##### 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, 2009
 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 33-82114
 
 Spanish Broadcasting System, Inc.
  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)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



SPANISH BROADCASTING SYSTEM, INC.
INDEX
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial Statements  Unaudited
    
    
    4Unaudited Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    4Unaudited Condensed Consolidated Statements of Operations for the Three-Months Ended March 31, 2009 and 2008
    
    
    5Unaudited Condensed Consolidated Statement of Changes in Stockholders Deficit and Comprehensive Loss for
the Three-Months Ended March 31, 2009
    
    
    6Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March 31, 2009 and 2008
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16ITEM 4T. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    23ITEM 1A. Risk Factors
    
    
    23ITEM 5. Other Information
    
    
    23ITEM 6. Exhibits
    
    
    24EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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Special Note Regarding Forward-Looking Statements
  3




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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 31,2009
    
    
    2008(In thousands, except share data)AssetsCurrent assets:Cash and cash equivalents
    
    $
    33,936
    
    
    
    32,852Receivables, net of allowance for doubtful accounts of $1,459 in 2009 and $1,675 in 2008
    
    
    21,821
    
    
    
    27,580Prepaid expenses and other current assets
    
    
    4,777
    
    
    
    4,426Total current assets
    
    
    60,534
    
    
    
    64,858Property and equipment, net of accumulated depreciation of $45,021 in 2009 and $43,567 in 2008
    
    
    50,821
    
    
    
    52,411FCC broadcasting licenses
    
    
    321,101
    
    
    
    331,224Goodwill
    
    
    32,806
    
    
    
    32,806Other intangible assets, net of accumulated amortization of $187 in 2009 and $178 in 2008
    
    
    1,247
    
    
    
    1,256Deferred financing costs, net of accumulated amortization of $4,225 in 2009 and $3,956 in 2008
    
    
    3,377
    
    
    
    3,646Other assets
    
    
    2,804
    
    
    
    3,066Total assets
    
    $
    472,690
    
    
    
    489,267Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    14,981
    
    
    
    15,428Accrued interest
    
    
    2,633
    
    
    
    486Unearned revenue
    
    
    601
    
    
    
    560Other liabilities
    
    
    66
    
    
    
    66Current portion of the senior credit facility term loan due 2012
    
    
    3,250
    
    
    
    3,250Current portion of other long-term debt
    
    
    440
    
    
    
    438Series B cumulative exchangeable redeemable preferred stock dividends payable
    
    
    2,068
    
    
    
    2,068Total current liabilities
    
    
    24,039
    
    
    
    22,296Other liabilities, less current portion
    
    
    122
    
    
    
    139Derivative instruments
    
    
    9,297
    
    
    
    12,541Senior credit facility revolver due 2010
    
    
    15,000
    
    
    
    15,000Senior credit facility term loan due 2012, less current portion
    
    
    308,750
    
    
    
    309,563Other long-term debt, less current portion
    
    
    6,941
    
    
    
    7,052Deferred income taxes
    
    
    65,674
    
    
    
    68,082Total liabilities
    
    
    429,823
    
    
    
    434,673Cumulative 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, 2009 and December 31, 2008, 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, 2009 and December 31, 2008, respectively
    
    
    4
    
    
    
    4Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 41,499,222 and 41,445,222
shares issued and outstanding at March 31, 2009 and December 31, 2008, 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, 2009 and December 31, 2008, respectively
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    524,793
    
    
    
    524,722Accumulated other comprehensive loss
    
    
    (6,557
    )
    
    
    (8,187
    )Accumulated deficit
    
    
    (567,728
    )
    
    
    (554,300
    )Total stockholders deficit
    
    
    (49,482
    )
    
    
    (37,755
    )Total liabilities and stockholders deficit
    
    $
    472,690
    
    
    
    489,267
  4




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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  Three-Months EndedMarch 31,2009
    
    
    2008(In thousands, except per share data)Net revenue
    
    $
    27,794
    
    
    
    36,433Operating expenses:Engineering and programming
    
    
    11,005
    
    
    
