##### 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 1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    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 000-27823
 
 Spanish Broadcasting System, Inc.
  Delaware
    
    13-3827791(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 2601 South Bayshore Drive, PH 2
 Coconut Grove, Florida 33133  (Address of principal executive offices) (Zip Code)
 (305) 441-6901  (Registrants telephone number, including area code)
 Yes þ No o
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



SPANISH BROADCASTING SYSTEM, INC.
INDEX
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial Statements  Unaudited
    
    
    3Unaudited Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Unaudited Condensed Consolidated Statements of Operations for the Three-Months Ended March
31, 2010 and 2009
    
    
    4Unaudited Condensed Consolidated Statement of Changes in Stockholders Deficit and
Comprehensive Income for the Three-Months Ended March 31, 2010
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March
31, 2010 and 2009
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15ITEM 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    20ITEM 1A. Risk Factors
    
    
    20ITEM 6. Exhibits
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements  Unaudited
 SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands, except share data)AssetsCurrent assets:Cash and cash equivalents
    
    $
    60,603
    
    
    
    53,580Receivables, net of allowance for doubtful accounts of $1,098 in 2010 and $1,247 in 2009
    
    
    20,929
    
    
    
    24,800Prepaid expenses and other current assets
    
    
    2,988
    
    
    
    3,439Total current assets
    
    
    84,520
    
    
    
    81,819Property and equipment, net of accumulated depreciation of $51,107 in 2010 and $49,560 in 2009
    
    
    44,190
    
    
    
    45,365FCC broadcasting licenses
    
    
    312,623
    
    
    
    312,623Goodwill
    
    
    32,806
    
    
    
    32,806Other intangible assets, net of accumulated amortization of $223 in 2010 and $214 in 2009
    
    
    1,211
    
    
    
    1,220Deferred financing costs, net of accumulated amortization of $5,293 in 2010 and $5,028 in 2009
    
    
    2,308
    
    
    
    2,574Other assets
    
    
    2,323
    
    
    
    2,386Total assets
    
    $
    479,981
    
    
    
    478,793Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    18,239
    
    
    
    18,211Accrued interest
    
    
    8,864
    
    
    
    5,608Unearned revenue
    
    
    532
    
    
    
    570Other liabilities
    
    
    345
    
    
    
    602Derivative instruments
    
    
    3,016
    
    
    
    5,863Senior credit facility revolver due 2010
    
    
    15,000
    
    
    
    15,000Current portion of the senior credit facility term loan due 2012
    
    
    3,250
    
    
    
    3,250Current portion of other long-term debt
    
    
    448
    
    
    
    447Series B cumulative exchangeable
 redeemable preferred stock dividends payable
    
    
    9,514
    
    
    
    7,032Total current liabilities
    
    
    59,208
    
    
    
    56,583Other liabilities, less current portion
    
    
    392
    
    
    
    405Derivative instruments
    
    
    696
    
    
    
    612Senior credit facility term loan due 2012, less current portion
    
    
    305,500
    
    
    
    306,313Other long-term debt, less current portion
    
    
    6,493
    
    
    
    6,605Deferred income taxes
    
    
    73,152
    
    
    
    71,408Total liabilities
    
    
    445,441
    
    
    
    441,926Commitments and contingencies (note 7)Cumulative 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; 92,349 shares issued and
outstanding at March 31, 2010 and December 31, 2009, respectively
    
    
    92,349
    
    
    
    92,349Stockholders deficit:Series C convertible preferred stock, $0.01 par value and liquidation value. Authorized 600,000 shares;
380,000 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively
    
    
    4
    
    
    
    4Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 41,596,513 and 41,542,513
shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively
    
    
    4
    
    
    
    4Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 23,403,500
shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    525,065
    
    
    
    525,026Accumulated other comprehensive loss
    
    
    (1,569
    )
    
    
    (2,513
    )Accumulated deficit
    
    
    (581,315
    )
    
    
    (578,005
    )Total stockholders deficit
    
    
    (57,809
    )
    
    
    (55,482
    )Total liabilities and stockholders deficit
    
    $
    479,981
    
    
    
