UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20162017
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 001-09553
CBS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
04-2949533
(I.R.S. Employer Identification No.)
  
51 W. 52nd Street, New York, New York
(Address of principal executive offices)
10019
(Zip Code)
(212) 975-4321
(Registrant’s telephone number, including area codecode)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o    No x
Number of shares of common stock outstanding at July 25, 2016:31, 2017:
Class A Common Stock, par value $.001 per share— 37,726,90437,598,604
Class B Common Stock, par value $.001 per share— 406,874,849364,054,978
 



CBS CORPORATION
INDEX TO FORM 10-Q
  Page
 PART I – FINANCIAL INFORMATION 
   
Item 1.
Financial Statements.
 
   
 Consolidated Statements of Operations (Unaudited) for the
 Three and Six Months Ended June 30, 20162017 and June 30, 20152016
3
   
 Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the
 Three and Six Months Ended June 30, 20162017 and June 30, 20152016
4
   
 Consolidated Balance Sheets (Unaudited) at June 30, 20162017
 and December 31, 20152016
5
   
 Consolidated Statements of Cash Flows (Unaudited) for the
 Six Months Ended June 30, 20162017 and June 30, 20152016
6
   
 
Notes to Consolidated Financial Statements (Unaudited)
7
   
Item 2.
Management’s Discussion and Analysis of Results of Operations and Financial Condition.
2933
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
5156
   
Item 4.
Controls and Procedures.
5156
   
 
PART II – OTHER INFORMATION
 
   
Item 1A.Risk Factors.
52
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
52
Item 5.Other Information.
5357
   
Item 6.
Exhibits.
5458


PART I – FINANCIAL INFORMATION
Item 1.Financial Statements.
CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Revenues$3,287
 $3,219
 $7,136
 $6,719
$3,257
 $2,976
 $6,600
 $6,564
Costs and expenses: 
  
     
  
    
Operating1,861
 1,907
 4,217
 4,049
2,004
 1,758
 4,078
 4,030
Selling, general and administrative630
 605
 1,247
 1,193
528
 510
 1,038
 1,013
Depreciation and amortization63
 66
 127
 134
56
 57
 111
 114
Restructuring charges (Note 10)—
 55
 —
 55
Other operating items, net—
 —
 (9) (19)—
 —
 —
 (9)
Total costs and expenses2,554
 2,633
 5,582
 5,412
2,588
 2,325
 5,227
 5,148
Operating income733
 586
 1,554
 1,307
669
 651
 1,373
 1,416
Interest expense(100) (94) (200) (187)(111) (100) (220) (200)
Interest income8
 7
 15
 12
15
 8
 28
 15
Other items, net(4) 4
 (7) (19)5
 (4) 6
 (7)
Earnings before income taxes and equity in loss of
investee companies
637
 503
 1,362
 1,113
Earnings from continuing operations before income taxes and
equity in loss of investee companies
578
 555
 1,187
 1,224
Provision for income taxes(205) (165) (436) (368)(169) (173) (307) (379)
Equity in loss of investee companies, net of tax(9) (6) (30) (19)(12) (9) (29) (30)
Net earnings$423
 $332
 $896
 $726
Net earnings from continuing operations397
 373
 851
 815
Net earnings (loss) from discontinued operations, net of tax (Note 3)(339) 50
 (1,045) 81
Net earnings (loss)$58
 $423
 $(194) $896
              
Basic net earnings per common share$.94

$.68

$1.97

$1.47
Basic net earnings (loss) per common share: 
  
    
Net earnings from continuing operations$.98

$.83

$2.09

$1.79
Net earnings (loss) from discontinued operations$(.84)
$.11

$(2.57)
$.18
Net earnings (loss)$.14

$.94

$(.48)
$1.97
              
Diluted net earnings per common share$.93

$.67

$1.95

$1.45
Diluted net earnings (loss) per common share: 
  
    
Net earnings from continuing operations$.97

$.82

$2.06

$1.78
Net earnings (loss) from discontinued operations$(.83)
$.11

$(2.53)
$.18
Net earnings (loss)$.14

$.93

$(.47)
$1.95
              
Weighted average number of common shares outstanding: 
  
     
  
    
Basic451
 490
 455
 494
405
 451
 407
 455
Diluted455

495

459

500
410

455

413

459
              
Dividends per common share$.15
 $.15
 $.30
 $.30
$.18
 $.15
 $.36
 $.30
See notes to consolidated financial statements.


CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; in millions)
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Net earnings$423
 $332
 $896
 $726
Net earnings (loss)$58
 $423
 $(194) $896
Other comprehensive income, net of tax:              
Cumulative translation adjustments—
 2
 1
 (1)—
 —
 2
 1
Amortization of net actuarial loss and prior service cost9
 9
 19
 18
12
 9
 24
 19
Total other comprehensive income, net of tax9
 11
 20
 17
12
 9
 26
 20
Total comprehensive income$432

$343

$916

$743
Total comprehensive income (loss)$70

$432

$(168)
$916
See notes to consolidated financial statements.


CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share amounts)
At AtAt At
June 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
ASSETS          
Current Assets:          
Cash and cash equivalents $176
 $323
  $170
 $598
 
Receivables, less allowances of $66 (2016) and $63 (2015) 3,243
 3,628
 
Programming and other inventory (Note 3) 1,224
 1,271
 
Receivables, less allowances of $61 (2017) and $60 (2016) 3,299
 3,314
 
Programming and other inventory (Note 4) 1,560
 1,427
 
Prepaid income taxes 39
 101
  41
 30
 
Prepaid expenses 174
 175
  132
 185
 
Other current assets 240
 249
  185
 204
 
Current assets of discontinued operations (Note 3) 299
 305
 
Total current assets 5,096
 5,747
  5,686
 6,063
 
Property and equipment 3,242
 3,243
  2,967
 2,935
 
Less accumulated depreciation and amortization 1,886
 1,838
  1,753
 1,694
 
Net property and equipment 1,356
 1,405
  1,214
 1,241
 
Programming and other inventory (Note 3) 2,069
 1,957
 
Programming and other inventory (Note 4) 2,459
 2,439
 
Goodwill 6,531
 6,481
  4,891
 4,864
 
Intangible assets 5,504
 5,514
  2,627
 2,633
 
Other assets 2,582
 2,661
  2,558
 2,707
 
Assets of discontinued operations (Note 3) 3,218
 4,291
 
Total Assets $23,138

$23,765
  $22,653

$24,238
 
          
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 

  

 

 
Current Liabilities: 

 

  

 

 
Accounts payable $121
 $192
  $124
 $148
 
Accrued compensation 231
 315
  223
 369
 
Participants’ share and royalties payable 1,007
 1,013
  1,005
 1,024
 
Program rights 322
 374
  262
 290
 
Deferred revenues 156
 295
 
Commercial paper (Note 5) 163
 —
 
Current portion of long-term debt (Note 5) 23
 222
 
Commercial paper (Note 6) 263
 450
 
Current portion of long-term debt (Note 6) 23
 23
 
Accrued expenses and other current liabilities 1,064
 1,149
  1,169
 1,249
 
Current liabilities of discontinued operations (Note 3) 161
 155
 
Total current liabilities 3,087
 3,560
  3,230
 3,708
 
Long-term debt (Note 5) 8,223
 8,226
 
Long-term debt (Note 6) 8,898
 8,902
 
Pension and postretirement benefit obligations 1,545
 1,575
  1,638
 1,769
 
Deferred income tax liabilities, net 1,574
 1,509
  628
 590
 
Other liabilities 3,253
 3,260
  3,149
 3,129
 
Liabilities of discontinued operations 68
 72
 
Liabilities of discontinued operations (Note 3) 2,483
 2,451
 
 

 

  

 

 
Commitments and contingencies (Note 9) 

 

 
Commitments and contingencies (Note 10) 

 

 
 

 

  

 

 
Stockholders’ Equity:
 

 

  

 

 
Class A Common Stock, par value $.001 per share; 375 shares authorized;
38 (2016 and 2015) shares issued		 —
 —
 
Class B Common Stock, par value $.001 per share; 5,000 shares authorized;
828 (2016) and 826 (2015) shares issued		 1
 1
 
Class A Common Stock, par value $.001 per share; 375 shares authorized;
38 (2017 and 2016) shares issued		 —
 —
 
Class B Common Stock, par value $.001 per share; 5,000 shares authorized;
832 (2017) and 829 (2016) shares issued		 1
 1
 
Additional paid-in capital 43,964
 44,055
  43,820
 43,913
 
Accumulated deficit (19,622) (20,518)  (19,451) (19,257) 
Accumulated other comprehensive loss (Note 7) (750) (770) 
Accumulated other comprehensive loss (Note 8) (741) (767) 
 23,593
 22,768
  23,629
 23,890
 
Less treasury stock, at cost; 420 (2016) and 401 (2015) Class B shares 18,205
 17,205
 
Less treasury stock, at cost; 467 (2017) and 455 (2016) Class B shares 21,002
 20,201
 
Total Stockholders’ Equity
 5,388
 5,563
  2,627
 3,689
 
Total Liabilities and Stockholders’ Equity
 $23,138
 $23,765
  $22,653
 $24,238
 
See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Six Months EndedSix Months Ended
June 30,June 30,
2016 20152017 2016
Operating Activities:      
Net earnings$896
 $726
Adjustments to reconcile net earnings to net cash flow provided by
operating activities from continuing operations:





Net earnings (loss)$(194) $896
Less: Net earnings (loss) from discontinued operations, net of tax(1,045) 81
Net earnings from continuing operations851

815
Adjustments to reconcile net earnings from continuing operations to net cash flow
provided by operating activities from continuing operations:





Depreciation and amortization127

134
111

114
Stock-based compensation88

89
85

81
Equity in loss of investee companies, net of tax and distributions34

22
29

34
Change in assets and liabilities, net of investing and financing activities108

(90)(167)
95
Net cash flow provided by operating activities from continuing operations1,253

881
909

1,139
Net cash flow used for operating activities from discontinued operations(2)
(18)
Net cash flow provided by operating activities from discontinued operations29

112
Net cash flow provided by operating activities1,251

863
938

1,251
Investing Activities:









Acquisitions(51) (1)(21) (51)
Capital expenditures(79)
(46)(68)
(69)
Investments in and advances to investee companies(43)
(55)(65)
(43)
Proceeds from dispositions27

59
1

19
Other investing activities4
 4
14
 4
Net cash flow used for investing activities from continuing operations(142)
(39)(139)
(140)
Net cash flow used for investing activities from discontinued operations—

(3)(13)
(2)
Net cash flow used for investing activities(142)
(42)(152)
(142)
Financing Activities:









Proceeds from (repayments of) short-term debt borrowings, net163

(222)
Proceeds from issuance of senior notes—
 1,178
(Repayments of) proceeds from short-term debt borrowings, net(187)
163
Repayment of senior debentures(199) —
—
 (199)
Proceeds from debt borrowings of CBS Radio24
 —
Repayment of debt borrowings of CBS Radio(5) —
Payment of capital lease obligations(8)
(8)(8)
(8)
Payment of contingent consideration(7) —
Dividends(142)
(155)(151)
(142)
Purchase of Company common stock(1,033)
(1,832)(845)
(1,033)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation(57)
(95)(89)
(57)
Proceeds from exercise of stock options10

123
39

10
Excess tax benefit from stock-based compensation11

82
Excess tax benefit from stock-based compensation (Note 1)—

11
Other financing activities(1) —
—
 (1)
Net cash flow used for financing activities(1,256)
(929)(1,229)
(1,256)
Net decrease in cash and cash equivalents(147)
(108)(443)
(147)
Cash and cash equivalents at beginning of period323

428
Cash and cash equivalents at end of period$176

$320
Cash and cash equivalents at beginning of period
(includes $24 (2017) and $6 (2016) of discontinued operations cash)
622

323
Cash and cash equivalents at end of period
(includes $9 (2017 and 2016) of discontinued operations cash)
$179

$176
Supplemental disclosure of cash flow information









Cash paid for interest$207
 $163
Cash paid for income taxes$296
 $125
Cash paid for interest:   
Continuing operations$217
 $207
Discontinued operations$39
 $—
   
Cash paid for income taxes:   
Continuing operations$272
 $261
Discontinued operations$46
 $35
See notes to consolidated financial statements.


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

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

Discontinued Operations-On February 2, 2017, the Company entered into an agreement with Entercom Communications Corp. (“Entercom”) to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s previously announced plansstockholders may elect to separate its radio business, a preliminary registration statement was filed with the Securities and Exchange Commission in July 2016 for the proposed initial public offeringexchange shares of the common stockCompany’s Class B Common Stock for shares of CBS Radio, Inc.which will then be immediately converted into shares of Entercom Class A common stock at the time of the merger. CBS Radio has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented (See Note 3).

Basis of Presentation-The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the Securities and Exchange Commission. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.2016.

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

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

Other Operating Items, Net-Other operating items, net for the six months ended June 30, 2016 and 2015 includes gainsincluded a gain from the salessale of businesses,a business and for 2016 also includes a multiyear, retroactive impact of a new operating tax.

Net Earnings (Loss) per Common Share-Basic net earnings (loss) per share (“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”) only in the periods in which such effect would have been dilutive. Excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, were 64 million stock options for botheach of the three and six months ended June 30, 20162017 and 46 million stock options for botheach of the three and six months endedJune 30, 2015.2016.



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

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
(in millions)2016 2015 2016 20152017 2016 2017 2016
Weighted average shares for basic EPS451
 490
 455
 494
405
 451
 407
 455
Dilutive effect of shares issuable under stock-based
compensation plans
4
 5
 4
 6
5
 4
 6
 4
Weighted average shares for diluted EPS455
 495
 459
 500
410
 455
 413
 459
Other Liabilities-Other liabilities consist primarily of the noncurrent portion of residual liabilities of previously disposed businesses, participants’ share and royalties payable, program rights obligations, deferred compensation and other employee benefit accruals.

Additional Paid-In Capital-For the six months ended June 30, 20162017 and 2015,2016, the Company recorded dividends of $138$148 million and $150138 million, respectively, as a reduction to additional paid-in capital as the Company had an accumulated deficit balance.

Adoption of New Accounting Standards
Simplifying theImprovements to Employee Share-Based Payment Accounting for Measurement Period Adjustments
During the first quarter of 2016,2017, the Company adopted amended Financial Accounting Standards Board (“FASB”) guidance which eliminates the requirement to retrospectively account for adjustments to provisional amounts recognized in a business combination when new information is obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Under the amended guidance the acquirer is required to recognize such adjustments in the reporting period in which the adjustment amounts are identified. Such adjustments also include the effect on earnings from any changes in depreciation, amortization, or other income effects resulting from the change to provisional amounts, as if the change occurred at the acquisition date. The amendment also requires disclosure or separate presentation on the face of the income statement of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.
Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items
During the first quarter of 2016, the Company adopted amended FASB guidance which eliminates the concept of extraordinary items. This guidance removes the requirement to assess whether an event or transaction is both unusual in nature and infrequent in occurrence and to separately present any such items on the statement of operations after income from continuing operations. Rather, such items are required to be presented as a separate component of income from continuing operations or disclosed in the notes to the financial statements. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period
During the first quarter of 2016, the Company adopted FASB guidance on the accounting for stock-based compensation when the terms of an award provide that a performance target that affects vesting could be achieved after the requisite service period. Under this guidance, such performance target should not be reflected in estimating the grant-date fair value of the award. The Company should begin recognizing compensation cost in the


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

period in which it becomes probable that the performance target will be achieved, for the cumulative amount of compensation cost attributable to the period(s) for which the requisite service has already been rendered. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.
Recent Pronouncements
Improvements to Employee Share-Based Payment Accounting
In March 2016, the FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will beare recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits will beare classified with other income tax cash flows in operating activities. As a result of the adoption of this guidance, the Company’s excess tax benefits associated with the exercise of stock options and vesting of RSUs for the three and six months endedJune 30,2017 were recorded in the provision for income taxes on the Consolidated Statements of Operations. The guidance requires the income statement classification to be applied prospectively, and therefore, excess tax benefits for prior periods remain classified in stockholders’ equity on the balance sheet. The Company elected to apply the cash flow classification provision of this guidance prospectively and therefore, excess tax benefits for prior periods remain classified as financing activities on the statements of cash flows. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification.occur. The Company, expects thathowever, has elected to continue its existing practice of estimating forfeitures.

Simplifying the adoptionAccounting for Goodwill Impairment
During the first quarter of 2017, the Company early adopted amended FASB guidance which simplifies the accounting for goodwill impairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge is recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.



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

Recent Pronouncements
Stock Compensation: Scope of Modification Accounting
In May 2017, the FASB issued amended guidance on the accounting for stock-based compensation which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this guidance, will introduce volatility intomodification accounting is required only if the fair value, the vesting conditions, or the classification of the award as equity or liability changes as a result of the change in the terms or conditions of a share-based payment award. This guidance, which is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted, is not expected to have an impact on the Company’s income tax provision, whichconsolidated financial statements.
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
In March 2017, the FASB issued amended guidance on the presentation of net periodic pension and postretirement benefit cost (“net benefit cost”). This guidance requires an employer to present on the statement of operations the service cost component of net benefit cost in the same line item(s) as other compensation costs of the related employees. The other components of net benefit cost will be impacted by the timing of employee exercises and changespresented in the Company’s stock price.statement of operations separately from the service cost component and below the subtotal of operating income. This guidance is required to be applied retrospectively and is effective for interim and annual reporting periods beginning after December 15, 2016,2017, with early adoption permitted as of the beginning of an annual reporting period. Upon adoption, the Company’s operating income will increase or decrease by an amount equal to the components of net benefit cost other than service cost, which are disclosed in Note 7.
Clarifying the Definition of a Business
In January 2017, the FASB issued amended guidance on the accounting for business combinations which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would not represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The amended guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.
Intra-Entity Transfers of Assets Other than Inventory
In October 2016, the FASB issued amended guidance on the accounting for income taxes, which eliminates the exception in existing guidance which defers the recognition of the tax effects of intra-entity asset transfers other than inventory until the transferred asset is sold to a third party. Rather, the amended guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance, which is effective for interim and annual periods beginning after December 15, 2017, is not expected to have a material impact on the Company’s consolidated financial statements.

Statement of Cash Flows: Classification of Cash Receipts and Cash Payments
In August 2016, the FASB issued amended guidance which clarifies how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The new guidance is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.



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

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

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

Revenue from Contracts with Customers
In May 2014, the FASB issued guidance on the recognition of revenues which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. This guidance is effective for the Company beginning in the first quarter of 2018. The Company anticipates that it will apply the modified retrospective method of adoption with the cumulative effect of the initial adoption reflected as an adjustment to the opening balance of accumulated deficit as of the date of adoption. The Company has identified the predominant changes to its accounting policies and is in the process of quantifying the impact on its consolidated financial statements and evaluating the additional disclosures that may be required. The adoption of this guidance will result inis not expected to have a significant impact on the Company’s total revenues. The Company has identified changes to its revenue recognition policies primarily relating to two areas of content licensing and distribution revenues. First, revenues from certain distribution arrangements of third-party content will be recognized based on the gross amount of consideration received by the Company for such sale, with an associated expense recognized for the fees paid to the third-party producer. Under current accounting guidance, such revenues are recognized at the net amount retained by the Company after the payment of fees to the third-party producer. This change will not have an impact on the Company’s operating income. Second, revenues associated with the extension of an existing licensing arrangement, which are currently recognized upon the execution of such extension, will be recognized at a later date once the extension period begins. This change is currently assessingnot expected to have a material impact on the impact. This guidance is effectiveCompany’s results on an annual basis, since extensions executed each year are generally offset by extensions for interimwhich the license period has begun.
2) STOCK-BASED COMPENSATION
The following table summarizes the Company’s stock-based compensation expense for the three and annual reporting periods beginning after December 15,six months ended June 30, 2017 with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.
 Three Months Ended Six Months Ended
 June 30, June 30,
 2017 2016 2017 2016
RSUs and PSUs$38
 $35
 $71
 $67
Stock options7
 7
 14
 14
Stock-based compensation expense, before income taxes45
 42
 85
 81
Related tax benefit(18) (16) (33) (31)
Stock-based compensation expense, net of tax benefit$27
 $26
 $52
 $50


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

2) STOCK-BASED COMPENSATION
The following table summarizes the Company’s stock-based compensation expense for the three and six months ended June 30, 2016 and 2015.
 Three Months Ended Six Months Ended
 June 30, June 30,
 2016 2015 2016 2015
RSUs$37
 $35
 $73
 $73
Stock options8
 8
 15
 16
Stock-based compensation expense, before income taxes45
 43
 88
 89
Related tax benefit(17) (16) (34) (34)
Stock-based compensation expense, net of tax benefit$28
 $27
 $54
 $55
During the six months ended June 30, 20162017, the Company granted 32 million RSUs for CBS Corp. Class B Common Stock with a weighted average per unit grant-date fair value of $47.24.$66.78. RSUs granted during the first six months of 20162017 generally vest over a one- to four-year service period. Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant. For certain RSU awards the number of shares an employee earns ranges from 0% to 120% of the target award, based on the outcome of established performance conditions. Compensation expense is recorded based on the probable outcome of the performance conditions. During the six months ended June 30, 2016,2017, the Company also granted 2awards of market-based PSUs. The number of shares that will be issued upon vesting of the PSUs is based on the Company’s stock price performance over a designated measurement period, as well as the achievement of established operating goals. The fair value of the PSUs is determined on the grant date using a Monte Carlo simulation model and is expensed over the required employee service period. The fair value of the PSU awards granted during the six months ended June 30, 2017 was $23 million. 

