<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 205049
FORM 11-K
(Mark One):
[X] ANNUAL REPORT PURSUANT SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the plan year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 00024017
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SFX ENTERTAINMENT PROFIT
SHARING AND 401(k)PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
SFX ENTERTAINMENT, INC.
650 Madison Avenue, Suite 1600
New York, New York 10022
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REQUIRED INFORMATION
Financial Statements, Supplemental Schedules and Exhibits as follows:
1. Financial Statements:
Report of Independent Accountants
Statement of Net Assets Available for Plan
Benefits as of December 31, 1999
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1999
Notes to Financial Statements
Supplemental Schedule:
Schedule of Assets Held for Investment Purposes as
of December 31, 1999-Schedule H, Line 4i
Exhibits:
Consent of Scott Gildea & Company, LLP, Independent Accountants
1
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator of the Plan has duly caused this annual report to be signed on its
behalf by the undersigned, hereunto duly authorized.
SFX ENTERTAINMENT PROFIT
SHARING AND 401(k) PLAN
Dated: June 28, 2000
By: SFX Entertainment, Inc.
-----------------------------------
Plan Sponsor and Plan Administrator
By: /s/ Richard A. Liese
-----------------------------------
Richard A. Liese
Senior Vice President
2
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SFX ENTERTAINMENT
PROFIT SHARING AND 401(K) PLAN
Financial Statements and Supplemental Information
For the Period January 1, 1999 (inception)
through December 31, 1999
<PAGE> 5
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
INDEX
-----
<TABLE>
<S> <C>
Report of Independent Accountants 2
Statement of Net Assets Available for Plan Benefits 3
Statement of Changes in Net Assets Available for Plan Benefits 4
Notes to Financial Statements 5-9
Supplemental Schedule:
Schedule H (Form 5500), Financial Information *
</TABLE>
* Refer to Schedule H of Form 5500 (Annual Return/Report of Employee Benefit
Plan) for the year ended December 31, 1999 which material is incorporated herein
by reference.
1
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REPORT of INDEPENDENT ACCOUNTANTS
To the Trustees of SFX Entertainment Profit Sharing and 401(k) Plan:
We have audited the accompanying statement of net assets available for plan
benefits of SFX Entertainment Profit Sharing and 401(k) Plan, as listed in the
accompanying index on page 1. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1999 and the changes in net assets available for plan benefits
for the period January 1, 1999 (inception) through December 31, 1999 in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule, as listed in the
accompanying index on page 1, 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. The fund information in the statement of net assets
available for plan benefits and the statement of changes in net assets available
for plan benefits is presented for purposes of additional analysis rather than
to present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedule and fund
information have been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the financial statements taken as a whole.
June 23, 2000 Scott Gildea & Company, LLP
2
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STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1999
ASSETS
<TABLE>
<S> <C>
Investments, at market value:
Stable Value Fund $ 551,201
Intermediate Bond Fund 226,915
Balanced Fund 348,708
Equity Index Fund 2,508,192
Growth Stock Fund 2,742,567
Aggressive Growth Stock Fund 3,886,690
International Fund 487,637
SFX Entertainment, Inc. Common Stock 1,010,294
-----------
Total investments, at market value 11,762,204
Participant loans 117,648
Employee contributions receivable 216,881
Employer contributions receivable 77,557
-----------
Net assets available for plan benefits $12,174,290
===========
</TABLE>
The accompanying notes are an integral part of the
financial statements.
3
<PAGE> 8
SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Period January 1, 1999 (inception) through December 31, 1999
ADDITIONS
<TABLE>
<S> <C>
Contributions:
Employee $ 3,264,314
Employee Rollover 234,382
Employer 1,131,435
-----------
4,630,131
-----------
Investment Income:
Interest 4,126
Dividends 294,607
Net appreciation of investments 1,534,640
-----------
1,833,373
-----------
Transfers due to plan mergers 5,779,053
-----------
Total additions 12,242,557
-----------
DEDUCTIONS
Withdrawals 34,689
Administrative expenses 33,578
-----------
Total deductions 68,267
-----------
Net increase in net assets available for plan benefits 12,174,290
-----------
Net assets available for plan benefits,
beginning of year 0
-----------
Net assets available for plan benefits,
end of year $12,174,290
===========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
4
<PAGE> 9
SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan
The following brief description of the SFX Entertainment Profit Sharing and
401(k) Plan (The "Plan") is provided for general information purposes only.
