NEW YORK, Aug. 2, 2018
/PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today
reported results for the second quarter of 2018, including record
revenues and adjusted diluted earnings per share ("EPS").
"CBS' strong second quarter puts us firmly on track to deliver
the record full-year results we have forecast," said Leslie Moonves, Chairman and Chief Executive
Officer, CBS Corporation. "During the quarter, each of our three
revenue types enjoyed solid growth, led by affiliate and
subscription fees, where we continue to see healthy gains in both
traditional distribution and new digital platforms. Once again, our
total subscriber base -- including retrans, virtual MVPDs, and our
own direct-to-consumer streaming services -- continues to grow, and
our average rate per sub is increasing as well. In particular, our
direct-to-consumer platforms, CBS All Access and Showtime
OTT, are greatly exceeding our expectations. Our goal was to have
eight million subscribers combined by 2020, and we are now on track
to hit that number in 2019. For that reason, and based on our
trajectory of growth in these services, we now predict that CBS
All Access and Showtime OTT will have 16 million domestic
subscribers by 2022. At the same time, we continue to grow in
content licensing as we expand our content development and
distribution to a host of third-party distributors such as Apple,
Netflix, and TBS. In addition, advertising continues to grow as
well, up 2% for the quarter. And we recently concluded another
terrific upfront with solid increases in pricing and volume,
including dramatic growth in digital volume, reflecting the power
of our programming on the CBS Television Network. Plus, we expect
to have strong gains in the back half of the year at our local
business with the midterm elections in the fall. Looking ahead, we
are set up for continued growth in 2018, and we feel more confident
than ever that CBS is uniquely positioned to succeed as a
direct-to-consumer global content company."
Second Quarter 2018 Results
Revenues for the second quarter of 2018 increased 6% to
$3.47 billion from $3.26 billion for the same prior-year period,
with growth across all of the Company's significant revenue
streams. Affiliate and subscription fee revenues were up 17%, led
by 25% higher retransmission revenues and fees from CBS Television
Network affiliated stations as well as 70% growth from digital
initiatives, including the Company's owned streaming subscription
services. Content licensing and distribution revenues were up 4%
for the quarter, benefiting from additional series produced for
third-party services. Advertising revenues increased 2% despite the
absence of the National Semifinals and National Championship games
of the NCAA Division I Men's Basketball Tournament ("NCAA
Tournament"), which the CBS Television Network broadcast in the
second quarter last year. Advertising revenues for the second
quarter of 2018 include Network Ten, which the Company acquired in
the fourth quarter of 2017.
Operating income for the second quarter of 2018, which included
costs for restructuring and other corporate matters, decreased 4%
to $659 million from $690 million for the same prior-year period.
Adjusted operating income was up 1% to $694
million from $690 million for
the same prior-year period, reflecting the revenue growth, which
was offset by a higher investment in programming and digital
initiatives.
Net earnings from continuing operations for the second
quarter of 2018 increased 1% to $400 million from
$397 million for the same quarter
last year. Adjusted net earnings from continuing operations
increased 8% to $427 million from
$397 million for the second quarter
of 2017. The increase was driven by a lower effective income tax
rate in 2018 compared with the prior year, as a result of the
enactment of new federal tax legislation in December 2017.
Diluted EPS from continuing operations for the second quarter of
2018 increased 8% to $1.05 from
$.97 for the same quarter in 2017.
Adjusted diluted EPS increased 8% to $1.12 from $1.04 as
a result of higher adjusted earnings from continuing operations and
lower weighted average shares outstanding. During the quarter, the
Company repurchased 3.8 million of its shares for $200 million.
Details of the discrete items excluded from financial results
and reconciliations of adjusted results to their most directly
comparable GAAP financial measures are included at the end of this
earnings release.
Cash Flow
For the second quarter of 2018, operating cash flow from
continuing operations was $328
million compared with $231
million for the second quarter of 2017. For the first six
months of 2018, operating cash flow from continuing operations was
$1.05 billion compared with
$909 million for the same period in
2017. These increases were driven by lower cash payments for income
taxes in 2018, which were partially offset by a higher investment
in programming. Free cash flow was $296
million for the second quarter of 2018 compared with
$154 million for the same prior-year
period, and for the first six months of the year, free cash flow
was $983 million in 2018 compared
with $905 million for 2017.