    14,654Selling, general and administrative
    
    
    11,362
    
    
    
    19,589Corporate expenses
    
    
    2,861
    
    
    
    3,593Depreciation and amortization
    
    
    1,593
    
    
    
    1,362Total operating expenses
    
    
    26,821
    
    
    
    39,198Loss (gain) on the disposal of assets, net
    
    
    11
    
    
    
    (3
    )Impairment of FCC broadcasting licenses and restructuring costs
    
    
    10,616
    
    
    
    Operating loss
    
    
    (9,654
    )
    
    
    (2,762
    )Other (expense) income:Interest expense, net
    
    
    (6,417
    )
    
    
    (5,084
    )Change in fair value of derivative instrument
    
    
    2,856
    
    
    
    Other, net
    
    
    
    
    
    
    1,928Loss before income taxes
    
    
    (13,215
    )
    
    
    (5,918
    )Income tax (benefit)
    
    
    (2,269
    )
    
    
    Net loss
    
    
    (10,946
    )
    
    
    (5,918
    )Dividends on Series B preferred stock
    
    
    (2,482
    )
    
    
    (2,417
    )Net loss applicable to common stockholders
    
    $
    (13,428
    )
    
    
    (8,335
    )Basic and diluted net loss per common share
    
    $
    (0.19
    )
    
    
    (0.12
    )Weighted average common shares outstanding:Basic and diluted
    
    
    72,502
    
    
    
    72,405
  5




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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, 2008
    
    
    380,000
    
    
    $
    4
    
    
    
    41,445,222
    
    
    $
    4
    
    
    
    23,403,500
    
    
    $
    2
    
    
    $
    524,722
    
    
    $
    (8,187
    )
    
    $
    (554,300
    )
    
    $
    (37,755
    )Issuance of Class A common stock from
vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    54,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    71Series B preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,482
    )
    
    
    (2,482
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,946
    )
    
    
    (10,946
    )Amounts reclassified to earnings during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,242
    
    
    
    
    
    
    
    1,242Unrealized gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    388
    
    
    
    
    
    
    
    388Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,316
    )Balance at March 31, 2009
    
    
    380,000
    
    
    $
    4
    
    
    
    41,499,222
    
    
    $
    4
    
    
    
    23,403,500
    
    
    $
    2
    
    
    $
    524,793
    
    
    $
    (6,557
    )
    
    $
    (567,728
    )
    
    $
    (49,482
    )
  6




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 
  Three-Months EndedMarch 31,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net loss
    
    $
    (10,946
    )
    
    
    (5,918
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Loss on the sale of assets
    
    
    11
    
    
    
    Impairment of FCC broadcasting licenses
    
    
    10,123
    
    
    
    Stock-based compensation
    
    
    71
    
    
    
    326Depreciation and amortization
    
    
    1,593
    
    
    
    1,362Net barter (income) expense
    
    
    (31
    )
    
    
    99Provision for trade doubtful accounts
    
    
    (130
    )
    
    
    760Amortization of deferred financing costs
    
    
    269
    
    
    
    276Amortization of non-interest bearing promissory note payable
    
    
    
    
    
    
    342Deferred income taxes
    
    
    (2,408
    )
    
    
    Unearned revenue
    
    
    120
    
    
    
    (1,813
    )Accretion of the time-value of money component related to unearned revenue
    
    
    
    
    
    
    59Change in fair value of derivative instrument
    
    
    (1,614
    )
    
    
    Amortization of deferred commitment fee
    
    
    
    
    
    
    (19
    )Amortization of other liabilities
    
    
    (17
    )
    
    
    (17
    )Changes in operating assets and liabilities:Trade receivables
    
    
    5,841
    
    
    
    5,298Prepaid expenses and other current assets
    
    
    (351
    )
    
    
    (909
    )Other assets
    
    
    262
    
    
    
    196Accounts payable and accrued expenses
    
    
    (326
    )
    
    
    (1,673
    )Accrued interest
    
    
    2,147
    
    
    
    32Net cash provided by (used in) operating activities
    
    
    4,614
    
    
    
