moreover, if we were required to
repurchase units for cash at a time when we did not have sufficient cash to fund the repurchase, we might be required to sell
one or more assets to raise funds to satisfy this obligation. Furthermore, we might agree that if distributions the holder of
operating partnership units (or similar securities) received did not provide them with a defined return, then upon redemption of
the units, we would pay the holder an additional amount necessary to achieve that return. Such a provision could further
negatively impact our liquidity and flexibility. Finally, in order to allow a contributor of assets to defer taxable gain on the
31
contribution of assets to our operating partnerships, we might agree not to sell a contributed asset for a defined period of time
or until the contributor exchanged its operating partnership units (or similar securities) for cash or shares. Such an agreement
would prevent us from selling those properties, even if market conditions made such a sale favorable to us.
U.S. federal tax reform legislation could affect REITs, trading of our stock, the markets in which we operate, and our
business, financial condition and results of operations, in ways that are difficult to anticipate.
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law making significant changes to the Code,
including corporate and individual tax rates and the calculation of taxes, as well as international tax rules. While the changes in
the Tax Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Code
may have unanticipated effects on REITs, the Company and/or our stockholders. Moreover, Congressional leaders have
recognized that the process of adopting extensive tax legislation in a short amount of time is likely to have led to drafting
errors, issues needing clarification and unintended consequences that will have to be reviewed in subsequent tax legislation. At
this point, it is not clear when Congress will address these issues or when the IRS will issue guidance on the changes made in
the Tax Act. In addition, it is unclear how the Tax Act will affect state and local taxation, which often uses federal taxable
income as a starting point for computing state and local tax liabilities. State and local tax laws may change in response to the
Tax Act, which could have a significant impact on individuals and businesses within these state and local jurisdictions.
As a REIT, we are generally not required to pay federal taxes otherwise applicable to C corporations if we comply with the
various tax regulations governing REITs. Our stockholders, however, are generally required to pay taxes on REIT dividends
and distributions. The Tax Act could impact our stock price or how our stockholders and potential investors view investing in
REITs. For example, the decrease in corporate tax rates in the Tax Act could decrease the attractiveness of the REIT structure
relative to companies that are not organized as REITs. In addition, while certain elements of the Tax Act do not impact us
directly as a REIT, they could impact the geographic markets in which we operate as well as our landlords, transit franchise
partners and customers in ways, both positive and negative, that are difficult to anticipate. Accordingly, there can be no
assurance that the Tax Act will not have an adverse effect on our business, financial condition and results of operations.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our principal executive offices, which we lease, are located at 405 Lexington Avenue, 17th Floor, New York, NY 10174. We
and our subsidiaries also own and lease office and warehouse space throughout the United States and Canada. We consider our
properties adequate for our present needs, and adequately covered by insurance.
In the United States and Canada, we primarily lease our outdoor advertising sites, but, in a few cases, we own or hold
permanent easements on our outdoor advertising sites. These lease agreements have terms varying between one month and
multiple years, with an average term of nine years, and usually provide renewal options. Our lease agreements generally allow
us to use the land for the construction, repair and relocation of outdoor advertising structures, including all rights necessary to
access and maintain the site. Approximately 68% of our outdoor advertising site leases will expire or be subject to renewal in
the next 5 years, 21% will expire or be subject to renewal in 6 to 10 years and 11% will expire or be subject to renewal in more
than 10 years. There is no significant concentration of outdoor advertising sites under any one lease or with any one landlord.
An important part of our business activity is to manage our lease portfolio and negotiate suitable lease renewals and extensions.
For further information regarding our outdoor advertising sites and structures, see “Item 1. Business—Our Portfolio of Outdoor
Advertising Structures and Sites” and “Item 1. Business—Renovation, Improvement and Development.”
Item 3. Legal Proceedings.
On an ongoing basis, we are engaged in lawsuits and governmental proceedings and respond to various investigations,
inquiries, notices and claims from national, state and local governmental and other authorities (collectively, “litigation”).
Litigation is inherently uncertain and always difficult to predict. Although it is not possible to predict with certainty the
eventual outcome of any litigation, in our opinion, none of our current litigation is expected to have a material adverse effect on
our results of operations, financial position or cash flows.
Item 4. Mine Safety Disclosures.
Not applicable.
32
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information
Shares of our common stock began trading on the New York Stock Exchange (“NYSE”) on March 28, 2014 under the ticker
symbol “CBSO.” On November 20, 2014, in connection with our rebranding, shares of our common stock began trading on
the NYSE under the ticker symbol “OUT”. Prior to March 28, 2014, there was no public market for our common stock.
The following table sets forth the historical high and low sales prices per share of our common stock as reported on the NYSE
during the periods indicated, and the amount of dividends declared per share.
(per share)
2017:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2016:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
Low
Dividends
Declared
$
27.89
$
24.80
$
26.87
25.30
25.13
21.91
20.82
22.58
$
22.10
$
18.01
$
24.24
24.32
25.47
20.54
20.72
21.06
0.36
0.36
0.36
0.36
0.34
0.34
0.34
0.34
On February 26, 2018, the closing price of our common stock on the NYSE was $22.21 per share.
Holders
As of February 26, 2018, we had 231 holders of record of our common stock.
Dividend Policy
To maintain REIT status, we must annually distribute to our stockholders at least 90% of our REIT taxable income, determined
without regard to the dividends-paid deduction and excluding any net capital gains. To the extent that we satisfy this
distribution requirement and qualify for taxation as a REIT but distribute less than 100% of our REIT taxable income,
determined with the above modifications, we will be subject to U.S. federal income tax on our undistributed net taxable
income. In addition, we will be subject to a nondeductible 4% excise tax if the amount that we actually distribute to our
stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. We intend to pay regular
quarterly distributions to our stockholders in an amount not less than 100% of our REIT taxable income (determined before the
deduction for dividends paid). See “Item 1. Business—Tax Status.”
Distributions that we make will be authorized and determined by our board of directors in its sole discretion out of assets
legally available therefor. While we anticipate maintaining relatively stable distribution(s) during each year, the amount, timing
and frequency of distributions will be at the sole discretion of the board of directors, and distributions will be declared based
upon various factors, including but not limited to: future taxable income, limitations contained in our debt instruments (such as
restrictions on distributions in excess of the minimum amount required to maintain our status as a REIT and on the ability of
our subsidiaries to distribute cash to the Company), debt service requirements, our results of operations, our financial condition,
our operating cash inflows and outflows, including capital expenditures and acquisitions, limitations on our ability to use cash
generated in the TRSs to fund distributions and applicable law. See “Item 1A. Risk Factors,” “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Item 8.
Financial Statements and Supplementary Data.” We may need to increase our borrowings in order to fund our intended
33
distributions. We expect that our distributions may exceed our net income, due, in part, to noncash expenses included in net
income (loss).
We anticipate that our distributions generally will be taxable as ordinary income to our stockholders, although we may
designate a portion of the distributions as qualified dividend income or capital gain dividends or a portion of the distributions
may constitute a return of capital or be taxable as capital gain. We furnish annually to each of our stockholders a statement
setting forth distributions paid during the preceding year and their characterization as ordinary income dividends, return of
capital, qualified dividends, income or capital gain dividends or non-dividend distributions. Approximately 84.5% of the
dividends we distributed in 2017 should be considered ordinary income by our stockholders for tax purposes, approximately
1.3% should be considered a capital gain, and approximately 14.2% should be considered a return of capital. The capital gain
distribution is subject to certain recapture provisions for both individual and corporate shareholders.
On February 22, 2017, we announced that our board of directors had authorized a quarterly cash dividend of $0.36 per share on
our common stock, which was paid on March 31, 2017, to stockholders of record at the close of business on March 10, 2017.
On April 25, 2017, we announced that our board of directors had authorized a quarterly cash dividend of $0.36 per share on our
common stock, which was paid on June 30, 2017, to stockholders of record at the close of business on June 9, 2017.
On July 25, 2017, we announced that our board of directors had authorized a quarterly cash dividend of $0.36 per share on our
common stock, which was paid on September 29, 2017, to stockholders of record at the close of business on September 8,
2017.
On October 25, 2017, we announced that our board of directors had authorized a quarterly cash dividend of $0.36 per share on
our common stock, which was paid on December 29, 2017, to stockholders of record at the close of business on December 8,
2017.
On February 27, 2018, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our
common stock, payable on March 30, 2018, to stockholders of record at the close of business on March 9, 2018.
Performance Graph
The information in this section, including the performance graph, shall not be deemed “soliciting material” or to be “filed”
with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall
not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or
the Exchange Act.
The following graph compares the cumulative total stockholder return on OUTFRONT Media Inc.’s common stock to the
cumulative total return of Lamar Advertising Company, Clear Channel Outdoor Holdings, Inc., the Standard & Poor’s 500
Stock Index (“S&P 500”), the S&P 500 Media Industry Index, and the FTSE National Association of Real Estate Investment
Trusts (“NAREIT”) All Equity REITs Index.
The performance graph assumes $100 invested on March 28, 2014, in OUTFRONT Media Inc.’s common stock, Lamar
Advertising Company’s common stock, Clear Channel Outdoor Holdings, Inc.’s common stock, the S&P 500, the S&P 500
Media Industry Index, and the FTSE NAREIT All Equity REITs Index, including the reinvestment of dividends, through the
calendar year ended December 31, 2017.
34
OUTFRONT Media Inc.
Lamar Advertising Company
Clear Channel Outdoor Holdings, Inc.
S&P 500
S&P 500 Media Industry Index(a)
FTSE NAREIT All Equity REITs Index
$
Mar. 28,
2014
100.00
100.00
100.00
100.00
100.00
100.00
Dec. 31, 2014
110.12
$
108.99
123.81
112.56
115.65
118.77
Dec. 31, 2015
94.82
$
127.89
65.36
114.12
110.68
122.12
Dec. 31, 2016
114.66
$
150.48
91.96
127.77
127.97
132.66
Dec. 31, 2017
113.74
$
174.01
101.01
155.66
138.47
144.17
(a) As of December 29, 2017, the S&P 500 Media Industry Index consists of the following companies: CBS Corporation; Charter Communications, Inc.;
Comcast Corporation; Discovery Communications, Inc.; DISH Network Corporation; Interpublic Group of Companies Inc.; News Corporation;
Omnicom Group Inc.; Scripps Networks Interactive, Inc.; Time Warner Inc.; Twenty-First Century Fox, Inc.; Viacom Inc.; and Walt Disney Company.
Unregistered Sales of Equity Securities
None.
35
Purchases of Equity Securities by the Issuer
October 1, 2017 through October 31, 2017
November 1, 2017 through November 30, 2017
December 1, 2017 through December 31, 2017
Total
Item 6. Selected Financial Data.
Total Number of
Shares
Purchased
Average Price
Paid Per Share
Total Number of
Shares Purchased
as Part of
Publicly
Announced
Programs
Remaining
Authorizations
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The following table sets forth our selected historical consolidated financial data for the periods presented. The selected
historical consolidated statements of operations and cash flow data for each of the years ended December 31, 2017, 2016 and
2015 and the selected historical consolidated balance sheet data as of December 31, 2017 and 2016, have been derived from
our audited consolidated financial statements for such years, which are included in this Annual Report on Form 10-K. The
selected historical consolidated statements of operations and cash flow data for the years ended December 31, 2014 and 2013
and the selected historical consolidated balance sheet information as of December 31, 2015, 2014 and 2013 have been derived
from our audited historical consolidated financial statements, which are not included in this Annual Report on Form 10-K.
Our historical consolidated financial data for 2013 have been presented on a “carve-out” basis from CBS’s consolidated
financial statements using the historical results of operations, cash flows, assets and liabilities attributable to CBS’s Outdoor
Americas operating segment and include allocations of expenses from CBS. These allocations reflect significant assumptions,
and the selected historical consolidated financial information set forth below do not necessarily reflect what our results of
operations, financial condition or cash flows would have been if we had operated as a stand-alone company during the periods
presented, and, accordingly, such information should not be relied upon as an indicator of our future performance, financial
condition or liquidity.
You should read the following information together with “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.”
36
(in millions, except per share amounts)
2017
2016(a)
2015
2014
2013
Year Ended December 31,
Statement of Operations data:
Revenues
Adjusted OIBDA(c)
Less:
Stock-based compensation(d)
Restructuring charges
Acquisition costs
Loss on real estate assets held for
sale(b)
Net (gain) loss on dispositions
Depreciation
Amortization
Operating income
Interest expense, net
Benefit (provision) for income taxes
Net income (loss)
Net income (loss) per weighted
average shares outstanding(e):
Basic
Diluted
Dividends declared per common
share
Funds from operations (“FFO”)(f)
Adjusted FFO (“AFFO”)(f)
Balance sheet data (at period end):
Property and equipment, net
Total assets
Current liabilities
Long-term debt, net
Total stockholders’ equity/invested
equity
Cash flow data:
Cash flow provided by operating
activities
Capital expenditures:
Growth
Maintenance
Total capital expenditures
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,520.5
444.1
20.5
6.4
—
—
(14.3)
89.7
100.1
$
$
1,513.9
449.0
18.0
2.5
—
1.3
(1.9)
108.9
115.3
241.7
$
(116.9) $
(4.1) $
125.8
$
204.9
$
(113.8) $
(5.4) $
$
90.9
0.90
0.90
1.44
277.3
277.6
662.1
3,808.2
299.6
2,145.3
1,181.1
249.3
50.9
19.9
70.8
$
$
$
$
$
$
$
$
$
$
$
$
$
0.66
0.66
1.36
280.4
294.5
665.0
3,738.5
251.5
2,136.8
1,232.9
287.1
40.9
18.5
59.4
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,513.8
437.6
15.2
2.6
—
103.6
0.7
113.7
115.4
$
86.4
(114.8) $
(5.4) $
(29.4) $
(0.21) $
(0.21) $
1.42
272.2
268.1
701.7
3,815.5
265.6
2,222.0
1,212.6
293.1
33.6
25.6
59.2
$
$
$
$
$
$
$
$
$
$
$
1,353.8
413.4
10.4
9.8
10.4
—
(2.5)
107.2
95.0
183.1
$
(84.8) $
$
206.0
306.9
$
2.69
2.67
5.67
483.9
235.7
782.9
3,991.4
255.2
2,166.1
1,445.5
262.8
40.9
23.3
64.2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,294.0
414.8
7.5
—
—
—
(27.3)
104.5
91.3
238.8
—
(96.6)
143.5
1.26
1.25
—
299.5
263.1
755.4
3,355.5
212.2
—
2,754.4
281.1
37.2
23.7
60.9
(a) In 2016, we sold all of our equity interest in certain of our subsidiaries, which held all of the assets of our outdoor advertising business in
Latin America. (See Item 8., Note 11. Acquisitions and Dispositions: Dispositions to the Consolidated Financial Statements).
(b) In 2015, we recorded a non-cash loss on real estate assets held for sale. This non-cash loss is primarily comprised of the impact of
including unrecognized foreign currency translation adjustment losses in the carrying value of assets held for sale. (See Item 8., Note 11.
Acquisitions and Dispositions: Dispositions to the Consolidated Financial Statements).
(c) Adjusted OIBDA is a non-GAAP financial measure. For purposes of the above table, we calculate “Adjusted OIBDA” as operating
income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation, restructuring charges, loss on
real estate assets held for sale and costs related to the Acquisition. Adjusted OIBDA is among the primary measures we use for managing
our business, evaluating our operating performance and planning and forecasting future periods, as it is an important indicator of our
operational strength and business performance. Our management believes users of our financial data are best served if the information
37
that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our
management uses in managing, planning and executing our business strategy. Our management also believes that the presentation of
Adjusted OIBDA, as a supplemental measure, is useful in evaluating our business because eliminating certain non-comparable items
highlight operational trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is
management’s opinion that this supplemental measure provides users of our financial data with an important perspective on our
operating performance and also makes it easier for users of our financial data to compare our results with other companies that have
different financing and capital structures or tax rates. See “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” for further information about Adjusted OIBDA.
(d) Stock-based compensation in 2014, excludes $5.6 million recorded as Restructuring charges.
(e) Net income per weighted average share outstanding for 2014 and 2013 was calculated based on weighted average shares outstanding for
2014 of 114.3 million for basic earnings (loss) per share (“EPS”) and 114.8 million for diluted EPS.
(f) We calculate FFO in accordance with the definition established by NAREIT. FFO reflects net income (loss) adjusted to exclude gains
and losses from the sale of real estate assets, depreciation and amortization of real estate assets, amortization of direct lease acquisition
costs, the non-cash effect of loss on real estate assets held for sale and the same adjustments for our equity-based investments, as well as
the related income tax effect of adjustments, as applicable. We calculate AFFO as FFO adjusted to include cash paid for direct lease
acquisition costs as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a
regular basis. AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary
for our operations. In addition, AFFO excludes costs related to the Acquisition and restructuring charges, as well as certain non-cash
items, including non-real estate depreciation and amortization, stock-based compensation expense, accretion expense, the non-cash
effect of straight-line rent and amortization of deferred financing costs, and the non-cash portion of income taxes, as well as the related
income tax effect of adjustments, as applicable. We use FFO and AFFO measures for managing our business and for planning and
forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared
to other REITs. Our management believes users of our financial data are best served if the information that is made available to them
allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing,
planning and executing our business strategy. Our management also believes that the presentations of FFO and AFFO, as supplemental
measures, are useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating
performance of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial
measures. It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective
on our operating performance and also make it easier to compare our results to other companies in our industry, as well as to REITs. See
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for further information about FFO
and AFFO.
38
The following table presents a reconciliation of Net income (loss) to FFO and AFFO:
Year Ended December 31,
2017
2016
2015
2014
2013
$
125.8
$
90.9
$
(29.4) $
306.9
$
143.5
(in millions)
Net income (loss)(1)
Depreciation of billboard
advertising structures
Amortization of real estate-related
intangible assets
Amortization of direct lease
acquisition costs
Loss on real estate assets held for
sale
Net (gain) loss on dispositions of
billboard advertising structures
Adjustment related to equity-
based investments
Income tax effect of
adjustments(2)
FFO
Non-cash portion of income taxes
Cash paid for direct lease
acquisition costs
Maintenance capital expenditures
Restructuring charges - severance
Acquisition costs
Other depreciation
Other amortization
Stock-based compensation
Non-cash effect of straight-line
rent
Accretion expense
Amortization of deferred
financing costs
Income tax effect of
adjustments(3)
AFFO
76.2
48.2
40.0
—
98.2
52.9
38.2
1.3
(14.3)
(1.9)
0.7
0.1
280.4
4.2
(37.0)
(18.5)
2.5
—
10.7
24.2
18.0
1.3
2.4
6.4
0.5
0.9
277.3
(3.6)
(39.2)
(19.9)
6.4
—
13.5
11.9
20.5
3.4
2.3
6.1
(1.1)
$
277.6
$
104.9
55.8
36.3
103.6
0.7
0.7
(0.4)
272.2
(0.4)
(35.9)
(25.6)
2.6
—
8.8
23.3
15.2
(0.3)
2.5
6.3
99.6
44.9
33.8
—
97.5
43.2
30.9
—
(2.5)
(27.3)
0.8
0.4
483.9
(259.0)
(32.8)
(23.3)
4.2
10.4
7.6
16.3
16.0
(0.2)
2.3
12.1
0.8
10.9
299.5
(16.2)
(31.6)
(23.7)
—
—
7.0
17.2
7.5
1.2
2.2
—
—
263.1
(0.1)
294.5
$
(0.6)
268.1
$
(1.8)
235.7
$
(1) Our net income (loss) reflects our tax status as a regular domestic C corporation for U.S. federal income tax purposes through July
16, 2014. On July 17, 2014, we began operating as a REIT for U.S. federal income tax purposes. We incurred an income tax
expense of $4.1 million in 2017, $5.4 million in each of 2016 and 2015, realized an income tax benefit of $206.0 million in 2014,
and incurred an income tax expense of $96.6 million in 2013. Our cash paid for taxes during these periods were $6.8 million in
2017, $1.2 million in 2016, $5.8 million in 2015, $53.0 million in 2014 and $112.8 million in 2013. (See “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Cash Flows.”)
(2) Income tax effect related to Net (gain) loss on dispositions of billboard advertising structures.
(3) Income tax effect related to Restructuring charges - severance and acquisition costs.
39
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be
read in conjunction with our historical consolidated financial statements and the notes thereto in “Item 8. Financial Statements
and Supplementary Data.” This MD&A contains forward-looking statements that involve numerous risks and uncertainties.
The forward-looking statements are subject to a number of important factors, including, but not limited to, those factors
discussed in “Item 1A. Risk Factors” and the “Cautionary Statement Regarding Forward-Looking Statements” section of this
Annual Report on Form 10-K, that could cause our actual results to differ materially from the results described herein or
implied by such forward-looking statements.
Overview
OUTFRONT Media is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home
advertising structures and sites in the United States (the “U.S.”) and Canada. We currently manage our operations through three
operating segments—(1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International
and (3) Sports Marketing. International and Sports Marketing do not meet the criteria to be a reportable segment and
accordingly, are both included in Other (see Item 8., Note 17. Segment Information to the Consolidated Financial Statements).
Prior to April 1, 2016, our International segment included our advertising businesses in Canada and Latin America.
On April 1, 2016, we sold all of our equity interests in certain of our subsidiaries (the “Disposition”), which held all of the
assets of our outdoor advertising business in Latin America. (See Item 8., Note 11. Acquisitions and Dispositions: Dispositions
to the Consolidated Financial Statements.) The operating results of our outdoor advertising business in Latin America through
April 1, 2016, are included in our Consolidated Financial Statements for 2016 and 2015, and are included in Other in our
segment reporting.
Business
We are one of the largest providers of advertising space on out-of-home advertising structures and sites across the U.S. and
Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and
roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-
year contracts with municipalities in large cities across the U.S. and Canada. We also have marketing and multimedia rights
agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising
displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. In total, we
have displays in all of the 25 largest markets in the U.S. and 140 markets in the U.S. and Canada. Our top market, high profile
location focused portfolio includes sites such as the Bay Bridge in San Francisco, various locations along Sunset Boulevard in
Los Angeles, and sites in and around both Grand Central Station and Times Square in New York. The breadth and depth of our
portfolio provides our customers with a range of options to address their marketing objectives, from national, brand-building
campaigns to hyper-local campaigns that drive customers to the advertiser’s website or retail location “one mile down the
road.”
Using Geopath, the out-of-home advertising industry’s audience measurement system, we provide advertisers with the size and
demographic composition of the audience that is exposed to individual displays or a complete campaign. As part of our ON
Smart Media platform, we are developing hardware and software solutions for enhanced demographic and location targeting,
and engaging ways to connect with consumers on-the-go. Additionally, our OUTFRONT Mobile Network allows our
customers to further leverage location targeting with interactive mobile advertising that uses geofence technology to push
mobile ads to consumers within a pre-defined radius around a corresponding billboard display or other designated advertising
location.
We believe out-of-home advertising continues to be an attractive form of advertising, as our displays are ALWAYS ON™, are
always viewable and cannot be turned off, skipped, blocked or fast-forwarded. Further, out-of-home advertising can be an
effective “stand-alone” medium, as well as an integral part of a campaign to reach audiences using multiple forms of media,
including television, radio, print, online, mobile and social media advertising platforms. We provide our customers with a
differentiated advertising solution at an attractive price point relative to other forms of advertising. In addition to leasing
displays, we provide other value-added services to our customers, such as pre-campaign category research, consumer insights,
creative design support, print production and post-campaign tracking and analytics, as well as use of a real-time mobile
operations reporting system that facilitates proof of performance to customers for substantially all of our business.
40
U.S. Media. Our U.S. Media segment generated 23% of its revenues in the New York City metropolitan area in 2017, 25% in
2016 and 27% in 2015, and generated 16% in the Los Angeles metropolitan area in each of 2017 and 2016, and 15% in 2015.
Our U.S. Media segment generated Revenues of $1,406.5 million in 2017, $1,393.8 million in 2016 and $1,344.3 million in
2015, and Operating income before Depreciation, Amortization, Net (gain) loss on dispositions, Stock-based compensation,
Restructuring charges and Loss on real estate assets held for sale (“Adjusted OIBDA”) of $478.1 million in 2017, $473.8
million in 2016 and $451.1 million in 2015. (See the “Segment Results of Operations” section of this MD&A.)
Other (includes International and Sports Marketing). Other generated Revenues of $114.0 million in 2017, $120.1 million in
2016 and $169.5 million in 2015, and Adjusted OIBDA of $8.4 million in 2017, $17.8 million in 2016, and $24.3 million in
2015.
Economic Environment
Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and
other external events beyond our control.
Business Environment
The outdoor advertising industry is fragmented, consisting of several companies operating on a national basis, as well as
hundreds of smaller regional and local companies operating a limited number of displays in a single or a few local geographic
markets. We compete with these companies for customers, structures and display locations. We also compete with other media,
including online, mobile and social media advertising platforms and traditional platforms such as, broadcast and cable
television, radio, print media and direct mail marketers.
Increasing the number of digital displays in our most heavily trafficked locations is an important element of our organic growth
strategy, as digital displays have the potential to attract additional business from both new and existing customers. We believe
digital displays are attractive to our customers because they allow for the development of richer and more visually engaging
messages, provide our customers with the flexibility both to target audiences by time of day and to quickly launch new
advertising campaigns, and eliminate or greatly reduce production costs. In addition, digital displays enable us to run multiple
advertisements on each display. Digital billboard displays generate approximately four times more revenue per display on
average than traditional static billboard displays. Digital billboard displays also incur, on average, approximately two to four
times more costs, including higher variable costs associated with the increase in revenue than traditional static billboard
displays. As a result, digital billboard displays generate higher profits and cash flows than traditional static billboard displays.
The majority of our digital billboard displays were converted from traditional static billboard displays. In 2017, we commenced
deployment of state-of-the-art digital transit displays in connection with several transit franchises and are planning to increase
deployments significantly over the coming years. Once the digital transit displays have been deployed at scale, we expect that
revenue generated on digital transit displays will be a multiple of the revenue generated on comparable static transit
displays. We intend to incur significant equipment deployment costs and capital expenditures in the coming years to continue
increasing the number of digital displays in our portfolio. In 2017, we have built or converted 65 new digital billboard displays
in the United States and 21 in Canada. Additionally, in 2017, we entered into marketing arrangements to sell advertising on 49
digital billboard displays in the U.S. and 26 in Canada. In 2017, we have built, converted or replaced 238 digital transit and
other displays in the United States. The following table sets forth information regarding our digital displays.
