CBS Corporation Reports Second Quarter 2011 Results
Revenues of $3.6 Billion Up 8%

NEW YORK, Aug. 2, 2011 /PRNewswire/ -- CBS Corporation (NYSE: CBS.A and CBS) today reported results for the second quarter ended June 30, 2011.

"CBS's second quarter performance built on our tremendous first quarter, posting strong results throughout each of our businesses," said Sumner Redstone, Executive Chairman, CBS Corporation.  "The Company continues to operate at an exceptionally high level as we remain focused on creating the absolute best content and distributing that content in strategic and profitable ways.  I am confident that Leslie and his team will continue to manage CBS for success and enhance shareholder value for a long, long time to come."

"Our extraordinary second quarter results demonstrate the power of the strategic actions we've taken to strengthen our business model," said Leslie Moonves, President and Chief Executive Officer, CBS Corporation.  "We delivered stellar growth across every single key financial metric, nearing record levels in all profit measures.  These remarkable results reflect our increasing ability to monetize our content, while at the same time, diversifying and de-risking our Company for the future, including recent new licensing deals with leading online video distributors.  In addition, we led the marketplace in another highly successful Upfront selling season, setting us up for strong advertising growth next year.  Meanwhile, we continue to generate very healthy free cash flow and return an increasing amount of value to our shareholders through our ongoing share repurchase program and recently increased dividend.  Going forward, positive trends and new developments in our industry position us to deliver strong results not only for the balance of the year, but in 2012 and beyond as well."  

Second Quarter 2011 Results

Revenues of $3.59 billion for the second quarter of 2011 increased 8% from $3.33 billion for the same quarter last year driven by 21% growth in content licensing and distribution revenues, which benefited from a new licensing agreement for the digital streaming of select library titles.  Revenues were also boosted by 12% growth in affiliate and subscription fee revenues, reflecting rate increases and subscription growth as well as higher retransmission revenues.  Advertising revenues increased 3% despite a difficult comparison to last year's second quarter, which posted higher political advertising and higher revenue for the NCAA Division I Men's Basketball Championship ("NCAA Tournament").  CBS's new programming agreement for the NCAA Tournament results in lower revenues, but higher profits.

Operating income before depreciation and amortization ("OIBDA") of $873 million for the second quarter of 2011 increased 51% from $579 million for the same prior-year period, driven by strong growth and margin expansion in every segment.  The OIBDA margin increased seven percentage points to 24% compared to last year's second quarter. The Company's strong growth and margin expansion was driven by higher margin revenue streams, as well as lower sports programming costs resulting from the new programming agreement for the NCAA Tournament.

Operating income for the second quarter of 2011 increased 69% to $734 million from $435 million for the same quarter last year.

Net earnings were $395 million, or $.58 per diluted share, for the second quarter of 2011, up from net earnings of $150 million, or $.22 per diluted share, and adjusted net earnings of $176 million, or $.25 per diluted share, for the same quarter last year due to the aforementioned OIBDA growth and a decrease to interest expense of $24 million, driven by the Company's 2010 debt reduction activities.

Adjusted net earnings and adjusted earnings per share for the second quarter of 2010 exclude a pre-tax loss on early extinguishment of debt of $41 million.  For the second quarter of 2011, no adjustments were made to reported results.  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 for the second quarter of 2011 increased 32% to $646 million from $491 million for the second quarter of 2010 and for the first half of 2011 increased 30% to $1.50 billion from $1.15 billion for the first half of 2010, principally driven by the OIBDA increase.

During the second quarter of 2011, the Company spent $250 million to repurchase 9.9 million shares of CBS Corp. Class B Common Stock under its $1.5 billion share repurchase program. During the first half of 2011, the Company repurchased 21.7 million Class B shares for $500 million. At June 30, 2011, the Company's cash balance was $1.35 billion, $866 million higher than December 31, 2010, debt outstanding was $6.00 billion and there were no credit facility borrowings. In July, the Company used its significant year-to-date free cash flow to make a pension contribution of $200 million, principally to pre-fund its qualified plans.

Consolidated and Segment Results (dollars in millions)

The tables below present the Company's revenues by segment and type and its OIBDA and operating income by segment for the three and six months ended June 30, 2011 and 2010.  Adjusted OIBDA and adjusted operating income by segment for the three and six months ended June 30, 2010 exclude restructuring charges.  Reconciliations of all non-GAAP measures to reported results are included at the end of this earnings release.





















