UNITED STATES
Form 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2004 | ||
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Commission file number 33-82114
Spanish Broadcasting
System, Inc.
(305) 441-6901
(Former name, former address and former fiscal
year,
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
þ
No
o
Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange
Act). Yes
þ
No
o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each
of the issuers classes of common stock, as of the latest
practicable date: As of May 6, 2004, 39,600,355 shares of
Class A common stock, par value $.0001 per share, and
25,105,150 shares of Class B common stock, par value $.0001
per share, were outstanding.
SPANISH BROADCASTING SYSTEM, INC.
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Unaudited
SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES
See accompanying notes to the unaudited condensed
consolidated financial statements.
3
SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES
See accompanying notes to the unaudited condensed
consolidated financial statements.
4
SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES
See accompanying notes to the unaudited condensed
consolidated financial statements.
5
SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The unaudited condensed consolidated financial
statements include the accounts of Spanish Broadcasting System,
Inc. and its subsidiaries (the Company). All
intercompany balances and transactions have been eliminated in
consolidation. The accompanying unaudited condensed consolidated
financial statements as of December 31, 2003 and
March 31, 2004, and for the three-month periods ended
March 31, 2003 and 2004 do not contain all disclosures
required by generally accepted accounting principles. These
unaudited 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
December 31, 2003 included in the Companys fiscal
year 2003 Annual Report on Form 10-K.
Effective December 30, 2002, the Company
changed its year-end from a broadcast calendar 52-53-week fiscal
year ending on the last Sunday in December to a calendar year
ending on December 31. Pursuant to Securities and Exchange
Commission Financial Reporting Release No. 35, such change
was not deemed a change in fiscal year for financial reporting
purposes and the Company was not required to file a separate
transition report or to report separate financial information
for the two-day period of December 30 and 31, 2002.
Financial results for December 30 and 31, 2002 are included
in the Companys financial results for the three-month
period ended March 31, 2003.
In the opinion of the Companys management,
the accompanying unaudited condensed consolidated financial
statements contain all adjustments, which are all of a normal
and recurring nature, necessary for a fair presentation of the
results of the interim periods. The results of operations for
the three-month period ended March 31, 2004 are not
necessarily indicative of the results for a full year.
Certain of the Companys subsidiaries
(collectively, the Subsidiary Guarantors) have
guaranteed the Companys 9 5/8% senior subordinated
notes due 2009 on a joint and several basis. The Company has not
included separate financial statements of the Subsidiary
Guarantors because (i) all of the Subsidiary Guarantors are
wholly owned subsidiaries of the Company, and (ii) the
guarantees issued by the Subsidiary Guarantors are full and
unconditional. The Company has not included separate parent-only
financial statements since the parent (Spanish Broadcasting
System, Inc., a Delaware corporation) is a holding company with
no independent assets or operations other than its investments
in its subsidiaries. All Federal Communications Commission (FCC)
licenses are held by special purpose subsidiaries formed solely
for the purpose of holding each respective FCC license and/or
non-guarantor subsidiaries. All of the special purpose
subsidiaries are non-guarantors of the 9 5/8% senior
subordinated notes due 2009. Condensed consolidating unaudited
financial information for the parent and its guarantor and
non-guarantor subsidiaries is as follows (in thousands):
6
CONDENSED CONSOLIDATING BALANCE
SHEET
7
CONDENSED CONSOLIDATING BALANCE
SHEET
8
CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS
CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS
CONDENSED CONSOLIDATING STATEMENT OF CASH
FLOWS
9
CONDENSED CONSOLIDATING STATEMENT OF CASH
FLOWS
In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure
(SFAS No. 148). SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123 Accounting for
Stock-Based Compensation. Among other items, SFAS
No. 148 allows companies adopting SFAS No. 123 to
utilize one of three alternative transition methods, one of
which was a prospective method, as defined, that was
only available if adopted during 2003. To date, we have not
adopted SFAS No. 123 utilizing any of the transition
methods of SFAS No. 148. On March 31, 2004, the FASB
issued an exposure draft on a proposed statement, Share-Based
Payment, that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services
in exchange for (a) equity instruments of the enterprise or
(b) liabilities that are based on the fair value of the
enterprises equity instruments or that may be settled by
the issuance of such equity instruments. The proposed statement
would eliminate the ability to account for share-based
compensation transactions using Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and generally would require instead that such
transactions be accounted for using a fair-value-based method.
The proposed statement is effective for awards granted,
modified, or settled in fiscal years beginning after
December 15, 2004, for public entities that used the
fair-value based method of accounting under the original
provisions of SFAS No. 123, Accounting for Stock-Based
Compensation for recognition or pro forma disclosure purposes.
The Company is currently evaluating the impact the proposed
statement may have on its consolidated financial position, cash
flows and results of operations.
In May 2003, FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (SFAS No.
150), effective for financial instruments entered into or
modified after May 31, 2003, and otherwise effective at the
beginning of the first interim period beginning after
June 15, 2003. This statement establishes standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a freestanding financial instrument that
is within its scope as a liability (or an asset in some
circumstances) when that financial instrument embodies an
obligation of the issuer. The adoption of SFAS No. 150 did
not have an impact on our consolidated financial statements.
In December 2003, FASB issued a revised
Interpretation No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51 (FIN 46R). FIN 46R requires the
consolidation of entities in which an enterprise absorbs a
majority of the entitys expected losses, receives a
majority of the entitys expected residual returns, or
both, as a result of ownership, contractual or other financial
interests in the entity. Currently, entities are generally
consolidated by an enterprise when it has a controlling
financial interest through ownership of a majority voting
interest in the entity. The provisions of FIN 46R are generally
effective for existing (prior to February 1, 2003) variable
interest relationships of a public entity no later than the end
of the first reporting period that ends after March 15,
2004. However, prior to the required application of this
interpretation, a public entity that is not a small business
issuer shall apply FIN 46R to those entities that are considered
to be special-purpose entities no later than the end of the
first reporting period that ends after December 15, 2003.
The adoption of FIN 46R did not have an impact on our
consolidated financial statements.
10
On September 18, 2003, the Company entered
into an asset purchase agreement with Border Media Partners, LLC
to sell the assets of radio stations KLEY-FM and KSAH-AM,
serving the San Antonio, Texas market, for a cash purchase price
of $24.4 million. On January 30, 2004, the Company
completed the sale of the assets of these radio stations KLEY-FM
and KSAH-AM consisting of $11.2 million of intangible assets,
net, and $0.6 million of property and equipment. The Company
recognized a gain of approximately $11.3 million, net of closing
costs and taxes on the sale.
On October 2, 2003, the Company entered into
an asset purchase agreement with 3 Point Media San
Francisco, LLC (Three Point Media) to sell the assets of radio
station KPTI-FM, serving the San Francisco, California market,
for a cash purchase price of $30.0 million. In connection with
this agreement, Three Point Media made a $1.5 million deposit on
the purchase price. On February 3, 2004, the Company
terminated the agreement; however, on April 15, 2004, the
Company reinstated the agreement and entered into an amendment
to the asset purchase agreement and a time brokerage agreement.
In connection with this amendment, Three Point Media made an
additional $0.5 million deposit on the purchase price. The
Company intends to sell the assets of radio station KPTI-FM;
however, there cannot be any assurance that the sale will be
completed.
The Company determined that the pending sales
and/or sales of these stations met the criteria in accordance
with SFAS No. 144 to classify the stations respective
assets as held for sale and their respective operations as
discontinued operations. The results of operations in the
current year and prior year period of these stations have been
classified as discontinued operations in the condensed
consolidated statements of operations. On March 31, 2004,
the Company had assets held for sale consisting of $13.7 million
of intangible assets, net, and $0.3 million of property and
equipment for radio station KPTI-FM.
The Company accounts for its stock option plans
in accordance with APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations,
under which compensation expense is recorded to the extent that
the market price on the grant date of the underlying stock
exceeds the exercise price. No stock-based employee compensation
cost is reflected in net income (loss), as all options granted
under these plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The
fair value of each option granted to employees is estimated on
the date of grant using the Black-Scholes option-pricing model
with the following assumptions at:
11
Had compensation expense for the Companys
plans been determined consistent with SFAS No. 123, the
Companys net income (loss) applicable to common
stockholders and net income (loss) per common share would
have been adjusted to pro forma amounts indicated below (in
thousands, except per share data):
In connection with the purchase of KXOL-FM
serving the Los Angeles, California market, the Company issued
warrants to purchase an aggregate of 2,700,000 shares of the
Companys Class A common stock. The following table
summarizes information about these warrants:
From time to time we are involved in litigation
incidental to the conduct of our business, such as contractual
matters and employee-related matters. In the opinion of
management, such litigation is not likely to have a material
adverse effect on our business, operating results, or financial
position.
On June 14, 2000, an action was filed in the
Eleventh Judicial Circuit in and for Miami-Dade County, Florida
by Jose Antonio Hurtado against us, alleging that he was
entitled to a commission related to an acquisition made by us.
The case was tried before a jury during the week of
December 1, 2003 and Mr. Hurtado was awarded the sum of
$1.8 million, plus interest. Mr. Hurtado also filed an
application for attorneys fees, which we opposed on
grounds that there is no contractual or statutory basis for such
an award. We filed a motion for judgment notwithstanding the
verdict, which was heard on February 6, 2004. On
March 12, 2004, the Court denied our motion for judgment
notwithstanding the verdict and, upon its own motion, the Court
granted a new trial. On April 7, 2004, Mr. Hurtado
filed a notice of appeal with the Third District Court of
Appeal, challenging the order granting a new trial, and on
April 8, 2004, we filed a notice of cross-appeal,
challenging the denial of our motion for judgment
notwithstanding the verdict. The appeal is sitting with the
Third District Court of Appeal, pending the filing of appellate
briefs and oral argument. We have accrued for the $1.8 million
award, plus interest, at December 31, 2003 and have
recorded the amount in other expense (income), net, in the
consolidated statement of operations in the fourth quarter of
the fiscal year ended December 31, 2003.
12
In connection with our sale of WXLX-AM in 1997,
we assigned the lease of the transmitter for WXLX in Lyndhurst,
New Jersey, to the purchaser of the station. The transmitter is
located on a former landfill which ceased operations in the late
1960s. Although WXLX has been sold, we retain potential
exposure to possible environmental liabilities relating to the
transmitter site (the Transmitter Property). On
September 12, 2002, the landlords of the property, Frank F.
