10-Q 1 d48959e10vq.htm FORM 10-Q e10vq
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
     
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.
(Exact name of registrant as specified in its charter)
     
Texas
(State of Incorporation)
  74-1787539
(I.R.S. Employer Identification No.)
     
200 East Basse Road
San Antonio, Texas

(Address of principal executive offices)
  78209
(Zip Code)
(210) 822-2828
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each class of the issuer’s classes of common stock, as of the latest practicable date.
     
Class   Outstanding at August 7, 2007
     
Common Stock, $.10 par value   497,932,764
 
 

 


 

CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
         
    Page No.  
       
 
       
    3  
 
       
    3  
 
       
    5  
 
       
    6  
 
       
    7  
 
       
    15  
 
       
    27  
 
       
    27  
 
       
       
 
       
    28  
 
       
    28  
 
       
    29  
 
       
    29  
 
       
    30  
 
       
    31  
 
       
    32  
 Statement re: Computation of Per Share Earnings
 Statement re: Computation of Ratios
 Certification of CEO Pursuant to Section 302
 Certification of CFO Pursuant to Section 302
 Certification of CEO Pursuant to Section 906
 Certification of CFO Pursuant to Section 906

 


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,  
    2007     2006  
    (Unaudited)     (Audited)  
CURRENT ASSETS
               
Cash and cash equivalents
  $ 91,784     $ 116,000  
Accounts receivable, net of allowance of $58,324 in 2007 and $56,068 in 2006
    1,668,713       1,619,858  
Prepaid expenses
    138,333       122,000  
Other current assets
    236,250       244,103  
Income taxes receivable
          7,392  
Current assets from discontinued operations
    84,292       96,377  
 
           
Total Current Assets
    2,219,372       2,205,730  
 
               
PROPERTY, PLANT AND EQUIPMENT
               
Land, buildings and improvements
    794,718       768,574  
Structures
    3,707,008       3,601,653  
Towers, transmitters and studio equipment
    606,251       587,929  
Furniture and other equipment
    547,661       524,378  
Construction in progress
    106,973       89,823  
 
           
 
    5,762,611       5,572,357  
Less accumulated depreciation
    2,809,573       2,605,774  
 
           
 
    2,953,038       2,966,583  
 
               
Property, plant and equipment from discontinued operations, net
    235,508       269,627  
 
               
INTANGIBLE ASSETS
               
Definite-lived intangibles, net
    493,548       522,482  
Indefinite-lived intangibles — licenses
    4,191,539       4,199,971  
Indefinite-lived intangibles — permits
    245,593       260,950  
Goodwill
    7,116,195       7,082,024  
 
               
Intangible assets from discontinued operations, net
    513,914       540,900  
 
               
OTHER ASSETS
               
Notes receivable
    6,561       6,318  
Investments in, and advances to, nonconsolidated affiliates
    330,448       311,258  
Other assets
    281,063       249,524  
Other investments
    236,923       245,064  
Other assets from discontinued operations
    24,760       35,547  
 
           
Total Assets
  $ 18,848,462     $ 18,895,978  
 
           
See Notes to Consolidated Financial Statements

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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
(In thousands)
                 
    June 30,     December 31,  
    2007     2006  
    (Unaudited)     (Audited)  
CURRENT LIABILITIES
               
Accounts payable
  $ 112,821     $ 151,577  
Accrued expenses
    882,237       884,479  
Accrued interest
    103,504       112,049  
Accrued income taxes
    46,776        
Current portion of long-term debt
    688,821       336,375  
Deferred income
    186,332       134,287  
Current liabilities from discontinued operations
    28,943       45,079  
 
           
Total Current Liabilities
    2,049,434       1,663,846  
 
               
Long-term debt
    6,519,119       7,326,700  
Other long-term obligations
    81,421       68,509  
Deferred income taxes
    695,469       746,617  
Other long-term liabilities
    782,652       673,953  
Long-term liabilities from discontinued operations
    22,029       24,621  
 
               
Minority interest
    383,007       349,391  
Commitments and contingent liabilities (Note 6)
               
 
               
SHAREHOLDERS’ EQUITY
               
Common Stock
    49,807       49,399  
Additional paid-in capital
    26,833,564       26,745,687  
Retained deficit
    (18,902,708 )     (19,054,365 )
Accumulated other comprehensive income
    338,474       304,975  
Cost of shares held in treasury
    (3,806 )     (3,355 )
 
           
Total Shareholders’ Equity
    8,315,331       8,042,341  
 
           
 
               
Total Liabilities and Shareholders’ Equity
  $ 18,848,462     $ 18,895,978  
 
           
See Notes to Consolidated Financial Statements

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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,  
    2007     2006     2007     2006  
Revenue
  $ 3,263,343     $ 3,056,856     $ 1,778,237     $ 1,688,844  
Operating expenses:
                               
Direct operating expenses (includes share-based payments of $8,172, $8,106, $5,172 and $4,086 for the six and three months ended June 30, 2007 and 2006, respectively, and excludes depreciation and amortization)
    1,293,752       1,194,454       671,094       617,323  
Selling, general and administrative expenses (includes share-based payments of $7,331, $8,394, $4,499 and $4,210 for the six and three months ended June 30, 2007 and 2006, respectively, and excludes depreciation and amortization)
    845,606       827,438       437,924       432,459  
Depreciation and amortization
    279,637       289,299       141,310       148,189  
Corporate expenses (includes share-based payments of $6,082, $5,735, $3,668 and $2,332 for the six and three months ended June 30, 2007 and 2006, respectively, and excludes depreciation and amortization)
    91,194       88,746       43,044       48,239  
Merger expenses
    4,370             2,684        
Gain (loss) on disposition of assets — net
    11,041       49,221       4,090       821  
 
                       
Operating income
    759,825       706,140       486,271       443,455  
Interest expense
    234,499       237,674       116,422       123,298  
Gain (loss) on marketable securities
    (15 )     (3,324 )     (410 )     (1,000 )
Equity in earnings of nonconsolidated affiliates
    16,699       16,624       11,435       9,715  
Other income (expense) — net
    328       (5,257 )     340       (4,609 )
 
                       
Income before income taxes, minority interest and discontinued operations
    542,338       476,509       381,214       324,263  
Income tax benefit (expense):
                               
Current
    (150,782 )     (106,764 )     (120,989 )     (104,542 )
Deferred
    (73,912 )     (93,931 )     (36,494 )     (33,417 )
 
                       
Income tax benefit (expense)
    (224,694 )     (200,695 )     (157,483 )     (137,959 )
Minority interest expense, net of tax
    15,245       12,957       14,970       13,736  
 
                       
Income before discontinued operations
    302,399       262,857       208,761       172,568  
Income from discontinued operations, net
    35,813       31,445       27,229       24,920  
 
                       
Net income
  $ 338,212     $ 294,302     $ 235,990     $ 197,488  
 
                       
Other comprehensive income (loss), net of tax:
                               
Foreign currency translation adjustments
    45,889       26,386       37,138       17,297  
Unrealized gain (loss) on securities and derivatives:
                               
Unrealized holding gain (loss) on marketable securities
    (11,177 )     (62,959 )     (4,218 )     (38,901 )
Unrealized holding gain (loss) on cash flow derivatives
          61,001             35,437  
 
                       
Comprehensive income
  $ 372,924     $ 318,730     $ 268,910     $ 211,321  
 
                       
Net income per common share:
                               
Income before discontinued operations — Basic
  $ .61     $ .52     $ .42     $ .34  
Discontinued operations — Basic
    .07       .06       .06       .05  
 
                       
Net income — Basic
  $ .68     $ .58     $ .48     $ .39  
 
                       
Weighted average common shares — basic
    494,105       509,591       494,364       501,136  
Income before discontinued operations — Diluted
  $ .61     $ .52     $ .42     $ .34  
Discontinued operations — Diluted
    .07       .06       .06       .05  
 
                       
Net income — Diluted
  $ .68     $ .58     $ .48     $ .39  
 
                       
Weighted average common shares — diluted
    495,280       510,392       495,688       502,060  
 
               
Dividends declared per share
  $ .375     $ .375     $ .1875     $ .1875  
See Notes to Consolidated Financial Statements

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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
                 
    Six Months Ended June 30,  
    2007     2006  
Cash flows from operating activities:
               
Net income
  $ 338,212     $ 294,302  
(Income) loss from discontinued operations, net
    (35,813 )     (31,445 )
 
           
 
    302,399       262,857  
 
               
Reconciling items:
               
Depreciation and amortization
    279,637       289,299  
Deferred taxes
    73,912       93,931  
(Gain) loss on disposal of assets
    (11,041 )     (49,221 )
(Gain) loss forward exchange contract
    9,505       11,406  
(Gain) loss on trading securities
    (9,490 )     (8,082 )
Provision for doubtful accounts
    16,091       13,232  
Share-based compensation
    21,585       22,235  
Equity in earnings of non-consolidated affiliates
    (16,699 )     (16,624 )
Other reconciling items — net
    13,935       25,537  
Changes in operating assets and liabilities:
               
Federal income tax refund
          133,336  
Decrease in income taxes receivable
    58,944       82,020  
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions
    (79,780 )     (87,182 )
 
           
Net cash provided by operating activities
    658,998       772,744  
Cash flows from investing activities:
               
Increase in restricted cash
          (81,333 )
Decrease (increase) in notes receivable — net
    (242 )     (1,155 )
Decrease (increase) in investments in and advances to nonconsolidated affiliates — net
    10,331       2,614  
Purchases of investments
    (384 )     (461 )
Purchases of property, plant and equipment
    (152,373 )     (147,755 )
Proceeds from disposal of assets
    18,280       60,280  
Acquisition of operating assets, net of cash acquired
    (51,539 )     (149,441 )
Decrease (increase) in other — net
    (25,386 )     (66,998 )
 
           
Net cash used in investing activities
    (201,313 )     (384,249 )
Cash flows from financing activities:
               
Draws on credit facilities
    368,872       1,943,270  
Payments on credit facilities
    (576,527 )     (1,509,325 )
Proceeds from long-term debt
    12,481       506,159  
Payments on long-term debt
    (261,873 )     (49,287 )
Payments for purchase of common shares
          (1,103,737 )
Proceeds from exercise of stock options, stock purchase plan, common stock warrants and other
    75,985       14,036  
Dividends paid
    (185,641 )     (196,377 )
 
           
Net cash used in financing activities
    (566,703 )     (395,261 )
Cash flows from discontinued operations:
               
Net cash provided by operating activities
    33,459       55,456  
Net cash provided by (used in) investing activities
    51,343       (26,963 )
Net cash provided by (used in) financing activities
           
