CBS Corporation Reports Record Third Quarter 2012 Results
CBS Corporation Reports Record Third Quarter 2012 Results
Revenues of $3.4 Billion, Up 2%
OIBDA of $898 Million, Up 7%
Operating Income of $771 Million, Up 10%
Adjusted EPS of $.65, Up 30%
NEW YORK, Nov. 7, 2012 /PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today reported very strong results, including third quarter records in revenues, operating income before depreciation and amortization ("OIBDA"), operating income, and adjusted earnings per share.
"CBS has continued its remarkable run with yet another record quarter," said Sumner Redstone, Executive Chairman, CBS Corporation. "Our world-class content and multiplatform distribution strategy remain at the center of our success. I am very proud of all that Leslie and his team have accomplished, and I know we are in position for continued growth for many years to come."
"The transformation of CBS continues as reflected in these record third quarter results," said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. "We have taken a number of significant steps during the last several months to execute our strategy and grow the Company. These include three major retransmission consent agreements, an important reverse compensation deal, new international and domestic streaming contracts, and the sale of our two new hit dramas, Vegas and Elementary, into international syndication. As we continue to take actions like these, we are increasing our recurring revenue from nonadvertising sources and setting ourselves up for even more record results in the future. Going forward, we will continue to expand the ways we achieve value for our content, and we are confident we will hit our goal of a record 2012 and an even better 2013."
Third Quarter 2012 Results
The Company set third quarter records in the following key metrics:
•Revenues of $3.42 billion
•OIBDA of $898 million
•Operating income of $771 million
•Net earnings of $391 million
•Adjusted diluted earnings per share of $.65
Revenues of $3.42 billion for the third quarter of 2012 increased 2% from $3.37 billion for the same prior-year period. This growth was led by an 8% increase in content licensing and distribution revenues, which were driven by higher domestic and international television license fees. Affiliate and subscription fee revenues rose 12%, reflecting growth at Cable Networks, higher retransmission revenues, and fees received from CBS Network affiliated television stations. Advertising revenues were down 3%, primarily driven by lower advertising for CBS Radio, the impact of foreign exchange rate changes, and the impact of pre-emptions for the Republican and Democratic national conventions on six nights of the CBS Television Network's primetime schedule.
OIBDA of $898 million increased 7% in the third quarter of 2012 from $837 million for the same prior-year period. Operating income of $771 million increased 10% in the third quarter of 2012 from $703 million in the third quarter of 2011. The growth in OIBDA and operating income was primarily driven by higher revenues and increased profits on television licensing revenues.
Net earnings were $391 million for the third quarter of 2012, or $.60 per diluted share, up from $338 million, or $.50 per diluted share, during last year's third quarter. The increase in diluted earnings per share reflected the operating income growth, lower interest expense because of the Company's 2012 debt refinancing, and lower weighted average shares outstanding as a result of the Company's share repurchase program. Net earnings include a pretax loss on early extinguishment of debt of $57 million ($35 million, net of tax), or $.05 per share.
Adjusting to exclude the pretax loss on early extinguishment of debt, adjusted net earnings were $426 million, or $.65 per diluted share.
Reconciliations of non-GAAP measures to reported results are included at the end of this earnings release.
Free Cash Flow, Balance Sheet and Liquidity
Free cash flow was $163 million for the third quarter of 2012, compared with $29 million for the third quarter a year ago. Free cash flow for the third quarter of 2012 included payments of approximately $60 million associated with the early extinguishment of debt, primarily for make-whole premiums. Free cash flow for the same prior-year period included pension contributions of $200 million to prefund the Company's qualified plans. For the first nine months of 2012, free cash flow was $1.33 billion compared with $1.53 billion for the first nine months of 2011, reflecting increased investment in content and higher income tax payments. The Company generated cash flow from operating activities of $1.48 billion for the nine months ended September 30, 2012, versus $1.68 billion for the comparable prior-year period.
During the third quarter of 2012, the Company used the net proceeds from its second quarter debt issuances to repay its $152 million of 8.625% debentures at maturity on August 1, 2012, and redeem its $338 million of 5.625% senior notes due August 2012 and its $400 million of 8.20% senior notes due 2014. These actions, along with the debt activity during the first quarter of 2012, will result in annualized interest expense savings of $53 million.
Also during the quarter, the Company repurchased 8.6 million shares of CBS Corp. Class B Common Stock for $300 million. Since the inception of its share repurchase program in January 2011 – and through September 30, 2012 – the Company has repurchased 69.2 million shares for $1.89 billion, at an average cost of approximately $27 per share. At the end of the third quarter of 2012, $2.81 billion of authorization remained on the program.
At September 30, 2012, the Company's debt outstanding was $5.93 billion and its cash balance was $947 million, which was $287 million higher than December 31, 2011.
Consolidated and Segment Results (dollars in millions)
The tables below present the Company's revenues by segment and type as well as its OIBDA before impairment charges and operating income (loss) by segment for the three and nine months ended September 30, 2012, and 2011. Reconciliations of all non-GAAP measures to reported results are included at the end of this earnings release.