SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993 Commission File No. 1-2931
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
CBS INC.
A NEW YORK CORPORATION I.R.S. EMPLOYER NO. 13-0590730
51 West 52 Street, New York, NY 10019
Telephone Number (212) 975-4321
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
___________________ _______________________
Common stock, $2.50 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
Indicate by check mark 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 II of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 28, 1994 was $3,827,716,813.
As of February 28, 1994 there were 15,491,633 shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for Annual Meeting of
Shareholders to be held May 11, 1994 (Part III).<PAGE>
PART I
Item 1. Business.
The registrant, CBS Inc. ("CBS")*, conducts its domestic and
international operations either directly or through subsidiaries and joint
ventures.
The operations of CBS are carried out primarily by the CBS/Broadcast
Group. Other activities of CBS include various activities not directly
associated with the Group, i.e., The CBS/FOX Company, Radford Studio Center
Inc. and other non-material miscellaneous activities.
CBS/Broadcast Group
The CBS/Broadcast Group, through the CBS Television Network,
distributes a comprehensive schedule of news and public affairs broadcasts,
entertainment and sports programming and feature films to 206 independently
owned affiliated stations and the seven CBS owned and operated television
stations, which in the aggregate serve the 50 states and the District of
Columbia, and to certain overseas affiliated stations. The CBS Operations
and Administration Division operates the technical facilities used to
produce and distribute programs of the CBS News, Sports and Entertainment
Divisions. This division is also responsible for providing facilities
management, personnel services, management information systems and
administrative support services to CBS, including the CBS/Broadcast Group,
and to unaffiliated companies for a fee. The CBS/Broadcast Group consists
of eight divisions, whose operations are briefly described below:
The CBS Entertainment Division produces and otherwise acquires
entertainment series and other programs, and acquires feature films, for
distribution by the CBS Television Network for broadcast.
The CBS Marketing Division is responsible for sales of advertising
time for CBS Television Network broadcasts and related marketing research,
merchandising and sales promotion activities.
The CBS Enterprises Division, operating primarily through the CBS
Broadcast International and CBS Video units, is responsible for the
worldwide distribution of CBS-owned news and public affairs broadcasts,
sports and entertainment programming and feature films to broadcast and
other media (including cable, airlines and home video, in the latter case
through The CBS/Fox Company) and the acquisition of broadcast and non-
broadcast rights in independently produced programs where permitted by law.
The CBS Affiliate Relations Division is responsible for the full range
of ongoing activities and mutual concerns between the CBS Television
Network and the 206 independently owned affiliated stations.
The CBS News Division operates a worldwide news organization which
produces regularly scheduled news and public affairs broadcasts and special
reports for the CBS Television and Radio Networks. This division also
produces certain news-
_______________
* Except as the context otherwise requires, references to CBS in this
Annual Report mean CBS Inc. and include its subsidiaries.
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oriented programming for broadcast in the early morning daypart and in
designated hours during prime time.
The CBS Sports Division produces and otherwise acquires sports
programs for distribution by the CBS Television Network for broadcast.
The CBS Television Stations Division operates and serves as sales
representative for the seven CBS owned television stations (serving New York,
Chicago, Los Angeles, Philadelphia, Minneapolis-St. Paul (which includes two
satellite stations), Green Bay-Appleton (which includes a satellite station)
and Miami). The division also owns and operates Midwest Sports Channel, a
supplier of regional sports programming to cable subscribers in Minnesota,
North Dakota, South Dakota, northern Iowa and western Wisconsin, and Teleport
Minnesota, which provides programming and technical services to cable operators
in the upper Midwest and operates a service enabling broadcast companies and
other clients to transmit video signals into and out of Minnesota.
The CBS Radio Division operates the eight CBS owned AM radio stations
(serving New York, Chicago, Detroit, Los Angeles, Philadelphia, Minneapolis-
St. Paul, St. Louis and San Francisco) and 13 CBS owned FM radio stations
(serving the same cities named above, as well as Boston, Dallas/Fort Worth
(two stations), Houston and Washington, D.C.); serves as broadcast sales
representative for the CBS owned radio stations, 14 independently owned AM and
24 independently owned FM radio stations; and operates the CBS Radio Networks,
which serve approximately 585 affiliated stations nationwide.
Other Activities
The CBS/FOX Company is a partnership in which CBS and a wholly-owned
subsidiary of Twentieth Century-Fox Film Corporation ("Fox") each own a 50%
interest. This partnership is engaged in the acquisition from unrelated
third parties of the videocassette rights to feature films and other,
non-theatrical product, and provides marketing activities relating to the
videocassette distribution (by a subsidiary of Fox) of products produced by
CBS and the partnership. It also engages in selling activities to
specialized accounts of product of CBS and the partnership. The related
partnership agreement expires February 28, 1997.
Radford Studio Center Inc., a wholly owned subsidiary of CBS
("Radford"), owns and operates television and film production facilities at
its Studio Center facility in Studio City, California. CBS, through
Radford, became the sole owner of the Studio Center business and facilities
in March 1992 when it acquired the 50 percent partnership interest of MTM
Studios, Ltd. in The CBS/MTM Company.
Industry Segment Information
Since January 1988, CBS has operated predominantly in a single industry
- -- broadcasting. Accordingly, there is no requirement for segment reporting.
Competition
The CBS Television Network and CBS owned television stations compete
for audiences with other television networks and television stations, as
well as with other video media, including cable television, multipoint
distribution services, low power television stations, satellite television
services and video cassettes. In the sale of advertising, the CBS
Television Network competes with other networks,
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television stations, cable television programmers, and other advertising
media. The CBS owned television stations compete for advertising with other
television stations and cable television systems, as well as with newspapers,
magazines and billboards. The CBS Television Network and CBS owned
television stations also compete with other video media for distribution
rights to television programming. The CBS owned television stations compete
primarily in their individual markets.
In addition to competing television broadcast stations, cable
television systems and program services represent a significant source of
competition for audiences, advertising and program rights to CBS. In
individual markets, cable systems provide competition by offering audiences
additional signals and by supplying a broad array of advertiser- and
subscription-supported video programming not available on conventional stations.
Current and future technological developments may affect competition
within the television field. Developments in advanced digital technology may
enable competitors to provide "high definition" pictures and sound
qualitatively superior to what television stations now provide. Development
of the technology to compress digital signals may also permit the same
broadcast or cable channel or satellite transponder to carry multiple video
and data services, and could result in an expanded field of competing
services. CBS cannot predict when and to what extent digital technology will
be implemented in the various television services, and whether and how
television stations will be able to make use of the improvements inherent in
it. The Federal Communications Commission (FCC) has initiated proceedings
having the ultimate goal of adopting a standard for the use of advanced
digital technology in terrestrial television broadcast service.
Recent statutory, judicial and regulatory actions may also affect
competition. The Cable Consumer Protection and Competition Act of 1992 ("1992
Cable Act") for the first time required cable systems to obtain broadcast
stations' consent to retransmit the stations' signals, thereby providing
television stations the opportunity to negotiate a fee or other compensation
for such retransmission. (In September 1993 CBS granted cable systems carrying
the signals of its owned television stations consent to continue to carry those
signals, without compensation, until October 6, 1994.) As an alternative, the
Cable Act allowed television stations to require cable systems to carry their
signals within their television markets without compensation. The cable
industry has brought legal challenges to the latter provisions of the 1992
Cable Act (commonly referred to as the "must carry" provisions), and a split
lower court decision upholding them has been appealed to the United States
Supreme Court, which is expected to render its decision by the end of June 1994.
Telephone companies represent another source of potential competition
in the television field through their efforts to provide both video services
and data transmission services directly to their subscribers' homes. While
the Cable Communications Policy Act of 1984 ("1984 Cable Act") prohibits
regional Bell operating companies ("RBOCs") from providing video programming
directly to subscribers' homes, several recent developments may affect
competition. In 1992, the FCC permitted telephone companies, without the
necessity of obtaining a municipal cable franchise, to offer "video dialtone"
distribution services to programmers on a common carrier basis. In 1993, a
federal district court in Virginia ruled that the 1984 Cable Act's
prohibition on telephone companies' provision of video programming to
subscribers is unconstitutional as applied to the Bell Atlantic Corporation.
Other RBOCs have sought similar rulings, and the Bell Atlantic ruling is on
appeal. Currently, there are a number of legislative
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proposals that would provide a regulatory framework for telephone company
entry into the cable television business and into the provision of future
broadband video services in the companies' service areas.
Network regulations may also affect competition. In 1991, the FCC
modified its Financial Interest and Syndication ("Fin/Syn") rules, which had
limited the ability of television networks to acquire any financial interest
or syndication rights in television programs and prohibited the networks from
themselves syndicating television programs. CBS and other television
networks appealed this decision to the United States Court of Appeals for the
Seventh Circuit, contending that the rules should have been eliminated rather
than modified. The Court affirmed the FCC's decision to abrogate the
pre-existing rules, but vacated the FCC's modification of those rules as
arbitrary and capricious and remanded the matter to the FCC. In April 1993,
the FCC announced new rules which eliminate all restrictions on network
acquisition of financial interests and syndication rights in network
programming and retain most restrictions on syndication by the networks
themselves. Petitions to review the new rules are before the Seventh Circuit
Court of Appeals.
The television network operations of CBS and other television networks
are subject to consent decrees entered by the United States District Court
for the Central District of California in 1980. In November 1993, the court
modified the consent decrees to eliminate restrictions parallel to the FCC's
old Fin/Syn rules, thereby permitting the networks to act to the extent
permitted by the FCC's 1993 rules. The FCC has provided that all its Fin/Syn
restrictions are to "sunset" two years from the date of the November 1993
modification of the consent decrees. It has also determined that it will
review the rules six months before they expire and that the burden of proof
in this review will rest on those favoring retention of the rules.
The CBS Radio Network and CBS's owned radio stations compete with other
radio networks, independent radio stations, suppliers of radio programming,
and other advertising media. Competition with CBS's owned radio stations
occurs primarily in their individual market areas, although on occasion
stations outside a market place signals within that area. While such outside
stations may obtain an audience share, they generally do not obtain any
significant share of the advertising within the market.
Developments in radio technology could affect competition in the radio
field. New radio technology, known as "digital audio broadcasting" (DAB),
can provide sound of the quality of compact discs, which is significantly
higher than that now provided by radio networks and stations using analog
technology. CBS, among others, is actively involved in the study and
development of this digital technology, but cannot predict when and to what
extent existing radio networks and stations will be in a position to utilize
it. The FCC has initiated proceedings to consider the development and
implementation of DAB services. The FCC is also currently considering an
application to establish a nationwide, satellite-delivered DAB service,
which, if approved, could constitute an additional source of competition to
conventional radio stations and networks.
CBS cannot predict the effect on its business or earnings of possible
future competitive, economic, technological, international or industrial
changes. Nor can CBS generally predict the outcome of administrative and
judicial procedures or whether new legislation may be enacted or new
regulations adopted that might bear on the broadcast industry or affect CBS's
business.
