- Financial, Operational and Strategic Progress in Unlocking
Value from Merged Company
- Sequential Improvement in Operating Income and Adjusted
OIBDA, Diluted EPS and Adjusted Diluted EPS, as well as Operating
Cash Flow and Free Cash Flow
- Proactive Response to COVID-19 Included Actions to
Significantly Increase Financial Flexibility and Materially Reduce
Costs, while Ensuring the Safety of Employees and Supporting
Communities
- Significant Growth in Domestic Streaming and Digital Video
Revenue, Subscribers and Consumption Reinforces Demand for
ViacomCBS Content
ViacomCBS Inc. (NASDAQ: VIAC; VIACA) today reported financial
results for the quarter ended March 31st, 2020.
Statement from Bob Bakish, President
& CEO
“ViacomCBS delivered solid results in our first full quarter,
including sequential improvement on key financial metrics, as well
as clear operating momentum. In the wake of the COVID-19 pandemic,
we also took decisive action to fortify our balance sheet, protect
our employees and help communities in need. And through new
creative strategies and production models, we continue to deliver
must-watch content that big audiences love. Importantly, we are
just beginning to tap into the potential of our combined assets,
and our growing scale, audience reach and earnings power will
become even more apparent as the market rebounds and we put the
power of our portfolio behind our streaming strategy. I thank
ViacomCBS employees around the world for their adaptive creativity
and continued focus on serving our audiences, commercial partners
and shareholders amid these unprecedented circumstances.”
Q1 2020 RESULTS
Quarter Ended March 31
2020
2019
B/(W) %
GAAP Revenues
$
6,669
$
7,100
(6
)%
Operating income*
917
1,804
(49
)
Net earnings from continuing operations attributable to ViacomCBS*
508
1,946
(74
)
Diluted EPS from continuing operations attributable to ViacomCBS
0.82
3.15
(74
)
Non-GAAP† Adjusted OIBDA
$
1,263
$
1,539
(18
)%
Adjusted net earnings from continuing operations attributable to
ViacomCBS
699
898
(22
)
Adjusted diluted EPS from continuing operations attributable to
ViacomCBS
1.13
1.46
(23
)
$ in millions, except per share amounts † Non-GAAP measures
referenced in this release are detailed in the Supplemental
Disclosures at the end of this release. * Operating income and net
earnings from continuing operations attributable to ViacomCBS for
Q1 2019 include a gain on the sale of CBS Television City of $549
million ($386 million, net of tax). Net earnings from continuing
operations attributable to ViacomCBS for Q1 2019 also includes a
deferred tax benefit of $768 million associated with the
reorganization of our international operations.
OVERVIEW OF Q1 REVENUE
- Advertising revenue declined 19% year-over-year, but increased
2% excluding a 21-percentage point unfavorable impact from the
comparison against CBS’ broadcasts of Super Bowl LIII and the NCAA
Tournament in the prior year quarter. International advertising
revenue included a 10-percentage point unfavorable F/X impact.
- Affiliate revenue increased 1%, reflecting growth in station
affiliation and retransmission fees, as well as subscription
streaming revenue, which more than offset declines in pay-TV
subscribers. International affiliate revenue included an
8-percentage point unfavorable F/X impact.
- Domestic streaming and digital video revenue – which includes
streaming subscription and digital video advertising revenue – grew
to $471 million, up 51% year-over-year.
- Content licensing revenue grew 9%, fueled by growth in original
studio production for third parties. Paramount Television Studios,
CBS Television Studios and Cable Networks’ studios all benefited
from strong content deliveries during the quarter.
- Theatrical revenue declined 3% as strong results from Sonic the
Hedgehog were more than offset by prior year quarter revenues,
which included carryover performance from Bumblebee.
- Publishing revenue rose 4%, driven by higher sales of
electronic and digital audio books.
