##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
 FOR THE QUARTER ENDED JUNE 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM
 Commission file number 1-9645
 CLEAR CHANNEL COMMUNICATIONS, INC.
  Texas
    
    74-1787539(State of Incorporation)
    
    (I.R.S. Employer Identification No.)200 East Basse RoadSan Antonio, Texas
    
    78209(Address of principal executive offices)
    
    (Zip Code)
 (210) 822-2828
  þ o
  þ o o
 o þ
  Class
    
    Outstanding at August 8, 2006Common Stock, $.10 par value
    
    496,296,787




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##### 



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 INDEX
 Page No.Part I  Financial InformationItem 1. Unaudited Financial StatementsConsolidated Balance Sheets at June 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations for the six and three months ended June 30, 2006
and 2005
    
    
    5Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2006 and 2005
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31Part II  Other InformationItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 6. Exhibits
    
    
    33Signatures
    
    
    34Index to Exhibits
    
    
    35Statement Re: Computation of Per Share EarningsStatement Re: Computation of RatiosCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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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)
 June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)
    
    
    (Audited)CURRENT ASSETSCash and cash equivalents
    
    $
    104,691
    
    
    $
    82,786Accounts receivable, net of allowance of $50,598 in 2006
and $47,061 in 2005
    
    
    1,596,941
    
    
    
    1,505,650Prepaid expenses
    
    
    103,727
    
    
    
    114,452Other current assets
    
    
    304,658
    
    
    
    278,294Income taxes receivable
    
    
    205,761
    
    
    
    417,112Total Current Assets
    
    
    2,315,778
    
    
    
    2,398,294PROPERTY, PLANT AND EQUIPMENTLand, buildings and improvements
    
    
    897,515
    
    
    
    863,133Structures
    
    
    3,449,016
    
    
    
    3,327,326Towers, transmitters and studio equipment
    
    
    879,185
    
    
    
    881,070Furniture and other equipment
    
    
    561,710
    
    
    
    599,296Construction in progress
    
    
    96,421
    
    
    
    91,7895,883,847
    
    
    
    5,762,614Less accumulated depreciation
    
    
    2,649,974
    
    
    
    2,506,9653,233,873
    
    
    
    3,255,649INTANGIBLE ASSETSDefinite-lived intangibles, net
    
    
    483,935
    
    
    
    480,790Indefinite-lived intangibles  licenses
    
    
    4,327,069
    
    
    
    4,312,570Indefinite-lived intangibles  permits
    
    
    264,117
    
    
    
    207,921Goodwill
    
    
    7,284,987
    
    
    
    7,111,948OTHER ASSETSNotes receivable
    
    
    9,900
    
    
    
    8,745Restricted cash
    
    
    81,333
    
    
    
    Investments in, and advances to, nonconsolidated affiliates
    
    
    310,012
    
    
    
    300,223Other assets
    
    
    272,429
    
    
    
    302,655Other investments
    
    
    229,579
    
    
    
    324,581Total Assets
    
    $
    18,813,012
    
    
    $
    18,703,376
  -3-




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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS EQUITY
(In thousands)
 June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)
    
    
    (Audited)CURRENT LIABILITIESAccounts payable
    
    $
    134,927
    
    
    $
    250,563Accrued expenses
    
    
    823,227
    
    
    
    731,105Accrued interest
    
    
    110,664
    
    
    
    97,515Current portion of long-term debt
    
    
    1,109,466
    
    
    
    891,185Deferred income
    
    
    172,677
    
    
    
    116,670Other current liabilities
    
    
    16,712
    
    
    
    20,275Total Current Liabilities
    
    
    2,367,673
    
    
    
    2,107,313Long-term debt
    
    
    6,802,245
    
    
    
    6,155,363Other long-term obligations
    
    
    84,141
    
    
    
    119,655Deferred income taxes
    
    
    628,622
    
    
    
    528,259Other long-term liabilities
    
    
    729,234
    
    
    
    675,962Minority interest
    
    
    311,173
    
    
    
    290,362Commitment and contingent liabilities (Note 7)SHAREHOLDERS EQUITYCommon Stock
    
    
    50,161
    
    
    
    53,829Additional paid-in capital
    
    
    26,883,315
    
    
    
    27,945,725Retained deficit
    
    
    (19,266,610
    )
    
    
    (19,371,411
    )Accumulated other comprehensive income
    
    
    226,356
    
    
    
    201,928Cost of shares held in treasury
    
    
    (3,298
    )
    
    
    (3,609
    )Total Shareholders Equity
    
    
    7,889,924
    
    
    
    8,826,462Total Liabilities and Shareholders Equity
    
    $
    18,813,012
    
    
    $
    18,703,376
  -4-




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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 (In thousands, except per share data)
 Six Months Ended June 30,
    
    
    Three Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue
    
    $
    3,355,029
    
    
    $
    3,170,542
    
    
    $
    1,850,647
    
    
    $
    1,722,732Operating expenses:Direct operating expenses (includes share-based payments of
$8,698, $212, $4,382 and $0 for the six and three months
ended June 30, 2006 and 2005, respectively, and excludes
depreciation and amortization)
    
    
    1,265,556
    
    
    
    1,199,500
    
    
    
    652,770
    
    
    
    611,418Selling, general and administrative expenses (includes
share-based payments of $8,926, $0, $4,476 and $0 for the
six and three months ended June 30, 2006 and 2005,
respectively, and excludes depreciation and amortization)
    
    
    985,490
    
    
    
    937,956
    
    
    
    512,342
    
    
    
    481,202Depreciation and amortization
    
    
    309,548
    
    
    
    308,103
    
    
    
    158,258
    
    
    
    152,708Corporate expenses (includes share-based payments of
$5,735, $2,706, $2,332 and $1,417 for the six and three
months ended June 30, 2006 and 2005, respectively, and
excludes depreciation and amortization)
    
    
    91,015
    
    
    
    78,341
    
    
    
    49,491
    
    
    
    42,374Gain (loss) on disposition of assets  net
    
    
    47,085
    
    
    
    5,816
    
    
    
    (425
    )
    
    
    4,891Operating income
    
    
    750,505
    
    
    
    652,458
    
    
    
    477,361
    
    
    
    439,921Interest expense
    
    
    237,674
    
    
    
    211,707
    
    
    
    123,298
    
    
    
    105,058Gain (loss) on marketable securities
    
    
    (3,324
    )
    
