NEW YORK, Aug. 8, 2019 /PRNewswire/ -- CBS Corporation
(NYSE: CBS.A and CBS) today reported results for the second quarter
of 2019, including the Company's best-ever second quarter results
in revenues, adjusted operating income and adjusted diluted
earnings per share ("EPS").
"CBS delivered another outstanding quarter as we continue to
execute on our long-term growth strategy, which is to invest in our
premium content and direct-to-consumer streaming services," said
Joe Ianniello, President and Acting
Chief Executive Officer, CBS Corporation. "We achieved double-digit
revenue growth in the second quarter, with increases in each of our
three key revenue sources. Our direct-to-consumer services, CBS
All Access and Showtime, continue to perform strongly,
helping fuel a 13% increase in affiliate and subscription fee
revenue for the quarter. And we remain on track to reach our goal
of 25 million subscribers combined by 2022. Meanwhile, advertising
grew 7%, and we have continued momentum as we head into the back
half of the year, thanks to another robust upfront, with solid
gains in pricing. Content licensing also had a very strong quarter,
up 12%, as we continue to build a lucrative portfolio by creating
must-have programming for our own content brands in addition to
highly successful content for third-party platforms. So with our
strong quarterly results we're reporting today and the prospects we
have before us, we feel even better about our future as a global
multiplatform premium content company."
Second Quarter 2019 Results
Revenues for the second quarter of 2019 increased 10% to
$3.81 billion from $3.47 billion for the same prior-year period,
with growth across all of the Company's significant revenue
streams. Advertising revenues grew 7%, led by CBS' broadcast of the
national semifinals and championship game of the NCAA Division I
Men's Basketball Tournament ("NCAA Tournament") in the second
quarter of 2019. Content licensing and distribution revenues were
up 12%, mainly as a result of higher domestic licensing sales.
Affiliate and subscription fee revenues rose 13%, reflecting growth
from the Company's direct-to-consumer streaming services and
increases in fees from CBS Television Network affiliated stations
and retransmission revenues, driven by virtual MVPDs.
Operating income for the second quarter of 2019 increased 5% to
$695 million from $659 million for the same prior-year period.
Adjusted operating income increased 1% to $702 million from $694
million for the same prior-year period. These increases were
primarily driven by the revenue growth, which was offset by a
higher investment in content, and higher costs associated with the
growth and expansion of the Company's direct-to-consumer streaming
services.
Net earnings for the second quarter of 2019 increased
10% to $440 million from
$400 million for the second quarter
of 2018. Adjusted net earnings increased 2% to $435 million from $427
million for the second quarter of 2018. These increases were
mainly a result of the higher operating income.
Diluted EPS for the second quarter of 2019 increased 11% to
$1.17 from $1.05 for the same quarter in 2018. Adjusted
diluted EPS increased 4% to $1.16
from $1.12 for the same prior-year
period.
Cash Flow
For the second quarter of 2019, operating cash flow was an
outflow of $124 million compared with
an inflow of $326 million for the
second quarter of 2018. For the first six months of 2019, operating
cash flow was $314 million compared
with $1.04 billion for the same
period in 2018. Free cash flow was an outflow of $157 million for the second quarter of 2019
compared with an inflow of $296
million for the same prior-year period, and for the first
six months of the year, free cash flow was $254 million in 2019 compared with $983 million for 2018. The decreases were mainly
driven by an increased investment in content and higher payments
for income taxes.
