PARAMOUNT GLOBAL EffectiveFebruary 16, 2022 , we changed our name fromViacomCBS Inc. toParamount Global . Management's discussion and analysis of the results of operations and financial condition ofParamount Global should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which was filed prior to the above-mentioned name change. References in this document to "Paramount ," the "Company," "we," "us" and "our" refer toParamount Global .
Significant components of management's discussion and analysis of results of operations and financial condition include:
•Overview-Summary of our business and operational highlights.
•Consolidated Results of Operations-Analysis of our results on a consolidated basis for the three months endedMarch 31, 2022 compared with the three months endedMarch 31, 2021 . •Segment Results of Operations-Analysis of our results on a reportable segment basis for the three months endedMarch 31, 2022 compared with the three months endedMarch 31, 2021 . •Liquidity and Capital Resources-Discussion of our cash flows, including sources and uses of cash, for the three months endedMarch 31, 2022 andMarch 31, 2021 ; and our outstanding debt as ofMarch 31, 2022 .
•Legal Matters-Discussion of legal matters in which we are involved.
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Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Overview
Operational Highlights - Three Months Ended
Consolidated results of operations Increase/(Decrease) Three Months Ended March 31, 2022 2021 $ % GAAP: Revenues$ 7,328 $ 7,412 $ (84) (1) % Operating income$ 775 $ 1,528 $ (753) (49) % Net earnings from continuing operations attributable to Paramount$ 391 $ 899 $ (508) (57) % Diluted EPS from continuing operations attributable to Paramount$ .58 $ 1.42 $ (.84) (59) % Non-GAAP: (a) Adjusted OIBDA$ 913 $ 1,627 $ (714) (44) % Adjusted net earnings from continuing operations attributable to Paramount$ 403 $ 961 $ (558) (58) % Adjusted diluted EPS from continuing operations attributable to Paramount$ .60 $ 1.52 $ (.92) (61) % (a) Certain items identified as affecting comparability are excluded in non-GAAP results. See "Reconciliation of Non-GAAP Measures" for details of these items and reconciliations of non-GAAP results to the most directly comparable financial measures in accordance with accounting principles generally accepted inthe United States ("GAAP"). For the three months endedMarch 31, 2022 , revenues decreased 1% to$7.33 billion as significant increases in revenues from our direct-to-consumer streaming services ("DTC services") and revenue from theatrical releases were more than offset by the benefits in 2021 fromCBS' broadcast of theSuper Bowl , reflecting the rotational nature of the rights to air this event, and the licensing of Coming 2 America andTom Clancy's Without Remorse. The absence of theSuper Bowl negatively impacted the total revenue comparison by 6-percentage points. The above-mentioned growth from our DTC services was led by Paramount+ and Pluto TV, and theatrical revenues in the first quarter of 2022 benefited from the releases of Scream, Jackass Forever, and The Lost City, while there were no releases in the prior-year quarter as a result of the closure or reduced capacity of movie theaters in response to the coronavirus pandemic ("COVID-19"). Operating income for the three months endedMarch 31, 2022 decreased 49% from the same prior-year period. The operating income comparison was impacted by items identified as affecting comparability, including restructuring and other corporate matters and gains on sales for the three months endedMarch 31, 2022 . Adjusted operating income before depreciation and amortization ("Adjusted OIBDA") decreased 44%, driven by the benefit to the 2021 period from the broadcast of theSuper Bowl , increased investment in our DTC services, and higher costs in 2022 associated with theatrical releases and the mix of programming on our linear networks. For the three months endedMarch 31, 2022 , net earnings from continuing operations attributable toParamount and diluted EPS from continuing operations decreased 57% and 59%, respectively, from the same prior-year period. These comparisons were impacted by items identified as affecting comparability, including the aforementioned items impacting operating income, and a loss on extinguishment of debt and discrete tax items in both periods. Adjusted net earnings from continuing operations attributable toParamount and adjusted diluted EPS decreased 58% and 61%, respectively, reflecting the lower adjusted OIBDA. Additionally, adjusted diluted EPS was impacted by theMarch 2021 issuance of 20 million shares of our Class B Common Stock and 10 million shares of 5.75% Series A Mandatory Convertible Preferred Stock ("Mandatory Convertible Preferred Stock"), which negatively impacted the EPS comparison by$.03 . -31- --------------------------------------------------------------------------------
Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
Results for the three months endedMarch 31, 2022 and 2021 included certain items identified as affecting comparability. Adjusted OIBDA, adjusted earnings from continuing operations before income taxes, adjusted provision for income taxes, adjusted net earnings from continuing operations attributable toParamount , and adjusted diluted EPS from continuing operations (together, the "adjusted measures") exclude the impact of these items and are measures of performance not calculated in accordance with GAAP. We use these measures to, among other things, evaluate our operating performance. These measures are among the primary measures used by management for planning and forecasting of future periods, and they are important indicators of our operational strength and business performance. In addition, we use Adjusted OIBDA to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by our management; provide a clearer perspective on our underlying performance; and make it easier for investors, analysts and peers to compare our operating performance to other companies in our industry and to compare our year-over-year results. Because the adjusted measures are measures of performance not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, earnings from continuing operations before income taxes, provision/benefit for income taxes, net earnings from continuing operations attributable toParamount or diluted EPS from continuing operations, as applicable, as indicators of operating performance. These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.
The following tables reconcile the adjusted measures to their most directly comparable financial measures in accordance with GAAP.
Three Months Ended
March 31,
2022 2021
Operating income (GAAP) $ 775 $ 1,528
Depreciation and amortization 96 99
Restructuring and other corporate matters (a) 57 -
Gain on sales (a) (15) -
Adjusted OIBDA (Non-GAAP) $ 913 $ 1,627 (a) See notes on the following table for additional information on items affecting comparability.
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Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)
Three Months Ended March 31, 2022
Earnings from Continuing Net Earnings from
Operations Before Income Provision for Income Continuing Operations Diluted EPS from
Taxes Taxes Attributable to Paramount Continuing Operations
Reported (GAAP) $ 470 $ (34) $ 391 $ .58
Items affecting comparability:
Restructuring and other corporate
matters (a) 57 (12) 45 .07
Gain on sales (b) (15) 4 (11) (.02)
Loss on extinguishment of debt 73 (17) 56 .09
Discrete tax items (c) - (78) (78) (.12)
Adjusted (Non-GAAP) $ 585 $ (137) $ 403 $ .60
(a) Reflects restructuring charges of $18 million , consisting of severance
costs, and a charge of $39 million , principally to reserve against amounts due
from counterparties in Russia , Belarus and Ukraine , following Russia's invasion
of Ukraine .
(b) Reflects a gain from the sale of international intangible assets and a working capital adjustment to the gain from the fourth quarter 2021 sale of CBS Studio Center.
(c) Primarily reflects a deferred tax benefit resulting from the transfer of
intangible assets between our subsidiaries in connection with a reorganization
of our international operations.
Three Months Ended March 31, 2021
Earnings from Continuing Net Earnings from
Operations Before Income Provision for Income Continuing Operations Diluted EPS from
Taxes Taxes Attributable to Paramount Continuing Operations
Reported (GAAP) $ 1,155 $ (226) $ 899 $ 1.42
Items affecting comparability:
Loss on extinguishment of debt 128 (30) 98 .16
Gain from investments (a) (20) 5 (15) (.03)
Discrete tax items (b) - (21) (21) (.03)
Adjusted (Non-GAAP) $ 1,263 $ (272) $ 961 $ 1.52 (a) Reflects an unrealized gain from an increase in the fair value of a marketable security.
(b) Primarily reflects tax benefits from the resolution of certain state income
tax matters and excess tax benefits from the vesting or exercise of stock-based
compensation awards.
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