UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~September~~June 30, ~~2016~~2017



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

For the transition period from ____________ to ____________

Commission File Number 001-09553

CBS CORPORATION

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)	04-2949533 (I.R.S. Employer Identification No.)

51 W. 52^nd Street, New York, New York (Address of principal executive offices)	10019 (Zip Code)

(212) 975-4321

(Registrant’s telephone number, including area ~~code~~code)

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 ~~October~~July 31, ~~2016:~~2017:

Class A Common Stock, par value $.001 per share— ~~37,726,904~~37,598,604

Class B Common Stock, par value $.001 per share— ~~391,975,900~~364,054,978

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 ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~September~~June 30, ~~2015~~2016	3

	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~September~~June 30, ~~2015~~2016	4

	Consolidated Balance Sheets (Unaudited) at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016	5

	Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~September~~June 30, ~~2015~~2016	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.	3033

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	5556

Item 4.	Controls and Procedures.	5556

	PART II – OTHER INFORMATION

~~Item 1A.~~	~~Risk Factors.~~	56

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	5657

Item 6.	Exhibits.	5758

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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Revenues	$	3,396		$	3,257		$	10,532		$	9,976		$	3,257		$	2,976		$	6,600		$	6,564
Costs and expenses:
Operating	1,897			1,842			6,114			5,891			2,004			1,758			4,078			4,030
Selling, general and administrative	640			597			1,887			1,790			528			510			1,038			1,013
Depreciation and amortization	61			65			188			199			56			57			111			114
Restructuring charges (Note 10)	—			—			—			55
Other operating items, net	—			—			(9		)	(19		)	—			—			—			(9		)
Total costs and expenses	2,598			2,504			8,180			7,916			2,588			2,325			5,227			5,148
Operating income	798			753			2,352			2,060			669			651			1,373			1,416
Interest expense	(104		)	(102		)	(304		)	(289		)	(111		)	(100		)	(220		)	(200		)
Interest income	7			6			22			18			15			8			28			15
Other items, net	2			(4		)	(5		)	(23		)	5			(4		)	6			(7		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	703			653			2,065			1,766			578			555			1,187			1,224
Provision for income taxes	(176		)	(211		)	(612		)	(579		)	(169		)	(173		)	(307		)	(379		)
Equity in loss of investee companies, net of tax	(13		)	(16		)	(43		)	(35		)	(12		)	(9		)	(29		)	(30		)
Net earnings from continuing operations	514			426			1,410			1,152			397			373			851			815
Loss from discontinued operations (Note 1)	(36		)	—			(36		)	—
Net earnings	$	478		$	426		$	1,374		$	1,152
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 (loss) per common share:
Net earnings from continuing operations	$	1.16		$	.89		$	3.13		$	2.36		$	.98		$	.83		$	2.09		$	1.79
Loss from discontinued operations	$	(.08	)	$	—		$	(.08	)	$	—
Net earnings	$	1.08		$	.89		$	3.05		$	2.36
Net earnings (loss) from discontinued operations													$	(.84	)	$	.11		$	(2.57	)	$	.18
Net earnings (loss)													$	.14		$	.94		$	(.48	)	$	1.97

Diluted net earnings (loss) per common share:
Net earnings from continuing operations	$	1.15		$	.88		$	3.10		$	2.33		$	.97		$	.82		$	2.06		$	1.78
Loss from discontinued operations	$	(.08	)	$	—		$	(.08	)	$	—
Net earnings	$	1.07		$	.88		$	3.02		$	2.33
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:
Basic	442			480			451			489			405			451			407			455
Diluted	446			484			455			495			410			455			413			459

Dividends per common share	$	.18		$	.15		$	.48		$	.45		$	.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					Nine Months Ended					Three Months Ended				Six Months Ended
	September 30,					September 30,					June 30,				June 30,
	2016		2015			2016		2015			2017		2016		2017			2016
Net earnings	$	478	$	426		$	1,374	$	1,152
Net earnings (loss)											$	58	$	423	$	(194	)	$	896
Other comprehensive income, net of tax:
Cumulative translation adjustments	1		(5		)	2		(6		)	—		—		2			1
Amortization of net actuarial loss and prior service cost	10		9			29		27			12		9		24			19
Total other comprehensive income, net of tax	11		4			31		21			12		9		26			20
Total comprehensive income	$	489	$	430		$	1,405	$	1,173
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				At				At				At
	September 30, 2016				December 31, 2015				June 30, 2017				December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents		$	179			$	323			$	170			$	598
Receivables, less allowances of $67 (2016) and $63 (2015)		3,348				3,628
Programming and other inventory (Note 3)		1,459				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		204				175				132				185
Other current assets		228				249				185				204
Current assets of discontinued operations (Note 3)										299				305
Total current assets		5,457				5,747				5,686				6,063
Property and equipment		3,263				3,243				2,967				2,935
Less accumulated depreciation and amortization		1,918				1,838				1,753				1,694
Net property and equipment		1,345				1,405				1,214				1,241
Programming and other inventory (Note 3)		2,237				1,957
Programming and other inventory (Note 4)										2,459				2,439
Goodwill		6,531				6,481				4,891				4,864
Intangible assets		5,499				5,514				2,627				2,633
Other assets		2,779				2,661				2,558				2,707
Assets of discontinued operations (Note 3)										3,218				4,291
Total Assets		$	23,848			$	23,765			$	22,653			$	24,238

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	153			$	192			$	124			$	148
Accrued compensation		282				315				223				369
Participants’ share and royalties payable		979				1,013				1,005				1,024
Program rights		373				374				262				290
Deferred revenues		141				295
Commercial paper (Note 5)		33				—
Current portion of long-term debt (Note 5)		22				222
Commercial paper (Note 6)										263				450
Current portion of long-term debt (Note 6)										23				23
Accrued expenses and other current liabilities		1,115				1,149				1,169				1,249
Current liabilities of discontinued operations (Note 3)										161				155
Total current liabilities		3,098				3,560				3,230				3,708
Long-term debt (Note 5)		8,902				8,226
Long-term debt (Note 6)										8,898				8,902
Pension and postretirement benefit obligations		1,526				1,575				1,638				1,769
Deferred income tax liabilities, net		1,667				1,509				628				590
Other liabilities		3,240				3,260				3,149				3,129
Liabilities of discontinued operations		67				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		43,935				44,055				43,820				43,913
Accumulated deficit		(19,144		)		(20,518		)		(19,451		)		(19,257		)
Accumulated other comprehensive loss (Note 7)		(739		)		(770		)
Accumulated other comprehensive loss (Note 8)										(741		)		(767		)
		24,053				22,768				23,629				23,890
Less treasury stock, at cost; 429 (2016) and 401 (2015) Class B shares		18,705				17,205
Less treasury stock, at cost; 467 (2017) and 455 (2016) Class B shares										21,002				20,201
Total Stockholders’ Equity		5,348				5,563				2,627				3,689
Total Liabilities and Stockholders’ Equity		$	23,848			$	23,765			$	22,653			$	24,238

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2016			2015			2017			2016
Operating Activities:
Net earnings	$	1,374		$	1,152
Less: Loss from discontinued operations	(36		)	—
Net earnings (loss)							$	(194	)	$	896
Less: Net earnings (loss) from discontinued operations, net of tax							(1,045		)	81
Net earnings from continuing operations	1,410			1,152			851			815
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	188			199			111			114
Stock-based compensation	134			128			85			81
Equity in loss of investee companies, net of tax and distributions	48			37			29			34
Change in assets and liabilities, net of investing and financing activities	(472		)	(866		)	(167		)	95
Net cash flow provided by operating activities from continuing operations	1,308			650			909			1,139
Net cash flow used for operating activities from discontinued operations	(2		)	(27		)
Net cash flow provided by operating activities from discontinued operations							29			112
Net cash flow provided by operating activities	1,306			623			938			1,251
Investing Activities:
Acquisitions	(51		)	(7		)	(21		)	(51		)
Capital expenditures	(125		)	(104		)	(68		)	(69		)
Investments in and advances to investee companies	(44		)	(58		)	(65		)	(43		)
Proceeds from dispositions	28			75			1			19
Other investing activities	11			(8		)	14			4
Net cash flow used for investing activities from continuing operations	(181		)	(102		)	(139		)	(140		)
Net cash flow used for investing activities from discontinued operations	—			(4		)	(13		)	(2		)
Net cash flow used for investing activities	(181		)	(106		)	(152		)	(142		)
Financing Activities:
Proceeds from (repayments of) short-term debt borrowings, net	33			(313		)
Proceeds from issuance of senior notes	685			1,959
(Repayments of) proceeds from short-term debt borrowings, net							(187		)	163
Repayment of senior debentures	(199		)	—			—			(199		)
Proceeds from debt borrowings of CBS Radio							24			—
Repayment of debt borrowings of CBS Radio							(5		)	—
Payment of capital lease obligations	(13		)	(13		)	(8		)	(8		)
Payment of contingent consideration							(7		)	—
Dividends	(209		)	(228		)	(151		)	(142		)
Purchase of Company common stock	(1,534		)	(2,345		)	(845		)	(1,033		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(57		)	(96		)	(89		)	(57		)
Proceeds from exercise of stock options	13			137			39			10
Excess tax benefit from stock-based compensation	13			87
Excess tax benefit from stock-based compensation (Note 1)							—			11
Other financing activities	(1		)	—			—			(1		)
Net cash flow used for financing activities	(1,269		)	(812		)	(1,229		)	(1,256		)
Net decrease in cash and cash equivalents	(144		)	(295		)	(443		)	(147		)
Cash and cash equivalents at beginning of period	323			428
Cash and cash equivalents at end of period	$	179		$	133
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	$	358		$	303
Cash paid for income taxes from continuing operations	$	370		$	230
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 Media (CBS Television ~~Stations)~~Stations and ~~Radio (CBS Radio)~~CBS Local Digital Media).

~~In connection~~Discontinued Operations-On February 2, 2017, the Company entered into an agreement with Entercom Communications Corp. (“Entercom”) to combine the Company’s ~~previously announced plans to separate its~~ radio business, ~~a preliminary registration statement was filed with the Securities and Exchange Commission during the third quarter of 2016 for the proposed initial public offering of the common stock of~~ CBS Radio, ~~Inc. (“~~with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS ~~Radio”). In preparation for the planned separation, the Company changed the manner in which it manages~~Corp. and its television and radio operations during the third quarter of 2016. Accordingly, the Company's previously reported operating segment, Local Broadcasting, has been separated into two operating segments, Local Media and Radio.stockholders. In connection with this ~~new segment presentation,~~transaction, the ~~presentation~~Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of ~~intercompany revenues~~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. CBS Radio has been ~~revised, including station affiliation fees paid by Local Media to~~presented as a discontinued operation in the ~~CBS Television Network. Prior period results have been reclassified to conform to this presentation.~~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 ~~nine~~six months ended ~~September~~June 30, 2016 ~~and 2015 includes gains~~included a gain from the ~~sales~~sale of ~~businesses,~~a business and ~~for 2016 also includes~~ a multiyear, retroactive impact of a new operating tax.

~~Loss from Discontinued Operations~~-Loss from discontinued operations for the three and nine months ended September 30, 2016 reflects the resolution of a tax matter in a foreign jurisdiction relating to a previously disposed business that was accounted for as a discontinued operation.

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

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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 54 million stock options for each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2016. Excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, were 7 million stock options~~2017 and ~~RSUs for the three months ended September 30, 2015 and 4~~6 million stock options for each of the ~~nine~~three and six months ended ~~September~~June 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		Nine Months Ended		Three Months Ended		Six Months Ended
	September 30,		September 30,		June 30,		June 30,
(in millions)	2016	2015	2016	2015	2017	2016	2017	2016
Weighted average shares for basic EPS	442	480	451	489	405	451	407	455
Dilutive effect of shares issuable under stock-based compensation plans	4	4	4	6	5	4	6	4
Weighted average shares for diluted EPS	446	484	455	495	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 ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, the Company recorded dividends of ~~$218~~$148 million and $~~222~~138 million, respectively, as a reduction to additional paid-in capital as the Company had an accumulated deficit balance.

Adoption of New Accounting Standards

~~Simplifying the~~Improvements 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 assimplifies several aspects of the ~~acquisition date.~~accounting for employee share-based payment transactions. Under ~~the~~this amended guidance, ~~the acquirer is required to recognize such adjustments~~all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the ~~reporting~~income statement in the period in which the ~~adjustment amounts~~awards vest or are ~~identified. Such adjustments also include~~exercised. In the ~~effect on earnings from any changes in depreciation, amortization, or~~statement of cash flows, excess tax benefits are classified with 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~~tax cash flows in operating activities. As a result 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~~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 ~~Company’s consolidated financial statements.~~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. The Company, however, has elected to continue its existing practice of estimating forfeitures.

Simplifying ~~Income Statement Presentation by Eliminating~~ the ~~Concept of Extraordinary Items~~Accounting for Goodwill Impairment

During the first quarter of ~~2016,~~2017, the Company early adopted amended FASB guidance which ~~eliminates~~simplifies the ~~concept of extraordinary items.~~accounting for goodwill impairment. This guidance removes Step 2 of the ~~requirement~~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 ~~assess whether an event or transaction is both unusual in nature and infrequent in occurrence and to separately present any such items on~~exceed the ~~statement~~carrying amount 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.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 ~~for Share-Based Payments When~~

In May 2017, 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 issued amended guidance on the accounting for stock-based compensation which clarifies when to account for a change to the terms or conditions of ana share-based payment award ~~provide that~~as a ~~performance target that affects vesting could be achieved after the requisite service period.~~modification. Under this guidance, ~~such performance target should not be reflected in estimating~~modification accounting is required only if the ~~grant-date~~ fair value, the vesting conditions, or the classification of the ~~award. The Company should begin recognizing compensation cost~~award as equity or liability changes as a result of the change in the ~~period in~~terms or conditions of a share-based payment award. This guidance, which ~~it becomes probable that the performance target will be achieved,~~is effective for ~~the cumulative amount of compensation cost attributable~~interim and annual periods beginning after December 15, 2017, with early adoption permitted, is not expected to ~~the period(s) for which the requisite service has already been rendered. The adoption of this guidance did not~~ have an ~~effect~~impact on the Company’s consolidated financial statements.

~~Recent Pronouncements~~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 presented in the 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, 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. ~~The Company is currently assessing the impact of this guidance on its consolidated statements of cash flows.~~

~~Improvements to Employee Share-Based Payment Accounting~~

In March 2016, the FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits will be classified with other income tax cash flows in operating activities. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification. The Company expects that the adoption of this guidance will introduce volatility into the Company’s income tax provision, which will be impacted by the timing of employee exercises and changes in the Company’s stock price. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted.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

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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 in~~is 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 assessing~~not expected to have a material impact on the ~~impact. This guidance is effective~~Company’s results on an annual basis, since extensions executed each year are generally offset by extensions for ~~interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.~~which the license period has begun.

2) STOCK-BASED COMPENSATION

The following table summarizes the Company’s stock-based compensation expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015.~~2016.


