<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-82114
SPANISH BROADCASTING SYSTEM, INC.
-----------------------------------
See Table of Additional Registrants
-----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3827791
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
26 West 56 Street 10019
New York, NY
(Address of principal (Zip Code)
executive offices)
(212) 541-9200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-Q
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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of Registrant's Common Stock, par value $.01 per share,
outstanding as of May 9, 1996: 606,668 shares of Common Stock of which 558,135
shares are designated Class A Common Stock and 48,533 shares are designated
Class B Common Stock.
<PAGE> 3
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR PRIMARY
OTHER STANDARD I.R.S. EMPLOYER
NAME JURISDICTION OF INDUSTRIAL IDENTIFICATION
INCORPORATION CLASSIFICATION NUMBER
NUMBER
<S> <C> <C> <C>
Spanish Broadcasting New Jersey 4832 13-3181941
System, Inc.
Spanish Broadcasting California 4832 92-3952357
System of California, Inc.
Spanish Broadcasting Florida 4832 58-1700848
System of Florida, Inc.
Spanish Broadcasting New York 4832 13-3570696
System of New York, Inc.
Alarcon Holdings, Inc. New York 6512 13-3475833
Spanish Broadcasting New York 4899 13-3511101
System Network, Inc.
SBS Promotions, Inc. New York 7999 13-3456128
SBS of Greater New York 4832 Application
New York, Inc. Pending
</TABLE>
<PAGE> 4
SPANISH BROADCASTING SYSTEM, INC.
INDEX TO QUARTERLY REPORT
MARCH 31, 1996
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART 1. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of September 24, 1995
and March 31, 1996 (unaudited) 3
Condensed Consolidated Statements of Operations for the three months
ended and six months ended March 26, 1995 and March 31, 1996 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the
six months ended March 26, 1995 and March 31, 1996 (unaudited) 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART 2. OTHER INFORMATION 14
SIGNATURES
</TABLE>
<PAGE> 5
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 24,1995 MARCH 31, 1996
ASSETS (AUDITED) (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS :
CASH AND CASH EQUIVALENTS $ 17,817,119 $ 5,364,647
RECEIVABLES:
TRADE 12,614,434 8,399,140
LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS 2,077,930 1,921,168
------------ ------------
NET RECEIVABLES - TRADE 10,536,504 6,477,972
BARTER (NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS OF
$ 2,806,956 AT SEPT.24,1995 AND $2,865, 347 AT MAR. 31,1996.) 663,360 760,040
------------ ------------
NET RECEIVABLES 11,199,864 7,238,012
OTHER CURRENT ASSETS 549,270 647,938
------------ ------------
TOTAL CURRENT ASSETS 29,566,253 13,250,597
PROPERTY AND EQUIPMENT, NET 17,596,572 18,504,619
FRANCHISE COSTS, NET 50,251,987 135,114,173
DUE FROM RELATED PARTY 286,947 290,437
DEFERRED FINANCING COSTS, NET 5,647,915 8,437,235
OTHER ASSETS 279,566 301,295
------------ ------------
$103,629,240 $175,898,356
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES :
CURRENT PORTION OF LONG TERM DEBT $ 61,565 $ 70,285
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 4,315,365 5,093,919
ACCRUED INTEREST 2,341,919 2,341,919
INCOME TAXES PAYABLE 196,835 -
UNEARNED REVENUE 656,875 769,107
------------ ------------
TOTAL CURRENT LIABILITIES 7,572,559 8,275,230
SENIOR NOTES, NET OF UNAMORTIZED DISCOUNT 94,315,087 129,534,597
DEFERRED INCOME TAXES 1,745,682 326,217
LONG-TERM DEBT, LESS CURRENT PORTION 1,146,066 1,122,082
REDEEMABLE SERIES A PREFERRED STOCK, $.01 PAR VALUE. AUTHORIZED
