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FORM 10-Q SECURITIES AND EXCHANGE COMMISSION  QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarter ended
March 31, 2004
Commission file number
1-9645 CLEAR CHANNEL COMMUNICATIONS, INC.  Texas
(State of Incorporation)
    
    74-1787539
(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 such 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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes þ  No o 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 May 7, 2004Common Stock, $.10 par value
    
    614,289,742




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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES INDEX Part I  Financial InformationItem 1. Unaudited Financial StatementsConsolidated Balance Sheets at March 31, 2004 and December 31, 2003
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003
    
    
    5Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24Part II  Other InformationItem 1. Legal Proceedings
    
    
    25Item 2. Changes in Securities, and Use of Proceeds and Issuer Purchases of Equity Securities
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits and reports on Form 8-K
    
    
    25(a) Exhibits(b) Reports on Form 8-KSignatures
    
    
    26Index to Exhibits
    
    
    27Statement re: Computation of Earnings Per ShareStatement re: Computation of RatiosCertification of Principal Executive OfficerCertification of Chief Financial OfficerCertification of Principal Executive OfficerCertification of Chief Financial Officer




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##### Table of Contents



PART I Item 1. UNAUDITED FINANCIAL STATEMENTS 
 
 CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands) March 31,
    
    December 31,2004
    
    2003(Unaudited)
    
    (Audited)Current AssetsCash and cash equivalents
    
    $
    194,046
    
    
    $
    123,334Restricted cash
    
    
    4,900
    
    
    
    Accounts receivable, less allowance of $56,173 at March
31, 2004 and $56,586 December 31, 2003
    
    
    1,519,994
    
    
    
    1,703,393Prepaid expenses
    
    
    296,797
    
    
    
    196,494Other current assets
    
    
    181,761
    
    
    
    162,461Total Current Assets
    
    
    2,197,498
    
    
    
    2,185,682Property, Plant and EquipmentLand, buildings and improvements
    
    
    1,653,803
    
    
    
    1,635,611Structures
    
    
    2,865,746
    
    
    
    2,888,834Towers, transmitter and studio equipment
    
    
    832,749
    
    
    
    829,488Furniture and other equipment
    
    
    710,176
    
    
    
    694,163Construction in progress
    
    
    162,276
    
    
    
    161,9736,224,750
    
    
    
    6,210,069Less accumulated depreciation
    
    
    2,056,482
    
    
    
    1,949,1544,168,268
    
    
    
    4,260,915Intangible AssetsDefinite-lived intangibles, net
    
    
    688,045
    
    
    
    717,181Indefinite-lived intangibles  licenses
    
    
    11,843,671
    
    
    
    11,797,742Indefinite-lived intangibles  permits
    
    
    424,617
    
    
    
    424,640Goodwill
    
    
    7,295,866
    
    
    
    7,306,338Other AssetsNotes receivable
    
    
    18,463
    
    
    
    19,389Investments in, and advances to, nonconsolidated affiliates
    
    
    365,046
    
    
    
    353,132Other assets
    
    
    481,543
    
    
    
    361,306Other investments
    
    
    316,464
    
    
    
    926,368Total Assets
    
    $
    27,799,481
    
    
    $
    28,352,693
 See Notes to Consolidated Financial Statements -3-




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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS EQUITY
(In thousands) March 31,
    
    December 31,2004
    
    2003(Unaudited)
    
    (Audited)Current LiabilitiesAccounts payable
    
    $
    344,938
    
    
    $
    402,289Accrued interest
    
    
    94,735
    
    
    
    93,848Accrued expenses
    
    
    955,499
    
    
    
    941,263Accrued income taxes
    
    
    131,606
    
    
    
    1,079Current portion of long-term debt
    
    
    154,699
    
    
    
    143,664Deferred income
    
    
    469,005
    
    
    
    284,904Other current liabilities
    
    
    23,336
    
    
    
    25,672Total Current Liabilities
    
    
    2,173,818
    
    
    
    1,892,719Long-term debt
    
    
    6,130,420
    
    
    
    6,921,348Other long-term obligations
    
    
    155,076
    
    
    
    153,311Deferred income taxes
    
    
    2,955,368
    
    
    
    3,049,337Other long-term liabilities
    
    
    746,314
    
    
    
    723,676Minority interest
    
    
    56,464
    
    
    
    58,363Shareholders EquityCommon stock
    
    
    61,709
    
    
    
    61,632Additional paid-in capital
    
    
    30,968,404
    
    
    
    30,950,820Accumulated deficit
    
    
    (15,575,632
    )
    
    
    (15,630,387
    )Accumulated other comprehensive income
    
    
    143,003
    
    
    
    194,406Other
    
    
    (926
    )
    
    
    (1,293
    )Cost of shares held in treasury
    
    
    (14,537
    )
    
    
    (21,239
    )Total shareholders equity
    
    
    15,582,021
    
    
    
    15,553,939Total Liabilities and Shareholders Equity
    
    $
    27,799,481
    
    
    $
    28,352,693
 See Notes to Consolidated Financial Statements -4-




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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data) Three Months Ended March 31,2004
    
    2003Revenue
    
    $
    1,969,566
    
    
    $
    1,779,443Operating expenses:Divisional operating expenses (excludes non-cash compensation expenses
of $261 and $516 in 2004 and 2003, respectively)
    
    
    1,499,718
    
    
    
    1,361,075Non-cash compensation expense
    
    
    918
    
    
    
    799Depreciation and amortization
    
    
    173,158
    
    
    
    159,562Corporate expenses (excludes non-cash compensation expenses of $657 and
$283 in 2004 and 2003, respectively)
    
    
    49,364
    
    
    
    42,779Operating income
    
    
    246,408
    
    
    
    215,228Interest expense
    
    
    89,805
    
    
    
    100,952Gain (loss) on marketable securities
    
    
    49,723
    
    
    
    2,792Equity in earnings of nonconsolidated affiliates
    
    
    6,675
    
    
    
    2,335Other income (expense)  net
    
    
    (17,270
    )
    
    
    2Income before income taxes
    
    
    195,731
    
    
    
    119,405Income tax (expense) benefit:Current
    
    
    (145,985
    )
    
    
    17,995Deferred
    
    
    66,714
    
    
    
    (66,354
    )Net income
    
    
    116,460
    
    
    
    71,046Other comprehensive income, net of tax:Foreign currency translation adjustments
    
    
    2,914
    
    
    
    7,207Unrealized gain (loss) on securities:Unrealized holding gain (loss)
    
    
    (6,177
    )
    
    
    25,037Unrealized holding gain (loss) on cash flow derivatives
    
    
    (16,565
    )
    
    
    Reclassification adjustment for (gains) losses included in net income
    
    
    (31,575
    )
    
    
    (1,723
    )Comprehensive income
    
    $
    65,057
    
    
    $
    101,567Net income per common share:Basic
    
    $
    .19
    
    
    $
    .12Diluted
    
    $
    .19
    
    
    $
    .12Dividends declared per share
    
    $
    .10
    
    
    $
    
 See Notes to Consolidated Financial Statements -5-




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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands) Three Months Ended March 31,2004
    
    2003Cash Flows from operating activities:Net income
    
    $
    116,460
    
    
    $
    71,046Reconciling Items:Depreciation and amortization
    
    
    173,158
    
    
    
    159,562Deferred taxes
    
    
    (66,714
    )
    
    
    66,354(Gain) loss on disposal of assets
    
    
    (10,731
    )
    
    
    3,381(Gain) loss on sale of other investments
    
    
    (46,973
    )
    
    
    (2,779
    )(Gain) loss on forward exchange contract
    
    
    (1,684
    )
    
    
    3,988(Gain) loss on trading securities
    
    
    (1,066
    )
    
    
    (4,001
    )Increase (decrease) accrued income and other taxes
    
    
    134,249
    
    
    
    (16,369
    )Increase (decrease) other, net
    
    
    23,302
    
    
    
    (1,421
    )Changes in other operating assets and liabilities,
net of effects of acquisitions
    
    
    210,761
    
    
    
    156,081Net cash provided by (used in) operating activities
    
    
    530,762
    
    
    
    435,842Cash flows from investing activities:(Investment) in liquidation of restricted cash
    
    
    (4,900
    )
    
    
    Decrease
(increase) in notes receivable  net
    
    
    376
    
    
    
    2,928Decrease (increase) in investments in and advances
to nonconsolidated affiliates  net
    
    
    (2,794
    )
    
    
    3,195Purchases of investments
    
    
    (615
    )
    
    
    (2,079
    )Proceeds from sale of investments
    
    
    599,426
    
    
    
    10,332Purchases of property, plant and equipment
    
    
    (70,784
    )
    
    
    (64,432
    )Proceeds from disposal of assets
    
    
    2,499
    
    
    
    3,196Proceeds from divestitures placed in restricted cash
    
    
    13,138
    
    
    
    Acquisition of operating assets
    
    
    (82,146
    )
    
    
    (30,792
    )Acquisition of operating assets with restricted cash
    
    
    (12,951
    )
    
    
    Decrease
(increase) in other  net
    
    
    (5,527
    )
    
    
    (19,738
    )Net cash (used in) provided by investing activities
    
    
    435,722
    
    
    
    (97,390
    )Cash flows from financing activities:Draws on credit facilities
    
    
    1,349,018
    
    
    
    242,209Payments on credit facilities
    
    
    (1,635
    )
    
    
    (829,799
    )Proceeds from long-term debt
    
    
    
    
    
    
    999,164Payments on long-term debt
    
    
    (2,193,716
    )
    
    
    (581,399
    )Proceeds from exercise of stock options, stock
purchase plan and common stock warrants
    
    
    12,185
    
    
    
    10,529Dividends paid
    
    
    (61,624
    )
    
    
    Net cash used in financing activities
    
    
    (895,772
    )
    
    
    (159,296
    )Net increase in cash and cash equivalents
    
    
    70,712
    
    
    
    179,156Cash and cash equivalents at beginning of period
    
    
    123,334
    
    
    
