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Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant To Rule 13a-16 or 15d-16
of The Securities Exchange Act of 1934
For the month of July, 2006 Commission File Number 1-12090
GRUPO RADIO CENTRO, S.A. de C.V.
(Translation of Registrant's name into English)
Constituyentes 1154, Piso 7
Col. Lomas Altas, Mexico D.F. 11954
(Address of principal office)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F [X] Form 40-F [ ]
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
(Check One) Yes [ ] No [X]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b). 82- .)
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GRUPO RADIO CENTRO REPORTS SECOND QUARTER AND FIRST HALF 2006 RESULTS
PR Newswire -- July 13, 2006
MEXICO CITY, July 13 /PRNewswire-FirstCall/ -- Grupo Radio Centro, S.A.
de C.V. (NYSE: RC, BMV: RCENTRO-A) (the "Company"), one of Mexico's
leading radio broadcasting companies, announced today its results of
operations for the second quarter and first half ended June 30, 2006.
All figures were prepared in accordance with the Financial Information
Standards issued by the Mexican Board for Research and Development of
Financial Standards and have been restated in constant Pesos as of June
30, 2006.
Second Quarter Results
Broadcasting revenue for the second quarter of 2006 was Ps. 234,947,000,
representing an increase of 62.4% compared to the Ps. 144,656,000
reported for the same period of 2005. This increase was mainly
attributable to the increase in advertising expenditures from political
parties in connection with the July 2006 presidential and congressional
elections.
The Company's broadcasting expenses (excluding depreciation,
amortization and corporate, general and administrative expenses) for the
second quarter of 2006 were Ps. 122,787,000, representing an increase of
18.9% compared to the Ps. 103,235,000 reported for the same period of
2005. This increase was primarily due to increases in the second quarter
of 2006 in (i) sales commissions paid to the Company's general sales
force and (ii) the allowance for doubtful accounts, as well as expenses
related to additional advertising and marketing campaigns conducted by
the Company during the second quarter of 2006.
For the second quarter of 2006, the Company reported broadcasting income
(i.e., broadcasting revenue minus broadcasting expenses, excluding
depreciation, amortization and corporate, general and administrative
expenses) of Ps. 112,160,000, an increase of 170.8% compared to
broadcasting income of Ps. 41,421,000 reported for the same period of
2005. This increase was mainly attributable to the increase in
broadcasting revenue, which more than offset the increase in
broadcasting expenses.
Depreciation and amortization for the second quarter of 2006 amounted to
Ps. 7,105,000, a 27.6% decrease compared to the Ps. 9,813,000 reported
for the same period of 2005. This decrease was mainly attributed to the
Company no longer recording in the second quarter of 2006 the
depreciation of company vehicles whose useful lives ended in the second
quarter of 2006.
For the second quarter of 2006, the Company's corporate, general and
administrative expenses were Ps. 3,338,000, a slight decrease compared
to Ps. 3,341,000 reported for the same period of 2005.
2
The Company reported operating income of Ps. 101,717,000 for the second
quarter of 2006 compared to operating income of Ps. 28,267,000 for the
same period of 2005. This significant increase was mainly attributed to
the increase in broadcasting revenue in the second quarter of 2006,
which resulted from higher advertising expenditures from political
parties in connection with the July 2006 presidential and congressional
elections, which more than offset the increase in broadcasting expenses.
It is important to notice that corporate, general and administrative
expenses practically were not increased in the second quarter of 2006
compared to the same period of 2005.
The Company reported a comprehensive financing gain for the second
quarter of 2006 of Ps. 2,223,000 compared to a comprehensive financing
gain of Ps. 2,452,000 for the same period of 2005. This slight decrease
reflects the reduction in interest expense for the second quarter of
2006 compared to the same period of 2005, which resulted from (i) the
cancellation of Ps. 6,451,000 of interest recorded in 2006 on the
provision for the contingent liability recorded by the Company in 2003
and (ii) the Company no longer recording interest on bank debt after
paying off the remaining balance of its bank debt on May 17, 2006. The
favorable effect of this decrease, however, was more than offset by
declines in the second quarter of 2006 compared to the same period of
2005 in (i) gain on foreign currency exchange, net, which was due
primarily to the depreciation of the Peso against the U.S. dollar in the
second quarter of 2006 compared to the appreciation of the Peso against
the U.S. dollar for the same period of 2005, and (ii) gain on net
monetary position, which was due primarily to a lower inflation rate in
the second quarter of 2006 compared to the same period of 2005
During the second quarter of 2006, other expenses, net, totalled Ps.
14,265,000, a 17.2% increase compared to the Ps. 12,173,000 reported in
the same period in 2005. This increase was mainly attributed to higher
expenses related to the Company's listing, the implementation of the
Sarbanes&Oaxley Law and legal expenses during the second quarter of 2006
compared to the same period of 2005.
