<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM 10-Q/A
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 28, 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, New York, NY 10019
(Address of principal executive offices) (Zip Code)
(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)
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.
|X| YES |_| NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of Registrant's Common Stock, par value $.01 per share,
outstanding as of February 11, 1998; 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> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
Primary
State or Standard
Other Industrial I.R.S. Employer
Jurisdiction of Classification Identification
Incorporation Number Number
--------------- -------------- --------------
<S> <C> <C> <C>
Spanish Broadcasting System, Inc.................. New Jersey 4832 13-3181941
Spanish Broadcasting System of California, Inc.... California 4832 92-3952357
Spanish Broadcasting System of Florida, Inc....... Florida 4832 58-1700848
Alarcon Holdings, Inc............................. New York 6512 13-3475833
Spanish Broadcasting System Network, Inc.......... New York 4899 13-3511101
SBS Promotions, Inc............................... New York 7999 13-3456128
SBS of Greater New York, Inc...................... New York 4832 13-3888732
Spanish Broadcasting System of Illinois, Inc...... Delaware 4832 36-4174296
Spanish Broadcasting System of Greater Miami, Inc. Delaware 4832 65-0774450
</TABLE>
1
<PAGE> 3
SPANISH BROADCASTING SYSTEM, INC.
INDEX
Part I. Financial Information Page
Number
------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 28,
1997 and December 28, 1997 (unaudited) .................... 3
Condensed Consolidated Statements of Operations for the
three months ended December 29, 1996 and December 28, 1997
(unaudited) ............................................... 4
Condensed Consolidated Statements of Cash Flows for the
three months ended December 29, 1996 and December 28, 1997
(unaudited) ............................................... 5
Notes to Condensed Consolidated Financial Statements
(unaudited) ............................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................. 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
<PAGE> 4
PART I FINANCIAL INFORMATION
<PAGE> 5
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 28, December 28,
1997 1997
------------ ------------
Current Assets: (Unaudited)
<S> <C> <C>
Cash and cash equivalents.................................. $12,287,764 $40,822,339
Receivables:
Trade.................................................... 17,226,345 19,075,384
Less allowance for doubtful accounts..................... 2,385,267 3,343,599
------------ ------------
Net receivables - Trade................................ 14,841,078 15,731,785
Barter (net of allowance for doubtful accounts of $3,019,828 at
September 28, 1997 and $3,954,907 at December 28, 1997) 270,900 106,532
------------ ------------
Net receivables........................................ 15,111,978 15,838,317
Other current assets....................................... 1,409,906 2,187,435
------------ ------------
Total current assets..................................... 28,809,648 58,848,091
Property and equipment, net................................ 18,409,415 14,986,070
Franchise costs, net....................................... 273,631,766 268,481,874
Due from related party..................................... 289,869 289,869
Deferred financing costs, net.............................. 9,262,314 8,436,017
Deferred income taxes...................................... 3,674,287 --
Other assets............................................... 289,784 201,564
------------ ------------
$334,367,083 $351,243,485
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Current portion of senior secured notes.................... 15,000,000 --
Current portion of other long term debt.................... 44,644 48,588
Accounts payable and accrued expenses...................... 5,090,349 5,525,827
Accrued interest........................................... 4,536,627 3,069,433
Unearned revenue........................................... 1,551,255 1,588,849
Dividends payable.......................................... 960,761 7,612,190
------------ ------------
Total current liabilities................................ 27,183,636 17,844,887
12 1/2% Senior Secured Notes, net of unamortized discount.. 88,820,963 91,225,023
11% Senior Secured Notes................................... 75,000,000 75,000,000
Deferred income taxes payable.............................. -- 10,090,763
Other Long-term debt, less current portion................. 4,147,676 4,220,532
14 1/4% Senior Exchangeable Redeemable Preferred Stock, $.01 par
value. Authorized 413,930 shares; issued and outstanding 186,706
shares..................................................... 171,261,919 171,869,437
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................................. 6,590,473 6,590,473
Accumulated deficit........................................ (35,119,184) (22,079,230)
------------ ------------
(28,522,645) (15,482,691)
Less: loans receivable from stockholders................... (3,524,466) (3,524,466)
------------ ------------
Total stockholders' deficiency........................... (32,047,111) (19,007,157)
------------ ------------
$334,367,083 $351,243,485
============ ============
</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
-----------------------------
December 29, December 28,
1996 1997
------------ ------------
<S> <C> <C>
Gross broadcasting revenues ..................... $13,994,572 $21,587,922
Less: Agency commissions ..................... 1,628,432 2,647,093
------------ ------------
Net broadcasting revenues ................... 12,366,140 18,940,829