During the six months ended June 30, 2017, the Company also granted 1 million stock options with a weighted average exercise price of $45.79.$66.31. Stock options granted during the first six months of 20162017 vest over a four-year service period and expire eight years from the date of grant. Compensation expense for stock options is determined based on the grant date fair value of the award calculated using the Black-Scholes options-pricing model.

Total unrecognized compensation cost related to unvested RSUs and PSUs at June 30, 20162017 was $276$270 million, which is expected to be recognized over a weighted average period of 2.5 years. Total unrecognized compensation cost related to unvested stock option awards at June 30, 20162017 was $58$51 million, which is expected to be recognized over a weighted average period of 2.52.6 years.
3) PROGRAMMING AND OTHER INVENTORYDISCONTINUED OPERATIONS
 At At
 June 30, 2016 December 31, 2015
Acquired program rights $1,490
   $1,533
 
Internally produced programming:       
Released 1,447
   1,261
 
In process and other 308
   392
 
Publishing, primarily finished goods 48
   42
 
Total programming and other inventory 3,293
   3,228
 
Less current portion 1,224
   1,271
 
Total noncurrent programming and other inventory $2,069
   $1,957
 
On February 2, 2017, the Company entered into an agreement with Entercom to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, Entercom will issue up to 105 million shares of its Class A common stock on a fully diluted basis, and the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of the Company’s Class B Common Stock for shares of CBS Radio, which will then be immediately converted into shares of Entercom Class A common stock at the time of the merger. The Company expects the transaction to be completed during the fourth quarter of 2017, subject to customary approvals and closing conditions. CBS Radio has been classified as held for sale and presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented.

FASB Accounting Standards Codification (“ASC”) 360 requires that an asset classified as held for sale be measured each reporting period at the lower of its carrying amount or fair value less cost to sell. The ultimate value of the transaction with Entercom will be determined based on Entercom’s stock price at the closing of the transaction. The Company recorded noncash charges of $365 million and $1.08 billion for the three and six months ended June 30, 2017, respectively, to record a valuation allowance to adjust the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. In accordance with ASC 360, the valuation allowance will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses. A 10% change to Entercom’s stock price would change the carrying value of CBS Radio by approximately $100 million.



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

For the three and six months ended June 30, 2017, CBS Radio recorded a restructuring charge of $7 million associated with the reorganization of certain business operations, reflecting severance costs and costs associated with exiting contractual obligations.

The following table sets forth details of net earnings (loss) from discontinued operations for the three and six months ended June 30, 2017 and 2016.
 Three Months Ended June 30, Six Months Ended June 30,
 2017 2016 2017
2016
Revenues$306
 $313
 $556
 $575
Costs and expenses:       
Operating105
 103
 194
 188
Selling, general and administrative129
 122
 251
 236
Depreciation and amortization (a)
—
 6
 —

13
Restructuring charge7
 —
 7
 —
Provision for valuation allowance365
 —
 1,080
 —
Total costs and expenses606
 231
 1,532
 437
Operating income (loss)(300) 82
 (976) 138
Interest expense(20) —
 (39) —
Earnings (loss) from discontinued operations(320) 82
 (1,015) 138
Income tax provision(19) (32) (30) (57)
Net earnings (loss) from discontinued operations, net of tax$(339) $50
 $(1,045) $81
(a) CBS Radio has been classified as held for sale beginning in the fourth quarter of 2016. Under ASC 360, assets held for sale are not depreciated or amortized.
The following table presents the major classes of assets and liabilities of the Company’s discontinued operations.
 At At
 June 30, 2017 December 31, 2016
Receivables, net $240
   $244
 
Other current assets 59
   61
 
Goodwill 1,285
   1,285
 
Intangible assets 2,832
   2,832
 
Net property and equipment 153
   145
 
Other assets 28
   29
 
Valuation allowance for carrying value (1,080)   —
 
Total Assets $3,517
   $4,596
 
Current portion of long-term debt $10
   $10
 
Other current liabilities 151
   145
 
Long-term debt 1,356
   1,335
 
Deferred income tax liabilities 1,010
   998
 
Other liabilities 117
   118
 
Total Liabilities $2,644
   $2,606
 


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

The following table presents CBS Radio’s long-term debt.
 At At
 June 30, 2017 December 31, 2016
Term Loan due October 2023, net of discount $950
   $955
 
7.250% Senior Notes due November 2024 400
   400
 
Revolving Credit Facility 34
   10
 
Deferred financing costs (18)   (20) 
Total long-term debt, including current portion $1,366
   $1,345
 
CBS Radio’s senior secured term loan (“Term Loan”) bears interest at a rate equal to 3.50% plus the greater of the London Interbank Offered Rate (“LIBOR”) and 1.00%. The Term Loan is part of CBS Radio’s credit agreement which also includes a $250 million senior secured revolving credit facility (the “Revolving Credit Facility”) which expires in 2021. Interest on the Revolving Credit Facility is based on either LIBOR or a base rate plus a margin based on CBS Radio’s Consolidated Net Secured Leverage Ratio. The Consolidated Net Secured Leverage Ratio reflects the ratio of CBS Radio’s secured debt (less up to $150 million of cash and cash equivalents) to CBS Radio’s consolidated EBITDA (as defined in the credit agreement). The Revolving Credit Facility requires CBS Radio to maintain a maximum Consolidated Net Secured Leverage Ratio of 4.00 to 1.00.

In connection with financing for the transaction with Entercom, on March 3, 2017, CBS Radio entered into Amendment No. 1 to its credit agreement, dated as of October 17, 2016, to, among other things, create a tranche of Term B-1 Loans in an aggregate principal amount not to exceed $500 million. The Term B-1 Loans are expected to be funded on the closing date of the transaction, subject to customary conditions.
4) PROGRAMMING AND OTHER INVENTORY
 At At
 June 30, 2017 December 31, 2016
Acquired program rights $1,892
   $1,773
 
Internally produced programming:       
Released 1,668
   1,746
 
In process and other 405
   298
 
Publishing, primarily finished goods 54
   49
 
Total programming and other inventory 4,019
   3,866
 
Less current portion 1,560
   1,427
 
Total noncurrent programming and other inventory $2,459
   $2,439
 

5) RELATED PARTIES
National Amusements, Inc. National Amusements, Inc. (“NAI”) is the controlling stockholder of CBS Corp. and Viacom Inc. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, is the Chairman Emeritus of each of CBS Corp. and the Chairman Emeritus of Viacom Inc. In addition, Ms. Shari Redstone, Mr. Sumner M. Redstone’s daughter, is the president and a director of NAI and the vice chair of the Board of Directors of each of CBS Corp. and Viacom Inc. Mr. David R. Andelman is a director of CBS Corp. and serves as a director of NAI. At June 30, 20162017, NAI directly or indirectly owned approximately 79.5% of CBS Corp.’s voting Class A Common Stock, and owned approximately 8.8%9.7% of CBS Corp.’s Class A Common Stock and non-voting Class B Common Stock on a combined basis. NAI is controlled by Mr. Redstone through the Sumner M. Redstone National Amusements Trust (the “SMR Trust”), which owns 80% of the voting interest of NAI, and such voting interest of NAI held by the SMR Trust is voted solely by Mr. Redstone until his incapacity or death. The SMR Trust provides that in the event of Mr. Redstone’s death or incapacity, voting control


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

of the NAI voting interest held by the SMR Trust will pass to seven trustees, who will include CBS Corporation directors Ms. Shari Redstone and Mr. David R. Andelman. No member of the Company’s management is a trustee of the SMR Trust.

Viacom Inc. As part of its normal course of business, the Company licenses its television content, leases production facilities and sells advertising spots to various subsidiaries of Viacom Inc. Viacom Inc. also distributes certain of the Company’s television programs in the home entertainment market. The Company’s total revenues from these transactions were $31$19 million and $54$31 million for the three months ended June 30, 20162017 and 20152016, respectively, and $69$73 million and $100$67 million for the six months ended June 30, 20162017 and 2015,2016, respectively.

The Company places advertisements with and leases production facilities from various subsidiaries of Viacom Inc. The total amounts for these transactions were $4 million and $5 million for each of the three months ended June 30, 20162017 and 20152016, respectively, and $9 million and $11 million for both the six months ended June 30, 2017 and 2016, and 2015.respectively.

The following table presents the amounts due from Viacom Inc. in the normal course of business as reflected on the Company’s Consolidated Balance Sheets. Amounts due to Viacom Inc. were minimal at June 30, 20162017 and December 31, 20152016.
At AtAt At
June 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
Receivables $111
 $115
  $86
 $113
 
Other assets (Receivables, noncurrent) 34
 38
  51
 35
 
Total amounts due from Viacom Inc.
 $145
 $153
  $137
 $148
 
Other Related Parties. The Company has equity interests in two domestic television networks and several international joint ventures for television channels from which the Company earns revenues primarily by selling its television programming. Total revenues earned from sales to these joint ventures were $2420 million and $23$24 million for the three months ended June 30, 20162017 and 20152016, respectively, and $56$49 million and $71$56 million for the six months ended June 30, 20162017 and 2015,2016, respectively. At June 30, 20162017 and December 31, 2015,2016, total amounts due from these joint ventures were $41$40 million and $48$47 million, respectively.

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


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

5)6) BANK FINANCING AND DEBT
The following table sets forth the Company’s debt.

At AtAt At

June 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
Commercial paper
$163

$—


$263

$450

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

8,167

8,365

Senior debt (1.95% - 7.875% due 2017 - 2045) (a)

8,853

8,850

Obligations under capital leases
79

83


68

75

Total debt
8,409

8,448


9,184

9,375

Less commercial paper
163

—


263

450

Less current portion of long-term debt
23

222


23

23

Total long-term debt, net of current portion
$8,223

$8,226


$8,898

$8,902

(a) At June 30, 20162017 and December 31, 2015,2016, the senior debt balances included (i) a net unamortized discount of $43$49 million and $45$52 million, respectively, (ii) unamortized deferred financing costs of $42$41 million and $44$43 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $11$2 million and $14$5 million, respectively. The face value of the Company’s senior debt was $8.24 billion and $8.44$8.94 billion at both June 30, 20162017 and December 31, 2015, respectively.2016.

DuringIn July 2016,2017, the Company issued $700$400 million of 2.90%2.50% senior notes due 2027.2023 and $500 million of 3.375% senior notes due 2028. The Company is usingused the net proceeds from this issuancethese issuances to repay its $400 million outstanding 1.95% senior notes that matured on July 1, 2017 and to redeem all of its $300 million outstanding 4.625% senior notes due May 2018. The remaining proceeds were used for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and the repayment of short-term borrowings, including commercial paper.

During January 2016,At June 30, 2017, the Company repaid its $200classified $400 million of outstanding 7.625% senior debentures upon maturity.debt which matured in July 2017 and $300 million of debt due May 2018 as long-term debt on the Consolidated Balance Sheet, as a result of the above-mentioned debt refinancing.

Commercial Paper
At June 30, 2016, theThe Company had $163 million of outstanding commercial paper borrowings under its $2.5 billion commercial paper program of $263 million and $450 million at a weighted average interest rate of 0.72%June 30, 2017 and December 31, 2016, respectively, each with maturities of less than 45 days. The Company had no outstanding commercial paperweighted average interest rate for these borrowings was 1.42% at June 30, 2017 and 0.98% at December 31, 2015.2016.

Credit Facility
DuringAt June 2016,30, 2017, the Company amended and restated itshad a $2.5 billion revolving credit facility (the “Credit Facility”). The amended Credit Facility which expires in June 2021 and contains provisions that are substantially similar to the previous Credit Facility, which was due to expire in December 2019.2021. The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.5x at the end of each quarter as further described in the Credit Facility. At June 30, 20162017, the Company’s Consolidated Leverage Ratio was approximately 2.4x2.9x.

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



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

The Credit Facility is used for general corporate purposes. At June 30, 20162017, the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.49 billion.


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

6)7) PENSION AND OTHER POSTRETIREMENT BENEFITS
The components of net periodic cost for the Company’s pension and postretirement benefit plans were as follows:
Pension Benefits Postretirement BenefitsPension Benefits Postretirement Benefits
Three Months Ended June 30,2016 2015 2016 20152017 2016 2017 2016
Components of net periodic cost:              
Service cost$7
 $8
 $—
 $—
$8
 $7
 $—
 $—
Interest cost53
 53
 5
 4
47
 53
 5
 5
Expected return on plan assets(57) (66) —
 —
(51) (57) —
 —
Amortization of actuarial loss (gain) (a)
22
 20
 (6) (5)26
 22
 (6) (6)
Net periodic cost$25
 $15
 $(1) $(1)$30
 $25
 $(1) $(1)
Pension Benefits Postretirement BenefitsPension Benefits Postretirement Benefits
Six Months Ended June 30,2016 2015 2016 20152017
2016
2017
2016
Components of net periodic cost:              
Service cost$15
 $16
 $—
 $—
$15
 $15
 $—
 $—
Interest cost107
 105
 10
 9
95
 107
 9
 10
Expected return on plan assets(114) (131) —
 —
(101) (114) —
 —
Amortization of actuarial loss (gain) (a)
43
 40
 (11) (10)51
 43
 (11) (11)
Net periodic cost$51
 $30
 $(1) $(1)$60
 $51
 $(2) $(1)
(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net earnings.earnings (loss).
7)8) STOCKHOLDERS’ EQUITY
During the second quarter of 2016,2017, the Company repurchased 9.24.7 million shares of its Class B Common Stock under its share repurchase program for $500$300 million, at an average cost of $54.21$63.64 per share. During the six months ended June 30, 2016,2017, the Company repurchased 19.512.3 million shares of its Class B Common Stock for $1.00 billion,$800 million, at an average cost of $51.27$65.08 per share, leaving $1.00$3.31 billion of authorization at June 30, 2016.2017.

During the second quarter of 2016,2017, the Company declared a quarterly cash dividend of $.15$.18 on its Class A and Class B Common Stock, resulting in total dividends of $69$73 million, payablewhich were paid on July 1, 2016.2017.


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

Accumulated Other Comprehensive Income (Loss)
The following tables summarize the changes in the components of accumulated other comprehensive income (loss).
 
Cumulative
Translation
Adjustments
 
Net Actuarial
Gain (Loss)
and Prior
Service Cost
 
Accumulated Other
Comprehensive Loss
At December 31, 2015$152
 $(922)  $(770) 
Other comprehensive income before reclassifications1
 —
  1
 
Reclassifications to net earnings—
 19
(a) 
 19
 
Net other comprehensive income1
 19

 20
 
At June 30, 2016$153
 $(903)
 $(750) 
 
Cumulative
Translation
Adjustments
 
Net Actuarial
Gain (Loss)
and Prior
Service Cost
 
Accumulated
Other
Comprehensive Loss
At December 31, 2016$151
 $(918)  $(767) 
Other comprehensive income before reclassifications2
 —
  2
 
Reclassifications to net earnings (loss)—
 24
(a) 
 24
 
Net other comprehensive income2
 24

 26
 
At June 30, 2017$153
 $(894)
 $(741) 
 
Cumulative
Translation
Adjustments
 
Net Actuarial
Gain (Loss)
and Prior
Service Cost
 
Accumulated Other
Comprehensive Loss
At December 31, 2014$157
 $(892)  $(735) 
Other comprehensive loss before reclassifications(1) —
  (1) 
Reclassifications to net earnings—
 18
(a) 
 18
 
Net other comprehensive income (loss)(1) 18
  17
 
At June 30, 2015$156
 $(874)  $(718) 
 
Cumulative
Translation
Adjustments
 
Net Actuarial
Gain (Loss)
and Prior
Service Cost
 
Accumulated
Other
Comprehensive Loss
At December 31, 2015$152
 $(922)  $(770) 
Other comprehensive income before reclassifications1
 —
  1
 
Reclassifications to net earnings (loss)—
 19
(a) 
 19
 
Net other comprehensive income1
 19
  20
 
At June 30, 2016$153
 $(903)  $(750) 
(a)Reflects amortization of net actuarial losses. See Note 6.7.

The net actuarial gain (loss) and prior service cost related to pension and other postretirement benefit plans included in other comprehensive income (loss) is net of a tax provision of $13$16 million and $12$13 million for the six months ended June 30, 2017 and 2016, and 2015, respectively.


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

8)9) INCOME TAXES
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.

The provision for income taxes was $205 million for
 Three Months Ended June 30,
Six Months Ended June 30,
 2017
2016
2017
2016
Provision for income taxes, including interest and before
other discrete items
$(176) $(171) $(361) $(374)
Excess tax benefits from stock-based compensation (a)
4

—

31

—
Other discrete items (b)
3

(2)
23

(5)
Provision for income taxes$(169)
$(173)
$(307)
$(379)
Effective income tax rate29.2%
31.2%
25.9%
31.0%
(a) Reflects excess tax benefits associated with the three months ended June 30, 2016exercise of stock options and $165 million forvesting of RSUs. During the three months ended June 30, 2015, reflecting an effectivefirst quarter of 2017, the Company adopted FASB guidance which requires that the difference between the tax benefit from stock-based compensation expense and the deduction on the tax return be recognized within the income tax rateprovision on the statement of 32.2%operations. Previously, such difference was recognized in stockholders’ equity on the balance sheet. This difference occurs because stock-based compensation expense is recorded based on the grant-date fair value of the award, whereas the tax deduction is based on the fair value on the date the stock option is exercised or the RSU vests. This guidance requires the income statement classification to be applied prospectively, and 32.8%, respectively.therefore, excess tax benefits for prior periods remain classified in stockholders’ equity.
(b) For the six months ended June 30, 2016,2017, primarily reflects tax benefits from the provision for income taxes was $436 million compared to $368 million for the six months ended June 30, 2015, reflecting anresolution of certain state income tax rate of 32.0% and 33.1%, respectively.matters.

9)10) COMMITMENTS AND CONTINGENCIES
Guarantees
The Company has indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. At June 30, 2016,2017, the outstanding letters of credit and surety bonds approximated $110$101 million and were not recorded on the Consolidated Balance Sheet.

In the course of its business, the Company both provides and receives indemnities which are intended to allocate certain risks associated with business transactions. Similarly, the Company may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not live up to its


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

obligations under an indemnification obligation. The Company records a liability for its indemnification obligations and other contingent liabilities when probable and reasonably estimable.

