##### 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
    June 30, 2006oro

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


13-3827791(State or other jurisdiction
    of
    incorporation or organization)


(I.R.S. Employer
    Identification No.
)   2601 South Bayshore Drive, PH II
 Coconut Grove, Florida 33133
 (Address of principal executive
    offices) (Zip Code)
  (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
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
  APPLICABLE
    ONLY TO CORPORATE ISSUERS:




---



##### 



SPANISH
    BROADCASTING SYSTEM, INC.
  INDEX
  
  PagePART I.
    FINANCIAL INFORMATIONITEM 1.

Financial
    Statements  Unaudited


4Unaudited Condensed
    Consolidated Balance Sheets as of June 30, 2006 and
    December 31, 2005


4Unaudited Condensed
    Consolidated Statements of Operations for the Three- and
    Six-Months
    Ended June 30, 2006 and 2005


5Unaudited Condensed
    Consolidated Statement of Changes in Stockholders Equity
    and Comprehensive Income for the Six-Months Ended June 30,
    2006


6Unaudited Condensed
    Consolidated Statements of Cash Flows for the Six-Months Ended
    June 30, 2006 and 2005


7Notes to Unaudited
    Condensed Consolidated Financial Statements


8ITEM 2.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


17ITEM 3.

Quantitative and
    Qualitative Disclosures About Market Risk


24ITEM 4.

Controls and
    Procedures


25PART II.
    OTHER INFORMATIONITEM 1.

Legal
    Proceedings


25ITEM 1A.

Risk
    Factors


25ITEM 4.

Submission of
    Matters to a Vote of Security Holders


25ITEM 5.

Other
    Information


26ITEM 6.

Exhibits


262006 Omnibus Equity Compensation PlanEX-31.(I).1 Section 302 Certification of CEOEX-31.(I).2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEOEx-32.2 Section 906 Certification of CFO   2




---



##### Table of Contents



Special
    Note Regarding Forward-Looking Statements
  Form 10-Q Form 10-K
 3




---



##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Unaudited  SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  Unaudited Condensed Consolidated Balance
    Sheets
  June 30,


December 31,2006


2005(In thousands, except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
59,808


$
125,156Receivables, net of allowance for
    doubtful accounts of $3,994 in 2006 and $3,832 in 2005


36,015



34,269Prepaid expenses and other current
    assets


4,332



3,635Assets held for sale






65,109Total current assets


100,155



228,169Property and equipment, net of
    accumulated depreciation of $31,793 in 2006 and $30,335 in 2005


25,890



22,973FCC licenses


749,861



710,410Goodwill


32,806



32,806Other intangible assets, net of
    accumulated amortization of $88 in 2006 and $70 in 2005


1,346



2,580Deferred financing costs, net of
    accumulated amortization of $1,189 in 2006 and $749 in 2005


6,473



8,744Other assets


726



596Derivative instrument


14,646



6,939Total assets

$
931,903


$
1,013,217LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued
    expenses

$
16,226


$
21,487Accrued interest


53



1,426Deposits on sale of stations






55,000Unearned revenue


2,716



263Deferred commitment fee


413



450Current portion of the senior
    credit facility term loan due 2012


3,250



3,250Current portion of the senior
    credit facility term loan due 2013






100,000Current portion of other long-term
    debt


77



75Series B cumulative
    exchangeable redeemable preferred stock dividends payable


2,014



2,014Total current liabilities


24,749



183,965Senior credit facility term loan
    due 2012, less current portion


317,688



319,313Non-interest bearing note payable
    due 2009, net of unamortized discount of $3,326 in 2006


15,174



Other long-term debt, less current
    portion


453



492Deferred income taxes


145,943



144,163Unearned revenue, less current
    portion


2,968



Other long-term liabilities


244



525Total liabilities


507,219



648,458Cumulative 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 June 30, 2006 and December 31, 2005


89,932



89,932Stockholders equity:Series C preferred stock,
    $0.002 par value and liquidation value. Authorized
    600,000 shares; 380,000 shares issued and outstanding
    at June 30, 2006 and December 31, 2005


