NEW YORK, Nov. 3, 2016 /PRNewswire/ -- CBS Corporation
(NYSE: CBS.A and CBS) today reported results for the third quarter
of 2016, including the highest quarterly diluted earnings per share
("EPS") in the Company's history and a third quarter record for
revenues and operating income.
"CBS is clearly knocking the cover off the ball, including
revenue and profit growth across every one of our operating
segments," said Leslie Moonves,
Chairman and Chief Executive Officer, CBS Corporation. "Our premium
content continues to be the driving force behind our success,
starting with the CBS Television Network, which kicked off another
terrific season as the #1 network, with the #1 new drama,
Bull, and the #1 new comedy, Kevin Can Wait. With ownership in all of our
new fall shows, we have once again positioned our Company to
monetize additional content across all platforms for years to come.
This includes content licensing and distribution, which benefited
from a 40% increase in streaming revenue during the third quarter.
It also includes affiliate and subscription fees, where
retransmission consent and reverse compensation grew 32% during the
quarter, and where we continue to see rapid growth in our
subscription streaming services, CBS All Access and Showtime
OTT. Meanwhile, advertising remains strong and is accelerating here
in the fourth quarter as our new upfront pricing kicks in and
political spending is ramping up nicely. Looking ahead to the
separation of our radio business, we see additional opportunities
to return value to shareholders and invest in our core content
business. So we feel extremely good about our future, and we are
confident we have set ourselves up to succeed under any
scenario."
Third Quarter 2016 Results
Revenues for the third quarter of 2016 increased 4% to
$3.40 billion from $3.26 billion for the same prior-year period. The
growth was led by a 32% increase in retransmission revenues and
fees from CBS Television Network affiliated stations as well as
growth from digital distribution platforms. Content licensing and
distribution revenues increased 6%, driven by growth in domestic
television licensing sales. Advertising revenues during the third
quarter were affected by 10 hours of primetime preemptions for
Democratic and Republican conventions and the first Presidential
debate as well as competition from the 2016 Summer Olympics, while
advertising benefited from higher political spending.
Operating income for the third quarter of 2016 increased 6% to
$798 million from $753 million for the same prior-year period,
reflecting the higher revenues, which were partially offset by
increased investment in programming.
Net earnings from continuing operations of $514 million for the third quarter of 2016 rose
21% from $426 million for the same
quarter in 2015, and adjusted net earnings from continuing
operations increased 10% to $467
million, driven by the higher operating income.
EPS from continuing operations for the third quarter of 2016
grew 31% to $1.15 from $.88 for the same quarter in 2015, and adjusted
EPS increased 19% to $1.05. Weighted
average shares outstanding were 446 million in the third quarter of
2016, down from 484 million in the prior-year period, mainly as a
result of the Company's ongoing share repurchase program.
Adjusted results for the third quarter of 2016 excluded a
one-time tax benefit of $47 million
associated with a multiyear adjustment to a tax deduction, which
was approved by the Internal Revenue Service ("IRS") during the
third quarter of 2016. No adjustments were made to reported results
for the third quarter of 2015.
Free Cash Flow, Balance Sheet and Liquidity
For the third quarter of 2016, operating cash flow from
continuing operations was an inflow of $55
million compared with an outflow of $231 million in the same prior-year period, and
for the first nine months of the year, operating cash flow from
continuing operations was $1.31
billion compared with $650
million in 2015. For the third quarter of 2016, free cash
flow was an inflow of $9 million
compared with an outflow of $289
million for the same prior-year period, and for the first
nine months of 2016, free cash flow of $1.18
billion increased from $546
million in 2015. The increases for the nine-month period
were driven by growth in affiliate and subscription fees and higher
advertising revenues, including from the broadcast of Super Bowl
50 on CBS, partially offset by increased investment in
content.
During the third quarter of 2016, the Company issued
$700 million of 2.90% senior notes
due 2027 and used 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 third quarter of 2016, the Company repurchased 9.5
million shares of its Class B Common Stock for $500 million. For the first nine months of 2016,
the Company repurchased 29.0 million shares of its Class B Common
Stock for $1.50 billion, at an
average cost of $51.76 per share.