Consolidated and Segment Results (dollars in
millions)
The tables below present the Company's revenues by segment and
type, segment operating income (loss) and depreciation and
amortization by segment for the three and six months ended
June 30, 2018, and 2017.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Revenues by
Segment
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Entertainment
|
$
|
2,365
|
|
|
$
|
2,184
|
|
|
$
|
5,081
|
|
|
$
|
4,531
|
|
Cable
Networks
|
591
|
|
|
571
|
|
|
1,200
|
|
|
1,114
|
|
Publishing
|
207
|
|
|
206
|
|
|
367
|
|
|
367
|
|
Local
Media
|
420
|
|
|
412
|
|
|
835
|
|
|
821
|
|
Corporate/Eliminations
|
(117)
|
|
|
(116)
|
|
|
(256)
|
|
|
(233)
|
|
Total
Revenues
|
$
|
3,466
|
|
|
$
|
3,257
|
|
|
$
|
7,227
|
|
|
$
|
6,600
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Revenues by
Type
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Advertising
|
$
|
1,327
|
|
|
$
|
1,299
|
|
|
$
|
3,060
|
|
|
$
|
2,902
|
|
Content licensing and
distribution
|
1,096
|
|
|
1,056
|
|
|
2,091
|
|
|
1,901
|
|
Affiliate and
subscription fees
|
989
|
|
|
848
|
|
|
1,968
|
|
|
1,690
|
|
Other
|
54
|
|
|
54
|
|
|
108
|
|
|
107
|
|
Total
Revenues
|
$
|
3,466
|
|
|
$
|
3,257
|
|
|
$
|
7,227
|
|
|
$
|
6,600
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Segment Operating
Income (Loss)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Entertainment
|
$
|
356
|
|
|
$
|
351
|
|
|
$
|
848
|
|
|
$
|
754
|
|
Cable
Networks
|
256
|
|
|
255
|
|
|
486
|
|
|
505
|
|
Publishing
|
31
|
|
|
29
|
|
|
47
|
|
|
44
|
|
Local
Media
|
128
|
|
|
128
|
|
|
246
|
|
|
252
|
|
Corporate
|
(77)
|
|
|
(73)
|
|
|
(152)
|
|
|
(139)
|
|
Adjusted Operating
Income
|
694
|
|
|
690
|
|
|
1,475
|
|
|
1,416
|
|
Restructuring and
other corporate matters
|
(35)
|
|
|
—
|
|
|
(44)
|
|
|
—
|
|
Total
Operating Income
|
$
|
659
|
|
|
$
|
690
|
|
|
$
|
1,431
|
|
|
$
|
1,416
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Depreciation and
Amortization
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Entertainment
|
$
|
31
|
|
|
$
|
27
|
|
|
$
|
61
|
|
|
$
|
56
|
|
Cable
Networks
|
5
|
|
|
6
|
|
|
11
|
|
|
12
|
|
Publishing
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
Local
Media
|
11
|
|
|
12
|
|
|
22
|
|
|
23
|
|
Corporate
|
7
|
|
|
9
|
|
|
15
|
|
|
17
|
|
Total Depreciation
and Amortization
|
$
|
56
|
|
|
$
|
56
|
|
|
$
|
112
|
|
|
$
|
111
|
|
Entertainment (CBS Television Network, CBS Television
Studios, CBS Studios International, CBS Television Distribution,
Network Ten, CBS Interactive, and CBS Films)
Entertainment revenues of $2.37
billion for the second quarter of 2018 increased 8% from
$2.18 billion for the second quarter
of 2017. Affiliate and subscription fees grew 38%, driven by higher
station affiliation fees and growth from digital initiatives,
including CBS All Access and virtual MVPDs. Advertising
revenues increased 3% from the same prior-year period, reflecting
the acquisition of Network Ten in the fourth quarter of 2017. This
increase was partially offset by the absence of the National
Semifinals and National Championship games of the NCAA Tournament,
which the CBS Television Network broadcast in the second quarter
last year. Underlying CBS Network advertising revenues increased 1%
for the quarter. Content licensing and distribution revenues were
up 4%, benefiting from additional series produced for third-party
services.
Entertainment operating income of $356
million for the second quarter of 2018 increased 1% from
$351 million for the same prior-year
period, reflecting the higher revenues, which were offset by an
increased investment in content and digital initiatives.
