NEW YORK, Nov. 3, 2015
/PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today
reported results for the third quarter of 2015, including growth in
operating income and record diluted earnings per share ("EPS").
"Thanks to the strength of our great content, CBS continues to
have a winning hand," said Sumner Redstone, Executive Chairman, CBS
Corporation. "Les and his team are capitalizing on all of the
opportunities before us, and I'm confident they are setting the
Company up for continued, long-term growth."
"During the third quarter, we once again grew our profit and EPS
while continuing to increase our investment in content and new
distribution services," said Leslie
Moonves, President and Chief Executive Officer, CBS
Corporation. "I'm particularly pleased with the gains we're seeing
in network advertising, including underlying ad growth in the third
quarter and even better pricing here in the fourth. Plus, having
sold less inventory in the Upfront, we stand to benefit throughout
this television season as we sell our #1 network in a very robust
scatter marketplace. Add to that CBS's broadcast of Super Bowl
50 in February and the upcoming presidential election, you can
see why we feel very good about advertising in 2016. At the same
time, our nonadvertising revenue continues to grow even faster, led
by retransmission consent and reverse compensation, which were up
50% in the third quarter and are well on their way to exceeding
$1 billion next year. Looking ahead,
as viewers increasingly want to access and pay for content in new
ways, we see continued increases in subscription revenue from our
in-house over-the-top services at CBS and Showtime, as well as
those from outside distribution partners. The good news is, no
matter how quickly the industry changes — from big bundles to
'skinny' ones to a la carte — CBS is positioned to succeed."
Third Quarter 2015 Results
Revenues were $3.26 billion for
the third quarter of 2015 compared with $3.37 billion for the same prior-year period,
primarily reflecting the timing of television licensing sales and
decreases in lower-margin revenues, including the nonrenewal of a
sports contract and lower pay-per-view revenues. Meanwhile,
revenues for this year's third quarter benefited from growth in
underlying network advertising, as well as 9% higher affiliate and
subscription fees, including a 50% increase in revenues from
retransmission consent and CBS Television Network-affiliated
television stations.
Operating income of $753 million
for the third quarter of 2015 grew from adjusted operating income
of $746 million for the same
prior-year period. This increase reflects growth in high-margin
affiliate and subscription fee revenues, which were offset by lower
profits from television licensing.
Net earnings from continuing operations of $426 million for the third quarter of 2015 rose
from adjusted net earnings from continuing operations of
$400 million for the same prior-year
period. The increase was driven by higher operating income and
lower losses from foreign exchange rate changes.
Net earnings from continuing operations per diluted share for
the third quarter of 2015 rose to $.88 compared with adjusted net earnings from
continuing operations per diluted share of $.74 for the same quarter in 2014. Weighted
average shares outstanding were 484 million in this year's third
quarter, down from 541 million in the prior-year period, mainly as
a result of the Company's ongoing share repurchase program.
For the third quarter of 2014, adjusted results exclude
restructuring charges of $26 million
($16 million, net of tax), an
impairment charge of $52 million
($74 million, including tax
provision), a pre-tax loss on early extinguishment of debt of
$352 million ($219 million, net of tax), and a discrete tax
item of $19 million. Also for the
third quarter of 2014, reported operating income was $668 million, and reported net earnings from
continuing operations was $72
million, or $.13 per diluted
share. For the third quarter of 2015, no adjustments were made to
reported results.
Net earnings per diluted share of $3.03 for the third quarter of 2014 includes a
gain of $1.56 billion, or
$2.88 per diluted share, recognized
in connection with the split-off of CBS Outdoor Americas Inc.
Free Cash Flow, Balance Sheet and Liquidity
For the third quarter of 2015, free cash flow was an outflow of
$289 million compared with an outflow
of $400 million in the same
prior-year period. For the first nine months of 2015, free cash
flow grew to $546 million compared
with $124 million for the same
prior-year period, and operating cash flow from continuing
operations was $650 million compared
with $236 million in 2014. These
increases reflect premiums paid in 2014 in connection with the
Company's debt refinancing and higher collections from television
licensing arrangements.