Viola, Thomas C. Viola Trust and Louis Viola Company, received a
notice from the New Jersey Meadowlands Commission indicating
that it was planning to redevelop the lands which include the
Transmitter Property and offering compensation to the landlords
for the purchase of the Transmitter Property. The Meadowlands
Commission also initially indicated that it would not seek
reimbursement from the landlords for the costs of landfill
closure or for the remediation of environmental conditions that
resulted from the operation of the landfill. The landlords
assert that, in any condemnation proceedings, the Meadowlands
Commission should be legally bound by its prior statements,
foregoing landfill related claims. The landlords did not accept
the initial offer of the Meadowlands Commission. On
December 4, 2002, the Meadowlands Commission filed a
condemnation proceeding in the Superior Court of New Jersey,
Bergen County, against the landlords, and named us as an
additional defendant. The principal parties to the condemnation
proceeding recently negotiated a settlement of the compensation
to be paid to the property owner and have petitioned the Court
for approval of the settlement and for entry of an Order of
Final Judgment. That motion is scheduled to be heard on
May 14, 2004. In the proposed Order, the Meadowlands
Commission does not reserve claims for reimbursement for
landfill closure related costs. While it does reserve its rights
to assert independently (even subsequent to the conclusion of
the condemnation proceedings), claims concerning the remediation
of any contamination unrelated to the landfill operations, the
Meadowlands Commissions investigations thus far have
disclosed no such contamination and, to date, no claims have
been made against the landlords or us relating to the
environmental condition of the Transmitter Property.
Overview
We are the largest Hispanic-controlled radio
broadcasting company in the United States. After giving effect
to the proposed sale of our San Francisco station, we will own
and operate 24 radio stations in five of the top-ten Hispanic
markets in the United States, including Los Angeles, New York,
Puerto Rico, Miami and Chicago. Our radio stations are located
in markets that reach approximately 45% of the U.S. Hispanic
population. As part of our operating business, we also operate
LaMusica.com, a bilingual Spanish-English Internet website
providing content related to Latin music, entertainment, news
and culture.
The success of each of our radio stations depends
significantly upon its audience ratings and share of the overall
advertising revenue within its market. The radio broadcasting
industry is a highly competitive business, but some barriers to
entry do exist. Each of our radio stations competes with both
Spanish-language and English-language radio stations in its
market as well as with other advertising media such as
newspapers, broadcast television, cable television, the
Internet, magazines, outdoor advertising, transit advertising
and direct mail marketing. Factors which are material to
competitive position include management experience, the radio
stations rank in its market, signal strength and
frequency, and audience demographics, including the nature of
the Spanish-language market targeted by a particular station.
Our top three markets, based on net revenue, are New York, Los
Angeles and Miami. A significant decline in net revenue or
station operating income from our stations in any of these
markets could have a material adverse effect on our financial
position and results of operations.
Our primary source of revenue is the sale of
advertising time on our radio stations to local and national
advertisers. Our revenue is affected primarily by the
advertising rates that our radio stations are able to charge, as
well as the overall demand for radio advertising time in each
respective market. Seasonal net broadcasting revenue
fluctuations are common in the radio broadcasting industry and
are due to fluctuations in advertising expenditures by local and
national advertisers. Typically, for the radio broadcasting
industry, the first calendar quarter generally produces the
lowest revenue.
The performance of a radio station group is
customarily measured by its ability to generate station
operating income and Adjusted EBITDA. Our most significant
operating expenses, for purposes of the
13
The term station operating income
(our former broadcast cash flow or BCF) is defined
as Generally Accepted Accounting Principles
(GAAP) operating income from continuing operations,
excluding corporate expenses and depreciation and amortization.
Station operating income replaces our former BCF as one of the
metrics used by management to assess the performance of our
radio stations. Although it is calculated in the same manner as
BCF, management believes that using the term station
operating income provides a more accurate description of
the performance measure. The term station operating income
margin consists of station operating income divided by net
revenue.
EBITDA consists of earnings before interest
expenses, interest income, income taxes, depreciation and
amortization of assets and discontinued operations. We calculate
our EBITDA differently. Our EBITDA is EBITDA as
defined above but excluding other income or expense, or
alternatively, GAAP operating income from continuing operations
before depreciation and amortization. To distinguish our
calculation of EBITDA from other possible meanings of EBITDA,
for periods ending after March 31, 2003 and going forward
we changed references to EBITDA in our financial
reports to the term Adjusted EBITDA. Although our
Adjusted EBITDA and what we formerly referred to as
our EBITDA are calculated in the same manner,
management believes Adjusted EBITDA is a more
accurate description and represents another metric used by
management to assess the performance of the stations and
Company, as a whole.
Station operating income,
station operating income margin, and Adjusted
EBITDA are non-GAAP financial measures as defined by the
Securities and Exchange Commissions Regulation G.
These non-GAAP financial measures should not be construed as
superior to GAAP financial measures. The GAAP financial measure
most directly comparable to each non-GAAP financial measure and
a reconciliation of the differences between each non-GAAP
financial measure and the comparable GAAP financial measure are
included below. Although station operating income, station
operating income margin and Adjusted EBITDA are not measures of
performance calculated in accordance with GAAP, we believe that
they are useful to an investor in evaluating an investment in
our securities because they are measures widely used in the
broadcast industry to evaluate a radio companys operating
performance and are used by management for internal budgeting
purposes and to evaluate the performance of our radio stations.
However, station operating income, station operating income
margin and Adjusted EBITDA should not be considered in isolation
or as substitutes for operating income, net income (loss), cash
flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as measures
of liquidity or profitability. Also, because they are not
calculated in the same manner by all companies, they may not be
comparable to other similarly titled measures used by other
companies.
14
Fluctuation Analysis of the Operating Results
for the Three Months Ended March 31, 2004 Compared to the Three
Months Ended March 31, 2003 and Non-GAAP Measures
Reconciliation.
The following summary table presents a comparison
of our results of operations for the three-months ended
March 31, 2003 and 2004 with respect to certain of our key
financial measures, as well as a reconciliation of the
difference between each Non-GAAP financial measure and the
comparable GAAP financial measure. The changes illustrated in
the table are discussed below. This section should be read in
conjunction with the unaudited condensed consolidated financial
statements and notes.
Net Revenue.
The
increase in net revenue was due to the double-digit growth in
our Miami and Chicago markets primarily in local and network
revenue. In addition, the start-up stations KZAB-FM and KZBA-FM
in Los Angeles, which began operating on March 1, 2003,
generated an increase in net revenue of approximately $1.0
million. Offsetting these increases was a decrease in the New
York market mainly in national and local revenue.
Station Operating Expenses.
The increase in station operating
expenses was primarily due to the investments made in our Los
Angeles and New York programming departments. Other expenses
that increased were audience research costs and insurance due to
higher premiums. These increases were offset by decreases in:
(a) local and national commissions due to lower commission
structures (b) stock-based programming expense related to
the warrants issued in connection with the KXOL-FM asset
purchase agreement and (c) advertising and promotional
expenses due to a decrease in promotional events and less
advertising in our core markets.
Station Operating Income.
The increase in station operating
income was due to the increase in net revenue offset by the
increase in station operating expenses. Station operating income
margin remained flat due to the proportional increases in net
revenue and station operating expenses.
Corporate Expenses.
The decrease in corporate expenses
resulted mainly from the decrease in legal and professional fees
related to various lawsuits and other legal matters.
Adjusted EBITDA.
The
increase in Adjusted EBITDA was primarily attributed to the
increase in station operating income and decrease in corporate
expenses.
15
Depreciation and Amortization.
The increase in depreciation and
amortization was due to the acquisition of property and
equipment in our Chicago, Los Angeles and New York markets.
Operating Income from Continuing Operations.
The increase in operating income from
continuing operations was primarily attributed to the increase
in Adjusted EBITDA.
Interest Expense, Net.
The increase in interest expense, net,
was due to interest incurred on the new $125.0 million senior
secured credit facility term loan that was entered into on
October 30, 2003 and a decrease in interest income
resulting from a general decline in interest rates and our
average cash balances.
Income Taxes.
The
income tax benefit was a result of applying our estimated
effective tax rate for the full year of 125% to our pre-tax loss
from continuing operations. The increase in income tax benefit
was due to an increase in our estimated effective book tax rate,
over the prior year, primarily due to the additional tax
amortization of FCC licenses as a result of our acquisition of
KXOL-FM in October 2003. Our effective book tax rate was
impacted by the adoption of SFAS No. 142 on
December 31, 2001. As a result of adopting SFAS
No. 142, the reversal of our deferred tax liabilities
related to our intangible assets could no longer be assured over
our net operating loss carryforward period. Therefore, our
estimated effective book tax rate reflects a full valuation
allowance on our deferred tax assets.
Discontinued Operations, Net of Taxes.
We determined that the sale of our
KLEY-FM and KSAH-AM stations serving the San Antonio, Texas
market, and the pending sale of our KPTI-FM station serving the
San Francisco, California market, all met the criteria in
accordance with SFAS No. 144 to classify their respective
operations as discontinued operations. Consequently, these
stations results from operations for the three months
ended March 31, 2003 and 2004 have been classified as
discontinued operations. The increase in discontinued
operations, net of taxes was a result of the $11.3 million gain
recognized on the sale of our KLEY-FM and KSAH-AM stations, net
of closing costs and taxes on the sale.
Net Income.
The
increase in net income was primarily due to the increase in
discontinued operations, net of taxes, related to an $11.3
million gain on the sale of radio stations KLEY-FM and KSAH-AM.
Liquidity and Capital Resources
Our primary source of liquidity is cash on hand
and cash provided by operations and, to the extent necessary,
undrawn commitments that are available under a five-year $10.0
million revolving credit facility. Our ability to raise funds by
increasing our indebtedness is limited by the terms of the
indentures governing our senior subordinated notes, the
certificates of designations governing our preferred stock and
the credit agreement governing our senior secured credit
facilities. Additionally, the indentures, certificates of
designations and credit agreement place restrictions on us with
respect to the sale of assets, liens, investments, dividends,
debt repayments, capital expenditures, transactions with
affiliates and consolidations and mergers, among other things.
We had cash and cash equivalents of $45.6 million and $74.2
million as of December 31, 2003 and March 31, 2004,
respectively.
The following summary table presents a comparison
of our capital resources for the three months ended
March 31, 2003 and 2004, with respect to certain of our key
measures affecting our liquidity. The changes set forth in the
table are discussed below. This section should be read in
conjunction with the unaudited condensed consolidated financial
statements and notes.
16
Net Cash Flows Provided By Operating
Activities.
Changes in our net cash
flows from operating activities were primarily a result of the
increase in cash paid to vendors, suppliers and employees and
for interest, causing the decrease in working capital balances.
Net Cash Flows Provided By (Used In) Investing
Activities.
Changes in our net cash
flows from investing activities were primarily a result of the
proceeds received from the sale of radio stations KLEY-FM and
KSAH-AM in January 2004, and a deposit made in March 2003 for
the acquisition of KXOL-FM, which was completed in October 2003.
Net Cash Flows (Used in) Financing Activities.
Changes in our net cash flows from
financing activities were primarily a result of the additional
offering costs related to our 10 3/4% Series B
cumulative exchangeable redeemable preferred stock and financing
costs related to our $135.0 million senior secured credit
facilities, and the principal payment made on the senior secured
credit facility term loan during the three months period ended
March 31, 2004.
