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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    
|- | ----------------------------------------------------------------------------------------
|  | For the fiscal year ended December 31, 2001, or                                         
|o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  | For the transition period from  to                                                      

Commission File Number0-24516

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LOGO

HISPANIC BROADCASTING CORPORATION(Exact name of registrant as specified in its charter)

Delaware
(State of Incorporation)

99-0113417
(I.R.S. Employer Identification No.)


3102
Oak Lawn Avenue, Suite 215
Dallas, Texas 75219
Telephone (214) 525-7700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Securities
registered pursuant to Section 12(b) of the Act: Class A Common Stock

Securities
registered pursuant to Section 12(g) of the Act: None

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

On
March 15, 2002, the aggregate market price of the Class A Common Stock held by non-affiliates of the Company was approximately $1,946.5 million. (For
purposes hereof, directors, executive officers and 10% or greater shareholders have been deemed affiliates).

On
March 15, 2002, there were 80,327,718 outstanding shares of Class A Common Stock, $.001 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2002 Annual Meeting, expected to be filed within 120 days from the Company's fiscal year-end, are
incorporated by reference into Part III.

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HISPANIC BROADCASTING CORPORATION    INDEX TO FORM 10-K

|          |  |                                                                                       |  | Page
Number
|--------- |  | ------------------------------------------------------------------------------------- |  | -----------
|PART I.   |  |                                                                                      
|Item 1.   |  | Business                                                                              |  | 3          
|Item 2.   |  | Properties                                                                            |  | 18         
|Item 3.   |  | Legal Proceedings                                                                     |  | 18         
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                   |  | 18         
|PART II.  |  |                                                                                      
|Item 5.   |  | Market for Registrant's Class A Common Stock and Related Stockholder Matters          |  | 19         
|Item 6.   |  | Selected Financial Data                                                               |  | 19         
|Item 7.   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 21         
|Item 7a.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 28         
|Item 8.   |  | Financial Statements and Supplementary Data                                           |  | 29         
|Item 9.   |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 49         
|PART III. |  |                                                                                      
|Item 10.  |  | Directors and Executive Officers of the Registrant                                    |  | 50         
|Item 11.  |  | Executive Compensation                                                                |  | 50         
|Item 12.  |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 50         
|Item 13.  |  | Certain Relationships and Related Transactions                                        |  | 50         
|PART IV.  |  |                                                                                      
|Item 14.  |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  | 51         

2

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PART I.

ITEM 1. BUSINESS

General

Hispanic Broadcasting Corporation (the "Company") is the largest Spanish-language radio broadcasting company, as measured in gross revenues, and the
9th largest radio broadcaster in the United States(a). The Company currently owns and programs 52 radio stations in 13 markets. Our stations are located in 12 of the 15
largest Hispanic markets in the United States, including Los Angeles, New York, Miami, San Francisco/San Jose, Chicago, Houston, San Antonio, Dallas/Fort Worth, McAllen/Brownsville/Harlingen, San
Diego, Phoenix and El Paso. In addition, we also operate HBC Radio Network, which is one of the largest Spanish-language radio broadcast networks in the United States in terms of audience delivery,
and HBCi which operates the Company's radio station Internet websites and a network of Hispanic community-focused bilingual websites at www.netmio.com.

Our
strategy is to own and program top performing Spanish-language and other Hispanic-targeted radio stations, principally in the 15 largest Hispanic markets in the United States. The
Company programs 41 radio formats on 52 radio stations. As of the Fall 2001 Arbitron Ratings Book, we operated the leading Spanish-language radio station in the adult 25-54 age group, as
measured by audience share, in 10 of the 13 markets and, during this same period, we operated 12 top-ten ranked radio stations, regardless of language or format.

We
intend to acquire or develop additional Spanish-language radio stations in the leading Hispanic markets. The Company historically has acquired under-performing radio stations with
good signal coverage of the target market and converted the existing station format to a Hispanic-targeted format. In addition, the Company also seeks to acquire radio stations whose radio signals
might eventually be upgraded or improved. The Company's acquisition strategy typically results in operating losses for 12 to
18 months from the date of launch of a station's format. We believe that the largest Hispanic markets are generally underserved by the existing Hispanic-targeted radio stations. As a result, we
expect our acquisitions will achieve an acceptable level of profitability as we build audiences and as more and more advertisers target Hispanics.

We
frequently evaluate strategic opportunities, both within and outside our existing line of business, that closely relate to serving the Hispanic market, including opportunities outside
of the United States. We expect to pursue additional acquisitions from time to time and may decide to dispose of certain businesses. Such acquisitions or dispositions could be material.

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3

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The
following table sets forth certain information regarding the radio stations that we owned and programmed as of December 31, 2001:

|   |  |                               |  | No. of Stations
|-- |  | ----------------------------- |  | ---------------
|
|
|1  |  | Los Angeles                   |  | 1              
|2  |  | New York                      |  | 1              
|3  |  | Miami                         |  | 2              
|4  |  | Chicago                       |  | 2              
|5  |  | Houston                       |  | 2              
|6  |  | San Francisco/San Jose        |  | 0              
|8  |  | Dallas/Fort Worth             |  | 2              
|9  |  | San Antonio                   |  | 2              
|10 |  | McAllen/Brownsville/Harlingen |  | 1              
|11 |  | Phoenix                       |  | 0              
|12 |  | San Diego                     |  | 0              
|13 |  | El Paso                       |  | 2              
|18 |  | Las Vegas                     |  | 1              
|   |  |                               |  |                
|   |  | Total                         |  | 16             
|   |  |                               |  |                

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The
Company believes Hispanic-targeted radio broadcasting has significant growth potential for the following reasons:



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The
Company was incorporated under the laws of the State of Delaware in 1992. The Company's principal executive offices are located at 3102 Oak Lawn Avenue, Suite 215, Dallas, Texas
75219 and the telephone number is (214) 525-7700.

Hispanic-Targeted Radio

Due to differences in origin, Hispanics are not a homogeneous group. The music, culture, customs and Spanish dialects vary from one radio market to another.
Consequently, the Company programs its stations in a manner responsive to the local preferences of the target demographic audience in each of the markets it serves. A well-researched mix
of Spanish-language music and on-air programming at an individual station can attract a wide audience targeted by advertisers. Programming is continuously
monitored to maintain its quality and relevance to the target audience. Most music formats are primarily variations of Regional Mexican, Tropical, Tejano and Contemporary music styles. The local
program director selects music from the various music styles that best reflect the music preferences of the local Hispanic audiences. A brief description of the Company's programming follows:

Regional Mexican.Regional Mexican consists of various types of music played in different regions of Mexico. Ranchera music,
originating in Jalisco, Mexico, is a traditional folkloric music commonly referred to as Mariachi music. Mariachi music features acoustical instruments and is considered the music indigenous to
Mexicans who have lived in the country towns. Nortena means northern, and is representative of Northern Mexico. Featuring an accordion, Nortena has a Polka sound with a distinct Mexican flavor. Banda
is a regional music from the state of Sinaloa, Mexico and is popular in California. Banda is reminiscent of marching band music with mostly brass orchestrations. Mexican Cumbia represents a regional
Mexican version of the tropical cumbia style. Grupo music is a synthesizer based modern version of traditional regional music and it covers all the principal styles of the regional genre.

Tropical.The Tropical format primarily consists of Salsa, Merengue, and Cumbia music. Salsa is dance music combining Latin
Caribbean rhythms with jazz. Salsa symbolizes music from Puerto Rico, Cuba, and the Dominican Republic and is popular with Hispanics living in New York, Miami and Chicago. Merengue music is
up-tempo dance music originating in the Dominican Republic. There are also regional derivatives of tropical in Mexico, Central and South America, all based substantially on the Colombian
cumbia style.

Tejano.Tejano music originated in Texas and is based on Mexican themes but is indigenous to Texas. It is a combination of
contemporary rock, Ranchera, and country music. The lyrics are primarily sung in Spanish. The on-air talent speak in Spanish and English.

Contemporary.The Contemporary format includes pop, Latin rock, and ballads. This format is similar to English adult
contemporary and contemporary hit radio stations. A contemporary station may focus on softer music or may be quite up tempo depending on the age target.

Full Service.The Full Service format includes all the traditional radio services: music, news, sports, traffic reports,
special information programs and weather.

News/Talk.News includes local, national, international reports and weather, business, traffic and sports. Talk includes
commentary, analysis, discussion, interviews, call-ins and information shows.

Mexican Spanish Oldies.The Spanish Oldies format includes songs of all styles that were hits in Mexico in the 1960s and
1970s.

Rhythmic.The Rhythmic format includes Latin-oriented hip-hop, top 40 and contemporary music. The
on-air talent speak primarily in English.

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Company's Stations

The following table sets forth information regarding the radio stations owned and programmed by the Company as of December 31, 2001:

|Ranking
of
Market by
Hispanic
Population |  | Market(a)              |  | Station                                                                 |  | Station Format(b)                                                                                 |  | Primary
Demographic
Market                                     
|---------------------------------------- |  | ---------------------- |  | ----------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------
|1                                        |  | Los Angeles            |  | KLVE(FM)
KSCA(FM)
KTNQ(AM)
KRCD(FM)
KRCV(FM)                            |  | Contemporary
Regional Mexican
Spanish Oldies
Spanish Oldies
Spanish Oldies                        |  | A 25-54
A 25-54
A 35+
A 35+
A 35+                              
|2                                        |  | New York               |  | WCAA(FM)
WADO(AM)                                                       |  | Contemporary
News/Talk                                                                            |  | A 18-34
A 35+                                                  
|3                                        |  | Miami                  |  | WAMR(FM)
WRTO(FM)
WAQI(AM)
WQBA(AM)                                     |  | Contemporary
Tropical
News/Talk
News/Talk                                                         |  | A 25-54
A 18-34
A 35+
A 35+                                    
|4                                        |  | Chicago                |  | WOJO(FM)
WIND(AM)
WLXX(AM)                                              |  | Regional Mexican
News/Talk
Tropical                                                               |  | A 18-54
A 25-54
A 18-54                                        
|5                                        |  | Houston                |  | KLTN(FM)
KOVE(FM)
KPTY(FM)
KLTO(FM)
KRTX(FM)
KLAT(AM)
KRTX(AM)
KQBU(FM) |  | Regional Mexican
Contemporary
Rhythmic
Rhythmic
Contemporary
News/Talk
News/Talk
Regional Mexican |  | A 18-49
A 18-49
A 25-54
A 25-54
A 18-34
A 25-54
A 25-54
A 18-49
|6                                        |  | San Francisco/San Jose |  | KSOL(FM)
KZOL(FM)                                                       |  | Regional Mexican
Regional Mexican                                                                 |  | A 25-54
A 25-54                                                
|8                                        |  | Dallas/Fort Worth      |  | KLNO(FM)
KHCK(FM)
KDXT(FM)
KDXX(FM)
KDOS(FM)
KESS(AM)
KDXX(AM)          |  | Regional Mexican
Tejano
Contemporary
Contemporary
Contemporary
Spanish Oldies/Sports
Contemporary |  | A 18-49
A 18-49
A 18-49
A 18-49
A 18-49
A 25-54
A 18-49        
|9                                        |  | San Antonio            |  | KXTN(FM)
KROM(FM)
KXTN(AM)
KCOR(AM)
KBBT(FM)
KCOR(FM)                   |  | Tejano
Regional Mexican
Tejano
Spanish Oldies
Rhythmic
Contemporary                               |  | A 25-54
A 25-54
A 25-54
A 35+
A 18-34
A 18-49                  

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|10 |  | McAllen/Brownsville/Harlingen |  | KGBT(FM)
KIWW(FM)
KGBT(AM)                   |  | Regional Mexican
Tejano
News/Talk                                        |  | A 25-54
A 25-54
A 25-54                
|-- |  | ----------------------------- |  | -------------------------------------------- |  | ------------------------------------------------------------------------ |  | ---------------------------------------
|11 |  | Phoenix                       |  | KHOT(FM)
KHOV(FM)
KOMR(FM)
KMRR(FM)
KKMR(FM) |  | Regional Mexican
Regional Mexican
Contemporary
Contemporary
Contemporary |  | A 25-54 A 25-54
A 18-34
A 18-34
A 18-34
|12 |  | San Diego                     |  | KLQV(FM)
KLNV(FM)                            |  | Contemporary
Regional Mexican                                            |  | A 25-54 A 18-49                        
|13 |  | El Paso                       |  | KBNA(FM)
KBNA(AM)
KAMA(AM)                   |  | Contemporary
Contemporary
Spanish Oldies                                 |  | A 25-54
A 25-54
A 35+                  
|18 |  | Las Vegas                     |  | KISF(FM)
KLSQ(AM)                            |  | Regional Mexican
Spanish Oldies                                          |  | A 18-49
A 25-54                        

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The
following table sets forth selected information with regard to Company owned radio stations:

|Station/Market            |  | Date
Acquired |  | License
Broadcast Date |  | Broadcast
Frequency
|------------------------- |  | ------------- |  | ---------------------- |  | -------------------
|KLVE(FM), Los Angeles, CA |  | 10/85         |  | 12/01/05               |  | 107.5 MHz          
|KSCA(FM), Los Angeles, CA |  | 09/99         |  | 12/01/05               |  | 101.9 MHz          
|KTNQ(AM), Los Angeles, CA |  | 10/85         |  | 12/01/05               |  | 1020 kHz           
|KRCD(FM), Los Angeles, CA |  | 01/00         |  | 12/01/05               |  | 103.9 MHz          
|KRCV(FM), Los Angeles, CA |  | 01/00         |  | 12/10/05               |  | 98.3 MHz           
|WCAA(FM), New York, NY    |  | 05/98         |  | 06/01/06               |  | 105.9 MHz          
|WADO(AM), New York, NY    |  | 08/94         |  | 06/01/06               |  | 1280 kHz           
|WAMR(FM), Miami, FL       |  | 08/94         |  | 02/01/03               |  | 107.5 MHz          
|WRTO(FM), Miami, FL       |  | 10/89         |  | 02/01/03               |  | 98.3 MHz           
|WAQI(AM), Miami, FL       |  | 10/89         |  | 02/01/03               |  | 710 kHz            
|WQBA(AM), Miami, FL       |  | 08/94         |  | 02/01/03               |  | 1140 kHz           
|WOJO(FM), Chicago, IL     |  | 02/97         |  | 12/01/04               |  | 105.1 MHz          
|WIND(AM), Chicago, IL     |  | 02/97         |  | 12/01/04               |  | 560 kHz            
|WLXX(AM), Chicago, IL     |  | 07/95         |  | 12/01/04               |  | 1200 kHz           
|KOVE(FM), Houston, TX     |  | 07/01         |  | 08/01/05               |  | 106.5 MHz          
|KLTN(FM), Houston, TX     |  | 05/98         |  | 08/01/05               |  | 102.9 MHz          
|KQBU(FM), Houston, TX     |  | 02/97         |  | 08/01/05               |  | 93.3 MHz           
|KPTY(FM), Houston, TX     |  | 02/97         |  | 08/01/05               |  | 104.9 MHz          
|KLTO(FM), Houston, TX     |  | 02/97         |  | 08/01/05               |  | 105.3 MHz          
|KRTX(FM), Houston, TX     |  | 02/97         |  | 08/01/05               |  | 100.7 MHz          
|KLAT(AM), Houston, TX     |  | 02/97         |  | 08/01/05               |  | 1010 kHz           
|KRTX(AM), Houston, TX     |  | 02/97         |  | 08/01/05               |  | 980 kHz            