49,201 SHARES; ISSUED AND OUTSTANDING 37,500 SHARES - 32,944,333
STOCKHOLDERS EQUITY (DEFICIENCY):
CLASS A COMMON STOCK, $.01 PAR VALUE. AUTHORIZED
2,000,000 SHARES; ISSUED AND OUTSTANDING 558,135
SHARES 5,581 5,581
CLASS B COMMON STOCK, $.01 PAR VALUE. AUTHORIZED
200,000 SHARES; ISSUED AND OUTSTANDING 48,533
SHARES 485 485
ADDITIONAL PAID IN CAPITAL 5,690,934 12,524,441
ACCUMULATED DEFICIT (4,425,882) (6,413,338)
------------ ------------
1,271,118 6,117,169
LESS: LOANS RECEIVABLE FROM STOCKHOLDERS (2,421,272) (2,421,272)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (1,150,154) 3,695,897
------------ ------------
$103,629,240 $175,898,356
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
(3)
<PAGE> 6
SPANISH BROADCASTING SYSTEM,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 26, 1995 MARCH 31, 1996 MARCH 26, 1995 MARCH 31, 1996
<S> <C> <C> <C> <C>
GROSS BROADCASTING REVENUES 11,030,693 10,318,819 24,462,293 24,169,520
LESS: AGENCY COMMISSIONS 1,355,495 1,186,674 3,029,721 2,932,108
---------- ---------- ---------- ----------
NET BROADCASTING REVENUES 9,675,198 9,132,145 21,432,572 21,237,412
---------- ---------- ---------- ----------
OPERATING EXPENSES
ENGINEERING 359,810 422,549 681,502 860,533
PROGRAMMING 1,222,251 1,293,367 2,527,032 2,704,152
SELLING 2,819,181 3,187,118 5,486,183 6,733,963
GENERAL AND ADMINISTRATIVE 1,402,210 1,525,413 2,979,848 3,117,957
CORPORATE EXPENSES 1,177,153 1,094,269 1,985,898 1,936,322
DEPRECIATION & AMORTIZATION 823,032 816,543 1,652,941 1,636,739
---------- ---------- ---------- ----------
7,803,637 8,339,259 15,313,404 16,989,666
---------- ---------- ---------- ----------
OPERATING INCOME 1,871,561 792,886 6,119,168 4,247,746
OTHER EXPENSES :
INTEREST EXPENSE, NET 3,302,463 3,414,213 6,562,825 6,649,023
OTHER, NET 77,309 911,157 55,000 911,150
---------- ---------- ---------- ----------
LOSS BEFORE INCOME TAXES (1,508,211) (3,532,484) (498,657) (3,312,427)
INCOME TAXES 30,065 (1,426,017) 71,065 (1,324,971)
---------- ---------- ---------- ----------
NET LOSS (1,538,276) (2,106,467) (569,722) (1,987,456)
========== ========== ======== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
(4)
<PAGE> 7
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 26, 1995 AND MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS (569,722) (1,987,456)
----------- ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES :
DEPRECIATION AND AMORTIZATION 1,652,941 1,636,739
CHANGE IN PROVISION FOR LOSSES ON RECEIVABLES 680,284 (98,371)
AMORTIZATION OF DEBT DISCOUNT 2,248,213 2,497,350
AMORTIZATION OF DEFERRED FINANCING COSTS 385,159 416,327
IMPUTED INTEREST 95,559 0
CHANGES IN OPERATING ASSETS AND LIABILITIES:
DECREASE IN RECEIVABLES 1,050,770 4,060,223
INCREASE IN OTHER CURRENT ASSETS (155,845) (98,668)
(INCREASE) DECREASE IN OTHER ASSETS 42,416 (21,729)
INCREASE IN DEFERRED FINANCING COSTS (237,110) -
INCREASE IN ACCOUNTS PAYABLE AND ACCRUED INTEREST 106,637 778,554
INCREASE IN ACCRUED INTEREST 378,458 0
DECREASE IN INCOME TAXES PAYABLE (204,936) (196,835)
INCREASE IN UNEARNED REVENUE 173,160 112,232
INCREASE IN DEFERRED INCOME TAXES PAYABLE - (1,419,465)
----------- ------------
TOTAL ADJUSTMENTS 6,215,706 7,666,357
----------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,645,984 5,678,901
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF RADIO STATION WPAT-FM - (85,726,695)
ADDITIONS TO PROPERTY AND EQUIPMENT (2,828,520) (1,680,277)
----------- ------------
NET CASH USED IN INVESTING ACTIVITIES (2,828,520) (87,406,972)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
REPAYMENTS OF LONG-TERM DEBT (18,242) (15,264)
ADVANCES TO RELATED PARTY (61,420) (3,490)
PROCEEDS FROM ISSUANCE OF SENIOR SECURED NOTES NET OF FINANCING - 33,452,446