REVENUE BY TYPE
Quarter Ended March 31
2020
2019
B/(W) %
Advertising
$
2,484
$
3,066
$
(582
)
(19
)%
Domestic
2,229
2,775
(546
)
(20
)
International
255
291
(36
)
(12
)
Affiliate
2,197
2,165
32
1
Domestic
2,046
1,993
53
3
International
151
172
(21
)
(12
)
Content Licensing
1,594
1,465
129
9
Theatrical
167
172
(5
)
(3
)
Publishing
170
164
6
4
Other
57
68
(11
)
(16
)
Total Revenues
$
6,669
$
7,100
$
(431
)
(6
)%
$ in millions
BALANCE SHEET & LIQUIDITY
- In April, the company raised $2.5 billion of capital through a
5- and 10-year bond offering.
- On May 4, 2020, the company redeemed all of its outstanding
4.30% senior notes due February 15, 2021, and will redeem all of
its outstanding 4.50% senior notes due March 1, 2021 on May 18,
2020.
- ViacomCBS has access to a committed and undrawn $3.5 billion
revolving credit facility and other sources of liquidity to
reinforce financial flexibility going forward.
- The company also had a strong start to the year, with Q1 2020
Operating Cash Flow of $356 million and Free Cash Flow† of $305
million, marking a significant sequential improvement from Q4
2019.
† Non-GAAP measures referenced in this
release are detailed in the Supplemental Disclosures at the end of
this release.
RESPONSE TO COVID-19
In response to COVID-19, ViacomCBS focused on reinforcing
financial flexibility and business continuity, while supporting its
employees and communities.
- Reinforced financial flexibility: ViacomCBS strengthened
its balance sheet and liquidity with a $2.5 billion debt offering
in April and implemented cost savings initiatives to mitigate
revenue impacts.
- Evolved content operations: Leveraging alternative
production models and its extensive library, the company ensured
the continuity of its linear and streaming programming, including
national and local news and late night. It also shifted its film
releases to preserve the value of its strong slate.
- Ensured employee safety: The company quickly pivoted to
remote working, with strict protocols for protecting employees, and
committed $100 million to support impacted TV and film production
personnel.
- Supported community wellbeing: The company launched an
expansive PSA campaign, #AloneTogether, resulting in over 80,000
linear spots and more than half a billion video views on social. It
also aired relief specials, including BET’s Saving Our Selves and
Global Citizen’s One World: Together at Home.
Q1 STREAMING & DIGITAL VIDEO HIGHLIGHTS
In Q1, ViacomCBS delivered strong revenue growth, and saw
record sign-ups and consumption across pay and free
streaming.
- Domestic streaming and digital video revenue – which includes
streaming subscription and digital video advertising revenue – grew
to $471 million, up 51% year-over-year.
- Domestic streaming subscribers surpassed 13.5M, up 50%
year-over-year.
− CBS All Access and Showtime OTT delivered
record subscribers, sign-ups and consumption, reflecting original
programming, including Star Trek: Picard and Homeland.
- In free, Pluto TV’s domestic monthly active users (MAUs) grew
to a record of 24M+, an increase of 55% year-over-year.
− In March, Pluto TV rolled out its most
significant product upgrade, introducing a new interface, updated
features and improved search capabilities for an enhanced user
experience.
− Pluto TV expanded distribution in the US
and internationally, including with XBOX, Roku, Verizon in April
and TiVo in May. In the quarter, Pluto TV also launched in 17
countries in Latin America, with more than 12,000 hours of
Spanish-language programming.
SURGE IN GROWTH IN APRIL
- With more consumers at home, ViacomCBS streaming platforms had
their best month, with accelerated subscriber growth and
consumption, reinforcing consumer demand for its content.
- CBS All Access and Showtime OTT sign-ups, daily average streams
and minutes watched all rose substantially, versus the prior
month.
− Live TV and original programming, such as
Star Trek: Discovery, Star Trek: Picard, The Good Fight and
Survivor, drove consumption records in April on CBS All Access,
with total streams and minutes watched up significantly.
− Showtime OTT delivered its best month ever
in time watched and total streams. Viewers took advantage of the
full catalogue, with streaming of original series, such as Homeland
and Penny Dreadful: City of Angels, and movies growing +50% and
+110% year-over-year, respectively.
− CBS All Access and Showtime OTT are seeing
strong account activation, as well as consistent paid subscription
conversion rates.
