Spanish Broadcasting System, Inc. Reports Results for the
Fourth Quarter and Fiscal Year 2009
GlobeNewswire
2010-03-10
COCONUT GROVE, Fla., March 10, 2010 (GLOBE NEWSWIRE) -- Spanish
Broadcasting System, Inc. (the "Company" or "SBS") (Nasdaq:SBSA) today
reported financial results for the fourth quarter and fiscal year ended
December 31, 2009.
Financial Highlights
Quarter Ended Fiscal Year Ended
(in thousands) December 31, December 31,
------------------- % --------------------- %
2009 2008 Change 2009 2008 Change
--------- -------- ------ ---------- --------- ------
Net revenue:
Radio $ 31,679 34,976 (9%) $ 123,602 145,421 (15%)
Television 4,282 5,875 15,787 18,296
--------- -------- (27%) ---------- --------- (14%)
Consolidated $ 35,961 40,851 $ 139,389 163,717
========= ======== (12%) ========== ========= (15%)
Operating income
before
depreciation and
amortization,
(gain) loss on
the disposal of
assets, net, and
impairment of
assets and
restructuring
costs, a non-GAAP
measure:
Radio $ 13,808 12,626 9% $ 54,401 48,032 13%
Television (825) (5,600) 85% (6,420) (16,047) 60%
Corporate (2,141) (2,834) (9,686) (12,806)
--------- -------- 24% ---------- --------- 24%
Consolidated $ 10,842 4,192 $ 38,295 19,179
========= ======== 159% ========== ========= 100%
As of
Dec. 31,
2009
---------
Cash and cash
equivalents $ 53,580
Please refer to the Unaudited Segment Data and Non-GAAP Financial Measures
sections for definitions and a reconciliation of GAAP to non-GAAP financial
measures.
Discussion and Results
Raul Alarcon, Jr., Chairman and CEO, commented, "Our fourth quarter
results reflect the positive impact of our disciplined approach to
managing our costs during the global recession, as we generated
significantly improved cash flows from our operations for the fourth
consecutive quarter. As we seek to capitalize on the early stages of
the rebound in the advertising market, we believe the operating
efficiencies in our new broadcast model will become increasingly
evident, even as we prudently invest in our content and sales
resources. Looking ahead, our radio, TV and online brands continue to
grow, as we cross-promote our multi-platform media assets with both our
advertisers and consumers. As the nation's Hispanic population
continues its rapid expansion, we believe we are well positioned to
benefit given the strength of our diverse media platform and our
leadership position in serving this increasingly influential and
powerful audience."
Quarter Results
For the quarter ended December 31, 2009, consolidated net revenue
totaled $36.0 million compared to $40.9 million for the same prior year
period, resulting in a decrease of $4.9 million or 12%. This
consolidated decrease was mainly attributable to the decrease in our
radio segment net revenue of $3.3 million or 9%. Our radio segment net
revenue decreased due to lower local, special event and barter sales
caused mainly by the decline in economic conditions. The decrease in
local sales occurred in all of our markets. The decrease in special
event sales of $1.0 million occurred primarily in our Puerto Rico and
Miami markets. The decrease in barter sales occurred in all of our
markets, with the exception of our Los Angeles market. Our television
segment net revenue decreased $1.6 million or 27%, primarily due to a
decrease in sponsorship revenue, local sales and barter sales.
Operating income before depreciation and amortization, gain on the
disposal of assets, net, and impairment of assets and restructuring
costs, a non-GAAP measure, totaled $10.8 million compared to $4.2
million for the same prior year period, representing an increase of
$6.6 million or 159%. This increase was primarily attributed to the
decreases in station operating expenses of $10.8 million and corporate
expenses of $0.7 million, offset by a decrease in net revenue of $4.9
million. Please refer to the Unaudited Segment Data and Non-GAAP
Financial Measures sections for definitions and a reconciliation of
GAAP to non-GAAP financial measures.