Details of the discrete items excluded from financial results
and reconciliations of adjusted results and free cash flow to their
most directly comparable GAAP financial measures 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; segment operating income (loss); and depreciation and
amortization by segment for the three and six months ended
June 30, 2019, and 2018.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Revenues by
Segment
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Entertainment
|
$
|
2,741
|
|
|
$
|
2,402
|
|
|
$
|
5,917
|
|
|
$
|
5,155
|
|
Cable
Networks
|
562
|
|
|
553
|
|
|
1,114
|
|
|
1,124
|
|
Publishing
|
218
|
|
|
207
|
|
|
382
|
|
|
367
|
|
Local
Media
|
423
|
|
|
420
|
|
|
880
|
|
|
835
|
|
Corporate/Eliminations
|
(135)
|
|
|
(116)
|
|
|
(317)
|
|
|
(254)
|
|
Total
Revenues
|
$
|
3,809
|
|
|
$
|
3,466
|
|
|
$
|
7,976
|
|
|
$
|
7,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Revenues by
Type
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Advertising
|
$
|
1,424
|
|
|
$
|
1,327
|
|
|
$
|
3,468
|
|
|
$
|
3,060
|
|
Content licensing and
distribution
|
1,224
|
|
|
1,096
|
|
|
2,187
|
|
|
2,091
|
|
Affiliate and
subscription fees
|
1,113
|
|
|
989
|
|
|
2,224
|
|
|
1,968
|
|
Other
|
48
|
|
|
54
|
|
|
97
|
|
|
108
|
|
Total
Revenues
|
$
|
3,809
|
|
|
$
|
3,466
|
|
|
$
|
7,976
|
|
|
$
|
7,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Segment Operating
Income (Loss)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Entertainment
|
$
|
426
|
|
|
$
|
367
|
|
|
$
|
956
|
|
|
$
|
853
|
|
Cable
Networks
|
185
|
|
|
245
|
|
|
360
|
|
|
481
|
|
Publishing
|
33
|
|
|
31
|
|
|
50
|
|
|
47
|
|
Local
Media
|
130
|
|
|
128
|
|
|
268
|
|
|
246
|
|
Corporate
|
(72)
|
|
|
(77)
|
|
|
(139)
|
|
|
(152)
|
|
Adjusted Operating
Income
|
702
|
|
|
694
|
|
|
1,495
|
|
|
1,475
|
|
Restructuring and
other corporate matters
|
(7)
|
|
|
(35)
|
|
|
(121)
|
|
|
(44)
|
|
Gain on sale of
assets
|
—
|
|
|
—
|
|
|
549
|
|
|
—
|
|
Total Operating
Income
|
$
|
695
|
|
|
$
|
659
|
|
|
$
|
1,923
|
|
|
$
|
1,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Depreciation and
Amortization
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Entertainment
|
$
|
29
|
|
|
$
|
32
|
|
|
$
|
59
|
|
|
$
|
63
|
|
Cable
Networks
|
6
|
|
|
4
|
|
|
10
|
|
|
9
|
|
Publishing
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
Local
Media
|
9
|
|
|
11
|
|
|
20
|
|
|
22
|
|
Corporate
|
7
|
|
|
7
|
|
|
14
|
|
|
15
|
|
Total Depreciation
and Amortization
|
$
|
53
|
|
|
$
|
56
|
|
|
$
|
106
|
|
|
$
|
112
|
|
Entertainment (CBS Television Network, CBS Television
Studios, CBS Global Distribution Group, Network 10, CBS
Interactive, CBS Sports Network and CBS Films)
Entertainment revenues of $2.74
billion for the second quarter of 2019 increased 14% from
$2.40 billion for the second quarter
of 2018. Advertising revenues increased 9% from the same prior-year
period, led by the CBS Television Network's broadcast of the
national semifinals and championship game of the NCAA Tournament.
Underlying CBS Network advertising revenues increased 3% for the
quarter. Content licensing and distribution revenues were up 18%,
mainly from growth in domestic licensing sales and higher sales of
series produced for third-party services. Affiliate and
subscription fee revenues grew 22%, driven by increases in station
affiliation fees and revenues from virtual MVPDs, as well as
subscriber growth at CBS All Access.
Entertainment operating income of $426
million for the second quarter of 2019 increased 16% from
$367 million for the same prior-year
period. This increase was driven by the revenue growth, which was
partially offset by an increased investment in content and higher
costs associated with the growth and expansion of the Company's
direct-to-consumer streaming services.
Cable Networks (Showtime Networks, Pop and Smithsonian
Networks)
Cable Networks revenues of $562
million for the second quarter of 2019 increased 2% from
$553 million for the same prior-year
period. The increase reflects growth from the Showtime
digital streaming subscription offering as well as the inclusion of
the results of Pop. The Company acquired the remaining stake
of Pop in March 2019, bringing
its ownership to 100%. These increases were partially offset by the
timing of international licensing sales.
Cable Networks operating income of $185
million for the second quarter of 2019 decreased 24% from
$245 million for the same prior-year
period. The decrease mainly reflects the lower licensing revenues
and an increased investment in programming, including costs
associated with the June 2019
premieres of the new series City On A Hill and the limited
series The Loudest Voice.
Publishing (Simon & Schuster)
Publishing revenues of $218
million for the second quarter of 2019 increased 5% from
$207 million for the same prior-year
period, driven by higher print book and digital audio sales.
