10-Q

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)
ý	Quarterly report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2002
or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition period from                              to
Commission file number 0-24516

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

Delaware (State or other jurisdiction of incorporation or organization)	99-0113417 (I.R.S. Employer Identification No.)
3102 Oak Lawn Avenue, Suite 215 Dallas, Texas (Address of principal executive offices)	75219 (Zip Code)
(214) 525-7700 (Registrant's telephone number, including area code)

        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 ý        No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at May 1, 2002
Class A Common Stock, $.001 Par Value	80,395,972
Class B Non-Voting Common Stock, $.001 Par Value	28,312,940

HISPANIC BROADCASTING CORPORATION

MARCH 31, 2002

INDEX

PART I.		FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001	2
		Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2002 and 2001	3
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2002 and 2001	4
		Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		15
PART II.		OTHER INFORMATION
Item 1.	Legal Proceedings		16
Item 6.	Exhibits and Reports on Form 8-K		16

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PART I    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED)

HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands except share information)

			March 31, 2002			December 31, 2001
ASSETS
Current assets:
	Cash and cash equivalents		$	57,217		$	59,587
	Accounts receivable, net			39,558			50,241
	Prepaid expenses and other current assets			2,530			748
		Total current assets		99,305			110,576
Property and equipment, at cost, net				53,910			54,428
Intangible assets, net				1,079,489			1,023,400
Restricted cash				2,901			3,151
Deferred charges and other assets				15,970			50,188
		Total assets	$	1,251,575		$	1,241,743
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable and accrued expenses		$	21,793		$	24,017
	Current portion of long-term obligations			6			6
		Total current liabilities		21,799			24,023
Long-term obligations, less current portion				1,418			1,418
Deferred income taxes				122,486			119,486
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; issued 81,061,872 shares and outstanding 80,376,372 shares in 2002 and issued 80,923,786 shares and outstanding 80,238,286 shares in 2001			81			81
	Class B Common Stock, convertible, $.001 par value; authorized 50,000,000 shares; issued and outstanding 28,312,940 shares			28			28
	Additional paid-in capital			1,045,037			1,042,907
	Retained earnings			70,834			63,908
	Treasury stock, at cost, 685,500 shares			(10,108	)		(10,108	)
		Total stockholders' equity		1,105,872			1,096,816
		Total liabilities and stockholders' equity	$	1,251,575		$	1,241,743

See accompanying notes to unaudited condensed consolidated financial statements.

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands except per share data)

		Three Months Ended March 31,
		2002		2001
Net revenues		$	51,951	$	47,796
Operating expenses			15,851		13,820
Wages, salaries and benefits			20,367		19,010
Provision for bad debts			599		605
Depreciation and amortization			2,842		9,087
Corporate expenses			968		1,056
Operating income			11,324		4,218
Interest income, net			67		1,398
Other, net			—		364
Income before income tax			11,391		5,980
Income tax			4,465		2,362
Net income		$	6,926	$	3,618
Net income per common share—basic and diluted		$	0.06	$	0.03
Weighted average common shares outstanding:
	Basic		108,589		108,982
	Diluted		109,718		110,007

See accompanying notes to unaudited condensed consolidated financial statements.

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

				Three Months Ended March 31,
				2002			2001
Cash flows from operating activities:
	Net income			$	6,926		$	3,618
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for bad debts			599			605
		Depreciation and amortization			2,842			9,087
		Deferred income taxes			3,000			800
		Changes in operating assets and liabilities			6,077			8,630
		Other, net			120			54
			Net cash provided by operating activities		19,564			22,794
Cash flows from investing activities:
	Acquisitions of radio stations				(20,774	)		—
	Property and equipment acquisitions				(2,277	)		(2,509	)
	Dispositions of property and equipment				181			3
	Additions to intangible assets				(422	)		(19	)
	Increase in deferred charges and other assets				(740	)		(795	)
			Net cash used in investing activities		(24,032	)		(3,320	)
Cash flows from financing activities:
	Payments on long-term obligations				—			(9	)
	Proceeds from stock issuances				2,098			873
			Net cash provided by financing activities		2,098			864
Net increase (decrease) in cash and cash equivalents					(2,370	)		20,338
Cash and cash equivalents at beginning of period					59,587			115,689
Cash and cash equivalents at end of period				$	57,217		$	136,027

See accompanying notes to unaudited condensed consolidated financial statements.

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HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2002

1.    Basis of Presentation

        The accompanying unaudited condensed consolidated financial statements of Hispanic Broadcasting Corporation and subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

2.    New Accounting Pronouncements

        In 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 adopted the provisions of SFAS No. 142 on July 1, 2001 and January 1, 2002 for intangible assets acquired in business combinations completed after June 30, 2001 and prior to July 1, 2001, respectively.

        On January 1, 2002, we were required by SFAS No. 142 to reassess the useful lives of all intangible assets acquired on or before June 30, 2001, and make any necessary remaining amortization period adjustments by June 30, 2002. No remaining amortization period adjustments were necessary. In addition, to the extent that an intangible asset is identified as having an indefinite useful life, we are required to perform a transitional test to determine if there is an asset impairment in accordance with the provisions of SFAS No. 142. Any impairment loss is measured as of January 1, 2002 and recognized as the cumulative effect of a change in accounting principle in the three months ended March 31, 2002.

        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 January 1, 2002. To accomplish this, we identified the reporting units and determined the carrying value of each reporting unit. 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 January 1, 2002. Any transitional impairment loss is recognized as the cumulative effect of a change in accounting principle in our statement of income. No impairment loss was recognized for the three months ended March 31, 2002 as a result of the transitional test discussed above.

        In 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 retains the requirements of SFAS No. 121 to (a) recognize an impairment loss only if the carrying amount of a

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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 assets. The statement also removes goodwill from its scope and covers the accounting for the disposal of long-lived assets. The Company adopted the provisions of SFAS No. 144 on January 1, 2002. Management does not believe adoption of this statement will materially impact the Company's financial position or results of operations.

3.    Acquisitions and Radio Signal Upgrades

2002 Acquisitions and Radio Signal Upgrades

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

        The fair value of the assets acquired in the Las Vegas Acquisition as of March 22, 2002 is as follows (in thousands):

Property and equipment	$	26
Broadcast licenses		15,955
Other intangible assets		57
	$	16,038

        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"). On March 29, 2002, the Company closed on the Fresno Acquisition. The Company used its available cash to fund the acquisition.

        The fair value of the assets acquired in the Fresno Acquisition as of March 29, 2002 is as follows (in thousands):

Property and equipment	$	90
Broadcast licenses		4,896
Other intangible assets		34
	$	5,020

        The intangible assets acquired in the Las Vegas Acquisition and the Fresno Acquisition are not subject to amortization.

        Radio stations KPTY(FM) in Houston and KDXX(FM) and KDXT(FM) in Dallas have been involved in a variety of proceedings before the Federal Communications Commission to upgrade each of the stations' signal strength. The radio signal upgrade projects for KPTY(FM) in Houston and KDXX(FM) in Dallas were substantially completed in February 2002 and the stations began broadcasting according to their new authorized signal authority. The upgrade costs of $34.9 million incurred by the Company and included in deferred charges and other assets were reclassified to broadcast licenses in February 2002 and are not subject to amortization.

6

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

Property and equipment	$	2,028
Broadcast licenses		77,863
Other 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), KMRR(FM), KKMR(FM) and KHOV(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) is simulcast with the Company's existing Phoenix station KHOT(FM).

        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	$	24
Property and equipment		2,052
Broadcast licenses		31,707
Other intangible assets		282
	$	34,065

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

        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.

Pending Transactions

        On December 17, 2001, the Company entered into an asset purchase agreement to acquire for $58.0 million the assets of KEMR(FM) (formerly 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 as of March 31, 2002. On April 1, 2002, the Company closed on the San Jose Acquisition. The Company used its available cash to fund the acquisition along with $15.0 million borrowed from the $213.8 million revolving credit facility (the "Credit Facility") on April 1, 2002.

        Unaudited pro forma results of operations for the three months ended March 31, 2002 and 2001, calculated as though the Houston Acquisition, the Phoenix Acquisition, the Las Vegas Acquisition, the

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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 Three Months Ended March 31,
	2002		2001
Net revenues	$	54,455	$	50,301
Operating income		11,081		3,975
Net income		6,411		2,605
Net income per common share—basic and diluted		0.06		0.02

        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.

4.    Intangible Assets

        Intangible assets as of March 31, 2002 are summarized as follows (in thousands):

		Gross Carrying Amount		Accumulated Amortization		Net Amount
Intangible assets subject to amortization:
	Other intangible assets	$	12,260	$	10,653	$	1,607
Intangible assets not subject to amortization:
	Broadcast licenses		1,073,978		86,667		987,311
	Cost in excess of fair value of net assets acquired		97,624		12,379		85,245
	Other intangible assets		5,847		521		5,326
		$	1,189,709	$	110,220	$	1,079,489

        Amortization expense for the three months ended March 31, 2002 is $0.1 million. Estimated amortization expense of intangible assets acquired as of March 31, 2002 with finite useful lives are summarized as follows (in thousands):

Year	Amount
2002	$	423
2003		366
2004		239
2005		124
2006		106

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        The reconciliation of reported net income to adjusted net income, which is adjusted for the effect of amortization of intangible assets with an indefinite useful life (net of income taxes) is as follows (in thousands except per share data):

			Three Months Ended March 31,
			2002		2001
Reported net income			$	6,926	$	3,618
Broadcast licenses amortization, net of income tax				—		3,636
Cost in excess of fair value of net assets acquired amortization, net of income tax				—		401
Other intangible assets amortization, net of income tax				—		21
Adjusted net income			$	6,926	$	7,676
Adjusted net income per common share:
	Basic and diluted:
		Reported net income	$	0.06	$	0.03
		Broadcast licenses amortization, net of income tax		—		0.04
		Cost in excess of fair value of net assets acquired amortization, net of income tax		—		—
		Other intangible assets amortization, net of income tax		—		—
		Adjusted net income	$	0.06	$	0.07

5.    Long-Term Obligations

        The Company's ability to borrow under the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit Facility. The Credit Facility is secured by the stock of the Company's subsidiaries. Borrowings under the Credit Facility bear interest at a rate based on the LIBOR rate plus an applicable margin as determined by the Company's leverage ratio. The Company borrowed $15.0 million from the Credit Facility on April 1, 2002 and has $198.8 million of credit remaining on that date. The Credit Facility commitment began reducing on September 30, 1999 and continues quarterly through December 31, 2004.

6.    Stockholders' Equity

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

			Three Months Ended March 31,
			2002		2001
Numerator:
	Net income		$	6,926	$	3,618
Denominator:
	Denominator for basic earnings per share			108,589		108,982
	Effect of dilutive securities:
		Stock options		1,119		1,009
		Employee Stock Purchase Plan		10		16
	Denominator for diluted earnings per share			109,718		110,007

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        Stock options which were excluded from the computation of diluted earnings per share due to their antidilutive effect amounted to 1.1 and 1.3 million shares for the three months ended March 31, 2002 and 2001, respectively.

7.    Supplemental Cash Flows Information

        Noncash investing and financing activities for the three months ended March 31, 2002 are as follows (in thousands):

	Increase (Decrease)
	Property and equipment, net		Intangible assets, net		Restricted Cash			Deferred charges and other assets
Amounts reclassified due to the completion of radio station upgrades	$	18	$	34,811	$	—		$	(34,829	)
Amounts reclassified due to radio station acquisitions		—		284		(250	)		(34	)
	$	18	$	35,095	$	(250	)	$	(34,863	)

8.    Long-Term Incentive Plan

        On May 21, 1997, the stockholders of the Company approved the Hispanic Broadcasting Corporation Long-Term Incentive Plan (the "Incentive Plan"). The types of awards that may be granted under the Incentive Plan include (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) rights to receive a specified amount of cash or shares of Class A Common Stock and (e) restricted stock. In addition, the Incentive Plan provides that directors of the Company may elect to receive some or all of their annual director compensation in the form of shares of Class A Common Stock. Subject to certain exceptions set forth in the Incentive Plan, the aggregate number of shares of Class A Common Stock that may be the subject of awards under the Incentive Plan at one time shall be an amount equal to (a) ten percent of the total number of shares of Class A Common Stock outstanding from time to time minus (b) the total number of shares of Class A Common Stock subject to outstanding awards on the date of calculation under the Incentive Plan and any other stock-based plan for employees or directors of the Company (other than the Company's Employee Stock Purchase Plan). The Company has incentive and non-qualified stock options outstanding for 4,875,732 shares of Class A Common Stock primarily to directors and key employees. The exercise prices range from $8.22 to $51.38 per share and were equal to the fair market value of the Class A Common Stock on the dates such options were granted.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

        The following discussion of the consolidated results of operations and cash flows of the Company for the three months ended March 31, 2002 and 2001 and consolidated financial condition as of March 31, 2002 and December 31, 2001 should be read in conjunction with the unaudited condensed consolidated financial statements of the Company and the related notes included elsewhere in this report.

        The primary source of revenues is the sale of broadcasting time for advertising. We generate the majority of our gross revenues from local advertising, which is sold primarily by each individual local radio station's sales staff, and from national spot advertising, which is sold by independent advertising sales representatives. The balance of our revenues are derived 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 typically generates operating losses in its first one to two years 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 period can be affected by the timing, number, acquisition cost and operating expenses of its start-up stations in that period.

        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 accounting principles generally accepted in the United States of America. 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.

Results of Operations for the Three Months Ended March 31, 2002 Compared to the Three Months Ended March 31, 2001

        The results of operations for the three months ended March 31, 2002 are not comparable to the results of operations for the same period in 2001 primarily due to the programming format change on KQBU(FM) in Houston on August 18, 2001 and the acquisitions of KOVE(FM) in Houston on July 20, 2001, KOMR(FM), KMRR(FM), KKMR(FM) and KHOV(FM) in Phoenix on October 31, 2001, KQMR(FM) in Las Vegas on March 22, 2002 and KAJZ(FM) in Fresno on March 29, 2002. In addition, in January 2002, the Company launched HBC Sales Integration, Inc. ("HBCSi"). HBCSi is a

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partnership with Katz Hispanic Media (a unit of Katz Media Group) to integrate national and network sales and other marketing platforms under one entity.

        Net revenues increased by $4.2 million or 8.8% to $52.0 million for the three months ended March 31, 2002 from $47.8 million for the same period in 2001. Net revenues increased for the three months ended March 31, 2002, compared to the same periods in 2001 primarily because of (a) revenue growth of same stations, and (b) revenues from start-up stations acquired or reformatted in 2000, 2001 and 2002.

        Operating expenses increased by $2.0 million or 14.5% to $15.8 million for the three months ended March 31, 2002 from $13.8 million for the same period in 2001. Operating expenses increased for the three months ended March 31, 2002, compared to the same period in 2001 primarily because of (a) promotion expenses to improve audience ratings on stations located in Los Angeles, San Francisco and Houston, (b) barter expenses associated with the promotion campaigns to improve audience ratings for stations located in Houston, Dallas and Chicago, (c) rent associated with the studio and office facilities in San Francisco, New York and San Diego and tower space rent in Chicago, (d) programming contract labor to perform music research, (e) music fees in Los Angeles, Houston, Dallas and HBCSi, (f) insurance expense in all markets, (g) special event expense in Dallas, (h) representative commissions in Houston, and (i) the above increases are offset by the collection of an account receivable which was previously written off. As a percentage of net revenues, operating expenses increased to 30.4% from 28.9% for the three months ended March 31, 2002 and 2001, respectively.

        Wages, salaries and benefits increased by $1.4 million or 7.4% to $20.4 million for the three months ended March 31, 2002 from $19.0 million for the same period in 2001. Wages, salaries and benefits increased for the three months ended March 31, 2002, compared to the same period in 2001 primarily because of (a) sales commissions in Dallas, Houston, Chicago and HBCi (the Internet subsidiary), (b) local sales salaries related to the launch of HBCSi, (c) local sales salaries in Los Angeles, Houston and San Antonio, (d) general and administrative salaries of the corporate office, HBCSi and Miami, and (e) group insurance costs. As a percentage of net revenues, wages, salaries and benefits decreased to 39.2% from 39.7% for the three months ended March 31, 2002 and 2001, respectively.

        The provision for bad debts for the three months ended March 31, 2002 and 2001, respectively, was $0.6 million. As a percentage of net revenues, the provision decreased to 1.2% from 1.3% for the three months ended March 31, 2002 and 2001, respectively.

        Corporate expenses decreased $0.1 million or 9.1% to $1.0 million for the three months ended March 31, 2002 from $1.1 million for the same period in 2001. The decrease was primarily due to legal and accounting fees. As a percentage of net revenues, corporate expenses decreased to 1.9% from 2.3% for the three months ended March 31, 2002 and 2001, respectively.

        Depreciation and amortization for the three months ended March 31, 2002 decreased 68.1% to $2.9 million compared to $9.1 million for the same period in 2001. The decrease is due to the adoption of 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.

        Interest income, net decreased to $0.1 million from $1.4 million for the three months ended March 31, 2002 and 2001, respectively. The decrease for the three months ended March 31, 2002 compared to the same period in 2001 was due to cash and cash equivalents being higher in 2001 than in 2002 and lower interest rates on cash balances.

        Other, net decreased to zero from $0.4 million for the three months ended March 31, 2002 and 2001, respectively. The decrease was due to the final award received by the Company in 2001 related to an arbitration proceeding.

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        Federal and state income taxes are being provided at an effective rate of 39.2% and 39.5% for the three months ended March 31, 2002 and 2001, respectively. The decrease in the effective rate is due to a lower effective state tax rate.

        For the three months ended March 31, 2002, the Company's net income totaled $6.9 million ($0.06 per common share) compared to $3.6 million ($0.03 per common share) in the same period in 2001.

Liquidity and Capital Resources

        Net cash provided by operating activities for the three months ended March 31, 2002 was $19.6 million as compared to $22.8 million for the same period in 2001. The $3.2 million decrease from 2001 to 2002 is due to changes in operating assets and liabilities. Accounts receivable collections were greater for the three months ended March 31, 2001 than they were in the comparable period in 2002. Prepaid expenses and other current assets increased by a greater amount for the three months ended March 31, 2002 than the comparable period in 2001 due to prepaid expenses for special events and insurance. Income taxes payable increased by a greater amount for the three months ended March 31, 2001 than the comparable period in 2002 due to taxes related to a greater amount of interest income and the final award related to an arbitration proceeding. Net cash used in investing activities was $24.0 and $3.3 million for the three months ended March 31, 2002 and 2001, respectively. The $20.7 million decrease from 2001 to 2002 is due to the Las Vegas Acquisition and the Fresno Acquisition. Net cash provided by financing activities was $2.1 and $0.9 million for the three months ended March 2002 and 2001, respectively. The $1.2 million increase from 2001 to 2002 is due to the proceeds from the issuance of stock under the Incentive Plan.

        Generally, capital expenditures are made with cash provided by operations. Capital expenditures totaled $2.3 and $2.5 million for the three months ended March 31, 2002 and 2001. Approximately $1.0 million of the capital expenditures incurred during the three months ended March 31, 2002 related to radio signal upgrade projects for three different radio stations in Houston and Dallas and the build-out of studio and office space in Las Vegas, Phoenix, San Francisco, San Antonio and Fresno compared to $1.3 million incurred in the same period in 2001 for three radio signal upgrade projects and the build-out of studio and office space in Los Angeles, Dallas, New York, San Francisco, Miami, San Antonio and Houston.

        Available cash on hand 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 on hand 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 proceeds from borrowings under the Credit Facility, available cash on hand, and proceeds from securities offerings.

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 March 31, 2002 are as follows (in thousands):

	Payments Due by Period
	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Long-term obligations	$	1,424	$	6	$	14	$	17	$	1,387
Operating leases		72,073		5,955		15,434		13,597		37,087
Radio station acquisitions		58,244		58,244		—		—		—
Total contractual cash obligations	$	131,741	$	64,205	$	15,448	$	13,614	$	38,474

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        For the three months ended March 31, 2002, no amounts were borrowed on the Credit Facility, however $15.0 million was borrowed on April 1, 2002. As of April 1, 2002, the Company had $198.8 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 the Credit Facility is subject to compliance with certain financial ratios and other conditions set forth in the Credit Facility.

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.

Impairment of Long-Lived Assets

        The Company records impairment losses when events and circumstances indicate that long-lived assets might be impaired. Long-lived assets other than cost in excess of fair value of net assets acquired and intangible assets with an indefinite useful life are determined to be impaired if the undiscounted cash flow estimated to be generated by those assets is less than the carrying amount of those assets. Cost in excess of fair value of net assets acquired and intagible assets with an indefinite useful life are determined to be impaired if the fair value of a reporting unit is less than the carrying value of the respective reporting unit. 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 as of January 1, 2002. All long-lived assets were determined to be recoverable.

Revenue Recognition

        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.

Allowance For Doubtful Accounts

        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 Annual Report on Form 10-K for the year ended December 31, 2001.

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.

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Forward Looking Statements

        Certain statements contained in this report are not based on historical facts, but are forward looking statements that are based on numerous assumptions made as of the date of this report. When used in the preceding and following discussions, the words "believes," "intends," "expects," "anticipates" and similar expressions are intended to identify forward looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to, industry-wide market factors and regulatory developments affecting the Company's operations, acquisitions of broadcast properties described elsewhere herein, the financial performance of start-up stations, and efforts by management to integrate its operating philosophies and practices at the station level. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The Company disclaims any obligation to update the forward looking statements in this report.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        The Company is subject to interest rate risk on the interest earned on cash and cash equivalents. A change of 10% in the interest rate earned on short-term investments would not have had a significant impact on the Company's historical financial statements.

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PART II    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

        The Company is involved in various claims and lawsuits, which are generally incidental to its business. The Company is vigorously contesting all such matters and believes that their ultimate resolution will not have a material adverse effect on its consolidated financial position or results of operations.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits

Exhibit No.	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 on 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 12, 1998).
3.3	Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 3, 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 Exhibit 3.2 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994).
10.1	Amended and Restated Employment Agreement, dated April 2, 2002, by and between Hispanic Broadcasting Corporation and McHenry T. Tichenor, Jr.

(b)

Reports on Form 8-K

None

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Signatures

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HISPANIC BROADCASTING CORPORATION (Registrant)
	/s/  JEFFREY T. HINSON Jeffrey T. Hinson Senior Vice President/ Chief Financial Officer Principal Financial Officer
Dated: May 15, 2002

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Index To Exhibits

Exhibit No.	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 on 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 12, 1998).
3.3	Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company dated June 3, 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 Exhibit 3.2 to the Company's Registration Statement on Amendment No. 3 to Form S-1 (Registration No. 33-78370) filed on July 8, 1994).
10.1	Amended and Restated Employment Agreement, dated April 2, 2002, by and between Hispanic Broadcasting Corporation and McHenry T. Tichenor, Jr.

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HISPANIC BROADCASTING CORPORATION MARCH 31, 2002 INDEX
PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands except share information)
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands except per share data)
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
HISPANIC BROADCASTING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2002

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Results of Operations for the Three Months Ended March 31, 2002 Compared to the Three Months Ended March 31, 2001
Liquidity and Capital Resources
Long-Term Debt
Critical Accounting Policies
Inflation
Forward Looking Statements
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Signatures

Index To Exhibits

EX-10.1

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Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

        THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 2^nd day of April and effective as of the 14th day of February, 2002 (the "Effective Date") by and between Hispanic Broadcasting Corporation, a Delaware corporation (together with its successors and assigns permitted hereunder and as further defined in Section 8(c) hereof, the "Company"), and McHenry T. Tichenor, Jr. (the "Executive").

        WHEREAS, the Company and the Executive previously entered into an Employment Agreement dated as of February 14, 1997 (the "Prior Employment Agreement");

        WHEREAS, the Prior Employment Agreement expires according to its terms on February 14, 2002; and

        WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stockholders to, and the Executive desires to, amend and restate the Prior Employment Agreement as set forth herein.

        NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

        1.    Employment Period. Subject to Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, in accordance with the terms and provisions of this Agreement, for the period commencing on the Effective Date and ending at the close of business on February 14, 2005 (the "Initial Employment Period"). Thereafter, unless either the Company or the Executive elects to terminate this Agreement as of the end of the Initial Employment Period by giving written notice thereof to the other party not later than the close of business on August 14, 2004 (a "Termination Election"), the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, in accordance with the terms and provisions of this Agreement, for the period commencing at the close of business on February 14, 2005 and ending at the close of business on February 14, 2007 (such two-year term following the Initial Employment Period being referred to herein as the "Subsequent Employment Period"). The term "Employment Period" as used in this Agreement shall mean the Initial Employment Period until the close of business on August 14, 2004, has occurred without a Termination Election having been given by either the Company or the Executive, after which time the Employment Period shall mean the Initial Employment Period and the Subsequent Employment Period.

        2.    Terms of Employment.

(a)

Position and Duties.

                        (i)    During the term of the Executive's employment, the Executive shall serve as Chairman, President and Chief Executive Officer of the Company and, in so doing, shall report to the Board. The Executive shall have supervision and control over, and responsibility for, such management and operational functions of the Company currently assigned to such position, and shall have such other powers and duties (including holding officer positions with one or more subsidiaries of the Company) as may from time to time be prescribed by the Board, so long as such powers and duties are reasonable and customary for the Chairman, President and Chief Executive Officer of an enterprise comparable to the Company.

                        (ii)  During the term of the Executive's employment, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote full business time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully, effectively and efficiently such responsibilities. During the term of the Executive's

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employment it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures or fulfill speaking engagements and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement.

(b)

Compensation.

                        (i)    Base Salary. During the term of the Executive's employment, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid in accordance with the customary payroll practices of the Company, at least equal to $400,000. During the term of the Executive's employment, the Annual Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the "Compensation Committee") and shall be increased annually by an amount equal to the greater of (A) five percent (5%) of the Annual Base Salary in effect for the immediately preceding year, and (B) such amount as the Compensation Committee shall consider appropriate in accordance with the compensation practices and guidelines of the Company for its executive officers. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased.

                        (ii)  Bonus. In addition to Annual Base Salary, the Executive shall be awarded during the term of the Executive's employment such bonuses (each a "Bonus"), if any, as shall be determined by the Compensation Committee consistent with its practices for executive officers of the Company.

                        (iii)  Stock Option Grant. The Company hereby agrees to grant to the Executive as of April 2, 2002, (the "Date of Grant") stock options (the "Options") to purchase 100,000 shares of Class A Common Stock, par value $.001 per share, of the Company (the "Common Stock"), in accordance with the terms of (A) the Company's Long-Term Incentive Plan and (B) a stock option award agreement to be entered into between the Executive and the Company in a form consistent with that used by the Company for grants of stock options in the ordinary course of its business except as otherwise provided herein (the "Option Agreement"). The exercise price of the Options shall be the fair market value of the Common Stock on the Date of Grant as determined in accordance with the terms of the Company's Long-Term Incentive Plan. One-half of such Options shall be vested and exercisable as of the Date of Grant, and ¹/6 of such Options shall become vested and exercisable on each of the first, second and third anniversaries of the Date of Grant of such Options. The grant of such Options shall be subject to approval by the Compensation Committee or a subcommittee thereof.

                        (iv)  Incentive, Savings and Retirement Plans. During the term of the Executive's employment, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other executives of the Company ("Investment Plans").

                        (v)  Welfare Benefit Plans. During the term of the Executive's employment, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs ("Welfare Plans") provided by the Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other executives of the Company.

                        (vi)  Perquisites. During the term of the Executive's employment, the Executive shall be entitled to receive (in addition to the benefits described above) such perquisites and fringe benefits appertaining to his position in accordance with any practice established by the Board.

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                        (vii) Expenses. During the term of the Executive's employment, the Executive shall be entitled to receive prompt reimbursement for all reasonable employment expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company.

                        (viii)Vacation and Holidays. During the term of the Executive's employment, the Executive shall be entitled to paid vacation and paid holidays in accordance with the plans, policies, programs and practices of the Company for its executive officers.

                        (ix)  Employment Credit. For the purpose of determining the Executive's eligibility, and the extent of his and his family's benefits, under the Investment Plans, the We1fare Plans, and his rights under clauses (iv), (v), (vi) and (viii) above, the Executive shall be deemed to have been employed by the Company since the commencement of his employment with Tichenor Media System, Inc., a Texas corporation.

        3.    Termination of Employment.

                (a)  Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give to the Executive written notice in accordance with Section 11(b) of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably).

                (b)  Cause. The Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, "Cause" shall mean (i) a breach by the Executive of the Executive's obligations under Section 2(a) (other than as a result of incapacity due to physical or mental illness) which constitutes a continued material nonperformance by the Executive of his obligations and duties thereunder, as determined by the Board, and which is not remedied within 60 days after receipt of written notice from the Company specifying such breach, (ii) commission by the Executive of an act of fraud upon, or willful misconduct toward, the Company, as reasonably determined by a majority of the disinterested members of the Board (neither the Executive nor members of his family being deemed disinterested for this purpose) after a hearing by the Board following ten days' notice to the Executive of such hearing, (iii) a material breach by the Executive of Section 6 or Section 9, or (iv) the conviction of the Executive of any felony (or a plea of nolo contendere thereto).

