##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2007oro
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from              to
 Commission file number 33-82114
 
 Spanish Broadcasting System, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    13-3827791(I.R.S. Employer
Identification No.)
 
 2601 South Bayshore Drive, PH II
Coconut Grove, Florida 33133  (Address of principal executive offices) (Zip Code)  (305) 441-6901  (Registrants telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
 þ o
  o þ o
 o þ
 APPLICABLE ONLY TO CORPORATE ISSUERS:




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##### 



SPANISH BROADCASTING SYSTEM, INC.
 INDEX
 PagePART I. FINANCIAL INFORMATIONITEM 1.
    
    Financial Statements  Unaudited
    
    
    4Unaudited Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    4Unaudited Condensed Consolidated Statements of Operations for the Three- and Nine-Months Ended September 30, 2007 and 2006
    
    
    5Unaudited Condensed Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income for the Nine-Months Ended September 30, 2007
    
    
    6Unaudited Condensed Consolidated Statements of Cash Flows for the Nine-Months Ended September 30,
2007 and 2006
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21ITEM 4.
    
    Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONITEM 1A.
    
    Risk Factors
    
    
    22ITEM 6.
    
    Exhibits
    
    
    22EX-10.1 Indemnification AgreementEX-10.2 Stock Option AgreementEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
   
 2




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Special Note Regarding Forward-Looking Statements
  3




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements  Unaudited
 
 SPANISH BROADCASTING SYSTEM, INC. AND SUBIDIARIES
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands, except share data)AssetsCurrent assets:Cash and cash equivalents
    
    $
    63,810
    
    
    
    66,815Receivables, net of allowance for doubtful accounts of $3,683 in 2007 and $4,383 in 2006
    
    
    35,681
    
    
    
    32,142Prepaid expenses and other current assets
    
    
    3,470
    
    
    
    3,460Total current assets
    
    
    102,961
    
    
    
    102,417Property and equipment, net of accumulated depreciation of $36,891 in 2007 and $33,751 in 2006
    
    
    40,872
    
    
    
    28,022FCC licenses
    
    
    749,864
    
    
    
    749,864Goodwill
    
    
    32,806
    
    
    
    32,806Other intangible assets, net of accumulated amortization of $133 in 2007 and $106 in 2006
    
    
    1,301
    
    
    
    1,328Deferred financing costs, net of accumulated amortization of $2,584 in 2007 and $1,749 in 2006
    
    
    5,079
    
    
    
    5,914Other assets
    
    
    1,995
    
    
    
    1,634Derivative instruments
    
    
    2,794
    
    
    
    7,755Total assets
    
    $
    937,672
    
    
    
    929,740Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    16,719
    
    
    
    18,622Accrued interest
    
    
    351
    
    
    
    394Deferred commitment fee
    
    
    319
    
    
    
    375Unearned revenue
    
    
    3,482
    
    
    
    3,882Other current liabilities
    
    
    22
    
    
    
    22Current portion of the senior credit facilities term loan due 2012
    
    
    3,250
    
    
    
    3,250Current portion of other long-term debt
    
    
    428
    
    
    
    79Series B cumulative exchangeable redeemable preferred stock dividends payable
    
    
    2,014
    
    
    
    2,014Total current liabilities
    
    
    26,585
    
    
    
    28,638Unearned revenue, less current portion
    
    
    747
    
    
    
    2,064Other long-term liabilities, less current portion
    
    
    149
    
    
    
    166Senior credit facilities term loan due 2012, less current portion
    
    
    313,625
    
    
    
    316,063Other long-term debt, less current portion
    
    
    7,598
    
    
    
    413Non-interest bearing promissory note payable due 2009, net of unamortized discount
of $1,745 in 2007 and $2,713 in 2006
    
    
    16,755
    
    
    
    15,787Deferred income taxes
    
    
    164,325
    
    
    
    153,683Total liabilities
    
    
    529,784
    
    
    
    516,814Cumulative exchangeable redeemable preferred stock:103/4% Series B cumulative exchangeable redeemable preferred stock, $0.01 par value,
liquidation value $1,000 per share. Authorized 280,000 shares; 89,932 shares issued and
outstanding at September 30, 2007 and December 31, 2006, respectively
    
    
    89,932
    
    
    
    89,932Stockholders equity:Series C convertible preferred stock, $0.01 par value and liquidation value. Authorized 600,000 shares;
380,000 shares issued and outstanding at September 30, 2007 and December 31, 2006,
respectively
    
    
    4
    
    
    
    4Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 40,777,805 and 40,277,805
shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively
    
    
    4
    
    
    
    4Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 24,003,500 and 24,503,500
shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    523,626
    
    
    
    522,397Accumulated other comprehensive income
    
    
    2,794
    
    
    
    7,755Accumulated deficit
    
    
    (208,474
    )
    
