The Industry Dot Biz: WESTWOOD ONE, INC. REPORTS RESULTS FOR THE FIRST QUARTER 2010
New York, NY – May 17, 2010 ““ Westwood One, Inc. (NASDAQ: WWON), a leading
independent provider of network radio content and traffic information to the radio,
television and on-line sectors, today reported operating results for the first quarter ended
March 31, 2010.
“In the first quarter of 2010, revenue increased by $6.9 million or 8.1%, from $85.9 million
to $92.8 million, which was Westwood One’s first year-over-year quarterly revenue
increase since 2005,” said Rod Sherwood, President. “Revenue increased in both of our
businesses, with Network Radio up 8.6% and Metro Traffic up 7.5%, reflecting increased
advertising spending both nationally and locally. In addition to reflecting the initial signs of
growth in the economy, this increase is also a result of our strategic focus on meeting the
needs of our advertising and affiliate customers, and investing in areas with the most
potential for revenue growth.”
Westwood One’s earnings (on an Adjusted EBITDA basis) increased approximately $9.0
million, from a loss of $6.9 million in the first quarter of 2009 to an Adjusted EBITDA profit
of $2.1 million in the first quarter of 2010. This increase is primarily the result of increased
advertising revenue, and lower operating costs resulting from the Company’s cost
reduction initiatives.
“The measures we took in 2009 positioned us to take advantage of a recovering economy
with a re-structured balance sheet, a strengthened sales force, and strong programming
to attract targeted audiences for our advertisers and affiliates,” said Sherwood. “We are
beginning to see positive results from our actions, and early pacing for the second quarter
is encouraging.”
In Network Radio, Westwood One’s leadership position in play-by-play sports
programming provided many opportunities to effectively reach consumers and listeners.
As the exclusive network radio partner of the NFL, Westwood One broadcast every game
of the NFL playoffs, capping off the season with a Super Bowl broadcast which aired on a
record-breaking 650 radio stations.
Westwood One’s first quarter sports line-up also included the 2010 NCAA Men’s
Basketball Championship, leading up to, and including, the Final Four, which aired on a
record-breaking 500 affiliate stations. In addition, Westwood One and the Masters
Tournament renewed the longest-running national radio partnership in all of sports,
maintaining Westwood One as the exclusive 2010 radio play-by-play provider from
Augusta National Golf Club.
In another development, Westwood One announced an agreement with Harpo Radio to
bring The Gayle King Show to terrestrial broadcast radio listeners nationwide in June
P R E S S R E L E A S E
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2010, as well as to launch a new nightly music program hosted by the acclaimed
newscaster and television personality entitled Night & Gayle. In addition, Westwood One
will also present a daily feature from Dr. Mehmet Oz, host of daytime television’s newest
hit, The Dr. Oz Show.
Westwood One also introduced The Fab 30 Countdown with Perez Hilton in partnership
with C-Student Entertainment. The four-hour weekend countdown show, broadcast live
from Los Angeles, features hit music selected by celebrity blogger Perez Hilton, plus his
unique take on entertainment stories, and celebrity interviews.
In Metro Traffic, the Company announced the acquisition of the Sigalert business from
Jaytu Technologies, LLC, a leading regional provider of traffic information. Sigalert is a
source for the most up-to-date, useful traffic information in Southern California, one of the
most highly congested traffic areas in the country. In 2010, Westwood One’s Sigalert
product will provide affiliate radio stations the best on-air, on-line and mobile traffic
products, and will give Metro’s television affiliates a “three-screen” solution with a
consistent look across their television, Web and mobile products.
Three Months Ended March 31, 2010
For the three months ended March 31, 2010, revenue increased $6.9 million or 8.1%, to
$92.8 million compared with $85.9 million for the three months ended March 31, 2009.
This increase in revenue for the first quarter was the first year-over-year quarterly
increase since the second quarter of 2005.
For the first three months of 2010, Network revenue increased to $55.6 million from $51.2
million for the first three months of 2009, an increase of $4.4 million, or 8.6%. Network
advertising sales, the largest component of Network revenue, increased by 10%. This
resulted primarily from increased sports advertising revenue, including the 2010 Winter
Olympics and the NCAA Men’s Basketball Championship and NFL games, as well as new
programming for The Weather Channel.
.
Metro Traffic revenue for the first three months of 2010 was $37.3 million, an increase of
$2.6 million, or 7.5%, from $34.7 million for the first three months of 2009. The increase in
Metro Traffic revenue was principally related to an increase in revenue from television and
radio advertising, primarily in the automotive and quick service restaurant sectors.
The operating loss in the first quarter of 2010 was $6.6 million compared with an operating
loss of $19.6 million in 2009, or a decrease in operating loss of $13.0 million. The
decreased loss reflects the increase in revenue, lower operating costs, and lower
restructuring and special charges. These were partially offset by higher depreciation and
amortization expense of $2.4 million, primarily attributable to the increase in the fair value
of amortizable intangibles that were recorded as a result of the April 2009 refinancing
(“Refinancing”).
Adjusted EBITDA (1) for the first quarter of 2010 was $2.1 million compared with a loss of
$6.9 million in 2009. The improvement was due to increased Network Radio, Metro
television, and Metro Traffic radio revenue and lower operating costs resulting from our
cost reduction programs, primarily enacted in late 2008 and 2009.
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Interest expense in the first quarter of 2010 increased $2.3 million, or 70.6%, to $5.6
million from $3.3 million in the first quarter of 2009. This reflects the higher average
interest rates on our outstand ing debt, which resulted from the Refinancing, and increased
interest expense related to capital leases incurred in connection with the December 2009
Culver City sale-leaseback transaction.
The Company’s tax benefit decreased $2.2 million to $5.2 million in 2010 compared to
$7.4 million in 2009 due to a lower pre-tax loss in the first quarter of 2010 as compared to
the first quarter of 2009, partially offset by a higher effective tax rate.
For the first quarter of 2010, net loss was $6.9 million, or $0.34 per diluted share,
compared with a net loss in the first quarter of 2009 of $15.2 million, or $33.95 per diluted
share. Per share amounts reflect the effect of the 200-for-1 reverse stock split of our
common stock that occurred on August 3, 2009. First quarter 2009 average share
amounts are significantly lower than first quarter 2010 as a result of the conversions of
shares of preferred stock in July and August 2009.
Free cash flow (2) in the first quarter of 2010 increased to $2.7 million from $1.0 million in
2009, an increase of $1.7 million. This was due to the favorable change in net loss of
$8.3 million, partially offset by changes in working capital of $5.6 million and higher capital
expenditures of $1.0 million.
2010 Outlook
We remain cautiously optimistic about growth in advertising spending during 2010.
Industry research sources are revising their earlier forecasts slightly upward, but local
radio remains at relatively low levels of growth. Magna, a division of IPG’s Mediabrand s,
forecasts that local radio is expected to grow by 0.6%. Other industry sources forecast
increases in local radio of 2%, and network radio of 6%.
Our strategies remain consistent with those stated at the end of 2009. While continuing
revenue gains will likely improve our operating leverage, we will continue to make targeted
investments in the business to enhance our competitive position in 2010 and beyond.
That said, we will continue to evaluate our cost structure to maintain the appropriate levels
of liquidity.
We will continue to invest in new programming, while also identifying, and investing in,
opportunities for expand ed content and distribution in Metro television and digital. We will
maintain our focus on improving our infrastructure and we will continue to seek
opportunities to complement our organic growth strategy with strategic partnerships and
select business development activity like SigAlert.
About Westwood One
Westwood One, Inc. (NASDAQ: WWON) is one of the nation’s largest providers of
network radio programming and one of the largest domestic outsourced providers of traffic
information in the U.S. Westwood One serves approximately 5,000 radio and 170
television 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.
Through its Metro Traffic business, Westwood One provides traffic reporting and local
news, sports and weather to approximately 2,200 radio and 170 television stations.
Westwood One also provides digital and other cross-platform delivery of its Network and
Metro Traffic content to over 700 radio, television and newspaper affiliates.
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Footnotes to Press Release
1 Adjusted EBITDA is a non-GAAP financial measure that is reconciled to net cash
provided by (used in) operating activities, its most directly comparable GAAP measure, in
the accompanying financial tables. Adjusted EBITDA is defined as net cash provided by
(used in) operating activities adjusted to exclude the following: interest expense, income
tax expense (benefit), restructuring charges, special charges, other non-operating income,
amortization of deferred financing costs and changes in assets and liabilities including
deferred tax assets and liabilities.
Adjusted EBITDA is used by the Company to calculate its compliance with its debt
covenants under the terms of its senior notes and senior credit facility. The Company
believes this measure is relevant and useful for investors because it allows investors to
view performance in the same manner as the Company’s lenders (who also own
approximately 22.5% of the Company’s equity as a result of the refinancing, excluding
Gores).
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, consolidated
statements of operations and cash flow data prepared in accordance with GAAP.
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. The Company uses Adjusted EBITDA as a
liquidity measure, which is different from operating cash flow, the most directly
comparable GAAP financial measure calculated and prepared in accordance with GAAP.
Users of this financial information should consider the types of events and transactions
which are excluded.
2 Free cash flow is a non-GAAP financial measure that is reconciled to net cash provided
by (used in) operating activities, its most directly comparable GAAP measure, in the
accompanying financial tables. Free cash flow is defined by the Company as net cash
provided by (used in) operating activities, 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 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 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 the Company’s ability to fund its cash needs. In arriving at
free cash flow, the Company adjusts net cash provided by (used in) operating activities to
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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 provided by (used in) operating activities (the
most directly comparable GAAP financial measure) for capital expenditures, special
charges, and deferred taxes, 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.
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 forwardlooking
statements included in this release include, but are not limited to: continued
declines in our operating income; the availability of additional financing; our future cash
flow from operations and access to additional financing; our ability to achieve our financial
forecast; a significant amount of indebtedness that contain various covenants, which could
adversely affect our liquidity and future business operations and accelerate repayment;
changes to our CBS arrangement; increased proliferation of free traffic content;
maintenance of an effective system of internal controls; technological changes and
innovations; failure to obtain or retain the rights in popular programming; acceptance of
our content; consolidation in the radio broadcast industry; further impairment charges;
Gores’ influence over our corporate actions; and changes in governmental regulations and
policies and actions of federal and state regulatory bodies. Our key risks are described in
our reports filed with the SEC, including our Annual Report on Form 10-K for the year
ending December 31, 2009 and our Quarterly Report on Form 10-Q for the quarter ended
March 31, 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.
Media Contact:
Chris Miller
Westwood One
212.641.2108
[email protected]
Successor Company Predecessor Company
Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
Revenue $ 92,842 $ 85,867
Operating costs 89,341 9 1,393
Depreciation and amortization 4,496 2 ,063
Corporate general and administrative expenses 3,019 2 ,766
Restructuring charges 743 3 ,440
Special charges 1,823 5,809
Total operating costs 99,422 105,471
Operating loss (6,580) (19,604)
Interest expense 5,565 3 ,263
Other expense (income) 1 (300)
Loss before income tax (12,146) (22,567)
Income tax benefit (5,234) (7,381)
Net loss $ (6,912) $ (15,186)
$ (6,912) $ (16,650)
(Loss) earnings per share
Common Stock
Basic $ (0.34) $ (33.95)
Diluted $ (0.34) $ (33.95)
Class B stock
Basic $ –
Diluted $ –
Weighted average shares outstand ing:
Common Stock
Basic 20,544 4 90
Diluted 20,544 4 90
Class B stock
Basic 1
Diluted 1
Net loss attributable to common stockholders
WESTWOOD ONE, INC
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousand s, except share and per share amounts)
(unaudited)
March 31, 2010 December 31, 2009
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 6 ,794 $ 4,824
Accounts receivable, net of allowance for doubtful accounts 8 6,487 87,568
Income tax receivable 1 2,945 12,355
Prepaid and other assets 19,278 20,994
Total current assets 1 25,504 125,741
Property and equipment, net 3 5,446 36,265
Intangible assets, net 1 00,671 103,400
Goodwill 3 9,745 38,917
Other assets 3,276 2,995
TOTAL ASSETS $ 304,642 $ 307,318
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 4 4,592 $ 40,164
Amounts payable to related parties 4 90 129
Deferred revenue 2 ,517 3,682
Accrued expenses and other liabilities 3 0,183 28,864
Current maturity of long-term debt 10,000 13,500
Total current liabilities 8 7,782 86,339
Long-term debt 1 26,967 122,262
Deferred tax liability 4 7,781 50,932
Due to Gores 1 0,984 11,165
Other liabilities 20,067 18,636
TOTAL LIABILITIES 293,581 289,334
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value: authorized: 5,000,000 shares
issued and outstand ing: 20,544 (2010) and 20,544 (2009) 2 05 205
Class B stock, $.01 par value: authorized: 3,000 shares;
issued and outstand ing: 0 – –
Additional paid-in capital 8 1,171 81,268
Net unrealized gain 1 97 111
Accumulated deficit (70,512) (63,600)
TOTAL STOCKHOLDERS’ EQUITY 11,061 17,984
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3 04,642 $ 307,318
WESTWOOD ONE, INC
CONSOLIDATED BALANCE SHEETS
(In thousand s, except per share amounts)
Successor Company Predecessor Company
Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,912) $ ( 15,186)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 4,496 2,063
Deferred taxes (4,306) ( 6,698)
Non-cash stock compensation 1,059 1,352
Amortization of deferred financing costs – 308
Net change in assets and liabilities 10,578 20,295
Net cash provided by operating activities 4,915 2,134
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,183) (1,169)
Net cash used in investing activities (2,183) (1,169)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Revolving Credit Facility 3,000 –
Repayments of Senior Notes (3,500) –
Payments of capital lease obligations (262) (203)
Net cash used in financing activities (762) (203)
Net increase in cash and cash equivalents 1,970 762
Cash and cash equivalents at beginning of period 4,824 6,437
Cash and cash equivalents at end of period $ 6,794 $ 7,199
WESTWOOD ONE, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousand s)
(unaudited)
2010 2009
Net cash provided by operating activities $ 4,915 $ 2,134
Interest expense 5,565 3,263
Income tax benefit ( 5,234) (7,381)
Restructuring and special charges (a) 3,162 9,249
Other non-operating expense (income) 1 (300)
Deferred taxes 4,306 6,698
Amortization of deferred financing costs – (308)
Change in assets and liabilities ( 10,578) (20,295)
Adjusted EBITDA $ 2,137 $ (6,940)
(a) Includes $597 of special charges classified as operating costs in the Statement of Operations for the three months
ended March 31, 2010.
Three Months Ended
March 31,
WESTWOOD ONE, INC
ADJUSTED EBITDA RECONCILIATION
(In thousand s)
2010 2009
Net cash provided by operating activities $ 4,915 $ 2,134
(Less) Capital expenditures (2,183) (1,169)
Free Cash Flow $ 2 ,732 $ 965
WESTWOOD ONE, INC
FREE CASH FLOW RECONCILIATION
(In thousand s)
Three Months Ended March 31,
WESTWOOD ONE, INC. REPORTS RESULTS FOR THE FIRST QUARTER 2010
