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CBS Corporation Reports Second Quarter 2007 Results
Net Earnings From Continuing Operations Up 9% to $393 Million and EPS Up
15% to $.54 Per Diluted Share, Each Adjusted For Tax Benefits and Station
Divestitures
Free Cash Flow Up 4% to $571 Million, First Half 2007 Free Cash Flow Up 11%
to $1.3 Billion
NEW YORK, July 31 /PRNewswire-FirstCall/ -- CBS Corporation (
CBS.A and CBS) today reported results for the second quarter ended June 30,
2007.
"CBS Corporation has delivered yet again," said Sumner Redstone,
Executive Chairman, CBS Corporation. "With smart, strategic acquisitions
and selective investments, Leslie and his team are positioning the Company
for the future while doing a terrific job managing CBS's world class
assets. I am proud of all we have accomplished and confident that we'll
continue to capitalize upon the unique set of opportunities that lie
ahead."
"We had solid second quarter results with mid-teens EPS growth on an
adjusted basis, as well as strong free cash flow which continues to allow
us to return value to our shareholders," said Leslie Moonves, President and
CEO, CBS Corporation. "I'm pleased with our underlying revenue performance,
coupled with the excellent showing by the CBS Television Network in the
Upfront marketplace, which underscores the strength of our network
television business. At the same time, we continue to adjust our portfolio
of assets, moving this quarter to complete the sale of several television
and radio stations and investing in new digital properties. Together with a
host of other strategic investments, our acquisition of Last.fm during the
quarter adds a compelling interactive extension to all of our content
properties and is helping us advance our overall strategy of building
communities around our industry-leading content."
Second Quarter 2007 Results
Revenues of $3.4 billion for the second quarter of 2007 decreased 3%
from $3.5 billion for the same quarter last year, reflecting the absence of
UPN, which ceased broadcasting in September of 2006, the timing of the
semifinals of the NCAA Men's Basketball Tournament, which aired in the
first quarter in 2007 versus the second quarter in 2006, and the impact of
radio and television station divestitures.
Operating income before depreciation and amortization ("OIBDA") of
$859.4 million and operating income of $749.9 million for the second
quarter of 2007 remained flat with $858.9 million and $750.3 million,
respectively, for the same prior-year period, as increases at Television,
Publishing and Outdoor and lower residual costs were offset by a decline at
Radio. Stock-based compensation expense for the second quarter of 2007 was
$30.5 million versus $18.2 million for the same quarter in 2006.
Reported net earnings from continuing operations for the second quarter
of 2007 were $404.0 million, or $.55 per diluted share. Net earnings from
continuing operations for the same period last year were $489.8 million, or
$.64 per diluted share, which included a tax benefit of $129.0 million, or
$.17 per diluted share, from income tax settlements. On an adjusted basis,
excluding tax benefits from income tax settlements in both years and the
pre- tax gain and related tax effect of station divestitures, net earnings
from continuing operations increased 9% to $393.1 million for the second
quarter of 2007 from $360.8 million, and diluted earnings per share from
continuing operations increased 15% to $.54 from $.47 for the same
prior-year period, due in part to lower shares outstanding in 2007. Net
earnings were $404.0 million, or $.55 per diluted share, compared with
$781.7 million, or $1.02 per diluted share, for the second quarter of 2006.
Net earnings for the second quarter of 2006 included net earnings from
discontinued operations of $291.9 million, or $.38 per diluted share,
principally reflecting the gain on the sale of Paramount Parks.
Free cash flow of $570.5 million for the second quarter of 2007
increased 4% from $546.2 million for the same prior-year period.
First Half 2007 Results
For the six months ended June 30, 2007, revenues of $7.03 billion
decreased $26 million from the same prior-year period, as growth at
Publishing and Outdoor was offset by declines at Radio and Television,
primarily reflecting the impact of radio and television station
divestitures and the absence of UPN. These decreases were partially offset
by the 2007 telecast of Super Bowl XLI on CBS Network. OIBDA of $1.5
billion remained flat and operating income of $1.3 billion decreased 1% as
compared to the first half of 2006. Stock-based compensation expense was
$51.5 million for the first six months of 2007 versus $30.8 million for the
same prior-year period.
Reported net earnings from continuing operations for the first half of
2007 were $617.5 million, or $.83 per diluted share, compared to $724.3
million, or $.94 per diluted share, for the same prior-year period. On an
adjusted basis, excluding tax benefits from income tax settlements in both
years and the pre-tax gain and related tax effect of station divestitures,
net earnings from continuing operations increased 9% to $646.7 million for
the first half of 2007 from $595.3 million, and diluted earnings per share
from continuing operations increased 13% to $.87 from $.77 for the same
prior-year period, due in part to lower shares outstanding in 2007. Net
earnings were $617.5 million, or $.83 per diluted share, compared to $1.0
billion, or $1.31 per diluted share, for the first half of 2006. Net
earnings for the 2006 period included net earnings from discontinued
operations of $284.3 million, or $.37 per diluted share, principally
reflecting the gain on the sale of Paramount Parks.
Free cash flow for the first six months of 2007 was $1.3 billion, up
11% from $1.2 billion for the same prior-year period.
Business Outlook
When comparing full year 2007 to 2006 on an as reported basis, several
factors -- including higher expense for stock-based compensation, the sale
of 39 radio stations and nine television stations, the shutdown of UPN and
the non-renewal of low-margin major urban outdoor transit contracts -- will
result in revenue and operating income that will be comparable to that of
2006.
For the long-term, the Company is positioned to deliver rates of growth
as follows: low single-digit growth in revenues, mid single-digit growth in
operating income and high single-digit growth in earnings per share.
Consolidated and Segment Results
The tables below present the Company's revenues, OIBDA and operating
income by segment for the three and six months ended June 30, 2007 and 2006
(dollars in millions). Reconciliations of all non-GAAP measures to reported
results have been included at the end of this earnings release.
Three Months Ended Six Months Ended
June 30, Better/ June 30, Better/
Revenues 2007 2006 (Worse)% 2007 2006 (Worse)%
Television $2,163.0 $2,259.8 (4)% $4,736.0 $4,775.5 (1)%
Radio 463.4 519.1 (11) 860.9 953.6 (10)
Outdoor 554.2 534.4 4 1,016.5 986.6 3
Publishing 200.3 176.0 14 429.6 357.1 20
Eliminations (6.0) (6.2) 3 (10.3) (14.3) 28
Total Revenues $3,374.9 $3,483.1 (3)% $7,032.7 $7,058.5 -%
Three Months Ended Six Months Ended
June 30, Better/ June 30, Better/
OIBDA 2007 2006 (Worse)% 2007 2006 (Worse)%
Television $549.5 $535.4 3% $948.5 $959.1 (1)%
Radio 187.3 227.9 (18) 351.7 398.5 (12)
Outdoor 168.3 160.0 5 268.5 259.1 4
Publishing 20.1 10.6 90 43.9 16.4 n/m
Corporate (41.6) (39.7) (5) (68.4) (67.4) (1)
Residual costs (24.2) (35.3) 31 (48.3) (70.6) 32
Total OIBDA $859.4 $858.9 -% $1,495.9 $1,495.1 -%
Three Months Ended Six Months Ended
June 30, Better/ June 30, Better/
Operating Income 2007 2006 (Worse)% 2007 2006 (Worse)%
Television $506.1 $491.9 3% $856.2 $874.7 (2)%
Radio 179.4 219.6 (18) 336.2 382.2 (12)
Outdoor 115.3 107.9 7 162.3 152.4 6
Publishing 18.1 8.2 n/m 39.5 11.9 n/m
Corporate (44.8) (42.0) (7) (74.7) (72.1) (4)
Residual costs (24.2) (35.3) 31 (48.3) (70.6) 32
Total Operating
Income $749.9 $750.3 -% $1,271.2 $1,278.5 (1)%
n/m - not meaningful
Television (CBS Television Network, Television Stations, CBS Paramount
Network Television, CBS Television Distribution, Showtime Networks and CSTV
Networks)
Television revenues for the second quarter of 2007 decreased 4% to $2.2
billion from $2.3 billion for the same prior-year period as underlying
revenue growth in the Television segment was more than offset by the timing
of the semifinals of the NCAA Men's Basketball Tournament, the absence of
UPN and the impact of television station divestitures. Advertising revenues
decreased 11% from the same prior-year period principally due to these same
three factors. Television license fees decreased 8% principally due to the
absence of the 2006 domestic syndication of Without A Trace. Home
entertainment revenues increased $83.4 million over the second quarter of
2006.
Television OIBDA and operating income for the second quarter of 2007
both increased 3% to $549.5 million and $506.1 million, respectively,
primarily due to higher home entertainment revenues and the absence of
$24.0 million of costs related to the shutdown of UPN in 2006, partially
offset by higher costs associated with entertainment series and lower
political advertising revenues. Television results included stock-based
compensation of $14.8 million and $8.5 million for the second quarter of
2007 and 2006, respectively.
On May 30, 2007, the Company acquired Last.fm, a global,
community-based music discovery network, for approximately $280 million.
Radio (CBS Radio)
Radio revenues for the second quarter of 2007 decreased 11% to $463.4
million from $519.1 million for the same prior-year period, reflecting the
impact of the previously announced radio station sales in ten markets, as
well as continued weakness in the radio advertising market. On a "same
station" basis, excluding divested stations, Radio revenues decreased 5%
from the second quarter of 2006.
Radio OIBDA and operating income for the second quarter of 2007 both
decreased 18% to $187.3 million and $179.4 million, respectively,
principally resulting from the revenue decline partially offset by the
absence of expenses for divested stations. Radio results included
stock-based compensation of $5.0 million and $3.4 million for the second
quarter of 2007 and 2006, respectively.
On May 31, 2007, the Company completed the previously announced sale of
the two radio stations in San Antonio for cash proceeds of $45.0 million.
Outdoor (CBS Outdoor)
Outdoor revenues for the second quarter of 2007 increased 4% to $554.2
million from $534.4 million for the same prior-year period, reflecting a
12% increase in Europe and Asia, primarily due to favorable fluctuations in
foreign exchange rates and growth in the U.K. In constant dollars, Outdoor
revenues increased 1% for the quarter. North America revenues for the
second quarter remained flat with the prior year as growth of 11% in U.S.
billboards was offset by a 29% decline in U.S. transit and displays, driven
by the non- renewal of marginally profitable transit and street furniture
contracts in New York City and Chicago.
Outdoor OIBDA increased 5% to $168.3 million and operating income
increased 7% to $115.3 million for the second quarter of 2007, reflecting
growth in North America partially offset by a decline in Europe and Asia.
North America OIBDA increased 12% to $143.6 million and operating income
increased 16% to $97.5 million, led by continued strength in the U.S.
billboard business. Europe and Asia OIBDA decreased 21% to $24.7 million
and operating income decreased 26% to $17.8 million, principally reflecting
higher transit lease costs in the U.K. Outdoor results included stock-based
compensation of $1.2 million and $.9 million for the second quarter of 2007
and 2006, respectively.
Publishing (Simon & Schuster)
Publishing revenues for the second quarter of 2007 increased 14% to
$200.3 million from $176.0 million for the same prior-year period,
principally reflecting higher sales from best-selling titles, including
Blaze by Stephen King writing as Richard Bachman and The Secret by Rhonda
Byrne. OIBDA increased to $20.1 million from $10.6 million and operating
income increased to $18.1 million from $8.2 million, reflecting the revenue
increase partially offset by higher production and royalty costs.
Publishing results included stock-based compensation of $.9 million and $.5
million for the second quarter of 2007 and 2006, respectively.
Corporate
Corporate expenses before depreciation expense increased to $41.6
million for the second quarter of 2007 from $39.7 million for the same
prior-year period, due to higher stock-based compensation expense in 2007.
Corporate expenses included stock-based compensation of $8.6 million and
$4.9 million for the second quarter of 2007 and 2006, respectively.
Residual Costs
Residual costs primarily include pension and postretirement benefits
costs for benefit plans retained by the Company for previously divested
businesses. For the quarter, residual costs decreased to $24.2 million from
$35.3 million for the same prior-year period, primarily due to the
recognition of lower actuarial losses and the impact of $250 million of
discretionary contributions made during 2006 to pre-fund one of the
Company's qualified pension plans.
Interest Expense
Interest expense increased to $145.5 million in the second quarter of
2007 from $140.8 million for the same prior-year period primarily due to
the timing of the refinancing of $700 million of senior notes and higher
weighted average interest rates.
Interest Income
Interest income increased to $33.8 million from $18.5 million for the
same prior-year period, primarily resulting from higher average cash
balances and the timing of the refinancing of $700 million of senior notes.
Other Items, Net
"Other items, net" for the second quarter and first half of 2007
included pre-tax gains of $9.2 million and $12.6 million, respectively,
resulting from the divestitures of television and radio stations.
Provision for Income Taxes
For the second quarter, the Company's effective income tax rate was
36.4% for 2007 versus 19.3% for 2006, and for the six-month period, the
effective income tax rate was 41.2% for 2007 versus 27.9% for 2006. The
effective income tax rates for the second quarter and six-month periods of
2007 reflected the tax impact of the station divestitures and a benefit
from income tax settlements, and for 2006 periods, reflected a benefit of
$129.0 million from income tax settlements. Excluding the tax impact of the
2007 station divestitures and the tax benefits from income tax settlements
in both years, the effective income tax rate for the second quarter
decreased to 37.2% for 2007 from 40.4% for 2006 and for the six-month
period decreased to 37.8% for 2007 from 40.8% for 2006, in each case
principally resulting from lower state and foreign income taxes.
Other Matters
On March 6, 2007, the Company repurchased approximately 47.3 million
shares of CBS Corp. Class B Common Stock for $1.4 billion, subject to
adjustment, through an accelerated share repurchase transaction. On April
16, 2007, the Company completed the exchange agreement with Liberty Media
Corporation under which CBS Corp. repurchased 7.6 million shares of its
Class B Common Stock held by Liberty Media Corporation in exchange for the
stock of a subsidiary which held CBS Corp.'s Green Bay television station,
and $169.8 million in cash.
On May 23, 2007, the Company's Board of Directors declared a quarterly
cash dividend of $.22 per share to stockholders of record at the close of
business on June 4, 2007, and approximately $158 million was paid to these
stockholders on July 1, 2007.
About CBS Corporation
CBS Corporation ( CBS.A and CBS) is a mass media company with
constituent parts that reach back to the beginnings of the broadcast
industry, as well as newer businesses that operate on the leading edge of
the media industry. The Company, through its many and varied operations,
combines broad reach with well-positioned local businesses, all of which
provide it with an extensive distribution network by which it serves
audiences and advertisers in all 50 states and key international markets.
It has operations in virtually every field of media and entertainment,
including broadcast television (CBS and The CW - a joint venture between
CBS Corporation and Warner Bros. Entertainment), cable television (Showtime
and CSTV Networks), local television (CBS Television Stations), television
production and syndication (CBS Paramount Network Television and CBS
Television Distribution), radio (CBS Radio), advertising on out-of-home
media (CBS Outdoor), publishing (Simon & Schuster), interactive media (CBS
Interactive), music (CBS Records), licensing and merchandising (CBS
Consumer Products) and video/DVD (CBS Home Entertainment). For more
information, log on to www.cbscorporation.com.
Cautionary Statement Concerning Forward-looking Statements
This news release contains both historical and forward-looking
statements. All statements, including Business Outlook, other than
statements of historical fact are, or may be deemed to be, forward-looking
statements within the meaning of section 27A of the Securities Act of 1933
and section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are not based on historical facts, but rather
reflect the Company's current expectations concerning future results and
events. Similarly, statements that describe our objectives, plans or goals
are or may be forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that are
difficult to predict and which may cause the actual results, performance or
achievements of the Company to be different from any future results,
performance and achievements expressed or implied by these statements.
These risks, uncertainties and other factors include, among others:
advertising market conditions generally; changes in the public acceptance
of the Company's programming; changes in technology and its effect on
competition in the Company's markets; changes in the Federal Communications
laws and regulations; the impact of piracy on the Company's products, the
impact of the consolidation in the market for the Company's programming;
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 news releases and filings with the
Securities and Exchange Commission including but not limited to the
Company's most recent Form 10-K. The forward-looking statements included in
this document are made only as of the date of this document, and under
section 27A of the Securities Act and section 21E of the Exchange Act, we
do not have any obligation to publicly update any forward-looking
statements to reflect subsequent events or circumstances.
CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited; all amounts, except per share amounts, are in millions)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues $3,374.9 $3,483.1 $7,032.7 $7,058.5
Operating income 749.9 750.3 1,271.2 1,278.5
Interest expense (145.5) (140.8) (285.3) (285.1)
Interest income 33.8 18.5 73.1 31.1
Loss on early
extinguishment of debt - (2.0) - (6.0)
Other items, net 4.3 (15.2) 2.8 (18.1)
Earnings before income
taxes 642.5 610.8 1,061.8 1,000.4
Provision for income
taxes (233.7) (118.0) (437.9) (279.2)
Equity in earnings
(loss) of affiliated
companies, net of tax (4.9) (3.0) (6.8) 3.0
Minority interest,
net of tax .1 - .4 .1
Net earnings from
continuing operations 404.0 489.8 617.5 724.3
Net earnings from
discontinued operations - 291.9 - 284.3
Net earnings $404.0 $781.7 $617.5 $1,008.6
Basic earnings per common share:
Net earnings from
continuing operations $.56 $.64 $.84 $.95
Net earnings from
discontinued operations $- $.38 $- $.37
Net earnings $.56 $1.02 $.84 $1.32
Diluted earnings per common share:
Net earnings from
continuing operations $.55 $.64 $.83 $.94
Net earnings from
discontinued operations $- $.38 $- $.37
Net earnings $.55 $1.02 $.83 $1.31
Weighted average number of
common shares outstanding:
Basic 720.8 764.6 738.6 763.7
Diluted 729.4 769.6 747.2 768.2
Dividends per common
share $.22 $.18 $.44 $.34
CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited; Dollars in millions)
At At
June 30, December 31,
2007 2006
Assets
Cash and cash equivalents $2,796.8 $3,074.6
Receivables, net 2,541.7 2,824.0
Programming and other inventory 729.6 982.9
Prepaid expenses and other current assets 1,360.7 1,262.6
Total current assets 7,428.8 8,144.1
Property and equipment 4,517.7 4,274.6
Less accumulated depreciation and
amortization 1,708.3 1,460.8
Net property and equipment 2,809.4 2,813.8
Programming and other inventory 1,584.0 1,665.6
Goodwill 19,022.8 18,821.5
Intangible assets 10,254.3 10,425.0
Other assets 1,592.5 1,638.8
Total Assets $42,691.8 $43,508.8
Liabilities and Stockholders' Equity
Accounts payable $396.1 $502.3
Participants' share and royalties payable 777.3 767.5
Program rights 1,028.0 906.9
Current portion of long-term debt 19.5 15.0
Accrued expenses and other current liabilities 2,176.1 2,207.8
Total current liabilities 4,397.0 4,399.5
Long-term debt 6,995.8 7,027.3
Other liabilities 8,665.1 8,558.5
Minority interest .6 1.0
Stockholders' equity 22,633.3 23,522.5
Total Liabilities and Stockholders' Equity $42,691.8 $43,508.8
CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in millions)
Six Months Ended
June 30,
2007 2006
Operating activities:
Net earnings $617.5 $1,008.6
Less: Net earnings from discontinued operations - 284.3
Net earnings from continuing operations 617.5 724.3
Adjustments to reconcile net earnings from
continuing operations to net cash flow
provided by operating activities:
Depreciation and amortization 224.7 216.6
Stock-based compensation 51.5 30.8
Equity in (earnings) loss of affiliated
companies, net of tax 6.8 (3.0)
Distribution from affiliated companies 5.0 9.8
Minority interest, net of tax (.4) (.1)
Change in assets and liabilities, net of
effects of acquisitions 624.9 326.1
Net cash flow from operating activities
attributable to discontinued operations - 33.0
Net cash flow provided by operating activities 1,530.0 1,337.5
Investing activities:
Capital expenditures (206.6) (113.2)
Acquisitions, net of cash acquired (309.6) (68.3)
Proceeds from dispositions 305.6 1,247.0
Investments in and advances to affiliated
companies (43.8) (.3)
Net receipts from Viacom Inc. related to
the Separation 212.2 77.6
Other, net (.8) -
Net cash flow used for investing
activities attributable to discontinued
operations - (34.5)
Net cash flow (used for) provided by
investing activities (43.0) 1,108.3
Financing Activities:
Repayment of notes (660.0) (832.0)
Proceeds from issuance of notes 678.0 -
Borrowings from (repayments to) banks,
including commercial paper, net 1.9 (2.8)
Payment of capital lease obligations (8.2) (7.2)
Purchase of Company common stock (1,602.1) (5.7)
Dividends (313.9) (229.9)
Proceeds from exercise of stock options 131.7 37.5
Excess tax benefit from stock-based compensation 7.8 .8
Net cash flow used for financing activities (1,764.8) (1,039.3)
Net increase (decrease) in cash and cash
equivalents (277.8) 1,406.5
Cash and cash equivalents at beginning of
period 3,074.6 1,655.3
Cash and cash equivalents at end of period $2,796.8 $3,061.8
CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(Unaudited; Dollars in millions)
Operating Income Before Depreciation and Amortization ("OIBDA")
The following tables set forth the Company's Operating Income before
Depreciation and Amortization for the three and six months ended June 30,
2007 and 2006. The Company defines "Operating Income before Depreciation
and Amortization" ("OIBDA") as net earnings adjusted to exclude the
following line items presented in its Statements of Operations: Net
earnings from discontinued operations; Minority interest, net of tax;
Equity in earnings (loss) of affiliated companies, net of tax; Provision
for income taxes; Other items, net; Loss on early extinguishment of debt;
Interest income; Interest expense; and Depreciation and amortization.
The Company uses OIBDA, among other things, to evaluate the Company's
operating performance, to value prospective acquisitions and as one of
several components of incentive compensation targets for certain management
personnel, and this measure is among the primary measures used by
management for planning and forecasting of future periods. This measure is
an important indicator of the Company's operational strength and
performance of its business because it provides a link between
profitability and operating cash flow. The Company believes the
presentation of this measure 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, helps improve their ability to understand
the Company's operating performance and makes it easier to compare the
Company's results with other companies that have different financing and
capital structures or tax rates. In addition, this measure is also among
the primary measures used externally by the Company's investors, analysts
and peers in its industry for purposes of valuation and comparing the
operating performance of the Company to other companies in its industry.
Since OIBDA is not a measure of performance calculated in accordance with
generally accepted accounting principles ("GAAP"), it should not be considered
in isolation of, or as a substitute for, net earnings as an indicator of
operating performance. OIBDA, 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 OIBDA excludes certain financial information
compared with net earnings, the most directly comparable GAAP financial
measure, users of this financial information should consider the types of
events and transactions which are excluded. The Company provides the
following reconciliations of Total OIBDA to Net earnings and OIBDA for each
segment to such segment's operating income, the most directly comparable
amounts reported under GAAP.
Three Months Ended June 30, 2007
Depreciation Operating
OIBDA and Income (Loss)
Amortization
Television $549.5 $(43.4) $506.1
Radio 187.3 (7.9) 179.4
Outdoor 168.3 (53.0) 115.3
Publishing 20.1 (2.0) 18.1
Corporate (41.6) (3.2) (44.8)
Residual costs (24.2) - (24.2)
Total $859.4 $(109.5) $749.9
Three Months Ended June 30, 2006
Depreciation Operating
OIBDA and Income (Loss)
Amortization
Television $535.4 $(43.5) $491.9
Radio 227.9 (8.3) 219.6
Outdoor 160.0 (52.1) 107.9
Publishing 10.6 (2.4) 8.2
Corporate (39.7) (2.3) (42.0)
Residual costs (35.3) - (35.3)
Total $858.9 $(108.6) $750.3
Three Months Ended June 30,
2007 2006
Total operating income before depreciation &
amortization $859.4 $858.9
Depreciation and amortization (109.5) (108.6)
Operating income 749.9 750.3
Interest expense (145.5) (140.8)
Interest income 33.8 18.5
Loss on early extinguishment of debt - (2.0)
Other items, net 4.3 (15.2)
Earnings before income taxes 642.5 610.8
Provision for income taxes (233.7) (118.0)
Equity in loss of affiliated companies,
net of tax (4.9) (3.0)
Minority interest, net of tax .1 -
Net earnings from continuing operations 404.0 489.8
Net earnings from discontinued operations - 291.9
Net earnings $404.0 $781.7
Six Months Ended June 30, 2007
Depreciation Operating
OIBDA and Income (Loss)
Amortization
Television $948.5 $(92.3) $856.2
Radio 351.7 (15.5) 336.2
Outdoor 268.5 (106.2) 162.3
Publishing 43.9 (4.4) 39.5
Corporate (68.4) (6.3) (74.7)
Residual costs (48.3) - (48.3)
Total $1,495.9 $(224.7) $1,271.2
Six Months Ended June 30, 2006
Depreciation Operating
OIBDA and Income (Loss)
Amortization
Television $959.1 $(84.4) $874.7
Radio 398.5 (16.3) 382.2
Outdoor 259.1 (106.7) 152.4
Publishing 16.4 (4.5) 11.9
Corporate (67.4) (4.7) (72.1)
Residual costs (70.6) - (70.6)
Total $1,495.1 $(216.6) $1,278.5
Six Months Ended June 30,
2007 2006
Total operating income before depreciation &
amortization $1,495.9 $1,495.1
Depreciation and amortization (224.7) (216.6)
Operating income 1,271.2 1,278.5
Interest expense (285.3) (285.1)
Interest income 73.1 31.1
Loss on early extinguishment of debt - (6.0)
Other items, net 2.8 (18.1)
Earnings before income taxes 1,061.8 1,000.4
Provision for income taxes (437.9) (279.2)
Equity in earnings (loss) of affiliated
companies, net of tax (6.8) 3.0
Minority interest, net of tax .4 .1
Net earnings from continuing operations 617.5 724.3
Net earnings from discontinued operations - 284.3
Net earnings $617.5 $1,008.6
Free Cash Flow
Free cash flow reflects the Company's net cash flow from operating
activities less capital expenditures and operating cash flow of
discontinued operations. The Company uses free cash flow, among other
measures, to evaluate its operating performance. Management believes free
cash flow provides investors with an important perspective on the cash
available 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 view performance in a manner
similar to the method used by management. In addition, free cash flow is
also a primary measure used externally by the Company's investors, analysts
and peers in its industry for purposes of valuation and comparing the
operating performance of the Company to other companies in its industry.
As free cash flow is not a measure of performance calculated in
accordance with GAAP, free cash flow should not be considered in isolation
of, or as a substitute for, net earnings as an indicator of operating
performance or net cash flow provided by operating activities as a measure
of liquidity. 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 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 free cash flow deducts capital expenditures and
operating cash flow of discontinued operations from net cash flow provided
by operating activities, the most directly comparable GAAP financial
measure, users of this financial information should consider the types of
events and transactions which are not reflected. The Company provides below
a reconciliation of free cash flow to net cash flow provided by operating
activities, the most directly comparable amount reported under GAAP.
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,
2007 2006 2007 2006
Net cash flow provided
by operating activities $682.0 $689.7 $1,530.0 $1,337.5
Less capital expenditures 111.5 66.9 206.6 113.2
Less operating cash flow
of discontinued operations - 76.6 - 33.0
Free cash flow $570.5 $546.2 $1,323.4 $1,191.3
The following table presents a summary of the Company's cash flows:
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Net cash flow provided
by operating activities $682.0 $689.7 $1,530.0 $1,337.5
Net cash flow (used for)
provided by investing
activities $(320.9) $1,272.0 $(43.0) $1,108.3
Net cash flow used for
financing activities $(942.9) $(186.7) $(1,764.8) $(1,039.3)
2007 and 2006 Adjusted Results
The following tables reconcile financial measures excluding the impact
of the 2007 pre-tax gain and the related tax provision of the television
and radio station divestitures and the 2007 and 2006 tax benefits from the
settlement of certain income tax audits, to the reported measures included
in this earnings release. The Company believes that adjusting its financial
results for the impact of these items is relevant and useful for investors
because it allows investors to view performance in a manner similar to the
method used by the Company's management, provides a clearer perspective on
the current underlying performance of the Company and makes it easier to
compare the Company's year-over-year results.
Three Months Ended June 30, 2007
2007 Station Tax 2007 Increase
Reported Divestitures Benefit Adjusted vs.
(a) (b) 2006
Adjusted
Revenues $3,374.9 $- $- $3,374.9
OIBDA 859.4 - - 859.4
Operating income 749.9 - - 749.9
Interest expense (145.5) - - (145.5)
Interest income 33.8 - - 33.8
Other items, net 4.3 (9.2) - (4.9)
Earnings before
income taxes 642.5 (9.2) - 633.3
Provision for
income taxes (233.7) 6.2 (7.9) (235.4)
Effective income
tax rate 36.4% 37.2%
Equity in loss of
affiliated companies,
net of tax (4.9) - - (4.9)
Minority interest,
net of tax .1 - - .1
Net earnings from
continuing
operations $404.0 $(3.0) $(7.9) $393.1 9%
Diluted EPS from
continuing
operations $ .55 $- $(.01) $.54 15%
Diluted weighted
average number
of common shares
outstanding 729.4 729.4 729.4 729.4
Three Months Ended June 30, 2006
2006 Tax 2006
Reported Benefit(b) Adjusted
Revenues $3,483.1 $ - $3,483.1
OIBDA 858.9 - 858.9
Operating income 750.3 - 750.3
Interest expense (140.8) - (140.8)
Interest income 18.5 - 18.5
Loss on early extinguishment of debt (2.0) - (2.0)
Other items, net (15.2) - (15.2)
Earnings before income taxes 610.8 - 610.8
Provision for income taxes (118.0) (129.0) (247.0)
Effective income tax rate 19.3% 40.4%
Equity in loss of affiliated
companies, net of tax (3.0) - (3.0)
Net earnings from continuing
operations $489.8 $(129.0) $360.8
Diluted EPS from continuing operations $.64 $(.17) $.47
Diluted weighted average number of
common shares outstanding 769.6 769.6 769.6
(a) Impact of the pre-tax gain and related tax provision of the
divestitures of television and radio stations.
(b) Tax benefit from the settlement of certain income tax audits.
Six Months Ended June 30, 2007
2007 Station Tax 2007 Increase
Reported Divestitures Benefit Adjusted vs.
(a) (b) 2006
Adjusted
Revenues $7,032.7 $- $- $7,032.7
OIBDA 1,495.9 - - 1,495.9
Operating income 1,271.2 - - 1,271.2
Interest expense (285.3) - - (285.3)
Interest income 73.1 - - 73.1
Other items, net 2.8 (12.6) - (9.8)
Earnings before
income taxes 1,061.8 (12.6) - 1,049.2
Provision for
income taxes (437.9) 49.7 (7.9) (396.1)
Effective income
tax rate 41.2% 37.8%
Equity in loss of
affiliated companies,
net of tax (6.8) - - (6.8)
Minority interest,
net of tax .4 - - .4
Net earnings from
continuing
operations $617.5 $37.1 $(7.9) $646.7 9%
Diluted EPS from
continuing
operations $.83 $.05 $(.01) $.87 13%
Diluted weighted
average number of
common shares
outstanding 747.2 747.2 747.2 747.2
Six Months Ended June 30, 2006
2006 Tax 2006
Reported Benefit(b) Adjusted
Revenues $7,058.5 $ - $7,058.5
OIBDA 1,495.1 - 1,495.1
Operating income 1,278.5 - 1,278.5
Interest expense (285.1) - (285.1)
Interest income 31.1 - 31.1
Loss on early extinguishment of debt (6.0) - (6.0)
Other items, net (18.1) - (18.1)
Earnings before income taxes 1,000.4 - 1,000.4
Provision for income taxes (279.2) (129.0) (408.2)
Effective income tax rate 27.9% 40.8%
Equity in earnings of affiliated
companies, net of tax 3.0 - 3.0
Minority interest, net of tax .1 - .1
Net earnings from continuing
operations $724.3 $(129.0) $595.3
Diluted EPS from continuing operations $.94 $(.17) $.77
Diluted weighted average number of
common shares outstanding 768.2 768.2 768.2
(a) Impact of the pre-tax gain and related tax provision of the
divestitures of television and radio stations.
(b) Tax benefit from the settlement of certain income tax audits.
Radio Segment "Same Station" Reconciliation
In connection with the previously announced sales of 39 radio stations
in ten of its smaller markets, the Company has completed the sales of its
stations in six of these markets (24 stations) and expects to close on the
remaining markets during the second half of 2007. The following table
presents the revenues for the Radio segment on a "same station" basis,
which excludes all revenues for the divested stations, for all periods
presented. The Company believes that adjusting the revenues of the Radio
segment for the impact of station divestitures provides investors with a
clearer perspective on the current underlying financial performance of the
Radio segment.
Three Months Ended Six Months Ended
June 30, Better/ June 30, Better/
2007 2006 (Worse)% 2007 2006 (Worse)%
Radio revenues,
as reported $463.4 $519.1 (11)% $860.9 $953.6 (10)%
Divested stations (5.1) (35.9) n/m (12.2) (65.6) n/m
Radio revenues,
"same station"
basis $458.3 $483.2 (5)% $848.7 $888.0 (4)%
n/m - not meaningful
SOURCE CBS Corporation