    (1,599
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (289
    )
    
    
    (2,225
    )Acquisition of a building and its related building improvements
    
    
    
    
    
    
    (2,788
    )Proceeds from the sale of property and equipment
    
    
    163
    
    
    
    Net cash used in investing activities
    
    
    (126
    )
    
    
    (5,013
    )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
    )
    
    
    (2,417
    )Payments of other long-term debt
    
    
    (109
    )
    
    
    (106
    )Net cash used in financing activities
    
    
    (3,404
    )
    
    
    (3,336
    )Net increase (decrease) in cash and cash
equivalents
    
    
    1,084
    
    
    
    (9,948
    )Cash and cash equivalents at beginning of period
    
    
    32,852
    
    
    
    61,122Cash and cash equivalents at end of period
    
    $
    33,936
    
    
    
    51,174Supplemental cash flows information:Interest paid
    
    $
    2,760
    
    
    
    4,937Income taxes paid, net
    
    
    22
    
    
    
    10Noncash investing and financing activities:Unrealized gain (loss) on derivative instruments
    
    $
    1,630
    
    
    
    (9,190
    )
  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
 3 4
 8




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##### Table of Contents



(c)
    
    Share-Based Compensation Plans
 2006 Omnibus Equity Compensation Plan
  1999 Stock Option Plans
  Stock Options
   WeightedWeighted
    
    
    
    
    
    AverageAverage
    
    Aggregate
    
    RemainingExercise
    
    Intrinsic
    
    ContractualShares
    
    Price
    
    Value
    
    Life (Years)Outstanding at December 31, 2008
    
    
    2,747
    
    
    $
    10.17Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (30
    )
    
    
    7.08Outstanding at March 31, 2009
    
    
    2,717
    
    
    $
    10.20
    
    
    $
    
    
    
    
    4.1Exercisable at March 31, 2009
    
    
    2,585
    
    
    $
    10.66
    
    
    $
    
    
    
    
    3.9
   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
    
    
    470
    
    
    
    130
    
    
    $
    2.49
    
    
    
    7.6
    
    
    
    470
    
    
    $
    2.845.00 - 9.99
    
    
    1,212
    
    
    
    2
    
    
    
    8.23
    
    
    
    4.2
    
    
    
    1,212
    
    
    
    8.2310.00 - 14.99
    
    
    198
    
    
    
    
    
    
    
    10.79
    
    
    
    5.5
    
    
    
    198
    
    
    
    10.7915.00 - 20.00
    
    
    705
    
    
    
    
    
    
    
    20.00
    
    
    
    0.6
    
    
    
    705
    
    
    
    20.002,585
    
    
    
    132
    
    
    $
    10.20
    
    
    
    4.1
    
    
    
    2,585
    
    
    $
    10.66
 9




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##### Table of Contents



Nonvested Shares
   WeightedAverage Grant-Date Fair ValueShares
    
    (per Share)Nonvested at December 31, 2008
    
    
    225
    
    
    $
    1.75Awarded
    
    
    
    
    
    
    Vested
    
    
    (54
    )
    
    
    2.78Forfeited
    
    
    
    
    
    
    Nonvested at March 31, 2009
    
    
    171
    
    
    $
    1.43
 3.
    
    Basic and Diluted Net (Loss) Income Per Common Share
   10




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##### Table of Contents



4.
    
    Operating Segments
 Disclosures about Segments of an
Enterprise and Related Information,
 Three-Months EndedMarch 31,
    
    Change2009
    
    2008
    
    $
    
    %Net revenue:Radio
    
    $
    24,176
    
    
    
    33,026
    
    
    
    (8,850
    )
    
    
    (27
    %)Television
    
    
    3,618
    
    
    
    3,407
    
    
    
    211
    
    
    
    6
    %Consolidated
    
    $
    27,794
    
    
    
    36,433
    
    
    
    (8,639
    )
    
    
    (24
    %)Engineering and programming expenses:Radio
    
    $
    7,391
    
    
    
    9,916
    
    
    
    (2,525
    )
    