During the third quarter of 2015, the Company issued
$800 million of 4.00% senior notes
due 2026 and used the net proceeds from this offering 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 third quarter of 2015, the Company repurchased 10.6
million shares of its Class B Common Stock for $500 million. Year-to-date through
September 30, 2015, the Company repurchased 41.0 million
shares of its Class B Common Stock for $2.30
billion.
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 and
impairment charges by segment ("Segment Operating Income"), and
depreciation and amortization by segment for the three and nine
months ended September 30, 2015, and 2014.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Revenues by
Segment
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Entertainment
|
$
|
1,932
|
|
|
$
|
1,911
|
|
|
$
|
5,978
|
|
|
$
|
6,049
|
|
Cable
Networks
|
526
|
|
|
624
|
|
|
1,680
|
|
|
1,677
|
|
Publishing
|
203
|
|
|
199
|
|
|
547
|
|
|
563
|
|
Local
Broadcasting
|
638
|
|
|
680
|
|
|
1,888
|
|
|
1,971
|
|
Eliminations
|
(42)
|
|
|
(47)
|
|
|
(117)
|
|
|
(135)
|
|
Total
Revenues
|
$
|
3,257
|
|
|
$
|
3,367
|
|
|
$
|
9,976
|
|
|
$
|
10,125
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Revenues by
Type
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Advertising
|
$
|
1,481
|
|
|
$
|
1,548
|
|
|
$
|
4,859
|
|
|
$
|
5,057
|
|
Content licensing and
distribution
|
1,046
|
|
|
1,141
|
|
|
2,889
|
|
|
3,117
|
|
Affiliate and
subscription fees
|
664
|
|
|
608
|
|
|
2,044
|
|
|
1,761
|
|
Other
|
66
|
|
|
70
|
|
|
184
|
|
|
190
|
|
Total
Revenues
|
$
|
3,257
|
|
|
$
|
3,367
|
|
|
$
|
9,976
|
|
|
$
|
10,125
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Segment Operating
Income (Loss)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Entertainment
|
$
|
339
|
|
|
$
|
302
|
|
|
$
|
947
|
|
|
$
|
1,063
|
|
Cable
Networks
|
246
|
|
|
266
|
|
|
717
|
|
|
733
|
|
Publishing
|
43
|
|
|
42
|
|
|
80
|
|
|
76
|
|
Local
Broadcasting
|
174
|
|
|
192
|
|
|
533
|
|
|
586
|
|
Corporate
|
(49)
|
|
|
(56)
|
|
|
(181)
|
|
|
(191)
|
|
Adjusted Operating
Income
|
753
|
|
|
746
|
|
|
2,096
|
|
|
2,267
|
|
Restructuring
charges
|
—
|
|
|
(26)
|
|
|
(55)
|
|
|
(26)
|
|
Impairment
charge
|
—
|
|
|
(52)
|
|
|
—
|
|
|
(52)
|
|
Total Operating
Income
|
$
|
753
|
|
|
$
|
668
|
|
|
$
|
2,041
|
|
|
$
|
2,189
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Depreciation and
Amortization
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Entertainment
|
$
|
31
|
|
|
$
|
33
|
|
|
$
|
95
|
|
|
$
|
105
|
|
Cable
Networks
|
5
|
|
|
6
|
|
|
17
|
|
|
17
|
|
Publishing
|
1
|
|
|
1
|
|
|
4
|
|
|
4
|
|
Local
Broadcasting
|
20
|
|
|
22
|
|
|
60
|
|
|
66
|
|
Corporate
|
8
|
|
|
6
|
|
|
23
|
|
|
18
|
|
Total Depreciation
and Amortization
|
$
|
65
|
|
|
$
|
68
|
|
|
$
|
199
|
|
|
$
|
210
|
|
Entertainment (CBS Television Network, CBS Television
Studios, CBS Global Distribution Group, CBS Interactive, and CBS
Films)
Entertainment revenues rose 1% to $1.93
billion for the third quarter of 2015 compared with
$1.91 billion for the same prior-year
period, primarily reflecting a 55% increase in affiliate and
subscription fees. Network advertising revenues were up 1% despite
the broadcast of fewer sporting events on the CBS Television
Network. Content licensing and distribution revenues decreased 3%,
primarily reflecting the timing of television licensing sales.
