SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1994
Commission file number 1-2931
CBS Inc.
(Exact name of registrant as specified in its charter)
New York 13-0590730
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 West 52 Street, New York, N.Y. 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 975-4321
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 4, 1994
Common Stock $2.50 par value 61,307,095
<PAGE>
PART I. FINANCIAL INFORMATION
CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in millions, except per share amounts)
ASSETS
September 30 December 31 September 30
1994 1993 1993
CURRENT ASSETS:
Cash and cash equivalents(notes 2 and 7) $ 49.7 $ 173.4 $ 248.0
Marketable securities (notes 2 and 7) 35.9 420.7 420.6
Accounts receivable, less allowances: 391.5 454.5 413.2
$13.6 - September 1994
$9.1 - December 1993
$10.8 - September 1993
Program rights 427.1 581.9 635.7
Recoverable income taxes 28.8 37.4
Other 22.1 18.2 15.4
TOTAL CURRENT ASSETS 926.3 1,677.5 1,770.3
MARKETABLE SECURITIES (notes 2 and 7) 371.0 826.0 765.2
PROPERTY, PLANT AND EQUIPMENT:
Land 81.4 81.4 81.4
Buildings, improvements and equipment 917.5 896.7 895.2
998.9 978.1 976.6
Less accumulated depreciation 487.2 459.0 463.3
NET PROPERTY, PLANT AND EQUIPMENT 511.7 519.1 513.3
OTHER ASSETS:
Program rights 155.0 90.9 91.0
Goodwill, net of amortization 266.6 280.6 277.5
Other 29.9 24.6 23.5
TOTAL OTHER ASSETS 451.5 396.1 392.0
TOTAL ASSETS $2,260.5 $3,418.7 $3,440.8
See accompanying notes to consolidated condensed financial statements.
-2-<PAGE>
CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in millions, except per share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30 December 31 September 30
1994 1993 1993
CURRENT LIABILITIES:
Accounts payable $ 28.7 $ 33.4 $ 34.0
Accrued salaries, wages and benefits 67.3 72.6 58.3
Liabilities for talent and program rights 256.7 317.4 318.7
Liabilities for securities sold under
repurchase agreements (note 2) 103.6 374.7 361.2
Debt (note 5) 150.8 .9 .9
Income taxes 3.3
Other 193.6 239.9 415.8
TOTAL CURRENT LIABILITIES 804.0 1,038.9 1,188.9
LONG-TERM DEBT (note 5) 589.8 590.3 491.0
OTHER LIABILITIES 420.8 406.0 413.0
DEFERRED INCOME TAXES 108.6 120.8 123.4
PREFERENCE STOCK, SERIES B,
PAR VALUE $1.00 PER SHARE,
SUBJECT TO REDEMPTION (notes 6 and 8) 89.9 124.7 124.7
SHAREHOLDERS' EQUITY (notes 7 and 8):
Common stock, par value $2.50 per share: 39.4 62.0 62.0
authorized: 100,000,000 shares
issued: 15,760,944 shares - September 1994
24,816,623 shares - December 1993
24,799,498 shares - September 1993
Additional paid-in capital 207.6 318.6 316.0
Unrealized holding losses (note 2) (2.9)
Retained earnings 1,141.6 2,441.9 2,406.3
1,385.7 2,822.5 2,784.3
Less shares of common stock in treasury,
at cost: 1,138.3 1,684.5 1,684.5
3,500,000 shares - September 1994
9,332,916 shares - December 1993
9,332,916 shares - September 1993 _______ _______ _______
TOTAL SHAREHOLDERS' EQUITY 247.4 1,138.0 1,099.8
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,260.5 $3,418.7 $3,440.8
See accompanying notes to consolidated condensed financial statements.
-3-<PAGE>
CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Three months ended Nine months ended
September 30 September 30
1994 1993 1994 1993
Net sales $727.1 $752.9 $2,856.7 $2,467.3
Cost of sales (526.2) (539.0) (2,142.2) (1,831.8)
Selling, general and
administrative expenses (119.3) (112.6) (359.2) (332.7)
Other income, net (note 4) 2.3 31.5 5.4 45.7
Operating income 83.9 132.8 360.7 348.5
Interest income on investments,
net (note 2) 9.9 23.0 52.2 91.9
Interest expense on debt, net (11.5) (9.1) (33.7) (31.9)
Interest, net (1.6) 13.9 18.5 60.0
Income before income taxes 82.3 146.7 379.2 408.5
Income taxes (note 3) (23.8) (28.5) (142.1) (128.7)
Net income $ 58.5 $118.2 $ 237.1 $ 279.8
Per share of common stock:
Net income (note 8) $ .77 $ 1.48 $ 3.00 $ 3.53
See accompanying notes to consolidated condensed financial statements.
-4-<PAGE>
CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
Nine months ended
September 30
1994 1993
Operating activities:
Net income $ 237.1 $ 279.8
Adjustments:
Depreciation and amortization 57.5 51.3
Gain on sale of marketable securities, net (1.2) (37.9)
Changes in assets and liabilities*:
Accounts receivable 63.0 4.2
Program rights, net 4.3 (111.9)
Other, net 8.5 28.7
369.2 214.2
Investing activities:
Marketable securities:
Gross sales 1,767.8 1,674.1
Gross purchases (931.7) (1,737.1)
Liabilities for securities sold under
repurchase agreements (271.1) 52.5
Capital expenditures (47.6) (83.4)
517.4 (93.9)
Financing activities**:
Repurchase of common stock (1,138.3) -
Dividends to shareholders (29.7) (20.5)
Extinguishment of debt (.6) (25.5)
Issuance of debt 150.0 24.0
Other, net 8.3 4.3
(1,010.3) (17.7)
Net (decrease) increase in cash and cash equivalents (123.7) 102.6
Cash and cash equivalents at beginning of period 173.4 145.4
Cash and cash equivalents at end of period $ 49.7 $ 248.0
See accompanying notes to consolidated condensed financial statements.
*Excludes effect of items included in Adjustments.
**Excludes noncash item in 1993 for the conversion of $389.6 of the
Company's 5% convertible debentures into common stock.
-5-<PAGE>
CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. The accompanying unaudited consolidated condensed financial
statements have been prepared by the Company pursuant to the rules of the
Securities and Exchange Commission (SEC) and, in the opinion of the Company,
include all adjustments necessary for a fair presentation of financial
position, results of operations and cash flows. There are no material
adjustments other than those that are normal and recurring, except for the
repurchase of 3.5 million shares of the Company's common stock and the
retirement of previously held treasury shares of 9.1 million in September
1994 (note 7), and the consummation of the stock split in October 1994 (note
8). Earnings per share information presented in this report has been
adjusted for the retroactive recognition of the stock split. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules. The
Company believes that the disclosures made are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's 1993 Annual Report on Form 10-K and
subsequent quarterly filings.
Note 2. On January 1, 1994, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." As of that date, the
Company classified its marketable securities as available-for-sale and
recorded an unrealized post-tax holding gain of $34.2 million, net of a tax
effect of $23.0 million, in a separate component of shareholders' equity.
There was no effect on net income as a result of this adoption.
In the third quarter of 1994, the Company repurchased 3.5 million shares
of its common stock (note 7) and funded this repurchase from available cash
and the sale of marketable securities. Along with the sale of these
marketable securities, the related liabilities for securities sold under
repurchase agreements were extinguished.
During the first nine months of 1994, there were no trading securities
or securities held-to-maturity. The marketable securities as of September
30, 1994 consisted of the following (in millions):
Fair Unrealized Holding
Value Gains Losses
U.S. Government and its Agencies $187.4 $1.0 $ 2.7
States and their Agencies 3.6 .1 -
Political Subdivisions of States,
and their agencies 38.2 .9 .2
Corporate securities:
Equity 78.1 6.5 2.8
Debt 99.6 - 7.7
$406.9 $8.5 $13.4
The above unrealized holding gains and losses, net of income taxes of
$2.0 million, are reflected as "Unrealized holding losses" in shareholders'
equity.
-6-<PAGE>
CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Income from the Company's investments in marketable securities, classified as
interest income on investments, net, consisted of the following
(in millions):
Three months Nine months
ended September 30 ended September 30
1994 1993 1994 1993
Interest income $16.3 $19.9 $54.7 $57.0
Dividend income 1.4 1.5 5.1 5.2
Interest expense on repurchase
agreements (2.3) (2.9) (8.8) (8.2)
Gross realized gains 11.3 6.6 24.5 41.4
Gross realized losses (16.8) (2.1) (23.3) (3.5)
$ 9.9 $23.0 $52.2 $91.9
The cost of marketable securities sold was determined by specific
identification.
Note 3. Total tax expense on income before income taxes for the nine months
ended September 30, 1994 amounted to $142.1 million (an effective rate of
37.5%) compared to $128.7 million (an effective rate of 31.5%) for the
comparable period in 1993. In the third quarter of 1994, the Company
recorded a favorable state and local tax audit settlement for 1988. In the
third quarter of 1993, the Company recorded deferred tax benefits resulting
from new Federal tax law and a favorable Federal tax audit settlement for the
years 1988-1990. A reconciliation between the statutory Federal income tax
rate and the Company's effective income tax rate as a percentage of income
before income taxes is as follows:
Nine months ended September 30
1994 1993
Statutory Federal income tax rate 35.1% 35.1%
Income from tax preference securities (1.4) (1.7)
State and local tax audit settlement (2.1) -
Federal tax audit settlement - (5.1)
Federal tax law changes - (2.7)
State and local taxes 5.3 5.2
Other, net .6 .7
Effective income tax rate 37.5% 31.5%
Note 4. For the three months and the nine months ended September 30, 1993,
the Company recorded pretax gains of $1.3 million and $12.0 million,
respectively, related to insurance settlements for hurricane damage to its
television station in Miami.
In the third quarter of 1993, the Company recorded a pretax gain of
$29.5 million from a settlement with Viacom International Inc. which resolved
all pending litigation between them. A portion of the settlement constituted
payment for rights granted to Viacom to distribute in the United States and
abroad certain television programs owned by the Company. This gain increased
the Company's 1993 third quarter earnings by $.23 per share.
-7-<PAGE>
CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 5. In August 1994, the Company entered into a $500.0 million revolving
credit agreement, with a syndicate of commercial banks led by Chase Manhattan
Bank as agent, which expires in August 1999. The purpose of this credit
facility is to provide funds for the Company's working capital requirements
subsequent to its recent common stock repurchase (note 7) and for other
corporate purposes. Pursuant to the revolving credit agreement, in September
1994, the Company borrowed $150.0 million on a 30 day basis, which was
reflected as debt in current liabilities in the balance sheet.
The Company may repurchase from time to time amounts of one or more
series of its publicly held long-term debt, at such prices as the Company
considers advisable, the aggregate of such purchases not to exceed $50.0
million.
Note 6. In the third quarter of 1994, shareholders converted 230,000 shares
of the Company's Series B Preference Stock. In addition, in the second
quarter and first quarter of 1994, the Company made inducement payments of
$.3 million and $.1 million, respectively, for the conversion of 50,000
shares and 20,000 shares, respectively, of its Series B Preference Stock.
Also, as stated in the Company's 1994 first quarter Form 10-Q, the Company
purchased 50,000 of certain custody receipts, which are derived securities of
the Company's Series B Preference Stock. The purchase of these securities
was accounted for as a redemption of 50,000 shares of Series B Preference
Stock.
Note 7. In July 1994, the Company commenced a tender offer to purchase for
cash 3.5 million shares of its common stock at $325 per share. The offer
concluded in August 1994 at which time approximately 12.4 million shares had
been tendered. Simultaneously with the conclusion of the offer, 9.1 million
shares of common stock previously held in treasury were retired and restored
to the status of authorized but unissued shares. The Company purchased 3.5
million of the tendered shares in September 1994 and funded the purchase from
available cash and the sale of marketable securities. These shares so
acquired are held in treasury, which upon consummation of the stock split
(note 8) amounted to 17.5 million shares.
Had the tender offer been consummated as of January 1, 1994, the
unaudited pro forma net income and earnings per share of common stock would
have been $199.0 million and $3.15 per share, respectively, for the nine
months ended September 30, 1994. These pro forma amounts do not purport to
be indicative of a) the results that actually would have been achieved if the
offer had been completed as of January 1, 1994 or b) future results of
operations.
As a result of the retirement of the 9.1 million shares of common stock
held in treasury as noted above, the pro-rata share of the individual
components of shareholders' equity related to these shares has been removed
from shareholders' equity as follows (in millions):
Common stock $ 22.8
Additional paid-in capital 117.8
Retained earnings 1,506.5
$1,647.1
-8-<PAGE>
CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 8. In September 1994, the Company announced a 5-for-1 split of its
common stock to be effected by paying a stock dividend of four shares (par
value $2.50 per share) on each share of common stock on October 18, 1994 to
shareholders of record on October 3, 1994. As a result of this distribution,
63.0 million additional shares were issued, which also included the issuance
of shares for the 3.5 million shares held in treasury. The common stock of
the Company was increased in October 1994 by $157.6 million with a
corresponding decrease in additional paid-in capital for the capitalization
of the par value of these additional shares issued. The stock dividend had
no effect on the Company's retained earnings.
In accordance with Accounting Principles Board Opinion No. 15, adjusted
weighted average number of shares outstanding was restated for computing the
earnings per share amounts for all periods presented in this Form 10-Q to
reflect the retroactive recognition of the stock split. However, the number
of common shares issued and held in treasury were stated on a before stock
split-basis for all periods presented in the Consolidated Condensed Balance
Sheets, as the stock split was not consummated until October 18, 1994.
As a result of the stock split, the conversion ratio of the
$10 Convertible Series B Preference Stock was adjusted from .6915 shares to
3.4575 shares of common stock for each $10 Convertible Series B Preference
Stock.
Note 9. In September 1994, the Company announced that it will acquire
WGPR-TV Channel 62 in Detroit and WVEU-TV Channel 69 in Atlanta for cash of
$24.0 million and $22.0 million, respectively. These acquisitions are
subject to necessary regulatory approvals and other customary conditions of
closing. These acquisitions when consummated will be accounted for by the
purchase method.
-9-<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operations
The Company's net sales decreased 3 percent in the third quarter of 1994
compared with the 1993 third quarter, due primarily to lower sales at the
Television Network as a result of the absence of professional football and
baseball broadcasts in 1994. In addition, the increase in net sales for the
first nine months of 1994 compared with the same period in 1993 was mainly
caused by the Television Network Division's broadcast of the Lillehammer Olympic
Winter Games which aired in the first quarter of 1994 and to strengthened demand
for advertising.
In the third quarter, pretax operating income decreased 37 percent over 1993.
The Television Network reported a decrease in income because of the absence of
a pretax gain of $29.5 million from a legal settlement with Viacom which was
recorded in the third quarter of 1993, as well as increased costs for primetime
movie programming, increased preemptions, lower ratings for daytime programming,
and lower syndication sales. However, Sports programs registered higher
operating income despite lower revenues because of the absence of Major League
Baseball and National Football League television contracts. During the third
quarter of 1994, the Television Stations Division income rose reflecting
increased demand for local and national spot television advertising. Sales
increases exceeded 10 percent for CBS owned stations in Los Angeles, Chicago and
Miami. Sales and operating income at the Radio Division increased led by
improved results at the FM Radio Group.
For the first nine months of 1994, pretax operating income increased modestly
over 1993, due principally to strengthened demand for advertising. Operating
income decreased at the Television Network due to the absence of a legal
settlement with Viacom as noted above. Sales and profits for the Television
Stations Division increased significantly as a result of the Television
Network's coverage of the Olympic Winter Games, as well as to increased demand
for local television advertising in each of the seven markets of the Division.
Operating income at the Radio Division increased principally as a result of
sales gains at the Radio Networks and at the Division's AM and FM Groups of
Stations.
The decrease in interest, net, in the third quarter of 1994 compared with the
prior year period was due to the loss of interest income from the cash outlays
for the purchase of 3.5 million common shares for $1.1 billion (note 7) and a
pretax loss of $5.5 million recorded in liquidating marketable securities to
fund the repurchase of shares. In addition, in the third quarter of 1993, the
Company recorded a pretax gain of $4.5 million from the sale of marketable
securities. The decrease in interest, net, for the first nine months of 1994
compared with the same period last year, was due to the decrease in interest,
net, in the third quarter of 1994, as explained above, as well as to higher net
gains from the sale of marketable securities of $26.7 million in the first six
months of 1993 compared with the same period in 1994.
The effective income tax rates for the third quarter and the nine months ended
September 30, 1994, were higher than the comparable periods in 1993 due
primarily to higher tax benefits in 1993. In 1993, income tax expense was
reduced by $31.9 million as a result of deferred tax benefits that resulted from
a change in Federal tax law and a favorable Federal tax audit settlement.
Whereas in 1994, a favorable state and local tax audit settlement reduced income
tax expense by $8.0 million.
-10-<PAGE>
The Company recorded certain non-recurring items in the second and third
quarters of 1993, as well as in the third quarter of 1994. In 1993 it included
gains from an insurance settlement in the second and third quarters; a legal
settlement with Viacom, and tax benefits that resulted from a change in Federal
tax law and a Federal tax audit settlement in the third quarter. In 1994 it
recorded a favorable state and local tax audit settlement. In addition, the
Company recorded gains and losses from sale of marketable securities -- gains
in the first quarter of 1994 and in the first three quarters of 1993 and losses
in the third quarter of 1994. Absent the impact of these items, net income per
share registered a decrease of 11 percent and an increase of 16 percent for the
third quarter and the nine months ended September 30, 1994, respectively, over
prior year periods.
Comparison of the third quarter of 1994 with the second quarter of 1994 is not
meaningful because of the seasonal nature of the Company's business.
-11-<PAGE>
Liquidity and capital resources:
During the nine months ended September 30, 1994, cash and cash equivalents
decreased by $123.7 million and marketable securities, net of repurchase
agreements, decreased by $568.7 million for a net decrease in liquid assets of
$692.4 million. This decrease resulted primarily from the repurchase of common
stock which was funded by available cash and the sale of marketable securities
(notes 2 and 7), partially offset by positive cash flows from operating
activities.
Year-to-date cash flows for 1994 and 1993 varied as follows:
Operating activities:
The $155.0 million higher positive cash flows in 1994, compared with the
same period in 1993 were due primarily to the $116.2 million increase in
cash flows related to program rights which was due mainly to payments
made in 1993 for Major League Baseball contracts. In addition, the
positive cash flows in 1994 resulted from the broadcasts of the Olympic
Winter Games and National Football League games (for which payments were
made in prior periods), were substantially offset by the increased
investment in program rights and to a scheduled payment made in 1994 as
part of the acquisition of rights to the 1998 Olympic Winter Games.
Also, cash flows from accounts receivable in 1994 were higher due
primarily to higher fourth quarter sales in 1993 compared with the fourth
quarter of 1992.
Investing and financing activities:
The variances in cash flows from investing and financing activities were
related primarily to the repurchase of 3.5 million shares at $325 per
share in the third quarter of 1994. In addition, the variance in capital
expenditures is due largely to additional expenditures in 1993 related
to the acquisition and renovation of the Ed Sullivan Theater in New York
City. Also, the Company issued $150.0 million of short-term debt in
September 1994 to fund its working capital requirements (note 5).
The Company's liquid assets include the following (in millions):
As of
September 30 December 31 September 30
1994 1993 1993
Cash and cash equivalents $ 49.7 $ 173.4 $ 248.0
Marketable securities:
Current 35.9 420.7 420.6
Noncurrent 371.0 826.0 765.2
Liabilities for securities sold
under repurchase agreements (103.6) (374.7) (361.2)
$353.0 $1,045.4 $1,072.6
-12-<PAGE>
PART II
Item 1. Legal Proceedings.
a. As previously reported in Item 1 of Registrant's 10-Q for the quarter ended
March 31, 1994, Registrant filed with the Federal Communications Commission (the
"FCC") on April 1, 1994 a timely application to renew the television license for
WCAU-TV, Philadelphia. On July 13, 1994, the Philadelphia Lesbian and Gay Task
Force and other groups filed with the FCC a petition to deny the WCAU-TV
application, to which CBS responded on August 22, 1994. CBS believes the
station has been operated in accordance with all applicable requirements.
b. As previously reported in Item 1 of Part II of Registrant's 10-Q for the
quarter ended June 30, 1994, Registrant and its Chief Executive Officer,
Laurence A. Tisch, were named defendants in seven shareholder lawsuits (three
in the Supreme Court of the State of New York, three in the Chancery Court in
Delaware and one in the Federal Court for the Southern District of New York)
following announcement of discussions regarding a possible merger with QVC, Inc.
("QVC"). Following announcement that such discussions had been terminated, as
previously reported in said Item 1, on July 15, 1994, the three complaints filed
in Delaware Chancery Court were consolidated by the filing of an Amended
Complaint, which dropped Registrant and Mr. Laurence Tisch as defendants. On
September 23, 1994, counsel for each of the three plaintiffs who had filed suit
in the Supreme Court of the State of New York, purportedly on behalf of all
common shareholders of Registrant excluding the defendants, executed
stipulations voluntarily discontinuing those lawsuits. Those voluntary
Stipulations of Discontinuance have been filed with the New York County Supreme
Court. The complaint filed in Federal Court is still pending, but the time in
which Registrant is required to answer has been extended. Registrant continues
to believe that the action is without merit, and it will be contested vigorously
if it is not voluntarily dismissed.
c. Various other legal actions, governmental proceedings and other claims
(including those relating to environmental investigations and remediation
resulting from the operations of discontinued businesses) are pending or, with
respect to certain claims, unasserted.
Item 6. Exhibits and Reports on Form 8-K
a. Filed herewith as Exhibit 11 is a statement regarding the computation of
earnings per common share and as Exhibit 12 is a computation of
consolidated ratio of earnings to fixed charges.
b. No reports on Form 8-K have been filed during the relevant period.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBS Inc.
(Registrant)
Date: November 8, 1994 By: S/Peter W. Keegan
Peter W. Keegan
Executive Vice President, Finance
-and-
Principal Financial and
Accounting Officer
-13-<PAGE>
CBS INC. and subsidiaries
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
(In millions, except per share amounts)
PRIMARY
Three months Nine months
ended September 30 ended September 30
1994 1993 1994 1993
Earnings:
Net Income $58.5 $118.2 $237.1 $279.8
Post-tax interest on convertible
debentures (assumes conversion
of debt)* - - - 3.3
Dividends on Series B preference
stock (note 6) (2.4) (3.2) (9.2) (9.5)
Net income applicable to common
shares $56.1 $115.0 $227.9 $273.6
Shares:
Weighted average number of common
shares outstanding 72.6 77.3 75.9 72.9
Common stock equivalents - .5 - 4.7
Adjusted shares** 72.6 77.8 75.9 77.6
Per share **:
Net income $ .77 $1.48 $ 3.00 $ 3.53
*The debentures were converted in May 1993. Conversion was assumed for
all prior periods.
**In accordance with Accounting Principles Board Opinion No. 15, for all
periods presented earnings per share amounts were calculated based on
adjusted shares which reflected the retroactive recognition of the stock
split (note 8).