1



1Class A common stock,
    $0.0001 par value. Authorized 100,000,000 shares;
    40,277,805 shares issued and outstanding at June 30,
    2006 and December 31, 2005


4



4Class B common stock,
    $0.0001 par value. Authorized 50,000,000 shares;
    24,503,500 shares issued and outstanding at June 30,
    2006 and December 31, 2005


2



2Additional paid-in capital


521,501



520,421Accumulated other comprehensive
    income


14,646



6,939Accumulated deficit


(201,402
)


(252,540
)Total stockholders equity


334,752



274,827Total liabilities, cumulative
    exchangeable redeemable preferred stock and stockholders
    equity

$
931,903


$
1,013,217    4




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  Unaudited Condensed Consolidated Statements of
    Operations
  Three-Months Ended


Six-Months EndedJune 30,


June 30,2006


2005


2006


2005(In thousands, except per share data)


(In thousands, except per share data)Net revenue

$
48,841



44,575


$
86,616



79,914Operating expenses:Engineering and programming


12,986



8,452



24,805



16,317Selling, general and administrative


19,727



16,858



36,426



32,176Corporate expenses


3,661



3,733



7,189



7,434Depreciation and amortization


905



824



1,832



1,654Loss (gain) on the sale of assets,
    net of disposal of costs


8







(50,793
)


Total operating expenses


37,287



29,867



19,459



57,581Operating income


11,554



14,708



67,157



22,333Other (expense) income:Interest expense, net


(4,936
)


(10,646
)


(10,355
)


(20,816
)Loss on early extinguishment of
    debt






(3,154
)


(2,997
)


(3,154
)Other, net


3



1,793



(23
)


1,800Income before income taxes and
    discontinued operations


6,621



2,701



53,782



163Income tax expense (benefit)


4,190



2,579



(2,190
)


Income before discontinued
    operations


2,431



122



55,972



163Loss on discontinued operations,
    net of tax






(1
)






(3
)Net income

$
2,431



121


$
55,972



160Dividends on Series B
    preferred stock


(2,417
)


(2,343
)


(4,834
)


(4,625
)Net income (loss) applicable to
    common stockholders

$
14



(2,222
)

$
51,138



(4,465
)Basic and diluted income (loss)
    per common share:Net income (loss) per common share
    before discontinued operations

$




(0.03
)

$
0.71



(0.06
)Net loss per common share from
    discontinued operations

$







$




Net income (loss) per common share

$




(0.03
)

$
0.71



(0.06
)Weighted average common shares
    outstanding:Basic


72,381



72,381



72,381



72,381Diluted


72,390



72,381



72,392



72,381    5




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  Unaudited Condensed Consolidated Statement of
    Changes in
 Stockholders Equity and Comprehensive Income
 for the Six-Months Ended June 30, 2006
  Class C


Class A


Class B





AccumulatedPreferred Stock


Common Stock


Common Stock


Additional


Other





TotalNumber


Par


Number


Par


Number


Par


Paid-In


Comprehensive


Accumulated


Stockholdersof Shares


Value


of Shares


Value


of Shares


Value


Capital


Income


Deficit


Equity(In thousands, except per share data)Balance at December 31, 2005


380,000


$
1



40,277,805


$
4



24,503,500


$
2


$
520,421


$
6,939


$
(252,540
)

$
274,827Stock-based compensation


























1,080











1,080Series B preferred stock
    dividends


































(4,834
)


(4,834
)Comprehensive income:Net income


































55,972



55,972Unrealized gain on derivative
    instrument






























7,707







7,707Comprehensive income






































63,679Balance at June 30, 2006


380,000


$
1



40,277,805


$
4



24,503,500


$
2


$
521,501


$
14,646


$
(201,402
)

$
334,752    6




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  Unaudited Condensed Consolidated Statements of
    Cash Flows
  Six-Months EndedJune 30,2006


2005(In thousands)Cash flows from operating
    activities:Net income

$
55,972



160Adjustments to reconcile net income
    to net cash provided byoperating activities:Income from discontinued
    operations, net of tax