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Material Licenses and Federal Regulation
Except as indicated below, all of CBS's television and radio stations
operate under currently effective licenses from the Federal Communications
Commission ("FCC"), which is empowered by the Communications Act of 1934, as
amended, to, inter alia, license and regulate television and radio
broadcasting stations. The FCC has authority to grant or renew broadcast
licenses for a maximum term of five years for television and seven years for
radio 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, competing applications
seeking a license to broadcast on the same frequency may be filed with the
FCC, and are entitled to consideration by the FCC in a hearing to evaluate
the comparative merits of the applications. Persons objecting to the license
renewal application may also file petitions to deny during this period.
In Item 1 of CBS's Form 10-K for 1992 (under the caption "Material
Licenses and Federal Regulation"), CBS reported that, on August 3, 1992, it
had filed with the FCC timely applications to renew the television broadcast
licenses for WBBM-TV, Chicago, Illinois; WFRV-TV, Green Bay, Wisconsin; and
WJMN-TV, Escanaba, Michigan. The applications to renew such licenses for
WFRV-TV and WJMN-TV were granted on November 23, 1993. There is no change in
the status of CBS's application to renew the license for WBBM-TV. CBS believes
that the station has been operated in accordance with all requirements.
In Item 1 of Part II of CBS's Form 10-Q for the quarter ended September
30, 1993, CBS reported that, on August 2, 1993, CBS filed with the FCC a
timely application to renew the television broadcast license for KCBS-TV, Los
Angeles, California. On November 17, 1993, Mark McDermott and Americans for
Responsible Media filed with the FCC a petition to deny the KCBS-TV
application, to which CBS responded on December 14, 1993. CBS believes that
the station has been operated in accordance with all requirements.
On February 1, 1994 CBS filed with the FCC a timely application to
renew the television license for WCBS-TV, New York, New York. The date by
which oppositions or competing applications may be filed is May 2, 1994.
The FCC has adopted rules prohibiting common ownership in the same
market of radio and VHF television stations and prohibiting common ownership
of stations with certain overlapping signals ("duopoly"). When those rules
were adopted, existing commonly owned stations, including the VHF/radio
combinations and a television duopoly then owned by CBS, were "grandfathered".
In addition, in February 1992, CBS acquired from Midwest Communications, Inc.,
a VHF television station and AM and FM radio stations in Minneapolis,
Minnesota, pursuant to an FCC waiver of its rules relating to VHF/radio
combinations. As a result, absent an FCC waiver, a transfer of CBS licenses to
a third party or a change in control of CBS could result in the loss of the
license of either the television station or the radio stations in New York,
Philadelphia, Chicago, Los Angeles and Minneapolis, and (as a result of
overlapping television signals) the television station in either New York or
Philadelphia. Under the FCC's waiver policy, however, the FCC will generally
look favorably on waiver applications relating to radio-television station
combinations in the top 25 television markets where there would be at least
30 separately owned broadcast stations after the proposed combination.
Employees
As of December 31, 1993, CBS had approximately 6,500 full-time employees.
- 6 -<PAGE>
Executive Officers of the Registrant (as of March 1, 1994)
Date of Commencement
of Service as
Executive Officer
in Present Position;
Other Positions Since
Name Age Present Positions January 1, 1989
____ ___ _________________ ______________________
Laurence A. Tisch 71 Chairman of the Board, December 12, 1990; President
President and Chief Exe- and Chief Executive Officer
cutive Officer, CBS Inc. since January 1987; Chairman
of the Board and Co-chief
Executive Officer, Loews
Corporation (Chief Executive
Officer from August 1986 to
February 1988 and a Director
since 1959) (insurance,
tobacco products, hotels,
watches)
Edward Grebow 44 Senior Vice President, February 8, 1988; executive
Administration, CBS Inc. in charge of CBS Operations
and Administration Division
since June 1988
Ellen Oran Kaden 42 Senior Vice President, October 13, 1993; Vice
General Counsel and President, General Counsel
Secretary, CBS Inc. and Secretary, from July
1991 to October 1993; Vice
President, Deputy General
Counsel and Secretary
(Acting General Counsel),
from May to July 1991;
Deputy General Counsel, from
April 1989 to July 1991;
Associate General Counsel,
from September 1986 to April
1989
Peter W. Keegan 49 Senior Vice President, March 9, 1988
Finance, CBS Inc.
Howard Stringer 52 Vice President, CBS Inc.; August 1, 1988
President, CBS/Broadcast
Group
Peter A. Lund 53 Executive Vice President, January 3, 1994; President,
CBS/Broadcast Group; CBS Marketing Division, from
President, CBS Television October 9, 1990 to December
Network 1993; President, Multimedia
Entertainment, from March
1987 to October 1990
Anthony C. Malara 57 President, CBS Affiliate May 31, 1988
Relations, a Division of
CBS Inc.
- 7 -<PAGE>
Eric W. Ober 52 President, CBS News, a September 1, 1990;
Division of CBS Inc. President, CBS Television
Stations Division, from
March 1987 to August 1990
Neal H. Pilson 53 President, CBS Sports, December 15, 1986
a Division of CBS Inc.
Johnathan Rodgers 48 President, CBS Television September 1, 1990; Vice
Stations, a Division of President and General
CBS Inc. Manager, WBBM-TV, from March
1986 to August 1990
Jeffrey F. Sagansky 42 President, CBS January 1, 1990; President,
Entertainment, a Tri-Star Pictures Inc.,
Division of from March to December
CBS Inc. 1989; President,
Production, Tri-Star
Pictures Inc., from
February 1985 to March
1989
James A. Warner 40 President, CBS December 4, 1989; Vice
Enterprises, a Division President, HBO Enterprises,
of CBS Inc. Home Box Office, Inc., from
April 1986 to November 1989
Nancy C. Widmann 51 President, CBS Radio, a August 1, 1988
Division of CBS Inc.
- 8 -<PAGE>
Item 2. Properties.
The principal executive offices of CBS are located in its headquarters
building at 51 West 52 Street, New York, NY 10019.
Major CBS television and/or radio facilities are located at the CBS
Broadcast Center at 524 West 57 Street, New York, NY and the headquarters
building in New York, NY; CBS Television City and Columbia Square in Los
Angeles, CA; and in Chicago, IL; Philadelphia, PA; St. Louis, MO; Boston, MA;
San Francisco, CA; a suburb of Washington, D.C.; Miami, FL; Detroit, MI; St.
Petersburg, FL; Dallas/Fort Worth and Houston, TX; Minneapolis, MN; and Green
Bay, WI.
Of the foregoing real estate properties, all are owned by CBS except as
described below:
CBS Radio Division occupies radio studios and offices in St. Louis, MO
(leases expire December 31, 2002); Boston, MA (lease expires December 31,
2006); San Francisco, CA (lease expires December 31, 1995); Dallas, TX (lease
expires December 31, 1996); Houston, TX (lease expires March 25, 1994);
Detroit, MI (lease expires April 30, 1998); and Minneapolis, MN
(month-to-month).
Radford owns and operates a television and film production facility lot
in Studio City, CA which includes 17 sound stages. Some of these facilities
are made available to the CBS Entertainment Division, and the balance is
leased to third parties.
CBS owns and leases other domestic real properties (including
transmitter sites), and leases foreign real properties, used in connection
with its business activities.
In October 1993, CBS and the City of New York consummated a previously-
announced agreement whereby, for a 15-year period, CBS agreed to maintain
current principal operations and specified levels of employment in New York
City, and in consideration thereof the City of New York granted to CBS annual
tax abatements, investment incentives, and certain other concessions. Over
such period, the abatements and concessions are expected to aggregate
approximately $48.5 million, and will reduce CBS's annual operating costs
accordingly. Included among a series of interrelated transactions among CBS,
the City and certain of its administrative units, and the New York State
Power Authority, was CBS's conveyance of fee title to its Broadcast Center
properties, located on West 57th Street in Manhattan, to the New York City
Industrial Development Agency for a period of 15 years with a lease of those
properties back to CBS. Such conveyance is expressly subject to CBS's
retaining a reversionary interest in the properties, so that title in fee
will revert to CBS at the end of the 15-year term, or prior thereto in the
event of the occurrence of certain contingencies.
Also, on March 15, 1993, CBS acquired the Ed Sullivan Theater and an
adjacent 13-story office building in New York City. The Ed Sullivan Theater
has been designated a landmark theater by the New York City Landmark
Preservation Commission. CBS has renovated the theater for use as a television
production facility, and the Landmark Commission has granted its approval of
the renovation. The Ed Sullivan Theater currently serves as the home of the
LATE SHOW with DAVID LETTERMAN, which commenced broadcasting on the CBS
Television Network in August, 1993.
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Item 3. Legal Proceedings.
There are no active pending legal proceedings to which CBS is a party,
or to which any of its property is subject, other than (a) routine litigation
incidental to the business, and (b) proceedings before the FCC with respect
to the renewal of certain radio broadcast and television broadcast licenses
reported in Item 1 under the caption "Material Licenses and Federal
Regulation". In addition, 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 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
Incorporated herein by this reference and made a part of this Item 5
are the materials included under the captions "Stock Data" and "Dividends" at
page 41 of Item 8 of this Report. There were approximately 11,584 holders of
CBS common stock as of February 28, 1994.
In May 1993, CBS converted $389.6 million of its outstanding 5%
Convertible Subordinated Debentures Due 2002 for 1,947,975 shares of its
common stock, issued from its treasury shares. The remaining Debentures of
$.9 million were redeemed.
In November 1993, CBS issued $100,000,000 of 7-1/8% Senior Notes that
are due on November 1, 2023 and may not be redeemed prior to maturity. The
net proceeds from the sale of those debt securities were used to fund the
cost of implementing a related transaction with the New York City Industrial
Development Agency, referred to in Item 2 of this Report.
Item 6. Selected Financial Data.
Incorporated herein by this reference and made a part of this Item 6 is
the information set forth for the years 1989 through 1993 in Item 7 of this
Report under the captions or opposite the line items and at the pages
identified below:
"Management's Financial Commentary":
"Net sales", page 16;
"Income (loss) from continuing operations", page 16;
"Per share of common stock: Continuing operations", page 16;
"Dividends per common share", page 16;
"Long-term debt" and "Preference stock subject to redemption",
page 20; and
"Total assets", page 20.
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Incorporated herein by this reference and made a part of this Item 7
are the materials included under the caption "Management's Financial
Commentary" at pages 15 through 20 of this Report.
Item 8. Financial Statements and Supplementary Data.
