<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 1999
Commission file number 1-977
CBS CORPORATION
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(Exact name of registrant as
specified in its charter)
PENNSYLVANIA 25-0877540
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
51 WEST 52ND STREET, NEW YORK, NY 10019
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(Address of principal executive offices; zip code)
(212) 975-4321
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(Registrant's Telephone No., including area code)
<PAGE>
Item 5. OTHER EVENTS
On October 28, 1999, the Registrant issued a press release concerning earnings
for the quarter and year-to-date ended September 30, 1999. A copy of the press
release is attached hereto as Exhibit 99.1 and is incorporated herein. A copy of
the Condensed Consolidated Statement of Income for the quarter and year-to-date
ended September 30, 1999 and 1998 is attached hereto as Exhibit 99.2 and is
incorporated herein in its entirety. A copy of the segment information for the
quarter and year-to-date ended September 30, 1999 and 1998 is attached hereto as
Exhibit 99.3 and incorporated herein in its entirety.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit No.
99.1 Press release concerning earnings of the Registrant for the
quarter and year-to-date ended September 30, 1999 is filed as
Exhibit 99.1 to this Report.
99.2 Condensed Consolidated Statement of Income for the quarter and
year-to-date ended September 30, 1999 is filed as Exhibit 99.2
to this Report.
99.3 Segment Results for the quarter and year-to-date ended
September 30, 1999 is filed as Exhibit 99.3 to this Report.
SIGNATURE
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 hereunto duly authorized.
CBS CORPORATION
(Registrant)
BY: /s/ ROBERT G. FREEDLINE
-----------------------------
ROBERT G. FREEDLINE
VICE PRESIDENT AND CONTROLLER
Date: October 29, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION SEQUENTIAL PAGE NO.
- ----------- ----------- -------------------
99.1 Press Release
99.2 Condensed Consolidated Statement of
Income for the quarter and
year-to-date ended September 30,
1999 and 1998.
99.3 Segment Results for the quarter and
year-to-date ended September 30, 1999
and 1998.
<PAGE>
Exhibit 99.1
CBS CORPORATION REPORTS RECORD PROFITS
FOR THE THIRD QUARTER OF 1999
INFINITY REVENUES UP 16%
CONSOLIDATED OPERATING CASH FLOW UP 51 %
AFTER TAX CASH FLOW UP 73%
NEW YORK, October 28, 1999 -- CBS Corporation (NYSE: CBS) today
reported record third quarter operating results.
RESULTS FOR THE THIRD QUARTER OF 1999
Operating cash flow (defined as earnings before interest, taxes,
depreciation, amortization, minority interests and equity losses, or EBITDA) for
the third quarter of 1999 was $406 million, as compared to $268 million for the
third quarter of 1998, an increase of approximately 51%. Last year's third
quarter included a special charge of $68 million. Excluding this charge,
operating cash flow for the third quarter of 1999 increased by 21% over last
year. The improvement in EBITDA was primarily due to the strong performance of
Infinity Broadcasting Corporation (NYSE:INF), the Company's out-of-home media
segment, and CBS Cable, as well as an increase at the Television segment.
After tax cash flow (defined as income from continuing operations plus
equity losses, and depreciation and amortization as adjusted for minority
interests) for the third quarter of 1999 was $201 million, as compared to $116
million for the third quarter of 1998, an increase of $85 million or 73%.
However, as a result of the Company's substantial deferred tax position, after
tax cash flow adjusted to reflect cash taxes only was $326 million, an increase
of $186 million or 133% from the third quarter of 1998. Excluding the impact of
last year's $68 million special charge ($41 million after tax), after tax cash
flow would have increased by $44 million, an increase of 28%, and after tax cash
flow adjusted for cash taxes only would have increased by $118 million, or 57%.
"This was an outstanding quarter for our Company," said Mel Karmazin,
President and Chief Executive Officer, CBS Corporation. "Infinity continued its
long trend of record operating performance with double-digit revenue and cash
flow growth. I am particularly pleased with this quarter's profits at the
Television and Cable segments. The CBS Television Network enjoyed a strong start
to the 1999-2000 season, with ratings gains in prime time, where we have the
most successful new drama of the year, and late night, where David Letterman is
up 14% in households year-to-year and Craig Kilborn is up 17% in key
demographics versus last season. In Sports, the ratings performance of our NFL
franchise is up double digits season-to-date over last year. Our ratings
improvement, plus robust scatter market pricing, provides us with a strong
outlook for our Television segment."
1
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Net revenues for the third quarter of 1999 were $1,708 million, as
compared to $1,581 million for the third quarter of 1998, an increase of 8%. The
increase was due to excellent revenue growth at Infinity and the performance of
the Television segment. Excluding the effect of last year's divestiture of CBS
Cable's two start-up channels, revenue for that segment was up as well.
