EXHIBIT 99.1
WESTWOOD ONE, INC.
PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: Andrew Zaref
(212) 373-5311
WESTWOOD ONE, INC. REPORTS OPERATING RESULTS FOR THE
FULL-YEAR AND FOURTH QUARTER 2003
New York, NY -- February 18, 2004 - Westwood One, Inc. (NYSE: WON) today
reported operating results for the full-year and fourth quarter 2003.
Westwood One recorded full-year 2003 net revenues of $539.2 million
compared with $550.8 million in 2002. The decline in revenues is primarily
attributable to the absence of revenues recorded in the prior year from the
Company's exclusive 2002 Winter Olympic radio broadcast. For the full-year 2003,
revenues associated with local and regional clients declined while revenues from
national clients increased. Fourth quarter 2003, net revenues were $146.1
million, compared with $149.8 million in 2002's fourth quarter, reflecting a
decline in revenues from local and regional clients, partially offset by higher
revenues from national clients.
Full year operating income was $170.0 million versus $178.9 million in
2002. For the fourth quarter of 2003 operating income was $52.4 million,
compared with $56.4 million in the same prior year period, primarily
attributable to lower revenues and higher sports rights fees.
Shane Coppola, President and Chief Executive Officer of Westwood One, said,
"Despite the difficult local advertising environment in 2003, our revenues
declined only 1% on a comparable basis relative to 2002 which benefited from the
favorable impact of the Winter Olympics. Westwood One is well positioned to take
advantage of the anticipated rebound in advertising in 2004. We continue to make
strategic investments in programming, while controlling our variable costs."
Interest expense was approximately $10.1 million for the year and $2.6
million for the fourth quarter of 2003 compared with $7.0 million for full year
2002 and $1.8 million for the fourth quarter of 2002. The increases were
attributable to incremental borrowings and higher average interest rates.
Income tax expense for the full year 2003 was $59.9 million, compared with
$62.9 million in the prior year. For the fourth quarter of 2003, income tax
expense was $18.7 million, compared with $20.0 million in the same period last
year. The Company's effective income tax rate in 2003 increased to 37.5%,
compared with 36.6% in 2002, as a result of changes in state tax laws enacted
in 2003.
Net income for the full year 2003 was $100.0 million ($.99 per basic share
and $.97 per diluted share), compared with $109.1 million ($1.03 per basic share
and $1.00 per diluted share) in 2002. Net income for the fourth quarter of 2003
was $31.1 million ($.31 per basic and diluted share), compared with $34.5
million ($.33 per basic share and $.32 per diluted share) in the same 2002
period.
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Depreciation and amortization expense of approximately $11.5 million and
$2.9 million, respectively, for the full year and fourth quarter of 2003 was
flat with the corresponding periods in the prior year.
Capital expenditures for 2003 were approximately $4.4 million, compared
with $4.3 million in 2002. For the fourth quarter of 2003, capital expenditures
were $1.1 million, compared with $1.0 million in the comparable 2002 period.
Weighted average shares outstanding for the year and fourth quarter of 2003
decreased approximately 5%, due principally to the Company's stock repurchase
program. The Company repurchased over 5.5 million shares of the Company's Common
Stock for approximately $180.4 million in 2003.
Andrew Zaref, Chief Financial Officer of Westwood One said "Westwood One
continues to generate significant free cash flow and has used our resources to
repurchase Common Stock. Additionally, we continue to build value for
shareholders by investing in our existing products, as well as new program
offerings."
2004 Outlook
Westwood One reiterated its previously issued guidance to deliver revenue
growth of mid-single digits, resulting in double digit growth in operating
income before depreciation and amortization.
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 7,700 radio stations.
Westwood One, Inc. is managed by Infinity Broadcasting Corporation, a
wholly-owned subsidiary of Viacom Inc.
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
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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 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
U.S. Securities and Exchange Commission. 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.
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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 period and year ended December
31, 2003 and 2002. 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); Interest
expense; and Depreciation and Amortization. While this non-Generally Accepted
Accounting Principles ("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
compared with net 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 Operating
Income before Depreciation and Amortization to net income the most directly
comparable amount reported under GAAP.
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WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In millions)
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- --------------------
2003 2002 2003 2002
---- ---- ---- ----
Operating income before depreciation
and amortization $ 55.3 $ 59.3 $ 181.5 $ 190.4
Depreciation and amortization (2.9) (2.9) (11.5) (11.5)
------ ------ ------- -------
Operating Income 52.4 56.4 170.0 178.9
Interest Expense 2.6 1.9 10.1 7.0
Other (Income) - - - (.1)
------ ------ ------- -------
Income before income taxes 49.8 54.5 159.9 172.0
Income Taxes 18.7 20.0 59.9 62.9
------ ------ ------- -------
Net income $ 31.1 $ 34.5 $ 100.0 $ 109.1
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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.
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
flow 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 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 operating cash flow (the most directly comparable GAAP financial
measure) for capital expenditures, deferred taxes and certain other non-cash
items 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 flow provided by operating activities.
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WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In millions)
The following table presents a reconciliation of the Company's net cash flow
provided by operating activities to free cash flow:
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
Net Cash Provided by Operating Activities $13.35 $22.0 $107.9 $147.6
Plus (Minus)
Changes in assets and liabilities
Increase (Decrease) in accounts receivable 11.5 9.2 4.1 7.9
Increase (Decrease) in other assets 2.9 2.1 1.2 .8
Decrease (Increase) in accounts payable and
accrued liabilities 11.5 7.5 7.1 (28.9)
Deferred taxes and other adjustments to reconcile
net income to net cash provided by operating activities (5.2) (3.5) (8.7) (6.9)
Capital Expenditures (1.1) (1.0) (4.4) (4.3)
----- ---- ------ ------
Free Cash Flow $32.9 $36.3 $107.2 $116.2
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WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2003 2002 2003 2002
---- ---- ---- ----
NET REVENUES $146,076 $149,814 $539,226 $550,751
-------- -------- -------- --------
Operating Costs and Expenses Excluding
Depreciation and Amortization 88,752 88,570 350,582 352,385
Depreciation and Amortization 2,884 2,884 11,513 11,464
Corporate General and Administrative Expense 2,080 2,002 7,106 8,005
-------- -------- -------- --------
93,716 93,456 369,201 371,854
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OPERATING INCOME 52,360 56,358 170,025 178,897
Interest Expense 2,639 1,838 10,132 6,955
Other Income (8) (7) (52) (110)
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INCOME BEFORE INCOME TAXES 49,729 54,527 159,945 172,052
INCOME TAXES 18,650 20,031 59,906 62,937
-------- -------- -------- --------
NET INCOME $31,079 $34,496 $100,039 $109,115
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NET INCOME PER SHARE:
BASIC $ 0.31 $ 0.33 $ 0.99 $ 1.03
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DILUTED $ 0.31 $ 0.32 $ 0.97 $ 1.00
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WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 99,563 104,626 101,243 105,992
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DILUTED 101,806 107,437 103,625 109,101
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WESTWOOD ONE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
------------
2003 2002
---- ----
ASSETS
------
CURRENT ASSETS $ 158,295 $ 153,628
PROPERTY AND EQUIPMENT, NET 50,562 53,699
INTANGIBLE ASSETS, NET 7,626 9,647
GOODWILL 990,472 990,192
OTHER ASSETS 55,079 59,146
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TOTAL ASSETS $1,262,034 $ 1,266,312
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES (1) $ 179,873 $ 90,086
DEBT 200,366 232,135
DEFERRED INCOME TAXES 36,902 30,733
OTHER LIABILITIES 8,943 10,318
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TOTAL LIABILITIES 426,084 363,272
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock: authorized 10,000,000 shares, none outstanding - -
Common stock, $.01 par value: authorized, 263,323,250 shares;
issued and outstanding, 99,056,659 (2003) and 103,988,678 (2002) 991 1,040
Class B stock, $.01 par value: authorized, 3,000,000 shares:
issued and outstanding, 703,466 (2003 and 2002) 7 7
Additional paid-in capital 517,132 684,311
Retained earnings 319,020 218,981
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837,150 904,339
Less treasury stock, at cost; 35,000 (2003 and 2002) shares (1,200) (1,299)
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TOTAL SHAREHOLDERS' EQUITY 835,950 903,040
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,262,034 $ 1,266,312
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(1) - Includes $100,000 of current maturities of debt in 2003