Management believes that cash from operating
activities, together with cash on hand, should be sufficient to
permit us to meet our operating obligations in the foreseeable
future, including required interest and quarterly principal
payments pursuant to the senior secured credit facilities
agreement, interest payment requirements under our 9 5/8%
senior subordinated notes due 2009 and capital expenditures,
excluding the acquisitions of FCC licenses. Assumptions (none of
which can be assured), which underlie managements beliefs,
include the following:
Our strategy is to primarily utilize cash flows
from operations to meet our capital needs and contractual
obligations. However, we also have bank borrowings available to
meet our capital needs and contractual obligations and, when
appropriate, will obtain financing by issuing debt or stock.
We are required to maintain financial covenant
ratios under our senior secured credit facilities as follows:
(i) Consolidated EBITDA minimum, (ii) Consolidated Fixed
Charge Coverage Ratio, (iii) Consolidated Leverage Ratio,
(iv) Consolidated Interest Coverage Ratio and
(v) Consolidated Senior Secured Debt Ratio, all as defined
in the credit agreement solely for the purpose of determining
compliance with the covenants. The credit agreement requiring
compliance with these financial covenants states that the
calculations must be based on generally accepted accounting
principles promulgated by the Financial Accounting Standards
Board. We are in compliance with all covenants under our senior
secured credit facilities and all other debt instruments as of
March 31, 2004 and expect to be in compliance in the
foreseeable future.
On October 2, 2003, we entered into an asset
purchase agreement with 3 Point Media San Francisco, LLC
(Three Point Media) to sell the assets of radio
station KPTI-FM, serving the San Francisco, California market,
for a cash purchase price of $30.0 million. In connection with
this agreement, Three Point Media made a $1.5 million deposit on
the purchase price. On February 3, 2004, we terminated the
agreement; however, on April 15, 2004, we reinstated the
agreement and entered into an amendment to the asset purchase
agreement and a time brokerage agreement. In connection with
this amendment, Three Point Media made an additional $0.5
million deposit on the purchase price. We intend to sell the
assets of radio station KPTI-FM; however, there cannot be any
assurance that the sale will be completed. Pursuant to the
credit agreement governing our senior secured credit facilities,
a portion (approximately $25.0 million) of the proceeds received
from the sale of KPTI-FM, when and if completed, must be offered
to the noteholders to repay a portion of our borrowings under
the senior secured credit facilities.
We continuously review opportunities to acquire
additional radio stations and sell non-core radio stations,
primarily in the largest Hispanic markets in the United States.
We engage in discussions regarding potential acquisitions from
time to time in the ordinary course of business. We currently
have no written understandings, letters of intent or contracts
to acquire radio stations or other companies. We anticipate that
any future
17
During the three months ended March 31,
2004, we entered into various contractual obligations related to
production services agreements, syndication agreements and
employee agreements. We expect unrecorded obligations to
increase by approximately $5.1 million, $4.9 million,
$5.1 million, $4.4 million, $4.6 million and
$0.7 million for the fiscal years ended 2004, 2005, 2006,
2007, 2008 and 2009.
New Accounting Pronouncements
In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure
(SFAS No. 148). SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123 Accounting for
Stock-Based Compensation. Among other items, SFAS
No. 148 allows companies adopting SFAS No. 123 to
utilize one of three alternative transition methods, one of
which was a prospective method, as defined, that was
only available if adopted during 2003. To date, we have not
adopted SFAS No. 123 utilizing any of the transition
methods of SFAS No. 148. On March 31, 2004, the FASB
issued an exposure draft on a proposed statement, Share-Based
Payment, that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services
in exchange for (a) equity instruments of the enterprise or
(b) liabilities that are based on the fair value of the
enterprises equity instruments or that may be settled by
the issuance of such equity instruments. The proposed statement
would eliminate the ability to account for share-based
compensation transactions using Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and generally would require instead that such
transactions be accounted for using a fair-value-based method.
The proposed statement is effective for awards granted,
modified, or settled in fiscal years beginning after
December 15, 2004, for public entities that used the
fair-value based method of accounting under the original
provisions of SFAS No. 123, Accounting for Stock-Based
Compensation for recognition or pro forma disclosure purposes.
The Company is currently evaluating the impact the proposed
statement may have on its consolidated financial position, cash
flows and results of operations.
In May 2003, FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (SFAS No.
150), effective for financial instruments entered into or
modified after May 31, 2003, and otherwise effective at the
beginning of the first interim period beginning after
June 15, 2003. This statement establishes standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a freestanding financial instrument that
is within its scope as a liability (or an asset in some
circumstances) when that financial instrument embodies an
obligation of the issuer. The adoption of SFAS No. 150 did
not have an impact on our consolidated financial statements.
In December 2003, FASB issued a revised
Interpretation No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51 (FIN 46R). FIN 46R requires the
consolidation of entities in which an enterprise absorbs a
majority of the entitys expected losses, receives a
majority of the entitys expected residual returns, or
both, as a result of ownership, contractual or other financial
interests in the entity. Currently, entities are generally
consolidated by an enterprise when it has a controlling
financial interest through ownership of a majority voting
interest in the entity. The provisions of FIN 46R are generally
effective for existing (prior to February 1, 2003) variable
interest relationships of a public entity no later than the end
of the first reporting period that ends after March 15,
2004. However, prior to the required application of this
interpretation, a public entity that is not a small business
issuer shall apply FIN 46R to those entities that are considered
to be special-purpose entities no later than the end of the
first reporting period that ends after December 15, 2003.
The adoption of FIN 46R did not have an impact on our
consolidated financial statements.
18
Disclosure Regarding Forward-Looking
Statements
This quarterly report on Form 10-Q contains
both historical and forward-looking statements. All statements
other than statements of historical fact are, or may be deemed
to be, forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are not based on
historical facts, but rather reflect our current expectations
concerning future results and events. These forward-looking
statements generally can be identified by the use of statements
that include phrases such as believe,
expect, anticipate, intend,
plan, foresee, likely,
will or other similar words or phrases. Similarly,
statements that describe our objectives, plans or goals are, or
may be, forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or
achievements to be different from any future results,
performance and achievements expressed or implied by these
statements. Factors that could cause actual results to differ
from those expressed in forward-looking statements include, but
are not limited to:
19
Consequently, such forward-looking statements
should be regarded solely as our current plans, estimates and
beliefs. We do not undertake any obligation to update any
forward-looking statements to reflect subsequent events or
circumstances.
We believe that inflation has not had a material
impact on our results of operations for the three months ended
March 31,2003 and 2004, respectively. However, there can be
no assurance that inflation will not have an adverse impact on
our future operating results and financial condition.
Our primary market risk is a change in interest
rates associated with borrowings under our senior secured credit
facilities. Advances under the senior secured credit facilities
bear base rate or eurodollar rate interest (in each case subject
to applicable margins), as applicable, which vary in accordance
with prevailing economic conditions. Our earnings are affected
by changes in interest rates due to the impact those changes
have on interest expense from variable-rate debt instruments and
on interest income generated from our cash and investment
balances. At March 31, 2004, all of our debt, other than
our $124.7 million senior secured credit facility term loan, had
fixed interest rates. If variable interest rates average 10%
higher in 2004 than they did during 2003, our variable interest
expense would increase by approximately $0.6 million, compared
to a variable annualized estimated $5.5 million for 2003
measured as of December 31, 2003. If interest rates average
10% lower in 2004 than they did during 2003, our interest income
from cash and investment balances would decrease by
approximately $0.1 million, compared to a variable annualized
estimated $0.5 million for 2003 measured as of December 31,
2003. These amounts are determined by considering the impact of
the hypothetical interest rates on our variable-rate debt, cash
equivalents and short-term investment balances at
December 31, 2003. There has been no material change in our
market risk position since December 31, 2003.
Evaluation of disclosure controls and
procedures
We maintain disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the
SECs rules and forms, and that such information is
accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required
disclosure.
As of the end of the quarterly period covered by
this report, our management carried out an evaluation, with the
participation of our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and
procedures. Based on this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of the
end of such period, our disclosure controls and procedures were
effective.
20
Changes in internal control over financial
reporting
There has been no change in our internal control
over financial reporting during the fiscal quarter to which this
report relates that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
PART II OTHER INFORMATION
From time to time we are involved in litigation
incidental to the conduct of our business, such as contractual
matters and employee-related matters. In the opinion of
management, such litigation is not likely to have a material
adverse effect on our business, operating results, or financial
position.
On June 14, 2000, an action was filed in the
Eleventh Judicial Circuit in and for Miami-Dade County, Florida
by Jose Antonio Hurtado against us, alleging that he was
entitled to a commission related to an acquisition made by us.
The case was tried before a jury during the week of
December 1, 2003 and Mr. Hurtado was awarded the sum of
$1.8 million, plus interest. Mr. Hurtado also filed an
application for attorneys fees, which we opposed on
grounds that there is no contractual or statutory basis for such
an award. We filed a motion for judgment notwithstanding the
verdict, which was heard on February 6, 2004. On
March 12, 2004, the Court denied our motion for judgment
notwithstanding the verdict and, upon its own motion, the Court
granted a new trial. On April 7, 2004, Mr. Hurtado
filed a notice of appeal with the Third District Court of
Appeal, challenging the order granting a new trial, and on
April 8, 2004, we filed a notice of cross-appeal,
challenging the denial of our motion for judgment
notwithstanding the verdict. The appeal is sitting with the
Third District Court of Appeal, pending the filing of appellate
briefs and oral argument. We have accrued for the $1.8 million
award, plus interest, at December 31, 2003 and have
recorded the amount in other expense (income), net, in the
consolidated statement of operations in the fourth quarter of
the fiscal year ended December 31, 2003.
In connection with our sale of WXLX-AM in 1997,
we assigned the lease of the transmitter for WXLX in Lyndhurst,
New Jersey, to the purchaser of the station. The transmitter is
located on a former landfill which ceased operations in the late
1960s. Although WXLX has been sold, we retain potential
exposure to possible environmental liabilities relating to the
transmitter site (the Transmitter Property). On
September 12, 2002, the landlords of the property, Frank F.
Viola, Thomas C. Viola Trust and Louis Viola Company, received a
notice from the New Jersey Meadowlands Commission indicating
that it was planning to redevelop the lands which include the
Transmitter Property and offering compensation to the landlords
for the purchase of the Transmitter Property. The Meadowlands
Commission also initially indicated that it would not seek
reimbursement from the landlords for the costs of landfill
closure or for the remediation of environmental conditions that
resulted from the operation of the landfill. The landlords
assert that, in any condemnation proceedings, the Meadowlands
Commission should be legally bound by its prior statements,
foregoing landfill related claims. The landlords did not accept
the initial offer of the Meadowlands Commission. On
December 4, 2002, the Meadowlands Commission filed a
condemnation proceeding in the Superior Court of New Jersey,
Bergen County, against the landlords, and named us as an
additional defendant. The principal parties to the condemnation
proceeding recently negotiated a settlement of the compensation
to be paid to the property owner and have petitioned the Court
for approval of the settlement and for entry of an Order of
Final Judgment. That motion is scheduled to be heard on
May 14, 2004. In the proposed Order, the Meadowlands
Commission does not reserve claims for reimbursement for
landfill closure related costs. While it does reserve its rights
to assert independently (even subsequent to the conclusion of
the condemnation proceedings), claims concerning the remediation
of any contamination unrelated to the landfill operations, the
Meadowlands Commissions investigations thus far have
disclosed no such contamination and, to date, no claims have
been made against the landlords or us relating to the
environmental condition of the Transmitter Property.
