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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE YEAR ENDED DECEMBER 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
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(Exact name of registrant as specified in its charter)
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<S> <C>
PENNSYLVANIA 25-0877540
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(State of Incorporation) (I.R.S. Employer Identification No.)
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019 (212) 975-4321
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(Address of Principal Executive Offices) (Telephone No.)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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<S> <C> <C>
Common Stock, par value $1.00 per Share New York Stock Exchange Boston Stock Exchange
Pacific Stock Exchange Philadelphia Stock Exchange
Chicago Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
CBS Corporation had 767,184,087 shares of common stock outstanding at February
29, 2000. As of that date, the aggregate market value of common stock held by
non-affiliates was approximately $44 billion.
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The terms "we," "our," "us," "CBS" and "Corporation" as used in this Report on
Form 10-K refer to CBS Corporation and its consolidated subsidiaries unless the
context indicates otherwise.
PART I
ITEM 1. BUSINESS.
GENERAL
CBS Corporation is one of the largest radio and television broadcasters in the
United States and operates the largest outdoor advertising business in North
America. We operate our businesses primarily in the United States through our
Infinity, Television, Cable and Internet Group business segments. The Infinity
segment consists of radio stations and outdoor advertising businesses. The
Television segment consists of 16 owned and operated television stations which
are integrated with our television network and television syndication
operations. Our television and radio stations are operated under licenses from
the Federal Communications Commission (FCC). The Cable segment consists of cable
networks, including The Nashville Network (TNN), Country Music Television (CMT)
and two regional sports networks. The Internet Group segment, formerly referred
to as the New Media segment, consists of our interests in Internet based
companies, certain of which are consolidated and others accounted for under the
cost or equity method of accounting.
On September 6, 1999, we entered into an agreement and plan of merger, as
amended, with Viacom Inc. (Viacom). Viacom is a diversified entertainment
company with operations in six segments: Networks, Entertainment, Video, Parks,
Publishing and Online. See note 2 to the financial statements.
We have dramatically redefined our business portfolio and strategic direction in
recent years. Through acquisitions and divestitures we have essentially
transformed ourselves from an industrial company to a media company. A number of
significant acquisitions in 1999 and in recent years contributed to the
successful execution of our strategy. We acquired CBS Inc. in November 1995; the
radio and outdoor advertising business of Infinity Media Corporation in December
1996; Gaylord Entertainment Company's two major cable networks, TNN and CMT, in
September 1997; the radio broadcasting operations of American Radio Systems
Corporation (American Radio) in June 1998; the television syndication operations
of King World Productions, Inc. (King World) in November 1999; and, through our
majority owned subsidiary, Infinity Broadcasting Corporation (Infinity
Broadcasting), acquired Outdoor Systems, Inc. (Outdoor Systems), an outdoor
advertising business, now known as Infinity Outdoor, Inc. (Infinity Outdoor), in
December 1999. For information about significant mergers and acquisitions, see
note 2 to the financial statements.
We have also adopted various disposal plans that, in the aggregate, provide for
the disposal or liquidation of all of our industrial and financial services
businesses. The assets and liabilities and the results of operations for these
businesses are classified as Discontinued Operations for all periods presented
in our financial statements. At December 31, 1999, essentially all of the
industrial businesses were divested, all in accordance with the terms of their
respective agreements. See notes 12 and 19 to the financial statements.
In August 1998, we formed a new company named Infinity Broadcasting comprising
our radio and outdoor advertising businesses. In December 1998, Infinity
Broadcasting issued approximately 18% of its common stock in an initial public
offering (IPO). After giving effect to the offering, we beneficially owned
approximately 82% of Infinity Broadcasting's equity, which represented 96% of
its combined voting power. On December 7, 1999, Infinity Broadcasting exchanged
1.25 of its shares of Class A common stock for each outstanding common share of
Outdoor Systems. The closing of this transaction caused a reduction in our
ownership and voting interests in Infinity Broadcasting to approximately 65% and
90%, respectively, excluding the dilutive effect of stock options, at December
31, 1999.
We were founded in 1886 and operate under a corporate charter granted by the
Commonwealth of Pennsylvania in 1872.
2 CBS CORPORATION
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BUSINESS SEGMENTS
Financial and other information by segment is included in note 18 to the
financial statements.
Infinity
The Infinity segment is comprised of the radio and outdoor advertising
businesses of Infinity Broadcasting. The Infinity segment is characterized as
out-of-home media because the majority of radio listening and virtually all
viewing of outdoor advertising takes place in automobiles, transit systems, on
the street and other locations outside the consumer's home, including listening
to radio at work. Infinity Broadcasting acquired American Radio in June 1998 as
part of its continued strategy of pursuing acquisitions in the top 50 markets.
In December 1999, Infinity Broadcasting acquired Outdoor Systems.
On March 3, 2000, Infinity Broadcasting entered into an asset purchase agreement
to acquire 18 radio stations, located in the top 50 markets, from Clear Channel
Communications, Inc. (Clear Channel Communications) for approximately $1.4
billion. This transaction is expected to close by year-end 2000 and is subject
to regulatory reviews and approvals. In addition, on March 21, 2000, Infinity
Broadcasting announced that it had entered into an agreement to purchase
Giraudy, one of France's largest outdoor advertising companies, for
approximately $425 million. This transaction is expected to close mid-year 2000.
Infinity Broadcasting owns and operates 162 radio stations located in 34
markets. Sixty-two of these radio stations are in the nation's ten largest radio
markets. We believe that the presence of Infinity's radio stations in large
markets makes it attractive to advertisers and that the overall diversity of its
stations reduces its dependence on any single station, local economy, or
advertiser. These stations serve diverse target demographics through a broad
range of programming formats, such as rock, oldies, news/talk, adult
contemporary, sports/talk, and country, and include leading franchises in news,
sports, and personality programming. Infinity Broadcasting also has a minority
equity investment in Westwood One, Inc. (Westwood One), which it manages.
Westwood One produces and distributes syndicated and network radio programming
and also manages the CBS Radio Network. In order to take advantage of the
growing opportunity in the internet market, the vast majority of the radio
stations operate web sites. These web sites focus on the local markets,
promoting the stations' talent and programming, and providing news, information
and entertainment, as well as other services to the stations' listeners.
Infinity Broadcasting operates the largest outdoor advertising business in North
America through its wholly owned subsidiaries. Our outdoor advertising business
sells advertising space throughout the United States, United Kingdom, Republic
of Ireland, Canada, Mexico and the Netherlands on various media, including
buses, trains, malls, train platforms and terminals throughout commuter rail
systems, and on painted billboards, eight and thirty-sheet posters and phone
kiosks.
Television
The Television segment consists of three integrated operations: the CBS
television network; our owned and operated television stations; and our
television syndication operations. In November 1999, we acquired King World, a
leading syndicator of television programming.
The CBS television network produces or acquires, and distributes a comprehensive
schedule of news, public affairs, entertainment and sports programming, to our
owned and operated television stations and more than 200 affiliates. Our owned
and operated television stations and domestic affiliates serve, in the
aggregate, all 50 states and the District of Columbia. The television network is
responsible for sales of advertising time for the television network broadcasts
of news, public affairs, sports and entertainment programming.
We own and operate 16 television stations located in eight of the nation's ten
largest markets and 12 of the nation's top 20 markets reaching approximately 34%
of all U.S. television households. The CBS owned stations are: WCBS-TV New York,
KCBS-TV Los Angeles, WBBM-TV Chicago, KYW-TV Philadelphia, KPIX-TV San
Francisco, WBZ-TV Boston, KTVT-TV Dallas-Fort Worth, WWJ-TV Detroit, WCCO-TV
Minneapolis, WFOR-TV Miami, KCNC-TV Denver, KDKA-TV Pittsburgh, WJZ-TV
Baltimore, KUTV-TV Salt Lake City, KEYE-TV Austin and WFRV-TV Green Bay. The
stations produce news and broadcast public affairs and other programming to
serve their local markets and offer the CBS television network and syndicated
programming. Many
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of our television stations currently operate web sites which promote the
stations' talent and programming, and provide news, information and
entertainment, as well as other services to the stations' viewers.
Our programming also involves the production, distribution and marketing of
first-run and off-network syndicated programming to television stations, cable,
home video, in-flight and emerging media worldwide. Subsequent to year-end 1999,
we approved a proposed plan to integrate the newly acquired operations of King
World with the existing CBS syndication business to achieve synergies and
eliminate redundant functions. See notes 2 and 13 to the financial statements.
The success of our television segment is driven primarily by programming. Our
network depends on our owned and operated television stations, our television
syndication operations and the affiliates for distribution of the programming.
In addition, the network provides the majority of programming aired at our owned
and operated television stations.
Cable
The Cable segment primarily consists of our cable networks, including TNN, CMT
and two regional sports networks. These networks are distributed by cable
television and other multi-channel technologies.
TNN is an advertiser-supported cable network featuring country lifestyle and
entertainment programming. This network serves approximately 76 million U.S.
homes. TNN offers a broad array of programming from original series to movies to
country music concerts as well as motorsports, including the NASCAR Winston Cup
Races, outdoor sports such as hunting and fishing, professional bull riding and
sports entertainment such as wrestling. In April 2000, TNN is expected to be the
primary network for the Arena Football League. Our rights to broadcast the
NASCAR Winston Cup races were not renewed and expire during the year 2000.
CMT is an advertiser-supported, 24-hour cable network with a country music video
format. It reaches approximately 39 million U.S. homes.
In addition, we own and operate the Midwest Sports Channel, a regional sports
network in Minneapolis, and we are a majority owner of Home Team Sports, a
regional sports network serving the mid-Atlantic states.
Also part of the cable operations, Group W Network Services (GWNS) is a global
provider of satellite services to broadcast, cable and corporate networks. Based
in Stamford, Connecticut, GWNS provides transmission and other technical
services to U.S. broadcast networks and to many major cable networks.
Internet Group
The Internet Group segment consists of our consolidated and nonconsolidated
Internet businesses including CBS.com, Inc. the operator of two Internet
sites--CBS.com and CBSNews.com. CBS.com, which launched in February 1998, offers
a broad range of informational, entertainment, news and promotional content. In
January 2000, CBS.com, Inc. launched CBSNews.com, a news and news related
information web site. A majority of the television network affiliates currently
participate in these web sites. In addition, during the second half of 1999, we
closed on a number of strategic investments focused on growing our Internet
based operations. We received an equity interest in these Internet companies,
primarily in exchange for future advertising and promotion time on our
television, radio, outdoor and cable media properties. In exchange for providing
advertising and promotion time on its media properties, Infinity Broadcasting
will be provided an economic interest in certain of these Internet investments.
4 CBS CORPORATION
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The Internet based companies that comprise the Internet Group are as follows:
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NAME OF COMPANY DESCRIPTION METHOD OF ACCOUNTING
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CBS.com, Inc. Offers a broad range of Consolidated
informational, entertainment, news
and promotional content through
CBS.com and CBSNews.com; a majority
of the television network
affiliates currently participate in
this web site
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iWon, Inc. Portal site that combines search, Consolidated
content, and functionality with
cash sweepstakes
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Hollywood.com, Inc.(a) Entertainment news and movie web Equity basis-publicly traded
site
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Jobs.com, Inc. Online recruitment service for Equity basis
posting or locating jobs
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Loudeye Technologies, Inc. Provides digital media solutions Cost basis-publicly traded
(formerly encoding.com, Inc.)(b)
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MarketWatch.com, Inc. Publishes the web site Equity basis-publicly traded
CBS.MarketWatch.com
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Medscape Inc. Publishes the web sites Equity basis-publicly traded
Medscape.com and CBSHealthWatch.com
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Office.com, Inc. Destination site for small and Equity basis
medium-sized businesses
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Rx.com, Inc. Provider of over-the-counter health Equity basis
and wellness products over the
Internet
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SportsLine.com, Inc. Publishes several sports web sites, Cost basis-publicly traded
including CBS.SportsLine.com
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StoreRunner, Inc. Interactive online shopping mall Equity basis
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Switchboard, Inc.(b) Internet directory service Equity basis-publicly traded
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ThirdAge Media, Inc. "Baby boomer" lifestyle Internet Equity basis
destination
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Women's Consumer Network, LLC A national membership-based online Equity basis
consumer service geared toward
women
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Wrenchead.com, Inc. Online auto parts superstore Equity basis
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Webvan Group, Inc. A full-service online grocery and Cost basis-publicly traded
drug service
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Content Commerce, L.P.(c) Will publish the web site Equity basis
Contentville.com, devoted to
selling all types of content,
including magazines, e-books,
traditional books and transcripts
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(a) Transaction completed effective January 3, 2000; formerly Big Entertainment,
Inc.
(b) IPO completed March 2000.
(c) Transaction completed February 2000.
COMPETITION
The broadcast environment and the outdoor advertising industry are highly
competitive. The Telecommunications Act of 1996 (the Act) has provided both new
opportunities and potential new competition for us. By deregulating station
ownership limits, the Act has allowed us to pursue strategic growth in our
businesses.
CBS CORPORATION 5
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Our out-of-home media business competes for audiences and advertising revenues
directly with other radio stations and outdoor advertising companies, as well as
with other media, such as broadcast television, newspapers, magazines, cable
television, the Internet and direct mail, within their respective markets.
The radio and outdoor advertising industry is also subject to competition from
new media technologies that are being developed or introduced, such as the
delivery of audio programming by cable television systems, by satellite and by
terrestrial delivery of digital audio broadcasting. The FCC has recently
authorized spectrum for the use of a new technology, satellite digital audio
radio services, to deliver audio programming. The FCC has adopted licensing and
operating rules for this service and awarded two licenses. Satellite digital
audio radio service may provide a medium for the delivery by satellite of
multiple new audio programming formats to local and national audiences. Digital
technology also may be used in the future by existing radio broadcast stations
either on existing (a so-called "in-band on-channel" approach) or alternate
broadcasting frequencies. The FCC has begun a proceeding to explore the
authorization of a digital radio service. The FCC also recently issued a Report
and Order creating a new "low power" FM radio service which could open up
opportunities for low cost "neighborhood" service. The radio industry is
challenging this FCC ruling through legal and legislative action.
For the sale of advertising time, the CBS television network, television
stations and the cable operations compete for audiences with other television
networks, television stations and cable networks, as well as with other media,
including satellite television services, videocassettes and the Internet. The
CBS television network, television stations and the cable operations also
compete with other video media for distribution rights to television programming
leading to escalating costs for the program rights to broadcast marquee events.
In addition, the CBS television network competes with other television networks
to secure affiliations with independently owned television stations in markets
across the country, which are necessary to ensure the effective distribution of
network programming to a nationwide audience. Broadcast television, including
CBS, has experienced a decline in total audience viewership in recent years.
And, among the major networks, CBS delivers an audience that has an older
demographic. An older demographic may result in lower revenue for an advertising
spot.
An extended conversion to digital television broadcasting has begun. Current and
future technological developments may affect competition within the television
marketplace. Developing technology to compress digital signals will increasingly
permit the same broadcast, cable, or satellite channel to carry multiple video
and data services which could result in an expanded field of competing services.
Television broadcasters will continue to operate their current stations while
gradually building and operating digital facilities concurrently on separate
channels. This transition is expected to continue well into this decade.
The FCC's expanded television duopoly rule, which is defined in Regulatory
Matters on page 26, permits common ownership of two television stations without
regard to signal contour overlap provided they are located in separate markets
referred to as designated market areas (DMA's). In larger DMA's, common
ownership of up to two television stations is permitted so long as at least
eight independently owned and operating full-power television stations remain in
the market at the time of acquisition and at least one of the two commonly owned
stations is not among the top four-ranked stations in the market based on
audience share. In addition, without regard to numbers of remaining or
independently owned television stations, the FCC will permit television
duopolies within the same DMA so long as certain signal contours of the stations
involved do not overlap. Satellite stations that simply rebroadcast the
programming of a "parent" station will continue to be exempt from the duopoly
rule if located in the same DMA as the "parent" station. The duopoly rule also
applies to same-market local marketing agreements involving more than 15% of the
brokered station's program time, although current local marketing agreements
will be exempt from the television duopoly rule for a limited period of time of
either two or five years, depending on the date of the adoption of the local
marketing agreement. Further, the FCC may grant a waiver of the television
duopoly rule if one of the two television stations is a "failed" or "failing"
station, or the proposed transaction would result in the construction of a new
television station.
Following consummation of the Viacom/CBS merger, and exclusive of other
acquisitions, the combined company could potentially have duopolies in the
following six television markets: Philadelphia, Boston, Dallas, Miami, Detroit,
and Pittsburgh.
6 CBS CORPORATION
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TRADEMARKS AND PATENTS
CBS has a worldwide trademark portfolio that we consider important in the
marketing of our products and services, including, among others, the trademarks
"CBS" and the CBS "Eye" logo. We believe that our rights in these trademarks are
adequately protected and of unlimited duration. We also have rights to the
trademarks "WESTINGHOUSE" and the "CIRCLE W" logo from our former industrial
businesses.
ENVIRONMENTAL MATTERS
Information with respect to environmental matters is incorporated herein by
reference to Management's Discussion and Analysis--Environmental Matters and in
note 19 to the financial statements.
RESEARCH AND DEVELOPMENT
Our operations do not engage in any material research and development
activities.
EMPLOYEE RELATIONS
At December 31, 1999, we employed approximately 28,900 people, of whom
approximately 27,500 were located in the United States. Approximately 16,400 are
full-time and 12,500 are part-time. At December 31, 1999, approximately 11,300
domestic employees were represented in collective bargaining by approximately 17
labor organizations.
ITEM 2. PROPERTIES.
Our corporate headquarters is located at 51 West 52nd Street, New York, New
York, where we currently own approximately 900,000 square feet of floor space,
which is utilized for executive and certain operating division offices or is
leased to third parties. The majority of other properties used by our media
businesses consists of both owned and leased office space, studio facilities,
transmitter equipment, antenna sites and outdoor advertising throughout the
United States and in 17 countries around the world. As of December 31, 1999, we
owned or leased 658 U.S. properties totaling 10,445,583 square feet of floor
area and 85 foreign locations totaling 668,808 square feet. Domestic locations
comprised approximately 94% of the total space. Leased facilities in the United
States accounted for approximately 35% of the total space occupied, while
facilities leased in foreign countries accounted for approximately 3% of the
total space occupied. No individual lease was material. The physical properties
described above are adequate and suitable, with an appropriate level of
utilization, for the conduct of our businesses in the future.
ITEM 3. LEGAL PROCEEDINGS.
(a) On February 27, 1996, suit was brought against us in the United States
District Court (USDC) for the District of New Jersey by Public Service Electric
& Gas Company, PECO Energy Company, Atlantic City Electric Company, and Delaware
Power & Light Company, the owners of the Salem Generating Station. The suit
alleges counts under the Racketeer Influenced and Corrupt Organization Act
(RICO) for fraud, negligent misrepresentation, and breach of contract in
connection with our supply of steam generators and for service orders in 1993
and 1995 related to these steam generators. On October 1, 1997, we filed a
motion for summary judgment in this case. On November 6, 1998, the USDC granted
our motion for summary judgment based on the statute of limitations with respect
to plaintiffs' RICO claims and dismissed the RICO claims (with prejudice) and
plaintiffs' state claims, i.e., fraud, negligent misrepresentation and breach of
contract (without prejudice). Plaintiffs appealed the dismissal of the RICO
claims to the United States Court of Appeals for the Third Circuit (Third
Circuit) and have refiled their state claims in New Jersey Superior Court. On
January 27, 2000, a settlement was entered into resolving all claims associated
with this matter.
(b) In August 1988, the Pennsylvania Department of Environmental Resources
(PDER) filed a complaint against us alleging violations of the Pennsylvania
Clean Streams Law at our Gettysburg, Pennsylvania elevator plant. PDER requested
that the Environmental Hearing Board assess a penalty in the amount of $9
million. We denied these allegations. In November 1996, the Board assessed a
civil penalty of approximately $5.5 million. We appealed the Board's decision to
the Commonwealth Court. On January 2, 1998, the Commonwealth Court upheld the
Board's
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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. Our
application for a rehearing before the Commonwealth Court was denied, as well as
our petition for a rehearing before the Pennsylvania Supreme Court. Oral
arguments before the Board were completed in February 1999. In March, 1999, the
Board reduced the penalty to approximately $3.3 million. In February, 2000, the
Commonwealth Court entered an order affirming the Board's decision to reduce the
penalty. On February 28, 2000, we paid this amount plus interest.
(c) We have 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 CBS, Westinghouse Financial
Services, Inc. (WFSI) and Westinghouse Credit Corporation (WCC), previously
subsidiaries of CBS, and/or certain present and former directors and officers of
CBS, 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 our public filings concerning the
financial condition of CBS, WFSI, and WCC in connection with a $975 million
charge to earnings announced on February 27, 1991; a public offering of our
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 CBS, 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 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 us 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 parties to the class
actions and a derivative action reached an agreement to settle the matters for a
total cost of approximately $67 million, funded in large part by our liability
insurers. On October 19, 1999, the District Court approved the settlements and
our share was paid in 1999. The parties await the entry of a final order by the
District Court.
(d) On August 19, 1998, a former subsidiary of ours known as Westinghouse
International Services Corporation ("Westinghouse International") and others
commenced an arbitration proceeding (the "Arbitration") against WAK Orient Power
& Light Limited ("WAK"), a Pakistan corporation, in the International Court of
Arbitration of the International Chamber of Commerce (the "ICC"). The
Arbitration arose out of alleged breaches by WAK of an engineering, procurement
and construction contract (the "EPC Contract"), dated March 31, 1996, and
matters connected with the related project. WAK has denied these claims and has
filed counterclaims in the Arbitration. An arbitration proceeding on the merits
of this dispute was held on December 6, 1999. The parties await the decision.
On September 7, 1998, in contravention of its Arbitration obligations, WAK
commenced an action in a court in Lahore, Pakistan (the "Lahore Court")
reasserting its counterclaims from the Arbitration and now naming CBS,
Westinghouse Power Generation ("Westinghouse Power") and Westinghouse
International, and seeking 60 billion Pakistan rupees (approximately $1.3
billion). On May 7, 1999, without previously ruling on our and other defendants'
jurisdictional motions, the Lahore Court entered a default decree in the amount
of 60 billion Pakistan rupees (approximately $1.3 billion) against Westinghouse
Power and Westinghouse International and certain other defendants. The judgment
entered in the Lahore Court does not name CBS.
The above two proceedings relate to the sale of our Power Generation Business to
Siemens Power Generation Corporation (Buyer), which was completed on August 19,
1998.
Between May 26, 1999 and June 10, 1999, WAK purported to register the judgment
from Pakistan in the United States and execute upon the same against us and
others in the amount of approximately $1.5 billion. On June 14,
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1999, we and Westinghouse International filed an action in the USDC for the
Eastern District of Pennsylvania (the "Federal Court") seeking, among other
things, a declaration that the parties' disputes are subject to Arbitration
under the authority of the ICC and enjoining WAK from registering, levying based
upon, or otherwise attempting to execute and enforce in any manner any levy or
any other execution action taken under the default judgment entered by the
Lahore Court. On June 16, 1999, the Federal Court entered an order restraining
WAK from registering or otherwise seeking to enforce any judgment based upon the
judgment entered by the Lahore Court. Also, on June 17, 1999, the Lahore High
Court, where the judgment is on appeal, entered an order suspending operation
and enforcement of the judgment entered by the Lahore Court pending a hearing.
On July 20, 1999, the Federal Court issued an order stating that its June 16,
1999 Order "remains in full force and effect until a further Order of this
Court." On September 15, 1999, a hearing was held before the Lahore High Court
on our appeal on the default judgment and plaintiff's appeal on the suspension
of enforcement of the judgment. A ruling has not yet been issued.
We believe that the Buyer has assumed all liabilities of CBS with respect to
this matter and that the Arbitration should take precedence over the Lahore
Court Action.
(e) On December 15, 1998, John F. Gritzer, along with six other individuals,
brought suit against CBS and the Westinghouse Pension Plan (the "Plan") in the
Federal District Court for the Western District of Pennsylvania (the "Court").
The suit alleges that we violated the terms of the Plan and breached our
fiduciary duty as Plan Administrator. Plaintiffs were employees of CBS until CBS
sold the division in which the plaintiffs were employed. Plaintiffs continued
their employment with the buyer of the business until plaintiffs were
involuntarily terminated in 1995. Plaintiff's claim that as a result of their
termination, they are entitled to special retirement benefits under the Plan by
virtue of the terms of the Plan and a reciprocal service agreement contained in
the asset purchase agreement between CBS and the buyer. On October 14, 1999, the
Court certified as a class all persons in the Plan who (i) were transferred to
another corporation in connection with a transfer of assets, (ii) were under a
purchase agreement that included a reciprocal service agreement, (iii) were
terminated through no fault of their own, and (iv) met the requisite age-service
combination for special early retirement pensions. We opposed class
certification. The Court declined to grant class status with respect to the
claims for breach of fiduciary duty. The parties have until June 30, 2000 to
complete discovery. No trial date has been set. A case involving similar facts
was recently tried before the Court. The Court in that case granted our motion
for a directed verdict.
(f) In September 1999, CBS and the individual members of the Board of Directors
were named as defendants in actions filed in Pennsylvania in the Philadelphia
County Court of Common Pleas Trial Division and in New York in the Supreme Court
of New York County of New York in connection with the contemplated merger of CBS
with Viacom. The action in Pennsylvania is entitled Rywell vs. CBS Corp. (filed
September 7, 1999) ("Rywell") and the action in New York is entitled Robert H.
Shenker Money Purchase Trust vs. Conrades (filed September 7, 1999) (the "New
York action"). The parties to the New York action stipulated on November 30,
1999, that the time to move against or answer the New York complaint would be
extended until 60 days after the plaintiffs served defendants with a copy of the
final disposition in Rywell. On November 30, 1999, plaintiffs served defendants
with a Consolidated Class Action Complaint in the Rywell action. In their
Consolidated Complaint, the plaintiffs, purportedly on behalf of themselves and
other shareholders of CBS, primarily assert that (i) the individual members of
CBS's Board of Directors have failed to act to maximize shareholder value,
including by failing to properly consider or solicit other bids for CBS, to hold
a public auction for CBS to conduct a market check, or to negotiate for an
adequate premium, and have acted according to their own personal interests,
rather than to their fiduciary obligations, (ii) the individual members of CBS's
Board of Directors have deprived plaintiff of an alleged informed right to vote
through misleading disclosures in the Proxy Statement sent the CBS shareholders
on November 26, 1999, and (iii) the merger of CBS with Viacom does not provide
sufficient value to CBS and its shareholders. Plaintiffs seek to enjoin the
merger with Viacom, unquantified damages, costs and disbursements, and other
remedies, and seek to have the defendants conduct an auction. We have filed
Preliminary Objections to Plaintiffs' complaint in the Philadelphia court.
Briefing on the Preliminary Objections has been completed. Oral argument on the
Preliminary Objections is scheduled for March 30, 2000.
(g) We are a defendant in numerous lawsuits claiming various asbestos-related
personal injuries, which allegedly occurred from use or inclusion of asbestos in
certain of our products supplied by its industrial businesses, generally in the
pre-1970 time period. Typically, these lawsuits are brought against multiple
defendants. We were neither a
CBS CORPORATION 9
<PAGE> 10
manufacturer nor a producer of asbestos and are oftentimes dismissed from these
lawsuits on the basis that we have no relationship to the products in question
or the claimant was not exposed to our products. At December 31, 1999, we had
approximately 121,000 unresolved claims pending against us. In court actions
that have been resolved, we have prevailed in many of the asbestos claims and
have resolved others through settlement. Furthermore, we have brought suit
against certain of our 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 us for a substantial
portion of our current costs and settlements associated with asbestos claims.
A number of the asbestos-related cases pending against us, including those in
Louisiana, Mississippi, Pennsylvania, and West Virginia, are consolidated or
purported class action cases. In consolidated cases, the claims of a group of
plaintiffs are tried together, and oftentimes limited findings with respect to
common issues of fact and punitive damages are decided with respect to a
representative grouping of plaintiffs and then applied to other individuals in
the group. However, for us to be liable for damages to any particular claimant,
that individual claimant must prove that he or she developed an asbestos-related
disease, that he or she was exposed to a product manufactured or supplied by us,
and that this exposure was a substantial factor in the development of the
disease.
Litigation is inherently uncertain and always difficult to predict. Substantial
damages are sought in certain of the foregoing matters and although we believe a
significant adverse judgment is unlikely, any such judgment could have a
material adverse effect on our results of operations for a quarter or a year.
However, based on our understanding and evaluation of the relevant facts and
circumstances, we believe that we have meritorious defenses to the litigation
described in items (c) through (g) above, and that we have adequately provided
for resolution of these matters. We believe that the litigation should not have
a material adverse effect on our financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) A special meeting of shareholders of the Corporation was held on December
29, 1999.
(b) The following matter was submitted to a vote of the shareholders at the
special meeting with the following results: Adoption of the Agreement and Plan
of Merger, dated as of September 6, 1999, as amended and restated as of October
8, 1999 and as of November 23, 1999, among CBS Corporation, Viacom Inc. and
Viacom/CBS LLC was submitted to a vote of the shareholders at the special
meeting with the following results: 575,963,542 votes were cast for; 7,400,261
votes were cast against; and 2,644,747 abstentions were recorded in connection
with the adoption of this proposal.
10 CBS CORPORATION
<PAGE> 11
EXECUTIVE OFFICERS
The names, ages, offices, and positions held during the past five years by each
of our executive officers as of February 19, 2000, are listed below. Officers
are elected annually. There are no family relationships among any of our
directors and executive officers.
<TABLE>
<CAPTION>
AGE AT
FEBRUARY 19,
NAME, OFFICES, AND POSITIONS 2000
- --------------------------------------------------------------------------
<S> <C>
Mel Karmazin--President and Chief Executive Officer since 56
January 1999; President and Chief Operating Officer from
April 1998 to January 1999; Chairman and Chief Executive
Officer of CBS Station Group from May 1997 to January
1999; Chairman and Chief Executive Officer of CBS Radio
from December 1996 to May 1997; President and Chief
Executive Officer, Infinity Media Corporation from 1981 to
December 1996. Mr. Karmazin also currently serves as
Chairman, President, and Chief Executive Officer of
Infinity Broadcasting Corporation, a subsidiary of ours
since September 1998.
Louis J. Briskman--Executive Vice President and General 51
Counsel since April 1998; Senior Vice President and
General Counsel from January 1993 to April 1998.
Robert G. Freedline--Vice President and Controller since May 42
1998; Director, Corporate Reporting, Policies and Business
Planning from June 1996 to May 1998; Director, Corporate
Audit from March 1995 to June 1996; Manager, Corporate
Reporting and Policies, Zurn Industries from November 1992
to March 1995.
Leslie Moonves--President and Chief Executive Officer, CBS 50
Television, since April 1998; President, CBS Television
from August 1997 to April 1998; President, CBS
Entertainment Division from May 1995 to August 1997;
President, Warner Bros. Television from July 1993 to May
1995.
Fredric G. Reynolds--Executive Vice President and Chief 49
Financial Officer since March 1994.
Farid Suleman--Senior Vice President, Finance since August 48
1998 and Treasurer since May 1999; Senior Vice President
and Chief Financial Officer of CBS Radio from January 1997
and of the CBS Station Group from June 1997; Executive
Vice President, Finance, and Chief Financial Officer,
Infinity Media Corporation, from 1986 to December 1996;
Mr. Suleman also currently serves as the Executive Vice
President, Chief Financial Officer and Treasurer of
Infinity Broadcasting Corporation since September 1998 and
as Executive Vice President, Chief Financial Officer and
Secretary of Westwood One, Inc., an equity investment of
Infinity Broadcasting Corporation, since February 1994.
- --------------------------------------------------------------------------
</TABLE>
CBS CORPORATION 11
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal markets for CBS's common stock are identified on page 1 of this
report. As of February 29, 2000, there were approximately 100,600 shareholders
of record. In February 1998, we announced that we would suspend dividend
payments on our common stock after payment of the March 1, 1998 dividend. The
remaining information required by this item appears on page 59 of this report
and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item appears on page 60 of this report and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item appears on pages 13 through 28 of this
report and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information required by this item appears on page 25 of this report and is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item, together with the report of KPMG LLP
dated January 25, 2000, except as to note 20, which is as of March 21, 2000,
appears on pages 30 through 59 of this report and is incorporated herein by
reference.
<TABLE>
<CAPTION>
PAGE
- ------------------------------------------------------------------
<S> <C>
Report of Management 29
Independent Auditors' Report 30
Consolidated Statements of Income and Comprehensive Income
for each of the three years in the period
ended December 31, 1999 31
Consolidated Balance Sheet at December 31, 1999 and 1998 32
Consolidated Statement of Cash Flows for each of the three
years in the period ended December 31, 1999 33
Consolidated Statement of Shareholders' Equity for each of
the three years in the period
ended December 31, 1999 34
Notes to the Financial Statements 35
Quarterly Financial Information (unaudited) 59
Five-Year Summary of Selected Financial Data (unaudited) 60
- ------------------------------------------------------------------
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There were no reportable events.
12 CBS CORPORATION
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
During 1999, we continued our record of growth and transformation. We have
divested our remaining industrial businesses, grown our core business operations
through strategic acquisitions, made investments in our newly created Internet
Group and effectively positioned CBS for continued future growth through our
pending merger with Viacom.
PENDING MERGER
On September 6, 1999, we entered into an agreement and plan of merger with
Viacom. Pursuant to this merger agreement, as amended, each share of CBS common
stock and each share of CBS Series B participating preferred stock issued and
outstanding immediately prior to the effective time of the merger will be
converted into the right to receive 1.085 shares of Viacom non-voting Class B
common stock and 1.085 shares of Viacom Series C preferred stock, respectively.
Each share of the CBS Series B participating preferred stock is entitled to
1,000 votes per share and is convertible at the option of the holder into 1,000
shares of CBS common stock. Each Viacom Series C preferred share will be
entitled to 100 votes per share and will be convertible into 1,000 shares of
Viacom non-voting Class B common stock at the option of the holder. On December
29, 1999, shareholders of both companies approved the merger. The merger is
contingent upon, among other things, the approvals of the Department of Justice
and the FCC. This transaction is expected to close in April 2000. As of December
31, 1999 merger related costs were not significant as they were largely
reimbursable by Viacom. We anticipate our share of additional merger related
costs for legal and investment banking fees to range from $8 million to $15
million. These costs will be expensed as incurred to the extent not reimbursable
by Viacom in accordance with the merger agreement.
See also Management's Discussion and Analysis--Regulatory Matters for potential
impacts of the merger.
ACQUISITIONS OF BUSINESSES
On December 7, 1999, Infinity Broadcasting, our majority-owned subsidiary
comprising our radio and outdoor advertising businesses, completed its
acquisition of Outdoor Systems. In connection with the acquisition, Infinity
Broadcasting issued $6.1 billion in Class A common stock in exchange for all of
the outstanding common stock of Outdoor Systems, and assumed $1.9 billion in
Outdoor Systems debt, at fair value and $670 million of Outdoor Systems stock
options. The closing of this transaction caused a reduction in our ownership
interest in Infinity Broadcasting from approximately 82% at December 31, 1998,
to approximately 65%, excluding the dilutive effect of stock options. Our voting
interest also declined from 96% at December 31, 1998, to approximately 90% at
December 31, 1999, as a result of the transaction. On December 6, 1999, CBS,
Infinity Broadcasting and Outdoor Systems (the Parties) entered into a final
judgment with the United States in connection with Infinity Broadcasting's
acquisition of Outdoor Systems. Under the terms of the final judgment, the
Parties must divest certain outdoor advertising properties principally in the
New York City area, all in accordance with the terms and conditions of the final
judgment. We do not view these divestitures as material to our business. Any
adjustments that may result from the disposal of Outdoor Systems' assets will be
offset against goodwill and any gains or losses on disposal of existing Infinity
Broadcasting assets will be recognized in operations.
On November 15, 1999, we completed our acquisition of King World for
approximately $2.7 billion which included $312 million for the fair value of
King World stock options assumed. Under the terms of the agreement reached on
March 31, 1999, King World shareholders received 0.81 shares of CBS common stock
for each share of outstanding King World common stock equating to approximately
58 million shares of CBS common stock with a market price of $40.81 per share.
King World is the distributor of a number of shows which include "The Oprah
Winfrey Show," "Wheel of Fortune," "Jeopardy!," and "Hollywood Squares."
Subsequent to December 31, 1999, we approved a proposed plan to integrate the
operations of King World with the existing CBS syndication business. See
Management's Discussion and Analysis--Consolidated Results of Operations--
Restructuring of Operations.
During 1999, we also acquired two CBS affiliate television stations in Texas.
KEYE-TV in Austin was acquired in August for approximately $160 million in cash.
KTVT-TV in Dallas-Fort Worth was acquired in October for $485 million of CBS
Series B participating preferred stock, or 10,142 preferred shares, and
approximately $3 million in cash.
CBS CORPORATION 13
<PAGE> 14
INVESTMENTS IN INTERNET BASED COMPANIES
During 1999, we closed on a number of strategic investments focused on growing
our Internet based operations. These investments provided us with equity
ownership interests in Internet based companies in exchange for $45 million in
cash and $604 million in commitments to provide future advertising and promotion
time. In general, these advertising commitments will be met over a period of
seven years. In exchange for providing advertising and promotion time on its
media properties, Infinity Broadcasting will be provided an economic interest in
certain of these Internet investments.
As of December 31, 1999, we had investments in four publicly traded Internet
based companies: MarketWatch.com, Inc., Medscape Inc., SportsLine.com, Inc., and
Webvan Group, Inc. Other Internet investments as of December 31, 1999 include:
Jobs.com, Inc.; Loudeye Technologies, Inc.; Office.com, Inc.; Rx.com, Inc.;
StoreRunner, Inc.; Switchboard, Inc.; ThirdAge Media, Inc.; Women's Consumer
Network, LLC; and Wrenchead.com, Inc. Our investment in these nonconsolidated
investments in Internet based companies totaled $836 million at December 31,
1999. Our commitment to provide future advertising and promotion time is
non-cash in nature and has been recorded as deferred revenue in Other current
and Other noncurrent liabilities in the Consolidated Balance Sheet and totaled
$592 million at December 31, 1999. Barter revenue of $58 million was recognized
in our consolidated financial statements through December 31, 1999 as the
related advertising and promotion time was delivered. In addition, CBS.com, Inc.
is a wholly owned subsidiary of CBS and we have an ownership interest in iWon,
Inc., which is consolidated.
DISPOSAL OF INDUSTRIAL BUSINESSES
During 1999, we sold our Energy Systems, Government Operations, Machinery
Apparatus Operations and Plant Apparatus Division businesses for approximately
$250 million in cash plus the assumption by the buyers of liabilities,
commitments and obligations of approximately $970 million, all in accordance
with the terms of their respective agreements. With these sales, we have
disposed of essentially all of our industrial businesses. See notes 12 and 19 to
the financial statements.
USE OF EBITDA
We evaluate our operating performance based on several factors, of which the
primary financial measure is earnings before interest, taxes, minority interest,
equity losses, depreciation, and amortization (EBITDA). EBITDA eliminates the
effect of depreciation and amortization of tangible and intangible assets, most
of which were from acquisitions accounted for under the purchase method of
accounting. However, EBITDA should be considered in addition to, not as a
substitute for, operating earnings, net earnings, cash flows, and other measures
of financial performance reported in accordance with generally accepted
accounting principles. As EBITDA is not a measure of performance calculated in
accordance with generally accepted accounting principles, this measure may not
be comparable to similarly titled measures employed by other companies. EBITDA
differs from cash flows from operating activities primarily because it does not
consider changes in assets and liabilities from period to period, and it does
not include cash flows for interest and taxes.
CONSOLIDATED RESULTS OF OPERATIONS
REVENUES increased $568 million or 8% in 1999. This increase includes the impact
of the 1999 acquisitions of King World and Outdoor Systems, as well as the
inclusion of the full-year results of American Radio which was acquired in June
1998. Partially offsetting these increases were the absences of revenues from
the 1998 Winter Olympics and our 1998 divestitures of TeleNoticias and Eye on
People. On a comparable basis, which was determined as if the June 1998
acquisition of American Radio and any related divestitures and exchanges had
occurred on January 1, 1997 and excluding the impacts of the remaining
aforementioned items, 1999 revenues increased $733 million or 11% driven
primarily by advertising rate increases in our Infinity and Television segments.
In 1998, revenues increased $1,438 million or 27%. On a comparable basis,
excluding the impact of the 1998 Winter Olympics and the acquisition of American
Radio, 1998 revenues increased $610 million or 10%, reflecting strong growth in
the major radio markets as well as the inclusion of NFL American Football
Conference games in our television broadcasts in the second half of 1998.
OPERATING PROFIT increased $474 million or 98% in 1999. On a comparable basis,
as defined above, operating profit increased $504 million or 115%. This increase
resulted from higher advertising rates at our three largest segments and
management's continued focus on cost control. In 1998, operating profit
increased $229 million or 91%. The 1999 and 1998 results include special charges
of $2 million and $62 million, respectively, recognized for restructuring costs.
Due to television programming changes and
14 CBS CORPORATION
<PAGE> 15
lower than expected severance costs in 1999, we reversed $26 million of the 1998
charge in 1999. In addition, 1999 operating profit includes a $7 million
recovery of a previously written off receivable in the Cable segment.
EBITDA increased $540 million or 49% in 1999. On a comparable basis, as defined
above, 1999 EBITDA increased $480 million or 44%. This increase resulted from
the higher advertising rates at our three largest segments and management's
continued focus on cost control. In 1998, EBITDA increased $324 million or 42%.
On a comparable basis, 1998 EBITDA increased $74 million or 8%. The 1999 and
1998 EBITDA include the special charges discussed above. In addition, 1999
EBITDA includes a special charge of $24 million recorded in other income related
to obligations of TeleNoticias. See Management's Discussion and
Analysis--Segment Results of Operations--Cable.
DEPRECIATION AND AMORTIZATION expense increased $98 million in 1999 and $126
million in 1998 due to significant levels of amortization of FCC licenses and
non-deductible goodwill arising from acquisitions. These costs will continue to
increase due to 1999 acquisitions.
RESIDUAL COSTS OF DISCONTINUED BUSINESSES primarily represent pension and
postretirement benefit costs for benefit plans retained by us covering inactive
and retired employees of previously divested industrial businesses. The pension
and postretirement benefit costs amounted to $169 million in 1999, $161 million
in 1998 and $142 million in 1997. Although our objective is to reduce this
earnings constraint over the next few years by fully funding the pension plan
and modifying postretirement benefits, management expects that these costs will
continue to negatively affect operating results in future years. Residual costs
increased $12 million in 1999 and $20 million in 1998. The increases resulted
from the retention of benefit obligations related to our 1999 divested
businesses as well as the full-year impact of those businesses divested in 1998
and 1997. Prior to the sales of these businesses, these costs were charged
against the liability for estimated loss on disposal included in the net
liabilities of Discontinued Operations. See note 12 to the financial statements.
Residual costs are expected to increase in 2000 by approximately $20 million due
to the full-year impact of 1999 divestitures. We are considering merging certain
qualified pension plans in the second quarter of 2000. If such merger is
completed as planned, the residual costs are expected to remain at 1999 levels.
OTHER INCOME, NET includes miscellaneous gains and losses on dispositions of
non-strategic assets and income from royalties. The decrease of $32 million in
1999 primarily relates to a $24 million charge recorded in 1999 for obligations
associated with TeleNoticias, a Spanish language cable network. See Management's
Discussion and Analysis--Business Segments--Cable. The decrease of $31 million
in 1998 primarily relates to a $24 million gain recorded in 1997 on the sale of
a partnership interest.
INTEREST EXPENSE declined $166 million in 1999 due to lower debt levels
resulting from the use of a significant portion of the cash proceeds received
from Infinity Broadcasting subsequent to its December 1998 IPO as repayment of
an intercompany note, to pay down CBS debt. In addition, during 1999 we
purchased certain debt securities prior to their scheduled maturity. The
decrease in interest expense of $16 million in 1998 was due to lower debt levels
and lower interest rates. The lower debt levels resulted from the use of cash
proceeds from divestitures to pay down debt and the purchase of certain debt
securities prior to their scheduled maturity, partially offset by debt assumed
in connection with our acquisition of American Radio in June 1998 totaling $1.3
billion.
In conjunction with our December 1999 acquisition of Outdoor Systems, we assumed
$1.9 billion in debt that will cause an increase in future interest expense.
This expected increase will be slightly offset by a reduction in interest
expense as a result of our recent debt extinguishments. See note 8 to the
financial statements. Future interest expense will also depend on our financing
strategy in future acquisitions, additional activity under the stock repurchase
programs, payment of postretirement benefits and retained liabilities of
discontinued businesses, as well as our overall performance. See note 20 to the
financial statements.
INCOME TAX EXPENSE was $461 million or 60% of pre-tax earnings for 1999 and $161
million or 104% of pre-tax earnings for 1998. The decrease in the effective tax
rate in 1999 primarily relates to increased operating earnings. In 1997, income
tax expense was $73 million despite a pre-tax loss of $59 million. The increase
in the income tax provision from 1997 to 1998 is primarily related to increased
operating earnings.
Our tax provision is significantly higher than the U.S. federal statutory tax
rate of 35% of pre-tax income. This higher tax provision results primarily from
the amortization of non-deductible goodwill associated with our media
acquisitions in recent years. Such
CBS CORPORATION 15
<PAGE> 16
permanent differences between book income and taxable income can significantly
impact our tax provision, and depending upon our level of income or loss and the
effect of non-recurring transactions, can cause dramatic fluctuations in our
effective tax rate. Non-deductible amortization is expected to increase as a
result of recent acquisitions. The components of our income tax provision
(benefit) are set forth in note 10 to the financial statements.
MINORITY INTEREST IN (INCOME) LOSS OF CONSOLIDATED SUBSIDIARIES increased $66
million to $72 million in 1999 and increased to $6 million in 1998 from a
benefit of $1 million in 1997. The increase in 1999 primarily resulted from the
full year impact of the December 1998 IPO of Infinity Broadcasting, our then
wholly-owned radio and outdoor advertising business. The IPO reduced our
ownership interest in Infinity Broadcasting to approximately 82%, excluding the
dilutive effect of stock options. This results in an offset in our consolidated
financial statements for the minority interest holder's proportionate interest
in post-IPO results of operations of Infinity Broadcasting. The closing of the
Outdoor Systems transaction in December 1999 caused a reduction in our ownership
interest in Infinity Broadcasting from approximately 82% at December 31, 1998 to
approximately 65% at December 31, 1999, excluding the dilutive effect of stock
options. As a result of this reduced ownership interest, minority interest in
(income) loss of consolidated subsidiaries is expected to increase. Future
minority interest expense will also depend on Infinity Broadcasting's financing
strategy for their future acquisitions and activity under their stock repurchase
program.
EQUITY LOSSES OF UNCONSOLIDATED AFFILIATED COMPANIES, NET OF INCOME TAXES are
related to our equity method of accounting investments in Internet based
companies. During the second half of 1999, we closed on a number of strategic
investments focused on growing our Internet based operations. We received an
equity interest in these Internet companies, in exchange for cash and future
advertising and promotion time on CBS and Infinity Broadcasting media
properties. We recognized our proportionate share of losses in these Internet
based companies and the amortization of the difference between our initial
investment in these entities and our proportionate ownership share in the
underlying net assets of these companies, which totaled $73 million, net of tax
benefit of $8 million. As of December 31, 1999, this difference of $596 million
is being amortized over a five-year period. See note 3 to the financial
statements. Future equity losses in Internet based companies are expected to
increase dramatically as the number of such equity investments expands and as
the full year impact of such losses is recognized. Additionally, these Internet
based companies will recognize marketing and promotional expenses as we deliver
the advertising and promotion time. Therefore, future losses for the Internet
based companies are expected to grow significantly, which in turn will increase
the non-cash equity losses for which we must recognize our proportionate share
and these losses are expected to be material to our consolidated results of
operations. Because of the expected growing significance of these non-cash
equity losses and amortization, we reported this amount as a separate line item
in the Consolidated Statement of Income.
The shares evidencing our equity ownership interests typically contain
restrictions that may limit our ability to sell or otherwise dispose of our
investments. The majority of these Internet based investments represent newly
formed enterprises that will require access to capital markets to fund their
future start-up losses. There can be no assurance that these companies will be
successful in raising the necessary capital to finance their operations, and we
have no obligation for future funding. These companies may also face intense
competition as more traditional "brick-and-mortar" companies respond to changes
in the market place, including launching their own Internet sites. As a result,
our future results of operations for a quarter or a year could be materially
affected by a non-cash write down in the carrying amount of these investments to
recognize an impairment loss due to an other than temporary decline in the value
of these investments. The advertising and promotion agreements entered into in
exchange for our equity interests in these investees contain termination
provisions in the event of failure or inability of the investee to perform.
Generally, pursuant to these termination provisions, we are released from
delivering any remaining unfulfilled advertising commitments. Upon termination
of the unfulfilled advertising and promotion commitments, the remaining deferred
revenue, if any, recorded as a liability will be reversed and recognized as a
component of equity losses of unconsolidated affiliated companies, net of income
taxes.
DISCONTINUED OPERATIONS, NET OF INCOME TAXES reflect the impact of our decision
to divest our remaining industrial businesses. During 1999, we closed on the
disposals of our Energy Systems, Government Operations, Machinery Apparatus
Operations and Plant Apparatus Division businesses. These disposals as well
16 CBS CORPORATION
<PAGE> 17
as purchase price resolutions related to businesses previously disposed of
resulted in a gain on disposal of $628 million, net of income tax expense of
$294 million. In 1997, we recognized a gain on disposal of $871 million, net of
income tax expense of $779 million, related primarily to the sale of Thermo
King.
