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, 2004,
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 COMMUNICATIONS, 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 COMMUNICATIONS, 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, 2004 and 2003..................................... 4
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 2004......................................... 5
Notes to Financial Statements.......................................... 6
Supplemental Schedules:
Schedule of Assets (Held at End of Year) as of December 31, 2004....... 11
Schedule of Delinquent Participant Contributions Year Ended
December 31, 2004.................................................... 12
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 COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
Date: June 27, 2005
By: /s/ Randall T. Mays
-------------------------------------------------------
Name: Randall T. Mays
Title: Executive Vice President/Chief Financial Officer
Page 2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Clear Channel Communications, Inc. 401(k) Savings Plan
San Antonio, Texas
We have audited the financial statements of the Clear Channel Communications,
Inc. 401(k) Savings Plan as of December 31, 2004 and 2003, and for the year
ended December 31, 2004, 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. The Plan is not required
to have, nor were we engaged to perform, an audit of its internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectives of the Plan's internal control over financial
reporting. Accordingly we express no such opinion. 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 Clear
Channel Communications, Inc. 401(k) Savings Plan as of December 31, 2004 and
2003, and the changes in its net assets available for plan benefits for the year
ended December 31, 2004, 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
at end of year) as of December 31, 2004, and the schedule of delinquent
participant contributions for the year ended December 31, 2004, are presented
for the purpose of additional analysis and are not a part of the basic financial
statements but is supplemental 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 information is the responsibility
of the Plan's management. The supplemental information 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, 2004, and in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
San Antonio, Texas
June 22, 2005
Page 3
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2004 AND 2003
2004 2003
ASSETS
INVESTMENT:
Plan interest in Clear Channel Communications, Inc. -
Master Trust $529,448,976 $472,372,648
------------ ------------
RECEIVABLES:
Employer's contribution 461,116 285,086
Participants' contributions 1,439,423 1,480,581
------------ ------------
Total receivables 1,900,539 1,765,667
------------ ------------
TOTAL ASSETS 531,349,515 474,138,315
------------ ------------
LIABILITIES
Administrative fees payable 13,183 26,256
------------ ------------
TOTAL LIABILITIES 13,183 26,256
------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $531,336,332 $474,112,059
============ ============
See notes to financial statements.
Page 4
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31, 2004
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 14,797,765
Dividends and interest 13,050,634
------------
Total investment income 27,848,399
------------
Contributions:
Employer 16,701,351
Participants 52,936,906
Rollovers 2,799,343
------------
Total contributions 72,437,600
------------
TOTAL ADDITIONS 100,285,999
------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 45,703,706
Administrative expenses 107,337
------------
TOTAL DEDUCTIONS 45,811,043
------------
Net increase before transfer of plan assets 54,474,956
Transfer of plan assets 2,749,317
------------
Net increase 57,224,273
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 474,112,059
------------
End of year $531,336,332
============
See notes to financial statements.
Page 5
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
1. DESCRIPTION OF PLAN
The following description of the Clear Channel Communications, Inc. (the Company
and Plan Sponsor) 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 generally covering all
eligible employees of the Company who have one year of service. It is subject to
the provisions of the Employee Retirement Income Security Act of 1974.
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 contribution
was $16,701,351 for the year ended December 31, 2004.
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 elect to contribute up to 25% of their eligible pay on a
pre-tax basis, up to the annual IRS maximum 401(k) deferral limit of $13,000 in
2004. The IRS also limits the amount of compensation that can be taken into
account for Plan purposes; for 2004, the qualified plan compensation limit was
$205,000. Employees participating in the Plan who will attain age 50 by December
31, 2004, are eligible to contribute an additional $3,000 in pre-tax "Catch-Up"
contributions. 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 unitized
common stock fund and nineteen registered investment funds of which two are
closed to new investors.
PARTICIPANT ACCOUNTS -- Each participant's account is credited with 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 and unclaimed
benefits are used to reduce employer contributions to the Plan. For the year
ending December 31, 2004, approximately $915,025 of forfeitures was used to
reduce employer contributions. There are unallocated forfeitures of
approximately $7,900 as of December 31, 2004.
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 seven years of
credited service (or upon the death or disability of the participant, or
attainment of age 65) for contributions made prior to January 1, 2002. A
participant is 100% vested after five years of credited service (or upon the
death or disability of the participant, or attainment of age 65) for
contributions made after January 1, 2002.
