Westwood One, Inc. Reports Operating Results for the Third Quarter 2007

Westwood One, Inc. Reports Operating Results for the Third Quarter 2007

NEW YORK, Nov. 1 /PRNewswire-FirstCall/ -- Westwood One, Inc. (NYSE:WON) , a provider of analog and digital content, including news, sports, weather, traffic, video news services and other information, to the radio and TV industries, today reported its operating results for its third quarter ended September 30, 2007.

Revenue in the third quarter of 2007 decreased $10.4 million, or 8.8%, to $108.1 million from $118.5 million in the third quarter of 2006. The decrease is principally attributable to reduced audience levels, lower demand for the Company's products and services, and increased competition. Revenue from national and local/regional advertisements decreased approximately 3.7% ($1.9 million) and 12.8% ($8.5 million), respectively, from the third quarter of 2006.

For the third quarter of 2007, Adjusted EBITDA, defined as operating income plus depreciation and amortization, special charges and non-cash stock- based compensation was $28.1 million compared with $32.2 million for the same period of 2006, a decrease of $4.1 million, or 12.9%. The decrease was principally attributable to lower revenue, partially offset by a reduction in operating costs.

Westwood One's President and CEO, Peter Kosann, stated, "We have seen recent signs that demand for our programs and services are improving, and accordingly have taken steps to stabilize our audience levels and begin making selective investments in additional programs and product offerings."

Gary Yusko, Westwood One's CFO added, "As a result of our improved outlook for the remainder of 2007 combined with our strong start in the 2008 upfront market, we believe that our contractual reduction in our operating leverage ratio in early 2008 will not result in the Company violating a debt covenant."

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 third quarter of 2007 decreased approximately $1.3 million to $15.1 million, or $0.17 per diluted share, compared with $16.4 million, or $0.19 per diluted share, in the third quarter of 2006. Capital expenditures for the third quarter of 2007 and 2006 were approximately $1.9 million and $2.6 million, respectively. In the quarter, the Company purchased six helicopters for approximately $1.3 million.

Operating income decreased $4.2 million, or 17.4%, to $19.7 million from $23.8 million in the third quarter of 2006. The decrease in revenue was partially offset by a reduction in operating costs.

Interest expense decreased $0.8 million, or 12.6%, to $5.8 million from $6.6 million in the third quarter of 2006, due principally to a reduction in debt levels, partially offset by an increase in interest rates.

Income tax expense decreased $1.4 million, or 20.8%, to $5.4 million from $6.9 million in the third quarter of 2006. The Company's effective income tax rate for the quarter was 39.2% in the third quarter of 2007 compared with 39.6% in the third quarter of 2006.

For the third quarter of 2007, net income decreased $2.0 million, or 19.4%, to $8.5 million ($0.10 per basic and diluted share) from $10.5 million ($0.12 per basic and diluted share).

Weighted average shares outstanding used in the computation of diluted earnings per share were 86.5 million in the third quarter of 2007 and 86.3 million in the third quarter of 2006.

Nine Months Ended September 30, 2007

Revenue for the nine months ended September 30, 2007 decreased $44.9 million, or 11.9%, to $333.1 million from $378.0 million in the nine month period ended September 30, 2006. The decrease is principally attributable to reduced audience levels, lower demand for the Company's products and services, increased competition, and the non-recurrence of revenue related to the 2006 Winter Olympics. Revenue from national and local/regional advertisements decreased approximately 12.8% and 11.0%, respectively. National revenue declined $23.3 million and local/regional revenue decreased $21.6 million from the first nine month results of 2006. Excluding the effects of revenue from the 2006 Winter Olympics, national revenue would have declined by approximately $17.6 million, or 10.5%.

For the nine month period ended September 30, 2007, Adjusted EBITDA, defined as operating income plus depreciation and amortization, special charges and non-cash stock-based compensation was $70.1 million compared with $76.9 million for the same period of 2006, a decrease of $6.8 million, or 8.8%. Excluding the effect on Adjusted EBITDA of the 2006 Winter Olympics, Adjusted EBITDA in 2007 would have decreased approximately $8.9 million, or 11.3%, which decrease is principally attributable to lower revenue, partially offset by cost reductions.

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 nine month period ended September 30, 2007 decreased approximately $1.6 million to $39.0 million, or $0.45 per share, compared with $40.6 million, or $0.47 per share, in the comparable period of 2006. Capital expenditures for the nine months of 2007 decreased $1.3 million, to $4.0 million from $5.3 million in the same nine month period of 2006.

Operating income decreased $6.8 million, or 13.6%, to $43.6 million from $50.4 million in the nine month period ended September 30, 2006.

Interest expense decreased $1.4 million, or 7.2%, to $17.7 million from $19.1 million in the first nine months of 2006, due principally to a reduction in debt levels, partially offset by an increase in interest rates.

Income tax expense decreased $2.6 million, or 21.0%, to $9.9 million from $12.6 million in the nine month period ended September 30, 2006. The Company's effective income tax rate was 38.2% in the first nine months of 2007 compared with 39.6% in the comparable period of 2006.

For the first nine months of 2007, net income decreased $3.1 million, or 16.0%, to $16.1 million ($0.19 per basic and diluted share) from $19.1 million ($0.22 per basic and diluted share) in the first nine months of 2006.

Outlook for the Remainder of 2007

The Company expects its full year revenue to decrease low double digits and operating costs to decrease mid to high-single digits compared with 2006. Accordingly, we expect full year Adjusted EBITDA to exceed $90 million.

About Westwood One

Westwood One provides over 150 news, sports, music, talk, entertainment programs, features and live events. Through its subsidiaries, Metro Networks/Shadow Broadcast Services, Westwood One provides analog and digital 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 CBS Radio Inc. (previously Infinity Broadcasting Corporation), a wholly-owned subsidiary of CBS Corporation.

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 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 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; failure by the Company's shareholders to approve the proposed modifications to the Company's agreements with CBS Radio; 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 U.S. Securities and Exchange Commission (the "SEC"), including the Company's annual report on Form 10-K/A for the year ending December 31, 2006. 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    A.  Adjusted EBITDA   

The table which appears below set forth the Company's Adjusted EBITDA for the three and nine-month periods ended September 30, 2007 and 2006. The Company defines "Adjusted EBITDA" as net income adjusted to exclude the following items presented in its Statement of Operations: income taxes, interest expense, other income, depreciation and amortization, special charges and non-cash stock-based compensation expense.

The Company uses Adjusted EBITDA among other things, to evaluate the Company's operating performance and to value prospective acquisitions. Adjusted EBITDA 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. Finally, Adjusted EBITDA is the key measure used to determine compliance with our 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 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 SEC, the Company provides below a reconciliation of Adjusted EBITDA to net income.

                            Three Months Ended         Nine Months Ended                               September 30,             September 30,   (In millions)             2007         2006         2007         2006    Net income                $8.5        $10.5        $16.1        $19.1   Plus:     Income taxes             5.4          6.9          9.9         12.6     Interest expense and      other                   5.8          6.4         17.6         18.7     Depreciation and      amortization            4.8          5.2         14.7         15.4     Special charges          1.4          0.1          4.0          1.5     Non-cash stock based      compensation            2.2          3.1          7.8          9.6    Adjusted EBITDA          $28.1        $32.2        $70.1        $76.9     B.  Free Cash Flow   

Free cash flow is defined by the Company as net income plus depreciation and amortization, amortization of deferred debt costs, special charges, and stock-based compensation expense 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, pay dividends 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 shares outstanding is defined by the Company as free cash flow divided by the fully diluted weighted average shares outstanding.

As free cash flow and free cash flow per share are not measures 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 (used in) 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 operating cash flow, as the Company does not adjust operating cash flow to remove the impact of cash flow timing differences. Specifically, the Company adjusts operating cash flow (the most directly comparable GAAP financial measure) for capital expenditures, non-recurring expenditures 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.

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,   (In millions except per    share amounts)           2007         2006         2007         2006   Net cash provided by    (used in) operating    activities              $23.2        $22.2        $20.7        $62.1   plus (minus):     Changes in assets and      liabilities            (9.6)        (9.7)        13.2        (22.3)     Special charges          1.4          0.1          4.0          1.5     Deferred taxes           2.0          6.4          5.1          4.6     Capital expenditures    (1.9)        (2.6)        (4.0)        (5.3)     Free cash flow         $15.1        $16.4        $39.0        $40.6    Fully diluted weighted    average shares    outstanding            86,481       86,250       86,434       87,015    Free cash flow per    diluted share           $0.17        $0.19        $0.45        $0.47                                WESTWOOD ONE, INC.                   CONSOLIDATED STATEMENTS OF OPERATIONS                  (In thousands, except per share amounts)                                (Unaudited)                                       Three Months Ended  Nine Months ended                                         September 30,       September 30,                                        2007      2006      2007      2006       NET REVENUE                      $108,083  $118,485  $333,067  $377,973      Operating Costs (includes      related party expenses of      $15,408, $17,117, $51,238 and      $58,853, respectively, and      equity based compensation of      $1,555, $1,659, $4,484 and      $5,072, respectively)             79,351    86,232   260,419   299,105      Depreciation and Amortization      (includes related party warrant      amortization of $2,427, $2,427,      $7,281 and $7,281, respectively)   4,791     5,239    14,739    15,424      Corporate General and      Administrative Expenses       (includes related party expenses       of $861, $825, $2,551 and $2,440       respectively, and equity based       compensation of $681, $1,440,       $3,323 and $4,524, respectively)  2,867     3,107    10,318    11,562      Special Charges                     1,388        71     4,025     1,469                                         88,397    94,649   289,501   327,560      OPERATING INCOME                   19,686    23,836    43,566    50,413      Interest Expense                    5,790     6,625    17,739    19,117     Other Income                           (4)     (154)     (154)     (389)      INCOME BEFORE INCOME TAXES         13,900    17,365    25,981    31,685     INCOME TAXES                        5,448     6,881     9,917    12,558      NET INCOME                         $8,452   $10,484   $16,064   $19,127      EARNINGS PER SHARE:       COMMON STOCK            BASIC                        $0.10     $0.12     $0.19     $0.22            DILUTED                      $0.10     $0.12     $0.19     $0.22        CLASS B STOCK            BASIC                         $  -     $0.08     $0.02     $0.24            DILUTED                       $  -     $0.08     $0.02     $0.24      WEIGHTED AVERAGE SHARES OUTSTANDING:       COMMON STOCK            BASIC                       86,137    85,954    86,101    86,995            DILUTED                     86,481    86,250    86,434    87,015        CLASS B STOCK            BASIC                          292       292       292       292            DILUTED                        292       292       292       292        DIVIDENDS DECLARED PER SHARE:            COMMON STOCK                  $  -     $0.10     $0.02     $0.30            CLASS B STOCK                 $  -     $0.08     $0.02     $0.24                                WESTWOOD ONE, INC.                        CONSOLIDATED BALANCE SHEETS                  (In thousands, except per share amounts)                                (unaudited)                                                September 30,     December 31,                                                   2007              2006                              ASSETS     CURRENT ASSETS:       Cash and cash equivalents                  $13,456           $11,528       Accounts receivable, net of allowance for        doubtful accounts of $5,376 (2007) and        $4,387 (2006)                             108,807           115,505       Warrants, current portion                    9,706             9,706       Prepaid and other assets                    10,037            12,483         Total Current Assets                     142,006           149,222      PROPERTY AND EQUIPMENT, NET                   33,623            37,353     GOODWILL                                     464,114           464,114     INTANGIBLE ASSETS, NET                         3,639             4,225     OTHER ASSETS                                  33,168            41,787           TOTAL ASSETS                          $676,550          $696,701            LIABILITIES AND SHAREHOLDERS' EQUITY      CURRENT LIABILITIES:       Accounts payable                           $17,291           $35,425       Amounts payable to related parties          28,928            26,344       Deferred revenue                             5,182             8,150       Income taxes payable                         3,961             6,149       Accrued expenses and other liabilities      40,371            43,841         Total Current Liabilities                 95,733           119,909      LONG-TERM DEBT                               355,339           366,860     OTHER LIABILITIES                              6,422             7,001           TOTAL LIABILITIES                      457,494           493,770      COMMITMENTS AND CONTINGENCIES     SHAREHOLDERS' EQUITY       Preferred stock: authorized 10,000 shares,        none outstanding                                -                 -       Common stock, $.01 par value: authorized,        300,000,000 shares; issued and outstanding        86,141 (2007) and 85,956 (2006)               861               860       Class B stock, $.01 par value: authorized,        3,000 shares; issued and outstanding, 292        (2007 and 2006)                                 3                 3       Additional paid-in capital                 289,674           291,851       Unrealized gain on available for        sale securities                             6,807             4,570       Accumulated deficit                        (78,289)          (94,353)           TOTAL SHAREHOLDERS' EQUITY             219,056           202,931           TOTAL LIABILITIES AND SHAREHOLDERS'            EQUITY                               $676,550          $696,701                                WESTWOOD ONE, INC.                   CONSOLIDATED STATEMENTS OF CASH FLOWS                               (In thousands)                                (Unaudited)                                                        Nine Months Ended                                                          September 30,                                                          2007     2006   CASH FLOW FROM OPERATING ACTIVITIES:     Net income                                         $16,064  $19,127     Adjustments to reconcile net income to net cash      provided by operating activities:        Depreciation and amortization                    14,738   15,424        Deferred taxes                                   (5,055)  (4,554)        Non-cash stock compensation                       7,808    9,596        Amortization of deferred financing costs            359      250                                                         33,914   39,843      Changes in assets and liabilities:        Accounts receivable                               6,698   26,124        Prepaid and other assets                          3,286    2,771        Deferred revenue                                 (2,968)    (606)        Income taxes payable and prepaid income taxes    (2,188) (20,287)        Accounts payable and accrued expenses and other         liabilities                                    (20,660)  17,414        Amounts payable to related parties                2,584   (3,109)          Net Cash Provided By Operating Activities      20,666   62,150    CASH FLOW FROM INVESTING ACTIVITIES:        Capital expenditures                             (4,031)  (5,258)        Repayment of loan receivable                          -    2,000        Acquisition of companies and other                    -       75          Net Cash Used In Investing Activities          (4,031)  (3,183)    CASH FLOW FROM FINANCING ACTIVITIES:        Issuance of common stock under equity based         compensation plans                                   -      302        Borrowings under bank and other long-term         obligations                                     30,000   10,000        Debt repayments and payments of capital lease         obligations                                    (43,044) (30,509)        Dividend payments                                (1,663) (25,910)        Repurchase of common stock                            -  (11,044)          Net Cash Used in Financing Activities         (14,707) (57,161)    NET INCREASE IN CASH AND CASH EQUIVALENTS              1,928    1,806    CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD      11,528   10,399    CASH AND CASH EQUIVALENTS AT END OF PERIOD           $13,456  $12,205  

Source: Westwood One, Inc.

CONTACT: Gary Yusko of Westwood One, Inc., +1-212-373-5311

Web site: http://www.westwoodone.com/

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