CBS Corporation Reports 4% Gain In Revenues

April 27, 2006
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April 27 – May 4, 2006 Edition

CBS Corporation

Reports 4% Gain

In Revenues

NEW YORK, NY/4/26/06—CBS Corporation (NYSE: BS.A and CBS), which now owns Simon & Schuster, has reported results for the first quarter ended March 31,2006, posting solid revenue and net earnings per share increases from Continuing operations.

Parks/Publishing (Paramount Parks and Simon & Schuster) revenues increased 12% to $188 million from $168 million and OIBDA increased to $4 million from a loss of $4 million for the same prior-year period.

Parks/Publishing reported an operating loss of $13 million in the first quarter of 2006 versus an operating loss of $20 million in the first quarter of 2005. Publishing’s revenues increased 14% in 2006 on the strength of first quarter titles, including Two Little Girls in Blue by Mary Higgins Clark and Cell by Stephen King.

Publishing’s OIBDA and operating income both increased $3 million in 2006 primarily driven by the revenue increases noted above.

On January 26, 2006, the Company announced its intention to divest Paramount Parks. The Company expects to complete the divestiture in the second half of 2006.

The Company is on track to deliver low single-digit growth in revenues and mid single-digit growth in operating income and earnings per share.

Excluding 2006 stock option expense and on a pro forma basis for 2005, the Company’s first quarter increases over the same quarter last year were as follows: 4% in revenues, 5% in net earnings from continuing operations to $232 million from $220 million and 11% in diluted earnings per share (“EPS”) to $.30 from $.27. Pro forma results for 2005 are adjusted for the separation and exclude a net gain on investments.

The Company reported free cash flow of $585 million, up 12% from $524 million for the same prior-year period. Free cash flow reflects the Company’s net cash flow from operating activities of $648 million less capital expenditures of $63 million. In the first quarter of 2006, the Company’s free cash flow was reduced by a $50 million contribution to pre-fund one of its qualified pension plans.

“I am very pleased with the progress of the new CBS Corporation,” said Sumner Redstone, Executive Chairman, CBS Corporation. “The Company’s rapid pace of change and innovative approach to emerging business opportunities can be seen in the many strategic announcements we have made over these past few months. The more focused and more nimble organization we sought to create has become a reality and that aggressive spirit of excellence and innovation will continue to benefit shareholders for many years to come.”

“We have clearly built strong momentum during our first three months,” said Leslie Moonves, President and Chief Executive Officer, CBS Corporation. “Our strong double-digit free cash flow growth demonstrates that we are successfully leveraging the revenue growth produced by our core operations. Our Television segment continues to perform well, led by significant revenue growth at CBS Paramount Television, Showtime and our television stations; and our industry-leading network is extremely well-positioned. I’m particularly pleased with the performance of Outdoor where profits are up dramatically as a result of strong North America revenue growth and our strategy to exit less profitable transit contracts.”

Moonves continued, “Radio—which has extremely valuable assets—is our one segment that is not yet achieving acceptable growth. We have implemented a number of recent initiatives to change that, including the new JACK and Spanish formats which have shown good success. And we believe this week’s announcement to add a powerful new morning show will greatly improve the performance of our drive-time programming in the nation’s largest east-coast markets.

We’re going to continue to invest in the best programming and marketing, and actively adjust our portfolio to maximize Radio’s growth potential.”

On a reported basis, the Company’s first quarter revenues increased 4% to $3.6 billion from $3.4 billion last year, led by growth of 5% in Television, 5% in Outdoor and 12% in Parks/Publishing, partially offset by a decline of 6% at Radio.

Operating income before depreciation and amortization (“OIBDA”) increased 1% to $634 million from $626 million, including increases of 3% in Television and 43% in Outdoor.

Results in 2006 include stock option expense of $8.5 million ($5.1 million net of tax or $.01 per diluted share) due to the adoption of SFAS 123R, “Share-Based Payment.”

Excluding stock option expense, OIBDA increased 3% to $643 million, including increases of 4% in Television and 43% in Outdoor.

Operating income increased 1% to $511 million from $505 million including increases of 3% in Television, 170% in Outdoor and 33% in Parks/Publishing. Excluding stock option expense, operating income increased 3% to $520 million.

Net earnings from continuing operations of $227 million increased 1% from the first quarter of 2005, while diluted EPS from continuing operations increased 7% to $.30 from $.28 reflecting lower shares outstanding in 2006. Diluted EPS increased 11% to $.30 from 2005 pro Forma EPS of $.27.

 

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