Three Months Ended

Six Months Ended





June 30,

June 30,

Revenues by Segment


2011 



2010 



2011 



2010 



Entertainment

$

1,836


$

1,672


$

3,830


$

3,753



Cable Networks


413



369



806



737



Publishing


183



189



338



341





Content Group


2,432



2,230



4,974



4,831



Local Broadcasting


691



678



1,312



1,284



Outdoor


490



457



903



849





Local Group


1,181



1,135



2,215



2,133



Eliminations


(27)



(34)



(93)



(102)




Total Revenues

$

3,586


$

3,331


$

7,096


$

6,862






















Three Months Ended

Six Months Ended





June 30,

June 30,

Revenues by Type


2011 



2010 



2011 



2010 



Advertising

$

2,215


$

2,158


$

4,507


$

4,539



Content licensing and distribution


889



733



1,629



1,447



Affiliate and subscription fees


426



381



846



764



Other


56



59



114



112




Total Revenues

$

3,586


$

3,331


$

7,096


$

6,862






















Three Months Ended

Six Months Ended





June 30,

June 30,

Adjusted OIBDA


2011 



2010 



2011 



2010 



Entertainment

$

440


$

223


$

708


$

368



Cable Networks


176



129



329



230



Publishing


19



17



26



20





Content Group


635



369



1,063



618



Local Broadcasting


230



214



399



348



Outdoor


86



79



135



111





Local Group


316



293



534



459



Corporate


(57)



(56)



(109)



(95)



Residual costs


(18)



(26)



(37)



(52)



Eliminations


(3)



1



(2)



2




Adjusted OIBDA


873 



581 



1,449 



932 



Restructuring charges


— 



(2)



— 



(59)




Total OIBDA

$

873 


$

579 


$

1,449 


$

873 






















Three Months Ended

Six Months Ended





June 30,

June 30,

Adjusted Operating Income
 (Loss)


2011 



2010 



2011 



2010 



Entertainment

$

400



181



630



285



Cable Networks


171



123



318



218



Publishing


17



15



22



17





Content Group


588



319



970



520



Local Broadcasting


204



190



347



299



Outdoor


26



14



14



(17)





Local Group


230



204



361



282



Corporate


(63)



(61)



(121)



(105)



Residual costs


(18)



(26)



(37)



(52)



Eliminations


(3)



1



(2)



2




Adjusted Operating Income


734



437



1,171



647



Restructuring charges




(2)





(59)




Total Operating Income

$

734


$

435


$

1,171


$

588




















Entertainment (CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Films and CBS Interactive)

Entertainment revenues for the second quarter of 2011 increased 10% to $1.84 billion from $1.67 billion for the same prior-year period, driven by the new licensing agreement for the digital streaming of select library titles, the third-cycle domestic syndication sale of Frasier, higher retransmission revenues and growth in Network primetime advertising.  These increases were partially offset by the impact of the new programming agreement for the NCAA Tournament, which resulted in lower revenues but higher profits.

Entertainment OIBDA for the second quarter of 2011 increased 97% to $440 million from $223 million for the same prior-year period with an 11 percentage point improvement in the margin to 24%.  The strong margin growth reflects increases in higher margin revenues as well as lower sports programming costs resulting from the new programming agreement for the NCAA Tournament.

Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks)

Cable Networks revenues for the second quarter of 2011 increased 12% to $413 million from $369 million for the same prior-year period driven by rate increases and growth in subscriptions at both Showtime Networks and CBS Sports Network, as well as higher international syndication and home entertainment revenues for Showtime original series. Showtime Networks (which includes Showtime, The Movie Channel and Flix) subscriptions totaled 70 million as of June 30, 2011, up by 6 million from the same time last year, due to higher cable, direct broadcast satellite and telco subscriptions.  CBS Sports Network subscriptions of 44 million were up by 8 million compared to the prior year, resulting from increased cable subscriptions, driven by the Company's ten year carriage agreement with Comcast entered into in 2010, and higher direct broadcast satellite subscriptions.  Smithsonian Networks subscriptions of 8 million as of June 30, 2011 were up by 3 million from the same time last year.

Cable Networks OIBDA for the second quarter of 2011 increased 36% to $176 million from $129 million for the same prior-year period, reflecting revenue growth as well as lower theatrical programming costs, partially offset by higher programming costs for original series.

Publishing (Simon & Schuster)

Publishing revenues for the second quarter of 2011 decreased 3% to $183 million from $189 million for the same prior-year period, as strong growth in the sale of more profitable digital content was offset by lower print book sales.  Digital content revenues for the second quarter of 2011 more than doubled last year's second quarter digital sales and represented 15% of Publishing's total revenues.  Best-selling titles in the second quarter included The Greater Journey by David McCullough and The Original Argument by Glenn Beck.

Publishing OIBDA for the second quarter of 2011 increased 12% to $19 million, driven by lower expenses resulting from cost-savings initiatives, as well as the significant increase in more profitable digital sales as a percentage of total revenues.

Local Broadcasting (CBS Television Stations and CBS Radio)

Local Broadcasting revenues for the second quarter of 2011 increased 2% to $691 million from $678 million for the same prior-year period, primarily driven by higher advertising sales, which benefitted in part from an increase in market share.  CBS Television Stations revenues increased slightly despite a difficult comparison to the second quarter of 2010, which included significant political advertising sales.  CBS Television Stations' performance was led by growth in many key advertising categories, including financial services, media and retail, partially offset by a decline in spending from Japanese auto manufacturers.  CBS Radio revenues increased 4% with growth in retail and financial services, partially offset by a decline in political advertising.

Local Broadcasting OIBDA for the second quarter of 2011 increased 7% to $230 million from $214 million for the same prior-year period, due to the revenue growth and lower programming costs.  

Outdoor (CBS Outdoor)

Outdoor revenues for the second quarter of 2011 increased 7% to $490 million from $457 million for the same prior-year period resulting from the continued improvement in the outdoor advertising marketplace in the Americas and the favorable impact of foreign exchange rate changes.  Revenues for the Americas (comprising North America and South America) for the second quarter of 2011 increased 7% in constant dollars from the same prior-year period, driven by growth in the U.S. billboards and displays businesses.  Revenues for Europe decreased 4% in constant dollars, reflecting weakness in the European economy.

Outdoor OIBDA for the second quarter of 2011 increased 9% to $86 million from adjusted OIBDA of $79 million for the same prior-year period due to the revenue growth partially offset by higher costs, primarily due to foreign exchange rate changes.  In addition, Outdoor operating income for the second quarter of 2011 increased 86% from adjusted operating income for the second quarter of 2010, partially reflecting lower depreciation and amortization expense as capital spending in recent years has been reduced to normalized levels.  Adjusted OIBDA and adjusted operating income for the second quarter of 2010 exclude restructuring charges of $2 million.

Residual Costs

Residual costs include pension and postretirement benefits costs for benefit plans retained by the Company for previously divested businesses. For the second quarter of 2011, residual costs decreased $8 million to $18 million from $26 million for the same quarter last year, primarily due to the favorable performance of pension plan assets in 2010 as well as the benefit from pre-funding pension plans at the end of 2010.

About CBS Corporation

CBS Corporation 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 Networks, Smithsonian Networks and CBS Sports Network), local television (CBS Television Stations), television production and syndication (CBS Television Studios, CBS Studios International 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), video/DVD (CBS Home Entertainment), motion pictures (CBS Films), and sustainable media (EcoMedia).  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 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 or 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; the impact of union activity, including possible strikes or work stoppages or the Company's inability to negotiate favorable terms for contract renewals; 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, 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 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 STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)






















Three Months Ended


Six Months Ended




June 30,


June 30,





2011 




2010 




2011 




2010 




















Revenues

$

3,586




3,331



$

7,096



$

6,862




















Operating income


734




435




1,171




588






















Interest expense


(110)




(134)




(220)




(272)




Interest income


1




2




3




3




Loss on early extinguishment of debt





(41)







(38)




Other items, net


5




(14)




14




(27)


Earnings before income taxes


630




248




968




254





















Provision for income taxes


(230)




(91)




(352)




(112)




Equity in loss of investee companies, net of tax


(5)




(7)




(19)




(18)


Net earnings

$

395



$

150



$

597



$

124




















Basic net earnings per common share

$

.59



$

.22



$

.89



$

.18




















Diluted net earnings per common share

$

.58



$

.22



$

.87



$

.18




















Weighted average number of common shares outstanding:

















Basic


669




679




671




678



Diluted


686




693




689




693




















Dividends per common share

$

.10



$

.05



$

.15



$

.10





CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)
















