NEW YORK, July 28, 2016
/PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today
reported results for the second quarter of 2016, including the
highest second quarter diluted earnings per share ("EPS") in the
Company's history.
"CBS turned in another terrific quarter, on the way to another
outstanding year, as we continue to take advantage of all the
growth catalysts before us," said Leslie
Moonves, Chairman and Chief Executive Officer, CBS
Corporation. "Our base business is very healthy, including our
strongest upfront selling season in years, which will benefit us
beginning in late September when the new higher pricing takes
effect. At the same time, we continue to build our fast-growing,
high-margin revenue streams at a rapid clip. During the quarter,
retransmission consent and reverse compensation grew 44% and remain
on track to surpass $1 billion in
revenue this year. Our over-the-top streaming services, CBS All
Access and Showtime OTT, continue to exceed expectations, and
we anticipate a significant lift next year with the launch of our
new Star Trek series on CBS and Twin Peaks on
Showtime. Our content licensing business also had a great quarter
and was up 16% thanks to lucrative international deals for our
Star Trek library programming that will continue to benefit
us as new episodes launch in January. All of these high-margin
revenue streams will become an even bigger part of our revenue mix
next year when we expect to complete the separation of our radio
business and intensify our focus on our core content strategy.
Looking ahead, we will continue to invest first and foremost in
premium content while using excess cash to return capital to our
investors. We will take advantage of every opportunity that is in
the best interest of our shareholders, and we are more confident
than ever in our long-term growth prospects."
Second Quarter 2016 Results
Revenues for the second quarter of 2016 increased 2% to
$3.29 billion from $3.22 billion for the same prior-year period,
even though the prior year included two significant events which
did not recur in 2016: Showtime's distribution of the Floyd
Mayweather/Manny Pacquiao boxing
event, the highest-grossing pay-per-view event of all time, and the
broadcast of the NCAA Division I Men's Basketball
Championship ("NCAA Tournament") finals on the CBS Television
Network. Revenue growth for this year's second quarter reflects a
16% increase from content licensing and distribution revenues,
driven mainly by the licensing of five Star Trek series in
the international marketplace. Revenues for the second quarter of
2016 also benefited from 44% growth in retransmission revenues and
fees from CBS Television Network affiliated stations, as well as
revenues from new digital distribution platforms.
Operating income for the second quarter of 2016 increased 25% to
$733 million from $586 million for the same prior-year period,
driven by growth in higher-margin revenues, and rose 14% from
adjusted operating income of $641
million for the second quarter of 2015.
Net earnings of $423 million for
the second quarter of 2016 rose 27% from $332 million for the same quarter in 2015, driven
by the higher operating income, and increased 16% from adjusted net
earnings of $365 million for the
second quarter of 2015.
EPS for the second quarter of 2016 grew 39% to $.93 from $.67 for
the same quarter in 2015 and increased 26% from adjusted EPS of
$.74. Weighted average shares
outstanding were 455 million in the second quarter of 2016, down
from 495 million in the prior-year period, mainly as a result of
the Company's ongoing share repurchase program.
Adjusted results for the second quarter of 2015 excluded
restructuring charges of $55 million
($33 million, net of tax). No
adjustments were made to reported results for the second quarter of
2016.
Free Cash Flow, Balance Sheet and Liquidity
For the second quarter of 2016, operating cash flow from
continuing operations was $225
million compared with $464
million in the same prior-year period, while free cash flow
was $184 million compared with
$435 million for the second quarter
of 2015. These decreases partly reflected the timing of receipts
and payments relating to the previously mentioned 2015 pay-per-view
boxing event. For the first six months of 2016, operating cash flow
from continuing operations was $1.25
billion compared with $881
million in the same prior-year period, and free cash flow of
$1.17 billion increased from
$835 million in 2015. The increases
for the six-month period were driven by growth in affiliate and
subscription fees and higher advertising revenues, including the
broadcast of Super Bowl 50 on CBS, partially offset by
increased investment in content.
In July 2016, the Company issued
$700 million of 2.90% senior notes
due 2027. The Company is using the net proceeds from this issuance
for general corporate purposes, including the repurchase of CBS
Corp. Class B Common Stock and the repayment of short-term
borrowings, including commercial paper.