3Loss on early extinguishment of debt


2,997



3,154Gain on the sale of assets, net of
    disposal costs


(50,793
)


Depreciation and amortization


1,832



1,654Net barter income


(3
)


(126
)Provision for (reduction of)
    doubtful trade accounts receivable


657



(167
)Loss (gain) on disposal of fixed
    assets


(11
)


(2
)Amortization of debt discount






672Accretion of the time-value of
    money component related to unearned revenue


97



Amortization of non-interest
    bearing note payable


396



Stock-based compensation


1,080



Amortization of deferred financing
    costs


626



1,031Decrease in deferred income taxes


(2,069
)


Increase in unearned revenue


15



Amortization of deferred commitment
    fee


(37
)


(37
)Changes in operating assets and
    liabilities:(Increase) decrease in trade
    receivables


(2,429
)


1,185(Increase) decrease in prepaids and
    other current assets


(697
)


93Increase in other assets


(130
)


(260
)Decrease in accounts payable and
    accrued expenses


(5,261
)


(7,693
)(Decrease) increase in accrued
    interest


(1,373
)


422Net cash provided by continuing
    operations


869



89Net cash used in discontinued
    operations






(245
)Net cash provided by (used in)
    operating activities


869



(156
)Cash flows from investing
    activities:Proceeds from sale of radio
    stations, net of closing costs


64,751



20,000Acquisition of television stations


(18,534
)


Additions to property and equipment


(4,305
)


(1,987
)Net cash provided by investing
    activities


41,912



18,013Cash flows from financing
    activities:Payment of senior credit facility
    term loan due 2009






(123,750
)Payments of senior credit facility
    term loan due 2012


(1,625
)


(812
)Payment of senior credit facility
    term loan due 2013 (including prepayment premium of
    $1.0 million)


(101,000
)


Payments of Series B preferred
    stock dividends


(4,834
)


Payments of other long-term debt


(318
)


(3,275
)Payments of deferred financing costs


(352
)


(8,699
)Restricted cash related to the
    redemption of the
    95/8% senior
    subordinated notes, due 2009






(357,483
)Proceeds from senior credit
    facility term loan due 2012






325,000Proceeds from senior credit
    facility term loan due 2013






100,000Net cash used in financing
    activities


(108,129
)


(69,019
)Net decrease in cash and cash
    equivalents


(65,348
)


(51,162
)Cash and cash equivalents at
    beginning of period


125,156



132,032Cash and cash equivalents at end of
    period


59,808



80,870Supplemental cash flows information:Interest paid during the period


12,403



20,673Income taxes paid during the
    period, net


389



1,582Non-cash investing and financing
    activities:Unrealized gain on derivative
    instrument

$
7,707



Unearned revenue (advertising given
    as consideration for acquisition of television stations)

$
5,338



Non-interest bearing note payable
    issued for the acquisition of television stations

$
14,778



Accrual of preferred stock as
    payment of preferred stock dividend

$




1,961    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  Form 10-Q Rule 10-01 Regulation S-X. Form 10-K.
    2.
    Assets
    Held for Sale  KZAB-FM KZBA-FM,
    KZAB-FM KZBA-FM
  KZAB-FM KZBA-FM KZAB-FM KZBA-FM
 8




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    Stockholders
    Equity  (a)
    Series C
    Preferred Stock          (b)
    Class A
    and B Common Stock  3 4
  (c)
    Warrants  KXOL-FM,
 9




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Number of Class ACommon Shares


Per ShareWarrant Date of Issue

Underlying Warrants


Exercise Price


Warrant Expiration DateJuly 31, 2003(1)


100,000


$
8.17



July 31, 2006August 31, 2003


100,000


$
7.74



August 31, 2006September 30, 2003


100,000


$
8.49



September 30, 2006December 23, 2004


3,800,000



(see Note 3
(a))


December 23, 20084,100,000     (1)
    
    Subsequent to June 30, 2006, warrants for
    100,000 shares of Class A common stock expired
    unexercised.  (d)
    Stock
    Option Plans  Background
    Impact of
    the Adoption of SFAS No. 123(R) Share-Based
    Payment
   10




