SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
[x] Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the fiscal year ended December 31, 2003,
or
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to _________.
COMMISSION FILE NUMBER
1-9645
CLEAR CHANNEL ENTERTAINMENT, INC. 401(k) SAVINGS PLAN
(Full title of the plan)
CLEAR CHANNEL COMMUNICATIONS, INC.
200 EAST BASSE ROAD
SAN ANTONIO, TEXAS 78209
TELEPHONE (210) 822-2828
(Name of Issuer of the securities held pursuant to the plan
and address of its principal executive office)
CLEAR CHANNEL ENTERTAINMENT, INC. 401(k) SAVINGS PLAN
INDEX TO FORM 11-K
REQUIRED INFORMATION
Report of Independent Registered Public Accounting Firm........................3
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2003 and 2002.............................................4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2003.........................................5
Notes to Financial Statements..................................................6
Supplemental Schedule:
Schedule of Assets Held for Investment Purposes as of December 31, 2003.......11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other person who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CLEAR CHANNEL ENTERTAINMENT, INC. 401(k) SAVINGS PLAN
Date: June 28, 2004
By: /s/ Randall T. Mays
----------------------
Name: Randall T. Mays
Title: Executive Vice President/Chief Financial Officer
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Clear Channel Entertainment, Inc. 401(k) Savings Plan
San Antonio, Texas
We have audited the financial statements of the Clear Channel Entertainment,
Inc. 401(k) Savings Plan as of December 31, 2003 and 2002, and for the year
ended December 31, 2003, as listed in the accompanying contents page. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining on a test basis evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Clear
Channel Entertainment, Inc. 401(k) Savings Plan as of December 31, 2003 and
2002, and the changes in its net assets available for plan benefits for the year
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 2003, is presented for purposes of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements as of and for
the year ended December 31, 2003, and in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ THE HANKE GROUP, P.C.
San Antonio, Texas
June 15, 2004
Page 3
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2003 AND 2002
------------------------------------------------------------------------- -- ------------------- -- ------------------
ASSETS 2003 2002
INVESTMENT:
Plan interest in Clear Channel Communications, Inc. -
Master Trust $39,576,313 $27,917,520
RECEIVABLES:
Employer's contribution -- 20,847
Participants' contributions 127,538 125,764
----------- -----------
Total receivables 127,538 146,611
----------- -----------
TOTAL ASSETS 39,703,851 28,064,131
LIABILITIES
Expenses payable 1,167 12,289
----------- -----------
TOTAL LIABILITIES 1,167 12,289
----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $39,702,684 $28,051,842
=========== ===========
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See notes to financial statements. Page 4
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 6,820,350
Dividends and interest 547,719
-----------
Total investment income 7,368,069
Contributions:
Employer 1,739,071
Participants 5,242,815
Rollovers 506,254
-----------
Total contributions 7,488,140
-----------
TOTAL ADDITIONS 14,856,209
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 3,200,401
Administrative expenses 4,966
-----------
TOTAL DEDUCTIONS 3,205,367
-----------
Net increase 11,650,842
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 28,051,842
-----------
End of year $39,702,684
===========
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See notes to financial statements. Page 5
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the Clear Channel Entertainment, Inc. 401(k)
Savings Plan (the Plan) provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
GENERAL -- The Plan is a defined contribution plan covering all eligible
employees, as defined, of the plan sponsor. It is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS -- Employer contributions to the Plan include matching
contributions. Additionally, elective contributions may be made annually at the
discretion of the plan sponsor's Board of Directors. The employer matching
contributions were $1,739,071 for the year ended December 31, 2003.
Participants may elect to defer a portion of their compensation by an amount
that does not exceed the maximum allowed under IRS rules and regulations.
Participants are always 100% vested in their voluntary contributions.
Each year, participants may contribute from 1% up to 25% of pre-tax
compensation, as defined in the Plan. Participants may also contribute amounts
representing distributions from other qualified defined benefit or defined
contribution plans. Participants direct the investment of their contributions
into various investment options offered by the Plan. The Plan currently offers
one common stock fund, one common commingled pool, and seventeen registered
investment funds.