NET PROCEEDS FROM ISSUANCE OF REDEEMABLE PREFERRED STOCK - 35,841,907
----------- ------------
NET CASH USED IN FINANCING ACTIVITIES (79,662) 69,275,599
----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,737,802 (12,452,472)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,136,567 17,817,119
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,874,369 $ 5,364,647
=========== ============
CASH PAID FOR:
INTEREST $ 3,702,457 $ 4,040,953
=========== ============
INCOME TAXES $ 312,860 $ 470,270
=========== ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
(5)
<PAGE> 8
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 26, 1995 AND MARCH 31, 1996
(UNAUDITED)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
the Company and its direct and indirect subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements for the
three and six month periods ended March 26, 1995 and March 31, 1996 do not
contain all disclosures required by generally accepted accounting principles.
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements of the Company as of and for the
fiscal year ended September 24, 1995.
In the opinion of management of the Company, the accompanying unaudited
condensed consolidated financial statements contain all adjustments, which are
all of a normal, recurring nature, necessary for a fair presentation of the
results of the interim periods. The results of operations for the three and six
month periods ended March 31, 1996 are not necessarily indicative of the results
for a full year.
(2) ACQUISITION
On March 25,1996, the Company acquired the Federal Communications
Commission ("FCC") broadcast license and substantially all of the assets used or
useful in the operation of radio station WPAT-FM for $84.6 million, plus
financing and closing costs. The Company financed this purchase with a
combination of the issuance of 37,500 shares of the Company's Series A
Exchangeable Preferred Stock, $35.0 million of the Company's 12 1/4% Senior
Secured Notes due 2001 and cash on hand of $14.2 million. The Company also
issued to the holders of the Preferred Stock and new Notes, warrants to
purchase, in the aggregate, 6% of the Company's common stock on a fully diluted
basis. Approximately $6.8 million of the gross proceeds was determined to be the
value of the warrants which was credited to Additional Paid in Capital. The
Company assumed operational responsibility of WPAT-FM on January 20, 1996 under
an interim agreement at which time the Company changed the musical format of
WPAT-FM to adult contemporary music in Spanish, targeting the three million
Hispanics in the New York metropolitan area.
The Company's consolidated results of operations include the results of
WPAT-FM which was operated by the Company since January 20, 1996. The following
unaudited pro-forma summary presents the consolidated results of operations as
if the acquisition had occurred as of the beginning of fiscal year 1996, after
giving effect to certain adjustments, including amortization of franchise costs
and interest expense on the acquisition debt. These pro-forma results have been
prepared for comparative purposes only and do not purport to be indicative of
what would have occurred had the acquisition been made as of that date or of
results which may occur in the future.
(6)
<PAGE> 9
Six months ended March 31, 1996
<TABLE>
<S> <C>
Pro-Forma Results
Net Revenues $23,816
Net Loss (6,636)
</TABLE>
(3) RECLASSIFICATIONS
The Company reclassified certain balances in the accompanying condensed
consolidated statement of operations for the three and six months ended March
26, 1995 to conform to the current period presentation.
(7)
<PAGE> 10
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 26,1995 AND MARCH 31,1996
ALL AMOUNTS ARE PRESENTED IN $ THOUSANDS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 26, 1995 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1996
Net revenues increased from $9,675 for the three months ended March 26,
1995, to $9,132 for the three months ended March 31, 1996, a decrease of $543,
or 5.6%. The Company's net revenues in New York, which include recently acquired
WPAT-FM, had a strong increase which was offset by a significant decrease in the
net revenues of the Los Angeles stations and a slight decrease for the Miami
stations. The Los Angeles stations suffered from a decrease in ratings related
to increased competition from other Spanish broadcasters as well as general
softness in the advertising market for this area. The Miami market's decrease
was due in significant part to the cancellation of the "Calle Ocho" event which
historically has accounted for a significant portion of Miami's net revenues in
this quarter. In the New York market, the significant increase in sales related
to the upward trend in ratings. The newly acquired station, WPAT-FM, which
started operations on January 20,1996, contributed to the revenue growth in this
market.
Total operating expenses increased from $7,804 in the three months ended
March 26, 1995 to $8,339 in the three months ended March 31, 1996, an increase
of $535 or 6.9%. The higher operating expenses were caused by an increase of
$134 in broadcasting operating expenses and an increase of $491 in selling,
general and administrative expenses offset by a decrease of $7 in depreciation
and amortization expense and a decrease of $83 in corporate expenses.
The increase in broadcasting operating expenses resulted from an increase
in programming salaries due to the acquisition of WPAT-FM and an increase in
engineering costs in New York and Miami. The $491 increase in selling, general
and administrative expenses was caused by an increase in advertising in the Los
Angeles market, costs associated with the Company's introduction to a Spanish
music format on WPAT-FM and higher commissions in New York. Corporate expenses
were lower due to a decrease in professional fees.
Operating income decreased from $1,872 during the three months ended March
26, 1995 to $793 during the three months ended March 31, 1996, a decrease of
$1,079, or 57.6%. The decrease was due to the decrease in net revenues combined
with the increase in operating expenses.
(8)
<PAGE> 11
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 26,1995 AND MARCH 31,1996
EBITDA (defined as earnings before net interest, income taxes,
depreciation and amortization and other income and expense items) decreased
$1,085 or 40.3% from $2,694 during the three months ended March 26, 1995 to
$1,609 during the three months ended March 31, 1996. The decrease in EBITDA was
caused by a decrease in net revenues and an increase in operating expenses.
Other expenses, comprised mostly of interest expenses, increased from $3,380 in
the three months ended March 26, 1995 to $4,325 in the three months ended March
31,1996, an increase of $945 or 28.0% caused primarily by non-recurring
financial costs related to the purchase of WPAT.
Net loss increased from $1,538 for the three months ended March 26, 1995
to $2,106 for the three months ended March 31, 1996, an increase of $568 or
36.9%. The increase is attributable to the decrease in operating income and the
write-off of financing costs.
(9)
<PAGE> 12
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 26, 1995 AND MARCH 31,1996
ALL AMOUNTS ARE PRESENTED IN THOUSANDS
RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 26, 1995 COMPARED TO THE SIX MONTHS ENDED
MARCH 31, 1996
Net revenues decreased from $21,433 for the six months ended March 26,
1995, to $21,237 for the six months ended March 31, 1996, a decrease of $196, or
0.9%. The Company's radio stations in New York had a strong increase in net
revenues, the Miami stations had a moderate increase in net revenues, while Los
Angeles stations had a decrease in net revenues. In the New York market, the
significant increase in sales related to the upward trend in ratings which led
to higher billing rates. The newly acquired station, WPAT-FM, which began
operating on January 20, 1996, contributed to the revenue growth in this market.
The Miami stations' sales rose as a result of more effective sales efforts. The
Los Angeles stations suffered from a decrease in ratings related to increased
competition from other Spanish broadcasters and general advertising market
softness in the area.
Total operating expenses increased from $15,313 in the six months ended
March 26, 1995 to $16,990 in the six months ended March 31, 1996, an increase of
$1,677 or 11.0%. The higher operating expenses were caused by an increase of
$356 in broadcasting operating expenses and an increase of $1,386 in selling,
general and administrative expenses offset by a decrease of $50 in corporate
expenses and a decrease in depreciation and amortization expense of $16.