Cable Networks (Showtime Networks, CBS Sports Network,
and Smithsonian Networks)
Cable Networks revenues of $591
million for the second quarter of 2018 increased 4% from
$571 million for the same prior-year
period, driven by growth from the Showtime subscription
streaming service.
Cable Networks operating income increased to $256 million for the second quarter of 2018 from
$255 million for the second quarter
of 2017, reflecting the higher revenues, which were offset by an
increased investment in programming.
Publishing (Simon & Schuster)
Publishing revenues increased to $207
million for the second quarter of 2018 from $206 million for the same prior-year period.
Bestselling titles for the second quarter of 2018 included The
Outsider by Stephen King and
The Restless Wave by John
McCain and Mark Salter.
Publishing operating income of $31
million for the second quarter of 2018 increased 7% from
$29 million for the same prior-year
period, reflecting the higher revenues and lower production
costs.
Local Media (CBS Television Stations and CBS Local
Digital Media)
Local Media revenues of $420
million for the second quarter of 2018 increased 2% from
$412 million for the same prior-year
period, driven by higher retransmission revenues, which were
partially offset by the absence of the National Semifinals and
National Championship games of the NCAA Tournament.
Local Media operating income of $128
million for the second quarter of 2018 was comparable with
the same prior-year period, as a result of the mix of revenues.
Corporate
Corporate expenses of $77 million
for the second quarter of 2018 increased 5% from $73 million for the same prior-year period.
Adoption of New Accounting Standards
During the first quarter of 2018, the Company adopted two new
accounting standards. Changes from these standards include the
presentation of net periodic pension and postretirement benefit
costs on the statement of operations; the recognition of revenue
from the renewal of license agreements at the beginning of the
license periods rather than upon execution of such agreements; and
the presentation of revenues from the distribution of third-party
content at the gross amount received from the customer, with a
corresponding increase to operating expenses. For more information
regarding the effects of these accounting changes, refer to the
Company's quarterly report on Form 10-Q for the second quarter
ended June 30, 2018.
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, local TV, film, and interactive and socially
responsible media. CBS' businesses include CBS Television Network,
The CW (a joint venture between CBS Corporation and Warner Bros.
Entertainment), Network Ten Australia, 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 EcoMedia, and CBS
Experiences. 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, including the Company's expectations concerning its
revenues and EPS for 2018. 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: changes in the public acceptance of the
Company's content; advertising market conditions generally; 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 any
dividend of shares of the Company's Class A common stock to holders
of its Class A common stock and Class B common stock, which is
contingent on Delaware court
approval, and to the validity of purported bylaw amendments by the
Company's controlling stockholders; the outcome of any legal
actions, including the lawsuits filed in the Delaware Court of Chancery in May 2018, regarding any such dividend and the
purported bylaw amendments, among other related matters, which are
inherently unpredictable; the impact of union activity, including
possible strikes or work stoppages or the Company's inability to
negotiate favorable terms for contract renewals; other domestic and
global economic, business, competitive and/or other regulatory
factors affecting the Company's businesses generally; and other
factors described in the Company's filings with the U.S. Securities
and Exchange Commission (the "SEC") 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 we do not undertake any
obligation to publicly update any forward-looking statements to
reflect subsequent events or circumstances.