Location
United States
Canada
Total
Digital Revenues (in millions)
for the Year Ended December 31, 2017
Number of Digital Displays
as of December 31, 2017(a)
Digital
Billboard
Digital
Transit
and Other
Total
Digital
Revenues
Digital
Billboard
Displays
$
$
159.1
14.6
173.7
$
$
44.8
0.2
45.0
$
$
203.9
14.8
218.7
822
160
982
Digital
Transit
and Other
Displays
Total
Digital
Displays
Percentage
of Total
Digital
Displays
871
63
934
1,693
223
1,916
88%
12
100%
(a) Digital display amounts (1) include displays reserved for transit agency use and (2) exclude: (i) all displays under our multimedia rights agreements with
colleges, universities and other educational institutions; (ii) 1,650 MetroCard vending machine digital screens; and (iii) 317 in-train advertising displays
which are scheduled to be taken out of service permanently.
Our revenues and profits may fluctuate due to seasonal advertising patterns and influences on advertising markets. Typically,
our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as
advertisers cut back on spending following the holiday shopping season.
41
We have a diversified base of customers across various industries. During 2017, our largest categories of advertisers were
retail, healthcare/pharmaceuticals and television, each of which represented 8% of our total U.S. Media segment revenues.
During 2016, our largest categories of advertisers were retail, television and healthcare/pharmaceuticals, which represented
9%, 8% and 7% of our total U.S. Media segment revenues, respectively. During 2015, our largest categories of advertisers
were retail, television and healthcare/pharmaceuticals, which represented 10%, 8% and 7% of our total U.S. Media segment
revenues, respectively.
Our large-scale portfolio allows our customers to reach a national audience and also provides the flexibility to tailor campaigns
to specific regions or markets. In 2017, we generated approximately 43% of our U.S. Media segment revenues from national
advertising campaigns, compared to 46% in 2016 and 47% in 2015.
Our transit businesses require us to obtain and renew contracts with municipalities and other governmental entities. When these
contracts expire, we generally must participate in highly competitive bidding processes in order to obtain or renew contracts.
In November 2014, we were informed that we were not successful in the renewal of the New York City phone kiosk contract
which we obtained as part of the Acquisition and our operation of these kiosks ceased during the first quarter of 2015. In 2015,
we generated revenue of $1.6 million related to these operations.
Our contracts with the New York Metropolitan Transportation Authority (the “MTA”) represented 53% of our U.S. Media
segment transit and other revenues, or 17% of our total U.S. Media segment revenues, in 2017. On December 8, 2017, we
entered into a transit advertising and communications concession agreement with the MTA for subway, commuter rail and
buses for a 10-year term, with an additional 5-year extension at our option. Under the agreement, we are obligated to deploy
over 50,000 digital displays for advertising and MTA communications across the transit system over a number of years,
commencing in 2018, and the MTA is entitled to receive the greater of a percentage of revenues or a guaranteed minimum
annual payment. Due to the change in the MTA’s revenue share percentage under the new agreement, we expect our transit
franchise operating expenses to decline in year one of the new agreement as compared to prior historical periods, and gradually
increase in subsequent years if our revenues increase over an annual base revenue amount. Incremental revenues that exceed an
annual base revenue amount will be retained by us for the cost of deploying advertising and communications screens
throughout the transit system. Our currently estimated equipment deployment costs will be approximately $800 million for the
full 15-year term and approximately $600 million for the first eight years of the term, and we anticipate these equipment
deployment costs will be recorded as Prepaid lease and transit franchise costs and Intangible assets on our Consolidated
Statement of Financial Position. If incremental revenues generated over the term of the agreement are not sufficient to cover all
or a portion of the equipment deployment costs, the costs will not be recovered, which could have an adverse effect on our
business, financial condition and results of operation. We expect to utilize third party financing to fund equipment deployment
costs, and have increased our letters of credit for the benefit of the MTA from approximately $30.0 million to $136.0 million,
which is subject to change as equipment installations are completed and revenues are generated.
Key Performance Indicators
Our management reviews our performance by focusing on the indicators described below.
Several of our key performance indicators are not prepared in conformity with Generally Accepted Accounting Principles in the
United States of America (“GAAP”). We believe these non-GAAP performance indicators are meaningful supplemental
measures of our operating performance and should not be considered in isolation of, or as a substitute for, their most directly
comparable GAAP financial measures.
42
(in millions, except percentages)
Revenues
Organic revenues(a)(b)
Operating income
Adjusted OIBDA(b)
Adjusted OIBDA(b) margin
Funds from operations (“FFO”)(b)
Adjusted FFO (“AFFO”)(b)
Net income
Year Ended December 31,
$
2017
1,520.5
1,501.6
241.7
444.1
29%
277.3
277.6
125.8
2016
% Change
$
1,513.9
1,493.2
204.9
449.0
30%
280.4
294.5
90.9
—%
1
18
(1)
(1)
(6)
38
(a) Organic revenues exclude revenues associated with significant acquisitions and divestitures, revenues associated with business lines we no longer operate,
and the impact of foreign currency exchange rates (“non-organic revenues”). We provide organic revenues to understand the underlying growth rate of
revenue excluding the impact of non-organic revenue items. Our management believes organic revenues are useful to users of our financial data because
it enables them to better understand the level of growth of our business period to period. Since organic revenues are not calculated in accordance with
GAAP, it should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Organic revenues, as we
calculate it, may not be comparable to similarly titled measures employed by other companies.
(b) See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income to Adjusted
OIBDA, Net income (loss) to FFO and AFFO and Revenues to organic revenues.
Adjusted OIBDA
We calculate Adjusted OIBDA as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions,
stock-based compensation, restructuring charges and loss on real estate assets held for sale. We calculate Adjusted OIBDA
margin by dividing Adjusted OIBDA by total revenues. Adjusted OIBDA and Adjusted OIBDA margin are among the primary
measures we use for managing our business, evaluating our operating performance and planning and forecasting future periods,
as each is an important indicator of our operational strength and business performance. Our management believes users of our
financial data are best served if the information that is made available to them allows them to align their analysis and evaluation
of our operating results along the same lines that our management uses in managing, planning and executing our business
strategy. Our management also believes that the presentations of Adjusted OIBDA and Adjusted OIBDA margin, as
supplemental measures, are useful in evaluating our business because eliminating certain non-comparable items highlight
operational trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is
management’s opinion that these supplemental measures provide users of our financial data with an important perspective on
our operating performance and also make it easier for users of our financial data to compare our results with other companies
that have different financing and capital structures or tax rates.
FFO and AFFO
We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts
(“NAREIT”). FFO reflects net income (loss) adjusted to exclude gains and losses from the sale of real estate assets,
depreciation and amortization of real estate assets, amortization of direct lease acquisition costs, the non-cash effect of loss on
real estate assets held for sale and the same adjustments for our equity-based investments, as well as the related income tax
effect of adjustments, as applicable. We calculate AFFO as FFO adjusted to include cash paid for direct lease acquisition costs
as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a regular
basis. AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are
necessary for our operations. In addition, AFFO excludes costs related to restructuring charges, as well as certain non-cash
items, including non-real estate depreciation and amortization, stock-based compensation expense, accretion expense, the non-
cash effect of straight-line rent and amortization of deferred financing costs, and the non-cash portion of income taxes, as well
as the related income tax effect of adjustments, as applicable. We use FFO and AFFO measures for managing our business and
for planning and forecasting future periods, and each is an important indicator of our operational strength and business
performance, especially compared to other REITs. Our management believes users of our financial data are best served if the
information that is made available to them allows them to align their analysis and evaluation of our operating results along the
same lines that our management uses in managing, planning and executing our business strategy. Our management also
believes that the presentations of FFO, AFFO, and related per weighted average share amounts, as supplemental measures, are
useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating performance
of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures.
It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective
43
on our operating performance and also make it easier to compare our results to other companies in our industry, as well as to
REITs.
Since Adjusted OIBDA, Adjusted OIBDA margin, FFO and AFFO and, as applicable, related per weighted average share
amounts, are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute
for, operating income (loss), net income (loss), revenues and net income (loss) per common share for diluted earnings per share,
the most directly comparable GAAP financial measures, as indicators of operating performance. These measures, as we
calculate them, may not be comparable to similarly titled measures employed by other companies. In addition, these measures
do not necessarily represent funds available for discretionary use and are not necessarily a measure of our ability to fund our
cash needs.
Reconciliation of Non-GAAP Financial Measures
The following table reconciles Operating income to Adjusted OIBDA, and Net income (loss) to FFO and AFFO.
(in millions, except per share amounts)
Total revenues
Operating income
Restructuring charges
Loss on real estate assets held for sale
Net gain on dispositions
Depreciation
Amortization
Stock-based compensation
Adjusted OIBDA
Adjusted OIBDA margin
Net income
Depreciation of billboard advertising structures
Amortization of real estate-related intangible assets
Amortization of direct lease acquisition costs
Loss on real estate assets held for sale
Net gain on dispositions of billboard advertising structures
Adjustment related to equity-based investments
Income tax effect of adjustments(a)
FFO
FFO per weighted average shares outstanding, diluted
Year Ended December 31,
2017
1,520.5
241.7
6.4
—
(14.3)
89.7
100.1
20.5
444.1
29%
125.8
76.2
48.2
40.0
—
(14.3)
0.5
0.9
277.3
2.00
$
$
$
$
$
$
2016
1,513.9
204.9
2.5
1.3
(1.9)
108.9
115.3
18.0
449.0
30%
90.9
98.2
52.9
38.2
1.3
(1.9)
0.7
0.1
280.4
2.03
$
$
$
$
$
$
44
(in millions, except per share amounts)
FFO
Non-cash portion of income taxes
Cash paid for direct lease acquisition costs
Maintenance capital expenditures
Restructuring charges
Other depreciation
Other amortization
Stock-based compensation
Non-cash effect of straight-line rent
Accretion expense
Amortization of deferred financing costs
Income tax effect of adjustments(b)
AFFO
AFFO per weighted average shares outstanding, diluted
Net income per common share, diluted
Year Ended December 31,
2017
2016
$
$
$
$
277.3
(3.6)
(39.2)
(19.9)
6.4
13.5
11.9
20.5
3.4
2.3
6.1
(1.1)
277.6
2.00
0.90
$
$
$
$
280.4
4.2
(37.0)
(18.5)
2.5
10.7
24.2
18.0
1.3
2.4
6.4
(0.1)
294.5
2.13
0.66
Weighted average shares outstanding, diluted
138.9
138.4
(a)
(b)
Income tax effect related to Net gain on dispositions of billboard advertising structures.
Income tax effect related to Restructuring charges.
FFO in 2017 of $277.3 million decreased $3.1 million, or 1%, compared to 2016. AFFO in 2017 of $277.6 million decreased
$16.9 million, or 6%, compared to 2016, primarily due to the impact of a reimbursement of historical tax payments received in
2016 from our former parent company, CBS Corporation, and lower depreciation and amortization, partially offset by higher
net income.
Analysis of Results of Operations
Revenues
We derive Revenues primarily from providing advertising space to customers on our advertising structures and sites. Our
contracts with customers generally cover periods ranging from four weeks to one year. Revenues from billboard displays are
recognized as rental income on a straight-line basis over the contract term. Transit and other revenues are recognized as earned
over the contract period.
45
2017 vs. 2016
(in millions, except percentages)
Revenues:
Billboard
Transit and other
Total revenues
Foreign currency exchange impact
Constant dollar revenues(b)
Organic revenues(a):
Billboard
Transit and other
Total organic revenues(a)
Non-organic revenues:
Billboard
Transit and other
Total non-organic revenues
Total revenues
$
$
$
Year Ended December 31,
2017
2016
%
Change
(in constant dollars)(b)
Year Ended
December 31,
2016
%
Change
1,059.0
$
461.5
1,520.5
—
1,520.5
$
1,071.0
442.9
1,513.9
1.2
1,515.1
(1)% $
4
— $
1,072.0
443.1
1,515.1
(1)%
4
—
1,046.5
$
455.1
1,501.6
1,057.8
435.4
1,493.2
12.5
6.4
18.9
13.2
7.5
20.7
(1)
$
5
1
(5)
(15)
(9)
1,057.8
435.4
1,493.2
14.2
7.7
21.9
$
1,520.5
$
1,513.9
— $
1,515.1
(1)
5
1
(12)
(17)
(14)
—
(a) Organic revenues exclude revenues associated with significant acquisitions and divestitures, and the impact of foreign currency exchange rates (“non-
organic revenues”).
(b) Revenues on a constant dollar basis are calculated as reported revenues excluding the impact of foreign currency exchange rates between periods. We
provide constant dollar revenues to understand the underlying growth rate of revenue excluding the impact of changes in foreign currency exchange rates
between periods, which are not under management’s direct control. Our management believes constant dollar revenues are useful to users of our financial
data because it enables them to better understand the level of growth of our business period to period. Since constant dollar revenues are not calculated in
accordance with GAAP, they should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Constant
dollar revenues, as we calculate them, may not be comparable to similarly titled measures employed by other companies.
Total revenues increased $6.6 million and organic revenues increased $8.4 million, or 1%, in 2017 compared to 2016. In
constant dollars, revenues increased $5.4 million and organic revenues increased $8.4 million, or 1%, in 2017 compared to
2016.
Non-organic revenues primarily reflects acquisitions and dispositions.
Total billboard revenues decreased $12.0 million, or 1%, in 2017 compared to 2016, principally driven by a decrease in
average revenue per display (yield), the net effect of new and lost billboards in the period, the impact of the Disposition and the
impact of hurricanes in the Florida and Texas markets, partially offset by the conversion of traditional static billboard displays
to digital billboard displays, higher proceeds from condemnations and the impact of the Transaction (as defined in the
“Segments Results of Operations: Other” section of this MD&A). The decrease in average revenue per display (yield) is
primarily due to a reduction in national advertising revenues, partially offset by an increase in local advertising revenues. In
constant dollars, billboard revenues decreased $13.0 million, or 1%, in 2017 compared to 2016.
The decrease in organic billboard revenues in 2017 compared to 2016, is due to a decrease in average revenue per display
(yield), as discussed above, the net effect of new and lost billboards in the period, the impact of hurricanes in the Florida and
Texas markets, and lower performance in Canada, partially offset by the conversion of traditional static billboard displays to
digital billboard displays and higher proceeds from condemnations.
Total transit and other revenues increased $18.6 million, or 4%, in 2017 compared to 2016, driven by the net effect of won and
lost franchises in the period (primarily the Massachusetts Bay Transportation Authority (the “MBTA”)), partially offset by
lower revenues in New York due to a decrease in average revenue per display (yield), and the impact of the Disposition. The
decrease in average revenue per display (yield) is primarily due to a reduction in national advertising revenues, partially offset
by an increase in local advertising revenues.
46
The increase in organic transit and other revenues in the 2017 compared to 2016, is due to the net effect of won and lost
franchises in the period (primarily the MBTA), partially offset by lower revenues in New York due to a decrease in average
revenue per display (yield), as discussed above.
2016 vs. 2015
(in millions, except percentages)
Revenues:
Billboard
Transit and other
Total revenues
Foreign currency exchange impact
Constant dollar revenues(b)
Organic revenues(a):
Billboard
Transit and other
Total organic revenues(a)
Non-organic revenues:
Billboard
Transit and other
Total non-organic revenues
Total revenues
$
$
$
Year Ended December 31,
2016
2015
%
Change
(in constant dollars)(b)
Year Ended
December 31,
2015
%
Change
1,071.0
$
442.9
1,513.9
—
1,513.9
$
1,084.3
429.5
1,513.8
5.2
1,508.6
(1)% $
3
— $
1,079.7
428.9
1,508.6
(1)%
3
—
1,056.8
$
435.2
1,492.0
1,025.9
420.8
1,446.7
14.2
7.7
21.9
58.4
8.7
67.1
$
3
3
3
(76)
(11)
(67)
1,025.9
420.8
1,446.7
53.8
8.1
61.9
$
1,513.9
$
1,513.8
— $
1,508.6
3
3
3
(74)
(5)
(65)
—
(a) Organic revenues exclude revenues associated with significant acquisitions and divestitures, revenues associated with business lines we no longer operate,
and the impact of foreign currency exchange rates (“non-organic revenues”).
(b) Revenues on a constant dollar basis are calculated as reported revenues excluding the impact of foreign currency exchange rates between periods. We
provide constant dollar revenues to understand the underlying growth rate of revenue excluding the impact of changes in foreign currency exchange rates
between periods, which are not under management’s direct control. Our management believes constant dollar revenues are useful to users of our financial
data because it enables them to better understand the level of growth of our business period to period. Since constant dollar revenues are not calculated in
accordance with GAAP, they should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Constant
dollar revenues, as we calculate them, may not be comparable to similarly titled measures employed by other companies.
Total revenues increased $0.1 million and organic revenues increased $45.3 million, or 3%, in 2016 compared to 2015. In
constant dollars, revenues increased $5.3 million and organic revenues increased $45.3 million, or 3%, in 2016 compared to
2015.
Non-organic revenues primarily reflect acquisitions and dispositions, and the discontinuation of business lines in 2015.
Total billboard revenues decreased $13.3 million, or 1%, in 2016 compared to 2015, principally driven by the impact of the
Disposition, the effect of lost billboard leases in 2016, lower performance in Canada, foreign currency exchange losses of $4.6
million and the impact of the disposition of billboard advertising structures in the second quarter of 2015, partially offset by an
increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard
displays. In constant dollars, billboard revenues decreased $8.7 million, or 1%, in 2016 compared to 2015.
Total transit and other revenues increased $13.4 million, or 3%, in 2016 compared to 2015, driven by stronger market
conditions in local advertising, the impact of an acquisition and the net effect of won and lost franchises in 2016, partially offset
by lower advertising revenue in the first quarter of 2016 from major sports entertainment events and the impact of the
Disposition.
47
Expenses
(in millions, except percentages)
2017
2016
2015
Year Ended December 31,
Expenses:
Operating
Selling, general and administrative
Restructuring charges
Loss on real estate assets held for sale
Net (gain) loss on dispositions
Depreciation
Amortization
Total expenses
*
Calculation is not meaningful.
Operating Expenses
$
835.2
$
818.1
$
261.7
6.4
—
(14.3)
89.7
100.1
264.8
2.5
1.3
(1.9)
108.9
115.3
833.1
258.3
2.6
103.6
0.7
113.7
115.4
$
1,278.8
$
1,309.0
$
1,427.4
% Change
2017 vs.
2016
2016 vs.
2015
2%
(1)
156
*
*
(18)
(13)
(2)
(2)%
3
(4)
(99)
*
(4)
—
(8)
Our operating expenses are composed of the following:
Billboard property lease expenses. These expenses reflect the cost of leasing the real property on which our billboards are
mounted. These lease agreements have terms varying between one month and multiple years, and usually provide renewal
options. Rental expenses are comprised of a fixed monthly amount and under certain agreements, also include contingent rent,
which varies based on the revenues we generate from the leased site. The fixed portion of property leases are generally paid in
advance for periods ranging from one to twelve months and expensed evenly over the contract term. Contingent rent is
generally paid in arrears and is expensed as incurred when the related revenues are recognized.
Transit franchise expenses. These expenses reflect costs charged by municipalities and transit operators under transit
advertising contracts and are generally calculated based on a percentage of the revenues we generate under the contract, with a
minimum guarantee. The costs that are determined based on a percentage of revenues are expensed as incurred when the related
revenues are recognized, and the minimum guarantee is expensed over the contract term.
Posting, maintenance and other site-related expenses. These expenses primarily reflect costs associated with posting and
rotation, materials, repairs and maintenance, utilities and property taxes.
(in millions, except percentages)
Operating expenses:
Billboard property lease
Transit franchise
Posting, maintenance and other
Total operating expenses
Year Ended December 31,
2017
2016
2015
% Change
2017 vs.
2016
2016 vs.
2015
$
$
371.2
$
364.9
$
238.0
226.0
230.9
222.3
835.2
$
818.1
$
369.5
227.3
236.3
833.1
2%
(1)%
3
2
2
2
(6)
(2)
Billboard property lease expenses represented 35% of billboard revenues in 2017 and 34% in each of 2016 and 2015. The
increase in billboard property lease costs in 2017 compared to 2016 was primarily due to an increase in Canada billboard
property lease costs, primarily as a result of the impact of the Transaction, and an increase in U.S. Media segment billboard
property lease costs, including a $1.5 million one-time true-up, partially offset by the impact of the Disposition (a decrease of
$3.0 million compared to 2016). Excluding the impact of the Disposition in 2016, billboard property lease expenses increased
3% in 2017 compared to 2016. The decrease in billboard property lease expenses in 2016 compared to 2015 was primarily due
to the impact of the Disposition (a decrease of $12.2 million compared to 2015) and lost billboard leases in 2016, partially
offset by increases in billboard property lease expenses in our U.S. Media segment. Excluding the impact of the Disposition in
2016, billboard property lease expenses increased 2% in 2016 compared to 2015.
Transit franchise expenses represented 63% of transit revenues in each of 2017, 2016 and 2015. The increase in transit
franchise expenses in 2017 compared to 2016 was primarily due to the increase in transit revenues, primarily from new
48
contracts (primarily the MBTA), partially offset by the impact of the Disposition (a decrease of $0.8 million compared to
2016). The increase in transit franchise expenses in 2016 compared to 2015 was primarily due to the increase in transit
revenues, partially offset by the impact of the Disposition (a decrease of $3.6 million compared to 2015).
Billboard property lease and transit franchise expenses increased by $13.4 million in 2017 compared to 2016. Billboard
property lease and transit franchise expenses decreased by $1.0 million in 2016 compared to 2015.
Posting, maintenance and other expenses as a percentage of Revenues were 15% in each of 2017 and 2016 and 16% in 2015.
Posting, maintenance and other expenses increased $3.7 million, or 2%, in 2017 compared to 2016, primarily due to higher
expenses related to our Sports Marketing operating segment, higher compensation and benefits-related costs, and the impact of
hurricanes in the Florida and Texas markets, partially offset by the impact of the Disposition (a decrease of $5.0 million
compared to 2016). Excluding the impact of the Disposition, posting, maintenance and other expenses increased 4% in 2017
compared to 2016. Posting, maintenance and other expenses decreased $14.0 million, or 6%, in 2016 compared to 2015,
principally due to the impact of the Disposition (a decrease of $17.1 million compared to 2015). Excluding the impact of the
Disposition, posting, maintenance and other expenses increased 1% in 2016 compared to 2015.
Selling, General and Administrative Expenses (“SG&A”)
SG&A expenses represented 17% of Revenues in each of 2017, 2016 and 2015. SG&A expenses decreased $3.1 million, or 1%,
in 2017 compared to 2016, primarily due to lower professional fees and the impact of the Disposition (a decrease of $3.1
million compared to 2016), partially offset by higher expenses related to our Sports Marketing operating segment. Excluding
the impact of the Disposition, SG&A expenses in 2017 were comparable to 2016. SG&A expenses increased $6.5 million, or
3%, in 2016 compared to 2015, primarily due to increased sales and other compensation-related expenses and one-time
professional fees in 2016 of $3.8 million associated with implementing initiatives to improve our cost base and pricing/yield
management, partially offset by the impact of the Disposition (a decrease of $11.5 million compared to 2015), lower
administrative costs and non-recurring legal expenses in 2015 of $5.2 million. Excluding the impact of the Disposition, SG&A
expenses increased 7% in 2016 compared to 2015.
Restructuring Charges
In 2017, we recorded restructuring charges of $6.4 million for severance charges primarily associated with the Transaction. In
2016, we recorded restructuring charges of $2.5 million for severance charges associated with the reorganization of our sales
management and administrative functions. In 2015, we recorded restructuring charges of $2.6 million associated with the
elimination of management positions and the elimination of positions in connection with the sale of assets and the
consolidation of leased locations.
Loss on Real Estate Assets Held for Sale
In connection with the Disposition, the assets of our outdoor advertising business in Latin America had been classified as
Assets held for sale on the Consolidated Statement of Financial Position as of December 31, 2015. It is required that we
measure assets held for sale at the lower of their carrying value (including unrecognized foreign currency translation
adjustment losses) or fair value less cost to sell. The impact of including unrecognized foreign currency translation adjustment
losses in the carrying value of assets held for sale resulted in a non-cash loss on real estate assets held for sale of approximately
$1.3 million in 2016 and $103.6 million in 2015. Upon completion of the Disposition in 2016, the unrecognized foreign
currency translation adjustment loss was reclassified to earnings from Accumulated other comprehensive loss on the
Consolidated Statement of Financial Position.
Net (Gain) Loss on Dispositions
Net gain on dispositions was $14.3 million in 2017, which includes a gain of $14.1 million from the acquisition of digital
billboards in the Boston, Massachusetts, DMA in exchange for static billboards in four non-metropolitan market clusters, and
$1.9 million in 2016. Net loss on dispositions in 2015 was $0.7 million.
49
Depreciation
Depreciation decreased $19.2 million, or 18%, in 2017 compared to 2016, due primarily to the increase in fully-depreciated
advertising billboards and the impact of the Disposition, partially offset by higher depreciation associated with the increased
number of digital billboards. Depreciation decreased $4.8 million, or 4%, in 2016 compared to 2015, due primarily to the
impact of the Disposition, partially offset by higher depreciation associated with the increased number of digital billboards.
Both digital and static billboards are depreciated over an estimated useful life of 5 years to 20 years.
Amortization
Amortization decreased $15.2 million, or 13%, in 2017 compared to 2016, principally driven by lower amortization of
intangible assets. Amortization decreased $0.1 million in 2016 compared to 2015, principally driven by lower amortization of
intangible assets, partially offset by increased direct lease acquisition costs in 2016 compared to 2015. Amortization expense
includes the amortization of direct lease acquisition costs of $40.0 million in 2017, $38.2 million in 2016 and $36.3 million in
2015. Capitalized direct lease acquisition costs were $40.4 million in 2017, $38.0 million in 2016 and $36.3 million in 2015.
Interest Expense
Interest expense, net, was $116.9 million (including $6.1 million of deferred financing costs) in 2017, $113.8 million (including
$6.4 million of deferred financing costs) in 2016 and $114.8 million (including $6.3 million of deferred financing costs) in
2015.
Provision for Income Taxes
The Provision for income taxes was $4.1 million (including a $2.1 million effect from the Tax Cuts and Jobs Act on net
deferred tax assets) in 2017 and $5.4 million in each of 2016 and 2015. Excluding the Loss on real estate assets held for sale of
$103.6 million in 2015, the effective income tax rate was 3.3% for 2017, 5.9% for 2016 and 7.2% for 2015.