Interest expense for the third quarter of 1999 was $46 million, as
compared to $112 million in 1998's third quarter, a decrease of approximately
59%. This decrease was principally due to the lower debt levels as a result of
proceeds received from Infinity's initial public offering in late 1998, proceeds
from business dispositions, and strong cash flow from operations.
Income tax expense for the third quarter of 1999 was $126 million, as
compared to $39 million for the third quarter of 1998, an increase of $87
million. The increase is principally due to higher operating profits.
The Company's income from continuing operations for the third quarter
of 1999 was $35 million, or $0.05 per diluted share, as compared to a loss of
$38 million, or $0.05 per diluted share, for the third quarter of 1998, which
included the $41 million after tax special charge.
The Company's reported net income for the quarter was $47 million, or
$0.07 per diluted share, as compared to a net loss for the year-ago quarter of
$43 million, or $0.06 per diluted share. The third quarter of 1999 includes a
$12 million after tax gain, or $0.02 per diluted share, recognized in
discontinued operations, arising from the resolution of a purchase price
adjustment associated with a business divested in the second quarter of 1999.
During the second and third quarter of 1999, the Company closed on a
number of strategic investments focused on growing its Internet-based
operations. The Company received an equity interest in these Internet companies,
in exchange for future advertising and promotional time on CBS's and Infinity's
media properties. During the third quarter of 1999, the Company recognized its
proportionate share of losses for these Internet-based companies, as well as the
amortization of the difference between CBS's investment in these entities and
its proportionate ownership share in the underlying net assets of these
companies, which totaled $28 million after tax.
Major acquisitions include:
o The Company continued its Internet expansion during the third
quarter, with additional investments in the following
companies: a 35% interest in Medscape, Inc. (NASDAQ:MSCP),
which recently launched a consumer health Web site; a 38%
interest in Jobs.com, Inc., a leading online recruitment
service; a 22% interest in Wrenchead.com, an online auto parts
superstore, and a 40% interest in Women's Consumer Network,
the first national membership-based consumer service geared
toward women. CBS also announced that it had signed a
definitive agreement to acquire a 30% interest in Big
Entertainment (NASDAQ:BIGE), which operates the Web site
Hollywood.com. After the close of the quarter, the Company
announced a majority investment in iWon.com, an internet
portal, and a 20% equity stake in Rx.com, an online pharmacy.
2
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o During the third quarter, CBS completed its acquisition of
KEYE-TV Austin, Texas. Subsequent to the close of the quarter,
the Company also completed the acquisition of KTVT-TV Dallas
Ft. Worth, the nation's #7 market. Combined, these
acquisitions have raised CBS ownership position to television
stations serving 34% of the United States.
o The Company expects to close the $2.5 billion King World
Productions, Inc. (NYSE:KWP) acquisition in the fourth quarter
of 1999, subsequent to the approval of King World
shareholders. King World is one of the leading suppliers of
first-run syndicated programming in the United States.
o Infinity Broadcasting Corporation also expects to close the
acquisition of Outdoor Systems Inc. (NYSE:OSI) in November
1999, subsequent to an Outdoor Systems shareholder meeting
scheduled for November 4th. Outdoor Systems is one of the
largest outdoor advertising companies in North America.
RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Net revenues for the nine months ended September 30, 1999, were $5,154
million, as compared to $5,014 million for the nine months ended September 30,
1998. Excluding the revenues associated with the 1998 Winter Olympics, net
revenues for the nine months ended September 30, 1999 increased by approximately
13%.
Revenue increases were driven by Infinity, which experienced strong
revenue growth of 28% during the first nine months, or approximately 16% on a
same-station, pro-forma basis. The Company's 1999 results reflect the inclusion
of operations of American Radio Systems stations, which were acquired in June
1998. Excluding the effect of the Olympics and certain cable divestitures that
occurred late in 1998, solid revenue growth was achieved at the Television and
Cable segments as well.
EBITDA for the nine months ended September 30, 1999 was $1,113 million,
as compared to $814 million for the nine months ended September 30, 1998, an
increase of 37%. Excluding the effects of special items recognized in 1998 and
1999, EBITDA was up 25% over 1998's first nine months' results. Last year's
EBITDA reflected a benefit associated with the 1998 Winter Olympics. Excluding
the effect of the Olympics, and the special items, EBITDA for the nine months
ended September 30, 1999, would have increased by approximately 40% over the
prior year period. This increase in EBITDA was due to strong revenue
performance, and the Television and Cable segments benefited from cost
containment efforts implemented during the prior year.
