<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[x] Quarterly report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from to
Commission file number 0-24516
HISPANIC BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 99-0113417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3102 Oak Lawn Avenue, Suite 215 75219
Dallas, Texas (Zip Code)
(Address of principal executive offices)
(214) 525-7700
(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 [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT AUGUST 1, 2000
----- -----------------------------
<S> <C>
Class A Common Stock, $.001 Par Value 80,502,924
Class B Non-Voting Common Stock, $.001 Par Value 28,312,940
</TABLE>
<PAGE>
HISPANIC BROADCASTING CORPORATION
JUNE 30, 2000
INDEX
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999............................................................... 2
Condensed Consolidated Statements of Operations for the
Three Months Ended June 30, 2000 and 1999 and the
Six Months Ended June 30, 2000 and 1999............................................. 3
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2000 and 1999............................................. 4
Notes to Condensed Consolidated Financial Statements ............................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................................ 8
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ......................................................................... 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................... 11
Item 6. Exhibits and Reports on Form 8-K .................................................... 11
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands except number of shares)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 143,136 $ 215,136
Accounts receivable, net 52,684 40,621
Prepaid expenses and other current assets 1,751 825
----------- -----------
Total current assets 197,571 256,582
Property and equipment, at cost, net 42,734 40,923
Intangible assets, net 910,108 848,351
Deferred charges and other assets 19,233 11,282
----------- -----------
Total assets $ 1,169,646 $ 1,157,138
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 17,475 $ 25,345
Current portion of long-term obligations 70 100
----------- -----------
Total current liabilities 17,545 25,445
----------- -----------
Long-term obligations, less current portion 1,429 1,448
----------- -----------
Deferred income taxes 106,592 103,992
----------- -----------
Stockholders' equity:
Preferred Stock, cumulative, $.001 par value;
authorized 5,000,000 shares; no shares issued or outstanding -- --
Class A Common Stock, $.001 par value; authorized
175,000,000 shares at June 30, 2000 and 100,000,000 shares at
December 31, 1999; issued and outstanding 80,502,924 at
June 30, 2000 and 80,489,556 at December 31, 1999 81 80
Class B Common Stock, convertible, $.001 par value;
authorized 50,000,000 shares; issued and outstanding
28,312,940 shares 28 28
Additional paid-in capital 1,035,290 1,034,737
Retained earnings (accumulated deficit) 8,681 (8,592)
----------- -----------
Total stockholders' equity 1,044,080 1,026,253
----------- -----------
Total liabilities and stockholders' equity $ 1,169,646 $ 1,157,138
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
2000 1999 2000 1999
------- ------- -------- -------
<S> <C> <C> <C> <C>
Net revenues $64,771 $51,905 $111,309 $89,614
Operating expenses 34,981 27,064 64,652 51,115
Depreciation and amortization 8,282 6,497 16,490 12,726
------- ------- -------- -------
Operating income before corporate expenses 21,508 18,344 30,167 25,773
Corporate expenses 2,783 1,563 4,448 3,226
------- ------- -------- -------
Operating income 18,725 16,781 25,719 22,547
Interest income (expense), net 1,880 128 3,807 (13)
------- ------- -------- -------
Income before income tax 20,605 16,909 29,526 22,534
Income tax 8,551 6,933 12,253 9,239
------- ------- -------- -------
Net income $12,054 $ 9,976 $ 17,273 $13,295
======= ======= ======== =======
Net income per common share -
basic and diluted $ 0.11 $ 0.10 $ 0.16 $ 0.13
Weighted average common shares outstanding:
Basic 108,816 99,689 108,816 99,184
Diluted 110,598 100,977 110,668 100,218
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,273 $ 13,295
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for bad debts 1,556 738
Depreciation and amortization 16,490 12,727