    478,793
   3




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  Three-Months EndedMarch 31,2010
    
    
    2009(In thousands, except per share data)Net revenue
    
    $
    30,846
    
    
    
    27,794Operating expenses:Engineering and programming
    
    
    9,874
    
    
    
    11,005Selling, general and administrative
    
    
    12,789
    
    
    
    11,362Corporate expenses
    
    
    2,221
    
    
    
    2,861Depreciation and amortization
    
    
    1,556
    
    
    
    1,593Total operating expenses
    
    
    26,440
    
    
    
    26,821Loss on the disposal of assets, net
    
    
    
    
    
    
    11Impairment of assets and restructuring costs
    
    
    
    
    
    
    10,616Operating income (loss)
    
    
    4,406
    
    
    
    (9,654
    )Other (expense) income:Interest expense, net
    
    
    (6,303
    )
    
    
    (6,417
    )Change in fair value of derivative instrument
    
    
    2,847
    
    
    
    2,856Income (loss) before income taxes
    
    
    950
    
    
    
    (13,215
    )Income tax expense (benefit)
    
    
    1,778
    
    
    
    (2,269
    )Net loss
    
    
    (828
    )
    
    
    (10,946
    )Dividends on Series B preferred stock
    
    
    (2,482
    )
    
    
    (2,482
    )Net loss applicable to common stockholders
    
    $
    (3,310
    )
    
    
    (13,428
    )Basic and diluted net loss per common share
    
    $
    (0.05
    )
    
    
    (0.19
    )Weighted average common shares outstanding:Basic and Diluted
    
    
    72,600
    
    
    
    72,502
   4




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##### Table of Contents



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
    
    
    loss
    
    
    deficit
    
    
    deficit(In thousands, except share data)Balance at December 31, 2009
    
    
    380,000
    
    
    $
    4
    
    
    
    41,542,513
    
    
    $
    4
    
    
    
    23,403,500
    
    
    $
    2
    
    
    $
    525,026
    
    
    $
    (2,513
    )
    
    $
    (578,005
    )
    
    $
    (55,482
    )Issuance of Class A common stock from
vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    54,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    39Series B preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,482
    )
    
    
    (2,482
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (828
    )
    
    
    (828
    )Amounts reclassified to earnings during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,028
    
    
    
    
    
    
    
    1,028Unrealized loss on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    (84
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116Balance at March 31, 2010
    
    
    380,000
    
    
    $
    4
    
    
    
    41,596,513
    
    
    $
    4
    
    
    
    23,403,500
    
    
    $
    2
    
    
    $
    525,065
    
    
    $
    (1,569
    )
    
    $
    (581,315
    )
    
    $
    (57,809
    )
   5




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  Three-Months EndedMarch 31,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net loss
    
    $
    (828
    )
    
    
    (10,946
    )Adjustments to reconcile net loss to net cash provided by operating activities:Loss on the sale of assets
    
    
    
    
    
    
    11Impairment of assets
    
    
    
    
    
    
    10,123Stock-based compensation
    
    
    39
    
    
    
    71Depreciation and amortization
    
    
    1,556
    
    
    
    1,593Net barter income
    
    
    (46
    )
    
    
    (31
    )Provision for trade doubtful accounts
    
    
    282
    
    
    
    (130
    )Amortization of deferred financing costs
    
    
    266
    
    
    
    269Deferred income taxes
    
    
    1,744
    
    
    
    (2,408
    )Unearned revenue
    
    
    37
    
    
    
    120Change in fair value of derivative instrument
    
    
    (1,819
    )
    
    
    (1,614
    )Amortization of other liabilities
    
    
    
    
    
    
    (17
    )Changes in operating assets and liabilities:Trade receivables
    
    
    3,560
    
    
    
    5,841Prepaid expenses and other current assets
    
    
    451
    
    
    
    (351
    )Other assets
    
    
    63
    
    
    
    262Accounts payable and accrued expenses
    
    
    41
    
    
    
    (326
    )Accrued interest
    
    
    3,256
    
    
    
    2,147Other liabilities
    
    
    (270
    )
    
    
    Net cash provided by operating activities
    
    
    8,332
    
    
    