21
On February 18, 2004, we commenced an offer
to exchange registered shares of our 10 3/4% Series B
cumulative exchangeable redeemable preferred stock, par value
$.01 per share and liquidation preference of $1,000 per share
(the Series B Preferred Stock) for any and all
shares of our outstanding unregistered 10 3/4%
Series A cumulative exchangeable redeemable preferred
stock, par value $.01 per share and liquidation preference of
$1,000 per share (the Series A Preferred
Stock). Our registration statement on Form S-4, which
registered the Series B Preferred Stock and the
10 3/4% subordinated exchange notes due 2013 that may be
issued by us in exchange for the Series B Preferred Stock
under certain circumstances, was declared effective by the
Securities and Exchange Commission on February 13, 2004.
The exchange offer expired at 5:00 p.m., eastern standard time,
on March 26, 2004, with full participation in the exchange
offer by all holders of our Series A Preferred Stock. On
April 5, 2004, we completed the exchange offer and
exchanged 76,702,083 shares of our Series B Preferred Stock
for all of our then outstanding shares of Series A
Preferred Stock.
(a)
Exhibits
22
(b)
Reports on Form 8-K
The Company filed the following report on
Form 8-K during the three months ended March 31, 2004:
23
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.
Date: May 10, 2004
24
13-3827791
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
2601 South Bayshore Drive, PH II
Coconut Grove, Florida 33133
(Address of principal executive
offices) (Zip Code)
Table of Contents
December 31, 2003
March 31, 2004
(In thousands, except share data)
ASSETS
$
45,609
$
74,187
25,567
21,364
3,482
3,188
25,906
13,993
100,564
112,732
24,558
24,425
705,251
705,244
11,461
11,108
448
1,025
$
842,282
$
854,534
LIABILITIES AND STOCKHOLDERS
EQUITY
$
1,250
$
1,250
227
232
18,822
16,525
6,370
13,485
1,500
1,500
281
28,169
33,273
123,750
123,438
325,246
325,540
3,721
3,661
68,354
64,332
549,240
550,244
$0.01 par value. Authorized 280,000 shares, 75,000 issued and
outstanding at December 31, 2003 and 76,702 issued and
outstanding at March 31, 2004
76,366
78,420
3
3
3
3
443,961
443,531
(227,291
)
(217,667
)
216,676
225,870
$
842,282
$
854,534
Table of Contents
Three Months Ended
March 31, 2003
March 31, 2004
(In thousands, except per share data)
$
32,052
$
33,520
4,129
4,288
27,923
29,232
918
1,088
5,236
6,324
343
7,636
7,384
3,335
3,533
4,489
3,228
708
822
22,665
22,379
5,258
6,853
(8,629
)
(10,238
)
26
175
(3,345
)
(3,210
)
(2,448
)
(3,948
)
(897
)
738
96
10,940
$
(801
)
$
11,678
(2,054
)
$
(801
)
$
9,624
$
(0.01
)
$
(0.02
)
$
$
0.17
$
(0.01
)
$
0.15
64,682
64,693
64,682
65,359
Table of Contents
Three Months Ended
Three Months Ended
March 31, 2003
March 31, 2004
(In thousands)
$
(801
)
$
11,678
(96
)
(10,940
)
343
707
822
(41
)
46
(138
)
(232
)
261
294
321
493
(2,576
)
(4,012
)
(176
)
(19
)
4,579
3,861
143
267
(1,102
)
(577
)
456
(3,537
)
8,150
7,115
300
10,030
5,559
53
908
10,083
6,467
23,730
(15,150
)
(1,233
)
(682
)
(2
)
(16,385
)
23,048
(430
)
(140
)
(312
)
(50
)
(55
)
(50
)
(937
)
(6,352
)
28,578
71,430
45,609
$
65,078
$
74,187
$
142
$
2,479
$
187
$
323
Table of Contents
1.
Basis of Presentation
2.
Financial Information for Parent, Guarantor
and Non-Guarantor Subsidiaries
Table of Contents
Non
Guarantors
Guarantors
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
24,503
18,340
2,766
45,609
23,917
1,650
25,567
2,379
760
343
3,482
2,879
23,027
25,906
26,882
45,896
27,786
100,564
1,453
15,987
7,118
24,558
9,019
696,232
705,251
11,461
11,461
780,105
267,978
(688,878
)
(359,205
)
300
147
1
448
$
820,201
339,027
42,259
(359,205
)
842,282
$
1,250
66
161
1,477
6,371
7,769
4,682
18,822
6,370
6,370
1,500
1,500
15,491
7,835
4,843
28,169
448,996
637
3,084
452,717
62,672
(6,995
)
12,677
68,354
527,159
1,477
20,604
549,240
76,366
76,366
6
1
(1
)
6
443,961
94,691
(94,691
)
443,961
(227,291
)
337,550
(73,037
)
(264,513
)
(227,291
)
216,676
337,550
21,655
(359,205
)
216,676
$
820,201
339,027
42,259
(359,205
)
842,282
Table of Contents
Non
Guarantors
Guarantors
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
57,897
14,466
1,824
74,187
20,156
1,208
21,364
1,040
1,812
336
3,188
1,761
12,232
13,993
58,937
38,195
15,600
112,732
1,385
16,007
7,033
24,425
9,012
696,232
705,244
11,108
11,108
760,630
298,587
(679,285
)
(379,932
)
255
769
1
1,025
$
832,315
362,570
39,581
(379,932
)
854,534
$
1,250
67
165
1,482
3,860
8,276
4,389
16,525
13,480
5
13,485
1,500
1,500
281
281
20,371
8,348
4,554
33,273
448,978
620
3,041
452,639
58,676
(6,005
)
11,661
64,332
528,025
2,963
19,256
550,244
78,420
78,420
6
1
(1
)
6
443,531
94,691
(94,691
)
443,531
(217,667
)
359,607
(74,367
)
(285,240
)
(217,667
)
225,870
359,607
20,325
(379,932
)
225,870
$
832,315
362,570
39,581
(379,932
)
854,534
Table of Contents
Non
Guarantors
Guarantors
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
25,490
2,433
27,923
15,493
1,975
17,468
4,489
120
(120
)
4,489
92
491
125
708
(4,581
)
9,506
213
120
5,258
(8,308
)
1,019
(1,340
)
(8,629
)
146
(120
)
26
(9,511
)
9,511
(2,577
)
82
47
(2,448
)
96
96
$
(801
)
10,685
(1,174
)
(9,511
)
(801
)
Non
Guarantors
Guarantors
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
26,788
2,444
29,232
16,175
2,154
18,329
3,228
120
(120
)
3,228
96
603
123
822
(3,324
)
10,010
47
120
6,853
(9,914
)
1,006
(1,330
)
(10,238
)
177
121
(3
)
(120
)
175
(20,727
)
20,727
(4,012
)
20
44
(3,948
)
10,940
10,940
$
11,678
22,057
(1,330
)
(20,727
)
11,678
(2,054
)
(2,054
)
$
9,624
22,057
(1,330
)
(20,727
)
9,624
Non
Guarantors
Guarantors
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
(4,537
)
14,066
554
10,083
$
4,182
(1,174
)
(5
)
(19,388
)
(16,385
)
$
(19,399
)
(39
)
19,388
(50
)
Table of Contents
Non
Guarantors
Guarantors
Parent
Subsidiaries
Subsidiaries
Eliminations
Total
$
(5,898
)
14,432
(2,067
)
6,467
$
40,174
(1,818
)
24,894
(40,202
)
23,048
$
(882
)
(16,172
)
(24,085
)
40,202
(937
)
3.
New Accounting Pronouncements
Table of Contents
4.
Sale of Stations and/or Discontinued
Operations
5.
Stock Options and Warrants
March 31, 2003
March 31, 2004
7 years
7 years
None
None
3.35%
3.33%
86%
78%
Table of Contents
Three-Months Ended
Three-Months Ended
March 31, 2003
March 31, 2004
$
(801
)
$
9,624
(1,020
)
(1,786
)
$
(1,821
)
$
7,838
$
(0.01
)
$
0.15
$
(0.03
)
$
0.12
Number of Shares of
Class A
Common Stock
Per Share
Warrant Expiration
Warrant Date of Issue
Underlying Warrants
Exercise Price
Date
2,000,000
$
10.50
February 8, 2005
100,000
$
6.14
March 31, 2006
100,000
$
7.67
April 30, 2006
100,000
$
7.55
May 31, 2006
100,000
$
8.08
June 30, 2006
100,000
$
8.17
July 31, 2006
100,000
$
7.74
August 31, 2006
100,000
$
8.49
September 30, 2006
2,700,000
6.
Litigation
Table of Contents
Item 2.
Managements Discussion and Analysis
of Financial Condition and Results of Operations
Table of Contents
Table of Contents
Three Months
Ended March 31,
Change
2003
2004
$
(In thousands)
$
27,923
$
29,232
1,309
(Engineering, Programming, Selling and G & A expenses)
17,468
18,329
861
10,455
10,903
448
4,489
3,228
(1,261
)
5,966
7,675
1,709
708
822
114
5,258
6,853
1,595
(8,629
)
(10,238
)
(1,609
)
26
175
149
(2,448
)
(3,948
)
(1,500
)
96
10,940
10,844
$
(801
)
$
11,678
12,479
37.4
%
37.3
%
Table of Contents
Three Months
Ended March 31,
Change
2003
2004
$
In thousands
$
1,235
$
682
(553
)
$
10,083
$
6,467
(3,616
)
(16,385
)
23,048
39,433
(50
)
(937
)
(887
)
$
(6,352
)
$
28,578
Table of Contents
the economic conditions within the radio
broadcasting industry and economic conditions in general will
not deteriorate in any material respect;
we will continue to successfully implement our
business strategy; and
we will not incur any material unforeseen
liabilities, including environmental liabilities.