    170,086Cash and cash equivalents at end of period
    
    $
    194,046
    
    
    $
    349,242
 See Notes to Consolidated Financial Statements -6-




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CLEAR CHANNEL
COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Preparation of Interim Financial Statements The consolidated financial statements have been prepared by Clear Channel
Communications, Inc. (the Company) pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in the opinion of
management, include all adjustments (consisting of normal recurring accruals
and adjustments necessary for adoption of new accounting standards) necessary
to present fairly the results of the interim periods shown. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles in the
United States have been condensed or omitted pursuant to such SEC rules and
regulations. Management believes that the disclosures made are adequate to
make the information presented not misleading. Due to seasonality and other
factors, the results for the interim periods are not necessarily indicative of
results for the full year. The financial statements contained herein should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Companys 2003 Annual Report on Form 10-K. The consolidated financial statements include the accounts of the Company and
its subsidiaries, the majority of which are wholly-owned. Investments in
companies in which the Company owns 20 percent to 50 percent of the voting
common stock or otherwise exercises significant influence over operating and
financial policies of the company are accounted for under the equity method.
All significant intercompany transactions are eliminated in the consolidation
process. Certain reclassifications have been made to the 2003 consolidated
financial statements to conform to the 2004 presentation. Stock-Based Compensation The Company accounts for its stock-based award plans in accordance with
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations, under which compensation expense is
recorded to the extent that the market price on the grant date of the
underlying stock exceeds the exercise price. The required pro forma net income
and pro forma earnings per share as if the stock-based awards had been
accounted for using the provisions of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, are as follows: (In thousands, except per share
data)
    
    The three months ended March 31,2004
    
    2003Net incomeReported
    
    $
    116,460
    
    
    $
    71,046Pro forma stock compensation expense, net of tax
    
    
    15,785
    
    
    
    12,237Pro Forma
    
    $
    100,675
    
    
    $
    58,809Net incomeBasic:Reported
    
    $
    .19
    
    
    $
    .12Pro Forma
    
    $
    .16
    
    
    $
    .10Net incomeDiluted:Reported
    
    $
    .19
    
    
    $
    .12Pro Forma
    
    $
    .16
    
    
    $
    .10
 The fair value for these options was estimated at the date of grant using a
Black-Scholes option-pricing model with the following weighted average
assumptions for 2004 and 2003: 2004
    
    2003Risk-free interest rate
    
    
    2.21%  3.06%
    
    
    
    2.91%  3.76%Dividend yield
    
    
    .9%
    
    
    
    0%Volatility factors
    
    
    46%  50%
    
    
    
    43%  47%Expected life in years
    
    
    3.0  5.0
    
    
    
    5.0  7.5
 -7-




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Recent Accounting Pronouncements On January 1, 2004, the Company adopted Financial Accounting Standards Board
Interpretation No. 46, Consolidation of Variable Interest Entities(FIN 46).
The Interpretation addresses consolidation of business enterprises of variable
interest. The adoption of FIN 46 did not have a material impact on the
Companys financial position or results of operations. Note 2: INTANGIBLE ASSETS AND GOODWILL Definite-lived Intangibles The Company has definite-lived intangible assets recorded that continue to be
amortized in accordance with Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets(Statement 142). These assets
consist primarily of transit and street furniture contracts and other
contractual rights in the outdoor segment, talent and program rights contracts
in the radio segment, and, in the Companys other segment, representation
contracts for non-affiliated television and radio stations, all of which are
amortized over the respective lives of the agreements. Other definite-lived
intangible assets are amortized over the period of time the assets are expected
to contribute directly or indirectly to the Companys future cash flows. The
following table presents the gross carrying amount and accumulated amortization
for each major class of definite-lived intangible asset at March 31, 2004 and
December 31, 2003: (In thousands) March 31, 2004
    
    December 31, 2003Gross Carrying
    
    Accumulated
    
    Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Amount
    
    AmortizationTransit, street
furniture, and other
outdoor contractual
rights
    
    $
    648,170
    
    
    $
    302,184
    
    
    $
    655,775
    
    
    $
    289,821Talent contracts
    
    
    202,161
    
    
    
    138,263
    
    
    
    202,161
    
    
    
    132,421Representation contracts
    
    
    247,876
    
    
    
    68,891
    
    
    
    238,951
    
    
    
    62,678Other
    
    
    213,343
    
    
    
    114,167
    
    
    
    213,506
    
    
    
    108,292Total
    
    $
    1,311,550
    
    
    $
    623,505
    
    
    $
    1,310,393
    
    
    $
    593,212
 Total amortization expense from definite-lived intangible assets for the three
months ended March 31, 2004 and for the year ended December 31, 2003 was $32.3
million and $138.2 million, respectively. The following table presents the
Companys estimate of amortization expense for each of the five succeeding
fiscal years for definite-lived intangible assets: (In thousands)2005
    
    $
    115,2172006
    
    
    95,1902007
    
    
    65,8222008
    
    
    53,5482009
    
    
    45,186
 As acquisitions and dispositions occur in the future and as purchase price
allocations are finalized, amortization expense may vary. Indefinite-lived Intangibles The Companys indefinite-lived intangible assets consist of FCC broadcast
licenses and billboard permits. FCC broadcast licenses are granted to both
radio and television stations for up to eight years under the
Telecommunications Act of 1996. The Act requires the FCC to renew a broadcast
license if: it finds that the station has served the public interest,
convenience and necessity; there have been no serious violations of either the
Communications Act of 1934 or the FCCs rules and regulations by the licensee;
and there have been no other serious violations which taken together constitute
a pattern of abuse. The licenses may be renewed indefinitely at little or no
cost. The Company does not believe that the technology of wireless
broadcasting will be replaced in the foreseeable future. The Companys
billboard permits are issued in perpetuity by state and local governments and
are transferable or renewable at little or no cost. Permits typically include
the location for which the permit allows the Company the right to operate an
advertising structure. The Companys permits are located on either owned or
leased land. In cases where the Companys permits are located on leased land,
the leases are typically from 10 to 30 years and typically have been renewed
indefinitely, with rental payments generally escalating at an inflation based
index. Should the Company lose its lease, the Company will typically obtain
permission to relocate the permit or bank it with the municipality for future
use. -8-




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##### Table of Contents



In accordance with Statement 142, the Company does not amortize its FCC
broadcast licenses or billboard permits. The Company tests these
indefinite-lived intangible assets for impairment at least annually. The
Company generally uses an income approach to value FCC licenses and billboard
permits, which involves estimating future cash flows expected to be generated
from the licenses or billboard permits, discounted to their present value using
a risk-adjusted discount rate. Terminal values are also estimated and
discounted to their present value. The Company performed impairment tests at
October 1, 2003 and 2002, which resulted in no impairment charge. Goodwill Statement 142 requires the Company to test goodwill for impairment using a
two-step process. The first step, used to screen for potential impairment,
compares the fair value of the reporting unit with its carrying amount,
including goodwill. The second step, used to measure the amount of the
impairment loss, compares the implied fair value of the reporting unit goodwill
with the carrying amount of that goodwill. The Company completed the two-step
impairment test at October 1, 2003 and 2002, which resulted in no impairment
charge. Consistent with the Companys approach to fair valuing FCC licenses
and billboard permits, an income approach was used to determine the fair value
of each of the Companys reporting units. The following table presents the
changes in the carrying amount of goodwill in each of the Companys reportable
segments for the three-month period ended March 31, 2004: (In thousands)
    
    Radio
    
    Outdoor
    
    Entertainment
    
    Other
    
    TotalBalance as of December 31, 2003
    
    $
    6,419,191
    
    
    $
    710,815
    
    
    $
    147,590
    
    
    $
    28,742
    
    
    $
    7,306,338Acquisitions
    
    
    4,215
    
    
    
    1,928
    
    
    
    852
    
    
    
    
    
    
    
    6,995Foreign currency
    
    
    
    
    
    
    (5,856
    )
    
    
    (6,242
    )
    
    
    
    
    
    
    (12,098
    )Adjustments
    
    
    (2,537
    )
    
    
    2,223
    
    
    
    (5,055
    )
    
    
    
    
    
    
    (5,369
    )Balance as of March 31, 2004
    
    $
    6,420,869
    
    
    $
    709,110
    
    
    $
    137,145
    
    
    $
    28,742
    
    
    $
    7,295,866
 Note 3: DERIVATIVE INSTRUMENTS The Company holds a net purchased option (the collar) under a secured forward
exchange contract that limits its exposure to and benefit from price
fluctuations in XM Satellite Radio Holding, Inc. (XMSR) over the term of the
contract. The collar is accounted for as a hedge of the forecasted sale of the
underlying shares. At March 31, 2004 and December 31, 2003, the fair value of
the collar was a liability of $128.7 million and $101.7 million, respectively.
The amount recorded in other comprehensive income, net of tax, related to the
collar was $16.6 million and $63.5 million as of March 31, 2004 and December
31, 2003, respectively. The Company also holds options under two secured forward exchange contracts
that limit its exposure to and benefit from price fluctuations in American
Tower Corporation (AMT) over the terms of the contracts. These options are
not designated as hedges of the underlying shares of AMT. The AMT contracts
had a value of $49.0 million and $47.3 million at March 31, 2004 and December
31, 2003, respectively. For the three months and year ended March 31, 2004 and
December 31, 2003, respectively, the Company recognized a gain of $1.7 million
and a loss of $17.1 million in Gain (loss) on marketable securities related
to the change in fair value of the options. On February 25, 2004, the Company entered into a United States dollar  Euro
cross currency swap with a Euro notional amount of 497.0 million and a
corresponding U.S. dollar notional amount of $629.0 million. The swap requires
the Company to make fixed cash payments on the Euro notional amount while it
receives fixed cash payments on the equivalent U.S. dollar notional amount, all
on a semiannual basis. The Company has designated the swap as a hedge of its
net investment in Euro denominated assets. The Company selected the forward
method under the guidance of the Derivatives Implementation Group Statement 133
Implementation Issue H8, Foreign Currency Hedges: Measuring the Amount of
Ineffectiveness in a Net Investment Hedge. The forward method requires all
changes in the fair value of the cross currency swap and the semiannual cash
payments to be reported as a cumulative translation adjustment in other
comprehensive income in the same manner as the underlying hedged net assets.
As of March 31, 2004, an $8.3 million gain was recorded as a cumulative
translation adjustment to other comprehensive income related to the cross
currency swap. Note 4: RECENT DEVELOPMENTS Company Share Repurchase Program On March 30, 2004, the Companys Board of Directors authorized a share
repurchase program of up to $1.0 billion effective immediately. The share
repurchase program will be conducted over the next 12 months. As of March 31,
2004, no shares had been repurchased. -9-




