UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 4, 2006
LBI MEDIA HOLDINGS, INC.
LBI MEDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware
California
(State or other jurisdiction of incorporation)
| 333-110122 | 05-0584918 | |
| 333-100330 | 95-4668901 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
1845 West Empire Avenue Burbank, California | 91504 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (818) 563-5722
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
| Item 2.02. | Results of Operation and Financial Condition |
LBI Media, Inc. (the “Company”) held a conference call on March 31, 2006 to discuss its financial results for the year ended December 31, 2005. The Company also answered questions from analysts during the call. The transcript from the conference call is filed as Exhibit 99.1 and is hereby incorporated by reference in its entirety. The information in this Form 8-K and the exhibit attached hereto is being furnished (not filed) under Item 2.02 of Form 8-K.
The Company used the term “Adjusted EBITDA” in the conference call held on March 31, 2006. Adjusted EBITDA consists of net income (loss) plus income tax expense, (loss) gain on sale of property and equipment, net interest expense, depreciation and amortization, impairment of broadcast licenses and noncash employee compensation. This term, as the Company defines it, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with U.S. generally accepted accounting principles, or GAAP.
Management of the Company considers this measure an important indicator of its liquidity relating to its operations, as it eliminates the effects of non-cash items. Management believes liquidity is an important measure for the Company because it reflects its ability to meet the Company’s interest payments under its substantial indebtedness and is a measure of the amount of cash available to grow the Company through its acquisition strategy. This measure should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with GAAP, such as cash flows from operating activities, operating income and net income.
The Company believes Adjusted EBITDA is useful to an investor in evaluating its liquidity and cash flow because:
| • | it is widely used in the broadcasting industry to measure a company’s liquidity and cash flow without regard to items such as depreciation and amortization, impairment of broadcast licenses and noncash employee compensation. The broadcast industry uses liquidity to determine whether a company will be able to cover its capital expenditures and whether a company will be able to acquire additional assets and broadcast licenses if the company has an acquisition strategy. The Company believes that, by eliminating the effects of noncash items, Adjusted EBITDA provides a meaningful measure of liquidity. |
| • | it gives investors another measure to evaluate and compare the results of the Company’s operations from period to period by removing the impact of noncash expense items, such as noncash employee compensation, impairment of broadcast licenses and depreciation and amortization. By removing the noncash items, it allows investors to better determine whether the Company will be able to meet its debt obligations as they become due; and |
| • | it provides a liquidity measure before the impact of a company’s capital structure by removing net interest expense items. |
The Company’s management uses Adjusted EBITDA:
| • | as a measure to assist the Company in planning its acquisition strategy; |
| • | in presentations to the Company’s board of directors to enable them to have the same consistent measurement basis of liquidity and cash flow used by management; |
| • | as a measure for determining the Company’s operating budget and our ability to fund working capital; and |
| • | as a measure for planning and forecasting capital expenditures. |
The table set forth below reconciles net cash provided by operating activities, calculated and presented in accordance with U.S. generally accepted accounting principles, to Adjusted EBITDA:
| Three Months Ended Dec. 31, | Year Ended Dec. 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| (unaudited) | ||||||||||||||||
Net cash provided by operating activities | $ | 10,502 | $ | 8,777 | $ | 23,258 | $ | 23,518 | ||||||||
Add: | ||||||||||||||||
Gain on sale of investments | — | (2 | ) | — | 46 | |||||||||||
Income tax expense | 138 | 670 | 165 | 874 | ||||||||||||
Interest expense, net | 6,114 | 5,497 | 23,766 | 21,030 | ||||||||||||
Less: | ||||||||||||||||
Amortization of deferred financing costs | (200 | ) | (190 | ) | (797 | ) | (690 | ) | ||||||||
Offering costs | (2 | ) | (1,450 | ) | (287 | ) | (1,450 | ) | ||||||||
Provision for doubtful accounts | (233 | ) | (238 | ) | (959 | ) | (955 | ) | ||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (365 | ) | 592 | 2,648 | 794 | |||||||||||
Program rights | (211 | ) | 104 | (587 | ) | (324 | ) | |||||||||
Amounts due from related parties | (22 | ) | 145 | (460 | ) | 371 | ||||||||||
Prepaid expenses and other current assets | 420 | 411 | 49 | 127 | ||||||||||||
Employee advances | 129 | (18 | ) | 353 | 98 | |||||||||||
Accounts payable and accrued expenses | (1,754 | ) | (913 | ) | (946 | ) | 272 | |||||||||
Accrued interest | (3,770 | ) | (3,773 | ) | (105 | ) | (433 | ) | ||||||||
Program rights payable | 33 | — | 33 | (11 | ) | |||||||||||
Amounts due to related parties | — | — | — | 189 | ||||||||||||
Deferred state income tax payable | (110 | ) | (424 | ) | (110 | ) | (530 | ) | ||||||||
Other assets and liabilities | (12 | ) | (321 | ) | (222 | ) | (69 | ) | ||||||||
Adjusted EBITDA | $ | 10,657 | $ | 8,867 | $ | 45,799 | $ | 42,904 | ||||||||
| Item 9.01 | Financial Statements and Exhibits |
| (c) | Exhibits |
| 99.1 | Transcript of Conference Call on March 31, 2006 Discussing Financial Results for the Year Ended December 31, 2005 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, LBI Media Holdings, Inc. and LBI Media, Inc. have duly caused this report to be signed on their behalf by the undersigned, hereunto duly authorized, in the City of Burbank, State of California, on April 4, 2006.
LBI MEDIA HOLDINGS, INC. LBI MEDIA, INC. | ||
| By: | /s/ Lenard Liberman | |
| Lenard Liberman | ||
| Executive Vice President, Chief Financial Officer and Secretary | ||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Transcript of Conference Call on March 31, 2006 Discussing Financial Results for the Year Ended December 31, 2005 |