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three-Months


Six-MonthsEnded


EndedStock-Based Compensation Expense:

June 30, 2006


June 30, 2006Engineering and programming
    expenses

$
176


$
356Selling, general and
    administrative expenses


87



174Corporate expenses


250



550Total

$
513


$
1,080       Valuation
    Assumptions
    Three-Months Ended


Six-Months EndedJune 30,


June 30,2006


2005


2006


2005Expected life


7 years



5 years



7 years



5 yearsDividends


None



None



None



NoneRisk-free interest rate


5.11
%


3.72
%


4.97
%


4.11
%Expected volatility


66
%


71
%


66
%


72
%    11




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock-Based
    Payment Award Activity
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term


ValueOutstanding at December 31,
    2005


2,939


$
11.54Granted






Exercised






Forfeited


4



9.10Outstanding at June 30, 2006


2,935


$
11.54



6.2


$
32Exercisable at June 30, 2006


2,342


$
12.18



5.7


$
30     WeightedWeighted








AverageAverage


Weighted





ExerciseRemaining


Average


Number of


Price ofVested


Unvested


Contractual


Exercise


Exercisable


ExercisableRange of Exercise Prices

Options


Options


Life (Years)


Price


Options


Options$ 0 - 4.99


100







4.4


$
4.81



100


$
4.815 - 9.99


1,370



471



7.2



8.70



1,370



8.7410 - 14.99


146



122



7.9



10.95



146



11.0415 - 19.99


16







5.9



15.48



16



15.4820 - 24.99


710







3.3



20.00



710



20.002,342



593



6.2


$
11.54



2,342


$
12.18   Pro forma
    Information for Periods Prior to the Adoption of
    SFAS 123(R)
   12




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Three-Months


Six-MonthsEnded


EndedJune 30, 2005


June 30, 2005Net loss applicable to common
    stockholders:As reported

$
(2,222
)

$
(4,465
)Deduct: total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of tax


(587
)


(1,329
)Pro forma net loss

$
(2,809
)

$
(5,794
)Net loss per common share:As reported: Basic and Diluted

$
(0.03
)

$
(0.06
)Pro forma: Basic and Diluted

$
(0.04
)

$
(0.08
)   4.
    Operating
    Segments    Radio broadcasting.
  Television broadcasting.
    Three-Months Ended





Six-Months EndedJune 30,


Change


June 30,


Change2006


2005


$


%


2006


2005


$


%(In thousands)


(In thousands)Net revenue:Radio

$
47,443



44,575



2,868



6
%

$
84,787



79,914



4,873



6
%Television


1,398







1,398



100
%


1,829







1,829



100
%Consolidated

$
48,841



44,575



4,266



10
%

$
86,616



79,914



6,702



8
%Engineering and programming
    expense:Radio

$
8,320



8,452



(132
)


(2
)%

$
16,756



16,317



439



3
%Television


4,666







4,666



100
%


8,049







8,049



100
%Consolidated

$
12,986



8,452



4,534



54
%

$
24,805



16,317



8,488



52
%Selling, general and
    administrative:Radio

$
17,790



16,858



932



6
%

$
32,342



32,176



166



1
%Television


1,937







1,937



100
%


4,084







4,084



100
%Consolidated

$
19,727



16,858



2,869



17
%

$
36,426



32,176



4,250



13
% 13




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three-Months Ended





Six-Months EndedJune 30,


Change


June 30,


Change2006


2005


$


%


2006


2005


$


%(In thousands)


(In thousands)Operating income (loss) before
    depreciation and amortization and gain on sales of assets,
    net:Radio

$
21,333



19,265



2,068



11
%

$
35,689



31,421



4,268



14
%Television


(5,205
)






(5,205
)


100
%


(10,304
)






(10,304
)


100
%Corporate


(3,661
)


(3,733
)


72



(2
)%


(7,189
)


(7,434
)


245



(3
)%Consolidated

$
12,467



15,532



(3,065
)


(20
)%

$
18,196



23,987



(5,791
)


