##### 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 SEPTEMBER 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 November 6, 2006Common Stock, $.10 par value
    
    493,795,799




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##### 



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 INDEX
 Page No.Part I  Financial InformationItem 1. Unaudited Financial StatementsConsolidated Balance Sheets at September 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Operations for the nine and three months ended September 30, 2006
and 2005
    
    
    5Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 2006 and 2005
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34Part II  Other InformationItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 6. Exhibits
    
    
    35Signatures
    
    
    36Index to Exhibits
    
    
    37Statement 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)
 September 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)
    
    
    (Audited)CURRENT ASSETSCash and cash equivalents
    
    $
    104,632
    
    
    $
    82,786Accounts receivable, net of allowance of $55,249 in 2006
and $47,061 in 2005
    
    
    1,593,877
    
    
    
    1,505,650Prepaid expenses
    
    
    127,027
    
    
    
    114,452Other current assets
    
    
    292,010
    
    
    
    278,294Income taxes receivable
    
    
    257,379
    
    
    
    417,112Total Current Assets
    
    
    2,374,925
    
    
    
    2,398,294PROPERTY, PLANT AND EQUIPMENTLand, buildings and improvements
    
    
    895,414
    
    
    
    863,133Structures
    
    
    3,490,365
    
    
    
    3,327,326Towers, transmitters and studio equipment
    
    
    890,035
    
    
    
    881,070Furniture and other equipment
    
    
    575,413
    
    
    
    599,296Construction in progress
    
    
    91,337
    
    
    
    91,7895,942,564
    
    
    
    5,762,614Less accumulated depreciation
    
    
    2,734,286
    
    
    
    2,506,9653,208,278
    
    
    
    3,255,649INTANGIBLE ASSETSDefinite-lived intangibles, net
    
    
    518,437
    
    
    
    480,790Indefinite-lived intangibles  licenses
    
    
    4,331,872
    
    
    
    4,312,570Indefinite-lived intangibles  permits
    
    
    257,516
    
    
    
    207,921Goodwill
    
    
    7,417,405
    
    
    
    7,111,948OTHER ASSETSNotes receivable
    
    
    10,800
    
    
    
    8,745Investments in, and advances to, nonconsolidated affiliates
    
    
    313,765
    
    
    
    300,223Other assets
    
    
    267,527
    
    
    
    302,655Other investments
    
    
    230,685
    
    
    
    324,581Total Assets
    
    $
    18,931,210
    
    
    $
    18,703,376
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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS EQUITY
(In thousands)
 September 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)
    
    
    (Audited)CURRENT LIABILITIESAccounts payable
    
    $
    121,231
    
    
    $
    250,563Accrued expenses
    
    
    859,021
    
    
    
    731,105Accrued interest
    
    
    109,581
    
    
    
    97,515Current portion of long-term debt
    
    
    1,077,715
    
    
    
    891,185Deferred income
    
    
    177,951
    
    
    
    116,670Other current liabilities
    
    
    23,750
    
    
    
    20,275Total Current Liabilities
    
    
    2,369,249
    
    
    
    2,107,313Long-term debt
    
    
    7,045,558
    
    
    
    6,155,363Other long-term obligations
    
    
    44,506
    
    
    
    119,655Deferred income taxes
    
    
    703,793
    
    
    
    528,259Other long-term liabilities
    
    
    623,429
    
    
    
    675,962Minority interest
    
    
    327,715
    
    
    
    290,362Commitment and contingent liabilities (Note 7)SHAREHOLDERS EQUITYCommon Stock
    
    
    49,264
    
    
    
    53,829Additional paid-in capital
    
    
    26,705,083
    
    
    
    27,945,725Retained deficit
    
    
    (19,173,106
    )
    
    
    (19,371,411
    )Accumulated other comprehensive income
    
    
    239,106
    
    
    
    201,928Cost of shares held in treasury
    
    
    (3,387
    )
    
    
    (3,609
    )Total Shareholders Equity
    
    
    7,816,960
    
    
    
    8,826,462Total Liabilities and Shareholders Equity
    
    $
    18,931,210
    
    
    $
    18,703,376
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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 (In thousands, except per share data)
 Nine Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue
    
    $
    5,149,923
    
    
    $
    4,853,830
    
    
    $
    1,794,894
    
    
    $
    1,683,288Operating expenses:Direct operating expenses (includes share-based payments of
$13,028, $212, $4,330 and $0 for the nine and three months
ended September 30, 2006 and 2005, respectively, and
excludes depreciation and amortization)
    
    
    1,940,176
    
    
    
    1,813,523
    
    
    
    674,620
    
    
    
    614,023Selling, general and administrative expenses (includes
share-based payments of $13,382, $0, $4,456 and $0 for the
nine and three months ended September 30, 2006 and 2005,
respectively, and excludes depreciation and amortization)
    
    
    1,471,772
    
    
    
    1,426,776
    
    
    
    486,282
    
    
    
    488,820Depreciation and amortization
    
    
    466,722
    
    
    
    462,138
    
    
    
    157,174
    
    
    
    154,035Corporate expenses (includes share-based payments of
$7,995 $4,637, $2,260 and $1,931 for the nine and three
months ended September 30, 2006 and 2005, respectively,
and excludes depreciation and amortization)
    
    
    140,645
    
    
    
    119,412
    
    
    
    49,630
    
    
    
    41,071Gain (loss) on disposition of assets  net
    
    
    56,000
    
    
    
    14,303
    
    
    
    8,915
    
    
    
    8,487Operating income
    
    
    1,186,608
    
    
    
    1,046,284
    
    
    
    436,103
    
    
    
