##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q

|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended March 31,
    2004                                           
|          
|or        
|          
|o          |  | 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 33-82114

(SBS Logo)

Spanish Broadcasting
System, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                                                         |  |                                         
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                                                                                 |  | 13-3827791                              
|(State or other jurisdiction
    of incorporation or organization)                                                       |  | (I.R.S. Employer
    Identification No.)
|2601 South Bayshore Drive, PH II
    Coconut Grove, Florida 33133(Address of principal executive
    offices) (Zip Code)

(305) 441-6901

(Registrants telephone number, including
area code)


(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 þ  No o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange
Act). Yes þ  No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each
of the issuers classes of common stock, as of the latest
practicable date: As of May 6, 2004, 39,600,355 shares of
Class A common stock, par value $.0001 per share, and
25,105,150 shares of Class B common stock, par value $.0001
per share, were outstanding.



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SPANISH BROADCASTING SYSTEM, INC.

INDEX

|                                              |  |                                                                                           |  |                                                                                                                  |    |  |   | 
|--------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- | -- |  | - | 
|                                              |  |                                                                                           |  | Page                                                                                                            
|                                              |  |                                                                                           |  |                                                                                                                 
|                                              |  |                                                                                           |  |                                                                                                                  |    |  |   | 
|PART I.  FINANCIAL
    INFORMATION           
|ITEM 1.                                       |  | Financial Statements 
    Unaudited                                                      |  |                                                                                                                  | 3  | 
|                                              |  |                                                                                           |  | Unaudited Condensed Consolidated Balance Sheets
    as of December 31, 2003 and March 31, 2004                   |    |  | 3 | 
|                                              |  |                                                                                           |  | Unaudited Condensed Consolidated Statements of
    Operations for the Three-Months Ended March 31, 2003 and 2004 |    |  | 4 | 
|                                              |  |                                                                                           |  | Unaudited Condensed Consolidated Statements of
    Cash Flows for the Three-Months Ended March 31, 2003 and 2004 |    |  | 5 | 
|                                              |  |                                                                                           |  | Notes to Unaudited Condensed Consolidated
    Financial Statements                                               |    |  | 6 | 
|ITEM 2.                                       |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |  |                                                                                                                  | 13 | 
|ITEM 3.                                       |  | Quantitative and Qualitative
    Disclosures About Market Risk                            |  |                                                                                                                  | 20 | 
|ITEM 4.                                       |  | Controls and Procedures                                                                   |  |                                                                                                                  | 20 | 
|                                              |  |                                                                                           |  |                                                                                                                  |    |  |   | 
|PART II.  OTHER
    INFORMATION              
|ITEM 1.                                       |  | Legal Proceedings                                                                         |  |                                                                                                                  | 21 | 
|ITEM 5.                                       |  | Other Information                                                                         |  |                                                                                                                  | 22 | 
|ITEM 6.                                       |  | Exhibits and Reports on
    Form 8-K                                                      |  |                                                                                                                  | 22 | 
|Stock Option Agreement - Garcia              
|Investment Stock Option Agreement - Garcia   
|Amendment to Asset Purchase Agreement        
|Time Brokerage Agreement                     
|Sec 302 Chief Executive Officer Certification
|Sec 302 Chief Financial Officer Certification
|Sec 906 Chief Executive Officer Certification
|Sec 906 Chief Financial Officer Certification



2



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##### Table of Contents






PART I.  FINANCIAL INFORMATION




Item 1. Financial Statements 
Unaudited

SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS


|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |          |         | 
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ------- | -------------- | ------- | - | ------- | -------- | ------- | 
|                                                                      |                                                                                                                                                                                                                                        | December 31, 2003                 |         | March 31, 2004
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |               
|                                                                      |                                                                                                                                                                                                                                        |                                  
|                                                                      |                                                                                                                                                                                                                                        | (In thousands, except share data)
|ASSETS                                                               
|Current assets:                                                       |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      | Cash and cash equivalents                                                                                                                                                                                                              |                                   | $       | 45,609         |         |   | $       | 74,187   |        
|                                                                      | Net receivables                                                                                                                                                                                                                        |                                   |         | 25,567         |         |   |         | 21,364   |        
|                                                                      | Other current assets                                                                                                                                                                                                                   |                                   |         | 3,482          |         |   |         | 3,188    |        
|                                                                      | Assets held for sale                                                                                                                                                                                                                   |                                   |         | 25,906         |         |   |         | 13,993   |        
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      |                                                                                                                                                                                                                                        | Total current assets              |         |                | 100,564 |   |         |          | 112,732 | 
|Property and equipment, net                                           |                                                                                                                                                                                                                                        |                                   | 24,558  |                |         |   | 24,425  |         
|Intangible assets, net                                                |                                                                                                                                                                                                                                        |                                   | 705,251 |                |         |   | 705,244 |         
|Deferred financing costs, net                                         |                                                                                                                                                                                                                                        |                                   | 11,461  |                |         |   | 11,108  |         
|Other assets                                                          |                                                                                                                                                                                                                                        |                                   | 448     |                |         |   | 1,025   |         
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      |                                                                                                                                                                                                                                        | $                                 | 842,282 |                |         | $ | 854,534 |         
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY                             
|Current liabilities:                                                  |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      | Current portion of the senior credit facilities
    term loan due 2009                                                                                                                                                                 |                                   | $       | 1,250          |         |   | $       | 1,250    |        
|                                                                      | Current portion of other long-term debt                                                                                                                                                                                                |                                   |         | 227            |         |   |         | 232      |        
|                                                                      | Accounts payable and accrued expenses                                                                                                                                                                                                  |                                   |         | 18,822         |         |   |         | 16,525   |        
|                                                                      | Accrued interest                                                                                                                                                                                                                       |                                   |         | 6,370          |         |   |         | 13,485   |        
|                                                                      | Deposit on the sale of a station                                                                                                                                                                                                       |                                   |         | 1,500          |         |   |         | 1,500    |        
|                                                                      | Deferred commitment fee                                                                                                                                                                                                                |                                   |         |               |         |   |         | 281      |        
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      |                                                                                                                                                                                                                                        | Total current liabilities         |         |                | 28,169  |   |         |          | 33,273  | 
|Senior credit facilities term loan due 2009, less
    current portion |                                                                                                                                                                                                                                        |                                   | 123,750 |                |         |   | 123,438 |         
|9 5/8% senior subordinated notes due 2009,
    net                    |                                                                                                                                                                                                                                        |                                   | 325,246 |                |         |   | 325,540 |         
|Other long-term debt, less current portion                            |                                                                                                                                                                                                                                        |                                   | 3,721   |                |         |   | 3,661   |         
|Deferred income taxes                                                 |                                                                                                                                                                                                                                        |                                   | 68,354  |                |         |   | 64,332  |         
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      |                                                                                                                                                                                                                                        | Total liabilities                 |         |                | 549,240 |   |         |          | 550,244 | 
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|Cumulative exchangeable redeemable preferred
    stock:               |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      | 10 3/4 Series B cumulative exchangeable
    redeemable preferred stock,
    $0.01 par value. Authorized 280,000 shares, 75,000 issued and
    outstanding at December 31, 2003 and 76,702 issued and
    outstanding at March 31, 2004 |                                   |         | 76,366         |         |   |         | 78,420   |        
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|Stockholders equity:                                                 |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      | Class A common stock, $0.0001 par value.
    Authorized 100,000,000 shares; 37,087,355 shares issued and
    outstanding at December 31, 2003, 39,587,355 shares issued
    and outstanding at March 31, 2004                          |                                   |         | 3              |         |   |         | 3        |        
|                                                                      | Class B common stock, $0.0001 par value.
    Authorized 50,000,000 shares; 27,605,150 shares issued and
    outstanding at December 31, 2003, 25,105,150 shares issued
    and outstanding at March 31, 2004                           |                                   |         | 3              |         |   |         | 3        |        
|                                                                      | Additional paid-in capital                                                                                                                                                                                                             |                                   |         | 443,961        |         |   |         | 443,531  |        
|                                                                      | Accumulated deficit                                                                                                                                                                                                                    |                                   |         | (227,291       | )       |   |         | (217,667 | )      
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      |                                                                                                                                                                                                                                        | Total stockholders equity        |         |                | 216,676 |   |         |          | 225,870 | 
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         
|                                                                      |                                                                                                                                                                                                                                        | $                                 | 842,282 |                |         | $ | 854,534 |         
|                                                                      |                                                                                                                                                                                                                                        |                                   |         |                |         |   |         |         

See accompanying notes to the unaudited condensed
consolidated financial statements.

3



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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                              |                               |                                                                                     |                   |                |        |        |        |         |        |        | 
|------------------------------------------------------------- | ----------------------------- | ----------------------------------------------------------------------------------- | ----------------- | -------------- | ------ | ------ | ------ | ------- | ------ | ------ | 
|                                                              |                               |                                                                                    
|                                                              |                               | Three Months Ended                                                                 
|                                                              |                               |                                                                                    
|                                                              |                               | March 31, 2003                                                                      |                   | March 31, 2004
|                                                              |                               |                                                                                     |                   |               
|                                                              |                               |                                                                                    
|                                                              |                               | (In thousands, except per share data)                                              
|Gross revenue                                                 |                               | $                                                                                   | 32,052            |                |        | $      | 33,520 |        
|Less agency commissions                                       |                               |                                                                                     | 4,129             |                |        |        | 4,288  |        
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               |                                                                                     | Net revenue       |                |        | 27,923 |        |         |        | 29,232 | 
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|Operating expenses:                                           |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Engineering                   |                                                                                     |                   | 918            |        |        |        | 1,088   |       
|                                                              | Programming                   |                                                                                     |                   | 5,236          |        |        |        | 6,324   |       
|                                                              | Stock-based programming       |                                                                                     |                   | 343            |        |        |        |        |       
|                                                              | Selling                       |                                                                                     |                   | 7,636          |        |        |        | 7,384   |       
|                                                              | General and administrative    |                                                                                     |                   | 3,335          |        |        |        | 3,533   |       
|                                                              | Corporate expenses            |                                                                                     |                   | 4,489          |        |        |        | 3,228   |       
|                                                              | Depreciation and amortization |                                                                                     |                   | 708            |        |        |        | 822     |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               | Total operating expenses                                                            |                   |                | 22,665 |        |        |         | 22,379 |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               | Operating income from continuing operations                                         |                   |                | 5,258  |        |        |         | 6,853  |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|Other (expense) income:                                       |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Interest expense, net         |                                                                                     |                   | (8,629         | )      |        |        | (10,238 | )     
|                                                              | Other, net                    |                                                                                     |                   | 26             |        |        |        | 175     |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               | Loss from continuing operations before income
    taxes and discontinued operations |                   |                | (3,345 | )      |        |         | (3,210 | )     
|Income tax (benefit) expense                                  |                               |                                                                                     | (2,448            | )              |        |        | (3,948 | )      
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               | (Loss) income from continuing operations before
    discontinued operations         |                   |                | (897   | )      |        |         | 738    |       
|Income on discontinued operations, net of tax                 |                               |                                                                                     | 96                |                |        |        | 10,940 |        
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               |                                                                                     | Net (loss) income |                | $      | (801   | )      |         | $      | 11,678 | 
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|Dividends on preferred stock                                  |                               |                                                                                     |                  |                |        |        | (2,054 | )      
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|Net (loss) income applicable to common
    stockholders       |                               | $                                                                                   | (801              | )              |        | $      | 9,624  |        
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|Basic and diluted loss per common share:                      |                               |                                                                                     |                   |                |        |        |        |        
|Net loss per common share before discontinued
    operations: |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Basic and Diluted             |                                                                                     | $                 | (0.01          | )      |        | $      | (0.02   | )     
|Net income per common share for discontinued
    operations:  |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Basic and Diluted             |                                                                                     | $                 |               |        |        | $      | 0.17    |       
|Net (loss) income per common share:                           |                               |                                                                                     |                   |                |        |        |        |        
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Basic and Diluted             |                                                                                     | $                 | (0.01          | )      |        | $      | 0.15    |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|Weighted average common shares outstanding:                   |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Basic                         |                                                                                     |                   | 64,682         |        |        |        | 64,693  |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        
|                                                              | Diluted                       |                                                                                     |                   | 64,682         |        |        |        | 65,359  |       
|                                                              |                               |                                                                                     |                   |                |        |        |        |        

See accompanying notes to the unaudited condensed
consolidated financial statements.