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited; in millions, except per share
amounts)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
3,466
|
|
|
$
|
3,257
|
|
|
$
|
7,227
|
|
|
$
|
6,600
|
|
Operating
income
|
659
|
|
|
690
|
|
|
1,431
|
|
|
1,416
|
|
Interest
expense
|
(116)
|
|
|
(111)
|
|
|
(234)
|
|
|
(220)
|
|
Interest
income
|
14
|
|
|
15
|
|
|
31
|
|
|
28
|
|
Other items,
net
|
(24)
|
|
|
(16)
|
|
|
(35)
|
|
|
(37)
|
|
Earnings from
continuing operations before income taxes
|
533
|
|
|
578
|
|
|
1,193
|
|
|
1,187
|
|
Provision for income
taxes
|
(113)
|
|
|
(169)
|
|
|
(248)
|
|
|
(307)
|
|
Equity in loss of
investee companies, net of tax
|
(20)
|
|
|
(12)
|
|
|
(34)
|
|
|
(29)
|
|
Net earnings from
continuing operations
|
400
|
|
|
397
|
|
|
911
|
|
|
851
|
|
Net loss from
discontinued operations, net of tax
|
—
|
|
|
(339)
|
|
|
—
|
|
|
(1,045)
|
|
Net earnings
(loss)
|
$
|
400
|
|
|
$
|
58
|
|
|
$
|
911
|
|
|
$
|
(194)
|
|
|
|
|
|
|
|
|
|
Basic net earnings
(loss) per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
$
|
1.06
|
|
|
$
|
.98
|
|
|
$
|
2.40
|
|
|
$
|
2.09
|
|
Net loss from
discontinued operations
|
$
|
—
|
|
|
$
|
(.84)
|
|
|
$
|
—
|
|
|
$
|
(2.57)
|
|
Net earnings
(loss)
|
$
|
1.06
|
|
|
$
|
.14
|
|
|
$
|
2.40
|
|
|
$
|
(.48)
|
|
|
|
|
|
|
|
|
|
Diluted net
earnings (loss) per common share:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
$
|
1.05
|
|
|
$
|
.97
|
|
|
$
|
2.38
|
|
|
$
|
2.06
|
|
Net loss from
discontinued operations
|
$
|
—
|
|
|
$
|
(.83)
|
|
|
$
|
—
|
|
|
$
|
(2.53)
|
|
Net earnings
(loss)
|
$
|
1.05
|
|
|
$
|
.14
|
|
|
$
|
2.38
|
|
|
$
|
(.47)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
378
|
|
|
405
|
|
|
380
|
|
|
407
|
|
Diluted
|
381
|
|
|
410
|
|
|
383
|
|
|
413
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
$
|
.18
|
|
|
$
|
.18
|
|
|
$
|
.36
|
|
|
$
|
.36
|
|
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited; in millions)
|
|
|
At
|
|
|
At
|
|
|
June 30,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
252
|
|
|
|
|
$
|
285
|
|
|
Receivables,
net
|
|
3,597
|
|
|
|
|
3,697
|
|
|
Programming and other
inventory
|
|
1,876
|
|
|
|
|
1,828
|
|
|
Prepaid expenses and
other current assets
|
|
323
|
|
|
|
|
463
|
|
|
Total current
assets
|
|
6,048
|
|
|
|
|
6,273
|
|
|
Property and
equipment
|
|
2,984
|
|
|
|
|
3,051
|
|
|
Less accumulated
depreciation and amortization
|
|
1,747
|
|
|
|
|
1,771
|
|
|
Net property and
equipment
|
|
1,237
|
|
|
|
|
1,280
|
|
|
Programming and other
inventory
|
|
3,197
|
|
|
|
|
2,881
|
|
|
Goodwill
|
|
4,921
|
|
|
|
|
4,891
|
|
|
Intangible
assets
|
|
2,655
|
|
|
|
|
2,666
|
|
|
Other
assets
|
|
2,327
|
|
|
|
|
2,852
|
|
|
Total
Assets
|
|
$
|
20,385
|
|
|
|
|
$
|
20,843
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
138
|
|
|
|
|
$
|
231
|
|
|
Participants' share
and royalties payable
|
|
1,071
|
|
|
|
|
986
|
|
|
Program
rights
|
|
369
|
|
|
|
|
373
|
|
|
Commercial
paper
|
|
370
|
|
|
|
|
679
|
|
|
Current portion of
long-term debt
|
|
16
|
|
|
|
|
19
|
|
|
Accrued expenses and
other current liabilities
|
|
1,820
|
|
|
|
|
1,684
|
|
|
Total current
liabilities
|
|
3,784
|
|
|
|
|
3,972
|
|
|
Long-term
debt
|
|
9,464
|
|
|
|
|
9,464
|
|
|
Other
liabilities
|
|
4,970
|
|
|
|
|
5,429
|
|
|
Stockholders'
Equity
|
|
2,167
|
|
|
|