    393,826Interest expense
    
    
    365,945
    
    
    
    324,794
    
    
    
    128,271
    
    
    
    113,087Gain (loss) on marketable securities
    
    
    2,072
    
    
    
    (278
    )
    
    
    5,396
    
    
    
    (815
    )Equity in earnings of nonconsolidated affiliates
    
    
    25,054
    
    
    
    28,160
    
    
    
    8,568
    
    
    
    10,565Other income (expense)  net
    
    
    (5,752
    )
    
    
    8,585
    
    
    
    (536
    )
    
    
    (560
    )Income before income taxes, minority interest, and
discontinued operations
    
    
    842,037
    
    
    
    757,957
    
    
    
    321,260
    
    
    
    289,929Income tax benefit (expense):Current
    
    
    (186,135
    )
    
    
    (150,064
    )
    
    
    (72,032
    )
    
    
    (32,096
    )Deferred
    
    
    (159,100
    )
    
    
    (149,330
    )
    
    
    (59,684
    )
    
    
    (82,426
    )Income tax benefit (expense)
    
    
    (345,235
    )
    
    
    (299,394
    )
    
    
    (131,716
    )
    
    
    (114,522
    )Minority interest income (expense), net of tax
    
    
    (16,629
    )
    
    
    (6,380
    )
    
    
    (3,673
    )
    
    
    (3,577
    )Income before discontinued operations
    
    
    480,173
    
    
    
    452,183
    
    
    
    185,871
    
    
    
    171,830Income (loss) from discontinued operations, net
    
    
    
    
    
    
    21,906
    
    
    
    
    
    
    
    33,645Net income
    
    $
    480,173
    
    
    $
    474,089
    
    
    $
    185,871
    
    
    $
    205,475Other comprehensive income (loss), net of tax:Foreign currency translation adjustments
    
    
    30,007
    
    
    
    (112,257
    )
    
    
    3,621
    
    
    
    2,311Unrealized gain (loss) on securities and derivatives:Unrealized holding gain (loss) on marketable securities
    
    
    (68,961
    )
    
    
    (5,135
    )
    
    
    (6,002
    )
    
    
    13,838Unrealized holding gain (loss) on cash flow derivatives
    
    
    76,132
    
    
    
    12,513
    
    
    
    15,131
    
    
    
    (9,644
    )Adjustment for (gain) loss included in net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income (loss)
    
    $
    517,351
    
    
    $
    369,210
    
    
    $
    198,621
    
    
    $
    211,980Net income per common share:Income before discontinued operations  Basic
    
    $
    .95
    
    
    $
    .82
    
    
    $
    .38
    
    
    $
    .32Discontinued operations  Basic
    
    
    
    
    
    
    .04
    
    
    
    
    
    
    
    .06Net income  Basic
    
    $
    .95
    
    
    $
    .86
    
    
    $
    .38
    
    
    $
    .38Income before discontinued operations  Diluted
    
    $
    .95
    
    
    $
    .82
    
    
    $
    .38
    
    
    $
    .32Discontinued operations  Diluted
    
    
    
    
    
    
    .04
    
    
    
    
    
    
    
    .06Net income  Diluted
    
    $
    .95
    
    
    $
    .86
    
    
    $
    .38
    
    
    $
    .38Dividends declared per share
    
    $
    .5625
    
    
    $
    .50
    
    
    $
    .1875
    
    
    $
    .1875
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##### Table of Contents



CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (In thousands)
 Nine Months Ended September 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    480,173
    
    
    $
    474,089Income from discontinued operations, net
    
    
    
    
    
    
    (21,906
    )480,173
    
    
    
    452,183Reconciling Items:Depreciation and amortization
    
    
    466,722
    
    
    
    462,138Deferred taxes
    
    
    159,100
    
    
    
    149,330(Gain) loss on disposal of assets
    
    
    (56,000
    )
    
    
    (14,303
    )(Gain) loss forward exchange contract
    
    
    16,827
    
    
    
    13,447(Gain) loss on trading securities
    
    
    (18,899
    )
    
    
    (13,169
    )Other reconciling items  net
    
    
    35,070
    
    
    
    (12,132
    )Changes in operating assets and liabilities:Federal income tax refund
    
    
    133,336
    
    
    
    Decrease in income taxes receivable
    
    
    28,421
    
    
    
    Increase in income taxes payable
    
    
    
    
    
    
    (53,819
    )Changes in other operating assets and liabilities,
net of effects of acquisitions
    
    
    (62,566
    )
    
    
    (2,220
    )Net cash provided by operating activities
    
    
    1,182,184
    
    
    
    981,455Cash flows from investing activities:Decrease (increase) in notes receivable  net
    
    
    (1,900
    )
    
    
    327Decrease (increase) in investments in and advances
to nonconsolidated affiliates  net
    
    
    5,387
    
    
    
    12,374Purchases of investments
    
    
    (652
    )
    
    
    (707
    )Proceeds from sale of investments
    
    
    
    
    
    
    370Purchases of property, plant and equipment
    
    
    (239,948
    )
    
    
    (219,353
    )Proceeds from disposal of assets
    
    
    73,811
    
    
    
    23,585Acquisition of operating assets, net of cash acquired
    
    
    (293,416
    )
    
    
    (90,313
    )Decrease (increase) in other  net
    
    
    (53,571
    )
    
    
    (10,154
    )Net cash used in investing activities
    
    
    (510,289
    )
    
    
    (283,871
    )Cash flows from financing activities:Draws on credit facilities
    
    
    2,500,198
    
    
    
    1,591,074Payments on credit facilities
    
    
    (2,098,358
    )
    