4



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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS


|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |        |         |        |        |  
|-------------------------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------------------- | ------ | ------ | ------- | ------ | ------- | ------ | ------ | -
|                                                         |                                                                                              | Three Months Ended                                                    |                                                                  | Three Months Ended                                     
|                                                         |                                                                                              | March 31, 2003                                                        |                                                                  | March 31, 2004                                         
|                                                         |                                                                                              |                                                                       |                                                                  |                                                        
|                                                         |                                                                                              |                                                                      
|                                                         |                                                                                              | (In thousands)                                                       
|Cash flows from operating activities:                    |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         | Net (loss) income                                                                            |                                                                       | $                                                                | (801                                                    | )      |        | $       | 11,678 |        
|                                                         | Adjustments to reconcile net (loss) income to net
    cash provided by operating activities: |                                                                       |                                                                  |                                                         |        |        |         |        |        
|                                                         |                                                                                              | Income from discontinued operations                                   |                                                                  |                                                         | (96    | )      |         |        | (10,940 | )     
|                                                         |                                                                                              | Stock-based programming expense                                       |                                                                  |                                                         | 343    |        |         |        |        |       
|                                                         |                                                                                              | Depreciation and amortization                                         |                                                                  |                                                         | 707    |        |         |        | 822     |       
|                                                         |                                                                                              | Net barter (income) expense                                           |                                                                  |                                                         | (41    | )      |         |        | 46      |       
|                                                         |                                                                                              | Reduction of allowance for doubtful accounts                          |                                                                  |                                                         | (138   | )      |         |        | (232    | )     
|                                                         |                                                                                              | Amortization of debt discount                                         |                                                                  |                                                         | 261    |        |         |        | 294     |       
|                                                         |                                                                                              | Amortization of deferred financing costs                              |                                                                  |                                                         | 321    |        |         |        | 493     |       
|                                                         |                                                                                              | Deferred income taxes                                                 |                                                                  |                                                         | (2,576 | )      |         |        | (4,012  | )     
|                                                         |                                                                                              | Amortization of deferred commitment fee                               |                                                                  |                                                         | (176   | )      |         |        | (19     | )     
|                                                         |                                                                                              | Changes in operating assets and liabilities, net
    of acquisitions: |                                                                  |                                                         |        |        |         |        |         |       
|                                                         |                                                                                              |                                                                       | Decrease in receivables                                          |                                                         |        | 4,579  |         |        |         | 3,861  |       
|                                                         |                                                                                              |                                                                       | Decrease in other current assets                                 |                                                         |        | 143    |         |        |         | 267    |       
|                                                         |                                                                                              |                                                                       | Increase in other assets                                         |                                                         |        | (1,102 | )       |        |         | (577   | )     
|                                                         |                                                                                              |                                                                       | Increase (decrease) in accounts payable and
    accrued expenses |                                                         |        | 456    |         |        |         | (3,537 | )     
|                                                         |                                                                                              |                                                                       | Increase in accrued interest                                     |                                                         |        | 8,150  |         |        |         | 7,115  |       
|                                                         |                                                                                              |                                                                       | Increase in deferred commitment fee                              |                                                         |        |       |         |        |         | 300    |       
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         |                                                                                              |                                                                       |                                                                  | Net cash provided by continuing operations              |        |        | 10,030  |        |         |        | 5,559  |  
|                                                         |                                                                                              |                                                                       |                                                                  | Net cash provided by discontinued operations            |        |        | 53      |        |         |        | 908    |  
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         |                                                                                              |                                                                       |                                                                  | Net cash provided by operating activities               |        |        | 10,083  |        |         |        | 6,467  |  
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|Cash flows from investing activities:                    |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         | Proceeds from a sale of radio stations, net of
    closing cost                              |                                                                       |                                                                  |                                                        |        |        |         | 23,730 |        
|                                                         | Advances on purchase price of radio stations                                                 |                                                                       |                                                                  | (15,150                                                 | )      |        |         |       |        
|                                                         | Additions to property and equipment                                                          |                                                                       |                                                                  | (1,233                                                  | )      |        |         | (682   | )      
|                                                         | Additions to property and equipment of
    discontinued operations                           |                                                                       |                                                                  | (2                                                      | )      |        |         |       |        
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         |                                                                                              |                                                                       |                                                                  | Net cash (used in) provided by investing
    activities |        |        | (16,385 | )      |         |        | 23,048 |  
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|Cash flows from financing activities:                    |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         | Increase in deferred offering costs                                                          |                                                                       |                                                                  |                                                        |        |        |         | (430   | )      
|                                                         | Increase in deferred financing costs                                                         |                                                                       |                                                                  |                                                        |        |        |         | (140   | )      
|                                                         | Repayment of senior credit facilities                                                        |                                                                       |                                                                  |                                                        |        |        |         | (312   | )      
|                                                         | Repayment of other long-term debt                                                            |                                                                       |                                                                  | (50                                                     | )      |        |         | (55    | )      
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         |                                                                                              |                                                                       |                                                                  | Net cash used in financing activities                   |        |        | (50     | )      |         |        | (937   | )
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|Net (decrease) increase in cash and cash
    equivalents |                                                                                              |                                                                       | (6,352                                                           | )                                                       |        |        | 28,578  |       
|Cash and cash equivalents at beginning of period         |                                                                                              |                                                                       | 71,430                                                           |                                                         |        |        | 45,609  |       
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|Cash and cash equivalents at end of period               |                                                                                              | $                                                                     | 65,078                                                           |                                                         |        | $      | 74,187  |       
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|Supplemental cash flow information:                      |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         | Interest paid                                                                                |                                                                       | $                                                                | 142                                                     |        |        | $       | 2,479  |        
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       
|                                                         | Income taxes paid                                                                            |                                                                       | $                                                                | 187                                                     |        |        | $       | 323    |        
|                                                         |                                                                                              |                                                                       |                                                                  |                                                         |        |        |         |       

See accompanying notes to the unaudited condensed
consolidated financial statements.

5



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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS



|   |                      
|-- | ---------------------
|1. | Basis of Presentation

The unaudited condensed consolidated financial
statements include the accounts of Spanish Broadcasting System,
Inc. and its subsidiaries (the Company). All
intercompany balances and transactions have been eliminated in
consolidation. The accompanying unaudited condensed consolidated
financial statements as of December 31, 2003 and
March 31, 2004, and for the three-month periods ended
March 31, 2003 and 2004 do not contain all disclosures
required by generally accepted accounting principles. These
unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements
of the Company as of and for the fiscal year ended
December 31, 2003 included in the Companys fiscal
year 2003 Annual Report on Form 10-K.

Effective December 30, 2002, the Company
changed its year-end from a broadcast calendar 52-53-week fiscal
year ending on the last Sunday in December to a calendar year
ending on December 31. Pursuant to Securities and Exchange
Commission Financial Reporting Release No. 35, such change
was not deemed a change in fiscal year for financial reporting
purposes and the Company was not required to file a separate
transition report or to report separate financial information
for the two-day period of December 30 and 31, 2002.
Financial results for December 30 and 31, 2002 are included
in the Companys financial results for the three-month
period ended March 31, 2003.

In the opinion of the Companys management,
the accompanying unaudited condensed consolidated financial
statements contain all adjustments, which are all of a normal
and recurring nature, necessary for a fair presentation of the
results of the interim periods. The results of operations for
the three-month period ended March 31, 2004 are not
necessarily indicative of the results for a full year.



|   |                                                                               
|-- | ------------------------------------------------------------------------------
|2. | Financial Information for Parent, Guarantor
    and Non-Guarantor Subsidiaries

Certain of the Companys subsidiaries
(collectively, the Subsidiary Guarantors) have
guaranteed the Companys 9 5/8% senior subordinated
notes due 2009 on a joint and several basis. The Company has not
included separate financial statements of the Subsidiary
Guarantors because (i) all of the Subsidiary Guarantors are
wholly owned subsidiaries of the Company, and (ii) the
guarantees issued by the Subsidiary Guarantors are full and
unconditional. The Company has not included separate parent-only
financial statements since the parent (Spanish Broadcasting
System, Inc., a Delaware corporation) is a holding company with
no independent assets or operations other than its investments
in its subsidiaries. All Federal Communications Commission (FCC)
licenses are held by special purpose subsidiaries formed solely
for the purpose of holding each respective FCC license and/or
non-guarantor subsidiaries. All of the special purpose
subsidiaries are non-guarantors of the 9 5/8% senior
subordinated notes due 2009. Condensed consolidating unaudited
financial information for the parent and its guarantor and
non-guarantor subsidiaries is as follows (in thousands):

6



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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE
SHEET

