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CBS Corp. Reports Operating Results (10-Q)

May 05, 2010 | About:
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10qk

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CBS Corp. (CBS) filed Quarterly Report for the period ended 2010-03-31.

Cbs Corp. has a market cap of $10.97 billion; its shares were traded at around $16.2 with a P/E ratio of 32.4 and P/S ratio of 0.9. The dividend yield of Cbs Corp. stocks is 1.2%.CBS is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, NWQ Managers of NWQ Investment Management Co, Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, Stanley Druckenmiller of Duquesne Capital Management, LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, David Dreman of Dreman Value Management, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Free cash flow for the first quarter of 2010 increased $455.5 million to $659.8 million from $204.3 million for the same prior-year period principally reflecting higher advertising sales and lower payments for interest, taxes and capital expenditures. The Company generated cash flow from operating activities of $700.7 million for the three months ended March 31, 2010, up $722.2 million versus a use of cash of $21.5 million for the comparable prior-year period, as 2009 included a $300.0 million reduction to the amounts outstanding under the Company's accounts receivable securitization program. Free cash flow, a non-GAAP financial measure, reflects the Company's net cash flow provided by (used for) operating activities before increases and decreases to the accounts receivable securitization program and less capital expenditures. See "Reconciliation of Non-GAAP Financial Information" on pages 33 34 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.

Selling, general and administrative ("SG&A") expenses, which include expenses incurred for selling and marketing costs, occupancy and back office support, increased $19.9 million, or 3%, to $616.1 million for the three months ended March 31, 2010 primarily due to higher incentive compensation accruals and higher advertising expense partially offset by lower pension and postretirement benefits costs. Pension and postretirement benefits costs decreased $12.9 million to $44.1 million for the three months ended March 31, 2010 from $57.0 million for the same prior-year period principally due to pension plan asset performance in 2009. SG&A expenses as a percentage of revenues were 17% and 19% for the three months ended March 31, 2010 and 2009, respectively.

During the three months ended March 31, 2010, in a continued effort to reduce its cost structure, the Company recorded restructuring charges of $57.1 million, reflecting $44.7 million of severance costs associated with the elimination of positions and $12.4 million of contract termination and other associated costs. During the year ended December 31, 2009, the Company recorded restructuring charges of $22.8 million, reflecting $20.8 million of severance costs and $6.7 million of contract termination and other associated costs, partially offset by the reversal of $4.7 million as a result of changes in estimates of previously established restructuring accruals. During the year ended December 31, 2008, the Company recorded restructuring charges of $136.7 million, which reflected $127.5 million of severance costs and $9.2 million of contract termination and other associated costs. As of March 31, 2010, the Company had paid $126.1 million of the severance costs and $6.6 million of the contract termination and other associated costs. The Company expects to substantially utilize the remaining reserves by the end of 2011.

For the three months ended March 31, 2010, "Other items, net" reflected a net loss of $13.1 million primarily consisting of foreign exchange losses of $11.9 million and a non-cash charge of $1.2 million associated with other-than-temporary declines in the market value of the Company's investments.

The provision for income taxes was $21.0 million and $8.8 million for the three months ended March 31, 2010 and 2009, respectively. The provision for income taxes for the three months ended March 31, 2010 included three discrete items which impacted comparability totaling $25.9 million, comprised of a $62.2 million reduction of deferred tax assets associated with the recently enacted Patient Protection and Affordable Care Act, partially offset by a $26.4 million reversal of previously established deferred tax liabilities and a $9.9 million tax benefit from the settlements of state and local income tax audits. The provision for income taxes for the three months ended March 31, 2009 included a charge of $18.8 million for the reduction of deferred tax assets associated with stock-based compensation. This reduction reflects the difference between the estimated tax benefit recognized based on the grant date fair value of the stock-based compensation award versus the actual tax benefit realized based on the market value on the date of vest.

The Company reported a net loss of $26.2 million for the three months ended March 31, 2010 versus a net loss of $55.3 million for the three months ended March 31, 2009. Comparability for the first quarter was impacted by 2010 restructuring charges of $57.1 million ($34.6 million, net of tax) and discrete tax items of $25.9 million, and a 2009 charge to income tax expense of $18.8 million for the reduction of deferred tax assets associated with stock-based compensation.

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