NEW YORK, May 7, 2015
/PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today
reported results for the first quarter of 2015, including its
highest-ever net earnings from continuing operations per diluted
share ("EPS").
"There are tremendous opportunities afforded to companies that
create premium programming, and Les and his team are capitalizing
on all of them," said Sumner Redstone, Executive Chairman, CBS
Corporation. "I am confident they have the strategy to keep CBS at
the top of its game for many years to come."
"CBS turned in another quarter of record EPS, and our investment
in world-class content will lay the foundation to drive future
profits," said Leslie Moonves,
President and Chief Executive Officer, CBS Corporation. "We are set
to close the season with four of the top five new scripted series,
all of which we have ownership in and can monetize in a growing
number of ways. We will also win the season as the most-watched
network in America, with a solid performance across all
demographics at a time when others are facing ratings erosion.
Looking ahead, we will continue to build upon our position of great
strength with a new primetime lineup that we will announce next
week, and we expect to be #1 in the Upfront marketplace as well. At
the same time, our premium content is also driving growth in our
nonadvertising revenue sources. We had terrific first-quarter
results in streaming, both internationally and domestically, as
well as retransmission consent and reverse compensation, which are
steadily making their way toward $2
billion in revenue by 2020 if not before. In addition, our
online news channel, CBSN, and our over-the-top service, CBS All
Access, are exceeding expectations. We have already expanded
CBS All Access to more than half of the country, and we
expect it to be offered to 75% of all households by year's end. As
we continue to find new ways to monetize our content, our
investment in programming will pay off well into the future, and we
remain as committed as ever to returning value to our
shareholders."
First Quarter 2015 Results
Revenues were $3.50 billion for
the first quarter of 2015 compared with $3.57 billion for the same prior-year period. The
quarter was affected by the broadcast of one fewer National
Football League ("NFL") playoff game on the CBS Television Network
and lower advertising revenues at the Company's Local Broadcasting
segment. Content licensing and distribution revenues decreased 4%,
while affiliate and subscription fees increased 11%, driven by
growth in rates.
Operating income was $702 million
for the first quarter of 2015 compared with $791 million for the same prior-year period,
reflecting a higher investment in sports and entertainment
programming.
Net earnings from continuing operations were $394 million for the first quarter of 2015
compared with $462 million for the
same prior-year period as a result of the lower operating income.
EPS was a record for the quarter at $.78 compared with $.77 for the same quarter in 2014. Weighted
average shares outstanding were 506 million in this year's first
quarter, down from 600 million in the prior-year period.
Free Cash Flow, Balance Sheet and Liquidity
For the first quarter of 2015, free cash flow was $400 million compared with $520 million for the same prior-year period.
Operating cash flow from continuing operations was $417 million compared with $548 million for last year's first quarter. This
performance was primarily driven by a higher investment in
programming.
During January 2015, the Company
issued $600 million of 3.50% senior
notes due 2025 and $600 million of
4.60% senior notes due 2045. The Company used the net proceeds for
the repurchase of CBS Corp. Class B Common Stock and repayment of
short-term borrowings, including commercial paper. Also during the
quarter, the Company repurchased 17.2 million shares of its Class B
Common Stock for $1.00 billion, at an
average cost of $58.07 per share.
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 as well as operating income (loss) by segment and depreciation
and amortization by segment for the three months ended
March 31, 2015, and 2014.