Net Income (Loss)
Net income was $125.8 million in 2017, an increase of $34.9 million compared to 2016, primarily due to lower depreciation
and amortization, a gain of $14.1 million from the acquisition of digital billboards in the Boston, Massachusetts, DMA in
exchange for static billboards in four non-metropolitan market clusters, lower professional fees and the impact of the
Disposition. In 2016, Net income was $90.9 million compared to a Net loss of $29.4 million in 2015, primarily due to the
impact of the Disposition, and a Loss on real estate assets held for sale and non-recurring legal expenses in 2015, partially
offset by higher sales and other compensation-related expenses and one-time professional fees in 2016 of $3.8 million
associated with implementing initiatives to improve our cost base and pricing/yield management.
50
Segment Results of Operations
We present Adjusted OIBDA as the primary measure of profit and loss for our operating segments in accordance with Financial
Accounting Standards Board (the “FASB”) guidance for segment reporting. (See the “Key Performance Indicators” section of
this MD&A and Item 8., Note 18. Segment Information to the Consolidated Financial Statements.)
As of April 1, 2016, we manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is
included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing. International and Sports Marketing
do not meet the criteria to be a reportable segment and accordingly, are both included in Other. Our segment reporting therefore
includes U.S. Media and Other.
The following table presents our Revenues, Adjusted OIBDA, Operating income (loss) and Depreciation and Amortization by
segment, in 2017, 2016 and 2015. Historical financial information by reportable segment has been recast to reflect the current
year’s presentation. On April 1, 2016, we completed the Disposition. Historical operating results for our advertising business in
Latin America are included in Other.
(in millions)
Revenues:
U.S. Media
Other
Total revenues
Operating income
Restructuring charges
Loss on real estate assets held for sale
Net (gain) loss on dispositions
Depreciation
Amortization
Stock-based compensation(a)
Total Adjusted OIBDA
Adjusted OIBDA:
U.S. Media
Other
Corporate
Total Adjusted OIBDA
Operating income (loss):
U.S. Media
Other
Corporate
Total operating income
(a) Stock-based compensation is classified as Corporate expense.
Year Ended December 31,
2017
2016
2015
$
$
$
$
$
$
$
$
1,406.5
114.0
1,520.5
241.7
6.4
—
(14.3)
89.7
100.1
20.5
444.1
478.1
8.4
(42.4)
444.1
320.6
(16.0)
(62.9)
241.7
$
$
$
$
$
$
$
$
1,393.8
120.1
1,513.9
204.9
2.5
1.3
(1.9)
108.9
115.3
18.0
449.0
473.8
17.8
(42.6)
449.0
269.5
(4.0)
(60.6)
204.9
$
$
$
$
$
$
$
$
1,344.3
169.5
1,513.8
86.4
2.6
103.6
0.7
113.7
115.4
15.2
437.6
451.1
24.3
(37.8)
437.6
245.3
(105.9)
(53.0)
86.4
51
U.S. Media
2017 vs. 2016
(in millions, except percentages)
Revenues:
Billboard
Transit and other
Total revenues
Organic revenues(a):
Billboard
Transit and other
Total organic revenues(a)
Non-organic revenues:
Billboard
Transit and other
Total non-organic revenues
Total revenues
Operating expenses
SG&A expenses
Adjusted OIBDA
Adjusted OIBDA margin
Operating income
Restructuring charges
Net (gain) loss on dispositions
Depreciation and amortization
Adjusted OIBDA
Year Ended December 31,
2017
2016
%
Change
$
$
$
$
$
$
997.9
408.6
1,406.5
992.4
402.2
1,394.6
5.5
6.4
11.9
1,406.5
(754.5)
(173.9)
478.1
34%
320.6
2.3
(14.4)
169.6
478.1
$
$
$
$
$
$
1,005.6
388.2
1,393.8
1,001.6
381.7
1,383.3
4.0
6.5
10.5
1,393.8
(739.3)
(180.7)
473.8
34%
269.5
2.5
(1.7)
203.5
473.8
(1)%
5
1
(1)
5
1
38
(2)
13
1
2
(4)
1
19
(8)
*
(17)
1
Calculation not meaningful.
*
(a) Organic revenues exclude revenues associated with significant acquisitions and divestitures (“non-organic revenues”).
Total U.S. Media segment revenues increased $12.7 million, or 1%, and U.S. Media segment organic revenues increased $11.3
million, or 1%, in 2017 compared to 2016. Non-organic revenues primarily reflect an acquisition.
Total U.S. Media segment revenue grew in 2017 compared to 2016, reflecting the net effect of won and lost franchises in the
period (primarily the MBTA), the conversion of traditional static billboard displays to digital billboard displays and higher
proceeds from condemnations, partially offset by a decrease in average revenue per display (yield) in billboards and transit, the
net effect of new and lost billboards in the period, and the impact of hurricanes in the Florida and Texas markets. We generated
approximately 43% in 2017 and 46% in 2016 of our U.S. Media segment revenues from national advertising campaigns. We
have seen a softening of advertising revenues from national accounts across a variety of industry categories, primarily
automotive, travel/leisure and retail.
Revenues from U.S. Media segment billboards decreased $7.7 million, or 1%, in 2017 compared to 2016, reflecting a decrease
in average revenue per display (yield), the net effect of new and lost billboards in the period, and the impact of hurricanes in the
Florida and Texas markets, partially offset by the conversion of traditional static billboard displays to digital billboard displays
and higher proceeds from condemnations. The decrease in average revenue per display (yield) is primarily due to a reduction in
national advertising revenues, partially offset by an increase in local advertising revenues.
Organic revenues from U.S. Media segment billboards decreased $9.2 million, or 1%, in 2017 compared to 2016, primarily due
to a decrease in average revenue per display (yield), as discussed above, the net effect of new and lost billboards in the period,
and the impact of hurricanes in the Florida and Texas markets, partially offset by the conversion of traditional static billboard
displays to digital billboard displays and higher proceeds from condemnations.
52
Transit and other revenues in the U.S. Media segment increased $20.4 million, or 5%, in 2017 compared to 2016, reflecting the
net effect of won and lost franchises in the period (primarily the MBTA), partially offset by lower revenues in New York due to
a decrease in average revenue per display (yield). The decrease in average revenue per display (yield) is primarily due to a
reduction in national advertising revenues, partially offset by an increase in local advertising revenues.
Organic transit and other revenues in the U.S. Media segment increased $20.5 million, or 5%, in 2017 compared to 2016,
reflecting the net effect of won and lost franchises in the period (primarily the MBTA), partially offset by lower revenues in
New York due to a decrease in average revenue per display (yield), as discussed above.
U.S. Media segment operating expenses increased $15.2 million, or 2%, in 2017 compared to 2016, primarily due to increased
transit franchise expenses resulting from an increase in transit revenues, primarily from new contracts, increased billboard
property lease costs, including a $1.5 million one-time true-up, and higher compensation and benefits-related costs. In the U.S.
Media segment, billboard property lease expenses represented 35% of billboard revenues in 2017 and 34% in 2016, and transit
franchise expenses represented 63% of transit revenues in each of 2017 and 2016. U.S. Media segment SG&A expenses
decreased $6.8 million, or 4%, in 2017 compared to 2016, primarily due to lower professional fees.
U.S. Media segment Adjusted OIBDA increased $4.3 million, or 1%, in 2017 compared to 2016.
2016 vs. 2015
(in millions, except percentages)
Revenues:
Billboard
Transit and other
Total revenues
Organic revenues(a):
Billboard
Transit and other
Total organic revenues(a)
Non-organic revenues:
Billboard
Transit and other
Total non-organic revenues
Total revenues
Operating expenses
SG&A expenses
Adjusted OIBDA
Adjusted OIBDA margin
Operating income
Restructuring charges
Net (gain) loss on dispositions
Depreciation and amortization
Adjusted OIBDA
Year Ended December 31,
2016
2015
%
Change
$
$
$
$
$
$
1,005.6
388.2
1,393.8
1,001.6
381.7
1,383.3
4.0
6.5
10.5
1,393.8
(739.3)
(180.7)
473.8
34%
269.5
2.5
(1.7)
203.5
473.8
$
$
$
$
$
$
969.8
374.5
1,344.3
968.4
372.9
1,341.3
1.4
1.6
3.0
1,344.3
(722.4)
(170.8)
451.1
34%
245.3
2.6
0.6
202.6
451.1
4%
4
4
3
2
3
186
*
*
4
2
6
5
10
(4)
*
—
5
Calculation not meaningful.
*
(a) Organic revenues exclude revenues associated with significant acquisitions and divestitures, and revenues associated with business lines we no longer
operate (“non-organic revenues”).
Total U.S. Media segment revenues increased $49.5 million, or 4%, and U.S. Media segment organic revenues increased $42.0
million, or 3%, in 2016 compared to 2015.
53
Non-organic revenues primarily reflect acquisitions and dispositions, and revenues associated with business lines we no longer
operate.
Total U.S. Media segment revenue grew in 2016 compared to 2015, reflecting stronger market conditions in local advertising,
an increase in average revenue per display (yield) in billboards, growth attributable to the conversion of traditional static
billboard displays to digital billboard displays and the impact of an acquisition, partially offset by the impact of the disposition
of billboard advertising structures in the second quarter of 2015, the loss of the New York City phone kiosk contract in the first
quarter of 2015, the net impact of won and lost billboard leases and franchises in 2016, and lower advertising revenue in the
first quarter of 2016 from major sports entertainment events. We generated approximately 45% in 2016 and 47% in 2015 of our
U.S. Media segment revenues from national advertising campaigns.
Revenues from U.S. Media segment billboards increased $35.8 million, or 4%, in 2016 compared to 2015, primarily reflecting
stronger market conditions in local advertising, an increase in average revenue per display (yield) and the conversion of
traditional static billboard displays to digital billboard displays, partially offset by the impact of lost billboard leases in 2016
and the disposition of billboard advertising structures in the second quarter of 2015.
Organic revenues from U.S. Media segment billboards increased $33.2 million in 2016 compared to 2015, primarily due to an
increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard
displays, partially offset by the impact of lost low-margin billboard leases in 2016.
Transit and other revenues in the U.S. Media segment increased $13.7 million, or 4%, in 2016 compared to 2015, reflecting
stronger market conditions in local advertising, the net effect of won and lost franchises in 2016 and the impact of an
acquisition, partially offset by lower advertising revenue in the first quarter of 2016 from major sports entertainment events.
Organic transit and other revenues in the U.S. Media segment increased $8.8 million, or 2%, in 2016 compared to 2015. This
increase was driven by the net effect of won and lost franchises.
U.S. Media segment operating and SG&A expenses increased $16.9 million and $9.9 million, or 2% and 6%, respectively, in
2016 compared to 2015, primarily due to higher billboard property lease expenses, increased transit franchise expenses
resulting from an increase in transit revenues, increased sales and other compensation-related expenses, increased strategic
business development expenses of $3.3 million and higher professional fees of $2.4 million, partially offset by lost billboard
leases in 2016 and lower administrative costs. In the U.S. Media segment, billboard property lease expenses represented 34% of
billboard revenues in each of 2016 and 2015, and transit franchise expenses represented 63% of transit revenues in each of
2016 and 2015.
U.S. Media segment Adjusted OIBDA increased $22.7 million in 2016 compared to 2015.
54
Other
2017 vs. 2016
(in millions, except percentages)
Revenues:
Billboard
Transit and other
Total revenues
Organic revenues(a):
Billboard
Transit and other
Total organic revenues(a)
Non-organic revenues:
Billboard
Transit and other
Total non-organic revenues
Total revenues
Operating expenses
SG&A expenses
Adjusted OIBDA
Adjusted OIBDA margin
Operating loss
Restructuring charges
Loss on real estate assets held for sale
Net (gain) loss on dispositions
Depreciation and amortization
Adjusted OIBDA
Year Ended December 31,
2017
2016
%
Change
(in constant dollars)(a)
Year Ended
December 31,
2016
%
Change
66.4
54.9
121.3
56.2
53.7
109.9
10.2
1.2
11.4
121.3
(79.8)
(23.7)
17.8
15%
(8)%
(4)
(6)
(4)
(1)
(3)
(31)
*
(39)
(6)
1
5
(53)
$
$
$
$
$
$
61.1
52.9
114.0
54.1
52.9
107.0
7.0
—
7.0
114.0
(80.7)
(24.9)
8.4
7%
(16.0)
4.1
—
0.1
20.2
8.4
$
$
$
$
$
$
65.4
54.7
120.1
56.2
53.7
109.9
9.2
1.0
10.2
120.1
(78.8)
(23.5)
17.8
15%
(4.0)
—
1.3
(0.2)
20.7
17.8
(7)% $
(3)
(5)
$
$
(4)
(1)
(3)
(24)
*
(31)
(5)
2
6
(53)
$
*
*
*
*
(2)
(53)
Calculation is not meaningful.
*
(a) Revenues on a constant dollar basis are calculated as reported revenues excluding the impact of foreign currency exchange rates between periods.
On June 13, 2017, certain subsidiaries of OUTFRONT Media Inc. acquired the equity interests of certain subsidiaries of All
Vision LLC (“All Vision”), which hold substantially all of All Vision’s existing outdoor advertising assets in Canada, and
effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”).
Total Other revenues decreased $6.1 million, or 5%, in 2017 compared to 2016, reflecting the impact of the Disposition (a
decrease of $11.4 million), partially offset by the impact of the Transaction. In constant dollars, total Other revenues in 2017
decreased 6% compared to 2016, driven by the impact of the Disposition (a decrease of $11.4 million), partially offset by the
impact of the Transaction.
Other operating expenses increased $1.9 million, or 2%, in 2017 compared to 2016, driven by higher expenses related to
renewed contracts in our Sports Marketing operating segment, the impact of the Transaction and foreign currency exchange
rates, partially offset by the impact of the Disposition (a decrease of $8.8 million). Other SG&A expenses increased $1.4
million, or 6%, in 2017 compared to 2016, primarily driven by higher expenses related to our Sports Marketing operating
segment, the impact of the Transaction and foreign currency exchange rates, partially offset by the impact of the Disposition (a
decrease of $3.1 million).
55
Other Adjusted OIBDA decreased $9.4 million, or 53%, in 2017 compared to 2016, primarily driven by our Sports Marketing
operating segment and lower performance in Canada, partially offset by the impacts of both the Transaction and the
Disposition. In constant dollars, Other Adjusted OIBDA decreased $9.4 million, or 53%, in 2017 compared to 2016.
2016 vs. 2015
(in millions, except percentages)
Revenues:
Billboard
Transit and other
Total revenues
Organic revenues(a):
Billboard
Transit and other
Total organic revenues(a)
Non-organic revenues:
Billboard
Transit and other
Total non-organic revenues
Total revenues
Operating expenses
SG&A expenses
Adjusted OIBDA
Adjusted OIBDA margin
Operating loss
Loss on real estate assets held for sale
Net (gain) loss on dispositions
Depreciation and amortization
Adjusted OIBDA
(in constant dollars)(a)
%
Change
(40)%
1
(27)
(4)
12
3
(81)
(82)
(81)
(27)
(26)
(29)
(27)
Year Ended December 31,
2016
2015
%
Change
Year Ended
December 31,
2015
109.9
54.4
164.3
57.5
47.9
105.4
52.4
6.5
58.9
164.3
(106.9)
(33.0)
24.4
15%
$
$
$
$
$
$
65.4
54.7
120.1
55.2
53.5
108.7
10.2
1.2
11.4
120.1
(78.8)
(23.5)
17.8
15%
(4.0)
1.3
(0.2)
20.7
17.8
$
$
$
$
$
$
114.5
55.0
169.5
57.5
47.9
105.4
57.0
7.1
64.1
169.5
(110.7)
(34.5)
24.3
14%
(105.9)
103.6
0.1
26.5
24.3
(43)% $
(1)
(29)
$
$
$
(4)
12
3
(82)
(83)
(82)
(29)
(29)
(32)
(27)
(96)
(99)
*
(22)
(27)
Calculation is not meaningful.
*
(a) Revenues on a constant dollar basis are calculated as reported revenues excluding the impact of foreign currency exchange rates between periods.
Total Other revenues decreased $49.4 million, or 29%, in 2016 compared to 2015. In constant dollars, total Other revenues in
2016 decreased 27% compared to 2015, driven by the impact of the Disposition (a decrease of $47.5 million) and lower
performance in Canada of 3%, partially offset by stronger results in our Sports Marketing operating segment.
Other operating expenses decreased $31.9 million, or 29%, in 2016 compared to 2015, driven by the impact of the Disposition
(a decrease of $32.9 million), partially offset by higher expenses related to our Sports Marketing operating segment. Other
SG&A expenses decreased $11.0 million, or 32%, in 2016 compared to 2015, primarily driven by the impact of the Disposition
(a decrease of $11.2 million), foreign currency exchange rates and lower expenses in Canada, partially offset by higher
expenses related to our Sports Marketing operating segment.
Other Adjusted OIBDA decreased $6.5 million, or 27%, in 2016 compared to 2015, primarily driven by the impact of the
Disposition and lower performance in Canada. In constant dollars, Other Adjusted OIBDA decreased $6.6 million, or 27%, in
2016 compared to 2015.
56
Corporate
Corporate expenses primarily include expenses associated with employees who provide centralized services. Corporate
expenses, excluding stock-based compensation, were $42.4 million in 2017, $42.6 million in 2016 and $37.8 million in 2015.
Corporate expenses in 2017 decreased slightly compared to 2016, primarily reflecting lower professional fees, partially offset
by costs incurred in connection with the Amendment (as defined in the “Liquidity and Capital Resources” section of this
MD&A). The increase in corporate expenses in 2016 compared to 2015 primarily reflects increased compensation-related
expenses and one-time professional fees in 2016 of $3.8 million associated with implementing initiatives to improve our cost
base and pricing/yield management, partially offset by non-recurring legal expenses in 2015 of $5.2 million.
Liquidity and Capital Resources
(in millions, except percentages)
Assets:
Cash and cash equivalents
Receivables, less allowances of $11.5 in 2017 and $9.2 in 2016
Prepaid lease and transit franchise costs
Other prepaid expenses
Other current assets
Total current assets
Liabilities:
Accounts payable
Accrued compensation
Accrued interest
Accrued lease costs
Other accrued expenses
Deferred revenues
Short-term debt
Other current liabilities
Total current liabilities
Working capital
*
Calculation is not meaningful.
As of December 31,
2017
2016
%
Change
$
$
48.3
231.1
73.3
13.5
9.8
376.0
56.1
34.6
16.1
30.5
42.3
21.3
80.0
18.7
299.6
76.4
$
$
65.2
222.0
67.4
15.8
7.8
378.2
85.6
33.9
15.7
26.7
54.8
20.2
—
14.6
251.5
126.7
(26)%
4
9
(15)
26
(1)
(34)
2
3
14
(23)
5
*
28
19
(40)
We continually project anticipated cash requirements for our operating, investing and financing needs as well as cash flows
generated from operating activities available to meet these needs. Due to seasonal advertising patterns and influences on
advertising markets, our revenues and operating income are typically highest in the fourth quarter, during the holiday shopping
season, and lowest in the first quarter, as advertisers cut back on spending following the holiday shopping season. Further,
certain of our municipal transit contracts, as well as our marketing and multimedia rights agreements with colleges and
universities, require guaranteed minimum annual payments to be paid at the beginning of the year.
Our short-term cash requirements primarily include payments for operating leases, guaranteed minimum annual payments,
capital expenditures, equipment deployment costs, interest and dividends. Funding for short-term cash needs will come
primarily from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowing capacity
under the Revolving Credit Facility (as defined below), the AR Facility (as defined below) or other secured credit facilities that
we may establish.
In addition, as part of our growth strategy, we frequently evaluate strategic opportunities to acquire new businesses, assets or
digital technology. Consistent with this strategy, we regularly evaluate potential acquisitions, ranging from small transactions to
larger acquisitions, which transactions could be funded through cash on hand, additional borrowings, equity or other securities,
or some combination thereof.
Our long-term cash needs include principal payments on outstanding indebtedness and commitments related to operating leases
and franchise and other agreements, including any related guaranteed minimum annual payments, and equipment deployment
57
costs. Funding for long-term cash needs will come from our cash on hand, operating cash flows, our ability to issue debt and
equity securities, and borrowing capacity under the Revolving Credit Facility or other secured credit facilities that we may
establish.
Our decline in working capital during 2017 is due to short-term borrowings primarily used to finance the Transaction and due to
the change in timing of transit franchise payments to the MTA under the short-term extension of our previous contracts for
transit advertising services.
Under the MTA agreement, we are obligated to deploy over 50,000 digital displays for advertising and MTA communications
across the transit system over a number of years, commencing in 2018, and the MTA is entitled to receive the greater of a
percentage of revenues or a guaranteed minimum annual payment. Due to the change in the MTA’s revenue share percentage
under the current agreement, we expect our transit franchise operating expenses to decline in year one of the current agreement
as compared to prior historical periods, and gradually increase in subsequent years if our revenues increase over an annual base
revenue amount. Incremental revenues that exceed an annual base revenue amount will be retained by us for the cost of
deploying advertising and communications screens throughout the transit system. Our currently estimated equipment
deployment costs will be approximately $800 million for the full 15-year term and approximately $600 million for the first
eight years of the term, and we anticipate these equipment deployment costs will be recorded as Prepaid lease and transit
franchise costs and Intangible assets on our Consolidated Statement of Financial Position. If incremental revenues generated
over the term of the agreement are not sufficient to cover all or a portion of the equipment deployment costs, the costs will not
be recovered, which could have an adverse effect on our business, financial condition and results of operation. We expect to
utilize third party financing to fund equipment deployment costs, and have increased our letters of credit for the benefit of the
MTA from approximately $30.0 million to $136.0 million, which is subject to change as equipment installations are completed
and revenues are generated. For the full year of 2018, we expect our equipment deployment costs to be approximately $100.0
million.
As of December 31, 2017, we had total indebtedness of approximately $2.3 billion.
On February 27, 2018, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our
common stock, payable on March 30, 2018, to stockholders of record at the close of business on March 9, 2018.
Debt
Debt, net, consists of the following:
(in millions, except percentages)
Short-term debt:
AR Facility
Total short-term debt
Long-term debt:
Term loan
Senior unsecured notes:
5.250% senior unsecured notes, due 2022
5.625% senior unsecured notes, due 2024
5.875% senior unsecured notes, due 2025
Total senior unsecured notes
Debt issuance costs
Total long-term debt, net
Total debt, net
Weighted average cost of debt
58
As of
December 31,
2017
December 31,
2016
$
$
80.0
80.0
—
—
667.8
659.0
549.6
502.6
450.0
1,502.2
(24.7)
2,145.3
549.5
503.0
450.0
1,502.5
(24.7)
2,136.8
$
2,225.3
$
2,136.8
4.8%
4.8%
(in millions)
Long-term debt
Interest
Total
Payments Due by Period
Total
2018
2019-2020
2021-2022
2023 and
thereafter
$
$
2,170.0
648.4
2,818.4
$
$
— $
— $
109.2
215.3
109.2
$
215.3
$
550.0
193.6
743.6
$
$
$
1,620.0
130.3
1,750.3
On March 16, 2017, the Company, along with its wholly-owned subsidiaries, Outfront Media Capital LLC (“Finance LLC”)
and Outfront Media Capital Corporation (together with Finance LLC, the “Borrowers”), and other guarantor subsidiaries party
thereto, entered into an amendment (the “Amendment”) to its credit agreement and its related security agreement, each dated
January 31, 2014 (together, and as amended, supplemented or otherwise modified, the “Credit Agreement”).
The Amendment provides for (i) the extension of the maturity date of the Borrowers’ existing revolving credit facility (the
“Revolving Credit Facility”) from January 31, 2019, to March 16, 2022, (ii) the extension of the maturity date of the
Borrowers’ existing term loan (the “Term Loan” and together with the Revolving Credit Facility, the “Senior Credit Facilities”)
from January 31, 2021, to March 16, 2024, (iii) an increase to the Revolving Credit Facility by $5.0 million to $430.0 million,
(iv) the incurrence of a $10.0 million incremental term loan primarily to cover transaction fees and expenses, which increases
the outstanding principal balance of the Term Loan to $670.0 million, and (v) revisions to certain provisions of the Credit
Agreement to, among other things, lower the interest rate floor for all loans to 0.0% and update covenants for greater
operational and financial flexibility to the Company (including incurrence of additional indebtedness), as well as include other
ministerial changes to the Credit Agreement. The remaining terms of the Credit Agreement, as amended by the Amendment, are
substantially the same as the terms under the existing Credit Agreement, including with respect to events of default and loan
acceleration. The letter of credit sublimit that is part of the Revolving Credit Facility under the Credit Agreement remains at
$100.0 million.
On November 17, 2017, the Company, the Borrowers and other guarantor subsidiaries party thereto entered into another
amendment to the Credit Agreement to reduce the interest rate margin applicable to the Term Loan from 1.25% to 1.00%, in the
case of base rate borrowings, and from 2.25% to 2.00% in the case of London Interbank Offered Rate borrowings. The
remaining terms of the Credit Agreement, as amended, are substantially the same as the terms under the existing Credit
Agreement, including with respect to events of default and loan acceleration.
On June 30, 2017, certain subsidiaries of the Company entered into a three-year $100.0 million revolving accounts receivable
securitization facility (the “AR Facility”).
Term Loan
The interest rate on the Term Loan was 3.6% per annum as of December 31, 2017. As of December 31, 2017, a discount of $2.2
million on the Term Loan remains unamortized. The discount is being amortized through Interest expense, net, on the
Consolidated Statement of Operations.
Revolving Credit Facility
As of December 31, 2017, there were no outstanding borrowings under the Revolving Credit Facility.
The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $1.5 million in
2017, $1.8 million in 2016 and $1.9 million in 2015. As of December 31, 2017, we had issued letters of credit totaling
approximately $88.6 million against the letter of credit facility sublimit under the Revolving Credit Facility.
Standalone Letter of Credit Facilities
As of December 31, 2017, we had issued letters of credit totaling approximately $119.5 million under our aggregate $150.0
million standalone letter of credit facilities. The total fees under the letter of credit facilities in 2017, 2016 and 2015, were
immaterial.