The Company reported income before extraordinary item and provisions for
income tax and employee profit sharing of Ps. 89,675,000 for the second
quarter of 2006, which is more than four times the Ps. 18,546,000
reported during the same period of 2005.
During the second quarter of 2006, the Company recorded extraordinary
income of Ps. 246,198,000, which resulted from the reversal of the Ps.
260,050,000 provision for the contingent liability recorded by the
Company in 2003 minus the accumulated foreign exchange loss and interest
recorded by the Company in 2006 in relation to the provision. The
Company reversed the provision for the contingent liability after a
Mexican court set aside and refused to enforce in Mexico the arbitration
award issued against the Company in an arbitration proceeding.
For the second quarter of 2006, the Company reported income before
provisions for income tax and employee profit sharing of Ps. 335,873,000
compared to income before provisions for income tax and employee profit
sharing of Ps. 18,546,000 reported for the same period of 2005. The
Company recorded provisions for income tax and employee profit sharing
for the second quarter of 2006 of Ps. 27,395,000 compared to provisions
for income tax and employee profit sharing of Ps. 5,726,000 for the same
period of 2005. This increase was primarily due to the increase in
taxable income for the second quarter of 2006 compared to the same
period of 2005.
As a result of the foregoing, the Company's net income for the second
quarter 2006 totalled Ps. 308,478,000, compared to a net income of Ps.
12,820,000 reported for same period of 2005.
3
First Half Results
For the six months ended June 30, 2006, broadcasting revenue was Ps.
411,477,000, a 61.5% increase compared to the Ps. 254,794,000 reported
for the same period of 2005. This increase was mainly attributable to
the increase in advertising expenditures from political parties in
connection with the elections that took place during the first half of
2006.
The Company's broadcasting expenses (excluding depreciation,
amortization and corporate, general and administrative expenses)
reported for the first six months of 2006 were Ps. 222,515,000, a 14.9%
increase compared to the Ps. 193,702,000 reported for the same period of
2005. This increase was primarily due to increases during the first six
months of 2006 in (i) sales commissions paid to the Company's general
sales force and (ii) the allowance for doubtful accounts, as well as
expenses related to additional advertising and marketing campaigns
conducted by the Company during the first six months of 2006.
Broadcasting income (i.e., broadcasting revenue minus broadcasting
expenses, excluding depreciation, amortization and corporate, general
and administrative expenses) for the first six months of 2006, was Ps.
188,962,000, an increase of more than 200% compared to the Ps.
61,092,000 reported for the same period of 2005. This increase was
mainly attributable to the increase in broadcasting revenue, which more
than offset the increase in broadcasting expenses.
Depreciation and amortization for the first six months of 2006 totalled
Ps. 17,695,000, a decrease of 11.0% compared to the Ps. 19,891,000
reported for the same period of 2005. This decrease was mainly
attributable to the Company no longer recording in the second quarter of
2006 the depreciation of company vehicles whose useful lives ended in
the second quarter of 2006.
The Company's corporate, general and administrative expenses during the
first half of 2006 were Ps. 6,953,000, an increase of 3.6% compared to
Ps. 6,713,000 reported for the same period of 2005.
As a result of the foregoing, the Company reported operating income of
Ps. 164,314,000 for the first half of 2006, which was more than
quadruple the Ps. 34,488,000 operating income reported for the same
period of 2005.
The Company's comprehensive cost of financing for the first half of 2006
was Ps. 7,407,000, an increase of 89.5% compared to a comprehensive cost
of financing of Ps. 3,908,000 for the first half of 2005. This increase
reflects the decrease in interest expense for the first six months of
2006 compared to the same period of 2005, which resulted from (i) the
cancellation of Ps. 6,451,000 of interest recorded in 2006 on the
provision for the contingent liability recorded by the Company in 2003
and (ii) the Company no longer recording interest on bank debt after
paying off the remaining balance of its bank debt on May 17, 2006. The
favorable effect of this decrease, however, was more than offset by
declines for the first six months of 2006 compared to the same period of
2005 in (i) gain on foreign currency exchange, net, which was due
primarily to the depreciation of the Peso against the U.S. dollar in the
first six months of 2006 compared to the appreciation of the Peso
against the U.S. dollar in the same period of 2005, and (ii) gain on net
monetary position, which was due primarily to a lower inflation rate for
the first six months of 2006 compared to the same period for 2005.
4
Other expenses, net for the first half of 2006 were Ps. 23,277,000, a
8.1% increase compared to Ps. 21,524,000 reported for the same period of
2005. This increase was mainly attributed to higher expenses related to
the Company's listing, the implementation of the Sarbanes&Oaxley Law and
legal expenses during the first half of 2006 compared to the same period
of 2005.