Participants should refer to the Plan Agreement for more complete information.
SFX Entertainment, Inc. (the "Company") established the Plan on January 1, 1999
as a defined contribution plan covering all employees age twenty one and older
who have completed a year of eligibility service. Eligibility service is defined
as a calendar year during which at least one thousand hours are worked. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Plan provides for benefits available under
Section 401(k) of the Internal Revenue Code.
Employees may make voluntary contributions to the Plan in an amount up to 16% of
their compensation and the Company matches an amount equal to 50% of that
portion of the employee's contributions which is not in excess of 6% of the
employee's compensation. The Company match per employee is not to exceed $4,800.
The Company may also make a profit sharing contribution to the Plan at the
discretion of the Company's Board of Directors.
Contributions to the Plan, including the employer match, may be invested in a
variety of investment funds at the election of the employee as follows:
Stable Value Fund
This fund seeks to provide a consistent rate of return while preserving
capital and minimizing risk. The fund consists of assets whose principal
value remains stable regardless of stock and bond market fluctuations. These
assets may include guaranteed investment contracts issued by insurance
companies, and bank investment contracts issued by banks. These assets may
also include money market instruments, such as bank certificates of deposit,
banker's acceptances and short-term treasury bills. This fund currently
utilizes the Schwab Institutional Advantage Money Fund. Rates of return are
subject to market fluctuations.
Intermediate Bond Fund
This fund seeks a total return consistent with prudent investment
management. The fund invests in fixed-income securities, including corporate
bonds, U.S. government securities, mortgage-related securities, and money
market instruments. This fund is intended to maintain a portfolio duration
range of three to seven years. This fund currently utilizes the Strong
Government Securities Fund. Rates of return are subject to market
fluctuations.
5
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SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
Balanced Fund
This fund seeks income, conversion of principal and long-term growth of
principal and income. The fund may invest a large portion of its assets in
common stocks and convertible securities. Prospective earnings and dividends
are major considerations in these purchases. Individual securities are
selected with regard to financial strength and economic background. The
balance of the fund's assets are invested in investment-grade fixed-income
securities. This fund currently utilizes the Dodge & Cox Balanced Fund.
Rates of return are subject to market fluctuations.
Equity Index Fund
This fund seeks capital appreciation by investing primarily in equity
securities of companies with earnings that are expected to grow at an a
above average rate. Current income is a secondary objective and is achieved
by investing in dividend paying common stocks and convertible securities.
This fund currently utilizes the Selected American Shares Fund. Rates of
return are subject to market fluctuations.
Growth Stock Fund
This fund seeks maximum capital growth. The fund invests primarily in common
stocks and favors securities of companies expected to benefit from special
factors or trends. These may include established companies, small companies
or new issues. This fund may also invest in debt securities and in foreign
securities. This fund currently utilizes the Oakmark Fund.
Rates of return are subject to market fluctuations.
Aggressive Growth Stock Fund
This fund seeks rapid capital growth by investing primarily in small to
medium sized companies that are expected to demonstrate growth in earnings
and revenue. These companies may be concentrated in a few industries that
are experiencing rapid growth. The fund may use investment techniques, such
as short selling, leveraging and frequent trading. The fund may also invest
in debt securities and in foreign securities. This fund currently utilizes
the Baron Asset Fund. Rates of return are subject to market fluctuations.
International Fund
This fund invests primarily in stocks and debt securities of companies and
governments outside the United States. It seeks long term capital growth.
Any realized income is incidental. The fund maintains a flexible investment
policy and can invest in all types of securities and in any foreign country.
While common stocks are the usual form of investment, the fund may invest a
portion of its assets in medium quality or high risk debt securities. This
fund currently utilizes the GAM International A Fund. Rates of return are
subject to market fluctuations.
6
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SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
SFX Entertainment, Inc.
This fund consists of class A common stock of the Company's parent and is
administered by the Company. Rates of return are subject to market
fluctuations.
Under the loan provision of the Plan, employees are permitted to borrow between
$1,000 and the lesser of $50,000 or 50% of the participant's vested account
balance. The interest rate charged is fixed at the prime rate in effect at the
beginning of the month the loan is requested plus 1%. Loans are required to be
repaid over a maximum period of five years, unless the loan is used to purchase
a principal residence, in which case the maximum period is 15 years. However,
all loans must be repaid upon cessation of employment and, if not repaid within
90 days, the unpaid balance of principal and interest is charged against the
participant's vested account balance.
