<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 30, 1997
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
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 14, 1997: 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.
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 13-3888732
New York, Inc.
</TABLE>
<PAGE> 4
SPANISH BROADCASTING SYSTEM, INC.
INDEX TO QUARTERLY REPORT
MARCH 30, 1997
<TABLE>
<CAPTION>
PAGE
PART 1. FINANCIAL INFORMATION NUMBER
<S> <C>
Condensed Consolidated Balance Sheets as of September 29, 1996
and March 30,1997 (unaudited) 3
Condensed Consolidated Statements of Operations for the three months
ended and six months ended March 31, 1996 and March 30, 1997 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the
six months ended March 31, 1996 and March 30,1997 (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 29,1996 MARCH 30, 1997
ASSETS (AUDITED) (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS :
CASH AND CASH EQUIVALENTS $ 5,468,079 $ 13,151,379
RECEIVABLES:
TRADE 12,104,500 9,887,459
LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS 1,823,359 1,980,351
------------- -------------
NET RECEIVABLES - TRADE 10,281,141 7,907,108
BARTER (NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS OF
$ 2,372,386 AT SEPT. 29, 1996 AND $3,462,564 AT MAR. 30, 1997) 548,885 476,092
------------- -------------
NET RECEIVABLES 10,830,026 8,383,200
OTHER CURRENT ASSETS 1,115,332 2,208,177
------------- -------------
TOTAL CURRENT ASSETS 17,413,437 23,742,756
PROPERTY AND EQUIPMENT, NET 18,873,036 19,353,908
FRANCHISE COSTS, NET 133,917,182 277,981,910
DUE FROM RELATED PARTY 289,869 289,869
DEFERRED FINANCING COSTS, NET 6,235,341 8,148,692
OTHER ASSETS 131,294 2,443,147
------------- -------------
$ 176,860,159 $ 331,960,282
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES :
CURRENT PORTION OF LONG TERM DEBT $ 53,572 $ 48,588
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 4,918,207 4,940,588
ACCRUED INTEREST 2,394,621 2,489,449
UNEARNED REVENUE 875,256 1,511,640
------------- -------------
TOTAL CURRENT LIABILITIES 8,241,656 8,990,265
SENIOR NOTES, NET OF UNAMORTIZED DISCOUNT 134,827,372 177,225,874
DEFERRED INCOME TAXES 387,960 --
LONG-TERM DEBT, LESS CURRENT PORTION 1,033,368 4,018,843
REDEEMABLE PREFERRED STOCK, RETIRED 35,938,659 --
REDEEMABLE PREFERRED STOCK, $.01 PAR VALUE. AUTHORIZED
413,930 SHARES; ISSUED AND OUTSTANDING 175,000 SHARES -- 148,135,197
STOCKHOLDERS DEFICIENCY:
CLASS A COMMON STOCK, $.01 PAR VALUE. AUTHORIZED
5,000,000 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 10,806,004 16,859,592
ACCUMULATED DEFICIT (11,906,690) (20,801,319)
------------- -------------
(1,094,620) (3,935,661)
LESS: LOANS RECEIVABLE FROM STOCKHOLDERS (2,474,236) (2,474,236)
------------- -------------
TOTAL STOCKHOLDERS' DEFICIENCY (3,568,856) (6,409,897)
------------- -------------
$ 140,921,500 $ 331,960,282
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
(3)
<PAGE> 6
SPANISH BROADCASTING SYSTEM,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1996 MARCH 30, 1997 MARCH 31, 1996 MARCH 30, 1997
<S> <C> <C> <C> <C>
GROSS BROADCASTING REVENUES 10,318,819 12,746,549 24,169,520 26,741,121
LESS: AGENCY COMMISSIONS 1,186,674 1,322,935 2,932,108 2,951,367
----------------------------------------------------------------
NET BROADCASTING REVENUES 9,132,145 11,423,614 21,237,412 23,789,754
----------------------------------------------------------------
OPERATING EXPENSES
ENGINEERING 422,549 586,743 860,533 1,084,513
PROGRAMMING 1,293,367 1,514,869 2,704,152 3,032,258
SELLING 3,187,118 2,628,309 6,733,963 6,165,789
GENERAL AND ADMINISTRATIVE 1,525,413 1,403,153 3,117,957 2,934,438
CORPORATE EXPENSES 1,094,269 1,528,342 1,936,322 2,522,335
DEPRECIATION & AMORTIZATION 816,543 1,406,609 1,636,739 2,801,156