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|KSOL(FM), San Francisco/San Jose, CA        |  | 02/97 |  | 12/01/05 |     | 98.9 MHz 
|------------------------------------------- |  | ----- |  | -------- | --- | ---------
|KZOL(FM), San Francisco/San Jose, CA        |  | 02/97 |  | 12/01/05 |     | 99.1 MHz 
|KLNO(FM), Dallas/Ft. Worth, TX              |  | 09/99 |  | 08/01/05 |     | 94.1 MHz 
|KHCK(FM), Dallas/Ft. Worth, TX              |  | 07/95 |  | 08/01/05 |     | 99.1 MHz 
|KDXT(FM), Dallas/Ft. Worth, TX              |  | 06/95 |  | 08/01/05 |     | 106.7 MHz
|KDOS(FM), Dallas/Ft. Worth, TX              |  | 04/95 |  | 08/01/05 | (1) | 107.9 MHz
|KDXX (FM), Dallas/Ft. Worth, TX             |  | 08/94 |  |          | (2) | 107.9 MHz
|KESS(AM), Dallas/Ft. Worth, TX              |  | 08/94 |  | 08/01/05 |     | 1270 kHz 
|KDXX(AM), Dallas/Ft. Worth, TX              |  | 12/94 |  | 08/01/05 |     | 1480 kHz 
|KXTN(FM), San Antonio, TX                   |  | 02/97 |  | 08/01/05 |     | 107.5 MHz
|KROM(FM), San Antonio, TX                   |  | 02/97 |  | 08/01/05 |     | 92.9 MHz 
|KXTN(AM), San Antonio, TX                   |  | 02/97 |  | 08/01/05 |     | 1310 kHz 
|KCOR(AM), San Antonio, TX                   |  | 02/97 |  | 08/01/05 |     | 1350 kHz 
|KBBT(FM), San Antonio, TX                   |  | 09/00 |  | 08/01/05 |     | 98.5 MHz 
|KCOR(FM), San Antonio, TX                   |  | 09/00 |  | 08/01/05 |     | 95.1 MHz 
|KGBT(FM), McAllen/Brownsville/Harlingen, TX |  | 02/97 |  | 08/01/05 |     | 98.5 MHz 
|KIWW(FM), McAllen/Brownsville/Harlingen, TX |  | 02/97 |  | 08/01/05 |     | 96.1 MHz 
|KGBT(AM), McAllen/Brownsville/Harlingen, TX |  | 02/97 |  | 08/01/05 |     | 1530 kHz 
|KHOT(FM), Phoenix, AZ                       |  | 04/99 |  | 12/01/05 |     | 105.9 MHz
|KOMR(FM), Phoenix, AZ                       |  | 10/01 |  | 12/01/05 |     | 106.3 MHz
|KMRR(FM), Phoenix, AZ                       |  | 10/01 |  | 12/01/05 |     | 100.3 MHz
|KKMR(FM), Phoenix, AZ                       |  | 10/01 |  | 12/01/05 |     | 106.5 MHz
|KHOV(FM), Phoenix, AZ                       |  | 10/01 |  | 12/01/05 |     | 105.3 MHz
|KLQV(FM), San Diego, CA                     |  | 08/98 |  | 12/01/05 |     | 102.9 MHz
|KLNV(FM), San Diego, CA                     |  | 08/98 |  | 12/01/05 |     | 106.5 MHz
|KBNA(FM), El Paso, TX                       |  | 02/97 |  | 08/01/05 |     | 97.5 MHz 
|KBNA(AM), El Paso, TX                       |  | 02/97 |  | 08/01/05 |     | 920 kHz  
|KAMA(AM), El Paso, TX                       |  | 02/97 |  | 08/01/05 |     | 750 kHz  
|KISF(FM), Las Vegas, NV                     |  | 04/99 |  | 10/01/05 |     | 103.5 MHz
|KLSQ(AM), Las Vegas, NV                     |  | 08/95 |  | 10/01/97 | (3) | 870 kHz  

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Competition

Radio broadcasting is a highly competitive business. The Company's radio stations compete for audiences and advertising revenues with other radio stations of all
formats, as well as with other media, such as newspapers, magazines, television, cable television, outdoor advertising and direct mail, within

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their respective markets. In addition, the radio broadcasting industry is subject to competition from new media technologies that are being developed or introduced such as
(1) satellite-delivered digital audio radio service, which has resulted and is expected to result, in the near term introduction of new subscriber based satellite radio services with numerous
niche formats; and (2) audio programming by cable systems, direct broadcast satellite systems, Internet content providers, personal communications services and other digital audio broadcast
formats.

The
FCC adopted a plan in 1999 for the establishment of non-commercial "microbroadcasting" stations, low-powered FM stations that will be designed to serve small
localized areas and that in some localized areas may cause interference with regular broadcast by existing radio stations. Satellite delivered audio may provide a medium for the delivery by satellite
or supplemental terrestrial means of multiple new audio programming formats to local and/or national audiences. XM Satellite Radio launched its commercial service on September 25, 2001 and
Sirius Satellite Radio is scheduled to launch service in 2002. The Company entered into a Programming Partner Agreement with XM Satellite Radio in 1998, in which the Company agreed to develop, produce
and supply to XM Satellite Radio certain Spanish-language programming to be distributed over one or more audio channels of the digital audio radio service implemented by XM Satellite Radio in the
continental United States.

Audience
ratings and market shares are subject to change and any adverse change in a particular market would have a material adverse effect on the revenues of stations located in that
market. Future operations are further subject to many variables which could have an adverse effect upon the Company's financial performance. These variables include economic conditions, both general
and relative to the broadcasting industry; shifts in population and other demographics; the level of competition for advertising dollars with other radio stations and other entertainment and
communications media; fluctuations in operating costs; technological changes and innovations; changes in labor conditions; and changes in governmental regulations and policies and actions of federal
regulatory bodies, including the FCC, the Federal Trade Commission ("FTC"), and the Antitrust Division of the Department of Justice (the "Antitrust Division"). Although the Company believes that each
of its stations does or will be able to compete effectively in its respective market, there can be no assurance that any such station will be able to maintain or increase its current audience ratings
and advertising revenues. Radio stations can quickly change formats. Any radio station could shift its format to duplicate the format of any of the Company's stations. If a station converted its
programming to a format similar to that of a station owned by the Company, the ratings and broadcast cash flow of the Company's station could be adversely affected.

Regulation of the Company's Business

Existing Regulation and Legislation.

Radio broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the "Communications Act"). The Communications Act
prohibits the operation of a radio broadcast station except under a license issued by the FCC and empowers the FCC, among other things, to issue, renew, revoke and modify broadcast licenses; assign
frequency bands; determine stations' frequencies, locations and power; regulate the equipment used by stations; adopt other regulations to carry out the provisions of the Communications Act; impose
penalties for violation of such regulations; and impose fees for processing applications and other administrative functions. The Communications Act prohibits the assignment of a license or the
transfer of control of a licensee without prior approval of the FCC.

The
Telecommunications Act of 1996 (the "1996 Act") significantly changed both the broadcast ownership rules and the process for renewal of broadcast station licenses. The 1996 Act
relaxed local radio ownership restrictions. The 1996 Act also established a "two-step" renewal process that limits the FCC's discretion to consider applications filed in competition with
an incumbent's renewal application.

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This new regulatory flexibility has engendered aggressive local, regional, and national acquisition campaigns. Relaxation of previous station ownership limitations on leading incumbents (i.e.,
existing networks and major station groups) has increased sharply the competition for radio station acquisitions, and the prices of attractive stations.

Multiple Ownership Restrictions.

The FCC has promulgated rules that, among other things, limit the ability of individuals and entities to own or have an official position or ownership interest
above a certain level (an "attributable" interest, as defined more fully below) in broadcast stations, as well as other specified mass media entities.

The
1996 Act and the FCC's subsequently issued rule changes eliminated the national ownership restriction, allowing a single entity to own nationally any number of AM or FM broadcast
stations. The 1996 Act and the FCC's rules also greatly eased local radio multiple ownership restrictions. The maximum number of radio stations in which a person or entity is allowed to hold an
"attributable interest" depends on the number of radio stations within the defined market. In markets with more than 45 commercial radio stations, an entity may own, operate or control a maximum of
eight stations, with no more than five in either service (AM or FM). In markets of 30 - 44 stations, an entity may own as many as seven stations, with no more than four in
either service; in markets with 15 - 29 stations, an entity may own as many as six stations, with no more than four in either service. In markets with 14 stations or less, an
entity may own as many as five stations or 50% of all of the stations, whichever is less, with no more than three stations in either service. It should be noted, however, that the Department of
Justice has precluded certain entities from acquiring the maximum number of radio stations allowed in a market under the 1996 Act because of anti-trust concerns. Thus, it is possible that
the Company would, in certain instances, be unable to acquire the maximum number of stations allowed in a market under the 1996 Act. The FCC has placed limitations on time brokerage (local marketing)
agreements ("LMA") through which the licensee of one radio station provides the programming for another licensee's station in the same market. In LMA situations, stations operating in the same service
(e.g., both stations are AM) with substantial contour overlap are prohibited from duplicating more than 25% of their programming. Moreover, in determining the number of stations that a single entity
may control, an entity programming a station pursuant to a LMA is required, under certain circumstances, to count that station toward its numerical maximum even though it does not own the station.

The
FCC's regulations limit the number of radio stations an entity may own or control in markets where the entity also owns or controls one or more television stations. The FCC currently
permits an entity to own or control more than one radio station in a market in which the entity also owns or controls one or more television stations, depending on the number of independent voices
existing in the market. The FCC's regulations also prohibit an entity from owning both a radio station and a daily newspaper of general circulation in the same market, but has initiated a proceeding
and sought public comment on whether it should relax or eliminate its radio/newspaper cross-ownership restriction.

Expansion
of the Company's broadcast operations in particular areas and nationwide will continue to be subject to the FCC's ownership rules and any further changes the FCC or Congress
may adopt. Significantly, the 1996 Act requires the FCC to review its remaining ownership rules bienniallyas part of its regulatory reform obligationsto determine whether its
various rules are still necessary. In November 2001, the FCC issued a Notice of Proposed Rule Making which solicits public comment on the current local radio multiple ownership rules. Under
interim processing guidelines announced by the FCC in its November 2001 Local Radio Multiple Ownership Notice of Proposed Rulemaking, the FCC recently approved a number of
long-pending transactions but decided in one case (involving an
application by Clear Channel Radio Licenses, Inc. to acquire Station WUMX(FM) in Charlottesville, Virginia) that, because of competitive concerns, it had insufficient facts to support a grant
of that

10

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application and ordered an evidentiary hearing before an FCC Administrative Law Judge to consider the matter. This is the first such hearing ordered by the FCC in an assignment of license case on
competition issues since 1969. The Company cannot predict the impact of future announcements in the biennial review process or any other agency or legislative initiatives upon the FCC's broadcast
rules.

Under
the FCC's ownership rules, a direct or indirect purchaser of certain types of securities of the Company could violate FCC regulations if that purchaser owned or acquired an
"attributable" interest in other media properties in the same areas as stations owned by the Company or in a manner otherwise prohibited by the FCC. All officers and directors of a licensee, as well
as general partners, limited partners who are not properly "insulated" from management activities, and stockholders who own five percent or more of the outstanding voting stock of a licensee (either
directly or indirectly), are generally deemed to have an "attributable interest" in the licensee. Certain institutional investors who exert no control or influence over a licensee may own up to twenty
percent of such outstanding voting stock without the interest being considered "attributable". In addition to the foregoing limitations, under the FCC's "equity/debt plus" standard, if an investor's
interest in a licensee corporation exceeds thirty-three percent of the aggregated debt and equity of the company (i.e., the "total asset value" of the company), the investor's interest is considered
attributable if the investor is also either a major program supplier to the licensee or a same-market media entity. Insulated limited partnership interests (as to which the licensee
certifies that the limited partners are not "materially involved" in the management and operation of the subject media property), and voting stock held by minority stockholders where there is a single
majority stockholder, are generally not considered attributable interests.

License Grant and Renewal.

Under the 1996 Act, the FCC has implemented an eight year license term provision for radio stations. The 1996 Act also requires renewal of a broadcast license if
the FCC finds that (1) the station has served the public interest, convenience, and necessity; (2) there have been no serious violations of either the Communications Act or the FCC's
rules and regulations by the licensee; and (3) there have been no other serious violations which, taken together, constitute a pattern of abuse. In making its determination, the FCC may still
consider petitions to deny a renewal application but cannot consider whether the public interest would be better served by a person/entity other than the renewal applicant. Instead, competing
applications for the same frequency may be accepted only after the FCC has denied an incumbent's application for renewal of license.

Although
in the vast majority of cases the FCC grants broadcast license renewal applications when petitions to deny are filed against them, there can be no assurance that any of the
Company's stations' licenses will be renewed.

Alien Ownership Restrictions.

The Communications Act restricts the ability of foreign entities or individuals to own or hold certain interests in broadcast licenses. Foreign governments,
representatives of foreign governments, non-U.S. citizens, representatives of non-U.S. citizens, and corporations or partnerships organized under the laws of a foreign nation
are barred from holding broadcast licenses. Non-U.S. citizens, collectively, may directly or indirectly own or vote up to twenty percent of the capital stock of a licensee. In addition, a
broadcast license may not be granted to or held by any corporation that is controlled, directly or indirectly, by any other corporation more than one-fourth of whose capital stock is owned
or voted by non-U.S. citizens or their representatives, by foreign governments or their representatives, or by non-U.S. corporations, if the FCC finds that the public interest
will be served by the refusal to grant or revocation of such license. The FCC has interpreted this provision of the Communications Act to require an affirmative public interest finding before a
broadcast license may be granted to or held by any such corporation, and the FCC has made such an affirmative finding only in

11

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limited circumstances. The Company, which serves as a holding company for subsidiaries that serve as licensees for the stations, therefore may be restricted from having more than
one-fourth of its stock owned or voted directly or indirectly by non-U.S. citizens, foreign governments, representatives of non-U.S. citizens or foreign
governments, or foreign corporations. Our articles of incorporation prohibit the ownership, voting and transfer of our capital stock in violation of the FCC restrictions, and prohibit the issuance of
capital stock or the voting rights such capital stock represents to or for the account of aliens or corporations otherwise subject to domination or control by aliens in excess of the FCC limits. The
articles of incorporation authorize our board of directors to enforce these prohibitions.

Other Regulations Affecting Radio Broadcasting Stations.

Although the FCC has significantly reduced its regulation of broadcast stations FCC rules and policies, and rules and policies of other federal agencies,
currently regulate matters such as political advertising practices, equal employment opportunities, application procedures and other areas affecting the business and operations of broadcast stations.

Antitrust Matters.

An important element of the Company's growth strategy involves the acquisition of additional radio stations, many of which are likely to require preacquisition
antitrust review by the FTC or the Antitrust Division. Following passage of the 1996 Act, the Antitrust Division has become more aggressive in reviewing proposed acquisitions of radio stations and
radio station networks, particularly in instances where the proposed acquirer seeks to acquire another radio station in a market in which it already owns stations. The Antitrust Division has, in some
cases, obtained consent decrees requiring radio station divestitures in specific markets based on allegations that proposed acquisitions would lead to unacceptable concentration levels. There can be
no assurance that the Antitrust Division or the FTC
will not seek to bar the Company from acquiring additional radio stations in a market where the Company already owns stations.

The
FCC has been increasingly aggressive in independently examining issues of market concentration when considering radio station acquisitions. The FCC has delayed its approval of
several radio station purchases by various parties because of market concentration concerns. Moreover, the FCC has followed an informal policy of giving specific public notice of its intention to
conduct additional ownership concentration analysis and soliciting public comment on the issue of concentration and its effect on competition and diversity with respect to certain applications for
consent to radio station acquisitions.

