Part I    Part II   

WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)

NOTE 1 - Basis of Presentation:

The accompanying consolidated balance sheet as of March 31, 2003, the consolidated statements of operations and the consolidated statements of cash flows for the three month periods ended March 31, 2003 and 2002 are unaudited, but in the opinion of management include all adjustments necessary for a fair presentation of the financial position and the results of operations for the periods presented. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

NOTE 2– Reclassification:

Certain prior period amounts have been reclassified to conform to the current presentation.

NOTE 3 - Earnings Per Share:

Net income per share is computed in accordance with SFAS No. 128. Basic earnings per share excludes all dilution and is calculated using the weighted average number of shares outstanding in the period. Diluted earnings per share reflects the potential dilution that would occur if all financial instruments which may be exchanged for equity securities were exercised or converted to Common Stock.

The Company has issued options and warrants which may have a dilutive effect on reported earnings if they were exercised or converted to Common Stock. The following numbers of shares related to options and warrants were added to the basic weighted average shares outstanding to arrive at the diluted weighted average shares outstanding for each period:

NOTE 4- Debt:

A March 31, 2003 the Company had outstanding borrowings of $200,000 pursuant to its outstanding Notes and $30,000 under its bank revolving credit facility. In addition, the Company had available borrowings of $197,500 under its bank revolving credit facility.

The estimated fair value of the Company’s interest rate swaps at March 31, 2003 was $3,111.

NOTE 5- Stock Options:

The Company applies APB 25 and related interpretations in accounting for its stock option plans. Accordingly, no compensation expense has been recognized for its plans. Had compensation cost been determined in accordance with the methodology prescribed by SFAS 123, the Company’s net income and earnings per share would have been reduced by approximately $2,037 ($.02 per basic and diluted share) in the first quarter of 2003 and $2,018 ($.02 per basic and diluted share) in the first quarter of 2002.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
(In thousands, except per share amounts)

Management’s discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related Notes and the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Discussions included herein related to “revenue” or “net revenues” corresponds to the financial statement caption of Net Revenues on the Company’s Consolidated Statements of Operations. The principal components of Operating costs and expenses excluding depreciation and amortization are personnel costs (exclusive of corporate personnel), affiliate compensation, broadcast rights fees, program production and distribution costs, sales related expenses (including bad debt expenses, commissions, and promotional and advertising expenses), expenses related to the Company’s representation agreement with Infinity and news expenses. Corporate general and administrative expenses are primarily comprised of costs associated with the Infinity Management Agreement, personnel costs and other administrative expenses.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2003 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2002

Westwood One derives substantially all of its revenue from the sale of advertising time to advertisers. Net revenue in the first quarter of 2003 was $125,795 compared with $126,296 in the first quarter of 2002, a decrease of $501. The non-recurrence of approximately $6,000 of revenue associated with the Company’s exclusive radio broadcast of the Winter Olympics in 2002 was partially offset by revenue attributable to new programming. Additionally, we experienced a softening of advertiser sales prior to and immediately after the commencement of the war with Iraq.

Operating costs and expenses excluding depreciation and amortization decreased $349 to $92,052 in the first quarter of 2003 from $92,401 in the first quarter of 2002. The non-recurrence of expenses attributable to the Company’s broadcast of the Winter Olympics (approximately 6% of 2002 first quarter operating costs and expenses) and lower employee related expenses were partially offset by costs associated with new program offerings, higher insurance expenses and news costs.

Depreciation and amortization increased 2% to $2,880 in the first quarter of 2003 compared with $2,835 in the first quarter of 2002.

Corporate administrative expenses decreased 5% to $1,644 in the first quarter of 2003 from $1,737 in the first quarter of 2002. The decrease was primarily attributable to lower compensation expense, partially offset by higher expenses associated with new corporate governance regulations.

Operating income decreased nominally to $29,219 in the first quarter of 2003 from $29,323 in the first quarter of 2002, primarily due to the non-recurrence of profit associated with the 2002 Winter Olympics broadcast in the first quarter of 2002.

Net interest expense increased 41% in the first quarter of 2003 to $2,431 from $1,723 in 2002. The increase was attributable to higher debt outstanding in the first quarter of 2003 as a result of the Company’s issuance of $200 million in a combination of 7 and 10-year fixed rate Senior Unsecured Notes in the fourth quarter of 2002 and higher average interest rates.

Income tax expense in the first quarter of 2003 was $9,874 compared with $10,157 in the first quarter of 2002. The Company’s effective income tax rate was approximately 37% in both periods.

Net income in the first quarter of 2003 was $16,914 compared with $17,443 in the first quarter of 2002 a decrease of $529 or 3%. Net income per basic and diluted share were $.16 in both periods.

Weighted average shares outstanding used to compute basic and diluted earnings per share decreased to 103,063 and 105,638, respectively, in the first quarter of 2003 compared with 106,629 and 110,434, respectively, in the first quarter of 2002. The decrease is principally attributable to the Company’s stock repurchase program.

LIQUIDITY AND CAPITAL RESOURCES

The business is financed through cash flows from operations and the issuance of debt and equity. The Company continually projects anticipated cash requirements, which include share repurchases, acquisitions, capital expenditures, and principal and interest payments on its outstanding indebtedness, as well as cash flows generated from operating activity available to meet these needs. Any net cash funding requirements are financed with short-term borrowings and long-term debt.

At March 31, 2003, the Company's cash and cash equivalents were $5,316, a decrease of $2,055 from the December 31, 2002 balance.

For the three months ended March 31, 2003 versus the comparable prior year period, net cash from operating activities increased $11,757. The improvement was primarily attributable to increased accounts receivable collections.

At March 31, 2003, the Company had available borrowings of $197,500 on its revolving credit facility. Pursuant to the terms of the facility, the amount of available borrowings declines by $7,500 at the end of each quarter in 2003. The Company has used its available cash to either repurchase its Common Stock and warrants and/or repay its debt. In the first quarter of 2003, the Company repurchased approximately 1,769 shares of Common Stock at a cost of $59,526. In the month of April, the Company repurchased an additional 515 shares of Common Stock at a cost of approximately $17,025.

The Company’s business does not require, and is not expected to require, significant cash outlays for capital expenditures.

The Company believes that its cash, other liquid assets, operating cash flows and available bank borrowings, taken together, provide adequate resources to fund ongoing operating requirements.

Item 3. Qualitative and Quantitative Disclosures about Market Risk

In the normal course of business, the Company employs established policies and procedures to manage its exposure to changes in interest rates using financial instruments. The Company uses derivative financial instruments (fixed-to-floating interest rate swap agreements) for the purpose of hedging specific exposures and holds all derivatives for purposes other than trading. All derivative financial instruments held reduce the risk of the underlying hedged item and are designated at inception as hedges with respect to the underlying hedged item. Hedges of fair value exposure are entered into in order to hedge the fair value of a recognized asset, liability, or a firm commitment.

In order to achieve a desired proportion of variable and fixed rate debt, in December 2002, the Company entered into a seven year interest rate swap agreement covering $25 million notional value of its outstanding borrowing to effectively float the interest rate at three-month LIBOR plus 74 basis points and two ten year interest rate swap agreements covering $75 million notional value of its outstanding borrowing to effectively float the interest rate at three-month LIBOR plus 80 basis points.

These swap transactions allow the Company to benefit from short-term declines in interest rates. The instruments meet all of the criteria of a fair-value hedge. The Company has the appropriate documentation, including the risk management objective and strategy for undertaking the hedge, identification of the hedging instrument, the hedged item, the nature of the risk being hedged, and how the hedging instrument’s effectiveness offsets the exposure to changes in the hedged item’s fair value or variability in cash flows attributable to the hedged risk.

With respect to the borrowings pursuant to the Company’s revolving credit facility, the interest rate on the borrowings is based on the prime rate plus an applicable margin of up to .25%, or LIBOR plus an applicable margin of up to 1.25%, as chosen by the Company. Historically, the Company has typically chosen the LIBOR option with a three month maturity. Every .25% change in interest rates has the effect of increasing or decreasing our annual interest expense by $5,000 for every $2 million of outstanding debt.

The Company continually monitors its positions with, and the credit quality of, the financial institutions that are counterparties to its financial instruments, and does not anticipate nonperformance by the counterparties.

The Company’s receivables do not represent a significant concentration of credit risk due to the wide variety of customers and markets in which the Company operates.

Item 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a–14 and 15d-14 of the Securities Exchange Act of 1934, as amended) within 90 days of the filing date of this report, and have concluded that the Company’s disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities and Exchange Act of 1934. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date