Radio Separation
In connection with the Company's previously announced plans to
separate its radio business, CBS Radio Inc. ("CBS Radio") filed a
preliminary registration statement with the Securities and Exchange
Commission during the third quarter of 2016 for the proposed
initial public offering of its common stock. In October 2016, CBS Radio borrowed $1.46 billion through a $1.06 billion senior secured term loan due 2023
and the issuance of $400 million of
7.25% senior unsecured notes due 2024 through a private placement
("CBS Radio Borrowings"). The term loan bears interest at a rate
equal to 3.50% plus the greater of LIBOR and 1.00%. The weighted
average interest rate on these borrowings is 5.25% as of
November 3, 2016. Also in
October 2016, CBS Radio entered into
a $250 million senior secured
revolving credit facility. As of November 3,
2016, there were no outstanding borrowings under the
revolving credit facility. The CBS Radio Borrowings are guaranteed
by certain subsidiaries of CBS Radio. The Company does not
guarantee, or otherwise provide credit support for, the CBS Radio
Borrowings or the revolving credit facility. The net debt proceeds
will be primarily used by CBS Corporation to repurchase shares of
its Class B Common Stock, with the remainder to be used for general
corporate purposes and ongoing cash needs.
Segment Presentation
In preparation for the planned separation of CBS Radio, the
Company changed the manner in which it manages its television and
radio operations during the third quarter of 2016. Accordingly, the
Company's previously reported operating segment, Local
Broadcasting, has been separated into two operating segments, Local
Media and Radio. In connection with this new segment presentation,
the presentation of intercompany revenues has been revised,
including station affiliation fees paid by Local Media to the CBS
Television Network. Prior period results have been reclassified to
conform to this presentation.
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 nine months ended September 30,
2016, and 2015.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Revenues by
Segment
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Entertainment
|
$
|
1,949
|
|
|
$
|
1,932
|
|
|
$
|
6,483
|
|
|
$
|
5,978
|
|
Cable
Networks
|
598
|
|
|
526
|
|
|
1,659
|
|
|
1,680
|
|
Publishing
|
226
|
|
|
203
|
|
|
558
|
|
|
547
|
|
Local
Media
|
409
|
|
|
376
|
|
|
1,253
|
|
|
1,138
|
|
Radio
|
319
|
|
|
318
|
|
|
898
|
|
|
907
|
|
Corporate/Eliminations
|
(105)
|
|
|
(98)
|
|
|
(319)
|
|
|
(274)
|
|
Total
Revenues
|
$
|
3,396
|
|
|
$
|
3,257
|
|
|
$
|
10,532
|
|
|
$
|
9,976
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Revenues by
Type
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Advertising
|
$
|
1,469
|
|
|
$
|
1,481
|
|
|
$
|
5,363
|
|
|
$
|
4,859
|
|
Content licensing and
distribution
|
1,108
|
|
|
1,046
|
|
|
2,780
|
|
|
2,889
|
|
Affiliate and
subscription fees
|
753
|
|
|
664
|
|
|
2,208
|
|
|
2,044
|
|
Other
|
66
|
|
|
66
|
|
|
181
|
|
|
184
|
|
Total
Revenues
|
$
|
3,396
|
|
|
$
|
3,257
|
|
|
$
|
10,532
|
|
|
$
|
9,976
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Segment Operating
Income (Loss)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Entertainment
|
$
|
348
|
|
|
$
|
339
|
|
|
$
|
1,148
|
|
|
$
|
947
|
|
Cable
Networks
|
285
|
|
|
246
|
|
|
740
|
|
|
717
|
|
Publishing
|
44
|
|
|
43
|
|
|
83
|
|
|
80
|
|
Local
Media
|
122
|
|
|
101
|
|
|
402
|
|
|
338
|
|
Radio
|
77
|
|
|
73
|
|
|
215
|
|
|
195
|
|
Corporate
|
(78)
|
|
|
(49)
|
|
|
(245)
|
|
|
(181)
|
|
Adjusted Operating
Income
|
798
|
|
|
753
|
|
|
2,343
|
|
|
2,096
|
|
Restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
(55)
|
|
Other operating
items, net
|
—
|
|
|
—
|
|
|
9
|
|
|
19
|
|
Total Operating
Income
|
$
|
798
|
|
|
$
|
753
|
|
|
$
|
2,352
|
|
|
