-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F/hNoIfynY6v6hu1l6Nt5G7qsGEVLlVkOWyLKJFgQrS0EqbJGAyTYUxF9XEdRptZ xbaXNFMVwjo0P9+Me0C8Sg== /in/edgar/work/0000912057-00-049565/0000912057-00-049565.txt : 20001115 0000912057-00-049565.hdr.sgml : 20001115 ACCESSION NUMBER: 0000912057-00-049565 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HISPANIC BROADCASTING CORP CENTRAL INDEX KEY: 0000922503 STANDARD INDUSTRIAL CLASSIFICATION: [4832 ] IRS NUMBER: 990113417 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15859 FILM NUMBER: 764028 BUSINESS ADDRESS: STREET 1: 3102 OAK LAWN AVENUE STREET 2: STE 215 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145257700 MAIL ADDRESS: STREET 1: 3102 OAK LAWN AVENUE STREET 2: SUITE 215 CITY: DALLAS STATE: TX ZIP: 75219 FORMER COMPANY: FORMER CONFORMED NAME: HEFTEL BROADCASTING CORP DATE OF NAME CHANGE: 19940502 10-Q 1 a2030793z10-q.txt 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [x] Quarterly report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2000 or [ ] 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 0-24516 HISPANIC BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) Delaware 99-0113417 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3102 Oak Lawn Avenue, Suite 215 75219 Dallas, Texas (Zip Code) (Address of principal executive offices) (214) 525-7700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 1, 2000 - ----- ------------------------------- Class A Common Stock, $.001 Par Value 80,591,387 Class B Non-Voting Common Stock, $.001 Par Value 28,312,940 HISPANIC BROADCASTING CORPORATION SEPTEMBER 30, 2000 INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999................................................ 2 Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2000 and 1999 and the Nine Months Ended September 30, 2000 and 1999........................ 3 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2000 and 1999........................ 4 Notes to Condensed Consolidated Financial Statements ................ 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................... 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk ............................................................ 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings....................................................... 11 Item 6. Exhibits and Reports on Form 8-K ....................................... 12
1 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands except share information)
September 30, December 31, 2000 1999 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 123,808 $ 215,136 Accounts receivable, net 52,064 40,621 Prepaid expenses and other current assets 1,078 825 ------------- ------------- Total current assets 176,950 256,582 Property and equipment, at cost, net 42,486 40,923 Intangible assets, net 950,738 848,351 Deferred charges and other assets 20,354 11,282 ------------- ------------- Total assets $ 1,190,528 $ 1,157,138 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 22,040 $ 25,345 Current portion of long-term obligations 46 100 ------------- ------------- Total current liabilities 22,086 25,445 ------------- ------------- Long-term obligations, less current portion 1,407 1,448 ------------- ------------- Deferred income taxes 108,492 103,992 ------------- ------------- Stockholders' equity: Preferred Stock, cumulative, $.001 par value; authorized 5,000,000 shares; no shares issued or outstanding - - Class A Common Stock, $.001 par value; authorized 175,000,000 shares at September 30, 2000 and 100,000,000 shares at December 31, 1999; issued and outstanding 80,591,387 at September 30, 2000 and 80,489,556 at December 31, 1999 81 80 Class B Common Stock, convertible, $.001 par value; authorized 50,000,000 shares; issued and outstanding 28,312,940 shares 28 28 Additional paid-in capital 1,036,642 1,034,737 Retained earnings (accumulated deficit) 21,792 (8,592) ------------- ------------- Total stockholders' equity 1,058,543 1,026,253 ------------- ------------- Total liabilities and stockholders' equity $ 1,190,528 $ 1,157,138 ============= ============= See accompanying notes to condensed consolidated financial statements.