Bestselling titles for the second quarter of 2019 included
Howard Stern Comes Again by Howard
Stern and The Pioneers by David McCullough.
Publishing operating income of $33
million for the second quarter of 2019 increased 6% from
$31 million for the same prior-year
period, mainly as a result of the higher revenues.
Local Media (CBS Television Stations and CBS Local
Digital Media)
Local Media revenues of $423
million for the second quarter of 2019 increased 1% from
$420 million for the same prior-year
period, reflecting revenues from the broadcast of the national
semifinals and championship game of the NCAA Tournament and growth
in retransmission revenues. These increases were partially offset
by lower political advertising sales.
Local Media operating income of $130
million for the second quarter of 2019 increased 2% from
$128 million for the same prior-year
period, mainly as a result of the higher revenues.
Corporate
Corporate expenses of $72 million
for the second quarter of 2019 decreased 6% from $77 million for the same prior-year period,
primarily reflecting lower executive compensation 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, local TV, film and interactive. CBS'
businesses include CBS Television Network, The CW (a joint venture
between CBS Corporation and Warner Bros. Entertainment), Network 10
Australia, CBS Television Studios, CBS Global Distribution Group,
CBS Consumer Products, CBS Home Entertainment, CBS Interactive,
CBS All Access, the Company's direct-to-consumer digital
streaming subscription service, CBS Sports Network, CBS Films,
Showtime Networks, Pop, Smithsonian Networks, Simon & Schuster,
CBS Television Stations 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. 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; increased programming costs and investments; 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; the outcomes of investigation-related
legal actions, which are inherently unpredictable, and any
associated costs; the uncertainties arising from leadership changes
at the Company; 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, technological 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 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,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
3,809
|
|
|
$
|
3,466
|
|
|
$
|
7,976
|
|
|
$
|
7,227
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
695
|
|
|
$
|
659
|
|
|
$
|
1,923
|
|
|
$
|
1,431
|
|
Interest
expense
|
(115)
|
|
|
(116)
|
|
|
(232)
|
|
|
(234)
|
|
Interest
income
|
12
|
|
|
14
|
|
|
26
|
|
|
31
|
|
Other items,
net
|
(21)
|
|
|
(24)
|
|
|
(42)
|
|
|
(35)
|
|
Earnings before
income taxes and equity in loss of investee companies
|
571
|
|
|
533
|
|
|
1,675
|
|
|
1,193
|
|
(Provision) benefit
for income taxes
|
(119)
|
|
|
(113)
|
|
|
377
|
|
|
(248)
|
|
Equity in loss of
investee companies, net of tax
|
(12)
|
|
|
(20)
|
|
|
(29)
|
|
|
(34)
|
|
Net
earnings
|
$
|
440
|
|
|
$
|
400
|
|
|
$
|
2,023
|
|
|
$
|
911
|
|
|
|
|
|
|
|
|
|
Basic net earnings
per common share
|
$
|
1.18
|
|
|
$
|
1.06
|
|
|
$
|
5.41
|
|
|
$
|
2.40
|
|
|
|
|
|
|
|
|
|
Diluted net
earnings per common share
|
$
|
1.17
|
|
|
$
|
1.05
|
|
|
$
|
5.38
|
|
|
$
|
2.38
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
374
|
|
|
378
|
|
|
374
|
|
|
380
|
|
Diluted
|
376
|
|
|
381
|
|
|
376
|
|
|
383
|
|
CBS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited; in millions)
|
|
|
At
|
|
|
At
|
|
|
June 30,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
216
|
|
|
|
|
$
|
322
|
|
|
Receivables,
net
|
|
3,795
|
|
|
|
|
4,041
|
|
|
Programming and other
inventory
|
|
1,945
|
|
|
|
|
1,988
|
|
|
Prepaid expenses and
other current assets
|
|
380
|
|
|
|
|
401
|
|
|
Total current
assets
|
|
6,336
|
|
|
|
|
6,752
|
|
|
Property and
equipment
|
|
2,931
|
|
|
|
|
2,926
|
|
|
Less accumulated
depreciation and amortization
|
|
1,754
|
|
|
|
|
1,717
|
|
|
Net property and
equipment
|
|
1,177
|
|
|
|
|
1,209
|
|
|
Programming and other
inventory
|
|
4,269
|
|
|
|
|
3,883
|
|
|
Goodwill
|
|
5,062
|
|
|
|
|
4,920
|