As of December 31, 2003


|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |         |         | 
|------------------------------------------- | -------------------- | ----------------- | -------- | ------------ | ------- | ------------ | ------- | ------------ | ----- | ----- | -------- | ------ | ------ |  | -------- | -------- | - |  | -------- | ------- | ------- | 
|                                            |                      |                   |          |              |         | Non          |         |              |       |      
|                                            |                      |                   |          | Guarantors   |         | Guarantors   |         |              |       |      
|                                            |                      | Parent            |          | Subsidiaries |         | Subsidiaries |         | Eliminations |       | Total
|                                            |                      |                   |          |              |         |              |         |              |       |      
|Cash and cash equivalents                   |                      | $                 | 24,503   |              |         |              | 18,340  |              |       |       | 2,766    |        |        |  |         |          |   |  | 45,609   |        
|Net receivables                             |                      |                   |         |              |         |              | 23,917  |              |       |       | 1,650    |        |        |  |         |          |   |  | 25,567   |        
|Other current assets                        |                      |                   | 2,379    |              |         |              | 760     |              |       |       | 343      |        |        |  |         |          |   |  | 3,482    |        
|Assets held for sale                        |                      |                   |         |              |         |              | 2,879   |              |       |       | 23,027   |        |        |  |         |          |   |  | 25,906   |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|                                            | Total current assets |                   |          | 26,882       |         |              |         | 45,896       |       |       |          | 27,786 |        |  |          |         |   |  |          | 100,564 |        
|Property and equipment, net                 |                      |                   | 1,453    |              |         |              | 15,987  |              |       |       | 7,118    |        |        |  |         |          |   |  | 24,558   |        
|Intangible assets, net                      |                      |                   |         |              |         |              | 9,019   |              |       |       | 696,232  |        |        |  |         |          |   |  | 705,251  |        
|Deferred financing costs, net               |                      |                   | 11,461   |              |         |              |        |              |       |       |         |        |        |  |         |          |   |  | 11,461   |        
|Investment in subsidiaries and intercompany |                      |                   | 780,105  |              |         |              | 267,978 |              |       |       | (688,878 | )      |        |  | (359,205 | )        |   |  |         |        
|Other assets                                |                      |                   | 300      |              |         |              | 147     |              |       |       | 1        |        |        |  |         |          |   |  | 448      |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|                                            |                      | $                 | 820,201  |              |         |              | 339,027 |              |       |       | 42,259   |        |        |  | (359,205 | )        |   |  | 842,282  |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|Current portion of long-term debt           |                      | $                 | 1,250    |              |         |              | 66      |              |       |       | 161      |        |        |  |         |          |   |  | 1,477    |        
|Accounts payable and accrued expenses       |                      |                   | 6,371    |              |         |              | 7,769   |              |       |       | 4,682    |        |        |  |         |          |   |  | 18,822   |        
|Accrued interest                            |                      |                   | 6,370    |              |         |              |        |              |       |       |         |        |        |  |         |          |   |  | 6,370    |        
|Deposit on the sale of station              |                      |                   | 1,500    |              |         |              |        |              |       |       |         |        |        |  |         |          |   |  | 1,500    |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|                                            | Current liabilities  |                   |          | 15,491       |         |              |         | 7,835        |       |       |          | 4,843  |        |  |          |         |   |  |          | 28,169  |        
|Long-term debt                              |                      |                   | 448,996  |              |         |              | 637     |              |       |       | 3,084    |        |        |  |         |          |   |  | 452,717  |        
|Deferred income taxes                       |                      |                   | 62,672   |              |         |              | (6,995  | )            |       |       | 12,677   |        |        |  |         |          |   |  | 68,354   |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|                                            |                      | Total liabilities |          |              | 527,159 |              |         |              | 1,477 |       |          |        | 20,604 |  |          |          |  |  |          |         | 549,240 | 
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|Preferred stock                             |                      |                   | 76,366   |              |         |              |        |              |       |       |         |        |        |  |         |          |   |  | 76,366   |        
|Common stock                                |                      |                   | 6        |              |         |              |        |              |       |       | 1        |        |        |  | (1       | )        |   |  | 6        |        
|Additional paid-in capital                  |                      |                   | 443,961  |              |         |              |        |              |       |       | 94,691   |        |        |  | (94,691  | )        |   |  | 443,961  |        
|(Accumulated deficit) retained earnings     |                      |                   | (227,291 | )            |         |              | 337,550 |              |       |       | (73,037  | )      |        |  | (264,513 | )        |   |  | (227,291 | )      
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|                                            | Stockholders equity |                   |          | 216,676      |         |              |         | 337,550      |       |       |          | 21,655 |        |  |          | (359,205 | ) |  |          | 216,676 |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        
|                                            |                      | $                 | 820,201  |              |         |              | 339,027 |              |       |       | 42,259   |        |        |  | (359,205 | )        |   |  | 842,282  |        
|                                            |                      |                   |          |              |         |              |         |              |       |       |          |        |        |  |          |          |   |  |          |        

7



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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE
SHEET

As of March 31, 2004


|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |         | 
|------------------------------------------- | ------------------------- | ------ | -------- | ------------ |  | ------------ | ------- | ------------ |  | ----- | -------- | ------ |  |  | -------- | -------- | - |  | -------- | ------- | 
|                                            |                           |        |          |              |  | Non          |         |              |  |      
|                                            |                           |        |          | Guarantors   |  | Guarantors   |         |              |  |      
|                                            |                           | Parent |          | Subsidiaries |  | Subsidiaries |         | Eliminations |  | Total
|                                            |                           |        |          |              |  |              |         |              |  |      
|Cash and cash equivalents                   |                           | $      | 57,897   |              |  |              | 14,466  |              |  |       | 1,824    |        |  |  |         |          |   |  | 74,187   |        
|Net receivables                             |                           |        |         |              |  |              | 20,156  |              |  |       | 1,208    |        |  |  |         |          |   |  | 21,364   |        
|Other current assets                        |                           |        | 1,040    |              |  |              | 1,812   |              |  |       | 336      |        |  |  |         |          |   |  | 3,188    |        
|Assets held for sale                        |                           |        |         |              |  |              | 1,761   |              |  |       | 12,232   |        |  |  |         |          |   |  | 13,993   |        
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|                                            | Total current assets      |        |          | 58,937       |  |              |         | 38,195       |  |       |          | 15,600 |  |  |          |         |   |  |          | 112,732 | 
|Property and equipment, net                 |                           |        | 1,385    |              |  |              | 16,007  |              |  |       | 7,033    |        |  |  |         |          |   |  | 24,425   |        
|Intangible assets, net                      |                           |        |         |              |  |              | 9,012   |              |  |       | 696,232  |        |  |  |         |          |   |  | 705,244  |        
|Deferred financing costs, net               |                           |        | 11,108   |              |  |              |        |              |  |       |         |        |  |  |         |          |   |  | 11,108   |        
|Investment in subsidiaries and intercompany |                           |        | 760,630  |              |  |              | 298,587 |              |  |       | (679,285 | )      |  |  | (379,932 | )        |   |  |         |        
|Other assets                                |                           |        | 255      |              |  |              | 769     |              |  |       | 1        |        |  |  |         |          |   |  | 1,025    |        
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|                                            |                           | $      | 832,315  |              |  |              | 362,570 |              |  |       | 39,581   |        |  |  | (379,932 | )        |   |  | 854,534  |        
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|Current portion of long-term debt           |                           | $      | 1,250    |              |  |              | 67      |              |  |       | 165      |        |  |  |         |          |   |  | 1,482    |        
|Accounts payable and accrued expenses       |                           |        | 3,860    |              |  |              | 8,276   |              |  |       | 4,389    |        |  |  |         |          |   |  | 16,525   |        
|Accrued interest                            |                           |        | 13,480   |              |  |              | 5       |              |  |       |         |        |  |  |         |          |   |  | 13,485   |        
|Deposit on the sale of station              |                           |        | 1,500    |              |  |              |        |              |  |       |         |        |  |  |         |          |   |  | 1,500    |        
|Deferred commitment fee                     |                           |        | 281      |              |  |              |        |              |  |       |         |        |  |  |         |          |   |  | 281      |        
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|                                            | Total current liabilities |        |          | 20,371       |  |              |         | 8,348        |  |       |          | 4,554  |  |  |          |         |   |  |          | 33,273  | 
|Long-term debt                              |                           |        | 448,978  |              |  |              | 620     |              |  |       | 3,041    |        |  |  |         |          |   |  | 452,639  |        
|Deferred income taxes                       |                           |        | 58,676   |              |  |              | (6,005  | )            |  |       | 11,661   |        |  |  |         |          |   |  | 64,332   |        
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|                                            | Total liabilities         |        |          | 528,025      |  |              |         | 2,963        |  |       |          | 19,256 |  |  |          |         |   |  |          | 550,244 | 
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|Preferred Stock                             |                           |        | 78,420   |              |  |              |        |              |  |       |         |        |  |  |         |          |   |  | 78,420   |        
|Common stock                                |                           |        | 6        |              |  |              |        |              |  |       | 1        |        |  |  | (1       | )        |   |  | 6        |        
|Additional paid-in capital                  |                           |        | 443,531  |              |  |              |        |              |  |       | 94,691   |        |  |  | (94,691  | )        |   |  | 443,531  |        
|(Accumulated deficit) retained earnings     |                           |        | (217,667 | )            |  |              | 359,607 |              |  |       | (74,367  | )      |  |  | (285,240 | )        |   |  | (217,667 | )      
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|                                            | Stockholders equity      |        |          | 225,870      |  |              |         | 359,607      |  |       |          | 20,325 |  |  |          | (379,932 | ) |  |          | 225,870 | 
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        
|                                            |                           | $      | 832,315  |              |  |              | 362,570 |              |  |       | 39,581   |        |  |  | (379,932 | )        |   |  | 854,534  |        
|                                            |                           |        |          |              |  |              |         |              |  |       |          |        |  |  |          |          |   |  |          |        

8



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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS

For the three months ended March 31,
2003


|                                       |                                             |        |        |              |   |              |        |              |  |       |        |        |   |  |       |        |   |  |        |       |  
|-------------------------------------- | ------------------------------------------- | ------ | ------ | ------------ | - | ------------ | ------ | ------------ |  | ----- | ------ | ------ | - |  | ----- | ------ | - |  | ------ | ----- | -
|                                       |                                             |        |        |              |   | Non          |        |              |  |      
|                                       |                                             |        |        | Guarantors   |   | Guarantors   |        |              |  |      
|                                       |                                             | Parent |        | Subsidiaries |   | Subsidiaries |        | Eliminations |  | Total
|                                       |                                             |        |        |              |   |              |        |              |  |      
|Net revenue                            |                                             | $      |       |              |   |              | 25,490 |              |  |       | 2,433  |        |   |  |      |        |   |  | 27,923 |      
|Station operating expenses             |                                             |        |       |              |   |              | 15,493 |              |  |       | 1,975  |        |   |  |      |        |   |  | 17,468 |      
|Corporate expenses                     |                                             |        | 4,489  |              |   |              |       |              |  |       | 120    |        |   |  | (120  | )      |   |  | 4,489  |      
|Depreciation and amortization          |                                             |        | 92     |              |   |              | 491    |              |  |       | 125    |        |   |  |      |        |   |  | 708    |      
|                                       |                                             |        |        |              |   |              |        |              |  |       |        |        |   |  |       |        |   |  |        |      
|                                       | Operating income from continuing operations |        |        | (4,581       | ) |              |        | 9,506        |  |       |        | 213    |   |  |       | 120    |   |  |        | 5,258 |  
|Interest (expense) income, net         |                                             |        | (8,308 | )            |   |              | 1,019  |              |  |       | (1,340 | )      |   |  |      |        |   |  | (8,629 | )    
|Other income (expense), net            |                                             |        |       |              |   |              | 146    |              |  |       |       |        |   |  | (120  | )      |   |  | 26     |      
|Equity in net earnings of subsidiaries |                                             |        | (9,511 | )            |   |              |        |              |  |       |       |        |   |  | 9,511 |        |   |  |       |      
|Income tax expense (benefit)           |                                             |        | (2,577 | )            |   |              | 82     |              |  |       | 47     |        |   |  |      |        |   |  | (2,448 | )    
|Discontinued operations, net of tax    |                                             |        |       |              |   |              | 96     |              |  |       |       |        |   |  |      |        |   |  | 96     |      
|                                       |                                             |        |        |              |   |              |        |              |  |       |        |        |   |  |       |        |   |  |        |      
|                                       | Net (loss) income                           |        | $      | (801         | ) |              |        | 10,685       |  |       |        | (1,174 | ) |  |       | (9,511 | ) |  |        | (801  | )
|                                       |                                             |        |        |              |   |              |        |              |  |       |        |        |   |  |       |        |   |  |        |      

CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS

For the three months ended March 31,
2004


|                                       |                                                         |        |         |              |   |              |        |              |  |       |        |        |   |  |        |         |   |  |         |        | 
|-------------------------------------- | ------------------------------------------------------- | ------ | ------- | ------------ | - | ------------ | ------ | ------------ |  | ----- | ------ | ------ | - |  | ------ | ------- | - |  | ------- | ------ | 
|                                       |                                                         |        |         |              |   | Non          |        |              |  |      
|                                       |                                                         |        |         | Guarantors   |   | Guarantors   |        |              |  |      
|                                       |                                                         | Parent |         | Subsidiaries |   | Subsidiaries |        | Eliminations |  | Total
|                                       |                                                         |        |         |              |   |              |        |              |  |      
|Net revenue                            |                                                         | $      |        |              |   |              | 26,788 |              |  |       | 2,444  |        |   |  |       |         |   |  | 29,232  |       
|Station operating expenses             |                                                         |        |        |              |   |              | 16,175 |              |  |       | 2,154  |        |   |  |       |         |   |  | 18,329  |       
|Corporate expenses                     |                                                         |        | 3,228   |              |   |              |       |              |  |       | 120    |        |   |  | (120   | )       |   |  | 3,228   |       
|Depreciation and amortization          |                                                         |        | 96      |              |   |              | 603    |              |  |       | 123    |        |   |  |       |         |   |  | 822     |       
|                                       |                                                         |        |         |              |   |              |        |              |  |       |        |        |   |  |        |         |   |  |         |       
|                                       | Operating income from continuing operations             |        |         | (3,324       | ) |              |        | 10,010       |  |       |        | 47     |   |  |        | 120     |   |  |         | 6,853  | 
|Interest (expense) income, net         |                                                         |        | (9,914  | )            |   |              | 1,006  |              |  |       | (1,330 | )      |   |  |       |         |   |  | (10,238 | )     
|Other income (expense), net            |                                                         |        | 177     |              |   |              | 121    |              |  |       | (3     | )      |   |  | (120   | )       |   |  | 175     |       
|Equity in net earnings of subsidiaries |                                                         |        | (20,727 | )            |   |              |       |              |  |       |       |        |   |  | 20,727 |         |   |  |        |       
|Income tax expense (benefit)           |                                                         |        | (4,012  | )            |   |              | 20     |              |  |       | 44     |        |   |  |       |         |   |  | (3,948  | )     
|Discontinued operations, net of tax    |                                                         |        |        |              |   |              | 10,940 |              |  |       |       |        |   |  |       |         |   |  | 10,940  |       
|                                       |                                                         |        |         |              |   |              |        |              |  |       |        |        |   |  |        |         |   |  |         |       
|                                       | Net (loss) income                                       |        | $       | 11,678       |   |              |        | 22,057       |  |       |        | (1,330 | ) |  |        | (20,727 | ) |  |         | 11,678 | 
|                                       |                                                         |        |         |              |   |              |        |              |  |       |        |        |   |  |        |         |   |  |         |       
|Dividend on preferred stock            |                                                         |        | (2,054  | )            |   |              |       |              |  |       |       |        |   |  |       |         |   |  | (2,054  | )     
|                                       | Net (loss) income applicable to common
    stockholders |        | $       | 9,624        |   |              |        | 22,057       |  |       |        | (1,330 | ) |  |        | (20,727 | ) |  |         | 9,624  | 
|                                       |                                                         |        |         |              |   |              |        |              |  |       |        |        |   |  |        |         |   |  |         |       

CONDENSED CONSOLIDATING STATEMENT OF CASH
FLOWS

For the three months ended March 31,
2003


|                                     |  |        |        |              |  |              |         |              |  |       |     |   |  |  |         |   |  |  |         |  
|------------------------------------ |  | ------ | ------ | ------------ |  | ------------ | ------- | ------------ |  | ----- | --- | - |  |  | ------- | - |  |  | ------- | -
|                                     |  |        |        |              |  | Non          |         |              |  |      
|                                     |  |        |        | Guarantors   |  | Guarantors   |         |              |  |      
|                                     |  | Parent |        | Subsidiaries |  | Subsidiaries |         | Eliminations |  | Total
|                                     |  |        |        |              |  |              |         |              |  |      
|Cash flows from operating activities |  | $      | (4,537 | )            |  |              | 14,066  |              |  |       | 554 |   |  |  |        |   |  |  | 10,083  |  
|                                     |  |        |        |              |  |              |         |              |  |       |     |   |  |  |         |   |  |  |         |  
|Cash flows from investing activities |  | $      | 4,182  |              |  |              | (1,174  | )            |  |       | (5  | ) |  |  | (19,388 | ) |  |  | (16,385 | )
|                                     |  |        |        |              |  |              |         |              |  |       |     |   |  |  |         |   |  |  |         |  
|Cash flows from financing activities |  | $      |       |              |  |              | (19,399 | )            |  |       | (39 | ) |  |  | 19,388  |   |  |  | (50     | )
|                                     |  |        |        |              |  |              |         |              |  |       |     |   |  |  |         |   |  |  |         |  

9



---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH
FLOWS

For the three months ended March 31,
2004


|                                     |  |        |        |              |  |              |         |              |  |       |         |   |  |  |         |   |  |  |        |  
|------------------------------------ |  | ------ | ------ | ------------ |  | ------------ | ------- | ------------ |  | ----- | ------- | - |  |  | ------- | - |  |  | ------ | -
|                                     |  |        |        |              |  | Non          |         |              |  |      
|                                     |  |        |        | Guarantors   |  | Guarantors   |         |              |  |      
|                                     |  | Parent |        | Subsidiaries |  | Subsidiaries |         | Eliminations |  | Total
|                                     |  |        |        |              |  |              |         |              |  |      
|Cash flows from operating activities |  | $      | (5,898 | )            |  |              | 14,432  |              |  |       | (2,067  | ) |  |  |        |   |  |  | 6,467  |  
|                                     |  |        |        |              |  |              |         |              |  |       |         |   |  |  |         |   |  |  |        |  
|Cash flows from investing activities |  | $      | 40,174 |              |  |              | (1,818  | )            |  |       | 24,894  |   |  |  | (40,202 | ) |  |  | 23,048 |  
|                                     |  |        |        |              |  |              |         |              |  |       |         |   |  |  |         |   |  |  |        |  
|Cash flows from financing activities |  | $      | (882   | )            |  |              | (16,172 | )            |  |       | (24,085 | ) |  |  | 40,202  |   |  |  | (937   | )
|                                     |  |        |        |              |  |              |         |              |  |       |         |   |  |  |         |   |  |  |        |  



|   |                              
|-- | -----------------------------
|3. | New Accounting Pronouncements

In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure
(SFAS No. 148). SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123 Accounting for
Stock-Based Compensation. Among other items, SFAS
No. 148 allows companies adopting SFAS No. 123 to
utilize one of three alternative transition methods, one of
which was a prospective method, as defined, that was
only available if adopted during 2003. To date, we have not
adopted SFAS No. 123 utilizing any of the transition
methods of SFAS No. 148. On March 31, 2004, the FASB
issued an exposure draft on a proposed statement, Share-Based
Payment, that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services
in exchange for (a) equity instruments of the enterprise or
(b) liabilities that are based on the fair value of the
enterprises equity instruments or that may be settled by
the issuance of such equity instruments. The proposed statement
would eliminate the ability to account for share-based
compensation transactions using Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and generally would require instead that such
transactions be accounted for using a fair-value-based method.
The proposed statement is effective for awards granted,
modified, or settled in fiscal years beginning after
December 15, 2004, for public entities that used the
fair-value based method of accounting under the original
provisions of SFAS No. 123, Accounting for Stock-Based
Compensation for recognition or pro forma disclosure purposes.
The Company is currently evaluating the impact the proposed
statement may have on its consolidated financial position, cash
flows and results of operations.

In May 2003, FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (SFAS No.
150), effective for financial instruments entered into or
modified after May 31, 2003, and otherwise effective at the
beginning of the first interim period beginning after
June 15, 2003. This statement establishes standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a freestanding financial instrument that
is within its scope as a liability (or an asset in some
circumstances) when that financial instrument embodies an
obligation of the issuer. The adoption of SFAS No. 150 did
not have an impact on our consolidated financial statements.

In December 2003, FASB issued a revised
Interpretation No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51 (FIN 46R). FIN 46R requires the
consolidation of entities in which an enterprise absorbs a
majority of the entitys expected losses, receives a
majority of the entitys expected residual returns, or
both, as a result of ownership, contractual or other financial
interests in the entity. Currently, entities are generally
consolidated by an enterprise when it has a controlling
financial interest through ownership of a majority voting
interest in the entity. The provisions of FIN 46R are generally
effective for existing (prior to February 1, 2003) variable
interest relationships of a public entity no later than the end
of the first reporting period that ends after March 15,
2004. However, prior to the required application of this
interpretation, a public entity that is not a small business
issuer shall apply FIN 46R to those entities that are considered
to be special-purpose entities no later than the end of the
first reporting period that ends after December 15, 2003.
The adoption of FIN 46R did not have an impact on our
consolidated financial statements.

10



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|   |                                                    
|-- | ---------------------------------------------------
|4. | Sale of Stations and/or Discontinued
    Operations

On September 18, 2003, the Company entered
into an asset purchase agreement with Border Media Partners, LLC
to sell the assets of radio stations KLEY-FM and KSAH-AM,
serving the San Antonio, Texas market, for a cash purchase price
of $24.4 million. On January 30, 2004, the Company
completed the sale of the assets of these radio stations KLEY-FM
and KSAH-AM consisting of $11.2 million of intangible assets,
net, and $0.6 million of property and equipment. The Company
recognized a gain of approximately $11.3 million, net of closing
costs and taxes on the sale.

On October 2, 2003, the Company entered into
an asset purchase agreement with 3 Point Media  San
Francisco, LLC (Three Point Media) to sell the assets of radio
station KPTI-FM, serving the San Francisco, California market,
for a cash purchase price of $30.0 million. In connection with
this agreement, Three Point Media made a $1.5 million deposit on
the purchase price. On February 3, 2004, the Company
terminated the agreement; however, on April 15, 2004, the
Company reinstated the agreement and entered into an amendment
to the asset purchase agreement and a time brokerage agreement.
In connection with this amendment, Three Point Media made an
additional $0.5 million deposit on the purchase price. The
Company intends to sell the assets of radio station KPTI-FM;
however, there cannot be any assurance that the sale will be
completed.