59
Accounts Receivable Securitization Facility
On June 30, 2017, we entered into the AR Facility. The AR Facility provides up to $100.0 million in borrowing capacity, which
is limited to the availability of eligible accounts receivable collateralizing the borrowings under the agreements governing the
AR Facility. In connection with the AR Facility, Outfront Media LLC, a wholly-owned subsidiary of the Company, will sell
and/or contribute its existing and future accounts receivable and certain related assets to Outfront Media Receivables LLC, a
special purpose vehicle and wholly-owned subsidiary of the Company (the “SPV”). The SPV will transfer an undivided interest
in the accounts receivable to certain purchasers from time to time (the “Purchasers”). Outfront Media LLC will service the
accounts receivables on behalf of the SPV for a fee. The SPV has granted the Purchasers a security interest in all of its assets,
which primarily consist of the accounts receivable relating to the Company’s qualified REIT subsidiaries, in order to secure its
obligations under the agreements governing the AR Facility. The Company has agreed to guarantee the performance of Outfront
Media LLC, in its capacity as originator and servicer, of its obligations under the agreements governing the AR Facility. Neither
Outfront Media LLC nor the SPV guarantees the collectability of the receivables under the AR Facility. In addition, the SPV is
a separate legal entity with its own separate creditors who will be entitled to access the SPV’s assets before the assets become
available to the Company. Accordingly, the SPV’s assets are not available to pay creditors of the Company or any of its
subsidiaries, although collections from the receivables in excess of amounts required to repay the Purchasers and other creditors
of the SPV may be remitted to the Company.
The AR Facility is accounted for as a collateralized financing activity, rather than a sale of assets, and therefore: (i) accounts
receivable balances pledged as collateral are presented as assets and the borrowings are presented as liabilities on our
Consolidated Statements of Financial Position, (ii) our Consolidated Statements of Operations reflect the associated charges for
bad debt expense related to pledged accounts receivable (a component of selling, general and administrative expenses) and
interest expense associated with the collateralized borrowings and (iii) receipts from customers related to the underlying
accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are
reflected as financing cash flows within our Consolidated Statements of Cash Flows.
As of December 31, 2017, there were $80.0 million of outstanding borrowings under the AR Facility at a borrowing rate of
approximately 2.3%, which were primarily used to repay previously outstanding amounts under the Revolving Credit Facility.
As of December 31, 2017, the total borrowing capacity remaining under the AR Facility was approximately $14.9 million based
on approximately $192.2 million of eligible accounts receivable used as collateral for the AR Facility. The commitment fee
based on the amount of unused commitments under the AR Facility was immaterial in 2017. As of February 26, 2018, there
were $55.0 million of outstanding borrowings under the AR Facility at a borrowing rate of approximately 2.4%.
Senior Unsecured Notes
As of December 31, 2017, a discount of $0.4 million on $150.0 million aggregate principal amount of the 5.250% Senior
Unsecured Notes due 2022, remains unamortized. The discount is being amortized through Interest expense, net, on the
Consolidated Statement of Operations.
As of December 31, 2017, a premium of $2.6 million on $100.0 million aggregate principal amount of the 5.625% Senior
Unsecured Notes, due 2024, remains unamortized. The premium is being amortized through Interest expense, net, on the
Consolidated Statement of Operations.
Debt Covenants
The Credit Agreement governing the Senior Credit Facilities, the agreements governing the AR Facility, and the indentures
governing our senior unsecured notes contain customary affirmative and negative covenants, subject to certain exceptions,
including but not limited to those that limit the Company’s and our subsidiaries’ abilities to (i) pay dividends on, repurchase or
make distributions in respect to the Company’s or its wholly-owned subsidiary, Finance LLC’s capital stock or make other
restricted payments other than dividends or distributions necessary for us to maintain our REIT status, subject to certain
conditions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany or
third-party transfers.
The terms of the Credit Agreement (and under certain circumstances, the agreements governing the AR Facility) require that we
maintain a Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0
million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four
consecutive quarters, of no greater than 4.0 to 1.0. As of December 31, 2017, our Consolidated Net Secured Leverage Ratio was
1.4 to 1.0, as adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. The Credit
Agreement also requires that, in connection with the incurrence of certain indebtedness, we maintain a Consolidated Total
60
Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive
quarters, of no greater than 6.0 to 1.0. As of December 31, 2017, our Consolidated Total Leverage Ratio was 4.7 to 1.0, as
adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. As of December 31, 2017, we are
in compliance with our debt covenants.
Deferred Financing Costs
As of December 31, 2017, we had deferred $29.4 million in fees and expenses associated with the Term Loan, Revolving Credit
Facility, AR Facility and our senior unsecured notes. We are amortizing the deferred fees through Interest expense, net, on the
Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility, AR Facility and
our senior unsecured notes.
At-the-Market Equity Offering Program
On November 21, 2017, we entered into a sales agreement in connection with an “at-the-market” equity offering program (the
“ATM Program”), under which we may, from time to time, issue and sell shares of our common stock up to an aggregate
offering price of $300.0 million. We have no obligation to sell any of our common stock under the sales agreement and may at
any time suspend solicitations and offers under the sales agreement. As of February 26, 2018, no shares of our common stock
have been sold under the ATM Program and accordingly, as of February 26, 2018, $300.0 million remained available to be sold
under the sales agreement.
Cash Flows
The following table sets forth our cash flows in 2017, 2016 and 2015.
(in millions, except percentages)
Cash provided by operating activities
Cash used for investing activities
Cash used for financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) to cash and cash
equivalents
$
$
*
Calculation is not meaningful.
Year Ended December 31,
% Change
2017
2016
2015
$
249.3
(135.3)
(131.5)
$
287.1
(36.7)
(286.5)
293.1
(62.4)
(148.6)
2017 vs.
2016
(13)%
*
(54)
2016 vs.
2015
(2)%
(41)
93
0.6
(0.3)
(3.3)
*
(91)
(16.9) $
(36.4) $
78.8
(54)
*
Cash provided by operating activities decreased $37.8 million in 2017 compared to 2016, principally as a result of the timing of
payments made under the MTA agreement and lower net income, as adjusted for non-cash items. As a result of a change in the
payment terms under the extensions to our previous MTA contracts, during 2017, we made payments to the MTA for percentage
of revenues transit franchise fees due in excess of the guaranteed minimum payments related to both 2016 and 2017. The
additional payment made in 2017 was $20.9 million. Additionally, we incurred $4.7 million of equipment deployment costs that
are expected to be recouped against future revenues under the terms of our new MTA agreement and are recorded as a prepaid
expense as of December 31, 2017. Cash provided by operating activities decreased $6.0 million in 2016 compared to 2015, due
primarily to the timing of interest payments on our debt and the timing of commissions and other expense payments, partially
offset by higher net income, as adjusted for non-cash items.
Cash used for investing activities increased $98.6 million in 2017 compared to 2016 and decreased $25.7 million in 2016
compared to 2015. In 2017, we completed several acquisitions for total cash payments of approximately $70.1 million, incurred
$70.8 million in capital expenditures and received $5.6 million in proceeds from dispositions. In 2016, we completed several
acquisitions for a total purchase price of approximately $67.9 million, incurred $59.4 million in capital expenditures and
received $90.6 million in proceeds from dispositions, primarily related to the Disposition. In 2015, we incurred $59.2 million in
capital expenditures, completed several acquisitions for a total purchase price of approximately $12.1 million and received $8.9
million in proceeds from dispositions, primarily related to the disposition of substantially all of our assets in Puerto Rico.
61
The following table presents our capital expenditures in 2017, 2016 and 2015.
(in millions, except percentages)
Growth
Maintenance
Total capital expenditures
Year Ended December 31,
2017
2016
2015
$
$
50.9
19.9
70.8
$
$
40.9
18.5
59.4
$
$
33.6
25.6
59.2
% Change
2017 vs.
2016
2016 vs.
2015
24%
8
19
22%
(28)
—
Capital expenditures increased $11.4 million, or 19%, in 2017 compared to 2016, driven by an increase in digital billboard and/
or transit display spending. Capital expenditures increased $0.2 million in 2016 compared to 2015, driven by installation of the
most current LED lighting technology to improve the quality and extend the life of our static billboards and an increase in
digital display spending, partially offset by decreased expenditures related to the Disposition and the renovation of certain
office facilities.
For the full year of 2018, we expect our capital expenditures to be approximately $75.0 million, which will be used primarily
for maintenance, growth in digital displays, installation of the most current LED lighting technology to improve the quality and
extend the life of our static billboards, and to renovate certain office facilities. This estimate does not include equipment
deployment costs that will be incurred in connection with the MTA agreement, which we anticipate will be recorded as Prepaid
lease and transit franchise costs and Intangible assets on our Consolidated Statement of Financial Position, as applicable. For
the full year of 2018, we expect our equipment deployment costs to be approximately $100.0 million.
Cash used for financing activities decreased $155.0 million in 2017 compared to 2016 and increased $137.9 million in 2016
compared to 2015. In 2017, we drew net borrowings of $80.0 million on our short-term borrowing facilities, received net
proceeds from an incremental borrowing on our Term Loan of $8.3 million, paid cash dividends of $201.8 million and incurred
additional deferred financing costs of $8.5 million. In 2016, we paid cash dividends $188.6 million and made discretionary
payments totaling $90.0 million on the Term Loan. In 2015, we paid cash dividends of $196.3 million, prepaid $50.0 million on
the Term Loan and incurred debt, including a premium, of $103.8 million.
Cash paid for income taxes was $6.8 million in 2017, $1.2 million in 2016 and $5.8 million in 2015. The increase in 2017 was
due primarily to higher income from taxable REIT subsidiaries in 2017 and the impact of a reimbursement of historical tax
payments received in 2016 from our former parent company, CBS Corporation.
Contractual Obligations
As of December 31, 2017, our significant contractual obligations and payments due by period were as follows:
Payments Due by Period
(in millions)
Total
2018
2019-2020
2021-2022
Guaranteed minimum annual
payments(a)(b)
Operating leases(c)
Long-term debt(d)
Interest(d)
Total
$
1,526.2
$
193.5
$
325.5
$
302.4
$
1,078.9
2,170.0
648.4
131.0
—
109.2
244.2
—
215.3
198.5
550.0
193.6
$
5,423.5
$
433.7
$
785.0
$
1,244.5
$
2023 and
thereafter
704.8
505.2
1,620.0
130.3
2,960.3
(a) We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit systems, including on the
interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks, and transit platforms. Under most of these
franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant revenues, net of agency fees, or a specified guaranteed
minimum annual payment. Franchise rights are generally paid monthly, or in some cases upfront at the beginning of the year.
(b) We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-
campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. Under most of these
agreements, the school is entitled to receive the greater of a percentage of the relevant revenue, net of agency commissions, or a specified guaranteed
minimum annual payment.
(c) Consists of non-cancellable operating leases with terms in excess of one year for billboard sites, office space and equipment. Total future minimum
payments of $1.1 billion include $1.0 billion for our billboard sites. Excludes rent on cancellable leases and leases with terms of under one year, as well as
contingent rent.
(d) As of December 31, 2017, we had long-term debt of approximately $2.2 billion. Interest on the Term Loan is variable. For illustrative purposes, we are
assuming an interest rate of 3.6% for all years, which reflects the interest rate as of December 31, 2017. An increase or decrease of 1/4% in the interest
rate will change the annual interest expense by $1.7 million.
62
The above table excludes $0.6 million of reserves for uncertain tax positions and the related accrued interest and penalties, as
we cannot reasonably predict the amount of and timing of cash payments related to this obligation.
In 2018, we expect to contribute $2.5 million to our pension plans. Contributions to our pension plans were $2.0 million in
2017 and $2.0 million in each of 2016 and 2015.
For further information about our contractual obligations, including the MTA agreement, see Item 8, Note 16. Commitments
and Contingencies to the Consolidated Financial Statements.
Off-Balance Sheet Arrangements
Our off-balance sheet commitments primarily consist of operating lease arrangements and guaranteed minimum annual
payments. (See Item 8, Note 16. Commitments and Contingencies to the Consolidated Financial Statements for information
about our off-balance sheet commitments.)
Critical Accounting Policies
The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis,
we evaluate these estimates, which are based on historical experience and on various assumptions that we believe are
reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying
values of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions.
We consider the following accounting policies to be the most critical as they are significant to its financial condition and results
of operations, and require significant judgment and estimates on the part of management in their application. For a summary of
our significant accounting policies, see Item 8., Note 2. Summary of Significant Accounting Policies to the Consolidated
Financial Statements.
Goodwill
We test goodwill for impairment on an annual basis on October 31 of each year and between annual tests should factors or
indicators become apparent that would require an interim test. Goodwill is tested for impairment at the reporting-unit level. We
elected to perform the two-step quantitative impairment test in 2017 and 2016.
The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. We
compute the estimated fair value of each reporting unit by adding the present value of the estimated annual cash flows over a
discrete projection period to the residual value of the business at the end of the projection period. This technique requires us to
use significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates. The
estimated growth rates, operating margins and capital expenditures for the projection period are based on our internal forecasts
of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate,
which is based on projected long-range inflation and long-term industry projections. The discount rates are determined based
on the weighted average cost of capital of comparable entities. A downward revision of these assumptions would decrease the
fair values of our reporting units.
If the fair value of a reporting unit falls below its carrying value, excluding any impacts from foreign currency translation
adjustments reflected in Accumulated other comprehensive loss on the Consolidated Statement of Financial Position in
conformity with GAAP, we would then perform the second step of the goodwill impairment test to determine the amount of any
non-cash impairment charge. Such a charge could have a material effect on our consolidated statement of operations and
consolidated statement of financial position.
The estimated fair value of our reporting units significantly exceeded their respective carrying values, except for our Canadian
reporting unit, for which the fair value exceeded the carrying amount by approximately 2.9%. As of December 31, 2017,
goodwill associated with our Canadian reporting unit was $68.1 million.
Revenue in this reporting unit is projected to grow 15.7% in 2018 before trending down to 2.5% in the terminal period. These
increases are due to the impact of the Transaction and specific digital billboard display development projects. Our revenue
63
projections include the successful conversion or new development of approximately 70 digital displays between 2018 and
2020. Our operating costs are expected to decline as a percentage of revenue over the next two years, principally due to the
expiration of an unfavorable transit contract, after which point costs are projected to grow in line with revenue. We utilized a
discount rate of 8.8%.
We performed a sensitivity analysis to determine how our assumptions impact the impairment assessment. Our plan to grow
revenues is highly dependent on our ability to deliver projected results on the assets acquired in the Transaction and to execute
on the digital development projects. The inability to fully execute those plans would result in an impairment. In addition,
holding all other assumptions constant, an increase in the discount rate to 9.0% or above would result in an impairment.
While these projections supported no impairment of goodwill in this reporting unit, given the sensitivities to the assumptions
used in the calculation of the projected cash flows, it is possible that an impairment could be incurred in the future.
Long-Lived Assets
We report long-lived assets, including billboard advertising structures, other property, plant and equipment and intangible
assets, at historical cost less accumulated depreciation and amortization. We depreciate or amortize these assets over their
estimated useful lives, which generally range from five to 40 years. For billboard advertising structures, we estimate the useful
lives based on the estimated economic life of the asset. Transit fixed assets are depreciated over the shorter of their estimated
useful lives or the related contractual term. Our long-lived identifiable intangible assets primarily consist of acquired permits
and leasehold agreements and franchise agreements, which grant us the right to operate out-of-home advertising structures in
specified locations and the right to provide advertising displays on railroad and municipal transit properties. Our long-lived
identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives, which is the respective life
of the agreement and in some cases includes an estimation for renewals, which is based on historical experience.
Long-lived assets subject to depreciation and amortization are also reviewed for impairment when events and circumstances
indicate that the long-lived asset might be impaired, by comparing the forecasted undiscounted cash flows to be generated by
those assets to the carrying values of those assets. The significant assumptions we use to determine the useful lives and fair
values of long-lived assets include contractual commitments, regulatory requirements, future expected cash flows and industry
growth rates, as well as future salvage values.
Long-lived assets are assessed for impairment whenever there is an indication that the carrying amount of the asset may not be
recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows generated by
those assets to the respective asset’s carrying value, excluding any impacts from foreign currency translation adjustments
reflected in Accumulated other comprehensive loss on the Consolidated Statement Financial Position in conformity with
GAAP. The amount of impairment loss, if any, will be measured by the difference between the net carrying value and the
estimated fair value of the asset and recognized as a non-cash charge. Long-lived assets held for sale are required to be
measured at the lower of their carrying value (including unrecognized foreign currency translation adjustment losses) or fair
value less cost to sell.
Asset Retirement Obligation
We record an asset retirement obligation for our estimated future legal obligation, upon termination or nonrenewal of a lease,
associated with removing structures from the leased property and, when required by the contract, the cost to return the leased
property to its original condition. These obligations are recorded at their present value in the period in which the liability is
incurred and are capitalized as part of the related assets’ carrying value. Accretion of the liability is recognized in selling,
general and administrative expenses and the capitalized cost is depreciated over the expected useful life of the related asset. The
obligation is calculated based on the assumption that all of our advertising structures will be removed within the next 50 years.
The significant assumptions used in estimating the asset retirement obligation include the cost of removing the asset, the cost of
remediating the leased property to its original condition where required and the timing and number of lease renewals, all of
which are estimated based on historical experience.
Income Taxes
Income taxes are accounted for under the asset and liability method of accounting. Deferred income tax assets and liabilities are
recognized for the estimated future tax effects of temporary differences between the financial statement carrying amounts and
their respective tax basis. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all
of the deferred tax assets will not be realized.
64
We are organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue
Code of 1986, as amended (the “Code”). (See Item 1. Business—Tax Status). Accordingly, we have not provided for U.S.
federal income tax on our REIT taxable income that we distribute to our stockholders. We have elected to treat our subsidiaries
that participate in certain non-REIT qualifying activities, and our foreign subsidiaries, as taxable REIT subsidiaries (“TRSs”).
As such, we have provided for their federal, state and foreign income taxes.
Accounting Standards
See Item 8., Note 2. Summary of Significant Accounting Policies to the Consolidated Financial Statements, for information
about adoption of new accounting standards and recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk related to commodity prices and foreign currency exchange rates, and to a limited extent, interest
rates and credit risks.
Commodity Price Risk
We incur various operating costs that are subject to price risk caused by volatility in underlying commodity values. Commodity
price risk is present in electricity costs associated with powering our digital billboard displays and lighting our traditional static
billboard displays at night.
We do not currently use derivatives or other financial instruments to mitigate our exposure to commodity price risk. However,
we do enter into contracts with commodity providers to limit our exposure to commodity price fluctuations. For the year ended
December 31, 2017, such contracts accounted for 13.5% of our total utility costs. As of December 31, 2017, we had active
electricity purchase agreements with fixed contract rates for locations throughout Connecticut, Illinois, New Jersey, New York,
Pennsylvania, Ohio and Texas, which expire at various dates until July 2018.
Foreign Exchange Risk
Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating our Canadian business’
statements of earnings and statements of financial position from functional currency to our reporting currency (the U.S. Dollar)
for consolidation purposes. Any gain or loss on translation is included within comprehensive income and Accumulated other
comprehensive income on our Consolidated Statement of Financial Position. The functional currency of our international
subsidiaries is their respective local currency. As of December 31, 2017, we have $1.9 million of unrecognized foreign currency
translation gains included within Accumulated other comprehensive income on our Consolidated Statement of Financial
Position.
Substantially all of our transactions at our Canadian subsidiary is denominated in their local functional currency, thereby
reducing our risk of foreign currency transaction gains or losses.
We do not currently use derivatives or other financial instruments to mitigate foreign currency risk, although we may do so in
the future.
65
Interest Rate Risk
We are subject to interest rate risk to the extent we have variable-rate debt outstanding including under our Senior Credit
Facilities and the AR Facility.
As of December 31, 2017, we had a $670.0 million variable-rate Term Loan due 2024 outstanding, which has an interest rate of
3.6% per year. An increase or decrease of 1/4% in our interest rate on the Term Loan will change our annualized interest
expense by approximately $1.7 million.
As of December 31, 2017, we had $80.0 million of outstanding borrowings under our variable rate AR Facility, at a borrowing
rate of approximately 2.3%. An increase or decrease of 1/4% in our interest rate on the AR Facility will change our annualized
interest expense by approximately $0.2 million. As of February 26, 2018, there were $55.0 million of outstanding borrowings
under the AR Facility at a borrowing rate of approximately 2.4%.
We do not currently use derivatives or other financial instruments to mitigate interest rate risk, although we may do so in the
future.
Credit Risk
In the opinion of our management, credit risk is limited due to the large number of customers and advertising agencies utilized.
We perform credit evaluations on our customers and agencies and believe that the allowances for doubtful accounts are
adequate. We do not currently use derivatives or other financial instruments to mitigate credit risk.
66
Item 8. Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of OUTFRONT Media Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of OUTFRONT Media Inc. and its
subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income
(loss), equity and cash flows for each of the three years in the period ended December 31, 2017, including the related notes and
financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated
financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
67
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 28, 2018
We have served as the Company’s auditor since 2008.
68
OUTFRONT Media Inc.
Consolidated Statements of Financial Position
(in millions)
Assets:
Current assets:
Cash and cash equivalents
Receivables, less allowances of $11.5 in 2017 and $9.2 in 2016
Prepaid lease and transit franchise costs
Other prepaid expenses
Other current assets
Total current assets
Property and equipment, net (Note 3)
Goodwill (Note 4)
Intangible assets (Note 4)
Other assets
Total assets
Liabilities:
Current liabilities:
Accounts payable
Accrued compensation
Accrued interest
Accrued lease costs
Other accrued expenses
Deferred revenues
Short-term debt (Note 7)
Other current liabilities
Total current liabilities
Long-term debt, net (Note 7)
Deferred income tax liabilities, net (Note 14)
Asset retirement obligation (Note 5)
Other liabilities
Total liabilities
Commitments and contingencies (Note 16)
Stockholders’ equity (Note 9):
Common stock (2017 - 450.0 shares authorized, and 138.6 shares issued and outstanding;
2016 - 450.0 shares authorized, and 138.0 shares authorized, issued or outstanding)
Additional paid-in capital
Distribution in excess of earnings
Accumulated other comprehensive loss (Note 8)
Total stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
As of December 31,
2017
2016
$
$
$
48.3
231.1
73.3
13.5
9.8
376.0
662.1
2,128.0
580.9
61.2
3,808.2
56.1
34.6
16.1
30.5
42.3
21.3
80.0
18.7
299.6
2,145.3
19.6
34.7
82.4
2,581.6
65.2
222.0
67.4
15.8
7.8
378.2
665.0
2,089.4
545.3
60.6
3,738.5
85.6
33.9
15.7
26.7
54.8
20.2
—
14.6
251.5
2,136.8
8.5
34.1
74.6
2,505.5
1.4
1,963.0
(775.6)
(7.7)
1,181.1
45.5
1,226.6
3,808.2
$
1.4
1,949.5
(699.5)
(18.5)
1,232.9
0.1
1,233.0
3,738.5
$
$
$
$
See accompanying notes to consolidated financial statements.
69
OUTFRONT Media Inc.
Consolidated Statements of Operations
(in millions, except per share amounts)
Revenues:
Billboard
Transit and other
Total revenues
Expenses:
Operating
Selling, general and administrative
Restructuring charges (Note 10)
Loss on real estate assets held for sale (Note 11)
Net (gain) loss on dispositions
Depreciation
Amortization
Total expenses
Operating income
Interest expense, net
Other income (expense), net
Income (loss) before provision for income taxes and equity in earnings of
investee companies
Provision for income taxes
Equity in earnings of investee companies, net of tax
Net income (loss)
Net income (loss) per common share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
Year Ended December 31,
2017
2016
2015
$
1,059.0
$
1,071.0
$
461.5
1,520.5
835.2
261.7
6.4
—
(14.3)
89.7
100.1
1,278.8
241.7
(116.9)
0.3
125.1
(4.1)
4.8
442.9
1,513.9
818.1
264.8
2.5
1.3
(1.9)
108.9
115.3
1,309.0
204.9
(113.8)
(0.1)
91.0
(5.4)
5.3
$
$
$
125.8
$
90.9
$
0.90
0.90
$
$
0.66
0.66
$
$
138.5
138.9
137.9
138.4
1,084.3
429.5
1,513.8
833.1
258.3
2.6
103.6
0.7
113.7
115.4
1,427.4
86.4
(114.8)
(0.4)
(28.8)
(5.4)
4.8
(29.4)
(0.21)
(0.21)
137.3
137.3
Dividends declared per common share
$
1.44
$
1.36
$
1.42
See accompanying notes to consolidated financial statements.
70
OUTFRONT Media Inc.
Consolidated Statements of Comprehensive Income (Loss)
(in millions)
Net income (loss)
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments
Net actuarial gain (loss)
Total other comprehensive income (loss), net of tax
Total comprehensive income (loss)
Year Ended December 31,
2017
2016
2015
125.8
$
90.9
$
(29.4)
11.8
(1.0)
10.8
136.6
$
102.3
0.1
102.4
193.3
$
(32.3)
1.5
(30.8)
(60.2)
$
$
See accompanying notes to consolidated financial statements.
71
Balance as of
December 31, 2015
137.6
$
(in millions, except
per share amounts)
Balance as of
December 31, 2014
Net loss
Other
comprehensive
loss
Stock-based
payments:
Vested
Exercise of stock
options
Amortization
Shares paid for tax
withholding for
stock-based
payments
Issuance of stock
for purchase of
property and
equipment
Dividends ($1.42
per share)
Net income
Other
comprehensive
income
Stock-based
payments:
Vested
Amortization
Shares paid for tax
withholding for
stock-based
payments
Issuance of stock
for purchase of
property and
equipment
Dividends ($1.36
per share)
Other
Balance as of
December 31, 2016
OUTFRONT Media Inc.
Consolidated Statements of Equity
Shares of
Common
Stock
Common
Stock ($0.01
per share par
value)
Additional
Paid-In
Capital
Distribution
in Excess of
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Non-
Controlling
Interests
Total Equity
136.6
$
—
—
0.5
0.2
—
(0.1)
0.4
—
—
—
0.5
—
(0.2)
0.1
—
—
1.4
—
—
—
—
—
—
—
—
1.4
—
—
—
—
—
—
—
—
$
1,911.2
$
(377.0) $
(90.1) $
1,445.5
—
—
—
2.0
15.8
(6.9)
12.2
—
(29.4)
—
(29.4)
—
—
—
—
—
(195.8)
(30.8)
(30.8)
—
—
—
—
—
—
2.0
15.8
(6.9)
12.2
(195.8)
$
1,934.3
$
(602.2) $
(120.9) $
1,212.6
$
— $
1,212.6
—
—
—
18.0
(4.7)
1.9
—
—
90.9
—
90.9
—
—
—
—
—
(188.2)
—
102.4
102.4
—
—
—
—
—
—
—
18.0
(4.7)
1.9
(188.2)
—
—
—
—
—
—
—
—
0.1
90.9
102.4
—
18.0
(4.7)
1.9
(188.2)
0.1
138.0
$
1.4
$
1,949.5
$
(699.5) $
(18.5) $
1,232.9
$
0.1
$
1,233.0
72
(in millions, except
per share amounts)
Balance as of
December 31, 2016
Net income
Other
comprehensive
income
Stock-based
payments:
Cumulative prior
period
adjustment to
amortization
of estimated
forfeitures
Vested
Exercise of stock
options
Amortization
Shares paid for tax
withholding for
stock-based
payments
Issuance of shares
of a subsidiary
Dividends ($1.44
per share)
Other
Balance as of
December 31, 2017
OUTFRONT Media Inc.