    
    (207,168
    )Total stockholders equity
    
    
    317,956
    
    
    
    322,994Total liabilities and stockholders equity
    
    $
    937,672
    
    
    
    929,740
  4




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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  Three-Months Ended
    
    
    Nine-Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except per share data)Net revenue
    
    $
    46,772
    
    
    
    45,891
    
    
    $
    133,580
    
    
    
    132,507Operating expenses:Engineering and programming
    
    
    12,553
    
    
    
    12,739
    
    
    
    37,224
    
    
    
    37,544Selling, general and administrative
    
    
    17,219
    
    
    
    17,879
    
    
    
    53,323
    
    
    
    54,305Corporate expenses
    
    
    3,881
    
    
    
    3,125
    
    
    
    10,596
    
    
    
    10,314Depreciation and amortization
    
    
    1,194
    
    
    
    968
    
    
    
    3,436
    
    
    
    2,800Total operating expenses
    
    
    34,847
    
    
    
    34,711
    
    
    
    104,579
    
    
    
    104,963Loss (gain) on the sale of assets, net of disposal costs
    
    
    51
    
    
    
    6
    
    
    
    50
    
    
    
    (50,787
    )Operating income
    
    
    11,874
    
    
    
    11,174
    
    
    
    28,951
    
    
    
    78,331Other (expense) income:Interest expense, net
    
    
    (4,789
    )
    
    
    (4,840
    )
    
    
    (14,213
    )
    
    
    (15,195
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,997
    )Other, net
    
    
    25
    
    
    
    16
    
    
    
    1,985
    
    
    
    (7
    )Income before income taxes
    
    
    7,110
    
    
    
    6,350
    
    
    
    16,723
    
    
    
    60,132Income tax expense
    
    
    4,569
    
    
    
    5,507
    
    
    
    10,778
    
    
    
    3,317Net income
    
    
    2,541
    
    
    
    843
    
    
    
    5,945
    
    
    
    56,815Dividends on Series B preferred stock
    
    
    (2,417
    )
    
    
    (2,417
    )
    
    
    (7,251
    )
    
    
    (7,251
    )Net income (loss)
applicable to common
stockholders
    
    $
    124
    
    
    
    (1,574
    )
    
    $
    (1,306
    )
    
    
    49,564Basic and diluted net income (loss) per common share
    
    $
    
    
    
    
    (0.02
    )
    
    $
    (0.02
    )
    
    
    0.68Weighted average common shares outstanding:Basic
    
    
    72,381
    
    
    
    72,381
    
    
    
    72,381
    
    
    
    72,381Diluted
    
    
    72,386
    
    
    
    72,381
    
    
    
    72,381
    
    
    
    72,386
  5




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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
 Class C
    
    
    Class A
    
    
    Class B
    
    
    
    
    
    
    Accumulatedpreferred stock
    
    
    common stock
    
    
    common stock
    
    
    Additional
    
    
    other
    
    
    
    
    
    
    TotalNumber of
    
    
    Par
    
    
    Number of
    
    
    Par
    
    
    Number of
    
    
    Par
    
    
    paid-in
    
    
    comprehensive
    
    
    Accumulated
    
    
    stockholdersshares
    
    
    value
    
    
    shares
    
    
    value
    
    
    shares
    
    
    value
    
    
    capital
    
    
    income
    
    
    deficit
    
    
    equity(In thousands, except share data)Balance at December 31, 2006
    
    
    380,000
    
    
    $
    4
    
    
    
    40,277,805
    
    
    $
    4
    
    
    
    24,503,500
    
    
    $
    2
    
    
    $
    522,397
    
    
    $
    7,755
    
    
    $
    (207,168
    )
    
    $
    322,994Conversion of Class B common stock to
Class A common stock
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    (500,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,229
    
    
    
    
    
    
    
    
    
    
    
    1,229Series B preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,251
    )
    
    
    (7,251
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,945
    
    
    
    5,945Unrealized loss on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,961
    )
    
    
    
    
    
    
    (4,961
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    984Balance at September 30, 2007
    
    
    380,000
    
    
    $
    4
    
    
    
    40,777,805
    
    
    $
    4
    
    
    
    24,003,500
    
    
    $
    2
    
    
    $
    523,626
    
    
    $
    2,794
    
    
    $
    (208,474
    )
    
    $
    317,956
  6




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  Nine-Months EndedSeptember 30,2007
    
    
    2006(In thousands)Cash flows from operating activities:Net income
    
    $
    5,945
    
    
    
    56,815Adjustments to reconcile net income to net cash provided by operating activities:Loss (gain) on the sale of assets
    
    
    50
    
    
    
    (50,787
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    2,997Stock-based compensation
    
    
    1,229
    
    
    
    1,542Depreciation and amortization
    
    
    3,436
    
    
    
    2,800Net barter income
    
    
    (173
    )
    