The Company determined that the pending sales
and/or sales of these stations met the criteria in accordance
with SFAS No. 144 to classify the stations respective
assets as held for sale and their respective operations as
discontinued operations. The results of operations in the
current year and prior year period of these stations have been
classified as discontinued operations in the condensed
consolidated statements of operations. On March 31, 2004,
the Company had assets held for sale consisting of $13.7 million
of intangible assets, net, and $0.3 million of property and
equipment for radio station KPTI-FM.



|   |                           
|-- | --------------------------
|5. | Stock Options and Warrants

The Company accounts for its stock option plans
in accordance with APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations,
under which compensation expense is recorded to the extent that
the market price on the grant date of the underlying stock
exceeds the exercise price. No stock-based employee compensation
cost is reflected in net income (loss), as all options granted
under these plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The
fair value of each option granted to employees is estimated on
the date of grant using the Black-Scholes option-pricing model
with the following assumptions at:

|                        |  |                |         |                |  |  |         | 
|----------------------- |  | -------------- | ------- | -------------- |  |  | ------- | 
|                        |  | March 31, 2003 |         | March 31, 2004
|                        |  |                |         |               
|Expected life           |  |                | 7 years |                |  |  | 7 years | 
|Dividends               |  |                | None    |                |  |  | None    | 
|Risk-free interest rate |  |                | 3.35%   |                |  |  | 3.33%   | 
|Expected volatility     |  |                | 86%     |                |  |  | 78%     | 

11



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Had compensation expense for the Companys
plans been determined consistent with SFAS No. 123, the
Companys net income (loss) applicable to common
stockholders and net income (loss) per common share would
have been adjusted to pro forma amounts indicated below (in
thousands, except per share data):

|                                                                                                                                    |                                |                    |        |                    |   |   |        |      | 
|----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ------------------ | ------ | ------------------ | - | - | ------ | ---- | 
|                                                                                                                                    |                                | Three-Months Ended |        | Three-Months Ended
|                                                                                                                                    |                                | March 31, 2003     |        | March 31, 2004    
|                                                                                                                                    |                                |                    |        |                   
|Net (loss) income applicable to common
    stockholders:                                                                            |                                |                    |        |                    |   |   |        |     
|As reported                                                                                                                         |                                | $                  | (801   | )                  |   | $ | 9,624  |     
|Deduct: total stock-based employee compensation
    expense determined under fair value based method for all awards,
    net of tax |                                |                    | (1,020 | )                  |   |   | (1,786 | )   
|                                                                                                                                    |                                |                    |        |                    |   |   |        |     
|Pro forma net (loss) income                                                                                                         |                                | $                  | (1,821 | )                  |   | $ | 7,838  |     
|                                                                                                                                    |                                |                    |        |                    |   |   |        |     
|Net (loss) income per common share:                                                                                                 |                                |                    |        |                    |   |   |        |     
|                                                                                                                                    | As reported: Basic and Diluted |                    | $      | (0.01              | ) |   | $      | 0.15 | 
|                                                                                                                                    | Pro forma: Basic and Diluted   |                    | $      | (0.03              | ) |   | $      | 0.12 | 
|                                                                                                                                    |                                |                    |        |                    |   |   |        |     

In connection with the purchase of KXOL-FM
serving the Los Angeles, California market, the Company issued
warrants to purchase an aggregate of 2,700,000 shares of the
Companys Class A common stock. The following table
summarizes information about these warrants:

|                      |  |                     |           |                |  |                    |       |  |  |  |                    | 
|--------------------- |  | ------------------- | --------- | -------------- |  | ------------------ | ----- |  |  |  | ------------------ | 
|                      |  | Number of Shares of |           |                |  |                   
|                      |  | Class A             |           |                |  |                   
|                      |  | Common Stock        |           | Per Share      |  | Warrant Expiration
|Warrant Date of Issue |  | Underlying Warrants |           | Exercise Price |  | Date              
|                      |  |                     |           |                |  |                   
|February 8, 2002      |  |                     | 2,000,000 |                |  | $                  | 10.50 |  |  |  | February 8, 2005   | 
|March 31, 2003        |  |                     | 100,000   |                |  | $                  | 6.14  |  |  |  | March 31, 2006     | 
|April 30, 2003        |  |                     | 100,000   |                |  | $                  | 7.67  |  |  |  | April 30, 2006     | 
|May 31, 2003          |  |                     | 100,000   |                |  | $                  | 7.55  |  |  |  | May 31, 2006       | 
|June 30, 2003         |  |                     | 100,000   |                |  | $                  | 8.08  |  |  |  | June 30, 2006      | 
|July 31, 2003         |  |                     | 100,000   |                |  | $                  | 8.17  |  |  |  | July 31, 2006      | 
|August 31, 2003       |  |                     | 100,000   |                |  | $                  | 7.74  |  |  |  | August 31, 2006    | 
|September 30, 2003    |  |                     | 100,000   |                |  | $                  | 8.49  |  |  |  | September 30, 2006 | 
|                      |  |                     |           |                |  |                    |       |  |  |  |                    | 
|                      |  |                     | 2,700,000 |                |  |                    |       |  |  |  |                    | 
|                      |  |                     |           |                |  |                    |       |  |  |  |                    | 



|   |           
|-- | ----------
|6. | Litigation

From time to time we are involved in litigation
incidental to the conduct of our business, such as contractual
matters and employee-related matters. In the opinion of
management, such litigation is not likely to have a material
adverse effect on our business, operating results, or financial
position.

On June 14, 2000, an action was filed in the
Eleventh Judicial Circuit in and for Miami-Dade County, Florida
by Jose Antonio Hurtado against us, alleging that he was
entitled to a commission related to an acquisition made by us.
The case was tried before a jury during the week of
December 1, 2003 and Mr. Hurtado was awarded the sum of
$1.8 million, plus interest. Mr. Hurtado also filed an
application for attorneys fees, which we opposed on
grounds that there is no contractual or statutory basis for such
an award. We filed a motion for judgment notwithstanding the
verdict, which was heard on February 6, 2004. On
March 12, 2004, the Court denied our motion for judgment
notwithstanding the verdict and, upon its own motion, the Court
granted a new trial. On April 7, 2004, Mr. Hurtado
filed a notice of appeal with the Third District Court of
Appeal, challenging the order granting a new trial, and on
April 8, 2004, we filed a notice of cross-appeal,
challenging the denial of our motion for judgment
notwithstanding the verdict. The appeal is sitting with the
Third District Court of Appeal, pending the filing of appellate
briefs and oral argument. We have accrued for the $1.8 million
award, plus interest, at December 31, 2003 and have
recorded the amount in other expense (income), net, in the
consolidated statement of operations in the fourth quarter of
the fiscal year ended December 31, 2003.

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In connection with our sale of WXLX-AM in 1997,
we assigned the lease of the transmitter for WXLX in Lyndhurst,
New Jersey, to the purchaser of the station. The transmitter is
located on a former landfill which ceased operations in the late
1960s. Although WXLX has been sold, we retain potential
exposure to possible environmental liabilities relating to the
transmitter site (the Transmitter Property). On
September 12, 2002, the landlords of the property, Frank F.
Viola, Thomas C. Viola Trust and Louis Viola Company, received a
notice from the New Jersey Meadowlands Commission indicating
that it was planning to redevelop the lands which include the
Transmitter Property and offering compensation to the landlords
for the purchase of the Transmitter Property. The Meadowlands
Commission also initially indicated that it would not seek
reimbursement from the landlords for the costs of landfill
closure or for the remediation of environmental conditions that
resulted from the operation of the landfill. The landlords
assert that, in any condemnation proceedings, the Meadowlands
Commission should be legally bound by its prior statements,
foregoing landfill related claims. The landlords did not accept
the initial offer of the Meadowlands Commission. On
December 4, 2002, the Meadowlands Commission filed a
condemnation proceeding in the Superior Court of New Jersey,
Bergen County, against the landlords, and named us as an
additional defendant. The principal parties to the condemnation
proceeding recently negotiated a settlement of the compensation
to be paid to the property owner and have petitioned the Court
for approval of the settlement and for entry of an Order of
Final Judgment. That motion is scheduled to be heard on
May 14, 2004. In the proposed Order, the Meadowlands
Commission does not reserve claims for reimbursement for
landfill closure related costs. While it does reserve its rights
to assert independently (even subsequent to the conclusion of
the condemnation proceedings), claims concerning the remediation
of any contamination unrelated to the landfill operations, the
Meadowlands Commissions investigations thus far have
disclosed no such contamination and, to date, no claims have
been made against the landlords or us relating to the
environmental condition of the Transmitter Property.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

Overview

We are the largest Hispanic-controlled radio
broadcasting company in the United States. After giving effect
to the proposed sale of our San Francisco station, we will own
and operate 24 radio stations in five of the top-ten Hispanic
markets in the United States, including Los Angeles, New York,
Puerto Rico, Miami and Chicago. Our radio stations are located
in markets that reach approximately 45% of the U.S. Hispanic
population. As part of our operating business, we also operate
LaMusica.com, a bilingual Spanish-English Internet website
providing content related to Latin music, entertainment, news
and culture.

The success of each of our radio stations depends
significantly upon its audience ratings and share of the overall
advertising revenue within its market. The radio broadcasting
industry is a highly competitive business, but some barriers to
entry do exist. Each of our radio stations competes with both
Spanish-language and English-language radio stations in its
market as well as with other advertising media such as
newspapers, broadcast television, cable television, the
Internet, magazines, outdoor advertising, transit advertising
and direct mail marketing. Factors which are material to
competitive position include management experience, the radio
stations rank in its market, signal strength and
frequency, and audience demographics, including the nature of
the Spanish-language market targeted by a particular station.
Our top three markets, based on net revenue, are New York, Los
Angeles and Miami. A significant decline in net revenue or
station operating income from our stations in any of these
markets could have a material adverse effect on our financial
position and results of operations.

Our primary source of revenue is the sale of
advertising time on our radio stations to local and national
advertisers. Our revenue is affected primarily by the
advertising rates that our radio stations are able to charge, as
well as the overall demand for radio advertising time in each
respective market. Seasonal net broadcasting revenue
fluctuations are common in the radio broadcasting industry and
are due to fluctuations in advertising expenditures by local and
national advertisers. Typically, for the radio broadcasting
industry, the first calendar quarter generally produces the
lowest revenue.

The performance of a radio station group is
customarily measured by its ability to generate station
operating income and Adjusted EBITDA. Our most significant
operating expenses, for purposes of the

13



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##### Table of Contents



computation of station operating income and
Adjusted EBITDA, are compensation expenses, programming
expenses, and advertising and promotional expenses. Our senior
management strives to control these expenses as well as other
expenses by working closely with local station management and
others.


The term station operating income
(our former broadcast cash flow or BCF) is defined
as Generally Accepted Accounting Principles
(GAAP) operating income from continuing operations,
excluding corporate expenses and depreciation and amortization.
Station operating income replaces our former BCF as one of the
metrics used by management to assess the performance of our
radio stations. Although it is calculated in the same manner as
BCF, management believes that using the term station
operating income provides a more accurate description of
the performance measure. The term station operating income
margin consists of station operating income divided by net
revenue.

EBITDA consists of earnings before interest
expenses, interest income, income taxes, depreciation and
amortization of assets and discontinued operations. We calculate
our EBITDA differently. Our EBITDA is EBITDA as
defined above but excluding other income or expense, or
alternatively, GAAP operating income from continuing operations
before depreciation and amortization. To distinguish our
calculation of EBITDA from other possible meanings of EBITDA,
for periods ending after March 31, 2003 and going forward
we changed references to EBITDA in our financial
reports to the term Adjusted EBITDA. Although our
Adjusted EBITDA and what we formerly referred to as
our EBITDA are calculated in the same manner,
management believes Adjusted EBITDA is a more
accurate description and represents another metric used by
management to assess the performance of the stations and
Company, as a whole.

