<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
--------------
OR
[ ] 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 1-977
----------------
CBS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0877540
----------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
51 WEST 52ND STREET, NEW YORK, NY 10019
--------------------------------------------------
(Address of principal executive offices, zip code)
(212) 975-4321
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by checkmark 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
--- ---
COMMON STOCK 711,900,230 SHARES OUTSTANDING AT APRIL 30, 1999
================================================================================
-1-
<PAGE> 2
CBS CORPORATION
INDEX
---------------
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Statement of Income and Comprehensive Income 3
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Cash Flows 5
Notes to the Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 15
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 6. Exhibits and Reports on Form 8-K 24
SIGNATURE 28
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CBS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
-------------------------------------------------------------------
(unaudited, in millions except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1999 1998
===========================================================================================================================
<S> <C> <C>
Revenues $ 1,768 $ 1,949
Operating expenses (1,160) (1,305)
Marketing, administration, and general expenses (301) (340)
Depreciation and amortization (149) (130)
Residual costs of discontinued businesses (40) (38)
- ---------------------------------------------------------------------------------------------------------------------------
Operating profit 118 136
Other income, net (note 3) 13 5
Interest expense, net (51) (75)
- ---------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations before income taxes
and minority interest in income of consolidated subsidiaries 80 66
Income tax expense (46) (47)
Minority interest in income of consolidated subsidiaries (9) --
- ---------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations 25 19
Gain on disposal of Discontinued Operations
net of income taxes (note 6) 366 --
Extraordinary item:
Loss on extinguishment of debt, net of income taxes (note 1) (4) --
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 387 $ 19
===========================================================================================================================
Basic earnings per common share (note 9):
Continuing Operations $ .04 $ .03
Discontinued Operations .53 --
Extraordinary item (.01) --
- ---------------------------------------------------------------------------------------------------------------------------
Basic earnings per common share $ .56 $ .03
===========================================================================================================================
Diluted earnings per common share (note 9):
Continuing Operations $ .04 $ .03
Discontinued Operations .52 --
Extraordinary item (.01) --
- ---------------------------------------------------------------------------------------------------------------------------
Diluted earnings per common share $ .55 $ .03
===========================================================================================================================
Cash dividends per common share $ -- $ .05
===========================================================================================================================
Comprehensive income:
Net income $ 387 $ 19
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss), net of taxes (note 10):
Unrealized gains on marketable securities,
net of taxes of $26 million and $10 million, respectively 40 17
Minimum pension liability adjustment,
net of taxes of $52 million and $14 million, respectively 97 (25)
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss) 137 (8)
- ---------------------------------------------------------------------------------------------------------------------------
Comprehensive income $ 524 $ 11
===========================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
-3-
<PAGE> 4
CBS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
(in millions except per-share amounts)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
==============================================================================================================================
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 987 $ 798
Customer receivables (net of allowance for doubtful
accounts of $54 and $48, respectively) 1,272 1,180
Program rights 562 533
Deferred income taxes 217 138
Prepaid and other current assets 170 140
- ------------------------------------------------------------------------------------------------------------------------------
Total current assets 3,208 2,789
Property and equipment, net 1,132 1,149
FCC licenses, net (note 2) 4,220 4,308
Goodwill, net 10,299 10,357
Other intangible and noncurrent assets (note 4) 1,667 1,536
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $ 20,526 $ 20,139
==============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current maturities of long-term debt $ 127 $ 159
Accounts payable 347 336
Liabilities for talent and program rights 592 290
Other current liabilities (note 5) 788 820
- ------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,854 1,605
Long-term debt 2,315 2,506
Net liabilities of Discontinued Operations (note 6) 1,078 1,284
Pension liability 878 945
Postretirement benefit liability 1,020 1,046
Other noncurrent liabilities (note 5) 2,055 2,081
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities 9,200 9,467
- ------------------------------------------------------------------------------------------------------------------------------
Contingent liabilities and commitments (note 8)
Minority interest in equity of consolidated subsidiaries 1,624 1,618
- ------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, $1.00 par value (25 million shares authorized, no shares issued) -- --
Common stock, $1.00 par value (1,100 million shares
authorized, 740 million and 734 million shares issued, respectively) 740 734
Capital in excess of par value 9,082 8,914
Common stock held in treasury, at cost (1,265) (1,215)
Retained earnings 1,815 1,428
Accumulated other comprehensive loss (note 10) (670) (807)
- ------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 9,702 9,054
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 20,526 $ 20,139
==============================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
-4-
<PAGE> 5
CBS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
(unaudited, in millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999 1998
==========================================================================================================================
<S> <C> <C>
Cash flows from operating activities of Continuing Operations:
Income from Continuing Operations $ 25 $ 19
Adjustments to reconcile income from Continuing Operations to
net cash provided by operating activities:
Depreciation and amortization 149 130
Gain on asset dispositions (9) --
Other noncash adjustments (43) (128)
Changes in assets and liabilities, net of effects of acquisitions and
divestitures of businesses:
Receivables, current and noncurrent (120) (136)
Accounts payable 11 (16)
Deferred and current income taxes 14 17
Program rights 283 271
Pensions and postretirement benefits (32) (17)
Other assets and liabilities (48) (79)
- --------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities of Continuing Operations 230 61
- --------------------------------------------------------------------------------------------------------------------------
Cash used by operating activities of Discontinued Operations (note 6) (101) (248)
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Business acquisitions and investments (49) (4)
Business divestitures and other asset liquidations 342 33
Deposits in acquisition trust (21) --
Capital expenditures - Continuing Operations (24) (18)
Capital expenditures - Discontinued Operations (12) (10)
- --------------------------------------------------------------------------------------------------------------------------
Cash provided by investing activities 236 1
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Bank revolver borrowings -- 503
Bank revolver repayments -- (303)
Net increase in short-term debt -- 35
Long-term debt repayments (247) (39)
Stock issued 128 107
Purchase of treasury stock (70) (21)
Bank fees paid and other costs (1) (6)
Dividends paid -- (36)
- --------------------------------------------------------------------------------------------------------------------------
Cash provided (used) by financing activities (190) 240
- --------------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 175 54
Cash and cash equivalents at beginning of period for Continuing and
Discontinued Operations 825 67
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period for Continuing and
Discontinued Operations $1,000 $ 121
==========================================================================================================================
Supplemental disclosure of cash flow information:
Interest paid - Continuing Operations $ 58 $ 75
Interest paid - Discontinued Operations 1 12
- --------------------------------------------------------------------------------------------------------------------------
Total interest paid $ 59 $ 87
==========================================================================================================================
Total income taxes paid from Continuing and Discontinued Operations $ 42 $ 94
==========================================================================================================================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
-5-
<PAGE> 6
CBS CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------
1. GENERAL
The condensed consolidated financial statements include the accounts of CBS
Corporation (CBS) and its subsidiary companies (together, the Corporation) after
elimination of intercompany accounts and transactions. When reading the
financial information contained in this Quarterly Report, reference should be
made to the consolidated financial statements, schedule, and notes contained in
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1998. Certain amounts pertaining to the three months ended March 31, 1998 have
been restated or reclassified for comparative purposes.
During the first quarter of 1999, the Corporation purchased, at market value, or
redeemed, at redemption prices, debt securities with a face value of
approximately $190 million and reduced the available borrowing capacity under
its credit facility from $4.0 billion to $3.0 billion. As a result of these
early extinguishments and the write-off of related debt issue costs, the
Corporation recognized an extraordinary loss of $4 million, net of income taxes,
during the first quarter.
On March 31, 1999, the Corporation entered into a definitive merger agreement
with King World Production, Inc. (King World) in which it will issue
approximately $2.5 billion in common stock in exchange for all of the
outstanding common stock of King World. Under the terms of the agreement, King
World shareholders will receive 0.81 shares of CBS common stock for each share
of King World common stock. King World is the distributor of a number of shows
which include "The Oprah Winfrey Show," "Wheel of Fortune," "Jeopardy!," and
"Hollywood Squares." The consummation of the merger is subject to certain
conditions, including approval by King World stockholders.
In June 1998, Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities," was issued. SFAS
133 standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair value. This statement is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999. The
Corporation's derivative and hedging transactions are not material and it is
anticipated that adoption of this standard will not materially impact its
financial results or disclosure.
Under various disposal plans adopted in recent years, the Corporation has
essentially disposed of the remaining industrial businesses. These businesses
have been classified as Discontinued Operations in accordance with Accounting
Principles Board (APB) Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business and
Extraordinary, Unusual, and Infrequently Occurring Events and Transactions." On
March 22, 1999, the Corporation completed the previously announced sale of its
Energy Systems and Government Operations businesses for approximately $220
million in cash, subject to certain adjustments, and the assumption by the
buyer, of liabilities, commitments, and obligations totaling approximately $950
million, all in accordance with the terms of the divestiture agreement. The pre
tax and after tax gain on disposal totaled $490 million and $366 million,
respectively. See note 6 to the condensed consolidated financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ significantly from those estimates. On an ongoing
basis, management reviews its estimates, including those related to litigation,
environmental liabilities, product liabilities, contracts, program rights,
pensions, income taxes, and Discontinued Operations, based on currently
available information. Changes in facts and circumstances may result in revised
estimates. In the opinion of management, the condensed consolidated financial
statements include all material adjustments necessary to present fairly the
Corporation's financial position, results of operations, and cash flows. Such
adjustments are of a normal recurring nature. The results for this interim
period are not necessarily indicative of results for the entire year or any
other interim period.
-6-
<PAGE> 7
2. ACQUISITIONS
On June 4, 1998, the Corporation acquired the radio broadcasting operations of
American Radio Systems Corporation (American Radio). The acquisition was
accounted for under the purchase method. Based on the latest information
available to the Corporation, the excess consideration paid over the estimated
fair value of net assets acquired totaling approximately $0.8 billion was
recorded as goodwill and is being amortized on a straight-line basis over 40
years. The following unaudited pro forma information combines the consolidated
results of operations of the Corporation with those of American Radio's as if
the acquisition had occurred at the beginning of 1998. The pro forma results for
the three months ended March 31, 1998 give effect to certain purchase accounting
adjustments, additional amortization expense from goodwill and other
identifiable intangible assets, additional interest expense and related income
tax effects.
PRO FORMA RESULTS OF OPERATIONS
(unaudited, in millions except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999 1998
=====================================================================================================================
<S> <C> <C>
Revenues $1,768 $ 2,038
Income (loss) from Continuing Operations 25 (13)
Basic and diluted earnings (loss) per common share - Continuing Operations .04 (.02)
=====================================================================================================================
</TABLE>
This pro forma information is presented for comparative purposes only and is not
necessarily indicative of the operating results that actually would have
occurred had the American Radio transaction been consummated on January 1, 1998.
In addition, these results are not intended to be a projection of future results
and do not reflect any synergies that might be achieved from combined
operations.
3. OTHER INCOME, NET
Other income, net during the three months ended March 31, 1999 reflected income
of $13 million compared to income of $5 million for the same period in 1998.
Generally, other income and expense items include miscellaneous gains and losses
on dispositions of non-strategic assets and operating results of
non-consolidated affiliates. During the three months ended March 31, 1999, the
Corporation recognized a gain of $8 million on the disposal of certain corporate
aircraft which represents the majority of the activity during the period.
4. OTHER INTANGIBLE AND NONCURRENT ASSETS (in millions)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
====================================================================================================================
<S> <C> <C>
Cable license agreements $ 428 $ 441
Other intangible assets 351 357
Joint ventures and other investments 272 141
Recoverable costs of discontinued businesses (note 8) 175 180
Noncurrent receivables 231 228
Program rights 102 93
Deferred charges 23 33
Intangible pension asset 5 5
Other 80 58
- --------------------------------------------------------------------------------------------------------------------
Total other intangible and noncurrent assets $ 1,667 $ 1,536
====================================================================================================================
</TABLE>
-7-
<PAGE> 8
5. OTHER CURRENT AND NONCURRENT LIABILITIES (in millions)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
====================================================================================================================
<S> <C> <C>
OTHER CURRENT LIABILITIES
Accrued employee compensation $ 74 $ 108
Income taxes payable -- 24
Accrued restructuring cost 30 38
Accrued liabilities 335 318
Retained liabilities of discontinued businesses (note 8) 256 254
Accrued interest and insurance 79 67
Other 14 11
- --------------------------------------------------------------------------------------------------------------------
Total other current liabilities $ 788 $ 820
====================================================================================================================
OTHER NONCURRENT LIABILITIES
Deferred income taxes $ 475 $ 499
Postemployment benefits 29 29
Liabilities for talent and program rights 118 119
Accrued liabilities 178 156
Retained liabilities of discontinued businesses (note 8) 793 766
Accrued restructuring costs 24 28
Other 438 484
- ----------------------------------------------------------------------------- ------------------- ------------------
Total other noncurrent liabilities $ 2,055 $ 2,081
====================================================================================================================
</TABLE>
6. DISCONTINUED OPERATIONS
In recent years, the Corporation adopted various disposal plans that, in the
aggregate, provide for the disposal of all of its industrial businesses and its
financial services business. The assets and liabilities and the results of
operations for these businesses are classified as Discontinued Operations for
all periods presented except for certain liabilities expected to be retained by
the Corporation. See note 8 to the condensed consolidated financial statements.
On March 22, 1999, the Corporation completed the sale of its Energy Systems and
Government Operations businesses for approximately $220 million in cash, subject
to certain adjustments, plus the assumption of liabilities, commitments, and
obligations of approximately $950 million, all in accordance with the terms of
the divestiture agreement. With the completion of this sale, the Corporation has
essentially disposed of the remaining industrial businesses and recorded a pre
tax and after tax gain on the disposal of Discontinued Operations of $490
million and $366 million, respectively.
At March 31, 1999, the remaining assets and liabilities of Discontinued
Operations generally consisted of portfolio investments and related debt and
other miscellaneous assets including surplus properties, that are expected to be
divested. In addition, Discontinued Operations includes a liability for
estimated loss on disposal that provides for the portfolio investments'
estimated results of operations through the expected date of liquidation, other
obligations associated with the disposal of the industrial businesses, and
transaction related costs. Those obligations that are expected to be retained by
the Corporation are separately presented in Continuing Operations as retained
liabilities of discontinued businesses.
-8-
<PAGE> 9
The assets and liabilities of Discontinued Operations have been classified on
the consolidated balance sheet as "Net Liabilities of Discontinued Operations."
A summary of these assets and liabilities follows:
NET LIABILITIES OF DISCONTINUED OPERATIONS
(in millions)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
====================================================================================================================
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 13 $ 27
Customer receivables 53 224
Inventories 36 94
Costs and estimated earnings over billings on uncompleted contracts -- 87
Portfolio investments 629 642
Plant and equipment, net 52 269
Deferred income taxes 122 414
Other assets 109 162
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 1,014 $ 1,919
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Accounts payable $ 71 $ 190
Billings over costs and estimated earnings on uncompleted contracts -- 137
Current maturities of long-term debt 56 46
Long-term debt 353 382
Liability for estimated loss on disposal 1,493 1,309
Settlements and environmental liabilities -- 569
Other liabilities 119 570
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 2,092 3,203
- --------------------------------------------------------------------------------------------------------------------
Net liabilities of Discontinued Operations $ (1,078) $ (1,284)
====================================================================================================================
</TABLE>
Portfolio investments, which remain from the financial services business,
primarily consist of direct financing and leveraged lease receivables.
Generally, these leases are expected to liquidate in accordance with their
contractual terms, which extend to 2015. The Corporation has provided for all of
the estimated costs associated with liquidation of this portfolio. Cash inflows
from contractual liquidation of the leasing portfolio are expected to be
sufficient to repay the principal amount of the debt as well as interest costs
associated with the portfolio.
Prior to the disposition of its Energy Systems business, the Corporation had
been defending various lawsuits brought by utilities claiming a substantial
amount of damages in connection with alleged tube degradation in steam
generators sold by the Energy Systems business as components of nuclear steam
supply systems. Settlement agreements had been entered resolving a number of the
litigation claims which generally required that the Corporation provide certain
products and services at prices discounted at varying rates. In addition, the
Corporation was a party to three tolling agreements with utilities or utility
plant owners' groups that asserted steam generator claims. The obligations
associated with these previous settlement agreements, the tolling agreements and
such litigation were assumed by the buyer of the Energy Systems business, all in
accordance with the terms of the divestiture agreement.
The liability for estimated loss on disposal of $1,493 million at March 31,
1999, includes estimated losses and disposal costs associated with the
divestiture transactions, the portfolio investments' estimated results of
operations through the expected date of liquidation, and certain contingencies
related to the industrial businesses. Satisfaction of these liabilities is
expected to occur over the next several years. Management believes that the
liability for estimated loss on disposal at March 31, 1999, is adequate to cover
these liabilities of Discontinued Operations.
-9-
<PAGE> 10
In accordance with APB 30, the condensed consolidated financial statements
reflect the operating results of Discontinued Operations separately from
Continuing Operations. The operating results of the Corporation's Discontinued
Operations as presented in the table below occurred after the measurement date
and therefore have been charged to the liability for estimated loss on disposal.