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



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

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

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. The Company does not report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of June 30, 2016,2017, the Company had pending approximately 34,79033,240 asbestos claims, as compared with approximately 36,03033,610 as of December 31, 20152016 and 38,00034,790 as of June 30, 2015.2016. During the second quarter of 2016,2017, the Company received approximately 1,1901,030 new claims and closed or moved to an inactive docket approximately 1,4401,390 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. In 2016, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $48 million. In 2015, as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and defense of asbestos claims by approximately $5 million. In 2014, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $11 million. The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims. While the number of asbestos claims filed against the Company has trended down in the past five to ten years and has remained generally 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


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

principally relating to historical and predecessor operations of the Company. In addition, the Company from time to time receives personal injury claims including toxic tort and product liability claims (other than asbestos) arising from historical operations of the Company and its predecessors.
10)11) RESTRUCTURING CHARGES
During the year ended December 31, 2015,2016, in a continued effort to reduce its cost structure, the Company initiated restructuring plans across several of its businesses, primarily for the reorganization of certain business operations. As a result, the Company recorded restructuring charges of $81$30 million, reflecting $48$19 million of severance costs and $33$11 million of costs associated with exiting contractual obligations and other related costs. During the year ended December 31, 2014,2015, the Company recorded restructuring charges of $26$45 million, reflecting $17$24 million of severance costs and $9$21 million of costs associated with exiting contractual obligations.obligations and other related costs. As


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

of June 30, 2016,2017, the cumulative settlements for the 20152016 and 20142015 restructuring charges were $7653 million, of which $5034 million was for severance costs and $2619 million was for costs associated with contractual obligations. The Company expects to substantially utilize its restructuring reserves by the end of 2016.
Balance at 2016 Balance atBalance at 2017 Balance at
December 31, 2015 Settlements June 30, 2016December 31, 2016 Settlements June 30, 2017
Entertainment $19
 $(10) $9
  $20
 $(9) $11
 
Local Broadcasting 34
 (12) 22
 
Cable Networks 4
 (2) 2
 
Publishing 1
 (1) —
 
Local Media 12
 (4) 8
 
Corporate 1
 (1) —
  2
 (1) 1
 
Total $54
 $(23) $31
  $39
 $(17) $22
 
Balance at 2015 2015 Balance atBalance at 2016 2016 Balance at
December 31, 2014 Charges Settlements December 31, 2015December 31, 2015 Charges Settlements December 31, 2016
Entertainment $6
 $26
 $(13) $19
  $16
 $16
 $(12) $20
 
Local Broadcasting 10
 55
 (31) 34
 
Cable Networks —
 4
 —
 4
 
Publishing —
 1
 —
 1
 
Local Media 11
 6
 (5) 12
 
Corporate 2
 —
 (1) 1
  —
 3
 (1) 2
 
Total $18
 $81
 $(45) $54
  $27
 $30
 $(18) $39
 
11)12) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The Company’s carrying value of financial instruments approximates fair value, except for notes and debentures, which are not recorded at fair value. At June 30, 20162017 and December 31, 2015,2016, the carrying value of the Company’s senior debt was $8.17$8.85 billion and $8.37 billion, respectively, and the fair value, which is estimated based on quoted market prices for similar liabilities (Level 2) and includes accrued interest, was $9.18$9.77 billion and $8.78$9.51 billion, respectively.

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

Foreign Exchange Contracts

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

At June 30, 2017 and December 31, 2016, the notional amount of all foreign exchange contracts was $356 million and $433 million, respectively.



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

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

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

Gains (losses) recognized on derivative financial instruments were as follows:
 Three Months Ended Six Months Ended 
 June 30, June 30, 
 2016 2015 2016 2015Financial Statement Account
Non-designated foreign exchange contracts$15
 $(7) $9
 $6
Other items, net
         
Designated interest rate swaps (a)
$—
 $3
 $—
 $5
Interest expense
(a) The gains during the three and six months ended June 30, 2015 related to interest rate swaps that were settled during 2015.

 Three Months Ended Six Months Ended 
 June 30, June 30, 
 2017 2016 2017 2016Financial Statement Account
Non-designated foreign exchange contracts$(12) $15
 $(20) $9
Other items, net
The fair value of the Company’s derivative instruments was not material to the Consolidated Balance Sheets for any of the periods presented.
The following tables set forth the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 20162017 and December 31, 20152016. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.
At June 30, 2016Level 1 Level 2 Level 3 Total
At June 30, 2017Level 1 Level 2 Level 3 Total
Assets:              
Foreign currency hedges$—
 $19
 $—
 $19
$—
 $12
 $—
 $12
Total Assets$—
 $19
 $—
 $19
$—
 $12
 $—
 $12
Liabilities:              
Deferred compensation$—
 $317
 $—
 $317
$—
 $361
 $—
 $361
Foreign currency hedges—
 4
 —
 4
—
 6
 —
 6
Total Liabilities$—
 $321
 $—
 $321
$—
 $367
 $—
 $367
At December 31, 2015Level 1 Level 2 Level 3 Total
At December 31, 2016Level 1 Level 2 Level 3 Total
Assets:              
Foreign currency hedges$—
 $13
 $—
 $13
$—
 $34
 $—
 $34
Total Assets$—
 $13
 $—
 $13
$—
 $34
 $—
 $34
Liabilities:              
Deferred compensation$—
 $312
 $—
 $312
$—
 $347
 $—
 $347
Foreign currency hedges—
 1
 —
 1
Total Liabilities$—
 $312
 $—
 $312
$—
 $348
 $—
 $348
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.


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

12)13) REPORTABLE SEGMENTS
The following tables set forth the Company’s financial performance by reportable segment. The Company’s operating segments, which are the same as its reportable segments, have been determined in accordance with the Company’s internal management structure, which is organized based upon products and services.

Three Months Ended Six Months EndedThree Months Ended Six Months Ended

June 30, June 30,June 30, June 30,

2016 2015
2016 20152017 2016
2017 2016
Revenues:





















Entertainment$1,947

$1,785

$4,534

$4,046
$2,184

$1,947

$4,531

$4,534
Cable Networks536

615

1,061

1,154
571

536

1,114

1,061
Publishing187

199

332

344
206

187

367

332
Local Broadcasting647

654

1,296

1,250
Local Media412
 396
 821
 844
Corporate/Eliminations(30)
(34)
(87)
(75)(116)
(90)
(233)
(207)
Total Revenues$3,287

$3,219

$7,136

$6,719
$3,257

$2,976

$6,600

$6,564
Revenues generated between segments primarily reflect advertising sales, and television license fees and station affiliation fees. These transactions are recorded at market value as if the sales were to third parties and are eliminated in consolidation.
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Intercompany Revenues:              
Entertainment$31
 $34
 $92
 $74
$118
 $92
 $237
 $214
Local Broadcasting3
 3
 6
 6
Local Media3
 2
 6
 4
Total Intercompany Revenues$34
 $37
 $98
 $80
$121
 $94
 $243
 $218


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

The Company presents operating income (loss) excluding restructuring charges impairment charges, and other operating items, net, if any,each where applicable, (“Segment Operating Income”) as the primary measure of profit and loss for its operating segments in accordance with FASB guidance for segment reporting. The Company believes the presentation of Segment Operating Income is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company’s management and enhances their ability to understand the Company’s operating performance.
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Segment Operating Income (Loss):              
Entertainment$351
 $262
 $800
 $608
$346
 $351
 $744
 $800
Cable Networks227
 220
 455
 471
253
 227
 501
 455
Publishing26
 25
 39
 37
28
 26
 42
 39
Local Broadcasting212
 198
 418
 359
Local Media127
 130
 250
 280
Corporate(83) (64) (167) (132)(85) (83) (164) (167)
Total Segment Operating Income733
 641
 1,545
 1,343
669
 651
 1,373
 1,407
Restructuring charges—
 (55) —
 (55)
Other operating items, net (a)
—
 —
 9
 19
—
 —
 —
 9
Operating income733

586

1,554

1,307
669

651

1,373

1,416
Interest expense(100) (94) (200) (187)(111) (100) (220) (200)
Interest income8
 7
 15
 12
15
 8
 28
 15
Other items, net(4) 4
 (7) (19)5
 (4) 6
 (7)
Earnings before income taxes and equity in loss of
investee companies
637
 503
 1,362
 1,113
Earnings from continuing operations before income taxes
and equity in loss of investee companies
578
 555
 1,187
 1,224
Provision for income taxes(205) (165) (436) (368)(169) (173) (307) (379)
Equity in loss of investee companies, net of tax(9) (6) (30) (19)(12) (9) (29) (30)
Net earnings$423
 $332
 $896
 $726
Net earnings from continuing operations397
 373
 851
 815
Net earnings (loss) from discontinued operations, net of tax(339) 50
 (1,045) 81
Net earnings (loss)$58
 $423
 $(194) $896
(a) Other operating items, net includes gainsa gain from the salessale of an internet businessesbusiness in China for the six months ended June 30, 2016 and 2015, and for 2016, also includes a multiyear, retroactive impact of a new operating tax.
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Depreciation and Amortization:              
Entertainment$30

$32

$60

$64
$27

$30

$56

$60
Cable Networks5

6

11

12
6

5

12

11
Publishing2

2

3

3
2

2

3

3
Local Broadcasting18

19

37

40
Local Media12
 11
 23
 22
Corporate8

7

16

15
9

9

17

18
Total Depreciation and Amortization$63

$66

$127

$134
$56

$57

$111

$114


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

Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Stock-based Compensation:              
Entertainment$16
 $16
 $31
 $32
$17
 $16
 $32
 $31
Cable Networks3
 2
 6
 5
3
 3
 6
 6
Publishing1
 1
 2
 2
1
 1
 2
 2
Local Broadcasting6
 9
 13
 16
Local Media3
 3
 6
 6
Corporate19
 15
 36
 34
21
 19
 39
 36
Total Stock-based Compensation$45
 $43
 $88
 $89
$45
 $42
 $85
 $81
Three Months Ended Six Months EndedThree Months Ended Six Months Ended
June 30, June 30,June 30, June 30,
2016 2015 2016 20152017 2016 2017 2016
Capital Expenditures:              
Entertainment$24

$13

$37

$21
$24

$24

$38

$37
Cable Networks2

2

4

3
4

2

7

4
Publishing3

2

6

2
—

3

1

6
Local Broadcasting10

11

21

18
Local Media7
 4
 12
 11
Corporate2
 1
 11
 2
6
 2
 10
 11
Total Capital Expenditures$41
 $29
 $79
 $46
$41
 $35
 $68
 $69
At AtAt At
June 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
Assets:          
Entertainment $10,610
 $10,910
  $11,441
 $11,262
 
Cable Networks 2,410
 2,369
  2,594
 2,618
 
Publishing 828
 880
  858
 880
 
Local Broadcasting 8,992
 9,105
 
Corporate 274
 476
 
Local Media 4,018
 4,065
 
Corporate/Eliminations 225
 817
 
Discontinued operations 24
 25
  3,517
 4,596
 
Total Assets $23,138
 $23,765
  $22,653
 $24,238
 



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

13)14) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
CBS Operations Inc. is a wholly owned subsidiary of the Company. CBS Operations Inc. has fully and unconditionally guaranteed CBS Corp.’s senior debt securities. The following condensed consolidating financial statements present the results of operations, financial position and cash flows of CBS Corp., CBS Operations Inc., the direct and indirect Non-Guarantor Affiliates of CBS Corp. and CBS Operations Inc., and the eliminations necessary to arrive at the information for the Company on a consolidated basis.
Statement of OperationsStatement of Operations
For the Three Months Ended June 30, 2016For the Three Months Ended June 30, 2017
CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Revenues$36
 $3
 $3,248
 $—
 $3,287
$42
 $2
 $3,213
 $—
 $3,257
Costs and expenses:                  
Operating15
 2
 1,844
 —
 1,861
22
 2
 1,980
 —
 2,004
Selling, general and administrative21
 67
 542
 —
 630
23
 68
 437
 —
 528
Depreciation and amortization1
 6
 56
 —
 63
1
 6
 49
 —
 56
Total costs and expenses37
 75
 2,442
 —
 2,554
46
 76
 2,466
 —
 2,588
Operating income (loss)(1) (72) 806
 —
 733
(4) (74) 747
 —
 669
Interest (expense) income, net(124) (106) 138
 —
 (92)(127) (120) 151
 —
 (96)
Other items, net(1) 13
 (16) —
 (4)1
 (12) 16
 —
 5
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies(126) (165) 928
 —
 637
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies(130) (206) 914
 —
 578
Benefit (provision) for income taxes40
 52
 (297) —
 (205)39
 62
 (270) —
 (169)
Equity in earnings (loss) of investee companies,
net of tax
509
 289
 (9) (798) (9)149
 339
 (12) (488) (12)
Net earnings from continuing operations58
 195
 632
 (488) 397
Net loss from discontinued operations, net of tax—
 —
 (339) —
 (339)
Net earnings$423
 $176
 $622
 $(798) $423
$58
 $195
 $293
 $(488) $58
Total comprehensive income$432
 $185
 $611
 $(796) $432
$70
 $190
 $302
 $(492) $70


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

Statement of OperationsStatement of Operations
For the Six Months Ended June 30, 2016For the Six Months Ended June 30, 2017
CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Revenues$83
 $6
 $7,047
 $—
 $7,136
$84
 $5
 $6,511
 $—
 $6,600
Cost and expenses:         
Costs and expenses:         
Operating32
 3
 4,182
 —
 4,217
46
 3
 4,029
 —
 4,078
Selling, general and administrative42
 133
 1,072
 —
 1,247
43
 132
 863
 —
 1,038
Depreciation and amortization2
 11
 114
 —
 127
2
 12
 97
 —
 111
Other operating items, net—
 —
 (9) —
 (9)
Total costs and expenses76
 147
 5,359
 —
 5,582
91
 147
 4,989
 —
 5,227
Operating income (loss)7
 (141) 1,688
 —
 1,554
(7) (142) 1,522
 —
 1,373
Interest (expense) income, net(248) (210) 273
 —
 (185)(249) (237) 294
 —
 (192)
Other items, net(2) 3
 (8) —
 (7)1
 (25) 30
 —
 6
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies(243) (348) 1,953
 —
 1,362
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies(255) (404) 1,846
 —
 1,187
Benefit (provision) for income taxes77
 111
 (624) —
 (436)77
 122
 (506) —
 (307)
Equity in earnings (loss) of investee companies,
net of tax
1,062
 549
 (30) (1,611) (30)(16) 693
 (29) (677) (29)
Net earnings$896
 $312
 $1,299
 $(1,611) $896
Total comprehensive income$916
 $325
 $1,290
 $(1,615) $916
Net earnings (loss) from continuing operations(194) 411
 1,311
 (677) 851
Net loss from discontinued operations, net of tax—
 —
 (1,045) —
 (1,045)
Net earnings (loss)$(194) $411
 $266
 $(677) $(194)
Total comprehensive income (loss)$(168) $404
 $281
 $(685) $(168)



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

 Statement of Operations
 For the Three Months Ended June 30, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Revenues$34
 $3
 $3,182
 $—
 $3,219
Costs and expenses:         
Operating14
 2
 1,891
 —
 1,907
Selling, general and administrative12
 55
 538
 —
 605
Depreciation and amortization2
 5
 59
 —
 66
Restructuring charges—
 —
 55
 —
 55
Total costs and expenses28
 62
 2,543
 —
 2,633
Operating income (loss)6
 (59) 639
 —
 586
Interest (expense) income, net(118) (99) 130
 —
 (87)
Other items, net1
 (11) 14
 —
 4
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies(111) (169) 783
 —
 503
Benefit (provision) for income taxes36
 55
 (256) —
 (165)
Equity in earnings (loss) of investee companies,
net of tax
407
 149
 (6) (556) (6)
Net earnings$332
 $35
 $521
 $(556) $332
Total comprehensive income$343
 $34
 $542
 $(576) $343


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


 Statement of Operations
 For the Six Months Ended June 30, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Revenues$65
 $6
 $6,648
 $—
 $6,719
Costs and expenses:         
Operating30
 3
 4,016
 —
 4,049
Selling, general and administrative24
 116
 1,053
 —
 1,193
Depreciation and amortization3
 10
 121
 —
 134
Restructuring charges—
 —
 55
 —
 55
Other operating items, net—
 —
 (19) —
 (19)
Total costs and expenses57
 129
 5,226
 —
 5,412
Operating income (loss)8
 (123) 1,422
 —
 1,307
Interest (expense) income, net(233) (197) 255
 —
 (175)
Other items, net—
 —
 (19) —
 (19)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies(225) (320) 1,658
 —
 1,113
Benefit (provision) for income taxes73
 104
 (545) —
 (368)
Equity in earnings (loss) of investee companies, net of tax878
 464
 (19) (1,342) (19)
Net earnings$726
 $248
 $1,094
 $(1,342) $726
Total comprehensive income$743
 $247
 $1,115
 $(1,362) $743


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


 Balance Sheet
 At June 30, 2016
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Assets         
Cash and cash equivalents$46
 $1
 $129
 $—
 $176
Receivables, net22
 2
 3,219
 —
 3,243
Programming and other inventory4
 3
 1,217
 —
 1,224
Prepaid expenses and other current assets91
 39
 350
 (27) 453
Total current assets163
 45
 4,915
 (27) 5,096
Property and equipment46
 183
 3,013
 —
 3,242
Less accumulated depreciation and amortization23
 129
 1,734
 —
 1,886
Net property and equipment23
 54
 1,279
 —
 1,356
Programming and other inventory5
 7
 2,057
 —
 2,069
Goodwill98
 62
 6,371
 —
 6,531
Intangible assets—
 —
 5,504
 —
 5,504
Investments in consolidated subsidiaries43,808
 13,326
 —
 (57,134) —
Other assets161
 11
 2,410
 —
 2,582
Intercompany—
 2,000
 25,313
 (27,313) —
Total Assets$44,258
 $15,505
 $47,849
 $(84,474) $23,138
Liabilities and Stockholders’ Equity         
Accounts payable$1
 $3
 $117
 $—
 $121
Participants’ share and royalties payable—
 —
 1,007
 —
 1,007
Program rights3
 4
 315
 —
 322
Commercial paper163
 —
 —
 —
 163
Current portion of long-term debt7
 —
 16
 —
 23
Accrued expenses and other current liabilities380
 222
 876
 (27) 1,451
Total current liabilities554
 229
 2,331
 (27) 3,087
Long-term debt8,114
 —
 109
 —
 8,223
Other liabilities2,889
 242
 3,309
 —
 6,440
Intercompany27,313
 —
 —
 (27,313) —
Stockholders’ Equity:         
Preferred stock—
 —
 126
 (126) —
Common stock1
 123
 590
 (713) 1
Additional paid-in capital43,964
 —
 60,894
 (60,894) 43,964
Retained earnings (deficit)(19,622) 15,225
 (14,782) (443) (19,622)
Accumulated other comprehensive income (loss)(750) 17
 72
 (89) (750)
 23,593
 15,365
 46,900
 (62,265) 23,593
Less treasury stock, at cost18,205
 331
 4,800
 (5,131) 18,205
Total Stockholders’ Equity5,388
 15,034
 42,100
 (57,134) 5,388
Total Liabilities and Stockholders’ Equity$44,258
 $15,505
 $47,849
 $(84,474) $23,138
 Statement of Operations
 For the Three Months Ended June 30, 2016
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Revenues$36
 $3
 $2,937
 $—
 $2,976
Costs and expenses:         
Operating15
 2
 1,741
 —
 1,758
Selling, general and administrative21
 66
 423
 —
 510
Depreciation and amortization1
 6
 50
 —
 57
Total costs and expenses37
 74
 2,214
 —
 2,325
Operating income (loss)(1) (71) 723
 —
 651
Interest (expense) income, net(124) (106) 138
 —
 (92)
Other items, net(1) 13
 (16) —
 (4)
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies(126) (164) 845
 —
 555
Benefit (provision) for income taxes40
 51
 (264) —
 (173)
Equity in earnings (loss) of investee companies, net of tax509
 289
 (9) (798) (9)
Net earnings from continuing operations423
 176
 572
 (798) 373
Net earnings from discontinued operations, net of tax—
 —
 50
 —
 50
Net earnings$423
 $176
 $622
 $(798) $423
Total comprehensive income$432
 $185
 $611
 $(796) $432


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

 Balance Sheet
 At December 31, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Assets         
Cash and cash equivalents$267
 $1
 $55
 $—
 $323
Receivables, net28
 2
 3,598
 —
 3,628
Programming and other inventory3
 3
 1,265
 —
 1,271
Prepaid expenses and other current assets192
 26
 337
 (30) 525
Total current assets490

32

5,255

(30)
5,747
Property and equipment46
 180
 3,017
 —
 3,243
Less accumulated depreciation and amortization20
 118
 1,700
 —
 1,838
Net property and equipment26

