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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file number 0-13020
WESTWOOD ONE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3980449
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9540 WASHINGTON BOULEVARD
CULVER CITY, CA 90232
(Address of principal executive offices)
(310) 204-5000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ------------------- ------------------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK
(Title of Class)
SEVEN YEAR COMMON STOCK PURCHASE WARRANTS
(Title of Class)
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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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of Common Stock held by non-affiliates as of
March 15, 1996 was approximately $458 million.
As of March 15, 1996, 30,986,604 shares (excluding 607,395 treasury shares)
of Common Stock were outstanding and 351,733 shares of Class B Stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its annual
meeting of shareholders (which will be filed with the Commission within 120 days
of the registrant's last fiscal year end) are incorporated in Part III of this
Form 10-K.
PART I
ITEM 1. BUSINESS
GENERAL
Westwood One, Inc. (the "Company" or "Westwood One") is a leading producer and
distributor of nationally sponsored radio programs and is the nation's second
largest radio network. In addition, the Company owns and operates Westwood One
Broadcasting Services, Inc. ("WBS"), which provides local traffic, news, sports
and weather programming to radio stations and other media outlets in New York,
Chicago, Los Angeles and Philadelphia. Westwood One is managed by Infinity
Broadcasting Corporation pursuant to a five-year Management Agreement which
expires on February 3, 1999.
The Company's principal source of revenue is selling radio time to advertisers
through one of three operating divisions: Westwood One Radio Networks, Westwood
One Entertainment (the "Network Divisions"), and effective March 1996, WBS. The
Company generates revenue principally by its Network Divisions entering into
radio station affiliation agreements to obtain audience and commercial spots and
then selling the spots to national advertisers. WBS generates revenue
principally by selling audience it obtains from radio stations and other media
outlets where it has operations to local as well as national advertisers. The
Company is strategically positioned to provide a broad range of programming and
services which both deliver audience to advertisers and news, talk, sports, and
entertainment programs to radio stations.
Westwood One Radio Networks offers radio stations three traditional news
services, CNN Radio, NBC Radio Network and the Mutual Broadcasting System, plus
youth-oriented network news and entertainment programming from The Source, in
addition to eight 24-hour satellite-delivered continuous play music formats and
weekday and weekend news and entertainment features and programs.
Westwood One Entertainment produces music, sports, talk and special event
programming. These programs include: countdown shows; music and interview
programs; live concert broadcasts; major sporting events (principally covering
the NFL, Notre Dame football and other college football and basketball games);
live, personality intensive talk shows; and exclusive satellite simulcasts with
HBO and other cable networks.
The Company's programs are broadcast in every radio market in the United States
measured by The Arbitron Ratings Company ("Arbitron"), the leading rating
service, as well as being broadcast internationally.
WBS provides radio stations and other media outlets, including television and
cable companies, with local traffic, news, sports and weather programming in New
York, Chicago, Los Angeles and Philadelphia.
Westwood One, through its Divisions, enables national advertisers to purchase
advertising time and to have their commercial messages broadcast on radio
stations throughout the United States, reaching demographically defined
listening audiences. The Company delivers both of the major demographic groups
targeted by national advertisers: the 25 to 54-year old adult market and the 12
to 34-year-old youth market. The Company currently sells advertising time to
over 300 national advertisers, including each of the 25 largest network radio
advertisers. Radio stations are able to obtain quality programming from Westwood
One to meet their objective of attracting larger listening audiences and
increasing local advertising revenue. Westwood One, through the development of
internal programming as well as through acquisitions, has developed an extensive
tape library of previously aired programs, interviews, live concert
performances, news and special events.
INDUSTRY BACKGROUND
Radio Broadcasting
As of January 1, 1996, there were approximately 9,750 commercial radio stations
in the United States.
A radio station selects a style of programming ("format") to attract a target
listening audience and thereby attract commercial advertising directed at that
audience. There are many formats from which a station may select, including
news, talk, sports and various types of music and entertainment programming.
1
The diversity in program formats has intensified competition among stations for
local advertising revenue. A radio station has two principal ways of effectively
competing for these revenues. First, it can differentiate itself in its local
market by selecting and successfully executing a format targeted at a particular
audience thus enabling advertisers to place their commercial messages on
stations aimed at audiences with certain demographic characteristics. A station
can also broadcast special programming, sporting events or national news
product, such as supplied by Westwood One, not available to its competitors
within its format. National programming broadcast on an exclusive geographic
basis can help differentiate a station within its market, and thereby enable a
station to increase its audience and local advertising revenue.
Radio Advertising
Radio advertising time can be purchased on a local, regional or national basis.
Local purchases allow an advertiser to select specific radio stations in chosen
geographic markets for the broadcast of commercial messages. However, this
process can be expensive and inefficient. Local and regional purchases are
typically best suited for an advertiser whose business or ad campaign is in a
specific geographic area. Advertising purchased from a radio network is one
method by which an advertiser gets its commercial messages to a specific
demographic audience, achieving national coverage on a cost efficient basis. In
addition, an advertiser can choose to emphasize their message in a certain
market or markets by supplementing a national purchase with local and/or
regional purchases.
In recent years the increase in the number of program formats has led to more
demographically specific listening audiences, making radio an attractive,
alternative medium for national advertisers. In addition, nationally broadcast
news, concerts and special event programming have made radio an effective medium
of reach (size of listening audiences) as well as frequency (number of exposures
to the target audience).
To verify audience delivery and demographic composition, specific measurement
information is available to national advertisers by independent rating services
such as Arbitron and Statistical Research, Inc.'s RADAR. These rating services
provide demographic information such as the age and sex composition of the
listening audiences. Consequently, national advertisers can verify that their
advertisements are being heard by their target listening audience.
BUSINESS STRATEGY
Westwood One's Network Divisions provide targeted radio audiences and commercial
spots to national advertisers through its recognized programming and other
network products. The Company, through its various radio networks, produces and
distributes quality programming to radio stations seeking to increase their
listening audience and improve local and national advertising revenue. The
Company sells advertising time within its programs to national advertisers
desiring to reach large listening audiences nationwide with specific demographic
characteristics.
In February 1994, the Company acquired Unistar Radio Networks, Inc. ("Unistar")
for $101,300,000 plus expenses along with the following additional transactions
(see Notes 4, 7, 8 and 9 to Consolidated Financial Statements):
(a) the sale by the Company to Infinity Network, Inc. ("INI"), a
wholly-owned subsidiary of Infinity Broadcasting Corporation
("Infinity"), of 5,000,000 shares of the Company's Common Stock and a
warrant to purchase up to an additional 3,000,000 shares of Common
Stock at an exercise price of $3.00 per share, for a total purchase
price of $15,000,000;
(b) a Management Agreement between the Company and Infinity pursuant to
which (a) the Chief Executive Officer of Infinity, currently Mel
Karmazin, became the Chief Executive Officer of the Company, (b) the
Chief Financial Officer of Infinity, currently Farid Suleman, became
the Chief Financial Officer of the Company and (c) Infinity began
managing the business and operations for an annual base fee of
$2,000,000 (adjusted for inflation), an annual cash bonus (payable in
the event of meeting certain financial targets) and additional
warrants to acquire up to 1,500,000 shares of Common Stock exercisable
after the Company's Common Stock reaches certain market prices per
share.
2
(c) a Voting Agreement providing for the reconstitution of the Board of
Directors into a nine-member Board and the voting of Norman Pattiz's
shares of the Company's Common Stock and Class B Stock and the shares
of the Common Stock held by INI.
In 1996, the Company expanded its strategy to include providing local traffic,
news, sports and weather programming to radio stations and other media outlets
in selected cities across the United States. In March 1996, WBS acquired the
operating assets of New York Shadow Traffic Limited Partnership, Chicago Shadow
Traffic Limited Partnership, Los Angeles Shadow Traffic Limited Partnership, and
Philadelphia Express Traffic Limited Partnership (collectively "Shadow Traffic")
for $20,000,000 plus expenses, subject to an adjustment based on future cash
flow (See Note 17 to Consolidated Financial Statements). In addition, WBS has
options to acquire the Shadow operations in other cities.