(24
)%Depreciation and
    amortization:Radio

$
605



565



40



7
%

$
1,223



1,137



86



8
%Television


73







73



100
%


130







130



100
%Corporate


227



259



(32
)


(12
)%


479



517



(38
)


(7
)%Consolidated

$
905



824



81



10
%

$
1,832



1,654



178



11
%Operating income
    (loss):Radio

$
20,720



18,700



2,020



11
%

$
85,259



30,284



54,975



182
%Television


(5,278
)






(5,278
)


100
%


(10,434
)






(10,434
)


100
%Corporate


(3,888
)


(3,992
)


104



(3
)%


(7,668
)


(7,951
)


283



(4
)%Consolidated

$
11,554



14,708



(3,154
)


(21
)%

$
67,157



22,333



44,824



201
%Capital expenditures:Radio

$
994



826



168



20
%

$
1,523



1,515



8



1
%Television


923







923



100
%


2,441







2,441



100
%Corporate


220



267



(47
)


(18
)%


341



472



(131
)


(28
)%Consolidated

$
2,137



1,093



1,044



96
%

$
4,305



1,987



2,318



117
%   As of June 30,2006


2005Total Assets:Radio

$
885,276



1,320,169Television


46,627



Consolidated

$
931,903



1,320,169   5.
    Litigation   14




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Amigo
    Broadcasting Litigation
      6.
    Repayment
    of Second Lien Senior Secured Credit Facilities    7.
    Television
    Station Acquisition  WSBS-TV WDLP-TV),
 15




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  WSBS-TV-DT
      8.
    New
    Accounting Pronouncements  ,
  9.
    Income
    Taxes    10.
    Comprehensive
    Income    Three-Months


Six-MonthsEnded June 30,


Ended June 30,2006


2005


2006


2005Net income:

$
2,431



121



55,972



160Other comprehensive income:Unrealized gain on derivative
    instrument


3,174







7,707



Total comprehensive income

$
5,605



121



63,679



160  16




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
  LaMusica.com
  WSBS-TV WDLP-TV) 18-to-49 year
     17




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##### Table of Contents



Comparison
    Analysis of the Operating Results for the Three-Months Ended
    June 30, 2006 and 2005
    Three-Months Ended June 30,


Change2006


2005


$


%(In thousands)Net revenue:Radio

$
47,443



44,575



2,868



6
%Television


1,398







1,398



100
%Consolidated

$
48,841



44,575



4,266



10
%Engineering and programming
    expense:Radio

$
8,320



8,452



(132
)


(2
)%Television


4,666







4,666



100
%Consolidated

$
12,986



8,452



4,534



54
%Selling, general and
    administrative:Radio

$
17,790



16,858



932



6
%Television


1,937







1,937



100
%Consolidated

$
19,727



16,858



2,869



17
%Operating income (loss) before
    depreciation and amortization and gain on sales of assets,
    net:Radio

$
21,333



19,265



2,068



11
%Television


(5,205
)






(5,205
)


100
%Corporate


(3,661
)


(3,733
)


72



(2
)%Consolidated

$
12,467



15,532



(3,065
)


(20
)%Depreciation and
    amortization:Radio

$
605



565



40



7
%Television


73







73



100
%Corporate


227



259



(32
)


(12
)%Consolidated

$
905



824



81



10
%Operating income
    (loss):Radio

$
20,720



18,700



2,020



11
%Television


(5,278
)






(5,278
)


100
%Corporate


(3,888
)


(3,992
)


104



(3
)%Consolidated

$
11,554



14,708



(3,154
)


(21
)%Capital expenditures:Radio

$
994



826



168



20
%Television


923







923



100
%Corporate


220



267



(47
)


(18
)%Consolidated

$
2,137



1,093



1,044



96
%  18




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##### Table of Contents



Three Months EndedJune 30,


Change2006


2005


$


%(In thousands)Net revenue

$
48,841



44,575



4,266



10
%Engineering and programming expense


12,986



8,452



4,534



54
%Selling, general and
    administrative expense


19,727



16,858



2,869



17
%Corporate expenses


3,661



3,733



(72
)