    
    537
    
    
    
    (1,000
    )
    
    
    1,610Equity in earnings of nonconsolidated affiliates
    
    
    16,486
    
    
    
    17,595
    
    
    
    9,577
    
    
    
    11,962Other income (expense)  net
    
    
    (5,216
    )
    
    
    9,145
    
    
    
    (4,633
    )
    
    
    7,705Income before income taxes, minority interest, and
discontinued operations
    
    
    520,777
    
    
    
    468,028
    
    
    
    358,007
    
    
    
    356,140Income tax benefit (expense):Current
    
    
    (114,103
    )
    
    
    (117,968
    )
    
    
    (110,830
    )
    
    
    (107,938
    )Deferred
    
    
    (99,416
    )
    
    
    (66,904
    )
    
    
    (35,953
    )
    
    
    (32,738
    )Income tax benefit (expense)
    
    
    (213,519
    )
    
    
    (184,872
    )
    
    
    (146,783
    )
    
    
    (140,676
    )Minority interest income (expense), net of tax
    
    
    (12,956
    )
    
    
    (2,803
    )
    
    
    (13,736
    )
    
    
    (2,229
    )Income before discontinued operations
    
    
    294,302
    
    
    
    280,353
    
    
    
    197,488
    
    
    
    213,235Income (loss) from discontinued operations, net
    
    
    
    
    
    
    (11,739
    )
    
    
    
    
    
    
    7,497Net income
    
    $
    294,302
    
    
    $
    268,614
    
    
    $
    197,488
    
    
    $
    220,732Other comprehensive income (loss), net of tax:Foreign currency translation adjustments
    
    
    26,386
    
    
    
    (114,568
    )
    
    
    17,297
    
    
    
    (61,339
    )Unrealized gain (loss) on securities and derivatives:Unrealized holding gain (loss) on marketable securities
    
    
    (62,959
    )
    
    
    (18,973
    )
    
    
    (38,901
    )
    
    
    12,058Unrealized holding gain (loss) on cash flow derivatives
    
    
    61,001
    
    
    
    22,157
    
    
    
    35,437
    
    
    
    (7,591
    )Adjustment for (gain) loss included in net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income (loss)
    
    $
    318,730
    
    
    $
    157,230
    
    
    $
    211,321
    
    
    $
    163,860Net income per common share:Income before discontinued operations  Basic
    
    $
    .58
    
    
    $
    .51
    
    
    $
    .39
    
    
    $
    .39Discontinued operations  Basic
    
    
    
    
    
    
    (.02
    )
    
    
    
    
    
    
    .02Net income  Basic
    
    $
    .58
    
    
    $
    .49
    
    
    $
    .39
    
    
    $
    .41Income before discontinued operations  Diluted
    
    $
    .58
    
    
    $
    .51
    
    
    $
    .39
    
    
    $
    .39Discontinued operations  Diluted
    
    
    
    
    
    
    (.02
    )
    
    
    
    
    
    
    .01Net income  Diluted
    
    $
    .58
    
    
    $
    .49
    
    
    $
    .39
    
    
    $
    .40Dividends declared per share
    
    $
    .375
    
    
    $
    .3125
    
    
    $
    .1875
    
    
    $
    .1875
  -5-




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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (In thousands)
 Six Months Ended June 30,2006
    
    
    2005Cash Flows from operating activities:Net income
    
    $
    294,302
    
    
    $
    268,614Add: Loss from discontinued operations, net
    
    
    
    
    
    
    11,739294,302
    
    
    
    280,353Reconciling Items:Depreciation and amortization
    
    
    309,548
    
    
    
    308,103Deferred taxes
    
    
    99,416
    
    
    
    66,904(Gain) loss on disposal of assets
    
    
    (47,085
    )
    
    
    (5,816
    )(Gain) loss forward exchange contract
    
    
    11,406
    
    
    
    4,731(Gain) loss on trading securities
    
    
    (8,082
    )
    
    
    (5,268
    )Other reconciling items  net
    
    
    33,035
    
    
    
    (17,148
    )Changes in operating assets and liabilities:Federal income tax refund
    
    
    133,336
    
    
    
    Decrease in income taxes receivable
    
    
    82,010
    
    
    
    Increase in income taxes payable
    
    
    
    
    
    
    72,439Changes in other operating assets and liabilities,
net of effects of acquisitions
    
    
    (79,509
    )
    
    
    (84,215
    )Net cash provided by operating activities
    
    
    828,377
    
    
    
    620,083Cash flows from investing activities:Increase in restricted cash
    
    
    (81,333
    )
    
    
    Decrease (increase) in notes receivable  net
    
    
    (1,155
    )
    
    
    192Decrease (increase) in investments in and advances
to nonconsolidated affiliates  net
    
    
    2,731
    
    
    
    4,859Purchases of investments
    
    
    (576
    )
    
    
    (207
    )Proceeds from sale of investments
    
    
    
    
    
    
    370Purchases of property, plant and equipment
    
    
    (155,734
    )
    
    
    (133,276
    )Proceeds from disposal of assets
    
    
    60,568
    
    
    
    13,446Acquisition of operating assets, net of cash acquired
    
    
    (168,807
    )
    
    
    (82,919
    )Decrease (increase) in other  net
    
    
    (66,905
    )
    
    
    15,870Net cash used in investing activities
    
    
    (411,211
    )
    
    
    (181,665
    )Cash flows from financing activities:Draws on credit facilities
    
    
    1,943,270
    
    
    
    993,188Payments on credit facilities
    
    
    (1,509,325
    )
    
    
    (436,946
    )Proceeds from long-term debt
    
    
    506,159
    
    
    
    Payments on long-term debt
    
    
    (49,287
    )
    
    
    Payments for purchase of common shares
    
    
    (1,103,737
    )
    
    
    (859,140
    )Proceeds from exercise of stock options, stock
purchase plan, common stock warrants, and other
    
    
    14,036
    
    
    
    18,586Dividends paid
    
    
    (196,377
    )
    
    
    (139,760
    )Net cash used in financing activities
    
    
    (395,261
    )
    
    
    (424,072
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    78,300Net cash used in investing activities
    
    
    
    
    
    
    (54,604
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    Net cash provided by discontinued operations
    
    
    
    
    
    
    23,696Net increase in cash and cash equivalents
    
    
    21,905
    
    
    
    38,042Cash and cash equivalents at beginning of period
    
    
    82,786
    
    
    