OPERATING RESULTS OF DISCONTINUED OPERATIONS (unaudited, in millions)
<TABLE>
<CAPTION>
PRE-TAX
SALES OF PRODUCTS LOSS AFTER
OR SERVICES MEASUREMENT DATE
------------------------------- -----------------------------
THREE MONTHS ENDED MARCH 31, 1999 1998 1999 1998
====================================================================================================================
<S> <C> <C> <C> <C>
Industrial businesses $ 113 $ 588 $ (20) $ (153)
Financial Services 3 6 (7) (5)
- --------------------------------------------------------------------------------------------------------------------
Total $ 116 $ 594 $ (27) $ (158)
====================================================================================================================
</TABLE>
Cash proceeds from the sale or liquidation of all assets of Discontinued
Operations except for portfolio investments, as well as cash requirements to
satisfy non-debt obligations of Discontinued Operations, will affect cash flows
of Continuing Operations. Operating cash flows of Discontinued Operations, which
include cash flows from the operations of the businesses as well as payments for
disposition-related costs, are presented separately from Continuing Operations
in the condensed consolidated financial statements and consist of the following:
CASH FLOWS FROM OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS
(unaudited, in millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999 1998
====================================================================================================================
<S> <C> <C>
Industrial businesses $ (101) $ (236)
Financial Services -- (9)
Other -- (3)
- --------------------------------------------------------------------------------------------------------------------
Cash used by operating activities $ (101) $(248)
====================================================================================================================
</TABLE>
7. RESTRUCTURING
In recent years, the Corporation has restructured its corporate headquarters and
certain of its businesses in an effort to reduce its cost structure and remain
competitive in its markets. Restructuring activities primarily involve the
separation of employees, termination of leases, and other similar actions. Costs
for restructuring activities are limited to incremental costs that directly
result from restructuring activities and provide no future benefit to the
Corporation.
During the three months ended March 31, 1999 and 1998, no new restructuring
plans were initiated. Restructuring plans initiated during 1998 and 1997
totaling $62 million and $15 million, respectively, are anticipated to be
completed by the end of 1999, although certain expenditures for lease
commitments will extend over the next several years. Cash expenditures under
these plans totaled $12 million during the quarter and are estimated to
approximate $23 million for the remainder of 1999 and approximately $30 million
for 2000 and beyond.
8. CONTINGENT LIABILITIES AND COMMITMENTS
Certain environmental, litigation, and other liabilities associated with the
industrial businesses were not assumed by other parties in the divestiture
transactions and, therefore, will be retained by the Corporation. These
liabilities include certain environmental, general litigation, and other matters
not involving active businesses. Accrued liabilities associated with these
matters, which have been separately presented in Continuing Operations as
retained liabilities of discontinued businesses, totaled $1.0 billion at March
31, 1999, including amounts related to previously discontinued businesses of CBS
Inc. Of this amount, $793 million is classified as noncurrent. A separate asset
of $227 million was recorded for estimated amounts recoverable from third
parties, of which $175 million is classified as noncurrent.
-10-
<PAGE> 11
LEGAL MATTERS
SECURITIES CLASS ACTIONS - FINANCIAL SERVICES
The Corporation has been defending class action lawsuits alleging federal
securities law and common law violations arising out of purported misstatements
or omissions contained in the Corporation's public filings and in a Prospectus
and Registration Statement for a public offering of the Corporation's common
stock in 1991, arising out of charges to earnings of $975 million in 1990 and
$1,680 million in 1991. The Corporation and certain directors and former
officers were also the subject of derivative litigation arising out of these
same events. The district court dismissed both the derivative claim and the
class action claims in their entirety. These dismissals were appealed. In July
1996, the United States Court of Appeals for the Third Circuit (the Circuit
Court) affirmed the court's dismissal of the derivative claim. The Circuit Court
also affirmed in part and reversed in part the dismissal of the class action
claims. Those class action claims that were not dismissed by the Circuit Court
were remanded to the lower court for further proceedings. The parties to the
class actions have reached an agreement in principle to resolve all claims. In
March 1999, the attorneys who filed the derivative action described herein,
filed a new derivative action based on the same allegations previously asserted
and dismissed. The parties to that derivative action have also reached an
agreement in principle to settle the derivative action. Both the class and the
derivative action settlements are subject to execution of definitive
documentation, notice to the shareholders and class upon whose behalf the
actions were brought, fairness hearings and approval by Court of the settlement.
ASBESTOS
The Corporation is a defendant in numerous lawsuits claiming various
asbestos-related personal injuries, which allegedly occurred from use or
inclusion of asbestos in certain of the Corporation's products supplied by its
industrial businesses, generally in the pre-1970 time period. Typically, these
lawsuits are brought against multiple defendants. The Corporation was neither a
manufacturer nor a producer of asbestos and is oftentimes dismissed from these
lawsuits on the basis that the Corporation has no relationship to the products
in question or the claimant did not have exposure to the Corporation's product.
At March 31, 1999, the Corporation had approximately 106,050 unresolved claims
pending.
In court actions that have been resolved, the Corporation has prevailed in the
majority of the asbestos claims and has resolved others through settlement.
Furthermore, the Corporation has brought suit against certain of its insurance
carriers with respect to these asbestos claims. Under the terms of a settlement
agreement resulting from this suit, carriers that have agreed to the settlement
are now reimbursing the Corporation for a substantial portion of its current
costs and settlements associated with asbestos claims. The Corporation has
recorded a liability for asbestos-related matters that are deemed probable and
can be reasonably estimated and has separately recorded an asset equal to the
amount of such estimated liability that will be recovered pursuant to agreements
with insurance carriers. Factors considered in evaluating this litigation
include: claimed product involvement, alleged exposure to product, alleged
disease, validity of medical claims, number of resolved claims, available
insurance proceeds, and status of litigation in multiple jurisdictions. The
Corporation has not been able to reasonably estimate costs for unasserted
asbestos claims. However, the Corporation reviews asbestos claims on an ongoing
basis and adjusts its liability as appropriate.
GENERAL
Litigation is inherently uncertain and always difficult to predict. Substantial
damages are sought in the securities class action and certain groupings of
asbestos claims, and, although management believes a significant adverse
judgment is unlikely, any such judgment could have a material adverse effect on
the Corporation's results of operations for a quarter or a year. However, based
on its understanding and evaluation of the relevant facts and circumstances,
management believes that the Corporation has meritorious defenses to the
litigation described previously and that the Corporation has adequately provided
for costs arising from resolution of these matters. Management believes that the
litigation should not have a material adverse effect on the financial condition
of the Corporation.
-11-
<PAGE> 12
ENVIRONMENTAL MATTERS
Compliance with federal, state, and local laws and regulations relating to the
discharge of pollutants into the environment, the disposal of hazardous wastes,
and other related activities affecting the environment have had and will
continue to have an impact on the Corporation. It is difficult to estimate the
timing and ultimate costs to be incurred in the future due to uncertainties
about the status of laws, regulations, and technology; the adequacy of
information available for individual sites; the extended time periods over which
site remediation occurs; and the identification of new sites. The Corporation
has, however, recognized an estimated liability, measured in current dollars,
for those sites where it is probable that a loss has been incurred and the
amount of the loss can be reasonably estimated. The Corporation recognizes
changes in estimates as new remediation requirements are defined or as more
information becomes available.
With regard to remedial actions under federal and state Superfund laws, the
Corporation has been named a potentially responsible party (PRP) at numerous
sites located throughout the country. At many of these sites, the Corporation is
either not a responsible party or its site involvement is very limited or de
minimis. However, the Corporation may have varying degrees of cleanup
responsibilities at approximately 70 sites. The Corporation believes that any
liability incurred for cleanup at these sites will be satisfied over a number of
years, and in many cases, the costs will be shared with other responsible
parties. These sites include certain sites for which the Corporation, as part of
an agreement for sale, has retained obligations for remediation of environmental
contamination and for other Comprehensive Environmental Response Compensation
and Liability Act (CERCLA) issues.
Based on the costs associated with the most probable alternative remediation
strategy for the above mentioned sites, the Corporation has an accrued liability
of $310 million at March 31, 1999. Depending on the remediation alternatives
ultimately selected, the actual costs related to these sites could differ from
the amounts currently accrued. The accrued liability includes $227 million for
site investigation and remediation, and $83 million for post closure and
monitoring activities. Management anticipates that the majority of expenditures
for site investigation and remediation will occur during the next five to ten
years. Expenditures for post-closure and monitoring activities will be made over
periods up to 30 years. In addition, included in Discontinued Operations are
environmental liabilities directly related to properties that are held for sale.
The Corporation is involved with several administrative actions alleging
violations of federal, state, or local environmental regulations. For these
matters, the Corporation has estimated its remaining reasonably possible costs
and determined them to be immaterial.
Management believes, based on its best estimate, that the Corporation has
adequately provided for its present environmental obligations and that complying
with existing government regulations will not materially impact the
Corporation's financial position, liquidity, or results of operations.
COMMITMENTS
The Corporation routinely enters into commitments to purchase the rights to
broadcast programs, including feature films and sporting events. These contracts
permit the broadcast of such programs for various periods. At March 31, 1999,
the Corporation was committed to make payments under such broadcasting
contracts, along with commitments for talent contracts, totaling $7.3 billion.
In addition, the Corporation has commitments under operating and capital leases
for certain facilities and equipment as well as commitments to pay for certain
franchise rights entitling it to display advertising on buses, taxis, trains,
bus shelters, terminals, and phone kiosks.
-12-
<PAGE> 13
9. EARNINGS PER COMMON SHARE
COMPUTATION OF EARNINGS PER COMMON SHARE - CONTINUING OPERATIONS
(unaudited, in millions except per-share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999 1998
====================================================================================================================
<S> <C> <C>
Income from Continuing Operations applicable to common stockholders $ 25 $ 19
====================================================================================================================
Basic and diluted earnings per common share $ .04 $ .03
- --------------------------------------------------------------------------------------------------------------------
Average number of basic common shares outstanding 693 698
Average number of diluted common shares outstanding 708 718
====================================================================================================================
</TABLE>
Shares of common stock issuable under deferred compensation arrangements were
excluded from the computation of diluted earnings per common share for the
periods presented above because their inclusion would have resulted in an
increase from basic earnings per common share.
10. SHAREHOLDERS' EQUITY
During 1998, the Corporation's Board of Directors authorized a $3 billion
multi-year stock repurchase program. For the three months ended March 31, 1999,
the Corporation purchased 1,988,700 shares of common stock at cost of $70
million under the program bringing total shares repurchased during 1998 and 1999
to 30,330,408 at a cost of $929 million. At March 31, 1999, and December 31,
1998, 44,464,867 shares and 43,204,000 shares, respectively, of the
Corporation's common stock were held in treasury.
At March 31, 1998, the Corporation adopted the provisions of SFAS 130 which
establishes standards for reporting and disclosing comprehensive income in the
financial statements. Comprehensive income is used to describe all changes in
equity from transactions and other events and circumstances, including net
income, from nonowner sources. The following table presents the accumulated
components of comprehensive income other than net income reflected within
shareholders' equity at March 31, 1999 and December 31, 1998:
ACCUMULATED OTHER COMPREHENSIVE LOSS
(in millions)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
====================================================================================================================
<S> <C> <C>
Minimum pension liability $ (711) $(808)
Unrealized gains on securities 41 1
- --------------------------------------------------------------------------------------------------------------------
Total accumulated other comprehensive loss $ (670) $(807)
====================================================================================================================
</TABLE>
During the three months ended March 31, 1999, the Corporation disposed of
essentially the remaining industrial businesses with the sale of its Energy
Systems and Government Operations businesses. The minimum pension liability
declined in the quarter primarily as a result of these disposals and the
assumption of certain pension obligations by the buyer.
11. SEGMENT INFORMATION
The Corporation's Continuing Operations are aligned into two business segments:
Radio and Television. These business segments are consistent with the
Corporation's management of these businesses and its financial reporting
structure and generally reflect the operating focus on out-of-home media and
in-home media.
-13-
<PAGE> 14
SEGMENT RESULTS OF OPERATIONS
(unaudited, in millions)
<TABLE>
<CAPTION>
REVENUES OPERATING PROFIT (LOSS) EBITDA
---------------------- ----------------------- --------------------
THREE MONTHS ENDED MARCH 31, 1999 1998 1999 1998 1999 1998
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Radio $ 474 $ 330 $ 98 $ 64 $170 $113
Television 1,295 1,620 73 127 153 212
Corporate and Other (1) (1) (13) (17) (3) (16)
Residual costs of discontinued businesses -- -- (40) (38) (40) (38)
- ----------------------------------------------------------------------------------------------------------------------
Total Continuing Operations $ 1,768 $ 1,949 $ 118 $ 136 $280 $271
======================================================================================================================
</TABLE>
The Corporation evaluates its performance, based on earnings before interest,
minority interest, taxes, depreciation and amortization (EBITDA). Management
believes that EBITDA is an appropriate measure for evaluating the operating
performance of the Corporation's businesses. EBITDA eliminates the effect of
depreciation and amortization of tangible and intangible assets, most of which
arises from acquisitions accounted for under the purchase method of accounting.
The exclusion of amortization expense eliminates variations in results caused by
the timing of acquisitions. However, EBITDA should be considered in addition to,
not as a substitute for, operating profit, net income, cash flows, and other
measures of financial performance reported in accordance with generally accepted
accounting principles.
The Corporation's consolidated income from Continuing Operations before taxes
and minority interest for the quarters ended March 31 1999, and 1998 totaled $80
million, and $66 million, respectively. Consolidated EBITDA noted in the
preceding table varies from the consolidated income from Continuing Operations
before taxes and minority interest because it excludes depreciation,
amortization, and interest expense, net.
The category "Corporate and other" includes certain assets and results of
operations that are not identifiable to a specific operating segment. These
assets primarily include cash and cash equivalents, deferred income taxes,
property, equipment and other assets associated with corporate headquarters as
well as certain receivables. Included in the results of operations are certain
intersegment eliminations, non-allocated income and costs related to interest,
taxes and employee benefits as well as certain other headquarter related income
and expenses. Intersegment sales and transfers are not material to the
Corporation's Radio or Television segment results.
Residual costs of discontinued businesses primarily include certain costs, such
as pension and post-retirement benefit costs, remaining from past divestitures
of the Corporation's industrial businesses.
12. SUBSEQUENT EVENTS
Subsequent to March 31, 1999, the Corporation entered into the following
definitive agreements to acquire two television stations. On April 12, 1999, the
Corporation announced its agreement with Gaylord Entertainment Company pursuant
to which the Corporation will issue $485 million of its common stock in exchange
for the KTVT-TV Dallas-Fort Worth television station and on April 29, 1999, the
Corporation announced its agreement to purchase KEYE-TV in Austin, Texas from
Granite Broadcasting Corporation for $160 million in cash. In addition, on April
30, 1999, Infinity Broadcasting Corporation (Infinity), the Corporation's radio
and outdoor advertising business, acquired two radio stations in Tampa, Florida,
and one in Cleveland, Ohio, from Clear Channel Communications for $123 million
in cash.
The Corporation also entered into or announced a number of strategic alliances
focused on growing its New Media operations. In January the Corporation
announced a cross promotional alliance, making CBS News the sole branded
broadcast news partner on America Online and CompuServe news channels. In
February, CBS and SportsLine USA, Inc. announced the extension of their
equity-for-promotion agreement. The Corporation signed letters of intent to
exchange promotion and advertising for equity in two companies establishing
online services and information sites; hollywood.com and storerunner.com. In
connection with the hollywood.com transaction, the Corporation expects to
receive a 35 percent ownership interest in the company for approximately $100
million of promotion and content support over a period of seven years. In the
storerunner.com transaction, which closed on April 29, 1999, the Corporation
received a 50 percent ownership interest in the company for approximately $100
million of promotion and branding support, over a period of six years. In
addition, the Corporation entered into a definitive agreement with a subsidiary
of WinStar Communications, Inc., to acquire a one-third equity stake in
Office.com for $42 million of promotion and advertising over a term of six
years. Office.com is designed to provide a comprehensive information website
directed towards small and medium-sized businesses.
-14-
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Corporation reported $1.8 billion in revenues for the three months ended
March 31, 1999 which was a slight decline from the same period during 1998 due
to the impact of the broadcast of the 1998 Winter Olympics on the prior year
first quarter results. Excluding the effect of the Winter Olympics from the 1998
results, revenues for the first three months ended March 31, 1999 increased 18
percent. Earnings before interest, taxes, minority interest, depreciation and
amortization (EBITDA) also increased dramatically, excluding the impact of the
Olympics, up over 50 percent during the first quarter when compared to the prior
year first quarter.
The Corporation reported net income, for the three months ended March 31, 1999,
of $387 million, or $0.55 per share, on a diluted basis which included a gain on
the disposal of Discontinued Operations of $366 million, net of income tax.
Income from Continuing Operations totaled $25 million, or $0.04 per-share, for
the three months ended March 31, 1999, compared to $19 million, or $0.03
per-share, during the three months ended March 31, 1998.
The Corporation purchased, at market value, or redeemed, at redemption prices,
debt securities with a face value of approximately $190 million and reduced the
available borrowing capacity under its credit facility from $4.0 billion to $3.0
billion. As a result of these early extinguishments and the write-off of related
debt issue costs, the Corporation recognized an extraordinary loss of $4
million, net of income taxes, during the first quarter.
On March 22, 1999, the Corporation completed the previously announced sale of
its Energy Systems and Government Operations businesses for approximately $220
million in cash, subject to certain adjustments, and the assumption by the
buyer, of liabilities, commitments, and obligations totaling approximately $950
million, all in accordance with the terms of the divestiture agreement. The pre
tax and after tax gain on disposal totaled $490 million and $366 million,
respectively. With the completion of this sale, the Corporation has essentially
disposed of the remaining industrial businesses.