The increase in broadcasting operating expenses resulted from a sign-up
bonus and increased salary of a new on-air personality, as well as increased
engineering costs in Miami and additional programming expenses related to the
recently purchased WPAT-FM. The $1,386 increase in selling, general and
administrative expenses resulted from an increase in representative and sales
people's commissions in New York and a settlement of a lawsuit with a former
customer in New York. Additionally, increased advertising and promotions on the
Los Angeles stations and WPAT-FM, New York, contributed to the increase.
Corporate expenses were lower due to decreased professional fees.
Operating income decreased from $6,119 during the six months ended March
26, 1995 to $4,248 during the six months ended March 31, 1996, a decrease of
$1,871, or 30.6%. The decrease was due to the decrease in net revenues and the
increase in total operating expenses.
(10)
<PAGE> 13
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 26, 1995 AND MARCH 31, 1996
EBITDA decreased $1,888 or 24.3% from $7,772 during the six months ended
March 26, 1995 to $5,884 during the six months ended March 31, 1996. The
decrease in EBITDA was caused by the decrease in net revenues combined with the
increase in operating expenses. Other expenses, comprised mainly of interest
expenses, increased from $6,618 for the six months ended March 26, 1995 to
$7,560 for the six months ended March 31, 1996 an increase of $942 or 14.2%
mainly because of non-recurring financing costs.
The net loss increased from $570 for the six months ended March 26, 1995
to $1,987 for the six months ended March 31, 1996, an increase of $1,417 or
248.6%. The increase was caused by the decrease in operating income combined
with the write-off of financing costs.
(11)
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise primarily from its debt service
obligations, funding of the Company's working capital needs and capital
expenditures. The company's primary form of financing is cash generated from
operations, long term indebtedness and the issuance of preferred stock.
Cash flow generated from operations was $5,679 for the six months ended
March 31, 1996. A portion of the company's cash flow was used to make its
semiannual interest payment on the Company's 12 1/2% senior notes due 2001.
Additionally, the Company invested $1,680 for capital expenditures mostly for
the upgrade of the Los Angeles building being used for its radio operations and
the construction of a new tower and antenna at its newly leased site in New
Jersey for WXLX-AM.
On March 25, 1996, the Company consummated its purchase of the FCC
broadcast license and substantially all of the assets used or useful in the
operation of radio station WPAT-FM for an aggregate purchase price of $84.6
million plus closing costs of $1.2 million. The Company financed the purchase
price with a combination of the sale in a private placement of 37,500 shares of
the Company's Series A Exchangeable Preferred Stock, $35.0 million of the
Company's 12 1/4% Senior Secured Notes due 2001 and the balance with cash on
hand. The Company also issued to the holders of the Preferred Stock and new
Notes warrants to purchase, in the aggregate, 6% of the Company's common stock
on a fully diluted basis which are exercisable no later than June 29,1998.
Approximately $6.8 million of the gross proceeds was determined to be the value
of the warrants. In addition, deferred financing costs related to the financing
were $3.3 million.
. The Exchangeable Preferred Stock is entitled to dividends at the rate of
12.75% per annum payable quarterly with the dividend rate increasing by 0.25%
for each period of three months from March 25, 1996 through March 24, 1997 and
0.50% for each period of three months thereafter, provided that the dividend
rate will at no time exceed 15.25% . During the first three years, dividends
that are due may be paid in cash or additional shares of Preferred Stock. The
Company is required to redeem the Preferred Stock on December 1, 2002.
The Senior Secured Notes are secured by FCC licenses for WPAT-FM and are
guaranteed by each of the Company's subsidiaries. The Notes are due on June
1,200l and bear interest at the rate of 12.25% per annum payable quarterly, with
the interest rate increasing by 0.25% for each three month period from March 25,
1996 to March 24, 1997, and 0.50% for each period of three months thereafter,
provided that the interest rate on the Notes may not exceed 14.75% per annum.