$
|
2,060
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
Depreciation and
Amortization
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Entertainment
|
$
|
28
|
|
|
$
|
31
|
|
|
$
|
88
|
|
|
$
|
95
|
|
Cable
Networks
|
6
|
|
|
5
|
|
|
17
|
|
|
17
|
|
Publishing
|
1
|
|
|
1
|
|
|
4
|
|
|
4
|
|
Local
Media
|
11
|
|
|
12
|
|
|
33
|
|
|
37
|
|
Radio
|
7
|
|
|
8
|
|
|
22
|
|
|
23
|
|
Corporate
|
8
|
|
|
8
|
|
|
24
|
|
|
23
|
|
Total Depreciation
and Amortization
|
$
|
61
|
|
|
$
|
65
|
|
|
$
|
188
|
|
|
$
|
199
|
|
Entertainment (CBS Television Network, CBS Television
Studios, CBS Studios International, CBS Television Distribution,
CBS Interactive, and CBS Films)
Entertainment revenues for the third quarter of 2016 were
$1.95 billion, up 1% from
$1.93 billion for the same prior-year
period. This increase was led by 39% growth in affiliate and
subscription fees, driven by higher station affiliation fees and
subscription growth for CBS All Access. Due to 10 hours of
primetime preemptions for Democratic and Republican conventions and
the first Presidential debate as well as competition from the 2016
Summer Olympics, network advertising revenues were down 2% for the
third quarter. Content licensing and distributions revenues were 3%
lower than last year's third quarter, which included the initial
domestic availability of Elementary. Growth in domestic
streaming sales partly offset this impact.
Entertainment operating income for the third quarter of 2016
grew 3% to $348 million from
$339 million for the same prior-year
period, driven by the increase in revenues.
Cable Networks (Showtime Networks, CBS Sports Network,
and Smithsonian Networks)
Cable Networks revenues grew 14% to $598
million for the third quarter of 2016 from $526 million for the same prior-year period. The
increase was driven by higher revenues from the domestic licensing
of Showtime original series, including Penny
Dreadful, and growth from Showtime Networks' over-the-top
streaming service.
Cable Networks operating income for the third quarter of 2016
increased 16% to $285 million from
$246 million for the same prior-year
period, reflecting the revenue growth, which was partly offset by
increased investment in original series.
Publishing (Simon & Schuster)
Publishing revenues increased 11% to $226
million for the third quarter of 2016 from $203 million for the same prior-year period. The
increase was led by growth in both print and digital book sales,
including the bestselling titles Born to Run by Bruce Springsteen and The Girl with the Lower
Back Tattoo by Amy Schumer.
Digital revenues represented 23% of Publishing's total revenues for
the third quarter of 2016.
Publishing operating income increased to $44 million for the third quarter of 2016 from
$43 million for the same prior-year
period, as the increase in revenues was largely offset by higher
production and selling costs.
Local Media (CBS Television Stations)
Local Media revenues rose 9% to $409
million for the third quarter of 2016 from $376 million for the same prior-year period,
reflecting growth in retransmission revenues and higher political
advertising sales from upcoming federal and state elections.
Local Media operating income increased 21% to $122 million for the third quarter of 2016 from
$101 million for the same prior-year
period, primarily reflecting the higher revenues.
Radio (CBS Radio)
Radio revenues were $319 million
for the third quarter of 2016 compared with $318 million for the same prior-year period,
reflecting higher national advertising sales, which were offset by
lower local advertising sales.
Radio operating income grew 5% to $77
million for the third quarter of 2016 from $73 million for the same prior-year period. The
increase mainly reflects lower expenses resulting from
restructuring activities put in place during 2015.