Entertainment operating income for the third quarter of 2015 was
$339 million, up 12% from
$302 million for the same prior-year
period, driven by growth in higher margin revenues, which were
partially offset by an increased investment in programming and
digital distribution initiatives.
Cable Networks (Showtime Networks, CBS Sports Network,
and Smithsonian Networks)
Cable Networks revenues for the third quarter of 2015 were
$526 million compared with
$624 million for the same prior-year
period, which included significant domestic streaming sales of
Dexter and Californication and higher revenues from
pay-per-view boxing events. An increase in affiliate and
subscription fees, reflecting growth in rates and revenues from new
digital distribution platforms, partially offset the decline.
Cable Networks operating income for the third quarter of 2015
was $246 million compared with
$266 million for the same prior-year
period, primarily reflecting the lower revenues. The decline was
partially offset by lower programming costs that were mainly
associated with pay-per-view boxing events.
Publishing (Simon & Schuster)
Publishing revenues for the third quarter of 2015 grew 2% to
$203 million from $199 million for the same prior-year period.
Digital revenues represented 25% of Publishing's total revenues for
the third quarter of 2015. Best-selling titles included The
Survivor by Vince Flynn and
Kyle Mills and Plunder and
Deceit by Mark R. Levin, as well
as the continued success of the Pulitzer Prize-winning 2014
release, All the Light We Cannot See by Anthony Doerr.
Publishing operating income of $43
million for the third quarter of 2015 increased 2% from
$42 million in the third quarter of
2014, primarily reflecting the revenue increase.
Local Broadcasting (CBS Television Stations and CBS
Radio)
Local Broadcasting revenues of $638
million for the third quarter of 2015 decreased 6% from
$680 million in the same prior-year
period. CBS Television Stations revenues declined 7% from a year
ago, as a result of the benefit to 2014 from the midterm elections
and the broadcast of fewer sporting events on CBS in 2015. Growth
in affiliate fees partially offset the decline. CBS Radio revenues
decreased 6%, reflecting several noncomparable items, including
fewer stations and lower political revenues, as well as continued
softness in the radio advertising marketplace.
Local Broadcasting operating income for the third quarter of
2015 was down 9% to $174 million from
$192 million for the same prior-year
period, primarily because of the revenue decline, which was
partially offset by the recent cost-cutting measures the Company
put in place.
Corporate
Corporate expenses for the third quarter of 2015 decreased
$7 million to $49 million from $56
million for the same prior-year period, mainly because of
lower 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 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 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
3,257
|
|
|
$
|
3,367
|
|
|
$
|
9,976
|
|
|
$
|
10,125
|
|
Operating
income
|
753
|
|
|
668
|
|
|
2,041
|
|
|
2,189
|
|
Interest
expense
|
(102)
|
|
|
(89)
|
|
|
(289)
|
|
|
(276)
|
|
Interest
income
|
6
|
|
|
4
|
|
|
18
|
|
|
10
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