|
Three Months
Ended
|
|
March
31,
|
Revenues by
Segment
|
2015
|
|
2014
|
Entertainment
|
$
|
2,261
|
|
|
$
|
2,303
|
|
Cable
Networks
|
539
|
|
|
537
|
|
Publishing
|
145
|
|
|
153
|
|
Local
Broadcasting
|
596
|
|
|
626
|
|
Eliminations
|
(41)
|
|
|
(49)
|
|
Total
Revenues
|
$
|
3,500
|
|
|
$
|
3,570
|
|
|
Three Months
Ended
|
|
March
31,
|
Revenues by
Type
|
2015
|
|
2014
|
Advertising
|
$
|
1,784
|
|
|
$
|
1,873
|
|
Content licensing and
distribution
|
1,028
|
|
|
1,073
|
|
Affiliate and
subscription fees
|
628
|
|
|
567
|
|
Other
|
60
|
|
|
57
|
|
Total
Revenues
|
$
|
3,500
|
|
|
$
|
3,570
|
|
|
Three Months
Ended
|
|
March
31,
|
Operating Income
(Loss)
|
2015
|
|
2014
|
Entertainment
|
$
|
346
|
|
|
$
|
420
|
|
Cable
Networks
|
251
|
|
|
254
|
|
Publishing
|
12
|
|
|
11
|
|
Local
Broadcasting
|
161
|
|
|
179
|
|
Corporate
|
(68)
|
|
|
(73)
|
|
Total Operating
Income
|
$
|
702
|
|
|
$
|
791
|
|
|
Three Months
Ended
|
|
March
31,
|
Depreciation and
Amortization
|
2015
|
|
2014
|
Entertainment
|
$
|
32
|
|
|
$
|
37
|
|
Cable
Networks
|
6
|
|
|
5
|
|
Publishing
|
1
|
|
|
2
|
|
Local
Broadcasting
|
21
|
|
|
21
|
|
Corporate
|
8
|
|
|
6
|
|
Total Depreciation
and Amortization
|
$
|
68
|
|
|
$
|
71
|
|
Entertainment (CBS Television Network, CBS Television
Studios, CBS Global Distribution Group, CBS Interactive, and CBS
Films)
Entertainment revenues were $2.26
billion for the first quarter of 2015 compared with
$2.30 billion for the same prior-year
period, when the CBS Television Network aired one additional NFL
playoff game. Higher affiliate and subscription fee revenues from
growth in rates offset a decline in content licensing and
distribution revenues.
Entertainment operating income for the first quarter of 2015 was
$346 million compared with
$420 million for the same prior-year
period, reflecting a higher investment in sports and entertainment
programming.
Cable Networks (Showtime Networks, CBS Sports Network,
and Smithsonian Networks)
Cable Networks revenues were $539
million for the first quarter of 2015 compared with
$537 million for the same prior-year
period. Higher revenues from growth in affiliate rates and from the
international licensing of Showtime original series offset
lower domestic licensing revenues as the first quarter of 2014
included a significant domestic streaming sale of
Dexter.
Cable Networks operating income for the first quarter of 2015 of
$251 million decreased 1% from
$254 million for the same prior-year
period, reflecting higher operating expenses, mainly from the
timing of theatrical programming.
Publishing (Simon & Schuster)
Publishing revenues for the first quarter of 2015 were
$145 million compared with
$153 million for the same prior-year
period, reflecting lower print book sales. Digital revenues
represented 31% of Publishing's total revenues for the first
quarter of 2015. Bestselling titles for the quarter include the
2014 release, All the Light We Cannot See by Anthony Doerr, and Get What's Yours: The
Secrets to Maxing Out Your Social Security by Laurence J. Kotlikoff, Philip Moeller, and Paul
Solman.
Publishing operating income for the first quarter of 2015 of
$12 million increased from
$11 million in the first quarter of
2014 as the revenue decline was more than offset by lower selling
and inventory costs.
Local Broadcasting (CBS Television Stations and CBS
Radio)
Local Broadcasting revenues of $596
million for the first quarter of 2015 decreased 5% from
$626 million in the same prior-year
period. The decline was due to lower advertising revenues,
particularly from the entertainment and retail industries, and was
partially offset by growth in affiliate and subscription fee
revenues. CBS Television Stations revenues were down 3%, and CBS
Radio revenues decreased 7%.
Local Broadcasting operating income for the first quarter of
2015 declined 10% to $161 million
from $179 million for the same
prior-year period, primarily reflecting lower revenues.
Corporate
Corporate expenses for the first quarter of 2015 decreased 7% to
$68 million from $73 million for the same prior-year period
primarily reflecting lower employee-related expenses.