------------ ------------
Operating expenses
Engineering ................................... 497,770 496,042
Programming ................................... 1,517,389 1,846,010
Selling ....................................... 3,537,480 4,624,358
General and administrative .................... 1,531,285 2,848,404
Corporate expenses ........................... 993,993 1,309,307
Depreciation and amortization ................ 1,394,547 2,374,318
------------ ------------
9,472,464 13,498,439
------------ ------------
Operating income .......................... 2,893,676 5,442,390
Other (income) expenses:
Gain on sale of AM stations .................. -- (36,868,441)
Interest expense, net ........................ 5,006,413 5,791,458
Other, net ................................... 27,438 --
------------ ------------
Income (loss) before income taxes and
extraordinary item ........................... (2,140,175) 36,519,373
Income tax expense (benefit) .................... (814,000) 14,607,749
------------ ------------
Income (loss) before extraordinary item ......... (1,326,175) 21,911,624
Extraordinary item, loss on extinguishment
of debt, net of income taxes ................. -- (1,612,723)
------------ ------------
Net (loss) income ............................... (1,326,175) 20,298,901
Accumulated deficit at beginning of period ...... (11,906,690) (35,119,184)
Dividends on preferred stock .................... (1,324,689) (6,651,429)
Accretion of preferred Stock .................... (246,054) (607,518)
------------ ------------
Accumulated deficit at end of period ............ $(14,803,608) $(22,079,230)
============ ============
</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
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
DECEMBER 29, DECEMBER 28,
1996 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ........................................................... $ (1,326,175) $ 20,298,901
------------ -------------
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Loss on extinguishment of debt .......................................... -- 2,687,872
Gain on sale of AM Stations ............................................. -- (36,868,441)
Depreciation and amortization ........................................... 1,394,547 2,374,318
Change in provision for losses on receivables ........................... 358,818 1,893,411
Amortization of debt discount ........................................... 1,558,046 182,511
Interest satisfied through the issuance of new notes .................... 1,185,722 --
Amortization of deferred financing costs ................................ 282,005 360,029
Interest added to face amount of note payable............................ -- 76,800
Deferred income taxes ................................................... (621,000) 13,765,050
Changes in operating assets and liabilities:
Decrease (Increase) in receivables .................................... 615,577 (2,619,750)
Increase in other current assets ...................................... (694,313) (777,529)
Decrease in other assets .............................................. 30,000 88,220
(Decrease) Increase in accounts payable and accrued expenses .......... (286,276) 435,478
Decrease in accrued interest ......................................... (2,007,357) (1,467,194)
(Decrease) Increase in unearned revenue ............................... (36,616) 37,594
------------ ------------
Total adjustments .............................................. 1,779,153 (19,831,631)
------------ ------------
Net cash, (used in) provided by operating activities ............... 452,978 467,270
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of AM Stations, net of closing costs ..................... -- 43,787,348
Additions to property and equipment ......................................... (956,213) (719,988)
------------ ------------
Net cash (used in) provided by investing activities ............... (956,213) 43,067,360
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of Senior Secured Notes ............................................ -- (15,000,055)
Increase in deferred financing costs ........................................ (58,296) --
Repayments of other long-term debt .......................................... (7,380) --
------------ ------------
Net cash used in financing activities .............................. (65,676) (15,000,055)
------------ ------------
Net increase (decrease) in cash and cash equivalents ........................ (568,911) 28,534,575
Cash and cash equivalents at the beginning period ........................... 5,468,079 12,287,764
------------ ------------
Cash and cash equivalents at the end of period .............................. $ 4,899,168 $ 40,822,339
============ ============
Cash paid for:
Interest ................................................................. $ 4,027,832 $ 6,561,515
Income taxes ............................................................. 342,923 183,431
</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
DECEMBER 29, 1996 AND DECEMBER 28, 1997
(Unaudited)
(Dollars in Thousands)
(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 month periods ended December 29, 1996 and December 28, 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 28, 1997.
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 month
period ended December 28, 1997 are not necessarily indicative of the results for
a full year.
(2) Acquisitions and Dispositions
On March 27, 1997, the Company acquired the FCC broadcast license and
substantially all of the assets used or useful in the operation of radio station
WYSY-FM, serving the Chicago metropolitan area, for a purchase price of $33.0
million, including a $3.0 million seller note, plus closing costs of $0.5
million. The Company subsequently changed the call letters to WLEY-FM.