PARTICIPANT LOANS -- Participants may borrow from $1,000 up to a maximum of the
lesser of i) $50,000 reduced by the excess, if any, of (A) the highest
outstanding balance of loans to the participant from the plan during the one
year period ending on the day before the day the loan is made, over (B) the
outstanding balance of loans to the participant from the plan on the date on
which the loan is made, or ii) 50% of their vested account balance. The loans
are secured by the balance in the participant's account and bear a fixed
interest rate determined by the plan sponsor.
PAYMENT OF BENEFITS -- On termination of service, the Plan provides that
benefits less than $5,000 will be paid by lump sum distribution or rollover. For
benefits over $5,000, benefits may be paid by lump sum distribution, remain in
the Plan until the earlier of age 65 or death of the participant, or rolled over
into another qualified plan. Hardship withdrawals are available to Plan
participants upon approval.
Page 6
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
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 (see Note 3).
PAYMENTS OF BENEFITS -- Benefits are recorded when paid.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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:
- Sponsored Company stock - quoted market price
- Registered investment funds - net asset value of shares held at
December 31
- 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, 2004
AND 2003, WAS APPROXIMATELY 90.3% AND 90.6%, RESPECTIVELY.
The following table presents the fair values of investments and investment
income for the Master Trust:
2004 2003
Investments at fair value:
Clear Channel Communications, Inc.
common stock (unitized) $ 57,868,991 $ 80,224,035
Registered investment funds 516,792,816 383,304,496
Common commingled pool - 48,623,212
Participant loans 11,593,297 9,359,973
------------ ------------
$586,255,104 $521,511,716
============ ============
Investment income:
Net appreciation (depreciation) in fair
value of investments:
Clear Channel Communications, Inc.
common stock (unitized) $(22,795,711)
Registered investment funds 38,032,500
Common commingled pool 3,167,841
------------
18,404,630
Interest and dividends 14,276,857
------------
$ 32,681,487
============
Page 7
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
4. PLAN MERGERS
Effective March 31, 2004, all of the net assets of The WOKR-TV 401(k) Profit
Sharing & Savings Plan merged into the Clear Channel Communications, Inc. 401(k)
Savings Plan. Effective June 30, 2004, all of the net assets of MJI
Broadcasting, Inc. 401(k) Plan merged into the Clear Channel Communications,
Inc. 401(k) Savings Plan. The net assets transferred were recorded by the Clear
Channel Communications, Inc. 401(k) Savings Plan at their fair market value at
the date of merger. The changes in net assets of the combined plans are included
in the accompanying statement of changes in net assets available for benefits
from the effective date of respective plan mergers through December 31, 2004. A
summary of the transferred net assets follows:
Investments at fair value:
WOKR-TV 401(k) Profit Sharing & Savings Plan $1,994,039
MJI Broadcasting, Inc. 401(k) Plan 755,278
----------
$2,749,317
==========
5. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets as of December 31, 2004 and 2003:
2004 2003
Clear Channel Communications, Inc.
common stock (unitized*) $56,386,238 $78,227,576
Fidelity Puritan Fund $37,044,943 $39,210,293
Fidelity U.S. Equity Index Commingled Pool $ - $40,664,211
Fidelity Equity-Income Fund $39,441,409 $31,819,412
Fidelity Dividend Growth Fund $56,630,397 $49,038,048
Fidelity Retirement Money Market Portfolio $29,484,851 $37,470,215
MSIFT Mid Cap Growth Portfolio - Adviser Class $51,006,518 $40,681,770
PIMCO Total Return Fund - Institutional Class $30,782,176 $27,902,362
Fidelity Low-Priced Stock Fund $54,521,854 $41,986,575
Fidelity Diversified International Fund $38,667,869 $28,231,052
Spartan U.S. Equity Index Fund $47,628,470 $ -
Fidelity Freedom 2010 Fund $32,138,918 $ -
During 2004, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated/(depreciated) in
value as follows:
Clear Channel Communications, Inc.
common stock (unitized*) $(22,235,610)
Common commingled pool 2,663,342
Registered investment funds 34,370,033
------------
$ 14,797,765
============
*A non-registered fund comprised of the underlying Company stock and a
short-term cash component.
6. 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 $154,000 in professional fees related to the
Plan for the year ended December 31, 2004.
Page 8
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
7. 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 account.
8. TAX STATUS
The Internal Revenue Service has determined and informed the plan sponsor by a
letter dated April 11, 2003, 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 Communications, 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 believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
9. SUBSEQUENT EVENTS
Effective January 1, 2005, Clear Channel began limiting the 401(k) deferral
percentage elections of all highly compensated employees in the Plan to a
maximum of 5% of pay.
