10-Q

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 001-09553
CBS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
04-2949533
(I.R.S. Employer Identification No.)
 
 
51 W. 52nd Street, New York, New York
(Address of principal executive offices)
10019
(Zip Code)
(212) 975-4321
Registrant’s telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
Number of shares of common stock outstanding at April 29, 2016:
Class A Common Stock, par value $.001 per share— 37,726,904
Class B Common Stock, par value $.001 per share— 415,313,216
 



CBS CORPORATION
INDEX TO FORM 10-Q
 
 
Page
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations (Unaudited) for the
 Three Months Ended March 31, 2016 and March 31, 2015
 
 
 
 
Consolidated Statements of Comprehensive Income (Unaudited) for the
 Three Months Ended March 31, 2016 and March 31, 2015
 
 
 
 
Consolidated Balance Sheets (Unaudited) at March 31, 2016
 and December 31, 2015
 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) for the
 Three Months Ended March 31, 2016 and March 31, 2015
 
 
 
 
 
 
 
Management’s Discussion and Analysis of Results of Operations and Financial Condition.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1A.
Risk Factors.
 
 
 
 
 
 

- 2-


PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements.
CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Revenues
$
3,849

 
$
3,500

Costs and expenses:
 

 
 

Operating
2,356

 
2,142

Selling, general and administrative
617

 
588

Depreciation and amortization
64

 
68

Other operating items, net
(9
)
 
(19
)
Total costs and expenses
3,028

 
2,779

Operating income
821

 
721

Interest expense
(100
)
 
(93
)
Interest income
7

 
5

Other items, net
(3
)
 
(23
)
Earnings before income taxes and equity in loss of investee companies
725

 
610

Provision for income taxes
(231
)
 
(203
)
Equity in loss of investee companies, net of tax
(21
)
 
(13
)
Net earnings
$
473

 
$
394

 
 
 
 
Basic net earnings per common share
$
1.03


$
.79

 
 
 
 
Diluted net earnings per common share
$
1.02


$
.78

 
 
 
 
Weighted average number of common shares outstanding:
 

 
 

Basic
459

 
498

Diluted
464


506

 
 
 
 
Dividends per common share
$
.15

 
$
.15

See notes to consolidated financial statements.

-3-


CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in millions)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Net earnings
$
473

 
$
394

Other comprehensive income, net of tax:
 
 
 
Cumulative translation adjustments
1

 
(3
)
Amortization of net actuarial loss and prior service cost
10

 
9

Total other comprehensive income, net of tax
11

 
6

Total comprehensive income
$
484


$
400

See notes to consolidated financial statements.

-4-


CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share amounts)
 
At
 
At
 
March 31, 2016
 
December 31, 2015
ASSETS
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
411

 
 
 
$
323

 
Receivables, less allowances of $63 (2016 and 2015)
 
3,678

 
 
 
3,628

 
Programming and other inventory (Note 3)
 
822

 
 
 
1,271

 
Prepaid income taxes
 
—

 
 
 
101

 
Prepaid expenses
 
189

 
 
 
175

 
Other current assets
 
434

 
 
 
249

 
Total current assets
 
5,534

 
 
 
5,747

 
Property and equipment
 
3,248

 
 
 
3,243

 
Less accumulated depreciation and amortization
 
1,872

 
 
 
1,838

 
Net property and equipment
 
1,376

 
 
 
1,405

 
Programming and other inventory (Note 3)
 
2,023

 
 
 
1,957

 
Goodwill
 
6,533

 
 
 
6,481

 
Intangible assets
 
5,509

 
 
 
5,514

 
Other assets
 
2,526

 
 
 
2,661

 
Total Assets
 
$
23,501




$
23,765

 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 


 
 
 


 
Current Liabilities:
 


 
 
 


 
Accounts payable
 
$
196

 
 
 
$
192

 
Accrued compensation
 
193

 
 
 
315

 
Participants’ share and royalties payable
 
987

 
 
 
1,013

 
Program rights
 
520

 
 
 
374

 
Deferred revenues
 
205

 
 
 
295

 
Income taxes payable
 
68

 
 
 
—

 
Current portion of long-term debt (Note 5)
 
23

 
 
 
222

 
Accrued expenses and other current liabilities
 
1,192

 
 
 
1,149

 
Total current liabilities
 
3,384

 
 
 
3,560

 
Long-term debt (Note 5)
 
8,226

 
 
 
8,226

 
Pension and postretirement benefit obligations
 
1,558

 
 
 
1,575

 
Deferred income tax liabilities, net
 
1,562

 
 
 
1,509

 
Other liabilities
 
3,220

 
 
 
3,260

 
Liabilities of discontinued operations
 
68

 
 
 
72

 
 
 


 
 
 


 
Commitments and contingencies (Note 9)
 


 
 
 


 
 
 


 
 
 


 
Stockholders’ Equity:
 


 
 
 


 
Class A Common stock, par value $.001 per share; 375 shares authorized;
 38 (2016 and 2015) shares issued
 
—

 
 
 
—

 
Class B Common stock, par value $.001 per share; 5,000 shares authorized;
 827 (2016) and 826 (2015) shares issued
 
1

 
 
 
1

 
Additional paid-in capital
 
43,990

 
 
 
44,055

 
Accumulated deficit
 
(20,045
)
 
 
 
(20,518
)
 
Accumulated other comprehensive loss (Note 7)
 
(759
)
 
 
 
(770
)
 
 
 
23,187

 
 
 
22,768

 
Less treasury stock, at cost; 411 (2016) and 401 (2015) Class B shares
 
17,704

 
 
 
17,205

 
Total Stockholders’ Equity
 
5,483

 
 
 
5,563

 
Total Liabilities and Stockholders’ Equity
 
$
23,501

 
 
 
$
23,765

 
See notes to consolidated financial statements.

