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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 June 30, 2002, the consolidated statements of operations for the three and six month periods ended June 30, 2002 and 2001 and the consolidated statements of cash flows for the six months ended June 30, 2002 and 2001 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 – Accounting Change – Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standard Board (“FASB”) issued Statement of Financial Accounting Standards No. 141, “Business Combinations” (“SFAS 141”) and No. 142 “Goodwill and Other Intangible Assets (‘SFAS 142”) (collectively, the “Statements”). SFAS 141 supercedes APB Opinion No. 16, “Business Combinations” and requires all business combinations to be accounted for under the purchase method. SFAS 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their initial recognition. The provisions of SFAS 142 (1) prohibit the amortization of goodwill and indefinite-lived intangible assets, (2) require that goodwill and indefinite – lived intangible assets be tested annually for impairment, (3) require that reporting units be identified for the purpose of assessing potential future impairments of goodwill, and (4) remove the forty-year limitation on the amortization period of intangible assets that have finite lives. The Company adopted these Statements, as required, on January 1, 2002.

In accordance with SFAS No. 142, the Company completed its transitional impairment testing of intangible assets during the first quarter of 2002. The outcome of such impairment testing indicated that the fair value of the Company’s intangible assets were in excess of their carrying value.

Intangible assets subject to amortization primarily consists of network affiliation agreements that are being amortized on an accelerated basis over periods ranging from 4 to 20 years with a weighted-average amortization period of approximately 8 years. At June 30, 2002, the Company’s amortizable intangible assets gross value was $29,337 with accumulated amortization of $18,492. The Company’s estimated aggregate amortization expense for fiscal year 2002, 2003, 2004, 2005 and 2006 are $1,800, $1,450, $1,450, $1,450 and $900, respectively.

The following table provides a reconciliation of reported net income for the three and six month periods ended June 30, 2001 to net income that would have been reported had SFAS No. 142 been applied as of January 1, 2001:

NOTE 3 – Reclassification:

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

NOTE 4 - 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:

At June 30, 2002 the Company had outstanding borrowings of $192,000 under its bank revolving credit facility and available borrowings of $95,000. The Company is in compliance with all its debt covenants.

NOTE 5 – Related Party Transactions:

The Company is managed by Infinity Broadcasting Corporation (“Infinity”), a wholly-owned subsidiary of Viacom Inc. (“Viacom”), pursuant to an amended Management Agreement which expires on March 31, 2009.

The Company amended its Representation, Registration Rights, License and Programming Agreements with Infinity on April 15, 2002 to principally extend the expiration dates of those agreements to March 31, 2009 from March 31, 2004.

The amendment to the Management Agreement, which was approved by shareholders on May 29, 2002, provides for the issuance of warrants to purchase up to 4,500 shares of the Company's Common Stock at exercise prices based on a formula tied to the Company’s future stock price.

For a more detailed description of the amendments made to the Infinity Management Agreement and Representation, Registration Rights, License and Programming Agreements with Infinity, refer to the Company’s April 29, 2002 proxy statement.

In 2002, the Company repurchased warrants representing 2,000 shares of Common Stock for $51,070.

RESULTS OF OPERATIONS

Effective January 1, 2002, the Company adopted SFAS 141 and SFAS 142. The Statements prohibit retroactive application, and accordingly several comparisons to prior year reported amounts are not meaningful. As a result, the Company has included pro forma disclosures to compare the current year operating results to those that would have been reported had the Statements been applied as of January 1, 2001.

THREE MONTHS ENDED JUNE 30, 2002 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2001

Westwood One derives substantially all of its revenue from the sale of advertising time to advertisers. Net revenue increased $7,128, or 5.3%, to $140,812 in the second quarter of 2002 from $133,684 in the comparable prior year quarter. The increase in net revenue was due principally to increased advertising rates and better inventory management at both our network and traffic divisions, as well as a result of creating new programming.

Operating costs and expenses excluding depreciation and amortization decreased
$569, or .7%, to $86,146 in the second quarter of 2002 from $86,715 in the second quarter of 2001. The decrease was principally due to tight cost controls, and reductions in affilitate compensation and personnel costs, partially offset by higher bad debt expense.

Depreciation and amortization decreased $14,243, or 83.2% to $2,866 in the second quarter of 2002 as compared with $17,109 in the second quarter of 2001 due principally to the Company’s adoption of SFAS 142, which prohibits the Company from continuing to amortize goodwill.

Corporate general and administrative expenses increased $211, or 11.4%, to $2,064 in the second quarter of 2002 from $1,853 in the comparable 2001 quarter. The increase is principally attributable to higher administrative and compensation expenses.

Operating income increased $21,729, or 77.6%, to $49,736 in the second quarter of 2002 from $28,007 in the second quarter of 2001, primarily due to higher net revenue as well as lower depreciation and amortization expense resulting from the Company’s adoption of SFAS 142. On a pro forma basis, assuming the Company had adopted the provisions of SFAS 142 on January 1, 2001, the Company’s operating income increased approximately 25.6%.

Interest expense decreased 19.7% to $1,677 in the second quarter of 2002 from $2,089 in 2001. The decrease is principally attributable to lower interest rates.

Other income in the second quarter of 2002 was $41 compared with other expense of $1,183 in the second quarter of 2001, an increase of $1,224. The 2001 expense is principally attributable to a 2001 non-cash charge to write-down the carrying value of the Company’s investments in internet companies, principally Sportsline USA, to its estimated market value.

Income taxes increased $5,023, or 39.9%, to $17,626 in the second quarter of 2002 from $12,603 in the second quarter of 2001. The Company’s effective income tax rate in the first half of 2002 is approximately 36.7% compared with a 51.2% effective tax rate in the first half of 2001. Both the Company’s reported income tax expense and effective income tax rate were affected by the Company’s adoption of SFAS 142. On a pro forma basis, assuming the Company had adopted the provisions of SFAS 142 on January 1, 2001, income tax expense would have increased by approximately 41.4% and the Company’s effective income tax rate would have been approximately 35.3% in the first half of 2001. Principally, all of the 2002 income tax expense is non-cash as a result of tax deductions related to stock option exercises and warrant purchases.

Net income increased $18,342, or 151.2%, to $30,474 ($.29 per basic share and $.28 per diluted share) in the second quarter of 2002 from $12,132 ($.11 per basic and diluted share) in the second quarter of 2001. On a pro forma basis, assuming the Company had adopted the provisions of SFAS 142 on January 1, 2001, the Company’s net income would have increased by approximately 27.7%, net income per basic share would have increased by approximately 29.6% and net income per diluted share would have increased by approximately 31.7%.

Weighted average shares outstanding used to compute basic and diluted earnings per share decreased to 106,751 and 110,092, respectively, in the second quarter of 2002 as compared with 108,377 and 113,544 in the second quarter of 2001. The decrease is principally attributable to the Company’s stock repurchase program.

SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2001

Net revenue for the first half of 2002 increased 4.6% to $267,108 from $255,253 in the first half of 2001. The increase in net revenue was attributable to the Company’s exclusive radio broadcast of the Winter Olympics from Salt Lake City, higher advertising rates and better inventory management at both our network and traffic divisions, as well as a result of launching new programming.

Operating costs and expenses increased .8% to $178,547 in the first half of 2002 from $177,156 in the comparable 2001 period. The increase was principally due to broadcast rights fees and other related cost associated with the Company’s exclusive radio broadcast of the Winter Olympics and higher bad debt expense, partially offset by reductions in affiliate compensation and personnel costs.

Depreciation and amortization decreased 83.3% to $5,701 in the first half of 2002 as compared with $34,116 in the first half of 2001. The decrease is principally attributable to the Company’s adoption of SFAS 142, which prohibits the Company from continuing to amortize goodwill.

Operating income increased $38,742, or 96.1%, to $79,059 in the first half of 2002 from $40,317 in the comparable 2001 period primarily due to higher net revenue as well as lower depreciation and amortization expense resulting from the Company’s adoption of SFAS 142. On a pro forma basis, assuming the Company had adopted the provisions of SFAS 142 on January 1, 2001, the Company’s operating income increased approximately 24.5%.

Interest expense decreased 30.4% to $3,435 in the first half of 2002 from $4,935 in the comparable 2001 period. The decrease results principally from lower interest rates.

Net income increased 186.4% to $47,917 ($.45 per basic share and $.43 per diluted share) in the first half of 2002 from $16,732 ($.15 per basic and diluted share) in the comparable 2001 period. On a pro forma basis, assuming the Company had adopted the provisions of SFAS 142 on January 1, 2001, the Company’s net income would have increased approximately 28.8%, net income per basic share would have increased by approximately 30.5% and net income per diluted share would have increased by approximately 31.8%.

Weighted average shares outstanding used to compute basic and diluted earnings per share decreased to 106,690 and 110,177, respectively, in the first six months of 2002 as compared with 108,121 and 112,739 in the comparable 2001 period. The decrease is principally attributable to the Company’s stock repurchase program.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2002, the Company's cash and cash equivalents were $12,051, an increase of $7,542 from December 31, 2001.

For the six months ended June 30, 2002, net cash provided by operating activities was $89,801 as compared with $76,815 for the six months ended June 30, 2001, an increase of $12,986. Included in net cash provided by operating activities is the income tax benefit attributable to stock option exercises and warrant purchases ($37,750 in 2002 and $15,400 in 2001) that was charged directly to shareholders’ equity. The cash flow from operations combined with bank borrowings was used to fund the Company’s stock buy-back program.

At June 30, 2002, the Company had available borrowings of $95,000 on its revolving credit facility. Pursuant to the terms of the facility, the amount of available borrowings declines by $6,000 at the end of each quarter in 2002. In addition, the Company is required to repay its term loan by $3,750 per quarter in 2002. The Company has extinguished all term loan installments which were due in 2002. In 2003, the quarterly term loan repayments increase to $5,000 per quarter.

The Company has used its available cash to either repurchase its Common Stock and warrants and/or repay its debt. In the first six months of 2002, the Company repurchased 4,447 common shares and warrants at a cost of $136,332. Subsequent to the quarter through July 31, 2002, the Company repurchased an additional 530 shares of Common Stock at a cost of approximately $16,715.