On March 31, 1999, the Corporation entered into a definitive merger agreement
with King World Production, Inc. (King World) in which it will issue
approximately $2.5 billion in common stock in exchange for all of the
outstanding common stock of King World. Under the terms of the agreement, King
World shareholders will receive 0.81 shares of CBS common stock for each share
of King World common stock. King World is the distributor of a number of shows
which include "The Oprah Winfrey Show," "Wheel of Fortune," "Jeopardy!," and
"Hollywood Squares." The consummation of the merger is subject to certain
conditions, including approval by King World stockholders.
In addition, subsequent to March 31, 1999, the Corporation entered into the
following definitive agreements to acquire two television stations. On April 12,
1999, the Corporation announced its agreement with Gaylord Entertainment Company
pursuant to which the Corporation will issue $485 million of its common stock in
exchange for the KTVT-TV Dallas-Fort Worth television station and on April 29,
1999, the Corporation announced its agreement to purchase KEYE-TV in Austin,
Texas from Granite Broadcasting Corporation for $160 million in cash. In
addition, on April 30, 1999, Infinity Broadcasting Corporation (Infinity), the
Corporation's radio and outdoor advertising business, acquired two radio
stations in Tampa, Florida, and one in Cleveland, Ohio, from Clear Channel
Communications for $123 million in cash.
The Corporation also entered into or announced a number of strategic alliances
focused on growing its New Media operations. In January the Corporation
announced a cross promotional alliance, making CBS News the sole branded
broadcast news partner on America Online and CompuServe news channels. In
February, CBS and SportsLine USA, Inc. announced the extension of their
equity-for-promotion agreement. The Corporation signed letters of intent to
exchange promotion and advertising for equity in two companies establishing
online services and information sites; hollywood.com and storerunner.com. In
connection with the hollywood.com transaction, the Corporation expects to
receive a 35 percent ownership interest in the company for approximately $100
million of promotion and content support over a period of seven years. In the
storerunner.com transaction, which closed on April 29, 1999, the Corporation
received a 50 percent ownership interest in the company for approximately $100
million of promotion and branding support, over a period of six years. In
addition, the Corporation entered into a definitive agreement with a subsidiary
of WinStar Communications, Inc., to acquire a one-third equity stake in
Office.com for $42 million of promotion and advertising over a term of six
years. Office.com is designed to provide a comprehensive information website
directed towards small and medium-sized businesses.
-15-
<PAGE> 16
SEGMENT RESULTS OF OPERATIONS
The following table presents the segment results for the Corporation's
Continuing Operations for the three months ended March 31, 1999 and 1998. EBITDA
is presented in the table because management believes that EBITDA is an
appropriate measure for evaluating the operating performance of the
Corporation's businesses. EBITDA eliminates the effect of depreciation and
amortization of tangible and intangible assets, most of which were acquired in
acquisitions accounted for under the purchase method of accounting. The
exclusion of amortization expense eliminates variations in results among
stations and other businesses caused by the timing of acquisitions. More recent
acquisitions reflect higher amortization expense due to the increasing prices
paid for FCC licenses, goodwill and other identifiable intangibles. However,
EBITDA should be considered in addition to, not as a substitute for, operating
profit, net income, cash flows and other measures of financial performance
reported in accordance with generally accepted accounting principles. EBITDA
differs from cash flows from operating activities primarily because it does not
consider certain changes in assets and liabilities from period to period and it
does not include cash flows for interest and taxes.
SEGMENT RESULTS OF OPERATIONS - CONTINUING OPERATIONS
(unaudited, in millions)
<TABLE>
<CAPTION>
REVENUES OPERATING PROFIT (LOSS) EBITDA
---------------------- ----------------------- --------------------
THREE MONTHS ENDED MARCH 31, 1999 1998 1999 1998 1999 1998
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Radio $ 474 $ 330 $ 98 $ 64 $170 $113
Television 1,295 1,620 73 127 153 212
Corporate and Other (1) (1) (13) (17) (3) (16)
Residual costs of discontinued businesses -- -- (40) (38) (40) (38)
- ----------------------------------------------------------------------------------------------------------------------
Total Continuing Operations $ 1,768 $ 1,949 $ 118 $136 $280 $271
======================================================================================================================
</TABLE>
Certain discussions below provide a comparison of actual results with pro forma
results. For the three months ended March 31, 1999 and 1998 comparisons, pro
forma results were determined as if the American Radio Systems Corporation
(American Radio) and related divestitures and exchanges of radio stations had
occurred on January 1, 1998.
RADIO AND OUTDOOR ADVERTISING
Infinity Broadcasting Corporation (Infinity), which is comprised of the radio
and outdoor advertising operations (Radio) of the Corporation, owns and operates
more than 160 radio stations and TDI Worldwide, Inc. (TDI), its outdoor
advertising business. Revenues, as reported, increased by $144 million, or 44
percent, during the first three months of 1999 compared to the same period in
1998. This growth was primarily driven by the overall strong performance at the
Corporation's existing radio stations and TDI and the inclusion of the results
of operations of American Radio, which was acquired on June 4, 1998. On a pro
forma basis, first quarter 1999 Radio segment revenue growth continued to
outpace the industry increasing by approximately 16 percent over the prior year
first quarter. These pro forma increases reflect strong station growth across
the majority of the Corporation's radio markets as well as double digit growth
at TDI during 1999.
Operating profit and EBITDA for the three months ended March 31, 1999, increased
over the prior year quarter by $34 million, or 53 percent, and $57 million, or
51 percent, respectively. On a pro forma basis operating profit and EBITDA
increased by approximately 56 percent and 27 percent, respectively. The
increases in pro forma operating profit and EBITDA are primarily due to the
higher revenues at the Corporation's existing stations and TDI combined with
management's continued cost control efforts. On an as-reported basis, the
increases in operating profit and EBITDA are driven by the same factors as the
pro forma increases, as well as the inclusion of the results of operations of
American Radio subsequent to its acquisition by the Corporation in June 1998.
The higher rate of growth in operating profit and EBITDA compared to the rate of
growth in revenues is attributable to the fact that a substantial portion of the
Radio segment costs are fixed.
TELEVISION
The television segment consists of the Corporation's 14 owned and operated
television stations, the CBS television network, and the cable television
operations. The segment's revenues for the first three months of 1999 totaled
$1,295 million compared to $1,620 million during the prior year first quarter.
This decline is primarily due to the effect of the Winter Olympics on the first
quarter of 1998 results. Excluding the impact of the Winter Olympics, the
television segment revenues increased at a double digit rate. This increase in
first quarter revenues for the Television segment, excluding the effect of the
Olympics, is due to stronger 1999 primetime pricing on network advertising and
primetime ratings share growth.
-16-
<PAGE> 17
The Television segment's operating profit and EBITDA for the three months ended
March 31, 1999 totaled $73 million and $153 million, respectively, compared to
$127 million and $212 million, respectively, for the same period during 1998.
These declines are due to the effect of the Winter Olympics on the first quarter
of 1998 results. Excluding the impact of the Olympics from the 1998 results,
operating profit and EBITDA increased greater than 25 percent. These
improvements were attributable to the revenue growth at the television network
due to higher pricing on primetime network advertising and primetime ratings
share growth during 1999, as well as lower operating costs due to recent cost
reduction initiatives and the benefit of the elimination of start-up losses
associated with certain cable operations divested late in 1998.
RESIDUAL COSTS OF DISCONTINUED BUSINESSES
The Corporation's results of operations are unfavorably affected by certain
costs remaining from past divestitures of its industrial businesses. Following
those divestitures, certain liabilities arising from these businesses remained
with the Corporation, such as pension and postretirement benefit obligations for
inactive and retired employees, environmental liabilities, and
litigation-related liabilities. The pension and postretirement benefit costs
associated with these former employees, as well as, administration costs
associated with managing the retained liabilities, have been presented
separately in the condensed consolidated statement of income.
For the three months ended March 31, 1999 and 1998, these costs primarily
reflect pension and postretirement benefit costs. The slight increase in costs
during 1999 is a result of the closing of the sale of Power Generation in August
1998 and the retention of these benefit obligations. Following the sales of
Energy Systems and Government Operations, the quarterly costs will increase by
an additional $5 million. Prior to the sales, these costs are included in the
respective businesses' results of operations which are reported in Discontinued
Operations.
The Corporation's objective is to reduce this earnings constraint over the next
few years by fully funding the pension plan and modifying postretirement
benefits. However, management expects that these costs will continue to
negatively affect operating results during future years.
OTHER INCOME, NET
Other income, net during the three months ended March 31, 1999 reflected income
of $13 million compared to income of $5 million for the same period in 1998.
Generally, other income and expense items include miscellaneous gains and losses
on dispositions of non-strategic assets and operating results of
non-consolidated affiliates. During the three months ended March 31, 1999, the
Corporation recognized a net gain of $8 million on the disposal of certain
corporate aircraft which represents the majority of the activity during the
period.
INTEREST EXPENSE, NET
Interest expense from Continuing Operations totaled $51 million for the three
months ended March 31, 1999, compared to $75 million for the same period in
1998. The decrease in interest expense during 1999 was driven by a reduction in
average debt, primarily revolving credit borrowings, compared to the first
quarter of 1998. Average debt was primarily affected by the proceeds received
from Infinity subsequent to its initial public offering, the timing of major
acquisitions and divestiture transactions, and the repurchase of shares under
the Corporation's stock repurchase program.
During 1999, the Corporation purchased, at market value, or redeemed, at
redemption prices, debt securities with a face value of approximately $190
million and reduced the available borrowing capacity under its credit facility
from $4.0 billion to $3.0 billion (see Revolving Credit Facility). In addition,
the Corporation paid off approximately $35 million of other debt and notes
payable.
Future interest expense will depend on the Corporation's financing strategy in
future acquisitions, additional activity under the Corporation's stock
repurchase program, use of proceeds from dispositions, and payment of pension
benefits, postretirement benefits, remaining divestiture costs and retained
liabilities of discontinued businesses as well as the Corporation's performance.
-17-
<PAGE> 18
INCOME TAXES
The Corporation's Continuing Operations effective tax rates for the three months
ended March 31, 1999 and 1998 are 58 percent and 71 percent, respectively, and
therefore, significantly higher than the U.S. federal statutory tax rate of 35
percent of pre tax income. The higher effective tax rate is primarily resulting
from amortization of non-deductible goodwill associated with the media
acquisitions in recent years. Such permanent differences between book income and
taxable income can significantly impact the provision and, depending upon the
Corporation's level of income or loss and the effect of non-recurring
transactions, can cause dramatic fluctuations in the Corporation's effective tax
rate.
The Corporation's net deferred tax liability at March 31, 1999 totaled $136
million and its net deferred tax assets as of December 31, 1998 totaled $53
million. At March 31, 1999, the net liability of $136 million consisted of a net
deferred tax liability of $258 million for Continuing Operations partially
offset by a net deferred tax asset of $122 million for Discontinued Operations.
At December 31, 1998, the net deferred tax asset consisted of a net deferred tax
liability of $361 million for Continuing Operations offset by a net deferred tax
asset of $414 million for Discontinued Operations.
YEAR 2000
The Year 2000 issue results from the development of computer programs and
computer chips using two digits rather than four digits to define the applicable
year. Computer programs and/or equipment with time-sensitive software or
computer chips may recognize the date using "00" as the year 1900 rather than
the year 2000. This could result in system failure or miscalculations and cause
disruptions to business operations.
To address the Year 2000 issue, the Corporation has undertaken efforts to
identify, modify or replace, and test systems that may not be Year 2000
compliant. The Corporation estimates its cost to achieve Year 2000 compliance to
be approximately $36 million, of which $20 million has been incurred through
March 31, 1999. Approximately 36% of the total expenditures relate to
replacement of existing systems. The Corporation has and expects to continue
funding these costs through its cash flows from operations and expense
modification costs as incurred.
Several centrally managed critical systems are currently Year 2000 compliant or
will be replaced by Year 2000 compliant applications by mid-1999. A significant
portion of the Year 2000 work for the Corporation's systems has been performed
or is underway. The various businesses are currently in the process of
developing Year 2000 procedures and guidelines. The Corporation plans to have
all systems tested and compliant by the end of 1999.
The Year 2000 effort also includes communication with all significant third
party suppliers and customers to determine the extent to which the Corporation's
systems are vulnerable to those parties' failures to reach Year 2000 compliance.
There can be no guarantee that the Corporation's third party suppliers or
customers will be Year 2000 compliant on a timely basis and that failure to
achieve compliance would not have a material adverse impact on the Corporation's
business operations.
Overall, the Corporation believes that it will complete its Year 2000 effort and
will be compliant on time. Although there can be no assurances that this will
occur, the Corporation will continuously monitor its progress and evaluate the
need for a contingency plan. Based on its current plan, the Corporation believes
that it will have adequate time to prepare for contingency measures if the need
arises.
The Corporation believes that it is difficult to fully assess the risks of the
Year 2000 problem due to numerous uncertainties surrounding the issue.
Management believes the primary risks are external to the Corporation and relate
to the Year 2000 readiness of its third party business partners. The inability
of the Corporation or its third party business partners to adequately address
the Year 2000 issues on a timely basis could result in a material financial
risk, including loss of revenue, substantial unanticipated costs and service
interruptions. Accordingly, the Corporation plans to devote the resources it
concludes are appropriate to address all significant Year 2000 issues in a
timely manner.
DISCONTINUED OPERATIONS
On March 22, 1999, the Corporation completed the previously announced sale of
its Energy Systems and Government Operations businesses for approximately $220
million in cash, subject to certain adjustments, and the assumption, by the
buyer, of liabilities, commitments and obligations totaling approximately $950
million, all in accordance with the terms of the divestiture agreement. The pre
tax and after tax gain on disposal totaled $490 million and $366 million,
respectively. With the completion of this sale, the Corporation has essentially
disposed of the remaining industrial businesses.
-18-
<PAGE> 19
Following the divestiture of the Energy Systems and Government Operations
business, the assets of Discontinued Operations consist primarily of the
portfolio investments remaining from the 1992 decision to exit the financial
services business. These portfolio investments, which consist primarily of the
leasing portfolio, generally are expected to liquidate through the year 2015 in
accordance with contractual terms. Debt of Discontinued Operations, which
totaled $409 million at March 31, 1999, includes only the amount that will be
repaid through the liquidation of the portfolio investments. Certain other
divestiture costs and contingencies that related to the industrial businesses
also will remain.
Except for cash flows related to the portfolio investments and the associated
debt, all future cash inflows and outflows of Discontinued Operations will
affect Continuing Operations liquidity and interest expense. Management believes
that the liability for estimated loss on disposal of Discontinued Operations of
$1,493 million at March 31, 1999 is adequate to provide for the portfolio
investments' estimated results of operations through the expected date of
liquidation, other obligations associated with the disposal of the industrial
business, and transaction related costs.
RESULTS OF OPERATIONS - DISCONTINUED OPERATIONS
(unaudited, in millions)
<TABLE>
<CAPTION>
SALE OF PRODUCTS OPERATING PROFIT
AND SERVICES (LOSS)
- -----------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1999 1998 1999 1998
=================================================================================================================
<S> <C> <C> <C> <C>
Industrial businesses $ 113 $ 588 $ (17) $ (154)
Financial Services 3 6 2 4
- -----------------------------------------------------------------------------------------------------------------
Total $ 116 $ 594 $ (15) $ (150)
=================================================================================================================
</TABLE>
The results presented in the table above include sales and operating profit for
the Corporation's industrial and financial services businesses after the
measurement date and are charged directly to the liability for estimated loss on
disposal.
Sales for the industrial businesses during the three months ended March 31, 1999
and 1998 declined from $594 million to $116 million. The decline primarily
reflects the sale of several businesses throughout 1998, most notably the Power
Generation business in August. These results will continue to decline with the
sale of the Energy Systems and Government Operations businesses. Financial
services sales reflect the continued liquidation of the remaining portfolio
investments.
The divestiture of the industrial businesses also reduced the operating losses
during the three months ended March 31, 1999 compared to the same period in
1998. The operating profit for financial services reflects yield income on the
portfolio investments.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
In 1998, the Corporation formed Infinity, a new company comprising the Radio
segment of the Corporation. In December 1998, Infinity sold 18.2 percent of its
common stock in an initial public offering, generating $3.2 billion of proceeds
($3.0 billion, net of offering costs). The Corporation, as the parent company of
Infinity, received the benefit of nearly 90 percent of the proceeds from
Infinity's stock offering through the payment by Infinity of an intercompany
note and certain other intercompany transactions. These proceeds were used by
the Corporation to repay its revolving credit borrowings and for general
corporate purposes.
Because of the minority interest in Infinity following the stock offering,
certain modifications have been made to the Corporation's cash management
practices. Under certain circumstances, Infinity's cash generally would be
available to the Corporation under the terms of an intercompany agreement
(pursuant to which Infinity reimburses CBS for certain services provided to
Infinity) and a tax sharing agreement between Infinity and the Corporation, or
if Infinity would pay a dividend on all of its common stock. However, Infinity
does not anticipate paying any dividends in the near term. Cash generated by
Infinity's operations is expected to be retained by Infinity for use in its
operations or for investing. Management does not believe that this segregation
of cash will materially impact the Corporation's liquidity.
During the first quarter of 1999, the Corporation purchased or redeemed debt
securities for $247 million and reduced the available borrowing capacity under
its credit facility from $4.0 billion to $3.0 billion. As a result of these
early extinguishments and the write-off of related debt issue costs, the
Corporation recognized an extraordinary loss of $4 million net of income taxes
during the first quarter.
-19-
<PAGE> 20
On March 22, 1999, the Corporation completed the previously announced sale of
its Energy Systems and Government Operations businesses for approximately $220
million in cash, subject to certain adjustment, and the assumption, by the
buyer, of liabilities, commitments, and obligations totaling approximately $950
million, all in accordance with the terms of the divestiture agreement.
Management expects that the Corporation will have sufficient liquidity to meet
its ordinary future business needs. Sources of liquidity generally available to
the Corporation include cash from operations, proceeds from sales of investments
and non-strategic assets, cash and cash equivalents, availability of debt under
its credit facility, borrowings from other sources, including funds from capital
markets, and issuance of additional capital stock of the Corporation.
OPERATING ACTIVITIES
The operating activities of Continuing Operations provided cash of $230 million
during the first three months of 1999 and $61 million during the first three
months of 1998.
Cash contributed to all of the Corporation's pension plans totaled $65 million
during the first three months of 1999 and $73 million during the same period in
1998. The Corporation's contribution level for 1999 is expected to approximate
$270 million (including the $65 million contribution made in the first three
months of 1999), and is consistent with the Corporation's goal to fully fund its
qualified pension plans over the next several years.
The operating activities of Discontinued Operations used cash of $101 million
during the first three months of 1999 compared to $248 million during the same
period in 1998. The cash flows during the first quarter of 1999 primarily
reflect cash used in the operations of the Energy Systems and Government
Operations businesses while the cash flows during the same period in 1998
primarily reflect the cash used in the operations of its Power Generation
business as well as the Energy Systems and Government Operations businesses.
With the completion of the sale of the Corporation's Power Generation business
in August 1998 and its Energy Systems and Government Operations businesses in
March 1999, future operating cash flows of Discontinued Operations will consist
primarily of disposal and other costs associated with the industrial businesses.
These cash flows will affect the cash flows of Continuing Operations. Cash flows
associated with the financial services business, including interest cost on debt
of Discontinued Operations and the repayment of that debt, will be paid through
the continued liquidation of portfolio investments and are not expected to
impact future cash flows from Continuing Operations.
INVESTING ACTIVITIES
Investing activities provided cash of $236 million and $1 million during the
first three months 1999 and 1998, respectively. Investing cash inflows from
business divestitures and other asset liquidations totaled $342 million and $33
million during the first quarter of 1999 and 1998, respectively. Asset
liquidations in 1999 primarily relate to Discontinued Operations and include the
sale of the Energy Systems and Government Operations businesses during March
1999 for approximately $220 million, subject to certain adjustments. In
addition, during the first quarter of 1999, approximately $59 million was
received from the divestiture of several media properties. Investing cash
outflows during 1999 primarily relate to the acquisition of a transit
advertising company for $34 million.
The Corporation's capital expenditures for Continuing Operations during the
first three months of 1999 and 1998 totaled $24 million and $18 million,
respectively. This increase is primarily attributable to recent acquisitions.
With the sale of the Energy Systems and Government Operations businesses, future
capital expenditures for Discontinued Operations will essentially be eliminated.
FINANCING ACTIVITIES
Cash used by financing activities during the first three months of 1999 totaled
$190 million compared to cash provided by financing activities during the same
period in 1998 of $240 million.
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<PAGE> 21
Total financing cash outflows during the first quarter of 1999 primarily reflect
the repurchase or redemption of certain outstanding debt for $247 million as
well as the purchase of 1,988,700 shares of common stock for $70 million under
the Corporation's $3 billion multi-year stock repurchase program. During the
first quarter of 1998, 700,000 shares of common stock were purchased at a cost
of $21 million. Future purchases of common stock under the program will be
guided by financial policies that are consistent with maintaining an investment
grade rating. In addition, total 1998 financing cash outflows during the first
quarter, reflect the Corporation's payment of a $36 million dividend on its
common stock. Subsequent to March 1, 1998, the Corporation suspended dividend
payments on its common stock so that cash could be used to better enhance
shareholder value.
Cash provided by financing activities during the first three months of 1999 and
1998 primarily reflect the issuance of the Corporation's stock in connection
with certain employee compensation and benefit plans totaling $128 million and
$107 million, respectively.
REVOLVING CREDIT FACILITY
With the completion of Infinity's initial public offering in December 1998, all
remaining revolving credit borrowings were repaid and no new borrowings were
outstanding at March 31, 1999. On March 15, 1999, the Corporation amended its
revolving credit agreement which resulted in the reduction of total available
borrowings from $4.0 billion to $3.0 billion. The unused capacity under the
existing credit facility was therefore equal to $3.0 billion at March 31, 1999
of which up to $1.0 billion is available to Infinity.
Borrowing availability under the credit agreement is subject to compliance with
certain covenants, a maximum leverage ratio, minimum interest coverage ratio,
and minimum consolidated net worth. Certain of the financial covenants become
more restrictive over the term of the agreement. At March 31, 1999, the
Corporation was in compliance with the financial covenants.
LEGAL, ENVIRONMENTAL, AND OTHER MATTERS
The Corporation is addressing a number of environmental and litigation matters,
including those discussed in note 8 to the condensed consolidated financial
statements. Litigation is inherently uncertain and always difficult to predict.
Substantial damages are sought in certain of the Corporation's pending cases
and, although management believes that a significant adverse judgment is
unlikely, any such judgment could have a material adverse effect on the
Corporation's results of operations for a quarter or a year. However, based on
its understanding and evaluation of the relevant facts and circumstances,
management believes that the Corporation has meritorious defenses to the
litigation referenced in note 8 and that the Corporation has adequately provided
for costs arising from potential settlement of these matters when in the best
interest of the Corporation. Management believes that the litigation should not
have a material adverse effect on the financial condition of the Corporation.
Liabilities for certain of the Corporation's environmental, litigation, and
other matters, although arising from discontinued businesses, have been retained
by the Corporation following the divestiture of the remaining industrial
businesses. These liabilities include certain environmental obligations,
liabilities associated with asbestos claims, and certain general litigation
claims not involving active businesses. Accrued liabilities associated with
these matters, which have been separately presented as retained liabilities of
discontinued businesses, totaled $1.0 billion at March 31, 1999, including
amounts related to previously discontinued businesses of CBS Inc. Of this
amount, $793 million is classified as noncurrent. A separate asset of $227
million has been recorded for estimated amounts recoverable from third parties,
of which $175 million is classified as noncurrent. See note 4 to the condensed
consolidated financial statements.
The costs associated with resolving these matters are recognized in the period
in which the costs are deemed probable and can be reasonably estimated.
Management believes that the Corporation has adequately provided for the
estimated costs of resolving these matters.
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<PAGE> 22
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, that are not historical facts but rather reflect the Corporation's
current expectations concerning future results and events. The words "believes,"
"expects," "intends," "plans," "anticipates," "likely," "will," and similar
expressions identify such forward-looking statements. These forward-looking
statements are subject to risks, uncertainties, and other factors, some of which
are beyond the Corporation's control, that could cause actual results to differ
materially from those forecast or anticipated in such forward-looking
statements.
Such risks, uncertainties, and factors include, but are not limited to: the
Corporation's ability to develop and/or acquire television programming and to
attract and retain advertisers; the impact of significant competition from both
over-the-air broadcast stations and programming alternatives such as cable
television, wireless cable, in-home satellite distribution services, and
pay-per-view and home video entertainment services; the impact of new
technologies; the impact of the year 2000 transition; changes in Federal
Communications Commission regulations; and such other competitive and business
risks as from time to time may be detailed in the Corporation's Securities and
Exchange Commission reports.
Readers are cautioned not to place undue reliance on these forward-looking
statements which reflect management's view only as of the date of this Report on
Form 10-Q. The Corporation undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
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<PAGE> 23
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) In August 1988, the Pennsylvania Department of Environmental Resources
(PDER) filed a complaint against the Corporation alleging violations of
the Pennsylvania Clean Streams Law at the Corporation's Gettysburg,
Pennsylvania, elevator plant. PDER requested that the Environmental
Hearing Board assess a penalty in the amount of $9 million. The
Corporation denied these allegations. In November 1996, the Board
assessed a civil penalty of approximately $5.5 million. The Corporation
appealed the Board's decision to the Commonwealth Court. On January 2,
1998, the Commonwealth Court upheld the Board's findings with respect to
violations of the Pennsylvania Clean Streams Law but not with respect to
the amount of the penalty assessed. The Commonwealth Court returned the
matter to the Board for a reassessment of the penalty. The Corporation's
application for a rehearing before the Commonwealth Court was denied.
Also, on October 9, 1998, the Corporation's petition for a rehearing
before the Pennsylvania Supreme Court was denied. Oral arguments were
completed in February 1999. The Board has reduced the penalty to $3.3
million. The Corporation is pursuing a Petition for Review by the
Commonwealth Court to further reduce the penalty.
(b) The Corporation has been defending, in the USDC for the Western District
of Pennsylvania (the District Court), consolidated class and derivative
actions and an individual lawsuit brought by shareholders against the
Corporation, Westinghouse Financial Services, Inc. (WFSI) and
Westinghouse Credit Corporation (WCC), previously subsidiaries of the
Corporation, and/or certain present and former directors and officers of
the Corporation, as well as other unrelated parties. Together, these
actions allege various federal securities law and common law violations
arising out of alleged misstatements or omissions contained in the
Corporation's public filings concerning the financial condition of the
Corporation, WFSI, and WCC in connection with a $975 million charge to
earnings announced on February 27, 1991; a public offering of the
Corporation's common stock in May 1991; a $1,680 million charge to
earnings announced on October 7, 1991; and alleged misrepresentations
regarding the adequacy of internal controls at the Corporation, WFSI, and
WCC. In July 1993, the court dismissed in its entirety the derivative
claim and dismissed most of the class action claims with leave to replead
certain claims in both actions. Both actions were subsequently repled. On
January 20, 1995, the District Court again dismissed the derivative
complaint in its entirety. Also on January 20, 1995, the court dismissed
the class action claims but granted plaintiffs the right to replead
certain of the claims. Plaintiffs in the class action did not replead the
claims, and on February 28, 1995, the court dismissed these claims in
their entirety. Plaintiffs in both the derivative and class action suits
appealed the rulings and dismissals of their claims by the District Court
to the Third Circuit. (In the derivative action, the Third Circuit
affirmed the dismissal of this action by the District Court.) In July
1996, the Third Circuit affirmed in part and reversed in part the class
action claims. Pursuant to this ruling, the class action claims have been
remanded to the District Court. In 1997, two similar class action suits
were brought against the Corporation in the District Court. These cases
allege similar facts and include the same defendants as in the previous
class action complaint filed in the District Court. In November 1997, the
District Court dismissed both of these actions. In March 1999, the
attorneys who filed the derivative action described herein filed a new
derivative action based on the same allegations previously asserted and
dismissed. The Corporation has reached an agreement in principle to
resolve all claims in the derivative and class actions. The settlements
are subject to the execution of definitive documentation, notice to the
shareholders and class upon whose behalf the actions were brought,
fairness hearings, and approval by the Court of the settlements.
Litigation is inherently uncertain and always difficult to predict. Substantial
damages are sought in certain of the foregoing matters and although management
believes a significant adverse judgment is unlikely, any such judgment could
have a material adverse effect on the Corporation's results of operations for a
quarter or a year. However, based on its understanding and evaluation of the
relevant facts and circumstances, management believes that the Corporation has
meritorious defenses to the litigation described in items (a) and (b) above, and
that the Corporation has adequately provided for resolution of these matters.
Management believes that the litigation should not have a material adverse
effect on the financial condition of the Corporation.
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<PAGE> 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
(3) ARTICLES OF INCORPORATION AND BYLAWS
(a) The Restated Articles of the Corporation, as amended to
December 11, 1997, are incorporated herein by reference to
Exhibit 3(b) to Form 10-K for the year ended December 31,
1997.
(b) The Bylaws of the Corporation, as amended to March 11, 1999,
are incorporated herein by reference to Exhibit 3(b) to Form
10-K for the year ended December 31, 1998.
(4) RIGHTS OF SECURITY HOLDERS
(a) There are no instruments with respect to long-term debt of the
Corporation that involve securities authorized thereunder
exceeding 10 percent of the total assets of the Corporation
and its subsidiaries on a consolidated basis. The Corporation
agrees to provide to the Securities and Exchange Commission,
upon request, a copy of instruments defining the rights of
holders of long-term debt of the Corporation and its
subsidiaries.
(b) Rights Agreement is incorporated herein by reference to
Exhibit 1 to Form 8-A filed with the Securities and Exchange
Commission on January 9, 1996.
(10) MATERIAL CONTRACTS
(a*) The CBS Corporation 1998 Executive Annual Incentive Plan is
incorporated herein by reference to Exhibit A to the
Corporation's Definitive Proxy Statement for the Annual
Meeting of Shareholders held on May 6, 1998, as filed with the
Commission on March 25, 1998.
(b*) The Annual Performance Plan, as amended to November 1, 1996,
is incorporated herein by reference to Exhibit 10(a) to Form
10-Q for the quarter ended September 30, 1996.
(c*) The 1993 Long-Term Incentive Plan, as amended to January 28,
1998, is incorporated herein by reference to Exhibit 10(b) to
Form 10-K for the year ended December 31, 1997.
(d*) The 1991 Long-Term Incentive Plan, as amended to January 28,
1998, is incorporated herein by reference to Exhibit 10(g) to
Form 10-K for the year ended December 31, 1997.
(e*) The 1984 Long-Term Incentive Plan, as amended to November 1,
1996, is incorporated herein by reference to Exhibit 10(c) to
Form 10-Q for the quarter ended September 30, 1996.
(f*) Amended and restated Infinity Broadcasting Corporation Stock
Option Plan is incorporated herein by reference to Exhibit 4.4
to the Corporation's Registration Statement No. 333-13219 on
Post-Effective Amendment No. 1 on Form S-8 to Form S-4 filed
with the Securities and Exchange Commission on January 2,
1997.
(g*) The Westinghouse Executive Pension Plan, as amended as of
August 19, 1998, is incorporated by reference to Exhibit 10(g)
to Form 10-K for the year ended December 31, 1998.
(h*) CBS Supplemental Executive Retirement Plan, as amended to
November 15, 1995, is incorporated herein by reference to
Exhibit 10(n) to Form 10-K for the year ended December 31,
1996.
(i*) CBS Bonus Supplemental Executive Retirement Plan, as amended
to November 15, 1995, is incorporated herein by reference to
Exhibit 10(o) to Form 10-K for the year ended December 31,
1996.
(j*) CBS Supplemental Employee Investment Fund is incorporated by
reference to Exhibit 10(j) to Form 10-K for the year ended
December 31, 1998.
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<PAGE> 25
(k*) The Deferred Compensation and Stock Plan for Directors, as
amended as of January 27, 1999, is incorporated by reference
to Exhibit 10(k) to Form 10-K for the year ended December 31,
1998.
(l*) The Director's Charitable Giving Program, as amended to April
30, 1996, is incorporated herein by reference to Exhibit 10(g)
to Form 10-Q for the quarter ended June 30, 1996.
(m*) Advisory Director's Plan Termination Fee Deferral Terms and
Conditions, dated April 30, 1996, is incorporated herein by
reference to Exhibit 10(i) to Form 10-Q for the quarter ended
June 30, 1996.
(n*) Employment Agreement between the Corporation and Mel Karmazin,
made as of June 20, 1996 and effective as of December 31,
1996, is hereby incorporated by reference to Exhibit 10(s) to
Form 10-Q for the quarter ended March 31, 1997.
(o*) Infinity Broadcasting Corporation Warrant Certificate No. 3 to
Mel Karmazin is incorporated herein by reference to Exhibit
4.6 to the Corporation's Registration Statement No. 333-13219
on Post-Effective Amendment No. 1 on Form S-8 to Form S-4
filed with the Securities and Exchange Commission on January
2, 1997.
(p*) Employment agreement between a subsidiary of the Corporation,
CBS Broadcasting Inc. (formerly CBS Inc.) and Leslie Moonves
entered into as of May 17, 1995, and amended as of January 20,
1998 is incorporated herein by reference to Exhibit 10(u) to
Form 10-K for the year ended December 31, 1997.
(q*) Agreement between the Corporation and Fredric G. Reynolds
dated March 2, 1999.
(r*) Agreement between the Corporation and Louis J. Briskman
dated March 2, 1999.
(s) The $5.5 billion Credit Agreement among the Corporation, the
Lenders parties thereto, NationsBank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, dated
August 29, 1996, is incorporated herein by reference to
Exhibit 10(l) to Form 10-Q for the quarter ended September 30,
1996.
(t) First Amendment, dated as of January 29, 1997 to the Credit
Agreement, dated as of August 29, 1996, among CBS Corporation,
the Lenders parties thereto, NationsBank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, is hereby
incorporated by reference to Exhibit 10(p) to Form 10-Q for
the quarter ended March 31, 1997.
(u) Second Amendment, dated as of March 21, 1997, to the Credit
Agreement, dated as of August 29, 1996, as amended by the
First Amendment thereto dated as of January 29, 1997, among
the Corporation, the Subsidiary Borrowers parties thereto, the
Lenders parties thereto, NationsBank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, is hereby
incorporated by reference to Exhibit 10(q) to Form 10-Q for
the quarter ended March 31, 1997.