Consolidated Statements of Equity (Continued)
Shares of
Common
Stock
Common
Stock ($0.01
per share par
value)
Additional
Paid-In
Capital
Distribution
in Excess of
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Non-
Controlling
Interests
138.0
$
—
—
—
0.7
0.2
—
(0.3)
—
—
—
1.4
—
—
—
—
—
—
—
—
—
—
$
1,949.5
$
(699.5) $
(18.5) $
1,232.9
$
—
—
0.5
—
1.2
20.5
(8.7)
—
—
—
125.8
—
125.8
—
10.8
10.8
(0.5)
—
—
—
—
—
(201.4)
—
—
—
—
—
—
—
—
—
—
—
1.2
20.5
(8.7)
—
(201.4)
—
0.1
—
—
—
—
—
—
—
44.6
—
0.8
Total Equity
$
1,233.0
125.8
10.8
—
—
1.2
20.5
(8.7)
44.6
(201.4)
0.8
138.6
$
1.4
$
1,963.0
$
(775.6) $
(7.7) $
1,181.1
$
45.5
$
1,226.6
See accompanying notes to consolidated financial statements.
73
OUTFRONT Media Inc.
Consolidated Statements of Cash Flows
(in millions)
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash flow provided by
operating activities:
Depreciation and amortization
Deferred tax benefit
Stock-based compensation
Provision for doubtful accounts
Accretion expense
Loss on real estate assets held for sale
Net (gain) loss on dispositions
Equity in earnings of investee companies, net of tax
Distributions from investee companies
Amortization of deferred financing costs and debt discount and
premium
Cash paid for direct lease acquisition costs
Change in assets and liabilities, net of investing and financing activities:
Increase in receivables
Increase in prepaid expenses and other current assets
Increase (decrease) in accounts payable and accrued expenses
Increase in deferred revenues
Increase in income taxes
Other, net
Net cash flow provided by operating activities
Investing activities:
Capital expenditures
Acquisitions
Proceeds from dispositions
Net cash flow used for investing activities
Financing activities:
Proceeds from long-term debt borrowings - senior notes
Proceeds from long-term debt borrowings - term loan
Repayments of long-term debt borrowings - term loan
Proceeds from borrowings under short-term debt facilities
Repayments of borrowings under short-term debt facilities
Payments of deferred financing costs
Proceeds from stock option exercises
Earnout payment related to prior acquisition
Taxes withheld for stock-based compensation
Dividends
Other
Net cash flow used for financing activities
74
Year Ended December 31,
2017
2016
2015
$
125.8
$
90.9
$
(29.4)
189.8
(4.9)
20.5
4.4
2.3
—
(14.3)
(4.8)
7.3
6.1
(39.2)
(9.5)
(4.5)
(31.9)
0.8
2.1
(0.7)
249.3
(70.8)
(70.1)
5.6
(135.3)
—
8.3
—
250.0
(170.0)
(8.5)
1.2
(2.0)
(8.5)
(201.8)
(0.2)
(131.5)
224.2
(1.8)
18.0
3.6
2.4
1.3
(1.9)
(5.3)
5.0
6.4
(37.0)
(11.7)
(0.5)
(6.8)
—
6.0
(5.7)
287.1
(59.4)
(67.9)
90.6
(36.7)
—
—
(90.0)
35.0
(35.0)
(0.4)
—
—
(7.3)
(188.6)
(0.2)
(286.5)
229.1
(1.7)
15.2
2.7
2.5
103.6
0.7
(4.8)
7.7
6.3
(35.9)
(13.3)
(2.7)
10.0
3.0
1.2
(1.1)
293.1
(59.2)
(12.1)
8.9
(62.4)
103.8
—
(50.0)
105.0
(105.0)
(3.3)
2.0
—
(4.3)
(196.3)
(0.5)
(148.6)
OUTFRONT Media Inc.
Consolidated Statements of Cash Flows (Continued)
(in millions)
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash reclassified to assets held for sale
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Cash paid for income taxes (Note 14)
Cash paid for interest
Non-cash investing and financing activities:
Accrued purchases of property and equipment
Issuance of stock for purchase of property and equipment
Issuance of shares of a subsidiary for an acquisition
Acquisitions
Dispositions
Taxes withheld for stock-based compensation
Year Ended December 31,
2017
2016
2015
0.6
(16.9)
65.2
—
(0.3)
(36.4)
101.6
—
48.3
$
65.2
$
6.8
$
1.2
$
111.0
111.4
9.5
$
11.2
$
—
44.6
(13.3)
13.3
—
1.9
—
—
—
—
(3.3)
78.8
28.5
(5.7)
101.6
5.8
107.0
7.0
12.2
—
—
—
2.6
$
$
$
See accompanying notes to consolidated financial statements.
75
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements
Note 1. Description of Business and Basis of Presentation
Description of Business
OUTFRONT Media Inc. (the “Company”) and its subsidiaries (collectively, “we,” “us” or “our”) is a real estate investment
trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United
States (the “U.S.”) and Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily
traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated
under exclusive multi-year contracts with municipalities in large cities across the U.S. and Canada. We also have marketing and
multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-
campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports
events. In total, we have displays in all of the 25 largest markets in the U.S. and 140 markets across the U.S. and Canada. We
currently manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in our
U.S. Media reportable segment, (2) International and (3) Sports Marketing.
On April 1, 2016, we sold all of our equity interests in certain of our subsidiaries (the “Disposition”), which held all of the
assets of our outdoor advertising business in Latin America (see Note 11. Acquisitions and Dispositions: Dispositions to the
Consolidated Financial Statements). The operating results of our outdoor advertising business in Latin America through April 1,
2016, are included in our Consolidated Financial Statements for 2016 and 2015.
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange
Commission (the “SEC”). In the opinion of our management, the accompanying financial statements reflect all adjustments,
consisting of normal and recurring adjustments, necessary for a fair presentation of our financial position, results of operations
and cash flows for the years presented. Certain previously reported amounts have been reclassified to conform with the current
2017 presentation.
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reporting period. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
Note 2. Summary of Significant Accounting Policies
Cash and Cash Equivalents—Cash and cash equivalents consist of cash on hand and short-term (maturities of three months or
less at the date of purchase) highly liquid investments.
Receivables—Receivables consist primarily of trade receivables from customers, net of advertising agency commissions, and
are stated net of an allowance for doubtful accounts. The provision for doubtful accounts is estimated based on historical bad
debt experience, the aging of accounts receivable, industry trends and economic indicators, as well as recent payment history
for specific customers.
Property and Equipment—Property and equipment is stated at cost. Depreciation is computed using the straight-line method
over the estimated useful lives as follows:
Buildings and improvements
Advertising structures
Furniture, equipment and other
20 to 40 years
5 to 20 years
3 to 10 years
For advertising structures associated with a contract, the assets are depreciated over the shorter of the contract term or useful
life. Maintenance and repair costs to maintain property and equipment in their original operating condition are charged to
76
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
expense as incurred. Improvements or additions that extend the useful life of the assets are capitalized. When an asset is retired
or otherwise disposed of, the associated cost and accumulated depreciation are removed and the resulting gain or loss is
recognized.
Construction in progress includes all costs capitalized related to projects which have yet to be placed in service.
Business Combinations and Asset Acquisitions—We routinely acquire out-of-home advertising assets, including advertising
structures, permits and leasehold agreements. We determine the accounting for these transactions by first evaluating whether the
assets acquired and liabilities assumed, if any, constitute a business using the guidelines in the Financial Accounting Standards
Board (“FASB”) guidance for business combinations. If the assets acquired and liabilities assumed constitute a business, the
purchase price is allocated to the tangible and identifiable intangible net assets acquired based on their estimated fair values
with the excess of the purchase price over those estimated fair values recorded as goodwill. If the acquired assets do not
constitute a business, we allocate the purchase price to the individual tangible and intangible assets acquired based on their
relative fair values.
Impairment of Long-Lived Assets—Long-lived assets are assessed for impairment whenever there is an indication that the
carrying amount of the asset may not be recoverable. Recoverability of these assets is determined by comparing the forecasted
undiscounted cash flows generated by those assets to the respective asset’s carrying value. The amount of impairment loss, if
any, will be measured by the difference between the net carrying value and the estimated fair value of the asset and recognized
as a non-cash charge. Long-lived assets held for sale are required to be measured at the lower of their carrying value (including
unrecognized foreign currency translation adjustment losses) or fair value less cost to sell.
Goodwill and Intangible Assets—Goodwill is allocated to various reporting units. Intangible assets, which primarily consist of
acquired permits and leasehold agreements and franchise agreements, are amortized by the straight-line method over their
estimated useful lives, which range from five to 40 years. Goodwill is not amortized but is tested at the reporting-unit level
annually for impairment on October 31 of each year and between annual tests if events occur or circumstances change that
would more likely than not reduce the fair value below its carrying amount. If the carrying value of goodwill exceeds its fair
value, an impairment loss is recognized as a non-cash charge.
Revenue Recognition—We derive Revenues primarily from providing advertising space to customers on our advertising
structures and sites. Our contracts with customers generally cover periods ranging from four weeks to one year. Revenues from
billboard displays are recognized as rental income on a straight-line basis over the contract term. Transit and other revenues are
recognized as earned over the contract period. For space provided to advertisers through the use of an advertising agency whose
commission is calculated based on a stated percentage of gross advertising spending, our Revenues are reported net of agency
commissions.
Deferred revenues primarily consist of revenues paid in advance of being earned.
Revenues derived from a single contract that contains multiple site locations are allocated based on the relative fair value of
each delivered item and recognized in accordance with the applicable revenue recognition criteria for the specific unit of
accounting.
Concentration of Credit Risk—In the opinion of management, credit risk is limited due to the large number of customers and
advertising agencies utilized. We perform credit evaluations on our customers and agencies and believe that the allowances for
doubtful accounts are adequate.
Billboard Property Lease and Transit Franchise Expenses—Our billboards are primarily located on leased real property. Lease
agreements are negotiated for varying terms ranging from one month to multiple years, most of which provide renewal options.
Lease costs consist of a fixed monthly amount and certain lease agreements also include contingent rent based on the revenues
we generate from the leased site. Property leases are generally paid in advance for periods ranging from one to twelve months.
The fixed component of lease costs is expensed evenly over the non-cancellable contract term, and contingent rent is expensed
as incurred when the related revenues are recognized.
Transit franchise agreements generally provide for payment to the municipality or transit operator of the greater of a percentage
of the revenues that we generate under the related transit contract and a specified guaranteed minimum payment. The costs
77
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
which are determined based on a percentage of revenues are expensed as incurred when the related revenues are recognized,
and the minimum guarantee is expensed over the contract term.
Direct Lease Acquisition Costs—Variable commissions directly associated with billboard revenues are amortized on a straight-
line basis over the related customer lease term, which generally ranges from four weeks to one year. Amortization of direct
lease acquisition costs is presented within Amortization expense in the accompanying Consolidated Statements of Operations.
Foreign Currency Translation and Transactions—The assets and liabilities of foreign subsidiaries are translated at exchange
rates in effect at the balance sheet date, while results of operations are translated at average exchange rates for the respective
periods. Any gain or loss on translation is included within other comprehensive income (loss) and Accumulated other
comprehensive loss on our Consolidated Statement of Financial Position. Foreign currency transaction gains and losses are
included in Other income (expense), net, in the Consolidated Statements of Operations.
Income Taxes—As of July 17, 2014, we began operating as a REIT. Accordingly, we generally will not be subject to U.S.
federal income tax on our REIT taxable income that we distribute to our stockholders. We have elected to treat our subsidiaries
that participate in certain non-REIT qualifying activities, and our foreign subsidiaries, as taxable REIT subsidiaries (“TRSs”).
As such, the taxable income of our TRSs will be subject to federal, state and foreign income taxation at regular corporate rates.
Income taxes are accounted for under the asset and liability method of accounting. Deferred income tax assets and liabilities are
recognized for the estimated future tax effects of temporary differences between the financial statement carrying amounts and
their respective tax basis. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all
of the deferred tax assets will not be realized.
We have applied the FASB’s guidance relating to uncertainty in income taxes recognized. Under this guidance we may
recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized from such a
position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate
settlement. The guidance on accounting for uncertainty in income taxes also provides guidance on de-recognition,
classification, interest and penalties on income taxes, and accounting in interim periods.
Asset Retirement Obligation—An asset retirement obligation is established for the estimated future obligation, upon termination
or non-renewal of a lease, associated with removing structures from the leased property and, when required by the contract, the
cost to return the leased property to its original condition. These obligations are recorded at their present value in the period in
which the liability is incurred and are capitalized as part of the related assets’ carrying value. Accretion of the liability is
recognized in selling, general and administrative expenses and the capitalized cost is depreciated over the expected useful life
of the related asset.
Stock-based Compensation—We measure the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. The cost is recognized over the vesting period during which an
employee is required to provide service in exchange for the award.
Adoption of New Accounting Standards
Stock Compensation
During the first quarter of 2017, we adopted the FASB’s guidance that simplifies the accounting for employee share-based
payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well
as the classification in the statement of cash flows. We have elected to account for forfeitures as they occur, which we adopted
on a modified retrospective basis and resulted in an increase of $0.5 million to Additional paid in capital, offset by a decrease
of $0.5 million to Distribution in excess of earnings on our Consolidated Statement of Financial Position and Consolidated
Statement of Equity as of December 31, 2017.
78
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Business Combinations
During the first quarter of 2017, we adopted the FASB’s guidance clarifying the definition of a business for acquisitions and
dispositions. The guidance is being applied on a prospective basis. Adoption of this guidance did not have a material effect on
our consolidated financial statements.
Statement of Cash Flows
During the third quarter of 2017, we adopted the FASB’s guidance clarifying presentation of certain cash receipts and cash
payments in the Statement of Cash Flows. The guidance is being applied on a retrospective basis. Adoption of this guidance did
not have a material effect on our consolidated financial statements.
Recent Pronouncements
Goodwill
In January 2017, the FASB issued guidance simplifying the test for goodwill impairment by eliminating Step 2 from the
goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s
goodwill with the carrying amount of that goodwill. An entity should recognize an impairment charge for the amount by which
the carrying amount exceeds the reporting unit’s fair value, however, the loss recognized should not exceed the total amount of
goodwill allocated to that reporting unit. The guidance is to be applied on a prospective basis and is effective for interim and
annual periods beginning after December 15, 2019. Early adoption is permitted for interim and annual impairment tests
performed on testing dates after January 1, 2017. We do not expect this guidance to have a material effect on our consolidated
financial statements.
Leases
In February 2016, the FASB issued guidance addressing the recognition, measurement, presentation and disclosure of leases for
both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or
operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification
will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the
term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a
term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for
similar to existing guidance for operating leases today. Lessors will account for leases using an approach that is substantially
equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This guidance is to be applied
on a modified retrospective basis and is effective for interim and annual periods beginning after December 15, 2018. Early
adoption is permitted for financial statements that have not been previously issued.
As of December 31, 2017, we had approximately 21,500 lease agreements in the U.S. and approximately 3,200 lease
agreements in Canada, the majority of which will be classified as operating leases under the new guidance. We are currently
evaluating our lease contracts and planning for the implementation of this standard. This standard will require us to recognize a
right-of-use asset and lease liability for the present value of minimum lease payments for operating leases with a term greater
than 12 months and will have a significant impact on our consolidated financial statements. Our billboard lease revenues will
continue to be recognized on a straight-line basis over their respective lease terms.
Revenue from Contracts with Customers
In May 2014 (updated in August 2015, March 2016, April 2016 and May 2016), the FASB issued principles-based guidance
addressing revenue recognition issues. The guidance will be applied to all contracts with customers regardless of industry-
specific or transaction-specific fact patterns. The guidance requires that the amount of revenue a company should recognize
reflect the consideration it expects to be entitled to in exchange for goods and services. This guidance is effective for the
Company beginning in the first quarter of 2018. Our billboard lease revenues are recognized under the lease standard as
described above. The revenue recognition guidance will be primarily applicable to our multi-year transit advertising contracts
with municipalities in the U.S. and Canada, and marketing and multimedia rights agreements with colleges, universities and
other educational institutions. We have assessed the changes to our accounting policies under the new standard and this
79
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
guidance does not have a material effect on our consolidated financial statements. We are in the process of preparing the
expanded disclosures required under the new standard in 2018 and will apply the modified retrospective method of adoption.
Note 3. Property and Equipment
The table below presents the balances of major classes of assets and accumulated depreciation.
(in millions)
Land
Buildings and improvements
Advertising structures(a)
Furniture, equipment and other(b)
Construction in progress
Less accumulated depreciation
Property and equipment, net
As of December 31,
2017
2016
94.4
51.3
1,750.8
120.7
27.4
2,044.6
1,382.5
662.1
$
$
90.7
48.2
1,696.6
88.5
37.2
1,961.2
1,296.2
665.0
$
$
(a) As of December 31, 2017, includes $9.3 million associated with the Transaction (as defined below, see Note 9. Equity and Note 11. Acquisitions and
Dispositions to the Consolidated Financial Statements).
(b) As of December 31, 2017, includes $22.5 million related to software and equipment that is being utilized within our digital displays and principally
consists of software and equipment developed under a license and development agreement in exchange for the issuance of stock (see Note 9. Equity to the
Consolidated Financial Statements).
Depreciation expense was $89.7 million in 2017, $108.9 million in 2016 and $113.7 million in 2015.
Note 4. Goodwill and Other Intangible Assets
For the years ended December 31, 2017 and 2016, the changes in the book value of goodwill by segment were as follows:
(in millions)
As of December 31, 2015
Currency translation adjustments
Additions
Dispositions
As of December 31, 2016
Currency translation adjustments
Additions(a)
As of December 31, 2017
U.S. Media
Other
Total
$
$
2,040.1
—
13.9
—
2,054.0
—
—
2,054.0
$
$
34.6
1.1
—
(0.3)
35.4
4.3
34.3
74.0
$
$
$
2,074.7
1.1
13.9
(0.3)
2,089.4
4.3
34.3
2,128.0
(a) Non-deductible addition associated with the Transaction (as defined below, see Note 9. Equity and Note 11. Acquisitions and Dispositions to the
Consolidated Financial Statements).
Our identifiable intangible assets primarily consist of acquired permits and leasehold agreements and franchise agreements
which grant us the right to operate out-of-home structures in specified locations and the right to provide advertising space on
railroad and municipal transit properties. Identifiable intangible assets are amortized on a straight-line basis over their estimated
useful life, which is the respective life of the agreement that in some cases includes historical experience of renewals.
80
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Our identifiable intangible assets consist of the following:
(in millions)
As of December 31, 2017:
Permits and leasehold agreements(a)
Franchise agreements
Other intangible assets(a)
Total intangible assets
As of December 31, 2016:
Permits and leasehold agreements
Franchise agreements
Other intangible assets
Total intangible assets
Gross
Accumulated
Amortization
Net
$
$
$
$
1,111.3
455.4
47.1
1,613.8
1,038.0
451.6
45.4
1,535.0
$
$
$
$
(661.6) $
(346.2)
(25.1)
(1,032.9) $
(636.1) $
(336.6)
(17.0)
(989.7) $
449.7
109.2
22.0
580.9
401.9
115.0
28.4
545.3
(a)
Includes additions associated with the Transaction (as defined below, see Note 9. Equity and Note 11. Acquisitions and Dispositions to the Consolidated
Financial Statements).
All of our intangible assets, except goodwill, are subject to amortization. Amortization expense was $100.1 million in 2017,
$115.3 million in 2016 and $115.4 million in 2015, which includes the amortization of direct lease acquisition costs of $40.0
million in 2017, $38.2 million in 2016 and $36.3 million in 2015. Direct lease acquisition costs are amortized on a straight-line
basis over the related customer lease term, which generally ranges from four weeks to one year.
We expect our aggregate annual amortization expense for intangible assets, before considering the impact of future direct lease
acquisition costs, for each of the years 2018 through 2022, to be as follows:
(in millions)
Amortization expense
2018
2019
2020
2021
2022
$
55.0
$
52.8
$
48.2
$
46.6
$
41.8
Note 5. Asset Retirement Obligation
The following table sets forth the change in the asset retirement obligations associated with our advertising structures located
on leased properties. The obligation is calculated based on the assumption that all of our advertising structures will be removed
within the next 50 years. The estimated annual costs to dismantle and remove the structures upon the termination or non-
renewal of our leases are consistent with our historical experience.
(in millions)
Balance, at beginning of period
Accretion expense
Additions
Liabilities settled
Foreign currency translation adjustments
Balance, at end of period
Year Ended December 31,
2017
2016
$
$
34.1
$
2.3
0.2
(2.3)
0.4
34.7
$
33.2
2.4
0.2
(1.8)
0.1
34.1
81
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Note 6. Related Party Transactions
Joint Ventures
We have a 50% ownership interest in two joint ventures that operate transit shelters in the greater Los Angeles area and
Vancouver, and four joint ventures which operate a total of 15 billboard displays in New York and Boston. All of these ventures
are accounted for as equity investments. These investments totaled $19.5 million as of December 31, 2017, and $21.7 million as
of December 31, 2016, and are included in Other assets on the Consolidated Statements of Financial Position. We provided
sales and management services to these joint ventures and recorded management fees in Revenues on the Consolidated
Statement of Operations of $7.4 million in 2017, $7.3 million in 2016 and $7.2 million in 2015.
Note 7. Debt
Debt, net, consists of the following:
(in millions, except percentages)
Short-term debt:
AR Facility
Total short-term debt
Long-term debt:
Term loan
Senior unsecured notes:
5.250% senior unsecured notes, due 2022
5.625% senior unsecured notes, due 2024
5.875% senior unsecured notes, due 2025
Total senior unsecured notes
Debt issuance costs
Total long-term debt, net
Total debt, net
Weighted average cost of debt
As of
December 31,
2017
December 31,
2016
$
$
80.0
80.0
—
—
667.8
659.0
549.6
502.6
450.0
1,502.2
(24.7)
2,145.3
549.5
503.0
450.0
1,502.5
(24.7)
2,136.8
$
2,225.3
$
2,136.8
4.8%
4.8%
On March 16, 2017, the Company, along with its wholly-owned subsidiaries, Outfront Media Capital LLC (“Finance LLC”)
and Outfront Media Capital Corporation (together with Finance LLC, the “Borrowers”), and other guarantor subsidiaries party
thereto, entered into an amendment (the “Amendment”) to its credit agreement and its related security agreement, each dated
January 31, 2014 (together, and as amended, supplemented or otherwise modified, the “Credit Agreement”).
The Amendment provides for (i) the extension of the maturity date of the Borrowers’ existing revolving credit facility (the
“Revolving Credit Facility”) from January 31, 2019, to March 16, 2022, (ii) the extension of the maturity date of the
Borrowers’ existing term loan (the “Term Loan” and together with the Revolving Credit Facility, the “Senior Credit Facilities”)
from January 31, 2021, to March 16, 2024, (iii) an increase to the Revolving Credit Facility by $5.0 million to $430.0 million,
(iv) the incurrence of a $10.0 million incremental term loan primarily to cover transaction fees and expenses, which increases
the outstanding principal balance of the Term Loan to $670.0 million, and (v) revisions to certain provisions of the Credit
Agreement to, among other things, lower the interest rate floor for all loans to 0.0% and update covenants for greater
operational and financial flexibility to the Company (including incurrence of additional indebtedness), as well as include other
ministerial changes to the Credit Agreement. The remaining terms of the Credit Agreement, as amended by the Amendment, are
substantially the same as the terms under the existing Credit Agreement, including with respect to events of default and loan
82
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
acceleration. The letter of credit sublimit that is part of the Revolving Credit Facility under the Credit Agreement remains at
$100.0 million.
On November 17, 2017, the Company, the Borrowers and other guarantor subsidiaries party thereto entered into another
amendment to the Credit Agreement to reduce the interest rate margin applicable to the Term Loan from 1.25% to 1.00%, in the
case of base rate borrowings, and from 2.25% to 2.00% in the case of London Interbank Offered Rate borrowings. The
remaining terms of the Credit Agreement, as amended, are substantially the same as the terms under the existing Credit
Agreement, including with respect to events of default and loan acceleration.
On June 30, 2017, certain subsidiaries of the Company entered into a three-year $100.0 million revolving accounts receivable
securitization facility (the “AR Facility”).
Term Loan
The interest rate on the Term Loan was 3.6% per annum as of December 31, 2017. As of December 31, 2017, a discount of $2.2
million on the Term Loan remains unamortized. The discount is being amortized through Interest expense, net, on the
Consolidated Statement of Operations.
Revolving Credit Facility
As of December 31, 2017, there were no outstanding borrowings under the Revolving Credit Facility.
The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $1.5 million in
2017, $1.8 million in 2016 and $1.9 million in 2015. As of December 31, 2017, we had issued letters of credit totaling
approximately $88.6 million against the letter of credit facility sublimit under the Revolving Credit Facility.
Standalone Letter of Credit Facilities
As of December 31, 2017, we had issued letters of credit totaling approximately $119.5 million under our aggregate $150.0
million standalone letter of credit facilities. The total fees under the letter of credit facilities in 2017, 2016 and 2015, were
immaterial.