The Loss from Discontinued Operations includes the operating results of the
industrial businesses prior to adoption of the related disposal plans. For the
year ended December 31, 1997, this loss totaled $191 million, net of tax
benefits of $112 million. All operating results after the measurement date are
charged directly to the liability for estimated loss on disposal. Actual
operating results have not varied significantly from the amounts estimated. See
notes 12 and 19 to the financial statements.
EXTRAORDINARY LOSSES, NET OF INCOME TAXES in 1999 and 1998 primarily reflect the
write-off of debt issue costs in connection with the early extinguishment of
debt. During 1999, we repurchased, at market value, debt securities with a face
value of approximately $371 million. During 1998, we repurchased, at market
value, debt securities with a face value of approximately $298 million. As a
result of these early extinguishments and the write-off of debt issue costs, we
recognized extraordinary losses of $5 million in 1999, and $9 million in 1998,
net of tax benefits of $3 million and $6 million, respectively.
NET INCOME (LOSS) changed significantly year-over-year in 1999 and 1998 due
primarily to the absence in 1998 of the net gain on disposal of Discontinued
Operations. Income (loss) from Continuing Operations in 1999 reflects improved
results of $169 million to $157 million compared to a loss of $12 million. This
improvement was due to strong operating profits in our Infinity, Television and
Cable segments, as well as the lower interest expense. The decrease in the loss
from Continuing Operations in 1998 of $119 million was primarily due to the
increase in operating profit at our Infinity segment.
RESTRUCTURING OF OPERATIONS
We are committed to strengthening our businesses and improving our profitability
through restructuring actions ranging from changes in business strategies to
downsizing for process reengineering and productivity improvements. Cost
reduction initiatives are undertaken when the expected benefits are substantial
in relation to the cost of the programs and are realizable in the near term.
During the last three years, these efforts have resulted in charges of $2
million in 1999, $62 million in 1998 and $15 million in 1997, primarily at our
Television and Cable segments and our former and current corporate headquarters.
The majority of the restructuring costs involve the elimination of positions and
separation of employees. Due to television programming changes and lower than
expected severance costs in 1999, we reversed $26 million of the restructuring
reserve we established in 1998. Restructuring charges and the 1999 reversals are
primarily reflected in Operating expenses in the Consolidated Statement of
Income.
The following is a reconciliation of restructuring liability:
(in millions)
<TABLE>
<S> <C>
Balance at January 1, 1997 $117
Provision for restructuring 15
Cash expenditures (83)
Non-cash charges (8)
- -----------------------------------------------------
Balance at December 31, 1997 41
Provision for restructuring 62
Cash expenditures (37)
- -----------------------------------------------------
Balance at December 31, 1998 66
Provision for restructuring 2
Cash expenditures (27)
Change in estimates (26)
- -----------------------------------------------------
Balance at December 31, 1999 $ 15
- -----------------------------------------------------
</TABLE>
The remaining $15 million principally relates to lease termination costs and to
a lesser extent employee separation costs. See note 13 to the financial
statements.
Subsequent to December 31, 1999, we approved a proposed plan to integrate the
newly acquired operations of King World with the existing CBS syndication
business to achieve synergies and eliminate redundant functions. The plan is
expected to result in a restructuring accrual in the range of $10 million to $14
million in 2000 and reflects primarily severance-related and relocation costs of
the acquired business. Restructuring costs related to the historical operating
activities of King World will increase goodwill and those costs incurred
relating to the existing CBS syndication business will be charged to operations.
The restructuring accrual includes severance-related and relocation costs of the
acquired business for approximately 70 employees in redundant functions and are
expected to be paid by year-end 2000. Terminations of employees are expected to
be completed by year-end 2000. The restructuring is expected to generate about
$13 million in savings in 2000, when fully realized.
CBS CORPORATION 17
<PAGE> 18
SEGMENT RESULTS OF OPERATIONS
(in millions)
<TABLE>
<CAPTION>
REVENUES OPERATING PROFIT EBITDA
------------------------ ---------------------- -----------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997 1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Infinity $2,449 $1,893 $1,480 $ 739 $ 542 $ 372 $1,067 $ 798 $ 575
Television 4,371 4,369 3,589 351 146 119 606 385 339
Cable 565 546 302 138 50 10 219 148 73
Internet Group 13 4 -- (35) (8) -- (37) (4) --
- ---------------------------------------------------------------------------------------------------------------------
Total combined segments 7,398 6,812 5,371 1,193 730 501 1,855 1,327 987
Corporate and Other (25) (7) (4) (62) (85) (105) (44) (68) (72)
Residual costs of discontinued
businesses -- -- -- (175) (163) (143) (175) (163) (143)
- ---------------------------------------------------------------------------------------------------------------------
Total $7,373 $6,805 $5,367 $ 956 $ 482 $ 253 $1,636 $1,096 $ 772
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
INFINITY
Discussions below are provided on a comparable basis. Comparable basis was
determined as if the June 1998 acquisition of American Radio and any related
divestitures and exchanges of radio stations occurred on January 1, 1997. In
addition, comparable results exclude the December 1999 operating results of
Outdoor Systems.
The Infinity segment is comprised of owned and operated radio stations and
outdoor advertising businesses. Reported revenues in 1999 increased $556 million
or 29% over the prior year. The reported results include the full-year impact of
the June 1998 acquisition of American Radio and the one-month results of Outdoor
Systems. On a comparable basis, revenues increased 17%, primarily driven by
higher advertising rates at the majority of the radio stations and in the
outdoor advertising business. The higher advertising rates reflect increased
demand for advertising. Reported revenues in 1998 increased $413 million or 28%
over the prior year. The reported results include the impact of the acquisition
of American Radio. On a comparable basis, revenues increased 12%. This increase
reflects strong growth primarily in the top 15 radio markets and double-digit
growth at our outdoor advertising business in 1998. Radio revenues were 75% in
1999, 77% in 1998 and 75% in 1997 of total Infinity segment revenues. The
percentage of outdoor revenues is expected to increase in 2000 due to the
full-year impact of the December 1999 acquisition of Outdoor Systems.
Reported operating profit and EBITDA in 1999 increased $197 million or 36% and
$269 million or 34%, respectively, over the prior year. Reported operating
profit and EBITDA in 1998 increased $170 million or 46% and $223 million or 39%,
respectively, over the prior year. On a comparable basis, operating profit and
EBITDA in 1999 increased 34% and 23%, respectively, over the prior year. On a
comparable basis, operating profit and EBITDA in 1998 increased 36% and 21%,
respectively, over the prior year. These increases were driven by the higher
revenues discussed above and management's continued focus on cost control. The
higher growth rate in operating profit and EBITDA compared to the growth rate in
revenues results because a substantial portion of the Infinity segment's costs
are fixed.
As previously discussed, certain outdoor advertising assets are expected to be
divested in connection with Infinity Broadcasting's acquisition of Outdoor
Systems. See Management's Discussion and Analysis--Overview.
On March 3, 2000, Infinity Broadcasting entered into an asset purchase agreement
to acquire 18 radio stations, located in the top 50 markets, from Clear Channel
Communications for approximately $1.4 billion. This transaction is expected to
close by year-end 2000 and is subject to regulatory reviews and approvals. In
addition, on March 21, 2000, Infinity Broadcasting announced that it had entered
into an agreement to purchase Giraudy, one of France's largest outdoor
advertising companies, for approximately $425 million. This transaction is
expected to close mid-year 2000.
TELEVISION
The Television segment consists of three integrated operations: the CBS
television network; our owned and operated television stations; and our
television syndication operations. On November 15, 1999, we acquired the King
World syndication operations which have been reflected in our reported amounts.
Reported revenues in 1999 were level with those of the prior year. On a
comparable basis, excluding $103 million in revenues associated with the 1999
acquisition of King World and the impact of the 1998 Winter Olympics, revenues
would have increased by approximately 9%. This advance was driven by strong
18 CBS CORPORATION
<PAGE> 19
up-front and scatter market advertising pricing, due in part to, increased
advertising demand across the industry. Approximately 80% of CBS Television's
1999-2000 season up-front inventory was sold at double-digit price increases,
subject to actual audience levels being achieved. Reported revenues in 1998
increased $780 million or 22% over 1997 primarily due to the broadcast of the
Winter Olympics during the first quarter of 1998 and the broadcasts of the 1998
NFL American Football Conference games during the third and fourth quarters.
Excluding the impact of the broadcast of the 1998 Winter Olympics and the NFL,
revenues would have remained level with the prior year. During 1998 CBS signed
an eight-year agreement, subject to rebid at the end of five years at the
discretion of the NFL, to broadcast American Football Conference games.
Reported operating profit and EBITDA increased $205 million or 140%, and $221
million or 57%, respectively in 1999. These increases are primarily attributable
to higher 1999 advertising pricing, partially offset by increased programming
costs, and the inclusion of operating profit of $6 million and EBITDA of $28
million associated with the recently completed King World acquisition. These
1999 increases also include a net benefit of $87 million resulting from the
absence of a 1998 special charge of $63 million recognized for restructuring
costs and asset impairment, the inclusion of a 1999 special charge of $2 million
recognized for employee terminations, and the reversal of $26 million of the
1998 special charge during 1999. This reversal was the result of television
programming changes and lower than expected severance costs. Partially
offsetting these 1999 improvements is the impact of the broadcast of the 1998
Winter Olympics. On a comparable basis, excluding the net effect of these items,
operating profit and EBITDA in 1999 would have increased approximately 170% and
55%, respectively. Reported operating profit and EBITDA in 1998 increased $27
million or 23%, and $46 million or 14%, respectively. These increases are due to
the broadcast of the 1998 Winter Olympics partially offset by a $63 million
restructuring and asset impairment charge recognized in the third quarter of
1998 and declines in profitability during the third and fourth quarters of 1998
due to higher costs for program rights. Excluding the net effect of these items,
operating profit was flat while EBITDA increased slightly compared to the prior
year. Comparable EBITDA margins were 13% in 1999 and 9% in both 1998 and 1997.
See Management's Discussion and Analysis--Consolidated Results of
Operations--Restructuring of Operations for discussion on the proposed plan to
integrate the operations of King World with the existing CBS syndication
business.
In the fourth quarter of 1999, we entered into a new agreement with the National
Collegiate Athletic Association (NCAA) for certain rights, including the right
to broadcast the NCAA Division I Men's Basketball Tournament and other
championship events. The contract provides for program rights payments of
approximately $6.2 billion over an eleven-year period commencing with the 2003
season. This new contract represents a significant increase in costs, more than
double the annual cost of the current eight-year contract of approximately $1.7
billion, but includes a significant expansion of our rights, including rights to
cable, digital broadcasting, rights to produce and develop the NCAA official
championship Internet site, rights to radio broadcasts, marketing, corporate
sponsorship, home video, merchandising and licensing. It is anticipated that we
will retain a substantial amount of the revenues generated from these rights in
accordance with the terms of the agreement. The new contract's impact on
operating profit, EBITDA and cash flows is significantly dependent upon a number
of factors, including the strength of the advertising market and our ability to
attract sufficient audience levels with respect to the NCAA programming.
CABLE
The Cable segment primarily consists of our cable networks, including TNN, CMT
and two regional sports networks. These networks are distributed by cable
television and other multichannel technologies. In December 1998 we divested Eye
on People and in November 1998 we finalized a joint venture agreement pursuant
to which 70% of the TeleNoticias cable channel business was sold. During 1999,
TeleNoticias filed for bankruptcy protection and subsequently is being
liquidated with certain obligations reverting back to us.
Reported revenues in 1999 increased $19 million or 3% over the prior year. This
increase was negatively impacted by the absence of revenues in 1999 related to
Eye on People and TeleNoticias which were divested in late 1998. On a comparable
basis, assuming the exclusion of the 1998 revenues of Eye on People and
TeleNoticias, revenues would have increased 8%. This growth reflects our ability
to increase advertising rates due to higher demand for
CBS CORPORATION 19
<PAGE> 20
advertising across the industry. The increase in advertising has occurred
despite the continued increase in competition across the cable industry as the
growing number of channels available continues to provide more options to
viewers thereby placing more pressure on cable networks to attract and maintain
their audiences. Reported revenues in 1998 increased by $244 million or 81% over
the prior year. These increases were primarily attributable to the September 30,
1997 acquisition of TNN and CMT. We had previously owned a 33% interest in CMT.
On a comparable basis, assuming the acquisition of TNN and CMT occurred on
January 1, 1997, revenues for 1998 would have increased by approximately 10%.
Our rights to broadcast the NASCAR Winston Cup races were not renewed and expire
during the year 2000. Unless these broadcast rights are replaced with similar
revenue generating events, the positive historical trend in revenues may be
adversely affected.
Reported operating profit in 1999 increased $88 million or 176% as compared to
the prior year. On a comparable basis, assuming the exclusion of the 1998
operating losses of TeleNoticias and Eye on People, operating profit would have
increased 50% due to the increased advertising rates, a $7 million recovery of a
previously written off receivable and improved margins from restructuring and
other cost containment efforts initiated in 1998.
Reported EBITDA in 1999 increased $71 million or 48% over the prior year. On a
comparable basis, excluding the 1998 impact of TeleNoticias and Eye on People,
EBITDA increased 13%. This increase was driven by the improvement in operating
profit, partially offset by a special charge of $24 million in the second
quarter of 1999. This special charge was a direct result of the financial
difficulties which led TeleNoticias to file for bankruptcy protection under
Chapter 11, in the second quarter of 1999 and to ultimately be liquidated under
Chapter 7. Because of these financial difficulties, it is probable that certain
obligations that were assumed by the buyer will revert back to us. The $24
million special charge was recorded in Other income, net. Of the $24 million,
$11 million was paid in the second half of 1999 and the remaining balance is
expected to be satisfied over the next few years. On a comparable basis,
excluding the impact of this special charge and the recovery of the receivable,
EBITDA would have increased 22% and EBITDA margin would have increased to 42% in
1999 from 37% in 1998.
In 1998, reported operating profit increased $40 million and reported EBITDA
increased $75 million over last year. These increases were primarily
attributable to the September 30, 1997 acquisition of TNN and CMT, partially
offset by a 1997 gain on the sale of a partnership interest. On a comparable
basis, assuming the acquisition of TNN and CMT occurred on January 1, 1997, 1998
operating profit increased approximately 80%; this increase was attributable to
higher advertising sales. EBITDA on a comparable basis was flat compared to 1997
because of increased expenditures and a loss on disposal of a 70% interest in
TeleNoticias.
INTERNET GROUP
The Internet Group segment consists of our consolidated Internet based
companies, including CBS.com, Inc. and iWon, Inc., as well as our interests in
Internet based companies accounted for under the cost or equity methods of
accounting. However, the Internet Group segment results in the table on page 18
exclude the effect of changes in market value for our publicly traded cost
method investments and the results of operations for our equity method of
accounting Internet investments. Our proportionate share of losses and related
amortization expense in our equity method investments are reported separately as
Equity losses of unconsolidated affiliated companies, net of income taxes on the
Consolidated Statement of Income and discussed in Management's Discussion and
Analysis--Consolidated Results of Operations. The appreciation or depreciation
in the stock prices on our publicly traded cost method Internet investments are
recorded as a component of Accumulated other comprehensive loss in shareholders'
equity. The discussion below reflects the results of the consolidated Internet
based companies. See note 3 to financial statements.
Revenues of $13 million were primarily contributed by CBS.com, Inc. which began
operations in February 1998. Operating losses were $35 million with a negative
EBITDA of $37 million. The losses were driven by iWon, Inc.'s aggressive
advertising efforts to attract users to the web site through their cash
sweepstakes campaign. Approximately $19 million of the losses recognized relate
to advertising spots provided to consolidated Internet Group investments by our
Infinity, Television and Cable segments.
As discussed in Management's Discussion and Analysis--Overview, during 1999 we
closed on a number of strategic investments focused on growing our Internet
based operations. Future losses in these
20 CBS CORPORATION
<PAGE> 21
companies are expected to increase dramatically due to their recognizing
marketing and promotional expenses as we deliver our advertising and promotion
time. Additionally, our losses will increase as the number of such investments
expand and as full-year results are recognized. We expect future non-cash equity
losses and amortization to be material to our consolidated results of
operations.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
During 1999, we generated $686 million in cash flow from operating activities
from our Continuing Operations, which represents a $391 million increase over
the prior year. These cash inflows were one of our major sources of liquidity
during the year, and were primarily utilized along with cash and cash
equivalents on hand at the beginning of the year to fund our stock repurchase
programs, repay debt, complete business acquisitions, and fund the operations of
our discontinued businesses through their dates of disposal. Additional 1999
sources of liquidity primarily include cash provided by business divestitures
and assets liquidations of $479 million and the cash and cash equivalents
acquired through the 1999 acquisitions of King World and Outdoor Systems which
were funded by the issuance of CBS and Infinity Broadcasting common stock,
respectively. Cash and cash equivalents and short-term investments acquired as
of the closing date for these companies totaled $573 million and $353 million,
respectively.
As previously stated, during 1999, we completed a number of acquisitions for
stock, cash and the assumptions of debt and stock options aggregating
approximately $12.2 billion and made certain equity investments in Internet
based businesses for cash and commitments to provide future advertising. In
general, future commitments to provide advertising will be met over a period of
seven years. The acquisitions and investments were primarily funded by the
issuance of 233 million shares of Class A common stock by Infinity Broadcasting,
the issuance of 58 million shares of CBS common stock, the issuance of
approximately 10 thousand shares of CBS Series B participating preferred stock,
the assumptions of $1.9 billion of debt at fair value and $982 million of stock
options as well as commitments to provide future advertising for $604 million.
In 1998, CBS formed Infinity Broadcasting, a new company comprising the Infinity
segment. In December 1998, Infinity Broadcasting sold 18% of its common stock in
an IPO, generating $3.2 billion of proceeds ($3.0 billion, net of offering
costs). CBS received the benefit of nearly 90% of the proceeds from the IPO
through the payment to CBS by Infinity Broadcasting of an intercompany note and
certain other intercompany transactions. A significant portion of these proceeds
were used by CBS to repay its revolving credit borrowings in 1998 and the
remainder was used to reacquire our common stock, repay other outstanding debt
and for general corporate purposes.
Because of the minority interest in Infinity Broadcasting following the stock
offering, certain modifications have been made to our cash management practices.
Of the $194 million in cash and cash equivalents presented on our Consolidated
Balance Sheet, CBS, as the parent company of Infinity Broadcasting, has direct
access to $122 million. The remaining cash balance is available to CBS if
Infinity Broadcasting were to pay a dividend on all of its common stock.
Infinity Broadcasting does not anticipate paying any dividends in the near term.
Cash generated by Infinity Broadcasting's operations is expected to be retained
by Infinity Broadcasting for use in its operations or for investing. Management
does not believe that this segregation of cash will materially impact our
liquidity.
Additionally, under the terms of an intercompany agreement and a tax sharing
agreement, Infinity Broadcasting reimburses CBS in cash for certain services
provided and its standalone income tax liability. Under the intercompany
agreement, we provide to Infinity Broadcasting a number of services, including
executive, human resources, legal, finance, information management, internal
audit, tax, and treasury services. The costs of these services are allocated
according to established methodologies determined on an annual basis.
With the completion of the Outdoor Systems acquisition, our ownership interest
in Infinity was reduced to approximately 65%, excluding the dilutive effect of
stock options, and therefore, after December 7, 1999, Infinity Broadcasting can
no longer be included in our consolidated U.S. federal and some state
consolidated tax returns. During 1999 cash taxes paid to CBS by Infinity
Broadcasting totaled $290 million while total net cash taxes paid by CBS,
excluding a prior year tax refund of $109 million, was $164 million. This
difference was due to the utilization of certain CBS deferred tax assets during
1999. During the next several years, consolidated cash taxes are expected to
increase as a result of the de-consolidation of Infinity Broadcasting from our
consolidated U.S. federal tax
CBS CORPORATION 21
<PAGE> 22
return since their taxable income can no longer be sheltered by our remaining
deferred tax assets.
We expect to have sufficient liquidity to meet our ordinary future business
needs. Sources of liquidity generally available to us include cash from
operations, proceeds from sales of investments and non-strategic assets, cash
and cash equivalents, short-term investments, availability of debt under our
credit facility, borrowings from other sources, including funds from capital
markets, and issuance of additional capital stock of CBS.
OPERATING ACTIVITIES
The operating activities of Continuing Operations provided cash of $686 million
during 1999 and $295 million during 1998. This increase in cash flow is
primarily attributable to our improved operating results. The sources of funds
identified as deferred and current income taxes are primarily related to the
utilization of certain CBS deferred tax assets and the receipt of $109 million
of prior year tax refunds in 1999. Cash paid for interest and taxes during 1999
also decreased significantly from 1998.
During 1998 operating activities of Continuing Operations provided $295 million
of cash while in 1997 used cash of $201 million. The $496 million improvement in
operating cash flows in 1998 reflects significant improvements in our results of
operations partially offset by the increase in customer receivables. The decline
in cash outflows of other assets and liabilities is primarily due to the timing
of payments in 1997.
Over the next several years it is likely that a portion of the future non-cash
advertising and promotion time provided by us in exchange for consolidated and
non-consolidated Internet based investments of $51 million and $592 million,
respectively, at December 31, 1999, will displace advertising inventory that
could otherwise be sold for cash. During 1999, $58 million in non-cash
advertising was provided to our nonconsolidated Internet investees and $19
million to our consolidated investees. In addition, as a result of our recent
investments in these Internet based companies, cash taxes paid are expected to
increase because CBS is contributing services in exchange for its ownership
interests. We are required to recognize taxable income equal to the fair value
of the shares received.
Cash outflows for operating activities are expected to increase as a result of
our NFL contract and our new NCAA contract. The new NCAA contract provides for
program rights payments of approximately $6.2 billion over an eleven-year period
commencing with the 2003 season. This new contract represents a significant
increase in costs, more than double the annual cost of the current eight-year
contract of approximately $1.7 billion, but includes a significant expansion of
our rights, including rights to cable, digital broadcasting, rights to produce
and develop the NCAA official championship Internet site, rights to radio
broadcasts, marketing, corporate sponsorship, home video, merchandising and
licensing. It is anticipated that we will retain a substantial amount of the
revenues generated from these rights in accordance with terms of the agreement.
Future liquidity may be significantly impacted by our ability to attract
sufficient audience levels with respect to the NFL and NCAA programming.
Cash contributed to our pension and postretirement plans totaled $366 million
during 1999 and $393 million during 1998. Our contribution level for 2000 is
expected to range between $210 million and $273 million and is consistent with
our goal to fully fund our qualified pension plans over the next several years.
The operating activities of Discontinued Operations used cash of $241 million
during 1999 compared to $331 million during 1998. The cash outflows during 1999
primarily reflect cash used in the operations of the Energy Systems and
Government Operations businesses through their date of disposition in March 1999
and resolution of certain working capital adjustments, while the cash outflows
during 1998 primarily reflect the cash used in the operations of its Power
Generation business through the date of its disposition in August 1998 as well
as the Energy Systems and Government Operations businesses. With the completion
of the sale of essentially all of our remaining industrial operations in 1998
and 1999, future operating cash flows of Discontinued Operations will consist
primarily of cash flows associated with certain remaining purchase price
adjustments, indemnification obligations and the liquidation of financial
services businesses. Cash flows associated with the financial services business,
including interest cost on debt of Discontinued Operations and the repayment of
that debt, will be satisfied through borrowings under the CBS revolver and cash
from continuing operations which the cash inflows from contractual liquidation
of the leasing portfolio are expected to be sufficient to repay, while cash
requirements to satisfy non-debt obligations of Discontinued Operations will
affect cash flows of Continuing Operations. Cash taxes arising from the
liquidation of our lease portfolio are expected to be
22 CBS CORPORATION
<PAGE> 23
funded by cash from Continuing Operations over the next 15 years.
The operating activities of Discontinued Operations used $331 million of cash
during 1998 compared to $437 million of cash during 1997. The cash flows in 1998
and 1997 primarily reflect cash used in the operations of the Power Generation
and Energy Systems businesses.
We will continue to make payments for postretirement benefits, pensions,
divestiture costs and retained liabilities associated with the industrial
businesses. In addition, over the next several years we expect to resolve
certain tax contingencies related to the divestitures of our industrial
businesses which may increase cash taxes paid.
INVESTING ACTIVITIES
Net cash flows from investing activities during 1999 remained relatively
consistent with 1998, however a number of significant acquisitions and
divestitures occurred during each of these periods which ultimately drove the
results.
Investing cash inflows of $422 million during 1999 are primarily attributable to
$573 million of cash received in connection with the stock acquisitions of King
World and Outdoor Systems, and $479 million of cash received from business
divestitures and other asset liquidations which was partially offset by cash
outflows of $341 million for non-Internet business acquisitions, $45 million for
equity investments in Internet based companies acquired in 1999, $106 million
for other investments and assets as well as $171 million for capital spending.
Included in the 1999 capital spending is $16 million for consolidated Internet
investments. A portion of the cash paid for 1999 business acquisitions was
received from deposits held in acquisition trust. Business divestitures and
asset liquidations during 1999 primarily include the sale of certain of our
industrial businesses for approximately $250 million, the liquidation of our
leasing portfolio for $109 million, cash received from the divestiture of
several media properties totaling $59 million and proceeds of $47 million
received from the sale of short-term investments. Cash outflows during 1999 for
business acquisitions and investments primarily relate to the acquisition of
three radio stations, a television station, two transit advertising companies,
payments for Internet based and other investments, and the acquisition of a
radio dating service for a total of $492 million.
Cash flows provided from investing activities of $467 million during 1998 were
primarily related to the cash received from divestiture of discontinued
businesses, investments, and securities for approximately $2.2 billion,
partially offset by cash outflows associated with the cash payment to acquire
American Radio for $1.4 billion and 1998 capital expenditures for Continuing
Operations of $139 million. Cash flows provided by investing activities declined
$2.0 billion between 1998 and 1997. This decline in cash provided by investing
activities is a reflection of increased cash payments for business acquisitions
and investments and lower proceeds from divestitures in 1998. Cash inflows
during 1997 primarily relate to the sale of one of our industrial businesses for
$2.6 billion.
We have taken a number of actions which will have a direct impact on our cash
flows from investing activities. During 1999, we entered into a satellite
service arrangement that requires an advance payment of approximately $65
million, which will become payable in October 2000. As a result of the satellite
service payment and recent acquisitions, capital spending levels are expected to
increase between $90 million to $120 million over 1999 levels. We have committed
to contribute, upon request, approximately $55 million to a fund aimed at
providing minorities and women with access to capital to acquire and operate
radio and television stations. Over the next five years, based on our current
projections, we expect to spend approximately $100 million for equipment and
other capital assets to meet commitments for digital multichannel and high
definition transmission capability.
With the sale of essentially all the remaining industrial businesses, future
capital expenditures for Discontinued Operations will essentially be eliminated.
FINANCING ACTIVITIES
Total cash flows from financing activities dramatically shifted to a net cash
outflow during 1999 of $1.4 billion from a net cash inflow of $327 million
during 1998. A number of significant actions taken during each of these years
drove these results.
Total financing cash outflows of $1.4 billion during 1999 primarily reflect the
repurchase or redemption of certain outstanding debt for $683 million and the
purchase of 11.5 million shares of CBS common stock for $489 million, bringing
our total share repurchases to 39.8 million shares for $1,348 million. In
addition, Infinity Broadcasting purchased 17.6 million shares of
CBS CORPORATION 23
<PAGE> 24
its Class A common stock for $485 million. Partially offsetting these outflows
was cash generated of $266 million from stock issued for employee compensation
and benefit plans.
Cash inflows of $327 million during 1998, primarily relate to the net proceeds
of $3.0 billion received from Infinity Broadcasting's IPO, $493 million received
upon the issuance of Senior Notes due in 2005 and $351 million from CBS stock
issued for employee benefit plans. These 1998 cash inflows were partially offset
by cash outflows for net debt repayments totaling approximately $2.7 billion and
cash outflows for the purchase of 28.3 million shares of CBS's common stock
totaling $859 million. In February 1998, we announced that we would suspend
dividend payments on our common stock after payment of the March 1, 1998
dividend.
Cash used in 1999 and 1998 to repurchase and redeem debt as well as the purchase
of common stock were primarily financed by cash proceeds received from Infinity
Broadcasting subsequent to its December 1998 IPO, our cash flow from asset
dispositions and operations. Future purchases of common stock under CBS's $3.0
billion multi-year stock repurchase program and Infinity Broadcasting's $1.0
billion multi-year stock repurchase program ($500 million announced in June 1999
and an additional $500 million announced in January 2000) will be guided by
financial policies that are consistent with maintaining an investment grade
rating. Subsequent to December 31, 1999 through March 20, 2000, Infinity
Broadcasting purchased 4.7 million shares of its Class A common stock for $156
million and CBS purchased 3.5 million shares of its common stock for $200
million.
As discussed above, financing activities during 1998 provided cash of $327
million while cash used during 1997 totaled $2.0 billion. The increase in net
cash flows from financing activities is a reflection of the proceeds received
from Infinity Broadcasting subsequent to its December 1998 IPO. Cash outflows
during 1997 primarily include net debt repayments of $2.1 billion which was
funded primarily by the $2.6 billion in proceeds received on the sale of one of
our industrial businesses.
We are considering various alternatives with respect to our Internet strategy,
including pursuing a spin-off or creation of a tracking stock for our Internet
interests.
REVOLVING CREDIT FACILITY
Our August 1996 five-year revolving credit facility, as amended and restated in
December 1999, provides for $1.5 billion of credit available to CBS and our
subsidiaries excluding Infinity Broadcasting and its subsidiaries, and an
additional $1.5 billion of credit available for the exclusive use of Infinity
Broadcasting and its subsidiaries. Infinity Broadcasting's borrowings under this
facility are guaranteed by us.
The credit facility provides for short-term money market loans and revolver
borrowings. Borrowing rates under the facility are determined at the time of
each borrowing and are based generally on a floating rate index, the London
Interbank Offer Rate (LIBOR), plus a margin based on our senior unsecured debt
rating and leverage. The cost of the facility includes commitment fees, which
are based on the unutilized portion of the facility and vary with our debt
ratings. Revolver borrowings are classified as long-term. There are no
compensating balance requirements under the facility. At December 31, 1999,
Infinity Broadcasting had outstanding credit facility borrowings of $988
million, of which $38 million were short-term borrowings. These borrowings were
primarily used to pay down Outdoor Systems' credit facility in conjunction with
our acquisition of Outdoor Systems in December 1999.
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 December 31, 1999, we were
in compliance with the financial covenants.
As previously discussed, on March 3, 2000, Infinity Broadcasting entered into an
asset purchase agreement to acquire 18 radio stations from Clear Channel
Communications for approximately $1.4 billion. In addition, on March 21, 2000,
Infinity Broadcasting announced that it had entered into an agreement to
purchase Giraudy, one of France's largest outdoor advertising companies, for
approximately $425 million. Infinity Broadcasting plans to finance these
acquisitions with excess cash from operations and by executing a credit facility
which will increase their borrowing availability by $2.0 billion.
CONSOLIDATED BALANCE SHEET
During 1999, with the consummation of the acquisitions of King World, Outdoor
Systems, two television stations and various other media properties, we
24 CBS CORPORATION
<PAGE> 25
continued our pursuit of identifying and obtaining accretive acquisitions. As a
result of these acquisitions both total assets and liabilities increased
dramatically. The increase in our assets resulted primarily from additional
intangible assets of $9.7 billion, property and equipment of $1.9 billion and an
increase of $811 million, year-over-year, in our investments in Internet based
companies. The increase in our liabilities resulted primarily from incremental
deferred tax liabilities of approximately $600 million recorded on identifiable
intangibles acquired, debt assumed of approximately $1.9 billion from Outdoor
Systems and deferred barter revenues of $592 million recorded in connection with
our 1999 investments in Internet based companies.
OTHER MATTERS
YEAR 2000
We have not experienced any significant disruptions to our financial or
operating activities caused by a failure of our computerized systems resulting
from Year 2000 issues. In addressing this matter we had undertaken efforts to
identify, modify or replace and then test systems to ensure Year 2000 compliance
by December 31, 1999. Total expenditures of $33 million were necessary to
achieve Year 2000 compliance, of which $18 million was incurred in 1999 and $15
million through December 31, 1998. Approximately 36% of these total expenditures
related to the replacement of existing systems. These costs were funded through
our cash flows from operations. All system modification costs were expensed as
incurred. The Year 2000 effort also included communications with all significant
third party suppliers and customers to determine the extent to which our systems
were vulnerable to those parties' failures to reach Year 2000 compliance. There
has been no significant loss of revenue, unanticipated costs or service
interruptions. Management does not expect any future failure of our third party
suppliers or customers to have a material adverse impact on our future business
operations or financial results.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates and foreign
exchange rates. To manage this exposure, we periodically enter into interest
rate and currency exchange agreements. We do not use financial instruments for
trading purposes and we are not a party to any leveraged derivatives.
At December 31, 1999, our total long-term debt from Continuing Operations was
$3,759 million, of which $2,799 million was fixed-rate debt. The fair value of
our fixed-rate debt was $2,831 million. A 1% decrease in interest rates would
increase the fair value of our fixed-rate debt by approximately $135 million.
Based on the balance of variable-rate debt at December 31, 1999, a 1% increase
in interest rates would increase annual interest expense by approximately $10
million.
At December 31, 1998, our total long-term debt from Continuing Operations was
$2,665 million, of which $2,634 million was fixed-rate debt. The fair value of
our fixed-rate debt was $2,805 million. A 1% decrease in interest rates would
increase the fair value of our fixed-rate debt by approximately $151 million.
Based on the balance of variable-rate debt at December 31, 1998, a 1% increase
in interest rates would have increased annual interest expense by approximately
$0.3 million.
At December 31, 1999, we had variable-to-fixed interest rate swap contracts
outstanding with a notional value of $775 million. The swap contracts expire in
less than three months. The fair value of these swaps at December 31, 1999 was
not material. At December 31, 1998, no interest rate swap contracts were
outstanding.
We continually monitor our economic exposure to changes in foreign exchange
rates and enter into foreign exchange forward contracts to hedge our transaction
exposure where appropriate. The notional amount of our foreign currency forward
contracts, which were hedging foreign currency denominated transactions at
year-end 1999, was $99 million and at year-end 1998 was $5 million. The majority
of these related to the Canadian Dollar. A 10% change in foreign exchange rates
across all currencies in our portfolio would not be material.
Our credit exposure under these agreements is limited to the cost of replacing
an agreement in the event of non-performance by our counterparty. To minimize
this risk, we select high credit quality counterparties.
For further information regarding our debt and financial instruments, see notes
8 and 9 to the financial statements.
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 us. With regard to remedial actions under federal
and state
CBS CORPORATION 25
<PAGE> 26
Superfund laws, we had been named a potentially responsible party at numerous
sites located throughout the country. At many of these sites, we are either not
a responsible party or our site involvement is very limited or de minimis.
However, we may have varying degrees of cleanup responsibilities at
approximately 74 sites. 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 majority of the environmental matters
being addressed have arisen from past operation of our industrial businesses.
Although all the industrial businesses were divested by year-end 1999, we have
retained certain obligations relating to these past activities. At December 31,
1999, we had an accrued liability of $514 million reflected in Retained
liabilities of discontinued businesses and presented in Other current and Other
noncurrent liabilities in the Consolidated Balance Sheet. Of this amount, $397
million covers site investigation and remediation, and $117 million is for
post-closure and monitoring activities for approximately 74 sites for which
environmental responsibility remains with us. We anticipate 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. Should alternative remediation strategies
be selected, the costs related to these sites could differ from the amounts
currently accrued. We recognize changes in estimates as new remediation
requirements are defined or as more information becomes available.
We believe, based on our best estimate, that we have adequately provided for our
present environmental obligations and that complying with existing government
regulations will not materially impact our financial position, liquidity, or
results of operations.
REGULATORY MATTERS
Certain of our media acquisitions in recent years were subject to a number of
temporary conditional waivers of the FCC's rules respecting common ownership of
radio and television stations in the same market (formerly known as the
"one-to-a-market" rule). These waivers were granted subject to the outcome of
pending rulemaking in which a review of the one-to-a-market rule had been
proposed. Last August, the FCC revised the one-to-a-market rule and the rule
prohibiting common ownership of television stations with certain overlapping
signals (the "television duopoly" rule). The new radio/television
cross-ownership rule allows a single party to own in a market (a) up to two
television stations (if permitted by the television duopoly rule) and up to six
radio stations or (b) one television station and seven radio stations, in both
instances if sufficient market "voices," which include independently owned TV
and radio stations, daily newspapers and cable television, exist. The new
television duopoly rule allows the common ownership of television stations
located in different DMAs regardless of signal overlap. The new rule also
permits ownership of two television stations in the same market, if more than
eight independently owned television stations are licensed to the DMA and at
least one of the stations is not ranked among the top four in the DMA in
audience share. We have demonstrated compliance with the new rule in all markets
other than Los Angeles, Chicago and Dallas-Fort Worth, in each of which we own
attributable interests in eight radio stations and one television station, and
in Baltimore/Washington D.C. area where we have attributable interests in one
television station and (depending on how the FCC interprets its new rule) either
eight or eleven radio stations. As to those four markets, the temporary
conditional waivers will continue until 2004, at which time the FCC will review
its radio/television cross-ownership rule, and we will have an opportunity to
demonstrate that the continued ownership of our media assets in these markets
would serve the public interest.
In connection with the pending Viacom/CBS merger, the combined company may be
required to divest some of its broadcasting assets in order to obtain FCC
approval. The combined company would not be in compliance with current FCC
regulations in the following areas:
- - television stations held by both entities reach 41% of U.S. television
households which exceeds the 35% maximum currently permitted by the FCC,
- - the combined company would not be permitted to continue the temporary
conditional waivers of the radio/television cross-ownership rule until 2004,
and with the addition of the Viacom television stations, the combined company
may be required to divest as many as nine radio stations in certain markets,
- - the combined company would hold licenses for two television stations in six
markets and may be required to divest a television station in one of these
markets under the television duopoly rule,
26 CBS CORPORATION
<PAGE> 27
- - it is likely that the combined company may also be required to divest
additional broadcast stations in the event that the Commission's recent
relaxation of its multiple ownership restrictions fails to become effective,
or is stayed, reconsidered or modified by the FCC or by a court, and
- - the combined company may have to reduce or divest its interest in the United
Paramount Network to comply with the rules limiting the common ownership of
certain television networks.
In order to consummate the Viacom/CBS merger on an orderly and timely basis,
Viacom and CBS have requested that the companies be afforded a period of
twenty-four months to come into compliance with the 35% limitation and the dual
network rule, and six months to come into compliance with the radio/television
cross-ownership rule.
In April 1997, the FCC adopted a schedule under which broadcasters must build
digital television facilities and begin digital transmission. The FCC has not
expressly stated what the consequences would be if a licensee fails to meet the
adopted schedule. However, the Commission has indicated that it will grant an
extension of the applicable deadline where a broadcaster has been unable to
complete construction due to circumstances that are either unforeseeable or
beyond its control. Under the FCC's policy, two six-month extensions may be
granted by the FCC staff pursuant to delegated authority, but subsequent
extension requests must be referred to the full Commission.
Under the FCC's schedule, we were required to build digital facilities by May 1,
1999 for the eight stations we own in the ten largest television markets, and by
November 1, 1999 for the five television stations we own in television markets
11-30. We have begun transmitting digital broadcasts in New York, San Francisco,
Philadelphia, Los Angeles, Detroit and Dallas, all of which are top ten markets.
Applications for extension of construction permit have been granted with respect
to our stations in Minneapolis, Miami, Denver, and Baltimore. In addition, an
application for a second extension of construction permit has been granted in
Boston and one is pending in Chicago, both of which are top ten markets. An
application for a first extension remains pending in Pittsburgh. Our three
television stations in markets below the largest 30 must construct digital
facilities by May 1, 2002. Timely applications for construction permits have
been filed with respect to those stations.
All of our television and radio stations operate under licenses from the FCC,
which is empowered by the Communications Act of 1934, as amended, to, among
other things, license and regulate television and radio broadcasting stations.
The FCC has authority to grant or renew broadcast licenses for a maximum
statutory term of eight years if it determines that the "public convenience,
interest, or necessity" will be served thereby. During a specified period after
an application for renewal of a broadcast station license has been filed,
persons objecting to the license renewal application may file petitions to deny.
We have no reason to believe that the licenses will not be renewed in the
ordinary course, although there can be no assurance to that effect. The
non-renewal of a substantial number of or certain key licenses could have a
material adverse effect on us.
LEGAL MATTERS
We are defending a number of lawsuits on various matters. See note 19 to the
financial statements. We have provided for management's best estimate of costs
associated with resolution of these matters.
We are a defendant in numerous lawsuits claiming various asbestos-related
personal injuries. We were neither a manufacturer nor a producer of asbestos and
have often times been dismissed from these lawsuits on that basis. In court
actions resolved, we have prevailed in the majority of these claims and have
resolved others through settlement. We are reimbursed for a substantial portion
of our current costs and settlements through our insurance carriers. We have an
accrued liability for our share of estimated costs associated with outstanding
claims. This liability is reflected in Retained liabilities of discontinued
businesses and presented in Other current and Other noncurrent liabilities in
the Consolidated Balance Sheet. 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. We have
not been able to reasonably estimate costs for unasserted asbestos claims.
However, we review asbestos claims on an ongoing basis and adjust our liability
as appropriate.
Litigation is inherently uncertain and always difficult to predict. Substantial
damages are sought in certain of our pending cases and, although we believe a
significant adverse judgment is unlikely, any such judgment could have a
material adverse effect on our results of operations for a quarter or a year.
However, based on our understanding and evaluation of the relevant facts and
circumstances, we believe we have
CBS CORPORATION 27
<PAGE> 28
meritorious defenses to the litigation and we have adequately provided for costs
arising from resolution of these matters. We believe that the litigation should
not have a material adverse effect on our financial condition.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." In June 1999, SFAS 133 was amended by SFAS
137, "Accounting for Derivative Instruments and Hedging Activities--Deferral of
Effective Date of FASB Statement No. 133," which delays the effective date for
adoption of SFAS No. 133 for one year, to fiscal years beginning after June 15,
2000. SFAS No. 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. Our derivative
and hedging transactions are not material and it is anticipated that adoption of
this standard will not materially impact our financial results when adopted on
January 1, 2001.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, including Item 7--"Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains both
historical and forward-looking statements. All statements other than statements
of historical fact are, or may be deemed to be, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are not based on historical facts but rather reflect
our current expectations concerning future results and events. The words
"believe," "expect," "intend," "plan," "anticipate," "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 our 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
timing, impact and other uncertainties related to acquisitions; our 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 including the
magnitude of equity losses and other uncertainties related to our Internet based
investments; changes in Federal Communications Commission regulations;
uncertainties related to certain litigation, environmental and other liabilities
associated with former industrial businesses; and such other competitive and
business risks as from time to time may be detailed in our 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 Annual
Report on Form 10-K. The forward-looking statements included in this document
are made only as of the date of this document and we do not have any obligation
under Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, to publicly update any
forward-looking statements to reflect subsequent events or circumstances.
28 CBS CORPORATION
<PAGE> 29
REPORT OF MANAGEMENT
We have prepared the consolidated financial statements and related financial
information included in this report. Management has the primary responsibility
for the financial statements and other financial information and for
ascertaining that the data fairly reflect our financial position, results of
operations, and cash flows. The financial statements were prepared in accordance
with generally accepted accounting principles and necessarily include amounts
that are based on best estimates and judgments with appropriate consideration
given to materiality. Financial information included elsewhere in this report is
presented on a basis consistent with the financial statements.
We maintain a system of internal accounting controls, supported by adequate
documentation, to provide reasonable assurance that assets are safeguarded and
that our books and records reflect authorized transactions. Limitations exist in
any system of internal accounting controls based on the recognition that the
cost of the system should not exceed the benefits derived. We believe our system
of internal accounting controls, augmented by the corporate audit function,
appropriately balances the cost/benefit relationship.
The independent auditors provide an objective assessment of the degree to which
management meets its responsibility for fair financial reporting. They regularly
evaluate elements of the internal control structure and perform such tests and
procedures as they deem necessary to express an opinion on the fairness of the
financial statements.
The Board of Directors pursues its responsibility for our financial statements
through its Audit Review Committee composed of directors who are not officers or
employees of CBS. The Audit Review Committee meets regularly with the
independent auditors, management, and the corporate auditors. The independent
auditors and the corporate auditors have direct access to the Audit Review
Committee, with and without the presence of management representatives, to
discuss the scope and results of their audit work and their comments on the
adequacy of internal accounting controls and the quality of financial reporting.
We believe that our policies and procedures, including our system of internal
accounting controls, provide reasonable assurance that the financial statements
are prepared in accordance with the applicable securities laws and with a
corresponding standard of business conduct.
CBS CORPORATION 29
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CBS CORPORATION
We have audited the accompanying consolidated balance sheet of CBS Corporation
and subsidiaries as of December 31, 1999, and 1998, and the related consolidated
statements of income and comprehensive income, cash flows, and shareholders'
equity for each of the years in the three year period ended December 31, 1999.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CBS Corporation and
subsidiaries as of December 31, 1999, and 1998, and the results of their
operations and their cash flows for each of the years in the three year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
New York, New York
January 25, 2000, except as to note 20,
which is as of March 21, 2000
30 CBS CORPORATION
<PAGE> 31
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(in millions except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 7,373 $ 6,805 $ 5,367
Operating expenses (4,281) (4,373) (3,483)
Marketing, administration and general expenses (1,292) (1,216) (1,043)
Depreciation and amortization (669) (571) (445)
Residual costs of discontinued businesses (175) (163) (143)
- -----------------------------------------------------------------------------------------------
Operating profit 956 482 253
Other income, net 11 43 74
Interest expense (204) (370) (386)
- -----------------------------------------------------------------------------------------------
Income (loss) from Continuing Operations before income
taxes, minority interest in income of consolidated
subsidiaries and equity losses of unconsolidated
affiliated companies 763 155 (59)
Income tax expense (461) (161) (73)
Minority interest in (income) loss of consolidated
subsidiaries (72) (6) 1
Equity losses of unconsolidated affiliated companies, net of
income taxes (73) -- --
- -----------------------------------------------------------------------------------------------
Income (loss) from Continuing Operations 157 (12) (131)
- -----------------------------------------------------------------------------------------------
Discontinued Operations, net of income taxes:
Loss from Discontinued Operations -- -- (191)
Gain on disposal of Discontinued Operations 628 -- 871
- -----------------------------------------------------------------------------------------------
Income from Discontinued Operations 628 -- 680
Extraordinary item, net of income taxes:
Loss on early extinguishment of debt (5) (9) --
- -----------------------------------------------------------------------------------------------
Net income (loss) $ 780 $ (21) $ 549
- -----------------------------------------------------------------------------------------------
Net income (loss) per common share--Basic:
Continuing Operations $ .22 $ (.02) $ (.24)
Discontinued Operations .89 -- 1.08
Extraordinary item (.01) (.01) --
- -----------------------------------------------------------------------------------------------
Net income (loss) per common share--Basic $ 1.10 $ (.03) $ .84
- -----------------------------------------------------------------------------------------------
Net income (loss) per common share--Diluted:
Continuing Operations $ .22 $ (.02) $ (.24)
Discontinued Operations .87 -- 1.08
Extraordinary item (.01) (.01) --
- -----------------------------------------------------------------------------------------------
Net income (loss) per common share--Diluted $ 1.08 $ (.03) $ .84
- -----------------------------------------------------------------------------------------------
Cash dividends per common share $ -- $ .05 $ .20
- -----------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS)
Net income (loss) $ 780 $ (21) $ 549
- -----------------------------------------------------------------------------------------------
Other comprehensive income (loss):
Minimum pension liability adjustment, net of tax (expense)
benefit of $(176), $19 and $(14) 331 (37) 25
Unrealized gains on marketable securities, net of tax
expense of $47 in 1999 and $1 in 1998 72 1 --
Foreign currency translation adjustment (13) -- --
- -----------------------------------------------------------------------------------------------
Other comprehensive income (loss) 390 (36) 25
- -----------------------------------------------------------------------------------------------
Comprehensive income (loss) $ 1,170 $ (57) $ 574
- -----------------------------------------------------------------------------------------------
</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements.
CBS CORPORATION 31
<PAGE> 32
CONSOLIDATED BALANCE SHEET
(in millions except per share amounts)
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 194 $ 798
Short-term investments 306 --
Customer receivables (net of allowance for doubtful
accounts of $74 and $48) 1,676 1,180
Program rights 623 533
Prepaid expenses and other current assets 373 140
Deferred income taxes 200 138
- ----------------------------------------------------------------------------------
Total current assets 3,372 2,789
Property and equipment, net 3,070 1,149
Intangibles, net 24,917 15,463
Other noncurrent assets 1,766 738
- ----------------------------------------------------------------------------------
Total assets $33,125 $20,139
- ----------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Short-term debt $ 38 $ --
Current maturities of long-term debt 6 159
Accounts payable 377 336
Liabilities for talent and program rights 401 290
Other current liabilities 1,142 820
- ----------------------------------------------------------------------------------
Total current liabilities 1,964 1,605
Long-term debt 3,753 2,506
Pensions, postretirement and postemployment benefits 1,440 2,020
Deferred income taxes 1,717 795
Other noncurrent liabilities 2,590 2,541
- ----------------------------------------------------------------------------------
Total liabilities 11,464 9,467
- ----------------------------------------------------------------------------------
Contingent liabilities and commitments (note 19)
Minority interest in equity of consolidated subsidiaries 5,514 1,618
- ----------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, $1.00 par value (25 shares authorized):
Series B participating preferred stock (.01 and zero
shares issued) -- --
Common stock, $1.00 par value (1,100 shares authorized,
805 and 734 shares issued) 805 734
Capital in excess of par value 15,234 8,914
Retained earnings 2,208 1,428
Accumulated other comprehensive loss (417) (807)
- ----------------------------------------------------------------------------------
17,830 10,269
Less: Treasury stock, at cost (54 and 43 shares held) (1,683) (1,215)
- ----------------------------------------------------------------------------------
Total shareholders' equity 16,147 9,054
- ----------------------------------------------------------------------------------
Total liabilities and shareholders' equity $33,125 $20,139
- ----------------------------------------------------------------------------------
</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements.