The Plan is to be amended, effective January 1, 2005, to allow Hardship
withdrawals for a) the payment of burial or funeral expenses for the
participant's deceased parent, spouse, children or dependents, and b) expenses
for the repair of damages to the participant's principal residence that would
qualify for the casualty deduction under section 165 of the IRC. The Plan is
currently operating in accordance with this policy.
Effective with respect to distributions made on or after March 28, 2005, in the
event of a mandatory distribution greater than $1,000, if a participant does not
elect: a) to have such distribution paid directly to an eligible retirement plan
in the form of a direct rollover, or b) to receive the distribution directly,
then the distribution will be paid in a direct rollover to an individual
retirement plan designated by the Committee.
On April 29, 2005, Clear Channel Communications, Inc. announced that its Board
of Directors had approved a plan of strategic initiatives focused on
significantly increasing shareholder value. The Plan includes: a) an initial
public offering of approximately 10% of Clear Channel Outdoor; b) the 100%
spin-off of Clear Channel Entertainment; c) a $3.00 per share special dividend;
and d) a 50% increase in the Company's recurring quarterly dividend.
10. 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.
Page 9
SUPPLEMENTAL SCHEDULES
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4(i): SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EMPLOYER IDENTIFICATION NUMBER: 74-1787539
PLAN NUMBER: 001
DECEMBER 31, 2004
DESCRIPTION OF INVESTMENT,
INCLUDING MATURITY DATE,
IDENTITY OF ISSUER, BORROWER, RATE OF INTEREST, COLLATERAL,
LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE CURRENT VALUE
------------------------------------- ------------------------------------ -------------
Spartan U.S. Equity Index Fund $ 47,628,470
MSIFT Mid Cap Growth Portfolio - Adviser
Class 51,006,518
PIMCO Total Return Fund - Institutional
Class 30,782,176
Harbor Small Cap Value Fund - Institutional
Class 627,826
Lord Abbett Mid-Cap Value Fund - Class Y 8,680,672
* Clear Channel Communications, Inc. Common Stock (unitized) 56,386,238
* Fidelity Management Trust Company Puritan Fund 37,044,943
* Fidelity Management Trust Company Equity-Income Fund 39,441,409
* Fidelity Management Trust Company Low-Priced Stock Fund 54,521,854
* Fidelity Management Trust Company Diversified International Fund 38,667,869
* Fidelity Management Trust Company Dividend Growth Fund 56,630,397
* Fidelity Management Trust Company Small Cap Stock Fund 3,842,408
* Fidelity Management Trust Company Freedom Income Fund 737,595
* Fidelity Management Trust Company Freedom 2000 Fund 1,159,023
* Fidelity Management Trust Company Freedom 2010 Fund 32,138,918
* Fidelity Management Trust Company Freedom 2020 Fund 9,297,881
* Fidelity Management Trust Company Freedom 2030 Fund 2,979,239
* Fidelity Management Trust Company Freedom 2040 Fund 1,486,063
* Fidelity Management Trust Company Retirement Money Market Portfolio 29,484,851
* Fidelity Management Trust Company Growth Company Fund 16,189,277
Participant Loans Various due dates with interest rates
between 5% - 11.5% 10,715,349
-------------
$ 529,448,976
=============
* Denotes party-in-interest
See accompanying report of independent registered public accounting firm.
Page 11
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4(a): SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS
EMPLOYER IDENTIFICATION NUMBER: 74-1787539
PLAN NUMBER: 001
YEAR ENDED DECEMBER 31, 2004
TOTAL THAT CONSTITUTE NONEXEMPT PROHIBITED TRANSACTIONS
TOTAL
PARTICIPANT CONTRIBUTIONS FULLY CORRECTED
CONTRIBUTION CONTRIBUTIONS PENDING UNDER VFCP
TRANSFERRED CONTRIBUTIONS CORRECTED CORRECTION AND PTE
LATE TO PLAN NOT CORRECTED OUTSIDE VFCP IN VFCP 2002-51
$ 9,861* $ - $ - $ - $ 9,861*
*Form 5330 was filed on April 15, 2005, excise tax paid, and correction made
under EPCRS and in accordance with VFCP.
See accompanying report of independent registered public accounting firm.
Page 12
EXHIBIT INDEX
23.1 Consent of The Hanke Group, P.C.