Environmental Matters.

As the owner, lessee or operator of various real properties and facilities, the Company is subject to various federal, state and local environmental laws and
regulations. Historically, compliance with such laws and regulations has not had a material adverse effect on the Company's business. There can be no assurance, however, that compliance with existing
or new environmental laws or regulations will not require the Company to make significant expenditures in the future.

Recent Developments, Proposed Legislation and Regulation.

The FCC has approved the introduction of new technologies to the radio broadcasting industry, including terrestrial delivery of digital audio broadcasting on both
the AM and FM bands. In 1997, the FCC granted two licenses for national, satellite-delivered digital audio broadcasting services. These services are capable of delivering multiple,
high-quality audio channels. The Company is unable to predict the effect such new technology will have on the Company's financial condition or results of operations. In addition, cable
television operators and direct satellite broadcast television companies

12

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market service commonly referred to as "cable radio" which provides subscribers with several high-quality channels of music, news and other information. Technical considerations currently
limit this technology to fixed locations.

Congress
and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and policies regarding a wide variety of matters that could affect, directly
or indirectly, the operation and ownership of the Company's broadcast properties. For example, the FCC has adopted rules which, with limited exceptions, require the holder of an FCC construction
permit to complete construction of new or modified facilities within three (3) years of grant. In December 2001 the FCC issued a Second Notice of Proposed Rule Making which seeks public
comments on proposed rules in the area of equal employment opportunity. In addition to the changes and proposed changes noted above, such matters include, for example, the license renewal process,
spectrum use fees, political
advertising rates, and potential restrictions on the advertising of certain products (liquor, beer and wine, for example). Other matters that could affect the Company's broadcast properties include
technological innovations and developments generally affecting competition in the mass communications industry. The foregoing does not purport to be a complete summary of all the provisions of the
Communications Act, or the 1996 Act, nor of the regulations and policies of the FCC thereunder. Proposals for revised regulations and requirements are currently pending before Congress and federal
regulatory agencies, and additional regulations will undoubtedly be considered in the future from time to time. Also, various of the foregoing matters are now, or may become, the subject of court
litigation, and the Company cannot predict the outcome of any such litigation or the impact on its broadcast business.

Risk Factors

Decreases in Cash Flows from Our Los Angeles Stations Could Significantly Reduce Our Overall Cash Flows.

The portion of our overall net revenue attributable to the Los Angeles market was 27.0% for the year ended December 31, 2001. In addition, the portion of
our overall broadcast cash flow attributable to the Los Angeles market was 35.2% for the year ended December 31, 2001. Increased competition for advertising dollars with other radio stations
and communications media in the Los Angeles metropolitan area, both from other radio stations and from other advertising media such as television and newspapers, and other competitive and economic
factors have and may continue to cause a decline in revenue generated by our Los Angeles stations. A significant decline in the revenue of the Los Angeles stations could significantly reduce our
overall results of operations and broadcast cash flow.

Significant Control by the Tichenor Family May Impact or Constrain Our Future Actions.

As of March 15, 2002, McHenry T. Tichenor, Jr., our Chairman, President and Chief Executive Officer, and his family held voting control over approximately
16.1% of the shares of our Class A common stock. Since these shares are subject to a voting agreement, the Tichenor family can exert significant influence over the election of our board of
directors and other management decisions. This ownership and control by the Tichenor family could have the effect of delaying or preventing a change in control of Hispanic Broadcasting, thereby
possibly having the effect of depriving our stockholders of the opportunity to receive a premium for their shares. This ownership and control could also have the effect of making us less attractive to
a potential acquirer and could result in holders of our Class A common stock receiving less consideration upon a sale of their shares than might otherwise be available in the event of a
takeover attempt.

Clear Channel's Ownership of All Our Class B Common Stock Means that Clear Channel May Have a Class Vote on Mergers, Consolidations, and Sales of Substantially All Our
Assets.

13

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As
of March 15, 2002, Clear Channel Communications, Inc. owned no shares of our Class A common stock and thus was not entitled to vote in the election of our
directors. However, Clear Channel does own all the outstanding shares of our Class B common stock, which accounts for approximately 26.1% of our common stock. As long as Clear Channel owns at
least 20.0% of our common stock, Clear Channel will have a class vote and could potentially veto:



Shares
of our Class B common stock are generally convertible into shares of our Class A common stock, at the holder's option, subject to any necessary governmental
consents, including the consent of the FCC. Because of the FCC's multiple ownership rules, which limit the number of radio stations that a company may own or have an attributable interest in, in any
single market, Clear Channel may not presently convert its shares of our Class B common stock into shares of our Class A common stock if such conversion would create an attributable
interest, without first obtaining the consent of the FCC. These provisions of our Class B common stock could have the effect of delaying or preventing a change
in control of Hispanic Broadcasting, thereby possibly depriving our stockholders of the opportunity to receive a premium for their shares. These provisions could also have the effect of making us less
attractive to a potential acquirer and could result in holders of our Class A common stock receiving less consideration upon a sale of their shares than might otherwise be available in the
event of a takeover attempt.

In
addition, Clear Channel owns a significant percentage of our common stock. Consequently, significant direct or indirect sales of our common stock by Clear Channel could significantly
reduce our stock price and could impair our ability to raise money.

Hispanic Broadcasting and Clear Channel are Each Engaged in the Radio Broadcasting Business and Compete with Each Other for Advertising Revenues, Which May Give Rise to Actual
or Potential Conflicts of Interest Between the Two Companies.

The
similarity of the respective businesses of Hispanic Broadcasting and Clear Channel gives rise to potential conflicts of interest between the two companies. Hispanic Broadcasting and
Clear Channel are each engaged in the radio broadcasting business in certain markets, and as a result, are competing with each other for advertising revenues. As of December 31, 2001, Clear
Channel owned, programmed, or sold airtime for 1,225 radio stations in the United States, as well as radio stations in a number of foreign countries. Clear Channel also owned or programmed 37
television stations and was one of the world's largest outdoor advertising companies based on its total inventory of advertising display faces. Clear Channel's television and outdoor advertising
operations may also be deemed to compete with our business. In addition, conflicts could arise with respect to transactions involving the purchase or sale of radio broadcasting companies, particularly
Spanish-language radio broadcasting companies, the issuance of additional equity securities, or the payment of dividends by Hispanic

14

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Broadcasting Corporation. For instance, Clear Channel currently owns a 40% equity interest in Grupo ACIR Comunicaciones, one of the largest radio broadcasters in Mexico.

We May Compete Directly or Indirectly With Clear Channel in the Future With Respect to Acquisitions and Investment Opportunities in New Lines of Business and New Markets, but
We May Lack the Financial Resources Necessary to Compete with Clear Channel in these New Lines and Markets.

Clear
Channel is engaged in the Spanish-language radio broadcasting business in the United States, other than through its ownership of shares in Hispanic Broadcasting. In addition, Clear
Channel may from time to time acquire domestic Spanish-language radio broadcasting companies or an interest in such companies, individually or as part of a larger group. Furthermore, Clear Channel may
from time to time seek to make international acquisitions of or investments in companies engaged in the Spanish-language radio broadcasting business outside the United States, and we may compete with
Clear Channel for such acquisition or investment opportunities. To the extent we enter into new lines of business, we may compete directly or indirectly with Clear Channel, and we may compete with
Clear Channel in the future with respect to acquisitions and investment opportunities in these areas.

Because
we are significantly smaller than Clear Channel, we may lack the financial resources necessary to compete with Clear Channel in these new lines of business and new markets.
Similarly, while Clear Channel could pursue very large business expansions, acquisition opportunities could arise which require greater financial resources than those available to us.

Cancellations or Reductions of Advertising Could Adversely Affect Our Results of Operations.

In the competitive broadcasting industry, the success of each of our radio stations is primarily dependent upon its share of the overall advertising revenue
within its market. Although we believe that each of our stations can compete effectively in its broadcast area, we cannot be sure that any of our stations can maintain or increase its current audience
ratings or market share, or that advertisers will not decrease the amount they spend on advertising. Shifts in population, demographics, audience tastes and other factors beyond our control could
cause us to lose market share. Our stations also compete for audiences and advertising revenue directly with other radio and television stations. If a competing station converts to a format similar to
that of one of our stations, or if one of our competitors strengthens its operations, our stations could suffer a reduction in ratings and advertising revenue.

We
believe that adverting is a discretionary business expense, meaning that spending on advertising may decline during an economic recession or downturn. Consequently, a recession or
downturn in the U.S. economy or the economy of an individual geographic market in which we operate stations could reduce our advertising revenue and, therefore, results of operations. We do not obtain
long-term commitments from our advertisers, and advertisers may cancel, reduce or postpone orders without penalty. Cancellations, reductions or delays in purchases of advertising could
reduce our revenue, especially if we are unable to replace such purchases. Our expense levels are based, in part, on expected future revenue and are relatively fixed once set. Therefore, unforeseen
fluctuations in adverting sales could reduce our operating results.

Our Acquisition Strategy Could Pose Risks.

We intend to grow through the acquisition of radio stations and other assets we believe will complement our existing portfolio. Our acquisition strategy involves
numerous risks, including:



15

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Part
of our strategy is to acquire radio stations with an English-language format and convert these stations to a Spanish-language or other Hispanic-targeted format. This conversion
strategy requires a heavy initial investment of both financial and management resources. Start-up stations typically incur losses for a period of time after a format change because of the
time required to build up ratings and station loyalty. We cannot guarantee that this strategy will be successful in any given market, even though we may incur substantial costs and losses in
implementing this part of our strategy.

International Acquisition Opportunities Pose Risks to Which We are Not Accustomed, Such as Risks of Foreign Currency Fluctuations, Foreign Taxation, and Additional or Novel
Legal Restrictions.

We
continue to explore international opportunities. If we make one or more international acquisitions, we will face new risks that we do not face in the United States, such as foreign
currency risks, foreign ownership restrictions, foreign taxation, restrictions on withdrawal of foreign investments and earnings, possible expropriation and other risks.

We May Not be Able to Secure Financing Necessary for Acquisition Opportunities, or We May have to Secure Financing on Unfavorable Terms.

We
face stiff competition from other companies for acquisition opportunities. If the prices sought by sellers of existing radio stations continue to rise, we may find fewer acceptable
acquisition opportunities. In addition, the purchase price of possible acquisitions could require additional debt or equity financing. We can give no assurance that either we will obtain the needed
financing or that we will obtain such financing on attractive terms. Additional indebtedness could increase our leverage and make us more vulnerable to economic downturns and may limit our ability to
withstand competitive pressures. Additional equity financing or the issuance of our shares in connection with an acquisition would dilute the ownership interest of our stockholders. We may not have
sufficient capital resources to complete acquisitions.

Caution Concerning Forward-Looking Statements.

This report may contain forward-looking statements that are presented for illustrative purposes only, within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future results and events. You can identify
these forward-looking statements by our use of works such as "anticipates," "believes," "continues," "expects," "intends," "likely," "may," "opportunity," "plans," "potential," "project," "will," and
similar expressions to identify forward-looking statements, whether in the negative or the affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. These
forward-looking statements are subject to risks, uncertainties and other factors, some of which are beyond our control, which could cause actual results to differ materially from those forecast or
anticipated in such forward-looking statements. These risks, uncertainties and factors include, but are not limited to:



16

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You
should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this report. We undertake no obligation to update these statements
or publicly release the result of any revisions to these statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

Signal Improvements

From time to time, the Company has sought to improve the signal coverage of selected stations it owns. In addition, the Company has and will in the future seek to
acquire and/or to participate in proceedings at the FCC that would allow the radio signals of the Company's existing radio stations or stations it might acquire in the future to be upgraded or
improved. A proceeding to change the signal coverage of one of our radio stations can take years to complete. As a result, the Company may have to invest or spend money during the upgrade process
without knowing if the process will ultimately result in the upgrade. The upgrade process is typically subjected to one or more objections and/or counterproposals by other station owners. These
objections require time to resolve and might result in additional, unforeseen payments or costs in order to complete the upgrade. At December 31, 2001, the Company had invested approximately
$43.2 million in various upgrade proceedings or efforts around the country. Of that amount, approximately $41.2 million represents upgrade proceedings involving five radio stations in
Houston and Dallas. In February 2002, certain upgrades, representing $34.8 million of the Company's total upgrade investment, were completed and placed in service. There can be no assurances
that any other pending or future upgrades will be successfully concluded. Any investments the Company makes or has made in upgrade attempts that prove to be unsuccessful would likely require
write-downs or write-offs. The Company's current exposure of approximately $8.4 million in the aggregate associated with various uncompleted upgrade projects, if partially or
totally written off as a
result of unsuccessful outcomes of these projects, would not be material to the overall financial position of the Company.

Industry Segments

The Company considers radio broadcasting to be its only operating segment.

Employees

As of January 25, 2002, the Company employed 1,108 persons on a full-time basis, including corporate employees and 17 employees (at WCAA(FM)
and WADO(AM), New York) who are subject to two collective bargaining agreements. The Company considers its employee relations to be good.

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Seasonality

Our Company's performance and that of the radio industry as a whole is affected by seasonal revenue fluctuations and variation in demand between local and
national advertisers. The Company's revenues vary throughout the year. As is typical in the radio broadcasting industry, the first calendar quarter generally produces the lowest revenues. The second
and third quarters generally produce the highest revenues. Revenues are also affected by audience share performance of each of the Company's radio stations as reported by The Arbitron Company. Revenue
performance of a radio station tends to lag behind the audience share ratings

ITEM 2. PROPERTIES

The Company's corporate headquarters is in Dallas, Texas. The Company has leased approximately 11,000 square feet at 3102 Oak Lawn Avenue in Dallas, Texas. The
initial term of this lease expires in 2013, and the Company has one option to extend the lease for one additional five-year term.

The
types of properties required to support each of the Company's radio stations listed in Item 1 above includes offices and transmitter sites. A radio station's studios are generally
housed with its offices in
downtown or business districts. A radio station's transmitter sites generally are located in a manner that provides maximum market coverage subject to the station's FCC license and FCC rules and
regulations.

The
offices and studios of the Company's radio stations are located in leased or owned facilities. These leases generally have expiration dates that range from three to fifteen years.
The Company either owns or leases its transmitter and antenna sites. These leases generally have expiration dates that range from one to seventeen years. The Company does not anticipate any
difficulties in renewing those leases that expire within the next several years or in leasing other space, if required.

A
substantial amount of the Company's broadcast cash flow was generated by the Company's Los Angeles stations during 2001. Accordingly, the offices, studios, transmitter sites and
antenna sites used in the operation of the Company's Los Angeles stations may be material to the Company's overall operations.

As
noted in Item 1 above, as of December 31, 2001, the Company owns and programs 52 radio stations in 13 markets throughout the United States. Therefore, except as set forth
above, no one property is material to the Company's overall operations. The Company believes that its properties are in good condition and suitable for its operations. The Company owns substantially
all of the equipment used in its radio broadcasting business.

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of business, the Company becomes involved in certain legal claims and litigation. In the opinion of management, based upon consultations
with legal counsel, the disposition of such litigation pending against the Company will not have a materially adverse effect on its consolidated financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Price Range of Class A Common Stock

The Class A Common Stock is traded on the New York Stock Exchange under the symbol "HSP." The following table sets forth for each of the periods presented
below, the high and low closing sale prices per share:

High

LowYear Ended December 31, 2000First Quarter

$
64.19

$
43.13Second Quarter


52.78


30.94Third Quarter


41.50


20.63Fourth Quarter


37.60


19.13Year Ended December 31, 2001First Quarter

$
37.44

$
17.90Second Quarter


28.69


15.69Third Quarter


27.74


14.11Fourth Quarter


26.00


15.00


As
of December 31, 2001, there were approximately 118 and 1 record holders of the Class A and Class B Common Stock, respectively. This figure does not include an
estimate of the indeterminate number of beneficial holders whose shares of Class A Common Stock may be held of record by brokerage firms and clearing agencies.