2 HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands except per share data)
Three Months Ended Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Net revenues $ 64,885 $ 52,370 $176,195 $141,984 Operating expenses 34,602 27,608 99,254 78,723 Depreciation and amortization 8,609 6,966 25,099 19,692 -------- -------- -------- -------- Operating income before corporate expenses 21,674 17,796 51,842 43,569 Corporate expenses 1,967 1,724 6,416 4,950 -------- -------- -------- -------- Operating income 19,707 16,072 45,426 38,619 Interest income, net 1,832 950 5,639 937 -------- -------- -------- -------- Income before income tax 21,539 17,022 51,065 39,556 Income tax 8,428 7,177 20,681 16,416 -------- -------- -------- -------- Net income $ 13,111 $ 9,845 $ 30,384 $ 23,140 ======== ======== ======== ======== Net income per common share: Basic $ 0.12 $ 0.10 $ 0.28 $ 0.23 Diluted $ 0.12 $ 0.09 $ 0.28 $ 0.23 Weighted average common shares outstanding: Basic 108,872 102,700 108,834 100,356 Diluted 110,033 104,316 110,456 101,584 See accompanying notes to condensed consolidated financial statements.
3 HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
Nine Months Ended September 30, ----------------------- 2000 1999 --------- --------- Cash flows from operating activities: Net income $ 30,384 $ 23,140 Adjustments to reconcile net income to net cash provided by operating activities: Provision for bad debts 2,275 987 Depreciation and amortization 25,099 19,692 Deferred income taxes 4,500 5,300 Other 352 143 Changes in operating assets and liabilities (17,275) (1,033) --------- --------- Net cash provided by operating activities 45,335 48,229 --------- --------- Cash flows from investing activities: Property and equipment acquisitions (8,102) (7,325) Dispositions of property and equipment 106 919 Additions to intangible assets (512) (127) Increase in deferred charges and other assets (9,743) (6,165) Acquisitions of radio stations (120,029) (208,869) --------- --------- Net cash used in investing activities (138,280) (221,567) --------- --------- Cash flows from financing activities: Borrowing on long-term obligations -- 71,000 Payments on long-term obligations (93) (20,108) Proceeds from stock issuances, net of costs 1,710 120,778 --------- --------- Net cash provided by financing activities 1,617 171,670 --------- --------- Net decrease in cash and cash equivalents (91,328) (1,668) Cash and cash equivalents at beginning of period 215,136 10,293 --------- --------- Cash and cash equivalents at end of period $ 123,808 $ 8,625 ========= ========= See accompanying notes to condensed consolidated financial statements.
4 HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2000 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Hispanic Broadcasting Corporation and subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 2. ACQUISITIONS AND DISPOSITIONS 2000 ACQUISITIONS On October 15, 1999, the Company entered into an asset purchase agreement to acquire for $75.0 million the assets of KRCD(FM) and KRCV(FM) (formerly KACE(FM) and KRTO(FM)), serving the Los Angeles market (the "Los Angeles Acquisition"). The Los Angeles Acquisition closed on January 31, 2000. The asset acquisition was funded with a portion of the proceeds from the November 1999 secondary public stock offering (the "November 1999 Offering"). The stations' programming was converted to a single Spanish-language format in February 2000. On May 31, 2000, the Company entered into an asset purchase agreement to acquire for $45.0 million the assets of KCOR(FM) and KBBT(FM) (formerly KBUC(FM) and KRNH(FM)), serving the San Antonio market. The KCOR(FM) and KBBT(FM) acquisitions closed on September 15, 2000 and September 29, 2000, respectively. The asset acquisitions were funded with a portion of the proceeds from the November 1999 Offering. The stations' programming was converted to separate Spanish-language formats. 5 1999 ACQUISITIONS On January 27, 1999, the Company entered into an asset purchase agreement to acquire for $18.3 million the assets of KHOT(FM), serving the Phoenix market (the "Phoenix Acquisition"). The Phoenix Acquisition closed on April 5, 1999. The asset acquisition was funded with cash generated from operations. Immediately after closing, the station's programming was converted to a Spanish-language format. On March 1, 1999, the Company entered into an asset purchase agreement to acquire for $20.3 million the assets of KISF(FM), serving the Las Vegas market (the "Las Vegas Acquisition"). The Las Vegas Acquisition closed on April 30, 1999. The asset acquisition was financed with a $20.0 million borrowing from the Company's $276.0 million revolving credit facility (the "Credit Facility") and $0.3 million