    
    (25
    %)Television
    
    
    3,614
    
    
    
    4,738
    
    
    
    (1,124
    )
    
    
    (24
    %)Consolidated
    
    $
    11,005
    
    
    
    14,654
    
    
    
    (3,649
    )
    
    
    (25
    %)Selling, general and administrative expenses:Radio
    
    $
    9,152
    
    
    
    17,222
    
    
    
    (8,070
    )
    
    
    (47
    %)Television
    
    
    2,210
    
    
    
    2,367
    
    
    
    (157
    )
    
    
    (7
    %)Consolidated
    
    $
    11,362
    
    
    
    19,589
    
    
    
    (8,227
    )
    
    
    (42
    %)Corporate expenses:
    
    $
    2,861
    
    
    
    3,593
    
    
    
    (732
    )
    
    
    (20
    %)Depreciation and amortization:Radio
    
    $
    813
    
    
    
    796
    
    
    
    17
    
    
    
    2
    %Television
    
    
    538
    
    
    
    167
    
    
    
    371
    
    
    
    222
    %Corporate
    
    
    242
    
    
    
    399
    
    
    
    (157
    )
    
    
    (39
    %)Consolidated
    
    $
    1,593
    
    
    
    1,362
    
    
    
    231
    
    
    
    17
    %(Gain) loss on the disposal of assets, net:Radio
    
    $
    (8
    )
    
    
    (3
    )
    
    
    (5
    )
    
    
    167
    %Television
    
    
    19
    
    
    
    
    
    
    
    19
    
    
    
    100
    %Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    %Consolidated
    
    $
    11
    
    
    
    (3
    )
    
    
    14
    
    
    
    (467
    %)Impairment of FCC broadcasting licenses
and restructuring costs:Radio
    
    $
    10,548
    
    
    
    
    
    
    
    10,548
    
    
    
    100
    %Television
    
    
    24
    
    
    
    
    
    
    
    24
    
    
    
    100
    %Corporate
    
    
    44
    
    
    
    
    
    
    
    44
    
    
    
    100
    %Consolidated
    
    $
    10,616
    
    
    
    
    
    
    
    10,616
    
    
    
    100
    %Operating (loss) income:Radio
    
    $
    (3,720
    )
    
    
    5,095
    
    
    
    (8,815
    )
    
    
    (173
    %)Television
    
    
    (2,787
    )
    
    
    (3,865
    )
    
    
    1,078
    
    
    
    (28
    %)Corporate
    
    
    (3,147
    )
    
    
    (3,992
    )
    
    
    845
    
    
    
    (21
    %)Consolidated
    
    $
    (9,654
    )
    
    
    (2,762
    )
    
    
    (6,892
    )
    
    
    250
    %Capital expenditures:Radio
    
    $
    178
    
    
    
    1,091
    
    
    
    (913
    )
    
    
    (84
    %)Television
    
    
    98
    
    
    
    3,696
    
    
    
    (3,598
    )
    
    
    (97
    %)Corporate
    
    
    13
    
    
    
    226
    
    
    
    (213
    )
    
    
    (94
    %)Consolidated
    
    $
    289
    
    
    
    5,013
    
    
    
    (4,724
    )
    
    
    (94
    %)March 31,
    
    December 31,2009
    
    2008Total Assets:Radio
    
    $
    405,987
    
    
    
    422,827Television
    
    
    57,892
    
    
    
    57,225Corporate
    
    
    8,811
    
    
    
    9,215Consolidated
    
    $
    472,690
    
    
    
    489,267
 11




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##### Table of Contents



5.
    
    Comprehensive Loss
  Three-Months EndedMarch 31,2009
    
    
    2008Net loss
    
    $
    (10,946
    )
    
    
    (5,918
    )Other comprehensive loss:Amounts reclassified to earnings during the period
    
    
    1,242
    
    
    
    Unrealized gain (loss) on derivative instruments
    
    
    388
    
    
    
    (9,190
    )Total comprehensive loss
    
    $
    (9,316
    )
    
    
    (15,108
    )
 6.
    
