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Item 5. Market for Registrant's Common Stock and Related Shareholder Matters

On February 1, 2002 there were approximately 320 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 the Company estimates that the total number of beneficial holders of the Company's Common Stock exceeds 5,000.

Since December 15, 1998, the Company's Common Stock has been traded on the New York Stock Exchange (“NYSE”) under the symbol “WON”. The following table sets forth the range of high and low last sales prices on the NYSE for the Common Stock for the calendar quarters indicated. These prices have been adjusted on a retroactive basis to reflect the effect of the Company’s two-for-one stock split which was paid on March 22, 2000.

The Company does not intend to pay cash dividends. No cash dividend was paid on the Company’s stock during 2001 or 2000, and the payment of dividends is restricted by the terms of its loan agreements.

The following table contains information regarding equity compensation plans as of December 31, 2001:

(1) – Options included herein were granted or are available for grant as part of the Company’s 1989 and/or 1999 stock option plans that were approved by shareholders of the Company. The Company’s 1999 stock option plan provides for mandatory grants of options to members of the Company’s Board of Directors on an annual basis. The Compensation Committee of the Board of Directors approves periodic option grants to Executive Officers and other employees based on their contributions to the operations of the Company.
(2) – Warrants included herein were issued in conjunction with the Infinity Management Agreement.

Item 6. SELECTED FINANCIAL DATA
(In thousands except per share data)

The per share amounts included herein have been restated to reflect on a retroactive basis the Company’s two-for-one stock split which was paid on March 22, 2000.

(1) Results for the year ended December 31, 1999 include the results of Metro from the date of the merger on September 22, 1999.
(2) Results for the year ended December 31, 1998 include the Shadow Traffic Operations for 10 markets from the time they were acquired in May 1998.
(3) Results for the year ended December 31, 1997 include the CBS Radio Networks from the effective date of the Representation Agreement in April 1997.
(4) Operating cash flow is defined as operating income plus depreciation and amortization and non-recurring items. Operating cash flow is not determined in accordance with generally accepted accounting principles (GAAP), is not indicative of Cash Provided by Operating Activities and should not be considered in isolation from, or as an alternative to, other measures determined in accordance with GAAP.
-- No cash dividend was paid on the Company’s Common Stock during the periods presented above.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
(In thousands except for per share amounts)

On January 27, 2000 the Board of Directors approved a two-for-one stock split of the Company’s Common Stock and Class B Stock effective March 22, 2000. All references herein to share and per share amounts have been restated to give effect to the stock split on a retroactive basis.

On September 22, 1999, the Company completed its acquisition of Metro Networks, Inc. (“Metro”). The results of operations for Metro are included in the consolidated financial statements of the Company from the date of the acquisition.

Results of Operations

Westwood One derives substantially all of its revenue from the sale of advertising time to advertisers. Net revenues decreased 7% to $515,940 in 2001 from $553,693 in 2000, and increased 55% in 2000 from $358,305 in 1999. The 2001 decrease in net revenue was due to the non-recurrence of revenues from the 2000 Summer Olympics from Sydney, Australia, a reduction of spending by internet companies, the cancellation of programming and advertising commitments due to the events of September 11 and a slowdown in the advertising market generally. The 2000 increase was primarily attributable to the September 22, 1999 merger with Metro, higher advertising rates at both the Company’s Network and Traffic operations and due to the Company’s exclusive live broadcast of the 2000 Summer Olympics. On a pro forma basis, assuming the acquisition of Metro had occurred as of January 1, 1999, net revenue for 2000 would have increased by approximately 13%.

Operating costs and expenses excluding depreciation and amortization decreased 10% to $343,120 in 2001 from $380,346 in 2000, and increased 45% in 2000 from $261,538 in 1999. The 2001 decrease was primarily attributable to the non-recurrence of broadcast rights fees and related costs associated with the 2000 Summer Olympics, tight cost controls, reductions in affiliate and personnel costs, and lower revenue related expenses including bad debts, partially offset by operating costs incurred for the full year in 2001 associated with the operations of SmartRoute, whose assests were acquired in November 2000. The 2000 increase was attributable to operating expenses associated with the Metro acquisition and broadcast rights fees and other related costs associated with the 2000 Summer Olympics.

Depreciation and amortization increased 9% to $67,611 in 2001 from $62,104 in 2000, and increased 106% in 2000 from $30,214 in 1999. The 2001 increase was principally attributable to depreciation and amortization related to the acquisition of the operating assets of SmartRoute. The 2000 increase was principally related to the amortization of goodwill resulting from the Metro acquisition.

Corporate general and administrative expenses decreased 12% to $6,816 in 2001 from $7,749 in 2000, and increased 35% in 2000 from $5,756 in 1999. The decrease in 2001 was principally attributable to a lower incentive bonus payable to Infinity pursuant to the terms of the Management Agreement. The increase in 2000 was principally attributable to expenses related to Infinity’s incentive bonus.

Operating income decreased 5% to $98,393 in 2001 from $103,494 in 2000, and increased 70% in 2000 from $60,797 in 1999. The 2001 decrease was due to lower revenues and higher depreciation and amortization partially offset by a reduction in operating costs. The 2000 increase was attributable to higher revenues from the Company’s operations partially offset by higher depreciation and amortization.

Interest expense was $8,705, $10,785 and $12,150 in 2001, 2000 and 1999, respectively. The 2001 decrease was attributable to lower interest rates and debt levels. The 2000 decrease was attributable to lower debt levels throughout most of 2000 (compared with 1999 debt levels) partially offset by higher interest rates.

The income tax provisions for 2001, 2000 and 1999 are based on annual effective tax rates of 51%, 55% and 52%, respectively. The decrease in the effective tax rate in 2001 is primarily attributable to lower state taxes. The increase in the effective tax rate in 2000 is principally attributable to non-deductible goodwill resulting from the Metro acquisition.

Net income in 2001 increased 2% to $43,195 ($.40 per basic share and $.38 per diluted share) from $42,283 ($.38 per basic share and $.36 per diluted share) in 2000 and increased 77% in 2000 from $23,887 ($.33 per basic share and $.30 per diluted share) in 1999.

Weighted averages shares outstanding for purposes of computing basic earnings per share were 107,551, 110,640 and 72,168 in 2001, 2000 and 1999, respectively. The decrease in 2001 was primarily attributable to the Company’s stock repurchase program partially offset by additional share issuances as a result of stock option exercises. The increase in 2000 was primarily attributable to the issuance of 50,224 shares of Common Stock in conjunction with the Company’s acquisition of Metro partially offset by stock repurchases made pursuant to the Company’s ongoing stock repurchase program. Weighted average shares outstanding for purposes of computing diluted earnings per share were 112,265, 115,864 and 78,930 in 2001, 2000 and 1999, respectively. The changes in weighted average diluted shares are due principally to the increase in basic shares partially offset by the effect of stock option grants and the increase in the Company’s stock price.

Liquidity and Capital Resources

At December 31, 2001, the Company's principal sources of liquidity were its cash and cash equivalents of $4,509 and available borrowings under its loan agreement of $147,000.

For 2001, net cash from operating activities was $145,673, a decrease of $10,719 from 2000. Cash flow from operations was principally used to fund the Company’s stock repurchase program.

At December 31, 2001, the Company had an unsecured $259,000 bank revolving credit facility and an unsecured $47,500 term loan (collectively the “Facility”). At December 31, 2001, the Company had available borrowings of $147,000 under its Facility. The amount of the Facility is scheduled to be reduced by $6,000 at the end of each quarter during 2002. In addition, the Company is required to repay its term loan by $3,750 at the end of the Company’s third and fourth quarters of 2002.

In 2001, the Company purchased 6,152 shares of the Company’s Common Stock and warrants for a total cost of $146,278. In 2000, the Company purchased 5,190 shares of the Company’s Common Stock for a total cost of $123,431 and in 1999, purchased 3,128 shares of the Company’s Common Stock for a total cost of $54,164. In 2002 (through February 28, 2002), the Company repurchased an additional 944 shares of Common Stock at a cost of $29,658. The stock buybacks have been funded principally from the Company’s free cash flow.

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.

Critical Accounting Policies and Estimates

Westwood One’s financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities. Management continually evaluates its estimates and judgments including those related to allowances for doubtful accounts, useful lives of property, plant and equipment and intangible assets, investments, income taxes, and other contingencies. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies, the following may involve a higher degree of judgment or complexity:

Allowances for doubtful accounts – we maintain allowances for doubtful accounts for estimated losses which may result from the inability of our customers to make required payments. We base our allowances on the likelihood of recoverability of accounts receivable by aging category, based on past experience and taking into account current collection trends that are expected to continue. If economic or specific industry trends worsen beyond our estimates, we would be required to increase our allowances for doubtful accounts by recording additional expense. Alternatively, if trends improve beyond our estimates, we would be required to decrease our allowance for doubtful accounts by reducing our recorded expense.

