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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission file number 333-110122



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LBI MEDIA HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)



|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 05-0584918                       
|(State or other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification No.)



1845 West Empire
Avenue

Burbank, California 91504

(Address of principal executive offices, excluding zip code) (Zip code)



Registrants Telephone Number, Including Area Code: (818) 563-5722



---



Not Applicable

(Former name, former address and former fiscal year, if changed since last report).



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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 x   No ̈



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



As of August 15, 2005, there
were approximately 100 shares outstanding of Common Stock, $0.01 par value.



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##### Table of Contents

LBI MEDIA HOLDINGS, INC.

FORM 10-Q QUARTERLY REPORT



TABLE OF CONTENTS



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | Page
|PART I. FINANCIAL INFORMATION                                                                 |  |     
|                                                                                              | 
|Item 1.
Financial Statements                                                                  |  | 1   
|                                                                                              | 
|Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 17  
|                                                                                              | 
|Item 3.
Quantitative and Qualitative Disclosures About Market Risk                            |  | 35  
|                                                                                              | 
|Item 4.
Controls and Procedures                                                               |  | 36  
|                                                                                              | 
|PART II. OTHER INFORMATION                                                                    |  |     
|                                                                                              | 
|Item 1.
Legal Proceedings                                                                     |  | 37  
|                                                                                              | 
|Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 37  
|                                                                                              | 
|Item 3.
Defaults Upon Senior Securities                                                       |  | 37  
|                                                                                              | 
|Item 4.
Submission of Matters to a Vote of Security Holders                                   |  | 37  
|                                                                                              | 
|Item 5.
Other Information                                                                     |  | 37  
|                                                                                              | 
|Item 6.
Exhibits                                                                              |  | 37  



i



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##### Table of Contents



PART I. FINANCIAL
INFORMATION



|Item 1. | Financial Statements
|------- | --------------------



LBI MEDIA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                                    |  |                  |             |   |              |   |            
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----------- | - | ------------ | - | -----------
|                                                                                                                                    |  | December 31,2004 |             |   | June 30,2005
|                                                                                                                                    |  | (Note 1)         |             |   | (unaudited) 
|Assets                                                                                                                              |  |                  |             |   |              |   |            
|Current assets                                                                                                                      |  |                  |             |   |              |   |            
|Cash and cash equivalents                                                                                                           |  | $                | 5,742,299   |   |              | $ | 3,892,876  
|Short-term investments                                                                                                              |  |                  | 33,860      |   |              |   | 35,340     
|Accounts receivable (less allowance for doubtful accounts of $1,312,765 as of December 31, 2004 and $1,247,528 as of June 30,
2005) |  |                  | 13,563,455  |   |              |   | 15,001,086 
|Current portion of program rights, net                                                                                              |  |                  | 878,570     |   |              |   | 887,350    
|Amounts due from related parties                                                                                                    |  |                  | 705,939     |   |              |   | 67,360     
|Current portion of employee advances                                                                                                |  |                  | 81,973      |   |              |   | 81,297     
|Prepaid expenses and other current assets                                                                                           |  |                  | 1,217,756   |   |              |   | 899,163    
|                                                                                                                                    |  |                  |             |   |              |   |            
|Total current assets                                                                                                                |  |                  | 22,223,852  |   |              |   | 20,864,472 
|Property and equipment, net                                                                                                         |  |                  | 66,874,250  |   |              |   | 68,039,723 
|Program rights, excluding current portion                                                                                           |  |                  | 1,617,518   |   |              |   | 1,455,780  
|Notes receivable from related parties                                                                                               |  |                  | 2,586,098   |   |              |   | 2,619,487  
|Employee advances, excluding current portion                                                                                        |  |                  | 762,292     |   |              |   | 826,506    
|Deferred financing costs, net                                                                                                       |  |                  | 6,779,535   |   |              |   | 6,306,911  
|Broadcast licenses, net                                                                                                             |  |                  | 288,809,598 |   |              |   | 288,818,328
|Other assets                                                                                                                        |  |                  | 439,768     |   |              |   | 313,226    
|                                                                                                                                    |  |                  |             |   |              |   |            
|Total assets                                                                                                                        |  | $                | 390,092,911 |   |              | $ | 389,244,433
|                                                                                                                                    |  |                  |             |   |              |   |            
|Liabilities and stockholders equity                                                                                                |  |                  |             |   |              |   |            
|Current liabilities:                                                                                                                |  |                  |             |   |              |   |            
|Accounts payable and accrued expenses                                                                                               |  | $                | 3,751,744   |   |              | $ | 2,555,080  
|Accrued interest                                                                                                                    |  |                  | 7,864,146   |   |              |   | 8,015,370  
|Program rights payable                                                                                                              |  |                  | 33,500      |   |              |   | 33,500     
|Amounts due to related parties                                                                                                      |  |                  |            |   |              |   | 1,800,000  
|Current portion of long-term debt                                                                                                   |  |                  | 118,043     |   |              |   | 121,337    
|                                                                                                                                    |  |                  |             |   |              |   |            
|Total current liabilities                                                                                                           |  |                  | 11,767,433  |   |              |   | 12,525,287 
|Long-term debt, excluding current portion                                                                                           |  |                  | 327,508,965 |   |              |   | 326,455,877
|Deferred compensation                                                                                                               |  |                  | 11,430,000  |   |              |   | 10,937,000 
|Deferred state income taxes                                                                                                         |  |                  | 766,362     |   |              |   | 766,362    
|Other liabilities                                                                                                                   |  |                  | 333,460     |   |              |   | 472,501    
|                                                                                                                                    |  |                 
|Commitments and contingencies                                                                                                       |  |                  |             |   |              |   |            
|                                                                                                                                    |  |                 
|Stockholders equity:                                                                                                               |  |                  |             |   |              |   |            
|Common stock, $0.01 par value:                                                                                                      |  |                  |             |   |              |   |            
|Authorized shares 1,000                                                                                                            |  |                  |             |   |              |   |            
|Issued and outstanding shares 100                                                                                                  |  |                  | 1           |   |              |   | 1          
|Additional paid-in capital                                                                                                          |  |                  | 22,657,667  |   |              |   | 16,865,264 
|Retained earnings                                                                                                                   |  |                  | 15,629,447  |   |              |   | 21,221,085 
|Accumulated other comprehensive (loss) income                                                                                       |  |                  | (424        | ) |              |   | 1,056      
|                                                                                                                                    |  |                  |             |   |              |   |            
|Total stockholders equity                                                                                                          |  |                  | 38,286,691  |   |              |   | 38,087,406 
|                                                                                                                                    |  |                  |             |   |              |   |            
|Total liabilities and stockholders equity                                                                                          |  | $                | 390,092,911 |   |              | $ | 389,244,433
|                                                                                                                                    |  |                  |             |   |              |   |            



See accompanying
notes.



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##### Table of Contents



LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                                                                                                                                                                                                                      |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                                                                                                                                                                                                                      |  | Three Months EndedJune 30, |            |   | Six Months EndedJune 30, |  
|                                                                                                                                                                                                                                                                                                      |  | 2004                       |            |   | 2005                     |   |            | 2004 |  |   | 2005        |  
|Net revenues                                                                                                                                                                                                                                                                                          |  | $                          | 24,770,601 |   |                          | $ | 26,404,788 |      |  | $ | 44,142,896  |   |  | $ | 46,941,665  |  
|Operating expenses:                                                                                                                                                                                                                                                                                   |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  
|Program and technical, exclusive of noncash employee compensation of ($48,000) and $(52,000) for the three months ended June 30, 2004 and
2005, respectively, and $197,000 and $(127,000) for the six months ended June 30, 2004 and 2005, respectively, and depreciation shown below                 |  |                            | 3,933,513  |   |                          |   | 4,440,597  |      |  |   | 7,505,990   |   |  |   | 8,562,460   |  
|Promotional, exclusive of depreciation shown below                                                                                                                                                                                                                                                    |  |                            | 429,869    |   |                          |   | 682,899    |      |  |   | 811,170     |   |  |   | 959,063     |  
|Selling, general and administrative, exclusive of noncash employee compensation of ($127,000) and $(147,000) for the three months ended June
30, 2004 and 2005, respectively, and $689,000 and $(366,000) for the six months ended June 30, 2004 and 2005, respectively, and depreciation shown below |  |                            | 7,017,236  |   |                          |   | 7,467,923  |      |  |   | 13,735,519  |   |  |   | 14,893,217  |  
|Noncash employee compensation                                                                                                                                                                                                                                                                         |  |                            | (175,000   | ) |                          |   | (199,000   | )    |  |   | 886,000     |   |  |   | (493,000    | )
|Depreciation                                                                                                                                                                                                                                                                                          |  |                            | 1,314,660  |   |                          |   | 1,483,734  |      |  |   | 2,439,223   |   |  |   | 2,971,197   |  
|Offering costs                                                                                                                                                                                                                                                                                        |  |                            |           |   |                          |   | 246,961    |      |  |   |            |   |  |   | 246,961     |  
|                                                                                                                                                                                                                                                                                                      |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  
|Total operating expenses                                                                                                                                                                                                                                                                              |  |                            | 12,520,278 |   |                          |   | 14,123,114 |      |  |   | 25,377,902  |   |  |   | 27,139,898  |  
|                                                                                                                                                                                                                                                                                                      |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  
|Operating income                                                                                                                                                                                                                                                                                      |  |                            | 12,250,323 |   |                          |   | 12,281,674 |      |  |   | 18,764,994  |   |  |   | 19,801,767  |  
|Interest expense                                                                                                                                                                                                                                                                                      |  |                            | (6,271,876 | ) |                          |   | (7,246,317 | )    |  |   | (12,544,755 | ) |  |   | (14,261,261 | )
|Interest and other income                                                                                                                                                                                                                                                                             |  |                            | 66,466     |   |                          |   | 35,984     |      |  |   | 90,589      |   |  |   | 65,538      |  
|Gain on sale of property and equipment                                                                                                                                                                                                                                                                |  |                            | 2,354      |   |                          |   |           |      |  |   | 2,354       |   |  |   |            |  
|                                                                                                                                                                                                                                                                                                      |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  
|Income before income taxes                                                                                                                                                                                                                                                                            |  |                            | 6,047,267  |   |                          |   | 5,071,341  |      |  |   | 6,313,182   |   |  |   | 5,606,044   |  
|Provision for income taxes                                                                                                                                                                                                                                                                            |  |                            | (105,311   | ) |                          |   | 24,950     |      |  |   | (123,869    | ) |  |   | (14,406     | )
|                                                                                                                                                                                                                                                                                                      |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  
|Net income                                                                                                                                                                                                                                                                                            |  | $                          | 5,941,956  |   |                          | $ | 5,096,291  |      |  | $ | 6,189,313   |   |  | $ | 5,591,638   |  
|                                                                                                                                                                                                                                                                                                      |  |                            |            |   |                          |   |            |      |  |   |             |   |  |   |             |  



See accompanying
notes.



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LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                  |  |                          |             |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---- | - | ---------- | -
|                                                                                  |  | Six Months EndedJune 30, |            
|                                                                                  |  | 2004                     |             |   | 2005 |  
|Operating activities                                                              |  |                          |             |   |      |   |            |  
|Net income                                                                        |  | $                        | 6,189,313   |   |      | $ | 5,591,638  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |             |   |      |   |            |  
|Depreciation                                                                      |  |                          | 2,439,223   |   |      |   | 2,971,197  |  
|Amortization of deferred financing costs                                          |  |                          | 407,578     |   |      |   | 496,312    |  
|Accretion on senior discount notes                                                |  |                          | 2,251,833   |   |      |   | 2,508,414  |  
|Noncash employee compensation                                                     |  |                          | 886,000     |   |      |   | (493,000   | )
|Offering costs                                                                    |  |                          |            |   |      |   | 246,961    |  
|Gain on sale of investments                                                       |  |                          | (47,614     | ) |      |   |           |  
|Gain on sale of property and equipment                                            |  |                          | (2,354      | ) |      |   |           |  
|Provision for doubtful accounts                                                   |  |                          | 457,693     |   |      |   | 444,440    |  
|Changes in operating assets and liabilities:                                      |  |                          |             |   |      |   |            |  
|Accounts receivable                                                               |  |                          | 107,432     |   |      |   | (1,882,071 | )
|Program rights                                                                    |  |                          | 461,347     |   |      |   | 152,958    |  
|Amounts due from related parties                                                  |  |                          | (190,528    | ) |      |   | 638,579    |  
|Prepaid expenses and other current assets                                         |  |                          | 163,118     |   |      |   | 318,593    |  
|Employee advances                                                                 |  |                          | (27,536     | ) |      |   | 6,712      |  
|Accounts payable and accrued expenses                                             |  |                          | 624,593     |   |      |   | (1,196,667 | )
|Accrued interest                                                                  |  |                          | (192,501    | ) |      |   | 151,224    |  
|Program rights payable                                                            |  |                          | (6,833      | ) |      |   |           |  
|Amounts due from (to) related parties                                             |  |                          | (189,485    | ) |      |   |           |  
|Deferred state income tax payable                                                 |  |                          | 67,971      |   |      |   |           |  
|Other assets and liabilities                                                      |  |                          | (134,149    | ) |      |   | 242,194    |  
|                                                                                  |  |                          |             |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                          | 13,265,101  |   |      |   | 10,197,484 |  
|                                                                                  |  |                          |             |   |      |   |            |  
|                                                                                  |  |                         
|Investing activities                                                              |  |                          |             |   |      |   |            |  
|Purchase of property and equipment                                                |  |                          | (6,269,434  | ) |      |   | (4,133,351 | )
|Acquisition of radio and television station property and equipment                |  |                          | (7,000,000  | ) |      |   |           |  
|Acquisition costs                                                                 |  |                          | (142,483    | ) |      |   |           |  
|Acquisition of broadcast licenses                                                 |  |                          | (28,660,985 | ) |      |   | (8,730     | )
|Amounts deposited in escrow for the acquisition of broadcast licenses             |  |                          | (750,000    | ) |      |   |           |  
|Proceeds from sale of property and equipment                                      |  |                          | 140,000     |   |      |   |           |  
|Proceeds from sale of investments                                                 |  |                          | 141,750     |   |      |   |           |  
|Acquisition of Spanish Media Rep Team, Inc.                                       |  |                          |            |   |      |   | (4,075,970 | )
|                                                                                  |  |                          |             |   |      |   |            |  
|Net cash used in investing activities                                             |  |                          | (42,541,152 | ) |      |   | (8,218,051 | )
|                                                                                  |  |                          |             |   |      |   |            |  
|                                                                                  |  |                         
|Financing activities                                                              |  |                          |             |   |      |   |            |  
|Proceeds from issuance of long-term debt and bank borrowings                      |  |                          | 36,702,499  |   |      |   | 1,100,000  |  
|Payments of deferred financing costs                                              |  |                          | (1,390,749  | ) |      |   | (270,648   | )
|Payments on long-term debt and bank borrowings                                    |  |                          | (10,832,168 | ) |      |   | (4,658,208 | )
|Distributions to Parent                                                           |  |                          | (1,165,802  | ) |      |   |           |  
|                                                                                  |  |                          |             |   |      |   |            |  
|Net cash provided by (used in) financing activities                               |  |                          | 23,313,780  |   |      |   | (3,828,856 | )
|                                                                                  |  |                          |             |   |      |   |            |  
|Net decrease in cash and cash equivalents                                         |  |                          | (5,962,271  | ) |      |   | (1,849,423 | )
|Cash and cash equivalents at beginning of period                                  |  |                          | 6,670,129   |   |      |   | 5,742,299  |  
|                                                                                  |  |                          |             |   |      |   |            |  
|Cash and cash equivalents at end of period                                        |  | $                        | 707,858     |   |      | $ | 3,892,876  |  
|                                                                                  |  |                          |             |   |      |   |            |  
|Supplemental disclosure of cash flow information:                                 |  |                          |             |   |      |   |            |  
|Cash paid during the period for:                                                  |  |                          |             |   |      |   |            |  
|Interest                                                                          |  | $                        | 10,038,052  |   |      | $ | 11,063,768 |  
|                                                                                  |  |                          |             |   |      |   |            |  
|Income taxes                                                                      |  | $                        | 10,400      |   |      | $ | 19,306     |  
|                                                                                  |  |                          |             |   |      |   |            |  