Radio Programming
The Company produces and distributes 24-hour continuous play formats, regularly
scheduled and special syndicated programs, including exclusive live concerts,
music and interview shows, national music countdowns, lifestyle short features,
news broadcasts, talk programs, sporting events, and sports features.
The Company controls most aspects of production of its programs, therefore being
able to tailor its programs to respond to current and changing listening
preferences. The Company produces regularly scheduled short-form programs
(typically 5 minutes or less), long-form programs (typically 60 minutes or
longer) and 24-hour continuous play formats. Typically, the short-form programs
are produced at the Company's in-house facilities located in Culver City,
California, New York, New York and Arlington, Virginia. The long-form programs
include shows produced entirely at the Company's in-house production facilities
and recordings of live concert performances and sports events made on location.
The 24-hour continuous play formats are produced at the Company's facilities in
Valencia, California.
Westwood One also produces and distributes special event syndicated programs. In
1995 the Company produced and distributed numerous special event programs,
including exclusive broadcasts of REM, Page and Plant and an HBO simulcast of
the Rock'N Roll Hall of Fame concert.
Westwood One obtains most of the programming for its concert series by recording
live concert performances of prominent recording artists. The agreements with
these artists often provide the exclusive right to broadcast the concerts
worldwide over the radio (whether live or pre-recorded) for a specific period of
time. The Company may also obtain interviews with the recording artist and
retain a copy of the recording of the concert and the interview for use in its
radio programs and as additions to its extensive tape library. The agreements
provide the artist with master recordings of their concerts and nationwide
exposure on affiliated radio stations. In certain cases the artists may receive
compensation.
Westwood One's syndicated programs are produced at its in-house production
facilities. The Company determines the content and style of a program based on
the target audience it wishes to reach. The Company assigns a producer, writer,
narrator or host, interviewer and other personnel to record and produce the
programs. Because Westwood One controls the production process, it can refine
the programs' content to respond to the needs of its affiliated stations and
national advertisers. In addition, the Company can alter program content in
response to current and anticipated audience demand.
The Company produces and distributes eight 24-hour continuous play formats
providing music, news and talk programming for Country, Hot Country, Adult
Contemporary, Soft AC, Oldies, Adult Standards, Adult Rock and Roll and the 70's
formats. Using its production facilities in Valencia, California, the Company
provides all the programming for stations affiliated with each of these formats.
Affiliates compensate the Company for these formats by providing the Company
with a portion of their commercial air time and, in most cases, cash fees.
The Company believes that its tape library is a valuable asset for its future
programming and revenue generating capabilities. The library contains previously
broadcast programs, live concert performances, interviews, daily news programs,
sports and entertainment features, Capitol Hill hearings and other special
events. New programs can be created and developed at a low cost by excerpting
material from the library.
3
Affiliated Radio Stations
Westwood One's radio network business strategy is to provide for the programming
needs of radio stations by supplying to radio stations programs and services
that individual stations may not be able to produce on their own. The Company
offers radio stations a wide selection of regularly scheduled and special event
syndicated programming as well as 24-hour continuous play formats. These
programs and formats are completely produced by the Company and, therefore, the
stations have no production costs. Typically, each program is offered for
broadcast by the Company exclusively to one station in its geographic market,
which assists the station in competing for audience share in its local
marketplace. In addition, except for news programming, Westwood One's programs
contain available commercial air time that the stations may sell to local
advertisers. Westwood One typically distributes promotional announcements to the
stations and places advertisements in trade and consumer publications to further
promote the upcoming broadcast of its programs.
Westwood One's networks enter into affiliation agreements with radio stations.
In the case of news and current events programming, the agreements commit the
station to broadcast only the advertisements associated with these programs and
allows the station flexibility to have the news headlined by their newscasters.
The other affiliation agreements require a station to broadcast the Company's
programs and to use a portion of the program's commercial slots to air national
advertisements and any related promotional spots. With respect to the 24-hour
formats, the Company may also receive a fee from the affiliated stations for the
right to broadcast the formats. Radio stations in the top 200 national markets
may also receive compensation for airing national advertising spots.
Affiliation agreements specify the number of times and the approximate daypart
each program and advertisement may be broadcast. Westwood One requires that each
station complete and promptly return to the Company an affidavit
(proof-of-performance) that verifies the time of each broadcast. Affiliation
agreements for Westwood One's entertainment programming are non-cancelable for
26 weeks and are automatically renewed for subsequent 26-week periods, if not
canceled 30 days prior to the end of the existing contract term. Affiliation
agreements for Westwood One's news and current events programming generally run
for a period of at least one year, are automatically renewable for subsequent
periods and are cancelable by either the Company or the station upon 90 days'
notice.
The Company has a number of people responsible for station relations and
marketing its programs to radio stations. Station relationships are managed
geographically to allow the marketing staff to concentrate on specific
geographical regions. This enables the Company's staff to develop and maintain
close, professional relationships with radio station personnel and to provide
them with quick programming assistance.
National Advertisers
Westwood One provides national advertisers with a cost-effective way to
communicate their commercial messages to large listening audiences nationwide
that have specific demographic characteristics. An advertiser can obtain both
frequency (number of exposures to the target audience) and reach (size of
listening audience) by purchasing advertising time in the Company`s programs. By
purchasing time in programs directed to different formats, advertisers can be
assured of obtaining high market penetration and visibility as their commercial
messages will be broadcast on several stations in the same market at the same
time. The Company supports its national sponsors with promotional announcements
and advertisements in trade and consumer publications. This support promotes the
upcoming broadcasts of Company programs and is designed to increase the
advertisers' target listening audience.
The Company sells its commercial time to advertisers either as "bulk" or
"flighted" purchases. Bulk purchases are long-term contracts (26 to 52 weeks)
that are sold "up-front" (early advertiser commitments for national broadcast
time). Flighted purchases are contracts for a specific, short-term period of
time (one to six weeks) that are sold at or above prevailing market prices.
Advertising prices vary significantly based on prevailing market conditions.
Generally, the contracts provide that advertising orders are firm and
non-cancelable. The Company's strategy for growth in advertising revenue is to
increase the amount of advertising time sold on the usually more profitable
flighted basis, to increase revenue of the non-RADAR rated programs, and to
increase audience size for news, talk and current events programming.
4
Local Traffic and Information Programming
In 1996, the Company expanded its business to include the production and
distribution of local traffic, news, sports and weather programming in selected
metropolitan areas (initially New York, Chicago, Los Angeles and Philadelphia).
The programming is produced in facilities rented by the Company in those
metropolitan areas. Local traffic information is obtained through the
utilization of strategically placed cameras overlooking portions of major
freeways, monitoring police radio bands, phone calls from drivers, and through
patrolling freeways with rented aircraft.
COMPETITION
The Company operates in a very competitive environment. In marketing its
programs to national advertisers, the Company directly competes with other radio
networks as well as with independent radio syndication producers and
distributors. In addition, Westwood One competes for advertising revenue with
network television, cable television, print and other forms of communications
media. The Company believes that the high quality of its programming and the
strength of its station relations and advertising sales forces enable it to
compete effectively with other forms of communication media. Westwood One
markets its programs to radio stations, including affiliates of other radio
networks, that it believes will have the largest and most desirable listening
audience for each of its programs. The Company often has different programs
airing on a number of stations in the same geographic market at the same time.
The Company believes that in comparison with any other independent radio
syndication producer and distributor or radio network it has a more diversified
selection of programming from which national advertisers and radio stations may
choose. In addition, the Company both produces and distributes programs, thereby
enabling it to respond more effectively to the demands of advertisers and radio
stations.
The increase in the number of program formats has led to increased competition
among local radio stations for audience. As stations attempt to differentiate
themselves in an increasingly competitive environment, their demand for quality
programming available from outside programming sources increases. This demand
has been intensified by high operating and production costs at local radio
stations and increased competition for local advertising revenue.
WBS, in the metropolitan areas in which it operates, competes for advertising
revenue with local print and other forms of communications media. The Company's
principal competitor providing local traffic, news, sports and weather
programming is Metro Networks.
GOVERNMENT REGULATION
Radio broadcasting and station ownership are regulated by the FCC. Westwood One,
as a producer and distributor of radio programs, is generally not subject to
regulation by the FCC. Shadow Traffic utilizes FCC regulated frequencies
pursuant to licenses issued by the FCC.