Interest expense for the nine months ended September 30, 1999 was $143
million, as compared to $272 million in 1998's first nine months, a decrease of
approximately 47%. This decrease was principally due to the lower debt levels as
a result of proceeds received from Infinity's initial public offering in late
1998, proceeds from business dispositions, and strong cash flow from operations.
3
<PAGE>
Income tax expense for the nine months ended September 30, 1999 was
$302 million, as compared to $134 million for the nine months ended September
30, 1998, an increase of $168 million. The increase is principally due to higher
operating profits.
For the nine months ended September 30, 1999, income from continuing
operations was $138 million, or $0.19 per diluted share, as compared to a loss
$15 million, or $0.02 per diluted share, an increase of $153 million. Excluding
the effects of special items recognized in 1998 and 1999, income from continuing
operations for the nine months increased approximately $107 million over the
prior year.
The Company's reported net income for the nine months ended September
30, 1999 was $529 million, or $0.74 per diluted share, which includes a net gain
of $396 million after taxes, or $0.56 per diluted share, on the disposal of
certain of the discontinued operations related to its former Westinghouse
Electric Corporation businesses during the first nine months of 1999. For the
nine months of 1998, the Company reported a $20 million net loss, or $0.03 per
diluted share.
After tax cash flow for the nine months ended September 30, 1999 was
$578 million, as compared to $405 million for the third quarter of 1998, an
increase of $173 million or 43%. However, as a result of the Company's
substantial deferred tax position, after tax cash flow adjusted for cash taxes
only for the nine months ended September 30, 1999 was $852 million, an increase
of $340 million or 66% from the same period during 1998. Excluding the effects
of special items recognized in 1998 and 1999, after tax cash flow for the
nine-month period would have increased by $127 million, or 28%, and after tax
cash flow adjusted for cash taxes only would have increased by $264 million, or
46%.
Pursuant to a previously authorized $3 billion stock buyback program,
the Company to date has purchased almost 40 million shares of its common stock
at a cost of approximately $1.3 billion.
On September 7, 1999, CBS Corporation and Viacom Inc. announced that
their respective boards of directors had unanimously approved a definitive
agreement to merge the two companies.
Mr. Karmazin said: "The many actions taken by our Company over the last
12 months - including the pending acquisitions of King World and Outdoor
Systems -- have successfully repositioned CBS as a leading pure-play media
company and contributed to the strong results at all of our operating segments.
This in turn has made it possible for CBS to merge with Viacom to form the most
exciting media company in the business. All of this has been made possible
thanks to the hard work of the employees of CBS and Infinity, whose talent and
dedication have made the success of this great company possible."
Mr. Karmazin added: "Both CBS and Viacom are continuing to invest in
the Internet, building a strong presence in the new media by leveraging our
extensive content and the strongest branding platform in the industry. These
Internet investments, working hand-in-hand with our array of strong assets in
the established media, will make the new Viacom a truly 21st Century media
company."
4
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CBS Corporation is composed of CBS Television, Cable and a majority
stake in Infinity Broadcasting Corporation, its radio and outdoor advertising
business. CBS Television is comprised of the CBS Television Network and 16 CBS
owned television stations, eight of which are in the Top 10 markets. CBS Cable
consists of two country networks and regional sports operations. Infinity
Broadcasting Corporation operates 163 radio stations and TDI, Infinity's outdoor
business.
NOTE: CERTAIN STATEMENTS IN THIS PRESS RELEASE CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS OF CBS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. REFERENCE IS MADE TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS
AMENDED BY FORM 10-K/A, FOR THE 1998 YEAR AND SUBSEQUENT REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR ADDITIONAL INFORMATION CONCERNING SUCH
RISKS AND UNCERTAINTIES.