 
           
Net cash provided by discontinued operations
    84,802       28,493  
 
               
Net (decrease) increase in cash and cash equivalents
    (24,216 )     21,727  
 
               
Cash and cash equivalents at beginning of period
    116,000       84,337  
 
           
 
               
Cash and cash equivalents at end of period
  $ 91,784     $ 106,064  
 
           
See Notes to Consolidated Financial Statements

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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Preparation of Interim Financial Statements
The consolidated financial statements were prepared by Clear Channel Communications, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments (consisting of normal recurring accruals and adjustments necessary for adoption of new accounting standards) necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. Due to seasonality and other factors, the results for the interim periods are not necessarily indicative of results for the full year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2006 Annual Report on Form 10-K.
The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in companies in which the Company owns 20 percent to 50 percent of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.
Merger Update
On May 17, 2007 the Company entered into a second amendment to its previously announced Merger Agreement with a private equity group co-led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC. Under the terms of the Merger Agreement, as amended, the Company’s shareholders can elect to have each share of the Company’s common stock they own to be converted into the right to receive either (1) $39.20 in cash, without interest, or (2) one share of Class A common stock of CC Media Holdings, Inc, a corporation formed by the private equity group that, after the merger, will be the ultimate corporate parent of the Company.
Unaffiliated shareholders and option holders of the Company will have the right to select the form of merger consideration they receive. This election is subject to pro rata adjustment in the event that elections to receive Class A common stock would require CC Media Holdings, Inc. to issue more than 30.6 million shares of Class A common stock, or approximately 30% of the outstanding capital stock and voting power of CC Media Holdings, Inc., immediately following the merger. In addition, no shareholder or option holder who has selected the stock consideration may be allocated a number of CC Media Holdings, Inc. Class A common stock representing more than 9.9% of the outstanding common stock of CC Media Holdings, Inc., immediately following the merger. The limitation on the aggregate number of shares to be issued as stock consideration will allow up to a maximum of approximately 6% of the shares of the Company’s common stock and stock options outstanding as of the record date of the special meeting to be converted into Class A common stock of CC Media Holdings, Inc. as merger consideration.
The consummation of the merger is subject to shareholder approval, antitrust clearances, FCC approval and other customary closing conditions. Assuming satisfaction of the closing conditions, the parties expect to close the merger during the fourth quarter of 2007.
Certain Reclassifications
The Company has reclassified certain selling, general and administrative expenses to direct operating expenses in 2006 to conform to current year presentation. As a result of the divestiture of certain of its radio stations and its television business, the historical footnote disclosures have been revised to exclude amounts related to these businesses.
Discontinued Operations and Assets Held for Sale
On November 16, 2006, the Company announced plans to sell certain radio markets, comprising 448 of its radio stations, as well as all of its television stations. The radio markets are located outside the top 100 U.S. media markets. As of June 30, 2007, the Company had sold 26 radio stations, 5 of which were not part of the announced 448 stations, and had definitive agreements to sell an additional 374 radio stations, 8 of which were not part of the announced 448 stations. The closing of the transactions under definitive asset purchase agreements are subject to antitrust clearances, FCC approval and other customary closing conditions. The Company determined that each of these markets represents a disposal group. Consistent with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets (“Statement 144”), the Company classified these markets’ assets and liabilities that are subject to transfer under the definitive asset purchase agreements as

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discontinued operations at June 30, 2007 and December 31, 2006. Accordingly, depreciation and amortization associated with these assets was discontinued. Additionally, the Company determined that these markets comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company. As of June 30, 2007, the Company determined that the estimated fair value less costs to sell attributable to these markets was in excess of the carrying value of their related net assets held for sale.
On April 20, 2007, the Company entered into a definitive agreement to sell its television business for approximately $1.2 billion. The transaction is expected to close in the fourth quarter of 2007, subject to regulatory approvals and other customary closing conditions. Consistent with its radio station divestitures, the Company classified its television business as discontinued operations at June 30, 2007 and December 31, 2006 and presented the results of operations as discontinued operations, net of tax, for all periods presented. As of June 30, 2007, the Company determined that the estimated fair value less costs to sell attributable to its television business was in excess of the carrying value of their related net assets held for sale.
Summarized operating results for the six and three months ended June 30, 2007 and 2006 from these businesses are as follows:
                                 
    Six Months     Three Months  
(In thousands)   2007     2006     2007     2006  
Revenue
  $ 282,071     $ 301,941     $ 146,463     $ 163,908  
Income before income taxes
  $ 62,391     $ 44,268     $ 48,276     $ 33,744  
Included in income from discontinued operations, net are income tax expenses of $26.6 million, $12.8 million, $21.0 million and $8.8 million for the six and three months ended June 30, 2007 and 2006, respectively. Also included in income from discontinued operations for the six and three months ended June 30, 2007 is a gain on the sale of certain radio stations of $19.6 million and $16.8 million, respectively.
The following table summarizes the carrying amount at June 30, 2007 and December 31, 2006 of the major classes of assets and liabilities of the Company’s businesses classified as discontinued operations:
                 
(In thousands)   June 30,     December 31,  
Assets
  2007     2006  
Accounts receivable, net
  $ 70,673     $ 75,490  
Other current assets
    13,619       20,887  
 
           
Total current assets
  $ 84,292     $ 96,377  
 
           
 
               
Land, buildings and improvements
  $ 106,075     $ 137,729  
Transmitter and studio equipment
    286,641       298,173  
Other property, plant and equipment
    41,009       37,651  
Less accumulated depreciation
    (198,217 )     (203,926 )
 
           
Property, plant and equipment, net
  $ 235,508     $ 269,627  
 
           
 
               
Definite-lived intangibles, net
  $ 307     $ 335  
Licenses
    128,630       131,691  
Goodwill
    384,977       408,874  
 
           
Total intangible assets
  $ 513,914     $ 540,900  
 
           
 
               
Film rights
  $ 16,486     $ 20,442  
Other long-term assets
    8,274       15,105  
 
           
Total non current assets
  $ 24,760     $ 35,547  
 
           
 
               
Liabilities
               
Accounts payable and accrued expenses
  $ 3,321     $ 5,345  
Film liability
    14,131       21,765  
Other current liabilities
    11,491       17,969  
 
           
Total current liabilities
  $ 28,943     $ 45,079  
 
           
 
               
Film liability
    18,919       22,158  
Deferred income
    3,110       2,463  
 
           
Total long-term liabilities
  $ 22,029     $ 24,621  
 
           
Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115 (“Statement 159”), was issued in February 2007. Statement 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Statement 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. Statement 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. Statement 159 does not eliminate

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disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in Statements No. 157, Fair Value Measurements, and No. 107, Disclosures about Fair Value of Financial Instruments. Statement 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company expects to adopt Statement 159 on January 1, 2008 and does not anticipate adoption to materially impact its financial position or results of operations.
New Accounting Standard
The Company adopted Financial Accounting Standard Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. FIN 48 prescribes a recognition threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. The adoption of FIN 48 resulted in a decrease of $0.2 million to the January 1, 2007 balance of “Retained deficit”, an increase of $101.7 million in “Other long term-liabilities” for unrecognized tax benefits and a decrease of $123.0 million in “Deferred income taxes”. The total amount of unrecognized tax benefits at January 1, 2007 was $416.1 million, inclusive of $89.6 million for interest. Of this total, $218.4 million represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.
The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense. The total amount of interest accrued during the six and three months ended June 30, 2007 was $19.6 million and $9.5 million, respectively. The total amount of unrecognized tax benefits at June 30, 2007 was $435.1 million.
The Company and its subsidiaries file income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company is in the process of settling most federal issues for the tax years 2000, 2001 and 2002 with the Internal Revenue Service (“IRS”). The IRS is near completion of its field examinations of the Company’s tax returns through 2004. The Company expects to resolve several of its federal issues with the IRS within the next 12 months without any material adverse impact on the Company’s financial statements. Substantially all material state, local, and foreign income tax matters have been concluded for years through 1999.
Note 2: INTANGIBLE ASSETS AND GOODWILL
The Company has definite-lived intangible assets which consist primarily of transit and street furniture contracts and other contractual rights in its Americas and International outdoor segments, talent and program right contracts in its radio segment, and contracts for non-affiliated radio and television stations in the Company’s media representation operations, all of which are amortized over the respective lives of the agreements. Other definite-lived intangible assets are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.
The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at June 30, 2007 and December 31, 2006:
                                 
(In thousands)   June 30, 2007     December 31, 2006  
    Gross Carrying     Accumulated     Gross Carrying     Accumulated  
    Amount     Amortization     Amount     Amortization  
Transit, street furniture, and other outdoor contractual rights
  $ 837,445     $ 565,791     $ 821,364     $ 530,063  
Talent contracts
    125,270       123,880       125,270       115,537  
Representation contracts
    367,093       193,122       349,493       175,658  
Other
    121,221       74,688       120,930       73,317  
 
                       
Total
  $ 1,451,029     $ 957,481     $ 1,417,057     $ 894,575  
 
                       
Total amortization expense from definite-lived intangible assets for the six and three months ended June 30, 2007 and for the year ended December 31, 2006 was $54.7 million, $28.5 million and $150.7 million, respectively. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:
(In thousands)
         
2008
  $ 82,192  
2009
    69,958  
2010
    51,962  
2011
    42,136  
2012
    40,593  

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As acquisitions and dispositions occur in the future and as purchase price allocations are finalized, amortization expense may vary.
The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses and billboard permits. FCC broadcast licenses are granted to both radio and television stations for up to eight years under the Telecommunications Act of 1996. The Act requires the FCC to renew a broadcast license if: it finds that the station has served the public interest, convenience and necessity; there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee; and there have been no other serious violations which taken together constitute a pattern of abuse. The licenses may be renewed indefinitely at little or no cost. The Company does not believe that the technology of wireless broadcasting will be replaced in the foreseeable future. The Company’s billboard permits are issued in perpetuity by state and local governments and are transferable or renewable at little or no cost. Permits typically include the location which allows the Company the right to operate an advertising structure. The Company’s permits are located on either owned or leased land. In cases where the Company’s permits are located on leased land, the leases are typically from 10 to 20 years and renew indefinitely, with rental payments generally escalating at an inflation based index. If the Company loses its lease, the Company will typically obtain permission to relocate the permit or bank it with the municipality for future use.
The Company does not amortize its FCC broadcast licenses or billboard permits. The Company tests these indefinite-lived intangible assets for impairment at least annually using the direct method. Under the direct method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model which results in value that is directly attributable to the indefinite-lived intangible assets.
Under the direct method, the Company continues to aggregate its indefinite-lived intangible assets at the market level for purposes of impairment testing. The Company’s key assumptions using the direct method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information.
Goodwill
The Company tests goodwill for impairment using a two-step process. The first step, used to screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The second step, used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments for the six month period ended June 30, 2007:
                                         