Table of Contents
Table of Contents
Our substantial amount of debt could adversely
affect our financial condition and prevent us from fulfilling
our obligations under our senior secured credit facilities and
Series B preferred stock;
We will require a significant amount of cash to
service our debt and to make cash dividend payments under the
Series B preferred stock after October 15, 2008;
We may not have the funds to repay or the ability
to refinance our senior secured credit facilities or 9 5/8%
senior subordinated notes due 2009;
Our ability to generate cash is affected by many
factors beyond our control;
Any acceleration of our debt or event of default
would harm our business and financial condition;
Despite our current significant level of debt, we
and our subsidiaries may still be able to incur substantially
more debt. This could further intensify some of the risks
described above;
The terms of our debt restrict us from engaging
in many activities and require us to satisfy various financial
tests;
The terms of our debt and Series B preferred
stock impose or will impose restrictions on us that may
adversely affect our business;
The restrictions imposed by our debt may prevent
us from paying cash dividends on the Series B preferred
stock after October 15, 2008 and exchanging the
Series B preferred stock for exchange notes;
We may not have the funds or the ability to raise
the funds necessary to repurchase our Series B preferred
stock if holders exercise their repurchase right, or to finance
the change of control offer required by the Series B
preferred stock;
We may not complete the pending sale of our San
Francisco station;
We have experienced net losses in the past and,
to the extent that we experience net losses in the future, the
market price of our common stock may be adversely affected which
in turn may adversely affect our ability to raise capital;
Our operating results could be adversely affected
by a national or regional recession;
A large portion of our net revenue and station
operating income currently comes from our New York, Los Angeles
and Miami markets;
Loss of any key personnel could adversely affect
our business;
Our long-term growth depends upon successfully
executing our acquisition strategy;
Raúl Alarcón, Jr., Chairman of the
Board of Directors, Chief Executive Officer and President, has
majority voting control and this control may discourage or
influence certain types of transactions, including an actual or
potential change of control of SBS such as a merger or sale of
SBS;
Table of Contents
We compete for advertising revenue with other
radio groups as well as television and other media, many
operators of which have greater resources than we do;
We might face increased competition because of
the merger of Univision Communications Inc. and Hispanic
Broadcasting Corp.;
We must be able to respond to rapidly changing
technology, services and standards which characterize our
industry for us to remain competitive;
Our business depends on maintaining our FCC
licenses and we cannot assure you that we will be able to
maintain these licenses;
We may face regulatory review for additional
acquisitions;
The market price of our shares of Class A
common stock may fluctuate significantly; and
Current or future sales by existing or future
stockholders could depress the market price of our Class A
common stock.
Item 3.
Quantitative and Qualitative Disclosures
About Market Risk
Item 4.
Controls and Procedures
Table of Contents
Item 1.
Legal Proceedings
Table of Contents
Item 5.
Other Information
Item 6.
Exhibits and Reports on
Form 8-K
Third Amended and Restated Certificate of
Incorporation of Spanish Broadcasting System, Inc. (the
Company), dated September 29, 1999
(incorporated by reference to the Companys 1999
Registration Statement on Form S-1 (Commission File
No. 333-85499) (the 1999 Registration
Statement)) (Exhibit A to this exhibit is
incorporated by reference to the Companys Current Report
on Form 8-K, dated March 25, 1996 (the 1996
Current Report)).
Certificate of Amendment to the Third Amended and
Restated Certificate of Incorporation of the Company, dated
September 29, 1999 (incorporated by reference to the
Companys 1999 Registration Statement).
Amended and Restated By-Laws of the Company
(incorporated by reference to the Companys 1999
Registration Statement).
Certificate of Elimination of 14 1/4% Senior
Exchangeable Preferred Stock, Series A of the Company,
dated October 28, 2003 (incorporated by reference to
Exhibit 3.3 of the Companys Quarterly Report on
Form 10-Q, dated November 14, 2003 (the 11/14/03
Quarterly Report)).
Article V of the Third Amended and Restated
Certificate of Incorporation of the Company, dated
September 29, 1999 (incorporated by reference to the
Companys 1999 Registration Statement) (see
Exhibit 3.1).
Certificate of Designations dated
October 29, 2003 Setting Forth the Voting Power,
Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions
of the 10 3/4% Series A Cumulative Exchangeable
Redeemable Preferred Stock of Spanish Broadcasting System, Inc.
(incorporated by reference to Exhibit 4.1 of the
Companys 11/14/03 Quarterly Report).
Certificate of Designations dated
October 29, 2003 Setting Forth the Voting Power,
Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and Restrictions
of the 10 3/4% Series B Cumulative Exchangeable
Redeemable Preferred Stock of Spanish Broadcasting System, Inc.
(incorporated by reference to Exhibit 4.2 of the
Companys 11/14/03 Quarterly Report).
Indenture dated June 29, 1994 among the
Company, IBJ Schroder Bank & Trust Company, as Trustee, the
Guarantors named therein and the Purchasers named therein
(incorporated by reference to Exhibit 4.1 of the
Companys 1994 Registration Statement on Form S-4).
First Supplemental Indenture dated as of March
25, 1996 to the Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ Schroder Bank
& Trust Company, as Trustee (incorporated by reference to
the 1996 Current Report).
Table of Contents
Second Supplemental Indenture dated as of
March 1, 1997 to the Indenture dated as of June 29,
1994 among the Company, the Guarantors named therein and IBJ
Schroder Bank & Trust Company, as Trustee (incorporated by
reference to the 1996 Current Report).
Supplemental Indenture dated as of
October 21, 1999 to the Indenture dated as of June 29,
1994 among the Company, the Guarantors named therein and IBJ
Schroder Bank & Trust Company, as Trustee (incorporated by
reference to the Companys 1999 Registration Statement).
Indenture with respect to 9 5/8% Senior
Subordinated Notes due 2009 with The Bank of New York as
Trustee, dated November 2, 1999 (incorporated by reference
to the Current Report on Form 8-K dated November 2,
1999).
Indenture with respect to 9 5/8% Senior
Subordinated Notes due 2009 with The Bank of New York as
Trustee, dated June 8, 2001 (incorporated by reference to
the Companys Registration Statement on Form S-3,
filed on June 25, 2001).
Form of stock certificate for the Class A common
stock of the Company (incorporated by reference to the
Companys 1999 Registration Statement).
Nonqualified Stock Option Agreement dated
March 3, 2004 between the Company and Joseph A. García.
Incentive Stock Option Agreement dated
March 3, 2004 between the Company and Joseph A. García.
Amendment dated as of April 15, 2004 to the
Asset Purchase Agreement dated as of October 2, 2003 by and
among the Company, Spanish Broadcasting System-San Francisco,
Inc., KPTI Licensing, Inc. and 3 Point Media-San Francisco,
LLC.
Time Brokerage Agreement dated as of
April 15, 2004, by and among the Company, Spanish
Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc.
and 3 Point Media-San Francisco, LLC.
Chief Executive Officers Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Chief Financial Officers Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Chief Executive Officers Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Chief Financial Officers Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(i) a current report on Form 8-K on
March 4, 2004 to report that on March 4, 2004 the
Company issued a press release announcing its fourth quarter and
fiscal year 2003 financial results.
Table of Contents
SPANISH BROADCASTING SYSTEM, INC.
By:
/s/ JOSEPH A. GARCIA
Joseph A. García
Executive Vice President, Chief Financial Officer
and Secretary
(principal financial and
accounting officer and duly
authorized
officer of the registrant)
EXHIBIT 10.1
[Spanish Broadcasting System, inc. Logo]
March 3, 2004
Joseph A. Garcia
14021 SW 67 Ct.
Miami, FL 33158
Dear Joseph A. Garcia:
Pursuant to the terms and conditions of the Spanish Broadcasting System, Inc. 1999 Stock Option Plan (the "Plan") and/or your Employment Agreement, if applicable, you have been granted a Nonqualified Stock Option, to purchase 33,024 shares (the "Option") of Class A common stock as outlined below.
Granted To: Joseph A. Garcia Granted Date: January 21, 2004 Option Granted: 33,024 Option Price per Share: $11.78 Total Cost to Exercise: $389,022.72 Expiration Date: January 21, 2014, unless terminated earlier. Vesting Schedule: Special Vesting as follows: 10,000 on 01/21/2005 10,000 on 01/21/2006 1,512 on 01/21/2007 1,512 on 01/21/2008 Transferability: Not transferable except in accordance with the Plan. Spanish Broadcasting System, Inc. By: /s/ Joseph A. Garcia By my signature below, I hereby acknowledge receipt of this Option granted on the date shown above, which has been issued to me under the terms and conditions of the Plan. I further acknowledge receipt of a copy of the Plan and agree to conform to all of the terms and conditions of the Option and the Plan. Signature: /s/ Joseph A. Garcia Date: 03/15/04 -------------------- Joseph A. Garcia |
EXHIBIT 10.2
[Spanish Broadcasting System, inc. Logo]
March 3, 2004
Joseph A. Garcia
14021 SW 67 Ct.
Miami, FL 33158
Dear Joseph A. Garcia:
Pursuant to the terms and conditions of the Spanish Broadcasting System, Inc. 1999 Stock Option Plan (the "Plan") and/or your Employment Agreement, if applicable, you have been granted an Incentive Stock Option, subject to limitations set forth by the Internal Revenue Code of 1986, as amended from time to time, to purchase 16,976 shares (the "Option") of Class A common stock as outlined below.
Granted To: Joseph A. Garcia Granted Date: January 21, 2004 Option Granted: 16,976 Option Price per Share: $11.78 Total Cost to Exercise: $199,977.28 Expiration Date: January 21, 2014, unless terminated earlier. Vesting Schedule: Special Vesting as follows: 8,488 on 01/21/2007 8,488 on 01/21/2007 Transferability: Not transferable except in accordance with the Plan. Spanish Broadcasting System, Inc. By: /s/ Joseph A. Garcia |
By my signature below, I hereby acknowledge receipt of this Option granted on the date shown above, which has been issued to me under the terms and conditions of the Plan. I further acknowledge receipt of a copy of the Plan and agree to conform to all of the terms and conditions of the Option and the Plan.
Signature: /s/ Joseph A. Garcia Date: 03/15/04 ---------------------- Joseph A. Garcia |
EXHIBIT 10.3
AMENDMENT TO ASSET PURCHASE AGREEMENT
This Amendment dated as of April 15, 2004, ("Amendment") to the Asset
Purchase Agreement dated as of October 2, 2003 ("Agreement"), by and among
Spanish Broadcasting System, Inc., Spanish Broadcasting System-San Francisco,
Inc., and KPTI Licensing, Inc. (collectively, "SBS Entities") and 3 Point Media
- San Francisco, LLC ("Buyer").
WITNESSETH:
WHEREAS, pursuant to the terms and conditions of the Agreement, SBS Entities and Buyer failed to consummate the acquisition of Station KPTI-FM, Alameda, California ("Station"); and
WHEREAS, the SBS Entities are desirous of providing a further extension of time to Buyer for it to consummate the acquisition of Station; and
WHEREAS, the parties desire to enter into this Amendment to the Agreement on the terms and subject to the conditions set forth herein.
1. Section 2.5 is deleted in its entirety and replaced by the following understanding and agreements. Pursuant to the terms of Section 2.5(c) of the Agreement, Buyer delivered to the SBS Entities a cash advance of One Million Five Hundred Thousand Dollars ($1,500,000) ("Cash Advance"). Due to the failure to consummate the acquisition of Station pursuant to the Agreement, the SBS Entities have retained the Cash Advance. It is agreed that upon execution of this Amendment Buyer shall deliver to the SBS Entities an additional Cash Advance in the amount Five Hundred Thousand Dollars ($500,000.00) (collectively, "Cash Advances"). Should closing occur as set forth herein, the aggregate of the Cash Advances, to wit, Two Million Dollars ($2,000,000.00) will be credited against the total purchase price of Thirty Million Dollars ($30,000,000.00) to be delivered at Closing (as defined below).
2. Section 10 is deleted in its entirety and the parties hereby agree that in the event that the Agreement, as amended herein, is not consummated on or before September 30, 2004 ("Closing"), the Agreement, as amended, will automatically terminate without further liability of any party to the other, except that notwithstanding the foregoing the SBS Entities will retain the aggregate Two Million Dollar ($2,000,000.00) Cash Advances without recourse to Buyer, provided, however, that Five Hundred Thousand Dollars ($500,000) shall be returned to Buyer if the Agreement is not consummated on or before September 30, 2004, due to:
(a) the mutual written consent of the SBS Entities and Buyer;
(b) a material breach by any SBS Entity of any of its respective covenants, agreements, representations or warranties contained in this Agreement or if any of the representations or warranties of any SBS Entity contained in this Agreement shall have been inaccurate in any material respect when made, provided that Buyer is not then in material breach of this Agreement and the SBS Entities, as the case may be, have failed to cure such breach within thirty (30) days after receipt of written notice from Buyer
requesting such breach to be cured, and provided that the failure to cure such breach would result in the conditions contained in Section 8.1 not being satisfied;
(c) a final and non-appealable order, decree or ruling of any court of competent jurisdiction in the United States or other United States Governmental Body permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; or
(d) a Specified Event, pursuant to the provisions of
Section 11.12(b).
3. Section 8.8 is deleted in its entirety.
4. Buyer and the SBS Entities concurrent with the execution of this Amendment will enter into the Local Marketing Agreement attached hereto as Exhibit 1 and made a part hereof.
5. Except for the above, the Agreement remains in full force and effect without change.
6. This Amendment may be signed in counterpart originals, which collectively shall have the same legal effect as if all signatures had appeared on the same physical document. This Amendment may be signed and exchanged by facsimile transmission, with the same legal effect as if the signatures had appeared in original handwriting on the same physical document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon, Jr. --------------------------------------- Raul Alarcon, Jr. President and CEO |
SPANISH BROADCASTING SYSTEM-SAN
FRANCISCO, INC.
By: /s/ Raul Alarcon, Jr. --------------------------------------- Raul Alarcon, Jr. President and CEO |
KPTI LICENSING, INC.
By: /s/ Raul Alarcon, Jr. --------------------------------------- Raul Alarcon, Jr. President and CEO |
3 POINT MEDIA - SAN FRANCISCO, LLC
By: /s/ Bruce Buzil --------------------------------------- Bruce Buzil Co-Manager |
EXHIBIT 10.4
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (the "Agreement") is entered into as of the 15th day of April, 2004, by and among KPTI LICENSING, INC., a Delaware corporation ("Licensee"), SPANISH BROADCASTING SYSTEM, INC., a Delaware corporation ("SBS"), and SPANISH BROADCASTING SYSTEM - SAN FRANCISCO, INC., a Delaware corporation (together with SBS and Licensee, the "SBS Entities") and 3 POINT MEDIA - SAN FRANCISCO, LLC, an Illinois limited liability company ("Programmer").
WHEREAS, Licensee is the licensee of and owns and operates radio station KPTI(FM), FCC Facility ID No. 36029, Alameda, California (the "Station"), pursuant to licenses, permits, and authorizations issued to Licensee by the Federal Communications Commission (the "Commission" or "FCC").
WHEREAS, the SBS Entities and Programmer are parties to that certain Asset Purchase Agreement, dated as of October 2, 2003, as amended on April 14, 2004 (the "Asset Purchase Agreement"), whereby the SBS Entities have agreed to sell, and Programmer has agreed to buy, substantially all of the assets used in the operation of the Station on the terms and conditions set forth therein. All capitalized terms not defined herein shall have the meaning provided in the Asset Purchase Agreement.
WHEREAS, Licensee desires to provide air time on the Station to Programmer on terms and conditions that conform to Station policies and the FCC's rules, regulations and policies for time brokerage arrangements and as set forth herein.
WHEREAS, Programmer desires to use the air time to be made available by Licensee for the purpose of providing Programmer's programming to and for the Station in conformity with all rules, regulations, and policies of the FCC.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual promises set forth herein, Licensee and Programmer hereby agree as follows:
1. TIME SALE. Subject to the terms of this Agreement, and to applicable rules, regulations, and policies of the FCC, Licensee shall make available to Programmer all air time on the Station as may be requested by Programmer except for time reserved to or permitted to be used by Licensee in accordance with Sections 4 and 5. Licensee shall broadcast the programming, including commercial announcements, supplied by Programmer without interruption, deletion, or addition of any kind, subject to the terms of this Agreement and Licensee's obligations under the Communications Act of 1934, as amended, and the published rules, regulations, and policies of the Commission (collectively, the "Communications Act").
2. TERM. The term of this Agreement shall be from April 15, 2004, through October 15, 2004, unless earlier terminated pursuant to Paragraph 15 hereof. This Agreement may be renewed upon such terms and conditions as may be mutually agreeable to Programmer and Licensee.
3. HOURS OF PROGRAMMING. Subject to the exceptions set forth in Sections 4 and 5 below, Programmer shall supply, and Licensee shall transmit without modification, programming
for all periods of broadcast operations as may be requested by Programmer, as long as this Agreement remains in force. Programmer shall provide all such programming, produced at its own cost and expense.
4. RESERVATION OF TIME. Licensee specifically reserves for its own use up to three (3) hours per week of programming time (the "Reserved Time") during which it may broadcast programming of its choice to serve community needs. The Reserved Time shall be at a mutually agreeable time between the hours of 6:00 a.m. to 11:00 a.m. Sundays.
5. LICENSEE'S PROGRAMMING DISCRETION. Nothing herein shall be
construed as limiting in any way the reasonable, good faith exercise by Licensee
of its rights and obligations as the licensee of the Station to make the
ultimate programming decisions for the Station. Licensee shall be responsible
for ensuring that the Station's overall programming is responsive to community
needs and in the public interest. Programmer's programming shall be broadcast in
conformity with the regulations and restrictions set forth in Attachment 1,
which are an integral part of this Agreement. Programmer agrees to abide by the
standards set forth in Attachment 1 in its programming and operations. Licensee
has the authority, in its sole discretion, to reject and refuse to transmit any
programming produced or proposed by Programmer that, in the reasonable good
faith judgment of Licensee, is contrary to the public interest. Licensee shall
notify Programmer, unless such notice is impractical or impossible, at least one
(1) week in advance of any such refusal of Programmer's programming that
Licensee deems necessary to serve the public interest. In the event of any such
refusal, Programmer shall receive a pro-rated credit for the preempted time
against the compensation required under Section 7 hereof and, in addition, shall
be entitled to the cash value equivalent of any consideration received by the
Licensee for the programming included in such period of preemption. Although the
parties shall cooperate in the broadcast of emergency information over the
Station, Licensee shall have the right to interrupt Programmer's programming in
case of an emergency or for programming that, in the reasonable good faith
judgment of Licensee, is of overriding public importance. In the event of any
such interruption, except interruptions reasonably necessary to inform the
public of a governmentally declared federal, state, or local emergency,
Programmer shall receive a pro-rated credit for the preempted time against the
compensation required under Section 7 hereof.
6. PROGRAMMER'S RIGHTS IN PROGRAMMING. All right, title and interest in and to the programming provided by Programmer, and the right to authorize the use of the programming in any manner and in any media whatsoever, shall be and remain vested at all times solely in Programmer. Programmer may use the network and syndicated programs of Licensee in accordance with appropriate Licensee contracts and agreements pertaining to such programming, but all right, title and interest in and to such programming shall be and remain vested at all times solely in Licensee.
7. COMPENSATION. In consideration of the broadcast time provided to Programmer pursuant to this Agreement, Programmer shall pay Licensee the fee set forth in Attachment 2 hereto.
8. EXPENSES.
a. Licensee shall be responsible for paying to appropriate third parties all direct and indirect capital, operating and maintenance costs of the Station, including but not limited to: (i)
rents and utilities at Licensee's studio, tower, and transmitter site
facilities; (ii) insurance costs related to Licensee's assets and operations;
(iii) Licensee's telephone, delivery, and postal service; (iv) costs related to
the operation and maintenance of Licensee's main studio and operation and
maintenance of the equipment necessary for the operation of the Station in
compliance with the rules, regulations, and policies of the FCC; (v) salaries,
payroll taxes, insurance, and related costs of personnel employed by Licensee in
connection with the operation of the Station; (vi) all costs and expenses
related to the production and broadcast of the programming provided by Licensee;
and (vii) all performing rights, licensing fees for music and other material
contained in the programming provided by Licensee.
b. Programmer shall be responsible for all direct and indirect costs of the production and delivery of Programmer's programming, including but not limited to: (i) all costs for the power and utilities at any facilities owned by Programmer and used by Programmer in the production of programming; (ii) insurance costs related to Programmer's equipment and assets used in its business operations; (iii) costs related to the maintenance of the studio and equipment owned by Programmer and used for the production and delivery of Programmer's programming; (iv) salaries, payroll taxes, insurance, and related costs of personnel employed by Programmer in connection with production and delivery of the programming, Programmer's promotion of that programming, and the sale of advertising in that programming; and (v) all performing rights, licensing fees for music and other material contained in the programming provided by Programmer.
9. ACCOUNTS RECEIVABLE.
a. On and after the Effective Date, during the term of this Agreement, all revenue from broadcasts on the Station (except for revenue from broadcasts of the Licensee's programming during the Reserved Time) shall belong to Programmer and Programmer shall be responsible for all traffic, billing and collection functions with respect to such revenue.
b. All cash accounts receivable for broadcasts on the Station, which occur prior to the Effective Date (the "Accounts Receivable") shall belong to Licensee and Licensee shall be responsible for all billing and collection functions with respect to such Accounts Receivable.
10. USE OF FACILITIES. During the term of this Agreement, Programmer shall have the right to use the studio equipment and premises of the Station (collectively, the "Studio Facilities") for producing the programming and related functions (including the sale of advertising). Programmer may, at its own expense, install any additional studio equipment reasonably necessary for producing the programming and related functions. Programmer shall replace all spare parts belonging to Licensee that Programmer may use during the term of this Agreement and shall reimburse Licensee for any and all damages to the facilities caused by Programmer, ordinary wear and tear excepted, except to the extent that such damage is reimbursed by policies of insurance. Programmer shall maintain its own business liability insurance and hazard insurance in commercially reasonable amounts. Programmer also shall have the right to use the call letters of the Station in correspondence and in promotion related to the programming provided by Programmer, provided, however, that, during the term hereof, any use of the Station's call letters as part of letterhead or in any other preprinted form such as, but not limited
to, checks, invoices or business cards, shall indicate that Programmer provides programming services for the Station. Programmer acknowledges that it has no authority to bind Licensee, the Station or any affiliate thereof to any agreement, contract, obligation or understanding of any nature whatsoever. Programmer shall have no right to mortgage, pledge or otherwise encumber the assets of Licensee.
11. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF PROGRAMMER. Programmer represents and warrants to, and covenants with, Licensee that:
a. This Agreement has been duly executed and delivered by Programmer, and is valid, binding and enforceable against Programmer in accordance with its terms. Programmer has full right, power, authority and legal capacity to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.
b. The programming provided by Programmer for broadcast on the Station shall comply in all material respects with the Communications Act, and with the programming standards established by Licensee as set forth in Attachment 1 hereto.
c. Programmer shall obtain, at its own cost and expense, music licenses for the music in the programs it provides for broadcast. The performing rights to all music contained in its programming shall be licensed by BMI, ASCAP, or SESAC or shall be in the public domain. The Programmer shall keep all the payment of all such accounts current.
d. Programmer shall cooperate with Licensee in making time available in programming supplied to the Station by Programmer for broadcasting proper station identification announcements as required by FCC rules and regulations.
e. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated hereby will constitute or result in the breach of any term, condition or provision of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of Programmer pursuant to, the certificate of formation and the limited liability company operating agreement of Programmer, any agreement or other instrument to which Programmer is a party or by which any part of its property is bound, or violate any law, regulation, judgment or order binding upon Programmer.
f. Programmer shall promptly pay any and all expenses or obligations of any kind or nature relating to the provision of programming when such expenses become due.
g. Programmer shall forward to Licensee any letter from a member of the general public addressing the Station's programming or documentation which comes into its custody which is required to be included in the Station's public file or which is reasonably requested by Licensee.
h. No representation or warranty made by Programmer in this Agreement, contains any untrue statement of a material fact or omits a material fact necessary in order to make such statements or information not misleading in any material respect.
12. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF LICENSEE. The SBS Entities represent and warrant to, and covenant with, Programmer that:
a. This Agreement has been duly executed and delivered by the SBS Entities, and is valid, binding and enforceable against Licensee in accordance with its terms. The SBS Entities have full right, power, authority and legal capacity to enter into and perform their obligations under this Agreement and to consummate the transactions contemplated hereby.
b. No consent, license, approval or authorization of or exemption by, or filing, restriction or declaration with, any governmental authority bureau, agency or regulatory authority, other than the filing of this Agreement with the FCC, is required in connection with the execution, delivery or performance of this Agreement and to consummate the transactions contemplated hereby.
c. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated hereby will constitute or result in the breach of any term, condition or provision of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the SBS Entities pursuant to, the articles of incorporation or bylaws of the SBS Entities, any agreement or other instrument to which SBS Entities are party or by which any part of their property is bound, or violate any law, regulation, judgment or order binding upon the SBS Entities.
d. The Licensee shall ensure that the Station's overall programming is responsive to community needs and the public interest. Licensee shall prepare the quarterly listings of significant community issues and responsive programming.
e. The Station's facilities and equipment shall be operated in accordance with good engineering standards of the radio broadcast industry, with all applicable laws and regulations and broadcast to the full power and height authorized for it by the FCC. During the term of this Agreement, Licensee shall maintain the transmission facility and the broadcast output with the same quality, normal wear and tear excepted, to broadcast to the same power and height as Licensee is presently authorized by the FCC. Any maintenance work, other than emergency repairs, which prevent the operation of the Station at full power and maximum facility, shall not be scheduled without giving at least forty-eight (48) hours notice to Programmer, unless Programmer waives such notice.
f. Licensee shall employ such management and staff-level employees to direct the day-to-day operations of the Station as may be necessary to fully comply with the provisions of the Communications Act regarding main studio staffing and such additional personnel as shall be necessary to enable the Licensee to perform its obligations under this Agreement. All such employees will report to and be accountable solely to Licensee. Licensee shall notify Programmer prior to making any changes in management personnel.
g. Licensee shall maintain a main studio (as defined by the rules and regulations of the FCC). Licensee shall maintain an appropriate public inspection file at the main studio and shall, from time to time, place such documents in that file as may be required by present or future FCC rules and regulations.
h. On and after the Effective Date, during the term of this Agreement, the SBS Entities shall not enter into any contract or agreement for the cash or non-cash sale of time on the Station. The SBS Entities acknowledge that they have no authority to bind Programmer or any affiliate thereof to any agreement, contract, obligation or understanding of any nature whatsoever. The SBS Entities shall have no right to mortgage, pledge or otherwise encumber the assets of Programmer.
i. Licensee, at the election of Programmer on or before the Effective Date, shall change the call sign of the Station to a call sign designated by Programmer. Licensee shall use commercially reasonable efforts to prepare, file and prosecute any filings with the FCC that may be required, necessary or desirable to effectuate such call sign change on or before the Effective Date.
j. No representation or warranty made by any of the SBS Entities in this Agreement, contains any untrue statement of a material fact or omits a material fact necessary in order to make such statements or information not misleading in any material respect.
13. POLITICAL TIME. Licensee shall retain responsibility to comply with the FCC's political programming rules. Programmer shall cooperate with Licensee to assist Licensee in complying with the FCC's political programming rules. Licensee shall promptly supply to Programmer, and Programmer shall promptly supply to Licensee, such information, including all inquiries concerning the broadcast of political advertising, as may be necessary to comply with FCC rules and policies, including the lowest unit rate, equal opportunities, reasonable access, political file and related requirements of federal law. Licensee, in consultation with Programmer, shall develop a statement which discloses its political broadcasting policies to political candidates, and Programmer shall follow those policies and rates in the sale of political programming and advertising.
14. INDEMNIFICATION.
a. Programmer shall indemnify, defend, and hold harmless Licensee from and against any Claim (as defined herein) arising out of (i) programming exclusively provided by Programmer, and (ii) any inaccuracy or breach of any representations, warranties, covenants, or obligations of Programmer under this Agreement, and (iii) Programmer's use of the facilities of Licensee.
b. Licensee shall indemnify, defend, and hold harmless Programmer from and against any Claim arising out of (i) programming exclusively provided by Licensee, and (ii) any inaccuracy or breach of any representations, warranties, covenants, or obligations of Licensee under this Agreement.
c. As used in this Section 14, the term "Claim" shall include (i) all liabilities; (ii) all losses, damages (including, without limitation, consequential damages), judgments, awards, penalties and settlements; (iii) all demands, claims, suits, actions, causes of action, proceedings and assessments, whether or not ultimately determined to be valid; and (iv) all costs and expenses (including, without limitation, interest (including prejudgment interest in any litigated or arbitrated
matter), court costs and fees and expenses of attorneys and expert witnesses) of investigating, defending or asserting any of the foregoing or of enforcing this Agreement.
d. The indemnification obligations of this Section 14 shall survive any termination of this Agreement and shall continue until the expiration of all applicable statutes of limitations and the conclusion and payment of all judgments which may be rendered in all litigation which may be commenced prior to such expiration.
e. Any party seeking indemnification hereunder (the "Indemnified Party") shall give promptly to the party obligated to provide indemnification to such Indemnified Party (the "Indemnitor") a written notice (a "Claim Notice") describing in reasonable detail the facts giving rise to the claim for indemnification hereunder and shall include in such Claim Notice (if then known or estimable) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based. The failure of any Indemnified Party to give the Claim Notice promptly as required by this Section 14e shall not affect such Indemnified Party's rights under this Section 14 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.
f. After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Section 14 shall be determined: (i) by the written agreement between the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any court of competent jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor shall agree in writing. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. The Indemnified Party shall have the burden of proof in establishing the amount of losses and expenses suffered by it.
g. In order for a party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any third Person against the Indemnified Party, such Indemnified Party must notify the Indemnitor in writing, and in reasonable detail, of the third Person claim promptly after receipt by such Indemnified Party of written notice of the third Person claim. Thereafter, the Indemnified Party shall promptly deliver to the Indemnitor copies of all notices and documents (including court papers) received by the Indemnified Party relating to the third Person claim. Notwithstanding the foregoing, should a party be physically served with a complaint with regard to a third Person claim, the Indemnified Party must notify the Indemnitor with a copy of the complaint within five (5) business days after receipt thereof and shall deliver to the Indemnitor within seven (7) business days after the receipt of such complaint copies of notices and documents (including court papers) physically served upon the Indemnified Party relating to the third Person claim. The failure of any Indemnified Party to give the Claim Notice promptly (or in five (5) business days in the case of service of a complaint upon the Indemnified Party) or to deliver copies of notices and documents as required by this Section 14g shall not affect such Indemnified Party's rights under this Section 14 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.
h. In the event of the initiation of any legal proceeding against the Indemnified Party by a third Person, the Indemnitor shall have the sole and absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice and to control, defend against, negotiate, settle or otherwise deal with any proceeding, claim, or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnified Party defends against or otherwise deals with any such proceeding, claim or demand, the Indemnified Party may retain counsel, reasonably acceptable to the Indemnitor, at the expense of the Indemnitor, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnified Party may settle any such proceeding which settlement obligates the other party to pay money, to perform obligations or to admit liability without the consent of the other party, such consent not to be unreasonably withheld. After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall arrive at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor shall pay all of the sums so owing to the Indemnified Party by wire transfer, certified or bank cashier's check within thirty (30) days after the date of such notice.
i. In any case where an Indemnified Party recovers from third Persons any amount in respect of a matter with respect to which an Indemnitor has indemnified it pursuant to this Section 14, such Indemnified Party shall promptly pay over to the Indemnitor the amount so recovered (after deducting therefrom the full amount of the expenses incurred by it in procuring such recovery), but not in excess of the sum of (i) any amount previously so paid by the Indemnitor to or on behalf of the Indemnified Party in respect of such matter and (ii) any amount expended by the Indemnitor in pursuing or defending any claim arising out of such matter. All Loss and Expenses shall be computed net of any insurance proceeds (less any increase in premiums, reasonably attributable to such Loss, for the one-year period following such Loss) that reduce any damages that would otherwise be sustained.
15. TERMINATION; EFFECT OF TERMINATION.
a. The term of this Agreement is subject to the limitations that:
i. This Agreement may be terminated by mutual consent of the parties.
ii. Either party may terminate this Agreement if the terminating party is not then in material breach and the other party is in material breach under this Agreement and has failed to cure such breach within thirty (30) calendar days after receiving notice of breach from the terminating party.
iii. Either party may terminate this Agreement if the Asset Purchase Agreement is terminated in accordance with its terms and the terminating party is not then in material breach of this Agreement.
iv. This Agreement shall terminate automatically upon the occurrence of any of the following:
(1) This Agreement is declared invalid
or illegal in whole or material part by an order or decree of the FCC or any
other administrative agency or court of competent jurisdiction and such order or
decree has become final and no longer subject to further administrative or
judicial review;
(2) The assignment of the license of the
Station from Licensee to Programmer (FCC File No. BALH-20031010ACK) is
consummated by the parties.
iv. Programmer shall have the right at its sole option to terminate this Agreement if Licensee, pursuant to this Agreement, preempts or substitutes other programming for that supplied by Programmer during ten percent (10%) or more of the total hours of operation of the Station during any period of seven consecutive days.
b. In the event of termination hereunder, Licensee shall be under no further obligation to make available to Programmer any further broadcast time or broadcast transmission facilities, and Programmer shall have no further obligation to make any payments to Licensee hereunder. All unperformed agreements and contracts for advertising to be aired during Programmer's time shall automatically belong to Licensee, who shall have the right to perform such agreements and contracts and to collect and receive the money derived therefrom. Programmer shall remit to Licensee any money or consideration it shall have received as pre-payment for such unaired advertising. Programmer shall be entitled to all uncollected revenue for advertising already broadcast over the Station prior to such termination, and Licensee shall pay over to Programmer any sums received in respect of the same.