32 CBS CORPORATION
<PAGE> 33
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities of Continuing
Operations:
Income (loss) from Continuing Operations $ 157 $ (12) $ (131)
Adjustments to reconcile income (loss) from Continuing
Operations to net cash provided (used) by operating
activities:
Depreciation and amortization 669 571 445
Gains on asset dispositions (10) (5) (39)
Barter revenue--Internet (58) -- --
Equity losses of unconsolidated affiliated companies 73 -- --
Minority interest in (income) loss of consolidated
subsidiaries 72 6 (1)
Other non-cash adjustments (75) (150) (81)
Changes in assets and liabilities, net of effects of
acquisitions and divestitures of businesses:
Receivables, current and noncurrent (207) (178) (144)
Program rights (9) 72 (79)
Accounts payable (60) 94 14
Deferred and current income taxes 403 10 5
Pensions, postretirement and postemployment benefits (165) (57) 121
Other assets and liabilities (104) (56) (311)
- -----------------------------------------------------------------------------------------------
Cash provided (used) by operating activities of Continuing
Operations 686 295 (201)
- -----------------------------------------------------------------------------------------------
Cash used by operating activities of Discontinued Operations (241) (331) (437)
- -----------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired, assets
and investments 118 (1,522) (59)
Business divestitures and other asset liquidations 479 2,168 2,752
Capital expenditures--Continuing Operations (171) (139) (121)
Capital expenditures--Discontinued Operations (4) (40) (85)
- -----------------------------------------------------------------------------------------------
Cash provided by investing activities 422 467 2,487
- -----------------------------------------------------------------------------------------------
Cash flows from financing activities:
Bank revolver borrowings 1,551 4,129 2,970
Bank revolver repayments (1,655) (6,161) (4,555)
Net increase (reduction) in other short-term debt 38 (89) (406)
Issuance of senior notes -- 493 --
Repayments of long-term debt (683) (539) (153)
Stock issued 266 351 287
Issuance of subsidiary stock 21 3,047 --
Purchase of treasury stock (489) (859) --
Purchase of treasury stock by subsidiary (485) -- --
Dividends paid -- (36) (148)
Other financing activities (7) (9) (10)
- -----------------------------------------------------------------------------------------------
Cash (used) provided by financing activities (1,443) 327 (2,015)
- -----------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (576) 758 (166)
Cash and cash equivalents at beginning of period for
Continuing and Discontinued Operations 825 67 233
- -----------------------------------------------------------------------------------------------
Cash and equivalents at end of period for Continuing and
Discontinued Operations $ 249 $ 825 $ 67
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Schedule of non-cash investing and financing activities:
Fair value of assets acquired and investments made $13,421 $ 3,550 $ 1,889
Fair value of liabilities assumed (7,548) (2,028) (281)
Cash paid, net of cash acquired of $573, $18 and $8 118 (1,522) (59)
- -----------------------------------------------------------------------------------------------
Impact on CBS shareholders' equity $ 5,991 $ -- $ 1,549
- -----------------------------------------------------------------------------------------------
Interest paid--Continuing Operations $ 212 $ 373 $ 395
Interest paid--Discontinued Operations 38 51 95
- -----------------------------------------------------------------------------------------------
Total interest paid $ 250 $ 424 $ 490
- -----------------------------------------------------------------------------------------------
Income taxes paid, net of refunds $ 55 $ 145 $ 68
- -----------------------------------------------------------------------------------------------
</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements.
CBS CORPORATION 33
<PAGE> 34
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in millions)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON CAPITAL IN OTHER
PREFERRED STOCK AT EXCESS OF RETAINED COMPREHENSIVE TREASURY
STOCK PAR VALUE PAR VALUE EARNINGS INCOME (LOSS) STOCK TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $ 4 $609 $ 5,376 $1,084 $(796) $ (546) $ 5,731
Series C preferred shares converted (4) 32 (28) --
Shares issued under various
compensation and benefit plans, net
of taxes 18 333 15 366
Shares issued under dividend
reinvestment plan 7 1 8
Shares issued for acquisition 59 1,490 1,549
Comprehensive income:
Minimum pension liability
adjustment, net of deferred taxes 25 25
Net income 549 549
Dividends paid (148) (148)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 $ -- $718 $ 7,178 $1,485 $(771) $ (530) $ 8,080
Gain on issuance of subsidiary stock 1,439 1,439
Shares issued under various
compensation and benefit plans, net
of taxes 16 293 174 483
Shares issued under dividend
reinvestment plan 4 4
Shares repurchased (859) (859)
Comprehensive income:
Minimum pension liability
adjustment, net of deferred taxes (37) (37)
Unrealized gain on marketable
securities, net of deferred taxes 1 1
Net loss (21) (21)
Dividends paid (36) (36)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 $ -- $734 $ 8,914 $1,428 $(807) $(1,215) $ 9,054
Gain on issuance of subsidiary stock 2,836 2,836
Shares issued under various
compensation and benefit plans, net
of taxes 13 387 21 421
Shares issued for acquisitions 58 3,097 3,155
Shares repurchased (489) (489)
Comprehensive income:
Minimum pension liability
adjustment, net of deferred taxes 331 331
Unrealized gain on marketable
securities, net of deferred taxes 72 72
Foreign currency translation
adjustment (13) (13)
Net income 780 780
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 $ -- $805 $15,234 $2,208 $(417) $(1,683) $16,147
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements.
34 CBS CORPORATION
<PAGE> 35
NOTES TO THE FINANCIAL STATEMENTS
(tabular dollars and shares in millions unless otherwise noted, except per share
amounts)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of the consolidated 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 from those estimates. On an
ongoing basis, management reviews its estimates, including those related to
litigation, environmental liabilities, program rights, Internet investments,
contracts, pensions, income taxes, and Discontinued Operations, based on
currently available information. Changes in facts and circumstances may result
in revised estimates.
Certain previously reported amounts have been reclassified to conform to the
1999 presentation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of CBS Corporation
and its subsidiary companies. Intercompany accounts and transactions have been
eliminated. Investments in joint ventures and other companies we control are
consolidated in these financial statements. Investments in companies we do not
control but have the ability to exercise significant influence over operating
and financial policies are accounted for by the equity method. Equity method
investments are stated at their cost of acquisition adjusted for our equity in
undistributed net income (loss) since the date of acquisition. Investments that
we do not control and do not have the ability to exercise significant influence
over the operating and financial policies are accounted for by the cost method.
Cost method investments are carried at their cost of acquisition. Cost method
investments in publicly traded companies are subsequently marked-to-market with
unrealized gains and losses, net of income taxes, reported as a component of
Accumulated other comprehensive loss within shareholders' equity in the
Consolidated Balance Sheet.
REVENUE RECOGNITION
Revenues are primarily derived from the sale of advertising spots and are
recognized when spots are broadcast. We also receive revenues from syndication
on sales of owned programming, cable license fees from distribution of our cable
networks, and advertising revenues on the sale of outdoor advertising space and
the sale of banner advertisements on our web sites. Revenues from syndication
are recognized when the programming is available to telecast and certain other
conditions are met. Revenues from cable license fees are recorded in the period
that service is provided. Revenues on outdoor advertising space are recognized
proportionately over the contract term. Advertising revenues on banner contracts
are recognized over the period in which the advertisement is displayed.
ENVIRONMENTAL COSTS
We record liabilities when environmental assessments or remedial efforts are
probable and the costs can be reasonably estimated. Such estimates are adjusted
if necessary as new remediation requirements are defined or as more information
becomes available.
CASH AND CASH EQUIVALENTS
All investment securities with an original maturity of three months or less when
acquired are considered to be cash equivalents. All cash and temporary
investments are placed with high credit quality financial institutions and the
amount of credit exposure to any one financial institution is limited.
Following the December 1998 public stock offering of Infinity Broadcasting
Corporation (Infinity Broadcasting), our majority owned subsidiary, certain
modifications were made to our cash management practices. At December 31, 1999,
CBS, as the parent company of Infinity Broadcasting, has direct access to $122
million of the $194 million in cash and cash equivalents presented in the
Consolidated Balance Sheet. The remaining cash balance is available to us only
if Infinity Broadcasting pays a dividend on all of its common stock. Infinity
Broadcasting does not anticipate paying any dividends in the near term.
SHORT-TERM INVESTMENTS
Short-term investments are primarily comprised of available-for-sale securities
and reported at fair value, with unrealized gains and losses, net of income
taxes reported in Accumulated other comprehensive loss within shareholders'
equity in the Consolidated Balance Sheet. The cost of debt securities is
adjusted for the amortization of premiums and the accretion of
CBS CORPORATION 35
<PAGE> 36
discounts through maturity. Such amortization, interest income, realized gains
and losses, and declines in value judged to be other than temporary are included
in Other income, net in the Consolidated Statement of Income. The cost of
securities sold is based on specific identification.
PROGRAM RIGHTS
Costs incurred in connection with the production of programming or the purchase
of rights to programs, that are available to be broadcast within one year are
capitalized and classified as current assets while costs of programs to be
broadcast after one year are considered noncurrent and are classified as other
noncurrent assets in the Consolidated Balance Sheet. Program costs are amortized
as the respective programs are broadcast. Program rights are carried at the
lower of unamortized cost or net realizable value.
PROPERTY AND EQUIPMENT
Property and equipment assets are recorded at cost and depreciated over their
estimated useful lives. Depreciation is generally computed on the straight-line
method based on useful lives as follows:
<TABLE>
<CAPTION>
ASSET CATEGORY DEPRECIATION PERIOD
<S> <C>
- -----------------------------------------------------------
Buildings and leasehold improvements 25 to 60 years
Advertising structures 5 to 20 years
Land improvements 20 years
Equipment and fixtures 3 to 12 years
- -----------------------------------------------------------
</TABLE>
Leasehold improvements are amortized over the shorter of their useful life or
the term of the lease. Expenditures for additions and improvements are
capitalized, and costs for repairs and maintenance are charged to operations as
incurred.
INTANGIBLE ASSETS
Intangible assets primarily arise from the allocation of the purchase price of
businesses acquired. Amounts assigned to identifiable intangibles are based on
independent appraisals or internal estimates. Goodwill represents the residual
purchase price after allocation to all identifiable net assets including
identifiable intangibles. Identifiable intangible assets primarily include
Federal Communications Commission (FCC) licenses, which are limited as to
availability and have historically appreciated in value with the passage of
time, as well as cable license agreements, show contracts, distribution
networks, tradenames and transit franchise agreements. Intangible assets are
amortized using the straight-line method over their estimated lives ranging from
7 to 40 years.
RECOVERABILITY OF LONG-LIVED ASSETS
Intangible assets and all other long-lived assets are evaluated whenever events
and circumstances indicate that the remaining estimated useful life of the
assets may warrant revision or the remaining carrying value of such asset may
not be recoverable. When factors indicate that an asset should be evaluated for
possible impairment, we use an estimate of the related asset's undiscounted
future cash flows over the remaining life of that asset in measuring
recoverability. If identifiable cash flows are not available for the specific
asset, we evaluate recoverability of the specific business to which the asset
relates. If the undiscounted cash flows are less than the carrying value of the
asset, an impairment has in fact occurred. The carrying value of the asset is
written down to its estimated fair value and a charge is recognized in operating
expenses in the Consolidated Statement of Income. In the case of an equity
investment in an Internet based company, the impairment charge to reduce the
carrying value of the investment to its estimated fair value will be reflected
in Equity losses of unconsolidated affiliated companies, net of income taxes, in
the Consolidated Statement of Income. Estimated fair value is generally measured
by discounting estimated future cash flows or an active market price for the
asset.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are used, from time to time, to manage interest
rate and foreign currency exchange risks. We do not use financial instruments
for trading or speculative purposes and we are not a party to any leveraged
derivatives.
Under interest rate swap contracts, the differentials to be received or paid are
recognized as an adjustment to interest expense over the life of the contract.
Gains and losses on terminations of swap contracts are recognized as interest
expense when terminated in conjunction with the termination of the hedged
transaction, or to the extent that such hedged transaction remains outstanding,
deferred and amortized to interest expense over the remaining life of the hedged
transaction.
Forward exchange contracts are used to hedge the currency fluctuations on
transactions denominated in foreign currencies. Gains and losses on forward
exchange contracts and the offsetting losses and gains on hedged transactions
are recorded currently in Other
36 CBS CORPORATION
<PAGE> 37
income, net in the Consolidated Statement of Income. Forward exchange contracts
are carried at fair value and are reflected in Other current assets or Other
current liabilities, as appropriate in the Consolidated Balance Sheet.
SUBSIDIARY STOCK TRANSACTIONS
Gains and losses on stock transactions by our subsidiaries and equity investees
are recognized directly in shareholders' equity through an increase or decrease
to capital in excess of par value in the period in which the transaction occurs.
STOCK-BASED COMPENSATION
We measure compensation cost for stock-based awards using the intrinsic value
based method of accounting prescribed by Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees." The pro forma net
income and pro forma earnings per share disclosures using the fair value based
method defined in Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," are provided in note 17 to the
financial statements.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging Activities." In June
1999, SFAS 133 was amended by SFAS 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of Effective Date of FASB Statement No. 133,"
which delays the effective date for adoption of SFAS No. 133 for one year, to
fiscal years beginning after June 15, 2000. SFAS No. 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. Our derivative and hedging transactions are not material and it
is anticipated that adoption of this standard will not materially impact our
financial results when adopted on January 1, 2001.
NOTE 2: MERGERS AND ACQUISITIONS
PENDING MERGER
On September 6, 1999, we entered into an agreement and plan of merger with
Viacom Inc. (Viacom). Pursuant to this merger agreement, as amended, each share
of CBS common stock and each share of CBS Series B participating preferred stock
issued and outstanding immediately prior to the effective time of the merger
will be converted into the right to receive 1.085 shares of Viacom non-voting
Class B common stock and 1.085 shares of Viacom Series C preferred stock,
respectively. Each share of the CBS Series B participating preferred stock is
entitled to 1,000 votes per share and is convertible at the option of the holder
into 1,000 shares of CBS common stock. Each share of Viacom Series C preferred
stock will be entitled to 100 votes per share. Each Viacom Series C preferred
share will be convertible into 1,000 shares of Viacom non-voting Class B common
stock at the option of the holder. The merger will be accounted for by the
purchase method of accounting. On December 29, 1999, shareholders of both
companies approved the merger. The merger is contingent upon, among other
things, the approvals of the Department of Justice and the FCC. This transaction
is expected to close in April 2000.
ACQUISITIONS OF BUSINESSES
During 1999, we completed the acquisitions of several businesses, the most
significant of which are discussed below, aggregating approximately $12.2
billion. These acquisitions were primarily funded by the issuance of 58 million
shares of CBS common stock, by the issuance of 233 million shares of Class A
common stock by Infinity Broadcasting, which led to the reduction of our
ownership interest, the issuance of 10,142 shares of CBS Series B participating
preferred stock, and the assumptions of $1.9 billion of debt at fair value and
$982 million of stock options. In addition, $341 million of cash was paid in
these transactions. These transactions primarily included acquisitions in
outdoor advertising businesses in the U.S. and internationally, television
syndication operations and television and radio stations. The acquisitions were
all accounted for under the purchase method. The purchase prices have been
preliminarily allocated based on the estimated fair value of the assets acquired
and liabilities assumed. The preliminary allocations were determined using
management's best estimates based on currently available information. We are in
the process of obtaining independent appraisals of the assets acquired and
expect this process to be complete by the end of the second quarter of 2000. As
additional information becomes available, these estimates will be adjusted and
the allocations finalized. The excess purchase prices over the preliminary
estimated fair values of the net assets acquired, of approximately $7.9 billion,
was allocated to goodwill.
CBS CORPORATION 37
<PAGE> 38
The results of operations of all acquisitions are included in the consolidated
financial statements from their respective dates of acquisition.
On December 7, 1999, Infinity Broadcasting completed its acquisition of Outdoor
Systems, Inc., (Outdoor Systems) for approximately $8.7 billion, which included
the assumption of $1.9 billion in debt, at fair value and $670 million of
Outdoor Systems stock options. The agreement to acquire Outdoor Systems was
reached May 27, 1999 and called for the exchange of each outstanding common
share of Outdoor Systems for 1.25 shares of Infinity Broadcasting Class A common
stock equating to approximately 233 million shares of common stock with a market
value of $26 per share. The closing of this transaction resulted in a reduction
in our ownership interest in Infinity Broadcasting from approximately 82% at
December 31, 1998 to approximately 65% at December 31, 1999, excluding the
dilutive effect of stock options. Our voting interest also declined from
approximately 96% at December 31, 1998 to approximately 90% at December 31, 1999
as a result of the transaction. The excess purchase price over the estimated
fair value of the net assets acquired of approximately $6.5 billion was
preliminarily allocated to goodwill and is being amortized on a straight-line
basis over 30 years. On December 6, 1999, CBS, Infinity Broadcasting and Outdoor
Systems (the Parties) entered into a final judgment with the United States in
connection with Infinity Broadcasting's acquisition of Outdoor Systems. Under
the terms of the final judgment, the Parties must divest certain outdoor
advertising properties principally in the New York City area, all in accordance
with the terms and conditions of the final judgment. We do not view these
divestitures as material to our business. Any adjustments that may result from
the disposal of Outdoor Systems' assets will be offset against goodwill and any
gains or losses on disposal of existing Infinity Broadcasting assets will be
recognized in operations.
On November 15, 1999, we completed our acquisition of King World Productions,
Inc. (King World) for approximately $2.7 billion which includes $312 million for
the estimated fair value of King World stock options assumed. Under the terms of
the agreement reached on March 31, 1999, King World shareholders received 0.81
shares of CBS common stock for each share of outstanding King World common stock
equating to approximately 58 million shares of CBS common stock with a market
price of $40.81 per share. The purchase price was preliminarily allocated to
assets acquired and liabilities assumed, identifiable intangibles of $1.1
billion and deferred taxes of $435 million with the excess purchase price over
the fair value of the net assets acquired of approximately $989 million
allocated to goodwill - which is being amortized on a straight-line basis over
15 years. Subsequent to December 31, 1999, we approved a proposed plan to
integrate the operations of King World with those of the existing CBS
syndication business. The plan is expected to result in a restructuring accrual
in the range of $10 million to $14 million in 2000. Restructuring costs related
to the historical operating activities of King World will increase goodwill and
those costs incurred relating to the existing CBS syndication business will be
charged to operations. See note 13 to the financial statements.
We also completed our acquisitions of two CBS affiliate television stations in
Texas: KEYE-TV in Austin closed on August 31, 1999 for $160 million in cash and
KTVT-TV in Dallas-Fort Worth closed on October 12, 1999 for $485 million of CBS
Series B participating preferred stock, or 10,142 preferred shares, and
approximately $3 million in cash. The purchase prices were preliminarily
allocated to FCC licenses of $478 million and to goodwill of $304 million. FCC
licenses and goodwill are amortized on a straight-line basis over 40 years.
Deferred tax liabilities of $143 million were recorded on the identifiable
intangibles.
During 1998, we completed acquisitions of radio stations and outdoor advertising
businesses aggregating approximately $2.8 billion for $1.5 billion in cash and
the assumption of debt of $1.3 billion. The most significant was our acquisition
of the radio broadcasting operations of American Radio Systems Corporation
(American Radio) on June 4, 1998, for $1.4 billion in cash plus the assumption
of debt with a fair value of approximately $1.3 billion. The acquisition was
accounted for under the purchase method. The purchase price was primarily
allocated to FCC licenses of $2.3 billion with the excess purchase price over
the estimated fair value of net assets acquired of approximately $825 million
allocated to goodwill and amortized on a straight-line basis over 40 years.
Deferred tax liabilities of $928 million were recorded on the identifiable
intangibles.
During 1997, we made acquisitions of cable networks, radio stations and transit
advertising assets aggregating $1.6 billion funded by the issuance of CBS common
stock and cash of $59 million. The most significant was our acquisition on
September 30, 1997, of The Nashville Network (TNN) and the remaining interest in
Country Music Television (CMT) from the
38 CBS CORPORATION
<PAGE> 39
Gaylord Entertainment Company. We had previously owned a 33% interest in CMT.
The total purchase price for these cable networks of $1.6 billion was paid
through the issuance of 59 million shares of CBS's common stock. The acquisition
was accounted for under the purchase method. The purchase price was allocated to
cable license agreements of $506 million with the excess of the purchase price
over the estimated fair value of net assets acquired of $1.2 billion allocated
to goodwill and amortized on a straight-line basis over 40 years. Deferred tax
liabilities of $200 million were recorded on the identifiable intangibles. Prior
to the acquisition, we provided certain services to TNN and CMT for which we
received a commission.
PRO FORMA RESULTS
(unaudited)
The following unaudited pro forma information combines our consolidated results
of operations on a continuing basis with those of Outdoor Systems, King World
and American Radio as if these acquisitions had occurred on January 1, 1998. The
aggregate impact of other acquisitions was not material to our revenue, income
(loss) or income (loss) per share. The pro forma results give effect to certain
adjustments, including amortization expense from goodwill and other identifiable
intangible assets, interest expense from acquisition debt, the effect to
minority interest participation, all related income tax effects and the issuance
of additional shares.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Revenues $8,751 $8,369
Income (loss) from Continuing Operations 34 (209)
Income (loss) per common share-Basic .05 (.28)
Income (loss) per common share-Diluted .04 (.28)
- ---------------------------------------------------------
</TABLE>
This pro forma financial information is presented for comparative purposes only
and is not necessarily indicative of the operating results that actually would
have occurred had the Outdoor Systems, King World and American Radio
transactions 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 the combined operations.
NOTE 3: INVESTMENTS IN INTERNET BASED COMPANIES
During 1999, we closed on 12 investments focused on growing our Internet based
operations. These investments provided us with equity ownership interests in
Internet based companies primarily in exchange for commitments to provide future
advertising and promotion time. In general, these advertising commitments will
be met over a period of seven years. In exchange for providing advertising and
promotion time on its media properties, Infinity Broadcasting will be provided
an economic interest in certain of these Internet investments.
We obtained equity ownership interests during 1999, ranging from 22% to 50%, in
nine Internet based companies in exchange for $29 million in cash and $604
million in commitments to provide future advertising and promotion time. These
investments are accounted for under the equity method of accounting and comprise
the following: Jobs.com, Inc.; Medscape Inc.; Office.com, Inc.; Rx.com, Inc.;
StoreRunner, Inc.; Switchboard, Inc.; ThirdAge Media, Inc.; Women's Consumer
Network, LLC; and Wrenchead.com, Inc. In January 2000, we completed the
acquisition of a 30% ownership interest in Hollywood.com, Inc. (formerly Big
Entertainment, Inc.) which will also be accounted for as an equity method
investment in exchange for $100 million in future advertising and promotion time
and television content as well as cash of $5 million.
We obtained approximately 1% ownership interests in Webvan Group, Inc. and
Loudeye Technologies, Inc. (formerly encoding.com, Inc.). Both of these
investments are accounted for using the cost method of accounting.
We also acquired a majority ownership interest in iWon, Inc. in exchange for $6
million in cash, net of related transactions, and $70 million in future
advertising and promotion time, which is accounted for as a consolidated
subsidiary.
These 1999 Internet based investments added to our existing portfolio of
investments in Internet based companies: MarketWatch.com, Inc. our equity method
of accounting investment; SportsLine.com, Inc. our cost method of accounting
investment; and CBS.com, Inc. our consolidated Internet business.
Additionally, subsequent to December 31, 1999, we obtained a 35% equity
ownership interest in Content Commerce, L.P. in exchange for a commitment to
provide $40 million in future advertising and promotion time.
CBS CORPORATION 39
<PAGE> 40
The shares evidencing our equity ownership interest typically contain
restrictions that may limit our ability to sell or otherwise dispose of our
investments.
At the date of acquisition, for nonconsolidated equity investments in Internet
based companies we typically record our investment at an amount equal to the
cash consideration paid plus the fair value of the advertising and promotion
time to be provided. The associated obligation to provide future advertising and
promotion time is non-cash and is recorded as deferred revenue at an amount
equal to the fair value of the advertising and promotion time to be provided.
The December 31, 1999 investment balance of $836 million is reflected in Other
noncurrent assets and any related deferred revenue balance is presented in Other
current and Other noncurrent liabilities in the Consolidated Balance Sheet. See
note 7 to the financial statements. Deferred revenue is relieved and barter
revenue is recognized as the related advertising and promotion time is
delivered. Barter revenue of $58 million has been recognized on a consolidated
basis in 1999.
Where an agreement provides us with a licensing fee, based on a percentage of
gross revenues earned by the Internet based company in exchange for a license to
use the CBS name and logo, licensing revenue is recorded by us as the Internet
based company earns the revenues on which the license fees are based. No
significant license fee income has been recognized in 1999.
For equity method investments, a difference typically exists between our initial
investment and our proportionate share in the underlying net assets of these
companies. As of December 31, 1999, this difference of $596 million is being
amortized over a five-year period. Our 1999 proportionate share of losses in
these Internet based companies and the related amortization expense of our
initial basis difference totaled $73 million, net of income tax benefit of $8
million and represents the recording of operating results generally using a one
quarter lag. This non-cash amount is presented as Equity losses of
unconsolidated affiliated companies, net of income taxes in the Consolidated
Statement of Income.
The following summarized unaudited financial information of our Internet equity
investees reflects their results of operations for the first three quarters in
1999 and fourth quarter in 1998 or from inception.
Balance sheet information is as of September 30, 1999. For many of these
companies, 1998 information is not meaningful or not available since they were
newly formed.
<TABLE>
<CAPTION>
1999
<S> <C>
- --------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
Revenues $ 39
Gross profit 15
Loss from Continuing Operations (112)
Net loss (112)
- --------------------------------------------------------
BALANCE SHEET DATA:
Current assets $ 174
Noncurrent assets 196
- --------------------------------------------------------
Total assets $ 370
- --------------------------------------------------------
Current liabilities $ 46
Noncurrent liabilities 24
- --------------------------------------------------------
Total liabilities $ 70
- --------------------------------------------------------
</TABLE>
We had $199 million in cost basis Internet investments at December 31, 1999. The
1999 mark-to-market adjustments in fair value for the publicly traded cost
method investments in Internet based companies recognized through other
comprehensive income totaled a $67 million gain, net of deferred taxes.
The majority of our Internet based investments represent newly formed
enterprises that will require access to capital markets to fund their future
start-up losses. There can be no assurance that these companies will be
successful in raising the necessary capital to finance their operations, and we
have no obligation for future funding. These companies may also face intense
competition as more traditional "brick-and-mortar" companies respond to changes
in the market place, including launching their own Internet sites. Therefore,
our future results of operations for a quarter or a year could be materially
affected by a non-cash write down in the carrying amount of these investments to
recognize an impairment loss due to an other than temporary decline in the value
of these investments. This write down would be recognized in Equity losses of
unconsolidated affiliated companies, net of income taxes in the Consolidated
Statement of Income. The advertising and promotion agreements entered into in
exchange for our equity interest in these investees contain termination
provisions in the event of failure or inability of the investee to perform.
Generally, pursuant to these above termination provisions, we are released from
delivering any remaining unfulfilled advertising commitments. Upon termination
of the unfulfilled advertising and promotion commitments, the remaining deferred
revenue, if any, recorded as a liability will be reversed and recognized as an
adjustment to Equity losses of unconsolidated
40 CBS CORPORATION
<PAGE> 41
affiliated companies, net of income taxes in the Consolidated Statement of
Income.
As of December 31, 1999, our investments include four publicly traded Internet
based companies: MarketWatch.com, Inc., Medscape Inc., SportsLine.com, Inc., and
Webvan Group, Inc. Based upon quoted market prices at December 31, 1999, the
aggregate market value of these investments would have exceeded their respective
aggregate carrying values by approximately $253 million.
NOTE 4: INCOME (LOSS) PER COMMON SHARE--CONTINUING OPERATIONS
In 1997, we adopted SFAS No. 128, "Earnings per Share," which establishes
standards for computing and disclosing basic and diluted income (loss) per
common share.
The following is the computation of basic and diluted income (loss) per common
share from Continuing Operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- ----------------------------------------------------------
Income (loss) from Continuing
Operations $ 157 $ (12) $(131)
Less: preferred stock dividends -- -- (23)
- ----------------------------------------------------------
Income (loss) from Continuing
Operations applicable to common
shareholders $ 157 $ (12) $(154)
- ----------------------------------------------------------
Average shares outstanding-basic 702 696 629
Dilutive effect of stock option
plans and convertible preferred
stock 19 -- --
- ----------------------------------------------------------
Average shares outstanding-diluted 721 696 629
- ----------------------------------------------------------
Income (loss) per common
share-basic and diluted $ .22 $(.02) $(.24)
- ----------------------------------------------------------
</TABLE>
Options to purchase shares of common stock of 15 million in 1998 and 27 million
in 1997 were excluded in the computation of income (loss) per common
share-diluted, because their inclusion would be anti-dilutive. Shares of common
stock issuable under deferred compensation arrangements of 3 million in 1999, 5
million in 1998 and 6 million in 1997 were also excluded in the computation of
income (loss) per common share-diluted, because their inclusion would be
anti-dilutive. See note 17 to the financial statements for additional
information on stock options.
NOTE 5: PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Land and land improvements $ 308 $ 246
Buildings and leasehold improvements 449 366
Advertising structures 1,780 13
Equipment and fixtures 1,059 920
Construction in progress 105 77
- ---------------------------------------------------------
Property and equipment, at cost 3,701 1,622
Accumulated depreciation (631) (473)
- ---------------------------------------------------------
Property and equipment, net $3,070 $1,149
- ---------------------------------------------------------
</TABLE>
Included in advertising structures are costs allocated to leasehold interests
totaling $813 million at December 31, 1999.
For the years ended December 31, 1999, 1998, and 1997, depreciation expense
totaled $148 million, $137 million, and $120 million, respectively.
NOTE 6: INTANGIBLES, NET
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Goodwill $18,161 $10,357
FCC licenses 4,725 4,308
Show contracts 478 --
Cable license agreements 402 441
Distribution networks 363 --
Tradenames 245 --
Other intangibles 543 357
- ---------------------------------------------------------
Intangibles, net $24,917 $15,463
- ---------------------------------------------------------
</TABLE>
Intangible assets presented in the preceding table are net of accumulated
amortization of $1,533 million at December 31, 1999 and $1,016 million at
December 31, 1998. The increase in intangible assets resulted from the 1999
acquisitions. See note 2 to the financial statements. In addition, goodwill in
1999 includes the effect of Infinity Broadcasting's stock repurchase program.
See note 16 to the financial statements.
NOTE 7: OTHER CURRENT AND NONCURRENT LIABILITIES
Other current liabilities are as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Accrued liabilities $ 442 $318
Income taxes payable 56 24
Accrued employee compensation 149 108
Deferred revenue--Internet (note 3) 125 --
Retained liabilities of discontinued
businesses (note 19) 237 254
Other 133 116
- ---------------------------------------------------------
Total Other current liabilities $1,142 $820
- ---------------------------------------------------------
</TABLE>
CBS CORPORATION 41
<PAGE> 42
Other noncurrent liabilities are as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Net liabilities of Discontinued
Operations (note 12) $ 637 $1,284
Retained liabilities of discontinued
businesses (note 19) 996 766
Deferred revenue-Internet (note 3) 467 --
Other 490 491
- ---------------------------------------------------------
Total Other noncurrent liabilities $2,590 $2,541
- ---------------------------------------------------------
</TABLE>
NOTE 8: DEBT
SHORT-TERM DEBT
At December 31, 1999, we had $38 million of short-term borrowings outstanding
that primarily related to short-term money market loans under our credit
facility. The weighted average interest rate on these borrowings was 7.1%. No
short-term borrowings were outstanding at December 31, 1998.
LONG-TERM DEBT
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Revolver $ 950 $ --
7.15% senior notes due 2005 499 498
8 7/8% senior subordinated notes
due 2007 482 --
6 7/8% notes due 2003 275 275
8 5/8% debentures due 2012 271 272
7 7/8% debentures due 2023 251 267
9 3/8% senior subordinated notes
due 2006 229 --
8 3/8% notes due 2002 200 200
7 5/8% notes due 2002 143 143
9 3/4% senior notes due 2005 113 163
8 7/8% notes due 2014 102 112
9% senior subordinated notes due 2006 72 165
11 3/8% subordinated exchange debentures
due 2009 53 115
7 1/8% notes due 2023 52 80
7 3/4% notes due 1999 -- 125
8 7/8% debentures due 2022 -- 91
7% convertible subordinated debentures
due 2011 -- 79
Other 67 80
- ---------------------------------------------------------
3,759 2,665
Less: Current maturities (6) (159)
- ---------------------------------------------------------
Long-term debt $3,753 $2,506
- ---------------------------------------------------------
</TABLE>
We are also obligated under various debt securities related to our Discontinued
Operations. See note 12 to the financial statements.
The scheduled maturities of long-term debt outstanding at December 31, 1999 are
as follows:
<TABLE>
<CAPTION>
YEAR OF MATURITY
---------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------
Long-term debt $6 $975 $350 $285 $8 $2,135
- --------------------------------------------------------------------
</TABLE>
In connection with the acquisition of Outdoor Systems in December 1999, Infinity
Broadcasting assumed Outdoor Systems' debt with a fair value of $1.9 billion. At
the time of acquisition, approximately $1.1 billion was outstanding under
Outdoor Systems' senior credit facility which was repaid in conjunction with the
acquisition, primarily with borrowings under Infinity Broadcasting's revolving
credit agreement. The remaining debt assumed consisted of 8 7/8% senior
subordinated notes due 2007 and 9 3/8% senior subordinated notes due 2006. These
notes were recorded at their respective fair values at the date of acquisition.
The indentures related to these notes contain covenants applicable to Outdoor
Systems including, among others, limitations on sales of assets, dividend
payments, and future indebtedness. Under the most restrictive covenants of these
indentures, approximately $440 million of Outdoor Systems' net assets at
December 31, 1999 are restricted. This, in turn, limits the ability of Outdoor
Systems to pay dividends. As a result of the change in control related to the
acquisition of Outdoor Systems by Infinity Broadcasting, an offer to purchase
the outstanding notes was made in January 2000. The offer expired in February
2000 and $6 million of the notes were redeemed.
The 9 3/4% senior notes due 2005, the 9% senior subordinated notes due 2006, the
11 3/8% subordinated exchange debentures due 2009, and the 7% convertible
subordinated debentures due 2011 are related to our June 1998 acquisition of
American Radio. The indentures related to these notes and debentures contain
covenants applicable to American Radio including, among others, limitations on
sales of assets, dividend payments, and future indebtedness. Under the most
restrictive covenants of these indentures, approximately $1.2 billion of
American Radio's net assets at December 31, 1999 are restricted. This, in turn,
limits the ability of American Radio to pay dividends.
Our August 1996 five-year revolving credit facility, as amended and restated in
December 1999, provides for $1.5 billion of credit available to CBS and our
subsidiaries excluding Infinity Broadcasting and its subsidiaries, and an
additional $1.5 billion of credit available for the exclusive use of Infinity
Broadcasting and its subsidiaries. Infinity Broadcasting's borrowings under this
facility are guaranteed by us. The credit facility provides for short-term money
market loans and revolver borrowings. Borrowing rates under the facility are
determined at the time of each borrowing and are based generally on a floating
rate index, the London Interbank Offer Rate (LIBOR), plus a margin based on our
senior unsecured debt rating and leverage. The cost of the facility includes
commitment fees, which are based on the unutilized portion of the facility and
vary with our debt ratings. Revolver
42 CBS CORPORATION
<PAGE> 43
borrowings are classified as long-term. There are no compensating balance
requirements under the facility. 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 December 31, 1999, we were in compliance with the financial
covenants.
During 1999, we repurchased, at market value, debt securities with a face value
of approximately $371 million. During 1998, we repurchased, at market value,
debt securities with a face value of approximately $298 million. As a result of
these early extinguishments and the write-off of debt issue costs, we recognized
extraordinary losses of $5 million in 1999, and $9 million in 1998, net of tax
benefits of $3 million and $6 million, respectively.
The 8 7/8% notes due 2014 are redeemable at 100% of principal plus accrued
interest at the election of the holder on June 14, 2004. We may redeem the notes
only if the total outstanding principal is $10 million or less. We also have the
option to redeem certain debentures and notes at specified redemption prices
plus accrued interest prior to their scheduled maturity dates, as set forth in
the table below.
<TABLE>
<CAPTION>
DEBT SECURITY REDEMPTION DATE
<S> <C>
- ------------------------------------------------------------
7.15% senior notes due 2005 Any time
8 7/8% senior subordinated notes
due 2007 After June 15, 2002
9 3/8% senior subordinated notes
due 2006 After October 15, 2001
9 3/4% senior notes due 2005 After December 1, 2000
9% senior subordinated notes
due 2006 After February 1, 2001
11 3/8% subordinated exchange
debentures due 2009 After January 15, 2002
- ------------------------------------------------------------
</TABLE>
NOTE 9: FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments is determined using the best
available market information and appropriate valuation methodologies. However,
considerable judgment is necessary in interpreting market data to develop the
estimates of fair value.
Accordingly, the estimates presented are not necessarily indicative of the
amounts that we could realize in a current market exchange or the value that
ultimately will be realized upon maturity or disposition. Additionally, because
of the variety of valuation techniques permitted under SFAS No. 107,
"Disclosures about Fair Values of Financial Instruments," comparability of fair
values among entities may not be meaningful. The use of different market
assumptions or estimation methodologies may have a material effect on the
estimated fair value amounts.
SHORT-TERM INSTRUMENTS
The fair values of cash and cash equivalents, short-term investments, short-term
debt and current maturities of long-term debt approximated the carrying values
at December 31, 1999 and 1998 because of the short-term nature of these
instruments.
INVESTMENTS IN MARKETABLE SECURITIES
The fair value of investments in marketable securities is based on quoted market
prices. Fair value approximated the carrying value at December 31, 1999 and
1998, as these investments are marked-to-market.
NONCURRENT CUSTOMER AND OTHER RECEIVABLES
The fair values of noncurrent customer and other receivables are estimated by
discounting the expected future cash flows at interest rates commensurate with
the creditworthiness of the customer or third party. The fair values
approximated the carrying values at December 31, 1999 and 1998.
LONG-TERM DEBT
The fair value of long-term debt is estimated using quoted market prices or
discounted cash flow methods based on our current borrowing rates for similar
types of borrowing arrangements with comparable terms and maturities. The
carrying values and fair values were $3,753 million and $3,785 million,
respectively, at December 31, 1999 and $2,506 million and $2,674 million,
respectively, at December 31, 1998.
FOREIGN CURRENCY EXCHANGE CONTRACTS
We are subject to risks associated with changes in foreign currency exchange
rates that affect the value of transactions denominated in foreign currencies.
Foreign exchange forward contracts are used to manage certain of these risks,
primarily with respect to the Canadian dollar. These contracts generally mature
in less than six months. At December 31, 1999 and 1998, the notional amount of
forward contracts was $99 million and $5 million, respectively. The increase in
1999 relates to contracts to hedge exposures at Outdoor Systems which was
acquired in December 1999. Foreign exchange forward contracts are carried on the
balance sheet at fair value based on quoted market prices to terminate the
contracts. At December 31, 1999 and 1998, the fair value of these contracts was
not material.
CBS CORPORATION 43
<PAGE> 44
INTEREST RATE SWAP CONTRACTS
At December 31, 1999, we had variable-to-fixed interest rate swap contracts
outstanding with a notional value of $775 million. The swap contracts expire in
less than three months. The fair value of these swaps at December 31, 1999 was
not material. At December 31, 1998, no interest rate swap contracts were
outstanding.
CREDIT CONSIDERATIONS
Our credit exposure under foreign currency exchange contracts and interest rate
swap contracts is limited to the cost of replacing a contract in the event of
non-performance by our counterparties. To minimize this risk, we select high
credit quality counterparties. We do not anticipate non-performance by our
counterparties.
LETTERS OF CREDIT
Outstanding letters of credit totaled $176 million in 1999 and $148 million in
1998. Management does not believe it is practicable to estimate the fair value
of these financial instruments and does not expect any material losses from
their resolution since performance is not likely to be required.
NOTE 10: INCOME TAXES
Income tax expense (benefit) included in the consolidated financial statements
is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- --------------------------------------------------------
Continuing Operations $461 $161 $ 73
Discontinued Operations 294 -- 667
Extraordinary item (3) (6) --
- --------------------------------------------------------
Income tax expense $752 $155 $740
- --------------------------------------------------------
</TABLE>
The tax provision for Discontinued Operations includes tax expense of $294
million in 1999 and $779 million in 1997 related to the gain on disposal of
Discontinued Operations.
Income Tax Expense from Continuing Operations is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- --------------------------------------------------------
Current:
Federal $159 $119 $37
State 69 28 19
Foreign 7 9 1
- --------------------------------------------------------
Total current income tax expense 235 156 57
- --------------------------------------------------------
Deferred:
Federal 222 5 14
State 4 -- 2
- --------------------------------------------------------
Total deferred income tax
expense 226 5 16
- --------------------------------------------------------
Income tax expense $461 $161 $73
- --------------------------------------------------------
</TABLE>
Consolidated Income Tax Expense (Benefit):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- --------------------------------------------------------
Current:
Federal $168 $127 $ 79
State 70 28 73
Foreign 7 9 46
- --------------------------------------------------------
Total current income tax expense 245 164 198
- --------------------------------------------------------
Deferred:
Federal 486 (9) 553
State 21 -- (41)
Foreign -- -- 30
- --------------------------------------------------------
Total deferred income tax
expense (benefit) 507 (9) 542
- --------------------------------------------------------
Income tax expense $752 $155 $740
- --------------------------------------------------------
</TABLE>
The tax benefit associated with stock based compensation plans reduced taxes
currently payable by $131 million for 1999, $121 million for 1998, and $29
million for 1997.
Deferred income taxes result from temporary differences in the financial bases
and tax bases of assets and liabilities. The types of differences that give rise
to significant portions of deferred income tax liabilities or assets are shown
in the following table:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Deferred tax assets:
Provision for expenses and losses $ 1,004 $ 1,514
Postretirement and postemployment
benefits 383 421
Minimum pension liability adjustment 239 415
Tax credit carryforwards 329 353
Long-term contracts in process -- 9
Other 83 362
- ---------------------------------------------------------
Total deferred tax assets 2,038 3,074
Valuation allowance (53) (84)
- ---------------------------------------------------------
Net deferred tax asset 1,985 2,990
- ---------------------------------------------------------
Deferred tax liabilities:
Property, equipment, and intangibles
assets (2,484) (1,768)
Leasing activities (436) (526)
Other (792) (939)
- ---------------------------------------------------------
Total deferred tax liabilities (3,712) (3,233)
- ---------------------------------------------------------
Deferred income taxes, net liability $(1,727) $ (243)
- ---------------------------------------------------------
</TABLE>
At December 31, 1999 and 1998, included in the balance sheet of Continuing
Operations and the net liabilities of Discontinued Operations are the following
deferred tax assets and liabilities:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Continuing Operations $(1,517) $(657)
Discontinued Operations (210) 414
- ---------------------------------------------------------
Deferred income taxes, net liability $(1,727) $(243)
- ---------------------------------------------------------
</TABLE>
The valuation allowance for deferred tax assets primarily reflects foreign tax
credits which may not be utilized as a result of the reduction in foreign source
income caused by the divestiture of foreign subsidiaries
44 CBS CORPORATION
<PAGE> 45
principally related to Discontinued Operations. We believe we will have
sufficient future taxable income to make it more likely than not that the net
deferred tax asset will be realized.
At December 31, 1999, CBS and Infinity Broadcasting had alternative minimum tax
credit carryfowards of $192 million and $14 million, respectively, both having
no expiration dates. In addition, CBS had $32 million of foreign tax credit
carryfowards that expire through 2003.
Infinity Broadcasting also has recognized a deferred tax asset for net operating
loss carryforwards of $91 million primarily related to Mexican operating loss
benefits that expire in 2008. The Infinity Broadcasting net operating loss
carryforwards arose from the operations of Outdoor Systems prior to the
acquisition by Infinity Broadcasting. We believe that our taxable income will
more likely than not be sufficient to utilize the net operating loss
carryforwards prior to their expiration.
Income Tax Expense (Benefit) from Continuing Operations is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- --------------------------------------------------------
Federal income tax expense (benefit)
at statutory rate $267 $ 54 $(21)
Increase (decrease) in tax resulting
from:
Amortization of goodwill 101 88 78
State income tax expense, net of
federal effect 47 18 13
Lower tax rate on income of
foreign sales corporation (4) (5) (5)
Nondeductible expenses 10 4 3
Other differences, net 40 2 5
- --------------------------------------------------------
Income tax expense from Continuing
Operations $461 $161 $ 73
- --------------------------------------------------------
</TABLE>
The foreign portion of income or loss from Continuing Operations before income
taxes and minority interest in income of consolidated subsidiaries consisted of
income of $35 million in 1999, $26 million in 1998 and $13 million in 1997. Such
income consists of profits and losses generated from foreign operations that can
be subject to both U.S. and foreign income taxes.
The federal income tax returns are settled through the year ended December 31,
1989. We have reached an agreement with the Internal Revenue Service regarding
certain issues for the years 1990 through 1992 and a tentative agreement for
1993. We believe adequate provisions for taxes have been made through December
31, 1999.
NOTE 11: PENSIONS, POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
In 1998, we adopted SFAS 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." SFAS 132 standardized the disclosures of pensions and
other postretirement benefits into a combined format but did not change the
accounting for these benefits. We have a number of defined benefit pension and
other postretirement benefit plans.
PENSION AND POSTRETIREMENT BENEFITS
The change in benefit obligation and plan assets and the amounts recognized in
the Consolidated Balance Sheet are presented in the following tables:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
---------------- -----------------
AT DECEMBER 31, 1999 1998 1999 1998
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------
CHANGE IN BENEFIT
OBLIGATION:
Benefit obligation at
beginning of year $5,430 $ 5,276 $ 1,315 $ 1,425
Service cost 34 60 4 10
Interest cost 313 359 79 98
Plan participants'
contributions 4 13 2 3
Actuarial (gain) loss (476) 463 (97) 58
Foreign currency exchange
rate change 8 (13) -- (1)
Benefits paid (542) (644) (108) (114)
Plan amendments (75) -- -- (112)
Divestitures (454) (136) (103) (52)
Curtailments (1) -- -- --
Special termination
benefits 32 52 -- --
- ----------------------------------------------------------------
Benefit obligation at end
of year $4,273 $ 5,430 $ 1,092 $ 1,315
- ----------------------------------------------------------------
CHANGE IN PLAN ASSETS:
Fair value of plan assets
at beginning of year $4,253 $ 4,014 $ 61 $ 69
Actual return on plan
assets 452 705 1 6
Employer contributions 276 296 90 97
Plan participants'
contributions 4 13 2 3
Benefits paid (542) (644) (108) (114)
Foreign currency exchange
rate change 8 (13) -- --
Divestitures (291) (118) -- --
- ----------------------------------------------------------------
Fair value of plan assets
at end of year $4,160 $ 4,253 $ 46 $ 61
- ----------------------------------------------------------------
FUNDED STATUS:
Net amount recognized $ 310 $ 128 $ (999) $(1,144)
Unrecognized actuarial
loss (546) (1,366) (126) (247)
Unrecognized prior service
benefit 126 105 79 137
Unrecognized net
transition obligation (3) (44) -- --
- ----------------------------------------------------------------
Funded status $ (113) $(1,177) $(1,046) $(1,254)
- ----------------------------------------------------------------
</TABLE>
CBS CORPORATION 45
<PAGE> 46
Amounts Recognized in the Consolidated Balance Sheet:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
----------------- ---------------
AT DECEMBER 31, 1999 1998 1999 1998
<S> <C> <C> <C> <C>
- -----------------------------------------------------------
Prepaid benefit cost $ -- $ 5 $ -- $ --
Accrued benefit
liability (407) (1,105) (999) (1,144)
Intangible asset -
Other noncurrent
assets 1 5 -- --
Accumulated other
comprehensive loss 477 808 -- --
Deferred tax effects
of accumulated other
comprehensive loss 239 415 -- --
- -----------------------------------------------------------
Net amount recognized $ 310 $ 128 $(999) $(1,144)
- -----------------------------------------------------------
</TABLE>
Of the amounts above, the following are included in net liabilities of
discontinued operations in the Consolidated Balance Sheet. All other amounts are
included in the balance sheet of Continuing Operations.
Amounts Recognized in Discontinued Operations:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
----------------- ---------------
AT DECEMBER 31, 1999 1998 1999 1998
<S> <C> <C> <C> <C>
- -----------------------------------------------------------
Prepaid benefit cost $ -- $ 5 $ -- $ --
Accrued benefit
liability -- (160) -- (98)
- -----------------------------------------------------------
Total $ -- $ (155) $ -- $ (98)
- -----------------------------------------------------------
</TABLE>
Due to the disposition of certain industrial businesses in 1999 and 1998, we
recognized losses (gains) from curtailments and settlements as follows:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
----------------- ---------------
AT DECEMBER 31, 1999 1998 1999 1998
<S> <C> <C> <C> <C>
- -----------------------------------------------------------
Recognition of:
Actuarial loss $ 136 $ 26 $ 20 $ 2
Prior service benefit (41) (16) (48) (8)
Net obligation 36 22 -- --
- -----------------------------------------------------------
Net amount recognized $ 131 $ 32 $ (28) $ (6)
- -----------------------------------------------------------
</TABLE>
Selected information for plans with accumulated benefit obligation in excess of
plan assets:
<TABLE>
<CAPTION>
PENSION BENEFITS
-----------------
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Projected benefit obligation $(3,483) $(4,495)
Accumulated benefit obligation (3,455) (4,316)
Fair value of plan assets 3,046 3,234
- ---------------------------------------------------------
</TABLE>
Included in pension plan assets at December 31, 1999 are 5,614,600 shares of
CBS's common stock with a market value of $359 million.
The weighted average assumptions used to measure the present value of benefit
obligations and net periodic benefit cost are shown in the following table:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
------------------ ------------------
AT DECEMBER 31, 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------
Discount rate 8.0% 6.75% 7.25% 8.0% 6.75% 7.25%
Expected return on plan
assets 8.2 9.5 9.5 7.9 7.0 7.0
Compensation increase
rate 5.5 4.0 4.0 5.5 4.0 4.0
- ----------------------------------------------------------------
</TABLE>
For measurement purposes, an 8% annual rate of increase in the per capita cost
of covered health care benefits was assumed for 2000. The rate was assumed to
decrease gradually to 6% for 2004 and remain at that level thereafter.
Components of Net Periodic Benefit Cost:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
--------------------- ------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------
Service cost $ 34 $ 60 $ 62 $ 4 $10 $ 11
Interest cost 313 359 384 79 98 104
Expected return on plan
assets (332) (342) (346) (4) (5) (5)
Amortization of
unrecognized net
transition obligation 5 22 27 -- -- --
Amortization of
unrecognized prior
service benefit (13) (14) (10) (10) (3) (3)
Recognized actuarial
loss 88 93 83 7 5 4
- --------------------------------------------------------------------
Net periodic benefit
cost $ 95 $ 178 $ 200 $76 $105 $111
- --------------------------------------------------------------------
DISTRIBUTION OF NET PERIODIC BENEFIT COST:
Continuing Operations $ 83 $ 106 $ 117 $72 $80 $ 69
Discontinued Operations 12 72 83 4 25 42
- --------------------------------------------------------------------
Net periodic benefit
cost $ 95 $ 178 $ 200 $76 $105 $111
- --------------------------------------------------------------------
</TABLE>
A one percentage point increase or decrease in the assumed health care cost
trend rates would have an approximate effect of a $2 million increase or
decrease on the total of service and interest cost components and a $26 million
increase or decrease on the postretirement benefit obligation.
We also participate in various multi-employer, union-administered defined
benefit plans that cover certain broadcast employees. Contributions for pension
and other postretirement benefits to these multi-employer plans were $16 million
in 1999, $14 million in 1998 and $13 million in 1997.
POSTEMPLOYMENT BENEFITS
We provide certain postemployment benefits to former or inactive employees and
their dependents during the time period following employment but before
retirement. Our liability for postemployment benefits totaled
46 CBS CORPORATION
<PAGE> 47
$34 million in 1999 and $55 million in 1998. The portion of this liability
included in the net assets of Discontinued Operations was $26 million in 1998.
NOTE 12: DISCONTINUED OPERATIONS
In recent years, we adopted various disposal plans that, in the aggregate,
provide for the disposal of all of our industrial and financial services
businesses. The assets and liabilities and the results of operations for these
businesses are classified as Discontinued Operations for all periods presented.
Certain environmental, litigation and other liabilities associated with the
industrial businesses were not assumed by other parties in the divestiture
transactions. These liabilities were retained by CBS and reported in Retained
liabilities of discontinued businesses in the Consolidated Balance Sheet. See
notes 7 and 19 to the financial statements.
During 1999, we closed on the previously announced sales of our Energy Systems,
Government Operations, Machinery Apparatus Operations and Plant Apparatus
Division businesses for approximately $250 million in cash plus the assumption
by the buyers of liabilities, commitments and obligations totaling approximately
$970 million, all in accordance with the terms of their respective agreements.
These disposals, as well as purchase price resolutions related to businesses
previously disposed, resulted in a gain of $628 million, net of income tax
expense of $294 million.
During 1998 and 1997, we sold several businesses as well as certain securities
and other assets in connection with our disposal plans. The most significant of
these disposals were the 1998 sale of the Power Generation business for $1.2
billion in cash and the 1997 sale of Thermo King for $2.6 billion in cash. In
1997, we recognized a gain of $871 million, net of income tax expense of $779
million, primarily related to the sale of Thermo King.
NET LIABILITIES OF DISCONTINUED OPERATIONS
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- ---------------------------------------------------------
Total assets (including cash and cash
equivalents of $55 and $27) $ 613 $ 1,919
Less: Total liabilities (1,250) (3,203)
- ---------------------------------------------------------
Net liabilities of Discontinued
Operations $ (637) $(1,284)
- ---------------------------------------------------------
</TABLE>
Total assets of Discontinued Operations at December 31, 1999 consist primarily
of portfolio investments that remain from the financial services business. These
investments totaled $555 million and $642 million at December 31, 1999 and 1998.
The portfolio investments consist of direct financing and leveraged leases and
are generally expected to liquidate in accordance with contractual terms through
2015. At December 31, 1999 and 1998, 84% and 81% of the portfolio investments
related to aircrafts while the remainder primarily related to cogeneration
facilities. Approximately $281 million of the portfolio investment balance in
1999 relates to the estimated residual value of leased assets.
Total liabilities of Discontinued Operations consist primarily of the estimated
loss on disposal of $623 million in 1999 and $1,309 million in 1998. At December
31, 1999, the estimated loss on disposal primarily includes the portfolio
investments' estimated results of operations through the expected date of
liquidation, unresolved purchase price adjustments, costs to dispose of surplus
property held for sale and certain contingencies related to the divestiture of
the industrial businesses. Satisfaction of these liabilities is expected to
occur over the next several years. During 1999, we resolved several purchase
price adjustments resulting in a reduction to the estimated loss on disposal. We
believe the liability for estimated loss on disposal at December 31, 1999 is
adequate to cover liquidation of the remaining assets and liabilities of
Discontinued Operations, resolution of unresolved purchase price adjustments and
other related costs and contingencies.
Liabilities of Discontinued Operations also include portfolio related debt of
$415 million and $428 million at December 31, 1999 and 1998, as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- --------------------------------------------------------
8 7/8% notes due 2001 $230 $229
8 3/8% notes due 2002 122 122
Other 63 77
- --------------------------------------------------------
415 428
Less: Current maturities (10) (46)
- --------------------------------------------------------
Long-term debt $405 $382
- --------------------------------------------------------
</TABLE>
Contractual maturities for leasing rental payments receivable at December 31,
1999 are as follows:
<TABLE>
<CAPTION>
YEAR OF MATURITY
---------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------
Contractual
Maturities $32 $41 $33 $35 $26 $200
- --------------------------------------------------------------------
</TABLE>
SETTLEMENT AND ENVIRONMENTAL LIABILITIES
Prior to the disposition of our Energy Systems business in 1999, we had been
defending various lawsuits claiming damages in connection with certain steam
generators sold by the Energy Systems business. Settlement agreements had been
entered into resolving a number of the litigation claims, which generally
required that we provide certain products and services at prices discounted at
varying rates. In addition, we
CBS CORPORATION 47
<PAGE> 48
were 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.
RESULTS OF OPERATIONS
Summarized in the following table are the operating results of Discontinued
Operations, primarily related to industrial businesses, after the measurement
date charged directly to the liability for estimated loss on disposal.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- ----------------------------------------------------
Sales of products or
services $137 $2,256 $1,319
Pre-tax loss 51 181 101
- ----------------------------------------------------
</TABLE>
The loss from Discontinued Operations reflected in the Consolidated Statement of
Income includes the operating results of the discontinued businesses prior to
adoption of the related disposal plans. For the year ended December 31, 1997,
this loss totaled $191 million, net of tax benefits of $112 million. Sales of
Discontinued Operations in 1997 prior to adoption of the related disposal plans
totaled $2,950 million.
CASH FLOWS
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. Cash flows associated with the financial services
business, including interest cost on debt of Discontinued Operations and the
repayment of that debt, will be satisfied through borrowings under the CBS
revolver and cash from continuing operations, which the cash inflows from
contractual liquidation of the leasing portfolio are expected to be sufficient
to repay. Operating cash flows of Discontinued Operations, which include cash
flows from the operations of the businesses prior to the date of disposal as
well as payments for disposition-related costs, are presented separately from
Continuing Operations in the Consolidated Statement of Cash Flows.
NOTE 13: RESTRUCTURING
In recent years, we have restructured our corporate headquarters and certain
businesses in an effort to reduce our cost structure and remain competitive.
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 the
restructuring activities and provide no future benefit.
Generally, separated employees receive benefits under certain plans, including
layoff income benefits, retraining, and/or outplacement assistance. The amount
included for these benefits in the restructuring charge represents the
incremental cost of such benefits over those amounts previously accrued under
SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
Restructuring costs totaling $2 million in 1999, $62 million in 1998 and $15
million in 1997 are included in our results of operations. Except for lease
termination and other facility closure costs of $10 million at our television
segment in 1998, these costs were essentially for the elimination of positions
and separation of employees. Expenditures for employee separation costs
generally are paid over a period of up to two years following the separation
although payments can extend longer in certain cases. Certain expenditures for
lease commitments will extend over the next several years. The remaining
liability of $15 million at December 31, 1999 is primarily for lease termination
costs and to a lesser extent employee separation costs.
The 1998 plan primarily included the separation of 441 employees and the
termination of leases at our Television and Cable segments. Implementation of
the plan began in September 1998 and was to be completed in 1999. Of the 441
employees, 283 employees have been terminated through December 31, 1999 while 80
employees will no longer be terminated. The remaining 78 employees are expected
to be terminated by year-end 2000. In the second quarter of 1999, we reversed a
total of $26 million of the $62 million restructuring reserve primarily as a
result of television programming changes and lower than expected severance
costs.
The 1997 plan primarily included the separation of 118 employees at the former
Pittsburgh headquarters related to the transfer of our overhead functions to New
York. Implementation of this plan began in January 1998 and was completed by the
end of 1999. Future expenditures for the 1997 plan consist prima-
48 CBS CORPORATION
<PAGE> 49
rily of remaining lease commitments and separation costs for actions already
taken.
The following is a reconciliation of the restructuring liability:
<TABLE>
<S> <C>
- --------------------------------------------------------
Balance at January 1, 1997 $117
Provision for restructuring 15
Cash expenditures (83)
Non-cash charges (8)
- --------------------------------------------------------
Balance at December 31, 1997 41
Provision for restructuring 62
Cash expenditures (37)
- --------------------------------------------------------
Balance at December 31, 1998 66
Provision for restructuring 2
Cash expenditures (27)
Change in estimates (26)
- --------------------------------------------------------
Balance at December 31, 1999 $ 15
- --------------------------------------------------------
</TABLE>
Subsequent to December 31, 1999, we approved a proposed plan to integrate the
newly acquired operations of King World with the existing CBS syndication
business to achieve synergies and eliminate redundant functions. The plan is
expected to result in a restructuring accrual in the range of $10 million to $14
million in 2000 and reflects primarily severance-related and relocation costs of
the acquired business. Restructuring costs related to the historical operating
activities of King World will increase goodwill and those costs incurred
relating to the existing CBS syndication business will be charged to operations.
The restructuring accrual includes severance-related and relocation costs of the
acquired business for approximately 70 employees in redundant functions and are
expected to be paid by year-end 2000. Terminations of employees are expected to
be completed by year-end 2000.
NOTE 14: LEASES AND OTHER COMMITMENTS
LEASES
We lease certain office space and equipment through various operating and
capital lease agreements. Rental expense for Continuing Operations was $131
million in 1999, $85 million in 1998 and $64 million in 1997. These amounts
include immaterial amounts for contingent rentals and sublease income.
Additionally, our outdoor advertising business has franchise rights entitling it
to display advertising on such media as buses, taxis, trains, bus shelters,
terminals, billboards, and phone kiosks. Under most of these franchise
agreements, the franchiser is entitled to receive the greater of a percentage of
the relevant advertising revenues, net of advertising agency fees, or a
specified guaranteed minimum annual payment. Franchise expense totaled $271
million in 1999, $222 million in 1998 and $192 million in 1997.
Future minimum rental and franchise payments are as follows:
<TABLE>
<CAPTION>
GUARANTEED
LEASES MINIMUM
------------------- FRANCHISE
AT DECEMBER 31, CAPITAL OPERATING PAYMENTS
<S> <C> <C> <C>
- -----------------------------------------------------------
2000 $ 6 $240 $202
2001 6 128 190
2002 6 104 144
2003 6 88 107
2004 8 57 88
Thereafter 14 150 105
- -----------------------------------------------------------
Minimum rental and
franchise payments $46 $767 $836
- -----------------------------------------------------------
Less: Interest and
executory costs (15)
- ---------------------------------
Present value of minimum
rental payments $31
- ---------------------------------
</TABLE>
OTHER COMMITMENTS
We routinely enter into commitments to purchase the rights to broadcast
programs, including feature films and sports events. These contracts permit the
broadcast of such properties for various periods. At December 31, 1999, we were
committed to make payments under such broadcasting contracts, along with
commitments for talent contracts, of $13.5 billion.
Aggregate payments related to these commitments during the next five years and
thereafter are as follows:
<TABLE>
<CAPTION>
AGGREGATE
AT DECEMBER 31, PAYMENTS
<S> <C>
- ---------------------------------------------------------
2000 $ 1,545
2001 1,470
2002 1,332
2003 1,399
2004 1,340
Thereafter 6,440
- ---------------------------------------------------------
Total other commitments $13,526
- ---------------------------------------------------------
</TABLE>
NOTE 15: SHAREHOLDERS' EQUITY
Our Board of Directors authorized a $3 billion multi-year stock repurchase
program in 1998. During 1999, we purchased 11.5 million shares for $489 million,
bringing our total share repurchases under this program to 39.8 million shares
for $1.3 billion. Of the common stock held in treasury at December 31, 1999 and
1998, 14 million and 16 million shares, respectively, were held by our rabbi
trusts for the payment of benefits under executive benefit plans.
In October 1999, in conjunction with our acquisition of KTVT-TV in Dallas
Fort-Worth, we issued 10,142
CBS CORPORATION 49
<PAGE> 50
shares of CBS Series B participating preferred stock (the preferred stock) with
a par value $1.00 per share. Total consideration for the issuance of the
preferred stock was $485 million. Holders of the preferred stock are entitled to
receive, when and if declared by the Board of Directors, a cash dividend equal
to 1,000 times the aggregate per share amount of each cash dividend declared or
paid on the CBS common stock. Each share of the preferred stock is entitled to
1,000 votes per share and is convertible at the option of the holder into 1,000
shares of our common stock. Approximately 10,142,000 common shares have been
reserved for conversion. The preferred stock ranks senior to the common shares
outstanding. The liquidation preference of the preferred stock is equal to the
greater of $1.00 per share plus accrued and unpaid dividends, or an amount equal
to 1,000 times the per share amount to be distributed to common shareholders.
On May 30, 1997, we redeemed all outstanding shares of CBS Series C Conversion
Preferred Stock (Series C Preferred) and, in connection with the redemption,
issued 32 million shares of common stock. All accrued and unpaid dividends on
the redeemed shares of CBS Series C Preferred were paid on May 30, 1997.
COMMON SHARES
(in thousands)
<TABLE>
<CAPTION>
ISSUED IN TREASURY OUTSTANDING
<S> <C> <C> <C>
- ------------------------------------------------------------
Balance at January 1,
1997 608,972 22,627 586,345
Shares issued for
dividend reinvestment
plan 384 (29) 413
Shares issued for
employee plans 17,245 (925) 18,170
Shares issued for
acquisitions 59,058 -- 59,058
Shares issued for
conversion of Series
C Preferred 31,859 -- 31,859
- ------------------------------------------------------------
Balance at December 31,
1997 717,518 21,673 695,845
Shares used for
dividend reinvestment
plan 132 -- 132
Shares issued for
employee plans 15,881 (6,811) 22,692
Shares repurchased -- 28,342 (28,342)
- ------------------------------------------------------------
Balance at December 31,
1998 733,531 43,204 690,327
Shares issued for
employee plans 13,845 (738) 14,583
Shares issued for
acquisitions 57,771 -- 57,771
Shares repurchased -- 11,467 (11,467)
- ------------------------------------------------------------
Balance at December 31,
1999 805,147 53,933 751,214
- ------------------------------------------------------------
</TABLE>
On December 29, 1995, the Board of Directors adopted a shareholder rights plan
providing for the distribution of one right for each share of common stock
outstanding on January 9, 1996 or issued thereafter until the occurrence of
certain events. The rights become exercisable only in the event, with certain
exceptions, that an acquiring party accumulates 15% or more of our voting stock
or a party announces an offer to acquire 30% or more of the voting stock. The
rights have an exercise price of $64 per share and expire on January 9, 2006.
The Board of Directors has adopted a resolution affirming its intention to
redeem the rights in January 2001 (if still outstanding). Upon the occurrence of
certain events, holders of the rights will be entitled to purchase either CBS
preferred shares or shares in an acquiring entity at half of their market value.
We are entitled to redeem the rights at a value of $.01 per right at any time
until the tenth day following the acquisition of a 15% position in our voting
stock. The rights will expire at the time of consummation of the Viacom/CBS
merger.
OTHER COMPREHENSIVE INCOME
In 1998 we adopted SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income and its
components in the financial statements but did not change the recognition or
measurement of assets and liabilities. Comprehensive income is used to describe
all changes in equity from transactions and other events and circumstances from
nonowner sources. Comprehensive income includes net income and other
comprehensive income or loss items.
The following table presents the components of Accumulated other comprehensive
loss, net of related taxes presented in our Consolidated Balance Sheet:
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999 1998
<S> <C> <C>
- --------------------------------------------------------
Minimum pension liability adjustment $(477) $(808)
Unrealized gains on marketable securities 73 1
Foreign currency translation adjustment (13) --
- --------------------------------------------------------
Total accumulated other comprehensive
loss $(417) $(807)
- --------------------------------------------------------
</TABLE>
NOTE 16: SUBSIDIARY STOCK TRANSACTIONS
In December 1998, Infinity Broadcasting, our then wholly owned subsidiary,
issued 155 million shares of its Class A common stock in an initial public
offering (IPO). We own all of the 700 million outstanding shares of Infinity
Broadcasting's Class B common stock. Holders of Infinity Broadcasting Class A
common stock generally have identical rights to the
50 CBS CORPORATION
<PAGE> 51
holders of Infinity Broadcasting Class B common stock except that the holders of
the Class A common stock are entitled to one vote per share, while holders of
the Class B common stock are entitled to five votes per share on matters
submitted to a vote of the stockholders. In addition, the shares of Class B
common stock maintain certain conversion rights and transfer restrictions. As a
result of the IPO, at December 31, 1998, we beneficially owned 82% of Infinity
Broadcasting's equity, which represented 96% of the voting power.
Proceeds from the offering, based on the offering price of $20.50 per share,
totaled $3.2 billion ($3.0 billion, net of offering expenses). A gain of $1.4
billion was recognized in shareholders' equity as a direct increase in capital
in excess of par value.
In June 1999, Infinity Broadcasting's Board of Directors authorized a $500
million stock repurchase program. By December 31, 1999 Infinity Broadcasting had
bought back approximately 17.6 million Class A common shares at a total cost of
$485 million. This stock repurchase program resulted in an increase in our
ownership interest to approximately 84%, excluding the dilutive effect of stock
options, and resulted in incremental goodwill of approximately $300 million. In
January 2000, Infinity Broadcasting's Board of Directors authorized an
additional $500 million stock repurchase plan.
The increase in our ownership interest as a result of stock repurchases under
the above described plan was more than offset by Infinity Broadcasting's $8.7
billion, December 7, 1999, acquisition of Outdoor Systems through the issuance
of approximately 233 million shares of Infinity Broadcasting Class A common
stock. This issuance reduced our ownership interest in Infinity Broadcasting
from approximately 84% to just over 65% and reduced our voting interest to
approximately 90%, both excluding the dilutive effect of stock options. The
impact of this issuance of subsidiary stock resulted in the recognition of
approximately a $2.7 billion gain through shareholders' equity as a direct
increase to capital in excess of par value. The reduction in our ownership
interest also results in an increase in minority interest participation at the
time of the transaction and in Infinity Broadcasting's future results of
operations from the date of the transaction.
Additionally, during 1999, stock transactions of our equity method investees
resulted in our recording a net gain of approximately $135 million through
shareholders' equity as a direct increase to capital in excess of par value. The
offset resulted in a net increase in our related investment balances for the
respective investees.
Under an intercompany agreement, we provide to Infinity Broadcasting a number of
services, including executive, human resources, legal, finance, information
management, internal audit, tax, and treasury services. The costs of these
services are allocated according to established methodologies determined on an
annual basis. In addition, a tax sharing agreement generally provides that, for
any taxable period in which Infinity Broadcasting is included in our
consolidated tax return, the amount of income taxes to be paid by them were
determined as if they had filed separate income tax returns. At the time of the
Outdoor Systems acquisition, because our ownership interest in Infinity
Broadcasting fell below 80% they no longer qualified for inclusion in our
federal income tax filing and some state tax combine filings, and therefore in
those instances they will be filing a separate tax return.
NOTE 17: STOCK-BASED COMPENSATION PLANS
At December 31, 1999, we had stock-based compensation plans at CBS and Infinity
Broadcasting that provide for the granting of stock options, restricted stock,
and other performance awards to employees or directors. We account for our
stock-based compensation plans under APB 25. For stock options granted, the
option price is not less than the market value of shares on the grant date;
therefore, no compensation cost has been recognized for stock options granted.
Had compensation cost for these plans been determined under the provisions of
SFAS 123, our net income and earnings per share would have been reduced to the
following pro forma amounts:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- ---------------------------------------------------------
Report results:
Net income (loss) $ 780 $ (21) $549
Net income (loss) per
common share:
Basic 1.10 (.03) .84
Diluted 1.08 (.03) .84
- ---------------------------------------------------------
Pro Forma results:
Net income (loss) $ 728 $ (55) $487
Net income (loss) per
common share:
Basic 1.04 (.08) .74
Diluted 1.01 (.08) .74
- ---------------------------------------------------------
</TABLE>
These pro forma effects may not be representative of future amounts since the
estimated fair value of stock options on the date of grant is amortized to
expense over the vesting period, and additional options may be granted in future
years.
CBS CORPORATION 51
<PAGE> 52
CBS STOCK OPTION PLANS
At December 31, 1999, shares authorized for awards under the CBS plans totaled
66.9 million of which 10.3 million shares remained available for future awards.
Generally, stock option awards vest over a three-year period from the date of
grant and expire 10 years after the date of grant.
In connection with the acquisitions of King World, TNN and CMT, and Infinity
Media Corporation, we assumed options outstanding under the King World, Gaylord
and Infinity Media Corporation plans as of the date of the acquisition. The
then-outstanding options were converted to options to acquire CBS's common stock
and are included in the following table as awards assumed. Exercise prices for
awards assumed in the 1999 King World acquisition range from $12.81 to $44.30.
Exercise prices for awards assumed in the 1997 TNN and CMT acquisition, range
from $9.45 to $25.41. Exercise prices for awards assumed in the 1996 Infinity
Media Corporation acquisition, range from $0.0002 to $19.66. Generally, these
options assumed have a ten-year term and become exercisable over a vesting
period of five years.
In addition to the stock options shown in the following table, we granted 8,903
shares, 9,493 shares and 9,449 shares of restricted stock to employees and
directors in 1999, 1998 and 1997, respectively. These shares had a
weighted-average fair value at date of grant of $34.64, $29.96 and $18.52,
respectively, with a weighted-average vesting period of one year.
CBS STOCK OPTION INFORMATION
(options in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Balance at January 1, 54,617 $18.14 60,409 $14.05 57,816 $13.15
Options granted 8,845 38.70 9,494 29.86 12,917 19.30
Awards assumed 12,494 23.97 -- -- 124 17.06
Options exercised (13,756) 19.00 (14,483) 7.90 (8,106) 14.62
Options forfeited (766) 30.82 (799) 26.45 (1,945) 10.69
Options expired (13) 25.72 (4) 26.19 (397) 30.70
- --------------------------------------------------------------------------------------------------------------
Balance at December 31, 61,421 21.93 54,617 18.14 60,409 14.05
- --------------------------------------------------------------------------------------------------------------
Exercisable at December 31, 44,229 $17.80 44,990 $15.90 45,267 $18.87
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
FAIR EXERCISE FAIR EXERCISE FAIR EXERCISE
VALUE PRICE VALUE PRICE VALUE PRICE
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Options granted:
Exercise price equaled grant date
stock price $16.82 $38.70 $12.85 $29.86 $7.92 $19.30
Exercise price exceeded grant date
stock price -- -- -- -- 6.51 23.46
- --------------------------------------------------------------------------------------------------------------
</TABLE>
52 CBS CORPORATION
<PAGE> 53
CBS STOCK OPTIONS OUTSTANDING AT DECEMBER 31, 1999
(options in thousands)
<TABLE>
<CAPTION>
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
WEIGHTED- REMAINING EXERCISE
RANGE OF OUTSTANDING AT AVERAGE CONTRACTUAL EXERCISABLE AT PRICE OF
EXERCISE PRICES DECEMBER 31, 1999 EXERCISE PRICE LIFE IN YEARS DECEMBER 31, 1999 EXERCISABLE OPTIONS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
$.0002 -- 4.99 3,325 $ 1.92 2.36 3,325 $ 1.92
5 -- 9.99 4,512 7.06 4.55 4,512 7.06
10 -- 14.99 4,804 13.42 5.28 4,182 13.37
15 -- 19.99 17,296 17.83 5.77 16,980 17.82
20 -- 29.99 20,793 25.55 6.46 13,398 24.55
30 -- 39.99 6,881 33.95 8.39 1,829 33.71
40 -- 60.47 3,810 44.84 9.52 3 43.09
- --------------------------------------------------------------------------------------------------------------------
Total 61,421 21.93 44,229 17.80
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black Scholes Option pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
Risk free interest rate 5.1% 5.5% 6.4%
Expected life (years) 6.5 6.6 7.3
Expected volatility 32.2% 31.0% 30.0%
Expected dividend yield -- -- 1.0%
- ------------------------------------------------------------------------------------
</TABLE>
Each CBS option outstanding at the time of the merger will convert into 1.085
options to purchase shares of Viacom non-voting Class B common stock at an
exercise price adjusted for the 1.085 conversion factor. The majority of these
options contain a provision that accelerates their vesting upon a change in
control. The consummation of the merger with Viacom would be considered to be a
change in control under a majority of these option agreements. Therefore,
approximately 11 million of unvested options outstanding at the date we entered
into the merger agreement will become fully vested upon the closing of the
transaction.
Additionally, approximately 36 million of the options outstanding at the date we
entered into the merger agreement contain a limited stock appreciation right
feature that becomes exercisable for a thirty-day period upon a change in
control. This feature entitles the holder to receive the highest reported
closing sales price of a share of CBS common stock on the New York Stock
Exchange during a period preceding the date of exercise.
INFINITY STOCK OPTION PLANS
At December 31, 1999, Infinity Broadcasting had several stock-based compensation
plans that provide for the granting of stock-based awards, including non-
statutory stock options, to non-employee directors of Infinity Broadcasting, and
to officers or employees of Infinity Broadcasting, its parent or their
subsidiaries. At December 31, 1999, approximately 18 million shares (excluding
Outdoor Systems options assumed) of Infinity Broadcasting's Class A common stock
were authorized for awards under the plans of which 12 million shares remained
available for future awards. Generally, stock option awards vest three-years
from the date of grant and expire ten years from the date of grant.
In conjunction with the acquisition of Outdoor Systems on December 7, 1999,
Infinity Broadcasting assumed 28 million options to acquire shares of Infinity
Broadcasting's Class A common stock with a weighted-average exercise price of
$2.89 per share.
CBS CORPORATION 53
<PAGE> 54
INFINITY BROADCASTING STOCK OPTION INFORMATION
(options in thousands)
<TABLE>
<CAPTION>
1999
---------------------------
WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Balance at January 1, -- $ --
Options granted 5,716 26.15
Awards assumed 27,822 2.89
Options exercised (724) 1.65
Options forfeited (48) 25.94
- -------------------------------------------------------------------------------------------
Balance at December 31, 32,766 6.94
- -------------------------------------------------------------------------------------------
Exercisable at December 31, 27,098 $ 2.93
- -------------------------------------------------------------------------------------------
</TABLE>
Options to acquire shares of Infinity Broadcasting's Class A common stock
granted during 1999 had a weighted average fair value per share of $13.37.
INFINITY BROADCASTING STOCK OPTIONS OUTSTANDING AT DECEMBER 31, 1999
(options in thousands)
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE WEIGHTED-AVERAGE
WEIGHTED- REMAINING EXERCISE
RANGE OF OUTSTANDING AT AVERAGE CONTRACTUAL EXERCISABLE AT PRICE OF
EXERCISE PRICES DECEMBER 31, 1999 EXERCISE PRICE LIFE IN YEARS DECEMBER 31, 1999 EXERCISABLE OPTIONS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
$ -- 65(1) $ -- N/A 65 $ --
.01 -- .99 17,163(2) .04 N/A 17,163 .04
1.00 -- 4.99 5,803 1.58 6.4 5,803 1.58
5.00 -- 9.99 159 7.25 7.4 159 7.25
10.00 -- 14.99 1,259 12.47 8.1 1,259 12.47
15.00 -- 19.99 2,649 19.87 9.2 2,649 19.87
20.00 -- 27.99 5,668 26.15 9.2 -- --
- ---------------------------------------------------------------------------------------------------------------------
Total 32,766 6.94 27,098 2.93
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options have no exercise price, have no expiration date and are
exercisable only upon termination.
(2) These options are fully exercisable and have no expiration date.
NOTE 18: SEGMENT INFORMATION
In 1998, we adopted SFAS No. 131, "Disclosure about Segments of a Business
Enterprise and Related Information." The segment information reflects a new
organizational structure which presents our Internet operations as a separate
segment called the Internet Group, formerly referred to as New Media. These
results were previously reported within the Television segment. This change was
as a result of our growth in Internet based companies during 1999 and the
identification of a separate management team to run these operations. The prior
segment information presented in this note has been restated to reflect the
Internet Group as a separate segment.
We are aligned into four business segments: Infinity, Television, Cable and the
Internet Group. These business segments are consistent with our management of
these businesses, our financial reporting structure and operating focus.
Our segments operate predominately in the United States. The accounting policies
as described in the summary of significant accounting policies note are applied
consistently across the segments. Intersegment sales and transfers are not
material to our Infinity, Television and Cable segment results and are
eliminated in Corporate and Other. Our Internet Group segment includes $19
million of advertising expense for our consolidated Internet investments for
advertising and promotion time provided by our Infinity, Television and Cable
segments.
We evaluate operating performance based on earnings before interest, taxes,
minority interest, equity losses, depreciation and amortization (EBITDA). We
believe that EBITDA is an appropriate measure of evaluating the operating
performance of our segments. EBITDA eliminates the effect of depreciation and
amortization of tangible and intangible assets caused by the
54 CBS CORPORATION
<PAGE> 55
magnitude and timing of acquisitions. However, EBITDA should be considered in
addition to, not as a substitute for operating earnings, net earnings, cash
flows, and other measures of financial performance reported in accordance with
generally accepted accounting principles. As EBITDA is not a measure of
performance calculated in accordance with generally accepted accounting
principles, this measure may not be comparable to similarly titled measures
employed by other companies.
SEGMENT DATA
<TABLE>
<CAPTION>
DEPRECIATION
REVENUES EBITDA AND AMORTIZATION
--------------------------- ----------------------- ------------------
YEAR ENDED DECEMBER 31, 1999 1998 1997 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Infinity $ 2,449 $ 1,893 $ 1,480 $1,067 $ 798 $ 575 $327 $250 $197
Television 4,371 4,369 3,589 606 385 339 231 209 209
Cable 565 546 302 219 148 73 105 107 35
Internet Group 13 4 -- (37) (4) -- 1 -- --
- ---------------------------------------------------------------------------------------------------------------------
Total combined segments 7,398 6,812 5,371 1,855 1,327 987 664 566 441
Corporate and Other (25) (7) (4) (44) (68) (72) 5 5 4
Residual costs of discontinued businesses -- -- -- (175) (163) (143) -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total $ 7,373 $ 6,805 $ 5,367 $1,636 $1,096 $ 772 $669 $571 $445
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EXPENDITURES FOR
TOTAL ASSETS LONG-LIVED ASSETS
--------------------------- -----------------------
DECEMBER 31, 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Infinity $19,561 $10,798 $ 7,074 $ 53 $ 32 $ 15
Television 10,260 6,665 6,602 295 201 264
Cable 1,809 1,850 1,958 10 18 17
Internet Group 849 28 8 53 10 --
- ------------------------------------------------------------------------------------------------
Total combined segments 32,479 19,341 15,642 411 261 296
Corporate and Other 646 798 861 16 5 4
- ------------------------------------------------------------------------------------------------
Total $33,125 $20,139 $16,503 $ 427 $ 266 $ 300
- ------------------------------------------------------------------------------------------------
</TABLE>
INFINITY
Management characterizes its Infinity segment as out-of-home media because the
majority of radio listening and virtually all viewing of outdoor advertising
takes place in automobiles, transit systems, on the street and other locations
outside the consumer's home, including listening to radio at work. The Infinity
segment owns and operates radio stations and participates in the outdoor
advertising business. Radio station revenues were 75% in 1999, 77% in 1998 and
75% in 1997 of total Infinity revenues. The percentage of outdoor revenues is
expected to increase in 2000 due to the full-year impact of the December 1999
acquisition of Outdoor Systems. Infinity Broadcasting owns and operates 162
radio stations located in 34 markets. Sixty-two of these radio stations are in
the nation's ten largest radio markets. We believe that the presence of Infinity
Broadcasting's radio stations in large markets makes it attractive to
advertisers and that the overall diversity of its stations reduces its
dependence on any single station, local economy, or advertiser. Infinity
Broadcasting also has a minority equity investment in Westwood One, Inc.
(Westwood One), which it manages. Westwood One produces and distributes
syndicated and network radio programming and also manages the CBS Radio Network.
Infinity Broadcasting operates the largest outdoor advertising business in North
America through its wholly owned subsidiaries. Our outdoor advertising business
sells advertising space throughout the United States, United Kingdom, Republic
of Ireland, Canada, Mexico, and the Netherlands on various media, including
buses, trains, malls, train platforms and terminals throughout commuter rail
systems, and on painted billboards, eight and thirty-sheet posters, and phone
kiosks.
TELEVISION
The Television segment consists of three integrated operations: the CBS
television network; our owned and operated television stations; and our
television syndication operations. In November 1999, we acquired King World, a
leading syndicator of television programming. See note 2 to the financial
statements.
The CBS television network produces or acquires, and distributes a comprehensive
schedule of news, public affairs, entertainment and sports programming, to our
CBS CORPORATION 55
<PAGE> 56
owned and operated television stations and more than 200 affiliates. Our owned
and operated television stations and domestic affiliates serve, in the
aggregate, all 50 states and the District of Columbia. The television network is
responsible for sales of advertising time for the television network broadcasts
of news, public affairs, sports and entertainment programming. Our programming
also involves the production, distribution and marketing of first-run and
off-network syndicated programming to television stations, cable, home video,
in-flight, and emerging media worldwide. Subsequent to December 31, 1999, we
approved a proposed plan to integrate the newly acquired operations of King
World with the existing CBS syndication business to achieve synergies and
eliminate redundant functions. See notes 2 and 13 to the financial statements.
The success of our television segment is driven primarily by programming. Our
network depends on our owned and operated television stations, our television
syndication operations and the affiliates for distribution of the programming.
In addition, the network provides the majority of programming aired at our owned
and operated television stations.
CABLE
The Cable segment primarily consists of our cable networks, including TNN, CMT
and two regional sports networks. These networks are distributed by cable
television and other multi-channel technologies.
TNN is an advertiser-supported cable network featuring country lifestyle and
entertainment programming. The network serves approximately 76 million U.S.
homes. TNN offers a broad array of programming from original series to movies to
country music concerts as well as motorsports, including the NASCAR Winston Cup
Races, outdoor sports such as hunting and fishing, professional bull riding and
sports entertainment such as wrestling. In April 2000, TNN is expected to be the
primary network for the Arena Football League. Our rights to broadcast the
NASCAR Winston Cup races were not renewed and expire during the year 2000.
CMT is an advertiser-supported, 24-hour cable network with a country music video
format. It reaches approximately 39 million U.S. homes.
In addition, we own and operate the Midwest Sports Channel, a regional sports
network in Minneapolis, and we are a majority owner of Home Team Sports, a
regional sports network serving the mid-Atlantic states.
Also part of the cable operations, Group W Network Services (GWNS) is a global
provider of satellite services to broadcast, cable, and corporate networks.
Based in Stamford, Connecticut, GWNS provides transmission and other technical
services to U.S. broadcast networks and to many major cable networks.
INTERNET GROUP
The Internet Group segment consists of our consolidated and nonconsolidated
Internet businesses including CBS.com, Inc. the operator of two Internet sites-
CBS.com and CBSNews.com. CBS.com, which launched in February 1998, offers a
broad range of informational, entertainment, news, and promotional content. In
January 2000, CBS.com, Inc. launched CBSNews.com, a news and news related
information web site. A majority of the television network affiliates currently
participate in these web sites. During the second half of 1999, we closed on a
number of strategic investments focused on growing our Internet based
operations. We received an equity interest in these Internet companies,
primarily in exchange for future advertising and promotion time on our
television, radio, outdoor and cable media properties. The segment data tables
above, except total assets, exclude the effect of changes in market value for
our publicly traded cost method investments and the results of operations for
our equity method of accounting Internet investments. Our proportionate share of
losses and related amortization expense in our equity method investments are
reported separately as Equity losses of unconsolidated affiliated companies, net
of income taxes on the Consolidated Statement of Income. The appreciation or
depreciation in the stock prices on our publicly traded cost method Internet
investments are recorded as a component of Accumulated other comprehensive loss
in shareholders' equity. In exchange for providing advertising and promotion
time on its media properties, Infinity Broadcasting will be provided an economic
interest in certain of these Internet investments. See note 3 to the financial
statements.
OTHER
The category "Corporate and Other" includes certain assets and results of
operations that are either not identifiable to a specific reportable segment or
relate to the maintenance of corporate functions. These assets primarily include
cash and cash equivalents, deferred income taxes, property and equipment and
other assets associated with corporate headquarters as well as certain
receivables. Included in the results of
56 CBS CORPORATION
<PAGE> 57
operations are intersegment eliminations, non-allocated income and costs related
to interest, taxes and employee benefits as well as certain headquarters related
income and expenses.
Residual costs of discontinued businesses primarily include pension and
postretirement benefit costs for benefit plans retained by us for previously
divested industrial businesses.
Long-lived assets include property and equipment, programming, noncurrent
receivables, and investments in joint ventures or other affiliates, and exclude
such assets as goodwill, FCC licenses, other intangible assets, financial
instruments, deferred acquisition costs and deferred tax assets. Increases in
long-lived assets during 1999 and 1998 are due primarily to acquisitions.
Expenditures for long-lived assets are primarily related to spending on
programming of $193 million, $108 million, and $161 million as well as capital
spending of $171 million, $139 million, and $121 million during 1999, 1998, and
1997, respectively.
NOTE 19: CONTINGENT LIABILITIES,
Certain environmental, litigation and other liabilities associated with the
industrial businesses were not assumed by other parties in the divestiture
transactions and, therefore, were retained by us. 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 $1.2 billion at December 31, 1999, including
$581 million for accrued legal matters as well as amounts related to previously
discontinued businesses of CBS Inc. Of the $1.2 billion, $996 million is
classified as noncurrent. A separate asset of $202 million was recorded for
estimated amounts recoverable from third parties, of which $175 million is
classified in Other noncurrent assets in the Consolidated Balance Sheet.
LEGAL MATTERS
SECURITIES CLASS ACTIONS--FINANCIAL SERVICES
We have been defending derivative and class action lawsuits alleging federal
securities law and common law violations arising out of purported misstatements
or omissions contained in public filings and in a Prospectus and Registration
Statement for a public offering of CBS's common stock in 1991. The parties to
the class actions and derivative action reached an agreement to settle the
matters for a total cost of $67 million, funded in large part by our liability
insurers. On October 19, 1999, the district court approved the settlements and
our share was paid in 1999. The parties await the entry of a final order by the
district court.
ASBESTOS
We are a defendant in numerous lawsuits claiming various asbestos-related
personal injuries, which allegedly occurred from use or inclusion of asbestos in
certain products supplied by the industrial businesses, generally in the
pre-1970 time period. Typically, these lawsuits are brought against multiple
defendants. We were neither a manufacturer nor a producer of asbestos and we are
oftentimes dismissed from these lawsuits on the basis that we have no
relationship to the products in question or the claimant did not have exposure
to our product. At December 31, 1999, we had approximately 121,000 unresolved
claims pending.
In court actions that have been resolved, we have prevailed in many of the
asbestos claims and have resolved others through settlement. Furthermore, we
have brought suit against certain of our 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 us
for a substantial portion of our current costs and settlements associated with
asbestos claims. We recorded a liability reflected in Retained liabilities of
discontinued businesses for asbestos-related matters that is deemed probable and
can be reasonably estimated. We have also separately recorded an asset reflected
in Other noncurrent assets in the Consolidated Balance Sheet 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. We have not been able to reasonably
estimate costs for unasserted asbestos claims. However, we review asbestos
claims on an ongoing basis and adjust our liability as appropriate.
GENERAL
Litigation is inherently uncertain and always difficult to predict. Substantial
damages are sought in certain
CBS CORPORATION 57
<PAGE> 58
groupings of asbestos claims, and, although we believe a significant adverse
judgment is unlikely, any such judgment could have a material adverse effect on
our results of operations for a quarter or a year. However, based on our
understanding and evaluation of the relevant facts and circumstances, we believe
that we have adequately provided for costs arising from resolution of these
matters and that the litigation should not have a material adverse effect on our
financial condition.
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 us. 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. We have, 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. We recognize 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, we have
been named a potentially responsible party (PRP) at numerous sites located
throughout the country. At many of these sites, we are either not a responsible
party or its site involvement is very limited or de minimis. However, we may
have varying degrees of cleanup responsibilities at approximately 74 sites. We
believe 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 we, as part of
an agreement for sale, have 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 previously mentioned sites, we have an accrued liability of
$514 million at December 31, 1999 which is reflected in Retained liabilities of
discontinued businesses in the Consolidated Balance Sheet. Depending on the
remediation alternatives ultimately selected, the costs related to these sites
could differ from the amounts currently accrued. The accrued liability includes
$397 million for site investigation and remediation, and $117 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 during periods of up to 30 years.
OTHER
We are involved with several administrative actions alleging violations of
federal, state, or local environmental regulations. For these matters, we have
estimated our remaining reasonably possible costs and determined them to be
immaterial.
We believe, based on our best estimate, that we have adequately provided for the
present environmental obligations and that complying with existing government
regulations will not materially impact our financial position, liquidity or
results of operations.
NOTE 20: SUBSEQUENT EVENT (AS OF MARCH 21, 2000)
On March 3, 2000, Infinity Broadcasting entered into an asset purchase agreement
to acquire 18 radio stations, located in the top 50 markets, from Clear Channel
Communications, Inc. for approximately $1.4 billion. This transaction is
expected to close by year-end 2000 and is subject to regulatory reviews and
approvals.
On March 21, 2000, Infinity Broadcasting announced that it had entered into an
agreement to purchase Giraudy, one of France's largest outdoor advertising
companies, for approximately $425 million. This transaction is expected to close
mid-year 2000.
Infinity Broadcasting plans to finance these acquisitions with excess cash from
operations and by executing a credit facility which will increase their
borrowing availability by $2.0 billion.
58 CBS CORPORATION
<PAGE> 59
QUARTERLY FINANCIAL INFORMATION
(unaudited, in millions except per share amounts)
<TABLE>
<CAPTION>
1999 QUARTER ENDED 1998 QUARTER ENDED
------------------------------------- -------------------------------------
DEC 31 SEPT 30 JUNE 30 MARCH 31 DEC 31 SEPT 30 JUNE 30 MARCH 31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Revenues $2,219 $1,708 $1,678 $1,768 $1,791 $1,581 $1,484 $1,949
Gross Margin 938 759 787 608 659 601 528 644
Operating profit (loss) (a) 298 246 294 118 117 102 127 136
Income (loss) from Continuing
Operations (b) 19 35 78 25 3 (38) 4 19
Gain on disposal of
Discontinued Operations (c) 232 12 18 366 -- -- -- --
Extraordinary item -- -- (1) (4) (4) (5) -- --
Net income (loss) 251 47 95 387 (1) (43) 4 19
- ------------------------------------------------------------------------------------------------------------
Net income (loss) per common share:
Basic:
Continuing Operations $ .03 $ .05 $ .11 $ .04 $ (.00) $ (.05) $ .01 $ .03
Discontinued Operations .32 .02 .03 .53 -- -- -- --
Extraordinary item -- -- -- (.01) (.00) (.01) -- --
Net income (loss) .35 .07 .14 .56 (.00) (.06) .01 .03
Diluted:
Continuing Operations .03 .05 .11 .04 (.00) (.05) .01 .03
Discontinued Operations .31 .02 .02 .52 -- -- -- --
Extraordinary item -- -- -- (.01) (.00) (.01) -- --
Net income (loss) .34 .07 .13 .55 (.00) (.06) .01 .03
- ------------------------------------------------------------------------------------------------------------
Market price per share (d):
High $63 15/16 $51 13/16 $46 7/8 $ 41 $32 13/16 $35 1/4 $36 3/16 $ 33 15/16
Low 43 3/16 43 15/1 40 1/16 31 7/8 20 1/2 23 1/4 29 3/4 27 117/25
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Per common share amounts for the quarters do not add to the year-end amounts
because of differences in the average common shares outstanding during each
quarter.
(a) Includes restructuring charges of $2 million in the second quarter of 1999
and $62 million ($38 million after-tax) in the third quarter of 1998. In the
second quarter of 1999, $26 million of the 1998 restructuring charge was
reversed. See note 13 to the financial statements.
(b) Includes a charge of $24 million in the second quarter of 1999 related to
probable obligations associated with TeleNoticias which may revert back to
us.
(c) Reflects a pre-tax gain of $922 million ($628 million after-tax) on disposal
of industrial businesses. See note 12 to the financial statements.
(d) Represents the high and low closing prices for one share of CBS common stock
on the New York Stock Exchange (NYSE).
CBS CORPORATION 59
<PAGE> 60
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
(unaudited, in millions except per share and employee data)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
STATEMENT OF INCOME DATA
Revenues $ 7,373 $ 6,805 $ 5,367 $ 4,143 $ 1,074
Operating Profit 956 482 253 54 160
Income (loss) from Continuing Operations before
income taxes, minority interest and equity losses 763 155 (59) (292) 128
Income (loss) from Continuing Operations 157 (12) (131) (221) 47
Income (loss) from Discontinued Operations 628 -- 680 409 (57)
Extraordinary item--Extinguishment of Debt (5) (9) -- (93) --
Net income (loss) 780 (21) 549 95 (10)
- ------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net Income (loss) per common share--Basic:
Continuing Operations $ .22 $ (.02) $ (.24) $ (.67) $ (.09)
Discontinued Operations .89 -- 1.08 1.02 (.16)
Extraordinary item (.01) (.01) -- (.23) --
Net Income (loss) per common share--Basic 1.10 (.03) .84 .12 (.25)
Net Income (loss) per common share--Diluted:
Continuing Operations .22 (.02) (.24) (.67) (.09)
Discontinued Operations .87 -- 1.08 1.02 (.16)
Extraordinary item (.01) (.01) -- (.23) --
Net Income (loss) per common share--Diluted 1.08 (.03) .84 .12 (.25)
Cash Dividends per common share -- .05 .20 .20 .20
- ------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Total assets:
Continuing Operations $33,125 $20,139 $16,503 $15,406 $10,391
Discontinued Operations 613 1,919 4,101 5,710 8,157
Total assets 33,738 22,058 20,604 21,116 18,548
Long-term debt:
Continuing Operations 3,753 2,506 3,236 5,147 7,222
Discontinued Operations 405 382 440 419 161
Total debt:
Continuing Operations 3,797 2,665 3,387 5,635 7,840
Discontinued Operations 415 428 543 439 528
Shareholders' equity 16,147 9,054 8,080 5,731 1,453
- ------------------------------------------------------------------------------------------------------
CASH FLOW DATA
Operating activities of Continuing Operations $ 686 $ 295 $ (201) $ (95) $ 175
Investing activities 422 467 2,487 2,893 (4,336)
Financing activities (1,443) 327 (2,015) (2,479) 3,525
Purchases of treasury stock 489 859 -- -- --
- ------------------------------------------------------------------------------------------------------
STATISTICAL DATA
EBITDA--Continuing Operations (a) $ 1,636 $ 1,096 $ 772 $ 388 $ 369
Average shares outstanding--diluted 721 696 629 401 370
Market price per share at end of year (b) $63 15/16 $32 13/16 $29 7/16 $19 7/8 $16 3/8
Number of employees--Continuing Operations 28,900 23,700 14,100 11,900 6,300
Number of employees--Discontinued Operations -- 22,100 32,400 41,300 65,400
- ------------------------------------------------------------------------------------------------------
</TABLE>
We have made numerous acquisitions in the last three years, see note 2 to the
financial statements. On December 31, 1996, we acquired Infinity Media
Corporation which gave rise to the year-over-year increases in 1997. In November
1995, we acquired CBS Inc. which gave rise to the significant year-over-year
increases in 1996. See note 12 to the financial statements for discussions on
discontinued businesses.
(a) We evaluate our operating performance based on several factors, of which the
primary financial measure is earnings before interest, taxes, minority
interest, equity losses, depreciation, and amortization (EBITDA). EBITDA
eliminates the effect of depreciation and amortization of tangible and
intangible assets, most of which were from acquisitions accounted for under
the purchase method of accounting. However, EBITDA should be considered in
addition to, not as a substitute for, operating earnings, net earnings, cash
flows, and other measures of financial performance reported in accordance
with generally accepted accounting principles. As EBITDA is not a measure of
performance calculated in accordance with generally accepted accounting
principles, this measure may not be comparable to similarly titled measures
employed by other companies. EBITDA differs from cash flows from operating
activities primarily because it does not consider changes in assets and
liabilities from period to period, and it does not include cash flows for
interest and taxes.
(b) Represents the closing price for one share of CBS common stock on the NYSE.
60 CBS CORPORATION
<PAGE> 61
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information concerning executive officers required by this item is set forth
in Part I pursuant to General Instruction G to Form 10-K; the remainder of the
information required by this item is expected to be filed in a subsequent filing
on Form 10-K/A.
The information as to directors is expected to be filed in a subsequent filing
on Form 10-K/A.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is expected to be filed in a subsequent
filing on Form 10-K/A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is expected to be filed in a subsequent
filing on Form 10-K/A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is expected to be filed in a subsequent
filing on Form 10-K/A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) FINANCIAL STATEMENTS
The financial statements required by this item are listed under Part II, Item 8,
which list is incorporated herein by reference.
(a)(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule for CBS and the Independent Auditors'
Reports thereon are included in Part IV of this report:
<TABLE>
<CAPTION>
PAGES
<S> <C>
Independent Auditors' Report on Financial Statement Schedule 67
Schedule II--Valuation and Qualifying Accounts for the three
years ended December 31, 1999 68
</TABLE>
Other schedules are omitted because they are not applicable or because the
required information is included in the financial statements or notes thereto.
<TABLE>
<S> <C> <C> <C>
(a)(3) EXHIBITS
(3) Articles of Incorporation and Bylaws
(a) The Restated Articles of the Corporation, as amended to
October 27, 1999, are incorporated herein by reference to
Exhibit 3(a) to Form 10-Q for the quarter ended September
30, 1999.
(b) The Bylaws of the Corporation, as amended to May 4, 1999,
are incorporated by reference to Exhibit 3(b) to Form 10-Q
for the quarter ended June 30, 1999.
(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.
</TABLE>
CBS CORPORATION 61
<PAGE> 62
<TABLE>
<S> <C> <C> <C>
(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 July 28, 1999, is
incorporated herein by reference to Exhibit 10.19 to Form
10-Q of Infinity Broadcasting Corporation for the quarter
ended September 30, 1999.
(c*) The 1993 Long-Term Incentive Plan, as amended to July 28,
1999, is incorporated herein by reference to Exhibit 10.16
to Form 10-K for the quarter ended September 30, 1999.
(d*) The 1991 Long-Term Incentive Plan, as amended to July 28,
1999, is incorporated herein by reference to Exhibit 10.15
to Form 10-K of Infinity Broadcasting Corporation for the
quarter ended September 30, 1999.
(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
July 28, 1999, is incorporated by reference to Exhibit 10.20
to Form 10-Q of Infinity Broadcasting Corporation for the
quarter ended September 30, 1999.
(h*) CBS Supplemental Executive Retirement Plan, as amended to
April 1, 1999, is incorporated herein by reference to
Exhibit 10(h) to Form 10-Q for the quarter ended September
30, 1999.
(i*) CBS Bonus Supplemental Executive Retirement Plan, as amended
to April 1, 1999, is incorporated herein by reference to
Exhibit 10(i) to Form 10-Q for the quarter ended September
30, 1999.
(j*) CBS Supplemental Employee Investment Fund, as amended as of
January 1, 1998, is incorporated by reference to Exhibit
10(j) to Form 10-Q for the quarter ended September 30, 1999.
(k*) The Deferred Compensation and Stock Plan for Directors, as
amended as of July 28, 1999, is incorporated by reference to
Exhibit 10(k) to Form 10-Q for the quarter ended September
30, 1999.
(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*) Amendment entered into as of July 5, 1999 to employment
agreement between CBS Broadcasting Inc. and Leslie Moonves
entered into as of May 17, 1995, as amended as of January
20, 1998 is incorporated by reference to Exhibit (q*) to
Form 10-Q for the quarter ended September 30, 1999.
(r*) Agreement between the Corporation and Fredric G. Reynolds
dated March 2, 1999 is incorporated herein by reference to
Exhibit 10(q) to Form 10-Q for the quarter ended March 31,
1999.
(s*) Agreement between the Corporation and Louis J. Briskman
dated March 2, 1999 is incorporated by reference to Exhibit
10(r) to Form 10-Q for the quarter ended March 31, 1999.
</TABLE>
62 CBS CORPORATION
<PAGE> 63
<TABLE>
<S> <C> <C> <C>
(t*) The Infinity Broadcasting Corporation 1998 Long-Term
Incentive Plan, incorporated by reference to Exhibit 10.16
to the Infinity Broadcasting Form 10-K for the year ended
December 31, 1999.
(u*) The Infinity Broadcasting Corporation Executive Annual
Incentive Plan is incorporated by reference to Exhibit 10.17
to the Infinity Broadcasting Form 10-K for the year ended
December 31, 1999.
(v) 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.
(w) 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.
(x) 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.
(y) 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.
(z) 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.
(aa) Amended and Restated Credit Agreement, dated as of December
10, 1999, among CBS Corporation, the Subsidiary Borrowers
parties thereto, the Lenders named therein, The Chase
Manhattan Bank, as Documentation Agent, Morgan Guaranty
Trust Company of New York, as Administrative Agent, and Bank
of American, N.A. and The Toronto-Dominion Bank, as
Syndication Agents.
(bb) Credit Agreement, dated as of December 10, 1999, among
Infinity Broadcasting Corporation, the Subsidiary Borrowers
parties thereto, CBS Corporation, as Guarantor, the Lenders
named therein, The Chase Manhattan Bank, as Documentation
Agent, Morgan Guaranty Trust Company of New York, as
Administrative Agent, and Bank of American, N.A. and The
Toronto-Dominion Bank, as Syndication Agents, is
incorporated by reference to Exhibit 10.8 to the Infinity
Broadcasting Form 10-K for the year ended December 31, 1999.
(cc) Intercompany Agreement between CBS Corporation 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.
(dd) 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.
</TABLE>
CBS CORPORATION 63
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<TABLE>
<S> <C> <C> <C>
(ee) Agreement and Plan of Merger, dated as of March 31, 1999, by
and among King World Productions, Inc., the Corporation and
K Acquisition Corp. is incorporated herein by reference to
Exhibit 2.1 to the report on Form 8-K of King World
Productions, Inc. filed with the SEC on April 1, 1999.
(ff) Amendment No. 1, dated as of September 8, 1999, to the
Agreement and Plan of Merger, dated as of March 31, 1999, by
and among King World Productions, Inc., the Corporation and
K Acquisition Corp., is incorporated herein by reference to
Exhibit 2.1 to the report on Form 8-K filed with the SEC on
September 15, 1999.
(gg) Stockholders Agreement dated as of March 31, 1999, among the
Corporation and the stockholders named therein, is
incorporated by reference to the Registration Statement No.
333-84761 on Form S-4 filed with the SEC on August 9, 1999.
(hh) Amendment No. 1, dated as of June 1, 1999, to the
Stockholders Agreement dated as of March 31, 1999, among the
Corporation and the stockholders named therein, is
incorporated by reference to the Registration Statement No.
333-84761 on Form S-4 filed with the SEC on August 9, 1999.
(ii) Amendment No. 2, dated as of October 5, 1999, to the
Stockholders Agreement dated as of March 31, 1999, among the
Corporation and the stockholders named therein, is
incorporated by reference to Post-Effective Amendment No. 1
to the Registration Statement No. 333-84761 on Form S-4
filed with the SEC on November 5, 1999.
(jj) Voting Agreement, dated as of September 6, 1999, between
National Amusements, Inc. and the Corporation, is
incorporated by reference to Exhibit 99.2 to the report on
Form 8-K filed with the SEC on September 8, 1999.
(kk) Stockholder Agreement, dated as of September 6, 1999,
between National Amusements, Inc. and the Corporation, is
incorporated by reference to Exhibit 99.3 to the report on
Form 8-K filed with the SEC on September 8, 1999.
(ll) Agreement and Plan of Merger, dated as of May 27, 1999,
among Infinity Broadcasting Corporation, Burma Acquisition
Corp. and Outdoor Systems, Inc., is incorporated herein by
reference to Exhibit 99.1 to the report on Form 8-K of
Outdoor Systems, Inc., filed with the SEC on June 3, 1999.
(mm) Amendment No. 1, dated as of June 16, 1999, to the Agreement
and Plan of Merger, dated as of May 27, 1999, among Infinity
Broadcasting Corporation, Burma Acquisition Corp. and
Outdoor Systems, Inc., is incorporated herein by reference
to Exhibit 99.2 to Infinity Broadcasting Corporation's
report on Form 8-K, filed with the SEC on June 25, 1999.
(nn) Stockholders Agreement, dated as of May 27, 1999, among
Infinity Broadcasting Corporation, William S. Levine, Arturo
R. Moreno, Carole D. Moreno, Levine Investments Limited
Partnership and BRN Properties Limited Partnership, is
incorporated herein by reference to Exhibit 99.2 to the
report on Form 8-K of Outdoor Systems, Inc., filed with the
SEC on June 3, 1999.
(oo) Amendment No. 1, dated July 15, 1999, to the Stockholders
Agreement dated May 27, 1999 among the Corporation and the
stockholders named in the agreement is incorporated by
reference to Exhibit 24 to Registration Statement No.
333-88363 on Form S-4 filed by Infinity Broadcasting
Corporation with the SEC on October 4, 1999.
(pp) Voting Agreement, dated as of May 27, 1999, between CBS
Broadcasting Inc. and Outdoor Systems, Inc., is incorporated
herein by reference to Exhibit 99.3 to the report on Form
8-K of Outdoor Systems, Inc., filed with the SEC on June 3,
1999.
(qq) Amended and Restated Agreement and Plan of Merger dated as
of October 8, 1999 between the Corporation and Viacom Inc.
is incorporated herein by reference to Exhibit 2 to Form 8-K
dated October 12, 1999.
(rr*) Letter Agreement, dated as of September 6, 1999, between
Viacom Inc. and Mel Karmazin, is incorporated by reference
to Exhibit 99.4 to the report on Form 8-K filed with the SEC
on September 8, 1999.
(ss*) First Amendment to Employment Agreement dated December 31,
1999, between Viacom Inc. and Mel Karmazin.
(tt) Amended and Restated Agreement and Plan of Merger dated as
of November 23, 1999 among the Corporation, Viacom Inc. and
Viacom/CBS LLC, is incorporated by reference to Exhibit 2.1
to Registration Statement No. 333-88613 on Form S-4 filed by
Viacom Inc. with the SEC.
</TABLE>
64 CBS CORPORATION
<PAGE> 65
<TABLE>
<S> <C> <C> <C>
(uu) Asset Purchase Agreement dated as of March 3, 2000 among
Clear Channel Communications, Inc., AMFM Inc., CCU Merger
Sub, Inc. and CBS Radio, Inc., is incorporated by reference
to Exhibit 10.30 to the Infinity Broadcasting Form 10-K for
the year ended December 31, 1999.
(vv) Asset Purchase Agreement, dated as of November 14, 1997,
between the Corporation and Siemens Power Generation
Corporation, a subsidiary of Siemens A.G., is incorporated
by reference to Exhibit 10(w) to Form 10-K for the year
ended December 31, 1997.
(ww) 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.
(xx) 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.
(21) Subsidiaries of the Registrant
(23) Consent of Independent Auditors
(24) Power of Attorney and Extract of Resolutions of Board of Directors
(27.1) Financial Data Schedule for the year ended December 31, 1999
(27.2) Restated Financial Data Schedules for the years ended December 31,
1998 and 1997
</TABLE>
- ---------------
* Identifies management contract or compensatory plan or arrangement.
(b) REPORTS ON FORM 8-K
A current report on Form 8-K (Item 5), filed with the Securities and Exchange
Commission on October 8, 1999, filing financial information related to Viacom
Inc., with whom we have a pending merger.
A current report on Form 8-K (Item 5), filed with the Securities and Exchange
Commission on October 8, 1999, filing financial information related to King
World Productions, Inc., and describing certain amendments to the CBS/King World
merger agreement.
A current report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on October 12, 1999, filing the Amended and Restated
Agreement and Plan of Merger, dated as of September 6, 1999, as amended and
restated as of October 8, 1999 between Viacom Inc. and CBS Corporation.
A current report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on October 29, 1999, filing a press release announcing our
earnings for the third quarter of 1999 and for the nine months ended September
30, 1999.
A current report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on November 2, 1999, filing a press release announcing that
we set November 12, 1999 as the record date for the special meeting of
stockholders to be held with respect to the approval of the merger with Viacom
Inc.
A current report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on November 5, 1999, filing a press release announcing that
we reset the record date for the special meeting of stockholders to be held with
respect to the approval of the merger with Viacom Inc. from November 12, 1999 to
November 17, 1999.
A current report on Form 8-K (Items 2 and 7), filed with the Securities and
Exchange Commission on November 22, 1999, filing a press release announcing we
completed our acquisition of King World Productions, Inc. on November 15, 1999.
A current report on Form 8-K (Item 5), filed with the Securities and Exchange
Commission on November 22, 1999, filing financial information related to King
World Productions, Inc., acquired on November 15, 1999.
A current report on Form 8-K (Item 5), filed with the Securities and Exchange
Commission on December 6, 1999, filing financial information related to Viacom
Inc., with whom we have a pending merger.
CBS CORPORATION 65
<PAGE> 66
A current report on Form 8-K (Items 2 and 7), filed with the Securities and
Exchange Commission on December 22, 1999, filing a press release announcing that
Infinity Broadcasting Corporation completed its acquisition of Outdoor Systems,
Inc. on December 7, 1999.
A current report on Form 8-K (Items 5 and 7), filed with the Securities and
Exchange Commission on December 29, 1999, filing a press release announcing our
shareholders approved the pending merger with Viacom Inc.
66 CBS CORPORATION
<PAGE> 67
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CBS CORPORATION
Under date of January 25, 2000, except as to note 20, which is as of March 21,
2000, we reported on the consolidated balance sheet of CBS Corporation and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of income and comprehensive income, cash flows, and shareholders'
equity, for each of the years in the three year period ended December 31, 1999,
which are included in the 1999 Annual Report on Form 10-K. In connection with
our audits of the aforementioned consolidated financial statements, we have also
audited the related consolidated financial statement schedule included in the
1999 Annual Report on Form 10-K. The consolidated financial statement schedule
is the responsibility of management. Our responsibility is to express an opinion
on this consolidated financial statement schedule based on our audits.
In our opinion, the December 31, 1999, 1998, and 1997 consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
/s/ KPMG LLP
KPMG LLP
New York, New York
March 21, 2000
CBS CORPORATION 67
<PAGE> 68
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
CUSTOMER RECEIVABLES FROM CONTINUING OPERATIONS--
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Balance at beginning of year $ 48 $ 35 $ 27
Charged to costs and expenses 19 21 12
Increase resulting from business acquisitions 22 8 7
Write-offs, net of recoveries (15) (16) (11)
- ---------------------------------------------------------------------------------------
Balance at end of year $ 74 $ 48 $ 35
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DEFERRED INCOME TAXES--VALUATION ALLOWANCE:
Balance at beginning of year $ 84 $ 137 $ 52
Charged to costs and expenses, net of reclassification (31) (53) 85(a)
- ---------------------------------------------------------------------------------------
Balance at end of year $ 53 $ 84 $ 137
- ---------------------------------------------------------------------------------------
</TABLE>
(a) Relates primarily to foreign tax credit carryforwards not expected to be
realized.
68 CBS CORPORATION
<PAGE> 69
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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 29th day of March,
2000.
CBS CORPORATION
By: /s/ ROBERT G. FREEDLINE
---------------------------------------
Robert G. Freedline
Vice President and
Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
SIGNATURE AND TITLE
George H. Conrades, Director
Martin C. Dickinson, Director
Robert G. Freedline, Vice President and Controller
(principal accounting officer)
William H. Gray III, Director
Mel Karmazin, President and Chief Executive Officer
and Director (principal executive officer)
Jan Leschly, Director
David T. McLaughlin, Chairman and Director
Leslie Moonves, President and Chief Executive
Officer, CBS Television and Director
Richard R. Pivirotto, Director
Fredric G. Reynolds, Executive Vice President and
Chief Financial Officer (principal financial
officer)
Raymond W. Smith, Director
Dr. Paula Stern, Director
Patty Stonesifer, Director
Robert D. Walter, Director
By:
/s/ ROBERT G. FREEDLINE
---------------------------
Robert G. Freedline
Attorney-in-fact
March 29, 2000
Original powers of attorney authorizing Robert G. Freedline and certain others,
individually, to sign this report on behalf of the listed directors and officers
of the Corporation and a certified copy of resolutions of the Board of Directors
of the Corporation authorizing Robert G. Freedline and certain others to sign on
behalf of the Corporation have been filed with the Securities and Exchange
Commission and are included as Exhibit 24 to this report.
CBS CORPORATION 69
<PAGE> 1
Exhibit 10(aa)
EXECUTION COPY
- --------------------------------------------------------------------------------
$1,500,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
among
CBS CORPORATION,
THE SUBSIDIARY BORROWERS PARTIES HERETO,
THE LENDERS NAMED HEREIN,
THE CHASE MANHATTAN BANK,
as Documentation Agent,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent,
and
BANK OF AMERICA, N.A. and THE TORONTO-DOMINION BANK,
as Syndication Agents
Dated as of December 10, 1999
- --------------------------------------------------------------------------------
CHASE SECURITIES INC.,
as Sole Lead Arranger and Book Manager
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS............................................................................................1
SECTION 1.1. Defined Terms..............................................................................1
SECTION 1.2. Terms Generally...........................................................................19
ARTICLE II. THE CREDITS..........................................................................................20
SECTION 2.1. Commitments...............................................................................20
SECTION 2.2. Revolving Credit Loans; Competitive Loans.................................................20
SECTION 2.3. Competitive Bid Procedure.................................................................21
SECTION 2.4. Revolving Credit Borrowing Procedure......................................................23
SECTION 2.5. Repayment of Loans........................................................................23
SECTION 2.6. Swingline Loans...........................................................................23
SECTION 2.7. Letters of Credit.........................................................................26
SECTION 2.8. Conversion and Continuation Options.......................................................29
SECTION 2.9. Fees......................................................................................30
SECTION 2.10. Interest on Loans; Eurodollar Tranches; Etc...............................................31
SECTION 2.11. Default Interest..........................................................................31
SECTION 2.12. Alternate Rate of Interest................................................................32
SECTION 2.13. Termination and Reduction of Commitments..................................................32
SECTION 2.14. Optional Prepayments of Revolving Credit Loans............................................33
SECTION 2.15. Reserve Requirements......................................................................33
SECTION 2.16. Indemnity.................................................................................34
SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence of Debt.....................................35
SECTION 2.18. Sharing of Setoffs........................................................................36
SECTION 2.19. Payments..................................................................................37
SECTION 2.20. Taxes.....................................................................................37
SECTION 2.21. Termination or Assignment of Commitments Under Certain Circumstances......................39
ARTICLE III. REPRESENTATIONS AND WARRANTIES......................................................................40
SECTION 3.1. Corporate Existence.......................................................................40
SECTION 3.2. Financial Condition.......................................................................40
SECTION 3.3. Litigation................................................................................40
SECTION 3.4. No Breach, etc............................................................................41
SECTION 3.5. Corporate Action..........................................................................41
SECTION 3.6. Approvals.................................................................................41
SECTION 3.7. ERISA.....................................................................................41
SECTION 3.8. Taxes.....................................................................................41
SECTION 3.9. Investment Company Act....................................................................42
SECTION 3.10. Public Utility Holding Company Act........................................................42
SECTION 3.11. Hazardous Materials.......................................................................42
SECTION 3.12. Material Subsidiaries.....................................................................42
SECTION 3.13. No Material Misstatements.................................................................42
SECTION 3.14. Ownership of Property.....................................................................42
SECTION 3.15. Intellectual Property.....................................................................43
SECTION 3.16. FCC Matters...............................................................................43
-i-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV. CONDITIONS OF EFFECTIVENESS AND LENDING..............................................................43
SECTION 4.1 Effectiveness..............................................................................43
SECTION 4.2. Initial Loans to Subsidiary Borrowers......................................................43
SECTION 4.3. All Credit Events..........................................................................44
ARTICLE V. COVENANTS.............................................................................................44
SECTION 5.1. Financial Statements......................................................................45
SECTION 5.2. Corporate Existence, Etc..................................................................47
SECTION 5.3. Insurance.................................................................................47
SECTION 5.4. Prohibition of Fundamental Changes........................................................47
SECTION 5.5. Limitation on Liens.......................................................................48
SECTION 5.6. Limitation on Subsidiary Indebtedness.....................................................50
SECTION 5.7. Consolidated Leverage Ratio...............................................................51
SECTION 5.8. Consolidated Coverage Ratio...............................................................51
SECTION 5.9. Minimum Consolidated Net Worth............................................................51
SECTION 5.10. Use of Proceeds...........................................................................51
SECTION 5.11. Transactions with Affiliates..............................................................51
SECTION 5.12. Limitation on Negative Pledge Clauses.....................................................51
ARTICLE VI. EVENTS OF DEFAULT....................................................................................52
ARTICLE VII. THE AGENTS..........................................................................................54
ARTICLE VIII. GUARANTEE..........................................................................................57
SECTION 8.1. Guarantee.................................................................................57
SECTION 8.2. No Subrogation, etc.......................................................................57
SECTION 8.3. Amendments, etc. with respect to the Subsidiary Borrower Obligations......................58
SECTION 8.4. Guarantee Absolute and Unconditional......................................................58
SECTION 8.5. Reinstatement.............................................................................59
SECTION 8.6. Payments..................................................................................59
ARTICLE IX. MISCELLANEOUS........................................................................................59
SECTION 9.1. Notices...................................................................................59
SECTION 9.2. Survival of Agreement.....................................................................60
SECTION 9.3. Binding Effect............................................................................60
SECTION 9.4. Successors and Assigns....................................................................60
SECTION 9.5. Expenses; Indemnity.......................................................................63
SECTION 9.6. Right of Setoff...........................................................................64
SECTION 9.7. APPLICABLE LAW............................................................................64
SECTION 9.8. Waivers; Amendment........................................................................64
SECTION 9.9. Entire Agreement..........................................................................65
SECTION 9.10. Waiver of Jury Trial......................................................................65
SECTION 9.11. Severability..............................................................................65
SECTION 9.12. Counterparts..............................................................................65
SECTION 9.13. Headings..................................................................................65
SECTION 9.14. Jurisdiction; Consent to Service of Process...............................................65
SECTION 9.15. Confidentiality...........................................................................66
-ii-
</TABLE>
<PAGE> 4
Page
----
EXHIBITS
- --------
Exhibit A Administrative Questionnaire
Exhibit B-1 Form of Competitive Bid Request
Exhibit B-2 Form of Notice of Competitive Bid Request
Exhibit B-3 Form of Competitive Bid
Exhibit B-4 Form of Revolving Credit Borrowing Request
Exhibit B-5 Form of Swingline Borrowing Request
Exhibit B-6 Form of Notice of Designated Letter of Credit
Exhibit B-7 Form of Subsidiary Borrower Designation
Exhibit B-8 Form of Subsidiary Borrower Request
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Confidentiality Agreement
Exhibit E Omitted
Exhibit F Form of Closing Certificate
Exhibit G Form of Issuing Lender Agreement
SCHEDULES
- ---------
Schedule 1.1 Commitments; Addresses for Notices
Schedule 3.12 Material Subsidiaries
Schedule 5.5(n) Certain CBS Assets
Schedule 5.6 Existing CBS Indebtedness
-iii-
<PAGE> 5
AMENDED AND RESTATED CREDIT AGREEMENT entered into as of December 10,
1999, among CBS CORPORATION, a Pennsylvania corporation ("CBS"); each Subsidiary
Borrower (as herein defined); the lenders whose names appear on Schedule 1.1
hereto or who subsequently become parties hereto as provided herein (the
"Lenders"); BANK OF AMERICA, N.A. ("Bank of America") and THE TORONTO-DOMINION
BANK ("Toronto Dominion"), as syndication agents for the Lenders (in such
capacity, the "Syndication Agents"); THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase"), as documentation agent for the Lenders; and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation
("Morgan"), as administrative agent for the Lenders.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, CBS is a party to the Credit Agreement dated as of August 29,
1996, as amended by the First Amendment thereto dated as of January 29, 1997,
the Second Amendment thereto dated as of March 21, 1997, the Third Amendment
thereto dated as of March 3, 1998 and the Fourth Amendment thereto dated as of
February 26, 1999 (the "Existing Credit Agreement"), among CBS Corporation
("CBS"), the Subsidiary Borrowers (as defined therein) parties thereto,
including Infinity Broadcasting Corporation, a Delaware corporation
("Infinity"), the Lenders, 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;
WHEREAS, CBS and Infinity have requested that the rights and
obligations of Infinity under the Existing Credit Agreement (and those of any
Subsidiary Borrower that is a Subsidiary of Infinity) be re-evidenced in a
separate $1,500,000,000 credit agreement (as further defined herein, the
"Infinity Credit Agreement"); and
WHEREAS, CBS has requested that the Existing Credit Agreement be
amended and restated to (i) permit the Infinity Credit Agreement and (ii) make
certain other amendments;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree that, effective the Closing
Date (as defined herein) the Existing Credit Agreement shall be amended and
restated as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Loan" shall mean (a) any Revolving Credit Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II and (b) any ABR Swingline Loan.
"ABR Revolving Credit Loan" shall mean any Revolving Credit Loan which
is an ABR Loan.
<PAGE> 6
2
"ABR Swingline Exposures" shall mean at any time the aggregate
principal amount at such time of the outstanding ABR Swingline Loans. The ABR
Swingline Exposure of any Lender at any time shall mean its Revolving Credit
Percentage of the aggregate ABR Swingline Exposures at such time.
"ABR Swingline Loan" shall have the meaning assigned to such term in
Section 2.6(a).
"Absolute Rate Loan" shall mean any Competitive Loan bearing interest
at a fixed percentage rate per annum (expressed in the form of a decimal rounded
to no more than four decimal places) specified by the Lender making such Loan in
its Competitive Bid.
"Administrative Agent" shall mean Morgan, together with its affiliates,
as an arranger of the Commitments and as the administrative agent for the
Lenders under this Agreement, and any successor thereto pursuant to Article VII.
"Administrative Agent Fee Letter" shall mean the Fee Letter with
respect to this Agreement between CBS and the Administrative Agent, as amended,
supplemented or otherwise modified from time to time.
"Administrative Agent's Fees" shall have the meaning assigned
to such term in Section 2.9(c).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A hereto.
"Affiliate" shall mean, as to CBS, any Person which directly or
indirectly controls, is under common control with or is controlled by CBS. As
used in this definition, "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any event, any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be deemed to be an Affiliate of CBS solely by
reason of his or her being an officer, director or employee of CBS or any of its
Subsidiaries, (b) CBS and its Subsidiaries shall not be deemed to be Affiliates
of each other and (c) no Person of which CBS or any of its Subsidiaries acquires
or has acquired control in connection with or as a consequence of any debt or
equity financing provided to such Person in the ordinary course of business of
WFSI, any of its Subsidiaries, Financial Services or WCI shall be deemed an
Affiliate of CBS.
"Agents" shall mean the collective reference to the Administrative
Agent, the Documentation Agent and the Syndication Agents.
"Aggregate LC Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time and
(b) the aggregate amount which has been drawn under Letters of Credit but for
which the applicable Issuing Lender or the Lenders, as the case may be, have not
been reimbursed by CBS at such time.
<PAGE> 7
3
"Agreement" shall mean this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Lender serving as the Administrative Agent as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective; and
"Federal Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it. If for
any reason the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be the Prime Rate until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Commitment Fee Rate" shall mean the "Applicable Commitment
Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable Eurodollar Margin" shall mean the "Applicable Eurodollar
Margin" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable LC Fee Rate" shall mean (a) with respect to Financial
Letters of Credit, the "Applicable Financial LC Fee Rate" determined in
accordance with the Pricing Grid set forth in Annex I hereto and (b) with
respect to Non-Financial Letters of Credit, the "Applicable Non-Financial LC Fee
Rate" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
"Bank of America" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall mean, as applicable, CBS or the relevant Subsidiary
Borrower.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall
<PAGE> 8
4
also exclude any day on which banks are not open for dealings in Dollar deposits
in the London interbank market.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"CBS" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Change of Control" shall mean that any person or group of persons,
(within the meaning of Sections 13 and 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC
relating to such sections) (other than Viacom and its Subsidiaries pursuant to
the Viacom Merger Agreement) shall have acquired beneficial ownership (within
the meaning of Rules 13d-3 and 13d-5 promulgated by the SEC pursuant to the
Exchange Act) of 30% or more of the outstanding shares of voting stock of CBS.
"Chase" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Closing Certificate" shall mean a certificate, substantially in the
form of Exhibit F.
"Closing Date" shall mean December 10, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment of
such Lender to make Revolving Credit Loans pursuant to Section 2.1, to make or
refund ABR Swingline Loans pursuant to Section 2.6 and to issue or participate
in Letters of Credit pursuant to Section 2.7, as set forth on Schedule 1.1, as
such Lender's Commitment may be permanently terminated or reduced from time to
time pursuant to Section 2.13 or changed pursuant to Section 9.4.
"Commitment Fee Calculation Amount" shall mean, as to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Commitment
over (b) the sum of (i) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding, (ii) such Lender's LC Exposure at
such time and (iii) in the case of each Swingline Lender, the aggregate
principal amount of all Swingline Loans made by such Swingline Lender then
outstanding.
"Commitment Fees" shall mean all fees payable pursuant to Section
2.9(a).
"Communications Act" shall mean the Communications Act of 1934, as
amended.
<PAGE> 9
5
"Competitive Bid" shall mean an offer to make a Competitive Loan
pursuant to Section 2.3.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made
pursuant to Section 2.3(b), (a) in the case of a Eurodollar Competitive Loan,
the Margin, and (b) in the case of an Absolute Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to Section
2.3 in the form of Exhibit B-1.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
pursuant to the bidding procedure described in Section 2.3. Each Competitive
Loan shall be a Eurodollar Competitive Loan or an Absolute Rate Loan.
"Compliance Certificate" shall have the meaning assigned to such term
in Section 5.1.
"Confidential Information" shall have the meaning assigned to such term
in Section 9.15(a).
"Confidential Information Memorandum" shall mean the Information
Memorandum dated October 1999 and furnished to the Lenders.
"Confidentiality Agreement" shall mean a confidentiality agreement
substantially in the form of Exhibit D, with such changes as CBS may approve.
"Consolidated Coverage Ratio" shall mean, for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
"Consolidated EBITDA" shall mean, with respect to CBS and its
Consolidated Subsidiaries for any period, operating profit (loss) (excluding
that related to Discontinued Operations), plus other income (loss), plus
interest income, plus depreciation and amortization (excluding amortization
related to programming rights), excluding (a) gains (losses) on sales of assets
(except (I) gains (losses) on sales of inventory sold in the ordinary course of
business and (II) gains (losses) on sales of other assets if such gains (losses)
are less than $10,000,000 individually and less than $50,000,000 in the
aggregate during such period), and (b) other non-cash items (including (i)
provisions for losses and additions to valuation allowances, (ii) provisions for
restructuring, litigation and environmental reserves and losses on the
Disposition of businesses and (iii) pension settlement charges), in each case
determined for such period on a basis consistent with that reported in CBS's
Form 10-Q for the fiscal quarter ended September 30, 1998 filed with the SEC,
minus cash payments made during such period in respect of non-cash charges taken
during any previous period (excluding cash payments in respect of non-cash
charges taken prior to December 31, 1998).
"Consolidated Interest Expense" shall mean, for any period, the gross
interest expense of CBS and its Consolidated Subsidiaries for such period,
computed and consolidated in accordance with GAAP, but excluding (a) the
amortization of deferred financing charges for such period and (b) the gross
interest expense of the Discontinued Operations for such period.
"Consolidated Leverage Ratio" shall mean, as of the last day of any
period, the ratio of Consolidated Total Funded Indebtedness at such date to
Consolidated EBITDA for such period.
<PAGE> 10
6
"Consolidated Net Income" shall mean, with respect to CBS and its
Consolidated Subsidiaries for any period, the aggregate net income (or net
deficit) of such Persons (excluding that related to the Discontinued Operations)
minus gains on the sale of assets (other than (a) gains on sales of inventory
sold in the ordinary course of business and (b) gains on sales of other assets
if such gains are less than $10,000,000 individually and less than $50,000,000
in the aggregate during such period) and extraordinary gains, computed and
consolidated in accordance with GAAP; provided, that, except as otherwise
provided in Section 1.2(c), there shall be excluded from the foregoing
calculation (I) the income of any other Person accrued prior to the date it
becomes a Consolidated Subsidiary of CBS or is merged into or consolidated with
CBS or any of its Consolidated Subsidiaries, (II) the income of any other Person
(other than a Consolidated Subsidiary of CBS) in which CBS or any of its
Consolidated Subsidiaries has an ownership interest, except to the extent that
any such income is actually received by CBS or such Consolidated Subsidiary in
the form of dividends or similar distributions, (III) the Undistributed Income
of any Consolidated Subsidiary (other than a Wholly Owned Subsidiary), except to
the extent of CBS's direct or indirect percentage equity interest in such
Consolidated Subsidiary, and (IV) the Undistributed Income of any Subsidiary (a
"Limited Subsidiary") to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary is not at the time permitted by the
terms of any contractual obligation or requirement of law applicable to such
Subsidiary. For the purposes of this definition, income shall be treated as
"Undistributed Income" unless it has been distributed to CBS or a Wholly Owned
Consolidated Subsidiary of CBS which is not a Limited Subsidiary.
"Consolidated Net Worth" shall mean the total shareholders' equity of
CBS and its Consolidated Subsidiaries determined without giving effect to any
changes in such total shareholders' equity resulting from (a) changes in pension
liabilities after the Net Worth Commencement Date pursuant to SFAS 87 and SFAS
88, (b) non-cash losses on the Disposition of businesses after the Net Worth
Commencement Date, (c) changes made in accordance with GAAP to the amortization
periods of separately identified intangible assets and goodwill attributable to
the acquisition of CBS, Infinity or American Radio Systems, as the case may be,
from the 40-year amortization utilized in the projections contained in the
Confidential Information Memorandum (in the case of CBS and Infinity) or in the
projections separately furnished to the Lenders (in the case of American Radio
Systems) or (d) provisions for restructuring reserves (but not environmental or
litigation reserves) established after the Net Worth Commencement Date and not
exceeding $50,000,000 in the aggregate, net of cash payments made in respect of
such reserves, all net of tax effect and computed and consolidated in accordance
with GAAP.
"Consolidated Subsidiary" shall mean, as to any Person, each Subsidiary
of such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be consolidated with the financial
statements of such Person in accordance with GAAP.
"Consolidated Total Funded Indebtedness" shall mean, with respect to
CBS and its Consolidated Subsidiaries at any date, the sum at such date of (a)
all Indebtedness for Borrowed Money (including commercial paper and unpaid
reimbursement obligations in respect of drawn letters of credit but otherwise
excluding letters of credit), (b) all indebtedness for the deferred purchase
price of Property or services (other than trade accounts payable and accruals in
the ordinary course of business), (c) all Capital Lease Obligations, (d) the
amount of any Indebtedness for Borrowed Money secured by receivables sold by CBS
and its Consolidated Subsidiaries pursuant to a program established for the
purpose of financing such receivables, and (e) all Guarantees of indebtedness of
the type referred to in any of clauses (a) through (d) above (other than
Guarantees of any such indebtedness of CBS and its
<PAGE> 11
7
Consolidated Subsidiaries); provided, that, in no event shall Indebtedness
attributable to Discontinued Operations be included in Consolidated Total Funded
Indebtedness.
"Credit Event" shall mean the making of any Loan or the issuance of any
Letter of Credit hereunder (including the designation of a Designated Letter of
Credit as a "Letter of Credit" hereunder). It is understood that conversions and
continuations pursuant to Section 2.8 do not constitute "Credit Events".
"Debt Rating" shall mean the rating applicable to CBS's senior,
unsecured, non-credit-enhanced long-term indebtedness for borrowed money, as
assigned by either Rating Agency.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Designated Letters of Credit" shall mean each letter of credit issued
by an Issuing Lender that (a) is not a Letter of Credit hereunder at the time of
its issuance and (b) is designated on or after the Closing Date by CBS, with the
consent of such Issuing Lender, as a "Letter of Credit" hereunder by written
notice to the Administrative Agent in the form of Exhibit B-6.
"Discontinued Operations" shall mean the operations classified as
"discontinued operations" pursuant to Accounting Principles Board Opinion No. 30
as presented in the quarterly report of CBS on Form 10-Q for the quarter ended
September 30, 1997 and filed with the SEC on December 14, 1997.
"Disposition" shall mean, with respect to any Property, any sale,
lease, assignment, conveyance, transfer or other disposition thereof; and the
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Documentation Agent" shall mean Chase, together with its affiliates,
as an arranger of the Commitments and as the documentation agent for the Lenders
under this Agreement.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Environmental Laws" shall mean any and all Federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" shall mean, with respect to CBS, any trade or
business (whether or not incorporated) that is a member of a group of which CBS
is a member and which is treated as a single employer under Section 414 of the
Code.
<PAGE> 12
8
"Eurodollar Competitive Loan" shall mean any Competitive Loan which is
a Eurodollar Loan.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to an Interest Period
pertaining to any Eurodollar Loan, the rate of interest determined on the basis
of the rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate Screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate Screen (or otherwise on the Telerate
Service), the "Eurodollar Rate" shall be determined by reference to such other
publicly available service for displaying eurodollar rates as may be agreed upon
by the Administrative Agent and CBS or, in the absence of such agreement, the
"Eurodollar Rate" shall instead be the interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the average of the rates at which
Dollar deposits approximately equal in principal amount to (a) in the case of a
Eurodollar Tranche, the portion of such Eurodollar Tranche of the Lender serving
as Administrative Agent and (b) in the case of a Eurodollar Competitive Loan, a
principal amount that would have been the portion of such Loan of the Lender
serving as the Administrative Agent had such Loan been a Eurodollar Revolving
Credit Loan, and for a maturity comparable to such Interest Period, are offered
by the principal London offices of the Reference Banks (or, if any Reference
Bank does not at the time maintain a London office, the principal London office
of any affiliate of such Reference Bank) for immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Eurodollar Revolving Credit Loan" shall mean any Revolving Credit Loan
which is a Eurodollar Loan.
"Eurodollar Tranche" shall mean the collective reference to Eurodollar
Revolving Credit Loans made by the Lenders, the then current Interest Periods
with respect to all of which begin on the same date and end on the same later
date (whether or not such Loans shall originally have been made on the same
day).
"Event of Default" shall have the meaning assigned to such term in
Article VI, provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Exchange Act Report" shall have the meaning assigned to such term in
Section 3.3.
"Excluded Indebtedness" shall mean (a) Indebtedness of any Person which
is acquired by CBS or any of its Subsidiaries after the Original Closing Date,
which Indebtedness was outstanding prior to the date of acquisition of such
Person and was not created in anticipation thereof, (b) any Indebtedness owing
by CBS or any of its Subsidiaries to CBS or any of its Subsidiaries (including
any intercompany Indebtedness created by the declaration of a note payable
dividend by any Subsidiary to CBS or any of its other Subsidiaries) and (c)
Specified Section 5.5(o) Indebtedness.
"Existing Credit Agreement" shall have the meaning assigned to such
term in the recitals to this Agreement.
<PAGE> 13
9
"Facility Exposure" shall mean, with respect to any Lender, the sum of
(a) the Outstanding Revolving Extensions of Credit of such Lender, (b) the
aggregate outstanding principal amount of any Competitive Loans made by such
Lender and (c) in the case of a Swingline Lender, the aggregate outstanding
principal amount of any Quoted Swingline Loans made by such Swingline Lender.
"FCC" shall mean the Federal Communications Commission.
"FCC Licenses" shall mean, with respect to CBS or any of its
Subsidiaries, any radio, television or other license, permit, certificate of
compliance or authorization issued by the FCC and required for the operation of
its respective radio and television broadcast stations.
"Federal Funds Effective Rate" shall have the meaning assigned to such
term in the definition of "Alternate Base Rate".
"Fees" shall mean the Commitment Fees, the Administrative Agent's Fees,
the Issuing Lender Fees and the LC Fees.
"Financial Covenants" shall have the meaning assigned to such term in
Section 1.2(b).
"Financial Letter of Credit" shall mean any Letter of Credit that, as
determined by the Administrative Agent, (a) supports a financial obligation and
(b) qualifies for the 100% credit conversion factor under the applicable Bank
for International Settlements guidelines.
"Financial Officer" of any corporation shall mean its chief financial
officer, its Vice President and Treasurer or its Vice President and Controller
or, in each case, any comparable officer or any Person designated by any such
officer.
"Financial Services" shall mean those operations designated as the
Financial Services portion of Discontinued Operations in the 1996 First Quarter
Financial Statements.
"Foreign Currency" shall mean any currency other than Dollars which is
readily convertible by the relevant Issuing Lender into Dollars.
"Foreign Exchange Rate" shall mean, with respect to any Foreign
Currency on a particular date, the rate at which such Foreign Currency may be
exchanged into Dollars, determined by reference to the selling rate in respect
of such Foreign Currency published in the "Wall Street Journal" on the relevant
date of determination. In the event that such rate is not, or ceases to be, so
published by the "Wall Street Journal", the "Foreign Exchange Rate" with respect
to such Foreign Currency shall be determined by reference to such other publicly
available source for determining exchange rates as may be agreed upon by the
Administrative Agent and CBS or, in the absence of such agreement, such "Foreign
Exchange Rate" shall instead be the Administrative Agent's spot rate of exchange
in the interbank market where its foreign currency exchange operations in
respect of such Foreign Currency are then being conducted, at or about 12:00
noon, local time, at such date for the purchase of Dollars with such Foreign
Currency, for delivery two banking days later.
"FSC" shall mean a subsidiary of CBS or any of its Subsidiaries which
is a FSC as defined in Section 922 of the Code, or in any successor provision,
and which is used solely for the purpose of a single lease project or lease
transaction or related lease projects or lease transactions and is not related
to Property predominantly manufactured by CBS or any of its Subsidiaries.
<PAGE> 14
10
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis (but subject to changes approved by CBS's independent public
accountants).
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Bank" shall have the meaning specified in Section 9.4(i).
"Guarantee" of or by any Person shall mean any obligation, contingent
or otherwise, of such Person guaranteeing or entered into with the purpose of
guaranteeing any Indebtedness of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase Property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to Property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred purchase price of
Property or services, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on Property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person and (i) all obligations of such Person as an account party in respect of
outstanding letters of credit (whether or not drawn) and bankers' acceptances;
provided, however, that Indebtedness shall not include (i) trade accounts
payable arising in the ordinary course of business, (ii) deferred compensation,
(iii) any Indebtedness of such Person (other than any such Person that is a FSC)
to the extent (A) such Indebtedness does not appear on the financial statements
of such Person, (B) such Indebtedness is recourse only to certain assets of such
Person and (C) the assets to which such Indebtedness is recourse only appear on
the financial statements of such Person net of such Indebtedness or (iv)
obligations (not constituting obligations for borrowed money) specifically with
respect to the production, distribution and acquisition of television and other
programming rights or talent; and provided further that the amount of any
Indebtedness described in clause (f) above shall be the lower of the amount of
the obligation or the fair market value of the collateral securing such
obligation. The Indebtedness of any Person shall include the Indebtedness of any
partnership in which such Person is a general partner, which Indebtedness is
recourse to such general partner.
"Indebtedness for Borrowed Money" shall mean Indebtedness of the type
described in clause (a) or (b) of the definition of "Indebtedness" and any
Guarantee thereof.
"Infinity" shall have the meaning assigned to such term in the recitals
to this Agreement.
<PAGE> 15
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"Infinity Credit Agreement" shall mean the Credit Agreement, dated as
of the date hereof, among Infinity, the Subsidiary Borrowers (as defined
therein) parties thereto, the lenders named therein, Bank of America, N.A. and
Toronto Dominion Bank, as syndication agents, The Chase Manhattan Bank, as
documentation agent and Morgan Guaranty Trust Company of New York, as
administrative agent, as amended, supplemented or otherwise modified from time
to time.
"Information" shall have the meaning assigned to such term in Section
3.13.
"Intellectual Property" shall mean the collective reference to patents,
trademarks (registered or unregistered), trade names, service marks, assumed
names, copyrights, technology, know-how and processes.
"Interest Payment Date" shall mean (a) with respect to any Eurodollar
Loan or Absolute Rate Loan, the last day of the Interest Period applicable
thereto and, in the case of a Eurodollar Loan with an Interest Period of more
than three months' duration or an Absolute Rate Loan with an Interest Period of
more than 90 days' duration, each day that would have been an Interest Payment
Date for such Loan had successive Interest Periods of three months' duration or
90 days' duration, as the case may be, been applicable to such Loan and, in
addition, the date of any conversion of any Eurodollar Revolving Credit Loan to
an ABR Loan, the date of repayment or prepayment of any Eurodollar Loan and the
applicable Maturity Date; (b) with respect to any ABR Loan (other than an ABR
Swingline Loan which is not an Unrefunded Swingline Loan), the last day of each
March, June, September and December and the applicable Maturity Date; (c) with
respect to any ABR Swingline Loan (other than an Unrefunded Swingline Loan), the
earlier of (i) the day that is five Business Days after such Loan is made and
(ii) the Revolving Credit Maturity Date and (d) with respect to any Quoted
Swingline Loan, the date established as such by the relevant Swingline Borrower
and the relevant Swingline Lender prior to the making thereof (but in any event
no later than the Revolving Credit Maturity Date).
"Interest Period" shall mean (a) as to any Eurodollar Loan, the period
commencing on the borrowing date or conversion date of such Loan, or on the last
day of the immediately preceding Interest Period applicable to such Loan, as the
case may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months or (subject, in the case of Revolving Credit Loans, to the
prior consent of each Lender) 9 or 12 months thereafter, as the relevant
Borrower may elect, and (b) as to any Absolute Rate Loan, the period commencing
on the date of such Loan and ending on the date specified in the Competitive
Bids in which the offer to make such Absolute Rate Loan was extended, which
shall not be later than 180 days after the date of such Loan; provided, however,
that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless, in the case of Eurodollar Loans only, such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day and (ii) notwithstanding anything to the
contrary herein, no Borrower may select an Interest Period which would end after
the Maturity Date applicable to the relevant Loan. Interest shall accrue from
and including that first day of an Interest Period to but excluding the last day
of such Interest Period.
"Interim Certificate" shall have the meaning assigned to such term in
Annex I hereto.
"Issuing Lender" shall mean any Lender designated as an Issuing Lender
in an Issuing Lender Agreement executed by such Lender, CBS and the
Administrative Agent.
<PAGE> 16
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"Issuing Lender Agreement" shall mean an agreement, substantially in
the form of Exhibit G, executed by a Lender, CBS, and the Administrative Agent
pursuant to which such Lender agrees to become an Issuing Lender hereunder.
"Issuing Lender Fees" shall mean, as to any Issuing Lender, the fees
set forth in the applicable Issuing Lender Agreement.
"King World" shall mean King World Productions, Inc.
"King World Merger" shall mean the merger of King World with and into a
Subsidiary of CBS.
"King World Merger Date" shall mean the date of consummation of the
King World Merger, December 15, 1999.
"LC Disbursement" shall mean any payment or disbursement made by an
Issuing Lender under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, as to each Lender, such Lender's Revolving
Credit Percentage of the Aggregate LC Exposure.
"LC Fee" shall have the meaning assigned such term in Section 2.9(b).
"Lenders" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Letters of Credit" shall mean letters of credit or bank guarantees
issued by an Issuing Lender for the account of CBS pursuant to Section 2.7
(including any Designated Letters of Credit).
"Leveraged Spin-Off Indebtedness" shall mean Indebtedness incurred by a
Subsidiary (either previously existing or newly formed) for the purpose of
financing a cash dividend or other cash distribution made, directly or
indirectly, to CBS, so long as (a) concurrently with or immediately after the
incurrence of such Indebtedness and the making of such dividend or distribution,
all of the common stock of such Subsidiary is distributed to the common
shareholders of CBS and (b) the assets of the Subsidiary which is the subject of
such transaction are comprised entirely of assets included within those
businesses of CBS and its Subsidiaries identified in a written notice from CBS
delivered to the Lenders prior to the Original Closing Date.
"Lien" shall mean, with respect to any asset or Property, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset or Property and (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention agreement
relating to such asset or Property.
"Loan" shall mean any loan made by a Lender hereunder.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the margin
(expressed as a percentage rate per annum in the form of a decimal rounded to no
more than four places) to be added to or subtracted from the Eurodollar Rate in
order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.
<PAGE> 17
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"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Acquisition" shall mean any acquisition of Property or series
of related acquisitions of Property (including by way of merger) which (a)
constitutes assets comprising all or substantially all of an operating unit of a
business or constitutes all or substantially all of the common stock of a Person
and (b) involves the payment of consideration by CBS and its Subsidiaries
(valued at the initial principal amount thereof in the case of non-cash
consideration consisting of notes or other debt securities and valued at fair
market value in the case of other non-cash consideration) in excess of
$50,000,000.
"Material Adverse Effect" shall mean (a) a material adverse effect on
the Property, business, results of operations or financial condition of CBS and
its Subsidiaries taken as a whole or (b) material impairment of the ability of
CBS to perform any of its obligations under this Agreement.
"Material Disposition" shall mean any Disposition of Property or series
of related Dispositions of Property which yields gross proceeds to CBS or any of
its Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of
$50,000,000.
"Material Subsidiary" shall mean any Subsidiary of CBS except for
Subsidiaries which in the aggregate would not constitute a significant
subsidiary under Regulation S-X of the SEC, provided, that each Subsidiary
Borrower shall in any event constitute a Material Subsidiary.
"Maturity Date" shall mean (a) in the case of the Revolving Credit
Loans and the ABR Swingline Loans, the Revolving Credit Maturity Date, (b) in
the case of the Quoted Swingline Loans, the date established as such by the
relevant Swingline Borrower and the relevant Swingline Lender prior to the
making thereof (but in any event no later than the Revolving Credit Maturity
Date) and (c) in the case of Competitive Loans, the last day of the Interest
Period applicable thereto, as specified in the related Competitive Bid Request.
"Moody's" shall mean Moody's Investors Service, Inc.
"Morgan" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 3(37) of ERISA to which contributions have been made by CBS or any ERISA
Affiliate of CBS and which is covered by Title IV of ERISA.
"Net Cash Proceeds" shall mean, in connection with any Disposition of
all or any material part of any Allocated Unit, the proceeds thereof in the form
of cash and cash equivalents (including any such proceeds received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Disposition, net of (i) attorneys' fees, accountants' fees,
investment banking fees and other customary fees and expenses actually incurred
in connection therewith, (ii) taxes paid or reasonably estimated to be payable
on a current basis as a result thereof (after taking into account any available
tax credits or deductions) and (iii) any cash purchase price adjustments paid in
connection therewith (but only as and when paid).
<PAGE> 18
14
"Net Worth Commencement Date" shall mean December 31, 1997.
"1996 First Quarter Financial Statements" shall mean the unaudited
consolidated financial statements of CBS and its subsidiaries as of and for the
fiscal quarter ended March 31, 1996 as set forth in the Quarterly Report on Form
10-Q of CBS.
"Non-Financial Letter of Credit" shall mean any Letter of Credit that
is not a Financial Letter of Credit.
"Non-U.S. Person" shall have the meaning assigned to such term in
Section 2.20(f).
"Original Closing Date" shall mean August 29, 1996.
"Outstanding Revolving Extensions of Credit" shall mean, as to any
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding, (b)
such Lender's LC Exposure at such time and (c) such Lender's ABR Swingline
Exposure at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA, or any successor thereto.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company or
other entity, or any government or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code and which is
maintained for employees of CBS or any ERISA Affiliate.
"Prime Rate" shall have the meaning assigned to such term in the
definition of "Alternate Base Rate".
"Pro Forma Period" shall have the meaning assigned to such term in
Section 1.2(c).
"Projections" shall have the meaning assigned to such term in Section
3.13.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Quoted Swingline Loans" shall have the meaning assigned to such term
in Section 2.6(a).
"Quoted Swingline Rate" shall have the meaning assigned to such term in
Section 2.6(a).
"Rating Agencies" shall mean S&P and Moody's.
"Reference Banks" shall mean Chase, Morgan, Bank of America and Toronto
Dominion.
<PAGE> 19
15
"Register" shall have the meaning assigned to such term in Section
9.4(d).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Required Lenders" shall mean, at any time, Lenders whose respective
Total Facility Percentages aggregate not less than 51%.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement (or, in the case of matters
relating to ERISA, any officer responsible for the administration of the pension
funds of such corporation).
"Revolving Credit Borrowing Request" shall mean a request made pursuant
to Section 2.4 in the form of Exhibit B-4.
"Revolving Credit Loans" shall mean the revolving loans made by the
Lenders to any Borrower pursuant to Section 2.4. Each Revolving Credit Loan
shall be a Eurodollar Loan or an ABR Loan.
"Revolving Credit Maturity Date" shall mean August 29, 2001.
"Revolving Credit Percentage" of any Lender at any time shall mean the
percentage of the aggregate Commitments (or, following any termination of all
the Commitments, the Commitments most recently in effect) represented by such
Lender's Commitment (or, following any such termination, the Commitment of such
Lender most recently in effect).
"Sale/Leaseback" shall mean any lease, whether an operating lease or a
capital lease, whereby CBS or any of its Subsidiaries, directly or indirectly,
becomes or remains liable as lessee or as guarantor or other surety, of any
Property whether now owned or hereafter acquired, (a) that CBS or any of its
Subsidiaries, as the case may be, has sold or transferred or is to sell or
transfer to any other Person (other than CBS or any of its Subsidiaries), or (b)
that is acquired by any other Person, as part of a financing transaction to
which CBS or any of its Subsidiaries is a party, in contemplation of leasing
such Property to CBS or any of its Subsidiaries, as the case may be.
"Sale/Leaseback Attributable Debt" shall mean, for any Sale/Leaseback,
the present value (discounted at the rate of interest implicit in such
Sale/Leaseback, determined in accordance with GAAP or, in the event that such
rate of interest is not reasonably determinable, discounted at the interest rate
applicable to an ABR Revolving Credit Loan on the date of the commencement of
such transaction), as of the date on which the amount thereof is to be
determined, of the obligation of the lessee for net rental payments during the
remaining term of such Sale/Leaseback (including any period for which such
Sale/Leaseback may, at the option of the lessor, be extended). In the case of
any master lease agreement, each fixed or capital asset subject thereto (or any
related group of such assets for which the lease terms commence at the same
time) shall be deemed to be the subject of a separate Sale/Leaseback, and, to
the extent that any fixed or capital asset is the subject of a Sale/Leaseback
and then of another, the
<PAGE> 20
16
Sale/Leaseback Attributable Debt will be deemed to be incurred only under the
first such Sale/Leaseback. For the purposes of Section 5.5(o), the
Sale/Leaseback Attributable Debt of any Subsidiary of CBS which is not a Wholly
Owned Subsidiary shall be deemed to be the amount determined in accordance with
the foregoing provisions of this definition multiplied by CBS's direct or
indirect percentage common equity interest in such Subsidiary at the date of
determination.
"S&P" shall mean Standard & Poor's Ratings Services.
"SEC" shall mean the Securities and Exchange Commission.
"Specified Section 5.5(o) Indebtedness" shall have the meaning assigned
to such term in Section 5.5(o).
"SPC" shall have the meaning specified in Section 9.4(i).
"Subsidiary" shall mean, for any Person (the "Parent"), any
corporation, partnership or other entity of which shares of Voting Capital Stock
sufficient to elect a majority of the board of directors or other Persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) are at the time directly or indirectly owned or controlled by
the Parent or one or more of its Subsidiaries or by the Parent and one or more
of its Subsidiaries; provided, however, that (a) no Person of which CBS or any
of its Subsidiaries acquires or has acquired control in connection with or as a
consequence of any debt or equity financing provided to such Person in the
ordinary course of the business of WFSI, any of its Subsidiaries, Financial
Services or WCI shall be deemed a Subsidiary of CBS and (b) for purposes of
paragraph (d) of Article VI, no Person which is a FSC shall be deemed a
Subsidiary of CBS. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of CBS.
"Subsidiary Borrower" shall mean any Subsidiary, other than Infinity
and its Subsidiaries, (a) which is organized under the laws of the United States
of America, any state, territory or possession thereof or the District of
Columbia, (b) which is designated as a Subsidiary Borrower by CBS pursuant to a
Subsidiary Borrower Designation, (c) which has delivered to the Administrative
Agent a Subsidiary Borrower Request and (d) whose designation as a Subsidiary
Borrower has not been terminated pursuant to Section 4.2. Notwithstanding
anything to the contrary herein, on the Closing Date, (i) any Subsidiary which
is a Subsidiary Borrower under the Existing Credit Agreement, other than
Infinity or any Subsidiary of Infinity, shall be deemed to be a Subsidiary
Borrower under this Agreement; (ii) any Subsidiary of Infinity which is a
Subsidiary Borrower under the Existing Credit Agreement shall be deemed to be a
Subsidiary Borrower under the Infinity Credit Agreement and not under the
Existing Credit Agreement; and (iii) Infinity and each of its Subsidiaries shall
cease to be a Subsidiary Borrower under the Existing Credit Agreement.
"Subsidiary Borrower Designation" shall mean a designation,
substantially in the form of Exhibit B-7, which may be delivered by CBS and
shall be accompanied by a Subsidiary Borrower Request.
"Subsidiary Borrower Obligations" shall mean, with respect to each
Subsidiary Borrower, the unpaid principal of and interest on the Loans made to
such Borrower (including, without limitation, interest accruing after the
maturity of the Loans made to such Borrower and interest accruing
<PAGE> 21
17
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to such Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) and all other obligations and liabilities of such Borrower to
the Administrative Agent or to any Lender, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, this Agreement.
"Subsidiary Borrower Request" shall mean a request, substantially in
the form of Exhibit B-8, which is received by the Administrative Agent in
connection with a Subsidiary Borrower Designation.
"Swingline Borrower" shall mean CBS and any Subsidiary Borrower
designated as a "Swingline Borrower" by CBS in a written notice to the
Administrative Agent, provided, that, unless otherwise agreed by the
Administrative Agent, no more than one Subsidiary Borrower may be a Swingline
Borrower at any one time.
"Swingline Commitment" shall mean, with respect to any Swingline
Lender, the commitment of such Lender to make ABR Swingline Loans pursuant to
Section 2.6, as designated in accordance with Section 2.6(g).
"Swingline Lender" shall mean any Lender designated by CBS as a
"Swingline Lender" pursuant to Section 2.6(g).
"Swingline Loans" shall mean the collective reference to the ABR
Swingline Loans and the Quoted Swingline Loans.
"Swingline Percentage" of any Swingline Lender at any time shall mean
the percentage of the aggregate Swingline Commitments represented by such
Swingline Lender's Swingline Commitment.
"Syndication Agents" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Test Period" shall have the meaning assigned to such term in Section
1.2(c).
"Toronto Dominion" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Total Commitment" shall mean at any time the aggregate amount of the
Commitments in effect at such time.
"Total Facility Exposure" shall mean at any time the aggregate amount
of the Facility Exposures at such time.
"Total Facility Percentage" shall mean, as to any Lender at
any time, the quotient (expressed as a percentage) of (a) such Lender's
Commitment (or (x) for the purposes of acceleration of the Loans pursuant to
clause (II) of Article VI or (y) if the Commitments have terminated, such
Lender's Facility Exposure) and (b) the aggregate of all Lenders' Commitments
(or (x) for the purposes of
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acceleration of the Loans pursuant to clause (II) of Article VI or (y) if the
Commitments have terminated, the Total Facility Exposure).
"Transferee" shall mean any assignee or participant described in
Section 9.4(b) or (f).
"Type" when used in respect of any Loan, shall refer to the Rate by
reference to which interest on such Loan is determined. For purposes hereof,
"Rate" shall mean the Eurodollar Rate, the Alternate Base Rate, the Quoted
Swingline Rate and the rate paid on Absolute Rate Loans.
"Unrefunded Swingline Loans" shall have the meaning assigned to such
term in Section 2.6(d).
"U.S. Person" shall mean a citizen, national or resident of the United
States of America, or an entity organized in or under the laws of the United
States of America.
"Viacom" shall mean Viacom, Inc., a Delaware corporation.
"Viacom Merger" shall mean the merger between CBS and Viacom.
"Viacom Merger Agreement" shall mean the Amended and Restated Agreement
and Plan of Merger, dated as of September 6, 1999, between Viacom and CBS, as
amended, supplemented or otherwise modified from time to time.
"Voting Capital Stock" shall mean securities or other ownership
interests of a corporation, partnership or other entity having by the terms
thereof ordinary voting power to vote in the election of the board of directors
or other Persons performing similar functions of such corporation, partnership
or other entity (without regard to the occurrence of any contingency).
"WCI" shall mean WCI Communities, Inc., a Delaware corporation, and its
Wholly Owned Subsidiaries.
"WFSI" shall mean CBS Financial Services, Inc., a Delaware corporation
that was merged into CBS on May 5, 1993.
"Wholly Owned Subsidiary" shall mean any Subsidiary of which all shares
of Voting Capital Stock (other than, in the case of a corporation, directors'
qualifying shares) are owned directly or indirectly by the Parent (as defined in
the definition of "Subsidiary").
SECTION 1.2. Terms Generally. (a) The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall, except where the context otherwise requires, be deemed to be
followed by the phrase "without limitation". All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require.
(b) Except as otherwise expressly provided herein, all terms of an
accounting nature shall be construed in accordance with GAAP as in effect from
time to time; provided, however, that, for purposes of determining compliance
with the covenants set forth in Sections 5.7, 5.8 and 5.9 (such
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Sections being referred to as the "Financial Covenants"), except as otherwise
set forth in the Financial Covenants and the definitions related thereto, such
terms shall be construed in accordance with GAAP as in effect on March 31, 1996,
applied on a basis consistent with the application used in preparing the 1996
First Quarter Financial Statements.
(c) For the purposes of calculating Consolidated EBITDA and
Consolidated Interest Expense for any period (a "Test Period"), (i) if at any
time from the period (a "Pro Forma Period") commencing on the second day of such
Test Period and ending on the date which is ten days prior to the date of
delivery of the Compliance Certificate or Interim Certificate, as the case may
be, in respect of such Test Period (or, in the case of any pro forma calculation
made pursuant hereto in respect of a particular transaction, ending on the date
such transaction is consummated after giving effect thereto), CBS or any
Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for
such Test Period shall be reduced by an amount equal to the Consolidated EBITDA
(if positive) attributable to the Property which is the subject of such Material
Disposition for such Test Period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such Test Period, and
Consolidated Interest Expense for such Test Period shall be reduced by an amount
equal to the Consolidated Interest Expense for such Test Period attributable to
any Indebtedness of CBS or any Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to CBS and its Subsidiaries in connection with
such Material Disposition (or, if the Capital Stock of any Subsidiary is sold,
the Consolidated Interest Expense for such Test Period directly attributable to
the Indebtedness of such Subsidiary to the extent CBS and its continuing
Subsidiaries are no longer liable for such Indebtedness after such Disposition);
(ii) if during such Pro Forma Period CBS or any Subsidiary shall have made a
Material Acquisition, Consolidated EBITDA and Consolidated Interest Expense for
such Test Period shall be calculated after giving pro forma effect thereto
(including the incurrence or assumption of any Indebtedness in connection
therewith) as if such Material Acquisition (and the incurrence or assumption of
any such Indebtedness) occurred on the first day of such Test Period; (iii) if
during such Pro Forma Period any Person that subsequently became a Subsidiary or
was merged with or into CBS or any Subsidiary since the beginning of such Pro
Forma Period shall have entered into any disposition or acquisition transaction
that would have required an adjustment pursuant to clause (i) or (ii) above if
made by CBS or a Subsidiary during such Pro Forma Period, Consolidated EBITDA
and Consolidated Interest Expense for such Test Period shall be calculated after
giving pro forma effect thereto as if such transaction occurred on the first day
of such Test Period; and (iv) the financial results and effects of the
operations of the Eye on People and TeleNoticias businesses shall be entirely
excluded from Consolidated EBITDA. For the purposes of this paragraph, whenever
pro forma effect is to be given to a Material Disposition or Material
Acquisition, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness discharged or
incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a Financial Officer of CBS. If any Indebtedness bears a
floating rate of interest and the incurrence or assumption thereof is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the last day of the relevant Pro Forma
Period had been the applicable rate for the entire relevant Test Period (taking
into account any interest rate protection agreement applicable to such
Indebtedness if such interest rate protection agreement has a remaining term in
excess of 12 months).
(d) For the purposes of the Financial Covenants, (i) the Discontinued
Operations shall be disregarded and (ii) the businesses classified as
Discontinued Operations shall be limited to those businesses treated as such in
the financial statements of CBS referred to in the definition of "Discontinued
Operations" and the accounting treatment of Discontinued Operations shall be
consistent with the accounting treatment thereof in such financial statements.
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ARTICLE II.
THE CREDITS
SECTION 2.1. Commitments. Subject to the terms and conditions hereof
and relying upon the representations and warranties herein set forth, each
Lender agrees, severally and not jointly, to make Revolving Credit Loans to CBS
or any Subsidiary Borrower, at any time and from time to time on and after the
Closing Date and until the earlier of (a) the Business Day immediately preceding
the Revolving Credit Maturity Date and (b) the termination of the Commitment of
such Lender, in an aggregate principal amount at any time outstanding not to
exceed such Lender's Commitment. Each Borrower may borrow, prepay and reborrow
Revolving Credit Loans on and after the Closing Date and prior to the Revolving
Credit Maturity Date, subject to the terms, conditions and limitations set forth
herein. On the Closing Date, all loans and obligations of, and any Letters of
Credit issued on behalf of, CBS and any Subsidiary Borrowers thereunder (other
than Infinity and its Subsidiaries) under or in connection with the Existing
Credit Agreement shall be deemed to be outstanding hereunder and not under the
Existing Credit Agreement.
SECTION 2.2. Revolving Credit Loans; Competitive Loans. (a) Each
Revolving Credit Loan shall be made to the relevant Borrower by the Lenders
ratably in accordance with their respective Commitments. Each Competitive Loan
shall be made to the relevant Borrower by the Lender whose Competitive Bid
therefor is accepted, and in the amount so accepted, in accordance with the
procedures set forth in Section 2.3. The Revolving Credit Loans or Competitive
Loans shall be made in minimum amounts equal to (i) in the case of Competitive
Loans, $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (ii)
in the case of Eurodollar Revolving Credit Loans, $50,000,000 or an integral
multiple of $5,000,000 in excess thereof, and (iii) in the case of ABR Revolving
Credit Loans, $25,000,000 or an integral multiple of $5,000,000 in excess
thereof (or an aggregate principal amount equal to the remaining balance of the
available Total Commitment).
(b) Each Lender shall make each Loan (other than a Swingline Loan, as
to which this Section 2.2 shall not apply) to be made by it on the proposed date
thereof by wire transfer of immediately available funds to the Administrative
Agent in New York, New York, not later than 12:00 noon, New York City time (or,
in connection with an ABR Loan to be made on the same day on which a notice is
submitted, 12:30 p.m., New York City time) and the Administrative Agent shall by
3:00 p.m., New York City time, credit the amounts so received to the general
deposit account of the relevant Borrower with the Administrative Agent.
SECTION 2.3. Competitive Bid Procedure. (a) In order to request
Competitive Bids, the relevant Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Competitive Bid Request in the form of
Exhibit B-1, to be received by the Administrative Agent (i) in the case of a
Eurodollar Competitive Loan, not later than 10:00 a.m., New York City time, four
Business Days before a proposed Competitive Loan and (ii) in the case of an
Absolute Rate Loan, not later than 10:00 a.m., New York City time, one Business
Day before a proposed Competitive Loan. A Competitive Bid Request that does not
conform substantially to the format of Exhibit B-1 may be rejected in the
Administrative Agent's discretion (exercised in good faith), and the
Administrative Agent shall promptly notify the relevant Borrower of such
rejection by telephone, confirmed by telecopier. Such request shall in each case
refer to this Agreement and specify (x) whether the Competitive Loan then being
requested is to be a Eurodollar Competitive Loan or an Absolute Rate Loan, (y)
the date of such Loan (which shall be a Business Day) and the aggregate
principal amount thereof which shall be in a minimum principal amount of
$5,000,000 and in an integral multiple of $1,000,000, and (z) the Interest
Period with respect
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thereto (which may not end after the Revolving Credit Maturity Date). Promptly
after its receipt of a Competitive Bid Request that is not rejected as aforesaid
(and in any event by 5:00 p.m., New York City time, on the date of such receipt
if such receipt occurs by the time specified in the first sentence of this
paragraph), the Administrative Agent shall invite by telecopier (in the form set
forth in Exhibit B-2) the Lenders to bid, on the terms and conditions of this
Agreement, to make Competitive Loans pursuant to such Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the relevant Borrower responsive to a Competitive Bid
Request. Each Competitive Bid must be received by the Administrative Agent by
telecopier, in the form of Exhibit B-3, (i) in the case of a Eurodollar
Competitive Loan, not later than 9:30 a.m., New York City time, three Business
Days before a proposed Competitive Loan and (ii) in the case of an Absolute Rate
Loan, not later than 9:30 a.m., New York City time, on the day of a proposed
Competitive Loan. Multiple Competitive Bids will be accepted by the
Administrative Agent. Competitive Bids that do not conform substantially to the
format of Exhibit B-3 may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, the relevant Borrower, and the
Administrative Agent shall notify the Lender making such nonconforming
Competitive Bid of such rejection as soon as practicable. Each Competitive Bid
shall refer to this Agreement and specify (x) the principal amount (which shall
be in a minimum principal amount of $5,000,000 and in an integral multiple of
$1,000,000 and which may equal the entire principal amount of the Competitive
Loan requested by the relevant Borrower) of the Competitive Loan or Loans that
the applicable Lender is willing to make to the relevant Borrower, (y) the
Competitive Bid Rate or Rates at which such Lender is prepared to make the
Competitive Loan or Loans and (z) the Interest Period and the last day thereof.
A Competitive Bid submitted pursuant to this paragraph (b) shall be irrevocable
(subject to the satisfaction of the conditions to borrowing set forth in Article
IV).
(c) The Administrative Agent shall promptly (and in any event by 10:15
a.m., New York City time, on the date on which such Competitive Bids shall have
been made) notify the relevant Borrower by telecopier of all the Competitive
Bids made, the Competitive Bid Rate and the principal amount of each Competitive
Loan in respect of which a Competitive Bid was made and the identity of the
Lender that made each Competitive Bid. The Administrative Agent shall send a
copy of all Competitive Bids to the relevant Borrower for its records as soon as
practicable after completion of the bidding process set forth in this Section
2.3.
(d) The relevant Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The relevant Borrower shall
notify the Administrative Agent by telephone, confirmed by telecopier in such
form as may be agreed upon by such Borrower and the Administrative Agent,
whether and to what extent it has decided to accept or reject any of or all the
Competitive Bids referred to in paragraph (c) above, (x) in the case of a
Eurodollar Competitive Loan, not later than 11:00 a.m., New York City time,
three Business Days before a proposed Competitive Loan, and (y) in the case of
an Absolute Rate Loan, not later than 11:00 a.m., New York City time, on the day
of a proposed Competitive Loan; provided, however, that (i) the failure by such
Borrower to give such notice shall be deemed to be a rejection of all the
Competitive Bids referred to in paragraph (c) above, (ii) such Borrower shall
not accept a Competitive Bid made at a particular Competitive Bid Rate if it has
decided to reject a Competitive Bid made at a lower Competitive Bid Rate, (iii)
the aggregate amount of the Competitive Bids accepted by such Borrower shall not
exceed the principal amount specified in the Competitive Bid Request (but may be
less than that requested), (iv) if such Borrower shall accept a Competitive Bid
or Competitive Bids made at a particular Competitive Bid Rate but the amount of
such Competitive Bid or Competitive Bids shall cause the total amount of
Competitive Bids to be accepted by it to exceed the amount specified in
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the Competitive Bid Request, then such Borrower shall accept a portion of such
Competitive Bid or Competitive Bids in an amount equal to the amount specified
in the Competitive Bid Request less the amount of all other Competitive Bids
accepted with respect to such Competitive Bid Request, which acceptance, in the
case of multiple Competitive Bids at such Competitive Bid Rate, shall be made
pro rata in accordance with the amount of each such Competitive Bid at such
Competitive Bid Rate, and (v) except pursuant to clause (iv) above no
Competitive Bid shall be accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount of $5,000,000 and an integral amount
multiple of $1,000,000; provided, further, however, that if a Competitive Loan
must be in an amount less than $5,000,000 because of the provisions of clause
(iv) above, such Competitive Loan may be for a minimum of $1,000,000 or any
integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple Competitive Bids at a particular Competitive
Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral
multiples of $1,000,000 in a manner which shall be in the discretion of such
Borrower. A notice given by any Borrower pursuant to this paragraph (d) shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender
whether or not its Competitive Bid has been accepted (and if so, in what amount
and at what Competitive Bid Rate) by telecopy sent by the Administrative Agent,
and each successful bidder will thereupon become bound, subject to the other
applicable conditions hereof, to make the Competitive Loan in respect of which
its Competitive Bid has been accepted.
(f) A Competitive Bid Request shall not be made within five Business
Days after the date of any previous Competitive Bid Request, unless the
Administrative Agent shall agree otherwise.
(g) If the Lender which is the Administrative Agent shall elect to
submit a Competitive Bid in its capacity as a Lender, it shall submit such
Competitive Bid directly to the relevant Borrower one quarter of an hour earlier
than the latest time at which the other Lenders are required to submit their
Competitive Bids to the Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.3 shall be given in
accordance with Section 9.1.
(i) No Borrower shall have the right to prepay any Competitive Loan
without the consent of the affected Lender or Lenders.
SECTION 2.4. Revolving Credit Borrowing Procedure. In order to request
a Revolving Credit Loan, the relevant Borrower shall hand deliver or telecopy to
the Administrative Agent a Revolving Credit Borrowing Request in the form of
Exhibit B-4 (a) in the case of a Eurodollar Revolving Credit Loan, not later
than 11:00 a.m., New York City time, three Business Days before a proposed
borrowing and (b) in the case of an ABR Revolving Credit Loan, not later than
11:00 a.m., New York City time, on the day of a proposed borrowing. Such notice
shall be irrevocable and shall in each case specify (i) whether the Revolving
Credit Loan then being requested is to be a Eurodollar Revolving Credit Loan or
an ABR Revolving Credit Loan, (ii) the date of such Revolving Credit Loan (which
shall be a Business Day) and the amount thereof; and (iii) in the case of a
Eurodollar Revolving Credit Loan, the Interest Period with respect thereto. The
Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.4 and of each Lender's portion of the requested Loan.
SECTION 2.5. Repayment of Loans. Each Borrower shall repay all
outstanding Revolving Credit Loans and ABR Swingline Loans made to it, in each
case on the Revolving Credit
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Maturity Date (or such earlier date on which the Commitments shall terminate in
accordance herewith). Each Borrower shall repay Quoted Swingline Loans and
Competitive Loans made to it, in each case on the Maturity Date applicable
thereto. Each Loan shall bear interest from and including the date thereof on
the outstanding principal balance thereof as set forth in Section 2.10.
SECTION 2.6. Swingline Loans. (a) Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set forth,
each Swingline Lender agrees, severally and not jointly, at any time and from
time to time on and after the Closing Date and until the earlier of the Business
Day immediately preceding the Revolving Credit Maturity Date and the termination
of the Swingline Commitment of such Swingline Lender, (i) to make available to
any Swingline Borrower Swingline Loans ("Quoted Swingline Loans") on the basis
of quoted interest rates (each, a "Quoted Swingline Rate") furnished by such
Swingline Lender from time to time in its discretion to such Swingline Borrower
(through the Administrative Agent) and accepted by such Swingline Borrower in
its discretion and (ii) to make Swingline Loans ("ABR Swingline Loans") to any
Swingline Borrower bearing interest at a rate equal to the Alternate Base Rate
in an aggregate principal amount (in the case of this clause (ii)) not to exceed
such Swingline Lender's Swingline Commitment. The aggregate outstanding
principal amount of the Quoted Swingline Loans of any Swingline Lender, when
added to the aggregate outstanding principal amount of the ABR Swingline Loans
of such Swingline Lender, may exceed such Swingline Lender's Swingline
Commitment, provided, that in no event shall the aggregate outstanding principal
amount of the Swingline Loans exceed the aggregate Swingline Commitments then in
effect. Each Quoted Swingline Loan shall be made only by the Swingline Lender
furnishing the relevant Quoted Swingline Rate. Each ABR Swingline Loan shall be
made by the Swingline Lenders ratably in accordance with their respective
Swingline Percentages. The Swingline Loans shall be made in a minimum aggregate
principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof (or an aggregate principal amount equal to the remaining balance of the
available Swingline Commitments). Each Swingline Lender shall make the portion
of each Swingline Loan to be made by it available to any Swingline Borrower by
means of a credit to the general deposit account of such Swingline Borrower with
the Administrative Agent or a wire transfer, at the expense of such Swingline
Borrower, to an account designated in writing by such Swingline Borrower, in
each case by 3:30 p.m., New York City time, on the date such Swingline Loan is
requested to be made pursuant to paragraph (b) below, in immediately available
funds. Each Swingline Borrower may borrow, prepay and reborrow Swingline Loans
on or after the Closing Date and prior to the Revolving Credit Maturity Date (or
such earlier date on which the Commitments shall terminate in accordance
herewith) on the terms and subject to the conditions and limitations set forth
herein.
(b) The relevant Swingline Borrower shall give the Administrative Agent
telephonic, written or telecopy notice substantially in the form of Exhibit B-5
(in the case of telephonic notice, such notice shall be promptly confirmed by
telecopy) no later than 2:30 p.m., New York City time (or, in the case of a
proposed Quoted Swingline Loan, 12:00 noon, New York City time), on the day of a
proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall
be irrevocable (subject, in the case of Quoted Swingline Loans, to receipt by
the relevant Swingline Borrower of Quoted Swingline Rates acceptable to it) and
shall refer to this Agreement and shall specify the requested date (which shall
be a Business Day) and amount of such Swingline Loan. The Administrative Agent
shall promptly advise the Swingline Lenders of any notice received from any
Swingline Borrower pursuant to this paragraph (b). In the event that a Swingline
Borrower accepts a Quoted Swingline Rate in respect of a proposed Quoted
Swingline Loan, it shall notify the Administrative Agent (which shall in turn
notify the relevant Swingline Lender) of such acceptance no later than 2:30
p.m., New York City time, on the relevant borrowing date.
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(c) In the event that any ABR Swingline Loan shall be outstanding for
more than five Business Days, the Administrative Agent shall, on behalf of the
relevant Swingline Borrower (which hereby irrevocably directs and authorizes the
Administrative Agent to act on its behalf), request each Lender, including the
Swingline Lenders, to make an ABR Revolving Credit Loan in an amount equal to
such Lender's Revolving Credit Percentage of the principal amount of such ABR
Swingline Loan. Each Lender will make the proceeds of its Revolving Credit Loan
available to the Administrative Agent for the account of the Swingline Lenders
at the office of the Administrative Agent prior to 12:00 Noon, New York City
time, in funds immediately available on the Business Day next succeeding the
date such notice is given. The proceeds of such Revolving Credit Loans shall be
immediately applied to repay the ABR Swingline Loans.
(d) If, for any reason, Revolving Credit Loans may not be (as
determined by the Administrative Agent in its sole discretion), or are not, made
pursuant to Section 2.6(c) to repay ABR Swingline Loans as required by said
Section, then, effective on the date such Revolving Credit Loans would otherwise
have been made, each Lender severally, unconditionally and irrevocably agrees
that it shall purchase an undivided participating interest in such ABR Swingline
Loans ("Unrefunded Swingline Loans") in an amount equal to the amount of the
Revolving Credit Loan which otherwise would have been made by such Lender
pursuant to Section 2.6(c), which purchase shall be funded by the time such
Revolving Credit Loan would have been required to be made pursuant to Section
2.6(c). In the event that the Lenders purchase undivided participating interests
pursuant to the first sentence of this paragraph (d), each Lender shall
immediately transfer to the Administrative Agent, for the account of the
Swingline Lenders, in immediately available funds, the amount of its
participation. Any Lender holding a participation in an Unrefunded Swingline
Loan may exercise any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the relevant Swingline Borrower to
such Lender by reason thereof as fully as if such Lender had made a Loan
directly to such Swingline Borrower in the amount of such participation.
(e) Whenever, at any time after any Swingline Lender has received from
any Lender such Lender's participating interest in an ABR Swingline Loan, such
Swingline Lender receives any payment on account thereof, such Swingline Lender
will promptly distribute to such Lender its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was outstanding
and funded); provided, however, that in the event that such payment received by
such Swingline Lender is required to be returned, such Lender will return to
such Swingline Lender any portion thereof previously distributed by such
Swingline Lender to it.
(f) Notwithstanding anything to the contrary in this Agreement, each
Lender's obligation to make the Revolving Credit Loans referred to in Section
2.6(c) and to purchase and fund participating interests pursuant to Section
2.6(d) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or any Swingline Borrower
may have against any Swingline Lender, any Swingline Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the conditions
specified in Article IV; (iii) any adverse change in the condition (financial or
otherwise) of CBS or any of its Subsidiaries; (iv) any breach of this Agreement
by any Borrower or any Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
(g) Upon written or telecopy notice to the Swingline Lenders and to the
Administrative Agent, CBS may at any time terminate, from time to time in part
reduce, or from time to time (with the
<PAGE> 29
25
approval of the relevant Swingline Lender) increase, the Swingline Commitment of
any Swingline Lender. At any time when there shall be fewer than ten Swingline
Lenders, CBS may appoint from among the Lenders a new Swingline Lender, subject
to the prior consent of such new Swingline Lender and prior notice to the
Administrative Agent, so long as at no time shall there be more than ten
Swingline Lenders. Notwithstanding anything to the contrary in this Agreement,
(i) if any ABR Swingline Loans shall be outstanding at the time of any
termination, reduction, increase or appointment pursuant to the preceding two
sentences, the Swingline Borrowers shall on the date thereof prepay or borrow
ABR Swingline Loans to the extent necessary to ensure that at all times the
outstanding ABR Swingline Loans held by the Swingline Lenders shall be pro rata
according to the respective Swingline Commitments of the Swingline Lenders and
(ii) in no event may the aggregate Swingline Commitments exceed $300,000,000. On
the date of any termination or reduction of the Swingline Commitments pursuant
to this paragraph (g), the Swingline Borrowers shall pay or prepay so much of
the Swingline Loans as shall be necessary in order that, after giving effect to
such termination or reduction, (i) the aggregate outstanding principal amount of
the ABR Swingline Loans of any Swingline Lender will not exceed the Swingline
Commitment of such Swingline Lender and (ii) the aggregate outstanding principal
amount of all Swingline Loans will not exceed the aggregate Swingline
Commitments.
(h) Each Swingline Borrower may prepay any Swingline Loan in whole or
in part at any time without premium or penalty; provided that such Swingline
Borrower shall have given the Administrative Agent written or telecopy notice
(or telephone notice promptly confirmed in writing or by telecopy) of such
prepayment not later than 10:30 a.m., New York City time, on the Business Day
designated by such Swingline Borrower for such prepayment; and provided further
that each partial payment shall be in an amount that is an integral multiple of
$1,000,000. Each notice of prepayment under this paragraph (h) shall specify the
prepayment date and the principal amount of each Swingline Loan (or portion
thereof) to be prepaid, shall be irrevocable and shall commit such Swingline
Borrower to prepay such Swingline Loan (or portion thereof) by the amount stated
therein on the date stated therein. All prepayments under this paragraph (h)
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment. Each payment of principal of or interest on ABR
Swingline Loans shall be allocated, as between the Swingline Lenders, pro rata
in accordance with their respective Swingline Percentages.
SECTION 2.7. Letters of Credit. (a) Subject to the terms and
conditions hereof and relying upon the representations and warranties herein set
forth, each Issuing Lender agrees, at any time and from time to time on or after
the Closing Date until the earlier of (i) the tenth Business Day preceding the
Revolving Credit Maturity Date and (ii) the termination of the Commitments in
accordance with the terms hereof, to issue and deliver or to extend the expiry
of Letters of Credit for the account of CBS in an aggregate outstanding undrawn
amount which does not exceed the maximum amount specified in the applicable
Issuing Lender Agreement; provided that in no event shall the Aggregate LC
Exposure exceed $750,000,000 at any time. Each Letter of Credit (i) shall be in
a form approved in writing by CBS and the applicable Issuing Lender and (ii)
shall permit drawings upon the presentation of such documents as shall be
specified by CBS in the applicable notice delivered pursuant to paragraph (c)
below. The Lenders agree that, subject to compliance with the conditions
precedent set forth in Section 4.3, any Designated Letter of Credit may be
designated as a Letter of Credit hereunder from time to time on or after the
Closing Date pursuant to the procedures specified in the definition of
"Designated Letters of Credit".
(b) Each Letter of Credit shall by its terms expire not later than the
fifth Business Day preceding the Revolving Credit Maturity Date. Any Letter of
Credit may provide for the renewal thereof for additional periods (which shall
in no event extend beyond the date referred to in the preceding
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26
sentence). Each Letter of Credit shall by its terms provide for payment of
drawings in Dollars or in a Foreign Currency, provided that a Letter of Credit
denominated in a Foreign Currency may not be issued if, after giving effect
thereto, the Dollar equivalent of the aggregate face amount of all Letters of
Credit denominated in Foreign Currencies then outstanding would exceed
$150,000,000, as determined by the Administrative Agent.
(c) CBS shall give the applicable Issuing Lender and the Administrative
Agent written or telecopy notice not later than 10:00 a.m., New York City time,
five Business Days (or such shorter period as shall be acceptable to such
Issuing Lender) prior to any proposed issuance of a Letter of Credit. Each such
notice shall refer to this Agreement and shall specify (i) the date on which
such Letter of Credit is to be issued (which shall be a Business Day) and the
face amount of such Letter of Credit, (ii) the name and address of the
beneficiary, (iii) whether such Letter of Credit is a Financial Letter of Credit
or a Non-Financial Letter of Credit (subject to confirmation of such status by
the Administrative Agent), (iv) whether such Letter of Credit shall permit a
single drawing or multiple drawings, (v) the form of the documents required to
be presented at the time of any drawing (together with the exact wording of such
documents or copies thereof), (vi) the expiry date of such Letter of Credit
(which shall conform to the provisions of paragraph (b) above) and (vii) if such
Letter of Credit is to be in a Foreign Currency, the relevant Foreign Currency.
The Administrative Agent shall give to each Lender prompt written or telecopy
advice of the issuance of any Letter of Credit. Each determination by the
Administrative Agent as to whether or not a Letter of Credit constitutes a
Financial Letter of Credit shall be conclusive and binding upon CBS and the
Lenders.
(d) By the issuance of a Letter of Credit and without any further
action on the part of the applicable Issuing Lender or the Lenders in respect
thereof, the applicable Issuing Lender hereby grants to each Lender, and each
Lender hereby acquires from such Issuing Lender, a participation in such Letter
of Credit equal to such Lender's Revolving Credit Percentage at the time of any
drawing thereunder of the face amount of such Letter of Credit, effective upon
the issuance of such Letter of Credit. In addition, the applicable Issuing
Lender hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Lender, a participation in each Designated Letter of Credit equal to
such Lender's Revolving Credit Percentage at the time of any drawing thereunder
of the face amount of such Designated Letter of Credit, effective on the date
such Designated Letter of Credit is designated as a Letter of Credit hereunder.
In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of each Issuing Lender, in accordance with paragraph (f) below, such
Lender's Revolving Credit Percentage of each unreimbursed LC Disbursement made
by such Issuing Lender; provided, however, that the Lenders shall not be
obligated to make any such payment with respect to any payment or disbursement
made under any Letter of Credit to the extent resulting from the gross
negligence or wilful misconduct of such Issuing Lender.
(e) Each Lender acknowledges and agrees that its acquisition of
participations pursuant to paragraph (d) above in respect of Letters of Credit
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or CBS may have against any
Issuing Lender, CBS or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default or an Event of Default or the failure to
satisfy any of the conditions specified in Article IV; (iii) any adverse change
in the condition (financial or otherwise) of CBS or any of its Subsidiaries;
(iv) any breach of this Agreement by CBS or any Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
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(f) On the date on which it shall have ascertained that any documents
presented under a Letter of Credit appear to be in conformity with the terms and
conditions of such Letter of Credit, the applicable Issuing Lender shall give
written or telecopy notice to CBS and the Administrative Agent of the amount of
the drawing and the date on which payment thereon has been or will be made. If
the applicable Issuing Lender shall not have received from CBS the payment
required pursuant to paragraph (g) below by 12:00 noon, New York City time, two
Business Days after the date on which payment of a draft presented under any
Letter of Credit has been made, such Issuing Lender shall so notify the
Administrative Agent, which shall in turn promptly notify each Lender,
specifying in the notice to each Lender such Lender's Revolving Credit
Percentage of such LC Disbursement. Each Lender shall pay to the Administrative
Agent, not later than 2:00 p.m., New York City time, on such second Business
Day, such Lender's Revolving Credit Percentage of such LC Disbursement (which
obligation shall be expressed in Dollars only), which the Administrative Agent
shall promptly pay to the applicable Issuing Lender. The Administrative Agent
will promptly remit to each Lender such Lender's Revolving Credit Percentage of
any amounts subsequently received by the Administrative Agent from CBS in
respect of such LC Disbursement; provided that (i) amounts so received for the
account of any Lender prior to payment by such Lender of amounts required to be
paid by it hereunder in respect of any LC Disbursement and (ii) amounts
representing interest at the rate provided in paragraph (g) below on any LC
Disbursement for the period prior to the payment by such Lender of such amounts
shall in each case be remitted to the applicable Issuing Lender.
(g) If an Issuing Lender shall pay any draft presented under a Letter
of Credit, CBS shall pay to such Issuing Lender an amount equal to the amount of
such draft before 12:00 noon, New York City time, on the second Business Day
immediately following the date of payment of such draft, together with interest
(if any) on such amount at a rate per annum equal to the interest rate in effect
for ABR Loans (or, in the case of Foreign Currency-denominated Letters of
Credit, the rate which would reasonably and customarily be charged by such
Issuing Lender on outstanding loans denominated in the relevant Foreign
Currency) from (and including) the date of payment of such draft to (but
excluding) the date on which either CBS shall have repaid, or the Lenders shall
have refunded, such draft in full (which interest shall be payable on such
second Business Day and from time to time thereafter on demand until either CBS
shall have repaid, or the Lenders shall have refunded, such draft in full). In
the event that such drawing shall be refunded by the Lenders as provided in
Section 2.7(f), CBS shall pay to the Administrative Agent, for the account of
the Lenders, quarterly on the last day of each March, June, September and
December, interest on the amount so refunded at a rate per annum equal to the
interest rate in effect for ABR Loans from (and including) the date of such
refunding to (but excluding) the date on which the amount so refunded by the
Lenders shall have been paid in full in Dollars by CBS. Each payment made to an
Issuing Lender by CBS pursuant to this paragraph shall be made at such Issuing
Lender's address for notices specified herein in lawful money of (x) the United
States of America (in the case of payments made on Dollar-denominated Letters of
Credit) or (y) the applicable foreign jurisdiction (in the case of payments on
Foreign Currency-denominated Letters of Credit) and in immediately available
funds. The obligation of CBS to pay the amounts referred to above in this
paragraph (g) (and the obligations of the Lenders under paragraphs (d) and (f)
above) shall be absolute, unconditional and irrevocable and shall be satisfied
strictly in accordance with their terms irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Issuing Lender Agreement or of the obligations of CBS
under this Agreement or any Issuing Lender Agreement;
(ii) the existence of any claim, setoff, defense or other
right which CBS or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Agents, any
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Issuing Lender or any Lender (other than the defense of payment in
accordance with the terms of this Agreement or a defense based on the
gross negligence or wilful misconduct of the applicable Issuing Lender)
or any other Person in connection with this Agreement or any other
transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect;
provided that payment by the applicable Issuing Lender under such
Letter of Credit against presentation of such draft or document shall
not have constituted gross negligence or wilful misconduct;
(iv) payment by the applicable Issuing Lender under a Letter
of Credit against presentation of a draft or other document which does
not comply in any immaterial respect with the terms of such Letter of
Credit; provided that such payment shall not have constituted gross
negligence or wilful misconduct; or
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance
or event shall not have been the result of gross negligence or wilful
misconduct of the applicable Issuing Lender.
It is understood that in making any payment under a Letter of Credit
(x) such Issuing Lender's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereof equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be forged, fraudulent or invalid in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (y) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the terms
thereof shall, in either case, not, in and of itself, be deemed wilful
misconduct or gross negligence of such Issuing Lender.
(h) (i) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of calculating any LC Fee or Commitment Fee payable in
respect of any Business Day, the Administrative Agent shall convert the amount
available to be drawn under any Letter of Credit denominated in Foreign Currency
into an amount of Dollars based upon the relevant Foreign Exchange Rate in
effect for such day. If on any date the Administrative Agent shall notify CBS
that, by virtue of any change in the Foreign Exchange Rate of any Foreign
Currency in which a Letter of Credit is denominated, the Total Facility Exposure
shall exceed the Total Commitment then in effect, then, within three Business
Days after the date of such notice, CBS shall prepay the Revolving Credit Loans
and/or the Swingline Loans to the extent necessary to eliminate such excess.
Each Issuing Lender which has issued a Letter of Credit denominated in a Foreign
Currency agrees to notify the Administrative Agent of the average daily
outstanding amount thereof for any period in respect of which LC Fees or
Commitment Fees are payable and, upon request by the Administrative Agent, for
any other date or period. For all purposes of this Agreement, determinations by
the Administrative Agent of the Dollar equivalent of any amount expressed in a
Foreign Currency shall be made on the basis of Foreign Exchange Rates reset
monthly (or on such other periodic basis as shall be selected by the
Administrative Agent in its sole discretion) and shall in each case be
conclusive absent manifest error.
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(ii) Notwithstanding anything to the contrary contained in
this Section 2.7, prior to demanding any reimbursement from the Lenders
pursuant to Section 2.7(f) in respect of any Letter of Credit
denominated in a Foreign Currency, the relevant Issuing Lender shall
convert CBS's obligation under Section 2.7(g) to reimburse such Issuing
Lender in such Foreign Currency into an obligation to reimburse such
Issuing Lender (and, in turn, the Lenders) in Dollars. The amount of
any such converted obligation shall be computed based upon the relevant
Foreign Exchange Rate (as quoted by the Administrative Agent to such
Issuing Lender) in effect for the day on which such conversion occurs.
SECTION 2.8. Conversion and Continuation Options. (a) The relevant
Borrower may elect from time to time to convert Eurodollar Revolving Credit
Loans (or, subject to Section 2.10(f), a portion thereof) to ABR Revolving
Credit Loans on the last day of an Interest Period with respect thereto by
giving the Administrative Agent prior irrevocable notice of such election. The
relevant Borrower may elect from time to time to convert ABR Revolving Credit
Loans (subject to Section 2.10(f)) to Eurodollar Revolving Credit Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election. Any such notice of conversion to Eurodollar Revolving
Credit Loans shall specify the length of the initial Interest Period therefor.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Revolving Credit
Loans and ABR Revolving Credit Loans may be converted as provided herein,
provided that no Revolving Credit Loan may be converted into a Eurodollar
Revolving Credit Loan when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Required Lenders have determined in its
or their sole discretion not to permit such a conversion.
(b) Any Eurodollar Revolving Credit Loans (or, subject to Section
2.10(f), a portion thereof) may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the relevant Borrower
giving irrevocable notice to the Administrative Agent, not less than three
Business Days prior to the last day of the then current Interest Period with
respect thereto, of the length of the next Interest Period to be applicable to
such Revolving Credit Loans, provided that no Eurodollar Revolving Credit Loan
may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such a continuation,
and provided, further, that if the relevant Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Eurodollar Revolving Credit
Loans shall be automatically converted to ABR Revolving Credit Loans on the last
day of such then expiring Interest Period. Upon receipt of any notice from a
Borrower pursuant to this Section 2.8(b), the Administrative Agent shall
promptly notify each Lender thereof.
SECTION 2.9. Fees. (a) CBS agrees to pay to the Administrative Agent
for the account of each Lender a Commitment Fee for the period from and
including the Original Closing Date to the Revolving Credit Maturity Date (or
such earlier date on which the Commitments shall terminate in accordance
herewith), computed at a per annum rate equal to the Applicable Commitment Fee
Rate on the average daily Commitment Fee Calculation Amount in respect of such
Lender during the period for which payment is made. All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360 days
and shall be payable quarterly in arrears on the last day of each March, June,
September and December, on the Revolving Credit Maturity Date or such earlier
date on which the Commitments shall be terminated, commencing on the first of
such dates to occur after the Original Closing Date.
(b) CBS agrees to pay each Lender, through the Administrative Agent, on
the last day of each March, June, September and December and on the Revolving
Credit Maturity Date or the date on which the Commitment of such Lender shall be
terminated as provided herein and all Letters of Credit
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issued hereunder shall have expired, a letter of credit fee (an "LC Fee")
computed at a per annum rate equal to the Applicable LC Fee Rate on such
Lender's Revolving Credit Percentage of the average daily undrawn amount of the
Financial Letters of Credit or Non-Financial Letters of Credit, as the case may
be, outstanding during the preceding quarter (or shorter period commencing with
the Original Closing Date or ending with the Revolving Credit Maturity Date or
the date on which the Commitment of such Lender shall have been terminated and
all Letters of Credit issued hereunder shall have expired). All LC Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
(c) CBS and Infinity, jointly and severally, agree to pay, without
duplication, to the Administrative Agent, for its own account, the
administrative agent's fees ("Administrative Agent's Fees") provided for in the
Administrative Agent Fee Letter at the times provided therein.
(d) CBS agrees to pay to each Issuing Lender, through the
Administrative Agent, for its own account, the applicable Issuing Lender Fees.
(e) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the relevant Lenders or to the Issuing Lenders. Once paid, none of the
Fees shall be refundable under any circumstances (other than corrections of
errors in payment).
SECTION 2.10. Interest on Loans; Eurodollar Tranches; Etc. (a) Subject
to the provisions of Section 2.11, Eurodollar Loans shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to (i) in the case of each Eurodollar Revolving
Credit Loan, the Eurodollar Rate for the Interest Period in effect for such Loan
plus the Applicable Eurodollar Margin and (ii) in the case of each Eurodollar
Competitive Loan, the Eurodollar Rate for the Interest Period in effect for such
Loan plus the Margin offered by the Lender making such Loan and accepted by the
relevant Borrower pursuant to Section 2.3. The Eurodollar Rate for each Interest
Period shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error. The Administrative Agent shall
promptly advise the relevant Borrower and each Lender of such determination.
(b) Subject to the provisions of Section 2.11, ABR Loans shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be, when determined by reference to the
Prime Rate and over a year of 360 days at all other times) at a rate per annum
equal to the Alternate Base Rate. The Alternate Base Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
(c) Subject to the provisions of Section 2.11, Quoted Swingline Loans
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the relevant Quoted
Swingline Rate.
(d) Subject to the provisions of Section 2.11, each Absolute Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the relevant
Borrower pursuant to Section 2.3.
(e) Interest on each Loan shall be payable on each applicable Interest
Payment Date.
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(f) Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations, repayments and prepayments of Eurodollar
Revolving Credit Loans hereunder and all selections of Interest Periods
hereunder in respect of Eurodollar Revolving Credit Loans shall be in such
amounts and shall be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of the Eurodollar Revolving
Credit Loans comprising each Eurodollar Tranche shall be equal to $50,000,000 or
a whole multiple of $5,000,000 in excess thereof. Unless otherwise agreed by the
Administrative Agent, in no event shall there be more than 25 Eurodollar
Tranches outstanding at any time.
(g) If no election as to the Type of Revolving Credit Loan is specified
in any notice of borrowing with respect thereto, then the requested Loan shall
be an ABR Loan. If no Interest Period with respect to a Eurodollar Revolving
Credit Loan is specified in any notice of borrowing, conversion or continuation,
then the relevant Borrower shall be deemed to have selected an Interest Period
of one month's duration.
SECTION 2.11. Default Interest. (a) If all or a portion of the
principal amount of any Loan shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans (whether or not
overdue) shall bear interest at a rate per annum which is equal to the rate that
would otherwise be applicable thereto pursuant to the provisions of Section 2.10
plus 2% and (b) if all or a portion of any LC Disbursement, any interest payable
on any Loan or LC Disbursement or any Fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate otherwise applicable to ABR Loans pursuant to Section 2.10(b) plus 2%,
in each case, with respect to clauses (a) and (b) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
SECTION 2.12. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan (i) the Administrative Agent shall have
determined (which determination shall be conclusive and binding upon each
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, or (ii) the Required Lenders shall have determined and
shall have notified the Administrative Agent that the Eurodollar Rate determined
or to be determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such Lenders) of
making or maintaining Eurodollar Loans during such Interest Period, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telecopy notice of such determination to the Borrowers and the Lenders. In the
event of any such determination, until the Administrative Agent shall have
advised the Borrowers and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any request by a Borrower for a Eurodollar
Competitive Loan pursuant to Section 2.3 to be made after such determination
shall be of no force and effect and shall be denied by the Administrative Agent,
(ii) any request by a Borrower for a Eurodollar Revolving Credit Loan pursuant
to Section 2.4 to be made after such determination shall be deemed to be a
request for an ABR Loan and (iii) any request by a Borrower for conversion into
or a continuation of a Eurodollar Revolving Credit Loan pursuant to Section 2.8
to be made after such determination shall have no force and effect (in the case
of a requested conversion) or shall be deemed to be a request for a conversion
into an ABR Loan (in the case of a requested continuation). Also, in the event
of any such determination, the relevant Borrower shall be entitled, in its sole
discretion, if the requested Loan has not been made, to cancel its acceptance of
the Competitive Bids or to cancel its Competitive Bid Request relating thereto.
Each determination by the Administrative Agent or the Required Lenders hereunder
shall be conclusive absent manifest error.
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SECTION 2.13. Termination and Reduction of Commitments. (a) Upon at
least three Business Days' prior irrevocable written or telecopy notice to the
Administrative Agent, CBS may at any time in whole permanently terminate, or
from time to time in part permanently reduce, the Commitments; provided,
however, that (i) each partial reduction of the Commitments shall be in a
minimum principal amount of $10,000,000 and in integral multiples of $1,000,000
in excess thereof and (ii) no such termination or reduction shall be made if,
after giving effect thereto and to any prepayments of the Loans made on the
effective date thereof, (x) the Outstanding Revolving Extensions of Credit of
any Lender would exceed such Lender's Commitment then in effect or (y) the Total
Facility Exposure would exceed the Total Commitment then in effect. The
Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.13(a).
(b) Except as otherwise provided in Section 2.21, each reduction in the
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective Commitments. CBS agrees to pay to the Administrative Agent for
the account of the Lenders, on the date of termination or reduction of the
Commitments, the Commitment Fees on the amount of the Commitments so terminated
or reduced accrued through the date of such termination or reduction.
SECTION 2.14. Optional Prepayments of Revolving Credit Loans. The
relevant Borrower may at any time and from time to time prepay the Revolving
Credit Loans, in whole or in part, without premium or penalty, upon giving
irrevocable written or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) to the Administrative Agent: (i) before 10:00
a.m., New York City time, three Business Days prior to prepayment, in the case
of Eurodollar Revolving Credit Loans, and (ii) before 10:00 a.m., New York City
time, one Business Day prior to prepayment, in the case of ABR Revolving Credit
Loans. Such notice shall specify the date and amount of prepayment and whether
the prepayment is of Eurodollar Revolving Credit Loans, ABR Revolving Credit
Loans or a combination thereof, and, if of a combination thereof, the amount
allocable to each. If a Eurodollar Revolving Credit Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the relevant
Borrower shall also pay any amounts owing pursuant to Section 2.16. Upon receipt
of any such notice the Administrative Agent shall promptly notify each Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (except in the
case of ABR Revolving Credit Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Revolving Credit Loans shall be in an aggregate
principal amount of $10,000,000 or a whole multiple of $1,000,000 in excess
thereof.
SECTION 2.15. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the Original Closing Date
any change in applicable law or regulation (including any change in the reserve
percentages provided for in Regulation D) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof shall change the basis of taxation of
payments to any Lender of the principal of or interest on any Eurodollar Loan or
Absolute Rate Loan made by such Lender (other than changes in respect of taxes
imposed on the overall net income of such Lender by the jurisdiction in which
such Lender has its principal office (or in which it holds any Eurodollar Loan
or Absolute Rate Loan) or by any political subdivision or taxing authority
therein and other than taxes that would not have been imposed but for the
failure of such Lender to comply with applicable certification, information,
documentation or other reporting requirements), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets of
or deposits with or for the account of such Lender, or shall impose on such
Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan or Absolute Rate Loan made by such Lender, and
the result of
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any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or Absolute Rate Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise) in respect of any Eurodollar Loan or Absolute Rate Loan
by an amount deemed by such Lender to be material, then the relevant Borrower
agrees to pay to such Lender as provided in paragraph (c) below such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered. Notwithstanding the foregoing, no Lender shall
be entitled to request compensation under this paragraph with respect to any
Competitive Loan if the change giving rise to such request shall, or in good
faith should, have been taken into account in formulating the Competitive Bid
pursuant to which such Competitive Loan shall have been made.
(b) If any Lender or any Issuing Lender shall have determined that the
adoption after the Original Closing Date of any law, rule, regulation or
guideline regarding capital adequacy, or any change in any law, rule, regulation
or guideline regarding capital adequacy or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
Issuing Lender or any Lender's or Issuing Lender's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's or Issuing
Lender's capital or on the capital of such Lender's or Issuing Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender or the LC Exposure of such Lender or Letters of Credit issued by such
Issuing Lender pursuant hereto to a level below that which such Lender or
Issuing Lender or such Lender's or Issuing Lender's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's or Issuing Lender's policies and the policies of
such Lender's or Issuing Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender or Issuing Lender to be material,
then from time to time CBS agrees to pay to such Lender or Issuing Lender as
provided in paragraph (c) below such additional amount or amounts as will
compensate such Lender or Issuing Lender or such Lender's or Issuing Lender's
holding company for any such reduction suffered.
(c) A certificate of each Lender or Issuing Lender setting forth such
amount or amounts as shall be necessary to compensate such Lender or Issuing
Lender as specified in paragraph (a) or (b) above, as the case may be, and the
basis therefor in reasonable detail shall be delivered to the relevant Borrower
and shall be conclusive absent manifest error. The relevant Borrower shall pay
each Lender or Issuing Lender the amount shown as due on any such certificate
within 30 days after its receipt of the same. Upon the receipt of any such
certificate, the relevant Borrower shall be entitled, in its sole discretion, if
any requested Loan has not been made, to cancel its acceptance of the relevant
Competitive Bids or to cancel the Competitive Bid Request relating thereto,
subject to Section 2.16.
(d) Except as provided in this paragraph, failure on the part of any
Lender to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's right to demand
compensation with respect to any other period. The protection of this Section
2.15 shall be available to each Lender regardless of any possible contention of
the invalidity or inapplicability of the law, rule, regulation, guideline or
other change or condition which shall have occurred or been imposed so long as
it shall be customary for Lenders affected thereby to comply therewith. No
Lender shall be entitled to compensation under this Section 2.15 for any costs
incurred or reductions suffered with respect to any date unless it shall have
notified the relevant Borrower that it will demand compensation for such costs
<PAGE> 38
34
or reductions under paragraph (c) above not more than 90 days after the later of
(i) such date and (ii) the date on which it shall have become aware of such
costs or reductions. Notwithstanding any other provision of this Section 2.15,
no Lender shall demand compensation for any increased cost or reduction referred
to above if it shall not at the time be the general policy or practice of such
Lender to demand such compensation in similar circumstances under comparable
provisions of other credit agreements, if any. In the event any Borrower shall
reimburse any Lender pursuant to this Section 2.15 for any cost and such Lender
shall subsequently receive a refund in respect thereof, such Lender shall so
notify such Borrower and, upon its request, will pay to such Borrower the
portion of such refund which such Lender shall determine in good faith to be
allocable to the cost so reimbursed. The covenants contained in this Section
2.15 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
SECTION 2.16. Indemnity. Each Borrower agrees to indemnify each Lender
against any loss or expense described below which such Lender may sustain or
incur as a consequence of (a) any failure by such Borrower to fulfill on the
date of any borrowing hereunder the applicable conditions set forth in Article
IV, (b) any failure by such Borrower to borrow, continue or convert any Loan
hereunder after irrevocable notice of such borrowing, continuation or conversion
has been given or deemed given or Competitive Bids have been accepted pursuant
to Article II or (c) any payment, prepayment or conversion of a Eurodollar Loan
or Absolute Rate Loan made to such Borrower required by any other provision of
this Agreement or otherwise made or deemed made, whatever the circumstances may
be that give rise to such payment, prepayment or conversion, or any transfer of
any such Loan pursuant to Section 2.21 or 9.4(b), on a date other than the last
day of the Interest Period applicable thereto. The loss or expense for which
such Lender shall be indemnified under this Section 2.16 shall be equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid, converted or not borrowed,
continued or converted (assumed to be the Eurodollar Rate in the case of
Eurodollar Loans) for the period from the date of such payment, prepayment,
conversion or failure to borrow, continue or convert to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, continue
or convert, the Interest Period for such Loan which would have commenced on the
date of such failure) over (ii) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid, converted or not borrowed, continued or converted for such
period or Interest Period, as the case may be; provided, however, that such
amount shall not include any loss of a Lender's margin or spread over its cost
of obtaining funds as described above. A certificate of any Lender setting forth
any amount or amounts which such Lender is entitled to receive pursuant to this
Section 2.16 shall be delivered to the relevant Borrower and shall be conclusive
absent manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence of Debt.
(a) Except as required under Section 2.21, each payment or prepayment of
principal of any Revolving Credit Loan, each payment of interest on the
Revolving Credit Loans, each payment of the Commitment Fees pursuant to Section
2.9(a)(i), each payment of LC Fees, and each reduction of the Commitments, shall
be allocated pro rata among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Revolving
Credit Loans). Each Lender agrees that in computing such Lender's portion of any
Loan to be made hereunder, the Administrative Agent may, in its discretion,
round such Lender's percentage of such Loan to the next higher or lower whole
Dollar amount.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the relevant borrowing date that such Lender will not make
available to the Administrative Agent such
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Lender's portion of a borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the date
of such borrowing in accordance with this Agreement and the Administrative Agent
may, in reliance upon such assumption, make available to the relevant Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have made such portion available to the Administrative Agent, each of such
Lender and the relevant Borrower agrees to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to such Borrower until
the date such amount is repaid to the Administrative Agent at (i) in the case of
such Borrower, the interest rate applicable at the time to the relevant Loan and
(ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount shall constitute such Lender's Loan as part of such borrowing for the
purposes of this Agreement; provided that such repayment shall not release such
Lender from any liability it may have to such Borrower for the failure to make
such Loan at the time required herein.
(c) The failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).
(d) Each Lender may at its option make any Eurodollar Loan by causing
any domestic or foreign branch or affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
relevant Borrower to repay such Loan in accordance with the terms of this
Agreement.
(e) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by it from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.
The Administrative Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Borrower with respect to each Loan, the
Type of each Loan and each Interest Period, if any, applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from each Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from any Borrower and each
Lender's share thereof. The entries made in the accounts maintained pursuant to
this paragraph (e) shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligations of any Borrower to repay the Loans in accordance with their terms.
(f) In order to expedite the transactions contemplated by this
Agreement, each Subsidiary Borrower shall be deemed, by its execution and
delivery of a Subsidiary Borrower Request, to have appointed CBS to act as agent
on behalf of such Subsidiary Borrower for the purpose of (a) giving any notices
contemplated to be given by such Subsidiary Borrower pursuant to this Agreement,
including, without limitation, borrowing notices, prepayment notices,
continuation notices, conversion notices, competitive bid requests and
competitive bid acceptances or rejections and (b) paying on behalf of such
Subsidiary Borrower any Subsidiary Borrower Obligations owing by such Subsidiary
Borrower; provided, that each Subsidiary Borrower shall retain the right, in its
discretion, to directly give any or all of such notices or make any or all of
such payments.
(g) The Administrative Agent shall promptly notify the Lenders upon
receipt of any Subsidiary Borrower Designation and Subsidiary Borrower Request.
The Administrative Agent shall
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promptly notify the Swingline Lenders upon receipt of any designation of a
Subsidiary Borrower as a Swingline Borrower.
SECTION 2.18. Sharing of Setoffs. Except to the extent that this
Agreement provides for payments to be allocated to Revolving Credit Loans,
Swingline Loans or Competitive Loans, as the case may be, each Lender agrees
that if it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against any Borrower, or pursuant to a secured claim under Section
506 of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means (other than pursuant to any provision of this Agreement), obtain
payment (voluntary or involuntary) in respect of any category of its Loans or
such Lender's Revolving Credit Percentage of any LC Disbursement as a result of
which the unpaid principal portion of such Loans or the unpaid portion of such
Lender's Revolving Credit Percentage of the LC Disbursements shall be
proportionately less than the unpaid principal portion of such Loans or the
unpaid portion of the Revolving Credit Percentage of the LC Disbursements of any
other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in such Loans or the Revolving Credit
Percentage of the LC Disbursements of such other Lender, so that the aggregate
unpaid principal amount of such Loans and participations in such Loans held by
each Lender or the Revolving Credit Percentage of LC Disbursements and
participations in LC Disbursements held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all such Loans or LC
Disbursements then outstanding as the principal amount of such Loans or the
Revolving Credit Percentage of LC Disbursements of each Lender prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all such Loans or LC Disbursements outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. Any Lender holding a participation in a
Loan or LC Disbursement deemed to have been so purchased may exercise any and
all rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by any Borrower to such Lender by reason thereof as fully as if
such Lender had made a Loan directly such Borrower or issued a Letter of Credit
for the account of CBS in the amount of such participation.
SECTION 2.19. Payments. (a) Except as otherwise expressly provided
herein, each Borrower shall make each payment (including principal of or
interest on any Loan or any Fees or other amounts) hereunder without setoff or
counterclaim and shall make each such payment not later than 12:00 noon, New
York City time, on the date when due in Dollars to the Administrative Agent at
its offices at 60 Wall Street, New York, New York, in immediately available
funds.
(b) Whenever any payment (including principal of or interest on any
Loan or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by each Borrower
hereunder to or for the benefit of a Non-U.S. Person shall be made, in
accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto imposed by or on behalf
of the United States or any political subdivision thereof, excluding taxes
imposed on (or measured by) such Non-U.S. Person's net
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income or net receipts, franchise taxes, taxes on doing business or taxes
imposed on capital or net worth (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to a Non-U.S. Person, (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.20) such Non-U.S. Person shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law.
(b) The relevant Borrower agrees to pay and reimburse on demand all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any Governmental Authority in respect of this Agreement, any of the
Loans or the Letters of Credit (all such taxes, assessments or charges
hereinafter referred to as "Other Taxes").
(c) The relevant Borrower will indemnify each Lender (or Transferee)
and the Administrative Agent for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by the applicable jurisdiction on
amounts payable under this Section 2.20) paid by such Lender (or Transferee) or
the Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date such Lender (or
Transferee) or the Administrative Agent, as the case may be, makes written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by any Borrower in respect of any payment to a Non-U.S. Person,
such Borrower will furnish to the Administrative Agent, at its address referred
to in Section 9.1 for delivery to such Non-U.S. Person, the original or a
certified copy of a receipt (if available) evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.20 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder and of all other amounts payable hereunder.
(f) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America, or any estate
or trust that is subject to federal income taxation regardless of the source of
its income (a "Non-U.S. Person") shall deliver to CBS and the Administrative
Agent (or, in the case of a participant, to the Lender from which the related
participation shall have been purchased) two copies of either U.S. Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Person
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form W-8,
or any subsequent versions thereof or successors thereto (and, if such Non-U.S.
Person delivers a Form W-8, an annual certificate representing that such
Non-U.S. Person is not a "bank" for purposes of Section 881(c) of the Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of CBS and is not a controlled foreign corporation related to CBS (within
the meaning of Section 864(d)(4) of the Code)), properly completed and duly
executed by such Non-U.S. Person claiming complete exemption from U.S. federal
withholding tax on all payments by any Borrower under this Agreement. Such forms
shall be delivered by each Non-U.S. Person promptly after it becomes a party to
this Agreement (or, in the case of any participant, promptly after the date such
participant purchases the related participation). In addition,
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each Non-U.S. Person shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Person. Each
Non-U.S. Person shall promptly notify CBS at any time it determines that it is
no longer in a position to provide any previously delivered certificate to CBS
(or any other form of certification adopted by the U.S. taxing authorities for
such purpose). Unless CBS and the Administrative Agent (or, in the case of a
participant, the Lender from which the related participation shall have been
purchased) have received forms or other documents satisfactory to them
indicating that payments hereunder are not subject to United States withholding
tax, the relevant Borrower or the Administrative Agent shall withhold taxes from
such payments at the applicable statutory rate in the case of payments of
interest to or for any Lender (or Transferee) that is a Non-U.S. Person.
Notwithstanding any other provision of this Section 2.20(f), a Non-U.S. Person
shall not be required to deliver any form pursuant to this Section 2.20(f) that
such Non-U.S. Person is not legally able to deliver by reason of the adoption of
any law, rule or regulation, or any change in any law, rule or regulation or in
the interpretation thereof, in each case occurring after the date such Non-U.S.
Person becomes a Lender (or Transferee).
(g) No Borrower shall be required to pay any additional amounts to any
Non-U.S. Person in respect of United States withholding tax pursuant to
paragraph (a) above (i) if the obligation to pay such additional amounts would
not have arisen but for a failure by such Non-U.S. Person to comply with the
provisions of paragraph (f) above or (ii) in the case of a Transferee, to the
extent such additional amounts exceed the additional amounts that would have
been payable had no transfer or assignment to such Transferee occurred;
provided, however, that each Borrower shall be required to pay those amounts to
any Lender (or Transferee) that it was required to pay hereunder prior to the
failure of such Lender (or Transferee) to comply with the provisions of such
paragraph (f).
SECTION 2.21. Termination or Assignment of Commitments Under Certain
Circumstances. (a) Any Lender (or Transferee) claiming any additional amounts
payable pursuant to Section 2.15 or Section 2.20 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by any Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such Lender (or
Transferee), be otherwise disadvantageous to such Lender (or Transferee).
(b) In the event that (x) any Lender shall have delivered a notice or
certificate pursuant to Section 2.15, (y) any Borrower shall be required to make
additional payments to any Lender under Section 2.20, or (z) any Lender (a
"Non-Consenting Lender") shall withhold its consent to any amendment described
in clause (i) or (ii) of Section 9.8(b) as to which consents have been obtained
from Lenders having Total Facility Percentages aggregating at least 90%, CBS
shall have the right, at its own expense, upon notice to such Lender (or
Lenders) and the Administrative Agent, (i) to terminate the Commitments of such
Lender (except in the case of clause (z) above) or (ii) to require such Lender
(or, in the case of clause (z) above, each Non-Consenting Lender) to transfer
and assign without recourse (in accordance with and subject to the restrictions
contained in Section 9.4) all its interests, rights and obligations under this
Agreement to one or more other financial institutions acceptable to the
Administrative Agent (which approval shall not be unreasonably withheld) which
shall assume such obligations; provided that (w) in the case of any replacement
of Non-Consenting Lenders, each assignee shall have consented to the relevant
amendment, (x) no such termination or assignment shall conflict with any law,
rule or regulation or order of any Governmental Authority, (y) the Borrowers or
the assignee (or assignees), as the case may be, shall pay to each affected
Lender in immediately available funds on the date of such termination or
assignment the principal of and interest accrued to the date of
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payment on the Loans made by it hereunder and all other amounts accrued for its
account or owed to it hereunder and (z) CBS may not terminate Commitments
representing more than 10% of the original aggregate Commitments pursuant to
this paragraph (b).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
CBS hereby represents and warrants, and each Subsidiary Borrower by its
execution and delivery of a Subsidiary Borrower Request represents and warrants
(to the extent specifically applicable to such Subsidiary Borrower), to each of
the Lenders that:
SECTION 3.1. Corporate Existence. Each of CBS and each Material
Subsidiary: (a) is a corporation, partnership or other entity duly organized and
validly existing under the laws of the jurisdiction of its organization; (b) has
all requisite corporate or other power, and has all material governmental
licenses, authorizations, consents and approvals, necessary to own its assets
and carry on its business as now being or as proposed to be conducted, except
where the failure to have any of the foregoing would not result in a Material
Adverse Effect; and (c) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would result in a Material Adverse
Effect.
SECTION 3.2. Financial Condition. (a) Each of (i) the consolidated
balance sheet of CBS and its Consolidated Subsidiaries as at December 31, 1998,
and the related consolidated statements of income and cash flows of CBS and its
Consolidated Subsidiaries for the fiscal year ended on such date, with the
opinion thereon of KPMG, LLP and (ii) the unaudited consolidated balance sheets
of CBS and its Consolidated Subsidiaries as at March 31, 1999 and as at June 30,
1999, and the related unaudited consolidated statements of income and cash flows
of CBS and its Consolidated Subsidiaries for the fiscal quarters ended on such
dates, all certified by a Financial Officer of CBS, heretofore furnished to each
of the Lenders, fairly present the consolidated financial condition of CBS and
its Consolidated Subsidiaries as at such dates and the consolidated results of
their operations for the fiscal year or fiscal quarter ended on such dates in
accordance with GAAP (subject, in the case of the statements referred to in
clause (ii) above, to year-end audit adjustments). Neither CBS nor any of its
Material Subsidiaries had on such dates any known material contingent liability,
except as referred to or reflected or provided for in the Exchange Act Report or
in such balance sheets (or the notes thereto) as at such dates.
(b) There has been no material adverse change in the consolidated
financial condition, operations, assets, business or prospects taken as a whole
of CBS and its Consolidated Subsidiaries from that set forth in the consolidated
financial statements of CBS for the fiscal year ended December 31, 1995 referred
to in Section 3.2(a) (it being agreed, however, that none of (i) the reduction
by any rating agency of any rating assigned to Indebtedness of CBS, (ii)
non-cash provisions for loan losses and additions to valuation allowances, (iii)
any change in GAAP or compliance therewith and (iv) any legal or arbitral
proceedings which have been disclosed in the Exchange Act Report, whether
threatened, pending, resulting in a judgment or otherwise, prior to the time a
final judgment for the payment of money shall have been recorded against CBS or
any Material Subsidiary by any Governmental Authority having jurisdiction, and
the judgment is non-appealable (or the time for appeal has expired) and all
stays of execution have expired or been lifted shall, in and of itself,
constitute such a material adverse change).
SECTION 3.3. Litigation. Except as disclosed to the Lenders in the
Exchange Act Report filed prior to the Closing Date or otherwise disclosed in
writing to the Lenders prior to the
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Closing Date, there are no legal or arbitral proceedings, or any proceedings by
or before any Governmental Authority, pending or (to the knowledge of CBS)
threatened against CBS or any of its Material Subsidiaries which have resulted
in a Material Adverse Effect (it being agreed that any legal or arbitral
proceedings which have been disclosed in the Exchange Act Report, whether
threatened, pending, resulting in a judgment or otherwise, prior to the time a
final judgment for the payment of money shall have been recorded against CBS or
any Material Subsidiary by any Governmental Authority having jurisdiction, and
the judgment is non-appealable (or the time for appeal has expired) and all
stays of execution have expired or been lifted shall not, in and of itself, be
deemed to result in a Material Adverse Effect). The "Exchange Act Report" shall
mean, collectively, the Annual Report of each of CBS and Infinity on Form 10-K
and Form 10-K/A for the year ended December 31, 1998, each Report on Form 8-K of
each of CBS and Infinity filed subsequent to December 31, 1998 and delivered to
the Lenders prior to the date hereof, and the Reports of each of CBS and
Infinity on Form 10-Q and, with respect to Infinity, on Form 10-Q/A, for the
quarter ended June 30, 1999.
SECTION 3.4. No Breach, etc. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated and
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or By-laws (or other
equivalent organizational documents) of any Borrower, or any applicable law or
regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any material agreement or instrument to which CBS or any of its
Material Subsidiaries is a party or by which any of them is bound or to which
any of them is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of CBS or any of its Material Subsidiaries pursuant to the
terms of any such agreement or instrument. Neither CBS nor any of its Material
Subsidiaries is in default under or with respect to any of its material
contractual obligations in any respect which would have a Material Adverse
Effect.
SECTION 3.5. Corporate Action. Each Borrower has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement; the execution and delivery by each Borrower of this
Agreement (or, in the case of each Subsidiary Borrower, the relevant Subsidiary
Borrower Request), and the performance by each Borrower of this Agreement, have
been duly authorized by all necessary corporate action on such Borrower's part;
this Agreement (or, in the case of each Subsidiary Borrower, the relevant
Subsidiary Borrower Request) has been duly and validly executed and delivered by
each Borrower; and this Agreement constitutes a legal, valid and binding
obligation of each Borrower, enforceable in accordance with its terms except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.6. Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by each Borrower of this Agreement or
for the validity or enforceability hereof.
SECTION 3.7. ERISA. CBS and, to the best of its knowledge, its ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the currently applicable provisions of ERISA and
the Code except where any failure or non-compliance would not result in a
Material Adverse Effect.
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SECTION 3.8. Taxes. As of the Closing Date, United States Federal
income tax returns of CBS and its Material Subsidiaries have been examined and
closed through the fiscal year of CBS ended December 31, 1989. CBS and its
Material Subsidiaries have filed all United States Federal income tax returns
and all other material tax returns which are required to be filed by them and
have paid all taxes shown as due on such returns or pursuant to any assessment
received by CBS or any of its Material Subsidiaries, except those being
contested and reserved against in accordance with Section 5.2.
SECTION 3.9. Investment Company Act. No Borrower is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 3.10. Public Utility Holding Company Act. No Borrower is
subject to regulation as a "holding company", subject to regulation as an
"affiliate" of a "holding company", or subject to regulation as a "subsidiary
company" of a "holding company", under the Public Utility Holding Company Act of
1935, as amended.
SECTION 3.11. Hazardous Materials. CBS and each of its Subsidiaries
have obtained all permits, licenses and other authorizations which are required
under all Environmental Laws, except to the extent failure to have any such
permit, license or authorization has not resulted in a Material Adverse Effect.
CBS and each of its Subsidiaries are in compliance with the terms and conditions
of all such permits, licenses and authorizations, and are also in compliance
with other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not result in a
Material Adverse Effect.
SECTION 3.12. Material Subsidiaries. Set forth in Schedule 3.12 is a
complete and correct list, as of the Closing Date, of all Material Subsidiaries.
SECTION 3.13. No Material Misstatements. No written information,
report, financial statement, exhibit or schedule (the "Information") furnished
by or on behalf of CBS to the Administrative Agent or any Lender in connection
with the syndication of the Commitments or the negotiation of this Agreement or
included in this Agreement or delivered pursuant hereto contained as of the time
it was furnished any material misstatement of fact or omitted as of such time to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading;
provided that the foregoing representation and warranty is made only to the best
of CBS's knowledge in the case of Information relating to King World and its
Subsidiaries furnished prior to the King World Merger Date (which knowledge,
prior to the King World Merger Date, was principally based upon public
disclosure by King World); and provided, further, that with respect to
Information consisting of statements, estimates and projections regarding the
future performance of CBS and its Subsidiaries ("Projections"), no
representation or warranty is made other than that such Projections have been
prepared in good faith utilizing due and careful consideration and the best
information available to CBS at the time of preparation thereof.
SECTION 3.14. Ownership of Property. Each of CBS and each of its
Material Subsidiaries has good record and marketable title in fee simple to, or
a valid leasehold interest in, all its real property, and good title to, or a
valid leasehold interest in, all its other Property, except to the extent that
the failure to have such title would not result in a Material Adverse Effect.
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SECTION 3.15. Intellectual Property. Each of CBS and each of its
Material Subsidiaries maintains, and is in compliance in all material respects
with, appropriate policies and procedures for establishing and protecting their
respective rights in Intellectual Property. Except as, in the aggregate, would
not result in a Material Adverse Effect, (a) each of CBS and each of its
Material Subsidiaries owns, or is licensed to use, all Intellectual Property
necessary for the conduct of their respective businesses; (b) no claim has been
asserted and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does CBS know of any valid basis for any such claim; and (c) to
the best knowledge of CBS, the use of the Intellectual Property by CBS and its
Material Subsidiaries does not infringe on the rights of any Person.
SECTION 3.16. FCC Matters. Except as, in the aggregate, would not
result in a Material Adverse Effect: (a) CBS and each of its Material
Subsidiaries have all the FCC Licenses necessary for the conduct of their
respective businesses; (b) CBS and each of its Material Subsidiaries are in
substantial compliance with the Communications Act and with the rules and
regulations thereunder; (c) neither CBS nor any of its Material Subsidiaries is
a party to, or has any knowledge of, any pending investigation, notice of
violation, order or complaint issued with respect to it by or before the FCC;
and (d) CBS and its Material Subsidiaries have no reason to believe that any FCC
License will not be renewed in the ordinary course of business.
SECTION 3.17. Year 2000 Matters. The statements contained in CBS's
filings with the Securities and Exchange Commission with respect to year 2000
compliance are true and correct.
ARTICLE IV.
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 4.1 Effectiveness. The effectiveness of this Agreement is
subject to the satisfaction of the following conditions (the date on which all
of such conditions shall have been satisfied, the "Closing Date"):
(a) Credit Agreement. The Administrative Agent shall have
received this Agreement, executed and delivered by a duly authorized
officer of CBS.
(b) Closing Certificate. The Administrative Agent shall have
received a Closing Certificate, substantially in the form of Exhibit F,
of CBS, with appropriate insertions and attachments.
(c) Consent. The Administrative Agent shall have (i) received
the consent of the Required Lenders authorizing the Administrative
Agent to execute this Agreement and (ii) executed this Agreement.
(a) Infinity Credit Agreement. The Infinity Credit Agreement
shall have been executed and delivered by Infinity, CBS and the
Administrative Agent.
SECTION 4.2. Initial Loans to Subsidiary Borrowers. The obligation of
each Lender to make its initial Loan to a particular Subsidiary Borrower, if
designated as such after the Closing Date, is subject to the satisfaction of the
conditions that (a) CBS shall have delivered to the Administrative Agent
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a Subsidiary Borrower Designation for such Subsidiary Borrower and (b) such
Subsidiary Borrower shall have furnished to the Administrative Agent (i) a
Subsidiary Borrower Request, (ii) a Closing Certificate of such Subsidiary
Borrower, with appropriate insertions and attachments and (iii) one or more
executed legal opinions with respect to such Subsidiary Borrower, in form and
substance reasonably satisfactory to the Administrative Agent and including, to
the extent applicable, the opinions set forth in Exhibits E-1 and E-2. CBS may
from time to time deliver a subsequent Subsidiary Borrower Designation with
respect to any Subsidiary Borrower, countersigned by such Subsidiary Borrower,
for the purpose of terminating such Subsidiary Borrower's designation as such,
so long as, on the effective date of such termination, all Subsidiary Borrower
Obligations in respect of such Subsidiary Borrower shall have been paid in full.
In addition, if on any date a Subsidiary Borrower shall cease to be a
Subsidiary, all Subsidiary Borrower Obligations in respect of such Subsidiary
Borrower shall automatically become due and payable on such date and no further
Loans may be borrowed by such Subsidiary Borrower hereunder.
SECTION 4.3. All Credit Events. The obligation of each Lender to make
each Loan, and the obligation of each Issuing Lender to issue each Letter of
Credit, are subject to the satisfaction of the following conditions.
(a) The Administrative Agent shall have received a request
for, or notice of, such Credit Event if and as required by Section 2.3,
2.4, 2.6 or 2.7, as applicable.
(b) Each of the representations and warranties made by CBS
and, in the case of a borrowing by a Subsidiary Borrower, by such
Subsidiary Borrower, in Article III, or in any certificate delivered
pursuant hereto, shall be true and correct in all material respects on
and as of the date of such Credit Event with the same effect as though
made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date; provided that, with respect
to any Loan made or Letter of Credit issued after the Closing Date, in
the event that the CBS Ratings are then A-2 or higher by S&P and P-2 or
higher by Moody's, the representation in Section 3.2(b) shall be
excluded from the foregoing requirement.
(c) At the time of and immediately after giving effect to such
Credit Event no Default or Event of Default shall have occurred and be
continuing.
(d) After giving effect to such Credit Event, (i) the
Outstanding Revolving Extensions of Credit of each Lender shall not
exceed such Lender's Commitment then in effect and (ii) the Total
Facility Exposure shall not exceed the Total Commitment then in effect.
Each Credit Event shall be deemed to constitute a representation and warranty by
CBS on the date of such Credit Event as to the matters specified in paragraphs
(b) and (c) of this Section 4.3.
ARTICLE V.
COVENANTS
CBS covenants and agrees with each Lender that, as long as the
Commitments shall be in effect or the principal of or interest on any Loan shall
be unpaid, or there shall be any Aggregate LC Exposure, unless the Required
Lenders shall otherwise consent in writing:
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SECTION 5.1. Financial Statements. CBS shall deliver to each of the
Lenders:
(a) within 55 days after the end of each of the first three
quarterly fiscal periods of each fiscal year of CBS, consolidated
statements of income and cash flows of CBS and its Consolidated
Subsidiaries for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
consolidated balance sheet as at the end of such period, setting forth
in each case in comparative form the corresponding consolidated figures
for the corresponding period in the preceding fiscal year, accompanied
by a certificate of a Financial Officer of CBS which certificate shall
state that such financial statements fairly present the consolidated
financial condition and results of operations of CBS and its
Consolidated Subsidiaries in accordance with GAAP as at the end of, and
for, such period, subject to normal year-end audit adjustments
(provided that the requirement herein for the furnishing of such
quarterly financial statements may be fulfilled by providing to the
Lenders the report of CBS to the SEC on Form 10-Q for the applicable
quarterly period, accompanied by the officer's certificate described in
the last sentence of this Section 5.1);
(b) within 105 days after the end of each fiscal year of CBS,
consolidated statements of income and cash flows of CBS and its
Consolidated Subsidiaries for such year and the related consolidated
balance sheet as at the end of such year, setting forth in comparative
form the corresponding consolidated figures for the preceding fiscal
year, and accompanied by an opinion thereon (unqualified as to the
scope of the audit) of independent certified public accountants of
recognized national standing, which opinion shall state that such
consolidated financial statements fairly present the consolidated
financial condition and results of operations of CBS and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year
(provided that the requirement herein for the furnishing of annual
financial statements may be fulfilled by providing to the Lenders the
report of CBS to the SEC on Form 10-K for the applicable fiscal year);
(c) promptly upon their becoming publicly available, copies of
all registration statements and regular periodic reports (including
without limitation any and all reports on Form 8-K), if any, which CBS
or any of its Subsidiaries shall have filed with the SEC or any
national securities exchange;
(d) promptly upon the mailing thereof to the shareholders of
CBS generally, copies of all financial statements, reports and proxy
statements so mailed;
(e) within 30 days after a Responsible Officer of CBS knows or
has reason to believe that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan have occurred or
exist which would reasonably be expected to result in a Material
Adverse Effect, a statement signed by a senior financial officer of CBS
setting forth details respecting such event or condition and the
action, if any, which CBS or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by CBS or an ERISA Affiliate with respect
to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum
<PAGE> 49
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funding standard of Section 412 of the Code or Section 302 of
ERISA shall be a reportable event regardless of the issuance
of any waiver in accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of
any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by CBS or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC
with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by CBS or any
ERISA Affiliate under Section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by CBS or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against CBS or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not
dismissed within 30 days; and
(vi) a failure to make a required installment or
other payment with respect to a Plan (within the meaning of
Section 412(n) of the Code), in which case the notice required
hereunder shall be provided within 10 days after the due date
for filing notice of such failure with the PBGC;
(f) promptly after a Responsible Officer of CBS knows or has
reason to believe that any Default or Event of Default has occurred, a
notice of such Default or Event of Default describing it in reasonable
detail and, together with such notice or as soon thereafter as
possible, a description of the action that CBS has taken and proposes
to take with respect thereto;
(g) promptly after a Responsible Officer of CBS knows that any
change has occurred in CBS's Debt Rating by either Rating Agency, a
notice describing such change; and
(h) promptly from time to time such other information
regarding the financial condition, operations or business of CBS or any
of its Subsidiaries (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Lender through the Administrative Agent may
reasonably request.
CBS will furnish to the Administrative Agent and each Lender, at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate (which may be a copy in the case of each Lender) of a
Financial Officer of CBS (a "Compliance Certificate") (i) to the effect that no
Default or Event of Default has occurred and is continuing (or, if any Default
or Event of Default has occurred and is continuing, describing it in reasonable
detail and describing the action that CBS has taken and proposes to take with
respect thereto), and (ii) setting forth in reasonable detail the computations
(including any pro forma calculations as described in Section 1.2(c)) necessary
to determine whether CBS is in compliance with the Financial Covenants as of the
end of the respective quarterly fiscal period or fiscal year.
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SECTION 5.2. Corporate Existence, Etc. CBS will, and will cause each of
its Material Subsidiaries to, preserve and maintain its legal existence and all
of its material rights, privileges and franchises (provided that (a) nothing in
this Section 5.2 shall prohibit any transaction expressly permitted under
Section 5.4 and (b) CBS or such Material Subsidiary shall not be required to
preserve or maintain any such right, privilege or franchise if the Board of
Directors of CBS or such Material Subsidiary, as the case may be, shall
determine that the preservation or maintenance thereof is no longer desirable in
the conduct of the business of CBS or such Material Subsidiary, as the case may
be); comply with the requirements of all applicable laws, rules, regulations and
orders of Governmental Authorities (including, without limitation, all
Environmental Laws) and with all contractual obligations if failure to comply
with such requirements or obligations would reasonably be expected to result in
a Material Adverse Effect; pay and discharge all material taxes, assessments,
governmental charges, levies or other obligations of whatever nature imposed on
it or on its income or profits or on any of its Property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge,
levy or other obligation the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; maintain all its Property used or useful in its business in good
working order and condition, ordinary wear and tear excepted, all as in the
judgment of CBS or such Material Subsidiary may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times (provided that CBS or such Material Subsidiary shall not
be required to maintain any such Property if the failure to maintain any such
Property is, in the judgment of CBS or such Material Subsidiary, desirable in
the conduct of the business of CBS or such Material Subsidiary); keep proper
books of records and accounts in which entries that are full, true and correct
in all material respects shall be made in conformity with GAAP; and permit
representatives of any Lender, during normal business hours upon reasonable
advance notice, to inspect any of its books and records and to discuss its
business and affairs with its Financial Officers or their designees, all to the
extent reasonably requested by such Lender.
SECTION 5.3. Insurance. CBS will, and will cause each of its Material
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business and similarly situated against loss or damage of the kinds and
in the amounts consistent with prudent business practice and carry such other
insurance as is consistent with prudent business practice (it being understood
that self-insurance shall be permitted to the extent consistent with prudent
business practice).
SECTION 5.4. Prohibition of Fundamental Changes. CBS will not, and will
not permit any of its Material Subsidiaries to (i) enter into any transaction of
merger, consolidation, liquidation or dissolution or (ii) Dispose of, in one
transaction or a series of related transactions, all or a substantial part
(determined by reference to CBS and its Subsidiaries taken as a whole) of its
business or Property, whether now owned or hereafter acquired (excluding (x)
financings by way of sales of receivables or inventory, (y) inventory or other
Property Disposed of in the ordinary course of business and (z) obsolete or
worn-out Property, tools or equipments no longer used or useful in its
business). Notwithstanding the foregoing provisions of this Section 5.4:
(a) any Subsidiary of CBS may be merged or consolidated with
or into: (i) CBS if CBS shall be the continuing or surviving
corporation or (ii) any other such Subsidiary; provided that (x) if any
such transaction shall be between a Subsidiary and a Wholly Owned
Subsidiary, such Wholly Owned Subsidiary shall be the continuing or
surviving corporation and (y) if any such transaction shall be between
a Subsidiary and a Subsidiary Borrower, the continuing or surviving
corporation shall be a Subsidiary Borrower;
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(b) any Subsidiary of CBS may distribute, dividend or Dispose
of any of or all its Property (upon voluntary liquidation or otherwise)
to CBS or a Wholly Owned Subsidiary of CBS;
(c) CBS may merge or consolidate with or into any other Person
if (i) either (x) CBS is the continuing or surviving corporation or (y)
the corporation (or other entity, in the case of the Viacom Merger)
formed by such consolidation or into which CBS is merged shall be a
corporation (or other entity, in the case of the Viacom Merger)
organized under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume the
obligations of CBS hereunder and under the Infinity Credit Agreement,
as Guarantor, pursuant to a written agreement and shall have delivered
to the Administrative Agent such agreement and a certificate of a
Responsible Officer and an opinion of counsel to the effect that such
merger or consolidation complies with this Section 5.4(c), and (ii)
after giving effect thereto and to any repayment of Loans to be made
upon consummation thereof (it being expressly understood that no
repayment of Loans is required solely by virtue thereof), no Default or
Event of Default shall have occurred and be continuing;
(d) CBS or any Subsidiary of CBS may merge or consolidate with
or into any other Person if, after giving effect thereto and to any
repayment of Loans to be made upon the consummation thereof (it being
expressly understood that, except as otherwise expressly provided in
Section 4.2 with respect to Subsidiary Borrowers, no repayment of Loans
is required solely by virtue thereof), no Default or Event of Default
shall have occurred and be continuing; and
(e) CBS or any Subsidiary of CBS may Dispose of its Property
if, after giving effect thereto and to any repayment of Loans to be
made upon the consummation thereof (it being expressly understood that,
except as otherwise expressly provided in Section 4.2 with respect to
Subsidiary Borrowers, no repayment of Loans is required solely by
virtue thereof), no Default or Event of Default shall have occurred and
be continuing.
SECTION 5.5. Limitation on Liens. CBS will not, and will not permit any
of its Material Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, or enter into any Sale/Leaseback with respect to
any such Property, whether now owned or hereafter acquired; provided that the
foregoing restrictions shall not apply to:
(a) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due and payable or which are being
contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, architects' or other like Liens arising in the ordinary
course of business which are not overdue for a period of more than 30
days or which are being contested in good faith and by appropriate
proceedings;
(c) Liens securing judgments or to perfect an appeal of any
order or decree but only to the extent, for an amount and for a period
not resulting in an Event of Default under paragraph (h) of Article VI;
<PAGE> 52
48
(d) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(e) pledges or deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory
obligations to secure surety, appeal or performance bonds and
contractual and other obligations of a like nature incurred in the
ordinary course of business and not involving the borrowing of money;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto and Liens under leases and subleases which, in the aggregate,
are not material in amount, and which do not interfere in any material
respects with the ordinary conduct of the business of CBS and its
Subsidiaries taken as a whole;
(g) Liens on Property of any Subsidiary of CBS or of any
Person which is or was merged with or into CBS or any Subsidiary
thereof, provided that such Liens are or were in existence at the time
such Person becomes or became a Subsidiary of CBS or such Person merged
with or into CBS or any Subsidiary thereof, as the case may be, were
not created in anticipation thereof other than to finance the purchase
thereof and are not spread to cover any Property other than the
Property covered at the time of the relevant transaction;
(h) Liens upon real and/or personal property acquired (by
purchase, construction, foreclosure, deed in lieu of foreclosure or
otherwise) by CBS or any of its Subsidiaries, each of which Liens
either (A) existed on such Property before the time of its acquisition
and was not created in anticipation thereof or (B) was created solely
for the purpose of securing Indebtedness representing, or incurred to
finance, refinance or refund, all or a part of the cost (including the
cost of construction) of such Property or improvements thereon;
provided that no such Lien shall extend to or cover any Property of CBS
or such Subsidiary other than the respective Property so acquired and
improvements thereon;
(i) mortgages on Property securing indebtedness in favor of
the United States of America or any state thereof or any department,
agency or instrumentality or political subdivision of the United States
of America or any state thereof, incurred for the purpose of financing
all or any part of the purchase price or the cost of construction of
the Property subject to such mortgages (including without limitation
such debt secured by such mortgages in connection with pollution
control, industrial revenue or similar financings) or incurred to
secure progress, advance or other payments pursuant to any contract or
provision of any statute;
(j) Liens securing Indebtedness owed to CBS or to any Wholly
Owned Subsidiary of CBS;
(k) Liens (i) upon the receivables and inventory of CBS or any
of its Subsidiaries to secure Indebtedness resulting from financings of
such receivables and inventory in an aggregate amount not greater than
$800,000,000 less the aggregate amount of Indebtedness that is secured
pursuant to clause (ii) below, provided that the terms of such
Indebtedness do not provide for any recourse to CBS or any Material
Subsidiary (except to the extent of breaches of representations and
warranties of CBS or any of its Subsidiaries in connection with such
<PAGE> 53
49
financings and other recourse customary in connection with "off-balance
sheet" financings) and (ii) upon the Property of CBS to secure
Indebtedness of CBS in an aggregate amount not greater than
$250,000,000;
(l) Sale/Leasebacks consummated prior to the Original Closing
Date;
(m) any Sale/Leaseback of CBS's headquarters building located
at 51 West 52nd Street in New York City;
(n) any Sale/Leaseback of assets of CBS owned on the Original
Closing Date and listed on Schedule 5.5(n);
(o) additional Liens upon real and/or personal property, and
additional Sale/Leasebacks, provided that the sum of (i) the aggregate
principal amount of the obligations secured by such Liens (other than
Indebtedness as defined in clause (f) of the definition thereof which
has not been assumed by CBS or any of its Subsidiaries and where the
Lien relates to Property acquired by CBS or any of its Subsidiaries in
satisfaction, in whole or in part, of indebtedness to CBS or any of its
Subsidiaries, in the ordinary course of business (any such
Indebtedness, "Specified Section 5.5(o) Indebtedness")) and (ii) the
aggregate Sale/Leaseback Attributable Debt with respect to such
Sale/Leasebacks shall not exceed $250,000,000 at any one time
outstanding;
(p) any extension, renewal or replacement of the foregoing;
provided, however, that, except to the extent otherwise permitted by
this Section 5.5 (including Section 5.5(o)), the Liens permitted under
this paragraph shall not be spread to cover any additional Indebtedness
or Property (other than a substitution of like Property or improvements
on such Property or other Property of equivalent value); and
(q) Liens upon real and/or personal property owned at the
Original Closing Date by WCI.
SECTION 5.6. Limitation on Subsidiary Indebtedness. CBS will not permit
any of its Subsidiaries to create, incur, assume or suffer to exist any
Indebtedness (which includes, for the purposes of this Section 5.6, any
preferred stock), except (i) Indebtedness of CBS Broadcasting Inc. outstanding
on the Original Closing Date and in the approximate amounts set forth on
Schedule 5.6 (but not any refinancing, refunding or other replacement thereof),
(ii) Excluded Indebtedness, (iii) Leveraged Spin-Off Indebtedness, (iv)
Indebtedness of any Subsidiary Borrower under this Agreement, (v) Indebtedness
incurred on any date when, after giving effect thereto, the aggregate principal
amount of Indebtedness incurred pursuant to this clause (v) that is outstanding
on such date (it being understood that, for the purposes of this clause (v), the
term "Indebtedness" does not include borrowings under this Agreement or Excluded
Indebtedness) does not exceed the greater of (x) $750,000,000 and (y)
consolidated EBITDA of Infinity and its consolidated Subsidiaries (determined in
a manner comparable to that set forth in the definition of "Consolidated
EBITDA") for the most recent period of four consecutive fiscal quarters for
which the relevant financial information is available less, in the case of any
such Indebtedness incurred by Infinity or any of its consolidated Subsidiaries,
the then actual aggregate outstanding balances of Indebtedness incurred pursuant
to this clause (v) by Subsidiaries other than Infinity and its consolidated
Subsidiaries, provided that the aggregate outstanding principal amount of
Indebtedness incurred pursuant to this clause (v) by Subsidiaries other than
Infinity and its consolidated Subsidiaries shall not exceed $300,000,000 at any
time and (vi) Indebtedness of Infinity and its Subsidiaries under the Infinity
Credit Agreement up to an aggregate principal amount of $1,500,000,000.
<PAGE> 54
50
SECTION 5.7. Consolidated Leverage Ratio. CBS will not permit the
Consolidated Leverage Ratio at the end of any period of four consecutive fiscal
quarters ending on any date set forth below to be greater than the ratio set
forth below opposite such date:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
12/31/99 and 3/31/00 4.00 to 1
6/30/00 and 9/30/00 3.75 to 1
12/31/00 and thereafter 3.50 to 1
</TABLE>
SECTION 5.8. Consolidated Coverage Ratio. CBS will not permit the
Consolidated Coverage Ratio for any period of four consecutive fiscal quarters
to be less than 3:00 to 1.
SECTION 5.9. Minimum Consolidated Net Worth. CBS will not permit
Consolidated Net Worth on the last day of any fiscal quarter to be less than the
sum of (a) $6,060,800,000, (b) 50% of cumulative Consolidated Net Income for
each fiscal quarter of CBS ending after the Net Worth Commencement Date for
which Consolidated Net Income is positive and (c) 100% of the amount by which
total shareholders' equity of CBS and its Consolidated Subsidiaries increases
after the Net Worth Commencement Date as a result of the merger of Infinity with
and into a Subsidiary of CBS, including, without limitation, as a result of the
issuance of Capital Stock of CBS in connection with the exercise of warrants,
options and similar deferred issuances of common stock (determined at the time
of the exercise thereof).
SECTION 5.10. Use of Proceeds. On and after the Closing Date each
Borrower will use the proceeds of the Loans and will use the Letters of Credit
hereunder solely for general corporate purposes (in each case in compliance with
all applicable legal and regulatory requirements, including, without limitation,
Regulation U and the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and the regulations thereunder), provided that
neither any Agent nor any Lender shall have any responsibility as to the use of
any of such proceeds.
SECTION 5.11. Transactions with Affiliates. CBS will not, and will not
permit any of its Material Subsidiaries to, directly or indirectly enter into
any material transaction with any Affiliate of CBS except on terms at least as
favorable to CBS or such Subsidiary as it could obtain on an arm's-length basis.
SECTION 5.12. Limitation on Negative Pledge Clauses. CBS will not, and
will not permit any of its Material Subsidiaries to, enter into any contractual
obligation (a "Lien Restriction") in connection with the incurrence of
Indebtedness for Borrowed Money which, with respect to any material asset of CBS
or any of its Material Subsidiaries, would prohibit CBS or such Material
Subsidiary from granting a Lien on such asset as collateral security for the
obligations of CBS hereunder or, as applicable, a Guarantee of such obligations
by such Material Subsidiary (collectively, "Credit Obligations"), except (a)
Lien Restrictions with respect to any asset encumbered by a Lien permitted by
Section 5.5, (b) Lien Restrictions with respect to any asset (or any proceeds
thereof) which are comparable to Lien Restrictions affecting such asset on the
Original Closing Date, (c) Lien Restrictions included in the documentation
governing the terms of any Indebtedness of any Person which is acquired by CBS
or any of its Material Subsidiaries after the Original Closing Date, which
Indebtedness was outstanding prior to the date of acquisition of such Person and
was not created in anticipation thereof, (d) Lien Restrictions in connection
with securitizations or other transactions involving sales of receivables
affecting only such
<PAGE> 55
51
receivables and (e) Lien Restrictions included in the Infinity Credit Agreement.
It is understood that an "equal and ratable" clause shall not be deemed to
constitute a Lien Restriction so long as such clause would permit the
obligations entitled to the benefit of such clause and the applicable Credit
Obligations to be secured by Liens on the relevant assets on a pari passu basis.
ARTICLE VI.
EVENTS OF DEFAULT.
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any Borrower shall default in the payment when due of
any principal of any Loan or (ii) any Borrower shall default in the
payment when due of any interest on any Loan, any reimbursement
obligation in respect of any LC Disbursement, any Fee or any other
amount payable by it hereunder and, in the case of this clause (ii),
such default shall continue unremedied for a period of five Business
Days;
(b) any representation, warranty or certification made or
deemed made herein (or in any modification or supplement hereto) by any
Borrower, or any certificate furnished to any Lender or the
Administrative Agent pursuant to the provisions hereof, shall prove to
have been false or misleading in any material respect as of the time
made, deemed made or furnished;
(c) (i) CBS shall default in the performance of any of its
obligations under Section 5.1(f), Section 5.4, Section 5.5, Sections
5.7 through 5.10 (inclusive) or Section 5.12 or (ii) CBS shall default
in the performance of any of its other obligations under this Agreement
and, in the case of this clause (ii), such default shall continue
unremedied for a period of 15 days after notice thereof to CBS by the
Administrative Agent or the Required Lenders (through the
Administrative Agent);
(d) CBS or any of its Subsidiaries shall (i) fail to pay at
maturity any Indebtedness (other than Indebtedness as defined in
subsection (f) of the definition thereof which has not been assumed by
CBS or any of its Subsidiaries and where the Lien relates to Property
acquired by CBS or any of its Subsidiaries in satisfaction, in whole or
in part, of indebtedness to CBS or any of its Subsidiaries, in the
ordinary course of business of WFSI, any of its Subsidiaries, Financial
Services or WCI] in an aggregate amount in excess of $100,000,000, or
(ii) fail to make any payment (whether of principal, interest or
otherwise), regardless of amount, due in respect of, or fail to observe
or perform any other term, covenant, condition or agreement contained
in any agreement or instrument evidencing or governing, any such
Indebtedness in excess of $100,000,000 if the effect of any failure
referred to in this clause (ii) (x) is to cause, or to permit the
holder or holders of such Indebtedness or a trustee on its or their
behalf to cause, such Indebtedness to become due prior to its stated
maturity (provided that this subclause (ii)(x) shall not apply to any
provision that permits the holders, or a trustee on their behalf, to
cause Indebtedness to become due prior to its stated maturity because
of the failure to deliver to such holders or such trustee financial
statements or certificates for any Subsidiary that is not required by
law or regulation to file financial statements with the SEC, unless
such Indebtedness has become due prior to its stated maturity as a
result of such failure) or (y) has caused such Indebtedness to become
due prior to its stated maturity (it being agreed that for purposes of
this paragraph (d) only (other than subclause (ii)(x) of this paragraph
(d)), the term "Indebtedness"
<PAGE> 56
52
shall include obligations under any interest rate protection agreement,
foreign currency exchange agreement or other interest or exchange rate
hedging agreement and that the amount of any Person's obligations under
any such agreement shall be the net amount that such Person could be
required to pay as a result of a termination thereof by reason of a
default thereunder);
(e) CBS or any of its Material Subsidiaries shall admit in
writing its inability, or be generally unable, to pay its debts as such
debts become due;
(f) CBS or any of its Material Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, trustee or liquidator of itself or of all or a substantial
part of its Property, (ii) make a general assignment for the benefit of
its creditors, (iii) commence a voluntary case under the Bankruptcy
Code (as now or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce
in writing to, any petition filed against it in an involuntary case
under the Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing;
(g) a proceeding or a case shall be commenced, without the
application or consent of CBS or any of its Material Subsidiaries, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of CBS or such Material Subsidiary or
of all or any substantial part of its assets or (iii) similar relief in
respect of CBS or such Material Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 or more days; or an order for relief against CBS or
such Material Subsidiary shall be entered in an involuntary case under
the Bankruptcy Code;
(h) a final judgment or judgments for the payment of money in
excess of $100,000,000 in the aggregate shall be rendered by one or
more courts, administrative tribunals or other bodies having
jurisdiction against CBS and/or any of its Material Subsidiaries and
the same shall not be paid or discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be
procured, within 60 days from the date of the date of entry thereof and
CBS or the relevant Material Subsidiary shall not, within said period
of 60 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal;
(i) an event or condition specified in Section 5.1(e) shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events
or conditions, CBS or any ERISA Affiliate shall incur or in the good
faith opinion of the Required Lenders shall be reasonably likely to
incur a liability to a Plan, a Multiemployer Plan or PBGC (or any
combination of the foregoing) which would constitute, in the good faith
determination of the Required Lenders, a Material Adverse Effect;
(j) a Change of Control shall have occurred or, with respect
to any period of 25 consecutive calendar months (whether commencing
before or after the date of this Agreement), individuals who were
directors of CBS on the first day of such period or who were nominated
by
<PAGE> 57
53
such directors (or by directors in a direct chain of directors so
nominated) shall no longer occupy a majority of the seats (other than
vacant seats) on the Board of Directors of CBS (excluding by reason of
the death or retirement of any director or by reason of the Viacom
Merger); or
(k) The guarantee contained in Article VIII shall cease, for
any reason, to be in full force and effect or CBS shall so assert;
then and in every such event (other than an event with respect to CBS described
in paragraph (f) or (g) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to CBS, take any or all of the following
actions, at the same or different times: (I) terminate forthwith the
Commitments, (II) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of each Borrower accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by each
Borrower, anything contained herein to the contrary notwithstanding, and (III)
require that CBS deposit cash with the Administrative Agent, in an amount equal
to the Aggregate LC Exposure, as collateral security for the repayment of any
future LC Disbursements; and in any event with respect to any Borrower described
in paragraph (f) or (g) above, (A) if such Borrower is CBS, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of each Borrower accrued hereunder, shall automatically become due
and payable and CBS shall be required to deposit cash with the Administrative
Agent, in an amount equal to the Aggregate LC Exposure, as collateral security
for the repayment of any future drawings under the Letters of Credit and (B) if
such Borrower is a Subsidiary Borrower, the principal of the Loans made to such
Subsidiary Borrower then outstanding, together with accrued interest thereon and
all other liabilities of such Subsidiary Borrower accrued hereunder, shall
automatically become due and payable, in each case without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by each Borrower, anything contained herein to the contrary
notwithstanding.
ARTICLE VII.
THE AGENTS
In order to expedite the transactions contemplated by this Agreement,
each Agent is hereby appointed to act as Agent on behalf of the Lenders. Each of
the Lenders and the Issuing Lenders hereby irrevocably authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are specifically delegated to the Administrative Agent by the terms
and provisions hereof, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders and the Issuing Lenders, without hereby limiting any implied
authority, (a) to receive on behalf of the Lenders all payments of principal of
and interest on the Loans and the LC Disbursements and all other amounts due to
the Lenders and Issuing Lenders hereunder, and promptly to distribute to each
Lender and Issuing Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrowers of any Event of
Default specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender and Issuing Lender copies of all notices, financial
statements and other materials delivered by any Borrower pursuant to this
Agreement as received by the Administrative Agent.
<PAGE> 58
54
Neither any Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or wilful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by any Borrower of
any of the terms, conditions, covenants or agreements contained in this
Agreement. The Agents shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Administrative Agent shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders (or, when expressly
required hereby, all the Lenders) and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders and the Issuing Lenders. The Administrative Agent
shall, in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper Person or Persons. Neither the
Agents nor any of their directors, officers, employees or agents shall have any
responsibility to any Borrower on account of the failure of or delay in
performance or breach by any Lender or Issuing Lender of any of its obligations
hereunder or to any Lender or Issuing Lender on account of the failure of or
delay in performance or breach by any other Agent, any other Lender or Issuing
Lender or any Borrower of any of their respective obligations hereunder or in
connection herewith. The Administrative Agent may execute any and all duties
hereunder by or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or suffered in good faith
by it in accordance with the advice of such counsel.
The Lenders and the Issuing Lenders hereby acknowledge that the
Administrative Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement unless
it shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint from the
Lenders a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint from the
Lenders a successor Administrative Agent which shall be a bank with an office in
New York, New York, having a combined capital and surplus of at least
$500,000,000 or an affiliate of any such bank, which successor shall be
acceptable to CBS (such acceptance not to be unreasonably withheld). Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
bank, such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 9.5 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
With respect to the Loans made by them and their LC Exposure hereunder,
the Agents in their individual capacity and not as Agents shall have the same
rights and powers as any other Lender and may exercise the same as though they
were not Agents, and the Agents and their affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrowers or
any of their respective Subsidiaries or any Affiliate thereof as if they were
not Agents.
<PAGE> 59
55
Each Lender and Issuing Lender agrees (i) to reimburse the
Administrative Agent in the amount of its pro rata share (based on its Total
Facility Percentage or, after the date on which the Loans shall have been paid
in full, based on its Total Facility Percentage immediately prior to such date)
of any reasonable, out-of-pocket expenses incurred for the benefit of the
Lenders or the Issuing Lenders by the Administrative Agent, including reasonable
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders or the Issuing Lenders, which shall not have been
reimbursed by or on behalf of any Borrower and (ii) to indemnify and hold
harmless the Administrative Agent and any of its directors, officers, employees
or agents, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as
Administrative Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by it under this Agreement, to the extent the same
shall not have been reimbursed by or on behalf of CBS, provided that no Lender
or Issuing Lender shall be liable to the Administrative Agent or any such
director, officer, employee or agent for any portion of such liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents.
Each Lender and Issuing Lender acknowledges that it has, independently
and without reliance upon the Agents or any other Lender or Issuing Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender and
Issuing Lender also acknowledges that it will, independently and without
reliance upon any Agent or any other Lender or Issuing Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any related agreement or any document furnished hereunder
or thereunder.
Neither the Documentation Agent nor either Syndication Agent nor any
managing agent shall have any duties or responsibilities hereunder in its
capacity as such.
ARTICLE VIII.
GUARANTEE
SECTION 8.1. Guarantee. In order to induce the Administrative Agent and
the Lenders to become bound by this Agreement and to make or maintain the Loans
hereunder, and in consideration thereof, CBS hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety, to the
Administrative Agent, for the ratable benefit of the Lenders, the prompt and
complete payment and performance by each Subsidiary Borrower when due (whether
at stated maturity, by acceleration or otherwise) of the Subsidiary Borrower
Obligations, and CBS further agrees to pay any and all expenses (including,
without limitation, all reasonable fees, charges and disbursements of counsel)
which may be paid or incurred by the Administrative Agent or by the Lenders in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under the guarantee contained in this Article VIII. The guarantee contained in
this Article VIII, subject to Section 8.5, shall remain in full force and effect
until the Subsidiary Borrower Obligations are paid in full and the Commitments
are terminated, notwithstanding that from time to time prior thereto any
Subsidiary Borrower may be free from any Subsidiary Borrower Obligations.
<PAGE> 60
56
CBS agrees that whenever, at any time, or from time to time, it shall
make any payment to the Administrative Agent or any Lender on account of its
liability under this Article VIII, it will notify the Administrative Agent and
such Lender in writing that such payment is made under the guarantee contained
in this Article VIII for such purpose. No payment or payments made by any
Subsidiary Borrower or any other Person or received or collected by the
Administrative Agent or any Lender from any Subsidiary Borrower or any other
Person by virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Subsidiary Borrower Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of CBS under this Article VIII which,
notwithstanding any such payment or payments, shall remain liable for the unpaid
and outstanding Subsidiary Borrower Obligations until, subject to Section 8.5,
the Subsidiary Borrower Obligations are paid in full and the Commitments are
terminated.
SECTION 8.2. No Subrogation, etc. Notwithstanding any payment or
payments made by CBS hereunder, or any set-off or application of funds of CBS by
the Administrative Agent or any Lender, CBS shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against any Subsidiary Borrower or against any collateral security or guarantee
or right of offset held by the Administrative Agent or any Lender for the
payment of the Subsidiary Borrower Obligations, nor shall CBS seek or be
entitled to seek any contribution, reimbursement, exoneration or indemnity from
or against any Subsidiary Borrower in respect of payments made by CBS hereunder,
until all amounts owing to the Administrative Agent and the Lenders by the
Subsidiary Borrowers on account of the Subsidiary Borrower Obligations are paid
in full and the Commitments are terminated. So long as the Subsidiary Borrower
Obligations remain outstanding, if any amount shall be paid by or on behalf of
any Subsidiary Borrower or any other Person to CBS on account of any of the
rights waived in this Section 8.2, such amount shall be held by CBS in trust,
segregated from other funds of CBS, and shall, forthwith upon receipt by CBS, be
turned over to the Administrative Agent in the exact form received by CBS (duly
indorsed by CBS to the Administrative Agent, if required), to be applied against
the Subsidiary Borrower Obligations, whether matured or unmatured, in such order
as the Administrative Agent may determine.
SECTION 8.3. Amendments, etc. with respect to the Subsidiary Borrower
Obligations. CBS shall remain obligated under this Article VIII notwithstanding
that, without any reservation of rights against CBS, and without notice to or
further assent by CBS, any demand for payment of or reduction in the principal
amount of any of the Subsidiary Borrower Obligations made by the Administrative
Agent or any Lender may be rescinded by the Administrative Agent or such Lender,
and any of the Subsidiary Borrower Obligations continued, and the Subsidiary
Borrower Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and this Agreement and any
other documents executed and delivered in connection herewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Required
Lenders (or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Subsidiary
Borrower Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any lien at any time held by it as security
for the Subsidiary Borrower Obligations or for the guarantee contained in this
Article VIII or any property subject thereto.
SECTION 8.4. Guarantee Absolute and Unconditional. CBS waives any and
all notice of the creation, renewal, extension or accrual of any of the
Subsidiary Borrower Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in
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this Article VIII or acceptance of the guarantee contained in this Article VIII;
the Subsidiary Borrower Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Article
VIII; and all dealings between CBS or the Subsidiary Borrowers, on the one hand,
and the Administrative Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Article VIII. CBS waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon CBS
or any Subsidiary Borrower with respect to the Subsidiary Borrower Obligations.
The guarantee contained in this Article VIII shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of this Agreement, any of the Subsidiary Borrower
Obligations or any collateral security therefor or guarantee or right of offset
with respect thereto at any time or from time to time held by the Administrative
Agent or any Lender, (b) the legality under applicable requirements of law of
repayment by the relevant Subsidiary Borrower of any Subsidiary Borrower
Obligations or the adoption of any requirement of law purporting to render any
Subsidiary Borrower Obligations null and void, (c) any defense, setoff or
counterclaim (other than a defense of payment or performance by the applicable
Subsidiary Borrower) which may at any time be available to or be asserted by CBS
against the Administrative Agent or any Lender, or (d) any other circumstance
whatsoever (with or without notice to or knowledge of CBS or any Subsidiary
Borrower) which constitutes, or might be construed to constitute, an equitable
or legal discharge of any Subsidiary Borrower for any Subsidiary Borrower
Obligations, or of CBS under the guarantee contained in this Article VIII, in
bankruptcy or in any other instance. When the Administrative Agent or any Lender
is pursuing its rights and remedies under this Article VIII against CBS, the
Administrative Agent or any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against any Subsidiary Borrower
or any other Person or against any collateral security or guarantee for the
Subsidiary Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to pursue such other
rights or remedies or to collect any payments from any Subsidiary Borrower or
any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of any
Subsidiary Borrower or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve CBS of any liability under this
Article VIII, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative Agent
and the Lenders against CBS.
SECTION 8.5. Reinstatement. The guarantee contained in this Article
VIII shall continue to be effective, or be reinstated, as the case may be, if at
any time payment, or any part thereof, of any of the Subsidiary Borrower
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Subsidiary Borrower or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, any Subsidiary Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
SECTION 8.6. Payments. CBS hereby agrees that any payments in respect
of the Subsidiary Borrower Obligations pursuant to this Article VIII will be
paid to the Administrative Agent without setoff or counterclaim in Dollars at
the office of the Administrative Agent specified in Section 9.1.
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ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. Notices. Notices and other communications provided for
herein shall be in writing (or, where permitted to be made by telephone, shall
be confirmed promptly in writing) and shall be delivered by hand or overnight
courier service, mailed or sent by telecopier as follows:
(a) if to CBS, to it at CBS Corporation, 51 West 52nd Street,
New York, New York 10019, Attention of Executive Vice President and
Chief Financial Officer (Telecopy No. (212) 975-9191), with a copy to
General Counsel (Telecopy No. (212) 597-4031);
(b) if to the Administrative Agent, to it at 60 Wall Street,
New York, New York 10260, Attention of Laura Reim (Telecopy No. (212)
648-5336);
(c) if to any Issuing Lender, to it at the address for notices
specified in the applicable Issuing Lender Agreement;
(d) if to a Lender, to it at its address (or telecopy number)
set forth in Schedule 1.1 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto; and
(e) if to a Subsidiary Borrower, to it at its address set
forth in the relevant Subsidiary Request.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service, sent by
telecopy or, if permitted by the terms hereof and if promptly confirmed in
writing, by telephone, or on the date five Business Days after dispatch by
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.1 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.1.
SECTION 9.2. Survival of Agreement. All representations and warranties
made hereunder and in any certificate delivered pursuant hereto or in connection
herewith shall be considered to have been relied upon by the Agents and the
Lenders and shall survive the execution and delivery of this Agreement and the
making of the Loans and other extensions of credit hereunder, regardless of any
investigation made by the Agents or the Lenders or on their behalf.
SECTION 9.3. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of each Borrower, each Agent and each Lender and their
respective successors and assigns, except that CBS shall not have the right to
assign its rights or obligations hereunder or any interest herein without the
prior consent of all the Lenders.
SECTION 9.4. Successors and Assigns. (a) Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party, and all covenants, promises and
agreements by or on behalf of each Borrower, either Agent or any Lender that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment or Swingline Commitment and the Loans at the time
owing to it); provided, however, that (i) except in the case of an
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assignment to a Lender or an affiliate of such Lender (other than if at the time
of such assignment, such Lender or affiliate would be entitled to require any
Borrower to pay greater amounts under Section 2.20(a) than if no such assignment
had occurred, in which case such assignment shall be subject to the consent
requirement of this clause (i)), CBS and the Administrative Agent must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) (x) except in the case of assignments of
Competitive Loans or assignments to any Person that is a Lender prior to giving
effect to such assignment, the amount of the aggregate Commitments and/or Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $12,500,000 and (y) the
amount of the aggregate Commitments and/or Loans retained by any assigning
Lender (determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent) shall not be less than
$12,500,000, unless (in the case of clause (x) or (y) above) the assigning
Lender's Commitment and Loans (other than any Competitive Loans) are being
reduced to $0 pursuant to such assignment, (iii) the assignor and assignee shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500 and (iv) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Upon acceptance and recording pursuant to Section
9.4(e), from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof (or any lesser period to which the Administrative Agent and
CBS may agree), (A) the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto (but shall continue to be entitled
to the benefits of Sections 2.15, 2.16, 2.20 and 9.5, as well as to any Fees
accrued for its account hereunder and not yet paid)). Notwithstanding the
foregoing, any Lender or Issuing Lender assigning its rights and obligations
under this Agreement may maintain any Competitive Loans or Letters of Credit
made or issued by it outstanding at such time, and in such case shall retain its
rights hereunder in respect of any Loans or Letters of Credit so maintained
until such Loans or Letters of Credit have been repaid or terminated in
accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other instrument or document furnished pursuant hereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto
or the financial condition of CBS or any of its Subsidiaries or the performance
or observance by CBS or any of its Subsidiaries of any of its obligations under
this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance; (iv) such assignee confirms that it
has received a copy of this Agreement, together with copies of the most recent
financial statements delivered pursuant to Sections 3.2 and 5.1 and such other
documents and information as it has deemed appropriate to make it own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
such assigning Lender or any other Agent or Lender and based on such documents
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and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (vi)
such assignee appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as agent of each
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error and each Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by any Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of CBS and the Administrative
Agent to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to CBS.
(f) Each Lender may without the consent of any Borrower or the Agents
sell participations to one or more banks, other financial institutions or other
entities (provided that any such other entity is a not a competitor of CBS or
any Affiliate of CBS) in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans
owing to it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(ii) the participating banks or other entities shall be entitled to the benefit
of the cost protection provisions contained in Sections 2.15, 2.16 and 2.20 to
the same extent as if they were Lenders (provided that additional amounts
payable to any Lender pursuant to Section 2.20 shall be determined as if such
Lender had not sold any such participations) and (iv) the Borrowers, the Agents
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of each Borrower relating to the Loans and the Letters of Credit and
to approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Loans or LC Disbursements, extending any scheduled principal
payment date or date fixed for the payment of interest on the Loans or LC
Disbursements or of LC Fees or Commitment Fees, increasing the amount of or
extending the Commitments or releasing the guarantee contained in Article VIII,
in each case to the extent the relevant participant is directly affected
thereby).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.4, disclose to the assignee or participant or proposed assignee or participant
any information relating to any Borrower furnished to such Lender by or on
behalf of such Borrower; provided that, prior to any such disclosure of
information
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designated by such Borrower as confidential, each such assignee or participant
or proposed assignee or participant shall execute a Confidentiality Agreement
whereby such assignee or participant shall agree (subject to the exceptions set
forth therein) to preserve the confidentiality of such confidential information.
A copy of each such Confidentiality Agreement executed by an assignee shall be
promptly furnished to CBS. It is understood that confidential information
relating to the Borrowers would not ordinarily be provided in connection with
assignments or participations of Competitive Loans.
(h) Notwithstanding the limitations set forth in paragraph (b) above,
(i) any Lender may at any time assign or pledge all or any portion of its rights
under this Agreement to a Federal Reserve Bank and (ii) any Lender which is a
"fund" may at any time assign or pledge all or any portion of its rights under
this Agreement to secure such Lender's indebtedness, in each case without the
prior written consent of any Borrower or the Administrative Agent; provided that
each such assignment shall be made in accordance with applicable law and no such
assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate any such assignment, each Borrower shall, at the request of
the assigning Lender, duly execute and deliver to the assigning Lender a
registered promissory note or notes evidencing the Loans made to such Borrower
by the assigning Lender hereunder.
(i) Notwithstanding anything to the contrary contained herein, any Bank
(a "Granting Bank") may grant to a special purpose funding vehicle (a "SPC"),
identified as such in writing from time to time by the Granting Bank to the
Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Bank would otherwise be obligated to
make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan, and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Bank shall be obligated to make such Loan
pursuant to the terms hereof. The making of an Loan by an SPC hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Loan were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Bank). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section, any SPC may (i) with notice
to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Bank or to any
financial institutions (consented to by the Borrower and Administrative Agent )
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This section may not be amended without the
written consent of any SPC which has been identified as such by the Granting
Bank to the Administrative Agent and the Borrower and which then holds any Loan
pursuant to this paragraph (i).
(j) CBS shall not assign or delegate any of its rights or duties
hereunder without the prior consent of all the Lenders.
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SECTION 9.5. Expenses; Indemnity. (a) CBS agrees to pay all reasonable
out-of-pocket expenses incurred by the Agents in connection with the
preparation, negotiation, execution and delivery of this Agreement or in
connection with any amendments, modifications or waivers of the provisions
hereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by any Agent, any Lender or any Issuing Lender in
connection with the enforcement or protection of the rights of the Agents, the
Lenders or the Issuing Lenders under this Agreement or in connection with the
Loans made or the Letters of Credit issued hereunder, including, without
limitation, the reasonable fees, charges and disbursements of Simpson Thacher &
Bartlett, counsel for the Agents, and, in connection with any such enforcement
or protection, the reasonable fees, charges and disbursements of any other
counsel for any Agent, Lender or Issuing Lender.
(b) CBS agrees to indemnify and hold harmless each Agent, each Lender,
each Issuing Lender and each of their respective directors, officers, employees,
affiliates and agents (each, an "Indemnified Person") against, and to reimburse
each Indemnified Person, upon its demand, for, any losses, claims, damages,
liabilities or other expenses ("Losses") to which such Indemnified Person
becomes subject insofar as such Losses arise out of or in any way relate to or
result from (i) the execution or delivery of this Agreement, any Letter of
Credit or any agreement or instrument contemplated hereby (and any amendment
hereto or thereto), the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby or (ii) the use (or proposed use) of
the proceeds of the Loans or other extensions of credit hereunder, including,
without limitation, Losses consisting of reasonable legal or other expenses
incurred in connection with investigating, defending or participating in any
legal proceeding relating to any of the foregoing (whether or not such
Indemnified Person is a party thereto); provided that the foregoing will not
apply to any Losses to the extent they are found by a final decision of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnified Person.
(c) The provisions of this Section 9.5 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any investigation made by or on behalf of any
Agent or Lender. All amounts under this Section 9.5 shall be payable on written
demand therefor.
SECTION 9.6. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Agent and each Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Agent or Lender to or for the credit or the account of any Borrower
against any of and all the obligations of such Borrower now or hereafter
existing under this Agreement or the Administrative Agent Fee Letter held by
such Agent or Lender which shall be due and payable. The rights of each Agent
and each Lender under this Section 9.6 are in addition to other rights and
remedies (including other rights of setoff) which such Agent or Lender may have.
SECTION 9.7. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS
AND PRINCIPLES OF SUCH STATE.
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SECTION 9.8. Waivers; Amendment. (a) No failure or delay of any Agent,
any Issuing Lender or any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the Agents,
the Issuing Lenders and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by any Borrower
from any such provision shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Borrower in any case shall entitle any Borrower to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement in writing entered into by
the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) reduce the amount or extend the scheduled date of maturity
of any Loan or of any installment thereof, or reduce the stated amount of any LC
Disbursement, interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration date of any
Commitment of any Lender, in each case without the prior written consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 9.8(b), or reduce the percentage specified in the definition of
"Required Lenders", release the guarantee contained in Article VIII or consent
to the assignment or transfer by CBS of any of its rights and obligations under
this Agreement, in each case without the prior written consent of all the
Lenders; or (iii) amend, modify or waive any provision of Article VII without
the prior written consent of each Agent affected thereby; provided, further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Swingline Lenders or the Issuing Lenders
hereunder in such capacity without the prior written consent of the
Administrative Agent, each Swingline Lender directly affected thereby or each
Issuing Lender directly affected thereby, as the case may be.
SECTION 9.9. Entire Agreement. This Agreement (together with the
Issuing Lender Agreements, the Subsidiary Borrower Designations and the
Subsidiary Borrower Requests) constitutes the entire contract between the
parties relative to the subject matter hereof. Any previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (a) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or
<PAGE> 68
64
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.3.
SECTION 9.13. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
Property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each Subsidiary Borrower designates and directs CBS at its offices at 51 West
52nd Street, New York, New York 10019, as its agent to receive service of any
and all process and documents on its behalf in any legal action or proceeding
referred to in this Section 9.14 in the State of New York and agrees that
service upon such agent shall constitute valid and effective service upon such
Subsidiary Borrower and that failure of CBS to give any notice of such service
to any Subsidiary Borrower shall not affect or impair in any way the validity of
such service or of any judgment rendered in any action or proceeding based
thereon. Nothing in this Agreement shall affect any right that any Agent or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement against any Borrower or its Properties in the courts of any
jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality. (a) Each Lender agrees to keep
confidential and not to disclose (and to cause its affiliates, officers,
directors, employees, agents and representatives to keep confidential and not to
disclose) and, at the request of CBS (except as provided below or if such Lender
is required to retain any Confidential Information (as defined below) pursuant
to customary internal or banking practices, bank regulations or applicable law),
promptly to return to CBS or destroy the Confidential Information and all copies
thereof, extracts therefrom and analyses or other materials based thereon,
except that such Lender shall be permitted to disclose Confidential Information
(i) to such of its officers, directors, employees, agents, affiliates and
representatives as need to know such Confidential Information in connection with
such Lender's participation in this Agreement, each of whom shall be informed by
such Lender of the confidential nature of the Confidential
<PAGE> 69
65
Information and shall agree to be bound by the terms of this Section 9.15; (ii)
to the extent required by applicable laws and regulations or by any subpoena or
similar legal process or requested by any Governmental Authority or agency
having jurisdiction over such Lender; provided, however, that, except in the
case of disclosure to bank regulators or examiners in accordance with customary
banking practices, written notice of each instance in which Confidential
Information is required or requested to be disclosed shall be furnished to CBS
not less than 30 days prior to the expected date of such disclosure or, if 30
days' notice is not practicable under the circumstances, as promptly as
practicable under the circumstances; (iii) to the extent such Confidential
Information (A) is or becomes publicly available other than as a result of a
breach of this Agreement, (B) becomes available to such Lender on a
non-confidential basis from a source other than a party to this Agreement or any
other party known to such Lender to be bound by an agreement containing a
provision similar to this Section 9.15 or (C) was available to such Lender on a
non-confidential basis prior to this disclosure to such Lender by a party to
this Agreement or any other party known to such Lender to be bound by an
agreement containing a provision similar to this Section 9.15; (iv) as permitted
by Section 9.4(g); or (v) to the extent CBS shall have consented to such
disclosure in writing. As used in this Section 9.15, "Confidential Information"
shall mean any materials, documents or information furnished by or on behalf of
any Borrower in connection with this Agreement designated by or on behalf of
such Borrower as confidential.
(b) Each Lender (i) agrees that, except to the extent the conditions
referred to in subclause (A), (B) or (C) of clause (iii) of paragraph (a) above
have been met and as provided in paragraph (c) below, (A) it will use the
Confidential Information only in connection with its participation in this
Agreement and (B) it will not use the Confidential Information in connection
with any other matter or in a manner prohibited by any law, including, without
limitation, the securities laws of the United States and (ii) understands that
breach of this Section 9.15 might seriously prejudice the interest of the
Borrowers and that the Borrowers are entitled to equitable relief, including an
injunction, in the event of such breach.
(c) Notwithstanding anything to the contrary contained in this Section
9.15, each Agent and each Lender shall be entitled to retain all Confidential
Information for so long as it remains an Agent or a Lender to use solely for the
purposes of servicing the credit and protecting its rights hereunder.
<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CBS CORPORATION
By: /s/ Fredric G. Reynolds
------------------------------------
Title: Executive Vice President and
Chief Financial Officer
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent
By: /s/ Dennis Wilczek
------------------------------------
Title: Associate
<PAGE> 1
Exhibit 10(ss)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
WHEREAS, Mel Karmazin (the "Executive") and Viacom Inc. ("Viacom")
entered into an employment agreement dated September 6, 1999 (the "Agreement")
to be effective at the Effective Time (as defined in the Agreement and Plan of
Merger between Viacom and CBS Corporation ("CBS") dated as of September 6, 1999,
as amended and restated as of October 8, 1999 and November 23, 1999 (as amended,
the "Merger Agreement")); and
WHEREAS, the Executive and Viacom desire to amend the Agreement in
certain respects, as described hereinbelow;
NOW, THEREFORE, the Executive and the Company agree that the Agreement
is hereby amended, effective as of September 6, 1999, as follows:
1. Section 7(k) of the Agreement is amended hereby by adding a new
sentence at the end thereof to read as follows:
"Notwithstanding anything hereinabove to the contrary, the provisions
of this Section 7(k) shall not apply to any of the following: (i) any
shares that were held in the Karmazin Charitable Lead Annuity Trust
dated December 28, 1998 (the "Trust") on September 6, 1999 that are
transferred from the Trust as required by the provisions of the trust
agreement under which the Trust was established as in effect as of the
date hereof ("Trust Agreement") and as may be required by the Internal
Revenue Code of 1986, as amended (the "Code"), to the Mel Karmazin
Foundation, Inc., a Delaware corporation (the "Foundation"), or to
another
<PAGE> 2
charitable organization, and any shares disposed of by the Foundation
as required by the private foundation minimum distribution requirements
of the Code, and the terms of the operative documents for such
Foundation as in effect as of the date hereof (copies of which Trust
and Foundation have been provided to Viacom by you); (ii) any shares
required to be transferred by you to or for the benefit of your former
spouse, Sharon Karmazin, pursuant to a Separation and Property
Settlement Agreement dated as of July 1, 1996, as amended (the
"Settlement Agreement") (a copy of which has been provided to Viacom by
you); and (iii) any shares sold or disposed of (including pursuant to
withholding by CBS or Viacom upon the exercise of stock options to
acquire either CBS or Viacom shares) by you in order to satisfy any tax
obligation arising upon your exercise of stock options (i) that would
otherwise expire in accordance with their terms during the Employment
Term within a reasonable period of time preceding such options'
expiration or (ii) to satisfy any transfers of CBS or Viacom shares to
Sharon Karmazin required pursuant to the Settlement Agreement."
2. Except as hereinabove provided, the Agreement is ratified and
confirmed in all respects.
IN WITNESS WHEREOF, the Executive and Viacom have executed this First
Amendment to the Agreement on this 31st day of December, 1999.
VIACOM INC.
by: /s/ Philippe P. Dauman
-------------------------------------------
Name: Philippe P. Dauman
Title: Deputy Chairman
ACCEPTED AND AGREED:
/s/ Mel Karmazin
- ------------------------------------
Mel Karmazin
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Subsidiary companies of the Registrant are listed below. With respect to the
companies named, all voting securities are owned directly or indirectly by the
Registrant, except where otherwise indicated. Ownership percentages are as of
December 31, 1999.
<TABLE>
<CAPTION>
INCORPORATED OWNED BY
UNDER IMMEDIATE
NAME LAWS OF PARENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Bay County Energy Systems, Inc. Delaware 100
Bonneville Wind Corporation Utah 100
CBS Cable Networks, Inc. Delaware 100
Network Enterprises, Inc. (1) Tennessee 100
Peppercorn Productions, Inc. Tennessee 100
Silver Spice Productions, LLC Delaware 50
TNN Productions, Inc. Delaware 100
World Sports Enterprises Tennessee 51
World Skating League, LLC Tennessee 50
CBS.com, Inc. Delaware 100
CBS Communications Services, Inc. Delaware 100
CBS Dallas Media, Inc. Delaware 100
KTVT Broadcasting Company, LP Texas 100
CBS Dallas Ventures, Inc. Texas 100
CBS Mass Media Corporation Delaware 100
Central Fidelity Insurance Company Vermont 100
Communities IP Holdings, Inc. Delaware 100
Communities LP Holdings, Inc. Delaware 100
Delaware Resource Beneficiary, Inc. Delaware 100
Delaware Resource Lessee Trust Delaware 100
Delaware Resource Management, Inc. Delaware 100
Dutchess Resource Management, Inc. Delaware 100
First Hotel Investment Corporation Delaware 100
First Westinghouse Capital Corporation Delaware 100
GLD Holdings, LLC Delaware 80
Group W Television Stations, Inc. Delaware 100
Group W Television Stations LP Delaware 100
Home Team Sports Limited Partnership Delaware 66
iWon, Inc. Delaware 54
King World Productions, Inc. (2) Delaware 100
Peak FSC, Ltd. Bermuda 100
Rocky Mount Town Associates Limited Partnership Delaware 100
Seven-Up Bottling Co. of Visalia California 100
Ship House, Inc. Florida 100
Station Holdings B, Inc. Delaware 100
Group W/CBS Television Station Partners Delaware 100
KUTV, LP Delaware 88
KUTV Associates Delaware 100
KUTV Real Estate Company, LLC Delaware 100
KUTV Holdings, Inc. Delaware 100
Symphonette Recording Society, LLC Delaware 50
Tube Mill, Inc. Alabama 100
Two Productions, Inc. Delaware 100
W-F Productions, Inc. Delaware 100
Waste Resource Energy, Inc. Delaware 100
WBCE Corporation New York 100
WCC FSC I, Inc. Delaware 100
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
INCORPORATED OWNED BY
UNDER IMMEDIATE
NAME LAWS OF PARENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
WCC FSC III, Inc. U.S. Virgin Islands 100
WCC FSC IV, Inc. U.S. Virgin Islands 100
WCC FSC V, Inc. Bermuda 100
WCC FSC VIII, Inc. U.S. Virgin Islands 100
WCC FSC IX, Inc. U.S. Virgin Islands 100
Wcc Project Corp. Delaware 100
Wcc Soledad I, Inc. Delaware 100
Wcc Soledad II, Inc. Delaware 100
Westinghouse (New Zealand) Ltd. New Zealand 100
Westinghouse Canada Holdings LLC Delaware 100
CBS Canada Co. Nova Scotia 100
Westinghouse Electric Corporation Delaware 100
Westinghouse Hanford Company Delaware 100
Westinghouse Holdings Corporation Delaware 100
Westinghouse Electric GmbH, Birsfelden Switzerland 100
Westinghouse Electric (Asia-Pacific) Holdings, Ltd. Singapore 100
Group W Yarra Broadcast Pte. Ltd. Singapore 51
Westinghouse Irish Holdings, Limited Ireland 100
Westinghouse Reinvestment Company LLC Delaware 100
Westinghouse Investment Corporation Delaware 100
Westinghouse World Investment Corporation Delaware 100
Westinghouse Foreign Sales Corporation Barbados 100
Westinghouse Licensing Corporation Pennsylvania 100
Westinghouse LMG, Inc. Delaware 100
Westinghouse Pictures, Inc. Delaware 100
WPIC Corporation Delaware 100
York Resource Energy Systems, Inc. Delaware 100
Westinghouse CBS Holding Company, Inc. Delaware 100
CBS Broadcasting Inc. (3) New York 100
Bala Cynwyd Associates Pennsylvania 50
CBS Pageants, Inc. Delaware 100
Miss Universe LP, LLP Delaware 50
CBS Survivor Productions, Inc. Delaware 100
Survivor Productions, LLC Delaware 50
Meadowlands Parkway Associates New Jersey 50
The CBS/FOX Company New York 50
Infinity Broadcasting Corporation Delaware 65
CBS Radio Inc. (4) Delaware 100
Radio Data Group, Inc. Virginia 50
Infinity Media Corporation (5) Delaware 100
TDI Worldwide, Inc. (6) Delaware 100
TDI Holdings Limited (7) United Kingdom 100
LDI Limited United Kingdom 100
TDI Advertising Limited (8) United Kingdom 100
TDI Mail Holdings Limited (9) Northern Ireland 75
Transportation Displays Incorporated (10) Delaware 100
Infinity Radio, Inc. Delaware 100
Outdoor Systems, Inc. (11) Delaware 100
Spark Network Services, Inc. Delaware 100
</TABLE>
- ---------------
(1) Network Enterprises, Inc. is also the parent company of 10 wholly-owned
subsidiaries which operate cable stations and produce, marketing, and
broadcasting related cable programming, of which 9 are incorporated in the
United States and 1 is incorporated in Canada.
<PAGE> 3
(2) King World Productions, Inc. is the parent company of 17 wholly-owned
subsidiaries, incorporated in the United States for the purpose of producing and
distributing various television programming.
(3) CBS Broadcasting Inc. is the parent company of 23 wholly-owned subsidiaries
which produce, market and broadcast various network programming, of which 20 are
incorporated in the United States and 3 are incorporated in foreign countries.
(4) CBS Radio, Inc. is the parent company of 15 wholly-owned subsidiaries which
consist of primarily radio station operations, all of which are incorporated in
the United States.
(5) Infinity Media Corporation is the parent company of 53 wholly-owned
subsidiaries which consist primarily of radio station operations, all of which
are incorporated in the United States.
(6) TDI Worldwide, Inc. is the parent company of 3 wholly-owned outdoor and
transit advertising companies and franchises, all of which are incorporated in
Ireland.
(7) TDI Holdings Limited is the parent company of 5 wholly-owned subsidiaries
which consist primarily of outdoor and transit advertising operations, all of
which are incorporated in the Netherlands.
(8) TDI Advertising Limited is the parent company of 6 wholly-owned outdoor and
transit advertising subsidiaries, all of which are incorporated in the United
Kingdom.
(9) TDI Mail Holdings Limited is the parent company of 3 wholly-owned outdoor
and transit advertising subsidiaries, all of which are incorporated in foreign
countries.
(10) Transportation Displays Incorporated is the parent company of 5
wholly-owned outdoor and transit advertising subsidiaries, all of which are
incorporated in the United States.
(11) Outdoor Systems, Inc. is the parent company of 21 wholly-owned outdoor and
transit advertising subsidiaries, of which 17 are incorporated in the United
States and 4 are incorporated in foreign countries.
Companies not shown by name, if considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in each prospectus constituting
part of the Registration Statements on Form S-3 (Nos. 333-88775 and 33-41475),
and on Form S-8 (Nos. 2-92085, 33-44044, 33-45365, 33-46779, 33-51445, 33-51579,
33-53815, 33-53819, 33-62043, 33-62045, 333-12583, 333-12589, 333-12591,
333-13219, 333-23661, 333-23663, 333-30127, 333-30468, 333-37497, 333-75843,
333-75845, and 333-84761) of CBS Corporation, of our report dated January 25,
2000, except as to note 20, which is as of March 21, 2000, appearing on page 30
of this Form 10-K. We also consent to the incorporation by reference of our
report on the financial statement schedule, which appears on page 67 of this
Form 10-K.
/s/ KPMG LLP
KPMG LLP
New York, New York
March 29, 2000
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ George H. Conrades
-------------------------------
<PAGE> 2
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Martin C. Dickinson
-----------------------------
<PAGE> 3
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ William H. Gray
-----------------------------
<PAGE> 4
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Mel Karmazin
-----------------------------
<PAGE> 5
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Jan Leschly
-----------------------------
<PAGE> 6
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ David T. McLaughlin
-----------------------------
<PAGE> 7
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Leslie Moonves
-----------------------------
<PAGE> 8
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Richard R. Pivirotto
-----------------------------
<PAGE> 9
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Raymond W. Smith
-----------------------------
<PAGE> 10
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Paula Stern
-----------------------------
<PAGE> 11
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Patty Stonesifer
-----------------------------
<PAGE> 12
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Robert D. Walter
-----------------------------
<PAGE> 13
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Fredric G. Reynolds
-----------------------------
<PAGE> 14
POWER OF ATTORNEY
----------------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of CBS CORPORATION, a Pennsylvania corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Exchange Act of 1934, as amended,
its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999,
hereby constitutes and appoints Mel Karmazin, Fredric G. Reynolds, Louis J.
Briskman and Robert G. Freedline, his/her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the others, for him/her
and in his/her name, place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K and any and all amendments thereto, with power where
appropriate to affix the corporate seal of said Corporation thereto and to
attest said seal, and to file said Form 10-K and any and all other documents in
connection therewith, with the Securities Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises as fully to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly signed this Power of
Attorney this 27th day of March, 2000.
/s/ Robert G. Freedline
-----------------------------
<PAGE> 15
EXTRACT FROM MINUTES OF MEETING OF THE
BOARD OF DIRECTORS OF
CBS CORPORATION
HELD ON JANUARY 26, 2000
------------------------
RESOLVED, that the Chief Executive Officer, President, Executive Vice
President and Chief Financial Officer, Executive Vice President and General
Counsel, Principal Accounting Officer, Vice President and Treasurer, and Vice
President, Secretary and Deputy General Counsel of the Company are, and each of
them with full power to act without the others hereby is, authorized to prepare,
or cause to be prepared, and to execute the Company's Annual Report on Form 10-K
for the year ended December 31, 1999 and the Company's Quarterly Reports on Form
10-Q for 2000, as well as any and all other reports or documents to be filed by
the Company and/or its subsidiaries with the Securities and Exchange Commission,
and any and all amendments thereto, on behalf of and as attorneys for the
Company and/or its subsidiaries, and to file said Forms 10-K and 10-Q and other
reports or documents, and any and all amendments thereto, with all exhibits
thereto and any and all other documents in connection therewith, with the
Securities and Exchange Commission on behalf of, and as attorneys for, the
Company and/or its subsidiaries.
-----------------------
I, JULIANNE O'RIORDAN, Assistant Secretary of CBS Corporation, DO
HEREBY CERTIFY that the foregoing is a true and correct copy of resolutions
adopted at a meeting of the Board of Directors of said Company held on January
26, 2000, at which meeting a quorum was present and which resolution is still in
full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
said Company.
Dated: March 28, 2000
/s/ Julianne O'Riordan
-----------------------
Assistant Secretary
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