UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K


ý
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 20122015

OR

o
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period fromto

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 Number)


51 W. 52nd Street
New York, NY 10019
(212) 975-4321
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)


51 W. 52nd Street
New York, NY 10019
(212) 975-4321
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class
Name of Each Exchange on
Which Registered

Class A Common Stock, $0.001 par value

 New York Stock Exchange

Class B Common Stock, $0.001 par value

 New York Stock Exchange

7.625% Senior Debentures due 2016

NYSE MKT 

Securities Registered Pursuant to Section 12(g) of the Act:

None
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act of 1933). Yes ýx    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o    No ýx

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 ýx    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 registrant was required to submit and post such files). Yes ýx    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ýx

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer, or smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.

Large accelerated filer ýx
 
Accelerated filer o
 
Non-accelerated filer o
(Do not check if a smaller
reporting company)
 
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o    No ýx

As of June 30, 2012,2015, which was the last business day of the registrant's most recently completed second fiscal quarter, the market value of the shares of CBS Corporation Class A Common Stock, $0.001 par value ("Class A Common Stock"), held by non-affiliates was approximately $302,759,933$442,896,391 (based upon the closing price of $33.29$57.40 per share as reported by the New York Stock Exchange on that date) and the market value of the shares of CBS Corporation Class B Common Stock, $0.001 par value ("Class B Common Stock"), held by non-affiliates was approximately $19,296,678,355$24,061,922,159 (based upon the closing price of $32.78$55.50 per share as reported by the New York Stock Exchange on that date); and the aggregate market value of the shares of both Class A Common Stock and Class B Common Stock held by non-affiliates was $19,599,438,288.

$24,504,818,550.

As of February 12, 2013, 42,712,20210, 2016, 37,726,904 shares of Class A Common Stock and 586,448,427421,814,016 shares of Class B Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of CBS Corporation's Notice of 20132016 Annual Meeting of Stockholders and Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the "Proxy Statement") (Portion of Item 5; Part III).






PART I

Item 1.    Business.

Item 1.Business.
CBS Corporation (together with its consolidated subsidiaries unless the context otherwise requires, the "Company"“Company” or "CBS“CBS Corp."”) is a mass media company with operations in the following segments:


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ENTERTAINMENT: The Entertainment segment is composed of the CBS® Television Network; CBS Television Studios®; CBS Global Distribution Group™ (composed of CBS Studios International™ and CBS Television Distribution™); CBS Interactive™; and CBS Films®.

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CABLE NETWORKS: The Cable Networks segment is composed ofShowtime®Networks, the Company's premium subscription program services;CBS Sports Network™, the Company's cable network focused on college athletics and other sports; and Smithsonian Networks™, a venture between Showtime Networks and Smithsonian Institution, which operatesSmithsonian Channel™, a basic cable program service.
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CABLE NETWORKS: The Cable Networks segment is composed of Showtime Networks, which operates the Company’s premium subscription program services, Showtime®, The Movie Channel®, and Flix®, including a digital streaming subscription offering; CBS Sports Network®, the Company’s cable network focused on college athletics and other sports; and Smithsonian Networks™, a venture between Showtime Networks and Smithsonian Institution, which operates Smithsonian Channel™, a basic cable program service, and a digital streaming subscription service.

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PUBLISHING: The Publishing segment is composed of Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster®, Pocket Books®, Scribner®, Gallery Books®, Touchstone® and Atria Books®.

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PUBLISHING: The Publishing segment is composed of Simon & Schuster, which publishes
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LOCAL BROADCASTING: The Local Broadcasting segment is composed of CBS Television Stations, the Company’s 30 owned broadcast television stations; and distributes consumer books under imprints such asSimon & Schuster®, Pocket Books®, Scribner®andFree Press™.CBS Radio®, through which the Company owns and operates 117 radio stations in 26 United States (“U.S.”) markets.


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LOCAL BROADCASTING: The Local Broadcasting segment is composed of CBS Television Stations, the Company's 30 owned broadcast television stations; andCBS Radio®, through which the Company owns and operates 127 radio stations in 28 United States ("U.S.") markets.

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OUTDOOR AMERICAS: The Outdoor Americas segment provides space for advertisers on various structures in North America and South America, including billboards, transit shelters and benches, buses, rail systems (in-car and structures on station platforms and terminals), mall kiosks, stadium signage, and in retail stores principally throughCBS Outdoor®. The Company's outdoor advertising business in Europe has been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.

For the year ended December 31, 2012,2015, contributions to the Company'sCompany’s consolidated revenues from its segments were as follows: Entertainment 55%61%, Cable Networks 13%16%, Publishing 6%, and Local Broadcasting 20% and Outdoor Americas 9%19%. The Company generated approximately 12%14% of its total revenues from international regions in 2012.2015. For the year ended December 31, 2012,2015, approximately 43%52% and 21%14% of total international revenues of approximately $1.73$2.00 billion were generated in Europe and Canada, respectively.


The Company operates businesses which span the media and entertainment industries, including the CBS Television Network, cable program services, televisionnetworks, content production and distribution, motion pictures, publishing,television and radio stations, television stations, interactiveInternet-based businesses, and outdoor advertising, with a focus on optimizing the performance of each and establishing synergies and efficiencies among them.consumer publishing.  The Company'sCompany’s principal strategy is to create and acquire premium content that is widely accepted by audiences, and to generate both advertising and non-advertisingnon‑advertising revenues from the distribution of this content on multiple media platforms and to various geographic locations. The Company also continues to pursueincrease its investment in both Company-owned and acquired premium content to enhance its opportunities to grow and diversifyfor revenue growth, which include exhibiting its revenue streams, including licensing its content for exhibition on digital and other platforms;platforms through licensing and subscription services, including the Company’s owned digital streaming content offerings; expanding the distribution of its content internationally; and securing compensation from multichannel video programming distributors ("MVPDs"(“MVPDs”), including cable, direct broadcast satellite ("DBS"(“DBS”), telephone company, and other distributors, for authorizing the MVPDs'MVPDs’ carriage of the Company'sCompany’s owned television stations (also known as "retransmission fees"“retransmission fees”) and cable networks, and securing compensation from television stations affiliated with the CBS Television Network ("network(“station affiliation fees"fees” also known as "reverse compensation"“reverse compensation”); and increasingly. The Company also seeks to grow its advertising revenues by monetizing all content viewership and ratings as industry measurements evolve to reflect viewers’ changing viewership habits.

        As part


On July 16, 2014, the Company completed the disposition of CBS Outdoor Americas Inc. (“Outdoor Americas”), which was previously a subsidiary of the Company's strategic initiatives for its outdoor advertising business,Company and has been renamed OUTFRONT Media Inc. During 2013, the Company has beguncompleted the processsale of converting its outdoor businesses in the Americas into a real estate investment trust


("REIT"). In addition, during the fourth quarter of 2012, the Company initiated a plan to divest its outdoor advertising business in Europe which includes an interest in an outdoor business in Asia.(“Outdoor Europe”). Outdoor Americas and Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operationoperations in the Company'sCompany’s consolidated financial statements for all periods presented. All of these actions are subject to customary approvals.



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The Company competes with many different entities and media in various markets worldwide. In addition to competition in each of its businesses, the Company competes for opportunities in the entertainment business with other diversified entertainment companies such as The Walt Disney Company, NBCUniversal Media, LLC, News Corporation,Twenty-First Century Fox, Inc., Time Warner Inc., Cumulus Media Inc. and Clear Channel Communications,iHeartMedia, Inc.


As of December 31, 2012,2015, National Amusements, Inc. ("NAI"(“NAI”), a closely held corporation that owns and operates approximately 935947 movie screens in the U.S., the United Kingdom ("(“U.K."”) and South America and manages 164 movie screens in the U.S. and South America, directly or indirectly owned approximately 79%79.5% of the Company'sCompany’s voting Class A Common Stock, and approximately 6%8.5% of the Company'sCompany’s Class A Common Stock and Class B Common Stock on a combined basis. Owners of the Company'sCompany’s Class A Common Stock are entitled to one vote per share. The Company'sCompany’s Class B Common Stock does not have voting rights. NAI is not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.

On February 2, 2016, Sumner M. Redstone, the controlling shareholder of NAI, is theresigned from his position as Executive Chairman of the Board of Directors and Founder of the Company.

Mr. Redstone remains a director of the Company. On February 3, 2016, the Company’s Board of Directors elected Leslie Moonves, the Company’s President and Chief Executive Officer and a director, to serve as Chairman of the Board of Directors of the Company and appointed Mr. Redstone to the position of Chairman Emeritus of the Company's Board.


The Company was organized in Delaware in 1986. The Company'sCompany’s principal offices are located at 51 W. 52nd Street, New York, New York 10019. Its telephone number is (212) 975-4321 and its Website address is www.cbscorporation.com.


CBS CORP. BUSINESS SEGMENTS


Entertainment(55% (61%, 55%60% and 55%62% of the Company's consolidated revenues in 2012, 20112015, 2014 and 2010,2013, respectively, and 46%, 47%44% and 37%53% of the Company's consolidatedtotal segment operating income in 2012, 20112015, 2014 and 2010,2013, respectively)


The Entertainment segment consists of the CBS Television Network; CBS Television Studios and CBS Global Distribution Group (composed of CBS Studios International and CBS Television Distribution), the Company'sCompany’s television production and syndication operations; CBS Interactive, the Company’s online content networks for information and entertainment; and CBS Films, the Company'sCompany’s producer and distributor of theatrical motion pictures; and CBS Interactive, the Company's online content networks for information and entertainment.

pictures.


Television Network. The CBS Television Network through CBS Entertainment™, CBS News®News® and CBS Sports®Sports® distributes a comprehensive schedule of news and public affairs broadcasts, sports and entertainment programming to more than 200 domestic affiliates reaching throughout the U.S., including 16 of the Company'sCompany’s owned and operated television stations, and to affiliated stations in certain U.S. territories.


The CBS Television Network primarily derives revenues from the salessale of advertising time for its network broadcasts. A significant portion of the advertising spots sold for the network'snetwork’s non-sports programming occurs annually generally during May through July in the industry'sindustry’s upfront advertising market for the upcoming television broadcast season, which runs for one year generally commencing in late-September.mid-September. Advertisers purchase the remaining advertising spots closer to the broadcast of the related programming in the scatter advertising market. Overall advertising revenue for the network is also impacted by audience ratings for its programming. The Company offers dynamic advertising insertions for the CBS Television Network's on demand programming which allow the Company to change advertisements at any time within such programming and offer advertisers greater audience reach. In addition, the CBS Television Network'sNetwork’s revenues include networkstation affiliation fees.


CBS Entertainment is responsible for acquiring or developing and scheduling the entertainment programming presented on the CBS Television Network, which includes primetime comedy and drama series, reality-basedreality‑based programming, specials, children'schildren’s programs, daytime dramas, game shows and


late-night programs. CBS News operates a worldwide news organization, providing the CBS Television Network and the CBS Radio Network™ with



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regularly scheduled news and public affairs broadcasts, including60 Minutes®Minutes,48 Hours Mystery®,Mystery, CBS Evening News with Scott Pelley™Pelley,CBS This Morning™,Morning, CBS Sunday Morning®MorningandFace the Nation®Nationas well as special reports. CBS News off-network production units produce programming for domestic and international outlets, including the CBS Television Network, cable television, home video, audio-book and in-flight markets, as well as schools and libraries. CBS News also provides CBS Newspath®Newspath®, a television news syndication service that offers daily news coverage, sports highlights and news features to the CBS Television Network affiliates and other subscribers worldwide. CBS Sports broadcasts on the television network includeThe NFL Today, certain PGA Tour Golf Tournaments, the Masters, the PGA Championship and certain games from the NCAA Division I Men'sMen’s Basketball Tournament, (including the 2013 NCAA Men's Final Four), the PGA Golf Tour, Masters Tournament and PGA Championship, the U.S. Open Tennis Championships, regular-season college football, including the Southeastern Conference, and regular-season college basketball games, on network television, in addition to the NFL'sNFL’s American Football Conference (AFC) regular-season, post-season divisional playoff and championship games. CBS Sports hasbroadcast certain AFC games in the 2015 season as part of its rights under its NFL agreement to broadcast the AFC through the 2013 season, including the broadcast of the 2013 Super Bowl. In December 2011, CBS extended its rights with the NFL to broadcast the AFCpackage from the 2014 season through the 2022 season, includingseasons, which also includes certain National Football Conference regular season games and the Super Bowls in 2016, 2019 and 2022. The Company produced and broadcast Thursday Night Football for the 2015 season under its January 2015 agreement with the NFL. The Company also will produce and broadcast certain Thursday Night Football games for the 2016 and 2017 seasons under its January 2016 agreement with the NFL, which is subject to NFL approval. CBS Home Entertainment licenses home video rightsTelevision Network content also is exhibited via the Internet, including through CBS.com™; CBS All Access®, the Company’s digital streaming subscription service launched in October 2014; and CBSN®,the Company’slive digital streaming advertiser-supported news network available 24 hours a day, seven days a week launched in November 2014. CBS Consumer Products licenses merchandising rights.All Access

and CBSN are available at CBS.com and CBSNews.com™, respectively, and through CBS software applications (“apps”) on multiple digital platforms, including Android, iOS and Windows 8 mobile platforms, and Amazon Fire TV, Android TV, Apple TV, Chromecast, Roku and Xbox connected device platforms. Furthering the Company’s analytic tools regarding television advertising and ratings, in 2015 the Company announced “Campaign Performance Audit™,” a data-driven approach for analyzing and buying advertising time on broadcast television which helps advertising customers enhance consumer targeting and measure the effectiveness of their advertising.


The CW, a broadcast network and the Company'sCompany’s 50/50 joint venture with Warner Bros. Entertainment, airs programming, includingGossip Girl,90210, The Vampire Diaries, Jane the Virgin andAmerica's Next Top Model Reign.. Eight of the Company'sCompany’s owned television stations are affiliates of The CW. Certain of The CW'sCW’s programming is streamed on video-on-demand services owned by each of Hulu, LLC and Netflix, Inc. pursuant to license agreements.


Television Production and Syndication.    The Company, through CBS Television Studios and CBS Global Distribution Group (composed of CBS Studios International and CBS Television Distribution), produces, acquiresproduce, acquire and/or distributesdistribute programming worldwide, including series, specials, news and public affairs. Suchaffairs, and generate revenue principally from the licensing and distribution of such programming. The programming is produced primarily for broadcast on network television, exhibition on basic cable and premium subscription services or distribution via first-runfirst‑run syndication. First-run syndication is programming exhibited on television stations without prior exhibition on a network or cable service. The Company subsequently distributes programming after its initial exhibition on a network, basic cable network or premium subscription service for domestic exhibition on television stations, cable networks or video-on-demand services (known as "off-network“off-network syndicated programming"programming”). Off-network syndicated programming first-runand first‑run syndicated programming anddistributed domestically, as well as programming distributed internationally, can sometimes be sold in successive cycles of sales known as "first“first cycle," "second cycle,"” “second cycle” sales, and so on, which may occur on exclusive or non-exclusive bases. Generally, license fees may decrease with successive sales cycles due to increased program exhibitions.


Programming that was produced or co-produced by the Company'sCompany’s production group and is broadcast on network television includes, among others,CSI: Crime Scene InvestigationNCIS(CBS),NCIS(CBS),The Good Wife (CBS), Madam Secretary (CBS), Scorpion (CBS), Criminal Minds (CBS) and90210Jane the Virgin(The (The CW). Generally, a network will license a specified number of episodes for broadcast on the network in the U.S. during a license period. Remaining distribution rights, including international and/or off-networkoff‑network syndication rights, are typically retained by the Company or, in the case of co-productions, distribution rights are shared with the co-producer for U.S. or international markets. The network license fee for a series episode is normally lower than the costs of producing the episode; however, the Company'sCompany’s objective is to recoup its costs and earn a profit through various forms of distribution, including international andlicensing, domestic syndication and digital streaming of episodes. InternationalGenerally, international sales of network series are generally made within one year of the U.S. network run. Generally, arun and series must have a network run of at least three or four years to be successfully sold in domestic off-network syndication.syndication; however, increasingly, these time frames are being shortened, particularly for


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sales to digital streaming services. In off-network syndication, the Company distributes series, such asCSI:, CSI: Miami, CSI: NY,Hawaii Five-O, Criminal Minds, Blue Bloods, The Good Wife, Elementary, NCIS andNCIS: Los Angeles, as well as a library of older television programs. The Company also produces and/or distributes first-run syndicated series such asWheel of Fortune, Jeopardy!, Entertainment Tonight, Inside Edition, The Insider, Dr. Phil,The Doctors, Rachael Ray, Hot BenchandJudge Judy. The Company also distributes syndicated and other programming internationally.

The Company continues to monetize its content through digital media. It enters


into and renews numerous multi-year licensing agreements for digital streamingdistribution of certain of its programming into various services, including the U.S. and certain other countries. The Company extended its licensing agreements with Netflix, Inc., fordigital streaming various programming from the Company's library on Netflix's subscription video-on-demand services owned by Netflix (in the U.S, Canada and countries in October 2012 for Canada,Africa, Asia, Europe and Latin America), Amazon (in the U.S., Germany and U.K.), Comcast, Hulu, Hulu Plus (each, in the U.S.), Bell Media, Shomi (each, in Canada), Canal Play (in France), DLA (in countries in Latin America and the U.K,Caribbean), Foxtel, Stan Entertainment (each, in Australia), iFlix (in Malaysia, Thailand and entered into a new agreement with Netflix for Denmark, Finland, Norway and SwedenPhilippines), Nippon TV (in Japan), PlayCo (in the Middle East), MultiChoice Africa (in sub-Saharan Africa), Sky TV NZ, Telecom NZ (each, in October, 2012. In November 2012, the Company entered into a non-exclusive licensing agreement with Hulu LLC to stream various programs from the Company's libraryNew Zealand), Telefonica (in Spain), Watchever (in Germany), among others; digital streaming on Hulu'sadvertising supported video-on-demand services, such as PPTV (in China); Sony’s broadband pay television service, PlayStation Vue (in the U.S.); and the digital downloading on various electronic-sell-through services owned by Amazon (in the U.S., Germany and the U.K.), Apple (in the U.S., Canada, Australia and countries in Europe), Google and Microsoft (each, in the U.S. In September 2011, the Company entered into a non-exclusive licensing agreement with Hulu Japan LLC for streaming various programs from the Company's library on Hulu's subscription video-on-demand service in Japan. In February 2011 and July 2011, the Company entered into non-exclusive licensing agreements with each of Netflix, Inc. and Amazon Digital Services, Inc.), respectively, to stream various programs from the Company's library on each of Netflix's and Amazon's subscription video-on-demand services in the U.S.

among others.


Fees for television programming licensed for syndication and digital streaming are recorded as revenues at the beginning of the license period in which the programs are made available for exhibition, which, among other reasons, may cause substantial fluctuations in the Entertainment segment'ssegment’s operating results. Unrecognized revenues attributable to such license agreements were $1.31 billion$847 million and $1.25$1.02 billion at December 31, 20122015 and December 31, 2011,2014, respectively.


The Company continues to expand itshas a global channel presence through domestic and international joint ventures. The Company owns a 50% interest in a joint venture with Lionsgate, which owns and operates the entertainment cable network, Pop™. The Company owns a 49% interest in a joint venture with a subsidiary of Liberty Global,AMC Networks Inc., which owns and operates six cable and satellite channels in the U.K. and Ireland, includingCBS Action™,CBS Drama™and, CBS Reality™ and Horror Channel™. The Company also owns a 30% interest in a joint venture with another subsidiary of Liberty Global,AMC Networks, which owns and operates sevennine cable and satellite channels in Europe, the Middle East and Africa. In December 2012, these channels were re-launched withAfrica broadcasting CBS programming and renamedbranded as CBS Action™,CBS Drama™,CBS Reality™andCBS Europa™. In India, the Company owns a 50% interest in a joint venture with Reliance Broadcast Network Limited, which operates three English language and one Punjabi language general entertainment cable and satellite channels customized for the Indian market and surrounding territory. In Australia, the Company owns an approximately 33% interest in a joint venture with a subsidiary of Ten Network Holdings Limited to provide content toELEVEN™, a digital television channel service, and an approximately 33%service. The Company owns a 30% interest in anothera joint venture with RTL Group, which owns and operates two cable channels in Southeast Asia in English and satellite channels calledlocal languages, TV1RTL CBS Entertainment™andSci FiRTL CBS Extreme™.


CBS Interactive. CBS Interactive is one of the leading global publishers of premium content on the Internet, delivering this content via Web properties, mobile properties and CBS apps on mobile, as well as Internet-connected television and other device platform apps. CBS Interactive was ranked among the top Internet properties in the world according to comScore Media Metrix, December 2015. CBS Interactive’s leading brands, including CNET®, CBS.com™, CBSSports.com™, GameSpot®, TVGuide.com™, TV.com™, CBSNews.com™, ZDNet®, Last.fm®, and MetroLyrics.com®, among others, serve targeted audiences with text, video, audio, and mobile content spanning technology, entertainment, sports, news, business, gaming and music categories. In addition to its U.S.‑based business, CBS Interactive operates in Asia, Australia and Europe. CBS Interactive’s worldwide brands reached approximately 254 million unique monthly visitors during December 2015 according to comScore Media Metrix, December 2015.

CBS Interactive generates revenue principally from the sale of advertising and sponsorships, in addition to fees derived from search and commerce partners, licensing fees, subscriptions, e-commerce activities, and other paid services. Advertising spending on the Internet, as in traditional media, fluctuates significantly with economic conditions. In addition, online marketing spending follows seasonal consumer behavior throughout the calendar year to reflect trends during the calendar year.



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CBS Interactive owns and operates digital properties, including: CNET, one of the preeminent digital properties for technology and consumer electronics information and featuring news, reviews, downloads and instructional and entertaining video and audio shows about technology; CNET en Espanol™, which delivers CNET.com’s information in the U.S. to Spanish speakers; TVGuide Digital™,which provides comprehensive information about television programming; GameSpot, a leading gaming information digital property providing video game reviews and previews, news, eSports, Webcasts, videos, and game downloads; CBSSports Digital™, which provides sports content, fantasy sports, community and e‑commerce features, and also owns and operates MaxPreps®; Last.fm, which is a music recommendation, discovery and social networking property; MetroLyrics.com, which is one of the most popular databases for song lyrics online; and TV.com, which is a destination for entertainment and community around television where visitors can watch videos and discuss and obtain information about television shows across all networks.

CBS Interactive also operates CBS.com, the online destination for CBS Television Network programming. Further extending the CBS.com experience, the Company offers a CBS app for on-demand streaming of various programs from the Company’s current network programming and library to users on multiple digital platforms, including Android, iOS, and Windows 8 and 10 mobile platforms, and Amazon Fire TV, Android TV, Apple TV, Chromecast, Roku and Xbox connected device platforms. CBS Interactive operates CBS All Access, the Company’s digital streaming subscription service launched in October 2014, which offers a more extensive on-demand selection of CBS Television Network content, both current programming and library, as well as the ability to stream live programming from local CBS Television Stations. CBS All Access is available at CBS.com and on the multiple digital platforms described above through the CBS app. CBS Interactive also operates CBSN, a live digital streaming advertiser-supported news network available 24 hours a day, seven days a week which launched in November 2014. CBSN is available at CBSNews.com and through the CBS News app on multiple digital platforms, including Android, iOS and Windows 8 mobile platforms, and Amazon Fire TV, Android TV, Apple TV, Chromecast, Roku and Xbox One connected device platforms. Through the CBS Audience Network™, the Company delivers video content from its digital properties and television, radio and affiliated stations under an advertiser-supported distribution model to third-party digital properties. The growing slate of the Company’s content available online includes full episodes, clips and highlights based on CBS, CBS Sports Network and Showtime Networks programming as well as original made-for-the-Web content.

CBS Films. CBS Films produces, acquires and distributes theatrical motion pictures across all genres. The budget for each picture is intended to be up to $50 million plus advertising and marketing costs at a level consistent with industry custom. The majority of motion pictures produced or acquired by CBS Films is intended for a wide, commercial theatrical release, similar to motion pictures typically produced and released by major studios. CBS Films'Films’ theatrical releases in 20122015 wereThe Woman in Black,Salmon Fishing in the Yemen,The WordsDuff andSeven Psychopaths Love the Coopers. . TheatricalIn 2016, CBS Films’ expected theatrical releases scheduled for 2013 includeare Middle School: The Last Exorcism Part II, Worst Years of My Life, The To Do ListPrice You Payand, Last VegasThe Sense of An Ending and Patriots Day.


In general, motion pictures produced or acquired by CBS Films are exhibited theatrically in the U.S. and internationally, followed by exploitation via home entertainment (including DVDs and Blu-ray Discs and electronic rental and sell-through), video-on-demand, pay-per-view, pay television, free television and basic cable, digital media outlets, including subscription video-on-demand, and, in some cases, other channels such as airlines and hotels. CBS Films will exploitexploits its motion pictures (including certain ancillary rights such as licensing and merchandising) and generategenerates revenues in all media in the relevant release windows either directly, through affiliated CBS entities, or via third party distribution arrangements.

arrangements, including CBS Interactive.Films’ multi-year agreement with Lions Gate Films, which was entered into in November 2014, for Lions Gate Films to distribute CBS Interactive operates one of the leading global publishers of premium content on the Internet. CBS Interactive was ranked among the top Internet propertiesFilms’ new wide-release motion pictures in the world according to comScore Media Metrix, December 2012. CBS Interactive's leading brands, includingCNET,CBS.com,CBSSports.com,GameSpot,TV.com, CBSNews.com, ZDNet, Last.fm, andMetroLyrics.com, among others, serve targeted audiences with text, video, audio, and mobile content spanning technology, entertainment,

all media, except U.S. pay television.

sports, news, business, gaming and music categories. In addition to its U.S.-based business, CBS Interactive operates in Asia, Australia and Europe. CBS Interactive's worldwide brands reached approximately 280 million unique monthly visitors during December 2012 according to comScore Media Metrix, December 2012.

        CBS Interactive generates revenue principally from the sale of advertising and sponsorships, in addition to fees derived from search and commerce partners, licensing fees, subscriptions, e-commerce activities, and other paid services. Advertising spending on the Internet, as in traditional media, fluctuates significantly with economic conditions. In addition, online marketing spending follows seasonal consumer behavior throughout the calendar year to reflect trends during the calendar year.

CNET.comis one of the preeminent Websites for technology and consumer electronics information and features news, reviews, downloads and instructional and entertaining video and audio shows about technology.GameSpotis a leading gaming information Website providing video game reviews and previews, news, eSports, Webcasts, videos, and game downloads.CBSSports.comprovides sports content, fantasy sports, community and e-commerce features, and also owns and operatesMaxPreps.com.Lastfmis a music recommendation, discovery and social networking site, andMetroLyrics.comis one of the most popular databases for song lyrics online.TV.comis a destination for entertainment and community around television where visitors can watch videos and discuss and obtain information about television shows across all networks. CBS Interactive also operatesCBS.com, the online destination for CBS Television Network programming. Through theCBS Audience Network™, the Company delivers video content from its Websites and television, radio and affiliated stations under an advertiser-supported distribution model. The growing slate of the Company's content available online includes full episodes, clips and highlights based on CBS, CBS Sports Network and Showtime Networks programming as well as original made-for-the-Web content.


Television Network. The television broadcast environment is highly competitive. The principal methods of competition in broadcast television are the development and acquisition of popular programming and the development of audience interest through programming and promotion, in order to sell advertising at profitable rates. Broadcast networks like CBS compete for audience, advertising revenues and programming with other broadcast networks, such as ABC, FOX, NBC, The CW and MyNetworkTV, independent television stations, cable program services, as well


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as other media, including DVDs and Blu-rayBlu‑ray Discs, digital program services, print and the Internet. In addition, the CBS Television Network competes with the other broadcast networks to secure affiliations with independently owned television stations in markets across the country which are necessary to ensure the effective distribution of network programming to a nationwide audience.


Television Production and Syndication. As a producer and distributor of programming, the Company competes with studios, television production groups, and independent producers and syndicators, such as Disney, Fox, NBCUniversal, Sony and Warner Bros., to produce and sell programming both domestically and overseas.internationally. The Company also competes to obtain creative talent and story properties which are essential to the success of all of the Company'sCompany’s entertainment businesses.


CBS Interactive. CBS Interactive competes with a variety of online properties for users, advertisers, and partners, including the following: general purpose portals, such as AOL, MSN and Yahoo!, especially as these properties expand their content offerings; search engines such as Google, Yahoo! and Bing; online comparison shopping and retail properties, including Amazon.com; vertical content sites in the categories that CBS Interactive’s brands serve such as technology, gaming, music, news, business, food, and lifestyle focused digital properties; other content sites and apps, such as ESPN.com, HBO GO, Hulu and Netflix, as well as major television broadcast company digital properties and apps; and platforms such as blogs, podcasts and video properties. CBS Interactive also competes for users and advertisers with diversified media companies that provide both online and offline content, including magazines, cable television, network television, radio and newspapers.

CBS Films. Motion picture production and distribution is a highly competitive business. During the life cycle of the development and production of a motion picture project, CBS Films must compete for the rights to compelling underlying source material and talent such as writers, producers, directors, on-screen performers and other creative personnel. CBS Films must also compete with other buyers for the acquisition of third-party produced motion pictures. Once a motion picture is completed or acquired, CBS Films must compete with numerous other motion pictures produced and/or distributed by various studios and independent producers, including Paramount Pictures Corporation, Walt Disney Studios Motion Pictures, Warner Bros. Entertainment Inc., Lions Gate Entertainment, The Weinstein Company, Relativity Media, FilmDistrict, Metro-Goldwyn-Mayer Studios Inc. and Lakeshore Entertainment


Group, LLC, among others, for audience acceptance as well as limited exhibition outlets across all of the relevant release windows. In addition, the ultimate consumer has many options for entertainment other than motion pictures including video games, sports, travel, outdoor recreation, the Internet, and other cultural and computer-related activities.

        CBS Interactive.    CBS Interactive competes with a variety of online properties for users, advertisers, and partners, including the following: general purpose portals such as AOL, MSN and Yahoo!, especially as these properties expand their content offerings; search engines such as Google, Yahoo! and Bing; online comparison shopping and retail properties, including Shopping.com, Amazon.com and eBay; vertical content sites in the categories that CBS Interactive's brands serve, such as technology, gaming, music, news, business, food, and lifestyle focused Websites; and platforms such as blogs, podcasts and video properties. CBS Interactive also competes for users and advertisers with diversified media companies that provide both online and offline content, including magazines, cable television, network television, radio and newspapers.


Cable Networks(13% (16%, 12%16% and 11%15% of the Company's consolidated revenues in 2012, 20112015, 2014 and 2010,2013, respectively, and 26%33%, 26%33% and 28%29% of the Company's consolidatedtotal segment operating income in 2012, 20112015, 2014 and 2010,2013, respectively)


The Cable Networks segment is composed ofShowtime Networks, which operates the Company’s premium subscription program services, including a digital streaming subscription offering; CBS Sports Network, the Company's premium subscription program services;CBS Sports Network, the Company'sCompany’s cable network focused on college athletics and other sports; andSmithsonian Networks,, a venture with Smithsonian Institution, which operatesSmithsonian Channel.and a digital streaming subscription service.


Showtime Networks. Showtime Networks owns and operates three commercial-free, premium subscription program services in the U.S.:Showtime, offering original series, recently released theatrical feature films, original series, documentaries, boxing and other sports-related programming, and special events;The Movie Channel®Channel, offering recently released theatrical feature films and related programming; andFlix®Flix, offering theatrical feature films primarily from the last several decades, as well as selected other titles.decades; and a digital streaming subscription offering of the Showtime service which launched in July 2015. At December 31, 2012,2015, Showtime, The Movie ChannelandFlix, in the aggregate, had approximately 7677 million subscriptions in the U.S., certain U.S. territories and Bermuda.


Showtime Networks also owns and operates multiplexed channels ofShowtimeandThe Movie Channelin the U.S., which offer additional and varied programming choices. In addition, Showtime Networks transmits high definition feedsmakes versions ofShowtime, The Movie Channeland many of their multiplexed channels, and also makes versions ofShowtime, The Movie ChannelandFlixavailable "on“on demand,"” enabling subscribers to watch selected individual programs at their convenience (in both standard and high definition in the case of


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ShowtimeandThe Movie Channel, and standard definition in the case ofFlix).convenience. Showtime Networks also makes availableShowtime Anytime®Anytime®, an on-demand authenticated version ofShowtime, which can be accessed on computers viashowtimeanytime.comshowtimeanytime.com™ or via certain portableInternet-connected devices through aShowtime Anytimesoftware application or "app"app free of charge toShowtimesubscribers as part of theirShowtimesubscription through participating Showtime Networks'Networks’ distributors. Through Showtime Anytime, Showtime subscribers can view on demand programming as well as the live telecast of the east and west coast feeds of Showtime. Showtime Networks additionally operates the WebsiteSHO.comSHO.com™ and various apps which promoteShowtime, The Movie ChannelandFlixprogramming, and provide information and entertainment and other services. In July 2015, the Company launched its digital streaming subscription offering of the

Showtime service for purchase by consumers without a traditional MVPD video subscription. This offering features current and classic original Showtime series, theatrical feature films, documentaries and sports-related programming, as well as the live east and west coast linear feeds of Showtime, and is available at showtime.com™, through the Showtime app on multiple digital platforms, including Amazon Fire TV, Apple TV, Chromecast and Roku connected device platforms, and as an add-on subscription to Amazon Prime or Hulu services or via Sony’s PlayStation Vue’s cloud-based television service.


Showtime Networks derives revenue principally from the license of its program services to numerous MVPDs, with a substantial portion of such revenue coming from three of the largest such distributors. The costs of acquiring exhibition rights to programming and producing original series are the principal expenses of Showtime Networks. Showtime Networks enters into commitments to acquire rights, with an emphasis on acquiring exclusive rights forShowtimeandThe Movie Channel, from major or independent motion picture producersstudios and other distributors typically covering the U.S. and Bermuda for varying durations. For example, in addition to a motion picture output agreement with CBS Films, Showtime Networks has entered intodurations, including exclusive motion picture output agreements with CBS Films, Buena Vista Pay Television, a subsidiary of The Walt Disney Company for(for certain DreamWorks motion pictures), Open Road Films, STX Entertainment and (for motion pictures theatrically released through 2015) The Weinstein Company and


Summit Entertainment for the exclusive U.S. premium subscription television rights for certain exhibition windows relating to feature films initially theatrically released in the U.S. through December 2015 and, in the case of Summit Entertainment, December 2012.Company. Showtime Networks'Networks’ original series includetelecast in 2015 included Homeland, which received six Emmy® Awards in 2012 (including Outstanding Drama Series),Dexter®,Ray Donovan, Masters of Sex, The Affair, Penny Dreadful, Shameless,,Weeds,The Borgias,Nurse Jackie, The Big C, Californication, House of LiesandEpisodes, among others. Showtime Networks also telecast various sports-related programs, including Inside the NFL, 60 Minutes Sports and A Season With Notre Dame Football. Showtime Networks has entered into and may from time to time enter into co-financing, co-production and/or distribution arrangements with other parties to reduce the net cost to Showtime Networks for its original programming. In addition, Showtime Networks derives revenue by licensing rights it retains in certain of its original programming. For example, Showtime Networks and its corporate affiliate(s) have enteredThe Company enters into licenseslicensing arrangements with television networks, in various territoriesInternet content distributors, such as Amazon and Netflix, and/or other media companies for the exhibition of certain Showtime original series, as well as licensing arrangementsprogramming domestically and in various international territories. For example, the Company has entered into an output agreement with several Internet distributors, including iTunesBell Media Inc. in January 2015 for Canada, with Sky-affiliated entities in December 2015, for Austria, Germany, Ireland, Italy and Amazon, among others,the U.K., and with Stan Entertainment PTY Limited in January 2016 for certainShowtimeprogramming.Australia. Showtime Networks also produces and/or provides special events to licensees on a pay-per-view basis throughShowtime PPV®PPV® such as Floyd Mayweather’s two championship boxing matches held in 2015, including his pay-per-view record-breaking match against Manny Pacquiao, in May 2015, co-produced by HBO PPV®.


Showtime Networks also owns a majority of and manages Smithsonian Networks, a venture with Smithsonian Institution, which operatesSmithsonian Channel, a basic cable service in the U.S., featuring programs of a cultural, historical, scientific and educational nature. Smithsonian Networks has launched both standard and high definition versions ofSmithsonian Channeland itsoffers a companion on-demand version. Smithsonian Networks additionallyversion, makesSmithsonian Channelcontent available on an authenticated basis to certain distributors. Itdistributors in the U.S. and licenses Smithsonian Channel content outside of the U.S., including to Blue Ant Television Ltd. in connection with Smithsonian Channel in Canada. Smithsonian Networks also operates the WebsiteSmithsonianChannel.comSmithsonianChannel.com™ and various apps, which promoteSmithsonian Channelprogramming and provide information and entertainment services. In November 2015, Smithsonian Networks launched

Smithsonian Earth™, its digital streaming subscription service featuring original nature content, which is available to consumers without a traditional MVPD video subscription. Smithsonian Earth is available in ultra-high-definition resolution (4K) on multiple digital platforms, including Amazon Fire TV, Apple TV and Roku connected device platforms.


CBS Sports Network.CBS Sports Network is a 24-hour24 hours a day, seven days a week cable program service that provides sports and related content, with a strong focus on college sports. The network televises in high definition over 350580 live professional, amateur, semi-professional and collegiate events annually, highlighted by Division I college football, basketball, hockey and lacrosse, as well as professional bull riding (PBR), professional basketball (NBA Development League), professional lacrosse (MLL and NLL) and, commencing in March 2013,(MLL), arena football


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(AFL) and various styles of motor sports events (including asphalt, dirt, and off road racing). In addition, the network showcases a variety of original programming, including documentaries, features and features, studio shows, such as weeknight news and commentary show,highlighted by ROMEThat Other Pre-Game Show (TOPS), featuring host Jim Rome, andLead Off, and weekly shows such asNFL Monday QB, Inside College Basketball, Inside College Football, . and a first of its kind all-female panel talk show, We Need to Talk, and a new live sports talk show, Time to Schein. CBS Sports Network also provides ancillary coverage for CBS Sports relating to major events, such as the NCAA Division I Men'sMen’s Basketball Tournament, the Masters theTournament and PGA Championship, and U.S. Open Tennis.for Showtime Networks relating to Showtime Championship Boxing. CBS Sports Network produces weekday simulcasts of the radio shows Boomer and Carton and The Doug Gottlieb Show. Further, CBS Sports Network televises a diverse slate of additional programming under the CBS Sports Spectacular™ brand, including mixed martial arts, skiing, bowling, surfing, boxing, horse racing, volleyball, cheerleading and skate boarding, among other events. CBS Sports Network had approximately 4655 million subscribers as of December 31, 2012.2015. The network derives its revenues from subscription fees and the sale of advertising. CBS Sports Network has secured carriage arrangements with the top MVPDs.


Cable Networks Competition.


Showtime Networks. Showtime Networks primarily competes with other providers of premium subscription program services in the U.S.:, including Home Box Office, Inc. and Starz.Starz, LLC. Competition among these premium subscription program services in the U.S. is dependent on: (i) the production, acquisition and packaging of original series and other original programming and the acquisition and packaging of an adequate number of recently released theatrical motion pictures; and (ii) the offering of prices, marketing and advertising support and other incentives to MVPDsdistributors for carriage so as to favorably position and package Showtime Networks'Networks’ premium subscription program services to subscribers. Home Box Office, Inc. is the largest company in the U.S. premium subscription program service category, offering two premium subscription program services, HBO and Cinemax.In addition, Showtime Networks competes with Home Box Office, Inc.non-traditional subscription programming services delivered via the Internet, such as Amazon, Hulu and has a smaller share of the premium subscription program service category. Starz, another premium subscription program service, competes with Showtime Networks'Netflix, for original programming, theatrical motion pictures and Home Box Office, Inc.'s premium program services.viewership. Showtime Networks also competes for programming, distribution and/or audiences with basic cable program services, broadcast television and other media, including DVDsvideo games and Blu-ray Discs, portable devicesother Internet apps.

Smithsonian Networks competes for programming, distribution and/or audiences with non‑fiction and the Internet.

other basic cable program services, including Discovery Channel, National Geographic Channel and History, as well as with broadcast television and other media.

CBS Sports Network. CBS Sports Network principally competes with cable programming services, including other sports‑oriented cable programming services, for distribution and license fee revenue among MVPDs, as well as for viewership and advertising revenue. The effects of consolidation among MVPDs and consumer pricing sensitivity have made it more difficult for niche channels to secure broad distribution in mainstream programming packages. In addition, the largest cable providers have created sports tiers for sports programming services which have not, in many cases, achieved significant subscriber penetration or acceptance. CBS Sports Network continues its repositioning to be included in programming packages with more subscribers. Re-alignment of college athletic conferences and their member institutions may adversely impact CBS Sports Network’s programming arrangements. CBS Sports Network also competes with cable programming services generally, including other sports programming services, such as ESPN, FOX Sports Networks and NBC Sports Network, in acquiring the television and multimedia rights to sporting events, resulting in increased rights fees and increased production expenses.

The terms and favorable renewal of agreements with distributors for the distribution of the Company'sCompany’s subscription program services are important to the Company. The effects of consolidation among MVPDs and other marketplace factors make it more difficult to reach and maintain favorable terms and positioning and could have an adverse effect on revenues. In addition, new entrants, such as Netflix, Inc., providing programming or other services for cable and/or other platforms, including the Internet, are or could be competitive with and adversely affect the Company's media businesses, including Showtime Networks' subscription program service business.

        Smithsonian Networks competes for programming, distribution and/or audiences with non-fiction and other basic cable program services, including Discovery Channel, National Geographic Channel and History, as well as with broadcast television and other media, such as DVDs and Blu-ray Discs, portable devices and the Internet.

        CBS Sports Network.    CBS Sports Network principally competes with cable programming services, including other sports-oriented cable programming services, for distribution and license fee revenue among MVPDs, as well as for viewership and advertising revenue. The effects of consolidation among cable operators and consumer pricing sensitivity have made it more difficult for newer channels to secure broad distribution in mainstream programming packages. In addition, the largest cable providers have created sports tiers for newer sports programming services which have not, in many cases, achieved significant subscriber penetration or acceptance. Re-alignment of college athletic conferences and their member institutions may adversely impact CBS Sports Network's programming arrangements. CBS Sports Network also competes with cable programming services generally, including other sports programming services, such as ESPN, NBC Sports Network and the FOX Sports Networks, in acquiring the television and multimedia rights to sporting events, resulting in increased rights fees and increased production expenses.


Publishing(6%, 6% and 6% (6% of the Company's consolidated revenues in 2012, 20112015, 2014 and 2010,2013, respectively, and 3%4%, 3% and 3% of the Company's consolidatedtotal segment operating income in 2012, 2011each of 2015, 2014 and 2010,2013, respectively)


The Publishing segment consists of Simon & Schuster, which publishes and distributes consumer books in the U.S. and internationally.




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Simon & Schuster publishes and distributes adult and children'schildren’s consumer books in printed, digital and audio formats in the U.S. and internationally. DigitalIts digital formats include audio downloads for the Apple iPod and other companies' MP3 players, electronic books, for increasingly popular devices such as Amazon's Kindle, the Apple iPad and Barnes & Noble's NOOK, stand-alone applications for the Apple iPod and iPhone, and new hybrid text and video combinations.audio books. Simon & Schuster'sSchuster’s major adult imprints includeSimon & Schuster,Pocket Books, Scribner,Atria Books®,Books, Gallery Books™Books,Touchstone®Touchstone,Threshold Editions™ andFree PressHoward Books®. Simon & Schuster'sSchuster’s major children'schildren’s imprints includeSimon Pulse®Pulse®, Aladdin® and, Atheneum Books for Young Readers®, Margaret K. McElderry Books™, Saga Press™ and Simon & Schuster Books For Young Readers™. Simon & Schuster also develops special imprints and publishes titles based on the products of certain CBS businesses as well as that of third parties and distributes products for other publishers. Simon & Schuster distributes its products directly and through third parties. Simon & Schuster also delivers content and promotes its products on its own Websites, social media, general Internet sites as well as those linkeddedicated to individual titles; itstitles. Its created assets include online videos showcasing Simon & Schuster authors and new releases on AOL, Scripps Lifestyle Networks, SimonandSchuster.com, YouTube Facebook, MSN.com, AOL.com and SimonandSchuster.com and other sites.sites as well as online video courses led by authors made available for sale to consumers. International publishing includes the international distribution of English-language titles through Simon & Schuster UK, Simon & Schuster Canada, Simon & Schuster Australia, Simon & Schuster India and other distributors, as well as the publication of locallocally originated titles by Simon & Schuster UK and Simon & Schuster Australia.its international companies.


In 2012,2015, Simon & Schuster published 317249 New York Times bestsellers in hardcover, paperback and electronic formats, collectively, including 3532 New York Times #1 bestsellers. Best-selling titles in 20122015 includeKill ShotThe Wright Brothers by Vince Flynn,David McCullough, Lone WolfBazaar of Bad Dreams by Jodi Picoult,Stephen King and ongoing sales of the 2015 Pulitzer Prize-winning 2014 release, Far FromAll the TreeLight We Cannot See by Andrew Solomon, andProof of Heaven by Eben Alexander.Anthony Doerr. Bestselling children'schildren’s titles from Simon & Schuster includeCity of Lost Souls by Cassandra Clare andDork Diaries 410 by Rachel Renee Russell.Renée Russell, Rush Revere and the Star-Spangled Banner by Rush Limbaugh and Kathryn Adams Limbaugh and Michael Vey 5 by Richard Paul Evans. Simon & Schuster Digital™,Digital™, throughSimonandSchuster.com, publishes original content, builds reader communities and promotes and sells Simon & Schuster'sSchuster’s books over the Internet.


The consumer publishing marketplace is subject to increased periods of demand in the summer months and during the end-of-yearend‑of‑year holiday season. Major new title releases represent a significant portion of Simon & Schuster'sSchuster’s sales throughout the year. Simon & Schuster'sSchuster’s top two accounts drive a significant portion of its annual revenue. Consumer print books are generally sold on a fully returnable basis, resulting in the return of unsold books. In the domestic and international markets, the Company is subject to global trends and local economic conditions. In 2012,2015, the sale of digital content represented approximately 23%25% of Simon & Schuster'sSchuster’s revenues. The Company expects that electronic books will continue to represent an increasinga significant portion of Simon & Schuster revenues in the coming years.


Publishing Competition. The consumer publishing business is highly competitive and has been affected over the years by consolidation trends and new electronic distribution methods and models. Mass merchandisers and on-lineon‑line retailers are significant factors in the industry contributing to the general trend toward consolidation in the retail channel. The growth of the electronic book market has impacted print book retailers and wholesalers and could result in a reduction of these channels for the sales and marketing of the Company'sCompany’s books. In addition, unfavorable economic conditions and competition may adversely affect book retailers'retailers’ operations, including distribution of the Company'sCompany’s books. The Company must compete with other larger publishers, such as Penguin Random House, Penguin Group, Hachette and Harper CollinsHarperCollins, for the rights to works by authors.authors and sales to retailers and customers. Competition is particularly strong for well-knownwell‑known authors and public personalities. In addition, technological changes have made it increasingly possible for authors to self-publishself‑publish and have led to the development of new digital distribution models in which the Company'sCompany’s books must compete with the availability of both a larger volume of books as well as non-booknon‑book content. In 2010, Simon & Schuster began to enter into agency arrangements with book retailers and wholesalers under which Simon & Schuster sold its electronic books directly to the consumer and set the consumer price; in 2012, as a result of a settlement with the U.S. Department of Justice, new agency arrangements permit book retailers and wholesalers to set the consumer price for Simon & Schuster's electronic books, subject to certain restrictions. The Company still faces price competition from retailers and from competing publishers that sell directly to consumers.


Local Broadcasting (20%(19%, 20% and 21%19% of the Company's consolidated revenues in 2012, 20112015, 2014 and 2010,2013, respectively, and 28%27%, 29%30% and 38%27% of the Company's consolidatedtotal segment operating income in 2012, 20112015, 2014 and 2010,2013, respectively)


The Local Broadcasting segment is composed of CBS Television Stations, the Company'sCompany’s 30 owned broadcast television stations, and CBS Radio, through which the Company owns and operates 127117 radio stations in 2826 U.S. markets and related online properties. The Company operates local Websitesdigital properties in major U.S. markets, including New York, Los Angeles, Chicago, San Francisco and Dallas, which combine the Company'sCompany’s television and radio local


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media brands online to provide the latest news, traffic, weather, and sports information as well as local discounts, directories and reviews to serve the local community.


CBS Television Stations. The Company owns 30 broadcast television stations through its CBS Television Stations group, all of which operate under licenses granted by the Federal Communications Commission ("FCC"(“FCC”) pursuant to the Communications Act of 1934, as amended (the "Communications Act"“Communications Act”). The licenses are renewable every eight years. The Company'sCompany’s television stations are located in the 76 largest, and 15 of the top 20, television markets in the U.S. The Company owns multiple television stations within the same designated market area ("DMA"(“DMA”) in 10 major markets. These multiple station markets


are: New York (market #1), Los Angeles (market #2), Philadelphia (market #4), Dallas-Fort Worth (market #5), San Francisco-Oakland-San Jose (market #6), Boston (market #7)#8), Detroit (market #11)#13), Miami-Ft. Lauderdale (market #16), Sacramento-Stockton-Modesto (market #20), and Pittsburgh (market #23). This group of television stations enables the Company to reach a wide audience within and across geographically diverse markets in the U.S. The stations produce news and broadcast public affairs, sports and other programming to serve their local markets and offer CBS, The CW or MyNetworkTV programming and syndicated programming. The CBS Television Stations group principally derives its revenues from the sale of advertising time on its television stations. In addition, the CBS Television Stations group receives retransmission fees from MVPDs for authorizing the MVPDs'MVPDs’ carriage of the Company'sCompany’s owned television stations. Substantially all of the Company'sThe Company’s television stations operatestation Websites, many of which are combined with thecertain Websites of the Company'sCompany’s radio stations in co-located markets, whichare operated by CBS Local Digital Media™ and promote the stations'stations’ programming andas well as provide news, information, entertainment, and other services, through the CBS Local Digital Media group.services. These Websites principally derive revenues from the sale of advertising.


Television The “Television Stations,

        The Radio Stations and CBS Local Digital Media Websites” table below sets forth the broadcastincludes information with respect to certain of these properties within top U.S. television stations owned bymarkets and radio markets. In October 2014, the Company launched CBS All Access, a digital streaming subscription service offering an extensive on-demand selection of CBS Television Network content as of February 14, 2013.

Station and Metropolitan Area Served(1)well as the ability to stream live programming from local CBS Television Stations. CBS All Access is available at CBS.com and through the CBS app on multiple digital platforms, including Android, iOS, Windows 8 and 10 mobile platforms, and Amazon Fire TV, Android TV, Apple TV, Chromecast, Roku and Xbox connected device platforms. In 2015, CBS Television Stations and Weigel Broadcasting launched DECADES™, a national entertainment program service featuring classic television content, movies and original programming for local television stations’ digital sub-channels, which utilize a local television station's available broadcast spectrum to provide a companion to that station's primary channel.
Market Rank(2)TypeNetwork Affiliation

WCBS-TV
New York, NY

1UHFCBS

WLNY-TV
New York, NY


1

UHF

Independent

KCAL-TV
Los Angeles, CA


2

VHF

Independent

KCBS-TV
Los Angeles, CA


2

UHF

CBS

WBBM-TV
Chicago, IL


3

VHF

CBS

KYW-TV
Philadelphia, PA


4

UHF

CBS

WPSG-TV
Philadelphia, PA


4

UHF

The CW

KTVT-TV
Dallas-Fort Worth, TX


5

UHF

CBS

KTXA-TV
Dallas-Fort Worth, TX


5

UHF

Independent

KPIX-TV
San Francisco-Oakland-San Jose, CA


6

UHF

CBS

KBCW-TV
San Francisco-Oakland-San Jose, CA


6

UHF

The CW

WBZ-TV
Boston, MA


7

UHF

CBS

WSBK-TV
Boston, MA


7

UHF

MyNetworkTV


Station and Metropolitan Area Served(1)
Market Rank(2)TypeNetwork Affiliation

WUPA-TV
Atlanta, GA

9

UHF

The CW

WKBD-TV
Detroit, MI


11

UHF

The CW

WWJ-TV
Detroit, MI


11

UHF

CBS

KSTW-TV
Seattle-Tacoma, WA


12

VHF

The CW

WTOG-TV
Tampa-St. Petersburg-Sarasota, FL


14

UHF

The CW

WCCO-TV
Minneapolis-St. Paul, MN


15

UHF

CBS

Satellites:

KCCO-TV(3)
Alexandria, MN

VHF

CBS

KCCW-TV(4)
Walker, MN

VHF

CBS

WFOR-TV
Miami-Ft. Lauderdale, FL


16

UHF

CBS

WBFS-TV
Miami-Ft. Lauderdale, FL


16

UHF

MyNetworkTV

KCNC-TV
Denver, CO


17

UHF

CBS

KOVR-TV
Sacramento-Stockton-Modesto, CA


20

UHF

CBS

KMAX-TV
Sacramento-Stockton-Modesto, CA


20

UHF

The CW

KDKA-TV
Pittsburgh, PA


23

UHF

CBS

WPCW-TV
Pittsburgh, PA


23

VHF

The CW

WBXI-CA(5)
Indianapolis, IN


26

UHF

Tr3s

WJZ-TV
Baltimore, MD


27

VHF

CBS

(1)
Metropolitan Area Served is Nielsen Media Research's DMA.
(2)
Market Rankings based on Nielsen Media Research Local Market Universe Estimate, September 2012.
(3)
KCCO-TV is operated as a satellite station of WCCO-TV.
(4)
KCCW-TV is operated as a satellite station of WCCO-TV.
(5)
WBXI-CA is a Class A low power television station. Class A low power television stations do not implicate the FCC's ownership rules.

CBS Radio. The Company'sCompany’s radio broadcasting business operates through CBS Radio, one of the largest operators of radio stations in the U.S. CBS Radio owns and operates 127117 radio stations serving 2826 U.S. markets as of February 14, 2013.9, 2016. Virtually all of the Company'sCompany’s owned and operated radio stations are


located in the 50 largest U.S. radio markets and approximately 78%77% in the 25 largest U.S. radio markets. Most of the Company's owned radio stations implement digital broadcasting. The Company'sCompany’s strategy generally is to operate radio stations in the largest markets and take advantage of the Company'sCompany’s ability to sell advertising across multiple markets and formats. In June 2012, the Company announced the creation ofCBS Sports Radio Network, which launched in January 2013 and provides up to 24-hours, seven-days-a-week of national sports programming to affiliated radio stations. The network has more than 250 affiliates across the country and Canada, including radio stations in 9 of the top 10 U.S. radio markets. Cumulus Media, asCBS Sports Radio Network's exclusive syndicator, is responsible for securing radio station affiliates and for the network's advertising sales. The Company believes that it is favorably impacted by offering radio television and outdoor advertisingtelevision platforms in large markets. The "Radio Stations, Television Stations and Outdoor Advertising Displays" table below includes information with respect to the Company's radio stations in the top 25 U.S. radio markets.


CBS Radio'sRadio’s geographically dispersed stations serve diverse target demographics through a broad range of formats, such as rock, classic hits/oldies, all-news,all‑news, talk, Spanish language, adult contemporary, top 40/contemporary hit radio, urban, sports and country, andcountry. In addition, CBS Radio has established leading franchises in news, sports and personalitypersonality-driven programming. This diversity provides advertisers with the convenience of selecting stations to reach a targeted demographic or of selecting groups of stations to reach broad groups of consumers within and across markets and also reduces the Company'sCompany’s dependence on any single station, local economy, format or advertiser. At the same time, CBS Radio maintains substantial diversity in each marketmost markets where its stations operate so that its stations can appeal to several demographic groups. CBS Radio'sRadio’s general programming strategies include employing popular on-air talent, some of whose broadcasts may be syndicated by CBS Radio using the services of athird parties, broadcasting third party syndicator, broadcastingsyndicated programming syndicated to it by others,, acquiring the rights to broadcast sports play-by-playplay‑by‑play and producing and acquiring news content for its radio stations.content. The overall mix of each radio station'sstation’s programming lineup is designed to fit the station'sstation’s specific format and serve its local community.




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The majority of CBS Radio'sRadio’s revenues are generated from the sale of local and national advertising. The major categories of radio advertisers include:include automotive, retail, healthcare, telecommunications, insurance, fast food, beverage, movies and entertainment. CBS Radio is able to use the reach, diversity and branding of its radio stations to create unique division-widedivision‑wide marketing and promotional initiatives for major national advertisers of products and services.advertisers. Advertising expenditures by advertisers fluctuate, which has an effect on CBS Radio'sRadio’s revenues.

        Substantially all of the Company's


The Company’s radio stations operatestation Websites, many of which are combined with the Websitescertain of the Company'sCompany’s television stationsstation Websites in co-locatedco‑located markets, whichare operated by CBS Local Digital Media and promote and stream simultaneously the stations'stations’ programming andas well as provide news, information and entertainment, as well asand other services. Radio station programming is also streamed live on the Company's Radio.com™ Website and CBS Local apps. The “Television Stations, Radio Stations and CBS Local Digital Media Websites” table below includes information with respect to certain of these properties within top U.S. television markets and radio markets. Also, CBS RadioLocal Digital Media operates Websites for itsthe Company's music radio stations. All of these Websites are part of the CBS Local Digital Media group and principally derive revenues from the sale of advertising. CBS Radio is one of the most listened to online radio providers according to Triton Digital'sDigital’s monthly Top 20 Ranker for December 2012.


CBS Sports Radio Network™ provides national sports programming to affiliated radio stations up to 24 hours a day, seven days a week. The network has more than 300 affiliates across the U.S. and in Canada, including radio stations in all of the top 10 U.S. radio markets. Cumulus Media, as CBS Sports Radio Network's exclusive syndicator, is responsible for securing radio station affiliates and for the network's advertising sales.

Local Broadcasting Competition.


CBS Television Stations. Television stations compete for programming, on-airon‑air talent, audiences and advertising revenues with other stations and cable networks in their respective coverage areas and, in some cases, with respect to programming, with other station groups, and, in the case of advertising revenues, with other local and national media. The owned and operated television stations'stations’ competitive position is largely influenced by the quality of the syndicated programs and local news programs in time periods not programmed by the network; the strength of the CBS Television Network programming and, in particular, the viewership of the CBS Television Network in the time period immediately prior to the late evening news; and in some cases, by the quality of the broadcast signal.


CBS Radio. The Company'sCompany’s radio stations directly compete within their respective markets for audience, advertising revenues and programming with other radio stations, including those owned by other group owners such as Clear Channel Communications, Inc., Cumulus Media Inc., Emmis Communications Corporation, Entercom Communications Corp., iHeartMedia, Inc. and Radio One, Inc. The Company'sCompany’s radio stations, including their Internet and streaming activities, also compete with other media, such as broadcast, cable and DBS television, newspapers, magazines, direct mail, and the Internet, including services such as Pandora, Spotify and Rhapsody. The radio industry is also subject to competition from Sirius XM RadioHoldings Inc., which provides digital audio services to subscribers.


The Company'sCompany’s television and radio stations face increasing competition from newer technologies includingsuch as audio and visual programmingcontent delivered via the Internet, which create new ways for individuals to watch programming and listen to music and other content of their choosing while avoiding traditional commercial advertisements. Also, an increasingly broad adoption by consumers of portable digital devices could affect the ability of the Company'sCompany’s television and radio stations to attract audiences and advertisers.


Aggregate total revenues for the Company'sCompany’s radio stations for 20122015 were ranked #1 or #2 in four of the top five U.S. markets by metro area population (New York, Los Angeles, Chicago, and San Francisco), according to the 20122015 Market Total Revenues Performance Summary of Miller Kaplan Arase & Co., LLP.






I-11


Television Stations, Radio Stations Television Stations and Outdoor Advertising Displays

CBS Local Digital Media Websites

The following table sets forth information with regard to the Company'sCompany’s owned television stations, radio stations television stations and outdoor advertising displaysrelated CBS Local Digital Media Websites, as of February 14, 2013 in the9, 2016, within top 25 U.S. television and radio markets:


TelevisionRadio
RadioCBS Local Digital Media
Television(1)Outdoor Americas
Market and Market Rank(1)Rank(2)
StationsType
Network
Affiliation
StationsAM/
FM		FormatStationsTypeNetwork
Affiliation		Display TypeWebsites

New York, NY

WCBS‑TVUHFCBS WCBSAMNews WCBS-TVnewyork.cbslocal.com
 WLNY‑TVUHFCBSBillboards,

Independent		 WCBSFMClassic Hits WLNY-TV
#1—Television UHF IndependentSubway/Rail, Bus,

#1—Radio

 WFANAMAMSports 
#1—RadioWFANFMSports
      WINSTransit Structures, Malls,AM

#1—Television

News		 WFAN(2)FMSports
      WBMPDigital In-Store NetworksFM

Top 40		 WINSAMNews
      

WNOWWWFSFMContemporary Hit Radio

WWFSFMAdult Contemporary

Los Angeles, CA(3)

KAMP

FM

Contemporary Hit Radio

KCAL-TV

VHF

Independent

Billboards,

KCBSFMAdult HitsKCBS-TVUHFCBSSubway/Rail, Bus,

#2—Radio

KNXAMNewsTransit Structures,

#2—Television

KROQFMAlternative RockMalls, Digital

KRTHFMClassic HitsIn-Store Networks

KTWVFMAdult Contemporary

Chicago, IL

WBBM

AM

News

WBBM-TV

VHF

CBS

Billboards, Malls,

WBBMFMContemporary Hit RadioDigital In-Store

#3—Radio

WCFSFMNewsNetworks

#3—Television

WJMKFMClassic Hits

WSCRAMSports

WUSNFMCountry

WXRTFMAdult Album Alternative

San Francisco, CA

KCBS

AM

News

KPIX-TV

UHF

CBS

Billboards,

KFRCFMNewsKBCW-TVUHFThe CWSubway/Rail,

#4—Radio

KITSFMAlternative RockTransit Structures,

#6—Television

KLLCFMHot Adult Contemporary  Malls, Digital

KMVQFMContemporary Hit RadioIn-Store Networks

KZDG(4)AMIndian Talk/Music

Dallas-Fort Worth, TX

KJKK

FM

Adult Hits

KTVT-TV

UHF

CBS

Billboards, Transit

KLUVFMClassic HitsKTXA-TVUHFIndependentStructures, Malls,

#5—Radio

KMVKFMSpanishDigital In-Store

#5—Television

KRLDAMNews/TalkNetworks

KRLDFMSports

KVILFMAdult Contemporary

Houston, TX

KHMX

FM

Hot Adult Contemporary

Billboards, Malls,

KIKKAMSportsDigital In-Store

#6—Radio

KILTAMSportsNetworks

KILTFMCountry

KKHHFMContemporary Hit Radio

KLOLFMSpanish

Washington, D.C.

