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8-K - FORM 8-K - DIAL GLOBAL, INC. /DE/ | c21647e8vk.htm |
Exhibit
99.1
PRESS
RELEASE
WESTWOOD ONE, INC.
REPORTS RESULTS FOR
THE SECOND QUARTER 2011
REPORTS RESULTS FOR
THE SECOND QUARTER 2011
New York, NY August 15, 2011 Westwood One, Inc. (NASDAQ: WWON), a leading independent provider
of network radio content to the radio and digital sectors, today reported operating results for the
second quarter 2011.
Westwood Ones second quarter revenue increased 1.8% to $40.8 million from $40.0 million in 2010.
The increase was primarily due to increased advertising revenue from the Companys news
programming, partially offset by decreased advertising revenue from other programming.
Net income increased $19.4 million to $14.0 million in the second quarter of 2011 from a net loss
of $5.4 million in the second quarter of 2010. This was primarily due to the sale of our Metro
Traffic business on April 29, 2011, which resulted in a gain of
$19.3 million. The results of the Metro Traffic business are presented as a discontinued operation
in accordance with generally accepted accounting principles.
Adjusted EBITDA from continuing operations (1) in the second quarter was a loss of $1.0 million,
which includes higher broadcast rights expense of $1.8 million primarily related to a new sports
programming agreement, compared to Adjusted EBITDA from continuing operations of $1.0 million in
the second quarter of last year.
Our revenue was up slightly in the midst of slower than expected growth in the Network radio
industry, and the seasonal absence of major sports programming in the second quarter. said Rod
Sherwood, President. We continued to pursue new opportunities in programming and distribution by
launching Rocsi on the Radio with the star of BETs hit TV program, 106th and Park, and
by increasing distribution for our Dennis Miller show and our suite of Rick Dees programming. In addition, we launched digital and social media extensions of our new talk programming, as well as digital
distribution of the Dennis Miller Show, and digital video distribution of Loveline with Dr. Drew Pinsky and Mike
Catherwood.
The most significant event of the second quarter was the sale of our Metro Traffic business to
Clear Channel. said Sherwood. This transaction reduced the Companys senior debt by
approximately $104.0 million, strengthened our balance sheet, and helped position the Company for
future growth. Since that time, we have continued to expand our programming assets, renew key
partnerships, invest in our digital business and our IT infrastructure, and build new alliances
with affiliates and advertisers and their agencies.
We believe that the best path to growth is to enhance the breadth of the products and services we provide to our
customers, said Sherwood. Based on that strategy, on August 1, 2011, Westwood One announced plans to merge with Dial
Global, a division of Triton Media Group, LLC. The combination of Dial Global and Westwood One creates a diverse radio
programming, services and advertising sales company, enhancing the array of products and services provided to radio
stations and national advertisers. The two companies also have complementary station group relationships, based on
Westwood Ones distribution in large markets and Dial Globals mid-size market distribution. The transaction is
expected to close in the fourth quarter of 2011, subject to customary closing conditions including completion of the
debt financing and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
1
Three Months Ended June 30, 2011.
For the three months ended June 30, 2011, revenue was $40.8 million, an increase of 1.8%, compared
to $40.0 million in the second quarter of 2010.
Operating loss in the second quarter of 2011 increased by $2.6 million to $5.2 million from $2.6
million in 2010. This increased loss is primarily due to increased operating costs of $2.6 million
and higher restructuring expenses of $1.2 million, partially offset by higher revenue of $0.7
million and lower corporate expense of $0.6 million. The increased operating costs were largely due
to increases in broadcast rights fees and station compensation which represent an investment in our
future revenue generation capability. The higher restructuring expense was primarily related to
the termination of a programming agreement for $0.9 million.
Adjusted EBITDA from continuing operations (1) in the second quarter was a loss of $1.0 million,
which includes higher broadcast rights expense of $1.8 million, primarily related to a new sports
programming agreement, compared to Adjusted EBITDA from continuing operations of $1.0 million in the
second quarter of last year.
Interest expense decreased $0.7 million, or 36.6%, to $1.3 million from $2.0 million in the second
quarter of 2010, reflecting lower fees of $0.7 million related to amendments to agreements
governing our Senior Notes. Interest expense included in discontinued operations of $1.2 million
and $4.0 million for the three months ended June 30, 2011 and 2010, respectively, is related to the
non-Gores Senior Notes being repaid in conjunction with the Metro Sale transaction.