    
    (135
    )Provision for doubtful trade accounts receivables
    
    
    1,122
    
    
    
    1,273Amortization of deferred financing costs
    
    
    835
    
    
    
    906Amortization of discount on the non-interest bearing promissory note payable
    
    
    968
    
    
    
    700Deferred income taxes
    
    
    10,642
    
    
    
    3,361(Decrease) increase in unearned revenue
    
    
    (1,800
    )
    
    
    170Accretion of the time-value of money component related to unearned revenue
    
    
    183
    
    
    
    170Amortization of deferred commitment fee
    
    
    (56
    )
    
    
    (56
    )Amortization of other liabilities
    
    
    (17
    )
    
    
    Changes in operating assets and liabilities:(Increase) decrease in trade receivables
    
    
    (4,588
    )
    
    
    208Increase in other current assets
    
    
    (52
    )
    
    
    (252
    )Increase in other assets
    
    
    (1,396
    )
    
    
    (79
    )Decrease in accounts payable and accrued expenses
    
    
    (2,557
    )
    
    
    (4,701
    )Decrease in accrued interest
    
    
    (77
    )
    
    
    (1,320
    )Net cash provided by operating activities
    
    
    13,694
    
    
    
    13,612Cash flows from investing activities:Proceeds from sale of radio stations, net of disposal costs
    
    
    
    
    
    
    64,751Purchases of property and equipment
    
    
    (4,141
    )
    
    
    (6,670
    )Acquisition of a building and its related building improvements
    
    
    (2,590
    )
    
    
    Proceeds from an insurance recovery
    
    
    15
    
    
    
    Acquisition of television stations and related equipment
    
    
    
    
    
    
    (18,537
    )Net cash (used in) provided by investing
activities
    
    
    (6,716
    )
    
    
    39,544Cash flows from financing activities:Payment of senior credit facility term loan 2012
    
    
    (2,438
    )
    
    
    (2,438
    )Payment of senior credit facility term loan due 2013 (including prepayment premium of $1.0 million)
    
    
    
    
    
    
    (101,000
    )Payment of Series B preferred stock cash dividends
    
    
    (7,251
    )
    
    
    (7,252
    )Payments of other long-term debt
    
    
    (294
    )
    
    
    (482
    )Payments of deferred financing costs
    
    
    
    
    
    
    (352
    )Net cash used in financing activities
    
    
    (9,983
    )
    
    
    (111,524
    )Net decrease in cash and cash equivalents
    
    
    (3,005
    )
    
    
    (58,368
    )Cash and cash equivalents at beginning of period
    
    
    66,815
    
    
    
    125,156Cash and cash equivalents at end of period
    
    $
    63,810
    
    
    
    66,788Supplemental cash flows information:Interest paid
    
    $
    14,950
    
    
    
    17,315Income taxes paid, net
    
    
    
    
    
    
    313Noncash investing and financing activities:Ten-year promissory note issued for the acquisition of a building
    
    $
    7,650
    
    
    
    Unrealized (loss) gain on derivative instruments
    
    
    (4,961
    )
    
    
    907Unearned revenue (advertising given as consideration for acquisition of television stations)
    
    
    
    
    
    
    5,338Non-interest bearing promissory note payable issued for the acquisition of television stations
and related equipment
    
    
    
    
    
    
    14,778
  7




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
   2. Acquisition of a Facility and Related Financing
      8




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##### Table of Contents



3. Stockholders Equity
 (a) Series C Convertible Preferred Stock
     (b) Class A and B Common Stock
 3 4
 (c) Warrant
  (d) Share-based Compensation Plans
 2006 Omnibus Equity Compensation Plan
  9




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##### Table of Contents



1999 Stock Option Plans
  (e) Stock-Based Compensation Expense
  Three-Months Ended
    
    
    Nine-Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Engineering and programming expenses
    
    $
    192
    
    
    
    178
    
    
    $
    569
    
    
    
    533Selling, general and administrative expenses
    
    
    32
    
    
    
    92
    
    
    
    101
    
    
    
    266Corporate expenses
    
    
    144
    
    
    
    192
    
    
    
    559
    
    
    
    743Total stock-based compensation expense
    
    $
    368
    
    
    
    462
    
    
    $
    1,229
    
    
    
    1,542
  Stock Options
   WeightedWeighted
    
    
    
    
    
    
    AverageAverage
    
    
    Aggregate
    
    
    RemainingExercise
    
    
    Intrinsic
    
    
    ContractualShares
    
    
    Price
    
    
    Value
    
    
    Life (Years)Outstanding at December 31, 2006.
    
