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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 February, 2007 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 FOURTH QUARTER AND YEAR-END RESULTS
FOR THE PERIOD ENDED DECEMBER 31, 2006
MEXICO CITY, Feb. 20 /PRNewswire-FirstCall/ -- Grupo Radio Centro, S.A.B
de C.V. (NYSE: RC) (BMV: RCENTRO-A) (the "Company"), one of Mexico's leading
radio broadcasting companies, announced today its operating results for the
fourth quarter and year ended December 31, 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 December 31, 2006.
Fourth Quarter Results
Broadcasting revenue for the fourth quarter of 2006 was Ps. 202,130,000, a
5.2% increase from Ps. 192,119,000 reported for the same period of 2005. This
increase was mainly attributable to higher advertising expenditures by the
Company's clients, who purchased more airtime in the fourth quarter compared
to the same period of 2005.
The Company's broadcasting expenses (excluding depreciation, amortization
and corporate, general and administrative expenses) in the fourth quarter of
2006 were Ps. 103,328,000, an 8.4% decrease from Ps. 112,796,000 reported for
the same period of 2005. This decrease was primarily due to a reduction in
the allowance for doubtful accounts in December 2006 as a result of a sale of
accounts receivable that had given rise to a portion of the allowance.
For the fourth 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. 98,802,000, a 24.6% increase from Ps. 79,323,000 reported for the same
period of 2005. This increase was attributable to the increase in
broadcasting revenue described above.
Depreciation and amortization expense for the fourth quarter of 2006
amounted to Ps. 9,094,000, a 6.4% decrease from Ps. 9,714,000 reported during
the same period of 2005, because the Company no longer recorded depreciation
of company vehicles whose useful lives ended in the second quarter of 2006.
For the fourth quarter of 2006, the Company's corporate, general and
administrative expenses were Ps. 4,778,000, a 4.5% increase from Ps. 4,573,000
reported for the same period of 2005 due to an increase in performance bonuses
paid by the Company to its executives in the fourth quarter of 2006 as
compared with the same period of 2005.
The Company reported operating income of Ps. 84,930,000 for the fourth
quarter of 2006, a 30.6% increase from Ps. 65,036,000 reported for the same
period of 2005. This increase was due primarily to the aforementioned
increase in broadcasting income during the fourth quarter of 2006.
2
The Company's comprehensive financing cost for the fourth quarter of 2006
was Ps. 30,637,000, an increase from Ps. 4,943,000 reported for the same
period of 2005. This increase was primarily due to:
* the sale of certain accounts receivable in December 2006 (described
below), as a result of which the book value in excess of the purchase
price for the accounts receivable was classified as interest expense,
and
* a loss on net monetary position of Ps. 3,563,000 compared to a gain on
net monetary position of Ps. 1,508,000 reported for the same period of
2005, due to the fact that the Company no longer held bank debt or a
contingent liability, which resulted in lower monetary liabilities in
the fourth quarter of 2006 compared to the same period of 2005.
In December 2006, the Company sold for Ps. 12 million accounts receivable
representing Ps. 38.9 million owed to it mainly by political parties in
connection with these customers' purchases of airtime from 2003 to 2005. The
Company had been unsuccessful in its attempts to collect the accounts
receivable and, accordingly, increased its allowance for doubtful accounts
beginning in 2005. Following the sale, the Company classified as interest
expense Ps. 26.9 million (which is equivalent to the difference between the
book value and the purchase price of the accounts receivable), and reduced its
allowance for doubtful accounts from Ps. 29.4 million to Ps. 12.8 million.
The Company sold the accounts receivable because:
* it believed, based on its past efforts, that the accounts receivable
were not recoverable, and
* the sale enabled the Company to take a tax deduction in connection with
the unrecoverable accounts receivable, which deduction otherwise would
not have been available without bringing legal proceedings against the
customers.
The accounts receivable were sold to a company controlled by Francisco
Aguirre Gomez, Chairman of the Board of Directors of Grupo Radio Centro.
There were no other buyers, the price was higher than fair market value and
payment has been received in cash. This transaction was ratified by the
Company's audit committee on February 19, 2007.
During the fourth quarter of 2006, other expenses, net, totaled Ps.
