Entravision Communications (EVC) 10-Q 2003 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

OR

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

FOR THE TRANSITION PERIOD FROM            TO            

COMMISSION FILE NUMBER 1-15997

ENTRAVISION COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	95-4783236
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2425 Olympic Boulevard, Suite 6000 West

Santa Monica, California 90404

(Address of principal executive offices) (Zip Code)

(310) 447-3870

(Registrant’s telephone number, including area code)

N/A

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

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.

YES  x    NO  ¨

As of November 11, 2003, there were 59,431,246 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding and 27,678,533 shares, $0.0001 par value per share, of the registrant’s Class B common stock outstanding.

ENTRAVISION COMMUNICATIONS CORPORATION

TABLE OF CONTENTS

		Page Number
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002	4
	CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE - AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND SEPTEMBER 30, 2002	5
	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND SEPTEMBER 30, 2002	6
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
ITEM 4.	CONTROLS AND PROCEDURES	25
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	26
ITEM 2.	CHANGES IN SECURITIES AND USE OF PROCEEDS	26
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	26
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	26
ITEM 5.	OTHER INFORMATION	26
ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K	26

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Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

• risks related to our history of operating losses, our substantial indebtedness or our ability to raise capital;

• provisions of the agreements governing our debt instruments that may restrict the operation of our business;

• cancellations or reductions of advertising, whether due to a general economic downturn or otherwise;

• our relationship with Univision Communications Inc. and Univision’s agreement to sell a significant portion of its equity interest in our company; and

• industry-wide market factors and regulatory and other developments affecting our operations.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2002.

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PART I

FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30, 2003			December 31, 2002
	(Unaudited)			Reclassified (Note 1)
ASSETS
Current assets
Cash and cash equivalents	$	11,318		$	12,201
Trade receivables (including related parties of $180 and $443), net of allowance for doubtful accounts of $4,209 and $3,728		52,440			49,022
Assets held for sale		—			4,482
Prepaid expenses and other current assets (including related parties of $1,680 and $1,014)		6,420			4,928
Deferred Taxes		4,000			4,000
Total current assets		74,178			74,633
Property and equipment, net		173,458			180,835
Intangible assets subject to amortization, net		154,753			167,365
Intangible assets not subject to amortization		889,814			749,510
Goodwill		379,545			379,545
Other assets (including related parties of $354 and $340)		18,116			21,593
	$	1,689,864		$	1,573,481
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	1,145		$	1,376
Advances payable, related parties		118			118
Accounts payable and accrued expenses (including related parties of $1,961 and $1,952)		23,623			25,863
Liabilities held for assignment		—			3,378
Total current liabilities		24,886			30,735
Notes payable, less current maturities		379,241			304,502
Other long-term liabilities		108			93
Deferred taxes		126,287			122,187
Total liabilities		530,522			457,517
Commitments and contingencies
Series A mandatorily redeemable convertible preferred stock, $0.0001 par value, 11,000,000 shares authorized; shares issued and outstanding 2003 and 2002 5,865,102 (liquidation value of $116,537 and $109,553)		109,317			100,921
Stockholders’ equity
Preferred stock, $0.0001 par value, 39,000,000 shares authorized; shares issued and outstanding 2003 369,266 Series U convertible preferred stock; 2002 0		—			—
Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding 2003 59,433,549; 2002 70,450,367		6			7
Class B common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding 2003 and 2002 27,678,533		3			3
Class C common stock, $0.0001 par value, 25,000,000 shares authorized; shares issued and outstanding 2003 0; 2002 21,983,392		—			2
Additional paid-in capital		1,182,785			1,143,782
Deferred compensation		—			(846	)
Accumulated deficit		(132,769	)		(127,905	)
		1,050,025			1,015,043
Treasury stock, Class A common stock, $0.0001 par value, 2003 and 2002 5,101 shares		—			—
Total stockholders’ equity		1,050,025			1,015,043
	$	1,689,864		$	1,573,481

See Notes to Consolidated Financial Statements

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ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

	Three-Month Period Ended September 30,						Nine-Month Period Ended September 30,
	2003			2002 As restated (Note 1)			2003			2002 As restated (Note 1)
Net revenue (including related parties of $221, $260, $899 and $730)	$	64,419		$	59,584		$	176,838		$	161,148
Expenses:
Direct operating expenses (including related parties of $3,136, $2,071, $8,802 and $5,697)		27,858			26,058			79,500			73,592
Selling, general and administrative expenses		13,037			12,428			37,214			34,995
Corporate expenses (including related party reimbursements of $0, $0, $2,000 and $0) (Note 2)		4,141			4,259			10,266			11,118
Loss on sale of assets		945			349			945			707
Non-cash stock-based compensation (includes direct operating of $0, $74, $113 and $224; selling, general and administrative of $0, $98, $149 and $296; and corporate of $(106), $724, $781 and $1,979)		(106	)		896			1,043			2,499
Depreciation and amortization (includes direct operating of $9,371, $12,458, $27,743 and $24,542; selling, general and administrative of $1,206, $1,436, $3,923 and $4,086; and corporate of $372, $356, $1,102 and $999)		10,949			14,250			32,768			29,627
		56,824			58,240			161,736			152,538
Operating income		7,595			1,344			15,102			8,610
Interest expense		(6,796	)		(5,995	)		(20,218	)		(18,625	)
Interest income		50			15			79			138
Income (loss) before income taxes		849			(4,636	)		(5,037	)		(9,877	)
Income tax benefit (expense)		(1,070	)		4,936			(600	)		398
Net income (loss) before equity in net earnings of nonconsolidated affiliates		(221	)		300			(5,637	)		(9,479	)
Equity in net earnings of nonconsolidated affiliates		88			95			299			95
Net income (loss) before discontinued operations		(133	)		395			(5,338	)		(9,384	)
Gain on disposal of discontinued operations, net of tax $6,300, $0, $6,300 and $0 (Note 1)		9,346			—			9,346			—
Income (loss) from discontinued operations, net of tax $(5), $8, $(13) and $24 (Note 1)		(203	)		187			(475	)		654
Net income (loss)		9,010			582			3,533			(8,730	)
Accretion of preferred stock redemption value		(2,874	)		(2,584	)		(8,397	)		(7,548	)
Net income (loss) applicable to common stockholders	$	6,136		$	(2,002	)	$	(4,864	)	$	(16,278	)
Net loss per share from continuing operations applicable to common stockholders	$	(0.02	)	$	(0.02	)	$	(0.11	)	$	(0.14	)
Net income per share from discontinued operations	$	0.08		$	0.00		$	0.07		$	0.01
Net income (loss) per share, basic and diluted	$	0.05		$	(0.02	)	$	(0.04	)	$	(0.14	)
Weighted average common shares outstanding, basic and diluted		120,388,734			119,633,081			121,205,552			118,926,100

See Notes to Consolidated Financial Statements

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ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Nine-Month Period Ended September 30,
	2003			2002 As restated (Note 1)
Cash flows from operating activities:
Net income (loss)	$	3,533		$	(8,730	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		32,768			29,627
Deferred income taxes		5,561			(1,057	)
Amortization of debt issue costs		1,576			4,261
Amortization of syndication contracts		542			389
Equity in net earnings of nonconsolidated affiliates		(299	)		(95	)
Non-cash stock-based compensation		1,043			2,499
(Gain) loss on sale of media properties and other assets		(8,179	)		843
Changes in assets and liabilities, net of effect of acquisitions and dispositions:
Increase in accounts receivable		(2,280	)		(6,306	)
Increase in prepaid expenses and other assets		(8,024	)		(1,263	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		(4,225	)		2,278
Effect of discontinued operations		475			(654	)
Net cash provided by operating activities		22,491			21,792
Cash flows from investing activities:
Proceeds from sale of discontinued operations, land and equipment		18,141			1,341
Purchases of property and equipment and intangibles		(116,455	)		(120,068	)
Net cash used in investing activities		(98,314	)		(118,727	)
Cash flows from financing activities:
Proceeds from issuance of common stock		1,021			3,439
Principal payments on notes payable		(28,540	)		(204,262	)
Proceeds from borrowing on notes payable		103,000			299,011
Payments of deferred debt and offering costs		(541	)		(8,178	)
Net cash provided by financing activities		74,940			90,010
Net decrease in cash and cash equivalents		(883	)		(6,925	)
Cash and cash equivalents:
Beginning		12,201			18,338
Ending	$	11,318		$	11,413
Supplemental disclosures of cash flow information:
Cash payments for:
Interest	$	23,247		$	14,496
Income taxes	$	1,318		$	1,430
Supplemental disclosures of non-cash investing and financing activities:
Property and equipment acquired under capital lease obligations and included in accounts payable	$	211		$	124
Note receivable from disposal of discontinued operations	$	1,900		$	—
Issuance of Class A common shares for:
Partial payment for Big City Radio stations	$	37,785		$	—
Repayment of note payable and related accrued interest payable	$	—		$	40,641

See Notes to Consolidated Financial Statements

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ENTRAVISION COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2003

1.    BASIS OF PRESENTATION

The condensed consolidated financial statements included herein have been prepared by Entravision Communications Corporation, or the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2002 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2003 or any other future period.

