EX-99.1 2 y14238exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
 

Exhibit 99.1
(WESTWOOD LOGO)
PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: ANDREW ZAREF
(212) 373-5311
WESTWOOD ONE, INC.
REPORTS THIRD QUARTER 2005 OPERATING RESULTS
     New York, NY — November 3, 2005: Westwood One, Inc. (NYSE: WON) Revenues for the third quarter of 2005 were $134.9 million compared with $141.4 million for the third quarter of 2004, a decrease of approximately $6.5 million, or 4.6%. Revenues for the nine month period ended September 30, 2005 were $410.8 million compared with $410.6 million for the nine month period ended September 30, 2004. The decrease in revenues for the three month period ended September 30, 2005 as compared to 2004, is primarily attributable to the absence of revenues associated with our exclusive broadcast of the 2004 Summer Olympic games.
     Operating income for the third quarter of 2005 was $40.4 million, consistent with the third quarter of 2004. Operating income for the third quarter of 2005 benefited from the absence of costs associated with our exclusive broadcast of the Summer Olympic games and reduced distribution expenses, partially offset by increased programming expenses.
     Net income for the third quarter of 2005 was $21.8 million compared with $23.2 million in the third quarter of 2004, a decrease of $1.4 million, or 6.0%. Net income per diluted share was $.24 per share, consistent with the same quarter of the prior year.
     Interest expense in the third quarter of 2005 was $4.8 million compared with $2.9 million in the third quarter of 2004, an increase of $1.9 million, or 66.3%. The increase in interest expense was due to an increase in outstanding borrowings and higher interest rates.
     Income tax expense in the third quarter of 2005 was $13.9 million compared with $14.3 million in the third quarter of 2004, a decrease of $400,000, or 2.8%. The Company’s effective income tax rate in the third quarter of 2005 was 39.0% compared with 38.1% in the third quarter of 2004. The increase in the Company’s effective tax rate is attributable to recent tax developments in the states in which we operate.

 

 

     Weighted average fully diluted shares outstanding in the third quarter of 2005 decreased approximately 6.3%. The decrease in weighted average fully diluted shares outstanding was primarily attributable to the Company’s stock repurchase program. In the third quarter of 2005, the Company repurchased approximately 2.1 million shares of its common stock for approximately $41.7 million.
     Non-GAAP1 free cash flow for the third quarter of 2005 was $25.7 million compared with $25.6 million for the third quarter of 2004. On a non-GAAP basis free cash flow per diluted share for the third quarter of 2005 increased to $.28 from $.26 for the third quarter of 2004, or 7.7%.
     The Company also announced the declaration of a cash dividend of $.10 per share for all issued and outstanding common stock, payable on November 30, 2005 to stockholders of record at the close of business on November 18, 2005. Further declarations of dividends, including the establishment of record and payment dates related to dividends, will be at the discretion of the Company’s Board of Directors.
Business Outlook
     Westwood One expects to deliver revenue growth of low single digits resulting in low single digit growth in operating income before depreciation and amortization for the fourth quarter of 2005.
 
1   All Non-GAAP financial measures have been adjusted from comparable GAAP measures. A description of all adjustments and reconciliations to comparable GAAP measures for all periods presented are included herein.

 

 

ABOUT WESTWOOD ONE
     Westwood One provides over 150 news, sports, music, talk, entertainment programs, features, live events and 24/7 Formats. Through its subsidiaries, Metro Networks/Shadow Broadcast Services, Westwood One provides local content to the radio and TV industries including 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. Westwood One is managed by Infinity Broadcasting Corporation, a wholly-owned subsidiary of Viacom Inc.
     Certain statements in this release, including those relating to the Company’s expected growth in revenues and operating income before depreciation and amortization and to the payment of dividends, 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 currently does business (both general and relative to the advertising and entertainment industries); fluctuations in interest rates; changes in industry conditions; changes in operating performance; shifts in population and other demographics; changes in the level of competition for advertising dollars; fluctuations in operating costs; technological changes and innovations; changes in labor conditions; changes in governmental regulations and policies and actions of regulatory bodies; changes in tax rates; changes in capital expenditure requirements and access to capital markets. Other key risks are described in the Company’s reports filed with the United States Securities and Exchange Commission (“SEC”). Except as otherwise stated in this news announcement, Westwood One 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.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
     The following tables set forth the Company’s operating income before depreciation and amortization for the three month and nine month periods ended September 30, 2005 and 2004. The Company defines “operating income before depreciation and amortization” as net income adjusted to exclude the following line items presented in its Statement of Operations: income taxes; other (income) expense; interest expense; and depreciation and amortization. While this non-GAAP measure has been relabeled to more accurately describe in the title the method of calculation of the measure, the actual method of calculating the measure now labeled operating income before depreciation and amortization is unchanged from the method previously used to calculate the measure formerly labeled EBITDA or operating cash flow in prior disclosures.
     The Company uses operating income before depreciation and amortization, among other things, to evaluate the Company’s operating performance, to value prospective acquisitions, to determine compliance with debt covenants and as one of several components of incentive compensation targets for certain management personnel, and this measure is among the primary measures used by management for planning and forecasting of future periods. 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.
     Since operating income before depreciation and amortization 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. Operating income before depreciation and amortization, 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 operating income before depreciation and amortization excludes certain financial information included in net income, users of this financial information should consider the types of events and transactions which are excluded. As required by the SEC, set forth below is a reconciliation of operating income before depreciation and amortization to net income, the most directly comparable amount reported under GAAP.

 

 

WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In millions)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2005     2004     2005     2004  
Operating income before depreciation and amortization
   $ 45.6     $ 45.4     $ 126.5     $ 127.5  
Depreciation and amortization
     5.2       5.0       15.6       13.0  
 
                        
Operating income
     40.4       40.4       110.9       114.5  
Interest expense, net
     4.7       2.9       12.3       8.4  
 
                        
Income before income taxes
     35.7       37.5       98.6       106.1  
Income taxes
     13.9       14.3       38.0       40.2  
 
                        
Net income
   $ 21.8     $ 23.2     $ 60.6     $ 65.9  
 
                        
     Free cash flow is defined by the Company as net income plus depreciation and amortization 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 cash available to service debt, 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 weighted average fully diluted share outstanding is defined by the Company as free cash flow divided by the weighted average fully diluted share 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 in isolation of, or as a substitute for, net cash flow provided by operating activities as a measure of liquidity. Free cash flow, as calculated by the Company, 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 operating cash flow 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 flows provided by operating activities (the most directly comparable GAAP financial measure) for capital expenditures, deferred taxes and certain other non-cash items and removes the impact of sources and 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 has reconciled net cash flow provided by operating activities to free cash flow as follows:

 

 

WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2005     2004     2005     2004  
Net Cash Flow Provided by Operating Activities
   $ 41.7     $ 32.3     $ 110.1     $ 108.3  
Plus (Minus):
                                
Changes in assets and liabilities:
                                
Accounts Receivable
     (13.0 )     (1.3 )     (19.6 )     (11.7 )
Prepaid & Other Assets
     1.8       1.1       5.7       (3.0 )
Deferred Revenue
     2.6       0.9       4.1       0.4  
Income Taxes Payable
     (1.8 )     (1.3 )     (12.5 )     (8.0 )
Accounts Payable and Accrued and Other Liabilities
     (7.5 )     1.5       (11.9 )     (1.0 )
Amounts Payable to Related Parties
     3.2       (3.9 )     1.0       (4.1 )
Adjustments to reconcile net income to net cash provided by operating activities:
                                
Deferred Taxes
     0.3       (1.0 )     (0.1 )     (1.3 )
Non-cash Stock Compensation
     (0.2 )     —       (0.2 )     —  
Amortization of Deferred Financing Costs
     (0.1 )     (0.1 )     (0.3 )     (0.6 )
Capital Expenditures
     (1.3 )     (2.6 )     (2.9 )     (5.0 )
 
                        
Free Cash Flow
   $ 25.7     $ 25.6     $ 73.4     $ 74.0  
 
                        
 
                                
Diluted Shares Outstanding
     90.7       97.2       92.4       99.1  
 
                        
 
                                
Free Cash Flow per Diluted Share
   $ 0.28     $ 0.26     $ 0.79     $ 0.75  
 
                        

 

 

WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    September 30,     December 31,  
    2005     2004  
    (Unaudited)          
ASSETS
                
 
                
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 21,162     $ 10,932  
Accounts receivable, net of allowance for doubtful accounts of $4,075 (2005) and $2,566 (2004)
     122,394       142,014  
Prepaid and other assets
     25,265       21,400  
 
            
Total Current Assets
     168,821       174,346  
PROPERTY AND EQUIPMENT, NET
     43,103       47,397  
GOODWILL
     982,219       981,969  
INTANGIBLE ASSETS, NET
     5,299       6,176  
OTHER ASSETS
     29,545       36,391  
 
            
TOTAL ASSETS
   $ 1,228,987     $ 1,246,279  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
CURRENT LIABILITIES:
                
Accounts payable
     17,459       13,135  
Amounts payable to related parties
     19,276       20,274  
Deferred revenue
     10,149       14,258  
Income taxes payable
     17,413       5,211  
Accrued expenses and other liabilities
     43,091       28,463  
 
            
Total Current Liabilities
     107,388       81,341  
LONG-TERM DEBT
     398,648       359,439  
DEFERRED INCOME TAXES
     11,914       12,541  
OTHER LIABILITIES
     7,932       8,465  
 
            
TOTAL LIABILITIES
     525,882       461,786  
 
            
COMMITMENTS AND CONTINGENCIES
                
SHAREHOLDERS’ EQUITY
                
Preferred stock: authorized 10,000,000 shares, none outstanding
     —       —  
Common stock, $.01 par value: authorized, 252,751,250 shares;
issued and outstanding, 88,543,721 (2005) and 94,353,675 (2004)
     885       944  
Class B stock, $.01 par value: authorized, 3,000,000 shares:
                
issued and outstanding, 291,796 (2005 and 2004)
     3       3  
Additional paid-in capital
     227,061       369,036  
Accumulated earnings
     475,156       414,510  
 
            
TOTAL SHAREHOLDERS’ EQUITY
     703,105       784,493  
 
            
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,228,987     $ 1,246,279  
 
            

 

 

WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2005     2004     2005     2004  
    (Unaudited)     (Unaudited)  
NET REVENUES
   $ 134,928     $ 141,422     $ 410,847     $ 410,615  
 
                        
 
                                
Operating Costs (include related party expenses of $18,094, $19,784, $60,103 and $64,111, respectively)
     87,166       94,162       276,895       277,419  
 
                                
Depreciation and Amortization (includes related party warrant amortization of $2,427, $2,427, $7,281 and
     5,194       4,964       15,597       13,074  
$5,191, respectively)
                                
 
                                
Corporate General and Administrative Expenses (includes related party expenses of $819, $759, $2,367 and $2,221, respectively)
     2,196       1,877       7,412       5,653  
 
                        
 
     94,556       101,003       299,904       296,146  
 
                        
OPERATING INCOME
     40,372       40,419       110,943       114,469  
Interest Expense
     4,840       2,911       12,626       8,528  
Other (Income) Expense
     (133 )     (41 )     (319 )     (114 )
 
                        
INCOME BEFORE INCOME TAXES
     35,665       37,549       98,636       106,055  
INCOME TAXES
     13,912       14,313       37,990       40,166  
 
                        
NET INCOME
   $ 21,753     $ 23,236     $ 60,646     $ 65,889  
 
                        
 
                                
EARNINGS PER SHARE:
                                
BASIC
   $ 0.24     $ 0.24     $ 0.66     $ 0.67  
 
                        
DILUTED
   $ 0.24     $ 0.24     $ 0.66     $ 0.66  
 
                        
 
                                
WEIGHTED AVERAGE SHARES OUTSTANDING:
                                
BASIC
     90,338       96,457       91,940       97,806  
 
                        
DILUTED
     90,678       97,224       92,380       99,101