WIAD

FM

Adult Contemporary

Billboards,

WJFKAMSportsSubway/Rail, Bus,

WJFKFMSportsMalls, Digital

#7—Radio

WLZLFMSpanishIn-Store Networks

WNEWFMNews

WPGCFMRhythmic Top 40

Philadelphia, PA

KYW

AM

News

KYW-TV

UHF

CBS

Billboards, Malls,

WIPAMSportsWPSG-TVUHFThe CWDigital In-Store Networks

#8—Radio

WIPFMSports

#4—Television

WOGLFMClassic Hits

WPHTAMNews/Talk

Atlanta, GA

WAOK

AM

News/Talk

WUPA-TV

UHF

The CW

Billboards,

WVEEFMUrbanSubway/Rail, Bus,

#9—Radio

WZGCFMSportsTransit Structures,

#9—Television

Malls, Digital In-Store

Networks


RadioTelevisionOutdoor Americas
Market and Market Rank(1)
StationsAM/
FM		FormatStationsTypeNetwork
Affiliation		Display Type

Boston, MA

WBMX

FM

Hot Adult Contemporary

WBZ-TV

UHF

CBS

Billboards, Malls,

WBZAMNewsWSBK-TVUHFMyNetworkTVDigital In-Store Networks

#10—Radio

WBZFMSports

#7—Television

WODSFMContemporary Hit Radio

WZLXFMClassic Rock

Miami-Ft. Lauderdale, FL

WFOR-TV

UHF

CBS

Billboards,

WBFS-TVUHFMyNetworkTVSubway/Rail, Bus, Malls,

#11—Radio

Digital In-Store Networks

#16—Television

           

Detroit, MILos Angeles, CA

(3)
 

WDZH

KCAL‑TV		VHFIndependent 

KAMP

FM

Top 40 

Contemporary Hit Radio

losangeles.cbslocal.com
 

WKBD-TV

UHF

The CW

Billboards, Bus,

WOMCFMClassic HitsWWJ-TVKCBS‑TVUHFCBS Malls, DigitalKCBS

#12—Radio

FM		Adult Hits WWJ
#2—Television AM KNXAMNews
#2—RadioKROQFMAlternative
      KRTHIn-Store NetworksFM

#11—Television

Classic Hits		 WXYTAMSports
      

WXYTKTWVFMSportsSmooth Adult Contemporary  

WYCDFMCountry

Seattle-Tacoma, WA

KJAQ

FM

Adult Hits

KSTW-TV

VHF

The CW

Billboards, Malls,

KMPSFMCountryDigital In-Store

#13—Radio

KFNQAMSportsNetworks

#12—Television

KZOKFMClassic Rock

Phoenix, AZ

KMLE

FM

Country

Billboards,

KOOLFMClassic HitsSubway/Rail,

#14—Radio

KZONFMContemporary Hit RadioTransit Structures,

Malls, Digital In-Store

Networks

Puerto Rico

Billboards

#15—Radio

           

Minneapolis, MN

Chicago, IL		 

KMNB

FM

Country

WCCO-TV

UHF

CBS

Billboards,

KZJKFMAdult HitsKCCO-TVWBBM‑TVVHFCBS Transit Structures,WBBM

#16—Radio

AM		News WCCOAMNews/TalkKCCW-TVVHFCBSMalls, Digital In-Storechicago.cbslocal.com

#15—Television

      WBBMFMTop 40
#3—TelevisionWCFSFMNews
#3—RadioWJMKFMClassic Hits
      NetworksWSCR

San Diego, CA

AM		Sports 

KEGY

FM

Contemporary Hit Radio

      WUSN

Billboards, Transit

FM

Country		 KYXYFMAdult Contemporary
      Structures, Malls,

#17—Radio

Digital In-Store Networks

Tampa-St. Petersburg, FL

WLLD

FM

Rhythmic Contemporary Hit Radio

WTOG-TV

UHF

The CW

Billboards, Malls,

WHFSAMSportsDigital In-Store

#18—Radio

WQYKWXRTFMCountryNetworks

#14—Television

WRBQFMClassic HitsAdult Alternative  

WHFSFMSports

WYUUFMSpanish

Nassau-Suffolk, NY(5)

Billboards,

#19—Radio

Subway/Rail, Bus, Digital

In-Store Networks

Denver, CO

KCNC-TV

UHF

CBS

Billboards, Transit

Structures, Malls, Digital

#20—Radio

In-Store Networks

#17—Television

           

Baltimore, MD

Philadelphia, PA		 

WJZ

KYW‑TV		UHFCBS 

KYW

AM

News 

Sports

philadelphia.cbslocal.com
 

WJZ-TV

WPSG‑TV		UHFThe CW 

VHF

WIP		FMSports 

CBS

#4—Television 

Billboards,

 WJZ WOGLFMClassic Hits Sports
#9—RadioWPHTAMNews/Talk
      WZMPTransit Structures,FM

#21—Radio

Top 40		 WLIFFMAdult Contemporary
      Malls, Digital

#27—Television

WWMXWXTUFMHot Adult ContemporaryCountry  In-Store Networks

St. Louis, MO

KEZK

FM

Adult Contemporary

Billboards, Malls,

KMOXAMNews/TalkDigital In-Store

#22—Radio

KYKYFMHot Adult ContemporaryNetworks

Portland, OR

           
Dallas‑Fort Worth, TXKTVT‑TVUHFCBSKJKKFMAdult Hitsdfw.cbslocal.com
  

Billboards, Malls,

KTXA‑TV		UHFIndependentKLUVFMClassic Hits

#5—Television		KMVKFMSpanish
#5—RadioKRLDAMNews
KRLDFMSports
KVILFMHot Adult Contemporary
           
San Francisco, CAKPIX‑TVUHFCBSKCBSAMNewssanfrancisco.cbslocal.com
  Digital In-Store NetworksKBCW‑TVUHFThe CWKFRCFMNews

#23—Radio

#6—Television		   KITSFMAlternative
#4—RadioKLLCFMHot Adult Contemporary
KMVQFMTop 40
KZDG(4)
AMIndian Talk/Music
Washington, D.C.WIADFMHot Adult Contemporarywashington.cbslocal.com
WJFKAMSports
#7—TelevisionWJFKFMSports
#7—RadioWLZLFMSpanish
WNEW(5)
FMBusinessNews/Talk
WPGCFMRhythmic Top 40
Boston, MAWBZ‑TVUHFCBSWBMXFMHot Adult Contemporaryboston.cbslocal.com
WSBK‑TVUHFMyNetworkTVWBZAMNews
#8—TelevisionWBZFMSports
#10—RadioWODSFMTop 40
WZLXFMClassic Rock
Atlanta, GAWUPA‑TVUHFThe CWWAOKAMNews/Talkatlanta.cbslocal.com
WVEEFMUrban
#9—TelevisionWZGCFMSports
#8—Radio
           


I-12



TelevisionRadio
RadioCBS Local Digital Media
Television(1)Outdoor Americas
Market and Market Rank(1)Rank(2)
StationsAM/
FM		FormatStationsTypeNetwork
Affiliation		Display Type

Charlotte, NC

 

WBAV

Stations		Type
Network
Affiliation
 

Stations

AM/
FM

Format 

UrbanWebsites

Houston, TXKHMXFMHot Adult Contemporary

houston.cbslocal.com
      KIKK

Malls,

AM

Sports		 WBCN
#10—Television AM KILTAMSports
#6—RadioKILTFMCountry
      KKHHDigital In-StoreFM

#24—Radio

Top 40		 WFNZAMSports
      KLOLNetworksFM

Spanish		 WKQC
 FMAdult Contemporary        

Tampa‑St. Petersburg, FL		 WNKSWTOG‑TVUHFThe CW FM Contemporary Hit Radiotampa.cbslocal.com
        

#11—Television		 WPEGFMUrban        

#19—Radio		 WSOCFMCountry        

Pittsburgh, PA

KDKA

AM

News/Talk

KDKA-TV

UHF

CBS

Billboards, Malls,

KDKAFMSportsWPCW-TVVHFThe CWDigital In-Store

#25—Radio

WDSYFMCountry       Networks

Phoenix, AZ

KMLEFMCountry
KOOLFMClassic Hits
#12—TelevisionKZONFMTop 40
#14—Radio
Detroit, MIWKBD‑TVUHFThe CWWDZHFMTop 40detroit.cbslocal.com
WWJ‑TVUHFCBSWOMCFMClassic Hits
#13—TelevisionWWJAMNews
#12—RadioWXYTAMSports
WXYTFMSports
WYCDFMCountry
Seattle‑Tacoma, WAKSTW‑TVVHFThe CWKFNQAMSportsseattle.cbslocal.com
KJAQFMAdult Hits
#14—TelevisionKMPSFMCountry��
#13—RadioKZOKFMClassic Rock
Minneapolis, MNWCCO‑TVUHFCBSKMNBFMCountryminnesota.cbslocal.com
KCCO‑TV(6)
VHFCBSKZJKFMAdult Hits
#15—Television
KCCW‑TV(7)
VHFCBSWCCOAMNews/Talk
#16—Radio
Miami-Ft. Lauderdale, FLWFOR‑TVUHFCBSWKISFMCountrymiami.cbslocal.com

WBFS‑TVUHFMyNetworkTVWPOWFMTop 40
#16—TelevisionWQAMAMSports
#11—Radio
Denver, COKCNC‑TVUHFCBSdenver.cbslocal.com
#17—Television
#18—Radio
Cleveland, OHWDOKFMAdult Contemporarycleveland.cbslocal.com
WKRKFMSports
#18—TelevisionWNCXFMClassic Rock
#32—RadioWQALFMHot Adult Contemporary
Orlando, FLWQMPFMTop 40
WOCLFMClassic Hits
#19—TelevisionWOMXFMHot Adult Contemporary
#33—Radio
Sacramento, CAKOVR-TVUHFCBSKHTKAMSportssacramento.cbslocal.com
KMAX-TVUHFThe CWKNCIFMCountry
#20—TelevisionKSFMFMRhythmic Top 40
#28—RadioKYMXFMAdult Contemporary
KZZOFMHot Adult Contemporary
St. Louis, MOKEZKFMAdult Contemporarystlouis.cbslocal.com
KMOXAMNews/Talk
#21—TelevisionKYKYFMHot Adult Contemporary
#22—Radio
Pittsburgh, PAKDKA-TVUHFCBSKDKAAMNews/Talkpittsburgh.cbslocal.com
WPCW-TVVHFThe CWKDKAFMSports
#23—Television

 WBZZFMHot Adult Contemporary
#26—RadioWDSYFMCountry
Baltimore, MDWJZ‑TVVHFCBSWJZAMSportsbaltimore.cbslocal.com
WJZFMSports
#26—TelevisionWLIFFMAdult Contemporary
#21—RadioWWMXFMTop 40


I-13


TelevisionRadio
CBS Local Digital Media(1)
Market and Market Rank(2)
StationsType
Network
Affiliation
StationsAM/
FM		FormatWebsites
Indianapolis, IN
WBXI-CA(8)
UHFIndependent
#27—Television
#38—Radio
San Diego, CAKEGYFMTop 40
KYXYFMAdult Contemporary
#28—Television
#17—Radio
Riverside-San Bernardino, CAKFRGFMCountry
KRAKAMSports
#25—RadioKVFGFMClassic Hits
KXFGFMCountry
        
(1)
Radio market rank based on Fall 2012 Radio Market Ranking as provided by Arbitron Inc. Television market rank based on Nielsen Media Research Local Market Universe Estimate, September 2012.

(2)
CBS Radio is the operator and beneficial owner of WFAN-FM through agreements with a third-party entity, which holds title to WFAN-FM for tax purposes.

(3)
As required by the FCC, the Company assigned KFWB-AM to a divestiture trust. The Company is a beneficiary of the trust. The trustee is operating the radio station and is responsible for selling the radio station to a third party. (See "CBS Business Segments—Regulation—Broadcasting—Ownership Regulation—Radio-Television Cross-Ownership Rule").

(4)
KZDG-AM in San Francisco, California, is programmed by a third party through a time brokerage agreement.

(5)
Sub-market of New York City. The Company's New York City radio and television stations serve Nassau-Suffolk.

Outdoor Americas (9%, 9% and 9% of the Company's consolidated revenues in 2012, 2011 and 2010, respectively, and 7%, 8% and 7% of the Company's consolidated operating income in 2012, 2011 and 2010, respectively)

        The Company provides, through its Outdoor Americas businesses, advertising space on various structures, including billboards, transit shelters and benches, buses, rail systems (in-car and structures on station platforms and terminal), mall kiosks, stadium signage, and in retail stores. It has outdoor advertising structures in more than 100 markets in North America, including all 50 of the largest metropolitan markets in the U.S., 19 of the 20 largest metropolitan markets in Canada and all 45 of the largest metropolitan markets in Mexico. Additionally, Outdoor has a variety of outdoor structures in Puerto Rico, Argentina, Brazil, Uruguay and Chile. The Company operates its Outdoor businesses throughCBS Outdoor in the U.S., Canada and South America,CBS Outernet® in the U.S. andVendor® in Mexico. The "Radio Stations, Television Stations and Outdoor Advertising Displays" table above includes information with regard to the Company's outdoor advertising properties in the top 25 U.S. radio markets.

        The substantial majority of Outdoor Americas' revenues is generated from providing advertising space to local, regional and national advertisers. Rates for advertising space for a particular structure are based on supply and demand, which are influenced by the structure's exposure known as "impressions", the demographics of the particular market and the location of the structure within that market. Commencing in January 2011, metrics for fixed structures such as billboards and transit shelters, including demographic information and audience views, are measured through the new "Eyes On" technology administered by the Traffic Audit Bureau, an independent agency formed by a number of major owners of outdoor advertising structures, including CBS Outdoor, advertising agencies and advertisers. These metrics facilitate the inclusion of Outdoor Americas' inventory in the planning stages of media campaigns. The major categories of out-of-home advertisers include: entertainment, media, automotive, beverage, financial, real estate, retail, healthcare, telecommunications, restaurants, health and beauty aids, hotels and professional services. Out-of-home media industry advertising expenditures by retailers and the entertainment industry fluctuate, which has an effect on Outdoor Americas' revenues.

        Outdoor Americas generally operates in the billboard, transit, and retail store advertising markets. The two primary types of billboard structures are commonly referred to as "bulletins" and "posters."

        Space on billboard structures is generally provided for periods ranging from 4 weeks to 12 months. Billboard faces are generally mounted on structures owned by Outdoor Americas located on leased real property. Lease agreements are negotiated with both public and private landowners for varying terms ranging from month-to-month to year-to-year, can be for terms of 10 years or longer and may provide for renewal options. There are no significant concentrations of billboard structures that are subject to any one lease or subject to negotiation with any one landlord.

(1)The CBS Local Digital Media group operates the Websites of the Company’s television stations and radio stations. Many of these Websites are combined for the television stations and non-music radio stations in co-located markets. The Websites provide news, information, entertainment, as well as other services, and promote stations’ programming.
(2)Television market (DMA) rankings based on Nielsen Media Research Local Market Universe Estimates, September 2015. Radio market (DMA) rankings based on Nielsen Audio Radio Market Survey, Fall 2015.
(3)As required by the FCC, the Company assigned KFWB-AM to a divestiture trust. The Company is a beneficiary of the trust. The trustee is operating the radio station and is responsible for selling the radio station to a third party. An agreement to sell the radio station has been executed and an application to obtain the FCC's consent to the proposed sale is pending. (See “CBS Business Segments—Regulation—Broadcasting—Ownership Regulation—Radio‑Television Cross‑Ownership Rule”).
(4)KZDG-AM in San Francisco, California, is programmed by a third party through a time brokerage agreement.
(5)WNEW-FM in Washington, D.C., is programmed by a third party through a time brokerage agreement.
(6)KCCO-TV is operated as a satellite station of WCCO-TV.
(7)KCCW-TV is operated as a satellite station of WCCO-TV.
(8)WBXI-CA is a Class A low power television station. Class A low power television stations do not implicate the FCC’s ownership rules.

        Transit advertising is provided on or in transit systems, including the interiors and exteriors of buses, trains and trams and at rail stations. Transit advertising contracts are negotiated with public transit authorities and private transit operators and generally provide for payment to the transit authority of a percentage of the revenues that Outdoor Americas receives from providing space to advertisers, a fixed payment, or the greater of a percentage of the revenues or a fixed payment. Where revenues are lower than anticipated, the minimum amount required to be paid to a transit authority may exceed, or be a high percentage of, the revenues received by Outdoor Americas under that advertising contract.

        Transit shelters and benches reach both vehicular and pedestrian audiences. Transit shelters are usually constructed, installed and maintained by Outdoor. Most of Outdoor Americas' transit shelter and bench contracts include revenue-sharing arrangements with a municipality or transit authority and often include minimum required payments. Such contracts usually involve a competitive bidding process and are awarded on the basis of projected revenues to the municipality, including minimum payments, and Outdoor Americas' willingness to construct public facilities, such as bus shelters, public toilets and information kiosks. In these negotiations, Outdoor Americas seeks to reduce minimum payment obligations on new agreements and on renewal of existing agreements. There is no assurance that Outdoor Americas will be successful in reducing its minimum payments, entering into new agreements or renewing certain existing agreements and any such agreements may provide a lesser return to the Company.

        Newer technologies for outdoor advertising displays, such as changeable message displays and digital billboards using light-emitting diode and liquid crystal display technology, continue to evolve. The Company keeps apprised of and has adopted such new technologies as they evolve and mature. For example, Outdoor is utilizing digital technology containing moving images in New York City subways and in retail outlets through CBS Outernet. Outdoor is also building new digital billboards and digitizing the displays on previously static billboards. CBS Outernet, a leading distributor of video programming and advertising content to structures in retail stores, enables customized messaging by region and retail environment. Generally, CBS Outernet enters into revenue-sharing arrangements with retailers.

        Outdoor Americas' business strategy involves operating in major selected markets, to grow its revenues and cash flow by being a leading provider of out-of-home advertising in the markets it serves, controlling costs, developing and entering into new markets and using advanced technologies to build greater awareness for its clients. In addition, the Company purchases structures within its existing markets or in contiguous markets to expand its reach. The Company believes that there will be continuing opportunities for implementing its acquisition and development strategies given the outdoor industry's fragmentation.

        In January 2013, the Company announced that it has begun the process of converting its Outdoor Americas business into a REIT, which is subject to customary approvals.

        Outdoor Competition.    The outdoor advertising industry is fragmented, consisting of several large companies involved in providing outdoor space for advertising such as Clear Channel Outdoor Holdings, Inc., JCDecaux S.A., Cemusa Inc., Titan Outdoor Holdings, Inc. and Lamar Advertising Company as well as hundreds of smaller regional and local companies operating a limited number of display faces in a single or a few local markets. The Company also competes with other media, including broadcast and cable television, radio, print media, the Internet and direct mail marketers, within their respective markets. In addition, it competes with a wide variety of out-of-home media, including providers of advertising space in shopping centers, airports, movie theaters, supermarkets and taxis. Advertisers compare relative costs of available media and cost-per-thousand impressions, particularly when delivering a message to customers with distinct demographic characteristics. In competing with other media, the outdoor advertising industry relies on its relative cost efficiency and its ability to reach a broad segment in a specific market or to target a particular geographic area or population with a particular demographic within that market. The Company keeps apprised of the evolution of new technologies in the industry. As new technologies such as digital billboards prove desirable to Outdoor Americas' customers and deliver

REGULATION

appropriate returns on investment, the Company could face increased competition for rights to digital billboards and costs could increase.

The Company believes that its strong emphasis in customer service and its position as a leading provider of space for out-of-home advertising in each of its primary markets as well as its international inventory enables it to compete effectively with the other outdoor companies, as well as other media, within those markets.

REGULATION

        The Company'sCompany’s businesses are either subject to or affected by regulations of federal, state and local governmental authorities in the U.S. and of national, regional and local authorities in foreign countries. The rules, regulations, policies and procedures affecting these businesses are subject to change. The descriptions which follow are summaries and should be read in conjunction with the texts of the statutes, rules and regulations described herein. The descriptions do not purport to describe all present and proposed statutes, rules and regulations affecting the Company'sCompany’s businesses.


Intellectual Property and Privacy


Laws affecting intellectual property are of significant importance to the Company. (See "Intellectual Property"“Intellectual Property” on page I-23I-18 for more information on the Company'sCompany’s brands).


Unauthorized Distribution of Copyrighted Content and Piracy. Unauthorized distribution, reproduction or display of copyrighted material over the Internet and through physical devicesin digital formats without regard to content owners'owners’ copyright rights in television programming, motion pictures, clips and books, such as through pirated DVDs and Blu-ray Discs, user-generated content, unauthorized stored copies and livestreaming, Internet downloads, file "sharing"“sharing” and peer-to-peer services, is a threat to copyright owners'owners’ ability to protect and exploit their property. The Company’s digital delivery services and commercial arrangements with digital content providers help reduce the risks associated with unauthorized access to its content. The Company is also engaged in enforcement and other activities to protect its intellectual property and has participatedparticipates in various litigations,litigation, public relations programs and legislative activity. In addition to these efforts, the Company continues to enter into and explore possibilities for commercial arrangements with various online providers to further protect and exploit its content.


Copyright Law and Content. The Company derives revenues from the creation and exploitation of creative content, for which the copyright law grants certain exclusive rights, including to reproduce, publicly perform and distribute. The duration of the protection afforded to the Company’s intellectual property depends on the type of property and the laws and regulations of the relevant jurisdiction.In the U.S., the copyright term for authored works is the life of the author plus 70 years. For works made for hire, the copyright term is the shorter of 95 years from the


I-14


first publication or 120 years from creation. Any changes to copyright laws, including through court decisions, which diminish the scope of a copyright owner'sowner’s exclusive rights, could impact the Company.


Privacy. The laws and regulations governing the collection, use and transfer of consumer information are complex and rapidly evolving, particularly as they relate to the Company'sCompany’s interactive businesses. The Company monitors and considers these laws and regulations in the design and operation of its Websites, digital content services and legal and regulatory compliance programs.


Broadcasting

Broadcasting

General. Television and radio broadcasting are subject to the jurisdiction of the FCC pursuant to the Communications Act. The Communications Act empowers the FCC, among other actions, to issue, renew, revoke and modify broadcasting licenses; determine stations'stations’ frequencies, locations and operating power; regulate some of the equipment used by stations; adopt other regulations to carry out the provisions of the Communications Act and other laws, including requirements affecting the content of broadcasts; and to impose penalties for violation of its regulations, including monetary forfeitures, short-term renewal of licenses and, in egregious cases, license revocation or denial of license renewals.


Under the Communications Act, the FCC also regulates certain aspects of the operation of MVPDs and certain other electronic media that compete with broadcast stations.


Indecency and Profanity Regulation. The FCC'sFCC’s rules prohibit the broadcast of obscene material at any time and indecent or profane material between the hours of 6 a.m. and 10 p.m. Broadcasters risk violating the prohibition against broadcasting indecent or profane material because the vagueness of the FCC'sFCC’s indecency/profanity definition makes it difficult to apply, particularly with respect to spontaneous, live programming. The FCC'sFCC’s maximum forfeiture penalty per station for broadcasting indecent or profane programming is $325,000 per indecent or profane utterance with a maximum forfeiture exposure of $3 million for any continuing violation arising from a single act or failure to act. The Company has been involved in litigation and, from time to time, has received and may receive in the future letters of inquiry from the FCC prompted by complaints alleging that certain programming on its broadcast stations included indecent or profane material.


License Renewals. Radio and television broadcast licenses are typically granted for standard terms of eight years. The Communications Act requires the FCC to renew a broadcast license if the FCC finds that the station has served the public interest, convenience and necessity and, with respect to the station, there have been no serious violations by the licensee of either the Communications Act or the FCC'sFCC’s rules and regulations and there have been no other violations by the licensee of the Communications Act or the FCC'sFCC’s rules and regulations that, taken together, constitute a pattern of abuse. The Company has a number of pending renewal applications, nine of which have been opposed by third parties (there are two opposedapplications. A station remains authorized to operate while its license renewal applications for Radio and seven opposed renewal applications for Television Stations).application is pending.


License Assignments. The Communications Act requires prior FCC approval for the assignment of a license or transfer of control of an FCC licensee. Third parties may oppose the Company'sCompany’s applications to assign, transfer or acquire additional broadcast licenses.


Ownership Regulation. The Communications Act and FCC rules and regulations limit the ability of individuals and entities to have an official position or ownership interest, known as an "attributable"“attributable” interest, above specific levels in broadcast stations as well as in other specified mass media entities. In seeking FCC approval for the acquisition of a broadcast radio or television station license, the acquiring person or entity must demonstrate that the acquisition complies with the FCC'sFCC’s ownership rules or that a waiver of the rules is in the public interest.


The FCC adopted a notice of proposed rule-making ("NPRM"rule‑making (“NPRM”) in its latest quadrennial review of broadcast ownership rules in April 2014, which incorporates the record of the FCC’s prior review of broadcast ownership rules, which started in December 2011, which is still pending. In that NPRM, the FCC has proposed modifying the newspaper-broadcast cross-ownership rule and eliminating the radio-television cross-ownership rule.2011. The FCC'sFCC’s current ownership rules, andcertain proposed changes by and items for which the FCC is seeking comments under the ownership NPRM, are briefly summarized below.



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Local Radio Ownership. The FCC'sFCC’s local radio ownership rule applies in all markets where the Company owns radio stations. Under that rule, one party may own up to eight radio stations in the largest markets, no more than five of which may be either AM or FM. With a few exceptions, the rule permits the common ownership of 8 radio stations in the top 50 markets, where CBS Radio has significant holdings.


Local Television Ownership. Under the FCC'sFCC’s local television ownership rule, one party may own up to two television stations in the same DMA, so long as at least one of the two stations is not among the top four-rankedtop-four ranked stations in the market based on audience share as of the date an application for approval of an acquisition is filed with the FCC, and at least eight independently owned and operating full-power television stations remain in the market following the acquisition.acquisition of the second television station. The NPRM proposes to modify the local television station ownership rule to prohibit transactions involving the sale or swap of network affiliations between same-market television stations that result in an entity holding an attributable interest in two top-four ranked television stations. Further, without regard to the number of remaining independently owned television stations, the rule permits the ownership of more than one television station within the same DMA so long as certain signal contours of the stations involved do not overlap. Satellite“Satellite” television stations that simply rebroadcast the programming of a "parent"“parent” television station are



Television National Audience Reach Limitation. Under the FCC'sFCC’s national television ownership rule, one party may not own television stations which reach more than 39% of all U.S. television households. For purposes of calculating the total number of television households reached by a station, the FCC attributes a UHF television station with only 50% of the television households in its market. In September 2013, the FCC adopted a notice of proposed rule‑making to eliminate the UHF discount, which remains pending. The Company currently owns and operates television stations that reach approximately 38% of all U.S. television households but for purposes of the national ownership limitation, the Company'sCompany’s reach is less than this amount applying the UHF discount in accordance with the FCC'sFCC’s methodology.


Radio-Television Cross-Ownership Rule. The radio-television cross-ownership rule limits the common ownership of radio and television stations in the same market. The numeric limit varies according to the number of independent media voices in the market. The Company owns a combination of radio and television stations in the Los Angeles market in excess of the limit. As required by the FCC, the Company assigned radio station KFWB-AM in Los Angeles to a divestiture trust. The Company is a beneficiary of the trust. The trustee is operating the radio station and is responsible for selling the radio station to a third party,party. An agreement to sell the closing of whichradio station has been executed and an application to obtain the FCC's consent to the proposed sale is pending. This radio station sale would bring the Company into compliance with this cross-ownership rule. As part of its quadrennial review of media ownership rules, the FCC has proposed to repeal this rule in favor of reliance on the local radio ownership rule and the local television ownership rule.


Newspaper-Broadcast Cross-Ownership. The newspaper-broadcast cross-ownership rule prohibits the common ownership of a broadcastradio or television station and daily newspaper in the same market absent a waiver by the FCC. As part of its quadrennial review of media ownership rules,NPRM, the FCC has proposedseeks comment on: (1) whether the restriction on newspaper-radio cross-ownership should be eliminated, and (2) a rule that would presume a waiver of the restriction on newspaper-television cross-ownership to be consistent with the public interest if: (1) a daily newspaper sought to combine with a radio station in the same top 20 market, or (2)if a daily newspaper sought to combine with a full-power commercial television station in the same top 20 television market, and (a) the television station is not ranked among the top four television stations in the market and (b) at least eight independently owned and operated "major“major media voices"voices” would remain in the market after the combination.


Dual Network Rule. The dual network rule prohibits any of the four major networks, ABC, CBS, FOX and NBC, from combining.


Attribution of Ownership. Under the FCC'sFCC’s attribution rules, a direct or indirect purchaser of various types of securities of an entity which holds FCC licenses, such as the Company, could violate the foregoing FCC ownership regulations or policies if that purchaser owned or acquired an "attributable"“attributable” interest in other media properties. Under


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the FCC'sFCC’s rules, an "attributable"“attributable” interest for purposes of the FCC'sFCC’s broadcast ownership rules generally includes: equity and debt interests which combined exceed 33% of a licensee'slicensee’s total assets, if the interest holder supplies more than 15% of the licensee'slicensee’s total weekly programming, or has an attributable same-market media interest, whether television, radio, cable or newspaper; a 5% or greater direct or indirect voting stock interest, including certain interests held in trust, unless the holder is a qualified passive investor in which case the threshold is a 20% or greater voting stock interest; any equity interest in a limited liability company or a partnership, including a limited partnership, unless the interest holder is properly "insulated"“insulated” from management activities; and any position as an officer or director of a licensee or of its direct or indirect parent. The FCC is reviewing its single majority voting shareholder attribution exemption, which renders as non-attributablenon‑attributable voting interests up to 49% in a licensee controlled by a single majority voting shareholder. Because NAI holds an attributable interest in both the Company and Viacom Inc., the business of each company is attributable to the other for certain FCC purposes, which may have the effect of limiting and affecting the activities, strategic business alternatives and business terms available to the Company. (See Item 1A. "Risk“Risk Factors—The Businesses of the


Company and Viacom Inc. Will Be Attributable to the Other Company for Certain Regulatory Purposes, Which May Limit Business Opportunities"Opportunities”).


Alien Ownership. In general, the Communications Act prohibits foreign individuals or entities from owning more than 20% or more than 25%, depending on the circumstances, of the voting power or equity of the Company. In November 2013, the FCC provided additional information regarding its case-by-case review process for applications that propose foreign ownership that exceed such 25% threshold and, in October 2015, the FCC issued an NPRM proposing to simplify the process to obtain FCC consent to exceed the 25% threshold.


Cable and Satellite Carriage of Television Broadcast Stations. The 1992 Cable Act and implementing FCC regulations govern the retransmission of commercial television stations by cable television operators. Every three years, a television station must elect, with respect to cable systems within its DMA, either "must carry"“must carry” status, pursuant to which the cable system'ssystem’s carriage of the station is mandatory, or "retransmission“retransmission consent,"” pursuant to which the station gives up its right to mandatory carriage and secures instead the right to negotiate consideration in return for consenting to carriage. The Company'sCompany’s owned television stations have elected the retransmission consent option in substantially all cases, and, since 2006, the Company has implemented a systematic process of seeking monetary consideration for its retransmission consent.


Similarly, federal legislation and FCC rules govern the retransmission of broadcast television stations by DBS operators. DBS operators are required to carry the signals of all local television broadcast stations requesting carriage in local markets in which the DBS operator carries at least one signal pursuant to the statutory local-to-local compulsory copyright license. Every three years, each television station in such markets must elect "must carry"“must carry” or "retransmission consent"“retransmission consent” status, in a manner similar to that described above with respect to cable systems. Substantially all of the Company'sThe Company’s owned and operated television stations are being transmitted into their local markets by the two major DBS operators pursuant to retransmission consent agreements.


        Children'sChildren’s Television Programming. Federal legislation and FCC rules limit the amount and content of commercial matter that may be shown on television stations during programming designed for children 12 years of age and younger, and require stations to broadcast on their main program stream three hours per week of educational and informational programming ("(“E/I programming"programming”) designed for children 16 years of age and younger. FCC rules also impose E/I programming requirements on each additional digital multicast program stream transmitted by television stations, with the requirement increasing in proportion to the additional hours of free programming offered on multicast channels. These rules also limit the display during children'schildren’s programming of Internet addresses of Websites that contain or link to commercial material or that use program characters to sell products.


Program Access. Under the Communications Act, vertically integrated cable programmers (more fully described below) are generally prohibited from offering different prices, terms or conditions for programming to competing MVPDs unless the differential is justified by certain permissible factors set forth in the FCC'sFCC’s regulations. Until recently,2012, the FCC's "program access"FCC’s “program access” rules also generally prohibited vertically integrated cable programmers from entering into exclusive distribution arrangements with cable operators. The FCC continues to assess the competitive impact of such individual exclusive contracts. A cable programmer is considered to be vertically integrated under the FCC's FCC’s


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program access attribution rules if it owns or is owned by a cable operator in whole or in part. Cable operators for this purpose may include telephone companies that provide video programming directly to subscribers.


The Company'sCompany’s wholly owned program services are not currently subject to the program access rules. The Company'sCompany’s flexibility to negotiate the most favorable terms available for carriage of these services and its ability to offer cable operators exclusive programming could be adversely affected if it were to become subject to the program access rules. Because the Company and Viacom Inc. are under common control by NAI, Viacom Inc.'s’s businesses could be attributable to the Company for purposes of the FCC'sFCC’s program access rules. (See Item 1A. "Risk“Risk Factors—The Businesses of the Company and Viacom Inc. Will Be Attributable to the Other Company for Certain Regulatory Purposes, Which May Limit Business Opportunities"Opportunities”).


National Broadband Plan. In response to the FCC'sFCC’s March 2010 National Broadband Plan, which seeks to provide affordable broadband access throughout the U.S., Congress passed legislation in February 2012 authorizing the FCC to conduct voluntary auctions ofto reclaim spectrum utilized by broadcast television stations to provide additional spectrum for wireless broadband services. The television stations that continue their operations may have to change channels once the FCC "repacks"“repacks” the broadcastremaining spectrum dedicated to broadcast television use.use after the auction. The legislation provides that the FCC will assist television stations in retaining their current coverage areas, no UHF band stations will be forced into the VHF band and a fund will be established to reimburse broadcasters for reasonable relocation expenses relating to the spectrum-repacking. In September 2012,spectrum‑repacking. The FCC has established the FCC launched a rule-making proceeding to implementrules by which the auction, legislation and auctions are expectedwhich is scheduled to occur in 2014, followed by the repacking process.

        The outdoor advertising industry is subject to extensive governmental regulation at the federal, state and local levels in the U.S. and to national, regional and local restrictions in foreign countries. These regulations can affect the operation of outdoor structures and include restrictions on the construction, repair, operation, upgrading, height, size and location of outdoor structures and, in some instances, the content of advertising copy that can2016, will be displayed on these structures. In addition, outdoor advertising is the subject of targeted state and municipal taxes and fees. These laws may affect competitive conditions in various markets in various ways. Such laws may reduce the Company's expansion opportunities, or may increase or reduce competitive pressure from others. No assurance can be given that existing or future laws or regulations and the enforcement thereof will not materially and adversely affect the Outdoor Americas business.

        Under U.S. law, principally the Highway Beautification Act of 1965 (the "HBA"), outdoor advertising is controlled on primary and interstate highways built with federal financial assistance. As a condition to federal highway assistance, the HBA requires states to restrict billboards on such highways to commercial and industrial areas, and imposes certain additional size, spacing and other requirements associated with the installation and operation of billboards. Outdoor Americas is not aware of any states which have passed laws and adopted regulations which are less restrictive than the federal requirements, including the obligation on the part of the billboard owner to remove, at the owner's expense and without compensation, any non-grandfathered signs on such highways that do not comply with such requirements. Outdoor Americas does not believe that the number of its billboards that may be subject to removal under these regulations is material. No state in which Outdoor Americas operates has banned billboards, but some have adopted standards more restrictive than the federal requirements. Municipal and county governments generally also have sign controls as part of their zoning laws and building codes. Some state and local governments prohibit construction of new billboards and some allow new construction only to replace existing structures, although most allow construction of billboards subject to restrictions on zoning, size, spacing, height and type of construction. In some cases, the construction of new billboards or the relocation or modification of existing billboards is prohibited. A number of cities including New York City, Los Angeles, Philadelphia and Miami have implemented or initiated legislative billboard controls, including imposing taxes, fees and/or registration requirements in an effort to decrease or restrict the number of outdoor signs and/or to raise revenue. The Company contests such laws and regulations that it believes unlawfully restrict its constitutional or other legal rights and may adversely impact the growth of its outdoor advertising business.

        U.S. law neither requires nor prohibits removal of existing lawful billboards, but it does require payment of compensation if a state or political subdivision compels the removal of a lawful billboard along a primary or interstate highway that was built with federal financial assistance. State governments have purchased and removed legal billboards for beautification objectives in the past using federal funding for transportation enhancement programs, and may do so in the future. State government authorities from time to time use the power of eminent domain to remove billboards. Thus far, Outdoor Americas has been able to obtain satisfactory compensation for its billboards purchased or removed as a result of this type of

conducted.

governmental action, although there is no assurance that this will continue to be the case in the future. Local governments do not generally purchase billboards for beautification, but some have attempted to force removal of legal but nonconforming billboards (billboards which conformed with applicable zoning regulations when built but which do not conform to current zoning regulations) after a period of years under a concept called amortization. Under this concept the governmental body asserts that just compensation is earned by continued operation of the billboard over time. Although there is some question as to the legality of amortization under federal and many state laws, amortization has been upheld in some instances. Outdoor Americas generally has been successful in negotiating settlements with municipalities for billboards required to be removed. Restrictive regulations also limit Outdoor Americas' ability to rebuild or replace nonconforming billboards.

        As the owner or operator of various real properties and facilities in outdoor advertising operations, the Company must comply with various U.S. federal, state and local and foreign environmental, health, safety and land use laws and regulations. The Company and its properties are subject to such laws and regulations relating to the use, storage, disposal, emission and release of hazardous and non-hazardous substances and employee health and safety, as well as zoning and other land use restrictions which may affect, among other things, the type of display, such as digital, tri-vision or static, the hours of operation and illumination as well as methods and conditions of maintenance of facilities and advertising installation. Historically, the Company has not incurred significant expenditures to comply with these laws. However, future laws or a finding of a violation of or liability under existing laws could require the Company to make significant expenditures and otherwise limit or restrict its ability to use or operate some of its outdoor structures.

        Certain products, services and types of displays are or may be targeted by federal, state and local laws and regulations. For example, tobacco products have been banned from outdoor advertising. In addition, state and local governments continue to initiate proposals designed to limit outdoor advertising of alcohol. Legislation regulating alcohol-related advertising due to content-related restrictions could cause a reduction in Outdoor Americas' direct revenue from such advertisements and a simultaneous increase in the available space on the existing inventory of billboards in the outdoor advertising industry.

INTELLECTUAL PROPERTY


The Company creates, owns, distributes and exploits under licenses intellectual property worldwide. It is the Company'sCompany’s practice to protect its products, including its television, radio and motion picture products, characters, publications and other original and acquired works and audiovisual works made for digital exploitation. The following logos, trade names, trademarks and related trademark families are among those strongly identified with the product lines they represent and are significant assets of the Company:CBS®CBS®, CBS Entertainment™, CBS News®News®, CBS Sports®Sports®, CBSSports.com®, CNET®CBSSports.com®, CBS Radio®All Access®, Showtime®CBSN®, CNET®, CBS Radio®, Showtime®, Showtime Anytime®Anytime®, The Movie Channel®Channel®, Flix®Flix®, CBS Outdoor®, CBS Films®, CBS Outernet®Films®, CBS Audience Network™Network®, TV.com™, Last.fm®Last.fm®, MetroLyrics®MetroLyrics®, CSI:®, NCIS™NCIS®, Entertainment Tonight®Tonight®, Star Trek®Trek®, Simon & Schuster®Schuster®, CBS Sports Network™Network®, CBS Interactive™and all the call letters for the Company'sCompany’s television and radio stations. As a result, domestic and foreign laws protecting intellectual property rights are important to the Company and the Company actively enforces its intellectual property rights against infringements.


EMPLOYEES


At December 31, 2012,2015, the Company employed approximately 20,93016,260 full-time and part-time salaried employees and had approximately 5,0005,640 additional project-based staff.


FINANCIAL INFORMATION ABOUT SEGMENTS AND FOREIGN AND DOMESTIC OPERATIONS


Financial and other information by segment and relating to foreign and domestic operations for each of the last three years ending December 31 is set forth in Note 1517 to the Consolidated Financial Statements.


AVAILABLE INFORMATION


CBS Corp. makes available free of charge on or through the Investors section of its Website, www.cbscorporation.com (Investors section), its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. Such material is made available through the Company'sCompany’s Website as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. These documents are also available on the Securities and Exchange Commission'sCommission’s Website at www.sec.gov.



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Item 1A. Risk Factors.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKINGFORWARD‑LOOKING STATEMENTS


This document, including "Item“Item 7. Management'sManagement’s Discussion and Analysis of Results of Operations and Financial Condition,"” and the documents incorporated by reference into this Annual Report on Form 10-K, contain both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements are not based on historical facts, but rather reflect the Company'sCompany’s current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee," "likely," "will"“believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “may,” “could” or other similar words or phrases. Similarly, statements that describe the Company'sCompany’s objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause the actual results, performance or achievements of the Company to be different from any future results, performance and achievements expressed or implied by these statements. More information about these risks, uncertainties and other factors is set forth below. Additional risks, uncertainties and other factors may be described in the Company'sCompany’s news releases and other filings made under the securities laws. There may be additional risks, uncertainties and factors that the Company does not currently view as material or that are not necessarily known. The forward-looking statements included in this document are only made as of the date of this document and the Company does not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.


RISK FACTORS


For an enterprise as large and complex as the Company, a wide range of factors could affect our business and financial results. The factors described below are considered to be the most significant. There may be other currently unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on the Company'sCompany’s future results. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The following discussion of risk factors should be read in conjunction with "Item“Item 7. Management'sManagement’s Discussion and Analysis of Results of Operations and Financial Condition"Condition” and the consolidated financial statements and related notes in "Item“Item 8. Financial Statements and Supplementary Data"Data” of this Form 10-K.


A Decline in Advertising Expenditures Could Cause the Company'sCompany’s Revenues and Operating Results to Decline Significantly in Any Given Period or in Specific Markets


The Company derives substantial revenues from the sale of advertising on its broadcast and basic cable networks, television stations, radio stations, outdoor structures, syndicated programming, and onlinedigital properties. A decline in the economic prospects of advertisers, the economy in general or the economy of


any individual geographic market, particularly a major market, such as Los Angeles, New York or Chicago, in which the Company owns and operates sizeable businesses, could alter current or prospective advertisers'advertisers’ spending priorities. Natural and other disasters, acts of terrorism, political uncertainty or hostilities could lead to a reduction in advertising expenditures as a result of disrupted programming and services, uninterrupted news coverage and economic uncertainty. Advertising expenditures may also be affected by increasing competition for the leisure time of audiences. In addition, advertising expenditures by companies in certain sectors of the economy, including the automotive, financial and pharmaceutical segments, represent a significant portion of the Company'sCompany’s advertising revenues. Any political, economic, social or technological change resulting in a reduction in these sectors'sectors’ advertising expenditures may adversely affect the Company'sCompany’s revenue. Advertisers'Advertisers’ willingness to purchase advertising from the Company may also be affected by a decline in audience ratings for the Company'sCompany’s programming, the inability of the Company to retain the rights to popular programming, increasing audience fragmentation caused by new program channels and the proliferation of new media formats, including the Internet and video-on-demandvideo‑on‑demand and the deployment of portable digital video devices and new technologies, which allow consumers to live stream and time shift programming, make and store digital copies and skip or fast-forward fast‑forward



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through advertisements. The Company's revenuesIn addition, the pricing and volume of advertising may be affected by shifts in spending toward digital and mobile offerings from outdoormore traditional media, or toward new ways of purchasing advertising, structures also depend onsuch as through automated purchasing, dynamic advertising insertion, third parties selling local advertising spots and advertising exchanges, some or all of which may not be as beneficial to the Company's continued ability to obtain the right to use effective outdoorCompany as traditional advertising space.methods. Any reduction in advertising expenditures could have an adverse effect on the Company'sCompany’s revenues and results of operations.


The Company'sCompany’s Success and Profitability Are Dependent Upon Audience Acceptance of Its Content, Including Its Television and Radio Programs and Motion Pictures, Which Is Difficult to Predict


Television, radio, and motion picture and other content production and distribution are inherently risky businesses because the revenues derived from the production and distribution of a television or radio program or motion picture,such content, and the licensing of rights to the associated intellectual property, depend primarily upon their acceptance by the public, which is difficult to predict. The commercial success of a television or radio program or motion picture also depends upon the quality and acceptance of other competing programs and motion pictures released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, all of which are difficult to predict. Rating points are also factors that are weighed when determining the advertising rates that the Company receives. The use of newevolving ratings technologies and measurements, and viewership on new platforms or devices, such as tablets, smart phones and other mobile devices, that is not being measured, could have an impact on the Company'sCompany’s program ratings. For example, while C-3, a current television industry ratings system, measures live commercial viewing plus three days of DVR and video-on-demand playback, the growing viewership occurring on subsequent days of DVR and video-on-demandvideo‑on‑demand playback is excluded from C-3 and other subsequent ratings. Poor ratings can lead to a reduction in pricing and advertising spending. For example, there can be no assurance that any replacement programming on the Company'sCompany’s radio or television stations will generate the same level of revenues or profitability of previous programming. In addition, the success of the Company'sCompany’s cable networks and Simon & Schuster is similarly dependent on audience acceptance of its programming and publications, respectively. The theatrical success of a motion picture, based in large part upon audience acceptance, is a significant factor in determining the revenues it is likely to generate in home entertainment sales, licensing fees and other exploitation during the various other distribution windows. Consequently, low public acceptance of the Company'sCompany’s content, including its television and radio programs, motion pictures and publications, will have an adverse effect on the Company'sCompany’s results of operations. In addition, any decreased popularity of programming for which the Company has incurred significant commitments could have an adverse effect on its profitability. Programming and talent commitments of the Company, estimated to aggregate approximately $15.21$11.91 billion as of December 31, 2012,2015, primarily included $11.98$9.21 billion for sports programming rights, $2.44$1.79 billion relating to television, radio, filmthe production and licensing of television, radio, and $789film programming, and $905 million for talent contracts with $6.70$2.95 billion of these amounts payable in and after 2018.2021. A shortfall, now or in the future, in the


expected popularity of the sports events for which the Company has acquired rights, or in the television and radio programming the Company expects to distribute, could lead to decreased profitability or losses for a significant period of time.


Failure by the Company to Obtain, Create and Retain the Rights Related to Popular Programming Could Adversely Affect the Company'sCompany’s Revenues

The Company'sCompany’s revenue from its television, radio, cable networks and motion picture business is partially dependent on the Company'sCompany’s continued ability to anticipate and adapt to changes in consumer tastes and behavior on a timely basis. Moreover, the Company derives a portion of its revenues from the exploitation of its extensive library of television programming. Generally, a television series must have a network run of at least three or four years to be successfully sold in domestic syndication.syndication, however, increasingly, these time frames are being shortened. If the content of its television programming library ceases to be widely accepted by audiences or is not continuously replenished with popular content, the Company'sCompany’s revenues could be adversely affected. The Company obtains a significant portion of its popular programming from third parties. For example, some of CBS Television Network'sNetwork’s most widely viewed broadcasts, including the NCAA's Men's Final Four, golf'sgolf’s Masters Tournament, andthe PGA Championship, and NFL games, NCAA Division I Men’s Basketball Tournament games, and series such as The Big Bang Theory, are made available based upon programming rights of varying duration that the Company has negotiated with third parties. In addition, Showtime Networks enters into commitments to acquire rights to certain programming forShowtime,The Movie Channel andFlix from motion


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picture producers and other suppliers for varying durations, and CBS Radio acquires the broadcast rights to syndicated shows and to various programs such as sports events from third parties. CBS Films competes for compelling source material for and the talent necessary to produce motion pictures, as well as with other buyers for the acquisition of third-partythird‑party produced motion pictures. Competition for popular programming that is licensed from third parties is intense, and the Company may be outbid by its competitors for the rights to new, popular programming or in connection with the renewal of popular programming currently licensed by the Company. The Company'sCompany’s failure to obtain or retain rights to popular content could adversely affect the Company'sCompany’s revenues.


The Company Must Respond to Rapid Changes in Technology, Content Creation, Services and Standards in Order to Remain Competitive


Video, telecommunications, radio and data services technologies used in the entertainment industry are changing rapidly as are the digital publishing and distribution models for books. Advances in technologies or alternative methods of product delivery or storage, or certain changes in consumer behavior driven by these or other technologies and methods of delivery and storage, could have a negative effect on the Company'sCompany’s businesses. Examples of the foregoing include the convergence of television broadcasts and online delivery of programming to televisions and other devices, video-on-demand platforms, tablets, satellite radio, new video and electronic book formats, user-generated content sites, Internet and mobile distribution of video content via streaming and downloading, place- shiftingand place-shifting of content from the home to portable devices on which content is viewable outside the home, and digital outdoor displays.home. For example, devices that allow users to view or listen to television or radio programs on a time-delayed basis; technologies, such as DVRs, that enable users to fast-forward or skip advertisements such as DVRs, or increase the sharing of subscription content; systems that allow users to access copyrighted product of the Company over the Internet through antennas andor other devices;media; and portable digital devices and systems that enable users to view programming or store or make portable copies of programming, may cause changes in consumer behavior that could affect the attractiveness of the Company'sCompany’s offerings to advertisers and adversely affect its revenues. Also, the growing uses of user-generated content sites and live and stored video streaming sites, which deliver unauthorized copies of copyrighted content, including those emanating from other countries in various languages, may adversely impact the Company'sCompany’s businesses. In addition, further increases in the use of Internet-connected television or other digital devices, which allow users to view or listen toconsume content of their own choosing, in their own time and remote locations while avoiding traditional commercial advertisements or subscription payments, could adversely affect the Company'sCompany’s radio and television broadcasting advertising and subscription revenues. Users who reduce, cancel or never had cable television subscription services are also known as “cord-cutters” or “cord-nevers”. Cable


providers and DBS operators are developing new techniques that allow them to transmit more channels on their existing equipment to highly targeted audiences, reducing the cost of creating channels and potentially leading to the division of the television marketplace into more specialized niche audiences. More television and video programming options increase competition for viewers and competitors targeting programming to narrowly defined audiences may gain an advantage over the Company for television advertising and subscription revenues. Television manufacturers, cable providers and others are developing and offering technology to enable viewers to locate digital copies of programming from the Internet to view on television monitors or other devices, which could diminish viewership of the Company'sCompany’s programming. Generally, changing consumer behavior may impact the Company'sCompany’s traditional distribution methods, for example, by reducing viewership of its programming (including motion pictures), the demand for DVD and Blu-ray Disc product and/or the desire to see motion pictures in theaters, which could have an adverse impact on the Company'sCompany’s revenues and profitability. Also, the impact of technological changes on traditional distributors of video programming may adversely affect the Company'sCompany’s cable networks'networks’ ability to grow revenue. Anticipating and adapting to changes in technology on a timely basis and exploiting new sources of revenue from these changes will affect the Company'sCompany’s ability to continue to increase its revenue.


Piracy of the Company's Programming and Other Content, Including Digital Piracy, May Decrease Revenue Received from the Exploitation of the Company's Programming and Other Content and Adversely Affect Its Businesses and Profitability


Piracy of programming (including motion pictures), books and other copyrighted material is prevalent in many parts of the world and is made easier by the availability of digital copies of content and technological advances allowing conversion of such programming and other content into digital formats, which facilitate the creation,


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transmission and sharing of high quality unauthorized copies of the Company's content. Recent technologicalTechnological advances, which facilitate the streaming of programming via the Internet to television screens and other devices, may increase piracy. The proliferation of unauthorized copiesaccess to programming, including through unauthorized live streaming and unauthorized account sharing of programmingsubscription program services, has an adverse effect on the Company's businesses and profitability because these unauthorized actions reduce the revenue that the Company potentially could receive from the legitimate sale and distribution of its products and services. In addition, if piracy were to increase, it would have an adverse effect on the Company's businesses and profitability. Also, while legal protections exist, piracy and technological tools with which to carry it out continue to escalate, evolve and present challenges for enforcement. The Company vigorously defends itself against entities that illegally secure and exhibit its content, including streaming the Company’s content without obtaining the consent of or paying compensation to the Company. Failure of legal protections to evolve and enable enhanced enforcement efforts to combat piracy could make it more difficult for the Company to adequately protect its intellectual property, which could negatively impact its value and further increase the Company's enforcement costs.


The Company'sCompany’s Businesses Operate in Highly Competitive and Consolidating Industries

The Company competes with other media companies for high quality content to achieve large audiences and to generate advertising revenue. The Company also competes for distribution on various MVPD and other third-party digital platforms. The Company’s ability to attract audiences and advertisers and obtain favorable distribution depends in part on its ability to provide popular television programming and radio programming, motion pictures and books. The consolidation of advertising agencies, distributors and television service providers also has made competition for audiences, advertising revenue, and distribution more intense. In addition, consolidation among book retailers and the growth of on-line sales and electronic books sales have resulted in increased competition for limited physical shelf space for the Company’s publications and for the attention of consumers on-line. Competition for audiences and advertising comes from: broadcast television stations and networks; cable television systems and networks; motion picture studios; the Internet; non-traditional programming services; technological innovations in content distribution; terrestrial and satellite radio and portable devices; local, regional and national newspapers; direct mail; and other communications and advertising media that operate in these markets. Other television and radio stations or cable networks may change their formats or programming, a new station or new network may adopt a format to compete directly with the Company’s stations or networks, or stations or networks might engage in aggressive promotional campaigns. In book publishing, competition among electronic and print book retailers could decrease the prices for new releases and the outlets available for book sales. Moreover, the growing use of self-publishing technologies by authors increases competition and could result in decreased use of traditional publishing services. This competition could result in lower ratings and advertising and subscription and other revenues or increased content costs and promotional and other expenses and, consequently, lower earnings and cash flow for the Company. The Company cannot be assured that it will be able to compete successfully in the future against existing, new or potential competitors, or that competition will not have a material adverse effect on its business, financial condition or results of operations.

The Loss of Affiliation Agreements or Retransmission Agreements Could Materially Adversely Affect the Company’s Results of Operations

The CBS Television Network provides its affiliates with up to approximately 98 hours of regularly scheduled programming per week. In return, the CBS Television Network’s affiliated stations broadcast network-inserted commercials during that programming and pay the Company station affiliation fees. Loss of station affiliation agreements of the CBS Television Network could adversely affect the Company’s results of operations by reducing the reach of the Company’s programming and therefore its attractiveness to advertisers, and renewal of these affiliation agreements on less favorable terms may also adversely affect the Company’s results of operations. The non-renewal or termination of retransmission agreements with MVPDs or continued distribution on less favorable terms, could also adversely affect the Company’s revenues and its ability to distribute its network programming to a nationwide audience and affect the Company’s ability to sell advertising, which could have a material adverse effect on the Company’s results of operations. Showtime Networks, CBS Sports Network and Smithsonian Networks are also dependent upon the maintenance of distribution agreements with MVPDs and other third-party digital platforms and there can be no assurance that these agreements will be renewed in the future on terms acceptable to such programmers.


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The loss of one or more of these arrangements could reduce the distribution of Showtime Networks’, CBS Sports Network’s and Smithsonian Networks’ program services and reduce revenues from subscriber fees and advertising, as applicable. Further, the loss of favorable packaging, positioning, pricing or other marketing opportunities with any distributor could reduce revenues from subscriber fees. Also, consolidation among MVPDs and increased vertical integration of such distributors into the cable or broadcast network business have provided more leverage to these distributors and could adversely affect the Company’s ability to maintain or obtain distribution for its network programming or distribution and/or marketing of its subscription program services on favorable or commercially reasonable terms, or at all. In addition, MVPDs are developing alternative offerings for consumers which are generally smaller than the traditional program package or may allow the consumer to customize its package of program services. To the extent these packages do not include the Company’s programming and become widely accepted in lieu of traditional program packages, the Company could experience a decline in affiliate and subscription revenues.

The Company’s Operating Results Are Subject to Seasonal Variations and Other Factors


The Company'sCompany’s business has experienced and is expected to continue to experience seasonality due to, among other things, seasonal advertising patterns and seasonal influences, on people'speople’s viewing, reading, attendance and listening habits. Typically, the Company'sCompany’s revenue from advertising increases in the fourth quarter, Simon & Schuster generates a substantial portion of its revenues in the fourth quarter, and license fees for television programming and CBS Films'Films’ revenue from motion pictures are dependent on the timing, mix, number and availability of the Company'sCompany’s television programming and motion pictures, as applicable, which may cause operating results to increase or decrease during a period and create non-comparable results relative to the corresponding period in the prior year. In addition, advertising revenues in even-numbered years benefit from advertising placed by candidates for political offices. The effects of such seasonality make it difficult to estimate future operating results based on the previous results of any specific quarter and may adversely affect operating results.


The Company's Businesses Operate in Highly Competitive Industries

        The Company competes with other media companies for high quality content and attractive outdoor advertising space to achieve large audiences and to generate advertising revenue. The Company also competes for distribution on various MVPD platforms. The Company's ability to attract audiences and advertisers and obtain favorable distribution depends in part on its ability to provide popular television programming and radio programming, motion pictures and books, as well as well-placed outdoor advertising faces. In addition, the consolidation of advertising agencies, distributors and television service providers has made competition for audiences, advertising revenue, and distribution more intense. In addition, consolidation among book retailers and the growth of on-line sales and electronic books sales have resulted in increased competition for limited physical shelf space for the Company's publications and for the attention of consumers on-line. Competition for audiences and advertising comes from: broadcast television stations and networks; cable television systems and networks; motion picture studios; the Internet; terrestrial and satellite radio and portable devices; outdoor advertisers; local, regional and national newspapers; direct mail; and other communications and advertising media that operate in these markets. Other television and radio stations or cable networks may change their formats or programming, a new station or new network may adopt a format to compete directly with the Company's stations or networks, or stations or networks might engage in aggressive promotional campaigns. In book publishing, competition among electronic and print book retailers could decrease the prices for new releases and the outlets available for book sales. Moreover, the growing use of self-publishing technologies by authors, increases competition and could result in decreased use of traditional publishing services. This competition could result in lower ratings and advertising and subscription and other revenues or increased promotional and other expenses and, consequently, lower earnings and cash flow for the Company. The Company cannot be assured that it will be able to compete successfully in the future against existing or potential competitors, or that competition will not have a material adverse effect on its business, financial condition or results of operations.

Economic Conditions May Adversely Affect the Company'sCompany’s Businesses and Customers


The U.S. and other countries where the Company operates have experienced slowdowns and volatilities in their economies. A downturn could lead to lower consumer and business spending for the Company'sCompany’s products and services, particularly if customers, including advertisers, subscribers, licensees, retailers, theater operators and other consumers of the Company'sCompany’s content offerings and services, reduce demands for the Company'sCompany’s products and services. In addition, in unfavorable economic environments, the Company'sCompany’s customers may have difficulties obtaining capital at adequate or historical levels to finance their ongoing business and operations and may face insolvency, all of which could impair their ability to make timely payments and continue operations, including distribution of the Company'sCompany’s content. The Company is unable to predict the duration and severity of weakened economic conditions and such conditions and resultant effects could adversely impact the Company'sCompany’s businesses, operating results, and financial condition.


Volatility and Weakness in Capital Markets May Adversely Affect Credit Availability and Related Financing Costs for the Company


Bank and capital markets can experience periods of volatility and disruption. If the disruption in these markets is prolonged, the Company'sCompany’s ability to refinance, and the related cost of refinancing, some or all of its debt could be adversely affected. Although the Company can currently access the bank and capital markets, there is no assurance that such markets will continue to be a reliable source of financing for the Company. In addition, the Company'sCompany’s access to and cost of borrowing can be affected by the Company'sCompany’s short- and long-term debt ratings assigned by ratings agencies. These factors, including the tightening of credit markets, or a decrease in the Company'sCompany’s debt ratings, could adversely affect the Company'sCompany’s ability to obtain cost-effectivecost‑effective financing.


Increased Programming and Content Costs May Adversely Affect the Company'sCompany’s Profits


The Company produces and acquires programming (including motion pictures) and other content and incurs costs with respect to its content, including for all types of creative talent, including actors, authors, writers and producers, composers and publishers of music, as well as for marketing and distribution. An increase in any of these costs and


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increased competition from consolidated entities and new entrants into the market for the production and acquisition of new content may lead to decreased profitability.


Changes in Communications Laws or Other Regulations May Have an Adverse Effect on the Company'sCompany’s Business


The television and radio broadcasting and distribution industries in the U.S. are highly regulated by U.S. federal laws and regulations issued and administered by various federal agencies, including the FCC. The television and radio broadcasting industry is subject to extensive regulation by the FCC under the Communications Act. For example, the Company is required to obtain licenses from the FCC to operate its radio and television stations. The Company cannot be assured that the FCC will approve its future renewal applications or that the renewals will be for full terms or will not include conditions or qualifications. The non-renewal, or renewal with substantial conditions or modifications, of one or more of the Company'sCompany’s licenses could have a material adverse effect on the Company'sCompany’s revenues. The Company must also comply with extensive FCC regulations and policies in the ownership and operation of its television and radio stations and its television networks. FCC regulations prohibit the common ownership of more than one of the top four networks, ABC, CBS, FOX and NBC, and limit the number of television and radio stations that a licensee can own in a market and the number of television stations that can be owned nationwide, which could restrict the Company'sCompany’s ability to consummate future transactions and in certain circumstances could require it to divest some television or radio stations. The U.S. Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations, and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation and ownership of the Company'sCompany’s radio and television properties. For example, from time to time, proposals have been advanced in the U.S. Congress and at the FCC to require radio and television broadcast stations to provide advertising time to political candidates for free or at a reduced charge. Any restrictions on political advertising may adversely affect the Company'sCompany’s advertising revenues. The FCC has initiated a proceeding to examine and potentially regulate more closely embedded advertising such as product placement and product integration. Enhanced restrictions affecting these means of delivering advertising messages may adversely affect the Company'sCompany’s advertising revenues. Changes to the media ownership and other FCC rules may affect the competitive landscape in ways that could increase the competition faced by the Company. Proposals have also been advanced from time to time before the U.S. Congress and the FCC to extend the program access rules (currently applicable only to those cable program services which also own or are owned by cable distribution systems) to all cable program services. The Company'sCompany’s ability to obtain the most favorable terms available for its content could be adversely affected should such an extension be enacted into law. In response to the FCC'sFCC’s March 2010 National Broadband Plan, which seeks to provide affordable broadband access throughout the U.S., Congress passed legislation in February 2012 authorizing the FCC to conduct voluntary auctions of spectrum utilized by broadcast television stations to provide additional spectrum for wireless broadband services. The television stations that continue their operations may have to change channels once the FCC "repacks"“repacks” the broadcastremaining spectrum dedicated to broadcast television use.use after the auction. Such auctions are expected to beginoccur in 20142016 followed by repacking, which could adversely impact the Company'sCompany’s broadcast coverage and related revenues. It is difficult to predict the timing or outcome of the FCC'sFCC’s actions or their effect, if any, on the Company'sCompany’s broadcasting properties. Legislation could be enacted which could remove over-the-air broadcasters'broadcasters’ existing exemption from payment of a performance royalty to record companies and performers of music which is broadcast on radio stations and could have an adverse impact on the cost of music programming for the Company. In addition, changes in or new interpretations of international laws and regulations governing competition and the Internet, including those affecting data privacy, may have an adverse impact on the Company's


Company’s international businesses and Internet properties. The Company is unable to predict the effect that any such laws, regulations or policies may have on its operations.