Repurchase of Company Stock
During the second quarter of 2016, the Company repurchased 9.2
million shares of its Class B Common Stock for $500 million. For the first six months of 2016,
the Company repurchased 19.5 million shares of its Class B Common
Stock for $1.00 billion. The average
cost for the first half of 2016 was $51.27 per share.
Radio IPO
In connection with the Company's previously announced plans to
separate its radio business, a preliminary registration statement
was filed with the Securities and Exchange Commission in
July 2016 for the proposed initial
public offering (''IPO'') of the common stock of CBS Radio Inc.
Reconciliations of non-GAAP measures to reported results are
included at the end of this earnings release.
Consolidated and Segment Results (dollars in
millions)
The tables below present the Company's revenues by segment and
type, operating income (loss) excluding restructuring charges,
impairment charges, and other operating items, net by segment
("Segment Operating Income"), and depreciation and amortization by
segment for the three and six months ended June 30, 2016, and
2015.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Revenues by
Segment
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Entertainment
|
$
|
1,947
|
|
|
$
|
1,785
|
|
|
$
|
4,534
|
|
|
$
|
4,046
|
|
Cable
Networks
|
536
|
|
|
615
|
|
|
1,061
|
|
|
1,154
|
|
Publishing
|
187
|
|
|
199
|
|
|
332
|
|
|
344
|
|
Local
Broadcasting
|
647
|
|
|
654
|
|
|
1,296
|
|
|
1,250
|
|
Corporate/Eliminations
|
(30)
|
|
|
(34)
|
|
|
(87)
|
|
|
(75)
|
|
Total
Revenues
|
$
|
3,287
|
|
|
$
|
3,219
|
|
|
$
|
7,136
|
|
|
$
|
6,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Revenues by
Type
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Advertising
|
$
|
1,552
|
|
|
$
|
1,594
|
|
|
$
|
3,894
|
|
|
$
|
3,378
|
|
Content licensing and
distribution
|
943
|
|
|
815
|
|
|
1,672
|
|
|
1,843
|
|
Affiliate and
subscription fees
|
733
|
|
|
752
|
|
|
1,455
|
|
|
1,380
|
|
Other
|
59
|
|
|
58
|
|
|
115
|
|
|
118
|
|
Total
Revenues
|
$
|
3,287
|
|
|
$
|
3,219
|
|
|
$
|
7,136
|
|
|
$
|
6,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Segment Operating
Income (Loss)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Entertainment
|
$
|
351
|
|
|
$
|
262
|
|
|
$
|
800
|
|
|
$
|
608
|
|
Cable
Networks
|
227
|
|
|
220
|
|
|
455
|
|
|
471
|
|
Publishing
|
26
|
|
|
25
|
|
|
39
|
|
|
37
|
|
Local
Broadcasting
|
212
|
|
|
198
|
|
|
418
|
|
|
359
|
|
Corporate
|
(83)
|
|
|
(64)
|
|
|
(167)
|
|
|
(132)
|
|
Adjusted Operating
Income
|
733
|
|
|
641
|
|
|
1,545
|
|
|
1,343
|
|
Restructuring
charges
|
—
|
|
|
(55)
|
|
|
—
|
|
|
(55)
|
|
Other operating
items, net
|
—
|
|
|
—
|
|
|
9
|
|
|
19
|
|
Total Operating
Income
|
$
|
733
|
|
|
$
|
586
|
|
|
$
|
1,554
|
|
|
$
|
1,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Depreciation and
Amortization
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Entertainment
|
$
|
30
|
|
|
$
|
32
|
|
|
$
|
60
|
|
|
$
|
64
|
|
Cable
Networks
|
5
|
|
|
6
|
|
|
11
|
|
|
12
|
|
Publishing
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
Local
Broadcasting
|
18
|
|
|
19
|
|
|
37
|
|
|
40
|
|
Corporate
|
8
|
|
|
7
|
|
|
16
|
|
|
15
|
|
Total Depreciation
and Amortization
|
$
|
63
|
|
|
$
|
66
|
|
|
$
|
127
|
|
|
$
|
134
|
|
Entertainment (CBS Television Network, CBS Television
Studios, CBS Studios International, CBS Television Distribution,
CBS Interactive, and CBS Films)
Entertainment revenues rose 9% to $1.95
billion for the second quarter of 2016 compared with
$1.79 billion for the same prior-year
period. Content licensing and distributions revenues grew 19%,
driven by higher international television licensing revenues,
mainly from sales of Star Trek library programming.