|
1,978
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
20,385
|
|
|
|
|
$
|
20,843
|
|
|
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited; in millions)
|
|
|
Six Months
Ended
|
|
June
30,
|
|
2018
|
|
2017
|
Operating
Activities:
|
|
|
|
Net earnings
(loss)
|
$
|
911
|
|
|
$
|
(194)
|
|
Less: Net loss from
discontinued operations, net of tax
|
—
|
|
|
(1,045)
|
|
Net earnings from
continuing operations
|
911
|
|
|
851
|
|
Adjustments to
reconcile net earnings from continuing operations to net cash
flow
provided by operating
activities from continuing operations:
|
|
|
|
Depreciation and
amortization
|
112
|
|
|
111
|
|
Stock-based
compensation
|
91
|
|
|
85
|
|
Equity in loss of
investee companies, net of tax and distributions
|
34
|
|
|
29
|
|
Change in assets and
liabilities, net of investing and financing activities
|
(103)
|
|
|
(167)
|
|
Net cash flow
provided by operating activities from continuing
operations
|
1,045
|
|
|
909
|
|
Net cash flow (used
for) provided by operating activities from discontinued
operations
|
(2)
|
|
|
29
|
|
Net cash flow
provided by operating activities
|
1,043
|
|
|
938
|
|
Investing
Activities:
|
|
|
|
Investments in and
advances to investee companies
|
(71)
|
|
|
(65)
|
|
Capital
expenditures
|
(62)
|
|
|
(68)
|
|
Acquisitions
|
(29)
|
|
|
(21)
|
|
Other investing
activities
|
2
|
|
|
15
|
|
Net cash flow used
for investing activities from continuing operations
|
(160)
|
|
|
(139)
|
|
Net cash flow used
for investing activities from discontinued operations
|
(23)
|
|
|
(13)
|
|
Net cash flow used
for investing activities
|
(183)
|
|
|
(152)
|
|
Financing
Activities:
|
|
|
|
Repayments of
short-term debt borrowings, net
|
(309)
|
|
|
(187)
|
|
Proceeds from debt
borrowings of CBS Radio
|
—
|
|
|
24
|
|
Repayment of debt
borrowings of CBS Radio
|
—
|
|
|
(5)
|
|
Payment of capital
lease obligations
|
(8)
|
|
|
(8)
|
|
Payment of contingent
consideration
|
(5)
|
|
|
(7)
|
|
Dividends
|
(140)
|
|
|
(151)
|
|
Purchase of Company
common stock
|
(394)
|
|
|
(845)
|
|
Payment of payroll
taxes in lieu of issuing shares for stock-based
compensation
|
(58)
|
|
|
(89)
|
|
Proceeds from
exercise of stock options
|
22
|
|
|
39
|
|
Other financing
activities
|
(1)
|
|
|
—
|
|
Net cash flow used
for financing activities
|
(893)
|
|
|
(1,229)
|
|
Net decrease in cash
and cash equivalents
|
(33)
|
|
|
(443)
|
|
Cash and cash
equivalents at beginning of period
(includes $24 (2017)
of discontinued operations cash)
|
285
|
|
|
622
|
|
Cash and cash
equivalents at end of period
(includes $9 (2017)
of discontinued operations cash)
|
$
|
252
|
|
|
$
|
179
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(Unaudited; in millions)
Adjusted Operating Income and Segment Operating Income
The following tables set forth the Company's Adjusted Operating
Income for the three and six months ended June 30, 2018 and 2017. The Company defines
"Adjusted Operating Income" as operating income excluding costs for
restructuring and other corporate matters, 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 ("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. 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 (loss) 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 (loss), 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 (loss).