PARTICIPANT ACCOUNTS -- Each participant's account is credited with the
participant's contribution and allocations of the plan sponsor's contribution
and Plan earnings and charged with certain stock fund expenses and transaction
fees. Allocations are based on participant account balances and participant
directed transactions, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
FORFEITURES -- Participant forfeitures of non-vested contributions are used to
reduce employer contributions to the Plan. For the Plan year ended December 31,
2003, approximately $47,000 of forfeitures was used to reduce employer
contributions. There are no unallocated forfeitures at December 31, 2003.
VESTING -- Participants are immediately vested in their contributions plus
actual earnings thereon. Vesting in the plan sponsor's contributions is based on
years of continuous service. A participant is 100% vested after five years of
credited service (or upon the death, disability, or retirement of the
participant).
PARTICIPANT LOANS -- Participants may borrow $1,000 up to a maximum of $50,000
or 50% of their vested account balance, whichever is less. The loans are secured
by the balance in the participant's account and bear a fixed interest rate at
one percent above prime.
PAYMENT OF BENEFITS -- On termination of service, a participant may elect to
receive either a lump sum or roll over into another qualified plan or
individual retirement account. Hardship withdrawals are available to Plan
participants upon approval.
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Page 6
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING -- The financial statements of the Plan are prepared using
the accrual method of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION -- The Plan's interest in the Clear
Channel Communications, Inc. Master Trust is stated at fair value.
PAYMENTS OF BENEFITS -- Benefits are recorded when paid.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
3. PLAN INTEREST IN CLEAR CHANNEL COMMUNICATIONS, INC. MASTER TRUST
The Master Trust was established for the investment of assets of the Plan and
three other Clear Channel Communications, Inc., sponsored retirement plans.
These investments in the Master Trust consist of and are valued as follows:
o Sponsored Company stock - quoted market price.
o Registered investment funds - net asset value of shares held
at December 31.
o Common commingled pool - fair value of the underlying
publicly-traded stocks which it holds.
o Participant loans - valued at cost which approximates fair
value.
The purpose of the Master Trust is the collective investment of the assets of
participating employee benefit plans of the Company. The Master Trust's assets
are allocated among participating plans by assigning to each plan those
transactions (primarily contributions and benefit payments) which can be
specifically identified and allocating among all plans (in proportion to the
fair value of the assets assigned to each plan) the income and expenses
resulting from the collective investment of the assets.
The proportionate interest of the Plan in the Master Trust at December 31, 2003
and 2002, was approximately 7.6% and 8.0%, respectively.
The following table presents the fair values of investments and investment
income for the Master Trust:
2003 2002
Investments at fair value:
Clear Channel Communications, Inc., stock (unitized) $ 80,224,035 $ 67,343,100
Registered investment funds 383,304,496 243,577,987
Common commingled pool 48,623,212 31,223,703
Participant loans 9,359,973 7,738,452
------------ ------------
$521,511,716 $349,883,242
============ ============
Investment income:
Net appreciation in fair value of investments:
Clear Channel Communications, Inc., stock (unitized) $17,324,681
Registered investment funds 62,498,813
Common commingled pool 10,431,226
-----------
90,254,720
Interest and dividends 7,803,269
-----------
$98,057,989
===========
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Page 7
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 and 2002
----------------------------------------------------------------------------
4. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets as of December
31, 2003 and 2002, are:
2003 2002
Clear Channel Communications, Inc. (unitized*) $1,996,389 $1,589,022
Fidelity Low-Priced Stock Fund $2,052,856 $ --
Fidelity Diversified International Fund $2,297,439 $ --
PIMCO Total Return Fund - Institutional Class $3,874,457 $3,010,501
MSIFT Mid Cap Growth Portfolio - Adviser Class $5,224,349 $3,374,461
Fidelity Puritan Fund $2,975,533 $3,041,136
Fidelity Dividend Growth Fund $6,774,825 $4,640,256
Fidelity Retirement Money Market Portfolio $3,511,706 $3,791,585
Fidelity U.S. Equity Index Commingled Pool $7,287,769 $5,196,349
During 2003, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value as
follows:
Registered investment funds $4,777,204
Common commingled pool 1,637,585
Clear Channel Communications, Inc., stock (unitized*) 405,561
----------
$6,820,350
==========
*A non-registered fund comprised of the underlying Company stock and a
short-term cash component.