15,457,000, a 5.5% increase from the Ps. 14,646,000 reported for the same
period of 2005. This increase was mainly attributable to expenses related to
the Company's 60th anniversary celebration.
As a result of the foregoing, the Company reported income before
extraordinary item and provisions for income tax and employee profit sharing
of Ps. 38,836,000 for the fourth quarter of 2006, a 14.5% decrease from Ps.
45,447,000 reported for the same period of 2005.
The Company recorded extraordinary income of Ps. 4,762,000 in the fourth
quarter of 2006 as a result of an adjustment for inflation to extraordinary
income that was recorded in June 2006 in connection with the reversal of a
contingent liability provision.
For the fourth quarter of 2006, the Company reported income before
provisions for income tax and employee profit sharing of Ps. 43,598,000, a
4.1% decrease from Ps. 45,447,000 reported for the same period of 2005.
The Company reduced its provision for income tax and employee profit
sharing by Ps. 3,589,000 in the fourth quarter of 2006 compared to a provision
of Ps. 8,904,000 for the same period of 2005. This reduction was a result of
lower taxable income due to the fact that the Company had more deductible
expenses in the fourth quarter of 2006 compared to the same period of 2005.
As a result of the foregoing, the Company's net income for the fourth
quarter of 2006 was Ps. 47,187,000, a 29.1% increase from Ps. 36,543,000
reported for the same period of 2005.
Twelve-Month Results
For the year ended December 31, 2006, broadcasting revenue was Ps.
795,680,000, a 29.4% increase from Ps. 615,083,000 reported for the same
period of 2005. This increase was mainly attributable to an increase in
advertising expenditures by political parties in connection with the
presidential and congressional elections that took place on July 2, 2006, as
well as higher advertising expenditures by the Company's commercial clients
compared to the same period of 2005.
3
The Company's broadcasting expenses (excluding depreciation, amortization
and corporate, general and administrative expenses) for the year ended
December 31, 2006 were Ps. 443,404,000, an 8.5% increase from the Ps.
408,501,000 reported for the same period of 2005. This increase was primarily
due to:
* an increase in sales commissions paid to the Company's sales force,
outside agents and affiliated stations in connection with increased
sales of airtime,
* a net increase in the allowance for doubtful accounts, and
* increased expenses related to additional advertising and marketing
campaigns.
Broadcasting income (i.e., broadcasting revenue minus broadcasting
expenses, excluding depreciation, amortization and corporate, general and
administrative expenses) for the year ended December 31, 2006, was Ps.
352,276,000, a 70.5% increase from Ps. 206,582,000 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 expense for the year ended December 31, 2006
totaled Ps. 35,836,000, a 6.9% decrease from Ps. 38,509,000 reported for the
same period of 2005. This decrease was mainly attributable to the fact that
the Company no longer recorded depreciation for certain Company vehicles whose
useful lives ended in the second quarter of 2006.
The Company's corporate, general and administrative expenses for the year
ended December 31, 2006 were Ps. 14,276,000, a slight increase from Ps.
14,047,000 reported for the same period of 2005.
As a result of the foregoing, the Company reported operating income of Ps.
302,164,000 for the year ended December 31, 2006, a 96.2% increase from Ps.
154,026,000 reported for the same period of 2005.
The Company's comprehensive financing cost for the year ended December 31,
2006 was Ps. 38,399,000, a 189.1% increase from Ps. 13,280,000 recorded for
the same period of 2005. This increase was primarily due to:
* the cost attributable to the sale of certain accounts receivable, which
was classified as interest expense;
* a decrease in gain on net foreign currency exchange, which was Ps. 8,000
in 2006 compared to Ps. 10,940,000 in 2005, due to the cancellation of a
U.S. dollar-denominated contingent liability in 2006, and
* a loss on net monetary position of Ps. 2,569,000 in 2006 compared to a
gain of Ps. 6,974,000 in 2005, due to the fact that the Company repaid
its bank debt in May 2006 and cancelled a contingent liability in June
2006, thus significantly reducing its monetary liabilities during the
year.
Other expenses, net, for the year ended December 31, 2006 were Ps.