At


At




June 30, 2011


December 31, 2010












Assets


















Cash and cash equivalents

$

1,346



$

480



Receivables, net


3,024




3,248



Programming and other inventory


360




725



Prepaid expenses and other current assets


965




882





Total current assets


5,695




5,335



Property and equipment


5,147




5,105




Less accumulated depreciation and amortization


2,552




2,411





Net property and equipment


2,595




2,694



Programming and other inventory


1,224




1,425



Goodwill


8,622




8,524



Intangible assets


6,577




6,624



Other assets


1,516




1,541



Total Assets

$

26,229



$

26,143














Liabilities and Stockholders' Equity


















Accounts payable

$

372



$

439



Participants' share and royalties payable


1,018




943



Program rights


572




601



Current portion of long-term debt


31




27



Accrued expenses and other current liabilities


1,938




2,016





Total current liabilities


3,931




4,026



Long-term debt


5,964




5,973



Other liabilities


6,386




6,323



Total Stockholders' Equity


9,948




9,821



Total Liabilities and Stockholders' Equity

$

26,229



$

26,143






CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)





















Six Months Ended



June 30,




2011 




2010 











Operating Activities:








Net earnings

$

597



$

124


Adjustments to reconcile net earnings to net cash flow









provided by operating activities:









Depreciation and amortization


278




285



Stock-based compensation


75




70



Loss on early extinguishment of debt





38



Equity in loss of investee companies, net of tax and distributions


21




18



Change in assets and liabilities, net of effects of acquisitions


623




716


Net cash flow provided by operating activities


1,594




1,251


Investing Activities:









Acquisitions, net of cash acquired


(55)




(8)



Capital expenditures


(95)




(100)



Investments in and advances to investee companies


(42)




(41)



Proceeds from dispositions


13




1



Other investing activities


8





Net cash flow used for investing activities


(171)




(148)


Financing Activities:









Proceeds from issuance of notes


4




497



Repayment of notes and debentures


(2)




(976)



Payment of capital lease obligations


(9)




(8)



Dividends


(73)




(74)



Purchase of Company common stock


(578)




(36)



Proceeds from exercise of stock options


45




3



Excess tax benefit from stock-based compensation


61




12



Decrease to accounts receivable securitization program





(400)



Other financing activities


(5)





Net cash flow used for financing activities


(557)




(982)


Net increase in cash and cash equivalents


866




121


Cash and cash equivalents at beginning of period


480




717


Cash and cash equivalents at end of period

$

1,346



$

838





CBS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(Unaudited; in millions, except per share amounts)

Operating Income (Loss) Before Depreciation and Amortization ("OIBDA"), Adjusted OIBDA, and Adjusted Operating Income (Loss)

The following tables set forth the Company's OIBDA and operating income for the three and six months ended June 30, 2011.  The Company defines OIBDA as net earnings (loss) adjusted to exclude the following line items presented in its Consolidated Statements of Operations: Equity in loss of investee 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 following tables also set forth the Company's adjusted OIBDA and adjusted operating income for the three and six months ended June 30, 2010. The Company defines "Adjusted OIBDA" as OIBDA before restructuring charges and "Adjusted Operating Income" as Operating Income (Loss) before restructuring charges.

The Company uses OIBDA, Adjusted OIBDA and Adjusted Operating Income, as well as OIBDA, Adjusted OIBDA and Adjusted Operating Income margins, 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 these measures are among the primary measures used by management for planning and forecasting of future periods.  These measures are important indicators of the Company's operational strength and performance of its business because they provide a link between profitability and operating cash flow.  The Company believes the presentation of these measures is relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by the Company's management, help improve their ability to understand the Company's operating performance and make it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates.  In addition, these measures are 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, Adjusted OIBDA and Adjusted Operating Income are not measures of performance calculated in accordance with accounting principles generally accepted in the United States ("GAAP"), they should not be considered in isolation of, or as a substitute for, net earnings (loss) 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, Adjusted OIBDA and Adjusted Operating Income exclude certain financial information compared with net earnings (loss), 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 OIBDA and Adjusted OIBDA to net earnings (loss) and OIBDA, Adjusted OIBDA and Adjusted Operating Income for each segment to such segment's operating income (loss), the most directly comparable amounts reported under GAAP.





Three Months Ended June 30, 2011




















Depreciation

Operating

Restructuring

Operating




OIBDA

and Amortization

Income/(Loss)

Charges

Income/(Loss)

Entertainment

$

440


$

(40)


$

400


$


$

400

Cable Networks


176



(5)



171





171

Publishing


19



(2)



17





17



Content Group


635



(47)



588





588

Local Broadcasting


230



(26)



204





204

Outdoor


86



(60)



26





26



Local Group


316



(86)



230





230

Corporate


(57)



(6)



(63)





(63)

Residual Costs


(18)





(18)





(18)

Eliminations


(3)





(3)





(3)


Total

$

873


$

(139)


$

734


$


$

734


Margins (a)


24%






20%






20%

























Three Months Ended June 30, 2010










Adjusted









Adjusted

Depreciation

Operating

Restructuring

Operating




OIBDA

and Amortization

Income/(Loss)

Charges

Income/(Loss)

Entertainment

$

223


$

(42)


$

181


$


$

181

Cable Networks


129



(6)



123





123

Publishing


17



(2)



15





15



Content Group


369



(50)



319





319

Local Broadcasting


214



(24)



190





190

Outdoor


79



(65)



14



(2)



12



Local Group


293



(89)



204



(2)



202

Corporate


(56)



(5)



(61)





(61)

Residual Costs


(26)





(26)





(26)

Eliminations


1





1





1


Total

$

581


$

(144)


$

437


$

(2)


$

435


Margins (a)


17%






13%






13%

















Three Months Ended June 30,





2011 



2010 


Adjusted OIBDA

$

873


$

581




Restructuring charges




(2)


Total OIBDA


873



579




Depreciation and amortization


(139)



(144)


Operating income


734



435




Interest expense


(110)



(134)




Interest income


1



2




Loss on early extinguishment of debt




(41)




Other items, net


5



(14)


Earnings before income taxes


630



248




Provision for income taxes


(230)



(91)




Equity in loss of investee companies, net of tax


(5)



(7)


Net earnings

$

395


$

150





a) Margin is defined as OIBDA, adjusted OIBDA, operating income, or adjusted operating income, as applicable, divided by revenues.







Six Months Ended June 30, 2011




















Depreciation

Operating

Restructuring

Operating




OIBDA

and Amortization

Income/(Loss)

Charges

Income/(Loss)

Entertainment

$

708


$

(78)


$

630


$


$

630

Cable Networks


329



(11)



318





318

Publishing


26



(4)



22





22



Content Group


1,063



(93)



970





970

Local Broadcasting


399



(52)



347





347

Outdoor


135



(121)



14





14



Local Group


534



(173)



361





361

Corporate


(109)



(12)



(121)





(121)

Residual Costs


(37)





(37)





(37)

Eliminations


(2)





(2)





(2)


Total

$

1,449


$

(278)


$

1,171


$


$

1,171


Margins (a)


20%






17%






17%

























































Six Months Ended June 30, 2010










Adjusted









Adjusted

Depreciation

Operating

Restructuring

Operating




OIBDA

and Amortization

Income/(Loss)

Charges

Income/(Loss)

Entertainment

$

368


$

(83)


$

285


$

(11)


$

274

Cable Networks


230



(12)



218





218

Publishing


20



(3)



17



(1)



16



Content Group


618



(98)



520



(12)



508

Local Broadcasting


348



(49)



299



(25)



274

Outdoor


111



(128)



(17)



(22)



(39)



Local Group


459



(177)



282



(47)



235

Corporate


(95)



(10)



(105)





(105)

Residual Costs


(52)





(52)





(52)

Eliminations


2





2





2


Total

$

932


$

(285)


$

647


$

(59)


$

588


Margins (a)


14%






9%






9%

















Six Months Ended June 30,





2011 



2010 


Adjusted OIBDA

$

1,449


$

932




Restructuring charges




(59)


Total OIBDA


1,449



873




Depreciation and amortization


(278)



(285)


Operating income


1,171



588




Interest expense


(220)



(272)




Interest income


3



3




Loss on early extinguishment of debt




(38)




Other items, net


14



(27)


Earnings before income taxes


968



254




Provision for income taxes


(352)



(112)




Equity in loss of investee companies, net of tax


(19)



(18)


Net earnings

$

597


$

124





a) Margin is defined as OIBDA, adjusted OIBDA, operating income, or adjusted operating income, as applicable, divided by revenues.



Free Cash Flow

Free cash flow reflects the Company's net cash flow provided by (used for) operating activities less capital expenditures.  The Company's calculation of free cash flow includes capital expenditures since investment in capital expenditures is a use of cash that is directly related to the Company's operations. The Company's net cash flow provided by (used for) operating activities is the most directly comparable GAAP financial measure.