|
|
Intangible
assets
|
|
2,660
|
|
|
|
|
2,638
|
|
|
Operating lease
assets
|
|
922
|
|
|
|
|
—
|
|
|
Deferred income tax
assets, net
|
|
785
|
|
|
|
|
29
|
|
|
Other
assets
|
|
2,624
|
|
|
|
|
2,395
|
|
|
Assets held for
sale
|
|
—
|
|
|
|
|
33
|
|
|
Total
Assets
|
|
$
|
23,835
|
|
|
|
|
$
|
21,859
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
214
|
|
|
|
|
$
|
201
|
|
|
Participants' share
and royalties payable
|
|
1,188
|
|
|
|
|
1,177
|
|
|
Accrued programming
and production costs
|
|
590
|
|
|
|
|
704
|
|
|
Commercial
paper
|
|
—
|
|
|
|
|
674
|
|
|
Accrued expenses and
other current liabilities
|
|
1,851
|
|
|
|
|
1,817
|
|
|
Total current
liabilities
|
|
3,843
|
|
|
|
|
4,573
|
|
|
Long-term
debt
|
|
9,359
|
|
|
|
|
9,465
|
|
|
Noncurrent operating
lease liabilities
|
|
858
|
|
|
|
|
—
|
|
|
Other
liabilities
|
|
5,022
|
|
|
|
|
5,017
|
|
|
Stockholders'
Equity
|
|
4,753
|
|
|
|
|
2,804
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
23,835
|
|
|
|
|
$
|
21,859
|
|
|
CBS CORPORATION
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
Six Months
Ended
|
|
June
30,
|
|
2019
|
|
2018
|
Operating
Activities:
|
|
|
|
Net
earnings
|
$
|
2,023
|
|
|
$
|
911
|
|
Adjustments to
reconcile net earnings to net cash flow provided by operating
activities
from
continuing operations:
|
|
|
|
Depreciation and
amortization
|
106
|
|
|
112
|
|
Deferred tax
(benefit) provision
|
(607)
|
|
|
40
|
|
Stock-based
compensation
|
75
|
|
|
91
|
|
Equity in loss of
investee companies, net of tax and distributions
|
29
|
|
|
34
|
|
Gain on sale of
assets
|
(549)
|
|
|
—
|
|
Change in assets and
liabilities, net of investing and financing activities
|
(763)
|
|
|
(143)
|
|
Net cash flow
provided by operating activities from continuing
operations
|
314
|
|
|
1,045
|
|
Net cash flow used
for operating activities from discontinued operations
|
—
|
|
|
(2)
|
|
Net cash flow
provided by operating activities
|
314
|
|
|
1,043
|
|
Investing
Activities:
|
|
|
|
Investments in and
advances to investee companies
|
(72)
|
|
|
(71)
|
|
Capital
expenditures
|
(60)
|
|
|
(62)
|
|
Acquisitions, net of
cash acquired
|
(39)
|
|
|
(29)
|
|
Proceeds from
dispositions
|
736
|
|
|
—
|
|
Proceeds from sale of
investments
|
15
|
|
|
—
|
|
Other investing
activities
|
2
|
|
|
2
|
|
Net cash flow
provided by (used for) investing activities from continuing
operations
|
582
|
|
|
(160)
|
|
Net cash flow used
for investing activities from discontinued operations
|
—
|
|
|
(23)
|
|
Net cash flow
provided by (used for) investing activities
|
582
|
|
|
(183)
|
|
Financing
Activities:
|
|
|
|
Repayments of
short-term debt borrowings, net
|
(674)
|
|
|
(309)
|
|
Proceeds from
issuance of senior notes
|
493
|
|
|
—
|
|
Repayment of senior
notes
|
(600)
|
|
|
—
|
|
Payment of finance
lease obligations
|
(6)
|
|
|
(8)
|
|
Payment of contingent
consideration
|
(3)
|
|
|
(5)
|
|
Dividends
|
(138)
|
|
|
(140)
|
|
Purchase of Company
common stock
|
(14)
|
|
|
(394)
|
|
Payment of payroll
taxes in lieu of issuing shares for stock-based
compensation
|
(43)
|
|
|
(58)
|
|
Acquisition of
noncontrolling interest
|
(26)
|
|
|
—
|
|
Proceeds from
exercise of stock options
|
11
|
|
|
22
|
|
Other financing
activities
|
—
|
|
|
(1)
|
|
Net cash flow used
for financing activities
|
(1,000)
|
|
|
(893)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
(104)
|
|
|
(33)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
(includes $120 (2019) and $0 (2018) of restricted
cash)
|
442
|
|
|
285
|
|
Cash, cash
equivalents and restricted cash at end of period
(includes $122 (2019) and $0 (2018) of restricted
cash)
|
$
|
338
|
|
|
$
|
252
|
|
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, 2019 and 2018. The Company defines
"Adjusted Operating Income" as operating income excluding costs for
restructuring and other corporate matters and gain on sale of
assets, each 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; provide a clearer perspective on
the underlying performance of the Company; and make 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.