    
    3,029
    
    
    $
    11.33Granted
    
    
    50
    
    
    
    2.58Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (141
    )
    
    
    10.55Outstanding at September 30, 2007
    
    
    2,938
    
    
    $
    11.21
    
    
    $
    
    
    
    
    5.2Exercisable at September 30, 2007
    
    
    2,521
    
    
    $
    11.67
    
    
    $
    
    
    
    
    4.8
 10




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WeightedAverageWeighted
    
    
    Remaining
    
    
    
    
    
    
    WeightedAverage
    
    
    Contractual
    
    
    
    
    
    
    AverageUnvested
    
    
    Exercise
    
    
    Life
    
    
    Number
    
    
    ExerciseRange of Exercise Prices
    
    Vested Options
    
    
    Options
    
    
    Price
    
    
    (Years)
    
    
    Exercisable
    
    
    Price$0    4.99
    
    
    210
    
    
    
    40
    
    
    $
    4.36
    
    
    
    6.9
    
    
    
    210
    
    
    $
    4.705    9.99
    
    
    1,452
    
    
    
    323
    
    
    
    8.72
    
    
    
    6.0
    
    
    
    1,452
    
    
    
    8.6910  14.99
    
    
    149
    
    
    
    54
    
    
    
    10.77
    
    
    
    6.9
    
    
    
    149
    
    
    
    10.8115  19.99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20  24.99
    
    
    710
    
    
    
    
    
    
    
    20.00
    
    
    
    2.1
    
    
    
    710
    
    
    
    20.002,521
    
    
    
    417
    
    
    $
    11.21
    
    
    
    5.2
    
    
    
    2,521
    
    
    $
    11.67
 Nonvested Shares
   WeightedAverage Grant-Date Fair ValueShares
    
    
    (per Share)Nonvested at December 31, 2006.
    
    
    
    
    
    
    Awarded
    
    
    72
    
    
    $
    4.30Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested at September 30, 2007
    
    
    72
    
    
    $
    4.30
 4. Basic and Diluted Net Income (Loss) Per Common Share
   11




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##### Table of Contents



5. Operating Segments
 Disclosures about Segments of an
Enterprise and Related Information
 Three-Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine-Months EndedSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Net revenue:Radio
    
    $
    44,333
    
    
    
    44,552
    
    
    
    (219
    )
    
    
    (0%
    )
    
    $
    126,421
    
    
    
    129,339
    
    
    
    (2,918
    )
    
    
    (2%
    )Television
    
    
    2,439
    
    
    
    1,339
    
    
    
    1,100
    
    
    
    82%
    
    
    
    7,159
    
    
    
    3,168
    
    
    
    3,991
    
    
    
    126%Consolidated
    
    $
    46,772
    
    
    
    45,891
    
    
    
    881
    
    
    
    2%
    
    
    $
    133,580
    
    
    
    132,507
    
    
    
    1,073
    
    
    
    1%Engineering and programming expenses:Radio
    
    $
    8,957
    
    
    
    8,520
    
    
    
    437
    
    
    
    5%
    
    
    $
    26,867
    
    
    
    25,276
    
    
    
    1,591
    
    
    
    6%Television
    
    
    3,596
    
    
    
    4,219
    
    
    
    (623
    )
    
    
    (15%
    )
    
    
    10,357
    
    
    
    12,268
    
    
    
    (1,911
    )
    
    
    (16%
    )Consolidated
    
    $
    12,553
    
    
    
    12,739
    
    
    
    (186
    )
    
    
    (1%
    )
    
    $
    37,224
    
    
    
    37,544
    
    
    
    (320
    )
    
    
    (1%
    )Selling, general and administrative expenses:Radio
    
    $
    15,351
    
    
    
    16,231
    
    
    
    (880
    )
    
    
    (5%
    )
    
    $
    48,068
    
    
    
    48,573
    
    
    
    (505
    )
    
    
    (1%
    )Television
    
    
    1,868
    
    
    
    1,648
    
    
    
    220
    
    
    
    13%
    
    
    
    5,255
    
    
    
    5,732
    
    
    
    (477
    )
    
    
    (8%
    )Consolidated
    
    $
    17,219
    
    
    
    17,879
    
    
    
    (660
    )
    
    
    (4%
    )
    
    $
    53,323
    
    
    
    54,305
    
    
    
    (982
    )
    
    
    (2%
    )Corporate expenses:
    
    $
    3,881
    
    
    
    3,125
    
    
    
    756
    
    
    
    24%
    
    
    $
    10,596
    
    
    
    10,314
    
    
    
    282
    
    
    
    3%Depreciation and amortization:Radio
    
    $
    716
    
    
    
    643
    
    
    
    73
    
    
    
    11%
    
    
    $
    2,153
    
    
    
    1,866
    
    
    
    287
    
    
    
    15%Television
    
    
    170
    
    
    
    76
    
    
    
    94
    
    
    
    124%
    
    
    
    440
    
    
    
    206
    
    
    
    234
    
    
    
    114%Corporate
    
    
    308
    
    
    
    249
    
    
    
    59
    
    
    
    24%
    
    
    
    843
    
    
    
    728
    
    
    