(352)
|
|
|
—
|
|
|
(352)
|
|
Other items,
net
|
(4)
|
|
|
(21)
|
|
|
(4)
|
|
|
(10)
|
|
Earnings from
continuing operations before income taxes
|
653
|
|
|
210
|
|
|
1,766
|
|
|
1,561
|
|
Provision for income
taxes
|
(211)
|
|
|
(110)
|
|
|
(579)
|
|
|
(561)
|
|
Equity in loss of
investee companies, net of tax
|
(16)
|
|
|
(28)
|
|
|
(35)
|
|
|
(48)
|
|
Net earnings from
continuing operations
|
426
|
|
|
72
|
|
|
1,152
|
|
|
952
|
|
Net earnings from
discontinued operations, net of tax
|
—
|
|
|
1,567
|
|
|
—
|
|
|
1,594
|
|
Net
earnings
|
$
|
426
|
|
|
$
|
1,639
|
|
|
$
|
1,152
|
|
|
$
|
2,546
|
|
|
|
|
|
|
|
|
|
Basic net earnings
per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
$
|
.89
|
|
|
$
|
.14
|
|
|
$
|
2.36
|
|
|
$
|
1.69
|
|
Net earnings from
discontinued operations
|
$
|
—
|
|
|
$
|
2.95
|
|
|
$
|
—
|
|
|
$
|
2.84
|
|
Net
earnings
|
$
|
.89
|
|
|
$
|
3.08
|
|
|
$
|
2.36
|
|
|
$
|
4.53
|
|
|
|
|
|
|
|
|
|
Diluted net
earnings per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
$
|
.88
|
|
|
$
|
.13
|
|
|
$
|
2.33
|
|
|
$
|
1.66
|
|
Net earnings from
discontinued operations
|
$
|
—
|
|
|
$
|
2.90
|
|
|
$
|
—
|
|
|
$
|
2.78
|
|
Net
earnings
|
$
|
.88
|
|
|
$
|
3.03
|
|
|
$
|
2.33
|
|
|
$
|
4.44
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
480
|
|
|
532
|
|
|
489
|
|
|
562
|
|
Diluted
|
484
|
|
|
541
|
|
|
495
|
|
|
574
|
|
|
|
|
|
|
|
|
|
Dividends per
common share
|
$
|
.15
|
|
|
$
|
.15
|
|
|
$
|
.45
|
|
|
$
|
.39
|
|
CBS CORPORATION
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited; in
millions)
|
|
|
At
|
|
|
At
|
|
|
September 30,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
133
|
|
|
|
|
$
|
428
|
|
|
Receivables,
net
|
|
3,397
|
|
|
|
|
3,459
|
|
|
Programming and other
inventory
|
|
1,420
|
|
|
|
|
922
|
|
|
Prepaid expenses and
other current assets
|
|
605
|
|
|
|
|
780
|
|
|
Total current
assets
|
|
5,555
|
|
|
|
|
5,589
|
|
|
Property and
equipment
|
|
3,226
|
|
|
|
|
3,164
|
|
|
Less accumulated
depreciation and amortization
|
|
1,852
|
|
|
|
|
1,731
|
|
|
Net property and
equipment
|
|
1,374
|
|
|
|
|
1,433
|
|
|
Programming and other
inventory
|
|
1,909
|
|
|
|
|
1,817
|
|
|
Goodwill
|
|
6,663
|
|
|
|
|
6,698
|
|
|
Intangible
assets
|
|
5,997
|
|
|
|
|
6,008
|
|
|
Other
assets
|
|
2,741
|
|
|
|
|
2,527
|
|
|
Total
Assets
|
|
$
|
24,239
|
|
|
|
|
$
|
24,072
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
169
|
|
|
|
|
$
|
302
|
|
|
Participants' share
and royalties payable
|
|
926
|
|
|
|
|
999
|
|
|
Program
rights
|
|
377
|
|
|
|
|
404
|
|
|
Commercial
paper
|
|
303
|
|
|
|
|
616
|
|
|
Current portion of
long-term debt
|
|
20
|
|
|
|
|
20
|
|
|
Accrued expenses and
other current liabilities
|
|
1,637
|
|
|
|
|
1,692
|
|
|
Total current
liabilities
|
|
3,432
|
|
|
|
|
4,033
|
|
|
Long-term
debt
|
|
8,476
|
|
|
|
|
6,510
|
|
|
Other
liabilities
|
|
6,364
|
|
|
|
|
6,441
|
|
|
Liabilities of
discontinued operations
|
|
88
|
|
|
|
|
118
|
|
|
Total Stockholders'
Equity
|
|
5,879
|
|
|
|
|
6,970
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
24,239
|
|
|
|
|
$
|
24,072
|
|
|
CBS CORPORATION
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
2015
|
|
2014
|
Operating
Activities:
|
|
|
|
Net
earnings
|
$
|
1,152
|
|
|
$
|
2,546
|
|