    31,339Cash and cash equivalents at end of period
    
    $
    104,691
    
    
    $
    69,381
  -6-




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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  Preparation of Interim Financial Statements
   Certain Reclassifications
  (In millions)
    
    Six Months
    
    Three MonthsRevenue (including sales to other Company
segments of $0.5 million and $0.4 million for
the six and three months ended June 30,
respectively)
    
    $
    1,180.2
    
    
    $
    739.4Income (loss) before income taxes
    
    $
    (19.4
    )
    
    $
    12.4Income tax benefit (expense)
    
    $
    7.7
    
    
    $
    (4.9
    )
 Recent Accounting Pronouncements
 Accounting for Certain Hybrid Financial Instruments Accounting for Derivative Instruments and Hedging Activities Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities
 Accounting for Uncertainty in Income Taxes 
an interpretation of FASB Statement 109
 -7-




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##### Table of Contents



Share-Based Payment Accounting for Stock Issued to Employees Accounting
for Stock Based Compensation
   -8-




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##### Table of Contents



Six Months
    
    
    Three MonthsEnded
    
    
    Ended(In thousands, except per share data)
    
    June 30, 2005
    
    
    June 30, 2005Income before discontinued operations:Reported
    
    $
    280,353
    
    
    $
    213,235Add: Stock-based employee compensation expense
included in reported net income, net of related tax
effects
    
    
    1,765
    
    
    
    857Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects
    
    
    15,100
    
    
    
    6,536Pro Forma
    
    $
    267,018
    
    
    $
    207,556Income (loss) from discontinued operations, net:Reported
    
    $
    (11,739
    )
    
    $
    7,497Add: Stock-based employee compensation expense
included in reported net income, net of related tax
effects
    
    
    315
    
    
    
    156Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects
    
    
    2,639
    
    
    
    1,146Pro Forma
    
    $
    (14,063
    )
    
    $
    6,507Income before discontinued operations per common share:Basic:Reported
    
    $
    .51
    
    
    $
    .39Pro Forma
    
    $
    .48
    
    
    $
    .38Diluted:Reported
    
    $
    .51
    
    
    $
    .39Pro Forma
    
    $
    .48
    
    
    $
    .38Discontinued operations, net per common share:Basic:Reported
    
    $
    (.02
    )
    
    $
    .02Pro Forma
    
    $
    (.03
    )
    
    $
    .01Diluted:Reported
    
    $
    (.02
    )
    
    $
    .01Pro Forma
    
    $
    (.03
    )
    
    $
    .01
 -9-




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##### Table of Contents



2006
    
    2005Expected volatility
    
    
    25%

    
    
    25%Expected life in years
    
    
    5.0  7.5
    
    
    
    5.0 - 7.5Risk-free interest rate
    
    
    4.61% - 5.1
    %
    
    
    3.76% - 4.15
    %Dividend yield
    
    
    2.61% - 2.65
    %
    
    
    1.46% - 2.30
    %
  Weighted Average
    
    
    AggregateRemaining
    
    
    Intrinsic(In thousands, except per share data)
    
    Options
    
    
    Price
    
    
    Contractual Term
    
    
    ValueOutstanding, beginning of year
    
    
    42,696
    
    
    $
    41.34Granted
    
    
    16
    
    
    
    28.68Exercised (a)
    
    
    (787
    )
    
    
    17.89Forfeited
    
    
    (707
    )
    
    
    36.21Expired
    
    
    (2,244
    )
    
    
    51.87Outstanding, June 30
    
    
    38,974
    
    
    
    41.30
    
    
    
    3.6
    
    
    $
    40,268Exercisable, June 30
    
    
    28,614
    
    
    
    
    
    
    
    2.7
    
    
    $
    38,135Weighted average fair value per option granted
    
    $
    7.18
 
 (a)
    
    Cash received from option exercises for the six months ended June 30, 2006 and 2005 was $14.1
million and $14.8 million, respectively. The Company received an income tax benefit of $0.9
million and $0.05 million relating to the options exercised during the six months ended June
30, 2006 and 2005, respectively.   Weighted AverageGrant Date(In thousands, except per share data)
    
    Options
    
    Fair ValueNonvested, beginning of year
    
    
    13,086
    
    
    $
    15.03Granted
    
    
    16
    
    
    
    7.18Vested
    
    
    (2,035
    )
    
    
    25.86Forfeited
    
    
    (707
    )
    
    
    14.51Nonvested, June 30
    
    
    10,360
    
    
    
    12.93
 -10-




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##### Table of Contents



(In thousands of shares)
 WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedOutstanding
    
    
    Remaining
    
    
    Average
    
    
    Exercisable
    
    
    Averageas of
    
    
    Contractual
    
    
    Exercise
    
    
    as of
    
    
    ExerciseRange of Exercise Prices

    
    6/30/06
    
    
    Life
    
    
    Price
    
    
    6/30/06
    
    
    Price$
    .01
    
    
    
    
    
    
    $
    10.00
    
    
    
    690
    
    
    
    3.2
    
    
    $
    5.90
    
    
    
    690
    
    
    $
    5.9010.01
    
    
    
    
    
    
    
    20.00
    
    
    
    294
    
    
    
    0.6
    
    
    
    16.43
    
    
    
    294
    
    
    
    16.4320.01
    
    
    
    
    
    
    
    30.00
    
    
    
    3,252
    
    
    
    2.0
    
    
    
    25.76
    
    
    
    3,111
    
    
    
    25.7130.01
    
    
    
    
    
    
    
    40.00
    
    
    
    10,531
    
    
    
    6.0
    
    
    
    32.54
    
    
    
    2,369
    
    
    
    33.1340.01
    
    
    
    
    
    
    
    50.00
    
    
    
    18,450
    
    
    
    2.8
    
    
    
    44.96
    
    
    
    16,437
    
    
    
    45.0650.01
    
    
    
    
    
    
    
    60.00
    
    
    
    3,661
    
    
    
    3.5
    
    
    
    55.34
    
    
    
    3,617
    
    
    
    55.3760.01
    
    
    
    
    
    
    
    70.00
    
    
    
    1,516
    
    
    
    2.3
    
    
    
    64.10
    
    
    
    1,516
    
    
    
    64.1070.01
    
    
    
    
    
    
    
    80.00
    
    
    
    529
    
    
    
    3.8
    
    
    
    76.57
    
    
    
    529
    
    
    
    76.5780.01
    
    
    
