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, 2000,
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
Financial Statements
Independent Auditor's Report.........................................3
Statement of Net Assets Available for Benefits.......................4
Statement of Changes in Net Assets Available for Benefits............5
Notes to Financial Statements........................................6
Supplemental Schedule...............................................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: November 29, 2001
By: /s/ Randall T. Mays
-------------------------------------------------
Randall T. Mays
Executive Vice President and 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 financial statement of the SFX Entertainment
Profit Sharing and 401(k) Plan as of December 31, 2000, and the related
statement of changes in net assets available for plan benefits for the year then
ended. 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. The financial
statements of the SFX Entertainment Profit Sharing and 401(k) Plan as of
December 31, 1999, were audited by other auditors whose report dated June 23,
2000, expressed an unqualified opinion.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and supplemental schedule 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 audit provides 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, 2000, and the
changes in its net assets available for benefits for the year then ended in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as whole. The supplemental schedule of assets held for
investment purposes as of December 31, 2000, 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.
June 18, 2001
3
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------------------------------------------
ASSETS 2000 1999
INVESTMENTS $ 17,866,227 $ 11,879,852
RECEIVABLES:
Employer's contribution 112,302 216,881
Participants' contributions 330,154 77,557
Rollovers 64,948 -
---------------------- --------------------
Total receivables 507,404 294,438
---------------------- --------------------
TOTAL ASSETS 18,373,631 12,174,290
LIABILITIES
TOTAL LIABILITIES - -
---------------------- --------------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 18,373,631 $ 12,174,290
====================== ====================
--------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
4
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31, 2000
--------------------------------------------------------------------------------------------------------------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net depreciation in fair value of investments $ (2,138,455)
Dividends and interest 634,973
--------------------
(1,503,482)
Contributions:
Employer 1,834,994
Participants 5,086,494
Rollovers 331,219
Transfer of plan assets 3,094,177
--------------------
10,346,884
--------------------
TOTAL ADDITIONS 8,843,402
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 2,587,609
Administrative expenses 56,452
--------------------
TOTAL DEDUCTIONS 2,644,061
--------------------
Net Increase 6,199,341
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 12,174,290
--------------------
End of year $ 18,373,631
====================
--------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
5
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
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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. stock was purchased by Clear Channel
Communications, Inc., a San Antonio based diversified media company.
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 $1,834,994 for
the year ended December 31, 2000.
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.
Participants who are inactive on the last day of the Plan year will not share in
the non-elective employer contribution unless necessary to comply with Code
Section 410(b) coverage requirement.
Each year, participants may contribute up to 16 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. Employer matching contributions are
invested in the stock fund. The Plan currently offers one stock fund and seven
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,
2000, $36,734 of forfeitures was used to reduce employer contributions. There
were no unallocated forfeitures at December 31, 2000.
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).
6
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2000 AND 1999
-------------------------------------------------------------------------------
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 interest at a fixed
interest rate determined by the Plan Sponsor.
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. As of December 31, 2000, approximately $33,000 of
plan assets has been allocated to participants who have elected to withdraw from
the Plan.
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 year-end. 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 2000, the plans of various acquired companies 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 from January 1, 2000.
A summary of the transferred net assets follows:
Investments at fair value:
Contemporary Group 401(k) Plan $ 1,443,123
Nederlander Cincinnati, LLC 401(k) Plan 381,765
The Network Magazine Group 401(k) Profit Sharing Plan 572,488
Pavilion Partners 401(k) Plan 696,801
--------------
$ 3,094,177
==============
7
4. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets as of December 31, 2000 and 1999:
2000 1999
Invesco Dynamics Fund $4,085,867 $3,886,690
American Century Equity Growth Fund 3,754,081 2,742,567
Schwab S&P 500 Investors Shares 3,672,297 2,508,192
Clear Channel Communications, Inc. 2,117,177 1,010,294
Schwab Instl. Advantage Money Fund 1,524,099 -
Dodge & Cox Balanced Fund 968,310 -
American Aadvantage Intl Equity Instl. 922,898
During 2000, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$2,138,455 as follows:
Registered investment funds $ (1,533,734)
Company stock - Clear Channel
Communications, Inc. (unitized) (604,721)
--------------
$ (2,138,455)
==============
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 $615,000 in professional fees related to the
Plan for the year ended December 31, 2000.
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.
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 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
8. ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133", which defers the
effective date of SFAS No. 133 for one year to be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Plan has not
entered into, and is not expected to enter into, any transactions involving
derivative instruments or hedging activities. Therefore, management believes
there would be no material effect to the Plan's financial statements as a result
of implementation of this statement.
9. SUBSEQUENT EVENTS
Effective January 1, 2001, the Plan added two additional registered investment
funds as investment options, changed the vesting to a seven year schedule for
new employees, and increased the amount a participant may contribute to a
maximum of 20 percent of pre-tax compensation. Additionally, employer matching
contributions are no longer required to be invested in the stock fund and
instead follow the participants' direction of investments.
During 2001, several plans of various acquired companies were merged into the
Plan.
9
SUPPLEMENTAL SCHEDULE
10
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
EMPLOYER IDENTIFICATION NUMBER: 13-3977880
PLAN NUMBER: 001
DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------
Schedule H, Line 4(I): Schedule of Assets Held for Investment Purposes at End of Year
Description of investment
Identify of issuer, including maturity date,
borrower, lessor or rate of interest, Current
similar party collateral, par or maturity value value
----------------------------------------------------------------------------------------- ----------------------
* Schwab Instl Registered investment company $ 1,524,099
Advantage Money Fund Stable value fund
Clear Channel 2,117,177
Communications, Inc. Company stock
American Aadvantage Registered investment company 922,898
Intl Equity Instl International fund
American Century Registered investment company 3,754,081
Equity Growth Fund Growth stock fund
Dodge & Cox Registered investment company 968,310
Balanced Fund Balanced fund
Invesco Dynamics Fund Registered investment company 4,085,867
Aggressive growth stock
PIMCO Total Return Registered investment company 634,547
Fund Instl Class Intermediate bond fund
* Schwab S&P 500 Registered investment company 3,672,297
Investor Shares Equity index fund
Loans to Participants Various due dates with interest 186,951
rates ranging from 7% - 10.5%
----------------------
$ 17,866,227
======================
* denotes party-in-interest
11
EXHIBIT INDEX
99.1 Independent Auditors' Report - Hanke, Green & Stein
99.2 Independent Auditors' Report - Scott Gildea & Company, LLP
12