The Companys tax benefit increased $0.9 million to $2.7 million compared to $1.8 million in the
second quarter of 2010. Our effective tax rate for the quarter ended June 30, 2011 was
approximately 42.5% as compared to 40.0% for the comparable period in 2010. The higher income tax
benefit in 2011 is primarily the result of a higher pre-tax loss.
Net income increased $19.4 million to $14.0 million from a net loss of $5.4 million in the second
quarter of 2010, which is primarily attributable to the gain on the
Metro Sale transaction of $19.3
million and a lower loss from discontinued operations of $1.0 million, partially offset by a higher
loss from continuing operations of $0.9 million. Net income per share for basic and diluted shares
was $0.62 in the second quarter of 2011, compared with net loss per share for basic and diluted
shares of $(0.26) in the second quarter of 2010. Weighted average shares outstanding were higher in
the second quarter of 2011 compared to the second quarter of 2010 primarily due to the issuance to
Gores of 769,231 common shares in September 2010 and 1,186,240 common shares in February 2011.
Free
cash flow (2) decreased to a use of $15.6 million in the second quarter of 2011 from a source of
$6.0 million in the second quarter of 2010. The decrease was principally attributable to the
absence of the 2010 federal tax refund of $12.9 million, the 2011 repayment of PIK interest of
$10.9 million and decreases in other non-cash items of $0.9 million, partially offset by higher
changes in other assets and liabilities of $1.5 million and lower capital expenditures of $1.6
million.
2
Six Months Ended June 30, 2011.
For the six months ended June 30, 2011, revenue was $92.5 million, a decrease of 3.3% compared to
$95.6 million in the comparable 2010 period. This primarily reflected the absence of the Winter
Olympics revenue in 2011 versus the first quarter revenue from this event in 2010.
Operating loss for the first six months of 2011 increased by $9.2 million to $14.0 million from a
loss of $4.8 million in 2010. This increased loss is primarily due to increased operating costs of
$6.0 million, lower revenue of $3.1 million and higher restructuring expenses of $1.6 million,
partially offset by lower corporate expense of $1.5 million. The increased operating costs were
largely due to increases in broadcast rights and station compensation which represent an investment
in our future revenue generation capability. The higher restructuring expense was primarily related to the termination of a programming agreement for $0.9 million.
Adjusted EBITDA from continuing operations (1) in the first six months of 2011 was a loss of $5.9
million compared to Adjusted EBITDA from continuing operations income of $2.5 million in the first
six months of 2010. Adjusted EBITDA from continuing operations (1) decreased in the first six
months of 2011 primarily reflecting higher broadcast rights expense of $4.0 million compared to the
first six months of last year (which is largely related to a new sports programming agreement) and
lower revenue of $3.1 million. Of the $4.0 million of incremental broadcast rights expense, $2.4
million was non-cash expense. Excluding the incremental non-cash broadcast rights expense, Adjusted EBITDA
from continuing operations would have been a loss of $3.5 million for the first six months of 2011.
Interest expense decreased $0.7 million, or 20.3%, to $2.6 million from $3.3 million in the first
six months of 2010, reflecting lower fees of $0.7 million related to the amendments to agreements
governing our Senior Notes. Interest expense included in discontinued operations of $5.0 million
and $8.1 million for the six months ended June 30, 2011 and 2010, respectively, is related to the
non-Gores Senior Notes being repaid in conjunction with the Metro Sale transaction.
The Companys tax benefit increased $3.1 million to $7.0 million compared to $3.9 million in the
first six months of 2010. Our effective tax rate for the six months ended June 30, 2011 was
approximately 44.9% as compared to 48.3% for the comparable period in 2010. The higher income tax
benefit in 2011 is primarily the result of a higher pre-tax loss.
Net income increased $16.3 million to $4.2 million from a net loss of $12.1 million in the first
six months of 2010, which is primarily attributable to the gain on the Metro Sale transaction of
$19.3 million and a lower loss from discontinued operations of $1.4 million, partially offset by a
higher loss from continuing operations of $4.4 million. Net income per share for basic and diluted
shares was $0.19 in the first six months of 2011, compared with net loss per share for basic and
diluted shares of $(0.59) in the first six months of 2010. Weighted average shares outstanding were
higher in the first six months of 2011 compared to 2010, primarily due to the issuance to Gores of
769,231 common shares in September 2010 and 1,186,240 common shares in February 2011.