Deferred income taxes 2,600 3,050
Other 294 114
Changes in operating assets and liabilities (22,415) (5,332)
------------ ------------
Net cash provided by operating activities 15,798 24,592
------------ ------------
Cash flows from investing activities:
Property and equipment acquisitions (4,744) (3,899)
Dispositions of property and equipment 70 905
Additions to intangible assets (275) (10)
Increase in deferred charges and other assets (8,211) (500)
Acquisitions of radio stations (75,002) (38,748)
------------ ------------
Net cash used in investing activities (88,162) (42,252)
------------ ------------
Cash flows from financing activities:
Borrowing on long-term obligations -- 20,000
Payments on long-term obligations (47) (20,064)
Proceeds from stock issuances, net of costs 411 120,414
------------ ------------
Net cash provided by financing activities 364 120,350
------------ ------------
Net increase (decrease) in cash and cash equivalents (72,000) 102,690
Cash and cash equivalents at beginning of period 215,136 10,293
------------ ------------
Cash and cash equivalents at end of period $ 143,136 $ 112,983
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Hispanic Broadcasting Corporation and subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the disclosures required
by generally accepted accounting principles. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
month periods ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 133 ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES. SFAS No. 133 establishes new rules for the recognition and
measurement of derivatives and hedging activities. In June 1999, the FASB
delayed the required adoption of SFAS No. 133 and now the statement is effective
for years beginning after June 15, 2000. The Company plans to adopt this
statement in 2001. Management does not believe adoption of this statement will
materially impact the Company's financial position or results of operations.
The FASB issued interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation - an interpretation of APB Opinion
No. 25" ("FIN 44") in March 2000. Among other issues, this interpretation
clarifies the definition of employee for purposes of applying APB Opinion No.
25, "Accounting for Stock Issued to Employees", the criteria for determining
whether a plan qualifies as a non-compensatory plan, the accounting
consequence of various modifications to the terms of previously fixed stock
options or awards and the accounting for an exchange of stock compensation
awards in a business combination. The interpretation is effective July 1,
2000, but certain conclusions in the interpretation cover specific events
that occurred after either December 15, 1998, or January 12, 2000. Management
believes that FIN 44 will not have a material effect on the financial
position or the results of operations of the Company upon adoption.
3. ACQUISITIONS AND DISPOSITIONS
2000 ACQUISITION
On October 15, 1999, the Company entered into an asset purchase
agreement to acquire for $75.0 million the assets of KRCD(FM) and KRCV(FM)
(formerly KACE(FM) and KRTO(FM)), serving the Los Angeles market (the "Los
Angeles Acquisition"). The Los Angeles Acquisition closed on January 31, 2000.
The asset acquisition was funded with a portion of the proceeds from the
November 1999 secondary public stock offering (the "November 1999 Offering").
The stations' programming was converted to a single Spanish-language format in
February 2000.
1999 ACQUISITIONS
On January 27, 1999, the Company entered into an asset purchase
agreement to acquire for $18.3 million the assets of KHOT(FM), serving the
Phoenix market (the "Phoenix Acquisition"). The Phoenix Acquisition closed on
April 5, 1999. The asset acquisition was funded with cash generated from
operations. Immediately after closing, the station's programming was converted
to a Spanish-language format.
On March 1, 1999, the Company entered into an asset purchase agreement
to acquire for $20.3 million the assets of KISF(FM), serving the Las Vegas
market (the "Las Vegas Acquisition"). The Las Vegas Acquisition closed on April
30, 1999. The asset acquisition was financed with a $20.0 million borrowing from
the Company's $282.0 million revolving credit facility (the "Credit Facility")
and $0.3 million cash generated from operations. Immediately after closing, the
station's programming was converted to a Spanish-language format.