EMPLOYEES
On March 15, 1996, Westwood One had 566 full-time employees, including a
domestic advertising sales force of 69 people. In addition, the Company
maintains continuing relationships with approximately 58 independent writers,
program hosts, technical personnel and producers. Certain employees at the
Mutual Broadcasting System, NBC Radio Networks, and Unistar Radio Networks are
covered by collective bargaining agreements. The Company believes relations with
its employees and independent contractors are good.
ITEM 2. PROPERTIES
The Company owns a 7,600 square-foot building in Culver City, California in
which its production facilities are located; a 14,000 square-foot building and
an adjacent 10,000 square-foot building in Culver City, California which
contains administrative, sales and marketing offices, and storage space; and a
7,700 square-foot unoccupied building in Culver City. In addition, the Company
leases offices in New York; Chicago; Detroit; Dallas; Philadelphia; Arlington,
Virginia and Valencia, California.
The Company believes that its facilities are more than adequate for its current
level of operations.
5
ITEM 3. LEGAL PROCEEDINGS
- None -
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of the year ended December 31, 1995.
6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
On March 1, 1996 there were approximately 315 holders of record of the Company's
Common Stock, several of which represent "street accounts" of securities
brokers. Based upon the number of proxies requested by brokers in conjunction
with its shareholders' meeting on June 13, 1995, the Company estimates that the
total number of beneficial holders of the Company's Common Stock exceeds 4,500.
The Company's Common Stock has been traded in the over-the-counter market under
the NASDAQ symbol WONE since the Company's initial public offering on April 24,
1984. The following table sets forth the range of high and low last sales prices
on the NASDAQ/National Market System, as reported by NASDAQ, for the Common
Stock for the calendar quarters indicated.
1995 HIGH LOW
- ---- ---- ---
First Quarter 13 1/8 9 3/4
Second Quarter 15 1/8 12 1/8
Third Quarter 19 3/8 14 3/4
Fourth Quarter 17 3/4 13 3/4
1994
- ----
First Quarter 10 1/2 7 5/8
Second Quarter 87 /8 7 1/8
Third Quarter 11 3/8 7 11/16
Fourth Quarter 11 1/4 7 5/8
No cash dividend was paid on the Company's stock during 1995 or 1994, and the
payment of dividends is restricted by the terms of its loan agreements.
7
ITEM 6. SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE DATA)
The table below summarizes selected consolidated financial data of the Company
for each of the last five fiscal years:
OPERATING RESULTS FOR YEAR ENDED:
December 31, November 30,
-------------------- -----------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
NET REVENUES $145,729 $136,340 $84,014 $86,376 $93,170
OPERATING AND CORPORATE COSTS,
EXCLUDING DEPRECIATION AND AMORTIZATION 112,661 112,198 69,821 85,415 77,046
DEPRECIATION AND AMORTIZATION 13,753 18,160 16,384 19,661 22,055
OPERATING INCOME (LOSS) 19,315 5,982 (2,191) (18,700) (5,931)
INCOME (LOSS) FROM CONTINUING OPERATIONS 9,685 (2,730) (8,682) (21,397) (10,004)
(LOSS) FROM DISCONTINUED OPERATIONS - - (15,227) (2,721) (6,778)
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 9,685 (2,730) (23,909) (24,118) (16,782)
EXTRAORDINARY GAIN (LOSS) - (590) - - 25,618
NET INCOME (LOSS) $9,685 ($3,320) ($23,909) ($24,118) $8,836
INCOME (LOSS) PER SHARE:
Primary:
Continuing Operations $ .28 ($ .09) ($ .57) ($1.44) ($ .67)
Discontinued Operations - - ( 1.01) ( .18) ( .46)
------- -------- -------- -------- -------
Income (Loss) Before Extraordinary Item .28 ( .09) ( 1.58) ( 1.62) ( 1.13)
Extraordinary Item - ( .02) - - 1.73
------- ------- ------- ------- -------
Net Income (Loss) $ .28 ($ .11) ($1.58) ($1.62) $ .60
======= ======= ======= ======= =======
Fully diluted:
Continuing Operations $ .28 ($ .09) ($ .57) ($1.44) ($ .30)
Discontinued Operations - - ( 1.01) ( .18) ( .28)
------- ------- ------- ------ -------
Income (Loss) Before Extraordinary Item .28 ( .09) ( 1.58) ( 1.62) ( .58)
Extraordinary Item - ( .02) - - 1.06
------- ------- ------- ------ -------
Net Income (Loss) $ .28 ($ .11) ($1.58) ($1.62) $ .48
======= ======= ======= ======= =======
BALANCE SHEET DATA AT:
December 31, November 30,
--------------------- ------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
CURRENT ASSETS $41,885 $46,157 $32,987 $51,091 $46,126
WORKING CAPITAL 6,563 7,685 (1,503) (11,942) 10,200
TOTAL ASSETS 245,595 260,112 152,067 295,740 322,561
LONG-TERM DEBT 107,943 115,443 51,943 146,622 169,083
TOTAL SHAREHOLDERS' EQUITY 94,123 95,454 55,151 75,204 98,765
- ----------------
Effective December 1, 1993, the Company changed its method of accounting for
capitalized station affiliation agreements to expense the costs as
incurred. The effect of this change in accounting method does not
materially affect the comparability of the information reflected herein.
Results for the year ended December 31, 1994 include Unistar from the time it
was acquired in February 1994.
No cash dividend was paid on the Company's Common Stock during the periods
presented above.
8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
In August 1994, the Company changed its fiscal year end from November 30 to
December 31 effective with the fiscal year ending December 31, 1994.
Accordingly, in the following discussion "1995" and "1994" will refer to the
calendar years 1995 and 1994, and "1993" will refer to the fiscal year ended
November 30, 1993.
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.
Effective December 1, 1993, the Company changed its method of accounting for
capitalized station affiliation agreements and income taxes. In order to conform
to predominate current industry practice, capitalized station affiliation
agreements will be expensed as incurred. The cumulative effect of the change in
accounting for station affiliation expenses in December 1993 was an expense of
$4,344, or $.23 per share. SFAS No. 109 "Accounting for Income Taxes" was
adopted by the Company in December 1993. The Company elected not to restate
prior year's financial statements. Adopting SFAS No. 109 did not affect the
December 1993 or 1994 results.
In 1993, the Company classified the results of operations from Radio & Records
and its Los Angeles and New York radio stations as discontinued operations. The
Company disposed of these assets during 1993.
RESULTS OF OPERATIONS
Westwood One derives substantially all of its revenue from the sale of
advertising time to advertisers. Net revenues increased 7% to $145,729 in 1995
from $136,340 in 1994 and increased 62% in 1994 from $84,014 in 1993. The
increases in 1995 and 1994 net revenues were primarily a result of the purchase
of Unistar in February 1994.
Operating costs and expenses excluding depreciation and amortization increased
1% to $106,685 in 1995 from $105,389 in 1994 and increased 61% in 1994 from
$65,353 in 1993. The 1995 increase was primarily attributable to the purchase of
Unistar, partially offset by reductions in affiliate compensation expenses. The
1994 increase was primarily attributable to the purchase of Unistar and higher
programming expenses resulting from the production of additional programs.
Depreciation and amortization decreased 24% to $13,753 in 1995 from $18,160 in
1994 and increased 11% in 1994 from $16,384 in 1993. The 1995 decrease was
primarily a result of lower amortization of programming costs and rights from
lower levels of capitalized costs. The increase in depreciation and amortization
expense in 1994 was primarily a result of the purchase of Unistar, partially
offset by lower amortization of programming costs and rights and lower
amortization as a result of the Company's December 1, 1993 change in its method
of accounting for capitalized station affiliation agreements.
Corporate general and administrative expenses increased 36% to $5,976 in 1995
from $4,404 in 1994 and decreased 1% in 1994 from $4,468 in 1993. The increase
in 1995 was primarily a result of fees attributable to the Infinity Management
Agreement and higher compensation for the Company's chairman. The nominal
decrease in 1994 is a result of across-the-board expense cuts, partially offset
by fees attributable to the Infinity Management Agreement.
As a result of the purchase of Unistar, the Company accrued restructuring costs
of $2,405 in the first quarter of 1994 principally relating to the consolidation
of certain facilities and operations.
Operating income increased 223% to $19,315 in 1995 from $5,982 in 1994 and
increased $8,173 in 1994 from an operating loss of $2,191 in 1993. The dramatic
improvement in 1995 is attributable to the acquisition of Unistar and lower
amortization of programming costs and rights, partially offset by higher
corporate general and administrative expenses. The improvement in 1994 is
attributable to the acquisition of Unistar and cost savings resulting from
operating synergies from the Unistar acquisition, partially offset by higher
depreciation and amortization expense as a result of the Unistar acquisition.
9
Interest expense was $9,524, $8,802 and $6,551 in 1995, 1994 and 1993,
respectively. The increase in 1995 was primarily attributable to twelve months'
interest in the current year for debt obtained as a result of the Unistar
acquisition and higher interest rates, partially offset by lower debt levels as
a result of repaying $12,500 in debt in the current year and the 1994 conversion
of 9% Senior Debentures to Common Stock. The 1994 increase is principally
attributable to higher debt levels as a result of the acquisition of Unistar,
partially offset by the elimination of interest expense on the Company's 9%
Senior Debentures due to their conversion to Common Stock. Other income is
principally comprised of investment income.
Income (loss) from continuing operations increased $12,415 to $9,685 ($.28 per
share) from 1994's loss of $2,730 ($.09 per share) and the 1994 loss decreased
69% from 1993's loss of $8,682 ($.57 per share).
Loss on discontinued operations, net of income tax benefit, was $3,140 in 1993.
The loss represents the operating performance of discontinued operations through
March 1, 1993.
The $12,087 provision for loss on disposal of discontinued operations included
estimated future costs and operating results of the discontinued assets from
March 1, 1993 until the date of disposition.
In connection with the refinancing of its senior debt facility, the Company
recorded an extraordinary loss of $590 ($.02 per share).
Net income increased $13,005 to $9,685 ($.28 per share) from a net loss of
$3,320 ($.11 per share) in 1994 and the 1994 net loss decreased 86% in 1994 from
$23,909 ($1.58 per share) in 1993.
Weighted average shares outstanding increased 17% to 34,310 in 1995 from 29,414
in 1994 and 94% in 1994 from 15,153 in 1993. The 1995 increase is primarily
attributable to the full year impact of share issuances made in 1994 (conversion
of 9% Senior Debentures and sale of 5,000 shares to a subsidiary of Infinity).
The 1994 increase in weighted average shares is primarily attributable to the
conversion of its 9% Senior Debentures into approximately 8,864 shares of Common
Stock and the sale of 5,000 shares of Common Stock to a subsidiary of Infinity.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company's cash and cash equivalents were $256, a
decrease of $2,183 from December 31, 1994. In addition, the Company had
available borrowings under its loan agreement of $17,500.
For 1995, net cash from operating activities was $24,223, an increase of $21,778
from 1994. The increase was primarily attributable to higher cash flow from
operations. In 1994, net cash from operating activities was much lower due to
high working capital requirements as a result of the acquisition of Unistar. Net
cash used by investing activities was $2,890 principally due to the purchase of
capital equipment. Consequently, cash provided before financing activities was
$21,333.
The Company has been authorized by its Board of Directors to repurchase up to
$40,000 of its Common Stock through December 31, 1996. During 1995, the Company
purchased 607 shares of the Company's Common Stock and 500 warrants for a total
cost of $14,475. In addition, the Company prepaid $12,500 of its long-term debt.
On March 1, 1996, the Company purchased the operating assets of New York Shadow
Traffic Limited Partnership, Chicago Shadow Traffic Limited Partnership, Los
Angeles Shadow Traffic Limited Partnership, and Philadelphia Express Traffic
Limited Partnership (collectively "Shadow Traffic") for $20,000 plus expenses,
subject to an adjustment based on the future cash flow of Shadow Traffic. The
acquisition will be financed using the Company's existing cash and available
bank borrowings.
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.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and the related notes and schedules of the
Company are indexed on page F-1 of this Report, and attached hereto as pages F-1
through F-15 and by this reference incorporated herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after the end of the Company's fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after the end of the Company's fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after then end of the Company's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after the end of the Company's fiscal year.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT ON FORM 10-K
1. Financial statements and schedules to be filed thereunder are indexed
on page F-1 hereof.
2. Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Certificate of Incorporation of Registrant. (1)
3.2 Agreement of Merger. (1)
3.3 Certificate of Amendment of Certificate of Incorporation, as filed on
October 10, 1986. (2)
3.4 Certificate of Amendment of Certificate of Incorporation, as filed on
October 9, 1986. (3)
3.5 Certificate of Amendment of Certificate of Incorporation, as filed on
March 23, 1987. (3)
3.6 Certificate of Correction of Certificate of Amendment, as filed on March
31, 1987 at 10:00 a.m. (3)
3.7 Certificate of Correction of Certificate of Amendment, as filed on March
31, 1987 at 10:01 a.m. (3)
3.8 Bylaws of Registrant as currently in effect. (15)
4 Form of Indenture for 6 3/4% Convertible Subordinated Debentures
(including the form of the Debenture). (2)
4.1 Warrant Agreement dated August 27, 1990 between Registrant and Security
Pacific National Bank, as Warrant Agent. (7)
*10.1 Employment Agreement and Registration Rights Agreement, dated October 18,
1993, between Registrant and Norman J. Pattiz. (13)
*10.2 First Amendment to Employment Agreement, dated January 26, 1994 between
Registrant and Norman J. Pattiz. (13)
*10.3 Second Amendment to Employment Agreement,dated February 2, 1994, between
Registrant and Norman J. Pattiz. (15)
*10.4 Employment Agreement, dated June 1, 1995, between Registrant and Gregory
P. Batusic.
*10.5 Employment Agreement, dated April 10, 1995, between Registrant and
Jeffrey Lawenda.
10.6 Form of Indemnification Agreement Between Registrant and its Directors
and Executive Officers. (4)
10.7 Credit Agreement, dated February 1, 1994, between Registrant and The
Chase Manhattan Bank (National Association) and Co-Agents. (15)
10.8 Amendment No. 1 to the Credit Agreement, dated August 12, 1994, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents. (15)
10.9 Amendment No. 2 to the Credit Agreement, dated August 31, 1994, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents. (15)
10.10 Amendment No. 3 to the Credit Agreement, dated February 23, 1995, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents. (15)
10.11 Amendment No. 4 to the Credit Agreement, dated April 6, 1995, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents.
10.12 Amendment No. 5 to the Credit Agreement, dated December 1, 1995, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents.
10.13 Purchase Agreement dated as of August 24, 1987, between Registrant and
National Broadcasting Company, Inc. (5)
10.14 Stock Purchase Agreement, dated November 4, 1993, between Registrant and
Unistar Communications Group, Inc., Unistar Radio Network, Inc., and
Infinity Broadcasting Corporation. (12)
10.15 Securities Purchase Agreement, dated November 4, 1993, between Registrant
and Infinity Network, Inc. (12)
*10.16 Management Agreement, dated as of February 4, 1994, between Registrant
and Infinity Broadcasting Corporation. (12)
*10.17 Voting Agreement, dated as of February 4, 1994, among Registrant,
Infinity Network, Inc., Infinity Broadcasting Corporation and Norman J.
Pattiz. (12)
13
10.18 Asset Purchase Agreement, dated March 4, 1996, between Westwood One
Broadcasting Services, Inc. and Chicago Shadow Traffic Limited
Partnership, New York Shadow Traffic Limited Partnership, Los Angeles
Shadow Traffic Limited Partnership, Philadelphia Express Traffic Limited
Partnership, City Traffic Corp., Express Traffic Corp. and Alan
Markowitz.
10.19 Westwood One, Inc. 1989 Stock Incentive Plan. (10)
10.20 Amendments to the Westwood One, Inc. Amended 1989 Stock Incentive Plan.
(14)
10.21 Lease, dated July 19, 1989, between First Ball Associates Limited
Partnership and Westwood One, Inc., relating to Arlington, Virginia
offices. (6)
10.22 Lease, dated June 18, 1990, between Broadway 52nd Associates and Unistar
Communications Group, Inc. relating to New York, New York offices. (15)
10.23 Lease, dated December 18, 1991, between Valencia Paragon Associates,
Ltd., and Unistar Communications Group, Inc. relating to Valencia,
California offices. (15)
10.24 Digital Audio Transmission Service Agreement, dated June 5, 1990, between
Registrant and GE American Communications, Inc. (8)
10.25 Transmission Service Agreement, dated May 28, 1993, between IDB
Communications Group, Inc. and Unistar Radio Networks, Inc. (15)
10.26 Stipulation of Settlement of Class Action Law Suit. (6)
10.27 Agreement for Cancellation of Loan Documents, Guarantees and Securities
Purchase Documents, dated as of November 19, 1993 between Registrant,
Westwood One Stations Group, Inc., Westwood One Stations-LA, Inc., Radio
& Records, Inc. and Westinghouse Electric Corporation. (13)
22 List of Subsidiaries
24 Consent of Independent Accountants
27 Financial Data Schedule
**********************
* Indicates a management contract or compensatory plan.
(1) Filed as an exhibit to Registrant's registration statement on Form S-1
(File Number 2-98695) and incorporated herein by reference.
(2) Filed as an exhibit to Registrant's registration statement on Form S-1
(Registration Number 33-9006) and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Form 8 dated March 1, 1988 (File Number
0-13020), and incorporated herein by reference.
(4) Filed as part of Registrant's September 25, 1986 proxy statement (File
Number 0-13020) and incorporated herein by reference.
(5) Filed an exhibit to Registrant's current report on Form 8-K dated September
4, 1987 (File Number 0-13020) and incorporated herein by reference.
(6) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1989 (File Number 0-13020) and incorporated
herein by reference.
(7) Filed as an exhibit to Registrant's Quarterly report on Form 10-Q for the
quarter ended August 31, 1990 (File Number 0-13020) and incorporated herein
by reference.
(8) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1990 (File Number 0-13020) and incorporated
herein by reference.
(9) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1991 (File Number 0-13020) and incorporated
herein by reference.
(10) Filed as part of Registrant's March 27, 1992 proxy statement (File Number
0-13020) and incorporated herein by reference.
(11) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1992 (File Number 0-13020) and incorporated
herein by reference.
(12) Filed as part of Registrant's January 7, 1994 proxy statement (File Number
0-13020) and incorporated herein by reference.
(13) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1993 (File Number 0-13020) and incorporated
herein by reference.
(14) Filed as an exhibit to Registrant's July 20, 1994 proxy statement (File
Number 0-13020) and incorporated herein by reference.
(15) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 (File Number 0-13020) and incorporated herein by
reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of 1995.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 27, 1996 By /s/ FARID SULEMAN
-------------------------------
Farid Suleman
Director, Secretary and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
PRINCIPAL EXECUTIVE OFFICER:
/s/ MEL A KARMAZIN
- ---------------------------- Director, President
Mel A. Karmazin Chief Executive Officer March 27, 1996
PRINCIPAL FINANCIAL OFFICER AND
CHIEF ACCOUNTING OFFICER:
/s/ FARID SULEMAN
- ------------------------------- Director, Secretary and March 27, 1996
Farid Suleman Chief Financial Officer
Additional Directors:
/s/ NORMAN J. PATTIZ
- ------------------------------ Chairman of the Board of March 27, 1996
Norman J. Pattiz Directors
/s/ DAVID L. DENNIS
- ------------------------------ Director March 27, 1996
David L. Dennis
/s/ GERALD GREENBERG
- ------------------------------ Director March 27, 1996
Gerald Greenberg
/s/ PAUL G. KRASNOW
- ------------------------------ Director March 27, 1996
Paul G. Krasnow
/s/ STEVEN A. LERMAN
- ------------------------------ Director March 27, 1996
Steven A. Lerman
/s/ ARTHUR E. LEVINE
- ------------------------------ Director March 27, 1996
Arthur E. Levine
/s/ JOSEPH B. SMITH
- ------------------------------ Director March 27, 1996
Joseph B. Smith
15
WESTWOOD ONE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
PAGE
----
1. CONSOLIDATED FINANCIAL STATEMENTS
--Report of Independent Accountants F-2
--Consolidated Balance Sheets at December 31, 1995 and 1994 F-3
--Consolidated Statements of Operations for the years ended
December 31, 1995 and 1994, November 30, 1993 and the month
ended December 31, 1993 F-4
--Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1995 and 1994, November 30, 1993
and the month ended December 31, 1993 F-5
--Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1994, November 30, 1993 and the
month ended December 31, 1993 F-6
--Notes to Consolidated Financial Statements F-7 - F-14
2. FINANCIAL STATEMENT SCHEDULES:
IX. --Short-term Borrowings F-15
All other schedules have been omitted because they are not applicable, the
required information is immaterial, or the required information is included
in the consolidated financial statements or notes thereto.
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF WESTWOOD ONE, INC.
In our opinion, the consolidated financial statements listed in the index to
consolidated financial statements and financial statement schedules on page F-1
present fairly, in all material respects, the financial position of Westwood
One, Inc. and its subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the two fiscal years in the
period ended December 31, 1995, the one month ended December 31, 1993 and for
the fiscal year ended November 30, 1993, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in the Notes to Consolidated Financial Statements, effective
December 1, 1993 the Company changed its accounting policy for capitalized
station affiliation agreements and adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes".
PRICE WATERHOUSE LLP
Century City, California
February 5, 1996
F-2
WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
------------
1995 1994
---- ----
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 256 $ 2,439
Accounts receivable, net of allowance for doubtful accounts
of $2,157 (1995) and $1,645 (1994) 36,591 37,631
Other current assets 5,038 6,087
--------- ---------
Total Current Assets 41,885 46,157
PROPERTY AND EQUIPMENT, NET 15,632 16,748
INTANGIBLE ASSETS, NET 184,441 191,287
OTHER ASSETS 3,637 5,920
--------- ---------
TOTAL ASSETS $ 245,595 $ 260,112
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,468 $ 15,325
Accrued expenses and other liabilities 14,675 12,947
Amounts payable to affiliates 6,179 5,200
Current maturities of long-term debt -- 5,000
--------- ---------
Total Current Liabilities 35,322 38,472
LONG-TERM DEBT 107,943 115,443
OTHER LIABILITIES 8,207 10,743
--------- ---------
TOTAL LIABILITIES 151,472 164,658
--------- ---------
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, 31,507,027 (1995) and 30,652,652 (1994) 315 307
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 157,547 159,727
Accumulated deficit (54,899) (64,584)
--------- ---------
102,967 95,454
Less treasury stock, at cost; 607,395 shares (1995) (8,844) --
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 94,123 95,454
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 245,595 $ 260,112
========= =========
See accompanying notes to consolidated financial statements.
F-3
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Month Ended Year Ended
Year Ended December 31, December 31, November 30,
----------------------
1995 1994 1993 1993
---- ---- ---- ----
GROSS REVENUES $169,598 $158,780 $6,887 $98,357
Less Agency Commissions 23,869 22,440 970 14,343
------- ------- ------- -------
NET REVENUES 145,729 136,340 5,917 84,014
------- ------- ------- -------
Operating Costs and Expenses Excluding
Depreciation and Amortization 106,685 105,389 5,411 65,353
Depreciation and Amortization 13,753 18,160 1,243 16,384
Corporate General and Administrative Expenses 5,976 4,404 245 4,468
Restructuring Costs - 2,405 - -
------- ------- ------- -------
126,414 130,358 6,899 86,205
------- ------- ------- -------
OPERATING INCOME (LOSS) 19,315 5,982 (982) (2,191)
Interest Expense 9,524 8,802 381 6,551
Other Income (389) (290) (3) (60)
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES, DISCONTINUED
OPERATIONS, EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 10,180 (2,530) (1,360) (8,682)
INCOME TAXES 495 200 - -
------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS 9,685 (2,730) (1,360) (8,682)
(LOSS) ON DISCONTINUED OPERATIONS, NET
OF INCOME TAX BENEFIT - - - (3,140)
PROVISION FOR (LOSS) ON DISPOSAL OF
DISCONTINUED OPERATIONS - - - (12,087)
------- ------- ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 9,685 (2,730) (1,360) (23,909)
EXTRAORDINARY ITEM - (LOSS) ON RETIREMENT OF DEBT - (590) - -
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - (4,344) -
------- ------- ------- -------
NET INCOME (LOSS) $9,685 ($3,320) ($5,704) ($23,909)
======= ======= ======= =======
INCOME (LOSS) PER SHARE:
Continuing Operations $ .28 ($ .09) ($ .07) ($ .57)
Discontinued Operations - - - ( 1.01)
------- ------- ------- -------
Income (Loss) Before Extraordinary Item and Cumulative
Effect of Accounting Change .28 ( .09) ( .07) ( 1.58)
Extraordinary Item - ( .02) - -
------- ------- ------- -------
.28 ( .11) ( .07) ( 1.58)
Cumulative Effect of Accounting Change - - ( .23) -
------- ------- ------- -------
Net Income (Loss) $ .28 ($ .11) ($ .30) ($1.58)
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 34,310 29,414 19,051 15,153
======= ======= ======= =======
Pro Forma Amounts Assuming the New Accounting
Method is Applied Retroactively:
Income (Loss) Before Extraordinary Item $9,685 ($2,730) ($1,360) ($23,142)
Net Income (Loss) 9,685 (3,320) (1,360) (23,142)
Income (Loss) Per Share:
Income (Loss) Before Extraordinary Item $ .28 ($ .09) ($ .07) ($1.53)
Net Income (Loss) .28 ( .11) ( .07) ( 1.53)
See accompanying notes to consolidated financial statements.
F-4
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Common Stock Class B Stock Additional Treasury Stock
------------ ------------- Paid-in Accumulated --------------
Shares Amount Shares Amount Capital (Deficit) Shares Amount
------ ------ ------ ------ ------- --------- ------ ------
BALANCE AT NOVEMBER 30, 1992 .......... 14,663 $ 147 352 $ 4 $ 106,704 ($ 31,651) -- --
Net loss for fiscal 1993 ............. -- -- -- -- -- (23,909) -- --
Amortization of deferred compensation -- -- -- -- 281 -- -- --
Issuance of common stock under
stock option plans ................. 680 7 -- -- 1,381 -- -- --
Conversion of Senior Debentures to
common stock ....................... 591 6 -- -- 2,062 -- -- --
Issuance of common stock to 401-K plan 46 -- -- -- 119 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT NOVEMBER 30, 1993 .......... 15,980 160 352 4 110,547 (55,560) -- --
Net loss for December 1993 ........... -- -- -- -- -- (5,704) -- --
Issuance of common stock under
stock option plans ................. 179 2 -- -- 366 -- -- --
Conversion of Senior Debentures to
common stock ....................... 3,542 35 -- -- 12,530 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1993 .......... 19,701 197 352 4 123,443 (61,264) -- --
Net loss for 1994 .................... -- -- -- -- -- (3,320) -- --
Issuance of common stock and
warrants ........................... 5,000 50 -- -- 15,933 -- -- --
Issuance of common stock under
stock option plans ................. 629 7 -- -- 1,169 -- -- --
Conversion of Senior Debentures to
common stock ....................... 5,322 53 -- -- 19,170 -- -- --
Issuance of common stock to 401-K plan 1 -- -- -- 12 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1994 .......... 30,653 307 352 4 159,727 (64,584) -- --
Net income for 1995 .................. -- -- -- -- -- 9,685 -- --
Issuance of common stock under
stock option plans ................. 754 7 -- -- 3,215 -- -- --
Issuance of common stock under
warrants ........................... 100 1 -- -- 236 -- -- --
Purchase and cancellation of warrant . -- -- -- -- (5,631) -- -- --
Purchase of treasury stock ........... -- -- -- -- -- -- 607 8,844
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1995 .......... 31,507 $ 315 352 $ 4 $ 157,547 ($ 54,899) 607 $ 8,844
========= ========= ========= ========= ========= ========= ========= =========
See accompanying notes to consolidated financial statements
F-5
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Month Ended Year Ended
Year Ended December 31, December 31, November 30,
-----------------------
1995 1994 1993 1993
---- ---- ---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 9,685 ($ 3,320) ($ 5,704) ($ 23,909)
Adjustments to reconcile net loss to net cash provided by operating
activities before cash payments related to extraordinary item:
Depreciation and amortization 13,753 18,160 1,243 17,372
Extraordinary item - loss on retirement of debt -- 590 -- --
Cummulative effect of accounting change -- -- 4,344 --
Loss on disposal of discontinued operations -- -- -- 12,087
Other, principally capitalized programming costs and rights (206) (677) 11 (3,625)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,040 (19,191) 1,088 (2,239)
Decrease (increase) in prepaid assets (430) (377) (197) 209
Increase (decrease) in accounts payable and accrued
liabilities 381 7,510 (95) (2,189)
--------- --------- --------- ---------
Net cash provided by (used for) operating activities before cash
payments related to extraordinary item 24,223 2,695 690 (2,294)
Cash payments related to extraordinary item -- (250) -- --
--------- --------- --------- ---------
Net Cash Provided By (Used For) Operating Activities 24,223 2,445 690 (2,294)
--------- --------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of companies (Unistar in 1994) (994) (108,181) (72) (1,217)
Capital expenditures (1,229) (1,487) (296) (2,270)
Proceeds (cash payments) related to sales of discontinued
operations (73) (576) (229) 88,062
Proceeds related to sale of unconsolidated subsidary -- -- -- 10,372
Other (39) 551 (19) 200
--------- --------- --------- ---------
Net Cash Provided By (Used For) Investing Activities (2,335) (109,693) (616) 95,147
--------- --------- --------- ---------
CASH PROVIDED (USED) BEFORE
FINANCING ACTIVITIES 21,888 (107,248) 74 92,853
--------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Debt repayments (12,500) (14,515) (4,133) (104,071)
Borrowings under debt arrangements -- 110,000 -- 7,000
Issuance of common stock 3,459 16,126 368 1,507
Repurchase of common stock and warrants (14,475) -- -- --
Deferred financing costs (555) (2,038) (63) (309)
Issuance of subordinated debentures -- -- -- 433
--------- --------- --------- ---------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (24,071) 109,573 (3,828) (95,440)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,183) 2,325 (3,754) (2,587)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,439 114 3,868 6,455
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 256 $ 2,439 $ 114 $ 3,868
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
F - 6
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all wholly-owned
subsidiaries.
REVENUE RECOGNITION
Revenue is recognized when commercial advertisements are broadcast.
CASH EQUIVALENTS
The Company considers all highly liquid instruments purchased with a maturity of
less than three months to be cash equivalents. The carrying amount of cash
equivalents approximates fair value because of the short maturity of these
instruments.
DEPRECIATION
Depreciation is computed using the straight line method over the estimated
useful lives of the assets.
MEASUREMENT OF INTANGIBLE ASSET IMPAIRMENT
At each balance sheet date, the Company determines whether an impairment of
Intangible Assets has occurred based upon expectations of nondiscounted
broadcast cash flow. Broadcast Cash Flow is based on the consolidated statement
of operations, calculated by subtracting from net revenue, operating costs and
expenses excluding depreciation and amortization. To date, the Company has not
experienced an impairment in any of its intangible assets. However, should such
an impairment exist, the impairment will be measured as the amount by which the
carrying amount of the asset exceeds its fair value, as defined by Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
INCOME TAXES
Effective December 1, 1993, the Company implemented, on a prospective basis,
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes" which requires the use of the asset and liability method of
financial accounting and reporting for income taxes. The adoption of FAS109 did
not affect reported earnings. Under FAS 109, deferred income taxes reflect the
tax impact of temporary differences between the amount of assets and liabilities
recognized for financial reporting purposes and the amounts recognized for tax
purposes.
EARNINGS (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average number of common
shares and common equivalent shares (where inclusion of such equivalent shares
would not be anti-dilutive) outstanding during the year.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and revenue and expenses during the reporting period.
Actual results may differ from those estimates.
RECLASSIFICATION
Certain amounts have been reclassified to be comparable to the 1995
presentation.
F-7
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - ACCOUNTING CHANGE:
Effective December 1, 1993, the Company changed its method of accounting for
capitalized station affiliation agreements to expense these costs as incurred.
The Company believes this method is preferable and conforms to the predominant
current industry practice, including Unistar. Accordingly, the Company
recognized the cumulative effect of the change as of December 1, 1993. The
non-cash charge to earnings was an expense of $4,344, or $.23 per share and has
been reflected in the financial statements for the month of December 1993.
NOTE 3 - CHANGE IN FISCAL YEAR:
In the third quarter of 1994, the Company changed its fiscal year end from
November 30 to December 31 effective with the fiscal year ending December 31,
1994. The accompanying financial statements include audited statements of
operations, shareholders' equity and cash flows for the one month transition
period ended December 31, 1993.
NOTE 4 - ACQUISITION OF UNISTAR RADIO NETWORKS, INC.:
On February 3, 1994, the Company completed the acquisition of all of the issued
and outstanding capital stock of Unistar Radio Networks, Inc. ("Unistar") for
$101,300 plus expenses. The acquisition was accounted for as a purchase.
Accordingly, the operating results of Unistar are included with those of the
Company from the date of acquisition. Based on management's estimates, the
purchase price has been allocated to the fair value of assets and liabilities
acquired. The excess of cost over net assets of acquired company resulting from
the transaction ($92,464) is being amortized over 40 years.
NOTE 5 - PROPERTY AND EQUIPMENT:
Property and equipment is recorded at cost and is summarized as follows at:
DECEMBER 31,
------------------
1995 1994
Land............................................................ $ 3,378 $ 3,378
Recording and studio equipment.................................. 15,906 15,813
Buildings and leasehold improvements............................ 7,574 7,573
Furniture and equipment......................................... 5,788 5,664
Transportation equipment........................................ 587 690
Construction-in-progress........................................ 347 -
------- ------
33,580 33,118
Less: Accumulated depreciation and amortization................ 17,948 16,370
------ -------
Property and equipment, net............................ $15,632 $16,748
======= =======
Depreciation expense was $2,340 in 1995, $3,238 in 1994 and $2,111 in 1993.
F-8
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - INTANGIBLE ASSETS:
Intangible assets are summarized as follows at:
DECEMBER 31,
-----------------
1995 1994
---- ----
Goodwill, less accumulated amortization of $20,572 (1995) and
$16,334 (1994)..................................................... $148,967 $153,205
Acquired station affiliation agreements, less accumulated
amortization of $4,823 (1995) and $3,382 (1994).................... 18,956 21,025
Other intangible assets, less accumulated amortization of $5,082
(1995) and $4,543 (1994)........................................... 16,518 17,057
-------- --------
Intangible assets, net....................................... $184,441 $191,287
======== ========
Intangible assets, except for acquired station affiliation agreements, are
amortized on a straight-line basis over 40 years.
Station affiliation agreements are comprised of values assigned to agreements
acquired as part of the purchase of radio networks and are amortized using an
accelerated method over 40 years. The period of amortization is evaluated
periodically to determine whether a revision to the estimated useful life is
warranted.
NOTE 7 - DEBT:
Long-term debt consists of the following at:
DECEMBER 31,
--------------------
1995 1994
---- ----
Revolving Credit Facility/Term Loans................................ $ 92,500 $105,000
6 3/4% Convertible Subordinated Debentures maturing 2011............ 15,443 15,443
-------- --------
107,943 120,443
Less current maturities............................................. - 5,000
-------- --------
$107,943 $115,443
======== ========
The Company's amended senior loan agreement with a syndicate of banks, lead by
Chase Manhattan Bank, provides for a $125,000 revolving credit facility (the
"Facility"), which is subject to mandatory quarterly reductions. The Facility is
available until June 30, 2002. At December 31, 1995, the Company had available
borrowings under the Facility of $110,000. Interest is payable at the prime rate
plus an applicable margin of up to 1.5% or LIBOR plus an applicable margin of up
to 2.5%, at the Company's option. Based on the Company's Total Debt Ratio, the
applicable margins may be reduced to as low as 0% for prime rate loans and 1.0%
for LIBOR loans. At December 31, 1995, the applicable margins were 0% and 1.0%,
respectively. At December 31, 1995, the Company had borrowed $92,500 at 6.82%
under the Facility. The Facility is secured by substantially all the Company's
assets and contains covenants relating to dividends, liens, indebtedness,
capital expenditures and interest coverage and leverage ratios. As a matter of
policy, the Company does not engage in derivative trading. As part of the
Facility, the Company is required to enter into interest rate protection
agreements. Accordingly, the Company has entered into two interest rate
protection agreements under which the Company's interest rate on $50,000 of
borrowings under the Facility will not exceed 7% (based on the current margin).
The agreements are effective from July and August 1995 thru July and August
1996, with each covering $25,000 of borrowings.
F-9
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The 6 3/4% Convertible Subordinated Debentures ("Debentures") are unsecured and
subordinated in right of payment to senior indebtedness. Interest on the
Debentures is payable semiannually on April 15 and October 15. The Debentures
are convertible at any time prior to maturity, unless previously redeemed, into
shares of common stock of the Company at the conversion price of $24.58 per
share, subject to adjustment upon the occurrence of certain events.
The aggregate maturities of long-term debt for the next five fiscal years and
thereafter, pursuant to the Company's debt agreements as in effect at December
31, 1995, are as follows:
YEAR
1997................................. $ 12,500
1998................................. 17,500
1999................................. 17,500
2000................................. 17,500
Thereafter........................... 42,943
-------
$107,943
========
With the exception of the Company's Debentures, the fair value of short and
long-term debt approximates its carrying value. The fair value of the Debentures
at December 31, 1995 was approximately $13,744, based on its quoted market
price.
NOTE 8 - SHAREHOLDERS' EQUITY:
The authorized capital stock of the Company consists of Common stock, Class B
stock and Preferred stock. Common stock is entitled to one vote per share while
Class B stock is entitled to 50 votes per share.
In connection with the Company's purchase of Unistar, the Company sold 5 million
shares of common stock and a warrant to purchase up to an additional 3 million
shares of common stock at an exercise price of $3.00 per share (subject to
certain vesting conditions) to a wholly-owned subsidiary of Infinity
Broadcasting Corporation for $15,000.
As part of a settlement relating to class action lawsuits filed against the
Company, warrants to purchase 3,000,000 shares of the Company's common stock at
$17.25 per share were issued. The warrants expire on September 4, 1997. Warrants
not exercised may be redeemable under certain circumstances at $1.00 per
warrant.
NOTE 9 - STOCK OPTIONS:
The Company has stock option plans established in 1989 which provide for the
granting of options to directors, officers and key employees to purchase stock
at its market value on the date the options are granted. There are 4,800,000
shares authorized under the 1989 Plan, as amended. Options granted generally
become exercisable after one year in 20% increments per year and expire within
ten years from the date of grant.
F-10
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Information concerning options outstanding under the Plans is as follows for the
year ended:
DECEMBER 31,
----------------------
1995 1994
---- ----
Shares authorized under option plans at end of period 4,800,000 4,800,000
Exercisable at end of period.......................................... 574,125 608,750
-at exercise prices per share...................................... $1.81-$9.75 $1.63-$5.38
Exercised during the period........................................... 304,375 629,000
-at exercise prices per share...................................... $1.63-$5.38 $1.63-$3.00
Granted during the period............................................. 675,000 630,000
-at exercise prices per share...................................... $12.75-$14.50 $7.50-$9.75
Canceled during the period............................................ 20,625 91,875
Expired during the period............................................. - 50,000
Available for new stock options at end of period...................... 977,750 1,632,125
As part of a Management Agreement between the Company and Infinity Broadcasting
Corporation ("Infinity"), a subsidiary of Infinity was given warrants to acquire
up to 1,500,000 shares of common stock at prices ranging between $3.00 and $5.00
per share, subject to adjustment, which are exercisable after the Company's
common stock reaches certain market prices per share. At December 31, 1995,
500,000 warrants were exercisable at $4.00 per share (see Note 11 - Related
Party Transactions).
On December 1, 1986, the Chairman of the Board was granted options not covered
by the Plans to acquire 525,000 shares of common stock, which vested ratably
over a seven-year term or immediately upon a change in control of the Company.