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
RSUs	$	39		$	32		$	112		$	105
RSUs and PSUs													$	38		$	35		$	71		$	67
Stock options	7			7			22			23			7			7			14			14
Stock-based compensation expense, before income taxes	46			39			134			128			45			42			85			81
Related tax benefit	(18		)	(15		)	(52		)	(49		)	(18		)	(16		)	(33		)	(31		)
Stock-based compensation expense, net of tax benefit	$	28		$	24		$	82		$	79		$	27		$	26		$	52		$	50

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

During the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017, the Company granted 32 million RSUs for CBS Corp. Class B Common Stock with a weighted average per unit grant-date fair value of ~~$47.26.~~$66.78. RSUs granted during the first ~~nine~~six months of ~~2016~~2017 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 ~~nine~~six months ended ~~September~~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 ~~nine~~six months of ~~2016~~2017 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 ~~September~~June 30, ~~2016~~2017 was ~~$237~~$270 million, which is expected to be recognized over a weighted average period of ~~2.4~~2.5 years. Total unrecognized compensation cost related to unvested stock option awards at ~~September~~June 30, ~~2016~~2017 was ~~$50~~$51 million, which is expected to be recognized over a weighted average period of ~~2.4~~2.6 years.

3) DISCONTINUED OPERATIONS

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:
Operating	105			103			194			188
Selling, general and administrative	129			122			251			236
Depreciation and amortization^(a)	—			6			—			13
Restructuring charge	7			—			7			—
Provision for valuation allowance	365			—			1,080			—
Total costs and expenses	606			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.

3)4) PROGRAMMING AND OTHER INVENTORY


	At			At			At			At
	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Acquired program rights		$	1,737		$	1,533		$	1,892		$	1,773
Internally produced programming:
Released		1,459			1,261			1,668			1,746
In process and other		445			392			405			298
Publishing, primarily finished goods		55			42			54			49
Total programming and other inventory		3,696			3,228			4,019			3,866
Less current portion		1,459			1,271			1,560			1,427
Total noncurrent programming and other inventory		$	2,237		$	1,957		$	2,459		$	2,439

4)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 ~~September~~June 30, ~~2016~~2017, NAI directly or indirectly owned approximately 79.5% of CBS Corp.’s voting Class A Common Stock, and owned approximately ~~9.0%~~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

~~On September 29, 2016, the Company announced that its Board of Directors received a letter from NAI requesting that the Company consider a potential combination~~ CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

of the ~~Company~~NAI voting interest held by the SMR Trust will pass to seven trustees, who will include CBS Corporation directors Ms. Shari Redstone and ~~Viacom Inc. The Company~~Mr. David R. Andelman. No member of the Company’s management is ina trustee of the ~~process of evaluating whether to pursue any such potential transaction. No assurance can be given regarding the entry into, consummation or terms of any such potential transaction.~~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 ~~$16~~$19 million and ~~$44~~$31 million for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016, respectively, and ~~$85~~$73 million and ~~$144~~$67 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 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 $6$4 million for each of the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016, and ~~$17~~$9 million and $11 million for ~~each of~~ the ~~nine~~six months ended ~~September~~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)~~

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 ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016.


	At			At			At			At
	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Receivables		$	87		$	115		$	86		$	113
Other assets (Receivables, noncurrent)		47			38			51			35
Total amounts due from Viacom Inc.		$	134		$	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 $1320 million and ~~$20~~$24 million for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016, respectively, and ~~$69~~$49 million and ~~$91~~$56 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively. At ~~September~~June 30, ~~2016~~2017 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.

~~5) BANK FINANCING AND DEBT~~

~~The following table sets forth the Company’s debt.~~

At At

September 30, 2016 December 31, 2015
Commercial paper
$ 33

$ —

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

8,849

8,365

Obligations under capital leases
75

83

Total debt
8,957

8,448

Less commercial paper
33

—

Less current portion of long-term debt
22

222

Total long-term debt, net of current portion
$ 8,902

$ 8,226

(a) At September 30, 2016 and December 31, 2015, the senior debt balances included (i) a net unamortized discount of $53 million and $45 million, respectively, (ii) unamortized deferred financing costs of $45 million and $44 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $7 million and $14 million, respectively. The face value of the Company’s senior debt was $8.94 billion and $8.44 billion at September 30, 2016 and December 31, 2015, respectively.

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

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

~~At September 30, 2016, the Company classified $400 million of debt maturing in~~ ~~July 2017~~ ~~as long-term debt on the Consolidated Balance Sheet, reflecting its intent and ability to refinance this debt on a long-term basis.~~

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

6) BANK FINANCING AND DEBT

The following table sets forth the Company’s debt.



	At			At
	June 30, 2017			December 31, 2016
Commercial paper		$	263		$	450
Senior debt (1.95% - 7.875% due 2017 - 2045) ^(a)		8,853			8,850
Obligations under capital leases		68			75
Total debt		9,184			9,375
Less commercial paper		263			450
Less current portion of long-term debt		23			23
Total long-term debt, net of current portion		$	8,898		$	8,902

(a) At June 30, 2017 and December 31, 2016, the senior debt balances included (i) a net unamortized discount of $49 million and $52 million, respectively, (ii) unamortized deferred financing costs of $41 million and $43 million, respectively, and (iii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $2 million and $5 million, respectively. The face value of the Company’s senior debt was $8.94 billion at both June 30, 2017 and December 31, 2016.

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 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 repayment of short-term borrowings, including commercial paper.

At June 30, 2017, the Company classified $400 million of 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 September 30, 2016, the~~The Company had ~~$33 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 0.75%~~June 30, 2017 and December 31, 2016, respectively, each with maturities of less than 45 days. The ~~Company had no outstanding commercial paper~~weighted average interest rate for these borrowings was 1.42% at June 30, 2017 and 0.98% at December 31, ~~2015.~~2016.

Credit Facility

~~During~~At June ~~2016,~~30, 2017, the Company ~~amended and restated its~~had 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 ~~September~~June 30, ~~2016~~2017, the Company’s Consolidated Leverage Ratio was approximately ~~2.5x~~2.9x.

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 ~~September~~June 30, ~~2016~~2017, 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 Radio Indebtedness~~

In October 2016, in connection with the Company’s previously announced plans to separate its radio business, CBS Radio borrowed $1.46 billion through a $1.06 billion senior secured term loan due 2023 (the “Term Loan”) and the issuance of $400 million of 7.25% senior unsecured notes due 2024 through a private placement. The 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 a credit agreement which also includes a $250 million senior secured revolving credit facility (the “Radio Revolving Credit Facility”) which expires in 2021. Interest on the Radio Revolving Credit Facility will be 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 Radio Revolving Credit Facility requires CBS Radio to maintain a maximum Consolidated Net Secured Leverage Ratio of 4.00 to 1.00. As of November 3, 2016, there were no borrowings outstanding under the Radio Revolving Credit Facility.

This debt is guaranteed by certain subsidiaries of CBS Radio. The Company does not guarantee, or otherwise provide credit support for, the senior notes, Term Loan, or Radio Revolving Credit Facility. The net debt proceeds will be primarily used by the Company to repurchase shares of CBS Corp. Class B Common Stock, with the remainder to be used for general corporate purposes and ongoing cash needs.

~~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 Benefits						Pension Benefits						Postretirement Benefits
Three Months Ended September 30,	2016			2015			2016			2015
Three Months Ended June 30,													2017			2016			2017			2016
Components of net periodic cost:
Service cost	$	7		$	7		$	—		$	—		$	8		$	7		$	—		$	—
Interest cost	54			52			5			6			47			53			5			5
Expected return on plan assets	(56		)	(65		)	—			—			(51		)	(57		)	—			—
Amortization of actuarial loss (gain) ^(a)	21			20			(5		)	(6		)	26			22			(6		)	(6		)
Net periodic cost	$	26		$	14		$	—		$	—		$	30		$	25		$	(1	)	$	(1	)


	Pension Benefits						Postretirement Benefits						Pension Benefits						Postretirement Benefits
Nine Months Ended September 30,	2016			2015			2016			2015
Six Months Ended June 30,													2017			2016			2017			2016
Components of net periodic cost:
Service cost	$	22		$	23		$	—		$	—		$	15		$	15		$	—		$	—
Interest cost	161			157			15			15			95			107			9			10
Expected return on plan assets	(170		)	(196		)	—			—			(101		)	(114		)	—			—
Amortization of actuarial loss (gain) ^(a)	64			60			(16		)	(16		)	51			43			(11		)	(11		)
Net periodic cost	$	77		$	44		$	(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

~~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.~~ During the ~~third~~second quarter of ~~2016,~~2017, the Company repurchased ~~9.5~~4.7 million shares of its Class B Common Stock under its share repurchase program for ~~$500~~$300 million, at an average cost of ~~$52.77~~$63.64 per share. During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the Company repurchased ~~29.0~~12.3 million shares of its Class B Common Stock for ~~$1.50 billion,~~$800 million, at an average cost of ~~$51.76~~$65.08 per share, leaving ~~$5.60~~$3.31 billion of authorization at ~~September~~June 30, ~~2016.~~2017.

~~On July 28, 2016,~~During the second quarter of 2017, the Company ~~announced that its Board of Directors approved~~declared a ~~20% increase to the~~ quarterly cash dividend of $.18 on its Class A and Class B Common ~~stock to $.18 from $.15 per share. The~~Stock, resulting in total ~~third quarter 2016 dividend was $80~~dividends of $73 million, which ~~was~~were paid on ~~October~~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 reclassifications 2
—
2

Reclassifications to net earnings —
29
^(a)
29

Net other comprehensive income 2
29

31

At September 30, 2016 $ 154
$ (893 )
$ (739 )



	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 reclassifications	2		—					2
Reclassifications to net earnings (loss)	—		24			^(a)		24
Net other comprehensive income	2		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 (8 ) —
(8 )
Reclassifications to net earnings 2
27
^(a)
29

Net other comprehensive income (loss) (6 ) 27
21

At September 30, 2015 $ 151
$ (865 ) $ (714 )



	Cumulative Translation Adjustments		Net Actuarial Gain (Loss) and Prior Service Cost				Accumulated Other Comprehensive Loss
At December 31, 2015	$	152	$	(922	)			$	(770	)
Other comprehensive income before reclassifications	1		—					1
Reclassifications to net earnings (loss)	—		19			^(a)		19
Net other comprehensive income	1		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 ~~$19~~$16 million and ~~$17~~$13 million for the ~~nine~~six months ended ~~September~~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~~



	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 rate	29.2		%	31.2		%	25.9		%	31.0		%

(a) Reflects excess tax benefits 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 ~~income taxes was~~ ~~$176 million~~ ~~for~~prior periods remain classified in stockholders’ equity.

(b) For the ~~three~~six months ended ~~September~~June 30, ~~2016~~ ~~and $211 million for~~2017, primarily reflects tax benefits from the ~~three months ended~~ ~~September 30, 2015, reflecting an effective~~resolution of certain state income tax rate of 25.0% and 32.3%, respectively. For the nine months ended September 30, 2016, the provision for income taxes was $612 million compared to $579 million for the nine months ended September 30, 2015, reflecting an income tax rate of 29.6% and 32.8%, respectively. The lower tax rate for the three and nine months ended September 30, 2016 includes a one-time benefit of $47 million associated with a multiyear adjustment to a tax deduction, which was approved by the Internal Revenue Service during the third quarter of 2016.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 ~~September~~June 30, ~~2016,~~2017, the outstanding letters of credit and surety bonds approximated ~~$111~~$101 million and were not recorded on the Consolidated Balance Sheet.

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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

Legal Matters

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

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 ~~September~~June 30, ~~2016,~~2017, the Company had pending approximately ~~34,400~~33,240 asbestos claims, as compared with approximately ~~36,030~~33,610 as of December 31, ~~2015~~2016 and ~~37,190~~34,790 as of ~~September~~June 30, ~~2015.~~2016. During the ~~third~~second quarter of ~~2016,~~2017, the Company received approximately ~~930~~1,030 new claims and closed or moved to an inactive docket approximately ~~1,320~~1,390 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.

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Other. The Company from time to time receives claims from federal and state environmental regulatory agencies and other entities asserting that it is or may be liable for environmental cleanup costs and related damages principally relating to historical and predecessor operations of the Company. In addition, the Company from time to time receives personal injury claims including toxic tort and product liability claims (other than asbestos) arising from historical operations of the Company and its predecessors.

~~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, ~~of which $55 million was recorded during the nine months endedSeptember 30, 2015. The 2015 restructuring charges reflected $48~~reflecting $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 ~~September~~June 30, ~~2016,~~2017, the cumulative settlements for the ~~2015~~2016 and ~~2014~~2015 restructuring charges were $8353 million, of which $5434 million was for severance costs and $2919 million was for costs associated with contractual obligations.


	Balance at			2016				Balance at			Balance at			2017				Balance at
	December 31, 2015			Settlements				September 30, 2016			December 31, 2016			Settlements				June 30, 2017
Entertainment		$	19		$	(13	)		$	6		$	20		$	(9	)		$	11
Cable Networks												4			(2		)		2
Publishing												1			(1		)		—
Local Media		11			(5		)		6			12			(4		)		8
Radio		23			(11		)		12
Corporate		1			(1		)		—			2			(1		)		1
Total		$	54		$	(30	)		$	24		$	39		$	(17	)		$	22


	Balance at			2015			2015				Balance at			Balance at			2016			2016				Balance at
	December 31, 2014			Charges			Settlements				December 31, 2015			December 31, 2015			Charges			Settlements				December 31, 2016
Entertainment		$	6		$	26		$	(13	)		$	19		$	16		$	16		$	(12	)		$	20
Cable Networks															—			4			—				4
Publishing															—			1			—				1
Local Media		5			19			(13		)		11			11			6			(5		)		12
Radio		5			36			(18		)		23
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 ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the carrying value of the Company’s senior debt was $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 ~~$9.90~~$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.

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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 ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the notional amount of all foreign exchange contracts was ~~$456~~$356 million and ~~$291~~$433 million, respectively.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Gains (losses) recognized on derivative financial instruments were as follows:

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015 Financial Statement Account
Non-designated foreign exchange contracts $ 4
$ 10
$ 13
$ 13
Other items, net

Designated interest rate swaps ^(a)
$ —
$ 2
$ —
$ 7
Interest expense

~~(a) The gains during the three and nine months ended September 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			2016		Financial 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 ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016. 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, 2017	Level 1		Level 2		Level 3		Total
Assets:
Foreign currency hedges	$	—	$	12	$	—	$	12
Total Assets	$	—	$	12	$	—	$	12
Liabilities:
Deferred compensation	$	—	$	361	$	—	$	361
Foreign currency hedges	—		6		—		6
Total Liabilities	$	—	$	367	$	—	$	367


At September 30, 2016	Level 1		Level 2		Level 3		Total
At December 31, 2016									Level 1		Level 2		Level 3		Total
Assets:
Foreign currency hedges	$	—	$	21	$	—	$	21	$	—	$	34	$	—	$	34
Total Assets	$	—	$	21	$	—	$	21	$	—	$	34	$	—	$	34
Liabilities:
Deferred compensation	$	—	$	329	$	—	$	329	$	—	$	347	$	—	$	347
Foreign currency hedges	—		5		—		5		—		1		—		1
Total Liabilities	$	—	$	334	$	—	$	334	$	—	$	348	$	—	$	348

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

At December 31, 2015 Level 1 Level 2 Level 3 Total
Assets:
Foreign currency hedges $ —
$ 13
$ —
$ 13
Total Assets $ —
$ 13
$ —
$ 13
Liabilities:
Deferred compensation $ —
$ 312
$ —
$ 312
Total Liabilities $ —
$ 312
$ —
$ 312

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

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.