5. RELATED PARTY TRANSACTIONS
Certain Plan investments are managed by Fidelity Management Trust Company
(Fidelity). Fidelity is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions.
The plan sponsor paid approximately $102,000 in professional fees related to the
Plan for the year ended December 31, 2003.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the plan sponsor has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants would become 100% vested in the employer's
contributions allocated to their accounts.
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Page 8
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
7. TAX STATUS
The Internal Revenue Service has determined and informed the plan sponsor by a
letter dated August 5, 2002, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC).
Effective January 1, 2003, the Clear Channel Entertainment, Inc. 401(k) Savings
Plan was amended and restated to reflect recent amendments to the Plan and
clarify certain provisions under the Plan, among other matters. Although the
Plan has been amended and restated since receiving the determination letter, the
Plan Administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable requirements
of the IRC.
8. SUBSEQUENT EVENTS
Effective January 1, 2004, the Plan was amended to add Age 50 Catch-Up employee
contributions.
Effective March 15, 2004, the Fidelity Growth Company Fund was added as an
investment option. The Janus Twenty Fund was eliminated and all account balances
in the Janus Twenty Fund were transferred to the Fidelity Growth Company Fund
effective as of the close of business on March 15, 2004. Any contribution
elections to the Janus Twenty Fund as of March 15, 2004, were re-allocated to
the Fidelity Growth Company Fund.
Effective July 30, 2004, the Fidelity Low-Priced Stock Fund will be closed to
new participants. Those participants investing in the fund will be permitted to
continue investing. Those participants who do not have an account balance in
this fund will not be able to invest in the fund.
9. RISK AND UNCERTAINTIES
The Plan may invest in various types of investment securities. Investment
securities are exposed to various risks, such as interest rate, market, and
credit risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes could
materially affect the amounts reported in the statement of net assets available
for Plan benefits.
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Page 9
SUPPLEMENTAL SCHEDULE
CLEAR CHANNEL ENTERTAINMENT, INC. 401(K) SAVINGS PLAN
EMPLOYER IDENTIFICATION NUMBER: 13-3977880
PLAN NUMBER: 001
DECEMBER 31, 2003
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Schedule H, Line 4(I): Schedule of Assets Held for Investment Purposes at End of
Year
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUER, INCLUDING MATURITY DATE,
BORROWER, LESSOR OR RATE OF INTEREST, CURRENT
SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE VALUE
------------------------------------------------ ------------------------------------------------- --------------
Janus Twenty Fund $ 551,734
MSIFT Mid Cap Growth Portfolio - Adviser Class 5,224,349
PIMCO Total Return Fund - Institutional Class 3,874,457
Lord Abbett Mid-Cap Value Fund - Class A 368,798
* Clear Channel Communications, Inc. Common Stock (unitized) 1,996,389
* Fidelity Management Trust Company Puritan Fund 2,975,533
* Fidelity Management Trust Company Equity-Income Fund 613,191
* Fidelity Management Trust Company Low-Priced Stock Fund 2,052,856
* Fidelity Management Trust Company Diversified International Fund 2,297,439
* Fidelity Management Trust Company Dividend Growth Fund 6,774,825
* Fidelity Management Trust Company Small Cap Stock Fund 106,052
* Fidelity Management Trust Company Freedom Income Fund 26,230
* Fidelity Management Trust Company Freedom 2000 Fund 23,048
* Fidelity Management Trust Company Freedom 2010 Fund 1,187,508
* Fidelity Management Trust Company Freedom 2020 Fund 146,911
* Fidelity Management Trust Company Freedom 2030 Fund 65,680
* Fidelity Management Trust Company Freedom 2040 Fund 63,914
* Fidelity Management Trust Company Retirement Money Market Portfolio 3,511,706
* Fidelity Management Trust Company U.S. Equity Index Commingled Pool 7,287,769
Participant Loans Various due dates with interest rates between
5% - 10.5% 427,924
-----------
$39,576,313
===========
* Denotes party-in-interest
See accompanying report of independent registered public accounting firm. Page 11
EXHIBIT INDEX
23.1 Consent of The Hanke Group, P.C.