62

1,317

—
 1,405
Programming and other inventory6
 9
 1,942
 —
 1,957
Goodwill98
 62
 6,321
 —
 6,481
Intangible assets—
 —
 5,514
 —
 5,514
Investments in consolidated subsidiaries42,744
 12,775
 —
 (55,519) —
Other assets163
 11
 2,487
 —
 2,661
Intercompany—
 2,248
 23,988
 (26,236) —
Total Assets$43,527

$15,199

$46,824

$(81,785) $23,765
Liabilities and Stockholders’ Equity
         
Accounts payable$1
 $4
 $187
 $—
 $192
Participants’ share and royalties payable—
 —
 1,013
 —
 1,013
Program rights4
 4
 366
 —
 374
Current portion of long-term debt206
 —
 16
 —
 222
Accrued expenses and other current liabilities418
 230
 1,141
 (30) 1,759
Total current liabilities629

238

2,723

(30) 3,560
Long-term debt8,113
 —
 113
 —
 8,226
Other liabilities2,986
 252
 3,178
 —
 6,416
Intercompany26,236
 —
 —
 (26,236) —
Stockholders’ Equity:        

Preferred stock—
 —
 126
 (126) —
Common stock1
 123
 590
 (713) 1
Additional paid-in capital44,055
 —
 60,894
 (60,894) 44,055
Retained earnings (deficit)(20,518) 14,913
 (16,081) 1,168
 (20,518)
Accumulated other comprehensive income (loss)(770) 4
 81
 (85) (770)
 22,768

15,040

45,610

(60,650) 22,768
Less treasury stock, at cost17,205
 331
 4,800
 (5,131) 17,205
Total Stockholders’ Equity5,563
 14,709
 40,810
 (55,519) 5,563
Total Liabilities and Stockholders’ Equity$43,527

$15,199

$46,824

$(81,785) $23,765
 Statement of Operations
 For the Six Months Ended June 30, 2016
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Revenues$83
 $6
 $6,475
 $—
 $6,564
Costs and expenses:         
Operating32
 3
 3,995
 —
 4,030
Selling, general and administrative42
 132
 839
 —
 1,013
Depreciation and amortization2
 11
 101
 —
 114
Other operating items, net—
 —
 (9) —
 (9)
Total costs and expenses76
 146
 4,926
 —
 5,148
Operating income (loss)7
 (140) 1,549
 —
 1,416
Interest (expense) income, net(248) (210) 273
 —
 (185)
Other items, net(2) 3
 (8) —
 (7)
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies(243) (347) 1,814
 —
 1,224
Benefit (provision) for income taxes77
 110
 (566) —
 (379)
Equity in earnings (loss) of investee companies, net of tax1,062
 549
 (30) (1,611) (30)
Net earnings from continuing operations896
 312
 1,218
 (1,611) 815
Net earnings from discontinued operations, net of tax—
 —
 81
 —
 81
Net earnings$896
 $312
 $1,299
 $(1,611) $896
Total comprehensive income$916
 $325
 $1,290
 $(1,615) $916



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

 Statement of Cash Flows
 For the Six Months Ended June 30, 2016
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Net cash flow (used for) provided by operating activities$(476) $(116) $1,843
 $—
 $1,251
Investing Activities:         
Acquisitions—
 —
 (51) —
 (51)
Capital expenditures—
 (11) (68) —
 (79)
Investments in and advances to investee companies—
 —
 (43) —
 (43)
Proceeds from dispositions(4) —
 31
 —
 27
Other investing activities4
 —
 —
 —
 4
Net cash flow used for investing activities—
 (11) (131) —
 (142)
Financing Activities:         
Proceeds from short-term debt borrowings, net163
 —
 —
 —
 163
Repayment of senior debentures(199) —
 —
 —
 (199)
Payment of capital lease obligations—
 —
 (8) —
 (8)
Dividends(142) —
 —
 —
 (142)
Purchase of Company common stock(1,033) —
 —
 —
 (1,033)
Payment of payroll taxes in lieu of issuing
shares for stock-based compensation
(57) —
 —
 —
 (57)
Proceeds from exercise of stock options10
 —
 —
 —
 10
Excess tax benefit from stock-based compensation11
 —
 —
 —
 11
Other financing activities(1) —
 —
 —
 (1)
Increase (decrease) in intercompany payables1,503
 127
 (1,630) —
 —
Net cash flow provided by (used for) financing activities255
 127
 (1,638) —
 (1,256)
Net (decrease) increase in cash and cash equivalents(221) —
 74
 —
 (147)
Cash and cash equivalents at beginning of period267
 1
 55
 —
 323
Cash and cash equivalents at end of period$46
 $1
 $129
 $—
 $176
 Balance Sheet
 At June 30, 2017
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Assets         
Cash and cash equivalents$15
 $—
 $155
 $—
 $170
Receivables, net22
 2
 3,275
 —
 3,299
Programming and other inventory4
 3
 1,553
 —
 1,560
Prepaid expenses and other current assets94
 31
 266
 (33) 358
Current assets of discontinued operations—
 —
 299
 —
 299
Total current assets135
 36
 5,548
 (33) 5,686
Property and equipment48
 205
 2,714
 —
 2,967
Less accumulated depreciation and amortization26
 151
 1,576
 —
 1,753
Net property and equipment22
 54
 1,138
 —
 1,214
Programming and other inventory3
 6
 2,450
 —
 2,459
Goodwill98
 62
 4,731
 —
 4,891
Intangible assets—
 —
 2,627
 —
 2,627
Investments in consolidated subsidiaries44,467
 14,544
 —
 (59,011) —
Other assets149
 8
 2,401
 —
 2,558
Intercompany—
 1,455
 28,442
 (29,897) —
Assets of discontinued operations—
 —
 3,218
 —
 3,218
Total Assets$44,874
 $16,165
 $50,555
 $(88,941) $22,653
Liabilities and Stockholders’ Equity         
Accounts payable$1
 $4
 $119
 $—
 $124
Participants’ share and royalties payable—
 —
 1,005
 —
 1,005
Program rights4
 3
 255
 —
 262
Commercial paper263
 —
 —
 —
 263
Current portion of long-term debt6
 —
 17
 —
 23
Accrued expenses and other current liabilities383
 212
 830
 (33) 1,392
Current liabilities of discontinued operations—
 —
 161
 —
 161
Total current liabilities657
 219
 2,387
 (33) 3,230
Long-term debt8,801
 —
 97
 —
 8,898
Other liabilities2,892
 238
 2,285
 —
 5,415
Liabilities of discontinued operations—
 —
 2,483
 —
 2,483
Intercompany29,897
 —
 —
 (29,897) —
Stockholders’ Equity:         
Preferred stock—
 —
 126
 (126) —
Common stock1
 123
 590
 (713) 1
Additional paid-in capital43,820
 —
 60,894
 (60,894) 43,820
Retained earnings (accumulated deficit)(19,451) 15,894
 (13,572) (2,322) (19,451)
Accumulated other comprehensive income (loss)(741) 22
 65
 (87) (741)
 23,629
 16,039
 48,103
 (64,142) 23,629
Less treasury stock, at cost21,002
 331
 4,800
 (5,131) 21,002
Total Stockholders’ Equity2,627
 15,708
 43,303
 (59,011) 2,627
Total Liabilities and Stockholders’ Equity$44,874
 $16,165
 $50,555
 $(88,941) $22,653


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

 Statement of Cash Flows
 For the Six Months Ended June 30, 2015
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Net cash flow (used for) provided by operating activities$(301) $(150) $1,314
 $—
 $863
Investing Activities:        

Acquisitions—
 —
 (1) —
 (1)
Capital expenditures—
 (2) (44) —
 (46)
Investments in and advances to investee companies—
 —
 (55) —
 (55)
Proceeds from dispositions—
 —
 59
 —
 59
Other investing activities4
 —
 —
 —
 4
Net cash flow provided by (used for) investing activities from continuing operations4

(2)
(41)
—
 (39)
Net cash flow used for investing activities from discontinued operations(3) —
 —
 —
 (3)
Net cash flow provided by (used for) investing activities1

(2)
(41)
—
 (42)
Financing Activities:        

Repayments of short-term debt borrowings, net(222) —
 —
 —
 (222)
Proceeds from issuance of senior notes1,178
 —
 —
 —
 1,178
Payment of capital lease obligations—
 —
 (8) —
 (8)
Dividends(155) —
 —
 —
 (155)
Purchase of Company common stock(1,832) —
 —
 —
 (1,832)
Payment of payroll taxes in lieu of issuing
shares for stock-based compensation
(95) —
 —
 —
 (95)
Proceeds from exercise of stock options123
 —
 —
 —
 123
Excess tax benefit from stock-based compensation82
 —
 —
 —
 82
Increase (decrease) in intercompany payables1,185
 152
 (1,337) —
 —
Net cash flow provided by (used for) financing activities264
 152
 (1,345) —
 (929)
Net decrease in cash and cash equivalents(36)
—

(72)
—
 (108)
Cash and cash equivalents at beginning of period63
 1
 364
 —
 428
Cash and cash equivalents at end of period$27

$1

$292

$—
 $320
 Balance Sheet
 At December 31, 2016
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Assets         
Cash and cash equivalents$321
 $—
 $277
 $—
 $598
Receivables, net27
 2
 3,285
 —
 3,314
Programming and other inventory3
 3
 1,421
 —
 1,427
Prepaid expenses and other current assets102
 55
 297
 (35) 419
Current assets of discontinued operations—
 —
 305
 —
 305
Total current assets453

60

5,585

(35)
6,063
Property and equipment47
 201
 2,687
 —
 2,935
Less accumulated depreciation and amortization25
 140
 1,529
 —
 1,694
Net property and equipment22

61

1,158

—
 1,241
Programming and other inventory5
 7
 2,427
 —
 2,439
Goodwill98
 62
 4,704
 —
 4,864
Intangible assets—
 —
 2,633
 —
 2,633
Investments in consolidated subsidiaries44,473
 13,853
 —
 (58,326) —
Other assets150
 8
 2,549
 —
 2,707
Intercompany—
 1,785
 26,976
 (28,761) —
Assets of discontinued operations—
 3
 4,288
 —
 4,291
Total Assets$45,201

$15,839

$50,320

$(87,122) $24,238
Liabilities and Stockholders’ Equity
         
Accounts payable$1
 $3
 $144
 $—
 $148
Participants’ share and royalties payable—
 —
 1,024
 —
 1,024
Program rights4
 4
 282
 —
 290
Commercial paper450
 —
 —
 —
 450
Current portion of long-term debt6
 —
 17
 —
 23
Accrued expenses and other current liabilities421
 284
 948
 (35) 1,618
Current liabilities of discontinued operations—
 —
 155
 —
 155
Total current liabilities882

291

2,570

(35) 3,708
Long-term debt8,798
 —
 104
 —
 8,902
Other liabilities3,071
 244
 2,173
 —
 5,488
Liabilities of discontinued operations—
 —
 2,451
 —
 2,451
Intercompany28,761
 —
 —
 (28,761) —
Stockholders’ Equity:        

Preferred stock—
 —
 126
 (126) —
Common stock1
 123
 590
 (713) 1
Additional paid-in capital43,913
 —
 60,894
 (60,894) 43,913
Retained earnings (accumulated deficit)(19,257) 15,483
 (13,838) (1,645) (19,257)
Accumulated other comprehensive income (loss)(767) 29
 50
 (79) (767)
 23,890

15,635

47,822

(63,457) 23,890
Less treasury stock, at cost20,201
 331
 4,800
 (5,131) 20,201
Total Stockholders’ Equity3,689
 15,304
 43,022
 (58,326) 3,689
Total Liabilities and Stockholders’ Equity$45,201

$15,839

$50,320

$(87,122) $24,238


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

 Statement of Cash Flows
 For the Six Months Ended June 30, 2017
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Net cash flow (used for) provided by operating activities$(608) $(153) $1,699
 $—
 $938
Investing Activities:         
Acquisitions—
 —
 (21) —
 (21)
Capital expenditures—
 (10) (58) —
 (68)
Investments in and advances to investee companies—
 —
 (65) —
 (65)
Proceeds from dispositions—
 —
 1
 —
 1
Other investing activities14
 —
 —
 —
 14
Net cash flow provided by (used for) investing activities from continuing operations14
 (10) (143) —
 (139)
Net cash flow used for investing activities from discontinued operations—
 (1) (12) —
 (13)
Net cash flow provided by (used for) investing activities14
 (11) (155) —
 (152)
Financing Activities:         
Repayments of short-term debt borrowings, net(187) —
 —
 —
 (187)
Proceeds from debt borrowings of CBS Radio—
 —
 24
 —
 24
Repayment of debt borrowings of CBS Radio—
 —
 (5) —
 (5)
Payment of capital lease obligations—
 —
 (8) —
 (8)
Payment of contingent consideration—
 —
 (7) —
 (7)
Dividends(151) —
 —
 —
 (151)
Purchase of Company common stock(845) —
 —
 —
 (845)
Payment of payroll taxes in lieu of issuing
shares for stock-based compensation
(89) —
 —
 —
 (89)
Proceeds from exercise of stock options39
 —
 —
 —
 39
Increase (decrease) in intercompany payables1,521
 164
 (1,685) —
 —
Net cash flow provided by (used for) financing activities288
 164
 (1,681) —
 (1,229)
Net decrease in cash and cash equivalents(306) —
 (137) —
 (443)
Cash and cash equivalents at beginning of period
(includes $24 million of discontinued operations cash)
321
 —
 301
 —
 622
Cash and cash equivalents at end of period
(includes $9 million of discontinued operations cash)
$15
 $—
 $164
 $—
 $179


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

 Statement of Cash Flows
 For the Six Months Ended June 30, 2016
 CBS Corp. 
CBS
Operations
Inc.
 
Non-
Guarantor
Affiliates
 Eliminations 
CBS Corp.
Consolidated
Net cash flow (used for) provided by operating activities$(476) $(116) $1,843
 $—
 $1,251
Investing Activities:        

Acquisitions—
 —
 (51) —
 (51)
Capital expenditures—
 (11) (58) —
 (69)
Investments in and advances to investee companies—
 —
 (43) —
 (43)
Proceeds from dispositions(4) —
 23
 —
 19
Other investing activities4
 —
 —
 —
 4
Net cash flow used for investing activities from continuing operations—

(11)
(129)
—
 (140)
Net cash flow used for investing activities from discontinued operations—
 —
 (2) —
 (2)
Net cash flow used for investing activities—

(11)
(131)
—
 (142)
Financing Activities:        

Proceeds from short-term borrowings, net163
 —
 —
 —
 163
Repayment of senior debentures(199) —
 —
 —
 (199)
Payment of capital lease obligations—
 —
 (8) —
 (8)
Dividends(142) —
 —
 —
 (142)
Purchase of Company common stock(1,033) —
 —
 —
 (1,033)
Payment of payroll taxes in lieu of issuing
shares for stock-based compensation
(57) —
 —
 —
 (57)
Proceeds from exercise of stock options10
 —
 —
 —
 10
Excess tax benefit from stock-based compensation11
 —
 —
 —
 11
Other financing activities(1) —
 —
 —
 (1)
Increase (decrease) in intercompany payables1,503
 127
 (1,630) —
 —
Net cash flow provided by (used for) financing activities255
 127
 (1,638) —
 (1,256)
Net (decrease) increase in cash and cash equivalents(221)
—

74

—
 (147)
Cash and cash equivalents at beginning of period
(includes $6 million of discontinued operations cash)
267
 1
 55
 —
 323
Cash and cash equivalents at end of period
(includes $9 million of discontinued operations cash)
$46

$1

$129

$—
 $176


Item 2.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 (the “Company” or “CBS Corp.”) should be read in conjunction with the consolidated financial statements and related notes in the Company’s Annual Report filed on Form 10-K for the fiscal year ended December 31, 2015.2016.

Overview

Business overview and strategy
The Company operates businesses which span the media and entertainment industries, including the CBS Television Network, cable networks, content production and distribution, television and radio stations, internet-based businesses, and consumer publishing. The Company’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 continues to increase its investment in both Company-owned and acquired premium content to enhance its opportunities for revenue growth, which include exhibiting the Company’s content on multiple digital and other platforms, through licensing and subscription services, including the Company’s owned digital streaming services;services as well as third-party live television streaming offerings; expanding the distribution of its content internationally; and securing compensation from multichannel video programming distributors (“MVPDs”) and television stations affiliated with the CBS Television Network; and further monetizing delayed viewing.Network. The Company believes thatalso seeks to grow its increased investment in premiumadvertising revenues by monetizing all content viewership as industry measurements evolve to reflect viewers’ changing habits. The Company’s continued ability to capitalize on these and other emerging opportunities will also enableprovide it to stay ahead of changes in the mediawith incremental advertising and entertainment industry, including new distribution platforms and changes in programming packages offered to consumers.

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

Operational highlights - Three Months Ended June 30, 20162017 versus Three Months Ended June 30, 20152016
Consolidated results of operations    Increase/(Decrease)     Increase/(Decrease) 
Three Months Ended June 30,2016
2015 $ % 2017
2016 $ % 
GAAP:        
Revenues$3,287
 $3,219
 $68
 2% $3,257
 $2,976
 $281
 9 % 
Operating income$733
 $586
 $147
 25% $669
 $651
 $18
 3 % 
Adjusted operating income (a)
$733
 $641
 $92
 14% 
Net earnings from continuing operations$397
 $373
 $24
 6 % 
Net earnings$423
 $332
 $91
 27% $58
 $423
 $(365) (86)% 
Adjusted net earnings (a)
$423
 $365
 $58
 16% 
Diluted EPS from continuing operations$.97
 $.82
 $.15
 18 % 
Diluted EPS$.93
 $.67
 $.26
 39% $.14
 $.93
 $(.79) (85)% 
Adjusted diluted EPS (a)
$.93
 $.74
 $.19
 26% 
        
Non-GAAP: (a)
        
Adjusted net earnings$427
 $423
 $4
 1 % 
Adjusted diluted EPS$1.04
 $.93
 $.11
 12 % 
(a) See pages 31-32page 36 for reconciliations of adjusted results to the most directly comparable financial measures in accordance with accounting principles generally accepted in the United States (“GAAP”).

For the three months ended June 30, 2016,second quarter of 2017, the Company reportedCompany’s results benefited from growth in retransmission revenues operating income and diluted earnings per share (‘‘EPS’’), driven by higherstation affiliation fees as well as an increase in television licensing sales, reflecting a higher volume of titles available for sale as a result of recent increased investment in internally-produced series. However, the comparison with the prior year was impacted by the high-margin international markets and continued growthlicensing of five Star Trek library series in station affiliation fees and retransmission revenues.the second quarter of 2016.

For the three months ended June 30, 2016,2017, the 9% increase in revenues increased 2%; however, comparability was impacted by two significant events in the second quarter of 2015 which did not recur in 2016: Showtime Networks’ distributionreflects growth across all of the Floyd Mayweather/Manny Pacquiao boxing event,Company’s major revenue streams, led by 16% growth in affiliate and subscription fee revenues, which was driven by 25% growth in station affiliation fees and retransmission revenues, as well as growth from new initiatives, including the highest-grossing pay-per-view event of all time,Company’s owned streaming subscription services, CBS All Access and CBS’s broadcast of the NCAA Division I Men’s Basketball ChampionshipShowtime (“NCAA Tournament”) finals, which was broadcast by Turner Broadcasting Systems (“Turner”) in 2016. These two events impacted the second quarter revenue comparison by six percentage points. Revenue growth for the second quarter of 2016 was led by a 16%digital streaming


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


increase in content licensingsubscription offering, and distributionthird-party live television streaming services. Advertising revenues driven mainly by the international licensing of five Star Trek series. Affiliate and subscription fee revenues decreased 3%increased 4% as a result of the previously mentioned pay-per-view boxing event, which was offset by 44% growth in station affiliation fees and retransmission revenues, as well as revenues from new digital distribution platforms, including CBS All Access and Showtime Networks’ over-the-top digital streaming subscription offering (“Showtime Networks’ over-the-top service”). Advertising revenues decreased 3% reflecting the previously mentioned benefit to 2015 from the broadcast of the semifinals and finals of the NCAA Tournament finals, as well asDivision I Men’s Basketball Championship (“NCAA Tournament”), which are broadcast on the impactCBS Television Network every other year through 2032 under the current agreements with the NCAA and Turner Broadcasting System, Inc. Content licensing and distribution revenues benefited from a higher volume of television licensing sales and increased 12%, despite the international licensing sales of internet businessesStar Trek library programming in China during 2015, partially offset by 2% growth in underlying network advertising revenues.