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Recent Legal Proceedings At the Senate Judiciary Committee hearing on July 24, 2003, an Assistant United
States Attorney General announced that the Department of Justice (the DOJ),
is pursuing two separate antitrust inquiries concerning the Company. One
inquiry is whether the Company has violated antitrust laws in one of its radio
markets. The other is whether the Company has limited airplay of artists who
do not use its concert services in violation of antitrust laws. The Company is
cooperating fully with all DOJ requests. On September 9, 2003, the Assistant United States Attorney for the Eastern
District of Missouri caused a Subpoena to Testify before Grand Jury to be
issued to the Company. The Subpoena requires the Company to produce certain
information regarding commercial advertising run by it on behalf of offshore
and/or online (Internet) gambling businesses, including sports bookmaking and
casino-style gambling. The Company is cooperating with such requirements. The Company is among the defendants in a lawsuit filed on June 12, 2002 in the
United States District Court for the Southern District of Florida by Spanish
Broadcasting System. The plaintiffs alleged that the Company is in violation
of Section One and Section Two of the Sherman Antitrust Act as well as various
other claims, such as unfair trade practices and defamation, among other
counts. This case was dismissed with prejudice on January 31, 2003. The
plaintiffs filed an appeal with the 11th Circuit Court of Appeals and oral
argument was held in the case in February 2004. A decision has not yet been
issued. The Company is currently involved in certain legal proceedings and, as
required, has accrued its estimate of the probable costs for the resolution of
these claims. These estimates have been developed in consultation with counsel
and are based upon an analysis of potential results, assuming a combination of
litigation and settlement strategies. It is possible, however, that future
results of operations for any particular period could be materially affected by
changes in the Companys assumptions or the effectiveness of its strategies
related to these proceedings. Note 5: RESTRUCTURING As a result of the Companys merger with The Ackerley Group, Inc. (Ackerley)
in June 2002, the Company recorded a $40.0 million accrual related to the
restructuring of Ackerleys operations. Of the $40.0 million, $19.0 million is
related to severance and $21.0 million is related to lease terminations. The
Ackerley corporate office closed in July 2002. Also, in connection with the
Companys mergers in 2000 with SFX Entertainment, Inc. (SFX) and AMFM Inc.
(AMFM), the Company restructured the SFX and AMFM operations. The AMFM
corporate offices in Dallas and Austin, Texas were closed on March 31, 2001 and
a portion of the SFX corporate office in New York was closed on June 30, 2001.
Other operations of AMFM have either been discontinued or integrated into
existing similar operations. As of March 31, 2004, the restructuring has
resulted in the actual termination of approximately 800 employees. The Company
has recorded a liability in purchase accounting for Ackerley, SFX and AMFM,
primarily related to severance for terminated employees and lease terminations
as follows: (In thousands)
    
    Three Months Ended
    
    Year EndedMarch 31, 2004
    
    December 31, 2003Severance and lease termination costs:Accrual at January 1
    
    $
    57,140
    
    
    $
    73,573Adjustments to restructuring accrual
    
    
    
    
    
    
    Payments charged against restructuring accrual
    
    
    (455
    )
    
    
    (16,433
    )Ending balance of severance and lease termination accrual
    
    $
    56,685
    
    
    $
    57,140
 The remaining severance and lease accrual is comprised of $39.1 million of
severance and $17.6 million of lease termination. The severance accrual
includes amounts that will be paid over the next several years related to
deferred payments to former employees as well as other compensation. The lease
termination accrual will be paid over the next five years. During the first
quarter of 2004, $.1 million was paid and charged to the restructuring reserve
related to severance. The Company made adjustments to finalize the purchase
price allocation for both the AMFM and SFX mergers during 2001 and the purchase
price allocation related to the Ackerley merger was finalized in 2003. All adjustments have been made, and any
future potential excess reserves will be recorded as an adjustment to the
purchase price. In addition to the restructuring described above, the Company restructured its
outdoor advertising operations in France during the second quarter of 2003. As
a result, the Company has recorded a $13.8 million accrual in divisional
operating expenses. Of the $13.8 million, $12.5 million was related to
severance and $1.3 million was related to lease terminations and consulting
costs. As of March 31, 2004, this accrual balance was $2.9 million. This
restructuring resulted in the termination of 134 employees. -10-




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Note 6: COMMITMENTS AND CONTINGENCIES Certain agreements relating to acquisitions provide for purchase price
adjustments and other future contingent payments based on the financial
performance of the acquired companies. The Company will continue to accrue
additional amounts related to such contingent payments if and when it is
determinable that the applicable financial performance targets will be met.
The aggregate of these contingent payments, if performance targets are met,
would not significantly impact the financial position or results of operations
of the Company. In addition to the legal proceedings discussed in Note 4, there are various
lawsuits and claims pending against the Company. The Company believes that any
ultimate liability resulting from those actions or claims will not have a
material adverse effect on the results of operations, financial position or
liquidity of the Company. Note 7: GUARANTEES As of March 31, 2004, the Company guaranteed third party debt of approximately
$34.6 million. The guarantees arose primarily in 2000 in conjunction with the
Company entering into long-term contracts with third parties. The guarantees
will terminate at the earlier of the sale of the underlying assets or September
2004. The operating assets associated with these contracts secure the debt
that the Company has guaranteed. Only to the extent that the assets are either
sold by the third-party for less than the guaranteed amount or the third party
is unable to service the debt will the Company be required to make a cash
payment under the guarantee. As of March 31, 2004, it is not probable that the
Company will be required to make a payment under these guarantees. Thus, as of
March 31, 2004, the guarantees associated with long-term operating contracts
are not recorded on the Companys financial statements. These guarantees are
included in the Companys calculation of its leverage ratio covenant under the
bank credit facilities. The Company has provided a guarantee under a certain performance contract of
approximately $77.4 million that will expire during 2004. The amount of the
guarantee still outstanding at March 31, 2004 is $19.3 million. Under this
guarantee, if the amount collected from the third parties that receive the
benefit under the performance contract does not meet the guarantee amount, the
Company must make payment for the shortfall. The Company made no payments
under this guarantee during the first quarter of 2004. As of March 31, 2004,
the Company cannot reasonably estimate whether it will have to make any future
payments under this guarantee for the 2004 contract period. As such, possible
losses on this executory performance contract will be appropriately recorded in
the period that they are incurred. The Company guarantees a $150.0 million five-year revolving credit facility
between its international subsidiary and a group of international banks. The
credit facility expires in 2005. The facility allows for borrowings in various
foreign currencies, which are used to hedge net assets in those currencies and
provides funds to the Companys international operations for certain working
capital needs. At March 31, 2004, the outstanding balance on the credit
facility was $50.1 million. The outstanding balance on the credit facility is
recorded in Long-term debt on the Companys financial statements. AMFM Operating Inc., an indirect wholly-owned subsidiary of the Company has
guaranteed a portion of the Companys bank credit facilities including the
reducing revolving line of credit facility and the $1.5 billion five-year
multi-currency revolving credit facility with outstanding balances at March 31,
2004 of $417.0 million and $-0-, respectively. At March 31, 2004, the
contingent liability under these guarantees was $1.0 billion. At March 31,
2004, these outstanding balances are recorded in Long-term debt on the
Companys financial statements. Within the Companys bank credit facilities agreements is a provision that
requires the Company to reimburse lenders for any increased costs that they may
incur in an event of a change in law, rule or regulation resulting in their
reduced returns from any change in capital requirements. In addition to not
being able to estimate the potential amount of any future payment under this
provision, the Company is not able to predict if such event will ever occur. The Company currently has guarantees that provide protection to its
international subsidiarys banking institutions related to overdraft lines and
credit card charge-back transactions up to approximately $66.7 million. As of
March 31, 2004, no amounts were outstanding under these agreements. As of March 31, 2004, the Company has outstanding commercial standby letters of
credit and surety bonds of $143.2 million and $55.5 million, respectively, that
primarily expire during 2004. These letters of credit and surety bonds relate
to various operational matters including insurance, bid, and performance bonds
as well as other items. These letters of credit reduce the borrowing
availability on the Companys bank credit facilities, and are included in the
Companys calculation of its leverage ratio covenant under the bank credit
facilities. The surety bonds are not considered as borrowings under the
Companys bank credit facilities. -11-




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Note 8: OTHER Capital Market Transaction On February 25, 2004, the Company redeemed 454.4 million of its 6.5% senior
notes due July 7, 2005, for 477.7 million plus accrued interest. As a result
of this redemption, the Company recorded a pre-tax loss of $31.4 million on the
early extinguishment of debt. After this redemption, 195.6 million of the
6.5% senior notes remain outstanding. Marketable Security Transaction During the three months ended March 31, 2004, the Company received $599.4
million of proceeds related to the sale of its remaining investment in
Univision Communications, Inc. As a result, the Company recorded a gain of
$47.0 million in Gain (loss) on marketable securities. Note 9: SEGMENT DATA The Company has three reportable segments, which it believes best reflects how
the Company is currently managed  radio broadcasting, outdoor advertising and
live entertainment. The category other includes television broadcasting,
sports representation and media representation. Revenue and expenses earned
and charged between segments are recorded at fair value and eliminated in
consolidation. Radio
    
    Outdoor
    
    Live(In thousands)
    
    Broadcasting
    
    Advertising
    
    Entertainment
    
    Other
    
    Corporate
    
    Eliminations
    
    ConsolidatedThree Months Ended March 31, 2004Revenue
    
    $
    832,944
    
    
    $
    521,593
    
    
    $
    513,958
    
    
    $
    132,361
    
    
    $
    
    
    
    $
    (31,290
    )
    
    $
    1,969,566Divisional operating expenses
    
    
    512,328
    
    
    
    412,738
    
    
    
    491,848
    
    
    
    114,094
    
    
    
    
    
    
    
    (31,290
    )
    
    
    1,499,718Non-cash compensation
    
    
    261
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    657
    
    
    
    
    
    
    
    918Depreciation and amortization
    
    
    37,791
    
    
    
    99,750
    
    
    
    15,548
    
    
    
