SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES |
For the transition period from to
Commission File No.: 001-31740
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Citadel Broadcasting Company 401(k) Retirement Savings Plan
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Citadel Broadcasting Corporation
7201 West Lake Mead Boulevard, Suite 400
Las Vegas, NV 89128
CITADEL BROADCASTING COMPANY
401(k) RETIREMENT SAVINGS PLAN
| Page | ||
| 1 | ||
| FINANCIAL STATEMENTS: |
||
| Statements of Net Assets Available for Benefits as of December 31, 2005 and 2004 |
2 | |
| Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2005 |
3 | |
| 4 - 8 | ||
| 9 | ||
| 10 | ||
| 11 |
| NOTE: | All other schedules required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 are omitted because of the absence of conditions under which they are required. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Audit Committee and the participants of the
Citadel Broadcasting Company 401(k) Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of the Citadel Broadcasting Company 401(k) Retirement Savings Plan (the “Plan”) as of December 31, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2005 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2005 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
/s/ Deloitte & Touche, LLP
Los Angeles, California
June 23, 2006
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
| 2005 | 2004 | |||||
| ASSETS: |
||||||
| Investments, at fair value: |
||||||
| Common stock |
$ | 896,844 | $ | 99,182 | ||
| Common/collective trusts |
4,674,882 | 4,275,654 | ||||
| Mutual funds |
38,757,456 | 34,375,872 | ||||
| Participant notes |
1,474,763 | 1,166,261 | ||||
| Total investments |
45,803,945 | 39,916,969 | ||||
| Non-interest bearing cash and other |
34,280 | 3,064 | ||||
| Receivables: |
||||||
| Employer contributions |
710,307 | 902,003 | ||||
| Participant contributions |
138,512 | 135,652 | ||||
| Total receivables |
848,819 | 1,037,655 | ||||
| NET ASSETS AVAILABLE FOR BENEFITS |
$ | 46,687,044 | $ | 40,957,688 | ||
See accompanying notes to financial statements.
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401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2005
| ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS ATTRIBUTED TO: |
|||
| Investment income: |
|||
| Net appreciation in fair value of investments |
$ | 399,619 | |
| Dividend income |
2,404,718 | ||
| Interest on participants’ notes |
74,839 | ||
| Total investment income |
2,879,176 | ||
| Contributions: |
|||
| Participant |
5,420,206 | ||
| Employer |
736,109 | ||
| Rollover contributions by participants |
326,524 | ||
| Total contributions |
6,482,839 | ||
| ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS |
9,362,015 | ||
| DEDUCTIONS FROM NET ASSETS AVAILABLE FOR BENEFITS ATTRIBUTED TO: |
|||
| Distributions to and withdrawals by participants |
3,601,859 | ||
| Administrative expenses |
30,800 | ||
| Total deductions |
3,632,659 | ||
| NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS |
5,729,356 | ||
| NET ASSETS AVAILABLE FOR BENEFITS: |
|||
| Beginning of year |
40,957,688 | ||
| End of year |
$ | 46,687,044 | |
See accompanying notes to financial statements.
- 3 -
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
| 1. | DESCRIPTION OF PLAN |
The following brief description of the Citadel Broadcasting Company 401(k) Retirement Savings Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General—The Plan is a defined contribution plan covering all employees of Citadel Broadcasting Company (the “Company” or “Plan Sponsor”) who have reached the age of 21. The Company acts as the Plan administrator. The Company is a wholly-owned subsidiary of Citadel Broadcasting Corporation.
Eligibility and Contributions—Eligible employees may begin participation in the Plan on the first day of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code, as amended (“IRC”).
Eligible participants may elect to defer up to 20% of their regular annual earnings on a pretax basis, subject to the maximum amount allowable by the IRC. Rollover contributions from other qualified plans are permitted. The Company may make matching contributions to the Plan, which will be allocated to the participants’ accounts and may be given in the form of Citadel Broadcasting Corporation common stock. The amount of the matching contribution, if any, is at the discretion of Citadel Broadcasting Corporation’s Board of Directors. For the years ended December 31, 2005 and 2004, the matching contributions were equal to 1% and 1.5% of the participants’ eligible annual earnings, respectively. For the Plan year 2005 and 2004, the matching contribution was made in Citadel Broadcasting Corporation common stock and was not participant directed. Participants who have completed one year in which they complete 1,000 hours of service, who have reached age 21 and who were employed on the last day of the Plan year are eligible for the discretionary matching contribution.
Participants age 50 and older are permitted to make additional catch-up contributions not to exceed $4,000 in 2005.