Less: Net earnings
from discontinued operations
|
—
|
|
|
1,594
|
|
Net earnings from
continuing operations
|
1,152
|
|
|
952
|
|
Adjustments to
reconcile net earnings from continuing operations to net cash
flow
provided by operating activities from continuing
operations:
|
|
|
|
Depreciation and
amortization
|
199
|
|
|
210
|
|
Impairment
charge
|
—
|
|
|
52
|
|
Stock-based
compensation
|
128
|
|
|
117
|
|
Equity in loss of
investee companies, net of tax and distributions
|
37
|
|
|
56
|
|
Change in assets and
liabilities, net of investing and financing activities
|
(866)
|
|
|
(1,151)
|
|
Net cash flow
provided by operating activities from continuing
operations
|
650
|
|
|
236
|
|
Net cash flow (used
for) provided by operating activities from discontinued
operations
|
(27)
|
|
|
52
|
|
Net cash flow
provided by operating activities
|
623
|
|
|
288
|
|
Investing
Activities:
|
|
|
|
Acquisitions, net of
cash acquired
|
(7)
|
|
|
(27)
|
|
Capital
expenditures
|
(104)
|
|
|
(112)
|
|
Investments in and
advances to investee companies
|
(58)
|
|
|
(68)
|
|
Proceeds from
dispositions
|
75
|
|
|
7
|
|
Other investing
activities
|
(8)
|
|
|
3
|
|
Net cash flow used
for investing activities from continuing operations
|
(102)
|
|
|
(197)
|
|
Net cash flow used
for investing activities from discontinued operations
|
(4)
|
|
|
(271)
|
|
Net cash flow used
for investing activities
|
(106)
|
|
|
(468)
|
|
Financing
Activities:
|
|
|
|
Repayments of
short-term debt borrowings, net
|
(313)
|
|
|
(44)
|
|
Proceeds from
issuance of notes, net
|
1,959
|
|
|
1,729
|
|
Repayments of notes
and debentures
|
—
|
|
|
(1,152)
|
|
Payment of capital
lease obligations
|
(13)
|
|
|
(13)
|
|
Dividends
|
(228)
|
|
|
(214)
|
|
Purchase of Company
common stock
|
(2,345)
|
|
|
(2,830)
|
|
Payment of payroll
taxes in lieu of issuing shares for stock-based
compensation
|
(96)
|
|
|
(146)
|
|
Proceeds from
exercise of stock options
|
137
|
|
|
237
|
|
Excess tax benefit
from stock-based compensation
|
87
|
|
|
227
|
|
Net cash flow used
for financing activities from continuing operations
|
(812)
|
|
|
(2,206)
|
|
Net cash flow
provided by financing activities from discontinued
operations
|
—
|
|
|
2,167
|
|
Net cash flow used
for financing activities
|
(812)
|
|
|
(39)
|
|
Net decrease in cash
and cash equivalents
|
(295)
|
|
|
(219)
|
|
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
|
$
|
133
|
|
|
$
|
178
|
|
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 nine months ended September
30, 2015 and 2014 and the three months ended September 30, 2014. The Company defines "Adjusted
Operating Income" as operating income excluding restructuring
charges and impairment charges, 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 FASB 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 because they provide a link
between profitability and operating cash flow. 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.
Because Adjusted Operating Income is not a measure of
performance 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 are 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. In addition,
the following tables also provide reconciliations of Segment
Operating Income for each segment to such segment's operating
income (loss).
