UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ending March 31, 2003
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 333-100330
LBI MEDIA, INC.
(Exact Name of Registrant as Specified in Its Charter)
| California (State or other Jurisdiction of Incorporation or Organization) |
95-4668901 (IRS Employer Identification No.) |
1845 West Empire Avenue
Burbank, California 91504
(Address of principal executive offices, excluding zip code)
Registrant’s Telephone Number, Including Area Code: (818) 563-5722
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).
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 ¨ No x
As of March 31, 2003, there were approximately 100 shares outstanding of Common Stock, $0.01 par value.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
| Page | ||||
| PART I. FINANCIAL INFORMATION |
3 | |||
| Item 1. |
3 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||
| Item 3. |
23 | |||
| Item 4. |
23 | |||
| PART II. OTHER INFORMATION |
24 | |||
| Item 1. |
24 | |||
| Item 2. |
24 | |||
| Item 3. |
24 | |||
| Item 4. |
24 | |||
| Item 5. |
24 | |||
| Item 6. |
24 | |||
| Financial Statements |
LBI MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, |
March 31, |
|||||||
| (Note 1) |
(unaudited) |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
1,396,636 |
|
$ |
4,186,826 |
| ||
| Short-term investments |
|
135,110 |
|
|
117,025 |
| ||
| Accounts receivable (less allowance for doubtful accounts of $627,738 in 2002 and $593,086 in 2003) |
|
9,986,636 |
|
|
9,659,313 |
| ||
| Current portion of program rights, net |
|
1,054,655 |
|
|
1,100,631 |
| ||
| Amounts due from related parties |
|
730,761 |
|
|
876,220 |
| ||
| Current portion of employee advances |
|
58,632 |
|
|
65,477 |
| ||
| Prepaid expenses and other current assets |
|
1,201,697 |
|
|
1,652,783 |
| ||
| Total current assets |
|
14,564,127 |
|
|
17,658,275 |
| ||
| Property and equipment, net |
|
49,044,267 |
|
|
49,553,040 |
| ||
| Program rights, excluding current portion |
|
1,817,659 |
|
|
1,803,403 |
| ||
| Notes receivable from related parties |
|
2,455,666 |
|
|
2,467,867 |
| ||
| Employee advances, excluding current portion |
|
656,265 |
|
|
659,246 |
| ||
| Deferred financing costs, net |
|
4,129,447 |
|
|
4,075,086 |
| ||
| Broadcast licenses, net |
|
198,323,152 |
|
|
198,331,503 |
| ||
| Acquisition costs |
|
475,937 |
|
|
625,823 |
| ||
| Escrow funds |
|
2,500,000 |
|
|
2,500,000 |
| ||
| Other assets |
|
— |
|
|
17,035 |
| ||
| Total assets |
$ |
273,966,520 |
|
$ |
277,691,278 |
| ||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ |
1,768,958 |
|
$ |
1,242,901 |
| ||
| Accrued interest |
|
8,093,827 |
|
|
3,757,529 |
| ||
| Program rights payable |
|
58,324 |
|
|
58,324 |
| ||
| Amounts due to related parties |
|
133,695 |
|
|
119,821 |
| ||
| Current portion of long-term debt |
|
154,093 |
|
|
153,288 |
| ||
| Total current liabilities |
|
10,208,897 |
|
|
5,331,863 |
| ||
| Long-term debt, excluding current portion |
|
242,675,518 |
|
|
249,539,080 |
| ||
| Deferred compensation |
|
6,280,000 |
|
|
6,963,000 |
| ||
| Deferred state income taxes |
|
263,916 |
|
|
273,516 |
| ||
| Other liabilities |
|
95,095 |
|
|
120,491 |
| ||
| Commitments and contingencies |
||||||||
| Stockholder’s equity: |
||||||||
| Common stock, $0.01 par value: |
||||||||
| Authorized shares—1,000 |
||||||||
| Issued and outstanding shares—100 |
|
1 |
|
|
1 |
| ||
| Additional paid-in capital |
|
22,657,667 |
|
|
22,657,667 |
| ||
| Retained deficit |
|
(8,221,264 |
) |
|
(7,182,945 |
) | ||
| Accumulated other comprehensive income (loss) |
|
6,690 |
|
|
(11,395 |
) | ||
| Total stockholder’s equity |
|
14,443,094 |
|
|
15,463,328 |
| ||
| Total liabilities and stockholder’s equity |
$ |
273,966,520 |
|
$ |
277,691,278 |
| ||
See accompanying notes.