In preparation for the planned separation of its radio business, the Company changed the manner in which it manages its television and radio operations during the third quarter of 2016. Accordingly, the Company’s previously reported operating segment, Local Broadcasting, has been separated into two operating segments, Local Media and Radio. In connection with this new segment presentation, the presentation of intercompany revenues has been revised, including station affiliation fees paid by Local Media to the CBS Television Network. Prior period results have been reclassified to conform to this presentation.


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Revenues:
Entertainment	$	1,949		$	1,932		$	6,483		$	5,978		$	2,184		$	1,947		$	4,531		$	4,534
Cable Networks	598			526			1,659			1,680			571			536			1,114			1,061
Publishing	226			203			558			547			206			187			367			332
Local Media	409			376			1,253			1,138			412			396			821			844
Radio	319			318			898			907
Corporate/Eliminations	(105		)	(98		)	(319		)	(274		)	(116		)	(90		)	(233		)	(207		)
Total Revenues	$	3,396		$	3,257		$	10,532		$	9,976		$	3,257		$	2,976		$	6,600		$	6,564

Revenues generated between segments primarily reflect advertising sales, 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				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Intercompany Revenues:
Entertainment	$	102	$	96	$	321	$	270	$	118	$	92	$	237	$	214
Local Media	2		3		6		7		3		2		6		4
Radio	6		2		9		5
Total Intercompany Revenues	$	110	$	101	$	336	$	282	$	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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Segment Operating Income (Loss):
Entertainment	$	348		$	339		$	1,148		$	947		$	346		$	351		$	744		$	800
Cable Networks	285			246			740			717			253			227			501			455
Publishing	44			43			83			80			28			26			42			39
Local Media	122			101			402			338			127			130			250			280
Radio	77			73			215			195
Corporate	(78		)	(49		)	(245		)	(181		)	(85		)	(83		)	(164		)	(167		)
Total Segment Operating Income	798			753			2,343			2,096			669			651			1,373			1,407
Restructuring charges	—			—			—			(55		)
Other operating items, net ^(a)	—			—			9			19			—			—			—			9
Operating income	798			753			2,352			2,060			669			651			1,373			1,416
Interest expense	(104		)	(102		)	(304		)	(289		)	(111		)	(100		)	(220		)	(200		)
Interest income	7			6			22			18			15			8			28			15
Other items, net	2			(4		)	(5		)	(23		)	5			(4		)	6			(7		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	703			653			2,065			1,766			578			555			1,187			1,224
Provision for income taxes	(176		)	(211		)	(612		)	(579		)	(169		)	(173		)	(307		)	(379		)
Equity in loss of investee companies, net of tax	(13		)	(16		)	(43		)	(35		)	(12		)	(9		)	(29		)	(30		)
Net earnings from continuing operations	514			426			1,410			1,152			397			373			851			815
Loss from discontinued operations	(36		)	—			(36		)	—
Net earnings	$	478		$	426		$	1,374		$	1,152
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 ~~gains~~a gain from the ~~sales~~sale of an internet ~~businesses~~business in China ~~for the nine months ended September 30, 2016~~ and ~~2015, and for 2016, also includes~~ a multiyear, retroactive impact of a new operating tax.


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Depreciation and Amortization:
Entertainment	$	28	$	31	$	88	$	95	$	27	$	30	$	56	$	60
Cable Networks	6		5		17		17		6		5		12		11
Publishing	1		1		4		4		2		2		3		3
Local Media	11		12		33		37		12		11		23		22
Radio	7		8		22		23
Corporate	8		8		24		23		9		9		17		18
Total Depreciation and Amortization	$	61	$	65	$	188	$	199	$	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				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Stock-based Compensation:
Entertainment	$	16	$	16	$	47	$	48	$	17	$	16	$	32	$	31
Cable Networks	3		3		9		8		3		3		6		6
Publishing	1		1		3		3		1		1		2		2
Local Media	3		3		9		9		3		3		6		6
Radio	4		2		11		12
Corporate	19		14		55		48		21		19		39		36
Total Stock-based Compensation	$	46	$	39	$	134	$	128	$	45	$	42	$	85	$	81


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Capital Expenditures:
Entertainment	$	23	$	33	$	60	$	54	$	24	$	24	$	38	$	37
Cable Networks	4		5		8		8		4		2		7		4
Publishing	1		2		7		4		—		3		1		6
Local Media	9		10		20		17		7		4		12		11
Radio	4		5		14		16
Corporate	5		3		16		5		6		2		10		11
Total Capital Expenditures	$	46	$	58	$	125	$	104	$	41	$	35	$	68	$	69


	At			At			At			At
	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Assets:
Entertainment		$	11,220		$	10,910		$	11,441		$	11,262
Cable Networks		2,526			2,369			2,594			2,618
Publishing		835			880			858			880
Local Media		3,827			3,881			4,018			4,065
Radio		5,167			5,224
Corporate/Eliminations		249			476			225			817
Discontinued operations		24			25			3,517			4,596
Total Assets		$	23,848		$	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 Operations															Statement of Operations
	For the Three Months Ended September 30, 2016															For 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	$	42		$	3		$	3,351		$	—		$	3,396		$	42		$	2		$	3,213		$	—		$	3,257
Costs and expenses:
Operating	16			1			1,880			—			1,897			22			2			1,980			—			2,004
Selling, general and administrative	20			63			557			—			640			23			68			437			—			528
Depreciation and amortization	2			6			53			—			61			1			6			49			—			56
Total costs and expenses	38			70			2,490			—			2,598			46			76			2,466			—			2,588
Operating income (loss)	4			(67		)	861			—			798			(4		)	(74		)	747			—			669
Interest (expense) income, net	(129		)	(109		)	141			—			(97		)	(127		)	(120		)	151			—			(96		)
Other items, net	—			—			2			—			2			1			(12		)	16			—			5
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies	(125		)	(176		)	1,004			—			703			(130		)	(206		)	914			—			578
Benefit (provision) for income taxes	43			59			(278		)	—			(176		)	39			62			(270		)	—			(169		)
Equity in earnings (loss) of investee companies, net of tax	560			327			(13		)	(887		)	(13		)	149			339			(12		)	(488		)	(12		)
Net earnings from continuing operations	478			210			713			(887		)	514			58			195			632			(488		)	397
Loss from discontinued operations	—			—			(36		)	—			(36		)
Net loss from discontinued operations, net of tax																—			—			(339		)	—			(339		)
Net earnings	$	478		$	210		$	677		$	(887	)	$	478		$	58		$	195		$	293		$	(488	)	$	58
Total comprehensive income	$	489		$	215		$	675		$	(890	)	$	489		$	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 Operations															Statement of Operations
	For the Nine Months Ended September 30, 2016															For 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	$	125		$	9		$	10,398		$	—		$	10,532		$	84		$	5		$	6,511		$	—		$	6,600
Cost and expenses:
Costs and expenses:
Operating	48			4			6,062			—			6,114			46			3			4,029			—			4,078
Selling, general and administrative	62			196			1,629			—			1,887			43			132			863			—			1,038
Depreciation and amortization	4			17			167			—			188			2			12			97			—			111
Other operating items, net	—			—			(9		)	—			(9		)
Total costs and expenses	114			217			7,849			—			8,180			91			147			4,989			—			5,227
Operating income (loss)	11			(208		)	2,549			—			2,352			(7		)	(142		)	1,522			—			1,373
Interest (expense) income, net	(377		)	(319		)	414			—			(282		)	(249		)	(237		)	294			—			(192		)
Other items, net	(2		)	3			(6		)	—			(5		)	1			(25		)	30			—			6
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies	(368		)	(524		)	2,957			—			2,065			(255		)	(404		)	1,846			—			1,187
Benefit (provision) for income taxes	120			170			(902		)	—			(612		)	77			122			(506		)	—			(307		)
Equity in earnings (loss) of investee companies, net of tax	1,622			876			(43		)	(2,498		)	(43		)	(16		)	693			(29		)	(677		)	(29		)
Net earnings from continuing operations	1,374			522			2,012			(2,498		)	1,410
Loss from discontinued operations	—			—			(36		)	—			(36		)
Net earnings	$	1,374		$	522		$	1,976		$	(2,498	)	$	1,374
Total comprehensive income	$	1,405		$	540		$	1,965		$	(2,505	)	$	1,405
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															Statement of Operations
	For the Three Months Ended September 30, 2015															For the Three Months Ended June 30, 2016
	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		$	2		$	3,219		$	—		$	3,257		$	36		$	3		$	2,937		$	—		$	2,976
Costs and expenses:
Operating	17			1			1,824			—			1,842			15			2			1,741			—			1,758
Selling, general and administrative	3			49			545			—			597			21			66			423			—			510
Depreciation and amortization	1			5			59			—			65			1			6			50			—			57
Total costs and expenses	21			55			2,428			—			2,504			37			74			2,214			—			2,325
Operating income (loss)	15			(53		)	791			—			753			(1		)	(71		)	723			—			651
Interest (expense) income, net	(125		)	(103		)	132			—			(96		)	(124		)	(106		)	138			—			(92		)
Other items, net	(1		)	6			(9		)	—			(4		)	(1		)	13			(16		)	—			(4		)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies	(111		)	(150		)	914			—			653
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of investee companies																(126		)	(164		)	845			—			555
Benefit (provision) for income taxes	36			48			(295		)	—			(211		)	40			51			(264		)	—			(173		)
Equity in earnings (loss) of investee companies, net of tax	501			338			(16		)	(839		)	(16		)	509			289			(9		)	(798		)	(9		)
Net earnings from continuing operations																423			176			572			(798		)	373
Net earnings from discontinued operations, net of tax																—			—			50			—			50
Net earnings	$	426		$	236		$	603		$	(839	)	$	426		$	423		$	176		$	622		$	(798	)	$	423
Total comprehensive income	$	430		$	240		$	590		$	(830	)	$	430		$	432		$	185		$	611		$	(796	)	$	432

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)


	Statement of Operations																Statement of Operations
	For the Nine Months Ended September 30, 2015																For the Six Months Ended June 30, 2016
	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	$	101		$	8		$	9,867		$	—			$	9,976		$	83		$	6		$	6,475		$	—		$	6,564
Costs and expenses:
Operating	47			4			5,840			—				5,891			32			3			3,995			—			4,030
Selling, general and administrative	27			165			1,598			—				1,790			42			132			839			—			1,013
Depreciation and amortization	4			15			180			—				199			2			11			101			—			114
Restructuring charges	—			—			55			—				55
Other operating items, net	—			—			(19		)	—				(19		)	—			—			(9		)	—			(9		)
Total costs and expenses	78			184			7,654			—				7,916			76			146			4,926			—			5,148
Operating income (loss)	23			(176		)	2,213			—			��	2,060			7			(140		)	1,549			—			1,416
Interest (expense) income, net	(358		)	(300		)	387			—				(271		)	(248		)	(210		)	273			—			(185		)
Other items, net	(1		)	6			(28		)	—				(23		)	(2		)	3			(8		)	—			(7		)
Earnings (loss) before income taxes and equity in earnings (loss) of investee companies	(336		)	(470		)	2,572			—				1,766
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 taxes	109			152			(840		)	—				(579		)	77			110			(566		)	—			(379		)
Equity in earnings (loss) of investee companies, net of tax	1,379			802			(35		)	(2,181		)		(35		)	1,062			549			(30		)	(1,611		)	(30		)
Net earnings from continuing operations																	896			312			1,218			(1,611		)	815
Net earnings from discontinued operations, net of tax																	—			—			81			—			81
Net earnings	$	1,152		$	484		$	1,697		$	(2,181	)		$	1,152		$	896		$	312		$	1,299		$	(1,611	)	$	896
Total comprehensive income	$	1,173		$	487		$	1,705		$	(2,192	)		$	1,173		$	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)


	Balance Sheet														Balance Sheet
	At September 30, 2016														At 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
Assets
Cash and cash equivalents	$	54		$	1	$	124		$	—		$	179		$	15		$	—	$	155		$	—		$	170
Receivables, net	20			2		3,326			—			3,348			22			2		3,275			—			3,299
Programming and other inventory	4			3		1,452			—			1,459			4			3		1,553			—			1,560
Prepaid expenses and other current assets	93			39		375			(36		)	471			94			31		266			(33		)	358
Current assets of discontinued operations															—			—		299			—			299
Total current assets	171			45		5,277			(36		)	5,457			135			36		5,548			(33		)	5,686
Property and equipment	47			184		3,032			—			3,263			48			205		2,714			—			2,967
Less accumulated depreciation and amortization	23			135		1,760			—			1,918			26			151		1,576			—			1,753
Net property and equipment	24			49		1,272			—			1,345			22			54		1,138			—			1,214
Programming and other inventory	6			7		2,224			—			2,237			3			6		2,450			—			2,459
Goodwill	98			62		6,371			—			6,531			98			62		4,731			—			4,891
Intangible assets	—			—		5,499			—			5,499			—			—		2,627			—			2,627
Investments in consolidated subsidiaries	44,372			13,652		—			(58,024		)	—			44,467			14,544		—			(59,011		)	—
Other assets	153			11		2,615			—			2,779			149			8		2,401			—			2,558
Intercompany	—			1,901		25,528			(27,429		)	—			—			1,455		28,442			(29,897		)	—
Assets of discontinued operations															—			—		3,218			—			3,218
Total Assets	$	44,824		$	15,727	$	48,786		$	(85,489	)	$	23,848		$	44,874		$	16,165	$	50,555		$	(88,941	)	$	22,653
Liabilities and Stockholders’ Equity
Accounts payable	$	1		$	2	$	150		$	—		$	153		$	1		$	4	$	119		$	—		$	124
Participants’ share and royalties payable	—			—		979			—			979			—			—		1,005			—			1,005
Program rights	4			4		365			—			373			4			3		255			—			262
Commercial paper	33			—		—			—			33			263			—		—			—			263
Current portion of long-term debt	6			—		16			—			22			6			—		17			—			23
Accrued expenses and other current liabilities	363			228		983			(36		)	1,538			383			212		830			(33		)	1,392
Current liabilities of discontinued operations															—			—		161			—			161
Total current liabilities	407			234		2,493			(36		)	3,098			657			219		2,387			(33		)	3,230
Long-term debt	8,797			—		105			—			8,902			8,801			—		97			—			8,898
Other liabilities	2,843			244		3,413			—			6,500			2,892			238		2,285			—			5,415
Liabilities of discontinued operations															—			—		2,483			—			2,483
Intercompany	27,429			—		—			(27,429		)	—			29,897			—		—			(29,897		)	—
Stockholders’ Equity:
Preferred stock	—			—		126			(126		)	—			—			—		126			(126		)	—
Common stock	1			123		590			(713		)	1			1			123		590			(713		)	1
Additional paid-in capital	43,935			—		60,894			(60,894		)	43,935			43,820			—		60,894			(60,894		)	43,820
Retained earnings (deficit)	(19,144		)	15,435		(14,105		)	(1,330		)	(19,144		)
Retained earnings (accumulated deficit)															(19,451		)	15,894		(13,572		)	(2,322		)	(19,451		)
Accumulated other comprehensive income (loss)	(739		)	22		70			(92		)	(739		)	(741		)	22		65			(87		)	(741		)
	24,053			15,580		47,575			(63,155		)	24,053			23,629			16,039		48,103			(64,142		)	23,629
Less treasury stock, at cost	18,705			331		4,800			(5,131		)	18,705			21,002			331		4,800			(5,131		)	21,002
Total Stockholders’ Equity	5,348			15,249		42,775			(58,024		)	5,348			2,627			15,708		43,303			(59,011		)	2,627
Total Liabilities and Stockholders’ Equity	$	44,824		$	15,727	$	48,786		$	(85,489	)	$	23,848		$	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)