CBS CORPORATION
AND SUBSIDIARIES
|
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
|
(Unaudited; in
millions)
|
|
|
Three Months Ended
September 30, 2014
|
|
Adjusted Operating
Income (Loss)
|
|
Restructuring
Charges
|
|
Impairment
Charge
|
|
Operating Income
(Loss)
|
Entertainment
|
$
|
302
|
|
|
$
|
(8)
|
|
|
$
|
—
|
|
|
$
|
294
|
|
Cable
Networks
|
266
|
|
|
—
|
|
|
—
|
|
|
266
|
|
Publishing
|
42
|
|
|
(1)
|
|
|
—
|
|
|
41
|
|
Local
Broadcasting
|
192
|
|
|
(14)
|
|
|
(52)
|
|
|
126
|
|
Corporate
|
(56)
|
|
|
(3)
|
|
|
—
|
|
|
(59)
|
|
Total
|
$
|
746
|
|
|
$
|
(26)
|
|
|
$
|
(52)
|
|
|
$
|
668
|
|
Margin
(a)
|
22
|
%
|
|
|
|
|
|
20
|
%
|
|
|
|
Three Months Ended
September 30,
|
|
2015
|
|
2014
|
Adjusted Operating
Income
|
$
|
753
|
|
|
$
|
746
|
|
Restructuring
charges
|
—
|
|
|
(26)
|
|
Impairment
charge
|
—
|
|
|
(52)
|
|
Operating
income
|
753
|
|
|
668
|
|
Interest
expense
|
(102)
|
|
|
(89)
|
|
Interest
income
|
6
|
|
|
4
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
(352)
|
|
Other items,
net
|
(4)
|
|
|
(21)
|
|
Earnings from
continuing operations before income taxes
|
653
|
|
|
210
|
|
Provision for income
taxes
|
(211)
|
|
|
(110)
|
|
Equity in loss of
investee companies, net of tax
|
(16)
|
|
|
(28)
|
|
Net earnings from
continuing operations
|
426
|
|
|
72
|
|
Net earnings from
discontinued operations
|
—
|
|
|
1,567
|
|
Net
earnings
|
$
|
426
|
|
|
$
|
1,639
|
|
|
|
(a)
|
Margin is defined as
Adjusted Operating Income or operating income, as applicable,
divided by revenues.
|
CBS CORPORATION
AND SUBSIDIARIES
|
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
|
(Unaudited; in
millions)
|
|
|
Nine Months Ended
September 30, 2015
|
|
Adjusted Operating
Income (Loss)
|
|
Restructuring
Charges
|
|
Operating Income
(Loss)
|
Entertainment
|
$
|
947
|
|
|
$
|
(12)
|
|
|
$
|
935
|
|
Cable
Networks
|
717
|
|
|
—
|
|
|
717
|
|
Publishing
|
80
|
|
|
—
|
|
|
80
|
|
Local
Broadcasting
|
533
|
|
|
(43)
|
|
|
490
|
|
Corporate
|
(181)
|
|
|
—
|
|
|
(181)
|
|
Total
|
$
|
2,096
|
|
|
$
|
(55)
|
|
|
$
|
2,041
|
|
Margin
(a)
|
21
|
%
|
|
|
|
20
|
%
|
|
|
|
Nine Months Ended
September 30, 2014
|
|
Adjusted Operating
Income (Loss)
|
|
Restructuring
Charges
|
|
Impairment
Charge
|
|
Operating Income
(Loss)
|
Entertainment
|
$
|
1,063
|
|
|
$
|
(8)
|
|
|
$
|
—
|
|
|
$
|
1,055
|
|
Cable
Networks
|
733
|
|
|
—
|
|
|
—
|
|
|
733
|
|
Publishing
|
76
|
|
|
(1)
|
|
|
—
|
|
|
75
|
|
Local
Broadcasting
|
586
|
|
|
(14)
|
|
|
(52)
|
|
|
520
|
|
Corporate
|
(191)
|
|
|
(3)
|
|
|
—
|
|
|
(194)
|
|
Total
|
$
|
2,267
|
|
|
$
|
(26)
|
|
|
$
|
(52)
|
|
|
$
|
2,189
|
|
Margin
(a)
|
22
|
%
|
|
|
|
|
|
22
|
%
|
|
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
Adjusted Operating
Income
|
$
|
2,096
|
|
|
$
|
2,267
|
|
Restructuring
charges
|
(55)
|
|
|
(26)
|
|
Impairment
charge
|
—
|
|
|
(52)
|
|
Operating
income
|
2,041
|
|
|
2,189
|
|
Interest
expense
|
(289)
|
|
|
(276)
|
|
Interest
income
|
18
|
|
|
10
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
(352)
|
|
Other items,
net
|
(4)
|
|
|
(10)
|
|
Earnings from
continuing operations before income taxes
|
1,766
|
|
|
1,561
|
|
Provision for income
taxes
|
(579)
|
|
|
(561)
|
|
Equity in loss of
investee companies, net of tax
|
(35)
|
|
|
(48)
|
|
Net earnings from
continuing operations
|
1,152
|
|
|
952
|
|
Net earnings from
discontinued operations
|
—
|
|
|
1,594
|
|
Net
earnings
|
$
|
1,152
|
|
|
$
|
2,546
|
|
|
|
(a)
|
Margin is defined as
Adjusted Operating Income or operating income, as applicable,
divided by revenues.