    14,726
    
    
    
    5,343
    
    
    
    
    
    
    
    173,158Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,364
    
    
    
    
    
    
    
    49,364Operating income (loss)
    
    $
    282,564
    
    
    $
    9,105
    
    
    $
    6,562
    
    
    $
    3,541
    
    
    $
    (55,364
    )
    
    $
    
    
    
    $
    246,408Intersegment revenues
    
    $
    10,736
    
    
    $
    2,450
    
    
    $
    5,300
    
    
    $
    12,804
    
    
    $
    
    
    
    $
    
    
    
    $
    31,290Identifiable assets
    
    $
    19,742,233
    
    
    $
    4,791,966
    
    
    $
    1,524,851
    
    
    $
    1,366,396
    
    
    $
    374,035
    
    
    $
    
    
    
    $
    27,799,481Capital expenditures
    
    $
    7,655
    
    
    $
    36,644
    
    
    $
    23,218
    
    
    $
    3,048
    
    
    $
    219
    
    
    $
    
    
    
    $
    70,784Three Months Ended March 31, 2003Revenue
    
    $
    795,034
    
    
    $
    450,528
    
    
    $
    437,882
    
    
    $
    125,418
    
    
    $
    
    
    
    $
    (29,419
    )
    
    $
    1,779,443Divisional operating expenses
    
    
    495,104
    
    
    
    364,709
    
    
    
    421,136
    
    
    
    109,545
    
    
    
    
    
    
    
    (29,419
    )
    
    
    1,361,075Non-cash compensation
    
    
    516
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    799Depreciation and amortization
    
    
    37,300
    
    
    
    88,966
    
    
    
    14,819
    
    
    
    12,497
    
    
    
    5,980
    
    
    
    
    
    
    
    159,562Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,779
    
    
    
    
    
    
    
    42,779Operating income (loss)
    
    $
    262,114
    
    
    $
    (3,147
    )
    
    $
    1,927
    
    
    $
    3,376
    
    
    $
    (49,042
    )
    
    $
    
    
    
    $
    215,228Intersegment revenues
    
    $
    12,748
    
    
    $
    3,519
    
    
    $
    25
    
    
    $
    13,127
    
    
    $
    
    
    
    $
    
    
    
    $
    29,419Identifiable assets
    
    $
    19,689,777
    
    
    $
    4,609,656
    
    
    $
    1,334,580
    
    
    $
    1,388,708
    
    
    $
    738,272
    
    
    $
    
    
    
    $
    27,760,993Capital expenditures
    
    $
    10,636
    
    
    $
    39,776
    
    
    $
    9,846
    
    
    $
    3,754
    
    
    $
    420
    
    
    $
    
    
    
    $
    64,432
 Net revenue of $411.9 million and $333.4 million and identifiable assets of
$2.5 billion and $2.2 billion were derived from the Companys foreign
operations and are included in the March 31, 2004 and 2003 data above,
respectively. Note 10: SUBSEQUENT EVENTS On April 28, 2004, the Companys Board of Directors declared a quarterly cash
dividend of $0.10 per share on the Companys Common Stock. The dividend is
payable on July 15, 2004 to shareholders of record at the close of business on
June 30, 2004. As of May 7, 2004, 2.7 million shares had been repurchased for an aggregate
purchase price of $112.6 million, including commission and fees, under the
Companys share repurchase program. -12-




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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS Overview Managements discussion and analysis of our results of operations and
financial condition should be read in conjunction with the consolidated
financial statements and related footnotes. Our discussion is presented on
both a consolidated and segment basis. Corporate expenses, Interest expense,
Gain (loss) on sale of marketable securities, Equity in earnings of
nonconsolidated affiliates, Other income (expense)  net, and Income tax
benefit (expense) are managed on a total company basis and are, therefore,
reflected only in our discussion of consolidated results. We manage our operating segments primarily on their operating income.
Therefore, our discussion of the results of operations of our operating
segments focuses on their operating income. Our reportable operating segments
are Radio Broadcasting, which includes our national syndication business,
Outdoor Advertising and Live Entertainment. Included in the other segment
are television broadcasting, sports representation and our media representation
business, Katz Media. Radio Broadcasting Our local radio markets are run predominantly by the local management team
who control the formats they select for their programming. The formats are
designed to reach audiences with targeted demographic characteristics that
appeal to our advertisers. Our advertising rates are principally based on how
many people in a targeted audience are listening to our stations, as measured
by an independent ratings service. The size of the market influences rates as
well, with larger markets typically receiving higher rates than smaller
markets. Also, our advertising rates are influenced by the time of day the
advertisement airs, with morning and evening drive-time hours typically the
highest. We sell a certain number of radio advertising spots per hour to our
advertisers. Radio advertising contracts are typically less than one year. Due to the geographic diversity and autonomy of our markets, we have a
multitude of different advertising rates and audience demographics that are
market specific. Therefore, our discussion of the results of operations of our
radio broadcasting segment focuses on the macro level indicators that
management monitors to assess our radio segments financial condition and
results of operations. Management looks at our radio operations overall revenues as one of its
main performance metrics. Management also looks at local advertising, which is
sold predominately in a stations local market, and national advertising, which
is sold across multiple markets. Local advertising is sold by our local radio
stations sales staff while national advertising is sold, for the most part,
through our national representation firm. Local and national advertising revenues are tracked separately because
these revenue streams have different sales forces, respond differently to
changes in the economic environment and because local advertising is the
primary driver of our radio revenues. During the first quarter of 2004, growth
in our local advertising revenue outpaced the growth in our national
advertising revenue. Management also looks at radio revenue by market size, as defined by
Arbitron. Typically, larger markets can reach bigger audiences with wider
demographics than smaller markets. Over half of our radio revenue and
divisional operating expenses comes from our 50 largest markets. During the
first quarter of 2004, our top 50 markets grew in-line with the overall revenue
growth in our radio segment. Additionally, management reviews our share of listeners in target
demographics listening to the radio in an average quarter hour. This metric
gauges how well our formats are doing attracting and keeping listeners. Our
overall share of listeners 12 years and older and age 25 to 54 was up slightly
in the first quarter of 2004 over the first quarter of 2003. A significant portion of our radio segments expenses vary in connection
with changes in revenue. These variable expenses primarily relate to costs in
our sales department, such as salaries, commissions, and bad debt. Our costs
that do not vary as much in relation to revenue are mostly in our programming
and general and administrative departments, such as talent costs, rights fees,
utilities and office salaries. Lastly, our costs that are highly discretionary
are costs in our marketing and promotions department, which we primarily incur
to maintain and/or increase our audience and market share. -13-




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Outdoor Advertising Our outdoor advertising revenues are generated from selling advertisements
on our display faces, which consist of bulletins, posters and transit displays
as well as street furniture panels. Our advertising rates are based on a
particular displays impressions in relation to the demographics of a
particular market and its location within a market. Our outdoor advertising
contracts are typically based on the number of months or weeks the
advertisement is displayed on our inventory. To monitor the health of our outdoor business, management reviews average
rates, average occupancy and inventory levels of each of our display faces by
market. In addition, because a significant portion of our outdoor advertising
is conducted in foreign markets, principally Europe, management looks at
revenues from our foreign operations on a constant dollar basis. A constant
dollar basis allows for comparison of operations independent of foreign
exchange movements. Our outdoor advertising revenue and divisional operating
expenses increased in the first quarter of 2004 as compared to the first
quarter of 2003 by approximately $37.7 million and $34.1 million, respectively,
as a result of fluctuations in foreign currency exchange rates. Our significant outdoor expenses include production expenses, revenue
sharing or minimum guarantees on our transit and street furniture contracts and
site lease expenses, primarily for land under our advertising displays. Our
site lease terms vary from monthly to yearly, can be for terms of 20 years or
longer and typically provide for renewal options. Our street furniture
contracts are usually won in a competitive bid and generally have terms of
between 10 and 20 years. Live Entertainment We derive live entertainment revenues primarily from promoting or
producing music and theater events. Revenues from these events are mainly from
ticket sales, rental income, corporate sponsorships, concessions and
merchandise. We typically receive, for each event we host, all the ticket
sales, or just a fixed fee. We also receive fees representing a percentage of
total concession sales from vendors and total merchandise sales from the
performer or tour producer. We generally receive higher music profits when an event is at a venue we
own rather than a venue we rent. The higher music profits are due to our
ability to share in a percentage of the revenues received from concession and
merchandise sales as well as the opportunity to sell sponsorships for venue
naming rights and signage. To judge the health of our music business, management monitors the number
of shows, average paid attendance, talent cost as a percent of revenue,
sponsorship dollars and ticket revenues. In addition, because a significant
portion of our live entertainment business is conducted in foreign markets,
management looks at revenues from our foreign operations on a constant dollar
basis. A constant dollar basis allows for comparison of operations independent
of foreign exchange movements. Our live entertainment revenue and divisional
operating expenses increased in the first quarter of 2004 as compared to the
first quarter of 2003 by approximately $16.4 million and $15.5 million,
respectively, as a result of fluctuations in foreign currency exchange rates. The primary expense driver for live entertainment is talent cost. Talent
cost is the amount we pay to a musical artist or theatrical production to
perform at an event. This is a negotiated amount primarily driven by what the
artist or production requires to cover their direct costs and value of their
time. These fees are typically agreed to at a set minimum amount with the
potential for additional profit sharing if the event exceeds set revenue
targets. -14-




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The comparison of Three Months Ended March 31, 2004 to Three Months Ended
March 31, 2003 is as follows: Consolidated (In thousands)
    
    Three Months Ended March 31,2004
    
    2003
    
    % ChangeRevenue
    
    $
    1,969,566
    
    
    $
    1,779,443
    
    
    
    11
    %Operating expenses:Divisional operating expenses (excludes
non-cash compensation expenses of $261 and
$516 in 2004 and 2003, respectively)
    
    
    1,499,718
    
    
    
    1,361,075
    
    
    
    10
    %Non-cash compensation expense
    
    
    918
    
    
    
    799
    
    
    
    15
    %Depreciation and amortization
    
    
    173,158
    
    
    
    159,562
    
    
    
    9
    %Corporate expenses (excludes non-cash
compensation expenses of $657 and $283 in
2004 and 2003, respectively)
    
    
    49,364
    
    
    