Operating income grew 25% and diluted EPS increased 39% from the second quarter of 20152016.

Operating income for the three months ended June 30, 2017 increased 3%, primarily driven by increases from higher-marginthe growth in affiliate and subscription fee revenues, partially offset by lower non-sports advertising revenues. In addition, included inThe operating income and diluted EPSmargin decreased one point to 21% for the second quarter of 2015 were restructuring charges2017 from 22% for the second quarter of $55 million. On an adjusted basis, excluding these restructuring charges, operating income grew 14%2016, primarily as a result of the mix of revenues. 2016 included higher-margin television licensing sales of Star Trek library programming, and diluted EPS increased 26%. The previously mentioned impact to2017 was impacted by lower-margin revenues from the 2015 pay-per-view boxing event did not have a significant impact toNCAA Tournament. Net earnings from continuing operations increased 6% and diluted earnings per share (“EPS”) from continuing operations increased 18%, reflecting the higher operating income as the revenues were largely offset by the associated costs. Theincome. Diluted EPS comparisonfrom continuing operations also benefited from lower weighted average shares outstanding in the second quarter of 2017 as a result of the Company’s ongoing share repurchase program. Net earnings for the three months ended June 30, 2017 of $58 million included a noncash charge of $365 million, or $.89 per diluted share, in discontinued operations to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom Communications Corp. (“Entercom”). CBS Radio is classified as held for sale and therefore, in accordance with Financial Accounting Standards Board (“FASB”) guidance, its carrying value will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses.

Operational highlights - Six Months Ended June 30, 20162017 versusSix Months Ended June 30, 20152016
Consolidated results of operations    Increase/(Decrease)     Increase/(Decrease) 
Six Months Ended June 30,2016 2015 $ % 2017 2016 $ % 
GAAP:        
Revenues$7,136
 $6,719
 $417
 6% $6,600
 $6,564
 $36
 1 % 
Operating income$1,554
 $1,307
 $247
 19% $1,373
 $1,416
 $(43) (3)% 
Adjusted operating income (a)
$1,545
 $1,343
 $202
 15% 
Net earnings$896
 $726
 $170
 23% 
Adjusted net earnings (a)
$897
 $756
 $141
 19% 
Net earnings from continuing operations$851
 $815
 $36
 4 % 
Net earnings (loss)$(194) $896
 $(1,090) (122)% 
Diluted EPS from continuing operations$2.06
 $1.78
 $.28
 16 % 
Diluted EPS$1.95
 $1.45
 $.50
 34% $(.47) $1.95
 $(2.42) (124)% 
Adjusted diluted EPS (a)
$1.95
 $1.51
 $.44
 29% 
        
Non-GAAP: (a)
        
Adjusted operating income$1,373
 $1,407
 $(34) (2)% 
Adjusted net earnings from continuing operations$829
 $816
 $13
 2 % 
Adjusted net earnings$868
 $897
 $(29) (3)% 
Adjusted diluted EPS from continuing operations$2.01
 $1.78
 $.23
 13 % 
Adjusted diluted EPS$2.10
 $1.95
 $.15
 8 % 
(a) See pages 3136 - 3237 for reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.

For the six months endedJune 30, 2017, revenues increased 1% despite a difficult comparison to 2016, the 6% increase in revenues was driven by 15% growth in advertising revenues, reflectingwhich included CBS’s broadcast of Super Bowl 50and international licensing sales of five Star Trek and 7%library series. The growth in underlying network advertising. Affiliatewas driven by 16% higher affiliate and subscription fee revenues, increased 5%, drivenled by 43%27% growth in station affiliation fees and retransmission revenues, as well as revenuesgrowth from new digital distribution platforms, partially offset byinitiatives, including the benefit to the second quarter of 2015 from the previously mentioned pay-per-view boxing event. Content licensing and distribution revenues declined 9%, reflecting lower domestic licensing sales compared to the first half of 2015 which included significant domestic licensing sales ofCompany’s owned streaming subscription services, NCISCBS All Access and the CSI, partially offset by growth from international licensing, mainly from the sales of Star TrekShowtime series.

Operating income grew 19%digital streaming subscription service, and diluted EPS increased 34% primarily driven by the higher revenues, as well as restructuring charges of $55 million recorded during the six months ended June 30, 2015. The EPS comparison also benefited from lower weighted average shares outstanding as a result of the Company’s ongoing share repurchase program.

The Company generated operating cash flow from continuing operations of $1.25 billion for the six months ended June 30, 2016 compared with $881 million for the six months ended June 30, 2015. Free cash flow for the six months ended June 30, 2016 was $1.17 billion compared with $835 million for the same prior-year period. Thesethird-


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


increasesparty live television streaming services. In addition, content licensing and distribution revenues increased 14%, reflecting growth in domestic television licensing sales and strong demand for the Company’s content internationally, partially offset by the aforementioned 2016 sales of Star Trek library programming.
Operating income decreased 3% for the six months endedJune 30, 2017, primarily as a result of a mix of lower-margin revenues in 2017 compared to 2016. Net earnings from continuing operations increased 4% and diluted EPS from continuing operations increased 16%, as a result of tax benefits in 2017 from the resolution of certain state income tax matters and from the exercise of stock options and vesting of restricted stock units (“RSUs”) as a result of the adoption of new accounting guidance during the first quarter of 2017, partially offset by lower operating income. Diluted EPS from continuing operations also benefited from lower weighted average shares outstanding in 2017 as a result of the Company’s ongoing share repurchase program. Adjusted net earnings from continuing operations and adjusted diluted EPS from continuing operations, which exclude a tax benefit of $22 million, or $.05 per diluted share, from the resolution of state income tax matters, increased 2% and 13%, respectively. The Company reported a net loss of $194 million for the six months endedJune 30, 2017, which included a noncash charge of $1.08 billion, or $2.62 per diluted share, in discontinued operations to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. CBS Radio is classified as held for sale and therefore, in accordance with FASB guidance, its carrying value will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses. Adjusted net earnings from continuing operations and Adjusted diluted EPS from continuing operations are non-GAAP financial measures. See pages 36 - 37 for details of the discrete items excluded from financial results, along with reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.
The Company generated operating cash flow from continuing operations of $909 million for the six months endedJune 30, 2017 compared with $1.14 billion for the six months ended June 30, 2016. Free cash flow for the six months endedJune 30, 2017 was $841 million compared with $1.07 billion for the same prior-year period. These decreases were primarily driven by growththe benefit in affiliate and subscription fees and higher advertising revenues, including the2016 from CBS’s broadcast of Super Bowl 50, on CBS, partially offset by increased investment in content.and discretionary pension contributions of $100 million made during the first quarter of 2017 to prefund the Company’s qualified plans. Free cash flow for the three and six months ended June 30, 2017 benefited from higher affiliate and subscription fee revenues. Free cash flow is a non-GAAP financial measure. See “Free Cash Flow” on page 47pages 51 - 52 for a reconciliation of net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, to free cash flow.

Recent Developments
In connection with the Company’s previously announced agreement to combine CBS Radio with Entercom in a merger following the separation of CBS Radio through a tax-free split-off, CBS Radio filed a registration statement on Forms S-4 and S-1 with the Securities and Exchange Commission (“SEC”) on April 13, 2017, and two subsequent amendments to such registration statement, with the most recent amendment filed on July 10, 2017. The Company expects the transaction to be completed during the fourth quarter of 2017, subject to customary approvals and closing conditions. CBS Radio has been presented as a discontinued operation in the consolidated financial statements for all periods presented.

In July 2017, the Company issued $400 million of 2.50% senior notes due 2023 and $500 million of 3.375% senior notes due 2028. The Company used the net proceeds from these issuances to repay its $400 million outstanding 1.95% senior notes which matured on July 1, 2017, and to redeem all of its $300 million outstanding 4.625% senior notes due May 2018. The remaining net proceeds were used for general corporate purposes, including the repayment of short-term borrowings, including commercial paper. Subsequent to the July 2017 issuances, repayment and redemption of senior notes, the Company had $9.04 billion of long-term debt outstanding, excluding capital leases, at a weighted average interest rate of 4.43%.


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


Share Repurchases and Dividends
During the second quarter of 2016,2017, the Company repurchased 9.24.7 million shares of its Class B Common Stock under its share repurchase program for $500$300 million, at an average cost of $54.21$63.64 per share. During the six months ended June 30, 2016,2017, the Company repurchased 19.512.3 million shares of its Class B Common Stock for $1.00 billion,$800 million, at an average cost of $51.27$65.08 per share, leaving $1.00$3.31 billion of authorization at June 30, 2016.2017.

During the second quarter of 2016,2017, the Company declared a quarterly cash dividend of $.15$.18 on its Class A and Class B Common Stock, resulting in total dividends of $69$73 million, payablewhich were paid on July 1, 2016.2017.

On July 28, 2016, the Company announced that its Board of Directors approved an increase to the Company’s share repurchase program to a total availability of $6.0 billion, as well as a 20% increase to the quarterly cash dividend on the Company’s Class A and Class B Common Stock from $.15 to $.18 per share, payable on October 1, 2016, to shareholders of record on September 9, 2016.

Debt
During July 2016, the Company issued $700 million of 2.90% senior notes due 2027. The Company is using the net proceeds from this issuance for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and the repayment of short-term borrowings, including commercial paper. Upon settlement of the debt issuance on July 11, 2016, the Company had $8.85 billion of long-term debt outstanding, excluding capital leases, at a weighted average interest rate of 4.47%.

Reconciliation of Non-GAAP Measures
Results for the six months ended June 30, 2016 and the three and six months ended June 30, 20152017 and the six months endedJune 30, 2016 included discrete items that were not part of the normal course of operations. The following tables present adjusted operating income, adjusted net earnings, and adjusted diluted EPS,non-GAAP financial measures, which exclude the impact of these discrete items. These adjusted results are non-GAAP financial measures, which areitems, reconciled below to the most directly comparable financial measures in accordance with GAAP. The Company believes that presenting its financial results adjusted for the impact of discrete items is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company’s management and provides a clearer perspective on the underlying performance of the Company.
 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015 2016
2015 
Operating income$733
 $586
 $1,554
 $1,307
 
Exclude:        
Restructuring charges—
 55
 —
 55
 
Other operating items, net (a)
—
 —
 (9) (19) 
Adjusted operating income$733
 $641
 $1,545
 $1,343
 
 Three Months Ended June 30, 2017
 Reported 
Discontinued Operations Adjustments (a)
 Adjusted 
Net earnings from continuing operations$397
  $—
  $397
 
Net earnings (loss) from discontinued operations, net of tax(339)  369
  30
 
Net earnings$58
  $369
  $427
 
Diluted EPS from continuing operations$.97
  $—
  $.97
 
Diluted EPS$.14
  $.90
  $1.04
 

 Six Months Ended June 30, 2017
 Reported 
Discrete Tax Item (b)
 
Discontinued Operations Adjustments (a)
  Adjusted 
Earnings from continuing operations before income taxes$1,187
  $—
   $—
   $1,187
 
Provision for income taxes(307)  (22)   —
   (329) 
Equity in loss of investee companies, net of tax(29)  —
   —
   (29) 
Net earnings from continuing operations851
  (22)   —
   829
 
Net earnings (loss) from discontinued operations, net of tax(1,045)  —
   1,084
   39
 
Net earnings (loss)$(194)  $(22)   $1,084
   $868
 
Diluted EPS from continuing operations$2.06
  $(.05)   $—
   $2.01
 
Diluted EPS$(.47)  $(.05)   $2.62
   $2.10
 
(a) Other operating items, net includes gains fromReflects noncash charges of $365 million and $1.08 billion for the sales of internet businesses in China for thethree and six months ended June 30, 20162017, respectively, to record a valuation allowance for the carrying value of CBS Radio, and 2015, and for 2016, also includes a multiyear, retroactive impactrestructuring charge of $7 million ($4 million, net of tax) at CBS Radio.
(b) Reflects a new operating tax.tax benefit in the first quarter of 2017 from the resolution of certain state income tax matters.


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


 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015 2016 2015 
Net earnings$423
 $332
 $896
 $726
 
Exclude:        
Restructuring charges (net of tax of
$22 million in 2015)
—

33
 —
 33
 
Other operating items, net (net of tax of
$4 million in 2016 and $16 million in 2015) (a)
—
 —
 (5) (3) 
Write-down of an equity investment—
 —
 6
 —
 
Adjusted net earnings$423

$365
 $897
 $756

 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015 2016 2015 
Diluted EPS$.93
 $.67
 $1.95
 $1.45
 
Exclude:        
Restructuring charges—
 .07
 —
 .07
 
Other operating items, net (a)
—
 —
 (.01) (.01) 
Write-down of an equity investment—
 —
 .01
 —
 
Adjusted diluted EPS$.93
 $.74
 $1.95
 $1.51
 
 Six Months Ended June 30, 2016
 Reported 
Other Operating Items (a)
 
Write-down of Investment (b)
 Adjusted 
Operating income$1,416
  $(9)   $—
  $1,407
 
Interest expense(200)  —
   —
  (200) 
Interest income15
  —
   —
  15
 
Other items, net(7)  —
   —
  (7) 
Earnings from continuing operations before income taxes1,224
  (9)   —
  1,215
 
Provision for income taxes(379)  4
   —
  (375) 
Equity in loss of investee companies, net of tax(30)  —
   6
  (24) 
Net earnings from continuing operations815
  (5)   6
  816
 
Net earnings from discontinued operations, net of tax81
  —
   —
  81
 
Net earnings$896
  $(5)   $6
  $897
 
Diluted EPS from continuing operations$1.78
  $(.01)   $.01
  $1.78
 
Diluted EPS$1.95
  $(.01)   $.01
  $1.95
 
(a) Other operating items, net includes gains fromReflects a gain on the salessale of an internet businessesbusiness in China for the six months ended June 30, 2016 and 2015, and for 2016, also includes a multiyear, retroactive impact of a new operating tax.
(b) Reflects the write-down of an international television joint venture to its fair value.

Consolidated Results of Operations
Three and Six Months Ended June 30, 20162017 versus Three and Six Months Ended June 30, 20152016
Revenues
Three Months Ended June 30, Three Months Ended June 30, 
  
% of Total
Revenues
   
% of Total
Revenues
 Increase/(Decrease)   
% of Total
Revenues
   
% of Total
Revenues
 Increase/(Decrease) 
Revenues by Type2016 2015  $ % 2017 2016  $ % 
Advertising$1,552
 47% $1,594
 50% $(42) (3)% $1,299
 40% $1,245
 42% $54
 4 % 
Content licensing and distribution943
 29
 815
 25
 128
 16
 1,056
 32
 943
 32
 113
 12
 
Affiliate and subscription fees733
 22
 752
 23
 (19) (3) 848
 26
 733
 24
 115
 16
 
Other59
 2
 58
 2
 1
 2
 54
 2
 55
 2
 (1) (2) 
Total Revenues$3,287
 100% $3,219
 100% $68
 2 % $3,257
 100% $2,976
 100% $281
 9 % 
Six Months Ended June 30, Six Months Ended June 30, 
  
% of Total
Revenues
   
% of Total
Revenues
 Increase/(Decrease)   
% of Total
Revenues
   
% of Total
Revenues
 Increase/(Decrease) 
Revenues by Type2016 2015  $ % 2017 2016  $ % 
Advertising$3,894
 55% $3,378
 50% $516
 15 % $2,902
 44% $3,330
 51% $(428) (13)% 
Content licensing and distribution1,672
 23
 1,843
 27
 (171) (9) 1,901
 29
 1,672
 25
 229
 14
 
Affiliate and subscription fees1,455
 20
 1,380
 21
 75
 5
 1,690
 25
 1,455
 22
 235
 16
 
Other115
 2
 118
 2
 (3) (3) 107
 2
 107
 2
 —
 —
 
Total Revenues$7,136
 100% $6,719
 100% $417
 6 % $6,600
 100% $6,564
 100% $36
 1 % 
Advertising
For the three months ended June 30, 2017, the 4% increase in advertising revenues reflects 7% growth in network advertising revenues, driven by CBS’s broadcast of the semifinals and finals of the NCAA Tournament, partially offset by a decline in non-sports advertising revenues. The semifinals and finals of the NCAA Tournament are broadcast on the CBS Television Network every other year through 2032 under the current agreements with the NCAA and Turner Broadcasting System, Inc. For the six months ended June 30, 2017, the 13% decrease in advertising revenues primarily reflects the impact of two noncomparable sporting events that benefited 2016: the


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


Advertising
For the three months ended June 30, 2016, the 3% decrease in advertising revenues was principally driven by the absence of CBS’s broadcast of the NCAA Tournament finals, which was broadcast by Turner in 2016. Under the rights agreement with the NCAA, CBS and Turner alternate broadcasting both the semifinals and finals of the NCAA Tournament, with these games being broadcast by CBS in 2017. The decline in advertising also reflected the impact from the sales of internet businesses in China during 2015, partially offset by 2% growth in underlying network advertising revenues. For the six months ended June 30, 2016, the 15% increase in advertising revenues was driven by CBS’s broadcast of the Super Bowl which is broadcast50 and one additional NFL playoff game on the CBS Television Network, once every three years through 2022 under the current contract; one additional NFL playoff game broadcast on CBS in 2016;as well as lower political and 7% growth in underlying network advertising.non-sports advertising sales. These increasesdecreases were partially offset by the impact frompreviously mentioned broadcast of additional NCAA Tournament games in the salessecond quarter of internet businesses in China during 2015.2017.

The Company recently completed the CBS Television Network’s upfront advertising sales (“Upfront”) for the 2016/20172017/2018 television broadcast season, which runs from the middle of September 20162017 through the middle of September 2017.2018. A significant portion of advertising spots for the CBS Television Network’s non-sports programming is sold during May through July in the Upfront each year. This year’s Upfront concluded with increases in pricing compared with the prior broadcast season, and a majority of the Company’s deals will be based on a live-plus-seven day viewing window, which isare expected to benefit advertising revenues during the 2016/20172017/2018 broadcast season. However, overall advertising revenues for the Company will be dependent on ratings for its programming and market conditions, including demand in the scatter advertising market, which is when advertisers purchase the remaining advertising spots closer to the broadcast of the related programming. Additionally, in the second half of 2017, the advertising revenue comparison with the prior year will continue to be negatively affected by the benefit in 2016 local advertising revenues are expected to benefit from strong political advertising spending associated with U.S. federal and state elections.advertising.

Content Licensing and Distribution
For the three months ended June 30, 2016,2017, content licensing and distribution revenues benefited from a higher volume of television licensing sales and increased 12%, despite the 16%international licensing sales of five Star Trek library series in the second quarter of 2016. For the six months ended June 30, 2017, the 14% increase in content licensing and distribution revenues was driven by higher international television licensing, mainly from the sales of all episodes of five Star Trek series, as well as growth in domestic television licensing revenues. Forsales and strong demand for the Company’s content internationally, partially offset by the licensing sales of Star Trek in 2016. Content licensing and distribution revenues for the three and six months ended June 30, 2016,2017 benefited from additional titles available for sale as a result of the 9% decreaseCompany’s recent increased investment in internally-produced series.

For the remainder of 2017, the content licensing and distribution revenues reflects lower domestic television licensing revenues, as the first six months of 2015 included significant sales of NCIS and CSI. This decrease was partially offset by growth from international licensing of Star Trek series. For the remainder of 2016, the content and licensing distribution revenue comparison will continue to be impacted by fluctuations resulting from the timing of when Company-owned television series are made available for multiyear 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.

Affiliate and Subscription Fees
For the three and six months ended June 30, 2016,2017, the 3% decreaseincrease in affiliate and subscription fees reflects the benefit to 2015 from Showtime Networks’ distribution of the Floyd Mayweather/Manny Pacquiao pay-per-view boxing event, which impacted the second quarter affiliate and subscription fees comparison by 21 percentage points. Underlying results reflect 44%16% in each period reflects growth in station affiliation fees and retransmission revenues, and higher revenues from new digital distribution platforms,initiatives, including the Company’s owned streaming subscription services, CBS All Access and Showtime Networks’ over-the-top service. For the six months ended June 30, 2016, the 5% increase in affiliateShowtime digital streaming subscription offering, and third-party live television streaming offerings.