(v) Third Amendment dated as of March 3, 1998, to the Credit
Agreement dated as of August 29, 1996, as amended by the First
Amendment thereto dated as of January 29, 1997, as amended by
the Second Amendment thereto dated as of March 21, 1997 among
the Corporation, the Subsidiaries Borrowers parties thereto,
the Lenders parties thereto, NationsBank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent is
incorporated by reference to Exhibit 10(x) to Form 10-Q for
the quarter ended March 31, 1998.
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<PAGE> 26
(w) Fourth Amendment, dated as of February 26, 1999, to the CBS
Corporation Credit Agreement, dated as of August 29, 1996, as
amended by the First, Second, and Third Amendments, dated
January 29, 1997, March 21, 1997 and March 3, 1999,
respectively, among CBS Corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, Nationsbank,
N.A. and The Toronto-Dominion Bank as Syndication Agents, The
Chase Manhattan Bank as Documentation Agent, and Morgan
Guaranty Trust Company of New York as Administrative Agent is
incorporated by reference to Exhibit 10.9 to Form 10-Q of
Infinity Broadcasting Corporation for the quarter ended March
31, 1999.
(x) Asset Purchase Agreement, dated June 25, 1998, between the
Corporation and WGNH Acquisition, LLC, an entity owned 60
percent by Morrison Knudson Corporation and 40 percent by BNFL
USA Group, Inc., relating to the Corporation's Energy Systems
Business Unit is incorporated by reference to Exhibit 10(w) to
Form 10-Q for the quarter ended June 30, 1998.
(y) Asset Purchase Agreement, dated June 25, 1998, between the
Corporation and WGNH Acquisition, LLC, an entity owned 60
percent by Morrison Knudson Corporation and 40 percent by BNFL
USA Group, Inc., relating to the Corporation's Government and
Environmental Services Company is incorporated by reference to
Exhibit 10(x) to Form 10-Q for the quarter ended June 30,
1998.
(z) Intercompany Agreement between CBS and Infinity Broadcasting
Corporation dated as of December 15, 1998 is incorporated by
reference to Exhibit 10(x) to Form 10-K for the year ended
December 31, 1998.
(aa) Tax Sharing Agreement between CBS Corporation and Infinity
Broadcasting Corporation dated as of December 15, 1998 is
incorporated by reference to Exhibit 10(y) to Form 10-K for
the year ended December 31, 1998.
(bb) Agreement and Plan of Merger dated as of March 31, 1999 by and
among King World Productions, Inc., CBS Corporation and K
Acquisition Corp. is incorporated herein by reference to
Exhibit 2.1 to the report on Form 8-K dated March 31, 1999 of
King World Productions, Inc.
(27) FINANCIAL DATA SCHEDULE
- --------
* Identifies management contract or compensatory plan or arrangement.
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<PAGE> 27
B) REPORTS ON FORM 8-K
A Current Report on Form 8-K (Items 5 and 7), dated January 29, 1999, regarding
the Corporation's announcement of the date of its 1999 Annual Meeting.
A Current Report on Form 8-K (Items 5 and 7), dated February 5, 1999, filing a
press release concerning the Corporation's earnings for the fourth quarter of
1998 and year-end results for 1998.
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<PAGE> 28
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, thereunto duly authorized, on the 17 day of May 1999.
CBS CORPORATION
By: /s/ ROBERT G. FREEDLINE
-----------------------------
Robert G. Freedline
Vice President and
Controller
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<PAGE> 1
Exhibit 10(R)
[CBS LOGO]
CBS CORPORATION David T. McLaughlin 51 West 52nd Street
Chairman New York, NY 10019
CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Mr. Louis J. Briskman
Executive Vice President
and General Counsel
CBS Corporation
51 West 52nd Street
New York, New York 10019
Dear Lou:
CBS Corporation (the "Company") recognizes the importance of
maintaining a high level of executive performance and expertise and of retaining
the services of certain Company executives, such as yourself, who are key to the
execution of corporate strategy. The purpose of this letter agreement
("Agreement") is to provide an incentive for you to remain with the Company as
an executive by providing you with assurances that you will receive certain
payments and/or other benefits in the event that your employment with the
Company terminates under the circumstances set forth herein, as long as you
comply with all of the terms and conditions of the Agreement.
The Agreement is intended to set forth the terms and conditions to
which you and the Company have agreed regarding the termination of your
employment under certain circumstances, and supersedes all prior agreements and
understandings with respect to the subject matter hereof.
Certain capitalized terms and phrases used in the Agreement are defined
in Section 10(c) below.
<PAGE> 2
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 2
1. Eligibility for Payments and Other Benefits
(a) Limitations and Conditions. In addition to any further limitations
and/or conditions that may be set forth in the Agreement with respect to a
particular payment or other benefit, your receipt of any and all payments and
other benefits under the Agreement is subject to the limits set forth in Section
7 and subject to your compliance with all of the provisions of Section 8 and the
terms and conditions of any applicable plans or programs, as they may be
modified hereby, pursuant to which you receive such payments or other benefits.
(b) Eligibility for Separation Pay and Financial Counseling Benefits
Pursuant to Section 2. You will be eligible to receive the separation payment
and other separation benefits set forth in Section 2, in lieu of any and all
other separation/severance payments or salary continuation payments, if your
employment is Terminated after the Effective Date and on or before the fifth
anniversary of the Effective Date or such later anniversary of the Effective
Date as may be determined from time to time pursuant to the following paragraph
(the "Section 2 Final Anniversary Date").
On March 2 of each year, beginning in 2000, the Section 2 Final
Anniversary Date will be automatically extended for one additional year unless,
prior to such March 2, the Company notifies you to the contrary in writing.
(c) Eligibility for Supplemental Pension Payments Pursuant to Section
3. You will be eligible to receive the applicable Supplemental Pension Payments
set forth in Section 3(b) or 3(c) if your employment is Terminated at any time
after the Effective Date. If, after the Effective Date, you die while an
employee of any CBS Company and leave a surviving spouse, your spouse will be
eligible to receive the applicable Supplemental Pension Payments set forth in
Section 3(e).
(d) Eligibility for Certain Welfare Benefits Pursuant to Section 4. You
will be eligible to receive the welfare benefits set forth in Section 4 if your
employment is Terminated at any time after the Effective Date.
(e) Eligibility for Stock Option Benefits Pursuant to Section 5. You
will be eligible to receive the stock option benefits set forth in Section 5,
subject to your compliance with all of the provisions of your Company stock
option agreement(s), as modified by the Agreement, if your employment is
Terminated at any time after the Effective Date.
(f) Eligibility for Home Sale Payment Pursuant to Section 6. You will
be eligible to receive the home sale payment set forth in Section 6 if (1) your
employment is Terminated after the Effective Date and prior to the third
anniversary of the Effective
<PAGE> 3
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 3
Date and (2) within the twenty-four (24) month period after your Termination you
either relocate your primary residence out of the New York, New York commuting
area or you change your primary residence in the New York, New York commuting
area to another residence in the New York, New York commuting area with a price
lower than your Cost (as defined in Section 6).
(g) Mitigation. You will not be required to mitigate the amount of any
payment or other benefit provided for in Sections 2, 3, 4, 5 and/or 6, and
except as otherwise set forth in Section 4 with respect to certain welfare
benefits, the amount of any payments and/or other benefits which would otherwise
be provided to you pursuant to Sections 2, 3, 4, 5 and/or 6 will not be reduced
by any compensation earned by you, or any retirement or other benefits provided
to you, as the result of your employment by another employer after your
Termination Date.
In the event that you receive payments or other benefits in accordance
with Section 9(c) and/or 9(d), you will not be required to mitigate the amount
of such payments or other benefits, and the amount of such payments and other
benefits will not be reduced by any compensation earned by you, or any
retirement or other benefits provided to you, as the result of your employment
by the Company or another employer after the Succession Effective Date.
2. Separation Pay and Financial Counseling Benefits
Upon Termination on or before the Section 2 Final Anniversary Date, as
in effect on your Termination Date, you will be entitled to receive the
following payment and other benefits.
(a) Separation Pay. After Termination, you will be entitled to receive
as Separation Pay an amount equal to the greater of the two amounts calculated
pursuant to Section 2(a)(1) and 2(a)(2) below:
(1) two times the sum of: (x) an amount equal to your annual base
salary in effect on the Termination Date (or, if higher, an amount
equal to your highest annual base salary in effect at any time on or
after the Effective Date and before your Termination Date) (the higher
of such two annual base salary amounts hereafter the "Termination Date
Annual Base Salary"); and (y) an amount equal to your target annual
incentive award opportunity, if any, for the year in which your
employment is Terminated (or, if higher, an amount equal to the average
of your actual annual incentive awards for the two years immediately
preceding the year in which your employment is Terminated) (the higher
of such two annual incentive amounts hereafter the "Termination Date
Annual Incentive"); and
<PAGE> 4
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 4
(2) an amount equal to the aggregate of all severance/separation or
salary continuation payments, under any CBS Company plan(s) or
program(s) or otherwise, that you would otherwise be entitled to
receive on Termination.
Whether your Separation Pay is calculated pursuant to Section 2(a)(1)
or 2(a)(2), such payment will be provided solely pursuant to the terms of the
Agreement and not pursuant to any CBS Company plan or program.
This Separation Pay will be in lieu of any and all other
severance/separation or salary continuation payments you might otherwise have
been entitled to receive under any CBS Company plan or program or otherwise.
Your Separation Pay will be payable to you in a single lump sum payment
within 30 days after your Termination Date.
If you should die after your Termination Date but before you receive
your Separation Pay, such Separation Pay will be payable (at the same time and
in the same amount that would have been payable to you) to your surviving
spouse, if any, or, if you do not have a spouse or if your spouse predeceases
you, to your estate.
(b) Financial Counseling. You will be entitled to AYCO financial
counseling, or to similar financial counseling services provided by another
financial advisor selected by the Company, up to a cost to the Company of
$5,000, for a period of up to six (6) months after your Termination Date.
3. Supplemental Pension Payments
(a) Supplemental Pension Payments. Upon Termination, you will be
entitled to receive Supplemental Pension Payments, determined in accordance with
Section 3(b) if you are receiving Separation Pay pursuant to Section 2(a) or
determined in accordance with Section 3(c) if you are not receiving Separation
Pay pursuant to Section 2(a).
(b) Supplemental Pension Payments if Separation Pay is Applicable. If,
upon Termination, you are entitled to receive Separation Pay pursuant to Section
2(a), then you will receive Supplemental Pension Payments beginning in the month
immediately following the second anniversary of your Termination Date calculated
as set forth in the following paragraph and in the form you elect pursuant to
Section 3(d) below:
<PAGE> 5
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 5
Supplemental Pension Calculation. Your annual Supplemental Pension
Payment will be the larger of the two amounts calculated pursuant to Section
3(b)(1) and 3(b)(2) below, respectively, and will, in either case, be paid to
you net of the aggregate of any payments or other benefits you actually receive
under any CBS Company executive pension and/or executive retirement plans apart
from the Agreement (expressed as an annual amount calculated on the basis of a
single life annuity commencing on the second anniversary of your Termination
Date):
(1) an annual amount equal to your base amount (determined by
multiplying (x) 1.47%, times (y) your Section 3(b) Average Annual
Compensation, times (z) your number of years of Section 3(b) Credited
Service (including any fraction of a whole year)) minus your Section
3(b) Qualified Plan Benefit; and
(2) the aggregate annual supplemental pension amount (expressed as a
single life annuity) that would be payable to you under the terms of
all CBS Company executive pension and/or other executive retirement
plans that you are eligible to participate in as in effect on your
Termination Date as if you had remained an employee of the Company
until the second anniversary of your Termination Date with an annual
base salary equal to your Termination Date Annual Base Salary and had
received two additional annual incentive awards, each in an amount
equal to your Termination Date Annual Incentive, and as if you had met
all of the requirements/qualifications for benefits under said plans
and your employment had terminated on the second anniversary of your
Termination Date.
(c) Supplemental Pension Payments if Separation Pay is Not Applicable.
If your employment is Terminated but you are not eligible to receive Separation
Pay pursuant to Section 2(a), then you will receive Supplemental Pension
Payments beginning in the month immediately following your Termination Date
calculated as set forth in the following paragraph and in the form you elect
pursuant to Section 3(d) below:
Supplemental Pension Calculation. Your annual Supplemental Pension
Payment will be the larger of the two amounts calculated pursuant to Section
3(c)(1) and 3(c)(2) below, respectively, and will, in either case, be paid to
you net of the aggregate of any payments or other benefits you actually receive
under any CBS Company executive pension and/or executive retirement plans apart
from the Agreement (expressed as an annual amount calculated on the basis of a
single life annuity commencing on your Termination Date):
(1) an annual amount equal to your base amount (determined by
multiplying (x) 1.47%, times (y) your Section 3(c) Average Annual
Compensation, times (z) your number of years of Section 3(c) Credited
Service (including any fraction of a whole year)) minus your Section
3(c) Qualified Plan Benefit; and
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March 2, 1999
Page 6
(2) the aggregate annual supplemental pension amount (expressed as a
single life annuity) that would be payable to you under the terms of
all CBS Company executive pension and/or other executive retirement
plans that you are eligible to participate in as in effect on your
Termination Date as if you had met all of the
requirements/qualifications for benefits under said plans on your
Termination Date.
(d) Form of Payment of Supplemental Pension.
(1) The Supplemental Pension amount calculation pursuant to Section
3(b)(1) or 3(c)(1) is expressed as a single life annuity. However, if you are
receiving Supplemental Pension Payments pursuant to Section 3(b)(1) or 3(c)(1),
you may elect instead to receive your Supplemental Pension in accordance with
any one of the optional forms of payment available with respect to your Section
3(b) or 3(c) Qualified Plan Benefit, as applicable (other than as a lump sum),
subject to the same reductions or other provisions that would have applied with
respect to such form of payment had you elected such form of payment with
respect to your Section 3(b) or 3(c) Qualified Plan Benefit, as applicable. Such
payments will be made in monthly installments, each equal to one-twelfth
(1/12th) of the annual amount determined for the form of payment you select.
Regardless of the form of payment you elect, once you begin to receive
a Supplemental Pension calculated pursuant to Section 3(b)(1) or 3(c)(1), a
minimum of sixty (60) times the monthly payment you would have received on a
single life annuity basis (the "Guaranteed Amount") will be guaranteed as
follows. If you elected a single life annuity payment option and die before
receiving monthly payments which in the aggregate at least equal the Guaranteed
Amount, then an amount equal to the Guaranteed Amount less the aggregate of the
monthly Supplemental Pension Payments you received will be paid in a lump sum to
your properly designated beneficiary, or, if none, to your estate or otherwise
pursuant to the laws of descent and distribution. If you elected a survivor
annuity and both you and your spouse or other joint annuitant die before the two
of you have received monthly payments which in the aggregate at least equal the
Guaranteed Amount, then an amount equal to the Guaranteed Amount less the
aggregate of the monthly Supplemental Pension Payments you and your spouse or
other joint annuitant received will be paid in a lump sum to (i) your properly
designated beneficiary, or, if none, to your estate or otherwise pursuant to the
laws of descent and distribution, if your spouse or other joint annuitant
predeceases you, or (ii) your spouse's or other joint annuitant's properly
designated beneficiary, or, if none, to their estate or otherwise pursuant to
the laws of descent and distribution, if you die first.
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 7
A properly designated beneficiary is one that is so designated on a
form to be supplied to you or your surviving spouse or other joint annuitant by
the Company on request, which form is properly executed and delivered to the
Company.
(2) If your Supplemental Pension is calculated pursuant to Section
3(b)(2) or 3(c)(2), you may elect to receive your Supplemental Pension in any
form then available under the applicable CBS Company plan or plans, subject to
any reductions or other provisions that would apply to your elected form of
payment under such CBS Company plan(s).
(3) The form of payment must be elected prior to commencement of
payment of your Supplemental Pension.
(e) Death in Active Service: Surviving Spouse Payments. In the event
that, after the Effective Date, you die while an employee of any CBS Company and
leave a surviving spouse, your spouse will receive Supplemental Pension Payments
pursuant to the Agreement in the amount of 55% of the single life annuity amount
that would have been calculated pursuant to Section 3(c) if your employment had
Terminated on the date of your death, such payments to be made to your surviving
spouse net of the aggregate of any payments or other benefits your surviving
spouse actually receives as a surviving spouse under any CBS Company executive
pension and/or executive retirement plan(s) apart from the Agreement (expressed
as an annual amount calculated on the basis of a single life annuity for your
spouse commencing on the date of your death). In calculating the amount of the
Supplemental Pension you would have received pursuant to Section 3(c) had your
employment Terminated on the date of your death, the aggregate of the amounts
that your surviving spouse is entitled to receive under all CBS Company pension
plans as your surviving spouse (expressed as an annual amount calculated on the
basis of a single life annuity for your spouse commencing on your Termination
Date) will be substituted for the amounts you would have been entitled to
receive under such plans.
Surviving spouse Supplemental Pension Payments pursuant to Section 3(e)
will commence in the second month after your death and continue for the life of
your surviving spouse and will be payable in monthly installments, each equal to
one-twelfth (1/2th) of the annual amount determined as set forth in the
immediately preceding paragraph. An additional payment will be made with the
first monthly payment equal to the regular monthly payment amount, as payments
commence in the second month after your death rather than the first such month.
Once your surviving spouse begins receiving Supplemental Pension Payments
pursuant to Section 3(e), a minimum of sixty (60) payments will be guaranteed.