3
Free cash flow (2) decreased to a use of $22.2 million in the first six months of 2011 from a source of
$8.7 million in the comparable period of 2010. The decrease was principally
attributable to the 2011 non-cash gain on the Metro Sale transaction of $19.3 million, the absence
of the 2010 federal tax refund of $12.9 million, the 2011 repayment of PIK interest of $10.9
million, decreases in other non-cash items of $3.8 million and higher changes in other assets and
liabilities of $2.3 million, partially offset by higher net income of $16.4 million and lower
capital expenditures of $1.9 million.
Outlook
Westwood Ones
revenue is pacing ahead for the second half of 2011 when compared to the same period
in 2010. We were encouraged by the recent resolution of the NFL lock-out in August,
and we are focused on bringing our unique sports packages to our advertising customers.
However, since the NFL agreement was reached mid-way into the third quarter, it is
possible that some substitution by advertisers into other properties may have occurred
in September.
In addition, the recent
events in the economy may impact our industry in the near term and could impact our revenue
if advertisers respond by decreasing their spending.
About Westwood One
Westwood One (NASDAQ: WWON) is one of the nations largest providers of network radio programming
serving more than 5,000 radio stations in the U.S. Westwood One provides over 150 news, sports,
music, talk and entertainment programs, features and live events to numerous media partners.
Footnotes to Press Release
(1) Adjusted EBITDA is a non-GAAP financial measure that is reconciled to net income in the
accompanying financial tables. We use Adjusted EBITDA to evaluate our performance relative to our
competitors and have included it in this press release because we believe Adjusted EBITDA
represents an effective means by which to measure our operating performance. Although we primarily
view Adjusted EBITDA as an operating performance measure, we also consider it to be useful to
investors because it enables them to evaluate and compare our results from operations and cash
resources generated from our business in a more meaningful and consistent manner by excluding
specific items which are not reflective of ongoing operating results. Adjusted EBITDA is not a
measurement of financial performance under GAAP (Generally Accepted Accounting Principles) and
should not be considered as an alternative to net income, operating income or any other performance
measure derived in accordance with GAAP, as an alternative to GAAP cash flow from operating
activities or as a measure of our profitability or liquidity.
(2) Free cash flow is a non-GAAP financial measure that is reconciled to net income in the
accompanying financial tables. We use free cash flow to evaluate our performance relative
to our competitors and have included it in this press release because we believe free cash
flow represents an effective means by which to measure our operating performance. Although
we primarily view free cash flow as an operating performance measure, we also consider it
to be a useful to investors because it provides them with an important perspective on the
cash we have available to service our debt, maintain capital assets and fund ongoing
operations and make strategic acquisitions and/or investments. Free cash flow is not a
measurement of our financial performance under GAAP and should not be considered as an
alternative to net income, operating income, or any other performance measure derived in
accordance with GAAP, as an alternative to GAAP cash flow from operating activities or as a
measure of our profitability or liquidity.
4
Forward-Looking Statements
Certain statements in this release constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual results, performance
or achievements of Westwood One to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. The words or phrases
guidance, expect, anticipate, estimates and forecast and similar words or expressions are
intended to identify such forward-looking statements. In addition any statements that refer to
expectations or other characterizations of future events or circumstances are forward-looking
statements. Various risks that could cause future results to differ from those expressed by the
forward-looking statements included in this release include, but are not limited to: risks related
to the proposed merger with Verge Media Holdings (d/b/a Dial Global) (the Merger), such as
consummation of the Merger is subject to regulatory approval and certain other closing conditions,
that our indebtedness after the Merger will be substantial, that the anticipated benefits of the
Merger may not be fully realized or may take longer to realize than expected, and failure to
complete the Merger could impact our stock price and/or our future business and financial results.
Other risks include those related to our business such as continued declines in our operating
income; the significant amount of our indebtedness; our future cash flow from operations and our
ability to achieve our financial projections; changes to our CBS arrangement; maintenance of an
effective system of internal controls; increased competition and technological changes and
innovations; failure to obtain or retain the rights in popular programming; acceptance of our
content; continued consolidation in the industry; and Gores influence over our corporate actions.
Our key risks are described in our reports filed with the SEC, including our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2011 and our Annual Report on Form 10-K for the year ended
December 31, 2010. Except as otherwise stated in this news announcement, Westwood One, Inc. does
not undertake any obligation to publicly update or revise any forward-looking statements because of
new information, future events or otherwise.
Media Contact:
Chris Miller
Westwood One
917-533-7224
chris_miller@westwoodone.com
Westwood One
917-533-7224
chris_miller@westwoodone.com
5
WESTWOOD ONE, INC
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
$ | 40,759 | $ | 40,036 | $ | 92,494 | $ | 95,611 | ||||||||
Operating costs |
40,151 | 37,575 | 94,744 | 88,728 | ||||||||||||
Depreciation and amortization |
1,693 | 1,450 | 3,393 | 2,846 | ||||||||||||
Corporate, general and administrative expenses |
2,018 | 2,640 | 4,673 | 6,171 | ||||||||||||
Restructuring charges |
1,339 | 129 | 1,774 | 159 | ||||||||||||
Special charges |
731 | 831 | 1,924 | 2,528 | ||||||||||||
Total expenses |
45,932 | 42,625 | 106,508 | 100,432 | ||||||||||||
Operating loss |
(5,173 | ) | (2,589 | ) | (14,014 | ) | (4,821 | ) | ||||||||
Interest expense |
1,285 | 2,026 | 2,589 | 3,248 | ||||||||||||
Other expense (income) |
| (3 | ) | (1,096 | ) | (2 | ) | |||||||||
Loss from continuing operations before income tax |
(6,458 | ) | (4,612 | ) | (15,507 | ) | (8,067 | ) | ||||||||
Income tax benefit from continuing operations |
(2,744 | ) | (1,847 | ) | (6,968 | ) | (3,899 | ) | ||||||||
Net loss from continuing operations |
(3,714 | ) | (2,765 | ) | (8,539 | ) | (4,168 | ) | ||||||||
Loss from discontinued operations, net of income tax |
(1,616 | ) | (2,653 | ) | (6,557 | ) | (7,973 | ) | ||||||||
Gain on disposal of discontinued operations, net of
income tax |
19,313 | | 19,313 | | ||||||||||||
Net income (loss) |
$ | 13,983 | $ | (5,418 | ) | $ | 4,217 | $ | (12,141 | ) | ||||||
Income (loss) per common share
basic and diluted: |
||||||||||||||||
Continuing operations |
$ | (0.16 | ) | $ | (0.13 | ) | $ | (0.39 | ) | $ | (0.20 | ) | ||||
Discontinued operations |
0.78 | (0.13 | ) | 0.58 | (0.39 | ) | ||||||||||
Net income (loss) |
$ | 0.62 | $ | (0.26 | ) | $ | 0.19 | $ | (0.59 | ) | ||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic and diluted |
22,592 | 20,544 | 22,173 | 20,544 |
6
WESTWOOD ONE, INC
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
June 30, 2011 | December 31, 2010 | |||||||
(unaudited) | (derived from audited) | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 13,289 | $ | 2,938 | ||||
Accounts receivable, net of allowance for doubtful accounts |
37,457 | 49,672 | ||||||
Prepaid and other assets |
14,085 | 16,583 | ||||||
Current assets discontinued operations |
590 | 48,723 | ||||||
Total current assets |
65,421 | 117,916 | ||||||
Property and equipment, net |
23,711 | 23,502 | ||||||
Intangible assets, net |
24,600 | 26,262 | ||||||
Goodwill |
25,796 | 25,796 | ||||||
Other assets |
6,216 | 1,642 | ||||||
Non-current assets discontinued operations |
| 93,156 | ||||||
TOTAL ASSETS |
$ | 145,744 | $ | 288,274 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 24,794 | $ | 33,957 | ||||
Amounts payable to related parties |
1,331 | 859 | ||||||
Accrued expenses and other liabilities |
17,339 | 20,148 | ||||||
Current liabilities discontinued operations |
11,754 | 32,357 | ||||||
Total current liabilities |
55,218 | 87,321 | ||||||
Long-term debt |
35,000 | 136,407 | ||||||
Deferred tax liability |
14,375 | 24,188 | ||||||
Due to Gores |
10,479 | 10,222 | ||||||
Other liabilities |
14,635 | 15,951 | ||||||
Non-current liabilities discontinued operations |
6,209 | 20,177 | ||||||
TOTAL LIABILITIES |
135,916 | 294,266 | ||||||
Commitments and Contingencies |
||||||||
STOCKHOLDERS EQUITY (DEFICIT) |
||||||||
Common stock, $.01 par value: authorized: 5,000,000 shares |
226 | 213 | ||||||
Additional paid-in capital |
100,242 | 88,652 | ||||||
Accumulated deficit |
(90,640 | ) | (94,857 | ) | ||||
TOTAL STOCKHOLDERS EQUITY (DEFICIT) |
9,828 | (5,992 | ) | |||||
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIT) |
$ | 145,744 | $ | 288,274 | ||||
7
WESTWOOD ONE, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash Flows from Operating Activities: |
||||||||
Net income (loss) |
$ | 4,217 | $ | (12,141 | ) | |||
Adjustments to reconcile net income (loss) to net cash (used in) provided by
operating activities: |
||||||||
Gain on sale of Metro Traffic |
(19,313 | ) | | |||||
Depreciation and amortization |
7,237 | 9,185 | ||||||
Deferred taxes |
(8,335 | ) | (8,622 | ) | ||||
Federal tax refund |
| 12,940 | ||||||
Paid-in-kind interest paid |
(10,895 | ) | | |||||
Paid-in-kind interest accrued |
1,924 | 2,980 | ||||||
Non-cash equity-based compensation |
1,952 | 1,881 | ||||||
Change in fair value of derivative liability |
(1,096 | ) | | |||||
Amortization of deferred financing costs |
11 | 11 | ||||||
Net change in other assets and liabilities |
4,723 | 6,988 | ||||||
Net cash (used in) provided by operating activities |
(19,575 | ) | 13,222 | |||||
Cash Flows from Investing Activities: |
||||||||
Proceeds from Metro Traffic Sale |
115,000 | | ||||||
Capital expenditures |
(2,618 | ) | (4,540 | ) | ||||
Net cash provided by (used in) investing activities |
112,382 | (4,540 | ) | |||||
Cash Flows from Financing Activities: |
||||||||
Repayments of Senior Notes |
(92,180 | ) | (15,500 | ) | ||||
Issuance of common stock |
10,000 | | ||||||
Proceeds from exercise of stock options |
567 | | ||||||
Payments of finance and capital lease obligations |
(843 | ) | (612 | ) | ||||
Proceeds from Revolving Credit Facility |
| 7,000 | ||||||
Net cash used in financing activities |
(82,456 | ) | (9,112 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
10,351 | (430 | ) | |||||
Cash and cash equivalents, beginning of period |
2,938 | 4,824 | ||||||
Cash and cash equivalents, end of period |
$ | 13,289 | $ | 4,394 | ||||
8
The following table provides a reconciliation of Adjusted EBITDA to net income determined in
accordance with GAAP for three and six months ended June 30, 2011 and 2010.
WESTWOOD ONE, INC
ADJUSTED EBITDA RECONCILIATION
(In thousands)
ADJUSTED EBITDA RECONCILIATION
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) |
$ | 13,983 | $ | (5,418 | ) | $ | 4,217 | $ | (12,141 | ) | ||||||
Gain on disposal of discontinued operations, net of
income tax |
(19,313 | ) | | (19,313 | ) | | ||||||||||
Loss from discontinued operations, net of income tax |
1,616 | 2,653 | 6,557 | 7,973 | ||||||||||||
Interest expense |
1,285 | 2,026 | 2,589 | 3,248 | ||||||||||||
Depreciation and amortization |
1,693 | 1,450 | 3,393 | 2,846 | ||||||||||||
Income taxes provision (benefit) |
(2,744 | ) | (1,847 | ) | (6,968 | ) | (3,899 | ) | ||||||||
Restructuring, special charges and other (a) |
2,070 | 1,556 | 3,698 | 3,283 | ||||||||||||
Stock-based compensation (continuing operations) |
423 | 546 | 1,069 | 1,224 | ||||||||||||
Other non-operating losses (gains) |
| (3 | ) | (1,096 | ) | (2 | ) | |||||||||
Adjusted
EBITDA (b) |
$ | (987 | ) | $ | 963 | $ | (5,854 | ) | $ | 2,532 | ||||||
(a) | Restructuring, special charges and other includes expense of $596 is classified as
general and administrative expense on the Statement of Operations for the three months and
six months ended June 30, 2010. |
|
(b) | Adjusted EBITDA includes incremental broadcast rights (credit) expense of $(2,220) and
2,372 for the three and six months ended June 30, 2011, respectively, related to a new sports
programming agreement. |
The following table provides a reconciliation of Free Cash Flow to net cash (used in) provided by
operating activities determined in accordance with GAAP for three and six months ended June 30,
2011 and 2010.
WESTWOOD ONE, INC
FREE CASH FLOW RECONCILIATION
(In thousands)
FREE CASH FLOW RECONCILIATION
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net cash (used in)
provided by operating
activities |
$ | (14,888 | ) | $ | 8,307 | $ | (19,575 | ) | $ | 13,222 | ||||||
(Less) Capital expenditures |
(706 | ) | (2,357 | ) | (2,618 | ) | (4,540 | ) | ||||||||
Free Cash Flow |
$ | (15,594 | ) | $ | 5,950 | $ | (22,193 | ) | $ | 8,682 | ||||||
9