Dividend Policy

The Company has never paid a cash dividend on its Common Stock and does not anticipate paying cash dividends in the foreseeable future. The Company intends to
retain any earnings for use in the growth of its business. The Company currently is restricted from paying any cash dividends on its capital stock under its credit agreement.

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data listed below should be read with Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operations and with the Company's consolidated financial statements including notes thereto, included elsewhere in this document. The following table presents selected consolidated financial data
for Hispanic Broadcasting Corporation and

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its subsidiaries for the years ended December 31, 2001, 2000, 1999, 1998 and 1997 (in thousands, except per share data):

|                                                    |                                | Year Ended December 31, |          
|--------------------------------------------------- | ------------------------------ | ----------------------- | ---------
|
|Statement of Operations Data:                       |                                |                         |          
|Net revenues                                        |                                | $                       | 240,775  
|Operating expenses                                  |                                |                         | 75,399   
|Wages, salaries and benefits                        |                                |                         | 76,363   
|Provision for bad debts                             |                                |                         | 4,289    
|Depreciation and amortization                       |                                |                         | 36,415   
|Corporate expenses                                  |                                |                         | 3,718    
|                                                    |                                |                         |          
|Operating income                                    |                                |                         | 44,591   
|                                                    |                                |                         |          
|Other income (expense):                             |                                |                         |          
|                                                    | Interest income (expense), net |                         |          
|                                                    | Other, net                     |                         |          
|                                                    |                                |                         |          
|                                                    |                                |                         | 6,320    
|                                                    |                                |                         |          
|Income before income tax                            |                                |                         | 50,911   
|Income tax                                          |                                |                         | 19,942   
|                                                    |                                |                         |          
|Net income                                          |                                | $                       | 30,969   
|                                                    |                                |                         |          
|Net income per common share(a):                     |                                |                         |          
|                                                    |                                | Basic                   |          
|                                                    |                                | Diluted                 |          
|Weighted average common shares outstanding:         |                                |                         |          
|                                                    | Basic                          |                         |          
|                                                    | Diluted                        |                         |          
|Statement of Cash Flow Data:                        |                                |                         |          
|Net cash provided by operating activities           |                                | $                       | 79,878   
|Net cash used in investing activities               |                                |                         | (129,963 
|Net cash provided by (used in) financing activities |                                |                         | (6,017   
|Other Operating Data(b):                            |                                |                         |          
|EBITDA                                              |                                | $                       | 81,006   
|Balance Sheet Data (at end of period):              |                                |                         |          
|Working capital                                     |                                | $                       | 86,553   
|Net intangible assets                               |                                |                         | 1,023,400
|Total assets                                        |                                |                         | 1,241,743
|Long-term debt, less current portion                |                                |                         | 1,418    
|Stockholders' equity                                |                                |                         | 1,096,816

---

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the consolidated results of operations and cash flows of the Company for the years ended December 31, 2001, 2000 and 1999 and
consolidated financial condition as of December 31, 2001 and 2000 should be read in conjunction with the consolidated financial statements of the Company and the related notes included
elsewhere in this report.

General

The primary source of revenues is the sale of broadcasting time for advertising. In 2001, we generated approximately 67.5% of our gross revenues from local
advertising, which is sold primarily by each individual local radio station's sales staff, and approximately 26.5% from national spot advertising, which is sold by independent advertising sales
representatives. The balance of our 2001 revenues came from political, network sales and miscellaneous revenues such as rental income from tower sites, and from our Internet operation.

The
most significant operating expenses are programming expenses, and advertising and promotion expenses. Operating expenses are affected in part by the timing of promotion campaigns to
improve audience ratings, the timing of acquisitions, and the financial performance of our new station formats.

The
Company has historically purchased primarily English-language radio stations and converted the formats to a variety of Spanish-language formats. As a result, the historical financial
performance of acquired radio stations is not a good indicator of future financial performance. A new start-up radio station generates operating losses in its first year of operation. The
magnitude of operating losses is determined in part by the size of the market served by the radio station, the amount of promotion expense required to attract an audience to the station, and the size
of the acquisition. Thus, the Company's financial results in any given year can be affected by the timing, number, and acquisition cost and operating expenses of its start-up stations in
that year.

EBITDA
consists of operating income or loss excluding depreciation and amortization. EBITDA is not calculated in accordance with generally accepted accounting principles. This measure
should not be considered in isolation or as a substitute for or as superior to operating income, cash flows from operating activities or any other measure for determining operating performance or
liquidity that is calculated in accordance with generally accepted accounting principles. EBITDA does not take into account the Company's debt service requirements and other commitments and,
accordingly, it is not necessarily indicative of an amount that may be available for dividends, reinvestment in the Company's business or other discretionary uses. In addition, our definition of
EBITDA is not necessarily comparable to similarly titled measures reported by other companies.

We
calculate same station results by measuring the operating performance of each radio station format in the current period to the performance in the comparable period of the prior year
for each station format that has been in a Spanish-language format for two or more years. In some instances, existing station formats are moved to new radio frequencies. In this case, the same station
designation follows the format and the start-up becomes the station that launches a new Spanish-language format.

In
2001 and 2000, the Company funded its acquisitions with available cash. In addition, the Company's financial performance benefited from interest income generated on the Company's
available cash balances. In 2002, the Company will use its excess cash to acquire more start-up radio stations and borrow from its $225.0 million revolving credit facility (the
"Credit Facility"). As a result, interest income and securities gains will decline and interest expense and long-term obligations will increase.

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Results of Operations for the Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

The results of operations for the year ended December 31, 2001 are not comparable to the results of operations for the same period in 2000 primarily due to
the acquisition of KLNO(FM) in Dallas on September 24, 1999 (the station operated under a time brokerage agreement until January 31, 2000 when the Company began programming the station
in a Spanish-language format), the start-up of radio stations KRCD(FM) and KRCV(FM) in Los Angeles on January 31, 2000, the start-up of radio stations KCOR(FM) and
KBBT(FM) in San Antonio on September 15, 2000 and September 29, 2000, respectively, the programming format changes on radio stations KDXX(AM/FM), KDXT(FM) and KDOS(FM) in Dallas on
February 1, 2000 and KQBU(FM) in Houston on August 18, 2001, the acquisition of KOVE(FM) in Houston on July 20, 2001 and KOMR(FM), KMRR(FM), KKMR(FM) and KHOV(FM) in Phoenix on
October 31, 2001, and the elimination of KTNQ(AM) in Los Angeles as a separately programmed radio station on January 1, 2001.

Net
revenues increased by $3.2 million or 1.3% to $240.8 million for the year ended December 31, 2001 from $237.6 million for the same period in 2000. Net
revenues increased for the year ended December 31, 2001, compared to the same period in 2000 primarily because of (a) revenue growth of same stations, and (b) revenues from
start-up stations acquired or reformatted in 2000 and 2001. For the year ended December 31, 2001, same station net revenues increased 1.4% over the same period of 2000 to
$226.1 million. The Company's same station revenue performance compares favorably to an overall decline in radio revenues experienced by all radio stations operating in the Company's thirteen
markets. The Company's FM same stations posted a net revenues increase of 3.4% for the year ended December 31, 2001, compared to the same period of 2000. The Company's AM same stations posted a
net revenues decrease of 9.7% for the year ended December 31, 2001, compared to the same period of 2000. The decrease in AM station performance was due in part to a decision to reformat some of
its news/talk stations during the first half of 2001.

Operating
expenses increased by $9.7 million or 14.8% to $75.4 million for the year ended December 31, 2001 from $65.7 million for the same period in 2000.
Operating expenses increased for the year ended December 31, 2001, compared to the same period in 2000 primarily because of (a) promotion expenses to address direct competition in the
key markets of Los Angeles, Chicago and Miami, (b) rent associated with the expansion of the Company's studio facilities in Los Angeles, San Francisco, Miami and New York, (c) trade
expenses due to additional promotion campaigns for Los Angeles and Miami, and (d) an impairment loss on an investment. As a percentage of net revenues, operating expenses increased to 31.3%
from 27.7% for the years ended December 31, 2001 and 2000, respectively.

Wages,
salaries and benefits increased by $6.4 million or 9.1% to $76.4 million for the year ended December 31, 2001 from $70.0 million for the same period in
2000. Wages, salaries and benefits increased for the year ended December 31, 2001, compared to the same period in 2000 primarily because of (a) additional personnel associated with
start-up stations, (b) personnel costs associated with the programming changes in New York and Miami, (c) additional costs incurred to hire experienced sales personnel in Los Angeles and
Houston, and (d) higher staffing costs in the corporate office. As a percentage of net revenues, wages, salaries and benefits increased to 31.7% from 29.5% for the years ended
December 31, 2001 and 2000, respectively.

The
provision for bad debts increased by $0.5 million or 13.2% to $4.3 million for the year ended December 31, 2001 from $3.8 million for the same period in 2000.
The provision for bad debts increased for the year ended December 31, 2001, compared to the same period in 2000 primarily because of the estimated uncollectability of certain notes receivable.
As a percentage of net revenues, the provision increased to 1.8% from 1.6% for the years ended December 31, 2001 and 2000, respectively.

22

---

Corporate
expenses decreased by $0.2 million or 5.1% to $3.7 million for the year ended December 31, 2001, from $3.9 million for the same period in 2000. The
decrease was primarily due to lower legal and professional fees in 2001. As a percentage of net revenues, corporate expenses decreased to 1.5% from 1.6% for the years ended December 31, 2001
and 2000, respectively.

EBITDA
for the year ended December 31, 2001 decreased $13.2 million or 14.0% to $81.0 million compared to $94.2 million for the same period in 2000. As a
percentage of net revenues, EBITDA decreased to 33.6% from 39.6% for the years ended December 31, 2001 and 2000, respectively.

Depreciation
and amortization for the year ended December 31, 2001 increased $2.1 million to $36.4 million, compared to $34.3 million for the same period in
2000. The increase is due to the acquisitions of KOVE(FM) in Houston and KOMR(FM), KMRR(FM), KKMR(FM) and KHOV(FM) in Phoenix, and capital expenditures.

Interest
income, net decreased to $3.4 million from $7.1 million for the year ended December 31, 2001 and 2000, respectively. The decrease for the year ended
December 31, 2001, compared to the same period in 2000 was due to cash and cash equivalents being higher in 2000 than in 2001 and lower interest rates in 2001.

Other,
net increased to $2.9 million for the year ended December 31, 2001, from $1.6 million in the same period in 2000. The increase was due to gains on the sales
of securities and the final award received by the Company related to an arbitration proceeding. Other, net is identified as revenues and expense incurred outside the normal course of business.

Federal
and state income taxes are being provided at an effective rate of 39.2% and 39.5% for the years ended December 31, 2001 and 2000, respectively. The decrease in the
effective rate is due to a lower effective state tax rate.

For
the year ended December 31, 2001, the Company's net income totaled $31.0 million ($0.28 per common share) compared to $41.5 million ($0.38 per common share) in
the same period in 2000.

Results of Operations for the Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999

The results of operations for the year ended December 31, 2000 are not comparable to the results of operations for the same period in 1999 primarily due to
the start-up of radio stations KHOT(FM) in Phoenix on April 5, 1999, the radio station broadcasting at 94.1 MHz (KLNO(FM)) in Dallas on September 24, 1999, KRCD(FM) and
KRCV(FM) in Los Angeles on January 31, 2000, KCOR(FM) and KBBT(FM) in San Antonio on September 15, 2000 and September 29, 2000, respectively, and the start-up of HBCi,
LLC, the Company's Internet subsidiary on January 1, 2000.

Net
revenues increased by $39.7 million or 20.1% to $237.6 million for the year ended December 31, 2000 from $197.9 million for the same period in 1999. Net
revenues increased for the year ended December 31, 2000, compared to the same periods in 1999 primarily because of (a) revenue growth of same stations, and (b) revenues from
start-up stations acquired or reformatted in 1999 and 2000. Same station revenues benefited from improved performance of the Company's news/talk stations, which collectively had posted
revenue declines a year earlier.

Operating
expenses increased by $14.6 million or 28.6% to $65.7 million for the year ended December 31, 2000 from $51.1 million for the same period in 1999.
Operating expenses increased primarily due to (a) an increase in operating expenses of same stations, (b) increases in operating expenses of start-up stations, and (c) costs
associated with the development, launch and operation of the Company's radio
station Internet websites and local portals. We increased the promotion of our radio stations to improve the ratings and invested in programming research and our non-traditional revenue initiative.
Non-traditional revenues are revenues from the implementation of new business

23

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development techniques. As a percentage of net revenues, operating expenses increased to 27.7% from 25.8% for the years ended December 31, 2000 and 1999, respectively.

Wages,
salaries and benefits increased by $12.6 million or 22.0% to $70.0 million for the year ended December 31, 2000 from $57.4 million for the same period
in 1999. Wages, salaries and benefits increased for the year ended December 31, 2000, compared to the same period in 1999 primarily because of (a) increased personnel costs associated
with start-up stations, (b) an additional investment in on-air talent, (c) additional sales and marketing personnel including such costs associated with our non-traditional revenue
initiative, and (d) higher staffing costs of the corporate office. As a percentage of net revenues, wages, salaries and benefits increased to 29.5% from 29.0% for the years ended
December 31, 2000 and 1999, respectively.

The
provision for bad debts increased by $1.9 million or 100.0% to $3.8 million for the year ended December 31, 2000 from $1.9 million for the same period in
1999. The provision for bad debts increased for the year ended December 31, 2000, compared to the same period in 1999 primarily due to our estimate that a certain agency account is
uncollectable. As a percentage of net revenues, the provision increased to 1.6% from 1.0% for the years ended December 31, 2000 and 1999, respectively.

Corporate
expenses increased by $1.1 million or 39.3% to $3.9 million for the year ended December 31, 2000 from $2.8 million for the same period in 1999. The
increase was primarily due to the costs of approximately $0.6 million associated with the move from the Nasdaq National Market to the New York Stock Exchange and the costs associated with the
Company's unsuccessful efforts to acquire three radio stations from Clear Channel. As a percentage of net revenues, corporate expenses increased to 1.6% from 1.4% for the years ended
December 31, 2000 and 1999, respectively.

EBITDA
for the year ended December 31, 2000 increased 11.2%, to $94.2 million compared to $84.7 million for the same period in 1999. As a percentage of net revenues,
EBITDA decreased to 39.6% from 42.8% for the years ended December 31, 2000 and 1999, respectively.

Depreciation
and amortization for the year ended December 31, 2000 increased 20.4% to $34.3 million compared to $28.5 million for the same period in 1999. The
increase is due to radio station acquisitions and capital expenditures.

Interest
income, net increased to $7.1 million from $1.8 million for the years ended December 31, 2000 and 1999, respectively. The increase for the year ended
December 31, 2000 compared to the same period in 1999 was due to cash and cash equivalents being much higher in 2000 than in 1999 due to the
unspent proceeds of the November 1999 secondary public stock offering being invested for the entire year.

Other,
net increased to $1.6 million for the year ended December 31, 2000. The increase was mainly due to the award received by the Company related to the
Z-Spanish Media Corporation (owner of radio station KLNZ(FM)) arbitration proceedings.

Federal
and state income taxes are being provided at an effective rate of 39.5% and 41.1% for the years ended December 31, 2000 and 1999, respectively. The decrease in the
effective rate is primarily due to an increase in tax-exempt interest income.

For
the year ended December 31, 2000, the Company's net income totaled $41.5 million ($0.38 per common share), compared to $34.2 million ($0.33 per common
sharediluted) in the same period in 1999.

Liquidity and Capital Resources

Net cash provided by operating activities for the year ended December 31, 2001 was $79.9 million as compared to $70.8 million for the same
period in 2000. The $9.1 million increase from 2000 to 2001 is due to (a) the estimated federal and state income tax payments for the year ended December 31,

24

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2001 are less than the comparative period in 2000 due to lower federal and state income tax liabilities, and (b) a greater amount of accounts receivable collections in 2001. Net cash used in
investing activities was $130.0 and $172.5 million for the years ended December 31, 2001 and 2000, respectively. The $42.5 million decrease from 2000 to 2001 is primarily due to
deferred charges and other assets increasing in 2000 due to expenditures for signal upgrades in process for radio stations KPTY(FM) in Houston and KDXX(FM) and KDXT(FM) in Dallas. The remaining
decrease is due to the acquisition of KRCD(FM), KRCV(FM), KCOR(FM) and KBBT(FM) in 2000 having a higher aggregate purchase price than KOVE(FM), KOMR(FM), KMRR(FM), KKMR(FM) and KHOV(FM) purchased in
2001. Net cash used in financing activities was $6.0 million and net cash provided by financing activities was $2.2 million for the years ended December 31, 2001 and 2000,
respectively. The $8.2 million decrease from 2000 to 2001 is primarily due to the purchase of treasury stock in 2001.

Generally,
capital expenditures are made with available cash. Capital expenditures totaled $14.3 million for the year ended December 31, 2001. Approximately
$10.0 million of the capital expenditures incurred during the year ended December 31, 2001 related to radio signal upgrade projects affecting five different radio stations in Houston and
Dallas and the build-out of studio and office space in Los Angeles, San Francisco, New York, Miami, Phoenix and San Antonio compared to $6.6 million incurred in the same period in
2000 for radio signal upgrade projects in Houston and Dallas and the build-out of studios in Miami, Los Angeles, Phoenix and Dallas.

Available
cash plus cash flow provided by operations was sufficient to fund the Company's operations, meet its debt obligations, and to fund capital expenditures. Management believes the
Company will have sufficient cash and cash provided by operations to finance its operations, satisfy its debt service requirements, and to fund capital expenditures. Management regularly reviews
potential acquisitions. Future acquisitions will be financed primarily through available cash, proceeds from borrowings under the Credit Facility, proceeds from securities or debt offerings, and/or
from cash provided by operations.

Stockholders' Equity

In 2001, the Company purchased 685,500 shares of its Class A Common Stock at a weighted average price per share of $14.75.

Long-Term Debt

The scheduled maturities of long-term obligations, future minimum rental payments under noncancellable operating leases and radio station acquisition commitments
as of December 31, 2001 are as follows (in thousands):

Payments Due by PeriodTotal

Less than 1 year

1-3 years

4-5 years

After 5 yearsLong-term obligations

$
1,424

$
6

$
14

$
17

$
1,387Operating leases


74,252


8,134


15,434


13,597


37,087Radio station acquisitions


79,025


79,025








Total contractual cash obligations

$
154,701

$
87,165

$
15,448

$
13,614

$
38,474


For
the years ended December 31, 2001 and 2000, no amounts were borrowed on the Credit Facility. As of December 31, 2001, the Company had $225.0 million of credit
available. Borrowings under the Credit Facility bear interest at a rate based on LIBOR plus an applicable margin as determined by the Company's leverage ratio. The Credit Facility is secured by the
stock of the Company's subsidiaries. Availability under the Credit Facility reduces quarterly commencing September 30, 1999 and ending December 31, 2004. Our ability to make additional
borrowings under

25

---

the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit Facility.

Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be
amortized and to be tested for impairment at least annually in accordance with the provisions of SFAS No. 142. The Company is required to adopt the provisions of SFAS No. 142 effective
January 1, 2002. Intangible assets determined to have an indefinite useful life that are acquired in a business combination completed after June 30, 2001 will not be amortized and will
be evaluated for impairment. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized prior to the adoption of SFAS
No. 142. Management believes the adoption of SFAS No. 142 will materially reduce amortization expense and increase operating income, net income and net income per common share.

Upon
adoption of SFAS No. 142, we will be required to reassess the useful lives of all intangible assets acquired on or before June 30, 2001, and make any necessary remianing
amortization period adjustments by the end of the first interim period after adoption of SFAS No. 142. In addition, to the extent that an intangible asset is identified as having an indefinite
useful life, we will be required to test the intangible asset for impairment in accordance with the provisions of SFAS No. 142 within the first interim period after adoption of SFAS
No. 142. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period after adoption.

In
connection with the transitional cost in excess of fair value of net assets acquired impairment evaluation, SFAS No. 142 requires us to perform an assessment of whether there
is an indication that cost in excess of fair value of net assets acquired is impaired as of the date of the adoption of SFAS No. 142. To accomplish this, we must identify the reporting units
and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing cost in excess of fair value of net assets acquired and other intangible assets,
to those reporting units as of the date of adoption of SFAS No. 142. The Company defines its reporting unit to be an individual radio market. To the extent a reporting unit's carrying amount
exceeds its fair value, the reporting unit's cost in excess of fair value of net assets acquired may be impaired and we must perform the second step of the transitional impairment test. In the second
step, we must compare the implied fair value of the reporting unit's cost in excess of fair value of net assets acquired, determined by allocating the reporting unit's fair value to all of its assets
(recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS No. 141, to its carrying amount, both of which would be measured as of
the date of adoption of SFAS No. 142. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in our statement of income and
comprehensive income.

Amortization
expense related to broadcast licenses, cost in excess of fair value of net assets acquired and certain other intangible assets was $25.4 million for the year ended
December 31, 2001. Because of the extensive effort needed to comply with adopting SFAS No. 141 and SFAS No. 142, it is not practicable to reasonably estimate the impact of adopting these
standards on our financial statements at this time, including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle.

In
October 2001, the Financial Accounting Standards Board issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 144 supersedes SFAS No. 121,Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. SFAS No. 144

26

---

retains the requirements of SFAS No. 121 to (a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash
flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset. The statement also removes goodwill from its scope and covers the accounting
for the disposal of long-lived assets. The Company is required to adopt the provisions of SFAS No. 144 effective January 1, 2002. Management does not believe adoption of this
statement will materially impact the Company's financial position or results of operations.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different
results under different assumptions and conditions. The Company believes that its critical accounting policies are limited to those described below.



The Company records impairment losses when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flow
estimated to be generated by those assets is less than the carrying amount of those assets. When specific assets are determined to be impaired, the cost basis of the assets is reduced to reflect their
current fair market value.

We
performed a recoverability assessment of all of our long-lived assets using an undiscounted cash flow model as of December 31, 2001. Based on our assumptions, all
long-lived assets were determined to be recoverable.



Revenue is derived primarily from the sale of advertising time to local and national advertisers. Revenue is recognized as commercials are broadcast. Revenues
from barter transactions are recognized as income when commercials are broadcast. Barter transactions are recorded at the estimated fair value of the goods or services received.



The allowance for doubtful accounts is estimated using a combination of the aging of the accounts receivable balances and knowledge related to the ability of the
Company to collect specific accounts. Older accounts receivable are seen to be less likely to be collected and require a greater allowance. Specific accounts which are estimated to not be collected
increase the allowance.

For
additional information on our significant accounting policies, see Note 1 to our accompanying consolidated financial statements.

Inflation

Inflation has affected financial performance due to higher operating expenses. Although the exact impact of inflation is indeterminable, we have offset these
higher costs by increasing the effective advertising rates of most of our radio stations.

Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends

The ratios of earnings to fixed charges for the Company are computed by dividing pretax income from continuing operations after certain adjustments, by fixed
charges. Fixed charges consist of interest expense on all long and short-term borrowings and the estimated interest portion of rental expense. Set

27

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forth below are the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock dividends (in thousands except ratios):

|                                                                 |  | Year Ended December 31,
|---------------------------------------------------------------- |  | -----------------------
|
|Earnings to Fixed Charges                                        |  | 16.7                   
|Earnings to Combined Fixed Charges and Preferred Stock Dividends |  | 16.7                   

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to interest rate risk on both the interest earned on cash and cash equivalents and interest paid on borrowings under the Credit Facility. A
change of 10% in the interest rate earned on short-term investments and interest paid under the Credit Facility would not have had a significant impact on our historical financial
statements.

28

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

|                                                                                                                |  | Page
Number
|--------------------------------------------------------------------------------------------------------------- |  | -----------
|Independent Auditors' Report                                                                                    |  | 30         
|Consolidated Balance Sheets as of December 31, 2001 and 2000                                                    |  | 31         
|Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2001, 2000 and 1999 |  | 32         
|Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2001, 2000 and 1999            |  | 33         
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999                      |  | 34         
|Notes to Consolidated Financial Statements                                                                      |  | 35         

29

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INDEPENDENT AUDITORS' REPORT

The
Board of Directors
Hispanic Broadcasting Corporation:

We
have audited the accompanying consolidated balance sheets of Hispanic Broadcasting Corporation and subsidiaries (the "Company") as of December 31, 2001 and 2000 and the related
consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2001. In
connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule included at Item 14(a) (2). These consolidated financial
statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hispanic Broadcasting Corporation and
subsidiaries as of December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001,
in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As
discussed in Note 1 to the consolidated financial statements, effective July 1, 2001, Hispanic Broadcasting Corporation and subsidiaries adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 141,Business Combinations, and certain provisions of SFAS No. 142, Goodwill and Other Intangible
Assets, as required for goodwill and intangible assets resulting from business combinations consummated after
June 30, 2001.



Dallas,
Texas
February 8, 2002, except for Note 2 which is as of April 1, 2002

30

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (in thousands except share information)    ASSETS

|                                            |                                                                                                                                                                                                                | December 31,                              
|------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------
|
|Current assets:                             |                                                                                                                                                                                                                |                                           
|                                            | Cash and cash equivalents                                                                                                                                                                                      |                                           
|                                            | Accounts receivable, net of allowance of $3,458 in 2001 and $3,181 in 2000                                                                                                                                     |                                           
|                                            | Prepaid expenses and other current assets                                                                                                                                                                      |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                | Total current assets                      
|                                            |                                                                                                                                                                                                                |                                           
|Property and equipment, at cost:            |                                                                                                                                                                                                                |                                           
|                                            | Land and improvements                                                                                                                                                                                          |                                           
|                                            | Buildings and improvements                                                                                                                                                                                     |                                           
|                                            | Broadcast and other equipment                                                                                                                                                                                  |                                           
|                                            | Furniture and fixtures                                                                                                                                                                                         |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            | Less accumulated depreciation and amortization                                                                                                                                                                 |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|Intangible assets:                          |                                                                                                                                                                                                                |                                           
|                                            | Broadcast licenses                                                                                                                                                                                             |                                           
|                                            | Cost in excess of fair value of net assets acquired                                                                                                                                                            |                                           
|                                            | Other intangible assets                                                                                                                                                                                        |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            | Less accumulated amortization                                                                                                                                                                                  |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|Restricted cash                             |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|Deferred charges and other assets           |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                | Total assets                              
|                                            |                                                                                                                                                                                                                |                                           
|LIABILITIES AND STOCKHOLDERS' EQUITY       
|Current liabilities:                        |                                                                                                                                                                                                                |                                           
|                                            | Accounts payable                                                                                                                                                                                               |                                           
|                                            | Accrued expenses                                                                                                                                                                                               |                                           
|                                            | Income taxes payable                                                                                                                                                                                           |                                           
|                                            | Current portion of long-term obligations                                                                                                                                                                       |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                | Total current liabilities                 
|                                            |                                                                                                                                                                                                                |                                           
|Long-term obligations, less current portion |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|Deferred income taxes                       |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                |                                           
|Commitments and contingencies               |                                                                                                                                                                                                                |                                           
|Stockholders' equity:                       |                                                                                                                                                                                                                |                                           
|                                            | Preferred Stock, cumulative, $.001 par value; authorized 5,000,000 shares; no shares issued or outstanding                                                                                                     |                                           
|                                            | Class A Common Stock, $.001 par value; authorized 175,000,000 shares in 2001 and 2000; issued 80,923,786 shares and outstanding 80,238,286 shares in 2001 and issued and outstanding 80,645,351 shares in 2000 |                                           
|                                            | Class B Common Stock, convertible, $.001 par value; authorized 50,000,000 shares; issued and outstanding 28,312,940 shares                                                                                     |                                           
|                                            | Additional paid-in capital                                                                                                                                                                                     |                                           
|                                            | Retained earnings                                                                                                                                                                                              |                                           
|                                            | Treasury stock, at cost, 685,500 shares at December 31, 2001                                                                                                                                                   |                                           
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                | Total stockholders' equity                
|                                            |                                                                                                                                                                                                                |                                           
|                                            |                                                                                                                                                                                                                | Total liabilities and stockholders' equity
|                                            |                                                                                                                                                                                                                |                                           

See accompanying notes to consolidated financial statements.

31

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME        (in thousands except per share
data)

|                                            |                                         | Year Ended December 31,                                                           |        
|------------------------------------------- | --------------------------------------- | --------------------------------------------------------------------------------- | -------
|
|Revenues                                    |                                         | $                                                                                 | 274,314
|Agency commissions                          |                                         |                                                                                   | 33,539 
|                                            |                                         |                                                                                   |        
|Net revenues                                |                                         |                                                                                   | 240,775
|Operating expenses                          |                                         |                                                                                   | 75,399 
|Wages, salaries and benefits                |                                         |                                                                                   | 76,363 
|Provision for bad debt                      |                                         |                                                                                   | 4,289  
|Depreciation and amortization               |                                         |                                                                                   | 36,415 
|Corporate expenses                          |                                         |                                                                                   | 3,718  
|                                            |                                         |                                                                                   |        
|Operating income                            |                                         |                                                                                   | 44,591 
|                                            |                                         |                                                                                   |        
|Other income (expense):                     |                                         |                                                                                   |        
|                                            | Interest income                         |                                                                                   |        
|                                            | Interest expense                        |                                                                                   |        
|                                            | Other, net                              |                                                                                   |        
|                                            |                                         |                                                                                   |        
|                                            |                                         |                                                                                   | 6,320  
|                                            |                                         |                                                                                   |        
|Income before income tax                    |                                         |                                                                                   | 50,911 
|Income tax                                  |                                         |                                                                                   | 19,942 
|                                            |                                         |                                                                                   |        
|Net income                                  |                                         | $                                                                                 | 30,969 
|                                            |                                         |                                                                                   |        
|Net income per common share:                |                                         |                                                                                   |        
|                                            | Basic                                   |                                                                                   | $      
|                                            | Diluted                                 |                                                                                   | $      
|Weighted average common shares outstanding: |                                         |                                                                                   |        
|                                            | Basic                                   |                                                                                   |        
|                                            | Diluted                                 |                                                                                   |        
|Comprehensive income:                       |                                         |                                                                                   |        
|                                            | Net income                              |                                                                                   | $      
|                                            | Other comprehensive income, net of tax: |                                                                                   |        
|                                            |                                         | Unrealized gain on marketable equity securities (net of tax of $268)              |        
|                                            |                                         | Reclassification adjustment for gains included in net income (net of tax of $268) |        
|                                            |                                         |                                                                                   |        
|Comprehensive income                        |                                         | $                                                                                 | 30,969 
|                                            |                                         |                                                                                   |        

See
accompanying notes to consolidated financial statements.

32

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY        (in thousands except share information)

|                                                                        |                                                                                   |   |   | Common Stock |   |    |   | Retained
earnings
(accumulated
deficit) |    |   |   | Accummulated
other
comprehensive
income |   |   |        
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------- | - | - | ------------ | - | -- | - | --------------------------------------- | -- | - | - | --------------------------------------- | - | - | -------
|
|
|Balance at December 31, 1998                                            |                                                                                   | $ |  |              | $ | 35 |   | $                                       | 14 |   | $ | 665,340                                 |   | $ | (42,768
|Net proceeds from issuance of 10,145,596 shares of Class A Common Stock |                                                                                   |   |  |              |   | 5  |   |                                         |   |   |   | 369,451                                 |   |   |       
|Net income                                                              |                                                                                   |   |  |              |   |   |   |                                         |   |   |   |                                        |   |   | 34,176 
|                                                                        |                                                                                   |   |   |              |   |    |   |                                         |    |   |   |                                         |   |   |        
|Balance at December 31, 1999                                            |                                                                                   |   |  |              |   | 40 |   |                                         | 14 |   |   | 1,034,791                               |   |   | (8,592 
|Net proceeds from issuance of 149,111 shares of Class A Common Stock    |                                                                                   |   |  |              |   |   |   |                                         |   |   |   | 2,324                                   |   |   |       
|Two-for-one stock split                                                 |                                                                                   |   |  |              |   | 41 |   |                                         | 14 |   |   | (55                                     | ) |   |       
|Tax benefit of stock options exercised                                  |                                                                                   |   |  |              |   |   |   |                                         |   |   |   | 653                                     |   |   |       
|Options issued to non employees for services                            |                                                                                   |   |  |              |   |   |   |                                         |   |   |   | 242                                     |   |   |       
|Net income                                                              |                                                                                   |   |  |              |   |   |   |                                         |   |   |   |                                        |   |   | 41,531 
|                                                                        |                                                                                   |   |   |              |   |    |   |                                         |    |   |   |                                         |   |   |        
|Balance at December 31, 2000                                            |                                                                                   |   |  |              |   | 81 |   |                                         | 28 |   |   | 1,037,955                               |   |   | 32,939 
|Proceeds from issuance of 278,435 shares of Class A Common Stock        |                                                                                   |   |  |              |   |   |   |                                         |   |   |   | 4,094                                   |   |   |       
|Purchase of 685,500 shares of Class A Common Stock                      |                                                                                   |   |  |              |   |   |   |                                         |   |   |   |                                        |   |   |       
|Tax benefit of stock options exercised                                  |                                                                                   |   |  |              |   |   |   |                                         |   |   |   | 729                                     |   |   |       
|Options issued to non employees for services                            |                                                                                   |   |  |              |   |   |   |                                         |   |   |   | 129                                     |   |   |       
|Net income                                                              |                                                                                   |   |  |              |   |   |   |                                         |   |   |   |                                        |   |   | 30,969 
|Other comprehensive income:                                             |                                                                                   |   |   |              |   |    |   |                                         |    |   |   |                                         |   |   |        
|                                                                        | Unrealized gain on marketable equity securities (net of tax of $268)              |   |   |             |   |    |  |                                         |    |  |   |                                         |  |   |        
|                                                                        | Reclassification adjustment for gains included in net income (net of tax of $268) |   |   |             |   |    |  |                                         |    |  |   |                                         |  |   |        
|Total comprehensive income                                              |                                                                                   |   |  |              |   |   |   |                                         |   |   |   |                                        |   |   |       
|                                                                        |                                                                                   |   |   |              |   |    |   |                                         |    |   |   |                                         |   |   |        
|Balance at December 31, 2001                                            |                                                                                   | $ |  |              | $ | 81 |   | $                                       | 28 |   | $ | 1,042,907                               |   | $ | 63,908 
|                                                                        |                                                                                   |   |   |              |   |    |   |                                         |    |   |   |                                         |   |   |        

See accompanying notes to consolidated financial statements.

33

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands)

|                                                     |                                                                                                          | Year Ended December 31,                                        |                                          
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | -----------------------------------------
|
|Cash flows from operating activities:                |                                                                                                          |                                                                |                                          
|                                                     | Net income                                                                                               |                                                                | $                                        
|                                                     | Adjustments to reconcile net income to net cash rovided by operating activities:                         |                                                                |                                          
|                                                     |                                                                                                          | Provision for bad debts                                        |                                          
|                                                     |                                                                                                          | Depreciation and amortization                                  |                                          
|                                                     |                                                                                                          | Amortization of debt facility fee included in interest expense |                                          
|                                                     |                                                                                                          | Deferred income taxes                                          |                                          
|                                                     |                                                                                                          | Changes in operating assets and liabilities:                   |                                          
|                                                     |                                                                                                          |                                                                | Accounts receivable, net                 
|                                                     |                                                                                                          |                                                                | Prepaid expenses and other current assets
|                                                     |                                                                                                          |                                                                | Accounts payable                         
|                                                     |                                                                                                          |                                                                | Accrued expenses                         
|                                                     |                                                                                                          |                                                                | Income taxes payable                     
|                                                     |                                                                                                          |                                                                | Other, net                               
|                                                     |                                                                                                          |                                                                |                                          
|                                                     |                                                                                                          |                                                                |                                          
|                                                     |                                                                                                          |                                                                |                                          
|Cash flows from investing activities:                |                                                                                                          |                                                                |                                          
|                                                     | Acquisitions of radio stations                                                                           |                                                                |                                          
|                                                     | Cash deposited in restricted cash account related to the San Jose Acquisition and the Fresno Acquisition |                                                                |                                          
|                                                     | Property and equipment acquisitions                                                                      |                                                                |                                          
|                                                     | Dispositions of property and equipment                                                                   |                                                                |                                          
|                                                     | Additions to intangible assets                                                                           |                                                                |                                          
|                                                     | Increase in deferred charges and other assets                                                            |                                                                |                                          
|                                                     | Proceeds from the sale of securities included in deferred charges and other assets                       |                                                                |                                          
|                                                     |                                                                                                          |                                                                |                                          
|                                                     |                                                                                                          | Net cash used in investing activities                          |                                          
|                                                     |                                                                                                          |                                                                |                                          
|Cash flows from financing activities:                |                                                                                                          |                                                                |                                          
|                                                     | Borrowings on long-term obligations                                                                      |                                                                |                                          
|                                                     | Payments on long-term obligations                                                                        |                                                                |                                          
|                                                     | Proceeds from stock issuances                                                                            |                                                                |                                          
|                                                     | Purchase of treasury stock                                                                               |                                                                |                                          
|                                                     |                                                                                                          |                                                                |                                          
|                                                     |                                                                                                          | Net cash provided by (used in) financing activities            |                                          
|                                                     |                                                                                                          |                                                                |                                          
|Net increase (decrease) in cash and cash equivalents |                                                                                                          |                                                                | (56,102                                  
|Cash and cash equivalents at beginning of year       |                                                                                                          |                                                                | 115,689                                  
|                                                     |                                                                                                          |                                                                |                                          
|Cash and cash equivalents at end of year             |                                                                                                          | $                                                              | 59,587                                   
|                                                     |                                                                                                          |                                                                |                                          

See
accompanying notes to consolidated financial statements.

34

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies



Hispanic Broadcasting Corporation (the "Company"), through its subsidiaries, owns and operates 52 Spanish-language and other Hispanic-targeted radio stations
serving 13 markets throughout the United States (Los Angeles, New York City, Miami, San Francisco/San Jose, Chicago, Houston, San Antonio, Dallas/Fort Worth, McAllen/Brownsville/Harlingen, San Diego,
Phoenix, El Paso and Las Vegas). The Company also owns and operates HBC Radio Network, which is one of the largest Spanish-language radio broadcast networks in the United States in terms of audience
delivery and HBCi which operates the Company's radio station Internet websites.



The accompanying consolidated financial statements include the accounts of Hispanic Broadcasting Corporation and its wholly-owned subsidiaries. The Company
consolidates the accounts of subsidiaries when it has a controlling financial interest (over 50%) in the outstanding voting shares of the subsidiary.

All
significant intercompany accounts and transactions have been eliminated in consolidation.



The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Actual results could differ from those estimates.



Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.



Restricted cash is cash held in escrow accounts for pending acquisitions which is legally restricted.



The Company uses the equity method to account for investments when it does not have a controlling interest but has the ability to exercise significant influence
over the operating and/or financial decisions of the investee. Investments where the Company does not exert significant influence are accounted for using the cost method. Investments at
December 31, 2001 and 2000 (included in deferred charges and other assets) consist of interests in entities which are involved in radio broadcasting and the ownership of transmission towers. No
amount was recorded in equity in earnings in 2001.



Property and equipment are recorded at cost. Expenditures for significant renewals and betterments are capitalized. Repairs and maintenance are charged to expense
as incurred. Gains or

35

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losses from disposition of property and equipment are recognized in the statement of income and comprehensive income.

Depreciation
is provided in amounts sufficient to relate the asset cost to operations over the estimated useful lives on a straight-line basis. Leasehold improvements are
amortized over the remaining life of the lease or the estimated service life of the asset, whichever is shorter. The estimated useful lives are as follows:

Land improvements

15 yearsBuildings and improvements

3 - 40 yearsBroadcast and other equipment

2 - 30 yearsFurniture and fixtures

2 - 10 years




Intangible assets are recorded at cost. Amortization of intangible assets is provided in amounts sufficient to charge the asset cost to operations over the
estimated useful lives on a straight-line basis. Only intangible assets acquired prior to July 1, 2001 are subject to amortization. The estimated useful lives are as follows:

Broadcast licenses

40 yearsCost in excess of fair value of net assets acquired

principally 40 yearsOther intangible assets

3 - 40 years


The
Company evaluates periodically the propriety of the carrying amount of intangible assets, including cost in excess of fair value of net assets acquired, as well as the amortization
period to determine whether current events or circumstances warrant adjustments to the carrying value and/or revised estimates of useful lives. This evaluation consists of the projection of
undiscounted income before depreciation, amortization, and interest for each of the Company's radio stations over the remaining estimated useful life of the broadcast licenses. If such projections
indicate that undiscounted cash flows are not expected to be adequate to recover the carrying amounts of the related intangible assets, a loss is recognized to the extent the carrying amount of the
asset exceeds its fair value. The Company believes that no impairment of cost in excess of fair value of net assets acquired and other intangible assets has occurred and that no reduction of the
estimated useful lives is currently warranted.



Revenue is derived primarily from the sale of advertising time to local and national advertisers. Revenue is recognized as commercials are broadcast.



The Company incurs various marketing and promotional costs to add and maintain listenership. These costs are charged to expense in the year incurred and totaled
approximately $9.5, $5.7 and $4.2 million for the years ended December 31, 2001, 2000 and 1999, respectively.



Barter transactions represent advertising time exchanged for promotional items, advertising, supplies, equipment and services. Barter transactions are recorded at
the estimated fair value of the goods or services received. Revenues from barter transactions are recognized as income when commercials are broadcast. Expenses are recognized when goods or services
are received or used. Barter transactions are not significant to the Company's consolidated financial statements.

36

---



Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.



Basic earnings per common share is based on net earnings after preferred stock dividend requirements, if any, and the weighted average number of common shares
outstanding during each year. Diluted earnings per common share reflects the incremental increase in the weighted average number of common shares due to the dilutive effect of stock options and the
Employee Stock Purchase Plan.



The Company has not invested in derivative financial instruments and there were no outstanding swap agreements or other derivative financial instruments at
December 31, 2001 or 2000.



The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and payable, approximate fair value due to the relatively
short maturity of these instruments. The carrying amount of long-term obligations, including the current portion, approximates fair value based upon quoted interest rates for the same or
similar debt issues.



In the opinion of management, credit risk with respect to accounts receivable is limited due to the large number of diversified customers and the geographic
diversification of the Company's customer base. The Company performs ongoing credit evaluations of its customers and believes that adequate allowances for uncollectible accounts receivable are
maintained.



The Company accounts for stock options issued to employees and directors using the intrinsic-value method as outlined under Accounting Principles Board Opinion
No. 25 ("APB 25"),Accounting for Stock Issued to Employeesand related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions
involving Stock Compensation(an interpretation of APB Opinion No. 25), issued March 2000, to account for its
fixed plan stock options.

Under
APB 25, the Company does not recognize compensation expense related to employee stock options since options are not granted at a price below the market value of the underlying
common stock on the date of grant. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 123,Accounting for Stock-Based
Compensation, the Company has disclosed pro forma net income and net income per share using the fair-value method in calculating compensation expense. Also, in
accordance with SFAS 123 and Emerging Issues Task Force No. 96-18Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services, the Company includes in operating expenses in the statement of income and comprehensive income,

37

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the cost of stock options (calculated using the fair-value method) issued to persons who are not employees or directors.



SFAS No. 130,Reporting Comprehensive Income,establishes guidelines for the reporting and display of
comprehensive income and its components in financial statements. Comprehensive income includes unrealized gains on equity securities classified as available-for-sale and
included as a component of stockholders' equity.



In 2001, the Financial Accounting Standards Board issued SFAS No. 141,Business Combinations, and SFAS
No. 142,Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business
combinations. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized and that such assets be tested for impairment at least annually in
accordance with the provisions of SFAS No. 142. The Company adopted the provisions of SFAS No. 141 on July 1, 2001. SFAS No. 142 was adopted by the Company on
July 1, 2001 for goodwill and intangible assets determined to have an indefinite useful life that are acquired in a business combination completed after June 30, 2001. Goodwill and
intangible assets acquired in business combinations completed before July 1, 2001 continue to be amortized.



Certain prior year amounts have been reclassified to conform with the current year presentation.

2. Acquisitions



On April 24, 2001, the Company entered into an asset purchase agreement to acquire for $80.0 million the FCC licenses of a radio station
broadcasting at 106.5 MHz (KOVE(FM)), serving the Houston market (the "Houston Acquisition"). The Houston Acquisition closed on July 20, 2001. The asset acquisition was funded with available
cash. The station's programming is an existing format from a
different Company-owned radio station in the Houston market. The Company also granted to an affiliate of the seller, an option to program radio station KRTX(FM) which also serves the Houston market.

The
fair value of the assets acquired in the Houston Acquisition as of July 20, 2001 is as follows (in thousands):

Property and equipment

$
2,028Broadcast licenses


77,863Other intangible assets


173$
80,064


On
September 4, 2001, the Company entered into an asset purchase agreement to acquire for $34.0 million the assets of KOMR(FM) (formerly KEDJ(FM)), KMRR(FM), KKMR(FM)
(formerly KOMR(FM)) and KHOV(FM) (formerly KSSL(FM)), serving the Phoenix market (the "Phoenix Acquisition"). The Phoenix Acquisition closed on October 31, 2001. The asset acquisition was
funded with available cash. KOMR(FM), KMRR(FM) and KKMR(FM) are programmed with one new Hispanic-targeted format and KHOV(FM) will be simulcast with the Company's existing Phoenix station KHOT(FM).

38

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The
fair value of the assets acquired in the Phoenix Acquisition as of October 31, 2001 is as follows (in thousands):

Prepaid expenses and other current assets

$
24Property and equipment


2,052Broadcast licenses


31,707Other intangible assets


282$
34,065


The
intangible assets acquired in the Houston Acquisition and the Phoenix Acquisition are not subject to amortization.



On October 15, 1999, the Company entered into an asset purchase agreement to acquire for $75.0 million the assets of KRCD(FM) and KRCV(FM), serving
the Los Angeles market (the "Los Angeles Acquisition"). The Los Angeles Acquisition closed on January 31, 2000. The asset acquisition was funded with a portion of the proceeds from the
November 1999 secondary public stock offering (the "November 1999 Offering"). The stations' programming was converted to a single Spanish-language format in February 2000.

On
May 31, 2000, the Company entered into an asset purchase agreement to acquire for $45.0 million the assets of KCOR(FM) and KBBT(FM), serving the San Antonio market. The
KCOR(FM) and KBBT(FM) acquisitions closed on September 15, 2000 and September 29, 2000, respectively. The asset acquisitions were funded with a portion of the proceeds from the
November 1999 Offering. The stations' programming was converted to separate Hispanic-targeted formats.



On January 27, 1999, the Company entered into an asset purchase agreement to acquire for $18.3 million the assets of KHOT(FM), serving the Phoenix
market. The KHOT(FM) acquisition closed on April 5, 1999. The asset acquisition was funded with available cash. Immediately after closing, the station's programming was converted to a
Spanish-language format.

On
March 1, 1999, the Company entered into an asset purchase agreement to acquire for $20.3 million the assets of KISF(FM), serving the Las Vegas market (the "Las Vegas
Acquisition"). The Las Vegas Acquisition closed on April 30, 1999. The asset acquisition was funded with a $20.0 million borrowing from the Company's $225.0 million revolving
credit facility (the "Credit Facility") and $0.3 million of available cash. Immediately after closing, the station's programming was converted to a Spanish-language format.

On
January 2, 1997, the Company acquired an option to purchase all of the assets used in connection with the operation of KSCA(FM), a radio station serving the Los Angeles market
(the "KSCA Option"). In connection with the acquisition of the KSCA Option, the Company began providing Spanish-language programming to KSCA(FM) under a time brokerage agreement on February 5,
1997. The Company exercised the KSCA Option and on September 17, 1999, the Company acquired the assets of KSCA(FM) for $118.1 million. The Company had previously paid
$13.0 million to acquire and renew the option to purchase the assets of KSCA(FM) and such payments were subtracted from the purchase price at closing. To fund the acquisition, the Company
borrowed $38.0 million from the Credit Facility and used $67.1 million of available cash. The cash was generated from operating activities and proceeds of the June 1999 secondary
public stock offering (the "June 1999 Offering").

39

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On
July 6, 1999, the Company entered into an agreement to acquire from a nonaffiliated trust for $65.0 million, the FCC licenses and transmission equipment of a radio
station broadcasting at 94.1 MHz (KLNO(FM)), serving the Dallas/Fort Worth market (the "Dallas Acquisition"). The Dallas Acquisition closed on September 24, 1999. To fund the acquisition, the
Company borrowed $8.0 million from the Credit Facility and used $57.0 million of available cash. The cash was generated from operating activities and proceeds of the June 1999
Offering.

With
the Dallas Acquisition, the Company assumed a time brokerage agreement whereby an unaffiliated party provided the programming to the radio station broadcasting at 94.1 MHz until
January 31, 2000. The time brokerage payments ranged from $12,947 to $15,618 per day. Immediately after the time brokerage agreement terminated, the station's programming was converted to a
Spanish-language format.

All
of the acquisitions discussed above were accounted for using the purchase method of accounting. Accordingly, the accompanying financial statements include the operations of the
acquired businesses from the respective dates of acquisition.



On August 10, 2001, the Company entered into an asset purchase agreement to acquire for $16.0 million the assets of KQMR(FM) (formerly KPXC(FM)),
serving the Las Vegas market. On March 22, 2002, the Company closed on the asset purchase of KQMR(FM). The Company used its available cash to fund this acquisition.

On
October 10, 2001, the Company entered into an asset purchase agreement to acquire for $5.0 million the assets of KAJZ(FM), serving the Fresno market (the "Fresno
Acquisition"). The Company has $0.3 million cash held in escrow which is included in restricted cash. On March 29, 2002, the Company closed on the Fresno Acquisition. The Company used
its available cash to fund this acquisition.

On
December 17, 2001, the Company entered into an asset purchase agreement to acquire for $58.0 million the assets of KARA(FM), serving the San Jose and San Francisco
markets (the "San Jose Acquisition"). The Company has $2.9 million cash held in escrow which is included in restricted cash. On April 1, 2002, the Company closed on the San Jose
Acquisition. The Company used its available cash to fund this acquisition along with $15.0 million borrowed from the Credit Facility on April 1, 2002.

The
Company's contract for the acquisition of KPTY(FM) in Houston (formerly KOVA(FM)) (the station is currently owned by the Company) provided for an increase in the purchase price in
the event that the Federal Communications Commission ("FCC") authorized certain station improvements. In November 2000, the FCC authorized the station improvements. Radio stations KDXX(FM)
(formerly KDOS(FM)) and KDXT(FM) in Dallas are also undergoing certain station improvements. As of December 31, 2001, the Company has paid $36.9 million of upgrade costs and additional
purchase price (included in deferred charges and other assets) related to these radio stations and none of them were broadcasting with an upgraded signal.

The
radio signal upgrade projects for KPTY(FM) in Houston and KDXX(FM) in Dallas were completed and the stations were broadcasting with their upgraded signals in February 2002.
The upgrade costs and additional purchase price of $34.8 million incurred by the Company and included in deferred charges and other assets was reclassified to broadcast licenses in
February 2002 and will not be subject to amortization.

Unaudited
pro forma results of operations for the years ended December 31, 2001 and 2000, calculated as though the Houston Acquisition, the Phoenix Acquisition, the KQMR(FM)
acquisition,

40

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the Fresno Acquisition and the San Jose Acquisition had occurred at the beginning of each period, is as follows (in thousands, except per share data):

|                             |         | Pro forma
Year Ended December 31,
|---------------------------- | ------- | ---------------------------------
|
|Net revenues                 |         | $                                
|Operating income             |         |                                  
|Net income                   |         |                                  
|Net income per common share: |         |                                  
|                             | Basic   |                                  
|                             | Diluted |                                  

The
pro forma information is presented for comparative purposes only and does not purport to be indicative of what would have occurred had the acquisitions actually been made at such
dates, nor is it indicative of future operating results.



On April 14, 1999, the Company entered into an agreement with Z-Spanish Media Corporation ("Z"), to exchange the assets of KRTX(FM), a radio
station serving the Houston market, for the assets of KLNZ(FM), a radio station owned by Z serving the Phoenix market. Although the asset exchange received all necessary governmental consents, the
transaction did not close. The Company instituted arbitration proceedings. In December 2000, the arbitrators awarded the Company an interim amount of $2.0 million which was received in
January 2001 and a final award of $0.4 million received in March 2001. The Company had incurred costs related to this transaction and $0.4 and $1.5 million of awards net of
costs was included in other income, net for the years ended December 31, 2001 and 2000, respectively.

3. Investments

The Company recognized an impairment loss of $0.8 million in 2001 associated with an investment. The fair market value of the investment was determined to
be zero based on a review of current financial information. The loss is included in operating expenses for the year ended December 31, 2001.

In
2001, the Company sold marketable equity securities. Included in other income, net for the year ended December 31, 2001 is a realized gain of $2.5 million from the sale
of these securities.

4. Accrued Expenses

Accrued expenses consist of the following (in thousands):

|                                     |  | December 31,
|------------------------------------ |  | ------------
|
|Wages, salaries and benefits payable |  | $           
|Commissions payable                  |  |             
|Advertising payable                  |  |             
|Other accrued expenses               |  |             
|                                     |  |             
|                                     |  | $           
|                                     |  |             

41

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5. Long-Term Obligations

The following is a summary of long-term obligations outstanding as of December 31, 2001 and 2000 (in thousands):

|                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 2001 |       | 2000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----- | ----
|Revolving credit facility payable to banks; aggregate commitment of $225.0 million; interest rate based on LIBOR plus an applicable margin as determined by the Company's leverage ratio; no balance was outstanding during
2001; payable through December 2004; secured by 100% of the common stock of the Company's wholly-owned subsidiaries; the Company is required to comply with certain financial and nonfinancial covenants |  | $    |      |     
|Various loans net of imputed interest of 8.1%, payable in monthly installments through 2001                                                                                                                                                                                                                                                                                                                                          |  |      |      |     
|Prize awards net of imputed interest (10% to 12%), payable in varying annual installments through 2044                                                                                                                                                                                                                                                                                                                               |  |      | 1,424 |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |       |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      | 1,424 |     
|Less current portion                                                                                                                                                                                                                                                                                                                                                                                                                 |  |      | 6     |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |       |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $    | 1,418 |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      |       |     

The
Company's ability to make additional borrowings under the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit
Facility. As of December 31, 2001, the Company had $225.0 million of credit available. The Credit Facility commitment began reducing on September 30, 1999 and continues quarterly
through December 31, 2004.

Maturities
of long-term obligations for the five years subsequent to December 31, 2001 are as follows (in thousands):

Year

Amount2002

$
62003


72004


72005


82006


9Thereafter


1,387


Interest
paid for the years ended December 31, 2001, 2000 and 1999 amounted to $0.9, $0.7 and $1.7 million, respectively.

6. Commitments and Contingencies

The Company leases office space and other property under noncancellable operating leases. Terms of the leases vary from two to thirty years. Certain leases have
contingent rent clauses whereby rent is increased based on a change in the Consumer Price Index. Various leases have renewal options of five

42

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to ten years. Future minimum rental payments under noncancellable operating leases in effect at December 31, 2001 are summarized as follows (in thousands):

Year

Amount2002

$
8,1342003


7,7852004


7,6492005


7,1202006


6,477Thereafter


37,087


Rent
expense for the years ended December 31, 2001, 2000 and 1999 was $8.5, $5.0 and $4.3 million, respectively.

The
Company is subject to legal proceedings and other claims which have arisen in the ordinary course of its business and have not been fully adjudicated. These actions, when ultimately
concluded, will not, in the opinion of management, have a material adverse effect upon the financial position, results of operations or liquidity of the Company.

7. Stockholders' Equity



In 2001, the Company purchased 685,500 shares of its Class A Common Stock at a weighted average price per share of $14.75.

Clear
Channel owns all of the issued and outstanding Class B Common Stock. The rights of the Class A and Class B Common Stock are identical except that the
Class B Common Stock has no voting rights,
except in certain matters. Shares of Class B Common Stock are convertible into shares of Class A Common Stock, at Clear Channel's option, subject to any necessary governmental consents,
including the consent of the FCC.

On
May 25, 2000, the Board of Directors of the Company authorized a two-for-one stock split payable in the form of a stock dividend of one share of common
stock for each issued and outstanding share of common stock. The dividend was paid on June 15, 2000 to all holders of common stock at the close of business on June 5, 2000. All financial
information related to number of shares, per share amounts, stock option data and market prices of the Company's common stock have been restated to give effect to the split.



The Company is authorized to issue 5,000,000 shares of $.001 par value Preferred Stock. The Preferred Stock may be issued in series, with the rights and
preferences of each series established by the Company's Board of Directors.

43

---

8. Operating Expenses

Operating expenses consist of the following (in thousands):

Year Ended December 31,2001

2000

1999Rent

$
8,241

$
4,741

$
4,110General promotion


10,680


7,374


5,110Music fees and licenses


7,046


6,554


5,529Special events


8,376


8,866


6,505Representative commissions


6,445


6,797


5,096Other operating expenses


34,611


31,409


24,804$
75,399

$
65,741

$
51,154


9. Corporate Expenses

Corporate expenses consist of the following (in thousands):

Year Ended December 31,2001

2000

1999Travel costs

$
420

$
462

$
361Outside consulting


503


367


414Telecommunication costs


398


292


265Legal and professional fees


777


1,012


1,036Other corporate expenses


1,620


1,746


782$
3,718

$
3,879

$
2,858


10. Income Taxes

The provision for income tax consists of the following (in thousands):

Year Ended December 31,2001

2000

1999Current:Federal

$
9,117

$
15,552

$
12,618State


1,205


3,548


3,189Total current tax


10,322


19,100


15,807Deferred:Federal


8,102


6,640


7,146State


1,518


1,320


860Total deferred tax


9,620


7,960


8,006Total income tax

$
19,942

$
27,060

$
23,813


44

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The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2001 and 2000 are as follows (in
thousands):

|                               |                                            | 2001 |         | 2000   
|------------------------------ | ------------------------------------------ | ---- | ------- | -------
|Deferred tax assets:           |                                            |      |         |        
|                               | Net operating losses                       |      | $       | 922    
|                               | Other intangible assets                    |      |         | 1,871  
|                               | Long-term obligationsprize awards         |      |         | 556    
|                               | Allowance for doubtful accounts receivable |      |         | 1,347  
|                               | Other                                      |      |         | 749    
|                               |                                            |      |         |        
|Total deferred tax assets      |                                            |      | 5,445   |        
|                               |                                            |      |         |        
|Deferred tax liabilities:      |                                            |      |         |        
|                               | Broadcast licenses                         |      |         | 115,053
|                               | Property and equipment                     |      |         | 2,492  
|                               | Other                                      |      |         | 7,386  
|                               |                                            |      |         |        
|Total deferred tax liabilities |                                            |      | 124,931 |        
|                               |                                            |      |         |        
|Net deferred tax liabilities   |                                            | $    | 119,486 |        
|                               |                                            |      |         |        

The
reconciliation of income tax expense computed at the federal statutory tax rate to the Company's actual income tax expense is as follows (in thousands):

|                                           |  | Year Ended December 31,
|------------------------------------------ |  | -----------------------
|
|Federal income tax at statutory rate       |  | $                      
|State income taxes, net of federal benefit |  |                        
|Nondeductible and non-taxable items, net   |  |                        
|                                           |  |                        
|                                           |  | $                      
|                                           |  |                        

As
of December 31, 2001, the Company had tax net operating loss carryforwards for state tax purposes of approximately $15.0 million which expire in years 2005 through 2021
if not used.

Income
taxes paid for the years ended December 31, 2001, 2000 and 1999 amounted to $8.0, $22.9 and $13.3 million, respectively.

11. Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands):

Year Ended December 31,2001

2000

1999Numerator:Net income

$
30,969

$
41,531

$
34,176Denominator:Denominator for basic earnings per share


108,872


108,858


101,566Effect of dilutive securities:Stock options


733


1,514


1,347Employee Stock Purchase Plan


12


16


14Denominator for diluted earnings per share


109,617


110,388


102,927


45

---

Stock options which were excluded from the computation of diluted earnings per share due to their antidilutive effect amounted to 1.7 and
0.6 million shares for the years ended December 31, 2001 and 2000 and zero shares for the year ended December 31, 1999.

12. Retirement Plan

The Company has a defined contribution retirement savings plan (the "Plan"). The Plan covers all employees who have reached the age of 18 years and have
been employed by the Company for at least one year. The Company matches participants' contributions to the Plan in an amount not to exceed $1,500. The Company, at the sole discretion of the Board of
Directors, may make additional supplemental contributions to the Plan. The Company's expenses related to the Plan for the years ended December 31, 2001, 2000 and 1999 amounted to $0.6, $0.6 and
$0.3 million, respectively.

13. Stock Options

In May 1997, the stockholders of the Company approved a stock incentive plan ("Long-Term Incentive Plan"), to be administered by the Board of
Directors or by a sub-committee of the Board of Directors. The maximum number of shares of Class A Common Stock that may be the subject of awards at any one time shall be ten
percent of the total number of shares of Class A Common Stock outstanding. Options granted under the Long-Term Incentive Plan have a ten-year term and vest over various
periods up to five years.