	Balance Sheet														Balance Sheet
	At December 31, 2015														At December 31, 2016
	CBS Corp.			CBS Operations Inc.		Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated			CBS Corp.			CBS Operations Inc.		Non- Guarantor Affiliates			Eliminations			CBS Corp. Consolidated
Assets
Cash and cash equivalents	$	267		$	1	$	55		$	—		$	323		$	321		$	—	$	277		$	—		$	598
Receivables, net	28			2		3,598			—			3,628			27			2		3,285			—			3,314
Programming and other inventory	3			3		1,265			—			1,271			3			3		1,421			—			1,427
Prepaid expenses and other current assets	192			26		337			(30		)	525			102			55		297			(35		)	419
Current assets of discontinued operations															—			—		305			—			305
Total current assets	490			32		5,255			(30		)	5,747			453			60		5,585			(35		)	6,063
Property and equipment	46			180		3,017			—			3,243			47			201		2,687			—			2,935
Less accumulated depreciation and amortization	20			118		1,700			—			1,838			25			140		1,529			—			1,694
Net property and equipment	26			62		1,317			—			1,405			22			61		1,158			—			1,241
Programming and other inventory	6			9		1,942			—			1,957			5			7		2,427			—			2,439
Goodwill	98			62		6,321			—			6,481			98			62		4,704			—			4,864
Intangible assets	—			—		5,514			—			5,514			—			—		2,633			—			2,633
Investments in consolidated subsidiaries	42,744			12,775		—			(55,519		)	—			44,473			13,853		—			(58,326		)	—
Other assets	163			11		2,487			—			2,661			150			8		2,549			—			2,707
Intercompany	—			2,248		23,988			(26,236		)	—			—			1,785		26,976			(28,761		)	—
Assets of discontinued operations															—			3		4,288			—			4,291
Total Assets	$	43,527		$	15,199	$	46,824		$	(81,785	)	$	23,765		$	45,201		$	15,839	$	50,320		$	(87,122	)	$	24,238
Liabilities and Stockholders’ Equity
Accounts payable	$	1		$	4	$	187		$	—		$	192		$	1		$	3	$	144		$	—		$	148
Participants’ share and royalties payable	—			—		1,013			—			1,013			—			—		1,024			—			1,024
Program rights	4			4		366			—			374			4			4		282			—			290
Commercial paper															450			—		—			—			450
Current portion of long-term debt	206			—		16			—			222			6			—		17			—			23
Accrued expenses and other current liabilities	418			230		1,141			(30		)	1,759			421			284		948			(35		)	1,618
Current liabilities of discontinued operations															—			—		155			—			155
Total current liabilities	629			238		2,723			(30		)	3,560			882			291		2,570			(35		)	3,708
Long-term debt	8,113			—		113			—			8,226			8,798			—		104			—			8,902
Other liabilities	2,986			252		3,178			—			6,416			3,071			244		2,173			—			5,488
Liabilities of discontinued operations															—			—		2,451			—			2,451
Intercompany	26,236			—		—			(26,236		)	—			28,761			—		—			(28,761		)	—
Stockholders’ Equity:
Preferred stock	—			—		126			(126		)	—			—			—		126			(126		)	—
Common stock	1			123		590			(713		)	1			1			123		590			(713		)	1
Additional paid-in capital	44,055			—		60,894			(60,894		)	44,055			43,913			—		60,894			(60,894		)	43,913
Retained earnings (deficit)	(20,518		)	14,913		(16,081		)	1,168			(20,518		)
Retained earnings (accumulated deficit)															(19,257		)	15,483		(13,838		)	(1,645		)	(19,257		)
Accumulated other comprehensive income (loss)	(770		)	4		81			(85		)	(770		)	(767		)	29		50			(79		)	(767		)
	22,768			15,040		45,610			(60,650		)	22,768			23,890			15,635		47,822			(63,457		)	23,890
Less treasury stock, at cost	17,205			331		4,800			(5,131		)	17,205			20,201			331		4,800			(5,131		)	20,201
Total Stockholders’ Equity	5,563			14,709		40,810			(55,519		)	5,563			3,689			15,304		43,022			(58,326		)	3,689
Total Liabilities and Stockholders’ Equity	$	43,527		$	15,199	$	46,824		$	(81,785	)	$	23,765		$	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														Statement of Cash Flows
	For the Nine Months Ended September 30, 2016														For 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
Net cash flow (used for) provided by operating activities	$	(696	)	$	(146	)	$	2,148		$	—	$	1,306		$	(608	)	$	(153	)	$	1,699		$	—	$	938
Investing Activities:
Acquisitions	—			—			(51		)	—		(51		)	—			—			(21		)	—		(21		)
Capital expenditures	—			(16		)	(109		)	—		(125		)	—			(10		)	(58		)	—		(68		)
Investments in and advances to investee companies	—			—			(44		)	—		(44		)	—			—			(65		)	—		(65		)
Proceeds from dispositions	(4		)	—			32			—		28			—			—			1			—		1
Other investing activities	7			—			4			—		11			14			—			—			—		14
Net cash flow provided by (used for) investing activities from continuing operations															14			(10		)	(143		)	—		(139		)
Net cash flow used for investing activities from discontinued operations															—			(1		)	(12		)	—		(13		)
Net cash flow provided by (used for) investing activities	3			(16		)	(168		)	—		(181		)	14			(11		)	(155		)	—		(152		)
Financing Activities:
Proceeds from short-term debt borrowings, net	33			—			—			—		33
Proceeds from issuance of senior notes	685			—			—			—		685
Repayment of senior debentures	(199		)	—			—			—		(199		)
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	—			—			(13		)	—		(13		)	—			—			(8		)	—		(8		)
Payment of contingent consideration															—			—			(7		)	—		(7		)
Dividends	(209		)	—			—			—		(209		)	(151		)	—			—			—		(151		)
Purchase of Company common stock	(1,534		)	—			—			—		(1,534		)	(845		)	—			—			—		(845		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(57		)	—			—			—		(57		)	(89		)	—			—			—		(89		)
Proceeds from exercise of stock options	13			—			—			—		13			39			—			—			—		39
Excess tax benefit from stock-based compensation	13			—			—			—		13
Other financing activities	(1		)	—			—			—		(1		)
Increase (decrease) in intercompany payables	1,736			162			(1,898		)	—		—			1,521			164			(1,685		)	—		—
Net cash flow provided by (used for) financing activities	480			162			(1,911		)	—		(1,269		)	288			164			(1,681		)	—		(1,229		)
Net (decrease) increase in cash and cash equivalents	(213		)	—			69			—		(144		)
Cash and cash equivalents at beginning of period	267			1			55			—		323
Cash and cash equivalents at end of period	$	54		$	1		$	124		$	—	$	179
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														Statement of Cash Flows
	For the Nine Months Ended September 30, 2015														For the Six Months Ended June 30, 2016
	CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations		CBS Corp. Consolidated			CBS Corp.			CBS Operations Inc.			Non- Guarantor Affiliates			Eliminations		CBS Corp. Consolidated
Net cash flow (used for) provided by operating activities	$	(557	)	$	(183	)	$	1,363		$	—	$	623		$	(476	)	$	(116	)	$	1,843		$	—	$	1,251
Investing Activities:
Acquisitions	—			—			(7		)	—		(7		)	—			—			(51		)	—		(51		)
Capital expenditures	—			(5		)	(99		)	—		(104		)	—			(11		)	(58		)	—		(69		)
Investments in and advances to investee companies	—			—			(58		)	—		(58		)	—			—			(43		)	—		(43		)
Proceeds from dispositions	—			—			75			—		75			(4		)	—			23			—		19
Other investing activities	(8		)	—			—			—		(8		)	4			—			—			—		4
Net cash flow used for investing activities from continuing operations	(8		)	(5		)	(89		)	—		(102		)	—			(11		)	(129		)	—		(140		)
Net cash flow used for investing activities from discontinued operations	(4		)	—			—			—		(4		)	—			—			(2		)	—		(2		)
Net cash flow used for investing activities	(12		)	(5		)	(89		)	—		(106		)	—			(11		)	(131		)	—		(142		)
Financing Activities:
Repayments of short-term debt borrowings, net	(313		)	—			—			—		(313		)
Proceeds from issuance of senior notes	1,959			—			—			—		1,959
Proceeds from short-term borrowings, net															163			—			—			—		163
Repayment of senior debentures															(199		)	—			—			—		(199		)
Payment of capital lease obligations	—			—			(13		)	—		(13		)	—			—			(8		)	—		(8		)
Dividends	(228		)	—			—			—		(228		)	(142		)	—			—			—		(142		)
Purchase of Company common stock	(2,345		)	—			—			—		(2,345		)	(1,033		)	—			—			—		(1,033		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(96		)	—			—			—		(96		)	(57		)	—			—			—		(57		)
Proceeds from exercise of stock options	137			—			—			—		137			10			—			—			—		10
Excess tax benefit from stock-based compensation	87			—			—			—		87			11			—			—			—		11
Other financing activities															(1		)	—			—			—		(1		)
Increase (decrease) in intercompany payables	1,353			188			(1,541		)	—		—			1,503			127			(1,630		)	—		—
Net cash flow provided by (used for) financing activities	554			188			(1,554		)	—		(812		)	255			127			(1,638		)	—		(1,256		)
Net decrease in cash and cash equivalents	(15		)	—			(280		)	—		(295		)
Cash and cash equivalents at beginning of period	63			1			364			—		428
Cash and cash equivalents at end of period	$	48		$	1		$	84		$	—	$	133
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 that~~also seeks to grow its ~~increased investment in premium~~advertising 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 enable~~provide it ~~to stay ahead of changes in the media~~with incremental advertising and ~~entertainment industry, including new distribution platforms and changes in programming packages offered to consumers.~~non-advertising revenues.

Operational highlights - Three Months Ended ~~September~~June 30, ~~2016~~2017 versus Three Months Ended ~~September~~June 30, ~~2015~~2016


Consolidated results of operations					Increase/(Decrease)								Increase/(Decrease)
Three Months Ended September 30,	2016		2015		$		%
Three Months Ended June 30,									2017		2016		$			%
GAAP:
Revenues	$	3,396	$	3,257	$	139	4	%	$	3,257	$	2,976	$	281		9	%
Operating income	$	798	$	753	$	45	6	%	$	669	$	651	$	18		3	%
Net earnings from continuing operations	$	514	$	426	$	88	21	%	$	397	$	373	$	24		6	%
Adjusted net earnings from continuing operations ^(a)	$	467	$	426	$	41	10	%
Net earnings									$	58	$	423	$	(365	)	(86	)%
Diluted EPS from continuing operations	$	1.15	$	.88	$	.27	31	%	$	.97	$	.82	$	.15		18	%
Adjusted diluted EPS from continuing operations ^(a)	$	1.05	$	.88	$	.17	19	%
Diluted EPS									$	.14	$	.93	$	(.79	)	(85	)%

Non-GAAP:^(a)
Adjusted net earnings									$	427	$	423	$	4		1	%
Adjusted diluted EPS									$	1.04	$	.93	$	.11		12	%

(a) See page 3336 for reconciliations of adjusted results to the most directly comparable financial measures in accordance with ~~GAAP.~~accounting principles generally accepted in the United States (“GAAP”).

For the ~~three months ended September 30, 2016,~~second quarter of 2017, the ~~Company reported record third quarter~~Company’s results ~~in revenues, operating income and diluted earnings per share~~benefited from ~~continuing operations (‘‘EPS’’), led by~~ growth in retransmission revenues and station affiliation fees ~~and retransmission revenues, and higher~~as well as an increase in television licensing ~~sales. Diluted EPS also benefited from lower weighted average shares outstanding in the third quarter~~sales, reflecting a higher volume of ~~2016~~titles available for sale as a result of recent increased investment in internally-produced series. However, the ~~Company’s ongoing share repurchase program.~~comparison with the prior year was impacted by the high-margin international licensing of five Star Trek library series in the second quarter of 2016.

For the three months ended ~~September~~June 30, ~~2016,~~2017, the 4%9% increase in revenues reflects growth across all of the Company’s major revenue ~~growth was driven~~streams, led by ~~a 13% increase~~16% growth in affiliate and subscription fee revenues, ~~reflecting 32%~~which was driven by 25% growth in station affiliation fees and retransmission revenues, as well as ~~revenues~~growth from ~~digital distribution platforms,~~new initiatives, including the Company’s owned streaming subscription services, CBS All Access and the Showtime ~~Networks’ over-the-top~~ digital streaming subscription offering (“Showtime Networks’ over-the-top service”). Revenue growth for the third quarter of 2016 also reflected a 6% increase in content licensing and distribution revenues, driven by higher domestic television licensing sales. Advertising revenues for the quarter were impacted by 10 hours of primetime preemptions for the Democratic and Republican conventions and the first Presidential debate as well as competition from the 2016 Summer Olympics, while advertising benefited from higher political spending.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

subscription offering, and third-party live television streaming services. Advertising revenues increased 4% as a result of the broadcast of the semifinals and finals of the NCAA Division I Men’s Basketball Championship (“NCAA Tournament”), which are broadcast on the CBS 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 Star Trek library programming in the second quarter of 2016.