In the event that your surviving spouse dies before she has received at least
sixty (60) of such payments, then an amount equal to sixty (60) such payments
less the aggregate of the monthly Supplemental Pension Payments your surviving
spouse received will be paid in a lump sum to your spouse's properly designated
beneficiary, or, if none, to her estate or otherwise pursuant to the laws of
descent and distribution.
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
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Page 8
A properly designated beneficiary is one that is so designated on a
form to be supplied to your surviving spouse by the Company on request, which
form is properly executed and delivered to the Company.
(f) No Actuarial Reduction for Early Commencement. There will be no
actuarial reduction for commencement of Supplemental Pension Payments at the
time specified in the Agreement rather than at any later time.
(g) Supplemental Pension Payments, whether calculated pursuant to
Section 3(b), 3(c) or 3(e), will be provided solely pursuant to the terms of the
Agreement and not pursuant to any CBS Company plan or program, including,
without limitation, the Westinghouse Executive Pension Plan.
(h) In no event will the value of any stock options or any 401(k) plan
benefits be considered in any way when determining the amount of any payments to
be made pursuant to Section 3.
4. Certain Welfare Benefits
(a) Upon Termination after the Effective Date, subject to Section 4(c)
below, you will be eligible for continued participation in all CBS Company
health care, dental, vision care and life insurance programs in which you are
participating on your Termination Date as such programs are in effect from time
to time, and at employee contribution levels for the coverage selected that are
applicable to senior-level executives from time to time, until the earlier of
(1) the date on which you attain age 55 or (2) the date on which you receive, or
are eligible to receive, comparable or greater benefits under the plans and
programs of a subsequent employer (such comparability to be determined by the
Company on the basis of aggregate welfare benefits).
(b) Further, subject to Section 4(c) below, after Termination and after
you attain the age of 55, you will be eligible to participate in such Company
retiree welfare benefits, if any, as may be in effect from time to time, and at
the retiree contribution levels for the coverage selected, as if you were a
Company retiree until the earlier of (1) the date on which you attain age 65 or
(2) the date on which you receive, or are eligible to receive, comparable or
greater benefits under the plans and programs of a subsequent employer (such
comparability to be determined by the Company on the basis of aggregate welfare
benefits).
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
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Page 9
(c) In the event that you are precluded from so continuing your
participation in these CBS Company employee benefit plans or programs or are
precluded from participating in such Company retiree programs, in either case by
the terms of such plans or programs, then, at the election of the Company, the
Company will either (1) provide you with an equivalent benefit, (2) reimburse
you for the cost of obtaining an equivalent benefit (based on the lowest
available cost), or (3) pay you a lump sum amount as determined by a reputable
consultant in the employee benefits area selected by the Company as a reasonable
estimate of the amount that would be sufficient, on a present value basis using
such actuarial assumptions as such consultant deems appropriate, for you to
obtain such benefits, less your applicable contribution level as set forth in
Section 4(a) and/or 4(b) above.
5. Stock Option Benefits
If, at any time after the Effective Date, your employment is
Terminated, then notwithstanding the terms of any of your Company stock option
agreement(s) that may be to the contrary, any Company stock options you may have
that are outstanding on your Termination Date ("Stock Options") will not
automatically terminate when you cease to be an employee of the Company and/or
its Subsidiaries upon your Termination. Such of your Stock Options, if any, as
are not yet exercisable as of your Termination Date will become exercisable
("vest") by you beginning on their normal vesting date(s) (i.e., the date(s) on
which the Stock Options would have vested had you still been an employee) as
long as they do not terminate earlier for some reason other than termination of
employment. Those Stock Options, once vested, together with your then
outstanding Stock Options, if any, that are vested and have not yet been
exercised at the time of your Termination, will be exercisable by you in
accordance with their terms as set forth in your Company stock option
agreement(s) as modified hereby.
Once your Company Stock Options vest, they will be exercisable by you
at any time prior to the time when the option term(s) expire (or such earlier
time as may be provided in the relevant Company long-term incentive plan in the
event that you fail to comply with any condition or conditions that may be set
forth in such plan).
If, after the Effective Date, you should die either while an employee
of any CBS Company or after your Termination Date but in either case before your
Company Stock Options cease to be exercisable by you as set forth above, any
nonvested Stock Options outstanding on the date of your death will vest
immediately, and those Stock Options, together with your then outstanding Stock
Options that are vested and have not yet been exercised at the time of your
death, will be exercisable (but only to the extent that the Stock Options would
have been exercisable by you) by a properly designated beneficiary
<PAGE> 10
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 10
or by your estate until the earlier of (1) the time when they would have ceased
to be exercisable by you had you not died, and (2) two years after the date of
your death; provided, however, that if the terms of any Stock Options
outstanding on the date of your death provide for a longer exercise period than
two years after the date of your death, that longer exercise period will apply
to those options.
Any reload feature of your Company Stock Options which may have been
available prior to your Termination will cease to be available effective as of
your Termination.
If your employment with the Company and/or its Subsidiaries is
terminated for Cause, all of your Company stock options will be canceled upon
such termination.
All of your Company Stock Options are subject to the terms of your
Company stock option agreement(s), as modified hereby. You should note that
under certain of your Company Stock Option agreement(s), those Stock Options are
also subject to early termination in the event that you fail to comply with
certain conditions regarding competition and availability for consultation.
In the event that, for any reason, your Company Stock Options cannot be
modified so as to give effect to the provisions of the Agreement, whether
because of the terms of the plan or plans pursuant to which they are granted or
otherwise, then you (or your properly designated beneficiary or your estate, as
applicable) will be granted replacement options, upon surrender of such Company
Stock Options, such that the replacement options will provide the stock option
benefits intended to be provided pursuant to the Agreement.
6. Home Sale Payment
If (a) your employment is Terminated after the Effective Date and prior
to the third anniversary of the Effective Date and (b) within the twenty-four
(24) month period after your Termination you relocate your primary residence out
of the New York, New York commuting area (or you change your primary residence
in the New York, New York commuting area to another residence in the New York,
New York commuting area with a price lower than your Cost (as defined below)),
then you will be entitled to receive the payment set forth in the following
paragraph.
In the event that, after putting and maintaining such residence in
marketable condition and after using reasonable efforts to sell such residence
for a period of at least sixty (60) days, you are unable to sell your primary
residence in the New York, New York commuting area at a price which, after
payment of brokerage fees, would be at least
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
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Page 11
equal to the price at which you purchased such residence plus the cost of any
capital improvements which you have made to such residence (together, the
"Cost"), the Company will purchase said residence from you for an amount equal
to said Cost (less any amount you receive from a new employer as a housing
benefit related to the Cost) upon reasonable substantiation of said Cost and of
your selling efforts.
In order to receive this home sale payment, you must (1) notify the
Company within the 24 month period after such Termination that you are
relocating or changing your primary residence as set forth in the first
paragraph of Section 6 above and that you have initiated the 60 day sale process
described in the second paragraph of Section 6 above and (2) present to the
Company, no later than ninety (90) days after the date of such notice, your
request that the Company purchase said residence from you, together with
reasonable substantiation of your Cost and of your selling efforts.
7. Certain Limitations
(a) In the event that the payments and other benefits conferred
pursuant to the Agreement, taken together with all other payments made and other
benefits provided to you, would result in any of such payments or other benefits
being deemed an "excess parachute payment" pursuant to Section 280G of the
Internal Revenue Code of 1986, as amended, or other similar provision, then the
financial counseling and welfare benefits, if any, conferred under Section 2(b)
and Section 4, respectively, will be reduced to the maximum amount which, if
paid, would not result in any of such payments or other benefits being deemed an
"excess parachute payment."
(b) In the event that after reduction pursuant to Section 7(a) above,
if any, the payments and other benefits conferred pursuant to the Agreement
would still, when taken together with all other payments made and other benefits
provided to you, result in any of such payments or other benefits being deemed
an "excess parachute payment" pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended, or other similar provision, then the Company will
compare the following two tentative amounts:
(1) the total of (x) all other payments and other benefits to be made
to you, plus (y) the payments and other benefits conferred pursuant to
the Agreement reduced to the maximum amount which, if paid, would not
result in any of such payments or other benefits being deemed an
"excess parachute payment;" and
(2) the total of all payments and other benefits to be made to you,
including those conferred pursuant to the Agreement, less the amount of
tax which would be incurred by you on all such payments and other
benefits under Section 4999(a) of the Internal Revenue Code of 1986, as
amended.
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
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Page 12
If the tentative amount calculated as set forth in Section 7(b)(2)
above is less than the tentative amount calculated as set forth in Section
7(b)(1) above, then the payments and other benefits conferred pursuant to the
Agreement will be reduced to the maximum amount which, if paid, would not result
in any of such payments or other benefits being deemed an "excess parachute
payment."
If, however, the tentative amount calculated as set forth in Section
7(b)(2) above is greater than the tentative amount calculated as set forth in
Section 7(b)(1) above, then the payments and other benefits conferred pursuant
to the Agreement will not be subject to reduction pursuant to the provisions of
this Section 7(b).
(c) In the event that the payments or other benefits to be received
under the Agreement are reduced by reason of Section 7(b), then in determining
the priority of the payments and other benefits to be provided hereunder, the
Company will: (i) first vest all of the stock options possible under the terms
of Section 5, and only then (ii) provide for Supplemental Pension Payments as
set forth in Section 3(b) or 3(c), as applicable, and only then (iii) pay any
Separation Pay to be paid pursuant to Section 2(a), and only then (iv) provide
for any home sale payment pursuant to the terms of Section 6, in each case to
the extent possible within the limits imposed by Section 7(b).
8. Certain Conditions
(a) Payments under the Agreement will be made less all applicable tax
withholdings and deductions authorized by you.
(b) You acknowledge and agree that the consideration provided by the
Company to you under the Agreement, including without limitation payments or
other benefits to be made or provided by the Company to you pursuant to Sections
2, 3(b) or 3(c), 4, 5, 6 and/or 9, if any, is greater than and in addition to
anything of value that you otherwise would be entitled to receive from the
Company, and that the obligations assumed by you under the Agreement and in the
Release are given and undertaken in consideration of, and are adequately
supported by, the payments to be made and/or other payments to be provided to
you by the Company under and pursuant to the Agreement.
(c) In addition to compliance with the terms and provisions of any
applicable plans or programs, as they may be modified hereby, pursuant to which
any of such payments and/or other payments are provided, payment of any of the
amounts and the providing of any of the other payments referred to or set forth
in Sections 2, 3(b) or 3(c), 4, 5 and/or 6 is also subject to the following:
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 13
(i) your granting the CBS Companies and any Spin-off Companies a
general release (the "Release") substantially in the form
attached to the Agreement (with such changes, if any, as may
be appropriate in light of any intervening changes in law to
provide the CBS Companies and any Spin-off Companies with the
same level of protection as provided in the form attached);
(ii) your not revoking the Release within the period provided
therein; and
(iii) your complying with all of your other obligations as set forth
in the Agreement and in the Release.
No payment will be made, or other payment provided, by the Company
pursuant to Sections 2, 3(b) or 3(c), 4, 5 and/or 6 until the conditions set
forth in Section 8(c)(i) and (ii) above have been met.
(d) Payments and other payments provided in accordance with Section 9
will be subject to your complying with all of your obligations as set forth in
the Agreement. However, notwithstanding anything in the Agreement to the
contrary, payments and other payments provided in accordance with Section 9(c)
and/or 9(d) will not be subject to the conditions set forth in Section 8(c)(i)
and (ii) above or to the portion of Section 8(c)(iii) above relating to a
Release.
9. Successors and Assigns
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly, in a form
acceptable to you, and to perform the Agreement.
(b) Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession will be a breach of the
Agreement. Upon any such breach of the Agreement by the Company, in addition to
any other remedies which may be available to you (including but not limited to
equitable remedies), you will be entitled to receive payments and other benefits
from the Company pursuant to the Agreement as if your employment with the
Company had been Terminated on the date on which any such succession becomes
effective (the "Succession Effective Date"). The provisions of this Section 9(b)
will be implemented as set forth in Section 9(c) with respect to stock options
and as set forth in Section 9(d) with respect to payments and other benefits
pursuant to the Agreement.
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
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Page 14
(c) For the purpose of implementing Section 9(b), any Company stock
options that you may have that are outstanding immediately prior to the time
such succession becomes effective (the "Succession Effective Time") will, if
they are not already exercisable, become exercisable by you beginning
immediately prior to the Succession Effective Time, and those stock options,
together with your Company stock options that were already exercisable, will
remain exercisable in accordance with their terms as modified by Section 5.
Further, in the event that any adjustments favorable to the employee-holder are
made to any Company stock options with respect to or in connection with such
succession (including but not limited to the conversion of such stock options
to, or replacement of such stock options with, stock options of such successor),
your Company stock options will be treated in the same manner as those of the
employee or employees who receive the adjustments most favorable to the
employee(s).
(d) Further, for the purpose of implementing your entitlement to
receive payments and other benefits from the Company pursuant to the Agreement
as set forth in Section 9(b), except as otherwise provided in Section 9(c) with
respect to your Company stock options, you will be deemed to be entitled to all
of such payments and other payments from the Company immediately prior to the
Succession Effective Time; and notwithstanding anything in the Agreement to the
contrary, upon written demand by you to the Chief Executive Officer of the
Company, at your sole discretion, the Company will deliver such payments and
other benefits to you immediately prior to the Succession Effective Time in the
form of a lump sum, cash payment in immediately available funds consisting of
the following:
(i) an amount equal to your Separation Pay pursuant to Section 2(a), if
the Succession Effective Date is on or before the Section 2 Final
Anniversary Date;
(ii) the amount of $5,000 in lieu of financial counseling benefits
pursuant to Section 2(b), if the Succession Effective Date is on or
before the Section 2 Final Anniversary Date;
(iii) an amount equal to the actuarial equivalent on a lump sum basis
(determined in accordance with Section 9(e)) of the Supplemental
Pension Payments which you would otherwise be entitled to receive
pursuant to Section 3(b) or 3(c), as applicable, on a single life
annuity basis if your employment with the Company had been Terminated
on the Succession Effective Date;
(iv) an amount equal to the lump sum amount determined in accordance
with Section 4(c)(3) in lieu of any welfare benefits pursuant to
Section 4; and
(v) an amount equal to (a) your Cost (as defined in Section 6), minus
(b) the
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 15
fair market value of your primary residence in the New York, New York
commuting area immediately prior to the Succession Effective Time, as
determined by two real estate appraisers selected by you at the
Company's expense.
(e) For purposes of Section 9(d)(iii), the actuarial equivalent of your
Supplemental Pension Payments on a lump sum basis will be determined based on
(i) your age on the Succession Effective Date, (ii) the prevailing Internal
Revenue Commissioner's standard table (described in Section 807(d)(5)(A) (or its
successor provision) of the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute or statutes (the "Internal Revenue Code"), and
without regard to any other subparagraph of such Internal Revenue Code Section
807(d)(5)(A)) used to determine reserves for group annuity contracts issued on
the Succession Effective Date that is prescribed by the Internal Revenue
Commissioner in guidance published in the Internal Revenue Bulletin, and (iii)
the rate of interest equal to the annual interest rate on 30-year Treasury
securities as specified by the Internal Revenue Commissioner for the first full
month preceding the calendar month in which the Succession Effective Date
occurs.
(f) For purposes of Section 9(d)(iii), there will be no actuarial
reduction applied for the early deemed commencement of your Supplemental Pension
Payments at the Succession Effective Date rather than at any later time prior to
determining the actuarial equivalent of such payments on a lump sum basis in
accordance with Section 9(e).
(g) In no event will the value of any stock options or any 401(k) plan
benefits be considered in any way when determining the amount of any payments to
be made pursuant to Section 9(d)(iii).
10. General
(a) By your signature accepting the Agreement you resign, effective as
of the Termination Date, from any and all offices and positions with CBS
Corporation and any of its Subsidiaries or affiliates to which you have been
elected or appointed and from all administrative, fiduciary or other positions
you may hold with respect to arrangements or plans for, of or relating to, CBS
Corporation or any of its Subsidiaries or affiliates.
(b) You acknowledge and agree that the separation payment set forth in
the Agreement is the only severance/separation or salary continuation payment
that you will receive from the CBS Company(ies), and that you will be waiving
any retention incentive payments and any other separation/severance or salary
continuation payments that you
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Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
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Page 16
might otherwise be entitled to receive from CBS Corporation or its Subsidiaries
or affiliates, including but not limited to separation payments under any and
all CBS Company plans or programs or otherwise.
(c) Certain Definitions. These terms or phrases will have the following
meanings when used in the Agreement.
(i) "Cause" will mean either of the following on your part: (1) being
convicted in a court of law of (i) a felony or (ii) any lesser crime or
offense than a felony which has caused demonstrable and serious injury
to the Company and involves the property of the Company or any of its
Subsidiaries: or (2) being guilty of willful gross neglect of duties or
other willful grave misconduct in carrying out your duties with the CBS
Companies; provided, however, that no act or failure to act will be
deemed "Cause" if done, or omitted to be done, in good faith with a
reasonable belief that the action or inaction was in the best interests
of the Company.
(ii) "CBS Company" will mean the Company or any Subsidiary of the
Company or any Parent of the Company.
(iii) "Company" will mean CBS Corporation and any successor to its
business and/or assets as described in Section 9 which assumes and
agrees to perform the Agreement, by operation of law or otherwise.
(iv) "Effective Date" will mean the effective date of the Agreement as
set forth in Section 12.