            Americas     International              
(In thousands)   Radio     Outdoor     Outdoor     Other     Total  
Balance as of December 31, 2006
  $ 5,987,831     $ 667,986     $ 425,630     $ 577     $ 7,082,024  
Acquisitions
    6,399       9,817       7,601             23,817  
Dispositions
    (4,296 )                       (4,296 )
Foreign currency
          6,398       7,873             14,271  
Adjustments
    613       (234 )                 379  
 
                             
Balance as of June 30, 2007
  $ 5,990,547     $ 683,967     $ 441,104     $ 577     $ 7,116,195  
 
                             
Note 3: DERIVATIVE INSTRUMENTS
The Company holds options under two secured forward exchange contracts that limit its exposure to and benefit from price fluctuations in American Tower Corporation (“AMT”) over the terms of the contracts (the “AMT contracts”). These options are not designated as hedges of the underlying shares of AMT. The AMT contracts had a value of $19.8 million and $10.3 million recorded in “Other long term liabilities” at June 30, 2007 and December 31, 2006, respectively. For the six months ended June 30, 2007 and year ended December 31, 2006, the Company recognized losses of $9.5 million and $22.0 million, respectively, in “Gain (loss) on marketable securities” related to the change in fair value of the options. To offset the change in the fair value of these contracts, the Company has recorded AMT shares as trading securities. During the six months ended June 30, 2007 and year ended December 31, 2006, the Company recognized gains of $9.5 million and $20.5 million, respectively, in “Gain (loss) on marketable securities” related to the change in the fair value of the shares.

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The Company is exposed to foreign currency exchange risks related to its investment in net assets in foreign countries. To manage this risk, the Company entered into two United States dollar — Euro cross currency swaps with an aggregate Euro notional amount of 706.0 million and a corresponding aggregate U.S. dollar notional amount of $877.7 million. These cross currency swaps had a value of $81.4 million at June 30, 2007 and $68.5 million at December 31, 2006, which was recorded in “Other long-term obligations”. These cross currency swaps require the Company to make fixed cash payments on the Euro notional amount while it receives fixed cash payments on the equivalent U.S. dollar notional amount, all on a semiannual basis. The Company has designated these cross currency swaps as a hedge of its net investment in Euro denominated assets. The Company selected the forward method under the guidance of the Derivatives Implementation Group Statement 133 Implementation Issue H8, Foreign Currency Hedges: Measuring the Amount of Ineffectiveness in a Net Investment Hedge. The forward method requires all changes in the fair value of the cross currency swaps and the semiannual cash payments to be reported as a cumulative translation adjustment in other comprehensive income in the same manner as the underlying hedged net assets. As of June 30, 2007, a $48.8 million loss, net of tax, was recorded as a cumulative translation adjustment to other comprehensive income related to the cross currency swap.
Note 4: RECENT DEVELOPMENTS
Acquisitions
The Company acquired Americas outdoor display faces and additional equity interests in international outdoor companies for $32.7 million in cash during the six months ended June 30, 2007. The Company’s national representation business acquired representation contracts for $18.8 million in cash during the six months ended June 30, 2007.
Disposition of Assets
The Company received proceeds of $18.3 million primarily related to the sale of representation contracts and international street furniture assets recorded in cash flows from investing activities and recorded a gain of $6.3 million in Gain (loss) on disposition of assets — net during the six months ended June 30, 2007. The Company also received proceeds of $57.7 million related to the sale of radio stations recorded as investing cash flows from discontinued operations and recorded a gain of $19.6 million as a component of Income from discontinued operations, net during the six months ended June 30, 2007.
Debt Maturities
On February 1, 2007, the Company redeemed its 3.125% Senior Notes at their maturity for $250.0 million plus accrued interest with proceeds from its bank credit facility.
Recent Legal Proceedings
The Company is currently involved in certain legal proceedings and, as required, has accrued our estimate of the probable costs for the resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in management’s assumptions or the effectiveness of its strategies related to these proceedings.
Note 5: RESTRUCTURING
The Company restructured its outdoor operations in France in the third quarter of 2005. As a result, the Company recorded $26.6 million in restructuring costs as a component of selling, general and administrative expenses. Of the $26.6 million, $22.5 million was related to severance costs and $4.1 million was related to other costs. During 2007, $7.8 million of related costs were paid and charged to the restructuring accrual. As of June 30, 2007, the balance was $3.3 million.
Note 6: COMMITMENTS AND CONTINGENCIES
Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies. The Company will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets are met, would not significantly impact the financial position or results of operations of the Company.

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As discussed in Note 4, there are various lawsuits and claims pending against the Company. Based on current assumptions, the Company has accrued its estimate of the probable costs for the resolution of these claims. Future results of operations could be materially affected by changes in these assumptions.
Note 7: GUARANTEES
Within the Company’s $1.75 billion credit facility, there exists a $150.0 million sub-limit available to certain of the Company’s international subsidiaries. This $150.0 million sub-limit allows for borrowings in various foreign currencies, which are used to hedge net assets in those currencies and provide funds to the Company’s international operations for certain working capital needs. Subsidiary borrowings under this sub-limit are guaranteed by the Company. At June 30, 2007, this portion of the $1.75 billion credit facility’s outstanding balance was $16.1 million, which is recorded in “Long-term debt” on the Company’s financial statements.
Within the Company’s bank credit facility agreement is a provision that requires the Company to reimburse lenders for any increased costs that they may incur in an event of a change in law, rule or regulation resulting in their reduced returns from any change in capital requirements. In addition to not being able to estimate the potential amount of any future payment under this provision, the Company is not able to predict if such event will ever occur.
The Company guarantees $40.1 million of credit lines provided to certain of its international subsidiaries by a major international bank. Most of these credit lines relate to intraday overdraft facilities covering participants in the Company’s European cash management pool. As of June 30, 2007, no amounts were outstanding under these agreements.
As of June 30, 2007, the Company has outstanding commercial standby letters of credit and surety bonds of $82.4 million and $41.2 million, respectively. These letters of credit and surety bonds relate to various operational matters including insurance, bid, and performance bonds as well as other items. Letters of credit issued under the Company’s $1.75 billion credit facility reduce the borrowing availability on the credit facility, and are included in the Company’s calculation of its leverage ratio covenant under the bank credit facilities. The surety bonds are not considered as borrowings under the Company’s bank credit facilities.
Note 8: SEGMENT DATA
The Company has three reportable segments, which it believes best reflects how the Company is currently managed — radio broadcasting, Americas outdoor advertising and International outdoor advertising. The Americas outdoor advertising segment consists primarily of our operations in the United States, Canada and Latin America, and the International outdoor segment includes operations primarily in Europe, Asia, Africa and Australia. The category “other” includes media representation and other general support services and initiatives. Revenue and expenses earned and charged between segments are recorded at fair value and eliminated in consolidation.

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(In thousands)                                   Corporate,              
                                    Merger              
            Americas     International             and Gain on              
    Radio     Outdoor     Outdoor             disposition of              
    Broadcasting     Advertising     Advertising     Other     assets — net     Eliminations     Consolidated  
Six Months Ended June 30, 2007
                                                       
Revenue
  $ 1,692,622     $ 693,866     $ 833,703     $ 106,804     $     $ (63,652 )   $ 3,263,343  
Direct operating expenses
    462,749       279,799       543,549       41,601             (33,946 )     1,293,752  
Selling, general and administrative expenses
    562,305       110,368       151,722       50,917             (29,706 )     845,606  
Depreciation and amortization
    56,605       93,193       100,630       20,979       8,230             279,637  
Corporate expenses
                            91,194             91,194  
Merger expenses
                            4,370             4,370  
Gain on disposition of assets — net
                            11,041             11,041  
 
                                         
Operating income (loss)
  $ 610,963     $ 210,506     $ 37,802     $ (6,693 )   $ (92,753 )   $     $ 759,825  
 
                                         
 
                                                       
Intersegment revenues
  $ 22,629     $ 6,734     $     $ 34,289     $     $     $ 63,652  
Identifiable assets
  $ 11,717,492     $ 2,798,497     $ 2,451,724     $ 700,638     $ 321,637     $     $ 17,989,988  
Capital expenditures
  $ 35,962     $ 50,464     $ 61,654     $ 4,293     $     $     $ 152,373  
Share-based payments
  $ 11,140     $ 3,592     $ 770     $     $ 6,083     $     $ 21,585  
Six Months Ended June 30, 2006
                                                       
Revenue
  $ 1,658,254     $ 609,349     $ 737,423     $ 111,811     $     $ (59,981 )   $ 3,056,856  
Direct operating expenses
    467,002       248,933       469,622       41,726             (32,829 )     1,194,454  
Selling, general and administrative expenses
    567,413       98,817       135,817       52,543             (27,152 )     827,438  
Depreciation and amortization
    60,276       83,485       113,662       22,682       9,194             289,299  
Corporate expenses
                            88,746             88,746  
Gain on disposition of assets — net
                            49,221             49,221  
 
                                         
Operating income (loss)
  $ 563,563     $ 178,114     $ 18,322     $ (5,140 )   $ (48,719 )   $     $ 706,140  
 
                                         
 
                                                       
Intersegment revenues
  $ 20,108     $ 4,918     $     $ 34,955     $     $     $ 59,981  
Identifiable assets
  $ 11,705,732     $ 2,629,819     $ 2,337,087     $ 679,835     $ 525,548     $     $ 17,878,021  
Capital expenditures
  $ 41,454     $ 31,536     $ 73,808     $ 957     $     $     $ 147,755  
Share-based payments
  $ 12,619     $ 2,387     $ 666     $ 828     $ 5,735     $     $ 22,235  
Three Months Ended June 30, 2007
                                                       
Revenue
  $ 918,351     $ 376,843     $ 459,870     $ 56,171     $     $ (32,998 )   $ 1,778,237  
Direct operating expenses
    235,683       144,885       284,258       21,665             (15,397 )     671,094  
Selling, general and administrative expenses
    295,407       56,125       78,432       25,561             (17,601 )     437,924  
Depreciation and amortization
    28,153       46,632       51,521       10,917       4,087             141,310  
Corporate expenses
                            43,044             43,044  
Merger expenses
                            2,684             2,684  
Gain on disposition of assets — net
                            4,090             4,090  
 