    Income Taxes
 Accounting for Income Taxes in Interim Periods, Goodwill and Other Intangible Assets
   7.
    
    Litigation
  Wolf, et al., Litigation
   12




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##### Table of Contents



8.
    
    Impairment of FCC Broadcasting Licenses and Restructuring Costs
 Impairment of FCC Broadcasting Licenses
  13




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##### Table of Contents



Restructuring Costs
  9.
    
    Derivative Instruments
 Accounting for Derivatives and Hedging Activities
     Accounting for Derivative Instruments and Hedging Activities" Accounting for Certain Derivative Instruments and Certain Hedging Activities"
 Derivatives and Hedging Activities
  FixedNotional
    
    
    Interest
    
    
    Expiration
    
    
    FairAgreement
    
    Amount
    
    
    Rate
    
    
    Date
    
    
    ValueInterest rate swap
    
    $
    312,000
    
    
    
    5.98
    %
    
    June 30, 2010
    
    $
    8,797Interest rate swap
    
    
    6,987
    
    
    
    6.31
    %
    
    January 4, 2017
    
    
    500$
    318,987
    
    
    
    
    
    
    
    
    
    
    $
    9,297
 14




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##### Table of Contents

\

Fair Value Disclosure of Derivative Instruments
 Fair Value Measurements Disclosures about Derivative Instruments and Hedging Activities
 Fair Value Measurements at March 31, 2009LiabilitiesQuoted Prices in
    
    SignificantMarch 31, 2009
    
    Active Markets
    
    Other
    
    SignificantCarrying Value and
    
    for Identical
    
    Observable
    
    UnobservableBalance Sheet Location
    
    Instruments
    
    Inputs
    
    InputsDescription
    
    Derivative instruments
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Derivative
designated as cash
flow hedging
instrument:Interest rate swap
    
    
    $   500
    
    
    
    
    
    
    
    500
    
    
    
    Derivative no longer
designated as cash
flow hedging
instrument:Interest rate swap
    
    
    $8,797
    
    
    
    
    
    
    
    8,797
    
    
    
    Total
    
    
    $9,297
    
    
    
    
    
    
    
    9,297
    
    
    
    
  Three-Months Ended
    
    Three-Months EndedMarch 31, 2009
    
    March 31, 2008Interest Rate Swaps
    
    Interest Rate SwapsGain (loss) recognized in other comprehensive loss (effective portion)
    
    $
    388
    
    
    (9,190)Loss reclassified from accumulated other comprehensive loss into
interest expense
    
    
    1,242
    
    
    Gain recognized in change in fair value of derivative instrument
    
    
    2,856
    
    
    
 15




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##### Table of Contents



10.
    
    Fair Value of Financial Instruments
 Disclosures about Fair Value of Financial Instruments"
   March 31,
    
    December 31,2009
    
    2008Gross
    
    
    
    
    
    GrossCarrying
    
    
    
    
    
    CarryingDescription
    
    Amount
    
    Fair Value
    
    Amount
    
    Fair ValueSenior credit facilities term loan
    
    $
    312.0
    
    
    
    96.7
    
    
    
    312.8
    
    
    
    87.6103/4%
Series B cumulative exchangeable
redeemable preferred stock
    
    $
    92.3
    
    
    
    23.1
    
    
    
    92.3
    
    
    
    23.1
  11.
    
    Subsequent Events
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
    16




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17




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##### Table of Contents



Comparison Analysis of the Operating Results for the Three-Months Ended March 31, 2009 and 2008
  Three-Months EndedMarch 31,
    
    
    Change2009
    
    
    2008
    
    
    $
    
    
    %Net revenue:Radio
    
    $
    24,176
    
    
    
    33,026
    
    
    
    (8,850
    )
    
    
    (27
    %)Television
    
    
    3,618
    
    
    
    3,407
    
    
    
    211
    
    
    
    6
    %Consolidated
    
    $
    27,794
    
    
    
    36,433
    
    
    
    (8,639
    )
    
    
    (24
    %)Engineering and programming
expenses:Radio
    
    $
    7,391
    
    
    
    9,916
    
    
    
    (2,525
    )
    
    
    (25
    %)Television
    
    
    3,614
    
    
    
    4,738
    
    
    
    (1,124
    )
    
    
    (24
    %)Consolidated
    
    $
    11,005
    
    
    
    14,654
    
    
    
    (3,649
    )
    
    
    (25
    %)Selling, general and
administrative expenses:Radio
    
    $
    9,152
    
    
    
    17,222
    
    
    
    (8,070
    )
    
    
    (47
    %)Television
    
    
    2,210
    
    
    
    2,367
    
    
    
    (157
    )
    
    
    (7
    %)Consolidated
    
    $
    11,362
    
    
    
    19,589
    
    
    
    (8,227
    )
    
    
    (42
    %)Corporate expenses:
    
    $
    2,861
    
    
    
    3,593
    
    
    
    (732
    )
    
    
    (20
    %)Depreciation and amortization:Radio
    
    $
    813
    
    
    
    796
    
    
    
    17
    
    
    
    2
    %Television
    
    
    538
    
    
    
    167
    
    
    
    371
    
    
    
    222
    %Corporate
    
    
    242
    
    
    
    399
    
    
    
    (157
    )
    
    
    (39
    %)Consolidated
    
    $
    1,593
    
    
    
    1,362
    
    
    
    231
    
    
    
    17
    %Loss (gain) on the disposal
of assets, net:Radio
    
    $
    (8
    )
    
    
    (3
    )
    
    
    (5
    )
    
    
    167
    %Television
    
    
    19
    
    
    
    
    
    
    
    19
    
    
    
    100
    %Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    %Consolidated
    
    $
    11
    
    
    
    (3
    )
    
    
    14
    
    
    
    (467
    %)Impairment of FCC
broadcasting licenses and
restructuring costs:Radio
    
    $
    10,548
    
    
    
    
    
    
    
    10,548
    
    
    
    100
    %Television
    
    
    24
    
    
    
    
    
    
    
    24
    
    
    
    100
    %Corporate
    
    
    44
    
    
    
    
    
    
    
    44
    
    
    
    100
    %Consolidated
    
    $
    10,616
    
    
    
    
    
    
    
    10,616
    
    
    
    100
    %Operating (loss) income:Radio
    
    $
    (3,720
    )
    
    
    5,095
    
    
    
    (8,815
    )
    
    
    (173
    %)Television
    
    
    (2,787
    )
    
    
    (3,865
    )
    
    
    1,078
    
    
    
    (28
    %)Corporate
    
    
    (3,147
    )
    
    
    (3,992
    )
    
    
    845
    
    
    
    (21
    %)Consolidated
    
    $
    (9,654
    )
    
    
    (2,762
    )
    
    
    (6,892
    )
    
    
    250
    %Capital expenditures:Radio
    
    $
    178
    
    
    
    1,091
    
    
    
    (913
    )
    
    
    (84
    %)Television
    
    
    98
    
    
    
    3,696
    
    
    
    (3,598
    )
    
    
    (97
    %)Corporate
    
    
    13
    
    
    
    226
    
    
    
    (213
    )
    
    
    (94
    %)Consolidated
    
    $
    289
    
    
    
    5,013
    
    
    
    (4,724
    )
    
    
    (94
    %)March 31,
    
    
    December 31,2009
    
    
    2008Total Assets:Radio
    
    $
    405,987
    
    
    
    422,827Television
    
    
    57,892
    
    
    
    57,225Corporate
    
    
    8,811
    
    
    
    9,215Consolidated
    
    $
    472,690
    
    
    
    489,267
 18




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##### Table of Contents



Three-Months EndedMarch 31,
    
    
    Change2009
    
    
    2008
    
    
    $
    
    
    %(In thousands)Net revenue
    
    $
    27,794
    
    
    
    36,433
    
    
    
    (8,639
    )
    
    
    (24
    %)Engineering and programming expenses
    
    
    11,005
    
    
    
    14,654
    
    
    
    (3,649
    )
    
    
    (25
    %)Selling, general and administrative expenses
    
    
    11,362
    
    
    
    19,589
    
    
    
    (8,227
    )
    
    
    (42
    %)Corporate expenses
    
    
    2,861
    
    
    
    3,593
    
    
    
    (732
    )
    
    
    (20
    %)Depreciation and amortization
    
    
    1,593
    
    
    
    1,362
    
    
    
    231
    
    
    
    17
    %Loss (gain) on disposal of assets, net
    
    
    11
    
    
    
    (3
    )
    
    
    14
    
    
    
    (467
    %)Impairment of FCC broadcasting licenses and
restructuring costs
    
    
    10,616
    
    
    
    
    
    
    
    10,616
    
    
    
    100
    %Operating loss
    
    $
    (9,654
    )
    
    
    (2,762
    )
    
    
    (6,892
    )
    
    
    250
    %Interest expense, net
    
    
    (6,417
    )
    
    
    (5,084
    )
    
    
    (1,333
    )
    
    
    26
    %Change in fair value of derivative instrument
    
    
    2,856
    
    
    
    
    
    
    
    2,856
    
    
    
    100
    %Other income, net
    
    
    
    
    
    
    1,928
    
    
    
    (1,928
    )
    
    
    (100
    %)Income tax (benefit)
    
    
    (2,269
    )
    
    
    
    
    
    
    (2,269
    )
    
    
    100
    %Net loss
    
    $
    (10,946
    )
    
    $
    (5,918
    )
    
    
    (5,028
    )
    
    
    85
    %
 Net Revenue
  Engineering and Programming Expenses
  Selling, General and Administrative Expenses
  Corporate Expenses
  Depreciation and Amortization
  Impairment of FCC Broadcasting Licenses and Restructuring Costs
  19




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##### Table of Contents



Operating Loss
  Interest Expense, Net
  Change in Fair Value of Derivative Instrument
  Income Taxes
  Net Loss
  Liquidity and Capital Resources
   20




---



##### Table of Contents




    
    the demand for advertising within the broadcasting industry and economic conditions in
general will not continue to 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.
     Three-Months EndedMarch 31,
    
    
    Change2009
    
    
    2008
    
    
    $(In thousands)Capital expenditures:Radio
    
    $
    178
    
    
    
    1,091
    
    
    
    (913
    )Television
    
    
    98
    
    
    
    3,696
    
    
    
    (3,598
    )Corporate
    
    
    13
    
    
    
    226
    
    
    
    (213
    )Consolidated
    
    $
    289
    
    
    
    5,013
    
    
    
    (4,724
    )Net cash flows provided by (used in) operating activities
    
    $
    4,614
    
    
    
    (1,599
    )
    
    
    6,213Net cash flows used in investing activities
    
    
    (126
    )
    
    
    (5,013
    )
    
    
    4,887Net cash flows used in financing activities
    
    
    (3,404
    )
    
    
    (3,336
    )
    
    
    (68
    )Net increase (decrease) in cash and cash equivalents
    
    $
    1,084
    
    
    
    (9,948
    )
 Capital Expenditures
  Net Cash Flows Provided by (Used in) Operating Activities
  21




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##### Table of Contents



Net Cash Flows Used in Investing Activities
  Net Cash Flows Used in Financing Activities
  Recent Developments
 NASDAQ Delisting Letter and Temporary Postponement
      Dividend Payment on the Series B Preferred Stock
 3 4
 Off-Balance Sheet Arrangements
  
 Item 4T. Controls and Procedures
 Evaluation Of Disclosure Controls And Procedures.
 Changes In Internal Control Over Financial Reporting.
 22




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 5. Other Information
  23




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##### Table of Contents



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 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).
 24




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description4.7 
    
    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 8, 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
    
    Amended and Restated Employment Agreement dated as of April 1, 2009, by and between the Company
and Frank Flores.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.
 25




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##### 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)  26




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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 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).
 27




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description4.7 
    
    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 8, 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
    
    Amended and Restated Employment Agreement dated as of April 1, 2009, by and between the Company
and Frank Flores.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.
 28