Affiliate and subscription fees was driven by 43% growth in station affiliation fees and retransmission revenues, andfor the third quarter of 2017 are expected to include revenues from new digital distribution platforms. These increases were partially offset by the impact from the previously mentionedFloyd Mayweather/Conor McGregor pay-per-view boxing event.

Over the next few years, the Company expects to renew a significant portionbenefit from the renewal of several of its agreements with station affiliates and MVPDs as well as from agreements with new distributors of live television streaming offerings. In addition, the Company’s existing agreements with station affiliates and MVPDs include annual contractual increases. Together, these factors are expected to result in continued growth in affiliate and subscription fees over the next several years.


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


MVPDs. This, along with the Company’s new digital distribution initiatives, are expected to result in continued growth in affiliate and subscription fees.

International Revenues
The Company generated approximately 17%15% and 14%19% of its total revenues from international regions for the three months ended June 30, 20162017 and 2015,2016, respectively, and generated approximately 14% and 15% of its total revenues from international regions for the six months ended June 30, 20162017 and 2015,2016, respectively.

Operating Expenses
Three Months Ended June 30, Three Months Ended June 30, 
  % of Operating Expenses   % of Operating Expenses Increase/(Decrease)   % of Operating Expenses   % of Operating Expenses Increase/(Decrease) 
Operating Expenses by Type2016 2015  $ % 2017 2016  $ % 
Programming$543
 29% $683
 36% $(140) (20)% $652
 33% $525
 30% $127
 24% 
Production672
 36
 600
 32
 72
 12
 726
 36
 630
 36
 96
 15
 
Participation, distribution and royalty285
 15
 244
 12
 41
 17
 290
 14
 285
 16
 5
 2
 
Other361
 20
 380
 20
 (19) (5) 336
 17
 318
 18
 18
 6
 
Total Operating Expenses$1,861
 100% $1,907
 100% $(46) (2)% $2,004
 100% $1,758
 100% $246
 14% 
Six Months Ended June 30, Six Months Ended June 30, 
  % of Operating Expenses   % of Operating Expenses Increase/(Decrease)   % of Operating Expenses   % of Operating Expenses Increase/(Decrease) 
Operating Expenses by Type2016 2015  $ % 2017 2016  $ % 
Programming$1,656
 39% $1,515
 38% $141
 9 % $1,509
 37% $1,633
 41% $(124) (8)% 
Production1,347
 32
 1,257
 31
 90
 7
 1,383
 34
 1,267
 31
 116
 9
 
Participation, distribution and royalty497
 12
 546
 13
 (49) (9) 526
 13
 497
 12
 29
 6
 
Other717
 17
 731
 18
 (14) (2) 660
 16
 633
 16
 27
 4
 
Total Operating Expenses$4,217
 100% $4,049
 100% $168
 4 % $4,078
 100% $4,030
 100% $48
 1 % 

For the three months ended June 30, 2016,2017, the 20%24% increase in programming expenses was driven by higher sports programming costs, mainly associated with CBS’s broadcast of the semifinals and finals of the NCAA Tournament. For the six months ended June 30, 2017, the 8% decreasein programming expenses was driven by lower sports programming costs, as a result of2016 included costs in 2015 associated with Showtime Networks’ distribution of the Floyd Mayweather/Manny Pacquiao pay-per-view boxing event and CBS’s broadcast of Super Bowl 50, which were partially offset by costs associated with the 2017 broadcast of additional NCAA Tournament finals, which was broadcast by Turner in 2016. games.

For the three and six months ended June 30, 2016,2017, the 9% increase in programming expenses was primarily driven by increased sports programming costs as a result of additional NFL games broadcast on CBS in 2016, including Super Bowl 50, partially offset by the absence of the previously mentioned pay-per-view boxing event and lower costs for acquired television series as a result of a shift to a higher mix of internally developed television series.

For the three months ended June 30, 2016, the 12% increaseincreases in production expenses was driven byof 15% and 9%, respectively, reflect higher costs associated with the increase in television licensing revenues.revenues and a higher investment in internally-produced television series. For the six months ended June 30, 2016, the 7% increase in production expenses was the result of increased investment in internally developed series and costs associated with the Super Bowl production in 2016,2017, these increases were partially offset by lower sports production costs associated withas the decreasefirst quarter of 2016 included CBS’s broadcast of Super Bowl 50.

For the three and six months ended June 30, 2017, the increases in participation, distribution and royalty costs of 2% and 6%, respectively, primarily reflect higher residuals resulting from the increase in television licensing revenues.

For the three months ended June 30, 2016, the 17% increase in participation, distributionSelling, General and royalty costs primarily reflects higher participations and residuals resulting from higher television licensing revenues. For the six months ended June 30, 2016, the 9% decrease in participation, distribution and royalty costs primarily reflects lower participations and residuals associated with lower television licensing revenues.Administrative Expenses
 Three Months Ended June 30,
 2017 % of Revenues 2016 % of Revenues Increase/(Decrease) 
Selling, general and administrative expenses$528
  16%  $510
  17%   4%  


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
 Three Months Ended June 30,
 2016 % of Revenues 2015 % of Revenues Increase/(Decrease) 
Selling, general and administrative
expenses
$630
  19%  $605
  19%   4%  
 Six Months Ended June 30,
 2017 % of Revenues 2016 % of Revenues Increase/(Decrease) 
Selling, general and administrative expenses$1,038
  16%  $1,013
  15%   2%  

 Six Months Ended June 30,
 2016 % of Revenues 2015 % of Revenues Increase/(Decrease) 
Selling, general and administrative
expenses
$1,247
  17%  $1,193
  18%   5%  
Selling, general and administrative (“SG&A”) expenses include expenses incurred for selling and marketing costs, occupancy and back office support. For the three and six months ended June 30, 2016,2017, the increases in SG&A expenses increasedof 4% and 5%2%, respectively, primarily as a result of higher pension and other employee-related costs. For the six months ended June 30, 2016, the increase also reflectsreflect higher advertising and marketing costs, mainly associated with the timing of series premieres on Showtime.and to support the Company’s growth initiatives.

Depreciation and Amortization
 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015 Increase/(Decrease) 2016 2015 Increase/(Decrease) 
Depreciation and amortization$63
 $66
  (5)%  $127
 $134
  (5)%  
 Three Months Ended June 30, Six Months Ended June 30, 
 2017
2016 Increase/(Decrease) 2017
2016 Increase/(Decrease) 
Depreciation and amortization$56
 $57
  (2)%  $111
 $114
�� (3)%  
For both the three and six months ended June 30, 2016,2017, the 5%decreasedecreases in depreciation and amortization wasof 2% and 3%, respectively, were the result of intangibles and property and equipment that became fully amortized, as well as the sales of internet businesses in China during 2015.amortized.

Other Operating Items, Net
 Six Months Ended June 30, 
 2016 2015 Increase/(Decrease) 
Other operating items, net$(9) $(19)  (53)%  
For the six months ended June 30, 2016, and 2015, other operating items, net includes gainsincluded a gain from the salessale of an internet businessesbusiness in China and for 2016, also includes a multiyear, retroactive impact of a new operating tax.

Interest Expense/Income
Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 
2016
2015
Increase/(Decrease) 2016
2015 Increase/(Decrease) 2017
2016
Increase/(Decrease) 2017
2016 Increase/(Decrease) 
Interest expense$(100) $(94) 6% $(200) $(187)  7%  $(111) $(100) 11% $(220) $(200)  10%  
Interest income$8
 $7
 14% $15
 $12
 25% $15
 $8
 88% $28
 $15
 87% 
The following table presents the Company’s outstanding debt balances, excluding capital leases, and the weighted average interest rate as of June 30, 2017 and 2016:
 At June 30,
   Weighted Average   Weighted Average 
 2017 Interest Rate 2016 Interest Rate 
Total long-term debt$8,853
  4.47%  $8,167
  4.61%  
Commercial paper$263
  1.42%  $163
  0.72%  
Other Items, Net
 Three Months Ended June 30, Six Months Ended June 30, 
 2017
2016 Increase/(Decrease) 2017 2016 Increase/(Decrease) 
Other items, net$5
 $(4)  n/m  $6
 $(7)  n/m  
n/m - not meaningful
Other items, net for all periods primarily consists of foreign exchange gains and losses.


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 the Company’s outstanding debt balances, excluding capital leases, and the weighted average interest rate as of June 30, 2016 and 2015:
 At June 30,
   Weighted Average   Weighted Average 
 2016 Interest Rate 2015 Interest Rate 
Total long-term debt$8,167
  4.61%  $7,574
  4.75%  
Commercial paper$163
  0.72%  $394
  0.47%  

Other Items, Net
 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015 Increase/(Decrease) 2016 2015 Increase/(Decrease) 
Other items, net$(4) $4
  (200)%  $(7) $(19)  63%  
Other items, net for all periods primarily consists of foreign exchange gains and losses.
Provision for Income Taxes
 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015 Increase/(Decrease) 2016 2015 Increase/(Decrease) 
Tax provision$205
 $165
  24%  $436
 $368
  18%  
Effective tax rate32.2% 32.8%     32.0% 33.1%     
The provision for income taxes represents federal, state and local, and foreign taxes on earnings from continuing operations before income taxes and equity in loss of investee companies. The lower
 Three Months Ended June 30, Six Months Ended June 30, 
 2017 2016 Increase/(Decrease) 2017 2016 Increase/(Decrease) 
Provision for income taxes, including interest
and before other discrete items

$(176) $(171)  3 %  $(361) $(374)  (3)%  
Excess tax benefits from stock-based
compensation (a)
4
 —
     31
 —
     
Other discrete items (b)
3
 (2)     23
 (5)     
Provision for income taxes$(169) $(173)  (2)%  $(307) $(379)  (19)%  
Effective income tax rate29.2% 31.2%     25.9% 31.0%     
(a) Reflects excess tax ratebenefits associated with the exercise of stock options and vesting of RSUs. During the first quarter of 2017, the Company adopted FASB guidance which requires that the difference between the tax benefit from stock-based compensation expense and the deduction on the tax return be recognized within the income tax provision on the statement of operations. Previously, such difference was recognized in stockholders’ equity on the balance sheet. This difference occurs because stock-based compensation expense is recorded based on the grant-date fair value of the award, whereas the tax deduction is based on the fair value on the date the stock option is exercised or the RSU vests. This guidance requires the income statement classification to be applied prospectively, and therefore, excess tax benefits for prior periods remain classified in stockholders’ equity.
(b) For the three and six months ended June 30, 2016 includes a higher domestic production deduction resulting2017, primarily reflects tax benefits from the mixresolution of revenues during the period and a lower effectivecertain state income tax rate.matters.

Equity in Loss of Investee Companies, Net of Tax
 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015
Increase/(Decrease) 2016 2015 Increase/(Decrease) 
Equity in loss of investee
companies, net of tax
$(9) $(6)  50%  $(30) $(19)  58%  
 Three Months Ended June 30, Six Months Ended June 30, 
 2017
2016
Increase/(Decrease) 2017 2016 Increase/(Decrease) 
Equity in loss of investee companies,
net of tax
$(12) $(9)  33%  $(29) $(30)  (3)%  

Net Earnings from Continuing Operations and Diluted EPS from Continuing Operations
 Three Months Ended June 30, Six Months Ended June 30, 
 2017 2016 Increase/(Decrease) 2017 2016 Increase/(Decrease) 
Net earnings from continuing operations$397
 $373
  6%  $851
 $815
  4%  
Diluted EPS from continuing operations$.97
 $.82
  18%  $2.06
 $1.78
  16%  
For the three months ended June 30, 2017, the 6% increase in net earnings from continuing operations was primarily the result of higher operating income. For the six months endedJune 30, 2016, equity2017, the 4% increase in loss of investee companies, net ofearnings from continuing operations reflects the previously mentioned tax includes a $6 million write-down of an international television joint venturebenefits, which were partially offset by lower operating income. In addition to its fair value.

Net Earnings and Dilutedthe higher earnings, the increases in diluted EPS
 Three Months Ended June 30, Six Months Ended June 30, 
 2016
2015
Increase/(Decrease) 2016 2015 Increase/(Decrease) 
Net earnings$423
 $332
  27%  $896
 $726
  23%  
Diluted EPS$.93
 $.67
  39%  $1.95
 $1.45
  34%  
For from continuing operations for the three and six months ended June 30, 2016, the increases in net earnings2017 of 27%18% and 23%16%, respectively, andreflect lower weighted average shares outstanding as a result of the increases in diluted EPS of 39% and 34%, respectively, were driven by higher operating income. The increasesCompany’s ongoing share repurchase program.


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


Net Earnings (Loss) from Discontinued Operations
The following table sets forth details of net earnings (loss) from discontinued operations for the three and six months ended June 30, 2017 and 2016.
 Three Months Ended June 30, Six Months Ended June 30,
 2017
2016 2017
2016
Revenues$306
 $313
 $556
 $575
Costs and expenses:       
Operating105
 103
 194
 188
Selling, general and administrative129
 122
 251
 236
Depreciation and amortization (a)
—
 6
 —
 13
Restructuring charge7
 —
 7
 —
Provision for valuation allowance365
 —
 1,080
 —
Total costs and expenses606
 231
 1,532
 437
Operating income (loss)(300) 82
 (976) 138
Interest expense(20) —
 (39) —
Earnings (loss) from discontinued operations(320) 82
 (1,015) 138
Income tax provision(19) (32) (30) (57)
Net earnings (loss) from discontinued operations, net of tax$(339) $50
 $(1,045) $81
(a) CBS Radio has been classified as held for sale beginning in diluted EPS also reflectthe fourth quarter of 2016. Under ASC 360, assets held for sale are not depreciated or amortized.

FASB Accounting Standards Codification (“ASC”) 360 requires that an asset classified as held for sale be measured each reporting period at the lower weighted average shares outstanding as a resultof its carrying amount or fair value less cost to sell. The ultimate value of the Company’s ongoingtransaction with Entercom will be determined based on Entercom’s stock price at the closing of the transaction. The Company recorded noncash charges of $365 million and $1.08 billion for the three and six months ended June 30, 2017, respectively, to record a valuation allowance to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. In accordance with ASC 360, the valuation allowance will continue to be adjusted based on the trading price of Entercom’s stock, which could result in future gains or losses. A 10% change to Entercom’s stock price would change the carrying value of CBS Radio by approximately $100 million.

For the three and six months ended June 30, 2017, CBS Radio recorded a restructuring charge of $7 million associated with the reorganization of certain business operations, reflecting severance costs and costs associated with exiting contractual obligations.

Net Earnings (Loss) and Diluted EPS
 Three Months Ended June 30, Six Months Ended June 30, 
 2017
2016
Increase/(Decrease) 2017 2016 Increase/(Decrease) 
Net earnings (loss)$58
 $423
  (86)%  $(194) $896
  (122)%  
Diluted EPS$.14
 $.93
  (85)%  $(.47) $1.95
  (124)%  


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


Segment Results of Operations
The Company presents operating income (loss) excluding restructuring charges impairment charges, and other operating items, net, if any,each where applicable, (“Segment Operating Income”) as the primary measure of profit and loss for its operating segments in accordance with FASB guidance for segment reporting. The Company believes the presentation of Segment Operating Income is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company’s management and enhances their ability to understand the Company’s operating performance. The reconciliation of Segment Operating Income to the Company’s consolidated Net earnings (loss) is presented in Note 1213 (Reportable Segments) to the consolidated financial statements.
Three Months Ended June 30, 20162017 and 20152016
Three Months Ended June 30,Three Months Ended June 30,
 
% of Total
Revenues
  
% of Total
Revenues
Increase/(Decrease)  
% of Total
Revenues
  
% of Total
Revenues
Increase/(Decrease) 
2016
2015$ % 2017
2016$ % 
Revenues:                        
Entertainment$1,947
 59 % $1,785
 55% $162
 9 % $2,184
 67 % $1,947
 66 % $237
 12 % 
Cable Networks536
 16
 615
 19
 (79) (13) 571
 18
 536
 18
 35
 7
 
Publishing187
 6
 199
 6
 (12) (6) 206
 6
 187
 6
 19
 10
 
Local Broadcasting647
 20
 654
 20
 (7) (1) 
Local Media412
 13
 396
 13
 16
 4
 
Corporate/Eliminations(30) (1) (34) —
 4
 12
 (116) (4) (90) (3) (26) (29) 
Total Revenues$3,287
 100 % $3,219
 100% $68
 2 % $3,257
 100 % $2,976
 100 % $281
 9 % 
Three Months Ended June 30,
 
% of Total
Segment
Operating
Income
  
% of Total
Segment
Operating
Income
  Three Months Ended June 30,
       
% of Total
Operating
Income
  
% of Total
Operating
Income
  
   Increase/(Decrease)    Increase/(Decrease) 
2016 2015$ % 2017 2016$ % 
Segment Operating Income (Loss):                        
Entertainment$351
 48 % $262
 41 % $89
 34 % $346
 52 % $351
 54 % $(5) (1)% 
Cable Networks227
 31
 220
 34
 7
 3
 253
 38
 227
 35
 26
 11
 
Publishing26
 3
 25
 4
 1
 4
 28
 4
 26
 4
 2
 8
 
Local Broadcasting212
 29
 198
 31
 14
 7
 
Local Media127
 19
 130
 20
 (3) (2) 
Corporate(83) (11) (64) (10) (19) (30) (85) (13) (83) (13) (2) (2) 
Total Segment Operating Income733
 100 % 641
 100 % 92
 14
 
Restructuring charges—
   (55)   55
 n/m
 
Total Operating Income$733
   $586
   $147
 25 % $669
 100 % $651
 100 % $18
 3 % 
n/m - not meaningful
 Three Months Ended June 30,
   Increase/(Decrease) 
 2017 2016 $ % 
Depreciation and Amortization:        
Entertainment$27
 $30
 $(3) (10)% 
Cable Networks6
 5
 1
 20
 
Publishing2
 2
 —
 —
 
Local Media12
 11
 1
 9
 
Corporate9
 9
 —
 —
 
Total Depreciation and Amortization$56
 $57
 $(1) (2)% 


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


 Three Months Ended June 30,
   Increase/(Decrease) 
 2016
2015 $ % 
Depreciation and Amortization:        
Entertainment$30
 $32
 $(2) (6)% 
Cable Networks5
 6
 (1) (17) 
Publishing2
 2
 —
 —
 
Local Broadcasting18
 19
 (1) (5) 
Corporate8
 7
 1
 14
 
Total Depreciation and Amortization$63
 $66
 $(3) (5)% 
Six Months Ended June 30, 20162017 and 20152016
Six Months Ended June 30,Six Months Ended June 30, 
 
% of Total
Revenues
  
% of Total
Revenues
Increase/(Decrease)  
% of Total
Revenues
  
% of Total
Revenues
Increase/(Decrease) 
2016 2015$ % 2017 2016$ % 
Revenues:                        
Entertainment$4,534
 63 % $4,046
 60 % $488
 12 % $4,531
 69 % $4,534
 69 % $(3) — % 
Cable Networks1,061
 15
 1,154
 17
 (93) (8) 1,114
 17
 1,061
 16
 53
 5
 
Publishing332
 5
 344
 5
 (12) (3) 367
 6
 332
 5
 35
 11
 
Local Broadcasting1,296
 18
 1,250
 19
 46
 4
 
Local Media821
 12
 844
 13
 (23) (3) 
Corporate/Eliminations(87) (1) (75) (1) (12) (16) (233) (4) (207) (3) (26) (13) 
Total Revenues$7,136
 100 % $6,719
 100 % $417
 6 % $6,600
 100 % $6,564
 100 % $36
 1 % 
Six Months Ended June 30,
 
% of Total
Segment
Operating
Income
  
% of Total
Segment
Operating
Income
  Six Months Ended June 30, 
       
% of Total
Segment
Operating
Income
  
% of Total
Segment
Operating
Income
  
   Increase/(Decrease)    Increase/(Decrease) 
2016 2015$ % 2017 2016$ % 
Segment Operating Income (Loss):                        
Entertainment$800
 52 % $608
 45 % $192
 32 % $744
 54 % $800
 57 % $(56) (7)% 
Cable Networks455
 29
 471
 35
 (16) (3) 501
 37
 455
 32
 46
 10
 
Publishing39
 3
 37
 3
 2
 5
 42
 3
 39
 3
 3
 8
 
Local Broadcasting418
 27
 359
 27
 59
 16
 
Local Media250
 18
 280
 20
 (30) (11) 
Corporate(167) (11) (132) (10) (35) (27) (164) (12) (167) (12) 3
 2
 