Until March 24, 1998, interest may be paid in cash or in additional Senior
Secured Notes. Covenants under the Indentures governing the 12 1/2% Senior Notes
and the Senior Secured Notes limit the Company's ability to pay dividends,
repurchase or redeem its Common Stock or the Notes or incur additional
indebtedness, among other things.
(12)
<PAGE> 15
Cash Flow generated from operations for the six months ended March 26,
1995 amounted to $5,646. The Company used a portion of its cash flow to make its
first interest payment on 12 1/2% Senior Notes of $3,702. The Company also
invested $2,829 for capital expenditures, mostly for the purchase and upgrade of
the Los Angeles building.
The Company's revenues fluctuate throughout the year. The Company's second
fiscal quarter (January through March) generally produces the lowest revenues
for the year and its third fiscal quarter (April through June) generally
produces the highest revenues primarily due to increased levels of advertising
during this period.
The Company believes it has adequate cash resources and will generate
sufficient income to meet its working capital, capital expenditure and debt
service obligations, and that it will be in compliance for the foreseeable
future with all covenants in the indenture governing the Notes which constitute
the majority of the Company's indebtedness.
(13)
<PAGE> 16
PART II. OTHER INFORMATION
1. Legal, Regulatory and Other Matters
A. Information relating to the sale of preferred stock and
senior notes and the issuance of warrants to purchase the Company's Class A
Common Stock to finance the acquisition of WPAT-FM is contained in the Current
Report on Form 8-K incorporated by reference herein.
B. Information regarding legal proceedings is included in the
Company's previous 10-K and 10-Q reports and is expressly incorporated by
reference herein.
Item 6. Exhibits and Reports on Form 8-K
A Current Report on Form 8-K dated March 25, 1996, was filed on April
9, 1996 reporting the acquisition of WPAT-FM.
(14)
<PAGE> 17
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.
Spanish Broadcasting System, Inc.,
a Delaware Corporation
Spanish Broadcasting System, Inc.,
a New Jersey Corporation
Spanish Broadcasting System of
New York, Inc.
Spanish Broadcasting System of
Florida, Inc.
Spanish Broadcasting System
Network, Inc.
SBS Promotions, Inc.
Alarcon Holdings, Inc.
SBS of Greater New York, Inc.
Date: May 13, 1996 By: /s/ Raul Alarcon
-------------------------------------
Raul Alarcon
President
(principal executive officer)
Date: May 13, 1996 By: /s/ Joseph A. Garcia
-------------------------------------
Joseph A. Garcia
VP and Chief Financial Officer
(principal financial and accounting
officer)
<PAGE> 18
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.
Spanish Broadcasting System
of California, Inc.
Date: May 13, 1996 By: /s/ Raul Alarcon
-------------------------------------
Raul Alarcon
Vice President
Date: May 13, 1996 By: /s/ Joseph A. Garcia
-------------------------------------
Joseph A. Garcia
VP and Chief Financial Officer
(principal financial and
accounting officer)
<PAGE> 19
EXHIBIT INDEX
-------------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> SEP-26-1995 SEP-30-1996
<PERIOD-START> SEP-26-1994 SEP-25-1995
<PERIOD-END> MAR-26-1995 MAR-31-1996
<CASH> 17,817,119 5,364,647
<SECURITIES> 0 0
<RECEIVABLES> 12,614,434 8,399,140
<ALLOWANCES> 2,077,930 1,921,168
<INVENTORY> 0 0
<CURRENT-ASSETS> 29,566,253 13,250,597
<PP&E> 17,596,572 18,504,619
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 103,629,240 175,898,356
<CURRENT-LIABILITIES> 7,572,559 8,275,230
<BONDS> 0 0
0 0
0 32,944,333
<COMMON> 0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 103,629,240 175,898,356
<SALES> 0 0
<TOTAL-REVENUES> 24,462,293 24,169,520
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 6,562,825 6,649,023
<INCOME-PRETAX> (498,657) (3,312,427)
<INCOME-TAX> 17,065 (1,523,716)
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (569,722) (1,788,711)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