    
    
    
    
    91.35
    
    
    
    51
    
    
    
    0.7
    
    
    
    85.99
    
    
    
    51
    
    
    
    85.9938,974
    
    
    
    3.6
    
    
    
    41.30
    
    
    
    28,614
    
    
    
    43.69
 Restricted Stock Awards
   (In thousands, except per share data)
 2006Awards
    
    
    PriceOutstanding, beginning of year
    
    
    2,452
    
    
    $
    32.62Granted
    
    
    7
    
    
    
    28.49Vested (restriction lapsed)
    
    
    (2
    )
    
    
    28.37Forfeited
    
    
    (66
    )
    
    
    22.03Outstanding, June 30
    
    
    2,391
    
    
    
    32.91
 Subsidiary Share-Based Awards
    - 11 -




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##### Table of Contents



Expected volatility factors
    
    
    27
    %Expected life in years
    
    
    5.0  7.5Risk-free interest rate
    
    
    4.58% - 5.08
    %Dividend yield
    
    
    0
    %
  (In thousands, except per share data)
 Weighted Average
    
    
    AggregateRemaining
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Contractual Term
    
    
    ValueOutstanding, beginning of year
    
    
    8,509
    
    
    $
    24.05Granted
    
    
    177
    
    
    
    19.85Exercised
    
    
    (1
    )
    
    
    20.85Forfeited
    
    
    (170
    )
    
    
    21.66Expired
    
    
    (371
    )
    
    
    32.29Outstanding, June 30
    
    
    8,144
    
    
    
    23.61
    
    
    
    4.7
    
    
    $
    21,531Exercisable, June 30
    
    
    3,150
    
    
    
    
    
    
    
    2.5
    
    
    $
    217Weighted average fair value per option granted
    
    $
    6.55
  (In thousands, except per share data)
 Weighted AverageGrant DateOptions
    
    
    Fair ValueNonvested, beginning of year
    
    
    5,634
    
    
    $
    4.56Granted
    
    
    177
    
    
    
    6.55Vested
    
    
    (647
    )
    
    
    .87Forfeited
    
    
    (170
    )
    
    
    4.06Nonvested, June 30
    
    
    4,994
    
    
    
    5.15
  (In thousands of shares)
 WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedOutstanding
    
    
    Remaining
    
    
    Average
    
    
    Exercisable
    
    
    Averageas of
    
    
    Contractual
    
    
    Exercise
    
    
    as of
    
    
    ExerciseRange of Exercise Prices

    
    6/30/06
    
    
    Life
    
    
    Price
    
    
    6/30/06
    
    
    Price$
    15.01
    
    
    
    
    
    
    $
    20.00
    
    
    
    3,435
    
    
    
    6.8
    
    
    $
    17.97
    
    
    
    56
    
    
    $
    17.4620.01
    
    
    
    
    
    
    
    25.00
    
    
    
    1,121
    
    
    
    4.5
    
    
    
    21.07
    
    
    
    233
    
    
    
    21.5225.01
    
    
    
    
    
    
    
    30.00
    
    
    
    2,213
    
    
    
    3.1
    
    
    
    26.12
    
    
    
    1,573
    
    
    
    26.0230.01
    
    
    
    
    
    
    
    35.00
    
    
    
    759
    
    
    
    2.7
    
    
    
    32.74
    
    
    
    672
    
    
    
    32.9035.01
    
    
    
    
    
    
    
    40.00
    
    
    
    476
    
    
    
    .7
    
    
    
    37.87
    
    
    
    476
    
    
    
    37.8740.01
    
    
    
    
    
    
    
    45.00
    
    
    
    101
    
    
    
    4.1
    
    
    
    42.80
    
    
    
    101
    
    
    
    42.8045.01
    
    
    
    
    
    
    
    50.00
    
    
    
    39
    
    
    
    .5
    
    
    
    49.52
    
    
    
    39
    
    
    
    49.528,144
    
    
    
    4.7
    
    
    
    23.61
    
    
    
    3,150
    
    
    
    29.62
 - 12 -




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##### Table of Contents



(In thousands, except per share data)
 2006Awards
    
    
    PriceOutstanding, beginning of year
    
    
    236
    
    
    $
    18.00Granted
    
    
    6
    
    
    
    19.87Vested (restriction lapsed)
    
    
    
    
    
    
    Forfeited
    
    
    (9
    )
    
    
    18.02Outstanding, June 30
    
    
    233
    
    
    
    18.04
 Unrecognized share-based compensation cost
     (In thousands)
 June 30, 2006
    
    
    December 31, 2005Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationTransit, street
furniture, and other
outdoor contractual
rights
    
    $
    712,796
    
    
    $
    470,752
    
    
    $
    651,455
    
    
    $
    408,018Talent contracts
    
    
    125,270
    
    
    
    107,194
    
    
    
    202,161
    
    
    
    175,553Representation contracts
    
    
    320,176
    
    
    
    153,475
    
    
    
    313,004
    
    
    
    133,987Other
    
    
    130,328
    
    
    
    73,214
    
    
    
    135,782
    
    
    
    104,054Total
    
    $
    1,288,570
    
    
    $
    804,635
    
    
    $
    1,302,402
    
    
    $
    821,612
  (In thousands)
 2007
    
    $
    91,7172008
    
    
    53,0942009
    
    
    46,2642010
    
    
    36,5102011
    
    
    28,701
   - 13 -




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##### Table of Contents



Goodwill
  (In thousands)
 Americas
    
    
    InternationalRadio
    
    
    Outdoor
    
    
    Outdoor
    
    
    Other
    
    
    TotalBalance as of December 31, 2005
    
    $
    6,321,394
    
    
    $
    405,964
    
    
    $
    343,611
    
    
    $
    40,979
    
    
    $
    7,111,948Acquisitions
    
    
    31,096
    
    
    
    63,136
    
    
    
    51,904
    
    
    
    7,187
    
    
    
    153,323Dispositions
    
    
    (9,008
    )
    
    
    (57
    )
    
    
    
    
    
    
    
    
    
    
    (9,065
    )Foreign currency
    
    
    
    
    
    
    401
    
    
    
    28,862
    
    
    
    
    
    
    
    29,263Adjustments
    
    
    (914
    )
    
    
    109
    
    
    
    317
    
    
    
    6
    
    
    