----------------------------------------------------------------
8,339,259 9,068,025 16,989,666 18,540,489
----------------------------------------------------------------
OPERATING INCOME 792,886 2,355,589 4,247,746 5,249,265
OTHER EXPENSES:
INTEREST EXPENSE, NET 3,414,213 5,321,235 6,649,023 10,327,648
OTHER, NET 911,157 1,317,021 911,150 1,344,459
----------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (3,532,484) (4,282,667) (3,312,427) (6,422,842)
EXTRAORDINARY LOSS - EXTINGUISHMENT
OF DEBT, NET OF TAXES 0 1,715,206 1,715,206
INCOME TAXES (1,426,017) (1,626,681) (1,324,971) (2,440,681)
----------------------------------------------------------------
NET INCOME (LOSS) (2,106,467) (4,371,192) (1,987,456) (5,697,367)
ACCUMULATED DEFICIT AT
BEGINNING OF PERIOD (4,306,871) (14,803,608) (4,425,882) (11,906,690)
ACCRETION OF PREFERRED STOCK (697,877) (943,931)
PREFERRED STOCK ISSUED AS DIVIDENDS 0 (928,642) -- (2,253,331)
----------------------------------------------------------------
ACCUMULATED DEFICIT AT
END OF PERIOD (6,413,338) (20,801,319) (6,413,338) (20,801,319)
================================================================
</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 31, 1996 AND MARCH 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1997
--------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) (1,987,456) (5,697,367)
--------------------------------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
LOSS ON EXTINGUISHMENT OF DEBT -- 2,766,460
DEPRECIATION AND AMORTIZATION 1,636,739 2,801,156
CHANGE IN PROVISION FOR LOSSES ON RECEIVABLES (98,371) 1,247,170
AMORTIZATION OF DEBT DISCOUNT 2,497,350 3,203,122
INTEREST SATISFIED THROUGH THE ISSUANCE OF NEW NOTES -- 2,433,230
AMORTIZATION OF DEFERRED FINANCING COSTS 416,327 1,939,974
DEFERRED INCOME TAXES (1,419,465) (387,960)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
DECREASE IN RECEIVABLES 4,060,223 1,199,656
INCREASE IN OTHER CURRENT ASSETS (98,668) (1,092,845)
INCREASE IN OTHER ASSETS (21,729) (2,311,853)
INCREASE IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES 778,554 22,381
INCREASE IN ACCRUED INTEREST -- 94,828
DECREASE IN INCOME TAXES PAYABLE (196,835) --
INCREASE IN UNEARNED REVENUE 112,232 636,384
-------------------------------
TOTAL ADJUSTMENTS 7,666,357 12,551,703
-------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,678,901 6,854,336
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
INCREASE IN DEFERRED FINANCING COSTS -- (3,878,992)
ACQUISITIONS OF RADIO STATIONS (85,726,695) (146,000,000)
ADDITIONS TO PROPERTY AND EQUIPMENT (1,680,277) (1,346,756)
-------------------------------
NET CASH USED IN INVESTING ACTIVITIES (87,406,972) (151,225,748)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
REPAYMENTS OF LONG-TERM DEBT AND PREFERRED STOCK (15,264) (71,080,485)
ADVANCES TO RELATED PARTY (3,490) --
PROCEEDS FROM ISSUANCE OF SENIOR SECURED NOTES 33,452,446 75,000,000
NET PROCEEDS FROM ISSUANCE OF REDEEMABLE PREFERRED STOCK 35,841,907 148,135,190
-------------------------------
NET CASH USED IN FINANCING ACTIVITIES 69,275,599 152,054,712
-------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (12,452,472) 7,683,300
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 17,817,119 5,468,079
-------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,364,647 $ 13,151,379
===============================
CASH PAID FOR:
INTEREST $ 4,040,953 $ 4,022,235
===============================
INCOME TAXES $ 470,270 $ 358,826
===============================
</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 31, 1996 AND MARCH 30, 1997
(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 31, 1996 and March 30,1997 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 29, 1996.
