Exhibit 99
CBS CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR 2007 RESULTS
Fourth Quarter OIBDA Up 4% to $824 Million
Full Year OIBDA Up 1% to $3.08 Billion
Fourth Quarter Operating Income Up 3% to $705 Million
Full Year Operating Income Up 1% to $2.62 Billion
Fourth Quarter Adjusted Diluted EPS Up 2% to $.54
Full Year Adjusted Diluted EPS Up 9% to $1.88
Fourth Quarter Free Cash Flow Up $137 Million to $122 Million
Full Year Free Cash Flow Up 6% to $1.71 Billion
New York, New York, February 26, 2008 — CBS Corporation (NYSE: CBS.A and CBS) today reported results for the fourth quarter and full year ended December 31, 2007.
“I’m very pleased that CBS has turned in another solid quarter while making significant strides in the expanding interactive marketplace,” said Sumner Redstone, Executive Chairman, CBS Corporation. “At the same time, the Company remained steadfast in delivering on its promises and returning significant value to investors. Leslie and his team continue to lead the Company with distinction, capitalizing upon our strength today and positioning CBS for success in the months and years to come.”
“We finished 2007 with our businesses well poised to increase revenues and profits in 2008 and beyond,” said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. “In Television, I’m particularly pleased with the recent resolution of the WGA strike, which has restored stability to the network season. Meanwhile, Outdoor and Publishing had exceptionally strong performances for the year, with Outdoor picking up momentum to deliver a strong double-digit OIBDA gain in the fourth quarter. Our businesses produced a significant amount of free cash flow and, during the year, we returned $4 billion of cash to shareholders through a combination of dividends and share repurchases. At the same time, we used a prudent portion of our cash to invest in higher-growth properties like the online social networking community Last.fm and digital outdoor displays both domestically and overseas.”
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Fourth Quarter 2007 Results
Revenues of $3.76 billion for the fourth quarter of 2007 decreased 3% from $3.88 billion for the same quarter last year. The television and radio station divestitures, the non-renewal of several marginally profitable outdoor transit contracts, and record political advertising sales in the fourth quarter of 2006 negatively impacted the fourth quarter revenue comparison by 4%.
Operating income before depreciation and amortization (“OIBDA”) of $824.0 million for the fourth quarter of 2007 increased 4% from $794.9 million and operating income of $704.8 million increased 3% from $681.5 million for the same prior-year period, reflecting growth at Outdoor, lower residual costs and the impairment charge recorded in 2006. Stock-based compensation expense for the fourth quarter of 2007 was $25.8 million versus $12.6 million for the same quarter in 2006.
Net earnings from continuing operations on an adjusted basis were $366.7 million for the fourth quarter of 2007 versus $410.6 million for the same prior-year period, reflecting a higher effective income tax rate of 35.3% for 2007 versus 28.6% for 2006. Despite the higher income tax rate, adjusted diluted earnings per share from continuing operations for the fourth quarter of 2007 increased 2% to $.54 from $.53 for the same prior-year period due to the impact of the 2007 share repurchases. Adjusted results exclude the write-down of investments, and the impact of station divestitures and favorable tax settlements. Reported net earnings from continuing operations were $273.1 million, or $.40 per diluted share, versus $335.0 million, or $.43 per diluted share, for the prior-year period.
Free cash flow for the fourth quarter of 2007 increased $137.1 million to $122.4 million from $(14.7) million for the same prior-year period. The Company’s free cash flow for the fourth quarter of 2007 and 2006 was reduced by discretionary contributions of $150.0 million and $200.0 million, respectively, to pre-fund its qualified pension plans.
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Full Year 2007 Results
Revenues of $14.07 billion for the full year 2007 decreased 2% from $14.32 billion for 2006. The absence of UPN, the television and radio station divestitures and the non-renewal of several marginally profitable outdoor transit contracts negatively impacted the full year revenue comparison by 3%. Revenues in 2007 were favorably impacted by the 2007 telecast of Super Bowl XLI and growth at Outdoor and Publishing. OIBDA of $3.08 billion for 2007 increased 1% from $3.05 billion for 2006 and operating income of $2.62 billion for 2007 also increased 1% from $2.61 billion for 2006. Stock-based compensation expense was $106.6 million for 2007 versus $64.3 million for 2006.
Net earnings from continuing operations on an adjusted basis increased 3% to $1.36 billion for 2007 from $1.33 billion for 2006. Adjusted diluted earnings per share from continuing operations increased 9% to $1.88 from $1.72 for 2006 due in part to the impact of the 2007 share repurchases. Reported net earnings from continuing operations for 2007 were $1.23 billion, or $1.70 per diluted share, versus $1.38 billion, or $1.79 per diluted share, for 2006.