Incorporated herein by this reference and made a part of this Item 8
are the Consolidated Statements of Income, Retained Earnings, Additional
Paid-In Capital and Cash Flows for the years ended December 31, 1993, 1992,
and 1991; the Consolidated Balance Sheets as of December 31, 1993, 1992, and
1991; the Notes to Consolidated Financial Statements; the Report of
Independent Certified Public Accountants thereon; the material set forth
under "Quarterly Results of Operations (Unaudited)"; and the material set
forth under "Shareholder Reference Information"; all of which are set forth
at pages 21 through 41 of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Inapplicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Incorporated herein by this reference and made a part of this Item 10
are the materials included in CBS's Proxy Statement relating to the 1994
Annual Meeting of Shareholders (the "1994 Proxy Statement") under the
captions "Information Concerning the Director-Nominees" and "Board of Directors
and Its Committees". Definitive copies of the 1994 Proxy Statement are to
be filed with the Commission on or about April 8, 1994.
See also, "Executive Officers of the Registrant", included in Item 1
hereof pursuant to Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. Executive Compensation.
Incorporated herein by this reference and made a part of this Item 11
are the materials included under the caption "Executive Compensation" and the
sub-headings thereunder, as set forth in the 1994 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated herein by this reference and made a part of this Item 12
are the materials included under the caption "Principal Stockholders and
Management Ownership of Equity Securities", as set forth in the 1994 Proxy
Statement.
Item 13. Certain Relationships and Related Transactions.
Incorporated herein by this reference and made a part of this Item 13
are the materials included under the caption "Certain Relationships and
Related Transactions", as set forth in the 1994 Proxy Statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The Index to Financial Statements and Schedules filed as a part of this
Report appears on page 14 and the report and consent of the independent
certified public accountants thereon appears on page 22.
The following compensatory plans and management contracts have been
filed (or incorporated by reference) as Exhibits hereunder.
(i) Compensatory Plans: CBS Additional Compensation Plan, CBS
Stock Rights Plan, CBS Pension Plan, CBS Supplemental Executive
Retirement Plan, CBS Supplemental Executive Retirement Plan #2, CBS
Excess Benefits Plan, CBS Senior Executive Life Insurance Plan, CBS
Deferred Compensation Plan, CBS Employee Investment Fund, CBS
Retirement Plan for Outside Directors, Restricted Stock Plan for
Eligible Directors.
(ii) Management Contracts: The following executive officers of
CBS are the only executive officers of CBS who have employment
agreements: Messrs. Stringer, Lund, Ober, Sagansky, Grebow, Warner
and Rodgers.
(b) No reports on Form 8-K were filed during the fourth quarter of 1993.
(c) The Index to Exhibits begins on page 46.
(d) Not applicable.
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SIGNATURES
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.
Dated: March 9, 1994 (Registrant) CBS Inc.
Peter W. Keegan
By:________________________________
Peter W. Keegan
Senior Vice President, Finance
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 dates indicated.
Laurence A. Tisch Henry B. Schacht
_______________________________ _____________________________
Laurence A. Tisch Henry B. Schacht, Director
Chairman of the Board, Dated: March 7, 1994
President and Chief Executive Officer
(principal executive officer)
Dated: March 9, 1994
Peter W. Keegan Edson W. Spencer
________________________________ ______________________________
Peter W. Keegan Edson W. Spencer, Director
Senior Vice President, Finance Dated: March 9, 1994
(principal financial and accounting officer)
Dated: March 9, 1994
Michel C. Bergerac Franklin A. Thomas
________________________________ ______________________________
Michel C. Bergerac, Director Franklin A. Thomas, Director
Dated: March 9, 1994 Dated: March 9, 1994
Harold Brown Preston R. Tisch
________________________________ _____________________________
Harold Brown, Director Preston R. Tisch, Director
Dated: March 9, 1994 Dated: March 9, 1994
Ellen V. Futter James D. Wolfensohn
________________________________ _____________________________
Ellen V. Futter, Director James D. Wolfensohn, Director
Dated: March 9, 1994 Dated: March 9, 1994
Henry A. Kissinger
________________________________
Henry A. Kissinger, Director
Dated: March 9, 1994
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INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE NO.
DESCRIPTION IN 10-K
___________ _______
Management's Financial Commentary 15
Consolidated Financial Statements
Management's Responsibility for Financial Statements 21
Report and Consent of Independent Certified Public Accountants 22
Statements of Income 23
Balance Sheets 24
Statements of Retained Earnings and Additional
Paid-In Capital 25
Statements of Cash Flows 26
Notes to Financial Statements 27
Quarterly Results of Operations (unaudited) 40
Shareholder Reference Information 41
Schedules
Schedule I - Marketable Securities - Other Investments 42
Schedule II - Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees other
than Related Parties 44
Schedule X - Supplementary Income Statement Information 45
Schedules other than those listed above have been omitted since
they are either not required or not applicable.
Financial statements of 50% or less owned persons, the investments
in which are carried on an equity basis, are omitted because such persons are
not "significant subsidiaries" within the meaning of Rule 1-02(v) of
Regulation S-X.
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MANAGEMENT'S FINANCIAL COMMENTARY
In 1993, the Company's operating results improved significantly, reflecting both
its ratings strength and higher unit pricing. Earnings in 1993 were also
enhanced by several special items as well as by capital gains from the sale of
marketable securities. The special items, which are not expected to recur in
1994, included a legal settlement with Viacom International Inc. (Viacom), an
insurance settlement for hurricane damage to the Company's television station
in Miami, a favorable Federal income tax audit settlement, and deferred tax
benefits resulting from new Federal tax law.
Excluding the effect of the above noted special items and capital gains,
the Company anticipates improved operating results in 1994 based on continuing
solid audience ratings, improving advertiser demand and active cost control.
The Company continually updates its evaluations of environmental
liabilities and the adequacy of the provisions made in prior years to cover
asserted and unasserted environmental claims arising from the operations of its
discontinued businesses. (There are no significant environmental claims known
to the Company arising from its continuing operations.) In the Company's
opinion, any additional liabilities that may result from such claims are not
reasonably likely to have a material adverse effect on its consolidated
financial position, results of operations, or liquidity.
The impact of inflation on the Company's financial statements in 1993 was
not considered sufficient to warrant the inclusion of any additional current
cost disclosures in these statements.
This Financial Commentary should be read in conjunction with the
consolidated financial statements and notes to these financial statements. In
addition, although the Commentary's Liquidity and Capital Resources section is
based upon the Consolidated Statements of Cash Flows, certain data have been
rearranged for purposes of clarification and, therefore, it should be read in
conjunction with the Consolidated Statements of Cash Flows.
-15-<PAGE>
RESULTS OF OPERATIONS
Income from Continuing Operations and Net Income
The Company's sales in 1993 were essentially the same as in 1992. The
Television Network's strong household ratings and better unit prices resulted
in increased sales in 1993 from its regularly scheduled programming which
largely compensated for the absence of the sales generated from the broadcasts
of the Olympic Winter Games and the Super Bowl in 1992. As a result, the
Company's operating income improved significantly in 1993 over 1992 from the
Television Network's more profitable entertainment and news programs. The
Television Stations Division recorded increased sales and profits at all
stations except Los Angeles. The Radio Division experienced a significant
improvement in earnings, attributable to sales increases at most of its stations
and to lower operating costs.
Also, in 1993, earnings benefited from a legal settlement with Viacom and
an insurance settlement for hurricane damage to the Company's television station
in Miami (both of which were included in other income, net); capital gains from
the sale of marketable securities; a favorable Federal income tax audit
settlement; and deferred tax benefits resulting from new Federal tax law-all of
which contributed $5.33 to earnings per share.
The Company's sales and operating income improved significantly in 1992.
The Television Network's stronger primetime program schedule, as well as the
sales generated by the acquisition of Midwest Communications, Inc. (Midwest)
(note 2), contributed to the sales and operating income increases. The sales
increases due to the broadcasts of the Olympic Winter Games and the Super Bowl
were largely offset by their related costs. In 1991 and 1990, the Company
recorded operating losses due mainly to the provisions for losses on its Major
League Baseball and National Football League television contracts (note 3).
Interest income increased slightly in 1993. In 1992 and 1991, it decreased
from previous years, largely as a result of the sale of marketable securities
to fund the Company's $2 billion repurchase of its common stock in February 1991
(note 12). The decrease in interest expense in 1993 resulted mainly from the
conversion of the 5% convertible debt into common stock in 1993 and the
refinancing of the 10 7/8% senior notes in 1992. The increase in interest
expense in 1992 was due mainly to the issuance of $150.0 million of debt related
to the acquisition of Midwest. The decrease in interest expense in 1991 and
1990 was due primarily to the retirement of debt in 1990 and 1989.
In 1993, the effective income tax expense rate was reduced by deferred tax
benefits of $11.2 million resulting from new Federal tax law and by a favorable
Federal tax audit settlement for the years 1988-1990 of $23.0 million. The 1992
effective income tax expense rate was reduced by a favorable Federal tax audit
settlement of $17.9 million for the years 1985-1987. Income from tax preference
securities increased the effective tax benefit rate in 1991 and reduced the
effective tax expense rate in 1990.
The Company recorded additional gains in 1991 and 1990 as a result of the
final settlement of all disputed items in arbitration related to the sale of its
Records Group in 1988.
In 1992, the Company adopted certain accounting standards (note 1) that
resulted in a one-time charge to net income, shown as cumulative effects of
changes in accounting principles.
The decreases in 1992 and 1991 of the adjusted weighted average shares
outstanding were related mainly to the Company's repurchase of 10.5 million
shares of its common stock in February 1991. In connection with this
repurchase, the Company reduced its quarterly dividend per share in the first
quarter of 1991 from $1.10 to $.25. Based on the Company's improved financial
condition, it raised its quarterly dividend per share to $.50 in the fourth
quarter of 1993.
-16 (Page 1 of 2)-<PAGE>
Year ended December 31
1993 1992 1991 1990 1989
(In millions, except per share amounts)
Net sales $3,510.1 $3,503.0 $3,035.0 $3,261.2 $2,961.5
Cost of sales (2,688.8) (2,906.5) (2,938.0)(2,925.6) (2,313.2)
Selling, general and
administrative expenses (461.3) (422.9) (384.6) (409.3) (384.1)
Other income, net 51.2 6.5 16.3 23.9 9.6
Operating income (loss) 411.2 180.1 (271.3) (49.8) 273.8
Interest income on
investments, net 110.4 107.6 140.1 210.1 246.7
Interest expense on debt, net (42.3) (60.7) (47.4) (57.9) (64.8)
Interest, net 68.1 46.9 92.7 152.2 181.9
Income (loss) from continuing
operations before
income taxes 479.3 227.0 (178.6) 102.4 455.7
Income tax (expense) benefit (153.1) (64.5) 79.9 (10.9) (158.6)
Income (loss) from continuing
operations 326.2 162.5 (98.7) 91.5 297.1
Discontinued operations 12.9 20.0
Extraordinary items (.7) (.8)
Cumulative effects of changes
in accounting principles (81.5)
Net income (loss) $326.2 $81.0 $(85.8) $110.8 $296.3
Per share of common stock:
Continuing operations $20.39 $10.51 $(6.11) $3.55 $11.54
Discontinued operations .79 .78
Extraordinary items (.03) (.03)
Cumulative effects of changes
in accounting principles (5.28)
Net income (loss) $20.39 $5.23 $(5.32) $4.30 $11.51
Dividends per common share $1.25 $1.00 $1.00 $4.40 $4.40
Adjusted weighted average
shares outstanding 15.5 15.4 16.2 25.7 25.7
-16 (Page 2 of 2)-<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The Company's liquid assets include its cash and cash equivalents and readily
marketable securities held in its short-term and long-term portfolios. In 1993,
the increase in liquid assets of $123.8 million was attributable primarily to
cash flows from operating activities, gain on sale of marketable securities and
the issuance of $100.0 million of debt, partially offset by capital
expenditures.