    42,779
    
    
    
    15
    %Operating income
    
    
    246,408
    
    
    
    215,228
    
    
    
    14
    %Interest expense
    
    
    89,805
    
    
    
    100,952Gain (loss) on marketable securities
    
    
    49,723
    
    
    
    2,792Equity in earnings of nonconsolidated affiliates
    
    
    6,675
    
    
    
    2,335Other income (expense)  net
    
    
    (17,270
    )
    
    
    2Income before income taxes
    
    
    195,731
    
    
    
    119,405Income tax benefit (expense):Current
    
    
    (145,985
    )
    
    
    17,995Deferred
    
    
    66,714
    
    
    
    (66,354
    )Net income
    
    $
    116,460
    
    
    $
    71,046
 Consolidated Revenue Revenue increased $190.1 million for the three months ended March 31, 2004
from the same period of 2003. Excluding the effect of movement in foreign
currency exchange rates, our entertainment segment contributed $59.7 million,
the radio segment contributed $37.9 million and the outdoor segment contributed
$33.4 million towards this growth. The revenue increase is primarily
attributable to increased ticket revenue in our live entertainment segment,
growth in local advertising demand in our radio segment and growth in domestic
billboard and international street furniture revenues in our outdoor
advertising segment. Also contributing to the increase was $54.1 million
resulting from foreign currency exchange rate movement. Consolidated Divisional Operating Expenses Divisional operating expenses increased $138.6 million for the three
months ended March 31, 2004 as compared to the same period of 2003. Excluding
the effect of movement in foreign currency exchange rates, our entertainment
segment contributed $55.2 million, the radio segment contributed $17.2 million
and the outdoor segment contributed $13.9 million towards this growth. This
increase is primarily attributable to additional variable costs related to the
mix of events in our live entertainment business, increased production costs
and bonus expenses in our radio segment and site lease expenses and acquisition
activity in our outdoor advertising segment. Also contributing to the increase
was $49.6 million resulting from foreign currency exchange rate movement. Depreciation and Amortization Depreciation and amortization expense increased $13.6 million for the
three months ended March 31, 2004 as compared to the same period of 2003. The
increase is primarily related to $4.5 million from foreign exchange as well as
$4.4 million from increased accelerated depreciation on display takedowns and
abandonments in our outdoor advertising segment. We also saw increased
amortization as a result of the purchase of certain national representation
contracts during the latter part of 2003. Corporate Expenses Corporate expenses increased $6.6 million for the three months ended March
31, 2004 as compared to the same period of 2003. The increase is primarily the
result of a higher bonus accrual in the current period related to our improved
operating performance. Interest Expense Interest expense was $89.8 million and $101.0 million for the three months
ended March 31, 2004 and 2003, respectively, a decrease of $11.2 million. This
decrease for the three months ended March 31, 2004 was due to the decrease in
our total debt outstanding. At March 31, 2004 and 2003, outstanding debt was
$6.3 billion and $8.6 billion, respectively. -15-




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Gain (loss) on Marketable Securities During the three months ended March 31, 2004, a $49.7 million gain on
marketable securities was recorded primarily from a $47.0 million gain on the
sale of our remaining investment in Univision Communications. The remaining
$2.7 million gain relates to the change in the fair value of a secured forward
exchange contract and its underlying investment. Equity in Earnings of Nonconsolidated Affiliates Equity in earnings of nonconsolidated affiliates was $6.7 million and $2.3
million for the three months ended March 31, 2004 and 2003, respectively. This
$4.4 million increase is primarily the result of an investment in our live
entertainment segment that benefited from additional weeks of performances in
2004. Other Income (Expense)  Net For the three months ended March 31, 2004, other income (expense)  net
was expense of $17.3 million. The expense recognized for the three months
ended March 31, 2004 related to a $31.4 million loss on the early
extinguishment of debt, partially offset by an $11.6 million gain on the
disposal of radio operating assets and a $2.5 million net gain on various other
items. Income Tax Benefit (Expense) During the three months ended March 31, 2004, current tax expense includes
$195.0 million related to our sale of our remaining investment in Univision.
Although the book gain recorded during the current quarter related to this sale
was only $47.0 million, for tax purposes a much larger gain was realized as our
basis in our Univision investment was the carryover basis from our shares of
Hispanic Broadcasting Corporation. Upon receiving Univision shares as a result
of the Univision acquisition of Hispanic, we converted our investment from an
equity method investment to a cost method investment and thus began to carry
our investment on our balance sheet at fair value. Also, included in current
tax expense for the three months ended March 31, 2004 is a tax benefit of
approximately $67.5 million related to the tax loss on our early extinguishment
of debt. Deferred taxes for the three months ended March 31, 2004 includes a $195.0
million deferred tax benefit related to our Univision investment. Upon the
conversion of our investment to a cost method investment, a large non-taxable
gain was recorded during the three months ended September 30, 2003, which
resulted in a large deferred tax asset. As a result of the sale of this
investment, this deferred tax asset reversed resulting in the recognition of a
deferred tax benefit. In addition to the deferred tax asset recognized at the
time of the conversion, an additional deferred tax asset was recorded related
to the net unrealized gain recorded subsequent to the conversion of our
investment on the ultimate sale of our investment. Finally, deferred taxes for
the quarter ended March 31, 2004 includes a $54.3 million expense related to
our early extinguishment of debt. Segment Revenue and Divisional Operating Expenses Radio Broadcasting (In thousands)
    
    Three Months Ended March 31,% Change2004
    
    2003
    
    2004 v. 2003Revenue
    
    $
    832,944
    
    
    $
    795,034
    
    
    
    5
    %Divisional operating expenses
    
    
    512,328
    
    
    
    495,104
    
    
    
    3
    %Non-cash compensation
    
    
    261
    
    
    
    516
    
    
    
    (49
    %)Depreciation and amortization
    
    
    37,791
    
    
    
    37,300
    
    
    
    1
    %Operating income
    
    $
    282,564
    
    
    $
    262,114
 Our radio broadcasting revenue increased $37.9 million to $832.9 million
during the first quarter of 2004 compared to the first quarter of 2003.
Revenue growth was lead mainly by resurgent local advertising, with growth in
traffic revenue and growth in network revenue primarily from our syndicated
radio programs contributing to a lesser extent. Revenue grew sequentially
throughout the first quarter of 2004, with March being the strongest month.
During the first quarter of 2004, the majority of our markets grew in-line with the overall revenue growth in our radio segment.
Strong local and national advertising categories during the first quarter
included services, automotive, entertainment and consumer products. Divisional operating expenses increased $17.2 million to $512.3 million
during the first quarter of 2004 as compared to the first quarter of 2003. The
increase is primarily from a 6% increase in programming and promotion costs,
increased sales related expenses driven by commission and accrued bonus
expenses and an increase in general and administrative expenses associated with
an increase in the cost of employee healthcare benefits. -16-




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Outdoor Advertising (In thousands)
    
    Three Months Ended March 31,% Change2004
    
    2003
    
    2004 v. 2003Revenue
    
    $
    521,593
    
    
    $
    450,528
    
    
    
    16
    %Divisional operating expenses
    
    
    412,738
    
    
    
    364,709
    
    
    
    13
    %Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    99,750
    
    
    
    88,966
    
    
    
    12
    %Operating income (loss)
    
    $
    9,105
    
    
    $
    (3,147
    )
 Our outdoor advertising revenue increased $71.1 million to $521.6
million during the first quarter of 2004 as compared to the first quarter of
2003. Growth was led by strong domestic bulletin and international street
furniture and billboard revenues. Also contributing to the increase was
$10.4 million from the purchase and consolidation of our outdoor advertising
joint venture in Australia, which we had accounted for as an equity method
investment during the first quarter of 2003. Included in the revenue
increase is approximately $37.7 million from foreign exchange increases.
Offsetting the revenue increase was a decline in revenue from our airport
advertising inventory. The growth in our domestic bulletin revenue came from growth in average
bulletin rates, while bulletin occupancy levels were flat for the first quarter
of 2004 compared to 2003. Revenue from our domestic posters was essentially
unchanged during the first quarter of 2004 as compared to 2003, with average
poster rates up and poster occupancy slightly down. Growth occurred across the
majority of our domestic markets, with our top 25 markets outperforming our
aggregate outdoor advertising revenue growth. Strong markets included Miami,
Minneapolis, Atlanta and Portland with automotive, entertainment,
business/consumer services and real estate advertising categories contributing
to the growth. The growth in our international street furniture revenue was fueled by
growth in average revenue per street furniture display, while the total number
of displays was slightly up for the first quarter of 2004 as compared to 2003.
Similar to street furniture, the revenue growth in our international billboards
was led by an increase in average revenue per billboard with the total number
of international billboards consistent for the first quarter of 2004 as
compared to 2003. Strong international markets included the United Kingdom,
Australia and Sweden. Divisional operating expenses increased $48.0 million to $412.7 million
during the first quarter of 2004 compared to the first quarter of 2003. The
increase includes approximately $34.1 million from foreign exchange increases.
Additionally, we incurred more site lease expenses primarily related to
increased lease rates. We also saw an additional $8.8 million in divisional
operating expenses during the first quarter of 2004 resulting from the purchase
and consolidation of our outdoor advertising joint venture in Australia, which
we had accounted for as an equity method investment during the first quarter of
2003. Depreciation and amortization expense increased $10.8 million during the
first quarter of 2004 as compared to the first quarter of 2003. The increase
is primarily attributable to $4.5 million from foreign exchange as well as a
$4.4 million increase in accelerated depreciation on display takedowns and
abandonments. Live Entertainment (In thousands)
    
    Three Months Ended March 31,% Change2004
    
    2003
    
    2004 v. 2003Revenue
    
    $
    513,958
    
    
    $
    437,882
    
    
    
    17
    %Divisional operating expenses
    
    
    491,848
    
    
    
    421,136
    
    
    
    17
    %Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    15,548
    
    
    
    14,819
    
    
    
    5
    %Operating income
    
    $
    6,562
    
    
    $
    1,927
 Our live entertainment revenue increased $76.1 million to $514.0 million
during the first quarter of 2004 as compared to the first quarter of 2003.
Increased concert ticket sales from additional shows and higher attendance at
events, such as Bette Midler and Britney Spears, drove the increase. We also
saw increased touring revenue from events such as David Bowie. Revenue from
sponsorships was another contributing factor to the growth. Also underlying
the revenue increase was approximately $16.4 million from foreign exchange
increases. -17-




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##### Table of Contents



Divisional operating expenses increased $70.7 million to $491.8 million
during the first quarter of 2004 as compared to the first quarter of 2003. The
increase includes approximately $15.5 million from foreign exchange increases.
The remaining increase primarily relates to variable costs associated with the
volume and mix of events in 2004 as compared to 2003. Reconciliation of Segment Operating Income to Consolidated Operating Income (In thousands)
    
    Three Months Ended March 31,2004
    
    2003Radio Broadcasting
    
    $
    282,564
    
    
    $
    262,114Outdoor Advertising
    
    
    9,105
    
    
    
    (3,147
    )Live Entertainment
    
    
    6,562
    
    
    
    1,927Other
    
    
    3,541
    
    
    
    3,376Corporate
    
    
    (55,364
    )
    
    
    (49,042
    )Consolidated Operating Income
    
    $
    246,408
    
    
    $
    215,228
 LIQUIDITY AND CAPITAL RESOURCES Cash Flow Operating Activities: Net cash flow from operating activities of $530.8 million for the three
months ended March 31, 2004 principally reflects a net income of $116.5 million
plus depreciation and amortization of $173.2 million. Cash flow from
operations also reflects a positive change in working capital of approximately
$210.8 million primarily due to an increase in deferred income and a decrease
in accounts receivable. Net cash flow from operating activities of $435.8
million for the three months ended March 31, 2003 principally reflects a net
income of $71.0 million plus depreciation and amortization of $159.6 million.
Cash flow from operations also reflects a positive change in working capital of
approximately $156.1 million primarily due to an increase in deferred income
and a decrease in accounts receivable. Investing Activities: Net cash provided by investing activities of $435.7 million for the three
months ended March 31, 2004 principally reflects proceeds from the sale of our
remaining investment in Univision of $599.4 million, partially offset by
capital expenditures of $70.8 million related to purchases of property, plant
and equipment and $95.1 million primarily related to acquisitions of radio and
outdoor assets. Net cash expenditures used in investing activities of $97.4
million for the three months ended March 31, 2003 principally reflect capital
expenditures of $64.4 million related to purchases of property, plant and
equipment and $30.8 million primarily related to acquisitions of radio and
outdoor assets. Financing Activities: Net cash used in financing activities for the three months ended March 31,
2004 principally reflect the net reduction in debt of $846.3 million and $61.6
million in dividend payments, partially offset by proceeds of $12.2 million
related to the exercise of stock options. Financing activities for the three months ended March 31,
2003 principally reflect the net reduction in debt of $169.8 million and
proceeds of $10.5 million related to the exercise of stock options. We expect to fund anticipated cash requirements (including payments of
principal and interest on outstanding indebtedness and commitments,
acquisitions, anticipated capital expenditures, dividends and share
repurchases) for the foreseeable future with cash flows from operations and
various externally generated funds. -18-




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SOURCES OF CAPITAL As of March 31, 2004 and December 31, 2003 we had the following debt
outstanding: (In millions) March 31,
    
    December 31,2004
    
    2003Credit facilities  domestic
    
    $
    417.0
    
    
    $
    660.5Credit facility  international
    
    
    50.1
    
    
    
    50.1Long-term bonds (a)
    
    
    5,621.3
    
    
    
    6,159.4Other borrowings
    
    
    196.7
    
    
    
    195.0Total Debt (b)
    
    
    6,285.1
    
    
    
    7,065.0Less: Cash and cash equivalents
    
    
    194.0
    
    
    
    123.3$
    6,091.1
    
    
    $
    6,941.7
  (a)
    
    Includes $16.0 million and $16.8 million in unamortized fair value
purchase accounting adjustment premiums related to the merger with AMFM
Inc. at March 31, 2004 and December 31, 2003, respectively. Also includes
$48.0 million and $7.0 million related to fair value adjustments for
interest rate swap agreements at March 31, 2004 and December 31, 2003,
respectively.(b)
    
    Total face value of outstanding debt was $6.3 billion and $7.0 billion at
March 31, 2004 and December 31, 2003, respectively. Domestic Credit Facilities We currently have two separate domestic credit facilities. These provide
cash for working capital needs, funding dividends and share repurchases,
certain acquisitions and refinancing of public debt securities. The first credit facility is a reducing revolving credit facility,
originally in the amount of $2.0 billion. At March 31, 2004, $417.0 million
was outstanding and $423.6 million was available for future borrowings. The
amount available for future borrowings under this credit facility began
reducing on September 30, 2000, with quarterly reductions to continue through
the last business day of June 2005. The reductions in amounts available for
future borrowings total $109.4 million per quarter in 2004, $131.3 million in
the first quarter of 2005 and $381.3 million in the second quarter of 2005. The second facility is a $1.5 billion five-year multi-currency revolving
credit facility. At March 31, 2004, there was no outstanding balance and,
taking into account letters of credit of $142.3 million, $1.4 billion was
available for future borrowings, with the entire balance to be repaid on August
30, 2005. During the three months ended March 31, 2004, we made principal payments
totaling $1.6 billion and drew down $1.3 billion on these credit facilities.
As of May 7, 2004, the credit facilities aggregate outstanding balance was
$398.0 million and, taking into account outstanding letters of credit, $1.8
billion was available for future borrowings. International Credit Facility We have a $150.0 million five-year revolving credit facility with a group
of international banks. This facility allows for borrowings in various foreign
currencies, which are used to hedge net assets in those currencies and provides
funds to our international operations for certain working capital needs. At
March 31, 2004, $50.1 million was outstanding. This credit facility expires on
December 8, 2005. Sale of Investments During the three months ended March 31, 2004, we received $599.4 million
of proceeds related to the sale of our remaining investment in Univision. As a
result, we recorded a gain of $47.0 million in Gain (loss) on marketable
securities. Shelf Registration On April 22, 2004, we filed a Registration Statement on Form S-3/A
covering a combined $3.0 billion of debt securities, junior subordinated debt
securities, preferred stock, common stock, warrants, stock purchase contracts
and stock purchase units (the shelf registration statement). The shelf registration statement also
covers preferred securities that may be issued from time to time by -19-




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##### Table of Contents



our three Delaware statutory business trusts and guarantees of such preferred securities
by us. The SEC declared this shelf registration statement effective on April
26, 2004. Debt Covenants Our only significant covenants relate to leverage and interest coverage
contained and defined in the credit facilities. The leverage ratio covenant
requires us to maintain a ratio of total debt to EBITDA (as defined by the
credit facilities) of less than 5.50x through June 30, 2003 and less than 5.00x
from July 1, 2003 through the maturity of the facilities. The interest
coverage covenant requires us to maintain a minimum ratio of EBITDA (as defined
by the credit facilities) to interest expense of 2.00x. In the event that we
do not meet these covenants, we are considered to be in default on the credit
facilities at which time the credit facilities may become immediately due. At
March 31, 2004, our leverage and interest coverage ratios were 2.77x and 6.12x,
respectively. Including our cash and cash equivalents recorded at March 31,
2004, our leverage on a net debt basis was 2.68x. Our bank credit facilities
have cross-default provisions among the bank facilities only. No other Clear
Channel debt agreements have cross-default or cross-acceleration provisions. Additionally, the AMFM long-term bonds contain certain restrictive
covenants that limit the ability of AMFM Operating Inc., a wholly-owned
subsidiary of Clear Channel, to incur additional indebtedness, enter into
certain transactions with affiliates, pay dividends, consolidate, or affect
certain asset sales. Our $1.5 billion, five-year multi-currency revolving credit facility
includes a provision for an increase in fees of 12.5 basis points on borrowings
and five basis points on amounts available for future borrowings in the event
that both of our long-term debt ratings drop below our current ratings of
BBB-/Baa3. Conversely, if our long-term debt ratings improve, we have a
proportionate decrease in fees. Our international subsidiarys $150.0 million
international credit facility includes a put option to us in the event that our
long-term debt ratings fall below BB+/Ba1. We believe there are no other
agreements that contain provisions that trigger an event of default upon a
change in long-term debt ratings that would have a material impact to our
financial statements. At March 31, 2004, we were in compliance with all debt covenants. We
expect to remain in compliance throughout 2004. USES OF CAPITAL Long-Term Bonds On February 25, 2004, we redeemed 454.4 million of our 6.5% senior notes
due July 7, 2005, for 477.7 million plus accrued interest. As a result of
this redemption we recorded a pre-tax loss of $31.4 million on the early
extinguishment of debt. After this redemption, 195.6 million of the 6.5%
senior notes remain outstanding. Dividends On October 23, 2003 and February 19, 2004, our Board of Directors declared
a quarterly cash dividend of $0.10 per share on our Common Stock. Dividend
payments of $61.6 million and $61.7 million were disbursed on January 15, 2004
and April 15, 2004, respectively, to shareholders of record at the close of
business on December 31, 2003 and March 31, 2004, respectively. Additionally,
on April 28, 2004 our Board of Directors declared a quarterly cash dividend of
$0.10 per share of our Common Stock to be paid on July 15, 2004 to shareholders
of record on June 30, 2004. Acquisitions During the three months ended March 31, 2004 we acquired 16 radio stations
for $26.6 million in cash and $13.0 million in restricted cash. We also
acquired approximately 100 outdoor display faces for $44.5 million in cash.
Our live entertainment segment made cash payments of $.8 million during the
quarter ended March 31, 2004, primarily related to various earn-outs and
deferred purchase price consideration on prior year acquisitions. Also, our
national representation business acquired new contracts for a total of $10.2
million in cash during the three months ended March 31, 2004. -20-




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Capital Expenditures Capital expenditures were $70.8 million and $64.4 million in the quarters
ended March 31, 2004 and 2003, respectively. (In millions)
    
    Three Months Ended March 31, 2004 Capital ExpendituresRadio
    
    Outdoor
    
    Entertainment
    
    Corporate and Other
    
    TotalNon-revenue producing
    
    $
    7.6
    
    
    $
    13.1
    
    
    $
    6.6
    
    
    $
    3.3
    
    
    $
    30.6Revenue producing
    
    
    
    
    
    
    23.6
    
    
    
    16.6
    
    
    
    
    
    
    
    40.2$
    7.6
    
    
    $
    36.7
    
    
    $
    23.2
    
    
    $
    3.3
    
    
    $
    70.8
 Radio broadcasting capital expenditures declined $3.0 million in the
quarter ended March 31, 2004 as compared to the same quarter of 2003 due to
fewer non-revenue producing project related expenditures. Outdoor advertising capital expenditures during the quarter ended March
31, 2004 decreased $3.2 million as compared to the same quarter of 2003
primarily due to fewer revenue producing capital expenditures. Live entertainment capital expenditures during the quarter ended March 31,
2004 increased $13.4 million as compared to the same quarter of 2003 due to the
construction of new venues. Capital expenditures listed under Corporate and Other declined $.8 million
during quarter ended March 31, 2004 as compared to the same quarter of 2003. Company Share Repurchase Program As of May 7, 2004, 2.7 million shares had been repurchased for an
aggregate purchase price of $112.6 million, including commission and fees,
under our share repurchase program. Commitments, Contingencies and Guarantees In accordance with generally accepted accounting principles in the United
States, we do not record the following transactions on our balance sheet: Commitments and Contingencies We were among the defendants in a lawsuit filed on June 12, 2002 in the
United States District Court for the Southern District of Florida by Spanish
Broadcasting System. The plaintiffs alleged that we were in violation of
Section One and Section Two of the Sherman Antitrust Act as well as various
other claims, such as unfair trade practices and defamation, among other
counts. This case was dismissed with prejudice on January 31, 2003. The
plaintiffs filed an appeal with the 11th Circuit Court of Appeals and oral
argument was held in the case in February 2004. A decision has not yet been
issued. There are various other lawsuits and claims pending against us. We
believe that any ultimate liability resulting from those actions or claims
will not have a material adverse effect on our results of operations,
financial position or liquidity. Certain agreements relating to acquisitions provide for purchase price
adjustments and other future contingent payments based on the financial
performance of the acquired companies generally over a one to five year
period. We will continue to accrue additional amounts related to such
contingent payments if and when it is determinable that the applicable
financial performance targets will be met. The aggregate of these contingent
payments, if performance targets are met, would not significantly impact our
financial position or results of operations. Guarantees As of March 31, 2004, we guaranteed the debt of third parties of
approximately $34.6 million primarily related to long-term operating
contracts. The third parties associated operating assets secure a
substantial portion of these obligations. As of May 7, 2004, we have
reduced our guarantee of third party debt to $13.3 million. -21-




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At March 31, 2004, we guaranteed the third-party performance under a
certain contract for up to approximately $19.3 million that expires in 2004. Market Risk Interest Rate Risk At March 31, 2004, approximately 30% of our long-term debt, including
fixed rate debt on which we have entered into interest rate swap agreements,
bears interest at variable rates. Accordingly, our earnings are affected by
changes in interest rates. Assuming the current level of borrowings at
variable rates and assuming a two percentage point change in the years
average interest rate under these borrowings, it is estimated that our
interest expense would have changed by $38.3 million and that our net income
would have changed by $23.7 million during the first three months of 2004.
In the event of an adverse change in interest rates, management may take
actions to further mitigate our exposure. However, due to the uncertainty of
the actions that would be taken and their possible effects, the analysis
assumes no such actions. Further the analysis does not consider the effects
of the change in the level of overall economic activity that could exist in
such an environment. At March 31, 2004, we had entered into interest rate swap agreements
with a $1.3 billion aggregate notional amount that effectively float interest
at rates based upon LIBOR. These agreements expire from February 2007 to
March 2012. The fair value of these agreements at March 31, 2004 was an
asset of $48.0 million. Equity Price Risk At March 31, 2004, the carrying value of our available-for-sale and
trading equity securities was $247.7 million and $38.2 million, respectively.
These investments are affected by changes in their quoted market prices. It
is estimated that a 20% change in the market prices of these securities would
change their carrying value at March 31, 2004 by $57.2 million and would
change accumulated comprehensive income (loss) and net income (loss) by $30.7
million and $4.7 million, respectively. At March 31, 2004, we also held
$30.6 million of investments that do not have a quoted market price, but are
subject to fluctuations in their value. Foreign Currency We have operations in countries throughout the world. Foreign
operations are measured in their local currencies except in
hyper-inflationary countries in which we operate. As a result, our financial
results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in the foreign markets in which we
have operations. To mitigate a portion of the exposure to risk of
international currency fluctuations, we maintain a natural hedge through
borrowings in currencies other than the U.S. dollar. In addition, we have a
U.S. dollar  Euro cross currency swap which is also designated as a hedge of
our net investment in foreign denominated assets. These hedge positions are
reviewed monthly. Our foreign operations reported a net loss of $23.2
million for the three months ended March 31, 2004. It is estimated that a
10% change in the value of the U.S. dollar to foreign currencies would change
net loss for the three months ended March 31, 2004 by $2.3 million. Our earnings are also affected by fluctuations in the value of the U.S.
dollar as compared to foreign currencies as a result of our investments in
various countries, all of which are accounted for under the equity method.
It is estimated that the result of a 10% fluctuation in the value of the
dollar relative to these foreign currencies at March 31, 2004 would change
our equity in earnings of nonconsolidated affiliates by $.7 million and would
change our net income for the three months ended March 31, 2004 by
approximately $.4 million. This analysis does not consider the implications
that such fluctuations could have on the overall economic activity that could
exist in such an environment in the U.S. or the foreign countries or on the
results of operations of these foreign entities. Recent Accounting Pronouncements On January 1, 2004, we adopted Financial Accounting Standards Board
Interpretation No. 46, Consolidation of Variable Interest Entities. The
Interpretation addresses consolidation of business enterprises of variable
interest. The adoption of FIN 46 did not have a material impact on our
financial position or results of operations. Inflation Inflation has affected our performance in terms of higher costs for
wages, salaries and equipment. Although the exact impact of inflation is
indeterminable, we believe we have offset these higher costs in various
manners. -22-




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Ratio of Earnings to Fixed Charges The ratio of earnings to fixed charges is as follows: Three Months endedMarch 31,
    
    
    
    
    
    
    
    
    
    Year Ended December 31,2004
    
    2003
    
    2003
    
    2002
    
    2001
    
    2000
    
    19992.05
    
    
    1.65
    
    
    
    3.62
    
    
    
    2.62
    
    
    
    *
    
    
    
    2.20
    
    
    
    2.04
  *
    
    For the year ended December 31, 2001, fixed charges exceeded earnings
before income taxes and fixed charges by $1.3 billion. The ratio of earnings to fixed charges was computed on a total
enterprise basis. Earnings represent income from continuing operations
before income taxes less equity in undistributed net income (loss) of
unconsolidated affiliates plus fixed charges. Fixed charges represent
interest, amortization of debt discount and expense, and the estimated
interest portion of rental charges. We had no preferred stock outstanding
for any period presented. Risks Regarding Forward Looking Statements Except for the historical information, this report contains various
forward-looking statements that represent our expectations or beliefs
concerning future events, including the future levels of cash flow from
operations. Management believes that all statements that express
expectations and projections with respect to future matters, including the
strategic fit of radio assets, expansion of market share, our ability to
capitalize on synergies between the live entertainment and radio broadcasting
businesses, the availability of capital resources, and expected changes in
advertising revenues, are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act. We caution that these
forward-looking statements involve a number of risks and uncertainties and
are subject to many variables that could have an adverse effect upon our
financial performance. These statements are made on the basis of managements
views and assumptions, as of the time the statements are made, regarding
future events and business performance. There can be no assurance, however,
that managements expectations will necessarily come to pass. A wide range of factors could materially affect future developments and
performance, including:  
    
    the impact of general economic conditions in the U.S. and in other
countries in which we currently do business, including those resulting
from recessions, political events and acts or threats of terrorism or
military conflicts;
    
    the impact of the geopolitical environment;
    
    our ability to integrate the operations of recently acquired companies;
    
    shifts in population and other demographics;
    
    industry conditions, including competition;
    
    fluctuations in operating costs;
    
    technological changes and innovations;
    
    changes in labor conditions;
    
    fluctuations in exchange rates and currency values;
    
    capital expenditure requirements;
    
    the outcome of pending and future litigation;
    
    legislative or regulatory requirements;
    
    interest rates;
    
    the effect of leverage on our financial position and earnings;
    
    taxes;
    
    access to capital markets; and
    
    certain other factors set forth in our SEC filings, including our
Annual Report on Form 10-K for the year ended December 31, 2003. This list of factors that may affect future performance and the accuracy
of forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. -23-




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Required information is within Item 2 
 ITEM 4. CONTROLS AND PROCEDURES Our principal executive and financial officers have concluded, based on
their evaluation as of the end of the period covered by this Form
10-Q, that
our disclosure controls and procedures, as defined under Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, are effective to ensure
that information we are required to disclose in the reports we file or
submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and
include controls and procedures designed to ensure that information we are
required to disclose in such reports is accumulated and communicated to
management, including our principal executive and financial officers, as
appropriate to allow timely decisions regarding required disclosure. Subsequent to our evaluation, there were no significant changes in
internal controls or other factors that could significantly affect these
internal controls. -24-