Full year 2007 free cash flow increased 6% to $1.71 billion from $1.61 billion for 2006.
Business Outlook
The Company expects OIBDA and operating income growth to be in the range of 3% to 5% for 2008, excluding stock-based compensation expense. The Company’s 2008 business outlook is based on 2007 OIBDA of $3.18 billion and operating income of $2.73 billion, which exclude stock-based compensation expense.
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Consolidated and Segment Results
The tables below present the Company’s revenues, OIBDA and operating income by segment for the three and twelve months ended December 31, 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
December 31, | | Better/ | | Twelve Months Ended
December 31, | | Better/ | |
Revenues | | 2007 | | 2006 | | (Worse)% | | 2007 | | 2006 | | (Worse)% | |
Television | | $ | 2,460.5 | | $ | 2,561.0 | | (4 | )% | $ | 9,274.1 | | $ | 9,487.1 | | (2 | )% |
Radio | | 447.1 | | 498.2 | | (10 | ) | 1,753.7 | | 1,959.9 | | (11 | ) |
Outdoor | | 618.6 | | 580.6 | | 7 | | 2,187.3 | | 2,103.4 | | 4 | |
Publishing | | 242.3 | | 252.5 | | (4 | ) | 886.1 | | 807.0 | | 10 | |
Eliminations | | (9.7 | ) | (9.4 | ) | (3 | ) | (28.3 | ) | (37.2 | ) | 24 | |
Total Revenues | | $ | 3,758.8 | | $ | 3,882.9 | | (3 | )% | $ | 14,072.9 | | $ | 14,320.2 | | (2 | )% |
| | Three Months Ended
December 31, | | Better/ | | Twelve Months Ended
December 31, | | Better/ | |
OIBDA | | 2007 | | 2006 | | (Worse)% | | 2007 | | 2006 | | (Worse)% | |
Television | | $ | 501.6 | | $ | 531.5 | | (6 | )% | $ | 1,926.2 | | $ | 1,947.7 | | (1 | )% |
Radio | | 167.4 | | 211.3 | | (21 | ) | 688.7 | | 820.0 | | (16 | ) |
Outdoor | | 198.9 | | 166.8 | | 19 | | 620.9 | | 568.0 | | 9 | |
Publishing | | 29.5 | | 38.9 | | (24 | ) | 97.2 | | 78.0 | | 25 | |
Corporate | | (49.3 | ) | (54.2 | ) | 9 | | (159.0 | ) | (162.9 | ) | 2 | |
Residual costs | | (24.1 | ) | (34.2 | ) | 30 | | (96.5 | ) | (139.7 | ) | 31 | |
Total OIBDA before
impairment charges | | $ | 824.0 | | $ | 860.1 | | (4 | )% | $ | 3,077.5 | | $ | 3,111.1 | | (1 | )% |
Impairment charges(a) | | — | | (65.2 | ) | n/m | | — | | (65.2 | ) | n/m | |
Total OIBDA | | $ | 824.0 | | $ | 794.9 | | 4 | % | $ | 3,077.5 | | $ | 3,045.9 | | 1 | % |
| | Three Months Ended
December 31, | | Better/ | | Twelve Months Ended
December 31, | | Better/ | |
Operating Income | | 2007 | | 2006 | | (Worse)% | | 2007 | | 2006 | | (Worse)% | |
Television | | $ | 451.9 | | $ | 421.9 | | 7 | % | $ | 1,739.0 | | $ | 1,711.0 | | 2 | % |
Radio | | 159.6 | | 203.5 | | (22 | ) | 657.8 | | 787.4 | | (16 | ) |
Outdoor | | 142.8 | | 110.9 | | 29 | | 404.9 | | 351.8 | | 15 | |
Publishing | | 27.0 | | 36.3 | | (26 | ) | 88.1 | | 68.5 | | 29 | |
Corporate | | (52.4 | ) | (56.9 | ) | 8 | | (171.5 | ) | (172.6 | ) | 1 | |
Residual costs | | (24.1 | ) | (34.2 | ) | 30 | | (96.5 | ) | (139.7 | ) | 31 | |
Total Operating Income | | $ | 704.8 | | $ | 681.5 | | 3 | % | $ | 2,621.8 | | $ | 2,606.4 | | 1 | % |
(a) Represents a non-cash impairment charge to reduce goodwill in Television for the three and twelve months ended December 31, 2006.
n/m — not meaningful
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Television (CBS Television Network, CBS Television Stations, CBS Paramount Network Television, CBS Television Distribution, Showtime Networks and CSTV Networks)
Fourth Quarter
Television revenues for the fourth quarter of 2007 decreased 4% to $2.46 billion from $2.56 billion for the same prior-year period principally due to a 7% decline in advertising revenues, reflecting lower political advertising sales, which set a record in the fourth quarter of 2006, and the impact of television station divestitures. Affiliate revenues increased 5% reflecting rate increases and subscriber growth at both Showtime Networks and CSTV Networks. Showtime and CSTV subscriptions as of December 31, 2007 increased 11% and 5%, respectively, over the prior year. Television license fees decreased 4% due to the absence of the 2006 domestic syndication availability of Star Trek: Voyager partially offset by the 2007 availability of NCIS.