    (482
    )Balance as of June 30, 2006
    
    $
    6,342,568
    
    
    $
    469,553
    
    
    $
    424,694
    
    
    $
    48,172
    
    
    $
    7,284,987
    - 14 -




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##### Table of Contents



 Foreign Currency Hedges: Measuring the Amount of
Ineffectiveness in a Net Investment Hedge
  Company Share Repurchase Program
  Debt Offering
  Acquisitions
  Disposition of Assets
  Recent Legal Proceedings
   - 15 -




---



##### Table of Contents



- 16 -




---



##### Table of Contents



(In thousands)
 Corporateexpenses andAmericas
    
    
    International
    
    
    
    
    
    
    gain (loss) onRadio
    
    
    Outdoor
    
    
    Outdoor
    
    
    
    
    
    
    disposition ofBroadcasting
    
    
    Advertising
    
    
    Advertising
    
    
    Other
    
    
    assets - net
    
    
    Eliminations
    
    
    ConsolidatedSix Months Ended June 30, 2006Revenue
    
    $
    1,792,419
    
    
    $
    609,349
    
    
    $
    737,423
    
    
    $
    279,588
    
    
    $
    
    
    
    $
    (63,750
    )
    
    $
    3,355,029Direct operating expenses
    
    
    502,896
    
    
    
    248,933
    
    
    
    437,290
    
    
    
    109,371
    
    
    
    
    
    
    
    (32,934
    )
    
    
    1,265,556Selling, general and
administrative expenses
    
    
    631,626
    
    
    
    98,817
    
    
    
    168,149
    
    
    
    117,714
    
    
    
    
    
    
    
    (30,816
    )
    
    
    985,490Depreciation and amortization
    
    
    69,416
    
    
    
    83,485
    
    
    
    113,662
    
    
    
    33,604
    
    
    
    9,381
    
    
    
    
    
    
    
    309,548Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,015
    
    
    
    
    
    
    
    91,015Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,085
    
    
    
    
    
    
    
    47,085Operating income (loss)
    
    $
    588,481
    
    
    $
    178,114
    
    
    $
    18,322
    
    
    $
    18,899
    
    
    $
    (53,311
    )
    
    $
    
    
    
    $
    750,505Intersegment revenues
    
    $
    20,589
    
    
    $
    4,982
    
    
    $
    
    
    
    $
    38,179
    
    
    $
    
    
    
    $
    
    
    
    $
    63,750Identifiable assets
    
    $
    12,254,624
    
    
    $
    2,629,819
    
    
    $
    2,337,087
    
    
    $
    1,062,886
    
    
    $
    528,596
    
    
    $
    
    
    
    $
    18,813,012Capital expenditures
    
    $
    45,002
    
    
    $
    31,536
    
    
    $
    73,808
    
    
    $
    4,430
    
    
    $
    958
    
    
    $
    
    
    
    $
    155,734Three Months Ended June 30, 2006Revenue
    
    $
    983,523
    
    
    $
    335,247
    
    
    $
    413,156
    
    
    $
    150,235
    
    
    $
    
    
    
    $
    (31,514
    )
    
    $
    1,850,647Direct operating expenses
    
    
    254,939
    
    
    
    128,922
    
    
    
    228,675
    
    
    
    55,134
    
    
    
    
    
    
    
    (14,900
    )
    
    
    652,770Selling, general and
administrative expenses
    
    
    333,371
    
    
    
    50,623
    
    
    
    85,538
    
    
    
    59,424
    
    
    
    
    
    
    
    (16,614
    )
    
    
    512,342Depreciation and amortization
    
    
    35,539
    
    
    
    41,253
    
    
    
    59,574
    
    
    
    16,883
    
    
    
    5,009
    
    
    
    
    
    
    
    158,258Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,491
    
    
    
    
    
    
    
    49,491Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (425
    )
    
    
    
    
    
    
    (425
    )Operating income (loss)
    
    $
    359,674
    
    
    $
    114,449
    
    
    $
    39,369
    
    
    $
    18,794
    
    
    $
    (54,925
    )
    
    $
    
    
    
    $
    477,361Intersegment revenues
    
    $
    9,646
    
    
    $
    3,161
    
    
    $
    
    
    
    $
    18,707
    
    
    $
    
    
    
    $
    
    
    
    $
    31,514Six Months Ended June 30, 2005Revenue
    
    $
    1,705,491
    
    
    $
    568,944
    
    
    $
    694,524
    
    
    $
    258,233
    
    
    $
    
    
    
    $
    (56,650
    )
    
    $
    3,170,542Direct operating expenses
    
    
    462,888
    
    
    
    237,045
    
    
    
    421,537
    
    
    
    104,481
    
    
    
    
    
    
    
    (26,451
    )
    
    
    1,199,500Selling, general and
administrative expenses
    
    
    602,748
    
    
    
    91,151
    
    
    
    165,762
    
    
    
    108,494
    
    
    
    
    
    
    
    (30,199
    )
    
    
    937,956Depreciation and amortization
    
    
    70,124
    
    
    
    86,091
    
    
    
    108,737
    
    
    
    33,680
    
    
    
    9,471
    
    
    
    
    
    
    
    308,103Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,341
    
    
    
    
    
    
    
    78,341Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,816
    
    
    
    
    
    
    
    5,816Operating income (loss)
    
    $
    569,731
    
    
    $
    154,657
    
    
    $
    (1,512
    )
    
    $
    11,578
    
    
    $
    (81,996
    )
    
    $
    
    
    
    $
    652,458Intersegment revenues
    
    $
    18,156
    
    
    $
    4,471
    
    
    $
    
    
    
    $
    34,023
    
    
    $
    
    
    
    $
    
    
    
    $
    56,650Identifiable assets
    
    $
    12,296,650
    
    
    $
    2,506,253
    
    
    $
    2,012,448
    
    
    $
    1,189,501
    
    
    $
    295,664
    
    
    $
    
    
    
    $
    18,300,516Capital expenditures
    
    $
    46,566
    
    
    $
    33,281
    
    
    $
    42,927
    
    
    $
    7,067
    
    
    $
    3,435
    
    
    $
    
    
    
    $
    133,276
 - 17 -




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##### Table of Contents



(In thousands)
 Corporateexpenses andAmericas
    
    
    International
    
    
    
    
    
    
    gain (loss) onRadio
    
    
    Outdoor
    
    
    Outdoor
    
    
    