cash generated from operations. Immediately after closing, the station's programming was converted to a Spanish-language format. On January 2, 1997, the Company acquired an option to purchase all of the assets used in connection with the operation of KSCA(FM), a radio station serving the Los Angeles market (the "KSCA Option"). In connection with the acquisition of the KSCA Option, the Company began providing Spanish-language programming to KSCA(FM) under a time brokerage agreement on February 5, 1997. The Company exercised the KSCA Option and on September 17, 1999, the Company acquired the assets of KSCA(FM) for $118.1 million. The Company had previously paid $13.0 million to acquire and renew the option to purchase the assets of KSCA(FM) and such payments were subtracted from the purchase price at closing. To fund the acquisition, the Company borrowed $38.0 million from the Credit Facility and used $67.1 million of cash. The cash was generated from operating activities and proceeds of the June 1999 secondary public stock offering (the "June 1999 Offering"). On July 6, 1999, the Company entered into an agreement to acquire from a nonaffiliated trust for $65.0 million, the FCC licenses and transmission equipment of a radio station broadcasting at 94.1 MHz (KLNO(FM)), serving the Dallas/Fort Worth market (the "Dallas Acquisition"). The Dallas Acquisition closed on September 24, 1999. To fund the acquisition, the Company borrowed $8.0 million from the Credit Facility and used $57.0 million of cash. The cash was generated from operating activities and proceeds of the June 1999 Offering. With the Dallas Acquisition, the Company assumed a time brokerage agreement whereby an unaffiliated party provided the programming to the radio station broadcasting at 94.1 MHz until January 31, 2000. The time brokerage agreement fees were $484,158 and $90,629 for the nine months ended September 30, 2000 and 1999, respectively. Immediately after the time brokerage agreement terminated, the station's programming was converted to a Spanish-language format. PENDING TRANSACTIONS On April 14, 1999, the Company entered into an agreement with Z-Spanish Media Corporation ("Z"), to exchange the assets of KRTX(FM), a radio station serving the Houston market, for the assets of KLNZ(FM), a radio station owned by Z serving the Phoenix market. Although the asset exchange has received all necessary governmental consents, the transaction has not closed. Pursuant to the terms of the asset exchange agreement, the Company has instituted arbitration proceedings seeking, among other relief, specific performance to compel the closing of the transaction. The Company's contracts for the acquisition of stations KOVA(FM) and KLTO(FM) (both stations are currently owned by the Company) provided for an increase in the purchase price in the event that the FCC authorized certain station improvements. In November 2000, the FCC authorized the station improvements. These upgrade payments, as well as other payments made as part of the upgrade process, will aggregate to approximately $33.0 million. The Company will use its available cash on hand to fund 6 these upgrade payments. Some of the payments will be made during the fourth quarter of 2000, but the station upgrade is not expected to be completed and operating until the Spring of 2001. DISALLOWED TRANSACTION On March 4, 2000, the Company entered into an agreement with subsidiaries of Clear Channel Communications, Inc. ("Clear Channel") and AMFM Inc. to purchase for approximately $127.0 million the assets of KXPK(FM), KKFR(FM) and KEYI(FM), serving the Denver, Phoenix and Austin markets, respectively. The Department of Justice ("DOJ") has disallowed the Company from making this acquisition. The DOJ required these radio stations to be divested by Clear Channel or AMFM Inc. in connection with the merger of these two companies. Clear Channel owns a 26% passive, nonvoting equity interest in the Company. 3. LONG-TERM OBLIGATIONS The Company's ability to borrow under the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit Facility. The Credit Facility is secured by the stock of the Company's subsidiaries. Borrowings under the Credit Facility bear interest at a rate based on the LIBOR rate plus an applicable margin as determined by the Company's leverage ratio. As of September 30, 2000, the Company has $276.0 million of credit available, and may elect under the terms of the Credit Facility to increase the facility by $145.0 million. The Credit Facility commitment reduces quarterly through December 31, 2004. As of September 30, 2000 and 1999, the Company had no outstanding balance due on the Credit Facility. 