Estimated useful lives of property, plant and equipment and intangible assets – we estimate the useful lives of property, plant and equipment and intangible assets in order to determine the amount of depreciation and amortization expense to be recorded during any reporting period. The useful lives are estimated at the time the asset is acquired and are based on historical experience with similar assets as well as taking into account anticipated technological or other changes. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation and amortization expense in future periods. Alternatively, these types of technological changes could result in the recognition of an impairment charge to reflect the write-down in value of the asset. We review these types of assets for impairment annually, or when events or circumstances indicate that the carrying amount may not be recoverable over the remaining lives of the assets. Beginning January 1, 2002, in accordance with the provisions of SFAS 142 (see below), we will no longer amortize goodwill but will test these assets at least annually for impairment.

New Accounting Pronouncements Affecting Future Results

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”). 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 (and in interim periods if events occur indicating that the carrying value of goodwill and/or indefinite-lived intangible assets may be impaired), (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. SFAS 142 requires that goodwill be tested annually for impairment using a two-step process. The first step is to identify a potential impairment and, in transition, this step must be measured as of the beginning of the fiscal year. The Company expects to complete that first step of the goodwill impairment test during the first quarter of 2002, but does not anticipate that any of its goodwill will be impaired. If necessary, the second step of the goodwill impairment test measures the amount of the impairment loss (measured as of the beginning of the year of adoption), if any, and must be completed by the end of the Company’s fiscal year. Intangible assets deemed to have an indefinite life will be tested for impairment using a one-step process which compares the fair value to the carrying amount of the asset as of the beginning of the fiscal year. These Statements are effective on January 1, 2002 and accordingly the Company will adopt the provisions of SFAS 142 in its first quarter ended March 31, 2002.

As a result of adopting these new standards, the Company’s effective tax rate and depreciation and amortization expense is expected to decrease substantially in 2002. Had SFAS 142 been in effect for 2001, the Company’s reported depreciation and amortization expense for 2001 would have been reduced by approximately $48,000.

In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 supercedes SFAS 121, “Accounting For the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and establishes a single accounting model for the impairment or disposal of long-lived assets. SFAS 144 is effective for years beginning after December 15, 2001. The Company does not expect the adoption will have a material impact on its consolidated results of operations and financial position.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on the behalf of the Company. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Various risks that could cause future results to differ from those expressed by forward-looking statements include, but are not limited to: changes in economic conditions in the US (both general and relative to the advertising industry); fluctuations in interest rates; changes in industry conditions; changes in operating performance; shifts in population and other demographics; changes in the level of competition for advertising dollars; technological changes and innovations; changes in government regulations and policies and actions of regulatory bodies; changes in tax rates and access to capital markets. These statements are based on management’s views and assumptions at the time the statements are made, however no assurances can be given that management’s expectations will come to pass. The forward-looking statements included in this document are only made as of the date of this document and the Company does not have any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances.

Item 7A. Qualitative and Quantitative Disclosures about Market Risk

The Company is exposed to market risk related to changes in interest rates. 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).

The interest rate on the Company’s outstanding 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 for every $2,000 of outstanding debt.

Item 8. Financial Statements and Supplementary Data

The Consolidated Financial Statements and the related notes and schedules were prepared by and are the responsibility of management. The financial statements and related notes were prepared in conformity with generally accepted accounting principles and include amounts based upon management’s best estimates and judgments. All financial information in this annual report is consistent with the consolidated financial statements.

The Company maintains internal accounting control systems and related policies and procedures designed to provide reasonable assurance that assets are safeguarded, that transactions are executed in accordance with management’s authorization and properly recorded, and that accounting records may be relied upon for the preparation of consolidated financial statements and other financial information. The design, monitoring, and revision of internal accounting control systems involve, among other things, management’s judgment with respect to the relative cost and expected benefits of specifc control measures.

Westwood One’s consolidated financial statements have been audited by PricewaterhouseCoopers LLP, independent accountants, who have expressed their opinion with respect to the presentation of these statements.

The Audit Committee of the Board of Directors, which is comprised solely of directors who are not employees of the Company, meets periodically with the independent accountants, as well as with management, to review accounting, auditing, internal accounting controls and financial reporting matters. The Audit Committee is also responsible for recommending to the Board of Directors the independent accounting firm to be retained for the coming year. The independent accountants have full and free access to the Audit Committee with and without management’s presence.

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-17 and by this reference incorporated herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.