2007-03-13 16:00:54 -

COCONUT GROVE, Fla., March 13 /PRNewswire-FirstCall/ -- Spanish Broadcasting System, Inc. (the "Company" or "SBS") today reported financial results for the quarter- and fiscal year ended December 31, 2006.

Results and Discussions

For the quarter ended December 31, 2006, Consolidated Net Revenue totaled $44.4 million compared to $46.9 million for the same prior year period, resulting in a decrease of 5%. Radio net revenue was $42.7 million compared to $46.9 million for the same prior year period, resulting in a decrease of 9%, primarily from promotional events, and, to

a lesser extent, local and national revenues, and other revenues related to the Local Marketing Agreement (LMA) fees received for the previously sold Los Angeles stations (KZAB-FM and KZBA-FM). This radio net revenue decrease was primarily in our Los Angeles, New York, and Miami markets. In addition, our new television segment, "MEGA TV", which debuted on March 1, 2006, generated net revenue of $1.7 million, primarily from local revenues.

For the quarter ended December 31, 2006, Operating Income totaled $5.9 million compared to $10.8 million for the same prior year period, resulting in a decrease of 46%. Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, a non-GAAP measure, totaled $7.0 million compared to $12.4 million for the same prior year period, resulting in a decrease of 43%. Excluding our television segment's operating losses of $5.2 million and $2.3 million for the current and prior period, respectively, and SFAS No. 123(R) non-cash stock-based compensation expense of $0.4 million, Adjusted Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, a non-GAAP measure, totaled $12.7 million compared to $14.7 million for the same prior year period, resulting in a decrease of 14%. The decrease was primarily attributed to the decrease in our radio net revenue. Same Station Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, a non-GAAP measure, totaled $7.6 million compared to $12.1 million for the same prior year period, resulting in a decrease of 37%. Please refer to the Non-GAAP Financial Measures section for a reconciliation of GAAP to non-GAAP financial measures.

For the quarter ended December 31, 2006, Income before Income Taxes and Discontinued Operations totaled $0.9 million compared to $4.0 million for the same prior year period. The decrease resulted mainly from the decrease in Operating Income, offset by a decrease in Interest Expense, net.

For the fiscal year ended December 31, 2006, Net Revenue totaled $176.9 million compared to $169.8 million for the same prior year period, resulting in growth of 4%. Radio net revenue totaled $172.1 million compared to $169.8 million for the same prior year period, resulting in growth of 1%, primarily from local revenue. This radio net revenue growth was offset by decreases in promotional events revenue, national revenues and other revenues mainly related to LMA fees received for the previously sold Los Angeles stations (KZAB-FM and KZBA-FM). The radio net revenue growth of 1% was primarily in our San Francisco and Puerto Rico markets, offset by decreases in our New York, Los Angeles, Chicago and Miami markets. Our new television segment, "MEGA TV", which debuted on March 1, 2006, generated start-up net revenue of $4.8 million, primarily from local revenues.

For the fiscal year ended December 31, 2006, Operating Income totaled $84.2 million compared to $48.2 million for the same prior year period, resulting in an increase of 75%. Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, a non-GAAP measure, totaled $37.4 million compared to $52.3 million for the same prior year period, resulting in a decrease of 29%. Excluding our television segment's operating losses of $20.0 million and $3.2 million for the current and prior period, respectively, and SFAS No. 123(R) non-cash stock-based compensation expense of $2.0 million, Adjusted Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, a non-GAAP measure, totaled $59.4 million compared to $55.5 million for the same prior year period, resulting in an increase of 7%. This increase was primarily attributed to the increase in radio's operating income. Same Station Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, a non-GAAP measure, totaled $50.0 million compared to $51.0 million for the same prior year period, resulting in a decrease of 2%. Please refer to the Non-GAAP Financial Measures section for a reconciliation of GAAP to non-GAAP financial measures.

For the fiscal year ended December 31, 2006, Income before Income Taxes and Discontinued Operations totaled $61.0 million compared to a loss of $(18.2) million for the same prior year period. The increase resulted mainly from the Gain on the Sale of Assets, net, of $50.8 million related to the sale of our radio stations KZAB-FM and KZBA-FM and a decrease in Interest Expense, net, of $15.4 million due to our 2005 long-term debt refinancing and the repayment of our $100.0 million second lien credit facility in 2006, as well as the decrease in the Loss on Early Extinguishment of Debt that occurred in 2005.