On January 2, 1997, the Company acquired an option to purchase all of
the assets used in connection with the operation of KSCA(FM), a radio station
serving the Los Angeles market (the "KSCA
5
<PAGE>
Option"). In connection with the acquisition of the KSCA Option, the Company
began providing Spanish-language programming to KSCA(FM) under a time
brokerage agreement on February 5, 1997. The Company exercised the KSCA
Option and on September 17, 1999, the Company acquired the assets of KSCA(FM)
for $118.1 million. The Company had previously paid $13.0 million to acquire
and renew the option to purchase the assets of KSCA(FM) and such payments
were subtracted from the purchase price at closing. To fund the acquisition,
the Company borrowed $38.0 million from the Credit Facility and used $67.1
million of cash. The cash was generated from operating activities and
proceeds of the June 1999 secondary public stock offering (the "June 1999
Offering").
On July 6, 1999, the Company entered into an agreement to acquire from
a nonaffiliated trust for $65.0 million, the FCC licenses and transmission
equipment of a radio station broadcasting at 94.1 MHz (KLNO(FM)), serving the
Dallas/Fort Worth market (the "Dallas Acquisition"). The Dallas Acquisition
closed on September 24, 1999. To fund the acquisition, the Company borrowed $8.0
million from the Credit Facility and used $57.0 million of cash. The cash was
generated from operating activities and proceeds of the June 1999 Offering.
With the Dallas Acquisition, the Company assumed a time brokerage
agreement whereby an unaffiliated party provided the programming to the radio
station broadcasting at 94.1 MHz until January 31, 2000. The time brokerage
agreement fees were $484,158 ($15,618 per day) for the six months ended June 30,
2000. Immediately after the time brokerage agreement terminated, the station's
programming was converted to a Spanish-language format.
PENDING TRANSACTIONS
On April 14, 1999, the Company entered into an agreement with Z-Spanish
Media Corporation ("Z"), to exchange the assets of KRTX(FM), a radio station
serving the Houston market, for the assets of KLNZ(FM), a radio station owned by
Z serving the Phoenix market. Although the asset exchange has received all
necessary governmental consents, the transaction has not closed. Pursuant to the
terms of the asset exchange agreement, the Company has instituted arbitration
proceedings seeking, among other relief, specific performance to compel the
closing of the transaction.
On May 31, 2000, the Company entered into an asset purchase agreement
to acquire for $45.0 million the assets of KBUC(FM) and KRNH(FM), serving the
San Antonio market (the "San Antonio Acquisitions"). The closing of the San
Antonio Acquisitions is expected to occur during the third and fourth quarters
of 2000 for KRNH(FM) and KBUC(FM), respectively. Immediately after closing, the
programming of each station will be converted to separate Spanish-language
formats.
DISALLOWED TRANSACTION
On March 4, 2000, the Company entered into an agreement with
subsidiaries of Clear Channel Communications, Inc. ("Clear Channel") and AMFM
Inc. to purchase for approximately $127.0 million the assets of KXPK(FM),
KKFR(FM) and KEYI(FM), serving the Denver, Phoenix and Austin markets,
respectively. The Department of Justice ("DOJ") has disallowed the Company from
making this acquisition. The DOJ required these radio stations to be divested by
Clear Channel or AMFM Inc. in connection with the merger of these two companies.
Clear Channel owns a 26% passive, nonvoting equity interest in the Company.
6
<PAGE>
4. LONG-TERM OBLIGATIONS
The Company's ability to borrow under the Credit Facility is subject to
compliance with certain financial ratios and other conditions set forth in the
Credit Facility. The Credit Facility is secured by the stock of the Company's
subsidiaries. Borrowings under the Credit Facility bear interest at a rate based
on the LIBOR rate plus an applicable margin as determined by the Company's
leverage ratio. As of June 30, 2000, the Company has $282.0 million of credit
available, and may elect under the terms of the Credit Facility to increase the
facility by $147.5 million. The Credit Facility commitment reduces quarterly
through December 31, 2004.
As of June 30, 2000 and 1999, the Company had no outstanding balance
due on the Credit Facility.
5. STOCKHOLDERS' EQUITY
On May 25, 2000, the Board of Directors of the Company authorized a
two-for-one stock split payable in the form of a stock dividend of one share of
common stock for each issued and outstanding share of common stock. The dividend
was paid on June 15, 2000 to all holders of common stock at the close of
business on June 5, 2000. All financial information related to number of shares,
per share amounts, stock option data and market prices of the Company's common
stock have been restated to give effect to the split, unless otherwise noted.