Additionally, on March 27, 1997, the Company acquired the FCC broadcast license
and substantially all of the assets used or useful in the operations of radio
stations WRMA-FM and WXDJ-FM, serving the Miami metropolitan area, for a
purchase price of $111 million plus closing costs of $0.8 million.
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 (the "Series A 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 proceeds of these
offerings were used to finance the acquisition of radio stations WRMA-FM,
WXDJ-FM and WLEY-FM (the "Acquisitions") and retire the notes issued in
1996.
The Company's consolidated results of operations for the three month
period ended December 29, 1996 exclude the results of the acquisitions. The
following unaudited pro-forma summary presents the consolidated results of
operations as if the acquisition of WRMA-FM and WXDJ-FM had occurred as of the
beginning of fiscal year 1997 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.
The results of WLEY-FM prior to its acquisition have not been included in
the pro forma summary as the acquisition does not meet the significance test
for presentation of pro forma information.
<TABLE>
<CAPTION>
Three Months Ended
Pro-Forma Results: December 29, 1996
------------------
<S> <C>
Net Revenues $16,155
Net Loss $ (533)
</TABLE>
On July 22, 1997, the Company commenced an exchange offer whereby shares
of Series A Preferred Stock may be exchanged for an equal number of Series B
Senior Exchangeable Preferred Stock (the "Series B Preferred Stock"). The
exchange of Series A Preferred Stock for Series B Preferred Stock has been
registered under the Act.
6
<PAGE> 9
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
On July 22, 1997, the Securities and Exchange Commission declared
effective a shelf registration statement relating to the Senior Notes, and to
$338,930,000 in aggregate principal amount of 14 1/4% Exchange Debentures due
2005, Series A and 23,836 shares of Common Stock that may be issued upon the
occurrence of certain events, each of which may be offered from time to time by
or for the account of the holders thereof. The Company is using its best efforts
to keep such shelf registration continuously effective.
The Company has completed the transfer of certain assets to its newly
formed subsidiaries, Spanish Broadcasting System of Greater Miami, Inc. and
Spanish Broadcasting System of Illinois, Inc. (together the "New Subsidiaries").
The Company has not included separate financial statements for its guarantor
subsidiaries because (a) such guarantor subsidiaries (including the New
Subsidiaries) have jointly and severally guaranteed the Senior Notes on a full
and unconditional basis, (b) the aggregate assets, liabilities, earnings and
equity of the guarantor subsidiaries are substantially equivalent to the assets,
liabilities, earnings and equity of the parent on a consolidated basis and (c)
the separate financial statements and other disclosures concerning the
subsidiary guarantors are not deemed material to investors.
On July 2, 1997, the Company entered into an agreement (as amended, the
"One-on-One Agreement") with One-on-One Sports, Inc. ("One-on-One") to sell the
FCC licenses and all of the assets used or useful in operating its AM stations,
KXMG-AM of Los Angeles, WXLX-AM of New York and WCMQ-AM of Miami for $44
million. The Company was required to use the greater of $25 million or 50% of
the net proceeds of such sale to make offers to purchase 12 1/2% Senior Notes
due 2002 ("Old Notes") at 110% of the principal amount. The One-on-One
Agreement contained customary representations, warranties and conditions,
including receipt of FCC approval to the transfer of the FCC licenses. Pursuant
to the One-on-One Agreement, on September 29, 1997, the Company sold the assets
and FCC licenses of WXLX-AM and WCMQ-AM to One-on-One for a purchase price of
$26 million. On December 2, 1997, the Company consummated the sale of the assets
and FCC licenses of KXMG-AM to One-on-One for a purchase price of $18 million
(together with the sale of WXLX-AM and WCMQ-AM, the "Dispositions"). The gain
from the sale of these stations amounts to approximately $36.9 million before
income taxes.
Pursuant to the terms of the Company's debt agreements, in October 1997,
the Company made an offer to holders of its Notes to acquire $22,730,000 in
principal amount of Notes at a purchase price of $1,100 for each $1,000 in
principal amount. Pursuant to this tender offer, the Company purchased
$5,500,000 in principal amount of Notes for $6,050,000. In November 1997, the
Company purchased an additional $7,666,000 in principal amount of notes for
$8,950,055. The Company recognized a loss on the transactions of $1.6 million,
net of income taxes. This amount has been classified as an extraordinary item
in the accompanying condensed consolidated financial statements.