REPORTING SEGMENTS
TV ENTERTAINMENT
- CBS will finish the broadcast season as America’s most-watched
network for the 12th straight year. In the quarter, CBS had the top
2 dramas, 5 of the top 6 comedies and #1 news program, as well as 5
of the top 6 freshmen series.
- Revenue declined 13%, including a 20-percentage point
unfavorable impact from the comparison against CBS’ broadcasts of
Super Bowl LIII and the NCAA Tournament in the prior year quarter.
Excluding that impact, revenue increased 7%, driven by growth in
affiliate, advertising and content licensing revenue.
⎯ Affiliate revenue rose 20%, fueled by
increased station affiliation fees and retransmission revenues, as
well as strong subscription streaming revenue.
⎯ Advertising revenue decreased 30%,
reflecting the comparison to CBS’ broadcast of Super Bowl LIII and
the NCAA Tournament in the prior year quarter. Taken together,
these two events had an unfavorable impact of 34 percentage points
on advertising revenue compared to the prior year quarter. This
impact was partially offset by higher political advertising sales
and the broadcast of an additional NFL playoff game on CBS.
⎯ Content licensing revenue increased 2% due
to growth in original studio production for third parties.
- Adjusted OIBDA decreased 23% as a result of the comparison
against sporting events in the prior year quarter, lower profits
from the mix of programming under licensing arrangements and an
increased investment in content.
Quarter Ended March 31
2020
2019
B/(W) %
Revenues
$
2,947
$
3,406
$
(459
)
(13
)%
Advertising
1,381
1,967
(586
)
(30
)
Affiliate
734
611
123
20
Content Licensing
797
781
16
2
Other
35
47
(12
)
(26
)
Expenses
2,374
2,664
290
11
Adjusted OIBDA
$
573
$
742
$
(169
)
(23
)%
$ in millions
CABLE NETWORKS
- ViacomCBS grew share year-over-year in a majority of its cable
networks and had the most top 30 original cable series with viewers
2-11 and 18-34.
- Revenue decreased 2% as higher streaming and studio production
revenue was more than offset by linear subscriber declines.
⎯ Advertising revenue was flat, including a
3-percentage point unfavorable F/X impact, as strong growth in
domestic streaming and digital video advertising, which includes
Pluto TV, offset lower linear advertising.
⎯ Affiliate revenue fell 6% year-over-year,
including a 1-percentage point unfavorable F/X impact, as growth in
streaming was more than offset by linear subscriber declines.
Importantly, the rate of change improved sequentially by 2
percentage points from Q4 2019.
⎯ Content licensing revenue increased 19%,
driven by growth in original studio production for third
parties.
- Adjusted OIBDA declined 11%, a significant sequential
improvement versus Q4 2019, which included early cost savings in
Cable Networks following the merger.
Quarter Ended March 31
2020
2019
B/(W) %
Revenues
$
2,858
$
2,902
$
(44
)
(2
)%
Advertising
1,117
1,115
2
-
Affiliate
1,463
1,554
(91
)
(6
)
Content Licensing
278
233
45
19
Expenses
2,064
2,009
(55
)
(3
)
Adjusted OIBDA
$
794
$
893
$
(99
)
(11
)%
$ in millions
FILMED ENTERTAINMENT
- Sonic the Hedgehog had the #1 opening weekend and domestically
became the highest grossing movie based on a video game of all
time. Worldwide, the film earned approximately $307 million at the
box office.
- Revenue increased 11% due to strong growth in licensing and
home entertainment, which more than offset a 3% decline in
theatrical revenue.
⎯ Theatrical revenue declined 3% as strong
results from Sonic the Hedgehog were more than offset by prior year
quarter revenues, which included carryover performance from
Bumblebee.
⎯ Home entertainment revenue rose 13%, driven
by the mix of titles in release and higher sales of catalog
titles.
⎯ Licensing revenue grew 18%, fueled by
original studio productions for third parties, as well as the
licensing of The Lovebirds to Netflix.
- Adjusted OIBDA declined 29%, driven by the incurrence of
marketing expenses for A Quiet Place Part II, which was postponed
to later in the year due to COVID-19.