    115
    
    
    
    16%Consolidated
    
    $
    1,194
    
    
    
    968
    
    
    
    226
    
    
    
    23%
    
    
    $
    3,436
    
    
    
    2,800
    
    
    
    636
    
    
    
    23%Loss (gain) on sale of assets, net:Radio
    
    $
    51
    
    
    
    6
    
    
    
    45
    
    
    
    750%
    
    
    $
    50
    
    
    
    (50,787
    )
    
    
    50,837
    
    
    
    (100%
    )Television
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%Consolidated
    
    $
    51
    
    
    
    6
    
    
    
    45
    
    
    
    750%
    
    
    $
    50
    
    
    
    (50,787
    )
    
    
    50,837
    
    
    
    (100%
    )Operating income (loss):Radio
    
    $
    19,258
    
    
    
    19,152
    
    
    
    106
    
    
    
    1%
    
    
    $
    49,283
    
    
    
    104,411
    
    
    
    (55,128
    )
    
    
    (53%
    )Television
    
    
    (3,195
    )
    
    
    (4,604
    )
    
    
    1,409
    
    
    
    (31%
    )
    
    
    (8,893
    )
    
    
    (15,038
    )
    
    
    6,145
    
    
    
    (41%
    )Corporate
    
    
    (4,189
    )
    
    
    (3,374
    )
    
    
    (815
    )
    
    
    24%
    
    
    
    (11,439
    )
    
    
    (11,042
    )
    
    
    (397
    )
    
    
    4%Consolidated
    
    $
    11,874
    
    
    $
    11,174
    
    
    
    700
    
    
    
    6%
    
    
    $
    28,951
    
    
    $
    78,331
    
    
    
    (49,380
    )
    
    
    (63%
    )Capital expenditures:Radio
    
    $
    342
    
    
    
    2,116
    
    
    
    (1,774
    )
    
    
    (84%
    )
    
    $
    1,358
    
    
    
    3,639
    
    
    
    (2,281
    )
    
    
    (63%
    )Television
    
    
    1,005
    
    
    
    101
    
    
    
    904
    
    
    
    895%
    
    
    
    3,030
    
    
    
    2,542
    
    
    
    488
    
    
    
    19%Corporate
    
    
    974
    
    
    
    148
    
    
    
    826
    
    
    
    558%
    
    
    
    2,343
    
    
    
    489
    
    
    
    1,854
    
    
    
    379%Consolidated
    
    $
    2,321
    
    
    
    2,365
    
    
    
    (44
    )
    
    
    (2%
    )
    
    $
    6,731
    
    
    
    6,670
    
    
    
    61
    
    
    
    1%September 30,
    
    December 31,2007
    

2006Total Assets:Radio
    
    $
    865,328
    
    
    
    863,236Television
    
    
    59,475
    
    
    
    49,376Corporate
    
    
    12,869
    
    
    
    17,128Consolidated
    
    $
    937,672
    
    
    
    929,740
 12




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##### Table of Contents



6. Comprehensive (Loss) Income
  Three-Months Ended
    
    
    Nine-Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    2,541
    
    
    
    843
    
    
    $
    5,945
    
    
    
    56,815Other comprehensive (loss) income:Unrealized (loss) gain on derivative instruments
    
    
    (6,630
    )
    
    
    (6,800
    )
    
    
    (4,961
    )
    
    
    907Total comprehensive (loss) income
    
    $
    (4,089
    )
    
    
    (5,957
    )
    
    $
    984
    
    
    
    57,722
 7. New Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Liabilities  Including an Amendment of FASB Statement No. 115
 8. Income Taxes
 Goodwill and
Other Intangible Assets
 Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 Accounting for Income Taxes,
   9. Litigation
  13




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
 LaMusica.com, Mega.tv,
    14




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##### Table of Contents



Comparison Analysis of the Operating Results for the Three-Months Ended September 30, 2007 and 2006
  Three-Months EndedSeptember 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %Net revenue:Radio
    
    $
    44,333
    
    
    
    44,552
    
    
    
    (219
    )
    
    
    (0%
    )Television
    
    
    2,439
    
    
    
    1,339
    
    
    
    1,100
    
    
    
    82%Consolidated
    
    $
    46,772
    
    
    
    45,891
    
    
    
    881
    
    
    
    2%Engineering and programming expenses:Radio
    
    $
    8,957
    
    
    
    8,520
    
    
    
    437
    
    
    
    5%Television
    
    
    3,596
    
    
    
    4,219
    
    
    
    (623
    )
    
    
    (15%
    )Consolidated
    
    $
    12,553
    
    
    
    12,739
    
    
    
    (186
    )
    
    
    (1%
    )Selling, general and administrative expenses:Radio
    
    $
    15,351
    
    
    
    16,231
    
    
    
    (880
    )
    
    
    (5%
    )Television
    
    
    1,868
    
    
    