Affiliate and subscription fees increased 59%, reflecting higher
station affiliation fees, retransmission revenues, and subscription
growth for CBS All Access. Advertising revenues declined 3%,
reflecting the absence of the broadcast of the NCAA Tournament
finals on CBS and the impact from the sales of internet businesses
in China during 2015, which were
partially offset by 2% underlying network advertising growth.
Entertainment operating income for the second quarter of 2016
was $351 million, up 34% from
$262 million for the same prior-year
period, reflecting revenue growth.
Cable Networks (Showtime Networks, CBS Sports Network,
and Smithsonian Networks)
Cable Networks revenues for the second quarter of 2016 were
$536 million, down 13% from the same
prior-year period which included revenues from the Floyd
Mayweather/Manny Pacquiao boxing
event, the highest-grossing pay-per-view event of all time. This
boxing event affected the revenue comparison by 24 percentage
points. Underlying results reflect higher revenues from domestic
and international licensing of Showtime original series and
5% growth in affiliate and subscription fees, driven by Showtime
Networks' over-the-top streaming service.
Cable Networks operating income for the second quarter of 2016
increased 3% to $227 million compared
with $220 million for the same
prior-year period, primarily as a result of increases in
higher-margin revenues, which were partially offset by increased
investment in original series.
Publishing (Simon & Schuster)
Publishing revenues for the second quarter of 2016 were
$187 million compared with
$199 million for the same prior-year
period. Digital revenues represented 23% of Publishing's total
revenues for the second quarter of 2016. Best-selling titles
included End of Watch by Stephen
King and Foreign Agent by Brad Thor.
Publishing operating income of $26
million for the second quarter of 2016 was up 4% from
$25 million for the same prior-year
period, as the revenue decline was more than offset by lower
production, selling, and inventory costs.
Local Broadcasting (CBS Television Stations and CBS
Radio)
Local Broadcasting revenues were $647
million for the second quarter, down 1% compared with
$654 million in the same prior-year
period, reflecting the absence of CBS's broadcast of the NCAA
Tournament finals and lower local radio advertising sales. Growth
in retransmission revenues partially offset the declines. Revenues
for CBS Television Stations and CBS Radio each decreased 1%.
Local Broadcasting operating income for the second quarter of
2016 grew 7% to $212 million from
$198 million for the same prior-year
period. The increase was the result of restructuring activities put
in place during 2015.
Corporate
Corporate expenses for the second quarter of 2016 increased
$19 million to $83 million from $64
million for the same prior-year period, mainly due to higher
pension and other employee-related costs.
About CBS Corporation
CBS Corporation (NYSE: CBS.A and
CBS) is a mass media company that creates and distributes
industry-leading content across a variety of platforms to audiences
around the world. The Company has businesses with origins that date
back to the dawn of the broadcasting age as well as new ventures
that operate on the leading edge of media. CBS owns the
most-watched television network in the U.S. and one of the world's
largest libraries of entertainment content, making its brand -"the
Eye" - one of the most recognized in business. The Company's
operations span virtually every field of media and entertainment,
including cable, publishing, radio, local TV, film, and interactive
and socially responsible media. CBS's businesses include CBS
Television Network, The CW (a joint venture between CBS Corporation
and Warner Bros. Entertainment), CBS Television Studios, CBS
Studios International, CBS Television Distribution, CBS Consumer
Products, CBS Home Entertainment, CBS Interactive, CBS Films,
Showtime Networks, CBS Sports Network, Pop (a joint venture between
CBS Corporation and Lionsgate), Smithsonian Networks, Simon &
Schuster, CBS Television Stations, CBS Radio and CBS EcoMedia. For
more information, go to www.cbscorporation.com.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains both historical and
forward-looking statements. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements within the meaning of section 27A of the Securities Act
of 1933 and section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are not based on historical facts,
but rather reflect the Company's current expectations concerning
future results and events. Similarly, statements that describe our
objectives, plans or goals are or may be forward-looking
statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that are difficult
to predict and which may cause the actual results, performance or
achievements of the Company to be different from any future
results, performance or achievements expressed or implied by these
statements. These risks, uncertainties and other factors include,
among others: advertising market conditions generally; changes in
the public acceptance of the Company's content; changes in
technology and its effect on competition in the Company's markets;
changes in the federal communications laws and regulations; the
impact of piracy on the Company's products; the impact of the
consolidation in the market for the Company's content; the impact
of negotiations or the loss of affiliation agreements or
retransmission agreements; other domestic and global economic,
business, competitive and/or other regulatory factors affecting the
Company's businesses generally; the ability to achieve the
separation of the Company's radio business on terms that the
Company finds acceptable; the impact of union activity, including
possible strikes or work stoppages or the Company's inability to
negotiate favorable terms for contract renewals; and other factors
described in the Company's filings with the Securities and Exchange
Commission including but not limited to the Company's most recent
Form 10-K, Form 10-Qs and Form 8-Ks. The forward-looking statements
included in this document are made only as of the date of this
document, and under section 27A of the Securities Act and section
21E of the Exchange Act, we do not have any obligation to publicly
update any forward-looking statements to reflect subsequent events
or circumstances.