"During 2006, we continued to build our brands and strengthen our Hispanic multi-media platform," commented Raul Alarcon, Jr., Chairman and CEO. "Despite solid audience shares, our fourth quarter radio revenues were below our expectations due to a soft advertising environment in some of our larger markets, primarily New York and Los Angeles. As in prior periods of market volatility, we are confronting short-term market challenges with a long-term emphasis on consistently delivering Hispanic listeners to our advertisers. We are encouraged with Arbitron's Fall ratings book, which showed solid audience share gains in our key markets. Furthermore, Mega TV in Miami, while still in an early stage of development, continues to build a dynamic audience base in South Florida. Our Internet properties have also garnered an impressive user base, and we remain focused on monetizing our attractive user demographics. Overall, we are pleased with the progress we are making in positioning our assets to excel in a dynamic media marketplace. We believe the investments we are making in our business today will lead to enhanced value for our shareholders."

Non-GAAP Financial Measures

Included below are tables that reconcile the quarter- and year-ended reported results in accordance with Generally Accepted Accounting Principles (GAAP) to Non-GAAP results. The tables reconcile Net Revenue to Same Station Net Revenue and also reconciles Operating Income to Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, Adjusted Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, and Same Station Operating Income before Deprecation and Amortization and Gain on the Sale of Assets, net.

UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON- GAAP RESULTS Quarter Ended December 31, (Amounts in thousands) % 2006 2005 Change Radio Net Revenue $42,742 46,871 -9% TV Net Revenue 1,682 - Consolidated Net Revenue $44,424 46,871 -5% less: Non Same Station Net Revenue (1) (55) (610) Same Station Net Revenue (1) $44,369 46,261 -4% Operating Income $5,860 10,835 -46% add back: Depreciation & Amortization 1,191 926 add back: (Gain) Loss on the Sale of Assets, net (8) 645 Operating Income before Depreciation & Amortization and Gain on the Sale of Assets, net $7,043 12,406 -43% add back: Non-cash stock-based compensation expense (2) 437 - add back: New TV Segment Loss (2) 5,222 2,285 Adjusted Operating Income before Depreciation & Amortization and Gain on the Sale of Assets, net, (2) $12,702 14,691 -14% Operating Income $5,860 10,835 -46% add back: Depreciation & Amortization 1,191 926 add back: (Gain) Loss on the Sale of Assets, net (8) 645 add back: Non-cash stock-based compensation expense 437 - add back: Non Same Station Operating Results (1) 161 (341) Same Station Operating Income before Depreciation & Amortization and Gain on the Sale of Assets, net (1) $7,641 12,065 -37% UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON-GAAP RESULTS Fiscal Year Ended December 31, (Amounts in thousands) % 2006 2005 Change Radio Net Revenue $172,081 169,832 1% TV Net Revenue 4,850 - Consolidated Net Revenue $176,931 169,832 4% less: Non Same Station Net Revenue (1) (2,214) (2,417) Same Station Net Revenue (1) $174,717 167,415 4% Operating Income $84,191 48,219 75% add back: Depreciation & Amortization 3,991 3,447 add back: (Gain) Loss on the Sale of Assets, net (50,795) 645 Operating Income before Depreciation & Amortization and Gain on the Sale of Assets, net $37,387 52,311 -29% add back: Non-cash stock-based compensation expense (2) 1,979 - add back: New TV Segment Loss (2) 20,004 3,189 Adjusted Operating Income before Depreciation & Amortization and Gain on the Sale of Assets, net, (2) $59,370 55,500 7% Operating Income $84,191 48,219 75% add back: Depreciation & Amortization 3,991 3,447 add back: (Gain) Loss on the Sale of Assets, net (50,795) 645 add back: Non-cash stock-based compensation expense 1,979 - add back: Non Same Station Operating Results (1) 10,585 (1,306) Same Station Operating Income before Depreciation & Amortization and Gain on the Sale of Assets, net (1) $49,951 51,005 -2% (1) Same Station Results reflect stations operated during the same periods on a comparable monthly basis. The following stations were excluded fully or partially from the results for the quarters and fiscal years ended December 31, 2006 and 2005: Los Angeles- KZAB-FM and KZBA-FM (Disposed), Chicago- WDEK-FM, WKIE-FM and WKIF-FM (Disposed) and Miami TV station- WSBS-TV (Acquired). In addition, same station results exclude LaMusica.com Internet results, depreciation and amortization, gain on the sale of assets, net, and non-cash stock-based compensation expense related to SFAS No. 123(R). (2) Adjusted Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, excludes the new television segment and non-cash stock-based compensation expense related to SFAS No. 123(R), which provides a basis for comparability of our operating performance for the quarter and fiscal year ended December 31, 2006 compared to prior periods.

Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, Adjusted Operating Income before Depreciation and Amortization and Gain on the Sale of Assets, net, and Same Station Results are not measures of performance or liquidity determined in accordance with GAAP in the United States. However, we believe that these measures are useful in evaluating our performance because they reflect a measure of performance for our stations before considering costs and expenses related to our capital structure and dispositions. In addition, we believe Same Station Results provide a useful measure of performance because they present Operating Income, excluding the impact of any acquisitions or dispositions completed during the relevant periods, allowing us to measure only the performance of stations we owned and operated during the entire relevant periods. These measures are widely used in the broadcast industry to evaluate a company's operating performance and are used by us for internal budgeting purposes and to evaluate the performance of our stations and our consolidated operations. However, these measures should not be considered in isolation or as substitutes for Operating Income, Net Income (Loss), Cash Flows from Operating Activities or any other measure used in determining our operating performance or liquidity that is calculated in accordance with GAAP. In addition, since these measures of performance are not calculated in accordance with GAAP, they are not necessarily comparable to similarly titled measures used by other companies.

Impact of the Adoption of SFAS No. 123(R) "Share-Based Compensation"

We adopted SFAS No. 123(R) using the modified prospective transition method beginning January 1, 2006. SFAS No. 123(R) requires that stock-based compensation expense be recognized on awards that are ultimately expected to vest, as such, stock-based compensation for the quarter- and fiscal year ended December 31, 2006 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures. The impact on our results of operations of recording stock-based compensation for the quarter- and fiscal year ended December 31, 2006 was as follows (in thousands):

Quarter Ended Fiscal Year Ended (in thousands) December 31, 2006 December 31, 2006 Engineering and programming expenses $229 762 Selling, general and administrative expenses 9 275 Corporate expenses 199 942 Total $437 1,979 First Quarter 2007 Outlook

Our quarterly guidance will include an estimated range of the following: radio net revenue growth, television operating results before depreciation and amortization, and capital expenditures.

For the first quarter ending March 31, 2007, we expect our radio net revenue to decrease in the mid single digit range over the comparable prior year period. Also, we expect our television segment in the first quarter to generate operating losses before depreciation and amortization of approximately $4.0 million. Our total first quarter capital expenditures are projected to be in the range of $1.5 million to $2.5 million.

Fourth Quarter 2006 Conference Call

We will host a conference call to discuss our fourth quarter and fiscal- year 2006 financial results on Tuesday, March 13th at 2:00 p.m. Eastern Standard Time. To access the teleconference, please dial 973-935-8754 ten minutes prior to the start time. There will also be a live webcast of the teleconference, located on the investor portion of our corporate website, athttp://www.spanishbroadcasting.com/webcasts.shtml.

If you cannot listen to the teleconference at its scheduled time, there will be a replay available through March 20, 2007, which can be accessed by dialing 877-519-4471 (U.S) or 973-341-3080 (Int'l), passcode: 8357429. A seven day archived replay of the webcast will also be available at that link.

About Spanish Broadcasting System, Inc.

Spanish Broadcasting System, Inc. is the largest publicly traded Hispanic- controlled media and entertainment company in the United States. SBS owns and operates 20 radio stations located in the top Hispanic markets of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico. The Company also owns and operates Mega TV, a television operation serving the South Florida market, and occasionally produces live concerts and events throughout the U.S. and Puerto Rico. In addition, the Company operates LaMusica.com, a bilingual Spanish-English online site providing content related to Latin music, entertainment, news and culture. The Company's corporate Web site can be accessed at http://www.spanishbroadcasting.com/ .