    
    (752,995
    )Proceeds from long-term debt
    
    
    778,455
    
    
    
    Payments on long-term debt
    
    
    (111,827
    )
    
    
    (233,505
    )Payment on forward exchange contract
    
    
    (83,132
    )
    
    
    Payments for purchase of common shares
    
    
    (1,371,462
    )
    
    
    (859,140
    )Proceeds from exercise of stock options, stock
purchase plan, common stock warrants, and other
    
    
    26,488
    
    
    
    29,052Dividends paid
    
    
    (290,411
    )
    
    
    (241,503
    )Net cash used in financing activities
    
    
    (650,049
    )
    
    
    (467,017
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    12,511Net cash used in investing activities
    
    
    
    
    
    
    (135,143
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    Net cash used in discontinued operations
    
    
    
    
    
    
    (122,632
    )Net increase in cash and cash equivalents
    
    
    21,846
    
    
    
    107,935Cash and cash equivalents at beginning of period
    
    
    82,786
    
    
    
    31,339Cash and cash equivalents at end of period
    
    $
    104,632
    
    
    $
    139,274
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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)
    
    Nine Months
    
    Three MonthsRevenue (including sales to other Company
segments of $0.6 million and $0.1 million
for the nine and three months ended
September 30, respectively)
    
    $
    2,178.4
    
    
    $
    998.2Income (loss) before income taxes
    
    $
    36.2
    
    
    $
    55.6Income tax benefit (expense)
    
    $
    (14.3
    )
    
    $
    (22.0
    )
 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
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##### Table of Contents



Fair Value Measurements
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)
   Share-Based Payment Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation
   - 8 -




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##### Table of Contents



Nine Months Ended
    
    
    Three Months Ended(In thousands, except per share data)
    
    September 30, 2005
    
    
    September 30, 2005Income before discontinued operations:Reported
    
    $
    452,183
    
    
    $
    171,830Add: Stock-based employee compensation
expense included in reported net income, net
of related tax effects
    
    
    2,934
    
    
    
    1,168Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    (18,252
    )
    
    
    (3,153
    )Pro Forma
    
    $
    436,865
    
    
    $
    169,845Income (loss) from discontinued operations, net:Reported
    
    $
    21,906
    
    
    $
    33,645Add: Stock-based employee compensation
expense included in reported net income, net
of related tax effects
    
    
    796
    
    
    
    480Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    (3,465
    )
    
    
    (826
    )Pro Forma
    
    $
    19,237
    
    
    $
    33,299Income before discontinued operations per
common share:Basic:Reported
    
    $
    .82
    
    
    $
    .32Pro Forma
    
    $
    .80
    
    
    $
    .31Diluted:Reported
    
    $
    .82
    
    
    $
    .32Pro Forma
    
    $
    .80
    
    
    $
    .31Discontinued operations, net per common share:Basic:Reported
    
    $
    .04
    
    
    $
    .06Pro Forma
    
    $
    .04
    
    
    $
    .06Diluted:Reported
    
    $
    .04
    
    
    $
    .06Pro Forma
    
    $
    .04
    
    
    $
    .06
  - 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%  5.10
    %
    
    
    4.06%  4.20
    %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)
    
    
    (1,180
    )
    
    
    19.60Forfeited
    
    
    (1,148
    )
    
    
    35.58Expired
    
    
    (2,386
    )
    
    
    51.69Outstanding, September 30
    
    
    37,998
    
    
    
    41.54
    
    
    3.4 years
    
    $
    27,555Exercisable, September 30
    
    
    28,133
    
    
    
    
    
    
    2.5 years
    
    $
    27,311Weighted average fair value per option granted
    
    $
    7.18
 
 (a)
    
    Cash received from option exercises for the nine months ended September 30, 2006 and 2005 was
$23.1 million and $23.9 million, respectively. The Company received an income tax benefit of
$2.0 million and $0.6 million relating to the options exercised during the nine months ended
September 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
    
    
    (2,089
    )
    
    
    25.78Forfeited
    
    
    (1,148
    )
    
    
    13.49Nonvested, September 30
    
    
    9,865
    
    
    
    12.91
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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

    
    
    
    9/30/06
    
    Life
    
    Price
    
    9/30/06
    
    Price$
    .01
    
    $
    10.00
    
    
    
    
    
    635
    
    
    
    3.1
    
    
    $
    5.90
    
    
    
    635
    
    
    $
    5.9010.01
    
    
    20.00
    
    
    
    
    
    280
    
    
    
    0.4
    
    
    
    16.41
    
    
    
    280
    
    
    
    16.4120.01
    
    
    30.00
    
    
    
    
    
    2,912
    
    
    
    1.6
    
    
    
    25.74
    
    
    
    2,784
    
    
    
    25.6830.01
    
    
    40.00
    
    
    
    
    
    10,157
    
    
    
    5.8
    
    
    
    32.55
    
    
    
    2,369
    
    
    
    33.1440.01
    
    
    50.00
    
    
    
    
    
    18,332
    
    
    
    2.5
    
    
    
    44.97
    
    
    
    16,383
    
    
    
    45.0650.01
    
    
    60.00
    
    
    
    
    
    3,614
    
    
    
    3.2
    
    
    
    55.35
    
    
    
    3,614
    
    
    
    55.3560.01
    
    
    70.00
    
    
    
    
    
    1,491
    
    
    
    2.0
    
    
    
    64.09
    
    
    
    1,491
    
    
    
    64.0970.01
    
    
    80.00
    
    
    
    
    
    529
    
    
    
    3.6
    
    
    
    76.57
    
    
    
    529
    
    
    