On November 24, 1999, the Company completed the November 1999 Offering,
selling 6,102,580 shares of Class A Common Stock at $40.85 per share, net of
underwriters' discounts and commissions. The net proceeds of the offering were
approximately $248.7 million.
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share computations (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 12,054 $ 9,976 $ 17,273 $ 13,295
======== ======== ======== ========
Denominator:
Denominator for basic earnings per share 108,816 99,689 108,816 99,184
Effect of dilutive securities:
Stock options 1,758 1,266 1,837 1,017
Employee Stock Purchase Plan 24 22 15 17
-------- -------- -------- --------
Denominator for diluted earnings per share 110,598 100,977 110,668 100,218
======== ======== ======== ========
</TABLE>
6. LONG-TERM INCENTIVE PLAN
On May 21, 1997, the stockholders of the Company approved the Hispanic
Broadcasting Corporation Long-Term Incentive Plan (the "Incentive Plan"). The
types of awards that may be granted under the Incentive Plan include (a)
incentive stock options, (b) non-qualified stock options, (c) stock appreciation
rights, (d) rights to receive a specified amount of cash or shares of Class A
Common Stock and (e) restricted stock. In addition, the Incentive Plan provides
that directors of the Company may elect to receive some or all of their annual
director compensation in the form of shares of Class A Common Stock. Subject to
certain exceptions set forth in the Incentive Plan, the aggregate number of
shares of Class A Common Stock that may be the subject of awards under the
Incentive Plan at one time shall be an amount equal to (a) ten percent of the
total number of shares of Class A Common Stock outstanding from time to time
minus (b) the total number of shares of Class A Common Stock subject to
outstanding awards on the date of calculation under the Incentive Plan and any
other stock-based plan for employees or directors of the Company (other than the
Company's
7
<PAGE>
Employee Stock Purchase Plan). The Company has granted incentive and
non-qualified stock options for 4,008,068 shares of Class A Common Stock
primarily to directors and key employees. The exercise prices range from
$8.22 to $51.38 per share and were equal to the fair market value of the
Class A Common Stock on the dates such options were granted.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The performance of a radio station group is customarily measured by its
ability to generate broadcast cash flow. The two components of broadcast cash
flow are net revenues (gross revenues net of agency commissions) and operating
expenses (excluding depreciation, amortization and corporate general and
administrative expense). The primary source of revenues is the sale of
broadcasting time for advertising. The Company's most significant operating
expenses for purposes of the computation of broadcast cash flow are employee
salaries and commissions, programming expenses, and advertising and promotion
expenses. Management of the Company strives to control these expenses by working
closely with local station management. The Company's revenues vary throughout
the year. As is typical in the radio broadcasting industry, the first calendar
quarter generally produces the lowest revenues. The fourth quarter generally
produces the highest revenues.
Another measure of operating performance is EBITDA. EBITDA consists of
operating income or loss excluding depreciation and amortization.
Broadcast cash flow and EBITDA are not calculated in accordance with
generally accepted accounting principles. These measures should not be
considered in isolation or as substitutes for operating income, cash flows from
operating activities or any other measure for determining operating performance
or liquidity that is calculated in accordance with generally accepted accounting
principles. Broadcast cash flow and EBITDA do not take into account the
Company's debt service requirements and other commitments and, accordingly,
broadcast cash flow and EBITDA are not necessarily indicative of amounts that
may be available for dividends, reinvestment in the Company's business or other
discretionary uses.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 COMPARED
TO THE THREE AND SIX MONTHS ENDED JUNE 30, 1999
The results of operations for the three and six months ended June 30,
2000 are not comparable to results of operations for the same periods in 1999
primarily due to the start-up of radio stations KHOT(FM) in Phoenix on April 5,
1999, the radio station broadcasting at 94.1 MHz (KLNO(FM)) in Dallas on
September 24, 1999, and KRCD(FM) and KRCV(FM) in Los Angeles on January 31,
2000.
