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, 2002,
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
Independent Auditor's Report.....................................................................................3
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2002 and 2001...............................................................................4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2002...........................................................................5
Notes to Financial Statements....................................................................................6
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes at End of Year..................................................11
Schedule of Non-exempt Transactions.............................................................................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, 2003
By: /s/ Randall T. Mays
--------------------------------------------------------------
Name: Randall T. Mays
--------------------------------------------------------
Title: Executive Vice President/Chief Financial Officer
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Page 2
INDEPENDENT AUDITOR'S REPORT
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, 2002 and 2001, and for the year
ended December 31, 2002, as listed in the accompanying contents page. These
financial statements and schedules 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 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 Clear
Channel Communications, Inc. 401(k) Savings Plan as of December 31, 2002 and
2001, and the changes in its net assets available for plan benefits for the year
ended December 31, 2002, 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, 2002, was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 2002, and non-exempt transactions for
the year ended December 31, 2002, are presented for the purpose of additional
analysis and are not a 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 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, 2002, 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
May 30, 2003
Page 3
CLEAR CHANNEL COMMUNICATIONS, INC. 401(K) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2002 AND 2001
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ASSETS 2002 2001
------------ ------------
INVESTMENTS:
Plan interest in Clear Channel Communications,
Inc. - Master Trust $316,991,443 $222,617,523
RECEIVABLES:
Employer's contribution 269,307 263,234
Participants' contributions 1,203,156 1,112,971
------------ ------------
Total receivables 1,472,463 1,376,205
------------ ------------
TOTAL ASSETS 318,463,906 223,993,728
LIABILITIES
Administrative fees payable 49,622 101,209
------------ ------------
TOTAL LIABILITIES 49,622 101,209
------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $318,414,284 $223,892,519
============ ============
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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, 2002
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net depreciation in fair value of investments $ (60,911,979)
Dividends and interest 4,750,878
-------------
Total investment loss (56,161,101)
Contributions:
Employer 10,554,648
Participants 46,262,931
Rollovers 2,287,058
-------------
Total contributions 59,104,637
-------------
TOTAL ADDITIONS 2,943,536
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 24,154,014
Administrative expenses 224,617
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TOTAL DEDUCTIONS 24,378,631
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Net decrease before transfer of plan assets (21,435,095)
Transfer of plan assets 115,956,860
-------------
Net increase 94,521,765
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 223,892,519
-------------
End of year $ 318,414,284
=============
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See notes to financial statements. Page 5
CLEAR CHANNEL COMMUNICATIONS, INC. 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
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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 consist of matching
contributions and elective contributions made annually at the discretion of the
Plan Sponsor's Board of Directors. The employer contribution was $10,554,648 for
the year ended December 31, 2002.
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 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 sponsored
Company stock and twelve registered investment funds.
PARTICIPANT ACCOUNTS -- Each participant's account is credited with allocations
of the Plan Sponsor's contribution and Plan earnings and charged with an
allocation of 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 year ending December 31,
2002, approximately $674,000 of forfeitures was used to reduce employer
contributions.
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) 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) for contributions made after January 1, 2002.
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
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.
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Page 6
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001
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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 the common stock of the Company 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 INTEREST IN CLEAR CHANNEL COMMUNICATIONS, INC. - MASTER TRUST
Effective July 1, 1999, the Plan transferred all investments to the Clear
Channel Communications, Inc. - Master Trust (Master Trust) which is held by
Fidelity Management Trust Company (Trustee). 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 primarily of registered investment companies and sponsored
Company stock.
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, 2002
and 2001, was approximately 90.6% and 91.4%, respectively.
4. PLAN MERGERS
Effective January 1, 2002, all of the remaining net assets of AMFM Inc. 401(k)
merged into the Clear Channel Communications, Inc. 401(k) Savings Plan.
Effective April 30, 2002, all of the net assets of Clear Channel Outdoor, Inc.
401(k) Plan merged into the Clear Channel Communications, Inc. 401(k) Savings
Plan. Effective July 1, 2002, all of the net assets of Spectacolor Media, LLC
401(k) Plan were merged into Clear Channel Communications, Inc. 401(k) Savings
Plan. Effective December 30, 2002, all of the net assets of Universal Outdoor,
Inc. Salary Reduction Profit Sharing Plan and Evergreen Media Corporation 401(k)
Plan were 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, 2002. A summary
of the transferred net assets follows:
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Page 7
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001
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4. PLAN MERGERS (CONTINUED)
Investments at fair value:
AMFM Inc. 401(k) Savings Plan $ 85,066,573
Clear Channel Outdoor, Inc. 401(k) Plan 10,722,760
Universal Outdoor, Inc. Salary Reduction
Profit Sharing Plan 11,650,012
Evergreen Media Corporation 401(k) Plan 8,320,374
Spectacolor Media, LLC 401 (k) Plan 197,141
------------
$115,956,860
============
5. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets as of December 31, 2002 and 2001:
2002 2001
Clear Channel Communications, Inc. (unitized*) $65,754,022 $84,586,087
Fidelity Puritan Fund 36,394,878 23,540,602
Spartan US Equity Index Fund -- 17,618,051
Fidelity US Equity Index Commingled Pool 25,985,601 --
Fidelity Equity Income Fund 18,988,698 15,862,922
Fidelity Dividend Growth Fund 33,827,334 19,615,747
Fidelity Retirement Money Market Fund 31,652,551 --
MSIFT Mid-Cap Growth Advisor Fund 24,375,051 12,409,555
PIMCO Total Return Fund - Institutional Class 21,247,097 --
Fidelity Low Priced Stock Fund 26,549,917 --
Fidelity Diversified International Fund 16,084,717 --
During 2002, 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:
Clear Channel Communications, Inc., stock (unitized*) $(21,546,197)
Registered investment funds (39,365,782)
------------
$(60,911,979)
============
*A non-registered fund comprised of the underlying Company stock and a
short-term cash component.
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for Plan benefits per
the financial statements at December 31, 2002 and 2001, to Forms 5500:
2002 2001
Net assets available for plan benefits per
the accompanying financial statements $318,414,284 $223,892,519
Transfer of assets from the AMFM Inc.
401(k) Savings Plan* -- 85,066,573
------------ ------------
$318,414,284 $308,959,092
============ ============
*The transfer of net assets from the AMFM Inc. 401(k) Savings Plan was recorded
on Form 5500 as of December 31, 2001, for a transfer that occurred on January
1, 2002.
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Page 8
CLEAR CHANNEL COMMUNICATIONS, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001
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7. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds 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 $310,000 in professional fees related to the
Plan for the year ended December 31, 2002.
8. 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 the employer's
contributions.
9. 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). 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.
10. SUBSEQUENT EVENTS
Effective January 1, 2003, the participants of the Ackerley Group, Inc. Savings
and Retirement Plan began participating in the Plan. On January 16, 2003, all of
the plan assets of Ackerley Group, Inc. Savings and Retirement Plan were
transferred into the Plan.
Effective January 1, 2003, the Clear Channel Communications, Inc. 401(k) Savings
Plan was amended and restated to comply with the Economic Growth and Tax Relief
Reconciliation Act of 2001, among other matters.
Effective January 1, 2003, the Company began matching 50% of the employees'
contributions up to 5% of pay.
Effective January 1, 2003, the Fidelity Freedom Funds were added as investment
options. The Fidelity Puritan Fund was frozen to any new contributions or
incoming transfers effective January 1, 2003. Any contribution elections to the
Fidelity Puritan Fund as of December 31, 2002, were mapped to the Fidelity
Freedom 2010 Fund. The default fund was changed to the Fidelity Freedom 2010
Fund effective January 1, 2003.
Effective May 1, 2003, Fidelity Small Cap Stock Mutual Fund was added as an
investment option.
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Page 9
SUPPLEMENTAL SCHEDULES
CLEAR CHANNEL COMMUNICATIONS, INC. 401(K) SAVINGS PLAN
EMPLOYER IDENTIFICATION NUMBER: 74-1787539
PLAN NUMBER: 001
DECEMBER 31, 2002
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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
---------------------------------------- ---------------------------------------------- ----------------------
PIMCO Total Return Fund - Institutional Class $ 21,247,097
Janus Twenty Fund 8,011,997
MSIFT Mid-cap Growth Advisor Fund 24,375,051
Lord Abbett Midcap Value - Class A 467,080
* Clear Channel
Communications, Inc. Common Stock (unitized) 65,754,022
* Fidelity Management
Trust Company Puritan Fund 36,394,878
* Fidelity Management
Trust Company Equity Income Fund 18,988,698
* Fidelity Management
Trust Company Low Priced Stock Fund 26,549,917
* Fidelity Management
Trust Company Diversified International Fund 16,084,717
* Fidelity Management
Trust Company Dividend Growth Fund 33,827,334
* Fidelity Management
Trust Company Freedom 2010 479,377
* Fidelity Management
Trust Company Retirement Money Market Fund 31,652,551
* Fidelity Management U.S. Equity Index Commingled Pool 25,985,601
Trust Company
Loans to Participants Various due dates with interest
rates of prime plus 1% 7,173,123
---------------
$ 316,991,443
===============
* denotes party-in-interest
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See accompanying independent auditor's report. Page 11
CLEAR CHANNEL COMMUNICATIONS, INC. 401(K) SAVINGS PLAN
EMPLOYER IDENTIFICATION NUMBER: 74-1787539
PLAN NUMBER: 001
YEAR ENDED DECEMBER 31, 2002
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Schedule G, Part III - Schedule of Non-exempt Transactions
(c)
Description
of trans-
actions
including
maturity
(b) date,
Relationship rate of (g)
to plan, interest, Expenses (j)
employer collateral, incurred in (i) Net gain
(a) or other par or (d) (e) (f) connection (h) Current or (loss)
Identity of party-in maturity Purchase Selling Lease with Cost of value of on each
party involved interest value price price rental transaction asset asset transaction
-------------- ------------ ----------- -------- ------- ------ ----------- -------- -------- -----------
* Clear Channel Plan Failure to
Communications, Inc. Sponsor timely
segregate
salary
deferral
contributions
and loan
repayments** - - - - $169,966 - -
* denotes party-in-interest
** Form 5330 has been filed, excise tax paid, and correction made under EPCRS
and in accordance with VFCP.
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See accompanying independent auditor's report. Page 12
EXHIBIT INDEX
23.1 Consent of The Hanke Group, P.C.
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer