FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission File Number 0-13020
WESTWOOD ONE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 95-3980449
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9540 WASHINGTON BLVD., CULVER CITY, CALIFORNIA 90232
----------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (310) 204-5000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
As of July 28, 1995, 31,057,402 shares of Common Stock, excluding 226,500
treasury shares, were outstanding and 351,733 shares of Class B Stock were
outstanding.
<PAGE>
WESTWOOD ONE, INC.
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INDEX
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PART I. FINANCIAL INFORMATION: Page No.
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Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION 10
SIGNATURES 11
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<PAGE>
WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 1,547 $ 2,439
Accounts receivable, net of allowance for doubtful accounts 34,009 37,631
Other current assets 5,943 6,087
---------- ---------
Total Current Assets 41,499 46,157
PROPERTY AND EQUIPMENT, NET 15,772 16,748
INTANGIBLE ASSETS, NET 187,847 191,287
OTHER ASSETS 4,410 5,920
---------- ---------
TOTAL ASSETS $ 249,528 $ 260,112
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 15,207 $ 18,750
Accrued expenses and other liabilities 15,841 14,722
Current maturities of long-term debt 3,750 5,000
--------- ---------
Total Current Liabilities 34,798 38,472
LONG-TERM DEBT 107,943 115,443
OTHER LIABILITIES 9,666 10,743
--------- ---------
TOTAL LIABILITIES 152,407 164,658
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
SHAREHOLDERS' EQUITY
Preferred stock: authorized 10,000,000 shares, none outstanding - -
Common stock, $.01 par value: authorized, 117,000,000 shares;
issued and outstanding, 31,206,402 (1995) and 30,652,652 (1994) 312 307
Class B stock, $.01 par value: authorized, 3,000,000 shares:
issued and outstanding, 351,733 (1995 and 1994) 4 4
Additional paid-in capital 161,093 159,727
Accumulated deficit (62,841) (64,584)
--------- ---------
98,568 95,454
Less treasury stock, at cost; 101,500 shares (1995) (1,447) -
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 97,121 95,454
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 249,528 $ 260,112
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
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WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
GROSS REVENUES $ 43,748 $ 42,136 $ 80,351 $ 72,550
Less Agency Commissions 6,190 5,985 11,372 10,347
--------- --------- --------- ---------
NET REVENUES 37,558 36,151 68,979 62,203
--------- --------- --------- ---------
Operating Costs and Expenses Excluding
Depreciation and Amortization 25,779 25,942 52,710 49,745
Depreciation and Amortization 3,524 4,728 6,751 8,960
Corporate General and Administrative Expenses 1,517 1,140 2,735 2,374
Restructuring Costs - - - 2,405
--------- --------- --------- ---------
30,820 31,810 62,196 63,484
--------- --------- --------- ---------
OPERATING INCOME (LOSS) 6,738 4,341 6,783 (1,281)
Interest Expense 2,430 2,266 5,067 4,112
Other Income (114) (108) (214) (160)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 4,422 2,183 1,930 (5,233)
INCOME TAXES 187 - 187 -
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 4,235 2,183 1,743 (5,233)
EXTRAORDINARY ITEM - LOSS ON RETIREMENT OF DEBT - - - (590)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 4,235 $ 2,183 $ 1,743 ($ 5,823)
========= ========= ========= =========
INCOME (LOSS) PER SHARE:
Income (Loss) Before Extraordinary Item $ .12 $ .07 $ .05 ($ .19)
Extraordinary Item - - - ( .02)
--------- --------- --------- --------
Net Income (Loss) $ .12 $ .07 $ .05 ($ .21)
========= ========= ========= ========
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1995 1994
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ 1,743 ($ 5,823)
Adjustments to reconcile net loss to net cash provided by operating
activities before cash payments related to extraordinary item:
Depreciation and amortization 6,751 8,960
Extraordinary item - loss on retirement of debt - 590
Other (80) (149)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 3,622 (11,615)
Increase in prepaid assets (334) (645)
Increase (decrease) in accounts payable and accrued liabilities (3,088) 2,600
--------- ---------
Net cash from (used by) operating activities before cash payments
related to extraordinary item 8,614 (6,082)
Cash payments related to extraordinary item - (250)
--------- ---------
Net Cash Provided By (Used For) Operating Activities 8,614 (6,332)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of companies (Unistar in 1994) (378) (106,018)
Capital expenditures (275) (458)
Cash payments related to disposition of discontinued operations (35) (460)
Other (principally deferred financing costs in 1994) 8 (1,490)
--------- ---------
Net Cash Used For Investing Activities (680) (108,426)
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CASH PROVIDED (USED) BEFORE
FINANCING ACTIVITIES 7,934 (114,758)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Debt repayments (8,750) (9,515)
Borrowings under debt arrangements - 110,000
Issuance of common stock 1,371 15,715
Repurchase of common stock (1,447) -
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NET CASH FROM (USED IN) FINANCING ACTIVITIES (8,826) 116,200
---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (892) 1,442
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,439 114
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,547 $ 1,556
========== =========
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(In thousands, except per share data)
NOTE 1 - Basis of Presentation:
------------------------------
The accompanying consolidated balance sheet as of June 30, 1995, the
consolidated statements of operations for the three and six month periods ended
June 30, 1995 and 1994 and the consolidated statements of cash flows for the six
months ended June 30, 1995 and 1994 are unaudited, but in the opinion of
management include adjustments necessary for a fair presentation of the
financial position and the results of operations for the periods presented.
These financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K, filed with the Securities and Exchange
Commission.
NOTE 2 - Earnings Per Share:
----------------------------
Net income (loss) per share is computed based upon the weighted average
number of shares outstanding and Common Stock equivalents in periods where there
is net income. The number of shares used to compute earnings per share are
35,426 and 33,289 for the three month periods ended June 30, 1995 and 1994,
respectively and 35,124 and 27,914 for the six month periods ended June 30, 1995
and 1994, respectively.
NOTE 3 - Revolving Credit Facilities and Long-Term Debit:
---------------------------------------------------------
In addition to its long-term debt, the Company has a $15,000 secured
revolving credit facility ("Revolver"). At June 30, 1995, the Company did not
have any borrowing outstanding under the Revolver.
NOTE 4 - Repurchase of Common Stock:
------------------------------------
In the second quarter of 1995, the Company amended its senior loan
agreement with a syndicate of banks to permit the Company to repurchase up to
$15,000 of its Common Stock prior to December 31, 1996. On June 9, 1995, the
Company was authorized to repurchase shares of its Common Stock for an aggregate
purchase price not to exceed $15,000. Through June 30, 1995, the Company
repurchased 101 shares at a cost of $1,447. The Company repurchased an
additional 125 shares at a cost of $1,624 in July 1995.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(In thousands, except per share amounts)
On February 3, 1994 the Company completed the acquisition of all of the
issued and outstanding capital stock of the Unistar Radio Networks, Inc.
("Unistar"). The acquisition was accounted for as a purchase, and accordingly,
the operating results of Unistar are included with those of the Company from the
date of acquisition.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 COMPARED
WITH THREE MONTHS ENDED JUNE 30, 1994
-----------------------------------------
Westwood One derives substantially all of its revenue from the sale of
advertising time to advertisers. Net revenue increased $1,407, or 4%, to $37,558
in the second quarter of 1995 from $36,151 in the comparable prior year quarter.
The increase in net revenue was primarily a result of increasing commercial
inventory rates and adding syndicated programs.
Operating costs and expenses excluding depreciation and amortization
decreased $163 to $25,779 in the second quarter of 1995 from $25,942 in the
second quarter of 1994. The decrease was primarily attributable to expense
reductions, partially offset by additional costs related to new program
offerings.
Depreciation and amortization decreased 25% to $3,524 in the second
quarter of 1995 from $4,728 in the second quarter of 1994. The decrease is
principally attributable to lower amortization of programming costs and rights
due to lower capitalized balances.
Corporate general and administrative expenses increased 29% to $1,517
in 1995 from $1,140 in 1994. The increase is primarily attributable to higher
compensation expense.
Interest expense increased 7% to $2,430 in the second quarter of 1995
from $2,266 in the second quarter of 1994. The increase is attributable to
higher interest rates on the Company's borrowings, partially offset by lower
debt levels resulting from the prepayment of Term Loans.
Net income in the second quarter increased 94% to $4,235, or $.12 per
share, in 1995 from $2,183, or $.07 per share, in 1994. The weighted average
number of shares outstanding (including common stock equivalents) increased 6%
to 35,426 in the second quarter of 1995 from 33,289 in the comparable 1994
quarter.
SIX MONTHS ENDED JUNE 30, 1995 COMPARED
WITH SIX MONTHS ENDED JUNE 30, 1994
---------------------------------------
Net revenue for the first half of fiscal 1995 increased 11% to $68,979
in 1995 from $62,203 in the first half of 1994. The increase in net revenue was
primarily a result of the purchase of Unistar in February 1994.
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<PAGE>
Operating costs and expenses increased 6% to $52,710 in the first half
of 1995 from $49,745 in the comparable 1994 period. The increase was primarily
attributable to the purchase of Unistar.
Depreciation and amortization decreased 25% to $6,751 in the first half
of 1995 from $8,960 in the first half of 1994. The decrease is principally
attributable to lower amortization of programming costs and rights due to lower
capitalized balances, partially offset by higher depreciation and amortization
resulting from the purchase of Unistar in February 1994.
Corporate general and administrative expenses increased 15%, to $2,735
in the first half of 1995 from $2,374 in 1994's first half. The increase is
attributable to higher compensation expense and the Infinity Management
Agreement, which went into effect in February 1994, partially offset by
across-the-board expense reductions.
As a result of the purchase of Unistar, the Company accrued
restructuring costs of approximately $2,405 in the first quarter of 1994
principally relating to consolidations of certain facilities and operations.
Interest expense increased 23% to $5,067 in the first half of 1995 as
compared to $4,112 in the first half of 1994. The increase is principally
attributable to higher debt levels as a result of the acquisition of Unistar and
higher interest rates.
Income before extraordinary item was $1,743, or $.05 per share, in the
first half of 1995 as compared to a loss before extraordinary item of $5,233, or
$.19 per share, in the first half of 1994, an improvement of $6,976.
In connection with the refinancing of its senior debt facility, the
Company in the first quarter of 1994 recorded an extraordinary loss of $590
($.02 per share).
Net income was $1,743 ($.05 per share) in the first half of 1995 as
compared to a net loss of $5,823 ($.21 per share) in the comparable 1994 period.
The weighted average number of shares outstanding increased 26% to 35,124 in
1995 from 27,914 in 1994. Due to net income in the first half of 1995, the
weighted average number of shares for 1995 includes common stocks equivalents.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
At June 30, 1995, the Company's cash and cash equivalents were $1,547,
a decrease of $892 from December 31, 1994.
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<PAGE>
For the six months ended June 30, 1995 net cash from operating
activities was $8,614 as compared to a net use of cash for operating activities
of $6,332 in 1994. The improvement is principally attributable to improved
operating results and lower working capital requirements.
On June 9, 1995, the Board of Directors authorized the Company to
repurchase up to $15,000 of its Common Stock through December 31, 1996. The
Company has used its excess cash to prepay its Term Loans and to repurchase its
Common Stock. In the first half of 1995, the Company prepaid $8,750 of Term
Loans and repurchased 101 shares of its Common Stock at a cost of $1,447.
In July 1995, the Company prepaid $3,750 of Term Loans and repurchased
an additional 125 shares of Common Stock at a cost of $1,624. As a result, the
outstanding balance of the Company's Term Loans was reduced to $92,500.
Management believes that the Company's cash, available borrowings and
anticipated cash flow from operations will be sufficient to finance current and
forecasted operations over the next 12 months.
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<PAGE>
PART II OTHER INFORMATION
Items 1 through 3
-----------------
These items are not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
(a) The Annual Meeting of Shareholders of the Company was held on
June 13,1995.
(b) The Matters voted upon and the related voting results were as
follows (holders of Common Stock and Class B stock voted
together on all matters except for the election of Joseph B.
Smith as Class I director, for which holders of Common Stock
voted alone):
1) Election of Class I Directors:
Norman J. Pattiz Mel Karmazin Joseph B. Smith
---------------- ------------ ---------------
FOR 42,741,345 42,775,086 25,218,589
WITHHELD 307,277 273,536 243,683
2) Ratification of the selection of Price Waterhouse LLP as
the independent accountants of the Company for fiscal
1995.
FOR 43,028,321
AGAINST 5,191
ABSTAIN 15,110
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<PAGE>
Item 5
------
Not Applicable
Item 6 - Exhibits and Reports on Form 8-K
------ --------------------------------
(a) Exhibits
--------
27. Financial Data Schedule
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed for the three months
ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WESTWOOD ONE, INC.
By:--------------------------
FARID SULEMAN
Chief Financial Officer
Dated: August 8, 1995
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,547
<SECURITIES> 0
<RECEIVABLES> 34,009<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,499
<PP&E> 15,772<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 249,528
<CURRENT-LIABILITIES> 34,798
<BONDS> 107,943
<COMMON> 316<F3>
0
0
<OTHER-SE> 96,805<F4>
<TOTAL-LIABILITY-AND-EQUITY> 249,528
<SALES> 0
<TOTAL-REVENUES> 68,979<F5>
<CGS> 0
<TOTAL-COSTS> 52,710<F6>
<OTHER-EXPENSES> 9,486<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,067
<INCOME-PRETAX> 1,930
<INCOME-TAX> 187
<INCOME-CONTINUING> 1,743
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,743
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
<FN>
<F1> REFLECTED NET OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS.
<F2> REFLECTED NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION.
<F3> COMPRISED OF COMMON STOCK AND CLASS B STOCK.
<F4> REFLECTED NET OF TREASURY STOCK.
<F5> COMPRISED OF NET REVENUES.
<F6> COMPRISED OF OPERATING COSTS AND EXPENSES EXCLUDING DEPRECIATION AND
AMORTIZATION.
<F7> COMPRISED OF: (A) DEPRECIATION AND AMORTIZATION, AND (B) CORPORATE
GENERAL AND ADMINISTRATIVE EXPENSES.
</FN>
</TABLE>