    1,648
    
    
    
    220
    
    
    
    13%Consolidated
    
    $
    17,219
    
    
    
    17,879
    
    
    
    (660
    )
    
    
    (4%
    )Corporate expenses:
    
    $
    3,881
    
    
    
    3,125
    
    
    
    756
    
    
    
    24%Depreciation and amortization:Radio
    
    $
    716
    
    
    
    643
    
    
    
    73
    
    
    
    11%Television
    
    
    170
    
    
    
    76
    
    
    
    94
    
    
    
    124%Corporate
    
    
    308
    
    
    
    249
    
    
    
    59
    
    
    
    24%Consolidated
    
    $
    1,194
    
    
    
    968
    
    
    
    226
    
    
    
    23%Loss on sale of assets, net:Radio
    
    $
    51
    
    
    
    6
    
    
    
    45
    
    
    
    750%Television
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%Consolidated
    
    $
    51
    
    
    
    6
    
    
    
    45
    
    
    
    750%Operating income (loss):Radio
    
    $
    19,258
    
    
    
    19,152
    
    
    
    106
    
    
    
    1%Television
    
    
    (3,195
    )
    
    
    (4,604
    )
    
    
    1,409
    
    
    
    (31%
    )Corporate
    
    
    (4,189
    )
    
    
    (3,374
    )
    
    
    (815
    )
    
    
    24%Consolidated
    
    $
    11,874
    
    
    $
    11,174
    
    
    
    700
    
    
    
    6%
  15




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##### Table of Contents



Three-Months EndedSeptember 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %(In thousands)Net revenue
    
    $
    46,772
    
    
    
    45,891
    
    
    
    881
    
    
    
    2%Engineering and programming expenses
    
    
    12,553
    
    
    
    12,739
    
    
    
    (186
    )
    
    
    (1%
    )Selling, general and administrative expenses
    
    
    17,219
    
    
    
    17,879
    
    
    
    (660
    )
    
    
    (4%
    )Corporate expenses
    
    
    3,881
    
    
    
    3,125
    
    
    
    756
    
    
    
    24%Depreciation and amortization
    
    
    1,194
    
    
    
    968
    
    
    
    226
    
    
    
    23%Loss on sale of assets, net of disposal costs
    
    
    51
    
    
    
    6
    
    
    
    45
    
    
    
    750%Operating income
    
    $
    11,874
    
    
    
    11,174
    
    
    
    700
    
    
    
    6%Interest expense, net
    
    
    (4,789
    )
    
    
    (4,840
    )
    
    
    51
    
    
    
    (1%
    )Other income, net
    
    
    25
    
    
    
    16
    
    
    
    9
    
    
    
    56%Income tax expense
    
    
    4,569
    
    
    
    5,507
    
    
    
    (938
    )
    
    
    (17%
    )Net income
    
    $
    2,541
    
    
    
    843
    
    
    
    1,698
    
    
    
    201%
 Net Revenue.
 Engineering and Programming Expenses.
 Selling, General and Administrative Expenses.
 Corporate Expenses.
 Operating Income.
 Interest Expense, net.
 Income Taxes.
 Net Income.
 16




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##### Table of Contents



Comparison Analysis of the Operating Results for the Nine-Months Ended September 30, 2007 and 2006
  Nine-Months EndedSeptember 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %Net revenue:Radio
    
    $
    126,421
    
    
    
    129,339
    
    
    
    (2,918
    )
    
    
    (2%
    )Television
    
    
    7,159
    
    
    
    3,168
    
    
    
    3,991
    
    
    
    126%Consolidated
    
    $
    133,580
    
    
    
    132,507
    
    
    
    1,073
    
    
    
    1%Engineering and programming expenses:Radio
    
    $
    26,867
    
    
    
    25,276
    
    
    
    1,591
    
    
    
    6%Television
    
    
    10,357
    
    
    
    12,268
    
    
    
    (1,911
    )
    
    
    (16%
    )Consolidated
    
    $
    37,224
    
    
    
    37,544
    
    
    
    (320
    )
    
    
    (1%
    )Selling, general and administrative expenses:Radio
    
    $
    48,068
    
    
    
    48,573
    
    
    
    (505
    )
    
    
    (1%
    )Television
    
    
    5,255
    
    
    
    5,732
    
    
    
    (477
    )
    
    
    (8%
    )Consolidated
    
    $
    53,323
    
    
    
    54,305
    
    
    
    (982
    )
    
    
    (2%
    )Corporate expenses:
    
    $
    10,596
    
    
    
    10,314
    
    
    
    282
    
    
    
    3%Depreciation and amortization:Radio
    
    $
    2,153
    
    
    
    1,866
    
    
    
    287
    
    
    
    15%Television
    
    
    440
    
    
    
    206
    
    
    
    234
    
    
    
    114%Corporate
    
    
    843
    
    
    
    728
    
    
    
    115
    
    
    
    16%Consolidated
    
    $
    3,436
    
    
    
    2,800
    
    
    
    636
    
    
    
    23%Loss (gain) on sale of assets, net:Radio
    
    $
    50
    
    
    
    (50,787
    )
    
    
    50,837
    
    
    
    (100%
    )Television
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0%Consolidated
    
    $
    50
    
    
    
    (50,787
    )
    
    
    50,837
    
    
    
    (100%
    )Operating income (loss):Radio
    
    $
    49,283
    
    
    
    104,411
    
    
    
    (55,128
    )
    
    
    (53%
    )Television
    
    
    (8,893
    )
    
    
    (15,038
    )
    
    
    6,145
    
    
    
    (41%
    )Corporate
    
    
    (11,439
    )
    
    
    (11,042
    )
    
    
    (397
    )
    
    
    4%Consolidated
    
    $
    28,951
    
    
    $
    78,331
    
    
    
    (49,380
    )
    
    
    (63%
    )
 17




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##### Table of Contents



Nine-Months EndedSeptember 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %(In thousands)Net revenue
    
    $
    133,580
    
    
    
    132,507
    
    
    
    1,073
    
    
    
    1%Engineering and programming expenses
    
    
    37,224
    
    
    
    37,544
    
    
    
    (320
    )
    
    
    (1%
    )Selling, general and administrative expenses
    
    
    53,323
    
    
    
    54,305
    
    
    
    (982
    )
    
    
    (2%
    )Corporate expenses
    
    
    10,596
    
    
    
    10,314
    
    
    
    282
    
    
    
    3%Depreciation and amortization
    
    
    3,436
    
    
    
    2,800
    
    
    
    636
    
    
    
    23%Loss (gain) on sale of assets, net of disposal costs
    
    
    50
    
    
    
    (50,787
    )
    
    
    50,837
    
    
    
    (100%
    )Operating income
    
    $
    28,951
    
    
    
    78,331
    
    
    
    (49,380
    )
    
    
    (63%
    )Interest expense, net
    
    
    (14,213
    )
    
    
    (15,195
    )
    
    
    982
    
    
    
    (6%
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    (2,997
    )
    
    
    2,997
    
    
    
    (100%
    )Other income (expense), net
    
    
    1,985
    
    
    
    (7
    )
    
    
    1,992
    
    
    
    (28457%
    )Income tax expense
    
    
    10,778
    
    
    
    3,317
    
    
    
    7,461
    
    
    
    225%Net income
    
    $
    5,945
    
    
    
    56,815
    
    
    
    (50,870
    )
    
    
    (90%
    )
 Net Revenue.
 Engineering and Programming Expenses.
 Selling, General and Administrative Expenses.
 Corporate Expenses.
 Loss (Gain) on Sale of Assets, net.
 Operating Income.
 Interest Expense, net.
 18




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##### Table of Contents



Loss on Early Extinguishment of Debt.
 Other Income (Expense).
 Income Taxes.
 Net Income.
 Liquidity and Capital Resources
   
    
    the demand for advertising within the 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
and legal judgments.
     19




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##### Table of Contents



Nine-Months EndedSeptember 30,
    
    
    Change2007
    
    
    2006
    
    
    $(In thousands)Capital expenditures:Radio
    
    
    1,358
    
    
    
    3,639
    
    
    
    (2,281
    )Television
    
    
    3,030
    
    
    
    2,542
    
    
    
    488Corporate
    
    
    2,343
    
    
    
    489
    
    
    
    1,854Consolidated
    
    $
    6,731
    
    
    
    6,670
    
    
    
    61Net cash flows provided by operating activities
    
    $
    13,694
    
    
    
    13,612
    
    
    
    82Net cash flows (used in) provided by investing activities
    
    
    (6,716
    )
    
    
    39,544
    
    
    
    (46,260
    )Net cash flows used in financing activities
    
    
    (9,983
    )
    
    
    (111,524
    )
    
    
    101,541Net decrease in cash and cash equivalents
    
    $
    (3,005
    )
    
    
    (58,368
    )
 Net Cash Flows Provided by Operating Activities.
 Net Cash Flows (Used in) Provided by Investing Activities.
 Net Cash Flows Used In Financing Activities.
 Recent Developments
 Acquisition of a Facility and Related Financing
    20




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation Of Disclosure Controls And Procedures.
 Changes In Internal Control Over Financial Reporting.
 21




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 6. Exhibits
 (a) Exhibits
  ExhibitNumber
    
    
    
    Exhibit Description3.1
    
    
    
    Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the Company), dated September 29, 1999
(incorporated by reference to the Companys 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 Companys Current Report on Form 8-K, dated March 25, 1996 (the
1996 Current Report).3.2
    
    
    
    Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated
by reference to Exhibit 3.2 of the Companys 1999 Registration Statement).3.3
    
    
    
    Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of the Companys 1999 Registration Statement).3.4
    
    
    
    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 Companys Quarterly Report on Form 10-Q, dated November 14, 2003 (the 11/14/03 Quarterly Report)).4.1
    
    
    
    Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to
Exhibit 3.1 of the Companys 1999 Registration Statement).4.2
    
    
    
    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 Companys 11/14/03 Quarterly Report).4.3
    
    
    
    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 Companys 11/14/03 Quarterly Report).4.4
    
    
    
    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 Companys 1994 Registration Statement on Form S-4 (the 1994 Registration
Statement).4.5
    
    
    
    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).4.6
    
    
    
    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).4.7
    
    
    
    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 Companys 1999 Registration Statement).
 22




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Description4.8
    
    
    
    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 (the 1999 Current Report)).4.9
    
    
    
    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 Companys Registration Statement on Form S-3, filed on June 25, 2001 (the 2001 Form S-3).4.10
    
    
    
    Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the Companys 1999 Registration Statement).4.11
    
    
    
    Certificate of Elimination of 14 1/4% of Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by
reference to Exhibit 3.3 of the Companys Quarterly Report on Form 10-Q filed November 14, 2003).4.12
    
    
    
    Certificate of Designation Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and
Qualifications, Limitations and Restrictions of the Series C Convertible Preferred Stock of the Company (Certificate of Designation of Series C
Preferred Stock) (incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed on December 27, 2004).4.13
    
    
    
    Certificate of Correction to Certificate of Designation of Series C Preferred Stock of the Company dated January 7, 2005 (incorporated by
reference to Exhibit 4.13 of the Companys Annual Report filed on Form 10-K for the fiscal year 2004).10.1
    
    
    
    Indemnification Agreement with Mitchell A. Yellen as of October 1, 2007.10.2
    
    
    
    Stock Option Agreement dated as of October 1, 2007 between the Company and Mitchell A. Yellen.14.1
    
    
    
    Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Companys 2004 Form 10-K).31.1
    
    
    
    Chief Executive Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Chief Financial Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Chief Executive Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Chief Financial Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 23




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##### Table of Contents



SIGNATURES
  SPANISH BROADCASTING SYSTEM, INC.By:
    /s/  JOSEPH A. GARCÍAJOSEPH A. GARCÍAExecutive Vice President, Chief
Financial Officer and Secretary (principal
financial and accounting officer and duly
authorized officer of the registrant)  24




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Exhibit Description3.1
    
    
    
    Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the Company), dated September 29, 1999
(incorporated by reference to the Companys 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 Companys Current Report on Form 8-K, dated March 25, 1996 (the
1996 Current Report).3.2
    
    
    
    Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated
by reference to Exhibit 3.2 of the Companys 1999 Registration Statement).3.3
    
    
    
    Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of the Companys 1999 Registration Statement).3.4
    
    
    
    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 Companys Quarterly Report on Form 10-Q, dated November 14, 2003 (the 11/14/03 Quarterly Report)).4.1
    
    
    
    Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to
Exhibit 3.1 of the Companys 1999 Registration Statement).4.2
    
    
    
    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 Companys 11/14/03 Quarterly Report).4.3
    
    
    
    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 Companys 11/14/03 Quarterly Report).4.4
    
    
    
    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 Companys 1994 Registration Statement on Form S-4 (the 1994 Registration
Statement).4.5
    
    
    
    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).4.6
    
    
    
    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).4.7
    
    
    
    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 Companys 1999 Registration Statement).4.8
    
    
    
    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 (the 1999 Current Report)).4.9
    
    
    
    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 Companys Registration Statement on Form S-3, filed on June 25, 2001 (the 2001 Form S-3).4.10
    
    
    
    Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the Companys 1999 Registration Statement).4.11
    
    
    
    Certificate of Elimination of 14 1/4% of Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by
reference to Exhibit 3.3 of the Companys Quarterly Report on Form 10-Q filed November 14, 2003).




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Description4.12
    
    
    
    Certificate of Designation Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and
Qualifications, Limitations and Restrictions of the Series C Convertible Preferred Stock of the Company (Certificate of Designation of Series C
Preferred Stock) (incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed on December 27, 2004).4.13
    
    
    
    Certificate of Correction to Certificate of Designation of Series C Preferred Stock of the Company dated January 7, 2005 (incorporated by
reference to Exhibit 4.13 of the Companys Annual Report filed on Form 10-K for the fiscal year 2004).10.1
    
    
    
    Indemnification Agreement with Mitchell A. Yellen as of October 1, 2007.10.2
    
    
    
    Stock Option Agreement dated as of October 1, 2007 between the Company and Mitchell A. Yellen.14.1
    
    
    
    Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Companys 2004 Form 10-K).31.1
    
    
    
    Chief Executive Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Chief Financial Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Chief Executive Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Chief Financial Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.