Quarter Ended March 31
2020
2019
B/(W) %
Revenues
$
811
$
730
$
81
11
% Theatrical
167
172
(5
)
(3
)
Home Entertainment
174
154
20
13
Licensing
442
375
67
18
Other
28
29
(1
)
(3
)
Expenses
784
692
(92
)
(13
)
Adjusted OIBDA
$
27
$
38
$
(11
)
(29
)%
$ in millions
PUBLISHING
- Bestselling titles for the quarter included Stephen King’s If
It Bleeds and The Outsider, and Cassandra Clare’s Chain of
Gold.
- Strong performing audiobook titles included Garrett Graff’s The
Only Plane in the Sky and Rebecca Serle’s In Five Years.
- First quarter revenue increased 4%, reflecting 16% growth in
digital sales.
- Adjusted OIBDA was flat as revenue growth was offset by higher
costs from the mix of titles.
Quarter Ended March 31
2020
2019
B/(W) %
Revenues
$
170
$
164
$
6
4
% Expenses
151
145
(6
)
(4
)
Adjusted OIBDA
$
19
$
19
$
-
-
% $ in millions
ABOUT VIACOMCBS
ViacomCBS (NASDAQ: VIAC; VIACA) is a leading global media and
entertainment company that creates premium content and experiences
for audiences worldwide. Driven by iconic consumer brands, its
portfolio includes CBS, Showtime Networks, Paramount Pictures,
Nickelodeon, MTV, Comedy Central, BET, CBS All Access, Pluto TV and
Simon & Schuster, among others. The company delivers the
largest share of the US television audience and boasts one of the
industry’s most important and extensive libraries of TV and film
titles. In addition to offering innovative streaming services and
digital video products, ViacomCBS provides powerful capabilities in
production, distribution and advertising solutions for partners on
five continents.
For more information about ViacomCBS, please visit
www.viacbs.com and follow @ViacomCBS on social platforms.
VIAC-IR
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
This communication 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, as amended,
and section 21E of the Securities Exchange Act of 1934, as amended.
Similarly, statements that describe our objectives, plans or goals
are or may be forward-looking statements. These forward-looking
statements reflect our current expectations concerning future
results and events; generally can be identified by the use of
statements that include phrases such as “believe,” “expect,”
“anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,”
“could,” “estimate” or other similar words or phrases; and involve
known and unknown risks, uncertainties and other factors that are
difficult to predict and which may cause our actual results,
performance or achievements 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: the impact of the COVID-19 pandemic (and other
widespread health emergencies or pandemics) and measures taken in
response thereto; technological developments, alternative content
offerings and their effects in our markets and on consumer
behavior; the impact on our advertising revenues of changes in
consumers’ content viewership, deficiencies in audience measurement
and advertising market conditions; the public acceptance of our
brands, programming, films, published content and other
entertainment content on the various platforms on which they are
distributed; increased costs for programming, films and other
rights; the loss of key talent; competition for content, audiences,
advertising and distribution in consolidating industries; the
potential for loss of carriage or other reduction in or the impact
of negotiations for the distribution of our content; the risks and
costs associated with the integration of the CBS Corporation and
Viacom Inc. businesses and investments in new businesses, products,
services and technologies; evolving cybersecurity and similar
risks; the failure, destruction or breach of critical satellites or
facilities; content theft; domestic and global political, economic
and/or regulatory factors affecting our businesses generally;
volatility in capital markets or a decrease in our debt ratings;
strikes and other union activity; fluctuations in our results due
to the timing, mix, number and availability of our films and other
programming; losses due to asset impairment charges for goodwill,
intangible assets, FCC licenses and programming; liabilities
related to discontinued operations and former businesses; potential
conflicts of interest arising from our ownership structure with a
controlling stockholder; and other factors described in our news
releases and filings with the Securities and Exchange Commission,
including but not limited to our most recent Annual Report on Form
10-K and reports on Form 10-Q and Form 8-K. There may be additional
risks, uncertainties and factors that we do not currently view as
material or that are not necessarily known. The forward-looking
statements included in this communication are made only as of the
date of this communication, and we do not undertake any obligation
to publicly update any forward-looking statements to reflect
subsequent events or circumstances.