-5-

CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Operating Activities:
 
 
 
Net earnings
$
473

 
$
394

Adjustments to reconcile net earnings to net cash flow provided by operating activities:





Depreciation and amortization
64


68

Stock-based compensation
43


46

Equity in loss of investee companies, net of tax and distributions
22


13

Change in assets and liabilities, net of investing and financing activities
426


(104
)
Net cash flow provided by operating activities
1,028


417

Investing Activities:





Acquisitions
(50
)
 
(1
)
Capital expenditures
(38
)

(17
)
Investments in and advances to investee companies
(32
)

(39
)
Proceeds from dispositions
29


59

Other investing activities
(7
)
 
3

Net cash flow (used for) provided by investing activities from continuing operations
(98
)

5

Net cash flow used for investing activities from discontinued operations
—


(3
)
Net cash flow (used for) provided by investing activities
(98
)

2

Financing Activities:





Repayments of short-term debt borrowings, net
—


(616
)
Proceeds from issuance of senior notes
—

 
1,178

Repayment of senior debentures
(200
)
 
—

Payment of capital lease obligations
(4
)

(4
)
Dividends
(73
)

(80
)
Purchase of Company common stock
(533
)

(1,049
)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation
(46
)

(82
)
Proceeds from exercise of stock options
6


80

Excess tax benefit from stock-based compensation
8


57

Net cash flow used for financing activities
(842
)

(516
)
Net increase (decrease) in cash and cash equivalents
88


(97
)
Cash and cash equivalents at beginning of period
323


428

Cash and cash equivalents at end of period
$
411


$
331

Supplemental disclosure of cash flow information





Cash paid for interest
$
158

 
$
117

Cash paid for income taxes
$
7

 
$
4

See notes to consolidated financial statements.

-6-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share amounts)

1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business-CBS Corporation (together with its consolidated subsidiaries unless the context otherwise requires, the “Company” or “CBS Corp.”) is comprised of the following segments: Entertainment (CBS Television, comprised of the CBS Television Network, CBS Television Studios and CBS Global Distribution Group; CBS Interactive and CBS Films), Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks), Publishing (Simon & Schuster) and Local Broadcasting (CBS Television Stations and CBS Radio).

Basis of Presentation-The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the Securities and Exchange Commission. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

In the opinion of management, the accompanying unaudited financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the periods presented. Certain previously reported amounts have been reclassified to conform to the current presentation.

Use of Estimates-The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Other Operating Items, Net-Other operating items, net for the three months ended March 31, 2016 and 2015 includes gains from the sales of businesses, and for 2016 also includes a multiyear, retroactive impact of a new operating tax.

Net Earnings per Common Share-Basic net earnings per share (“EPS”) is based upon net earnings divided by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted stock units (“RSUs”) only in the periods in which such effect would have been dilutive. Excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, were 8 million and 5 million stock options and RSUs for the three months ended March 31, 2016 and 2015, respectively.

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.
 
Three Months Ended
 
March 31,
(in millions)
2016
 
2015
Weighted average shares for basic EPS
459

 
498

Dilutive effect of shares issuable under stock-based
compensation plans
5

 
8

Weighted average shares for diluted EPS
464

 
506


-7-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

Other Liabilities-Other liabilities consist primarily of the noncurrent portion of residual liabilities of previously disposed businesses, participants’ share and royalties payable, program rights obligations, deferred compensation and other employee benefit accruals.

Additional Paid-In Capital-For the three months ended March 31, 2016 and 2015, the Company recorded dividends of $69 million and $75 million, respectively, as a reduction to additional paid-in capital as the Company had an accumulated deficit balance.

Adoption of New Accounting Standards
Simplifying the Accounting for Measurement Period Adjustments
During the first quarter of 2016, the Company adopted amended Financial Accounting Standards Board (“FASB”) guidance which eliminates the requirement to retrospectively account for adjustments to provisional amounts recognized in a business combination when new information is obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Under the amended guidance the acquirer is required to recognize such adjustments in the reporting period in which the adjustment amounts are identified. Such adjustments also include the effect on earnings from any changes in depreciation, amortization, or other income effects resulting from the change to provisional amounts, as if the change occurred at the acquisition date. The amendment also requires disclosure or separate presentation on the face of the income statement of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.
Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items
During the first quarter of 2016, the Company adopted amended FASB guidance which eliminates the concept of extraordinary items. This guidance removes the requirement to assess whether an event or transaction is both unusual in nature and infrequent in occurrence and to separately present any such items on the statement of operations after income from continuing operations. Rather, such items are required to be presented as a separate component of income from continuing operations or disclosed in the notes to the financial statements. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period
During the first quarter of 2016, the Company adopted FASB guidance on the accounting for stock-based compensation when the terms of an award provide that a performance target that affects vesting could be achieved after the requisite service period. Under this guidance, such performance target should not be reflected in estimating the grant-date fair value of the award. The Company should begin recognizing compensation cost in the period in which it becomes probable that the performance target will be achieved, for the cumulative amount of compensation cost attributable to the period(s) for which the requisite service has already been rendered. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