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 30,1997 are not necessarily indicative of the results
for a full year.
(2) ACQUISITIONS AND DISPOSITIONS
On March 27, 1997, the Company acquired (a) from Infinity Holding Corp. of
Orlando ("Infinity") substantially all of the tangible and intangible assets
owned or held by Infinity and used or useful in the business or operations of
radio station WYSY-FM, serving the Chicago metropolitan area, for a purchase
price of $33.5 million, including acquisition costs and $3.0 million
seller note (the "Chicago Acquisition") and (b) from New Age broadcasting Inc.
and The Seventies Broadcasting Corporation (together, the "Miami Sellers") all
of the tangible and intangible assets owned or held by the Miami Sellers and
used or useful in the business or operations of radio stations WRMA-FM and
WXDJ-FM, serving the Miami metropolitan area, for a cash purchase price of
$112.5 million including acquisition costs (the "Miami Acquisitions," and
together with the Chicago Acquisition, the "Acquisitions").
On March 27, 1997, the Company completed offerings of (a) 175,000 units
(the "Units Offering") comprised of 175,000 shares of the Company's Series A
Senior Exchangeable Preferred Stock, liquidation preference $1,000 per share,
and warrants to purchase 74,900 shares of the Company's Class A Common Stock,
par value $.01 per share ("Common Stock") and (b) $75.0 million aggregate
principal amount of the Company's 11% Senior Notes due 2004 (the "Senior Notes")
(the "Notes Offering") in transactions not registered under the Securities Act
of 1933, as amended (the "Act"), in reliance upon the exemption provided in
Section 4 (2) of the Act.
The Company is negotiating with a potential purchaser of the assets
and FCC licenses of the radio stations WXLX-AM, serving the New York
metropolitan area, KXMG-AM, serving the Los Angeles metropolitan area and
WCMQ-AM, serving the Miami metropolitan area. In addition, the Company is
soliciting offers from financially qualified third parties to acquire the assets
and FCC licenses of radio station WSKP-FM, serving the Key West, Florida market.
(6)
<PAGE> 9
<TABLE>
<CAPTION>
Six months ended
March 30,1997
<S> <C>
Pro-Forma Results
Net Revenues $30,542
Net Loss $ 163
</TABLE>
(7)
<PAGE> 10
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996 AND MARCH 30, 1997
ALL AMOUNTS ARE PRESENTED IN $ THOUSANDS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED
MARCH 30, 1997
Net revenues increased from $9,132 for the three months ended March 31,
1996, to $11,424 for the three months ended March 30, 1997, an increase of
$2,292 or 25.1%. A major factor in the increase of net revenues was the
settlement of a representation agreement with the Company's previous national
sales representative. The company subsequentially entered into a representation
agreement for national sales with another representative firm which increased
this years net revenues due to payments received from the firm for the right to
represent the company. The New York market had a significant increase in net
revenues as the station which was purchased in March, 1996, WPAT-FM, was
operated for an entire quarter as opposed to two months for the same period in
fiscal year 1996. The Los Angeles market benefited from gradual increases in
ratings throughout 1996 resulting in a net revenue increase. The Miami stations
had a decrease in net revenue related to format changes on WCMQ-FM.
Total operating expenses increased from $8,339 in the three months
ended March 31, 1996, to $9,068 in the three months ended March 30, 1997, an
increase of $729 or 8.7%. The higher operating expenses were caused by an
increase of $590 in depreciation and amortization expense and an increase of
$434 in corporate expenses partially offset by a $295 decrease in broadcasting
operating expenses.