Corporate
Corporate expenses for the third quarter of 2016 increased
$29 million to $78 million from $49
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; effects relating to the Company
exploring, entering into, and/or consummating any potential
transaction with Viacom Inc.; 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
3,396
|
|
|
$
|
3,257
|
|
|
$
|
10,532
|
|
|
$
|
9,976
|
|
Operating
income
|
798
|
|
|
753
|
|
|
2,352
|
|
|
2,060
|
|
Interest
expense
|
(104)
|
|
|
(102)
|
|
|
(304)
|
|
|
(289)
|
|
Interest
income
|
7
|
|
|
6
|
|
|
22
|
|
|
18
|
|
Other items,
net
|
2
|
|
|
(4)
|
|
|
(5)
|
|
|
(23)
|
|
Earnings from
continuing operations before income taxes
|
703
|
|
|
653
|
|
|
2,065
|
|
|
1,766
|
|
Provision for income
taxes
|
(176)
|
|
|
(211)
|
|
|
(612)
|
|
|
(579)
|
|
Equity in loss of
investee companies, net of tax
|
(13)
|
|
|
(16)
|
|
|
(43)
|
|
|
(35)
|
|
Net earnings from
continuing operations
|
514
|
|
|
426
|
|
|
1,410
|
|
|
1,152
|
|
Loss from
discontinued operations
|
(36)
|
|
|
—
|
|
|
(36)
|
|
|
—
|
|
Net
earnings
|
$
|
478
|
|
|
$
|
426
|
|
|
$
|
1,374
|
|
|
$
|
1,152
|
|
|
|
|
|
|
|
|
|
Basic net earnings
(loss) per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
$
|
1.16
|
|
|
$
|
.89
|
|
|
$
|
3.13
|
|
|
$
|
2.36
|
|
Loss from
discontinued operations
|
$
|
(.08)
|
|
|
$
|
—
|
|
|
$
|
(.08)
|
|
|
$
|
—
|
|
Net
earnings
|
$
|
1.08
|
|
|
$
|
.89
|
|
|
$
|
3.05
|
|
|
$
|
2.36
|
|
|
|
|
|
|
|
|
|
Diluted net
earnings (loss) per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
$
|
1.15
|
|
|
$
|
.88
|
|
|
$
|
3.10
|
|
|
$
|
2.33
|
|
Loss from
discontinued operations
|
$
|
(.08)
|
|
|
$
|
—
|
|
|
$
|
(.08)
|
|
|
$
|
—
|
|
Net
earnings
|
$
|
1.07
|
|
|
$
|
.88
|
|
|
$
|
3.02
|
|
|
$
|
2.33
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
442
|
|
|
480
|
|
|
451
|
|
|
489
|
|
Diluted
|
446
|
|
|
484
|
|
|
455
|
|
|
495
|
|
|
|
|
|
|
|
|
|
Dividends per
common share
|
$
|
.18
|
|
|
$
|
.15
|
|
|
$
|
.48
|
|
|
$
|
.45
|
|
CBS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Unaudited; in
millions)
|
|
|
At
|
|
|
At
|
|
|
September 30,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
179
|
|
|
|
|
$
|
323
|
|
|
Receivables,
net
|
|
3,348
|
|
|
|
|
3,628
|
|
|
Programming and other
inventory
|
|
1,459
|
|
|
|
|
1,271
|
|
|
Prepaid expenses and
other current assets
|
|
471
|
|
|
|
|
525
|
|
|
Total current
assets
|
|
5,457
|
|
|
|
|
5,747
|
|
|
Property and
equipment
|
|
3,263
|
|
|
|
|
3,243
|
|
|
Less accumulated
depreciation and amortization
|
|
1,918
|
|
|
|
|
1,838
|
|
|
Net property and
equipment
|
|
1,345
|
|
|
|
|
1,405
|
|
|
Programming and other
inventory
|
|
2,237
|
|
|
|
|
1,957
|
|
|
Goodwill
|
|
6,531
|
|
|
|
|
6,481
|
|
|
Intangible
assets
|
|
5,499
|
|
|
|
|
5,514
|
|
|
Other
assets
|
|
2,779
|
|
|
|
|
2,661
|
|
|
Total
Assets
|
|
$
|
23,848
|
|
|
|
|
$
|
23,765
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
153
|
|
|
|
|
$
|
192
|
|
|
Participants' share
and royalties payable
|
|
979
|
|
|
|
|
1,013
|
|
|
Program
rights
|
|
373
|
|
|
|
|
374
|
|
|
Commercial
paper
|
|
33
|
|
|
|
|
—
|
|
|
Current portion of
long-term debt
|
|
22
|
|
|
|
|
222
|
|
|
Accrued expenses and
other current liabilities
|
|
1,538
|
|
|
|
|
1,759
|
|
|
Total current
liabilities
|
|
3,098
|
|
|
|
|
3,560
|
|
|
Long-term
debt
|
|
8,902
|
|
|
|
|
8,226
|
|
|
Other
liabilities
|
|
6,433
|
|
|
|
|
6,344
|
|
|
Liabilities of
discontinued operations
|
|
67
|
|
|
|
|
72
|
|
|
Total Stockholders'
Equity
|
|
5,348
|
|
|
|
|
5,563
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
23,848
|
|
|
|
|
$
|
23,765
|
|
|
CBS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited; in
millions)
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
2016
|
|
2015
|
Operating
Activities:
|
|
|
|
Net
earnings
|
$
|
1,374
|
|
|
$
|
1,152
|
|
Less: Loss from
discontinued operations
|
(36)
|
|
|
—
|
|
Net earnings from
continuing operations
|
1,410
|
|
|
1,152
|
|
Adjustments to
reconcile net earnings from continuing operations to net cash flow
provided
by
operating activities from continuing operations:
|
|
|
|
Depreciation and
amortization
|
188
|
|
|
199
|
|
Stock-based
compensation
|
134
|
|
|
128
|
|
Equity in loss of
investee companies, net of tax and distributions
|
48
|
|
|
37
|
|
Change in assets and
liabilities, net of investing and financing activities
|
(472)
|
|
|
(866)
|
|
Net cash flow
provided by operating activities from continuing
operations
|
1,308
|
|
|
650
|
|
Net cash flow used
for operating activities from discontinued operations
|
(2)
|
|
|
(27)
|
|
Net cash flow
provided by operating activities
|
1,306
|
|
|
623
|
|
Investing
Activities:
|
|
|
|
Acquisitions
|
(51)
|
|
|
(7)
|
|
Capital
expenditures
|
(125)
|
|
|
(104)
|
|
Investments in and
advances to investee companies
|
(44)
|
|
|
(58)
|
|
Proceeds from
dispositions
|
28
|
|
|
75
|
|
Other investing
activities
|
11
|
|
|
(8)
|
|
Net cash flow used
for investing activities from continuing operations
|
(181)
|
|
|
(102)
|
|
Net cash flow used
for investing activities from discontinued operations
|
—
|
|
|
(4)
|
|
Net cash flow used
for investing activities
|
(181)
|
|
|
(106)
|
|
Financing
Activities:
|
|
|
|
Proceeds from
(repayments of) short-term debt borrowings, net
|
33
|
|
|
(313)
|
|
Proceeds from
issuance of senior notes
|
685
|
|
|
1,959
|
|
Repayment of senior
debentures
|
(199)
|
|
|
—
|
|
Payment of capital
lease obligations
|
(13)
|
|
|
(13)
|
|
Dividends
|
(209)
|
|
|
(228)
|
|
Purchase of Company
common stock
|
(1,534)
|
|
|
(2,345)
|
|
Payment of payroll
taxes in lieu of issuing shares for stock-based
compensation
|
(57)
|
|
|
(96)
|
|
Proceeds from
exercise of stock options
|
13
|
|
|
137
|
|
Excess tax benefit
from stock-based compensation
|
13
|
|
|
87
|
|
Other financing
activities
|
(1)
|
|
|
—
|
|
Net cash flow used
for financing activities
|
(1,269)
|
|
|
(812)
|
|
Net decrease in cash
and cash equivalents
|
(144)
|
|
|
(295)
|
|
Cash and cash
equivalents at beginning of period
|
323
|
|
|
428
|
|
Cash and cash
equivalents at end of period
|
$
|
179
|
|
|
$
|
133
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(Unaudited; in millions)
Adjusted Operating Income and Segment Operating Income
The following table sets forth the Company's Adjusted Operating
Income for the nine months ended September
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 Accounting 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.