-8-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

Recent Pronouncements
Improvements to Employee Share-Based Payment Accounting
In March 2016, the FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits should be classified with other income tax cash flows in operating activities. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification. The Company expects that the adoption of this guidance will introduce volatility into the Company’s income tax provision, which will be impacted by the timing of employee exercises and changes in the Company’s stock price. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted.

Leases
In February 2016, the FASB issued new guidance on the accounting for leases, which supersedes previous lease guidance. Under this guidance, for all leases with terms in excess of one year, including operating leases, the Company will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance. Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed. The Company is currently evaluating the impact of this guidance on its consolidated balance sheets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted.

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
In August 2014, the FASB issued guidance which requires management to evaluate, for each interim and annual reporting period, whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. If management identifies conditions or events that raise substantial doubt, disclosures are required in the financial statements, including any plans that will alleviate the substantial doubt about the entity’s ability to continue as a going concern. This guidance, which is effective for the first annual period ending after December 15, 2016, is not expected to have an impact on the Company’s consolidated financial statements.

Revenue from Contracts with Customers
In May 2014, the FASB issued guidance on the recognition of revenues which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. The Company anticipates that this guidance will result in changes to its revenue recognition and is currently assessing the impact. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.

-9-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

2) STOCK-BASED COMPENSATION
The following table summarizes the Company’s stock-based compensation expense for the three months ended March 31, 2016 and 2015.
 
Three Months Ended
 
March 31,
 
2016
 
2015
RSUs
$
36

 
$
38

Stock options
7

 
8

Stock-based compensation expense, before income taxes
43

 
46

Related tax benefit
(17
)
 
(18
)
Stock-based compensation expense, net of tax benefit
$
26

 
$
28

During the three months ended March 31, 2016, the Company granted 3 million RSUs for CBS Corp. Class B Common Stock with a weighted average per unit grant-date fair value of $45.74. RSUs granted during the first quarter of 2016 generally vest over a one- to four-year service period. Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant. For certain RSU awards the number of shares an employee earns ranges from 0% to 120% of the target award, based on the outcome of established performance conditions. Compensation expense is recorded based on the probable outcome of the performance conditions. During the three months ended March 31, 2016, the Company also granted 2 million stock options with a weighted average exercise price of $45.79. Stock options granted during the first quarter of 2016 vest over a four-year service period and expire eight years from the date of grant. Compensation expense for stock options is determined based on the grant date fair value of the award calculated using the Black-Scholes options-pricing model.

Total unrecognized compensation cost related to unvested RSUs at March 31, 2016 was $286 million, which is expected to be recognized over a weighted average period of 2.7 years. Total unrecognized compensation cost related to unvested stock option awards at March 31, 2016 was $65 million, which is expected to be recognized over a weighted average period of 2.7 years.
3) PROGRAMMING AND OTHER INVENTORY
 
At
 
At
 
March 31, 2016
 
December 31, 2015
Acquired program rights
 
$
1,098

 
 
 
$
1,533

 
Internally produced programming:
 
 
 
 
 
 
 
Released
 
1,542

 
 
 
1,261

 
In process and other
 
155

 
 
 
392

 
Publishing, primarily finished goods
 
50

 
 
 
42

 
Total programming and other inventory
 
2,845

 
 
 
3,228

 
Less current portion
 
822

 
 
 
1,271

 
Total noncurrent programming and other inventory
 
$
2,023

 
 
 
$
1,957

 


-10-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

4) RELATED PARTIES
National Amusements, Inc. National Amusements, Inc. (“NAI”) is the controlling stockholder of CBS Corp. and Viacom Inc. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, is the Chairman Emeritus of each of CBS Corp. and Viacom Inc. In addition, Ms. Shari Redstone, Mr. Sumner M. Redstone’s daughter, is the president and a director of NAI and the vice chair of the Board of Directors of each of CBS Corp. and Viacom Inc. Mr. David R. Andelman is a director of CBS Corp. and serves as a director of NAI. Mr. Frederic V. Salerno is a director of CBS Corp. and serves as a director of Viacom Inc. At March 31, 2016, NAI directly or indirectly owned approximately 79.5% of CBS Corp.’s voting Class A Common Stock, and owned approximately 8.6% of CBS Corp.’s Class A Common Stock and non-voting Class B Common Stock on a combined basis.

Viacom Inc. As part of its normal course of business, the Company licenses its television content, leases production facilities and sells advertising spots to various subsidiaries of Viacom Inc. Viacom Inc. also distributes certain of the Company’s television programs in the home entertainment market. The Company’s total revenues from these transactions were $38 million and $46 million for the three months ended March 31, 2016 and 2015, respectively.