Participant Accounts—Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, any rollover amounts, the Company’s discretionary matching contribution, and allocations of Plan earnings, and charged with withdrawals and an allocation of Plan losses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting—Participants are immediately vested in elective deferral contributions and rollover amounts as well as earnings thereon. At the earliest of the following dates, participants are fully vested as to Company matching and discretionary contributions and earnings thereon:
| 1) | Date of participant’s death |
| 2) | Date participant incurs a total disability |
| 3) | Date of Plan termination |
| 4) | Date participant completes 60 months of vesting as follows: |
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CITADEL BROADCASTING COMPANY
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004 (continued)
| Vesting Service |
Vesting Percentage | |
| 1 year |
— | |
| 2 years |
20% | |
| 3 years |
40% | |
| 4 years |
60% | |
| 5 years |
100% |
Forfeited Accounts—At December 31, 2005 and 2004, forfeited nonvested accounts totaled $2,045 and $131,801, respectively. Forfeitures are used to reduce future employer contributions and to offset Plan expenses. During the year ended December 31, 2005, employer contributions of $172,000 and Plan expenses of $20,250 were paid from forfeited nonvested accounts.
Payment of Benefits—Upon termination of service, demonstrated hardship, retirement or in the event of death, a participant’s account may be distributed in a lump-sum payment equal to the value of the participant’s vested account balance. In-service distributions are permitted at age 59 1/2.
Investment Funds—All of the Plan’s investment funds are offered through Merrill Lynch Trust Company (“Merrill Lynch”), the custodian and trustee of the Plan.
Participants may direct the investment of their deferrals to the Plan into various investment choices provided under the Plan, as determined by the Plan Sponsor. The employer contribution is allocated to the participant accounts as Citadel Broadcasting Corporation common stock. After the employer contribution is made, participants are then permitted to allocate amounts held in Citadel Broadcasting Corporation common stock into other investment options provided by the Plan.
Participant Notes Receivable—Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms range from one to five years, except for a loan taken out for the purchase of a principal residence, which has a term of up to 15 years. The loans are secured by the balance in the participant’s account and bear interest at a rate commensurate with local prevailing rates as determined quarterly by the Plan administrator. Interest rates on loans outstanding as of December 31, 2005 and 2004 ranged from 5.0% to 11.25% with maturities through February 2020. Principal and interest are paid ratably through payroll deductions. Participants are expected to make timely repayments of loans according to the amortization schedule. In the event a participant with an outstanding loan terminates employment, the participant is expected to repay the outstanding loan balance in full within 90 days of the last payment made; otherwise, the loan will go into default status on the last day of the quarter following the quarter that last payment was made.
Plan Termination—Although the Plan Sponsor has not expressed any intent to do so, the Plan Sponsor has the right under the Plan to terminate the Plan at any time. Upon any full or partial termination, all amounts credited to the participants’ accounts shall become 100% vested.
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CITADEL BROADCASTING COMPANY
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004 (continued)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation—The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Investment Valuation—The investments, which are held by Merrill Lynch, are stated at fair value based on quoted market prices in an active market. The Plan’s investment in the common collective trust funds are presented at fair value, which has been determined based on the fair value of the underlying investments of the trust fund. When quoted market prices are not available, the fair value of investments is estimated primarily by independent investment brokerage firms and insurance companies. Participant notes receivable are valued at the outstanding note balance. Changes in the market value of investments held at year end and realized gains and losses on investment transactions during the year are reflected in the statement of changes in net assets available for benefits as net appreciation in fair value of investments.
Administrative Expenses—Expenses related to loan administration of $10,550 in 2005 were paid out of participants’ accounts. Other expenses related to the Plan’s administration are charged against and withdrawn from the Plan. The Company may pay any of such expenses or reimburse the Plan for any payments. During 2005, administrative expenses of $20,250 were paid out of the forfeiture account.
Payments of Benefits—Benefits are recorded when paid. At December 31, 2005 and 2004, there were no amounts allocated to accounts of persons who have elected to withdraw from the Plan but have not been paid.
Use of Estimates— The preparation of the Plan’s financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect the reported amounts of assets available for benefits and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions to and deductions from net assets available for benefits during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties— The Plan utilizes various investment instruments including common collective trusts, Citadel Broadcasting Corporation stock and mutual funds. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
Reclassification— Certain prior year amounts have been reclassified to separately present non-interest bearing cash and other investments from mutual funds.
