RADIO UNICA COMMUNICATIONS CORP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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FORM 10-K

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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 OR

/ / 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 001-15151

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RADIO UNICA COMMUNICATIONS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 65-00856900
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

8400 NW 52ND STREET, SUITE 101
MIAMI, FLORIDA 33166
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 305-463-5000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01

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. /X/ YES / / NO

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. / /

AS OF MARCH 27, 2002, THERE WERE OUTSTANDING 20,941,656 SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE. BASED ON THE CLOSING PRICE ON MARCH 27, 2002 THE
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT WAS APPROXIMATELY $34 MILLION.

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE PROXY STATEMENT FOR THE 2002 ANNUAL MEETING, EXPECTED TO BE
FILED WITHIN 120 DAYS FROM THE COMPANY'S FISCAL YEAR-END, ARE INCORPORATED BY
REFERENCE INTO PART III.

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TABLE OF CONTENTS

PART I

THIS ANNUAL REPORT INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"). ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS
ANNUAL REPORT, INCLUDING, WITHOUT LIMITATION, THE STATEMENTS UNDER "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS",
"BUSINESS" AND ELSEWHERE HEREIN, REGARDING THE COMPANY OR ANY OF THE
TRANSACTIONS DESCRIBED HEREIN, INCLUDING THE EFFECTS OF SUCH TRANSACTIONS, ARE
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO
ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT.

ITEM 1. BUSINESS

GENERAL

Radio Unica is the only national Spanish-language AM radio network in the
U.S., broadcasting 24-hours a day, 7-days a week. We began broadcasting our
network programming on January 5, 1998, producing 19 hours of live and first-run
celebrity-based news/talk, sports and information programming each weekday and
20 hours of such programming each weekend. With 16 Company-owned and/or operated
stations and our affiliated stations, our network reaches approximately 80% of
the U.S. Hispanic population. The Company-operated stations are located in 14 of
the top 25 U.S. markets in terms of Hispanic population. The markets in which we
maintain stations collectively account for approximately 63% of the total U.S.
Hispanic population.

Our uniform delivery of national programming to our stations 24 hours a day
differentiates us from other Spanish-language radio groups. Importantly, our
nationwide distribution allows us to produce high quality programming and spread
the cost of that programming over our large base of stations. Our network offers
advertisers the only Hispanic radio platform capable of delivering a consistent
and controlled message to a national audience. Additionally, our network allows
national advertisers to reach a large portion of the Hispanic population more
effectively and at a lower cost than would be the case if they had to purchase
advertising separately in each market.

We believe that our high quality, original programming gives us a
competitive advantage over other Spanish-language radio broadcasters in
marketing to the Hispanic audience. Popular Hispanic television and other
well-known personalities host our programs and their broad appeal extends beyond
any particular Hispanic cultural or geographical boundaries. These national
personalities include Dr. Isabel Gomez-Bassols, Jorge Ramos, Ricardo Brown, Hugo
Cadelago, Paul Bouche and Mauricio Zeilic. Our programming includes contemporary
talk, entertainment and information programs, news segments, hourly local and
national newscasts, sports talk programs, sports broadcasting, and other
programming relevant to our national Hispanic audience. Many of our radio
programs are fully-interactive talk shows that allow listeners nationwide to
call in as active participants in the on-air dialogue.

Live sporting events are an integral part of Radio Unica's network
programming, and we have acquired the broadcast rights in the United States to
numerous marquee sporting events. We have acquired the exclusive
Spanish-language radio rights for several of the most popular sporting events
among Hispanics, including Copa America 2003, Copa Oro 2004 and 2006, the Summer
Olympics in 2004, the World Cup 2002 qualifying matches and Mexican National
Team and Mexican soccer league games. In addition to being an important part of
our programming, major sporting events are an important means of attracting
first-time listeners. To capture these first-time listeners, we sponsor major
promotional events in conjunction with our sports programming which serve to
solidify listener loyalty and raise awareness of the Radio Unica network.

On April 30, 2001, the Company completed the acquisition of MASS
Promotions, Inc. ("MASS"). MASS provides integrated promotional and
merchandising services to the Hispanic market. We believe that MASS
complements our radio operations by offering our radio clients expanded
promotional services. Some of MASS' blue chip client base includes, General
Mills, Unilever Best Foods, Gerber, and Kimberly Clark.

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THE HISPANIC MARKET OPPORTUNITY

We believe that Spanish-language radio targeting the Hispanic market will
continue to benefit from the following:

STRONG PROJECTED GROWTH AND GEOGRAPHIC CONCENTRATION OF THE HISPANIC
POPULATION. Hispanics represent the most rapidly growing segment of the U.S.
population. From 1989 to 2001, the Hispanic population increased from 23.7
million to 38.6 million, a 63% increase. The strong growth of the Hispanic
population is expected to continue, increasing approximately 50% by 2010,
five times the growth rate of the U.S. population as a whole. Hispanics
represent 12.5% of the population and by the year 2020 one out of every five
U.S. residents is expected to be Hispanic. Additionally, the Hispanic
population is highly concentrated, with approximately 56% of all Hispanics
located in the top ten Hispanic markets. This concentration allows us to cost
effectively reach the majority of Hispanics through our existing network
platform.

USE OF SPANISH AMONG HISPANICS. Spanish is the language spoken at home by
the majority of Hispanics, regardless of income or education. The number of
Hispanics who speak Spanish at home is expected to increase substantially from
over 28.6 million today. We believe that the continued use of Spanish among
Hispanics indicates that Spanish-language media has been and will continue to be
an important source of news, sports, information, advice and entertainment for
Hispanics.

ATTRACTIVE PROFILE OF HISPANIC CONSUMERS. The demographic profile of the
Hispanic audience makes it attractive to advertisers. We believe the larger size
of 3.5 persons per household compared to the general public's average of 2.7
persons per household and younger age of Hispanic households leads Hispanics to
spend more per household on many categories of consumer goods and services. For
example, Hispanic households spend more each year on food to be eaten at home,
children's clothing, footwear, phone services, and laundry and household
cleaning products than the average U.S. household.

INCREASING HISPANIC BUYING POWER. U.S. Hispanic buying power is estimated
at $500 billion in 2001, an increase of 131% since 1990. Hispanics are expected
to spend $965 billion by 2010, an increase of 93%. This increase is five times
the expected growth rate in expenditures by all consumers in the United States.

GROWING USE OF SPANISH-LANGUAGE MEDIA BY ADVERTISERS. Advertising
expenditures to Hispanics grew from $730 million in 1992 to $2.2 billion in
2001, a compound annual growth rate of 13%. Although Hispanic consumers
represent approximately 7% of U.S. consumer spending, advertising targeting
Hispanics represents only 1% of total advertising expenditures. We believe that
the lack of Spanish-language media outlets relative to the size of the Hispanic
population has historically caused the differential between Hispanic consumer
spending and Spanish-language advertising expenditures. With the increasing
media access to this population, we believe advertising expenditures will move
closer towards parity with Hispanic consumer spending. We also believe that
advertisers who re-direct a portion of their English-language budgets to
Spanish-language media are able to increase overall audience reach without
incurring additional cost.

Furthermore, we believe that advertisers have found Spanish-language radio
advertising to be a particularly effective means to reach the growing Hispanic
audience. As a result, approximately 26% of Hispanic advertising expenditures in
2001 were directed to radio, a substantially higher percentage than radio's
overall share of national advertising expenditures.

OUR BUSINESS STRATEGY

Our strategy is to provide a leading national Spanish-language broadcast
network alternative to the major Spanish-language television networks. To this
end, our business strategy is to:

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CREATE POPULAR, NATIONAL, HIGH-IMPACT PROGRAMMING. Radio Unica's
programming is differentiated from other radio groups by its focus on topics and
issues relevant to today's Hispanic audience, its strong line-up of top Hispanic
personalities and its national reach. Radio Unica takes advantage of its
management's established relationships with talent, built over numerous years of
industry experience, to secure top personalities and to create high-impact
programming. In addition, management draws upon its expertise and established
track record of having created some of the well-received Spanish-language
television programs, including the Univision programs SABADO GIGANTE and
CRISTINA. We believe that our access to talent and the programming expertise of
our senior management will continue to serve as a strong competitive advantage
in attracting advertisers and listeners.

FOSTER STRONG BRAND IDENTITY. We continue to build a strong brand identity
for our radio stations and network by promoting the Radio Unica name on-air,
using music that listeners associate with our radio stations and programs and by
engaging in a wide array of marketing and promotional activities. Our marketing
strategy includes personal appearances by on-air personalities, promotional
tie-ins with sporting events covered on our network and advertising on
Spanish-language television and billboards and in Spanish-language print media.
We believe a strong brand identity will allow us to retain and increase our
listening audience, continue to grow our advertiser base, and attract and retain
top talent.

FOCUS ON THE NEWS/TALK RADIO FORMAT. We will continue to focus on the
news/talk radio format, which has broad listener appeal. News/talk programming
typically allows twice as many minutes of commercials per hour as music-based
formats. As a result, the news/talk format permits stations to capture a larger
share of advertising revenue relative to audience share. We believe that a
news/talk format is a more effective advertising medium than a music based
format, since the audience is actively listening and more attentive to the
programming. The news/talk format also enables on-air personalities to mention
the names of their station, program and network more frequently, which promotes
a high degree of name recognition and listener loyalty leading to higher ratings
and higher advertising revenue.

SELL ADVERTISING TO THE TOP 50 SPANISH-LANGUAGE ADVERTISERS. Our sales
strategy is to target the top 50 national Spanish-language advertisers who
collectively purchase the majority of Spanish-language network and national
advertising in the United States. We employ 14 in-house national sales people in
eight sales offices nationwide, as well as approximately 100 local sales people
situated throughout the markets where we own and/or operate stations. Our large,
in-house sales force allows us to maintain better control and accountability
over the sales process. We also believe that our sales force is important in
maintaining relationships with key advertisers and agencies and identifying new
advertisers. The combination of our commitment to pursue the largest
Spanish-language advertisers and our captive sales force has enabled us to
secure many premier national advertisers, including Sears, Wal-Mart, Home Depot,
Chevrolet, Johnson & Johnson, Honda, Miller, Procter & Gamble Moneygram and
Western Union.

MAINTAIN MODERN TECHNOLOGY AND REDUCE OPERATING COSTS. We operate
technologically advanced and automated nationwide production and delivery
systems which provide live programming via satellite to our owned and/or
operated and affiliate stations. At our modern production studios in Miami, we
produce substantially all of our radio programs, commercials and promotional
recordings. We deliver this programming to stations 24 hours a day via satellite
and our computer-based wide-area network. By employing modern technology and
producing and coordinating our programming from a centralized location, we are
able to operate with minimal staffing at our stations, thereby reducing
operating costs and increasing both quality of delivery and efficiency.

OUR EXPANSION STRATEGY

MAXIMIZE NETWORK REACH THROUGH OWNED/OPERATED AND AFFILIATE STATIONS. We
currently own and/or operate radio stations in the top 10 Hispanic markets and
in 4 other top 25 Hispanic markets. Our owned and operated stations reach
markets where approximately 63% of the Hispanic audience resides and our network
(including affiliates) reaches markets where approximately 80% of the Hispanic
audience resides. We seek to enter into agreements with affiliate stations in
smaller, less concentrated Hispanic markets so as to broaden the reach of our
network and increase its appeal to national advertisers while reducing the
amount of capital required to do so.

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PURSUE STRATEGIC INFRASTRUCTURE UPGRADES. We continue to pursue signal and
other operational upgrades at our existing stations that will allow us to
enhance our market coverage. We are currently pursuing or in the process of
upgrading our radio stations in New York, Dallas, San Francisco, and Sacramento.
By expanding our market coverage at existing and acquired stations, we believe
we can further increase the Radio Unica audience and enhance the value of our
radio stations.

PROGRAMMING

Radio Unica's network programming is broadcast 24 hours a day, seven days a
week and is designed to appeal to the general Hispanic audience, including
Hispanics located in different geographic regions of the United States and from
varying cultural backgrounds. The news/talk radio format is a proven format used
by several major networks, including ABC Radio Networks, Westwood One and
Premiere Radio Networks. The share of the audience listening to stations with
this format has increased over the last several years and news/talk is one of
the most popular formats in the United States.

Radio Unica currently produces 19 hours per day of live and first-run
programming, Monday through Friday, at our network production studios in Miami.
Our daily schedule features programs hosted by celebrities, many of whom also
host or appear on popular shows on the Univision and Telemundo networks. These
on-air personalities create radio shows exclusively for Radio Unica.

Our programming includes:

ARRIBA CON PAUL. Hosted by Paul Bouche, this show is a one-of-a-kind fun
and interactive talk show providing listeners with sharp wit, lively topics,
laughter, interviews with celebrities, and much more. Paul Bouche is a 10-year
veteran of Spanish-language radio and television, show host, producer and TV
executive. Besides his on-air experience, Paul Bouche has performed as a
stand-up comedian in numerous clubs throughout the United States and Latin
America.

BUENOS DIAS PAIS. Hosted by Hugo "El Gordo" Cadelago, this talk show is a
daily, interactive variety program devoted to news, daily topic discussions,
comedy segments, celebrity gossip and interviews. The show also features
extensive news coverage with Radio Unica's News Director and veteran television
reporter Ricardo Brown.

DRA. ISABEL. This advice program hosted by Dr. Isabel Gomez-Bassols focuses
on such topics as family issues and personal relationships. Dr. Isabel
Gomez-Bassols is a noted psychologist and educator and makes frequent
appearances on such popular television shows as THE BOLD AND THE BEAUTIFUL.

UNICA EN DEPORTES. This sports talk show hosted by Jorge Ramos features
sports, talk, news and interviews appealing to Hispanic audiences. Jorge Ramos
served as sports anchor for Telemundo from 1994 to 2000 and in his career has
broadcast four World Cups. Joining Jorge is an experienced, well-known team of
sports personalities. We have recently added Hugo Sanchez to our sports team.
Mr. Sanchez was the top ranked Mexican soccer player for 20 years and is well
regarded by Mexican soccer fans.

SPORTING EVENTS. During our major sporting events, we broadcast live,
play-by-play coverage and daily programs and interviews with players and
participants. We have obtained the exclusive United States Spanish-language
radio broadcasting rights for a number of popular sporting events including the
following:

SUMMER OLYMPICS 2004 AND 2008. Radio Unica has acquired the
Spanish-language radio broadcast rights in the United States for the 2004 Summer
Olympics and has a right of first refusal for the 2008 games. The Olympic games
are the highest profile sporting event in the world. Radio Unica's broadcasts
highlight soccer, boxing and other events and athletes of interest to Hispanics.
We also utilized the universal awareness of the Olympics to promote our brand
and attract new listeners.

COPA AMERICA 2001 AND 2003. Copa America is the most popular international
soccer event for Hispanics after the World Cup and is held every other year.
This event is the oldest international soccer tournament and is a forum for
Latin Americans to listen to their teams compete against neighboring countries.
With South America

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and Mexico participating, this event offers the soccer fan the opportunity to
listen to some of the best soccer stars playing for their national teams.

COPA ORO 2002, 2004 AND 2006. Copa Oro tournaments are held in the
alternate years from Copa America. Similar to Copa America, Copa Oro is an
international soccer event with countries in North and Central America
participating.

WORLD CUP 2002 QUALIFYING MATCHES. The World Cup is the most popular soccer
event in the world. These matches are of interest to the Hispanic audience since
they pit Latin American countries against each other in the qualifying rounds in
their quest for a World Cup trophy.

MEXICAN SOCCER. Radio Unica has the U.S. Spanish-language radio rights to
some of the most popular Mexican soccer league team games and the Mexican
national team games.

ADVERTISING REVENUE

Substantially all of our revenue is generated from the sale of network,
national and local advertising on our radio stations. The classes of advertising
are described in the following table:

CLASSES OF RADIO ADVERTISING

Sales of network and national advertising are made by our in-house national
sales force located in eight regional sales offices. Sales of local advertising
are made by our sales staffs located at each of our stations. We do not use
third party national representatives or "rep" firms. As a result, we have more
control over and greater accountability from our sales force. We also believe
that our sales force is important in maintaining relationships with key
advertisers and agencies and identifying new advertisers. We do not pass along
any of our network advertising revenue or pay cash compensation to our
affiliates.

Advertising rates charged by a radio station or network are based primarily
on the station's or network's ability to attract listeners and on the
attractiveness to advertisers of the station's or the network's listener
demographics. Rates vary depending upon a program's ability to increase sales
and popularity among an advertiser's target audience, the number of advertisers
seeking similar time slots, and the availability of alternative media in the
market. Radio advertising rates are generally highest during the morning and
afternoon drive-time hours.

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RADIO UNICA NETWORK

Radio Unica's 16 owned and/or operated AM stations in 14 markets and
affiliate stations comprise a network that reaches approximately 80% of the
Hispanic population. We are the only national Spanish-language AM radio network
available to advertisers targeting the fast growing Hispanic market. Radio
Unica's network is differentiated from other Spanish-language radio broadcasters
by its ability to deliver uniform programming to the national Hispanic audience
over a 24 hour period. We believe that advertisers benefit from this delivery as
it allows them to reach a national audience in a consistent and controlled
manner. With one contract, advertisers can reach a large portion of the Hispanic
population at a cost lower than if they had to purchase advertising separately
in each market. Radio Unica offers advertisers the opportunity to associate
their advertising message with a particular national program that will
consistently be aired at a specific time. No other Spanish-language radio
broadcasters have this capability on a national level.

ADVANTAGES TO RADIO UNICA. Although our owned and/or operated stations
reach markets where approximately 63% of Hispanics reside, through our
affiliates we are able to increase our reach to approximately 80%. Our
affiliates have allowed us to cost-effectively expand our reach and appeal to
advertisers. Affiliates allow us to enter a market without the capital
expenditures that would be required in buying or building a station. Many of our
affiliates have branded themselves as Radio Unica stations which helps build
brand awareness and listener loyalty. Additionally, the network enables us to
share the cost of programming over our owned and operated stations. We believe
that this sharing of expenses allows us to invest a larger amount in programming
compared to our competitors.

ADVANTAGES TO AFFILIATES. Affiliate stations benefit by gaining access to
Radio Unica's high-impact programming, including programs hosted by some of the
most popular Hispanic personalities and live sporting events, which would be
prohibitively expensive to create or purchase on their own. In addition,
affiliates benefit from our national advertising campaigns and promotional
materials and access to our sales, marketing and operating expertise.

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RADIO STATIONS

The following table sets forth certain information concerning the stations
owned and/or operated by the Company and their respective markets:

OWNED STATIONS

LOS ANGELES. Radio Unica's radio station KBLA(AM), broadcasting on 1580
kHz, serves the Los Angeles market, which has a population of approximately 16.9
million, of which approximately 7.0 million or 41.4% are Hispanic. In July 1998,
Radio Unica acquired substantially all of the assets used in the operation of
KBLA for a purchase price of approximately $21 million. The purchase of KBLA was
financed primarily through the proceeds from our senior discount notes. KBLA is
licensed at 50,000 watts during the daytime. KBLA's transmitter site is located
in Los Angeles and enables this station to reach substantially all of the Los
Angeles market.

NEW YORK. Radio Unica's radio station WWRU(AM), broadcasting on 1660 kHz in
the expanded band, serves the New York City market. The New York City market has
a population of approximately 20.1 million, of which approximately 4.0 million
or 19.2% are Hispanic. In January 1999, Radio Unica acquired WWRU, along with
WJDM, KAHZ, Dallas/Fort Worth, and KIDR, Phoenix for a purchase price of
approximately $30 million. The purchase of WWRU and WJDM, KAHZ and KIDR were
financed primarily through the proceeds from our senior discount notes. WWRU is
licensed at 10,000 watts during the daytime. WWRU's transmitter is located in
Carlstadt, New Jersey and enables this station to reach substantially all of the
New York City market during the day. We have received Federal Communications
Commission ("FCC") approval to upgrade our night signal in

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New York City, which will provide us with significantly improved market coverage
at night. We expect to complete the upgrade before June 2002.

In connection with the acquisition of WWRU, Radio Unica also acquired
substantially all the assets used in the operation of WJDM(AM), broadcasting on
1530 kHz. WJDM is licensed at 1,000 watts during the daytime. Broadcast time on
this station is currently sold to a third party. WJDM's transmitter is located
in Elizabeth, New Jersey. The Company currently operates WWRU pursuant to
special temporary authority ("STA") pending the submission by the Company of an
application for license to cover its outstanding construction permit. The FCC
first granted the STA on April 28, 1995 for a period of six months and has
granted successive six months extensions. The Company's permit to construct
WWRU, which was modified in 1999 to authorize improvement of the station's
nighttime operations, expires December 6, 2003. Upon completion of the new
nighttime facilities of WWRU, the Company will file a license application with
the Commission. The Company cannot predict when the FCC will grant the license
application, once it is filed. The license, when granted will contain a
condition that will require the Company too relinquish within five years the
license for either WWRU or WJDM.

MIAMI. Radio Unica's radio station WNMA(AM), broadcasting on 1210 kHz,
serves the Miami market. This market has a population of approximately 4.2
million, of which approximately 1.7 million or 41.1% are Hispanic. In May 1998,
Radio Unica acquired WNMA for approximately $9 million. The purchase of WNMA was
financed primarily through the proceeds from the issuance of preferred stock as
well as the issuance of notes payable to one of our stockholders, Warburg,
Pincus Ventures. WNMA is licensed at 47,000 watts during the daytime. WNMA's
transmitter site is located in Miami Springs, Florida and enables this station
to reach substantially all of the Miami market. During 2001 we completed a
signal upgrade that extended the signal beyond the Miami market to Broward
County and increased our coverage of South Florida's Hispanic population by
approximately 10%.

In connection with the acquisition of WNMA, the Company acquired WJCC(AM),
broadcasting on 1700 kHz. Broadcast time on this station has been sold to a
third party. Based on the terms of the license for WJCC, Radio Unica must
relinquish the license of either WNMA or WJCC by May 13, 2003.

CHICAGO. Radio Unica's radio station WNTD(AM), broadcasting on 950 kHz,
serves the Chicago market. This market has a population of approximately 9.4
million, of which approximately 1.6 million or 17.1% are Hispanic. In May 1999,
Radio Unica acquired WNTD for approximately $16.8 million. The purchase of WNTD
was financed through the proceeds from our senior discount notes as well as
proceeds from borrowings under our revolving credit facility. WNTD is licensed
at 1,000 watts during the daytime. WNTD's transmitter is located in Chicago,
Illinois and enables this station to reach substantially all of the Chicago
market.

HOUSTON. Radio Unica's station KXYZ(AM), broadcasting on 1320 kHz, serves
the Houston market. This market has a population of approximately 5.3 million,
of which approximately 1.6 million or 29.7% are Hispanic. The purchase of KXYZ
was financed primarily through the proceeds from our senior discount notes.
Prior to the acquisition, the station was operated for approximately 13 years
with a Spanish-language format. KXYZ is licensed at 5,000 watts during the
daytime. KXYZ's transmitter is located in Pasadena, Texas and enables this
station to reach substantially all of the Houston market.

SAN FRANCISCO/SAN JOSE. Radio Unica's station KIQI(AM), broadcasting on
1010 kHz, serves the San Francisco/San Jose market. This market has a population
of approximately 6.9 million, of which approximately 1.4 million or 19.6% are
Hispanic. In April 1998, Radio Unica acquired Oro Spanish Broadcasting, Inc.,
the parent of the licensee of KIQI, for approximately $12 million. The purchase
of KIQI was financed primarily through the proceeds from the issuance of
preferred stock, the issuance of notes payable to the former owners of KIQI and
the issuance of notes payable to one of our stockholders, Warburg, Pincus
Ventures. Prior to the acquisition, Oro Spanish Broadcasting, Inc. operated the
station for approximately 17 years with a Spanish-language format. KIQI is
licensed at 10,000 watts during the daytime. KIQI's transmitter is located in
Oakland, California and enables this station to reach substantially all of the
San Francisco/San Jose market during the day. We are pursuing an upgrade to
improve the signal of the station by moving our Sacramento station to the
northeast.

DALLAS/FORT WORTH. Radio Unica's station KAHZ(AM), broadcasting on 1360
kHz, serves the Dallas/Fort Worth market. This market has a population of
approximately 6.0 million, of which approximately 1.3 million or 22.0% are
Hispanic. KAHZ is licensed at 5,000 watts during the daytime. KAHZ's transmitter
is located in Fort Worth, Texas and enables this station to reach a significant
portion of the Dallas/Forth Worth market. We

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are in the process of completing a signal upgrade that will provide us with
significantly improved market coverage. We expect to complete the upgrade before
June 2002.

SAN ANTONIO. Radio Unica's station KZDC(AM), broadcasting on 1250 kHz,
serves the San Antonio market. This market has a population of approximately 2.1
million, of which approximately 1.2 million or 55.4% are Hispanic. In June 2000,
Radio Unica acquired KZDC from Lotus Texas Ltd for approximately $1.8 million.
The purchase of KZDC was financed through the net proceeds from the initial
public offering. Prior to the acquisition, Radio Unica operated the station
under a local marketing agreement with Texas Lotus Ltd. KZDC is licensed at
5,000 watts during the daytime. KZDC's transmitter site is located in San
Antonio, Texas and enables this station to reach substantially all of the San
Antonio market.

PHOENIX. Radio Unica's station KIDR(AM), broadcasting on 740 kHz, serves
the Phoenix market. This market has a population of approximately 4.1 million,
of which approximately 1.0 million or 25.0% are Hispanic. KIDR is licensed at
1,000 watts during the daytime. KIDR's transmitter is located in Phoenix,
Arizona and enables this station to reach substantially all of the Phoenix
market.

McALLEN/BROWNSVILLE. Radio Unica's station KVJY(AM) broadcasting on 840
kHz, serves the McAllen market. This market has a population of approximately
1.0 million, of which approximately 983,000 or 94.8% are Hispanic. In June 2000,
Radio Unica acquired KVJY from El Pistolon Investments, L.P. for approximately
$2.5 million. The purchase of KVJY was financed through the net proceeds from
the initial public offering. From February through May 2000, Radio Unica
operated the station under a local marketing agreement with El Pistolon
Investments, L.P. KVJY is licensed at 5,000 watts during the daytime. KVJY's
transmitter is located in Edinburg, Texas and enables the station to reach
substantially all of the McAllen/Brownsville market.

FRESNO. Radio Unica's station KWRU(AM) broadcasting on 940 kHz, serves the
Fresno market. This market has a population of approximately 1.7 million, of
which approximately 812,000 or 47.6% are Hispanic. In June 2000, Radio Unica
acquired KWRU from Harry Pappas for approximately $7.5 million. The purchase of
KWRU was financed through the net proceeds from the initial public offering as
well as through the issuance of shares of the Company's stock. From December
1999 through June 2000, Radio Unica operated the station under a local marketing
agreement with Harry Pappas. KWRU is licensed at 50,000 watts during the
daytime. KWRU's transmitter is located in Fresno, California and enables the
station to reach substantially all of the Fresno market.

SACRAMENTO. Radio Unica's station KATD(AM) broadcasting on 990 kHz, serves
the Sacramento market. This market has a population of approximately 3.7
million, of which approximately 794,000 or 21.7% are Hispanic. In October 2000,
Radio Unica acquired KATD from Peoples Radio, Inc. for approximately $5.0
million. The purchase of KATD was financed through the net proceeds from the
initial public offering as well as through the issuance of shares of the
Company's stock. KATD is licensed at 5,000 watts during the daytime. KATD's
transmitter is located in Pittsburg, California and enables the station to reach
a significant portion of the Sacramento market. We are pursuing an upgrade to
improve the signal of the station by moving the transmitter site closer to
Sacramento.

DENVER. Radio Unica's station KCUV(AM) broadcasting on 1150 kHz, serves the
Denver market. This market has a population of approximately 3.7 million, of
which approximately 652,000 or 17.7% are Hispanic. In January 2000, Radio Unica
acquired KCUV from Den-Mex LLC for approximately $2.8 million. The purchase of
KCUV was financed through the net proceeds from the initial public offering.
During 1999, Radio Unica operated the station under a local marketing agreement
with Den-Mex LLC. KCUV is licensed at 5,000 watts during the daytime. KCUV's
transmitter is located in Englewood, Colorado and enables the station to reach
substantially all of the Denver market. We have received FCC approval to upgrade
the signal of the station.

TUCSON. Radio Unica's station KQTL(AM) broadcasting on 1210 kHz, serves the
Tucson market. This market has a population of approximately 1.1 million, of
which approximately 347,000 or 31.8% are Hispanic. In August 2000, Radio Unica
acquired KQTL from Cima Broadcasting LLC for approximately $3.3 million. The
purchase of KQTL was financed through the net proceeds from the initial public
offering. From April through July 2000, Radio Unica operated the station under a
local marketing agreement with Cima Broadcasting. KQTL is licensed at 10,000
watts during the daytime. KQTL's transmitter is located in Sahuarita, Arizona
and enables the station to reach substantially all of the Tucson market.

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LOCAL MARKETING AGREEMENTS (OPERATED STATIONS)

SAN DIEGO. From January 1, 2000 through December 31, 2001 the Company
operated station KURS(AM), broadcasting on 1040 kHz, in San Diego pursuant to a
Local Marketing Agreement ("LMA") with Quetzal Bilingual Comm., Inc. Pursuant to
this LMA, the Company operated, and supplied all programming for, this station.
At December 31, 2001 the Company elected not to exercise its option to acquire
the station or extend the LMA.

AFFILIATE STATIONS

Radio Unica has several affiliate radio stations. Under our arrangements
with these stations, they are generally required to carry a minimum of eight
hours per day of our network programming. Currently, our affiliates are
substantially exceeding this minimum, broadcasting an average of 13 hours of our
programming each weekday. Our arrangements typically provide that our
programming will include a certain number of minutes per hour of network
advertising to be sold by us. We do not pass along any of our network
advertising revenue or pay cash compensation to our affiliates. We also provide
our affiliates with marketing, sales and promotional support. The terms of these
arrangements are generally one to two years, but may be terminated earlier for
certain reasons. Some of these arrangements give us a right of first refusal to
buy the station if the station owner offers to sell it.

On January 1, 2002, the Company entered into a three year affiliation
agreement with Uniradio Corp Broadcasting Baja California S.A. de C.V. ("BBC"),
a Mexican company broadcasting on radio station XERCN in Tijuana, Mexico. The
agreement provides the Company with an affiliate serving the San Diego,
California market, the 10th ranked market in the United States in terms of
Hispanic population. The agreement requires BBC to air the Company's network
programming on station XERCN, which reaches substantially all of the San Diego
market. The Company has sought and received permission from the FCC to allow it
to supply programming to station XERCN. The agreement requires the Company to
sell time for national advertising on station XERCN (for the which the Company
is entitled to a sales commission), and to guarantee BBC a minimum of $250,000
per year in national advertising sales for the station.

COMPETITION

Radio broadcasting is a highly competitive business. The financial success
of each of our radio stations depends, to a significant degree, upon our
audience ratings, our share of the overall radio advertising revenue within each
geographic market and the economic health of the market. In addition, our
advertising revenue depends upon the desire of marketers to reach our audience
demographic. Our radio stations compete for audience share and advertising
revenue directly with other FM and AM radio stations and with other media within
their respective markets, such as newspapers, broadcast and cable television,
magazines, billboard advertising, transit advertising, and direct mail
advertising. Some of these radio stations and networks also broadcast
Spanish-language talk radio. Our primary competitors are Univision, Telemundo,
Hispanic Broadcasting Corporation, Entravision Communications Corp. and Spanish
Broadcasting Systems Inc. Many of these entities are larger and have
significantly greater resources than Radio Unica. Additionally, our Arbitron
ratings for many of our stations are below the ratings of our competitors. If a
competing station converts to a format similar to that of one of our stations,
or if one of our competitors strengthens its operations, our stations could
suffer a reduction in ratings and advertising revenue. The audience ratings and
advertising revenue of our individual stations are subject to change and any
adverse change in a particular market could have a material adverse effect on
our operations. There is no ranking of Spanish-language radio networks.

The Telecommunications Act of 1996 facilitates the entry of other radio
broadcasting companies into the markets in which we operate or may operate in
the future, some of which may be larger and have more financial resources than
Radio Unica. In addition, certain of our stations compete, and in the future
other stations of Radio Unica may compete, with combinations of stations
operated by a single operator. There can be no assurance that our radio stations
will be able to develop, maintain or increase their current audience ratings and
radio advertising revenue.

In addition to the competition faced by our radio stations, we face
competition from other providers of radio programs, including other radio groups
that offer Spanish-language programming. Our network also competes with other
radio networks and individual radio stations for the services of talk show
personalities. Competition from existing and new radio networks may limit the
growth and profitability of our network.

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SEASONALITY

The Company's revenues and cash flow are expected to be typically lowest in
the first calendar quarter. Seasonal fluctuations are common in the radio
broadcasting industry and are due primarily to fluctuations in consumer
spending.

PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS

In the course of its business, the Company uses various trademarks, names
and service marks, including its logos, in its advertising and promotions. The
Company believes the strength of its trademarks, trade names and service marks
are important to its business and intends to continue to protect and promote its
marks as appropriate. The Company does not hold or depend upon any material
patent, government license, franchise or concession, except the broadcast
licenses granted by the FCC.

FEDERAL REGULATION OF RADIO BROADCASTING

The ownership, operation and sale of radio stations are subject to
regulation by the FCC. The FCC regulates radio broadcast stations under
authority granted by the Communications Act of 1934, as amended (the
"Communications Act"). Among other things, the FCC:

- assigns frequency bands for broadcasting;

- determines the particular frequencies, locations and power of
stations;

- issues, renews, revokes and modifies station licenses;

- determines whether to approve changes in ownership or control of
station licenses;

- regulates equipment used by stations;

- imposes regulations and takes other action to prevent harmful
interference between stations;

- adopts and implements regulations and policies that directly or
indirectly affect the ownership, management, programming, operation
and employment practices of stations; and

- has the power to impose penalties for violations of its rules or the
Communications Act.

In February 1996, Congress enacted the Telecommunications Act of 1996 to
amend the Communications Act.

The Telecommunications Act, among other measures, directed the FCC to:

- eliminate the national radio ownership limits;

- liberalize the local radio ownership limits as specified in the
Telecommunications Act;

- issue broadcast licenses for periods of up to eight years; and

- eliminate the opportunity for the filing of competing applications
against broadcast license renewal applications.

In the Balanced Budget Act of 1997, Congress authorized the FCC for the
first time to conduct auctions for the awarding of construction permits for
commercial radio and television stations. To settle already pending mutually
exclusive applications without auctions, Congress directed the FCC to waive
existing rules as necessary. The FCC has begun to implement these provisions.
While Radio Unica is not a participant in any implementation proceeding, this
recent action should result in the awarding of construction permits for
additional radio stations, some of which might compete with Radio Unica's radio
stations.

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LICENSE GRANTS AND RENEWALS. The Communications Act provides that a
broadcast license may be granted to an applicant if the grant would serve the
public interest, convenience and necessity, subject to limitations referred to
below. In deciding whether to grant a license, the FCC considers the legal,
technical, financial and other qualifications of the applicant, including
compliance with the Communications Act's limitations on alien ownership,
compliance with various rules limiting common ownership of broadcast, cable and
newspaper properties, and the "character" of the licensee and those persons
holding "attributable" interests in the licensee. Broadcast licenses are granted
for specific periods of time and, upon application, are renewable for additional
periods of time. The Telecommunications Act amended the Communications Act to
provide that broadcast licenses be granted, and thereafter renewed, for
successive terms of up to eight years each, if the FCC finds that the public
interest, convenience, and necessity would be served by the renewal .

Generally, the FCC renews broadcast licenses without a hearing. The
Telecommunications Act requires the FCC to grant an application for renewal of a
broadcast license if:

- the station has served the public interest, convenience and necessity;

- there have been no serious violations by the licensee of the
Communications Act or the rules and regulations of the FCC; and

- there have been no other violations by the licensee of the
Communications Act or the rules and regulations of the FCC which,
taken together, would constitute a pattern of abuse.

Accordingly, the FCC does not entertain competing applications against
broadcast license renewal applications. The Telecommunications Act provides that
if the FCC, after notice and an opportunity for a hearing, decides that the
requirements for renewal have not been met and that no mitigating factors
warrant lesser sanctions, it may deny a renewal application. Only after denying
an application for renewal may the FCC accept applications by third parties to
operate on the frequency of the former licensee. The Communications Act
continues to authorize the filing of petitions to deny against the renewal of
broadcast license applications during particular periods of time following the
filing of renewal applications. Petitions to deny can be used by interested
parties, including members of the public, to raise issues concerning the
qualifications of the renewal applicant.

There are no renewal applications currently pending for any of Radio
Unica's broadcast licenses. Although Radio Unica does not anticipate any
material difficulty in obtaining license renewals for full terms in the future,
however, there can be no assurance that the licenses of each of our stations
will be renewed or will be renewed without conditions or sanctions.

The FCC or its staff may reconsider its renewal of an application during
specified time periods on their own motion or by request of the petitioner, and
the petitioner may also appeal within a certain period actions by the FCC to the
U.S. Court of Appeals. If the FCC does not, on its own motion, or upon a request
by an interested party for reconsideration or review, review a staff grant or
its own action within the applicable time periods, and if no further
reconsideration, review or appeals are sought within the applicable time
periods, an action by the FCC or its staff becomes a "Final Order."

LICENSE ASSIGNMENTS AND TRANSFERS OF CONTROL. The Communications Act
prohibits the assignment of an FCC license or the transfer of control of a
corporation holding such a license without the prior approval of the FCC.
Applications to the FCC for such assignments or transfers are subject to
petitions to deny by interested parties and must satisfy requirements similar to
those for renewal and new station applications, such as the various FCC rules
limiting common ownership of media properties in a given market. Many
transactions involving radio stations provide, as a waivable pre-condition to
closing, that the FCC consent to the transaction has become a "Final Order."

OWNERSHIP RULES. Rules of the FCC limit the number and location of
broadcast stations in which one licensee may have an attributable interest.
"Attributable interests" are discussed in greater detail below. The FCC,
pursuant to the Telecommunications Act, eliminated the previously existing
"national radio ownership rule." Consequently, there now is no limit imposed by
the FCC on the number of radio stations one party may own nationally.

14

The "local radio ownership rule" limits the number of stations in a radio
market in which any one individual or entity may have a control position or
attributable ownership interest. Under the Telecommunications Act, the FCC
revised its rules to set the local radio ownership limits as follows:

- in markets with 45 or more commercial radio stations, a party may own
up to eight commercial radio stations, no more than five of which are
in the same service (AM or FM);

- in markets with 30-44 commercial radio stations, a party may own up to
seven commercial radio stations, no more than four of which are in the
same service;

- in markets with 15-29 commercial radio stations, a party may own up to
six commercial radio stations, no more than four of which are in the
same service; and

- in markets with 14 or fewer commercial radio stations, a party may own
up to five commercial radio stations, no more than three of which are
in the same service, provided that no party may own more than 50% of
the commercial stations in the market.

FCC cross-ownership rules also prohibit one party from having attributable
interests in a radio station and a daily newspaper in the same market and
restrict the number of radio and television stations a party may own in the same
geographic area, although such limits may be waived by the FCC. The "radio
television cross-ownership rule", permits common ownership of up to two
television stations and up to six radio stations or one television station and
seven radio stations in any market where at least 20 independently owned media
voices remain in the market. A party is permitted to own up to two television
stations and up to four radio stations in any market where at least 10 voices
remain after the combination is effected and to own up to two television
stations and one radio station regardless of the number of voices in the market.
Media voices include other radio stations, television stations, daily newspapers
and cable systems but do not include low power radio or low power television
stations. The FCC is presently evaluating its radio/ newspaper cross-ownership
rule. Radio Unica cannot predict whether the FCC will adopt any change in this
rule.

On December 6, 2000, the FCC adopted a Notice of Proposed Rulemaking
seeking comment on whether and how to modify the methods used in counting radio
stations for purposes of applying the multiple and cross-ownership rules. Under
the current rule, the FCC defines a radio market based on overlapping signal
contours. The FCC has requested comment on a number of alternative methods for
defining a radio market, including but not limited to: relying on a commercially
determined market definition service such as Arbitron; counting only those
stations that overlap a certain percentage of the contour of one or more
mutually overlapping stations; and counting only those stations whose contours
overlap or intersect the overlap area of the principal city contours of the
stations whose ownership is being merged. On November 9, 2001, the FCC adopted
an additional Notice of Proposed Rulemaking to examine whether its local radio
ownership rules and policies are adequately protecting the public interest, as
well as to continue consideration of the still-outstanding issues related to
defining the radio market. The FCC has not proposed to apply any changes
retroactively to existing ownership combinations. Radio Unica, however, cannot
predict what, if any, changes will be made by the FCC and cannot predict whether
any such changes will affect Radio Unica's ability to acquire additional radio
stations in the future.

ATTRIBUTION RULES. All holders of attributable interests must comply with,
or obtain waivers of, the FCC's multiple and cross-ownership rules. Under the
current FCC rules, an individual or other entity owning or having voting control
of 5% or more of a corporation's voting stock is considered to have an
attributable interest in the corporation and its stations, except that banks
holding such stock in their trust accounts, investment companies, and certain
other passive interests are not considered to have an attributable interest
unless they own or have voting control over 20% or more of such stock. An
officer or director of a corporation or any general partner of a partnership
also is deemed to hold an attributable interest in the media entity. Since 1984,
whenever a single shareholder holds a majority of the voting stock of a
corporate licensee, the FCC has considered other shareholders of the licensee,
unless they are also officers or directors of the licensee, exempt from
attribution. The FCC repealed this single-majority-shareholder exception to the
attribution of broadcast interests last year, but grandfathered minority
shareholdings acquired before December 14, 2000. Recently, however, the FCC
suspended the repeal of this exception, pending further review. As a result, the
FCC again will consider minority shareholders exempt from its attribution rules,
as long as they are not officers or directors of the licensee, if a single
shareholder holds a majority of the voting stock.

15

Holders of non-voting stock generally will not be attributed an interest in
the issuing entity, and holders of bona fide debt and instruments such as
warrants, convertible debentures, options, or other non-voting interests with
rights to conversion to voting interests generally will not be attributed such
an interest unless and until the conversion is effected.

Under the "Equity/Debt Plus" attribution rule, however, if the holder of an
otherwise non-attributable interest is either (1) a "major program supplier" or
(2) a same-market media entity subject to the broadcast multiple ownership
rules, its interest in a licensee or other media entity will be attributed if
the total interest (aggregating both debt and equity) exceeds 33 percent of the
total asset value of the licensee or media entity. A "major program supplier" is
defined as any entity that provides more than 15 percent of a station's total
weekly broadcast programming hours.

Under current FCC rules, any stockholder of Radio Unica with 5% or more of
the outstanding votes (except for qualified institutional investors, for which
the 20% threshold is applicable), will be considered to hold attributable
interests in Radio Unica. Such holders of attributable interests must comply
with or obtain waivers of the FCC's multiple and cross-ownership rules.
Currently, none of the attributable stockholders, officers or directors of Radio
Unica have any other media interests besides those of Radio Unica that implicate
the FCC's multiple ownership limits except that affiliates of Warburg, Pincus
Ventures hold interests in several daily newspapers none of which is published
in communities served by Radio Unica stations.

The FCC will consider a radio station providing programming and sales on
another local radio station pursuant to a local marketing agreement to have an
attributable ownership interest in the other station for purposes of the FCC's
radio multiple ownership rules. In particular, a radio station is not permitted
to enter into a local marketing agreement giving it the right to program more
than 15% of the broadcast time, on a weekly basis, of another local radio
station which it could not own under the FCC's local radio ownership rules.
Same-market local marketing agreements are also subject to the FCC's prohibition
against common ownership of a radio station and a local daily newspaper.

ALIEN OWNERSHIP LIMITS. Under the Communications Act, broadcast licenses
may not be granted, transferred or assigned to any corporation of which more
than one-fifth of the capital stock is owned of record or voted by aliens, who
consist of non-U.S. citizens or entities or their representatives or foreign
governments or their representatives or by foreign corporations. Where the
corporation owning the license is controlled by another corporation, the parent
corporation cannot have more than one-fourth of its capital stock owned of
record or voted by aliens, if the FCC finds it in the public interest to refuse
or revoke the license. The FCC has issued interpretations of existing law under
which these ownership restrictions in slightly modified form apply to other
forms of business organizations, including general and limited partnerships. The
FCC also prohibits a licensee from continuing to control broadcast licenses if
the licensee otherwise falls under alien influence or control in a manner
determined by the FCC to be in violation of the Communications Act or contrary
to the public interest.

PROGRAMMING REQUIREMENTS. While the FCC has relaxed or eliminated many of
its regulatory requirements related to programming and content, radio stations
are still required to broadcast programming responsive to the problems, needs
and interests of the stations' service areas and must comply with various rules
promulgated under the Communications Act that regulate political broadcasts and
advertisements, sponsorship identifications, indecent programming and other
matters. Failure to observe these or other FCC rules can result in the
imposition of monetary forfeitures, in the grant of a "short" (less than full
term) license term or, where there have been serious or a pattern of violations,
license revocation. The FCC also has imposed equal employment opportunity rules
on licensees. Under recently revised equal employment opportunity rules,
broadcast licensees, such as Radio Unica were required to not discriminate in
hiring practices, to file certain employment reports annually and at other
times, to certify compliance with the rules, and to conduct "broad outreach" in
their recruiting efforts by widely disseminating information regarding job
openings. On January 16, 2001, the United States Court of Appeals for the D.C.
Circuit found unconstitutional and vacated the revised equal employment
opportunity rules. In light of the court's opinion, the FCC suspended its equal
employment opportunity outreach program rules while it considers proposed new
outreach rules designed to comply with the court's decision. Broadcast
licensees, such as Radio Unica, however, still must afford equal opportunity in
employment to all qualified persons.

16

AGREEMENTS WITH OTHER BROADCASTERS. Over the past several years a
significant number of broadcast licensees, including Radio Unica, have entered
into cooperative agreements with other stations in their markets. One typical
example is a local marketing agreement between two separately or co-owned
stations, whereby the licensee of one station programs substantial portions or
all of the broadcast day on the other licensee's station, subject to ultimate
editorial and other controls being exercised by the latter licensee, and sells
advertising time during such program segments for its own account. The FCC has
held that local marketing agreements do not per se constitute a transfer of
control and are not contrary to the Communications Act provided that the
licensee of the station maintains ultimate responsibility for and control over
of its broadcast station. As is the case with Radio Unica in certain
circumstances the local marketing agreement is entered into in anticipation of
the sale of the station, with the proposed acquirer providing programming for
the station while the parties are awaiting the necessary regulatory approvals to
the transaction.

FCC rules also prohibit a radio licensee from simulcasting more than 25% of
its programming on other radio stations in the same broadcast service (i.e.,
AM-AM), whether it owns both stations or operates one or both through a LMA,
where such stations serve substantially the same geographic area as defined by
the stations' principal community contours. One exception to the simulcast rule
permits unlimited simulcasting on an expanded band AM station of the programming
of a corresponding commonly owned non-expanded band AM station in the same
market. Radio Unica formerly took advantage of the FCC's exception to the
general rule for simulcasting on an expanded band station (WJCC) in order to
simulcast in Miami.

LOW POWER RADIO BROADCAST SERVICE. On January 20, 2000, the FCC adopted
rules creating a new, low power FM radio service. These rules became effective
on April 17, 2000. This new radio service consists of two classes of low power
FM stations: one class with a maximum power of 100 watts that could reach an
area with a radius of approximately three and a half miles; and another with a
maximum power level of 10 watts that could reach an area with a radius of one to
two miles. This new service will be exclusively noncommercial, and the stations
will operate throughout the FM band. Existing licensees, like Radio Unica, are
prohibited from owning or having a relationship with these new low power FM
radio stations. In December 2000, the FCC announced the first group of
noncommercial educational applicants that are eligible for new low power FM
radio licenses. Pursuant to legislation enacted by the 106th Congress, these
applicants currently are only eligible for licenses if the low power FM stations
fully protect full service FM and FM translator stations authorized on
third-adjacent channels. Implementation of this low power radio service will
provide an additional audio programming service that could compete with Radio
Unica's stations for listeners.

PROPOSED REGULATORY CHANGES. The Congress and the FCC have under
consideration, and may in the future consider and adopt, new laws, regulations
and policies regarding a wide variety of matters that could, directly or
indirectly:

- affect the operation, programming, technical requirements, ownership
and profitability of Radio Unica and its radio broadcast stations;

- result in the loss of audience share and advertising revenues of Radio
Unica's radio broadcast stations;

- affect the ability of Radio Unica to acquire additional radio
broadcast stations or finance such acquisitions;

- affect cooperative agreements and/or financing arrangements with other
radio broadcast licensees; or

- affect Radio Unica's competitive position in relationship to other
advertising media in its markets.

Such matters include, for example:

- changes to the license, authorization and renewal process;

- proposals to revise the FCC's equal employment opportunity rules in
response to the recent action by the United States Court of Appeals
for the D.C. Circuit and other matters relating to minority and female
involvement in broadcasting;

- proposals to alter the benchmark or thresholds for attributing
ownership interest in broadcast media;

17

- proposals to change rules or policies relating to political
broadcasting;

- changes to technical and frequency allocation matters, including those
relative to the implementation of digital audio broadcasting on both a
satellite and terrestrial basis;

- proposals to restrict or prohibit the advertising of beer, wine and
other alcoholic beverages on radio;

- changes in the FCC's multiple ownership, alien ownership and
cross-ownership policies; and

- proposals to limit the tax deductibility of advertising expenses by
advertisers.

Although Radio Unica believes the foregoing discussion is sufficient to
provide the reader with a general understanding of all material aspects of FCC
regulations that affect Radio Unica, it does not purport to be a complete
summary of all provisions of the Communications Act or FCC rules and policies.
Reference is made to the Communications Act, FCC rules, and the public notices
and rulings of the FCC for further information.

EMPLOYEES

As of December 31, 2001, the Company employed approximately 340 full-time
employees. As of such date, none of the Company's employees were represented by
unions. Management believes that its relations with its employees are good.

ITEM 2. PROPERTIES

The Company's corporate headquarters is located in Miami, Florida. The
types of properties required to support each of the Company's owned and operated
stations include land, office space, broadcasting studios and towers where
broadcasting transmitters and antenna equipment are located. The Company leases
space in the building housing its corporate headquarters under a lease expiring
in 2008. The land, broadcasting studios and office space of the Company's owned
and operated stations are located in leased facilities with lease terms expiring
at various dates through December 2023.

The Company owns the transmitter, building and equipment and, in certain
markets, the building and land for each of its owned and operated stations. The
transmitter sites for the Company's stations are material to the Company's
overall operations. Management believes that the Company's properties are in
good condition and are suitable for its operations, however, the Company
continually seeks opportunities to upgrade its properties.

18

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the directors
and executive officers of the Company and certain key employees of Radio Unica
Network, Inc.

19

JOAQUIN F. BLAYA. Mr. Blaya has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since August 1997. From 1995 through
1996, Mr. Blaya served as the President of Solomon International Latino, the
Latin American division of Solomon International Enterprises, an international
telecommunications company. From 1992 through 1995, Mr. Blaya was the President,
Chief Executive Officer and a member of the Board of Directors of Telemundo, the
second largest U.S. Spanish-language television network. Prior to that, Mr.
Blaya was employed by Univision since 1971 in various positions, the latest
being President and a member of Univision's Board of Directors.

JOSE C. CANCELA. Mr. Cancela has been President of the Company since September
1998. He initially joined the Company in July 1998 serving as President,
Network. From 1992 through 1998, Mr. Cancela served as Executive Vice President
of Telemundo, responsible for the overall management of Telemundo's owned and
operated television stations in Puerto Rico and Miami. From 1990 to 1992, Mr.
Cancela was the Vice President of the Univision Southwest Station Group.

STEVEN E. DAWSON. Mr. Dawson has been Chief Financial Officer, Executive Vice
President, Secretary and a Director of the Company since August 1997. From 1991
through 1997, Mr. Dawson was employed by Telemundo in several positions, the
most recent being Vice President, Finance and Controller. Prior to that, Mr.
Dawson was employed at Coopers & Lybrand since 1986. Mr. Dawson is a Certified
Public Accountant.

ANDREW C. GOLDMAN. Mr. Goldman has been a Director and Executive Vice President,
Business Affairs of the Company since August 1997. Mr. Goldman served in
different capacities for Univision from 1981 to 1993 including as Executive Vice
President and President of Galavision. Prior to joining Univision, Mr. Goldman
was the Senior Vice President of Marketing at Teleprompter Corporation. Mr.
Goldman has served as President and Director of Cable Television Administration
and Marketing Society (CTAM), and as Founder and Director of the Cable
Advertising Bureau (CAB).

BLAINE R. DECKER. Mr. Decker has served as the Company's Executive Vice
President, Network Sales since October 1997. He was previously employed by
KWHY-TV Los Angeles as General Sales Manager from November 1995 through October
1997. From February 1984 through February 1995, Mr. Decker was employed by
Univision as Senior Vice President, Network Sales and in other management
positions. Prior to joining Univision, Mr. Decker was employed by Arbitron
Ratings Company as Vice President of Sales and Marketing from January 1980
through February 1984.

OMAR MARCHANT. Mr. Marchant has served as Radio Unica Network, Inc.'s Vice
President, Programming and as Creative Director since September 1997. Mr.
Marchant has been employed in various media-related capacities including TV
host, radio disc jockey, radio director, producer and creator of jingles and
producer of TV specials for the Latin and general market. Additionally, Mr.
Marchant served as Senior Vice President and Creative Director for Telemundo
from June 1992 through July 1994 and as Vice President and Director of
Promotions and Special Events or in other capacities for Univision from
September 1972 through July 1994.

ADRIANA GRILLET. Ms. Grillet has served as Radio Unica Network, Inc's Vice
President of Promotions, Affilliate Relations and Community Affairs since
January 2001. From August 1997 through December 2000 Ms. Grillet served as Radio
Unica Network, Inc.'s Vice President, Affiliate Relations. Ms. Grillet had
previously served as Director of Affiliate Relations for Caracol (Latino
Broadcasting Company) from April 1996 through July 1997 and CBS Americas from
February 1992 through April 1996. From 1992 through 1996 Ms. Grillet also served
as a program production consultant at WADO-NY and from 1988 through 1992 as
Senior Program Producer.

ROY PRESSMAN. Mr. Pressman has served as Radio Unica Network, Inc.'s Vice
President, Engineering since December 1997. Mr. Pressman has over 20 years of
experience in building and managing radio station facilities. From August 1997
to December 1997, Mr. Pressman served as Director of Engineering at Clear
Channel Communications, Inc. ("Clear Channel"). He was employed as Vice
President, Engineering at Paxson Communications Corp., since acquired by Clear
Channel, from August 1993 to July 1997. Prior to that, Mr. Pressman was employed
as Director of Engineering at Gilmore Broadcasting, Inc.

20

MANUEL BORGES. Mr. Borges has served as Vice President of Finance since February
2000. From July 1998 through January 2000, Mr. Borges served as Director of
Finance. From October 1992 through July 1998, Mr. Borges was employed at
PriceWaterhouseCoopers LLP where he held several positions, the most recent
being Manager in the Business Assurance practice. Mr. Borges is a Certified
Public Accountant.

LEONARD S. COLEMAN JR. Mr. Coleman, a Director of the Company since November 18,
1999, has served as Senior Advisor of Major League Baseball since 1999. From
1994 to 1999, Mr. Coleman was president of the National League of Major League
Baseball. He previously served in the New Jersey government cabinet as
Commissioner of Energy and as Commissioner of the New Jersey Department of
Community Affairs. Mr. Coleman also currently serves on the Board of Directors
of the Omnicom Group, H.J. Heinz Company, Cendant Corporation, Owens Corning and
New Jersey Resources. He is also a director of the Advisory Board of the Martin
Luther King, Jr. Center for Non-Violent Social Change; The Metropolitan Opera;
The Schumann Fund; the Children's Defense Fund and Seton Hall University. Mr.
Coleman is also Chairman of the Jackie Robinson Foundation.

THOMAS P. MARTIN. Mr. Martin, a Director of the Company since November 2001, is
President of Circle Advisors, Inc. a 25 year old firm specializing in executive
compensation and benefits where he has been employed since 1982.

SIDNEY LAPIDUS. Mr. Lapidus, a Director of the Company since September 1998,
is a General Partner of Warburg Pincus & Co.("WP") and a Managing Director
and Member of E.M. Warburg Pincus & Co. LLC ("EMLLC"), where he has been
employed since 1967. Mr. Lapidus is also a director of Lennar Corp., Knoll,
Inc., Information Holdings Inc. and several private companies.

DAVID E. LIBOWITZ. Mr. Libowitz, a Director of the Company since December 2000,
is a General Partner at WP and a Member and Managing Director of EMLLC, where he
has been employed since July 1991. He is currently a director of Information
Holdings Inc. and several privately held companies.

JUSTIN SADRIAN. Mr. Sadrian, a Director of the Company since December 2001 is an
Associate with Warburg Pincus LLC, where he has been employed since 2000. Prior
to joining Warburg, he was employed at J.P. Morgan & Co. from 1995 to 1999 in
their Investment Banking and Merchant Banking Groups. Mr. Sadrian is also a
director of Imark Communications, LLC, and American Show Management, Inc.

PART II

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

MARKET PRICE FOR COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "UNCA". The following table sets forth for the past two years the
high and low closing prices per share as reported by the Nasdaq National Market.

As of March 27, 2002 there were approximately 19 stockholders of record.
The Company believes it has more than 2,000 beneficial owners of its common
stock.

21

DIVIDEND POLICY

The Company has never paid or declared any cash dividends on its common
stock and has no plans to do so in the foreseeable future. The Company currently
intends to retain future earnings, if any, to finance the expansion of its
business. Future dividends, if any, will depend on, among other things, the
Company's results of operations, capital requirements and on such other factors
as the Board of Directors of the Company may, in its discretion, consider
relevant. The Company's 11 3/4% Senior Discount Notes due 2006 have covenants
restricting among other things, the payment of dividends. For the year ended
December 31, 2001, the Company did not declare nor pay any dividends.

INITIAL PUBLIC OFFERING

On October 19, 1999, the Company's first registration statement under the
Securities Act of 1933 was declared effective by the Securities and Exchange
Commission (File No. 333-82561). The offering commenced October 19, 1999 and was
consummated on October 22, 1999. Pursuant to this offering, the Company sold an
aggregate of 6,840,000 shares of its common stock at a price of $16.00 per
share. Pursuant to exercise of an over-allotment option, Warburg, Pincus
Ventures, L.P. ("WPV"), the majority stockholder of the Company, sold 1,026,000
shares of common stock at a price of $16.00 per share. The Company did not
receive any of the proceeds from the sale by WPV. The managing underwriters were
Salomon Smith Barney, Bear Stearns & Co. Inc., Donaldson, Lufkin & Jenrette and
CIBC World Markets. All the shares registered were sold resulting in aggregate
proceeds to the Company of $109,440,000 before the underwriting discount. The
underwriting discount was $1.12 per share for an aggregate of $7,660,800.

The net proceeds received by the Company from the offering were
approximately $99,450,000. In connection with the offering, the Company incurred
an estimated $9,990,000 of expenses, including underwriting discounts of
$7,660,800, and other expenses of the offering of approximately $2,329,200. The
payments were all made to persons who were not directors, officers, 10%
stockholders or affiliates.

From the effective date of the registration statement through December 31,
2001, the net proceeds from the offering have been used for the following
purposes; none of which was paid to persons who were officers, directors, 10%
stockholders or affiliates.

22

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data set forth below as of and for the years ended
December 31, 2001, 2000, 1999, 1998 and 1997, have been derived from the
consolidated financial statements of the Company, which were audited by Ernst &
Young LLP, independent certified public accountants. The selected historical
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements, including the notes thereto, appearing elsewhere in this annual
report.

(1) EBITDA is defined as loss from operations plus depreciation and
amortization.
(2) Adjusted EBITDA is defined as loss from operations plus depreciation and
amortization, stock option compensation expense and LMA termination fee.

23

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

The following discussion and analysis should be read in conjunction with
the accompanying consolidated financial statements, the notes thereto and the
supplemental data included in this annual report.

GENERAL

The Company, incorporated on September 12, 1996 (inception), was organized
for the purpose of producing, broadcasting and distributing Spanish-language
radio programming in the United States. The Company's strategy is to develop its
radio network as a national advertising platform that is attractive to national
advertisers. The network is comprised of owned and operated stations and
affiliated stations. The Company launched its network on January 5, 1998 with 30
affiliated stations and three stations operated under LMAs.

The Company generates revenue from sales of network advertising time and
sales of advertising time on the Company-owned and operated stations ("O&Os").
Advertising rates are, in large part, based upon the network's and each
station's ability to attract audiences in demographic groups targeted by
advertisers. All revenues are stated net of any agency commissions. The Company
also generates revenue from its promotional and merchandising services company,
MASS Promotions, Inc. ("MASS"). The Company recognizes revenue generated by MASS
when the promotional and/or merchandising services are performed.

The Company's operating expenses consist of programming expenses, marketing
and selling costs, including commissions paid to our sales staff, technical and
engineering costs, cost of promotion services and general and administrative
expenses.

The Company's performance is customarily measured by its earnings (loss)
from operations plus depreciation and amortization ("EBITDA"). EBITDA is
presented not as an alternative measure of operating results or cash flow
from operations (as determined in accordance with generally accepted
accounting principles ("GAAP")), but because it is a widely accepted
supplemental financial measure of a company's ability to service debt. The
Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate
this non-GAAP measure in the same fashion. The Company's EBITDA calculation
is not intended to represent cash used in operating activities, since it does
not include interest and taxes and changes in operating assets and
liabilities, nor is it intended to represent the net increase or decrease in
cash, since it does not include cash provided by (used in) investing and
financing activities.

On October 19, 1999, the Company completed an initial public offering
("IPO") of 6,840,000 shares of its common stock at an IPO price of $16.00 per
share. The Company received net proceeds from the IPO of approximately $99.4
million on October 22, 1999. The net proceeds from the IPO were used to repay
the indebtedness under the revolving credit facility, to acquire radio
stations, upgrade existing stations and for general corporate purposes.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

NET REVENUE. Net revenue increased by approximately $7.4 million or 25% to
approximately $37.5 million for the year ended December 31, 2001 from
approximately $30.1 million for the year ended December 31, 2000. The increase
in net revenue relates to increased network and O&Os sales and revenue generated
by promotional and merchandising services associated with MASS.

24

OPERATING EXPENSES. Operating expenses increased by approximately $10.9
million or 22% to approximately $59.6 million for the year ended December 31,
2001 from approximately $48.7 million for the year ended December 31, 2000. The
increase in operating expenses is due to increased direct operating expenses of
approximately $0.4 million, increased selling, general and administrative
expenses of approximately $3.2 million, increased network expenses of
approximately $5.6 million, increased depreciation and amortization of
approximately $0.7 million and costs associated with the operations of MASS of
approximately $3.6 million, offset in part by a decrease in stock option
compensation expense of $2.6 million.

Direct operating expenses increased by approximately $0.4 million or 7% to
approximately $7.3 million for the year ended December 31, 2001 from
approximately $6.9 million for the year ended December 31, 2000. The increase in
direct operating expenses is primarily due to increased spending associated with
the promotion and marketing of the O&Os as well as the increase in the number of
O&Os.

Selling, general and administrative expenses increased by approximately
$3.2 million or 21% to approximately $18.7 million for the year ended December
31, 2001 from approximately $15.5 million for the year ended December 31, 2000.
The increase in selling, general and administrative expenses primarily relates
to the increase in the number of O&Os, increased sales costs associated with the
increase in revenue, an increase in the allowance for doubtful accounts, as well
as administrative costs associated with MASS.

Network expenses increased by approximately $5.6 million or 43% to
approximately $18.6 million for the year ended December 31, 2001 from
approximately $13.0 million for the year ended December 31, 2000. The
increase in network expenses is mainly due to an increase in the cost of
network programming, including sporting events, increased sales costs
associated with the increase in network revenue, increased spending
associated with the promotion and marketing of the network as well as costs
related to the termination of an employment contract.

Corporate expenses remained constant at approximately $4.0 million for the
years ended December 31, 2001 and 2000. Corporate expenses are comprised of the
cost of corporate management as well as legal and professional fees.

Cost of promotion services of approximately $3.6 million for the year ended
December 31, 2001 relates to the cost of promotional and merchandising services
incurred by MASS for its clients.

Depreciation and amortization increased by approximately $0.7 million or
11% to approximately $6.8 million for the year ended December 31, 2001 from
approximately $6.1 million for the year ended December 31, 2000. The increase in
depreciation and amortization is due to additions of fixed and intangible assets
arising from the acquisition of new O&Os as well as the addition of fixed assets
relating to the buildout and upgrades of existing O&Os.

Stock option compensation expense decreased by approximately $2.6 million
or 81% to approximately $0.6 million for the year ended December 31, 2001 from
approximately $3.2 million for the year ended December 31, 2000. Stock option
compensation expense represents a non-cash charge relating to the vesting of
variable options granted to employees of the Company. The decrease in stock
option compensation expense is due to a large portion of the stock options
granted becoming fully vested during 2000.

OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately
$6.1 million or 42% to approximately $(20.7) million for the year ended December
31, 2001 from approximately $(14.6) million for the year ended December 31,
2000. Other income (expense) for the year ended December 31, 2001 included
interest income of approximately $1.4 million, interest expense of approximately
$17.1 million and the loss on an investment in an unconsolidated company of
approximately $5.0 million. Interest expense primarily relates to the interest
on the outstanding balance of the Senior Discount Notes. The Company had
approximately $3.6 million in interest income and $15.1 million in interest
expense as well as a loss in an unconsolidated company of approximately $3.0
million during the year ended December 31, 2000.

INCOME TAX BENEFIT (EXPENSE). The Company recorded an income tax benefit in
2001 of approximately $0.2 million as compared to approximately $0.8 million for
the year ended December 31, 2000.

25

The benefit in 2001 and 2000 results from the Company's ability to utilize a
portion of its net operating tax loss carryforwards to offset existing deferred
tax liabilities.

26

NET LOSS. Net loss increased by approximately $10.3 million or 32% to
approximately $42.6 million for the year ended December 31, 2001 as compared
to a net loss of approximately $32.3 million for the year ended December 31,
2000. The increase in net loss is mainly the result of the loss on the
investment in an unconsolidated company, increased costs of network
programming, including sporting events, increased costs associated with the
promotion and marketing of the Company's network and O&Os, costs related to
the termination of an employment contract, increased depreciation and
amortization resulting from the increase in the number of and buildout of
O&Os, increased interest on the outstanding balance of the Senior Discount
Notes and decreased interest income partially offset by the increase in net
revenue and the reduction of non-cash stock option compensation expense.

EBITDA. EBITDA, less the non-cash charge relating to the stock option
compensation expense of approximately $0.6 million and $3.2 million for the
years ended December 31, 2001 and 2000, respectively, decreased by
approximately $5.4 million or 58% to approximately $(14.7) million for the
year ended December 31, 2001 as compared to approximately $(9.3) million for
the year ended December 31, 2000. EBITDA decreased by approximately $2.8
million or 23% to approximately $(15.2) million for the year ended December
31, 2001 as compared to approximately $(12.4) million for the comparable
period in the prior year. The decrease in EBITDA is mainly a result of the
increased costs of network programming, including sporting events, increased
costs associated with the promotion and marketing of the Company's network
and O&Os, and costs related to the termination of an employment contract,
partially offset by the increase in net revenue and the reduction in non-cash
stock option compensation expense.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

NET REVENUE. Net revenue increased by approximately $13.9 million or 86% to
approximately $30.1 million for the year ended December 31, 2000 from
approximately $16.2 million for the year ended December 31, 1999. The increase
in net revenue relates to an increase in the Company's customer base due to the
continued growth of the Company's network and O&Os, and the increase in the
number of O&Os.

OPERATING EXPENSES. Operating expenses decreased by approximately $9.0
million or 16% to approximately $48.6 million for the year ended December 31,
2000 from approximately $57.6 million for the year ended December 31, 1999. The
decrease in operating expenses is due to the non-cash stock option compensation
expense charge of approximately $3.2 million in 2000 as compared to
approximately $19.6 million in 1999 and the one-time payment of $2.0 million to
terminate the LMA agreement for Los Angeles radio station KVCA-AM in 1999. These
decreases were offset in part by increased costs of network programming of
approximately $0.8 million, increased depreciation and amortization relating to
the increase in the number of O&Os of approximately $0.9 million and cost
increases associated with the increase in the number of O&Os.

Direct operating expenses increased by approximately $3.1 million or 83% to
approximately $6.8 million for the year ended December 31, 2000 from
approximately $3.7 million for the year ended December 31, 1999. The increase in
direct operating expenses is primarily due to the increase in the number of
O&Os.

Selling, general and administrative expenses increased by approximately
$3.7 million or 31% to approximately $15.5 million for the year ended December
31, 2000 from approximately $11.8 million for the year ended December 31, 1999.
The increase in selling, general and administrative expenses primarily relates
to the variable costs associated with the increase in sales as well as the
increase in the number of O&Os.

Network expenses increased by approximately $0.8 million or 6% to
approximately $13.0 million for the year ended December 31, 2000 from
approximately $12.2 million for the year ended December 31, 1999. The increase
in network expenses is mainly due to the increase in cost of network
programming.

Corporate expenses increased by approximately $1.0 million or 32% to
approximately $4.0 million for the year ended December 31, 2000 from
approximately $3.0 million for the year ended December 31, 1999. The increase in
corporate expenses is mainly due to increased costs for personnel, professional
and other costs associated with the growth of the Company.

27

Depreciation and amortization increased by approximately $0.9 million or
18% to approximately $6.1 million for the year ended December 31, 2000 from
approximately $5.2 million for the year ended December 31, 1999. The increase in
depreciation and amortization is due to additions of fixed and intangible assets
arising from the acquisition of new O&Os as well as the addition of fixed assets
relating to the buildout of existing O&Os.

Stock option compensation expense decreased by approximately $16.4 million
or 84% to approximately $3.2 million for the year ended December 31, 2000 from
approximately $19.6 million for the year ended December 31, 1999. Stock option
compensation expense represents a non-cash charge relating to the vesting of
variable options granted to employees of the Company. The decrease in stock
option compensation expense is due to a large portion of the stock options
granted becoming fully vested during 1999.

OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately
$2.2 million or 18% to approximately $(14.6) million for the year ended December
31, 2000 from approximately $(12.4) million for the year ended December 31,
1999. Other income (expense) for the year ended December 31, 2000 included
interest income of approximately $3.6 million, interest expense of approximately
$15.1 million and loss on an investment in an unconsolidated company of
approximately $3.0 million. Interest expense primarily relates to the interest
on the outstanding balance of the Senior Discount Notes. The Company had
approximately $1.7 million in interest income and $14.1 million in interest
expense during the year ended December 31, 1999.

INCOME TAX BENEFIT (EXPENSE). The Company recorded an income tax benefit in
2000 of approximately $0.8 million as compared to an income tax expense of
approximately $0.3 million for the year ended December 31, 1999. The benefit in
2000 results from the Company's ability to utilize a portion of its net
operating tax loss carryfowards to offset existing deferred tax liabilities.

NET LOSS. Net loss decreased by approximately $21.8 million or 40% to
approximately $32.3 million for the year ended December 31, 2000 as compared to
a net loss of approximately $54.1 million for the year ended December 31, 1999.
The decrease in net loss is primarily the result of increased revenue, the
decrease of approximately $16.4 million in non-cash stock option compensation
and the one-time payment of $2.0 million made during 1999 to terminate the LMA
agreement for Los Angeles radio station KVCA-AM.

EBITDA. EBITDA, less the non-cash charge relating to the stock option
compensation expense of approximately $3.2 million and $19.6 million during
December 31, 2000 and 1999, respectively and the one-time payment of $2.0
million, during 1999, to terminate the LMA agreement for Los Angeles radio
station KVCA-AM, increased by approximately $5.4 million or 37% to approximately
$(9.2) million for the year ended December 31, 2000 as compared to approximately
$(14.6) million for the year ended December 31, 1999. EBITDA increased by
approximately $23.8 million or 66% to approximately $(12.4) million for the year
ended December 31, 2000 as compared to approximately $(36.2) million for the
comparable period in the prior year. The increase in EBITDA is mainly the result
of the increase in revenue, the decrease in stock option compensation expense in
2000 and other charge occurring during 1999 as mentioned above.

LIQUIDITY AND CAPITAL RESOURCES

The Company has had negative cash flows from operations since inception.
Working capital and financing for the Company's acquisitions to date have
been provided primarily by the proceeds from the IPO, the issuance of the 11
3/4% Senior Discount Notes due August 1, 2006 and the issuance of promissory
notes, common stock and preferred stock to the Company's stockholders.

Net cash used in operating activities decreased by approximately $2.8
million to approximately $9.8 million for the year ended December 31, 2001 as
compared to approximately $12.6 million for the year ended December 31, 2000.
Net cash used in investing activities was approximately $9.1 million and $23.2
million for the years ended December 31, 2001 and 2000, respectively. The
decrease of $14.1 million from 2000 to 2001 is primarily due to the lack of
radio station acquisitions during 2001. Net cash used in financing activities
was $(0.4) million and $(1.7) million for the years ended December 31, 2001 and
2000, respectively. The decrease of approximately $(1.3) million primarily
relates to the acquisition of treasury stock during 2000.

28

Capital expenditures primarily relate to the purchase of broadcast
equipment for the network and O&Os, leasehold improvements, computer equipment
and telecommunications equipment. Capital expenditures were approximately $3.9
million and $3.6 million for the years ended December 31, 2001 and 2000,
respectively.

The Company believes that the remaining proceeds from the IPO, and to
the extent it is able to enter into a revolving credit facility, will provide
adequate resources to fund the Company's operating expenses, working capital
requirements, capital expenditures and acquisitions until its business
strategy provides the Company with sufficient operating cash flow. There can
be no assurance that such business strategy will be successfully implemented
or that the future cash flows of the Company will be sufficient to meet all
of the Company's obligations and commitments. The failure to generate such
sufficient cash flow could significantly adversely affect the market value of
the Company's common stock and Senior Discount Notes, and the Company's
ability to pay the principal of and interest on the Senior Discount Notes.
There is also no assurance that the Company will be able to enter into a
revolving credit facility on acceptable terms, if at all.

The known impact on future operating results related to the Senior Discount
Notes will be annual interest expense through August 1, 2006 as follows:

Expected interest payments under the terms of the Senior Discount Notes are
as follows:

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations". The statement discontinues the use of the pooling of interests
method of accounting for business combinations. The statement is effective for
all business combinations after June 30, 2001.

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". The statement requires discontinuing the amortization of goodwill and
other intangible assets with indefinite useful lives. Instead, these assets will
be tested periodically for impairment and written down to their fair market
value as necessary. The Company adopted this statement effective January 1,
2002. Application of the non-amortization provisions of SFAS 142 for goodwill
and intangible assets with indefinite useful lives is expected to result in an
increase in operating income of approximately $3.8 million in 2002. At December
31, 2001, the Company had goodwill of approximately $5.8 million and intangible
assets with indefinite useful lives of approximately $98.2 million.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which is effective for the
fiscal year beginning November 1, 2002. SFAS 144 establishes a single model
to account for impairment of assets to be held or disposed, incorporating
guidelines for accounting and disclosure of discontinued operations. We
believe the impact on our financial position and results of operations from
the adoption of SFAS 144 will not be material.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company was subject to interest rate risk on the interest on borrowings
under the Revolving Credit Facility. However, as of November 23, 2001 the credit
facility was terminated.

29

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

INDEX TO FINANCIAL STATEMENTS

30

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Radio Unica Communications Corp.

We have audited the accompanying consolidated balance sheets of Radio Unica
Communications Corp. (formerly Radio Unica Holdings Corp.) and subsidiaries as
of December 31, 2001 and 2000, and the related consolidated statements of
operations, changes in Series A redeemable cumulative preferred stock and
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 2001. Our audits also included the financial statement
schedules listed in the Index of Item 14(a). These financial statements and
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.

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

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

/s/ Ernst & Young LLP

Miami, Florida
March 5, 2002

31

RADIO UNICA COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEETS

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

32

RADIO UNICA COMMUNICATIONS CORP
CONSOLIDATED STATEMENTS OF OPERATIONS

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

33

RADIO UNICA COMMUNICATIONS CORP

CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CUMULATIVE PREFERRED
STOCK AND STOCK HOLDERS' EQUITY (DEFICIT)

34

RADIO UNICA COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

35

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND PRESENTATION

Radio Unica Communications Corp. (the "Company") through its subsidiaries
owns and/or operates 16 spanish-language radio stations serving 14 markets
throughout the United States. The Company was formed for the purpose of
producing, broadcasting and distributing Spanish language radio programming in
the United States. The Company launched its network on January 5, 1998 and began
broadcasting programming to radio broadcast stations that it operates and to
affiliated stations in the United States and abroad.

On October 19, 1999, the Company completed an initial public offering
("IPO") of 6,840,000 shares of its common stock at an IPO price of $16.00 per
share. The Company received net proceeds from the IPO of approximately $99.4
million on October 22, 1999. The net proceeds from the IPO were used to repay
the indebtedness under the revolving credit facility, to acquire radio
stations, upgrade existing stations and for general corporate purposes.

2. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation. The Company accounts for investments in
20% to 50% owned companies and for investments in over 50% owned companies over
which the Company does not have control under the equity method of accounting.

SHARE DIVIDEND

Effective July 6, 1999, the Company changed its name from Radio Unica
Holdings Corp. to Radio Unica Communications Corp. Also on that date, the
Company's Board of Directors approved a share dividend of 370 common shares
payable for each common share, subject to consummation of the Company's proposed
IPO. Also on that date, the Company's Board of Directors approved an increase in
the authorized common shares from 100,000 common shares to 40,000,000 common
shares, and an increase in the authorized preferred shares from 450,000
preferred shares to 5,000,000 preferred shares. Effective September 16, 1999,
the Company's Board of Directors rescinded the share dividend of 370 common
shares payable for each common share. Also on that date, the Company's Board of
Directors approved a share dividend of 310 common shares payable for each common
share, subject to consummation of the Company's IPO. As a result, all references
in the financial statements to number of shares and per share amounts have been
restated to give retroactive recognition to such dividend.

CASH EQUIVALENTS

The Company defines as cash equivalents all highly liquid investments with
a maturity of three months or less at the time of purchase.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is recorded on a
straight-line basis over the estimated useful lives of the related assets, which
range from 3 to 30 years. Leasehold improvements are capitalized and amortized
over their estimated useful lives or the remaining life of the lease, whichever
is shorter.

36

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

INTANGIBLE ASSETS

Intangible assets are recorded at cost. Amortization of intangible assets
is provided in amounts sufficient to relate the asset cost to operations over
the estimated useful lives on a straight-line basis. Intangible assets consist
primarily of broadcast licenses, goodwill and other identifiable intangible
assets. The estimated useful lives are as follows:

Broadcast licenses 30 years
Goodwill 30 years
Other intangibles 1-5 years

The Company evaluates periodically the propriety of the carrying amount of
intangible assets as well as the amortization period to determine whether
current events or circumstances warrant adjustments to the carrying value and/or
revised estimates of useful lives. This evaluation consists of the projection of
undiscounted operating income before depreciation, amortization, nonrecurring
charges and interest for the Company's radio stations and network over the
remaining amortization periods of the related intangible assets. If such
projections indicate that undiscounted operating income, as adjusted, is not
expected to be adequate to recover the carrying amounts of the related
intangible assets, a loss is recognized to the extent the carrying amount of the
asset exceeds its fair value. At this time, the Company believes that no
impairment of goodwill or other intangible assets has occurred and that no
reduction of the estimated useful lives is warranted.

REVENUE RECOGNITION

Revenue is derived primarily from the sale of commercial announcements to
local, national and network advertisers. Revenue for these activities is
recognized as commercials are broadcast. Revenue from promotional and
merchandising services is recognized when the promotional and/or merchandising
services are performed.

ADVERTISING COSTS

The Company incurs various marketing and promotional costs to increase and
maintain listenership. These costs are charged to expense as incurred and for
the years ended December 31, 2001, 2000 and 1999 amounted to approximately $4.5
million, $2.5 million and $3.5 million, respectively.

BARTER TRANSACTIONS

Barter transactions represent advertising time exchanged for promotional
items, advertising, supplies, equipment and services. Barter transactions are
recorded at the estimated fair value of the goods or services received or
rendered, if rendered services are deemed to be a better indicator of fair
value. Revenues from barter transactions are recognized as income when
advertisements are broadcast. Expenses are recognized when goods or services are
used.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company evaluates the collectibility of its accounts receivable
based on a combination of factors. In circumstances where it is aware of a
specific customer's inability to meet its financial obligations, it records a
specific reserve to reduce the amounts recorded to what it believes will be
collected. For all other customers, it recognizes reserves for bad debt based
on historical experience of bad debts as a percent of revenues, adjusted for
relative improvements or deteriorations in the agings and changes in current
economic conditions.

37

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

INCOME TAXES

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
Deferred tax assets and liabilities are determined based upon differences
between the financial statements and income tax basis of assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of the deferred tax assets will not be realized.

ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for the impairment of long-lived assets under the
provisions of SFAS No. 121, "Accounting For The Impairment Of Long-Lived
Assets". SFAS No. 121 requires impairment losses to be recorded on long-lived
assets when indications of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amounts. If the carrying value of the assets will not be
recoverable, as determined based on the undiscounted cash flows estimated,
the carrying value of the assets are reduced to fair value. Generally, fair
value will be determined using valuation techniques such as expected
discounted cash flows or appraisals, as appropriate. The Company has not
recorded any impairment losses on long-lived assets.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments of cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximate fair value because
of their short duration to maturity. The fair value of the long-term debt is
based on quoted market prices. At December 31, 2001, the fair value of the
Senior Discount Notes was approximately $75.1 million.

USE OF ESTIMATES

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Accordingly, actual results
could differ from those reported.

BUSINESS SEGMENTS

Pursuant to SFAS No. 131, "Disclosure About Segments of a Business
Enterprise and Related Information", the Company is required to report segment
information. The Company classified its businesses into two reporting segments:
radio-broadcasting and promotion services. The radio-broadcasting segment
includes the operations of the Company's radio network, the operations of all
owned and/or operated radio stations and corporate expenses. The promotion
services segment includes the operations of the Company's marketing and
promotions business. The Company evaluates performance based on several factors,
of which the primary financial measures are business segment net revenue,
operating income (loss) and operating income (loss) before depreciation and
amortization ("EBITDA").

38

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

LOSS PER SHARE

Basic loss per share is calculated using the weighted average common
shares outstanding during the periods. Common equivalent shares from stock
options, using the treasury stock method, are also included in the diluted
per share calculations unless their effect of inclusion would be
antidilutive. The Company did not include any stock options in the
calculation of diluted earnings per share for the years ended December 31,
2001, 2000 and 1999, since their inclusion would be antidilutive. For the
years ended December 31, 2001, 2000 and 1999 there was no difference between
the basic and diluted loss per share calculations.

RECLASSIFICATION

Certain amounts appearing in the 2000 and 1999 consolidated financial
statements have been reclassified to conform with the 2001 presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations". The statement discontinues the use of the pooling of interests
method of accounting for business combinations. The statement is effective for
all business combinations after June 30, 2001.

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". The statement requires discontinuing the amortization of goodwill and
other intangible assets with indefinite useful lives. Instead, these assets will
be tested periodically for impairment and written down to their fair market
value as necessary. The Company adopted this statement effective January 1,
2002. Application of the non-amortization provisions of SFAS 142 for goodwill
and intangible assets with indefinite useful lives is expected to result in an
increase in operating income of approximately $3.8 million in 2002. At December
31, 2001, the Company had goodwill of approximately $5.8 million and intangible
assets with indefinite useful lives of approximately $98.2 million.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which is effective for the
fiscal year beginning November 1, 2002. SFAS 144 establishes a single model
to account for impairment of assets to be held or disposed, incorporating
guidelines for accounting and disclosure of discontinued operations. We
believe the impact on our financial position and results of operations from the
adoption of SFAS 144 will not be material.

3. ACQUISITIONS

2001 ACQUISITION

On April 30, 2001, the Company entered into an asset purchase agreement
with Marketing Advertising & Sales Services, Inc. and related companies to
acquire its marketing and promotions businesses for a purchase price of
approximately $4.5 million. In connection with this transaction, the Company
acquired approximately $1.5 million in working capital, which included
approximately $0.7 million in cash. The purchase price was comprised of cash
payments of approximately $2.4 million and a promissory note of approximately
$2.1 million. The promissory note bears interest at a rate of 8% per annum.
Principal and interest on the promissory note are payable concurrently.
Principal payments are scheduled to be made as follows:

April 30, 2002 $ 953,561
April 30, 2003 625,000
April 30, 2004 500,000
------------
$ 2,078,561
============

The acquisition was accounted for as a purchase and, accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on estimates of their underlying values.

The proforma unaudited results of operations of the Company for the years
ended December 31, 2001 and 2000 assuming this acquisition had been consummated
as of January 1, 2000 are as follows:

The unaudited pro forma results do not purport to be indicative of the
results of operations which actually would have resulted had this acquisition
occurred on January 1, 2000, or of future results of operations of the
consolidated entities.

39

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS, CONTINUED

2000 ACQUISITIONS

On October 18, 1999, the Company entered into an asset purchase agreement
with Den-Mex LLC to acquire Denver radio station KCUV-AM for a cash purchase
price of $2.7 million. On January 3, 2000, after receiving the consent of the
Federal Communications Commission (the "FCC") to assign the broadcasting
license, the Company completed the acquisition.

On December 23, 1999, the Company entered into an asset purchase agreement
with Harry Pappas to acquire Fresno radio station KWRU-AM for a purchase price
of $7.5 million. The purchase price was comprised of approximately $5.5 million
in cash and 76,555 shares of the Company's common stock valued at $2.0 million.
On June 28, 2000, after receiving the consent of the FCC to assign the
broadcasting license, the Company completed the acquisition.

On February 11, 2000, the Company entered into an asset purchase agreement
with El Pistolon Investments, L.P. to acquire McAllen radio station KVJY-AM for
a cash purchase price of $2.5 million. On June 1, 2000, after receiving the
consent of the FCC to assign the broadcasting license, the Company completed the
acquisition.

On April 12, 2000, the Company entered into an asset purchase agreement
with Texas Lotus, Ltd. to acquire San Antonio radio station KZDC-AM for a cash
purchase price of $1.8 million. The Company operated the station under a local
marketing agreement, for a monthly fee of $62,500 from January 1998 through July
27, 2000, at which time the Company received the consent of the FCC to assign
the broadcasting license, and completed the acquisition.

On April 27, 2000, the Company entered into an asset purchase agreement
with Cima Broadcasting, L.L.C. to acquire Tucson radio station KQTL-AM for a
cash purchase price of approximately $3.3 million. On August 4, 2000, after
receiving the consent of the FCC to assign the broadcasting license, the Company
completed the acquisition.

On June 8, 2000, the Company entered into an asset purchase agreement with
Peoples Radio, Inc. to acquire Pittsburg, California radio station KATD-AM for
approximately $5.0 million. The purchase price was comprised of approximately
$4.5 million cash and 87,500 shares of the Company's common stock valued at
approximately $0.5 million. On October 18, 2000, after receiving the consent of
the FCC to assign the broadcasting license, the Company completed the
acquisition.

1999 ACQUISITIONS

On October 27, 1998, the Company entered into an asset purchase agreement
with Children's Broadcasting Corporation to acquire certain assets of New York
City area radio stations WWRU-AM and WJDM-AM, Dallas/Ft. Worth radio station
KAHZ-AM and Phoenix radio station KIDR-AM for a purchase price of $29.25
million. In connection with this acquisition, the Company entered into a
two-year non-compete agreement with the seller for $750,000. Other costs
associated with the transaction were approximately $441,000. The Company
operated these stations under a Time Brokerage Agreement (also known as local
marketing agreements and referred to herein as "LMAs") for a monthly fee of
$200,000 until the transaction closed. An advanced payment of $2.5 million was
made to Children's Broadcasting Corporation with the execution of the LMA. On
January 14, 1999, after receiving the consent of the FCC to assign the
broadcasting licenses, the Company completed the acquisitions. The Company's
permit to construct WWRU, which was modified in 1999 to authorize improvement of
the station's nighttime operations, expires December 6, 2003. Upon completion of
the new nighttime facilities of WWRU, the Company will file a license
application with the Commission. The Company cannot predict when the FCC will
grant the license application, once it is filed. The license, when granted will
contain a condition that will require the Company to relinquish within five
years the license for either WWRU or WJDM.

40

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS, CONTINUED

1999 ACQUISITIONS, CONTINUED

On February 22, 1999, the Company entered into an asset purchase agreement
with One-on-One to acquire certain assets of Chicago radio station WNTD-AM for a
cash purchase price of approximately $16.7 million. Other costs associated with
the transaction were approximately $60,000. On May 14, 1999, after receiving the
consent of the FCC to assign the broadcasting license, the Company completed the
acquisition.

The acquisitions of the assets of WWRU-AM and WJDM-AM, New York, KAHZ-AM,
Dallas/Ft.Worth, KIDR-AM, Phoenix, WNTD-AM, Chicago, KCUV-AM, Denver, KVJY-AM,
McAllen, KWRU-AM, Fresno, KZDC-AM, San Antonio, KQTL-AM, Tucson and KATD-AM,
Pittsburg were not the purchases of businesses, as the format and language of
the stations were changed and the Company did not assume responsibility for any
employees. The acquisitions were accounted for as purchases and, accordingly,
the purchase prices were allocated to the assets acquired and liabilities
assumed based on appraisals and other estimates of their underlying values.

4. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY

SENIOR DISCOUNT NOTES

On July 27, 1998, Radio Unica Corp. ("Corp") sold in an unregistered
offering to qualified institutional buyers and accredited institutional
investors $158,088,000 aggregate principal amount at maturity of Corp's 11 3/4%
Senior Discount Notes due August 1, 2006 (the "Old Notes"). Cash interest on the
Old Notes would not accrue or be payable prior to August 1, 2002. Thereafter,
cash interest would accrue at a rate of 11 3/4% per annum on the principal
amount at maturity of the Old Notes through and including the maturity date and
would be payable semi-annually on August 1 and February 1 of each year. In
connection with this transaction, Corp received net proceeds of approximately
$94.4 million after deducting issuance expenses of approximately $5.6 million.

The Old Notes were general senior unsecured obligations of Corp and ranked
pari-passu in right of payment with all existing and future unsecured and
unsubordinated indebtedness of Corp and senior in right of payment to any
subordinated indebtedness of Corp. The Old Notes were guaranteed on a senior
unsecured basis, as to payment of principal, premium if any, and interest, by
the Guarantors, which consist of Corp's Domestic Restricted Subsidiaries (as
defined in the Indenture, dated July 27, 1998 between Corp, Wilmington Trust as
trustee and the Guarantors named therein (the "Indenture")), on a full,
unconditional, joint and several basis. The Old Notes were redeemable at any
time and from time to time at the option of Corp, in whole or in part on or
after August 1, 2002, plus accrued and unpaid interest thereon to the date of
redemption.

In addition, on or prior to August 1, 2001, Corp could redeem, at its
option, up to 35% of the aggregate principal amount at maturity of the Old Notes
with the net proceeds of one or more Equity Offerings, as defined, at 111.75% of
the Accreted Value thereof, as defined in the Indenture, as long as Old Notes
representing at least $65.0 million of the aggregate initial Accreted Value of
the Old Notes originally issued remained outstanding after each such redemption
and that such redemption occurred within 90 days of the closing of any such
Equity Offering.

Upon a Change of Control as defined in the Indenture, Corp would be
required to offer to repurchase the Old Notes at a purchase price equal to (i)
101% of the Accreted Value thereof, if the purchase date was on or prior to
August 1, 2002, or (ii) 101% of the principal amount at maturity thereof, plus
accrued and unpaid interest thereon, if any, to the purchase date, if such date
was after August 1, 2002.

The Old Notes restricted, among other things, Corp's ability to incur
additional indebtedness, pay dividends or make certain other restricted
payments, consummate certain asset sales, create liens on assets, enter into
transactions with affiliates, make investments, loans or advances, consolidate
or merge with or into any other person or convey, transfer or lease all or
substantially all of its assets or change the business conducted by Corp.

41

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY,
CONTINUED

On December 17, 1998, in order to satisfy certain obligations of Corp under
a Registration Rights Agreement, dated July 22, 1998, between Corp, CIBC
Oppenheimer Corp. and Bear, Stearns & Co. Inc., Corp completed the registration
of the Old Notes and exchanged the Old Notes for newly issued 11 3/4% Senior
Discount Notes Series B due 2006 (the "New Notes").

The form and terms of the New Notes are substantially the same as the Old
Notes, except that the New Notes have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and hence are not subject to certain
transfer restrictions, registration rights and related liquidated damages
provisions applicable to the Old Notes. The New Notes evidence the same debt as
the Old Notes and are entitled to the benefits of the Indenture. The Indenture
provides for the issuance of both the Old Notes and the New Notes.

SENIOR SECURED REVOLVING CREDIT FACILITY

On July 8, 1998, Corp entered into a credit agreement with a bank for a
senior secured revolving credit facility (the "Revolving Credit Facility")
providing for up to $20.0 million of availability. The revolving credit
facility would have matured in May 2002. However, on November 23, 2001, the
Company terminated its revolving credit facility at which time no amounts
were outstanding. Amounts outstanding under the revolving credit facility
bore interest at the higher of the (i) bank's prime rate plus 1.25% or (ii)
LIBOR plus 2.50%. The obligations under the revolving credit facility were
guaranteed by the Company and secured by substantially all the assets of
Company and its subsidiaries.

5. INVESTMENTS

On July 18, 2000, the Company acquired approximately 13.5% of
Estrellamundo, LLC for $1.5 million in cash. As of February 9, 2001,
Estrellamundo, LLC completed construction and commenced operations of its
Latin-themed restaurant and club, "Y Arriba Y Arriba", which is located within
Disneyland in Anaheim, California.

In 2001, the Company guaranteed a $3.5 million loan for Estrellamundo, LLC.
The loan was guaranteed through the issuance of a letter of credit and reduced
the Company's borrowing capacity under its revolving credit facility. In
exchange for this guarantee, the Company received an additional 10.5% equity
interest in Estrellamundo, LLC valued at approximately $1.2 million. In
connection with this transaction, the Company recorded $1.2 million in deferred
income which was being amortized over the life of the guarantee. On September
28, 2001 due to financial difficulties encountered by Estrellamundo, LLC, the
loan, which was guaranteed through the letter of credit, was called by the
issuing bank. The letter of credit was subsequently drawn upon and on October 5,
2001, the Company repaid the $3.5 million outstanding under the letter of
credit.

In October 2001, Estrellamundo, LLC filed for relief under Chapter 11 of
the Bankruptcy code. Accordingly, the Company evaluated the recoverability of
its investment, including the $3.5 million associated with the loan
guaranteee, in Estrellamundo, LLC and determined that the carrying value of
its investment was impaired. Therefore, at September 30, 2001, based on the
information available, the Company wrote off the entire carrying value in its
investment in Estrellamundo, LLC. The loss on this investment is reflected in
the accompanying statement of operations for the year ended December 31,
2001, in loss on investments in unconsolidated companies.

On June 26, 2000, the Company acquired approximately 3% of a Spanish and
Portuguese language sports portal ("SportsYa"), through the purchase of
preferred stock, in exchange for $2.0 million in cash and $1.0 million in
advertising on the Company's network. At December 31, 2000, the Company
evaluated the carrying value of its investment in SportsYa and noted that due
to the financial condition of SportsYa, there existed an impairment in the
carrying value of its investment. Accordingly, at December 31, 2000, based on
the information available, the Company wrote off the entire carrying value in
its investment in SportsYa. The loss on this investment is reflected in the
accompanying statement of operations for the year ended December 31, 2000 in
loss on investments in unconsolidated companies.

42

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Depreciation expense for the years ended December 31, 2001, 2000 and 1999
was $2,577,152, $2,156,544 and $1,614,554, respectively.

7. OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following:

Amortization expense for other intangible assets for the years ended
December 31, 2001, 2000 and 1999 was $1,214,964, $1,382,124 and, $1,550,994,
respectively. Amortization expense relating to the deferred financing costs
of $815,277 for the year ended December 31, 2001 and $770,832 for each of the
years ended December 31, 2001 and 2000, was classified as interest expense.

43

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES

HISTORICAL

The components of the income tax benefit (expense) are as follows:

The differences between the federal statutory income tax and the effective
income tax rate are summarized below:

Deferred income taxes reflect the tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred income taxes are as follows:

SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
has determined that a $49,437,267 valuation allowance at December 31, 2001 is
necessary to reduce the deferred tax assets to the amount that will more likely
than not be realized. The change in the valuation allowance in 2001 is
approximately $16,793,000. At December 31, 2001, the Company has available net
operating loss carryforwards of approximately $141,345,000, a portion of which
will begin to expire in the year 2011.

44

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. PREFERRED STOCK

The Company has 5,000,000 authorized shares of Preferred Stock (the
"Preferred Stock"), $.01 par value, of which no shares were issued and
outstanding at December 31, 2001 and 2000.

Prior to October 19, 1999, the Company had 5,000,000 authorized shares of
redeemable, 10% cumulative, nonconvertible, voting, Series A Preferred Stock,
$.01 par value. In connection with the IPO, all the outstanding shares of Series
A redeemable cumulative preferred stock were exchanged for an aggregate of
2,974,909 shares of common stock. The total liquidation value of the Series A
redeemable cumulative preferred stock on the date of the IPO was $41,499,977
which included accrued dividends of $6,119,487.

10. STOCK OPTION PLAN

1998

On June 30, 1998, the Company adopted the 1998 Stock Option Plan ("the
Plan') which provides for the granting of stock options to purchase shares of
the Company's common stock to officers, directors, and key employees responsible
for the direction and management of the Company and to non-employee consultants
and independent contractors. At that time the Company reserved 6,200,000 shares
of its common stock for issuance under the Plan. On July 6, 1999, the Company
amended the plan to reduce the number of shares to be reserved for issuance
under the Plan to 5,000,000 shares. The vesting period and the terms of the
stock options granted are established by a Committee of the Board of Directors
(the Committee). The stock options expire no later than ten years from the date
of grant.

The Company accounts for stock options issued to employees and directors
using the intrinsic-value method as outlined under Accounting Principles
Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to Employees and
related interpretations. Stock options issued to non-employees for services,
are accounted for using the fair value method in accordance with the
provisions of Emerging Issues Task Force No. 96-18 ("EITF 96-18") "Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling, Goods or Services".

In 1998, the Company granted options to its employees to purchase 2,844,870
shares of the Company's common stock. Of the 2,844,870 options granted, 678,280
vested immediately, 407,650 vest ratably over time and 635,500 vest upon the
attainment of certain performance goals as determined by the Committee. Of the
635,500 options, 130,888 vested on December 31, 1998. The exercise price of the
678,280 options which vested immediately, the 407,650 options which vest ratably
over time and the 130,888 options which vested on December 31, 1998 is $0.03 per
share, which was determined by the Committee to be the fair market value at the
date of grant, or, in the case of the 130,888 options, on the date they vested.
As a result, no compensation expense has been recognized on these options under
the provisions of APB Opinion No. 25. The remaining 1,123,440 options have an
exercise price of $1.10 to $1.72 per share and vest upon (i) the sale of the
Company or substantially all of its assets, (ii) an IPO, or (iii) an issuance of
capital stock of the Company that would result in Warburg Pincus Ventures
("WPV") and/or its affiliates in the aggregate ceasing to control more common
stock of the Company than any other single stockholder. Compensation expense for
the 1,123,440 options is recognized to the extent that the market value of the
shares exceeds the option price when vesting for these options becomes probable.
Vesting for these options was not deemed probable as of December 31, 1998 and no
compensation expense was recorded for these options as of December 31, 1998.

45

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK OPTION PLAN, CONTINUED

1999

During 1999, the Company granted options to its employees to purchase
1,914,667 shares of the Company's common stock. Of the 1,914,667 options
granted, 1,821,357 vest ratably over time and 31,620 vest upon the attainment of
certain performance goals as determined by the Committee. The exercise price of
the 1,821,357 options which vest ratably over time range from $0.03 to $32.00
per share, which was determined by the Committee to be the fair market value at
the date of grant. As a result, no compensation expense has been recognized on
these options under the provisions of APB Opinion No. 25. The remaining 61,690
options have an exercise price of $1.10 to $1.72 per share and vest upon (i) the
sale of the Company or substantially all of its assets, (ii) an IPO, or (iii) an
issuance of capital stock of the Company that would result in WPV and/or its
affiliates in the aggregate ceasing to control more common stock of the Company
than any other single stockholder.

During 1999, the 31,620 and 61,690 options granted in 1999 and the 635,500
and 1,123,400 options granted in 1998, which were variable options, were valued
at the IPO price of $16.00 per share. Compensation expense of approximately
$19,591,000, representing the extent that the market value of the shares
exceeded the option price, was charged to operations immediately and
approximately $4.3 million is being charged to operations over the remaining
vesting period. Approximately $0.5 million and $3.2 million was charged to
operations in 2001 and 2000, respectively.

2000

During 2000, the Company granted options to purchase 528,600 shares of the
Company's common stock. All the options granted during 2000 vest ratably over
time. Of these options 497,600 were granted to employees and 31,000 were granted
to non-employees. The exercise price of the 528,600 options range from $3.44 to
$30.63 per share, the fair market value at the date of grant. As a result, no
compensation expense has been recognized on the options granted to employees
under the provisions of APB Opinion No. 25.

2001

During 2001 the Board of Directors of the Company amended the Plan (subject
to shareholder approval) to increase the number of shares of common stock
available for issuance under the Plan to 6,500,000. In addition, the Company
granted options to purchase 1,219,933 shares of the Company's common stock.
Of these options 1,144,433 were granted to employees and 75,500 were granted
to non-employees. All the options granted during 2001 vest ratably over time.
The exercise price of the 1,219,933 options range from $0.90 to $3.60 per
share, the fair market value at the date of grant. As a result, no
compensation expense has been recognized on the options issued to officers,
directors and employees under the provisions of APB Opinion No. 25.

Pursuant to EITF 96-18, the Company recognized compensation expense for all
non-employee options, in the of amount of approximately $33,000, $129,000 and $0
in 2001, 2000 and 1999, respectively, which is included in stock option
compensation expense in the accompanying statement of operations.

Plan activity for 2001, 2000 and 1999 is as follows:

46

RADIO UNICA COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK OPTION PLAN, CONTINUED

The following table summarizes information about stock options outstanding at
December 31, 2001:

The weighted average per share fair values of options granted under the
stock option plan during 2001, 2000 and 1999, based on the Black-Scholes option
valuation model, were $2.84, $6.56 and $6.20, respectively. Had compensation
expense for the stock option grants been determined based on the fair value at
the grant date for awards consistent with the methods of SFAS No. 123, the
Company's pro forma net loss would have increased for

each year as indicated below:

The following weighted average assumptions were used in the Black-Scholes
model:

The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because changes in the subjective input assumptions can materially
affect the fair value estimate, the existing models, in management's opinion, do
not necessarily provide a reliable single measure of the fair value of the
Company's stock options.

47

RADIO UNICA COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES

RADIO BROADCASTING RIGHTS

The Company has entered into Radio Broadcasting Rights Agreements ("Rights
Agreements") with Inter/Forever Sports, Inc. for several large soccer events
including Copa America 2003, and Copa Oro 2002, 2004 and 2006 (collectively the
"Soccer Events"). The Rights Agreements grant the Company exclusive
Spanish-language radio broadcast rights in the United States of America for the
Soccer Events.

At December 31, 2001, future minimum obligations under the Rights
Agreements are as follows:

LEASES

The Company leases office space, land, broadcasting studios and certain
equipment under operating leases, which expire at various dates through December
2023. Certain leases contain renewal options and provide for base rental
payments plus escalation charges for real estate taxes and operating expenses.

At December 31, 2001, future minimum lease payments under such leases are as
follows:

2002 $ 1,367,232
2003 1,357,125
2004 1,261,199
2005 931,461
2006 943,244
Thereafter 3,389,884
----------------
$ 9,250,145
================

Total rent expense for the years ended December 31, 2001, 2000 and 1999 was
approximately $1,580,000, $1,450,000, and $943,000, respectively.

On November 8, 2001, a securities class action suit was filed against
the Company and/or the following executive officers and directors: Joaquin F.
Blaya, Steven E. Dawson, and Manuel A. Borges, and the following underwriters
of our initial public offering: Salomon Smith Barney Holdings; The Bear
Stearns Companies Inc.; Credit Suisse First Boston Corp.; CIBC World Markets;
FleetBoston Robertson Stephens, Inc; Deutsche Banc Alex Brown Incorporated;
Merrill Lynch, Pierce, Fenner & Smith Inc.; Morgan Stanley Dean Witter & Co.;
and Prudential Securities Incorporated (collectively the "Underwriters"). The
suit was filed in the United States District Court for the Southern District
of New York on behalf of all persons who acquired our common stock between
October 19, 1999 and December 6, 2000, The complaint charges defendants with
violations of Sections 11, 12 and 15 of the Securities Act of 1933 and
Section 10(b) and 20(a) of the Securities Exchange Act of 1934 ( and Rules
10b-3 and 10b-5 promulgated thereunder), for issuing a registration statement
and prospectus that contained material misrepresentations and/or omissions.
The complaint alleges that the prospectus was false and misleading because it
failed to disclose (i) the agreements between the Underwriters and certain
investors to provide them with significant amounts of restricted Radio Unica
Communications Corp. shares in the IPO in exchange for excessive and
undisclosed commissions; and (ii) the agreements between the Underwriters and
certain customers under which the underwriters would allocate shares in the
IPO to those customers in exchange for the customers' agreement to purchase
Radio Unica Communications Corp's shares in the after-market at
pre-determined prices. The complaint seeks an undisclosed amount of damages,
as well as attorney fees. We consider this claim, as it relates to the
Company to be wholly without merit and we will vigorously defend against such
claim. Pursuant to the underwriting agreement between the Company and the
Underwriters, the Underwriters have agreed to indemnify the Company with
respect to all written information relating to the Underwriters and furnished
by them to the Company. Accordingly, the ultimate loss, if any, that may
result cannot be reasonably determined and, accordingly, no accrual for this
matter has been recorded as of December 31, 2001.

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

48

RADIO UNICA COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for the
years ended December 31, 2001 and 2000:

Basic and diluted loss per common share are computed independently for each
of the periods presented, accordingly, the sum of the quarterly loss per share
amounts may not agree to the total for the year.

13. STOCKHOLDER NOTES RECEIVABLE

On November 1, 2000, the Company's Board of Directors authorized loans
to the Company's Chairman and Chief Executive Officer ("CEO") and the
Company's Chief Financial Officer ("CFO") of up to $550,000 and $200,000,
respectively. The proceeds of these notes were used by the CEO and CFO to
purchase shares of the Company's common stock. The full recourse notes bear
interest at a rate of 8% per year and mature on November 13, 2005. The notes
have been classified in the accompanying balance sheets as a decrease to
stockholders' equity. At December 31, 2001, the amounts outstanding under
these notes totaled $749,657. Interest receivable of $56,105 at December 31,
2001 is included in other assets.

14. SEGMENT OPERATING RESULTS

Pursuant to SFAS No. 131, "Disclosure About Segments of a Business
Enterprise and Related Information", the Company is required to report segment
information. The Company classified its businesses into two reporting segments:
radio-broadcasting and promotion services. The radio-broadcasting segment
includes the operations of the Company's radio network, the operations of all
owned and/or operated radio stations and corporate expenses. The promotion
services segment includes the operations of the Company's marketing and
promotions business. The Company evaluates performance based on several factors,
of which the primary financial measures are business segment net revenue,
operating income (loss) and EBITDA.

Prior to the acquisition of the promotion services business in 2001, as
described in Note 3, the company operated in one segment.

49

RADIO UNICA COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SEGMENT OPERATING RESULTS, CONTINUED

Results by segment are as follows:

The Company's performance is customarily measured by its earnings (loss)
from operations plus depreciation and amortization ("EBITDA"). EBITDA is
presented not as an alternative measure of operating results or cash flow
from operations (as determined in accordance with generally accepted
accounting principles ("GAAP")), but because it is a widely accepted
supplemental financial measure of a company's ability to service debt. The
Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate
this non-GAAP measure in the same fashion. The Company's EBITDA calculation
is not intended to represent cash used in operating activities, since it does
not include interest and taxes and changes in operating assets and
liabilities, nor is it intended to represent the net increase or decrease in
cash, since it does not include cash provided by (used in) investing and
financing activities.

15. SUBSEQUENT EVENTS

AFFILIATION AGREEMENT

On January 1, 2002, the Company entered into a three year affiliation
agreement with Uniradio Corp Broadcasting Baja California S.A. de C.V. ("BBC"),
a Mexican company broadcasting on radio station XERCN in Tijuana, Mexico. The
agreement provides the Company with an affiliate serving the San Diego,
California market, the 10th ranked market in the United States in terms of
Hispanic population. The agreement requires BBC to air the Company's network
programming on station XERCN, which reaches substantially all of the San Diego
market. The Company has sought and received permission from the FCC to allow it
to supply programming to station XERCN. The agreement requires the Company to
sell time for national advertising on station XERCN (for the which the Company
is entitled to a sales commission), and to guarantee BBC a minimum of $250,000
per year in national advertising sales for the station.

50

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The information required by Item 10 with respect to directors, nominees and
executive officers of the Company is incorporated by reference to the
information set forth in the Company's Definitive Schedule 14A Proxy Statement
to be filed with the Securities and Exchange Commission not later than 120 days
after the Company's fiscal year end.

ITEM 11. EXECUTIVE COMPENSATION

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

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

51

PART IV

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

(a) 1. FINANCIAL STATEMENTS

The following financial statements have been filed under Item 8 of this report:

Report of Independent Certified Public Accountants

Consolidated Balance Sheets as of December 31, 2001 and 2000

Consolidated Statements of Operations for the Years Ended December 31, 2001,
2000 and 1999

Consolidated Statements of Changes in Series A Redeemable Cumulative Preferred
Stock and Stockholders' Equity (Deficit) for the Years Ended December 31,
2001, 2000 and 1999

Consolidated Statements of Cash Flows for the Years Ended December 31, 2001,
2000 and 1999

Notes to Consolidated Financial Statements

(a) 2. FINANCIAL STATEMENT SCHEDULES

Schedule I - Condensed Financial Information of Radio Unica Communications Corp.

Schedule II - Valuation and Qualifying Accounts

(b) REPORTS ON FORM 8-K

None

52

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF
RADIO UNICA COMMUNICATIONS CORP.

CONDENSED BALANCE SHEETS

53

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF
RADIO UNICA COMMUNICATIONS CORP.

CONDENSED STATEMENTS OF OPERATIONS

54

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF
RADIO UNICA COMMUNICATIONS CORP.

CONDENSED STATEMENTS OF CASH FLOWS

55

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF
RADIO UNICA COMMUNICATIONS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

In the parent company-only financial statements of Radio Unica
Communications Corp. (formerly Radio Unica Holdings Corp.) (the Company), the
investment in the wholly owned subsidiary is stated at cost plus intercompany
receivables, less equity in the net loss of subsidiary since inception. The
parent company-only financial statements should be read in conjunction with
Radio Unica Communications Corp.'s consolidated financial statements which
are included herein.

2. INITIAL PUBLIC OFFERING

On October 19, 1999, the Company completed an initial public offering
("IPO") of 6,840,000 shares of its common stock at an IPO price of $16.00 per
share. The Company received net proceeds from the IPO of approximately $99.4
million on October 22, 1999. The net proceeds from the IPO were and will be used
to repay the indebtedness under the revolving credit facility, to acquire radio
stations, upgrade existing stations and for general corporate purposes.

3. PREFERRED STOCK

In connection with the IPO, all the outstanding shares of Series A
redeemable cumulative preferred stock were exchanged for an aggregate of
2,974,909 shares of common stock. The total liquidation value of the Series A
redeemable cumulative preferred stock on the date of the IPO was $41,499,977,
which included accrued dividends of $6,119,487.

4. STOCK OPTION PLAN

1998

On June 30, 1998, the Company adopted the 1998 Stock Option Plan ("the
Plan') which provides for the granting of stock options to purchase shares of
the Company's common stock to officers, directors, and key employees responsible
for the direction and management of the Company and to non-employee consultants
and independent contractors. At that time the Company reserved 6,200,000 shares
of its common stock for issuance under the Plan. At July 6, 1999, the Company
amended the plan to reduce the number of shares to be reserved for issuance
under the Plan to 5,000,000 shares. The vesting period and the terms of the
stock options granted are established by a Committee of the Board of Directors
(the Committee). The stock options expire no later than ten years from the date
of grant.

The Company accounts for stock options issued to employees and
directors using the intrinsic-value method as outlined under Accounting
Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to
Employees and related interpretations. Stock options issued to non-employees
for services, are accounted for using the fair value method in accordance
with the provisions of Emerging Issues Task Force No. 96-18 ("EITF 96-18"),
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services".

In 1998, the Company granted options to its employees to purchase 2,844,870
shares of the Company's common stock. Of the 2,844,870 options granted, 678,280
vested immediately, 407,650 vest ratably over time and 635,500 vest upon the
attainment of certain performance goals as determined by the Committee. Of the
635,500 options, 130,888 vested on December 31, 1998. The exercise price of the
678,280 options which vested immediately, the 407,650 options which vest ratably
over time and the 130,888 options which vested on December 31, 1998 is $0.03 per
share, which was determined by the Committee to be the fair market value at the
date of grant, or, in the case of the 130,888 options, on the date they vested.
As a result, no compensation expense has been recognized on these options under
the provisions of APB Opinion No. 25. The remaining 1,123,440 options have an
exercise price of $1.10 to $1.72 per share and vest upon (i) the sale of the
Company or substantially all of its assets, (ii) an IPO, or (iii) an issuance of
capital stock of the Company that would result in Warburg Pincus Ventures and/or
its affiliates in the aggregate ceasing to control more common stock of the
Company than any other single stockholder. Compensation expense for the
1,123,440 options is recognized to the extent that the market value of the
shares exceeds the option price when vesting for these options becomes probable.
Vesting for these options was not deemed probable as of December 31, 1998 and no
compensation expense was recorded for these options as of December 31, 1998.

56

SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF
RADIO UNICA COMMUNICATIONS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

4. STOCK OPTION PLAN

1999

During 1999, the Company granted options to its employees to purchase
1,914,667 shares of the Company's common stock. Of the 1,914,667 options
granted, 1,821,357 vest ratably over time and 31,620 vest upon the attainment of
certain performance goals as determined by the Committee. The exercise price of
the 1,821,357 options which vest ratably over time range from $0.03 to $32.00
per share, which was determined by the Committee to be the fair market value at
the date of grant. As a result, no compensation expense has been recognized on
these options under the provisions of APB Opinion No. 25. The remaining 61,690
options have an exercise price of $1.10 to $1.72 per share and vest upon (i) the
sale of the Company or substantially all of its assets, (ii) an IPO, or (iii) an
issuance of capital stock of the Company that would result in WPV and/or its
affiliates in the aggregate ceasing to control more common stock of the Company
than any other single stockholder.

During 1999, the 31,620 and 61,690 options granted in 1999 and the 635,500
and 1,123,400 options granted in 1998, which were variable options, were valued
at the IPO price of $16.00 per share. Compensation expense of approximately
$19,591,000, representing the extent that the market value of the shares
exceeded the option price, was charged to operations immediately and
approximately $4.3 million is being charged to operations over the remaining
vesting period. Approximately $0.5 million and $3.2 million was charged to
operations in 2001 and 2000, respectively.

2000

During 2000, the Company granted options to its employees to purchase
528,600 shares of the Company's common stock. All the options granted during
2000 vest ratably over time. The exercise price of the 528,600 options range
from $3.44 to $30.63 per share, the fair market value at the date of grant.
As a result, no compensation expense has been recognized on these options
under the provisions of APE Opinion No. 25.

2001

During 2001 the Board of Directors of the Company amended the Plan
(subject to shareholder approval) to increase the number of shares of common
stock available for issuance under the Plan to 6,500,000. In addition, the
Company granted options to purchase 1,219,933 shares of the Company's common
stock. Of these options 1,144,433 were granted to employees and 75,500 were
granted to non-employees. All the options granted during 2001 vest ratably
over time. The exercise price of the 1,219,933 options range from $0.90 to
$3.60 per share, the fair market value at the date of grant. As a result, no
compensation expense has been recognized on the opitons issued to officers,
directors and employees under the provisions of APB Opinion No. 25.

Pursuant to EITF 96-18, the Company recognized compensation expense for
all non-employee opitons, in the of amount of approximately $33,000, $129,000
and $0 in 2001, 2000 and 1999, respectively, which is included in stock
option compensation expense in the accompanying statement of operations.

5. STOCKHOLDER NOTES RECEIVABLE

On November 1, 2000, the Company's Board of Directors authorized loans to
the Company's Chairman and Chief Executive Officer ("CEO") as well as the
Company's Chief Financial Officer ("CFO") of up to $550,000 and $200,000,
respectively. The proceeds of these notes may only be used by the CEO and CFO to
purchase shares of the Company's common stock. The full recourse notes bear
interest at a rate of 8% per year and mature on November 13, 2005. The notes
have been classified in the accompanying balance sheet as a decrease to
stockholders' equity. At December 31, 2001, the amounts outstanding under these
notes totaled $749,657. Interest receivable of $56,105 at December 31, 2001 is
included in other assets.

57

RADIO UNICA COMMUNICATION CORP.
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

58

(c) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K

- ----------
* Incorporated by reference from Registration Statement on Form S-4 (No.
333-61211) of Radio Unica Corp. as amended, as declared effective by the
Securities and Exchange Commission on December 18,1998.

** Incorporated by reference from Registration Statement on Form S-1 (No
333-82561) of Radio Unica Communications Corp, as amended, as declared
effective by the Securities and Exchange Commission on October 19, 1999.

**** Filed herewith

59

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 28, 2002.

Radio Unica Communications Corp.

By: /s/ Joaquin F. Blaya
--------------------
Joaquin F. Blaya
Chairman and Chief Executive Officer

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