Document




 
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 June 30, 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 July 25, 2016:
Class A Common Stock, par value $.001 per share— 37,726,904
Class B Common Stock, par value $.001 per share— 406,874,849
 



CBS CORPORATION
INDEX TO FORM 10-Q
 
 
Page
 
PART I – FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations (Unaudited) for the
 Three and Six Months Ended June 30, 2016 and June 30, 2015
 
 
 
 
Consolidated Statements of Comprehensive Income (Unaudited) for the
 Three and Six Months Ended June 30, 2016 and June 30, 2015
 
 
 
 
Consolidated Balance Sheets (Unaudited) at June 30, 2016
 and December 31, 2015
 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) for the
 Six Months Ended June 30, 2016 and June 30, 2015
 
 
 
 
 
 
 
Management’s Discussion and Analysis of Results of Operations and Financial Condition.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1A.
Risk Factors.
 
 
 
 
 
 
Item 5.
Other Information.
 
 
 

- 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
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Revenues
$
3,287

 
$
3,219

 
$
7,136

 
$
6,719

Costs and expenses:
 

 
 

 
 
 
 
Operating
1,861

 
1,907

 
4,217

 
4,049

Selling, general and administrative
630

 
605

 
1,247

 
1,193

Depreciation and amortization
63

 
66

 
127

 
134

Restructuring charges (Note 10)
—

 
55

 
—

 
55

Other operating items, net
—

 
—

 
(9
)
 
(19
)
Total costs and expenses
2,554

 
2,633

 
5,582

 
5,412

Operating income
733

 
586

 
1,554

 
1,307

Interest expense
(100
)
 
(94
)
 
(200
)
 
(187
)
Interest income
8

 
7

 
15

 
12

Other items, net
(4
)
 
4

 
(7
)
 
(19
)
Earnings before income taxes and equity in loss of
investee companies
637

 
503

 
1,362

 
1,113

Provision for income taxes
(205
)
 
(165
)
 
(436
)
 
(368
)
Equity in loss of investee companies, net of tax
(9
)
 
(6
)
 
(30
)
 
(19
)
Net earnings
$
423

 
$
332

 
$
896

 
$
726

 
 
 
 
 
 
 
 
Basic net earnings per common share
$
.94


$
.68


$
1.97


$
1.47

 
 
 
 
 
 
 
 
Diluted net earnings per common share
$
.93


$
.67


$
1.95


$
1.45

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 

 
 

 
 
 
 
Basic
451

 
490

 
455

 
494

Diluted
455


495


459


500

 
 
 
 
 
 
 
 
Dividends per common share
$
.15

 
$
.15

 
$
.30

 
$
.30

See notes to consolidated financial statements.

-3-


CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in millions)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Net earnings
$
423

 
$
332

 
$
896

 
$
726

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

 
2

 
1

 
(1
)
Amortization of net actuarial loss and prior service cost
9

 
9

 
19

 
18

Total other comprehensive income, net of tax
9

 
11

 
20

 
17

Total comprehensive income
$
432


$
343


$
916


$
743

See notes to consolidated financial statements.

-4-


CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share amounts)
 
At
 
At
 
June 30, 2016
 
December 31, 2015
ASSETS
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
176

 
 
 
$
323

 
Receivables, less allowances of $66 (2016) and $63 (2015)
 
3,243

 
 
 
3,628

 
Programming and other inventory (Note 3)
 
1,224

 
 
 
1,271

 
Prepaid income taxes
 
39

 
 
 
101

 
Prepaid expenses
 
174

 
 
 
175

 
Other current assets
 
240

 
 
 
249

 
Total current assets
 
5,096

 
 
 
5,747

 
Property and equipment
 
3,242

 
 
 
3,243

 
Less accumulated depreciation and amortization
 
1,886

 
 
 
1,838

 
Net property and equipment
 
1,356

 
 
 
1,405

 
Programming and other inventory (Note 3)
 
2,069

 
 
 
1,957

 
Goodwill
 
6,531

 
 
 
6,481

 
Intangible assets
 
5,504

 
 
 
5,514

 
Other assets
 
2,582

 
 