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 Global Distribution
Group (CBS Studios International and 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 programming; 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 programming; 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 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 news releases and 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
|
|
March
31,
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,500
|
|
|
|
|
$
|
3,570
|
|
|
Operating
income
|
|
702
|
|
|
|
|
791
|
|
|
Interest
expense
|
|
(93)
|
|
|
|
|
(93)
|
|
|
Interest
income
|
|
5
|
|
|
|
|
3
|
|
|
Other items,
net
|
|
(4)
|
|
|
|
|
5
|
|
|
Earnings from
continuing operations before income taxes
|
|
610
|
|
|
|
|
706
|
|
|
Provision for income
taxes
|
|
(203)
|
|
|
|
|
(234)
|
|
|
Equity in loss of
investee companies, net of tax
|
|
(13)
|
|
|
|
|
(10)
|
|
|
Net earnings from
continuing operations
|
|
394
|
|
|
|
|
462
|
|
|
Net earnings from
discontinued operations, net of tax
|
|
—
|
|
|
|
|
6
|
|
|
Net
earnings
|
|
$
|
394
|
|
|
|
|
$
|
468
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings
per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
|
$
|
.79
|
|
|
|
|
$
|
.79
|
|
|
Net earnings from
discontinued operations
|
|
$
|
—
|
|
|
|
|
$
|
.01
|
|
|
Net
earnings
|
|
$
|
.79
|
|
|
|
|
$
|
.80
|
|
|
|
|
|
|
|
|
|
|
Diluted net
earnings per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
|
$
|
.78
|
|
|
|
|
$
|
.77
|
|
|
Net earnings from
discontinued operations
|
|
$
|
—
|
|
|
|
|
$
|
.01
|
|
|
Net
earnings
|
|
$
|
.78
|
|
|
|
|
$
|
.78
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
498
|
|
|
|
|
585
|
|
|
Diluted
|
|
506
|
|
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
Dividends per
common share
|
|
$
|
.15
|
|
|
|
|
$
|
.12
|
|
|
CBS CORPORATION
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited; in
millions)
|
|
|
At
|
|
|
At
|
|
|
March 31,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
331
|
|
|
|
|
$
|
428
|
|
|
Receivables,
net
|
|
3,295
|
|
|
|
|
3,459
|
|
|
Programming and other
inventory
|
|
764
|
|
|
|
|
922
|
|
|
Prepaid expenses and
other current assets
|
|
830
|
|
|
|
|
780
|
|
|
Total current
assets
|
|
5,220
|
|
|
|
|
5,589
|
|
|
Property and
equipment
|
|
3,166
|
|
|
|
|
3,164
|
|
|
Less accumulated
depreciation and amortization
|
|
1,772
|
|
|
|
|
1,731
|
|
|
Net property and
equipment
|
|
1,394
|
|
|
|
|
1,433
|
|
|
Programming and other
inventory
|
|
1,854
|
|
|
|
|
1,817
|
|
|
Goodwill
|
|
6,664
|
|
|
|
|
6,698
|
|
|
Intangible
assets
|
|
6,002
|
|
|
|
|
6,008
|
|
|
Other
assets
|
|
2,622
|
|
|
|
|
2,488
|
|
|
Assets of
discontinued operations
|
|
30
|
|
|
|
|
39
|
|
|
Total
Assets
|
|
$
|
23,786
|
|
|
|
|
$
|
24,072
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
175
|
|
|
|
|
$
|
302
|
|
|
Participants' share
and royalties payable
|
|
929
|
|
|
|
|
999
|
|
|
Program
rights
|
|
449
|
|
|
|
|
404
|
|
|
Commercial
paper
|
|
—
|
|
|
|
|
616
|
|
|
Current portion of
long-term debt
|
|
21
|
|
|
|
|
20
|
|
|
Accrued expenses and
other current liabilities
|
|
1,474
|
|
|
|
|
1,666
|
|
|
Current liabilities
of discontinued operations
|
|
44
|
|
|
|
|
26
|
|
|
Total current
liabilities
|
|
3,092
|
|
|
|
|
4,033
|
|
|
Long-term
debt
|
|
7,693
|
|
|
|
|
6,510
|
|
|
Other
liabilities
|
|
6,510
|
|
|
|
|
6,441
|
|
|
Liabilities of
discontinued operations
|
|
94
|
|
|
|
|
118
|
|
|
Total Stockholders'
Equity
|
|
6,397
|
|
|
|
|
6,970