(3) Subsequent Events
On January 28, 1998, the Company entered into an Asset Purchase Agreement
with Radio Station KRIO-FM, Ltd. to buy the FCC broadcast license and
substantially all of the assets used or useful in the operation of radio station
KRIO-FM serving the San Antonio area for $9,000,000. The purchase of this
station is subject to certain closing conditions, including approval of the
FCC. The Company expects to finance this purchase from cash on hand and from
operations.
7
<PAGE> 10
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations Three Months Ended December 29, 1996 Compared to the Three
Months Ended December 28, 1997 (All Dollar Amounts Are Presented in Thousands).
Net Revenues. Net revenues increased from $12,366 for the three months
ended December 29, 1996 to $18,941 for the three months ended December 28, 1997,
an increase of $6,575 or 53.2%. This increase was due primarily to the inclusion
of the results of WRMA-FM, WXDJ-FM, and WLEY-FM which were purchased on March
27, 1997. The increase in net revenues attributable to these three stations was
$5,627. The increase in net revenues also resulted from a significant increase
in net revenues of $1,943 at the New York stations, WPAT-FM, and WSKQ-FM, offset
by a decrease in net revenues from the Company's other Miami stations, WCMQ-AM
and WCMQ-FM, and the Los Angeles station, KLAX-FM. The Miami Stations had net
revenues decrease due to the termination of a contract to broadcast Miami
Dolphins games and the sale of WCMQ-AM. The net revenues for the Company also
decreased because of the sale of the AM stations.
Operating Expenses. Total operating expenses increased from $9,472 in the
three months ended December 29, 1996, to $13,498 in the three months ended
December 28, 1997, an increase of $4,026 or 42.5%. The higher operating expenses
were caused by an increase of $2,731 in broadcasting operating expenses an
increase of $980 in depreciation and amortization expense, and a $315 increase
in corporate expenses.
The increase in broadcasting operating expenses was caused mainly by
the inclusion of the results of WRMA-FM, WXDJ-FM, and WLEY-FM. The increase in
corporate expenses was caused by higher professional fees and a small increase
in salaries. The increase in depreciation and amortization was the result of
increased amortization of franchise costs related to the acquisitions of
WRMA-FM, WXDJ-FM and WLEY-FM.
Operating Income. Operating income increased from $2,894 during the three
months ended December 29, 1996, to $5,442 during the three months ended December
28, 1997, an increase of $2,548 or 88.1%. The increase was due to the
significant increase in net revenues partially offset by the increase in
operating expenses.
EBITDA. EBITDA (defined as income before extraordinary item, net interest
expense, financing costs, income taxes, depreciation and amortization, writedown
of franchise costs, gains on sales of radio stations and other income and
expense) increased $3,529 or 82.3% from $4,288 during the three months ended
December 29, 1996, to $7,817 during the three months ended December 28, 1997.
The increase in EBITDA was caused by the increase in net revenues, partially
offset by an increase in operating expenses.
Other Income and Expenses. Other income and expenses, changed from an
expense of $5,034 in the three months ended December 29, 1996 to income of
$31,077 in the three months ended December 28, 1997. The income in fiscal year
1998 was primarily because of the sale of the AM Stations at a gain of $36,868.
Extraordinary Item. The extraordinary item in the three months ended
December 28, 1997 is a result of the premiums paid on the purchase of certain
outstanding Notes and the write off of related unamortized debt discount and
deferred financing costs.
Net Income (Loss). The Company's net income for the three months ended
December 28, 1997, was $20,299 compared to the net loss of $1,326 for the three
months ended December 29, 1996. The net income resulted from the increase in
operating income and the gain from the sale of AM stations partially offset by
the increase in interest expense and the extraordinary loss related to the
retirement of debt.
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, long-term indebtedness and the
issuance of preferred stock.
On March 27, 1997, the Company consummated the Acquisitions. The
Acquisitions were financed with proceeds of the Units Offering and the Notes
Offering (the "Offerings"). 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 2002 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. The dividend
has yet to be declared.
8
<PAGE> 11
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
On July 2, 1997, the Company entered into an agreement to sell the FCC licenses
and all of the assets used or useful in operating its AM stations, KXMG-AM of
Los Angeles, WXLX-AM of New York and WCMQ-AM of Miami for $44 million. The
Company was required to use the greater of $25 million or 50% of the net
proceeds of such sale to make offers to purchase Old Notes at 110% of the
principal amount. The One-on-One Agreement contained customary representations,
warranties and conditions, including receipt of FCC approval to the transfer of
the FCC licenses. Pursuant to the One-on-One Agreement, on September 29, 1997,
the Company sold the assets and FCC licenses of WXLX-AM and WCMQ-AM to
One-on-One for a purchase price of $26 million. On December 2, 1997, the
Company consummated the sale of the assets and FCC licenses of KXMG-AM to
One-on-One for a purchase price of $18 million. On January 28, 1998 the Company
entered into an Asset Purchase Agreement to purchase the FCC broadcast license
and substantially all the assets used or useful in the operation of radio
station KRIO-FM for $9 million. The Company expects to finance this acquisition
from cash on hand and from operations.
Cash flow generated from operations was $467 for the three months ended
December 28, 1997. A portion of the Company's cash flow was used to make its
semiannual interest payment on the Company's Old Notes of $6,347. Additionally,
the Company invested $720 in capital expenditures and used $15,000 to purchase
Old Notes. Proceeds from the sales of AM stations were approximately $43,787,
net of closing costs of $213.
Cash flow generated from operations was $453 for the three months ended
December 29, 1996. The Company made its semiannual interest payment on the Old
Notes and invested $956 for capital expenditures, mostly for the construction of
the new tower and antenna for the recently sold station in New York, 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.
Management believes, together with cash in hand, that cash from
operating activities should be sufficient to permit the Company to meet
required cash interest obligations (which will consist of cash interest expense
on the Senior Notes and cash interest expense on the Company's Old Notes,
which, commencing June 15, 1997, began to accrue cash interest at a rate of 12
1/2% per annum) for the foreseeable future as well as capital expenditures,
operating obligations and the pending acquisition of KRIO. However, significant
assumptions (none of which can be assured) underlie this belief, including that
(i) the Company will be able to successfully integrate the Acquisitions, (ii)
economic conditions within the radio broadcasting market and economic
conditions generally will not deteriorate in any material respect, (iii) the
Company will be able to successfully implement its business strategy, (iv) the
Company will not incur any material unforseen liabilities, including, without
limitation, environmental liabilities, and (v) no future acquisition will
adversely affect the Company's liquidity. The Company expects that it may be
required to refinance the Old Notes on or prior to their maturity date on June
15, 2002, and no assurances can be given that it will not be required to
refinance the Senior Notes and/or the Senior Preferred Stock. No assurance can
be given that any such refinancing, if required, will be obtained on terms
satisfactory to the Company, if at all.
9
<PAGE> 12
PART II -- OTHER INFORMATION
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Asset Purchase Agreement dated January 28, 1998 by and between
Spanish Broadcasting System of San Antonio, Inc. and Radio
KRIO, Ltd. (as previously filed).
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed by the Company on
October 15, 1997 Reporting an "Acquisition or Disposition of
Assets" pursuant to Item 2 of Form 8-K.
<PAGE> 14
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
of California, Inc.
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.
Spanish Broadcasting System of Illinois, Inc.
Spanish Broadcasting System of
Greater Miami, Inc.
By: /s/ JOSEPH A. GARCIA
-----------------------------
Joseph A. Garcia
EVP and Chief Financial Officer
(principal financial and accounting officer)
Date: February 23, 1998
10
<PAGE> 15
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
1 Asset Purchase Agreement dated
January 28, 1998 By and between
Spanish Broadcast System of San
Antonio, Inc. and Radio KRIO, LTD.
(as previously filed).
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1998
<PERIOD-START> SEP-29-1997
<PERIOD-END> DEC-29-1997
<CASH> 40,822,339
<SECURITIES> 0
<RECEIVABLES> 19,075,384
<ALLOWANCES> 3,343,599
<INVENTORY> 0
<CURRENT-ASSETS> 58,848,091
<PP&E> 14,986,070
<DEPRECIATION> 0
<TOTAL-ASSETS> 351,243,485
<CURRENT-LIABILITIES> 17,844,887
<BONDS> 0
0
171,869,437
<COMMON> 5,581
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 351,243,485
<SALES> 21,587,922
<TOTAL-REVENUES> 21,587,922
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (36,868,441)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,791,458
<INCOME-PRETAX> 36,519,373
<INCOME-TAX> 14,607,749
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (1,612,723)
<CHANGES> 0
<NET-INCOME> 20,298,901
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