 
2,661

 
Total Assets
 
$
23,138




$
23,765

 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 


 
 
 


 
Current Liabilities:
 


 
 
 


 
Accounts payable
 
$
121

 
 
 
$
192

 
Accrued compensation
 
231

 
 
 
315

 
Participants’ share and royalties payable
 
1,007

 
 
 
1,013

 
Program rights
 
322

 
 
 
374

 
Deferred revenues
 
156

 
 
 
295

 
Commercial paper (Note 5)
 
163

 
 
 
—

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

 
 
 
222

 
Accrued expenses and other current liabilities
 
1,064

 
 
 
1,149

 
Total current liabilities
 
3,087

 
 
 
3,560

 
Long-term debt (Note 5)
 
8,223

 
 
 
8,226

 
Pension and postretirement benefit obligations
 
1,545

 
 
 
1,575

 
Deferred income tax liabilities, net
 
1,574

 
 
 
1,509

 
Other liabilities
 
3,253

 
 
 
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;
 828 (2016) and 826 (2015) shares issued
 
1

 
 
 
1

 
Additional paid-in capital
 
43,964

 
 
 
44,055

 
Accumulated deficit
 
(19,622
)
 
 
 
(20,518
)
 
Accumulated other comprehensive loss (Note 7)
 
(750
)
 
 
 
(770
)
 
 
 
23,593

 
 
 
22,768

 
Less treasury stock, at cost; 420 (2016) and 401 (2015) Class B shares
 
18,205

 
 
 
17,205

 
Total Stockholders’ Equity
 
5,388

 
 
 
5,563

 
Total Liabilities and Stockholders’ Equity
 
$
23,138

 
 
 
$
23,765

 
See notes to consolidated financial statements.

-5-

CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
 
Six Months Ended
 
June 30,
 
2016
 
2015
Operating Activities:
 
 
 
Net earnings
$
896

 
$
726

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





Depreciation and amortization
127


134

Stock-based compensation
88


89

Equity in loss of investee companies, net of tax and distributions
34


22

Change in assets and liabilities, net of investing and financing activities
108


(90
)
Net cash flow provided by operating activities from continuing operations
1,253


881

Net cash flow used for operating activities from discontinued operations
(2
)

(18
)
Net cash flow provided by operating activities
1,251


863

Investing Activities:





Acquisitions
(51
)
 
(1
)
Capital expenditures
(79
)

(46
)
Investments in and advances to investee companies
(43
)

(55
)
Proceeds from dispositions
27


59

Other investing activities
4

 
4

Net cash flow used for investing activities from continuing operations
(142
)

(39
)
Net cash flow used for investing activities from discontinued operations
—


(3
)
Net cash flow used for investing activities
(142
)

(42
)
Financing Activities:





Proceeds from (repayments of) short-term debt borrowings, net
163


(222
)
Proceeds from issuance of senior notes
—

 
1,178

Repayment of senior debentures
(199
)
 
—

Payment of capital lease obligations
(8
)

(8
)
Dividends
(142
)

(155
)
Purchase of Company common stock
(1,033
)

(1,832
)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation
(57
)

(95
)
Proceeds from exercise of stock options
10


123

Excess tax benefit from stock-based compensation
11


82

Other financing activities
(1
)
 
—

Net cash flow used for financing activities
(1,256
)

(929
)
Net decrease in cash and cash equivalents
(147
)

(108
)
Cash and cash equivalents at beginning of period
323


428

Cash and cash equivalents at end of period
$
176


$
320

Supplemental disclosure of cash flow information





Cash paid for interest
$
207

 
$
163

Cash paid for income taxes
$
296

 
$
125

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, CBS Studios International, and CBS Television Distribution; 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).

In connection with the Company’s previously announced plans to separate its radio business, a preliminary registration statement was filed with the Securities and Exchange Commission in July 2016 for the proposed initial public offering of the common stock of CBS Radio Inc.

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 six months ended June 30, 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 6 million stock options for both the three and six months ended June 30, 2016 and 4 million stock options for both the three and six months ended June 30, 2015.