The Company places advertisements with and leases production facilities from various subsidiaries of Viacom Inc. The total amounts for these transactions were $7 million and $6 million for the three months ended March 31, 2016 and 2015, respectively.

The following table presents the amounts due from Viacom Inc. in the normal course of business as reflected on the Company’s Consolidated Balance Sheets. Amounts due to Viacom Inc. were minimal at March 31, 2016 and December 31, 2015.
 
At
 
At
 
March 31, 2016
 
December 31, 2015
Receivables
 
$
115

 
 
 
$
115

 
Other assets (Receivables, noncurrent)
 
30

 
 
 
38

 
Total amounts due from Viacom Inc.
 
$
145

 
 
 
$
153

 
Other Related Parties. The Company has equity interests in two domestic television networks and several international joint ventures for television channels from which the Company earns revenues primarily by selling its television programming. Total revenues earned from sales to these joint ventures were $32 million and $48 million for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016 and December 31, 2015, total amounts due from these joint ventures were $46 million and $48 million, respectively.

The Company, through the normal course of business, is involved in transactions with other related parties that have not been material in any of the periods presented.

-11-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

5) BANK FINANCING AND DEBT
The following table sets forth the Company’s debt.

At
 
At

March 31, 2016
 
December 31, 2015
Senior debt (1.95% - 7.875% due 2016 - 2045) (a)

$
8,166




$
8,365


Obligations under capital leases

83




83


Total debt

8,249




8,448


Less current portion of long-term debt

23




222


Total long-term debt, net of current portion

$
8,226




$
8,226


(a) At March 31, 2016 and December 31, 2015, the senior debt balances included (i) a net unamortized discount of $44 million and $45 million, respectively, (ii) unamortized deferred financing costs of $43 million and $44 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $13 million and $14 million, respectively. The face value of the Company’s senior debt was $8.24 billion and $8.44 billion at March 31, 2016 and December 31, 2015, respectively.

During January 2016, the Company repaid its $200 million of outstanding 7.625% senior debentures upon maturity.

Commercial Paper
The Company had no outstanding commercial paper borrowings under its $2.5 billion commercial paper program at March 31, 2016 and December 31, 2015.

Credit Facility
At March 31, 2016, the Company had a $2.5 billion revolving credit facility (the “Credit Facility”) which expires in December 2019. The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.5x at the end of each quarter as further described in the Credit Facility. At March 31, 2016, the Company’s Consolidated Leverage Ratio was approximately 2.4x.

The Consolidated Leverage Ratio is the ratio of the Company’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company’s Consolidated EBITDA for the trailing four consecutive quarters. Consolidated EBITDA is defined in the Credit Facility as operating income plus interest income and before depreciation, amortization and certain other noncash items.

The Credit Facility is used for general corporate purposes. At March 31, 2016, the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.49 billion.

-12-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

6) PENSION AND OTHER POSTRETIREMENT BENEFITS
The components of net periodic cost for the Company’s pension and postretirement benefit plans were as follows:
 
Pension Benefits
 
Postretirement Benefits
Three Months Ended March 31,
2016
 
2015
 
2016
 
2015
Components of net periodic cost:
 
 
 
 
 
 
 
Service cost
$
8

 
$
8

 
$
—

 
$
—

Interest cost
54

 
52

 
5

 
5

Expected return on plan assets
(57
)
 
(65
)
 
—

 
—

Amortization of actuarial loss (gain) (a)
21

 
20

 
(5
)
 
(5
)
Net periodic cost
$
26

 
$
15

 
$
—

 
$
—

(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net earnings.
7) STOCKHOLDERS’ EQUITY
During the first quarter of 2016, the Company repurchased 10.3 million shares of its Class B Common Stock under its share repurchase program for $500 million. At March 31, 2016, the Company had $1.50 billion of authorization remaining under its share repurchase program.

During the first quarter of 2016, the Company declared a quarterly cash dividend of $.15 on its Class A and Class B Common Stock, resulting in total dividends of $69 million, payable on April 1, 2016.
Accumulated Other Comprehensive Income (Loss)
The following tables summarize the changes in the components of accumulated other comprehensive income (loss).
 
Cumulative
Translation
Adjustments
 
Net Actuarial
Gain (Loss)
and Prior
Service Cost
 
Accumulated Other
Comprehensive Loss
At December 31, 2015
$
152

 
$
(922
)
 
 
$
(770
)
 
Other comprehensive income before reclassifications
1

 
—

 
 
1

 
Reclassifications to net earnings
—

 
10

(a) 
 
10

 
Net other comprehensive income
1

 
10


 
11

 
At March 31, 2016
$
153

 
$
(912
)

 
$
(759
)
 
 
Cumulative
Translation
Adjustments
 
Net Actuarial
Gain (Loss)
and Prior
Service Cost
 
Accumulated Other
Comprehensive Loss
At December 31, 2014
$
157

 
$
(892
)
 
 
$
(735
)
 
Other comprehensive loss before reclassifications
(3
)
 
—

 
 
(3
)
 
Reclassifications to net earnings
—

 
9

(a) 
 
9

 
Net other comprehensive income (loss)
(3
)
 
9

 
 
6

 
At March 31, 2015
$
154

 
$
(883
)
 
 
$
(729
)
 
(a)
Reflects amortization of net actuarial losses. See Note 6.