In 1992, the increase of $46.7 million was due mainly to cash flows from
operating activities, partially offset by capital expenditures. The issuance
of $150.0 million of debt in 1992 was used to fund major acquisitions. The
decrease in liquid assets in 1991 was related principally to the Company's $2
billion repurchase of its common stock (note 12). In 1990, the combination of
capital expenditures, retirement of debt and the payment of dividends to
shareholders moderately exceeded the Company's cash flows from operating
activities. In 1989, the Company retired debt, acquired a television station
and two radio stations, and made substantial investments in broadcasting
assets. These expenditures more than offset cash flows from operations, after
dividend payments, and resulted in negative cash flows.
The positive cash flows from asset dispositions in the 1985-1988 period and
from normal operations have enabled the Company to accumulate a substantial
amount of cash and marketable securities while allowing it to repurchase its
common stock and make major investments in program rights, broadcasting assets,
and television and radio stations.
Additional details on specific cash flows are provided in subsequent
sections of this Commentary.
Year ended December 31
1993 1992 1991 1990 1989
(In millions)
Cash flows:
Operating activities $117.6 $144.2 $97.8 $217.7 $180.7
Investing activities (163.0) (374.1) 1,484.3 103.5 203.8
Financing activities 73.4 105.3 (2,033.2) (198.6) (192.1)
Net change in cash and
cash equivalents 28.0 (124.6) (451.1) 122.6 192.4
Remove net investment in
marketable securities
(included above)* 95.8 171.3 (1,456.2) (147.6) (404.8)
Cash flows before investment
in marketable securities** 123.8 46.7 (1,907.3) (25.0) (212.4)
Cash and marketable securities
at beginning of year** 921.6 874.9 2,782.2 2,807.2 3,019.6
Cash and marketable
securities at end
of year** $1,045.4 $921.6 $874.9 $2,782.2 $2,807.2
*Includes liabilities for securities sold subject to repurchase agreements
(note 1).
**Includes cash and cash equivalents and readily marketable securites held in
the Company's short-term and long-term portfolios as well as liabilities for
securities sold under repurchase agreements.
-17-<PAGE>
Cash Flows from Operating Activities
In accordance with Statement of Financial Accounting Standards (SFAS) No. 95,
"Statement of Cash Flows," all cash flows not classified as investing or
financing activities, and all interest and income taxes including those related
to investing and financing activities, are classified as operating activities.
In 1993, cash flows from operating activities were lower than in 1992. This was
primarily caused by the excess of payments for baseball and football program
rights over their related revenues, the rights fee paid for the 1994 Olympic
Winter Games, and a higher level of year-end accounts receivable, due to
increased sales in the fourth quarter.
In 1992, cash flows from operating activities increased over the preceding
year due to improved operating results. The main reasons for this increase were
the sales due to the improved primetime ratings and unit pricing, and the
operating cash flows related to the acquisition of Midwest (note 2).
In 1991, cash flows from operating activities declined from 1990's level,
principally as a result of a decline in sales which more than offset cost
reductions, and also because of reduced interest income resulting from the sale
of marketable securities in February 1991 to fund the Company's $2 billion
repurchase of its common stock (note 12).
Cash flows from operating activities in 1990 rose over 1989's level,
despite a signficant reduction in income in 1990, because of lower year-end
accounts receivable in 1990 and the absence of 1989's buildup of program
rights.
Interest, net, increased in 1993, mainly because of the conversion of the
5% convertible debt into common stock in 1993 and the refinancing of the 10 7/8%
senior notes in 1992. In the preceding two years, interest, net, had declined,
due primarily to the issuance of debt in 1992 related to the acquisition of
Midwest and to the sale of securities in February 1991 to fund the Company's $2
billion repurchase of its common stock.
The significant taxes paid in 1993 related primarily to the Company's
improved operating results. The small positive cash flows from taxes in 1992
and 1991 were attributable principally to refunds related to prior years,
offsetting the current years'tax payments which were small due to tax deductions
for timing items. These timing items arose mainly from baseball and football
losses (note 3) which were accrued in 1990 and 1991 but which were deducted for
tax purposes in 1991, 1992 and 1993.
From an overall standpoint, the fluctuations in cash flows from operating
activities, over the period covered by the table, were due largely to changes
in operating income (exclusive of noncash items) and investments in program
rights. Additionally, there were period-to-period changes in year-end levels
of accounts receivable and various other assets and liabilities, due largely to
the timing of transactions.
-18 (Page 1 of 2)-<PAGE>
Year ended December 31
1993 1992 1991 1990 1989
(In millions)
Net income (loss) $326.2 $81.0 $(85.8) $110.8 $296.3
Adjustments:
Depreciation and amortization 71.0 66.7 59.9 58.7 63.6
Gain on sale of marketable
securities, net (39.6) (28.9) (38.1) (12.4) (10.5)
Cumulative effects of changes
in accounting principles 81.5
Gain on discontinued operations (21.2) (33.0)
Changes in assets and liabilities:
Accounts receivable (37.1) 7.8 (2.7) 32.4 (46.9)
Program rights, net (26.0) 23.3 .9 8.1 (160.5)
Accounts payable (2.3) (18.1) 4.7 (5.0) 6.6
Accrual on baseball and football
television contracts (242.0) (160.0) 233.0 190.0
Recoverable income taxes 88.3 (9.6) (2.6) (88.5) (4.0)
Deferred income taxes (27.8) 79.4 (61.9) (26.2) 27.4
Other, net 6.9 21.1 11.6 (17.2) 8.7
Cash flows from operating
activities $117.6 $144.2 $97.8 $217.7 $180.7
Cash flows from interest and
income taxes included above:
Interest, net* $28.5 $18.0 $54.6 $139.8 $171.4
Income taxes (94.2) 2.6 2.4 (143.4) (144.4)
*Excludes gain on sale of marketable securities, which was included in cash
flows from investing activities.
-18 (Page 2 of 2)-<PAGE>
Cash Flows from Investing Activities
The cash flows from marketable securities in 1991 were used mainly to fund the
Company's $2 billion repurchase of shares of its common stock (note 12). Other
changes in net investment in marketable securities were due essentially to the
cash requirements of the Company. In addition, the increases and decreases in
the sales and purchases of these securities, as presented in the Statements of
Cash Flows, reflected activity stimulated by market conditions.
In 1992, the Company acquired Midwest and the remaining 50 percent interest
in television and film production facilities in Los Angeles (note 2). In 1989,
it acquired a television station in Miami and two radio stations in Detroit.
The Company's principal capital expenditures in 1993, as in previous years,
were for broadcasting assets. In 1993, they also included the acquisition and
renovation of the Ed Sullivan Theater in New York City from which the Late Show
with David Letterman is broadcast. In 1989, the Company also acquired satellite
capacity for the distribution of Television Network programs to affiliated
stations.
The asset dispositions in 1991 represent the cash receipt of the final
settlement of all disputed items in arbitration related to the 1988 sale of the
Company's Records Group.
Interest income on investments, net, excluding gain on sale of marketable
securities, was included in operating activities and is presented for
informational purposes.
-19 (Page 1 of 4)-<PAGE>
Year ended December 31
1993 1992 1991 1990 1989
(In millions)
Marketable securities:
Gain on sale $ 39.6 $ 28.9 $ 38.1 $ 12.4 $ 10.5
Net investment (95.8) (171.3) 1,456.2 147.6 404.8
Cash flows from marketable
securities* (56.2) (142.4) 1,494.3 160.0 415.3
Major acquisitions** (160.2) (117.0)
Capital expenditures (106.8) (71.5) (64.2) (60.4) (98.7)
Asset dispositions 54.2 3.9 4.2
Cash flows from investing
activities*** $(163.0) $(374.1) $1,484.3 $ 103.5 $ 203.8
Interest income on investments,
net (not included above)*** $ 70.8 $ 78.7 $ 102.0 $ 197.7 $ 236.2
*Includes liabilities for securities sold subject to repurchase agreements
(note 1).
**The table excludes the noncash items indicated in the footnotes to the
Statements of Cash Flows.
***Cash flows related to interest (excluding gain on sale of marketable
securities) and taxes are included in operating activities in accordance
with SFAS No. 95.
-19 (Page 2 of 4)-<PAGE>
Cash Flows from Financing Activities
In 1993, the Company issued $100.0 million of senior notes. The proceeds from
the issuance of these debt securities were used to purchase New York City
Industrial Development Agency (IDA) bonds, which were issued by the IDA to
establish a trust fund to implement the Company's agreement with the IDA. Under
this agreement, the Company is required to invest in production facilities and
develop new broadcasting and production technologies in New York City in return
for certain tax incentives and low-cost energy.
In 1992, the Company issued $150.0 million of senior notes in connection
with the acquisition of Midwest. In addition, it issued $125.0 million of
senior notes and $125.0 million of senior debentures to refinance the $263.0
million of 10 7/8% senior notes due 1995. During the period 1989-1991, the
Company retired debt of $171.5 million.
In 1991, the Company repurchased 10.5 million shares of its common stock
at a cost of approximately $2 billion. In connection with this repurchase of
shares, the Company reduced its quarterly dividend per share in the first
quarter of 1991 from $1.10 to $.25. In the fourth quarter of 1993, based on
its improved financial condition, the Company increased its quarterly dividend
per share to $.50.
Interest expense on debt, net, was included in operating activities and is
presented for informational purposes.
-19 (Page 3 of 4)-<PAGE>
Year ended December 31
1993 1992 1991 1990 1989
(In millions)
7 1/8% senior notes due 2023 $100.0
7 5/8% senior notes due 2002 $ 150.0
7 3/4% senior notes due 1999 125.0
8 7/8% senior debentures due 2022 125.0
10 7/8% senior notes due 1995 (263.0) $(3.0) $ (7.7) $ (26.7)
11 3/8% notes due 1992 (75.6) (1.0)
14 1/2% notes due 1992 (50.0)
Other debt (.9) (2.5) (2.5) (2.3) (2.7)
Debt issued (retired)* 99.1 134.5 (5.5) (85.6) (80.4)
Repurchases of common stock (3.0) (2,005.1)
Dividends to shareholders (31.3) (25.9) (25.7) (116.6) (116.5)
Other, net 5.6 (.3) 3.1 3.6 4.8
Cash flows from
financing activities** $ 73.4 $105.3 $(2,033.2) $(198.6) $(192.1)
Interest expense on debt, net
(not included above)** $(42.3) $(60.7) $ (47.4) $ (57.9) $ (64.8)
*The table excludes the noncash items indicated in the footnotes to the
Statements of Cash Flows.