-1-<PAGE>
CBS INC. and subsidiaries
EXHIBIT 11 (continued) - COMPUTATION OF EARNINGS PER COMMON SHARE
(In millions, except per share amounts)
FULLY DILUTED
Three months Nine months
ended September 30 ended September 30
1994 1993 1994 1993
Earnings:
Net Income $58.5 $118.2 $237.1 $279.8
Post-tax interest on convertible
debentures (assumes conversion
of debt)* - - - 3.3
Net income applicable to common
shares $58.5 $118.2 $237.1 $283.1
Shares:
Weighted average number of common
shares outstanding 72.6 77.3 75.9 72.9
Common stock equivalents .6 .5 .6 4.7
Assumed conversion of Series B
preference stock 3.7 4.3 4.0 4.3
Adjusted shares** 76.9 82.1 80.5 81.9
Per share **:
Net income $ .76 $1.44 $ 2.94 $ 3.46
*The debentures were converted in May 1993. Conversion was assumed for
all prior periods.
**In accordance with Accounting Principles Board Opinion No. 15, for all
periods presented earnings per share amounts were calculated based on
adjusted shares which reflected the retroactive recognition of the stock
split (note 8).
-2-
<PAGE>
EXHIBIT 12
CBS Inc.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Nine Months
Ended
September 30 YEAR ENDED DECEMBER 31,
1994 (1) 1993 1992 1991 1990(3) 1989
Income from Continuing
Operations before
Income Taxes $379.2 $479.3 $227.0 ($178.6) $102.4 $455.7
Add:
Fixed charges 48.3 65.6 89.8 78.3 88.2 90.9
Amortization of
Capitalized Interest 3.7 4.3 3.4 3.7 4.3 6.1
Less:
Capitalized Interest (2.8) (6.4) (10.2) (8.4) (8.3) (5.6)
Adjusted Earnings $428.4 $542.8 $310.0 ($105.0) $186.6 $547.1
Interest Cost (2) $36.4 $48.8 $71.9 $58.8 $68.5 $72.6
Interest Factor
Portion of Rentals 11.9 16.8 17.9 19.5 19.7 18.3
Fixed Charges $48.3 $65.6 $89.8 $78.3 $88.2 $90.9
Ratio of Earnings
to Fixed Charges 8.87:1 8.27:1 3.45:1 * 2.12:1 6.02:1
(1) In connection with its $1.1 billion common stock repurchase, consummated
in September 1994, the Company included unaudited pro forma net income
and earnings per share of common stock for the nine months ended
September 30, 1994, in note 7 of this Form 10-Q. The ratio of earnings
to fixed charges for this pro forma information was 7.55 to 1.
(2) Includes amortization of debt discount and amortization of debt issue
expenses.
(3) In connection with its $2 billion common stock repurchase, consummated in
February 1991, the Company included a 1990 Unaudited Pro Forma
Consolidated Condensed Income Statement in footnote 15 to its 1990 Annual
Report. The Ratio of Earnings to Fixed Charges for this income statement
was .35 to 1.
(*) The ratio of earnings to fixed charges is less than a one-to-one coverage
and the earnings are inadequate to cover fixed charges. The amount of
coverage deficiency is $183.3.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 50
<SECURITIES> 36
<RECEIVABLES> 405
<ALLOWANCES> 14
<INVENTORY> 0
<CURRENT-ASSETS> 926
<PP&E> 999
<DEPRECIATION> 487
<TOTAL-ASSETS> 2261
<CURRENT-LIABILITIES> 804
<BONDS> 590
<COMMON> 39
90
0
<OTHER-SE> 208
<TOTAL-LIABILITY-AND-EQUITY> 2261
<SALES> 2857
<TOTAL-REVENUES> 2862
<CGS> 2142
<TOTAL-COSTS> 2142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 379
<INCOME-TAX> 142
<INCOME-CONTINUING> 237
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 237
<EPS-PRIMARY> 3.00
<EPS-DILUTED> 3.00
</TABLE>