Vigorous Enforcement or Enhancement of FCC Indecency and Other Program Content Rules Against the Broadcast and Cable Industries Could Have an Adverse Effect on the Company'sCompany’s Businesses and Results of Operations


The FCC'sFCC’s rules prohibit the broadcast of obscene material at any time and indecent or profane material on television or radio broadcast stations between the hours of 6 a.m. and 10 p.m. Broadcasters risk violating the prohibition against broadcasting indecent material because of the vagueness of the FCC'sFCC’s indecency/profanity definition, coupled


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with the spontaneity of live programming. The FCC vigorously enforces its indecency rules against the broadcasting industry. The FCC has found on a number of occasions that the content of radio and television broadcasts has contained indecent material. In such instances, the FCC issued fines or advisory warnings to the offending licensees. Moreover, the FCC has in some instances imposed separate fines for each allegedly indecent "utterance,"“utterance,” in contrast with its previous policy, which generally considered all indecent words or phrases within a given program as constituting a single violation. The fines for broadcasting indecent material per station are a maximum of $325,000 per utterance. If the FCC denied a license renewal or revoked the license for one of the Company'sCompany’s broadcast radio or television stations, the Company would lose its authority to operate the station. The determination of whether content is indecent is inherently subjective and, as such, it can be difficult to predict whether particular content could violate indecency standards. The difficulty in predicting whether individual programs, words or phrases may violate the FCC'sFCC’s indecency rules adds significant uncertainty to the Company'sCompany’s ability to comply with the rules. Violation of the indecency rules could lead to sanctions which may adversely affect the Company'sCompany’s businesses and results of operations. Some policymakers support the extension of the indecency rules that are applicable to over-the-air broadcasters to cover cable and satellite programming and/or attempts to increase enforcement of or otherwise expand existing laws and rules. If such an extension, attempt to increase enforcement or other expansion took place and were found to be constitutional, some of the Company'sCompany’s cable content could be subject to additional regulation and might not be able to attract the same subscription and viewership levels.

The Loss of Affiliation Agreements or Retransmission Agreements Could Materially Adversely Affect the Company's Results of Operations

        The CBS Television Network provides its affiliates with up to approximately 98 hours of regularly scheduled programming per week. In return, the CBS Television Network's affiliated stations broadcast network-inserted commercials during that programming. Loss of network affiliation agreements of the CBS Television Network could adversely affect the Company's results of operations by reducing the reach of the Company's programming and therefore its attractiveness to advertisers, and renewal of these affiliation agreements on less favorable terms may also adversely affect the Company's results of operations. The non-renewal or termination of retransmission agreements with MVPDs or continued distribution on less favorable terms, could also adversely affect the Company's revenues and its ability to distribute its network programming to a nationwide audience and affect the Company's ability to sell advertising, which could have a material adverse effect on the Company's results of operations. Showtime Networks, CBS Sports Network and Smithsonian Networks are also dependent upon the maintenance of affiliation agreements with MVPDs, and there can be no assurance that these agreements will be renewed in the future on terms acceptable to such programmers. The loss of one or more of these arrangements could reduce the distribution of Showtime Networks', CBS Sports Network's and Smithsonian Networks' program services and reduce revenues from subscriber fees and advertising, as applicable. Further, the loss of favorable packaging, positioning, pricing or other marketing opportunities with any distributor could reduce revenues from subscriber fees. Also, consolidation among MVPDs and increased vertical integration of such distributors into the cable or broadcast network business have provided more leverage to these distributors and could adversely affect the Company's ability to maintain or obtain distribution for


its network programming or distribution and/or marketing of its subscription program services on favorable or commercially reasonable terms, or at all.

The Failure or Destruction of Satellites and Transmitter Facilities and Network and Information Systems and Other Technology that the Company Depends Upon to Distribute Its Programming and Operate Could Materially Adversely Affect the Company'sCompany’s Businesses and Results of Operations


The Company uses satellite systems to transmit its broadcast and cable networks to affiliates. The distribution facilities include uplinks, communications satellites and downlinks. Transmissions may be disrupted as a result of local disasters including extreme weather that impair on-ground uplinks or downlinks, or as a result of an impairment of a satellite. Currently, there are a limited number of communications satellites available for the transmission of programming. If a disruption occurs, failure to secure alternate distribution facilities in a timely manner could have a material adverse effect on the Company'sCompany’s businesses and results of operations. Each of the Company'sCompany’s television and radio stations and cable networks uses studio and transmitter facilities that are subject to damage or destruction. Failure to restore such facilities in a timely manner could have a material adverse effect on the Company'sCompany’s businesses and results of operations. In addition, network

Breach of Security Measures Regarding Information Systems Could Disrupt Operations and Damage the Company’s Reputation and Could Materially Adversely Affect the Company’s Businesses and Results of Operations

Network and information systems and other technologies are important to the Company'sCompany’s business activities. For example,Despite the Company’s security measures, network and information systems-relatedsystems‑related events, such as computer hackings, cyber threats, security breaches, viruses, or other destructive or disruptive software, process breakdowns or malicious or other activities, and natural or other disasters could result in a disruption of the Company'sCompany’s services and operations oroperations. These events could also result in the improper disclosure of personal data or confidential information, including through third parties which receive any of such information on a confidential basis for business purposes and could be subject to any of these events, and damage the Company'sCompany’s reputation and require the Company to expend resources to remedy any such breaches. The occurrence of any of such network or information systems-relatedthese events security breaches or natural or other disasters could have a material adverse effect on the Company'sCompany’s business and results of operations.


The Company Could Suffer Losses Due to Asset Impairment Charges for Goodwill, Intangible Assets, FCC Licenses and Programming


The Company will test goodwill and indefinite-lived intangible assets, including FCC licenses, for impairment during the fourth quarter of each year and between annual tests if events or circumstances require an interim impairment assessment. A downward revision in the estimated fair value of a reporting unit or intangible assets, including FCC licenses, could result in a non-cash impairment charge. Also, any significant shortfall, now or in the future, in the expected popularity of the programming for which the Company has acquired rights could lead to a downward revision


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in the fair value of such assets. Any such impairment charge for goodwill, intangible assets and/or programming could have a material adverse effect on the Company'sCompany’s reported net earnings.


Dividends and Dividend Rates Cannot Be Guaranteed


The Company'sCompany’s Board of Directors assesses relevant factors when considering the declaration of a dividend on the Company'sCompany’s common stock. The Company cannot guarantee that it will continue to declare dividends, including at the same or similar rates.


The Loss of Key Personnel, Including Talent, Could Disrupt the Management or Operations of the Company'sCompany’s Business and Adversely Affect Its Revenues


The Company'sCompany’s business depends upon the continued efforts, abilities and expertise of its chief executive officer and other key employees and entertainment personalities. The Company believes that the unique combination of skills and experience possessed by its executive officers would be difficult to replace, and that the loss of its executive officers could have a material adverse effect on the Company, including the impairment of the Company'sCompany’s ability to execute its business strategy. While the Company does not maintain a written succession plan with respect to Chairman of the Board, in accordance with the


Company's Company’s Corporate Governance Guidelines, designated independent committees of the CBS Board together periodically review succession planning for the position of Chairman and report to the non-management directors of the CBS Board. Because 79%approximately 79.5% of the voting shares are controlled by Sumner Redstone there can be no assurance now or in the future that he or the successors to the voting control may not seek to effect succession of the Chairman; however, and in all cases, the Board will elect the next Chairman by a majority vote of the Board. Additionally, the Company employs or independently contracts with several entertainment personalities and authors with significant loyal audiences or readership. Entertainment personalities are sometimes significantly responsible for the ranking of a television or radio station and, therefore, the ability of the station to sell advertising, and an author'sauthor’s popularity can be significantly responsible for the success of a particular book. Cable Networks producesThe Company’s cable networks, CBS Television Studios and CBS Television Distribution produce programming and CBS Films produces motion pictures with highly regarded directors, actors and other talent who are important to achieving audience endorsement of attracting and retaining audiences fortheir content. There can be no assurance that these entertainment personalities, authors and talent will remain with or be drawn to the Company or will retain their current audiences or readership. If the Company fails to retain or attract these entertainment personalities, authors and talent or they lose their current audiences or readership, the Company'sCompany’s revenues could be adversely affected.


Fluctuations in Foreign Exchange Rates Could Have an Adverse Effect on the Company'sCompany’s Results of Operations


Certain of the Company'sCompany’s revenues are earned and expenses are incurred in foreign currencies. The value of these currencies fluctuates relative to the U.S. dollar. As a result, the Company is exposed to exchange rate fluctuations, which could have an adverse effect on its results of operations.

Regulation of the Outdoor Advertising Industry Could Materially Adversely Affect the Company's Outdoor Americas Business

        The outdoor advertising industry is subject to extensive governmental regulation and enforcement at the federal, state and local levels in the U.S. and to national, regional and local restrictions in foreign countries. These regulations and enforcement actions can affect the operation and continuance of operations of advertising displays and include restrictions on the construction, operation, repair, upgrading, height, size, location and type, such as digital, tri-vision or static, of outdoor advertising structures and displays and, in some instances, the content of advertising copy that can be displayed on these structures. In addition, outdoor advertising is the subject of targeted state and municipal taxes and fees. Such laws may increase the Company's costs and reduce the Company's expansion opportunities or may increase competitive pressure from others. The Company cannot give any assurance that existing or future laws or regulations will not materially and adversely affect its outdoor business.

The Company's Plans to Convert its Outdoor Americas Business into a Real Estate Investment Trust and Divest its Outdoor Europe Business Are Subject to Approvals and Changes in Legislation, Tax Rules and Market Conditions

        In January 2013, the Company announced that it has begun the process of converting its outdoor advertising businesses in North America and South America into a real estate investment trust. In addition, during the fourth quarter of 2012, the Company initiated a plan to divest its outdoor advertising business in Europe, which includes an interest in an outdoor business in Asia. Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented. All of these actions are subject to customary approvals and risks, many of which are outside the Company's control, including changes in legislation, tax rules or market conditions, which could adversely impact timing, the ability to consummate or achieve the benefits of the transactions and the ability to divest the Outdoor Europe business on terms that the Company finds acceptable.


The Company'sCompany’s Liabilities Related to Discontinued Operations and Former Businesses Could Adversely Impact Its Financial Condition


The Company has both recognized and potential liabilities and costs related to discontinued operations (including the Company's outdoor advertising business in Europe (which includes an interest in an outdoor business in Asia), which has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented) and former businesses, certain of which are unrelated to the media business, including leases, guarantees, environmental liabilities, liabilities related to the pensions and medical expenses of retirees, asbestos liabilities, contractual disputes and other pending and threatened litigation. The Company cannot be assured that its reserves are sufficient to cover these liabilities in their entirety or any one of these liabilities when it becomes due or at what point any of these liabilities may come due. Therefore, there can be no assurances that these liabilities will not have a material adverse effect on the Company'sCompany’s financial position, operating performance or cash flow.




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The Company Could Be Adversely Affected by Strikes and Other Union Activity


The Company and its suppliers engage the services of writers, directors, actors and other talent, trade employees and others who are subject to collective bargaining agreements. If the Company or its suppliers are unable to renew expiring collective bargaining agreements, it is possible that the affected unions or others could take action in the form of strikes or work stoppages. Such actions, higher costs in connection with these agreements or a significant labor dispute could adversely affect the Company'sCompany’s television, radio, cable networks, interactive and motion picture businesses by disrupting the Company'sCompany’s ability to provide scheduled services and programming or by causing delays in the production of the Company'sCompany’s television or radio programming or motion pictures or the Company's outdoor business by disrupting its ability to place advertising on outdoor faces.pictures. Depending on its duration, any lockout, strike or work stoppage could have an adverse effect on the Company'sCompany’s revenues, cash flows and/or operating income and/or the timing thereof.


Political and Economic Risks Associated with the Company'sCompany’s International Businesses Could Harm the Company'sCompany’s Financial Condition or Results of Operations


The Company'sCompany’s businesses operate and have customers worldwide. Inherent risks of doing business in international markets include, among other risks, changes in the economic environment, export restrictions, exchange controls, tariffs and other trade barriers and longer payment cycles. The Company may incur substantial expense as a result of the imposition of new restrictions or changes in the existing economic environment in the regions where it does business. In addition, acts of terrorism or other hostilities, or other future financial, political, economic or other uncertainties, could lead to a reduction in advertising expenditures, which could materially adversely affect the Company'sCompany’s business, financial condition or results of operations.


NAI, Through Its Voting Control of the Company, Is in a Position to Control Actions that Require Stockholder Approval


NAI, through its direct and indirect ownership of the Company'sCompany’s Class A Common Stock, has voting control of the Company. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, serves as Executive Chairman Emeritus of the Company's Board of Directors, and Ms. Shari Redstone, the president and a director of NAI, serves as Vice Chair of the Company'sCompany’s Board of Directors. In addition, Mr. David R. Andelman is a director of NAI and serves as a director of the Company. NAI is in a position to control the outcome of corporate actions that require stockholder approval, including the election of directors and transactions involving a change of control. Other stockholders who may have different interests are unable to affect the outcome of the corporate actions of the Company for so long as NAI retains voting control.


Sales of Shares of Common Stock by NAI Could Adversely Affect the Stock Price


NAI, through its direct and indirect ownership of the Company'sCompany’s Class A Common Stock, has voting control of the Company.  Based on information received from NAI, shares of the Company'sCompany’s voting Class A common stock and non-voting Class B common stock owned by NAI Entertainment Holdings LLC ("NAI EH"), a wholly-owned subsidiarycertain wholly‑owned subsidiaries of NAI are pledged to NAI EH'ssuch subsidiaries’ lenders.  NAI holds more than 50% of the Company'sCompany’s voting Class A shares directly and these shares are not pledged. If NAI EHany of such subsidiaries defaults on its obligations and the lenders foreclose on the collateral, the lenders or anyone to whom the lenders transfer the Company'sCompany’s shares could sell such shares or convert those shares of voting Class A Common Stock into shares of non-voting Class B Common Stock and sell such shares, which could adversely affect the Company'sCompany’s share price. Additionally, if the lenders foreclose on the pledged shares of voting Class A Common Stock, NAI will no longer directly or indirectly own those shares and such lenders or other transferees would have voting rights in the Company. In addition, there can be no assurance that NAI or NAI EHits subsidiaries at some future time will not sell or pledge additional shares of the Company'sCompany’s stock, which could adversely affect the Company'sCompany’s share price.



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Many Factors May Cause the Stock Price of the Company'sCompany’s Class A Common Stock and Class B Common Stock to Fluctuate


The stock price of Class A Common Stock and Class B Common Stock may fluctuate significantly as a result of many factors. These factors, some or all of which are beyond the Company'sCompany’s control, include:

In addition, the stock market has experienced volatility that often has been unrelated or disproportionate to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the trading prices of the Company'sCompany’s common stock, regardless of the Company'sCompany’s actual operating performance.


The Businesses of the Company and Viacom Inc. Will Be Attributable to the Other Company for Certain Regulatory Purposes, Which May Limit Business Opportunities


So long as the Company and Viacom Inc. are under common control, each company'scompany’s businesses, as well as the businesses of any other commonly controlled company, will be attributable to the other company for purposes of certain rules and regulations of the FCC, U.S. and non-U.S. antitrust rules and regulations and certain rules regarding political campaign contributions in the U.S., among others potentially. The businesses of one company will continue to be attributable to the other company for certain FCC and other purposes even after the two companies cease to be commonly controlled, if the two companies share common officers, directors, or attributable stockholders. As a result, the businesses and conduct of Viacom Inc. may have the effect of limiting and affecting the activities, strategic business alternatives and business terms available to the Company, including limitations to which the Company contractually agreed in connection with the Company'sCompany’s separation of former Viacom Inc. ("(“Former Viacom"Viacom”) into two publicly traded entities, CBS Corporation and new Viacom Inc., which was completed on December 31, 2005 (the "Separation"“Separation”).


In Connection with the Separation, Each Company Will Rely on the Other Company'sCompany’s Performance Under Various Agreements Between the Companies


In connection with the Separation, the Company and Viacom Inc. entered into various agreements, including thea Separation Agreement dated December 19, 2005, a tax matters agreementTax Matters Agreement dated December 30, 2005, which isare filed as an exhibitexhibits to this report, effective as of the Separation (the "Tax Matters Agreement") and certain related party arrangements pursuant to which the Company and Viacom Inc. will provide services and products to each other from and after the Separation. The Separation Agreement sets forth the allocation of assets, liabilities, rights and obligations of the Company and Viacom Inc. following the Separation, and includes indemnification obligations for such liabilities and obligations. In addition, pursuant to the Tax Matters Agreement, certain income tax liabilities and related responsibilities are allocated between, and indemnification obligations are assumed by, each of the Company and Viacom Inc. Each company will rely on the other to satisfy its performance and payment obligations under these agreements. Certain of the liabilities to be assumed or indemnified by the Company or Viacom Inc. under these agreements are legal or contractual liabilities of the other company. If Viacom Inc. were to breach or be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification obligations, the Company could suffer operational difficulties or significant losses.


Certain Members of Management, Directors and Stockholders May Face Actual or Potential Conflicts of Interest


The management and directors of the Company may own both CBS Corp. common stock and Viacom Inc. common stock, and both the Company and Viacom Inc. are controlled by NAI. Mr. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, serves as Executive Chairman Emeritus of the Company's Board of DirectorsCompany and executive chairmanChairman Emeritus of Viacom Inc.'s board of directors. Ms. Redstone, the president and a director of NAI, serves as Vice Chair of the Board of Directors of each of the Company and Viacom Inc. Mr. David R. Andelman is a director of NAI and serves as a director of the Company. Mr. Frederic V. Salerno is a director of Viacom Inc. and serves as a director of


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the Company. This ownership overlap and these common directors could create, or appear to create, potential conflicts of interest when the Company'sCompany’s and Viacom Inc.'s’s management, directors and controlling stockholder face decisions that could have different implications for the Company and Viacom Inc. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between the Company and Viacom Inc. regarding the terms of the agreements governing the Separation and the relationship between the Company and Viacom Inc. thereafter. These agreements include, among others, the Separation Agreement, the Tax Matters Agreement and any commercial agreements between the parties or their affiliates. On occasion, the Company and Viacom Inc. may compete with each other in various commercial enterprises. Potential conflicts of interest could also arise if the Company and Viacom Inc. enter into any commercial arrangements with each other in the future. Each of Mr. Redstone and Ms. Redstone may also face conflicts of interest with regard to the allocation of his or her time between the Company and Viacom Inc. CBS Corp.'s’s certificate of incorporation contains provisions related to corporate opportunities that may be of interest to both the Company and Viacom Inc. CBS Corp.'s’s certificate of incorporation provides that in the event that a director, officer or controlling stockholder of the Company who is also a director, officer or controlling stockholder of Viacom Inc. acquires knowledge of a potential corporate opportunity for both the Company and Viacom Inc., such director, officer or controlling stockholder may present such opportunity to the Company or Viacom Inc. or both, as such director, officer or controlling stockholder deems appropriate in his or her sole discretion, and that by doing so such person will have satisfied his or her fiduciary duties to the Company and its stockholders. In addition, CBS Corp.'s’s certificate of incorporation provides that the Company renounces any interest in any such opportunity presented to Viacom Inc. These provisions create the possibility that a corporate opportunity of one of such companies may be used for the benefit of the other company.



Item 1B. Unresolved Staff Comments.

Not applicable.


Item 2. Properties.

The Company maintains its world headquarters at 51 West 52nd Street, New York, New York, where it owns a building containing approximately 900,000 square feet of space, 831,000 square feet of which is office space. The Company occupies approximately 276,000275,000 square feet of the office space and leases the balance to third parties. The Company owns the CBS Broadcast Center complex located on approximately 3.7 acres at 524 West 57th Street, New York, New York, which consists of approximately 860,000 square feet of office and studio space. The Company also owns two studio facilities in California: (a) the CBS Studio Center at 4024 Radford Avenue, Studio City, California, located on approximately 40 acres, and (b) CBS Television City at 7800 Beverly Boulevard, Los Angeles, California, located on approximately 25 acres. Showtime Networks leases approximately 200,000230,000 square feet at 1633 Broadway, New York, New York under a lease which expires in 2026. Simon & Schuster leases approximately 290,000 square feet of office space at 1230 Avenue of the Americas, New York, New York, which lease runs to 2019. CBS Interactive leases approximately 280,000 square feet of space at 235 2ndSecond Street, San Francisco, California under a lease which expires in 2022. CBS Interactive subleases approximately 75,000 square feet of this space to a third party. The Company and its subsidiaries also own and lease office, studio and warehouse space and broadcast, antenna and satellite transmission facilities and outdoor advertising properties throughout the U.S., Canada and several other foreign countries for its businesses. The Company considers its properties adequate for its present needs.


Item 3. Legal Proceedings.

        E-books Matters.General. A number ofOn an ongoing basis, the Company vigorously defends itself in numerous lawsuits described below have been pendingand proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the following parties relatingCompany without merit, is inherently uncertain and always difficult to the sale of e-books: Apple Inc., Hachette Book Group, Inc., HarperCollins Publishers, LLC, Holtzbrinck Publishers LLC d/b/a Macmillan, Penguin Group (USA) Inc.predict. However, based on its understanding and the Company's subsidiary, Simon & Schuster, Inc. (collectively, the "Publishing parties").

        On April 10, 2012, for purposes of settlement and without any admission of wrongdoing or liability, Simon & Schuster and twoevaluation of the other Publishing parties entered into a settlement stipulationrelevant facts and proposed final judgment (the "Stipulation") withcircumstances, the United States Department of Justice (the "DOJ") in connection with the DOJ's investigations of agency distribution of e-books. In furtherance of this settlement, on April 11, 2012, the DOJ filed an antitrust action in the United States District Court for the Southern District of New York against the Publishing parties and concurrently filed the Stipulation with the court. On September 7, 2012, the Stipulation was approved by the court and final judgment was entered. The Stipulation does not involve any monetary payments by Simon & Schuster, but will require the adoption of certain business practices for a 24 month period and certain compliance practices for a five year period.

        On June 11, 2012, for purposes of settlement and without any admission of wrongdoing or liability, Simon & Schuster entered into a proposed settlement agreement to resolve the antitrust action filed by a number of states and the Commonwealth of Puerto Rico against several of the Publishing parties in the United States District Court for the Western District of Texas, which was transferred to the United States District Court for the Southern District of New York ("States") on April 30, 2012. The proposed settlement provides that, certain Publishing parties, including Simon & Schuster, will pay agreed upon amounts for consumer restitution, among other things, and also requires the adoption of certain business and compliance practices, which are substantially similar to those described in the Stipulation with the DOJ. On September 14, 2012, the court granted preliminary approval of the proposed settlement, which all states (except Minnesota), the District of Columbia and the United States territories joined. On October 15, 2012, Simon & Schuster paid the agreed upon amounts into an escrow account pending final court approval. On February 8, 2013, the court approved the proposed settlement following a final


settlement approval hearing that day. The Company believes that this settlement with the Statesbelow-described legal matters and other litigation to which it is a party are not likely, in the Stipulation with the DOJ will notaggregate, to have a material adverse effect on its results of operations, financial position or cash flows.

        On December 9, 2011, Under the United States Judicial Panel on Multidistrict Litigation (the "MDL") issued an order consolidating in the United States District Court for the Southern District of New York various purported class action suits that private litigants had filed in federal courts in California and New York. On January 20, 2012, the plaintiffs filed a consolidated amended class action complaint with the court against the Publishing parties. These private litigant plaintiffs, who are e-book purchasers, allege that, among other things, the defendants are in violation of federal and/or state antitrust laws in connection with the sale of e-books pursuant to agency distribution arrangements between each of the publishers and e-book retailers. The consolidated amended class action complaint generally seeks multiple forms of damages for the purchase of e-books and injunctive and other relief. On March 2, 2012, the Publishing parties filed a motion to dismiss this action. On May 15, 2012, the court denied the motion to dismiss. The Company believes that the States' settlement will likely resolve the class claims of those private litigant plaintiffs in the MDL litigation who reside in the areas covered by the States' settlement and who do not opt out of such settlement.

        Commencing on February 24, 2012, similar antitrust suits have been filed under Canadian law against the Publishing parties by private litigants in Canada, purportedly as class actions. Simon & Schuster intends to vigorously defend itself in the MDL and Canadian matters.

        In addition, the European Commission (the "EC") and Canadian Competition Bureau are conducting separate competition investigations of agency distribution arrangements of e-books in this industry and Simon & Schuster is cooperating with these investigations. On September 19, 2012, the EC began accepting public comment on the terms of a proposed settlement. On December 12, 2012, following the close of that comment period, the EC accepted the proposed settlement. The settlementSeparation Agreement between the ECCompany and Viacom Inc., the Company and Viacom Inc. have agreed to defend and indemnify the other in certain Publishing parties, including Simon & Schuster, requireslitigation in which the adoption of certain business and compliance practices similar to those described in the Stipulation with the DOJ.

Company and/or Viacom Inc. is named.



I-29



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'sCompany’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, or by asbestos-containing grades of decorative micarta, a laminate used in commercial ships.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 December 31, 2012,2015, the Company had pending approximately 45,90036,030 asbestos claims, as compared with approximately 50,09041,100 as of December 31, 20112014 and 52,22045,150 as of December 31, 2010.2013. During 2012,2015, the Company received approximately 4,3503,670 new claims and closed or moved to an inactive docket approximately 8,5408,740 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 claim,claims, the quality of evidence supporting the claims and other factors. The Company's totalIn 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 years 2012 and 2011Company’s costs for settlement and defense of asbestos claims after insurance recoveries


and net of tax benefitstaxes were approximately $21 million and $33 million, respectively.$11 million. The Company'sCompany’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.


Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of claims against the Company are non-cancer claims. In a substantial number of the pending claims, the plaintiff has not yet identified the claimed injury. 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.

        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 and local 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 above-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.


Item 4.    Mine Safety Disclosures.

Not applicable.




I-30



EXECUTIVE OFFICERS OF THE COMPANY


Set forth below is certain information concerning the executive officers of the Company as of February 14, 2013.

9, 2016.

NameAgeTitle

Sumner M. Redstone

 89Age Executive Chairman of the Board of Directors and FounderTitle

Leslie Moonves

 6366 Chairman, President and Chief Executive Officer and Director

Anthony G. Ambrosio

 5552
Senior Executive Vice President, Chief Administrative Officer and
Chief Human Resources Officer
Jonathan H. Anschell47 Executive Vice President, Human ResourcesDeputy General Counsel and AdministrationSecretary

Louis J. Briskman

Joseph R. Ianniello		 4864Chief Operating Officer
Richard M. Jones50 Executive Vice President and General Tax Counsel

Martin D. Franks

62Executive Vice President, Planning, Policy and Government Affairs

Joseph R. Ianniello

45Executive Vice President and Chief Financial Officer

Richard M. Jones

Lawrence Liding 47 Senior Vice President and General Tax Counsel

Lawrence Liding

44SeniorExecutive Vice President, Controller and Chief Accounting Officer

Gil Schwartz

 6164 Senior Executive Vice President and Chief Communications Officer

Angeline C. Straka

Lawrence P. Tu		61Senior Executive Vice President and Chief Legal Officer
  67 Senior Vice President, Deputy General Counsel and Secretary

None of the executive officers of the Company is related to any other executive officer or director by blood, marriage or adoption except that Shari Redstone, Vice Chair of the Board of Directors of the Company, is the daughter of Sumner M. Redstone.

adoption.


Mr. Redstone is the Company's Founder andMoonves has been Executive Chairman, of the Board of the Company since January 1, 2006. He was Chairman of the Board of Former Viacom from 1987 until January 1, 2006 and served as Chief Executive Officer of Former Viacom from 1996 until January 1, 2006. Mr. Redstone has also served as Chairman of the Board of NAI since 1986President and Chief Executive Officer of NAIthe Company since 1967. He served as President of NAI from 1967 through 1999. Mr. Redstone served as the first Chairman of the Board of the National Association of Theatre Owners and is currently a member of its Executive Committee. Mr. Redstone has lectured at a variety of universities, including Harvard Law School, Boston University School of Law and Brandeis University. Mr. Redstone graduated from Harvard University in 1944 and received a LL.B. from Harvard University School of Law in 1947. Upon graduation, Mr. Redstone served as Law Secretary with the United States Court of Appeals and then as a Special AssistantFebruary 3, 2016. Prior to the United States Attorney General. Mr. Redstone served in the Military Intelligence Division during World War II. While a student at Harvard, he was selected to join a special intelligence group whose mission was to break Japan's high-level military and diplomatic codes. Mr. Redstone received, among other honors, two commendations from the Military Intelligence Division in recognition of his service, contribution and devotion to duty. He is also a recipient of the Army Commendation Award. Mr. Redstone also serves as Executive Chairman of the Board of Directors and Founder of Viacom Inc.

that, Mr. Moonves has beenserved as President and Chief Executive Officer and a Director of the Company since January 1, 2006. Previously, Mr. Moonves served as Co-President and Co-Chief Operating Officer of Former Viacom since June 2004. Prior to that, Mr. Moonves served as2004, Chairman and Chief Executive Officer of CBS since 2003 and as its President and Chief Executive Officer since 1998. Mr. Moonves joined former CBS Corporation in 1995 as President, CBS Entertainment. Prior to that, Mr. Moonves was President of Warner Bros. Television since July 1993.


Mr. Ambrosio has been Senior Executive Vice President, Chief Administrative Officer and Chief Human Resources Officer of the Company since June 2013. Prior to that, Mr. Ambrosio served as Executive Vice President, Human Resources and Administration of the Company since January 1, 2006. Previously, he served as Co-ExecutiveCo‑Executive Vice President, Human Resources of Former Viacom since September 2005 and as Senior Vice President, Human Resources and Administration of the CBS, Infinity and Viacom Outdoor businesses since 2000. Prior to that, Mr. Ambrosio served as Vice President, Corporate Human Resources of the former CBS Corporation from 1999 to 2000, as Vice President, Benefits of the former CBS Corporation from 1995 to


November 1999 and as Director, Personnel of the former CBS Corporation in 1995. He joined the former CBS Corporation in 1985 and held various positions in the human resources area since that time.


Mr. BriskmanAnschell has been Executive Vice President, andDeputy General Counsel and Secretary of the Company since January 1, 2006. Previously, since September 2005, he served2016.  Mr. Anschell also serves as Executive Vice President and General Counsel of the businesses that comprisedCBS Broadcasting Inc., a position he has held since joining the Company on January 1, 2006.in 2004.  Mr. Anschell previously was a partner with the law firm, White O’Connor Curry in Los Angeles, California.

Mr. Ianniello has been Chief Operating Officer of the Company since June 2013. Prior to that, Mr. BriskmanIanniello served as Senior Vice President and General Counsel of Aetna Inc. since April 2004 and as Executive Vice President and General Counsel for CBS Television from 2000 to 2002. From 1993 to 2000, Mr. Briskman served as General Counsel of the former CBS Corporation and its predecessor, Westinghouse Electric Corporation. He joined Westinghouse Electric Corporation in 1975 and became its General Counsel in 1993 after serving as chief legal officer of its Group W division beginning in 1983.

        Mr. Franks has been Executive Vice President, Planning, Policy and Government Affairs of the Company since January 1, 2006. Previously, he served as Executive Vice President, CBS Television since 2000 and was also Senior Vice President of Former Viacom from 2000 to 2005. Prior to that, Mr. Franks served as Senior Vice President of the former CBS Corporation from 1997 to 2000, as Senior Vice President, Washington of the former CBS Corporation from 1994 to 1997, and as Vice President, Washington of the former CBS Corporation from 1988 to 1994.

        Mr. Ianniello has been Executive Vice President and Chief Financial Officer of the Company since August 2009. Prior to that, Mr. IannielloPreviously, he served as Deputy Chief Financial Officer of the Company since November 2008, as Senior Vice President, Chief Development Officer and Treasurer of the Company since September 2007, as Senior Vice President, Finance and Treasurer of the Company since January 1, 2006, as Senior Vice President and Treasurer of Former Viacom since July 2005, as Vice President, Corporate Development of Former Viacom from 2000 to 2005.


Mr. Jones has been Executive Vice President and General Tax Counsel since August 2014. Previously, he served as Senior Vice President and General Tax Counsel of the Company since January 1, 2006 and for Former Viacom in December 2005. Previously,Prior to that, he served as Vice President of Tax, Assistant Treasurer and Tax Counsel for NBC Universal, Inc. since 2003. Prior to that,2003 and he spent 13 years with Ernst & Young in their media & entertainment and transaction advisory services practices. Mr. Jones also served honorably as a non-commissioned officer in the U.S. Army'sArmy’s 75th Ranger Regiment.



I-31



Mr. Liding has been Executive Vice President, Controller and Chief Accounting Officer of the Company since August 2014. Previously, he served as Senior Vice President, Controller and Chief Accounting Officer of the Company since October 2011. Previously, he served as2011, Vice President, Deputy Controller of the Company since March 2010 and Vice President, Assistant Controller since January 1, 2006. Prior to that, Mr. Liding joined Former Viacom in 1995 and served as Vice President of Financial Reporting from 2002 through 2005.


Mr. Schwartz has been Senior Executive Vice President and Chief Communications Officer of the Company since June 2013. Prior to that, he served as Executive Vice President and Chief Communications Officer of the Company since January 1, 2006. Previously, he was Executive Vice President of CBS Communications Group, which served the Company'sCompany’s broadcast and local television, syndication, radio and outdoor operations, among others, from 2004 until January 1, 2006. He was Senior Vice President, Communications of CBS from 2000 to 2004, and Senior Vice President, Communications of the former CBS Corporation from 1996 to 2000. Mr. Schwartz served as Vice President, Corporate Communications of Westinghouse Broadcasting from 1995 to 1996. Prior to that, Mr. Schwartz served as Vice President, Communications for Westinghouse Broadcasting'sBroadcasting’s Group W Television Stations from 1989 to 1995. Mr. Schwartz joined Westinghouse Broadcasting in 1981.

        Ms. Straka


Mr. Tu has been Senior Executive Vice President Deputy General Counsel and SecretaryChief Legal Officer of the Company since January 1, 2006. Prior to that, Ms. Straka served as Vice President and Associate General Counsel and Co-Head of the Corporate, Transactions and Securities practice group in the corporate law department of Former Viacom. Prior to joining the Former Viacom corporate law department in February 2001, Ms. Straka2014. Previously, Mr. Tu served as Senior Vice President, General Counsel and Secretary of Infinity Broadcasting Corporation, then a majority-owned public subsidiary of Former Viacom, from May 2000. Ms. Straka wasDell Inc. since July 2004. Prior to that, Mr. Tu served as Executive Vice President Deputyand General Counsel of NBC Universal since 2001. He previously was a partner with the law firm, O’Melveny & Myers LLP, and Secretaryalso served five years as managing partner of the former CBS Corporationfirm’s Hong Kong office. Mr. Tu’s prior experience also includes serving as General Counsel Asia-Pacific for Goldman Sachs, attorney for the U.S. State Department, and its predecessor, Westinghouse Electric Corporation, since 1994 and up to the time of the May 2000 merger of Former Viacom and the former CBS Corporation.

law clerk for U.S. Supreme Court Justice Thurgood Marshall.


I-32



Part II

Item 5.    Market for CBS Corporation's Common Equity, Related Stockholder Matters and Purchases of Equity Securities.

Item 5.Market for CBS Corporation’s Common Equity, Related Stockholder Matters and Purchases of Equity Securities.
CBS Corporation (the "Company"“Company” or "CBS“CBS Corp."”) voting Class A Common Stock and CBS Corporation non-voting Class B Common Stock are listed and traded on the New York Stock Exchange ("NYSE"(“NYSE”) under the symbols "CBS.A"“CBS.A” and "CBS"“CBS”, respectively.

The following table sets forth, for the calendar periods indicated, the per share range of high and low sales prices for CBS Corporation'sCorporation’s Class A and Class B Common Stock, as reported on the NYSE.

 

 Voting Class A
Common Stock		 Non-Voting Class B
Common Stock		 Voting Class A Non-Voting Class B

 High
 Low
 High
 Low
 Common Stock Common Stock
 High Low High Low

2012

 

1st quarter

 $34.26 $27.82 $33.94 $27.18 

2nd quarter

 $35.56 $30.49 $35.00 $29.81 

3rd quarter

 $38.46 $30.55 $38.32 $29.85 

4th quarter

 $38.02 $32.39 $38.10 $31.84 
        

2011

 

1st quarter

 $26.25 $18.98 $26.17 $18.98 

2nd quarter

 $29.53 $23.53 $29.13 $23.35 

3rd quarter

 $30.03 $20.36 $29.68 $20.07 

4th quarter

 $28.05 $18.36 $27.72 $17.99 
 
2015       
1st quarter$64.63
 $53.93
 $63.71
 $52.94
2nd quarter$72.50
 $57.02
 $63.95
 $55.21
3rd quarter$58.44
 $42.54
 $56.39
 $38.51
4th quarter$57.90
 $43.28
 $52.18
 $38.76
2014       
1st quarter$68.00
 $55.74
 $68.10
 $55.71
2nd quarter$63.82
 $55.33
 $63.96
 $55.01
3rd quarter$65.07
 $53.62
 $65.24
 $53.49
4th quarter$57.48
 $49.24
 $56.67
 $48.83

On January 29, 2013,28, 2016, the Company announced a quarterly cash dividend of $.12$.15 per share on its Class A and Class B Common Stock, payable on April 1, 2013.2016. The Company declared a quarterly cash dividend on its Class A and Class B Common Stock during each of the four quarters of 20122015 and 2011,2014, resulting in total annual dividends of $287$293 million, for 2012 and $237 million for 2011. During 2012, the Company increased its quarterly cash dividend from $.10or $.60 per share to $.12for 2015 and $296 million, or $.54 per share beginning with the dividend declared in the third quarter.for 2014. CBS Corp. currently expects to continue to pay a regular cash dividend to its stockholders.

        On

In November 4, 2010, the Company announced that its Board of Directors approved a program to repurchase $1.5 billion share repurchase program. The Company subsequently announced that its Board of Directors approvedthe Company’s common stock. Since then, various increases to this share repurchasesuch amount have been approved and announced, including most recently a $3.0 billion increase to the amount available under such program of $1.5 billion on November 3, 2011 and $1.7 billion on July 26, 2012.August 7, 2014. Below is a summary of CBS Corp.'s’s purchases of its Class B Common Stock during the three months ended December 31, 20122015 under this publicly announced share repurchase program.

  
(in millions, except per share amounts)
 Total
Number of
Shares
Purchased
 Average
Price Per
Share
 Shares Purchased
as Part of
Publicly Announced
Programs
 Remaining
Authorization
 
  

October 1, 2012 – October 31, 2012

  2.6 $34.19  2.6 $2,721 

November 1, 2012 – November 30, 2012

  2.4 $34.50  2.4 $2,637 

December 1, 2012 – December 31, 2012

  3.5 $36.71  3.5 $2,511 
            

Total

  8.5 $35.30  8.5 $2,511 
            
(in millions, except per share amounts)
Total
Number of
Shares
Purchased
 
Average
Price Per
Share
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Programs
 
Remaining
Authorization
October 1, 2015 - October 31, 2015 2.8
  $43.08
  2.8
   $2,380
 
November 1, 2015 - November 30, 2015 2.8
  $49.88
  2.8
   $2,238
 
December 1, 2015 - December 31, 2015 5.0
  $47.68
  5.0
   $2,001
 
Total 10.6
  $47.05
  10.6
   $2,001
 

As of February 12, 2013,10, 2016, there were approximately 1,8151,586 record holders of CBS Corp. Class A Common Stock and approximately 26,84522,556 record holders of CBS Corp. Class B Common Stock.

II-1

        Information

Additional information required by this item is also contained in the CBS Corp. Proxy Statement for the Company's 2013Company’s 2016 Annual Meeting of Stockholders under the heading "Equity“Equity Compensation Plan Information,"” which information is incorporated herein by reference.


II-1


PerformancePerformance Graph

The following graph compares the cumulative total stockholder return on CBS Corp. Class A and Class B Common Stock with the cumulative total return on the companies listed in the Standard & Poor'sPoor’s 500 Stock Index ("(“S&P 500"500”) and a Peer Group of companies identified below.

The performance graph assumes $100 invested on December 31, 20072010 in each of the Class A and Class B Common Stock of CBS Corp., the S&P 500 and the Peer Group identified below including reinvestment of dividends, through the calendar year ended December 31, 2012.


2015.

Total Cumulative Stockholder Return
For Five-Year Period Ending December 31, 2012

2015

 
December 31,
 2007
 2008
 2009
 2010
 2011
 2012
 201020112012201320142015
 

CBS Corp. Class A Common Stock

 $100 $33 $59 $81 $119 $165 $100$147$205$347$309$290

CBS Corp. Class B Common Stock

 $100 $33 $58 $79 $114 $162 $100$144$205$347$304$262

S&P 500

 $100 $63 $80 $92 $94 $109 $100$102$118$157$178$181

Peer Group(a)

 $100 $57 $81 $91 $98 $135 $100$108$149$226$270$256
 
(a)
The Peer Group consists of the following companies: The Walt Disney Company, News Corporation,Twenty-First Century Fox, Inc., Time Warner Inc., and Cumulus Media Inc. and Clear Channel Outdoor Holdings, Inc.


II-2

Item 6.   Selected Financial Data.



Item 6.Selected Financial Data.
CBS CORPORATION AND SUBSIDIARIES
(In millions, except per share amounts)

  
 
 Year Ended December 31,(a) 
 
 2012
 2011
 2010
 2009(b)
 2008(b)
 
  

Revenues

 $14,089 $13,637 $13,466 $12,405 $13,112 

Operating income (loss)

 $2,983 $2,619 $1,929 $1,156 $(11,613)

Net earnings (loss) from continuing operations

 $1,634 $1,391 $822 $343 $(11,179)

Net loss from discontinued operations, net of tax

 $(60)$(86)$(98)$(116)$(494)

Net earnings (loss)

 $1,574 $1,305 $724 $227 $(11,673)

Basic net earnings (loss) per common share:

                

Net earnings (loss) from continuing operations

 $2.55 $2.09 $1.21 $.51 $(16.69)

Net loss from discontinued operations

 $(.09)$(.13)$(.14)$(.17)$(.74)

Net earnings (loss)

 $2.45 $1.97 $1.07 $.34 $(17.43)

Diluted net earnings (loss) per common share:

                

Net earnings (loss) from continuing operations

 $2.48 $2.04 $1.18 $.50 $(16.69)

Net loss from discontinued operations

 $(.09)$(.13)$(.14)$(.17)$(.74)

Net earnings (loss)

 $2.39 $1.92 $1.04 $.33 $(17.43)

Dividends per common share

 
$
..44		 
$
..35		 
$
..20		 
$
..20		 
$
1.06		 

At Year End:

                

Total assets:

                

Continuing operations

 $25,988 $25,695 $25,614 $26,350 $26,415 

Discontinued operations

  478  525  550  618  672 

Total assets

 $26,466 $26,220 $26,164 $26,968 $27,087 

Total debt:

                

Continuing operations

 $5,922 $5,982 $6,000 $6,997 $6,996 

Discontinued operations

  13  21  21  21  34 

Total debt

 $5,935 $6,003 $6,021 $7,018 $7,030 

Total Stockholders' Equity

 $10,213 $9,908 $9,821 $9,019 $8,597 
  
 
Year Ended December 31, (c) (d)
 
2015 (a) (b)
 
2014 (e)
 2013 2012 2011
Revenues$13,886
 $13,806
 $14,005
 $12,820
 $12,381
Operating income$2,417
 $2,896
 $3,025
 $2,778
 $2,423
Net earnings from continuing operations$1,403
 $1,354
 $1,738
 $1,508
 $1,263
Net earnings from discontinued operations, net of tax$10
 $1,605
 $141
 $66
 $42
Net earnings$1,413
 $2,959
 $1,879
 $1,574
 $1,305
          
Basic net earnings per common share:         
Net earnings from continuing operations$2.90
 $2.46
 $2.86
 $2.35
 $1.90
Net earnings from discontinued operations, net of tax$.02
 $2.92
 $.23
 $.10
 $.06
Net earnings$2.92
 $5.38
 $3.09
 $2.45
 $1.97
          
Diluted net earnings per common share:         
Net earnings from continuing operations$2.87
 $2.41
 $2.79
 $2.29
 $1.85
Net earnings from discontinued operations, net of tax$.02
 $2.86
 $.23
 $.10
 $.06
Net earnings$2.89
 $5.27
 $3.01
 $2.39
 $1.92
          
Dividends per common share$.60
 $.54
 $.48
 $.44
 $.35
          
At Year End:         
Total assets:         
Continuing operations$23,765
 $23,935
 $22,730
 $22,200
 $21,712
Discontinued operations—
 —
 3,475
 3,993
 4,161
Total assets$23,765
 $23,935
 $26,205
 $26,193
 $25,873
Total debt:         
Continuing operations$8,448
 $7,112
 $6,403
 $5,886
 $5,932
Discontinued operations—
 —
 14
 14
 22
Total debt$8,448
 $7,112
 $6,417
 $5,900
 $5,954
Total Stockholders’ Equity$5,563
 $6,970
 $9,966
 $10,213
 $9,908
(a)
During 2012, In 2015, CBS Corporation (the "Company"“Company” or "CBS“CBS Corp."”) initiatedrecorded a plan to divest its outdoor advertising business in Europe, which includes an interest in an outdoor business in Asia ("Outdoor Europe"). Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.

(b)
In 2009, the Company recorded noncash impairment chargescharge of $210$484 million ($131297 million, net of tax), or $.19$.61 per diluted share, to reduce the carrying value of radio FCC licenses to their fair value.
(b) In 2015, the Company recorded gains from the sales of Internet businesses in certain radio markets and to reduceChina of $139 million ($131 million, net of tax), or $.27 per diluted share.
(c) On July 16, 2014, the carrying valueCompany completed the disposition of CBS Outdoor Americas Inc., which was previously a subsidiary of the allocated goodwillCompany and has been renamed OUTFRONT Media, Inc. (“Outdoor Americas”). Outdoor Americas has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented. For 2014, net earnings from discontinued operations, net of tax, includes a gain on the disposal of Outdoor Americas of $1.56 billion, or $2.78 per diluted share.
(d) On September 30, 2013, the Company completed the sale of its outdoor advertising business in Europe, which included an interest in an outdoor business in Asia (“Outdoor Europe”) for $225 million.  Outdoor Europe has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented.
(e) In 2014, in connection with the saleearly redemption of certain radio stations. In 2008,$1.07 billion of its debt, the Company recorded noncash impairment chargesa pretax loss on early extinguishment of $14.18 billiondebt of $352 million ($12.73 billion,219 million, net of tax), or $19.00$.39 per diluted share, including $551 million reflected in net loss from discontinued operations, principally to reduce the carrying value of goodwill and intangible assets.share.



II-3

Item 7.   Management's Discussion and Analysis of Results of Operations and Financial Condition.


(Tabular dollars in millions, except per share amounts)

        Management's

Item 7.
Management’s Discussion and Analysis of Results of Operations and Financial Condition.
(Tabular dollars in millions, except per share amounts)
Management’s discussion and analysis of the results of operations and financial condition of CBS Corporation (together with its consolidated subsidiaries, unless the context otherwise requires, the "Company"“Company” or "CBS“CBS Corp."”) should be read in conjunction with the consolidated financial statements and related notes. Descriptions of all documents incorporated by reference herein or included as exhibits hereto are qualified in their entirety by reference to the full text of such documents so incorporated or included. Please see Item 1A. "Risk Factors" in Part I of this report for the Cautionary Statement Concerning Forward-Looking Statements.


Overview

Business overview and strategy
The Company operates businesses which span the media and entertainment industries, including the CBS Television Network, cable program services, televisionnetworks, content production and distribution, motion pictures, publishing,television and radio stations, television stations, interactiveInternet-based businesses, and outdoor advertising.consumer publishing. The Company'sCompany’s principal strategy is to create and acquire premium content that is widely accepted by audiences and generate both advertising and non-advertising revenues from the distribution of this content on multiple media platforms and to various geographic locations. The Company also continues to pursueincrease its investment in both Company-owned and acquired premium content to enhance its opportunities to grow itsfor revenue streams, including licensing itsgrowth, which include exhibiting the Company’s content for exhibition on digital and other platforms;platforms through licensing and subscription services, including the Company’s owned digital streaming services; expanding the distribution of its content internationally; and securing compensation from multichannel video programming distributors ("MVPDs"(“MVPDs”) and television stations affiliated with the CBS Television Network; and increasinglyNetwork. The Company also seeks to grow its advertising revenues by monetizing all content viewership and ratings as industry measurements evolve to reflect viewers’ changing viewership habits. The Company'sCompany’s continued ability to capitalize on these and other emerging opportunities will provide it with incremental advertising and non-advertising revenues and servesrevenues.

Operational highlights 2015 vs. 2014
Consolidated results of operations    Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Revenues$13,886
 $13,806
 $80
 1 % 
Operating income$2,417
 $2,896
 $(479) (17)% 
Adjusted operating income (a)
$2,843
 $2,974
 $(131) (4)% 
Net earnings from continuing operations$1,403
 $1,354
 $49
 4 % 
Adjusted net earnings from continuing operations (a)
$1,618
 $1,663
 $(45) (3)% 
Diluted EPS from continuing operations$2.87
 $2.41
 $.46
 19 % 
Adjusted diluted EPS from continuing operations (a)
$3.31
 $2.96
 $.35
 12 % 
(a) See page II-6 for reconciliations of adjusted results to de-risk and diversify the Company's business model.

most directly comparable financial measures in accordance with accounting principles generally accepted in the United States (“GAAP”).


For 2012, the Company's2015, diluted earnings per share ("EPS") from continuing operations of $2.48 increased $.44, or 22%,(“EPS”) was up 19% from $2.04 for 2011. This growth was primarily driven by 3%2014, reflecting higher revenues, increased profitability of television licensing revenuesnet earnings from continuing operations and lower weighted average shares outstanding resultingas a result of the Company’s ongoing share repurchase program and the split-off of Outdoor Americas Inc. (“Outdoor Americas”) in the third quarter of 2014. In 2015, EPS included a pretax noncash impairment charge to reduce the carrying value of radio FCC licenses to their fair value, restructuring charges, and gains from the Company's share repurchases.sales of Internet businesses in China. In 2014, EPS included an impairment charge associated with a radio station swap, restructuring charges, and a loss on early extinguishment of debt. On an adjusted basis, excluding these discrete items, EPS increased 12%. The revenue growth reflects increases across all major revenue streams, including higher revenues from licensingCompany believes that presenting its financial results adjusted for the Company's programmingimpact of these discrete items is relevant and useful for digital streaminginvestors because it allows investors to view performance in a manner similar to the method used by the Company’s management and domestic and international syndication, higher cable network affiliate fees and retransmission revenues from MVPDs, and higher political advertising sales. Total advertising revenues for 2012, which represented 60%provides a clearer perspective on the underlying performance of the Company's total revenues, grew 1% reflecting a steady advertising marketplace. For 2012, operating incomeCompany. These adjusted results are non-GAAP financial measures. See page II-6 for reconciliations of $2.98 billion increased 14% from $2.62 billion for 2011adjusted results to the most directly comparable financial measures in accordance with an increase in the Company's operating income margin of two percentage points to 21%.

        The Company expects to benefit from continued growth in revenues received from MVPDs and television stations affiliated with the CBS Television Network, as well as incremental television license fees driven by first-cycle domestic syndication availabilities of television series in 2013 (see page I-3 for more information about television syndication cycles). Advertising revenues in 2013 will benefit from the Super Bowl broadcast on the CBS Television Network. However, the Company's overall financial performance will be impacted by many factors, including, the health of the economy and audience acceptance of the Company's programming.

        The Company generated $1.82 billion of operating cash flow in 2012 which was primarily used to return $1.41 billion to shareholders through repurchases of the Company's stock and payment of dividends, and to invest approximately $400 million back into the business through capital expenditures and acquisitions.

GAAP.



II-4


Management's


Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

        Free



For 2015, the 1% increase in revenues reflected continued growth in affiliate and subscription fee revenues, partially offset by lower advertising and content licensing and distribution revenues. Affiliate and subscription fees increased 15% as a result of growth in station affiliation fees and retransmission revenues, reflecting the benefit from recently renegotiated agreements, as well as higher revenues from pay-per-view boxing events. Advertising revenues decreased 3% primarily reflecting lower local advertising revenues as a result of the benefit in 2014 from midterm elections and lower radio advertising sales. Total advertising revenues benefited from 1% growth in network advertising, which increased despite fewer sporting events broadcast on the CBS Television Network. Content licensing and distribution revenues decreased 2% reflecting lower domestic television licensing revenues, which were partially offset by higher international television licensing revenues.

Operating income was down 17% from 2014. On an adjusted basis, excluding the impairment charges, restructuring charges, and gains from the sales of Internet businesses in China, operating income declined 4% primarily as a result of increased investment in programming and new digital distribution initiatives.

The Company generated operating cash flow from continuing operations of $1.42 billion in 2015 and $1.21 billion in 2014. Included in operating cash flow for 2012 of $1.57 billion, decreased 1% from $1.59 billion for 2011, principally reflecting higher income tax payments and increased investment in television content. Included in free cash flow for 20122014 were contributions to the Company's qualified pension plans of $200 million and payments of approximately $60$360 million associated with the early extinguishment of debt, primarily for make-wholeearly redemption premiums. Free cash flow for 2011 included contributions to the Company's qualified pension plans of $410 million.2015 was $1.23 billion compared with $1.00 billion for 2014. Free cash flow is a non-GAAP financial measure. See "Reconciliation of Non-GAAP Financial Information"“Free Cash Flow” on pages II-12II-27 and II-13II-28 for a reconciliation of net cash flow provided by (used for) operating activities, the most directly comparable financial measure in accordance with accounting principles generally accepted in the United States of America ("GAAP"),GAAP, to free cash flow.

        As part


Share repurchases
Following is a summary of the Company's strategic initiatives forCompany’s purchases of its outdoor advertising business,Class B Common Stock during the year ended December 31, 2015:
Total Number of Shares Purchased
(in millions)
 
Average Price
Per Share
 
Dollar Value
of Shares Repurchased
 Remaining Authorization
 51.7
   $54.18
   $2,800
   $2,001
 
Dividends
      Increase/(Decrease) 
Year Ended December 31, 2015 2014 $ % 
Dividends per share $.60
 $.54
 $.06
 11 % 
Total dividends $293
 $296
 $(3) (1)% 
Debt
At December 31, 2015 and 2014 the Company’s outstanding debt, excluding capital leases, was as follows:
   Weighted Average   Weighted Average 
At December 31,2015 Interest Rate 2014 Interest Rate 
Total long-term debt$8,365
  4.68%  $6,399
  4.88%  
Commercial paper$—
  —%  $616
  0.46%  

During 2015, the Company has begunissued a total of $2.0 billion of senior debt and used the processnet proceeds from these offerings for general corporate purposes, including the repurchase of converting its outdoor businessCBS Corp. Class B Common Stock and the repayment of short-term borrowings, including commercial paper.


II-5



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Reconciliation of Non-GAAP Measures
The following tables present adjusted operating income, adjusted net earnings from continuing operations, and adjusted diluted EPS from continuing operations, which exclude the Americas into a real estate investment trust ("REIT"). In addition, duringimpact of the fourth quarterabove-mentioned discrete items. These adjusted results are non-GAAP financial measures, which are reconciled below to the most directly comparable financial measures in accordance with GAAP.
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Operating income$2,417
 $2,896
 $(479) (17)% 
Discrete items:        
Impairment charges484
 52
     
Restructuring charges81
 26
     
Gain on sales of businesses(139) —
     
Adjusted operating income$2,843

$2,974

$(131)
(4)% 
     Increase/(Decrease) 
Year Ended December 31,2015
2014 $ % 
Net earnings from continuing operations$1,403
 $1,354
 $49
 4 % 
Discrete items:        
Impairment charges (net of tax benefit of $187 million in
2015 and including tax provision of $22 million in 2014)
297
 74
     
Restructuring charges (net of tax benefit of $32 million
in 2015 and $10 million in 2014)
49
 16
     
Loss on early extinguishment of debt (net of tax benefit
of $133 million)
—
 219
     
Gain on sales of businesses (net of tax provision of
$8 million)
(131) —
     
Adjusted net earnings from continuing operations$1,618

$1,663

$(45)
(3)% 
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Diluted EPS from continuing operations$2.87
 $2.41
 $.46
 19% 
Discrete items:        
Impairment charges.61
 .13
     
Restructuring charges.10
 .03
     
Loss on early extinguishment of debt—
 .39
     
Gain on sales of businesses(.27) —
     
Adjusted diluted EPS from continuing operations$3.31

$2.96

$.35

12% 

II-6



Management’s Discussion and Analysis of 2012 the Company initiated a plan to divest its outdoor advertising business
Results of Operations and Financial Condition (Continued)
(Tabular dollars in Europe, which includes an interest in an outdoor business in Asia ("Outdoor Europe"). Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented. All of these actions are subject to customary approvals.

millions, except per share amounts)



Segments

CBS Corp. operates in the following fivefour segments:

ENTERTAINMENT:  The Entertainment segment consists of theCBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS FilmsInteractive and andCBS InteractiveFilms.  EntertainmentEntertainment’s revenues are generated primarily from advertising sales, the licensing and distribution of its content, and affiliate and subscription fees.  The Entertainment segment contributed 55%61%, 60%, and 62% to consolidated revenues in 2012, 20112015, 2014, and 20102013, respectively, and 46%, 47%44%, and 37%53% to consolidatedtotal segment operating income in 2012, 20112015, 2014, and 2010,2013, respectively.

CABLE NETWORKS:  The Cable Networks segment consists ofShowtime Networks, CBS Sports Network andSmithsonian Networks. Cable NetworksNetworks’ revenues are generated primarily from affiliate fees, and the licensing and distribution of its content.  The Cable Networks segment contributed 13%, 12% and 11%16% to consolidated revenues in 2012, 2011each of the years 2015 and 2010, respectively,2014, and 26%15% in 2013, and 33% to consolidatedtotal segment operating income in 2012each of the years 2015 and 2011,2014, and 28% to consolidated operating income29% in 2010.2013.

PUBLISHING:  The Publishing segment consists ofSimon & Schuster'sSchuster’s consumer book publishing business with imprints such asSimon & Schuster,Pocket Books, Scribner andFree Press.Atria Books.  Publishing generates revenues from the distribution of consumer books in print, digital and audio formats. The Publishing segment contributed 6% to consolidated revenues in each of the years 2015, 2014, and 3%2013, and 4% to consolidatedtotal segment operating income in 2012, 20112015 and 2010.3% in each of the years 2014 and 2013.

LOCAL BROADCASTING:  The Local Broadcasting segment consists ofCBS Television Stations andCBS Radio, with revenues generated primarily from advertising sales.sales and retransmission fees. The Local Broadcasting segment contributed 19%, 20% and 19% to consolidated revenues in 20122015, 2014, and 2011,2013, respectively, and 21%27%, 30%, and 27% to consolidated revenues in 2010 and 28%, 29% and 38% to consolidatedtotal segment operating income in 2012, 20112015, 2014, and 2010,2013, respectively.


OUTDOOR AMERICAS:Consolidated Results of Operations—2015 vs. 2014
Revenues
Revenues by Type  % of Total   % of Total Increase/(Decrease) 
Year Ended December 31,2015 Revenues 2014 Revenues $ % 
Advertising$7,018
  50%  $7,204
  52%  $(186) (3)% 
Content licensing and distribution3,903
  28
  3,990
  29
  (87) (2) 
Affiliate and subscription fees2,724
  20
  2,362
  17
  362
 15
 
Other241
  2
  250
  2
  (9) (4) 
Total Revenues$13,886
  100%  $13,806
  100%  $80
 1 % 
Advertising
For 2015, the 3% decrease in advertising revenues was principally driven by lower local advertising revenues, mainly from the benefit to 2014 from midterm elections and 6% lower radio advertising revenues. These declines were partially offset by growth in network advertising revenues, which increased 1% despite the broadcast of fewer sporting events on the CBS Television Network in 2015. The Outdoor Americas segment, principally throughCBS Outdoor, provides spaceincrease in network advertising reflects higher scatter pricing in the second half of the year, primarily as a result of increased demand. The increase is also driven by more inventory available to be sold at higher prices in the scatter market as a result of fewer units sold prior to the start of the 2015/2016 television broadcast season (“Upfront”) compared with the 2014/2015 season. (See pages I-2 and II-8 for advertisers on various structures in North Americafurther descriptions of the scatter and South America, including billboards, transit shelters and benches, buses, rail systems (both in-car and structures on station platforms and terminals), mall kiosks, stadium signage, and in retail stores. Outdoor Americas revenues are generated primarily fromUpfront advertising displayed on such structures. The Outdoor Americas segment contributed 9% to consolidated revenues in 2012, 2011 and 2010, and 7%, 8% and 7% to consolidated operating income in 2012, 2011 and 2010, respectively.

II-5

markets.)

II-7


Management's


Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Consolidated Results of Operations—2012 vs. 2011



In 2016, national and 2011 vs. 2010

Revenues

        The following tables present the Company's consolidated revenues by type for each of the years ended December 31, 2012, 2011 and 2010.

  
Revenues by Type
Year Ended December 31,
 2012
 2011
 Increase/(Decrease)
2012 vs. 2011
 2010
 Increase/(Decrease)
2011 vs. 2010
 
  

Advertising

 $8,459 $8,399 $60  1%$8,559 $(160) (2)%

Content licensing and distribution

  3,468  3,236  232  7  3,049  187  6 

Affiliate and subscription fees

  1,921  1,762  159  9  1,620  142  9 

Other

  241  240  1  —  238  2  1 
  

Total Revenues

 $14,089 $13,637 $452  3%$13,466 $171  1%
  


  
 
 Year Ended December 31, 
Percentage of Revenues by Type
 2012
 2011
 2010
 
  

Advertising

  60% 61% 63%

Content licensing and distribution

  24  24  23 

Affiliate and subscription fees

  14  13  12 

Other

  2  2  2 
  

Total

  100% 100% 100%
  

        Advertising sales increased 1% to $8.46 billion in 2012 from $8.40 billion in 2011 reflecting increased political advertising spending associated with the U.S. presidential election, as well as a steady advertising marketplace. Networklocal advertising revenues increased slightly reflecting higher pricing, partially offset by lower ratings during the second half of 2012. Advertising revenues in 2013 will benefit from the CBS Television Network'sNetwork’s broadcast of the Super Bowl, which airs on the CBS Television Network once every three years as well as upfront pricing increases forthrough 2022 under the remaindercurrent contract with the National Football League (“NFL”). The local advertising revenue comparison will also benefit from higher political advertising spending, mainly in the second half of the 2012/2013 television broadcast season. However, overallyear, associated with the U.S. Presidential election. For national advertising, revenues for the CBS Television Network will also be impacted by ratingsNetwork’s Upfront for its programmingthe 2015/2016 television broadcast season, which runs from the middle of September 2015 through the middle of September 2016, resulted in pricing increases and demandlower overall volume compared with the prior season. As a result, more advertising spots are available in the scatter advertising market, (see page I-2 for a descriptionwhen advertisers purchase the remaining advertising spots closer to the broadcast of advertising sales in the upfront and scatter markets). Also in 2013, advertising revenue comparisons for Local Broadcasting will be negatively impacted by lower political advertising spending.

        In 2011, advertising sales decreased 2% to $8.40 billion from $8.56 billion in 2010 as comparability for 2011 was impacted by the 2010 broadcast ofSuper Bowl XLIV on the CBS Television Network and the new programming agreement between the Company and Turner Broadcasting System, Inc. for the telecast of theNCAA Division I Men's Basketball Championship ("NCAA Tournament"), which began in 2011. In aggregate, these two non-comparable items negatively impacted the advertising revenue comparison for 2011 by four percentage points. Underlyingrelated programming. Overall advertising revenues for 2011 benefited from pricing increasesthe Company will be dependent on demand in the overall advertising marketplace and ratings for sports programming, growth in network primetimeits programming.


Content licensing and higher outdoor advertising sales, partially offset by significantly lower political spending as 2010 benefited from midterm elections.

distribution

Content licensing and distribution revenues are principally comprised of fees from the licensing of internally produced television programming tofor multiple media platforms and in various geographic locations; fees from the distribution of third party programming; and revenues from the publishing and distribution of consumer books. Content licensing and distribution revenues increased 7% to $3.47 billionFor 2015, the 2% decrease in 2012 from $3.24 billion in 2011 reflecting higher revenues from the licensing of programming for digital streaming

II-6


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

and increased domestic and international syndication sales. In 2011, content licensing and distribution revenues increased 6% to $3.24 billion from $3.05 billion in 2010 reflecting growth in bothreflects lower domestic andtelevision licensing revenues, partially offset by higher international television license fees, principally driven by the impact of new licensing agreements for digital streaming.

revenues. Significant contributors to domestic television licensing revenues in 2015 included Elementary and NCIS, while 2014 included Blue Bloods, Hawaii Five-0, and Dexter.


Content licensing and distribution revenuesrevenue comparisons are expected to grow in 2013, reflectingimpacted by fluctuations resulting from the benefit from first-cycle domestic syndication availabilities (see page I-3timing of the availability of Company-owned television series for more information about television syndication cycles).multi-year licensing agreements. Television license fee revenues are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition. Unrecognized revenues attributable to license agreements for produced programming that is not yet available for exhibition were $847 million and accordingly, substantial fluctuations in operating results may result from the timing$1.02 billion at December 31, 2015 and 2014, respectively. As of the availabilityend of a television series2015 the Company had approximately 400 episodes of scripted original programming that had not yet been made available in the secondary domestic marketplace (See page II-46 for a multiple yeardescription of the secondary marketplace).

Total outstanding receivables attributable to revenues recognized under licensing arrangement.

agreements at December 31, 2015 and 2014 were $3.83 billion and $3.57 billion, respectively. At December 31, 2015, the total amount due from these receivables was $1.69 billion in 2016, $1.03 billion in 2017, $552 million in 2018, $348 million in 2019, and $214 million in 2020 and thereafter.


Affiliate and subscription fees
Affiliate and subscription fees are principally comprised of revenues received from MVPDs for carriage of the Company'sCompany’s cable networks (“cable affiliate fees”), as well as for authorizing the MVPDsMVPDs’ carriage of the Company'sCompany’s owned television stations ("(“retransmission fees"fees”); fees received from television stations affiliated with the CBS Television Network (known as "network(“station affiliation fees" or "reverse compensation"fees”); and subscribersubscription fees for online content. Growth in eachcontent; and revenues received for the distribution of these components resulted in increasespay-per-view boxing events. For 2015, the 15% increase in affiliate and subscription fees of 9%reflects growth in both 2012station affiliation fees, retransmission fees, and 2011 to $1.92 billioncable affiliate fees from growth in rates; higher revenues from pay-per-view boxing events; and $1.76 billion, respectively. Therevenues from new digital distribution platforms. In 2016, the Company expects continued growth in affiliate and subscription fee revenues in 2013, reflectingfees. Over the benefitnext few years the Company expects to renew a significant portion of current agreements, as well as the renewal of certain otherits agreements with MVPDsstation affiliates and television stations affiliatedMVPDs. This, along with the Company’s new digital distribution initiatives, including CBS Television Network.

        Other revenues, which include ancillaryAll Access and Showtime’s digital streaming subscription offering, are expected to result in continued growth in affiliate and subscription fees for Entertainment, Cable Networks, Local Broadcastingover the next several years.



II-8



Management’s Discussion and Outdoor Americas operations, remained relatively flat for all periods presented.

Analysis of

Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


International Revenues

International revenues primarily consist of television licensing revenues, as well as outdoor advertising revenues generated in Canada, Mexico and South America.revenues. The Company generated approximately 12%14% and 13% of its total revenues from international regions in both 20122015 and 2011, and 11% in 2010.

2014, respectively.

    % of   % of 
Year Ended December 31,
 2012
 % of
International
 2011
 % of
International
 2010
 % of
International
  2015 International 2014 International 
 

United Kingdom

 $245 14%$202 13%$188 13% $345
 17% $270
 15% 

Other Europe

 498 29 480 30 436 29  691
 35
 657
 37
 

Canada

 359 21 371 24 383 26  286
 14
 241
 13
 

Asia

 173 10 129 8 108 7  236
 12
 262
 15
 

Other

 456 26 400 25 367 25  446
 22
 363
 20
 
 

Total International Revenues

 $1,731 100%$1,582 100%$1,482 100% $2,004
 100% $1,793
 100% 
 

II-7


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Operating Expenses

        The table below presents the Company's consolidated operating expenses by type for each of the years ended December 31, 2012, 2011 and 2010.

 
Operating Expenses by Type
Year Ended December 31,
 2012
 2011
 Increase/(Decrease)
2012 vs. 2011
 2010
 Increase/(Decrease)
2011 vs. 2010
 
   % of   % of   
Operating Expenses by Type  Operating   Operating Increase/(Decrease) 
Year Ended December 31,2015 Expenses 2014 Expenses $ % 

Programming

 $2,621 $2,563 $58 2%$3,094 $(531) (17)%$2,961
  36%  $2,975
  37%  $(14) — % 

Production

 2,149 2,096 53 3 2,104 (8) — 2,770
 33
 2,456
 30
 314
 13
 

Billboard, transit and other occupancy

 645 637 8 1 640 (3) — 

Participation, distribution and royalty

 1,004 1,065 (61) (6) 1,066 (1) — 1,109
 13
 1,185
 15
 (76) (6) 

Other

 1,548 1,521 27 2 1,608 (87) (5)1,484
 18
 1,473
 18
 11
 1
 
 

Total Operating Expenses

 $7,967 $7,882 $85 1%$8,512 $(630) (7)%$8,324
  100%  $8,089
 100% $235
 3 % 
 

Programming expenses represented 33% of total operating expenses for each of the years 2012 and 2011, and 36% in 2010, and reflect the amortization of acquired rights of programs exhibited on the television broadcast and cable networks, and television and radio stations. Programming expenses increased 2% to $2.62 billion in 2012 from $2.56 billion in 2011 primarily driven by higher television programming costs, principally for network primetime programming. The Company expectsFor 2015, programming expenses to be higher in 2013, principally driven by the amortization ofremained flat with 2014 as increased sports programming costs relating to the CBS Television Network's broadcast of the Super Bowl, which airs on the CBS Television Network once every three years. For 2011, programming expenses decreased 17% to $2.56 billionassociated with higher revenues from $3.09 billion in 2010 primarily reflectingNFL broadcasts and pay-per-view boxing events were offset by lower costs for sports programming, including the impact of the new programming agreement for the NCAA Tournament, which began in 2011, and the absence of the 2010 broadcast ofSuper Bowl XLIV on the CBS Television Network, as well as lower acquired television series costs.

as a result of a shift to a higher mix of internally developed television series.

Production expenses represented 27% of total operating expenses for each of the years 2012 and 2011, and 25% in 2010, and reflect the amortization of direct costs of internally developed television and theatrical film content, as well as television and radio costs, including on-air talent and other production costs. Production expenses increased 3% to $2.15 billionFor 2015, the 13% increase in 2012 from $2.10 billion in 2011 primarily driven by higher amortization associated with increased revenues from television licensing arrangements. For 2011, production expenses remained relatively flat at $2.10 billion due to the title mix from licensing arrangements forreflects an increased investment in internally developed television programming. The Company expects its production costs to increase in 2013 mainly reflecting cost amortization associated with revenues from first-cycle domestic syndication availabilities.

        Billboard, transit and other occupancy expenses represented 8% of total operating expenses for each of the years 2012, 2011 and 2010, and reflect lease and franchiseseries as well as higher costs associated with billboards, transit and other outdoor displays, rent expense on production facilities, and other occupancy costs. Billboard, transit and other occupancy expenses increased 1% to $645 millionthe mix of titles sold under television licensing agreements in 2012 from $637 million2015 compared with 2014. The Company produced approximately 20% more hours of original scripted programming in 2011, principally due to the negative outcome of a dispute over a billboard tax that has been imposed on the outdoor advertising industry in Toronto, partially offset by lower occupancy expenses from the impact of cost-savings initiatives. For 2011, billboard, transit and other occupancy expenses decreased slightly to $637 million from $640 million in 2010.

2015 compared with 2014.

Participation, distribution and royalty costs which represented 13% of total operating expenses in 2012, 14% in 2011 and 13% in 2010, primarily include participation and residual expenses for television programming, royalty costs for Publishing content and other distribution expenses incurred with respect to television and feature film content, such as print and advertising. Participation,For 2015, the 6%decrease in participation, distribution and royalty

II-8

costs primarily reflects lower participations and residuals associated with the decrease in licensing revenues.
Other operating expenses primarily include compensation and costs associated with book sales, including printing and warehousing. 

II-9


Management's


Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

costs decreased 6% to $1.00 billion in 2012 from $1.07 billion in 2011, principally due to lower participations associated with the mix of titles licensed for syndication. For 2011, participation, distribution and royalty costs remained relatively flat at $1.07 billion reflecting lower advertising and other distribution costs from the timing of theatrical film releases offset by higher participations from the licensing of titles for digital streaming and the mix of domestic syndication sales.

        Other operating expenses, which represented 19% of total operating expenses for each of the years 2012, 2011 and 2010, primarily include compensation, costs associated with book sales, including printing and warehousing, and costs associated with the production and hosting of websites. For 2012, other operating expenses increased 2% to $1.55 billion from $1.52 billion in 2011 reflecting higher employee-related costs mainly to support growth in digital businesses. For 2011, other operating expenses decreased 5% to $1.52 billion from $1.61 billion in 2010 primarily reflecting lower costs associated with the absence of sponsorship revenues resulting from the new programming agreement for the NCAA Tournament.



Selling, General and Administrative Expenses

   % of   % of Increase/(Decrease) 
Year Ended December 31,2015 Revenues 2014 Revenues $ % 
Selling, general and administrative
expenses
$2,455
  18%  $2,462
  18%  $(7) —% 
Selling, general and administrative ("(“SG&A"&A”) expenses which include expenses incurred for selling and marketing costs, occupancy and back office support, represented 19%support.

Depreciation and Amortization
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Depreciation and amortization$264
 $281
 $(17) (6)% 
For 2015, the 6%decrease in depreciation and amortization was the result of revenues for each of the years 2012intangibles and 2011,property and 18% for 2010. For 2012, SG&A expenses increased $36 million, or 1%, to $2.63 billion from $2.60 billion in 2011 principally due to a charge related to a Publishing legal settlement, and higher advertising and promotion expenses.

        For 2011, SG&A expenses increased $132 million, or 5%, to $2.60 billion from $2.47 billion in 2010 principally due to a settlement of $90 million recorded in 2010 related to the favorable resolutions of certain disputes regarding previously disposed businesses, higher advertising and increased selling expenses primarily associated with higher revenues, partially offset by $37 million lower pension and postretirement benefit costs primarily due to the favorable performance of pension plan assets in 2010.

equipment that became fully amortized.

Restructuring Charges

During the year ended December 31, 2012,2015, 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 $19$81 million, reflecting $13$48 million of severance costs and $6$33 million of costs associated with exiting contractual obligations. obligations and other related costs. These restructuring activities are expected to reduce the Company’s annual cost structure by approximately $95 million.

During the yearsyear ended December 31, 2011 and 2010,2014, the Company recorded restructuring charges of $43$26 million, and $59 million, respectively. The charges reflected $53reflecting $17 million of severance costs and $49$9 million of costs associated with exiting contractual obligations. As of December 31, 2012,2015, the cumulative amount paidsettlements for the 2012, 20112015 and 20102014 restructuring charges was $83were $53 million, of which

II-9

$35 million was for severance costs and $18 million related to costs associated with exiting contractual obligations. The Company expects to substantially utilize its restructuring reserves by the end of 2016.
 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
 
 2014 2014 Balance at
 Charges Settlements December 31, 2014
Entertainment$8
  $(2)   $6
 
Publishing1
  (1)   —
 
Local Broadcasting14
  (4)   10
 
Corporate3
  (1)   2
 
Total$26
  $(8)   $18
 
Impairment Charges
During 2015, the Company recorded a pretax noncash impairment charge of $484 million to reduce the carrying value of radio FCC licenses in 18 markets to their fair value. (See Note 3 to the consolidated financial statements).


II-10


Management's


Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

$55 million was



In December 2014, the Company completed a radio station swap with Beasley Broadcast Group, Inc. through which the Company exchanged 13 of its radio stations in Tampa and Charlotte as well as one radio station in Philadelphia, for the severance coststwo radio stations in Philadelphia and $28 million was related to costs associated with contractual obligations. The Company expects to substantially utilize the remaining reserves by the end of 2013.

  
 
 Balance at
December 31, 2011
 2012
Charges
 2012
Payments
 Balance at
December 31, 2012
 
  

Entertainment

 $42 $7 $(24)$25 

Cable Networks

  1  —  —  1 

Publishing

  2  3  (3) 2 

Local Broadcasting

  2  8  (1) 9 

Outdoor Americas

  1  —  (1) — 

Corporate

  —  1  —  1 
  

Total

 $48 $19 $(29)$38 
  


  
 
 Balance at
December 31, 2010
 2011
Charges
 2011
Payments
 Balance at
December 31, 2011
 
  

Entertainment

 $11 $40 $(9)$42 

Cable Networks

  2  —  (1) 1 

Publishing

  2  2  (2) 2 

Local Broadcasting

  9  —  (7) 2 

Outdoor Americas

  1  1  (1) 1 
  

Total

 $25 $43 $(20)$48 
  

Impairment Charges

three radio stations in Miami. In 2012, in connection with the sale of its five owned radio stations in West Palm Beach,station swap, the Company recorded a pre-taxpretax noncash impairment charge of $11$52 million to reduce the carrying value of the allocated goodwill.

Depreciation


Gain on Sales of Businesses
In 2015, the Company disposed of Internet businesses in China which resulted in gains of $139 million ($131 million, net of tax).

Interest expense/income
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Interest expense$(392) $(363) $29
 8% 
Interest income$24
 $13
 $11
 85% 
The following table presents the Company’s outstanding debt balances, excluding capital leases, and Amortization

        Depreciation and amortization decreased $20 million, or 4%, to $475 million for 2012 from $495 million for 2011 and decreased $5 million, or 1%, to $495 million for 2011 from $500 million for 2010, in both cases reflecting lower amortization for leasehold agreements.

Interest Expense

        Interest expense decreased $33 million, or 8%, to $402 million for 2012 from $435 million for 2011, primarily driven by the Company's debt refinancing during 2012. For 2011, interest expense decreased $92 million, or 17%, to $435 million from $527 million for 2010, primarily resulting from the refinancing and reduction of debt during 2010. The Company had $5.92 billion of debt outstanding at December 31, 2012 and $5.98 billion at December 31, 2011, at weighted average interest ratesrate as of 6.0%December 31, 2015 and 6.9%, respectively.

Interest Income

        Interest income of $6 million for 2012 remained flat compared to 2011 and for 2011, interest income increased from $5 million in 2010.

II-10


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

2014:

   Weighted Average   Weighted Average 
At December 31,2015 Interest Rate 2014 Interest Rate 
Total long-term debt$8,365
  4.68%  $6,399
  4.88%  
Commercial paper$—
  —%  $616
  0.46%  
Net Loss on Early Extinguishment of Debt

For 2012, the net loss on early extinguishment of debt of $32 million reflected a pre-tax loss associated with the redemption of the Company's $338 million of 5.625% senior notes due 2012 and $400 million of 8.20% senior notes due 2014, partially offset by the pre-tax gain recognized upon the redemption of the Company's $700 million of 6.75% senior notes due 2056. (See Note 8 to the consolidated financial statements).

        For 2010, the loss on early extinguishment of debt of $81$352 million wasreflected a pretax loss associated with the repurchase andCompany’s redemption of $2.07$1.07 billion of the Company's debt, of which $750 million was repurchased through tender offers.

its long-term debt.

Other Items, Net

        For all periods presented, "Other items, net" primarily consisted of foreign exchange gains and losses. For 2010, "Other items, net" also included gains of $21 million associated with dispositions.

     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Gain on sale of investments$—
 $4
 $(4) (100)% 
Foreign exchange losses(26) (34) 8
 24
 
Other items, net$(26) $(30) $4
 13 % 
Provision for Income Taxes

     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Tax provision$(587) $(762) $(175) (23)% 
Effective tax rate29.0% 35.2%     
The provision for income taxes represents federal, state and local, and foreign income taxes on earnings from continuing operations before income taxes and equity in loss of investee companies. For 2012, theThe Company’s income tax provision for income taxes increased2015 included a tax benefit of $187 million associated with a noncash impairment charge of $484 million to $892reduce the carrying value of radio FCC licenses to their fair value, and a tax provision of $8 million related to gains from $751 millionthe sales of Internet businesses in 2011 and for 2011,China of $139 million. In 2014, the provision for income taxes increased from $478 million in 2010. These increases were primarily driven by the increase in earnings from continuing operations before income taxes. The Company's effectiveCompany’s income tax rate was 35% in 2012, 34% in 2011 and 36% in 2010.provision included a tax benefit of $133 million associated with the loss on early extinguishment of debt of $352 million. For 2013,2016, the Company'sCompany’s annual effective tax rate is expected to be comparable to the prior three years.

approximately 33%.


II-11



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)



Equity in Loss of Investee Companies, Net of Tax

        Equity

The following table presents equity in lossearnings (loss) of investee companies net of tax, was $35 million for 2012, $37 million for 2011the Company’s domestic and $35 million for 2010 reflecting the Company's share of the operating results of itsinternational equity investments.

investments:

     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Domestic$(59) $(68) $9
 13 % 
International5
 (11) 16
 145
 
Tax benefit21
 31
 (10) (32) 
Equity in loss of investee companies, net of tax$(33) $(48) $15
 31 % 
Net Earnings from Continuing Operations

        The Company reported and Diluted EPS from Continuing Operations

     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Net earnings from continuing operations$1,403
 $1,354
 $49
 4% 
Diluted EPS from continuing operations$2.87
 $2.41
 $.46
 19% 
For 2015, the 4% increase in net earnings from continuing operations of $1.63 billion for 2012, $1.39 billion for 2011 and $822 million for 2010.

Net Loss from Discontinued Operations

        As part of the Company's strategic initiatives for its outdoor advertising business, during the fourth quarter of 2012 the Company initiated a plan to divest Outdoor Europe. Outdoor Europe is expected to be sold within one year. As a result, Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.

II-11


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

        The following table sets forth details of the net loss from discontinued operations for the years ended December 31, 2012, 2011 and 2010.

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues from discontinued operations

 $588 $608 $594 
  

Loss from discontinued operations before income taxes

 $(78)$(73)$(113)

Income tax benefit (provision)

  18  (13) 15 
  

Net loss from discontinued operations, net of tax

 $(60)$(86)$(98)
  

        In constant dollars, revenues from discontinued operations for 2012 increased 1% compared to 2011 and for 2011 revenues in constant dollars decreased 2% compared to 2010.

Net Earnings and Diluted EPS

        For 2012, net earnings were $1.57 billion, or $2.39 per diluted share, up from $1.31 billion, or $1.92 per diluted share in 2011 and for 2011, net earnings increased from $724 million, or $1.04 per diluted share in 2010. These increases were principally driven by growth in operating income and a decline in interest expense. The19% increase in diluted EPS from continuing operations was driven by a 2014 loss on early extinguishment of debt of $352 million ($219 million, net of tax) and 2015 gains from the sales of Internet businesses in China of $139 million ($131 million, net of tax), partially offset by a 2015 impairment charge of $484 million ($297 million, net of tax) to reduce the carrying value of radio FCC licenses to their fair value. The diluted EPS comparison also reflectedbenefited from lower weighted average shares outstanding as a result of the Company'sCompany’s ongoing share repurchase program.

Reconciliationprogram and the split-off of Non-GAAPOutdoor Americas during the third quarter of 2014.


Net Earnings from Discontinued Operations
The following table sets forth details of net earnings from discontinued operations for the years ended December 31, 2015 and 2014:
Year Ended December 31,
2015 (a)
 
2014 (b)
Revenues from discontinued operations$—
 $677
Earnings from discontinued operations$17
 $79
Income tax provision(7) (26)
Earnings from discontinued operations, net of tax10
 53
Gain on disposal—
 1,557
Income tax provision—
 —
Gain on disposal, net of tax—
 1,557
Less: Net earnings from discontinued operations attributable to noncontrolling interest, net of tax—
 5
Net earnings from discontinued operations attributable to CBS Corp.$10
 $1,605
(a) Primarily relates to a decrease to the guarantee liability associated with the 2013 disposition of the Company’s outdoor advertising business in Europe (“Outdoor Europe”) as a result of a reduction to the risk associated with the guarantee.
(b) Primarily reflects the activity of Outdoor Americas prior to its disposal in July 2014 as well as the gain on its disposal. See below for a discussion of this transaction.

During 2014, the Company completed the disposition of Outdoor Americas, which was previously a subsidiary of the Company and has been renamed OUTFRONT Media Inc. Outdoor Americas has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented. In connection with the

II-12



Management’s Discussion and Analysis of
Results of Operations and Financial InformationCondition (Continued)
(Tabular dollars in millions, except per share amounts)


Company’s plan to dispose of Outdoor Americas, in January 2014 Outdoor Americas borrowed $1.60 billion. On April 2, 2014, Outdoor Americas completed an initial public offering (“IPO”) through which it sold 23.0 million shares, or approximately 19%, of its common stock for $28.00 per share. Proceeds from the IPO aggregated $615 million, net of underwriting discounts and commissions. The Company received $2.04 billion of the combined IPO and debt proceeds from Outdoor Americas. On July 16, 2014, the Company completed the disposition of its 81% ownership of Outdoor Americas common stock through a tax-free split-off (the “Split-Off”) through which the Company accepted 44.7 million shares of CBS Corp. Class B Common Stock from its stockholders in exchange for the 97.0 million shares of Outdoor Americas common stock that it owned. In aggregate, the Company received $4.76 billion from the disposition of Outdoor Americas, including the cash from the IPO and debt proceeds, and the fair value of the shares of CBS Corp. Class B Common Stock that were accepted in the Split-Off of $2.72 billion. The Split-Off resulted in a gain of $1.56 billion, which is included in net earnings from discontinued operations for 2014 and is calculated as follows:
Fair value of CBS Corp. Class B Common Stock accepted $2,721
(44,723,131 shares at $60.85 per share on July 16, 2014)  
Carrying value of Outdoor Americas (1,162)
Accumulated other comprehensive income 30
Transaction costs (32)
Net gain on Split-Off of Outdoor Americas $1,557
The Split-Off was a tax-free transaction and therefore, there was no tax impact on the gain.

Net Earnings and Diluted EPS
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Net earnings$1,413
 $2,959
 $(1,546) (52)% 
Diluted EPS$2.89
 $5.27
 $(2.38) (45)% 
Included in net earnings for 2014 is the gain of $1.56 billion, or $2.78 per diluted share, on the disposal of Outdoor Americas.

Consolidated Results of Operations— 2014 vs. 2013

Revenues
Revenues by Type  % of Total   % of Total Increase/(Decrease) 
Year Ended December 31,2014 Revenues 2013 Revenues $ % 
Advertising$7,204
  52%  $7,525
  54%  $(321) (4)% 
Content licensing and distribution3,990
  29
  3,997
  29
  (7) —
 
Affiliate and subscription fees2,362
  17
  2,221
  15
  141
 6
 
Other250
  2
  262
  2
  (12) (5) 
Total Revenues$13,806
  100%  $14,005
  100%  $(199) (1)% 
Advertising
For 2014, the 4% decrease in advertising revenues reflected the benefit to 2013 from the CBS Television Network’s Super Bowl broadcast, which is broadcast on the CBS Television Network once every three years through 2022 under the current contract. Additionally, four fewer NCAA Division I Men’s Basketball Championship (“NCAA Tournament”) games were broadcast on CBS during 2014. Taken together these items impacted the advertising revenue comparison by five percentage points. These decreases were partially offset by the addition of Thursday Night Football on CBS in 2014 as well as political advertising spending associated with midterm elections.

II-13



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Content licensing and distribution
For 2014, content licensing and distribution revenues were comparable with 2013 reflecting higher revenues from the licensing of the Company’s television programming offset by lower revenues from book sales and theatrical releases. Significant contributors to television licensing revenues in 2014 included Blue Bloods, Hawaii Five-0, and Dexter and in 2013 included NCIS: Los Angeles and The Good Wife.

Affiliate and subscription fees
For 2014, the 6% increase in affiliate and subscription fees reflected higher rates across the Company partially offset by lower revenues from Showtime Networks’ distribution of pay-per-view boxing events.

International Revenues
International revenues primarily consist of television licensing revenues. The Company generated approximately 13%of its total revenues from international regions in each of 2014 and 2013.
    % of   % of 
Year Ended December 31, 2014 International 2013 International 
United Kingdom $270
  15%  $359
  20%  
Other Europe 657
  37
  607
  33
  
Canada 241
  13
  270
  15
  
Asia 262
  15
  225
  12
  
Other 363
  20
  366
  20
  
Total International Revenues $1,793
  100%  $1,827
  100%  
Operating Expenses
   % of Total   % of Total   
Operating Expenses by Type  Operating   Operating Increase/(Decrease) 
Year Ended December 31,2014 Expense 2013 Expense $ % 
Programming$2,975
  37%  $3,084
  38%  $(109) (4)% 
Production2,456
  30
  2,454
  30
  2
 —
 
Participation, distribution and
royalty
1,185
  15
  1,112
  14
  73
 7
 
Other1,473
  18
  1,474
  18
  (1) —
 
Total Operating Expenses$8,089
  100%  $8,124
  100%  $(35) — % 
For 2014, the 4% decrease in programming expenses was primarily driven by the absence of costs associated with the CBS Television Network’s broadcast of the Super Bowl in 2013. Programming expenses for 2014 also reflected an increased investment in programming, primarily for Thursday Night Football on CBS, partially offset by lower costs for acquired television series as a result of a shift to a higher mix of internally developed television series during 2014.

For 2014, production expenses remained flat with 2013 as an increased investment in internally developed television programming was offset by lower costs associated with the mix of titles licensed under television licensing arrangements.

For 2014, the 7% increase in participation, distribution and royalty costs was principally due to higher participations and residuals associated with the mix of titles licensed under television licensing arrangements, partially offset by lower advertising costs for feature films.

II-14



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Selling, General and Administrative Expenses
   % of   % of Increase/(Decrease) 
Year Ended December 31,2014 Revenues 2013 Revenues $ % 
Selling, general and administrative
expenses
$2,462
  18%  $2,546
  18%  $(84) (3)% 
The 3% decrease in SG&A expenses reflects lower stock-based compensation expense, driven by a change in the Company’s stock price.
Depreciation and Amortization
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Depreciation and amortization$281
 $290
 $(9) (3)% 
The 3% decrease in depreciation and amortization reflected lower amortization resulting from certain intangible assets that became fully amortized during 2014.

Restructuring charges
During the year ended December 31, 2013, the Company recorded restructuring charges of $20 million, reflecting $14 million of severance costs and $6 million of costs associated with exiting contractual obligations. The 2013 restructuring reserve was substantially utilized by December 31, 2014.

Interest expense/income
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Interest expense$(363) $(375) $(12) (3)% 
Interest income$13
 $8
 $5
 63 % 
The 3% decrease in interest expense was driven by the Company’s debt refinancing during 2014. During 2014, the Company issued $1.75 billion of senior notes and used the net proceeds principally for the early redemption of $1.07 billion of its outstanding debt, which was at significantly higher interest rates, and also redeemed $99 million of outstanding 8.875% notes upon maturity (See “Capital Structure”).

The following table presents the Company’s outstanding debt balances, excluding capital leases, and the weighted average interest rate as of December 31, 2014 and 2013:
   Weighted Average   Weighted Average 
At December 31,2014 Interest Rate 2013 Interest Rate 
Total long-term debt from continuing
operations
$6,399
  4.88%  $5,829
  6.01%  
Commercial paper$616
  0.46%  $475
  0.28%  
Other Items, Net
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Gain on sale of investments$4
 $2
 $2
 100% 
Foreign exchange (losses) gains(34) 5
 (39) n/m
 
Other items, net$(30) $7
 $(37) n/m
 

II-15



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Provision for Income Taxes
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Tax provision$(762) $(878) $(116) (13)% 
Effective tax rate35.2% 32.9%     
Equity in Loss of Investee Companies, Net of Tax
The following table presents equity in loss of investee companies for the Company’s domestic and international equity investments:
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Domestic$(68) $(75) $7
 9 % 
International(11) (4) (7) (175) 
Tax benefit31
 30
 1
 3
 
Equity in loss of investee companies, net of tax$(48) $(49) $1
 2 % 
Net Earnings from Continuing Operations and Diluted EPS from Continuing Operations
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Net earnings from continuing operations$1,354
 $1,738
 $(384) (22)% 
Diluted EPS from continuing operations$2.41
 $2.79
 $(.38) (14)% 
For 2014, the 22%decrease in net earnings from continuing operations and the 14% decrease in diluted EPS from continuing operations reflects lower operating income and a 2014 loss on early extinguishment of debt. The diluted EPS comparison benefited from lower weighted average shares outstanding as a result of the Company’s ongoing share repurchase program and the Split-Off of Outdoor Americas during 2014.

Net Earnings from Discontinued Operations
The following table sets forth details of net earnings from discontinued operations for the year ended December 31, 2013:
Year Ended December 31,2013
Revenues from discontinued operations$1,695
Loss from discontinued operations$(12)
Income tax provision—
Loss from discontinued operations, net of tax(12)
Gain on disposal159
Income tax provision(6)
Gain on disposal, net of tax153
Net earnings from discontinued operations$141
During 2013, the Company completed the sale of Outdoor Europe for $225 million. Outdoor Europe is presented as a discontinued operation. For 2013, net earnings from discontinued operations include a gain on the disposal of Outdoor Europe and an after-tax charge of $110 million related to Outdoor Europe. This charge was associated with exiting an unprofitable contractual arrangement and the estimated fair value of guarantees, which historically were intercompany but upon the closing of the transaction became third-party guarantees. (See Note 16 to the consolidated financial statements).


II-16



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Net Earnings and Diluted EPS
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Net earnings$2,959
 $1,879
 $1,080
 57% 
Diluted EPS$5.27
 $3.01
 $2.26
 75% 
For 2014, included in net earnings is a gain of $1.56 billion on the disposition of Outdoor Americas.

Segment Results of Operations - 2015 vs. 2014
The Company presents operating income (loss) excluding restructuring charges, impairment charges, and gain on sales of businesses, if any, (“Segment Operating Income”) as the primary measure of profit and loss for its operating segments (“segment profit measure”) in accordance with FASB guidance for segment reporting. The Company began presenting Segment Operating Income as its segment profit measure in the first quarter of 2015 in order to align with the primary method the Company’s management began using in 2015 to evaluate segment performance and to make decisions regarding the allocation of resources to its segments. 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. The reconciliation of Segment Operating Income to the Company’s consolidated net earnings is presented in Note 17 (Reportable Segments) to the consolidated financial statements.
   % of Total   % of Total Increase/(Decrease) 
Year Ended December 31,2015 Revenues 2014 Revenues $ % 
Entertainment$8,438
  61 %  $8,309
  60 %  $129
 2 % 
Cable Networks2,242
  16
  2,176
  16
  66
 3
 
Publishing780
  6
  778
  6
  2
 —
 
Local Broadcasting2,607
  19
  2,756
  20
  (149) (5) 
Corporate/Eliminations(181)  (2)  (213)  (2)  32
 15
 
Total Revenues$13,886
  100 %  $13,806
  100 %  $80
 1 % 
   % of Total   % of Total   
   Segment   Segment   
   Operating   Operating Increase/(Decrease) 
Year Ended December 31,2015 Income 2014 Income $ % 
Segment Operating Income (Loss):                
Entertainment$1,294
  46 %  $1,316
  44 %  $(22) (2)% 
Cable Networks945
  33
  974
  33
  (29) (3) 
Publishing114
  4
  101
  3
  13
 13
 
Local Broadcasting765
  27
  878
  30
  (113) (13) 
Corporate(275)  (10)  (295)  (10)  20
 7
 
Total Segment Operating Income2,843
  100 %  2,974
  100 %  (131) (4) 
Restructuring charges(81)     (26)     (55) n/m
 
Impairment charges(484)     (52)     (432) n/m
 
Gain on sales of businesses139
     —
     139
 n/m
 
Total Operating Income$2,417
     $2,896
     $(479) (17)% 
n/m - not meaningful

II-17



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Depreciation and Amortization:        
Entertainment$126
 $139
 $(13) (9)% 
Cable Networks23
 23
 —
 —
 
Publishing6
 6
 —
 —
 
Local Broadcasting79
 87
 (8) (9) 
Corporate30
 26
 4
 15
 
Total Depreciation and Amortization$264
 $281
 $(17) (6)% 
Entertainment(CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films)
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Revenues$8,438
 $8,309
 $129
 2 % 
Segment Operating Income$1,294
 $1,316
 $(22) (2)% 
Segment Operating Income as a % of revenues15% 16% n/m
 n/m
 
Restructuring charges$26
 $8
 $18
 n/m
 
Depreciation and amortization$126
 $139
 $(13) (9)% 
Capital expenditures$99
 $94
 $5
 5 % 
n/m - not meaningful
2015 vs. 2014
For 2015, the 2%increase in revenues was primarily driven by 47% growth in affiliate and subscription fees. Network advertising revenues increased 1%, despite the broadcast of fewer sporting events on the CBS Television Network in 2015, reflecting higher scatter pricing in the second half of the year, primarily as a result of increased demand. The increase is also driven by more inventory available to be sold at higher prices in the scatter market as a result of fewer units sold in the Upfront for the 2015/2016 broadcast season, compared with the 2014/2015 season. Overall advertising revenues for the Entertainment segment remained flat as the increase in network advertising revenues was offset by the impact from the sale of an Internet business in China during the first quarter of 2015. Content licensing and distribution revenues decreased 3% reflecting lower domestic television licensing revenues, which were partially offset by higher international television licensing revenues. Significant contributors to domestic television licensing revenues in 2015 included Elementary and NCIS, while 2014 included Blue Bloods, Hawaii Five-0, and Criminal Minds.
The decrease in operating income of 2% was primarily driven by increased investment in programming and digital distribution initiatives. For 2015 and 2014 restructuring charges primarily reflected severance costs and costs associated with exiting operating facilities.

During 2016, results are expected to benefit from continued growth in affiliate and subscription fees and the CBS Television Network’s broadcast of the Super Bowl, which airs on the CBS Television Network once every three years through 2022 under the current contract. Revenue comparisons will also be impacted by fluctuations resulting from the timing of the availability of television series for multi-year licensing agreements. Television license fee revenues are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition.


II-18



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Cable Networks(Showtime Networks, CBS Sports Network and Smithsonian Networks)
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Revenues$2,242
 $2,176
 $66
 3 % 
Segment Operating Income$945
 $974
 $(29) (3)% 
Segment Operating Income as a % of revenues42% 45% n/m
 n/m
 
Depreciation and amortization$23
 $23
 $—
 — % 
Capital expenditures$18
 $16
 $2
 13 % 
n/m - not meaningful
2015 vs. 2014
For 2015, the 3% increase in revenues was primarily driven by higher revenues from new long-term agreements for the international licensing of Showtime original series; pay-per-view boxing events; and affiliates, as well as revenues from new digital distribution initiatives. These increases were offset by lower domestic licensing revenues as 2014 benefited from significant domestic streaming sales of Dexter. As of December 31, 2015, subscriptions totaled approximately 77 million for Showtime Networks (including Showtime, The Movie Channel and Flix), 55 million for CBS Sports Network and 33 million for Smithsonian Networks.
Operating income decreased 3% as the revenue growth was more than offset by higher costs associated with the increased pay-per-view boxing revenues and the mix of titles sold under television licensing arrangements.

During 2015, the Company launched its digital streaming subscription offering of Showtime that is available both on a stand-alone basis and through third-party digital platforms. Subscribers to this offering have on-demand access to Showtime original series, theatrical feature films, documentaries and sports-related programming, as well as the live east and west coast linear feeds of Showtime.
Publishing (Simon & Schuster)
     Increase/(Decrease) 
Year Ended December 31,2015
2014
$ % 
Revenues$780
 $778
 $2
 —% 
Segment Operating Income$114
 $101
 $13
 13% 
Segment Operating Income as a % of revenues15% 13% n/m
 n/m
 
Restructuring charges$—
 $1
 $(1) n/m
 
Depreciation and amortization$6
 $6
 $—
 —% 
Capital expenditures$10
 $4
 $6
 150% 
n/m - not meaningful
2015 vs. 2014
For 2015, revenues increased slightly from 2014 with digital book sales representing 25% of Publishing’s total revenues. Best-selling titles for 2015 included the Pulitzer Prize-winning 2014 release All the Light We Cannot See by Anthony Doerr, The Wright Brothers by David McCullough and Finders Keepers by Stephen King.
The increase in operating income of 13% primarily reflected a favorable product mix, including strong backlist and digital audio sales, and lower production and distribution costs.

II-19



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Local Broadcasting(CBS Television Stations and CBS Radio)
     Increase/(Decrease) 
Year Ended December 31,2015
2014
$ % 
Revenues$2,607
 $2,756
 $(149) (5)% 
Segment Operating Income$765
 $878
 $(113) (13)% 
Segment Operating Income as a % of revenues29% 32% n/m
 n/m
 
Restructuring charges$55
 $14
 $41
 n/m
 
Impairment charges$484
 $52
 $432
 n/m
 
Depreciation and amortization$79
 $87
 $(8) (9)% 
Capital expenditures$50
 $65
 $(15) (23)% 
n/m - not meaningful
2015 vs. 2014
For 2015, the 5% decrease in revenues primarily reflected lower political advertising revenues as 2014 benefited from midterm elections, as well as lower radio revenues. The lower radio revenues, which decreased 6%, reflected continued softness in the radio advertising marketplace as well as fewer radio stations and lower political revenues. CBS Television Stations revenues declined 5%, reflecting lower political revenues, partially offset by growth in affiliate and subscription fees.

The decrease in operating income of 13% was driven by the revenue decline, which was partially offset by lower programming and employee related costs as a result of recent cost-cutting measures. Restructuring charges in 2015 and 2014 reflected severance costs and costs associated with exiting contractual obligations. In the fourth quarter of 2015, the Company recorded a pretax, noncash impairment charge of $484 million to reduce the carrying value of radio FCC licenses in 18 markets to their fair value. (See Note 3 to the consolidated financial statements). In 2014, in connection with a radio station swap with Beasley Broadcast Group, Inc., the Company recorded a pretax noncash impairment charge of $52 million to reduce the carrying value of the allocated goodwill. Under the swap, the Company exchanged 13 of its radio stations in Tampa and Charlotte as well as one radio station in Philadelphia, for two radio stations in Philadelphia and three radio stations in Miami.

In 2016, advertising revenues are expected to benefit from increased political spending associated with the U.S. presidential election and the CBS Television Network’s broadcast of the Super Bowl, which airs on the CBS Television Network once every three years through 2022 under the current contract. Continued growth in affiliate and subscription fees is also expected in 2016.

Corporate
     Increase/(Decrease) 
Year Ended December 31,2015 2014 $ % 
Segment Operating Loss$(275) $(295) $20
 7 % 
Restructuring charges$—
 $3
 $(3) n/m
 
Depreciation and amortization$30
 $26
 $4
 15 % 
Capital expenditures$16
 $27
 $(11) (41)% 
n/m - not meaningful
2015 vs. 2014
Corporate expenses include general corporate overhead, unallocated shared company expenses, pension and postretirement benefit costs for plans retained by the Company for previously divested businesses, and intercompany eliminations. The decrease in corporate expenses of 7% primarily reflected lower employee-related costs and lower pension and postretirement benefit costs.

II-20



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)



Segment Results of Operations - 2014 vs. 2013
   % of Total   % of Total Increase/(Decrease) 
Year Ended December 31,2014 Revenues 2013 Revenues $ % 
Entertainment$8,309
  60 %  $8,645
  62 %  $(336) (4)% 
Cable Networks2,176
  16
  2,069
  15
  107
 5
 
Publishing778
  6
  809
  6
  (31) (4) 
Local Broadcasting2,756
  20
  2,696
  19
  60
 2
 
Corporate/Eliminations(213)  (2)  (214)  (2)  1
 —
 
Total Revenues$13,806
  100 %  $14,005
  100 %  $(199) (1)% 
   % of Total   % of Total   
   Segment   Segment   
   Operating   Operating Increase/(Decrease) 
Year Ended December 31,2014 Income 2013 Income $ % 
Segment Operating Income (Loss):                
Entertainment$1,316
  44 %  $1,605
  53 %  $(289) (18)% 
Cable Networks974
  33
  878
  29
  96
 11
 
Publishing101
  3
  107
  3
  (6) (6) 
Local Broadcasting878
  30
  812
  27
  66
 8
 
Corporate(295)  (10)  (357)  (12)  62
 17
 
Total Segment Operating Income2,974
  100 %  3,045
  100 %  (71) (2) 
Restructuring charges(26)     (20)     (6) (30) 
Impairment charges(52)     —
     (52) n/m
 
Total Operating Income$2,896
     $3,025
     $(129) (4)% 
n/m - not meaningful
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Depreciation and Amortization:        
Entertainment$139
 $153
 $(14) (9)% 
Cable Networks23
 20
 3
 15
 
Publishing6
 6
 —
 —
 
Local Broadcasting87
 86
 1
 1
 
Corporate26
 25
 1
 4
 
Total Depreciation and Amortization$281
 $290
 $(9) (3)% 


II-21



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Entertainment(CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Interactive and CBS Films)
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Revenues$8,309
 $8,645
 $(336) (4)% 
Segment Operating Income$1,316
 $1,605
 $(289) (18)% 
Segment Operating Income as a % of revenues16% 19% n/m
 n/m
 
Restructuring charges$8
 $12
 $(4) (33)% 
Depreciation and amortization$139
 $153
 $(14) (9)% 
Capital expenditures$94
 $101
 $(7) (7)% 
n/m - not meaningful
2014 vs. 2013
For 2014, the 4% decrease in revenues reflected lower advertising revenues and content licensing and distribution revenues, partially offset by growth in affiliate and subscription fee revenues.  Advertising revenues decreased 7%, mainly driven by the benefit to 2013 from the CBS Television Network’s broadcast of the Super Bowl, which is broadcast on CBS once every three years through 2022 under the current contract, and four fewer NCAA Tournament games broadcast on CBS in 2014. These decreases were partially offset by advertising revenues from the broadcast of Thursday Night Football on CBS, which premiered on CBS in 2014. Content licensing and distribution revenues decreased 2% reflecting the timing of theatrical releases and television licensing revenues. Television licensing revenues in 2014 included the first-cycle domestic syndication sales of Blue Bloods and Hawaii Five-0 and in 2013 included NCIS: Los Angeles and The Good Wife.
The decrease in operating income of 18% primarily reflected an increased investment in programming, primarily for NFL games. Restructuring charges for 2014primarily reflected severance costs and costs associated with exiting operating facilities and 2013 principally reflected costs associated with exiting certain international operations and severance costs.
Cable Networks(Showtime Networks, CBS Sports Network and Smithsonian Networks)
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Revenues$2,176
 $2,069
 $107
 5% 
Segment Operating Income$974
 $878
 $96
 11% 
Segment Operating Income as a % of revenues45% 42% n/m
 n/m
 
Restructuring charges$—
 $1
 $(1) n/m
 
Depreciation and amortization$23
 $20
 $3
 15% 
Capital expenditures$16
 $16
 $—
 —% 
n/m - not meaningful
2014 vs. 2013
For 2014, the 5% increase in revenues was driven by higher revenues from the licensing of Showtime original series for digital streaming, mainly Dexter and Californication. Revenue growth also reflects higher cable affiliate fees, primarily reflecting rate increases. These increases were partially offset by lower revenues from pay-per-view boxing events. As of December 31, 2014, subscriptions totaled approximately 76 million for Showtime Networks (including Showtime, The Movie Channel and Flix), 55 million for CBS Sports Network and 30 million for Smithsonian Networks.

The increase in operating income of 11% was primarily a result of the increased revenues and lower programming costs from the timing of premieres.

II-22



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Publishing (Simon & Schuster)
     Increase/(Decrease) 
Year Ended December 31,2014
2013
$ % 
Revenues$778
 $809
 $(31) (4)% 
Segment Operating Income$101
 $107
 $(6) (6)% 
Segment Operating Income as a % of revenues13% 13% n/m
 n/m
 
Restructuring charges$1
 $1
 $—
 — % 
Depreciation and amortization$6
 $6
 $—
 — % 
Capital expenditures$4
 $4
 $—
 — % 
n/m - not meaningful
2014 vs. 2013
For 2014, the 4% decrease in revenues reflected lower book sales as 2013 benefited from the popularity of the Duck Dynasty series. Digital book sales represented 26% of total revenues for 2014. Best-selling titles in 2014 included Hard Choices by Hillary Rodham Clinton and Mr. Mercedes by Stephen King.

The decrease in operating income of 6% reflected the aforementioned lower revenues partially offset by lower inventory, selling and overhead costs.

Local Broadcasting(CBS Television Stations and CBS Radio)
     Increase/(Decrease) 
Year Ended December 31,2014
2013
$ % 
Revenues$2,756
 $2,696
 $60
 2% 
Segment Operating Income$878
 $812
 $66
 8% 
Segment Operating Income as a % of revenues32% 30% n/m
 n/m
 
Restructuring charges$14
 $5
 $9
 180% 
Impairment charges$52
 $—
 $52
 n/m
 
Depreciation and amortization$87
 $86
 $1
 1% 
Capital expenditures$65
 $64
 $1
 2% 
n/m - not meaningful
2014 vs. 2013
For 2014, the 2% increase in revenues was primarily driven by higher political advertising revenues as a result of midterm elections and growth in affiliate and subscription fee revenues. CBS Television Stations revenues grew 4% and CBS Radio revenues increased 1%.

The increase in operating income of 8% principally reflected the increase in revenues as well as lower programming costs, mainly for sports. Restructuring charges for 2014 reflected severance costs and costs associated with exiting contractual obligations and 2013 principally reflected severance costs.


II-23



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Corporate
     Increase/(Decrease) 
Year Ended December 31,2014 2013 $ % 
Segment Operating Loss$(295) $(357) $62
 17% 
Restructuring charges$3
 $1
 $2
 200% 
Depreciation and amortization$26
 $25
 $1
 4% 
Capital expenditures$27
 $27
 $—
 —% 
2014 vs. 2013
Corporate expenses include general corporate overhead, unallocated shared company expenses, pension and postretirement benefit costs for plans retained by the Company for previously divested businesses, and intercompany eliminations. The decrease in corporate expenses of 17% primarily reflected the impact of changes in the Company’s stock price on stock-based compensation.

Financial Position
     Increase/(Decrease) 
At December 31,2015 2014 $ % 
Current assets:        
Cash and cash equivalents$323
 $428
 $(105) (25)% 
Receivables, net (a)
3,628
 3,459
 169
 5
 
Programming and other inventory (b)
1,271
 922
 349
 38
 
Prepaid income taxes (c)
101
 161
 (60) (37) 
All other current assets, net (d)
424
 515
 (91) (18) 
Total current assets$5,747
 $5,485
 $262
 5 % 
(a) The increase in receivables is primarily associated with the licensing of television programming and higher network advertising revenues. The allowance for doubtful accounts as a percentage of receivables was 1.7% at December 31, 2015 compared with 1.4% at December 31, 2014.
(b) The increase primarily reflects an increase in programming inventory, mainly from the timing of payments for sports programming.
(c) The decrease reflects the timing of income tax payments.
(d) The decrease primarily reflects the sale of short-term investments.
     Increase/(Decrease) 
At December 31,2015 2014 $ % 
Intangible assets (a)
$5,514
 $6,008
 $(494) (8)% 
(a) The decrease primarily reflects a pretax noncash impairment charge to reduce the carrying value of radio FCC licenses to their fair value. (See Note 3 to the consolidated financial statements).

II-24



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


     Increase/(Decrease) 
At December 31,2015 2014 $ % 
Other assets (a)
$2,661
 $2,494
 $167
 7% 
(a) The increase primarily reflects higher long-term receivables associated with additional revenues from long-term television licensing arrangements. As of December 31, 2015, total outstanding receivables from licensing arrangements, including both current and noncurrent, were $3.83 billion versus $3.57 billion at December 31, 2014. At December 31, 2015, the total amount due from these receivables was $1.69 billion in 2016, $1.03 billion in 2017, $552 million in 2018, $348 million in 2019, and $214 million in 2020 and thereafter.
     Increase/(Decrease) 
At December 31,2015 2014 $ % 
Current liabilities:        
Accounts payable$192
 $302
 $(110) (36)% 
Accrued compensation315
 333
 (18) (5) 
Commercial paper—
 616
 (616) n/m
 
Current portion of long-term debt (a)
222
 20
 202
 n/m
 
All other current liabilities, net2,831
 2,762
 69
 2
 
Current liabilities$3,560
 $4,033
 $(473) (12)% 
n/m - not meaningful
(a) The increase was primarily due to the maturity of $200 million of outstanding senior debentures in January 2016.
     Increase/(Decrease) 
At December 31,2015 2014 $ % 
Long-term debt (a)
$8,226
 $6,476
 $1,750
 27% 
(a) The increase is primarily the result of the Company’s issuance of $2.00 billion of senior notes, partially offset by the reclassification of the previously mentioned senior debentures to the current portion of long-term debt. (See Note 9 to the consolidated financial statements).

Cash Flows
The changes in cash and cash equivalents were as follows:
     Increase/ (Decrease)   Increase/ (Decrease)
Year Ended December 31,2015
2014
2015 vs. 2014 2013 2014 vs. 2013
Cash provided by (used for) operating activities from:             
Continuing operations$1,419
 $1,210
  $209
  $1,779
  $(569) 
Discontinued operations(25) 65
  (90)  94
  (29) 
Cash provided by operating activities1,394
 1,275
  119
  1,873
  (598) 
Cash provided by (used for) investing activities from:             
Continuing operations157
 (316)  473
  (214)  (102) 
Discontinued operations(3) (285)  282
  (58)  (227) 
Cash provided by (used for) investing activities154
 (601)  755
  (272)  (329) 
Cash (used for) provided by financing activities from:             
Continuing operations(1,653) (2,810)  1,157
  (1,912)  (898) 
Discontinued operations—
 2,167
  (2,167)  —
  2,167
 
Cash used for financing activities(1,653) (643)  (1,010)  (1,912)  1,269
 
Net (decrease) increase in cash and cash equivalents$(105) $31
  $(136)  $(311)  $342
 

II-25



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Operating Activities.  In 2015, the increase in cash provided by operating activities from continuing operations resulted from early-redemption premiums paid in 2014 in connection with the Company’s debt refinancing, with no comparable amount in 2015, and lower payments for income taxes, mainly resulting from federal tax refunds received in 2015. These increases were partially offset by increased investment in programming.

In 2014, the decrease in cash provided by operating activities from continuing operations compared with 2013 reflected the above-mentioned debt redemption premiums, as well as the benefit to 2013 from CBS’s Super Bowl broadcast and the timing of payments for sports programming. These declines were partially offset by contributions of $150 million in 2013 to prefund the Company’s qualified pension plans, with no comparable amount in 2014, as well as higher collections from television licensing agreements.
Cash paid for income taxes for the years ended December 31, 2015, 2014 and 2013 was as follows:
Year Ended December 31,2015
2014
2013
Cash taxes included in operating activities from continuing operations$346
 $460
 $442
Excess tax benefits from the exercise of stock options and
vesting of restricted stock units, included in financing activities
88
 243
 148
Cash paid for income taxes from continuing operations$258
 $217
 $294

In 2015, cash used for operating activities from discontinued operations primarily reflected payments for a tax matter in a foreign jurisdiction related to a previously disposed business that is accounted for as a discontinued operation. For 2014 and 2013, cash provided by operating activities from discontinued operations primarily reflected the operating activities of Outdoor Americas and Outdoor Europe. Also included in 2013 was a payment of $171 million associated with exiting an unprofitable contractual arrangement in connection with the sale of Outdoor Europe.

Investing Activities
Year Ended December 31,2015
2014
2013
Capital expenditures (a)
$(193) $(206) $(212)
Investments in and advances to investee companies (b)
(98) (98) (176)
Proceeds from dispositions (c)
385
 7
 164
All other investing activities from continuing operations, net63
 (19) 10
Cash flow provided by (used for) investing activities from continuing operations157
 (316) (214)
Cash flow used for investing activities from discontinued operations (d)
(3) (285) (58)
Cash flow provided by (used for) investing activities$154
 $(601) $(272)
(a) Capital expenditures for 2016 are anticipated to be at a similar level as the prior three years.
(b) Mainly includes the Company’s investment in The CW as well as its other domestic and international television joint ventures. 2013 also includes the Company’s initial investment in Pop.
(c) 2015 was primarily related to sales of Internet businesses in China and 2013 was principally related to the sale of Outdoor Europe.
(d) For 2014 cash flow used for investing activities from discontinued operations principally reflects the disposition of Outdoor Americas’ cash as well as the capital expenditures of Outdoor Americas. 2013 primarily reflects Outdoor Americas’ capital expenditures.


II-26



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


Financing Activities
Year Ended December 31,2015 2014 2013
Repurchase of CBS Corp. Class B Common Stock$(2,813) $(3,595) $(2,185)
Repayment of notes and debentures—
 (1,152) —
Proceeds from issuance of senior notes1,959
 1,728
 —
(Repayments of) proceeds from short-term debt borrowings, net(616) 141
 475
Dividends(300) (292) (300)
Proceeds from exercise of stock options142
 283
 146
All other financing activities from continuing operations, net(25) 77
 (48)
Cash flow used for financing activities from continuing operations(1,653) (2,810) (1,912)
Cash flow provided by financing activities from discontinued operations (a)
—
 2,167
 —
Cash flow used for financing activities$(1,653) $(643) $(1,912)
(a) Cash provided by financing activities from discontinued operations for 2014 principally reflects the net proceeds from Outdoor Americas’ long-term debt borrowings and IPO.

Free Cash Flow
Free cash flow is a non-GAAP financial measure. Free cash flow reflects the Company'sCompany’s net cash flow provided by (used for) operating activities before operating cash flow from discontinued operations and lessincluding capital expenditures. The Company'sCompany’s calculation of free cash flow includes capital expenditures because investment in capital expenditures is a use of cash that is directly related to the Company'sCompany’s operations. The Company'sCompany’s net cash flow provided by (used for) operating activities is the most directly comparable GAAP financial measure.


Management believes free cash flow provides investors with an important perspective on the cash available to the Company to service debt, make strategic acquisitions and investments, maintain its capital assets, satisfy its tax obligations, and fund ongoing operations and working capital needs. As a result, free cash flow is a significant measure of the Company'sCompany’s ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of the Company'sCompany’s operating performance. The Company believes the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from the Company'sCompany’s underlying operations in a manner similar to the method used by management. Free cash flow is one of several components of incentive compensation targets for certain management personnel. In addition, free cash flow is a primary measure used externally by the Company'sCompany’s investors, analysts and industry peers for purposes of valuation and comparison of the Company'sCompany’s operating performance to other companies in its industry.

II-12


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

As free cash flow is not a measure calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by (used for) operating activities as a measure of liquidity or net earnings (loss) as a measure of operating performance. Free cash flow, as the Company calculates it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow as a measure of liquidity has certain limitations, does not necessarily represent funds available for discretionary use and is not necessarily a measure of the Company'sCompany’s ability to fund its cash needs. When comparing free cash flow to net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions that are not reflected in free cash flow.



II-27



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


The following table presents a reconciliation of the Company'sCompany’s net cash flow provided by operating activities to free cash flow.

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Net cash flow provided by operating activities

 $1,815 $1,749 $1,735 $1,394
 $1,275
 $1,873

Capital expenditures

 (254) (245) (254)(193) (206) (212)

Exclude net cash flow used for operating activities from discontinued operations

 (4) (83) (34)
 
Exclude operating cash flow from discontinued operations(25) 65
 94

Free cash flow

 $1,565 $1,587 $1,515 $1,226
 $1,004
 $1,567
 

Segment Results of Operations—


Dividends
For the Years Ended December 31, 2012, 2011 and 2010

        The following tables present the Company's revenues, segment operating income (loss) before depreciation and amortization, restructuring charges and impairment charges ("Segment OIBDA"), operating income (loss) and depreciation and amortization by segment, for each of the years ended December 31, 2012, 20112015, 2014 and 2010. The2013, the Company presents Segment OIBDA as the primary measure of profit and loss for its operating segments in accordance with Financial Accounting Standards Board ("FASB") guidance for segment reporting. The Company believes the presentation of Segment OIBDA 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. The reconciliation of Segment OIBDA to the Company's consolidated Net earnings (loss) is presented in Note 15 (Reportable Segments) to the consolidated financial statements.

        Outdoor Europe, previously included in the Outdoor segment, has been presented as a discontinued operation. As a result, the Outdoor segment has been renamed Outdoor Americas. In addition, Residual

II-13


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, exceptdeclared total per share amounts)

Costs, which was previously presented as a separate line item in the Company's segment presentation, is now included within Corporate. Prior periods have been reclassified to conform to this presentation.

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues:

          

Entertainment

 $7,694 $7,457 $7,391 

Cable Networks

  1,772  1,621  1,475 

Publishing

  790  787  791 

Local Broadcasting

  2,774  2,689  2,782 

Outdoor Americas

  1,296  1,286  1,225 

Eliminations

  (237) (203) (198)
  

Total Revenues

 $14,089 $13,637 $13,466 
  


  
Year Ended December 31,
 2012
 2011
 2010
 
  

Segment OIBDA:

          

Entertainment

 $1,549 $1,431 $894 

Cable Networks

  811  707  569 

Publishing

  89  92  72 

Local Broadcasting

  957  849  865 

Outdoor Americas

  378  380  317 

Corporate

  (296) (302) (229)
  

Total Segment OIBDA

  3,488  3,157  2,488 

Restructuring charges

  (19) (43) (59)

Impairment charges

  (11) —  — 

Depreciation and amortization

  (475) (495) (500)
  

Total Operating Income

 $2,983 $2,619 $1,929 
  

Operating Income (Loss):

          

Entertainment

 $1,381 $1,231 $708 

Cable Networks

  785  684  543 

Publishing

  80  83  61 

Local Broadcasting

  848  750  740 

Outdoor Americas

  209  197  127 

Corporate

  (320) (326) (250)
  

Total Operating Income

 $2,983 $2,619 $1,929 
  

Depreciation and Amortization:

          

Entertainment

 $161 $160 $163 

Cable Networks

  26  23  23 

Publishing

  6  7  7 

Local Broadcasting

  90  99  100 

Outdoor Americas

  169  182  186 

Corporate

  23  24  21 
  

Total Depreciation and Amortization

 $475 $495 $500 
  

II-14


Management's Discussiondividends of $.60, $.54, and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Entertainment(CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Films and CBS Interactive)

        (Contributed 55% to consolidated revenues in 2012, 2011 and 2010, and 46%, 47% and 37% to consolidated operating income in 2012, 2011 and 2010, respectively.)

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues

 $7,694 $7,457 $7,391 
  

Segment OIBDA

 $1,549 $1,431 $894 

Restructuring charges

  (7) (40) (23)

Depreciation and amortization

  (161) (160) (163)
  

Operating income

 $1,381 $1,231 $708 
  

Segment OIBDA as a % of revenues

  20%  19%  12% 

Operating income as a % of revenues

  18%  17%  10% 

Capital expenditures

 $92 $94 $90 
  

2012 vs. 2011

        For 2012, Entertainment revenues increased 3% to $7.69 billion from $7.46 billion in 2011. This growth was led by a 13% increase in revenues from the licensing of television programming, driven by higher licensing revenues from digital streaming as well as domestic and international syndication. Revenue growth also reflects higher network affiliation fees. Advertising revenues increased slightly, reflecting higher pricing partially offset by lower primetime ratings during the second half of 2012. Revenue comparisons in 2013 will benefit from the broadcast ofSuper Bowl XLVII on the CBS Television Network, first-cycle domestic syndication availabilities, and incremental network affiliation fees associated with current agreements and expected renewals in 2013.

        For 2012, Entertainment OIBDA increased $118 million, or 8%, to $1.55 billion from $1.43 billion for 2011, principally driven by the aforementioned revenue growth and higher profit margins on television licensing revenues. Restructuring charges of $7 million in 2012 principally reflect severance costs. For 2011, restructuring charges of $40 million principally reflect costs associated with exiting operating facilities and severance costs.

        Fees for television programming licensed for syndication and digital streaming are recorded as revenues at the beginning of the license period in which the programs are made available for exhibition, which, among other reasons, may cause substantial fluctuations in operating results. Unrecognized revenues attributable to such license agreements were $1.31 billion and $1.25 billion at December 31, 2012 and 2011, respectively.

2011 vs. 2010

        For 2011, Entertainment revenues increased 1% to $7.46 billion from $7.39 billion in 2010. This growth was led by 10% higher revenues from domestic and international television license fees, driven by licensing agreements for digital streaming. Revenue growth also reflected higher network affiliation fees and underlying advertising revenue increases from higher pricing for the broadcast of sporting events and higher primetime advertising for the CBS Television Network. These increases were partially offset by the absence of the 2010 telecast ofSuper Bowl XLIV on the CBS Television Network as well as the impact of

II-15


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

the new programming agreement for the NCAA Tournament,$.48, respectively, which resulted in lower revenues, but higher profits for 2011 compared to 2010.

        For 2011, Entertainment OIBDA increased $537total annual dividends of $293 million, or 60%, to $1.43 billion from $894 million for 2010 with an improved OIBDA margin of seven percentage points to 19%. The OIBDA increase and margin improvement reflect the aforementioned revenue growth, significantly lower sports programming costs resulting from the new programming agreement for the NCAA Tournament and the absence of the 2010 Super Bowl broadcast on the CBS Television Network, as well as cost decreases associated with the timing of production and distribution expenses. Restructuring charges of $23 million for 2010 principally reflected severance costs.

Cable Networks(Showtime Networks, CBS Sports Network and Smithsonian Networks)

        (Contributed 13%, 12% and 11% to consolidated revenues in 2012, 2011 and 2010, respectively, and 26% to consolidated operating income in 2012 and 2011, and 28% to consolidated operating income in 2010.)

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues

 $1,772 $1,621 $1,475 
  

Segment OIBDA

 $811 $707 $569 

Restructuring charges

  —  —  (3)

Depreciation and amortization

  (26) (23) (23)
  

Operating income

 $785 $684 $543 
  

Segment OIBDA as a % of revenues

  46%  44%  39% 

Operating income as a % of revenues

  44%  42%  37% 

Capital expenditures

 $18 $15 $19 
  

2012 vs. 2011

        For 2012, Cable Networks revenues increased 9% to $1.77 billion from $1.62 billion in 2011 primarily driven by higher affiliate fees, which reflect increases in rates and growth in subscriptions at Showtime Networks, CBS Sports Network and Smithsonian Networks, as well as higher licensing revenues from the digital streaming and international syndication ofShowtime original series. As of December 31, 2012 subscriptions totaled 76 million for Showtime Networks (includingShowtime,The Movie Channel andFlix), 46 million for CBS Sports Network and 17 million for Smithsonian Networks.

        For 2012, Cable Networks OIBDA increased $104 million, or 15%, to $811 million from $707 million for 2011, primarily due to the aforementioned revenue growth and 12% lower costs for theatrical programming, partially offset by 14% higher programming and production costs associated withShowtime original series and sports programming.

2011 vs. 2010

        For 2011, Cable Networks revenues increased 10% to $1.62 billion from $1.48 billion in 2010 primarily driven by 7% higher affiliate fees reflecting rate increases and growth in subscriptions at Showtime Networks, CBS Sports Network and Smithsonian Networks, as well as higher licensing revenues from international syndication, digital streaming and home entertainment sales ofShowtime original series. As

II-16


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

of December 31, 2011 subscriptions totaled 73 million for Showtime Networks (includingShowtime,The Movie Channel andFlix), 44 million for CBS Sports Network, and 12 million for Smithsonian Networks.

        For 2011, Cable Networks OIBDA increased $138 million, or 24%, to $707 million from $569 million for 2010, primarily due to the aforementioned revenue growth and lower costs for theatrical programming, partially offset by higher programming and advertising costs forShowtime original series. Restructuring charges of $3 million for 2010 principally reflect costs associated with exiting an operating facility.

