Part I    Part II   

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

See accompanying notes to consolidated financial statements.



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

See accompanying notes to consolidated financial statements.

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, 2001, the consolidated statements of operations for the three and six month periods ended June 30, 2001 and 2000 and the consolidated statements of cash flows for the six months ended June 30, 2001 and 2000 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:

At June 30, 2001 the Company had outstanding borrowings of $130,000 under its bank revolving credit facility and available borrowings of $195,500.

In April 2001, the Company entered into a one year interest rate swap agreement covering $25,000 principal value of its outstanding borrowing to effectively fix the interest rate at 4.27% plus the Applicable Margin (typically the Company borrows at a variable interest rate of three-month LIBOR plus the Applicable Margin).

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In thousands, except per share amounts)

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2000

Westwood One derives substantially all of its revenue from the sale of advertising time to advertisers. Net revenue decreased $2,817, or 2%, to $133,684 in the second quarter of 2001 from $136,501 in the comparable prior year quarter. The decrease in net revenue was due to a reduction in spending by Internet companies, as well as a slowdown in the advertising market generally, partially offset by higher revenue from the Company's traditional, as well as, new advertisers.

Operating costs and expenses excluding depreciation and amortization decreased $4,596, or 5%, to $86,715 in the second quarter of 2001 from $91,311 in the second quarter of 2000. The decrease was principally due to tight cost controls, and reductions in affilitate compensation and personnel costs, partially offset by additional operating costs associated with the operations of SmartRoute Systems, Inc. ("SmartRoute"), whose assets were acquired in mid-November 2000.

Depreciation and amortization increased $1,481, or 9% to $17,109 in the second quarter of 2001 as compared to $15,628 in the second quarter of 2000 due principally to the amortization of goodwill resulting from the Company's acquisition of the operating assets of SmartRoute.

Corporate general and administrative expenses decreased $215, or 10%, to $1,853 in the second quarter of 2001 from $2,068 in the comparable 2000 quarter. The decrease is principally attributable to reducing travel and entertainment expenses as well as other discretionary spending.

Operating income increased $513, or 2%, to $28,007 in the second quarter of 2001 from $27,494 in the second quarter of 2000, primarily due to a planned reduction in operating costs, partially offset by higher depreciation and amortization from the SmartRoute acquisition.

Interest expense decreased 12% to $2,089 in the second quarter of 2001 from $2,382 in 2000. The decrease is principally attributable to lower average debt levels and interest rates.

Other expense in the second quarter of 2001 was $1,183 compared with other income of $168 in the second quarter of 2000, an increase of $1,351. The increase is principally attributable to a 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 decreased $2,033, or 14%, to $12,603 in the second quarter of 2001 from $14,636 in the second quarter of 2000. The Company's effective income tax rate in the first half of 2001 is approximately 51% compared with a 58% effective tax rate in the first half of 2000. The decrease in the effective tax rate is principally a result of nondeductible goodwill amortization being a smaller percentage of pretax income and lower state tax expense.

Net income increased $1,488, or 14%, to $12,132 ($.11 per basic and diluted share) in the second quarter of 2001 from $10,644 ($.10 per basic share and $.09 per diluted share) in the second quarter of 2000.

Weighted average shares outstanding used to compute basic and diluted earnings per share decreased to 108,377 and 113,544, respectively, in the second quarter of 2001 as compared to 111,979 and 118,058 in the second quarter of 2000. The decrease is principally attributable to the Company's stock repurchase program.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000

Net revenue for the first half of 2001 decreased 1% to $255,253 from $258,603 in the first half of 2000. The decrease in net revenue was due to a reduction in advertising spending by Internet companie, as well as a slowdown in the advertising market generally, partially offset by higher revenue from the Company's traditional, as well as, new advertisers.

Operating costs and expenses decreased 4% to $177,156 in the first half of 2001 from $183,655 in the comparable 2000 period. The decrease was primarily attributable to tight cost controls and reductions in affiliate compensation and personnel costs, partially offset by additional operating costs associated with the Company's SmartRoute acquisition.

Depreciation and amortization increased 10% to $34,116 in the first half of 2001 as compared to $31,123 in the first half of 2000. The decrease is principally attributable to depreciation and amortization related to the Company's acquisition of the operating assets of SmartRoute.

Interest expense decreased 4% to $4,935 in the first half of 2001 from $5,126 in the comparable 2000 period. The decrease results from lower average debt levels and lower interest rates.

Net income increased 15% to $16,732 ($.15 per basic and diluted share) in the first half of 2001 from $14,600 ($.13 per basic share and $.12 per diluted share) in the comparable 2000 period.

Weighted average shares outstanding used to compute basic and diluted earnings per share decreased to 108,121 and 112,739, respectively, in the first six months of 2001 as compared to 112,067 and 118,192 in the comparable 2000 period. The decrease is attributable to the Company's stock repurchase program.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, the Company's cash and cash equivalents were $2,407, a decrease of $4,350 from December 31, 2000.

For the six months ended June 30, 2001, net cash provided by operating activities was $79,348 as compared to $86,784 for the six months ended June 30, 2000, a decrease of $7,436. The cash flow from operations was principally used to fund the Company's stock buy-back program and to reduce debt.

At June 30, 2001, the Company had available borrowings of $195,500 on its revolving credit facility. Pursuant to the terms of the facility, the amount of available borrowings declines by $4,500 at the end of each quarter. In addition, the Company is required to repay its term loan by $2,500 per quarter in 2001. In the first half of 2001, the Company reduced its outstanding borrowings by
$48,000. In April 2001, the Company entered into a one year interest rate swap agreement covering $25,000 of its debt to effectively fix the interest rate at 4.27%.

The Company has used its available cash to repurchase its Common Stock and repay debt. In the first six months of 2001, the Company repurchased 2,033 shares and warrants of Common Stock at a cost of $44,871. Subsequent to the quarter through July 31, 2001, the Company repurchased an additional 1,050 shares of Common Stock at a cost of approximately $31,743.

Recently Issued Accounting Standard

In July 2001, the Financial Standards Board (FASB) issued FASB Statement No. 142 (FAS 142), "Goodwill and Other Intangible Assets." FAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Upon adoption of FAS 142, goodwill will be tested at the reporting unit annually and whenever events or circumstances occur indicating that
goodwill might be impaired. Amortization of goodwill, including goodwill recorded in past business combinations, will cease. The adoption date for the Company will be January 1, 2002. As the Statement has only recently been issued, the Company has not yet determined the impact FAS 142 will have on the Company's results of operations and financial position.