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited; in millions, except per share
amounts)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
3,287
|
|
|
$
|
3,219
|
|
|
$
|
7,136
|
|
|
$
|
6,719
|
|
Operating
income
|
733
|
|
|
586
|
|
|
1,554
|
|
|
1,307
|
|
Interest
expense
|
(100)
|
|
|
(94)
|
|
|
(200)
|
|
|
(187)
|
|
Interest
income
|
8
|
|
|
7
|
|
|
15
|
|
|
12
|
|
Other items,
net
|
(4)
|
|
|
4
|
|
|
(7)
|
|
|
(19)
|
|
Earnings before
income taxes
|
637
|
|
|
503
|
|
|
1,362
|
|
|
1,113
|
|
Provision for income
taxes
|
(205)
|
|
|
(165)
|
|
|
(436)
|
|
|
(368)
|
|
Equity in loss of
investee companies, net of tax
|
(9)
|
|
|
(6)
|
|
|
(30)
|
|
|
(19)
|
|
Net
earnings
|
$
|
423
|
|
|
$
|
332
|
|
|
$
|
896
|
|
|
$
|
726
|
|
|
|
|
|
|
|
|
|
Basic net earnings
per common share
|
$
|
.94
|
|
|
$
|
.68
|
|
|
$
|
1.97
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
|
Diluted net
earnings per common share
|
$
|
.93
|
|
|
$
|
.67
|
|
|
$
|
1.95
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
451
|
|
|
490
|
|
|
455
|
|
|
494
|
|
Diluted
|
455
|
|
|
495
|
|
|
459
|
|
|
500
|
|
|
|
|
|
|
|
|
|
Dividends per
common share
|
$
|
.15
|
|
|
$
|
.15
|
|
|
$
|
.30
|
|
|
$
|
.30
|
|
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited; in millions)
|
|
|
At
|
|
|
At
|
|
|
June 30,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
176
|
|
|
|
|
$
|
323
|
|
|
Receivables,
net
|
|
3,243
|
|
|
|
|
3,628
|
|
|
Programming and other
inventory
|
|
1,224
|
|
|
|
|
1,271
|
|
|
Prepaid expenses and
other current assets
|
|
453
|
|
|
|
|
525
|
|
|
Total current
assets
|
|
5,096
|
|
|
|
|
5,747
|
|
|
Property and
equipment
|
|
3,242
|
|
|
|
|
3,243
|
|
|
Less accumulated
depreciation and amortization
|
|
1,886
|
|
|
|
|
1,838
|
|
|
Net property and
equipment
|
|
1,356
|
|
|
|
|
1,405
|
|
|
Programming and other
inventory
|
|
2,069
|
|
|
|
|
1,957
|
|
|
Goodwill
|
|
6,531
|
|
|
|
|
6,481
|
|
|
Intangible
assets
|
|
5,504
|
|
|
|
|
5,514
|
|
|
Other
assets
|
|
2,582
|
|
|
|
|
2,661
|
|
|
Total
Assets
|
|
$
|
23,138
|
|
|
|
|
$
|
23,765
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
121
|
|
|
|
|
$
|
192
|
|
|
Participants' share
and royalties payable
|
|
1,007
|
|
|
|
|
1,013
|
|
|
Program
rights
|
|
322
|
|
|
|
|
374
|
|
|
Commercial
paper
|
|
163
|
|
|
|
|
—
|
|
|
Current portion of
long-term debt
|
|
23
|
|
|
|
|
222
|
|
|
Accrued expenses and
other current liabilities
|
|
1,451
|
|
|
|
|
1,759
|
|
|
Total current
liabilities
|
|
3,087
|
|
|
|
|
3,560
|
|
|
Long-term
debt
|
|
8,223
|
|
|
|
|
8,226
|
|
|
Other
liabilities
|
|
6,372
|
|
|
|
|
6,344
|
|
|
Liabilities of
discontinued operations
|
|
68
|
|
|
|
|
72
|
|
|
Total Stockholders'
Equity
|
|
5,388
|
|
|
|
|
5,563
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
23,138
|
|
|
|
|
$
|
23,765
|
|
|
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited; in millions)
|
|
|
Six Months
Ended
|
|
June
30,
|
|
2016
|
|
2015
|
Operating
Activities:
|
|
|
|
Net
earnings
|
$
|
896
|
|
|
$
|
726
|
|
Adjustments to
reconcile net earnings to net cash flow provided by
operating activities
from continuing operations:
|
|
|
|
Depreciation and
amortization
|
127
|
|
|
134
|
|
Stock-based
compensation
|
88
|
|
|
89
|
|
Equity in loss of
investee companies, net of tax and distributions
|
34
|
|
|
22
|
|
Change in assets and
liabilities, net of investing and financing activities
|
108
|
|
|
(90)
|
|
Net cash flow
provided by operating activities from continuing
operations
|
1,253
|
|
|
881
|
|
Net cash flow used
for operating activities from discontinued operations
|
(2)
|
|
|
(18)
|
|
Net cash flow
provided by operating activities
|
1,251
|
|
|
863
|
|
Investing
Activities:
|
|
|
|
Acquisitions
|
(51)
|
|
|
(1)
|
|
Capital
expenditures
|
(79)
|
|
|
(46)
|
|
Investments in and
advances to investee companies
|
(43)
|
|
|
(55)
|
|
Proceeds from
dispositions
|
27
|
|
|
59
|
|
Other investing
activities
|
4
|
|
|
4
|
|
Net cash flow used
for investing activities from continuing operations
|
(142)
|
|
|
(39)
|
|
Net cash flow used
for investing activities from discontinued operations
|
—
|
|
|
(3)
|
|
Net cash flow used
for investing activities
|
(142)
|
|
|
(42)
|
|
Financing
Activities:
|
|
|
|
Proceeds from
(repayments of) short-term debt borrowings, net
|
163
|
|
|
(222)
|
|
Proceeds from
issuance of senior notes
|
—
|
|
|
1,178
|
|
Repayment of senior
debentures
|
(199)
|
|
|
—
|
|
Payment of capital
lease obligations
|
(8)
|
|
|
(8)
|
|
Dividends
|
(142)
|
|
|
(155)
|
|
Purchase of Company
common stock
|
(1,033)
|
|
|
(1,832)
|
|
Payment of payroll
taxes in lieu of issuing shares for stock-based
compensation
|
(57)
|
|
|
(95)
|
|
Proceeds from
exercise of stock options
|
10
|
|
|
123
|
|
Excess tax benefit
from stock-based compensation
|
11
|
|
|
82
|
|
Other financing
activities
|
(1)
|
|
|
—
|
|
Net cash flow used
for financing activities
|
(1,256)
|
|
|
(929)
|
|
Net decrease in cash
and cash equivalents
|
(147)
|
|
|
(108)
|
|
Cash and cash
equivalents at beginning of period
|
323
|
|
|
428
|
|
Cash and cash
equivalents at end of period
|
$
|
176
|
|
|
$
|
320
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL
INFORMATION(Unaudited; in millions)
Adjusted Operating Income and Segment Operating Income
The following tables set forth the Company's Adjusted Operating
Income for the three and six months ended June 30, 2016 and 2015. The Company defines
"Adjusted Operating Income" as operating income excluding
restructuring charges, impairment charges, and other operating
items, net, where applicable. For each individual reportable
segment Adjusted Operating Income is also known as "Segment
Operating Income". The Company presents Segment Operating Income as
the primary measure of profit and loss for its reportable segments
in accordance with Financial Accountings Standards Board guidance
for segment reporting.
The Company uses Adjusted Operating Income (or Segment Operating
Income for each segment), as well as Adjusted Operating Income
Margin, to, among other things, evaluate the Company's operating
performance, to value prospective acquisitions and as one of
several components of incentive compensation targets for certain
management personnel. These measures are among the primary measures
used by management for planning and forecasting of future periods,
and they are important indicators of the Company's operational
strength and business performance. The Company believes these
measures are relevant and useful for investors because they allow
investors to view performance in a manner similar to the method
used by the Company's management, help improve investors'
understanding of the Company's operating performance, and make it
easier for investors to compare the Company's results with other
companies that have different financing and capital structures or
tax rates. In addition, these are among the primary measures used
externally by the Company's investors, analysts and industry peers
for purposes of valuation and for the comparison of the Company's
operating performance to other companies in its industry, and to
compare the Company's year-over-year results.
Because Adjusted Operating Income is a measure of performance
not calculated in accordance with accounting principles generally
accepted in the United States
("GAAP"), it should not be considered in isolation of, or as a
substitute for, operating income or net earnings as an indicator of
operating performance. Adjusted Operating Income, as the Company
calculates it, may not be comparable to similarly titled measures
employed by other companies. In addition, this measure does not
necessarily represent funds available for discretionary use and is
not necessarily a measure of the Company's ability to fund its cash
needs. As Adjusted Operating Income excludes certain financial
information that is included in operating income and net earnings,
the most directly comparable GAAP financial measures, users of this
financial information should consider the types of events and
transactions which are excluded. The Company provides the following
reconciliation of Adjusted Operating Income to operating income and
net earnings.
CBS CORPORATION
AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING
NON-GAAP FINANCIAL INFORMATION (Continued) (Unaudited; in
millions)
|
|
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
Adjusted Operating
Income
|
$
|
733
|
|
|
$
|
641
|
|
Restructuring
charges
|
—
|
|
|
(55)
|
|
Operating
income
|
733
|
|
|
586
|
|
Interest
expense
|
(100)
|
|
|
(94)
|
|
Interest
income
|
8
|
|
|
7
|
|
Other items,
net
|
(4)
|
|
|
4
|
|
Earnings before
income taxes
|
637
|
|
|
503
|
|
Provision for income
taxes
|
(205)
|
|
|
(165)
|
|
Equity in loss of
investee companies, net of tax
|
(9)
|
|
|
(6)
|
|
Net
earnings
|
$
|
423
|
|
|
$
|
332
|
|
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
Adjusted Operating
Income
|
$
|
1,545
|
|
|
$
|
1,343
|
|
Restructuring
charges
|
—
|
|
|
(55)
|
|
Other operating
items, net
|
9
|
|
|
19
|
|
Operating
income
|
1,554
|
|
|
1,307
|
|
Interest
expense
|
(200)
|
|
|
(187)
|
|
Interest
income
|
15
|
|
|
12
|
|
Other items,
net
|
(7)
|
|
|
(19)
|
|
Earnings before
income taxes
|
1,362
|
|
|
1,113
|
|
Provision for income
taxes
|
(436)
|
|
|
(368)
|
|
Equity in loss of
investee companies, net of tax
|
(30)
|
|
|
(19)
|
|
Net
earnings
|
$
|
896
|
|
|
$
|
726
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
(Unaudited; in millions)
Free Cash Flow
The Company defines free cash flow as its net cash flow provided
by (used for) operating activities before operating cash flow from
discontinued operations and less capital expenditures. The
Company's calculation of free cash flow includes capital
expenditures because investment in capital expenditures is a use of
cash that is directly related to the Company's operations. The
Company's net cash flow provided by (used for) operating activities
is the most directly comparable GAAP financial measure.
Management believes free cash flow provides investors with an
important perspective on the cash available to the Company to
service debt, make strategic acquisitions and investments, maintain
its capital assets, satisfy its tax obligations, and fund ongoing
operations and working capital needs. As a result, free cash flow
is a significant measure of the Company's ability to generate
long-term value. It is useful for investors to know whether
this ability is being enhanced or degraded as a result of the
Company's operating performance. The Company believes the
presentation of free cash flow is relevant and useful for investors
because it allows investors to evaluate the cash generated from the
Company's underlying operations in a manner similar to the method
used by management. Free cash flow is one of several components of
incentive compensation targets for certain management personnel. In
addition, free cash flow is a primary measure used externally by
the Company's investors, analysts and industry peers for purposes
of valuation and comparison of the Company's operating performance
to other companies in its industry.
As free cash flow is not a measure calculated in accordance with
GAAP, free cash flow should not be considered in isolation of, or
as a substitute for, either net cash flow provided by (used for)
operating activities as a measure of liquidity or net earnings as a
measure of operating performance. Free cash flow, as the Company
calculates it, may not be comparable to similarly titled measures
employed by other companies. In addition, free cash flow as a
measure of liquidity has certain limitations, does
not necessarily represent funds available for discretionary
use, and is not necessarily a measure of the Company's ability to
fund its cash needs. When comparing free cash flow to net cash flow
provided by (used for) operating activities, the most directly
comparable GAAP financial measure, users of this financial
information should consider the types of events and transactions
that are not reflected in free cash flow.
The following table presents a reconciliation of the Company's
net cash flow provided by operating activities to free cash
flow:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash flow
provided by operating activities
|
$
|
223
|
|
|
$
|
446
|
|
|
$
|
1,251
|
|
|
$
|
863
|
|
Capital
expenditures
|
(41)
|
|
|
(29)
|
|
|
(79)
|
|
|
(46)
|
|
Exclude operating
cash flow from discontinued operations
|
(2)
|
|
|
(18)
|
|
|
(2)
|
|
|
(18)
|
|
Free cash
flow
|
$
|
184
|
|
|
$
|
435
|
|
|
$
|
1,174
|
|
|
$
|
835
|
|
The following table presents a summary of the Company's cash
flows:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash flow
provided by operating activities
|
$
|
223
|
|
|
$
|
446
|
|
|
$
|
1,251
|
|
|
$
|
863
|
|
Net cash flow used
for investing activities
|
$
|
(44)
|
|
|
$
|
(44)
|
|
|
$
|
(142)
|
|
|
$
|
(42)
|
|
Net cash flow used
for financing activities
|
$
|
(414)
|
|
|
$
|
(413)
|
|
|
$
|
(1,256)
|
|
|
$
|
(929)
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
(Unaudited; in millions, except per share
amounts)
2016 and 2015 Adjusted Results
The following tables reconcile adjusted financial results to the
reported results included in this earnings release. The Company
believes that adjusting its financial results for the impact of
these items is relevant and useful for investors because it allows
investors to view performance in a manner similar to the method
used by the Company's management; provides a clearer perspective on
the underlying performance of the Company; makes it easier for
investors, analysts, and peers to compare the Company's operating
performance to other companies in its industry; and adjusting each
period's results on the same basis makes it easier to compare the
Company's year-over-year results.
|
Three Months Ended
June 30, 2015
|
|
2015
Reported
|
|
Restructuring
Charges (a)
|
|
2015
Adjusted
|
|
Revenues
|
$
|
3,219
|
|
|
|
$
|
—
|
|
|
|
$
|
3,219
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
586
|
|
|
|
$
|
55
|
|
|
|
$
|
641
|
|
|
Operating income
margin (b)
|
18
|
%
|
|
|
|
|
|
20
|
%
|
|
Interest
expense
|
(94)
|
|
|
|
—
|
|
|
|
(94)
|
|
|
Interest
income
|
7
|
|
|
|
—
|
|
|
|
7
|
|
|
Other items,
net
|
4
|
|
|
|
—
|
|
|
|
4
|
|
|
Earnings before
income taxes
|
503
|
|
|
|
55
|
|
|
|
558
|
|
|
Provision for income
taxes
|
(165)
|
|
|
|
(22)
|
|
|
|
(187)
|
|
|
Effective income tax
rate
|
32.8
|
%
|
|
|
|
|
|
33.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(6)
|
|
|
|
—
|
|
|
|
(6)
|
|
|
Net
earnings
|
$
|
332
|
|
|
|
$
|
33
|
|
|
|
$
|
365
|
|
|
Diluted
EPS
|
$
|
.67
|
|
|
|
$
|
.07
|
|
|
|
$
|
.74
|
|
|
Diluted weighted
average number of common shares outstanding
|
495
|
|
|
|
|
|
|
495
|
|
|
(a)
Restructuring charges at Entertainment and Local Broadcasting
primarily for the reorganization of certain business operations and
other exit costs.