    
    
    
    disposition ofBroadcasting
    
    
    Advertising
    
    
    Advertising
    
    
    Other
    
    
    assets - net
    
    
    Eliminations
    
    
    ConsolidatedThree Months Ended June 30, 2005Revenue
    
    $
    931,929
    
    
    $
    315,094
    
    
    $
    369,415
    
    
    $
    135,792
    
    
    $
    
    
    
    $
    (29,498
    )
    
    $
    1,722,732Direct operating expenses
    
    
    237,492
    
    
    
    120,374
    
    
    
    212,310
    
    
    
    53,897
    
    
    
    
    
    
    
    (12,655
    )
    
    
    611,418Selling, general and
administrative expenses
    
    
    316,725
    
    
    
    46,226
    
    
    
    81,090
    
    
    
    54,004
    
    
    
    
    
    
    
    (16,843
    )
    
    
    481,202Depreciation and amortization
    
    
    34,430
    
    
    
    42,988
    
    
    
    53,574
    
    
    
    16,930
    
    
    
    4,786
    
    
    
    
    
    
    
    152,708Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,374
    
    
    
    
    
    
    
    42,374Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,891
    
    
    
    
    
    
    
    4,891Operating income (loss)
    
    $
    343,282
    
    
    $
    105,506
    
    
    $
    22,441
    
    
    $
    10,961
    
    
    $
    (42,269
    )
    
    $
    
    
    
    $
    439,921Intersegment revenues
    
    $
    9,750
    
    
    $
    2,791
    
    
    $
    
    
    
    $
    16,957
    
    
    $
    
    
    
    $
    
    
    
    $
    29,498
       - 18 -




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Executive Summary
  Share-Based Payment
  (In millions)
 Three Months
    
    Six MonthsRadio BroadcastingDirect Operating Expenses
    
    $
    2.8
    
    
    $
    5.6SG&A
    
    
    3.5
    
    
    
    7.0Americas Outdoor AdvertisingDirect Operating Expenses
    
    $
    0.9
    
    
    $
    1.7SG&A
    
    
    0.3
    
    
    
    0.6International Outdoor AdvertisingDirect Operating Expenses
    
    $
    0.2
    
    
    $
    0.4SG&A
    
    
    0.1
    
    
    
    0.2OtherDirect Operating Expenses
    
    $
    0.5
    
    
    $
    1.0SG&A
    
    
    0.5
    
    
    
    1.1Corporate
    
    $
    2.3
    
    
    $
    5.7
 Format of Presentation
   - 19 -




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##### Table of Contents



Radio Broadcasting
      Americas and International Outdoor Advertising
    - 20 -




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##### Table of Contents



(In thousands)
 Three Months Ended June 30,
    
    
    %

    
    Six Months Ended June 30,
    
    
    %2006
    
    
    2005
    
    
    Change

    
    2006
    
    
    2005
    
    
    ChangeRevenue
    
    $
    1,850,647
    
    
    $
    1,722,732
    
    
    
    7
    %
    
    $
    3,355,029
    
    
    $
    3,170,542
    
    
    
    6
    %Operating expenses:Direct operating expenses
    
    
    652,770
    
    
    
    611,418
    
    
    
    7
    %
    
    
    1,265,556
    
    
    
    1,199,500
    
    
    
    6
    %Selling, general and administrative expenses
    
    
    512,342
    
    
    
    481,202
    
    
    
    6
    %
    
    
    985,490
    
    
    
    937,956
    
    
    
    5
    %Depreciation and amortization
    
    
    158,258
    
    
    
    152,708
    
    
    
    4
    %
    
    
    309,548
    
    
    
    308,103
    
    
    
    0
    %Corporate expenses
    
    
    49,491
    
    
    
    42,374
    
    
    
    17
    %
    
    
    91,015
    
    
    
    78,341
    
    
    
    16
    %Gain (loss) on disposition of assets  net
    
    
    (425
    )
    
    
    4,891
    
    
    
    
    
    
    
    47,085
    
    
    
    5,816Operating income
    
    
    477,361
    
    
    
    439,921
    
    
    
    9
    %
    
    
    750,505
    
    
    
    652,458
    
    
    
    15
    %Interest expense
    
    
    123,298
    
    
    
    105,058
    
    
    
    
    
    
    
    237,674
    
    
    
    211,707Gain (loss) on marketable securities
    
    
    (1,000
    )
    
    
    1,610
    
    
    
    
    
    
    
    (3,324
    )
    
    
    537Equity in earnings of nonconsolidated
affiliates
    
    
    9,577
    
    
    
    11,962
    
    
    
    
    
    
    
    16,486
    
    
    
    17,595Other income (expense)  net
    
    
    (4,633
    )
    
    
    7,705
    
    
    
    
    
    
    
    (5,216
    )
    
    
    9,145Income before income taxes, minority
interest, and discontinued operations
    
    
    358,007
    
    
    
    356,140
    
    
    
    
    
    
    
    520,777
    
    
    
    468,028Income tax benefit (expense):Current
    
    
    (110,830
    )
    
    
    (107,938
    )
    
    
    
    
    
    
    (114,103
    )
    
    
    (117,968
    )Deferred
    
    
    (35,953
    )
    
    
    (32,738
    )
    
    
    
    
    
    
    (99,416
    )
    
    
    (66,904
    )Income tax benefit (expense)
    
    
    (146,783
    )
    
    
    (140,676
    )
    
    
    
    
    
    
    (213,519
    )
    
    
    (184,872
    )Minority interest income (expense), net of tax
    
    
    (13,736
    )
    
    
    (2,229
    )
    
    
    
    
    
    
    (12,956
    )
    
    
    (2,803
    )Income before discontinued operations
    
    
    197,488
    
    
    
    213,235
    
    
    
    
    
    
    
    294,302
    
    
    
    280,353Income (loss) from discontinued operations,
net
    
    
    
    
    
    
    7,497
    
    
    
    
    
    
    
    
    
    
    
    (11,739
    )Net income
    
    $
    197,488
    
    
    $
    220,732
    
    
    
    
    
    
    $
    294,302
    
    
    $
    268,614
 Consolidated Revenue
 Three Months
  Six Months
  Consolidated Direct Operating Expenses
 Three Months
  - 21 -




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##### Table of Contents



Six Months
  Consolidated Selling, General and Administrative Expenses, or SG&A
 Three Months
  Six Months
  Corporate Expenses
  Gain (loss) on Disposition of Assets  Net
   Interest Expense
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##### Table of Contents