4. STOCKHOLDERS' EQUITY On May 25, 2000, the Board of Directors of the Company authorized a two-for-one stock split payable in the form of a stock dividend of one share of common stock for each issued and outstanding share of common stock. The dividend was paid on June 15, 2000 to all holders of common stock at the close of business on June 5, 2000. All financial information related to number of shares, per share amounts, stock option data and market prices of the Company's common stock have been restated to give effect to the split, unless otherwise noted. On November 24, 1999, the Company completed the November 1999 Offering, selling 6,102,580 shares of Class A Common Stock at $40.85 per share, net of underwriters' discounts and commissions. The net proceeds of the offering were approximately $248.7 million. On June 7, 1999, the Company completed the June 1999 Offering, selling 4,000,000 shares of Class A Common Stock at $30.02 per share, net of underwriters' discounts and commissions. The net proceeds of the offering were approximately $119.9 million. 7 The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ------------------------ 2000 1999 2000 1999 ---------- --------- ---------- ---------- Numerator: Net income $ 13,111 $ 9,845 $ 30,384 $ 23,140 ========== ========= ========== ========== Denominator: Denominator for basic earnings per share 108,872 102,700 108,834 100,356 Effect of dilutive securities: Stock options 1,145 1,609 1,607 1,214 Employee Stock Purchase Plan 16 7 15 14 ---------- --------- ---------- ---------- Denominator for diluted earnings per share 110,033 104,316 110,456 101,584 ========== ========= ========== ==========
5. LONG-TERM INCENTIVE PLAN On May 21, 1997, the stockholders of the Company approved the Hispanic Broadcasting Corporation Long-Term Incentive Plan (the "Incentive Plan"). The types of awards that may be granted under the Incentive Plan include (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) rights to receive a specified amount of cash or shares of Class A Common Stock and (e) restricted stock. In addition, the Incentive Plan provides that directors of the Company may elect to receive some or all of their annual director compensation in the form of shares of Class A Common Stock. Subject to certain exceptions set forth in the Incentive Plan, the aggregate number of shares of Class A Common Stock that may be the subject of awards under the Incentive Plan at one time shall be an amount equal to (a) ten percent of the total number of shares of Class A Common Stock outstanding from time to time minus (b) the total number of shares of Class A Common Stock subject to outstanding awards on the date of calculation under the Incentive Plan and any other stock-based plan for employees or directors of the Company (other than the Company's Employee Stock Purchase Plan). The Company has incentive and non-qualified stock options outstanding for 3,830,305 shares of Class A Common Stock primarily to directors and key employees. The exercise prices range from $8.22 to $51.38 per share and were equal to the fair market value of the Class A Common Stock on the dates such options were granted. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The performance of a radio station group is customarily measured by its ability to generate broadcast cash flow. The two components of broadcast cash flow are net revenues (gross revenues net of agency commissions) and operating expenses (excluding depreciation, amortization and corporate general and administrative expense). The primary source of revenues is the sale of broadcasting time for advertising. The Company's most significant operating expenses for purposes of the computation of broadcast cash flow are employee salaries and commissions, programming expenses, and advertising and promotion expenses. Management of the Company strives to control these expenses by working closely with local station management. The Company's revenues vary throughout the year. As is typical in the radio broadcasting industry, the first calendar quarter generally produces the lowest revenues. The fourth quarter generally produces the highest revenues. Another measure of operating performance is EBITDA. EBITDA consists of operating income or loss excluding depreciation and amortization. 8 Broadcast cash flow and EBITDA are not calculated in accordance with generally accepted accounting principles. These measures should not be considered in isolation or as substitutes for operating income, cash flows from operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. Broadcast cash flow and EBITDA do not take into account the Company's debt service requirements and other commitments and, accordingly, broadcast cash flow and EBITDA are not necessarily indicative of amounts that may be available for dividends, reinvestment in the Company's business or other discretionary uses. RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 The results of operations for the three and nine months ended September 30, 2000 are not comparable to the results of operations for the same periods in 1999 primarily due to the start-up of radio stations KHOT(FM) in Phoenix on April 5, 1999, the radio station broadcasting at 94.1 MHz (KLNO(FM)) in Dallas on September 24, 1999, KRCD(FM) and KRCV(FM) in Los Angeles on January 31, 2000, KCOR(FM) and KBBT(FM) in San Antonio on September 15, 2000 and September 29, 2000, respectively, and the start-up of HBCi, Inc., the Company's Internet subsidiary on January 1, 2000. Net revenues increased by $12.5 million or 23.9% to $64.9 million for the three months ended September 30, 2000 from $52.4 million for the same period in 1999. Net revenues for the nine months ended September 30, 2000 increased by $34.2 million, or 24.1% to $176.2 million, compared to $142.0 million for the same period in 1999. Net revenues increased for the three and nine months ended September 30, 2000, compared to the same periods in 1999 primarily because of (a) revenue growth of same stations, and (b) revenues from start-up stations acquired or reformatted in 1999 and 2000. Same station revenues benefited from improved performance of the Company's news/talk stations, which collectively had posted revenue declines a year earlier. Operating expenses increased by $7.0 million or 25.4% to $34.6 million for the three months ended September 30, 2000 from $27.6 million for the same period in 1999. Operating expenses for the nine months ended September 30, 2000 increased by $20.6 million or 26.2% to $99.3 million, compared to $78.7 million for the same period in 1999. Operating expenses increased primarily due to (a) an increase in operating expenses of same stations, (b) increases in operating expenses of start-up stations, and (c) costs associated with the development, launch and operation of the Company's radio station Internet websites and local portals. We increased the promotion of our radio stations to improve the ratings and invested in on-air talent, programming research, additional sales and marketing personnel and our non-traditional revenue initiative. Non-traditional revenues are revenues from the implementation of new business development techniques. The provision for bad debts for the nine months ended September 30, 2000 increased by $1.3 million over the same period of 1999 primarily due to our estimate that a certain agency account is uncollectable. As a percentage of net revenues, operating expenses increased to 53.3% from 52.7% for the three months ended September 30, 2000 and 1999, respectively, and increased to 56.4% from 55.4% for the nine months ended September 30, 2000 and 1999, respectively. Operating income before corporate expenses, depreciation and amortization ("broadcast cash flow") for the three and nine months ended September 30, 2000 increased 22.2% and 21.5%, to $30.3 and $76.9 million, respectively, compared to $24.8 and $63.3 million, respectively, for the same periods in 1999. As a percentage of net revenues, broadcast cash flow decreased to 46.7% from 47.3% for the three months ended September 30, 2000 and 1999, respectively, and decreased to 43.6% from 44.6% for the nine months ended September 30, 2000 and 1999, respectively. Corporate expenses increased by $0.2 million or 11.1% to $2.0 million for the three months ended September 30, 2000 from $1.8 million for the same period in 1999. Corporate expenses for the nine months ended September 30, 2000 increased by $1.4 million, or 28.0%, to $6.4 million, compared to $5.0 million for the same period in 1999. The increase was primarily due to (a) higher staffing costs, and (b) one-time costs of approximately $0.6 million associated with the move from the Nasdaq National Market to the 9 New York Stock Exchange and the costs associated with the Company's unsuccessful efforts to acquire three radio stations from Clear Channel. As a percentage of net revenues, corporate expenses decreased to 3.1% from 3.4% for the three months ended September 30, 2000 and 1999, respectively, and increased to 3.6% from 3.5% for the nine months ended September 30, 2000 and 1999, respectively. EBITDA for the three and nine months ended September 30, 2000 increased 23.0% and 20.9%, to $28.3 and $70.5 million, respectively, compared to $23.0 and $58.3 million, respectively, for the same periods in 1999. As a percentage of net revenues, EBITDA decreased to 43.6% from 43.9% for the three months ended September 30, 2000 and 1999, respectively, and decreased to 40.0% from 41.1% for the nine months ended September 30, 2000 and 