Television OIBDA before impairment charges decreased 6% to $501.6 million for the fourth quarter of 2007 primarily due to lower political advertising sales and lower profits from the mix of titles in syndication partially offset by lower programming costs. Television operating income increased 7% to $451.9 million for the fourth quarter of 2007 reflecting the impairment charge recorded in 2006.
Full Year
Television revenues for 2007 decreased 2% to $9.27 billion from $9.49 billion for 2006, reflecting lower political advertising sales, the absence of UPN and the impact of television station divestitures. Also, television license fees decreased 14% as revenues from 2007 domestic availabilities, including NCIS, did not match contributions from the 2006 domestic syndication sales of Frasier and Star Trek: Voyager. These decreases were partially offset by the favorable impact of the 2007 telecast of Super Bowl XLI and $118.5 million higher home entertainment revenues.
Television OIBDA before impairment charges decreased 1% to $1.93 billion for 2007 due to lower political advertising sales and lower profits from syndication sales, partially offset by higher home entertainment and affiliate revenues and the absence of $24.0 million of costs related to the shutdown of UPN in 2006. Television operating income increased 2% to $1.74 billion reflecting the impairment charge recorded in 2006. Television results included stock-based compensation of $49.6 million and $31.1 million for 2007 and 2006, respectively.
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Radio (CBS Radio)
Fourth Quarter
Radio revenues on a “same station” basis, excluding divested stations, decreased 7% from the fourth quarter of 2006. Reported Radio revenues for the fourth quarter of 2007 decreased 10% to $447.1 million from $498.2 million for the same prior-year period, reflecting weakness in advertising sales and the impact of the radio station divestitures in ten markets.
Radio OIBDA and operating income for the fourth quarter of 2007 decreased 21% to $167.4 million and 22% to $159.6 million, respectively, principally resulting from the decline in advertising sales and the impact of station divestitures.
Full Year
Radio revenues on a “same station” basis decreased 6% from 2006. Reported Radio revenues for 2007 decreased 11% to $1.75 billion from $1.96 billion for 2006.
Radio OIBDA and operating income both decreased 16% to $688.7 million and $657.8 million, respectively, for 2007 due to the decline in advertising sales and the impact of station divestitures partially offset by lower sports programming expenses. Radio results included stock-based compensation of $15.9 million and $10.7 million for 2007 and 2006, respectively.
Outdoor (CBS Outdoor)
Fourth Quarter
Outdoor revenues for the fourth quarter of 2007 increased 7% to $618.6 million from $580.6 million for the same prior-year period led by an 18% increase in Europe and Asia, principally due to growth in the U.K. market and favorable fluctuations in foreign exchange rates, and growth in the U.S. billboard business. In constant dollars, Outdoor revenues increased 2% for the quarter. North America revenues for the fourth quarter increased slightly from the prior year as growth of 9% in U.S. billboards, 9% in Canada and 19% in Mexico was offset by a 27% decline in U.S. transit and displays, reflecting the non-renewal of marginally profitable transit and street furniture contracts in New York City and Chicago.
Outdoor OIBDA and operating income increased 19% to $198.9 million and 29% to $142.8 million, respectively, for the fourth quarter of 2007 reflecting growth in North America and in Europe and Asia. North America OIBDA increased 16% to $147.2 million and operating income increased 30% to $101.8 million, led by growth in the U.S. billboard business. Europe and Asia OIBDA increased 28% to $51.7 million and operating income increased 26% to $41.0 million, driven by the revenue increases.
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Full Year
Outdoor revenues for 2007 increased 4% to $2.19 billion from $2.10 billion for 2006 driven by an increase of 13% in Europe and Asia, principally reflecting growth in the U.K. and France markets and favorable foreign exchange rate changes, and growth in the U.S. billboard business. In constant dollars, Outdoor revenues increased slightly over 2006. Revenues for North America decreased 1% for 2007 as a result of a 28% decline in U.S. transit and displays, reflecting the non-renewal of marginally profitable transit and street furniture contracts in New York City and Chicago, partially offset by growth of 9% in U.S. billboards, 9% in Canada and 8% in Mexico.
Outdoor OIBDA and operating income increased 9% to $620.9 million and 15% to $404.9 million, respectively, led by North America, with OIBDA growth of 13% to $518.4 million and operating income growth of 23% to $336.5 million, reflecting strength in the U.S. billboard business. Europe and Asia OIBDA decreased 5% to $102.5 million and operating income decreased 13% to $68.4 million as the revenue growth was more than offset by higher transit lease costs, primarily in the U.K. Outdoor results included stock-based compensation of $5.3 million and $3.2 million for 2007 and 2006, respectively.
Publishing (Simon & Schuster)
Fourth Quarter
Publishing revenues for the fourth quarter of 2007 decreased 4% to $242.3 million from $252.5 million for the same prior-year period, as best-selling titles in the fourth quarter of 2007, including YOU: Staying Young by Michael F. Roizen and Mehmet C. Oz, did not match contributions from prior year titles, which included YOU: On a Diet by Michael F. Roizen and Mehmet C. Oz and Lisey’s Story by Stephen King.
Publishing OIBDA and operating income decreased 24% to $29.5 million and 26% to $27.0 million, respectively, reflecting the decline in revenues and higher employee-related and digital archive costs.
Full Year
Publishing revenues for 2007 increased 10% to $886.1 million from $807.0 million for 2006 reflecting higher sales from best-selling titles, including The Secret by Rhonda Byrne, YOU: Staying Young by Michael F. Roizen and Mehmet C. Oz and Become A Better You by Joel Osteen.
Publishing OIBDA and operating income increased 25% to $97.2 million and 29% to $88.1 million, respectively, driven by the revenue increase and lower bad debt expense. Publishing results included stock-based compensation of $3.5 million and $1.9 million for 2007 and 2006, respectively.
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Corporate
Corporate expenses before depreciation expense for the fourth quarter of 2007 decreased to $49.3 million from $54.2 million for the same prior-year period, and for the year decreased to $159.0 million from $162.9 million for 2006. Corporate expenses included stock-based compensation of $32.3 million and $17.4 million for 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. Residual costs decreased to $24.1 million for the fourth quarter of 2007 from $34.2 million for the same prior-year period, and decreased to $96.5 million for 2007 from $139.7 million for 2006, in each case primarily due to the recognition of lower actuarial losses and the impact of $250.0 million of discretionary contributions made during 2006 to pre-fund the Company’s qualified pension plans.
Interest Expense
Interest expense for the fourth quarter of 2007 of $143.9 million increased from $140.3 million for the same prior-year period, and for the year interest expense of $570.9 million increased from $565.5 million for 2006.
Interest Income
Interest income for the fourth quarter of 2007 of $13.0 million decreased from $39.6 million for the same prior-year period principally reflecting lower average cash balances resulting from share repurchases in 2007 totaling $3.4 billion. Interest income for the year increased to $116.1 million from $112.1 million for 2006.
Other Items, Net
Other items, net, for all periods presented included the write-down of investments associated with other-than-temporary declines in the market value of the Company’s investments and pre-tax gains or losses on station divestitures.
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Provision for Income Taxes
The Company’s effective income tax rate for the fourth quarter was 38.7% for 2007 versus 27.7% for 2006 and for the year was 38.5% for 2007 versus 30.6% for 2006. The effective income tax rates reflected favorable income tax settlements, principally in 2006, and the tax impact of station divestitures. Excluding favorable tax settlements, the tax impact of station divestitures and the write-down of investments, the effective income tax rate for the fourth quarter of 2007 was 35.3% versus 28.6% for 2006 and for the year was 35.9% for 2007 versus 37.1% for 2006.
Equity in Loss of Investee Companies, Net of Tax
Equity in loss of investee companies, net of tax, principally reflected the after-tax non-cash write-down of investments of $57.3 million and $62.9 million for the fourth quarter and full year of 2007, respectively, and $94.2 million for the fourth quarter and full year of 2006, associated with other-than-temporary declines in the market value of the Company’s investments.
About CBS Corporation
CBS Corporation (NYSE: 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), video/DVD (CBS Home Entertainment), in-store media (CBS Outernet) and motion pictures (CBS Films). For more information, log on to www.cbscorporation.com.
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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; 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. 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.
Contacts: | | |
| | |
Press: | | Investors: |
Gil Schwartz | | Martin Shea |
Executive Vice President, Corporate Communications | | Executive Vice President, Investor Relations |
(212) 975-2121 | | (212) 975-8571 |
gdschwartz@cbs.com | | marty.shea@cbs.com |
| | |
Dana McClintock | | Debra Wichser |
Senior Vice President, Corporate Communications | | Vice President, Investor Relations |
(212) 975-1077 | | (212) 975-3718 |
dlmcclintock@cbs.com | | debra.wichser@cbs.com |