-13-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

The net actuarial gain (loss) and prior service cost related to pension and other postretirement benefit plans included in other comprehensive income (loss) is net of a tax provision of $6 million for both the three months ended March 31, 2016 and 2015.
8) INCOME TAXES
The provision for income taxes represents federal, state and local, and foreign income taxes on earnings before income taxes and equity in loss of investee companies.

The provision for income taxes was $231 million for the three months ended March 31, 2016 and $203 million for the three months ended March 31, 2015, reflecting an effective income tax rate of 31.9% and 33.3%, respectively. The lower tax rate for the three months ended March 31, 2016 includes a higher domestic production deduction resulting from the mix of revenues during the period and a lower effective state tax rate.
9) COMMITMENTS AND CONTINGENCIES
Guarantees
The Company has indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. At March 31, 2016, the outstanding letters of credit and surety bonds approximated $110 million and were not recorded on the Consolidated Balance Sheet.

In the course of its business, the Company both provides and receives indemnities which are intended to allocate certain risks associated with business transactions. Similarly, the Company may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not live up to its obligations under an indemnification obligation. The Company records a liability for its indemnification obligations and other contingent liabilities when probable and reasonably estimable.

Legal Matters
General. On an ongoing basis, the Company vigorously defends itself in numerous lawsuits and proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the Company without merit, is inherently uncertain and always difficult to predict. However, based on its understanding and evaluation of the relevant facts and circumstances, the Company believes that the below-described legal matters and other litigation to which it is a party are not likely, in the aggregate, to have a material adverse effect on its results of operations, financial position or cash flows. Under the Separation Agreement between the Company and Viacom Inc., the Company and Viacom Inc. have agreed to defend and indemnify the other in certain litigation in which the Company and/or Viacom Inc. is named.


-14-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

Claims Related to Former Businesses: Asbestos. The Company is a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which allegedly occurred principally as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. The Company is typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the plaintiffs have not identified which of the Company’s products is the basis of a claim. Claims against the Company in which a product has been identified principally relate to exposures allegedly caused by asbestos-containing insulating material in turbines sold for power-generation, industrial and marine use.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. The Company does not report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of March 31, 2016, the Company had pending approximately 35,040 asbestos claims, as compared with approximately 36,030 as of December 31, 2015 and 40,090 as of March 31, 2015. During the first quarter of 2016, the Company received approximately 1,180 new claims and closed or moved to an inactive docket approximately 2,170 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. In 2015, as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and defense of asbestos claims by approximately $5 million. In 2014, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $11 million. The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims. While the number of asbestos claims filed against the Company has trended down in the past five to ten years and has remained flat in recent years, it is difficult to predict future asbestos liabilities, as events and circumstances may occur including, among others, the number and types of claims and average cost to resolve such claims, which could affect the Company’s estimate of its asbestos liabilities.

Other. The Company from time to time receives claims from federal and state environmental regulatory agencies and other entities asserting that it is or may be liable for environmental cleanup costs and related damages principally relating to historical and predecessor operations of the Company. In addition, the Company from time to time receives personal injury claims including toxic tort and product liability claims (other than asbestos) arising from historical operations of the Company and its predecessors.
10) RESTRUCTURING CHARGES
During the year ended December 31, 2015, in a continued effort to reduce its cost structure, the Company initiated restructuring plans across several of its businesses, primarily for the reorganization of certain business operations. As a result, the Company recorded restructuring charges of $81 million, reflecting $48 million of severance costs and $33 million of costs associated with exiting contractual obligations and other related costs. During the year ended December 31, 2014, the Company recorded restructuring charges of $26 million reflecting $17 million of severance costs and $9 million of costs associated with exiting contractual obligations. As of March 31, 2016, the cumulative settlements for the 2015 and 2014 restructuring charges were $67 million, of which $41 million was for

-15-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

severance costs and $26 million was for costs associated with contractual obligations. The Company expects to substantially utilize its restructuring reserves by the end of 2016.
 
Balance at
 
2016
 
Balance at
 
December 31, 2015
 
Settlements
 
March 31, 2016
Entertainment
 
$
19

 
 
 
$
(6
)
 
 
 
$
13

 
Local Broadcasting
 
34

 
 
 
(8
)
 
 
 
26

 
Corporate
 
1

 
 
 
—

 
 
 
1

 
Total
 
$
54

 
 
 
$
(14
)
 
 
 
$
40

 
 
Balance at
 
2015
 
2015
 
Balance at
 
December 31, 2014
 
Charges
 
Settlements
 
December 31, 2015
Entertainment
 
$
6

 
 
 
$
26

 
 
 
$
(13
)
 
 
 
$
19

 
Local Broadcasting
 
10

 
 
 
55

 
 
 
(31
)
 
 
 
34

 
Corporate
 
2

 
 
 
—

 
 
 
(1
)
 
 
 
1

 
Total
 
$
18

 
 
 
$
81

 
 
 
$
(45
)
 
 
 
$
54

 
11) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The Company’s carrying value of financial instruments approximates fair value, except for notes and debentures, which are not recorded at fair value. At March 31, 2016 and December 31, 2015, the carrying value of the Company’s senior debt was $8.17 billion and $8.37 billion, respectively, and the fair value, which is estimated based on quoted market prices for similar liabilities (Level 2) and includes accrued interest, was $8.96 billion and $8.78 billion, respectively.