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CITADEL BROADCASTING COMPANY
401(k) RETIREMENT SAVINGS PLA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004 (continued)
| 3. | INVESTMENTS |
Investments consist of the following at December 31:
| 2005 | 2004 | |||||||
| Common Stock |
||||||||
| Citadel Broadcasting Corporation |
$ | 896,844 | $ | 99,182 | ||||
| Common/Collective Trusts |
||||||||
| Merrill Lynch RET Preservation Trust |
4,309,410 | * | 4,022,076 | * | ||||
| Merrill Lynch RET Preservation Trust Goal Manager |
365,472 | 253,578 | ||||||
| 4,674,882 | 4,275,654 | |||||||
| Mutual Funds |
||||||||
| Merrill Lynch S&P 500 Index Fund Class A |
6,721,662 | * | 6,294,884 | * | ||||
| Merrill Lynch Value Opportunities Class A |
4,965,205 | * | 4,501,984 | * | ||||
| ING International Value Fund Class A |
4,339,536 | * | 3,879,796 | * | ||||
| Hotchkis & Wiley Mid Cap Value A |
3,247,625 | * | 2,792,130 | * | ||||
| Phoenix Real Estate Securities Fund |
3,204,920 | * | 2,731,709 | * | ||||
| Merrill Lynch Fundamental Growth Fund Class D |
3,144,722 | * | 3,012,366 | * | ||||
| The Oakmark Select Fund Class II |
2,807,376 | * | 2,668,700 | * | ||||
| Calvert Income Fund |
2,610,960 | * | 2,391,235 | * | ||||
| Oppen Quest Balance Value Class A |
1,824,088 | 1,697,069 | ||||||
| Calvert Income Fund Goal Manager |
1,265,046 | 937,887 | ||||||
| Merrill Lynch US Govt Mortgage Fund Class D |
1,023,618 | 1,011,962 | ||||||
| Van Kampen Comstock Fund Class A |
625,010 | 423,729 | ||||||
| Merrill Lynch Value Opportunities Class A Goal Manager |
455,369 | 318,648 | ||||||
| Merrill Lynch Global Allocation Fund Class D |
388,975 | 234,975 | ||||||
| ING International Value Fund Class A Goal Manager |
374,881 | 258,908 | ||||||
| Merrill Lynch Fundamental Growth D Goal Manager |
351,493 | 245,846 | ||||||
| Van Kampen Comstock Class A Goal Manager |
339,572 | 246,982 | ||||||
| Merrill Lynch Healthcare Fund Class D |
312,888 | 169,152 | ||||||
| Davis Series Financial Fund Class A |
281,056 | 218,197 | ||||||
| Hotchkis & Wiley Mid Cap Value A Goal Manager |
163,217 | 115,824 | ||||||
| Dreyfus Premier Tech GR Class A |
162,165 | 123,004 | ||||||
| The Oakmark Select Class II Goal Manager |
148,072 | 100,885 | ||||||
| 38,757,456 | 34,375,872 | |||||||
| Participant notes |
1,474,763 | 1,166,261 | ||||||
| Total Investments |
$ | 45,803,945 | $ | 39,916,969 | ||||
| * | Investment represents 5% or more of the Plan’s net assets available for benefits at December 31, 2005 and 2004. |
| Investment Income |
||||
| Net (depreciation) appreciation in fair value of investments for the year ended December 31, 2005: |
||||
| Citadel Broadcasting Corporation common stock |
$ | (68,744 | ) | |
| Mutual funds |
468,363 | |||
| Dividend income |
2,404,718 |
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CITADEL BROADCASTING COMPANY
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004 (continued)
| 4. | NONPARTICIPANT-DIRECTED INVESTMENTS |
Information about the net assets and the significant components of the changes in net assets relating to the investments in the Citadel Broadcasting Corporation common stock is as follows:
| 2005 | 2004 | ||||||
| Investments—at fair value |
|||||||
| Citadel Broadcasting Corporation common stock |
$ | 896,844 | $ | 99,182 | |||
| Year Ended December 31, 2005 |
|||||||
| Changes in Citadel Broadcasting Corporation common stock investments: |
|||||||
| Contributions |
$ | 955,438 | |||||
| Net depreciation |
(68,744 | ) | |||||
| Benefits paid to participants |
(38,722 | ) | |||||
| Transfers to participant-directed investments |
(50,310 | ) | |||||
| Total changes in net assets |
$ | 797,662 | |||||
The amounts presented above represent the participant directed and nonparticipant directed activity in Citadel Broadcasting Corporation common stock.
| 5. | FEDERAL INCOME TAX STATUS |
The Plan uses a prototype plan document sponsored by Merrill Lynch. Merrill Lynch received an opinion letter from the Internal Revenue Service (“IRS”), dated June 4, 2002, which states that the prototype document satisfies the applicable provisions of the IRC. The Plan itself has not received a determination letter from the IRS. However, the Plan Sponsor believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, no provision of income tax has been included in the Plan’s financial statements.
| 6. | RELATED PARTY TRANSACTIONS |
Certain of the Plan’s investments consisted of shares of common/collective trusts and mutual funds managed by Merrill Lynch, the custodian as defined by the Plan; therefore, these qualify as party-in-interest transactions.