(v) "Good Reason" will mean: (1) the occurrence without your express
written consent of any of the following, when considered on the basis
of a comparison to your overall job situation immediately prior to such
event: (a) a material change or reduction in your title or the scope of
your responsibilities and duties, a change in your reporting
relationship such that you report to someone other than the Chairman or
the Chief Executive Officer of the Company, or a substantial reduction
in your authority with respect to policy decisions or financial
approvals; provided, however, that a change that increases the scope of
your responsibilities and duties or results in your having a more
senior title will not itself be considered such a change; (b) requiring
you to be based at any location that is different from the location
where the most senior executives officers of the Company are based; or
(c) except in each case as part of an across-the-board reduction
applicable to all senior-level executives of the Company and its major
Subsidiaries that is proportionate as applied to you, (i) a reduction
in your base salary; (ii) a reduction in your target annual or
long-term incentive award
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Page 17
opportunity; or (iii) the termination or material reduction of your
participation in otherwise applicable executive benefit plans or
programs; or (2) the failure by the Company or any of its Subsidiaries
to make any payments or provide any other benefits to you when due and
such default by the Company and/or its Subsidiaries continues
unremedied for a period of 15 days after notice of such default is
given by you to the Chief Executive Officer of the Company.
(vi) "Parent of the Company" will mean any corporation that owns stock
possessing at least 50% of the voting power of the Company, either
directly or through one or more of its Subsidiaries.
(vii) "Release" will have the meaning set forth in Section 8(c)(i).
(viii) "Section" will refer to a section of the Agreement unless
otherwise indicated.
(ix) "Section 2 Final Anniversary Date" will have the meaning set forth
in Section 1(a).
(x) "Section 3(b) Average Annual Compensation" will mean the amount
equal to the sum of: (x) 12 times the amount equal to the average of
the five highest numbers out of the following 10 numbers: the first
eight numbers, respectively, being the numbers equal to your respective
monthly base salaries on the eight consecutive December 1sts which
immediately precede your Termination Date, and the ninth and tenth
numbers each being the number equal to one-twelfth (1/12th) of the
number which equals the amount of your Termination Date Annual Base
Salary; and (y) the amount equal to the average of the five highest
numbers out of the following 10 numbers: the first eight numbers,
respectively, being your annual incentive compensation awards, if any,
paid under the Company's annual incentive program(s) during the eight
year period immediately preceding your Termination Date, and the ninth
and tenth numbers each being the number equal to the amount of your
Termination Date Annual Incentive; provided, however, if your base
salary is reduced during the 12 month period immediately preceding your
Termination Date, then for purposes of calculating your Section 3(b)
Average Annual Compensation, the most recent December 1 monthly base
salary number and the most recent annual incentive compensation award
number in the eight year period immediately preceding your Termination
Date will be replaced by the same number that is used for the ninth and
tenth numbers in such series, if higher.
<PAGE> 18
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 18
(xi) "Section 3(b) Credited Service" will mean the period from your
first day of service as an employee of the Company to the second
anniversary of your Termination Date.
(xii) "Section 3(b) Qualified Plan Benefit" will mean the aggregate of
the amounts that you are entitled to receive under all CBS Company
defined benefit pension plans and defined contribution pension plans in
which you participate or have participated prior to your Termination
Date in each case expressed as an annual amount calculated on the basis
of a single life annuity commencing on the second anniversary of your
Termination Date, whether or not you could or do actually obtain
payment of those benefits in that form.
(xiii) "Section 3(c) Average Annual Compensation" will mean the amount
equal to the sum of: (x) 12 times the amount equal to the average of
the five highest of the ten respective numbers which are equal to your
respective monthly base salaries on the ten consecutive December 1sts
which immediately precede your Termination Date; and (y) the amount
equal to the average of the five highest of the ten numbers equal to
your annual incentive compensation awards, if any, paid under the
Company's annual incentive program(s) during the ten year period
immediately preceding your Termination Date; provided, however, if your
base salary is reduced during the 12 month period immediately preceding
your Termination Date, then for purposes of calculating your Section
3(c) Average Annual Compensation, the most recent December 1 monthly
base salary number and the most recent annual incentive compensation
award number in the ten year period immediately preceding your
Termination Date will, in each case, be replaced by the following, if
higher: in the case of the December 1 monthly base salary, the number
equal to 1/12th of the number equal to your Termination Date Annual
Base Salary; and in the case of the annual incentive compensation award
number, the amount of your Termination Date Annual Incentive.
(xiv) "Section 3(c) Credited Service" will mean the period from your
first day of service as an employee of the Company to your Termination
Date.
(xv) "Section 3(c) Qualified Plan Benefit" will mean the aggregate of
the amounts that you are entitled to receive under all CBS Company
defined benefit pension plans and defined contribution pension plans in
which you participate or have participated prior to your Termination
Date, in each case expressed as an annual amount calculated on the
basis of a single life annuity commencing on your Termination Date
whether or not you could or do actually obtain payment of those
benefits in that form.
(xvi) "Separation Pay" will mean the payment set forth in Section 2(a).
<PAGE> 19
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 19
(xvii) "Spin-off Companies" will mean any company or companies that the
Company may spin off to its shareholders, together with such spin-off
company's subsidiaries, affiliates, and their respective successors and
assigns.
(xviii) "Subsidiary" will mean, unless the context otherwise requires,
any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations
other than the last corporation in such chain owns stock possessing at
least 50% of the voting power in one of the other corporations in such
chain.
(xix) "Supplemental Pension Payment(s)" will mean the payment(s) set
forth in Section 3.
(xx) "Termination" (or your employment being "Terminated") will mean
that you are no longer an employee of the Company and ceased to be so
employed either because (1) your employment with the Company is
terminated by the Company (other than by reason of your death or for
Cause) or (2) you terminate your employment with the Company for Good
Reason or (3) for purposes of the payments and other benefits set forth
in Sections 3 and 5 only, you terminate your employment with the
Company for any reason (other than for Good Reason, which is dealt with
in Section 10(c)(xx)(2)) on or after the earlier of (i) your 58th
birthday and (ii) the earliest date on which you qualify for retirement
under a CBS Company pension plan in which you then participate.
Your ability to terminate your employment with the Company for
Good Reason will not be affected by any inability on your part to
perform your regular duties with the CBS Companies due in whole or in
part to any physical or mental infirmity.
(xxi) "Termination Date" will mean the date on which your employment is
Terminated and you are no longer an employee of the Company.
(xxii) "Termination Date Annual Incentive" will have the meaning set
forth in Section 2(a)(1)(y).
(xxiii) "Termination Date Annual Base Salary" will have the meaning set
forth in Section 2(a)(1)(x).
(d) Nothing in the Agreement will operate or be construed as a contract
or assurance of or a right to continued employment with the Company or any of
its affiliates, or will interfere in any way with the right of the Company or
any of its affiliates to terminate your employment at any time for any reason,
with or without Cause.
<PAGE> 20
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 20
11. Other agreements, obligations and understandings
(a) Payments pursuant to the Agreement are not eligible for deferral
under any Company Deferred Incentive Compensation Program. Payment of any
incentive compensation awards that you may have deferred in the past under the
terms of a Company Deferred Incentive Compensation Program that have not yet
been paid as of your Termination Date will be made to you in accordance with the
terms of that program as in effect from time to time, beginning in the January
following your Termination Date. You should contact Mr. Anthony Kaddo at AYCO
(1-800-342-2779) prior to your Termination Date to make any necessary elections
regarding the payment of any deferral account or accounts you may have.
(b) Receipt of any and all payments and other benefits pursuant to the
Agreement will be subject to the limitations and conditions set forth in Section
1(a). Breach of the Agreement and/or the Release, where applicable, will be
deemed to have occurred and payments and other benefits will be suspended
immediately upon your failure to comply with any of such obligations. Payments
and other benefits suspended for breach of any of your obligations will not
thereafter be resumed unless the Company determines that no breach has occurred,
whether or not you terminate the activity or activities which resulted in such
breach.
(c) If you should breach the Agreement, nothing stated in the Agreement
will be construed as prohibiting the CBS Companies and/or the Spin-off Companies
from pursuing all judicial legal and equitable rights and remedies available to
them, including but not limited to equitable relief and the recovery of all
other legal relief, such as lost profits, attorneys' fees, and compensatory
damages, from you.
If the Company should breach any of its obligations to you pursuant to
Section 9, nothing stated in the Agreement will be construed as prohibiting you
from pursuing all judicial legal and equitable rights and remedies available to
them, including but not limited to equitable relief and the recovery of all
other legal relief, such as attorneys' fees and compensatory damages, from the
Company.
(d) If for any reason any provision of the Agreement is held to be
invalid, illegal or unenforceable, such provision will be deemed modified to the
minimum extent necessary to make such provision consistent with applicable law
and the remaining provisions of the Agreement will not be affected and will
remain in full force and effect.
<PAGE> 21
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 21
(e) Except as otherwise provided in the Agreement, your participation
in and rights under any employee benefit plans (as defined in the Employee
Retirement Income Security Act of 1974, as amended (ERISA)), any incentive or
deferral plans of the Company, and any stock option plans of the Company will be
governed by the terms and provisions of such plans.
(f) The Agreement will be binding upon and inure to the benefit of you
and the Company, its successors and assigns; provided, however, that the Company
will require its successors and assigns to expressly assume, agree to perform,
and perform the Agreement in the same manner and to the same extent that the
Company would be required to perform the Agreement if no such succession and
assignment had taken place. Your rights hereunder may not be transferred or
assigned in any way (whether by operation of law or otherwise) and your duties
hereunder may not be delegated without the prior written consent of the Company.
(g) The Agreement is made and entered into in the State of New York,
and will in all respects be interpreted, enforced and governed by and under the
law of the State of New York without reference to principles of conflict of
laws. The Agreement, together with the Release, your Employee Intellectual
Property Agreement with the Company and your Company stock option agreement(s),
if any, supersedes and replaces all prior commitments, negotiations,
representations, agreements and understandings made to or with you, whether oral
or written, with respect to the subject matter hereof. The Agreement may be
amended, modified or waived only by a written agreement executed by both of the
parties hereto. No waiver of any provision of the Agreement at any one time will
be deemed a waiver of such provision at any subsequent time. The headings of the
Sections and subsections of the Agreement are inserted for convenience only.
Such headings will not affect the meaning of any of the provisions of the
Agreement and will not be deemed a part of the Agreement.
12. Conditions to Effectiveness
Upon execution by both you and CBS Corporation, the Agreement will be
effective as of March 2, 1999 (the "Effective Date").
<PAGE> 22
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 22
If the Agreement is acceptable to you, please sign the original copy of
the Agreement and return it to me at CBS Corporation. You should keep a copy of
the Agreement for your records. By signing and returning the unmodified original
copy of the Agreement, you acknowledge that you understand and accept the terms
and conditions set forth above.
Sincerely,
CBS CORPORATION
By: /s/ David T. McLaughlin
---------------------------
David T. McLaughlin
Chairman
cc: A.C. Straka Date: April 15, 1999
K. Beldegreen -------------------------
<PAGE> 23
Mr. Louis J. Briskman CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 23
ACCEPTANCE
I acknowledge that I have read, understand and agree with and to the
terms and conditions stated in the foregoing Agreement. By my signature I
acknowledge that the consideration set forth in the Agreement is adequate
compensation for all of my agreements contained herein and in the Release, that
I have had the opportunity to consult with counsel of my own choosing regarding
the Agreement, and that in signing the Agreement, I intend to be legally bound
by it.
/s/ Louis J. Briskman April 8, 1999
----------------------------- -----------------
Louis J. Briskman Date
<PAGE> 1
Exhibit 10(Q)
[CBS LOGO]
CBS CORPORATION Mel Karmazin 51 West 52nd Street
President & Chief Executive Officer New York, NY 10019
CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Mr. Fredric G. Reynolds
Executive Vice President
and Chief Financial Officer
CBS Corporation
51 West 52nd Street
New York, New York 10019
Dear Fred:
CBS Corporation (the "Company") recognizes the importance of
maintaining a high level of executive performance and expertise and of retaining
the services of certain Company executives, such as yourself, who are key to the
execution of corporate strategy. The purpose of this letter agreement
("Agreement") is to provide an incentive for you to remain with the Company as
an executive by providing you with assurances that you will receive certain
payments and/or other benefits in the event that your employment with the
Company terminates under the circumstances set forth herein, as long as you
comply with all of the terms and conditions of the Agreement.
The Agreement is intended to set forth the terms and conditions to
which you and the Company have agreed regarding the termination of your
employment under certain circumstances, and supersedes all prior agreements and
understandings with respect to the subject matter hereof, including but not
limited to the employment letter to you from Westinghouse Electric Corporation
(which, on and after December 1, 1997 is known as CBS Corporation) dated January
31, 1994.
Certain capitalized terms and phrases used in the Agreement are defined
in Section 7(c) below.
<PAGE> 2
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 2
1. Eligibility for Payments and Other Benefits
(a) Limitations and Conditions. In addition to any further limitations
and/or conditions that may be set forth in the Agreement with respect to a
particular payment or other benefit, your receipt of any and all payments and
other benefits under the Agreement is subject to the limits set forth in Section
4 and subject to your compliance with all of the provisions of Section 5 and the
terms and conditions of any applicable plans or programs, as they may be
modified hereby, pursuant to which you receive such payments or other benefits.
(b) Eligibility for Separation Pay Pursuant to Section 2. You will be
eligible to receive the separation payment set forth in Section 2, in lieu of
any and all other separation/severance payments or salary continuation payments,
if your employment is Terminated after the Effective Date and on or before the
fifth anniversary of the Effective Date or such later anniversary of the
Effective Date as may be determined from time to time pursuant to the following
paragraph (the "Section 2 Final Anniversary Date").
On March 2 of each year, beginning in 2000, the Section 2 Final
Anniversary Date will be automatically extended for one additional year unless,
prior to such March 2, the Company notifies you to the contrary in writing.
(c) Eligibility for Stock Option Benefits Pursuant to Section 3. You
will be eligible to receive the stock option benefits set forth in Section 3,
subject to your compliance with all of the terms and conditions of your Stock
Options, as modified by the Agreement, if your employment is Terminated at any
time after the Effective Date.
(d) Mitigation. You will not be required to mitigate the amount of any
payment or other benefit provided for in Sections 2 and/or 3, and the amount of
any payments and/or other benefits which would otherwise be provided to you
pursuant to Sections 2 and/or 3 will not be reduced by any compensation earned
by you, or any retirement or other benefits provided to you, as the result of
your employment by another employer after your Termination Date.
In the event that you receive payments or other benefits in accordance
with Section 6(c) and/or 6(d), you will not be required to mitigate the amount
of such payments or other benefits, and the amount of such payments and other
benefits will not be reduced by any compensation earned by you, or any
retirement or other benefits provided to you, as the result of your employment
by the Company or another employer after the Succession Effective Date.
<PAGE> 3
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 3
2. Separation Pay
Upon Termination on or before the Section 2 Final Anniversary Date, as
in effect on your Termination Date, you will be entitled to receive the
following payment as Separation Pay.
After Termination, you will be entitled to receive as Separation Pay an
amount equal to the greater of the two amounts calculated pursuant to Section
2(1) and 2(2) below:
(1) two times the sum of: (x) an amount equal to your annual base
salary in effect on the Termination Date (or, if higher, an amount
equal to your highest annual base salary in effect at any time on or
after the Effective Date and before your Termination Date); and (y) an
amount equal to your target annual incentive award opportunity, if any,
for the year in which your employment is Terminated (or, if higher, an
amount equal to the average of your actual annual incentive awards for
the two years immediately preceding the year in which your employment
is Terminated); and
(2) an amount equal to the aggregate of all severance/separation or
salary continuation payments, under any CBS Company plan(s) or
program(s) or otherwise, that you would otherwise be entitled to
receive on Termination.
Whether your Separation Pay is calculated pursuant to Section 2(1) or
2(2), such payment will be provided solely pursuant to the terms of the
Agreement and not pursuant to any CBS Company plan or program.
This Separation Pay will be in lieu of any and all other
severance/separation or salary continuation payments you might otherwise have
been entitled to receive under any CBS Company plan or program or otherwise.
Your Separation Pay will be payable to you in a single lump sum payment
within 30 days after your Termination Date.
If you should die after your Termination Date but before you receive
your Separation Pay, such Separation Pay will be payable (at the same time and
in the same amount that would have been payable to you) to your surviving
spouse, if any, or, if you do not have a spouse or if your spouse predeceases
you, to your estate.
3. Stock Option Benefits
(a) Any Company stock options that you may receive pursuant to the
<PAGE> 4
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 4
Company's Fund the Future program will continue to be governed by their own
terms and conditions and will not be modified or otherwise affected by the
Agreement. The provisions of Section 3(b) will apply to any other Company stock
options you may have that are outstanding on your Termination Date ("Stock
Options").
(b) If, at any time after the Effective Date, your employment is
Terminated, then notwithstanding the terms of any of your Company Stock Option
agreement(s) that may be to the contrary, your Stock Options will not
automatically terminate when you cease to be an employee of the Company and/or
its Subsidiaries upon your Termination.
Such of your Stock Options, if any, as are not yet exercisable as of
your Termination Date will become exercisable ("vest") by you beginning on their
normal vesting date(s) (i.e., the date(s) on which the Stock Options would have
vested had you still been an employee), as long as they do not terminate earlier
for some reason other than termination of employment, provided that such normal
vesting date occurs no later than the second anniversary of your Termination
Date. Once vested, your Stock Options will be exercisable by you in accordance
with their terms as set forth in your Company Stock Option agreement(s) as
modified hereby.