Total Segment Operating Income1,545
 100 % 1,343
 100 % 202
 15
 1,373
 100 % 1,407
 100 % (34) (2) 
Restructuring charges—
   (55)   55
 n/m
 
Other operating items, net9
   19
   (10) (53) —
   9
   (9) n/m
 
Total Operating Income$1,554
   $1,307
   $247
 19 % $1,373
   $1,416
   $(43) (3)% 
n/m - not meaningful
Six Months Ended June 30,Six Months Ended June 30,
  Increase/(Decrease)   Increase/(Decrease) 
2016 2015 $ % 2017 2016 $ % 
Depreciation and Amortization:                
Entertainment$60
 $64
 $(4) (6)% $56
 $60
 $(4) (7)% 
Cable Networks11
 12
 (1) (8) 12
 11
 1
 9
 
Publishing3
 3
 —
 —
 3
 3
 —
 —
 
Local Broadcasting37
 40
 (3) (8) 
Local Media23
 22
 1
 5
 
Corporate16
 15
 1
 7
 17
 18
 (1) (6) 
Total Depreciation and Amortization$127
 $134
 $(7) (5)% $111
 $114
 $(3) (3)% 


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 Studios International, CBS Television Distribution, CBS Interactive and CBS Films)
Three Months Ended June 30, 20162017 and 20152016
 Three Months Ended June 30,
   Increase/(Decrease) 
 2016
2015 $ % 
Revenues$1,947
 $1,785
 $162
 9 % 
Segment Operating Income$351
 $262
 $89
 34 % 
Segment Operating Income as a % of revenues18% 15%     
Restructuring charges$—
 $12
 $(12) n/m
 
Depreciation and amortization$30
 $32
 $(2) (6)% 
Capital expenditures$24
 $13
 $11
 85 % 
n/m - not meaningful
 Three Months Ended June 30,
   Increase/(Decrease) 
 2017
2016 $ % 
Revenues$2,184
 $1,947
 $237
 12 % 
Segment Operating Income$346
 $351
 $(5) (1)% 
Segment Operating Income as a % of revenues16% 18%     
Depreciation and amortization$27
 $30
 $(3) (10)% 
Capital expenditures$24
 $24
 $—
 — % 
For the three months ended June 30, 2016,2017, the 9%12% increase in revenues reflects 19% higher content licensing and distribution revenueswas driven by 38% growth in international television licensing, mainly from the sales of all episodes of five Star Trek series. The revenue growth also reflects a 59% increase in affiliate and subscription fees, led by higher station affiliation fees retransmission revenues and subscription growth forfrom new initiatives, including CBS All Access.Access and third-party live television streaming services. Content licensing and distribution revenues benefited from a higher volume of television licensing sales and grew 12%, despite the difficult comparison with the second quarter of 2016, which included international licensing sales of five Star Trek library series. Advertising revenues decreased 3%increased 6%, reflecting the absence of the broadcast of the semifinals and finals of the NCAA Tournament finals on the CBS Television Network in 2016 and the impact from the salessecond quarter of internet businesses in China during 2015,2017, partially offset by 2% growtha decline in underlying networknon-sports advertising revenues.

For the three months ended June 30, 2016, the 34% increase in2017, operating income wasdecreased 1%, primarily driven by the growthmix of revenues, reflecting higher-margin revenues in revenues. Restructuring charges for the second quarter of 2015 primarily reflected severance costs.2016, including the licensing of Star Trek, and lower-margin revenues from the NCAA Tournament in the second quarter of 2017.

Six Months Ended June 30, 20162017 and 20152016
 Six Months Ended June 30,
   Increase/(Decrease) 
 2016 2015 $ % 
Revenues$4,534
 $4,046
 $488
 12 % 
Segment Operating Income$800
 $608
 $192
 32 % 
Segment Operating Income as a % of revenues18% 15%     
Restructuring charges$—
 $12
 $(12) n/m
 
Depreciation and amortization$60
 $64
 $(4) (6)% 
Capital expenditures$37
 $21
 $16
 76 % 
n/m - not meaningful
 Six Months Ended June 30,
   Increase/(Decrease) 
 2017 2016 $ % 
Revenues$4,531
 $4,534
 $(3) — % 
Segment Operating Income$744
 $800
 $(56) (7)% 
Segment Operating Income as a % of revenues16% 18%     
Depreciation and amortization$56
 $60
 $(4) (7)% 
Capital expenditures$38
 $37
 $1
 3 % 
For the six months ended June 30, 2017, revenues were comparable with the same prior-year period, despite the benefit in 2016 the 12% increase in revenues was driven by 26% growth in network advertising revenues, driven byfrom the broadcast of Super Bowl 50; one additional NFL playoff game broadcast on CBS in 2016 compared to 2015; and 7% growth in underlying network advertising. Additionally, affiliate. Affiliate and subscription fees grew 63% for the six months ended June 30, 2016 as a result ofincreased 33%, reflecting higher station affiliation fees retransmission revenues and subscription growth forfrom new initiatives, including CBS All Access.and third-party live television streaming services. Content licensing and distribution revenues grew 16%, led by higher domestic licensing sales and strong demand for the Company’s content internationally, due in part to increased investment in internally-produced series. These increases were partially offset by lower content licensing and distribution revenues duethe benefit to lower domestic licensing, as 2015 benefited from significant domestic licensing sales of NCIS and CSI, partially offset by growth in international licensing revenues2016 from the sales of Star Trek series. The revenue comparison was alsoimpacted by the sales of internet businesses in China during 2015.library programming.

For the six months ended June 30, 2017, the 7% decrease in operating income was mainly a result of higher-margin revenues in 2016.


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


For the six months ended June 30, 2016, the 32% increase in operating income was primarily a result of the increase in revenues.
Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks)
Three Months Ended June 30, 20162017 and 20152016
Three Months Ended June 30,Three Months Ended June 30,
  Increase/(Decrease)   Increase/(Decrease) 
2016
2015 $ % 2017
2016 $ % 
Revenues$536
 $615
 $(79) (13)% $571
 $536
 $35
 7% 
Segment Operating Income$227
 $220
 $7
 3 % $253
 $227
 $26
 11% 
Segment Operating Income as a % of revenues42% 36%     44% 42%     
Depreciation and amortization$5
 $6
 $(1) (17)% $6
 $5
 $1
 20% 
Capital expenditures$2
 $2
 $—
 — % $4
 $2
 $2
 100% 
For the three months ended June 30, 2016,2017, the 7% increase in revenues decreased 13%aswas driven by higher affiliate and subscription fees, led by subscription growth for the second quarter of 2015 benefited from the distribution of the Floyd Mayweather/Manny Pacquiao boxing event, which was the highest-grossing pay-per-view event of all time. This boxing event negatively impacted theShowtime digital streaming subscription offering. The revenue comparison by 24 percentage points. Underlying results reflectgrowth also reflects higher revenues from the domestic and international television licensing sales of Showtime original series, including House of Lies, and 5% growth in affiliate and subscription fees, driven by Showtime Networks’ over-the-top service.series. As of June 30, 20162017, subscriptions totaled 7773 million for Showtime Networks (including Showtime, The Movie Channel and Flix), 5652 million for CBS Sports Network and 3431 million for Smithsonian Networks.

For the three months ended June 30, 2016,2017, the 3%11% increase in operating income primarily reflects growthrevenue growth.

Cable Networks revenues for the third quarter of 2017 are expected to include revenues from the licensing of Showtime original series and Showtime Networks’ over-the-top service, partially offset by increased investment in original series. TheFloyd Mayweather/Conor McGregor pay-per-view boxing event did not have a significant impact on operating income as the 2015 revenues were significantly offset by associated costs.event.

Six Months Ended June 30, 20162017 and 20152016
 Six Months Ended June 30,
   Increase/(Decrease) 
 2016 2015 $ % 
Revenues$1,061
 $1,154
 $(93) (8)% 
Segment Operating Income$455
 $471
 $(16) (3)% 
Segment Operating Income as a % of revenues43% 41%     
Depreciation and amortization$11
 $12
 $(1) (8)% 
Capital expenditures$4
 $3
 $1
 33 % 
For the six months ended June 30, 2016, revenues decreased 8% as the 2015 period benefited from the distribution of the aforementioned pay-per-view boxing event. The decrease in pay-per-view revenues negatively impacted the revenue comparison by 12 percentage points. This decrease was partially offset by growth in revenues from Showtime Networks’ over-the-top service.
 Six Months Ended June 30,
   Increase/(Decrease) 
 2017 2016 $ % 
Revenues$1,114
 $1,061
 $53
 5% 
Segment Operating Income$501
 $455
 $46
 10% 
Segment Operating Income as a % of revenues45% 43%     
Depreciation and amortization$12
 $11
 $1
 9% 
Capital expenditures$7
 $4
 $3
 75% 
For the six months ended June 30, 2016,2017, the 3% decrease5% increase in revenues reflects growth in affiliate and subscription fees, led by the Showtime digital streaming subscription offering. This growth was partially offset by the timing of television licensing sales of Showtime original series.
For the six months ended June 30, 2017, the 10% increase in operating income was primarily driven by increased investmentgrowth in programming, including costs associated with the 2016 series premiere of Billions. Growth from Showtime Networks’ over-the-top service partially offset this decline.higher-margin revenues.



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


Publishing (Simon & Schuster)
Three Months Ended June 30, 20162017 and 20152016
Three Months Ended June 30,Three Months Ended June 30,
  Increase/(Decrease)   Increase/(Decrease) 
2016
2015 $ % 2017
2016 $ % 
Revenues$187
 $199
 $(12) (6)% $206
 $187
 $19
 10% 
Segment Operating Income$26
 $25
 $1
 4 % $28
 $26
 $2
 8% 
Segment Operating Income as a % of revenues14% 13%     14% 14%     
Depreciation and amortization$2
 $2
 $—
 — % $2
 $2
 $—
 —% 
Capital expenditures$3
 $2
 $1
 50 % $—
 $3
 $(3) n/m
 
n/m - not meaningful
For the three months ended June 30, 2016,2017, the 6% decrease10% increase in revenues reflects lowerwas driven by higher print book sales partially offset byand growth in digital audio sales. Digital revenues represented 23% of Publishing’s total revenues for the second quarter of 2016. Best-selling titles in the second quarter of 20162017 included EndLord of WatchShadows by Stephen KingCassandra Clare and Foreign AgentI Can’t Make This Up by Brad Thor.Kevin Hart.

For the three months ended June 30, 2016,2017, the 4%8% increase in operating income was driven by lower production, selling and inventory costs, which more than offset themainly reflects revenue decline.growth.
Six Months Ended June 30, 20162017 and 20152016
Six Months Ended June 30,Six Months Ended June 30,
  Increase/(Decrease)   Increase/(Decrease) 
2016 2015 $ % 2017 2016 $ % 
Revenues$332
 $344
 $(12) (3)% $367
 $332
 $35
 11 % 
Segment Operating Income$39
 $37
 $2
 5 % $42
 $39
 $3
 8 % 
Segment Operating Income as a % of revenues12% 11%     11% 12%     
Depreciation and amortization$3
 $3
 $—
 — % $3
 $3
 $—
 — % 
Capital expenditures$6
 $2
 $4
 200 % $1
 $6
 $(5) (83)% 
For the six months ended June 30, 2016,2017, the 3% decrease11% increase in revenues reflects lower digital andwas driven by higher print book sales and growth in digital audio sales.
For the six months ended June 30, 2016,2017, the 5%8% increase in operating income reflects the revenue growth, which was drivenpartially offset by lowerhigher production and selling and inventory costs, which more than offset the decline in revenues.costs.



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


Local BroadcastingMedia (CBSTelevision Stations and CBS RadioLocal Digital Media)
Three Months Ended June 30, 20162017 and 20152016
 Three Months Ended June 30,
   Increase/(Decrease) 
 2016
2015 $ % 
Revenues$647
 $654
 $(7) (1)% 
Segment Operating Income$212
 $198
 $14
 7 % 
Segment Operating Income as a % of revenues33% 30%     
Restructuring charges$—
 $43
 $(43) n/m
 
Depreciation and amortization$18
 $19
 $(1) (5)% 
Capital expenditures$10
 $11
 $(1) (9)% 
n/m - not meaningful
 Three Months Ended June 30,
   Increase/(Decrease) 
 2017 2016 $��% 
Revenues$412
 $396
 $16
 4 % 
Segment Operating Income$127
 $130
 $(3) (2)% 
Segment Operating Income as a % of revenues31% 33%     
Depreciation and amortization$12
 $11
 $1
 9 % 
Capital expenditures$7
 $4
 $3
 75 % 
For the three months ended June 30, 2016,2017, the 1% decrease4% increase in revenues was primarily driven by the absence of CBS’s broadcast of the NCAA Tournament finals, which was broadcast by Turner in 2016, and lower local radio advertising, partially offset by growth in retransmission revenues. Revenues for CBS Television StationsAdvertising revenues benefited from CBS’s broadcast of the semifinals and CBS Radio eachfinals of the NCAA Tournament in the second quarter of 2017; however, advertising revenues decreased 1%.2% mainly due to lower political advertising sales.

For the three months ended June 30, 2016,2017, the 7% increase2% decrease in operating income mainly reflects lower expenses as a resultthe mix of restructuring activities in 2015, which more than offsetrevenues. Retransmission revenues have associated network affiliation costs paid to the revenue decline. Restructuring charges of $43 million for the three months ended June 30, 2015 primarily reflected severance costs and costs associated with exiting contractual obligations at CBS Television Stations and CBS Radio.Network, whereas political advertising sales have a high operating income margin.
In
During the second half of 2017, the revenue comparison will continue to be negatively impacted by the benefit in 2016 localfrom strong political advertising revenues are expected to benefit from higher political spending associated with U.S. federal and state elections.

Six Months Ended June 30, 20162017 and 20152016
 Six Months Ended June 30,
   Increase/(Decrease) 
 2016 2015 $ % 
Revenues$1,296
 $1,250
 $46
 4 % 
Segment Operating Income$418
 $359
 $59
 16 % 
Segment Operating Income as a % of revenues32% 29%     
Restructuring charges$—
 $43
 $(43) n/m
 
Depreciation and amortization$37
 $40
 $(3) (8)% 
Capital expenditures$21
 $18
 $3
 17 % 
n/m - not meaningful
 Six Months Ended June 30,
   Increase/(Decrease) 
 2017 2016 $ % 
Revenues$821
 $844
 $(23) (3)% 
Segment Operating Income$250
 $280
 $(30) (11)% 
Segment Operating Income as a % of revenues30% 33%     
Depreciation and amortization$23
 $22
 $1
 5 % 
Capital expenditures$12
 $11
 $1
 9 % 
For the six months ended June 30, 2016,2017, the 4% increase3% decrease in revenues was driven by 8% growth at CBS Television Stations,lower advertising revenues, reflecting the benefit in 2016 from CBS’s broadcast of Super Bowl 50, on CBS during the first quarter of 2016, higherand a decline in political advertising sales andsales. The lower advertising revenues were partially offset by growth in retransmission revenues. This growth was partially offset by lower radio revenues, which decreased 2%.
For the six months ended June 30, 2016,2017, the 16% increase11% decrease in operating income was driven by the revenue growth and lower expenses resulting from restructuring activities in 2015.


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


In connection with the Company’s previously announced plans to separate its radio business, in July 2016, a preliminary registration statement was filed with the SEC for the proposed initial public offering of the common stock of CBS Radio Inc.
Corporate
Three Months Ended June 30, 2016 and 2015
 Three Months Ended June 30,
   Increase/(Decrease) 
 2016
2015 $ % 
Segment Operating Loss$(83) $(64) $(19) (30)% 
Depreciation and amortization$8
 $7
 $1
 14 % 
Capital expenditures$2
 $1
 $1
 100 % 
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 the three months ended June 30, 2016, the 30% increase in corporate expenses primarily reflects higher pension and other employee-related costs.
Six Months Ended June 30, 2016 and 2015
 Six Months Ended June 30,
   Increase/(Decrease) 
 2016 2015 $ % 
Segment Operating Loss$(167) $(132) $(35) (27)% 
Depreciation and amortization$16
 $15
 $1
 7 % 
Capital expenditures (a)
$11
 $2
 $9
 n/m
 
n/m - not meaningful
(a) Primarily reflects the timinglower revenues, as well as the mix of capital projects.
Forrevenues compared to the six months ended June 30, 2016, the 27% increase in corporate expenses primarily reflects higher pension and other employee-related costs.same prior-year period.


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


Corporate
Three Months Ended June 30, 2017 and 2016
 Three Months Ended June 30,
   Increase/(Decrease) 
 2017
2016 $ % 
Segment Operating Loss$(85) $(83) $(2) (2)% 
Depreciation and amortization$9
 $9
 $—
 — % 
Capital expenditures$6
 $2
 $4
 200 % 

Six Months Ended June 30, 2017 and 2016
 Six Months Ended June 30,
   Increase/(Decrease) 
 2017 2016 $ % 
Segment Operating Loss$(164) $(167) $3
 2 % 
Depreciation and amortization$17
 $18
 $(1) (6)% 
Capital expenditures$10
 $11
 $(1) (9)% 
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.
Financial Position
At At Increase/(Decrease) At At Increase/(Decrease) 
June 30, 2016
December 31, 2015 $ % June 30, 2017
December 31, 2016 $ % 
Current Assets:                  
Cash and cash equivalents $176
 $323
 $(147) (46)%  $170
 $598
 $(428) (72)% 
Receivables, net (a)
 3,243
 3,628
 (385) (11)  3,299
 3,314
 (15) —
 
Programming and other inventory (b)(a)
 1,224
 1,271
 (47) (4)  1,560
 1,427
 133
 9
 
Prepaid income taxes (c)
 39
 101
 (62) (61) 
Prepaid expenses 132
 185
 (53) (29) 
All other current assets 414
 424
 (10) (2)  525
 539
 (14) (3) 
Total current assets $5,096
 $5,747
 $(651) (11)%  $5,686
 $6,063
 $(377) (6)% 
(a) The decrease is primarily due to seasonality.
(b) The decreaseincrease mainly reflects the timing of payments for sports programming.
(c) The decrease is primarily due to the timing of income tax payments.
 At At Increase/(Decrease) 
 June 30, 2016
December 31, 2015 $ % 
Other assets (a)
 $2,582
   $2,661
  $(79) (3)% 
 At At Increase/(Decrease) 
 June 30, 2017
December 31, 2016 $ % 
Other assets (a)
 $2,558
   $2,707
  $(149) (6)% 
(a) The decrease primarily reflects lower long-term receivables associated with revenues from television licensing agreements.
 At At Increase/(Decrease) 
 June 30, 2016 December 31, 2015 $ % 
Current Liabilities:            
Accounts payable $121
   $192
  $(71) (37)% 
Accrued compensation (a)
 231
   315
  (84) (27) 
Program rights 322
   374
  (52) (14) 
Deferred revenues (b)
 156
   295
  (139) (47) 
Commercial paper 163
   —
  163
 n/m
 
Current portion of long-term debt (c)
 23
   222
  (199) (90) 
All other current liabilities 2,071
   2,162
  (91) (4) 
Total current liabilities $3,087
   $3,560
  $(473) (13)% 
n/m - not meaningful
(a) The decrease is due to the timing of payments.
(b) The decrease primarily reflects the timing of advertising revenues.
(c) The decrease is the result of the repayment of $200 million of outstanding senior debentures upon maturity in January 2016.



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


 At At Increase/(Decrease) 
 June 30, 2017 December 31, 2016 $ % 
Assets of discontinued operations (a)
 $3,218
   $4,291
  $(1,073) (25)% 
(a) The decrease primarily reflects a noncash charge of $1.08 billion to record a valuation allowance to reduce the carrying value of CBS Radio to the value indicated by the stock valuation of Entercom. (See Note 3 to the consolidated financial statements).
 At At Increase/(Decrease) 
 June 30, 2017 December 31, 2016 $ % 
Current Liabilities:            
Accounts payable $124
   $148
  $(24) (16)% 
Accrued compensation (a)
 223
   369
  (146) (40) 
Participants’ share and royalties
payable
 1,005
   1,024
  (19) (2) 
Commercial paper 263
   450
  (187) (42) 
All other current liabilities 1,615
   1,717
  (102) (6) 
Total current liabilities $3,230
   $3,708
  $(478) (13)% 
(a) The decrease is due to the timing of payments.
 At At Increase/(Decrease) 
 June 30, 2017 December 31, 2016 $ % 
Pension and postretirement
benefit obligations (a)
 $1,638
   $1,769
  $(131) (7)% 
(a) The decrease primarily reflects discretionary pension contributions of $100 million made during the first quarter of 2017 to prefund the Company’s qualified plans.
Cash Flows
The changes in cash and cash equivalents were as follows:
Six Months Ended June 30,Six Months Ended June 30,
2016 2015 Increase/(Decrease)2017 2016 Increase/(Decrease)
Net cash flow provided by (used for) operating activities from:      
Net cash flow provided by operating activities from:      
Continuing operations$1,253
 $881
 $372
 $909
 $1,139
 $(230) 
Discontinued operations(2) (18) 16
 29
 112
 (83) 
Net cash flow provided by operating activities1,251
 863
 388
 938
 1,251
 (313) 
Net cash flow used for investing activities from:            
Continuing operations(142) (39) (103) (139) (140) 1
 
Discontinued operations—
 (3) 3
 (13) (2) (11) 
Net cash flow used for investing activities(142) (42) (100) (152) (142) (10) 
Net cash flow used for financing activities(1,256) (929) (327) (1,229) (1,256) 27
 
Net decrease in cash and cash equivalents$(147) $(108) $(39) $(443) $(147) $(296) 
Operating Activities. For the six months ended June 30, 2016,2017, the increasedecrease in cash provided by operating activities was primarily driven by growththe benefit in affiliate and subscription fees and higher advertising revenues, including the2016 from CBS’s broadcast of Super Bowl 50, and discretionary pension contributions of $100 million made during the first quarter of 2017 to prefund the Company’s qualified plans. These decreases were partially offset by increased investment in contenthigher affiliate and higher payments for income taxes.subscription fee revenues.

Cash paid for income taxes for the six months ended June 30, 2016 and 2015 was as follows:
 Six Months Ended June 30,
 2016 2015
Cash taxes included in operating activities $307
   $207
 
Excess tax benefits from the exercise of stock options and
vesting of restricted stock units, included in financing activities
 (11)   (82) 
Cash paid for income taxes $296
   $125
 
The increase in cash paid for income taxes was driven by the increase in pretax earnings, as well lower federal tax refunds applied during the six months ended June 30, 2016.


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


Investing Activities
Six Months Ended June 30,Six Months Ended June 30,
2016
20152017
2016
Acquisitions (a)
 $(51) $(1)  $(21) $(51) 
Capital expenditures (b)
 (79) (46)  (68) (69) 
Investments in and advances to investee companies (c)(b)
 (43) (55)  (65) (43) 
Proceeds from dispositions (d)(c)
 27
 59
  1
 19
 
Other investing activities 4
 4
  14
 4
 
Net cash flow used for investing activities from continuing operations (142) (39)  (139) (140) 
Net cash flow used for investing activities from discontinued operations —
 (3)  (13) (2) 
Net cash flow used for investing activities $(142) $(42)  $(152) $(142) 
(a) 2016 primarily reflects the acquisition of a sports-focused digital media business.
(b) Primarily reflects the timing of capital projects. Capital expenditures for the full year 2016 are expected to be at a similar level as the prior three years, which ranged from $193 million to $212 million.
(c) Mainly includes the Company’s investment in The CW as well as its other domestic and international television joint ventures.
(d) Primarily(c) 2016 primarily reflects sales of internet businesses in China.

Financing Activities
 Six Months Ended June 30,
 2016 2015
Repurchase of CBS Corp. Class B Common Stock $(1,033)   $(1,832) 
Proceeds from (repayments of) short-term debt borrowings, net 163
   (222) 
Proceeds from issuance of senior notes —
   1,178
 
Repayment of senior debentures (199)   —
 
Dividends (142)   (155) 
Proceeds from exercise of stock options 10
   123
 
All other financing activities, net (55)   (21) 
Net cash flow used for financing activities $(1,256)   $(929) 

 Six Months Ended June 30,
 2017 2016
Repurchase of CBS Corp. Class B Common Stock $(845)   $(1,033) 
(Repayments of) proceeds from short-term debt borrowings, net (187)   163
 
Repayment of senior debentures —
   (199) 
Dividends (151)   (142) 
Payment of payroll taxes in lieu of issuing shares for stock-based compensation (89)   (57) 
Proceeds from exercise of stock options 39
   10
 
All other financing activities, net 4
   2
 
Net cash flow used for financing activities $(1,229)   $(1,256) 

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


Free Cash Flow
Free cash flow is a non-GAAP financial measure. Free cash flow reflects the Company’s net cash flow provided by (used for) operating activities before operating cash flow from discontinued operations and less capital expenditures. The Company’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’s operations. The Company’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’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’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’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’s investors, analysts and industry


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


peers for purposes of valuation and comparison of the Company’s operating performance to other companies in its industry.

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’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.

The following table presents a reconciliation of the Company’s net cash flow provided by operating activities to free cash flow.
Six Months EndedSix Months Ended
June 30,June 30,
2016 20152017 2016
Net cash flow provided by operating activities$1,251
 $863
$938
 $1,251
Capital expenditures(79) (46)(68) (69)
Exclude operating cash flow from discontinued operations(2) (18)29
 112
Free cash flow$1,174
 $835
$841
 $1,070

Repurchase of Company Stock and Cash Dividends
During the second quarter of 2016,2017, the Company repurchased 9.24.7 million shares of its Class B Common Stock under its share repurchase program for $500$300 million, at an average cost of $54.21$63.64 per share. During the six months ended June 30, 2016,2017, the Company repurchased 19.512.3 million shares of its Class B Common Stock for $1.00 billion,$800 million, at an average cost of $51.27$65.08 per share, leaving $1.00$3.31 billion of authorization at June 30, 2016.2017.

During the second quarter of 2017, the Company declared a quarterly cash dividend of $.18 on its Class A and Class B Common Stock, resulting in total dividends of $73 million, which were paid on July 1, 2017.


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


On July 28, 2016, the Company announced that its Board of Directors approved an increase to the Company’s share repurchase program to a total availability of $6.0 billion. Repurchases are expected to be funded by cash flows from operations and, as appropriate, with short-term borrowings, including commercial paper, and/or the issuance of long-term debt.

During the second quarter of 2016, the Company declared a quarterly cash dividend of $.15 on its Class A and Class B Common Stock, resulting in total dividends of $69 million, payable on July 1, 2016.

On July 28, 2016, the Company announced that its Board of Directors approved a 20% increase to the quarterly cash dividend on the Company’s Class A and Class B Common Stock from $.15 to $.18 per share, payable on October 1, 2016, to shareholders of record on September 9, 2016.
Capital Structure
The following table sets forth the Company’s debt.
At AtAt At
June 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
Commercial paper $163
 $—
  $263
 $450
 
Senior debt (1.95% – 7.875% due 2016 – 2045) (a)
 8,167
 8,365
 
Senior debt (1.95% – 7.875% due 2017 – 2045) (a)
 8,853
 8,850
 
Obligations under capital leases 79
 83
  68
 75
 
Total debt 8,409
 8,448
  9,184
 9,375
 
Less commercial paper 163
 —
  263
 450
 
Less current portion of long-term debt 23
 222
  23
 23
 
Total long-term debt, net of current portion $8,223
 $8,226
  $8,898
 $8,902
 
(a) At June 30, 20162017 and December 31, 20152016, the senior debt balances included (i) a net unamortized discount of $4349 million and $4552 million, respectively, (ii) unamortized deferred financing costs of $42$41 million and $44$43 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $11$2 million and $14$5 million, respectively. The face value of the Company’s senior debt was $8.24 billion and $8.44$8.94 billion at both June 30, 20162017 and December 31, 2015, respectively.2016.

DuringIn July 2016,2017, the Company issued $700$400 million of 2.90%2.50% senior notes due 2027.2023 and $500 million of 3.375% senior notes due 2028. The Company is usingused the net proceeds from this issuancethese issuances to repay its $400 million outstanding 1.95% senior notes that matured on July 1, 2017 and to redeem all of its $300 million outstanding 4.625% senior notes due May 2018. The remaining proceeds were used for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and repayment of short-term borrowings, including commercial paper.

During January 2016,At June 30, 2017, the Company repaid its $200classified $400 million of outstanding 7.625% senior debentures upon maturity.debt which matured in July 2017 and $300 million of debt due May 2018 as long-term debt on the Consolidated Balance Sheet, as a result of the above-mentioned debt refinancing.

Commercial Paper
At June 30, 2016, theThe Company had $163 million of outstanding commercial paper borrowings under its $2.5 billion commercial paper program of $263 million and $450 million at a weighted average interest rate of 0.72%June 30, 2017 and December 31, 2016, respectively, each with maturities of less than 45 days. The Company had no outstanding commercial paperweighted average interest rate for these borrowings was 1.42% at June 30, 2017 and 0.98% at December 31, 2015.2016.

Credit Facility
DuringAt June 2016,30, 2017, the Company amended and restated itshad a $2.5 billion revolving credit facility (the “Credit Facility”). The amended Credit Facility which expires in June 2021 and contains provisions that are substantially similar to the previous Credit Facility, which was due to expire in December 2019.2021. The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.5x at the end of each quarter as further


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


described in the Credit Facility. At June 30, 2016,2017, the Company’s Consolidated Leverage Ratio was approximately 2.4x2.9x.

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



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


The Credit Facility is used for general corporate purposes. At June 30, 20162017, the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.49 billion.

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’s operating needs include, among other items, commitments for sports programming rights, television and film programming, talent contracts, operating leases, interest payments, and pension funding obligations. The Company’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 the Credit Facility, which had $2.49 billion of remaining availability at June 30, 20162017; and access to capital markets are sufficient to fund its operating, investing and financing requirements for the next twelve months.

The Company’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 forSubsequent to the refinancing of $700 million of debt in July 2017, the Company’s long-term debt obligations due over the next five years of $2.10 billion is expected to comebe funded by cash generated from operating activities and the Company’s ability to refinance its debt and cash generated from operating activities.debt.

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

Claims Related to Former Businesses: Asbestos.    The Company is a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which allegedly occurred principally as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. The Company is typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the


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


plaintiffs have not identified which of the Company’s products is the basis of a claim. Claims against the Company in which a product has been identified principally relate to exposures allegedly caused by asbestos-containing insulating material in turbines sold for power-generation, industrial and marine use.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. The Company does not


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


report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of June 30, 2016,2017, the Company had pending approximately 34,79033,240 asbestos claims, as compared with approximately 36,03033,610 as of December 31, 20152016 and 38,00034,790 as of June 30, 2015.2016. During the second quarter of 2016,2017, the Company received approximately 1,1901,030 new claims and closed or moved to an inactive docket approximately 1,4401,390 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. In 2016, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $48 million. In 2015, as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and defense of asbestos claims by approximately $5 million. In 2014, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $11 million. The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

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. 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 generally 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.

Related Parties
See Note 45 to the consolidated financial statements.
Recent Pronouncements and Adoption of New Accounting Standards
See Note 1 to the consolidated financial statements.



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


Critical Accounting Policies
See Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2016, for a discussion of the Company’s critical accounting policies.



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


Cautionary Statement Concerning Forward-Looking Statements
This quarterly report on Form 10-Q, including “Item 2 - Management’s Discussion and Analysis of Results of Operations and Financial Condition,” contains 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’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,” “may,” “could,” or other similar words or phrases. Similarly, statements that describe the Company’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. These risks, uncertainties and other factors include, among others: advertising market conditions generally; changes in the public acceptance of the Company’s content; changes in technology and its effect on competition in the Company’s markets; changes in the federal communications laws and regulations; the impact of piracy on the Company’s products; the impact of consolidation in the market for the Company’s content; the impact of negotiations or the loss of affiliation agreements or retransmission agreements; the ability to achieve the separation of the Company’s radio business on terms that the Company finds acceptable; the impact of union activity, including possible strikes or work stoppages or the Company’s inability to negotiate favorable terms for contract renewals; the ability to achieve the separation of the Company’s radio business through a merger of CBS Radio with a subsidiary of Entercom Communications Corp. on the anticipated terms, which is subject to regulatory and Entercom stockholder approvals, an exchange offer and other customary closing conditions, and fluctuations in the market values of Entercom’s Class A common stock and the Company’s Class B Common Stock; other domestic and global economic, business, competitive and/or regulatory factors affecting the Company’s businesses generally; and other factors described in the Company’s filings made under the securities laws, including, among others, those set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20152016 and in our Quarterly Reports on Form 10-Q.10-Q, and in the Company’s recent Current Reports on Form 8-K. 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 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.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes to market risk since reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.2016.
Item 4.Controls and Procedures.
The Company’s chief executive officer and chief operating officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) were effective, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Securities Exchange Act of 1934, as amended.

No change in the Company’s internal control over financial reporting occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


PART II – OTHER INFORMATION
Item 1A.Risk Factors.
The following updates the corresponding risk factor included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, based on the Company’s most recent annual impairment tests for goodwill and FCC licenses performed during the fourth quarter of 2015, the estimated fair value of the Company’s CBS Radio reporting unit exceeded its carrying value by less than 1%, the carrying value of FCC licenses in eighteen radio markets was equal to their respective fair values, and the carrying value of FCC licenses in four radio markets was within 10% of their respective estimated fair values. Any downward revisions to the estimated fair value of the CBS Radio reporting unit and/or these FCC licenses could cause the estimated fair value to fall below their respective carrying values, which could result in a noncash impairment charge. Any impairment charge for goodwill and/or FCC licenses could have a material adverse effect on the Company’s reported net earnings.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Company Purchases of Equity Securities
In November 2010, the Company announced that its Board of Directors approved a program to repurchase $1.5 billion of the Company’s common stock in open market purchases or other types of transactions (including accelerated stock repurchases or privately negotiated transactions). Since then, various increases to such amounttotaling $16.4 billion have been approved and announced, including a $3.0 billion increase to the amount available under such program on August 7, 2014. The program had $1.0 billion remaining as of June 30, 2016. On July 28, 2016, the Company announced that its Board of Directors approvedmost recently, an increase to the share purchaserepurchase program to a total availability of $6.0 billion.billion on July 28, 2016. Below is a summary of CBS Corp.’s purchases of its Class B Common Stock during the three months ended June 30, 2016.2017 under this publicly announced share repurchase program.
(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
April 1, 2016 - April 30, 2016 2.3
  $54.97
  2.3
   $1,374
 
May 1, 2016 - May 31, 2016 3.1
  $54.75
  3.1
   $1,206
 
June 1, 2016 - June 30, 2016 3.8
  $53.33
  3.8
   $1,002
 
Total 9.2
  $54.21
  9.2
   $1,002
 


Item 5.Other Information.
As of July 25, 2016, National Amusements, Inc. (“NAI”) directly or indirectly owned approximately 79.5% of the shares of the Company’s voting Class A Common Stock, and owned approximately 8.8% of the shares of the Company’s voting Class A Common Stock and non-voting Class B Common Stock on a combined basis. Mr. Sumner M. Redstone is the beneficial owner of the controlling interest in NAI and, accordingly, beneficially owns all such shares. NAI is controlled by Mr. Redstone through the Sumner M. Redstone National Amusements Trust (the “SMR Trust”), which owns approximately 80% of the voting interest of NAI, and such voting interest of NAI held by the SMR Trust is voted solely by Mr. Redstone until his incapacity or death. The SMR Trust provides that in the event of Mr. Redstone’s death or incapacity, voting control of the NAI voting interest held by the SMR Trust will pass to seven trustees, who will include CBS Corporation directors Ms. Shari Redstone and Mr. David R. Andelman. No member of the Company’s management is a trustee of the SMR Trust.
(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
April 1, 2017 - April 30, 2017 1.1
  $67.74
  1.1
   $3,529
 
May 1, 2017 - May 31, 2017 1.7
  $62.57
  1.7
   $3,426
 
June 1, 2017 - June 30, 2017 1.9
  $62.10
  1.9
   $3,307
 
Total 4.7
  $63.64
  4.7
   $3,307
 



Item 6.Exhibits.
Exhibit No.Description of Document
(2)Plan of acquisition, reorganization, arrangement, liquidation or succession.
(a)
Amendment No. 1, dated as of July 10, 2017 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of CBS Corporation filed July 10, 2017 (File No. 001-09553)), to Agreement and Plan of Merger, dated as of February 2, 2017, by and among CBS Corporation, CBS Radio Inc., Entercom Communications Corp. and Constitution Merger Sub Corp. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of CBS Corporation filed February 2, 2017 (File No. 001-09553)).

(4) Instruments defining the rights of security holders, including indentures.
 (a)
Amended and Restated Senior Indenture dated as of November 3, 2008 (“2008 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-3 filed byof CBS Corporation onfiled November 3, 2008 (Registration No. 333-154962) (File No. 001-09553)).

 (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-K filed byof CBS Corporation onfiled April 5, 2010 (File No. 001-09553)).

  
The other instruments defining the rights of holders of the long-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. CBS Corporation hereby agrees to furnish copies of these instruments to the Securities and Exchange Commission upon request.

(10)
 Material Contracts
 (a)
Amended and Restated $2.5 Billion CreditEmployment Agreement dated as of June 9, 2016, 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 Securities Inc., Goldman Sachs Bank USA, Mizuho Bank, Ltd., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as Co‑Documentation Agents (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K ofMay 19, 2017 between CBS Corporation filed June 10, 2016) (File No. 001-09553)and Leslie Moonves (filed herewith).

(12) Statement Regarding Computation of Ratios (filed herewith)
(31) Rule 13a-14(a)/15d-14(a) Certifications
 (a)Certification of the Chief Executive Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
 (b)Certification of the Chief Operating Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
(32) Section 1350 Certifications
 (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 Oxley Act of 2002 (furnished herewith).
 (b)Certification of the Chief Operating Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
(101) Interactive Data File
  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.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
CBS CORPORATION
(Registrant)
  
Date: July 28, 2016August 7, 2017/s/ Joseph R. Ianniello
 
Joseph R. Ianniello
Chief Operating Officer
  
Date: July 28, 2016August 7, 2017/s/ Lawrence Liding
 
Lawrence Liding
Executive Vice President, Controller and
Chief Accounting Officer


EXHIBIT INDEX
Exhibit No.Description of Document
(2)Plan of acquisition, reorganization, arrangement, liquidation or succession.
(a)Amendment No. 1, dated as of July 10, 2017 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of CBS Corporation filed July 10, 2017 (File No. 001-09553)), to Agreement and Plan of Merger, dated as of February 2, 2017, by and among CBS Corporation, CBS Radio Inc., Entercom Communications Corp. and Constitution Merger Sub Corp. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of CBS Corporation filed February 2, 2017 (File No. 001-09553)).
(4) Instruments defining the rights of security holders, including indentures.
 (a)
Amended and Restated Senior Indenture dated as of November 3, 2008 (“2008 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-3 filed byof CBS Corporation onfiled November 3, 2008 (Registration No. 333-154962) (File No. 001-09553)).

 (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-K filed byof CBS Corporation onfiled April 5, 2010 (File No. 001-09553)).
  
The other instruments defining the rights of holders of the long-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. CBS Corporation hereby agrees to furnish copies of these instruments to the Securities and Exchange Commission upon request.

(10) Material Contracts
 (a)Amended and Restated $2.5 Billion CreditEmployment Agreement dated as of June 9, 2016, 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 Securities Inc., Goldman Sachs Bank USA, Mizuho Bank, Ltd., Morgan Stanley MUFG Loan Partners, LLC and Wells Fargo Bank, N.A., as Co‑Documentation Agents (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K ofMay 19, 2017 between CBS Corporation filed June 10, 2016) (File No. 001-09553)and Leslie Moonves (filed herewith).
(12) Statement Regarding Computation of Ratios (filed herewith)
(31) Rule 13a-14(a)/15d-14(a) Certifications
 (a)Certification of the Chief Executive Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
 (b)Certification of the Chief Operating Officer of CBS Corporation pursuant to Rule 13a-14(a), or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
(32) Section 1350 Certifications
 (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 Oxley Act of 2002 (furnished herewith).
 (b)Certification of the Chief Operating Officer of CBS Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (furnished herewith).
(101) Interactive Data File
  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.

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