Plan investments include Citadel Broadcasting Corporation common stock. As of December 31, 2005 and 2004, the Plan held 66,729 shares and 6,130 shares, respectively, of Citadel Broadcasting Corporation common stock with a cost basis of $959,570 and $88,883, respectively.
******
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CITADEL BROADCASTING COMPANY
401(k) RETIREMENT SAVINGS PLAN
EIN: #86-0703641
PLAN NUMBER 002
FORM 5500, SCHEDULE H, PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
| (a) |
(b) Identity of Issuer, Borrower, Lessor or Similar Party |
(c) Description of Investment (Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value |
(d) Cost |
(e) Current Value | ||||||||
| Common Stock | ||||||||||||
| * |
Citadel Broadcasting Corporation | Citadel Broadcasting Corporation | ^ | $ | 959,570 | $ | 896,844 | |||||
| Common/Collective Trusts | ||||||||||||
| * |
Merrill Lynch | Merrill Lynch RET Preservation Trust | ** | 4,309,410 | ||||||||
| * |
Merrill Lynch | Merrill Lynch RET Preservation Trust Goal Manager | ** | 365,472 | ||||||||
| Mutual Funds | ||||||||||||
| * |
Merrill Lynch | Merrill Lynch S&P 500 Index Fund Class A | ** | 6,721,662 | ||||||||
| * |
Merrill Lynch | Merrill Lynch Value Opportunities Class A | ** | 4,965,205 | ||||||||
| ING | ING International Value Fund Class A | ** | 4,339,536 | |||||||||
| Mercury Advised | Hotchkis & Wiley Mid Cap Value A | ** | 3,247,625 | |||||||||
| Phoenix Investment | Phoenix Real Estate Securities Fund | ** | 3,204,920 | |||||||||
| * |
Merrill Lynch | Merrill Lynch Fundamental Growth Fund Class D | ** | 3,144,722 | ||||||||
| Morningstar | The Oakmark Select Fund Class II | ** | 2,807,376 | |||||||||
| Calvert | Calvert Income Fund | ** | 2,610,960 | |||||||||
| Oppenheimer Funds | Oppen Quest Balance Value Class A | ** | 1,824,088 | |||||||||
| Calvert | Calvert Income Fund Goal Manager | ** | 1,265,046 | |||||||||
| * |
Merrill Lynch | Merrill Lynch US Govt Mortgage Fund Class D | ** | 1,023,618 | ||||||||
| Van Kampen | Van Kampen Comstock Fund Class A | ** | 625,010 | |||||||||
| * |
Merrill Lynch | Merrill Lynch Value Opportunities Class A Goal Manager | ** | 455,369 | ||||||||
| * |
Merrill Lynch | Merrill Lynch Global Allocation Fund Class D | ** | 388,975 | ||||||||
| ING | ING International Value Fund Class A Goal Manager | ** | 374,881 | |||||||||
| * |
Merrill Lynch | Merrill Lynch Fundamental Growth D Goal Manager | ** | 351,493 | ||||||||
| Van Kampen | Van Kampen Comstock Class A Goal Manager | ** | 339,572 | |||||||||
| * |
Merrill Lynch | Merrill Lynch Healthcare Fund Class D | ** | 312,888 | ||||||||
| Davis Selected | Davis Series Financial Fund Class A | ** | 281,056 | |||||||||
| Mercury Advised | Hotchkis & Wiley Mid Cap Value A Goal Manager | ** | 163,217 | |||||||||
| Dreyfus Corp. | Dreyfus Premier Tech GR Class A | ** | 162,165 | |||||||||
| Morningstar | The Oakmark Select Class II Goal Manager | ** | 148,072 | |||||||||
| * |
Participant loans | 5.00 percent to 11.25 percent notes, due from January 2005 to February 2020 | ** | 1,474,763 | ||||||||
| $ | 45,803,945 | |||||||||||
| * | Indicates party-in-interest to the Plan. |
| ** | Not applicable—participant-directed investment |
| ^ | Includes participant-directed and nonparticipant-directed |
- 9 -
Pursuant to the requirements of the Securities Exchange Act of 1934, Citadel Broadcasting Corporation, through its wholly- owned subsidiary, which administers the Plan, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| CITADEL BROADCASTING CORPORATION | ||||
| Date: June 28, 2006 | By: | /s/ ROBERT G. FREEDLINE | ||
| Name: | Robert G. Freedline | |||
| Title: | Chief Financial Officer | |||
- 10 -
| Exhibit Number |
Document | |
| 23.1 | Consent of Independent Registered Public Accounting Firm (Filed herewith) |
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