Westwood One, Inc. Reports Results for the Second Quarter 2011

        Westwood One, Inc. Reports Results for the Second Quarter 2011

  PR Newswire

  NEW YORK, Aug. 15, 2011

NEW YORK, Aug. 15, 2011 /PRNewswire/ -- Westwood One, Inc. (NASDAQ: WWON), a
leading independent provider of network radio content to the radio and digital
sectors, today reported operating results for the second quarter 2011.

Westwood One’s second quarter revenue increased 1.8% to $40.8 million from
$40.0 million in 2010. The increase was primarily due to increased advertising
revenue from the Company’s news programming, partially offset by decreased
advertising revenue from other programming.

Net income increased $19.4 million to $14.0 million in the second quarter of
2011 from a net loss of $5.4 million in the second quarter of 2010. This was
primarily due to the sale of our Metro Traffic business on April 29, 2011,
which resulted in a gain of $19.3 million. The results of the Metro Traffic
business are presented as a discontinued operation in accordance with
generally accepted accounting principles.

Adjusted EBITDA from continuing operations (1) in the second quarter was a
loss of $1.0 million, which includes higher broadcast rights expense of $1.8
million primarily related to a new sports programming agreement, compared to
Adjusted EBITDA from continuing operations of $1.0 million in the second
quarter of last year. 

“Our revenue was up slightly in the midst of slower than expected growth in
the Network radio industry, and the seasonal absence of major sports
programming in the second quarter,” said Rod Sherwood, President. “We
continued to pursue new opportunities in programming and distribution by
launching Rocsi on the Radio with the star of BET’s hit TV program, 106th and
Park , and by increasing distribution for our Dennis Miller show and our suite
of Rick Dees programming. In addition, we launched digital and social media
extensions of our new talk programming, as well as digital distribution of the
Dennis Miller Show , and digital video distribution of Loveline with Dr. Drew
Pinsky and Mike Catherwood.”

“The most significant event of the second quarter was the sale of our Metro
Traffic business to Clear Channel,” said Sherwood. “This transaction reduced
the Company’s senior debt by approximately $104.0 million, strengthened our
balance sheet, and helped position the Company for future growth. Since that
time, we have continued to expand our programming assets, renew key
partnerships, invest in our digital business and our IT infrastructure, and
build new alliances with affiliates and advertisers and their agencies.” 

“We believe that the best path to growth is to enhance the breadth of the
products and services we provide to our customers,” said Sherwood. “Based on
that strategy, on August 1, 2011, Westwood One announced plans to merge with
Dial Global, a division of Triton Media Group, LLC. The combination of Dial
Global and Westwood One creates a diverse radio programming, services and
advertising sales company, enhancing the array of products and services
provided to radio stations and national advertisers. The two companies also
have complementary station group relationships, based on Westwood One’s
distribution in large markets and Dial Global’s mid-size market distribution.”
The transaction is expected to close in the fourth quarter of 2011, subject to
customary closing conditions including completion of the debt financing and
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act.

Three Months Ended June 30, 2011

For the three months ended June 30, 2011, revenue was $40.8 million, an
increase of 1.8%, compared to $40.0 million in the second quarter of 2010.

Operating loss in the second quarter of 2011 increased by $2.6 million to $5.2
million from $2.6 million in 2010. This increased loss is primarily due to
increased operating costs of $2.6 million and higher restructuring expenses of
$1.2 million, partially offset by higher revenue of $0.7 million and lower
corporate expense of $0.6 million. The increased operating costs were largely
due to increases in broadcast rights fees and station compensation which
represent an investment in our future revenue generation capability. The
higher restructuring expense was primarily related to the termination of a
programming agreement for $0.9 million.

Adjusted EBITDA from continuing operations (1) in the second quarter was a
loss of $1.0 million, which includes higher broadcast rights expense of $1.8
million, primarily related to a new sports programming agreement, compared to
Adjusted EBITDA from continuing operations of $1.0 million in the second
quarter of last year.

Interest expense decreased $0.7 million, or 36.6%, to $1.3 million from $2.0
million in the second quarter of 2010, reflecting lower fees of $0.7 million
related to amendments to agreements governing our Senior Notes. Interest
expense included in discontinued operations of $1.2 million and $4.0 million
for the three months ended June 30, 2011 and 2010, respectively, is related to
the non-Gores Senior Notes being repaid in conjunction with the Metro Sale
transaction.