|
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 (used for) operating activities to free
cash flow:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net cash flow (used
for) provided by operating activities
|
$
|
(240)
|
|
|
$
|
(336)
|
|
|
$
|
623
|
|
|
$
|
288
|
|
Capital
expenditures
|
(58)
|
|
|
(43)
|
|
|
(104)
|
|
|
(112)
|
|
Exclude operating
cash flow from discontinued operations
|
(9)
|
|
|
21
|
|
|
(27)
|
|
|
52
|
|
Free cash
flow
|
$
|
(289)
|
|
|
$
|
(400)
|
|
|
$
|
546
|
|
|
$
|
124
|
|
The following table presents a summary of the Company's cash
flows:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net cash flow (used
for) provided by operating activities
|
$
|
(240)
|
|
|
$
|
(336)
|
|
|
$
|
623
|
|
|
$
|
288
|
|
Net cash flow used
for investing activities
|
$
|
(64)
|
|
|
$
|
(319)
|
|
|
$
|
(106)
|
|
|
$
|
(468)
|
|
Net cash flow
provided by (used for) financing activities
|
$
|
117
|
|
|
$
|
349
|
|
|
$
|
(812)
|
|
|
$
|
(39)
|
|
CBS CORPORATION
AND SUBSIDIARIES
|
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
|
(Unaudited; in
millions, except per share amounts)
|
|
2015 and 2014
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 current
underlying performance of the Company, and adjusting each period's
results on the same basis makes it easier to compare the Company's
year-over-year results.
|
|
|
Nine Months Ended
September 30, 2015
|
|
2015
Reported
|
|
Restructuring
Charges (a)
|
|
2015
Adjusted
|
Revenues
|
$
|
9,976
|
|
|
$
|
—
|
|
|
$
|
9,976
|
|
|
|
|
|
|
|
Operating
income
|
2,041
|
|
|
55
|
|
|
2,096
|
|
Operating income
margin (b)
|
20
|
%
|
|
|
|
21
|
%
|
Interest
expense
|
(289)
|
|
|
—
|
|
|
(289)
|
|
Interest
income
|
18
|
|
|
—
|
|
|
18
|
|
Other items,
net
|
(4)
|
|
|
—
|
|
|
(4)
|
|
Earnings from
continuing operations before income taxes
|
1,766
|
|
|
55
|
|
|
1,821
|
|
Provision for income
taxes
|
(579)
|
|
|
(22)
|
|
|
(601)
|
|
Effective income tax
rate
|
32.8
|
%
|
|
|
|
33.0
|
%
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(35)
|
|
|
—
|
|
|
(35)
|
|
Net earnings from
continuing operations
|
$
|
1,152
|
|
|
$
|
33
|
|
|
$
|
1,185
|
|
Diluted EPS from
continuing operations
|
$
|
2.33
|
|
|
$
|
.07
|
|
|
$
|
2.39
|
|
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).