    76.5780.01
    
    
    91.35
    
    
    
    
    
    48
    
    
    
    0.4
    
    
    
    86.18
    
    
    
    48
    
    
    
    86.1837,998
    
    
    
    3.4
    
    
    
    41.54
    
    
    
    28,133
    
    
    
    43.96
 Restricted Stock Awards
   2006(In thousands, except per share data)
    
    Awards
    
    PriceOutstanding, beginning of year
    
    
    2,452
    
    
    $
    32.62Granted
    
    
    7
    
    
    
    28.50Vested (restriction lapsed)
    
    
    (2
    )
    
    
    28.37Forfeited
    
    
    (141
    )
    
    
    32.25Outstanding, September 30
    
    
    2,316
    
    
    
    32.64
 Subsidiary Share-Based Awards
    - 11 -




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##### Table of Contents



Expected volatility
    
    
    27
    %Expected life in years
    
    
    5.0  7.5Risk-free interest rate
    
    
    4.58%  5.08
    %Dividend yield
    
    
    0
    %
  Weighted Average
    
    
    AggregateRemaining
    
    
    Intrinsic(In thousands, except per share data)
    
    Options
    
    
    Price
    
    
    Contractual Term
    
    
    ValueOutstanding, beginning of year
    
    
    8,509
    
    
    $
    24.05Granted
    
    
    177
    
    
    
    19.85Exercised
    
    
    (6
    )
    
    
    20.42Forfeited
    
    
    (276
    )
    
    
    22.59Expired
    
    
    (510
    )
    
    
    32.37Outstanding, September 30
    
    
    7,894
    
    
    
    23.43
    
    
    4.5 years
    
    $
    8,262Exercisable, September 30
    
    
    3,064
    
    
    
    
    
    
    2.3 years
    
    $
    174Weighted average fair value per option granted
    
    $
    6.55
  Weighted AverageGrant Date(In thousands, except per share data)
    
    Options
    
    Fair ValueNonvested, beginning of year
    
    
    5,634
    
    
    $
    4.56Granted
    
    
    177
    
    
    
    6.55Vested
    
    
    (705
    )
    
    
    .91Forfeited
    
    
    (276
    )
    
    
    4.01Nonvested, September 30
    
    
    4,830
    
    
    
    5.21
  (In thousands of shares)
 WeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedOutstanding
    
    Remaining
    
    Average
    
    Exercisable
    
    Averageas of
    
    Contractual
    
    Exercise
    
    as of
    
    ExerciseRange of Exercise Prices
    
    
    
    
    
    9/30/06
    
    Life
    
    Price
    
    9/30/06
    
    Price$   15.01
    
    $
    20.00
    
    
    
    
    
    
    
    3,408
    
    
    
    6.5
    
    
    $
    17.98
    
    
    
    57
    
    
    $
    17.3520.01
    
    
    25.00
    
    
    
    
    
    
    
    1,097
    
    
    
    4.2
    
    
    
    21.08
    
    
    
    229
    
    
    
    21.5725.01
    
    
    30.00
    
    
    
    
    
    
    
    2,143
    
    
    
    2.9
    
    
    
    26.12
    
    
    
    1,532
    
    
    
    26.0430.01
    
    
    35.00
    
    
    
    
    
    
    
    692
    
    
    
    2.4
    
    
    
    32.78
    
    
    
    692
    
    
    
    32.7835.01
    
    
    40.00
    
    
    
    
    
    
    
    417
    
    
    
    0.6
    
    
    
    37.86
    
    
    
    417
    
    
    
    37.8640.01
    
    
    45.00
    
    
    
    
    
    
    
    98
    
    
    
    3.8
    
    
    
    42.80
    
    
    
    98
    
    
    
    42.8045.01
    
    
    50.00
    
    
    
    
    
    
    
    39
    
    
    
    0.2
    
    
    
    49.52
    
    
    
    39
    
    
    
    49.527,894
    
    
    
    4.5
    
    
    
    23.43
    
    
    
    3,064
    
    
    
    29.50
 - 12 -




---



##### Table of Contents



2006(In thousands, except per share data)
    
    Awards
    
    PriceOutstanding, beginning of year
    
    
    236
    
    
    $
    18.00Granted
    
    
    6
    
    
    
    19.87Vested (restriction lapsed)
    
    
    
    
    
    
    Forfeited
    
    
    (19
    )
    
    
    18.01Outstanding, September 30
    
    
    223
    
    
    
    18.04
 Unrecognized share-based compensation cost
     September 30, 2006
    
    
    December 31, 2005Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated(In thousands)
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationTransit, street
furniture, and other
outdoor contractual
rights
    
    $
    777,850
    
    
    $
    488,893
    
    
    $
    651,455
    
    
    $
    408,018Talent contracts
    
    
    125,270
    
    
    
    111,365
    
    
    
    202,161
    
    
    
    175,553Representation contracts
    
    
    323,436
    
    
    
    162,605
    
    
    
    313,004
    
    
    
    133,987Other
    
    
    130,180
    
    
    
    75,436
    
    
    
    135,782
    
    
    
    104,054Total
    
    $
    1,356,736
    
    
    $
    838,299
    
    
    $
    1,302,402
    
    
    $
    821,612
   (In thousands)2007
    
    $
    104,9992008
    
    
    66,7282009
    
    
    52,4922010
    
    
    46,4852011
    
    
    35,080
 - 13 -




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##### Table of Contents



Goodwill
  Americas
    
    
    International(In thousands)
    