Publishing (Simon & Schuster)

        (Contributed 6% to consolidated revenues and 3% to consolidated operating income in 2012, 2011 and 2010.)

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues

 $790 $787 $791 
  

Segment OIBDA

 $89 $92 $72 

Restructuring charges

  (3) (2) (4)

Depreciation and amortization

  (6) (7) (7)
  

Operating income

 $80 $83 $61 
  

Segment OIBDA as a % of revenues

  11%  12%  9% 

Operating income as a % of revenues

  10%  11%  8% 

Capital expenditures

 $5 $7 $6 
  

2012 vs. 2011

        For 2012, Publishing revenues of $790 million remained relatively flat compared to $787 million in 2011, reflecting growth in digital book sales and lower print book sales. Revenues from digital sales increased 35% from the same prior-year period and represented 23% of total Publishing revenues in 2012 compared to 17% in 2011. Best-selling titles in 2012 includedKill Shot by Vince Flynn andThe Wind Through the Keyhole by Stephen King.

        For 2012, Publishing OIBDA decreased $3 million, or 3%, to $89 million from $92 million for 2011. The decrease was driven by a charge related to a settlement agreement to resolve the e-books antitrust action covering a number of states, the District of Columbia and United States territories. Underlying Publishing results reflect margin growth associated with an increase in the mix of revenues from digital book sales, which have lower production and distribution costs than print books. As the Publishing business continues to transition to an increasing mix of digital book sales compared to print book sales, profit margins are expected to continue to grow. Restructuring charges of $3 million in 2012 primarily reflected costs associated with combining several of Publishing's imprints. Restructuring charges of $2 million in 2011 reflected severance costs.

2011 vs. 2010

        For 2011, Publishing revenues decreased 1% to $787 million from $791 million in 2010 as strong growth in digital book sales was offset by lower print book sales. Revenues from digital book sales of $133 million for 2011 more than doubled 2010 digital book sales and represented 17% of total Publishing revenues in 2011. Best-selling titles in 2011 includedSteve Jobs by Walter Isaacson and11/22/63 by Stephen King.

II-17


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

        For 2011, Publishing OIBDA increased $20 million, or 28%, to $92 million from $72 million for 2010 driven by lower direct operating costs, including expense decreases resulting from the significant increase in more profitable digital book sales as a percentage of total revenues, lower bad debt expenses and the impact of cost-containment measures. Restructuring charges of $4 million in 2010 reflected severance costs.

Local Broadcasting (CBS Television Stations and CBS Radio)

        (Contributed 20% to consolidated revenues in 2012 and 2011, and 21% to consolidated revenues in 2010 and 28%, 29% and 38% to consolidated operating income in 2012, 2011 and 2010, respectively.)

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues

 $2,774 $2,689 $2,782 
  

Segment OIBDA

 $957 $849 $865 

Restructuring charges

  (8) —  (25)

Impairment charges

  (11) —  — 

Depreciation and amortization

  (90) (99) (100)
  

Operating income

 $848 $750 $740 
  

Segment OIBDA as a % of revenues

  34%  32%  31% 

Operating income as a % of revenues

  31%  28%  27% 

Capital expenditures

 $64 $69 $74 
  

2012 vs. 2011

        For 2012, Local Broadcasting revenues increased 3% to $2.77 billion from $2.69 billion for 2011 principally reflecting higher political advertising and retransmission fees partially offset by softness in local economies. CBS Television Stations revenues increased 8% from the prior year, while CBS Radio revenues decreased 2%.

        Local Broadcasting OIBDA increased 13% to $957 million from $849 million for 2011, primarily driven by the revenue growth, lower programming costs for syndicated programming, and lower music royalty costs. During 2012, the Company recorded a pre-tax noncash impairment charge of $11 million to reduce the carrying value of the allocated goodwill in connection with the disposition of the Company's radio stations in West Palm Beach. Restructuring charges of $8 million for 2012 reflect severance costs and costs associated with exiting contractual obligations.

2011 vs. 2010

        For 2011, Local Broadcasting revenues decreased 3% to $2.69 billion from $2.78 billion for 2010 principally driven by lower political advertising sales. CBS Television Stations revenues decreased 7% due to the difficult comparison to 2010, which included significant political advertising for midterm elections and revenues from the 2010 Super Bowl broadcast. Comparability was also impacted by lost revenues resulting from the National Basketball Association lockout during 2011. CBS Television Stations results reflected growth in many key advertising categories, including domestic automotive and financial services, as well as higher retransmission fees. CBS Radio revenues increased slightly from the prior year, despite lower political advertising spending, reflecting growth in domestic auto, financial services and retail advertising.

II-18


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

        For 2011, Local Broadcasting OIBDA decreased 2% to $849 million from $865 million for 2010 primarily due to the revenue decline, partially offset by lower programming and production costs for syndicated and sports programming. Restructuring charges of $25 million for 2010 reflect severance costs and costs associated with exiting contractual obligations.

Acquisitions and Dispositions

        During 2012, the Company acquired a radio station in the New York market and a radio station in the Washington, D.C. area, as well as a television station in Long Island, New York. Also during 2012, the Company sold five radio stations in West Palm Beach. Together, these acquisitions and dispositions did not have a material impact on the comparability of operating results.

Outdoor Americas(CBS Outdoor)

        (Contributed 9% to consolidated revenues in 2012, 2011 and 2010, and 7%, 8% and 7% to consolidated operating income in 2012, 2011 and 2010, respectively.)

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues

 $1,296 $1,286 $1,225 
  

Segment OIBDA

 $378 $380 $317 

Restructuring charges

  —  (1) (4)

Depreciation and amortization

  (169) (182) (186)
  

Operating income

 $209 $197 $127 
  

Segment OIBDA as a % of revenues

  29%  30%  26% 

Operating income as a % of revenues

  16%  15%  10% 

Capital expenditures

 $54 $46 $48 
  

2012 vs. 2011

        For 2012, Outdoor Americas revenues increased 1% on both a reported and constant dollar basis to $1.30 billion from $1.29 billion in 2011, principally driven by 5% growth in the U.S. reflecting increases in both the billboards and displays businesses. The nonrenewal of the Toronto transit contract negatively affected the revenue comparison by two percentage points. Approximately 14% and 18% of Outdoor Americas revenues were generated from regions outside the U.S. for 2012 and 2011, respectively.

        For 2012, Outdoor Americas OIBDA decreased 1% to $378 million from $380 million in 2011, as the revenue growth was offset by the negative outcome of a dispute over a billboard tax that has been imposed on the outdoor advertising industry in Toronto, including a one-time retroactive payment. Outdoor Americas depreciation and amortization decreased in all periods presented principally reflecting lower amortization for leasehold agreements.

        The Company has begun the process of converting Outdoor Americas into a REIT. In addition, during the fourth quarter of 2012, the Company initiated a plan to divest Outdoor Europe. Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.

2011 vs. 2010

        For 2011, Outdoor Americas revenues increased 5% to $1.29 billion from $1.23 billion in 2010 principally driven by 5% growth in the U.S. reflecting increases in both the billboards and displays

II-19


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

businesses. The revenue increase was also due to the favorable impact of foreign exchange rate changes of approximately $7 million. In constant dollars, Outdoor Americas revenues increased 4%. Approximately 18% of Outdoor Americas revenues were generated from regions outside the U.S. for both 2011 and 2010.

        For 2011, Outdoor Americas OIBDA increased 20% to $380 million from $317 million in 2010 and the OIBDA margin increased to 30% for 2011 from 26% for 2010. These increases were primarily driven by the revenue growth and the mix of more profitable contracts. Restructuring charges of $4 million for 2010 principally reflect severance costs.

Corporate

        Corporate expenses include general corporate overhead, unallocated shared company expenses, pension and postretirement benefit costs for plans retained by the Company for previously divested businesses, and intercompany eliminations. For 2012, corporate expenses decreased 2% to $320 million from $326 million for 2011 driven by lower pension and postretirement benefit costs, primarily due to the benefit from pre-funding pension plans in 2011 and lower pension-related interest cost associated with retirees. This decrease was partially offset by expense increases associated with the Company's higher stock price.

        For 2011, corporate expenses increased to $326 million from $250 million for 2010 primarily reflecting the absence of the 2010 favorable settlement of $90 million related to the resolution of certain disputes regarding previously disposed businesses and higher incentive compensation, partially offset by lower pension and postretirement benefit costs. The decrease in pension and postretirement benefit costs was primarily due to the favorable performance of pension plan assets in 2010, as well as the benefit from pre-funding pension plans in 2010.

Financial Position

        Current assets increased by $171 million to $5.72 billion at December 31, 2012 from $5.55 billion at December 31, 2011, primarily due to increases in entertainment and sports programming rights. The allowance for doubtful accounts as a percentage of receivables decreased to 2.5% at December 31, 2012 compared with 3.1% at December 31, 2011, primarily due to recoveries and write-offs of previously reserved receivables.

        Net property and equipment of $2.27 billion at December 31, 2012 decreased by $101 million from $2.37 billion at December 31, 2011, primarily reflecting depreciation expense of $369 million, partially offset by capital expenditures of $254 million.

        Other assets increased by $142 million to $1.55 billion at December 31, 2012 from $1.41 billion at December 31, 2011, primarily reflecting higher long-term receivables associated with revenues from licensing agreements for digital streaming.

        Pension and postretirement benefit obligations increased by $30 million to $1.86 billion at December 31, 2012 from $1.83 billion at December 31, 2011, primarily reflecting actuarial losses resulting from the decrease in the discount rate, offset by contributions made to the Company's qualified pension plans and better than expected asset performance.

        Other liabilities decreased $209 million to $2.16 billion at December 31, 2012 from $2.37 billion at December 31, 2011, primarily driven by lower programming liabilities and residual liabilities of previously disposed businesses.

II-20


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Cash Flows

        Cash and cash equivalents increased by $48$296 million and $180$295 million, for the years ended December 31, 2012 and 2011, respectively, and decreased by $237 million for the year ended December 31, 2010. The changes in cash and cash equivalents were as follows:

respectively.
  
Year Ended December 31,
 2012
 2011
 2010
 
  

Cash provided by (used for) operating activities from:

          

Continuing operations

 $1,819 $1,832 $1,769 

Discontinued operations

  (4) (83) (34)
  

Cash provided by operating activities

  1,815  1,749  1,735 
  

Cash used for investing activities from:

          

Continuing operations

  (429) (369) (328)

Discontinued operations

  (22) (20) (40)
  

Cash used for investing activities

  (451) (389) (368)
  

Cash used for financing activities from:

          

Continuing operations

  (1,316) (1,180) (1,604)

Discontinued operations

  —  —  — 
  

Cash used for financing activities

  (1,316) (1,180) (1,604)
  

Net increase (decrease) in cash and cash equivalents

 $48 $180 $(237)
  

        Operating Activities.    In 2012, cash provided by operating activities from continuing operations decreased $13 million to $1.82 billion from $1.83 billion in 2011 as the increase in operating income was more than offset by higher income tax payments and a higher use of cash from working capital. The increased use of working capital primarily reflects a higher level of investment in television content in 2012, and higher receivables from the timing difference between revenue recognition and collections for long term television licensing arrangements, primarily for digital streaming. Revenues from the licensing of television programming are recognized when the television series is made available to the licensee, at the beginning of the applicable license period, while the related cash is collected over the term of the license period. The Company made pension contributions to its qualified plans of $200 million in 2012 compared with $410 million in 2011. Cash flow from operating activities from continuing operations for 2012 also included payments of approximately $60 million associated with the early extinguishment of debt, primarily for make-whole premiums.

        In 2011, cash provided by operating activities from continuing operations increased $63 million to $1.83 billion from $1.77 billion in 2010 principally driven by growth in operating income and lower interest payments, partially offset by lower contributions from changes in working capital, which reflected a use of cash during 2011 versus a source of cash during 2010. The working capital change reflected higher contributions to the Company's qualified pension plans in 2011 of $410 million compared to $167 million in 2010; the benefit to 2010 cash flow from the telecast of the Super Bowl in that year; and the timing difference between revenue recognition and collections for the Company's multi-year digital streaming agreements which were first signed in 2011.

        Cash paid for income taxes from continuing operations was $425 million for 2012, $233 million for 2011 and $245 million for 2010. The increase in cash taxes for 2012 was driven by the increase in pre-tax income and lower tax benefits from lower contributions to the Company's qualified pension plans. The decrease in cash taxes for 2011 was driven by tax benefits from contributions to the Company's qualified

II-21


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

pension plans and higher market values for stock-based compensation instruments exercised and vested, partially offset by higher tax payments associated with an increase in taxable income.

        Investing Activities.    In 2012, cash used for investing activities from continuing operations of $429 million principally includes capital expenditures of $254 million; acquisitions of $146 million, primarily for television and radio stations; and investments of $91 million, primarily in domestic and international television joint ventures. These uses of cash were partially offset by $49 million received for dispositions, principally from the sale of radio stations. In 2011, cash used for investing activities from continuing operations of $369 million principally reflected capital expenditures of $245 million; investments of $79 million, principally in domestic and international television ventures; and acquisitions of $75 million, primarily for internet businesses. In 2010, cash used for investing activities from continuing operations of $328 million principally reflected capital expenditures of $254 million and investments of $80 million, principally in domestic and international television ventures.

        Capital expenditures from continuing operations were $254 million in 2012, $245 million in 2011 and $254 million in 2010. For 2013, capital expenditures are anticipated to be at similar levels as the prior three years.

        Financing Activities.    In 2012, cash used for financing activities of $1.32 billion principally reflected the repayment of notes and debentures of $1.58 billion, the repurchase of CBS Corp. Class B Common Stock for $1.14 billion, dividend payments of $276 million and the payment of employee payroll taxes in lieu of issuing shares for restricted stock unit vests of $105 million, partially offset by proceeds from the issuance of notes of $1.57 billion and proceeds from the exercise of stock options of $168 million. For 2011, cash used for financing activities of $1.18 billion principally reflected the repurchase of CBS Corp. Class B Common Stock for $1.01 billion and dividend payments of $206 million, partially offset by proceeds from the exercise of stock options of $72 million. In 2010, cash used for financing activities of $1.60 billion principally reflected the repayment of notes and debentures of $2.13 billion, a $400 million reduction to amounts outstanding under the account receivable securitization program and dividend payments of $142 million, partially offset by proceeds from the issuance of notes of $1.09 billion.

Dividends

On January 29, 2013,28, 2016, the Company announced a quarterly cash dividend of $.12$.15 per share on its Class A and Class B Common Stock, payable on April 1, 2013. The Company declared a quarterly cash dividend on its Class A and Class B Common Stock during each of the four quarters of 2012, 2011 and 2010, resulting in total annual dividends of $287 million, $237 million and $139 million, respectively. During 2012, the Company increased its quarterly cash dividend from $.10 per share to $.12 per share, beginning with the dividend declared in the third quarter.

2016. 


Share Repurchase Program

During 2012,2015, the Company repurchased 35.551.7 million shares of CBS Corp. Class B Common Stock under its share repurchase program for $1.17$2.80 billion, at an average cost of $32.99$54.18 per share. Since the inceptionAt December 31, 2015, $2.00 billion of authorization remained under the share repurchase program in January 2011 throughprogram.

Capital Structure
At December 31,2015 2014
Commercial paper$—
 $616
Senior debt (1.95%-7.875% due 2016-2045)8,365
 6,399
Obligations under capital leases83
 97
Total debt (a)
8,448
 7,112
Less commercial paper—
 616
Less current portion of long-term debt222
 20
Total long-term debt, net of current portion$8,226
 $6,476
(a)At December 31, 2015 and 2014, the senior debt balances included (i) a net unamortized discount of $45 million and $21 million, respectively, (ii) unamortized deferred financing costs of $44 million and $34 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $14 million at both December 31, 2015 and 2014.  The face value of the Company’s total debt was $8.52 billion at December 31, 2015 and $7.15 billion at December 31, 2014.

For the year ended December 31, 2012,2015, debt issuances were as follows:

January 2015, $600 million 3.50% senior notes due 2025
January 2015, $600 million 4.60% senior notes due 2045
July 2015, $800 million 4.00% senior notes due 2026

The Company used the Company has repurchased 77.7 million shares of its Class B Common Stocknet proceeds from these issuances for $2.19 billion, at an average cost of $28.18 per share, leaving $2.51 billion of authorization remaining at December 31, 2012.

        On February 14, 2013,general corporate purposes, including the Company announced its intention to accelerate its current share repurchase program by repurchasing an additional $1 billion of CBS Corp. Class B Common Stock through an accelerated share repurchase ("ASR") transaction. Theand repayment of short-term borrowings, including commercial paper.


During the year ended December 31, 2014, the Company expectsissued $1.75 billion of senior notes and redeemed or repurchased $1.17 billion of senior notes and debentures, of which $1.07 billion was redeemed or repurchased prior to initiate the ASR during the first quartermaturity, resulting in a pretax loss on early extinguishment of 2013.

II-22

debt of $352 million.

II-28


Management's


Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Capital Structure



  
At December 31,
 2012
 2011
 
  

Senior debt (1.95% – 8.875% due 2012 – 2056)

 $5,863 $5,925 

Obligations under capital leases

  72  78 
  

Total debt (a)

  5,935  6,003 

Less discontinued operations debt (b)

  13  21 
  

Total debt from continuing operations

  5,922  5,982 

Less current portion

  18  24 
  

Total long-term debt from continuing operations, net of current portion

 $5,904 $5,958 
  

(a)
At December 31, 2012 and December 31, 2011,2015, the senior debt balances included (i) a net unamortized (discount) premium of $(16) million and $4 million, respectively, and (ii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $23 million and $75 million, respectively. The face value of the Company's total debt was $5.93 billion at December 31, 2012 and $5.92 billion at December 31, 2011.

(b)
Included in "Liabilities of discontinued operations" on the Consolidated Balance Sheets.

        Total debt of $5.94 billion at December 31, 2012 and $6.00 billion at December 31, 2011 was 37% and 38%, respectively, of the total capitalization of the Company.

        The senior debt of CBS Corp., is fully and unconditionally guaranteed by its wholly owned subsidiary, CBS Operations Inc. Senior debt in the amount of $52 million of the Company's wholly owned subsidiary, CBS Broadcasting Inc., has no guarantor.

        For the year ended December 31, 2012, debt issuances and redemptions were as follows:

Debt Issuances

    June 2012, $400 million 1.95% senior notes due 2017
    June 2012, $500 million 4.85% senior notes due 2042
    February 2012, $700 million 3.375% senior notes due 2022

Debt Redemptions

    $152 million 8.625% debentures due 2012
    $338 million 5.625% senior notes due 2012
    $400 million 8.20% senior notes due 2014
    $700 million 6.75% senior notes due 2056

        These redemptions resulted in a pre-tax net loss on early extinguishment of debt of $32 million for the year ended December 31, 2012.

        During the year ended December 31, 2010, the Company issued $1.10 billion of senior notes and repurchased and redeemed $2.07 billion of senior notes and debentures, of which $750 million was repurchased through tender offers, resulting in a pre-tax loss on early extinguishment of debt of $81 million.

        At December 31, 2012, the Company'sCompany’s scheduled maturities of long-term debt at face value, excluding capital leases, were as follows:

  
 
 2013
 2014
 2015
 2016
 2017
 2018 and
Thereafter
 
  

Long-term debt

 $— $99 $— $200 $400 $5,157 
  
                2021 and
 20162017201820192020Thereafter
Long-term debt $200
  $400
  $300
  $600
  $500
 $6,440

II-23


Management's Discussion and Analysis of
Results

During January 2016, the Company repaid its $200 million of Operations and Financial Condition (Continued)outstanding 7.625% senior debentures upon maturity.

(Tabular dollars in millions, except per share amounts)

Credit Facility

Commercial Paper
At December 31, 2012,2014 the Company had outstanding commercial paper borrowings under its $2.5 billion commercial paper program of $616 million, at a weighted average interest rate of 0.46% and with maturities of less than forty-five days. There were no outstanding commercial paper borrowings at December 31, 2015.
Credit Facility
At December 31, 2015, the Company had a $2.0$2.5 billion revolving credit facility, which expires in March 2015December 2019 (the "Credit Facility"“Credit Facility”). The Company, at its option, may also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the Company'sCompany’s option at the time of each borrowing and are based generally on the prime rate in the U.S. or the London Interbank Offer Rate ("LIBOR"(“LIBOR”) plus a margin based on the Company'sCompany’s senior unsecured debt rating. The Company pays a facility fee based on the total amount of the commitments.


The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.0x4.5x at the end of each quarter and a minimum Consolidated Coverage Ratio of 3.0x for the trailing four quarters, each as further described in the Credit Facility. At December 31, 2012,2015, the Company'sCompany’s Consolidated Leverage Ratio was approximately 1.6x and Consolidated Coverage Ratio was approximately 9.5x.

2.6x.


The Consolidated Leverage Ratio reflects the ratio of the Company'sCompany’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company'sCompany’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 non-cashnoncash items. The Consolidated Coverage Ratio reflects the ratio of Consolidated EBITDA to the Company's cash interest expense on indebtedness, adjusted to exclude certain capital lease obligations, in each case for the trailing four consecutive quarters.


The Credit Facility is used for general corporate purposes. At December 31, 2012,2015, 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 $1.99$2.49 billion.


Liquidity and Capital Resources

The Company continually projects anticipated cash requirements for its operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs.  The Company'sCompany’s operating needs include, among other items, commitments for sports programming rights, television and film programming, talent contracts, operating leases, franchise payments, interest payments, and pension funding obligations. The Company'sCompany’s investing and financing spending includes capital expenditures, share repurchases, dividends and principal payments on its outstanding indebtedness. The Company believes that its operating cash flows, cash and cash equivalents, borrowing capacity under its Credit Facility, which had $1.99$2.49 billion of remaining availability at December 31, 2012,2015, and access to capital markets are sufficient to fund its operating, investing and financing requirements for the next twelve months.


II-29



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


The Company'sCompany’s funding for short-term and long-term obligations will come primarily from cash flows from operating activities.  Any additional cash funding requirements are financed with short-term borrowings, including commercial paper, and long-term debt. To the extent that commercial paper is not available to the Company, the existing Credit Facility provides sufficient capacity to satisfy short-term borrowing needs.

The Company routinely assesses its capital structure and opportunistically enters into transactions to lower its interest expense, which could result in a charge from the early extinguishment of debt.


Funding for the Company'sCompany’s long-term debt obligations due over the next five years of $699 million$2.00 billion is expected to come from the Company’s ability to refinance its debt and cash generated from operating activities and the Company's ability to refinance its debt.

II-24

activities.


Management's Discussion and Analysis of
Results
As of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

        On February 14, 2013,December 31, 2015, the Company announcedhad $2.00 billion of remaining availability under its intentionshare repurchase program. The Company expects to accelerate its currentcomplete the share repurchase program by repurchasing an additional $1 billionthe end of CBS Corp. Class B Common Stock through an ASR transaction. The Company expects2016. This timing is subject to initiatemarket and business conditions, and remains at the ASR during the first quarterdiscretion of 2013management. These repurchases are expected to be funded by cash flows from operations and, finance it primarilyas appropriate, with short-term borrowings, cash on hand and cash generated from operations. The Company expects to repayincluding commercial paper, and/or the short-term borrowings during 2013 using cash generated from operations and proceeds from potential dispositions.

issuance of long-term debt.


Contractual Obligations

As of December 31, 2012 the Company's significant contractual obligations and2015 payments due by period under the Company’s significant contractual obligations with remaining terms in excess of one year were as follows:

  
 
 Payments Due by Period 
 
 Total
 2013
 2014-2015
 2016-2017
 2018 and
thereafter
 
  

Programming and talent commitments (a)

 $15,211 $2,489 $3,264 $2,758 $6,700 

Guaranteed minimum franchise payments (b)

  462  160  223  33  46 

Purchase obligations (c)

  582  221  216  62  83 

Operating leases (d)

  1,968  273  449  355  891 

Other long-term contractual obligations (e)

  1,006  —  853  121  32 

Long-term debt obligations (f)

  5,856  —  99  600  5,157 

Interest commitments on long-term debt (g)

  4,689  350  686  648  3,005 

Capital lease obligations (including interest) (h)

  88  17  24  20  27 
  

Total (i)

 $29,862 $3,510 $5,814 $4,597 $15,941 
  
 Payments Due by Period
         2021 and
 Total 2016 2017-2018 2019-2020 thereafter
Programming and talent commitments (a)
$11,906
 $2,175
 $3,691
 $3,087
 $2,953
Purchase obligations (b)
918
 230
 352
 267
 69
Operating leases (c)
1,002
 158
 255
 194
 395
Long-term debt obligations (d)
8,440
 200
 700
 1,100
 6,440
Interest commitments on long-term debt (e)
5,287
 380
 738
 676
 3,493
Capital lease obligations (including interest) (f)
94
 19
 31
 28
 16
Other long-term contractual obligations (g)
1,389
 —
 1,047
 284
 58
Total$29,036
 $3,162
 $6,814
 $5,636
 $13,424
(a)
Programming and talent commitments of the Company primarily include $11.98$9.21 billion for sports programming rights, $2.44$1.79 billion relating to the production and licensing of television, radio, and film productionprogramming, and licensing and $789$905 million for talent contracts.

(b)
Outdoor Americas has franchise rights entitling it to display advertising on media including transit shelters, buses, rail systems (in-car, station platforms and terminals), mall kiosks, stadium signage and in retail stores. Under most of these franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant advertising revenues, net of advertising agency fees, or a specified guaranteed minimum annual payment.

(c)
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including open purchase orders.

(d)
(c) Consists of long-term noncancellable operating lease commitments for office space, billboards, equipment, transponders and studio facilities. Total future minimum payments of $1.97 billion include $707 million
(d) Long-term debt obligations are presented at face value, excluding capital leases.
(e) Future interest based on scheduled debt maturities, excluding capital leases.
(f) Includes capital leases for Outdoor Americas billboards.

(e)
Long-termsatellite transponders.
(g) Reflects long-term contractual obligations recorded on the Company'sCompany’s Consolidated Balance Sheet, including program liabilities, participations due to producers and residuals.

(f)
Long-term debt obligations are presented at face value, including discontinued operations debt and excluding capital leases.

(g)
Future interest based on scheduled debt maturities, excluding capital leases.

(h)
Includes capital leases for satellite transponders.

(i)
Does not include contractual obligations of Outdoor Europe, which is presented as a discontinued operation in the consolidated financial statements. These obligations are mainly comprised of guaranteed minimum franchise payments of $565 million and long-term operating lease commitments of $166 million.

II-25


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

The table above also excludes $173$104 million of reserves for uncertain tax positions and the related accrued interest and penalties, as the Company cannot reasonably predict the amount of and timing of cash payments relating to this obligation.


In 2013,2016, the Company expects to make discretionary contributions of $150 million to pre-fund its qualified pension plans and contributions of approximately $51$52 million to its non-qualified pension plans to satisfy the benefit payments due under these plans. Also in 2013,2016, the Company expects to contribute

II-30



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


approximately $67$52 million to its other postretirement benefit plans to satisfy the Company'sCompany’s portion of benefit payments due under these plans.

Off-Balance Sheet Arrangements


Guarantees
During 2013, the Company completed the sale of Outdoor Europe.  The Company remained the guarantor of certain of Outdoor Europe’s obligations, including franchise payment obligations under certain transit franchise agreements. Generally, the Company would be required to perform under the guarantees in the event of non-performance by the buyer. These agreements have varying terms, with the majority of the obligations guaranteed under these agreements expiring over the next seven years. At December 31, 2015, the Company’s maximum exposure under the guaranteed obligations is approximately $26 million. The carrying value of the guarantee liability of approximately $14 million and $28 million at December 31, 2015 and 2014, respectively, is included in “Liabilities of discontinued operations” on the Consolidated Balance Sheets.
The Company also 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 December 31, 2012,2015, the outstanding letters of credit and surety bonds approximated $426$193 million and were not recorded on the Consolidated Balance Sheet.

        Prior to the separation of former Viacom Inc. into CBS Corp. and Viacom Inc. on December 31, 2005, former Viacom had entered into guarantees with respect to obligations related to Famous Players theater leases. In connection with the separation, Viacom Inc. has agreed to indemnify the Company with respect to these guarantees. In addition, the Company and Viacom Inc. have agreed to indemnify each other with respect to certain other matters pursuant to the separation agreement between the parties.


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 under generally accepted accounting principles.

Critical Accounting Policies

The preparation of the Company'sCompany’s financial statements in conformity with generally accepted accounting principles 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.  On an ongoing basis, the Company evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.  The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions.


The Company considers the following accounting policies to be the most critical as they are important to the Company'sCompany’s financial condition and results of operations, and require significant judgment and estimates on the part of management in its application.  For a summary of the Company'sCompany’s significant accounting policies see the accompanying notes to the consolidated financial statements.

II-26


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Programming and Production Costs

Accounting for the Company’s television and theatrical film production costs requires management'smanagement’s judgment as it relates to total estimated revenues to be earned ("(“Ultimate Revenues"Revenues”) and costs to be incurred throughout the life of each television program or theatrical film.program.  These estimates are used to determine the amortization of capitalized production costs, expensing of participation costs, and any necessary net realizable value adjustments to capitalized production costs.  For each television program, or theatrical film, management bases these estimates on the performance in the initial markets, the existence of future firm commitments to sell and the past performance of similar television programs or theatrical films.

programs.



II-31



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


The costs incurred in acquiring television series and feature film programming are capitalized when the program is accepted and available for airing and the costs of programming rights licensed under multi-year sports programming agreements are capitalized if the rights payments are made before the related economic benefit has been received. These costs are expensed over the period in which an economic benefit is expected to be derived. Management'sThe economic benefit is determined based on management’s estimates of revenues to be derived from the programming. Management’s judgment is required in determining the value of the future economic benefit and timing of the expensing of these costs, which is dependent on the economic benefit expected to be generated from the program.

costs.


Ultimate Revenuesrevenue estimates for internally produced television programming, and theatrical films, and the estimated economic benefit for acquired programming, which includes television series, feature films and sports, are updated regularly based on information available as the television program and theatricalor film progresses through its life cycle or contractual term. Overestimating Ultimate Revenues for internally produced programming or a failure to adjust for a downward revision in the estimated economic benefit to be generated from acquired programming could result in the understatement of the amortization of capitalized production or programming costs, future net realizable value adjustments and/or estimated accruals for participation expense.


Impairment of Goodwill and Intangible Assets

The Company tests goodwill and intangible assets with indefinite lives, primarily comprised of FCC licenses, for impairment during the fourth quarter of each year, and on an interim date should factors or indicators become apparent that would require an interim test.


        GoodwillFCC Licenses——Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. For 2012, in accordance with amended FASB guidance for goodwill impairment testing, the Company performed a qualitative assessment for seven reporting units which management estimates each have fair values that exceed their respective carrying values by 20% or more. For each reporting unit, the Company weighed the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. The reporting unit specific factors that were considered included financial performance and changes to the reporting units' carrying amounts since the most recent impairment tests. For each industry in which the reporting units operate, the Company considered growth projections from independent sources and significant developments or transactions within the industry. The Company also determined that the impact of macroeconomic factors on the discount rates and growth rates used for the most recent impairment tests would not significantly affect the fair value of the reporting units. Based on this qualitative assessment, considering the aggregation of these factors, the Company concluded that for these seven reporting units, it is not more likely than not that the fair value of each reporting unit is less than its carrying amount and therefore performing the two-step impairment test was unnecessary.

II-27


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

        The Company performed the first step of the goodwill impairment test for the remaining two reporting units. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. The estimated fair value of each reporting unit is computed based upon the present value of future cash flows ("Discounted Cash Flow Method") and both the traded and transaction values of comparable businesses ("Market Comparable Method"). For 2012, the Discounted Cash Flow Method and Market Comparable Method resulted in substantially equal fair values. The Discounted Cash Flow Method adds the present value of the estimated annual cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This technique requires the use of significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company's internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections. The discount rates are determined based on the average of the weighted average cost of capital of comparable entities. Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in the advertising market or a decrease in audience acceptance of programming, could result in changes to these assumptions and judgments. A downward revision of these assumptions could cause the fair values of the reporting units to fall below their respective carrying values. The Company would then perform the second step of the goodwill impairment test to determine the amount of any noncash impairment charge. Such a charge could have a material effect on the Company's Consolidated Statement of Operations and Balance Sheet.

        Based on the 2012 annual impairment test, the Company concluded that the fair value of each of the two reporting units for which the Company performed the first step of the goodwill impairment test exceeded their respective carrying values. The percentage that fair value exceeded carrying value and the significant assumptions used to calculate the fair value for these reporting units were as follows:

  
 
  
 Significant Assumptions 
Reporting Unit
 Reporting Unit Fair
Value in Excess of
Carrying Value
 Perpetual
Nominal
Growth Rate
 Discount
Rate
 
  

CBS Interactive

  9% 3.0% 9.5% 

CBS Radio

  6% 1.5% 8.0% 
  

        At December 31, 2012 the carrying value of goodwill for the CBS Interactive and CBS Radio reporting units was $993 million and $1.86 billion, respectively. An increase to the discount rates of 60 basis points and 40 basis points for Interactive and Radio, respectively, or a decrease to the perpetual nominal growth rates of 110 basis points and 50 basis points for Interactive and Radio, respectively, assuming no changes to other factors, would cause the fair values of these reporting units to fall below their respective carrying values.

        FCC Licenses—FCC licenses are tested for impairment at the geographic market level. The Company considers each geographic market, which is comprised of all of the Company'sCompany’s radio or television stations within that geographic market, to be a single unit of accounting because the FCC licenses at this level represent their highest and best use. At December 31, 2015, the Company had FCC license book values for stations in 14 television markets and 25 radio markets.


 For its annual impairment test, performed in the fourth quarter of 2012, the Company early adopted amended FASB guidance which permits the Company to choose to first assessperforms qualitative factors to

II-28


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

determine whether it is more likely than notassessments for each market that the indefinite-lived intangible asset is impaired. If based on this assessment the Company determines it is not more likely than not that the indefinite-lived intangible asset is impaired, then performing the quantitative impairment test is unnecessary. For 2012, the Company performed this qualitative assessment for ten radio markets and eleven television markets which management estimates each havehas an aggregate fair value of FCC licenses that significantly exceed their respective carrying values by 20% or more.values. For the 2015 annual impairment test, the Company performed qualitative assessments for 10 television markets. For each market,of these markets, the Company weighed the relative impact of market-specific and macroeconomic factors. The market-specific factors considered include recent projections by geographic market from both independent and internal sources for advertising revenue and operating costs, as well as market share and capital expenditures. The Company also considered the macroeconomic impact on discount rates and growth rates. Based on thisthe qualitative assessment,assessments, considering the aggregation of thesethe relevant factors, the Company concluded that it is not more likely than not that the aggregate fair values of the FCC licenses in each of these radio and television markets are less than their respective carrying values. Therefore, performing the quantitative impairment test was unnecessary.


For eachFCC licenses in the remaining television markets and all of the remaining radio and television markets, the Company performed a quantitative impairment test that compares the estimated fair value of the FCC licenses by geographic market with their respective carrying values.  The estimated fair value of each FCC license is computed using the Greenfield Discounted Cash Flow Method ("(‘‘Greenfield Method"Method’’), which attempts to isolate the income that is attributable to the license alone. The Greenfield Method is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method adds the present value of the estimated annual cash flows of the start-up station over a projection period to the residual value at the end of the projection period. The annual cash flows over the projection period include assumptions for overall advertising revenues in the relevant geographic market, the start-up station'sstation’s operating costs and capital expenditures, and a three-year build-up period for the start-upstart-

II-32



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


up station to reach a normalized state of operations, which reflects the point at which it achieves an average market share. In order to estimate the revenues of a start-up station, the totalThe overall market advertising revenue in the subject market is estimated based on recent industry projections. Operating costs and capital expenditures are estimated based on both industry and internal data. The residual value is calculated using a perpetual nominal growth rate, which is based on projected long-range inflation in the U.S. and long-term industry projections. The discount rate is determined based on the average of the weighted average cost of capital of comparable entities in the broadcast industry.

The discount rates and perpetual nominal growth rates used for each television and radio station for 20122015 were as follows:

 

 Discount
Rate
 Perpetual Nominal
Growth Rate
 Discount Perpetual Nominal
 Rate Growth Rate

Television stations

 7.5% 2.0% 8.0% 2.5%

Radio stations

 8.0% 1.5% 7.75% 1.0%
 

        The assumptions used in determining

For the 2015 quantitative impairment test, the Company concluded that the estimated fair values of the FCC licenses require managementin 18 radio markets were lower than their respective carrying values. Accordingly, the Company recognized a pretax noncash impairment charge of $484 million related to make significant judgments. Certain events and circumstances, including deteriorationradio FCC licenses in these markets. This impairment was the result of market conditions, higher cost of capital or a sustained decline in industry projections for the local radio oradvertising marketplace since 2014.

For the remaining seven radio and four television advertising markets, could resultthe Company concluded that the estimated fair values of FCC licenses in changes to these assumptionseach market exceeded their respective carrying values and judgments. therefore no impairment charge was necessary. Two radio markets, which had an aggregate carrying value of FCC licenses of $203 million, were each within 5% of their respective estimated fair value, and two radio markets, which had an aggregate carrying value of FCC licenses of $193 million, were each within 10% of their respective estimated fair value. In addition, the estimated fair value of one television market, which had a carrying value of FCC licenses of $167 million, exceeded its carrying value by 5%. In each of the remaining radio and television markets, the estimated fair value of FCC licenses was in excess of the respective carrying values by more than 10%. 

The estimated fair values of the FCC licenses are highly dependent on the assumptions of future economic conditions in the individual geographic markets in which the Company owns and operates television and radio stations. DeteriorationCertain future events and circumstances, including deterioration of market conditions, higher cost of capital, or a decline in the local radio or television advertising marketplace could result in a downward revision to the Company’s current assumptions and judgments. Various factors may contribute to a future decline in any local radio and/or television advertising marketplace including declines in economic conditions or a changeconditions; an other-than-temporary decrease in population size of any individual geographic market could adversely impact

II-29


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

advertisers' ability or willingness to purchase advertising on the radio and television stations in that market. Advertising expendituresspending by companiesadvertisers in certain industries including automotive, entertainment and retail,that have historically represented a significant portion of the local radio and television advertising revenues in all geographic markets. Asrevenues; a result, an other-than-temporary decrease in spendingshift by advertisers to competing advertising platforms; changes in these categories consumer behavior; and/or adverse economic conditions, particularlya change in larger markets such as New York, Los Angeles, Chicago and San Francisco, where the Company holds FCC licenses with substantial carrying values, could have a significant impact on the fair value of the FCC licenses.

        Based on the 2012 annual impairment test, the Company concluded that the estimated fair value of the FCC licenses in each radio and television market for which the Company performed the quantitative assessment exceeded their respective carrying values and therefore no impairment charge was necessary. Four radio markets, which had an aggregate carrying value of FCC licenses of $316 million, were each within 5% of their respective estimated fair value, and four radio markets, which had an aggregate carrying value of FCC licenses of $838 million, were each within 10% of their respective estimated fair value. In each of the remaining radio markets and in all of the television markets, the estimated fair value of FCC licenses was in excess of the respective carrying values at December 31, 2012 by more than 10%.population size. A downward revision to the present value of future cash flows could result in further impairment and a non-cashnoncash charge would be required.  Such a charge could have a material effect on the Company'sCompany’s Consolidated Statement of Operations and Consolidated Balance Sheet.


Goodwill—Goodwill is tested for impairment at the reporting unit level. At December 31, 2015 the Company had seven reporting units. The Company’s reporting units are one level below its operating segments, except for the Publishing reporting unit, which is the same as its operating segment because this operating segment has only one component. For its annual impairment test, the Company performs qualitative assessments for each reporting unit that management estimates have fair values that significantly exceed their respective carrying values. For the 2015 annual impairment test, the Company performed qualitative assessments for three reporting units. For each of these reporting units, the Company weighed the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. The reporting unit specific factors that were considered included financial performance and changes to the reporting units’ carrying amounts since the most recent impairment tests. For each

II-33



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


industry in which the reporting units operate, the Company considered growth projections from independent sources and significant developments or transactions within the industry. The Company also determined that the impact of macroeconomic factors on the discount rates and growth rates used for the most recent impairment tests would not significantly affect the fair value of the reporting units.  Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that for these three reporting units, it is not more likely than not that the fair value of each reporting unit is less than its respective carrying amount and therefore performing the quantitative impairment test was unnecessary.

For 2015, the Company performed the quantitative goodwill impairment test for four reporting units: CBS Interactive, CBS Sports Network, Publishing and CBS Radio. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. The estimated fair value of each reporting unit is computed based upon the present value of future cash flows (“Discounted Cash Flow Method”) and the traded or transaction values of comparable businesses (“Market Comparable Method”). The Discounted Cash Flow Method and Market Comparable Method resulted in similar estimated fair values. The Discounted Cash Flow Method adds the present value of the estimated annual cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This technique requires the use of significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends.  The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections. The discount rates are determined based on the average of the weighted average cost of capital of comparable entities.

For the 2015 annual impairment test, the Company concluded that the estimated fair value of each of the four reporting units exceeded their respective carrying values and therefore the second step of the impairment test was unnecessary. The fair value of the CBS Interactive, CBS Sports Network, and Publishing reporting units each exceeded their respective carrying values by more than 15%, while the estimated fair value of the CBS Radio reporting unit, which had a goodwill balance of $1.86 billion at December 31, 2015, exceeded its carrying value, after the FCC licenses impairment charge, by less than 1%. Following are the assumptions used in calculating the estimated fair value of the CBS Radio reporting unit:
  Significant Assumptions
 Reporting Unit FairPerpetual 
 Value in Excess ofNominalDiscount
Reporting UnitCarrying ValueGrowth RateRate
CBS Radio.4%1.5%8.0%
Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in the advertising market, a decrease in audience acceptance of programming, a shift by advertisers to competing advertising platforms; and/or changes in consumer behavior could result in changes to these assumptions and judgments. A downward revision of these assumptions could cause the fair values of the reporting units to fall below their respective carrying values. For the CBS Radio reporting unit, considering the narrow margin between the estimated fair value and carrying value, any downward revisions to its estimated fair value could cause the fair value of the reporting unit to fall below its carrying value. The Company would then perform the second step of the goodwill impairment test to determine the amount of any noncash impairment charge. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.
Reserves and Legal Matters

Estimates of reserves and liabilities related to legal issues and discontinued businesses, including asbestos and environmental matters, require significant judgments by management.  The Company continually evaluates these

II-34



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)


estimates based on changes in the relevant facts and circumstances and events that may impact estimates.  While management believes that the current reserves for matters related to predecessor operations of the Company, including environmental and asbestos, are adequate, there can be no assurance that circumstances will not change in future periods. 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.

Pensions

Pension benefit obligations and net periodic pension costs are calculated using many actuarial assumptions. Two key assumptions used in accounting for pension liabilities and expenses are the discount rate and expected rate of return on plan assets. The discount rate is determined based on the weighted average yield on portfolios of high quality bonds, constructed to provide cash flows necessary to meet each of the Company'sCompany’s pension plans'plans’ expected future benefit payments, as determined for the projected benefit obligation. The expected return on plan assets assumption wasis derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets. As of December 31, 2012,2015, the unrecognized actuarial losses increased from the prior year end due primarily to a decreaseunfavorable performance of pension plan assets partially offset by an increase in the discount rate as well as changes in other actuarial assumptions.rate. A decrease in the discount rate or a decrease in the expected rate of return on plan assets would increase pension expense.the projected benefit obligation. A 25 basis point change in the discount rate will result in an estimated change to the projected benefit obligation of approximately $110$123 million and will not have a material impact on the 20132015 pension expense. A decrease in the expected rate of return on plan assets would increase pension expense.  The estimated impact of a 25 basis point change in the expected rate of return on plan assets is a change of approximately $10$9 million in 2013to 2016 pension expense.

II-30


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Income Taxes

The Company is subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes.  When recording the worldwide provision for income taxes, an estimated effective tax rate for the year is applied to interim operating results.  In the event there is a significant or unusual item recognized in the quarterly operating results, the tax attributable to that item is separately calculated and recorded in the same quarter. A number of years may elapse before a tax return containing tax matters for which a reserve has been established is audited and finally resolved. During 20122015 and 2011,2014, the Company recognized tax benefits of $3$9 million and $6$7 million, respectively, related to the net impact of the settlement of certain prior year tax audits.  For positions taken in a previously filed tax return or expected to be taken in a future tax return, the Company evaluates each position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the position.  A tax position that meets the more-likely-than-not recognition threshold is subject to a measurement assessment to determine the amount of benefit to recognize in the Consolidated Statement of Operations and the appropriate reserve to establish, if any.  If a tax position does not meet the more-likely-than-not recognition threshold a tax reserve is established and no benefit is recognized. The Company is continually audited by U.S. federal and state as well as foreign tax authorities.  While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserve for uncertain tax positions of $173$104 million at December 31, 20122015 is properly recorded pursuant to the recognition and measurement provisions of FASB guidance for uncertainty in income taxes.


Legal Matters

        E-books Matters.General. A number ofOn an ongoing basis, the Company vigorously defends itself in numerous lawsuits described below have been pendingand proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the following parties relatingCompany without merit, is inherently uncertain and always difficult to the sale of e-books: Apple Inc., Hachette Book Group, Inc., HarperCollins Publishers, LLC, Holtzbrinck Publishers LLC d/b/a Macmillan, Penguin Group (USA) Inc.predict. However, based on its understanding and the Company's subsidiary, Simon & Schuster, Inc. (collectively, the "Publishing parties").

        On April 10, 2012, for purposes of settlement and without any admission of wrongdoing or liability, Simon & Schuster and twoevaluation of the relevant facts and circumstances, the Company believes that the below-described legal matters and other Publishing parties entered intolitigation to which it is a settlement stipulation and proposed final judgment (the "Stipulation") with the United States Department of Justice (the "DOJ")party are not likely, in connection with the DOJ's investigations of agency distribution of e-books. In furtherance of this settlement, on April 11, 2012, the DOJ filed an antitrust action in the United States District Court for the Southern District of New York against the Publishing parties and concurrently filed the Stipulation with the court. On September 7, 2012, the Stipulation was approved by the court and final judgment was entered. The Stipulation does not involve any monetary payments by Simon & Schuster, but will require the adoption of certain business practices for a 24 month period and certain compliance practices for a five year period.

        On June 11, 2012, for purposes of settlement and without any admission of wrongdoing or liability, Simon & Schuster entered into a proposed settlement agreement to resolve the antitrust action filed by a number of states and the Commonwealth of Puerto Rico against several of the Publishing parties in the United States District Court for the Western District of Texas, which was transferred to the United States District Court for the Southern District of New York ("States") on April 30, 2012. The proposed settlement provides that, certain Publishing parties, including Simon & Schuster, will pay agreed upon amounts for consumer restitution, among other things, and also requires the adoption of certain business and compliance practices, which are substantially similar to those described in the Stipulation with the DOJ. On September 14, 2012, the court granted preliminary approval of the proposed settlement, which all

II-31


II-35


Management's


Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

states (except Minnesota),



the District of Columbia and the United States territories joined. On October 15, 2012, Simon & Schuster paid the agreed upon amounts into an escrow account pending final court approval. On February 8, 2013, the court approved the proposed settlement following a final settlement approval hearing that day. The Company believes that this settlement with the States and the Stipulation with the DOJ will notaggregate, to have a material adverse effect on its results of operations, financial position or cash flows.

        On December 9, 2011, Under the United States Judicial Panel on Multidistrict Litigation (the "MDL") issued an order consolidating in the United States District Court for the Southern District of New York various purported class action suits that private litigants had filed in federal courts in California and New York. On January 20, 2012, the plaintiffs filed a consolidated amended class action complaint with the court against the Publishing parties. These private litigant plaintiffs, who are e-book purchasers, allege that, among other things, the defendants are in violation of federal and/or state antitrust laws in connection with the sale of e-books pursuant to agency distribution arrangements between each of the publishers and e-book retailers. The consolidated amended class action complaint generally seeks multiple forms of damages for the purchase of e-books and injunctive and other relief. On March 2, 2012, the Publishing parties filed a motion to dismiss this action. On May 15, 2012, the court denied the motion to dismiss. The Company believes that the States' settlement will likely resolve the class claims of those private litigant plaintiffs in the MDL litigation who reside in the areas covered by the States' settlement and who do not opt out of such settlement.

        Commencing on February 24, 2012, similar antitrust suits have been filed under Canadian law against the Publishing parties by private litigants in Canada, purportedly as class actions. Simon & Schuster intends to vigorously defend itself in the MDL and Canadian matters.

        In addition, the European Commission (the "EC") and Canadian Competition Bureau are conducting separate competition investigations of agency distribution arrangements of e-books in this industry and Simon & Schuster is cooperating with these investigations. On September 19, 2012, the EC began accepting public comment on the terms of a proposed settlement. On December 12, 2012, following the close of that comment period, the EC accepted the proposed settlement. The settlementSeparation Agreement between the ECCompany and Viacom Inc., the Company and Viacom Inc. have agreed to defend and indemnify the other in certain Publishing parties, including Simon & Schuster, requireslitigation in which the adoption of certain business and compliance practices similar to those described in the Stipulation with the DOJ.

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'sCompany’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, or by asbestos-containing grades of decorative micarta, a laminate used in commercial ships.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 December 31, 2012,2015, the Company had pending approximately 45,90036,030 asbestos claims, as compared with

II-32


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

approximately 50,09041,100 as of December 31, 20112014 and 52,22045,150 as of December 31, 2010.2013. During 2012,2015, the Company received approximately 4,3503,670 new claims and closed or moved to an inactive docket approximately 8,5408,740 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 claim,claims, the quality of evidence supporting the claims and other factors. The Company's totalIn 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 years 2012 and 2011Company’s costs for settlement and defense of asbestos claims after insurance recoveries and net of tax benefitstaxes were approximately $21 million and $33 million, respectively.$11 million. The Company'sCompany’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.


Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of claims against the Company are non-cancer claims. In a substantial number of the pending claims, the plaintiff has not yet identified the claimed injury. 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'sCompany’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.

        General.    On an ongoing basis, the Company vigorously defends itself



II-36



Management’s Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in numerous lawsuits and proceedings and responds to various investigations and inquiries from federal, state and local 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 above-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.

millions, except per share amounts)



Market Risk

The Company is exposed to market risk related to foreign currency exchange rates and interest rates. The Company uses derivative financial instruments to modify its exposure to market risks from fluctuations in foreign currency exchange rates and interest rates.rates and uses derivative financial instruments to modify this exposure. In accordance with its policy, the

II-33


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

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 Risk

The Company conducts business in various countries outside the U.S., resulting in exposure to movements in foreign exchange rates when translating from the foreign local currency to the U.S. dollar. In order to hedge anticipated cash flows generally within the next twelve months, in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar, foreign currency forward contracts, which are generally up to 24 months, are used. Additionally, the Company designates forward contracts used to hedge projected future televisioncommitted and film production costsforecasted 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 (loss) 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. The change in fair value of the non-designated contracts is included in "Other“Other items, net"net” in the Consolidated Statements of Operations. The Company manages the use of foreign exchange derivatives centrally.


At December 31, 20122015 and 2011,2014, the notional amount of all foreign currency contracts were $157was $291 million and $151$152 million, respectively, which represents hedges of expected foreign currency cash flows.


Interest Risk
All of the Company’s long-term debt has been issued under fixed interest rate agreements. During 2014, in connection with the issuance of its $600 million of 2.30% senior notes due 2019, the Company entered into $600 million notional amount of fixed-to-floating rate swap agreements to hedge this debt. During 2015, prior to maturity, the Company settled these interest rate swaps and received $12 million in cash, plus accrued interest. The resulting increase in the carrying value of the previously hedged debt is being amortized as a reduction to interest expense over the remaining term of the debt. The Company did not have any interest rate swaps outstanding at December 31, 2015 but in the future may use derivatives to modify its exposure to interest rates.

Credit Risk

The Company continually monitors its positions with, and credit quality of, the financial institutions that are counterparties to its financial instruments. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company does not anticipate nonperformance by the counterparties.


The Company'sCompany’s receivables do not represent significant concentrations of credit risk at December 31, 20122015 or 2011,2014, due to the wide variety of customers, markets and geographic areas to which the Company'sCompany’s products and services are sold.


Related Parties

        National Amusements, Inc.    National Amusements, Inc. ("NAI") is the controlling stockholder

For a discussion 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 Executive Chairman of the Board of Directors and founder of both 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 both 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. See Item 1A. "Risk Factors" in Part I of this report for additional information on the Company's relationship with NAI and Viacom Inc. At December 31, 2012, NAI directly or indirectly owned approximately 79% of CBS Corp.'s voting Class A Common Stock and owned approximately 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 enters into transactions with Viacom Inc. and its subsidiaries. Through its Entertainment segment, the Company licenses its television products and leases its production facilities to Viacom Inc.'s media networks businesses. In addition, the Company recognizes revenues for advertising spending placed by various subsidiaries of Viacom Inc.

II-34


Management's Discussion and Analysis of
Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Viacom Inc. also distributes certain of the Company's television products in the home entertainment market. The Company's total revenues from these transactions were $221 million, $255 million and $262 million for the years ended December 31, 2012, 2011 and 2010, respectively.

        As part of its normal course of business, the Company places advertisements with, leases production facilities from, and purchases other goods and services from various subsidiaries of Viacom Inc. The total amounts for these transactions were $26 million, $23 million and $27 million for the years ended December 31, 2012, 2011 and 2010, 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 December 31, 2012 and 2011.

  
At December 31,
 2012
 2011
 
  

Receivables

 $124 $102 

Other assets (Receivables, noncurrent)

  133  198 
  

Total amounts due from Viacom Inc.

 $257 $300 
  

        Other Related Parties    The Company has equity interests in a domestic television network and several international joint ventures for television channels, from which the Company earns revenues primarily by selling its television programming. Total revenues earned from these joint ventures were $160 million, $133 million and $145 million for the years ended December 31, 2012, 2011 and 2010, respectively.

        The Company, through the normal course of business, is involved in transactions with other related parties, that have not been material in any ofsee Note 7 to the periods presented.

consolidated financial statements.


Recent Pronouncements and Adoption of New Accounting Standards

Fair Value Measurements

        During

See Note 1 to the first quarter of 2012, the Company adopted the FASB's amended guidance which clarifies the FASB's intent about the application of existing fair value measurement requirements and changes certain principles and requirements for measuring fair value and for disclosing information about fair value measurements. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

Impairment Analysis of Unamortized Film Costs

        During the fourth quarter of 2012, the Company adopted the FASB's amended guidance on impairment assessments of unamortized film costs. This guidance eliminates the presumption that the conditions leading to the write-off of unamortized film costs after the balance sheet date existed as of the balance sheet date. The guidance also eliminates the requirement that fair value measurements used in the impairment analysis include the consideration of subsequent evidence, if such information would not have been considered by market participants at the measurement date. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

II-35



II-37


Management's Discussion and Analysis of

Results of Operations and Financial Condition (Continued)
(Tabular dollars in millions, except per share amounts)

Testing Indefinite-Lived Intangible Assets for Impairment

        During the fourth quarter of 2012, the Company early adopted the FASB's amended guidance on testing indefinite-lived intangible assets for impairment. Under this guidance, the Company has the option to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If based on this assessment, the Company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then performing the quantitative impairment test is unnecessary.

Recent Pronouncements

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

        In February 2013, the FASB issued guidance which requires disclosure of significant amounts reclassified out of accumulated other comprehensive income by component and their corresponding effect on the respective line items of net income. This guidance is effective for the Company beginning in the first quarter of 2013.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk.

        Response to this is included in "Management's Discussion and Analysis of Results of Operations and Financial Condition—Market Risk."

II-36

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

The following Consolidated Financial Statements and schedule of the registrant and its subsidiaries are submitted herewith as part of this report:



Reference
(Page/s)
Item 15(a)(1) Financial Statements:  

1.
 


Management'sManagement’s Report on Internal Control Over Financial Reporting


 
II-
II-3839

2.
 


Report of Independent Registered Public Accounting Firm


 
II-
II-3940

3.
 


Consolidated Statements of Operations for the years ended
December 31, 2012, 20112015, 2014 and 2010

2013

 
II-
II-4041

4.
 


Consolidated Statements of Comprehensive Income for the years ended
December 31, 2012, 20112015, 2014 and 2010

2013

 
II-
II-4142

5.
 


Consolidated Balance Sheets at December 31, 20122015 and 2011

2014
 
II-
II-4243

6.
 


Consolidated Statements of Cash Flows for the years ended
December 31, 2012, 20112015, 2014 and 2010

2013

 
II-
II-4344

7.
 


Consolidated Statements of Stockholders' Stockholders’ Equity for the years ended
December 31, 2012, 20112015, 2014 and 2010

2013

 
II-
II-4445

8.
 


Notes to Consolidated Financial Statements


 
II-
II-45 – II-9546


Item 15(a)(2) Financial Statement Schedule:

 

 


 


II. Valuation and Qualifying Accounts


 
F-
F-11

All other Schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule.

II-37


II-38

Item 8.    Financial Statements and Supplementary Data.


MANAGEMENT'S


Item 8.Financial Statements and Supplementary Data.
MANAGEMENT’ S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the effectiveness of internal control over financial reporting, as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act. Our internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company'sCompany’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 20122015 based on the framework set forth inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company'sCompany’s internal control over financial reporting was effective as of December 31, 2012.2015.

The effectiveness of our internal control over financial reporting as of December 31, 20122015 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

  CBS CORPORATION

 
 
By:
 

By:/s/ LESLIE MOONVES
Leslie Moonves
Leslie Moonves
Chairman, President
and
Chief Executive Officer

 
 
By:
 

By:/s/ JOSEPH R. IANNIELLO
Joseph R. Ianniello
Joseph R. Ianniello
Chief Operating Officer
By:/s/ Lawrence Liding
Lawrence Liding
Executive Vice President,
Chief Financial Officer



By:

/s/ LAWRENCE LIDING
Lawrence Liding
Senior Vice President, Controller
and
Chief Accounting Officer

II-38


II-39



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of CBS Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders'stockholders’ equity present fairly, in all material respects, the financial position of CBS Corporation and its subsidiaries at December 31, 20122015 and 2011,2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 20122015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012,2015, based on criteria established inInternal Control—Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company'sCompany’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management'sManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company'sCompany’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


A company'scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'scompany’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



/s/PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
New York, New York
February 15, 201312, 2016

II-39


II-40




CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)

 

 Year Ended December 31, 

 2012
 2011
 2010
 Year Ended December 31,
 2015 2014 2013

Revenues

 $14,089 $13,637 $13,466 $13,886
 $13,806
 $14,005
 

Expenses:

 
Costs and expenses:     

Operating

 7,967 7,882 8,512 8,324
 8,089
 8,124

Selling, general and administrative

 2,634 2,598 2,466 2,455
 2,462
 2,546

Restructuring charges (Note 4)

 19 43 59 

Impairment charges (Note 2)

 11 — — 

Depreciation and amortization

 475 495 500 264
 281
 290
 

Total expenses

 11,106 11,018 11,537 
 
Restructuring charges (Note 5)81
 26
 20
Impairment charges (Note 3)484
 52
 —
Gain on sales of businesses (Note 3)(139) —
 —
Total costs and expenses11,469
 10,910
 10,980

Operating income

 2,983 2,619 1,929 2,417
 2,896
 3,025

Interest expense

 (402) (435) (527)(392) (363) (375)

Interest income

 6 6 5 24
 13
 8

Net loss on early extinguishment of debt (Note 8)

 (32) — (81)
Loss on early extinguishment of debt (Note 9)—
 (352) —

Other items, net

 6 (11) 9 (26) (30) 7
 

Earnings from continuing operations before income taxes and equity in loss of investee companies

 2,561 2,179 1,335 2,023
 2,164
 2,665

Provision for income taxes

 (892) (751) (478)(587) (762) (878)

Equity in loss of investee companies, net of tax

 (35) (37) (35)(33) (48) (49)
 

Net earnings from continuing operations

 1,634 1,391 822 1,403
 1,354
 1,738

Net loss from discontinued operations, net of tax (Note 3)

 (60) (86) (98)
 
Net earnings from discontinued operations, net of tax (Note 4)10
 1,605
 141
Net earnings$1,413
 $2,959
 $1,879
Basic net earnings per common share:     
Net earnings from continuing operations$2.90
 $2.46
 $2.86
Net earnings from discontinued operations$.02
 $2.92
 $.23

Net earnings

 $1,574 $1,305 $724 $2.92
 $5.38
 $3.09
      

Basic net earnings (loss) per common share:

 
Diluted net earnings per common share:     

Net earnings from continuing operations

 $2.55 $2.09 $1.21 $2.87
 $2.41
 $2.79

Net loss from discontinued operations

 $(.09)$(.13)$(.14)
Net earnings from discontinued operations$.02
 $2.86
 $.23

Net earnings

 $2.45 $1.97 $1.07 $2.89
 $5.27
 $3.01

Diluted net earnings (loss) per common share:

 

Net earnings from continuing operations

 $2.48 $2.04 $1.18 

Net loss from discontinued operations

 $(.09)$(.13)$(.14)

Net earnings

 $2.39 $1.92 $1.04 
     

Weighted average number of common shares outstanding:

      

Basic

 642 664 679 484
 550
 608

Diluted

 659 681 694 489
 561
 624
     

Dividends per common share

 
$
..44		 
$
..35		 
$
..20		 $.60
 $.54
 $.48
 

See notes to consolidated financial statements.

II-40



II-41


CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)

 

 Year Ended December 31, 

 2012
 2011
 2010
 Year Ended December 31,
 2015 2014 2013

Net earnings

 $1,574 $1,305 $724 $1,413
 $2,959
 $1,879
 

Other comprehensive income (loss) from continuing operations, net of tax:

      

Cumulative translation adjustments

 7 12 4 (5) (9) (2)

Net actuarial gain (loss) and prior service cost (Note 13)

 (138) (145) 102 

Unrealized gain on securities

 — — 2 
 
Net actuarial gain (loss) and prior service costs (Note 15)(30) (163) 207
Unrealized (loss) gain on securities—
 (3) 1

Other comprehensive income (loss) from continuing operations, net of tax

 (131) (133) 108 (35) (175) 206

Other comprehensive income (loss) from discontinued operations, net of tax

 1 (20) 2 
 
Other comprehensive income (loss) from discontinued operations,
before reclassifications
—
 15
 (4)
Reclassification from accumulated other comprehensive income (loss) from
discontinued operations to net earnings
—
 (30) (178)

Total other comprehensive income (loss), net of tax

 (130) (153) 110 (35) (190) 24
 

Total comprehensive income

 $1,444 $1,152 $834 $1,378
 $2,769
 $1,903
 

See notes to consolidated financial statements.