The decrease in broadcasting operating expenses resulted mostly from a
decrease in promotional and advertising expenditures from the previous year
related to the start-up of WPAT-FM in New York and a promotional campaign for
KLAX-FM in Los Angeles and lower selling expenses in Miami. The decreases in
promotional and advertising expenditures were somewhat offset by increases in
audience research in each market.
Corporate expenses increased as a result of the creation of a new
senior position and increased professional fees. The increase in depreciation
and amortization was the result of increased amortization of franchise costs
related to the acquisition of WPAT-FM.
Operating income increased from $793 during the three months ended March
31, 1996 to $2,356 during the three months ended March 30, 1997, an increase of
$1,563 or 197.1%. The increase was due to the significant increase in net
revenues partially offset by the moderate 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 31, 1996 AND MARCH 30, 1997
EBITDA (defined as earnings before net interest, income taxes,
depreciation and amortization and other income and expense items) increased
$2,153 or 133.8% from $1,609 during the three months ended March 31, 1996 to
$3,762 during the three months ended March 30, 1997. The increase in EBITDA was
caused by the increase in net revenues, partially offset by an increase in
operating expenses. Other expenses, comprised mostly of interest expenses,
increased from $4,325 in the three months ended March 31, 1996 to $6,638 in the
three months ended March 30, 1997, an increase of $2,313 or 53.4%. The increase
was caused by higher interest expenses associated with the issuance of Senior
Secured Notes to partially finance the acquisition of WPAT-FM.
Simultaneously with the purchase of WRMA-FM and WXDJ-FM in Miami and
WYSY-FM in Chicago, the Company recorded an extraordinary loss on the
extinguishment of debt for the amount paid in excess of the Company's carrying
value and the write-off of the related unamortized debt issuance costs, net of
the related income tax benefits. The amount of this loss, net of taxes, is
$1,715. Consequently, the Company's net loss for the three months ended March
30,1997 was $4,371 compared to a net loss of $2,106 for the three months ended
March 31, 1996, an increase in the net loss of $2,265 or 107.6%.
(9)
<PAGE> 12
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996 AND MARCH 30, 1997
ALL AMOUNTS ARE PRESENTED IN $ THOUSANDS
RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO THE SIX MONTHS ENDED
MARCH 30, 1997
Net revenues increased from $21,237 for the six months ended March 31,
1996, to $23,790 for the six months ended March 30, 1997, an increase of $2,553
or 12.0%. The New York market benefited from six months of operation of WPAT-FM
which was only operated for two months during the same period last year. Another
major factor in the increase of net revenues was the settlement of a
representation agreement with the Company's previous national sales
representative. The Company subsequently entered into a new representation
agreement for national sales with another representative firm which increased
this year's net revenues due to payments received from the representative firm
for the rights to represent the Company. The Los Angeles market posted a slight
increase in net revenues while the Miami stations had a decrease in net revenues
partially related to a format change on WCMQ-FM.
Total operating expenses increased from $16,990 in the six months ended
March 31, 1996, to $18,540 in the six months ended March 30, 1997, an increase
of $1,550 or 9.1%. The higher operating expenses were caused by an increase of
$1,164 in depreciation and amortization expense and an increase of $586 in
corporate expenses partially offset by a $200 decrease in broadcasting operating
expenses.
The decrease in broadcasting operating expenses resulted from a
significant decrease in selling expenses in the Miami market mostly due to
lower salaries and commission rates and promotional expenditures.
Corporate expenses increased as a result of the creation of a new
senior position and increased professional fees. The increase in depreciation
and amortization was the result of increased amortization of franchise costs
related to the acquisition of WPAT-FM.
Operating income increased from $4,248 during the six months ended March
31, 1996 to $5,249 during the six months ended March 30, 1997, an increase of
$1,001 or 23.6%. The increase was due to the significant increase in net
revenues partially offset by the increase in operating expenses.