The Company’s consolidated financial statements included herein reflect the following reclassifications and restatements, as discussed in further detail below:

• the consolidated financial statements for the three- and nine-month periods ended September 30, 2002 have been restated for reclassifications of intangible assets in accordance with SFAS No. 142;

• certain reclassifications of expenses have been made in the consolidated financial statements for the three- and nine-month periods ended September 30, 2002 to be consistent with the 2003 presentation with no effect on reported net loss or stockholders’ equity; and

• the balance sheet information as of December 31, 2002 has been reclassified to be consistent with the 2003 treatment of the publishing segment as discontinued operations. The statements of operations information for the three- and nine-month periods ended September 30, 2002 have been reclassified to present all results of the publishing segment’s operations as one amount in discontinued operations.

Subsequent to the issuance of the Company’s September 30, 2002 condensed consolidated unaudited quarterly financial statements filed on Form 10-Q, management reevaluated and revised certain classifications of intangible assets and their respective estimated useful lives under SFAS No. 142, which was adopted effective January 1, 2002. As a result of the reclassifications, the Company’s unaudited interim financial information for each of the first three 2002 calendar quarters and the associated year-to-date amounts in those periods have been retroactively restated (1) to reclassify the radio network intangible asset totaling $160 million (previously considered by management to be a separately identifiable indefinite life intangible asset) to goodwill, net of the related deferred income taxes of $64 million, and (2) to reclassify its Univision network affiliation agreement intangible asset totaling $46.6 million (also previously considered by management to be a separately identifiable indefinite life intangible asset) to intangible assets subject to amortization. The latter reclassification resulted in additional amortization expense of approximately $583,000 and a related deferred tax benefit of approximately $233,000 for the Univision network affiliation agreement in each of the first three quarters of 2002. The change had no impact on cash flows provided by operations. These reclassifications and restatements were previously reported in Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Certain other items in the September 30, 2002 statements of operations have been reclassified in order to conform to the current period presentation, with no effect on reported net loss or stockholders’ equity.

As a result of the Company’s decision to sell its publishing segment, the Company’s consolidated financial statements for all periods presented have been adjusted to reflect the publishing operations as discontinued operations and publishing assets and liabilities as held for sale or assignment, as the case may be, in accordance with SFAS No. 144 (see Note 3).

2.    THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

Related Party

Univision currently owns approximately 28% of the Company’s common stock on a fully converted basis. In connection with Univision’s merger with Hispanic Broadcasting Corporation, or HBC, in September 2003, Univision entered into an agreement with the U.S. Department of Justice, or DOJ, pursuant to which Univision agreed, among other things, to sell enough of its holdings of the Company’s stock so that its ownership of the Company will not exceed 15% by March 26, 2006 and 10% by March 26, 2009.

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Also pursuant to Univision’s agreement with DOJ, in September 2003 Univision exchanged all 36,926,623 of its shares of the Company’s Class A and Class C common stock that it previously owned (14,943,231 shares of Class A common stock and 21,983,392 shares of Class C common stock) for 369,266 shares of the Company’s new Series U preferred stock. The Series U preferred stock has limited voting rights, does not include the right to elect directors and carries a nominal liquidation preference at its par value over common stockholders. Each share of Series U preferred stock is automatically convertible into 100 shares (subject to adjustment for stock splits, dividends or combinations) of the Company Class A common stock in connection with any transfer to a third party that is not an affiliate of Univision. The Series U preferred stock is also mandatorily convertible into common stock when and if the Company creates a new class of common stock that generally has the same rights, preferences, privileges and restrictions as the Series U preferred stock (other than the nominal liquidation preference). This exchange does not change Univision’s overall equity interest in the Company, nor does it have any impact on the Company’s existing television station affiliation agreement with Univision.

The Company received reimbursements from Univision for expenses the Company incurred in connection with Univision’s merger with HBC in the aggregate amount of $2.0 million during the nine-month period ended September 30, 2003.

Stock-based Compensation

Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock option plans. As allowed by SFAS No. 123, the Company has elected to continue to account for its employee stock-based compensation plan using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations, which does not require compensation to be recorded if the consideration to be received is at least equal to the fair value of the common stock to be issued at the measurement date. Under the requirements of SFAS No. 123, non-employee stock-based transactions require compensation to be recorded based on the fair value of the securities issued or the services received, whichever is more reliably measurable.

The following table illustrates the effect on net income (loss) and net income (loss) per share had employee compensation costs for the stock-based compensation plan been determined based on grant date fair values of awards under the provisions of SFAS No. 123, for the three- and nine-month periods ended September 30, 2003 and 2002 (unaudited; in thousands, except per share data):

	Three-Month Period Ended September 30,						Nine-Month Period Ended September 30,
	2003			2002 As restated (Note 1)			2003			2002 As restated (Note 1)
Net income (loss) applicable to common stockholders
As reported	$	6,136		$	(2,002	)	$	(4,864	)	$	(16,278	)
Deduct total employee stock-based compensation expense determined under the fair value-based method for all awards, net of related tax effects		(3,916	)		(2,233	)		(8,904	)		(6,195	)
Pro forma, net income (loss) per share applicable to common stockholders	$	2,220		$	(4,235	)	$	(13,768	)	$	(22,473	)
Net income (loss) per share applicable to common stockholders, basic and diluted
As reported	$	0.05		$	(0.02	)	$	(0.04	)	$	(0.14	)
Pro forma	$	0.02		$	(0.04	)	$	(0.11	)	$	(0.19	)

The Company granted 1,793,092 stock options for employees and directors and 35,000 stock options for non-employees during the nine-month period ended September 30, 2003. These stock options have an average exercise price of $6.92 and an average fair value of $4.48.

Loss Per Share

Basic loss per share is computed as net loss less accretion of the discount on Series A mandatorily redeemable convertible preferred stock divided by the weighted average number of shares outstanding for the period. The weighted average number of shares outstanding is reduced by 83,731 shares for the nine-month period ended September 30, 2003, which are unvested stock grants subject to repurchase. Diluted loss per share reflects the potential dilution, if any, that could occur from shares issuable through stock options and convertible securities.

For the three- and nine-month periods ended September 30, 2003 and 2002, all dilutive securities have been excluded from dilutive loss per share, as their inclusion would have had an antidilutive effect on loss per share. The securities whose conversion

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would result in an incremental number of shares that would be included in determining the weighted average shares outstanding for diluted loss per share if their effect was not antidilutive are as follows: the common stock equivalent effect of outstanding stock options, 5,865,102 shares of Series A mandatorily redeemable convertible preferred stock, and 3,612,387 and 1,217,361 equivalent shares of the Series U preferred stock for the three- and nine-month periods ended September 30, 2003, respectively.

As discussed above, the Series U preferred stock is mandatorily convertible into common stock when and if the Company creates a new class of common stock that generally has the same rights, preferences, privileges and restrictions as the Series U preferred stock (other than the nominal liquidation preference). The Company currently intends to create such a new class of common stock in connection with its 2004 Annual Meeting of Stockholders. If the Series U preferred stock had been treated as common stock outstanding, the weighted average common shares outstanding, basic and diluted, would have been 124,001,121 and 122,422,913 for the three- and nine-month periods ended September 30, 2003. The net income (loss) per share, basic and diluted, would not have changed from $0.05 and $(0.04) for the three- and nine-month periods ended September 30, 2003.

Acquisitions of Assets

Upon consummation of each acquisition, the Company evaluates whether the acquisition constitutes a business. An acquisition is considered a business if it is comprised of a complete self-sustaining integrated set of activities and assets consisting of inputs, processes applied to those inputs and resulting outputs that are used to generate revenues. For a transferred set of activities and assets to be a business, it must contain all of the inputs and processes necessary for it to continue to conduct normal operations after the transferred set is separated from the transferor, which includes the ability to sustain a revenue stream by providing its outputs to customers. A transferred set of activities and assets fails the definition of a business if it excludes one or more significant items such that it is not possible for the set to continue normal operations and sustain a revenue stream by providing its products and/or services to customers.

In January 2003, the Company acquired five low-power television stations in Santa Barbara, California from Univision for an aggregate purchase price of approximately $2.5 million.

In February 2003, the Company acquired a low-power television station in Hartford, Connecticut for $50,000.

On April 16, 2003, the Company consummated the purchase of substantially all of the assets of three radio stations in the greater Los Angeles area from Big City Radio, Inc. for $100 million in cash and 3,766,478 shares of Class A common stock. The value of the common stock was based on a five-day average closing price around the announcement date of the acquisition. From January 15, 2003 until April 16, 2003, the Company operated those same three stations pursuant to a time brokerage agreement with Big City Radio.

In July 2003, the Company acquired a permit to build a low-power television station in San Diego, California for approximately $1.8 million.

In connection with the above acquisitions consummated during the nine-month period ended September 30, 2003, the Company allocated $140.3 million in FCC licenses and permits, which are classified as intangible assets not subject to amortization. None of these acquisitions was considered a business.

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The composition of the Company’s intangible assets and the associated accumulated amortization as of September 30, 2003 and December 31, 2002 is as follows (in thousands):

		September 30, 2003						December 31, 2002
		(unaudited)						(reclassified)
	Weighted average remaining life in years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Television network affiliation agreements	19	$	62,591	$	20,248	$	42,343	$	62,591	$	18,513	$	44,078
Customer base	8		136,652		35,126		101,526		136,652		23,845		112,807
Other	11		40,534		29,650		10,884		38,692		28,212		10,480
Total intangible assets subject to amortization		$	239,777	$	85,024	$	154,753	$	237,935	$	70,570	$	167,365
Intangible assets not subject to amortization:
FCC licenses and permits						$	849,016					$	708,712
Time brokerage agreements							40,798						40,798
Total intangible assets not subject to amortization							889,814						749,510
Total intangible assets						$	1,044,567					$	916,875

3.    DISCONTINUED OPERATIONS

On July 3, 2003, the Company sold substantially all of the assets and certain specified liabilities related to its publishing segment to CPK NYC, LLC for aggregate consideration of approximately $19.9 million. In the sale, the Company received $18.0 million in cash and an unsecured, subordinated promissory note in the principal amount of $1.9 million. The note bears interest at a rate of 8.0% per annum compounded annually, and all principal and accrued interest on the note are due and payable on July 3, 2008. The Company used the cash proceeds from this disposition to repay a portion of the indebtedness then outstanding under its bank credit facility.

The cash portion of the purchase price is subject to adjustment based on the working capital of the publishing segment as of the closing date. The Company currently anticipates that this adjustment will be finalized during the fourth quarter of 2003 or the first quarter of 2004, and that such adjustment will not have a material effect on the Company’s consolidated financial statements.

As a result of the Company’s decision to sell its publishing segment, the Company’s consolidated financial statements for all periods presented have been adjusted to reflect the publishing operations as discontinued operations and publishing assets and liabilities as held for sale or assignment, as the case may be, in accordance with SFAS No. 144.

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Summarized financial information for the discontinued publishing operations is as follows (in thousands):

BALANCE SHEET DATA:

	December 31, 2002
Property and equipment, net	$	357
Favorable lease rights subject to amortization		3,889
Other assets		236
Other liabilities		3,378

STATEMENTS OF OPERATIONS DATA (unaudited):

	Three-Month Period Ended September 30,					Nine-Month Period Ended September 30,
	2003			2002		2003			2002
Net revenue	$	150		$	5,099	$	9,983		$	14,822
Net income (loss) from discontinued operations		(203	)		187		(475	)		654

4.    SEGMENT INFORMATION

Following the Company’s disposition of its publishing segment on July 3, 2003 (see Note 3 above), the Company now operates in three reportable segments: television broadcasting, radio broadcasting and outdoor advertising.

Television Broadcasting

The Company owns and/or operates 42 primary television stations located primarily in the southwestern United States, consisting primarily of Univision affiliates.

Radio Broadcasting

The Company owns and/or operates 58 radio stations (43 FM and 15 AM) located primarily in Arizona, California, Colorado, Florida, Illinois, Nevada, New Mexico and Texas.

Outdoor Advertising

The Company owns approximately 11,400 outdoor advertising faces located primarily in Los Angeles and New York.

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Separate financial data for each of the Company’s operating segments is provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses and non-cash stock-based compensation. There were no significant sources of revenue generated outside the United States during the three-and nine-month periods ended September 30, 2003 and 2002. The Company evaluates the performance of its operating segments based on the following (unaudited, in thousands):

	Three-Month Period Ended Ended September 30,								Nine-Month Period Ended Ended September 30,
	2003			2002 As restated (Note 1)			% Change		2003			2002 As restated (Note 1)			% Change
Net Revenue
Television	$	32,270		$	29,426		10	%	$	90,118		$	82,672		9	%
Radio		24,458			21,204		15	%		64,195			56,348		14	%
Outdoor		7,691			8,954		(14	)%		22,525			22,128		2	%
Consolidated		64,419			59,584		8	%		176,838			161,148		10	%
Direct operating expenses
Television		13,077			12,693		3	%		37,540			36,049		4	%
Radio		9,513			7,972		19	%		26,446			22,403		18	%
Outdoor		5,268			5,393		(2	)%		15,514			15,140		2	%
Consolidated		27,858			26,058		7	%		79,500			73,592		8	%
Selling, general and administrative expenses
Television		5,876			5,716		3	%		17,410			15,726		11	%
Radio		5,982			5,617		6	%		16,459			16,195		2	%
Outdoor		1,179			1,095		8	%		3,345			3,074		9	%
Consolidated		13,037			12,428		5	%		37,214			34,995		6	%
Depreciation and amortization
Television		3,649			3,580		2	%		11,120			10,769		3	%
Radio		2,026			3,015		(33	)%		5,784			6,164		(6	)%
Outdoor		5,274			7,655		(31	)%		15,864			12,694		25	%
Consolidated		10,949			14,250		(23	)%		32,768			29,627		11	%
Segment operating profit (loss)
Television		9,668			7,437		30	%		24,048			20,128		19	%
Radio		6,937			4,600		51	%		15,506			11,586		34	%
Outdoor		(4,030	)		(5,189	)	(22	)%		(12,198	)		(8,780	)	39	%
Consolidated		12,575			6,848		84	%		27,356			22,934		19	%
Corporate expenses		4,141			4,259		(3	)%		10,266			11,118		(8	)%
Loss on sale of assets		945			349		171	%		945			707		34	%
Non-cash stock-based compensation		(106	)		896		*			1,043			2,499		(58	)%
Operating income	$	7,595		$	1,344		465	%	$	15,102		$	8,610		75	%
Capital expenditures
Television	$	1,927		$	3,499				$	7,006		$	11,218
Radio		2,622			2,492					6,029			7,051
Outdoor		76			38					349			488
Consolidated	$	4,625		$	6,029				$	13,384		$	18,757
Total assets (as of September 30)
Television	$	390,383
Radio		1,060,559
Outdoor		238,922			��
Consolidated	$	1,689,864

* Percentage not meaningful.

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5. LITIGATION

The Company is subject to various outstanding claims and other legal proceedings that arose in the ordinary course of business. The Company is a party to one action, which management does not believe is material, from plaintiffs seeking unspecified damages. An accrual has been made in the consolidated financial statements as necessary to provide for management’s best estimate of the probable liability associated with this action. While the Company’s legal counsel cannot express an opinion on this matter, management believes that any liability of the Company that may arise out of or with respect to this matter will not materially adversely affect the financial position, results of operations or cash flows of the Company.

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

Overview

We generate revenue from sales of national and local advertising time on television and radio stations and advertising on our outdoor advertising faces. Advertising rates are, in large part, based on each media’s ability to attract audiences in demographic groups targeted by advertisers. We recognize advertising revenue when commercials are broadcast and outdoor advertising services are provided. We do not obtain long-term commitments from our advertisers and, consequently, they may cancel, reduce or postpone orders without penalties. We pay commission expense to agencies on local, regional and national advertising. Our revenue reflects deductions from gross revenue for commissions to these agencies.

As discussed further below, we sold our publishing operations on July 3, 2003. Following this disposition, we now operate in three reportable segments: television broadcasting, radio broadcasting and outdoor advertising. As of September 30, 2003, we own and/or operate 42 primary television stations that are located primarily in the southwestern United States. We own and/or operate 58 radio stations (43 FM and 15 AM) located primarily in Arizona, California, Colorado, Florida, Illinois, Nevada, New Mexico and Texas. Our outdoor advertising segment consists of approximately 11,400 advertising faces located primarily in Los Angeles and New York. The comparability of our results between the three- and nine-month periods ended September 30, 2003 and 2002 is significantly affected by acquisitions and dispositions in those periods.

Our net revenue for the nine-month period ended September 30, 2003 was $177 million. Of that amount, revenue generated by our television segment accounted for 51%, revenue generated by our radio segment accounted for 36% and revenue generated by our outdoor segment accounted for 13%.

Several factors may adversely affect our performance in any given period. Seasonal revenue fluctuations are common in the broadcasting and outdoor advertising industries and are due primarily to variations in advertising expenditures by both local and national advertisers. Our business is also affected by general trends in the national economic environment, as well as economic changes in the local or regional markets in which we operate. The effects of the recent economic downturn could continue to affect adversely our advertising revenues, causing our operating income to be reduced.

Our primary expenses are employee compensation, including commissions paid to our sales staffs and our national representative firms, marketing, promotion and selling, technical, local programming, engineering and general and administrative. Our local programming costs for television consist of costs related to producing local newscasts in most of our markets.

As a result of the acquisitions we consummated in recent years, approximately 84% of our total assets and 136% of our net assets are intangible. We periodically review our long-lived assets, including intangible assets and goodwill related to those acquisitions, to determine potential impairment. To date, we have determined that no impairment of long-lived assets or goodwill exists. In making this determination, the assumptions about future cash flows on the assets under evaluation are critical. Some stations under evaluation have had limited relevant cash flow history due to planned conversion of format or upgrade of station signal. The assumptions about increasing cash flows after conversion reflect management’s estimates of how these stations are expected to perform based on similar stations and markets and possible proceeds from the sale of the assets. If these expected increases or sale proceeds are not realized, impairment losses may be recorded in the future.

On January 15, 2003 we entered into a time brokerage agreement with Big City Radio, Inc., which allowed us to operate three radio stations in the greater Los Angeles market prior to our acquisition of those three stations. On April 16, 2003, we consummated our purchase of substantially all of the assets of those three stations for $100 million in cash and 3,766,478 shares of our Class A common stock. For purposes of allocating the purchase price, the Class A common stock issued to Big City Radio was valued at approximately $37.8 million, based on a five-day average closing price around the announcement date of the acquisition. We evaluated the transferred set of activities, assets, inputs and processes from this acquisition and determined that the items excluded were significant and that this acquisition was not considered a business.

On July 3, 2003, we sold substantially all of the assets and certain specified liabilities related to our publishing segment to CPK NYC, LLC for aggregate consideration of approximately $19.9 million, consisting of $18.0 million in cash and an unsecured, subordinated five-year note in the principal amount of $1.9 million (see Note 3 to the consolidated financial statements). We used the cash proceeds from this disposition to repay a portion of the indebtedness then outstanding under our bank credit facility. As a result of our decision to sell our publishing operations, our consolidated financial statements for all periods presented have been adjusted to reflect the publishing operations as discontinued operations and publishing assets and liabilities as held for sale or assignment, as the case may be, in accordance with SFAS No. 144.

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In July 2003, we acquired a permit to build a low-power television station in San Diego, California for approximately $1.8 million.

Univision currently owns approximately 28% of our common stock on a fully converted basis. In connection with its merger with Hispanic Broadcasting Corporation in September 2003, Univision entered into an agreement with the U.S. Department of Justice, or DOJ, pursuant to which Univision agreed, among other things, to sell enough of its holdings of our stock so that its ownership of our company will not exceed 15% by March 26, 2006 and 10% by March 26, 2009.

Also pursuant to Univision’s agreement with DOJ, in September 2003 Univision exchanged all of its shares of our Class A and Class C common stock that it previously owned for shares of our new Series U preferred stock. The Series U preferred stock has limited voting rights, does not include the right to elect directors and is automatically convertible into shares of our Class A common stock in connection with any transfer to a third party that is not an affiliate of Univision. The Series U preferred stock is also mandatorily convertible into common stock when and if we create a new class of common stock that generally has the same rights, preferences, privileges and restrictions as the Series U preferred stock (other than the nominal liquidation preference). This exchange does not change Univision’s overall equity interest in our company, nor does it have any impact on our existing television station affiliation agreement with Univision.

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Three and Nine-Month Periods Ended September 30, 2003 and 2002 (Unaudited)

The following table sets forth selected data from our operating results for the three- and nine-month periods ended September 30, 2003 and 2002 (in thousands):

	Three-Month Period Ended September 30,								Nine-Month Period Ended September 30,
	2003			2002 As restated			% Change		2003			2002 As restated			% Change
Statement of operations data:
Net revenue	$	64,419		$	59,584		8	%	$	176,838		$	161,148		10	%
Direct operating expenses		27,858			26,058		7	%		79,500			73,592		8	%
Selling, general and administrative expenses		13,037			12,428		5	%		37,214			34,995		6	%
Corporate expenses		4,141			4,259		(3	)%		10,266			11,118		(8	)%
Loss on sale of assets		945			349		171	%		945			707		34	%
Non-cash stock-based compensation		(106	)		896		*			1,043			2,499		(58	)%
Depreciation and amortization		10,949			14,250		(23	)%		32,768			29,627		11	%
Operating income		7,595			1,344		465	%		15,102			8,610		75	%
Interest expense		(6,796	)		(5,995	)	13	%		(20,218	)		(18,625	)	9	%
Interest income		50			15		233	%		79			138		(43	)%
Income (loss) before income tax		849			(4,636	)	*			(5,037	)		(9,877	)	(49	)%
Income tax benefit (expense)		(1,070	)		4,936		*			(600	)		398		*
Net income (loss) before equity in earnings of nonconsolidated affiliates		(221	)		300		*			(5,637	)		(9,479	)	(41	)%
Equity in net earnings of nonconsolidated
affiliates		88			95		(7	)%		299			95		215	%
Net income (loss) before discontinued operations		(133	)		395		*			(5,338	)		(9,384	)	(43	)%
Gain on disposal of discontinued operations		9,346			—		*			9,346			—		*
Income (loss) from discontinued operations		(203	)		187		*			(475	)		654		*
Net income (loss)	$	9,010		$	582		*		$	3,533		$	(8,730	)	*
Other Data:
Broadcast cash flow	$	23,524		$	21,098		11	%	$	60,124		$	52,561		14	%
EBITDA as adjusted (adjusted for non-cash stock-based compensation)	$	19,383		$	16,839		15	%	$	49,858		$	41,443		20	%
Cash flows provided by operating activities	$	8,159		$	6,222		31	%	$	22,491		$	21,792		3	%
Cash flows provided by (used in) investing activities	$	11,759		$	(38,531	)	*		$	(98,314	)	$	(118,727	)	(17	)%
Cash flows provided by (used in) financing activities	$	(17,617	)	$	35,194		*		$	74,940		$	90,010		(17	)%
Capital asset and intangible expenditures	$	6,378		$	41,606		(85	)%	$	116,455		$	120,068		(3	)%

* Percentage not meaningful.

(1) Broadcast cash flow means operating income before corporate expenses, loss on sale of assets, depreciation and amortization and non-cash stock-based compensation. EBITDA as adjusted means broadcast cash flow less corporate expenses. We use the term EBITDA as adjusted because that measure does not include non-cash stock-based compensation. We evaluate and project the liquidity and cash flows of our business using several measures, including broadcast cash flow and EBITDA as adjusted. We consider these measures as important indicators of liquidity relating to our operations, as they eliminate the effects of non-cash loss on sale of assets, non-cash depreciation and amortization and non-cash stock-based compensation awards. We use these measures to evaluate liquidity and cash flow improvement from year to year as they eliminate non-cash expense items. We believe that our investors should use these measures because they may provide a better comparability of our liquidity to that of our competitors.

Our calculation of EBITDA as adjusted included herein is substantially similar to the measures used in the financial covenants included in our bank credit facility and in the indenture governing our senior subordinated notes. In those instruments, EBITDA as adjusted is referred to as “operating cash flow” and “consolidated cash flow,” respectively. Under our bank credit facility as currently amended, we cannot incur additional indebtedness if the incurrence of such indebtedness would result in our ratio of total debt to operating cash flow having exceeded 6.75 to 1 on a pro forma basis for the prior full four quarters. Under the

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indenture, the corresponding ratio of total indebtedness to consolidated cash flow cannot exceed 7.1 to 1 on the same basis. The actual ratios of total indebtedness to each of operating cash flow and consolidated cash flow as of September 30, 2003 and 2002 were 5.8 to 1 and 5.6 to 1, respectively.

While we and many in the financial community consider broadcast cash flow and EBITDA as adjusted to be important, they should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income. In addition, our definitions of broadcast cash flow and EBITDA as adjusted differ from those of many companies reporting similarly named measures.

Broadcast cash flow and EBITDA as adjusted are non-GAAP measures. The most directly comparable GAAP financial measure to each of broadcast cash flow and EBITDA as adjusted is net income (loss). A reconciliation of these non-GAAP measures to net income (loss) follows (unaudited; in thousands):

	Three-Month Period Ended September 30,						Nine-Month Period Ended September 30,
	2003			2002 As restated			2003			2002 As restated
Broadcast cash flow	$	23,524		$	21,098		$	60,124		$	52,561
Corporate expenses		4,141			4,259			10,266			11,118
EBITDA as adjusted		19,383			16,839			49,858			41,443
Loss on sale of assets		945			349			945			707
Non-cash stock-based compensation		(106	)		896			1,043			2,499
Depreciation and amortization		10,949			14,250			32,768			29,627
Operating income		7,595			1,344			15,102			8,610
Interest expense		(6,796	)		(5,995	)		(20,218	)		(18,625	)
Interest income		50			15			79			138
Income (loss) before income taxes		849			(4,636	)		(5,037	)		(9,877	)
Income tax benefit (expense)		(1,070	)		4,936			(600	)		398
Net income (loss) before equity in earnings of nonconsolidated affiliates		(221	)		300			(5,637	)		(9,479	)
Equity in earnings of nonconsolidated affiliates		88			95			299			95
Net income (loss) before discontinued operations		(133	)		395			(5,338	)		(9,384	)
Gain on disposal of discontinued operations		9,346			—			9,346			—
Income (loss) from discontinued operations		(203	)		187			(475	)		654
Net income (loss)	$	9,010		$	582		$	3,533		$	(8,730	)

Consolidated Operations

Net Revenue.    Net revenue increased to $64.4 million for the three-month period ended September 30, 2003 from $59.6 million for the three-month period ended September 30, 2002, an increase of $4.8 million. The overall increase came from our television and radio segments, which together accounted for an increase of $6.1 million. The increase from these segments was attributable to increased advertising sold (referred to as “inventory” in our industry), increased rates for that inventory, revenue associated with our 2003 acquisitions and increased revenue due to a full three months of operations of our 2002 acquisitions. The overall increase in net revenue was partially offset by a decrease in revenue from our outdoor segment of $1.3 million.

Net revenue increased to $176.8 million for the nine-month period ended September 30, 2003 from $161.1 million for the nine-month period ended September 30, 2002, an increase of $15.7 million. The overall increase came primarily from our television and radio segments, which together accounted for $15.3 million of the increase. The increase from these segments was attributable to increased inventory sold, increased rates for that inventory, revenue associated with our 2003 acquisitions and increased revenue due to a full nine months of operations of our 2002 acquisitions. The overall increase in net revenue also came from an increase in revenue from our outdoor segment, which accounted for $0.4 million of the overall increase.

        We currently anticipate that a full year of operations from our 2002 and 2003 acquisitions will contribute to an overall increase in our net revenue for 2003. We also currently anticipate that the number of advertisers purchasing Spanish-language advertising will continue to rise and will result in greater demand for our inventory. We expect that this increased demand will, in turn, allow us to increase our rates, resulting in continued increases in net revenue in future periods.

Direct Operating Expenses.    Direct operating expenses increased to $27.9 million for the three-month period ended September 30, 2003 from $26.1 million for the three-month period ended September 30, 2002, an increase of $1.8 million. The overall increase came from our television and radio segments, which together accounted for an increase of $1.9 million. The increase from these segments was primarily attributable to an increase in national representation fees, an increase in news costs due to the addition or

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expansion of newscasts, expenses associated with our 2003 acquisitions and a full three months of operations of our 2002 acquisitions. The overall increase was partially offset by a decrease in outdoor direct operating expenses of $0.1 million. As a percentage of net revenue, direct operating expenses decreased to 43% for the three-month period ended September 30, 2003 from 44% for the three-month period ended September 30, 2002. Direct operating expenses decreased as a percentage of net revenue because their increases were outpaced by higher increases in net revenue.

Direct operating expenses increased to $79.5 million for the nine-month period ended September 30, 2003 from $73.6 million for the nine-month period ended September 30, 2002, an increase of $5.9 million. The overall increase came primarily from our television and radio segments, which together accounted for $5.5 million of the increase. The increase from these segments was primarily attributable to an increase in national representation fees, an increase in rating services expenses, an increase in news costs due to the addition or expansion of newscasts, expenses associated with our 2003 acquisitions and a full nine months of operations of our 2002 acquisitions. The overall increase also came from an increase in outdoor direct operating expenses, which accounted for $0.4 million of the overall increase. As a percentage of net revenue, direct operating expenses decreased to 45% for the nine-month period ended September 30, 2003 from 46% for the nine-month period ended September 30, 2002. Direct operating expenses as a percentage of net revenue decreased because their increases were outpaced by higher increases in net revenue.

We currently anticipate that, as our net revenue increases in future periods, our direct operating expenses correspondingly will continue to increase. However, on a long-term basis, we expect that net revenue increases will outpace direct operating expense increases such that direct operating expenses as a percentage of net revenue will decrease in future periods.

Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased to $13.0 million for the three-month period ended September 30, 2003 from $12.4 million for the three-month period ended September 30, 2002, an increase of $0.6 million. The overall increase came primarily from our television and radio segments, which together accounted for $0.5 million of the increase. The increase from these segments was primarily attributable to an increase in insurance costs, expenses associated with our 2003 acquisitions and a full three months of operations of our 2002 acquisitions. The overall increase also came from an increase in outdoor selling, general and administrative expenses, which accounted for $0.1 million of the overall increase. As a percentage of net revenue, selling, general and administrative expenses decreased to 20% for the nine-month period ended September 30, 2003 from 21% for the three-month period ended September 30, 2002. Selling, general and administrative expenses as a percentage of net revenue decreased because their increases were outpaced by higher increases in net revenue.

Selling, general and administrative expenses increased to $37.2 million for the nine-month period ended September 30, 2003 from $35.0 million for the nine-month period ended September 30, 2002, an increase of $2.2 million. The overall increase came primarily from our television and radio segments, which together accounted for $1.9 million of the increase. The increase from these segments was primarily attributable to an increase in insurance costs, expenses associated with our TeleFutura stations, expenses associated with our 2003 acquisitions and a full nine months of operations of our 2002 acquisitions. The increase was partially offset by the settlement of a contract dispute with our former radio national representation firm, Interep National Sales, Inc., which accounted for $1.6 million in 2002. The overall increase also came from an increase in outdoor selling, general and administrative expenses, which accounted for $0.3 million of the overall increase. As a percentage of net revenue, selling, general and administrative expenses decreased to 21% for the nine-month period ended September 30, 2003 from 22% for the nine-month period ended September 30, 2002. Excluding the Interep settlement, selling, general and administrative expenses as a percentage of net revenue remained unchanged at 21% for the nine-month periods ended September 30, 2003 and 2002.

On a long-term basis, although we currently anticipate that selling, general and administrative expenses will increase in future periods, we expect that net revenue increases will outpace selling, general and administrative expense increases such that selling, general and administrative expenses as a percentage of net revenue will decrease in future periods. On a short-term basis, we currently anticipate incurring additional expenses in and after the fourth quarter of 2003 in connection with the relocation of our Radio Division to Los Angeles from Campbell, California, including moving expenses, severance and additional rent expense associated with management’s decision to retain the Campbell facility as a back-up location for our radio network.

Corporate Expenses.    Corporate expenses decreased to $4.1 million for the three-month period ended September 30, 2003 from $4.3 million for the three-month period ended September 30, 2002, a decrease of $0.2 million. The decrease was primarily attributable to decreased legal fees and bonuses. As a percentage of net revenue, corporate expenses decreased to 6% for the three-month period ended September 30, 2003 from 7% for the three-month period ended September 30, 2002. Corporate expenses as a percentage of net revenue decreased as corporate expenses decreased and net revenue increased.

Corporate expenses decreased to $10.3 million for the nine-month period ended September 30, 2003 from $11.1 million for the nine-month period ended September 30, 2002, a decrease of $0.8 million. The decrease was primarily attributable to a $2.0 million reimbursement from Univision (offset by current period Univision-related expenses) for legal and other costs associated with the third-party information request that we received in connection with the recent merger between Univision and Hispanic Broadcasting Corporation. Approximately $0.6 million and $0.5 million of the reimbursement was attributable to out-of-pocket expenses incurred

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with third-party service providers in 2002 and in the nine-month period ended September 30, 2003, respectively. This decrease was partially offset by increased insurance costs, as well as bonuses associated with the increase in EBITDA as adjusted. As a percentage of net revenue, corporate expenses decreased to 6% for the nine-month period ended September 30, 2003 from 7% for the nine-month period ended September 30, 2002. Excluding the Univision reimbursement (offset by current period Univision-related expenses), corporate expenses as a percentage of net revenue still remained unchanged at 7% for each of the nine-month periods ended September 30, 2003 and 2002.

We currently anticipate that corporate expenses will increase in future periods, primarily due to increased insurance costs and higher accounting, legal and other costs associated with our compliance with the Sarbanes-Oxley Act of 2002. Nevertheless, we expect that these increases will be outpaced by net revenue increases such that corporate expenses as a percentage of net revenue will decrease in future periods.

Loss on Sale of Assets.    Loss on sale of assets increased to $0.9 million for the three-month period ended September 30, 2003 from $0.3 million for the three-month period ended September 30, 2002, an increase of $0.6 million. Loss on sale of assets increased to $0.9 million for the nine-month period ended September 30, 2003 from $0.7 million for the nine-month period ended September 30, 2002, an increase of $0.2 million. The loss was primarily due to the sale of land in Phoenix, Arizona.

Depreciation and Amortization.    Depreciation and amortization decreased to $10.9 million for the three-month period ended September 30, 2003 from $14.3 million for the three-month period ended September 30, 2002, a decrease of $3.4 million. This decrease was primarily attributable to decreased amortization of $2.4 million in our outdoor segment as a result of management revising its estimate of the cost basis of the customer base in our outdoor segment in the prior year.

Depreciation and amortization increased to $32.8 million for the nine-month period ended September 30, 2003 from $29.6 million for the nine-month period ended September 30, 2002, an increase of $3.2 million. This increase was primarily attributable to increased amortization of $3.0 million in our outdoor segment as a result of management revising downward its estimate of the remaining useful life of the outdoor segment’s customer base from 13 years to eight years effective October 1, 2002.

Non-Cash Stock-Based Compensation.    Non-cash stock-based compensation decreased to a credit of $0.1 million for the three-month period ended September 30, 2003 from an expense of $0.9 million for the three-month period ended September 30, 2002, a decrease in expense of $1.0 million. The non-cash stock-based compensation credit results from the treatment of non-employee stock option grants under variable plan accounting.

Non-cash stock-based compensation expense decreased to $1.0 million for the nine-month period ended September 30, 2003 from an expense of $2.5 million for the nine-month period ended September 30, 2002, a decrease of $1.5 million. Non-cash stock-based compensation consists primarily of compensation expense relating to restricted and unrestricted stock awards granted to our employees during the second quarter of 2000 and stock options granted to non-employees. As of May 2003, all non-cash compensation expense related to restricted and unrestricted stock awards made to date has been fully recognized.

Operating Income.    As a result of the above factors, we had operating income of $7.6 million for the three-month period ended September 30, 2003, compared to operating income of $1.3 million for the three-month period ended September 30, 2002. We had operating income of $15.1 million for the nine-month period ended September 30, 2003, compared to operating income of $8.6 million for the nine-month period ended September 30, 2002.

Interest Expense.    Interest expense increased to $6.8 million for the three-month period ended September 30, 2003 from $6.0 million for the three-month period ended September 30, 2002, an increase of $0.8 million. The increase was primarily attributable to $100 million of additional borrowings under our bank credit facility to fund the cash portion of the purchase price for the three radio stations we acquired from Big City Radio, partially offset by a reduction of indebtedness related to the disposal of our publishing operations.

Interest expense increased to $20.2 million for the nine-month period ended September 30, 2003 from $18.6 million for the nine-month period ended September 30, 2002, an increase of $1.6 million. The increase was primarily attributable to $100 million of additional borrowings under our bank credit facility to fund the cash portion of the purchase price for the three radio stations we acquired from Big City Radio, partially offset by a reduction of indebtedness related to the disposal of our publishing operations.

Income Tax Benefit (Expense).    Our expected tax benefit (expense) is based on the estimated effective tax rate for the full year 2003, adjusted for the reduction of state net operating loss carryforward benefits. We currently have approximately $104 million in net operating loss carryforwards expiring through 2022 that we expect will be utilized prior to their expiration.

Net Income (Loss) Before Discontinued Operations.    As a result of the above factors, net loss before discontinued operations was $0.1 million for the three-month period ended September 30, 2003 compared to net income of $0.4 million for the three-month

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period ended September 30, 2002. Net loss before discontinued operations decreased to $5.3 million for the nine-month period ended September 30, 2003 from $9.4 million for the nine-month period ended September 30, 2002, a decrease of $4.1 million.

Segment Operations

Television

Net Revenue.    Net revenue in our television segment increased to $32.3 million for the three-month period ended September 30, 2003 from $29.4 million for the three-month period ended September 30, 2002, an increase of $2.9 million. Of the overall increase, $2.6 million was attributable to our Univision stations, $0.1 million was attributable to our TeleFutura stations and $0.2 million was attributable to our other stations. The overall increase was primarily attributable to an increase in national advertising sales due to a combination of an increase in rates and inventory sold.

Net revenue increased to $90.1 million for the nine-month period ended September 30, 2003 from $82.7 million for the nine-month period ended September 30, 2002, an increase of $7.4 million. Of the overall increase, $6.9 million was attributable to our Univision stations, $0.2 million was attributable to our TeleFutura stations and $0.3 million was attributable to our other stations. The overall increase was primarily attributable to an increase in national advertising sales due to a combination of an increase in rates and inventory sold.

Direct Operating Expenses.    Direct operating expenses in our television segment increased to $13.1 million for the three-month period ended September 30, 2003 from $12.7 million for the three-month period ended September 30, 2002, an increase of $0.4 million. The increase was primarily attributable to an increase in national representation fees associated with the increase in net revenue, an increase in the cost of ratings services and an increase in news costs due to the addition or expansion of newscasts in the San Diego, Orlando and Boston markets.

Direct operating expenses increased to $37.5 million for the nine-month period ended September 30, 2003 from $36.0 million for the nine-month period ended September 30, 2002, an increase of $1.5 million. The increase was primarily attributable to an increase in national representation fees associated with the increase in net revenue, an increase in the cost of ratings services and an increase in news costs due to the addition or expansion of newscasts in the San Diego, Orlando and Boston markets.

Selling, General and Administrative Expenses.    Selling, general and administrative expenses in our television segment increased to $5.9 million for the three-month period ended September 30, 2003 from $5.7 million for the three-month period ended September 30, 2002, an increase of $0.2 million. The increase was primarily attributable to an increase in insurance costs and expenses associated with our TeleFutura stations.

Selling, general and administrative expenses increased to $17.4 million for the nine-month period ended September 30, 2003 from $15.7 million for the nine-month period ended September 30, 2002, an increase of $1.7 million. The increase was primarily attributable to an increase in insurance costs and expenses associated with our TeleFutura stations.

Radio

Net Revenue.    Net revenue in our radio segment increased to $24.5 million for the three-month period ended September 30, 2003 from $21.2 million for the three-month period ended September 30, 2002, an increase of $3.3 million. The increase was primarily attributable to a combination of an increase in rates and inventory sold by our national radio sales representative, Lotus/Entravision Reps LLC, as well as revenue associated with our 2003 acquisitions and a full three months of operations of our 2002 acquisitions. Lotus/Entravision Reps is a joint venture we entered into in August 2001 with Lotus Hispanic Reps Corp.

Net revenue increased to $64.2 million for the nine-month period ended September 30, 2003 from $56.3 million for the nine-month period ended September 30, 2002, an increase of $7.9 million. The increase was primarily attributable to a combination of an increase in rates and inventory sold by Lotus/Entravision Reps LLC, as well as revenue associated with our 2003 acquisitions and a full nine months of operations of our 2002 acquisitions.

Direct Operating Expenses.    Direct operating expenses in our radio segment increased to $9.5 million for the three-month period ended September 30, 2003 from $8.0 million for the three-month period ended September 30, 2002, an increase of $1.5 million. The increase was primarily attributable to an increase in commissions and national representation fees associated with the increase in net revenue, expenses associated with our 2003 acquisitions and a full three months of operations of our 2002 acquisitions.

Direct operating expenses increased to $26.4 million for the nine-month period ended September 30, 2003 from $22.4 million for the nine-month period ended September 30, 2002, an increase of $4.0 million. The increase was primarily attributable to an increase in commissions and national representation fees associated with the increase in net revenue, expenses associated with our 2003 acquisitions and a full nine months of operations of our 2002 acquisitions.

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Selling, General and Administrative Expenses.    Selling, general and administrative expenses in our radio segment increased to $6.0 million for the three-month period ended September 30, 2003 from $5.6 million for the three-month period ended September 30, 2002, a increase of $0.4 million. The increase was primarily attributable to an increase in promotional expenses, expenses associated with our 2003 acquisitions and a full three months of operations of our 2002 acquisitions.

Selling, general and administrative expenses increased to $16.5 million for the nine-month period ended September 30, 2003 from $16.2 million for the nine-month period ended September 30, 2002, an increase of $0.3 million. The increase was primarily attributable to an increase in salaries, expenses associated with our 2003 acquisitions and a full nine months of operations of our 2002 acquisitions. The increase was partially offset by the Interep settlement, which accounted for $1.6 million in 2002.

Outdoor

Net Revenue.    Net revenue from our outdoor segment decreased to $7.7 million for the three-month period ended September 30, 2003 from $9.0 million for the three-month period ended September 30, 2002, a decrease of $1.3 million. The decrease was attributable to a decline in both local and national advertising sales during the period resulting primarily from non-returning local government advertising dollars in New York, coupled with a weakening national advertising environment in both of our primary outdoor advertising markets.

Net revenue increased to $22.5 million for the nine-month period ended September 30, 2003 from $22.1 million for the nine-month period ended September 30, 2002, an increase of $0.4 million. The increase was primarily attributable to an increase in national advertising sales during the first half of the year, offset by a reduction in advertising sales during the three-month period ended September 30, 2003.

We currently anticipate that net revenue from our outdoor segment will continue to decrease in the short term primarily due to weakened demand in our Los Angeles business and non-returning local government advertising dollars in New York. In the longer term, however, we currently anticipate moderate increases in net revenue from our outdoor segment.

Direct Operating Expenses.    Direct operating expenses from our outdoor segment decreased to $5.3 million for the three-month period ended September 30, 2003 from $5.4 million for the three-month period ended September 30, 2002, a decrease of $0.1 million. The decrease was primarily attributable to decreased installation costs as a result of decreased sales.

Direct operating expenses increased to $15.5 million for the nine-month period ended September 30, 2003 from $15.1 million for the nine-month period ended September 30, 2002, an increase of $0.4 million. The increase was primarily attributable to higher lease rents for our billboard locations, coupled with increased installation costs during the first half of 2003 arising from increased sales during the same period.

Selling, General and Administrative Expenses.    Selling, general and administrative expenses from our outdoor segment increased to $1.2 million for the three-month period ended September 30, 2003 from $1.1 million for the three-month period ended September 30, 2002, an increase of $0.1 million.

Selling, general and administrative expenses increased to $3.3 million for the nine-month period ended September 30, 2003 from $3.1 million for the nine-month period ended September 30, 2002, an increase of $0.2 million. The increase was primarily attributable to an increase in sales commissions associated with the increase in net revenue.