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.
CBS CORPORATION
AND SUBSIDIARIES
|
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
|
(Unaudited; in
millions)
|
|
|
Three Months Ended
June 30,
|
|
2019
|
|
2018
|
Adjusted Operating
Income
|
$
|
702
|
|
|
$
|
694
|
|
Restructuring and
other corporate matters
|
(7)
|
|
|
(35)
|
|
Operating
income
|
695
|
|
|
659
|
|
Interest
expense
|
(115)
|
|
|
(116)
|
|
Interest
income
|
12
|
|
|
14
|
|
Other items,
net
|
(21)
|
|
|
(24)
|
|
Earnings before
income taxes and equity in loss of investee companies
|
571
|
|
|
533
|
|
Provision for income
taxes
|
(119)
|
|
|
(113)
|
|
Equity in loss of
investee companies, net of tax
|
(12)
|
|
|
(20)
|
|
Net
earnings
|
$
|
440
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
Adjusted Operating
Income
|
$
|
1,495
|
|
|
$
|
1,475
|
|
Restructuring and
other corporate matters
|
(121)
|
|
|
(44)
|
|
Gain on sale of
assets
|
549
|
|
|
—
|
|
Operating
income
|
1,923
|
|
|
1,431
|
|
Interest
expense
|
(232)
|
|
|
(234)
|
|
Interest
income
|
26
|
|
|
31
|
|
Other items,
net
|
(42)
|
|
|
(35)
|
|
Earnings before
income taxes and equity in loss of investee companies
|
1,675
|
|
|
1,193
|
|
Benefit (provision)
for income taxes
|
377
|
|
|
(248)
|
|
Equity in loss of
investee companies, net of tax
|
(29)
|
|
|
(34)
|
|
Net
earnings
|
$
|
2,023
|
|
|
$
|
911
|
|
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 net cash flow (used for)
provided by 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 (used for) 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 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 (used for) provided by
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
(used for) provided by 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 (used for) provided by operating activities to free
cash flow:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash flow (used
for) provided by operating activities
|
$
|
(124)
|
|
|
$
|
326
|
|
|
$
|
314
|
|
|
$
|
1,043
|
|
Capital
expenditures
|
(33)
|
|
|
(32)
|
|
|
(60)
|
|
|
(62)
|
|
Less: Operating cash
flow from discontinued operations
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
Free cash
flow
|
$
|
(157)
|
|
|
$
|
296
|
|
|
$
|
254
|
|
|
$
|
983
|
|
The following table presents a summary of the Company's cash
flows:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash flow (used
for) provided by operating activities
|
$
|
(124)
|
|
|
$
|
326
|
|
|
$
|
314
|
|
|
$
|
1,043
|
|
Net cash flow (used
for) provided by investing activities
|
$
|
(53)
|
|
|
$
|
(93)
|
|
|
$
|
582
|
|
|
$
|
(183)
|
|
Net cash flow used
for financing activities
|
$
|
(106)
|
|
|
$
|
(128)
|
|
|
$
|
(1,000)
|
|
|
$
|
(893)
|
|
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(continued)
(Unaudited; in millions, except per share
amounts)
2019 and 2018 Adjusted Results
The Company's results included discrete items that affected
comparability. Adjusted results exclude these discrete items and
are measures of performance not calculated in accordance with GAAP.
The Company believes that 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;
provide a clearer perspective on the underlying performance of the
Company; and make 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.