The Plan provides for distributions to plan participants or their beneficiaries
upon the participant's retirement, termination of employment, disability or
death, in accordance with the Internal Revenue Code. Since participants are
immediately vested in their voluntary contributions and earnings, they may also
withdraw all or any portion of their account balance subject to hardship
withdrawal provision criteria. Participants may elect to take their
distributions in the form of a lump sum payment, an annuity, or rollover into a
private Individual Retirement Account. Similarly, an employee may make a
withdrawal of the vested percentage of the employer matching account. The
vesting schedule for this account is as follows:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 1 year 0%
1 year 20
2 years 40
3 years 60
4 years 80
5 years or more 100
</TABLE>
Upon termination of employment, the non-vested portion of employer
contributions, if any, will be forfeited by the employee and applied to reduce
the Company's future contributions. Forfeitures used to reduce the Company's
contributions were $2,219 during 1999.
The foregoing description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
7
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SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of significant accounting policies
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles and include estimated amounts. While
all available information has been considered, actual amounts could differ from
those estimates.
Each fund is valued at the quoted closing price per share on major exchanges.
The change in the difference between the fair market value and the cost of
investments for each year is reflected in the statement of changes in net assets
as unrealized appreciation or depreciation in fair value of investments.
Substantially all general and administrative expenses of the Plan are paid by
the Company.
3. Investments
The following summarizes the Plan's investments as of December 31, 1999:
<TABLE>
<CAPTION>
Fair Value
----------
<S> <C>
Stable Value Fund $ 551,203
Intermediate Bond Fund 226,915
Balanced Fund 348,708
Equity Index Fund (a) 2,508,192
Growth Stock Fund (a) 2,742,567
Aggressive Growth Stock Fund (a) 3,886,690
International Fund 487,637
SFX Entertainment, Inc. (a) 1,010,294
-----------
$11,762,204
===========
</TABLE>
(a) Fund balance represents more than 5% of the Plan's net assets available
for plan benefits.
4. Plan Mergers
Net assets, consisting principally of cash and cash equivalents, transferred
from merged plans during October 1999 is as follows:
<TABLE>
<S> <C>
Bill Graham Plan $5,779,053
</TABLE>
8
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SFX ENTERTAINMENT PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
5. Termination Priorities
While the Company has not expressed any intent to discontinue its contributions,
the Board of Directors of the Company is free to do so at any time, subject to
the requirements of ERISA. In the event such discontinuance results in the
termination of the Plan, the net assets of the Plan will be distributed to the
participants and beneficiaries of the Plan under the terms of the Plan.
6. Income Tax Status
In accordance with the guidelines established by the Internal Revenue Service,
the plan administrator has applied for a determination letter. Although a
determination has not yet been received, the plan administrator and the plan's
tax counsel believe that the plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code.
Therefore, they believe that the plan is qualified and the related trust is
tax-exempt as of the financial statement date.
9
<PAGE> 14
SFX ENTERTAINMENT PROFIT SHARING AND 401(K) PLAN
SCHEDULE H (FORM 5500) - LINE 4i- SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
(a) (b) (c) (d)*** (e)
* denotes Description of Investment including
party in Identity of Issue, Borrower, Maturity Date, Rate of Interest, Current
interest Lessor, or Similar Party Collateral, Par or Maturity Value Cost Value
----------- ---------------------------- ------------------------------------ ---- -----
<S> <C> <C> <C> <C>
Schwab Institutional Advantage Fund Fixed income investment fund $551,201
Strong Government Securities Fund Conservative bond fund 226,915
Dodge & Cox Balanced Fund Balanced equity and debt fund 348,708
Selected American Shares Fund Capital appreciation fund 2,508,192
Oakmark Fund Aggressive capital growth fund 2,742,567
Baron Asset Fund Rapid capital growth fund 3,886,690
GAM International A Fund International funs seeking long-term growth 487,637
SFX Entertainment, Inc. Common Stock Common stock of Plan sponsor 1,010,294
Participant loans Loans to plan participants
with maturity dates through 2014, bearing
interest from 7.00% to 10.50% and secured by
the participant's vested account balance 117,648
</TABLE>
*** Cost information is not provided as all investments are participant
directed.