(2
)%Depreciation and amortization


905



824



81



10
%Loss on sale of assets, net of
    disposal costs


8







8



100
%Operating income

$
11,554



14,708



(3,154
)


(21
)%Interest expense, net


(4,936
)


(10,646
)


5,710



(54
)%Loss on early extinguishment of
    debt






(3,154
)


3,154



(100
)%Other income, net


3



1,793



(1,790
)


(100
)%Income tax expense


4,190



2,579



1,611



62
%Loss on discontinued operations,
    net of taxes






(1
)


1



(100
)%Net income

$
2,431



121



2,310



1909
%   Net Revenue.
  Engineering and Programming Expenses.
  Selling, General and Administrative
    Expenses.
  Corporate Expenses.
  Operating Income.
  Interest Expense, net.
 19




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##### Table of Contents



Income Taxes.
  Net Income.
  Comparison
    Analysis of the Operating Results for the Six-Months Ended
    June 30, 2006 and 2005
    Six-Months EndedJune 30,


Change2006


2005


$


%(In thousands)Net revenue:Radio

$
84,787



79,914



4,873



6
%Television


1,829







1,829



100
%Consolidated

$
86,616



79,914



6,702



8
%Engineering and programming
    expense:Radio

$
16,756



16,317



439



3
%Television


8,049







8,049



100
%Consolidated

$
24,805



16,317



8,488



52
%Selling, general and
    administrative:Radio

$
32,342



32,176



166



1
%Television


4,084







4,084



100
%Consolidated

$
36,426



32,176



4,250



13
%Operating income (loss) before
    depreciation and amortization and gain on sales of assets,
    net:Radio

$
35,689



31,421



4,268



14
%Television


(10,304
)






(10,304
)


100
%Corporate


(7,189
)


(7,434
)


245



(3
)%Consolidated

$
18,196



23,987



(5,791
)


(24
)%Depreciation and
    amortization:Radio

$
1,223



1,137



86



8
%Television


130







130



100
%Corporate


479



517



(38
)


(7
)%Consolidated

$
1,832



1,654



178



11
% 20




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##### Table of Contents



Six-Months EndedJune 30,


Change2006


2005


$


%(In thousands)Operating income
    (loss):Radio

$
85,259



30,284



54,975



182
%Television


(10,434
)






(10,434
)


100
%Corporate


(7,668
)


(7,951
)


283



(4
)%Consolidated

$
67,157



22,333



44,824



201
%Capital expenditures:Radio

$
1,523



1,515



8



1
%Television


2,441







2,441



100
%Corporate


341



472



(131
)


(28
)%Consolidated

$
4,305



1,987



2,318



117
%     Six Months EndedJune 30,


Change2006


2005


$


%(In thousands)Net revenue

$
86,616



79,914



6,702



8
%Engineering and programming expense


24,805



16,317



8,488



52
%Selling, general and
    administrative expense


36,426



32,176



4,250



13
%Corporate expenses


7,189



7,434



(245
)


(3
)%Depreciation and amortization


1,832



1,654



178



11
%Gain on sale of assets, net of
    disposal costs


(50,793
)






(50,793
)


100
%Operating income

$
67,157



22,333



44,824



201
%Interest expense, net


(10,355
)


(20,816
)


10,461



(50
)%Loss on early extinguishment of
    debt


(2,997
)


(3,154
)


157



(5
)%Other (expense) income, net


(23
)


1,800



(1,823
)


(101
)%Income tax benefit


(2,190
)






(2,190
)


100
%Loss on discontinued operations,
    net of taxes






(3
)


3



(100
)%Net income

$
55,972



160



55,812



34883
%   Net Revenue.
  Engineering and Programming Expenses.
 21




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##### Table of Contents



Selling, General and Administrative
    Expenses.
  Corporate Expenses.
  Gain on sales of assets, net. KZAB-FM KZBA-FM,
  Operating Income.
  Interest Expense, net.
  Loss on early extinguishment of debt.
  Income Taxes. KZAB-FM KZBA-FM,
  Net Income.
  Liquidity
    and Capital Resources
   22




---



##### Table of Contents



Six Months EndedJune 30,


Change2006


2005


$(In thousands)Capital expenditures

$
4,305



1,987



2,318Net cash flows provided by (used
    in) operating activities

$
869



(156
)


1,025Net cash flows provided by
    investing activities


41,912



18,013



23,899Net cash flows used in financing
    activities


(108,129
)


(69,019
)


(39,110
)Net decrease in cash and cash
    equivalents

$
(65,348
)


(51,162
)   Net Cash Flows Provided by (Used in) Operating
    Activities.
  Net Cash Flows Provided by Investing
    Activities. KZAB-FM KZBA-FM, KZAB-FM KZBA-FM,
  Net Cash Flows Used In Financing
    Activities. 5 8
    
    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
    strategies; and
    we will not incur any material unforeseen liabilities, including
    environmental liabilities and legal judgements.    KZAB-FM KZBA-FM,
 23




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##### Table of Contents



WDLP-TV WDLP-TV), WSBS-TV-DT
        New
    Accounting Pronouncements
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
 24




---



##### Table of Contents



Item 4.
    Controls
    and Procedures  Evaluation Of Disclosure Controls And
    Procedures. Rule 13a-15(e)
  Changes In Internal Control Over Financial
    Reporting.
  PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-Q
  Item 1A.
    Risk
    Factors  Form 10-Q, Form 10-K Form 10-K and/or
  Item 4.
    Submission
    of Matters to a Vote of Security Holders      Votes Against/Directors

Votes For


WithheldRaúl
    Alarcón, Jr.


270,219,650



9,987,942Pablo Raúl
    Alarcón, Sr.


270,166,884



10,040,708Antonio S. Fernandez


279,178,165



1,029,427Jose A. Villamil


279,510,064



697,528Dan Mason


279,510,235



697,357Jason L. Shrinsky


270,091,543



10,116,049     Proposal

Votes For


Votes Against


AbstentionsOmnibus Plan


269,304,340



1,206,481



53,891  25




---



##### Table of Contents



Item 5.
    Other
    Information  The
    Spanish Broadcasting System, Inc. 2006 Omnibus Equity
    Compensation Plan
              Item 6.
    Exhibits  (a)
    Exhibits   3
.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
    141/4% 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). 26




---



##### Table of Contents



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
    103/4%
    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
    103/4%
    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
    95/8% 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
    95/8% 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
    141/4%
    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



Employment Agreement dated as of
    November 21, 2005, effective January 3, 2006 between
    the Company and Cynthia Hudson-Fernandez (incorporated by
    reference to Exhibit 10.1 of the Companys Current Report
    on Form 8-K filed on July 6, 2006).10
.2



Spanish Broadcasting System, Inc.
    2006 Omnibus Equity Compensation Plan.14
.1



Code of Business Conduct and
    Ethics (incorporated by reference to Exhibit 14.1 of the
    Companys 2004
    Form 10-K).31(i)
.1



Chief Executive Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31(i)
.2



Chief Financial Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002. 27




---



##### Table of Contents



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.  28




---



##### Table of Contents



SIGNATURES
      By:
    /s/  JOSEPH
    A. GARCÍA    Executive Vice President, Chief
  Financial Officer and Secretary
  (principal financial and accounting
  officer and duly authorized
  officer of the registrant)
   29




---



##### Table of Contents



(a)
    Exhibits   3
.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
    141/4% 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
    103/4%
    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
    103/4%
    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
    95/8% 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
    95/8% 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
    141/4%
    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). 30




---



##### Table of Contents



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



Employment Agreement dated as of
    November 21, 2005, effective January 3, 2006 between
    the Company and Cynthia Hudson-Fernandez (incorporated by
    reference to Exhibit 10.1 of the Companys Current Report
    on Form 8-K filed on July 6, 2006).10
.2



Spanish Broadcasting System, Inc.
    2006 Omnibus Equity Compensation Plan.14
.1



Code of Business Conduct and
    Ethics (incorporated by reference to Exhibit 14.1 of the
    Companys 2004
    Form 10-K).31(i)
.1



Chief Executive Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31(i)
.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.  31