WESTWOOD ONE, INC. 
By
Revenue for the first quarter of 2008 decreased
Adjusted EBITDA for the first quarter of 2008, defined as operating income
plus depreciation and amortization, special charges, and non-cash stock-based
compensation, was
Westwood One's President and CEO,
Free cash flow, defined as net income plus depreciation and amortization,
special charges, stock-based compensation, and amortization of deferred
financing costs less capital expenditures, in the first quarter of 2008
decreased approximately
Special charges in the first quarter of 2008 were
Operating loss in the first quarter of 2008 increased
Interest expense decreased
Income tax expense decreased
Net loss for the first quarter was
2008 Outlook
The Company expects 2008 revenue to increase low single digits and Adjusted EBITDA to decrease 15% - 20% as a result of making strategic investments in our core business. These investments will focus on increasing the audience we deliver to our advertisers and expanding our program offerings. We will also improve and expand our sales force. While improving these core elements of our business, we will increase our focus on developing content for use across all media platforms.
About Westwood One
Westwood One (NYSE: WON) is a platform-agnostic content company providing over 150 news, sports, music, talk, entertainment programs, features and live events to numerous media partners. Through its subsidiaries, Metro Networks/Shadow Broadcast Services, Westwood One provides local content to the radio and TV industries and to the Web. This content includes news, sports, weather, traffic, video news services and other information. SmartRoute Systems manages traffic information centers for state and local departments of transportation, and markets traffic and travel content to wireless, Internet, in-vehicle navigation systems and voice portal customers. Westwood One serves more than 5,000 radio stations. For more information please visit www.westwoodone.com.
Certain statements in this release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. The words or phrases "guidance," "expect," "anticipate,"
"estimates" and "forecast" and similar words or expressions are intended to
identify such forward-looking statements. In addition any statements that
refer to expectations or other characterizations of future events or
circumstances are forward-looking statements. Various risks that could cause
future results to differ from those expressed by the forward-looking
statements included in this release include, but are not limited to: changes
in economic conditions in the U.S. and in other countries in which Westwood
One, Inc. currently does business (both generally and relative to the
broadcasting industry); advertiser spending patterns, including the notion
that orders are being placed in close proximity to air, limiting visibility of
demand; changes in the level of competition for advertising dollars;
technological changes and innovations; fluctuations in programming costs;
shifts in population and other demographics; changes in labor conditions; and
changes in governmental regulations and policies and actions of federal and
state regulatory bodies. Other key risks are described in the Company's
reports filed with the SEC, including the Company's annual report on Form 10-K
for the year ending
WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
Adjusted EBITDA
The following tables set forth the Company's Adjusted EBITDA for the three
month periods ended
Adjusted EBITDA is used by the Company to, among other things, evaluate its operating performance, forecast and plan for future periods, value prospective acquisitions, and as one of several components of incentive compensation targets for certain management personnel. This measure is an important indicator of the Company's operational strength and performance of its business because it provides a link between profitability and operating cash flow. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company's management, helps improve their ability to understand the Company's operating performance and makes it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, this measure is also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry. Adjusted EBITDA is also used to determine compliance with its debt covenants.
Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance. Adjusted EBITDA as the Company calculates it, may not be comparable to similarly titled measures employed by other companies. In addition, this measure does not necessarily represent funds available for discretionary use, and is not necessarily a measure of the Company's ability to fund its cash needs. As Adjusted EBITDA excludes certain financial information compared with operating income, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are excluded. As required by the Securities and Exchange Commission ("SEC"), the Company provides below a reconciliation of Adjusted EBITDA to operating income, the most directly comparable amount reported under GAAP.
(In millions)
Three Months Ended
March 31,
2008 2007
Adjusted EBITDA $11.1 $15.4
Less:
Depreciation and amortization 4.0 5.0
Stock-based compensation 2.1 2.7
Special charges 8.0 0.4
Operating Income (Loss) $(3.0) $7.3
Free Cash Flow
Free cash flow is defined by the Company as net income (loss) plus depreciation and amortization, stock-based compensation, special charges and goodwill impairment (when applicable) less capital expenditures. The Company uses free cash flow, among other measures, to evaluate its operating performance. Management believes free cash flow provides investors with an important perspective on the Company's cash available to service debt and the Company's ability to make strategic acquisitions and investments, maintain its capital assets, repurchase its common stock and fund ongoing operations. As a result, free cash flow is a significant measure of the Company's ability to generate long term value. The Company believes the presentation of free cash flow is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. In addition, free cash flow is also a primary measure used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the operating performance of the Company to other companies in its industry. Free cash flow per fully diluted weighted average Common shares outstanding is defined by the Company as free cash flow divided by the fully diluted weighted average Common shares outstanding.
As free cash flow is not a measure of performance calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or net cash provided by operating activities as a measure of liquidity. Free cash flow, as the Company calculates it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of the Company's ability to fund its cash needs. In arriving at free cash flow, the Company adjusts net cash provided by operating activities to remove the impact of cash flow timing differences to arrive at a measure which the Company believes more accurately reflects funds available for discretionary use. Specifically, the Company adjusts net cash provided by operating activities (the most directly comparable GAAP financial measure) for capital expenditures, special charges, and deferred taxes, in addition to removing the impact of sources and or uses of cash resulting from changes in operating assets and liabilities. Accordingly, users of this financial information should consider the types of events and transactions which are not reflected. The Company provides below a reconciliation of free cash flow to the most directly comparable amount reported under GAAP, net cash provided by operating activities.
The following table presents a reconciliation of the Company's net cash provided by operating activities to free cash flow:
(In millions except per share amounts)
Three Months Ended
March 31,
2008 2007
Net Cash Provided by Operating Activities $(10.8) $16.6
Plus (Minus)
Changes in assets and liabilities 12.4 (8.3)
Special charges 8.0 0.4
Deferred taxes (0.5) 0.3
Less Capital expenditures (3.7) (0.9)
Free Cash Flow $5.4 $8.1
Diluted weighted-average shares outstanding 89.4 86.1
Free Cash Flow per Share $0.06 $0.09
WESTWOOD ONE, INC
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
March 31,
2008 2007
(Unaudited)
NET REVENUE $106,627 $113,959
Operating Costs (includes related
party expenses of $17,827 and
$18,943, respectively) 94,229 97,435
Depreciation and Amortization
(includes related party
warrant amortization of $1,618
and $2,427, respectively) 3,976 5,031
Corporate General and
Administrative Expenses
(includes related party expenses
of $656 and $830, respectively) 3,466 3,876
Special Charges 7,956 355
109,627 106,697
OPERATING (LOSS) INCOME (3,000) 7,262
Interest Expense 5,399 6,097
Other Income (41) -
(LOSS) INCOME BEFORE INCOME TAXES (8,358) 1,165
INCOME TAX EXPENSE (BENEFIT) (3,020) 450
NET (LOSS) INCOME $(5,338) $715
EARNINGS (LOSS) PER SHARE
COMMON STOCK
BASIC $(0.06) $0.01
DILUTED $(0.06) $0.01
CLASS B STOCK
BASIC $- $0.02
DILUTED $- $0.02
WEIGHTED AVERAGE SHARES OUTSTANDING:
COMMON STOCK
BASIC 89,423 86,072
DILUTED 89,423 86,079
CLASS B STOCK
BASIC 292 292
DILUTED 292 292
WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
March 31, December 31,
2008 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $5,931 $6,187
Accounts receivable, net of
allowance for doubtful accounts
of $3,415 (2008) and $3,602(2007) 101,378 108,271
Warrants, current portion - 9,706
Prepaid and other assets 10,878 13,990
Total Current Assets 118,187 138,154
PROPERTY AND EQUIPMENT, NET 34,514 33,012
GOODWILL 464,114 464,114
INTANGIBLE ASSETS, NET 3,247 3,443
OTHER ASSETS 23,949 31,034
TOTAL ASSETS $644,011 $669,757
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturity of long-term debt $138,100 $-
Accounts payable 17,533 17,378
Amounts payable to related parties 16,390 30,859
Deferred revenue 4,621 5,815
Income taxes payable - 7,246
Accrued expenses and other liabilities 30,001 29,562
Total Current Liabilities 206,645 90,860
LONG-TERM DEBT 201,783 345,244
OTHER LIABILITIES 6,209 6,022
TOTAL LIABILITIES 414,637 442,126
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock: authorized
10,000 shares, none outstanding - -
Common stock, $.01 par value:
authorized, 300,000 shares;
issued and outstanding,
101,352 (2008) and 87,105(2007) 1,018 872
Class B stock, $.01 par value:
authorized, 3,000 shares; issued
and outstanding, 292(2008 and 2007) 3 3
Additional paid-in capital 295,178 290,786
Unrealized gain on available for
sale securities 8,503 5,955
Accumulated deficit (75,328) (69,985)
TOTAL SHAREHOLDERS' EQUITY 229,374 227,631
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $644,011 $669,757
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2008 2007
CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss) income $(5,338) $715
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization 3,977 5,031
Deferred taxes 522 (257)
Non-cash stock compensation 2,123 2,755
Amortization of deferred
financing costs 352 121
1,636 8,365
Changes in assets and liabilities:
Accounts receivable 6,893 16,463
Prepaid and other assets 6,652 624
Deferred revenue (1,194) (591)
Income taxes payable and prepaid
income taxes (10,894) (7,167)
Accounts payable and accrued
expenses and other liabilities 620 (9,603)
Amounts payable to related parties (14,469) 8,558
Net Cash (Used) Provided By
Operating Activities (10,756) 16,649
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (3,664) (906)
Net Cash Used In Investing
Activities (3,664) (906)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock 22,750 -
Borrowings under bank and other
long-term obligations - 10,000
Debt repayments and payments of
capital lease obligations (7,049) (30,178)
Dividend payments - (1,731)
Deferred financing costs (1,537) -
Net Cash Provided By (Used in)
Financing Activities 14,164 (21,909)
NET INCREASE IN CASH AND CASH
EQUIVALENTS (256) (6,166)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 6,187 11,528
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $5,931 $5,362
SOURCE Westwood One, Inc.