(b) Operating income margin is defined as operating income or
Adjusted Operating Income divided by revenues.
|
CBS CORPORATION
AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING
NON-GAAP FINANCIAL INFORMATION (Continued) (Unaudited; in
millions, except per share amounts)
|
|
Six Months Ended
June 30, 2016
|
|
2016
Reported
|
|
Other Operating
Items (a)
|
|
Write-down
of
Investment
(b)
|
|
2016
Adjusted
|
|
Revenues
|
$
|
7,136
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
7,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
1,554
|
|
|
$
|
(9)
|
|
|
|
$
|
—
|
|
|
|
$
|
1,545
|
|
|
Operating income
margin (c)
|
22
|
%
|
|
|
|
|
|
|
|
22
|
%
|
|
Interest
expense
|
(200)
|
|
|
—
|
|
|
|
—
|
|
|
|
(200)
|
|
|
Interest
income
|
15
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
|
Other items,
net
|
(7)
|
|
|
—
|
|
|
|
—
|
|
|
|
(7)
|
|
|
Earnings before
income taxes
|
1,362
|
|
|
(9)
|
|
|
|
—
|
|
|
|
1,353
|
|
|
Provision for income
taxes
|
(436)
|
|
|
4
|
|
|
|
—
|
|
|
|
(432)
|
|
|
Effective income tax
rate
|
32.0
|
%
|
|
|
|
|
|
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(30)
|
|
|
—
|
|
|
|
6
|
|
|
|
(24)
|
|
|
Net
earnings
|
$
|
896
|
|
|
$
|
(5)
|
|
|
|
$
|
6
|
|
|
|
$
|
897
|
|
|
Diluted
EPS
|
$
|
1.95
|
|
|
$
|
(.01)
|
|
|
|
$
|
.01
|
|
|
|
$
|
1.95
|
|
|
Diluted weighted
average number of common shares outstanding
|
459
|
|
|
|
|
|
|
|
|
459
|
|
|
|
|
|
Six Months Ended
June 30, 2015
|
|
2015
Reported
|
|
Restructuring
Charges (d)
|
|
Other Operating
Items (a)
|
|
2015
Adjusted
|
|
Revenues
|
$
|
6,719
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
6,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
1,307
|
|
|
|
$
|
55
|
|
|
|
$
|
(19)
|
|
|
$
|
1,343
|
|
|
Operating income
margin (c)
|
19
|
%
|
|
|
|
|
|
|
|
20
|
%
|
|
Interest
expense
|
(187)
|
|
|
|
—
|
|
|
|
—
|
|
|
(187)
|
|
|
Interest
income
|
12
|
|
|
|
—
|
|
|
|
—
|
|
|
12
|
|
|
Other items,
net
|
(19)
|
|
|
|
—
|
|
|
|
—
|
|
|
(19)
|
|
|
Earnings before
income taxes
|
1,113
|
|
|
|
55
|
|
|
|
(19)
|
|
|
1,149
|
|
|
Provision for income
taxes
|
(368)
|
|
|
|
(22)
|
|
|
|
16
|
|
|
(374)
|
|
|
Effective income tax
rate
|
33.1
|
%
|
|
|
|
|
|
|
|
32.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(19)
|
|
|
|
—
|
|
|
|
—
|
|
|
(19)
|
|
|
Net
earnings
|
$
|
726
|
|
|
|
$
|
33
|
|
|
|
$
|
(3)
|
|
|
$
|
756
|
|
|
Diluted
EPS
|
$
|
1.45
|
|
|
|
$
|
.07
|
|
|
|
$
|
(.01)
|
|
|
$
|
1.51
|
|
|
Diluted weighted
average number of common shares outstanding
|
500
|
|
|
|
|
|
|
|
|
500
|
|
|
(a) Reflects
gains on the sales of internet businesses in China. 2016 also
includes a multiyear, retroactive impact of a new operating
tax.
(b) Reflects the write-down of an international television
joint venture to its fair value.
(c) Operating income margin is defined as operating income or
Adjusted Operating Income divided by revenues.
(d) Restructuring charges at Entertainment and Local
Broadcasting primarily for the reorganization of certain business
operations and other exit costs.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cbs-corporation-reports-second-quarter-2016-results-300305846.html
SOURCE CBS Corporation