1999, respectively. Depreciation and amortization for the three months ended September 30, 2000 increased 24.6% to $8.6 million compared to $6.9 million for the same period in 1999. Depreciation and amortization for the nine months ended September 30, 2000 increased 27.4% to $25.1 million compared to $19.7 million for the same period in 1999. The increase in both periods is due to radio station acquisitions and capital expenditures. Interest income, net increased to $1.8 million from $0.9 million for the three months ended September 30, 2000 and 1999, respectively. Interest income, net increased to $5.7 million from $0.9 million for the nine months ended September 30, 2000 and 1999, respectively. The increase for the three and nine months ended September 30, 2000 compared to the same periods in 1999 was due to cash and cash equivalents being much higher in 2000 than in 1999 due to the unspent proceeds of the November 1999 Offering being invested for the entire three and nine month periods. The majority of the cash and cash equivalent balance at September 30, 1999 was the unspent proceeds of the June 1999 Offering. Federal and state income taxes are being provided at an effective rate of 40.5% and 41.5% for the nine months ended September 30, 2000 and 1999, respectively. The decrease in the effective rate is due to a lower effective state tax rate and tax-exempt interest income. For the three months ended September 30, 2000, the Company's net income totaled $13.1 million ($0.12 per common share) compared to $9.8 million ($0.09 per common share - diluted) in the same period in 1999. For the nine months ended September 30, 2000, the Company's net income totaled $30.4 million ($0.27 per common share) compared to $23.1 million ($0.23 per common share) in the same period in 1999. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the nine months ended September 30, 2000 was $45.3 million as compared to $48.2 million for the same period in 1999. The decrease from 1999 to 2000 is due to an increase in accounts receivable in 2000 which has not yet been collected and the payment of federal and state income taxes which were greater in 2000 than those paid in 1999. Net cash used in investing activities was $138.3 and $221.6 million for the nine months ended September 30, 2000 and 1999, respectively. The $83.3 million decrease from 1999 to 2000 is primarily due to the purchase price of KRCD(FM), KRCV(FM), KCOR(FM) and KBBT(FM) in 2000 being less than the purchase price of KHOT(FM), KISF(FM), KSCA(FM) and KLNO(FM) in 1999. The decrease is partially offset by an increase in deferred charges and other assets in 2000 due to signal upgrades in process for certain radio stations in New York, Houston and Dallas and the investment in Hispanic Radio Network, LLC. Net cash provided by financing activities was $1.6 and $171.7 million for the nine months ended September 30, 2000 and 1999, respectively. The $170.1 million decrease from 1999 to 2000 is due to the proceeds from the June 1999 Offering and the amounts borrowed from the Credit Facility in 1999 to purchase KISF(FM), KSCA(FM) and KLNO(FM). 10 Generally, capital expenditures are made with cash provided by operations. Capital expenditures totaled $8.1 and $7.3 million for the nine months ended September 30, 2000 and 1999, respectively. The $0.8 million increase is due to a higher amount of capital expenditure in 2000 compared to 1999 which is mostly due to the build-out of office space in Miami. Approximately $1.5 million of the capital expenditures incurred during the nine months ended September 30, 2000 related to radio signal upgrade projects for four different radio stations and the build-out of studios related to acquisitions in Phoenix and Dallas compared to $4.1 million incurred in the same period in 1999 for the same radio signal upgrade projects and the build-out of studios related to acquisitions made in New York, Phoenix, Los Angeles and Las Vegas. Available cash on hand plus cash flow provided by operations was sufficient to fund the Company's operations, meet its debt obligations, and to fund capital expenditures. Management believes the Company will have sufficient cash on hand and cash provided by operations to finance its operations, satisfy its debt service requirements, and to fund capital expenditures. Management regularly reviews potential acquisitions. Future acquisitions will be financed primarily through available cash on hand, proceeds from borrowings under the Credit Facility, proceeds from securities offerings, and/or from cash provided by operations. FORWARD LOOKING STATEMENTS Certain statements contained in this report are not based on historical facts, but are forward looking statements that are based on numerous assumptions made as of the date of this report. When used in the preceding and following discussions, the words "believes," "intends," "expects," "anticipates" and similar expressions are intended to identify forward looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to, industry-wide market factors and regulatory developments affecting the Company's operations, acquisitions and dispositions of broadcast properties described elsewhere herein, the financial performance of start-up stations, and efforts by the new management to integrate its operating philosophies and practices at the station level. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The Company disclaims any obligation to update the forward looking statements in this report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company is subject to interest rate risk on the interest earned on cash and cash equivalents. A change of 10% in the interest rate earned on short-term investments would not have had a significant impact on the Company's historical financial statements. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is involved in various claims and lawsuits, which are generally incidental to its business. The Company is vigorously contesting all such matters and believes that their ultimate resolution will not have a material adverse effect on its consolidated financial position or results of operations. 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NO. DESCRIPTION 3.1 Second Amended and Restated Certificate of Incorporation of the Company dated February 14, 1997 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 3, 1997). 3.2 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 4, 1998 (incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q filed on November 12, 1998). 3.3 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 3, 1999 (incorporated by reference to Exhibit 3.3 to the Company's Form 10-Q filed on August 12, 1999). 3.4 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated May 25, 2000 (incorporated by reference to Exhibit 3.4 to the Company's Form 10-Q filed on August 11, 2000). 3.5 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994). 4.1 Credit Agreement among the Company and its subsidiaries, The Chase Manhattan Bank, as administrative agent, and certain other lenders, dated February 14, 1997 without Exhibits (Schedules omitted) (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed on March 3, 1997). 4.2 Credit Agreement Amendment No. 1 among the Company and its subsidiaries, the Chase Manhattan Bank, as administrative agent, and certain other lenders, dated May 6, 1999 without Exhibits (Schedules omitted) (incorporated by reference to Exhibit 10.12 to the Company's Form 10-K filed on March 30, 2000). 27 Financial Data Schedule. 12 (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hispanic Broadcasting Corporation --------------------------------- (Registrant) /s/ Jeffrey T. Hinson --------------------------------- Jeffrey T. Hinson Senior Vice President/ Chief Financial Officer Dated: November 14, 2000 13 INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION 3.1 Second Amended and Restated Certificate of Incorporation of the Company dated February 14, 1997 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 3, 1997). 3.2 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 4, 1998 (incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q filed on November 12, 1998). 3.3 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 3, 1999 (incorporated by reference to Exhibit 3.3 to the Company's Form 10-Q filed on August 12, 1999). 3.4 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated May 25, 2000 (incorporated by reference to Exhibit 3.4 to the Company's Form 10-Q filed on August 11, 2000). 3.5 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994). 4.1 Credit Agreement among the Company and its subsidiaries, The Chase Manhattan Bank, as administrative agent, and certain other lenders, dated February 14, 1997 without Exhibits (Schedules omitted) (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed on March 3, 1997). 4.2 Credit Agreement Amendment No. 1 among the Company and its subsidiaries, the Chase Manhattan Bank, as administrative agent, and certain other lenders, dated May 6, 1999 without Exhibits (Schedules omitted) (incorporated by reference to Exhibit 10.12 to the Company's Form 10-K filed on March 30, 2000). 27 Financial Data Schedule. 14 EX-27 2 a2030793zex-27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 123,808 0 55,066 3,002 0 176,950 71,020 28,534 1,190,528 22,086 1,407 0 0 109 1,058,434 1,190,528 0 176,195 0 128,494 0 2,275 620 51,065 20,681 30,384 0 0 0 30,384 0.28 0.28
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