Income Tax Benefit (Expense)
   Minority Interest Income (Expense), net of tax
  Segment Revenue and Divisional Operating Expenses
 Radio Broadcasting
 (In thousands)
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeRevenue
    
    $
    983,523
    
    
    $
    931,929
    
    

    6%
    
    
    $
    1,792,419
    
    
    $
    1,705,491
    
    

    5%Direct operating expenses
    
    
    254,939
    
    
    
    237,492
    
    

    7%
    
    
    
    502,896
    
    
    
    462,888
    
    

    9%SG&A
    
    
    333,371
    
    
    
    316,725
    
    

    5%
    
    
    
    631,626
    
    
    
    602,748
    
    

    5%Depreciation and amortization
    
    
    35,539
    
    
    
    34,430
    
    

    3%
    
    
    
    69,416
    
    
    
    70,124
    
    

    (1%)Operating income
    
    $
    359,674
    
    
    $
    343,282
    
    

    5%
    
    
    $
    588,481
    
    
    $
    569,731
    
    

    3%
 Three months
   Six Months
   - 23 -




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##### Table of Contents



Americas Outdoor Advertising
 (In thousands)
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    % Change

    
    2006
    
    
    2005
    
    
    % ChangeRevenue
    
    $
    335,247
    
    
    $
    315,094
    
    
    
    6
    %
    
    $
    609,349
    
    
    $
    568,944
    
    
    
    7
    %Direct operating expenses
    
    
    128,922
    
    
    
    120,374
    
    
    
    7
    %
    
    
    248,933
    
    
    
    237,045
    
    
    
    5
    %SG&A
    
    
    50,623
    
    
    
    46,226
    
    
    
    10
    %
    
    
    98,817
    
    
    
    91,151
    
    
    
    8
    %Depreciation and amortization
    
    
    41,253
    
    
    
    42,988
    
    
    
    (4
    %)
    
    
    83,485
    
    
    
    86,091
    
    
    
    (3
    %)Operating income
    
    $
    114,449
    
    
    $
    105,506
    
    
    
    8
    %
    
    $
    178,114
    
    
    $
    154,657
    
    
    
    15
    %
 Three Months
   Six Months
   International Outdoor Advertising
 (In thousands)
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    % Change

    
    2006
    
    
    2005
    
    
    % ChangeRevenue
    
    $
    413,156
    
    
    $
    369,415
    
    
    
    12
    %
    
    $
    737,423
    
    
    $
    694,524
    
    
    
    6
    %Direct operating expenses
    
    
    228,675
    
    
    
    212,310
    
    
    
    8
    %
    
    
    437,290
    
    
    
    421,537
    
    
    
    4
    %SG&A
    
    
    85,538
    
    
    
    81,090
    
    
    
    5
    %
    
    
    168,149
    
    
    
    165,762
    
    
    
    1
    %Depreciation and amortization
    
    
    59,574
    
    
    
    53,574
    
    
    
    11
    %
    
    
    113,662
    
    
    
    108,737
    
    
    
    5
    %Operating
income (loss)
    
    $
    39,369
    
    
    $
    22,441
    
    
    
    75
    %
    
    $
    18,322
    
    
    $
    (1,512
    )
    
    
    N.A.
 Three Months
   - 24 -




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##### Table of Contents



Six Months
   Reconciliation of Segment Operating Income (Loss) to Consolidated Operating Income
 (In thousands)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Radio Broadcasting
    
    $
    359,674
    
    
    $
    343,282
    
    
    $
    588,481
    
    
    $
    569,731Americas Outdoor Advertising
    
    
    114,449
    
    
    
    105,506
    
    
    
    178,114
    
    
    
    154,657International Outdoor Advertising
    
    
    39,369
    
    
    
    22,441
    
    
    
    18,322
    
    
    
    (1,512
    )Other
    
    
    18,794
    
    
    
    10,961
    
    
    
    18,899
    
    
    
    11,578Gain (loss) on disposition of assets  net
    
    
    (425
    )
    
    
    4,891
    
    
    
    47,085
    
    
    
    5,816Corporate
    
    
    (54,500
    )
    
    
    (47,160
    )
    
    
    (100,396
    )
    
    
    (87,812
    )Consolidated operating income
    
    $
    477,361
    
    
    $
    439,921
    
    
    $
    750,505
    
    
    $
    652,458
 LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
 (In thousands)
 Six Months Ended June 30,2006
    
    
    2005Cash provided by (used in):Operating activities
    
    $
    828,377
    
    
    $
    620,083Investing activities
    
    $
    (411,211
    )
    
    $
    (181,665
    )Financing activities
    
    $
    (395,261
    )
    
    $
    (424,072
    )Discontinued operations
    
    $
    
    
    
    $
    23,696
 Operating Activities
  Investing Activities
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##### Table of Contents



Financing Activities
  Discontinued Operations
 Accounting for the Impairment of Disposal of Long-Lived Assets
 Anticipated Cash Requirements
    (In millions)
 June 30,
    
    
    December 31,2006
    
    
    2005Credit facility
    
    $
    718.7
    
    
    $
    292.4Long-term bonds (a)
    
    
    7,008.0
    
    
    
    6,537.0Other borrowings
    
    
    185.0
    
    
    
    217.1Total Debt
    
    
    7,911.7
    
    
    
    7,046.5Less: Cash and cash equivalents
    
    
    104.7
    
    
    
    82.8$
    7,807.0
    
    
    $
    6,963.7
 
 (a)
    
    Includes $8.8 million and $10.5 million in unamortized fair value purchase accounting
adjustment premiums related to the merger with AMFM at June 30, 2006 and December 31, 2005,
respectively. Also includes reductions of $56.6 million and $29.0 million related to fair
value adjustments for interest rate swap agreements at June 30, 2006 and December 31, 2005,
respectively. Credit Facility
   - 26 -




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##### Table of Contents



Debt Offering
  Shelf Registration
  Debt Covenants
         - 27 -




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##### Table of Contents



Dividends
  (In millions, except per share data)
 AmountperDeclaration
    
    Common
    
    
    
    
    
    TotalDate
    
    Share
    
    Record Date
    
    Payment Date
    
    PaymentOctober 26, 2005
    
    
    0.1875
    
    
    December 31, 2005
    
    January 15, 2006
    
    $
    100.9February 14, 2006
    
    
    0.1875
    
    
    March 31, 2006
    
    April 15, 2006
    
    
    95.5April 26, 2006
    
    
    0.1875
    
    
    June 30, 2006
    
    July 15, 2006
    
    
    94.0
  Derivative Instruments
  Acquisitions
   Capital Expenditures
  (In millions)
 Six Months Ended June 30, 2006 Capital ExpendituresAmericas
    