CBS CORPORATION
AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING
NON-GAAP FINANCIAL INFORMATION (continued) (Unaudited; in
millions)
|
|
|
Three Months Ended
June 30,
|
|
2018
|
|
2017
|
Adjusted Operating
Income
|
$
|
694
|
|
|
$
|
690
|
|
Restructuring and
other corporate matters
|
(35)
|
|
|
—
|
|
Operating
income
|
659
|
|
|
690
|
|
Interest
expense
|
(116)
|
|
|
(111)
|
|
Interest
income
|
14
|
|
|
15
|
|
Other items,
net
|
(24)
|
|
|
(16)
|
|
Earnings from
continuing operations before income taxes
|
533
|
|
|
578
|
|
Provision for income
taxes
|
(113)
|
|
|
(169)
|
|
Equity in loss of
investee companies, net of tax
|
(20)
|
|
|
(12)
|
|
Net earnings from
continuing operations
|
400
|
|
|
397
|
|
Net loss from
discontinued operations, net of tax
|
—
|
|
|
(339)
|
|
Net
earnings
|
$
|
400
|
|
|
$
|
58
|
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
Adjusted Operating
Income
|
$
|
1,475
|
|
|
$
|
1,416
|
|
Restructuring and
other corporate matters
|
(44)
|
|
|
—
|
|
Operating
income
|
1,431
|
|
|
1,416
|
|
Interest
expense
|
(234)
|
|
|
(220)
|
|
Interest
income
|
31
|
|
|
28
|
|
Other items,
net
|
(35)
|
|
|
(37)
|
|
Earnings from
continuing operations before income taxes
|
1,193
|
|
|
1,187
|
|
Provision for income
taxes
|
(248)
|
|
|
(307)
|
|
Equity in loss of
investee companies, net of tax
|
(34)
|
|
|
(29)
|
|
Net earnings from
continuing operations
|
911
|
|
|
851
|
|
Net loss from
discontinued operations, net of tax
|
—
|
|
|
(1,045)
|
|
Net earnings
(loss)
|
$
|
911
|
|
|
$
|
(194)
|
|
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 discretionary contributions to prefund
the Company's pension plans, 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. Free
cash flow excludes discretionary contributions to prefund the
Company's pension plans because management assesses the Company's
ability to generate operating cash flows without considering the
impact from discretionary pension contributions, and decisions
regarding the timing of pension plan funding are not dependent on
the level of operating cash flows generated during the period. 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
(loss) as a measure of operating performance. Free cash flow, as
the Company calculates it, may not be comparable to similarly
titled measures employed by other companies. In addition, free cash
flow as a measure of liquidity has certain limitations, does
not necessarily represent funds available for discretionary
use, and is not necessarily a measure of the Company's ability to
fund its cash needs. When comparing free cash flow to net cash flow
provided by (used for) operating activities, the most directly
comparable GAAP financial measure, users of this financial
information should consider the types of events and transactions
that are not reflected in free cash flow. The following table
presents a reconciliation of the Company's net cash flow provided
by operating activities to free cash flow:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net cash flow
provided by operating activities
|
$
|
326
|
|
|
$
|
219
|
|
|
$
|
1,043
|
|
|
$
|
938
|
|
Capital
expenditures
|
(32)
|
|
|
(41)
|
|
|
(62)
|
|
|
(68)
|
|
Less:
|
|
|
|
|
|
|
|
Discretionary pension
plan contributions, net of tax
|
—
|
|
|
36
|
|
|
—
|
|
|
(64)
|
|
Operating cash flow
from discontinued operations
|
(2)
|
|
|
(12)
|
|
|
(2)
|
|
|
29
|
|
Free cash
flow
|
$
|
296
|
|
|
$
|
154
|
|
|
$
|
983
|
|
|
$
|
905
|
|
The following table presents a summary of the Company's cash
flows:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net cash flow
provided by operating activities
|
$
|
326
|
|
|
$
|
219
|
|
|
$
|
1,043
|
|
|
$
|
938
|
|
Net cash flow used
for investing activities
|
$
|
(93)
|
|
|
$
|
(63)
|
|
|
$
|
(183)
|
|
|
$
|
(152)
|
|
Net cash flow used
for financing activities
|
$
|
(128)
|
|
|
$
|
(147)
|
|
|
$
|
(893)
|
|
|
$
|
(1,229)
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
(Unaudited; in millions, except per share
amounts)
2018 and 2017 Adjusted Results
The following tables reconcile adjusted financial results to
their most directly comparable GAAP financial measures. 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; and makes it easier for
investors, analysts, and peers to compare the Company's operating
performance to other companies in its industry and to compare the
Company's year-over-year results.
