On Nov. 2, all-media powerhouse CBS (NYSE:CBS) released Q3 2006 earnings for the period ended Sept. 30, 2006.

  • A stronger balance sheet can make a real difference to earnings, as only $0.03 of the EPS betterment came from operations -- the other $0.06 resulted from higher-interest income and lower-interest expense.
  • Income and cash flow from continuing operations grew at a healthy pace, particularly considering the flat sales curve. The company also announced a $1.5 billion share buyback program, which at today's stock price would translate into about 52 million shares, or more than 6.7% of shares outstanding.
  • This checkup is full of special cases, because CBS has been a stand-alone company for less than a year. It was spun off from Viacom (NYSE:VIA) in January 2006 to see if separate growth (Viacom) and income (CBS) stocks would be better than the combination.
  • Click here for more Foolish analysis on CBS's quarter.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$3,430

$3,378.8

$3,371.9

0.2%

Net Profit*

--

$323.6

$256.9

26%

EPS*

$0.40

$0.42

$0.33

27.3%

Diluted Shares

 --

774.2

789.0

(1.9%)

*Earnings from continuing operations, discounting theme parks sold to Cedar Fair and more than two dozen radio stations handed over to various buyers.

Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Operating Margin

19.13%

18.45%

0.68

Net Margin

9.58%

7.62%

1.96

*Expressed in percentage points.

No gross margin? CBS doesn't report cost of sales, so we don't have the information necessary to compute gross margins.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights*

Assets

Q3 2006

Q4 2005

Change

Cash + ST Invest.

$3,176.6

$1,655.3

91.9%

Accounts Rec.

$2,582.2

$2,726.1

(5.3%)

Inventory

$838.2

$970.0

(13.6%)



Liabilities

Q3 2006

Q4 2005

Change

Accounts Payable

$426.0

$588.6

(27.6%)

Long-Term Debt

$7,033.0

$7,153.2

(1.7%)

*Another oddity: We don't have year-ago balance sheets for CBS, so the oldest one available -- December 2005 -- will have to stand in here.

Learn the ways of the balance sheet.

Cash Flow Highlights*

Q3 2006

Q3 2005

Change

Cash From Ops.

$407.3

$332.8

22.4%

Capital Expenditures

$82.5

$71.5

15.4%

Free Cash Flow

$324.8

$261.3

24.3%
*Imagine that -- no footnotes!

Find out why Fools always follow the money.

Related Companies:

  • Viacom
  • Walt Disney (NYSE:DIS)
  • General Electric (NYSE:GE)
  • News Corp. (NYSE:NWS)
  • Time Warner (NYSE:TWX)
  • Cedar Fair (NYSE:FUN)

Related Foolishness:

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund was a Disney shareholder, but had no other position in any other company mentioned. Fool rules are here .