-7-


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

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(in millions)
2016
 
2015
 
2016
 
2015
Weighted average shares for basic EPS
451

 
490

 
455

 
494

Dilutive effect of shares issuable under stock-based
compensation plans
4

 
5

 
4

 
6

Weighted average shares for diluted EPS
455

 
495

 
459

 
500

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 six months ended June 30, 2016 and 2015, the Company recorded dividends of $138 million and $150 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

-8-


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

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.
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 will 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 and six months ended June 30, 2016 and 2015.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
RSUs
$
37

 
$
35

 
$
73

 
$
73

Stock options
8

 
8

 
15

 
16

Stock-based compensation expense, before income taxes
45

 
43

 
88

 
89

Related tax benefit
(17
)
 
(16
)
 
(34
)
 
(34
)
Stock-based compensation expense, net of tax benefit
$
28

 
$
27

 
$
54

 
$
55

During the six months ended June 30, 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 $47.24. RSUs granted during the first six months 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 six months ended June 30, 2016, the Company also granted 2 million stock options with a weighted average exercise price of $45.79. Stock options granted during the first six months 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 June 30, 2016 was $276 million, which is expected to be recognized over a weighted average period of 2.5 years. Total unrecognized compensation cost related to unvested stock option awards at June 30, 2016 was $58 million, which is expected to be recognized over a weighted average period of 2.5 years.
3) PROGRAMMING AND OTHER INVENTORY
 
At
 
At
 
June 30, 2016
 
December 31, 2015
Acquired program rights
 
$
1,490

 
 
 
$
1,533

 
Internally produced programming:
 
 
 
 
 
 
 
Released
 
1,447

 
 
 
1,261

 
In process and other
 
308

 
 
 
392

 
Publishing, primarily finished goods
 
48

 
 
 
42

 
Total programming and other inventory
 
3,293

 
 
 
3,228

 
Less current portion
 
1,224

 
 
 
1,271

 
Total noncurrent programming and other inventory
 
$
2,069

 
 
 
$
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. At June 30, 2016, NAI directly or indirectly owned approximately 79.5% of CBS Corp.’s voting Class A Common Stock, and owned approximately 8.8% 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 $31 million and $54 million for the three months ended June 30, 2016 and 2015, respectively, and $69 million and $100 million for the six months ended June 30, 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 $4 million and $5 million for the three months ended June 30, 2016 and 2015, respectively, and $11 million for both the six months ended June 30, 2016 and 2015.

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 June 30, 2016 and December 31, 2015.
 
At
 
At
 
June 30, 2016
 
December 31, 2015
Receivables
 
$
111

 
 
 
$
115

 
Other assets (Receivables, noncurrent)
 
34

 
 
 
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 $24 million and $23 million for the three months ended June 30, 2016 and 2015, respectively, and $56 million and $71 million for the six months ended June 30, 2016 and 2015, respectively. At June 30, 2016 and December 31, 2015, total amounts due from these joint ventures were $41 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

June 30, 2016
 
December 31, 2015
Commercial paper

$
163




$
—


Senior debt (1.95% - 7.875% due 2016 - 2045) (a)

8,167




8,365


Obligations under capital leases

79




83


Total debt

8,409




8,448


Less commercial paper

163




—


Less current portion of long-term debt

23




222


Total long-term debt, net of current portion

$
8,223




$
8,226


(a) At June 30, 2016 and December 31, 2015, the senior debt balances included (i) a net unamortized discount of $43 million and $45 million, respectively, (ii) unamortized deferred financing costs of $42 million and $44 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $11 million and $14 million, respectively. The face value of the Company’s senior debt was $8.24 billion and $8.44 billion at June 30, 2016 and December 31, 2015, respectively.

During July 2016, the Company issued $700 million of 2.90% senior notes due 2027. The Company is using the net proceeds from this issuance for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and the repayment of short-term borrowings, including commercial paper.

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

Commercial Paper
At June 30, 2016, the Company had $163 million of outstanding commercial paper borrowings under its $2.5 billion commercial paper program at a weighted average interest rate of 0.72% and with maturities of less than 45 days. The Company had no outstanding commercial paper borrowings at December 31, 2015.

Credit Facility
During June 2016, the Company amended and restated its $2.5 billion revolving credit facility (the “Credit Facility”). The amended Credit Facility expires in June 2021 and contains provisions that are substantially similar to the previous Credit Facility, which was due to expire 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 June 30, 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 June 30, 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 June 30,
2016
 
2015
 
2016
 
2015
Components of net periodic cost:
 
 
 
 
 
 
 
Service cost
$
7

 
$
8

 
$
—

 
$
—

Interest cost
53

 
53

 
5

 
4

Expected return on plan assets
(57
)
 
(66
)
 
—

 
—

Amortization of actuarial loss (gain) (a)
22

 
20

 
(6
)
 
(5
)
Net periodic cost
$
25

 
$
15

 
$
(1
)
 
$
(1
)
 
Pension Benefits
 
Postretirement Benefits
Six Months Ended June 30,
2016
 
2015
 
2016
 
2015
Components of net periodic cost:
 
 
 
 
 
 
 
Service cost
$
15

 
$
16

 
$
—

 
$
—

Interest cost
107

 
105

 
10

 
9

Expected return on plan assets
(114
)
 
(131
)
 
—

 
—

Amortization of actuarial loss (gain) (a)
43

 
40

 
(11
)
 
(10
)
Net periodic cost
$
51

 
$
30

 
$
(1
)
 
$
(1
)
(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net earnings.
7) STOCKHOLDERS’ EQUITY
During the second quarter of 2016, the Company repurchased 9.2 million shares of its Class B Common Stock under its share repurchase program for $500 million, at an average cost of $54.21 per share. During the six months ended June 30, 2016, the Company repurchased 19.5 million shares of its Class B Common Stock for $1.00 billion, at an average cost of $51.27 per share, leaving $1.00 billion of authorization at June 30, 2016.

During the second 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 July 1, 2016.

-13-


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

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
—

 
19

(a) 
 
19

 
Net other comprehensive income
1

 
19


 
20

 
At June 30, 2016
$
153

 
$
(903
)

 
$
(750
)
 
 
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
(1
)
 
—

 
 
(1
)
 
Reclassifications to net earnings
—

 
18

(a) 
 
18

 
Net other comprehensive income (loss)
(1
)
 
18

 
 
17

 
At June 30, 2015
$
156

 
$
(874
)
 
 
$
(718
)
 
(a)
Reflects amortization of net actuarial losses. See Note 6.

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 $13 million and $12 million for the six months ended June 30, 2016 and 2015, respectively.
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 $205 million for the three months ended June 30, 2016 and $165 million for the three months ended June 30, 2015, reflecting an effective income tax rate of 32.2% and 32.8%, respectively. For the six months ended June 30, 2016, the provision for income taxes was $436 million compared to $368 million for the six months ended June 30, 2015, reflecting an income tax rate of 32.0% and 33.1%, respectively.
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 June 30, 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

-14-


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

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.

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 June 30, 2016, the Company had pending approximately 34,790 asbestos claims, as compared with approximately 36,030 as of December 31, 2015 and 38,000 as of June 30, 2015. During the second quarter of 2016, the Company received approximately 1,190 new claims and closed or moved to an inactive docket approximately 1,440 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

-15-


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

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 June 30, 2016, the cumulative settlements for the 2015 and 2014 restructuring charges were $76 million, of which $50 million was for 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
 
June 30, 2016
Entertainment
 
$
19

 
 
 
$
(10
)
 
 
 
$
9

 
Local Broadcasting
 
34

 
 
 
(12
)
 
 
 
22

 
Corporate
 
1

 
 
 
(1
)
 
 
 
—

 
Total
 
$
54

 
 
 
$
(23
)
 
 
 
$
31

 
 
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 June 30, 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 $9.18 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

-16-


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

hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows.

At June 30, 2016 and December 31, 2015, the notional amount of all foreign exchange contracts was $398 million and $291 million, respectively.

Gains (losses) recognized on derivative financial instruments were as follows:
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2016
 
2015
 
2016
 
2015
Financial Statement Account
Non-designated foreign exchange contracts
$
15

 
$
(7
)
 
$
9

 
$
6

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

 
$
3

 
$
—

 
$
5

Interest expense
(a) The gains during the three and six months ended June 30, 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 June 30, 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 June 30, 2016
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Foreign currency hedges
$
—

 
$
19

 
$
—

 
$
19

Total Assets
$
—

 
$
19

 
$
—

 
$
19

Liabilities:
 
 
 
 
 
 
 
Deferred compensation
$
—

 
$
317

 
$
—

 
$
317

Foreign currency hedges
—

 
4

 
—

 
4

Total Liabilities
$
—

 
$
321

 
$
—

 
$
321

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
 
Six Months Ended

June 30,
 
June 30,

2016
 
2015

2016
 
2015
Revenues:











Entertainment
$
1,947


$
1,785


$
4,534


$
4,046

Cable Networks
536


615


1,061


1,154

Publishing
187


199


332


344

Local Broadcasting
647


654


1,296


1,250

Corporate/Eliminations
(30
)

(34
)

(87
)

(75
)
Total Revenues
$
3,287


$
3,219


$
7,136


$
6,719

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
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Intercompany Revenues:
 
 
 
 
 
 
 
Entertainment
$
31

 
$
34

 
$
92

 
$
74

Local Broadcasting
3

 
3

 
6

 
6

Total Intercompany Revenues
$
34

 
$
37

 
$
98

 
$
80


-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
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Segment Operating Income (Loss):
 
 
 
 
 
 
 
Entertainment
$
351

 
$
262

 
$
800

 
$
608

Cable Networks
227

 
220

 
455

 
471

Publishing
26

 
25

 
39

 
37

Local Broadcasting
212

 
198

 
418

 
359

Corporate
(83
)
 
(64
)
 
(167
)
 
(132
)
Total Segment Operating Income
733

 
641

 
1,545

 
1,343

Restructuring charges
—

 
(55
)
 
—

 
(55
)
Other operating items, net (a)
—

 
—

 
9

 
19

Operating income
733


586


1,554


1,307

Interest expense
(100
)
 
(94
)
 
(200
)
 
(187
)
Interest income
8

 
7

 
15

 
12

Other items, net
(4
)
 
4

 
(7
)
 
(19
)
Earnings before income taxes and equity in loss of
 investee companies
637

 
503

 
1,362

 
1,113

Provision for income taxes
(205
)
 
(165
)
 
(436
)
 
(368
)
Equity in loss of investee companies, net of tax
(9
)
 
(6
)
 
(30
)
 
(19
)
Net earnings
$
423

 
$
332

 
$
896

 
$
726

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


$
32


$
60


$
64

Cable Networks
5


6


11


12

Publishing
2


2


3


3

Local Broadcasting
18


19


37


40

Corporate
8


7


16


15

Total Depreciation and Amortization
$
63


$
66


$
127


$
134


-19-


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

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Stock-based Compensation:
 
 
 
 
 
 
 
Entertainment
$
16

 
$
16

 
$
31

 
$
32

Cable Networks
3

 
2

 
6

 
5

Publishing
1

 
1

 
2

 
2

Local Broadcasting
6

 
9

 
13

 
16

Corporate
19

 
15

 
36

 
34

Total Stock-based Compensation
$
45

 
$
43

 
$
88

 
$
89

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Capital Expenditures:
 
 
 
 
 
 
 
Entertainment
$
24


$
13


$
37


$
21

Cable Networks
2


2


4


3

Publishing
3


2


6


2

Local Broadcasting
10


11


21


18

Corporate
2

 
1

 
11

 
2

Total Capital Expenditures
$
41

 
$
29

 
$
79

 
$
46

 
At
 
At
 
June 30, 2016
 
December 31, 2015
Assets:
 
 
 
 
 
 
 
Entertainment
 
$
10,610

 
 
 
$
10,910

 
Cable Networks
 
2,410

 
 
 
2,369

 
Publishing
 
828

 
 
 
880

 
Local Broadcasting
 
8,992

 
 
 
9,105

 
Corporate
 
274

 
 
 
476

 
Discontinued operations
 
24

 
 
 
25

 
Total Assets
 
$
23,138

 
 
 
$
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 June 30, 2016
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Revenues
$
36

 
$
3

 
$
3,248

 
$
—

 
$
3,287

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating
15

 
2

 
1,844

 
—

 
1,861

Selling, general and administrative
21

 
67

 
542

 
—

 
630

Depreciation and amortization
1

 
6

 
56

 
—

 
63

Total costs and expenses
37

 
75

 
2,442

 
—

 
2,554

Operating income (loss)
(1
)
 
(72
)
 
806

 
—

 
733

Interest (expense) income, net
(124
)
 
(106
)
 
138

 
—

 
(92
)
Other items, net
(1
)
 
13

 
(16
)
 
—

 
(4
)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies
(126
)
 
(165
)
 
928

 
—

 
637

Benefit (provision) for income taxes
40

 
52

 
(297
)
 
—

 
(205
)
Equity in earnings (loss) of investee companies,
net of tax
509

 
289

 
(9
)
 
(798
)
 
(9
)
Net earnings
$
423

 
$
176

 
$
622

 
$
(798
)
 
$
423

Total comprehensive income
$
432

 
$
185

 
$
611

 
$
(796
)
 
$
432


-21-


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

 
Statement of Operations
 
For the Six Months Ended June 30, 2016
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Revenues
$
83

 
$
6

 
$
7,047

 
$
—

 
$
7,136

Cost and expenses:
 
 
 
 
 
 
 
 
 
Operating
32

 
3

 
4,182

 
—

 
4,217

Selling, general and administrative
42

 
133

 
1,072

 
—

 
1,247

Depreciation and amortization
2

 
11

 
114

 
—

 
127

Other operating items, net
—

 
—

 
(9
)
 
—

 
(9
)
Total costs and expenses
76

 
147

 
5,359

 
—

 
5,582

Operating income (loss)
7

 
(141
)
 
1,688

 
—

 
1,554

Interest (expense) income, net
(248
)
 
(210
)
 
273

 
—

 
(185
)
Other items, net
(2
)
 
3

 
(8
)
 
—

 
(7
)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies
(243
)
 
(348
)
 
1,953

 
—

 
1,362

Benefit (provision) for income taxes
77

 
111

 
(624
)
 
—

 
(436
)
Equity in earnings (loss) of investee companies,
net of tax
1,062

 
549

 
(30
)
 
(1,611
)
 
(30
)
Net earnings
$
896

 
$
312

 
$
1,299

 
$
(1,611
)
 
$
896

Total comprehensive income
$
916

 
$
325

 
$
1,290

 
$
(1,615
)
 
$
916


-22-


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 June 30, 2015
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Revenues
$
34

 
$
3

 
$
3,182

 
$
—

 
$
3,219

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating
14

 
2

 
1,891

 
—

 
1,907

Selling, general and administrative
12

 
55

 
538

 
—

 
605

Depreciation and amortization
2

 
5

 
59

 
—

 
66

Restructuring charges
—

 
—

 
55

 
—

 
55

Total costs and expenses
28

 
62

 
2,543

 
—

 
2,633

Operating income (loss)
6

 
(59
)
 
639

 
—

 
586

Interest (expense) income, net
(118
)
 
(99
)
 
130

 
—

 
(87
)
Other items, net
1

 
(11
)
 
14

 
—

 
4

Earnings (loss) before income taxes and equity in earnings (loss) of investee companies
(111
)
 
(169
)
 
783

 
—

 
503

Benefit (provision) for income taxes
36

 
55

 
(256
)
 
—

 
(165
)
Equity in earnings (loss) of investee companies,
net of tax
407

 
149

 
(6
)
 
(556
)
 
(6
)
Net earnings
$
332

 
$
35

 
$
521

 
$
(556
)
 
$
332

Total comprehensive income
$
343

 
$
34

 
$
542

 
$
(576
)
 
$
343


-23-


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


 
Statement of Operations
 
For the Six Months Ended June 30, 2015
 
CBS Corp.
 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 
Eliminations
 
CBS Corp.
Consolidated
Revenues
$
65

 
$
6

 
$
6,648

 
$
—

 
$
6,719

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating
30

 
3

 
4,016

 
—

 
4,049

Selling, general and administrative
24

 
116

 
1,053

 
—

 
1,193

Depreciation and amortization
3

 
10

 
121

 
—

 
134