    Radio
    
    
    Outdoor
    
    
    Outdoor
    
    
    Other
    
    
    TotalBalance as of December 31, 2005
    
    $
    6,321,394
    
    
    $
    405,964
    
    
    $
    343,611
    
    
    $
    40,979
    
    
    $
    7,111,948Acquisitions
    
    
    42,499
    
    
    
    211,649
    
    
    
    33,917
    
    
    
    6,564
    
    
    
    294,629Dispositions
    
    
    (10,591
    )
    
    
    (1,913
    )
    
    
    
    
    
    
    
    
    
    
    (12,504
    )Foreign currency
    
    
    
    
    
    
    401
    
    
    
    24,119
    
    
    
    
    
    
    
    24,520Adjustments
    
    
    (879
    )
    
    
    
    
    
    
    (315
    )
    
    
    6
    
    
    
    (1,188
    )Balance as of September 30, 2006
    
    $
    6,352,423
    
    
    $
    616,101
    
    
    $
    401,332
    
    
    $
    47,549
    
    
    $
    7,417,405
     - 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 Offerings
   Acquisitions
   - 15 -




---



##### Table of Contents



Disposition of Assets
  Recent Legal Proceedings
           - 16 -




---



##### Table of Contents



Corporateexpenses andAmericas
    
    
    International
    
    
    
    
    
    
    gain (loss) onRadio
    
    
    Outdoor
    
    
    Outdoor
    
    
    
    
    
    
    disposition of(In thousands)
    
    Broadcasting
    
    
    Advertising
    
    
    Advertising
    
    
    Other
    
    
    assets - net
    
    
    Eliminations
    
    
    ConsolidatedNine Months Ended September
30, 2006Revenue
    
    $
    2,754,566
    
    
    $
    965,733
    
    
    $
    1,101,293
    
    
    $
    423,098
    
    
    $
    
    
    
    $
    (94,767
    )
    
    $
    5,149,923Direct operating expenses
    
    
    768,215
    
    
    
    382,401
    
    
    
    671,442
    
    
    
    164,716
    
    
    
    
    
    
    
    (46,598
    )
    
    
    1,940,176Selling, general and
administrative expenses
    
    
    940,413
    
    
    
    150,846
    
    
    
    250,757
    
    
    
    177,925
    
    
    
    
    
    
    
    (48,169
    )
    
    
    1,471,772Depreciation and amortization
    
    
    102,998
    
    
    
    129,382
    
    
    
    169,888
    
    
    
    49,881
    
    
    
    14,573
    
    
    
    
    
    
    
    466,722Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140,645
    
    
    
    
    
    
    
    140,645Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,000
    
    
    
    
    
    
    
    56,000Operating income (loss)
    
    $
    942,940
    
    
    $
    303,104
    
    
    $
    9,206
    
    
    $
    30,576
    
    
    $
    (99,218
    )
    
    $
    
    
    
    $
    1,186,608Intersegment revenues
    
    $
    30,764
    
    
    $
    6,864
    
    
    $
    
    
    
    $
    57,139
    
    
    $
    
    
    
    $
    
    
    
    $
    94,767Identifiable assets
    
    $
    12,262,329
    
    
    $
    2,764,509
    
    
    $
    2,265,066
    
    
    $
    1,071,857
    
    
    $
    567,449
    
    
    $
    
    
    
    $
    18,931,210Capital expenditures
    
    $
    64,769
    
    
    $
    60,367
    
    
    $
    103,613
    
    
    $
    7,805
    
    
    $
    3,394
    
    
    $
    
    
    
    $
    239,948
 - 17 -




---



##### Table of Contents



Corporateexpenses andAmericas
    
    
    International
    
    
    
    
    
    
    gain (loss) onRadio
    
    
    Outdoor
    
    
    Outdoor
    
    
    
    
    
    
    disposition of(In thousands)
    
    Broadcasting
    
    
    Advertising
    
    
    Advertising
    
    
    Other
    
    
    assets - net
    
    
    Eliminations
    
    
    ConsolidatedThree Months Ended
September 30, 2006Revenue
    
    $
    962,147
    
    
    $
    356,384
    
    
    $
    363,870
    
    
    $
    143,510
    
    
    $
    
    
    
    $
    (31,017
    )
    
    $
    1,794,894Direct operating expenses
    
    
    265,319
    
    
    
    133,468
    
    
    
    234,152
    
    
    
    55,345
    
    
    
    
    
    
    
    (13,664
    )
    
    
    674,620Selling, general and
administrative expenses
    
    
    308,787
    
    
    
    52,029
    
    
    
    82,608
    
    
    
    60,211
    
    
    
    
    
    
    
    (17,353
    )
    
    
    486,282Depreciation and amortization
    
    
    33,582
    
    
    
    45,897
    
    
    
    56,226
    
    
    
    16,277
    
    
    
    5,192
    
    
    
    
    
    
    
    157,174Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,630
    
    
    
    
    
    
    
    49,630Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,915
    
    
    
    
    
    
    
    8,915Operating income (loss)
    
    $
    354,459
    
    
    $
    124,990
    
    
    $
    (9,116
    )
    
    $
    11,677
    
    
    $
    (45,907
    )
    
    $
    
    
    
    $
    436,103Intersegment revenues
    
    $
    10,175
    
    
    $
    1,882
    
    
    $
    
    
    
    $
    18,960
    
    
    $
    
    
    
    $
    
    
    
    $
    31,017Nine Months Ended
September 30, 2005Revenue
    
    $
    2,624,736
    
    
    $
    886,649
    
    
    $
    1,044,822
    
    
    $
    388,585
    
    
    $
    
    
    
    $
    (90,962
    )
    
    $
    4,853,830Direct operating expenses
    
    
    711,604
    
    
    