For the first six months of 2006, the Company reported income before
extraordinary item and provisions for income tax and employee profit
sharing of Ps. 133,630,000, a substantial multiple of the Ps. 9,056,000
reported for the same period of 2005.
During the first six months of 2006, the Company recorded extraordinary
income of Ps. 246,198,000, which resulted from the reversal of the Ps.
260,050,000 million provision for the contingent liability recorded by
the Company in 2003 less accumulated foreign exchange loss and interest
recorded by the Company in 2006 in relation to the provision. The
Company reversed the provision for the contingent liability after a
Mexican court set aside and refused to enforce in Mexico the arbitration
award issued against the Company in an arbitration proceeding.
For the first half of 2006, the Company reported income before
provisions for income tax and employee profit sharing of Ps. 379,828,000
compared to income before provisions for income tax and employee profit
sharing of Ps. 9,056,000 reported for the same period of 2005. During
the first half of 2006, the Company recorded provisions for income tax
and employee profit sharing of Ps. 37,452,000 compared to provisions for
income tax and employee profit sharing of Ps. 5,772,000 for the same
period in 2005. This increase was primarily due to the increase in
taxable income for the first half of 2006 compared to the same period of
2005.
As a result of the foregoing, the Company had net income of Ps.
342,376,000 for the first half of 2006 compared to net income of Ps.
3,284,000 for the same period of 2005.
Company Description:
Grupo Radio Centro owns and/or operates 14 radio stations. Of these 14
radio stations, Grupo Radio Centro operates 11 in Mexico City. The
Company's principal activities are the production and broadcasting of
musical and entertainment programs, talk shows, news and special events
programs. Revenue is primarily derived from the sale of commercial
airtime. In addition to the Organizacion Radio Centro radio stations,
the Company also operates Grupo RED radio stations and Organizacion
Impulsora de Radio (OIR), a radio network that acts as the national
sales representative for, and provides programming to, Grupo Radio
Centro-affiliated radio stations.
Note on Forward Looking Statements:
This release may contain projections or other forward-looking statements
related to Grupo Radio Centro that involve risks and uncertainties.
Readers are cautioned that these statements are only predictions and may
differ materially from actual future results or events. Readers are
referred to the documents filed by Grupo Radio Centro with the United
States Securities and Exchange Commission, specifically the most recent
filing on Form 20-F, which identifies important risk factors that could
cause actual results to differ from those contained in the
forward-looking statements. All forward-looking statements are based on
information available to Grupo Radio Centro on the date hereof, and
Grupo Radio Centro assumes no obligation to update such statements.
5
GRUPO RADIO CENTRO, S.A. DE C.V.
CONSOLIDATED UNAUDITED BALANCE SHEETS
as of June 30, 2006 and 2005
in Mexican Pesos ("Ps.") with purchasing power as of June 30, 2006
(figures in thousands of Ps. and U.S. dollars ("U.S. $")(1), except per
Share and per ADS amounts)
June 30,
--------------------------------------------
2006 2005
---------------------------- ------------
U.S. $(1) Ps. Ps.
------------ ------------ ------------
ASSETS
Current assets:
Cash and temporary investments 7,341 83,662 77,253
Accounts receivable:
Broadcasting, net 21,413 244,051 157,570
Other 749 8,532 5,744
Income taxes recoverable 0 0 3,527
22,162 252,583 166,841
Prepaid expenses 1,490 16,978 13,737
Total current assets 30,993 353,223 257,831
Property and equipment, net 40,774 464,718 492,092
Deferred charges, net 901 10,271 13,053
Excess of cost over book value
of net assets of subsidiaries, net 67,933 774,249 766,449
Other assets 282 3,220 3,323
Total assets 140,883 1,605,681 1,532,748
LIABILITIES
Current:
Notes payable 0 0 58,396
Advances from customers 5,602 63,847 52,599
Suppliers and other accounts
payable 4,526 51,580 42,421
Taxes payable 6,331 72,161 21,406
Contingent liability 0 0 248,355
Total current liabilities 16,459 187,588 423,177
Long-Term:
Notes payable 0 0 87,594
Reserve for labor liabilities 4,126 47,024 35,704
Deferred taxes 2,075 23,647 37,956
Total liabilities 22,660 258,259 584,431
SHAREHOLDERS' EQUITY
Capital stock 102,860 1,172,327 1,175,426
Cumulative (deficit) earnings 20,145 229,603 (175,152)
Reserve for repurchase of shares 3,481 39,673 42,048
Cumulative effect of deferred
income taxes (8,715) (99,331) (99,331)
Effects from labor liabilities (22) (255) 0
Surplus on restatement of capital 417 4,750 4,750
Minority interest 57 655 576
Total shareholders' equity 118,223 1,347,422 948,317
Total liabilities and stockholders'
equity 140,883 1,605,681 1,532,748
(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 11.3973 per U.S. dollar, the
noon buying rate for Mexican pesos on June 30, 2006.