Accounts Receivable Securitization Facility
On June 30, 2017, we entered into the AR Facility. The AR Facility provides up to $100.0 million in borrowing capacity, which
is limited to the availability of eligible accounts receivable collateralizing the borrowings under the agreements governing the
AR Facility. In connection with the AR Facility, Outfront Media LLC, a wholly-owned subsidiary of the Company, will sell
and/or contribute its existing and future accounts receivable and certain related assets to Outfront Media Receivables LLC, a
special purpose vehicle and wholly-owned subsidiary of the Company (the “SPV”). The SPV will transfer an undivided interest
in the accounts receivable to certain purchasers from time to time (the “Purchasers”). Outfront Media LLC will service the
accounts receivables on behalf of the SPV for a fee. The SPV has granted the Purchasers a security interest in all of its assets,
which primarily consist of the accounts receivable relating to the Company’s qualified REIT subsidiaries, in order to secure its
obligations under the agreements governing the AR Facility. The Company has agreed to guarantee the performance of Outfront
Media LLC, in its capacity as originator and servicer, of its obligations under the agreements governing the AR Facility. Neither
Outfront Media LLC nor the SPV guarantees the collectability of the receivables under the AR Facility. In addition, the SPV is
a separate legal entity with its own separate creditors who will be entitled to access the SPV’s assets before the assets become
available to the Company. Accordingly, the SPV’s assets are not available to pay creditors of the Company or any of its
subsidiaries, although collections from the receivables in excess of amounts required to repay the Purchasers and other creditors
of the SPV may be remitted to the Company.
The AR Facility is accounted for as a collateralized financing activity, rather than a sale of assets, and therefore: (i) accounts
receivable balances pledged as collateral are presented as assets and the borrowings are presented as liabilities on our
Consolidated Statements of Financial Position, (ii) our Consolidated Statements of Operations reflect the associated charges for
bad debt expense related to pledged accounts receivable (a component of selling, general and administrative expenses) and
interest expense associated with the collateralized borrowings and (iii) receipts from customers related to the underlying
83
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are
reflected as financing cash flows within our Consolidated Statements of Cash Flows.
As of December 31, 2017, there were $80.0 million of outstanding borrowings under the AR Facility at a borrowing rate of
approximately 2.3%, which were primarily used to repay previously outstanding amounts under the Revolving Credit Facility.
As of December 31, 2017, the total borrowing capacity remaining under the AR Facility was approximately $14.9 million,
based on approximately $192.2 million of eligible accounts receivable used as collateral for the AR Facility. The commitment
fee based on the amount of unused commitments under the AR Facility was immaterial in 2017. As of February 26, 2018, there
were $55.0 million of outstanding borrowings under the AR Facility at a borrowing rate of approximately 2.4%.
Senior Unsecured Notes
As of December 31, 2017, a discount of $0.4 million on $150.0 million aggregate principal amount of the 5.250% Senior
Unsecured Notes due 2022, remains unamortized. The discount is being amortized through Interest expense, net, on the
Consolidated Statement of Operations.
As of December 31, 2017, a premium of $2.6 million on $100.0 million aggregate principal amount of the 5.625% Senior
Unsecured Notes, due 2024, remains unamortized. The premium is being amortized through Interest expense, net, on the
Consolidated Statement of Operations.
Debt Covenants
The Credit Agreement governing the Senior Credit Facilities, the agreements governing the AR Facility, and the indentures
governing our senior unsecured notes contain customary affirmative and negative covenants, subject to certain exceptions,
including but not limited to those that limit the Company’s and our subsidiaries’ abilities to (i) pay dividends on, repurchase or
make distributions in respect to the Company’s or its wholly-owned subsidiary, Finance LLC’s capital stock or make other
restricted payments other than dividends or distributions necessary for us to maintain our REIT status, subject to certain
conditions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany or
third-party transfers.
The terms of the Credit Agreement (and under certain circumstances, the agreements governing the AR Facility) require that we
maintain a Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0
million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four
consecutive quarters, of no greater than 4.0 to 1.0. As of December 31, 2017, our Consolidated Net Secured Leverage Ratio was
1.4 to 1.0, as adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. The Credit
Agreement also requires that, in connection with the incurrence of certain indebtedness, we maintain a Consolidated Total
Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive
quarters, of no greater than 6.0 to 1.0. As of December 31, 2017, our Consolidated Total Leverage Ratio was 4.7 to 1.0, as
adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. As of December 31, 2017, we are
in compliance with our debt covenants.
Deferred Financing Costs
As of December 31, 2017, we had deferred $29.4 million in fees and expenses associated with the Term Loan, Revolving Credit
Facility, AR Facility and our senior unsecured notes. We are amortizing the deferred fees through Interest expense, net, on the
Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility, AR Facility and
our senior unsecured notes.
Fair Value
Under the fair value hierarchy, observable inputs such as unadjusted quoted prices in active markets for identical assets or
liabilities are defined as Level 1; observable inputs other than quoted prices included within Level 1 that are either directly or
indirectly observable for the asset or liability are defined as Level 2; and unobservable inputs for the asset or liability are
defined as Level 3. The aggregate fair value of our debt, which is estimated based on quoted market prices of similar liabilities,
was approximately $2.3 billion as of December 31, 2017, and $2.2 billion as of December 31, 2016. The fair value of our debt
as of both December 31, 2017 and 2016 is classified as Level 2.
84
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Note 8. Accumulated Other Comprehensive Loss
The following table presents the changes in the components of accumulated other comprehensive loss.
(in millions)
As of December 31, 2014
Other comprehensive income (loss) before reclassifications
Amortization of actuarial losses reclassified to net loss(a)
Total other comprehensive income (loss), net of tax
As of December 31, 2015
Other comprehensive income (loss) before reclassifications(b)
Amortization of actuarial losses reclassified to net loss(a)
Total other comprehensive income, net of tax
As of December 31, 2016
Other comprehensive income (loss) before reclassifications
Amortization of actuarial losses reclassified to net loss(a)
Total other comprehensive income (loss), net of tax
As of December 31, 2017
Cumulative
Translation
Adjustments
Net
Actuarial
Gain
(Loss)
Accumulated
Other
Comprehensive
Loss
$
$
(79.9) $
(32.3)
—
(32.3)
(112.2)
102.3
—
102.3
(9.9)
11.8
—
11.8
1.9
$
(10.2) $
1.0
0.5
1.5
(8.7)
(0.3)
0.4
0.1
(8.6)
(1.4)
0.4
(1.0)
(9.6) $
(90.1)
(31.3)
0.5
(30.8)
(120.9)
102.0
0.4
102.4
(18.5)
10.4
0.4
10.8
(7.7)
(a) See Note 13. Retirement Benefits to the Consolidated Financial Statements for additional details of items reclassified from accumulated other
comprehensive loss to net income (loss).
(b) On April 1, 2016, in connection with the Disposition, we recognized $99.9 million in unrealized foreign currency translation losses.
Net actuarial gain (loss) included in other comprehensive income (loss) is net of a tax benefit of $0.3 million in 2017 and net of
a tax expense of $1.0 million in 2015. The tax impact for net actuarial gain included in other comprehensive income (loss) in
2016 was immaterial.
Note 9. Equity
In 2016, we issued 79,690 shares, valued at approximately $1.9 million and in 2015, we issued 442,922 shares, valued at
approximately $12.2 million to J&M Holding Enterprises, Inc. (“J&M”), an affiliate of Videri Inc. (“Videri”), or Videri, as
applicable, in connection with licenses and services received under a development and license agreement (the “Videri
Agreement”) with J&M and Videri. We have capitalized the payments, which are related to the development of software and
equipment to be utilized within digital displays, within Property and equipment, net, on the Consolidated Statement of
Financial Position.
On June 13, 2017, certain subsidiaries of OUTFRONT Media Inc. acquired the equity interests of certain subsidiaries of All
Vision LLC (“All Vision”), which hold substantially all of All Vision’s existing outdoor advertising assets in Canada, and
effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”) (see Note 11.
Acquisitions and Dispositions to the Consolidated Financial Statements). In connection with the Transaction, the Company
issued 1,953,407 shares of Class A equity interests of a subsidiary of the Company that controls its Canadian business
(“Outfront Canada”).
85
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
The Class A equity interests are entitled to receive priority cash distributions from Outfront Canada at the same time and in the
same per share amount as the dividends paid on shares of the Company’s common stock. The Class A equity interests may be
redeemed by the holders in exchange for shares of the Company’s common stock on a one-for-one basis (subject to anti-dilution
adjustments) or, at the Company’s option, cash equal to the then fair market value of the shares of the Company’s common
stock commencing (i) one year after closing, with respect to 55% of the Class A equity interests, and (ii) 18 months after
closing, with respect to the remaining 45% of the Class A equity interests. In connection with the Transaction, the Company has
agreed to limitations on its ability to sell or otherwise dispose of the assets acquired from All Vision for a period of five years,
unless it pays holders of the Class A equity interests in Outfront Canada an amount intended to approximate their resulting tax
liability. During 2017, we made distributions of $1.4 million to holders of the Class A equity interests, which are recorded in
Dividends on our Consolidated Statements of Equity and Consolidated Statements of Cash Flows.
As of December 31, 2017, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 138,644,917
shares were issued and outstanding; and 50,000,000 shares of our preferred stock, par value $0.01 per share, were authorized
with no shares issued and outstanding.
On November 21, 2017, we entered into a sales agreement in connection with an “at-the-market” equity offering program (the
“ATM Program”), under which we may, from time to time, issue and sell shares of our common stock up to an aggregate
offering price of $300.0 million. We have no obligation to sell any of our common stock under the sales agreement and may at
any time suspend solicitations and offers under the sales agreement. As of February 26, 2018, no shares of our common stock
have been sold under the ATM Program, and accordingly, as of February 26, 2018, $300.0 million remained available to be sold
under the sales agreement.
On February 27, 2018, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our
common stock, payable on March 30, 2018, to stockholders of record at the close of business on March 9, 2018.
Note 10. Restructuring Charges
In 2015, we recorded restructuring charges of $2.6 million in our U.S. Media segment associated with the elimination of
management positions and the elimination of positions in connection with the sale of assets and the consolidation of leased
locations. In 2016, we recorded restructuring charges of $2.5 million in our U.S. Media segment for severance charges
associated with the reorganization of our sales management and administrative functions. In 2017, we recorded restructuring
charges of $6.4 million, of which $4.1 million was recorded in Other for severance charges primarily associated with the
Transaction and $2.3 million was recorded in our U.S. Media segment for severance charges associated with the reorganization
of our sales management and administrative functions. As of December 31, 2017, $4.4 million in restructuring reserves
remained outstanding and is included in Other current liabilities on the Consolidated Statement of Financial Position.
Note 11. Acquisitions and Dispositions
Acquisitions
In connection with the Transaction, the Company paid approximately $94.4 million for the assets, comprised of $50.0 million in
cash and $44.4 million, or 1,953,407 shares, of Class A equity interests of Outfront Canada, subject to post-closing adjustments
(upward or downward) for closing date working capital and indebtedness, and for the achievement of certain operating income
before depreciation and amortization targets relating to the acquired assets in 2017 and 2018. The issued Class A equity
interests of Outfront Canada are redeemable non-controlling interests and are included in Non-controlling interests on our
Consolidated Statement of Financial Position based on actual foreign currency exchange rates on the closing date of the
Transaction compared to the negotiated foreign currency exchange rate used in the valuation described above.
The preliminary allocation of the purchase price of approximately $94.4 million is based on management’s estimate of the fair
value of the assets acquired and liabilities assumed on the closing date of the Transaction, which was $68.0 million of identified
intangible assets, $34.3 million of goodwill, $17.0 million of deferred tax liabilities and $9.1 million of other assets and
liabilities (primarily property and equipment). These preliminary estimates may be revised in future periods as we obtain
additional information regarding fixed assets, intangible assets and certain liabilities. Any changes to the initial estimates of the
fair value of the assets and liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be
allocated to goodwill.
86
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Including the Transaction, we completed several acquisitions for a total purchase price of approximately $114.7 million in
2017, $67.9 million in 2016 and $12.1 million in 2015.
Dispositions
On April 1, 2016, we completed the Disposition and received $82.0 million in cash plus working capital, which was subject to
post-closing adjustments. We recorded a loss on real estate assets held for sale of approximately $1.3 million in 2016 and
$103.6 million in 2015 on the Consolidated Statement of Operations.
In the second quarter of 2015, we disposed of substantially all of our assets in Puerto Rico and recorded a loss of $0.9 million in
Net (gain) loss on dispositions on the Consolidated Statement of Operations.
Asset Swap
On July 1, 2017, in exchange for static billboards in four non-metropolitan market clusters, we acquired digital billboards in the
Boston, Massachusetts, DMA and $3.2 million in cash, which resulted in a pre-tax gain of $14.1 million.
Note 12. Stock-Based Compensation
Under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan (the “Stock Plan”), we have
8,000,000 shares of our common stock reserved for the issuance of stock-based awards. Under the Stock Plan, the board of
directors is authorized to grant awards of options to purchase shares of our common stock, stock appreciation rights, restricted
and unrestricted stock, restricted share units (“RSUs”), dividend equivalents, performance awards, including performance-
based restricted share units (“PRSUs”), and other equity-related awards and cash payments to all of our employees and non-
employee directors and employees of our subsidiaries. In addition, consultants and advisors who perform services for us and
our subsidiaries may, under certain conditions, receive grants under the Stock Plan.
RSUs and PRSUs accrue dividend equivalents in amounts equal to the regular cash dividends paid on our common stock and
will be paid in either cash or stock. Accrued dividend equivalents payable in stock shall convert to shares of our common stock
on the date of vesting.
Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of
grant and expensed over the vesting period, which is generally a three- to four-year service period. For PRSU awards, the
number of shares an employee earns may range from 0% to 120% based on the outcome of a one year performance condition.
Compensation expense is recorded based on the probable outcome of the performance condition. On an annual basis, our board
of directors will review actual performance and certify the degree to which performance goals applicable to the award have
been met. Forfeitures of RSUs are recorded as incurred. On an annual basis, adjustments are made to compensation expense
based on actual forfeitures and the forfeiture rates are revised as necessary.
The following table summarizes our stock-based compensation expense for 2017, 2016 and 2015.
(in millions)
RSUs and PRSUs
Stock options
Stock-based compensation expense, before income taxes
Tax benefit
Stock-based compensation expense, net of tax
Year Ended December 31,
2017
2016
2015
$
$
20.3
0.2
20.5
(2.0)
18.5
$
$
17.8
0.2
18.0
(1.9)
16.1
$
$
14.9
0.3
15.2
(1.3)
13.9
As of December 31, 2017, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $18.3 million,
which is expected to be recognized over a weighted average period of 1.8 years.
87
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
RSUs and PRSUs
The following table summarizes the 2017 activity of the RSUs and PRSUs issued to our employees.
Non-vested as of December 31, 2016
Granted:
RSUs
PRSUs
Vested:
RSUs
PRSUs
Forfeitures:
RSUs
PRSUs
Non-vested as of December 31, 2017
Weighted
Average Per
Share Grant
Date Fair
Market Value
Activity
1,637,141
$
22.71
569,365
254,931
(545,828)
(213,389)
(47,750)
(22,350)
1,632,120
26.70
27.17
23.20
24.36
24.12
19.01
24.43
The total fair value of RSUs and PRSUs that vested was $20.0 million during 2017, $11.6 million during 2016 and $17.3
million during 2015.
Stock Options
Stock options vest over a four-year service period and expire eight or ten years from the date of grant. Forfeitures of stock
options are recorded as incurred.
The following table summarizes the activity of stock options issued to our employees.
Outstanding as of December 31, 2016
Exercised
Outstanding as of December 31, 2017
Exercisable as of December 31, 2017
Activity
Weighted
Average Exercise
Price
$
294,897
(129,604)
165,293
165,293
15.72
9.37
20.69
20.69
The following table summarizes other information relating to stock option exercises.
(in millions)
Cash paid by our employees for stock option exercises
Tax benefit of stock option exercises
Intrinsic value of stock option exercises
Year Ended December 31,
2017
2016
2015
$
$
1.2
0.1
2.1
— $
—
—
2.0
0.1
1.8
88
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
The following table summarizes information concerning outstanding and exercisable stock options to purchase our common
stock under the Stock Plan as of December 31, 2017.
Range of
Exercise Price
$5 to 9.99
$10 to 14.99
$20 to 24.99
$25 to 29.99
Outstanding
Remaining
Contractual
Life (Years)
0.16
1.62
3.12
3.72
Weighted
Average
Exercise
Price
6.25
12.12
20.07
26.39
Number
of
Options
23,446
28,488
9,946
103,413
165,293
Exercisable
Weighted
Average
Exercise
Price
6.25
12.12
20.07
26.39
Number of
Options
23,446
28,488
9,946
103,413
165,293
Stock options outstanding as of December 31, 2017, have a weighted average remaining contractual life of 2.82 years and the
total intrinsic value for “in-the-money” options, based on the closing stock price of our common stock of $23.20, was $0.7
million. Stock options exercisable as of December 31, 2017, have a weighted average remaining contractual life of 2.82 years
and the total intrinsic value for “in-the-money” exercisable options was $0.7 million.
Note 13. Retirement Benefits
We sponsor two defined benefit pension plans covering specific groups of employees in Canada and the U.S.
The benefits for the pension plan in Canada are based primarily on an employee’s years of service and an average of the
employee’s highest five years of earnings. Participating employees in the pension plan in Canada are vested after two years of
service or immediately, depending on the province of their employment. We fund the pension plan in Canada in accordance
with the rules and regulations of the Pension Benefits Act of the Province of Ontario, Canada. Canada pension plan assets
consist principally of equity securities, corporate and government related securities, and insurance contracts.
The pension plan in the U.S. covers a small number of hourly employees. The investments of the pension plan in the U.S.
consist entirely of the plan’s interest in a trust, which invests the assets of this plan. The pension plan in the U.S. is funded in
accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended.
We use a December 31 measurement date for all pension plans.
The following table sets forth the change in benefit obligation for our pension plans.
(in millions)
Benefit obligation, beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Benefits paid
Cumulative translation adjustments
Benefit obligation, end of year
As of December 31,
2017
2016
2015
$
$
48.3
1.6
2.0
3.7
(1.4)
3.6
57.8
$
$
44.9
1.6
1.9
0.2
(1.5)
1.2
48.3
$
$
50.9
1.4
1.9
(0.2)
(1.1)
(8.0)
44.9
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OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
The following table sets forth the change in plan assets for our pension plans.
(in millions)
Fair value of plan assets, beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Cumulative translation adjustments
Fair value of plan assets, end of year
As of December 31,
2017
2016
$
$
43.6
4.9
2.0
(1.4)
3.2
52.3
$
$
The unfunded status of pension benefit obligations and the related amounts recognized on the Consolidated Statement of
Financial Position were as follows:
(in millions)
Unfunded status, end of year
Amounts recognized on the Consolidated Statement of Financial Position:
Other noncurrent liabilities
Net amounts recognized
As of December 31,
2017
2016
$
(5.4) $
(5.4)
(5.4)
39.7
2.4
2.0
(1.5)
1.0
43.6
(4.7)
(4.7)
(4.7)
The following amounts were recognized in accumulated other comprehensive loss on the Consolidated Statement of Financial
Position.
(in millions)
Net actuarial loss
Deferred income taxes
Net amount recognized in accumulated other comprehensive loss
As of December 31,
2017
2016
$
$
(12.9) $
3.3
(9.6) $
(11.6)
3.0
(8.6)
The accumulated benefit obligation for the defined benefit pension plans was $53.9 million as of December 31, 2017, and $43.8
million as of December 31, 2016.
The information for the pension plans with an accumulated benefit obligation in excess of plan assets is set forth below.
(in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
As of December 31,
2017
2016
$
$
57.8
53.9
52.3
48.3
43.8
43.6
The following tables present the components of net periodic pension cost and amounts recognized in other comprehensive
income (loss).
(in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses(a)
Amortization of transitional obligation
Net periodic pension cost
As of December 31,
2017
2016
2015
$
$
1.6
2.0
(2.3)
0.6
(0.1)
1.8
$
$
1.6
1.9
(2.1)
0.6
(0.1)
1.9
$
$
1.4
1.9
(2.2)
0.8
(0.1)
1.8
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OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Actuarial losses
Amortization of actuarial losses(a)
Cumulative translation adjustments
Amortization of transitional obligation
Deferred income taxes
Recognized in other comprehensive loss, net of tax
Year Ended
December 31,
2017
$
$
(1.1)
0.6
(0.7)
(0.1)
(1.3)
0.3
(1.0)
(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net income (loss).
Estimated net actuarial losses related to the defined benefit pension plans of approximately $0.7 million, will be amortized from
accumulated other comprehensive loss into net periodic pension costs in 2018.
Weighted average assumptions used to determine benefit obligations:
Discount rate
Rate of compensation increase
Weighted average assumptions used to determine net periodic cost:
Discount rate
Expected long-term return on plan assets
Rate of compensation increase
As of and for the Year Ended
December 31,
2017
2016
3.5%
3.0
4.0
5.1
3.0
4.0%
3.0
4.0
5.1
3.0
For each pension plan, the discount rate is determined based on the yield on portfolios of high quality bonds, constructed to
provide cash flows necessary to meet the expected future benefit payments, as determined for the projected benefit obligation.
The expected return on plan assets assumption was derived using the current and expected asset allocation of the pension plan
assets and considering historical as well as expected returns on various classes of plan assets.
Plan Assets
Our plan assets are included in a trust in Canada and a trust in the U.S. The asset allocations of these trusts are based upon an
analysis of the timing and amount of projected benefit payments, projected company contributions, the expected returns and
risk of the asset classes and the correlation of those returns. As of December 31, 2017, we invested approximately 31% in fixed
income instruments, 59% in equity instruments, and the remainder in cash, cash equivalents and insurance contracts.
The following tables set forth our pension plan assets measured at fair value on a recurring basis as of December 31, 2017 and
2016. These assets have been categorized according to the three-level fair value hierarchy established by the FASB which
prioritizes the inputs used in measuring fair value. Level 1 is based on quoted prices for the asset in active markets. Level 2 is
based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset in
inactive markets or quoted prices for similar assets. Level 3 is based on unobservable inputs that market participants would use
in pricing the asset.
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OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Cash and cash equivalents(a)
Fixed income securities:
Corporate and government related securities
Corporate bonds(b)
Equity securities(c):
U.S. equity
International equity
Insurance contracts
Total assets
(in millions)
Cash and cash equivalents(a)
Fixed income securities:
Corporate and government related securities
Corporate bonds(b)
Equity securities(c):
U.S. equity
International equity
Insurance contracts
Total assets
$
$
$
(a) Assets categorized as Level 2 reflect investments in money market funds.
(b) Securities of diverse industries, substantially all investment grade.
(c) Assets categorized as Level 2 reflect investments in common collective funds.
Significant changes in Level 3 plan assets are as follows:
(in millions)
Insurance contracts:
Beginning of year
Payments
Actuarial loss
Interest income
Cumulative translation adjustments
End of year
As of December 31, 2017
Level 1
Level 2
Level 3
Total
$
— $
1.0
$
— $
—
0.8
1.0
0.4
—
2.2
$
15.3
—
—
29.4
—
45.7
$
—
—
—
—
4.4
4.4
$
As of December 31, 2016
Level 1
Level 2
Level 3
Total
— $
0.9
$
— $
—
0.7
0.9
0.3
—
1.9
$
12.3
—
—
23.8
—
37.0
$
$
$
—
—
—
—
4.7
4.7
$
Year Ended December 31,
2017
2016
4.7
(0.5)
(0.3)
0.2
0.3
4.4
$
$
4.9
(0.5)
—
0.2
0.1
4.7
1.0
15.3
0.8
1.0
29.8
4.4
52.3
0.9
12.3
0.7
0.9
24.1
4.7
43.6
Our insurance contracts classified as Level 3 are valued based on a discount rate determined by reference to the market interest
rates prevailing on high quality debt instruments with cash flows that match the timing and amount of expected benefit
payments under the pension plan in Canada, as well as a mortality assumption based upon the current mortality table, CPM2014
generational projected using mortality improvement scale CPM-B. As a result, the fair value of the insurance contract is equal
to the defined benefit obligation in respect of the members covered under the insurance contract.
Money market investments are carried at amortized cost which approximates fair value due to the short-term maturity of these
investments. Investments in equity securities are reported at fair value based on quoted market prices on national security
exchanges. The fair value of investments in common collective funds are determined using the Net Asset Value (“NAV”)
provided by the administrator of the fund. The NAV is determined by each fund’s trustee based upon the fair value of the
underlying assets owned by the fund, less liabilities, divided by the number of outstanding units. The fair value of government
related securities and corporate bonds is determined based on quoted market prices on national security exchanges, when
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OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
available, or using valuation models which incorporate certain other observable inputs including recent trading activity for
comparable securities and broker-quoted prices.
Future Benefit Payments
(in millions)
Estimated future benefit payments for
pension plans
2018
1.6
2019
1.7
2020
1.8
2021
2.0
2022
2023-2027
2.1
13.3
We expect to contribute $2.5 million to our pension plans in 2018.
Multi-Employer Pension and Postretirement Benefit Plans
We contribute to multi-employer plans that provide pension and other postretirement benefits to certain employees under
collective bargaining agreements. Contributions to these plans were $3.3 million in 2017, $2.9 million in 2016 and $2.7 million
in 2015. Based on our contributions to each individual multi-employer plan relative to the total contributions of all participating
employers in such plan, no multi-employer plan was deemed to be individually significant to us.
Defined Contribution Plans
Employer contributions for defined contribution plans sponsored by us were $4.8 million in 2017, $4.5 million in 2016 and $4.2
million in 2015.
Note 14. Income Taxes
We are organized in conformity with the requirements for qualification and taxation as a REIT under the Code and, accordingly,
we have not provided for U.S. federal income tax on our REIT taxable income that we distribute to our stockholders. We have
elected to treat our subsidiaries that participate in certain non-REIT qualifying activities, and our foreign subsidiaries, as taxable
REIT subsidiaries (“TRSs”). As such, we have provided for their federal, state and foreign income taxes.
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax
Act amends the Internal Revenue Code of 1986, as amended, (the “Code”) to reduce tax rates and modify policies, credits and
deductions. The Tax Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate and transitions from a
worldwide tax system to a territorial tax system including a one-time deemed repatriation on corporate earnings held offshore.
The Tax Act also adds many new provisions including changes to bonus depreciation, the deduction for executive compensation
and interest expense. From an international tax perspective, a tax on global intangible low-taxed income (“GILTI”) and a base
erosion anti-abuse tax (“BEAT”) were added. While most of the provisions will not be effective until 2018, two items that are
effective for 2017 are the adjustments to our deferred tax assets and liabilities based on the above reduction in the tax rate and
the one-time taxable income inclusion of our post-1986 unremitted foreign earnings. The effects of these two items are reported
below.
Cash paid for income taxes was $6.8 million in 2017 and $1.2 million in 2016 and $5.8 million in 2015.
The U.S. and foreign components of Income (loss) before provision for income taxes and equity in earnings of investee
companies were as follows:
(in millions)
United States
Foreign
Income (loss) before provision for income taxes and equity in earnings
of investee companies
Year Ended December 31,
2017
2016
2015
$
139.2
(14.1)
$
100.9
(9.9)
83.3
(112.1)
125.1
$
91.0
$
(28.8)
$
$
93
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
The following table reconciles Income (loss) before provision for income taxes and equity in earnings of investee companies to
REIT taxable income.