    358,862
    
    
    
    629,185
    
    
    
    160,339
    
    
    
    
    
    
    
    (46,467
    )
    
    
    1,813,523Selling, general and
administrative expenses
    
    
    900,647
    
    
    
    136,919
    
    
    
    273,044
    
    
    
    160,661
    
    
    
    
    
    
    
    (44,495
    )
    
    
    1,426,776Depreciation and amortization
    
    
    106,309
    
    
    
    127,019
    
    
    
    163,214
    
    
    
    51,443
    
    
    
    14,153
    
    
    
    
    
    
    
    462,138Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,412
    
    
    
    
    
    
    
    119,412Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,303
    
    
    
    
    
    
    
    14,303Operating income (loss)
    
    $
    906,176
    
    
    $
    263,849
    
    
    $
    (20,621
    )
    
    $
    16,142
    
    
    $
    (119,262
    )
    
    $
    
    
    
    $
    1,046,284Intersegment revenues
    
    $
    27,396
    
    
    $
    5,633
    
    
    $
    
    
    
    $
    57,933
    
    
    $
    
    
    
    $
    
    
    
    $
    90,962Identifiable assets
    
    $
    12,246,440
    
    
    $
    2,515,518
    
    
    $
    2,166,667
    
    
    $
    1,269,086
    
    
    $
    316,296
    
    
    $
    
    
    
    $
    18,514,007Capital expenditures
    
    $
    65,806
    
    
    $
    50,012
    
    
    $
    87,210
    
    
    $
    11,064
    
    
    $
    5,261
    
    
    $
    
    
    
    $
    219,353Three Months Ended
September 30, 2005Revenue
    
    $
    919,245
    
    
    $
    317,705
    
    
    $
    350,298
    
    
    $
    130,352
    
    
    $
    
    
    
    $
    (34,312
    )
    
    $
    1,683,288Direct operating expenses
    
    
    248,716
    
    
    
    121,817
    
    
    
    207,648
    
    
    
    55,858
    
    
    
    
    
    
    
    (20,016
    )
    
    
    614,023Selling, general and
administrative expenses
    
    
    297,899
    
    
    
    45,768
    
    
    
    107,282
    
    
    
    52,167
    
    
    
    
    
    
    
    (14,296
    )
    
    
    488,820Depreciation and amortization
    
    
    36,185
    
    
    
    40,928
    
    
    
    54,477
    
    
    
    17,763
    
    
    
    4,682
    
    
    
    
    
    
    
    154,035Corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,071
    
    
    
    
    
    
    
    41,071Gain (loss) on disposition
of assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,487
    
    
    
    
    
    
    
    8,487Operating income (loss)
    
    $
    336,445
    
    
    $
    109,192
    
    
    $
    (19,109
    )
    
    $
    4,564
    
    
    $
    (37,266
    )
    
    $
    
    
    
    $
    393,826Intersegment revenues
    
    $
    9,240
    
    
    $
    1,162
    
    
    $
    
    
    
    $
    23,910
    
    
    $
    
    
    
    $
    
    
    
    $
    34,312
    - 18 -




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##### Table of Contents



- 19 -




---



##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Executive Summary
    Format of Presentation
   Radio Broadcasting
    - 20 -




---



##### Table of Contents



Americas and International Outdoor Advertising
    FAS 123(R), Share-Based Payment
 Share-Based Payment
  - 21 -




---



##### Table of Contents



(In millions)
    
    Three Months
    
    Nine MonthsRadio BroadcastingDirect Operating Expenses
    
    $
    2.7
    
    
    $
    8.3SG&A
    
    
    3.6
    
    
    
    10.6Americas Outdoor AdvertisingDirect Operating Expenses
    
    $
    0.9
    
    
    $
    2.6SG&A
    
    
    0.3
    
    
    
    0.9International Outdoor AdvertisingDirect Operating Expenses
    
    $
    0.2
    
    
    $
    0.6SG&A
    
    
    0.1
    
    
    
    0.3OtherDirect Operating Expenses
    
    $
    0.5
    
    
    $
    1.5SG&A
    
    
    0.5
    
    
    
    1.6Corporate
    
    $
    2.3
    
    
    $
    8.0
  Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    %

    
    September 30,
    
    
    
    %(In thousands)
    
    2006
    
    
    2005
    
    
    
    Change

    
    2006
    
    
    2005
    
    
    
    ChangeRevenue
    
    $
    1,794,894
    
    
    $
    1,683,288
    
    
    
    7%

    
    $
    5,149,923
    
    
    $
    4,853,830
    
    
    
    6%Operating expenses:Direct operating expenses
    
    
    674,620
    
    
    
    614,023
    
    
    
    10%
    
    
    1,940,176
    
    
    
    1,813,523
    
    
    
    7%Selling, general and administrative expenses
    
    
    486,282
    
    
    
    488,820
    
    
    
    (1%)

    
    
    1,471,772
    
    
    
    1,426,776
    
    
    
    3%Depreciation and amortization
    
    
    157,174
    
    
    
    154,035
    
    
    
    2%
    
    
    466,722
    
    
    
    462,138
    
    
    
    1%Corporate expenses
    
    
    49,630
    
    
    
    41,071
    
    
    
    21%
    
    
    140,645
    
    
    
    119,412
    
    
    
    18%Gain (loss) on disposition of assets  net
    
    
    8,915
    
    
    
    8,487
    
    
    
    
    
    
    
    56,000
    
    
    
    14,303Operating income
    
    
    436,103
    
    
    
    393,826
    
    
    
    11%

    
    
    1,186,608
    
    
    
    1,046,284
    
    
    
    13%Interest expense
    
    
    128,271
    
    
    
    113,087
    
    
    
    
    
    
    
    365,945
    
    
    
    324,794Gain (loss) on marketable securities
    
    
    5,396
    
    
    
    (815
    )
    
    
    
    
    
    
    2,072
    
    
    
    (278
    )Equity in earnings of nonconsolidated
affiliates
    
    
    8,568
    
    
    
    10,565
    
    
    
    
    
    
    
    25,054
    
    
    
    28,160Other income (expense)  net
    
    
    (536
    )
    
    
    (560
    )
    
    
    
    
    
    
    (5,752
    )
    
    
    8,585Income before income taxes, minority
interest, and discontinued operations
    
    
    321,260
    
    
    
    289,929
    
    
    
    
    
    
    
    842,037
    
    
    
    757,957Income tax benefit (expense):Current
    
    
    (72,032
    )
    
    
    (32,096
    )
    
    
    
    
    
    
    (186,135
    )
    
    
    (150,064
    )Deferred
    
    
    (59,684
    )
    
    
    (82,426
    )
    
    
    
    
    
    
    (159,100
    )
    
    
    (149,330
    )Income tax benefit (expense)
    
    
    (131,716
    )
    
    
    (114,522
    )
    
    
    
    
    
    
    (345,235
    )
    
    
    (299,394
    )Minority interest income (expense), net of tax
    
    
    (3,673
    )
    
    
    (3,577
    )
    
    
    
    
    
    
    (16,629
    )
    
    
    (6,380
    )Income before discontinued operations
    
    
    185,871
    
    
    
    171,830
    
    
    
    
    
    
    
    480,173
    
    
    
    452,183Income (loss) from discontinued operations,
net
    
    
    
    
    
    
    33,645
    
    
    
    
    
    
    
    
    
    
    
    21,906Net income
    
    $
    185,871
    
    
    $
    205,475
    
    
    
    
    
    
    $
    480,173
    
    
    $
    474,089
 Consolidated Revenue
 Three Months
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##### Table of Contents



Nine Months
  Consolidated Direct Operating Expenses
 Three Months
  Nine Months
  Consolidated Selling, General and Administrative Expenses, or SG&A
 Three Months
  Nine Months
  Corporate Expenses
  - 23 -




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##### Table of Contents



Gain (loss) on Disposition of Assets  Net
  Interest Expense
  Gain (loss) on marketable securities
   Income Tax Benefit (Expense)
    Share-Based Payment
 - 24 -




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##### Table of Contents



Minority Interest Income (Expense), net of tax
  Segment Revenue and Divisional Operating Expenses
 Radio Broadcasting
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeRevenue
    
    $
    962,147
    
    
    $
    919,245
    
    

    5%
    
    
    $
    2,754,566
    
    
    $
    2,624,736
    
    

    5%Direct operating expenses
    
    
    265,319
    
    
    
    248,716
    
    

    7%
    
    
    
    768,215
    
    
    
    711,604
    
    

    8%SG&A
    
    
    308,787
    
    
    
    297,899
    
    
    4%
    
    
    
    940,413
    
    
    
    900,647
    
    

    4%Depreciation and amortization
    
    
    33,582
    
    
    
    36,185
    
    

    (7%)
    
    
    
    102,998
    
    
    
    106,309
    
    

    (3%)Operating income
    
    $
    354,459
    
    
    $
    336,445
    
    

    5%
    
    
    $
    942,940
    
    
    $
    906,176
    
    

    4%
 Three months
   Nine Months
   Americas Outdoor Advertising
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeRevenue
    
    $
    356,384
    
    
    $
    317,705
    
    

    12%
    
    
    $
    965,733
    
    
    $
    886,649
    
    

    9%Direct operating expenses
    
    
    133,468
    
    
    
    121,817
    
    

    10%
    
    
    
    382,401
    
    
    
    358,862
    
    

    7%SG&A
    
    
    52,029
    
    
    
    45,768
    
    

    14%
    
    
    
    150,846
    
    
    
    136,919
    
    

    10%Depreciation and amortization
    
    
    45,897
    
    
    
    40,928
    
    

    12%
    
    
    
    129,382
    
    
    
    127,019
    
    

    2%Operating income
    
    $
    124,990
    
    
    $
    109,192
    
    

    14%
    
    
    $
    303,104
    
    
    $
    263,849
    
    

    15%
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##### Table of Contents



Three Months
   Nine Months
   International Outdoor Advertising
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    
    
    
    September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeRevenue
    
    $
    363,870
    
    
    $
    350,298
    
    

    4%
    
    
    $
    1,101,293
    
    
    $
    1,044,822
    
    

    5%Direct operating expenses
    
    
    234,152
    
    
    
    207,648
    
    

    13%
    
    
    
    671,442
    
    
    
    629,185
    
    

    7%SG&A
    
    
    82,608
    
    
    
    107,282
    
    

    (23%)
    
    
    
    250,757
    
    
    
    273,044
    
    

    (8%)Depreciation and amortization
    
    
    56,226
    
    
    
    54,477
    
    

    3%
    
    
    
    169,888
    
    
    
    163,214
    
    

    4%Operating income
    
    $
    (9,116
    )
    
    $
    (19,109
    )
    
    
    N.A.
    