                (c)  Good Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason or without Good Reason; provided, however that the Executive agrees not to terminate his employment for Good Reason unless (i) the Executive has given the Company at least 30 days' prior written notice of his intent to terminate his employment for Good Reason, which notice shall specify the facts and circumstances constituting Good Reason, and (ii) the Company has not remedied such facts and circumstances constituting Good Reason within such 30 day period. For purposes of this Agreement, "Good Reason" shall mean:

                        (i)    the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(a) or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the

3

Company promptly after receipt of notice thereof given by the Executive (without limiting the foregoing, the Company and the Executive agree that the Executive's failure to serve as the sole chief executive officer of the Company or the delegation of the authority, duties or responsibilities of the chief executive officer to another person or persons, including any committee, shall be deemed to be an action by the Company which results in a material diminution in the Executive's position, authority, duties, or responsibilities as contemplated by Section 2(a));

                        (ii)  any termination or material reduction of a material benefit under any Investment Plan or Welfare Plan in which the Executive participates unless (A) there is substituted a comparable benefit that is economically substantially equivalent to the terminated or reduced benefit prior to such termination or reduction or (B) benefits under such Investment Plan or Welfare Plan are terminated or reduced with respect to all employees previously granted benefits thereunder;

                        (iii)  any failure by the Company to comply with any of the provisions of Section 2(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

                        (iv)  any failure by the Company to comply with and satisfy Section 8(c), provided that such successor has received at least ten days prior written notice from the Company or the Executive of the requirements of Section 8(c);

                        (v)  prior to the termination of the Executive for Cause, the Executive's ceasing to be a director of the Company for any reason other than his death, Disability (as defined above) or voluntary resignation;

                        (vi)  the relocation or transfer of the Company's senior management executive offices to a location more than 15 miles from the Executive's current principal residence set forth in Section 11(b) hereof; or

                        (vii) without limiting the generality of the foregoing, any material breach by the Company or any of its subsidiaries or other affiliates (as defined below) of (A) this Agreement or (B) any other agreement between the Executive and the Company or any such subsidiary or other affiliate.

        As used in this Agreement, "affiliate" means, with respect to a person, any other person controlling, controlled by or under common control with the first person; the term "control," and correlative terms, means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a person; and "person" means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof.

                (d)  Notice of Termination. Any termination by the Company for Cause or without Cause, or by the Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstances in enforcing the Executive's or the Company's rights hereunder.

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                (e)  Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause or without Cause or by the Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be and (ii) if the Executive's employment is terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be.

        4.    Obligations of the Company upon Termination.

                (a)  Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for either Cause or Disability or the Executive shall terminate his employment for Good Reason, and the termination of the Executive's employment in any case is not due to his death:

                        (i)    the Company shall pay to the Executive in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (A) the sum of the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid and any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay ("Accrued Obligations"); (B) an amount equal to the product of (x) the sum of (1) the Executive's Annual Base Salary at the Date of Termination plus (2) the Executive's Bonus for the immediately preceding year multiplied by (y) 3; and (C) any amount arising from Executive's participation in, or benefits under, any Investment Plans ("Accrued Investments"), which amounts shall be payable in accordance with the terms and conditions of such Investment Plans;

                        (ii)  for the remainder of the Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits provided under Welfare Plans to the Executive and/or the Executive's family at least equal to those which would have been provided to them if the Executive's employment had not been terminated or pay the Executive monthly an amount of cash equal to the value of benefits under Welfare Plans; provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive similar benefits under another employer provided plan, such benefits or cash described herein shall be secondary to and not duplicate those provided under such other plan during such applicable period of eligibility (such continuation of such benefits or cash for the applicable period hereinabove set forth in this clause (ii) shall he hereinafter referred to as "Welfare Benefit Continuation"). For purposes of determining eligibility of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period;

                        (iii)  for the remainder of the Employment Period, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive and/or the Executive's family any other amounts or benefits required to be paid or provided or which the Executive and/or the Executive's family is eligible to receive pursuant to this Agreement and under any plan, program, policy or practice or contract or agreement of the Company ("Other Benefits"); and

                        (iv)  notwithstanding the terms or conditions of any stock option, stock appreciation right or similar agreements between the Company and the Executive, the Executive shall vest, as of the Date of Termination, in all rights under such agreements (i.e., stock options that would otherwise vest after the Date of Termination) and thereafter shall be permitted to exercise any and all such rights until the first anniversary of the Date of Termination.

                (b)  Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, the Company shall pay to his legal representatives in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (i) the Accrued Obligations; and (ii) the Accrued Investments. The Company shall have no further payment obligations to the Executive or his legal representatives under this Agreement, other than for payment

5

of Other Benefits and the timely provision of the Welfare Benefit Continuation to the Executive's family.

                (c)  Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, the Company shall have no further payment obligations to the Executive or his legal representatives under this Agreement, other than for (i) payment of Accrued Obligations, Accrued Investments and Other Benefits and (ii) the timely provision of the Welfare Benefit Continuation to the Executive and his family; provided however, that if the Executive is covered by a Company-provided group or individual disability insurance policy at the date the Executive's employment is terminated by reason of the Executive's Disability and benefits under such policy are not then payable to the Executive pursuant to the terms of such policy, then the Company shall continue to pay the Executive his Annual Base Salary in effect at the date of such termination (in accordance with the customary payroll practices of the Company) until the first to occur of six months after such termination date or benefits becoming payable to the Executive under such policy.

                (d)  Cause; Other than for Good Reason. If the Executive's employment shall be terminated by the Company for Cause or by the Executive without Good Reason during the Employment Period, the Company shall have no further payment obligations to the Executive other than for payment of Accrued Obligations, Accrued Investments and Other Benefits to the Date of Termination.