Net revenues increased by $12.9 million or 24.9% to $64.8 million for
the three months ended June 30, 2000 from $51.9 million for the same period in
1999. Net revenues for the six months ended June 30, 2000 increased by $21.7
million, or 24.2% to $111.3 million, compared to $89.6 million for the same
period in 1999. Net revenues increased for the three and six months ended June
30, 2000, compared to the same periods in 1999 primarily because of (a)
revenue growth of same stations, (b) revenues from start-up stations which
were acquired or reformatted in 1998 and are not currently classified as same
stations, and (c) revenues from start-up stations acquired or reformatted in
1999 and 2000. Same station revenues benefited from improved performance of
the Company's news/talk stations, which collectively had posted revenue
declines a year earlier.
Operating expenses increased by $7.9 million or 29.2% to $35.0 million
for the three months ended June 30, 2000 from $27.1 million for the same period
in 1999. Operating expenses for the six months ended June 30, 2000 increased by
$13.5 million or 26.4% to $64.6 million, compared to $51.1 million for the same
8
<PAGE>
period in 1999. Operating expenses increased primarily due to (a) an increase in
operating expenses of same stations, (b) increases in operating expenses of
start-up stations, and (c) costs associated with the development, launch and
operation of the Company's radio station Internet websites and local portals. We
increased the promotion of our radio stations to improve the ratings and
invested in on-air talent, programming research, additional sales and marketing
personnel and our non-traditional revenue initiative. Non-traditional
revenues are revenues from the implementation of new business development
techniques. The provision for bad debts for the six months ended June 30,
2000 increased by $0.9 million over the same period of 1999 due to our
estimate that a certain agency account is uncollectable. As a percentage of
net revenues, operating expenses increased to 54.0% from 52.2% for the three
months ended June 30, 2000 and 1999, respectively, and increased to 58.0%
from 57.0% for the six months ended June 30, 2000 and 1999, respectively.
Operating income before corporate expenses, depreciation and
amortization ("broadcast cash flow") for the three and six months ended June 30,
2000 increased 20.2% and 21.3%, to $29.8 and $46.7 million, respectively,
compared to $24.8 and $38.5 million, respectively, for the same periods in 1999.
As a percentage of net revenues, broadcast cash flow decreased to 46.0% from
47.8% for the three months ended June 30, 2000 and 1999, respectively, and
decreased to 42.0% from 43.0% for the six months ended June 30, 2000 and 1999,
respectively.
Corporate expenses increased by $1.3 million or 86.7% to $2.8 million
for the three months ended June 30, 2000 from $1.5 million for the same period
in 1999. Corporate expenses for the six months ended June 30, 2000 increased by
$1.3 million, or 40.6%, to $4.5 million, compared to $3.2 million for the same
period in 1999. The increase was primarily due to (a) higher staffing costs, and
(b) one-time costs of approximately $0.6 million associated with the move from
the Nasdaq National Market to the New York Stock Exchange and the costs
associated with the Company's unsuccessful efforts to acquire three radio
stations from Clear Channel. As a percentage of net revenues, corporate expenses
increased to 4.3% from 2.9% for the three months ended June 30, 2000 and 1999,
respectively, and increased to 4.0% from 3.6% for the six months ended June 30,
2000 and 1999, respectively.
EBITDA for the three and six months ended June 30, 2000 increased 15.9%
and 19.5%, to $27.0 and $42.2 million, respectively, compared to $23.3 and $35.3
million, respectively, for the same periods in 1999. As a percentage of net
revenues, EBITDA decreased to 41.7% from 44.9% for the three months ended June
30, 2000 and 1999, respectively, and decreased to 37.9% from 39.4% for the six
months ended June 30, 2000 and 1999, respectively.