VIACOMCBS INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions,
except per share amounts)
Quarter Ended
March 31,
2020
2019
Revenues
$
6,669
$
7,100
Costs and expenses:
Operating
4,065
4,248
Selling, general and administrative
1,341
1,313
Depreciation and amortization
113
106
Restructuring and other corporate
matters
233
178
Total costs and expenses
5,752
5,845
Gain on sale of assets
—
549
Operating income
917
1,804
Interest expense
(241
)
(240
)
Interest income
14
19
Gain on marketable securities
—
38
Other items, net
(33
)
(28
)
Earnings from continuing operations before
income taxes and equity in loss of
investee companies
657
1,593
(Provision) benefit for income taxes
(137
)
376
Equity in loss of investee companies, net
of tax
(9
)
(18
)
Net earnings from continuing
operations
511
1,951
Net earnings from discontinued operations,
net of tax
8
13
Net earnings (ViacomCBS and noncontrolling
interests)
519
1,964
Net earnings attributable to
noncontrolling interests
(3
)
(5
)
Net earnings attributable to ViacomCBS
$
516
$
1,959
Amounts attributable to ViacomCBS:
Net earnings from continuing
operations
$
508
$
1,946
Net earnings from discontinued operations,
net of tax
8
13
Net earnings attributable to ViacomCBS
$
516
$
1,959
Basic net earnings per common share
attributable to ViacomCBS:
Net earnings from continuing
operations
$
.83
$
3.17
Net earnings from discontinued
operations
$
.01
$
.02
Net earnings
$
.84
$
3.20
Diluted net earnings per common share
attributable to ViacomCBS:
Net earnings from continuing
operations
$
.82
$
3.15
Net earnings from discontinued
operations
$
.01
$
.02
Net earnings
$
.84
$
3.18
Weighted average number of common shares
outstanding:
Basic
614
613
Diluted
616
617
VIACOMCBS INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in millions,
except per share amounts)
At
At
March 31, 2020
December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents
$
589
$
632
Receivables, net
7,199
7,206
Programming and other inventory
1,431
2,876
Prepaid and other current assets
1,187
1,188
Total current assets
10,406
11,902
Property and equipment, net
2,028
2,085
Programming and other inventory
9,983
8,652
Goodwill
16,950
16,980
Intangible assets, net
2,968
2,993
Operating lease assets
1,874
1,939
Deferred income tax assets, net
931
939
Other assets
3,882
4,006
Assets held for sale
23
23
Total Assets
$
49,045
$
49,519
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Accounts payable
$
673
$
667
Accrued expenses
1,401
1,760
Participants’ share and royalties
payable
2,086
1,977
Accrued programming and production
costs
1,493
1,500
Deferred revenues
691
739
Debt
532
717
Other current liabilities
1,655
1,688
Total current liabilities
8,531
9,048
Long-term debt
18,005
18,002
Participants’ share and royalties
payable
1,556
1,546
Pension and postretirement benefit
obligations
2,092
2,121
Deferred income tax liabilities, net
639
500
Operating lease liabilities
1,841
1,909
Program rights obligations
316
356
Other liabilities
2,274
2,494
Redeemable noncontrolling interest
270
254
Commitments and contingencies
ViacomCBS stockholders’ equity:
Class A Common Stock, par value $.001 per
share; 55 shares authorized;
52 (2020 and 2019) shares issued
—
—
Class B Common Stock, par value $.001 per
share; 5,000 shares authorized;
1,065 (2020) and 1,064 (2019) shares
issued
1
1
Additional paid-in capital
29,633
29,590
Treasury stock, at cost; 502 (2020) and
501 (2019) Class B shares
(22,958
)
(22,908
)
Retained earnings
8,827
8,494
Accumulated other comprehensive loss
(2,054
)
(1,970
)
Total ViacomCBS stockholders’ equity
13,449
13,207
Noncontrolling interests
72
82
Total Equity
13,521
13,289
Total Liabilities and Equity
$
49,045
$
49,519
VIACOMCBS INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited; in
millions)
Quarter Ended
March 31,
2020
2019
Operating Activities:
Net earnings (ViacomCBS and noncontrolling
interests)
$
519
$
1,964
Less: Net earnings from discontinued
operations, net of tax
8
13
Net earnings from continuing
operations
511
1,951
Adjustments to reconcile net earnings from
continuing operations to net cash flow provided