3
LBI MEDIA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended |
||||||||
| 2002 |
2003 |
|||||||
| Revenues |
$ |
16,764,867 |
|
$ |
18,719,240 |
| ||
| Less agency commissions |
|
1,790,711 |
|
|
2,265,672 |
| ||
| Net revenues |
|
14,974,156 |
|
|
16,453,568 |
| ||
| Operating expenses: |
||||||||
| Program and technical, exclusive of noncash employee compensation of $330,000 and $159,000 for the three months ended March 31, 2002 and 2003, respectively, and depreciation shown below |
|
2,224,545 |
|
|
2,910,956 |
| ||
| Promotional, exclusive of depreciation shown below |
|
298,796 |
|
|
248,062 |
| ||
| Selling, general and administrative, exclusive of noncash employee compensation of $1,430,000 and $524,000 for the three months ended March 31, 2002 and 2003, respectively, and depreciation shown below |
|
4,239,150 |
|
|
5,802,062 |
| ||
| Noncash employee compensation |
|
1,760,000 |
|
|
683,000 |
| ||
| Depreciation |
|
724,518 |
|
|
794,211 |
| ||
| Total operating expenses |
|
9,247,009 |
|
|
10,438,291 |
| ||
| Operating income |
|
5,727,147 |
|
|
6,015,277 |
| ||
| Interest expense |
|
(4,861,889 |
) |
|
(4,979,572 |
) | ||
| Interest and other income |
|
73,907 |
|
|
22,614 |
| ||
| Income before income taxes and cumulative effect of accounting change |
|
939,165 |
|
|
1,058,319 |
| ||
| Provision for income taxes |
|
10,400 |
|
|
20,000 |
| ||
| Income before cumulative effect of accounting change |
|
928,765 |
|
|
1,038,319 |
| ||
| Cumulative effect of accounting change |
|
(8,106,000 |
) |
|
— |
| ||
| Net (loss) income |
$ |
(7,177,235 |
) |
$ |
1,038,319 |
| ||
See accompanying notes.
4
LBI MEDIA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, |
||||||||
| 2002 |
2003 |
|||||||
| Operating activities |
||||||||
| Net (loss) income |
$ |
(7,177,235 |
) |
$ |
1,038,319 |
| ||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: |
||||||||
| Cumulative effect of accounting change |
|
8,106,000 |
|
|
— |
| ||
| Depreciation |
|
724,518 |
|
|
794,211 |
| ||
| Amortization of deferred financing costs |
|
249,306 |
|
|
133,233 |
| ||
| Noncash employee compensation |
|
1,760,000 |
|
|
683,000 |
| ||
| Gain on sale of investments |
|
(52,976 |
) |
|
— |
| ||
| Provision for doubtful accounts |
|
42,444 |
|
|
216,813 |
| ||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
|
(175,018 |
) |
|
110,510 |
| ||
| Program rights |
|
(863,239 |
) |
|
(31,720 |
) | ||
| Amounts due from related parties |
|
(93,406 |
) |
|
(145,459 |
) | ||
| Prepaid expenses and other current assets |
|
292,792 |
|
|
(451,086 |
) | ||
| Employee advances |
|
(18,556 |
) |
|
(9,826 |
) | ||
| Accounts payable and accrued expenses |
|
(528,227 |
) |
|
(526,057 |
) | ||
| Accrued interest |
|
(2,326,717 |
) |
|
(4,336,298 |
) | ||
| Amounts due to related parties |
|
|||||||