    
    $
    9,206
    
    
    $
    (20,621
    )
    
    
    N.A.
 Three Months
   Nine Months
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##### Table of Contents



Reconciliation of Segment Operating Income (Loss) to Consolidated Operating Income
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(In thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Radio Broadcasting
    
    $
    354,459
    
    
    $
    336,445
    
    
    $
    942,940
    
    
    $
    906,176Americas Outdoor Advertising
    
    
    124,990
    
    
    
    109,192
    
    
    
    303,104
    
    
    
    263,849International Outdoor Advertising
    
    
    (9,116
    )
    
    
    (19,109
    )
    
    
    9,206
    
    
    
    (20,621
    )Other
    
    
    11,677
    
    
    
    4,564
    
    
    
    30,576
    
    
    
    16,142Gain (loss) on disposition of assets  net
    
    
    8,915
    
    
    
    8,487
    
    
    
    56,000
    
    
    
    14,303Corporate
    
    
    (54,822
    )
    
    
    (45,753
    )
    
    
    (155,218
    )
    
    
    (133,565
    )Consolidated operating income
    
    $
    436,103
    
    
    $
    393,826
    
    
    $
    1,186,608
    
    
    $
    1,046,284
 LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
 Nine Months Ended September 30,(In thousands)
    
    2006
    
    2005Cash provided by (used in):Operating activities
    
    $
    1,182,184
    
    
    $
    981,455Investing activities
    
    $
    (510,289
    )
    
    $
    (283,871
    )Financing activities
    
    $
    (650,049
    )
    
    $
    (467,017
    )Discontinued operations
    
    $
    
    
    
    $
    (122,632
    )
 Operating Activities
  Investing Activities
  Financing Activities
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##### Table of Contents



Discontinued Operations
 Accounting for the Impairment of Disposal of Long-Lived Assets
 Anticipated Cash Requirements
    September 30,
    
    
    December 31,(In millions)
    
    2006
    
    
    2005Credit facility
    
    $
    687.2
    
    
    $
    292.4Long-term bonds (a)
    
    
    7,279.5
    
    
    
    6,537.0Other borrowings
    
    
    156.6
    
    
    
    217.1Total Debt
    
    
    8,123.3
    
    
    
    7,046.5Less: Cash and cash equivalents
    
    
    104.6
    
    
    
    82.8$
    8,018.7
    
    
    $
    6,963.7
 
 (a)
    
    Includes $8.0 million and $10.5 million in unamortized fair value purchase accounting
adjustment premiums related to the merger with AMFM at September 30, 2006 and December 31,
2005, respectively. Also includes reductions of $32.4 million and $29.0 million related to
fair value adjustments for interest rate swap agreements at September 30, 2006 and December
31, 2005, respectively. Credit Facility
   Debt Offering
  - 28 -




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##### Table of Contents



Shelf Registration
  Debt Covenants
         - 29 -




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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
    
    
    94.0July 25, 2006
    
    
    0.1875
    
    
    September 30, 2006
    
    October 15, 2006
    
    
    92.4
  Derivative Instruments
  Acquisitions
   Capital Expenditures
  Nine Months Ended September 30, 2006 Capital ExpendituresAmericas
    
    
    InternationalOutdoor
    
    
    Outdoor
    
    
    Corporate and(In millions)
    
    Radio
    
    
    Advertising
    
    
    Advertising
    
    
    Other
    
    
    TotalNon-revenue producing
    
    $
    64.8
    
    
    $
    28.9
    
    
    $
    29.4
    
    
    $
    11.1
    
    
    $
    134.2Revenue producing
    
    
    
    
    
    
    31.4
    
    
    
    74.3
    
    
    
    
    
    
    
    105.7$
    64.8
    
    
    $
    60.3
    
    
    $
    103.7
    
    
    $
    11.1
    
    
    $
    239.9
 Treasury Stock Transactions
  - 30 -




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##### Table of Contents



Commitments, Contingencies and Guarantees
   Debt Maturities
   Interest Rate Risk
   Equity Price Risk
   Foreign Currency
  - 31 -




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##### 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
 Fair Value Measurements
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106,
and 132(R)
 Critical Accounting Policies
  - 32 -




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##### Table of Contents



Stock Based Compensation
 Accounting for Stock Issued to Employees Accounting
for Stock Based Compensation Share-Based Payment
 Inflation
  Ratio of Earnings to Fixed Charges
  Nine Months EndedSeptember 30,
    
    Year Ended December 31,2006
    
    2005
    
    2005
    
    2004
    
    2003
    
    2002
    
    20012.33
    
    2.30
    
    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.  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;
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##### Table of Contents




    
    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
   - 34 -




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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
    
    
    ProgramsJuly 1 through July 31
    
    
    3,758,500
    
    
    $
    29.85
    
    
    
    3,758,500
    
    
    $
    173,013,409August 1 through
August 31
    
    
    5,090,000
    
    
    $
    28.30
    
    
    
    5,090,000
    
    
    $
    28,980,829September 1 through
September 30
    
    
    397,000
    
    
    $
    28.98
    
    
    
    397,000
    
    
    $
    1,017,476,855Total
    
    
    9,245,500
    
    
    
    
    
    
    
    9,245,500
 
 Item 6. Exhibits
  - 35 -




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##### Table of Contents



Signatures
  CLEAR CHANNEL COMMUNICATIONS, INC.November 9, 2006
    /s/ Randall T. MaysRandall T. MaysPresident and
Chief Financial Officer November 9, 2006
    /s/ Herbert W. Hill, Jr.Herbert W. Hill, Jr.Senior Vice President and
Chief Accounting Officer - 36 -




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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).
 - 37 -




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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).
 - 38 -




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##### Table of Contents



ExhibitNumber
    
    Description4.21
    
    Twenty-first Supplemental Indenture dated August 15, 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 August 16, 2006).11
    
    Statement re: Computation of Per Share Earnings.12
    
    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.
 - 39 -