by operating activities:
Depreciation and amortization
113
106
Deferred tax provision (benefit)
149
(571
)
Stock-based compensation
88
56
Gain on sale of assets
—
(549
)
Gain on marketable securities
—
(38
)
Equity in loss of investee companies, net
of tax and distributions
9
17
Change in assets and liabilities
(514
)
(43
)
Net cash flow provided by operating
activities
356
929
Investing Activities:
Investments
(46
)
(99
)
Capital expenditures
(51
)
(67
)
Acquisitions, net of cash acquired
—
(359
)
Proceeds from dispositions
146
741
Other investing activities
—
3
Net cash flow provided by investing
activities
49
219
Financing Activities:
Repayments of short-term debt borrowings,
net
(186
)
(674
)
Proceeds from issuance of senior notes
—
493
Repayment of notes and debentures
—
(600
)
Dividends
(152
)
(150
)
Purchase of Company common stock
(58
)
(14
)
Payment of payroll taxes in lieu of
issuing shares for stock-based compensation
(50
)
(41
)
Other financing activities
(33
)
(32
)
Net cash flow used for financing
activities
(479
)
(1,018
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(29
)
1
Net (decrease) increase in cash, cash
equivalents and restricted cash
(103
)
131
Cash, cash equivalents and restricted cash
at beginning of period
(includes $202 (2020) and $120 (2019) of
restricted cash)
834
976
Cash, cash equivalents and restricted cash
at end of period
(includes $142 (2020) and $121 (2019) of
restricted cash)
$
731
$
1,107
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP
FINANCIAL MEASURES (Unaudited; in millions, except per share
amounts)
Results for the quarters ended March 31, 2020 and 2019 included
certain items identified as affecting comparability. Adjusted
operating income before depreciation and amortization (“Adjusted
OIBDA”), adjusted earnings from continuing operations before income
taxes, adjusted provision for income taxes, adjusted net earnings
from continuing operations attributable to ViacomCBS and adjusted
diluted EPS from continuing operations (together, the “adjusted
measures”) exclude the impact of these items and are measures of
performance not calculated in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). We use
these measures to, among other things, evaluate our operating
performance. These measures are among the primary measures used by
management for planning and forecasting of future periods, and they
are important indicators of our operational strength and business
performance. In addition, we use Adjusted OIBDA to, among other
things, value prospective acquisitions. We believe these measures
are relevant and useful for investors because they allow investors
to view performance in a manner similar to the method used by our
management; provide a clearer perspective on our underlying
performance; and make it easier for investors, analysts and peers
to compare our operating performance to other companies in our
industry and to compare our year-over-year results.
Because the adjusted measures are measures of performance not
calculated in accordance with GAAP, they should not be considered
in isolation of, or as a substitute for, operating income, earnings
from continuing operations before income taxes, (provision) benefit
for income taxes, net earnings from continuing operations
attributable to ViacomCBS or diluted EPS from continuing
operations, as applicable, as indicators of operating performance.
These measures, as we calculate them, may not be comparable to
similarly titled measures employed by other companies.
The following tables reconcile the adjusted measures to their
most directly comparable financial measures in accordance with
GAAP.
Quarter Ended
March 31,
2020
2019
Operating income (GAAP)
$
917
1,804
Depreciation and amortization (a)
113
106
Restructuring and other corporate matters
(b)
233
178
Gain on sale of assets (b)
—
(549
)
Adjusted OIBDA (Non-GAAP)
$
1,263
$
1,539
(a)
2020 includes accelerated depreciation of
$12 million for technology that was abandoned in connection with
synergy plans related to the merger of Viacom Inc. with and into
CBS Corporation (the “Merger”).