Operating income for the three months ended June 30, 2017 increased 3%, primarily driven by the growth in affiliate and subscription fee revenues, partially offset by lower non-sports advertising revenues. The operating income margin decreased one point to 21% for the second quarter of 2017 from 22% for the second quarter of 2016, primarily as a result of the mix of revenues. 2016 included higher-margin television licensing sales of Star Trek library programming, and 2017 was impacted by lower-margin revenues from the NCAA Tournament. Net earnings from continuing operations increased 6% and diluted earnings per share (“EPS”) from continuing operations increased 18%, reflecting the higher operating income. Diluted EPS ~~grew 31%~~ from continuing operations also benefited from lower weighted average shares outstanding in the ~~third~~second quarter of ~~2015 primarily driven by the revenue growth, which was partially offset by an increased investment in programming. In addition, included in diluted EPS for the third quarter~~2017 as a result of 2016 was a one-time tax benefit of $47 million associated with a multiyear adjustment to a tax deduction, which was approved by the Internal Revenue Service (“IRS”) during the third quarter of 2016. On an adjusted basis, excluding this tax benefit, diluted EPS grew 19%. Diluted EPS also benefited from 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, 2017 versusSix Months Ended June 30, 2016



Consolidated results of operations						Increase/(Decrease)
Six Months Ended June 30,	2017			2016		$			%
GAAP:
Revenues	$	6,600		$	6,564	$	36		1	%
Operating income	$	1,373		$	1,416	$	(43	)	(3	)%
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	$	(.47	)	$	1.95	$	(2.42	)	(124	)%

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 36 - 37 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, which included CBS’s broadcast of Super Bowl 50 and international licensing sales of five Star Trek library series. The growth was driven by 16% higher affiliate and subscription fee revenues, led by 27% growth in station affiliation fees and retransmission revenues, as well as growth from new initiatives, including the Company’s owned streaming subscription services, CBS All Access and the Showtime digital streaming subscription service, and third-

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

party 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 driven by the benefit in 2016 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. 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 pages 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 ~~plans~~agreement to ~~separate its radio business,~~combine CBS Radio with Entercom in a ~~preliminary~~merger following the separation of CBS Radio through a tax-free split-off, CBS Radio filed a registration statement ~~was filed~~on Forms S-4 and S-1 with the Securities and Exchange Commission ~~(‘‘SEC’’~~(“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 ~~third~~fourth quarter of ~~2016 for the proposed initial public offering of the common stock of~~2017, subject to customary approvals and closing conditions. CBS Radio ~~Inc. (‘‘CBS Radio’’). Additionally,~~has been presented as a discontinued operation in ~~October 2016, CBS Radio borrowed $1.46 billion through a $1.06 billion senior secured term loan (the “Term Loan”) and~~ the ~~issuance of~~consolidated financial statements for all periods presented.

In July 2017, the Company issued $400 million of 2.50% senior ~~unsecured~~ notes ~~through a private placement.~~due 2023 and $500 million of 3.375% senior notes due 2028. The Company used the net ~~debt~~ proceeds ~~will be primarily used by CBS Corp.~~from these issuances to ~~repurchase shares~~repay its $400 million outstanding 1.95% senior notes which matured on July 1, 2017, and to redeem all of its ~~Class B Common Stock, with the remainder to be~~$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 ~~ongoing cash needs. During the fourth quarter~~redemption of ~~2016,~~senior notes, the Company ~~intends to repurchase $1.5~~had $9.04 billion of ~~its Class B Common Stock, including $500 million as part~~long-term debt outstanding, excluding capital leases, at a weighted average interest rate of its ongoing repurchase program and $1.0 billion using the net proceeds from the CBS Radio borrowings. These planned repurchases are subject to market and business conditions, and remain at the discretion of management.

On September 29, 2016, the Company announced that its Board of Directors received a letter from National Amusements, Inc. requesting that the Company consider a potential combination of the Company and Viacom Inc. National Amusements, Inc., directly and indirectly, owns approximately 80% of the voting shares of each of the Company and Viacom Inc. The Company is in the process of evaluating whether to pursue any such potential transaction. No assurance can be given regarding the entry into, consummation or terms of any such potential transaction.

~~Operational highlights~~ - ~~Nine Months Ended September 30, 2016 versus Nine Months Ended September 30, 2015~~

Consolidated results of operations Increase/(Decrease)
Nine Months Ended September 30, 2016 2015 $ %
Revenues $ 10,532
$ 9,976
$ 556
6 %
Operating income $ 2,352
$ 2,060
$ 292
14 %
Adjusted operating income ^(a)
$ 2,343
$ 2,096
$ 247
12 %
Net earnings from continuing operations $ 1,410
$ 1,152
$ 258
22 %
Adjusted net earnings from continuing operations ^(a)
$ 1,364
$ 1,182
$ 182
15 %
Diluted EPS from continuing operations $ 3.10
$ 2.33
$ .77
33 %
Adjusted diluted EPS from continuing operations ^(a)
$ 3.00
$ 2.39
$ .61
26 %

~~(a) See page 33 for reconciliations of adjusted results to the most directly comparable financial measures in accordance with GAAP.~~

~~For the nine months ended September 30, 2016, the 6% increase in revenues was driven by 10% growth in advertising revenues, reflecting CBS’s broadcast of~~ ~~Super Bowl 50~~ and 6% growth in underlying network advertising. Affiliate and subscription fee revenues increased 8%, driven by 39% growth in station affiliation fees and retransmission revenues, as well as revenues from digital distribution platforms. These increases were partially offset by the benefit to 2015 from Showtime Networks’ distribution of the Floyd Mayweather/Manny Pacquiao boxing event. Content licensing and distribution revenues declined 4%, reflecting lower domestic licensing sales compared with the first nine months of 2015, which included significant licensing sales of ~~NCIS~~ ~~and~~ ~~Elementary~~,4.43%.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~partially offset by growth from international licensing, mainly from the sales of all episodes of five~~ ~~Star Trek~~ ~~series.~~

Operating income grew 14% and diluted EPS increased 33% for the nine months ended September 30, 2016, primarily driven by the higher revenues. In addition, for the nine months ended September 30, 2015, operating income and diluted EPS included restructuring charges of $55 million and for the three and nine months ended September 30, 2016, diluted EPS included the aforementioned tax benefit of $47 million. 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 $1.31 billion for the nine months ended September 30, 2016 compared with $650 million for the nine months ended September 30, 2015. Free cash flow for the nine months ended September 30, 2016 was $1.18 billion compared with $546 million for the same prior-year period. These increases were primarily driven by growth in affiliate and subscription fees and higher advertising revenues, including from the broadcast of ~~Super Bowl 50~~ on CBS, partially offset by increased investment in content. Free cash flow is a non-GAAP financial measure. See “Free Cash Flow” on pages 49 - 50 for a reconciliation of net cash flow provided by (used for) operating activities, the most directly comparable GAAP financial measure, to free cash flow.

Share Repurchases and Dividends

~~On July 28, 2016,~~During the second quarter of 2017, the Company ~~announced that its Board of Directors approved~~declared a ~~20% increase to the~~ quarterly cash dividend of $.18 on its Class A and Class B Common Stock, ~~to $.18 from $.15 per share. The~~resulting in total ~~third quarter 2016 dividend was $80~~dividends of $73 million, which ~~was~~were paid on ~~October~~July 1, ~~2016.~~2017.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Reconciliation of Non-GAAP Measures

Results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 included discrete items that were not part of the normal course of operations. The following tables present ~~adjusted operating income, adjusted net earnings from continuing operations, and adjusted diluted EPS from continuing operations,~~non-GAAP financial measures, which exclude the impact of these discrete ~~items. These adjusted results are non-GAAP financial measures, which are~~items, 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.

Nine Months Ended September 30,
2016
2015
Operating income $ 2,352
$ 2,060

Exclude:
Restructuring charges —
55

Other operating items, net ^(a)
(9 ) (19 )
Adjusted operating income $ 2,343
$ 2,096



	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

Three Months Ended September 30, Nine Months Ended September 30,
2016
2015 2016 2015
Net earnings from continuing operations $ 514
$ 426
$ 1,410
$ 1,152

Exclude:
Restructuring charges (net of tax of
$22 million in 2015)
—

—
—
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
—

Discrete tax item ^(b)
(47 ) —
(47 ) —

Adjusted net earnings from continuing operations $ 467

$ 426
$ 1,364
$ 1,182

Three Months Ended September 30, Nine Months Ended September 30,
2016
2015 2016 2015
Diluted EPS from continuing operations $ 1.15
$ .88
$ 3.10
$ 2.33

Exclude:
Restructuring charges —
—
—
.07

Other operating items, net ^(a)
—
—
(.01 ) (.01 )
Write-down of an equity investment —
—
.01
—

Discrete tax item ^(b)
(.11 ) —
(.10 ) —

Adjusted diluted EPS from continuing operations^(c)
$ 1.05
$ .88
$ 3.00
$ 2.39



	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 operations	851				(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 from the sales~~Reflects noncash charges of ~~internet businesses in China~~$365 million and $1.08 billion for the ~~nine~~three and six months ended ~~September~~June 30, ~~2016~~2017, respectively, to record a valuation allowance for the carrying value of CBS Radio, and ~~2015, and for 2016, also includes~~ a ~~multiyear, retroactive impact~~restructuring charge of ~~a new operating tax.~~$7 million ($4 million, net of tax) at CBS Radio.

(b) Reflects a ~~one-time~~ tax benefit ~~associated with a multiyear adjustment to a tax deduction, which was approved by~~in the ~~IRS during the third~~first quarter of ~~2016.~~2017 from the resolution of certain state income tax matters.

~~(c) Amounts may not sum as a result of rounding.~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)



	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 income	15				—				—		15
Other items, net	(7		)		—				—		(7		)
Earnings from continuing operations before income taxes	1,224				(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 operations	815				(5		)		6		816
Net earnings from discontinued operations, net of tax	81				—				—		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) Reflects a gain on the sale of an internet business in China and 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 ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 versus Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016

Revenues


	Three Months Ended September 30,																		Three Months Ended June 30,
			% of Total Revenues						% of Total Revenues			Increase/(Decrease)										% of Total Revenues						% of Total Revenues			Increase/(Decrease)
Revenues by Type	2016				2015				% of Total Revenues		$				%			2017				% of Total Revenues		2016				% of Total Revenues		$				%
Advertising	$	1,469	% of Total Revenues	43	%		$	1,481		46	%		$	(12	)		(1	)%		$	1,299		40	%		$	1,245		42	%		$	54			4	%
Content licensing and distribution	1,108		33			1,046			32			62				6			1,056			32			943			32			113				12
Affiliate and subscription fees	753		22			664			20			89				13			848			26			733			24			115				16
Other	66		2			66			2			—				—			54			2			55			2			(1		)		(2	)
Total Revenues	$	3,396	100	%		$	3,257		100	%		$	139			4	%		$	3,257		100	%		$	2,976		100	%		$	281			9	%


	Nine Months Ended September 30,																		Six Months Ended June 30,
			% of Total Revenues						% of Total Revenues			Increase/(Decrease)										% of Total Revenues						% of Total Revenues			Increase/(Decrease)
Revenues by Type	2016				2015				% of Total Revenues		$				%			2017				% of Total Revenues		2016				% of Total Revenues		$				%
Advertising	$	5,363	% of Total Revenues	51	%		$	4,859		49	%		$	504			10	%		$	2,902		44	%		$	3,330		51	%		$	(428	)		(13	)%
Content licensing and distribution	2,780		26			2,889			29			(109		)		(4	)		1,901			29			1,672			25			229				14
Affiliate and subscription fees	2,208		21			2,044			20			164				8			1,690			25			1,455			22			235				16
Other	181		2			184			2			(3		)		(2	)		107			2			107			2			—				—
Total Revenues	$	10,532	100	%		$	9,976		100	%		$	556			6	%		$	6,600		100	%		$	6,564		100	%		$	36			1	%

Advertising

For the three months ended ~~September~~June 30, ~~2016, advertising revenues decreased 1%. Advertising revenues were impacted by 10 hours of primetime preemptions for~~2017, the Democratic and Republican conventions and the first Presidential debate, competition from the 2016 Summer Olympics, and sales of internet businesses in China during 2015. Advertising revenues during the third quarter benefited from increased political advertising sales relating to U.S. federal and state elections. For the nine months ended September 30, 2016, the 10%4% increase in advertising revenues ~~was~~reflects 7% growth in network advertising revenues, driven by CBS’s broadcast of the ~~Super Bowl, which is~~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 ~~once~~ every ~~three years~~other year through ~~2022~~2032 under the current ~~contract; 6% growth~~agreements with the NCAA and Turner Broadcasting System, Inc. For the six months ended June 30, 2017, the 13% decrease in ~~underlying network advertising;~~advertising revenues primarily reflects the impact of two noncomparable sporting events that benefited 2016: the

Management’s Discussion and ~~higher~~Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

broadcast of Super Bowl 50 and one additional NFL playoff game on the CBS Television Network, as well as lower political and non-sports advertising sales. These ~~increases~~decreases were partially offset by the ~~impact from~~previously mentioned broadcast of additional NCAA Tournament games in the ~~sales~~second quarter of ~~internet businesses in China during 2015.~~2017.

~~During the fourth quarter of 2016, local advertising revenues are expected to continue to benefit from political advertising spending associated with U.S. federal and state elections. Additionally,~~The Company recently completed the CBS Television Network’s upfront advertising sales (“Upfront”) for the ~~2016/2017~~2017/2018 television broadcast season, which runs from the middle of September ~~2016~~2017 through the middle of September ~~2017, resulted~~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 ~~increases~~ 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 ~~2016/2017~~2017/2018 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 from strong political advertising.

Content Licensing and Distribution

For the three months ended ~~September~~June 30, ~~2016,~~2017, content licensing and distribution revenues benefited from a higher volume of television licensing sales and increased 12%, despite the 6%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~~growth in domestic television licensing ~~primarily reflecting~~sales and strong demand for the Company’s content internationally, partially offset by the licensing sales of ~~Showtime~~Star Trek ~~original series, including~~ ~~Penny Dreadful,~~ ~~as well as various titles from the Company’s television library, partially offset by the~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars~~ in ~~millions, except per share amounts)~~

~~initial domestic availability of~~ ~~Elementary~~ ~~in the third quarter of 2015. For the nine months ended September 30, 2016, the 4% decrease in content~~2016. Content licensing and distribution revenues ~~reflects lower domestic television licensing revenues,~~for the three and six months ended June 30, 2017 benefited from additional titles available for sale as a result of the ~~first nine months of 2015 included significant sales of~~ ~~NCIS~~ ~~and~~ ~~Elementary. This decrease was partially offset by growth from the international licensing of five~~ ~~Star Trek~~ ~~series and the domestic licensing sale of~~ ~~Penny Dreadful~~.Company’s recent increased investment in internally-produced series.

For the remainder of ~~2016,~~2017, the content licensing and ~~licensing~~ distribution ~~revenue~~revenues 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 ~~September~~June 30, ~~2016,~~2017, the ~~13%~~ increase in affiliate and subscription fees of 16% in each period reflects ~~32%~~ growth in station affiliation fees and retransmission revenues, and higher revenues from ~~digital distribution platforms,~~new initiatives, including the Company’s owned streaming subscription services, CBS All Access and ~~Showtime Networks’ over-the-top service. For~~ the ~~nine months ended September 30, 2016, the 8% increase in affiliate~~Showtime digital streaming subscription offering, and third-party live television streaming offerings.

Affiliate and subscription fees ~~was driven by 39% growth in station affiliation fees and retransmission revenues, and~~for the third quarter of 2017 are expected to include revenues from ~~digital distribution platforms. These increases were partially offset by the benefit to 2015 from Showtime Networks’ distribution of~~ the Floyd Mayweather/~~Manny Pacquiao~~Conor McGregor pay-per-view boxing ~~event, which was the highest grossing pay-per-view event of all time.~~event.