|
Three Months Ended
June 30, 2018
|
|
Reported
|
Restructuring
and
Other Corporate
Matters (a)
|
|
Adjusted
|
|
Revenues
|
$
|
3,466
|
|
|
$
|
—
|
|
|
|
$
|
3,466
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
659
|
|
|
$
|
35
|
|
|
|
$
|
694
|
|
|
Operating income
margin (b)
|
19
|
%
|
|
|
|
|
20
|
%
|
|
Interest
expense
|
(116)
|
|
|
—
|
|
|
|
(116)
|
|
|
Interest
income
|
14
|
|
|
—
|
|
|
|
14
|
|
|
Other items,
net
|
(24)
|
|
|
—
|
|
|
|
(24)
|
|
|
Earnings before
income taxes
|
533
|
|
|
35
|
|
|
|
568
|
|
|
Provision for income
taxes
|
(113)
|
|
|
(8)
|
|
|
|
(121)
|
|
|
Effective income tax
rate
|
21.2
|
%
|
|
|
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(20)
|
|
|
—
|
|
|
|
(20)
|
|
|
Net
earnings
|
$
|
400
|
|
|
$
|
27
|
|
|
|
$
|
427
|
|
|
Diluted
EPS
|
$
|
1.05
|
|
|
$
|
.07
|
|
|
|
$
|
1.12
|
|
|
Diluted weighted
average number of common shares outstanding
|
381
|
|
|
|
|
|
381
|
|
|
(a)
|
Reflects
restructuring charges of $25 million ($19 million, net of tax) at
Entertainment, Publishing, Local Media and Corporate primarily for
the reorganization of certain business operations, as well as
expenses of $10 million ($8 million, net of tax) primarily for
professional fees related to the evaluation of a potential
combination with Viacom Inc. and legal proceedings involving the
Company and National Amusements, Inc.
|
(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
June 30, 2017
|
|
Reported
|
|
Discontinued
Operations
Items (a)
|
|
Adjusted
|
|
Revenues
|
$
|
3,257
|
|
|
|
$
|
—
|
|
|
|
$
|
3,257
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
690
|
|
|
|
$
|
—
|
|
|
|
$
|
690
|
|
|
Operating income
margin (b)
|
21
|
%
|
|
|
|
|
|
21
|
%
|
|
Interest
expense
|
(111)
|
|
|
|
—
|
|
|
|
(111)
|
|
|
Interest
income
|
15
|
|
|
|
—
|
|
|
|
15
|
|
|
Other items,
net
|
(16)
|
|
|
|
—
|
|
|
|
(16)
|
|
|
Earnings from
continuing operations before income taxes
|
578
|
|
|
|
—
|
|
|
|
578
|
|
|
Provision for income
taxes
|
(169)
|
|
|
|
—
|
|
|
|
(169)
|
|
|
Effective income tax
rate
|
29.2
|
%
|
|
|
|
|
|
29.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(12)
|
|
|
|
—
|
|
|
|
(12)
|
|
|
Net earnings from
continuing operations
|
397
|
|
|
|
—
|
|
|
|
397
|
|
|
Net earnings (loss)
from discontinued operations, net of tax
|
(339)
|
|
|
|
369
|
|
|
|
30
|
|
|
Net
earnings
|
$
|
58
|
|
|
|
$
|
369
|
|
|
|
$
|
427
|
|
|
Diluted EPS from
continuing operations
|
$
|
.97
|
|
|
|
$
|
—
|
|
|
|
$
|
.97
|
|
|
Diluted
EPS
|
$
|
.14
|
|
|
|
$
|
.90
|
|
|
|
$
|
1.04
|
|
|
Diluted weighted
average number of common shares outstanding
|
410
|
|
|
|
|
|
|
410
|
|
|
(a)
|
Reflects a noncash
charge of $365 million to adjust the carrying value of CBS Radio
Inc. to the value indicated by the stock valuation of Entercom
Communications Corp. and a restructuring charge of $7 million ($4
million, net of tax) at CBS Radio Inc.
|
(b)
|
Operating income
margin is defined as operating income or Adjusted Operating Income
divided by revenues.
|
CBS CORPORATION
AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING
NON-GAAP FINANCIAL INFORMATION (continued) (Unaudited; in
millions, except per share amounts)
|
|
|
Six Months Ended
June 30, 2018
|
|
Reported
|
|
Restructuring
and
Other Corporate
Matters (a)
|
|
Adjusted
|
|
Revenues
|
$
|
7,227
|
|
|
|
$
|
—
|
|
|
|
$
|
7,227
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
1,431
|
|
|
|
$
|
44
|
|
|
|
$
|
1,475
|
|
|
Operating income
margin (b)
|
20
|
%
|
|
|
|
|
|
20
|
%
|
|
Interest
expense
|
(234)
|
|
|
|
—
|
|
|
|
(234)
|
|
|
Interest
income
|
31
|
|
|
|
—
|
|
|
|
31
|
|
|
Other items,
net
|
(35)
|
|
|
|
—
|
|
|
|
(35)
|
|
|
Earnings before
income taxes
|
1,193
|
|
|
|
44
|
|
|
|
1,237
|
|
|
Provision for income
taxes
|
(248)
|
|
|
|
(10)
|
|
|
|
(258)
|
|
|
Effective income tax
rate
|
20.8
|
%
|
|
|
|
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(34)
|
|
|
|
—
|
|
|
|
(34)
|
|
|
Net
earnings
|
$
|
911
|
|
|
|
$
|
34
|
|
|
|
$
|
945
|
|
|
Diluted
EPS
|
$
|
2.38
|
|
|
|
$
|
.09
|
|
|
|
$
|
2.47
|
|
|
Diluted weighted
average number of common shares outstanding
|
383
|
|
|
|
|
|
|
383
|
|
|
(a)
|
Reflects
restructuring charges of $25 million ($19 million, net of tax) at
Entertainment, Publishing, Local Media and Corporate primarily for
the reorganization of certain business operations, as well as
expenses of $19 million ($15 million, net of tax) primarily for
professional fees related to the evaluation of a potential
combination with Viacom Inc. and legal proceedings involving the
Company and National Amusements, Inc.
|
(b)
|
Operating income
margin is defined as operating income or Adjusted Operating Income
divided by revenues.
|
CBS CORPORATION
AND SUBSIDIARIES SUPPLEMENTAL DISCLOSURES REGARDING
NON-GAAP FINANCIAL INFORMATION (continued) (Unaudited; in
millions, except per share amounts)
|
|
|
Six Months Ended
June 30, 2017
|
|
Reported
|
|
Tax Items
(a)
|
|
Discontinued
Operations
Items (b)
|
Adjusted
|
|
Revenues
|
$
|
6,600
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
6,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
1,416
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,416
|
|
|
Operating income
margin (c)
|
21
|
%
|
|
|
|
|
|
|
|
21
|
%
|
|
Interest
expense
|
(220)
|
|
|
—
|
|
|
|
—
|
|
|
|
(220)
|
|
|
Interest
income
|
28
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
|
Other items,
net
|
(37)
|
|
|
—
|
|
|
|
—
|
|
|
|
(37)
|
|
|
Earnings from
continuing operations before income taxes
|
1,187
|
|
|
—
|
|
|
|
—
|
|
|
|
1,187
|
|
|
Provision for income
taxes
|
(307)
|
|
|
(22)
|
|
|
|
—
|
|
|
|
(329)
|
|
|
Effective income tax
rate
|
25.9
|
%
|
|
|
|
|
|
|
|
27.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(29)
|
|
|
—
|
|
|
|
—
|
|
|
|
(29)
|
|
|
Net earnings from
continuing operations
|
851
|
|
|
(22)
|
|
|
|
—
|
|
|
|
829
|
|
|
Net earnings (loss)
from discontinued operations, net of tax
|
(1,045)
|
|
|
—
|
|
|
|
1,084
|
|
|
|
39
|
|
|
Net earnings
(loss)
|
$
|
(194)
|
|
|
$
|
(22)
|
|
|
|
$
|
1,084
|
|
|
|
$
|
868
|
|
|
Diluted EPS from
continuing operations
|
$
|
2.06
|
|
|
$
|
(.05)
|
|
|
|
$
|
—
|
|
|
|
$
|
2.01
|
|
|
Diluted
EPS
|
$
|
(.47)
|
|
|
$
|
(.05)
|
|
|
|
$
|
2.62
|
|
|
|
$
|
2.10
|
|
|
Diluted weighted
average number of common shares outstanding
|
413
|
|
|
|
|
|
|
|
|
413
|
|
|
(a)
|
Reflects a tax
benefit in the first quarter of 2017 from the resolution of certain
state income tax matters.
|
(b)
|
Reflects a noncash
charge of $1.08 billion to adjust the carrying value of CBS Radio
Inc. to the value indicated by the stock valuation of Entercom
Communications Corp. and a restructuring charge of $7 million ($4
million, net of tax) at CBS Radio Inc.
|
(c)
|
Operating income
margin is defined as operating income or Adjusted Operating Income
divided by revenues.
|
View original
content:http://www.prnewswire.com/news-releases/cbs-corporation-reports-second-quarter-2018-results-300691353.html
SOURCE CBS Corporation