Depreciation and amortization for the three months ended June 30, 2000
increased 27.7% to $8.3 million compared to $6.5 million for the same period in
1999. Depreciation and amortization for the six months ended June 30, 2000
increased 28.9% to $16.5 million compared to $12.8 million for the same period
in 1999. The increase in both periods is due to radio station acquisitions and
capital expenditures.
Interest income, net increased to $1.9 million from $0.1 million for
the three months ended June 30, 2000 and 1999, respectively. Interest income,
net increased to $3.8 million from approximately zero for the six months ended
June 30, 2000 and 1999, respectively. The increase for the three and six months
ended June 30, 2000 compared to the same periods in 1999 was due to cash and
cash equivalents being much higher in 2000 than in 1999 due to the unspent
proceeds of the November 1999 Offering being invested for the entire three
and six month periods. The majority of the cash and cash equivalent balance
at June 30, 1999 was the unspent proceeds of the June 1999 Offering which was
completed on June 7, 1999 and earned interest for only a partial month.
Federal and state income taxes are being provided at an effective rate
of 41.5% in 2000 and 41.0% in 1999. The increase in the effective tax rate in
2000 is due to an increase in the estimated effective state tax rate.
9
<PAGE>
For the three months ended June 30, 2000, the Company's net income
totaled $12.1 million ($0.11 per common share) compared to $10.0 million ($0.10
per common share) in the same period in 1999. For the six months ended June 30,
2000, the Company's net income totaled $17.3 million ($0.16 per common share)
compared to $13.3 million ($0.13 per common share) in the same period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended June
30, 2000 was $15.8 million as compared to $24.6 million for the same period in
1999. The decrease from 1999 to 2000 is due to an increase in accounts
receivable in 2000 which has not yet been collected and the payment of federal
and state income taxes which were greater in 2000 than those paid in 1999. Net
cash used in investing activities was $88.2 and $42.3 million for the six months
ended June 30, 2000 and 1999, respectively. The $45.9 million increase from 1999
to 2000 is primarily due to the purchase price of KRCD(FM) and KRCV(FM) in 2000
being greater than the purchase price of KHOT(FM) and KISF(FM) in 1999. Also,
deferred charges and other assets increased in 2000 due to signal upgrades in
process for certain radio stations in New York, Houston and Dallas and the
investment in Hispanic Radio Network, LLC. Net cash provided by financing
activities was $0.4 and $120.4 million for the six months ended June 30, 2000
and 1999, respectively. The $120.0 million decrease from 1999 to 2000 is due to
the proceeds from the June 1999 Offering.
Generally, capital expenditures are made with cash provided by
operations. Capital expenditures totaled $4.7 and $3.9 million for the six
months ended June 30, 2000 and 1999, respectively. The $0.8 million increase
is due to a higher amount of capital expenditure in 2000 compared to 1999
which is mostly due to the build-out of office space in Miami. Approximately
$1.2 million of the capital expenditures incurred during the six months ended
June 30, 2000 related to radio signal upgrade projects for four different
radio stations and the build-out of studios related to acquisitions in
Phoenix and Dallas compared to $1.6 million incurred in the same period in
1999 for the same radio signal upgrade projects and the build-out of studios
related to acquisitions made in New York, Phoenix and Las Vegas.
Available cash on hand plus cash flow provided by operations was
sufficient to fund the Company's operations, meet its debt obligations, and to
fund capital expenditures. Management believes the Company will have sufficient
cash on hand and cash provided by operations to finance its operations, satisfy
its debt service requirements, and to fund capital expenditures. Management
regularly reviews potential acquisitions. Future acquisitions will be financed
primarily through available cash on hand, proceeds from borrowings under the
Credit Facility, proceeds from securities offerings, and/or from cash provided
by operations.
FORWARD LOOKING STATEMENTS
Certain statements contained in this report are not based on historical
facts, but are forward looking statements that are based on numerous assumptions
made as of the date of this report. When used in the preceding and following
discussions, the words "believes," "intends," "expects," "anticipates" and
similar expressions are intended to identify forward looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those expressed in any of the forward
looking statements. Such risks and uncertainties include, but are not limited
to, industry-wide market factors and regulatory developments affecting the
Company's operations, acquisitions and dispositions of broadcast properties
described elsewhere herein, the financial performance of start-up stations, and
efforts by the new management to integrate its operating philosophies and
practices at the station level. This report should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
The Company disclaims any obligation to update the forward looking statements in
this report.
10
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is subject to interest rate risk on the interest earned on
cash and cash equivalents. A change of 10% in the interest rate earned on
short-term investments would not have had a significant impact on the Company's
historical financial statements.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims and lawsuits, which are
generally incidental to its business. The Company is vigorously contesting all
such matters and believes that their ultimate resolution will not have a
material adverse effect on its consolidated financial position or results of
operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
3.1 Second Amended and Restated Certificate of Incorporation of
the Company dated February 14, 1997 (incorporated by reference
to Exhibit 3.1 to the Company's Form 8-K filed on March 3,
1997).
3.2 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Company dated June 4, 1998
(incorporated by reference to Exhibit 3.1 to the Company's
Form 10-Q filed on November 12, 1998).
3.3 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Company dated June 3, 1999
(incorporated by reference to Exhibit 3.3 to the Company's
Form 10-Q filed on August 12, 1999).
3.4 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Company dated May 25,
2000.
3.5 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration
Statement on Amendment No. 3 to Form S-1 (Registration No.
33-78370) filed on July 8, 1994).
4.1 Credit Agreement among the Company and its subsidiaries, The
Chase Manhattan Bank, as administrative agent, and certain
other lenders, dated February 14, 1997 without Exhibits
(Schedules omitted) (incorporated by reference to Exhibit 10.5
to the Company's Form 8-K filed on March 3, 1997).
4.2 Credit Agreement Amendment No. 1 among the Company and its
subsidiaries, the Chase Manhattan Bank, as administrative
agent, and certain other lenders, dated May 6, 1999 without
Exhibits (Schedules omitted) (incorporated by reference to
Exhibit 10.12 to the Company's Form 10-K filed on March 30,
2000).
27 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K
None
11
<PAGE>
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.
Hispanic Broadcasting Corporation
---------------------------------
(Registrant)
/S/ Jeffrey T. Hinson
---------------------------------
Jeffrey T. Hinson
Senior Vice President/
Chief Financial Officer
Dated: August 11, 2000
12
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Second Amended and Restated Certificate of Incorporation of
the Company dated February 14, 1997 (incorporated by reference
to Exhibit 3.1 to the Company's Form 8-K filed on March 3,
1997).
3.2 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Company dated June 4, 1998
(incorporated by reference to Exhibit 3.1 to the Company's
Form 10-Q filed on November 12, 1998).
3.3 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Company dated June 3, 1999
(incorporated by reference to Exhibit 3.3 to the Company's
Form 10-Q filed on August 12, 1999).
3.4 Certificate of Amendment to the Second Amended and Restated
Certificate of Incorporation of the Company dated May 25,
2000.
3.5 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration
Statement on Amendment No. 3 to Form S-1 (Registration No.
33-78370) filed on July 8, 1994).
4.1 Credit Agreement among the Company and its subsidiaries, The
Chase Manhattan Bank, as administrative agent, and certain
other lenders, dated February 14, 1997 without Exhibits
(Schedules omitted) (incorporated by reference to Exhibit 10.5
to the Company's Form 8-K filed on March 3, 1997).
4.2 Credit Agreement Amendment No. 1 among the Company and its
subsidiaries, the Chase Manhattan Bank, as administrative
agent, and certain other lenders, dated May 6, 1999 without
Exhibits (Schedules omitted) (incorporated by reference to
Exhibit 10.12 to the Company's Form 10-K filed on March 30,
2000).
27 Financial Data Schedule.
</TABLE>
13