The
stockholders of the Company also approved an Employee Stock Purchase Plan in May 1997. Under the plan, shares of the Company's common stock may be purchased at
six-month intervals at 85% of the lower of the fair market value on the first or the last day of each six-month period. Employees may purchase shares having a value not
exceeding 15% of their gross compensation during an offering period. During 2001, 2000 and 1999, employees purchased 55,980, 37,768 and 43,016 common shares at average prices of $23.35, $29.64 and
$19.25, respectively.

The
Company granted 844,000, 2,169,400 and 975,500 stock options in 2001, 2000 and 1999, respectively, to various employees of the Company under its Long-Term Incentive Plan.
The exercise prices of options outstanding at December 31, 2001 ranged from $8.22 to $50.57 per share, the market prices at dates of grant.

46

---

The
following is a summary of stock options outstanding and exercisable for the years ended December 31, 1999, 2000 and 2001 (in thousands, except per share data):

|                           |                                          | Number
Of Shares |       | Weighted Average
Exercise Price Per Share
|-------------------------- | ---------------------------------------- | ---------------- | ----- | -----------------------------------------
|Stock Options Outstanding: |                                          |                  |       |                                          
|                           | Options outstanding at December 31, 1998 |                  | 2,082 |                                          
|                           | Granted                                  |                  | 974   |                                          
|                           | Forfeited                                |                  | (104  | )                                        
|                           |                                          |                  |       |                                          
|                           | Options outstanding at December 31, 1999 |                  | 2,952 |                                          
|                           | Granted                                  |                  | 2,169 |                                          
|                           | Forfeited                                |                  | (221  | )                                        
|                           | Exercised                                |                  | (118  | )                                        
|                           |                                          |                  |       |                                          
|                           | Options outstanding at December 31, 2000 |                  | 4,782 |                                          
|                           | Granted                                  |                  | 844   |                                          
|                           | Forfeited                                |                  | (390  | )                                        
|                           | Exercised                                |                  | (222  | )                                        
|                           |                                          |                  |       |                                          
|                           | Options outstanding at December 31, 2001 |                  | 5,014 |                                          
|                           |                                          |                  |       |                                          
|Exercisable Stock Options: |                                          |                  |       |                                          
|                           | Options exercisable at December 31, 1998 |                  | 50    |                                          
|                           | Vested                                   |                  | 19    |                                          
|                           |                                          |                  |       |                                          
|                           | Options exercisable at December 31, 1999 |                  | 69    |                                          
|                           | Vested                                   |                  | 623   |                                          
|                           | Exercised                                |                  | (118  | )                                        
|                           |                                          |                  |       |                                          
|                           | Options exercisable at December 31, 2000 |                  | 574   |                                          
|                           | Vested                                   |                  | 1,082 |                                          
|                           | Exercised                                |                  | (222  | )                                        
|                           |                                          |                  |       |                                          
|                           | Options exercisable at December 31, 2001 |                  | 1,434 |                                          
|                           |                                          |                  |       |                                          

Pro
forma information regarding net income and net income per share is required by SFAS 123, and has been determined as if the Company had accounted for its employee stock options
under the fair value method of that Statement. The weighted average fair value at date of grant for options granted in the years ended December 31, 2001, 2000 and 1999 was $12.62, $16.46 and
$13.32 per share, respectively. The fair value of these options was estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions:

|                               |  | 2001    |  | 2000    |  | 1999   
|------------------------------ |  | ------- |  | ------- |  | -------
|Risk-free interest rate        |  | 4.57%   |  | 5.96%   |  | 6.11%  
|Dividend yield                 |  | 0.00%   |  | 0.00%   |  | 0.00%  
|Volatility factor              |  | 59.42%  |  | 57.82%  |  | 50.39% 
|Weighted average expected life |  | 6 years |  | 6 years |  | 6 years

47

---

For
purposes of pro forma disclosures, the estimated fair value of the options is expensed over the options' vesting period. Pro forma results of operations calculated as though the
Company had adopted the provisions of SFAS 123 are as follows (in thousands, except per share data):

|                             |         | Year Ended December 31,
|---------------------------- | ------- | -----------------------
|
|Net income                   |         | $                      
|Net income per common share: |         |                        
|                             | Basic   |                        
|                             | Diluted |                        

The
following is a summary of stock options outstanding and exercisable at December 31, 2001:

|Range of
Exercise Prices
Per Share |  | Shares
Under Option
(in thousands) |  | Weighted Average
Exercise Price Per Share |       | Weighted Average
Remaining
Contractual Life
(in years)
|---------------------------------- |  | ---------------------------------- |  | ----------------------------------------- | ----- | ------------------------------------------------------
|Stock Options Outstanding:         |  |                                    |  |                                           |      
|$8.22 - $11.75                     |  | 848                                |  | $                                         | 11.70 |                                                       
|12.34 - 18.13                      |  | 666                                |  |                                           | 17.57 |                                                       
|18.75 - 26.00                      |  | 2,420                              |  |                                           | 21.03 |                                                       
|27.70 - 41.38                      |  | 1,072                              |  |                                           | 33.57 |                                                       
|41.84 - 50.57                      |  | 8                                  |  |                                           | 48.38 |                                                       
|                                   |  |                                    |  |                                           |       |                                                       
|                                   |  | 5,014                              |  |                                           |       |                                                       
|                                   |  |                                    |  |                                           |       |                                                       
|Exercisable Stock Options:         |  |                                    |  |                                           |      
|$8.22 - $11.75                     |  | 569                                |  | $                                         | 11.67 |                                                       
|12.34 - 18.13                      |  | 268                                |  |                                           | 17.20 |                                                       
|18.75 - 26.00                      |  | 394                                |  |                                           | 20.51 |                                                       
|32.25 - 41.38                      |  | 203                                |  |                                           | 32.96 |                                                       
|                                   |  |                                    |  |                                           |       |                                                       
|                                   |  | 1,434                              |  |                                           |       |                                                       
|                                   |  |                                    |  |                                           |       |                                                       

14. Quarterly Results of Operations (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 2001 and 2000 (in thousands, except per share data):

|                              |                                                 | First
Quarter |   | Second
Quarter |  | Third
Quarter |        | Fourth
Quarter
|----------------------------- | ----------------------------------------------- | ------------- | - | -------------- |  | ------------- | ------ | --------------
|Year ended December 31, 2001: |                                                 |               |   |                |  |               |        |               
|                              | Net revenues                                    |               | $ | 47,796         |  | $             | 65,896 |               
|                              | Net income                                      |               |   | 3,618          |  |               | 10,246 |               
|                              | Net income per common sharebasic and diluted   |               |   | 0.03           |  |               | 0.09   |               
|                              | Comprehensive income                            |               |   | 3,618          |  |               | 11,319 |               
|Year ended December 31, 2000: |                                                 |               |   |                |  |               |        |               
|                              | Net revenues                                    |               | $ | 46,539         |  | $             | 64,771 |               
|                              | Net income                                      |               |   | 5,219          |  |               | 12,054 |               
|                              | Net income per common share  basic and diluted |               |   | 0.05           |  |               | 0.11   |               
|                              | Comprehensive income                            |               |   | 5,219          |  |               | 12,054 |               

48

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

49

---



PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 with respect to the directors, nominees and executive officers of the Company is incorporated by reference to the information
set forth under the caption "Election of Directors," "Executive Compensation and Other Matters" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's Definitive
Schedule 14A Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the Company's fiscal year-end.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference to the information set forth under the caption "Executive Compensation and Other Matters" in the
Company's Definitive Schedule 14A Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the Company's fiscal year-end.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated by reference to the information set forth under the captions "Security Ownership of Certain Beneficial Owners
and Management" in the Company's Definitive Schedule 14A Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the Company's fiscal
year-end.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated by reference to the information set forth under the caption "Certain Transactions" in the Company's Definitive
Schedule 14A Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the Company's fiscal year-end.

50

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PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



Hispanic Broadcasting Corporation and Subsidiaries  Valuation and Qualifying Accounts  For the years ended December 31, 2001, 2000 and 1999(in thousands)

|                                      |                                 |  |   | Additions |  |   |       | 
|------------------------------------- | ------------------------------- |  | - | --------- |  | - | ----- | 
|
|For the year ended December 31, 2001: |                                 |  |   |           |  |   |       | 
|                                      | Allowance for Doubtful Accounts |  | $ | 3,181     |  | $ | 4,289 | 
|For the year ended December 31, 2000: |                                 |  |   |           |  |   |       | 
|                                      | Allowance for Doubtful Accounts |  |   | 1,855     |  |   | 3,757 | 
|For the year ended December 31, 1999: |                                 |  |   |           |  |   |       | 
|                                      | Allowance for Doubtful Accounts |  |   | 2,301     |  |   | 1,869 | 

51

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|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Second Amended and Restated Certificate of Incorporation of the Company dated February 14, 1997 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed March 3, 1997).                                                                                                                                                                                                                                                                                                             
|3.2            |  | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 4, 1998 (incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q filed on November 11,
1998).                                                                                                                                                                                                                                                                          
|3.3            |  | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 8, 1999 (incorporated by reference to Exhibit 3.3 to the Company's Form 10-Q filed on August 12, 1999).                                                                                                                                                                                                                                                                            
|3.4            |  | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated May 25, 2000 (incorporated by reference to Exhibit 3.4 to the Company's Form 10-Q filed on August 11, 2000).                                                                                                                                                                                                                                                                            
|3.5            |  | Amended and Restated Bylaws of the Company (incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 33-78370) filed on April 29, 1994, as amended ("Company's S-1")).                                                                                                                                                                                                                                                                                         
|10.1           |  | Stock Option Plan (incorporated by reference to Exhibit 10.4 of Company's S-1).                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.2           |  | Form of Indemnification Agreement (incorporated by reference to Exhibit 10.22 of Company's S-1).                                                                                                                                                                                                                                                                                                                                                                                                      
|10.3           |  | Registration Rights Agreement, dated February 14, 1997, by and among the Company, McHenry T. Tichenor, Sr., McHenry T. Tichenor, Jr., Warren W. Tichenor, William E. Tichenor, Jean T. Russell, McHenry T. Tichenor, Jr., as Custodian for David T.
Tichenor, Alta Subordinated Debt Partners III, L.P., Prime II Management, LP, PrimeComm, LP, Ricardo A. del Castillo, Jeffrey Hinson and David D. Lykes (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed March 3,
1997).
|10.4           |  | Employment Agreement, dated February 14, 1997, by and between the Company and McHenry T. Tichenor, Jr. (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed March 3, 1997).                                                                                                                                                                                                                                                                                                     
|10.5           |  | Stockholders Agreement, dated February 14, 1997, by and among the Company and each of the stockholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.4 to Schedule 13D of McHenry T. Tichenor, Jr. filed February 14,
 1997).                                                                                                                                                                                                                                        
|10.6           |  | Registration Rights Agreement, dated February 14, 1997, by and among the Company and Clear Channel Communications, Inc. (incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed March 3, 1997).                                                                                                                                                                                                                                                                                    
|10.7           |  | Credit Agreement among the Company and its subsidiaries, The Chase Manhattan Bank, as administrative agent, and certain other lenders, dated February 14, 1997 without Exhibits (Schedules omitted) (incorporated by reference to Exhibit 10.5 to the
Company's Form 8-K filed on May 14, 1997).                                                                                                                                                                                                      
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

52

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|10.8  |  | Credit Agreement Amendment No. 1 among the Company and its subsidiaries, the Chase Manhattan Bank, as administrative agent, and certain other lenders, dated May 6, 1999 without Exhibits (Schedules omitted) (incorporated by reference to Exhibit 10.12
to the Company's Form 10-K filed on March 30, 2000).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.9  |  | Hispanic Broadcasting Corporation Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement filed on April 24, 1997 (Commission File No. 000-24516)).                                                                                                     
|10.10 |  | Hispanic Broadcasting Corporation Amended and Restated 1997 Employee Stock Purchase Plan (incorporated by reference to the Company's Form S-8 filed on December 31, 1997).                                                                                                                                    
|10.11 |  | Asset Purchase Agreement, dated April 24, 2001, by and between KQQK License, Inc., KQQK Inc., HBC License Corporation and HBC Broadcasting Texas, L.P.                                                                                                                                                        
|10.12 |  | Asset Purchase Agreement, dated September 4, 2001, by and between Big City RadioPhoenix, L.L.C., Big City Radio, Inc., HBC Phoenix, Inc. and HBC License Corporation.                                                                                                                                        
|10.13 |  | Employment, Nonsolicitation and Arbitration Agreement, dated March 1, 2001, by and between HBC Management Company, Inc. and Gary Stone (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on May 14, 2001).                                                                          
|10.14 |  | Asset Purchase Agreement, dated August 10, 2001, by and between Claire B. Benezra, HBC License Corporation and HBC-Las Vegas, Inc.                                                                                                                                                                            
|10.15 |  | Asset Purchase Agreement, dated October 10, 2001, by and between San Joaquin Radio Company, LLC and Hispanic Broadcasting Corporation.                                                                                                                                                                        
|10.16 |  | Asset Purchase Agreement, dated December 17, 2001, by and between Empire Broadcasting Corporation and Hispanic Broadcasting Corporation.                                                                                                                                                                      
|10.17 |  | Employment, Noncompetition and Arbitration Agreement, dated November 5, 2001, by and between HBC Management Company, Inc. and Jeffrey T. Hinson.                                                                                                                                                              
|11    |  | Statement Regarding Computation of Per Share Earnings.                                                                                                                                                                                                                                                        
|12.1  |  | Statement Regarding Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                        
|12.2  |  | Statement Regarding Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.                                                                                                                                                                                                 
|21    |  | Subsidiaries of the Company.                                                                                                                                                                                                                                                                                  
|23    |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                          
|24    |  | Power of Attorney (included on Signature Page).                                                                                                                                                                                                                                                               

Registrant
agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request.

None.

53

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on April 1, 2002.

| |  | HISPANIC BROADCASTING CORPORATION
| |  | ---------------------------------
| |  | By:                              

Each
person whose signature appears below authorizes McHenry T. Tichenor, Jr. and Jeffrey T. Hinson, or either of them, each of whom may act without joinder of the other, to execute in
the name of each such person who is then an officer or director of the Registrant and to file any amendments to this annual report on Form 10-K necessary or advisable to enable the
Registrant to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, which amendments
may make such changes in such report as such attorney-in-fact may deem appropriate.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

|Name                                                |  | Title                                                                                      |  | Date         
|--------------------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | -------------
|                                                    |  |                                                                                            |  |              
|/s/MCHENRY T. TICHENOR, JR.McHenry T. Tichenor, Jr. |  | President, Chief Executive Officer and
Chairman of the Board of Directors                  |  | April 1, 2002
|/s/JEFFREY T. HINSONJeffrey T. Hinson               |  | Senior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer) |  | April 1, 2002
|/s/DAVID P. GEROWDavid P. Gerow                     |  | Vice President, Controller and Secretary
(Principal Accounting Officer)                    |  | April 1, 2002
|/s/MCHENRY T. TICHENORMcHenry T. Tichenor           |  | Director                                                                                   |  | April 1, 2002
|/s/ROBERT W. HUGHESRobert W. Hughes                 |  | Director                                                                                   |  | April 1, 2002
|/s/JAMES M. RAINESJames M. Raines                   |  | Director                                                                                   |  | April 1, 2002
|/s/ERNESTO CRUZErnesto Cruz                         |  | Director                                                                                   |  | April 1, 2002

54

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