The options became exercisable at the fair market value of the common stock, as
defined, on the date of vesting. During 1995, options to acquire 450,000 shares
were exercised at prices ranging from $1.67 to $9.38. At December 31, 1995,
options covering 75,000 shares were exercisable at $16.31 per share.
NOTE 10 - INCOME TAXES:
The Company has approximately $80,000 of available U.S. net operating loss
carryforwards for tax purposes, which begin to expire in 2002. Utilization of
the carryforwards is dependent upon future taxable income and the absence of any
significant changes in the stock ownership of the Company. For financial
purposes, a valuation allowance of $20,639 has been recorded to offset the
deferred tax assets related to those carryforwards.
F-11
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities on the Company's balance
sheet and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities follow:
DECEMBER 31,
-------------------
1995 1994
---- ----
Deferred tax liabilities:
Affiliation agreements............................. $ 8,475 $ 9,143
Purchase accruals.................................. 7,956 8,207
Other.............................................. 1,643 3,726
------- -------
Total deferred tax liabilities................... 18,074 21,076
------- -------
Deferred tax assets:
Net operating loss................................. 30,695 32,650
Accrued liabilities and reserves................... 6,673 6,953
Tax credits (AMT and ITC).......................... 1,345 1,047
------ ------
Total deferred tax assets........................ 38,713 40,650
------ ------
Valuation allowance.................................. 20,639 19,574
------- ------
Total deferred income taxes.......................... $ - $ -
======= ======
The components of the provision (benefit) for income taxes related to continuing
operations is summarized as follows:
YEAR ENDED
----------------------------
DECEMBER 31, NOVEMBER 30,
------------ ------------
Current payable: 1995 1994 1993
---- ---- ----
Federal.................................... $ 280 $ 70 $ -
State...................................... 215 130 -
------ ------ -----
Total income tax expense................... $ 495 $ 200 $ -
====== ====== =====
NOTE 11 - RELATED PARTY TRANSACTIONS:
In connection with the acquisition of Unistar, the Company sold 5,000,000 shares
of the Company's common stock and a warrant to purchase up to an additional
3,000,000 shares to a subsidiary of Infinity (See Note 8) and entered into a
Management Agreement with Infinity. Pursuant to the Management Agreement, the
Company paid or accrued expenses aggregating $2,709 to Infinity in 1995 ($1,849
in 1994). In November 1995, the Company entered into a transaction with a
subsidiary of Infinity that effectively eliminated, for financial reporting
purposes, its obligation under the Management Agreement for $3.00 incentive
warrants covering 500,000 common shares. The net cost of this transaction was
$5,631.
In addition, several of Infinity's radio stations are affiliated with the
Company's radio networks and the Company purchases several programs from
Infinity. During 1995 the Company incurred expenses aggregating approximately
$14,657 for Infinity affiliations and programs ($12,159 in 1994).
F-12
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 - RESTRUCTURING COSTS:
As a result of the Company's February 1994 acquisition of Unistar, the Company
consolidated certain facilities and operations. Accordingly, the Company
recorded (and paid) an expense for the estimated restructuring charges,
including the costs of facility consolidations ($865), eliminating programs
($426), and employee separations, relocations and related costs ($1,114).
NOTE 13 - COMMITMENTS AND CONTINGENCIES:
The Company has various non-cancelable, long-term operating leases for office
space and equipment. In addition, the Company is committed under various
contractual agreements to pay for talent, broadcast rights, research, certain
digital audio transmission services and the Management Agreement with Infinity.
The approximate aggregate future minimum obligations under such operating leases
and contractual agreements for the five years after December 31, 1995, are set
forth below:
YEAR
----
1996.............................................. $20,961
1997.............................................. 15,660
1998.............................................. 12,595
1999.............................................. 10,548
2000.............................................. 6,775
-------
$66,539
=======
NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental Information on cash flows, including amounts from discontinued
operations, and non-cash transactions is summarized as follows:
YEAR ENDED
--------------------------------------
DECEMBER 31, NOVEMBER 30,
-------------------- ------------
Cash paid for: 1995 1994 1993
---- ---- ----
Interest...................................... $9,597 $7,763 $16,580
Income taxes.................................. 326 125 31
Non-cash investing and financing activities:
Conversion of Senior Debentures
to common stock.............................. - 19,223 2,068
Disposition of discontinued operations........... - - 19,474
For the one month ended December 31, 1993, $12,565 of Senior Debentures were
converted to common stock.
NOTE 15 - DISCONTINUED OPERATIONS:
At the end of the Company's first fiscal quarter of 1993, the Company classified
the results of operations from Radio & Records and its two radio stations as
discontinued operations. These three businesses collateralized the Company's
debt with Westinghouse Electric Corporation ("WEC"). In June 1993 the Company
completed the sales of its radio stations, and used the net proceeds from the
sales to retire a substantial portion of its WEC debt. On November 1, 1993, WEC
acquired the outstanding stock of Radio & Records and the net assets of Westwood
One Stations Group for the remaining balance of the WEC debt, accrued interest
and any other potential claims. Accordingly, the historical net loss of the
F-13
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company's owned-and-operated radio stations and Radio & Records have been
reported separately from continuing operations, and the prior periods were
restated (including an allocation of interest of $7,043 for fiscal 1993). The
Company made a provision for the loss on the disposition of these assets
including estimated future costs and operating results from March 1, 1993 until
the date of disposition, of $12,087. Revenue from discontinued operations for
fiscal 1993 was $22,282.
NOTE 16 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
The following is a tabulation of the unaudited quarterly results of operations.
The quarterly results are presented for the years ended December 31, 1995 and
1994.
(In thousands, except per share data)
FIRST SECOND THIRD FOURTH FOR THE
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- -------
1995
----
Net revenues....................................... $31,421 $37,558 $38,305 $38,445 $145,729
Operating income................................... 45 6,738 6,451 6,081 19,315
Net income (loss).................................. (2,492) 4,235 4,099 3,843 9,685
Net income (loss) per share ....................... $ (0.08) $ 0.12 $ 0.12 $ 0.11 $ 0.28
1994
----
Net revenues....................................... $26,052 $36,151 $36,491 $37,646 $136,340
Operating income (loss)............................ (5,622) 4,341 4,010 3,253 5,982
Income (loss) before extraordinary item............ (7,416) 2,183 1,658 845 (2,730)
Net income (loss) ................................. (8,006) 2,183 1,658 845 (3,320)
Income (loss) per share:
Before extraordinary item........................ (0.29) 0.07 0.05 0.02 (0.09)
Net income (loss) ............................... $ (0.32) $ 0.07 $ 0.05 $ 0.02 $ (0.11)
NOTE 17 - SUBSEQUENT EVENT (UNAUDITED):
On March 1, 1996 the Company acquired the operating assets of New York Shadow
Traffic Limited Partnership, Chicago Shadow Traffic Limited Partnership, Los
Angeles Shadow Traffic Limited Partnership, and Philadelphia Express Traffic
Limited Partnership (collectively "Shadow Traffic") for $20,000 plus expenses,
subject to an adjustment based on the future cash flow of Shadow Traffic. The
acquisition will be accounted for as a purchase and, accordingly, Shadow
Traffic's results of operations will be included in the consolidated statement
of operations from the date the acquisition is consummated. The acquisition will
be financed using existing cash and available bank borrowings.
F-14
WESTWOOD ONE, INC.
SCHEDULE IX
CONSOLIDATED SHORT-TERM BORROWINGS
(IN THOUSANDS)
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
CATEGORY OF BALANCE WEIGHTED OUT- OUT- INTEREST
AGGREGATE AT AVERAGE STANDING STANDING RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD PERIOD
- ------------ ------- -------- ---------- ---------- ----------
Year Ended
December 31,
1994:
Note payable $ - - $2,657 $ 139 8.4%
Year Ended
November 30,
1993:
Note payable 6,448 8.3% 7,248 4,399 8.2
Notes: Short-term borrowings during the years covered by this schedule consist
of loans made under various established credit lines. The average amount
outstanding during each period was computed by dividing the average outstanding
principal balance by 365 days. The weighted average interest rate during each
period was computed by dividing the actual interest expense on such borrowings
by the average amount outstanding during that period. The Company did not have
any short-term borrowings in 1995.
F-15