II-41


II-42



CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)

  
 
 At December 31, 
 
 2012
 2011
 
  

ASSETS

       

Current Assets:

       

Cash and cash equivalents

 $708 $660 

Receivables, less allowances of $81 (2012) and $100 (2011)

  3,137  3,086 

Programming and other inventory (Note 5)

  859  735 

Deferred income tax assets, net (Note 12)

  253  321 

Prepaid income taxes

  27  14 

Prepaid expenses

  206  186 

Other current assets

  312  324 

Current assets of discontinued operations

  218  223 
  

Total current assets

  5,720  5,549 
  

Property and equipment:

       

Land

  330  329 

Buildings

  718  711 

Capital leases

  194  200 

Advertising structures

  1,689  1,660 

Equipment and other

  2,057  1,980 
  

  4,988  4,880 

Less accumulated depreciation and amortization

  2,717  2,508 
  

Net property and equipment

  2,271  2,372 
  

Programming and other inventory (Note 5)

  1,582  1,496 

Goodwill (Note 2)

  8,567  8,571 

Intangible assets (Note 2)

  6,515  6,521 

Other assets

  1,551  1,409 

Assets of discontinued operations

  260  302 
  

Total Assets

 $26,466 $26,220 
  

LIABILITIES AND STOCKHOLDERS' EQUITY

       

Current Liabilities:

       

Accounts payable

 $386 $324 

Accrued expenses

  636  581 

Accrued compensation

  374  384 

Participants' share and royalties payable

  953  938 

Program rights

  455  577 

Deferred revenues

  232  230 

Current portion of long-term debt (Note 8)

  18  24 

Other current liabilities

  646  645 

Current liabilities of discontinued operations

  241  234 
  

Total current liabilities

  3,941  3,937 
  

Long-term debt (Note 8)

  5,904  5,958 

Participants' share and royalties payable

  965  975 

Pension and postretirement benefit obligations (Note 13)

  1,860  1,830 

Deferred income tax liabilities, net (Note 12)

  1,254  1,044 

Other liabilities

  2,157  2,366 

Liabilities of discontinued operations

  172  202 

Commitments and contingencies (Note 14)

       

Stockholders' Equity:

       

Class A Common Stock, par value $.001 per share; 375 shares authorized;
43 (2012) and 44 (2011) shares issued

  —  — 

Class B Common Stock, par value $.001 per share; 5,000 shares authorized;
785 (2012) and 769 (2011) shares issued

  1  1 

Additional paid-in capital

  43,424  43,395 

Accumulated deficit

  (26,769) (28,343)

Accumulated other comprehensive loss (Note 1)

  (569) (439)
  

  16,087  14,614 

Less treasury stock, at cost; 198 (2012) and 162 (2011) Class B Shares

  5,874  4,706 
  

Total Stockholders' Equity

  10,213  9,908 
  

Total Liabilities and Stockholders' Equity

 $26,466 $26,220 
  
  At December 31, 
  2015 2014 
ASSETS     
Current Assets:     
Cash and cash equivalents $323
 $428
 
Receivables, less allowances of $63 (2015) and $50 (2014) 3,628
 3,459
 
Programming and other inventory (Note 6) 1,271
 922
 
Prepaid income taxes 101
 161
 
Prepaid expenses 175
 129
 
Other current assets 249
 386
 
Total current assets 5,747
 5,485
 
Property and equipment 3,243
 3,164
 
Less accumulated depreciation and amortization 1,838
 1,731
 
Net property and equipment (Note 2) 1,405
 1,433
 
Programming and other inventory (Note 6) 1,957
 1,817
 
Goodwill (Note 3) 6,481
 6,698
 
Intangible assets (Note 3) 5,514
 6,008
 
Other assets (Note 1) 2,661
 2,494
 
Total Assets $23,765
 $23,935
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
     
Current Liabilities:     
Accounts payable $192
 $302
 
Accrued expenses 589
 605
 
Accrued compensation 315
 333
 
Participants’ share and royalties payable 1,013
 999
 
Program rights 374
 404
 
Deferred revenues 295
 206
 
Commercial paper (Note 9) —
 616
 
Current portion of long-term debt (Note 9) 222
 20
 
Other current liabilities 560
 548
 
Total current liabilities 3,560
 4,033
 
Long-term debt (Note 9) 8,226
 6,476
 
Participants’ share and royalties payable 1,318
 1,267
 
Pension and postretirement benefit obligations (Note 15) 1,575
 1,564
 
Deferred income tax liabilities, net (Note 14) 1,509
 1,427
 
Other liabilities 1,942
 2,080
 
Liabilities of discontinued operations (Note 4) 72
 118
 
      
Commitments and contingencies (Note 16) 

 

 
      
Stockholders’ Equity:     
Class A Common Stock, par value $.001 per share; 375 shares authorized;
38 (2015 and 2014) shares issued
 —
 —
 
Class B Common Stock, par value $.001 per share; 5,000 shares authorized;
826 (2015) and 818 (2014) shares issued
 1
 1
 
Additional paid-in capital 44,055
 44,041
 
Accumulated deficit (20,518) (21,931) 
Accumulated other comprehensive loss (Note 12) (770) (735) 
  22,768
 21,376
 
Less treasury stock, at cost; 401 (2015) and 349 (2014) Class B Shares 17,205
 14,406
 
Total Stockholders’ Equity 5,563
 6,970
 
Total Liabilities and Stockholders’ Equity
 $23,765
 $23,935
 

See notes to consolidated financial statements.

II-42


II-43



CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

 

 Year Ended December 31, 

 2012
 2011
 2010
  Year Ended December 31,
  2015 2014 2013

Operating Activities:

       

Net earnings

 $1,574 $1,305 $724  $1,413
 $2,959
 $1,879

Less: Net loss from discontinued operations

 (60) (86) (98)
 
Less: Net earnings from discontinued operations 10
 1,605
 141

Net earnings from continuing operations

 1,634 1,391 822  1,403
 1,354
 1,738

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

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

Depreciation and amortization

 475 495 500  264
 281
 290

Impairment charges

 11 — —  484
 52
 —

Deferred tax provision

 442 452 293  215
 692
 433

Stock-based compensation

 153 139 136  174
 154
 222

Redemption of debt

 (28) — 60 

Net loss (gain) on disposition and write-down of assets

 — 12 (19)
Net gain on disposition and write-down of assets (139) (12) (3)

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

 52 50 35  36
 57
 57

Amortization of deferred financing costs

 12 13 16 

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

       

Increase in receivables

 (238) (10) (16) (377) (600) (777)

(Increase) decrease in inventory and related program and participation liabilities, net

 (414) (159) 121  (497) (213) 48

Decrease in other assets

 28 43 123 
Decrease (increase) in other assets 16
 37
 (16)

Decrease in accounts payable and accrued expenses

 (10) (107) (23) (212) (152) (135)

Decrease in pension and postretirement benefit obligations

 (192) (381) (118) (46) (34) (188)

Decrease in income taxes

 (81) (27) (76)

Decrease in deferred revenue

 (17) (85) (79)
Increase (decrease) in income taxes 25
 (390) 9
Increase (decrease) in deferred revenue 66
 (47) 90

Other, net

 (8) 6 (6) 7
 31
 11
 

Net cash flow provided by operating activities from continuing operations

 1,819 1,832 1,769  1,419
 1,210
 1,779
 

Net cash flow used for operating activities from discontinued operations

 (4) (83) (34)
 
Net cash flow (used for) provided by operating activities from discontinued operations (25) 65
 94

Net cash flow provided by operating activities

 1,815 1,749 1,735  1,394
 1,275
 1,873
 

Investing Activities:

       

Acquisitions, net of cash acquired

 (146) (75) (11) (15) (27) (20)

Capital expenditures

 (254) (245) (254) (193) (206) (212)

Investments in and advances to investee companies

 (91) (79) (80) (98) (98) (176)

Proceeds from sale of investments

 13 12 —  81
 12
 7

Proceeds from dispositions

 49 18 18  385
 7
 164

Other investing activities

 — — (1) (3) (4) 23
 

Net cash flow used for investing activities from continuing operations

 (429) (369) (328)
 
Net cash flow provided by (used for) investing activities from continuing operations 157
 (316) (214)

Net cash flow used for investing activities from discontinued operations

 (22) (20) (40) (3) (285) (58)
 

Net cash flow used for investing activities

 (451) (389) (368)
 
Net cash flow provided by (used for) investing activities 154
 (601) (272)

Financing Activities:

       

Proceeds from issuance of notes

 1,566 — 1,094 
(Repayments of) proceeds from short-term debt borrowings, net (616) 141
 475
Proceeds from issuance of senior notes 1,959
 1,728
 —

Repayment of notes and debentures

 (1,583) — (2,126) —
 (1,152) —

Payment of capital lease obligations

 (19) (19) (16) (17) (17) (17)

Payment of contingent consideration

 (33) — —  —
 —
 (30)

Dividends

 (276) (206) (142) (300) (292) (300)

Purchase of Company common stock

 (1,137) (1,012) —  (2,813) (3,595) (2,185)

Payment of payroll taxes in lieu of issuing shares for stock-based compensation

 (105) (82) (37) (96) (146) (145)

Proceeds from exercise of stock options

 168 72 7  142
 283
 146

Excess tax benefit from stock-based compensation

 103 72 16  88
 243
 148

Decrease to accounts receivable securitization program

 — — (400)

Other financing activities

 — (5) —  —
 (3) (4)
 
Net cash flow used for financing activities from continuing operations (1,653) (2,810) (1,912)
Net cash flow provided by financing activities from discontinued operations —
 2,167
 —

Net cash flow used for financing activities

 (1,316) (1,180) (1,604) (1,653) (643) (1,912)
 

Net increase (decrease) in cash and cash equivalents

 48 180 (237)

Cash and cash equivalents at beginning of year

 660 480 717 
 

Cash and cash equivalents at end of year

 $708 $660 $480 
 
Net (decrease) increase in cash and cash equivalents (105) 31
 (311)
Cash and cash equivalents at beginning of year (includes $29 (2014) and $21 (2013)
of discontinued operations cash)
 428
 397
 708
Cash and cash equivalents at end of year (includes $29 (2013)
of discontinued operations cash)
 $323
 $428
 $397

See notes to consolidated financial statements.

II-43


II-44



CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'STOCKHOLDERS’ EQUITY
(In millions)

 

 Year Ended December 31, 

 2012
 2011
 2010
 

   Year Ended December 31,

 Shares
 Amount
 Shares
 Amount
 Shares
 Amount
 2015 2014 2013
 Shares Amount Shares Amount Shares Amount

Class A Common Stock:

            

Balance, beginning of year

 44 $— 44 $— 52 $— 38
 $—
 39
 $—
 43
 $—

Conversion of A shares into B shares

 (1) — — — (8) — —
 —
 (1) —
 (4) —
 

Balance, end of year

 43 — 44 — 44 — 38
 —
 38
 —
 39
 —
 

Class B Common Stock:

            

Balance, beginning of year

 769 1 757 1 743 1 818
 1
 801
 1
 785
 1

Conversion of A shares into B shares

 1 — — — 8 — —
 —
 1
 —
 4
 —

Issuance of stock for RSU vests

 8 — 9 — 7 — 
Restricted stock unit vests4
 —
 5
 —
 7
 —

Exercise of stock options

 10 — 7 — 1 — 6
 —
 14
 —
 8
 —

Retirement of Treasury Stock

 (3) — (4) — (2) — 
 
Retirement of treasury stock(2) —
 (3) —
 (3) —

Balance, end of year

 785 1 769 1 757 1 826
 1
 818
 1
 801
 1
 

Additional Paid-In Capital:

            

Balance, beginning of year

   43,395   43,443   43,479 
 44,041
 
 43,474
   43,424

Stock-based compensation

   147   135   133   174
   168
   187

Tax benefits related to employee stock-based transactions

   104   64   1 
Tax benefit related to employee stock-based transactions  87
   246
   159

Exercise of stock options

   170   72   7   142
   282
   144

Retirement of Treasury Stock

   (105)   (82)   (38)
Retirement of treasury stock  (96)   (146)   (145)

Dividends

   (287)   (237)   (139)  (293)   (296)   (295)
 
Gain on Outdoor Americas IPO  —
   313
   —

Balance, end of year

   43,424   43,395   43,443 
 44,055
 
 44,041
 
 43,474
 

Accumulated Deficit:

            

Balance, beginning of year

   (28,343)   (29,648)   (30,372)
 (21,931) 
 (24,890) 
 (26,769)

Net earnings

   1,574   1,305   724   1,413
   2,959
   1,879
 

Balance, end of year

   (26,769)   (28,343)   (29,648)
 (20,518) 
 (21,931) 
 (24,890)
 

Accumulated Other Comprehensive Loss:

            

Balance, beginning of year

   (439)   (286)   (396)  (735)   (545)   (569)

Other comprehensive income (loss)

   (130)   (153)   110   (35)   (190)   24
 

Balance, end of year

   (569)   (439)   (286)  (770)   (735)   (545)
 

Treasury Stock, at cost:

            

Balance, beginning of year

 162 (4,706) 120 (3,689) 120 (3,693)
Balance beginning of year349
 (14,406) 244
 (8,074) 198
 (5,874)

Class B Common Stock purchased

 36 (1,170) 42 (1,019) — — 52
 (2,800) 60
 (3,612) 46
 (2,201)
Outdoor Americas Split-Off—
 —
 45
 (2,721) —
 —

Shares paid for tax withholding for stock-based compensation

 3 (105) 4 (82) 2 (38)2
 (96) 3
 (146) 3
 (145)

Issuance of stock for deferred compensation

 — 2 — 2 — 4 —
 1
 —
 1
 —
 1

Retirement of Treasury Stock

 (3) 105 (4) 82 (2) 38 
 
Retirement of treasury stock(2) 96
 (3) 146
 (3) 145

Balance, end of year

 198 (5,874) 162 (4,706) 120 (3,689)401
 (17,205) 349
 (14,406) 244
 (8,074)
 

Total Stockholders' Equity

   $10,213   $9,908   $9,821 
 
Total Stockholders’ Equity
 $5,563
 
 $6,970
 
 $9,966

See notes to consolidated financial statements.

II-44



II-45


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"“Company” or "CBS“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 Films;Interactive; and CBS Interactive)Films), Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks), Publishing (Simon & Schuster), and Local Broadcasting (CBS Television Stations and CBS Radio) and Outdoor Americas (CBS Outdoor). During 2012, the Company initiated a plan to divest its outdoor advertising business in Europe, which includes an interest in an outdoor business in Asia ("Outdoor Europe"). Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company's consolidated financial statements for all periods presented.


Principles of ConsolidationConsolidation——The consolidated financial statements include the accounts of CBS Corp. and all of its subsidiaries in which a controlling interest is maintained. Controlling interest is determined by majority ownership interest and the absence of substantive third party participating rights.  Investments over which the Company has a significant influence or ownership of more than 20% but less than or equal to 50%, without a controlling interest, are accounted for under the equity method. Investments of 20% or less, over which the Company has no significant influence, are accounted for under the cost method if the fair value is not readily determinable and are accounted for as available for sale securities if the fair value is readily determinable. All significant intercompany transactions have been eliminated.


        ReclassificationsReclassifications——Certain amounts reported for prior years have been reclassified to conform to the current year'syear’s presentation.


Use of EstimatesEstimates——The preparation of the Company'sCompany’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.


Cash and Cash EquivalentsEquivalents——Cash and cash equivalents consist of cash on hand and short-term (maturities of three months or less at the date of purchase) highly liquid investments, including money market funds, commercial paper and bank time deposits.


Programming InventoryInventory——The Company acquires rights to programming and produces programming to exhibit on its broadcast and cable networks, broadcast television and radio stations, direct to consumers through its digital streaming services and the Internet, and in theaters. The costs incurred in acquiring and producing programs and theatrical films are capitalized and amortized over the license period or projected useful life of the programming. Program rights and the related liabilities are recorded at the gross amount of the liabilities when the license period has begun, the cost of the program is determinable, and the program is accepted and available for airing.


Television and theatrical film production costs (which include direct production costs, production overhead and acquisition costs) are stated at the lower of amortizedunamortized cost or net realizable value. The Company then estimates total revenues to be earned and costs to be incurred throughout the life of each

II-45


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

television program or theatrical film.program.  For television programming, estimates for remaining total lifetime revenues are limited to the amount of revenue contracted for each episode in the initial market. Accordingly, television programming costs and participation costs incurred in excess of the amount of revenue contracted for each episode in the initial market are expensed as incurred on an episode by episode basis. Estimates for all secondary market revenues such as domestic and foreign syndication, basic cable, digital streaming, home entertainment and merchandising are included in the estimated lifetime revenues of such television programming


II-46

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


once it can be demonstrated that a program can be successfully licensed in such secondary market. Television programming costs incurred subsequent to the establishment of the secondary market are initially capitalized and amortized, and estimated liabilities for participations are accrued, based on the proportion that current period revenues bear to the estimated remaining total lifetime revenues.


The costs incurred in acquiring television series and feature film programming are capitalized when the program is accepted and available for airing.  These costs are amortized over the period in which an economic benefit is expected to be derived based on the timing of the Company'sCompany’s usage of and benefit from such programming. The costs of programming rights licensed under multi-year sports programming agreements are capitalized if the rights payments are made before the related economic benefit has been received.  These costs are expensed over the period in which an economic benefit is expected to be derived based on the relative value of the events broadcast by the Company during a period.  The relative value for an event is determined based on the revenues generated for that event in relation to the estimated total revenues over the remaining term of the sports programming agreement.  For the Company'sCompany’s multi-year sports programming agreements where the rights payments for a season approximate the relative value of the events broadcast by the Company during that season, those rights payments are expensed during such season.


Lifetime revenue estimates for internally produced television programming, and theatrical films, and the estimated economic benefit for the acquired programming, including revenue projections for multi-year sports programming, are periodically reviewed and adjustments,reviewed. Adjustments, if any, will result in changes to amortization rates, future net realizable value adjustments and/or estimated accruals for participation expense.


Property and EquipmentEquipment——Property and equipment is stated at cost.  Depreciation is computed by the straight-line method over estimated useful lives as follows:

Buildings

and building improvements

2010 to 40 years

Leasehold Improvements

Shorter of lease term or useful life

Advertising Structures

5 to 20 years

Equipment and other (including capital leases)

3 to 20 years

        Depreciation expense, including capitalized lease amortization, was $369 million (2012), $374 million (2011) and $371 million (2010). Amortization expense related to capital leases was $19 million (2012 and 2011) and $18 million (2010). Accumulated amortization of capital leases was $131 million at December 31, 2012 and $132 million at December 31, 2011.

Impairment of Long-Lived AssetsAssets——The Company assesses long-lived assets and intangible assets, other than goodwill and intangible assets with indefinite lives, for impairment whenever there is an indication that the carrying amount of the asset may not be recoverable.  Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows expected to be generated by these assets, which is the estimated fair value, to their net carrying value.

II-46


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

The amount of impairment loss, if any, will generally be measured by the difference between the net bookcarrying value and the estimated fair value of the asset.


Impairment of InvestmentsInvestments——Investments are reviewed for impairment on a quarterly basis by comparing their fair value to their respective carrying amounts. The Company determines the fair value of its public company investments by reference to their publicly traded stock price. With respect to private company investments, the Company makes its estimate of fair value by considering recent investee equity transactions, discounted cash flow analyses, recent operating results, estimates based on comparable public company operating cash flow multiples and, in certain situations, balance sheet liquidation values.  If the fair value of the investment has dropped below the carrying amount, management considers several factors when determining whether an other-than-temporary decline has occurred.  These factors include the length of the time and the extent to which the estimated fair value or market value has been below the carrying value, the financial condition and the near-term prospects of the investee, the intent and ability of the Company to retain its investment in the investee for a period of time sufficient to allow for any anticipated recovery in market value, and other factors influencing the fair market value, such as general market conditions.



II-47

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


Goodwill and Intangible AssetsAssets——Goodwill is allocated to various reporting units, which are generally one level below the Company'sCompany’s operating segments. Intangible assets with finite lives, which primarily consist of leasehold agreements, franchise agreements and trade names, are generally amortized byusing the straight-line method over their estimated useful lives, which range from 4 to 40 years.  Goodwill and other intangible assets with indefinite lives, which consist of FCC licenses, are not amortized but are tested for impairment on an annual basis and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value below its carrying amount.  If the carrying value of goodwill or the intangible asset exceeds its fair value, an impairment loss is recognized as a noncash charge. (See Note 3).


Other LiabilitiesAssets——Other assets include noncurrent receivables of $2.09 billion at December 31, 2015 and $1.94 billion at December 31, 2014, which are primarily related to revenues recognized under long-term television licensing arrangements. Television license fee revenues are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition, while the related cash is collected over the term of the license period.

Other Liabilities—Other liabilities consist primarily of the noncurrent portion of residual liabilities of previously disposed businesses, program rights obligations, deferred compensation and other employee benefit accruals.


Discontinued OperationsOperations——TheOn July 16, 2014, the Company completed the disposition of CBS Outdoor Americas Inc., which was previously a subsidiary of the Company and has been renamed OUTFRONT Media, Inc. (“Outdoor Americas”). During 2013, the Company completed the sale of its outdoor advertising business in Europe, which included an interest in an outdoor business in Asia (“Outdoor Europe”). Outdoor Americas and Outdoor Europe have been presented as discontinued operations in the Company’s consolidated financial statements present Outdoor Europe as a discontinued operation (See Note 3)4). In addition, certain businesses that were previously disposed of by the Company prior to January 1, 2002, were accounted for as discontinued operations in accordance with accounting rules in effect prior to 2002. Assets and liabilities remaining in discontinued operations related to these previously disposed businesses primarily include aircraft leases that are generally expected to liquidate in accordance with contractual terms.


Revenue RecognitionRecognition——Advertising revenues, net of agency commissions, are recognized in the period during which advertising spots are aired or displayed.  If there is a guarantee to deliver a targeted audience rating, revenues are recognized for the actual audience rating delivered, based on the ratings data published by independent audience ratings measurement companies.  Revenues are deferred for any shortfall in the audience rating with respect to an advertising spot until such time as the required audience rating is delivered. Revenues from providing advertising space on outdoor structures are recognized ratably over the contract terms.


Revenues from the licensing of television programming are recognized in the period that the television series is made available to the licensee, which may cause fluctuations in operating results.  Television series initially produced for networks and first-run syndication are generally licensed to domestic

II-47


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

and international markets concurrently. The more successful networkconcurrently (“initial market”). Network series are lateralso licensed to digital streaming providers, television stations, and cable networks certain additional international markets and for digital streaming.(“secondary market”). Licensing in the secondary market typically occurs at a later date but can also be concurrent with sales in the initial market. The length of the revenue cycle for television series will vary depending on the number of seasons a series remains in active production.


Affiliate and subscription fees for cable and broadcast networks, television stations and online content are recognized in the period the service is provided.  Costs for advertising and marketing services provided to the Company by cable, satellite and other distributors are recorded in selling, general and administrative expenses.


Publishing revenues are recognized when merchandise is shipped.shipped or electronically delivered to the consumer.  The Company records a provision for sales returns and allowances at the time of sale based upon historical trends which allow for a percentage of revenue recognized.


Deferred revenues primarily consist of revenues related to advertising arrangements and the licensing of television programming for which the revenues have not yet been earned.  The amounts classified as current are expected to be earned within the next twelve months.


II-48

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


Sales of Multiple Products or ServicesServices——Revenues derived from a single sales contract that contains multiple products and services are allocated based on the relative fair value of each delivered item and recognized in accordance with the applicable revenue recognition criteria for the specific unit of accounting.


Collaborative ArrangementsArrangements——Collaborative arrangements primarily consist of joint efforts with third parties to produce and distribute programming such as television series and live sporting events, including the 14-year agreement between the Company and Turner Broadcasting System, Inc. to telecast theNCAA Division I Men'sMen’s Basketball Championship ("(“NCAA Tournament"Tournament”), which began in 2011.  In connection with this agreement for the NCAA Tournament, advertisements aired on the CBS Television Network are recorded as revenues and the Company'sCompany’s share of the program rights fees and other operating costs are recorded as operating expenses.


For episodic television programming, co-production costs are initially capitalized as programming inventory and amortized over the television series'series’ estimated economic life.  In such arrangements where the Company has distribution rights, all proceeds generated from such distribution are recorded as revenues and any participation profits due to third party collaborators are recorded as operating expenses.  In co-production arrangements where third party collaborators have distribution rights, the Company'sCompany’s net participating profits are recorded as revenues.


Amounts attributable to transactions arising from collaborative arrangements between participants were not material to the Company'sCompany’s consolidated financial statements for all periods presented.


        AdvertisingAdvertising——Advertising costs are expensed as incurred. The Company incurred total advertising expenses of $419$369 million (2012), $399in 2015, $410 million (2011)in 2014 and $432$449 million (2010).in 2013.


        InterestInterest——Costs associated with the refinancing or issuance of debt, as well as debt discounts or premiums, are recorded as interest over the term of its related debt.  The Company may enter into interest rate exchange agreements; the amount to be paid or received under such agreements is accrued and recognized over the life of the agreements as an adjustment to interest expense.


Income TaxesTaxes——The provision for income taxes includes federal, state, local, and foreign taxes. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary

II-48


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

differences between the financial statement carrying amounts and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be reversed. The Company evaluates the realizability of deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. For tax positions taken in a previously filed tax return or expected to be taken in a future tax return, the Company evaluates each position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is subject to a measurement assessment to determine the amount of benefit to recognize in the Consolidated Statement of Operations and the appropriate reserve to establish, if any. If a tax position does not meet the more-likely-than-not recognition threshold a tax reserve is established and no benefit is recognized.  A number of years may elapse before a tax return containing tax matters for which a reserve has been established is audited and finally resolved.


Foreign Currency Translation and TransactionsTransactions——The Company'sCompany’s assets and liabilities denominated in foreign currencies are translated at foreign exchange rates in effect at the balance sheet date, while results of operations are translated at average foreign exchange rates for the respective periods.  The resulting translation gains or losses are included as a separate component of stockholders'stockholders’ equity in accumulated other comprehensive income (loss).  Foreign currency transaction gains and losses have been included in "Other“Other items, net"net” in the Consolidated Statements of Operations.


II-49

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


Other Items, net—For all periods presented, “Other items, net” primarily consisted of foreign exchange gains and losses.

Provision for Doubtful AccountsAccounts——The provision for doubtful accounts is estimated based on historical bad debt experience, the aging of accounts receivable, industry trends and economic indicators, as well as recent payment history for specific customers. The provision for doubtful accounts charged to expense was $17$13 million (2012)in 2015, $24$9 million (2011)in 2014 and $37$14 million (2010).in 2013.


Net Earnings (Loss) per Common Share—Basic earnings (loss) per share ("EPS"(“EPS”) is based upon net earnings (loss) 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") and market-based performance share units ("PSUs"(“RSUs”) only in the periods in which such effect would have been dilutive.  For the years ended December 31, 2012, 2011 and 2010, stock options to purchase 4 million, 21 million and 31 million shares of Class B Common Stock, respectively, were outstanding but excludedExcluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive.anti-dilutive, were 4 million stock options for the year ended December 31, 2015, and 2 million stock options for each of the years ended December 31, 2014 and 2013.


The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 
(in millions)
  
  
  
      

Weighted average shares for basic EPS

 642 664 679 484
 550
 608

Dilutive effect of shares issuable under stock-based
compensation plans

 17 17 15 5
 11
 16
 

Weighted average shares for diluted EPS

 659 681 694 489
 561
 624
 

        Comprehensive IncomeStock-based Compensation——The components of other comprehensive income (loss) are net of the following tax benefit (provision) for the years ended December 31, 2012, 2011 and 2010: $80 million, $77 million and $39 million, respectively, for net actuarial gain (loss) and prior service cost related to

II-49


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

pension and other postretirement benefits plans, $.3 million, $.1 million and $(.3) million, respectively, for unrealized gain (loss) on securities, and $1 million, $1 million and $.4 million, respectively, for other comprehensive income (loss) from discontinued operations.

  
 
 Continuing Operations Discontinued
Operations		  
 
 
 Cumulative
Translation
Adjustments
 Net Actuarial
Gain (Loss) and
Prior Service
Cost
 Unrealized
Gain on
Securities
 Other
Comprehensive
Income (Loss)
 Accumulated
Other
Comprehensive
Income (Loss)
 
  

At December 31, 2009

 $92 $(767)$— $279 $(396)

2010 Activity

  4  102  2  2  110 
  

At December 31, 2010

  96  (665) 2  281  (286)

2011 Activity

  12  (145) —  (20) (153)
  

At December 31, 2011

  108  (810) 2  261  (439)

2012 Activity

  7  (138) —  1  (130)
  

At December 31, 2012

 $115 $(948)$2 $262 $(569)
  

        Stock-based Compensation—The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  The cost is recognized over the vesting period during which an employee is required to provide service in exchange for the award.

        The following table summarizes the Company's stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010.

  
Year Ended December 31,
 2012
 2011
 2010
 
  

RSUs and PSUs

 $111 $99 $103 

Stock options and equivalents

  42  40  33 
  

Stock-based compensation expense, before income taxes

  153  139  136 

Related tax benefit

  (59) (54) (54)
  

Stock-based compensation expense, net of tax benefit

 $94 $85 $82 
  

        Company Common Stock Held by Subsidiaries—Certain wholly owned subsidiaries of the Company hold 179 million shares of CBS Corp. Class B Common Stock, of which 47 million shares were repurchased shares and 132 million shares were issued by the Company to wholly owned subsidiaries. The 47 million repurchased shares are reflected as treasury shares and the 132 million issued shares are eliminated in consolidation.

Adoption of New Accounting Standards

Fair Value Measurements

Balance Sheet Classification of Deferred Taxes
During the fourth quarter of 2015, the Company early adopted amended Financial Accounting Standards Board (“FASB”) guidance which eliminates the requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts on the balance sheet. Rather the amended guidance requires deferred tax liabilities and assets be classified as noncurrent on the balance sheet. Prior period amounts were restated to conform with this presentation. The adoption of this guidance resulted in a decrease to “Deferred income tax liabilities, net” of $103 million, an increase in “Other assets” of $1 million and the elimination of “Deferred income tax assets, net” within current assets on the Company’s Consolidated Balance Sheet at December 31, 2014.
Simplifying the Presentation of Debt Issuance Costs
During the fourth quarter of 2015, the Company early adopted amended FASB guidance which requires debt issuance costs to be presented on the balance sheet as a direct deduction from the carrying amount of the related debt, consistent with debt discounts. Prior period amounts were restated to conform with this presentation. This requirement does not apply to issuance costs related to a line of credit, which may continue to be presented as an asset. The recognition and measurement guidance for debt issuance costs were not affected by this amended guidance. The adoption of this guidance resulted in a decrease in long-term debt of $44 million at December 31, 2015 and $34 million at December 31, 2014, with an offsetting decrease to “Other Assets” on the Company’s Consolidated Balance Sheets.

II-50

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


Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
During the first quarter of 2012,2015, the Company adopted the Financial Accounting Standards Board's ("FASB") amended FASB guidance which clarifieschanges the FASB's intent about the application of existing fair value measurement requirements and changes certain principles and requirements for measuring fair valuereporting discontinued operations and requires additional disclosures about discontinued operations and disposals of components of an entity that do not qualify for disclosing information about fair value measurements.discontinued operations reporting. Under this guidance, only a disposal of a component of an entity or a group of components of an entity that represents a strategic shift that has (or will have) a major effect on the company’s operations and financial results should be reported in discontinued operations. The guidance also expands the definition of a discontinued operation to include a business or nonprofit activity that, on acquisition, meets the criteria to be classified as held for sale and disposals of equity method investments that meet the definition of discontinued operations. The adoption of this guidance did not have a materialan effect on the Company'sCompany’s consolidated financial statements.

II-50


Recent Pronouncements

Simplifying the Accounting for Measurement Period Adjustments
In September 2015, the FASB issued amended 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 will be 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 amendments also require disclosure or separate presentation on the face of the statement of operations 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. This guidance, which is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted, is not expected to have a material impact on the Company’s consolidated financial statements.

Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items
In January 2015, the FASB issued amended 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 will either be presented as a separate component of income from continuing operations or disclosed in the notes to the financial statements. This guidance is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Additionally, the Company is permitted to amend prior periods presented in the financial statements once the guidance is adopted. This guidance is not expected to have an impact on the Company’s consolidated financial statements.

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.

II-51


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

Impairment Analysis



Accounting for Share-Based Payments When the Terms of Unamortized Film Costs

        During the fourth quarter of 2012, the Company adopted the FASB's amended guidance on impairment assessments of unamortized film costs. This guidance eliminates the presumption that the conditions leading to the write-off of unamortized film costsan Award Provide That a Performance Target Could Be Achieved after the balance sheet date existed as of the balance sheet date. The guidance also eliminates the requirement that fair value measurements used in the impairment analysis include the consideration of subsequent evidence, if such information would not have been considered by market participants at the measurement date. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

Testing Indefinite-Lived Intangible Assets for Impairment

        During the fourth quarter of 2012, the Company early adopted the FASB amended guidance on testing indefinite-lived intangible assets for impairment. Under this guidance, the Company has the option to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If based on this assessment, the Company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then performing the quantitative impairment test is unnecessary.

Recent Pronouncements

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

Requisite Service Period

In February 2013,June 2014, the FASB issued guidance which requires disclosure of significant amounts reclassified out of accumulated other comprehensive income by component and their corresponding effect on the respective line itemsaccounting for stock-based compensation when the terms of net income.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. This guidance, which is effective for interim and annual periods beginning after December 15, 2015, 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 is currently evaluating the impact of this guidance, which 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.

2) PROPERTY AND EQUIPMENT
At December 31,2015 2014
Land$241
 $240
Buildings737
 717
Capital leases (a)
163
 165
Equipment and other2,102
 2,042
 3,243
 3,164
Less accumulated depreciation and amortization1,838
 1,731
Net property and equipment$1,405
 $1,433
(a) Accumulated amortization of capital leases was $91 million and $78 million at December 31, 2015 and 2014, respectively.
Year Ended December 31,2015 2014 2013
Depreciation expense, including capitalized lease amortization (a)
$240
 $249
 $251
(a) Amortization expense related to capital leases was $16 million in the first quarter2015 and $17 million in each of 2014 and 2013.

2)


3) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and Intangible Assets Impairment Test
The Company performs an annuala fair value-based impairment test of goodwill and intangible assets with indefinite lives, primarily comprised of FCC licenses, annually during the fourth quarter and also between annual tests if an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit or an indefinite-lived intangible asset below its carrying value. Goodwill is tested for impairment at the reporting unit level, which islevel. The Company’s reporting units are one level below orits operating segments, except for the Publishing reporting unit, which is the same as anits operating segment.segment because this operating segment has only one component. FCC licenses are tested for impairment at the geographic market level. The Company considers each geographic market, which is comprised of all of the Company'sCompany’s radio or television stations within that geographic market, to be a single unit of accounting

II-52

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


because the FCC licenses at this level represent their highest and best use.

        For 2012, in accordance with amended FASB guidance for goodwill and intangibles impairment testing, At December 31, 2015, the Company performed the qualitative assessment forhad seven reporting units, ten radioand FCC license book values for stations in 14 television markets and eleven television markets which25 radio markets.


For its annual impairment test, the Company performs qualitative assessments for each reporting unit and market with FCC licenses that management estimates each have fair values that significantly exceed their respective carrying values by 20% or more.values. For the 2015 annual impairment test, the Company performed qualitative assessments for three reporting units and 10 television markets. For each reporting unit, the Company weighed the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. For each radio and television market, the Company weighed the relative impact of market-specific and macroeconomic factors. Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that it is not more likely than not that the fair values of these reporting units and the fair value of FCC licenses within each market are less than their respective carrying amounts.values. Therefore, performing the quantitative impairment test was unnecessary.

II-51


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

For 2012, the Company performed the two-step quantitative goodwill impairment test forFCC licenses in the remaining two reporting units, CBS Interactivetelevision markets and CBS Radio. The first stepall of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. If the carrying value exceeds the fair value, the second step of the test compares the implied fair value of a reporting unit's goodwill with the carrying value of its goodwill to determine the amount of impairment charge, if any. The estimated fair value of each reporting unit for which step one of the impairment test is performed is computed based upon the present value of future cash flows ("Discounted Cash Flow Method") and both the traded and transaction values of comparable businesses ("Market Comparable Method"). The Discounted Cash Flow Method and Market Comparable Method resulted in substantially equal fair values. The Discounted Cash Flow Method includes the Company's assumptions for growth rates, operating margins and capital expenditures for the projection period plus the residual value of the business at the end of the projection period. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company's internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections, and for 2012 was 3.0% for CBS Interactive and 1.5% for CBS Radio. The discount rates, which for 2012 were 9.5% for CBS Interactive and 8.0% for CBS Radio, are determined based on the average of the weighted average cost of capital of comparable entities.

        Based on the 2012 annual impairment test, for each of the two reporting units for which the Company performed the first step of the impairment test, the estimated fair values exceeded the respective carrying values and therefore the second step of the impairment test was unnecessary.

        For each of the remaining seventeen radio and three television markets, the Company performed the quantitative impairment test that compares the estimated fair value of the FCC licenses by geographic market with their respective carrying values.  The estimated fair value of each FCC license is computed using the Greenfield Discounted Cash Flow Method ("(‘‘Greenfield Method"Method’’), which attempts to isolate the income that is attributable to the license alone. The Greenfield Method is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method adds the present value of the estimated annual cash flows of the start-up station over a projection period to the residual value at the end of the projection period. The annual cash flows over the projection period include assumptions for overall advertising revenues in the relevant geographic market, the start-up station'sstation’s operating costs and capital expenditures, and a three-year build-up period for the start-up station to reach a normalized state of operations, which reflects the point at which it achieves an average market share. In order to estimate the revenues of a start-up station, the totalThe overall market advertising revenue in the subject market is estimated based on recent industry projections. Operating costs and capital expenditures are estimated based on both industry and internal data. The residual value is calculated using a perpetual nominal growth rate, which is based on projected long-range inflation in the U.S. and long-term industry projections. The discount rate is determined based on the average of the weighted average cost of capital of comparable entities in the broadcast industry.  For each television station and radio station, the discount rates used for 20122015 were 7.5%8.0% and 8.0%7.75%, respectively, and the perpetual nominal growth rates used were 2.0%2.5% and 1.5%1.0%, respectively.


For its 2012 annualthe 2015 quantitative impairment test, the Company concluded that the estimated fair values of the indefinite-lived intangible assetsFCC licenses in 18 radio markets were lower than their respective carrying values. Accordingly, the Company recognized a pretax noncash impairment charge of $484 million related to radio FCC licenses in these markets. This impairment was the result of a sustained decline in industry projections for the radio advertising marketplace since 2014. For the remaining seven radio and four television markets, the Company concluded that the estimated fair values of FCC licenses in each market exceeded their respective carrying values.

For 2015, the Company performed the quantitative goodwill impairment test for four reporting units: CBS Interactive, CBS Sports Network, Publishing and CBS Radio. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. If the carrying value exceeds the fair value, the second step of the test compares the implied fair value of a reporting unit’s goodwill with the carrying value of its goodwill to determine the amount of impairment charge, if any. The estimated fair value of each reporting unit is computed based upon the present value of future cash flows (“Discounted Cash Flow Method”) and the traded or transaction values of comparable businesses (“Market Comparable Method”). The Discounted Cash Flow Method and Market Comparable Method resulted in similar estimated fair values. The Discounted Cash Flow Method includes the Company’s assumptions for growth rates, operating margins and capital expenditures for the projection period plus the residual value of the business at the end of the projection period.  The estimated growth rates, operating

II-53

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


margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which it performed a quantitative assessmentis based on projected long-range inflation and long-term industry projections. The discount rates are determined based on the average of the weighted average cost of capital of comparable entities. For 2015, the perpetual nominal growth rates and discount rates were as follows:
 Significant Assumptions
 Perpetual 
 NominalDiscount
Reporting UnitGrowth RateRate
CBS Interactive 2.5%  9.5% 
CBS Sports Network 2.0%  9.0% 
Publishing 1.5%  8.5% 
CBS Radio 1.5%  8.0% 
For the 2015 annual impairment test, the Company concluded that the estimated fair value of each of the four reporting units exceeded thetheir respective carrying values and therefore nothe second step of the impairment chargetest was required.

        During 2012,unnecessary. The fair value of the CBS Interactive, CBS Sports Network, and Publishing reporting units each exceeded their respective carrying values by more than 15%, while the estimated fair value of the CBS Radio reporting unit, which had a goodwill balance of $1.86 billion at December 31, 2015, exceeded its carrying value by less than 1% after the above-mentioned FCC licenses impairment charge. Considering the narrow margin between the estimated fair value and carrying value of the CBS Radio reporting unit, any downward revisions to its estimated fair value could result in a future impairment charge.


Transactions

In 2015, the Company disposed of Internet businesses in China for $385 million, which resulted in gains of $139 million. The assets associated with the disposed businesses primarily consisted of goodwill of $217 million.

In 2014, in connection with its strategy to grow its major market presence, the saleCompany completed a radio station swap with Beasley Broadcast Group, Inc. through which the Company exchanged 13 of its five owned radio stations in West Palm Beach,Tampa and Charlotte as well as one radio station in Philadelphia, for two radio stations in Philadelphia and three radio stations in Miami. In connection with the radio station swap, the Company recorded a pre-taxpretax noncash impairment charge of $11$52 million to reduce the carrying value of the allocated goodwill.

II-52


II-54


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



For the years ended December 31, 20122015 and 2011,2014, the changes in the book value of goodwill by segment were as follows:

 

 Balance at
December 31, 2011
 Acquisitions
 Dispositions
 Impairment
 Other (a)
 Balance at
December 31, 2012
  Balance at   Balance at
  December 31, 2014 Dispositions December 31, 2015

Entertainment:

        

Goodwill

 $9,456 $4 $— $— $— $9,460  $9,467
 $(217)
(a) 
 $9,250
 

Accumulated impairment losses

 (6,294) — — — — (6,294) (6,294) —
 (6,294) 
 

Goodwill, net of impairment

 3,162 4 — — — 3,166  3,173
 (217) 2,956
 
 

Cable Networks:

        

Goodwill

 480 — — — — 480  480
 —
 480
 

Accumulated impairment losses

 — — — — — —  —
 —
 —
 
 

Goodwill, net of impairment

 480 — — — — 480  480
 —
 480
 
 

Publishing:

        

Goodwill

 407 — — — — 407  406
 —
 406
 

Accumulated impairment losses

 — — — — — —  —
 —
 —
 
 

Goodwill, net of impairment

 407 — — — — 407  406
 —
 406
 
 

Local Broadcasting:

        

Goodwill

 23,466 6 (263) — — 23,209  22,354
 —
 22,354
 

Accumulated impairment losses

 (20,816) — 255 (11) — (20,572) (19,715) —
 (19,715) 
 

Goodwill, net of impairment

 2,650 6 (8) (11) — 2,637  2,639
 —
 2,639
 
 

Outdoor Americas:

 

Goodwill

 9,579 — — — 5 9,584 

Accumulated impairment losses

 (7,707) — — — — (7,707)
 

Goodwill, net of impairment

 1,872 — — — 5 1,877 
 

Total:

        

Goodwill

 43,388 10 (263) — 5 43,140  32,707
 (217) 32,490
 

Accumulated impairment losses

 (34,817) — 255 (11) — (34,573) (26,009) —
 (26,009) 
 

Goodwill, net of impairment

 $8,571 $10 $(8)$(11)$5 $8,567  $6,698
 $(217) $6,481
 
 
(a)
Primarily includes foreign currency translation adjustments.
Amount reflects the disposition of Internet businesses in China.

II-53

  Balance at   Balance at
  December 31, 2013 Acquisitions December 31, 2014
Entertainment:          
Goodwill  $9,467
  $—
  $9,467
 
Accumulated impairment losses  (6,294)  —
  (6,294) 
Goodwill, net of impairment  3,173
  —
  3,173
 
Cable Networks:        

 
Goodwill  480
  —
  480
 
Accumulated impairment losses  —
  —
  —
 
Goodwill, net of impairment  480
  —
  480
 
Publishing:        

 
Goodwill  406
  —
  406
 
Accumulated impairment losses  —
  —
  —
 
Goodwill, net of impairment  406
  —
  406
 
Local Broadcasting:        

 
Goodwill  22,244
  110
(a) 
 22,354
 
Accumulated impairment losses  (19,715)  —
  (19,715) 
Goodwill, net of impairment  2,529
  110
  2,639
 
Total:        

 
Goodwill  32,597
 
110
  32,707
 
Accumulated impairment losses  (26,009) 
—

 (26,009) 
Goodwill, net of impairment  $6,588
  $110
  $6,698
 
(a) Amount primarily reflects goodwill acquired in the radio station swap with Beasley Broadcast Group, Inc. At December 31, 2013, the allocated goodwill, net of accumulated impairment relating to the stations disposed of in the swap was included in “Assets held for sale” on the Consolidated Balance Sheet and as a result is not included in the changes in book value above.


II-55


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



  
 
 Balance at
December 31, 2010
 Acquisitions (a)
 Dispositions
 Other (b)
 Balance at December 31, 2011
 
  

Entertainment:

                

Goodwill

 $9,352 $107 $— $(3)$9,456 

Accumulated impairment losses

  (6,294) —  —  —  (6,294)
  

Goodwill, net of impairment

  3,058  107  —  (3) 3,162 
  

Cable Networks:

                

Goodwill

  480  —  —  —  480 

Accumulated impairment losses

  —  —  —  —  — 
  

Goodwill, net of impairment

  480  —  —  —  480 
  

Publishing:

                

Goodwill

  407  —  —  —  407 

Accumulated impairment losses

  —  —  —  —  — 
  

Goodwill, net of impairment

  407  —  —  —  407 
  

Local Broadcasting:

                

Goodwill

  23,466  —  —  —  23,466 

Accumulated impairment losses

  (20,816) —  —  —  (20,816)
  

Goodwill, net of impairment

  2,650  —  —  —  2,650 
  

Outdoor Americas:

                

Goodwill

  9,587  —  —  (8) 9,579 

Accumulated impairment losses

  (7,707) —  —  —  (7,707)
  

Goodwill, net of impairment

  1,880  —  —  (8) 1,872 
  

Total:

                

Goodwill

  43,292  107  —  (11) 43,388 

Accumulated impairment losses

  (34,817) —  —  —  (34,817)
  

Goodwill, net of impairment

 $8,475 $107 $— $(11)$8,571 
  
(a)
Reflects acquisitions of internet businesses.

(b)
Primarily includes foreign currency translation adjustments.

II-54


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

The Company'sCompany’s intangible assets were as follows:

 
At December 31, 2012
 Gross
 Accumulated
Amortization
 Net
 
   Accumulated  
At December 31, 2015Gross Amortization Net

Intangible assets subject to amortization:

      

Leasehold agreements

 $889 $(635)$254 

Franchise agreements

 477 (309) 168 

Trade names

 213 (28) 185 $211
 $(59) $152

Other intangible assets

 245 (169) 76 161
 (120) 41
 

Total intangible assets subject to amortization

 1,824 (1,141) 683 372
 (179) 193

FCC licenses

 5,832 — 5,832 5,321
 —
 5,321
 

Total intangible assets

 $7,656 $(1,141)$6,515 $5,693
 $(179) $5,514
 


 
At December 31, 2011
 Gross
 Accumulated
Amortization
 Net
 
   Accumulated  
At December 31, 2014Gross Amortization Net

Intangible assets subject to amortization:

      

Leasehold agreements

 $878 $(589)$289 

Franchise agreements

 475 (282) 193 
Trade names$220
 $(54) $166

Other intangible assets

 376 (244) 132 167
 (129) 38
 

Total intangible assets subject to amortization

 1,729 (1,115) 614 387
 (183) 204

FCC licenses

 5,738 — 5,738 5,804
 —
 5,804

Trade names

 169 — 169 
 

Total intangible assets

 $7,636 $(1,115)$6,521 $6,191
 $(183) $6,008
 

Amortization expense was $106 million (2012), $121 million (2011) and $129 million (2010). as follows:
Year Ended December 31,2015 2014 2013
Amortization expense $24
   $32
   $39
 
The Company expects its aggregate annual amortization expense for existing intangible assets subject to amortization for each of the years, 20132016 through 2017,2020, to be as follows:

  
 
 2013
 2014
 2015
 2016
 2017
 
  

Amortization expense

 $99 $88 $78 $68 $41 
  
 2016 2017 2018 2019 2020
Future amortization expense $20
   $17
   $16
   $16
   $13
 


II-56

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


3)4) DISCONTINUED OPERATIONS

        As part of the Company's strategic initiatives for its outdoor advertising business, during the fourth quarter of 2012

During 2014, the Company initiated a plan to divestcompleted the disposition of Outdoor Europe.Americas. Outdoor Europe is expected to be sold within one year. As a result, Outdoor EuropeAmericas has been classified as held-for-sale and its results have been presented as a discontinued operation in the Company'sCompany’s consolidated financial statementsstatements. In connection with the Company’s plan to dispose of Outdoor Americas, in January 2014 Outdoor Americas borrowed $1.60 billion. On April 2, 2014, Outdoor Americas completed an initial public offering (“IPO”) through which it sold 23.0 million shares, or approximately 19%, of its common stock for all periods presented.

II-55


$28.00 per share. Proceeds from the IPO aggregated $615 million, net of underwriting discounts and commissions. The Company received $2.04 billion of the combined IPO and debt proceeds from Outdoor Americas. On July 16, 2014, the Company completed the disposition of its 81% ownership of Outdoor Americas common stock through a tax-free split-off (the “Split-Off”) through which the Company accepted 44.7 million shares of CBS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollarsCorp. Class B Common Stock from its stockholders in millions, except per share amounts)

exchange for the 97.0 million shares of Outdoor Americas common stock that it owned. In aggregate, the Company received $4.76 billion from the disposition of Outdoor Americas, including the cash from the IPO and debt proceeds and the fair value of the shares of CBS Corp. Class B Common Stock that were accepted in the Split-Off of $2.72 billion. The Split-Off resulted in a gain of $1.56 billion for the year ended December 31, 2014 which is included in net earnings from discontinued operations and is calculated as follows:

Fair value of CBS Corp. Class B Common Stock accepted $2,721
(44,723,131 shares at $60.85 per share on July 16, 2014)  
Carrying value of Outdoor Americas (1,162)
Accumulated other comprehensive income 30
Transaction costs (32)
Net gain on split-off of Outdoor Americas $1,557
The Split-Off was a tax-free transaction and therefore, there is no tax impact on the gain.

During 2013, the Company completed the sale of Outdoor Europe for $225 million. Outdoor Europe has been presented as a discontinued operation in the Company’s consolidated financial statements. For 2013, net earnings from discontinued operations include a gain on the disposal of Outdoor Europe and an after-tax charge of $110 million related to Outdoor Europe. This charge was associated with exiting an unprofitable contractual arrangement and the estimated fair value of guarantees, which historically were intercompany but upon the closing of the transaction became third-party guarantees (See Note 16).

For 2015, net earnings from discontinued operations primarily relates to a decrease to the guarantee liability relating to Outdoor Europe as a result of a reduction to the risk associated with the guarantee.

The following table sets forth details of the net lossearnings from discontinued operations for the years ended December 31, 2012, 20112015, 2014 and 2010.

2013.

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues from discontinued operations

 $588 $608 $594 
  

Loss from discontinued operations before income taxes

 $(78)$(73)$(113)

Income tax benefit (provision)

  18  (13) 15 
  

Net loss from discontinued operations, net of tax

 $(60)$(86)$(98)
  
Year Ended December 31,2015 2014 2013
Revenues from discontinued operations$—
 $677
 $1,695
Earnings (loss) from discontinued operations$17
 $79
 $(12)
Income tax provision(7) (26) —
Earnings (loss) from discontinued operations, net of tax10
 53
 (12)
Gain on disposal—
 1,557
 159
Income tax provision—
 —
 (6)
Gain on disposal, net of tax—
 1,557
 153
Less: Net earnings from discontinued operations attributable to noncontrolling interest, net of tax—
 5
 —
Net earnings from discontinued operations attributable to CBS Corp.$10
 $1,605
 $141

        Noncurrent assets

II-57

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


Other liabilities of discontinued operations of $260 million for 2012 and $302 million for 2011 primarily consist of net property and equipment of $103$72 million and $138$118 million for 2012at December 31, 2015 and 2011,2014, respectively, and goodwill of $49 million for both 2012 and 2011. Noncurrent liabilities from discontinued operations primarily relateinclude tax reserves related to aircraft leases from previously disposed businesses that are generally expected to liquidate in accordanceand the carrying value of the guarantee liability associated with contractual terms. (See Note 1 for the accounting policy related to these discontinued operations).

disposition of Outdoor Europe of approximately $14 million and $28 million, at December 31, 2015 and 2014, respectively.

4)5) RESTRUCTURING CHARGES

During the year ended December 31, 2012,2015, 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 $19$81 million, reflecting $13$48 million of severance costs and $6$33 million of costs associated with exiting contractual obligations.obligations and other related costs. During the yearsyear ended December 31, 2011 and 2010,2014, the Company recorded restructuring charges of $43$26 million, and $59 million, respectively. The charges reflected $53reflecting $17 million of severance costs and $49$9 million of costs associated with exiting contractual obligations. As of December 31, 2012,2015, the cumulative amount paidsettlements for the 2012, 20112015 and 20102014 restructuring charges was $83were $53 million, of which $55$35 million was for the severance costs and $28$18 million was related to costs associated with exiting contractual obligations. The Company expects to substantially utilize the remainingits restructuring reserves by the end of 2013.

2016.

 

 Balance at
December 31, 2011
 2012
Charges
 2012
Payments
 Balance at
December 31, 2012
 Balance at 2015 2015 Balance at
 December 31, 2014 Charges Settlements December 31, 2015

Entertainment

 $42 $7 $(24)$25  $6
 $26

 $(13) $19
 

Cable Networks

 1 — — 1 

Publishing

 2 3 (3) 2 

Local Broadcasting

 2 8 (1) 9  10
 55

 (31) 34
 

Outdoor Americas

 1 — (1) — 

Corporate

 — 1 — 1  2
 —

 (1) 1
 
 

Total

 $48 $19 $(29)$38  $18
 $81
 $(45) $54
 
 

II-56

 2014 2014 Balance at
 Charges Settlements December 31, 2014
Entertainment$8
  $(2)   $6
 
Publishing1
  (1)   —
 
Local Broadcasting14
  (4)   10
 
Corporate3
  (1)   2
 
Total$26
  $(8)   $18
 

6) PROGRAMMING AND OTHER INVENTORY
At December 31,2015 2014
Acquired program rights$1,533
 $1,187
Internally produced programming:   
Released1,261
 1,121
In process and other392
 384
Publishing, primarily finished goods42
 47
Total programming and other inventory3,228
 2,739
Less current portion1,271
 922
Total noncurrent programming and other inventory$1,957
 $1,817
The Company expects to amortize approximately $650 million of its released internally produced programming during the year ended December 31, 2016. In addition, while it is difficult to determine the precise timing of the amortization of the remaining released internally produced programming, the Company estimates that substantially all of the December 31, 2015 balance will be amortized over the next three years.

II-58

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



  
 
 Balance at
December 31, 2010
 2011
Charges
 2011
Payments
 Balance at
December 31, 2011
 
  

Entertainment

 $11 $40 $(9)$42 

Cable Networks

  2  —  (1) 1 

Publishing

  2  2  (2) 2 

Local Broadcasting

  9  —  (7) 2 

Outdoor Americas

  1  1  (1) 1 
  

Total

 $25 $43 $(20)$48 
  

5) PROGRAMMING AND OTHER INVENTORY

  
At December 31,
 2012
 2011
 
  

Program rights

 $1,389 $1,333 

Television programming:

       

Released (including acquired libraries)

  781  628 

In process and other

  128  170 

Theatrical programming:

       

Released

  25  15 

In process and other

  60  25 

Publishing, primarily finished goods

  57  59 

Other

  1  1 
  

Total programming and other inventory

  2,441  2,231 

Less current portion

  859  735 
  

Total noncurrent programming and other inventory

 $1,582 $1,496 
  

6)7) RELATED PARTIES

National Amusements, Inc. National Amusements, Inc. ("NAI"(“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 Executive Chairman Emeritus of the Boardeach of Directors and founder of both CBS Corp. and Viacom Inc. In addition, Ms. Shari Redstone, Mr. Sumner M. Redstone'sRedstone’s daughter, is the president and a director of NAI and the vice chair of the Board of Directors of botheach 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 December 31, 2012,2015, NAI directly or indirectly owned approximately 79%79.5% of CBS Corp.'s’s voting Class A Common Stock and owned approximately 6%8.5% of CBS Corp.'s’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 enters into transactions with Viacom Inc. and its subsidiaries. Through its Entertainment segment, the Company licenses its television products andcontent, leases its production facilities to Viacom Inc.'s media networks businesses. In addition, the Company recognizes revenues forand sells advertising spending placed byspots to various subsidiaries of Viacom Inc. Viacom Inc. also distributes certain of the Company'sCompany’s television productsprograms in the home entertainment market. The Company'sCompany’s total revenues from these transactions were $221$179 million, $255$183 million and $262$185 million for the years ended December 31, 2012, 20112015, 2014 and 2010,2013, respectively.

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

        As part of its normal course of business, the

The Company places advertisements with and leases production facilities from, and purchases other goods and services from various subsidiaries of Viacom Inc. The total amounts for these transactions were $26$25 million, $23$19 million and $27$21 million for the years ended December 31, 2012, 20112015, 2014 and 2010,2013, respectively.


The following table presents the amounts due from Viacom Inc. in the normal course of business as reflected on the Company'sCompany’s Consolidated Balance Sheets. Amounts due to Viacom Inc. were minimal at December 31, 20122015 and 2011.

2014.

 
At December 31,
 2012
 2011
 2015 2014
 

Receivables

 $124 $102 $115
 $107

Other assets (Receivables, noncurrent)

 133 198 38
 76
 

Total amounts due from Viacom Inc.

 $257 $300 
 
Total amounts due from Viacom Inc.$153
 $183

Other Related Parties  The Company has equity interests in atwo domestic television networknetworks 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 $160 million, $133$122 million and $145$108 million for the years ended December 31, 2012, 20112015, 2014 and 2010,2013, respectively. Total amounts due from these joint ventures were $48 million and $23 million at December 31, 2015 and 2014, 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.


7)8) INVESTMENTS

The Company accounts for investments over which it has significant influence or ownership of more than 20% but less than or equal to 50%, without a controlling interest, under the equity method. Such investments include the Company'sCompany’s 50% interestinterests in the broadcast network, The CW, a broadcast network.and the entertainment cable network, Pop. In addition, the Company has interests in several international television joint ventures including a 49% interest in a joint venture with a subsidiary of Liberty GlobalAMC Networks Inc., which owns and operates six cable and satellite channels in the United Kingdom and Ireland, including CBS branded channels; a 30% interest in a joint venture with another subsidiary of Liberty Global,AMC Networks Inc., which owns and operates sevennine cable and satellite channels in Europe, the Middle East and Africa; a 50% interest in a joint venture with Reliance Broadcast Network Limited, which operates four cable and satellite channels for the Indian market and surrounding territory; a 33% interest in a joint venture with a subsidiary of Ten Network Holdings Limited to provide content to ELEVEN, a digital television

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


channel service in Australia; and a 33%30% interest in anothera joint venture with RTL Group which owns and operates two cable and satellite channels in Australia.

Southeast Asia.


At December 31, 20122015 and 2011,2014, respectively, the Company had $118$224 million and $100$199 million of equity investments that are included in "Other assets"“Other assets” on the Consolidated Balance Sheets.


Investments of 20% or less, over which the Company has no significant influence, that do not have a readily determinable fair value are accounted for under the cost method. At December 31, 20122015 and 2011,2014, respectively, the Company had $10$34 million and $12$23 million of cost investments that are included in "Other assets"“Other assets” on the Consolidated Balance Sheets.

        The aggregate market value of the Company's available for sale investments was $9 million at both December 31, 2012 and 2011. The market value of each individual investment was not below its carrying value on the Consolidated Balance Sheets.


The Company invested $91$98 million $79during each of the years ended December 31, 2015 and 2014 and $176 million and $80 millionduring the year ended December 31, 2013 into its equity and cost investments during the years ended December 31, 2012, 2011 and 2010, respectively.

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investments.



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

8)9) BANK FINANCING AND DEBT

        Long-termThe Company’s debt consists of the following (a):

 
At December 31,
 2012
 2011
 2015 2014
 

8.625% Debentures due 2012

 $— $152 

5.625% Senior Notes due 2012

 — 339 

8.20% Senior Notes due 2014

 — 398 

8.875% Notes due 2014

 100 100 
Commercial paper$—
 $616

7.625% Senior Debentures due 2016

 200 200 200
 200

1.95% Senior Notes due 2017

 396 — 398
 397

4.625% Senior Notes due 2018

 321 325 309
 313

8.875% Senior Notes due 2019

 591 589 

5.750% Senior Notes due 2020

 500 500 
2.30% Senior Notes due 2019609
 596
5.75% Senior Notes due 2020498
 498

4.30% Senior Notes due 2021

 300 300 299
 299

3.375% Senior Notes due 2022

 694 — 694
 693

7.875% Debentures due 2023

 224 224 186
 186

7.125% Senior Notes due 2023 (b)

 52 52 46
 46
3.70% Senior Notes due 2024596
 595
3.50% Senior Notes due 2025585
 —
4.00% Senior Notes due 2026781
 —

7.875% Senior Debentures due 2030

 1,271 1,272 833
 833

5.50% Senior Debentures due 2033

 428 428 425
 425

5.90% Senior Notes due 2040

 299 299 297
 297

4.85% Senior Notes due 2042

 487 — 484
 484

6.750% Senior Notes due 2056

 — 747 
4.90% Senior Notes due 2044538
 537
4.60% Senior Notes due 2045587
 —

Obligations under capital leases

 72 78 83
 97
 

Total debt (c)

 5,935 6,003 8,448
 7,112

Less discontinued operations debt (d)

 13 21 
 

Total debt from continuing operations

 5,922 5,982 
Less commercial paper—
 616

Less current portion

 18 24 222
 20
 

Total long-term debt from continuing operations, net of current portion

 $5,904 $5,958 
 
Total long-term debt, net of current portion$8,226
 $6,476
(a)
Unless otherwise noted, the long-term debt instruments are issuances of CBS Corp. and are guaranteed by CBS Operations Inc.

(b)
Debt instrument is an issuance of CBS Broadcasting Inc., a wholly owned subsidiary of CBS Corp., and has no guarantor.

(c)
At December 31, 20122015 and December 31, 2011,2014, the senior debt balances included (i) a net unamortized (discount) premiumdiscount of $(16)$45 million and $4$21 million, respectively, (ii) unamortized deferred financing costs of $44 million and $34 million, respectively, and (ii)(iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $23$14 million at both December 31, 2015 and $75 million, respectively.2014.  The face value of the Company'sCompany’s total debt was $5.93$8.52 billion at December 31, 20122015 and $5.92$7.15 billion at December 31, 2011.2014.

II-60

(d)
Included in "Liabilities of discontinued operations" on the Consolidated Balance Sheets.

        For the year ended December 31, 2012, debt issuances and redemptions were as follows:

Debt Issuances

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

Debt Redemptions


$338 million 5.625% senior notes due 2012

$400 million 8.20% senior notes due 2014
$700 million 6.75% senior notes due 2056

        These redemptions resulted in a pre-tax net loss on early extinguishment of debt of $32 million for

For the year ended December 31, 2012.

2015, debt issuances were as follows:

January 2015, $600 million 3.50% senior notes due 2025
January 2015, $600 million 4.60% senior notes due 2045
July 2015, $800 million 4.00% senior notes due 2026

The Company used the net proceeds from these issuances for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and repayment of short-term borrowings, including commercial paper.

During the year ended December 31, 2010,2014, the Company issued $1.10$1.75 billion of senior notes and redeemed or repurchased and redeemed $2.07$1.17 billion of senior notes and debentures, of which $750 million$1.07 billion was redeemed or repurchased through tender offers,prior to maturity, resulting in a pre-taxpretax loss on early extinguishment of debt of $81$352 million.

At December 31, 2012,2015, the Company'sCompany’s scheduled maturities of long-term debt at face value, excluding capital leases, were as follows:

  
 
 2013
 2014
 2015
 2016
 2017
 2018 and
Thereafter
 
  

Long-term debt

 $— $99 $— $200 $400 $5,157 
  
                2021 and
 20162017201820192020Thereafter
Long-term debt $200
  $400
  $300
  $600
  $500
 $6,440

Credit Facility

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

Commercial Paper
At December 31, 2012,2014 the Company had outstanding commercial paper borrowings under its $2.5 billion commercial paper program of $616 million, at a weighted average interest rate of 0.46% and with maturities of less than forty-five days. There were no outstanding commercial paper borrowings at December 31, 2015.
Credit Facility
At December 31, 2015, the Company had a $2.0$2.5 billion revolving credit facility, which expires in March 2015December 2019 (the "Credit Facility"“Credit Facility”). The Company, at its option, may also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the Company'sCompany’s option at the time of each borrowing and are based generally on the prime rate in the U.S. or the London Interbank Offer Rate ("LIBOR"(“LIBOR”) plus a margin based on the Company'sCompany’s senior unsecured debt rating. The Company pays a facility fee based on the total amount of the commitments.


The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.0x4.5x at the end of each quarter and a minimum Consolidated Coverage Ratio of 3.0x for the trailing four quarters, each as further described in the Credit Facility. At December 31, 2012,2015, the Company'sCompany’s Consolidated Leverage Ratio was approximately 1.6x and Consolidated Coverage Ratio was approximately 9.5x.

2.6x.


The Consolidated Leverage Ratio reflects the ratio of the Company'sCompany’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company'sCompany’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 Consolidated Coverage Ratio reflects the ratio of Consolidated EBITDA to the Company's cash interest expense on indebtedness, adjusted to exclude certain capital lease obligations, in each case for the trailing four consecutive quarters.


The Credit Facility is used for general corporate purposes. At December 31, 2012,2015, 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 $1.99$2.49 billion.

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II-61


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



9)10) FINANCIAL INSTRUMENTS

The Company's carrying value of financial instruments approximates fair value, except for differences with respect to notes and debentures.debentures, which are not recorded at fair value.  At December 31, 20122015 and 2011,2014, the carrying value of the Company's senior debt was $5.86$8.37 billion and $5.93$6.40 billion, respectively, and the fair value, which is estimated based on quoted market prices for similar liabilities (Level 2) and includes accrued interest, was $7.16$8.78 billion and $6.86$7.15 billion, respectively.


The Company uses derivative financial instruments primarily to modify its exposure to market risks from fluctuations in foreign currency exchange rates, and interest 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, generally within the next twelve months, in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar.Dollar, generally for periods up to 24 months. The Company designates foreign exchange forward contracts used to hedge projected future televisioncommitted and film production costsforecasted 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")(loss) 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. The change in fair value of the non-designated contracts is included in "Other items, net" in the Consolidated Statements of Operations.


At December 31, 20122015 and 2011,2014, the notional amount of all foreign currency contracts were $157was $291 million and $151$152 million, respectively, which represents hedgesrespectively.

Interest Rate Swaps
All of expected foreign currencythe Company’s long-term debt has been issued under fixed interest rate agreements. During 2014, in connection with the issuance of its $600 million of 2.30% senior notes due 2019, the Company entered into $600 million notional amount of fixed-to-floating rate swap agreements to hedge this debt. During 2015, prior to maturity, the Company settled these interest rate swaps and received $12 million in cash, flows.

plus accrued interest. The resulting increase in the carrying value of the previously hedged debt is being amortized as a reduction to interest expense over the remaining term of the debt.


Gains recognized on derivative financial instruments were as follows:
Year Ended December 31,2015 2014 Financial Statement Account
Non-designated foreign exchange contracts $22
   $6
  Other items, net
          
Designated interest rate swaps $7
   $3
  Interest expense

The fair value of foreign exchange contracts recorded onthe Company’s derivative instruments was not material to the Consolidated Balance Sheets was as follows:

for any of the periods presented.
 
At December 31,
 2012
 2011
 Balance Sheet Account
 

Non-designated hedging instruments:

        

Assets

 $— $4 Other current assets

Liabilities

 $(2)$— Other current liabilities
 

        Gains (losses) recognized on foreign exchange contracts were as follows:


 
Year Ended December 31,
 2012
 2011
 2010
 Financial Statement Account
 

Designated hedging instruments:

           

Reclassified from accumulated OCI

 $— $— $1 Programming costs

Non-designated hedging instruments

 $(4)$2 $(4)Other items, net
 

The Company continually monitors its positions with, and credit quality of, the financial institutions that are counterparties to its financial instruments. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company does not anticipate nonperformance by the counterparties.



II-62

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


The Company'sCompany’s receivables do not represent significant concentrations of credit risk at December 31, 20122015 and 2011,2014, due to the wide variety of customers, markets and geographic areas to which the Company'sCompany’s products and services are sold.

II-61


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

10)11) FAIR VALUE MEASUREMENTS

The following tables set forth the Company'sCompany’s assets and liabilities measured at fair value on a recurring basis at December 31, 20122015 and 2011.2014. 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'sCompany’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

At December 31, 2015Level 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
At December 31, 2014Level 1 Level 2 Level 3 Total
Assets:       
Investments$80
 $—
 $—
 $80
Foreign currency hedges—
 6
 —
 6
Total Assets$80
 $6
 $—
 $86
Liabilities:      $—
Deferred compensation$—
 $307
 $—
 $307
Foreign currency hedges—
 2
 —
 2
Total Liabilities$—
 $309
 $—
 $309
  
At December 31, 2012
 Level 1
 Level 2
 Level 3
 Total
 
  

Assets:

             

Investments

 $70 $— $— $70 
  

Total Assets

 $70 $— $— $70 
  

Liabilities:

             

Deferred compensation

 $— $201 $— $201 

Foreign currency hedges

  —  2  —  2 
  

Total Liabilities

 $— $203 $— $203 
  


  
At December 31, 2011
 Level 1
 Level 2
 Level 3
 Total
 
  

Assets:

             

Investments

 $61 $— $— $61 

Foreign currency hedges

  —  4  —  4 
  

Total Assets

 $61 $4 $— $65 
  

Liabilities:

             

Deferred compensation

 $— $173 $— $173 
  

Total Liabilities

 $— $173 $— $173 
  

The fair value of investments iswas determined based on publicly quoted market prices in active markets. These investments were liquidated in 2015 for $79 million. 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.


During 2015, the Company recorded a pretax noncash impairment charge of $484 million to reduce the carrying value of radio FCC licenses to their fair value. The fair value was determined based on the Greenfield Method (Level 3). See Note 3.

During 2014, in connection with a radio station swap, the Company recorded a pretax noncash impairment charge of $52 million to reduce the carrying value of the allocated goodwill to its fair value using other nonobservable inputs (Level 3). The fair value of the transaction was determined based on a valuation of comparable assets in the same geographic markets.
11) STOCKHOLDERS'12) STOCKHOLDERS’ EQUITY

In general, CBS Corp. Class A Common Stock and CBS Corp. Class B Common Stock have the same economic rights; however, holders of CBS Corp. Class B Common Stock do not have any voting rights, except voting rights.as required by law. Holders of CBS Corp. Class A Common Stock are entitled to one vote per share with respect to all matters on which the holders of CBS Corp. Common Stock are entitled to vote. Holders of

II-63

CBS Corp. Class B Common Stock do not have any voting rights,CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Tabular dollars in millions, except as required by law.

per share amounts)



Dividends—The Company declared a quarterly cash dividend on its Class A and Class B Common Stock during each of the four quarters of 2012, 2011,2015, 2014, and 2010,2013. For the years ended December 31, 2015, 2014 and 2013, the Company declared total per share dividends of $.60, $.54, and $.48, respectively, resulting in total annual dividends of

II-62


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

$287 $293 million, $237$296 million and $139$295 million, respectively. Dividends have been recorded as a reduction to additional paid-in capital as the Company has an accumulated deficit balance.


Purchase of Company Stock—During 2012,2015, the Company repurchased 35.551.7 million shares of CBS Corp. Class B Common Stock under its share repurchase program for $1.17$2.80 billion, at an average cost of $32.99$54.18 per share. Since the inceptionAt December 31, 2015, $2.00 billion of authorization remained under the share repurchase program in January 2011 through December 31, 2012, the Company has repurchased 77.7 million shares of its Class B Common Stock for $2.19 billion, at an average cost of $28.18 per share, leaving $2.51 billion of authorization remaining at December 31, 2012.program.


Conversion Rights—Holders of Class A Common Stock have the right to convert their shares to Class B Common Stock as long as there are at least 5,000 shares of Class A Common Stock outstanding. Conversions of CBS Corp. Class A Common Stock into Class B Common Stock were .30.1 million for 2012, .22015, 1.3 million for 20112014 and 84.0 million for 2010.2013.


        Equity Incentive PlansAccumulated Other Comprehensive Income ——The following table presents the changes in the components of accumulated other comprehensive income (loss).
 Continuing Operations Discontinued Operations  
   Net Actuarial     Accumulated
 Cumulative Gain (Loss) Unrealized Other Other
 Translation and Prior Gain on Comprehensive Comprehensive
 Adjustments Service Cost Securities Income (Loss)
(a) 
Loss
At December 31, 2012$168
 $(936) $2
 $197
 $(569)
Other comprehensive income (loss) before reclassifications(2) 163
 1
 (4) 158
Reclassifications to net earnings—
 44
(b) 
—
 (178)
(c) 
(134)
Other comprehensive income (loss)(2) 207
 1
 (182) 24
At December 31, 2013166
 (729) 3
 15
 (545)
Other comprehensive income (loss) before reclassifications(9) (189) —
 15
 (183)
Reclassifications to net earnings—
 26
(b) 
(3) (30)
(c) 
(7)
Other comprehensive loss(9) (163) (3) (15) (190)
At December 31, 2014157
 (892) —
 —
 (735)
Other comprehensive income (loss) before reclassifications(5) (66) —
 —
 (71)
Reclassifications to net earnings—
 36
(b) 
—
 —
 36
Other comprehensive loss(5) (30) —
 —
 (35)
At December 31, 2015$152
 $(922) $—
 $—
 $(770)
(a) Primarily reflects cumulative translation adjustments.
(b) Reflects amortization of net actuarial losses. See Note 15.
(c) Reclassified in connection with the disposal of Outdoor Americas in 2014 and Outdoor Europe in 2013. See Note 4.

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 benefit (provision) for the years ended December 31, 2015, 2014 and 2013 of $19 million, $105 million and $(132) million, respectively, and other comprehensive loss from discontinued operations is net of a tax provision of $3 million for the year ended December 31, 2013. For the year ended December 31, 2014, the tax provision related to the other comprehensive loss from discontinued operations was minimal. The tax provision related to the unrealized gain on securities is minimal for all periods presented.

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


13) STOCK-BASED COMPENSATION

The Company has equity incentive plans (the "Plans"“Plans”) under which stock options stock option equivalents,and RSUs and PSUs were issued.

The purpose of the Plans is to benefit and advance the interests of the Company by attracting, retaining and motivating participants and to compensate participants for their contributions to the financial success of the Company. The Plans provide for awards of stock options, stock appreciation rights, restricted and unrestricted shares, RSUs, dividend equivalents, performance awards and other equity-related awards. Upon exercise of stock options or vesting of RSUs, and PSUs, the Company issues new shares from its existing authorization. At December 31, 20122015, there were 3253 million shares available for future grant under the Plans.

RSUs


The following table summarizes the Company’s stock-based compensation expense for the years ended December 31, 2015, 2014 and PSUs

2013.

Year Ended December 31,2015 2014 2013
RSUs$143
 $131
 $129
Stock options31
 23
 93
Stock-based compensation expense, before income taxes174
 154
 222
Related tax benefit(67) (60) (86)
Stock-based compensation expense, net of tax benefit$107
 $94
 $136
Stock-based compensation included in net earnings from discontinued operations was $5 million and $15 million for 2014 and 2013, respectively.
RSUs
Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant and expensed over the vesting period, which is generally a one- to four-year service period. Certain RSU awards are also subject to satisfying performance conditions. Once the Company determines that it is probable that the performance targets will be met, compensationCompensation expense is recorded for these awards.based on the probable outcome of the performance conditions. Forfeitures for RSUs are estimated on the date of grant based on historical forfeiture rates. On an annual basis, the Company adjusts the compensation expense based on actual forfeitures and revises the forfeiture rate as necessary.


The Company also grants awards of PSUs which vest based on the achievement of market performance targets. The number of shares that will be issued upon vesting of PSUs can range from 0% to 300% of the target award, based on the ranking of the total shareholder return ("TSR") for CBS Corp. Class B Common Stock within the S&P 500 Index over a designated three-year measurement period, or in certain circumstances, based on the achievement of established operating performance goals. The fair value of the PSUs is determined using a Monte Carlo Simulation model. This model generates simulated TSR of CBS Corp. Class B Common Stock versus each of the companies in the S&P 500 Index through the end of the relevant measurement period. Compensation expense for PSUs is expensed over the vesting period, which is a three- to four-year service period.

        The totalweighted average grant date fair value of RSUs was $59.11, $62.70 and PSUs$40.70 in 2015, 2014, and 2013, respectively. The total market value of RSUs that vested during 2012, 20112015, 2014, and 20102013 was $251$212 million, $198$319 million and $92$324 million, respectively. Total unrecognized compensation cost related to non-vested RSUs and PSUs at December 31, 20122015 was $163$198 million which is expected to be recognized over a weighted average period of 2.22.3 years.

II-63


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

The following table summarizes the Company'sCompany’s RSU and target PSU activity.

 

 RSUs and PSUs
 Weighted Average
Grant Date
Fair Value
    Weighted Average
 RSUs Grant Date Fair Value

Non-vested at December 31, 2011

 17,086,352 $14.28 
 
Non-vested at December 31, 2014 6,700,094
 $45.26
 

Granted

 5,392,082 27.16  2,994,745
 $59.11
 

Vested

 (8,309,742) 13.28  (3,579,992) $40.50
 

Forfeited

 (867,723) 17.83  (369,767) $53.94
 
 

Non-vested at December 31, 2012

 13,300,969 $19.89 
 
Non-vested at December 31, 2015 5,745,080
 $54.88
 

Stock Options and Equivalents

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. Stock options generally vest over a one-three- to four-year service period and generally expire eight years from the date of grant. Forfeitures are estimated on the date of grant based on historical forfeiture

II-65

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


rates. On an annual basis, the Company adjusts the compensation expense based on actual forfeitures and revises the forfeiture rate as necessary. Stock option equivalents are settled in cash upon exercise and therefore, the Company remeasures the fair value of these awards at each reporting date. At both December 31, 2012 and 2011 the Company had 2 million stock option equivalents outstanding.


The weighted average fair value of stock options as of the grant date was $9.05, $7.59$15.73, $18.23 and $4.97$12.11 in 2012, 20112015, 2014, and 2010,2013, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

 2012
 2011
 2010
 
 2015 2014 2013

Expected dividend yield

 1.92% 2.00% 1.49% 1.25% 1.25% 1.49%

Expected stock price volatility

 39.09% 41.17% 44.00% 31.45% 33.06% 34.86%

Risk-free interest rate

 .94% 2.33% 2.45% 1.63% 1.60% .97%

Expected term of options (years)

 5.02 5.06 5.19     5.00
 5.00
 5.00
 

The expected stock price volatility is determined using a weighted average of historical volatility for CBS Corp. Class B Common Stock and implied volatility of publicly traded options to purchase CBS Corp. Class B Common Stock. Given the existence of an actively traded market for CBS Corp. options, the Company was able to derive implied volatility using publicly traded options to purchase CBS Corp. Class B Common Stock that were trading near the grant date of the employee stock options at a similar exercise price and a remaining term of greater than one year.


The risk-free interest rate is based on a U.S. Treasury rate in effect on the date of grant with a term equal to the expected life.term. The expected term is determined based on historical employee exercise and post-vesting termination behavior. The expected dividend yield represents the Company'sCompany’s future expectation of the dividend yield based on current rates and historical patterns of dividend changes.


Total unrecognized compensation cost related to non-vested stock option awards at December 31, 20122015 was $70$51 million, which is expected to be recognized over a weighted average period of 2.22.4 years.

II-64


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

The following table summarizes the Company'sCompany’s stock option activity under the Plans.

 

 Stock Options
 Weighted Average Exercise Price
    Weighted Average
 Stock Options Exercise Price

Outstanding at December 31, 2011

 41,912,818 $20.08 
 
Outstanding at December 31, 2014 15,634,317
 $33.12
 

Granted

 4,492,924 31.00  1,885,683
 $59.41
 

Exercised

 (10,282,084) 16.54  (5,723,239) $24.88
 

Forfeited or expired

 (2,090,557) 30.30  (491,726) $31.60
 
 

Outstanding at December 31, 2012

 34,033,101 $21.96 
 

Exercisable at December 31, 2012

 
18,435,742		 
$
23.72		 
 
Outstanding at December 31, 2015 11,305,035
 $41.75
 
Exercisable at December 31, 2015 6,199,611
 $31.40
 

The following table summarizes other information relating to stock option exercises during the years ended December 31, 2012, 20112015, 2014 and 2010.

2013.

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Cash received from stock option exercises

 $168 $72 $7 $142
 $283
 $146

Tax benefit of stock option exercises

 $67 $45 $5 $74
 $200
 $88

Intrinsic value of stock option exercises

 $174 $117 $13 $192
 $517
 $229
 


II-66

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


The following table summarizes information concerning outstanding and exercisable stock options to purchase CBS Corp. Class B Common Stock under the Plans at December 31, 2012.

2015.


   

 Outstanding Exercisable Outstanding Exercisable
Range of Exercise Price
 Number
of Options
 Remaining
Contractual
Life (Years)
 Weighted
Average
Exercise Price
 Number
of Options
 Weighted
Average
Exercise Price
 
   Remaining Weighted   Weighted
Range ofNumber Contractual Average Number Average
Exercise Priceof Options Life (Years) Exercise Price of Options Exercise Price

$5 to 9.99

 5,169,826 4.18 $5.26 2,359,846 $5.25 676,135
 1.24 $5.25
 676,135
 $5.25
 

$10 to 19.99

 5,577,436 4.93 $13.83 1,846,888 $14.57 488,744
 2.42 $14.10
 488,744
 $14.10
 

$20 to 29.99

 18,554,590 4.35 $26.51 10,965,793 $27.08 2,744,846
 3.86 $27.83
 2,322,791
 $27.54
 

$30 to 39.99

 4,731,249 3.57 $31.97 3,263,215 $30.95 1,339,775
 4.69 $34.08
 1,168,110
 $34.03
 
$40 to 49.992,219,630
 5.17 $44.28
 971,946
 $44.36
 
$50 to 59.991,817,150
 7.01 $59.54
 44,672
 $59.58
 
$60 to 69.992,018,755
 6.07 $65.86
 527,213
 $65.91
 
         11,305,035
   6,199,611
   

 34,033,101     18,435,742   
         

At December 31, 20122015 stock options outstanding have a weighted average remaining contractual life of 4.314.90 years and the total intrinsic value for "in-the-money"“in-the-money” options, based on the Company'sCompany’s closing stock price of $38.05,$47.13, was $548$122 million. At December 31, 20122015 stock options exercisable have a weighted average remaining contractual life of 2.963.94 years and the total intrinsic value for "in-the-money"“in-the-money” exercisable options was $264$108 million.

II-65



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

12)14) INCOME TAXES

The U.S. and foreign components of earnings from continuing operations before income taxes and equity in loss of investee companies were as follows:

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

United States

 $2,236 $1,878 $1,071 $1,599
 $1,790
 $2,283

Foreign

 325 301 264 424
 374
 382
 

Total

 $2,561 $2,179 $1,335 $2,023
 $2,164
 $2,665
 

The components of the provision for income taxes were as follows:

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Current:

      

Federal

 $307 $190 $89 $227
 $(14) $310

State and local

 76 52 38 54
 22
 74

Foreign

 67 57 58 91
 62
 61
 372
 70
 445

 450 299 185 

Deferred

 442 452 293 215
 692
 433
 

Provision for income taxes

 $892 $751 $478 $587
 $762
 $878
 


In addition, included in discontinued operations was an income tax benefitprovision of $18$7 million, $26 million, and $6 million in 2012, an income tax provision of $13 million in 2011,2015, 2014, and an income tax benefit of $15 million in 2010.

2013, respectively.


The equity in loss of investee companies is shown net of tax on the Company'sCompany’s Consolidated Statements of Operations. The tax benefits relating to losses from equity investments in 2012, 20112015, 2014, and 20102013 were $22$21 million, $24$31 million, and $23$30 million, respectively, which represented an effective tax rate of 38.7% for each of 2015 and 2014 and 38.8% for both 20122013.

In 2015 and 2011, and 39.4% for 2010.

        In 2012 and 2011,2014, the Company realized tax benefits from the exercise of stock options and vesting of RSUs and PSUs of $163$155 million and $120$322 million, respectively.


II-67

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


The difference between income taxes expected at the U.S. federal statutory income tax rate of 35% and the provision for income taxes is summarized as follows:

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Taxes on income at U.S. federal statutory rate

 $896 $763 $467   $708
 $758
 $933

State and local taxes, net of federal tax benefit

 92 82 57   55
 93
 101

Effect of foreign operations

 (64) (73) (50) (100) (90) (92)

Change in tax law

 — — 62   
Sales of businesses(42) —
 —

Audit settlements, net

 (3) (6) (28) (9) (7) (17)

Other, net

 (29) (15) (30) 
 
Other, net (a)
(25) 8
 (47)

Provision for income taxes

 $892 $751 $478   $587
 $762
 $878
 

II-66

(a) For 2015 and 2013, amount primarily reflects the Company’s domestic production deduction.

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

The following table summarizes the components of deferred income tax assets and liabilities.

 
At December 31,
 2012
 2011
 2015 2014
 

Deferred income tax assets:

    

Provision for expenses and losses

 $801 $832   
Reserves and other accrued liabilities$699
 $743

Pension, postretirement and other employee benefits

 641 682   801
 794

Tax credit and loss carryforwards

 284 277   953
 628

Other

 136 132   108
 113
 

Total deferred income tax assets

 1,862 1,923   2,561
 2,278

Valuation allowance

 (249) (235) (919) (575)
 

Deferred income tax assets, net

 1,613 1,688   1,642
 1,703
 

Deferred income tax liabilities:

    

Intangible assets

 (1,995) (2,011) (2,391) (2,432)
Unbilled licensing receivables(599) (532)

Property, equipment and other assets

 (610) (400) (157) (151)
 

Total deferred income tax liabilities

 (2,605) (2,411) (3,147) (3,115)
 

Deferred income tax liabilities, net

 $(992)$(723) $(1,505) $(1,412)
 

In addition to the deferred income taxes reflected in the table above, included in the Company includedassets of discontinued operations on the Consolidated Balance Sheets are net noncurrent deferred income tax assets of $29$24 million in "Assets of discontinued operations" on the Consolidated Balance Sheetsand $38 million at both December 31, 20122015 and 2011.

2014, respectively.


At December 31, 2012,2015, the Company had net operating loss carryforwards for federal, state and local, and foreign jurisdictions of approximately $750$938 million, the majority of which expire in various years from 20132016 through 2032.

2035.


The 20122015 and 20112014 deferred income tax assets were reduced by a valuation allowance of $249$919 million and $235$575 million, respectively, principally relating to income tax benefits offrom capital losses and net operating losses in foreign jurisdictions which are not expected to be realized.


The Company'sCompany’s share of the undistributed earnings of certain foreign subsidiaries not included in its consolidated federal income tax return that could be subject to additional income taxes if remitted was approximately $3.54$4.15 billion at December 31, 20122015 and $3.25$3.99 billion at December 31, 2011. No2014. For certain foreign subsidiaries, no provision has been recorded for the U.S. or foreign taxes that could result from the remittance of such undistributed earnings since the Company intends to distribute only the portion of such earnings which would be offset by U.S. foreign tax credits or remitted in tax-free transactions, and intends to reinvest the remainder outside the U.S. indefinitely. The determination of the unrecognized U.S. federal deferred income tax liability for such undistributed earnings is not practicable.

II-67



II-68


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



The following table sets forth the change in the reserve for uncertain tax positions, excluding related accrued interest and penalties.

At January 1, 2010

$230  

Additions for current year tax positions

14  

Additions for prior year tax positions

17  

Reductions for prior year tax positions

(43)

Cash settlements

(4)

At December 31, 2010

214  

Additions for current year tax positions

11  

Additions for prior year tax positions

12  

Reductions for prior year tax positions

(18)

Cash settlements

(23)

Statute of limitations lapses

(1)

At December 31, 2011

195  

Additions for current year tax positions

12  

Additions for prior year tax positions

10  

Reductions for prior year tax positions

(33)

Cash settlements

(8)

Statute of limitations lapses

(3)

At December 31, 2012

$173  
At January 1, 2013$172
Additions for current year tax positions11
Additions for prior year tax positions14
Reductions for prior year tax positions(40)
Cash settlements(17)
Statute of limitations lapses(1)
At December 31, 2013139
Additions for current year tax positions14
Additions for prior year tax positions31
Reductions for prior year tax positions(26)
Cash settlements(16)
Statute of limitations lapses(2)
At December 31, 2014140
Additions for current year tax positions14
Additions for prior year tax positions6
Reductions for prior year tax positions(32)
Cash settlements(23)
Statute of limitations lapses(1)
At December 31, 2015$104

At December 31, 20122015 and 2011, $562014, $21 million and $54$48 million, respectively, of the reserve for uncertain tax positions were included in "Liabilities“Liabilities of discontinued operations"operations” on the Consolidated Balance Sheets.


The reserve for uncertain tax positions of $173$104 million at December 31, 20122015 includes $141$78 million which would affect the Company'sCompany’s effective income tax rate, including discontinued operations, if and when recognized in future years.


The Company recognizes interest and penalty charges related to the reserve for uncertain tax positions as income tax expense. For the years ended December 31, 2012, 20112015, 2014 and 2010,2013, the Company recognized interest and penalties of $13$7 million, $12$14 million and $11$12 million, respectively, in the Consolidated Statements of Operations. As of December 31, 20122015 and 2011,2014, the Company has recorded liabilities for accrued interest and penalties of $62$33 million and $61$50 million, respectively, on the Consolidated Balance Sheets.

        The


During the first quarter of 2015, the Company is currently under examination byand the Internal Revenue ServiceIRS settled the Company’s income tax audit for the years 2008, 20092011 and 2010.2012, which did not have a material effect on the Company’s consolidated financial statements. The IRS is expected to commence its examination is anticipated to be completed inof the next twelve months.years 2013 and 2014 during 2016. In addition, various tax years are currently under examination by state and local and other foreign tax authorities. With respect to open tax years in all jurisdictions, the Company does not currently believe that it is reasonably possible that the reserve for uncertain tax positions will significantly change within the next twelve months; however, it is difficult to predict the final outcome or timing of resolution of any particular tax matter and accordingly, unforeseen events could cause the Company's currentCompany’s expectation to change in the future.

II-68


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

13)15) PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company and certain of its subsidiaries sponsor qualified and non-qualified defined benefit pension plans, principally non-contributory, covering eligible employees. The majority of participants in these plans are retired employees or former employees of previously divested businesses. Most of the Company'sCompany’s pension plans are closed to new entrants. The benefits for some plans are based primarily on an employee'semployee’s years of service and average pay near retirement. Benefits under other plans are based primarily on an employee'semployee’s pay for each year that the employee

II-69

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


participated in the plan. Participating employees are vested in the plans after five years of service. The Company funds its pension plans in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA"(“ERISA”), the Pension Protection Act of 2006, the Internal Revenue Code of 1986 and the applicable rules and regulations. Plan assets consist principally of corporate bonds, equity securities and U.S. government securities. The Company'sCompany’s common stock represents approximately 1.3%1.8% and 1.0%1.9% of the plan assets'assets’ fair values at December 31, 20122015 and 2011,2014, respectively.


In addition, the Company sponsors health and welfare plans that provide postretirement health care and life insurance benefits to eligible retired employees and their covered dependents. Eligibility is based in part on certain age and service requirements at the time of their retirement. Most of the plans are contributory and contain cost-sharing features such as deductibles and coinsurance which are adjusted annually. Claims are paid primarily bywith the Company'sCompany’s funds.


The Company uses a December 31 measurement date for all pension and other postretirement benefit plans.


The following table sets forth the change in benefit obligation for the Company'sCompany’s pension and postretirement benefit plans.

 

 Pension Benefits Postretirement Benefits 

 2012
 2011
 2012
 2011
 Pension Benefits Postretirement Benefits
 2015 2014 2015 2014

Change in benefit obligation:

        

Benefit obligation, beginning of year

 $5,191 $4,974 $697 $785 $5,323
 $5,022
 $562
 $589

Service cost

 36 34 — — 31
 31
 —
 —

Interest cost

 243 249 33 38 209
 237
 20
 25

Actuarial loss (gain)

 498 366 1 (67)
Actuarial (gain) loss(210) 444
 (45) 5

Benefits paid

 (413) (427) (78) (80)(416) (396) (66) (74)

Participants' contributions

 — — 11 12 
Participants’ contributions—
 —
 11
 11

Retiree Medicare drug subsidy

 — — 12 7 —
 —
 4
 6

Early retirement reimbursement program

 — — — 2 
Settlements—
 (1) —
 —

Cumulative translation adjustments

 9 (5) — — (26) (14) —
 —
 

Benefit obligation, end of year

 $5,564 $5,191 $676 $697 $4,911
 $5,323
 $486
 $562
 

II-69


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

The following table sets forth the change in plan assets for the Company'sCompany’s pension and postretirement benefit plans.

 

 Pension Benefits Postretirement Benefits 

 2012
 2011
 2012
 2011
 Pension Benefits Postretirement Benefits
 2015 2014 2015 2014

Change in plan assets:

        

Fair value of plan assets, beginning of year

 $3,948 $3,660 $5 $5 $4,224
 $4,184
 $5
 $5

Actual return on plan assets

 476 260 — — (99) 402
 —
 —

Employer contributions

 254 460 55 59 52
 50
 50
 57

Benefits paid

 (413) (427) (78) (80)(416) (396) (66) (74)

Participants' contributions

 — — 11 12 
Participants’ contributions—
 —
 11
 11

Retiree Medicare drug subsidy

 — — 12 7 —
 —
 4
 6

Early retirement reimbursement program

 — — — 2 
Settlements—
 (1) —
 —

Cumulative translation adjustments

 9 (5) — — (27) (15) —
 —
 

Fair value of plan assets, end of year

 $4,274 $3,948 $5 $5 $3,734
 $4,224
 $4
 $5
 


II-70

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


The funded status of pension and postretirement benefit obligations and the related amounts recognized on the Company'sCompany’s Consolidated Balance Sheets were as follows:

 

 Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits
At December 31,
 2012
 2011
 2012
 2011
 2015 2014 2015 2014
 

Funded status at end of year

 $(1,290)$(1,243)$(671)$(692)$(1,177) $(1,099) $(482) $(557)
 

Amounts recognized on the Consolidated
Balance Sheets:

        

Other assets

 $17 $21 $— $— $17
 $15
 $—
 $—

Current liabilities

 (51) (55) (67) (71)(51) (50) (50) (57)

Noncurrent liabilities

 (1,256) (1,209) (604) (621)(1,143) (1,064) (432) (500)
 

Net amounts recognized

 $(1,290)$(1,243)$(671)$(692)$(1,177) $(1,099) $(482) $(557)
 

The Company'sCompany’s qualified pension plans were underfunded by $595$533 million and $615$425 million at December 31, 20122015 and 2011,2014, respectively.


The following amounts were recognized in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

 

 Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits
At December 31,
 2012
 2011
 2012
 2011
 2015 2014 2015 2014
 

Net actuarial (loss) gain

 $(1,854)$(1,654)$213 $230 $(1,848) $(1,774) $246
 $222

Net prior service (cost) credit

 (14) (15) 2 3 
Net prior service cost(9) (10) —
 —

Share of equity investee

 (1) — — — (1) (1) —
 —
 (1,858) (1,785) 246
 222

 (1,869) (1,669) 215 233 

Deferred income taxes

 739 662 (33) (36)734
 706
 (44) (35)
 

Net amount recognized in accumulated other
comprehensive income (loss)

 $(1,130)$(1,007)$182 $197 $(1,124) $(1,079) $202
 $187
 

The accumulated benefit obligation for all defined benefit pension plans was $5.48$4.83 billion and $5.12$5.23 billion at December 31, 20122015 and 2011,2014, respectively.

II-70


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

Information for the pension plans with an accumulated benefit obligation in excess of plan assets is set forth below.

 
At December 31,
 2012
 2011
 2015 2014
 

Projected benefit obligation

 $5,407 $5,039 $4,795
 $5,200

Accumulated benefit obligation

 $5,320 $4,963 $4,717
 $5,111

Fair value of plan assets

 $4,100 $3,775 $3,602
 $4,085
 


II-71

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


The following tables present the components of net periodic benefit cost and amounts recognized in other comprehensive income (loss).

 

 Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits
Year Ended December 31,
 2012
 2011
 2010
 2012
 2011
 2010
 2015 2014 2013 2015 2014 2013
 

Components of net periodic cost:

            

Service cost

 $36 $34 $30 $— $— $1 $31
 $31
 $38
 $—
 $—
 $—

Interest cost

 243 249 267 33 38 43 209
 237
 211
 20
 25
 26

Expected return on plan assets

 (250) (239) (227) — — — (261) (262) (271) —
 —
 —

Amortization of actuarial losses (gains)

 71 65 72 (16) (10) (10)79
 63
 85
 (21) (21) (16)

Amortization of prior service cost (credit)

 1 2 1 (1) (1) (1)1
 1
 1
 —
 (1) (1)

Settlement gains

 — — (1) — — — 
 

Net periodic cost

 $101 $111 $142 $16 $27 $33 $59
 $70
 $64
 $(1) $3
 $9
 


 
Year Ended December 31, 2012
 Pension Benefits
 Postretirement Benefits
 
 Pension Postretirement
Year Ended December 31, 2015Benefits Benefits

Other comprehensive income (loss):

    45
 

Actuarial (losses) gains

 $(271)$(1)
Actuarial (loss) gain $(154) $45
 

Amortization of actuarial losses (gains)(a)

 71 (16) 79
 (21) 

Amortization of prior service cost (credit)(a)

 1 (1) 1
 —
 

Share of equity investee

 (1) — 
 
Cumulative translation adjustments 1
 —
 

 (200) (18) (73) 24
 

Deferred income taxes

 77 3  28
 (9) 
 

Recognized in other comprehensive income, net of tax

 $(123)$(15) $(45) $15
 
 

(a)Reflects amounts reclassified from accumulated other comprehensive income (loss) to net earnings.

Estimated net actuarial losses and prior service costs related to the defined benefit pension plans of approximately $86 million and $2 million, respectively, will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs in 2013.

II-71


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

        Estimated net actuarial gains and prior service credits related to the other postretirement benefit plans of approximately $16$84 million and $1 million, respectively, will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs in 2013.

2016.


Estimated net actuarial gains related to the other postretirement benefit plans of approximately $21 million will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs in 2016.
 

 Pension Benefits Postretirement Benefits Pension Postretirement

 2012
 2011
 2012
 2011
 Benefits Benefits
 2015 2014 2015 2014

Weighted average assumptions used to determine benefit obligations at December 31:

        

Discount rate

 4.0% 4.9% 4.0% 4.9% 4.6% 4.1% 4.2% 3.8%

Rate of compensation increase

 3.0% 3.0% N/A N/A 3.0% 3.0% N/A
 N/A

Weighted average assumptions used to determine net periodic costs
for the year ended December 31:

        

Discount rate

 4.9% 5.2% 4.9% 5.1% 4.1% 4.9% 3.8% 4.5%

Expected long-term return on plan assets

 6.6% 6.8% 2.0% 2.0% 6.5% 6.5% 2.0% 2.0%

Rate of compensation increase

 3.0% 2.8% N/A N/A 3.0% 3.0% N/A
 N/A
 

N/A—A - not applicable



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


The discount rate isrates are determined primarily based on the weighted average yield on portfolios of high quality bonds, constructed to provide cash flows necessary to meet each of the Company's pension plans'plans’ expected future benefit payments, as determined for the projected benefit obligation.obligations. The expected return on plan assets assumption wasis derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets.

The following additional assumptions were used in accounting for postretirement benefits.

  
 
 2012
 2011
 
  

Projected health care cost trend rate for participants of age 65 and below

  8.0%  8.5% 

Projected health care cost trend rate for participants above age 65

  8.0%  8.5% 

Ultimate trend rate

  5.0%  5.0% 

Year ultimate trend rate is achieved for participants of age 65 and below

  2019  2019 

Year ultimate trend rate is achieved for participants above 65

  2019  2019 
  
 2015 2014
Projected health care cost trend rate7.0% 7.0%
Ultimate trend rate5.0% 5.0%
Year ultimate trend rate is achieved2021
 2019

        Assumed health care cost trend rates could have a significant effect on the amounts reported for postretirement health care plans.

A one percentage point change in assumed health care cost trend rates would have the following effects:

 

 One Percentage
Point Increase
 One Percentage
Point Decrease
 One Percentage One Percentage
 Point Increase Point Decrease

Effect on total service and interest cost components

 $— $—  $—
 $—
 

Effect on the accumulated postretirement benefit obligation

 $14 $(13) $7
 $(7) 
 

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

Plan Assets

The asset allocations for the Company'sCompany’s U.S. qualified defined benefit pension plan trust and international pension plan trusts are based upon an analysis of the timing and amount of projected benefit payments, projected company contributions, the expected returns and risk of the asset classes and the correlation of those returns. The target asset allocation for the Company'sCompany’s U.S. pension plan trust, which accounted for 94%95% of total plan assets at December 31, 2012,2015, is to invest between 70% - 80% in long duration fixed income instruments, 16% - 28% in equity securities and the remainder in cash and other investments. At December 31, 2012,2015, this trust was invested approximately 72%75% in long duration fixed income instruments,portfolios, 23% in equity instruments, and the remainder in cash, cash equivalents and other investments. Other trusts, which fund the Company'sCompany’s international pension plans, accounted for 6%5% of total plan assets at December 31, 20122015 and are invested approximately 63%72% in fixed income instruments, 22% in equity instruments, and the remainder in cash, cash equivalents and other investments. Long duration fixed income investments primarily consist of a diversified portfolio of investment grade fixed income instruments with a duration that approximates the duration of the liabilities covered by the trust. All equity portfolios are diversified between U.S. and non-U.S. equities and include large and small capitalization equities. The asset allocations are regularly reviewed.

reviewed regularly.



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


The following tables set forth the Company'sCompany’s pension plan assets measured at fair value on a recurring basis at December 31, 20122015 and 2011.2014. These assets 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 quoted prices for the asset 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 in inactive markets or quoted prices for similar assets. Level 3 is based on unobservable inputs that market participants would use in pricing the asset.

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

At December 31, 2015Level 1 Level 2 Level 3 Total
Cash and cash equivalents (a)
$3
 $72
 $—
 $75
Fixed income securities:      

U.S. treasury securities118
 —
 —
 118
Government-related securities29
 266
 —
 295
Corporate bonds (b)
—
 2,208
 —
 2,208
Mortgage-backed and asset-backed securities—
 114
 2
 116
Equity securities: (c)
      

U.S. large capitalization233
 322
 —
 555
U.S. small capitalization70
 2
 —
 72
International equity (d)
—
 230
 —
 230
Limited partnerships—
 —
 43
 43
Other—
 22
 —
 22
Total Assets$453
 $3,236
 $45
 $3,734
At December 31, 2014Level 1 Level 2 Level 3 Total
Cash and cash equivalents (a)
$5
 $43
 $—
 $48
Fixed income securities:       
U.S. treasury securities139
 —
 —
 139
Government-related securities49
 301
 —
 350
Corporate bonds (b)
—
 2,560
 —
 2,560
Mortgage-backed and asset-backed securities—
 116
 3
 119
Equity securities: (c)
      

U.S. large capitalization258
 349
 —
 607
U.S. small capitalization74
 2
 —
 76
International equity (d)
—
 242
 —
 242
Limited partnerships—
 —
 56
 56
Other—
 27
 —
 27
Total Assets$525
 $3,640
 $59
 $4,224
  
At December 31, 2012
 Level 1
 Level 2
 Level 3
 Total
 
  

Cash and cash equivalents (a)

 $25 $146 $— $171 

Fixed income securities:

             

U.S. treasury securities

  102  —  —  102 

Government related securities

  58  361  —  419 

Corporate bonds (b)

  —  2,358  —  2,358 

Mortgage-backed and asset-backed securities

  —  176  4  180 

Equity securities: (c)

             

U.S. large capitalization

  268  334  —  602 

U.S. small capitalization

  69  6  —  75 

International equity (d)

  5  301  —  306 

Limited partnerships

  —  —  52  52 

Other

  —  9  —  9 
  

Total assets

 $527 $3,691 $56 $4,274 
  


  
At December 31, 2011
 Level 1
 Level 2
 Level 3
 Total
 
  

Cash and cash equivalents (a)

 $27 $280 $— $307 

Fixed income securities:

             

U.S. treasury securities

  210  —  —  210 

Government related securities

  63  175  —  238 

Corporate bonds (b)

  —  2,036  —  2,036 

Mortgage-backed and asset-backed securities

  —  176  5  181 

Equity securities: (c)

             

U.S. large capitalization

  235  297  —  532 

U.S. small capitalization

  65  3  —  68 

International equity (d)

  4  267  —  271 

Limited partnerships

  —  —  75  75 

Other

  —  30  —  30 
  

Total assets

 $604 $3,264 $80 $3,948 
  
(a)
Assets categorized as Level 2 reflect investments in money market funds.

(b)
Securities of diverse industries, substantially all investment grade.

(c)
Assets categorized as Level 2 reflect investments in common collective funds.

(d)
Includes investments in emerging market funds of $59 million in 2012 and $44 million in 2011.
and $50 million at December 31, 2015 and 2014, respectively.

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

Money market investments are carried at amortized cost which approximates fair value due to the short-term maturity of these investments. Investments in equity securities are reported at fair value based on quoted market prices on national security exchanges. The fair value of investments in common collective funds are determined using the Net Asset Value ("NAV"(“NAV”) provided by the administrator of the fund. The NAV is determined by each fund'sfund’s trustee based upon the fair value of the underlying assets owned by the fund, less liabilities, divided by the number of outstanding units. The fair value of U.S. treasury securities is determined based on quoted market prices in active markets. The fair value of government related securities and corporate bonds is determined based on quoted market prices on national security exchanges, when available, or using valuation models which incorporate certain other observable inputs including recent trading activity for comparable securities and broker quoted prices. The fair value of mortgage-backed and asset-backed securities is based upon valuation models which incorporate available dealer

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


quotes and market information. Limited partnerships are valued using statements issued by the partnership which determine the value based on the fair value of the underlying investments.


The table below sets forth a summary of changes in the fair value of investments reflected as Level 3 at December 31, 2012.

2015.

  
 
 Limited
Partnerships
 Mortgage-
backed
Securities
 Total
 
  

At January 1, 2011

 $82 $5 $87 
  

Actual return related to investments held at end of year

  2  —  2 

Distributions

  (9) —  (9)
  

At December 31, 2011

  75  5  80 
  

Actual return related to investments held at end of year

  6  —  6 

Distributions

  (29) (1) (30)
  

At December 31, 2012

 $52 $4 $56 
  
 
Limited
Partnerships
 
Mortgage-backed
Securities
 Total
At January 1, 2014 $55
   $4
   $59
 
Actual return related to investments held at end of year 1
   —
   1
 
Contributions and distributions, net —
   (1)   (1) 
At December 31, 2014 56
   3
   59
 
Contributions and distributions, net (13)   (1)   (14) 
At December 31, 2015 $43
   $2
   $45
 

The Company'sCompany’s other postretirement benefits plan assets of $4 million and $5 million at both December 31, 20122015 and 20112014, respectively, were invested in U.S. fixed income index funds, which are categorized as Level 21 assets.


Future Benefit Payments

Estimated future benefit payments are as follows:

 

 2013
 2014
 2015
 2016
 2017
 2018-2022
 
 2016 2017 2018 2019 2020 2021-2025

Pension

 $432 $421 $407 $398 $385 $1,747 $432
 $380
 $371
 $363
 $355
 $1,650

Postretirement

 $78 $77 $74 $72 $69 $296 $60
 $58
 $56
 $54
 $51
 $213

Retiree Medicare drug subsidy

 $11 $11 $11 $11 $11 $50 $(8) $(8) $(8) $(8) $(7) $(34)
 

In 2013,2016, the Company expects to make discretionary contributions of $150 million to pre-fund its qualified pension plans and contributions of approximately $51$52 million to its non-qualified pension plans to satisfy the benefit payments due under these plans. Also in 2013,2016, the Company expects to contribute approximately $67$52 million to its other postretirement benefit plans to satisfy the Company'sCompany’s portion of benefit payments due under these plans.

II-75


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

Multiemployer Pension and Postretirement Benefit Plans

The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees including talent, writers, directors, producers and other employees, primarily in the entertainment industry. The other employers participating in these multiemployer plans are primarily in the entertainment and other related industries. The risks of participating in multiemployer plans are different from single-employer plans as assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers and if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. In addition, if the Company chooses to stop participating in some of its multiemployer plans it may be required to pay those plans a withdrawal liability based on the underfunded status of the plan.


The financial health of a multiemployer plan is indicated by the zone status, as defined by the Pension Protection Act of 2006, which represents the funded status of the plan as certified by the plan'splan’s actuary. Plans in the red zone are less than 65% funded, the yellow zone are between 65% and 80% funded, and green zone are at least 80% funded.



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


The table below presents information concerning the Company'sCompany’s participation in multiemployer defined benefit pension plans.


  
 Pension
Protection Act
Zone Status (a)		  
  
  
 Expiration
Date of
Collective-
Bargaining
Agreement
 
Employer
Identification
 
Pension
Protection Act
       
Expiration
Date of
Collective-

 Employer
Identification
Number/Pension
Plan Number
 Company Contributions Number/Pension 
Zone Status (a)
 Company Contributions Bargaining
Pension Plan
 2012
 2011
 2012
 2011
 2010
 Plan Number 20152014 2015 2014 2013 Agreement

AFTRA Retirement Plan (b)

 13-6414972-001 Green Green $7 $7 $6 (c) 13-6414972-001 Green $7
 $7
 $7
 (c)

Directors Guild of America—Producer

 51-0137697-001 Green Green 4 4 4 6/30/2014

Producer—Writers Guild of America

 95-2216351-001 Green Green 8 6 6 5/1/2014

Screen Actors Guild—Producers

 95-2110997-001 Green Green 6 6 6 6/30/2014
Directors Guild of America - Producer 95-2892780-001 Green 6
 5
 5
 6/30/2017
Producer-Writers Guild of America 95-2216351-001 Green 11
 10
 8
 5/1/2017
Screen Actors Guild - Producers 95-2110997-001 Green 9
 7
 7
 6/30/2017

Motion Picture Industry

 95-1810805-001 Green Green 7 8 7 (d) 95-1810805-001 Green 10
 8
 7
 (d)

Other Plans

       8 6 5   9
 10
 8
 
               Total contributions $52
 $47
 $42
 

 Total contributions $40 $37 $34  
(a)
The Zone status for each individual plan listed was certified by each plan'splan’s actuary as of the beginning of the plan years for 20122015 and 2011.2014. The plan year is the twelve months ending December 31 for each plan listed above except AFTRA Retirement Plan which has a plan year ending November 30.

(b)
The Company was listed in AFTRA Retirement Plan'sPlan’s Form 5500 as providing more than 5% of total contributions for the plan year ended November 30, 2011.

2014.
(c)
The expiration dates range from June 30, 20142017 through November 15, 2014.

June 30, 2018.
(d)
The expiration dates range from March 2, 20133, 2016 through March 2, 2016.
July 31, 2018.


As a result of the above noted zone status there were no funding improvements or rehabilitation plans implemented, as defined by ERISA, nor any surcharges imposed for any of the individual plans listed.


The Company also contributes to multiemployer plans that provide postretirement healthcare, defined contribution and other benefits to certain employees under collective bargaining agreements. The contributions to these plans were $19$26 million, $20 million and $18$17 million for the years ended December 31, 2012, 20112015, 2014 and 2010,2013, respectively.

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

The Company recognizes the net periodic cost for multiemployer pension and postretirement benefit plans based on the required contributions to the plans.


Defined Contribution Plans

The Company sponsors defined contribution plans for the benefit of substantially all employees meeting eligibility requirements. Employer contributions to such plans were $50 million, $49 million $46 million and $39$53 million for the years ended December 31, 2012, 20112015, 2014 and 2010,2013, respectively.

14)16) COMMITMENTS AND CONTINGENCIES

The Company'sCompany’s commitments not recorded on the balance sheet primarily consist of programming and talent commitments, operating lease arrangements and purchase obligations for goods and services and guaranteed minimum franchise payments resulting from the Company'sCompany’s normal course of business.

Programming and talent commitments of the Company, estimated to aggregate $15.21$11.91 billion as of December 31, 2012,2015, primarily include $11.98$9.21 billion for sports programming rights, $2.44$1.79 billion relating to the production and licensing of television, radio, and film productionprogramming, and licensing and $789$905 million for talent contracts.  The Company also has committed purchase obligations which include agreements to purchase goods andor services in the future that totaled $582$918 million as of December 31, 2012.

2015.


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


Other long-term contractual obligations recorded on the Company'sCompany’s Consolidated Balance Sheet include program liabilities, participations due to producers and residuals.

At December 31, 2012,2015, commitments for programming and talent and purchase obligations not recorded on the balance sheet, and other long-term contractual obligations recorded on the balance sheet were payable as follows:

  
 
 Programming
and Talent
 Purchase
Obligations
 Other Long-term
Contractual Obligations
 
  

2013

 $2,489 $221 $— 

2014

  1,820  131  600 

2015

  1,444  85  253 

2016

  1,459  34  81 

2017

  1,299  28  40 

2018 and thereafter

  6,700  83  32 
  

Total

 $15,211 $582 $1,006 
  
 Programming and Talent Purchase Obligations Other Long-Term Contractual Obligations
2016$2,175
 $230
  $—
 
20171,980
 198
  648
 
20181,711
 154
  399
 
20191,688
 132
  196
 
20201,399
 135
  88
 
2021 and thereafter2,953
 69
  58
 
Total$11,906
 $918
  $1,389
 

The Company has long-term noncancellable operating lease commitments for office space, billboards, equipment, transponders and studio facilities. At December 31, 2012, future minimum operating lease payments are estimated to aggregate $1.97 billion, of which $707 million relates to Outdoor Americas billboards. The Company also enters into capital leases for satellite transponders.

        In addition, Outdoor Americas has franchise rights entitling it to display advertising on various structures including transit shelters and benches, buses, rail systems (both in-car and structures on station platforms and terminals), mall kiosks, stadium signage, and in retail stores. Under most of these franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant advertising revenues, net of advertising agency fees, or a specified guaranteed minimum annual payment.

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

At December 31, 2012,2015, future minimum rental payments under noncancellable operating leases with terms in excess of one year and minimum franchise payments under capital leases are as follows:

 

 Leases Guaranteed
Minimum
Franchise Payments
 Leases

 Capital
 Operating
 Capital Operating
 

2013

 $17 $273 $160 

2014

 13 239 125 

2015

 11 210 98 

2016

 11 187 21 $19
 $158

2017

 9 168 12 16
 134

2018 and thereafter

 27 891 46 
 
201815
 121
201914
 108
202014
 86
2021 and thereafter16
 395

Total minimum payments

 $88 $1,968 $462 $94
 $1,002

Less amounts representing interest

 16     11
  
     

Present value of minimum payments

 $72     $83
  
 

Future minimum operating lease payments have been reduced by future minimum sublease income of $88$90 million. Rent expense was $487$211 million (2012), $483in 2015, $206 million (2011)in 2014 and $482$211 million (2010).

        The table above does not include contractual obligations in 2013. Included in net earnings from discontinued operations was rent expense of $158 million in 2014 and $292 million in 2013.

Guarantees
During 2013, the Company completed the sale of Outdoor Europe, which is presented as a discontinued operationEurope.  The Company remained the guarantor of certain of Outdoor Europe’s obligations, including franchise payment obligations under certain transit franchise agreements. Generally, the Company would be required to perform under the guarantees in the consolidated financial statements.event of non-performance by the buyer. These agreements have varying terms, with the majority of the obligations are mainly comprisedguaranteed under these agreements expiring over the next seven years. At December 31, 2015, the Company’s maximum exposure under the guaranteed obligations is approximately $26 million. The carrying value of guaranteed minimum franchise paymentsthe guarantee liability of $565approximately $14 million and long-term operating lease commitments$28 million at December 31, 2015 and 2014, respectively, is included in “Liabilities of $166 million.

Guarantees

discontinued operations” on the Consolidated Balance Sheets.



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


The Company also 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 December 31, 2012,2015, the outstanding letters of credit and surety bonds approximated $426$193 million and were not recorded on the Consolidated Balance Sheet.

        Prior to the separation of former Viacom Inc. into CBS Corp. and Viacom Inc. on December 31, 2005, former Viacom had entered into guarantees with respect to obligations related to Famous Players theater leases. In connection with the separation, Viacom Inc. has agreed to indemnify the Company with respect to these guarantees. In addition, the Company and Viacom Inc. have agreed to indemnify each other with respect to certain other matters pursuant to the separation agreement between the parties.


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 under generally accepted accounting principles.

Legal Matters

        E-books Matters.General. A number ofOn an ongoing basis, the Company vigorously defends itself in numerous lawsuits described below have been pendingand proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the following parties relatingCompany without merit, is inherently uncertain and always difficult to the sale of e-books: Apple Inc., Hachette Book Group, Inc., HarperCollins

II-78


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

Publishers, LLC, Holtzbrinck Publishers LLC d/b/a Macmillan, Penguin Group (USA) Inc.predict. However, based on its understanding and the Company's subsidiary, Simon & Schuster, Inc. (collectively, the "Publishing parties").

        On April 10, 2012, for purposes of settlement and without any admission of wrongdoing or liability, Simon & Schuster and twoevaluation of the other Publishing parties entered into a settlement stipulationrelevant facts and proposed final judgment (the "Stipulation") withcircumstances, the United States Department of Justice (the "DOJ") in connection with the DOJ's investigations of agency distribution of e-books. In furtherance of this settlement, on April 11, 2012, the DOJ filed an antitrust action in the United States District Court for the Southern District of New York against the Publishing parties and concurrently filed the Stipulation with the court. On September 7, 2012, the Stipulation was approved by the court and final judgment was entered. The Stipulation does not involve any monetary payments by Simon & Schuster, but will require the adoption of certain business practices for a 24 month period and certain compliance practices for a five year period.

        On June 11, 2012, for purposes of settlement and without any admission of wrongdoing or liability, Simon & Schuster entered into a proposed settlement agreement to resolve the antitrust action filed by a number of states and the Commonwealth of Puerto Rico against several of the Publishing parties in the United States District Court for the Western District of Texas, which was transferred to the United States District Court for the Southern District of New York ("States") on April 30, 2012. The proposed settlement provides that, certain Publishing parties, including Simon & Schuster, will pay agreed upon amounts for consumer restitution, among other things, and also requires the adoption of certain business and compliance practices, which are substantially similar to those described in the Stipulation with the DOJ. On September 14, 2012, the court granted preliminary approval of the proposed settlement, which all states (except Minnesota), the District of Columbia and the United States territories joined. On October 15, 2012, Simon & Schuster paid the agreed upon amounts into an escrow account pending final court approval. On February 8, 2013, the court approved the proposed settlement following a final settlement approval hearing that day. The Company believes that this settlement with the Statesbelow-described legal matters and other litigation to which it is a party are not likely, in the Stipulation with the DOJ will notaggregate, to have a material adverse effect on its results of operations, financial position or cash flows.

        On December 9, 2011, Under the United States Judicial Panel on Multidistrict Litigation (the "MDL") issued an order consolidating in the United States District Court for the Southern District of New York various purported class action suits that private litigants had filed in federal courts in California and New York. On January 20, 2012, the plaintiffs filed a consolidated amended class action complaint with the court against the Publishing parties. These private litigant plaintiffs, who are e-book purchasers, allege that, among other things, the defendants are in violation of federal and/or state antitrust laws in connection with the sale of e-books pursuant to agency distribution arrangements between each of the publishers and e-book retailers. The consolidated amended class action complaint generally seeks multiple forms of damages for the purchase of e-books and injunctive and other relief. On March 2, 2012, the Publishing parties filed a motion to dismiss this action. On May 15, 2012, the court denied the motion to dismiss. The Company believes that the States' settlement will likely resolve the class claims of those private litigant plaintiffs in the MDL litigation who reside in the areas covered by the States' settlement and who do not opt out of such settlement.

        Commencing on February 24, 2012, similar antitrust suits have been filed under Canadian law against the Publishing parties by private litigants in Canada, purportedly as class actions. Simon & Schuster intends to vigorously defend itself in the MDL and Canadian matters.

II-79


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

        In addition, the European Commission (the "EC") and Canadian Competition Bureau are conducting separate competition investigations of agency distribution arrangements of e-books in this industry and Simon & Schuster is cooperating with these investigations. On September 19, 2012, the EC began accepting public comment on the terms of a proposed settlement. On December 12, 2012, following the close of that comment period, the EC accepted the proposed settlement. The settlementSeparation Agreement between the ECCompany and Viacom Inc., the Company and Viacom Inc. have agreed to defend and indemnify the other in certain Publishing parties, including Simon & Schuster, requireslitigation in which the adoption of certain business and compliance practices similar to those described in the Stipulation with the DOJ.

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'sCompany’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, or by asbestos-containing grades of decorative micarta, a laminate used in commercial ships.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 December 31, 2012,2015, the Company had pending approximately 45,90036,030 asbestos claims, as compared with approximately 50,09041,100 as of December 31, 20112014 and 52,22045,150 as of December 31, 2010.2013. During 2012,2015, the Company received approximately 4,3503,670 new claims and closed or moved to an inactive docket approximately 8,5408,740 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 claim,claims, the quality of evidence supporting the claims and other factors. The Company's totalIn 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 years 2012 and 2011Company’s costs for settlement and defense of asbestos claims after insurance recoveries and net of tax benefitstaxes were approximately $21 million and $33 million, respectively.$11 million. The Company'sCompany’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.


II-78

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


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'sCompany’s estimate of its asbestos liabilities.

II-80



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

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.

        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 and local 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 above-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.

15)17) REPORTABLE SEGMENTS

The following tables set forth the Company'sCompany’s financial performance by reportable segment.  The Company'sCompany’s operating segments, which are the same as its reportable segments, have been determined in accordance with the Company'sCompany’s internal management structure, which is organized based upon products and services. Outdoor Europe, previously included in the Outdoor segment, has been presented as a discontinued operation. As a result, the Outdoor segment has been renamed Outdoor Americas. In addition, Residual Costs, which was previously presented as a separate line item in the Company's segment presentation, is now included within Corporate. Prior periods have been reclassified to conform to this presentation.

 
Year Ended December 31,
 2012
 2011
 2010
 2015
2014
2013
 

Revenues:

      

Entertainment

 $7,694 $7,457 $7,391 $8,438
 $8,309
 $8,645

Cable Networks

 1,772 1,621 1,475 2,242
 2,176
 2,069

Publishing

 790 787 791 780
 778
 809

Local Broadcasting

 2,774 2,689 2,782 2,607
 2,756
 2,696

Outdoor Americas

 1,296 1,286 1,225 

Eliminations

 (237) (203) (198)
 
Corporate/Eliminations(181) (213) (214)

Total Revenues

 $14,089 $13,637 $13,466 $13,886
 $13,806
 $14,005
 

II-81


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

Revenues generated between segments primarily reflect advertising sales and television and feature film license fees. These transactions are recorded at market value as if the sales were to third parties and are eliminated in consolidation.

 
Year Ended December 31,
 2012
 2011
 2010
 2015
2014
2013
 

Intercompany Revenues:

      

Entertainment

 $203 $160 $157 $178
 $206
 $208

Cable Networks

 — 1 — —
 1
 —

Local Broadcasting

 19 20 22 15
 18
 17

Outdoor Americas

 15 22 19 
 

Total Intercompany Revenues

 $237 $203 $198 $193
 $225
 $225
 


II-79

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


The Company presents segment operating income (loss) before depreciation and amortization,excluding restructuring charges, and impairment charges, ("and gain on sales of businesses, if any, (“Segment OIBDA"Operating Income”) as the primary measure of profit and loss for its operating segments (“segment profit measure”) in accordance with FASB guidance for segment reporting. The Company began presenting Segment Operating Income as its segment profit measure in the first quarter of 2015 in order to align with the primary method the Company’s management began using in 2015 to evaluate segment performance and to make decisions regarding the allocation of resources to its segments. The Company believes the presentation of Segment OIBDAOperating 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'sCompany’s management and enhances their ability to understand the Company'sCompany’s operating performance.

 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Segment OIBDA

 
Segment Operating Income (Loss):     

Entertainment

 $1,549 $1,431 $894 $1,294
 $1,316
 $1,605

Cable Networks

 811 707 569 945
 974
 878

Publishing

 89 92 72 114
 101
 107

Local Broadcasting

 957 849 865 765
 878
 812

Outdoor Americas

 378 380 317 

Corporate

 (296) (302) (229)(275) (295) (357)
 

Total Segment OIBDA

 3,488 3,157 2,488 
Total Segment Operating Income2,843
 2,974
 3,045

Restructuring charges

 (19) (43) (59)(81) (26) (20)

Impairment charges

 (11) — — (484) (52) —

Depreciation and amortization

 (475) (495) (500)
 
Gain on sales of businesses139
 —
 —

Operating income

 2,983 2,619 1,929 2,417
 2,896
 3,025

Interest expense

 (402) (435) (527)(392) (363) (375)

Interest income

 6 6 5 24
 13
 8

Net loss on early extinguishment of debt

 (32) — (81)
Loss on early extinguishment of debt—
 (352) —

Other items, net

 6 (11) 9 (26) (30) 7
 

Earnings from continuing operations before income taxes and equity in loss of investee companies

 2,561 2,179 1,335 2,023
 2,164
 2,665

Provision for income taxes

 (892)��(751) (478)(587) (762) (878)

Equity in loss of investee companies, net of tax

 (35) (37) (35)(33) (48) (49)
 

Net earnings from continuing operations

 1,634 1,391 822 1,403
 1,354
 1,738

Net loss from discontinued operations, net of tax

 (60) (86) (98)
 
Net earnings from discontinued operations, net of tax10
 1,605
 141

Net earnings

 $1,574 $1,305 $724 $1,413
 $2,959
 $1,879
 

II-82

Year Ended December 31,2015 2014 2013
Depreciation and Amortization:

 

 

Entertainment$126
 $139
 $153
Cable Networks23
 23
 20
Publishing6
 6
 6
Local Broadcasting79
 87
 86
Corporate30
 26
 25
Total Depreciation and Amortization$264
 $281
 $290

II-80


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



 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Operating Income (Loss):

 
Stock-based Compensation:     

Entertainment

 $1,381 $1,231 $708 $61
 $56
 $56

Cable Networks

 785 684 543 11
 9
 8

Publishing

 80 83 61 4
 4
 4

Local Broadcasting

 848 750 740 28
 28
 27

Outdoor Americas

 209 197 127 

Corporate

 (320) (326) (250)70
 57
 127
 

Total Operating Income

 $2,983 $2,619 $1,929 
 
Total Stock-based Compensation$174
 $154
 $222


 
Year Ended December 31,
 2012
 2011
 2010
 2015 2014 2013
 

Depreciation and Amortization:

 
Capital Expenditures:     

Entertainment

 $161 $160 $163 $99
 $94
 $101

Cable Networks

 26 23 23 18
 16
 16

Publishing

 6 7 7 10
 4
 4

Local Broadcasting

 90 99 100 50
 65
 64

Outdoor Americas

 169 182 186 

Corporate

 23 24 21 16
 27
 27
 

Total Depreciation and Amortization

 $475 $495 $500 
 
Total Capital Expenditures$193
 $206
 $212


 
Year Ended December 31,
 2012
 2011
 2010
 
 

Stock-based Compensation:

 
At December 31,2015 2014
Assets:   

Entertainment

 $49 $45 $43 $10,910
 $10,580

Cable Networks

 6 4 5 2,369
 2,131

Publishing

 3 3 3 880
 877

Local Broadcasting

 24 22 20 9,105
 9,575

Outdoor Americas

 6 5 5 

Corporate

 65 60 60 476
 733
 

Total Stock-based Compensation

 $153 $139 $136 
 
Discontinued operations25
 39
Total Assets$23,765
 $23,935


  
Year Ended December 31,
 2012
 2011
 2010
 
  

Capital Expenditures:

          

Entertainment

 $92 $94 $90 

Cable Networks

  18  15  19 

Publishing

  5  7  6 

Local Broadcasting

  64  69  74 

Outdoor Americas

  54  46  48 

Corporate

  21  14  17 
  

Total Capital Expenditures

 $254 $245 $254 
  
Year Ended December 31,2015
2014
2013
Revenues by Type:     
Advertising$7,018
 $7,204
 $7,525
Content licensing and distribution3,903
 3,990
 3,997
Affiliate and subscription fees2,724
 2,362
 2,221
Other241
 250
 262
Total Revenues$13,886
 $13,806
 $14,005

II-83

Year Ended December 31,2015 2014 2013
Revenues: (a)
     
United States$11,882
 $12,013
 $12,178
International2,004
 1,793
 1,827
Total Revenues$13,886
 $13,806
 $14,005
(a) Revenue classifications are based on customers’ locations.

II-81


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



  
At December 31,
 2012
 2011
 
  

Assets:

       

Entertainment

 $9,023 $8,471 

Cable Networks

  1,750  1,679 

Publishing

  1,033  1,091 

Local Broadcasting

  9,614  9,626 

Outdoor Americas

  3,542  3,665 

Corporate

  1,026  1,163 

Discontinued operations

  478  525 
  

Total Assets

 $26,466 $26,220 
  


At December 31,2015
2014
Long-lived Assets: (a)
   
United States$17,375
 $17,848
International357
 328
Total Long-lived Assets$17,732
 $18,176
  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues by Type:

          

Advertising

 $8,459 $8,399 $8,559 

Content licensing and distribution

  3,468  3,236  3,049 

Affiliate and subscription fees

  1,921  1,762  1,620 

Other

  241  240  238 
  

Total Revenues

 $14,089 $13,637 $13,466 
  


  
Year Ended December 31,
 2012
 2011
 2010
 
  

Revenues: (a)

          

United States

 $12,358 $12,055 $11,984 

International

  1,731  1,582  1,482 
  

Total Revenues

 $14,089 $13,637 $13,466 
  


  
At December 31,
 2012
 2011
 
  

Long-lived Assets:(b)

       

United States

 $19,850 $19,840 

International

  722  695 
  

Total Long-lived Assets

 $20,572 $20,535 
  

        Transactions within the Company between the United States and international regions were not significant.

(a)
Revenue classifications are based on customers' locations.

(b)
Reflects total assets from both continuing and discontinued operations less current assets, investments and noncurrent deferred tax assets.

II-84


Transactions within the Company between the United States and international regions were not significant.

18) SUPPLEMENTAL CASH FLOW INFORMATION
Year Ended December 31,2015 2014 2013
Cash paid for interest (a)
$349
 $707
 $360
      
Cash paid for income taxes:     
Continuing operations$258

$217

$294
Discontinued operations25
 42
 92
Total$283
 $259
 $386
(a) Included in 2014 are payments of $360 million associated with the early extinguishment of debt, mainly for early redemption premiums.
Year Ended December 31,2015 2014 2013
Noncash investing and financing activities:     
Shares received in Split-Off (Note 4)$—
 $2,721
 $—
Equipment acquired under capitalized leases$3
 $1
 $58
Radio station swap (Note 3)$—
 $262
 $—


II-82

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


19) QUARTERLY FINANCIAL DATA (unaudited):


16) OTHER ITEMS, NET

        For all periods presented, "Other items, net" primarily consisted of foreign exchange gains and losses. For 2010, "Other items, net" also included gains of $21 million associated with dispositions.

17) SUPPLEMENTAL CASH FLOW INFORMATION

  
Year Ended December 31,
 2012
 2011
 2010
 
  

Cash paid for interest, net of amounts capitalized

 $441 $419 $520 

Cash paid for income taxes:

          

Continuing operations

 $425 $233 $245 

Discontinued operations

  (19) 2  3 
  

Total

 $406 $235 $248 
  
 First Second Third Fourth  
2015 (a) (b)
Quarter Quarter Quarter Quarter Total Year
Revenues:         
Entertainment$2,261
 $1,785
 $1,932
 $2,460
 $8,438
Cable Networks539
 615
 526
 562
 2,242
Publishing145
 199
 203
 233
 780
Local Broadcasting596
 654
 638
 719
 2,607
Corporate/Eliminations(41) (34) (42) (64) (181)
Total Revenues$3,500
 $3,219
 $3,257
 $3,910
 $13,886
Segment Operating Income (Loss):         
Entertainment$346
 $262
 $339
 $347
 $1,294
Cable Networks251
 220
 246
 228
 945
Publishing12
 25
 43
 34
 114
Local Broadcasting161
 198
 174
 232
 765
Corporate(68) (64) (49) (94) (275)
Total Segment Operating Income702
 641
 753
 747
 2,843
Restructuring charges—
 (55) —
 (26) (81)
Impairment charge—
 —
 —
 (484) (484)
Gain on sales of businesses19
 —
 —
 120
 139
Total Operating Income$721
 $586
 $753
 $357
 $2,417
Net earnings from continuing operations$394
 $332
 $426
 $251
 $1,403
Net earnings$394
 $332
 $426
 $261
 $1,413
          
Basic net earnings per common share:         
Net earnings from continuing operations$.79
 $.68
 $.89
 $.54
 $2.90
Net earnings$.79
 $.68
 $.89
 $.56
 $2.92
Diluted net earnings per common share:         
Net earnings from continuing operations$.78
 $.67
 $.88
 $.53
 $2.87
Net earnings$.78
 $.67
 $.88
 $.55
 $2.89
          
Weighted average number of common shares         
outstanding:         
Basic498
 490
 480
 469
 484
Diluted506
 495
 484
 474
 489
          
Dividends per common share$.15
 $.15
 $.15
 $.15
 $.60

(a) In the fourth quarter of 2015, the Company recorded a pretax noncash impairment charge of $484 million to reduce the carrying value of radio FCC licenses to their fair value. (See Note 3).
(b) During 2015, the Company recorded gains from the sales of Internet businesses in China. (See Note 3).


II-83
  
Year Ended December 31,
 2012
 2011
 2010
 
  

Non-cash investing and financing activities:

          

Contingent consideration associated with acquisitions

 $4 $56 $— 

Equipment acquired under capitalized leases

 $13 $7 $1 
  

II-85


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

18) QUARTERLY FINANCIAL DATA (unaudited):



 
2012 (a)
 First
Quarter
 Second
Quarter
 Third
Quarter
 Fourth
Quarter
 Total Year
 
 First Second Third Fourth  
2014Quarter Quarter Quarter Quarter Total Year

Revenues:

          

Entertainment

 $2,318 $1,707 $1,680 $1,989 $7,694 $2,303
 $1,835
 $1,911
 $2,260
 $8,309

Cable Networks

 452 446 436 438 1,772 537
 516
 624
 499
 2,176

Publishing

 176 189 210 215 790 153
 211
 199
 215
 778

Local Broadcasting

 622 704 661 787 2,774 626
 665
 680
 785
 2,756

Outdoor Americas

 288 334 334 340 1,296 

Eliminations

 (60) (51) (55) (71) (237)
 
Corporate/Eliminations(49) (39) (47) (78) (213)

Total Revenues

 $3,796 $3,329 $3,266 $3,698 $14,089 $3,570
 $3,188
 $3,367
 $3,681
 $13,806
 

Segment OIBDA:

 
Segment Operating Income (Loss):         

Entertainment

 $411 $426 $384 $328 $1,549 $420
 $341
 $302
 $253
 $1,316

Cable Networks

 209 190 227 185 811 254
 213
 266
 241
 974

Publishing

 10 9 39 31 89 11
 23
 42
 25
 101

Local Broadcasting

 171 248 213 325 957 179
 215
 192
 292
 878

Outdoor Americas

 76 103 105 94 378 

Corporate

 (70) (65) (64) (97) (296)(73) (62) (56) (104) (295)
 

Total Segment OIBDA

 807 911 904 866 3,488 
Total Segment Operating Income791
 730
 746
 707
 2,974

Restructuring charges

 — — — (19) (19)—
 —
 (26) —
 (26)

Impairment charges

 (11) — — — (11)

Depreciation and amortization

 (119) (119) (116) (121) (475)
 
Impairment charge—
 —
 (52) —
 (52)

Total Operating Income

 $677 $792 $788 $726 $2,983 $791
 $730
 $668
 $707
 $2,896
 

Operating Income (Loss):

 

Entertainment

 $370 $385 $346 $280 $1,381 

Cable Networks

 204 184 221 176 785 

Publishing

 8 7 38 27 80 

Local Broadcasting

 138 225 190 295 848 

Outdoor Americas

 33 62 62 52 209 

Corporate

 (76) (71) (69) (104) (320)
 

Total Operating Income

 $677 $792 $788 $726 $2,983 
 

Net earnings from continuing operations

 $394 $452 $385 $403 $1,634 $462
 $418
 $72
 $402
 $1,354

Net earnings

 $363 $427 $391 $393 $1,574 $468
 $439
 $1,639
 $413
 $2,959
         

Basic net earnings per common share:

          

Net earnings from continuing operations

 $.61 $.70 $.60 $.64 $2.55 $.79
 $.73
 $.14
 $.78
 $2.46

Net earnings

 $.56 $.66 $.61 $.62 $2.45 $.80
 $.77
 $3.08
 $.80
 $5.38

Diluted net earnings per common share:

          

Net earnings from continuing operations

 $.59 $.68 $.59 $.62 $2.48 $.77
 $.72
 $.13
 $.77
 $2.41

Net earnings

 $.54 $.65 $.60 $.60 $2.39 $.78
 $.76
 $3.03
 $.79
 $5.27

Weighted average number of common shares
outstanding:

 
         
Weighted average number of common shares         
outstanding:         

Basic

 650 646 640 634 642 585
 570
 532
 515
 550

Diluted

 667 661 656 650 659 600
 581
 541
 523
 561
         

Dividends per common share

 
$
..10		 
$
..10		 
$
..12		 
$
..12		 
$
..44		 $.12
 $.12
 $.15
 $.15
 $.54
 
(a)
During the fourth quarter of 2012, the Company initiated a plan to divest Outdoor Europe. Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the consolidated financial statements for all periods presented.

II-86


II-84


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



  
2011 (a)
 First
Quarter
 Second
Quarter
 Third
Quarter
 Fourth
Quarter
 Total Year
 
  

Revenues:

                

Entertainment

 $1,994 $1,836 $1,632 $1,995 $7,457 

Cable Networks

  393  413  420  395  1,621 

Publishing

  155  183  220  229  787 

Local Broadcasting

  621  691  656  721  2,689 

Outdoor Americas

  279  332  333  342  1,286 

Eliminations

  (66) (27) (40) (70) (203)
  

Total Revenues

 $3,376 $3,428 $3,221 $3,612 $13,637 
  

Segment OIBDA:

                

Entertainment

 $268 $440 $405 $318 $1,431 

Cable Networks

  153  176  203  175  707 

Publishing

  7  19  38  28  92 

Local Broadcasting

  169  230  184  266  849 

Outdoor Americas

  69  99  104  108  380 

Corporate

  (70) (78) (73) (81) (302)
  

Total Segment OIBDA

  596  886  861  814  3,157 

Restructuring charges

  —  —  —  (43) (43)

Depreciation and amortization

  (126) (125) (120) (124) (495)
  

Total Operating Income

 $470 $761 $741 $647 $2,619 
  

Operating Income (Loss):

                

Entertainment

 $230 $400 $366 $235 $1,231 

Cable Networks

  147  171  197  169  684 

Publishing

  5  17  36  25  83 

Local Broadcasting

  143  204  161  242  750 

Outdoor Americas

  21  53  59  64  197 

Corporate

  (76) (84) (78) (88) (326)
  

Total Operating Income

 $470 $761 $741 $647 $2,619 
  

Net earnings from continuing operations

 $232 $422 $386 $351 $1,391 

Net earnings

 $202 $395 $338 $370 $1,305 

Basic net earnings per common share:

                

Net earnings from continuing operations

 $.34 $.63 $.59 $.54 $2.09 

Net earnings

 $.30 $.59 $.51 $.57 $1.97 

Diluted net earnings per common share:

                

Net earnings from continuing operations

 $.33 $.62 $.57 $.52 $2.04 

Net earnings

 $.29 $.58 $.50 $.55 $1.92 

Weighted average number of common shares
outstanding:

                

Basic

  674  669  659  653  664 

Diluted

  693  686  675  669  681 

Dividends per common share

 
$
..05		 
$
..10		 
$
..10		 
$
..10		 
$
..35		 
  
(a)
During the fourth quarter of 2012, the Company initiated a plan to divest Outdoor Europe. Outdoor Europe has been classified as held-for-sale and its results have been presented as a discontinued operation in the consolidated financial statements for all periods presented.

II-87


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

19)20) 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’s senior debt securities (See Note 8)9).  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. Changes to the entities that comprise the guarantor group are reflected for all periods presented. In addition, the operations of Outdoor Europe have been presented as a discontinued operation for all periods presented (See Note 3).

 

 Statement of Operations
For the Year Ended December 31, 2012		 Statement of Operations

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 For the Year Ended December 31, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Revenues

 $157 $15 $13,917 $— $14,089 $148
 $11
 $13,727
 $—
 $13,886
 

Expenses:

 
Costs and expenses:         

Operating

 74 8 7,885 — 7,967 65
 5
 8,254
 —
 8,324

Selling, general and administrative

 87 255 2,292 — 2,634 46
 244
 2,165
 —
 2,455
Depreciation and amortization6
 20
 238
 —
 264

Restructuring charges

 — 2 17 — 19 —
 —
 81
 —
 81

Impairment charges

 — — 11 — 11 

Depreciation and amortization

 6 14 455 — 475 
 

Total expenses

 167 279 10,660 — 11,106 
 
Impairment charge—
 —
 484
 —
 484
Gain on sales of businesses(117) —
 (22) —
 (139)
Total costs and expenses—
 269
 11,200
 —
 11,469

Operating income (loss)

 (10) (264) 3,257 — 2,983 148
 (258) 2,527
 —
 2,417

Interest income (expense), net

 (480) (351) 435 — (396)

Net loss on early extinguishment of debt

 (32) — — — (32)
Interest (expense) income, net(486) (403) 521
 —
 (368)

Other items, net

 1 (5) 10 — 6 (3) 9
 (32) —
 (26)
 

Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies

 (521) (620) 3,702 — 2,561 (341) (652) 3,016
 —
 2,023

(Provision) benefit for income taxes

 185 218 (1,295) — (892)
Benefit (provision) for income taxes160
 215
 (962) —
 (587)

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

 1,884 1,145 (35) (3,029) (35)1,593
 1,090
 (33) (2,683) (33)
 

Net earnings from continuing operations

 1,548 743 2,372 (3,029) 1,634 1,412
 653
 2,021
 (2,683) 1,403

Net earnings (loss) from discontinued operations, net of tax

 26 (1) (85) — (60)
 
Net earnings from discontinued operations, net of tax1
 —
 9
 —
 10

Net earnings

 $1,574 $742 $2,287 $(3,029)$1,574 $1,413
 $653
 $2,030
 $(2,683) $1,413
 

Total comprehensive income

 
$
1,444		 
$
735		 
$
2,295		 
$
(3,030
)
$
1,444		 $1,378
 $660
 $2,030
 $(2,690) $1,378
 

II-88


II-85


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



 

 Statement of Operations
For the Year Ended December 31, 2011		 Statement of Operations

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 For the Year Ended December 31, 2014
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Revenues

 $131 $19 $13,487 $— $13,637 $159
 $11
 $13,636
 $—
 $13,806
 

Expenses:

 
Costs and expenses:         

Operating

 72 8 7,802 — 7,882 68
 6
 8,015
 —
 8,089

Selling, general and administrative

 109 247 2,242 — 2,598 61
 255
 2,146
 —
 2,462
Depreciation and amortization6
 16
 259
 —
 281

Restructuring charges

 — — 43 — 43 —
 3
 23
 —
 26

Depreciation and amortization

 5 15 475 — 495 
 

Total expenses

 186 270 10,562 — 11,018 
 
Impairment charge—
 —
 52
 —
 52
Total costs and expenses135
 280
 10,495
 —
 10,910

Operating income (loss)

 (55) (251) 2,925 — 2,619 24
 (269) 3,141
 —
 2,896

Interest income (expense), net

 (514) (341) 426 — (429)
Interest (expense) income, net(443) (383) 476
 —
 (350)
Loss on early extinguishment of debt(351) —
 (1) —
 (352)

Other items, net

 — 6 (17) — (11)(1) 4
 (33) —
 (30)
 

Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies

 (569) (586) 3,334 — 2,179 (771) (648) 3,583
 —
 2,164

(Provision) benefit for income taxes

 201 207 (1,159) — (751)
Benefit (provision) for income taxes280
 229
 (1,271) —
 (762)

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

 1,666 1,256 (37) (2,922) (37)3,444
 1,270
 (48) (4,714) (48)
 

Net earnings from continuing operations

 1,298 877 2,138 (2,922) 1,391 2,953
 851
 2,264
 (4,714) 1,354

Net earnings (loss) from discontinued operations, net of tax

 7 7 (100) — (86)6
 (1) 1,600
 —
 1,605
 

Net earnings

 $1,305 $884 $2,038 $(2,922)$1,305 $2,959
 $850
 $3,864
 $(4,714) $2,959
 

Total comprehensive income

 
$
1,152		 
$
884		 
$
2,021		 
$
(2,905
)
$
1,152		 $2,769
 $857
 $3,819
 $(4,676) $2,769
 

II-89


II-86


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



 

 Statement of Operations
For the Year Ended December 31, 2010		 Statement of Operations

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 For the Year Ended December 31, 2013
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Revenues

 $149 $24 $13,293 $— $13,466 $145
 $11
 $13,849
 $—
 $14,005
 

Expenses:

 
Costs and expenses:         

Operating

 73 10 8,429 — 8,512 69
 8
 8,047
 —
 8,124

Selling, general and administrative

 49 241 2,176 — 2,466 65
 323
 2,158
 —
 2,546
Depreciation and amortization6
 14
 270
 —
 290

Restructuring charges

 1 — 58 — 59 —
 1
 19
 —
 20

Depreciation and amortization

 5 13 482 — 500 
 

Total expenses

 128 264 11,145 — 11,537 
 
Total costs and expenses140
 346
 10,494
 —
 10,980

Operating income (loss)

 21 (240) 2,148 — 1,929 5
 (335) 3,355
 —
 3,025

Interest (expense) income, net

 (568) (326) 372 — (522)(457) (369) 459
 —
 (367)

Net loss on early extinguishment of debt

 (81) — — — (81)

Other items, net

 — 5 4 — 9 —
 4
 3
 —
 7
 

Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies

 (628) (561) 2,524 — 1,335 (452) (700) 3,817
 —
 2,665

(Provision) benefit for income taxes

 177 194 (849) — (478)
Benefit (provision) for income taxes152
 235
 (1,265) —
 (878)

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

 1,175 884 (35) (2,059) (35)2,170
 1,288
 (49) (3,458) (49)
 

Net earnings from continuing operations

 724 517 1,640 (2,059) 822 1,870
 823
 2,503
 (3,458) 1,738

Net loss from discontinued operations, net of tax

 — — (98) — (98)
 
Net earnings (loss) from discontinued operations, net of tax9
 (5) 137
 —
 141

Net earnings

 $724 $517 $1,542 $(2,059)$724 $1,879
 $818
 $2,640
 $(3,458) $1,879
 

Total comprehensive income

 
$
834		 
$
517		 
$
1,516		 
$
(2,033
)
$
834		 $1,903
 $815
 $2,463
 $(3,278) $1,903
 

II-90


II-87


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



 

 Balance Sheet
At December 31, 2012		 Balance Sheet

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 At December 31, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Assets

          

Cash and cash equivalents

 $254 $1 $453 $— $708 $267
 $1
 $55
 $—
 $323

Receivables, net

 31 2 3,104 — 3,137 28
 2
 3,598
 —
 3,628

Programming and other inventory

 5 3 851 — 859 3
 3
 1,265
 —
 1,271

Prepaid expenses and other current assets

 142 14 886 (26) 1,016 192
 26
 337
 (30) 525
 

Total current assets

 432 20 5,294 (26) 5,720 490
 32
 5,255
 (30) 5,747
 

Property and equipment

 39 117 4,832 — 4,988 46
 180
 3,017
 —
 3,243

Less accumulated depreciation and amortization

 8 69 2,640 — 2,717 20
 118
 1,700
 —
 1,838
 

Net property and equipment

 31 48 2,192 — 2,271 26
 62
 1,317
 —
 1,405
 

Programming and other inventory

 3 2 1,577 — 1,582 6
 9
 1,942
 —
 1,957

Goodwill

 98 62 8,407 — 8,567 98
 62
 6,321
 —
 6,481

Intangible assets

 — — 6,515 — 6,515 —
 —
 5,514
 —
 5,514

Investments in consolidated subsidiaries

 38,658 9,128 — (47,786) — 42,744
 12,775
 —
 (55,519) —

Other assets

 171 14 1,626 — 1,811 163
 11
 2,487
 —
 2,661

Intercompany

 — 3,655 16,122 (19,777) — —
 2,248
 23,988
 (26,236) —
 

Total Assets

 $39,393 $12,929 $41,733 $(67,589)$26,466 $43,527
 $15,199
 $46,824
 $(81,785) $23,765
 

Liabilities and Stockholders' Equity

 
Liabilities and Stockholders’ Equity
         

Accounts payable

 $2 $6 $378 $— $386 $1
 $4
 $187
 $—
 $192

Participants' share and royalties payable

 — — 953 — 953 
Participants’ share and royalties payable
—
 —
 1,013
 —
 1,013

Program rights

 6 4 445 — 455 4
 4
 366
 —
 374

Current portion of long-term debt

 5 — 13 — 18 206
 —
 16
 —
 222

Accrued expenses and other current liabilities

 345 286 1,524 (26) 2,129 418
 230
 1,141
 (30) 1,759
 

Total current liabilities

 358 296 3,313 (26) 3,941 629
 238
 2,723
 (30) 3,560
 

Long-term debt

 5,793 — 111 — 5,904 8,113
 —
 113
 —
 8,226

Other liabilities

 3,252 255 2,901 — 6,408 2,986
 252
 3,178
 —
 6,416

Intercompany

 19,777 — — (19,777) — 26,236
 —
 —
 (26,236) —

Stockholders' Equity:

 
Stockholders’ Equity:         

Preferred stock

 — — 128 (128) — —
 —
 126
 (126) —

Common stock

 1 123 1,136 (1,259) 1 1
 123
 590
 (713) 1

Additional paid-in capital

 43,424 — 61,690 (61,690) 43,424 44,055
 —
 60,894
 (60,894) 44,055

Retained earnings (deficit)

 (26,769) 12,593 (23,049) 10,456 (26,769)(20,518) 14,913
 (16,081) 1,168
 (20,518)

Accumulated other comprehensive income (loss)

 (569) (7) 303 (296) (569)(770) 4
 81
 (85) (770)
 22,768
 15,040
 45,610
 (60,650) 22,768

 16,087 12,709 40,208 (52,917) 16,087 

Less treasury stock, at cost

 5,874 331 4,800 (5,131) 5,874 17,205
 331
 4,800
 (5,131) 17,205
 

Total Stockholders' Equity

 10,213 12,378 35,408 (47,786) 10,213 
 

Total Liabilities and Stockholders' Equity

 $39,393 $12,929 $41,733 $(67,589)$26,466 
 
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

II-91


II-88


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



 

 Balance Sheet
At December 31, 2011		 Balance Sheet

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 At December 31, 2014
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Assets

          

Cash and cash equivalents

 $134 $1 $525 $— $660 $63
 $1
 $364
 $—
 $428

Receivables, net

 30 3 3,053 — 3,086 29
 2
 3,428
 —
 3,459

Programming and other inventory

 6 4 725 — 735 4
 3
 915
 —
 922

Prepaid expenses and other current assets

 81 70 940 (23) 1,068 306
 27
 373
 (30) 676
 

Total current assets

 251 78 5,243 (23) 5,549 402
 33
 5,080
 (30) 5,485
 

Property and equipment

 46 100 4,734 — 4,880 41
 162
 2,961
 —
 3,164

Less accumulated depreciation and amortization

 14 56 2,438 — 2,508 15
 98
 1,618
 —
 1,731
 

Net property and equipment

 32 44 2,296 — 2,372 26
 64
 1,343
 —
 1,433
 

Programming and other inventory

 8 3 1,485 — 1,496 7
 8
 1,802
 —
 1,817

Goodwill

 98 62 8,411 — 8,571 98
 62
 6,538
 —
 6,698

Intangible assets

 — — 6,521 — 6,521 —
 —
 6,008
 —
 6,008

Investments in consolidated subsidiaries

 36,774 7,982 — (44,756) — 41,144
 11,685
 —
 (52,829) —

Other assets

 223 19 1,469 — 1,711 185
 17
 2,292
 —
 2,494

Intercompany

 — 4,158 13,977 (18,135) — —
 2,726
 21,772
 (24,498) —
 

Total Assets

 $37,386 $12,346 $39,402 $(62,914)$26,220 $41,862
 $14,595
 $44,835
 $(77,357) $23,935
 

Liabilities and Stockholders' Equity

 
Liabilities and Stockholders’ Equity
         

Accounts payable

 $5 $17 $302 $— $324 $3
 $24
 $275
 $—
 $302

Participants' share and royalties payable

 — — 938 — 938 
Participants’ share and royalties payable—
 —
 999
 —
 999

Program rights

 7 5 565 — 577 5
 3
 396
 —
 404
Commercial paper616
 —
 —
 —
 616

Current portion of long-term debt

 7 — 17 — 24 4
 —
 16
 —
 20

Accrued expenses and other current liabilities

 311 274 1,512 (23) 2,074 388
 270
 1,064
 (30) 1,692
 

Total current liabilities

 330 296 3,334 (23) 3,937 1,016
 297
 2,750
 (30) 4,033
 

Long-term debt

 5,845 — 113 — 5,958 6,349
 —
 127
 —
 6,476

Other liabilities

 3,168 407 2,842 — 6,417 3,029
 249
 3,178
 —
 6,456

Intercompany

 18,135 — — (18,135) — 24,498
 —
 —
 (24,498) —

Stockholders' Equity:

 
Stockholders’ Equity:
         

Preferred stock

 — — 128 (128) — —
 —
 126
 (126) —

Common stock

 1 123 1,136 (1,259) 1 1
 123
 590
 (713) 1

Additional paid-in capital

 43,395 — 61,690 (61,690) 43,395 44,041
 —
 60,894
 (60,894) 44,041

Retained earnings (deficit)

 (28,343) 11,851 (25,336) 13,485 (28,343)(21,931) 14,260
 (18,111) 3,851
 (21,931)

Accumulated other comprehensive income (loss)

 (439) — 295 (295) (439)(735) (3) 81
 (78) (735)
 21,376
 14,380
 43,580
 (57,960) 21,376

 14,614 11,974 37,913 (49,887) 14,614 

Less treasury stock, at cost

 4,706 331 4,800 (5,131) 4,706 14,406
 331
 4,800
 (5,131) 14,406
 

Total Stockholders' Equity

 9,908 11,643 33,113 (44,756) 9,908 
 

Total Liabilities and Stockholders' Equity

 $37,386 $12,346 $39,402 $(62,914)$26,220 
 
Total Stockholders’ Equity6,970
 14,049
 38,780
 (52,829) 6,970
Total Liabilities and Stockholders’ Equity
$41,862
 $14,595
 $44,835
 $(77,357) $23,935

II-92


II-89


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



 

 Statement of Cash Flows
For the Year Ended December 31, 2012		 Statement of Cash Flows

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 For the Year Ended December 31, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Net cash flow (used for) provided by operating activities

 $(827)$(179)$2,821 $— $1,815 $(634) $(201) $2,229
 $—
 $1,394
 

Investing Activities:

          

Acquisitions, net of cash acquired

 — — (146) — (146)—
 —
 (15) —
 (15)

Capital expenditures

 — (21) (233) — (254)—
 (16) (177) —
 (193)

Investments in and advances to investee companies

 — — (91) — (91)—
 —
 (98) —
 (98)

Proceeds from sale of investments

 9 2 2 — 13 79
 —
 2
 —
 81

Proceeds from dispositions

 — — 49 — 49 318
 —
 67
 —
 385
 
Other investing activities(3) —
 —
 —
 (3)

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

 9 (19) (419) — (429)394
 (16) (221) —
 157
 

Net cash flow used for investing activities from discontinued operations

 — — (22) — (22)(3) —
 —
 —
 (3)
 

Net cash flow provided by (used for) investing activities

 9 (19) (441) — (451)391
 (16) (221) —
 154
 

Financing Activities:

          

Proceeds from issuance of notes

 1,566 — — — 1,566 

Repayment of notes and debentures

 (1,583) — — — (1,583)
Repayments of short-term debt borrowings, net(616) —
 —
 —
 (616)
Proceeds from issuance of senior notes1,959
 —
 —
 —
 1,959

Payment of capital lease obligations

 — — (19) — (19)—
 —
 (17) —
 (17)

Payment of contingent consideration

 — — (33) — (33)

Dividends

 (276) — — — (276)(300) —
 —
 —
 (300)

Purchase of Company common stock

 (1,137) — — — (1,137)(2,813) —
 —
 —
 (2,813)

Payment of payroll taxes in lieu of issuing shares for stock-based compensation

 (105) — — — (105)(96) —
 —
 —
 (96)

Proceeds from exercise of stock options

 168 — — — 168 142
 —
 —
 —
 142

Excess tax benefit from stock-based compensation

 103 — — — 103 88
 —
 —
 —
 88

Increase (decrease) in intercompany payables

 2,202 198 (2,400) — — 2,083
 217
 (2,300) —
 —
 

Net cash flow provided by (used for) financing activities

 938 198 (2,452) — (1,316)447
 217
 (2,317) —
 (1,653)
 

Net increase (decrease) in cash and cash equivalents

 120 — (72) — 48 204
 —
 (309) —
 (105)

Cash and cash equivalents at beginning of year

 134 1 525 — 660 63
 1
 364
 —
 428
 

Cash and cash equivalents at end of year

 $254 $1 $453 $— $708 $267
 $1
 $55
 $—
 $323
 

II-93


II-90


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



 

 Statement of Cash Flows
For the Year Ended December 31, 2011		 Statement of Cash Flows

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 For the Year Ended December 31, 2014
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Net cash flow (used for) provided by operating activities

 $(700)$(181)$2,630 $— $1,749 $(1,107) $(194) $2,576
 $—
 $1,275
 

Investing Activities:

          

Acquisitions, net of cash acquired

 — — (75) — (75)—
 —
 (27) —
 (27)

Capital expenditures

 — (14) (231) — (245)—
 (27) (179) —
 (206)

Investments in and advances to investee companies

 — — (79) — (79)—
 —
 (98) —
 (98)

Proceeds from sale of investments

 8 4 — — 12 —
 —
 12
 —
 12

Proceeds from dispositions

 — — 18 — 18 —
 —
 7
 —
 7
 

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

 8 (10) (367) — (369)
 
Other investing activities(4) —
 —
 —
 (4)
Net cash flow used for investing activities from continuing operations(4) (27) (285) —
 (316)

Net cash flow used for investing activities from discontinued operations

 — — (20) — (20)(29) —
 (256) —
 (285)
 

Net cash flow provided by (used for) investing activities

 8 (10) (387) — (389)
 
Net cash flow used for investing activities(33) (27) (541) —
 (601)

Financing Activities:

          
Proceeds from short-term debt borrowings, net141
 —
 —
 —
 141
Proceeds from issuance of senior notes1,728
 —
 —
 —
 1,728
Repayment of notes and debentures(1,146) —
 (6) —
 (1,152)

Payment of capital lease obligations

 — — (19) — (19)—
 —
 (17) —
 (17)

Dividends

 (206) — — — (206)(292) —
 —
 —
 (292)

Purchase of Company common stock

 (1,012) — — — (1,012)(3,595) —
 —
 —
 (3,595)

Payment of payroll taxes in lieu of issuing shares for stock-based compensation

 (82) — — — (82)(146) —
 —
 —
 (146)

Proceeds from exercise of stock options

 72 — — — 72 283
 —
 —
 —
 283

Excess tax benefit from stock-based compensation

 72 — — — 72 243
 —
 —
 —
 243

Other financing activities

 (5) — — — (5)(3) —
 —
 —
 (3)

Increase (decrease) in intercompany payables

 1,882 191 (2,073) — — 3,921
 221
 (4,142) —
 —
 
Net cash flow provided by (used for) financing activities from continuing operations1,134
 221
 (4,165) —
 (2,810)
Net cash flow (used for) provided by financing activities from discontinued operations(11) —
 2,178
 —
 2,167

Net cash flow provided by (used for) financing activities

 721 191 (2,092) — (1,180)1,123
 221
 (1,987) —
 (643)
 

Net increase in cash and cash equivalents

 29 — 151 — 180 

Cash and cash equivalents at beginning of year

 105 1 374 — 480 
 
Net (decrease) increase in cash and cash equivalents(17) —
 48
 —
 31
Cash and cash equivalents at beginning of year
(includes $29 of discontinued operations cash)
80
 1
 316
 —
 397

Cash and cash equivalents at end of year

 $134 $1 $525 $— $660 $63

$1

$364

$—
 $428
 

II-94


II-91


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



 

 Statement of Cash Flows
For the Year Ended December 31, 2010		 Statement of Cash Flows

 CBS Corp.
 CBS
Operations
Inc.
 Non-
Guarantor
Affiliates
 Eliminations
 CBS Corp.
Consolidated
 For the Year Ended December 31, 2013
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated

Net cash flow (used for) provided by operating activities

 $(695)$(233)$2,663 $— $1,735 $(934) $(187) $2,994
 $—
 $1,873
 

Investing Activities:

          

Acquisitions, net of cash acquired

 — — (11) — (11)—
 —
 (20) —
 (20)

Capital expenditures

 — (17) (237) — (254)—
 (27) (185) —
 (212)

Investments in and advances to investee companies

 — — (80) — (80)—
 —
 (176) —
 (176)
Proceeds from sale of investments—
 1
 6
 —
 7

Proceeds from dispositions

 — — 18 — 18 —
 —
 164
 —
 164

Other investing activities

 (1) — — — (1)23
 —
 —
 —
 23
 

Net cash flow used for investing activities from continuing operations

 (1) (17) (310) — (328)
 
Net cash flow provided by (used for) investing activities from continuing operations23
 (26) (211) —
 (214)

Net cash flow used for investing activities from discontinued operations

 — — (40) — (40)—
 —
 (58) —
 (58)
 

Net cash flow used for investing activities

 (1) (17) (350) — (368)
 
Net cash flow provided by (used for) investing activities23
 (26) (269) —
 (272)

Financing Activities:

          

Proceeds from issuance of notes

 1,091 — 3 — 1,094 

Repayment of notes and debentures

 (2,122) — (4) — (2,126)
Proceeds from short-term debt borrowings, net475
 —
 —
 —
 475

Payment of capital lease obligations

 — — (16) — (16)—
 —
 (17) —
 (17)
Payment of contingent consideration—
 —
 (30) —
 (30)

Dividends

 (142) — — — (142)(300) —
 —
 —
 (300)
Purchase of Company common stock(2,185) —
 —
 —
 (2,185)

Payment of payroll taxes in lieu of issuing shares for stock-based compensation

 (37) — — — (37)(145) —
 —
 —
 (145)

Proceeds from exercise of stock options

 7 — — — 7 146
 —
 —
 —
 146

Excess tax benefit from stock-based compensation

 16 — — — 16 148
 —
 —
 —
 148

Decrease to accounts receivable securitization program

 — — (400) — (400)
Other financing activities(4) —
 —
 —
 (4)

Increase (decrease) in intercompany payables

 1,740 251 (1,991) — — 2,602
 213
 (2,815) —
 —
 

Net cash flow provided by (used for) financing activities

 553 251 (2,408) — (1,604)737
 213
 (2,862) —
 (1,912)
 

Net (decrease) increase in cash and cash equivalents

 (143) 1 (95) — (237)

Cash and cash equivalents at beginning of year

 248 — 469 — 717 
 

Cash and cash equivalents at end of year

 $105 $1 $374 $— $480 
 
Net decrease in cash and cash equivalents(174) —
 (137) —
 (311)
Cash and cash equivalents at beginning of year
(includes $21 of discontinued operations cash)
254
 1
 453
 —
 708
Cash and cash equivalents at end of year
(includes $29 of discontinued operations cash)
$80

$1

$316

$—
 $397

II-95



II-92



Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.

Item 9A.Controls and Procedures.
The Company Item 9.    ’Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

        None.

Item 9A.    Controls and Procedures.

        The Company'ss chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this report, the Company'sCompany’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended ("(“Exchange Act"Act”)) were effective, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act. No change in the Company'sCompany’s internal control over financial reporting occurred during the Company'sCompany’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company'sCompany’s internal control over financial reporting.

        Management's Report

Management’s report on Internal Control Over Financial Reporting is incorporated herein by reference tointernal control over financial reporting and the report of the Company’s independent registered public accounting firm thereon are set forth in Item 8, on page II-38pages II- 39 and II - 40, of this report.

Item 9B.Other Information.
None.


II-93
 Item 9B.    Other Information.

        None.

II-96


PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

Item 10.Directors, Executive Officers and Corporate Governance.
The information required by this item with respect to the Company'sCompany’s directors is contained in the CBS Corporation Proxy Statement for the Company's 2013Company’s 2016 Annual Meeting of Stockholders (the "Proxy Statement"“Proxy Statement”) under the headings "CBS“CBS Corporation's Board of Directors," "Item” “Item 1—Election of Directors,"” and "Section“Section 16(a) Beneficial Ownership Reporting Compliance,"” which information is incorporated herein by reference.

The information required by this item with respect to the Company'sCompany’s executive officers is (i) contained in the Proxy Statement under the headings "Corporate Governance"“Corporate Governance” and "Section 16(a) Beneficial Ownership Reporting Compliance"Compliance” and (ii) included in Part I of this Form 10-K under the caption "Executive“Executive Officers of the Company,"” which information is incorporated herein by reference.

Item 11.    Executive Compensation.

Item 11.Executive Compensation.
The information required by this item is contained in the Proxy Statement under the headings "CBS Corporation's“CBS Corporation’s Board of Directors," "Director” “Director Compensation,"” "Executive Compensation," "Compensation” “Compensation Discussion and Analysis"Analysis” and "Compensation“Compensation Committee Report,"” which information is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item is contained in the Proxy Statement under the headings "Security“Security Ownership of Certain Beneficial Owners and Management"Management” and "Equity“Equity Compensation Plan Information,"” which information is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions and Director Independence.

Item 13.Certain Relationships and Related Transactions and Director Independence.
The information required by this item is contained in the Proxy Statement under the headings "Related“Related Person Transactions"Transactions” and "CBS Corporation's“CBS Corporation’s Board of Directors,"” which information is incorporated herein by reference.

Item 14.    Principal Accounting Fees and Services.

Item 14.Principal Accounting Fees and Services.
The information required by this item is contained in the Proxy Statement under the heading "Fees“Fees for Services Provided by the Independent Registered Public Accounting Firm,"” which information is incorporated herein by reference.


III-1



PART IV

Item 15.Exhibits, Financial Statement Schedules.
(a)
1. Item 15.    Financial StatementsExhibits, Financial Statement Schedules.
.

(a)


1.
Financial Statements.

The financial statements of the Company filed as part of this report on Form 10-K are listed on the Index on page II-37.

2.
Financial Statement Schedules.

The financial statement schedule required to be filed by Item 8 of this Form 10-K is listed on the Index on page II-37.

3.
Exhibits.

The exhibits listed in Item 15(b) of this Part IV are filed or incorporated by reference as part of this Form 10-K. The Index to Exhibits is on page E-1.

(b)
Exhibits.

(b)Exhibits.
The exhibits listed in Item 15(b) of this Part IV are filed or incorporated by reference as part of this Form 10-K. The Index to Exhibits is on page E-1.



IV-1



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CBS Corporation has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

  CBS CORPORATION

 
 
By:
 

By:/s/ LESLIE MOONVES
Leslie Moonves
Leslie Moonves
Chairman, President
and
Chief Executive Officer

Date: February 15, 2013

12, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of CBS Corporation and in the capacities and on the dates indicated:

Signature
Title
Date







/s/ LESLIE MOONVES
Leslie Moonves		 TitleDate
/s/ Leslie Moonves
Chairman, President
and
Chief Executive Officer
(Principal Executive Officer)
(Chairman of the Board of Directors)
February 12, 2016
Leslie Moonves
/s/ Joseph R. Ianniello
Chief Operating Officer
(Principal Financial Officer)
February 12, 2016
Joseph R. Ianniello
/s/ Lawrence Liding
Executive Vice President,
Controller and
Chief Accounting Officer
(Principal Accounting Officer)
February 12, 2016
Lawrence Liding
*Director February 15, 201312, 2016

/s/ JOSEPH R. IANNIELLO
Joseph R. Ianniello

Executive Vice President
Chief Financial Officer

February 15, 2013

/s/ LAWRENCE LIDING
Lawrence Liding

Senior Vice President
Controller
Chief Accounting Officer

February 15, 2013

*
David R. Andelman
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
Joseph A. Califano, Jr.
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
William S. Cohen
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
Gary L. Countryman
 
Director

 
February 15, 2013

IV-2





Signature
Title
Date


 
Title
 


Date
*
Charles K. Gifford		 Director February 15, 201312, 2016

*
Leonard GoldbergCharles K. Gifford
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
Leonard Goldberg
*DirectorFebruary 12, 2016
Bruce S. Gordon
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
Linda M. Griego
 
Director

February 15, 2013

*
Arnold Kopelson
 
Director
 
February 15, 2013

*
Doug Morris
 
Director
 
February 15, 201312, 2016

*
Shari RedstoneArnold Kopelson
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
Doug Morris
*DirectorFebruary 12, 2016
Shari Redstone
*
Director,
Chairman Emeritus
February 12, 2016
Sumner M. Redstone
 
Director

February 15, 2013

*
DirectorFebruary 12, 2016
Frederic V. Salerno
 
Director

February 15, 2013

*By:

/s/ LOUIS J. BRISKMAN
Louis J. Briskman
Lawrence P. Tu		February 12, 2016
Lawrence P. Tu
Attorney-in-Fact
for Directors

 


February 15, 2013

IV-3






INDEX TO EXHIBITS
ITEM 15(b)

Effective December 31, 2005, Former Viacom was renamed CBS Corporation.

Exhibit No.
Description of Document
(3) Articles of Incorporation and Bylaws

 
(a)
(a)

Amended and Restated Certificate of Incorporation of CBS Corporation effective December 31, 2005 (incorporated by reference to Exhibit 3(a) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553)001‑09553).

 
(b)
(b)

Amended and Restated Bylaws of CBS Corporation effective November 1, 2007December 11, 2014 (incorporated by reference to Exhibit 3(b) to the QuarterlyCurrent Report on Form 10-Q of8‑K filed by CBS Corporation for the quarter ended September 30, 2007)on December 17, 2014) (File No. 001-09553)001‑09553).

(4)
 


Instruments defining the rights of security holders, including indentures

 
(a)
(a)

Amended and Restated Senior Indenture dated as of November 3, 2008 ("(“2008 Indenture"Indenture”) between CBS Corporation, CBS Operations Inc., and The Bank of New York Mellon, as senior trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3S‑3 filed by CBS Corporation on November 3, 2008 (Registration No. 333-154962)333‑154962) (File No. 001-09553)001‑09553).

 
(b)
(b)

First Supplemental Indenture to 2008 Indenture dated as of April 5, 2010 between CBS Corporation, CBS Operations Inc., and Deutsche Bank Trust Company Americas, as senior trustee (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K8‑K filed by CBS Corporation on April 5, 2010)2010 (File No. 001-09553)001‑09553).

 
 


The other instruments defining the rights of holders of the long-termlong‑term debt securities of CBS Corporation and its subsidiaries are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of Regulation S-K.S‑K. CBS Corporation hereby agrees to furnish copies of these instruments to the Securities and Exchange Commission upon request.

(10)
 


Material Contracts

 
(a)
(a)

CBS Corporation 2004 Long-TermLong‑Term Management Incentive Plan (as amended and restated through May 25, 2006) (incorporated by reference to Exhibit 10 to the Quarterly Report on Form 10-Q10‑Q of CBS Corporation for the quarter ended June 30, 2006) (File No. 001-09553)001‑09553).*

 
(b)
(b)

CBS Corporation 2009 Long-TermLong‑Term Incentive Plan (as amended and restated May 23, 2013) (incorporated by reference to Annex AExhibit 10(c) to the Quarterly Report on Form 10‑Q of CBS Corporation's Proxy Statement dated April 24, 2009)Corporation for the quarter ended June 30, 2013) (File No. 001-09553)001‑09553).*

 
(c)
(c)

Forms of Certificate and Terms and Conditions for equity awards for:

 
 
(i)

(i)

Stock Options (granted prior to 2010) (incorporated by reference to Exhibit 10(c)(i) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2011) (File No. 001-09553)001‑09553).*

 
 
(ii)

(ii)

Stock Options (granted in 2010 and 2011 and thereafter) (incorporated by reference to Exhibit 10(c)(ii) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2011) (File No. 001-09553)001‑09553).*

*Management contract or compensatory plan required to be filed as an exhibit to this form pursuant to Item 15(b).


E-1


Exhibit No.
Description of Document
  (iii)Performance-BasedPerformance‑Based Restricted Share Units with Time Vesting (granted in 2009)and Performance Vesting (incorporated by reference to Exhibit 10(c)(iv)(v) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2011) (File No. 001-09553)001‑09553).*

 
 
(iv)

(iv)

Performance-Based Restricted Share Units with Time Vesting and Performance Schedule (granted in 2010 and 2011 and thereafter) (incorporated by reference to Exhibit 10(c)(v)(vii) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2011) (File No. 001-09553)001‑09553).*

 
(d)


(v)

Restricted Share Units with Time Vesting (granted in 2009) (incorporated by reference to Exhibit 10(c)(vi) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2011) (File No. 001-09553).*





(vi)

Restricted Share Units with Time Vesting (granted in 2010 and 2011 and thereafter) (incorporated by reference to Exhibit 10(c)(vii) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2011) (File No. 001-09553).*



(d)

CBS Corporation Senior Executive Short-TermShort‑Term Incentive Plan (as amended and restated as of December 31, 2005) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553)001‑09553) (as amended by the First Amendment to the CBS Corporation Senior Executive Short-TermShort‑Term Incentive Plan effective January 1, 2009) (incorporated by reference to Exhibit 10(d) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2008) (File No. 001-09553)001‑09553).*

 
(e)
(e)

CBS Retirement Excess Pension Plan (as amended and restated as of December 31, 2005) (incorporated by reference to Exhibit 10(o) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553)001‑09553) (as Part A was amended by Amendment No. 1 as of January 1, 2009) (incorporated by reference to Exhibit 10(g) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2010) (File No. 001-09553)001‑09553) (as amended by Part B, effective as of January 1, 2009, as amended and restated as of January 1, 2012) (filed herewith)(incorporated by reference to Exhibit 10(e) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2012) (File No. 001‑09553).*

 
(f)
(f)

CBS Excess 401(k) Plan for Designated Senior Executives (as amended and restated as of December 31, 2005) (incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553)001‑09553) (as amended by Part B effective January 1, 2009) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2008) (File No. 001-09553)001‑09553) (as Part B was amended by Amendment No. 1 as of January 1, 2009) (incorporated by reference to Exhibit 10(b) to the Quarterly Report on Form 10-Q10‑Q of CBS Corporation for the quarter ended March 31, 2010) (File No. 001-09553)001‑09553) (as Part B was amended by Amendment No. 2 as of January 1, 2009) (incorporated by reference to Exhibit 10(h) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2010)2010 (File No. 001‑09553) (as Part A was amended by Amendment No. 1 as of January 1, 2014) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2013) (File No. 001‑09553) (as Part B was amended by Amendment No. 3 as of January 1, 2014) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2013) (File No. 001‑09553) (as Part A was amended by Amendment No. 2 as of February 1, 2015) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553), (as Part B was amended by Amendment No. 4 as of February 1, 2015) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553), (as Part A was amended by Amendment No. 3 as of January 1, 2015) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553), (as Part B was amended by Amendment No. 5 as of January 1, 2015) (incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553).*

*Management contract or compensatory plan required to be filed as an exhibit to this form pursuant to Item 15(b).


E-2


Exhibit No.
Description of Document
 (g)CBS Bonus Deferral Plan for Designated Senior Executives (as amended and restated as of December 31, 2005) (incorporated by reference to Exhibit 10(q) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553)001‑09553) (as amended by Part B effective January 1, 2009) (incorporated by reference to Exhibit 10(g) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2008) (File No. 001-09553)001‑09553) (as Part B was amended by Amendment No. 1 as of January 1, 2009) (incorporated by reference to Exhibit 10(c) to the Quarterly Report on Form 10-Q10‑Q of CBS Corporation for the quarter ended March 31, 2010) (File No. 001-09553)001‑09553) (as Part B was amended by Amendment No. 2 as of January 1, 2009) (incorporated by reference to Exhibit 10(i) to the Annual Report on Form 10-K10‑ K of CBS Corporation for the fiscal year ended December 31, 2010) (File No. 001-09553).*



(h)

Summary001‑09553) (as Part A was amended by Amendment No. 1 as of CBS Corporation Compensation for Outside DirectorsJanuary 1, 2014) (incorporated by reference to Exhibit 10(h)10(g) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2013) (File No. 001‑09553) (as Part B was amended by Amendment No. 3 as of January 1, 2014) (incorporated by reference to Exhibit 10(g) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2013) (File No. 001‑09553) (as Part A was amended by Amendment No. 2 as of January 1, 2015) (incorporated by reference to Exhibit 10(g) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2011)2014) (File No. 001-09553), (as Part B was amended by Amendment No. 4 as of January 1, 2015) (incorporated by reference to Exhibit 10(g) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553).*

 
(h)
(i)Summary of CBS Corporation Compensation for Outside Directors (as of January 28, 2016) (filed herewith).*

(i)
Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10 to the Current Report on Form 8-K8‑K of CBS Corporation filed September 18, 2009) (File No. 001-09553)001‑09553).*

 
(j)
(j)

Former Viacom Deferred Compensation Plan for Non-EmployeeNon‑Employee Directors (as amended and restated as of October 14, 2003) (incorporated by reference to Exhibit 10(e) to the Annual Report on Form 10-K10‑K of Former Viacom for the fiscal year ended December 31, 2003) (File No. 001-09553)001‑09553).*

 
(k)
(k)

CBS Corporation Deferred Compensation Plan for Outside Directors (as amended and restated as of December 31, 2005)January 29, 2015) (incorporated by reference to Exhibit 10(i)10(k) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553) (as amended by the First Amendment to the CBS Corporation Deferred Compensation Plan for Outside Directors, effective as of January 1, 2009) (incorporated by reference to Exhibit 10(j) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2008)2014) (File No. 001-09553).*

 
(l)
(l)

CBS Corporation 2000 Stock Option Plan for Outside Directors (as amended and restated through February 3, 2011)January 29, 2014) (incorporated by reference to Exhibit 10(n)10(l) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2010)2013) (File No. 001-09553)001‑09553).*

 
(m)
(m)

CBS Corporation 2005 RSU Plan for Outside Directors (as amended and restated through February 1, 2012)January 29, 2015) (incorporated by reference to Exhibit 10(m) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2011)2014) (File No. 001-09553).*

 
(n)
(n)CBS Corporation 2015 Equity Plan for Outside Directors (effective May 21, 2015) (incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of CBS Corporation for the quarter ended June 30, 2015) (File No. 001-09553).*

(o)
Employment Agreement dated December 29, 2005 between CBS Corporation and Sumner M. Redstone (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K8‑K of Former Viacom filed December 30, 2005) (File No. 001-09553)001‑09553), as amended by a Letter Agreement dated March 13, 2007 (incorporated by reference to Exhibit 10 to the Current Report on Form 8-K8‑K of CBS Corporation filed March 16, 2007) (File No. 001-09553)001‑09553), as amended by a 409A Letter Agreement dated December 10, 2008 (incorporated by reference to Exhibit 10(m) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2008) (File No. 001-09553)001‑09553).*

*Management contract or compensatory plan required to be filed as an exhibit to this form pursuant to Item 15(b).


E-3


Exhibit No.
Description of Document
 (o)(p)Employment Agreement dated October 15, 2012December 11, 2014 between CBS Corporation and Leslie Moonves (incorporated by reference to Exhibit 1010(o) to the QuarterlyAnnual Report on Form 10-Q10-K of CBS Corporation for the quarteryear ended September 30, 2012)December 31, 2014) (File No. 001-09553).*



(p)

, as amended by a Letter Agreement dated May 2, 2012 between CBS Corporation and Leslie Moonves (incorporated by reference to Exhibit 10 to the Quarterly Report on Form 10-Q of CBS Corporation for the quarter ended June 30, 2012) (File No. 001-09553).* Certain portions of this exhibit have been omitted pursuant to a confidential treatment order granted by the Securities and Exchange Commission.



(q)

Employment Agreement dated as of October 1, 2011 between CBS Corporation and Louis J. Briskman (incorporated by reference to Exhibit 10 to the Current Report on Form 8-K of CBS Corporation filed October 7, 2011) (File No. 001-09553).*



(r)

Employment Agreement dated February 3, 2011 between CBS Corporation and Joseph R. Ianniello (incorporated by reference to Exhibit 10 to the Current Report on Form 8-K of CBS Corporation filed February 4, 2011) (File No. 001-09553).*



(s)

Employment Agreement dated as of February 3, 2011 between CBS Corporation and Anthony G. Ambrosio24, 2015 (incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of CBS Corporation for the quarter ended March 31, 2011)2015) (File No. 001-09553).*

 
(q)
(t)
Letter Agreement dated December 11, 2014 between CBS Corporation and Leslie Moonves amending and restating the Letter Agreement dated May 2, 2012 between CBS Corporation and Leslie Moonves (incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553).*
Certain portions of this exhibit have been omitted pursuant to a confidential treatment order granted by the Securities and Exchange Commission.

(r)
Employment Agreement dated as of June 4, 2013 between CBS Corporation and Joseph R. Ianniello (incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10‑Q of CBS Corporation for the quarter ended June 30, 2013) (File No. 001‑09553).*
(s)Employment Agreement dated as of June 7, 2013 between CBS Corporation and Anthony G. Ambrosio (incorporated by reference to Exhibit 10(b) to the Quarterly Report on Form 10‑Q of CBS Corporation for the quarter ended June 30, 2013) (File No. 001‑09553), as amended by a Letter Agreement dated February 6, 2015 (incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553).*
(t)Employment Agreement dated as of July 1, 2013 between CBS Corporation and Gil Schwartz (filed herewith), as amended by a Letter Agreement dated August 25, 2014 (filed herewith).*
(u)Employment Agreement dated December 17, 2015 (effective as of July 1, 2016) between CBS Corporation and Gil Schwartz (filed herewith).*
(v)Employment Agreement dated as of November 11, 2013 between CBS Corporation and Lawrence Tu (incorporated by reference to Exhibit 10(s) to the Annual Report on Form 10-K of CBS Corporation for the year ended December 31, 2014) (File No. 001-09553).*
(w)CBS Corporation plans assumed by Former Viacom after the merger with former CBS Corporation, consisting of the following:

 
 
(i)

(i)

CBS Supplemental Executive Retirement Plan (as amended as of April 1, 1999) (incorporated by reference to Exhibit 10(h) to the Quarterly Report on Form 10-Q10‑Q of CBS for the quarter ended September 30, 1999) (File No. 001-00977)001‑00977) (as amended by Part B, effective as of January 1, 2009, as amended and restated as of January 1, 2012) (filed herewith)(incorporated by reference to Exhibit 10(t)(i) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2012) (File No. 001‑09553).*

 
 
(ii)

(ii)

CBS Bonus Supplemental Executive Retirement Plan (as amended as of April 1, 1999) (incorporated by reference to Exhibit 10(i) to the Quarterly Report on Form 10-Q10‑Q of CBS for the quarter ended September 30, 1999) (File No. 001-00977)001‑00977) (as amended by Part B, effective as of January 1, 2009, as amended and restated as of January 1, 2012) (filed herewith)(incorporated by reference to Exhibit 10(t)(ii) to the Annual Report on Form 10‑K of CBS Corporation for the fiscal year ended December 31, 2012) (File No. 001‑09553).*

 
 
(iii)

(iii)

CBS Supplemental Employee Investment Fund (as amended as of January 1, 1998) (incorporated by reference to Exhibit 10(j) to the Quarterly Report on Form 10-Q10‑Q of CBS for the quarter ended September 30, 1999) (File No. 001-00977)001‑00977).*





(iv)

Agreement dated March 2, 1999 between former CBS Corporation and Louis J. Briskman (incorporated by reference to Exhibit 10(r) to the Quarterly Report on Form 10-Q of CBS for the quarter ended March 31, 1999) (File No. 001-00977).*





(v)

Westinghouse Executive Pension Plan (as amended and restated as of December 31, 2005) (incorporated by reference to Exhibit 10(w)(x) to the Annual Report on Form 10-K of CBS Corporation for the fiscal year ended December 31, 2005) (File No. 001-09553) (as amended by Part B, effective as of January 1, 2009, as amended and restated as of January 1, 2012) (filed herewith).*

*Management contract or compensatory plan required to be filed as an exhibit to this form pursuant to Item 15(b).


E-4


Exhibit No.
Description of Document
 (u)(x)CBS Corporation Matching Gifts Program for Directors (incorporated by reference to Exhibit 10(t) to the Annual Report on Form 10-K10‑K of CBS Corporation for the fiscal year ended December 31, 2008) (File No. 001-09553)001‑09553).*

 
(y)
(v)

Amended and Restated $2.0$2.5 Billion Credit Agreement, dated as of March 16, 2011,December 2, 2014, among CBS Corporation; CBS Operations Inc.; the Subsidiary Borrowers Parties thereto; the Lenders named therein; JPMorgan Chase Bank, N.A., as Administrative Agent; Citibank, N.A., as Syndication Agent; and Bank of America, N.A., Deutsche Bank AG New York Branch,Securities Inc., Morgan Stanley MUFG Loan Partners, LLC, The Royal Bank of Scotland plc and UBS Loan Finance LLC,Wells Fargo Bank, N.A., as Co-DocumentationCo‑Documentation Agents (incorporated by reference to Exhibit 10.110(v) to the CurrentAnnual Report on Form 8-K10-K of CBS Corporation filed March 18, 2011)for the year ended December 31, 2014) (File No. 001-09553).

 
(z)
(w)

Separation Agreement dated as of December 19, 2005 by and between Former Viacom and New Viacom Corp. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K8‑K of Former Viacom filed December 21, 2005) (File No. 001-09553)001‑09553).

 
(aa)
(x)

Tax Matters Agreement dated as of December 30, 2005 by and between Former Viacom and New Viacom Corp. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K8‑K of CBS Corporation filed January 5, 2006) (File No. 001-09553)001‑09553).

(12)
 


Statement re Computations of Ratios (filed herewith).

(21)
 


Subsidiaries of CBS Corporation (filed herewith).

(23)
 


Consents of Experts and Counsel

 
(a)
(a)

Consent of PricewaterhouseCoopers LLP (filed herewith).

(24)
 


Powers of Attorney (filed herewith).

(31)
 


Rule 13a-14(a)13a‑14(a)/15d-14(a)15d‑14(a) Certifications

 
(a)
(a)

Certification of the Chief Executive Officer of CBS Corporation pursuant to Rule 13a-14(a)13a‑14(a) or 15d-14(a)15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes-OxleySarbanes‑Oxley Act of 2002 (filed herewith).

 
(b)
(b)

Certification of the Chief Financial Officer of CBS Corporation pursuant to Rule 13a-14(a)13a‑14(a) or 15d-14(a)15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes-OxleySarbanes‑Oxley Act of 2002 (filed herewith).

(32)
 


Section 1350 Certifications

 
(a)
(a)

Certification of the Chief Executive Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleySarbanes‑Oxley Act of 2002 (furnished herewith).

 
(b)
(b)

Certification of the Chief Financial Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleySarbanes‑Oxley Act of 2002 (furnished herewith).

(101)
 


101. INS XBRL Instance Document.
101. SCH XBRL Taxonomy Extension Schema.
101. CAL XBRL Taxonomy Extension Calculation Linkbase.
101. DEF XBRL Taxonomy Extension Definition Linkbase.
101. LAB XBRL Taxonomy Extension Label Linkbase.
101. PRE XBRL Taxonomy Extension Presentation Linkbase.

*Management contract or compensatory plan required to be filed as an exhibit to this form pursuant to Item 15(b).



E-5



CBS CORPORATION AND SUBSIDIARIES

SCHEDULE II—II—VALUATION AND QUALIFYING ACCOUNTS
(Tabular dollars in millions)

  
Col. A Col. B Col. C Col. D Col. E 
Description
 Balance at
Beginning
of Period
 Balance
Acquired through
Acquisitions
 Charged to
Costs and
Expenses
 Charged
to Other
Accounts (a)
 Deductions
 Balance at
End of
Period
 
  
Allowance for doubtful
accounts:		                   
Year ended December 31, 2012 $100 $— $17 $— $36 $81 
Year ended December 31, 2011 $117 $— $24 $9 $50 $100 
Year ended December 31, 2010 $126 $— $37 $1 $47 $117 

Valuation allowance on
deferred tax assets:

                   
Year ended December 31, 2012 $235 $— $38 $— $24 $249 
Year ended December 31, 2011 $247 $— $17 $— $29 $235 
Year ended December 31, 2010 $205 $— $71 $— $29 $247 

Reserves for inventory
obsolescence:

                   
Year ended December 31, 2012 $27 $— $13 $— $8 $32 
Year ended December 31, 2011 $22 $— $14 $— $9 $27 
Year ended December 31, 2010 $29 $— $10 $— $17 $22 
  
Col. A Col. B Col. C  Col. D Col. E
Description Balance at Beginning of Period Balance Acquired through Acquisitions Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period
Allowance for doubtful accounts:                        
Year ended December 31, 2015  $50
   $—
   $13
   $15
(a) 
  $15
   $63
 
Year ended December 31, 2014  $60
   $—
   $9
   $—
   $19
   $50
 
Year ended December 31, 2013  $62
   $—
   $14
   $—
   $16
   $60
 
                       

 
Valuation allowance on deferred tax assets:                      

 
Year ended December 31, 2015  $575
   $—
   $398
(b) 
  $—
   $54
   $919
 
Year ended December 31, 2014  $634
   $1
   $36
   $—
   $96
   $575
 
Year ended December 31, 2013  $240
   $—
   $450
(c) 
  $—
   $56
   $634
 
                       

 
Reserves for inventory obsolescence:                      

 
Year ended December 31, 2015  $30
   $—
   $10
   $—
   $17
   $23
 
Year ended December 31, 2014  $35
   $—
   $8
   $—
   $13
   $30
 
Year ended December 31, 2013  $32
   $—
   $15
   $—
   $12
   $35
 
(a)
Reclassification from long-term to current.
(b) Primarily reflects reclassesrelates to a valuation allowance for a U.S. capital loss carryforward deferred tax asset that arose from other balance sheet accounts.the sale of Internet businesses in China.
(c) Primarily relates to valuation allowances for a capital loss carryforward deferred tax asset in a foreign jurisdiction that arose from the restructuring of foreign operations and net operating loss carryforward deferred tax assets in foreign jurisdictions.


F-1