Over the next few years, the Company expects to ~~renew a significant portion~~benefit from the renewal of several of its agreements with station affiliates and ~~MVPDs. This, along~~MVPDs as well as from agreements with new distributors of live television streaming offerings. In addition, the Company’s ~~digital distribution initiatives,~~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.~~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)

International Revenues

The Company generated approximately ~~10%~~15% and ~~12%~~19% of its total revenues from international regions for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and generated approximately ~~13%~~14% and ~~14%~~15% of its total revenues from international regions for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Operating Expenses


	Three Months Ended September 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 Type	2016				2015				% of Operating Expenses		$				%			2017				% of Operating Expenses		2016				% of Operating Expenses		$				%
Programming	$	526	% of Operating Expenses	28	%		$	518		28	%		$	8			2	%		$	652		33	%		$	525		30	%		$	127			24	%
Production	706		37			683			37			23				3			726			36			630			36			96				15
Participation, distribution and royalty	291		15			271			15			20				7			290			14			285			16			5				2
Other	374		20			370			20			4				1			336			17			318			18			18				6
Total Operating Expenses	$	1,897	100	%		$	1,842		100	%		$	55			3	%		$	2,004		100	%		$	1,758		100	%		$	246			14	%



	Six Months Ended June 30,
			% of Operating Expenses				% of Operating Expenses		Increase/(Decrease)
Operating Expenses by Type	2017		% of Operating Expenses		2016		% of Operating Expenses		$			%
Programming	$	1,509	37	%	$	1,633	41	%	$	(124	)	(8	)%
Production	1,383		34		1,267		31		116			9
Participation, distribution and royalty	526		13		497		12		29			6
Other	660		16		633		16		27			4
Total Operating Expenses	$	4,078	100	%	$	4,030	100	%	$	48		1	%

For the three months ended June 30, 2017, the 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% decrease in programming expenses was driven by lower sports programming costs, as 2016 included costs associated with the broadcast of Super Bowl 50, which were partially offset by costs associated with the 2017 broadcast of additional NCAA Tournament games.

For the three and six months ended June 30, 2017, the increases in production expenses of 15% and 9%, respectively, reflect higher costs associated with the increase in television licensing revenues and a higher investment in internally-produced television series. For the six months ended June 30, 2017, these increases were partially offset by lower sports production costs as the first 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.

Selling, General and 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)

Nine Months Ended September 30,
% of Operating Expenses % of Operating Expenses Increase/(Decrease)
Operating Expenses by Type 2016 2015 $ %
Programming $ 2,182
36 % $ 2,033
34 % $ 149
7 %
Production 2,053
33
1,940
33
113
6

Participation, distribution and royalty 788
13
817
14
(29 ) (4 )
Other 1,091
18
1,101
19
(10 ) (1 )
Total Operating Expenses $ 6,114
100 % $ 5,891
100 % $ 223
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	%

For the three months ended September 30, 2016, the 2% increase in programming expenses was driven by higher sports programming costs associated with the broadcast of NFL games partially offset by lower costs for acquired television series. For the nine months ended September 30, 2016, the 7% increase in programming expenses was primarily driven by increased sports programming costs associated with the broadcast of NFL games, including ~~Super Bowl 50~~ ~~which was broadcast by CBS in 2016. This increase was~~partially offset by costs in 2015 associated with Showtime Networks’ distribution of the Floyd Mayweather/Manny Pacquiao 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 September 30, 2016, the 3% increase in production expenses was mainly driven by higher costs associated with the increase in television licensing revenues. For the nine months ended September 30, 2016, the 6% increase in production expenses was the result of increased investment in internally developed series and costs associated with the Super Bowl production in 2016, partially offset by lower costs associated with the decrease in television licensing revenues.

For the three months ended September 30, 2016, the 7% increase in participation, distribution and royalty costs primarily reflects higher participations and residuals resulting from the increase in television licensing revenues. For the nine months ended September 30, 2016, the 4% decrease in participation, distribution and royalty costs primarily reflects lower participations and residuals associated with lower television licensing revenues.

~~Selling, General and Administrative Expenses~~

Three Months Ended September 30,
2016 % of Revenues 2015 % of Revenues Increase/(Decrease)
Selling, general and administrative expenses $ 640
19 % $ 597
18 % 7 %

Nine Months Ended September 30,
2016 % of Revenues 2015 % of Revenues Increase/(Decrease)
Selling, general and administrative expenses $ 1,887
18 % $ 1,790
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 ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the increases in SG&A expenses ~~increased 7%~~of 4% and 5%2%, respectively, primarily ~~as a result of higher pension and other employee-related costs. For the nine months ended September 30, 2016, the increase also reflects~~reflect higher advertising and marketing costs, mainly associated with the timing of series premieres on ~~Showtime.~~and to support the Company’s growth initiatives.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Depreciation and Amortization

Three Months Ended September 30, Nine Months Ended September 30,
2016
2015 Increase/(Decrease) 2016
2015 Increase/(Decrease)
Depreciation and amortization $ 61
$ 65
(6 )% $ 188
$ 199
(6 )%



	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 ~~each of~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the ~~6% decrease~~decreases in depreciation and amortization ~~was~~of 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.~~

~~Restructuring Charges~~

During the nine months ended September 30, 2015, in a continued effort to reduce its cost structure, the Company initiated restructuring plans across several of its businesses, primarily for the reorganization of certain business operations. As a result, the Company recorded restructuring charges of $55 million, reflecting $34 million of severance costs and $21 million of costs associated with exiting contractual obligations and other related costs.amortized.

Other Operating Items, Net

Nine Months Ended September 30,
2016 2015 Increase/(Decrease)
Other operating items, net $ (9 ) $ (19 ) (53 )%

For the ~~nine~~six months ended ~~September~~June 30, 2016, ~~and 2015,~~ other operating items, net ~~includes gains~~included a gain from the ~~sales~~sale of an internet ~~businesses~~business in China and ~~for 2016, also includes~~ a multiyear, retroactive impact of a new operating tax.

Interest Expense/Income


	Three Months Ended September 30,									Nine Months Ended September 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	$	(104	)	$	(102	)		2	%	$	(304	)	$	(289	)		5	%	$	(111	)	$	(100	)		11	%	$	(220	)	$	(200	)		10	%
Interest income	$	7		$	6			17	%	$	22		$	18			22	%	$	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 ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


	At September 30,										At June 30,
			Weighted Average					Weighted Average					Weighted Average					Weighted Average
	2016		Interest Rate			2015		Interest Rate			2017		Interest Rate			2016		Interest Rate
Total long-term debt	$	8,849		4.47	%	$	8,409		4.68	%	$	8,853		4.47	%	$	8,167		4.61	%
Commercial paper	$	33		0.75	%	$	303		0.46	%	$	263		1.42	%	$	163		0.72	%



	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 the issuance of $400 million of 7.25% senior unsecured notes due 2024 through a private placement. The Term Loan bears interest at a rate equal to 3.50% plus the greater of the London Interbank Offered Rate (“LIBOR”) and 1.00%.

losses.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~Other Items, Net~~

Three Months Ended September 30, Nine Months Ended September 30,
2016
2015 Increase/(Decrease) 2016 2015 Increase/(Decrease)
Other items, net $ 2
$ (4 ) n/m $ (5 ) $ (23 ) 78 %

~~n/m - not meaningful~~

Other items, net for all periods primarily consists of foreign exchange gains and losses. For the three and nine months ended September 30, 2016, other items, net also includes a gain on the sale of an investment.

Provision for Income Taxes

Three Months Ended September 30, Nine Months Ended September 30,
2016
2015 Increase/(Decrease) 2016 2015 Increase/(Decrease)
Tax provision $ 176
$ 211
(17 )% $ 612
$ 579
6 %
Effective tax rate 25.0 % 32.3 % 29.6 % 32.8 %

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 rate	29.2		%	31.2		%				25.9		%	31.0		%

(a) Reflects excess tax ~~rate~~benefits 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 nine~~six months ended ~~September~~June 30, ~~2016 includes a one-time benefit~~2017, primarily reflects tax benefits from the resolution of ~~$47 million associated with a multiyear adjustment to a~~certain state income tax ~~deduction, which was approved by the IRS during the third quarter of 2016.~~matters.

Equity in Loss of Investee Companies, Net of Tax

Three Months Ended September 30, Nine Months Ended September 30,
2016
2015
Increase/(Decrease) 2016 2015 Increase/(Decrease)
Equity in loss of investee
companies, net of tax
$ (13 ) $ (16 ) (19 )% $ (43 ) $ (35 ) 23 %

~~For the nine months endedSeptember 30, 2016, equity in loss of investee companies, net of tax includes a $6 million write-down of an international television joint venture to its fair value.~~



	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 September 30, Nine Months Ended September 30,
2016 2015 Increase/(Decrease) 2016 2015 Increase/(Decrease)
Net earnings from continuing
operations
$ 514
$ 426
21 % $ 1,410
$ 1,152
22 %
Diluted EPS from continuing
operations
$ 1.15
$ .88
31 % $ 3.10
$ 2.33
33 %



	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 ~~and nine~~ months ended ~~September~~June 30, ~~2016,~~2017, the ~~increases~~6% increase in net earnings from continuing operations was primarily the result of ~~21% and 22%, respectively, and~~higher operating income. For the six months ended June 30, 2017, the 4% increase in net earnings from continuing operations reflects the previously mentioned tax benefits, which were partially offset by lower operating income. In addition to the higher earnings, the increases in diluted EPS from continuing operations for the three and six months ended June 30, 2017 of ~~31%~~18% and ~~33%~~16%, respectively, ~~were each driven by higher operating income and a lower effective tax rate. The increases in diluted EPS also~~ reflect lower weighted average shares outstanding as a result of the Company’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)

~~Loss~~Net Earnings (Loss) from Discontinued Operations

~~Loss~~The following table sets forth details of net earnings (loss) from discontinued operations ~~of $36 million~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 reflects~~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:
Operating	105			103			194			188
Selling, general and administrative	129			122			251			236
Depreciation and amortization^(a)	—			6			—			13
Restructuring charge	7			—			7			—
Provision for valuation allowance	365			—			1,080			—
Total costs and expenses	606			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 ~~resolution~~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 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 ~~tax matter~~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 ~~foreign jurisdiction relating to a previously disposed~~restructuring charge of $7 million associated with the reorganization of certain business ~~that was accounted for as a discontinued operation.~~operations, reflecting severance costs and costs associated with exiting contractual obligations.

Net Earnings (Loss) and Diluted EPS


	Three Months Ended September 30,							Nine Months Ended September 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)
Net earnings	$	478	$	426		12	%	$	1,374	$	1,152		19	%
Net earnings (loss)															$	58	$	423		(86	)%	$	(194	)	$	896		(122	)%
Diluted EPS	$	1.07	$	.88		22	%	$	3.02	$	2.33		30	%	$	.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 amounts)

Segment Results of Operations

Three Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016

Three Months Ended September 30,

% of Total
Revenues

% of Total
Revenues
Increase/(Decrease)
2016
2015 $ %
Revenues:
Entertainment $ 1,949
57 % $ 1,932
59 % $ 17
1 %
Cable Networks 598
18
526
16
72
14

Publishing 226
7
203
6
23
11

Local Media 409
12
376
12
33
9

Radio 319
9
318
10
1
—

Corporate/Eliminations (105 ) (3 ) (98 ) (3 ) (7 ) (7 )
Total Revenues $ 3,396
100 % $ 3,257
100 % $ 139
4 %

~~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,
				% of Total Revenues						% of Total Revenues			Increase/(Decrease)
	2017			% of Total Revenues			2016			% of Total Revenues			$			%
Revenues:
Entertainment	$	2,184			67	%	$	1,947			66	%	$	237		12	%
Cable Networks	571				18		536				18		35			7
Publishing	206				6		187				6		19			10
Local Media	412				13		396				13		16			4
Corporate/Eliminations	(116		)		(4	)	(90		)		(3	)	(26		)	(29	)
Total Revenues	$	3,257			100	%	$	2,976			100	%	$	281		9	%


	Three Months Ended September 30,																	Three Months Ended June 30,
				% of Total Operating Income						% of Total Operating Income											% of Total Operating Income						% of Total Operating Income
													Increase/(Decrease)																	Increase/(Decrease)
	2016						2015						$			%		2017						2016						$			%
Segment Operating Income (Loss):
Entertainment	$	348			44	%	$	339			45	%	$	9		3	%	$	346			52	%	$	351			54	%	$	(5	)	(1	)%
Cable Networks	285				36		246				33		39			16		253				38		227				35		26			11
Publishing	44				5		43				6		1			2		28				4		26				4		2			8
Local Media	122				15		101				13		21			21		127				19		130				20		(3		)	(2	)
Radio	77				10		73				10		4			5
Corporate	(78		)		(10	)	(49		)		(7	)	(29		)	(59	)	(85		)		(13	)	(83		)		(13	)	(2		)	(2	)
Total Operating Income	$	798			100	%	$	753			100	%	$	45		6	%	$	669			100	%	$	651			100	%	$	18		3	%

Three Months Ended September 30,
Increase/(Decrease)
2016
2015 $ %
Depreciation and Amortization:
Entertainment $ 28
$ 31
$ (3 ) (10 )%
Cable Networks 6
5
1
20

Publishing 1
1
—
—

Local Media 11
12
(1 ) (8 )
Radio 7
8
(1 ) (13 )
Corporate 8
8
—
—

Total Depreciation and Amortization $ 61
$ 65
$ (4 ) (6 )%

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,

% of Total
Revenues

% of Total
Revenues
Increase/(Decrease)
2016 2015 $ %
Revenues:
Entertainment $ 6,483
62 % $ 5,978
60 % $ 505
8 %
Cable Networks 1,659
16
1,680
17
(21 ) (1 )
Publishing 558
5
547
5
11
2

Local Media 1,253
12
1,138
11
115
10

Radio 898
8
907
9
(9 ) (1 )
Corporate/Eliminations (319 ) (3 ) (274 ) (2 ) (45 ) (16 )
Total Revenues $ 10,532
100 % $ 9,976
100 % $ 556
6 %

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Nine Months Ended September 30,

% of Total
Segment
Operating
Income

% of Total
Segment
Operating
Income

Increase/(Decrease)
2016 2015 $ %
Segment Operating Income (Loss):
Entertainment $ 1,148
49 % $ 947
45 % $ 201
21 %
Cable Networks 740
32
717
34
23
3

Publishing 83
3
80
4
3
4

Local Media 402
17
338
16
64
19

Radio 215
9
195
9
20
10

Corporate (245 ) (10 ) (181 ) (8 ) (64 ) (35 )
Total Segment Operating Income 2,343
100 % 2,096
100 % 247
12

Restructuring charges —
(55 ) 55
n/m

Other operating items, net 9
19
(10 ) (53 )
Total Operating Income $ 2,352
$ 2,060
$ 292
14 %

~~n/m - not meaningful~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Depreciation and Amortization:
Entertainment $ 88
$ 95
$ (7 ) (7 )%
Cable Networks 17
17
—
—

Publishing 4
4
—
—

Local Media 33
37
(4 ) (11 )
Radio 22
23
(1 ) (4 )
Corporate 24
23
1
4

Total Depreciation and Amortization $ 188
$ 199
$ (11 ) (6 )%

~~Entertainment~~ ~~(CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Interactive and CBS Films)~~

~~Three Months Ended September 30, 2016 and 2015~~

Three Months Ended September 30,
Increase/(Decrease)
2016
2015 $ %
Revenues $ 1,949
$ 1,932
$ 17
1 %
Segment Operating Income $ 348
$ 339
$ 9
3 %
Segment Operating Income as a % of revenues 18 % 18 %
Depreciation and amortization $ 28
$ 31
$ (3 ) (10 )%
Capital expenditures $ 23
$ 33
$ (10 ) (30 )%

~~For the three months ended September 30, 2016, the 1%increase in revenues was driven by a 39% increase in affiliate and subscription fees, led by higher station affiliation fees and subscription growth for~~ ~~CBS All Access.~~ This growth was largely offset by 4% lower advertising revenues and 3% lower content licensing and distribution revenues. Advertising revenues were impacted by 10 hours of primetime preemptions for the Democratic and Republican conventions and the first Presidential debate, competition from the 2016 Summer Olympics, and sales of internet businesses in China during 2015. The decrease in content licensing and distribution revenues reflects the initial domestic availability of ~~Elementary~~ ~~in the third quarter of 2015, partially offset by sales of various titles from the Company’s television library during the third quarter of~~ ~~2016~~.