Below are the Unaudited Condensed Consolidated Statements of Operations and other information as of and for the quarter- and fiscal year ended December 31, 2006 and 2005.

Quarter Ended Fiscal Year Ended December 31, December 31, Amounts in thousands 2006 2005 2006 2005 (Unaudited) (Unaudited) Net revenue $44,424 46,871 $176,931 169,832 Station operating expenses (1) 33,255 30,694 125,104 103,162 Corporate expenses (1) 4,126 3,771 14,440 14,359 Depreciation and amortization 1,191 926 3,991 3,447 (Gain) loss on the sale of assets, net of disposal costs (8) 645 (50,795) 645 Operating income 5,860 10,835 84,191 48,219 Interest expense, net (4,981) (6,782) (20,176) (35,619) Loss on early extinguishment of debt - - (2,997) (32,597) Other income (expense), net 4 (23) (3) 1,769 Income (loss) before income taxes and discontinued operations $883 4,030 $61,015 (18,228) Supplemental information: (1) Stock-based compensation expenses: Station operating expenses $238 - $1,037 - Corporate expenses 199 - 942 - Total stock-based compensation expenses $437 - $1,979 - Segment Data

Due to the commencement of our television operation, we began reporting two operating segments (radio and television). The following summary table presents separate financial data for each of our operating segments. We began evaluating the performance of our operating segments based on separate financial data for each operating segment as provided below (in thousands):

Quarter Ended December 31, Change 2006 2005 $ % (In thousands) Net revenue: Radio $42,742 46,871 (4,129) -9% Television 1,682 - 1,682 100% Consolidated $44,424 46,871 (2,447) -5% Operating income (loss) before depreciation and amortization and gain on sales of assets, net: Radio $16,410 18,462 (2,052) -11% Television (5,241) (2,285) (2,956) 129% Corporate (4,126) (3,771) (355) 9% Consolidated $7,043 $12,406 (5,363) -43% Depreciation and amortization: Radio $771 585 186 32% Television 149 80 69 86% Corporate 271 261 10 4% Consolidated $1,191 926 265 29% Operating income (loss): Radio $15,647 17,232 (1,585) -9% Television (5,390) (2,365) (3,025) 128% Corporate (4,397) (4,032) (365) 9% Consolidated $5,860 $10,835 (4,975) -46% Capital expenditures: Radio $748 547 201 37% Television 406 1,277 (871) -68% Corporate 757 70 687 981% Consolidated $1,911 1,894 17 1% As of December 31, Total Assets: 2006 2005 Radio $880,364 1,010,020 Television 49,376 3,197 Consolidated $929,740 1,013,217 Fiscal Year Ended December 31, Change 2006 2005 $ % (In thousands) Net revenue: Radio $172,081 169,832 2,249 1% Television 4,850 - 4,850 100% Consolidated $176,931 169,832 7,099 4% Operating income (loss) before depreciation and amortization and gain on sales of assets, net: Radio $71,900 69,859 2,041 3% Television (20,073) (3,189) (16,884) 529% Corporate (14,440) (14,359) (81) 1% Consolidated $37,387 $52,311 (14,924) -29% Depreciation and amortization: Radio $2,637 2,343 294 13% Television 355 81 274 338% Corporate 999 1,023 (24) -2% Consolidated $3,991 3,447 544 16% Operating income (loss): Radio $120,058 66,871 53,187 80% Television (20,428) (3,270) (17,158) 525% Corporate (15,439) (15,382) (57) 0% Consolidated $84,191 $48,219 35,972 75% Capital expenditures: Radio $4,387 2,562 1,825 71% Television 2,948 1,326 1,622 122% Corporate 1,246 596 650 109% Consolidated $8,581 4,484 4,097 91% Selected Unaudited Balance Sheet Information and Other Data: As of December 31, Amounts in thousands 2006 Cash and cash equivalents $66,815 Total assets $929,740 Senior credit facilities term loan due 2012 $319,313 Non-interest bearing note due 2009, net 15,787 Other debt 492 Total debt $335,592 Series B preferred stock $89,932 Fiscal Year Ended December 31, Amounts in thousands 2006 2005 Capital expenditures $8,581 4,484 Cash paid for income taxes, net $15 1,189

Source: Spanish Broadcasting System, Inc.