* * *
Contacts: Gil Schwartz CBS Corporation 212/975-2121 [email protected]
Dana McClintock CBS Corporation 212/975-1077 [email protected]
5
<PAGE>
Exhibit 99.2
CBS CORPORATION
EARNINGS INFORMATION
THIRD QUARTER
(UNAUDITED)
<TABLE>
<CAPTION>
(in millions except per share data) Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ---------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $ 1,708 $ 1,581 $ 5,154 $ 5,014
Operating expenses (1,267) (1,284) (3,915) (4,112)
Depreciation and amortization (150) (154) (451) (420)
Residual costs of discontinued businesses (45) (41) (130) (117)
------- ------- ------- -------
Operating costs and expenses (1,462) (1,479) (4,496) (4,649)
------- ------- ------- -------
Operating profit 246 102 658 365
Other income and expenses, net 10 12 4 29
Interest expense, net (46) (112) (143) (272)
------- ------- ------- -------
Income from Continuing Operations before
income tax, minority interest in income of
consolidated subsidiaries and equity losses
of unconsolidated affiliated companies 210 2 519 122
Income tax expense (126) (39) (302) (134)
Minority interest in income of consolidated
subsidiaries (21) (1) (51) (3)
Equity losses of unconsolidated affiliated
companies, net of income taxes (28) -- (28) --
------- ------- ------- -------
Income (loss) from Continuing Operations 35 (38) 138 (15)
Gain on disposal of Discontinued Operations,
net of income taxes 12 -- 396 --
Extraordinary loss on early extinguishment of
debt, net of income taxes -- (5) (5) (5)
------- ------- ------- -------
Net income (loss) $ 47 $ (43) $ 529 $ (20)
======= ======= ======= =======
Average shares outstanding:
Basic 692 697 693 698
Diluted 709 697 710 698
Basic earnings (loss) per common share:
Continuing Operations $ 0.05 $ (0.05) $ 0.20 $ (0.02)
Discontinued Operations $ 0.02 $ 0.00 $ 0.57 $ 0.00
Extraordinary item $ 0.00 $ (0.01) $ (0.01) $ (0.01)
------- ------- ------- -------
Basic earnings per common share $ 0.07 $ (0.06) $ 0.76 $ (0.03)
======= ======= ======= =======
Diluted earnings (loss) per common share:
Continuing Operations $ 0.05 $ (0.05) $ 0.19 $ (0.02)
Discontinued Operations $ 0.02 $ 0.00 $ 0.56 $ 0.00
Extraordinary item $ 0.00 $ (0.01) $ (0.01) $ (0.01)
------- ------- ------- -------
Diluted earnings per common share $ 0.07 $ (0.06) $ 0.74 $ (0.03)
======= ======= ======= =======
</TABLE>
<PAGE>
Exhibit 99.3
CBS CORPORATION
SEGMENT INFORMATION
($ in millions) (unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------- ---------------------------------
1999 1998 % Change 1999 1998 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
TOTAL CONTINUING OPERATIONS
Revenues $ 1,708 $ 1,581 8.0% $ 5,154 $ 5,014 2.8%
Operating Profit (Loss) 246 102 141.2% 658 365 80.3%
OP (Loss) without Special Items 246 168 46.4% 634 431 47.1%
EBITDA 406 268 51.5% 1,113 814 36.7%
EBITDA without Special Items 406 336 20.8% 1,105 882 25.3%
INFINITY
Revenues 619 534 15.9% 1,690 1,320 28.0%
Operating Profit (Loss) 208 157 32.5% 497 362 37.3%
OP (Loss) without Special Items 208 157 32.5% 497 362 37.3%
EBITDA 282 230 22.6% 717 541 32.5%
EBITDA without Special Items 282 230 22.6% 717 541 32.5%
TELEVISION
Revenues 955 912 4.7% 3,047 3,287 -7.3%
Operating Profit (Loss) 64 (6) N/A 231 138 67.4%
OP (Loss) without Special Items 64 57 12.3% 207 201 3.0%
EBITDA 121 51 137.3% 398 317 25.6%
EBITDA without Special Items 121 114 6.1% 374 380 -1.6%
CABLE
Revenues 137 137 - 423 412 2.7%
Operating Profit (Loss) 35 13 169.2% 104 41 153.7%
OP (Loss) without Special Items 35 14 150.0% 104 42 147.6%
EBITDA 61 41 48.8% 157 120 30.8%
EBITDA without Special Items 61 44 38.6% 181 123 47.2%
CORPORATE & OTHER
Revenues (3) (2) -50.0% (6) (5) -20.0%
Operating Profit (Loss) (16) (21) 23.8% (44) (59) 25.4%
OP (Loss) without Special Items (16) (19) 15.8% (44) (57) 22.8%
EBITDA (13) (13) - (29) (47) 38.3%
EBITDA without Special Items (13) (11) -18.2% (37) (45) 17.8%
RESIDUAL COSTS OF DISCONTINUED
BUSINESSES
Revenues - - N/A - - N/A
Operating Profit (Loss) (45) (41) -9.8% (130) (117) -11.1%
OP (Loss) without Special Items (45) (41) -9.8% (130) (117) -11.1%
EBITDA (45) (41) -9.8% (130) (117) -11.1%
EBITDA without Special Items (45) (41) -9.8% (130) (117) -11.1%
</TABLE>
SPECIAL ITEMS INCLUDE:
Nine Months Ended September 30, 1999
- ------------------------------------
- - Second quarter benefit of $24 for certain restructuring charges previously
recorded for the television segment
- - Second quarter provision of $24 for losses associated with a cable unit
- - First quarter gain of $8 recorded in Corporate & Other for the sale of an
airplane
Nine Months Ended Septmeber 30, 1998
- ------------------------------------
- - Third quarter special charge of $68 recognized as follows: $63 at
Television, $3 at Cable, and $2 at Corp & Other