The Company’s tax benefit increased $0.9 million to $2.7 million compared to
$1.8 million in the second quarter of 2010. Our effective tax rate for the
quarter ended June 30, 2011 was approximately 42.5% as compared to 40.0% for
the comparable period in 2010. The higher income tax benefit in 2011 is
primarily the result of a higher pre-tax loss.

Net income increased $19.4 million to $14.0 million from a net loss of $5.4
million in the second quarter of 2010, which is primarily attributable to the
gain on the Metro Sale transaction of $19.3 million and a lower loss from
discontinued operations of $1.0 million, partially offset by a higher loss
from continuing operations of $0.9 million. Net income per share for basic
and diluted shares was $0.62 in the second quarter of 2011, compared with net
loss per share for basic and diluted shares of $(0.26) in the second quarter
of 2010. Weighted average shares outstanding were higher in the second quarter
of 2011 compared to the second quarter of 2010 primarily due to the issuance
to Gores of 769,231 common shares in September 2010 and 1,186,240 common
shares in February 2011.

Free cash flow (2) decreased to a use of $15.6 million in the second quarter
of 2011 from a source of $6.0 million in the second quarter of 2010. The
decrease was principally attributable to the absence of the 2010 federal tax
refund of $12.9 million, the 2011 repayment of PIK interest of $10.9 million
and decreases in other non-cash items of $0.9 million, partially offset by
higher changes in other assets and liabilities of $1.5 million and lower
capital expenditures of $1.6 million.

Six Months Ended June 30, 2011

For the six months ended June 30, 2011, revenue was $92.5 million, a decrease
of 3.3% compared to $95.6 million in the comparable 2010 period. This
primarily reflected the absence of the Winter Olympics revenue in 2011 versus
the first quarter revenue from this event in 2010.

Operating loss for the first six months of 2011 increased by $9.2 million to
$14.0 million from a loss of $4.8 million in 2010. This increased loss is
primarily due to increased operating costs of $6.0 million, lower revenue of
$3.1 million and higher restructuring expenses of $1.6 million, partially
offset by lower corporate expense of $1.5 million. The increased operating
costs were largely due to increases in broadcast rights and station
compensation which represent an investment in our future revenue generation
capability. The higher restructuring expense was primarily related to the
termination of a programming agreement for $0.9 million.

Adjusted EBITDA from continuing operations (1) in the first six months of 2011
was a loss of $5.9 million compared to Adjusted EBITDA from continuing
operations income of $2.5 million in the first six months of 2010. Adjusted
EBITDA from continuing operations (1) decreased in the first six months of
2011 primarily reflecting higher broadcast rights expense of $4.0 million
compared to the first six months of last year (which is largely related to a
new sports programming agreement) and lower revenue of $3.1 million. Of the
$4.0 million of incremental broadcast rights expense, $2.4 million was
non-cash expense. Excluding the incremental non-cash broadcast rights
expense, Adjusted EBITDA from continuing operations would have been a loss of
$3.5 million for the first six months of 2011.

Interest expense decreased $0.7 million, or 20.3%, to $2.6 million from $3.3
million in the first six months of 2010, reflecting lower fees of $0.7 million
related to the amendments to agreements governing our Senior Notes. Interest
expense included in discontinued operations of $5.0 million and $8.1 million
for the six months ended June 30, 2011 and 2010, respectively, is related to
the non-Gores Senior Notes being repaid in conjunction with the Metro Sale
transaction.

The Company’s tax benefit increased $3.1 million to $7.0 million compared to
$3.9 million in the first six months of 2010. Our effective tax rate for the
six months ended June 30, 2011 was approximately 44.9% as compared to 48.3%
for the comparable period in 2010. The higher income tax benefit in 2011 is
primarily the result of a higher pre-tax loss.

Net income increased $16.3 million to $4.2 million from a net loss of $12.1
million in the first six months of 2010, which is primarily attributable to
the gain on the Metro Sale transaction of $19.3 million and a lower loss from
discontinued operations of $1.4 million, partially offset by a higher loss
from continuing operations of $4.4 million. Net income per share for basic
and diluted shares was $0.19 in the first six months of 2011, compared with
net loss per share for basic and diluted shares of $(0.59) in the first six
months of 2010. Weighted average shares outstanding were higher in the first
six months of 2011 compared to 2010, primarily due to the issuance to Gores of
769,231 common shares in September 2010 and 1,186,240 common shares in
February 2011.

Free cash flow (2) decreased to a use of $22.2 million in the first six months
of 2011 from a source of $8.7 million in the comparable period of 2010. The
decrease was principally attributable to the 2011 non-cash gain on the Metro
Sale transaction of $19.3 million, the absence of the 2010 federal tax refund
of $12.9 million, the 2011 repayment of PIK interest of $10.9 million,
decreases in other non-cash items of $3.8 million and higher changes in other
assets and liabilities of $2.3 million, partially offset by higher net income
of $16.4 million and lower capital expenditures of $1.9 million.

Outlook

Westwood One’s revenue is pacing ahead for the second half of 2011 when
compared to the same period in 2010. We were encouraged by the recent
resolution of the NFL lock-out in August, and we are focused on bringing our
unique sports packages to our advertising customers. However, since the NFL
agreement was reached mid-way into the third quarter, it is possible that some
substitution by advertisers into other properties may have occurred in
September.

In addition, the recent events in the economy may impact our industry in the
near term and could impact our revenue if advertisers respond by decreasing
their spending.

About Westwood One

Westwood One (NASDAQ: WWON) is one of the nation’s largest providers of
network radio programming serving more than 5,000 radio stations in the U.S.
Westwood One provides over 150 news, sports, music, talk and entertainment
programs, features and live events to numerous media partners.

Footnotes to Press Release

(1) Adjusted EBITDA is a non-GAAP financial measure that is reconciled to net
income in the accompanying financial tables. We use Adjusted EBITDA to
evaluate our performance relative to our competitors and have included it in
this press release because we believe Adjusted EBITDA represents an effective
means by which to measure our operating performance. Although we primarily
view Adjusted EBITDA as an operating performance measure, we also consider it
to be useful to investors because it enables them to evaluate and compare our
results from operations and cash resources generated from our business in a
more meaningful and consistent manner by excluding specific items which are
not reflective of ongoing operating results. Adjusted EBITDA is not a
measurement of financial performance under GAAP (Generally Accepted Accounting
Principles) and should not be considered as an alternative to net income,
operating income or any other performance measure derived in accordance with
GAAP, as an alternative to GAAP cash flow from operating activities or as a
measure of our profitability or liquidity.

(2) Free cash flow is a non-GAAP financial measure that is reconciled to net
income in the accompanying financial tables. We use free cash flow to
evaluate our performance relative to our competitors and have included it in
this press release because we believe free cash flow represents an effective
means by which to measure our operating performance. Although we primarily
view free cash flow as an operating performance measure, we also consider it
to be a useful to investors because it provides them with an important
perspective on the cash we have available to service our debt, maintain
capital assets and fund ongoing operations and make strategic acquisitions
and/or investments. Free cash flow is not a measurement of our financial
performance under GAAP and should not be considered as an alternative to net
income, operating income, or any other performance measure derived in
accordance with GAAP, as an alternative to GAAP cash flow from operating
activities or as a measure of our profitability or liquidity.

Forward-Looking Statements

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 Westwood One 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: risks related to the proposed merger with Verge Media Holdings
(d/b/a Dial Global) (the “Merger”), such as consummation of the Merger is
subject to regulatory approval and certain other closing conditions, that our
indebtedness after the Merger will be substantial, that the anticipated
benefits of the Merger may not be fully realized or may take longer to realize
than expected, and failure to complete the Merger could impact our stock price
and/or our future business and financial results. Other risks include those
related to our business such as continued declines in our operating income;
the significant amount of our indebtedness; our future cash flow from
operations and our ability to achieve our financial projections; changes to
our CBS arrangement; maintenance of an effective system of internal controls;
increased competition and technological changes and innovations; failure to
obtain or retain the rights in popular programming; acceptance of our content;
continued consolidation in the industry; and Gores’ influence over our
corporate actions. Our key risks are described in our reports filed with the
SEC, including our Quarterly Report on Form 10-Q for the quarter ended June
30, 2011 and our Annual Report on Form 10-K for the year ended December31,
2010. Except as otherwise stated in this news announcement, Westwood One,
Inc. does not undertake any obligation to publicly update or revise any
forward-looking statements because of new information, future events or
otherwise.

                              WESTWOOD ONE, INC
                    CONSOLIDATED STATEMENT OF OPERATIONS
                  (In thousands, except per share amounts)
                          Three Months Ended June
                                    30,             Six Months Ended June 30,
                             2011         2010          2011         2010
                            $        $         $        $    
Revenue                       40,759      40,036       92,494      95,611
Operating costs                40,151       37,575        94,744       88,728
Depreciation and
amortization                    1,693        1,450         3,393        2,846
Corporate, general and
administrative expenses         2,018        2,640         4,673        6,171
Restructuring charges           1,339          129         1,774          159
Special charges                   731          831         1,924        2,528
Total expenses                 45,932       42,625       106,508      100,432
Operating loss                (5,173)      (2,589)      (14,014)      (4,821)
Interest expense                1,285        2,026         2,589        3,248
Other expense (income)              -          (3)       (1,096)          (2)
Loss from continuing
operations before income
tax                           (6,458)      (4,612)      (15,507)      (8,067)
Income tax benefit from
continuing operations         (2,744)      (1,847)       (6,968)      (3,899)
Net loss from continuing
operations                    (3,714)      (2,765)       (8,539)      (4,168)
Loss from discontinued
operations, net of
income tax                    (1,616)      (2,653)       (6,557)      (7,973)
Gain on disposal of
discontinued operations,
net of income tax              19,313            -        19,313            -
                            $        $       $           $   
Net income (loss)             13,983     (5,418)        4,217    (12,141)
Income (loss) per common
share - basic and
diluted:
                          $       $        $       $     
Continuing operations         (0.16)      (0.13)       (0.39)      (0.20)
Discontinued operations          0.78       (0.13)          0.58       (0.39)
                          $       $        $       $     
Net income (loss)              0.62      (0.26)        0.19      (0.59)
Weighted average common
shares outstanding:
Basic and diluted              22,592       20,544        22,173       20,544

                              WESTWOOD ONE, INC
                         CONSOLIDATED BALANCE SHEETS
                  (In thousands, except per share amounts)
                                         June 30, 2011      December 31, 2010
                                                              (derived from
                                          (unaudited)           audited)
ASSETS
Current assets:
                                     $            $        
 Cash and cash equivalents                       13,289        2,938
 Accounts receivable, net of
 allowance for doubtful accounts                    37,457             49,672
 Prepaid and other assets                           14,085             16,583
 Current assets discontinued
 operations                                            590             48,723
     Total current assets                           65,421            117,916
Property and equipment, net                         23,711             23,502
Intangible assets, net                              24,600             26,262
Goodwill                                            25,796             25,796
Other assets                                         6,216              1,642
Non-current assets discontinued
operations                                               -             93,156
                                     $            $        
     TOTAL ASSETS                                145,744        288,274
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
                                     $            $        
 Accounts payable                                24,794        33,957
 Amounts payable to related parties                  1,331                859
 Accrued expenses and other
 liabilities                                        17,339             20,148
 Current liabilities discontinued
 operations                                         11,754             32,357
     Total current liabilities                      55,218             87,321
Long-term debt                                      35,000            136,407
Deferred tax liability                              14,375             24,188
Due to Gores                                        10,479             10,222
Other liabilities                                   14,635             15,951
Non-current liabilities discontinued
operations                                           6,209             20,177
     TOTAL LIABILITIES                             135,916            294,266
Commitments and Contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value:
authorized: 5,000,000 shares                         226                213
Additional paid-in capital                         100,242             88,652
Accumulated deficit                               (90,640)           (94,857)
     TOTAL STOCKHOLDERS' EQUITY
     (DEFICIT)                                       9,828            (5,992)
     TOTAL LIABILITIES AND           $            $        
     STOCKHOLDERS' EQUITY (DEFICIT)              145,744        288,274

                              WESTWOOD ONE, INC
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)
                                              Six Months Ended June 30,
                                               2011               2010
Cash Flows from Operating Activities:
                                         $            $       
Net income (loss)                                 4,217          (12,141)
Adjustments to reconcile net income
(loss) to net cash  (used in)
provided by operating activities:
     Gain on sale of Metro Traffic                (19,313)                  -
     Depreciation and amortization                   7,237              9,185
     Deferred taxes                                (8,335)            (8,622)
     Federal tax refund                                  -             12,940
     Paid-in-kind interest - paid                 (10,895)                  -
     Paid-in-kind interest - accrued                 1,924              2,980
     Non-cash equity-based compensation              1,952              1,881
     Change in fair value of derivative
     liability                                     (1,096)                  -
     Amortization of deferred financing
     costs                                              11                 11
     Net change in other assets and
     liabilities                                     4,723              6,988
     Net cash (used in) provided by
     operating activities                         (19,575)             13,222
Cash Flows from Investing Activities:
     Proceeds from Metro Traffic Sale              115,000                  -
     Capital expenditures                          (2,618)            (4,540)
     Net cash provided by (used in)
     investing activities                          112,382            (4,540)
Cash Flows from Financing Activities:
     Repayments of Senior Notes                   (92,180)           (15,500)
     Issuance of common stock                       10,000                  -
     Proceeds from exercise of stock
     options                                           567                  -
     Payments of finance and capital
     lease obligations                               (843)              (612)
     Proceeds from Revolving Credit
     Facility                                            -              7,000
     Net cash used in financing
     activities                                   (82,456)            (9,112)
      Net increase (decrease) in cash
     and cash equivalents                           10,351              (430)
      Cash and cash equivalents,
     beginning of period                             2,938              4,824
      Cash and cash equivalents, end    $          $        
     of period                                     13,289            4,394

The following table provides a reconciliation of Adjusted EBITDA to net income
determined in accordance with GAAP for three and six months ended June 30,
2011 and 2010.

                              WESTWOOD ONE, INC
                       ADJUSTED EBITDA RECONCILIATION
                               (In thousands)
                          Three Months Ended June
                                    30,             Six Months Ended June 30,
                             2011         2010          2011          2010
                            $        $         $            $  
Net income (loss)              13,983      (5,418)         4,217    (12,141)
Gain on disposal of
discontinued operations,
net of income tax            (19,313)            -      (19,313)            -
Loss from discontinued
operations, net of
income tax                      1,616        2,653         6,557        7,973
Interest expense                1,285        2,026         2,589        3,248
Depreciation and
amortization                    1,693        1,450         3,393        2,846
Income taxes provision
(benefit)                     (2,744)      (1,847)       (6,968)      (3,899)
Restructuring, special
charges and other (a)           2,070        1,556         3,698        3,283
Stock-based compensation
(continuing operations)           423          546         1,069        1,224
Other non-operating
losses (gains)                      -          (3)       (1,096)          (2)
                          $       $            $       $    
Adjusted EBITDA                (987)        963      (5,854)        2,532

(a) Restructuring, special charges and other includes expense of $596 is
classified as general and administrative expense on the Statement of
Operations for the three months and six months ended June 30, 2010.

(b) Adjusted EBITDA includes incremental broadcast rights (credit) expense of
$(2,220) and 2,372 for the three and six months ended June 30, 2011,
respectively, related to a new sports programming agreement.

The following table provides a reconciliation of Free Cash Flow to net cash
(used in) provided by operating activities determined in accordance with GAAP
for three and six months ended June 30, 2011 and 2010.

                              WESTWOOD ONE, INC
                        FREE CASH FLOW RECONCILIATION
                               (In thousands)
                           Three Months Ended June
                                     30,            Six Months Ended June 30,
                              2011         2010        2011          2010
Net cash (used in)
provided by operating           $     $        $       $     
activities                   (14,888)      8,307    (19,575)       13,222
(Less) Capital
expenditures                     (706)     (2,357)      (2,618)       (4,540)
                                 $     $        $       $     
Free Cash Flow               (15,594)      5,950    (22,193)       8,682

SOURCE Westwood One, Inc.

Website: http://www.westwoodone.com
Contact: Chris Miller, Westwood One, +1-917-533-7224,
chris_miller@westwoodone.com
 
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