**Cash flows related to interest and taxes are included in operating
activities in accordance with SFAS No. 95.
-19 (Page 4 of 4)-
<PAGE>
Working Capital
In 1993, the increase in working capital was due largely to the decrease in
other current liabilities caused by the reversal of accrued losses recorded in
prior years related to the baseball and football television contracts (note 3),
partially offset by the realization of tax benefits related to these losses.
The increase in accounts receivable, due to increased sales in the fourth
quarter, and the increase in net program rights, due primarily to the 1994
Olympic Winter Games, contributed to the increase in working capital.
In 1992, the decrease in working capital was due primarily to the
reclassification of certain marketable securities to the Company's long-term
portfolio, and to a reclassification from long-term to other current liabilities
for the accrued losses related to the baseball and football television
contracts.
The main reason for the decrease in working capital in 1991 related to the
Company's cash outlay for its $2 billion common stock repurchase (note 12). In
addition, the increase in other current liabilities was due mainly to accrued
losses on the baseball and football television contracts.
In 1990, the primary reason for the increased working capital was the
reclassification of marketable securities from long-term to short-term in
anticipation of their sale to fund the $2 billion common stock repurchase.
-20 (Page 1 of 4)-<PAGE>
December 31
1993 1992 1991 1990 1989
(In millions)
Current assets:
Cash and marketable
securities* $ 219.4 $169.0 $272.5 $2,318.8 $755.8
Accounts receivable 454.5 417.4 420.3 417.6 450.0
Program rights 581.9 447.4 505.5 403.3 353.5
Recoverable income taxes** 28.8 117.1 90.2 87.6
Other 18.2 20.9 18.2 17.8 19.8
Total current assets 1,302.8 1,171.8 1,306.7 3,245.1 1,579.1
Current liabilities:
Accounts payable 33.4 35.7 48.1 43.4 48.4
Liabilities for talent and
program rights 317.4 245.5 276.3 236.4 183.9
Debt .9 13.0 3.5 3.4 3.3
Other 312.5 514.4 410.0 251.7 263.1
Total current liabilities 664.2 808.6 737.9 534.9 498.7
Working capital $ 638.6 $363.2 $ 568.8 $2,710.2 $1,080.4
Ratio of current assets to
current liabilities 1.96:1 1.45:1 1.77:1 6.07:1 3.17:1
*Includes cash and cash equivalents and liabilities related to securities sold
subject to repurchase agreements (note 1).
**Primarily related to temporary differences attributable to the Major League
Baseball and National Football League television contracts (note 3).
-20 (Page 2 of 4)-
<PAGE>
Capital Structure and Total Assets
In 1993, the Company's total debt as a percentage of total capitalization
improved, mainly because of the conversion of $389.6 million of the 5%
convertible debentures into common stock, and net income $326.2 million. The
percentage remained essentially unchanged in 1992 compared with 1991, due mainly
to the higher level of debt largely offset by the increase in shareholders'
equity. The percentage rose in 1991, primarily as a result of the Company's
repurchase of common stock, which reduced shareholders' equity by $2 billion in
1991.
The higher level of debt in 1992 was due primarily to the issuance of
$150.0 million of senior notes in connection with the acquisition of Midwest
(note 2). Also, in 1992, the Company retired its 10 7/8% senior notes due 1995
by refinancing debt with lower interest rates and lengthened maturities.
The Company believes that, with a substantial amount of highly liquid
assets and a low debt-to-total capitalization ratio, it remains fully capable
of funding its current operations and sufficiently flexible with respect to the
acquisition of additional broadcast properties should suitable opportunities
arise.
The principal changes in total assets over the five-year period were
related to the Company's $2 billion common stock repurchase in 1991, the
acquisitions of Midwest and television and film production facilities in 1992,
and increased investment in marketable securities from the issuance of debt and
increased program rights in 1993.
-20 (Page 3 of 4)-<PAGE>
December 31
1993 1992 1991 1990 1989
(In millions)
Current debt $ .9 $ 13.0 $ 3.5 $ 3.4 $ 3.3
Long-term debt 590.3 870.0 696.5 712.4 795.5
Total debt 591.2 883.0 700.0 715.8 798.8
Common stock subject
to redemption 65.2 65.2
Preference stock subject
to redemption 124.7 124.5 124.4 124.2 124.0
Shareholders' equity 1,138.0 446.8 354.8 2,392.7 2,394.0
Total capitalization $1,853.9 $1,454.3 $1,179.2 $3,297.9 $3,382.0
Total debt as a percentage
of total capitalization 31.9% 60.7% 59.4% 21.7% 23.6%
Total assets $3,418.7 $3,175.0 $2,798.6 $4,691.8 $4,637.9
-20 (Page 4 of 4)-<PAGE>
FINANCIAL STATEMENTS
Management's Responsibility
for Financial Statements
The consolidated financial statements presented on the following pages have been
prepared by management in conformity with generally accepted accounting
principles. The reliability of the financial information, which includes amounts
based on judgment, is the responsibility of management.
The Company uses systems and procedures for handling routine business activities
which seek to prevent or detect unauthorized transactions. The Company's
internal control system envisages a segregation of duties among the Company's
personnel, a wide dissemination to these personnel of the Company's written
policies and procedures, the use of formal approval authorities and the
selection and training of qualified people. The design of internal control
systems involves a balancing of estimated benefits against estimated costs. The
system is monitored by an internal audit program. The scope and results of the
internal audit function and the adequacy of the system of internal accounting
controls are reviewed regularly by the Audit Committee of the Board of
Directors.
Management believes that the Company's system provides reasonable assurance that
assets are safeguarded against material loss and that the Company's financial
records permit the preparation of financial statements that are fairly presented
in accordance with generally accepted accounting principles.
-21-<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
____________________
To the Shareholders of CBS Inc.:
We have audited the consolidated financial statements and the financial
statement schedules of CBS Inc. and subsidiaries listed in the index on page
14 of this Form 10-K. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CBS Inc. and
subsidiaries as of December 31, 1993, 1992, and 1991, and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles. In addition, in
our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
As discussed in note 1 to the consolidated financial statements, in 1992 the
Company changed its method of accounting for postretirement benefits other
than pensions, postemployment benefits and income taxes.
COOPERS & LYBRAND
New York, New York
February 9, 1994
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
____________________
We consent to the incorporation by reference in the registration statements
of CBS Inc. and subsidiaries on Form S-8 (File Nos. 2-87270, 2-58540, and 2-
33-2098) and the registration statement of CBS Inc. on Form S-3 (File No. 33-
59462) of our report dated February 9, 1994, on our audits of the
consolidated financial statements and financial statement schedules of
CBS Inc. and subsidiaries as of December 31, 1993 and 1992, and for the years
ended December 31, 1993, 1992 and 1991, which report appears above.
COOPERS & LYBRAND
New York, New York
March 9, 1994
-22-<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
CBS Inc. and subsidiaries
(Dollars in millions, except per share amounts)
Year ended December 31
1993 1992 1991
Net sales. . . . . . . . . . . . . . . . . . $3,510.1 $3,503.0 $3,035.0
Cost of sales (note 3) . . . . . . . . . . . (2,688.8) (2,906.5) (2,938.0)
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . (461.3) (422.9) (384.6)
Other income, net (note 4) . . . . . . . . . 51.2 6.5 16.3
Operating income (loss). . . . . . . . . . . 411.2 180.1 (271.3)
Interest income on investments,
net. . . . . . . . . . . . . . . . . . . . 110.4 107.6 140.1
Interest expense on debt, net. . . . . . . . (42.3) (60.7) (47.4)
Interest, net (note 4) . . . . . . . . . . . 68.1 46.9 92.7
Income (loss) from continuing operations
before income taxes . . . . . . . . . . . . 479.3 227.0 (178.6)
Income tax (expense) benefit (note 5). . . . (153.1) (64.5) 79.9
Income (loss) from continuing operations . . 326.2 162.5 (98.7)
Discontinued operations (note 7) . . . . . . 12.9
Income (loss) before cumulative effects of
changes in accounting principles . . . . . 326.2 162.5 (85.8)
Cumulative effects of changes in
accounting principles (note 1) . . . . . . (81.5)
Net income (loss). . . . . . . . . . . . . . $ 326.2 $ 81.0 $ (85.8)
Per share of common stock (note 6):
Continuing operations . . . . . . . . . . . $ 20.39 $ 10.51 $ (6.11)
Discontinued operations . . . . . . . . . . .79
Cumulative effects of changes in
accounting principles (note 1) . . . . . (5.28)
Net income (loss) . . . . . . . . . . . . . $ 20.39 $ 5.23 $ (5.32)
See notes to consolidated financial statements.
-23-<PAGE>
CONSOLIDATED BALANCE SHEETS
CBS Inc. and subsidiaries
(Dollars in millions, except per share amounts)
ASSETS
December 31
1993 1992 1991
Current assets:
Cash and cash equivalents (note 1). . . . . . . . $ 173.4 $ 145.4 $ 270.0
Marketable securities (note 1). . . . . . . . . . 420.7 332.3 215.7
Accounts receivable, less allowance for doubtful
accounts: 1993, $9.1; 1992, $9.7; 1991, $9.0 . . 454.5 417.4 420.3
Program rights. . . . . . . . . . . . . . . . . . 581.9 447.4 505.5
Recoverable income taxes (note 5) . . . . . . . . 28.8 117.1 90.2
Other . . . . . . . . . . . . . . . . . . . . . . 18.2 20.9 18.2
Total current assets. . . . . . . . . . . . . . . 1,677.5 1,480.5 1,519.9
Marketable securities (note 1). . . . . . . . . . 826.0 752.6 602.4
Property, plant and equipment (note 2):
Land. . . . . . . . . . . . . . . . . . . . . . . 81.4 76.8 32.5
Buildings . . . . . . . . . . . . . . . . . . . . 319.0 297.2 218.0
Machinery and equipment . . . . . . . . . . . . . 556.9 542.0 544.2
Leasehold improvements. . . . . . . . . . . . . . 20.8 21.3 21.4
978.1 937.3 816.1
Less accumulated depreciation . . . . . . . . . . 459.0 451.9 437.5
Net property, plant and equipment . . . . . . . . 519.1 485.4 378.6
Other assets:
Program rights. . . . . . . . . . . . . . . . . . 90.9 154.1 131.9
Goodwill, less accumulated amortization (note 1):
1993, $33.0; 1992, $28.0; 1991, $20.4; . . . . . 280.6 283.8 144.6
Other . . . . . . . . . . . . . . . . . . . . . . 24.6 18.6 21.2
Total other assets. . . . . . . . . . . . . . . . 396.1 456.5 297.7
$3,418.7 $3,175.0 $2,798.6
-24 (Page 1 of 2)-<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31
1993 1992 1991
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . $ 33.4 $ 35.7 $ 48.1
Accrued salaries, wages and benefits . . . . . 72.6 61.4 53.5
Liabilities for talent and program rights. . . 317.4 245.5 276.3
Liabilities for securities sold under
repurchase agreements (note 1). . . . . . . . 374.7 308.7 213.2
Debt (note 8). . . . . . . . . . . . . . . . . .9 13.0 3.5
Other (note 3) . . . . . . . . . . . . . . . . 239.9 453.0 356.5
Total current liabilities. . . . . . . . . . . 1,038.9 1,117.3 951.1
Long-term debt (note 8). . . . . . . . . . . . 590.3 870.0 696.5
Other liabilities (notes 3, 9 and 11). . . . . 406.0 467.8 554.3
Deferred income taxes (note 5) . . . . . . . . 120.8 148.6 117.5
Commitments and contingent liabilities
(notes 10 and 16) . . . . . . . . . . . . . .