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
23,786
|
|
|
|
|
$
|
24,072
|
|
|
CBS CORPORATION
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2015
|
|
2014
|
Operating
Activities:
|
|
|
|
Net
earnings
|
$
|
394
|
|
|
$
|
468
|
|
Less: Net earnings
from discontinued operations
|
—
|
|
|
6
|
|
Net earnings from
continuing operations
|
394
|
|
|
462
|
|
Adjustments to
reconcile net earnings from continuing operations to net cash
flow
provided by operating activities from continuing
operations:
|
|
|
|
Depreciation and
amortization
|
68
|
|
|
71
|
|
Stock-based
compensation
|
46
|
|
|
40
|
|
Equity in loss of
investee companies, net of tax and distributions
|
13
|
|
|
12
|
|
Change in assets and
liabilities, net of investing and financing activities
|
(104)
|
|
|
(37)
|
|
Net cash flow
provided by operating activities from continuing
operations
|
417
|
|
|
548
|
|
Net cash flow used
for operating activities from discontinued operations
|
—
|
|
|
(47)
|
|
Net cash flow
provided by operating activities
|
417
|
|
|
501
|
|
Investing
Activities:
|
|
|
|
Capital
expenditures
|
(17)
|
|
|
(28)
|
|
Investments in and
advances to investee companies
|
(39)
|
|
|
(39)
|
|
Proceeds from
dispositions
|
59
|
|
|
6
|
|
Other investing
activities
|
2
|
|
|
5
|
|
Net cash flow
provided by (used for) investing activities from continuing
operations
|
5
|
|
|
(56)
|
|
Net cash flow used
for investing activities from discontinued operations
|
(3)
|
|
|
(9)
|
|
Net cash flow
provided by (used for) investing activities
|
2
|
|
|
(65)
|
|
Financing
Activities:
|
|
|
|
Repayments of
short-term debt borrowings, net
|
(616)
|
|
|
(35)
|
|
Proceeds from
issuance of notes, net
|
1,178
|
|
|
—
|
|
Payment of capital
lease obligations
|
(4)
|
|
|
(4)
|
|
Dividends
|
(80)
|
|
|
(75)
|
|
Purchase of Company
common stock
|
(1,049)
|
|
|
(2,032)
|
|
Payment of payroll
taxes in lieu of issuing shares for stock-based
compensation
|
(82)
|
|
|
(125)
|
|
Proceeds from
exercise of stock options
|
80
|
|
|
76
|
|
Excess tax benefit
from stock-based compensation
|
57
|
|
|
103
|
|
Net cash flow used
for financing activities from continuing operations
|
(516)
|
|
|
(2,092)
|
|
Net cash flow
provided by financing activities from discontinued
operations
|
—
|
|
|
1,570
|
|
Net cash flow used
for financing activities
|
(516)
|
|
|
(522)
|
|
Net decrease in cash
and cash equivalents
|
(97)
|
|
|
(86)
|
|
Cash and cash
equivalents at beginning of period (includes $29 (2014) of
discontinued operations cash)
|
428
|
|
|
397
|
|
Cash and cash
equivalents at end of period (includes $114 (2014) of
discontinued operations cash)
|
$
|
331
|
|
|
$
|
311
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL
INFORMATION
(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
|
|
March
31,
|
|
2015
|
|
2014
|
Net cash flow
provided by operating activities
|
$
|
417
|
|
|
$
|
501
|
|
Capital
expenditures
|
(17)
|
|
|
(28)
|
|
Exclude operating
cash flow from discontinued operations
|
—
|
|
|
(47)
|
|
Free cash
flow
|
$
|
400
|
|
|
$
|
520
|
|
The following table presents a summary of the Company's cash
flows:
|
Three Months
Ended
|
|
March
31,
|
|
2015
|
|
2014
|
Net cash flow
provided by operating activities
|
$
|
417
|
|
|
$
|
501
|
|
Net cash flow
provided by (used for) investing activities
|
$
|
2
|
|
|
$
|
(65)
|
|
Net cash flow used
for financing activities
|
$
|
(516)
|
|
|
$
|
(522)
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cbs-corporation-reports-first-quarter-2015-results-300079811.html
SOURCE CBS Corporation