Station operating income,
station operating income margin, and Adjusted
EBITDA are non-GAAP financial measures as defined by the
Securities and Exchange Commissions Regulation G.
These non-GAAP financial measures should not be construed as
superior to GAAP financial measures. The GAAP financial measure
most directly comparable to each non-GAAP financial measure and
a reconciliation of the differences between each non-GAAP
financial measure and the comparable GAAP financial measure are
included below. Although station operating income, station
operating income margin and Adjusted EBITDA are not measures of
performance calculated in accordance with GAAP, we believe that
they are useful to an investor in evaluating an investment in
our securities because they are measures widely used in the
broadcast industry to evaluate a radio companys operating
performance and are used by management for internal budgeting
purposes and to evaluate the performance of our radio stations.
However, station operating income, station operating income
margin and Adjusted EBITDA should not be considered in isolation
or as substitutes for operating income, net income (loss), cash
flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as measures
of liquidity or profitability. Also, because they are not
calculated in the same manner by all companies, they may not be
comparable to other similarly titled measures used by other
companies.

14



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##### Table of Contents



Fluctuation Analysis of the Operating Results
for the Three Months Ended March 31, 2004 Compared to the Three
Months Ended March 31, 2003 and Non-GAAP Measures
Reconciliation.

The following summary table presents a comparison
of our results of operations for the three-months ended
March 31, 2003 and 2004 with respect to certain of our key
financial measures, as well as a reconciliation of the
difference between each Non-GAAP financial measure and the
comparable GAAP financial measure. The changes illustrated in
the table are discussed below. This section should be read in
conjunction with the unaudited condensed consolidated financial
statements and notes.

|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |        | 
|------------------------------------------------------------------------------------- | ----------------------------------------------------------- | --------------- | ------ | ------ | - | - | ------- | ------ |  |  | ------ | ------ | 
|                                                                                      |                                                             |                 |        |       
|                                                                                      |                                                             | Three Months    |        |       
|                                                                                      |                                                             | Ended March 31, |        | Change
|                                                                                      |                                                             |                 |        |       
|                                                                                      |                                                             | 2003            |        | 2004   |   | $
|                                                                                      |                                                             |                 |        |        |   |  
|                                                                                      |                                                             |                
|                                                                                      |                                                             | (In thousands) 
|Net revenue                                                                           |                                                             | $               | 27,923 |        |   | $ | 29,232  |        |  |  | 1,309  |       
|Station operating expenses
    (Engineering, Programming, Selling and G & A expenses) |                                                             |                 | 17,468 |        |   |   | 18,329  |        |  |  | 861    |       
|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |       
|                                                                                      | Station operating income (formerly broadcast
    cash flow) |                 |        | 10,455 |   |   |         | 10,903 |  |  |        | 448    | 
|Corporate expenses                                                                    |                                                             |                 | 4,489  |        |   |   | 3,228   |        |  |  | (1,261 | )     
|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |       
|                                                                                      | Adjusted EBITDA                                             |                 |        | 5,966  |   |   |         | 7,675  |  |  |        | 1,709  | 
|Depreciation and amortization                                                         |                                                             |                 | 708    |        |   |   | 822     |        |  |  | 114    |       
|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |       
|Operating income from continuing operations                                           |                                                             |                 | 5,258  |        |   |   | 6,853   |        |  |  | 1,595  |       
|Interest expense, net                                                                 |                                                             |                 | (8,629 | )      |   |   | (10,238 | )      |  |  | (1,609 | )     
|Other income, net                                                                     |                                                             |                 | 26     |        |   |   | 175     |        |  |  | 149    |       
|Income tax expense (benefit)                                                          |                                                             |                 | (2,448 | )      |   |   | (3,948  | )      |  |  | (1,500 | )     
|Discontinued operations, net                                                          |                                                             |                 | 96     |        |   |   | 10,940  |        |  |  | 10,844 |       
|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |       
|                                                                                      | Net income (loss)                                           |                 | $      | (801   | ) |   | $       | 11,678 |  |  |        | 12,479 | 
|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |       
|Station operating income margin                                                       |                                                             |                 | 37.4   | %      |   |   | 37.3    | %      |  |  |        |       
|                                                                                      |                                                             |                 |        |        |   |   |         |        |  |  |        |       

Net Revenue.The
increase in net revenue was due to the double-digit growth in
our Miami and Chicago markets primarily in local and network
revenue. In addition, the start-up stations KZAB-FM and KZBA-FM
in Los Angeles, which began operating on March 1, 2003,
generated an increase in net revenue of approximately $1.0
million. Offsetting these increases was a decrease in the New
York market mainly in national and local revenue.

Station Operating Expenses.The increase in station operating
expenses was primarily due to the investments made in our Los
Angeles and New York programming departments. Other expenses
that increased were audience research costs and insurance due to
higher premiums. These increases were offset by decreases in:
(a) local and national commissions due to lower commission
structures (b) stock-based programming expense related to
the warrants issued in connection with the KXOL-FM asset
purchase agreement and (c) advertising and promotional
expenses due to a decrease in promotional events and less
advertising in our core markets.

Station Operating Income.The increase in station operating
income was due to the increase in net revenue offset by the
increase in station operating expenses. Station operating income
margin remained flat due to the proportional increases in net
revenue and station operating expenses.

Corporate Expenses.The decrease in corporate expenses
resulted mainly from the decrease in legal and professional fees
related to various lawsuits and other legal matters.

Adjusted EBITDA.The
increase in Adjusted EBITDA was primarily attributed to the
increase in station operating income and decrease in corporate
expenses.

15



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##### Table of Contents



Depreciation and Amortization.The increase in depreciation and
amortization was due to the acquisition of property and
equipment in our Chicago, Los Angeles and New York markets.

Operating Income from Continuing Operations.The increase in operating income from
continuing operations was primarily attributed to the increase
in Adjusted EBITDA.

Interest Expense, Net.The increase in interest expense, net,
was due to interest incurred on the new $125.0 million senior
secured credit facility term loan that was entered into on
October 30, 2003 and a decrease in interest income
resulting from a general decline in interest rates and our
average cash balances.

Income Taxes.The
income tax benefit was a result of applying our estimated
effective tax rate for the full year of 125% to our pre-tax loss
from continuing operations. The increase in income tax benefit
was due to an increase in our estimated effective book tax rate,
over the prior year, primarily due to the additional tax
amortization of FCC licenses as a result of our acquisition of
KXOL-FM in October 2003. Our effective book tax rate was
impacted by the adoption of SFAS No. 142 on
December 31, 2001. As a result of adopting SFAS
No. 142, the reversal of our deferred tax liabilities
related to our intangible assets could no longer be assured over
our net operating loss carryforward period. Therefore, our
estimated effective book tax rate reflects a full valuation
allowance on our deferred tax assets.

Discontinued Operations, Net of Taxes.We determined that the sale of our
KLEY-FM and KSAH-AM stations serving the San Antonio, Texas
market, and the pending sale of our KPTI-FM station serving the
San Francisco, California market, all met the criteria in
accordance with SFAS No. 144 to classify their respective
operations as discontinued operations. Consequently, these
stations results from operations for the three months
ended March 31, 2003 and 2004 have been classified as
discontinued operations. The increase in discontinued
operations, net of taxes was a result of the $11.3 million gain
recognized on the sale of our KLEY-FM and KSAH-AM stations, net
of closing costs and taxes on the sale.

Net Income.The
increase in net income was primarily due to the increase in
discontinued operations, net of taxes, related to an $11.3
million gain on the sale of radio stations KLEY-FM and KSAH-AM.

Liquidity and Capital Resources

Our primary source of liquidity is cash on hand
and cash provided by operations and, to the extent necessary,
undrawn commitments that are available under a five-year $10.0
million revolving credit facility. Our ability to raise funds by
increasing our indebtedness is limited by the terms of the
indentures governing our senior subordinated notes, the
certificates of designations governing our preferred stock and
the credit agreement governing our senior secured credit
facilities. Additionally, the indentures, certificates of
designations and credit agreement place restrictions on us with
respect to the sale of assets, liens, investments, dividends,
debt repayments, capital expenditures, transactions with
affiliates and consolidations and mergers, among other things.
We had cash and cash equivalents of $45.6 million and $74.2
million as of December 31, 2003 and March 31, 2004,
respectively.

The following summary table presents a comparison
of our capital resources for the three months ended
March 31, 2003 and 2004, with respect to certain of our key
measures affecting our liquidity. The changes set forth in the
table are discussed below. This section should be read in
conjunction with the unaudited condensed consolidated financial
statements and notes.

|                                                              |  |                 |         |        |  |   |        |   |  |  |        |  
|------------------------------------------------------------- |  | --------------- | ------- | ------ |  | - | ------ | - |  |  | ------ | -
|                                                              |  |                 |         |       
|                                                              |  | Three Months    |         |       
|                                                              |  | Ended March 31, |         | Change
|                                                              |  |                 |         |       
|                                                              |  | 2003            |         | 2004   |  | $
|In thousands                                                  |  |                 |         |        |  |  
|                                                              |  |                 |         |        |  |  
|Capital expenditures                                          |  | $               | 1,235   |        |  | $ | 682    |   |  |  | (553   | )
|                                                              |  |                 |         |        |  |   |        |   |  |  |        |  
|Net cash flows provided by operating activities               |  | $               | 10,083  |        |  | $ | 6,467  |   |  |  | (3,616 | )
|Net cash flows provided by (used in) investing
    activities |  |                 | (16,385 | )      |  |   | 23,048 |   |  |  | 39,433 |  
|Net cash flows used in financing activities                   |  |                 | (50     | )      |  |   | (937   | ) |  |  | (887   | )
|                                                              |  |                 |         |        |  |   |        |   |  |  |        |  
|Net (decrease) increase in cash and cash
    equivalents      |  | $               | (6,352  | )      |  | $ | 28,578 |   |  |  |        |  
|                                                              |  |                 |         |        |  |   |        |   |  |  |        |  

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##### Table of Contents



Net Cash Flows Provided By Operating
Activities.Changes in our net cash
flows from operating activities were primarily a result of the
increase in cash paid to vendors, suppliers and employees and
for interest, causing the decrease in working capital balances.

Net Cash Flows Provided By (Used In) Investing
Activities.Changes in our net cash
flows from investing activities were primarily a result of the
proceeds received from the sale of radio stations KLEY-FM and
KSAH-AM in January 2004, and a deposit made in March 2003 for
the acquisition of KXOL-FM, which was completed in October 2003.

Net Cash Flows (Used in) Financing Activities.Changes in our net cash flows from
financing activities were primarily a result of the additional
offering costs related to our 10 3/4% Series B
cumulative exchangeable redeemable preferred stock and financing
costs related to our $135.0 million senior secured credit
facilities, and the principal payment made on the senior secured
credit facility term loan during the three months period ended
March 31, 2004.