The following tables reconcile adjusted financial results to their
most directly comparable GAAP financial measures.
|
Three Months Ended
June 30, 2019
|
|
Reported
|
Corporate
Matters
(a)
|
|
Gain on
Sale
of Asset
(b)
|
|
Adjusted
|
|
Revenues
|
$
|
3,809
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
$
|
3,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
695
|
|
|
$
|
7
|
|
|
|
|
$
|
—
|
|
|
|
$
|
702
|
|
|
Operating income
margin (c)
|
18
|
%
|
|
|
|
|
|
|
|
|
18
|
%
|
|
Interest
expense
|
(115)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(115)
|
|
|
Interest
income
|
12
|
|
|
—
|
|
|
|
|
—
|
|
|
|
12
|
|
|
Other items,
net
|
(21)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
(21)
|
|
|
Earnings before
income taxes and equity in loss of
investee companies
|
571
|
|
|
7
|
|
|
|
|
—
|
|
|
|
578
|
|
|
Provision for income
taxes
|
(119)
|
|
|
(2)
|
|
|
|
|
—
|
|
|
|
(121)
|
|
|
Effective income tax
rate
|
20.8
|
%
|
|
|
|
|
|
|
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(12)
|
|
|
—
|
|
|
|
|
(10)
|
|
|
|
(22)
|
|
|
Net
earnings
|
$
|
440
|
|
|
$
|
5
|
|
|
|
|
$
|
(10)
|
|
|
|
$
|
435
|
|
|
Diluted
EPS
|
$
|
1.17
|
|
|
$
|
.01
|
|
|
|
|
$
|
(.03)
|
|
|
|
$
|
1.16
|
|
|
Diluted weighted
average number of common shares
outstanding
|
376
|
|
|
|
|
|
|
|
|
|
376
|
|
|
(a)
|
Reflects professional
fees associated with legal proceedings involving the Company and
other corporate matters.
|
(b)
|
Reflects a gain on
the sale of an international joint venture.
|
(c)
|
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, 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 and equity in loss of investee companies
|
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 associated with legal proceedings involving the
Company and other corporate matters.
|
(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, 2019
|
|
Reported
|
Restructuring
and Other
Corporate
Matters
(a)
|
|
Gain on
Sale
of Assets
(b)
|
|
Tax
Item
(c)
|
|
Adjusted
|
|
Revenues
|
$
|
7,976
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
7,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
1,923
|
|
|
$
|
121
|
|
|
|
|
$
|
(549)
|
|
|
|
$
|
—
|
|
|
$
|
1,495
|
|
|
Operating income
margin (d)
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
19
|
%
|
|
Interest
expense
|
(232)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
(232)
|
|
|
Interest
income
|
26
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
26
|
|
|
Other items,
net
|
(42)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
(42)
|
|
|
Earnings before
income taxes and equity in loss of
investee companies
|
1,675
|
|
|
121
|
|
|
|
|
(549)
|
|
|
|
—
|
|
|
1,247
|
|
|
Benefit (provision)
for income taxes
|
377
|
|
|
(30)
|
|
|
|
|
163
|
|
|
|
(768)
|
|
|
(258)
|
|
|
Effective income tax
rate
|
(22.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
20.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss of
investee companies, net of tax
|
(29)
|
|
|
—
|
|
|
|
|
(10)
|
|
|
|
—
|
|
|
(39)
|
|
|
Net
earnings
|
$
|
2,023
|
|
|
$
|
91
|
|
|
|
|
$
|
(396)
|
|
|
|
$
|
(768)
|
|
|
$
|
950
|
|
|
Diluted
EPS
|
$
|
5.38
|
|
|
$
|
.24
|
|
|
|
|
$
|
(1.05)
|
|
|
|
$
|
(2.04)
|
|
|
$
|
2.53
|
|
|
Diluted weighted
average number of common shares
outstanding
|
376
|
|
|
|
|
|
|
|
|
|
|
|
376
|
|
|
(a)
|
Primarily reflects
restructuring charges of $108 million ($81 million, net of tax) at
Entertainment, Cable Networks, Publishing, Local Media and
Corporate and expenses of $13 million ($10 million, net of tax)
associated with legal proceedings involving the Company and other
corporate matters.
|
(b)
|
Reflects a gain of
$549 million ($386 million, net of tax) on the sale of the CBS
Television City property and sound stage operation and a gain on
the sale of an international joint venture.
|
(c)
|
Reflects a deferred
tax benefit resulting from the transfer of intangible assets
between subsidiaries of the Company in connection with a
reorganization of the Company's international
operations.
|
(d)
|
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 and equity in loss of investee companies
|
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 associated with legal proceedings involving the
Company and other corporate matters.
|
(b)
|
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-2019-results-300899064.html
SOURCE CBS Corporation