(in millions)
Income (loss) before provision for income taxes and equity in earnings of
investee companies
Net (income) loss of TRSs
Income from REIT operations
Book depreciation in excess of tax depreciation
Book amortization in excess of tax amortization
Tax dividend from foreign subsidiary(a)
Book/tax differences - stock-based compensation
Book/tax differences - deferred gain for tax
Book/tax differences - capitalized costs
Book/tax differences - other
REIT taxable income (estimated)
Year Ended December 31,
2017
2016
2015
$
$
125.1
(2.4)
122.7
29.5
(1.8)
5.6
(2.2)
(13.1)
5.7
(0.2)
146.2
$
91.0
$
5.4
96.4
50.8
12.2
41.0
4.2
(3.5)
6.0
6.4
213.5
$
$
(28.8)
108.7
79.9
51.7
7.9
39.0
(3.4)
(2.7)
5.6
3.1
181.1
(a)
In 2017, the tax dividend from foreign subsidiary consists of a $12.6 million one-time deemed repatriation of foreign unremitted earnings under the Tax
Act, net of a $7.0 million deduction for dividends received.
The components of the Provision for income taxes are as follows:
(in millions)
Current:
Federal
State and local
Foreign
Deferred tax benefit (liability):
Federal
State and local
Foreign
Provision for income taxes
Year Ended December 31,
2017
2016
2015
$
$
(6.9) $
(2.2)
0.1
(9.0)
(2.2)
(0.1)
7.2
4.9
(4.1) $
(4.0) $
(1.5)
(1.7)
(7.2)
(0.7)
(0.2)
2.7
1.8
(5.4) $
(0.3)
(0.9)
(5.9)
(7.1)
(0.5)
—
2.2
1.7
(5.4)
Excluding the Loss on real estate assets held for sale of $103.6 million (see Note 11. Acquisitions and Dispositions:
Dispositions to the Consolidated Financial Statements) in 2015, the effective income tax rate was 3.3% in 2017, 5.9% in 2016
and 7.2% in 2015.
94
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
The difference between income taxes expected at the U.S. federal statutory income tax rate of 35% and the Provision for
income taxes is summarized as follows:
(in millions)
Benefit (provision) for income taxes on income (loss) at U.S. statutory
rate
Loss on real estate assets held for sale
REIT dividends paid deduction
State and local taxes, net of federal tax benefit
Effect of foreign operations
Resolution of prior year tax
Effect of the Tax Act on net deferred tax assets(a)
Gain on dispositions
Other, net
Provision for income taxes
Year Ended December 31,
2017
2016
2015
$
$
(43.8) $
—
42.9
(1.6)
2.4
—
(2.1)
(0.9)
(1.0)
(4.1) $
(31.9) $
—
33.8
(1.6)
(2.4)
(2.9)
—
—
(0.4)
(5.4) $
10.1
(36.3)
28.0
(1.8)
(7.3)
2.1
—
—
(0.2)
(5.4)
(a)
Impact on our net deferred tax assets resulting from the Tax Act’s reduction of corporate income tax rates from 35% to 21% for tax years beginning after
December 31, 2017.
The following table is a summary of the components of deferred income tax assets and liabilities.
(in millions)
Deferred income tax assets:
Provision for expenses and losses
Postretirement and other employee benefits
Tax credit and loss carryforwards
Total deferred income tax assets
Deferred income tax liabilities:
Property, equipment and intangible assets
Total deferred income tax liabilities
As of December 31,
2017
2016
$
$
0.9
3.8
2.2
6.9
(22.4)
(22.4)
Deferred income tax liabilities, net
$
(15.5) $
0.6
5.0
1.1
6.7
(8.8)
(8.8)
(2.1)
As of December 31, 2017, we had net operating loss carryforwards for Canadian jurisdictions of $8.3 million, which expire in
various years from 2018 through 2037.
Our undistributed earnings of foreign subsidiaries not includable in our federal income tax returns that could be subject to
additional income taxes if remitted was approximately $4.1 million as of December 31, 2017, and $25.0 million as of December
31, 2016. No provision was recorded for taxes that could result from the remittance of such undistributed earnings since we
intend to declare dividends to our shareholders in an amount sufficient to offset such distributions and intend to reinvest the
remainder outside of the U.S. indefinitely. The determination of the unrecognized U.S. federal deferred income tax liability for
undistributed earnings is not practicable.
95
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
The following table sets forth the change in the reserve for uncertain tax positions, excluding related accrued interest and
penalties.
(in millions)
As of January 1, 2015
Additions for current year tax positions
Reductions for prior year tax positions
As of December 31, 2015
Additions for current year tax positions
Reductions for prior year tax positions
As of December 31, 2016
Additions for current year tax positions
Reductions for prior year tax positions
As of December 31, 2017
$
$
1.2
0.2
(0.6)
0.8
0.1
(0.3)
0.6
0.2
(0.2)
0.6
The reserve for uncertain tax positions of $0.6 million as of December 31, 2017, includes $0.3 million which would affect our
effective income tax rate if and when recognized in future years.
We recognize interest and penalty charges related to the reserve for uncertain tax positions as part of income tax expense. These
charges were not material for any of the periods presented.
We are subject to taxation in the U.S. and various state, local and foreign jurisdictions. As of December 31, 2017, tax returns for
2016, 2015 and 2014 are open to examination by the tax authorities. As of December 31, 2017, we are no longer subject to U.S.
federal, state, local, or foreign examinations by tax authorities for years before 2014.
Note 15. Earnings (Loss) Per Share (“EPS”)
(in millions)
Year Ended December 31,
2017
2016
2015
Net income (loss) available for common stockholders
Less: Distributions to holders of Class A equity interests of a subsidiary(b)
Net income (loss) available for common stockholders, basic and diluted
$
$
125.8
1.4
124.4
$
$
90.9
—
90.9
$
$
Weighted average shares for basic EPS
Dilutive potential shares from grants of RSUs, PRSUs and stock options(a)
Weighted average shares for diluted EPS(a)(b)
138.5
0.4
138.9
137.9
0.5
138.4
(29.4)
—
(29.4)
137.3
—
137.3
(a) The potential impact of an aggregate 0.1 million granted RSUs, PRSUs and stock options for 2017, 0.5 million granted RSUs, PRSUs and stock options
for 2016 and 0.7 million granted RSUs, PRSUs and stock options for 2015 was antidilutive.
(b) On June 13, 2017, 1,953,407 shares of Class A equity interests of Outfront Canada were issued, which may be redeemed by the holders in exchange for
shares of the Company’s common stock on a one-for-one basis (subject to anti-dilution adjustments), at our option, after a certain time period. (See Note
9. Equity to the Consolidated Financial Statements.) The potential impact of 1.1 million shares of Class A equity interests of Outfront Canada was
antidilutive for 2017.
Note 16. Commitments and Contingencies
Off-Balance Sheet Arrangements
Our off-balance sheet commitments primarily consist of operating lease arrangements and guaranteed minimum annual
payments. These arrangements result from our normal course of business and represent obligations that are payable over several
years.
96
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Contractual Obligations
We have long-term operating leases for office space, billboard sites and equipment, which expire at various dates. Certain leases
contain renewal and escalation clauses.
We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit
systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street
kiosks, and transit platforms. Under most of these franchise agreements, the franchisor is entitled to receive the greater of a
percentage of the relevant revenues, net of agency fees, or a specified guaranteed minimum annual payment.
We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which
entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential
entertainment at sports events. Under most of these agreements, the school is entitled to receive the greater of a percentage of
the relevant revenue, net of agency commissions, or a specified guaranteed minimum annual payment.
On December 8, 2017, we entered into a transit advertising and communications concession agreement with the New York
Metropolitan Transportation Authority (the “MTA”) for subway, commuter rail and buses for a 10-year term, with an additional
5-year extension at our option. Under the agreement, we are obligated to deploy over 50,000 digital displays for advertising and
MTA communications across the transit system over a number of years, commencing in 2018, and the MTA will be entitled to
receive the greater of a percentage of revenues or a guaranteed minimum annual payment. Incremental revenues that exceed an
annual base revenue amount will be retained by us for the cost of deploying advertising and communications screens
throughout the transit system. Our currently estimated deployment costs will be approximately $800 million for the full 15-year
term and approximately $600 million for the first eight years of the term, and we anticipate these deployment costs will be
recorded as Prepaid lease and transit franchise costs and Intangible assets on our Consolidated Statement of Financial
Position. We expect to utilize third party financing to fund deployment costs, and have increased our letters of credit for the
benefit of the MTA from approximately $30.0 million to $136.0 million, which is subject to change as equipment installations
are completed and revenues are generated.
As of December 31, 2017, minimum rental payments under non-cancellable operating leases with terms in excess of one year
and guaranteed minimum annual payments are as follows:
(in millions)
2018
2019
2020
2021
2022
2023 and thereafter
Total minimum payments
Operating
Leases
Guaranteed
Minimum
Annual
Payments
$
$
131.0
129.7
114.5
104.7
93.8
505.2
1,078.9
$
$
193.5
172.3
153.2
151.8
150.6
704.8
1,526.2
Rent expense was $377.7 million in 2017, $372.1 million in 2016 and $376.4 million in 2015, including contingent rent
amounts of $84.7 million in 2017, $88.1 million in 2016 and $87.5 million in 2015. Rent expense is primarily reflected in
operating expenses on the Consolidated Statements of Operations and includes rent on cancellable leases and leases with terms
under one year, as well as contingent rent, none of which are included in the operating lease commitments in the table above.
Letters of Credit
We have indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-
performance in the normal course of business. As of December 31, 2017, outstanding letters of credit were approximately
$208.1 million and outstanding surety bonds were approximately $23.9 million, and were not recorded on the Consolidated
Statements of Financial Position.
97
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Legal Matters
On an ongoing basis, we are engaged in lawsuits and governmental proceedings and respond to various investigations,
inquiries, notices and claims from national, state and local governmental and other authorities (collectively, “litigation”).
Litigation is inherently uncertain and always difficult to predict. Although it is not possible to predict with certainty the
eventual outcome of any litigation, in our opinion, none of our current litigation is expected to have a material adverse effect on
our results of operations, financial position or cash flows.
Note 17. Segment Information
As of April 1, 2016, we manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is
included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing. International and Sports Marketing
do not meet the criteria to be a reportable segment and accordingly, are both included in Other.
The following tables set forth our financial performance by segment. Historical financial information by reportable segment has
been recast to reflect the current period’s presentation. On April 1, 2016, we completed the Disposition. Historical operating
results for our advertising business in Latin America are included in Other.
(in millions)
Revenues:
U.S. Media
Other
Total revenues
Year Ended December 31,
2017
2016
2015
$
$
1,406.5
114.0
1,520.5
$
$
1,393.8
120.1
1,513.9
$
$
1,344.3
169.5
1,513.8
We present Operating income before Depreciation, Amortization, Net gain (loss) on dispositions, Stock-based compensation,
Restructuring charges and Loss on real estate assets held for sale (“Adjusted OIBDA”) as the primary measure of profit and
loss for our operating segments in accordance with FASB guidance for segment reporting.
(in millions)
Net income (loss)
Provision for income taxes
Equity in earnings of investee companies, net of tax
Interest expense, net
Other (income) expense, net
Operating income
Restructuring charges
Loss on real estate assets held for sale
Net (gain) loss on dispositions
Depreciation and amortization
Stock-based compensation
Total Adjusted OIBDA
Adjusted OIBDA:
U.S. Media
Other
Corporate
Total Adjusted OIBDA
Year Ended December 31,
2017
2016
2015
$
$
$
$
125.8
4.1
(4.8)
116.9
(0.3)
241.7
6.4
—
(14.3)
189.8
20.5
444.1
478.1
8.4
(42.4)
444.1
$
$
$
$
90.9
5.4
(5.3)
113.8
0.1
204.9
2.5
1.3
(1.9)
224.2
18.0
449.0
473.8
17.8
(42.6)
449.0
$
$
$
$
(29.4)
5.4
(4.8)
114.8
0.4
86.4
2.6
103.6
0.7
229.1
15.2
437.6
451.1
24.3
(37.8)
437.6
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OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Operating income (loss):
U.S. Media
Other
Corporate
Total operating income
Net (gain) loss on dispositions:
U.S. Media
Other
Total (gain) loss on dispositions
Depreciation and amortization:
U.S. Media
Other
Total depreciation and amortization
Capital expenditures:
U.S. Media
Other
Total capital expenditures
(in millions)
Assets:
U.S. Media
Other(a)
Corporate
Total assets
$
$
$
$
$
$
$
$
$
$
Year Ended December 31,
2017
2016
2015
320.6
(16.0)
(62.9)
241.7
$
$
(14.4) $
0.1
(14.3) $
169.6
20.2
189.8
63.9
6.9
70.8
$
$
$
$
269.5
(4.0)
(60.6)
204.9
$
$
(1.7) $
(0.2)
(1.9) $
203.5
20.7
224.2
54.8
4.6
59.4
$
$
$
$
$
$
245.3
(105.9)
(53.0)
86.4
0.6
0.1
0.7
202.6
26.5
229.1
53.3
5.9
59.2
2015
3,593.0
134.3
88.2
3,815.5
As of December 31,
2017
2016
3,528.8
263.8
15.6
3,808.2
$
$
3,578.8
145.5
14.2
3,738.5
(a)
In 2015, includes amounts reclassified as Assets held for sale on the Consolidated Statement of Financial Position. (See Note 11. Acquisitions and
Dispositions: Dispositions to the Consolidated Financial Statements.)
(in millions)
Revenues(a):
United States
Canada
Latin America
Total revenues
(a) Revenues classifications are based on the geography of the advertising.
Year Ended December 31,
2017
2016
2015
$
$
1,447.3
73.2
—
1,520.5
$
$
1,435.2
67.3
11.4
1,513.9
$
$
1,380.3
71.7
61.8
1,513.8
99
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Long-lived assets(a):
United States
Canada
Total long-lived assets
As of December 31,
2017
2016
2015
$
$
3,216.4
189.1
3,405.5
$
$
3,255.0
73.9
3,328.9
$
3,291.1
82.2
3,373.3
(a) Reflects total assets less current assets, investments and non-current deferred tax assets.
Note 18. Condensed Consolidating Financial Information
We and our material existing and future direct and indirect 100% owned domestic subsidiaries (except Finance LLC and
Outfront Media Capital Corporation, the borrowers under the Term Loan and the Revolving Credit Facility) guarantee the
obligations under the Term Loan and the Revolving Credit Facility. Our senior unsecured notes are fully and unconditionally,
and jointly and severally guaranteed on a senior unsecured basis by us and each of our direct and indirect wholly-owned
domestic subsidiaries that guarantees the Term Loan and the Revolving Credit Facility (see Note 7. Debt to the Consolidated
Financial Statements). The following condensed consolidating schedules present financial information on a combined basis in
conformity with the SEC’s Regulation S-X, Rule 3-10 for: (i) OUTFRONT Media Inc. (the “Parent Company”); (ii) Finance
LLC (the “Subsidiary Issuer”); (iii) the guarantor subsidiaries; (iv) the non-guarantor subsidiaries, including the SPV; (v)
elimination entries necessary to consolidate the Parent Company and the Subsidiary Issuer, the guarantor subsidiaries and non-
guarantor subsidiaries; and (vi) the Parent Company on a consolidated basis. Outfront Media Capital Corporation is a co-issuer
finance subsidiary with no assets or liabilities, and therefore has not been included in the tables below.
100
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Current assets:
As of December 31, 2017
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
Cash and cash equivalents
$
— $
10.2
$
3.7
$
34.4
$
— $
Receivables, less allowances
Other current assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets
—
—
—
—
—
—
—
1.0
11.2
—
—
—
Investment in subsidiaries
1,181.1
3,333.6
Other assets
Intercompany
Total assets
Total current liabilities
Long-term debt
Deferred income tax liabilities, net
Asset retirement obligation
Deficit in excess of investment of
subsidiaries
Other liabilities
Intercompany
Total liabilities
Total stockholders’ equity
Non-controlling interests
Total equity
—
—
3.3
—
1,181.1
$
3,348.1
— $
21.7
$
$
$
$
—
—
—
—
—
—
—
1,181.1
—
2,145.3
—
—
—
—
—
2,167.0
1,181.1
—
42.1
89.0
134.8
609.1
2,059.9
511.5
293.4
55.1
123.9
3,787.7
199.4
—
—
29.7
2,152.5
76.7
148.3
2,606.6
1,181.1
—
$
$
202.7
20.0
257.1
53.0
68.1
69.4
—
2.8
148.3
598.7
(13.7)
(13.4)
(27.1)
—
—
—
(4,808.1)
—
(272.2)
$ (5,107.4) $
48.3
231.1
96.6
376.0
662.1
2,128.0
580.9
—
61.2
—
3,808.2
105.6
$
(27.1) $
—
299.6
2,145.3
—
19.6
5.0
—
5.7
123.9
259.8
293.4
45.5
338.9
598.7
—
—
(2,152.5)
—
(272.2)
(2,451.8)
(2,655.6)
—
(2,655.6)
$ (5,107.4) $
19.6
34.7
—
82.4
—
2,581.6
1,181.1
45.5
1,226.6
3,808.2
1,181.1
1,181.1
1,181.1
Total liabilities and equity
$
1,181.1
$
3,348.1
$
3,787.7
$
101
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Current assets:
As of December 31, 2016
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
Cash and cash equivalents
$
— $
11.4
$
35.8
$
Receivables, less allowances
Other current assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets
—
—
—
—
—
—
—
1.1
12.5
—
—
—
Investment in subsidiaries
1,233.0
3,371.9
Other assets
Intercompany
Total assets
Total current liabilities
Long-term debt
Deferred income tax liabilities, net
Asset retirement obligation
Deficit in excess of investment of
subsidiaries
Other liabilities
Intercompany
Total liabilities
Total stockholders’ equity
Non-controlling interests
Total equity
—
—
1.1
—
1,233.0
$
3,385.5
— $
15.7
$
$
$
$
—
—
—
—
—
—
—
1,232.9
0.1
2,136.8
—
—
—
—
—
2,152.5
1,232.9
0.1
207.9
77.9
321.6
621.4
2,059.9
545.3
114.4
56.9
42.7
3,762.2
223.4
—
—
29.7
2,138.9
70.2
67.0
2,529.2
1,232.9
0.1
$
$
18.0
14.1
12.0
44.1
43.6
29.5
—
—
2.6
67.0
186.8
$
— $
—
—
—
—
—
—
(4,719.3)
—
(109.7)
$ (4,829.0) $
65.2
222.0
91.0
378.2
665.0
2,089.4
545.3
—
60.6
—
3,738.5
12.4
$
— $
251.5
—
8.5
4.4
—
4.4
42.7
72.4
114.4
—
114.4
186.8
—
—
—
(2,138.9)
—
(109.7)
(2,248.6)
(2,580.2)
(0.2)
(2,580.4)
$ (4,829.0) $
2,136.8
8.5
34.1
—
74.6
—
2,505.5
1,232.9
0.1
1,233.0
3,738.5
1,233.0
1,233.0
1,233.0
Total liabilities and stockholders’ equity
$
1,233.0
$
3,385.5
$
3,762.2
$
102
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Revenues:
Billboard
Transit and other
Total revenues
Expenses:
Operating
Selling, general and administrative
Restructuring charges
Net gain on dispositions
Depreciation
Amortization
Total expenses
Operating income (loss)
Interest expense, net
Other income, net
Income (loss) before income taxes and
equity earnings of investee
Benefit (provision) for income taxes
Equity in earnings of investee companies,
net of tax
Net income (loss)
Net income (loss)
Total other comprehensive income, net of
tax
Total comprehensive income
Year Ended December 31, 2017
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
$
— $
— $
997.5
$
—
—
—
1.6
—
—
—
—
1.6
(1.6)
—
—
(1.6)
—
—
—
—
0.9
—
—
—
—
0.9
(0.9)
(113.9)
—
(114.8)
—
449.4
1,446.9
784.6
246.2
2.5
(14.4)
77.3
94.0
1,190.2
256.7
(2.3)
—
254.4
(11.3)
61.5
12.1
73.6
50.6
13.0
3.9
0.1
12.4
6.1
86.1
(12.5)
(0.7)
0.3
(12.9)
7.2
$
— $
1,059.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
461.5
1,520.5
835.2
261.7
6.4
(14.3)
89.7
100.1
1,278.8
241.7
(116.9)
0.3
125.1
(4.1)
127.4
125.8
125.8
$
$
242.2
127.4
127.4
$
$
(115.7)
127.4
127.4
$
$
0.8
(4.9) $
(249.9)
(249.9) $
4.8
125.8
(4.9) $
(249.9) $
125.8
10.8
10.8
10.8
10.8
136.6
$
138.2
$
138.2
$
5.9
$
(32.4)
(282.3) $
10.8
136.6
$
$
$
103
(in millions)
Revenues:
Billboard
Transit and other
Total revenues
Expenses:
Operating
Selling, general and administrative
Restructuring charges
Loss on real estate assets held for sale
Net loss on dispositions
Depreciation
Amortization
Total expenses
Operating income (loss)
Interest expense, net
Other expense, net
Income (loss) before income taxes and
equity earnings of investee
Benefit (provision) for income taxes
Equity in earnings of investee companies,
net of tax
Net income (loss)
Net income (loss)
Total other comprehensive income, net of
tax
Total comprehensive income
$
$
$
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Year Ended December 31, 2016
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
$
— $
— $
1,005.6
$
$
— $
1,071.0
65.4
13.3
78.7
53.2
16.4
—
1.3
(0.2)
14.8
3.0
88.5
(9.8)
—
(0.1)
(9.9)
1.0
—
—
—
1.5
—
—
—
—
—
1.5
(1.5)
—
—
(1.5)
—
—
—
—
0.2
—
—
—
—
—
0.2
(0.2)
(113.6)
—
(113.8)
—
429.6
1,435.2
764.9
246.7
2.5
—
(1.7)
94.1
112.3
1,218.8
216.4
(0.2)
—
216.2
(6.4)
92.4
90.9
90.9
$
$
206.2
92.4
92.4
$
$
(117.4)
92.4
92.4
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
442.9
1,513.9
818.1
264.8
2.5
1.3
(1.9)
108.9
115.3
1,309.0
204.9
(113.8)
(0.1)
91.0
(5.4)
5.3
90.9
1.0
(7.9) $
(176.9)
(176.9) $
(7.9) $
(176.9) $
90.9
102.4
102.4
102.4
102.6
193.3
$
194.8
$
194.8
$
94.7
$
(307.4)
(484.3) $
102.4
193.3
104
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Revenues:
Billboard
Transit and other
Total revenues
Expenses:
Operating
Selling, general and administrative
Restructuring charges
Loss on real estate assets held for sale
Net gain on dispositions
Depreciation
Amortization
Total expenses
Operating income (loss)
Interest income (expense), net
Other expense, net
Income (loss) before income taxes and
equity earnings of investee
Provision for income taxes
Equity in earnings of investee companies,
net of tax
Net loss
Net loss
Total other comprehensive loss, net of tax
Total comprehensive loss
Year Ended December 31, 2015
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
$
— $
— $
969.8
$
114.5
$
— $
1,084.3
—
—
—
1.5
—
—
—
—
—
1.5
(1.5)
—
—
(1.5)
—
—
—
—
0.3
—
—
—
—
—
0.3
(0.3)
(114.8)
—
(115.1)
—
410.5
1,380.3
743.9
228.0
2.6
—
0.6
94.0
111.1
1,180.2
200.1
(0.2)
—
199.9
(2.0)
19.0
133.5
89.2
28.5
—
103.6
0.1
19.7
4.3
245.4
(111.9)
0.2
(0.4)
(112.1)
(3.4)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(27.9)
(29.4) $
87.2
(27.9) $
(225.8)
(27.9) $
1.1
(114.4) $
170.2
170.2
(29.4) $
(27.9) $
(27.9) $
(114.4) $
170.2
$
$
(30.8)
(60.2) $
(30.8)
(58.7) $
(30.8)
(58.7) $
(30.5)
(144.9) $
92.1
262.3
$
$
$
$
429.5
1,513.8
833.1
258.3
2.6
103.6
0.7
113.7
115.4
1,427.4
86.4
(114.8)
(0.4)
(28.8)
(5.4)
4.8
(29.4)
(29.4)
(30.8)
(60.2)
105
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Cash provided by (used for) operating
activities
Investing activities:
Capital expenditures
Acquisitions
Proceeds from dispositions
Cash used for investing activities
Financing activities:
Proceeds from long-term debt
borrowings - term loan
Proceeds from borrowings under short-
term debt facilities
Repayments of borrowings under short-
term debt facilities
Payments of deferred financing costs
Proceeds from stock option exercises
Earnout payment related to prior
acquisition
Taxes withheld for stock-based
compensation
Dividends
Intercompany
Other
Cash provided by (used for) financing
activities
Effect of exchange rate on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at
beginning of period
Cash and cash equivalents at
end of period
Year Ended December 31, 2017
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
$
(1.7) $
(108.5) $
329.5
$
30.0
$
— $
249.3
—
—
—
—
—
—
—
—
1.2
—
—
(200.4)
200.9
—
1.7
—
—
—
—
—
—
—
8.3
90.0
(90.0)
(8.0)
—
—
—
—
107.0
—
(63.6)
(18.5)
5.5
(76.6)
—
—
—
—
—
(7.2)
(51.6)
0.1
(58.7)
—
160.0
(80.0)
(0.5)
—
(2.0)
—
(8.5)
—
(274.3)
(0.2)
107.3
(285.0)
—
—
(1.2)
(32.1)
11.4
35.8
—
(1.4)
(33.6)
—
44.5
0.6
16.4
18.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(70.8)
(70.1)
5.6
(135.3)
8.3
250.0
(170.0)
(8.5)
1.2
(2.0)
(8.5)
(201.8)
—
(0.2)
(131.5)
0.6
(16.9)
65.2
$
— $
10.2
$
3.7
$
34.4
$
— $
48.3
106
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Cash provided by (used for) operating
activities
Investing activities:
Capital expenditures
Acquisitions
Proceeds from dispositions
Cash provided by (used for) investing
activities
Financing activities:
Repayments of long-term debt
borrowings - term loan
Proceeds from borrowings under short-
term debt facilities
Repayments of borrowings under short-
term debt facilities
Payments of deferred financing costs
Taxes withheld for stock-based
compensation
Dividends
Intercompany
Other
Cash provided by (used for) financing
activities
Effect of exchange rate on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at
beginning of period
Cash and cash equivalents at
end of period
Year Ended December 31, 2016
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
$
(1.5) $
(111.3) $
399.1
$
0.8
$
— $
287.1
—
—
—
—
—
—
—
—
—
(188.6)
190.1
—
1.5
—
—
—
—
—
—
—
(90.0)
35.0
(35.0)
(0.4)
—
—
131.5
—
(54.8)
(67.9)
2.9
(119.8)
—
—
—
—
(7.3)
—
(244.5)
(0.2)
(4.6)
—
87.7
83.1
—
—
—
—
—
—
(77.1)
—
41.1
(252.0)
(77.1)
—
(70.2)
81.6
—
27.3
8.5
(0.3)
6.5
11.5
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(59.4)
(67.9)
90.6
(36.7)
(90.0)
35.0
(35.0)
(0.4)
(7.3)
(188.6)
—
(0.2)
(286.5)
(0.3)
(36.4)
101.6
$
— $
11.4
$
35.8
$
18.0
$
— $
65.2
107
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Cash provided by (used for) operating
activities
Investing activities:
Capital expenditures
Acquisitions
Proceeds from dispositions
Cash used for investing activities
Financing activities:
Proceeds from long-term debt
borrowings - senior notes
Repayments of long-term debt
borrowings - term loan
Proceeds from borrowings under short-
term debt facilities
Repayments of borrowings under short-
term debt facilities
Payments of deferred financing costs
Proceeds from stock option exercises
Taxes withheld for stock-based
compensation
Dividends
Intercompany
Other
Cash provided by (used for) financing
activities
Effect of exchange rate on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at
beginning of period
Cash reclassified to assets held for sale
Cash and cash equivalents at
end of period
Year Ended December 31, 2015
Parent
Company
Subsidiary
Issuer
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries
Eliminations
Consolidated
$
(1.5) $
(107.4) $
378.9
$
23.1
$
— $
293.1
—
—
—
—
—
—
—
—
—
2.0
—
(196.3)
195.8
—
1.5
—
—
—
—
—
—
—
—
103.8
(50.0)
105.0
(105.0)
(3.3)
—
—
—
127.0
—
(53.3)
(12.1)
8.9
(56.5)
—
—
—
—
—
—
(4.3)
—
(317.9)
(0.5)
177.5
(322.7)
—
70.1
11.5
—
—
(0.3)
8.8
—
(5.9)
—
—
(5.9)
—
—
—
—
—
—
—
—
(4.9)
—
(4.9)
(3.3)
9.0
8.2
(5.7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(59.2)
(12.1)
8.9
(62.4)
103.8
(50.0)
105.0
(105.0)
(3.3)
2.0
(4.3)
(196.3)
—
(0.5)
(148.6)
(3.3)
78.8
28.5
(5.7)
$
— $
81.6
$
8.5
$
11.5
$
— $
101.6
108
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
Note 19. Quarterly Financial Data (Unaudited)
Our revenues and profits experience seasonality due to seasonal advertising patterns and influences on advertising markets.