See accompanying
notes.



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##### Table of Contents

LBI MEDIA HOLDINGS, INC.



NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|1. | Description of Business and Basis of Presentation
|-- | -------------------------------------------------



LBI Media Holdings, Inc. was incorporated in Delaware on June 23, 2003, and is a qualified subchapter S subsidiary of LBI Holdings I, Inc. (the
Parent). Pursuant to an Assignment and Exchange Agreement dated September 29, 2003 between the Parent and LBI Media Holdings, Inc., the Parent assigned to LBI Media Holdings, Inc. all of its right, title and interest in 100 shares of
common stock of LBI Media, Inc. (LBI Media) (constituting all of the outstanding shares of LBI Media) in exchange for 100 shares of common stock of LBI Media Holdings, Inc. Thus, upon consummation of the exchange, LBI Media became a
wholly owned subsidiary of LBI Media Holdings, Inc. (LBI Media Holdings).



LBI Media Holdings is not engaged in any business operations and has not acquired any assets or incurred any liabilities, other than the acquisition of stock of LBI Media, the issuance of senior discount notes (see
Note 4) and the operations of its subsidiaries. Accordingly, its only material source of cash is dividends and distributions from its subsidiaries, which are subject to restriction by LBI Medias senior credit facility and the indenture
governing the senior subordinated notes issued by LBI Media (see Note 4). Parent-only condensed financial information of LBI Media Holdings on a stand-alone basis has been presented in Note 10.



LBI Media Holdings and its wholly owned subsidiaries (collectively referred
to as the Company) own and operate radio and television stations located in California and Texas. In addition, the Company owns a television studio facility that is primarily used to produce programming for Company-owned television
stations. Portions of this facility are also occasionally rented to independent third parties. The Company sells commercial airtime on its radio and television stations to local and national advertisers. In addition, the Company has entered into
time brokerage agreements with third parties for three of its radio stations.



The Companys KHJ-AM, KVNR-AM, KWIZ-FM, KBUE-FM, KBUA-FM and KEBN-FM radio stations service the Los Angeles, California market, its KQUE-AM, KJOJ-AM, KSEV-AM, KEYH-AM, KJOJ-FM, KTJM-FM, KQQK-FM, KIOX-FM and
KXGJ-FM radio stations service the Houston, Texas market and its KNOR-FM station services the Dallas-Fort Worth, Texas market.



The Companys television stations, KRCA, KZJL, KMPX and KSDX, service the Los Angeles, California, Houston, Texas, Dallas Fort-Worth, Texas and San
Diego, California markets, respectively.



The Companys
television studio facility is owned and operated by its wholly owned subsidiary, Empire Burbank Studios, Inc. (Empire), in Burbank, California.



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles
for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the SEC). Accordingly, they do



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LBI MEDIA HOLDINGS, INC.



NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



not include all of the information and footnotes required by U. S. generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be
expected for the fiscal year. The condensed consolidated financial statements should be read in conjunction with the Companys December 31, 2004 consolidated financial statements and accompanying notes included in the Companys annual
report on Form 10-K (the Annual Report). All terms used but not defined elsewhere herein have the meanings ascribed to them in the Annual Report.



The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all the information and
footnotes required by U.S. generally accepted accounting principles for complete financial statements.



The condensed consolidated financial statements include the accounts of LBI Media Holdings and its subsidiaries. All significant intercompany amounts and
transactions have been eliminated. The accounts of the Parent, including certain indebtedness (see Note 4), are not included in the accompanying unaudited condensed financial statements.



|2. | Recent Accounting Pronouncements
|-- | --------------------------------



In January 2003, the Financial Accounting Standards Board (FASB) issued FIN No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN
46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at
risk for the entity to finance its activities without additional subordinated financial support from other parties. The provisions of FIN 46 became effective immediately for all arrangements entered into after January 31, 2003. For arrangements
entered into with variable interest entities created prior to January 31, 2003, the provisions of FIN 46 become effective for the first interim or annual period ending after March 15, 2004. The Company adopted the provisions of FIN 46 in the first
quarter of 2004; however, such adoption has not had an impact on the Companys results of operations or financial position.



|3. | Broadcast Licenses
|-- | ------------------



The Company accounts for its broadcast licenses in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). The Company believes its broadcast licenses have indefinite useful lives given they are expected to indefinitely contribute to the future cash flows of the Company and that they may be continually renewed without
substantial cost to the Company. As such, in accordance with SFAS 142, the broadcast licenses are reviewed for impairment at least annually.



The carrying value of broadcast licenses is evaluated periodically in relation to the operating performance and anticipated future cash flows of the
underlying radio and television



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LBI MEDIA HOLDINGS, INC.



NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



stations for indicators of impairment. If indicators of impairment are identified and the discounted cash flows estimated to be generated from these assets
are less than the carrying value, an adjustment to reduce the carrying value to the fair market value of the assets is recorded, if necessary. The fair value of the Companys broadcast licenses is determined using the discounted cash flow
approach. This approach requires the projection of future cash flows and the restatement of these cash flows into their present valuation equivalent through the use of a discount rate. No adjustments to the carrying amounts of broadcast licenses for
impairment were required during the six months ended June 30, 2004 and 2005.



Accumulated amortization of broadcast licenses totaled approximately $17,696,000 at December 31, 2004 and June 30, 2005.



|4. | Long-Term Debt
|-- | --------------



Long-term debt consists of the following (not including the debt of the Parent  see discussion below):



|                          |  |                  |             |   |              |   |             |  
|------------------------- |  | ---------------- | ----------- | - | ------------ | - | ----------- | -
|                          |  | December 31,2004 |             |   | June 30,2005 |  
|2004 Revolver             |  | $                | 129,449,736 |   |              | $ | 125,949,736 |  
|Senior Subordinated Notes |  |                  | 150,000,000 |   |              |   | 150,000,000 |  
|Senior Discount Notes     |  |                  | 45,607,533  |   |              |   | 48,115,947  |  
|2004 Empire Note          |  |                  | 2,569,739   |   |              |   | 2,511,531   |  
|                          |  |                  |             |   |              |   |             |  
|                          |  |                  | 327,627,008 |   |              |   | 326,577,214 |  
|Less current portion      |  |                  | (118,043    | ) |              |   | (121,337    | )
|                          |  |                  |             |   |              |   |             |  
|                          |  | $                | 327,508,965 |   |              | $ | 326,455,877 |  
|                          |  |                  |             |   |              |   |             |  



On July 1, 2004,
Empire, an indirect, wholly owned subsidiary of the Company, issued an installment note payable that is secured by substantially all of the Empire assets for approximately $2.6 million (the 2004 Empire Note). The 2004 Empire Note bears
interest at the rate of 5.52% per annum and is payable in monthly principal and interest payments of $21,411 through maturity in July 2019. The borrowings under the 2004 Empire Note are secured primarily by all of Empires real property.



On July 9, 2002, LBI Media issued $150.0 million of senior
subordinated notes due 2012 (the Senior Subordinated Notes), entered into a new $160.0 million senior revolving credit facility (the 2002 Revolver), repaid its former senior credit facility and loaned approximately $54.3
million to LBI Intermediate Holdings, Inc. (LBI Intermediate Holdings) pursuant to an intercompany note (the July 2002 Refinancing). The proceeds from the intercompany note were used to repay LBI Intermediate Holdings
former senior notes (including a $2.5 million early redemption penalty). After such repayment, LBI Media merged with and into LBI Intermediate Holdings, at which time the intercompany note was cancelled.



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LBI MEDIA HOLDINGS, INC.



NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The Senior Subordinated Notes bear interest at the rate of 10 1/8% per annum, and interest payments
are to be made on a semi-annual basis each January 15 and July 15. LBI Media is a holding company that has no independent assets or operations, other than its investment in its subsidiaries. All of LBI Medias subsidiaries are wholly owned and
provide full and unconditional joint and several guarantees of the Senior Subordinated Notes. The indenture governing the Senior Subordinated Notes contains certain restrictive covenants that, among other things, limit LBI Medias ability to
borrow under its senior credit facility. LBI Media could borrow up to $150.0 million under its senior credit facility without having to meet the restrictions contained in the indenture, but any amount over $150.0 million would be subject to LBI
Medias compliance with a specified leverage ratio (as defined in the indenture governing the Senior Subordinated Notes). The indenture also limits LBI Medias ability to pay dividends.



On June 11, 2004, LBI Media amended and restated the 2002 Revolver (as
amended and restated, the 2004 Revolver). The 2004 Revolver includes an initial $175.0 million revolving loan facility and a $5.0 million swing loan sub-facility. There are no scheduled reductions of commitments under the 2004 Revolver.
In addition, LBI Media has the option to request its lenders to increase the amount of the 2004 Revolver by an additional $50.0 million ($5.0 million after the increase in LBI Medias borrowing capacity described below) in the aggregate;
however, the lenders are not obligated to do so. Borrowings under the 2004 Revolver bear interest at the election of LBI Media, based on either the prime rate for base rate loans or the LIBOR rate for LIBOR loans, in each case plus the applicable
margin stipulated in the senior credit agreement. The applicable margin, which is based on LBI Medias total leverage ratio, ranges from 0.25% to 1.75% per annum for base rate loans and 1.50% to 3.00% per annum for LIBOR loans. As of June 30,
2005, borrowings under the 2004 Revolver bore interest at rates ranging from 5.42% to 5.99% per annum.



On August 11, 2004, LBI Medias borrowing capacity under the 2004 Revolver was increased by $20.0 million to $195.0 million. On December 7, 2004, LBI
Medias borrowing capacity was increased by an additional $25.0 million to $220.0 million. The 2004 Revolver matures on September 30, 2010.



Borrowings under the 2004 Revolver are secured by substantially all of the tangible and intangible assets of LBI Media and its wholly owned subsidiaries,
including a first priority pledge of all capital stock of each of its respective subsidiaries. The 2004 Revolver also contains customary representations, affirmative and negative covenants and defaults for a senior credit facility.



LBI Media pays quarterly commitment fees on the unused portion of the 2004
Revolver based on its utilization rate of the total borrowing capacity. Under certain circumstances, if LBI Media borrows less than 50% of the revolving credit commitment, it must pay a quarterly commitment fee of 0.500% times the unused portion. If
LBI Media borrows 50% or more of the total revolving credit commitment, or if its total leverage ratio is below a certain level, it must pay a quarterly commitment fee of 0.375% times the unused portion.



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In connection with the July 2002 Refinancing described above, the Company loaned approximately $1.9
million to a stockholder of the Parent. The loan matures in 2009 and bears interest at the applicable federal rate (2.84% per annum). The Company also repaid notes payable to the stockholders of the Parent of approximately $1.9 million.