6
GRUPO RADIO CENTRO, S.A. DE C.V.
CONSOLIDATED UNAUDITED STATEMENTS OF INCOME
for the three-month and six-month periods ended June 30, 2006 and 2005
expressed
In Mexican Pesos ("Ps.") with purchasing power as of June 30, 2006
(figures in thousands of Ps. and U.S. dollars ("U.S. $")(1), except per
Share and per ADS amounts)
2nd Quarter Accumulated 6 months
------------------------------------ ------------------------------------
2006 2005 2006 2005
----------------------- ---------- ----------------------- ----------
U.S.$ (1) Ps. Ps. U.S.$ (1) Ps. Ps.
---------- ---------- ---------- ---------- ---------- ----------
Broadcasting
revenue (2) 20,614 234,947 144,656 36,103 411,477 254,794
Broadcasting expenses,
excluding depreciation,
amortization and
corporate expenses 10,773 122,787 103,235 19,523 222,515 193,702
Broadcasting income 9,841 112,160 41,421 16,580 188,962 61,092
Depreciation and
amortization 623 7,105 9,813 1,553 17,695 19,891
Corporate, general
and administrative
expenses 293 3,338 3,341 610 6,953 6,713
Operating income 8,925 101,717 28,267 14,417 164,314 34,488
Comprehensive financing
gain (cost):
Interest expense (74) (848) (8,220) (807) (9,203) (16,648)
Interest income (2) (51) (579) (321) 43 490 282
Gain (loss) on foreign
currency exchange, net 319 3,634 9,769 3 32 9,159
Gain (loss) on net
monetary position 1 16 1,224 112 1,274 3,299
195 2,223 2,452 (649) (7,407) (3,908)
Other expenses, net (1,252) (14,265) (12,173) (2,042) (23,277) (21,524)
Income (loss) before
extraordinary item
and provisions: 7,868 89,675 18,546 11,726 133,630 9,056
Extraordinary item 21,601 246,198 0 21,601 246,198 0
Income (loss) before
provisions 29,469 335,873 18,546 33,327 379,828 9,056
Provisions for income
tax & employee profit
sharing 2,404 27,395 5,726 3,286 37,452 5,772
Net income (loss) 27,065 308,478 12,820 30,041 342,376 3,284
Net income (loss)
applicable to:
Majority interest 27,060 308,424 12,801 30,033 342,286 3,260
Minority interest 5 54 19 8 90 24
27,065 308,478 12,820 30,041 342,376 3,284
Net income (loss) per
Series A Share (3) 0.218 2.487 0.195
Net income (loss) per
ADS (3) 1.962 22.383 1.755
Weighted average common
shares outstanding
(000's) (3) 162,631 162,558
7
(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 11.3973 per U.S. dollar, the
noon buying rate for Mexican pesos on June 30, 2006.
(2) Broadcasting revenue for a particular period includes (as a
reclassification of interest income) interest earned on funds received by
the Company pursuant to advance sales of commercial air time to the extent
that the underlying funds were earned by the Company during the period in
question. Advances from advertisers are recognized as broadcasting revenue
only when the corresponding commercial air time has been transmitted.
Interest earned and treated as broadcasting revenue for the second quarter
of 2006 and 2005 was Ps. 1,193,000 and Ps. 1,025,000, respectively.
Interest earned and treated as broadcasting revenue for the six months
ended June 30, 2006 and 2005 was Ps. 1,772,000 and Ps. 1,135,000,
respectively.
(3) Earnings per share calculations are made for the last twelve months as of
the date of the income statement, as required by the Mexican Stock
Exchange.
SOURCE Grupo Radio Centro, S.A. de C.V.
-0- 07/13/2006
/CONTACT: In Mexico: Pedro Beltran or Alfredo Azpeitia, both of Grupo
Radio Centro, S.A. de C.V., +5255-5728-4800 Ext. 7018, aazpeitia@grc.com.mx;
or In NY: Maria Barona or Peter Majeski, both of i-advize Corporate
Communications, Inc., +1-212-406-3690, grc@i-advize.com.mx/
/Web site: http://www.radiocentro.com.mx /
(RC)
8
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.
Grupo Radio Centro, S.A. de C.V.
(Registrant)
Date: July 13, 2006 By: /s/ Pedro Beltran Nasr
-------------------------
Name: Pedro Beltran Nasr
Title: Chief Financial Officer
9