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~For the three months ended September 30, 2016, the 3% increase in operating income was primarily driven by the increase in revenues.~~

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Revenues $ 6,483
$ 5,978
$ 505
8 %
Segment Operating Income $ 1,148
$ 947
$ 201
21 %
Segment Operating Income as a % of revenues 18 % 16 %
Restructuring charges $ —
$ 12
$ (12 ) n/m

Depreciation and amortization $ 88
$ 95
$ (7 ) (7 )%
Capital expenditures $ 60
$ 54
$ 6
11 %

~~n/m - not meaningful~~

~~For the nine months ended September 30, 2016, the 8% increase in revenues was driven by 19% growth in network advertising revenues, driven by the broadcast of~~ ~~Super Bowl 50~~ and 6% growth in underlying network advertising. Additionally, affiliate and subscription fees grew 54% for the nine months ended September 30, 2016 as a result of higher station affiliation fees and subscription growth for ~~CBS All Access. These increases were partially offset by 8% lower content licensing and distribution revenues due to lower domestic television licensing, as 2015 benefited from the significant licensing sales of~~ ~~NCIS~~ ~~and~~ ~~Elementary, partially offset by growth in international licensing revenues mainly from the sales of five~~ ~~Star Trek~~ ~~series.The revenue comparison was alsoimpacted by the sales of internet businesses in China during 2015.~~

For the nine months ended September 30, 2016, the 21% increase in operating income was primarily a result of the increase in revenues. Restructuring charges for the nine months ended September 30, 2015 primarily reflected severance costs.

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

~~Three Months Ended September 30, 2016 and 2015~~

Three Months Ended September 30,
Increase/(Decrease)
2016
2015 $ %
Revenues $ 598
$ 526
$ 72
14 %
Segment Operating Income $ 285
$ 246
$ 39
16 %
Segment Operating Income as a % of revenues 48 % 47 %
Depreciation and amortization $ 6
$ 5
$ 1
20 %
Capital expenditures $ 4
$ 5
$ (1 ) (20 )%

~~For the three months ended September 30, 2016, the 14% increase in revenues principally reflects higher revenues from the domestic licensing of~~ ~~Showtime~~ ~~original series, including~~ ~~Penny Dreadful, as well as growth in affiliate and subscription fees driven by Showtime Networks’ over-the-top service. As of September 30, 2016, subscriptions totaled 75 million for Showtime Networks (including~~ ~~Showtime~~, ~~The Movie Channel~~ ~~and~~ ~~Flix), 55 million for CBS Sports Network and 33 million for Smithsonian Networks.~~

~~For the three months ended September 30, 2016, the 16%increase in operating income primarily reflects the revenue growth partially offset by increased investment in original series.~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Revenues $ 1,659
$ 1,680
$ (21 ) (1 )%
Segment Operating Income $ 740
$ 717
$ 23
3 %
Segment Operating Income as a % of revenues 45 % 43 %
Depreciation and amortization $ 17
$ 17
$ —
— %
Capital expenditures $ 8
$ 8
$ —
— %

For the nine months ended September 30, 2016, revenues decreased 1% as the 2015 period benefited from the distribution of the Floyd Mayweather/Manny Pacquiao boxing event, which was the highest grossing pay-per-view event of all time. The decrease in pay-per-view revenues negatively impacted the revenue comparison by nine percentage points. Underlying results reflect higher revenues from the licensing of ~~Showtime~~ ~~original series and Showtime Networks’ over-the-top service.~~

~~For the nine months ended September 30, 2016, the 3% increase in operating income was driven by growth from the licensing of~~ ~~Showtime~~ ~~original series and Showtime Networks’ over-the-top service, partially offset by increased investment in programming.~~

~~Publishing~~ (~~Simon & Schuster~~)

~~Three Months Ended September 30, 2016 and 2015~~

Three Months Ended September 30,
Increase/(Decrease)
2016
2015 $ %
Revenues $ 226
$ 203
$ 23
11 %
Segment Operating Income $ 44
$ 43
$ 1
2 %
Segment Operating Income as a % of revenues 19 % 21 %
Depreciation and amortization $ 1
$ 1
$ —
— %
Capital expenditures $ 1
$ 2
$ (1 ) (50 )%

For the three months ended September 30, 2016, the 11% increase in revenues reflects higher print book sales and growth in digital book sales, mainly from digital audio. Digital revenues represented 23% of Publishing’s total revenues for the third quarter of 2016. Best-selling titles in the third quarter of 2016 included ~~Born to Run~~ ~~by Bruce Springsteen and~~ ~~The Girl with the Lower Back Tattoo~~ ~~by Amy Schumer.~~

~~For the three months ended September 30, 2016, operating income increased 2% as the increase in revenues was offset by higher production and selling costs.~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Revenues $ 558
$ 547
$ 11
2 %
Segment Operating Income $ 83
$ 80
$ 3
4 %
Segment Operating Income as a % of revenues 15 % 15 %
Depreciation and amortization $ 4
$ 4
$ —
— %
Capital expenditures $ 7
$ 4
$ 3
75 %

~~For the nine months ended September 30, 2016, the 2% increase in revenues reflects higher print book sales and growth in digital audio sales, partially offset by lower digital book sales.~~

~~For the nine months ended September 30, 2016, the 4% increase in operating income was driven by the revenue growth partially offset by higher production costs.~~

~~Local Media~~ (~~CBSTelevision Stations~~)

~~Three Months Ended September 30, 2016 and 2015~~

Three Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Revenues $ 409
$ 376
$ 33
9 %
Segment Operating Income $ 122
$ 101
$ 21
21 %
Segment Operating Income as a % of revenues 30 % 27 %
Depreciation and amortization $ 11
$ 12
$ (1 ) (8 )%
Capital expenditures $ 9
$ 10
$ (1 ) (10 )%

For the three months ended September 30, 2016, the 9% increase in revenues was driven by 7% growth in advertising revenues, which benefited from higher political advertising sales, and 13% growth in retransmission and subscription revenues.

~~For the three months ended September 30, 2016, the 21% increase in operating income primarily reflects the revenue growth.~~

~~During the fourth quarter of 2016, Local Media revenues are expected to continue to benefit from higher political spending associated with U.S. federal and state elections.~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Revenues $ 1,253
$ 1,138
$ 115
10 %
Segment Operating Income $ 402
$ 338
$ 64
19 %
Segment Operating Income as a % of revenues 32 % 30 %
Restructuring charges $ —
$ 19
$ (19 ) n/m

Depreciation and amortization $ 33
$ 37
$ (4 ) (11 )%
Capital expenditures $ 20
$ 17
$ 3
18 %

~~n/m - not meaningful~~

~~For the nine months ended September 30, 2016, the 10% increase in revenues was led by the broadcast of~~ ~~Super Bowl 50~~ ~~on CBS during the first quarter of 2016, higher political advertising sales and 16% growth in retransmission and subscription revenues.~~

For the nine months ended September 30, 2016, the 19% increase in operating income primarily reflects the revenue growth. Restructuring charges for the nine months ended September 30, 2015 primarily reflected severance costs and costs associated with exiting contractual obligations.

~~Radio~~ (~~CBS Radio~~)

~~Three Months Ended September 30, 2016 and 2015~~

Three Months Ended September 30,
Increase/(Decrease)
2016
2015 $ %
Revenues $ 319
$ 318
$ 1
— %
Segment Operating Income $ 77
$ 73
$ 4
5 %
Segment Operating Income as a % of revenues 24 % 23 %
Depreciation and amortization $ 7
$ 8
$ (1 ) (13 )%
Capital expenditures $ 4
$ 5
$ (1 ) (20 )%

~~For the three months ended September 30, 2016, the increase in revenues was primarily driven by higher national advertising sales, offset by lower local advertising sales.~~

For the three months ended September 30, 2016, the 5% increase in operating income primarily reflects lower employee compensation and talent costs resulting from restructuring activities put in place in 2015.

~~During the fourth quarter of 2016, Radio revenues are expected to continue to benefit from higher political spending associated with U.S. federal and state elections.~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Revenues $ 898
$ 907
$ (9 ) (1 )%
Segment Operating Income $ 215
$ 195
$ 20
10 %
Segment Operating Income as a % of revenues 24 % 21 %
Restructuring charges $ —
$ 24
$ (24 ) n/m

Depreciation and amortization $ 22
$ 23
$ (1 ) (4 )%
Capital expenditures $ 14
$ 16
$ (2 ) (13 )%

~~n/m - not meaningful~~

~~For the nine months ended September 30, 2016, the 1% decrease in revenues was driven by lower local advertising sales, which were partially offset by higher national advertising sales.~~

For the nine months ended September 30, 2016, the 10% increase in operating income primarily reflects lower employee compensation and talent costs resulting from restructuring charges in 2015, which more than offset the revenue decline. Restructuring charges for the nine months ended September 30, 2015 primarily reflected severance costs.

In connection with the Company’s previously announced plans to separate its radio business, a preliminary registration statement was filed with the SEC during the third quarter of 2016 for the proposed initial public offering of the common stock of CBS Radio.

~~Corporate~~

~~Three Months Ended September 30, 2016 and 2015~~

Three Months Ended September 30,
Increase/(Decrease)
2016
2015 $ %
Segment Operating Loss $ (78 ) $ (49 ) $ (29 ) (59 )%
Depreciation and amortization $ 8
$ 8
$ —
— %
Capital expenditures $ 5
$ 3
$ 2
67 %

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 September 30, 2016, the 59% increase in corporate expenses primarily reflects higher pension and other employee-related costs.

~~Nine Months Ended September 30, 2016 and 2015~~

Nine Months Ended September 30,
Increase/(Decrease)
2016 2015 $ %
Segment Operating Loss $ (245 ) $ (181 ) $ (64 ) (35 )%
Depreciation and amortization $ 24
$ 23
$ 1
4 %
Capital expenditures ^(a)
$ 16
$ 5
$ 11
n/m

~~n/m - not meaningful~~

~~(a) Primarily reflects the timing of capital projects.~~



	Three Months Ended June 30,
					Increase/(Decrease)
	2017		2016		$			%
Depreciation and Amortization:
Entertainment	$	27	$	30	$	(3	)	(10	)%
Cable Networks	6		5		1			20
Publishing	2		2		—			—
Local Media	12		11		1			9
Corporate	9		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)

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
				% of Total Revenues						% of Total Revenues			Increase/(Decrease)
	2017			% of Total Revenues			2016			% of Total Revenues			$			%
Revenues:
Entertainment	$	4,531			69	%	$	4,534			69	%	$	(3	)	—	%
Cable Networks	1,114				17		1,061				16		53			5
Publishing	367				6		332				5		35			11
Local Media	821				12		844				13		(23		)	(3	)
Corporate/Eliminations	(233		)		(4	)	(207		)		(3	)	(26		)	(13	)
Total Revenues	$	6,600			100	%	$	6,564			100	%	$	36		1	%



	Six Months Ended June 30,
				% of Total Segment Operating Income						% of Total Segment Operating Income
													Increase/(Decrease)
	2017						2016						$			%
Segment Operating Income (Loss):
Entertainment	$	744			54	%	$	800			57	%	$	(56	)	(7	)%
Cable Networks	501				37		455				32		46			10
Publishing	42				3		39				3		3			8
Local Media	250				18		280				20		(30		)	(11	)
Corporate	(164		)		(12	)	(167		)		(12	)	3			2
Total Segment Operating Income	1,373				100	%	1,407				100	%	(34		)	(2	)
Other operating items, net	—						9						(9		)	n/m
Total Operating Income	$	1,373					$	1,416					$	(43	)	(3	)%

n/m - not meaningful



	Six Months Ended June 30,
					Increase/(Decrease)
	2017		2016		$			%
Depreciation and Amortization:
Entertainment	$	56	$	60	$	(4	)	(7	)%
Cable Networks	12		11		1			9
Publishing	3		3		—			—
Local Media	23		22		1			5
Corporate	17		18		(1		)	(6	)
Total Depreciation and Amortization	$	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, 2017 and 2016



	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 revenues	16		%	18		%
Depreciation and amortization	$	27		$	30		$	(3	)	(10	)%
Capital expenditures	$	24		$	24		$	—		—	%

For the ~~nine~~three months ended June 30, 2017, the 12% ~~September 30, 2016, the 35%~~ increase in ~~corporate expenses~~revenues was driven by 38% growth in affiliate and subscription fees, led by higher station affiliation fees and growth from new initiatives, including CBS All 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 increased 6%, reflecting the broadcast of the semifinals and finals of the NCAA Tournament on the CBS Television Network in the second quarter of 2017, partially offset by a decline in non-sports advertising revenues.

For the three months ended June 30, 2017, operating income decreased 1%, primarily ~~reflects higher pension~~driven by the mix of revenues, reflecting higher-margin revenues in the second quarter of 2016, including the licensing of Star Trek, and ~~other employee-related costs.~~lower-margin revenues from the NCAA Tournament in the second quarter of 2017.

Six Months Ended June 30, 2017 and 2016



	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 revenues	16		%	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 from the broadcast of Super Bowl 50. Affiliate and subscription fees increased 33%, reflecting higher station affiliation fees and growth from 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 the benefit to 2016 from the sales of Star Trek 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)

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

Three Months Ended June 30, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$		%
Revenues	$	571		$	536		$	35	7	%
Segment Operating Income	$	253		$	227		$	26	11	%
Segment Operating Income as a % of revenues	44		%	42		%
Depreciation and amortization	$	6		$	5		$	1	20	%
Capital expenditures	$	4		$	2		$	2	100	%

For the three months ended June 30, 2017, the 7% increase in revenues was driven by higher affiliate and subscription fees, led by subscription growth for the Showtime digital streaming subscription offering. The revenue growth also reflects higher international television licensing sales of Showtime original series. As of June 30, 2017, subscriptions totaled 73 million for Showtime Networks (including Showtime, The Movie Channel and Flix), 52 million for CBS Sports Network and 31 million for Smithsonian Networks.

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

Cable Networks revenues for the third quarter of 2017 are expected to include revenues from the Floyd Mayweather/Conor McGregor pay-per-view boxing event.