On October 10, 2003, the Company issued $68.4 million aggregate principal
amount at maturity of senior discount notes that mature in 2013 (the Senior Discount Notes). The notes were sold at 58.456% of principal amount at maturity, resulting in gross proceeds of approximately $40.0 million and net proceeds of
approximately $38.8 million after certain transaction costs. The Company contributed all of the net proceeds from the offering to LBI Media, which it used to repay a portion of the indebtedness outstanding under the 2002 Revolver. Under the terms of
the Senior Discount Notes, cash interest will not accrue or be payable on the notes prior to October 15, 2008, and instead, the value of the notes will increase each period until it equals $68.4 million on October 15, 2008; such accretion
(approximately $1.2 million and $1.3 million for the three months ended June 30, 2004 and 2005, respectively, and $2.3 million and $2.5 million for the six months ended June 30, 2004 and 2005, respectively) is recorded as additional interest expense
by the Company. After October 15, 2008, cash interest on the notes will accrue at a rate of 11% per year payable semi-annually on each April 15 and October 15; provided, however, that the Company may make a cash interest election on any interest
payment date prior to October 15, 2008. If the Company makes a cash interest election, the principal amount of the notes at maturity will be reduced to the accreted value of the notes as of the date of the cash interest election and cash interest
will begin to accrue at a rate of 11% per year from the date the Company makes such election. The indenture governing the Senior Discount Notes contains certain restrictive covenants that, among other things, limit the Companys ability to
incur additional indebtedness and pay dividends. The Senior Discount Notes are structurally subordinated to the 2004 Revolver and Senior Subordinated Notes.



The 2004 Revolver, Senior Subordinated Notes and Senior Discount Notes contain certain financial and non-financial covenants including restrictions on LBI
Medias and LBI Media Holdings ability to pay dividends. At June 30, 2005, the Company was in compliance with all such covenants.



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LBI MEDIA HOLDINGS, INC.



NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



As of June 30, 2005, the Companys long-term debt had scheduled repayments as follows:



|           |  |   |            
|---------- |  | - | -----------
|2005       |  | $ | 59,833     
|2006       |  |   | 124,724    
|2007       |  |   | 131,786    
|2008       |  |   | 139,247    
|2009       |  |   | 147,131    
|Thereafter |  |   | 325,974,493
|           |  |   |            
|           |  | $ | 326,577,214
|           |  |   |            



The above table does
not include interest payments or scheduled repayments relating to debt of the Parent and does not include any deferred compensation amounts the Company may ultimately pay. Pursuant to SEC guidelines, the debt of the Parent is not reflected in the
Companys financial statements because (a) the Company will not assume the Parents debt, either presently or in a planned transaction in the future; (b) the proceeds from the offering of the Senior Discount Notes in October 2003 were not
used to retire all or a part of the Parents debt; and (c) the Company does not guarantee or pledge its assets as collateral for the Parents debt. The Parent is a holding company that has no assets, operations or cash flows other than its
investment in the Company. Accordingly, funding from the Company will be required for the Parent to repay its debt. The Parents debt, which is subordinated in right of payment to the 2004 Revolver, Senior Subordinated Notes and Senior Discount
Notes, is described below.



On March 20, 2001, the Parent
entered into an agreement whereby in exchange for $30.0 million, it issued junior subordinated notes (the Parent Subordinated Notes) and warrants to the holders of the Parent Subordinated Notes to initially acquire 14.02 shares
(approximately 6.55%) of the Parents common stock at an initial exercise price of $.01 per share. In connection with the July 2002 Refinancing and the issuance of the Senior Discount Notes in October 2003 described above, the Parent amended
the terms of the Parent Subordinated Notes and the related warrants. The following information gives effect to such amendments. The Parent Subordinated Notes initially bear interest at 9% per year and will bear interest at 13% per year beginning
September 21, 2009. The Parent Subordinated Notes will mature on the earliest of (i) January 31, 2014, (ii) their acceleration following the occurrence and continuance of a material event of default (as defined in the agreement), (iii) a merger,
sale or similar transaction involving the Parent or substantially all of the subsidiaries of the Parent, (iv) a sale or other disposition of a majority of the Parents issued and outstanding capital stock or other rights giving a third party a
right to elect a majority of the Parents board of directors, and (v) the date on which the warrants issued in connection with the Parent Subordinated Notes are repurchased pursuant to the call options applicable to such warrants. Interest is
not payable until maturity.



The warrants will expire on the
earlier of (i) the later of (a) July 31, 2015, and (b) the date which is six months from the payment in full of all outstanding principal and interest on the Parent Subordinated Notes or (ii) the closing of an underwritten public equity offering in
which the Parent raises at least $25.0 million (subject to extension in certain circumstances).



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A performance-based adjustment may increase or decrease the number of shares issued upon exercise of
the warrants based on the Parents future consolidated broadcast cash flow (as defined). Upon the maturity date of the Parent Subordinated Notes, the payment in full of the Parent Subordinated Notes and the repurchase of the warrants, a change
in control of the Parent or the exercise of the call or put options described below, the number of shares issuable upon the exercise of the warrants at the time of such event will be decreased by multiplying such number of shares by .9367, if the
Parent achieves consolidated broadcast cash flow for the trailing 12 months in excess of 125% of its budgeted forecasts and in the case of the sale of the Parent, its total fair market value is greater than 13 times consolidated broadcast cash flow
for the trailing 12 months. The number of shares issuable upon the exercise of the warrants will be increased by multiplying such number of shares by 1.0633, if the Parent achieves consolidated broadcast cash flow less than 75% of its budgeted plan
for the trailing 12 months and in the case of the sale of the Parent, its total fair market value is less than 15 times consolidated broadcast cash flow for the trailing 12 months.



The warrants contain a put right and a call right as described below. If either of these rights are exercised, it could
require a significant amount of cash from the Company to repurchase the warrants, since the Parent is a holding company that has no operations or assets, other than its investment in the Company, and is dependent on the Company for cash flow.
However, the Company has no legal obligation to provide that funding.



Put Right: The warrant holders have a put right, which entitles them at any time on or after the maturity date of the Parent Subordinated Notes to require the Parent to repurchase the warrants, or if the warrants have
been exercised, the stock issued pursuant to the warrants, at the fair market value of the stock/warrants (the fair market value is subject to certain adjustments).



Call Right: If the Parent proposes an acquisition with a valuation of at least $5.0 million in connection with which
any proposed financing source reasonably requires in good faith, as a condition of financing and/or permitting the acquisition, an amendment to the maturity date of the notes and a majority of the holders of the Parent Subordinated Notes do not
agree to such amendment, the Parent has the right to purchase the warrants (or related stock, if the warrants have been issued) at fair market value, in connection with its payment in full of the aggregate of principal and interest outstanding under
the Parent Subordinated Notes.



Based on the relative fair
values at the date of issuance, the Parent allocated $13.6 million to the Parent Subordinated Notes and $16.4 million to the warrants. These fair values were determined by using the income and market valuation approaches. The income approach
analyzes future cash flows and discounts them to arrive at a current estimated fair value. The market approach uses recent sales and offering prices of similar properties to determine estimated fair value. The Parent Subordinated Notes will be
accreted through January 31, 2014, up to their $30.0 million redemption value; such accretion (approximately $231,000 and $244,000 during the three months ended June 30, 2004 and 2005, respectively, and $459,000 and $481,000 for the six months ended
June 30, 2004 and 2005, respectively) is recorded as additional interest expense by the Parent. In the financial statements of the Parent, the warrants



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NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



are stated at fair value each reporting period (approximately $29,900,000 at June 30, 2005) with subsequent changes in fair value being recorded as deferred
financing costs and amortized to interest expense over the remaining life of the Parent Subordinated Notes.



On February 12, 2004, Liberman Broadcasting, Inc., a Delaware corporation, filed a registration statement on Form S-1 (File No. 333-112773) with the
Securities and Exchange Commission for the proposed initial public offering of its Class A common stock (the Offering). Immediately before the anticipated Offering, Liberman Broadcasting, Inc. will merge with the Parent, a California
corporation. Liberman Broadcasting, Inc. will survive the merger and effectively reincorporate the Parent into a Delaware corporation. If Liberman Broadcasting completes the anticipated Offering, it plans to repay all of its outstanding Parent
Subordinated Notes with the net proceeds from the Offering. If Liberman Broadcasting completes the anticipated Offering, it is also anticipated that a portion of the net proceeds from the Offering will be contributed to LBI Media and used to repay a
portion of the outstanding borrowings under the 2004 Revolver. In addition, Liberman Broadcasting may contribute a portion of the net proceeds from the Offering to the Company to redeem a portion of the accreted value of the Companys Senior
Discount Notes. As of August 15, 2005, the Offering has not been consummated and there is no fixed date at this time to consummate the Offering.



|5. | Acquisitions
|-- | ------------



On January 12, 2004, the Company completed its acquisition of selected assets of KMPX-TV, licensed to Decatur-Dallas, Texas, pursuant to an asset purchase
agreement, dated as of July 14, 2003. The aggregate purchase price was approximately $37,646,000, including acquisition costs of approximately $646,000. The Company changed the format, customer base, and employee base of the acquired station and
allocated the purchase price as follows:



|                       |  |   |           
|---------------------- |  | - | ----------
|Broadcast license      |  | $ | 33,351,596
|Property and equipment |  |   | 4,294,404 
|                       |  |   |           
|                       |  | $ | 37,646,000
|                       |  |   |           



On July 20, 2004, the
Company completed its acquisition of selected assets of radio station KNOR-FM, licensed to Krum, Texas, pursuant to an asset purchase agreement, dated as of March 18, 2004. The aggregate purchase price was approximately $16,130,000, including
acquisition costs of approximately $630,000. The Company changed the format, customer base and employee base of the acquired station and the initial purchase price allocation is as follows:



|                       |  |   |           
|---------------------- |  | - | ----------
|Broadcast license      |  | $ | 16,049,000
|Property and equipment |  |   | 81,000    
|                       |  |   |           
|                       |  | $ | 16,130,000
|                       |  |   |           



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NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|6. | Deferred Compensation
|-- | ---------------------



The Company and the Parent have entered into employment agreements with certain employees. The services required under the employment agreements are
rendered to the Company, and payment of amounts due under the employment agreements is made by the Company. Accordingly, the Company has reflected amounts due under the employment agreements in its financial statements. In addition to annual
compensation and other benefits, these agreements provide the employees with the ability to participate in the increase of the net value (as defined in the employment agreements) of the Parent over certain base amounts (Incentive
Compensation). There are two components of Incentive Compensation: (i) a component that vests in varying amounts over time; and (ii) a component that vests upon the attainment of certain performance measures. The time vesting component is accounted
for over the vesting periods specified in the employment agreements. Performance based amounts are accounted for at the time it is considered probable that the performance measures will be attained.



The employment agreements contain provisions which allow for limited
accelerated vesting in the event of a change in control of the Parent (as defined). Unless there is a change in control of the Parent (as defined), the net value (as defined) of the Parent is to be determined on December 31, 2005,
December 31, 2006 or December 31, 2009 (depending upon the particular employment agreement). Any Incentive Compensation amounts due are required to be paid within thirty days after the date the net value of the Parent is determined. If
the Parent is publicly traded, the Company may elect to pay all or a portion of the deferred compensation in the form of common stock of the Parent.



At December 31, 2004 and June 30, 2005, the net value of the Parent exceeded the base amounts set forth in certain of the respective
employment agreements, and the employees had vested in approximately $11,430,000 and $10,940,000, respectively, of Incentive Compensation. As a part of the calculation of this incentive compensation, the Company used the income and market valuation
approaches to estimate the net value of the Parent. The income approach analyzes future cash flows and discounts them to arrive at a current estimated fair value. The market approach uses recent sales and offering prices of similar
properties to determine estimated fair value. The base amounts were negotiated with each employee at the time the employment agreement was entered into. The vested amounts are shown as deferred compensation in the accompanying consolidated balance
sheets; the related expense is shown as noncash employee compensation in the accompanying consolidated statements of operations.



At June 30, 2005, neither the Company nor Parent had funded any portion of the deferred compensation liability.



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NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|7. | Related Party Transactions
|-- | --------------------------



The Companys national sales representative, Spanish Media Rep Team, Inc. (SMRT), is an entity owned by the stockholders of the Parent.
The Company was charged approximately $578,000 and $160,000 during the three months ended June 30, 2004 and the month of April 2005, respectively, and $898,000 and $495,000 during the six months ended June 30, 2004 and four months ended April 30,
2005, respectively. Such amounts, which the Company believes represent market rates, are included in selling expenses in the accompanying condensed consolidated statements of operations.



On April 27, 2005, SMRT merged with and into Liberman Broadcasting, Inc. (LBI), a wholly owned subsidiary of the
Company. LBI paid $3,286,000 in cash and issued notes payable totaling $1,800,000 to the stockholders of the Parent in exchange for the common stock of SMRT (representing a total purchase price of $5,086,000). The notes payable bear interest at the
rate of 3.35% and are due April 28, 2006. As the merger constitutes a transaction between entities under common control, it is required to be accounted for at historical cost. The prior periods were not restated to give effect to the consolidation
of SMRT since the impact was not significant. SMRT had a net book deficit of approximately $706,000 at the date of the merger. Such amount, plus the $5,086,000 purchase price, has been recorded as a distribution to the stockholders of the Parent in
the accompanying balance sheets.



The Company had approximately
$3,270,000 and $2,644,000 due from stockholders of the Parent and from affiliated companies at December 31, 2004 and June 30, 2005, respectively. The Company loaned approximately $1,917,000 to a stockholder of Parent in July 2002. These loans bear
interest at the applicable federal rate and mature through July 2009. Additionally, at the direction of the stockholders of the Parent, the Company has made advances to certain religious and charitable organizations and individuals totaling
approximately $102,000 and $132,000 at December 31, 2004 and June 30, 2005, respectively. These loans and advances, plus accrued interest, are included in amounts due from related parties and other assets in the accompanying condensed consolidated
balance sheets.



One of the Parents stockholders is the
sole shareholder of L.D.L. Enterprises, Inc. (LDL), a mail order business. From time to time, the Company allows LDL to use, free of charge, unsold advertising time on its television stations.



|8. | Comprehensive Income
|-- | --------------------



Comprehensive income, which includes net income plus unrealized gains (losses) on investments in marketable securities, amounted to approximately
$5,889,032 and $5,093,192 for the three months ended June 30, 2004 and 2005, respectively, and $6,133,759 and $5,593,119 for the six months ended June 30, 2004 and 2005, respectively.



Accumulated other comprehensive income (loss) at December 31, 2004 and June 30, 2005 consists of unrealized gains (losses)
on investments in marketable securities.



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NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|9. | Segment Data
|-- | ------------



SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information, requires companies to provide certain information about
their operating segments. The Company has two reportable segments  radio operations and television operations.



Management uses operating income before depreciation and noncash employee compensation as its measure of profitability for purposes of assessing
performance and allocating resources.



|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|----------------------------------------------------------------------------------------- |  | --------------------------- | ---------- | - | ------------------------- | - | ---------- | ---- |  | ---- | ---------- |  | - | ---------- | -
|                                                                                          |  | Three Months Ended June 30, |            |   | Six Months Ended June 30, |  
|                                                                                          |  | 2004                        |            |   | 2005                      |   |            | 2004 |  | 2005 |           
|Net revenues:                                                                             |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Radio operations                                                                          |  | $                           | 11,755,483 |   |                           | $ | 14,165,800 |      |  | $    | 20,706,587 |  | $ | 23,797,548 |  
|Television operations                                                                     |  |                             | 13,015,118 |   |                           |   | 12,238,988 |      |  |      | 23,436,309 |  |   | 23,144,117 |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Consolidated net revenues                                                                 |  |                             | 24,770,601 |   |                           |   | 26,404,788 |      |  |      | 44,142,896 |  |   | 46,941,665 |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Operating expenses, excluding depreciation and noncash employee compensation:             |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Radio operations                                                                          |  |                             | 5,168,493  |   |                           |   | 5,432,619  |      |  |      | 9,978,420  |  |   | 10,391,019 |  
|Television operations                                                                     |  |                             | 6,212,125  |   |                           |   | 7,405,761  |      |  |      | 12,074,259 |  |   | 14,270,682 |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Consolidated operating expenses, excluding depreciation and noncash employee compensation |  |                             | 11,380,618 |   |                           |   | 12,838,380 |      |  |      | 22,052,679 |  |   | 24,661,701 |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Operating income before depreciation and noncash employee compensation:                   |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Radio operations                                                                          |  |                             | 6,586,990  |   |                           |   | 8,733,181  |      |  |      | 10,728,167 |  |   | 13,406,529 |  
|Television operations                                                                     |  |                             | 6,802,993  |   |                           |   | 4,833,227  |      |  |      | 11,362,050 |  |   | 8,873,435  |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Consolidated operating income before depreciation and noncash employee compensation :     |  |                             | 13,389,983 |   |                           |   | 13,566,408 |      |  |      | 22,090,217 |  |   | 22,279,964 |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Depreciation expense:                                                                     |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Radio operations                                                                          |  |                             | 529,395    |   |                           |   | 580,151    |      |  |      | 991,004    |  |   | 1,160,301  |  
|Television operations                                                                     |  |                             | 785,265    |   |                           |   | 903,583    |      |  |      | 1,448,219  |  |   | 1,810,896  |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Consolidated depreciation expense                                                         |  |                             | 1,314,660  |   |                           |   | 1,483,734  |      |  |      | 2,439,223  |  |   | 2,971,197  |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Noncash employee compensation:                                                            |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Radio operations                                                                          |  |                             | (175,000   | ) |                           |   | (199,000   | )    |  |      | 886,000    |  |   | (493,000   | )
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Consolidated noncash employee compensation                                                |  |                             | (175,000   | ) |                           |   | (199,000   | )    |  |      | 886,000    |  |   | (493,000   | )
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Operating income:                                                                         |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Radio operations                                                                          |  |                             | 6,232,595  |   |                           |   | 8,352,030  |      |  |      | 8,851,163  |  |   | 12,739,228 |  
|Television operations                                                                     |  |                             | 6,017,728  |   |                           |   | 3,929,644  |      |  |      | 9,913,831  |  |   | 7,062,539  |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  
|Consolidated operating income                                                             |  | $                           | 12,250,323 |   |                           | $ | 12,281,674 |      |  | $    | 18,764,994 |  | $ | 19,801,767 |  
|                                                                                          |  |                             |            |   |                           |   |            |      |  |      |            |  |   |            |  



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NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                        |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | ------------------------ | - | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                                        |  | Three Months EndedJune 30, |             |   | Six Months EndedJune 30, |  
|                                                                                                                        |  | 2004                       |             |   | 2005                     |   |             | 2004 |  |   | 2005        |  
|Total assets:                                                                                                           |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  
|Radio operations                                                                                                        |  | $                          | 175,388,402 |   |                          | $ | 203,374,896 |      |  | $ | 175,388,402 |   |  | $ | 203,374,896 |  
|Television operations                                                                                                   |  |                            | 169,290,293 |   |                          |   | 172,675,434 |      |  |   | 169,290,293 |   |  |   | 172,675,434 |  
|Corporate                                                                                                               |  |                            | 22,505,208  |   |                          |   | 13,194,103  |      |  |   | 22,505,208  |   |  |   | 13,194,103  |  
|                                                                                                                        |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  
|Consolidated total assets                                                                                               |  | $                          | 367,183,903 |   |                          | $ | 389,244,433 |      |  | $ | 367,183,903 |   |  | $ | 389,244,433 |  
|                                                                                                                        |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  
|Reconciliation of operating income before depreciation and noncash employee compensation to income before income taxes: |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  
|Operating income before depreciation and noncash employee compensation                                                  |  | $                          | 13,389,983  |   |                          | $ | 13,566,408  |      |  | $ | 22,090,217  |   |  | $ | 22,279,964  |  
|Depreciation                                                                                                            |  |                            | (1,314,660  | ) |                          |   | (1,483,734  | )    |  |   | (2,439,223  | ) |  |   | (2,971,197  | )
|Noncash employee compensation                                                                                           |  |                            | 175,000     |   |                          |   | 199,000     |      |  |   | (886,000    | ) |  |   | 493,000     |  
|Interest expense                                                                                                        |  |                            | (6,271,876  | ) |                          |   | (7,246,317  | )    |  |   | (12,544,755 | ) |  |   | (14,261,261 | )
|Interest and other income                                                                                               |  |                            | 66,466      |   |                          |   | 35,984      |      |  |   | 90,589      |   |  |   | 65,538      |  
|Gain on sale of property and equipment                                                                                  |  |                            | 2,354       |   |                          |   |            |      |  |   | 2,354       |   |  |   |            |  
|                                                                                                                        |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  
|Income before income taxes                                                                                              |  | $                          | 6,047,267   |   |                          | $ | 5,071,341   |      |  | $ | 6,313,182   |   |  | $ | 5,606,044   |  
|                                                                                                                        |  |                            |             |   |                          |   |             |      |  |   |             |   |  |   |             |  



|10. | LBI Media Holdings, Inc. (Parent Company Only)
|--- | ----------------------------------------------



The terms of LBI Medias senior credit facility and the indenture governing LBI Medias senior subordinated notes restrict LBI Medias
ability to transfer assets to LBI Media Holdings in the form of loans, advances, or cash dividends. The following parent-only condensed financial information presents balance sheets and related statements of operations and cash flows of LBI Media
Holdings by accounting for the investments in the owned subsidiaries on the equity method of accounting. The accompanying condensed financial information should be read in conjunction with the consolidated statements and notes thereto.



Condensed Balance Sheet Information:



|                                           |  |                  |            |   |              |   |           
|------------------------------------------ |  | ---------------- | ---------- | - | ------------ | - | ----------
|                                           |  | December 31,2004 |            |   | June 30,2005
|Assets                                     |  |                  |            |   |              |   |           
|Prepaid and other assets                   |  | $                |           |   |              | $ | 9,056     
|Deferred financing costs                   |  |                  | 1,733,526  |   |              |   | 1,634,937 
|Investment in subsidiaries                 |  |                  | 82,149,892 |   |              |   | 84,559,360
|Other assets                               |  |                  | 10,806     |   |              |   |          
|                                           |  |                  |            |   |              |   |           
|Total assets                               |  | $                | 83,894,224 |   |              | $ | 86,203,353
|                                           |  |                  |            |   |              |   |           
|                                           |  |                 
|Liabilities and stockholders equity       |  |                  |            |   |              |   |           
|Amounts payable and accrued expenses       |  | $                |           |   |              | $ |          
|Long term debt                             |  |                  | 45,607,533 |   |              |   | 48,115,947
|Stockholders equity:                      |  |                  |            |   |              |   |           
|Common stock                               |  |                  | 1          |   |              |   | 1         
|Additional paid-in capital                 |  |                  | 22,657,667 |   |              |   | 16,865,264
|Retained earnings                          |  |                  | 15,629,447 |   |              |   | 21,221,085
|Accumulated other comprehensive income     |  |                  | (424       | ) |              |   | 1,056     
|                                           |  |                  |            |   |              |   |           
|Total stockholders equity                 |  |                  | 38,286,691 |   |              |   | 38,087,406
|                                           |  |                  |            |   |              |   |           
|Total liabilities and stockholders equity |  | $                | 83,894,224 |   |              | $ | 86,203,353
|                                           |  |                  |            |   |              |   |           



15



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##### Table of Contents

LBI MEDIA HOLDINGS, INC.



NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Condensed Statement of Operations Information:



|                                |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                |  | Three Months EndedJune 30, |            |   | Six Months EndedJune 30, |  
|                                |  | 2004                       |            |   | 2005                     |   |            | 2004 |  |   | 2005       |  
|Income:                         |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Equity earnings of subsidiaries |  | $                          | 7,157,538  |   |                          | $ | 6,420,810  |      |  | $ | 8,538,918  |   |  | $ | 8,200,391  |  
|Expenses:                       |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Interest expense                |  |                            | (1,201,517 | ) |                          |   | (1,332,475 | )    |  |   | (2,348,660 | ) |  |   | (2,608,753 | )
|                                |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Income before taxes             |  |                            | 5,956,021  |   |                          |   | 5,088,335  |      |  |   | 6,190,258  |   |  |   | 5,591,638  |  
|Income tax expense              |  |                            | (14,065    | ) |                          |   | 7,956      |      |  |   | (945       | ) |  |   |           |  
|                                |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net income                      |  | $                          | 5,941,956  |   |                          | $ | 5,096,291  |      |  | $ | 6,189,313  |   |  | $ | 5,591,638  |  
|                                |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  



Condensed Statement of Cash Flows
Information:



|                                                                                  |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|--------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                  |  | Three Months EndedJune 30, |            |   | Six Months EndedJune 30, |  
|                                                                                  |  | 2004                       |            |   | 2005                     |   |            | 2004 |  |   | 2005       |  
|Cash flows provided by operating activities:                                      |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net income                                                                        |  | $                          | 5,941,956  |   |                          | $ | 5,096,291  |      |  | $ | 6,189,313  |   |  | $ | 5,591,638  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Equity in earnings of subsidiaries                                                |  |                            | (7,157,538 | ) |                          |   | (6,420,810 | )    |  |   | (8,538,918 | ) |  |   | (8,200,391 | )
|Amortization of deferred financing costs                                          |  |                            | 48,442     |   |                          |   | 49,295     |      |  |   | 94,327     |   |  |   | 98,589     |  
|Accretion on senior discount notes                                                |  |                            | 1,151,825  |   |                          |   | 1,282,305  |      |  |   | 2,251,833  |   |  |   | 2,508,414  |  
|Change in prepaid expenses and other current assets                               |  |                            |           |   |                          |   | (7,014     | )    |  |   |           |   |  |   | (9,056     | )
|Change in other assets                                                            |  |                            | 15,315     |   |                          |   |           |      |  |   | 3,445      |   |  |   | 10,806     |  
|Change in accounts payable and accrued expenses                                   |  |                            |           |   |                          |   | (67        | )    |  |   |           |   |  |   |           |  
|Distributions from subsidiaries                                                   |  |                            | 397,534    |   |                          |   |           |      |  |   | 1,173,562  |   |  |   |           |  
|                                                                                  |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net cash provided by operating activities                                         |  |                            | 397,534    |   |                          |   |           |      |  |   | 1,173,562  |   |  |   |           |  
|                                                                                  |  |                            |            |  
|Cash flows used in financing activities:                                          |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Payments of deferred financing costs                                              |  |                            | (2,762     | ) |                          |   |           |      |  |   | (7,760     | ) |  |   |           |  
|Distributions to Parent                                                           |  |                            | (394,772   | ) |                          |   |           |      |  |   | (1,165,802 | ) |  |   |           |  
|                                                                                  |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Net cash used in financing activities                                             |  |                            | (397,534   | ) |                          |   |           |      |  |   | (1,173,562 | ) |  |   |           |  
|Net change in cash and cash equivalents                                           |  |                            |           |   |                          |   |           |      |  |   |           |   |  |   |           |  
|Cash and cash equivalents at beginning of period                                  |  |                            |           |   |                          |   |           |      |  |   |           |   |  |   |           |  
|                                                                                  |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Cash and cash equivalents at end of period                                        |  | $                          |           |   |                          | $ |           |      |  | $ |           |   |  | $ |           |  
|                                                                                  |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  





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##### Table of Contents

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



The following discussion and analysis of our financial condition and results of operations should be read in conjunction
with the financial statements included elsewhere in this Quarterly Report and the audited financial statements for the year ended December 31, 2004, included in our Annual Report on Form 10-K (File No. 333-110122). This Quarterly Report contains, in
addition to historical information, forward-looking statements, which involve risk and uncertainties. The words believe, expect, estimate, may, will, could, plan, or
continue, and similar expressions are intended to identify forward-looking statements. Our actual results could differ significantly from the results discussed in such forward-looking statements.



Overview



We own and operate radio and television stations in Los Angeles, California, Houston, Texas and Dallas, Texas and a
television station in San Diego, California. Our radio stations consist of four FM and two AM stations serving Los Angeles, California and its surrounding areas, five FM and four AM stations serving Houston, Texas and its surrounding areas, and one
FM station serving Dallas-Fort Worth, Texas and its surrounding areas. Our four television stations consist of three full-power stations serving Los Angeles, California, Houston, Texas and Dallas-Fort Worth, Texas and a low-power station serving San
Diego, California. In addition, we operate a television production facility, Empire Burbank Studios, in Burbank, California that we primarily use to produce our core programming for all of our television stations, and we have television production
facilities in Houston and Dallas-Fort Worth that will allow us to produce local programming for those markets.



We operate in two reportable segments, radio and television. We generate revenue from sales of local, regional and national advertising time on our radio
and television stations, the sale of time on a contractual basis to brokered or infomercial customers on our radio and television stations, and, to the extent available, the leasing of space in our production facilities to outside entertainment
companies. Advertising rates are, in large part, based on each stations ability to attract audiences in demographic groups targeted by advertisers. Our stations compete for audiences and advertising revenue directly with other Spanish-language
radio and television stations and we generally do not obtain long-term commitments from our advertisers. As a result, our management team focuses on creating a diverse advertiser base, producing cost-effective, locally focused programming, providing
creative advertising solutions for clients, executing targeted marketing campaigns to develop a local audience and implementing strict cost controls. We recognize revenues when the commercials are broadcast or the brokered time is made available to
the customer. We incur commissions from agencies on local, regional and national advertising and our revenue reflects deductions from gross revenue for commissions to these agencies.



Our primary expenses are employee compensation, including commissions paid to our sales staff, promotion, selling,
programming and engineering expenses, commissions paid to our national representative firm, SMRT, general and administrative expenses and interest expense. Our programming expenses for television consist of costs related to the production of
original



17



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##### Table of Contents

programming content, production of local newscasts and the acquisition of programming content from other sources. Because we are highly leveraged, we will
need to dedicate a substantial portion of our cash flow from operations to pay interest on our debt. We may need to pursue one or more alternative strategies in the future to meet our debt obligations, such as selling assets, refinancing or
restructuring our indebtedness or selling equity securities. If Liberman Broadcasting completes its initial public offering, we expect some of the proceeds will be contributed to us for repayment of our outstanding debt.



We are organized as a Delaware corporation and are a qualified S
subsidiary under federal and California state tax laws. As such, we are deemed for tax purposes to be part of our parent, an S corporation, and our taxable income is reported by the shareholders of LBI Holdings I, on their
respective federal and state income tax returns.



On January
12, 2004, we completed our acquisition of the selected assets of KMPX-TV, licensed to Decatur-Dallas, Texas, for an aggregate purchase price of approximately $37.6 million (including acquisition costs), and have significantly changed the format,
customer base, revenue stream and employee base of this station.



On July 20, 2004 we completed our acquisition of the selected assets of KNOR-FM, licensed to Krum, Texas, for an aggregate purchase price of approximately $16.1 million (including acquisition costs), and have changed the format, customer
base, revenue stream and employee base of this station.



We
generally experience lower operating margins for several months following the acquisition of radio and television stations. This is primarily due to the time it takes to fully implement our format changes, build our advertiser base and gain viewer
or listener support.



From time to time, we engage in
discussions with third parties concerning our possible acquisition of additional radio or television stations or related assets. Any such discussions may or may not lead to our acquisition of additional broadcasting assets.



Liberman Broadcasting, Inc., a Delaware corporation, currently has filed a
registration statement on Form S-1 (File No. 333-112773) for the initial public offering of its Class A common stock. Immediately before the anticipated offering, Liberman Broadcasting, Inc. will merge with our parent, LBI Holdings, I, Inc., a
California corporation. Liberman Broadcasting, Inc. will survive the merger and effectively reincorporate our parent into a Delaware corporation. In this report, Liberman Broadcasting refers to LBI Holdings I, Inc. before the merger and
Liberman Broadcasting, Inc. after the merger, each on an unconsolidated basis. Notwithstanding the foregoing, we can provide no assurance that the anticipated initial public offering will be consummated in the near future, or at all.



If Liberman Broadcasting completes its anticipated initial public offering,
it will no longer qualify as an S Corporation, and none of its subsidiaries, including us, will qualify as subchapter S subsidiaries. Thus, Liberman Broadcasting will be taxed at regular corporate rates after its offering. Although Liberman
Broadcasting may have less cash available as a result of losing its S corporation status, it will have access to new financial markets as a result of the offering, which we expect will provide Liberman Broadcasting with additional financing options.



18



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##### Table of Contents

Results of Operations



Separate financial data for each of our operating segments is provided below. We evaluate the performance of our operating segments based on the
following:



|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|------------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | ------------------------ | - | ----------- | ---- |  | ---- | ----------- |  | - | ----------- | -
|                                                                                |  | Three Months EndedJune 30, |             |   | Six Months EndedJune 30, |  
|                                                                                |  | 2004                       |             |   | 2005                     |   |             | 2004 |  | 2005 |            
|Net revenues:                                                                   |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | 11,755,483  |   |                          | $ | 14,165,800  |      |  | $    | 20,706,587  |  | $ | 23,797,548  |  
|Television                                                                      |  |                            | 13,015,118  |   |                          |   | 12,238,988  |      |  |      | 23,436,309  |  |   | 23,144,117  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | 24,770,601  |   |                          | $ | 26,404,788  |      |  | $    | 44,142,896  |  | $ | 46,941,665  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total operating expenses before noncash employee compensation and depreciation: |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | 5,168,493   |   |                          | $ | 5,432,619   |      |  | $    | 9,978,420   |  | $ | 10,391,019  |  
|Television                                                                      |  |                            | 6,212,125   |   |                          |   | 7,405,761   |      |  |      | 12,074,259  |  |   | 14,270,682  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | 11,380,618  |   |                          | $ | 12,838,380  |      |  | $    | 22,052,679  |  | $ | 24,661,701  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Noncash employee compensation:                                                  |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | (175,000    | ) |                          | $ | (199,000    | )    |  | $    | 886,000     |  | $ | (493,000    | )
|Television                                                                      |  |                            |            |   |                          |   |            |      |  |      |            |  |   |            |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | (175,000    | ) |                          | $ | (199,000    | )    |  | $    | 886,000     |  | $ | (493,000    | )
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Depreciation:                                                                   |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | 529,395     |   |                          | $ | 580,151     |      |  | $    | 991,004     |  | $ | 1,160,301   |  
|Television                                                                      |  |                            | 785,265     |   |                          |   | 903,583     |      |  |      | 1,448,219   |  |   | 1,810,896   |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | 1,314,660   |   |                          | $ | 1,483,734   |      |  | $    | 2,439,223   |  | $ | 2,971,197   |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Operating income:                                                               |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | 6,232,595   |   |                          | $ | 8,352,030   |      |  | $    | 8,851,163   |  | $ | 12,739,228  |  
|Television                                                                      |  |                            | 6,017,728   |   |                          |   | 3,929,644   |      |  |      | 9,913,831   |  |   | 7,062,539   |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | 12,250,323  |   |                          | $ | 12,281,674  |      |  | $    | 18,764,994  |  | $ | 19,801,767  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Adjusted EBITDA (1):                                                            |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | 6,586,990   |   |                          | $ | 8,733,181   |      |  | $    | 10,728,167  |  | $ | 13,406,529  |  
|Television                                                                      |  |                            | 6,802,993   |   |                          |   | 4,833,227   |      |  |      | 11,362,050  |  |   | 8,873,435   |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | 13,389,983  |   |                          | $ | 13,566,408  |      |  | $    | 22,090,217  |  | $ | 22,279,964  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total assets:                                                                   |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Radio                                                                           |  | $                          | 175,388,402 |   |                          | $ | 203,374,896 |      |  | $    | 175,388,402 |  | $ | 203,374,896 |  
|Television                                                                      |  |                            | 169,290,293 |   |                          |   | 72,675,434  |      |  |      | 169,290,293 |  |   | 172,675,434 |  
|Corporate                                                                       |  |                            | 22,505,208  |   |                          |   | 13,194,103  |      |  |      | 22,505,208  |  |   | 13,194,103  |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  
|Total                                                                           |  | $                          | 367,183,903 |   |                          | $ | 389,244,433 |      |  | $    | 367,183,903 |  | $ | 389,244,433 |  
|                                                                                |  |                            |             |   |                          |   |             |      |  |      |             |  |   |             |  

---

|(1) | We define Adjusted EBITDA as net income (loss) plus cumulative effect of accounting change, income tax expense, (loss) gain on sale of property and equipment, net interest expense,
depreciation and noncash employee compensation. Management considers this measure an important indicator of our liquidity relating to our operations because it eliminates the effects of certain noncash items and our capital structure. This measure
should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with U.S. generally accepted accounting principles, such as cash flows from operating
activities, operating income and net income. In addition, our definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We discuss Adjusted EBITDA and the limitations of this financial measure in
more detail under Managements Discussion and Analysis of Financial Condition and Results of Operations  Non-GAAP Financial Measures.



19



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##### Table of Contents

The table set forth below reconciles net cash provided by operating activities, calculated and presented
in accordance with U.S. generally accepted accounting principles, to Adjusted EBITDA:



|                                             |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|-------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------ | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                             |  | Three Months EndedJune 30, |            |   | Six Months EndedJune 30, |  
|                                             |  | 2004                       |            |   | 2005                     |   |            | 2004 |  |   | 2005       |  
|Net cash provided by operating activities    |  | $                          | 9,558,606  |   |                          | $ | 10,151,394 |      |  | $ | 13,265,101 |   |  | $ | 10,197,484 |  
|Add:                                         |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Income tax expense                           |  |                            | 105,311    |   |                          |   | (24,950    | )    |  |   | 123,869    |   |  |   | 14,406     |  
|Gain on sale of investment                   |  |                            | 47,614     |   |                          |   |           |      |  |   | 47,614     |   |  |   |           |  
|Interest expense, net                        |  |                            | 6,205,410  |   |                          |   | 7,210,333  |      |  |   | 12,454,166 |   |  |   | 14,195,723 |  
|Less:                                        |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Amortization of deferred financing costs     |  |                            | (207,823   | ) |                          |   | (248,583   | )    |  |   | (407,578   | ) |  |   | (496,312   | )
|Offering costs                               |  |                            |           |   |                          |   | (246,961   | )    |  |   |           |   |  |   | (246,961   | )
|Accretion on senior discount notes           |  |                            | (1,151,826 | ) |                          |   | (1,282,305 | )    |  |   | (2,251,833 | ) |  |   | (2,508,414 | )
|Provision for doubtful accounts              |  |                            | (259,180   | ) |                          |   | (248,571   | )    |  |   | (457,693   | ) |  |   | (444,440   | )
|Changes in operating assets and liabilities: |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Accounts receivable                          |  |                            | 2,791,913  |   |                          |   | 3,107,158  |      |  |   | (107,432   | ) |  |   | 1,882,071  |  
|Program rights                               |  |                            | (159,473   | ) |                          |   | (6,998     | )    |  |   | (461,347   | ) |  |   | (152,958   | )
|Amounts due from related parties             |  |                            | 175,507    |   |                          |   | (779,751   | )    |  |   | 190,528    |   |  |   | (638,579   | )
|Prepaid expenses and other current assets    |  |                            | (2,202     | ) |                          |   | (227,866   | )    |  |   | (163,118   | ) |  |   | (318,593   | )
|Employee advances                            |  |                            | 25,983     |   |                          |   | 12,223     |      |  |   | 27,536     |   |  |   | (6,712     | )
|Accounts payable and accrued expenses        |  |                            | (347,806   | ) |                          |   | 176,045    |      |  |   | (624,593   | ) |  |   | 1,196,667  |  
|Accrued interest                             |  |                            | (3,398,960 | ) |                          |   | (3,834,691 | )    |  |   | 192,501    |   |  |   | (151,224   | )
|Program rights payable                       |  |                            | (20,167    | ) |                          |   | 25,252     |      |  |   | 6,833      |   |  |   |           |  
|Amounts due to related parties               |  |                            | 135,981    |   |                          |   |           |      |  |   | 189,485    |   |  |   |           |  
|Deferred state income tax payable            |  |                            | (53,635    | ) |                          |   |           |      |  |   | (67,971    | ) |  |   |           |  
|Other assets and liabilities                 |  |                            | (55,270    | ) |                          |   | (215,321   | )    |  |   | 134,149    |   |  |   | (242,194   | )
|                                             |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  
|Adjusted EBITDA                              |  | $                          | 13,389,983 |   |                          | $ | 13,566,408 |      |  | $ | 22,090,217 |   |  | $ | 22,279,964 |  
|                                             |  |                            |            |   |                          |   |            |      |  |   |            |   |  |   |            |  



Three Months Ended June 30, 2005
Compared to the Three Months Ended June 30, 2004



Net
Revenues. Net revenues increased by $1.6 million, or 6.6%, to $26.4 million for the three months ended June 30, 2005, from $24.8 million for the same period in 2004. This increase was attributable to revenue growth from our radio stations in
California and Texas, along with incremental revenue growth from our television stations in Houston and Dallas-Forth Worth, Texas. These increases were offset by a decline in revenue from our television stations in California, primarily resulting
from lower national advertising revenues.



Net revenues for our
radio segment increased by $2.4 million, or 20.5%, to $14.2 million for the three months ended June 30, 2005, from $11.8 million for the same period in 2004. This increase was primarily attributable to increased national advertising revenues.



Net revenues for our television segment decreased by $0.8
million, or 6.0%, to $12.2 million for the three months ended June 30, 2005, from $13.0 million for the same period in 2004. This decrease was attributable to (a) lower national advertising revenues in our California market during the second quarter
of 2005, as compared to 2004, and (b) strong results posted during the second quarter of 2004, when our revenues for our television segment increased 30.6% from the second quarter of 2003.



We currently anticipate net revenue growth for 2005 from both our radio and
television segments due to increased advertising time sold and increased advertising rates. Our programming, focused sales strategy and the expected continued demand for Spanish-language advertising should continue to increase our advertising time
sold and advertising rates in 2005 for both segments.



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Total operating expenses. Total operating expenses increased by $1.6 million, or 12.8%, to $14.1
million for the three months ended June 30, 2005 from $12.5 million for the same period in 2004. This increase was due to:



| | (1) | a $0.5 million increase in program and technical expenses primarily related to (a) additional production of in-house television programs, (b) incremental expenses related to our new
television station in the Dallas-Fort Worth market, which began operations in January 2004 and (c) higher music license fees,
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $0.4 million increase in selling, general and administrative expenses due to higher salaries, commissions and other selling expenses in our radio and television stations in Texas,
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.2 million increase in depreciation expense, primarily due to increased capital expenditures for our existing properties,
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (4) | a $0.3 million increase in outside promotional expenses, and
| | --- | ------------------------------------------------------------



| | (5) | $0.2 million of costs associated with our anticipated initial public offering, which were expensed.
| | --- | ---------------------------------------------------------------------------------------------------



We believe that our total operating expenses will continue to increase through the end of 2005 due to increased programming
costs for our radio and television segments and increased sales commissions and administrative expenses associated with our anticipated net revenue growth. Our television programming expenses will likely continue to increase for the duration of 2005
due to additional in-house programming. We anticipate that the growth rate of our 2005 total operating expenses, excluding noncash employee compensation, will be lower than the growth rate of our 2005 net revenue. This expectation could be
negatively impacted by the number and size of additional radio and television assets that we may acquire, if any, and expenses related to our parent being a publicly traded company if the proposed initial public offering of its Class A common stock
is completed in 2005.



Total operating expenses for our radio
segment increased by $0.3 million, or 5.3%, to $5.8 million for the three months ended June 30, 2005, from $5.5 million for the same period in 2004. This change was the result of:



| | (1) | a $0.1 million increase in outside promotional expenses,
| | --- | --------------------------------------------------------



| | (2) | a $0.1 million increase in depreciation, and
| | --- | --------------------------------------------



| | (3) | $0.1 million of costs associated with our anticipated initial public offering, which were expensed.
| | --- | ---------------------------------------------------------------------------------------------------



Total operating expenses for our television segment increased by $1.3 million, or 18.8%, to $8.3 million for the three
months ended June 30, 2005, from $7.0 million, for the same period in 2004. This increase was primarily the result of:



| | (1) | a $0.5 million increase in program and technical expenses related to (a) the additional production of in-house programming, (b) the incremental costs associated
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | with our newly acquired television station in the Dallas-Fort Worth market, and (c) higher music license fees,
| | --------------------------------------------------------------------------------------------------------------



| | (2) | a $0.4 million increase in selling, general and administrative expenses related to higher sales salaries, commissions and selling expenses in our Texas stations,
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.1 million increase in depreciation expense,
| | --- | ------------------------------------------------



| | (4) | a $0.2 million increase in outside promotional expenses, and
| | --- | ------------------------------------------------------------



| | (5) | $0.1 million of costs associated with our anticipated initial public offering, which were expensed.
| | --- | ---------------------------------------------------------------------------------------------------



Interest expense, net.Interest expense, net increased by $1.0 million, or 16.2%, to $7.2 million for the three
months ended June 30, 2005, from $6.2 million for the corresponding period in 2004. This change is primarily attributable to (i) additional accretion on our senior discount notes issued in October 2003 and (ii) higher interest rates on borrowings
under our senior credit facility.



If Liberman
Broadcastings anticipated initial public offering were to be completed, we plan to use the proceeds contributed to us from our parent to redeem a portion of our outstanding indebtedness. However, if we acquire additional radio or television
station assets, we may need to incur additional debt, which would result in an increase in our interest expense.



Net income. We recognized net income of $5.1 million for the three months ended June 30, 2005, as compared to $5.9 million for the same period of
2004, a decrease of $0.8 million. This change was attributable to the factors noted above.



Adjusted EBITDA. Adjusted EBITDA increased by $0.1 million, or 1.3%, to $13.5 million from the three months ended June 30, 2005 from $13.4 million for the same period in 2004. The increase was primarily
attributable to the overall net revenue growth, offset by moderate increases in total operating expenses before noncash employee compensation and depreciation. See Non-GAAP Financial Measures.



Adjusted EBITDA for our radio segment increased by $2.1 million, or 32.6%, to
$8.7 million for the three months ended June 30, 2005 from $6.6 million for the same period in 2004. The increase was primarily the result of higher local and national advertising revenue during the second quarter of 2005, resulting from (i) an
increase in advertising time sold to local and national advertisers and (ii) improved ratings for our stations.



Adjusted EBITDA for our television segment decreased by $2.0 million, or 29.0%, to $4.8 million for the three months ended June 30, 2005, from $6.8
million for the same period in 2004. The decline was primarily attributable to the decrease in revenue from our California stations, coupled with an increase in operating expenses before noncash employee compensation and depreciation.



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Six Months Ended June 30, 2005 Compared to the Six Months Ended June 30, 2004



Net Revenues. Net revenues increased by $2.8 million, or 6.3%, to
$46.9 million for the six months ended June 30, 2005, from $44.1 million for the same period in 2004. This increase was attributable to increased advertising across all of our radio markets as well as our Dallas television station. The increase in
our radio segment was offset by a decline in revenue from our television division, primarily resulting from lower national advertising revenue during the first six months of 2005, as compared to the corresponding period in 2004. Our percentage
increase in revenue growth was partially dampened by strong results posted during the six months ended June 30, 2004, when our revenues increased 13.0% from the same period in 2003.



Net revenues for our radio segment increased by $3.1 million, or 14.9%, to $23.8 million for the six months ended June 30,
2005, from $20.7 million for the same period in 2004. This increase was primarily attributable to increased local and national advertising revenues during the first half of 2005, as compared to 2004.



Net revenues for our television segment decreased by $0.3 million, or 1.2%,
to $23.1 million for the six months ended June 30, 2005, from $23.4 million for the same period in 2004. This decrease was primarily attributable to advertising revenue declines at our California television stations. This decrease was offset in part
by the incremental revenues from our television operations in Dallas. Our percentage decrease in revenue growth for our television segment was further dampened by strong results posted during the first six months of 2004, when our revenues for our
television segment increased 32.8% from the first six months of 2003.



The overall decrease in net revenues for our television segment included a decline in revenues from the leasing of our television production facility, Empire Burbank Studios, Inc. This resulted from an increase in the use of the facility
for the production of in-house programming, thereby reducing available leasing space. We expect to continue using space in our production facility primarily to produce our internal programs and therefore expect future leasing revenues to be minimal.
As a result, we believe that in order to provide a comparable basis for evaluating our results for the six months ended June 30, 2005 compared to the same period in 2004, it is necessary to exclude net revenues of $0.1 million generated from leasing
this facility in the six months ended June 30, 2004. Below is a reconciliation of net revenues for our television segment, prepared and presented in accordance with U.S. generally accepted accounting principles, to net revenues excluding leasing
revenues from our production facility:



|                                                                                          |  |                          |            |   |      |   |        
|----------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | -------
|                                                                                          |  | Six months endedJune 30,
|                                                                                          |  | 2004                     |            |   | 2005
|                                                                                          |  | (in thousands)          
|Net revenues for television segment Less: Television production facility leasing revenues |  | $                        | 23,436(122 | ) |      | $ | 23,144
|                                                                                          |  |                          |            |   |      |   |        
|Net revenues for television segment excluding production facility leasing revenues        |  | $                        | 23,314     |   |      | $ | 23,144 
|                                                                                          |  |                          |            |   |      |   |        



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Total operating expenses. Total operating expenses increased by $1.8 million, or 6.9%, to $27.2
million for the six months ended June 30, 2005 from $25.4 million for the same period in 2004. This increase was due to:



| | (1) | a $1.1 million increase in program and technical expenses primarily related to (a) additional production of in-house television programs, (b) incremental expenses related to our new
television station in the Dallas-Fort Worth market, which began operations in January 2004 and (c) higher music license fees,
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $1.2 million increase in selling, general and administrative expenses due to (a) higher salaries, commissions and other selling expenses, reflecting net revenue growth, (b)
additional operating expenses related to the operation of our recently acquired television station, KMPX-TV, in January 2004 and (c) moderate increases in other general and administrative expenses associated with our revenue growth,
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.5 million increase in depreciation expense, primarily due to increased capital expenditures for our existing properties,
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (4) | a $1.4 million decrease in noncash employee compensation. Our deferred compensation liability can increase in future periods based on changes in the applicable employees
vesting percentage, which is based on time and performance measures, and can increase or decrease in future periods based on changes in the net value of our parent, Liberman Broadcasting,
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | a $0.2 million increase in outside promotional expenses, and
| | --- | ------------------------------------------------------------



| | (6) | $0.2 million of costs associated with our anticipated initial public offering, which were expensed.
| | --- | ---------------------------------------------------------------------------------------------------



Total operating expenses for our radio segment decreased by $0.8 million, or 6.7%, to $11.1 million for the six months ended
June 30, 2005, from $11.9 million for the same period in 2004. This change was the result of:



| | (1) | a $0.1 million increase in program and technical expenses,
| | --- | ----------------------------------------------------------



| | (2) | a $0.2 million increase in selling, general and administrative expenses,
| | --- | ------------------------------------------------------------------------



| | (3) | a $1.4 million decrease in noncash employee compensation,
| | --- | ---------------------------------------------------------



| | (4) | a $0.1 million increase in depreciation,
| | --- | ----------------------------------------



| | (5) | a $0.1 million increase in outside promotional expenses, and
| | --- | ------------------------------------------------------------



| | (6) | $0.1 million of costs associated with our anticipated initial public offering, which were expensed.
| | --- | ---------------------------------------------------------------------------------------------------



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Total operating expenses for our television segment increased by $2.6 million, or 18.9%, to $16.1 million
for the six months ended June 30, 2005, from $13.5 million, for the same period in 2004. This increase was primarily the result of:



| | (1) | a $1.0 million increase in program and technical expenses related to (a) the additional production of in-house programming, (b) the incremental costs associated with our newly
acquired television station in the Dallas-Fort Worth market, and (c) higher music license fees,
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $1.0 million increase in selling, general and administrative expenses related to (a) higher sales salaries and commissions and (b) incremental costs associated with our
Dallas-Fort Worth television station acquired in January 2004,
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.4 million increase in depreciation expense, primarily resulting from increased capital expenditures for our existing properties,
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



| | (4) | a $0.1 million increase in outside promotional expenses, and
| | --- | ------------------------------------------------------------



| | (5) | $0.1 million of costs associated with our anticipated initial public offering, which were expensed.
| | --- | ---------------------------------------------------------------------------------------------------



The overall increase in operating expenses for our television segment was offset in part by a decline in expenses relating
to the leasing of our television production facility, Empire Burbank Studios. This resulted from an increase in the use of the facility for the production of in-house programming, thereby reducing available leasing space. We expect to continue using
space in our production facility primarily to produce our internal programs and therefore expect future leasing expenses to be minimal. As a result, we believe that in order to provide a comparable basis for evaluating our results for the six months
ended June 30, 2005, compared to the same period in 2004, it is necessary to exclude $0.1 million in expenses related to the leasing of this facility in the six months ended June 30, 2004. Below is a reconciliation of total operating expenses for
our television segment, prepared and presented in accordance with U.S. generally accepted accounting principles, to total operating expenses excluding our production facility leasing expenses:



|                                                                                     |  |                          |        |   |      |   |       
|------------------------------------------------------------------------------------ |  | ------------------------ | ------ | - | ---- | - | ------
|                                                                                     |  | Six months endedJune 30,
|                                                                                     |  | 2004                     |        |   | 2005
|                                                                                     |  | (in thousands)          
|Television segment operating expenses                                                |  | $                        | 13,522 |   |      | $ | 16,082
|Less: Television production facility leasing expenses                                |  |                          | (43    | ) |      |   |      
|                                                                                     |  |                          |        |   |      |   |       
|Television segment operating expenses excluding production facility leasing expenses |  | $                        | 13,479 |   |      | $ | 16,082
|                                                                                     |  |                          |        |   |      |   |       



Interest expense,
net.Interest expense, net increased by $1.7 million, or 14.0%, to $14.2 million for the six months ended June 30, 2005, from $12.5 million for the corresponding period in 2004. This change is primarily attributable to (i) additional accretion
on our senior discount notes issued in October 2003 and (ii) higher interest rates on borrowings under our senior credit facility.



If Liberman Broadcastings anticipated initial public offering were to be completed, we plan to use the proceeds contributed to us from our parent to
redeem a portion of our outstanding indebtedness. However, if we



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acquire additional radio or television station assets, we may need to incur additional debt, which would result in an increase in our interest expense.



Net income. We recognized net income of $5.6 million
for the six months ended June 30, 2005, as compared to $6.2 million for the same period of 2004, a decrease of $0.6 million. This change was attributable to the factors noted above.



Adjusted EBITDA. Adjusted EBITDA increased by $0.2 million, or 0.9%, to $22.3 million for the six months ended June
30, 2005 from $22.1 million for the same period in 2004. The increase was primarily attributable to the overall net revenue growth, particularly in our radio segment and our Dallas television operations, offset by an overall increase in operating
expenses before noncash employee compensation and depreciation. See Non-GAAP Financial Measures.



Adjusted EBITDA for our radio segment increased by $2.7 million, or 25.0%, to $13.4 million for the six months ended June 30, 2005 from $10.7 million for
the same period in 2004. The increase was primarily the result of higher local and national advertising revenue during the first half of 2005, resulting from (i) an increase in advertising time sold to local and national advertisers and (ii)
improved ratings for our stations.



Adjusted EBITDA for our
television segment decreased by $2.5 million, or 21.9%, to $8.9 million for the six months ended June 30, 2005, from $11.4 million for the same period in 2004. The decrease was primarily the result of a decline in revenue from our California
television stations and an overall increase in operating expenses.



Liquidity and Capital Resources



LBI
Medias Senior Credit Facility.Our primary sources of liquidity are cash provided by operations and available borrowings under our subsidiarys, LBI Medias, $220.0 million revolving senior credit facility. The facility matures
on September 30, 2010, and there are no scheduled reductions of commitments. Borrowings under LBI Medias senior credit facility bear interest at a rate based on LIBOR, or a base rate, plus an applicable margin that is dependent upon LBI
Medias leverage ratio (as defined in the senior credit agreement). As of June 30, 2005, LBI Media had approximately $125.9 million aggregate principal amount outstanding under the senior credit facility. Since June 30, 2005, LBI Media has
borrowed, net of repayments, an additional $2.2 million under its senior credit facility. Under the indentures governing LBI Medias senior subordinated notes and our senior discount notes (described below), LBI Media is limited in its ability
to borrow under the senior credit facility. LBI Media may borrow up to $150.0 million under its senior credit facility without having to meet any restrictions under the indentures governing its senior subordinated notes and our senior discount
notes, but any amount over $150.0 million that LBI Media may borrow under the senior credit facility will be subject to our and LBI Medias compliance with specified leverage ratios (as defined in the indentures governing LBI Medias
senior subordinated notes and our senior discount notes). LBI Media may increase the borrowing capacity under its senior credit facility by up to an additional $5.0 million, subject to participation by its existing lenders or new lenders acceptable
to the administrative agent under the senior credit facility and subject to restrictions in the indentures governing its senior subordinated notes and our senior discount notes.



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LBI Medias senior credit facility contains customary restrictive covenants that, among other
things, limit its ability to incur additional indebtedness and liens in connection therewith, pay dividends and make capital expenditures above certain limits. Under the senior credit facility, LBI Media must also maintain specified financial
ratios, such as a maximum total leverage ratio, a maximum senior leverage ratio, a minimum ratio of EBITDA (as defined in the senior credit agreement) to interest expense and a minimum ratio of EBITDA (as defined in the senior credit agreement) to
fixed charges. As of June 30, 2005, LBI Media was in compliance with the covenants in its senior credit facility. If Liberman Broadcasting completes its anticipated initial public offering, LBI Media may repay a portion of the outstanding principal
amount under its senior credit facility with the net proceeds contributed to it from its indirect parent, Liberman Broadcasting.



LBI Medias Senior Subordinated Notes. In July 2002, LBI Media issued $150.0 million of senior subordinated notes that mature in 2012. Under
the terms of its senior subordinated notes, LBI Media pays semi-annual interest payments of approximately $7.6 million each January 15 and July 15. The indenture governing LBI Medias senior subordinated notes contains certain restrictive
covenants that, among other things, limit its ability to incur additional indebtedness and pay dividends. As of June 30, 2005, LBI Media was in compliance with these covenants.



Senior Discount Notes.In October 2003, we issued $68.4 million aggregate principal amount at maturity of senior
discount notes that mature in 2013. Under the terms of the senior discount notes, cash interest will not accrue or be payable on the senior discount notes prior to October 15, 2008 and instead the accreted value of the senior discount notes will
increase until such date. Thereafter, cash interest on the senior discount notes will accrue at a rate of 11% per year payable semi-annually on each April 15 and October 15; provided, however, that we may make a cash interest election on any
interest payment date prior to October 15, 2008. If we make a cash interest election, the principal amount of the senior discount notes at maturity will be reduced to the accreted value of the senior discount notes as of the date of the cash
interest election and cash interest will begin to accrue at a rate of 11% per year from the date we make such election. The indenture governing the senior discount notes contains certain restrictive covenants that, among other things, limit our
ability to incur additional indebtedness and pay dividends to Liberman Broadcasting. Our senior discount notes are structurally subordinated to LBI Medias senior credit facility and senior subordinated notes. If Liberman Broadcasting completes
its anticipated initial public offering, Liberman Broadcasting may contribute some of the net proceeds from the offering to us to redeem a portion of the accreted value of our senior discount notes at a redemption price of 111.0% of the accreted
value to the redemption date.



Liberman Broadcastings
9% Subordinated Notes. In March 2001, our parent, Liberman Broadcasting, issued $30.0 million principal amount of 9% subordinated notes. The 9% subordinated notes are subordinate in right of payment to LBI Medias senior credit facility and
senior subordinated notes and are structurally subordinated to our senior discount notes. The 9% subordinated notes will mature on the earliest of (i) January 31, 2014, (ii) their acceleration following the occurrence and continuance of a material
event of default, (iii) a merger, sale or similar transaction involving Liberman Broadcasting or substantially all of the subsidiaries of Liberman Broadcasting, (iv) a sale or other disposition of a majority of Liberman Broadcastings issued
and outstanding capital stock or other rights giving a third party a right to elect a majority



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of Liberman Broadcastings board of directors, and (v) the date on which the warrants issued in connection with Liberman Broadcastings 9%
subordinated notes are repurchased pursuant to the call options applicable to the warrants. Interest is not payable until maturity. If Liberman Broadcasting completes its anticipated initial public offering, Liberman Broadcasting plans to redeem all
of its outstanding 9% subordinated notes at a redemption price of 100.0% with a portion of the net proceeds from the anticipated offering.



In connection with these 9% subordinated notes, Liberman Broadcasting also issued warrants to purchase shares of its common stock. The warrants have a put
feature, which would allow the warrant holders at any time on or after the maturity date of the 9% subordinated notes, to require Liberman Broadcasting to repurchase the warrants or common stock issued upon exercise of the warrants at fair market
value under certain events, and a call feature, which would allow Liberman Broadcasting to repurchase the warrants at its option under certain events. Certain mergers, combinations or sales of assets of Liberman Broadcasting, however, will not
trigger the put right, even though such events would have accelerated the obligations under the 9% subordinated notes. If Liberman Broadcasting completes its anticipated initial public offering, we expect that these warrants will be exercised for
shares of Liberman Broadcastings Class A common stock at the closing of the anticipated initial public offering of its Class A common stock. If Liberman Broadcasting completes its anticipated initial public offering, it also intends to enter
into an agreement with the holders of the warrants to terminate certain of their rights under the warrant agreement, including the put and call rights.



Empire Burbank Studios Mortgage Note.On July 1, 2004 one of our indirect, wholly owned subsidiaries, Empire Burbank Studios, Inc., issued an
installment note for approximately $2.6 million. The loan is secured by Empire Burbank Studios real property and bears interest at 5.52% per annum. The loan is payable in monthly principal and interest payments of $21,000 through maturity in
July 2019.



Summary of Indebtedness.The
following table summarizes our various levels of indebtedness at June 30, 2005.



|                             |  |                                                         |  |                                            |  |                        |  |                                                                                      
|---------------------------- |  | ------------------------------------------------------- |  | ------------------------------------------ |  | ---------------------- |  | -------------------------------------------------------------------------------------
|Issuer                       |  | Form of Debt                                            |  | Principal AmountOutstanding                |  | Scheduled MaturityDate |  | Interest rate                                                                        
|LBI Media, Inc.              |  | $220.0 million Senior secured revolving credit facility |  | $125.9 million                             |  | September 30, 2010     |  | LIBOR or base rate, plus an applicable margin dependent on LBI Medias leverage ratio
|                             |  |                                                         |  |                                           
|LBI Media, Inc.              |  | Senior subordinated notes                               |  | $150.0 million                             |  | July 15, 2012          |  | 10.125%                                                                              
|                             |  |                                                         |  |                                           
|LBI Media Holdings, Inc.     |  | Senior discount notes                                   |  | $68.4 million aggregate amount at maturity |  | October 15, 2013       |  | 11%                                                                                  
|                             |  |                                                         |  |                                           
|Empire Burbank Studios, Inc. |  | Mortgage note                                           |  | $2.5 million                               |  | July 1, 2019           |  | 5.52%                                                                                



The above table does
not include the 9% subordinated notes of our parent, Liberman Broadcasting.



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Cash Flows.Cash and cash equivalents were $5.7 million and $3.9 million at December 31, 2004 and
June 30, 2005, respectively.



Net cash flow provided by
operating activities was $13.3 million and $10.2 million for the six months ended June 30, 2004 and 2005, respectively. The decrease in our net cash flow provided by operating activities was primarily the result of a decline in accounts receivable
collections and an increase in payments of accounts payable and accrued expenses during the first half of 2005, as compared to the same period in 2004.



Net cash flow used in investing activities was $42.5 million and $8.2 million for the six months ended June 30, 2004 and 2005, respectively. The net cash
flow used in investing activities in the first six months of 2004 includes $35.7 million attributable to the acquisitions of selected radio and television station assets. The net cash flow used in investing activities in the first six months of 2005
includes $4.1 million attributable to the acquisition of SMRT. The decrease is also attributable to the decrease in capital expenditures from $6.3 million during the first six months of 2004 to $4.1 million for the first six months of 2005.



Net cash flow provided by financing activities was $23.3
million for the six months ended June 30, 2004. Net cash flow used in financing activities was $3.8 million for the six months ended June 30, 2005. The net cash flow provided by financing activities for the first six months of 2004 was primarily
attributable to the additional funds borrowed under our senior credit facility to acquire the selected assets of KMPX-TV and KNOR-FM in the Dallas-Fort Worth, Texas market. The net cash flow used in financing activities for the six months ended June
30, 2005 reflects the principal payment on outstanding borrowings under our senior credit facility.



Contractual Obligations.We have certain cash obligations and other commercial commitments, which will impact our short- and long-term liquidity.
At June 30, 2005, such obligations and commitments were LBI Medias senior credit facility and senior subordinated notes, our senior discount notes, certain non-recourse debt of one of our indirect, wholly owned subsidiaries and our operating
leases as follows:



|                                   |  |       |             |                                           |   |            |  |           |            |               |   |            |  |   |            
|---------------------------------- |  | ----- | ----------- | ----------------------------------------- | - | ---------- |  | --------- | ---------- | ------------- | - | ---------- |  | - | -----------
|                                   |  |       |             | Payments due by Period from June 30, 2005
|Contractual Obligations            |  | Total |             | Less than 1year                           |   | 1-3 years  |  | 4-5 Years |            | After 5 Years
|Long term debt                     |  | $     | 536,392,644 |                                           | $ | 22,464,393 |  | $         | 44,928,788 |               | $ | 56,219,408 |  | $ | 412,780,055
|Operating leases                   |  |       | 15,786,460  |                                           |   | 1,415,759  |  |           | 2,719,088  |               |   | 2,559,528  |  |   | 9,092,085  
|                                   |  |       |             |                                           |   |            |  |           |            |               |   |            |  |   |            
|Total contractual cash obligations |  | $     | 552,179,104 |                                           | $ | 23,880,152 |  | $         | 47,647,876 |               | $ | 58,778,936 |  | $ | 421,872,140
|                                   |  |       |             |                                           |   |            |  |           |            |               |   |            |  |   |            



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The above table includes principal and interest payments under our debt agreements, based on our interest
rates as of June 30, 2005, and assumes no additional borrowings or principal payments on LBI Medias senior credit facility until its maturity in 2010. It does not include Liberman Broadcastings 9% subordinated notes or any deferred
compensation amounts we may ultimately pay.



Expected Use of
Cash Flows.For both our radio and television segments, we have historically funded, and will continue to fund, expenditures for operations, administrative expenses, capital expenditures and debt service from our operating cash flow and
borrowings under LBI Medias senior credit facility. For our television segment, our planned uses of liquidity during the next twelve months will include completing the relocation of our Dallas television antenna to a new tower site at an
estimated cost of $1.4 million and the addition of studio and transmission equipment for our Los Angeles and Houston television stations at an estimated cost of $1.0 million. For our radio segment, our planned uses of liquidity during the next
twelve months will include the construction of a new tower site for our recently acquired Dallas-Fort Worth radio station, KNOR-FM, at an estimated cost of $3.1 million. We also plan to upgrade several of our radio stations and towers located in the
Houston market for approximately $5.3 million.



We have used,
and expect to continue to use, a significant portion of our capital resources to fund acquisitions. Future acquisitions will be funded from amounts available under LBI Medias senior credit facility, contributions from our parent, the proceeds
of future equity or debt offerings and our internally generated cash flows. However, our ability to pursue future acquisitions may be impaired if Liberman Broadcasting is unable to consummate its anticipated initial public offering. As a result, we
may not be able to increase our revenues at the same rate as we have in recent years. We believe that our cash on hand, cash provided by operating activities and borrowings under LBI Medias senior credit facility will be sufficient to permit
us to fund our contractual obligations and operations for at least the next twelve months.



Inflation



We believe
that inflation has not had a material impact on our results of operations for the six months ended June 30, 2004 and 2005. However, there can be no assurance that future inflation would not have an adverse impact on our operating results and
financial condition.



Seasonality



Seasonal net revenue fluctuations are common in the television and radio
broadcasting industry and result primarily from fluctuations in advertising expenditures by local and national advertisers. Our first fiscal quarter generally produces the lowest net broadcast revenue for the year.



Non-GAAP Financial Measures



We use the term Adjusted EBITDA throughout this report. Adjusted
EBITDA consists of net income (loss) plus cumulative effect of accounting change, income tax expense, (loss) gain on sale of property and equipment, net interest expense, depreciation and noncash employee compensation.



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This term, as we define it, may not be comparable to similarly titled measures employed by other
companies and is not a measure of performance calculated in accordance with U.S. generally accepted accounting principles, or GAAP.