Management believes that cash from operating
activities, together with cash on hand, should be sufficient to
permit us to meet our operating obligations in the foreseeable
future, including required interest and quarterly principal
payments pursuant to the senior secured credit facilities
agreement, interest payment requirements under our 9 5/8%
senior subordinated notes due 2009 and capital expenditures,
excluding the acquisitions of FCC licenses. Assumptions (none of
which can be assured), which underlie managements beliefs,
include the following:



| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the economic conditions within the radio
    broadcasting industry and economic conditions in general will
    not deteriorate in any material respect;
|
| |  | we will continue to successfully implement our
    business strategy; and                                                                              
|
| |  | we will not incur any material unforeseen
    liabilities, including environmental liabilities.                                                        

Our strategy is to primarily utilize cash flows
from operations to meet our capital needs and contractual
obligations. However, we also have bank borrowings available to
meet our capital needs and contractual obligations and, when
appropriate, will obtain financing by issuing debt or stock.

We are required to maintain financial covenant
ratios under our senior secured credit facilities as follows:
(i) Consolidated EBITDA minimum, (ii) Consolidated Fixed
Charge Coverage Ratio, (iii) Consolidated Leverage Ratio,
(iv) Consolidated Interest Coverage Ratio and
(v) Consolidated Senior Secured Debt Ratio, all as defined
in the credit agreement solely for the purpose of determining
compliance with the covenants. The credit agreement requiring
compliance with these financial covenants states that the
calculations must be based on generally accepted accounting
principles promulgated by the Financial Accounting Standards
Board. We are in compliance with all covenants under our senior
secured credit facilities and all other debt instruments as of
March 31, 2004 and expect to be in compliance in the
foreseeable future.

On October 2, 2003, we entered into an asset
purchase agreement with 3 Point Media  San Francisco, LLC
(Three Point Media) to sell the assets of radio
station KPTI-FM, serving the San Francisco, California market,
for a cash purchase price of $30.0 million. In connection with
this agreement, Three Point Media made a $1.5 million deposit on
the purchase price. On February 3, 2004, we terminated the
agreement; however, on April 15, 2004, we reinstated the
agreement and entered into an amendment to the asset purchase
agreement and a time brokerage agreement. In connection with
this amendment, Three Point Media made an additional $0.5
million deposit on the purchase price. We intend to sell the
assets of radio station KPTI-FM; however, there cannot be any
assurance that the sale will be completed. Pursuant to the
credit agreement governing our senior secured credit facilities,
a portion (approximately $25.0 million) of the proceeds received
from the sale of KPTI-FM, when and if completed, must be offered
to the noteholders to repay a portion of our borrowings under
the senior secured credit facilities.

We continuously review opportunities to acquire
additional radio stations and sell non-core radio stations,
primarily in the largest Hispanic markets in the United States.
We engage in discussions regarding potential acquisitions from
time to time in the ordinary course of business. We currently
have no written understandings, letters of intent or contracts
to acquire radio stations or other companies. We anticipate that
any future

17



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##### Table of Contents



acquisitions would be financed through funds
generated from permitted debt financing, equity financing,
operations, asset sales or a combination of these sources.
However, there can be no assurance that financing from any of
these sources, if available, can be obtained on favorable terms
for future acquisitions.


During the three months ended March 31,
2004, we entered into various contractual obligations related to
production services agreements, syndication agreements and
employee agreements. We expect unrecorded obligations to
increase by approximately $5.1 million, $4.9 million,
$5.1 million, $4.4 million, $4.6 million and
$0.7 million for the fiscal years ended 2004, 2005, 2006,
2007, 2008 and 2009.

New Accounting Pronouncements

In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure
(SFAS No. 148). SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123 Accounting for
Stock-Based Compensation. Among other items, SFAS
No. 148 allows companies adopting SFAS No. 123 to
utilize one of three alternative transition methods, one of
which was a prospective method, as defined, that was
only available if adopted during 2003. To date, we have not
adopted SFAS No. 123 utilizing any of the transition
methods of SFAS No. 148. On March 31, 2004, the FASB
issued an exposure draft on a proposed statement, Share-Based
Payment, that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services
in exchange for (a) equity instruments of the enterprise or
(b) liabilities that are based on the fair value of the
enterprises equity instruments or that may be settled by
the issuance of such equity instruments. The proposed statement
would eliminate the ability to account for share-based
compensation transactions using Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and generally would require instead that such
transactions be accounted for using a fair-value-based method.
The proposed statement is effective for awards granted,
modified, or settled in fiscal years beginning after
December 15, 2004, for public entities that used the
fair-value based method of accounting under the original
provisions of SFAS No. 123, Accounting for Stock-Based
Compensation for recognition or pro forma disclosure purposes.
The Company is currently evaluating the impact the proposed
statement may have on its consolidated financial position, cash
flows and results of operations.

In May 2003, FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (SFAS No.
150), effective for financial instruments entered into or
modified after May 31, 2003, and otherwise effective at the
beginning of the first interim period beginning after
June 15, 2003. This statement establishes standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a freestanding financial instrument that
is within its scope as a liability (or an asset in some
circumstances) when that financial instrument embodies an
obligation of the issuer. The adoption of SFAS No. 150 did
not have an impact on our consolidated financial statements.

In December 2003, FASB issued a revised
Interpretation No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51 (FIN 46R). FIN 46R requires the
consolidation of entities in which an enterprise absorbs a
majority of the entitys expected losses, receives a
majority of the entitys expected residual returns, or
both, as a result of ownership, contractual or other financial
interests in the entity. Currently, entities are generally
consolidated by an enterprise when it has a controlling
financial interest through ownership of a majority voting
interest in the entity. The provisions of FIN 46R are generally
effective for existing (prior to February 1, 2003) variable
interest relationships of a public entity no later than the end
of the first reporting period that ends after March 15,
2004. However, prior to the required application of this
interpretation, a public entity that is not a small business
issuer shall apply FIN 46R to those entities that are considered
to be special-purpose entities no later than the end of the
first reporting period that ends after December 15, 2003.
The adoption of FIN 46R did not have an impact on our
consolidated financial statements.

18



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##### Table of Contents



Disclosure Regarding Forward-Looking
Statements

This quarterly report on Form 10-Q contains
both historical and forward-looking statements. All statements
other than statements of historical fact are, or may be deemed
to be, forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are not based on
historical facts, but rather reflect our current expectations
concerning future results and events. These forward-looking
statements generally can be identified by the use of statements
that include phrases such as believe,
expect, anticipate, intend,
plan, foresee, likely,
will or other similar words or phrases. Similarly,
statements that describe our objectives, plans or goals are, or
may be, forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or
achievements to be different from any future results,
performance and achievements expressed or implied by these
statements. Factors that could cause actual results to differ
from those expressed in forward-looking statements include, but
are not limited to:



| |   |                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our substantial amount of debt could adversely
    affect our financial condition and prevent us from fulfilling
    our obligations under our senior secured credit facilities and
    Series B preferred stock;                                                                                                   
|
| |  | We will require a significant amount of cash to
    service our debt and to make cash dividend payments under the
    Series B preferred stock after October 15, 2008;                                                                                                                                              
|
| |  | We may not have the funds to repay or the ability
    to refinance our senior secured credit facilities or 9 5/8%
    senior subordinated notes due 2009;                                                                                                                                                           
|
| |  | Our ability to generate cash is affected by many
    factors beyond our control;                                                                                                                                                                                                                                    
|
| |  | Any acceleration of our debt or event of default
    would harm our business and financial condition;                                                                                                                                                                                                               
|
| |  | Despite our current significant level of debt, we
    and our subsidiaries may still be able to incur substantially
    more debt. This could further intensify some of the risks
    described above;                                                                                                              
|
| |  | The terms of our debt restrict us from engaging
    in many activities and require us to satisfy various financial
    tests;                                                                                                                                                                                       
|
| |  | The terms of our debt and Series B preferred
    stock impose or will impose restrictions on us that may
    adversely affect our business;                                                                                                                                                                         
|
| |  | The restrictions imposed by our debt may prevent
    us from paying cash dividends on the Series B preferred
    stock after October 15, 2008 and exchanging the
    Series B preferred stock for exchange notes;                                                                                                   
|
| |  | We may not have the funds or the ability to raise
    the funds necessary to repurchase our Series B preferred
    stock if holders exercise their repurchase right, or to finance
    the change of control offer required by the Series B
    preferred stock;                                                    
|
| |  | We may not complete the pending sale of our San
    Francisco station;                                                                                                                                                                                                                                              
|
| |  | We have experienced net losses in the past and,
    to the extent that we experience net losses in the future, the
    market price of our common stock may be adversely affected which
    in turn may adversely affect our ability to raise capital;                                                              
|
| |  | Our operating results could be adversely affected
    by a national or regional recession;                                                                                                                                                                                                                          
|
| |  | A large portion of our net revenue and station
    operating income currently comes from our New York, Los Angeles
    and Miami markets;                                                                                                                                                                           
|
| |  | Loss of any key personnel could adversely affect
    our business;                                                                                                                                                                                                                                                  
|
| |  | Our long-term growth depends upon successfully
    executing our acquisition strategy;                                                                                                                                                                                                                              
|
| |  | Raúl Alarcón, Jr., Chairman of the
    Board of Directors, Chief Executive Officer and President, has
    majority voting control and this control may discourage or
    influence certain types of transactions, including an actual or
    potential change of control of SBS such as a merger or sale of
    SBS;

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| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We compete for advertising revenue with other
    radio groups as well as television and other media, many
    operators of which have greater resources than we do;
|
| |  | We might face increased competition because of
    the merger of Univision Communications Inc. and Hispanic
    Broadcasting Corp.;                                 
|
| |  | We must be able to respond to rapidly changing
    technology, services and standards which characterize our
    industry for us to remain competitive;             
|
| |  | Our business depends on maintaining our FCC
    licenses and we cannot assure you that we will be able to
    maintain these licenses;                              
|
| |  | We may face regulatory review for additional
    acquisitions;                                                                                                      
|
| |  | The market price of our shares of Class A
    common stock may fluctuate significantly; and                                                                         
|
| |  | Current or future sales by existing or future
    stockholders could depress the market price of our Class A
    common stock.                                      

Consequently, such forward-looking statements
should be regarded solely as our current plans, estimates and
beliefs. We do not undertake any obligation to update any
forward-looking statements to reflect subsequent events or
circumstances.






|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

We believe that inflation has not had a material
impact on our results of operations for the three months ended
March 31,2003 and 2004, respectively. However, there can be
no assurance that inflation will not have an adverse impact on
our future operating results and financial condition.

Our primary market risk is a change in interest
rates associated with borrowings under our senior secured credit
facilities. Advances under the senior secured credit facilities
bear base rate or eurodollar rate interest (in each case subject
to applicable margins), as applicable, which vary in accordance
with prevailing economic conditions. Our earnings are affected
by changes in interest rates due to the impact those changes
have on interest expense from variable-rate debt instruments and
on interest income generated from our cash and investment
balances. At March 31, 2004, all of our debt, other than
our $124.7 million senior secured credit facility term loan, had
fixed interest rates. If variable interest rates average 10%
higher in 2004 than they did during 2003, our variable interest
expense would increase by approximately $0.6 million, compared
to a variable annualized estimated $5.5 million for 2003
measured as of December 31, 2003. If interest rates average
10% lower in 2004 than they did during 2003, our interest income
from cash and investment balances would decrease by
approximately $0.1 million, compared to a variable annualized
estimated $0.5 million for 2003 measured as of December 31,
2003. These amounts are determined by considering the impact of
the hypothetical interest rates on our variable-rate debt, cash
equivalents and short-term investment balances at
December 31, 2003. There has been no material change in our
market risk position since December 31, 2003.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Evaluation of disclosure controls and
procedures

We maintain disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the
SECs rules and forms, and that such information is
accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required
disclosure.

As of the end of the quarterly period covered by
this report, our management carried out an evaluation, with the
participation of our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and
procedures. Based on this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of the
end of such period, our disclosure controls and procedures were
effective.

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##### Table of Contents



Changes in internal control over financial
reporting

There has been no change in our internal control
over financial reporting during the fiscal quarter to which this
report relates that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.




PART II  OTHER INFORMATION






|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

From time to time we are involved in litigation
incidental to the conduct of our business, such as contractual
matters and employee-related matters. In the opinion of
management, such litigation is not likely to have a material
adverse effect on our business, operating results, or financial
position.

On June 14, 2000, an action was filed in the
Eleventh Judicial Circuit in and for Miami-Dade County, Florida
by Jose Antonio Hurtado against us, alleging that he was
entitled to a commission related to an acquisition made by us.
The case was tried before a jury during the week of
December 1, 2003 and Mr. Hurtado was awarded the sum of
$1.8 million, plus interest. Mr. Hurtado also filed an
application for attorneys fees, which we opposed on
grounds that there is no contractual or statutory basis for such
an award. We filed a motion for judgment notwithstanding the
verdict, which was heard on February 6, 2004. On
March 12, 2004, the Court denied our motion for judgment
notwithstanding the verdict and, upon its own motion, the Court
granted a new trial. On April 7, 2004, Mr. Hurtado
filed a notice of appeal with the Third District Court of
Appeal, challenging the order granting a new trial, and on
April 8, 2004, we filed a notice of cross-appeal,
challenging the denial of our motion for judgment
notwithstanding the verdict. The appeal is sitting with the
Third District Court of Appeal, pending the filing of appellate
briefs and oral argument. We have accrued for the $1.8 million
award, plus interest, at December 31, 2003 and have
recorded the amount in other expense (income), net, in the
consolidated statement of operations in the fourth quarter of
the fiscal year ended December 31, 2003.

In connection with our sale of WXLX-AM in 1997,
we assigned the lease of the transmitter for WXLX in Lyndhurst,
New Jersey, to the purchaser of the station. The transmitter is
located on a former landfill which ceased operations in the late
1960s. Although WXLX has been sold, we retain potential
exposure to possible environmental liabilities relating to the
transmitter site (the Transmitter Property). On
September 12, 2002, the landlords of the property, Frank F.
Viola, Thomas C. Viola Trust and Louis Viola Company, received a
notice from the New Jersey Meadowlands Commission indicating
that it was planning to redevelop the lands which include the
Transmitter Property and offering compensation to the landlords
for the purchase of the Transmitter Property. The Meadowlands
Commission also initially indicated that it would not seek
reimbursement from the landlords for the costs of landfill
closure or for the remediation of environmental conditions that
resulted from the operation of the landfill. The landlords
assert that, in any condemnation proceedings, the Meadowlands
Commission should be legally bound by its prior statements,
foregoing landfill related claims. The landlords did not accept
the initial offer of the Meadowlands Commission. On
December 4, 2002, the Meadowlands Commission filed a
condemnation proceeding in the Superior Court of New Jersey,
Bergen County, against the landlords, and named us as an
additional defendant. The principal parties to the condemnation
proceeding recently negotiated a settlement of the compensation
to be paid to the property owner and have petitioned the Court
for approval of the settlement and for entry of an Order of
Final Judgment. That motion is scheduled to be heard on
May 14, 2004. In the proposed Order, the Meadowlands
Commission does not reserve claims for reimbursement for
landfill closure related costs. While it does reserve its rights
to assert independently (even subsequent to the conclusion of
the condemnation proceedings), claims concerning the remediation
of any contamination unrelated to the landfill operations, the
Meadowlands Commissions investigations thus far have
disclosed no such contamination and, to date, no claims have
been made against the landlords or us relating to the
environmental condition of the Transmitter Property.

21



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##### Table of Contents








|        |                  
|------- | -----------------
|Item 5. | Other Information

On February 18, 2004, we commenced an offer
to exchange registered shares of our 10 3/4% Series B
cumulative exchangeable redeemable preferred stock, par value
$.01 per share and liquidation preference of $1,000 per share
(the Series B Preferred Stock) for any and all
shares of our outstanding unregistered 10 3/4%
Series A cumulative exchangeable redeemable preferred
stock, par value $.01 per share and liquidation preference of
$1,000 per share (the Series A Preferred
Stock). Our registration statement on Form S-4, which
registered the Series B Preferred Stock and the
10 3/4% subordinated exchange notes due 2013 that may be
issued by us in exchange for the Series B Preferred Stock
under certain circumstances, was declared effective by the
Securities and Exchange Commission on February 13, 2004.
The exchange offer expired at 5:00 p.m., eastern standard time,
on March 26, 2004, with full participation in the exchange
offer by all holders of our Series A Preferred Stock. On
April 5, 2004, we completed the exchange offer and
exchanged 76,702,083 shares of our Series B Preferred Stock
for all of our then outstanding shares of Series A
Preferred Stock.






|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

(a) Exhibits 

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 |  | Third Amended and Restated Certificate of
    Incorporation of Spanish Broadcasting System, Inc. (the
    Company), dated September 29, 1999
    (incorporated by reference to the Companys 1999
    Registration Statement on Form S-1 (Commission File
    No. 333-85499) (the 1999 Registration
    Statement)) (Exhibit A to this exhibit is
    incorporated by reference to the Companys Current Report
    on Form 8-K, dated March 25, 1996 (the 1996
    Current Report)).
|3.2 |  | Certificate of Amendment to the Third Amended and
    Restated Certificate of Incorporation of the Company, dated
    September 29, 1999 (incorporated by reference to the
    Companys 1999 Registration Statement).                                                                                                                                                                                                                                                                     
|3.3 |  | Amended and Restated By-Laws of the Company
    (incorporated by reference to the Companys 1999
    Registration Statement).                                                                                                                                                                                                                                                                                                                                                              
|3.4 |  | Certificate of Elimination of 14 1/4% Senior
    Exchangeable Preferred Stock, Series A of the Company,
    dated October 28, 2003 (incorporated by reference to
    Exhibit 3.3 of the Companys Quarterly Report on
    Form 10-Q, dated November 14, 2003 (the 11/14/03
    Quarterly Report)).                                                                                                                                                                                       
|4.1 |  | Article V of the Third Amended and Restated
    Certificate of Incorporation of the Company, dated
    September 29, 1999 (incorporated by reference to the
    Companys 1999 Registration Statement) (see
    Exhibit 3.1).                                                                                                                                                                                                                                                              
|4.2 |  | Certificate of Designations dated
    October 29, 2003 Setting Forth the Voting Power,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and Qualifications, Limitations and Restrictions
    of the 10 3/4% Series A Cumulative Exchangeable
    Redeemable Preferred Stock of Spanish Broadcasting System, Inc.
    (incorporated by reference to Exhibit 4.1 of the
    Companys 11/14/03 Quarterly Report).                                          
|4.3 |  | Certificate of Designations dated
    October 29, 2003 Setting Forth the Voting Power,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and Qualifications, Limitations and Restrictions
    of the 10 3/4% Series B Cumulative Exchangeable
    Redeemable Preferred Stock of Spanish Broadcasting System, Inc.
    (incorporated by reference to Exhibit 4.2 of the
    Companys 11/14/03 Quarterly Report).                                          
|4.4 |  | Indenture dated June 29, 1994 among the
    Company, IBJ Schroder Bank & Trust Company, as Trustee, the
    Guarantors named therein and the Purchasers named therein
    (incorporated by reference to Exhibit 4.1 of the
    Companys 1994 Registration Statement on Form S-4).                                                                                                                                                                                                         
|4.5 |  | First Supplemental Indenture dated as of March
    25, 1996 to the Indenture dated as of June 29, 1994 among
    the Company, the Guarantors named therein and IBJ Schroder Bank
    & Trust Company, as Trustee (incorporated by reference to
    the 1996 Current Report).                                                                                                                                                                                                               

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|     |  |                                                                                                                                                                                                                                                                                           
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  |  | Second Supplemental Indenture dated as of
    March 1, 1997 to the Indenture dated as of June 29,
    1994 among the Company, the Guarantors named therein and IBJ
    Schroder Bank & Trust Company, as Trustee (incorporated by
    reference to the 1996 Current Report).              
|4.7  |  | Supplemental Indenture dated as of
    October 21, 1999 to the Indenture dated as of June 29,
    1994 among the Company, the Guarantors named therein and IBJ
    Schroder Bank & Trust Company, as Trustee (incorporated by
    reference to the Companys 1999 Registration Statement).
|4.8  |  | Indenture with respect to 9 5/8% Senior
    Subordinated Notes due 2009 with The Bank of New York as
    Trustee, dated November 2, 1999 (incorporated by reference
    to the Current Report on Form 8-K dated November 2,
    1999).                                                    
|4.9  |  | Indenture with respect to 9 5/8% Senior
    Subordinated Notes due 2009 with The Bank of New York as
    Trustee, dated June 8, 2001 (incorporated by reference to
    the Companys Registration Statement on Form S-3,
    filed on June 25, 2001).                                     
|4.10 |  | Form of stock certificate for the Class A common
    stock of the Company (incorporated by reference to the
    Companys 1999 Registration Statement).                                                                                                                                   
|10.1 |  | Nonqualified Stock Option Agreement dated
    March 3, 2004 between the Company and Joseph A. García.                                                                                                                                                                                     
|10.2 |  | Incentive Stock Option Agreement dated
    March 3, 2004 between the Company and Joseph A. García.                                                                                                                                                                                        
|10.3 |  | Amendment dated as of April 15, 2004 to the
    Asset Purchase Agreement dated as of October 2, 2003 by and
    among the Company, Spanish Broadcasting System-San Francisco,
    Inc., KPTI Licensing, Inc. and 3 Point Media-San Francisco,
    LLC.                                    
|10.4 |  | Time Brokerage Agreement dated as of
    April 15, 2004, by and among the Company, Spanish
    Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc.
    and 3 Point Media-San Francisco, LLC.                                                                                    
|31.1 |  | Chief Executive Officers Certification
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                    
|31.2 |  | Chief Financial Officers Certification
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                    
|32.1 |  | Chief Executive Officers Certification
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                 
|32.2 |  | Chief Financial Officers Certification
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                 

(b) Reports on Form 8-K

The Company filed the following report on
Form 8-K during the three months ended March 31, 2004:



| |                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) a current report on Form 8-K on
    March 4, 2004 to report that on March 4, 2004 the
    Company issued a press release announcing its fourth quarter and
    fiscal year 2003 financial results.

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##### Table of Contents



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.



| |                                  
| | ---------------------------------
| | SPANISH BROADCASTING SYSTEM, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ JOSEPH A. GARCIA

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Joseph A. García                                 
| | Executive Vice President, Chief Financial Officer
| | and Secretary (principal financial and           
| | accounting officer and duly
    authorized       
| | officer of the registrant)                       

Date: May 10, 2004

24