Six Months Ended June 30, 2017 and 2016



	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 revenues	45		%	43		%
Depreciation and amortization	$	12		$	11		$	1	9	%
Capital expenditures	$	7		$	4		$	3	75	%

For the six months ended June 30, 2017, the 5% 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 driven by growth in 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, 2017 and 2016



	Three Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	206		$	187		$	19		10	%
Segment Operating Income	$	28		$	26		$	2		8	%
Segment Operating Income as a % of revenues	14		%	14		%
Depreciation and amortization	$	2		$	2		$	—		—	%
Capital expenditures	$	—		$	3		$	(3	)	n/m

n/m - not meaningful

For the three months ended June 30, 2017, the 10% increase in revenues was driven by higher print book sales and growth in digital audio sales. Best-selling titles in the second quarter of 2017 included Lord of Shadows by Cassandra Clare and I Can’t Make This Up by Kevin Hart.

For the three months ended June 30, 2017, the 8% increase in operating income mainly reflects revenue growth.

Six Months Ended June 30, 2017 and 2016



	Six Months Ended June 30,
							Increase/(Decrease)
	2017			2016			$			%
Revenues	$	367		$	332		$	35		11	%
Segment Operating Income	$	42		$	39		$	3		8	%
Segment Operating Income as a % of revenues	11		%	12		%
Depreciation and amortization	$	3		$	3		$	—		—	%
Capital expenditures	$	1		$	6		$	(5	)	(83	)%

For the six months ended June 30, 2017, the 11% increase in revenues was driven by higher print book sales and growth in digital audio sales.

For the six months ended June 30, 2017, the 8% increase in operating income reflects the revenue growth, which was partially offset by higher production and selling costs.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Local Media (CBSTelevision Stations and CBS Local Digital Media)

Three Months Ended June 30, 2017 and 2016



	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 revenues	31		%	33		%
Depreciation and amortization	$	12		$	11		$	1			9	%
Capital expenditures	$	7		$	4		$	3			75	%

For the three months ended June 30, 2017, the 4% increase in revenues was driven by growth in retransmission revenues. Advertising revenues benefited from CBS’s broadcast of the semifinals and finals of the NCAA Tournament in the second quarter of 2017; however, advertising revenues decreased 2% mainly due to lower political advertising sales.

For the three months ended June 30, 2017, the 2% decrease in operating income mainly reflects the mix of revenues. Retransmission revenues have associated network affiliation costs paid to the CBS Television Network, whereas political advertising sales have a high operating income margin.

During the second half of 2017, the revenue comparison will continue to be negatively impacted by the benefit in 2016 from strong political advertising associated with U.S. federal and state elections.

Six Months Ended June 30, 2017 and 2016



	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 revenues	30		%	33		%
Depreciation and amortization	$	23		$	22		$	1		5	%
Capital expenditures	$	12		$	11		$	1		9	%

For the six months ended June 30, 2017, the 3% decrease in revenues was driven by lower advertising revenues, reflecting the benefit in 2016 from CBS’s broadcast of Super Bowl 50, and a decline in political advertising sales. The lower advertising revenues were partially offset by growth in retransmission revenues.

For the six months ended June 30, 2017, the 11% decrease in operating income primarily reflects the lower revenues, as well as the mix of revenues compared to the 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	)%

Financial Position


	At			At			Increase/(Decrease)					At			At			Increase/(Decrease)
	September 30, 2016			December 31, 2015			$			%		June 30, 2017			December 31, 2016			$			%
Current Assets:
Cash and cash equivalents		$	179		$	323	$	(144	)	(45	)%		$	170		$	598	$	(428	)	(72	)%
Receivables, net ^(a)		3,348			3,628		(280		)	(8	)		3,299			3,314		(15		)	—
Programming and other inventory ^(b)(a)		1,459			1,271		188			15			1,560			1,427		133			9
Prepaid income taxes ^(c)		39			101		(62		)	(61	)
Prepaid expenses													132			185		(53		)	(29	)
All other current assets		432			424		8			2			525			539		(14		)	(3	)
Total current assets		$	5,457		$	5,747	$	(290	)	(5	)%		$	5,686		$	6,063	$	(377	)	(6	)%

(a) ~~The decrease is primarily due to seasonality.~~

~~(b)~~ The increase 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)
September 30, 2016
December 31, 2015 $ %
Other assets ^(a)
$ 2,779
$ 2,661
$ 118
4 %



	At			At			Increase/(Decrease)
	June 30, 2017			December 31, 2016			$			%
Other assets ^(a)		$	2,558		$	2,707	$	(149	)	(6	)%

(a) The ~~increase~~decrease primarily reflects ~~higher~~lower long-term receivables associated with revenues from television licensing agreements.

At At Increase/(Decrease)
September 30, 2016 December 31, 2015 $ %
Current Liabilities:
Accounts payable ^(a)
$ 153
$ 192
$ (39 ) (20 )%
Accrued compensation ^(a)
282
315
(33 ) (10 )
Program rights 373
374
(1 ) —

Deferred revenues ^(b)
141
295
(154 ) (52 )
Commercial paper 33
—
33
n/m

Current portion of long-term debt ^(c)
22
222
(200 ) (90 )
All other current liabilities 2,094
2,162
(68 ) (3 )
Total current liabilities $ 3,098
$ 3,560
$ (462 ) (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.~~

At At Increase/(Decrease)
September 30, 2016 December 31, 2015 $ %
Long-term debt ^(a)
$ 8,902
$ 8,226
$ 676
8 %

~~(a) The increase is primarily the result of the Company’s issuance of $700 million of senior notes during July 2016. (See Note 5 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)



	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:


	Nine Months Ended September 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	$	1,308		$	650			$	658		$	909		$	1,139			$	(230	)
Discontinued operations	(2		)	(27		)		25			29			112				(83		)
Net cash flow provided by operating activities	1,306			623				683			938			1,251				(313		)
Net cash flow used for investing activities from:
Continuing operations	(181		)	(102		)		(79		)	(139		)	(140		)		1
Discontinued operations	—			(4		)		4			(13		)	(2		)		(11		)
Net cash flow used for investing activities	(181		)	(106		)		(75		)	(152		)	(142		)		(10		)
Net cash flow used for financing activities	(1,269		)	(812		)		(457		)	(1,229		)	(1,256		)		27
Net decrease in cash and cash equivalents	$	(144	)	$	(295	)		$	151		$	(443	)	$	(147	)		$	(296	)

Operating Activities. For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the ~~increase~~decrease in cash provided by operating activities was ~~primarily~~ driven by ~~growth~~the benefit in ~~affiliate and subscription fees and higher advertising revenues, including~~2016 from ~~the~~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 content.~~

~~Cash paid for income taxes for the nine months ended September 30, 2016~~higher affiliate and ~~2015 was as follows:~~

Nine Months Ended September 30,
2016 2015
Cash taxes included in operating activities from continuing operations $ 383
$ 317

Excess tax benefits from the exercise of stock options and
vesting of restricted stock units, included in financing activities
(13 ) (87 )
Cash paid for income taxes from continuing operations $ 370
$ 230

~~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 nine months ended September 30, 2016.~~

subscription fee revenues.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Investing Activities


	Nine Months Ended September 30,								Six Months Ended June 30,
	2016				2015				2017				2016
Acquisitions ^(a)		$	(51	)		$	(7	)		$	(21	)		$	(51	)
Capital expenditures ^(b)		(125		)		(104		)		(68		)		(69		)
Investments in and advances to investee companies ^(c)(b)		(44		)		(58		)		(65		)		(43		)
Proceeds from dispositions ^(d)(c)		28				75				1				19
Other investing activities		11				(8		)		14				4
Net cash flow used for investing activities from continuing operations		(181		)		(102		)		(139		)		(140		)
Net cash flow used for investing activities from discontinued operations		—				(4		)		(13		)		(2		)
Net cash flow used for investing activities		$	(181	)		$	(106	)		$	(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.

Financing Activities


	Nine Months Ended September 30,								Six Months Ended June 30,
	2016				2015				2017				2016
Repurchase of CBS Corp. Class B Common Stock		$	(1,534	)		$	(2,345	)		$	(845	)		$	(1,033	)
Proceeds from (repayments of) short-term debt borrowings, net		33				(313		)
Proceeds from issuance of senior notes		685				1,959
(Repayments of) proceeds from short-term debt borrowings, net										(187		)		163
Repayment of senior debentures		(199		)		—				—				(199		)
Dividends		(209		)		(228		)		(151		)		(142		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation										(89		)		(57		)
Proceeds from exercise of stock options		13				137				39				10
All other financing activities, net		(58		)		(22		)		4				2
Net cash flow used for financing activities		$	(1,269	)		$	(812	)		$	(1,229	)		$	(1,256	)

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’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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.


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2016			2015			2017			2016
Net cash flow provided by operating activities	$	1,306		$	623		$	938		$	1,251
Capital expenditures	(125		)	(104		)	(68		)	(69		)
Exclude operating cash flow from discontinued operations	(2		)	(27		)	29			112
Free cash flow	$	1,183		$	546		$	841		$	1,070

Repurchase of Company Stock and Cash Dividends

During the ~~fourth~~second quarter of ~~2016,~~2017, the Company ~~intends to repurchase $1.5 billion~~declared a quarterly cash dividend of $.18 on its Class A and Class B Common Stock, ~~including $500~~resulting in total dividends of $73 million, as part of its ongoing repurchase program and $1.0 billion using the net proceeds from the CBS Radio borrowings. These planned repurchases are subject to market and business conditions, and remain at the discretion of management.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 a 20% increase to the quarterly cash dividend on its Class A and Class B Common stock to $.18 from $.15 per share. The total third quarter 2016 dividend was $80 million, which was paid on October 1, 2016.

Capital Structure

The following table sets forth the Company’s debt.


	At			At			At			At
	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
Commercial paper		$	33		$	—		$	263		$	450
Senior debt (1.95% – 7.875% due 2016 – 2045) ^(a)		8,849			8,365
Senior debt (1.95% – 7.875% due 2017 – 2045) ^(a)								8,853			8,850
Obligations under capital leases		75			83			68			75
Total debt		8,957			8,448			9,184			9,375
Less commercial paper		33			—			263			450
Less current portion of long-term debt		22			222			23			23
Total long-term debt, net of current portion		$	8,902		$	8,226		$	8,898		$	8,902

(a) At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016, the senior debt balances included (i) a net unamortized discount of $5349 million and $4552 million, respectively, (ii) unamortized deferred financing costs of ~~$45~~$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 $7$2 million and ~~$14~~$5 million, respectively. The face value of the Company’s senior debt was $8.94 billion ~~and $8.44 billion~~ at ~~September~~both June 30, ~~2016~~2017 and December 31, ~~2015, respectively.~~2016.

~~During~~In 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 used the net proceeds from ~~this issuance~~these 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, the Company repaid its $200 million of outstanding 7.625% senior debentures upon maturity.~~

At ~~September~~June 30, ~~2016,~~2017, the Company classified $400 million of debt ~~maturing~~which matured in July 2017 and $300 million of debt due May 2018 as long-term debt on the Consolidated Balance Sheet, ~~reflecting its intent and ability to refinance this~~as a result of the above-mentioned debt ~~on a long-term basis.~~refinancing.

Commercial Paper

Credit Facility

~~During~~At June ~~2016,~~30, 2017, the Company ~~amended and restated its~~had 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 ~~September~~June 30, ~~2016,~~2017, the Company’s Consolidated Leverage Ratio was approximately ~~2.5x~~2.9x.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

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 Radio Indebtedness~~

In October 2016, in connection with the Company’s previously announced plans to separate its radio business, CBS Radio borrowed $1.46 billion through a $1.06 billion senior secured term loan due 2023 and the issuance of $400 million of 7.25% senior unsecured notes due 2024 through a private placement. The Term Loan bears interest at a rate equal to 3.50% plus the greater of LIBOR and 1.00%.

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 ~~September~~June 30, ~~2016~~2017; 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 for~~Subsequent 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 ~~come~~be funded by cash generated from operating activities and the Company’s ability to refinance its ~~debt and cash generated from operating activities.~~

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

During the fourth quarter of 2016, the Company intends to repurchase $1.5 billion of its Class B Common Stock, including $500 million as part of its ongoing repurchase program and $1.0 billion using the net proceeds from the CBS Radio borrowings. These planned repurchases are subject to market and business conditions, and remain at the discretion of management.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.

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 ~~September~~June 30, ~~2016,~~2017, the Company had pending approximately ~~34,400~~33,240 asbestos claims, as compared with approximately ~~36,030~~33,610 as of December 31, ~~2015~~2016 and ~~37,190~~34,790 as of ~~September~~June 30, ~~2015.~~2016. During the ~~third~~second quarter of ~~2016,~~2017, the Company received approximately ~~930~~1,030 new claims and closed or moved to an inactive docket approximately ~~1,320~~1,390 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

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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.

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.

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.

~~Beginning~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in the third quarter of 2016, in connection with its new segment presentation, the Company allocated the goodwill for its Radio segment into three reporting units. The estimated fair value of each of these three reporting units exceeded their respective carrying value by less than 1%, which is consistent with the results of the Company’s 2015 annual impairment test for its CBS Radio reporting unit. The assumptions used in the calculation of the estimated fair values of the three Radio reporting units were similar to those used in the Company’s 2015 annual impairment test for its CBS Radio reporting unit, as disclosed in the discussion of critical accounting policies in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.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

~~Management’s Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

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; effects relating to the Company exploring, entering into, and/or consummating any potential transaction with Viacom Inc.; 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, ~~2015~~2016 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~~

In connection with the Company’s new segment presentation, the Company allocated the goodwill for its Radio segment into three reporting units. The estimated fair value of each of these three reporting units exceeded their respective carrying value by less than 1%, which is consistent with the results of the Company’s 2015 annual impairment test for its CBS Radio reporting unit. In addition, as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, based on the Company’s annual impairment test for FCC licenses performed during the fourth quarter of 2015, 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 three Radio reporting units and/or these FCC licenses could cause the estimated fair values 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 amount~~totaling $16.4 billion have been approved and announced, including most recently, an increase to the share repurchase program to a total availability of $6.0 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 ~~September~~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
July 1, 2016 - July 31, 2016 2.2
$ 55.39
2.2
$ 5,982

August 1, 2016 - August 31, 2016 3.5
$ 52.05
3.5
$ 5,798

September 1, 2016 - September 30, 2016 3.8
$ 51.91
3.8
$ 5,603

Total 9.5
$ 52.77
9.5
$ 5,603



(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 by~~of 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 by~~of 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)	Employment Agreement dated ~~as of September 29, 2016~~May 19, 2017 between CBS Corporation and ~~Anthony G. Ambrosio~~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: ~~November 3, 2016~~August 7, 2017	/s/ Joseph R. Ianniello
	Joseph R. Ianniello Chief Operating Officer

Date: ~~November 3, 2016~~August 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 by~~of 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 by~~of 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)	Employment Agreement dated ~~as of September 29, 2016~~May 19, 2017 between CBS Corporation and ~~Anthony G. Ambrosio~~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.

~~-59-~~-60-



	Cumulative Translation Adjustments		Net Actuarial Gain (Loss) and Prior Service Cost				Accumulated Other Comprehensive Loss
At December 31, 2015	$	152	$	(922	)			$	(770	)
Other comprehensive income before reclassifications	2		—					2
Reclassifications to net earnings	—		29			^(a)		29
Net other comprehensive income	2		29					31
At September 30, 2016	$	154	$	(893	)			$	(739	)