Management considers this measure an important indicator of our liquidity relating to our operations, as it eliminates the effects of noncash items.
Management believes liquidity is an important measure for our company because it reflects our ability to meet our interest payments under our substantial indebtedness and is a measure of the amount of cash available to grow our company through our
acquisition strategy. This measure should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with GAAP, such as cash flows from operating activities,
operating income and net income.



We believe Adjusted EBITDA is
useful to an investor in evaluating our liquidity and cash flow because:



| |  |  | it is widely used in the broadcasting industry to measure a companys liquidity and cash flow without regard to items such as depreciation and noncash employee compensation.
The broadcast industry uses liquidity to determine whether a company will be able to cover its capital expenditures and whether a company will be able to acquire additional assets and broadcast licenses if the company has an acquisition strategy. We
believe that, by eliminating the effects of noncash items, Adjusted EBITDA provides a meaningful measure of liquidity.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | it gives investors another measure to evaluate and compare the results of our operations from period to period by removing the impact of noncash expense items, such as noncash
employee compensation and depreciation. By removing the noncash items, it allows investors to better determine whether we will be able to meet our debt obligations as they become due; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | it provides a liquidity measure before the impact of a companys capital structure by removing net interest expense items.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



Our management uses Adjusted EBITDA:



| |  |  | as a measure to assist us in planning our acquisition strategy;
| | - |  | ---------------------------------------------------------------



| |  |  | in presentations to our board of directors to enable them to have the same consistent measurement basis of liquidity and cash flow used by management;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | as a measure for determining our operating budget and our ability to fund working capital; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | as a measure for planning and forecasting capital expenditures.
| | - |  | ---------------------------------------------------------------



We also use non-GAAP numbers in the evaluation of our television segment. We exclude the results of the leasing of our production facility from our net
revenue and operating



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expenses, because we began using our production facility for more in-house programming in 2003, thereby reducing available leasing space. As a result, we
believe that in order to provide a comparable basis for evaluation our results for the six months ended June 30, 2004 and 2005, it is necessary to exclude the financial results related to the leasing of our television production facility.



The SEC has adopted rules regulating the use of non-GAAP
financial measures, such as Adjusted EBITDA, in filings with the SEC and in disclosures and press releases. These rules require non-GAAP financial measures to be presented with and reconciled to the most nearly comparable financial measure
calculated and presented in accordance with GAAP. We have included a presentation of net cash provided by operating activities and a reconciliation to Adjusted EBITDA on a consolidated basis under Item 2. Results of Operations.



Critical Accounting Policies



The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to allowance for doubtful accounts,
acquisitions of radio and television station assets, intangible assets, deferred compensation and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.



We believe the following accounting
policies and the related judgments and estimates affect the preparation of our consolidated financial statements.



Acquisitions of radio and television station assets



Our radio and television station acquisitions have consisted primarily of the FCC licenses to broadcast in a particular market (broadcast licenses). We
generally acquire the existing format and change it upon acquisition. As a result, a substantial portion of the purchase price for the assets of a radio or television station is allocated to its broadcast license. The allocations assigned to
acquired broadcast licenses and other assets are subjective by their nature and require our careful consideration and judgment. We believe the allocations represent appropriate estimates of the fair value of the assets acquired.



Allowance for doubtful accounts



We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. A considerable amount of judgment is required in assessing the likelihood of ultimate realization of these receivables including our history of write-offs, relationships with
our customers and the current creditworthiness of each advertiser. Our historical estimates have been a reliable method to estimate future allowances,



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with historical reserves averaging less than 9.0% of our outstanding receivables. If the financial condition of our advertisers were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be required. The effect of an increase in our allowance of 3% of our outstanding receivables as of June 30, 2005, from 8.2% to 11.2% or $1.2 million to $1.7
million, would result in a decrease in net income of $0.5 million for the three and six months ended June 30, 2005.



Intangible assets



We account for our broadcast licenses in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets (SFAS 142). We believe our broadcast licenses have indefinite useful lives given they are expected to indefinitely contribute to our future cash flows and that they may be continually renewed without substantial cost to us. As such, in
accordance with SFAS 142, we review our broadcast licenses for impairment at least annually.



In assessing the recoverability of goodwill and indefinite life intangible assets, we must make assumptions about the estimated future cash flows and other factors to determine the fair value of these assets.
Assumptions about future revenue and cash flows require significant judgment because of the current state of the economy and the fluctuation of actual revenue and the timing of expenses. We develop future revenue estimates based on projected ratings
increases, planned timing of signal strength upgrades, planned timing of promotional events, customer commitments and available advertising time. Estimates of future cash flows assume that expenses will grow at rates consistent with historical
rates. Alternatively, some stations under evaluation have had limited relevant cash flow history due to planned conversion of format or upgrade of station signal. The assumptions about cash flows after conversion reflect estimates of how these
stations are expected to perform based on similar stations and markets and possible proceeds from the sale of the assets. If the expected cash flows are not realized, impairment losses may be recorded in the future.



Deferred compensation



We and our parent, Liberman Broadcasting, have entered into employment
agreements with certain employees. In addition to annual compensation and other benefits, these agreements provide the employees with the ability to participate in the increase of the net value of Liberman Broadcasting over certain base
amounts. As part of the calculation of this incentive compensation, we use the income and market valuation approaches to determine the net value of Liberman Broadcasting. The income approach analyzes future cash flows and discounts them
to arrive at a current estimated fair value. The market approach uses recent sales and offering prices of similar properties to determine estimated fair value. Based on the net value of Liberman Broadcasting as determined in these
analyses, and based on the percentage of incentive compensation that has vested (as set forth in the employment agreements), we record noncash employee compensation expense (and a corresponding deferred compensation liability).



Our deferred compensation liability can increase based on changes in the
applicable employees vesting percentage and can increase or decrease based on changes in the net value of Liberman Broadcasting. We have two deferred compensation components that comprise the



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employees vesting percentage: (i) a component that vests in varying amounts over time; and (ii) a component that vests upon the attainment of certain
performance measures (each unique to the individual agreements). We account for the time vesting component over the vesting periods specified in the employment agreements and account for the performance based component when we consider it probable
that the performance measures will be attained.



If we assumed
no change in the net value of Liberman Broadcasting from that at June 30, 2005, we would expect to record $0.8 million in noncash deferred compensation expense during 2005 relating solely to the time vesting portion of the deferred
compensation.



Commitments and contingencies



We periodically record the estimated impacts of various conditions,
situations or circumstances involving uncertain outcomes. These events are called contingencies, and our accounting for such events is prescribed by SFAS No. 5, Accounting for Contingencies.



The accrual of a contingency involves considerable judgment on the part of
our management. We use our internal expertise, and outside experts (such as lawyers), as necessary, to help estimate the probability that a loss has been incurred and the amount (or range) of the loss. We currently do not have any material
contingencies that we believe require accrual or disclosure in our consolidated financial statements.



Recent Accounting Pronouncements



In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the
entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from
other parties. The provisions of FIN 46 became effective immediately for all arrangements entered into after January 31, 2003. For arrangements entered into with variable interest entities created prior to January 31, 2003, the provisions of FIN 46
become effective for the first interim or annual period ending after March 15, 2004. We adopted the provisions of FIN 46 in the first quarter of 2004; however, such adoption has not had an impact on our results of operations or financial position.



Cautionary Statement Regarding Forward-Looking Statements



Some of the statements in this report are forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995 (the Act). You can identify these statements by the use of words like may, will, could, continue, expect and
variations of these words or comparable words. Actual results could differ substantially from the results that the forward-looking statements suggest for various reasons. The risks and uncertainties include but are not limited to:



| |  |  | our dependence on advertising revenues;
| | - |  | ---------------------------------------



| |  |  | general economic conditions in the United States;
| | - |  | -------------------------------------------------



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| |  |  | our ability to reduce costs without adversely impacting revenues;
| | - |  | -----------------------------------------------------------------



| |  |  | changes in the rules and regulations of the FCC;
| | - |  | ------------------------------------------------



| |  |  | our ability to attract, motivate and retain salespeople and other key personnel;
| | - |  | --------------------------------------------------------------------------------



| |  |  | our ability to successfully convert acquired radio and television stations to a Spanish-language format;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | our ability to maintain FCC licenses for our radio and television stations;
| | - |  | ---------------------------------------------------------------------------



| |  |  | successful integration of acquired radio and television stations;
| | - |  | -----------------------------------------------------------------



| |  |  | potential disruption from natural hazards;
| | - |  | ------------------------------------------



| |  |  | our ability to protect our intellectual property rights; and
| | - |  | ------------------------------------------------------------



| |  |  | strong competition in the radio and television broadcasting industries.
| | - |  | -----------------------------------------------------------------------



The forward-looking statements in this report, as well as subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf, are hereby expressly qualified in their entirety by the cautionary statements in this report.



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



Our exposure to market risk is currently confined to our cash and cash equivalents, changes in interest rates related to borrowings under LBI Medias
senior credit facility, and changes in the fair value of LBI Medias senior subordinated notes, our senior discount notes and Liberman Broadcastings subordinated notes. Because of the short-term maturities of our cash and cash
equivalents, we do not believe that an increase in market rates would have any significant impact on the realized value of our investments. We currently do not hedge interest rate exposure and are not exposed to the impact of foreign currency
fluctuations.



We are exposed to changes in interest rates on
LBI Medias variable rate senior credit facility. A hypothetical 10% increase in the interest rates applicable to the six months ended June 30, 2005 would have increased interest expense by approximately $0.7 million. Conversely, a hypothetical
10% decrease in the interest rates applicable to the six months ended June 30, 2005 would have decreased interest expense by approximately $0.7 million. At June 30, 2005, we believe that the carrying value of amounts payable under LBI Medias
senior credit facility approximates its fair value based upon current yields for debt issues of similar quality and terms.



The fair value of our fixed rate long-term debt is sensitive to changes in interest rates. Based upon a hypothetical 10% increase in the interest rate,
assuming all other conditions affecting market risk remain constant, the market value of our fixed rate debt would have decreased by approximately $7.6 million at June 30, 2005. Conversely, a hypothetical 10% decrease in the interest rate, assuming
all other conditions affecting market risk remain constant, would have resulted in an increase in market value of approximately $8.1 million at June 30, 2005.



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Management does not foresee nor expect any significant change in our exposure to interest rate fluctuations or in how such exposure is managed in the future.



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



As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our
President and Executive Vice President, of the effectiveness of our disclosure controls and procedures as of June 30, 2005. Based on the foregoing, our President and Executive Vice President concluded that, as of the end of the period covered by
this report, our disclosure controls and procedures were effective at the reasonable assurance level.



There have been no significant changes in our internal control over financial reporting, identified in connection with the evaluation of such internal
control that occurred during our last fiscal quarter, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION

LBI MEDIA HOLDINGS, INC.



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



We are not currently a party to any material legal proceedings.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



None.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



None.



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



None.



|Item 6. | Exhibits
|------- | --------



| | (a) | Exhibits
| | --- | --------



|              |  |                                                                                                                                                                 
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                             
|              | 
|3.1           |  | Certificate of Incorporation of LBI Media Holdings, Inc. (1)                                                                                                    
|              | 
|3.2           |  | Bylaws of LBI Media Holdings, Inc. (1)                                                                                                                          
|              | 
|4.1           |  | Indenture dated as of October 10, 2003, among LBI Media Holdings, Inc., and U.S. Bank, N.A., as Trustee (1)                                                     
|              | 
|4.2           |  | Form of Exchange Note (included as Exhibit A-1 to Exhibit 4.1)                                                                                                  
|              | 
|10.1          |  | Merger Agreement, dated April 27, 2005, among Liberman Broadcasting, Inc., Spanish Media Rep Team, Inc. and the shareholders of Spanish Media Rep Team, Inc. (2)
|              | 
|31.1          |  | Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934                                                    
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934                                      
|              | 
|32.1          |  | Certifications of President and Executive Vice President pursuant to 18 U.S.C. 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002             

---

|(1) | Incorporated by reference to LBI Media Holdings, Inc.s Registration Statement on Form S-4 (Registration No. 333-110122) filed on October 30, 2003, as amended.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference to LBI Media Holdings, Inc.s Current Report on Form 8-K (Registration No. 333-110122) filed on April 29, 2005
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURE



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.



LBI MEDIA HOLDINGS, INC.By:

/S/    LENARD D. LIBERMANLenard D. LibermanExecutive Vice President and Chief Financial Officer




Date: August 15, 2005



S-1



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##### Table of Contents



EXHIBIT INDEX



|              |  |                                                                                                                                                                                        
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                    
|              | 
|3.1           |  | Certificate of Incorporation of LBI Media Holdings, Inc. (1)                                                                                                                           
|              | 
|3.2           |  | Bylaws of LBI Media Holdings, Inc. (1)                                                                                                                                                 
|              | 
|4.1           |  | Indenture dated as of October 10, 2003, among LBI Media Holdings, Inc., and U.S. Bank, N.A., as Trustee (1)                                                                            
|              | 
|4.2           |  | Form of Exchange Note (included as Exhibit A-1 to Exhibit 4.1)                                                                                                                         
|              | 
|10.1          |  | Merger Agreement, dated April 27, 2005, among Liberman Broadcasting, Inc., Spanish Media Rep Team, Inc. and the shareholders of Spanish Media Rep Team, Inc. (2)                       
|              | 
|31.1          |  | Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as created by Section 302 of the Sarbanes-Oxley Act of 2002              
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as created by Section 302 of the Sarbanes-Oxley Act of
2002
|              | 
|32.1          |  | Certifications of President and Executive Vice President pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|              | 
|              |  |                                                                                                                                                                                        

---

|(1) | Incorporated by reference to LBI Media Holdings, Inc.s Registration Statement on Form S-4 (Registration No. 333-110122) filed on October 30, 2003, as amended.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference to LBI Media Holdings, Inc.s Current Report on Form 8-K (Registration No. 333-110122) filed on April 29, 2005
|--- | ----------------------------------------------------------------------------------------------------------------------------------------