(b)
See notes on the following tables for
additional information on items affecting comparability.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP
FINANCIAL MEASURES (Continued) (Unaudited; in millions, except per
share amounts)
Quarter Ended March 31,
2020
Earnings from Continuing
Operations Before Income Taxes
Provision for Income
Taxes
Net Earnings from Continuing
Operations Attributable to ViacomCBS
Diluted EPS from Continuing
Operations
Reported (GAAP)
$
657
$
(137
)
$
508
$
.82
Items affecting comparability:
Restructuring and other corporate matters
(a)
233
(47
)
186
.30
Depreciation of abandoned technology
(b)
12
(3
)
9
.02
Discrete tax items
—
(4
)
(4
)
(.01
)
Adjusted (Non-GAAP)
$
902
$
(191
)
$
699
$
1.13
(a)
Primarily reflects severance and exit
costs as well as other costs related to the Merger.
(b)
Reflects accelerated depreciation for
technology that was abandoned in connection with synergy plans
related to the Merger.
Quarter Ended March 31,
2019
Earnings from Continuing
Operations Before Income Taxes
Benefit (Provision) for Income
Taxes
Net Earnings from Continuing
Operations Attributable to ViacomCBS
Diluted EPS from Continuing
Operations
Reported (GAAP)
$
1,593
$
376
$
1,946
$
3.15
Items affecting comparability:
Restructuring and other corporate matters
(a)
178
(43
)
135
.22
Gain on sale of assets (b)
(549
)
163
(386
)
(.63
)
Gain on marketable securities
(38
)
9
(29
)
(.04
)
Discrete tax items (c)
—
(768
)
(768
)
(1.24
)
Adjusted (Non-GAAP)
$
1,184
$
(263
)
$
898
$
1.46
(a)
Reflects severance and exit costs as well
as costs associated with the settlement of a commercial dispute and
other legal proceedings involving the Company.
(b)
Reflects a gain on the sale of the CBS
Television City property and sound stage operation.
(c)
Reflects a deferred tax benefit resulting
from the transfer of intangible assets between our subsidiaries in
connection with a reorganization of our international
operations.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP
FINANCIAL MEASURES (Continued) (Unaudited; in millions, except per
share amounts)
Free Cash Flow
Free cash flow is a non-GAAP financial measure. Free cash flow
reflects our net cash flow provided by operating activities less
capital expenditures. Our calculation of free cash flow includes
capital expenditures because investment in capital expenditures is
a use of cash that is directly related to our operations. Our net
cash flow provided by 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 us to service debt,
make strategic acquisitions and investments, maintain our capital
assets, satisfy our tax obligations, and fund ongoing operations
and working capital needs. As a result, free cash flow is a
significant measure of our 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 our operating performance. We
believe the presentation of free cash flow is relevant and useful
for investors because it allows investors to evaluate the cash
generated from our underlying operations in a manner similar to the
method used by management. Free cash flow is among several
components of incentive compensation targets for certain management
personnel. In addition, free cash flow is a primary measure used
externally by our investors, analysts and industry peers for
purposes of valuation and comparison of our operating performance
to other companies in our 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 operating
activities as a measure of liquidity or net earnings as a measure
of operating performance. Free cash flow, as we calculate 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
our ability to fund our cash needs.
The following table presents a reconciliation of our net cash
flow provided by operating activities to free cash flow.
Quarter Ended
March 31,
2020
2019
Net cash flow provided by operating
activities (GAAP)
$
356
$
929
Capital expenditures
(51
)
(67
)
Free cash flow (Non-GAAP)
$
305
$
862
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005283/en/
Press: Justin Dini
Executive Vice President, Corporate Communications (212) 846-2724
justin.dini@viacbs.com
Justin Blaber Senior Director, Corporate Communications
(212) 846-3139 justin.blaber@viacom.com
Pranita Sookai Director, Corporate Communications (212)
846-7553 pranita.sookai@viacom.com
Investors: Anthony
DiClemente Executive Vice President, Investor Relations (212)
846-5208 anthony.diclemente@viacbs.com
Jaime Morris Vice President, Investor Relations (212)
846-5237 jaime.morris@viacbs.com
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