The Company uses derivative financial instruments primarily to modify its exposure to market risks from fluctuations in foreign currency exchange rates. The Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes.

Foreign Exchange Contracts

Foreign exchange forward contracts have principally been used to hedge projected cash flows, in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar, generally for periods up to 24 months. The Company designates forward contracts used to hedge committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of designated cash flow hedges are initially recorded in other comprehensive income (“OCI”) and reclassified to the statement of operations when the hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows.

At March 31, 2016 and December 31, 2015, the notional amount of all foreign exchange contracts was $340 million and $291 million, respectively.


-16-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

Gains (losses) recognized on derivative financial instruments were as follows:
 
Three Months Ended
 
 
 
March 31,
 
 
 
2016
 
2015
 
Financial Statement Account
Non-designated foreign exchange contracts
$
(6
)
 
$
13

 
Other items, net
 
 
 
 
 
 
Designated interest rate swaps (a)
$
—

 
$
2

 
Interest expense
(a) The gain during the three months ended March 31, 2015 related to interest rate swaps that were settled during 2015.

The fair value of the Company’s derivative instruments was not material to the Consolidated Balance Sheets for any of the periods presented.
The following tables set forth the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.
At March 31, 2016
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Foreign currency hedges
$
—

 
$
9

 
$
—

 
$
9

Total Assets
$
—

 
$
9

 
$
—

 
$
9

Liabilities:
 
 
 
 
 
 
 
Deferred compensation
$
—

 
$
313

 
$
—

 
$
313

Foreign currency hedges
—

 
7

 
—

 
7

Total Liabilities
$
—

 
$
320

 
$
—

 
$
320

At December 31, 2015
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Foreign currency hedges
$
—

 
$
13

 
$
—

 
$
13

Total Assets
$
—

 
$
13

 
$
—

 
$
13

Liabilities:
 
 
 
 
 
 
 
Deferred compensation
$
—

 
$
312

 
$
—

 
$
312

Total Liabilities
$
—

 
$
312

 
$
—

 
$
312

The fair value of foreign currency hedges is determined based on the present value of future cash flows using observable inputs including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based on the fair value of the investments elected by employees.

-17-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

12) REPORTABLE SEGMENTS
The following tables set forth the Company’s financial performance by reportable segment. The Company’s operating segments, which are the same as its reportable segments, have been determined in accordance with the Company’s internal management structure, which is organized based upon products and services.

Three Months Ended

March 31,

2016
 
2015
Revenues:





Entertainment
$
2,587


$
2,261

Cable Networks
525


539

Publishing
145


145

Local Broadcasting
649


596

Corporate/Eliminations
(57
)

(41
)
Total Revenues
$
3,849


$
3,500

Revenues generated between segments primarily reflect advertising sales and television license fees. These transactions are recorded at market value as if the sales were to third parties and are eliminated in consolidation.
 
Three Months Ended
 
March 31,
 
2016
 
2015
Intercompany Revenues:
 
 
 
Entertainment
$
61

 
$
40

Local Broadcasting
3

 
3

Total Intercompany Revenues
$
64

 
$
43


-18-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

The Company presents operating income (loss) excluding restructuring charges, impairment charges, and other operating items, net, if any, (“Segment Operating Income”) as the primary measure of profit and loss for its operating segments in accordance with FASB guidance for segment reporting. The Company believes the presentation of Segment Operating Income is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company’s management and enhances their ability to understand the Company’s operating performance.
 
Three Months Ended
 
March 31,
 
2016
 
2015
Segment Operating Income (Loss):
 
 
 
Entertainment
$
449

 
$
346

Cable Networks
228

 
251

Publishing
13

 
12

Local Broadcasting
206

 
161

Corporate
(84
)
 
(68
)
Total Segment Operating Income
812

 
702

Other operating items, net (a)
9

 
19

Operating income
821


721

Interest expense
(100
)
 
(93
)
Interest income
7

 
5

Other items, net
(3
)
 
(23
)
Earnings before income taxes and equity in loss of investee companies
725

 
610

Provision for income taxes
(231
)
 
(203
)
Equity in loss of investee companies, net of tax
(21
)
 
(13
)
Net earnings
$
473

 
$
394

(a) Other operating items, net includes gains from the sales of Internet businesses in China for the three months ended March 31, 2016 and 2015, and for 2016, also includes a multiyear, retroactive impact of a new operating tax.
 