Operating loss totaled $(1.7) million compared to $(20.1) million for
the same prior year period. The decrease in operating loss was mainly
due to decreases in our operating expenses and corporate expenses,
offset by a decrease in our net revenue. Also contributing to the
decrease in operating loss was the decrease in our impairment of assets
and restructuring costs of $11.7 million. Please refer to the
Impairment of Assets and Restructuring Costs sections for detailed
discussions.
Fiscal Year Results
For the fiscal year ended December 31, 2009, consolidated net revenue
totaled $139.4 million compared to $163.7 million for the same prior
year period, resulting in a decrease of $24.3 million or 15%. This
consolidated decrease was mainly attributable to the decrease in our
radio segment net revenue of $21.8 million or 15%. Our radio segment
net revenue decreased due to lower local, national, and barter sales
caused mainly by the decline in economic conditions. The decrease in
local, national and barter sales occurred in all of our markets. Our
television segment net revenue decreased $2.5 million or 14%, primarily
due to a decrease in barter sales, local sales and sponsorship revenue.
Operating income before depreciation and amortization, gain on the
disposal of assets, net, and impairment of assets and restructuring
costs, a non-GAAP measure, totaled $38.3 million compared to $19.2
million for the same prior year period, representing an increase of
$19.1 million or 100%. This increase was primarily attributed to the
decreases in station operating expenses of $40.3 million and corporate
expenses of $3.1 million, offset by a decrease in net revenue of $24.3
million. Please refer to the Unaudited Segment Data and Non-GAAP
Financial Measures sections for definitions and a reconciliation of
GAAP to non-GAAP financial measures.
Operating income totaled $10.4 million compared to an operating loss of
$(408.2) million for the same prior year period. The increase in
operating income was mainly due to the decrease in impairment of assets
and restructuring costs of $399.5 million. Also contributing to the
increase in operating income were the decreases in our operating
expenses and corporate expenses, offset by a decrease in our net
revenue. Please refer to the Impairment of Assets and Restructuring
Costs sections for detailed discussions.
Impairment of Assets
For the quarter- and year-ended December 31, 2009, we recorded a
non-cash impairment loss of approximately $8.5 million and $18.6
million that reduced the carrying values of our FCC broadcasting
licenses, as a result of the impairment testing of our indefinite-lived
intangible assets and goodwill. The impairment loss was due to changes
in estimates and assumptions which were primarily: (a) lower industry
advertising revenue growth projections in our respective markets, and
(b) lower industry profit margins.
In addition, we entered into a sublease of office space and determined
that $1.4 million of property and equipment related to leasehold
improvements and furniture and fixtures were impaired.
Restructuring Costs
As a result of the deterioration of the economy and the decrease in the
demand for advertising, we began to implement a restructuring plan in
the third quarter of fiscal year 2008 to reduce expenses throughout the
Company. For the quarter- and year-ended December 31, 2009, we incurred
expenses of $1.1 million and $1.6 million, respectively, related to the
termination of various programming contracts and personnel and a loss
on a sublease of office space.
NASDAQ Delisting Letters and Temporary Extension
As initially announced on August 25, 2008, we received a notice from
The Nasdaq Stock Market ("Nasdaq") on August 20, 2008 indicating that
we failed to comply with the minimum bid price requirement set forth in
Nasdaq Listing Rule 5450(a)(1) (formerly Marketplace Rule 4450(a)(5))
for continued listing of our common stock on The Nasdaq Global Market
because the bid price of our common stock closed under $1.00 per share
for 30 consecutive business days. The notice also stated that, in
accordance with Nasdaq Listing Rule 5810(c)(3)(A) (formerly Marketplace
Rule 4450(e)(2)), we would be provided 180 calendar days, or until
February 17, 2009, to regain compliance with the minimum bid price
requirement. Due to Nasdaq's subsequent suspensions of enforcement of
the minimum bid price requirement in 2008 and 2009 and, as disclosed by
our filings of various Forms 8-K, 10-Q and 10-K, our time period for
regaining compliance was extended until December 4, 2009. To regain
compliance, the closing bid price of our common stock had to remain at
or above $1.00 per share for a minimum of 10 consecutive business days
prior to the market close on December 4, 2009.
We did not regain compliance with the $1.00 minimum bid price
requirement by December 4, 2009. Accordingly, on December 7, 2009, we
received written notification from Nasdaq (the "Staff Determination")
that unless we requested a hearing before the Nasdaq Listing
Qualifications Panel (the "Panel") on or before 4:00 p.m. Eastern Time
on December 14, 2009, our common stock would be delisted from The
Nasdaq Global Market at the opening of business on December 16, 2009.
On December 11, 2009, we requested a hearing before the Panel to appeal
the Staff Determination in order to present our plan to address the
minimum bid price deficiency (the "Appeal"). A hearing was held on
January 7, 2010. At the hearing, we provided Nasdaq with a specific
plan of how we intended to regain compliance with the minimum bid price
deficiency, including a time frame for completion of such plan.
On February 9, 2010, we received notice from Nasdaq indicating that
Nasdaq had granted us our request for an extension of time to regain
compliance with the Rule (the "Nasdaq Extension Notice"). Pursuant to
the terms of the Nasdaq Extension Notice, we will be required to, on or
before June 7, 2010, evidence a closing bid price of $1.00 or more for
a minimum of ten consecutive trading days. In the event that we do not
evidence compliance with the Rule and all other requirements for
continued listing, our securities may be delisted from The Nasdaq
Global Market.
About Spanish Broadcasting System, Inc.
Spanish Broadcasting System, Inc. is the largest publicly traded
Hispanic-controlled media and entertainment company in the United
States. SBS owns and/or operates 21 radio stations located in the top
U.S. Hispanic markets of New York, Los Angeles, Miami, Chicago, San
Francisco and Puerto Rico, including the #1 Spanish-language radio
station in America, WSKQ-FM in New York City, as well as leading radio
stations airing the Tropical, Mexican Regional, Spanish Adult
Contemporary and Hurban format genres. The Company also owns and
operates Mega TV, a television operation with over-the-air, cable and
satellite distribution and affiliates throughout the U.S. and Puerto
Rico. SBS also produces live concerts and events in the major U.S.
markets and Puerto Rico. In addition, the Company operates
www.LaMusica.com, a bilingual Spanish-English online site providing
content related to Latin music, entertainment, news and culture. The
Company's corporate Web site can be accessed at
www.spanishbroadcasting.com .
This press release contains certain forward-looking statements. These
forward-looking statements, which are included in accordance with the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, may involve known and unknown risks, uncertainties and other
factors that may cause the Company's actual results and performance in
future periods to be materially different from any future results or
performance suggested by the forward-looking statements in this press
release. Although the Company believes the expectations reflected in
such forward-looking statements are based upon reasonable assumptions,
it can give no assurance that actual results will not differ materially
from these expectations. Forward-looking statements, which are based
upon certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the
words "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," "might," or "continue" or the negative or other
variations thereof or comparable terminology. Factors that could cause
actual results, events and developments to differ are included from
time to time in the Company's public reports filed with the Securities
and Exchange Commission. All forward-looking statements made herein are
qualified by these cautionary statements and there can be no assurance
that the actual results, events or developments referenced herein will
occur or be realized. The Company undertakes no obligation to update or
revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operation
results.
Below are the Unaudited Condensed Consolidated Statements of Operations
and other information as of and for the quarter and fiscal year ended
December 31, 2009 and 2008.
Quarter Ended Dec. 31, Year Ended Dec. 31,
---------------------- -----------------------
Amounts in thousands 2009 2008 2009 2008
----------- --------- ----------- ----------
(Unaudited) (Unaudited)
Net revenue $ 35,961 40,851 $ 139,389 163,717
Station operating expenses 22,978 33,825 91,408 131,732
Corporate expenses 2,141 2,834 9,686 12,806
Depreciation and amortization 1,525 1,665 6,262 6,261
Loss (gain) on the disposal of
assets, net 15 (3) (14) (13)
Impairment of assets and
restructuring costs 10,955 22,665 21,641 421,116
----------- --------- ----------- ----------
Operating (loss) income (1,653) (20,135) 10,406 (408,185)
Interest expense, net (7,028) (5,977) (26,869) (22,062)
Changes in fair value of
derivative instrument 2,342 (7,398) 5,790 (3,813)
Other (loss) income, net (415) 1,923 (414) 3,851
----------- --------- ----------- ----------
(Loss) income before income
taxes (6,754) (31,587) (11,087) (430,209)
Income tax expense (benefit) 1,080 (3,279) 2,691 (101,486)
----------- --------- ----------- ----------
Net loss (7,834) (28,308) (13,778) (328,723)
Dividends on Series B preferred
stock (2,481) (2,471) (9,927) (9,722)
----------- --------- ----------- ----------
Net loss applicable to common
stockholders $ (10,315) (30,779) $ (23,705) (338,445)
=========== ========= =========== ==========
Net loss per common share:
Basic and Diluted $ (0.14) (0.42) $ (0.33) (4.67)
=========== ========= =========== ==========
Weighted average common shares
outstanding:
Basic and Diluted 72,545 72,448 72,517 72,419
=========== ========= =========== ==========
Non-GAAP Financial Measures
Included below are tables that reconcile the quarter- and year-ended
reported results in accordance with Generally Accepted Accounting
Principles (GAAP) to Non-GAAP results. The tables reconcile Operating
Income (Loss) to Operating Income before Depreciation and Amortization,
Gain on the Disposal of Assets, net, and Impairment of Assets and
Restructuring costs.
UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON- GAAP RESULTS
-----------------------------------------------------------------------------------------
Quarter Ended
December 31,
--------------------- %
(Amounts in thousands) 2009 2008 Change
---------- --------- ------
Operating Loss $ (1,653) (20,135)
add back: Impairment of assets and restructuring costs 10,955 22,665
add back: Loss (gain) on the disposal of assets, net 15 (3)
add back: Depreciation & amortization 1,525 1,665
---------- ---------
Operating Income before Depreciation & Amortization,
Gain on the Disposal of Assets, net, and Impairment of
Assets and Restructuring Costs $ 10,842 4,192
========== ========= 159%
UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON- GAAP RESULTS
--------------------------------------------------------------------------------------------
Fiscal Year Ended
December 31,
------------------------ %
(Amounts in thousands) 2009 2008 Change
---------- ------------ ------
Operating Income (Loss) $ 10,406 $ (408,185)
add back: Impairment of assets and restructuring costs 21,641 421,116
add back: Gain on the disposal of assets, net (14) (13)
add back: Depreciation & amortization 6,262 6,261
---------- ------------
Operating Income before Depreciation & Amortization,
Gain on the Disposal of Assets, net, and Impairment of
Assets and Restructuring Costs $ 38,295 $ 19,179
========== ============ 100%
Operating Income before Depreciation and Amortization, Gain on the
Disposal of Assets, net, and Impairment of Assets and Restructuring
costs are not measures of performance or liquidity determined in
accordance with GAAP in the United States. However, we believe that
these measures are useful in evaluating our performance because they
reflect a measure of performance for our stations before considering
costs and expenses related to our capital structure and dispositions.
These measures are widely used in the broadcast industry to evaluate a
company's operating performance and are used by us for internal
budgeting purposes and to evaluate the performance of our stations,
segments, management and consolidated operations. However, these
measures should not be considered in isolation or as substitutes for
Operating Income, Net Income (Loss), Cash Flows from Operating
Activities or any other measure used in determining our operating
performance or liquidity that is calculated in accordance with GAAP. In
addition, because Operating Income (Loss) before Depreciation and
Amortization, Gain on the Disposal of Assets, net, and Impairment of
Assets and Restructuring costs, is not calculated in accordance with
GAAP, it is not necessarily comparable to similarly titled measures
used by other companies.