Any Stock Options that have not yet vested will be canceled at the
close of business on the second anniversary of your Termination Date.
Your vested Stock Options will be exercisable by you at any time prior
to the earlier of (i) the time when the option term(s) expire and (ii) the close
of business on the second anniversary of your Termination Date (or, in any case,
such earlier time as may be provided in the relevant Company long-term incentive
plan in the event that you fail to comply with any condition or conditions that
may be set forth in such plan).
If, after the Effective Date, you should die either while an employee
of any CBS Company or otherwise before the second anniversary of your
Termination Date but in either case before your Stock Options cease to be
exercisable by you as set forth above, any nonvested Stock Options outstanding
on the date of your death will vest immediately, and those Stock Options,
together with your then outstanding Stock Options that are vested and have not
yet been exercised at the time of your death, will be exercisable (but only to
the extent that the Stock Options would have been exercisable by you) by a
properly designated beneficiary or by your estate until the earlier of (1) the
time when they would have ceased to be exercisable by you had you not died, and
(2) two years after the date of your death; provided, however, that if the terms
of any Stock Options outstanding on the date of your death provide for a longer
exercise period than two years after the date of your death, that longer
exercise period will apply to those options.
<PAGE> 5
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 5
Any reload feature which may have been available prior to your
Termination with respect to certain of your Stock Options will cease to be
available effective as of your Termination.
If your employment with the Company and/or its Subsidiaries is
terminated for Cause, all of your Company stock options will be canceled upon
such termination.
All of your Stock Options are subject to the terms of the applicable
Company Stock Option agreement(s), as modified hereby. You should note that
under your Company Stock Option agreement(s), Stock Options are also subject to
early termination in the event that you fail to comply with certain conditions
regarding competition and availability for consultation.
In the event that, for any reason, your Stock Options cannot be
modified so as to give effect to the provisions of the Agreement, whether
because of the terms of the plan or plans pursuant to which they are granted or
otherwise, then you (or your properly designated beneficiary or your estate, as
applicable) will be granted replacement options, upon surrender of such Stock
Options, such that the replacement options will provide the stock option
benefits intended to be provided pursuant to the Agreement.
4. Certain Limitations
(a) In the event that the payments and other benefits conferred
pursuant to the Agreement, taken together with all other payments made and other
benefits provided to you, would result in any of such payments or other benefits
being deemed an "excess parachute payment" pursuant to Section 280G of the
Internal Revenue Code of 1986, as amended, or other similar provision, then the
Company will compare the following two tentative amounts:
(1) the total of (x) all other payments and other benefits to be made
to you, plus (y) the payments and other benefits conferred pursuant to
the Agreement reduced to the maximum amount which, if paid, would not
result in any of such payments or other benefits being deemed an
"excess parachute payment;" and
(2) the total of all payments and other benefits to be made to you,
including those conferred pursuant to the Agreement, less the amount of
tax which would be incurred by you on all such payments and other
benefits under Section 4999(a) of the Internal Revenue Code of 1986, as
amended.
If the tentative amount calculated as set forth in Section 4(a)(2)
above is less than the tentative amount calculated as set forth in Section
4(a)(1) above, then the payments
<PAGE> 6
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 6
and other benefits conferred pursuant to the Agreement will be reduced to the
maximum amount which, if paid, would not result in any of such payments or other
benefits being deemed an "excess parachute payment."
If, however, the tentative amount calculated as set forth in Section
4(a)(2) above is greater than the tentative amount calculated as set forth in
Section 4(a)(1) above, then the payments and other benefits conferred pursuant
to the Agreement will not be subject to reduction pursuant to the provisions of
this Section 4(a).
(b) In the event that the payments or other benefits to be received
under the Agreement are reduced by reason of Section 4(a), then in determining
the priority of the payments and other benefits to be provided hereunder, the
Company will: (i) first provide for the exercisability of stock options under
the terms of Section 3, and only then (ii) pay any Separation Pay to be paid
pursuant to Section 2, in each case to the extent possible within the limits
imposed by Section 4(a).
5. Certain Conditions
(a) Payments under the Agreement will be made less all applicable tax
withholdings and deductions authorized by you.
(b) You acknowledge and agree that the consideration provided by the
Company to you under the Agreement, including without limitation payments or
other benefits to be made or provided by the Company to you pursuant to Sections
2, 3 and/or 6, if any, is greater than and in addition to anything of value that
you otherwise would be entitled to receive from the Company, and that the
obligations assumed by you under the Agreement and in the Release are given and
undertaken in consideration of, and are adequately supported by, the payments to
be made and/or other payments to be provided to you by the Company under and
pursuant to the Agreement.
(c) In addition to compliance with the terms and provisions of any
applicable plans or programs, as they may be modified hereby, pursuant to which
any of such payments and/or other payments are provided, payment of any of the
amounts and the providing of any of the other payments referred to or set forth
in Sections 2 and/or 3 is also subject to the following:
(i) your granting the CBS Companies and any Spin-off Companies a
general release (the "Release") substantially in the form
attached to the Agreement (with such changes, if any, as may
be appropriate in light of any intervening changes in law to
provide the CBS Companies and any
<PAGE> 7
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 7
Spin-off Companies with the same level of protection as
provided in the form attached);
(ii) your not revoking the Release within the period provided
therein; and
(iii) your complying with all of your other obligations as set forth
in the Agreement and in the Release.
No payment will be made, or other payment provided, by the Company
pursuant to Sections 2 and/or 3 until the conditions set forth in Section
5(c)(i) and (ii) above have been met.
(d) Payments and other payments provided in accordance with Section 6
will be subject to your complying with all of your obligations as set forth in
the Agreement. However, notwithstanding anything in the Agreement to the
contrary, payments and other payments provided in accordance with Section 6(c)
and/or 6(d) will not be subject to the conditions set forth in Section 5(c)(i)
and (ii) above or to the portion of Section 5(c)(iii) above relating to a
Release.
6. Successors and Assigns
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly, in a form
acceptable to you, and to perform the Agreement.
(b) Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession will be a breach of the
Agreement. Upon any such breach of the Agreement by the Company, in addition to
any other remedies which may be available to you (including but not limited to
equitable remedies), you will be entitled to receive payments and other benefits
from the Company pursuant to the Agreement as if your employment with the
Company had been Terminated on the date on which any such succession becomes
effective (the "Succession Effective Date"). The provisions of this Section 6(b)
will be implemented as set forth in Section 6(c) with respect to Stock Options
and as set forth in Section 6(d) with respect to Separation Pay.
(c) For the purpose of implementing Section 6(b), any Stock Options
that you may have that are outstanding immediately prior to the time such
succession becomes effective (the "Succession Effective Time") will, if they are
not already exercisable, become exercisable by you beginning immediately prior
to the Succession Effective Time, and those Stock Options, together with your
Stock Options that were already
<PAGE> 8
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 8
exercisable, will remain exercisable in accordance with their terms as modified
by Section 3. Further, in the event that any adjustments favorable to the
employee-holder are made to any Company stock options with respect to or in
connection with such succession (including but not limited to the conversion of
such stock options to, or replacement of such stock options with, stock options
of such successor), your Stock Options will be treated in the same manner as
those of the employee or employees who receive the adjustments most favorable to
the employee(s).
(d) Further, for the purpose of implementing your entitlement to
receive Separation Pay pursuant to the Agreement as set forth in Section 6(b),
you will be deemed to be entitled to such payment from the Company immediately
prior to the Succession Effective Time provided that the Succession Effective
Date is on or before the Section 2 Final Anniversary Date; and notwithstanding
anything in the Agreement to the contrary, upon written demand by you to the
Chief Executive Officer of the Company, at your sole discretion, the Company
will deliver such payment to you immediately prior to the Succession Effective
Time in the form of a lump sum, cash payment in immediately available funds
consisting of an amount equal to your Separation Pay pursuant to Section 2.
7. General
(a) By your signature accepting the Agreement you resign, effective as
of the Termination Date, from any and all offices and positions with CBS
Corporation and any of its Subsidiaries or affiliates to which you have been
elected or appointed and from all administrative, fiduciary or other positions
you may hold with respect to arrangements or plans for, of or relating to, CBS
Corporation or any of its Subsidiaries or affiliates.
(b) You acknowledge and agree that the separation payment set forth in
the Agreement is the only severance/separation payment or salary continuation
payment that you will receive from the CBS Company(ies), and that you will be
waiving any retention incentive payments and any other separation/severance or
salary continuation payments that you might otherwise be entitled to receive
from CBS Corporation or its Subsidiaries or affiliates, including but not
limited to separation payments under any and all CBS Company plans or programs
or otherwise.
(c) Certain Definitions. These terms or phrases will have the following
meanings when used in the Agreement.
(i) "Cause" will mean either of the following on your part: (1) being
convicted in a court of law of (i) a felony or (ii) any lesser crime or
offense than a felony which has caused demonstrable and serious injury
to the Company and
<PAGE> 9
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 9
involves the property of the Company or any of its Subsidiaries: or (2)
being guilty of willful gross neglect of duties or other willful grave
misconduct in carrying out your duties with the CBS Companies;
provided, however, that no act or failure to act will be deemed "Cause"
if done, or omitted to be done, in good faith with a reasonable belief
that the action or inaction was in the best interests of the Company.
(ii) "CBS Company" will mean the Company or any Subsidiary of the
Company or any Parent of the Company.
(iii) "Company" will mean CBS Corporation and any successor to its
business and/or assets as described in Section 6 which assumes and
agrees to perform the Agreement, by operation of law or otherwise.
(iv) "Effective Date" will mean the effective date of the Agreement as
set forth in Section 9.
(v) "Good Reason" will mean: (1) the occurrence without your express
written consent of any of the following, when considered on the basis
of a comparison to your overall job situation immediately prior to such
event: (a) a material change or reduction in your title or the scope of
your responsibilities and duties, a change in your reporting
relationship such that you report to someone other than the Chairman or
the Chief Executive Officer of the Company, or a substantial reduction
in your authority with respect to policy decisions or financial
approvals; provided, however, that a change that increases the scope of
your responsibilities and duties or results in your having a more
senior title will not itself be considered such a change; (b) requiring
you to be based at any location that is different from the location
where the most senior executives officers of the Company are based; or
(c) except in each case as part of an across-the-board reduction
applicable to all senior-level executives of the Company and its major
Subsidiaries that is proportionate as applied to you, (i) a reduction
in your base salary; (ii) a reduction in your target annual or
long-term incentive award opportunity; or (iii) the termination or
material reduction of your participation in otherwise applicable
executive benefit plans or programs; or (2) the failure by the Company
or any of its Subsidiaries to make any payments or provide any other
benefits to you when due and such default by the Company and/or its
Subsidiaries continues unremedied for a period of 15 days after notice
of such default is given by you to the Chief Executive Officer of the
Company.
(vi) "Parent of the Company" will mean any corporation that owns stock
possessing at least 50% of the voting power of the Company, either
directly or through one or more of its Subsidiaries.
<PAGE> 10
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 10
(vii) "Release" will have the meaning set forth in Section 5(c)(i).
(viii) "Section" will refer to a section of the Agreement unless
otherwise indicated.
(ix) "Section 2 Final Anniversary Date" will have the meaning set forth
in Section 1(a).
(x) "Separation Pay" will mean the payment set forth in Section 2.
(xi) "Spin-off Companies" will mean any company or companies that the
Company may spin off to its shareholders, together with such spin-off
company's subsidiaries, affiliates, and their respective successors and
assigns.
(xii) "Stock Options" will mean any Company stock options you may have
that are outstanding on your Termination Date other than Company stock
options you may have received pursuant to the Company's Fund the Future
program.
(xiii) "Subsidiary" will mean, unless the context otherwise requires,
any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations
other than the last corporation in such chain owns stock possessing at
least 50% of the voting power in one of the other corporations in such
chain.
(xiv) "Termination" (or your employment being "Terminated") will mean
that you are no longer an employee of the Company and ceased to be so
employed either because (1) your employment with the Company is
terminated by the Company (other than by reason of your death or for
Cause) or (2) you terminate your employment with the Company for Good
Reason.
Your ability to terminate your employment with the Company for
Good Reason will not be affected by any inability on your part to
perform your regular duties with the CBS Companies due in whole or in
part to any physical or mental infirmity.
(xv) "Termination Date" will mean the date on which your employment is
Terminated and you are no longer an employee of the Company.
(d) Nothing in the Agreement will operate or be construed as a contract
or assurance of or a right to continued employment with the Company or any of
its affiliates, or will interfere in any way with the right of the Company or
any of its affiliates
<PAGE> 11
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 11
to terminate your employment at any time for any reason, with or without Cause.
8. Other agreements, obligations and understandings
(a) Payments pursuant to the Agreement are not eligible for deferral
under any Company Deferred Incentive Compensation Program. Payment of any
incentive compensation awards that you may have deferred in the past under the
terms of a Company Deferred Incentive Compensation Program that have not yet
been paid as of your Termination Date will be made to you in accordance with the
terms of that program as in effect from time to time, beginning in the January
following your Termination Date. You should contact Mr. Anthony Kaddo at AYCO
(1-800-342-2779) prior to your Termination Date to make any necessary elections
regarding the payment of any deferral account or accounts you may have.
(b) Receipt of any and all payments and other benefits pursuant to the
Agreement will be subject to the limitations and conditions set forth in Section
1(a). Breach of the Agreement and/or the Release, where applicable, will be
deemed to have occurred and payments and other benefits will be suspended
immediately upon your failure to comply with any of such obligations. Payments
and other benefits suspended for breach of any of your obligations will not
thereafter be resumed unless the Company determines that no breach has occurred,
whether or not you terminate the activity or activities which resulted in such
breach.
(c) If you should breach the Agreement, nothing stated in the Agreement
will be construed as prohibiting the CBS Companies and/or the Spin-off Companies
from pursuing all judicial legal and equitable rights and remedies available to
them, including but not limited to equitable relief and the recovery of all
other legal relief, such as lost profits, attorneys' fees, and compensatory
damages, from you.
If the Company should breach any of its obligations to you pursuant to
Section 6, nothing stated in the Agreement will be construed as prohibiting you
from pursuing all judicial legal and equitable rights and remedies available to
them, including but not limited to equitable relief and the recovery of all
other legal relief, such as attorneys' fees and compensatory damages, from the
Company.
(d) If for any reason any provision of the Agreement is held to be
invalid, illegal or unenforceable, such provision will be deemed modified to the
minimum extent necessary to make such provision consistent with applicable law
and the remaining provisions of the Agreement will not be affected and will
remain in full force and effect.
<PAGE> 12
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 12
(e) Except as otherwise provided in the Agreement, your participation
in and rights under any employee benefit plans (as defined in the Employee
Retirement Income Security Act of 1974, as amended (ERISA)), any incentive or
deferral plans of the Company, and any stock option plans of the Company will be
governed by the terms and provisions of such plans.
(f) The Agreement will be binding upon and inure to the benefit of you
and the Company, its successors and assigns; provided, however, that the Company
will require its successors and assigns to expressly assume, agree to perform,
and perform the Agreement in the same manner and to the same extent that the
Company would be required to perform the Agreement if no such succession and
assignment had taken place. Your rights hereunder may not be transferred or
assigned in any way (whether by operation of law or otherwise) and your duties
hereunder may not be delegated without the prior written consent of the Company.
(g) The Agreement is made and entered into in the State of New York,
and will in all respects be interpreted, enforced and governed by and under the
law of the State of New York without reference to principles of conflict of
laws. The Agreement, together with the Release, your Employee Intellectual
Property Agreement with the Company and the terms and conditions of your Company
stock options, if any, supersedes and replaces all prior commitments,
negotiations, representations, agreements and understandings made to or with
you, whether oral or written, with respect to the subject matter hereof. The
Agreement may be amended, modified or waived only by a written agreement
executed by both of the parties hereto. No waiver of any provision of the
Agreement at any one time will be deemed a waiver of such provision at any
subsequent time. The headings of the Sections and subsections of the Agreement
are inserted for convenience only. Such headings will not affect the meaning of
any of the provisions of the Agreement and will not be deemed a part of the
Agreement.
9. Conditions to Effectiveness
Upon execution by both you and CBS Corporation, the Agreement will be
effective as of March 2, 1999 (the "Effective Date").
<PAGE> 13
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 13
If the Agreement is acceptable to you, please sign the original copy of
the Agreement and return it to me at CBS Corporation. You should keep a copy of
the Agreement for your records. By signing and returning the unmodified original
copy of the Agreement, you acknowledge that you understand and accept the terms
and conditions set forth above.
Sincerely,
CBS CORPORATION
By: /s/ Mel Karmazin
-------------------------------------------
Mel Karmazin
President and Chief Executive Officer
Date: May 13, 1999
-----------------------------------------
cc: A.C. Straka
T. Ambrosio
<PAGE> 14
Mr. Fredric G. Reynolds CONFIDENTIAL AND PROPRIETARY
March 2, 1999
Page 14
ACCEPTANCE
I acknowledge that I have read, understand and agree with and to the
terms and conditions stated in the foregoing Agreement. By my signature I
acknowledge that the consideration set forth in the Agreement is adequate
compensation for all of my agreements contained herein and in the Release, that
I have had the opportunity to consult with counsel of my own choosing regarding
the Agreement, and that in signing the Agreement, I intend to be legally bound
by it.
/s/ Fredric G. Reynolds May 13, 1999
- ----------------------------------- -------------------------
Fredric G. Reynolds Date
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