Spanish Broadcasting System, Inc. Reports Results for the Second Quarter 2009


COCONUT GROVE, Fla., Aug. 12, 2009 (GLOBE NEWSWIRE) -- Spanish Broadcasting System, Inc. (the "Company" or "SBS") (Nasdaq:SBSA) today reported financial results for the three- and six-month periods ended June 30, 2009.

Discussion and Results

Raul Alarcon, Jr., Chairman and CEO, commented, "During the second quarter, we continued to implement our multi-platform growth strategy, while maintaining a disciplined approach to cost-management. Our overall results were impacted by the continued nationwide advertising slowdown, offset in part by our success in reducing expenses via our restructuring plan. Despite current macro-economic challenges impacting all media, we remain focused on further strengthening our content and delivering valuable audiences to national and local advertisers. Given the strength of our brands and the continued expansion and growing influence of the Hispanic population, we remain optimistic about our ability to return to top-line growth as the economy recovers."

Quarter Results

For the quarter ended June 30, 2009, consolidated net revenue totaled $37.1 million compared to $45.2 million for the same prior year period, resulting in a decrease of $8.1 million or 18%. This consolidated decrease was mainly attributable to the decrease in our radio segment net revenue of $7.8 million or 19%. Our radio segment net revenue decreased due to lower local and national sales caused mainly by the decline in economic conditions. The decrease in local sales occurred in all of our markets, with the exception of our Puerto Rico market. The decrease in national sales occurred in all of our markets.

Operating income before depreciation and amortization, gain on the disposal of assets, net, and impairment of FCC broadcasting licenses and restructuring costs, a non-GAAP measure, totaled $11.0 million compared to $8.4 million for the same prior year period, representing an increase of $2.6 million or 31%. This increase was primarily attributed to the decreases in station operating expenses of $9.4 million and corporate expenses of $1.4 million, offset by a decrease in net revenue of $8.1 million. Please refer to the Unaudited Segment Data and Non-GAAP Financial Measures sections for definitions and a reconciliation of GAAP to non-GAAP financial measures.

Operating income totaled $9.4 million compared to an operating loss of $(389.3) million for the same prior year period. The increase in operating income was mainly due to the decrease in our impairment of FCC broadcasting licenses and restructuring costs of $396.2 million. Also contributing to the increase in operating income was a decrease in our operating expenses and corporate expenses, offset by a decrease in our net revenue. Please refer to the Impairment of FCC Broadcasting Licenses and Restructuring Costs sections for detailed discussions.

Income before income taxes totaled $2.4 million compared to a loss before income taxes of $(394.6) million for the same prior year period.

Six-month Results

For the six-months ended June 30, 2009, consolidated net revenue totaled $64.8 million compared to $81.6 million for the same prior year period, resulting in a decrease of $16.8 million or 21%. This consolidated decrease was mainly attributable to the decrease in our radio segment net revenue of $16.7 million or 23%. Our radio segment net revenue decreased due to lower local and national sales caused mainly by the decline in economic conditions. The decrease in local sales occurred in all of our markets, with the exception of our Chicago market. The decrease in national sales occurred in all of our markets.

Operating income before depreciation and amortization, gain on the disposal of assets, net, and impairment of FCC broadcasting licenses and restructuring costs, a non-GAAP measure, totaled $13.6 million compared to $7.0 million for the same prior year period, representing an increase of $6.6 million or 94%. This increase was primarily attributed to the decreases in station operating expenses of $21.3 million and corporate expenses of $2.1 million, offset by a decrease in net revenue of $16.8 million. Please refer to the Unaudited Segment Data and Non-GAAP Financial Measures sections for definitions and a reconciliation of GAAP to non-GAAP financial measures.

Operating loss totaled $(0.2) million compared to $(392.0) million for the same prior year period. The decrease in operating loss was mainly due to the decrease in impairment of FCC broadcasting licenses and restructuring costs of $385.6 million. Also contributing to the decrease in operating loss was a decrease in our operating expenses and corporate expenses, offset by a decrease in our net revenue. Please refer to the Impairment of FCC Broadcasting Licenses and Restructuring Costs sections for detailed discussions.

Loss before income taxes totaled $(10.9) million compared to $(400.5) million for the same prior year period.

Impairment of FCC Broadcasting Licenses

For the six-months ended June 30, 2009, we recorded a non-cash impairment loss of approximately $10.1 million that reduced the carrying values of our FCC broadcasting licenses in our Chicago and San Francisco markets as a result of our SFAS No. 142 impairment testing of our indefinite-lived intangible assets and goodwill. The impairment loss was due to changes in estimates and assumptions which were primarily: (a) lower industry advertising revenue growth projections in our respective markets, and (b) lower industry profit margins.

Restructuring Costs

As a result of the decrease in the demand for advertising and the continued deterioration of the economy, we began to implement a restructuring plan in the third quarter of fiscal year 2008 to reduce expenses throughout the Company. We have incurred restructuring costs totaling $3.0 million to date, which includes $0.6 million for the six-months ended June 30, 2009, related to the termination of various programming contracts and personnel. In addition, we continue to review further cost-cutting measures, as we continue to evaluate the scope and duration of the current economic slowdown and its impact on our operations and financial position.

About Spanish Broadcasting System, Inc.

Spanish Broadcasting System, Inc. is the largest publicly traded Hispanic-controlled media and entertainment company in the United States. SBS owns and/or operates 21 radio stations located in the top U.S. Hispanic markets of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico, including the #1 Spanish-language radio station in America, WSKQ-FM in New York City, as well as leading radio stations airing the Tropical, Mexican Regional, Spanish Adult Contemporary and Hurban format genres. The Company also owns and operates Mega TV, a television operation with over-the-air, cable and satellite distribution and affiliates throughout the U.S. and Puerto Rico. SBS also produces live concerts and events in the major U.S. markets and Puerto Rico. In addition, the Company operates www.LaMusica.com, a bilingual Spanish-English online site providing content related to Latin music, entertainment, news and culture. The Company's corporate Web site can be accessed at www.spanishbroadcasting.com.

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the Securities and Exchange Commission.

Below are the Unaudited Condensed Consolidated Statements of Operations and other information as of and for the three- and six-month periods ended June 30, 2009 and 2008.



                            Three-Months Ended      Six-Months Ended
                                  June 30,              June 30,
                           --------------------- ---------------------
 Amounts in thousands         2009       2008       2009       2008
                           ---------- ---------- ---------- ----------

                                 (Unaudited)           (Unaudited)
 Net revenue               $  37,052     45,180  $  64,846     81,613
 Station operating 
  expenses                    23,697     33,087     46,064     67,330
 Corporate expenses            2,312      3,672      5,173      7,265
 Depreciation and 
  amortization                 1,570      1,442      3,163      2,804
 Gain on the disposal of
  assets, net                    (26)        (2)       (15)        (5)
 Impairment of FCC 
  broadcasting licenses 
  and restructuring costs         70    396,252     10,686    396,252
                           ---------- ---------- ---------- ----------
   Operating income (loss)     9,429   (389,271)      (225)  (392,033)
 Interest expense, net        (6,701)    (5,315)   (13,118)   (10,399)
 Changes in fair value of
  derivative instrument         (366)        --      2,490         --
 Other income, net                 1         --          1      1,928
                           ---------- ---------- ---------- ----------

 Income (loss) before 
  income taxes                 2,363   (394,586)   (10,852)  (400,504)
 Income tax expense 
  (benefit)                    1,904   (100,532)      (365)  (100,532)
                           ---------- ---------- ---------- ----------
    Net income (loss)            459   (294,054)   (10,487)  (299,972)

 Dividends on Series B 
  preferred stock             (2,482)    (2,417)    (4,964)    (4,834)
                           ---------- ---------- ---------- ----------
    Net loss applicable to
     common stockholders   $  (2,023)  (296,471) $ (15,451)  (304,806)
                           ========== ========== ========== ==========

 Net loss per common 
  share:
    Basic and Diluted      $   (0.03)     (4.09) $   (0.21)     (4.21)
                           ========== ========== ========== ==========

 Weighted average common
  shares outstanding:
    Basic and Diluted         72,502     72,405     72,502     72,405
                           ========== ========== ========== ==========

Non-GAAP Financial Measures

Included below are tables that reconcile the three- and six-month ended reported results in accordance with Generally Accepted Accounting Principles (GAAP) to Non-GAAP results. The tables reconcile Operating Income (Loss) to Operating Income before Depreciation and Amortization, Gain on the Disposal of Assets, net, and Impairment of FCC Broadcasting Licenses and Restructuring costs.



 UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON-GAAP RESULTS
 --------------------------------------------------------------

                                       Three-Months Ended
                                            June 30,
                                       -------------------      %
 (Amounts in millions)                    2009      2008      Change
                                       --------- ---------   --------

 Operating Income (Loss)                $   9.4    (389.3)
 add back: Gain on the disposal           
  of assets, net                             --        --
 add back: Impairment of FCC              
  broadcasting licenses and               
  restructuring costs                        --     396.3
 add back: Depreciation &                 
  amortization                              1.6       1.4
                                       ---------  --------
 Operating Income before                  
  Depreciation & Amortization,            
  Gain on the Disposal of Assets,         
  net, and Impairment of FCC              
  Broadcasting Licenses and               
  Restructuring Costs                   $  11.0       8.4      31%
                                       =========  ========
                                           

 UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON-GAAP RESULTS
 --------------------------------------------------------------

                                        Six-Months Ended
                                            June 30,
                                       -------------------      %
 (Amounts in millions)                    2009      2008      Change
                                       --------- ---------   --------

 Operating Loss                         $  (0.2)   (392.0)
 add back: Gain on the disposal 
  of assets, net                             --        --
 add back: Impairment of FCC 
  broadcasting licenses and 
  restructuring costs                      10.7     396.2
 add back: Depreciation & 
  amortization                              3.1       2.8
                                       ---------  --------
 Operating Income before 
  Depreciation & Amortization,
  Gain on the Disposal of Assets, 
  net, and Impairment of FCC 
  Broadcasting Licenses and 
  Restructuring Costs                   $  13.6       7.0      94%
                                       =========  ========

Operating Income before Depreciation and Amortization, Gain on the Disposal of Assets, net, and Impairment of FCC Broadcasting Licenses and Restructuring costs are not measures of performance or liquidity determined in accordance with GAAP in the United States. However, we believe that these measures are useful in evaluating our performance because they reflect a measure of performance for our stations before considering costs and expenses related to our capital structure and dispositions. These measures are widely used in the broadcast industry to evaluate a company's operating performance and are used by us for internal budgeting purposes and to evaluate the performance of our stations, segments, management and consolidated operations. However, these measures should not be considered in isolation or as substitutes for Operating Income, Net Income (Loss), Cash Flows from Operating Activities or any other measure used in determining our operating performance or liquidity that is calculated in accordance with GAAP. In addition, because Operating Income (Loss) before Depreciation and Amortization, Gain on the Disposal of Assets, net, and Impairment of FCC Broadcasting Licenses and Restructuring costs, is not calculated in accordance with GAAP, it is not necessarily comparable to similarly titled measures used by other companies.

Unaudited Segment Data

We have two reportable segments: radio and television. The following summary table presents separate financial data for each of our operating segments (in thousands):



                             Three-Months Ended 
                                   June 30,               Change 
                            ---------------------  ------------------
                               2009       2008          $         % 
                               ----       ----         --        --

 Net revenue:
  Radio                     $  33,189     41,008      (7,819)   (19%)
  Television                    3,863      4,172        (309)    (7%)
                            ---------------------  ----------
    Consolidated            $  37,052     45,180      (8,128)   (18%)
                            =====================  ==========
 Operating income before
  depreciation and
  amortization, (gain)
  loss on the disposal of
  assets, net, and 
  impairment of FCC
  broadcasting licenses
  and restructuring costs:
  Radio                     $  15,782     16,124        (342)    (2%)
  Television                   (2,427)    (4,031)      1,604    (40%)
  Corporate                    (2,312)    (3,672)      1,360    (37%)
                            ---------------------  ----------
    Consolidated            $  11,043      8,421       2,622     31% 
                            =====================  ==========
 Depreciation and 
  amortization:
  Radio                     $     780        784          (4)    (1%)
  Television                      552        277         275     99% 
  Corporate                       238        381        (143)   (38%)
                            ---------------------  ----------
    Consolidated            $   1,570      1,442         128      9% 
                            =====================  ==========
 (Gain) loss on the 
  disposal of assets,
  net: 
  Radio                     $     (12)        (2)        (10)   500% 
  Television                       --         --          --      0% 
  Corporate                       (14)        --         (14)   100% 
                            ---------------------  ----------
    Consolidated            $     (26)        (2)        (24)  1200% 
                            =====================  ==========
 Impairment of FCC
  broadcasting licenses
  and restructuring costs:
  Radio                     $      66    379,415    (379,349)  (100%)
  Television                       --     16,837     (16,837)  (100%)
  Corporate                         4         --           4    100% 
                            ---------------------  ----------
    Consolidated            $      70    396,252    (396,182)  (100%)
                            =====================  ==========
 Operating income (loss):
  Radio                     $  14,948   (364,073)    379,021   (104%)
  Television                   (2,979)   (21,145)     18,166    (86%)
  Corporate                    (2,540)    (4,053)      1,513    (37%)
                            ---------------------  ----------
    Consolidated            $   9,429   (389,271)    398,700   (102%)
                            =====================  ==========


                               Six-Months Ended
                                   June 30,               Change 
                            ---------------------  ------------------
                               2009       2008          $         % 
                               ----       ----         --        --

 Net revenue:
  Radio                     $  57,365     74,034     (16,669)   (23%)
  Television                    7,481      7,579         (98)    (1%)
                            ---------------------  ----------
    Consolidated            $  64,846     81,613     (16,767)   (21%)
                            =====================  ==========
 Operating income before   
  depreciation and         
  amortization, (gain)     
  loss on the disposal of  
  assets, net, and         
  impairment of FCC        
  broadcasting licenses    
  and restructuring costs: 
  Radio                     $  23,415     22,012       1,403      6%
  Television                   (4,633)    (7,729)      3,096    (40%)
  Corporate                    (5,173)    (7,265)      2,092    (29%)
                            ---------------------  ----------
    Consolidated            $  13,609      7,018       6,591     94%
                            =====================  ==========
 Depreciation and 
  amortization:            
  Radio                     $   1,593      1,580          13      1%
  Television                    1,090        444         646    145%
  Corporate                       480        780        (300)   (38%)
                            ---------------------  ----------
    Consolidated            $   3,163      2,804         359     13%
                            =====================  ==========
 (Gain) loss on the
  disposal of assets,
  net:
  Radio                     $     (20)        (5)        (15)   300%
  Television                       19         --          19    100%
  Corporate                       (14)        --         (14)   100%
                            ---------------------  ----------
    Consolidated            $     (15)        (5)        (10)   200%
                            =====================  ==========
 Impairment of FCC         
  broadcasting licenses    
  and restructuring costs: 
  Radio                     $  10,614    379,415    (368,801)   (97%)
  Television                       24     16,837     (16,813)  (100%)
  Corporate                        48         --          48    100%
                            ---------------------  ----------
    Consolidated            $  10,686    396,252    (385,566)   (97%)
                            =====================  ==========
 Operating income (loss):  
  Radio                     $  11,228   (358,978)    370,206   (103%)
  Television                   (5,766)   (25,010)     19,244    (77%)
  Corporate                    (5,687)    (8,045)      2,358    (29%)
                            ---------------------  ----------
    Consolidated            $    (225)  (392,033)    391,808   (100%)
                            =====================  ==========

Selected Unaudited Balance Sheet Information and Other Data:


                                     As of June 30,
 (Amounts in thousands)                  2009
                                     --------------

 Cash and cash equivalents            $    37,056
                                     ==============

 Total assets                         $   477,132
                                     ==============

 Senior secured credit revolver 
  due 2010                            $    15,000
 Senior secured credit facility
  term loan due 2012                      311,187
 Other debt                                 7,273
                                      ----------
   Total debt                         $   333,460
                                     ==============

 Series B preferred stock             $    92,349
                                     ==============

 Total stockholders' deficit          $   (50,024)
                                     --------------

 Total capitalization                 $   375,785
                                     ==============



                                     For the Six-Months Ended June 30,
                                     ---------------------------------
 (Amounts in thousands)                   2009                2008
                                     --------------     --------------
                                 
 Capital expenditures                 $       547             12,379
                                     ==============     ==============
 Cash paid for income taxes, net      $        22                 10
                                     ==============     ==============


            

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