Preference stock, Series B, par value $1.00
per share, subject to redemption (note 14). . 124.7 124.5 124.4
Shareholders' equity (notes 12, 13 and 14):
Common stock, par value $2.50 per share;
authorized 100,000,000 shares; issued
24,816,623 shares . . . . . . . . . . . . . . 62.0 61.8 61.8
Additional paid-in capital . . . . . . . . . . 318.6 274.7 277.7
Retained earnings. . . . . . . . . . . . . . . 2,441.9 2,147.2 2,092.3
2,822.5 2,483.7 2,431.8
Less shares of common stock in treasury,
at cost: 9,332,916 in 1993; 11,284,669 in 1992;
11,504,270 in 1991 . . . . . . . . . . . . . 1,684.5 2,036.9 2,077.0
Total shareholders' equity . . . . . . . . . . 1,138.0 446.8 354.8
$3,418.7 $3,175.0 $2,798.6
See notes to consolidated financial statements.
-24 (Page 2 of 2)-<PAGE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
AND ADDITIONAL PAID-IN CAPITAL
CBS Inc. and subsidiaries
(Dollars in millions, except per share amounts)
Year ended December 31
1993 1992 1991
RETAINED EARNINGS
Balance at beginning of year. . . . . . . . $2,147.2 $2,092.3 $2,143.9
Net income (loss) . . . . . . . . . . . . . 326.2 81.0 (85.8)
Cash dividends:
Common stock (per share - 1993, $1.25;
1992 and 1991, $1.00) . . . . . . . . . (18.8) (13.4) (13.2)
Preference stock, Series B
($10.00 per share) . . . . . . . . . . . (12.5) (12.5) (12.5)
Accretion of preference stock,
Series B (note 14). . . . . . . . . . . . (.2) (.2) (.2)
Reclassification of common stock
subject to redemption (note 13). . . . . . 60.1
Balance at end of year. . . . . . . . . . . $2,441.9 $2,147.2 $2,092.3
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year. . . . . . . . $ 274.7 $ 277.7 $ 260.9
Exercise of stock options and other items . 12.5 1.8 3.3
Conversion of convertible
debentures (note 8) . . . . . . . . . . . 31.4 9.5
Acquisition of Midwest (note 2) . . . . . . (4.8)
Reclassification of common stock
subject to redemption (note 13). . . . . . 4.0
Balance at end of year. . . . . . . . . . . $ 318.6 $ 274.7 $ 277.7
See notes to consolidated financial statements.
-25-<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
CBS Inc. and subsidiaries
(Dollars in millions)
Year ended December 31
1993 1992 1991
Operating activities:
Net income (loss). . . . . . . . . . . . . . . $ 326.2 $ 81.0 $ (85.8)
Adjustments:
Depreciation and amortization. . . . . . . . 71.0 66.7 59.9
Gain on sale of marketable securities, net . (39.6) (28.9) (38.1)
Cumulative effects of changes in
accounting principles. . . . . . . . . . . 81.5
Gain on discontinued operations. . . . . . . (21.2)
Changes in assets and liabilities*:
Accounts receivable. . . . . . . . . . . . . (37.1) 7.8 (2.7)
Program rights, net. . . . . . . . . . . . . (26.0) 23.3 .9
Accounts payable . . . . . . . . . . . . . . (2.3) (18.1) 4.7
Accrual on baseball and football
television contracts . . . . . . . . . . . (242.0) (160.0) 233.0
Recoverable income taxes . . . . . . . . . . 88.3 (9.6) (2.6)
Deferred income taxes. . . . . . . . . . . . (27.8) 79.4 (61.9)
Other, net . . . . . . . . . . . . . . . . . 6.9 21.1 11.6
117.6 144.2 97.8
Investing activities**:
Marketable securities
Gross sales . . . . . . . . . . . . . . . . . 2,521.3 1,495.0 3,536.4
Gross purchases . . . . . . . . . . . . . . . (2,643.5) (1,732.9)(1,975.3)
Liabilities for securities sold under
repurchase agreements . . . . . . . . . . . 66.0 95.5 (66.8)
Capital expenditures . . . . . . . . . . . . . (106.8) (71.5) (64.2)
Major acquisitions . . . . . . . . . . . . . . (160.2)
Discontinued operations. . . . . . . . . . . . 54.2
(163.0) (374.1) 1,484.3
Financing activities**:
Issuance of debt . . . . . . . . . . . . . . . 124.0 422.5
Extinguishment of debt . . . . . . . . . . . . (24.9) (288.0) (5.5)
Dividends to shareholders. . . . . . . . . . . (31.3) (25.9) (25.7)
Repurchases of common stock. . . . . . . . . . (3.0)(2,005.1)
Other, net . . . . . . . . . . . . . . . . . . 5.6 (.3) 3.1
73.4 105.3 (2,033.2)
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . 28.0 (124.6) (451.1)
Cash and cash equivalents at beginning of year. 145.4 270.0 721.1
Cash and cash equivalents at end of year. . . . $ 173.4 $ 145.4 $ 270.0
See notes to consolidated financial statements.
*Excludes effect of major acquisitions and items included in Adjustments.
**Excludes the following noncash items:
a) In 1993 and 1991, the conversion of $389.6 and $9.5, respectively, of
the Company's 5% convertible debentures into common stock (note 8).
b) In 1992, the issuance of $36.8 of the Company's common stock re:
Midwest, and the consolidation of a mortgage obligation of $51.0
re: CBS/MTM Partnership (note 2).
-26-<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Statement of Significant Accounting Policies
Basis of presentation. The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
transactions and balances have been excluded from the consolidated financial
statements. All notes relate to continuing operations unless otherwise
indicated.
Revenue recognition. The Company's practice is to record revenues from
services when performed.
Income taxes. The Company provides deferred income taxes for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities.
Cash equivalents and marketable securities. The Company considers all highly
liquid debt instruments purchased with a maturity of three months or less,
including accrued interest thereon, to be cash equivalents. Marketable
securities include U.S. Treasury notes, money market instruments, tax-exempt
securities and corporate securities. The Company also enters into agreements
to sell and repurchase certain of these securities. Due to the agreements to
repurchase, the sales of these securities are not recorded. Instead, the
liabilities to repurchase securities sold under these agreements are reported
as current liabilities and the investments acquired with the funds received
are included in cash equivalents and/or short-term marketable securities.
Marketable securities managed for long-term yield and not required for
working capital are classified as long-term investments and are carried at
cost. At December 31, 1993, these long-term investments included $94.0
million in a trust fund to implement the Company's agreement with the New
York City Industrial Development Agency. (Under this agreement, the Company
is required to invest in production facilities and develop new broadcasting
and production technologies in New York City in return for certain tax
incentives and low-cost energy.) Other marketable securities are classified
as current assets and are carried at the aggregate of the lower of cost or
market value. Marketable securities, in current assets, also included
accrued interest on short-term and long-term marketable securities at
December 31, 1993, 1992 and 1991 of $20.4 million, $20.1 million and $19.3
million, respectively.
The market values of these securities were as follows (in millions):
December 31
1993 1992 1991
Marketable securities (current) . . . . . $405.0 $317.4 $198.7
Marketable securities (noncurrent). . . . 878.5 811.2 660.3
-27 (Page 1 of 2)-
As of December 31, 1993, securities sold and the corresponding liabilities
(both including accrued interest) under repurchase agreements were as
follows (in millions):
Maturity Carrying Market Repurchase
Term Amount Value Liabilities
U.S. Treasury notes up to 30 days $281.6 $302.4 $301.4
U.S. Government agency notes up to 30 days 73.0 73.7 73.3
$354.6 $376.1 $374.7
The loan rates on the repurchase liabilities varied between 2.75% and 3.32%
for U.S. Treasury notes and between 3.30% and 3.35% for U.S. Government
agency notes.
Program rights. Costs incurred in connection with the production of, or the
purchase of rights to, programs to be broadcast within one year are
classified as current assets while costs of those programs to be broadcast
subsequently are considered noncurrent. Program costs are charged to expense
as the respective programs are broadcast.
-27 (Page 2 of 2)-<PAGE>
1. Statement of Significant Accounting Policies (continued)
Property, plant and equipment. Land, buildings, machinery and equipment are
stated at cost. Major improvements to existing plant and equipment are
capitalized. Expenditures for maintenance and repairs which do not extend
the life of the assets are charged to expense as incurred. The cost of
properties retired or otherwise disposed of and any related accumulated
depreciation are generally removed from the accounts and the resulting gain
or loss is reflected in income currently. Depreciation is computed using
principally the straight-line method over the estimated useful lives of the
assets. Depreciation expense, in millions, for 1993, 1992 and 1991 was $63.1,
$58.9 and $53.9, respectively.
Goodwill. The goodwill at the date of acquisition of net assets of
businesses acquired is amortized over 40 years on a straight-line basis. The
increase in 1992 was attributable primarily to the acquisition of Midwest
(note 2).
Other. In 1992, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (note 11); SFAS No. 109,
"Accounting for Income Taxes"; and SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." In accordance with the provisions of SFAS No. 112,
the Company recorded a one-time pretax charge of $9.9 million for severance
and long-term disability-related benefits.
These adoptions resulted in a one-time post-tax charge to net income as
follows:
(In Millions) Per Share
Postretirement benefits other than pensions $(76.1) $(4.94)
Postemployment benefits . . . . . . . . (6.1) (.39)
Income taxes. . . . . . . . . . . . . . .7 .05
$(81.5) $(5.28)
The ongoing costs related to these adoptions do not have a material effect on
continuing operations.
On January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." It 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.
