11-K 1 d11k.txt FORM 11-K 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, 2001, 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 SFX ENTERTAINMENT PROFIT SHARING AND 401(k) 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) SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN INDEX TO FORM 11-K REQUIRED INFORMATION -------------------- Independent Auditor's Report .........................................................................3 Financial Statements -------------------- Statement of Net Assets Available for Plan Benefits ..................................................4 Statement of Changes in Net Assets Available for Plan Benefits .......................................5 Notes to Financial Statements ........................................................................6 Supplemental Schedule --------------------- Schedule of Assets Held for Investment Purposes at End of Year ......................................10
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. SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN Date: June 27, 2002 By: /s/ Randall T. Mays ---------------------------------------------------------- Name: Randall T. Mays ---------------------------------------------------- Title: Executive Vice President/Chief Financial Officer --------------------------------------------------- 2 INDEPENDENT AUDITOR'S REPORT To the SFX Entertainment Profit Sharing and 401(k) Plan San Antonio, Texas We have audited the accompanying statements of net assets available for plan benefits of the SFX Entertainment Profit Sharing and 401(k) Plan as of December 31, 2001 and 2000, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 2001. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and supplemental schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 SFX Entertainment Profit Sharing and 401(k) Plan as of December 31, 2001 and 2000, and the changes in its net assets available for plan benefits for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. Our audit of the Plan's financial statements as of and for the year ended December 31, 2001, was made 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, 2001, 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 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. May 24, 2002 SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 2001 AND 2000
ASSETS 2001 2000 INVESTMENTS $23,254,002 $17,866,227 RECEIVABLES: Employer's contribution 59,125 112,302 Participants' contributions 265,320 330,154 Rollovers - 64,948 ------------ ------------ Total receivables 324,445 507,404 ------------ ------------ TOTAL ASSETS 23,578,447 18,373,631 LIABILITIES Expenses payable 17,455 - ------------ ------------ TOTAL LIABILITIES 17,455 - ------------ ------------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $23,560,992 $18,373,631 ============ ============
See notes to financial statements. Page 4 SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS YEAR ENDED DECEMBER 31, 2001 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net depreciation in fair value of investments $ (2,542,285) Dividends and interest 408,928 ------------- (2,133,357) Contributions: Employer 1,387,104 Participants 5,402,075 Rollovers 580,997 ------------- Total Contributions 7,370,176 ------------- TOTAL ADDITIONS 5,236,819 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to participants 1,438,580 Administrative expenses 85,783 ------------- TOTAL DEDUCTIONS 1,524,363 ------------- Net increase before transfer of plan assets 3,712,456 Transfer of plan assets 1,474,905 ------------- Net Increase 5,187,361 NET ASSETS AVAILABLE FOR PLAN BENEFITS: Beginning of year 18,373,631 ------------- End of year $ 23,560,992 =============
See notes to financial statements. Page 5 SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 1. DESCRIPTION OF PLAN The following description of the SFX Entertainment, Inc. (the Company and the Plan Sponsor) Profit Sharing and 401(k) 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). In August 2000, SFX Entertainment, Inc.'s stock was purchased by Clear Channel Communications, Inc., a San Antonio based diversified media company. As a result, the SFX Entertainment, Inc. common stock offered as an investment option was replaced with Clear Channel Communications, Inc. common stock. Contributions -- Employer contributions to the Plan consist of matching contributions and elective contributions made annually at the discretion of the Plan Sponsor's Board of Directors. Employer contributions were $1,387,104 for the year ended December 31, 2001. 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 percent of pretax 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 and nine 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 an allocation of certain administrative expenses. Allocations are based on participant earnings or account balances, 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, 2001, $36,734 of forfeitures was used to reduce employer contributions. There were no unallocated forfeitures at December 31, 2001. 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). Page 6 SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 AND 2000 1. DESCRIPTION OF PLAN (continued) 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 amount equal to the value of the participant's vested interest in his or her account, paid out in a deferred annuity or rolled over into another qualified plan or IRA. Hardship withdrawals are available to Plan participants upon approval. Effective June 1, 2001, terminated participants can only receive lump sum distributions. 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 investments are stated at fair value. The Plan's investments in common stock are reported at fair value based on quoted market prices. Shares of mutual funds are valued at the net asset value of shares held by the Plan at December 31. Participant loans are valued at cost, which approximates 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 management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 3. PLAN MERGERS During 2001 the benefit plans of various companies previously acquired by SFX Entertainment, Inc. were merged into the SFX Entertainment Profit Sharing and 401(k) Plan. The transferred net assets have been recognized in the accounts of the SFX Entertainment Profit Sharing and 401(k) Plan, at amounts previously carried in the accounts of the merged plans. The changes in net assets of the combined plans are included in the accompanying statement of changes in net assets available for benefits for the year ended December 31, 2001. A summary of the transferred net assets follows: Investments at fair value: The Marquee Group 401(k) Plan $ 777,007 Broadway Series Management Group, Inc. 401(k) Plan 217,828 SJS Entertainment 401(k) Plan 324,203 Magicworks Entertainment, Inc. 401(k) Plan 155,867 ------------- $ 1,474,905 ============= Page 7 SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 AND 2000 4. INVESTMENTS The following presents investments that represent 5% or more of the Plan's net assets as of December 31, 2001 and 2000:
2001 2000 Invesco Dynamics Fund $ 3,516,786 $ 4,085,867 American Century Equity Growth Fund 4,747,077 3,754,081 Schwab S&P 500 Investor Shares 4,465,235 3,672,297 Clear Channel Communications, Inc. 2,120,594 2,117,177 Schwab Institutional Advantage Money Fund 3,058,702 1,524,099 Dodge & Cox Balanced Fund 2,010,254 968,310 American Aadvantage International Equity Institutional 1,158,296 922,898 PIMCO Total Return Fund Institutional Class 1,272,047 -
During 2001, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value as follows: Registered investment funds $ (2,087,085) Company stock - Clear Channel Communications, Inc. (455,200) -------------- $ (2,542,285) ============== 5. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of mutual funds managed by Charles Schwab Trust Company. Charles Schwab Trust Company is the Custodian as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. The Plan Sponsor paid approximately $210,000 in professional fees related to the Plan for the year ended December 31, 2001. 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 percent vested in their employer contributions. Page 8 SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 2001 AND 2000 7. TAX STATUS The Internal Revenue Service has determined and informed the Plan Sponsor by a letter dated January 17, 2001, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). 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, 2002, SFX Entertainment Profit Sharing and 401(k) Plan changed its name to Clear Channel Entertainment, Inc. 401(k) Savings Plan. Effective January 1, 2002, the Plan Custodian was changed from Charles Schwab Trust Company to Fidelity Management Trust Company. Page 9 SUPPLEMENTAL SCHEDULE SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN EMPLOYER IDENTIFICATION NUMBER: 13-3977880 PLAN NUMBER: 001 DECEMBER 31, 2001 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 ------------------------------------------- ----------------------------------------- ------------------------ * Schwab Institutional Registered investment company $ 3,058,702 Advantage Money Fund Stable value fund Clear Channel Company stock 2,120,594 Communications, Inc. American Aadvantage Registered investment company 1,158,296 International Equity Institutional International fund American Century Registered investment company 4,747,077 Equity Growth Fund Growth stock fund Berger Small Cap Value Fund Registered investment company 321,480 Small cap fund Dodge & Cox Registered investment company 2,010,254 Balanced Fund Balanced fund Invesco Dynamics Fund Registered investment company 3,516,786 Aggressive growth stock Janus Twenty Fund Registered investment company 287,826 Balanced fund PIMCO Total Return Registered investment company 1,272,047 Fund Institutional Class Intermediate bond fund * Schwab S&P 500 Registered investment company 4,465,235 Investor Shares Equity index fund Loans to Participants Various due dates with interest 295,705 rates ranging from 7% - 10.5% -------------------- $ 23,254,002 ====================
* denotes party-in-interest See accompanying independent auditor's report. Page 10 EXHIBIT INDEX 23.1 Consent of The Hanke Group, P.C.