56,465,000, a 11.6% increase from Ps. 50,588,000 reported for the same period
of 2005. This increase was mainly attributable to higher legal expenses
during 2006 compared to the same period of 2005 and expenses related to the
Company's 60th anniversary celebration during 2006.
As a result of the foregoing, the Company reported income before
extraordinary item and provisions for income tax and employee profit sharing
of Ps. 207,300,000 for the year ended December 31, 2006, a 129.9% increase
from Ps. 90,158,000 reported for the same period of 2005.
During 2006, the Company recorded extraordinary income of Ps. 253,976,000,
due to the reversal of a contingent liability provision recorded by the
Company in 2003 minus accumulated foreign exchange loss and interest recorded
by the Company in 2006 related to the provision.
For the year ended December 31, 2006, the Company reported income before
provisions for income tax and employee profit sharing of Ps. 461,276,000, a
411.6% increase from Ps. 90,158,000 reported for the same period of 2005, due
to both the increase in operating income and the recording of extraordinary
income.
4
For the year ended December 31, 2006, the Company recorded provisions for
income tax and employee profit sharing of Ps. 42,278,000, an 87.1% increase
from Ps. 22,599,000 reported for 2005. This increase was primarily due to the
increase in taxable income during 2006 compared to 2005.
As a result of the foregoing, the Company posted net income of Ps.
418,998,000 for the year ended December 31, 2006, a 520.2% increase from Ps.
67,559,000 reported for the same period of 2005.
Balance Sheet:
Other accounts receivable increased to Ps. 18,665,000 as of December 31,
2006 from Ps. 5,469,000 reported for 2005, mainly recording in 2006 Ps.
12,000,000 receivable from the sale of non-recoverable accounts receivable as
explained above. Payment has subsequently been received.
Current and Long Term Notes Payable of the Company of Ps. 58,913,000 and
Ps. 58,913,000 respectively as of December 31, 2005 have been repaid in full.
The Company had no debt as of December 31, 2006 nor as of today.
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.B. DE C.V.
CONSOLIDATED AUDITED BALANCE SHEET
as of December 31, 2006 and 2005
in Mexican Pesos ("Ps.") with purchasing power as of December 31, 2006
(figures in thousands of Ps. and U.S. dollars ("U.S. $")(1),
except per Share and per ADS amounts)
December 31,
--------------------------------------------
2006 2005
---------------------------- ------------
U.S. $(1) Ps. Ps.
------------ ------------ ------------
ASSETS
Current assets:
Cash and temporary investments 9,080 98,055 90,679
Accounts receivable:
Broadcasting, net 22,900 247,305 226,331
Other 1,728 18,665 5,469
Income taxes recoverable 0 0 11,583
24,628 265,970 243,383
Prepaid expenses 2,362 25,510 10,811
Total current assets 36,070 389,535 344,873
Property and equipment, net 42,945 463,786 494,665
Deferred charges, net 413 4,463 5,498
Excess of cost over book value
of net assets of subsidiaries,
net 73,958 798,710 798,710
Other assets 305 3,288 3,351
Total assets 153,691 1,659,782 1,647,097
LIABILITIES
Current:
Notes payable 0 0 58,913
Advances from customers 11,829 127,744 86,714
Suppliers and other accounts
payable 4,217 45,544 34,410
Taxes payable 8,106 87,540 27,211
Contingent liability 0 0 256,177
Total current liabilities 24,152 260,828 463,425
Long-Term:
Notes payable 0 0 58,913
Reserve for labor liabilities 4,882 52,724 39,999
Deferred taxes 838 9,049 42,322
Total liabilities 29,872 322,601 604,659
SHAREHOLDERS' EQUITY
Capital stock 100,880 1,089,457 1,212,561
Cumulative earnings (deficit) 28,029 302,699 (116,238)
Reserve for repurchase of shares 3,912 42,249 43,364
Cumulative effect of deferred
income taxes (9,488) (102,468) (102,468)
Surplus on restatement of capital 454 4,900 4,900
Effects from labor liabilities (28) (299) (263)
Minority interest 60 643 582
Total shareholders' equity 123,819 1,337,181 1,042,438
Total liabilities and
stockholders' equity 153,691 1,659,782 1,647,097
(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 10.7995 per U.S. dollar, the
noon buying rate for Mexican pesos on December 29, 2006 as published by the
Federal Reserve Bank of New York.