(10)
<PAGE> 13
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996 AND MARCH 30, 1997
EBITDA increased $2,166 or 36.8% from $5,884 during the six months
ended March 31, 1996 to $8,050 during the six months ended March 30, 1997. The
increase in EBITDA was caused by the increase in net revenues, partially offset
by an increase in operating expenses. Other expenses, comprised mostly of
interest expenses, increased from $7,560 in the six months ended March 31, 1996
to $11,672 in the six months ended March 30, 1997, an increase of $4,112 or
54.4%. The increase was caused by higher interest expenses associated with the
issuance of Senior Secured Notes to partially finance the acquisition of
WPAT-FM.
Simultaneously with the purchase of WRMA-FM and WXDJ-FM in Miami and
WYSY-FM in Chicago, the Company refinanced its existing debt structure.
Related to this transaction, the Company recorded an extraordinary loss on
the extinguishment of debt for the amount paid in excess of the Company's
carrying value and the write-off of the related unamortized debt issuance
costs, net of the related income tax benefits. The amount of this loss, net of
taxes, is $1,715. Consequently, the Company's net loss for the six months
ended March 30,1997 was $5,697 compared to a net loss of $1,987 for the six
months ended March 31, 1996, an increase in the net loss of $3,710 or 186.7%.
(11)
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise primarily from its debt service
obligations, preferred stock dividend requirements, funding of the Company's
working capital needs and capital expenditures. The Company's primary form of
financing is cash generated from operations, the issuance of long-term
indebtedness and the issuance of preferred stock.
Cash flow generated from operations was $6,854 for the six months
ended March 30, 1997. 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 $1,347 in capital expenditures, mostly for
the construction of a new tower and antenna system for WXLX-AM.
On March 27, 1997, the Company consumated the Acquisitions. The
Acquisitions were financed with the proceeds of the Offering. Concurrently with
the consummation of the Acquisitions and the Offerings, the Company effected a
series of transactions including the redemption (the "Redemption") of the
Company's Senior Secured Notes due 2001 and Senior Exchangeable Preferred Stock,
Series A and the repurchase of related warrants to purchase an aggregate of 6.0%
of the Company's Common Stock, on a fully-diluted basis. In addition,
simultaneously with the consummation of the Offerings, the Company announced its
intention to declare a dividend of up to $4 million in the aggregate (the
"Distribution") to its stockholders and existing warrantholders who elected to
receive their pro rata portion of the Distribution in lieu of the anti-dilution
adjustment they would otherwise have been entitled to as a result of the
Distribution.
(12)
<PAGE> 15
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 payments 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 the new tower and antenna for WXLX-AM.
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, debt
service obligations and dividend payment obligations and that it will be in
compliance for the foreseeable future with all covenants in the indenture
governing the Company's 12 1/2% Senior Notes due 2002 and the Company's 11%
Senior Notes due 2004 which constitute the majority of the Company's
indebtedness.
(13)
<PAGE> 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits. None
b) Reports on Form 8-K. Current Report on Form 8-K dated March 27,
1997.
(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
Florida, Inc.
Spanish Broadcasting System
Network, Inc.
SBS Promotions, Inc.
Alarcon Holdings, Inc.
SBS of Greater New York, Inc.
Date: May 14, 1997 By: /s/ Raul Alarcon
-----------------
Raul Alarcon, Jr.
President
(principal executive officer)
Date: May 14, 1997 By: /s/ Joseph A. Garcia
---------------------
Joseph A. Garcia
EVP 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 14, 1997 By: /s/ Raul Alarcon
- ----------------------------- --------------------------------------
Raul Alarcon, Jr.
Vice President
Date: May 14, 1997 By: /s/ Joseph A. Garcia
- ----------------------------- --------------------------------------
Joseph A. Garcia
EVP and Chief Financial Officer
(principal financial and accounting
officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> MAR-30-1997
<EXCHANGE-RATE> 1
<CASH> 13,151,379
<SECURITIES> 0
<RECEIVABLES> 9,887,459
<ALLOWANCES> 1,980,351
<INVENTORY> 0
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0
158,400,667
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</TABLE>