Three Months Ended
 
March 31,
 
2016
 
2015
Depreciation and Amortization:
 
 
 
Entertainment
$
30


$
32

Cable Networks
6


6

Publishing
1


1

Local Broadcasting
19


21

Corporate
8


8

Total Depreciation and Amortization
$
64


$
68


-19-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

 
Three Months Ended
 
March 31,
 
2016
 
2015
Stock-based Compensation:
 
 
 
Entertainment
$
15

 
$
16

Cable Networks
3

 
3

Publishing
1

 
1

Local Broadcasting
7

 
7

Corporate
17

 
19

Total Stock-based Compensation
$
43

 
$
46

 
Three Months Ended
 
March 31,
 
2016
 
2015
Capital Expenditures:
 
 
 
Entertainment
$
13


$
8

Cable Networks
2


1

Publishing
3


—

Local Broadcasting
11


7

Corporate
9

 
1

Total Capital Expenditures
$
38

 
$
17

 
At
 
At
 
March 31, 2016
 
December 31, 2015
Assets:
 
 
 
 
 
 
 
Entertainment
 
$
10,888

 
 
 
$
10,910

 
Cable Networks
 
2,405

 
 
 
2,369

 
Publishing
 
809

 
 
 
880

 
Local Broadcasting
 
9,013

 
 
 
9,105

 
Corporate
 
361

 
 
 
476

 
Discontinued operations
 
25

 
 
 
25

 
Total Assets
 
$
23,501

 
 
 
$
23,765

 


-20-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

13) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
CBS Operations Inc. is a wholly owned subsidiary of the Company. CBS Operations Inc. has fully and unconditionally guaranteed CBS Corp.’s senior debt securities. The following condensed consolidating financial statements present the results of operations, financial position and cash flows of CBS Corp., CBS Operations Inc., the direct and indirect Non-Guarantor Affiliates of CBS Corp. and CBS Operations Inc., and the eliminations necessary to arrive at the information for the Company on a consolidated basis.
 
Statement of Operations
 
For the Three Months Ended March 31, 2016
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Revenues
$
47

 
$
3

 
$
3,799

 
$
—

 
$
3,849

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating
17

 
1

 
2,338

 
—

 
2,356

Selling, general and administrative
21

 
66

 
530

 
—

 
617

Depreciation and amortization
1

 
5

 
58

 
—

 
64

Other operating items, net
—

 
—

 
(9
)
 
—

 
(9
)
Total costs and expenses
39

 
72

 
2,917

 
—

 
3,028

Operating income (loss)
8

 
(69
)
 
882

 
—

 
821

Interest (expense) income, net
(124
)
 
(104
)
 
135

 
—

 
(93
)
Other items, net
(1
)
 
(10
)
 
8

 
—

 
(3
)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies
(117
)
 
(183
)
 
1,025

 
—

 
725

Benefit (provision) for income taxes
37

 
59

 
(327
)
 
—

 
(231
)
Equity in earnings (loss) of investee companies,
net of tax
553

 
260

 
(21
)
 
(813
)
 
(21
)
Net earnings
$
473

 
$
136

 
$
677

 
$
(813
)
 
$
473

Total comprehensive income
$
484

 
$
140

 
$
679

 
$
(819
)
 
$
484

 
 
 
 
 
 
 
 
 
 

-21-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

 
Statement of Operations
 
For the Three Months Ended March 31, 2015
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Revenues
$
31

 
$
3

 
$
3,466

 
$
—

 
$
3,500

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating
16

 
1

 
2,125

 
—

 
2,142

Selling, general and administrative
12

 
61

 
515

 
—

 
588

Depreciation and amortization
1

 
5

 
62

 
—

 
68

Other operating items, net
—

 
—

 
(19
)
 
—

 
(19
)
Total costs and expenses
29

 
67

 
2,683

 
—

 
2,779

Operating income (loss)
2

 
(64
)
 
783

 
—

 
721

Interest (expense) income, net
(115
)
 
(98
)
 
125

 
—

 
(88
)
Other items, net
(1
)
 
11

 
(33
)
 
—

 
(23
)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies
(114
)
 
(151
)
 
875

 
—

 
610

Benefit (provision) for income taxes
37

 
49

 
(289
)
 
—

 
(203
)
Equity in earnings (loss) of investee companies,
net of tax
471

 
315

 
(13
)
 
(786
)
 
(13
)
Net earnings
$
394

 
$
213

 
$
573

 
$
(786
)
 
$
394

Total comprehensive income
$
400

 
$
220

 
$
580

 
$
(800
)
 
$
400


 
 
 
 
 
 
 
 
 
 

-22-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)


 
Balance Sheet
 
At March 31, 2016
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
170

 
$
1

 
$
240

 
$
—

 
$
411

Receivables, net
25

 
2

 
3,651

 
—

 
3,678

Programming and other inventory
4

 
3

 
815

 
—

 
822

Prepaid expenses and other current assets
30

 
23

 
599

 
(29
)
 
623

Total current assets
229

 
29

 
5,305

 
(29
)
 
5,534

Property and equipment
45

 
181

 
3,022

 
—

 
3,248

Less accumulated depreciation and amortization
22

 
123

 
1,727

 
—

 
1,872

Net property and equipment
23

 
58

 
1,295

 
—

 
1,376

Programming and other inventory
5

 
8

 
2,010

 
—

 
2,023

Goodwill
98

 
62

 
6,373

 
—

 
6,533

Intangible assets
—

 
—

 
5,509

 
—

 
5,509

Investments in consolidated subsidiaries
43,302

 
13,036

 
—

 
(56,338
)
 
—

Other assets
159

 
12

 
2,355

 
—

 
2,526

Intercompany
—

 
2,100

 
24,847

 
(26,947
)
 
—

Total Assets
$
43,816

 
$
15,305

 
$
47,694

 
$
(83,314
)
 
$
23,501

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
Accounts payable
$
1

 
$
3

 
$
192

 
$
—

 
$
196

Participants’ share and royalties payable
—

 
—

 
987

 
—

 
987

Program rights
3

 
4

 
513

 
—

 
520

Current portion of long-term debt
7

 
—

 
16

 
—

 
23

Accrued expenses and other current liabilities
332

 
201

 
1,154

 
(29
)
 
1,658

Total current liabilities
343

 
208

 
2,862

 
(29
)
 
3,384

Long-term debt
8,113

 
—

 
113

 
—

 
8,226

Other liabilities
2,930

 
248

 
3,230

 
—

 
6,408

Intercompany
26,947

 
—

 
—

 
(26,947
)
 
—

Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
Preferred stock
—

 
—

 
126

 
(126
)
 
—

Common stock
1

 
123

 
590

 
(713
)
 
1

Additional paid-in capital
43,990

 
—

 
60,894

 
(60,894
)
 
43,990

Retained earnings (deficit)
(20,045
)
 
15,049

 
(15,404
)
 
355

 
(20,045
)
Accumulated other comprehensive income (loss)
(759
)
 
8

 
83

 
(91
)
 
(759
)
 
23,187

 
15,180

 
46,289

 
(61,469
)
 
23,187

Less treasury stock, at cost
17,704

 
331

 
4,800

 
(5,131
)
 
17,704

Total Stockholders’ Equity
5,483

 
14,849

 
41,489

 
(56,338
)
 
5,483

Total Liabilities and Stockholders’ Equity
$
43,816

 
$
15,305

 
$
47,694

 
$
(83,314
)
 
$
23,501


-23-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

 
Balance Sheet
 
At December 31, 2015
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
267

 
$
1

 
$
55

 
$
—

 
$
323

Receivables, net
28

 
2

 
3,598

 
—

 
3,628

Programming and other inventory
3

 
3

 
1,265

 
—

 
1,271

Prepaid expenses and other current assets
192

 
26

 
337

 
(30
)
 
525

Total current assets
490


32


5,255


(30
)

5,747

Property and equipment
46

 
180

 
3,017

 
—

 
3,243

Less accumulated depreciation and amortization
20

 
118

 
1,700

 
—

 
1,838

Net property and equipment
26


62


1,317


—

 
1,405

Programming and other inventory
6

 
9

 
1,942

 
—

 
1,957

Goodwill
98

 
62

 
6,321

 
—

 
6,481

Intangible assets
—

 
—

 
5,514

 
—

 
5,514

Investments in consolidated subsidiaries
42,744

 
12,775

 
—

 
(55,519
)
 
—

Other assets
163

 
11

 
2,487

 
—

 
2,661

Intercompany
—

 
2,248

 
23,988

 
(26,236
)
 
—

Total Assets
$
43,527


$
15,199


$
46,824


$
(81,785
)
 
$
23,765

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
Accounts payable
$
1

 
$
4

 
$
187

 
$
—

 
$
192

Participants’ share and royalties payable
—

 
—

 
1,013

 
—

 
1,013

Program rights
4

 
4

 
366

 
—

 
374

Current portion of long-term debt
206

 
—

 
16

 
—

 
222

Accrued expenses and other current liabilities
418

 
230

 
1,141

 
(30
)
 
1,759

Total current liabilities
629


238


2,723


(30
)
 
3,560

Long-term debt
8,113

 
—

 
113

 
—

 
8,226

Other liabilities
2,986

 
252

 
3,178

 
—

 
6,416

Intercompany
26,236

 
—

 
—

 
(26,236
)
 
—

Stockholders’ Equity:
 
 
 
 
 
 
 
 


Preferred stock
—

 
—

 
126

 
(126
)
 
—

Common stock
1

 
123

 
590

 
(713
)
 
1

Additional paid-in capital
44,055

 
—

 
60,894

 
(60,894
)
 
44,055

Retained earnings (deficit)
(20,518
)
 
14,913

 
(16,081
)
 
1,168

 
(20,518
)
Accumulated other comprehensive income (loss)
(770
)
 
4

 
81

 
(85
)
 
(770
)
 
22,768


15,040


45,610


(60,650
)
 
22,768

Less treasury stock, at cost
17,205

 
331

 
4,800

 
(5,131
)
 
17,205

Total Stockholders’ Equity
5,563

 
14,709

 
40,810

 
(55,519
)
 
5,563

Total Liabilities and Stockholders’ Equity
$
43,527


$
15,199


$
46,824


$
(81,785
)
 
$
23,765


-24-


CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except per share amounts)

 
Statement of Cash Flows
 
For the Three Months Ended March 31, 2016
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Net cash flow (used for) provided by operating activities
$
(157
)
 
$
(103
)
 
$
1,288

 
$
—

 
$
1,028

Investing Activities: