Cbs has a market cap of $18.24 billion; its shares were traded at around $27.28 with a P/E ratio of 20.2 and P/S ratio of 1.3. The dividend yield of Cbs stocks is 1.5%.
Highlight of Business Operations:Operating income of $734 million for the second quarter of 2011 increased 69% from $435 million for the second quarter of 2010 and operating income of $1.17 billion for the six months ended June 30, 2011 increased 99% from $588 million for the same prior-year period, reflecting growth across all of the Company's segments with significant margin improvement. These increases were driven by the aforementioned revenue growth and significantly lower sports programming costs from the new programming agreement for the NCAA Tournament. The Company reported second quarter diluted earnings per share of $.58 for 2011, up from $.22 per diluted share for 2010, and diluted earnings per share of $.87 for the six months ended June 30, 2011, up from $.18 per diluted share for the comparable prior-year period. These increases were driven by the operating income growth and lower interest expense due to a $1.40 billion reduction to the Company's outstanding debt during 2010.
During the second quarter of 2011, the Company repurchased 9.9 million shares of its Class B Common Stock for $250 million, at an average cost of $25.19 per share, and for the six months ended June 30, 2011, the Company spent a total of $500 million to repurchase 21.7 million shares at an average cost of $23.06 per share. Free cash flow for the six months ended June 30, 2011 was $1.50 billion, up $348 million over the same prior-year period. The Company generated cash flow from operating activities of $1.59 billion for the six months ended June 30, 2011, up $343 million from $1.25 billion for the comparable prior-year period. Free cash flow, a non-GAAP financial measure, reflects the Company's net cash flow provided by (used for) operating activities less capital expenditures. See "Reconciliation of Non-GAAP Financial Information" on page 37 for a reconciliation of net cash flow provided by (used for) operating activities, the most directly comparable financial measure in accordance with accounting principles generally accepted in the United States of America ("GAAP"), to free cash flow.
Affiliate and subscription fees increased $45 million, or 12%, to $426 million for the three months ended June 30, 2011 and increased $82 million, or 11%, to $846 million for the six months ended June 30, 2011 reflecting growth in subscriptions and rate increases at Showtime Networks and CBS Sports Network, and higher retransmission revenues.
Selling, general and administrative ("SG&A") expenses, which include expenses incurred for selling and marketing costs, occupancy and back office support, increased $10 million, or 1%, to $683 million for the three months ended June 30, 2011 and increased $52 million, or 4%, to $1.34 billion for the six months ended June 30, 2011, primarily due to higher employee related costs partially offset by lower pension and postretirement benefit costs. For the six-month period, the increase also reflects higher advertising expense. Pension and postretirement benefits costs decreased $11 million to $33 million for the second quarter of 2011 and decreased $20 million to $68 million for the six-month period versus the comparable prior-year periods principally 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. SG&A expenses as a percentage of revenues were 19% for both the three and six months ended June 30, 2011, versus 20% and 19% for the three and six months ended June 30, 2010, respectively.
For the three months ended June 30, 2011, interest expense decreased $24 million to $110 million and for the six months ended June 30, 2011, interest expense decreased $52 million to $220 million, primarily resulting from the reduction of debt during 2010. The Company had $6.00 billion and $6.54 billion of principal amounts of debt outstanding (including current maturities) at June 30, 2011 and 2010, respectively, each at a weighted average interest rate of 7%.
The provision for income taxes for the three months ended June 30, 2011 increased to $230 million from $91 million and for the six months ended June 30, 2011 increased to $352 million from $112 million for the comparable prior-year period, in both cases driven by the increase in earnings before income taxes. In addition, the provision for income taxes for the six months ended June 30, 2010 included three discrete items which impacted comparability totaling $26 million, comprised of a $62 million reduction of deferred tax assets associated with the enactment of the Patient Protection and Affordable Care Act in 2010, partially offset by a $26 million reversal of previously established deferred tax liabilities and a $10 million tax benefit from the settlements of tax audits.
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