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##### Table of Contents



Part II  OTHER INFORMATION 
 Item 1. Legal Proceedings We are among the defendants in a lawsuit filed on June 12, 2002 in the
United States District Court for the Southern District of Florida by Spanish
Broadcasting System. The plaintiffs allege that we are in violation of Section
One and Section Two of the Sherman Antitrust Act as well as various other
claims, such as unfair trade practices and defamation, among other counts.
This case was dismissed with prejudice on January 31, 2003. The plaintiffs
filed an appeal with the 11th Circuit Court of Appeals and oral argument was
held in the case in February 2004. A decision has not yet been issued. There are various other lawsuits and claims pending against us. We
believe that any ultimate liability resulting from those actions or claims
will not have a material adverse effect on our results of operations,
financial position or liquidity. We are currently involved in certain legal proceedings and, as required,
have accrued our estimate of the probable costs for the resolution of these
claims. These estimates have been developed in consultation with counsel and
are based upon an analysis of potential results, assuming a combination of
litigation and settlement strategies. It is possible, however, that future
results of operations for any particular period could be materially affected by
changes in our assumptions or the effectiveness of our strategies related to
these proceedings. 
 Item 2. Changes in Securities, and Use of Proceeds and Issuer Purchases of
Equity Securities On March 30, 2004, we publicly announced that our Board of Directors
authorized a share repurchase program of up to $1.0 billion effective
immediately. This share repurchase program will expire on March 30, 2005,
although prior to such time, the program may be discontinued or suspended at
any time. During the three months ended March 31, 2004, we had not repurchased
any shares. 
 Item 5. Other Information On
April 30, 2004, Lowry Mays, our Chairman and Chief Executive Officer, awoke with numbness on his left side and was admitted to the
hospital for testing. Doctors found that he had suffered a subdural hematoma.
Surgery was performed to alleviate the pressure caused by the hematoma. The
surgery was successful. His doctors expect a complete recovery. On
May 7, 2004, our Board of Directors appointed Mark P. Mays as interim
CEO, effective immediately. 
 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index on Page 27 (b) Reports on Form 8-K Filing
    
    Date
    
    Items Reported
    Financial Statements Reported8-K
    
    
    1/12/04
    
    
    Item 5 - Other
    
    None8-K
    
    
    2/25/04
    
    
    Item 12 & 7
    
    Earnings Release8-K
    
    
    3/31/04
    
    
    Item 5 - Other
    
    None
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Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. CLEAR CHANNEL COMMUNICATIONS, INC.May 10, 2004
    /s/ Randall T. MaysRandall T. MaysExecutive Vice President and
Chief Financial Officer May 10, 2004
    /s/ Herbert W. Hill, Jr.Herbert W. Hill, Jr.Senior Vice President and
Chief Accounting Officer  -26-




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INDEX TO EXHIBITS ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger dated as of October 2, 1999,
among Clear Channel, CCU Merger Sub, Inc. and AMFM Inc.
(incorporated by reference to the exhibits of Clear
Channels Current Report on Form 8-K filed October 5,
1999).2.2
    
    Agreement and Plan of Merger dated as of February 28, 2000,
among Clear Channel, CCU II Merger Sub, Inc. and SFX
Entertainment, Inc. (incorporated by reference to the
exhibits of Clear Channels Current Report on Form 8-K
filed February 29, 2000).2.3
    
    Agreement and Plan of Merger dated as of October 5, 2001,
by and among Clear Channel, CCMM Sub, Inc. and The Ackerley
Group, Inc. (incorporated by reference to the exhibits of
Clear Channels Current Report on Form 8-K filed October 9,
2001).3.1
    
    Current Articles of Incorporation of the Company
(incorporated by reference to the exhibits of the Companys
Registration Statement on Form S-3 (Reg. No. 333-33371)
dated September 9, 1997).3.2
    
    Third Amended and Restated Bylaws of the Company
(incorporated by reference to the exhibits of the Companys
Registration Statement on Form S-4 (Reg. No. 333-74196)
dated November 29, 2001).3.3
    
    Amendment to the Companys Articles of Incorporation
(incorporated by reference to the exhibits to the Companys
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998).3.4
    
    Second Amendment to Clear Channels Articles of
Incorporation (incorporated by reference to the exhibits to
Clear Channels Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999).3.5
    
    Third Amendment to Clear Channels Articles of
Incorporation (incorporated by reference to the exhibits to
Clear Channels Quarterly Report on Form 10-Q for the
quarter ended May 31, 2000).4.1
    
    Agreement Concerning Buy-Sell Agreement by and between
Clear Channel Communications, Inc., L. Lowry Mays, B.J.
McCombs, John M. Schaefer and John W. Barger, dated August
3, 1998 (incorporated by reference to the exhibits to Clear
Channels Schedule 13-D/A, dated October 10, 2002).4.2
    
    Waiver and Second Agreement Concerning Buy-Sell Agreement
by and between Clear Channel Communications, Inc., L. Lowry
Mays and B.J. McCombs, dated August 17, 1998 (incorporated
by reference to the exhibits to Clear Channels Schedule
13-D/A, dated October 10, 2002).4.3
    
    Waiver and Third Agreement Concerning Buy-Sell Agreement by
and between Clear Channel Communications, Inc., L. Lowry
Mays and B.J. McCombs, dated July 26, 2002 (incorporated by
reference to the exhibits to Clear Channels Schedule
13-D/A, dated October 10, 2002).4.4
    
    Waiver and Fourth Agreement Concerning Buy-Sell Agreement
by and between Clear Channel Communications, Inc., L. Lowry
Mays and B.J. McCombs, dated September 27, 2002
(incorporated by reference to the exhibits to Clear
Channels Schedule 13-D/A, dated October 10, 2002).4.5
    
    Buy-Sell Agreement by and between Clear Channel
Communications, Inc., L. Lowry Mays, B. J. McCombs, John M.
Schaefer and John W. Barger, dated May 31, 1977
(incorporated by reference to the exhibits of the Companys
Registration Statement on Form S-1 (Reg. No. 33-289161)
dated April 19, 1984).4.6
    
    Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New York
as Trustee (incorporated by reference to the exhibits to
the Companys Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997).
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Exhibit Number
    
    Description4.7
    
    First Supplemental Indenture dated March 30, 1998 to Senior
Indenture dated October 1, 1997, by and between the Company
and The Bank of New York, as Trustee (incorporated by
reference to the exhibits to the Companys Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998).4.8
    
    Second Supplemental Indenture dated June 16, 1998 to Senior
Indenture dated October 1, 1997, by and between Clear
Channel Communications, Inc. and the Bank of New York, as
Trustee (incorporated by reference to the exhibits to the
Companys Current Report on Form 8-K dated August 27,
1998).4.9
    
    Third Supplemental Indenture dated June 16, 1998 to Senior
Indenture dated October 1, 1997, by and between Clear
Channel Communications, Inc. and the Bank of New York, as
Trustee (incorporated by reference to the exhibits to the
Companys Current Report on Form 8-K dated August 27,
1998).4.10
    
    Fourth Supplement Indenture dated November 24, 1999 to
Senior Indenture dated October 1, 1997, by and between
Clear Channel and The Bank of New York as Trustee
(incorporated by reference to the exhibits of the Companys
Annual Report on Form 10-K for the year ended December 31,
1999).4.11
    
    Fifth Supplemental Indenture dated June 21, 2000, to Senior
Indenture dated October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank of New York, as
Trustee (incorporated by reference to the exhibits of Clear
Channels registration statement on Form S-3 (Reg. No.
333-42028) dated July 21, 2000).4.12
    
    Sixth Supplemental Indenture dated June 21, 2000, to Senior
Indenture dated October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank of New York, as
Trustee (incorporated by reference to the exhibits of Clear
Channels registration statement on Form S-3 (Reg. No.
333-42028) dated July 21, 2000).4.13
    
    Seventh Supplemental Indenture dated July 7, 2000, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
of Clear Channels registration statement on Form S-3 (Reg.
No. 333-42028) dated July 21, 2000).4.14
    
    Eighth Supplemental Indenture dated September 12, 2000, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000).4.15
    
    Ninth Supplemental Indenture dated September 12, 2000, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000).4.16
    
    Tenth Supplemental Indenture dated October 26, 2001, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001).4.17
    
    Eleventh Supplemental Indenture dated January 9, 2003, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New York
as Trustee (incorporated by reference to the exhibits to
Clear Channels Annual Report on Form 10-K for the year
ended December 31, 2002).4.18
    
    Twelfth Supplemental Indenture dated March 17, 2003, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Current Report on Form 8-K dated March
18, 2003).
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Exhibit Number
    
    Description4.19
    
    Thirteenth Supplemental Indenture dated May 1, 2003, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Current Report on Form 8-K dated May 2,
2003).4.20
    
    Fourteenth Supplemental Indenture dated May 21, 2003, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Current Report on Form 8-K dated May 22,
2003).4.21
    
    Fifteenth Supplemental Indenture dated November 5, 2003, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Current Report on Form 8-K dated
November 14, 2003).4.22
    
    Sixteenth Supplemental Indenture dated December 9, 2003, to
Senior Indenture dated October 1, 1997, by and between
Clear Channel Communications, Inc. and The Bank of New
York, as Trustee (incorporated by reference to the exhibits
to Clear Channels Current Report on Form 8-K dated
December 10, 2003).4.23
    
    Termination Agreement by and among Clear Channel
Communications, Inc., L. Lowry Mays, Thomas O. Hicks and
certain other shareholders affiliated with Mr. Hicks dated
March 10, 2004, terminating that certain Shareholders
Agreement dated October 2, 1999 (incorporated by reference
to the exhibits of Clear Channels Annual Report on Form
10-K for the year ended December 31, 2003).4.24
    
    Shareholders Agreement by and between Clear Channel
Communications, Inc. and L. Lowry Mays dated March 10, 2004
(incorporated by reference to the exhibits of Clear
Channels Annual Report on Form 10-K for the year ended
December 31, 2003).4.25
    
    Shareholders Agreement by and among Clear Channel
Communications, Inc., Thomas O. Hicks and certain other
shareholders affiliated with Mr. Hicks dated March 10, 2004
(incorporated by reference to the exhibits of Clear
Channels Annual Report on Form10-K for the year ended
December 31, 2003).10.1
    
    Employment Agreement by and between Clear Channel
Broadcasting, Inc. and Paul Meyer dated February 18, 2004
(incorporated by reference to the exhibits of Clear
Channels Annual Report on Form 10-K for the year ended
December 31, 2003).10.2
    
    Employment Agreement by and between Clear Channel
Broadcasting, Inc. and John Hogan dated February 18, 2004
(incorporated by reference to the exhibits of Clear
Channels Annual Report on Form 10-K for the year ended
December 31, 2003).10.3
    
    Amendment to Employment Agreement by and between Clear
Channel Communications, Inc. and Brian E. Becker dated
February 12, 2004 (incorporated by reference to the
exhibits of Clear Channels Annual Report on Form 10-K for
the year ended December 31, 2003).11
    
    Statement re: Computation of Per Share Earnings.12
    
    Statement re: Computation of Ratios.31.1
    
    Certification of Principal Executive Officer Pursuant to
Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act
of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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Exhibit Number
    
    Description32.1
    
    Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 -30-