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
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Title: Executive Vice President/Chief Financial Officer
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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
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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
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TOTAL ADDITIONS 5,236,819
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 1,438,580
Administrative expenses 85,783
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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
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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
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$ 1,474,905
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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.