Typically, our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first
quarter, as advertisers cut back on spending following the holiday shopping season.
Effective April 1, 2016, we changed the segments that we use to review operating results and make decisions regarding segment
performance and resource allocation. Historical financial information by reportable segment has been recast to reflect the
changes in segment reporting with no impact to previously reported consolidated financial statements. (See Note 17. Segment
information to the Consolidated Financial Statements.)
(in millions)
Revenues:
U.S. Media
Other
Total revenues
Adjusted OIBDA:
U.S. Media
Other
Corporate
Total Adjusted OIBDA
Restructuring charges
Net gain (loss) on dispositions
Depreciation
Amortization
Stock-based compensation
Total operating income
Operating income (loss):
U.S. Media
Other
Corporate
Total operating income
Net income
First
Quarter
Second
Quarter
2017
Third
Quarter
Fourth
Quarter
Total
Year
$
$
$
$
$
$
$
307.1
23.5
330.6
92.4
(1.1)
(11.1)
80.2
(1.8)
(0.4)
(22.9)
(23.7)
(5.4)
26.0
47.5
(5.0)
(16.5)
26.0
2.5
$
$
$
$
$
$
$
367.1
29.1 (a)
396.2
128.3
4.0 (a)
(10.3)
122.0
(2.9)
(0.1)
(23.1)
(25.4)
(5.5)
65.0
83.9
(3.1) (a)
(15.8)
65.0
37.1
$
$
$
$
$
$
$
363.0
29.4 (a)
392.4
129.2
1.9 (a)
(10.3)
120.8
(1.6)
14.1
(22.3)
(25.5)
(5.2)
80.3
100.7
(4.9) (a)
(15.5)
80.3
50.7
$
$
$
$
$
$
$
369.3
32.0 (a)
401.3
$ 1,406.5
114.0
$ 1,520.5
128.2
$
478.1
3.6 (a)
(10.7)
121.1
(0.1)
0.7
(21.4)
(25.5)
(4.4)
70.4
88.5
(3.0) (a)
(15.1)
70.4
35.5
$
$
$
$
8.4
(42.4)
444.1
(6.4)
14.3
(89.7)
(100.1)
(20.5)
241.7
320.6
(16.0)
(62.9)
241.7
125.8
(a) On June 13, 2017, we completed the Transaction. (See Note 9. Equity and Note 11. Acquisitions and Dispositions: Acquisitions to the Consolidated
Financial Statements.)
109
OUTFRONT Media Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions)
Revenues:
U.S. Media
Other
Total revenues
Adjusted OIBDA:
U.S. Media
Other
Corporate
Total Adjusted OIBDA
Restructuring charges
Loss on real estate assets held for sale
Net gain (loss) on dispositions
Depreciation
Amortization
Stock-based compensation
Total operating income
Operating income (loss):
U.S. Media
Other
Corporate
Total operating income
Net income (loss)
First
Quarter
Second
Quarter
2016
Third
Quarter
Fourth
Quarter
Total
Year
$
$
$
$
$
$
$
312.6
35.8
348.4
94.9
2.2
(9.0)
88.1
—
(1.3)
(0.4)
(29.1)
(28.3)
(4.8)
24.2
43.1
(5.1)
(13.8)
24.2
(2.3)
$
$
$
$
$
$
$
356.5
28.8 (a)
385.3
123.7
8.4 (a)
(9.1)
123.0
(0.4)
—
(0.2)
(28.5)
(30.4)
(4.5)
59.0
69.7
2.9 (a)
(13.6)
59.0
28.5
$
$
$
$
$
$
$
356.7
26.1 (a)
382.8
129.3
2.2 (a)
(10.8)
120.7
—
—
2.3
(26.7)
(28.3)
(4.5)
63.5
81.5
(2.7) (a)
(15.3)
63.5
38.1
$
$
$
$
$
$
$
368.0
29.4 (a)
397.4
$ 1,393.8
120.1
$ 1,513.9
125.9
$
473.8
5.0 (a)
(13.7)
117.2
(2.1)
—
0.2
(24.6)
(28.3)
(4.2)
58.2
75.2
0.9 (a)
(17.9)
58.2
26.6
$
$
$
$
17.8
(42.6)
449.0
(2.5)
(1.3)
1.9
(108.9)
(115.3)
(18.0)
204.9
269.5
(4.0)
(60.6)
204.9
90.9
(a) On April 1, 2016, we completed the Disposition. (See Note 11. Acquisitions and Dispositions: Dispositions to the Consolidated Financial Statements.)
110
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Exchange Act, our management has carried out an evaluation, under the supervision of
and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the
period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures as of the end of the period covered by this report, were effective to provide reasonable
assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rules and
forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined
in Rule 13a-15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial
Officer, conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on that assessment, our management has concluded that our internal control over financial
reporting was effective as of December 31, 2017 to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in
“Item 8. Financial Statements and Supplementary Data.”
Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control Over Financial Reporting
In designing and evaluating our disclosure controls and procedures and internal control over financial reporting, management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control
over financial reporting must reflect the fact that there are resource constraints and that management is required to apply its
judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Item 9B. Other Information.
None.
111
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The Company has adopted a Code of Conduct that applies to all executive officers, employees and directors of the Company.
In addition, the Company has adopted a Supplemental Code of Ethics applicable to our principal executive officer, principal
financial officer, principal accounting officer and controller or persons performing similar functions. Both the Code of Conduct
and the Supplemental Code of Ethics are available in the Investor Relations section of our website at www.outfrontmedia.com.
We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a
provision of the Code of Conduct or the Supplemental Code of Ethics that applies to our principal executive officer, principal
financial officer, principal accounting officer and controller or persons performing similar functions, and relates to any element
of the definition of code of ethics set forth in Item 406(b) of Regulation S-K, by posting such information on our website at
www.outfrontmedia.com.
All additional information required by this item is incorporated by reference to our Proxy Statement for the 2018 Annual
Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to our Proxy Statement for the 2018 Annual Meeting of
Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item is incorporated by reference to our Proxy Statement for the 2018 Annual Meeting of
Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is incorporated by reference to our Proxy Statement for the 2018 Annual Meeting of
Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.
Item 14. Principal Accounting Fees and Services.
The information required by this item is incorporated by reference to our Proxy Statement for the 2018 Annual Meeting of
Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.
Item 15. Exhibits, Financial Statement Schedules.
PART IV
(a)(1) Financial Statements. The financial statements filed as part of this Annual Report on Form 10-K are listed in the index to
the financial statements, which is included in “Item 8. Financial Statements and Supplementary Data.”
(a)(2) Financial Statement Schedules. The following financial statement schedules should be read in conjunction with the
consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data.” All other schedules for
which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or
are inapplicable, and therefore have been omitted.
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016 and 2015.
Schedule III - Schedule of Real Estate and Accumulated Depreciation as of December 31, 2017
Page No.
113
114
112
11.5
9.2
8.9
—
—
—
OUTFRONT Media Inc.
Schedule II—Valuation and Qualifying Accounts
(in millions)
Col. B
Balance at
Beginning
of Period
Balance
Acquired through
Acquisitions
Col. C
Charged to
Costs and
Expenses
Col. D
Col. E
Charged
to Other
Accounts(a)
Deductions
Balance at
End of
Period
$
9.2
8.9
14.2
— $
—
—
$
4.4
3.6
2.7
$
0.1
—
(3.7)
$
2.2
3.3
4.3
Col. A
Description
Allowance for doubtful
accounts:
Year ended December 31, 2017
$
Year ended December 31, 2016
Year ended December 31, 2015
Valuation allowance on
deferred tax assets:
Year ended December 31, 2017
$
— $
— $
— $
— $
— $
Year ended December 31, 2016
Year ended December 31, 2015
—
6.9
—
—
—
0.1
—
(4.7)
—
2.3
(a) For the year ended December 31, 2015, reflects change in allowance related to foreign currency translation adjustments and amounts reclassified to Assets
held for sale on our Consolidated Statement of Financial Position.
113
OUTFRONT Media Inc.
SCHEDULE III – Schedule of Real Estate and
Accumulated Depreciation
as of December 31, 2017
(in millions)
Description (1)
Encumbrances
Land
Initial Cost
Structures and
Improvements
Cost
Capitalized
Subsequent
to
Acquisition
Structures added prior to January 1, 2014
United States - 40,303 displays
Canada - 5,497 displays
—
—
(2)
(2)
(2)
(2)
(2)
(2)
$
$
Structures added subsequent to January 1, 2014
United States - 2,127 displays
Canada - 190 displays
Total
United States - 42,430 displays
Canada - 5,687 displays
$
$
9.9
—
9.9
$
$
121.1
14.7
135.8
$
$
(11.9) $
—
(11.9) $
$
$
______________________
(1) No single asset exceeded 5% of the total gross carrying amount as of December 31, 2017.
(2) This information is omitted as it would be impracticable to compile on a site-by-site basis.
(3)
Includes sites under construction.
Gross Carrying Amount at
December 31, 2017 (3)
Land
Structures and
Improvements
Total
Accumulated
Depreciation
Construction
Date
Acquisition
Date
Useful
Lives
82.2
2.3
84.5
9.9
—
9.9
92.1
2.3
94.4
$
$
$
$
$
$
1,333.9
293.0
1,626.9
109.2
14.7
123.9
1,443.1
307.7
1,750.8
$
$
$
$
$
1,416.1
295.3
1,711.4
119.1
14.7
133.8
1,535.2
310.0
1,845.2
$
$
$
$
$
$
(1,015.3)
(262.8)
(1,278.1)
(1.6)
(1.0)
(2.6)
(1,016.9)
(263.8)
(1,280.7)
Various
Various
Various
Various
5 to 20 years
5 to 20 years
Various
Various
Various
Various
5 to 20 years
5 to 20 years
Various
Various
Various
Various
5 to 20 years
5 to 20 years
114
The following table summarizes the activity for the Company’s real estate assets, which consist of advertising displays, and the related accumulated depreciation.
Gross real estate assets:
Balance at the beginning of the year
New Investments
Redevelopments
Recurring capital expenditures
Purchase price accounting adjustments
Land acquisitions
Additions for construction of / improvements to structures
Assets sold or written-off
Foreign exchange
Balance at the end of the year
Accumulated depreciation:
Balance at the beginning of the year
Depreciation
Assets sold or written-off
Foreign exchange
Balance at the end of the year
2017
2016
2015
$
1,787.3
$
1,778.7
$
1,833.7
22.0
23.4
13.0
—
4.6
63.0
(28.9)
23.8
1,845.2
1,208.5
76.2
(24.5)
20.5
$
$
9.1
23.7
14.5
1.0
0.6
48.9
(49.4)
9.1
1,787.3
1,137.7
98.2
(34.6)
7.2
$
$
8.0
23.9
16.4
(13.1)
4.8
40.0
(26.5)
(68.5)
1,778.7
1,109.4
104.9
(22.5)
(54.1)
1,280.7
$
1,208.5
$
1,137.7
$
$
$
115
(a)(3) Exhibits. The exhibits filed as part of this Annual Report on Form 10-K are listed on the Exhibit Index immediately
following “Item16. Form 10-K Summary,” which is incorporated herein by reference.
Item 16. Form 10-K Summary.
None.
116
Exhibit
Number
2.1
2.2
2.3
3.1
3.2
4.1
4.2
4.3
4.4
10.1
10.2
10.3
10.4
EXHIBIT INDEX
Description
Agreement and Plan of Reorganization, dated as of January 15, 2014, by and among CBS Corporation, CBS
Outdoor Americas Inc. and CBS Radio Media Corporation (incorporated herein by reference to Exhibit 2.1 to
the Company’s Registration Statement on Form S-11 (File No. 333-189643), filed on January 31, 2014).
Master Separation Agreement, dated as of April 2, 2014, by and between CBS Outdoor Americas Inc. and
CBS Corporation (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form
8-K (File No. 001-36367), filed on April 2, 2014).†
Membership Interest Purchase Agreement, dated as of July 20, 2014, by and among CBS Outdoor Americas
Inc., CBS Outdoor LLC, Van Wagner Communications, LLC, Van Wagner Twelve Holdings, LLC and
Richard M. Schaps (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on
Form 8-K (File No. 001-36367), filed on July 21, 2014).†
Articles of Amendment and Restatement of OUTFRONT Media Inc. effective March 28, 2014, as amended
by the Articles of Amendment of OUTFRONT Media Inc. effective November 20, 2014 (incorporated herein
by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on
November 20, 2014).
Amended and Restated Bylaws of OUTFRONT Media Inc. (incorporated herein by reference to Exhibit 3.1
to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on February 25, 2016).
Indenture, dated as of January 31, 2014, by and among CBS Outdoor Americas Capital LLC, CBS Outdoor
Americas Capital Corporation, the guarantors named therein and Deutsche Bank Trust Company Americas
(including the Form of Senior Notes) (incorporated herein by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-11 (File No. 333-189643), filed on January 31, 2014).
Indenture, dated as of October 1, 2014, by and among CBS Outdoor Americas Capital LLC, CBS Outdoor
Americas Capital Corporation, the guarantors named therein and Deutsche Bank Trust Company Americas
(including the Form of Senior Notes) (incorporated herein by reference to Exhibit 4.1 to the Company’s
Current Report on Form 8-K (File No. 001-36367), filed on October 2, 2014).
First Supplemental Indenture, dated as of October 1, 2014, by and among CBS Outdoor Americas Capital
LLC, CBS Outdoor Americas Capital Corporation, the guarantors named therein and Deutsche Bank Trust
Company Americas (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on
Form 8-K (File No. 001-36367), filed on October 2, 2014).
Third Supplemental Indenture, dated as of March 30, 2015, by and among Outfront Media Capital LLC,
Outfront Media Capital Corporation, the guarantors named therein and Deutsche Bank Trust Company
Americas (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
(File No. 001-36367), filed on March 30, 2015).
Tax Matters Agreement, dated as of April 2, 2014, by and between CBS Outdoor Americas Inc. and CBS
Corporation (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
(File No. 001-36367), filed on April 2, 2014).
Form of Director Indemnification Agreement (incorporated herein by reference to Exhibit 10.5 to the
Company’s Registration Statement on Form S-11 (File No. 333-189643), filed on February 18, 2014).
Credit Agreement, dated as of January 31, 2014, by and among CBS Outdoor Americas Capital LLC, CBS
Outdoor Americas Capital Corporation, the guarantors party thereto, Citibank, N.A. and the other lenders
party thereto from time to time (incorporated herein by reference to Exhibit 10.9 to the Company’s
Registration Statement on Form S-4 (File No. 333-201197), filed on December 22, 2014).
Amendment No. 2 to Credit Agreement and Amendment No. 1 to Security Agreement, dated as of March 16,
2017, by and among Outfront Media Capital LLC, Outfront Media Capital Corporation, the guarantors party
thereto, Morgan Stanley Senior Funding, Inc. and the other lenders party thereto from time to time, to Credit
Agreement and to Security Agreement, each dated as of January 31, 2014, by and among CBS Outdoor
Americas Capital LLC, CBS Outdoor Americas Capital Corporation, the guarantors party thereto, Citibank,
N.A. and the other lenders party thereto from time to time, as applicable (incorporated herein by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on March 20, 2017).
117
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Amendment No. 4 to Credit Agreement, dated as of November 17, 2017, by and among Outfront Media
Capital LLC, Outfront Media Capital Corporation, the guarantors party thereto, Morgan Stanley Senior
Funding, Inc. and the other lenders party thereto from time to time, to Credit Agreement, dated as of January
31, 2014, as amended, by and among Outfront Media Capital LLC, Outfront Media Capital Corporation, the
guarantors party thereto, Morgan Stanley Senior Funding, Inc. and the other lenders party thereto from time
to time (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File
No. 001-36367), filed on November 20, 2017).
Receivables Purchase Agreement, dated as of June 30, 2017, by and among Outfront Media LLC, Outfront
Media Receivables LLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, the other parties
thereto from time to time as purchasers and group agents, and Gotham Funding Corporation (incorporated
herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-36367),
filed on July 3, 2017).
Purchase and Sale Agreement, dated as of June 30, 2017, between Outfront Media LLC and Outfront Media
Receivables LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K (File No. 001-36367), filed on July 3, 2017).
Performance Guaranty, dated as of June 30, 2017, between OUTFRONT Media Inc. and The Bank of Tokyo-
Mitsubishi UFJ, Ltd., New York Branch (incorporated herein by reference to Exhibit 10.3 to the Company’s
Current Report on Form 8-K (File No. 001-36367), filed on July 3, 2017).
Advertising License Agreement, entered into December 8, 2017, to be effective as of November 1, 2017, by
and between the Metropolitan Transportation Authority and Outfront Media Group LLC (incorporated herein
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on
December 13, 2017).
CBS Outdoor Americas Inc. Omnibus Stock Incentive Plan (incorporated herein by reference to Exhibit 10.6
to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on April 2, 2014).*
OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan (incorporated herein by
reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2015, File No. 001-36367).*
OUTFRONT Media Inc. Amended and Restated Executive Bonus Plan (incorporated herein by reference to
Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2015, File No. 001-36367).*
OUTFRONT Media Excess 401(k) Plan (incorporated herein by reference to Exhibit 10.9 to the Company’s
Registration Statement on Form S-11 (File No. 333-189643), filed on February 18, 2014).*
Form of Certificate and Terms and Conditions for Performance-Based Restricted Share Units Awards with
Time Vesting under the CBS Outdoor Americas Inc. Omnibus Stock Incentive Plan before February 19, 2015
(incorporated herein by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2014, File No. 001-36367).*
Form of Certificate and Terms and Conditions for Performance-Based Restricted Share Units Awards with
Time Vesting under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2015, File No. 001-36367).*
Form of Certificate and Terms and Conditions for Restricted Share Units Awards with Time Vesting under
the CBS Outdoor Americas Inc. Omnibus Stock Incentive Plan before February 19, 2015 (incorporated
herein by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2014, File No. 001-36367).*
Form of Certificate and Terms and Conditions for Restricted Share Units Awards with Time Vesting granted
under the CBS Outdoor Americas Inc. Omnibus Stock Incentive Plan on or after February 19, 2015
(incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2015, File No. 001-36367).*
Form of Certificate and Terms and Conditions for Restricted Share Units Awards with Time Vesting for
Directors granted under the CBS Outdoor Americas Inc. Omnibus Stock Incentive Plan before February 19,
2015 (incorporated herein by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2014, File No. 001-36367).*
Form of Certificate and Terms and Conditions for Restricted Share Units Awards with Time Vesting for
Directors granted under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No.
001-36367), filed on June 11, 2015).*
118
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
Summary of Compensation for Outside Directors, effective June 9, 2015 and July 1, 2017 (incorporated
herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2017, File No. 001-36367).*
CBS Corporation 2004 Long-Term Management Incentive Plan (as amended and restated through May 25,
2006) (incorporated herein by reference to Exhibit 10 to CBS Corporation’s Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2006, File No. 001-09553).*
CBS Corporation 2009 Long-Term Incentive Plan (effective February 21, 2008, as amended and restated
May 23, 2013) (incorporated herein by reference to Exhibit 10(c) to CBS Corporation’s Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2013, File No. 001-09553).*
Form of Certificate and Terms and Conditions for Converted Stock Options (incorporated herein by reference
to Exhibit 10(c)(ii) to CBS Corporation’s Annual Report on Form 10-K for the fiscal year ended December
31, 2011, File No. 001-09553).*
Employment Agreement with Jodi Senese, dated as of June 6, 2016 (incorporated herein by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016,
File No. 001-36367).*
OUTFRONT Media Inc. Executive Change in Control Severance Plan (incorporated herein by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-36367), filed on December 14,
2015).*
Form of Participation Agreement under the OUTFRONT Media Inc. Executive Change in Control Severance
Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File
No. 001-36367), filed on December 14, 2015).*
Employment Agreement with Donald R. Shassian, dated as of December 28, 2016 (incorporated herein by
reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31,
2016, File No. 001-36367).*
Employment Agreement with Richard Sauer, dated as of February 24, 2017 (incorporated herein by reference
to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2017, File No. 001-36367).*
Employment Agreement with Nancy Tostanoski, dated as of May 5, 2017 (incorporated herein by reference
to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2017, File No. 001-36367).*
Employment Agreement with Andrew R. Sriubas, dated as of July 28, 2017 (incorporated herein by reference
to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2017, File No. 001-36367).*
Employment Agreement with Jeremy J. Male, dated as of September 18, 2017 (incorporated herein by
reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2017, File No. 001-36367).*
10.32
Employment Agreement with Clive Punter, dated as of December 8, 2017.*
21.1
23.1
24.1
31.1
31.2
32.1
32.2
List of Subsidiaries of OUTFRONT Media Inc.
Consent of PricewaterhouseCoopers LLP.
Power of Attorney (included on the signature page of this Annual Report on Form 10-K and incorporated
herein by reference).
Certification of the Chief Executive Officer of OUTFRONT Media Inc. pursuant to Rule 13a-14(a) or
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer of OUTFRONT Media Inc. pursuant to Rule 13a-14(a) or
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer of OUTFRONT Media Inc. furnished pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
Certification of the Chief Financial Officer of OUTFRONT Media Inc. furnished pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
101.INS
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XBRL tags are embedded within the Inline XBRL document.
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XBRL Taxonomy Definition Document
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_______________________
† Schedules, annexes and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company
agrees to furnish supplementally to the SEC a copy of any omitted schedule, annex or exhibit upon request.
* Management contracts and compensatory plans and arrangements.
120
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
OUTFRONT MEDIA INC.
By:
/s/ Donald R. Shassian
Name:
Title:
Donald R. Shassian
Executive Vice President and Chief
Financial Officer
Date: February 28, 2018
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Donald R. Shassian, Richard H. Sauer and Louis J.
Capocasale, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all
amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jeremy J. Male
Jeremy J. Male
/s/ Donald R. Shassian
Donald R. Shassian
/s/ George Wood
George Wood
/s/ Nicolas Brien
Nicolas Brien
/s/ Angela Courtin
Angela Courtin
/s/ Manuel A. Diaz
Manuel A. Diaz
/s/ Peter Mathes
Peter Mathes
/s/ Susan M. Tolson
Susan M. Tolson
/s/ Joseph H. Wender
Joseph H. Wender
Chairman and Chief Executive Officer
February 28, 2018
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
February 28, 2018
(Principal Financial Officer)
Senior Vice President and Controller
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
121
February 28, 2018
February 28, 2018
February 28, 2018
February 28, 2018
February 28, 2018
February 28, 2018
February 28, 2018
Executive Officers
Jeremy J. Male
Chairman and Chief Executive Officer
Donald R. Shassian
Executive Vice President, Chief Financial Officer
Clive Punter
Executive Vice President, Chief Revenue Officer
Richard H. Sauer
Executive Vice President, General Counsel
Jodi Senese
Executive Vice President, Chief Marketing Officer
Andrew R. Sriubas
Chief Commercial Officer
Nancy Tostanoski
Executive Vice President, Chief Human Resources Officer
Board of Directors
Jeremy J. Male
Chairman and Chief Executive Officer, OUTFRONT Media Inc.
Nicolas Brien
Chief Executive Officer, the Americas and U.S., Dentsu Aegis Network Ltd.
Angela Courtin
Global Head of YouTube TV and Originals Marketing
Manuel A. Diaz
Partner, Lydecker Diaz, LLP; Former Mayor of the City of Miami
Peter Mathes
Former Chairman and Chief Executive Officer of AsianMedia Group LLC
Susan M. Tolson
Former analyst and portfolio manager at Capital Research Company
Joseph H. Wender
Senior Consultant, Goldman, Sachs & Co.