    
    InternationalOutdoor
    
    
    Outdoor
    
    
    Corporate andRadio
    
    
    Advertising
    
    
    Advertising
    
    
    Other
    
    
    TotalNon-revenue producing
    
    $
    45.0
    
    
    $
    16.8
    
    
    $
    20.8
    
    
    $
    5.4
    
    
    $
    88.0Revenue producing
    
    
    
    
    
    
    14.7
    
    
    
    53.0
    
    
    
    
    
    
    
    67.7$
    45.0
    
    
    $
    31.5
    
    
    $
    73.8
    
    
    $
    5.4
    
    
    $
    155.7
 Treasury Stock Transactions
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##### Table of Contents



Commitments, Contingencies and Guarantees
    Interest Rate Risk
   Equity Price Risk
   Foreign Currency
    - 29 -




---



##### Table of Contents



Recent Accounting Pronouncements
 Accounting for Certain Hybrid Financial Instruments Accounting for Derivative Instruments and Hedging Activities Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement 109
 Critical Accounting Policies
  Stock Based Compensation
  Inflation
  Ratio of Earnings to Fixed Charges
  Six Months EndedJune 30,
    
    Year Ended December 31,2006
    
    2005
    
    2005
    
    2004
    
    2003
    
    2002
    
    20012.18
    
    
    2.19
    
    
    
    2.32
    
    
    
    2.86
    
    
    
    3.64
    
    
    
    2.59
    
    
    
    *
 
 *
    
    For the year ended December 31, 2001, fixed charges exceeded earnings before income taxes and
fixed charges by $1.1 billion.  - 30 -




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##### Table of Contents



Risks Regarding Forward Looking Statements
   
    
    the impact of general economic and political 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 settlements;
    
    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 filings with the Securities and Exchange
Commission, including our Annual Report for the year ended December 31, 2005.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
   - 31 -




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##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Total Number of
    
    
    Maximum Dollar Value ofTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    Shares that May Yet Beof Shares
    
    
    Average Price
    
    
    Part of Publicly
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Announced Programs
    
    
    ProgramsApril 1 through April 30
    
    
    5,037,600
    
    
    $
    28.62
    
    
    
    5,037,600
    
    
    $
    368,451,753May 1 through May 31
    
    
    1,548,900
    
    
    $
    29.09
    
    
    
    1,548,900
    
    
    $
    323,400,374June 1 through June 30
    
    
    1,279,000
    
    
    $
    29.87
    
    
    
    1,279,000
    
    
    $
    285,202,822Total
    
    
    7,865,500
    
    
    
    
    
    
    
    7,865,500
 
 Item 4. Submission of Matters to a Vote of Security Holders
  - 32 -




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##### Table of Contents



Proposal No. 1
(Election of Directors)
 Nominee
    
    For
    
    
    WithheldL. Lowry Mays
    
    
    450,462,936
    
    
    
    14,188,671Alan D. Feld
    
    
    449,091,442
    
    
    
    15,560,165Perry J. Lewis
    
    
    453,214,770
    
    
    
    11,436,837Mark P. Mays
    
    
    448,846,724
    
    
    
    15,804,883Randall T. Mays
    
    
    430,728,008
    
    
    
    33,923,599B.J. McCombs
    
    
    401,951,702
    
    
    
    62,699,905Phyllis B. Riggins
    
    
    453,253,906
    
    
    
    11,397,701Theodore H. Strauss
    
    
    449,917,597
    
    
    
    14,734,010J.C. Watts
    
    
    418,506,834
    
    
    
    46,144,773John H. Williams
    
    
    320,549,398
    
    
    
    144,102,209John B. Zachry
    
    
    450,962,173
    
    
    
    13,689,434
 Proposal No. 2
(Selection of Ernst & Young LLP as Independent Auditors for the year ending December 31, 2006)
 For
    
    Withhold/Against
    
    
    Exceptions/Abstain457,371,298
    
    
    4,258,271
    
    
    
    3,022,038
 Proposal No. 3
(Shareholder Proposal  Corporate Political Contributions)
 For
    
    Withhold/Against
    
    
    Exceptions/Abstain
    
    
    Broker Non-votes82,839,776
    
    
    321,005,473
    
    
    
    27,095,375
    
    
    
    33,710,983
 Proposal No. 4
(Shareholder Proposal  Compensation Committee Independence)
 For
    
    Withhold/Against
    
    
    Exceptions/Abstain
    
    
    Broker Non-votes180,316,845
    
    
    246,167,484
    
    
    
    4,456,295
    
    
    
    33,710,983
 
 Item 6. Exhibits
  - 33 -




---



##### Table of Contents



Signatures
  CLEAR CHANNEL COMMUNICATIONS, INC.August 9, 2006
    
    /s/ Randall T. Mays

Randall T. MaysPresident andChief Financial OfficerAugust 9, 2006
    
    /s/ Herbert W. Hill, Jr.

Herbert W. Hill, Jr.Senior Vice President andChief Accounting Officer
 - 34 -




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description3.1
    
    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
    
    Seventh Amended and Restated Bylaws of the Company
(incorporated by reference to the exhibits to Clear
Channels Current Report on Form 8-K dated July 31, 2006).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).4.7
    
    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).4.8
    
    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).4.9
    
    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).
 - 35 -




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##### Table of Contents



ExhibitNumber
    
    Description4.10
    
    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).4.11
    
    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).4.12
    
    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).4.13
    
    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).4.14
    
    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).4.15
    
    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).4.16
    
    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).4.17
    
    Seventeenth Supplemental Indenture dated September 15,
2004, 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 September 15, 2004).4.18
    
    Eighteenth Supplemental Indenture dated November 22, 2004,
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 17, 2004).4.19
    
    Nineteenth Supplemental Indenture dated December 13, 2004,
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 13, 2004).4.20
    
    Twentieth Supplemental Indenture dated March 21, 2006, 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
21, 2006).11
    
    Statement re: Computation of Per Share Earnings.
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##### Table of Contents



ExhibitNumber
    
    Description12
    
    Statement re: Computation of Ratios.31.1
    
    Certification of Chief 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 2002.32.1
    
    Certification of Chief 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.
 - 37 -