|
|
|
Three Months Ended
September 30, 2014
|
|
2014
Reported
|
|
Restructuring
Charges (a)
|
|
Impairment Charge
(b)
|
|
Extinguishment of
Debt
|
|
Tax Item
(c)
|
|
2014
Adjusted
|
Revenues
|
$
|
3,367
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
668
|
|
|
26
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
746
|
|
Operating income
margin (d)
|
20
|
%
|
|
|
|
|
|
|
|
|
|
22
|
%
|
Interest
expense
|
(89)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89)
|
|
Interest
income
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Loss on early
extinguishment of debt
|
(352)
|
|
|
—
|
|
|
—
|
|
|
352
|
|
|
—
|
|
|
—
|
|
Other items,
net
|
(21)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21)
|
|
Earnings from
continuing operations before income taxes
|
210
|
|
|
26
|
|
|
52
|
|
|
352
|
|
|
—
|
|
|
640
|
|
Provision for income
taxes
|
(110)
|
|
|
(10)
|
|
|
22
|
|
|
(133)
|
|
|
19
|
|
|
(212)
|
|
Effective income tax
rate
|
52.4
|
%
|
|
|
|
|
|
|
|
|
|
33.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(28)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28)
|
|
Net earnings from
continuing operations
|
$
|
72
|
|
|
$
|
16
|
|
|
$
|
74
|
|
|
$
|
219
|
|
|
$
|
19
|
|
|
$
|
400
|
|
Diluted EPS from
continuing operations
|
$
|
.13
|
|
|
$
|
.03
|
|
|
$
|
.14
|
|
|
$
|
.40
|
|
|
$
|
.04
|
|
|
$
|
.74
|
|
Diluted weighted
average number of common shares outstanding
|
541
|
|
|
|
|
|
|
|
|
|
|
541
|
|
|
|
|
Nine Months Ended
September 30, 2014
|
|
2014
Reported
|
|
Restructuring
Charges (a)
|
|
Impairment Charge
(b)
|
|
Extinguishment of
Debt
|
|
Tax Item
(c)
|
|
2014
Adjusted
|
Revenues
|
$
|
10,125
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
2,189
|
|
|
26
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
2,267
|
|
Operating income
margin (d)
|
22
|
%
|
|
|
|
|
|
|
|
|
|
22
|
%
|
Interest
expense
|
(276)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(276)
|
|
Interest
income
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
Loss on early
extinguishment of debt
|
(352)
|
|
|
—
|
|
|
—
|
|
|
352
|
|
|
—
|
|
|
—
|
|
Other items,
net
|
(10)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
Earnings from
continuing operations before income taxes
|
1,561
|
|
|
26
|
|
|
52
|
|
|
352
|
|
|
—
|
|
|
1,991
|
|
Provision for income
taxes
|
(561)
|
|
|
(10)
|
|
|
22
|
|
|
(133)
|
|
|
19
|
|
|
(663)
|
|
Effective income tax
rate
|
35.9
|
%
|
|
|
|
|
|
|
|
|
|
33.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(48)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48)
|
|
Net earnings from
continuing operations
|
$
|
952
|
|
|
$
|
16
|
|
|
$
|
74
|
|
|
$
|
219
|
|
|
$
|
19
|
|
|
$
|
1,280
|
|
Diluted EPS from
continuing operations
|
$
|
1.66
|
|
|
$
|
.03
|
|
|
$
|
.13
|
|
|
$
|
.38
|
|
|
$
|
.03
|
|
|
$
|
2.23
|
|
Diluted weighted
average number of common shares outstanding
|
574
|
|
|
|
|
|
|
|
|
|
|
574
|
|
|
|
(a)
|
Restructuring charges
at Entertainment, Publishing, Local Broadcasting and Corporate
primarily for the reorganization of certain business operations and
other exit costs.
|
(b)
|
Reflects a noncash
impairment charge to reduce goodwill at Local Broadcasting in
connection with a radio station swap.
|
(c)
|
Reflects the
establishment of a tax reserve for the retroactive impact of an
uncertain tax position in a foreign jurisdiction.
|
(d)
|
Operating Income
margin is defined as Operating Income or Adjusted Operating Income
divided by revenues.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cbs-corporation-reports-third-quarter-2015-results-300171487.html
SOURCE CBS Corporation