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Table of Contents
 
FORM 10-Q
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarter ended June 30, 2002
  
Commission file number 1-9645
 
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
 
Texas
  
74-1787539
(State of Incorporation)
  
(I.R.S. Employer Identification No.)
 
200 East Basse Road
San Antonio, Texas 78209
(210) 822-2828
(Address and telephone number of principal executive offices)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
 
Indicate the number of shares outstanding of each class of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at July 31, 2002
Common Stock, $.10 par value
  
612,443,761
 

Table of Contents
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 
INDEX
 
          
Page No.
Part I—Financial Information
      
        Item 1.
  
Unaudited Financial Statements
       
        
3
        
5
        
6
        
7
Item 2.
       
14
Item 3.
       
30
Part II—Other Information
      
Item 4.
       
31
Item 6.
       
32
   
(a)  Exhibits
       
   
(b)  Reports on Form 8-K
       
    
32
    
33
 

Table of Contents
 
PART I
 
Item 1.    UNAUDITED FINANCIAL STATEMENTS
 
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
 
    
June 30,
2002
     
December 31,
2001
  
    
(Unaudited)
     
(Audited)
  
Current Assets
                  
Cash and cash equivalents
   
$
173,176
 
   
$
154,744
 
Restricted cash
   
 
15,039
 
   
 
4,600
 
Accounts receivable, less allowance of $73,891 at
    June 30, 2002 and $61,070 at December 31, 2001
   
 
1,670,051
 
   
 
1,475,276
 
Prepaid expenses
   
 
250,021
 
   
 
163,283
 
Other current assets
   
 
139,316
 
   
 
143,396
 
    
  
Total Current Assets
   
 
2,247,603
 
   
 
1,941,299
 
Property, Plant and Equipment
                  
Land, buildings and improvements
   
 
1,449,401
 
   
 
1,388,332
 
Structures and site leases
   
 
2,424,178
 
   
 
2,210,309
 
Towers, transmitter and studio equipment
   
 
680,853
 
   
 
634,532
 
Furniture and other equipment
   
 
583,635
 
   
 
556,977
 
Construction in progress
   
 
248,657
 
   
 
191,048
 
    
  
    
 
5,386,724
 
   
 
4,981,198
 
Less accumulated depreciation
   
 
(1,240,534
)
   
 
(1,024,449
)
    
  
    
 
4,146,190
 
   
 
3,956,749
 
Intangible Assets
                  
Definite-lived intangibles, net
   
 
804,404
 
   
 
814,306
 
Indefinite-lived intangibles—licenses
   
 
11,716,928
 
   
 
21,116,280
 
Indefinite-lived intangibles—other
   
 
381,286
 
   
 
155,593
 
Goodwill
   
 
7,155,194
 
   
 
18,267,306
 
Other Assets
                  
Notes receivable
   
 
30,193
 
   
 
45,856
 
Investments in, and advances to, nonconsolidated affiliates
   
 
522,620
 
   
 
502,185
 
Other assets
   
 
504,436
 
   
 
449,227
 
Other investments
   
 
180,994
 
   
 
354,341
 
    
  
Total Assets
   
$
27,689,848
 
   
$
47,603,142
 
    
  
 
See Notes to Consolidated Financial Statements

-3-

Table of Contents
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
(In thousands)
 
    
June 30,
2002
     
December 31,
2001
  
    
(Unaudited)
     
(Audited)
  
Current Liabilities
                  
Accounts payable
   
$
328,783
 
   
$
292,539
 
Accrued interest
   
 
105,976
 
   
 
85,842
 
Accrued expenses
   
 
796,341
 
   
 
803,709
 
Accrued income taxes
   
 
200,524
 
   
 
10,097
 
Current portion of long-term debt
   
 
1,924,786
 
   
 
1,515,221
 
Deferred income
   
 
478,076
 
   
 
234,559
 
Other current liabilities
   
 
11,154
 
   
 
17,890
 
    
  
Total Current Liabilities
   
 
3,845,640
 
   
 
2,959,857
 
Long-term debt
   
 
7,373,959
 
   
 
7,967,713
 
Deferred income taxes
   
 
2,254,850
 
   
 
6,512,217
 
Other long-term liabilities
   
 
405,403
 
   
 
374,307
 
Minority interest
   
 
51,121
 
   
 
52,985
 
Shareholders’ Equity
                  
Common stock
   
 
61,273
 
   
 
59,827
 
Additional paid-in capital
   
 
30,893,691
 
   
 
30,320,916
 
Common stock warrants
   
 
—
 
   
 
12,373
 
Accumulated deficit
   
 
(17,049,247
)
   
 
(599,086
)
Accumulated other comprehensive loss
   
 
(125,662
)
   
 
(34,470
)
Other
   
 
(5,018
)
   
 
(8,218
)
Cost of shares held in treasury
   
 
(16,162
)
   
 
(15,279
)
    
  
Total shareholders’ equity
   
 
13,758,875
 
   
 
29,736,063
 
    
  
Total Liabilities and Shareholders’ Equity
   
$
27,689,848
 
   
$
47,603,142
 
    
  
 
See Notes to Consolidated Financial Statements

-4-

Table of Contents
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands of dollars, except per share data)
 
    
Six Months Ended
June 30,
     
Three Months Ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenue
   
$
3,870,897
 
   
$
3,807,624
 
   
$
2,172,910
 
   
$
2,179,261
 
Operating expenses:
                                    
Divisional operating expenses (excludes non-cash compensation expenses of $2,777, $9,002, $1,317 and $5,108 for the six months ended and three months ended June 30, 2002 and 2001, respectively)
   
 
2,795,378
 
   
 
2,699,283
 
   
 
1,506,401
 
   
 
1,520,215
 
Non-cash compensation expense
   
 
3,283
 
   
 
12,350
 
   
 
1,445
 
   
 
8,456
 
Depreciation and amortization
   
 
288,679
 
   
 
1,258,601
 
   
 
146,261
 
   
 
644,850
 
Corporate expenses (excludes non-cash compensation expenses of $506, $3,348, $128 and $3,348 for the six months ended and three months ended June 30, 2002 and 2001, respectively)
   
 
78,172
 
   
 
92,682
 
   
 
39,203
 
   
 
47,611
 
    
  
  
  
Operating income (loss)
   
 
705,385
 
   
 
(255,292
)
   
 
479,600
 
   
 
(41,871
)
Interest expense
   
 
218,717
 
   
 
293,939
 
   
 
108,350
 
   
 
137,539
 
Gain (loss) on sale of assets related to mergers
   
 
3,991
 
   
 
(57,390
)
   
 
—
 
   
 
(51,000
)
Gain (loss) on marketable securities
   
 
8,901
 
   
 
23,805
 
   
 
5,917
 
   
 
5,349
 
Equity in earnings of nonconsolidated affiliates
   
 
10,713
 
   
 
4,608
 
   
 
7,500
 
   
 
4,045
 
Other income (expense) – net
   
 
41,601
 
   
 
(17,398
)
   
 
15,394
 
   
 
(9,765
)
    
  
  
  
Income (loss) before income taxes and cumulative effect of a change in accounting principle
   
 
551,874
 
   
 
(595,606
)
   
 
400,061
 
   
 
(230,781
)
Income tax (expense) benefit:
                                    
Current
   
 
(205,758
)
   
 
(95,321
)
   
 
(212,351
)
   
 
(110,465
)
Deferred
   
 
(17,751
)
   
 
144,698
 
   
 
50,326
 
   
 
104,245
 
    
  
  
  
Income (loss) before cumulative effect of a change in accounting principle
   
 
328,365
 
   
 
(546,229
)
   
 
238,036
 
   
 
(237,001
)
Cumulative effect of a change in accounting principle
   
 
(16,778,526
)
   
 
—  
 
   
 
—  
 
   
 
—  
 
    
  
  
  
Net income (loss)
   
 
(16,450,161
)
   
 
(546,229
)
   
 
238,036
 
   
 
(237,001
)
Other comprehensive income (loss), net of tax:
                                    
Foreign currency translation adjustments
   
 
(6,507
)
   
 
(49,259
)
   
 
5,755
 
   
 
(5,905
)
Unrealized gain (loss) on securities:
                                    
Unrealized holding gain (loss)
   
 
(78,228
)
   
 
(28,990
)
   
 
(41,107
)
   
 
121,671
 
Reclassification adjustment for gains on securities transferred to trading
   
 
—  
 
   
 
(45,315
)
   
 
—  
 
   
 
—  
 
Reclassification adjustment for gains on shares held prior to mergers
   
 
(3,982
)
   
 
—