        5.    Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others; provided, however, that the Company may reduce any payments it is required to make to the Executive under Section 4 by the amount of the principal and accrued interest on any loans or advances made to the Executive by the Company that are outstanding on the Date of Termination (and such reduction in payments shall be deemed to be payment in full by the Executive of such loans or advances to the extent of such reduction). In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as provided in Section 4(a)(ii), such amounts shall not be reduced whether or not the Executive obtains other employment. Neither the Executive nor the Company shall be liable to the other party for any damages in addition to the amounts payable under Section 4 hereof arising out of the termination of the Executive's employment prior to the end of the Employment Period; provided, however, that the Company shall be entitled to seek damages for any breach of Sections 6 or 9 or criminal misconduct.

        6.    Confidential Information.

                (a)  The Executive acknowledges that the Company and its affiliates have trade, business and financial secrets and other confidential and proprietary information (collectively, the "Confidential Information"). As defined herein, Confidential Information shall not include (i) information that is generally known to other persons or entities who can obtain economic value from its disclosure or use and (ii) information required to be disclosed by the Executive pursuant to a subpoena or court order, or pursuant to a requirement of a governmental agency or law of the United States of America or a state thereof or any governmental or political subdivision thereof; provided, however, that the Executive shall take all reasonable steps to prohibit disclosure pursuant to subsection (ii) above.

                (b)  The Executive agrees (i) to hold such Confidential Information in confidence and (ii) not to release such information to any person (other than Company employees and other persons to whom the Company has authorized the Executive to disclose such information and then only to the extent that such Company employees and other persons authorized by the Company have a need for such knowledge).

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                (c)  The Executive further agrees not to use any Confidential Information for the benefit of any person or entity other than the Company.

                (d)  The Executive's obligations under this Section 6 shall terminate (i) on the first anniversary of the Date of Termination if the Executive's employment is terminated by the Company for Cause or due to Disability or by the Executive without Good Reason or (ii) on the later of (A) the end of the Employment Period or (B) the first anniversary of the Date of Termination if the Executive's employment is terminated by the Company without Cause (and not due to Disability) or by the Executive for Good Reason; provided, however, that notwithstanding subsections (i) and (ii) of this Section 6(d), if the Company is obligated to make payments to the Executive pursuant to Section 4 and the Company fails to make any such payment on the date it is due, then the Executive's obligations pursuant to this Section 6 shall cease to apply as of such date.

        7.    Surrender of Materials Upon Termination. Upon any termination of the Executive's employment, the Executive shall immediately return to the Company all copies, in whatever form, of any and all Confidential Information and other properties of the Company and its affiliates which are in the Executive's possession, custody or control.

        8.    Successors.

                (a)  This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

                (b)  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

                (c)  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise and including as a successor any direct or indirect ultimate parent company of the Company) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which is obligated to assume and agree to perform this Agreement by operation of law or pursuant to the first sentence of this Section 8(c).

        9.    Non-Competition.

                (a)  The term of Non-Competition (herein so called) shall be for a term beginning on the date hereof and continuing until (i) the first anniversary of the Date of Termination if the Executive's employment is terminated by the Company for Cause or due to Disability or by the Executive without Good Reason or (ii) the end of the later of (A) Employment Period or (B) the first anniversary of the Date of Termination, if the Executive's employment is terminated by the Company without Cause (and not due to Disability) or by the Executive for Good Reason; provided, however, that notwithstanding subsections (i) and (ii) of this Section 9(a), if the Company is obligated to make payments to the Executive pursuant to Section 4 and the Company fails to make any such payment on the date it is due, then the Executive's obligations pursuant to this Section 9 shall cease to apply as of such date.

                (b)  During the term of Non-Competition, the Executive shall not (other than for the benefit of the Company pursuant to this Agreement) directly or indirectly, individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venturer, agent, equity owner or in any capacity whatsoever, (i) engage in any Spanish language radio or television broadcasting business that transmits a primary or city-grade signal within a Metro Survey Area (as currently defined by The Arbitron Company in its Radio Markets Reports) in which a station directly operated by the Company

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transmits a primary or city-grade signal (A), with respect to the term of Non-Competition that is during the Executive's employment, during such term of employment, and (B), with respect to the term of Non-Competition that is after the term of the Executive's employment, on the Date of Termination (all such areas being collectively called the "Geographic Area") (a "Competing Business"), (ii) hire, attempt to hire, or contact or solicit with respect to hiring any employee of the Company, or (iii) divert or take away any customers or suppliers of the Company in the Geographic Area. Notwithstanding the foregoing, the Company agrees that the Executive may own less than five percent of the outstanding voting securities of any publicly traded company that is a Competing Business so long as the Executive does not otherwise participate in such competing business in any way prohibited by the preceding clause. As used in this Section 9(b), "Company" shall include the Company and any of its subsidiaries.

                (c)  During the term of Non-Competition, the Executive shall not use the Executive's access to, knowledge of, or application of Confidential Information to perform any duty for any Competing Business; it being understood and agreed to that this paragraph 9(c) shall be in addition to and not be construed as a limitation upon the covenants in paragraph 9(b) hereof.

                (d)  The Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Company's proprietary information, plans and services and to protect the other legitimate business interests of the Company.

        10.  Effect of Agreement on Other Benefits. The existence of this Agreement shall not prohibit or restrict the Executive's entitlement to full participation in the executive compensation, employee benefit and other plans or programs in which executives of the Company are eligible to participate.

        11.  Miscellaneous.

                (a)  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

                (b)  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:	McHenry T. Tichenor, Jr. 3924 Mockingbird Lane Dallas, Texas 75205
If to the Company:	Hispanic Broadcasting Corporation 3102 Oak Lawn Avenue, Suite 215 Dallas, Texas 75219 Attention: Chief Financial Officer

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

                (c)  If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal,

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invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

                (d)  The Company agrees to attempt to obtain and maintain a director's and officer's liability insurance policy during the term of the Executive's employment covering the Executive on commercially reasonable terms, and the amount of coverage shall be reasonable in relation to the Executive's position and responsibilities hereunder; provided, however, that such coverage may be reduced or eliminated to the extent that the Company reduces or eliminates coverage for its directors and executives generally.

                (e)  The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

                (f)    The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

                (g)  The Executive acknowledges that money damages would be both incalculable and an insufficient remedy for a breach of Section 6 or 9 by the Executive and that any such breach would cause the Company irreparable harm. Accordingly, the Company, in addition to any other remedies at law or in equity it may have, shall be entitled, without the requirement of posting of bond or other security, to equitable relief, including injunctive relief and specific performance, in connection with a breach of Section 6 or 9 by the Executive.

                (h)  The provisions of this Agreement and the Option Agreement constitute the entire understanding and agreement between the parties with respect to the subject matter hereof.

                (i)    This Agreement may be executed in two or more counterparts.

                (j)    Except as otherwise provided in Section 11(k) below, in the event any dispute or controversy arises under this Agreement and is not resolved by mutual written agreement between the Executive and the Company within 30 days after notice of the dispute is first given, then, upon the written request of the Executive or the Company, such dispute or controversy shall be submitted to arbitration to be conducted in accordance with the rules of the American Arbitration Association. Judgment may be entered thereon and the results of the arbitration shall be binding and conclusive on the parties hereto. Any arbitrator's award or finding or any judgment or verdict thereon shall be final and unappealable. All parties agree that venue for arbitration shall be in Dallas, Texas, and that any arbitration commenced in any other venue shall be transferred to Dallas, Texas, upon the written request of any party to this Agreement. All arbitrations shall have three individuals acting as arbitrators: one arbitrator shall be selected by the Executive, one arbitrator shall be selected by the Company, and the two arbitrators so selected shall select a third arbitrator. Any arbitrator selected by a party shall not be affiliated, associated or related to the party selecting that arbitrator in any matter whatsoever. The decision of the majority of the arbitrators shall be binding on all parties. The Company shall be responsible for paying its own and the Executive's attorneys fees, costs and other expenses pertaining to any such arbitration and enforcement regardless of whether an arbitrator's award or finding or any judgment or verdict thereon is entered against the Executive. The Company shall promptly (and in no event after ten days following its receipt from the Executive of each written request therefor) reimburse the Executive for his reasonable attorneys fees, costs and other expenses pertaining to any such arbitration and the enforcement thereof.

(k)

Gross-Up for Certain Taxes.

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                        (i)    In the event that any part of any payment or benefit received (including, without limitation, acceleration of vesting of stock options) pursuant to the terms of this Agreement or the Option Agreement (the "Contract Payments") or any part of any payment or benefit received or to be received by the Executive or for the Executive's benefit pursuant to any other plan, arrangement or agreement of the Company or any affiliate ("Other Payments" and, together with the Contract Payments, the "Payments") would be subject to taxes (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), determined as provided below, the Company shall pay to the Executive, at the time specified in paragraph (ii) below, an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of the Excise Tax on the Payments and any federal, state and local income tax and the Excise Tax on the Gross-Up Payment, and any interest, penalties or additions to tax payable by the Executive with respect thereto, shall be equal to the total present value (using the applicable federal rate as defined in Section 1274(d) of the Code in such calculation) of the Payments at the time such Payments are to be made. For purposes of determining whether any of the Payments shall be subject to the Excise Tax and the amounts of such Excise Tax, (A) the total amount of the Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of independent counsel selected by the Company and reasonably acceptable to the Executive ("Independent Counsel"), a Payment (in whole or in part) does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in part) are not subject to the Excise Tax, (B) the amount of the Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Payments or (2) the amount of "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code (after applying clause (A) hereof), and (C) the value of any noncash benefits or any deferred payment or benefit shall be determined by Independent Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rates of federal income taxation applicable to individuals in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the state and locality of the Executive's residence in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates.

                        (ii)  The Gross-Up Payments provided for in paragraph (i) hereof shall be made upon the earlier of (A) the payment to the Executive of any Payment or (B) the imposition upon the Executive or payment by the Executive of any Excise Tax.

                        (iii)  If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Independent Counsel that the Excise Tax is less than the amount taken into account under paragraph (i) hereof, the Executive shall repay to the Company within thirty (30) days of the Executive's receipt of notice of such final determination or opinion the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax or a federal, state and local income tax deduction) plus any interest received by the Executive on the amount of such repayment. If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Independent Counsel that the Excise Tax exceeds the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall

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make an additional Gross-Up Payment in respect of such excess within thirty (30) days of the Company's receipt of notice of such final determination or opinion.

                        (iv)  In the event of any change in, or further interpretation of, Sections 280G or 4999 of the Code and the regulations promulgated thereunder, the Executive shall be entitled, by written notice to the Company, to request an opinion of Independent Counsel regarding the application of such change or interpretation to any of the foregoing, and the Company shall use its best efforts to cause such opinion to be rendered as promptly as practicable. All fees and expenses of Independent Counsel incurred in connection with this Agreement shall be paid by the Company.

                        (v)  The Company shall indemnify and hold harmless the Executive from and against any fees and expenses (including fees and expenses of attorneys and accountants) incurred in connection with any Internal Revenue Service audit or proceeding that relates to the Excise Tax.

                (l)    All fees and expenses (including attorneys fees and expenses) incurred by the Executive in connection with the drafting and negotiation of this Agreement shall be paid by the Company.

        [Signature page follows]

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        IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

EXECUTIVE
/s/  MCHENRY T. TICHENOR, JR. McHenry T. Tichenor, Jr.
HISPANIC BROADCASTING CORPORATION
By:	/s/  JEFFREY T. HINSONName: Jeffrey T. HinsonTitle: Senior Vice President, CFO and Treasurer

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Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT