EXHIBIT 99
WESTWOOD ONE, INC.
PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: ANDREW ZAREF
(212) 373-5311
WESTWOOD ONE, INC.
REPORTS THIRD QUARTER 2004 OPERATING RESULTS
New York, NY -- October 29, 2004 -- Westwood One, Inc. (NYSE: WON) today
reported third quarter 2004 operating results.
Net revenues for the third quarter of 2004 were $141.4 million compared
with $134.7 million for the third quarter of 2003, an increase of approximately
$6.7 million, or 5.0%. Net revenues for the nine month period ended September
30, 2004 were $410.6 million compared with $393.1 million for the nine month
period ended September 30, 2003, an increase of approximately $17.5, or 4.4%.
The Company benefited from a 5.0% increase in net revenues derived from both
local/regional and national commercial advertisements for the quarter ended
September 30, 2004. The increase in net revenues associated with national
commercial advertisements was primarily attributable to our exclusive broadcast
of the 2004 Summer Olympic games.
Operating income for the third quarter of 2004 was $40.4 million compared
with $46.8 million in the third quarter of 2003, a decrease of approximately
$6.4 million, or 13.6%. The decrease in operating income was primarily
attributable to costs associated with our exclusive broadcast of the 2004 Summer
Olympic games, incremental amortization expenses attributed to warrants issued
with regard to our Management Agreement, increased programming and distribution
costs, and higher corporate governance related expenses, which were partially
offset by lower selling related expenses. In addition, during the third quarter
of 2003, the Company received proceeds of $2.6 million from an insurance
settlement related to claims attributable to the September 11, 2001 terrorist
attacks which offset reported operating expenses for the quarter ended September
30, 2003.
Net income for the third quarter of 2004 was $23.2 million compared with
$27.7 million in the third quarter of 2003, a decrease of approximately $4.5
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million, or 16.2%. Net income per diluted share decreased 11.1% to $.24 per
share from $.27 per share in the third quarter of 2003.
Shane Coppola, President and Chief Executive Officer of Westwood One said:
"Despite an inconsistent overall advertising marketplace our local/regional
businesses demonstrated consistent and improved growth. We expect our
investments in our products and services to translate into growth in the fourth
quarter and beyond. We continue to increase our audience and program offerings
while at the same time controlling costs."
Income tax expense in the third quarter of 2004 was $14.3 million compared
with $16.5 million in the comparable 2003 period, a decrease of approximately
$2.2 million, or 13.4%. The Company's effective income tax rate in the third
quarter of 2004 was 37.9% compared with 37.4% in the comparable period
of 2003.
Weighted average diluted shares outstanding in the third quarter of 2004
decreased approximately 5.5% from the comparable period of the prior year. The
decrease in weighted average shares outstanding was primarily attributable to
the Company's stock repurchase program. In the third quarter of 2004, the
Company repurchased over 2.6 million shares of its Common Stock for
approximately $58.9 million.
Andrew Zaref, Chief Financial Officer of Westwood One said: "The recent
performance of our stock price has provided us with an opportunity for continued
acceleration of stock repurchases." Mr. Zaref added "at the end of the third
quarter, the Company had $196.4 million available under its buy back program."
2004 Outlook
Westwood One reiterated its previously issued 2004 annual guidance to
deliver revenue growth of mid-single digits. The Company further anticipates
that 2004 annual operating income before depreciation and amortization will grow
at a rate in the mid to high single digits.
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
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.
WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
- -----------------------------------------------------------------
The following table sets forth the Company's Operating Income before
Depreciation and Amortization for the three and nine month periods ended
September 30, 2004 and 2003. 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. 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.
WESTWOOD ONE, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
- -----------------------------------------------------------------
(In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
---- ---- ---- ----
Operating income before
depreciation and amortization $45.4 $49.7 $127.5 $126.3
Depreciation and amortization 5.0 3.0 13.0 8.6
----- ----- ------ ------
Operating Income 40.4 46.7 114.5 117.7
Interest Expense and Other 2.9 2.5 8.4 7.4
----- ----- ------ ------
Income before income taxes 37.5 44.2 106.1 110.2
Income Taxes 14.3 16.5 40.2 41.3
----- ----- ------ ------
Net income $23.2 $27.7 $ 65.9 $ 69.0
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Free cash flow, which appears in the table below, 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.
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 Nine Months Ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
---- ---- ---- ----
Net Cash Provided by Operating Activities $32.3 $25.9 $108.3 $94.6
Changes in assets and liabilities
Accounts receivable (1.3) 6.5 (11.7) (7.5)
Prepaid and other assets 1.1 3.8 (3.0) (1.7)
Deferred revenue 0.9 1.5 0.4 0.9
Income taxes payable (1.3) 0.4 (8.0) (1.4)
Accounts payable and accrued and other
liabilities 1.5 (8.9) (1.0) (3.7)
Amounts payable to related parties (3.9) 2.6 (4.1) (0.1)
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred taxes (1.0) (1.0) (1.3) (3.0)
Amortization of deferred financing
costs (0.1) (0.2) (0.6) (0.5)
Capital Expenditures (2.6) (1.0) (5.0) (3.3)
----- ----- ----- -----
Free Cash Flow $25.6 $29.6 $74.0 $74.3
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WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
NET REVENUES $ 141,422 $ 134,680 $ 410,615 $ 393,150
--------- --------- --------- ---------
Operating Costs 94,162 83,274 277,419 261,830
Depreciation and Amortization 4,964 2,889 13,074 8,629
Corporate General and Administrative Expenses 1,877 1,735 5,653 5,026
--------- --------- --------- ---------
101,003 87,898 296,146 275,485
--------- --------- --------- ---------
OPERATING INCOME 40,419 46,782 114,469 117,665
Interest Expense 2,911 2,546 8,528 7,493
Other (Income) Expense (41) (8) (114) (44
--------- --------- -------- ---------
INCOME BEFORE INCOME TAXES 37,549 44,244 106,055 110,216
INCOME TAXES 14,313 16,534 40,166 41,256
--------- --------- -------- --------
NET INCOME $ 23,236 $ 27,710 $ 65,889 $ 68,960
========= ======== ======== ========
EARNINGS PER SHARE:
BASIC 0.24 0.28 0.67 0.68
========= ======== ======== ========
DILUTED 0.24 0.27 0.66 0.66
========= ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 96,457 100,575 97,806 101,803
========= ======== ======== ========
DILUTED 97,224 102,868 99,101 104,232
========= ======== ======== ========
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WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2004 2003
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,188 $ 8,665
Accounts receivable, net of allowance for doubtful accounts
of $3,019 (2004) and $4,334 (2003) 124,051 135,720
Prepaid and other assets 27,188 21,110
--------- ---------
Total Current Assets 160,427 165,495
PROPERTY AND EQUIPMENT, NET 49,151 50,562
GOODWILL 990,472 990,472
INTANGIBLE ASSETS, NET 6,469 7,626
OTHER ASSETS 39,265 47,879
----------- -----------
TOTAL ASSETS $ 1,245,784 $ 1,262,034
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 15,164 13,136
Amounts payable to related parties 22,821 18,680
Deferred revenue 11,831 12,215
Income taxes payable - 3,760
Accrued expenses and other liabilities 31,125 32,082
------------ -----------
Total Current Liabilities 80,941 79,873
LONG-TERM DEBT 343,952 300,366
DEFERRED INCOME TAXES 40,126 36,902
OTHER LIABILITIES 8,465 8,943
------------ -----------
TOTAL LIABILITIES 473,484 426,084
------------ -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock: authorized 10,000 shares, none outstanding - -
Common stock, $.01 par value: authorized, 261,715 shares;
issued and outstanding, 95,720 (2004) and 99,057 (2003) 957 991
Class B stock, $.01 par value: authorized, 3,000 shares:
issued and outstanding, 292 (2004) and 704 (2003) 3 7
Additional paid-in capital 388,180 517,132
Accumulated earnings 384,909 319,020
------------ -----------
774,049 837,150
Less treasury stock, at cost; 90 (2004) and 35 (2003) shares (1,749) (1,200
------------ -----------
TOTAL SHAREHOLDERS' EQUITY 772,300 835,950
------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,245,784 $ 1,262,034
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