                                         
Operating income (loss)
  $ 359,108     $ 129,201     $ 45,659     $ (1,972 )   $ (45,725 )   $     $ 486,271  
 
                                         
 
                                                       
Intersegment revenues
  $ 12,207     $ 4,851     $     $ 15,940     $     $     $ 32,998  
Share-based payments
  $ 6,676     $ 2,466     $ 529     $     $ 3,668     $     $ 13,339  

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(In thousands)                                   Corporate,              
                                    Merger and              
            Americas     International             Gain on              
    Radio     Outdoor     Outdoor             disposition of              
    Broadcasting     Advertising     Advertising     Other     assets — net     Eliminations     Consolidated  
Three Months Ended June 30, 2006
                                                       
Revenue
  $ 910,194     $ 335,247     $ 413,156     $ 59,656     $     $ (29,409 )   $ 1,688,844  
Direct operating expenses
    237,092       128,922       245,237       20,913             (14,841 )     617,323  
Selling, general and administrative expenses
    300,678       50,623       68,976       26,750             (14,568 )     432,459  
Depreciation and amortization
    31,047       41,253       59,574       11,392       4,923             148,189  
Corporate expenses
                            48,239             48,239  
Gain on disposition of assets — net
                            821             821  
 
                                         
Operating income (loss)
  $ 341,377     $ 114,449     $ 39,369     $ 601     $ (52,341 )   $     $ 443,455  
 
                                         
 
                                                       
Intersegment revenues
  $ 9,310     $ 3,131     $     $ 16,968     $     $     $ 29,409  
Share-based payments
  $ 6,310     $ 1,230     $ 343     $ 413     $ 2,332     $     $ 10,628  
Revenue of $888.0 million and $785.0 million derived from foreign operations are included in the data above for the six months ended June 30, 2007 and 2006, respectively. Revenue of $489.5 million and $439.6 million derived from foreign operations are included in the data above for the three months ended June 30, 2007 and 2006, respectively. Identifiable assets of $2.7 billion and $2.6 billion derived from foreign operations are included in the data above for the six months ended June 30, 2007 and 2006, respectively.
Note 9: SUBSEQUENT EVENTS
On July 27, 2007, the Company’s Board of Directors declared a quarterly cash dividend of $0.1875 per share on the Company’s Common Stock. The dividend is payable on October 15, 2007 to shareholders of record at the close of business on September 30, 2007.
The Company announced on July 17, 2007 that it has set a new record date for the special meeting of shareholders regarding the proposed merger with the group co-led by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. The Company’s shareholders of record as of 5:00 p.m. Eastern Daylight Savings Time on July 27, 2007, will be entitled to vote at the special meeting.
Subsequent to June 30, 2007, the Company entered into definitive agreements for the sale of 13 additional radio stations. The closing of these sales is subject to antitrust clearances, FCC approval and other customary closing conditions. The Company also completed the sale of 11 radio stations it had under definitive asset purchase agreements at June 30, 2007.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Proposed Merger with a Group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC
     On May 17, 2007, we entered into a second amendment to our previously announced Merger Agreement with a private equity group co-led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC. Under the terms of the Merger Agreement, as amended, the Company’s shareholders can elect to have each share of Company’s common stock they own to be converted into the right to receive either (1) $39.20 in cash, without interest, or (2) one share of Class A common stock of CC Media Holdings, Inc., a corporation formed by the private equity group that, after the merger, will be the ultimate corporate parent of the Company.
     Unaffiliated shareholders and option holders of the Company will have the right to select the form of merger consideration they receive. This election is subject to pro rata adjustment in the event that elections to receive Class A common stock would require CC Media Holdings, Inc. to issue more than 30.6 million shares of Class A common stock, or approximately 30% of the outstanding capital stock and voting power of CC Media Holdings, Inc. immediately following the merger. In addition, no shareholder or option holder who has selected the stock consideration may be allocated a number of CC Media Holdings, Inc. Class A common stock representing more than 9.9% of the outstanding common stock of CC Media Holdings, Inc. immediately following the merger. The limitation on the aggregate number of shares to be issued as stock consideration will allow up to a maximum of approximately 6% of the shares of the Company’s common stock and stock options outstanding as of the record date of the special meeting to be converted into Class A common stock of CC Media Holdings, Inc. as merger consideration.
     We announced on July 17, 2007 that we set a new record date for the special meeting of shareholders regarding the second amendment to our Merger Agreement. Our shareholders of record as of 5:00 p.m. Eastern Daylight Savings Time on July 27, 2007, will be entitled to vote at the special meeting.
     The consummation of the merger is subject to shareholder approval, antitrust clearances, FCC approval and other customary closing conditions. Assuming satisfaction of the closing conditions, the parties expect to close the merger during the fourth quarter of 2007.
Sale of Radio Stations and all of our Television Stations
     On November 16, 2006, we announced plans to sell 448 radio stations and all of our television stations. The sale of these assets is not contingent on the closing of the merger described above. Definitive asset purchase agreements were signed for 374 radio stations, 8 of which were not part of the announced 448 stations, as of June 30, 2007. These stations, along with 26 stations which were sold in the fourth quarter of 2006 and first six months of 2007, 5 of which were not part of the announced 448 stations, were classified as assets from discontinued operations in our consolidated balance sheet and as discontinued operations in our consolidated statements of operations. Through August 7, 2007, we had definitive asset purchase agreements for the sale of 13 additional radio stations. The closing of these sales is subject to antitrust clearances, FCC approval and other customary closing conditions. Also through August 7, 2007, we completed the sales of 11 radio stations that were under definitive agreement at June 30, 2007.
     On April 20, 2007, we announced that we entered into a definitive agreement to sell our television business for approximately $1.2 billion. The sale of our television business is not contingent on the closing of the merger described above. The transaction is expected to close in the fourth quarter of 2007, subject to regulatory approvals and other customary closing conditions. Our television business is reported as assets and liabilities of discontinued operations on our consolidated balance sheet and the results of operations as discontinued operations on our statements of operations.
Format of Presentation
     Management’s discussion and analysis of our results of operations and financial condition should be read in conjunction with the consolidated financial statements and related footnotes. Our discussion is presented on both a consolidated and segment basis. Our reportable operating segments are Radio Broadcasting, or radio, which includes our national syndication business, Americas Outdoor Advertising, or Americas, and International Outdoor Advertising, or International. Included in the “other” segment are our media representation business, Katz Media, as well as other general support services and initiatives.
     We manage our operating segments primarily focusing on their operating income, while Corporate expenses, Merger expenses, Gain (loss) on disposition of assets — net, Interest expense, Gain (loss) on marketable securities, Equity in earnings of nonconsolidated affiliates, Other income (expense) — net, Income tax benefit (expense) and Minority interest — net of tax are managed on a total company basis and are, therefore, included only in our discussion of consolidated results.

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Radio Broadcasting
     Our revenues are derived from selling advertising time, or spots, on our radio stations, with advertising contracts typically less than one year. The formats are designed to reach audiences with targeted demographic characteristics that appeal to our advertisers. Management monitors average advertising rates, which are principally based on the length of the spot and how many people in a targeted audience listen to our stations, as measured by an independent ratings service. The size of the market influences rates as well, with larger markets typically receiving higher rates than smaller markets. Also, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours typically the highest. Management monitors yield in addition to average rates because yield allows management to track revenue performance across our inventory. Yield is defined by management as revenue earned divided by commercial capacity available.
     Management monitors macro level indicators to assess our radio operations’ performance. Due to the geographic diversity and autonomy of our markets, we have a multitude of market specific advertising rates and audience demographics. Therefore, management reviews average unit rates across all of our stations.
     Management looks at our radio operations’ overall revenues as well as local advertising, which is sold predominately in a station’s local market, and national advertising, which is sold across multiple markets. Local advertising is sold by each radio stations’ sales staffs while national advertising is sold, for the most part, through our national representation firm. Local advertising, which is our largest source of advertising revenue, and national advertising revenues are tracked separately, because these revenue streams have different sales forces and respond differently to changes in the economic environment.
     Management also looks at radio revenue by market size, as defined by Arbitron. Typically, larger markets can reach larger audiences with wider demographics than smaller markets. Additionally, management reviews our share of target demographics listening to the radio in an average quarter hour. This metric gauges how well our formats are attracting and retaining listeners.
     A portion of our radio segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our programming and general and administrative departments incur most of our fixed costs, such as talent costs, rights fees, utilities and office salaries. Lastly, our highly discretionary costs are in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience share.
Americas and International Outdoor Advertising
     Our revenues are derived from selling advertising space on the displays that we own or operate in key markets worldwide consisting primarily of billboards, street furniture and transit displays. We own the majority of our advertising displays, which typically are located on sites that we either lease or own or for which we have acquired permanent easements. Our advertising contracts typically outline the number of displays reserved, the duration of the advertising campaign and the unit price per display.
     Our advertising rates are based on the gross rating points, or total number of impressions delivered by a display or group of displays, expressed as a percentage of a market population. The number of impressions delivered by a display is measured by the number of people passing the site during a defined period of time and, in some international markets, is weighted to account for such factors as illumination, proximity to other displays and the speed and viewing angle of approaching traffic. Management typically monitors our business by reviewing the average rates, average revenues per display, or yield, occupancy, and inventory levels of each of our display types by market. In addition, because a significant portion of our advertising operations are conducted in foreign markets, principally France and the United Kingdom, management reviews the operating results from our foreign operations on a constant dollar basis. A constant dollar basis allows for comparison of operations independent of foreign exchange movements. Because revenue-sharing and minimum guaranteed payment arrangements are more prevalent in our International operations, the margins in our International operations typically are less than the margins in our Americas operations.
     The significant expenses associated with our operations include (i) direct production, maintenance and installation expenses, (ii) site lease expenses for land under our displays and (iii) revenue-sharing or minimum guaranteed amounts payable under our street furniture and transit display contracts. Our direct production, maintenance and installation expenses include costs for printing, transporting and changing the advertising copy on our displays, the related labor costs, the vinyl and paper costs and the costs for cleaning and maintaining our displays. Vinyl and paper costs vary according to the complexity of the advertising copy and the quantity of displays. Our site lease expenses include lease payments for use of the land under our displays, as well as any revenue-sharing arrangements or minimum guaranteed amounts payable that we may have with the landlords. The terms of our site leases and revenue-sharing or minimum guaranteed contracts generally range from 1 to 20 years.
     Our street furniture and transit display contracts, the terms of which range from 3 to 20 years, generally require us to make upfront investments in property, plant and equipment. These contracts may also include upfront lease payments and/or minimum

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annual guaranteed lease payments. We can give no assurance that our cash flows from operations over the terms of these contracts will exceed the upfront and minimum required payments.
     The results in 2007 include our acquisition of Interspace Airport Advertising, or Interspace, which we acquired in July 2006.
FAS 123(R), Share-Based Payment
     As of June 30, 2007, there was $113.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of approximately three years. The following table details compensation costs related to share-based payments for the three and six months ended June 30, 2007 and 2006:
                                 
    Three Months ended June 30,     Six Months ended June 30,  
(In millions)   2007     2006     2007     2006  
Radio Broadcasting
                               
Direct Operating Expenses
  $ 3.0     $ 2.8     $ 5.0     $ 5.6  
SG&A
    3.7       3.5       6.1       7.0  
Americas Outdoor Advertising
                               
Direct Operating Expenses
  $ 1.8     $ 0.9     $ 2.6     $ 1.7  
SG&A
    0.7       0.3       1.0       0.6  
International Outdoor Advertising
                               
Direct Operating Expenses
  $ 0.4     $ 0.2     $ 0.6     $ 0.4  
SG&A
    0.1       0.1       0.2       0.2  
Other
                               
Direct Operating Expenses
  $     $ 0.2     $     $ 0.4  
SG&A
          0.3             0.6  
Corporate
  $ 3.7     $ 2.3     $ 6.1     $ 5.7  

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The comparison of Three and Six Months Ended June 30, 2007 to Three and Six Months Ended June 30, 2006 is as follows:
                                                 
(In thousands)   Three Months Ended June 30,     %     Six Months Ended June 30,     %  
    2007     2006     Change     2007     2006     Change  
Revenue
  $ 1,778,237     $ 1,688,844       5 %   $ 3,263,343     $ 3,056,856       7 %
Operating expenses:
                                               
Direct operating expenses
    671,094       617,323       9 %     1,293,752       1,194,454       8 %
Selling, general and administrative expenses
    437,924       432,459       1 %     845,606       827,438       2 %
Depreciation and amortization
    141,310       148,189       (5 %)     279,637       289,299       (3 %)
Corporate expenses
    43,044       48,239       (11 %)     91,194       88,746       3 %
Merger expenses
    2,684                     4,370                
Gain (loss) on disposition of assets — net
    4,090       821               11,041       49,221          
 
                                       
Operating income
    486,271       443,455       10 %     759,825       706,140       8 %
Interest expense
    116,422       123,298               234,499       237,674          
Gain (loss) on marketable securities
    (410 )     (1,000 )             (15 )     (3,324 )        
Equity in earnings of nonconsolidated affiliates
    11,435       9,715               16,699       16,624          
Other income (expense) — net
    340       (4,609 )             328       (5,257 )        
 
                                       
Income before income taxes, minority interest and discontinued operations
    381,214       324,263               542,338       476,509          
Income tax benefit (expense):
                                               
Current
    (120,989 )     (104,542 )             (150,782 )     (106,764 )        
Deferred
    (36,494 )     (33,417 )             (73,912 )     (93,931 )        
 
                                       
Income tax benefit (expense)
    (157,483 )     (137,959 )             (224,694 )     (200,695 )        
Minority interest expense, net of tax
    14,970       13,736               15,245       12,957          
 
                                       
Income before discontinued operations
    208,761       172,568               302,399       262,857          
Income from discontinued operations, net
    27,229       24,920               35,813       31,445          
 
                                       
Net income
  $ 235,990     $ 197,488             $ 338,212     $ 294,302          
 
                                       
Consolidated Revenue
Three Months
     Our consolidated revenues increased $89.4 million during the second quarter of 2007 compared to the same period of 2006. Our International revenue increased $46.7 million, including approximately $28.1 million related to movements in foreign exchange. In addition to foreign exchange, International revenue growth was led by street furniture revenues. Our Americas revenue increased $41.6 million. Interspace, which we acquired in July 2006, contributed approximately $15.1 million of the increase. In addition to Interspace, our Americas revenue growth was led by bulletin revenues. Our radio revenue increased $8.2 million primarily from an increase in our syndicated radio programming, traffic and on-line businesses. These increases were partially offset by declines from operations classified in our “other” segment.
Six Months
     Our consolidated revenues increased $206.5 million during the six months of 2007 compared to the same period of 2006. Our International revenue increased $96.3 million, including approximately $59.3 million related to movements in foreign exchange. In addition to foreign exchange, International revenue growth was led by street furniture revenues. Our Americas revenue increased $84.5 million with Interspace contributing approximately $30.4 million of the increase. In addition to Interspace, our Americas revenue growth was led by bulletin revenues. Our radio revenue increased $34.4 million primarily from an increase in our syndicated radio programming, traffic and on-line businesses. These increases were partially offset by declines from operations classified in our “other” segment.
Consolidated Direct Operating Expenses
Three Months
     Our consolidated direct operating expenses increased approximately $53.8 million during the second quarter of 2007 compared to the same period of 2006. International direct operating expenses increased $39.0 million primarily from $18.5 million related to movements in foreign exchange. Americas direct operating expenses increased $16.0 million with Interspace contributing

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approximately $7.0 million. Partially offsetting these increases was a decline in our radio direct operating expenses of approximately $1.4 million primarily from a decline in programming expenses and expenses associated with non-traditional revenue.
Six Months
     Our consolidated direct operating expenses increased approximately $99.3 million during the first six months of 2007 compared to the same period of 2006. International direct operating expenses increased $73.9 million primarily from $41.0 million related to movements in foreign exchange. Americas direct operating expenses increased $30.9 million with Interspace contributing approximately $13.6 million. Partially offsetting these increases was a decline in our radio direct operating expenses of approximately $4.3 million primarily from a decline in programming expenses and expenses associated with non-traditional revenue.
Consolidated Selling, General and Administrative Expenses, or SG&A
Three Months
     Our consolidated SG&A expenses increased approximately $5.5 million during the second quarter of 2007 compared to the same period of 2006. International SG&A expenses increased $9.5 million primarily related to movements in foreign exchange. Americas SG&A expenses increased $5.5 million attributable to $3.6 million from Interspace and the rest primarily attributable to sales expenses associated with the increase in revenue. Our radio SG&A expenses decreased $5.3 million for the same period primarily driven by a decrease in selling expenses. We also experienced expense declines from operations classified in our “other” segment.
Six Months
     Our consolidated SG&A expenses increased approximately $18.2 million during the first six months of 2007 compared to the same period of 2006. International SG&A expenses increased $15.9 million primarily related to movements in foreign exchange. Americas SG&A expenses increased $11.6 million attributable to $6.6 million from Interspace and the rest primarily attributable to sales expenses associated with the increase in revenue. Our radio SG&A expenses decreased $5.1 million for the same period primarily driven by a decrease in selling expenses. We also experienced expense declines from operations classified in our “other” segment.
Corporate Expenses
     Corporate expenses decreased $5.2 million for the three months ended June 30, 2007 compared to the same period of 2006 primarily as a result of a reduction in legal costs associated with the completion of and favorable rulings surrounding certain legal cases. Corporate expenses increased $2.4 million for the six months ended June 30, 2007 compared to the same period of 2006 primarily as a result of an increase in bonus expenses.
Gain (loss) on Disposition of Assets — Net
     The gain on disposition of assets declined approximately $38.2 million primarily as a result of gains recognized in the first quarter of 2006 including a $15.1 million gain in our Americas outdoor segment from the exchange of assets in one of our markets for the assets of a third party located in a different market and $22.5 million in our radio segment primarily from the sale of programming rights in one of our markets.
Interest Expense
     Interest expense declined $6.9 million and $3.2 million in the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the same periods of 2006. The declines were primarily from a reduction in our outstanding debt related to the maturity of our 6% Senior Notes in November 2006 and the maturity of our 3.125% Senior Notes in February 2007. Our weighted average cost of debt at June 30, 2007 and 2006 was 6.2%.
Income Tax Benefit (Expense)
     Current tax expense increased $16.4 million primarily due to the increase in Income before income taxes, while our effective rate remained relatively flat, for the three months ended June 30, 2007 compared to the three months ended June 30, 2006.
     Current tax expense increased $44.0 million primarily due to the increase in Income before income taxes of $65.8 million, while our effective rate remained relatively flat, for the six months ended June 30, 2007 compared to the six months ended June 30, 2006. In addition, the Company recorded approximately $22.2 million in current tax benefit during the six months ended June 30, 2006 related to tax losses in excess of the amount reported for financial reporting purposes from the disposition of certain operating assets. Deferred tax expense for the six months ended June 30, 2007 decreased $20.0 million compared to the six months ended June

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     30, 2006 primarily due to deferred tax expense of $22.2 million being recorded during the six months ended June 30, 2006 related to the disposition of certain operating assets mentioned above.
Segment Revenue and Divisional Operating Expenses
Radio Broadcasting
                                                 
(In thousands)   Three Months Ended June 30,     %     Six Months Ended June 30,     %  
    2007     2006     Change     2007     2006     Change  
Revenue
  $ 918,351     $ 910,194       1 %   $ 1,692,622     $ 1,658,254       2 %
Direct operating expenses
    235,683       237,092       (1 %)     462,749       467,002       (1 %)
Selling, general and administrative expenses
    295,407       300,678       (2 %)     562,305       567,413       (1 %)
Depreciation and amortization
    28,153       31,047       (9 %)     56,605       60,276       (6 %)
 
                                       
Operating income
  $ 359,108     $ 341,377       5 %   $ 610,963     $ 563,563       8 %
 
                                       
Three Months
     Our radio revenue increased 1% during the second quarter of 2007 as compared to 2006 primarily from an increase in our syndicated radio programming, traffic and on-line businesses. Also contributing to the revenue growth was growth in our mid-size markets. Average unit rates for our 15, 30 and 60 second commercials also increased in the second quarter of 2007 compared to the same period of the prior year. Advertising categories that increased were services and health and beauty offset by a decline in automotive and retail.
     Our radio direct operating expenses decreased approximately $1.4 million during the second quarter of 2007 as compared to 2006 primarily from a decline of approximately $4.8 million in programming expenses and expenses associated with non-traditional revenue, partially offset by an increase of $3.4 million principally from increases in our traffic and on-line expenses. Our SG&A expenses decreased $5.3 million for the same period primarily driven by a decrease in selling expenses.
Six Months
     Our radio revenue increased 2% during the first six months of 2007 as compared to 2006 primarily from an increase in our syndicated radio programming, traffic and on-line businesses. National revenues and revenue growth in our top 100 markets also contributed to the revenue growth. Advertising categories contributing to the revenue growth for the first six months of 2007 were services, health and beauty, entertainment and restaurants. Our radio direct operating expenses decreased approximately $4.3 million primarily from a decline of $17.3 million in programming, news and sports expenses and expenses associated with non-traditional revenue, partially offset by an increase of $13.0 million principally from increases in our traffic and on-line expenses associated with the increase in revenue from these businesses during the first six months of 2007 as compared to the same period of 2006. Our SG&A expenses decreased $5.1 million for the same period primarily driven by a decrease in selling expenses.
Americas Outdoor Advertising
                                                 
(In thousands)   Three Months Ended June 30,     %     Six Months Ended June 30,     %  
    2007     2006     Change     2007     2006     Change  
Revenue
  $ 376,843     $ 335,247       12 %   $ 693,866     $ 609,349       14 %
Direct operating expenses
    144,885       128,922       12 %     279,799       248,933       12 %
Selling, general and administrative expenses
    56,125       50,623       11 %     110,368       98,817       12 %
Depreciation and amortization
    46,632       41,253       13 %     93,193       83,485       12 %
 
                                       
Operating income
  $ 129,201     $ 114,449       13 %   $ 210,506     $ 178,114       18 %
 
                                       
Three Months
     Our Americas revenue increased $41.6 million, or 12%, during the second quarter of 2007 as compared to 2006. Interspace contributed approximately $15.1 million to the increase. We experienced rate increases across our inventory. The growth was led by bulletin revenues due to the increased rates while occupancy was essentially flat in 2007 compared to 2006. Revenue growth occurred across many of our markets, including Boston, Washington, Philadelphia and Seattle. Advertising categories that contributed to the growth were automotive, telecommunications and retail.

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     Direct operating expenses increased $16.0 million in the second quarter of 2007 as compared to 2006 with Interspace contributing approximately $7.0 million and site-lease expenses contributing $6.5 million during this same period. SG&A expenses increased $5.5 million attributable to $3.6 million from Interspace and the rest primarily attributable to sales expenses associated with the increase in revenue.
     Depreciation and amortization increased $5.4 million primarily associated with $3.3 million from Interspace.
Six Months
     Our Americas revenue increased 14%, or $84.5 million, during the six months ended June 30, 2007 as compared to the same period of 2006. Interspace contributed approximately $30.4 million to the increase. Bulletin revenues also contributed to the increase in revenues. Direct operating expenses increased $30.9 million in the six months ended June 30, 2007 over the same period of 2006 primarily from an increase of $13.6 million related to Interspace and an increase in site lease expenses of approximately $13.8 million. Our SG&A expenses increased $11.6 million in the first six months of 2007 over the same period of 2006. Interspace contributed approximately $6.6 million to the increase and the rest of the increase was attributable to bonus and commission expenses.
     Depreciation and amortization increased $9.7 million primarily associated with $6.3 million from Interspace.
International Outdoor Advertising
                                                 
(In thousands)   Three Months Ended June 30,     %     Six Months Ended June 30,     %  
    2007     2006     Change     2007     2006     Change  
Revenue
  $ 459,870     $ 413,156       11 %   $ 833,703     $ 737,423       13 %
Direct operating expenses
    284,258       245,237       16 %     543,549       469,622       16 %
Selling, general and administrative expenses
    78,432       68,976       14 %     151,722       135,817       12 %
Depreciation and amortization
    51,521       59,574       (14 %)     100,630       113,662       (11 %)
 
                                       
Operating income
  $ 45,659     $ 39,369       16 %   $ 37,802     $ 18,322       106 %
 
                                       
Three Months
     Our International revenue increased $46.7 million, or 11%, in the second quarter of 2007 as compared to 2006. Included in the increase was approximately $28.1 million related to movements in foreign exchange. Growth was led by street furniture revenues. The increase in street furniture revenues was primarily attributable to increased yield. On a constant dollar basis, revenue from our operations in France decreased primarily from a decline in national advertising during the French Presidential elections and due to some retailers shifting to television advertising from outdoor. Revenue was essentially unchanged in the United Kingdom. Markets contributing to the revenue growth were Italy, Spain and Ireland.
     Direct operating expenses increased $39.0 million during the second quarter of 2007 as compared to 2006. Approximately $18.5 million of the increase related to movements in foreign exchange. Also contributing to the increase was an increase in site lease expenses primarily associated with the increase in revenue and higher expenses due to a certain contract to post political displays during the French Presidential election and the renewal of certain street furniture contracts. SG&A expenses increased $9.5 million primarily related to movements in foreign exchange.
     Depreciation and amortization declined $8.1 million primarily from contracts which were fully amortized at December 31, 2006.
Six Months
     Revenue in our international outdoor segment increased $96.3 million, or 13%, in the first six months of 2007 compared to the same period of 2006. Included in the increase was approximately $59.3 million related to movements in foreign exchange. Also contributing to the increase was growth in street furniture revenues primarily as a result of increased yield during the six months ended June 30, 2007 compared to the same period of 2006. Direct operating expenses increased $73.9 million during the six months ended June 30, 2007 as compared to the same period of 2006 primarily from approximately $41.0 million related to movements in foreign exchange as well as an increase in site-lease expenses associated with the increase in revenue and new contracts. Our SG&A expenses increased $15.9 million primarily attributable to $11.4 million related to movements in foreign exchange.
     Depreciation and amortization declined $13.0 million primarily from contracts which were fully amortized at December 31, 2006.

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Reconciliation of Segment Operating Income (Loss) to Consolidated Operating Income
                                 
    Three Months ended June 30,     Six Months ended June 30,  
(In thousands)   2007     2006     2007     2006  
Radio Broadcasting
  $ 359,108     $ 341,377     $ 610,963     $ 563,563  
Americas Outdoor Advertising
    129,201       114,449       210,506       178,114  
International Outdoor Advertising
    45,659       39,369       37,802       18,322  
Other
    (1,972 )     601       (6,693 )     (5,140 )
Gain on disposition of assets — net
    4,090       821       11,041       49,221  
Corporate
    (49,815 )     (53,162 )     (103,794 )     (97,940 )
 
                       
Consolidated operating income
  $ 486,271     $ 443,455     $ 759,825     $ 706,140  
 
                       
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
                 
(In thousands)   Six Months Ended June 30,  
    2007     2006  
Cash provided by (used in):
               
Operating activities
  $ 658,998     $ 772,744  
Investing activities
  $ (201,313 )   $ (384,249 )
Financing activities
  $ (566,703 )   $ (395,261 )
Discontinued operations
  $ 84,802     $ 28,493  
Operating Activities
     Cash flow from operating activities for the six months of 2007 primarily reflected income before discontinued operations of $302.4 million plus depreciation and amortization of $279.6 million and deferred taxes of $73.9 million. Cash flow from operating activities for the six months ended June 30, 2006 principally reflected income before discontinued operations of $262.9 million plus depreciation and amortization of $289.3 million and deferred taxes of $93.9 million. Also contributing to cash flow from operating activities was $133.3 million primarily related to a refund from the overpayment of 2005 taxes due to a foreign exchange loss from the restructuring of our international business in anticipation of our strategic realignment as well as applying a portion of the capital loss generated from our spin-off of Live Nation to capital gains recognized in 2005 and prior years.
Investing Activities
     Cash used in investing activities during the first six months of 2007 principally reflects the purchase of property, plant and equipment of $152.4 million. Cash used in investing activities for the six months ended June 30, 2006 reflected an increase in restricted cash related to money escrowed for our acquisition of Interspace Airport Advertising of $81.3 million. Cash used for the acquisition of operating assets was $149.4 million during the six months ended June 30, 2006 which primarily related to the acquisition of a music scheduling company in our radio segment and the acquisition of an outdoor advertising business in the United Kingdom. Cash used in investing activities for the six months ended June 30, 2006 also reflected $147.8 million used for the purchase of property, plant and equipment.
Financing Activities
     Cash used in financing activities for the six months ended June 30, 2007 principally reflected net payments on our credit facility of $207.7 million, $250.0 million plus accrued interest related to the February 2007 maturity of our 3.125% Senior Notes and $185.6 million in dividends paid. Cash used in financing activities of $395.3 million for the six months ended June 30, 2006 primarily reflected $1.1 billion used for the purchase of our common stock, $196.4 million used for the payment of dividends, partially offset by net draws on our credit facility of $433.9 million and $506.2 million from the issuance of long term debt.
Discontinued Operations
     We had definitive asset purchase agreements signed for the sale of 374 of our radio stations and all of our television stations as of June 30, 2007. The cash flows from these businesses, along with 26 radio stations which were sold in the fourth quarter of 2006 and first half of 2007, are reported for both years as cash flows from discontinued operations.

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Anticipated Cash Requirements
     We expect to fund anticipated cash requirements (including payments of principal and interest on outstanding indebtedness and commitments, acquisitions, anticipated capital expenditures, quarterly dividends and share repurchases) for the foreseeable future with cash flows from operations and various externally generated funds.
SOURCES OF CAPITAL
As of June 30, 2007 and December 31, 2006, we had the following debt outstanding:
                 
(In millions)   June 30,     December 31,  
    2007     2006  
Credit facilities
  $ 785.3     $ 966.5  
Long-term bonds (a)
    6,277.5       6,531.6  
Other borrowings
    145.2       164.9  
 
           
Total Debt
    7,208.0       7,663.0  
Less: Cash and cash equivalents
    91.8       116.0  
 
           
 
  $ 7,116.2     $ 7,547.0  
 
           
(a)   Includes $5.2 million and $7.1 million at June 30, 2007 and December 31, 2006, respectively, in unamortized fair value purchase accounting adjustment premiums related to the merger with AMFM. Also includes negative $33.1 million and $29.8 million related to fair value adjustments for interest rate swap agreements at June 30, 2007 and December 31, 2006, respectively.
Credit Facility
     We have a multi-currency revolving credit facility in the amount of $1.75 billion, which can be used for general working capital purposes including commercial paper support as well as to fund capital expenditures, share repurchases, acquisitions and the refinancing of public debt securities. At June 30, 2007, the outstanding balance on this facility was $785.3 million and, taking into account letters of credit of $76.0 million, $888.7 million was available for future borrowings, with the entire balance to be repaid on July 12, 2009.
     During the six months ended June 30, 2007, we made principal payments totaling $576.5 million and drew down $368.9 million on the credit facility. As of August 7, 2007, the credit facility’s outstanding balance was $716.2 million and, taking into account outstanding letters of credit, $957.8 million was available for future borrowings.
Shelf Registration
     On August 30, 2006, we filed a Registration Statement on Form S-3 covering the issuance of debt securities, junior subordinated debt securities, preferred stock, common stock, warrants, stock purchase contracts and stock purchase units. The shelf registration statement also covers preferred securities that may be issued from time to time by our three Delaware statutory business trusts and guarantees of such preferred securities by us. This shelf registration statement was automatically effective on August 31, 2006 for a period of three years.
Debt Covenants
     The significant covenants on our $1.75 billion five-year, multi-currency revolving credit facility relate to leverage and interest coverage contained and defined in the credit agreement. The leverage ratio covenant requires us to maintain a ratio of consolidated funded indebtedness to operating cash flow (each as defined by the credit agreement) of less than 5.25x. The interest coverage covenant requires us to maintain a minimum ratio of operating cash flow (each as defined by the credit agreement) to interest expense of 2.50x. In the event that we do not meet these covenants, we are considered to be in default on the credit facility at which time the credit facility may become immediately due. At June 30, 2007, our leverage and interest coverage ratios were 3.2x and 4.8x, respectively. This credit facility contains a cross default provision that would be triggered if we were to default on any other indebtedness greater than $200.0 million.
     Our other indebtedness does not contain provisions that would cause a default if we were to default on our credit facility.
     The fees we pay on our $1.75 billion, five-year multi-currency revolving credit facility depend on the highest of our long-term debt ratings, unless there is a split rating of more than one level in which case the fees depend on the long-term debt rating that is

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one level lower than the highest rating. Based on our current ratings level of B+/Baa3, our fees on borrowings are a 52.5 basis point spread to LIBOR and are 22.5 basis points on the total $1.75 billion facility. In the event our ratings improve, the fee on borrowings and facility fee decline gradually to 20.0 basis points and 9.0 basis points, respectively, at ratings of A/A3 or better. In the event that our ratings decline, the fee on borrowings and facility fee increase gradually to 120.0 basis points and 30.0 basis points, respectively, at ratings of BB/Ba2 or lower.
     We believe there are no other agreements that contain provisions that trigger an event of default upon a change in long-term debt ratings that would have a material impact to our financial statements.
     Additionally, our 8% senior notes due 2008, which were originally issued by AMFM Operating Inc., a wholly-owned subsidiary of Clear Channel, contain certain restrictive covenants that limit the ability of AMFM Operating Inc. to incur additional indebtedness, enter into certain transactions with affiliates, pay dividends, consolidate, or effect certain asset sales.
     At June 30, 2007 we were in compliance with all debt covenants.
USES OF CAPITAL
Dividends
     Our Board of Directors declared quarterly cash dividends as follows:
(In millions, except per share data)
                                 
Declaration   Amount per                     Total  
Date   Common Share     Record Date     Payment Date     Payment  
October 25, 2006
    0.1875     December 31, 2006   January 15, 2007   $ 92.6  
February 21, 2007
    0.1875     March 31, 2007   April 15, 2007     93.0  
April 19, 2007
    0.1875     June 30, 2007   July 15, 2007     93.4  
     Additionally, on July 27, 2007, our Board of Directors declared a quarterly cash dividend of $0.1875 per share on our Common Stock. The dividend is payable on October 15, 2007 to shareholders of record at the close of business on September 30, 2007.
Acquisitions
     We acquired Americas outdoor display faces and additional equity interests in international outdoor companies for $32.7 million in cash during the six months ended June 30, 2007. Our national representation business acquired representation contracts for $18.8 million in cash during the six months ended June 30, 2007.
Capital Expenditures
     Capital expenditures were $152.4 million and $147.8 million in the six months ended June 30, 2007 and 2006, respectively.
                                         
(In millions)   Six Months Ended June 30, 2007 Capital Expenditures  
            Americas     International              
            Outdoor     Outdoor     Corporate and        
    Radio     Advertising     Advertising     Other     Total  
Non-revenue producing
  $ 36.0     $ 16.1     $ 20.7     $ 4.3     $ 77.1  
Revenue producing
          34.4       40.9             75.3  
 
                             
 
  $ 36.0     $ 50.5     $ 61.6     $ 4.3     $ 152.4  
 
                             
Commitments, Contingencies and Guarantees
     There are various lawsuits and claims pending against us. Based on current assumptions, we have accrued an estimate of the probable costs for the resolution of these claims. Future results of operations could be materially affected by changes in these assumptions.

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     Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies generally over a one to five year period. We will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets are met, would not significantly impact our financial position or results of operations.
Debt Maturities
     On February 1, 2007, we redeemed our 3.125% Senior Notes at their maturity for $250.0 million plus accrued interest with proceeds from our bank credit facility.
MARKET RISK
Interest Rate Risk
     At June 30, 2007, approximately 27% of our long-term debt, including fixed-rate debt on which we have entered into interest rate swap agreements, bears interest at variable rates. Accordingly, our earnings are affected by changes in interest rates. Assuming the current level of borrowings at variable rates and assuming a two percentage point change in the average interest rate under these borrowings, it is estimated that our interest expense for the six months ended June 30, 2007 would have changed by $19.5 million and that our net income for the six months ended June 30, 2007 would have changed by $11.5 million. In the event of an adverse change in interest rates, management may take actions to further mitigate its exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, this interest rate analysis assumes no such actions. Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.
     At June 30, 2007, we had interest rate swap agreements with a $1.1 billion aggregate notional amount that effectively float interest at rates based upon LIBOR. These agreements expire from May 2009 to March 2012. The fair value of these agreements at June 30, 2007 was a liability of $33.1 million.
Equity Price Risk
     The carrying value of our available-for-sale and trading equity securities is affected by changes in their quoted market prices. It is estimated that a 20% change in the market prices of these securities would change their carrying value at June 30, 2007 by $44.1 million and would change comprehensive income and net income by $16.1 million and $10.0 million, respectively. At June 30, 2007, we also held $16.2 million of investments that do not have a quoted market price, but are subject to fluctuations in their value.
     We maintain derivative instruments on certain of our trading equity securities to limit our exposure to and benefit from price fluctuations on those securities.
Foreign Currency
     We have operations in countries throughout the world. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. To mitigate a portion of the exposure of international currency fluctuations, we maintain a natural hedge through borrowings in currencies other than the U.S. dollar. In addition, we have U.S. dollar — Euro cross currency swaps which are also designated as a hedge of our net investment in foreign denominated assets. These hedge positions are reviewed monthly. Our foreign operations reported net income of $22.3 million for the six months ended June 30, 2007. It is estimated that a 10% change in the value of the U.S. dollar to foreign currencies would change net income for the six months ended June 30, 2007 by $2.2 million.
     Our earnings are also affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies as a result of our investments in various countries, all of which are accounted for under the equity method. It is estimated that the result of a 10% fluctuation in the value of the dollar relative to these foreign currencies at June 30, 2007 would change our equity in earnings of nonconsolidated affiliates by $1.6 million and would change our net income by approximately $0.9 million for the six months ended June 30, 2007.
     This analysis does not consider the implications that such fluctuations could have on the overall economic activity that could exist in such an environment in the U.S. or the foreign countries or on the results of operations of these foreign entities.
Recent Accounting Pronouncements
     Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115 (“Statement 159”), was issued in February 2007. Statement 159 permits

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entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Statement 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. Statement 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. Statement 159 does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in Statements No. 157, Fair Value Measurements, and No. 107, Disclosures about Fair Value of Financial Instruments. Statement 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We expect to adopt Statement 159 on January 1, 2008 and do not anticipate adoption to materially impact our financial position or results of operations.
Inflation
     Inflation has affected our performance in terms of higher costs for wages, salaries and equipment. Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs in various manners.
Ratio of Earnings to Fixed Charges
     The ratio of earnings to fixed charges is as follows:
                                                 
Six Months Ended    
June 30,   Year Ended December 31,
2007   2006   2006   2005   2004   2003   2002
2.21
    2.08       2.22       2.20       2.69       3.49       2.38  
     The ratio of earnings to fixed charges was computed on a total enterprise basis. Earnings represent income from continuing operations before income taxes less equity in undistributed net income (loss) of unconsolidated affiliates plus fixed charges. Fixed charges represent interest, amortization of debt discount and expense, and the estimated interest portion of rental charges. We had no preferred stock outstanding for any period presented.
Risks Regarding Forward Looking Statements
     The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. Except for the historical information, this report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including our future levels of cash flow from operations. Management believes that all statements that express expectations and projections with respect to future matters, including the success of our Merger Agreement and the planned sale of radio and television assets; our ability to negotiate contracts having more favorable terms; and the availability of capital resources; are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our financial performance. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. The Company does not intend to update any forward looking statements.
     A wide range of factors could materially affect future developments and performance, including:
    the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;
 
    the outcome of any legal proceedings that have been or may be instituted against us relating to the Merger Agreement;
 
    our inability to complete the merger due to the failure to obtain shareholder approval or to satisfy any other conditions to completion of the merger;
 
    the impact of the substantial indebtedness incurred to finance the consummation of the merger;
 
    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;