Liquidity and Capital Resources

While we have a history of operating losses, we also have a history of generating significant positive cash flow from our operations. We expect to fund anticipated cash requirements (including acquisitions, anticipated capital expenditures, payments of principal and interest on outstanding indebtedness and share repurchases) with cash flow from operations and externally generated funds, such as proceeds from any debt or equity offering and our bank credit facility. We currently anticipate that funds generated from operations and available borrowings under our bank credit facility will be sufficient to meet our anticipated cash requirements for the foreseeable future.

Bank Credit Facility

Our primary sources of liquidity are cash provided by operations and available borrowings under our bank credit facility. We have a $400 million bank credit facility, comprised of a $250 million revolving facility and a $150 million incremental loan facility. In November 2003, we obtained commitments from participating banks for $50 million of the total amount available under the incremental loan facility. Our ability to borrow the remaining $100 million under the incremental loan facility remains subject to additional bank commitments.

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The revolving facility expires in 2007 and our ability to draw under the incremental loan facility expires in September 2004. The incremental loan facility had been due to expire in September 2003, but we amended our bank credit facility in that month to extend its maturity for an additional year. The original $250 million amount of the revolving facility is subject to an automatic quarterly reduction, and had been reduced to $219 million as of September 30, 2003. Our ability to make additional borrowings under the bank credit facility is subject to compliance with certain financial ratios and other conditions set forth in the bank credit facility.

Our bank credit facility is secured by substantially all of our assets, as well as the pledge of the stock of substantially all of our subsidiaries, including our special purpose subsidiary formed to hold our Federal Communications Commission, or FCC, licenses.

In connection with the issuance of our senior subordinated notes (discussed below under the caption “Debt and Equity Financing”), we amended our bank credit facility to conform to certain provisions in the indenture governing our senior subordinated notes. On April 16, 2003, we further amended our bank credit facility in connection with our acquisition of three radio stations from Big City Radio to, among other things, adjust upward the existing covenants relating to maximum total debt ratio and remove the existing cap on the incurrence of subordinated indebtedness. Please see “Broadcast Cash Flow and EBITDA as Adjusted” below.

The revolving facility bears interest at LIBOR (1.125% at September 30, 2003) plus a margin ranging from 0.875% to 3.25% based on our leverage. In addition, we pay a quarterly loan commitment fee ranging from 0.25% to 0.75% per annum, which is levied upon the unused portion of the amount available. As of September 30, 2003, $147 million was outstanding under our bank credit facility and $72 million was available for future borrowings. In October 2003, we paid down an additional $3 million of the outstanding balance on our bank credit facility from funds generated from operations.

Our bank credit facility contains a mandatory prepayment clause, triggered in the event that we liquidate any assets if the proceeds are not utilized to acquire assets of the same type within 180 days, receive insurance or condemnation proceeds which are not fully utilized toward the replacement of such assets or have excess cash flow, as defined in our bank credit facility, 50% of which excess cash flow shall be used to reduce our outstanding loan balance.

Our bank credit facility contains certain financial covenants relating to maximum total debt ratio, minimum total interest coverage ratio and fixed charge coverage ratio. The covenants become increasingly restrictive in the later years of the bank credit facility. Our bank credit facility also requires us to maintain our FCC licenses for our broadcast properties and contains restrictions on the incurrence of additional debt, the payment of dividends, the making of acquisitions and the sale of assets over a certain limit. Additionally, we are required to enter into interest rate agreements if our leverage exceeds certain limits.

We can draw on our revolving facility without prior approval for working capital needs and for acquisitions having an aggregate maximum consideration of less than $25 million. Acquisitions having an aggregate maximum consideration of greater than $25 million but less than or equal to $100 million are conditioned upon our delivery to the agent bank of a covenant compliance certificate showing pro forma calculations assuming such acquisition had been consummated and revised revenue projections for the acquired stations. For acquisitions having an aggregate maximum consideration in excess of $100 million, majority lender consent of the bank group is required.

Debt and Equity Financing

On March 18, 2002, we issued $225 million of our senior subordinated notes due 2009. The senior subordinated notes bear interest at 8 ¹/8% per year, payable semi-annually on March 15 and September 15 of each year. The net proceeds from our senior subordinated notes were used to repay all indebtedness then outstanding under our bank credit facility and for general corporate purposes.

On May 9, 2002, we filed a shelf registration statement with the SEC to register up to $500 million of equity and debt securities, which we may offer from time to time. That shelf registration statement has been declared effective by the SEC. We have not yet issued any securities under the shelf registration statement. We intend to use the proceeds of any issuance of securities under the shelf registration statement to fund acquisitions or capital expenditures, to reduce or refinance debt or other obligations and for general corporate purposes.

On April 16, 2003, we issued 3,766,478 shares of our Class A common stock as a portion of the purchase price for the three radio stations we acquired from Big City Radio.

Broadcast Cash Flow and EBITDA as Adjusted

Broadcast cash flow (as defined below) increased to $23.5 million for the three-month period ended September 30, 2003 from $21.1 million for the three-month period ended September 30, 2002, an increase of $2.4 million, or 11%. As a percentage of net revenue, broadcast cash flow increased to 37% for the three-month period ended September 30, 2003 from 35% for the three-month period ended September 30, 2002.

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Broadcast cash flow increased to $60.1 million for the nine-month period ended September 30, 2003 from $52.6 million for the nine-month period ended September 30, 2002, an increase of $7.5 million, or 14%. As a percentage of net revenue, broadcast cash flow increased to 34% for the nine-month period ended September 30, 2003 from 33% for the nine-month period ended September 30, 2002.

We currently anticipate that broadcast cash flow will increase in future periods, both in absolute dollars and as a percentage of net revenue, as we believe that net revenue increases will continue to outpace increases in direct operating and selling, general and administrative expenses.

EBITDA as adjusted (as defined below) increased to $19.4 million for the three-month period ended September 30, 2003 from $16.8 million for the three-month period ended September 30, 2002, an increase of $2.6 million, or 15%. As a percentage of net revenue, EBITDA as adjusted increased to 30% for the three-month period ended September 30, 2003 from 28% for the three-month period ended September 30, 2002.

EBITDA as adjusted increased to $49.9 million for the nine-month period ended September 30, 2003 from $41.4 million for the nine-month period ended September 30, 2002, an increase of $8.5 million, or 20%. As a percentage of net revenue, EBITDA as adjusted increased to 28% for the nine-month period ended September 30, 2003 from 26% for the nine-month period ended September 30, 2002.

We currently anticipate that EBITDA as adjusted will increase in future periods, both in absolute dollars and as a percentage of net revenue, as we believe that net revenue increases will continue to outpace increases in direct operating expenses, selling, general and administrative expenses and corporate expenses.

Broadcast cash flow means operating income before corporate expenses, loss on sale of assets, depreciation and amortization and non-cash stock-based compensation. EBITDA as adjusted means broadcast cash flow less corporate expenses. We use the term EBITDA as adjusted because that measure does not include non-cash stock-based compensation. We evaluate and project the liquidity and cash flows of our business using several measures, including broadcast cash flow and EBITDA as adjusted. We consider these measures as important indicators of liquidity relating to our operations, as they eliminate the effects of non-cash loss on sale of assets, non-cash depreciation and amortization and non-cash stock-based compensation awards. We use these measures to evaluate liquidity and cash flow improvement from year to year as they eliminate non-cash expense items. We believe that our investors should use these measures because they may provide a better comparability of our liquidity to that of our competitors.

Our calculation of EBITDA as adjusted included herein is substantially similar to the measures used in the financial covenants included in our bank credit facility and in the indenture governing our senior subordinated notes. In those instruments, EBITDA as adjusted is referred to as “operating cash flow” and “consolidated cash flow,” respectively. Under our bank credit facility as currently amended, we cannot incur additional indebtedness if the incurrence of such indebtedness would result in our ratio of total debt to operating cash flow having exceeded 6.75 to 1 on a pro forma basis for the prior full four quarters. Under the indenture, the corresponding ratio of total indebtedness to consolidated cash flow cannot exceed 7.1 to 1 on the same basis. The actual ratios of total indebtedness to each of operating cash flow and consolidated cash flow as of September 30, 2003 and 2002 were 5.8 to 1 and 5.6 to 1, respectively.

While we and many in the financial community consider broadcast cash flow and EBITDA as adjusted to be important, they should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income. In addition, our definitions of broadcast cash flow and EBITDA as adjusted differ from those of many companies reporting similarly named measures.

Broadcast cash flow and EBITDA as adjusted are non-GAAP measures. For a reconciliation of each of broadcast cash flow and EBITDA as adjusted to net income (loss), their most directly comparable GAAP financial measure, please see page 17.

Cash Flow

Net cash flow provided by operating activities increased to $22.5 million for the nine-month period ended September 30, 2003 from $21.8 million for the nine-month period ended September 30, 2002.

Net cash flow used in investing activities decreased to $98.3 million for the nine-month period ended September 30, 2003 from $118.7 million for the nine-month period ended September 30, 2002. The cash portion of our acquisition of media assets for the nine-month period ended September 30, 2003 was $103.3 million, consisting of three radio stations in the greater Los Angeles,

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California area, five low-power television stations in Santa Barbara, California, one low-power television station in Hartford, Connecticut and one permit to build a low-power station in San Diego, California. Additionally, we made other capital expenditures of $13.0 million. We received $18.0 million in cash from the disposition of our publishing operations.

Net cash flow provided by financing activities decreased to $74.9 million for the nine-month period ended September 30, 2003 from $90.0 million for the nine-month period ended September 30, 2002. During the nine-month period ended September 30, 2003, we borrowed $100 million under our bank facility for the acquisition of substantially all of the assets of three radio stations in the greater Los Angeles, California area from Big City Radio. We also received net proceeds of $1.0 million from the exercise of stock options issued under our 2000 Omnibus Equity Incentive Plan and from the sale of shares issued under our 2001 Employee Stock Purchase Plan, or the Employee Stock Purchase Plan. We made net payments on long-term liabilities in the amount of $25.5 million and paid bank financing fees of $0.5 million related to our acquisition of the Big City Radio assets.

During the remainder of 2003, we anticipate that our capital expenditures will be approximately $7 million, including approximately $0.4 million in digital television capital expenditures. We anticipate paying for these capital expenditures out of net cash flow from operations.

As part of the transition from analog to digital television, full-service television station owners may be required to stop broadcasting analog signals and relinquish their analog channels to the FCC by 2006 if the market penetration of digital television receivers reaches certain levels by that time. We currently expect that the cost to complete construction of digital television facilities for our full-service television stations between 2003 and 2006 will be approximately $18 million, with the majority of those costs to be incurred in 2004 and 2005. In addition, we will be required to broadcast both digital and analog signals through this transition period, but we do not expect those incremental costs to be significant. We intend to finance the conversion to digital television out of cash flow from operations. The amount of our anticipated capital expenditures may change based on future changes in business plans, our financial condition and general economic conditions.

We continually review, and are currently reviewing, opportunities to acquire additional television and radio stations, as well as other broadcast or media opportunities targeting the Hispanic market in the United States. We expect to finance any future acquisitions through funds generated from operations, borrowings under our bank credit facility and additional debt and equity financing. Any additional financing, if needed, might not be available to us on reasonable terms or at all. Any failure to raise capital when needed could seriously harm our business and our acquisition strategy. If additional funds are raised through the issuance of equity securities, the percentage of ownership of our existing stockholders will be reduced. Furthermore, these equity securities might have rights, preferences or privileges senior to those of our Class A common stock.

Series A Mandatorily Redeemable Convertible Preferred Stock

The holders of a majority of our Series A mandatorily redeemable convertible preferred stock have the right on or after April 19, 2006 to require us to redeem any and all or their preferred stock at the original issue price plus accrued dividends. On April 19, 2006 such redemption price will be $143.5 million, and our Series A mandatorily redeemable convertible preferred stock would continue to accrue a dividend of 8.5% per year. The Series A mandatorily redeemable convertible preferred stock is convertible into Class A common stock at the option of the holder at anytime. If, however, the holders elect not to convert and we are required to pay the redemption price in 2006, we anticipate that we would finance such payment with borrowings under our bank credit facility or the proceeds of any debt or equity offering.

Contractual Obligations

We have agreements with certain media research and ratings providers, expiring at various dates through December 2006, to provide television and radio audience measurement services. We lease facilities and broadcast equipment under various operating lease agreements with various terms and conditions, expiring at various dates through December 2025.

Our material contractual obligations at September 30, 2003 are as follows (in thousands):

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Senior subordinated notes	$	225,000	$	—	$	—	$	—	$	225,000
Series A preferred stock (1)		143,482		—		143,482		—		—
Bank credit facility and other borrowings		155,276		1,002		2,256		149,000		3,018
Media research and ratings providers (2)		25,259		7,920		14,211		3,128		—
Operating leases (2)(3)		73,000		8,600		16,900		13,300		34,200
Total contractual obligations	$	622,017	$	17,522	$	176,849	$	165,428	$	262,218

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(1) Please see “Series A Mandatorily Redeemable Convertible Preferred Stock” above.

(2) Operating leases includes amounts committed for a lease entered into as of March 12, 2003, for office space in Los Angeles to accommodate the anticipated relocation of our Radio Division’s headquarters from Campbell, California in the fourth quarter of 2003. Otherwise, the amounts committed for media research and ratings providers and for operating leases are as of December 31, 2002.

(3) Does not include month-to-month leases.

Other than lease commitments, legal contingencies incurred in the normal course of business and employment contracts for key employees, we do not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned subsidiaries or any interests in or relationships with any special-purpose entities that are not included in the consolidated financial statements.

Other

On March 19, 2001, our Board of Directors approved a stock repurchase program. We are authorized to repurchase up to $35 million of our outstanding Class A common stock from time to time in open market transactions at prevailing market prices, block trades and private repurchases. The extent and timing of any repurchases will depend on market conditions and other factors. We intend to finance stock repurchases, if and when made, with our available cash on hand and cash provided by operations. To date, no shares of Class A common stock have been repurchased under the stock repurchase program.

On April 4, 2001, our Board of Directors adopted the Employee Stock Purchase Plan. Our stockholders approved the Employee Stock Purchase Plan on May 10, 2001 at our 2001 Annual Meeting of Stockholders. Subject to adjustments in our capital structure, as defined in the Employee Stock Purchase Plan, the maximum number of shares of our Class A common stock that will be made available for sale under the Employee Stock Purchase Plan is 600,000, plus an annual increase of up to 600,000 shares on the first day of each of the ten calendar years beginning on January 1, 2002. All of our employees are eligible to participate in the Employee Stock Purchase Plan, provided that they have completed six months of continuous service as employees as of an offering date. There are two offering periods annually under the Employee Stock Purchase Plan, one which commences on February 15 and concludes on August 14, and the other which commences August 15 and concludes the following February 14. As of September 30, 2003, approximately 227,839 shares had been purchased under the Employee Stock Purchase Plan.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

Market risk represents the potential loss that may impact our financial position, results of operations or cash flows due to adverse changes in the financial markets. We are exposed to market risk from changes in the base rates on our variable rate debt. Under our bank credit facility, if we exceed certain leverage ratios we would be required to enter into derivative financial instrument transactions, such as swaps or interest rate caps, in order to manage or reduce our exposure to risk from changes in interest rates. Under no circumstances do we enter into derivatives or other financial instrument transactions for speculative purposes.

Interest Rates

Our revolving facility loan bears interest at a variable rate at LIBOR (1.125% as of September 30, 2003) plus a margin ranging from 0.875% to 3.25% based on our leverage. As of September 30, 2003, we had $147 million of variable rate bank debt outstanding. Our bank credit facility requires us to maintain interest rate swap agreements for at least two years when our total debt ratio is greater than 4.5 to 1. Effective March 31, 2003, we entered into a no-fee interest rate swap agreement covering 50% of the outstanding balance under our bank credit facility. This agreement provides for a LIBOR-based rate floor of 1% and rate ceiling of 6% for up to $82.5 million of the outstanding amount under our bank credit facility. The agreement terminates on March 31, 2005. Because this portion of our long-term debt is subject to interest at a variable rate, our earnings will be affected in future periods by changes in interest rates.

In the event that the LIBOR rate falls below 1%, we would still have to pay the floor rate of 1% plus the margin based on our leverage at such time. The fair market value of the swap would be recorded as a liability on the balance sheet and interest expense on the income statement.

ITEM 4.    CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) that is required to be included in our periodic SEC reports. There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We currently and from time to time are involved in litigation incidental to the conduct of our business, but we are not currently a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on us.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)Exhibits

The following exhibits are attached hereto and filed herewith:

3.1 Certificate of Designations, Preferences and Rights of Series U Preferred Stock of Entravision Communications Corporation

4.1 Exchange Agreement, dated as of September 22, 2003, by and between Entravision Communications Corporation and Univision Communications Inc.

10.1 Fourth Amendment to Credit Agreement, dated as of September 19, 2003, among Entravision Communications Corporation, the Lenders (as defined therein), Union Bank of California, N.A., Credit Suisse First Boston, The Bank of Nova Scotia and Fleet National Bank

31.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

31.2 Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

32 Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)Reports on Form 8-K

We filed three Current Reports on Form 8-K with the SEC during the quarter ended September 30, 2003:

(i) a Current Report on Form 8-K filed on July 3, 2003, attaching the press release announcing the sale of our publishing assets;

(ii) a Current Report on Form 8-K filed on July 9, 2003, attaching the transcript of a television interview with Walter F. Ulloa, the Company’s Chairman and Chief Executive Officer; and

(iii) a Current Report on Form 8-K filed on August 7, 2003, attaching the press release announcing our financial results for the quarter ended June 30, 2003.

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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.

ENTRAVISION COMMUNICATIONS CORPORATION
By:	/s/ JOHN F. DELORENZO
	John F. DeLorenzo Executive Vice President, Treasurer and Chief Financial Officer

Dated: November 13, 2003

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