    4,614Cash flows from investing activities:Purchases of property and equipment
    
    
    (385
    )
    
    
    (289
    )Proceeds from the sale of property and equipment and insurance recoveries
    
    
    
    
    
    
    163Net cash used in investing activities
    
    
    (385
    )
    
    
    (126
    )Cash flows from financing activities:Payment of senior secured credit facility term loan 2012
    
    
    (813
    )
    
    
    (813
    )Payment of Series B preferred stock cash dividends
    
    
    
    
    
    
    (2,482
    )Payments of other long-term debt
    
    
    (111
    )
    
    
    (109
    )Net cash used in financing activities
    
    
    (924
    )
    
    
    (3,404
    )Net increase in cash and cash equivalents
    
    
    7,023
    
    
    
    1,084Cash and cash equivalents at beginning of period
    
    
    53,580
    
    
    
    32,852Cash and cash equivalents at end of period
    
    $
    60,603
    
    
    
    33,936Supplemental cash flows information:Interest paid
    
    $
    1,758
    
    
    
    2,760Income taxes paid, net
    
    $
    8
    
    
    
    22Noncash investing and financing activities:Accrual of Series B preferred stock cash dividend
    
    $
    2,482
    
    
    
    Unrealized (loss) gain on derivative instruments
    
    $
    (84
    )
    
    
    388
   6




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Special Note Regarding Forward-Looking Statements
   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. Stockholders Deficit
 (a) Series C Convertible Preferred Stock
    (b) Class A and B Common Stock
   8




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##### Table of Contents



(c) Share-Based Compensation Plans
 2006 Omnibus Equity Compensation Plan
  1999 Stock Option Plans
  Stock Options and Nonvested Shares Activity
   WeightedWeighted
    
    
    
    
    
    
    AverageAverage
    
    
    Aggregate
    
    
    RemainingExercise
    
    
    Intrinsic
    
    
    ContractualShares
    
    
    Price
    
    
    Value
    
    
    Life (Years)Outstanding at December 31, 2009
    
    
    2,057
    
    
    $
    6.41Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (8
    )
    
    
    2.55Outstanding at March 31, 2010
    
    
    2,049
    
    
    $
    6.43
    
    
    $
    108
    
    
    
    4.6Exercisable at March 31, 2010
    
    
    1,987
    
    
    $
    6.59
    
    
    $
    93
    
    
    
    4.5
   9




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##### Table of Contents



WeightedOutstanding
    
    
    Average
    
    
    ExercisableWeighted
    
    
    Remaining
    
    
    
    
    
    
    WeightedAverage
    
    
    Contractual
    
    
    
    
    
    
    AverageUnvested
    
    
    Exercise
    
    
    Life
    
    
    Number
    
    
    ExerciseRange of Exercise Prices
    
    Vested Options
    
    
    Options
    
    
    Price
    
    
    (Years)
    
    
    Exercisable
    
    
    Price$0.20  4.99
    
    
    630
    
    
    
    62
    
    
    $
    2.23
    
    
    
    6.8
    
    
    
    630
    
    
    $
    2.345.00  9.99
    
    
    1,159
    
    
    
    
    
    
    
    8.19
    
    
    
    3.2
    
    
    
    1,159
    
    
    
    8.1910.00  11.78
    
    
    198
    
    
    
    
    
    
    
    10.79
    
    
    
    4.5
    
    
    
    198
    
    
    
    10.791,987
    
    
    
    62
    
    
    $
    6.43
    
    
    
    4.6
    
    
    
    1,987
    
    
    $
    6.59
   WeightedAverage Grant-Date Fair ValueShares
    
    
    (per Share)Nonvested at December 31, 2009
    
    
    127
    
    
    $
    1.73Awarded
    
    
    
    
    
    
    Vested
    
    
    (54
    )
    
    
    2.78Forfeited
    
    
    
    
    
    
    Nonvested at March 31, 2010
    
    
    73
    
    
    $
    0.96
 3. Basic and Diluted Net (Loss) Income Per Common Share
    10




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##### Table of Contents



4. Operating Segments
  Quarter EndedMarch 31,2010
    
    
    2009Net revenue:Radio
    
    $
    27,080
    
    
    
    24,176Television
    
    
    3,766
    
    
    
    3,618Consolidated
    
    $
    30,846
    
    
    
    27,794Engineering and programming expenses:Radio
    
    $
    5,790
    
    
    
    7,391Television
    
    
    4,084
    
    
    
    3,614Consolidated
    
    $
    9,874
    
    
    
    11,005Selling, general and administrative expenses:Radio
    
    $
    10,871
    
    
    
    9,152Television
    
    
    1,918
    
    
    
    2,210Consolidated
    
    $
    12,789
    
    
    
    11,362Operating income before depreciation and
amortization, (gain) loss on the disposal of
assets, net, and impairment
of assets and restructuring costs:Radio
    
    $
    10,419
    
    
    
    7,633Television
    
    
    (2,236
    )
    
    
    (2,206
    )Corporate
    
    
    (2,221
    )
    
    
    (2,861
    )Consolidated
    
    $
    5,962
    
    
    
    2,566Depreciation and amortization:Radio
    
    $
    733
    
    
    
    813Television
    
    
    562
    
    
    
    538Corporate
    
    
    261
    
    
    
    242Consolidated
    
    $
    1,556
    
    
    
    1,593(Gain) loss on the disposal of assets, net:Radio
    
    $
    
    
    
    
    (8
    )Television
    
    
    
    
    
    
    19Corporate
    
    
    
    
    
    
    Consolidated
    
    $
    
    
    
    
    11Impairment of assets and restructuring costs:Radio
    
    $
    
    
    
    
    10,548Television
    
    
    
    
    
    
    24Corporate
    
    
    
    
    
    
    44Consolidated
    
    $
    
    
    
    
    10,616Operating income (loss):Radio
    
    $
    9,686
    
    
    
    (3,720
    )Television
    
    
    (2,798
    )
    
    
    (2,787
    )Corporate
    
    
    (2,482
    )
    
    
    (3,147
    )Consolidated
    
    $
    4,406
    
    
    
    (9,654
    )Capital expenditures:Radio
    
    $
    59
    
    
    
    178Television
    
    
    295
    
    
    
    98Corporate
    
    
    31
    
    
    
    13Consolidated
    
    $
    385
    
    
    
    289March 31,
    
    
    December 31,2010
    
    
    2009Total Assets:Radio
    
    $
    428,202
    
    
    
    425,565Television
    
    
    45,357
    
    
    
    45,811Corporate
    
    
    6,422
    
    
    
    7,417Consolidated
    
    $
    479,981
    
    
    
    478,793
  11




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##### Table of Contents



5. Comprehensive Income (Loss)
  Three-Months EndedMarch 31,2010
    
    
    2009Net loss
    
    $
    (828
    )
    
    
    (10,946
    )Other comprehensive income (loss):Amounts reclassified to earnings during the period
    
    
    1,028
    
    
    
    1,242Unrealized (loss) gain on derivative instruments
    
    
    (84
    )
    
    
    388Total comprehensive income (loss)
    
    $
    116
    
    
    
    (9,316
    )
 6. Income Taxes
    7. Litigation
  8. Derivative and Hedging Activities
  Fixedinterest
    
    
    Expiration
    
    
    Notional
    
    
    FairAgreement
    
    rate
    
    
    date
    
    
    amounts
    
    
    valueInterest rate swap
    
    
    5.98
    %
    
    June 2010
    
    
    $
    308,750
    
    
    $
    3,016Interest rate swap
    
    
    6.31
    %
    
    January 2017
    
    
    
    6,681
    
    
    
    696$
    315,431
    
    
    $
    3,712
   12




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##### Table of Contents



9. Fair Value Measurement Disclosures
 Fair Value of Financial Instruments
    March 31, 2010
    
    
    December 31, 2009Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    
    
    
    
    CarryingDescription
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueSenior credit facility term loan
    
    $
    308.8
    
    
    
    274.0
    
    
    
    309.6
    
    
    
    255.9103/4%
Series B cumulative exchangeable redeemable
preferred stock
    
    
    92.3
    
    
    
    63.5
    
    
    
    92.3
    
    
    
    57.9Promissory note payable, included in other
long-term debt
    
    
    6.7
    
    
    
    6.4
    
    
    
    6.8
    
    
    
    6.5
   13




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##### Table of Contents



Fair Value of Derivative Instruments
  Fair value measurements at March 31, 2010LiabilitiesMarch 31, 2010
    
    
    Quoted prices in
    
    
    Significantcarrying value and
    
    
    active markets
    
    
    other
    
    
    Significantbalance sheet
    
    
    for identical
    
    
    observable
    
    
    unobservablelocation of derivative
    
    
    instruments
    
    
    inputs
    
    
    inputsDescription
    
    instruments
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivative
designated as a
cash flow hedging
instrument:Interest rate swap
    
    $
    696
    
    
    
    
    
    
    
    696
    
    
    
    Derivative no
longer designated
as a cash flow
hedging instrument:Interest rate swap
    
    
    3,016
    
    
    
    
    
    
    
    3,016
    
    
    
    Total
    
    $
    3,712
    
    
    
    
    
    
    
    3,712
    
    
    
    Fair value measurements at December 31, 2009LiabilitiesDecember 31, 2009
    
    
    Quoted prices in
    
    
    Significantcarrying value and
    
    
    active markets
    
    
    other
    
    
    Significantbalance sheet
    
    
    for identical
    
    
    observable
    
    
    unobservablelocation of derivative
    
    
    instruments
    
    
    inputs
    
    
    inputsDescription
    
    instruments
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivative
designated as a
cash flow hedging
instrument:Interest rate swap
    
    $
    612
    
    
    
    
    
    
    
    612
    
    
    
    Derivative no
longer designated
as a cash flow
hedging instrument:Interest rate swap
    
    
    5,863
    
    
    
    
    
    
    
    5,863
    
    
    
    Total
    
    $
    6,475
    
    
    
    
    
    
    
    6,475
    
    
    
    
  14




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##### Table of Contents



Three-months ended March 31,Interest rate swaps
    
    2010
    
    
    2009(Loss) gain recognized in other comprehensive loss (effective portion)
    
    $
    (84
    )
    
    
    388Loss reclassified from accumulated other comprehensive loss into interest expense
    
    $
    1,028
    
    
    
    1,242Gain recognized in change in fair value of derivative instrument
    
    $
    2,847
    
    
    
    2,856
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
       15




---



##### Table of Contents



Comparison Analysis of the Operating Results for the Three-Months Ended March 31, 2010 and 2009
  Quarter EndedMarch 31,2010
    
    
    2009Net revenue:Radio
    
    $
    27,080
    
    
    
    24,176Television
    
    
    3,766
    
    
    
    3,618Consolidated
    
    $
    30,846
    
    
    
    27,794Engineering and programming expenses:Radio
    
    $
    5,790
    
    
    
    7,391Television
    
    
    4,084
    
    
    
    3,614Consolidated
    
    $
    9,874
    
    
    
    11,005Selling, general and administrative expenses:Radio
    
    $
    10,871
    
    
    
    9,152Television
    
    
    1,918
    
    
    
    2,210Consolidated
    
    $
    12,789
    
    
    
    11,362Operating income before depreciation
and amortization, (gain) loss on the
disposal of assets, net, and impairment
of assets and restructuring costs:Radio
    
    $
    10,419
    
    
    
    7,633Television
    
    
    (2,236
    )
    
    
    (2,206
    )Corporate
    
    
    (2,221
    )
    
    
    (2,861
    )Consolidated
    
    $
    5,962
    
    
    
    2,566Depreciation and amortization:Radio
    
    $
    733
    
    
    
    813Television
    
    
    562
    
    
    
    538Corporate
    
    
    261
    
    
    
    242Consolidated
    
    $
    1,556
    
    
    
    1,593(Gain) loss on the disposal of assets, net:Radio
    
    $
    
    
    
    
    (8
    )Television
    
    
    
    
    
    
    19Corporate
    
    
    
    
    
    
    Consolidated
    
    $
    
    
    
    
    11Impairment of assets and restructuring costs:Radio
    
    $
    
    
    
    
    10,548Television
    
    
    
    
    
    
    24Corporate
    
    
    
    
    
    
    44Consolidated
    
    $
    
    
    
    
    10,616Operating income (loss):Radio
    
    $
    9,686
    
    
    
    (3,720
    )Television
    
    
    (2,798
    )
    
    
    (2,787
    )Corporate
    
    
    (2,482
    )
    
    
    (3,147
    )Consolidated
    
    $
    4,406
    
    
    
    (9,654
    )
  16




---



##### Table of Contents



Three-Months EndedMarch 31,2010
    
    
    2009(In thousands)Net revenue
    
    $
    30,846
    
    
    
    27,794Engineering and programming expenses
    
    
    9,874
    
    
    
    11,005Selling, general and administrative expenses
    
    
    12,789
    
    
    
    11,362Corporate expenses
    
    
    2,221
    
    
    
    2,861Depreciation and amortization
    
    
    1,556
    
    
    
    1,593Loss on disposal of assets, net of disposal costs
    
    
    
    
    
    
    11Impairment of assets and restructuring costs
    
    
    
    
    
    
    10,616Operating income (loss)
    
    $
    4,406
    
    
    
    (9,654
    )Interest expense, net
    
    
    (6,303
    )
    
    
    (6,417
    )Change in fair value of derivative instrument
    
    
    2,847
    
    
    
    2,856Income tax expense (benefit)
    
    
    1,778
    
    
    
    (2,269
    )Net loss
    
    $
    (828
    )
    
    
    (10,946
    )
 Net Revenue
  Engineering and Programming Expenses
  Selling, General and Administrative Expenses
  Corporate Expenses
  Operating Income (Loss)
  Income Taxes
   17




---



##### Table of Contents



Net Loss
  Liquidity and Capital Resources
   
    
    the demand for advertising within the broadcasting industry and economic conditions in
general will not deteriorate further in any material respect;
    
    we will continue to successfully implement our business strategy; and
    
    we will not incur any material unforeseen liabilities, including but not limited to taxes,
environmental liabilities, regulatory matters and legal judgments.
    18




---



##### Table of Contents



Three-Months EndedMarch 31,
    
    
    Change2010
    
    
    2009
    
    
    $(In thousands)Capital expenditures:Radio
    
    $
    59
    
    
    
    178
    
    
    
    (119
    )Television
    
    
    295
    
    
    
    98
    
    
    
    197Corporate
    
    
    31
    
    
    
    13
    
    
    
    18Consolidated
    
    $
    385
    
    
    
    289
    
    
    
    96Net cash flows provided by operating activities
    
    $
    8,332
    
    
    
    4,614
    
    
    
    3,718Net cash flows used in investing activities
    
    
    (385
    )
    
    
    (126
    )
    
    
    (259
    )Net cash flows used in financing activities
    
    
    (924
    )
    
    
    (3,404
    )
    
    
    2,480Net increase in cash and cash equivalents
    
    $
    7,023
    
    
    
    1,084
 Net Cash Flows Provided by Operating Activities
  Net Cash Flows Used in Investing Activities
  Net Cash Flows Used in Financing Activities
  Recent Developments
 NASDAQ Notification Letters
 NASDAQ Compliance Letter
   NASDAQ Audit Committee Compliance Letter
    19




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##### Table of Contents



Dividend Payment on the Series B Preferred Stock
 3 4
    Off-Balance Sheet Arrangements
  
 Item 4.
    
    Controls and Procedures
 Evaluation Of Disclosure Controls And Procedures.
 Changes In Internal Control Over Financial Reporting.
 
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
   20




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##### Table of Contents



The liquidity of our common stock could be adversely affected if we are delisted from the NASDAQ
Global Market.
    
 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).
  21




---



##### Table of Contents



ExhibitNumber
    
    Exhibit Description4.2
    
    
    
    
    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).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).
  22




---



##### Table of Contents



ExhibitNumber
    
    Exhibit Description4.13
    
    
    
    
    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).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




---



##### Table of Contents



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




---



##### 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).
  25




---



##### 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).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.
  26