16. EXCLUSIVITY. Any air time not used by Programmer in accordance with Section 3 or by Licensee shall not be available for use by any other Person. During the term of this Agreement, Licensee agrees not to enter into any other time brokerage, program provision, local management, or similar agreement relating to the Station with any Person.
17. INSURANCE. Licensee will maintain in full force and effect throughout the term of this Agreement insurance with responsible and reputable insurance companies or associations covering such risks (including fire and other risks insured against by extended coverage, public liability insurance, insurance for claims against personal injury or death or property damage and such other insurance as may be required by law) and in such amounts and on such terms as is conventionally carried by broadcasters operating radio stations with facilities comparable to those of the Station. Any insurance proceeds received by Licensee in respect of damaged property will be used to repair or replace such property so that the operation of the Station conforms with this Agreement.
18. REGULATORY REQUIREMENTS. Licensee shall operate the Station in conformity with the Communications Act, FCC rules and requirements, and all other applicable federal, state, and
local rules. Notwithstanding anything to the contrary set forth in this Agreement, Licensee shall be solely responsible for the management, operation, and regulatory compliance of the Station, including, specifically, control over the Station's finances, personnel, and programming.
19. PAYOLA/PLUGOLA. Neither Programmer nor its agents, employees, consultants, or personnel shall accept any consideration, compensation, gift, or gratuity of any kind whatsoever, regardless of its value or form, including but not limited to, a commission, discount, bonus, material, supplies, or other merchandise, services, or labor (collectively "Consideration"), whether or not pursuant to written contracts or agreements between Programmer and merchants or advertisers, unless the payer is identified in the program for which Consideration was provided as having paid for or furnished such Consideration, in accordance with the Communications Act and FCC requirements.
20. NOTICES. All notices and other communications permitted or required hereunder shall be in writing and any payment, notice, or other communications shall be deemed given by (a) personal delivery, (b) U. S. certified mail, postage prepaid, with return receipt requested, or (c) a nationally recognized overnight carrier, in each case addressed as follows:
If to Programmer, to:
3 Point Media - San Francisco, LLC
980 North Michigan Avenue
Suite 1880
Chicago, Illinois 60611
Attention: Bruce Buzil
Tel: (312) 204-9900
With a copy (which shall not constitute notice) to:
Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Telephone: (202) 776-2556 Facsimile: (202) 776-2526 Attention: Michael D. Basile
If to Licensee, to:
Spanish Broadcasting System, Inc.
2601 South Bayshore Drive PH II
Coconut Grove, FL 33133
Telephone: (305) 441-6901 Facsimile: (305) 441-2179 Attention: Raul Alarcon
With a copy to:
Kaye Scholer LLP
901 15th St., NW
Suite 1100
Washington, D.C. 20005
Telephone: (202) 682-3506
Facsimile: (202) 682-3580
Attention: Jason L. Shrinsky
or to such other person or address as any of the parties may specify to the others in writing from time to time. Notice shall be deemed to have been given upon actual receipt.
21. NO AGENCY. No agency relationship among the parties shall be expressed or implied by the terms of this Agreement, nor shall this Agreement be construed to create a joint venture or partnership among the parties. None of the parties shall hold itself out as an agent, partner, or joint venturer with any of the others. Programmer shall not perform or assume any obligation or liability of the SBS Entities. All contracts for the sale of airtime, purchase orders, agreements, sales materials, and similar documents produced or executed by Programmer shall be executed in the name of Programmer, and not on behalf of the Station or Licensee, and shall represent that Programmer is not the licensee of the Station.
22. ENTIRE AGREEMENT. This Agreement embodies the entire agreement between the parties with respect to the subject matter hereof and there are no other agreements, representations, warranties, or understandings, oral or written, between them with respect to the subject matter hereof. No alteration, modification or change of this Agreement shall be valid unless by like written instrument signed by each party hereto.
23. FURTHER ASSURANCES. Each of the parties shall execute and deliver such additional documents and take such further actions as are reasonably necessary for the purposes of carrying out this Agreement.
24. BROKER. The parties agree to indemnify and hold each other harmless against any claims from any broker or finder based upon any agreement, arrangement, or understanding alleged to have been made by the indemnifying party.
25. ASSIGNMENT. None of the parties shall assign its rights or delegate its duties under this Agreement without the other parties' prior written consent, which consent shall not be unreasonably withheld or delayed, provided, however, that, upon notice to Licensee, Programmer may assign its rights and delegate its duties under this Agreement to any person or entity controlling, controlled by or under common control with Programmer. Any assignment or delegation by any of the parties in contravention of this Section 25 shall be null and void.
26. BINDING EFFECT. This Agreement shall be binding upon the parties hereto and their successors and permitted assigns.
27. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of Licensee or Programmer in exercising any right or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Licensee and Programmer herein provided are cumulative and are not exclusive of any right or remedies which it may otherwise have.
28. FORCE MAJEURE. Any failure or impairment of facilities or any delay or interruption in broadcasting Programmer's programs, or failure at any time to furnish facilities, in whole or in part, for broadcasting, due to acts of God, strikes or threats thereof, or force majeure, shall not constitute a breach of this Agreement and Licensee will not be liable to Programmer with respect to facilities that failed or were impaired or not furnished as a result of such events.
29. SEVERABILITY. If any provision of this Agreement or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. In the event that the FCC raises a substantial and material question as to the validity of any provision of this Agreement, the parties hereto shall negotiate in good faith to revise any such provision of this Agreement with a view toward assuring compliance with all then existing FCC rules and policies which may be applicable, while attempting to preserve, as closely as possible, the intent of the parties as embodied in the provision of this Agreement which is to be so modified.
30. GOVERNING LAW. This Agreement and the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of New York without reference to its choice of law rules. Each of the parties hereto irrevocably submits to the exclusive jurisdiction (subject to the immediately following sentence) of the United States District Court for the Northern District of Illinois for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the parties hereto agrees, to the extent permitted under applicable laws and rules of procedure, to commence any action, suit or proceeding relating hereto either in the United States District Court for the Northern District of Illinois, or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Circuit Court of Cook County of the State of Illinois. Each of the parties hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party's respective address set forth below shall be effective service of process for any action, suit or proceeding in either the United States District Court for the Northern District of Illinois or the Circuit Court of Cook County of the State of Illinois with respect to any matters to which it has submitted to jurisdiction in this Section 31. Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the United States District Court for the Northern District of Illinois or (ii) the Circuit Court of Cook County of the State of Illinois, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, judgments, orders or decrees resulting from lawsuits or court actions brought in accordance with the foregoing provisions of this Section 31 may be appealed to or enforced in any court of competent jurisdiction.
31. HEADINGS. The headings contained in this Agreement are included for convenience only and no such heading shall in any way alter the meaning of any provision.
32. COUNTERPARTS. This Agreement may be signed in counterpart originals, which collectively shall have the same legal effect as if all signatures had appeared on the same physical document. This Agreement may be signed and exchanged by facsimile transmission, with the same legal effect as if the signatures had appeared in original handwriting on the same physical document.
33. AMENDMENT. This Agreement may be modified or amended only in writing and signed by the parties hereto.
34. CERTIFICATIONS. Programmer certifies that this Agreement complies with the Commission's multiple ownership rules, 47 C.F.R. ss. 73.3555, specifically including paragraphs (a), (c) and (d) thereof. Licensee certifies that it maintains, and shall continue to maintain during the term of this Agreement, ultimate control over the Station's facilities, including specific control over Station finances, personnel and programming.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Time Brokerage Agreement as of the date first above written.
KPTI LICENSING, INC.
By: /s/ Raul Alarcon, Jr. ----------------------------------- Name: Raul Alarcon, Jr. ------------------------------ Title: President and CEO ------------------------------ |
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon, Jr. ----------------------------------- Name: Raul Alarcon, Jr. ------------------------------ Title: President and CEO ------------------------------ |
SPANISH BROADCASTING SYSTEM -
SAN FRANCISCO, INC.
By: /s/ Raul Alarcon, Jr. ----------------------------------- Name: Raul Alarcon, Jr. ------------------------------ Title: President and CEO ------------------------------ |
3 POINT MEDIA - SAN FRANCISCO, LLC
By: /s/ Bruce Buzil ----------------------------------- Name: Bruce Buzil ------------------------------ Title: Co-Manager ------------------------------ |
Exhibit 31.1
CERTIFICATION
I, Raúl Alarcón, Jr., certify that:
Date: May 10, 2004
1.
I have reviewed this quarterly report on Form 10-Q of Spanish Broadcasting
System, Inc;
2.
Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4.
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a)
designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)
evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c)
disclosed in this report any change in the registrants internal
control over financial reporting that occured during the registrants most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting.
5.
The registrants other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
/s/ Raúl Alarcón, Jr.
Name:
Raúl Alarcón, Jr.
Title:
Chairman of the Board of
Directors,
Chief Executive Officer and President
Exhibit 31.2
CERTIFICATION
I, Joseph A. García, certify that:
Date: May 10, 2004
1.
I have reviewed this quarterly report on Form 10-Q of Spanish Broadcasting
System, Inc;
2.
Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4.
The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a)
designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b)
evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c)
disclosed in this report any change in the registrants internal
control over financial reporting that occured during the registrants most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting.
5.
The registrants other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
/s/ Joseph A. García
Name:
Joseph A. García
Title:
Chief Financial Officer,
Executive Vice President and
Secretary
Exhibit 32.1
CERTIFICATION PURSUANT TO
In connection with the Quarterly Report on Form 10-Q of Spanish
Broadcasting System, Inc. (the Company) for the period ended March 31,
2004 as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, Raúl Alarcón, Jr., Chairman of the Board of Directors,
President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Raúl Alarcón, Jr.
Raúl Alarcón, Jr.
May 10, 2004
Chairman of the Board of Directors,
President and Chief Executive
Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
In connection with the Quarterly Report on Form 10-Q of Spanish
Broadcasting System, Inc. (the Company) for the period ended March 31,
2004 as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, Joseph A. García, Chief Financial Officer, Executive Vice
President and Secretary of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Joseph A. García
Joseph A. García
May 10, 2004
Chief Financial Officer, Executive
Vice President and Secretary