6
GRUPO RADIO CENTRO, S.A.B. DE C.V.
CONSOLIDATED AUDITED INCOME STATEMENT
for the three-month and twelve-month periods ended
December 31, 2006 and 2005 expressed
in Mexican Pesos ("Ps.") with purchasing power as of December 31, 2006
(figures in thousands of Ps. and U.S. dollars ("U.S. $")(1),
except per Share and per ADS amounts)
4th Quarter Accumulated 12 months
------------------------------------ ------------------------------------
2006 2005 2006 2005
----------------------- ---------- ----------------------- ----------
U.S.$(1) Ps. Ps. U.S.$(1) Ps. Ps.
---------- ---------- ---------- ---------- ---------- ----------
Broadcasting
revenue(2) 18,717 202,130 192,119 73,677 795,680 615,083
Broadcasting
expenses, excluding
depreciation,
amortization and
corporate, general
and administrative
expenses 9,568 103,328 112,796 41,058 443,404 408,501
Broadcasting income 9,149 98,802 79,323 32,619 352,276 206,582
Depreciation and
amortization 842 9,094 9,714 3,318 35,836 38,509
Corporate, general and
administrative
expenses 442 4,778 4,573 1,322 14,276 14,047
Operating income 7,865 84,930 65,036 27,979 302,164 154,026
EBITDA 8,706 94,024 74,750 31,298 338,000 192,535
Comprehensive
financing gain
(cost):
Interest expense (2,488) (26,870) (7,461) (3,361) (36,301) (31,948)
Interest income(2) (16) (173) (824) 43 463 754
Gain (loss) on
foreign currency
exchange, net (3) (31) 1,834 1 8 10,940
Gain (loss) on net
monetary position (330) (3,563) 1,508 (238) (2,569) 6,974
(2,837) (30,637) (4,943) (3,555) (38,399) (13,280)
Other expenses, net (1,431) (15,457) (14,646) (5,228) (56,465) (50,588)
Income (loss) before
extraordinary item
and provisions: 3,597 38,836 45,447 19,196 207,300 90,158
Extraordinary item 441 4,762 0 23,517 253,976 0
Income (loss) before
provisions 4,038 43,598 45,447 42,713 461,276 90,158
Provisions for income
tax & employee profit
sharing (332) (3,589) 8,904 3,915 42,278 22,599
Net income (loss) 4,370 47,187 36,543 38,798 418,998 67,559
Net income (loss)
applicable to:
Majority interest 4,371 47,195 36,546 38,792 418,937 67,544
Minority interest (1) (8) (3) 6 61 15
4,370 47,187 36,543 38,798 418,998 67,559
Net income (loss) per
Series A Share(3) 0.239 2.578 0.415
Net income (loss) per
ADS(3) 2.151 23.202 3.735
Weighted average
common shares
outstanding (000's)(3) 162,500 162,657
(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 10.7995 per U.S. dollar, the
noon buying rate for Mexican pesos on December 29, 2006 as published by the
Federal Reserve Bank of New York.
(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 airtime 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 fourth quarter
of 2006 and 2005 was Ps. 1,680,000 and Ps. 2,636,000, respectively.
Interest earned and treated as broadcasting revenue for the twelve months
ended December 31, 2006 and 2005 was Ps. 4,623,000 and Ps. 4,234,000,
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- 02/20/2007
/CONTACT: RI Contacts: In Mexico: Pedro Beltran or Alfredo Azpeitia of
Grupo Radio Centro, S.A.B de C.V., +5255-5728-4800, ext. 7018,
aazpeitia@grc.com.mx; or In NY: Maria Barona or Peter Majeski of i-advize
Corporate Communications, Inc., +1-212-406-3690, grc@i-advize.com.mx, for
Grupo Radio Centro, S.A. de C.V./
/Web site: http://www.radiocentro.com.mx /
(RC)
7
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: February 21, 2007 By: /s/ Pedro Beltran Nasr
-------------------------
Name: Pedro Beltran Nasr
Title: Chief Financial Officer
8