Unaudited Segment Data
We have two reportable segments: radio and television. The following
summary table presents separate financial data for each of our
operating segments (in thousands):
Quarter Ended Fiscal Year Ended
December 31, December 31,
--------------------- ----------------------
2009 2008 2009 2008
---------- --------- ---------- ----------
Net revenue:
Radio $ 31,679 34,976 $ 123,602 145,421
Television 4,282 5,875 15,787 18,296
---------- --------- ---------- ----------
Consolidated $ 35,961 40,851 $ 139,389 163,717
========== ========= ========== ==========
Engineering and
programming
expenses:
Radio $ 6,462 8,154 $ 27,435 37,744
Television 3,087 8,748 13,944 23,268
---------- --------- ---------- ----------
Consolidated $ 9,549 16,902 $ 41,379 61,012
========== ========= ========== ==========
Selling, general
and
administrative
expenses:
Radio $ 11,409 14,196 $ 41,766 59,645
Television 2,020 2,727 8,263 11,075
---------- --------- ---------- ----------
Consolidated $ 13,429 16,923 $ 50,029 70,720
========== ========= ========== ==========
Operating income
before
depreciation
and
amortization,
(gain) loss on
the disposal of
assets, net,
and impairment
of assets and
restructuring
costs:
Radio $ 13,808 12,626 $ 54,401 48,032
Television (825) (5,600) (6,420) (16,047)
Corporate (2,141) (2,834) (9,686) (12,806)
---------- --------- ---------- ----------
Consolidated $ 10,842 4,192 $ 38,295 19,179
========== ========= ========== ==========
Depreciation and
amortization:
Radio $ 737 816 $ 3,111 3,213
Television 556 573 2,202 1,595
Corporate 232 276 949 1,453
---------- --------- ---------- ----------
Consolidated $ 1,525 1,665 $ 6,262 6,261
========== ========= ========== ==========
(Gain) loss on
the disposal of
assets, net:
Radio $ 19 7 $ (7) (3)
Television (4) (10) 15 (10)
Corporate -- -- (22) --
---------- --------- ---------- ----------
Consolidated $ 15 (3) $ (14) (13)
========== ========= ========== ==========
Impairment of
assets and
restructuring
costs:
Radio $ 3,574 20,749 $ 14,188 402,243
Television 7,381 1,865 7,405 18,710
Corporate -- 51 48 163
---------- --------- ---------- ----------
Consolidated $ 10,955 22,665 $ 21,641 421,116
========== ========= ========== ==========
Operating income
(loss):
Radio $ 9,478 (8,946) $ 37,109 (357,421)
Television (8,758) (8,028) (16,042) (36,342)
Corporate (2,373) (3,161) (10,661) (14,422)
---------- --------- ---------- ----------
Consolidated $ (1,653) (20,135) $ 10,406 (408,185)
========== ========= ========== ==========
Selected Unaudited Balance Sheet Information and Other Data:
As of
December
31,
(Amounts in thousands) 2009
-----------
Cash and cash equivalents $ 53,580
===========
Total assets $ 478,793
===========
Senior secured credit
revolver due 2010 $ 15,000
Senior secured credit
facility term loan due 2012 309,563
Other debt 7,052
-----------
Total debt $ 331,615
===========
Series B preferred stock $ 92,349
Accrued Dividends Payable 7,032
-----------
Total $ 99,381
===========
Total stockholders' deficit $ (55,482)
-----------
Total capitalization $ 375,514
===========
Fiscal Year Ended
December 31,
--------------------
(Amounts in thousands) 2009 2008
----------- -------
Capital expenditures $ 954 16,097
=========== =======
Cash paid (refund) for income
taxes, net $ 29 (57)
=========== =======
CONTACT: Spanish Broadcasting System, Inc.
Analysts and Investors
Joseph A. Garcia, Chief Financial Officer, Chief
Administrative Officer, Senior Executive Vice President and
Secretary
(305) 441-6901
Brainerd Communicators, Inc.
Analysts, Investors or Media
Chris Plunkett
(212) 986-6667
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