Management believes free cash flow provides investors with an important perspective on the cash available to the Company to service debt, make strategic acquisitions and investments, maintain its capital assets, satisfy its tax obligations and fund ongoing operations and working capital needs.  As a result, free cash flow is a significant measure of the Company's ability to generate long-term value.  It is useful for investors to know whether this ability is being enhanced or degraded as a result of the Company's operating performance.  The Company believes the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from the Company's underlying operations in a manner similar to the method used by management.  Free cash flow is one of several components of incentive compensation targets for certain management personnel.  In addition, free cash flow is 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 calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by (used for) operating activities as a measure of liquidity or net earnings (loss) as a measure of operating performance.  Free cash flow, as the Company calculates it, may not be comparable to similarly titled measures employed by other companies.  In addition, free cash flow as a measure of liquidity has certain limitations, and does not necessarily represent funds available for discretionary use and is not necessarily a measure of the Company's ability to fund its cash needs.  When comparing free cash flow to net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are not reflected in free cash flow.

The following table presents a reconciliation of the Company's net cash flow provided by operating activities to free cash flow:





Three Months Ended


Six Months Ended




June 30,


June 30,





2011 




2010 




2011 




2010 


Net cash flow provided by operating activities

$

700



$

550



$

1,594



$

1,251


Capital expenditures


(54)




(59)




(95)




(100)


Free cash flow

$

646



$

491



$

1,499



$

1,151






















The following table presents a summary of the Company's cash flows:






















Three Months Ended


Six Months Ended




June 30,


June 30,





2011 




2010 




2011 




2010 


Net cash flow provided by operating activities

$

700



$

550



$

1,594



$

1,251


Net cash flow used for investing activities

$

(68)



$

(74)



$

(171)



$

(148)


Net cash flow used for financing activities

$

(258)



$

(511)



$

(557)



$

(982)























2010 Adjusted Results

The following tables reconcile 2010 financial measures excluding restructuring charges, pre-tax loss on early extinguishment of debt and discrete tax items 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.  For 2011, no adjustments were made to reported results.
























Three Months Ended June 30, 2010





2010 


Restructuring


Extinguishment

Tax


2010 





Reported



Charges (a)


of Debt


Items


Adjusted


Revenues

$

3,331


$


$


$


$

3,331


OIBDA


579



2







581


OIBDA margin (b)


17%












17%




















Operating income


435



2







437


Interest expense


(134)









(134)


Interest income


2









2


Loss on early extinguishment of debt


(41)





41






Other items, net


(14)









(14)


Earnings before income taxes


248



2



41





291


Provision for income taxes


(91)



(1)



(16)





(108)


Effective income tax rate


37%












37%




















Equity in loss of investee companies, net of tax


(7)









(7)


Net earnings

$

150


$

1


$

25


$


$

176


Diluted EPS

$

.22


$


$

.04


$


$

.25


Diluted weighted average number of


















common shares outstanding


693












693

























Six Months Ended June 30, 2010





2010 


Restructuring


Extinguishment

Tax


2010 





Reported



Charges (c)


of Debt


Items (d)


Adjusted


Revenues

$

6,862


$


$


$


$

6,862


OIBDA


873



59







932


OIBDA margin (b)


13%












14%




















Operating income


588



59







647


Interest expense


(272)









(272)


Interest income


3









3


Loss on early extinguishment of debt


(38)





38






Other items, net


(27)









(27)


Earnings before income taxes


254



59



38





351


Provision for income taxes


(112)



(24)



(15)



26



(125)


Effective income tax rate


44%












36%




















Equity in loss of investee companies, net of tax


(18)









(18)


Net earnings

$

124


$

35


$

23


$

26


$

208


Diluted EPS

$

.18


$

.05


$

.03


$

.04


$

.30


Diluted weighted average number of


















common shares outstanding


693












693




a) Restructuring charges at Outdoor primarily reflecting severance costs associated with the elimination of
   positions.

b) OIBDA margin is defined as OIBDA divided by revenues.

c) Restructuring charges at Entertainment, Publishing, Local Broadcasting and Outdoor primarily reflecting
   severance costs associated with the elimination of positions and contract terminations.

d) Comprising a $62 million reduction of deferred tax assets associated with the 2010 Patient Protection and
   Affordable Care Act, partially offset by a $26 million reversal of previously established deferred tax liabilities
   and a $10 million tax benefit from the settlements of income tax audits.



SOURCE CBS Corporation

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