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    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.
     This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is within Item 2 of this Part I.
ITEM 4. CONTROLS AND PROCEDURES
     Our principal executive and financial officers have concluded, based on their evaluation as of the end of the period covered by this Form 10-Q, that our disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, are effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
     There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II — OTHER INFORMATION
Item 1. Legal Proceedings
     On September 9, 2003, the Assistant United States Attorney for the Eastern District of Missouri caused a Subpoena to Testify before Grand Jury to be issued to us. The Subpoena requires us to produce certain information regarding commercial advertising run by us on behalf of offshore and / or online (Internet) gambling businesses, including sports bookmaking and casino-style gambling. On October 5, 2006, the Company received a subpoena from the Assistant United States Attorney for the Southern District of New York requiring it to produce certain information regarding substantially the same matters as covered in the subpoena from the Eastern District of Missouri. We are cooperating with such requirements.
     On February 7, 2005, the Company received a subpoena from the State of New York Attorney General’s office, requesting information on policies and practices regarding record promotion on radio stations in the state of New York. We are cooperating with this subpoena.
Merger related litigation
     Eight putative class action lawsuits were filed in the District Court of Bexar County, Texas, in 2006 in connection with the merger. Of the eight, three have been voluntarily dismissed and five are still pending. The remaining putative class actions, Teitelbaum v. Clear Channel Communications, Inc., et al., No. 2006CI17492 (filed November 14, 2006), City of St. Clair Shores Police and Fire Retirement System v. Clear Channel Communications, Inc., et al., No. 2006CI17660 (filed November 16, 2006), Levy Investments, Ltd. v. Clear Channel Communications, Inc., et al., No. 2006CI17669 (filed November 16, 2006), DD Equity Partners LLC v. Clear Channel Communications, Inc., et al., No. 2006CI7914 (filed November 22, 2006), and Pioneer Investments Kapitalanlagegesellschaft MBH v. L. Lowry Mays, et al. (filed December 7, 2006), are consolidated into one proceeding and all raise substantially similar allegations on behalf of a purported class of our shareholders against the defendants for breaches of fiduciary duty in connection with the approval of the merger. Plaintiffs in these consolidated class actions have sought and withdrawn court dates for a hearing on a motion to temporarily enjoin the shareholder vote. No hearing is currently scheduled.
     Three other lawsuits filed in connection with the merger are also still pending, Rauch v. Clear Channel Communications, Inc., et al., Case No. 2006-CI17436 (filed November 14, 2006), Pioneer Investments Kapitalanlagegesellschaft mbH v. Clear Channel Communications, Inc., et al., (filed January 30, 2007 in the United States District Court for the Western District of Texas) and Alaska Laborers Employees Retirement Fund v. Clear Channel Communications, Inc., et. al., Case No. SA-07-CA-0042 (filed January 11, 2007). These lawsuits raise substantially similar allegations to those found in the pleadings of the consolidated class actions, and the plaintiffs have previously asked the courts in which the cases are pending to schedule hearings on motions to temporarily enjoin the shareholder vote. Currently, no hearing dates are scheduled.
     We continue to believe that the allegations contained in each of the pleadings in the above-referenced actions are without merit and we intend to contest the actions vigorously. We cannot assure you that we will successfully defend the allegations included in the complaints or that pending motions to enjoin the transactions contemplated by the merger agreement will not be granted. If we are unable to resolve the claims that are the basis for the lawsuits or to prevail in any related litigation we may be required to pay substantial monetary damages for which we may not be adequately insured, which could have a material adverse effect on our business, financial position and results of operations. Regardless of whether the merger is consummated or the outcome of the lawsuits, we may incur significant related expenses and costs that could have an adverse effect on our business and operations. Furthermore, the cases could involve a substantial diversion of the time of some members of management. Accordingly, we are unable to estimate the impact of any potential liabilities associated with the complaints.
     We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.
Item 1A. Risk Factors
     For information regarding risk factors, please refer to Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. There have not been any material changes in the risk factors disclosed in this Annual Report on Form 10-K.

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     Additional information relating to risk factors is described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Risks Regarding Forward-Looking Statements.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
     (c) Purchases of Equity Securities by the Issuer and Affiliated Purchases.
     On September 6, 2006, our Board of Directors authorized a share repurchase program, permitting us to repurchase $1.0 billion of our common stock. This program expires on September 6, 2007, although the program may be discontinued or suspended at anytime prior to its expiration. During the three months ended June 30, 2007, we did not repurchase any shares through this program; however, we accepted shares in payment of income taxes due upon the vesting of restricted stock awards as follows:
                                 
                    Total Number of        
                    Shares Purchased as     Maximum Dollar Value  
    Total Number     Average Price     Part of Publicly     of Shares that May Yet  
    of Shares     Paid per     Announced     Be Purchased Under the  
Period   Purchased     Share     Programs     Programs  
April 1 through April 30
    1,438     $ 35.90       -0-     $ 1,000,000,000  
May 1 through May 31
    3,217     $ 38.35       -0-     $ 1,000,000,000  
June 1 through June 30
    145     $ 37.52       -0-     $ 1,000,000,000  
 
                             
Total
    4,800               -0-     $ 1,000,000,000  
Item 4. Submission of Matters to a Vote of Security Holders
     Our annual meeting of shareholders was held on May 22, 2007. L. Lowry Mays, Alan D. Feld, Perry J. Lewis, Mark P. Mays, Randall T. Mays, B. J. McCombs, Phyllis B. Riggins, Theodore H. Strauss, J. C. Watts, John H. Williams and John B. Zachry were elected as our directors, each to hold office until the next annual meeting of shareholders or until his or her successor has been elected and qualified, subject to earlier resignation and removal. The shareholders also approved the selection of Ernst & Young LLP as our independent auditors for the year ending December 31, 2007.
     One of our shareholders submitted a proposal to be voted on by our shareholders which, if approved, would have asked that our Board of Director’s Executive Compensation Committee establish a pay-for-superior-performance standard in our executive compensation plan for senior executives. One of our shareholders submitted a proposal to be voted on by our shareholders which, if approved, would have asked that we provide a report disclosing our policies and procedures for political contributions, the monetary and non-monetary amounts of these contributions, and the individuals or entities who received these contributions. One of our shareholders submitted a proposal to be voted on by our shareholders which asked that the board of directors adopt a policy that our shareholders be given the opportunity at each annual meeting of shareholders to vote on an advisory resolution, to be proposed by our management, to ratify the compensation of the named executive officers set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative disclosure of material factors provided to under the SCT (but not the Compensation Discussion and Analysis). These shareholder proposals failed to receive the affirmative vote of the holders of a majority of shares represented in person or by proxy and entitled to vote on the proposals. One of our shareholders submitted a proposal to be voted on by our shareholders which asked that we amend our Compensation Committee Charter to specify different independence criteria for members of the Compensation Committee. This shareholder proposal received the affirmative vote of the holders of a majority of shares represented in person or by proxy and entitled to vote on these proposals.

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     The results of voting at the annual meeting of the shareholders were as follows:
Proposal No. 1
(Election of Directors)
                         
Nominee   For   Against   Abstain
L. Lowry Mays
    340,336,493       69,226,050       3,622,285  
Alan D. Feld
    309,971,017       99,583,805       3,630,006  
Perry J. Lewis
    358,808,490       50,770,123       3,606,215  
Mark P. Mays
    339,726,936       69,914,323       3,543,569  
Randall T. Mays
    327,494,795       82,112,856       3,577,177  
B.J. McCombs
    309,971,844       99,175,161       4,037,823  
Phyllis B. Riggins
    358,871,176       50,709,808       3,603,844  
Theodore H. Strauss
    356,918,989       52,567,594       3,698,245  
J.C. Watts
    296,290,696       113,294,743       3,599,389  
John H. Williams
    356,657,384       52,835,987       3,691,457  
John B. Zachry
    358,857,384       50,732,359       3,595,085  
Proposal No. 2
(Selection of Ernst & Young LLP as Independent Auditors for the year ending December 31, 2007)
                         
For   Against   Abstain    
 
                       
406,290,254
    3,469,681       3,424,893          
 
                       
Proposal No. 3
(Shareholder Proposal — Pay for Superior Performance)
 
                       
For   Against   Abstain   Broker Non-votes
 
                       
123,754,478
    166,835,182       9,718,463       112,876,705  
 
                       
Proposal No. 4
(Shareholder Proposal — Corporate Political Contributions)
 
                       
For   Against   Abstain   Broker Non-votes
 
                       
101,298,674
    118,060,563       80,148,887       113,676,704  
 
                       
Proposal No. 5
(Shareholder Proposal — Compensation Committee Independence)
 
                       
For   Against   Abstain   Broker Non-votes
 
                       
154,472,751
    142,143,244       3,692,131       112,876,702  
 
                       
Proposal No. 6
(Shareholder Proposal — Executive Compensation)
 
                       
For   Against   Abstain   Broker Non-votes
 
                       
125,320,935
    125,206,027       49,781,164       112,876,702  
Item 6. Exhibits
     See the Index to Exhibits, which is incorporated into and made a part of this Quarterly Report on Form 10-Q.

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Signatures
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
     
 
  CLEAR CHANNEL COMMUNICATIONS, INC.
 
   
August 9, 2007
  /s/ Randall T. Mays
 
   
 
  Randall T. Mays
 
  President and
Chief Financial Officer
 
   
August 9, 2007
  /s/ Herbert W. Hill, Jr.
 
   
 
  Herbert W. Hill, Jr.
 
  Senior Vice President and
Chief Accounting Officer

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INDEX TO EXHIBITS
     
Exhibit    
Number   Description
2.1
  Agreement and Plan of Merger among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC and Clear Channel Communications, Inc., dated as of November 16, 2006 (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated November 16, 2006).
 
   
2.2
  Amendment No. 1, dated April 18, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC and Clear Channel Communications, Inc. (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated April 18, 2007).
 
   
2.3
  Amendment No. 2, dated May 17, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, BT Triple Crown Holdings III, Inc. and Clear Channel Communications, Inc., as amended (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated May 18, 2007).
 
   
2.4
  Asset Purchase Agreement dated April 20, 2007, between Clear Channel Broadcasting, Inc., ABO Broadcasting Operations, LLC, Ackerley Broadcasting Fresno, LLC, AK Mobile Television, Inc., Bel Meade Broadcasting, Inc., Capstar Radio Operating Company, Capstar TX Limited Partnership, CCB Texas Licenses, L.P., Central NY News, Inc., Citicasters Co., Clear Channel Broadcasting Licenses, Inc., Clear Channel Investments, Inc. and TV Acquisition LLC (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated April 26, 2007).
 
   
3.1
  Current Articles of Incorporation of the Company (incorporated by reference to the exhibits of the Company’s Registration Statement on Form S-3 (Reg. No. 333-33371) dated September 9, 1997).
 
   
3.2
  Current Bylaws of the Company (incorporated by reference to the exhibits to Clear Channel’s Quarterly Report on Form 10-Q dated May 9, 2007).
 
   
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).

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Table of Contents

     
Exhibit    
Number   Description
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).
 
   
4.10
  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).
 
   
4.11
  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).
 
   
4.12
  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).
 
   
4.13
  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).
 
   
4.14
  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).
 
   
4.15
  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).
 
   
4.16
  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).

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Table of Contents

     
Exhibit    
Number   Description
4.17
  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).
 
   
4.18
  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).
 
   
4.19
  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).
 
   
10.1
  Amended and Restated Employment Agreement, dated April 24, 2007, by and between L. Lowry Mays and Clear Channel Communications, Inc. (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated April 30, 2007).
 
   
10.2
  Amended and Restated Employment Agreement, dated April 24, 2007, by and between Mark P. Mays and Clear Channel Communications, Inc. (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated April 30, 2007).
 
   
10.3
  Amended and Restated Employment Agreement, dated April 24, 2007, by and between Randall T. Mays and Clear Channel Communications, Inc. (incorporated by reference to the exhibits to Clear Channel’s Current Report on Form 8-K dated April 30, 2007).
 
   
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.

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