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
Adjusted Operating
Income
|
$
|
2,343
|
|
|
$
|
2,096
|
|
Restructuring
charges
|
—
|
|
|
(55)
|
|
Other operating
items, net
|
9
|
|
|
19
|
|
Operating
income
|
2,352
|
|
|
2,060
|
|
Interest
expense
|
(304)
|
|
|
(289)
|
|
Interest
income
|
22
|
|
|
18
|
|
Other items,
net
|
(5)
|
|
|
(23)
|
|
Earnings from
continuing operations before income taxes
|
2,065
|
|
|
1,766
|
|
Provision for income
taxes
|
(612)
|
|
|
(579)
|
|
Equity in loss of
investee companies, net of tax
|
(43)
|
|
|
(35)
|
|
Net earnings from
continuing operations
|
1,410
|
|
|
1,152
|
|
Loss from
discontinued operations
|
(36)
|
|
|
—
|
|
Net
earnings
|
$
|
1,374
|
|
|
$
|
1,152
|
|
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,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash flow
provided by (used for) operating activities
|
$
|
55
|
|
|
$
|
(240)
|
|
|
$
|
1,306
|
|
|
$
|
623
|
|
Capital
expenditures
|
(46)
|
|
|
(58)
|
|
|
(125)
|
|
|
(104)
|
|
Exclude operating
cash flow from discontinued operations
|
—
|
|
|
(9)
|
|
|
(2)
|
|
|
(27)
|
|
Free cash
flow
|
$
|
9
|
|
|
$
|
(289)
|
|
|
$
|
1,183
|
|
|
$
|
546
|
|
The following table presents a summary of the Company's cash
flows:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash flow
provided by (used for) operating activities
|
$
|
55
|
|
|
$
|
(240)
|
|
|
$
|
1,306
|
|
|
$
|
623
|
|
Net cash flow used
for investing activities
|
$
|
(39)
|
|
|
$
|
(64)
|
|
|
$
|
(181)
|
|
|
$
|
(106)
|
|
Net cash flow (used
for) provided by financing activities
|
$
|
(13)
|
|
|
$
|
117
|
|
|
$
|
(1,269)
|
|
|
$
|
(812)
|
|
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
September 30, 2016
|
|
2016
Reported
|
|
Tax Item
(a)
|
|
2016
Adjusted
|
|
Revenues
|
$
|
3,396
|
|
|
|
$
|
—
|
|
|
|
$
|
3,396
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
798
|
|
|
|
$
|
—
|
|
|
|
$
|
798
|
|
|
Operating income
margin (b)
|
23
|
%
|
|
|
|
|
|
23
|
%
|
|
Interest
expense
|
(104)
|
|
|
|
—
|
|
|
|
(104)
|
|
|
Interest
income
|
7
|
|
|
|
—
|
|
|
|
7
|
|
|
Other items,
net
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Earnings from
continuing operations before income taxes
|
703
|
|
|
|
—
|
|
|
|
703
|
|
|
Provision for income
taxes
|
(176)
|
|
|
|
(47)
|
|
|
|
(223)
|
|
|
Effective income tax
rate
|
25.0
|
%
|
|
|
|
|
|
31.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(13)
|
|
|
|
—
|
|
|
|
(13)
|
|
|
Net earnings from
continuing operations
|
$
|
514
|
|
|
|
$
|
(47)
|
|
|
|
$
|
467
|
|
|
Diluted EPS from
continuing operations
|
$
|
1.15
|
|
|
|
$
|
(.11)
|
|
|
|
$
|
1.05
|
|
|
Diluted weighted
average number of common shares outstanding
|
446
|
|
|
|
|
|
|
446
|
|
|
(a)
|
Reflects a one-time
tax benefit associated with a multiyear adjustment to a tax
deduction, which was approved by the IRS during the third quarter
of 2016.
|
(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)
|
|
|
Nine Months Ended
September 30, 2016
|
|
2016
Reported
|
|
Other Operating
Items (a)
|
|
Write-down
of
Investment
(b)
|
|
Tax Item
(c)
|
|
2016
Adjusted
|
|
Revenues
|
$
|
10,532
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
10,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
2,352
|
|
|
$
|
(9)
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
2,343
|
|
|
Operating income
margin (d)
|
22
|
%
|
|
|
|
|
|
|
|
|
|
22
|
%
|
|
Interest
expense
|
(304)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(304)
|
|
|
Interest
income
|
22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
22
|
|
|
Other items,
net
|
(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(5)
|
|
|
Earnings from
continuing operations
before income taxes
|
2,065
|
|
|
(9)
|
|
|
|
—
|
|
|
|
—
|
|
|
2,056
|
|
|
Provision for income
taxes
|
(612)
|
|
|
4
|
|
|
|
—
|
|
|
|
(47)
|
|
|
(655)
|
|
|
Effective income tax
rate
|
29.6
|
%
|
|
|
|
|
|
|
|
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies,
net of
tax
|
(43)
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
(37)
|
|
|
Net earnings from
continuing operations
|
$
|
1,410
|
|
|
$
|
(5)
|
|
|
|
$
|
6
|
|
|
|
$
|
(47)
|
|
|
$
|
1,364
|
|
|
Diluted EPS from
continuing operations
|
$
|
3.10
|
|
|
$
|
(.01)
|
|
|
|
$
|
.01
|
|
|
|
$
|
(.10)
|
|
|
$
|
3.00
|
|
|
Diluted weighted
average number of
common shares outstanding
|
455
|
|
|
|
|
|
|
|
|
|
|
455
|
|
|
|
Nine Months Ended
September 30, 2015
|
|
2015
Reported
|
|
Restructuring
Charges (e)
|
|
Other Operating
Items (a)
|
|
2015
Adjusted
|
|
Revenues
|
$
|
9,976
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
9,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
2,060
|
|
|
|
$
|
55
|
|
|
|
$
|
(19)
|
|
|
$
|
2,096
|
|
|
Operating income
margin (d)
|
21
|
%
|
|
|
|
|
|
|
|
21
|
%
|
|
Interest
expense
|
(289)
|
|
|
|
—
|
|
|
|
—
|
|
|
(289)
|
|
|
Interest
income
|
18
|
|
|
|
—
|
|
|
|
—
|
|
|
18
|
|
|
Other items,
net
|
(23)
|
|
|
|
—
|
|
|
|
—
|
|
|
(23)
|
|
|
Earnings before
income taxes
|
1,766
|
|
|
|
55
|
|
|
|
(19)
|
|
|
1,802
|
|
|
Provision for income
taxes
|
(579)
|
|
|
|
(22)
|
|
|
|
16
|
|
|
(585)
|
|
|
Effective income tax
rate
|
32.8
|
%
|
|
|
|
|
|
|
|
32.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(35)
|
|
|
|
—
|
|
|
|
—
|
|
|
(35)
|
|
|
Net
earnings
|
$
|
1,152
|
|
|
|
$
|
33
|
|
|
|
$
|
(3)
|
|
|
$
|
1,182
|
|
|
Diluted
EPS
|
$
|
2.33
|
|
|
|
$
|
.07
|
|
|
|
$
|
(.01)
|
|
|
$
|
2.39
|
|
|
Diluted weighted
average number of common
shares outstanding
|
495
|
|
|
|
|
|
|
|
|
495
|
|
|
(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)
|
Reflects a one-time
tax benefit associated with a multiyear adjustment to a tax
deduction, which was approved by the IRS during the third quarter
of 2016.
|
(d)
|
Operating income
margin is defined as operating income or Adjusted Operating Income
divided by revenues.
|
(e)
|
Restructuring charges
at Entertainment, Local Media and Radio 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-third-quarter-2016-results-300357029.html
SOURCE CBS Corporation