-28 (Page 1 of 2)-<PAGE>
2. Business Acquisitions (Dollars in millions, except per share amounts)
In February 1992, the Company acquired substantially all of the assets of
Midwest Communications, Inc. (Midwest), including a television station (with
two satellite stations) located in Minneapolis, Minnesota (WCCO-TV); a
television station (with one satellite station) located in Green Bay,
Wisconsin (WFRV-TV); two radio stations located in Minneapolis, Minnesota
(WCCO-AM and WLTE-FM); and Midwest Cable & Satellite, which operates Midwest
Sports Channel, a supplier of regional sports programming. This transaction
was consummated at a price of $177.0 through the issuance of $36.8 of the
Company's common stock, valued at an exchange price of $160 per share (the
market value of the Company's common stock on the closing date was $144 per
share), and the assumption and immediate pay-down of $140.2 of Midwest's debt
and other liabilities.
In March 1992, the Company acquired for $27.0 the 50 percent interest of
MTM Studios, Ltd. in the CBS/MTM Partnership, which operated television and
film production facilities in Los Angeles, California. The acquisition of
this interest also included the assumption of MTM's partnership mortgage
indebtedness. The Company is the sole owner of these television and film
production facilities and is obligated for the entire mortgage indebtedness
(note 8).
These acquisitions were accounted for by the purchase method and the
results of their operations from the respective dates of acquisition are
included in the accompanying financial statements. Had the acquisitions
occurred on January 1, 1991, consolidated results of operations for 1992 and
1991 would not have been materially different.
-28 (Page 2 of 2)-<PAGE>
3. Major League Baseball and National Football League Television Contracts
(Dollars in millions)
In 1991, the Company recorded a $322.0 pretax provision, reflected in cost of
sales, for losses over the remaining lives of its Major League Baseball and
National Football League television contracts. This provision was in
addition to a $282.0 pretax loss on the baseball contract recorded in 1990
and reflected the severely depressed condition of the television sports
marketplace. The remaining balances of the loss accruals, recorded to reduce
these contracts to their net realizable value, were as follows:
December 31
1993 1992 1991
Included in:
Other current liabilities . . $ 21.0 $242.0 $160.0
Other liabilities . . . . . . 21.0 263.0
$ 21.0 $263.0 $423.0
-29 (Page 1 of 2)-<PAGE>
4. Interest and Other Income, net (Dollars in millions)
Interest income on investments, net, consisted of the following:
Year ended December 31
1993 1992 1991
Interest income. . . . . . . . . . . . . . . .$ 75.6 $ 82.1 $103.6
Dividend income. . . . . . . . . . . . . . . . 6.6 8.7 10.4
Interest expense on repurchase agreements. . . (11.4) (12.1) (12.0)
Gain on sale of marketable securities, net:
Equity securities. . . . . . . . . . . . . . 8.0 10.5 2.1
Other securities . . . . . . . . . . . . . . 31.6 18.4 36.0
$110.4 $107.6 $140.1
The cost of marketable securities sold was determined by specific
identification.
As of December 31, 1993, gross unrealized gains and gross unrealized losses
on equity securities were $18.1 and $.2, respectively. The aggregate cost and
market value of the Company's equity securities, all of which were noncurrent,
were as follows:
December 31
1993 1992 1991
Aggregate cost . . . . . . . . . . . . . . . $74.2 $70.7 $78.1
Aggregate market value . . . . . . . . . . . 92.1 89.0 92.8
Interest expense on debt, net, was net of amounts capitalized in 1993, 1992 and
1991 of $6.4, $10.2 and $8.4, respectively, as part of the cost of investments
in property, plant and equipment, made-for-television movies and mini-series.
Interest paid on debt in 1993, 1992 and 1991 was $59.6, $76.3 and $56.3,
respectively.
Other income, net, in 1993, included a pretax gain of $29.5 from a legal
settlement with Viacom International Inc., a portion of which constituted
payment for rights granted to Viacom to distribute in the United States and
abroad certain television programs owned by the Company, and a pretax gain of
$12.4 from insurance settlements for hurricane damage to the Company's
television station in Miami. It also included other miscellaneous items
of income and expense.
-29 (Page 2 of 2)-<PAGE>
5. Income Taxes (Dollars in millions)
Income tax expense (benefit) consisted of the following:
Year ended December 31
1993 1992 1991
Federal:
Current . . . . . . . . . . . . . . . . . . $ 60.0 $ 5.2 $ 14.9
Deferred* . . . . . . . . . . . . . . . . . 54.3 40.4 (81.2)
Other:
Current . . . . . . . . . . . . . . . . . . 9.3 1.8 2.9
Deferred* . . . . . . . . . . . . . . . . . 29.5 17.1 (16.5)
$153.1 $64.5 $(79.9)
*Deferred taxes:
Accrual on baseball and football
television contracts. . . . . . . . . . $ 97.3 $62.9 $(91.6)
Federal tax audit settlement. . . . . . . . (23.0) (17.9)
Federal tax law changes . . . . . . . . . . (11.2)
Write-down of marketable securities . . . . 6.6 11.9 1.4
Amortization of intangibles . . . . . . . . (1.3) 13.9 .4
Other state and local taxes . . . . . . . . 7.9 11.9 (11.9)
Other, net. . . . . . . . . . . . . . . . . 7.5 (25.2) 4.0
$ 83.8 $57.5 $(97.7)
Income taxes of $94.2 were paid in 1993. In 1992 and 1991, there were net
income tax refunds of $2.6 and $2.4, respectively. In 1991, the Company's loss
from continuing operations before income taxes reflected significant provisions
for future losses over the remaining lives of its Major League Baseball and
National Football League television contracts, as explained in note 3. The tax
benefits attributable to these charges were included in deferred taxes and are
realized as the transactions provided for become taxable events.
Reconciliations between the statutory Federal income tax expense (benefit)
rate and the Company's effective income tax expense (benefit) rate as a
percentage of income (loss) from continuing operations before income taxes were
as follows:
Year ended December 31
1993 1992 1991
Statutory Federal income tax expense
(benefit) rate. . . . . . . . . . . . . . . 35.1% 34.1% (34.1)%
Federal tax audit settlement. . . . . . . . (4.8) (7.9)
Federal tax law changes . . . . . . . . . . (2.3)
Income from tax preference securities . . . (1.9) (4.2) (5.6)
State and local taxes . . . . . . . . . . . 5.2 5.3 (5.2)
Other, net. . . . . . . . . . . . . . . . . .6 1.1 .1
Effective income tax expense (benefit) rate. 31.9% 28.4% (44.8)%
-30-<PAGE>
5. Income Taxes (continued)
Deferred tax assets and liabilities consisted of the following*:
December 31
1993 1992
Deferred tax assets:
Accrual on baseball and football
television contracts. . . . . . . . . . . . . . $ 9.0 $110.2
Postretirement benefits other than pensions. . . 67.5 65.0
Employee benefits. . . . . . . . . . . . . . . . 21.6 19.6
Other. . . . . . . . . . . . . . . . . . . . . . 76.3 50.7
$174.4 $245.5
Deferred tax liabilities:
Property, plant and equipment. . . . . . . . . . $ 89.6 $ 90.0
Safe harbor leases . . . . . . . . . . . . . . . 97.6 96.5
Other. . . . . . . . . . . . . . . . . . . . . . 79.2 90.5
$266.4 $277.0
*Recoverable income taxes, reflected in the balance sheet at December 31, 1993
and 1992, include current deferred tax assets of $41.2 and $147.1,
respectively, reduced by current deferred tax liabilities of $12.4 and $30.0,
respectively. The remaining deferred tax liabilities, net of deferred tax
assets, were reflected in the balance sheet as deferred income taxes.
-31 (Page 1 of 2)-<PAGE>
6. Earnings Per Share Data (In thousands)
The data used in the computation of earnings per share were as follows:
Year ended December 31
1993 1992 1991
Earnings:
Income (loss) from continuing operations . $326,188 $162,479 $(98,634)
Add post-tax interest on convertible
debentures*. . . . . . . . . . . . . . . 3,288 12,259 12,277
Less dividends on preference stock . . . . (12,688) (12,688) (12,688)
Income (loss) from continuing operations
applicable to common shares. . . . . . . 316,788 162,050 (99,045)
Discontinued operations. . . . . . . . . . 12,871
Cumulative effects of changes in
accounting principles. . . . . . . . . . (81,472)
Net income (loss) applicable to
common shares. . . . . . . . . . . . . . $316,788 $ 80,578 $(86,174)
Shares:
Weighted average shares outstanding. . . . 14,797 13,423 14,217
Add common stock equivalents:
Convertible debentures*. . . . . . . . . 649 1,953 1,953
Other. . . . . . . . . . . . . . . . . . 92 40 35
Adjusted weighted average
shares outstanding. . . . . . . . . . . . 15,538 15,416 16,205
*The debentures were converted in May 1993. Conversion was assumed for
all prior periods.
In 1993, fully diluted earnings per share was considered equal to
primary earnings per share because the addition of potentially dilutive
securities that were not common stock equivalents would have resulted
in immaterial dilution. In 1992 and 1991, the fully diluted earnings
per share calculation produced an antidilutive effect.
- 31 (Page 2 of 2)-<PAGE>
7. Discontinued Operations
As a result of the final settlement of all disputed items in arbitration,
the Company recorded an additional gain in 1991 related to the 1988 sale
of its Records Group. Income tax expense applicable to this additional
gain was $8.3 million.
-32 (Page 1 of 2)-<PAGE>
8. Long-Term Debt (Dollars in millions)
Long-term debt consisted of the following:
December 31
1993 1992 1991
7 5/8% senior notes due 2002. . . . . . . . . $150.0 $150.0
7 3/4% senior notes due 1999. . . . . . . . . 125.0 125.0
8 7/8% senior debentures due 2022 . . . . . . 125.0 125.0
7 1/8% senior notes due 2023. . . . . . . . . 100.0
9.03% mortgage due 1998 . . . . . . . . . . . 27.0 51.0
5% convertible debentures due 2002. . . . . . 390.5 $390.5
10 7/8% senior notes due 1995 . . . . . . . . 263.0
7.85% debentures due 2001 . . . . . . . . . . 25.0
Capital lease obligations . . . . . . . . . . 19.4 20.4 21.5
Other debt. . . . . . . . . . . . . . . . . . 44.8 21.1
Reclassified to current debt. . . . . . . . . (.9) (13.0) (3.5)
$590.3 $870.0 $696.5
During 1993, 1992 and 1991, debt was repurchased, redeemed or converted as
follows:
Year ended December 31
1993 1992 1991
5% convertible debentures due 2002. . . . . . $390.5 $ 9.5
9.03% mortgage due 1998 . . . . . . . . . . . 24.0
10 7/8% senior notes due 1995 . . . . . . . . $263.0 3.0
7.85% debentures due 2001 . . . . . . . . . . 25.0 2.5
$414.5 $288.0 $15.0
In May 1993, the Company converted $389.6 of its 5% convertible debentures
into 1,947,975 shares of its common stock, issued from its treasury shares
(note 12). The difference between the amount of debt converted, net of
unamortized issue costs, and the average cost of the treasury shares issued
was credited to additional paid-in-capital. The remaining debentures of $.9
were redeemed.
The principal terms of the various long-term issues are as follows:
The 7 5/8% senior notes, issued in connection with the acquisition of
Midwest (note 2), are due January 1, 2002 and may not be redeemed prior to
maturity.
The 7 3/4% senior notes are due June 1, 1999 and may not be redeemed
prior to maturity.
The 8 7/8% senior debentures are due June 1, 2022 and may not be
redeemed prior to June 1, 2002. On and after that date they may be redeemed,
at the option of the Company, as a whole at any time, or in part from time to
time, at specified redemption prices.
The net proceeds from the issuance of the 7 3/4% senior notes due June
1, 1999 and the 8 7/8% senior debentures due June 1, 2022 were used to retire
the 10 7/8% senior notes due August 1, 1995.
-32 (Page 2 of 2)-<PAGE>
8. Long-Term Debt (continued)
The 7 1/8% senior notes are due on November 1, 2023 and may not be
redeemed prior to maturity. The proceeds from the issuance of these debt
securities were used to purchase New York City Industrial Development Agency
(IDA) bonds, which were issued by the IDA to establish a trust fund to
implement the Company's agreement with the IDA. Under this agreement, the
Company is required to invest in production facilities and develop new
broadcasting and production technologies in New York City in return for
certain tax incentives and low-cost energy.
The 9.03% mortgage, which was recorded as a result of the Company's
acquisition of the remaining 50 percent interest in the CBS/MTM Partnership
(note 2), is due $12.0 on July 15, 1996 and $15.0 on July 15, 1998.
The aggregate amounts of maturities of the Company's long-term debt for
each of the five years subsequent to December 31, 1993 are as follows:
1994. . . . . . . . . . . . . . . $ .9
1995. . . . . . . . . . . . . . . .6
1996. . . . . . . . . . . . . . . 12.7
1997. . . . . . . . . . . . . . . 23.3
1998. . . . . . . . . . . . . . . 40.2
To meet the disclosure requirements of SFAS No. 107, "Disclosures about Fair
Value of Financial Instruments," the Company estimated that, based primarily
on quoted market prices for its traded issues, the fair value of its long-
term debt at December 31, 1993 exceeded its book value by approximately
$38.0. It is anticipated, however, that the debt ultimately will be redeemed
at amounts approximating its book value.
-33 (Page 1 of 3)-<PAGE>
9. Environmental Liabilities
The Company continually evaluates its environmental liabilities and has
determined that, as of December 31, 1993, 1992, and 1991, its recorded
liabilities were adequate to cover asserted and unasserted claims arising
from the operations of its discontinued businesses. These liabilities were
not reduced by any potential recoveries from insurance companies or others.
There are no significant environmental claims known to the Company arising
from its continuing operations.
-33 (Page 2 of 3)-<PAGE>
10. Commitments and Contingent Liabilities (Dollars in millions)
The Company routinely enters 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 ending
no later than September 1999. As of December 31, 1993, the Company was
committed to make payments of $1,451.5 under such broadcasting contracts.
Rent expense, excluding payments of real estate taxes, insurance and
other expenses required under some leases, amounted to $50.3, $53.6 and $57.8
in 1993, 1992 and 1991, respectively. At December 31, 1993, minimum future
rental payments and receipts under noncancelable leases (including capital
leases and subleases, which were not significant) were as follows:
Payments Receipts
1994. . . . . . . . . . . $18.4 $ 10.1
1995. . . . . . . . . . . 13.3 9.7
1996. . . . . . . . . . . 11.2 9.6
1997. . . . . . . . . . . 8.1 9.5
1998. . . . . . . . . . . 6.4 9.4
1999 and thereafter . . . 30.0 58.7
$87.4 $107.0
The Company did not have any significant concentrations of credit risk at
December 31, 1993.
-33 (Page 3 of 3)-<PAGE>
11. Retirement Plans (Dollars in millions)
The Company has pension plans covering substantially all of its employees.
Benefits are based on formulas that consider years of service and average
compensation. The Company's general policy is to fund pension costs accrued
over the lives of the plans to the extent the contributions will be tax-
deductible. At December 31, 1993, the aggregate market value of all plan
assets exceeded the projected benefit obligations of all plans by $91.3.
This net amount consisted of $145.8 related to plans whose assets exceeded
their projected benefit obligations and $54.5 related to plans whose
projected benefit obligations exceeded their assets. Those plans whose
projected benefit obligations exceeded their assets are excluded from
coverage under Section 4021(b) of the Employee Retirement Income Security Act
of 1974 (ERISA). The assets of the funded plans consisted primarily of
interest-bearing securities.
The net pension costs for 1993, 1992 and 1991 were as follows:
Year ended December 31
1993 1992 1991
Service cost . . . . . . . . . . . . $16.8 $ 15.9 $ 15.4
Interest cost. . . . . . . . . . . . 41.6 39.3 38.4
Net amortization and deferral. . . . (2.6) (25.1) 29.4
55.8 30.1 83.2
Less return on plan assets . . . . . 55.5 33.8 84.2
Net pension cost (credit). . . . . . $ .3 $ (3.7) $ (1.0)
Reconciliations of the funded status of these plans were as follows:
December 31
1993 1992 1991
Plans whose assets exceed accumulated
benefits
Accumulated pension benefit obligation:
Vested . . . . . . . . . . . . . . . . . $391.7 $352.5 $336.0
Nonvested. . . . . . . . . . . . . . . . 20.4 18.0 22.3
$412.1 $370.5 $358.3
Market value of plan assets. . . . . . . . $669.1 $637.4 $636.5
Less projected pension benefit
obligation . . . . . . . . . . . . . . . 523.3 473.2 455.0
Assets exceed projected benefit
obligation . . . . . . . . . . . . . . . 145.8 164.2 181.5
Less items not yet recognized in net
periodic pension cost:
Unrecognized net asset . . . . . . . . . 84.3 94.6 105.3
Unrecognized net gain. . . . . . . . . . 31.1 55.6 73.0
Unrecognized prior service cost. . . . . 1.1 (10.0) (10.8)
Pension asset excluding unrecognized
items*. . . . . . . . . . . . . . . . . $ 29.3 $ 24.0 $ 14.0
* Amounts recognized in the Consolidated Balance Sheets. Unrecognized items,
in the aggregate, will be recognized in future years as a net reduction in
pension expense and pension liability under the provisions of SFAS No. 87,
"Employers' Accounting for Pensions."
-34-<PAGE>
11. Retirement Plans (continued)
December 31
1993 1992 1991
Plans whose accumulated benefits exceed assets
Accumulated pension benefit obligation:
Vested . . . . . . . . . . . . . . . . . $ 26.3 $ 20.0 $ 17.4
Nonvested. . . . . . . . . . . . . . . . 2.9 2.3 2.3
$ 29.2 $ 22.3 $ 19.7
Market value of plan assets. . . . . . . . $ - $ - $ -
Less projected pension benefit
obligation . . . . . . . . . . . . . . 54.5 34.4 31.0
Assets (are less than) projected benefit
obligation. . . . . . . . . . . . . . . (54.5) (34.4) (31.0)
Additional minimum (liability) . . . . . . (.6) (.6) (.9)
(55.1) (35.0) (31.9)
Less items not yet recognized in net
periodic pension cost:
Unrecognized net (liability). . . . . . (5.1) (5.7) (6.4)
Unrecognized net (loss) . . . . . . . . (8.7) (1.9) (.9)
Unrecognized prior service cost . . . . (10.0) (.3) (.5)
Pension (liability) excluding
unrecognized items* . . . . . . . . . $(31.3) $(27.1) $(24.1)
*Amounts recognized in the Consolidated Balance Sheets. Unrecognized items,
in the aggregate, will be recognized in future years as a net increase in
pension expense and pension liability under the provisions of SFAS No. 87,
"Employers' Accounting for Pensions."
The Company also participates in various multi-employer union-administered
defined benefit pension plans that cover certain broadcast employees. Pension
expense under these plans for 1993, 1992 and 1991 was $10.2, $9.2 and $7.9,
respectively.
In addition to providing pension benefits, the Company provides medical
and life insurance benefits for its retired employees. Substantially all of
the Company's nonunion employees may become eligible for these benefits when
they retire from the Company. Also included are those union employees covered
by a collective bargaining agreement that provides for such benefits. During
1991, the Company made certain revisions to its retiree medical insurance
program. Effective January 1, 1992, most current retirees and all future
retirees were required to contribute to the cost of this coverage, and a
maximum outlay by the Company for this cost was established. In addition, all
retirees whose employment started after March 31, 1991 may maintain their
coverage only if they pay its full cost.
In 1992, the Company implemented, on the immediate recognition basis,
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," and recorded a transition obligation that resulted in a charge to
net income of $76.1, net of an income tax benefit of $49.3.
-35-<PAGE>
11. Retirement Plans (continued)
Under the new guidelines, the costs of the benefits are accrued over a period
ending with the date that the qualified employees become eligible to retire,
and future inflation of medical costs is considered in the determination of
these costs. As a result, the costs of providing these benefits were as
follows:
Year ended December 31
1993 1992
Service cost . . . . . . . . . . . . . . . . $ 1.9 $ 1.9
Interest cost. . . . . . . . . . . . . . . . 14.1 14.6
Net amortization and deferral. . . . . . . . 1.9
17.9 16.5
Less return on plan assets . . . . . . . . . 5.5 3.4
Net periodic postretirement benefit cost . . $12.4 $13.1
Prior to the implementation of SFAS No. 106, the Company's practice was to
determine the costs of these benefits actuarially, without considering future
inflation of medical costs, and to accrue these costs over the working lives
of those employees expected to qualify for the benefits. The costs of
providing these benefits under this method in 1991 were $5.1.
The Company's general policy is to fund accrued postretirement medical
and life insurance costs to the extent the contributions will be tax-
deductible. The funded assets consisted primarily of interest-bearing
securities. The funded status of the postretirement medical and life
insurance plans were as follows:
December 31
1993 1992
Accumulated postretirement benefit
obligation (APBO):
Retirees. . . . . . . . . . . . . . . . . . . $141.1 $152.6
Fully eligible active plan participants . . . 17.1 16.0
Other active plan participants. . . . . . . . 34.1 30.2
192.3 198.8
Less market value of plan assets . . . . . . . 52.0 46.4
Assets are less than accumulated
postretirement benefit obligation . . . . . . 140.3 152.4
Add unrecognized net gain. . . . . . . . . . . 16.9
Postretirement benefit liability recognized
in the balance sheet. . . . . . . . . . . . . $157.2 $152.4
The calculations for the postretirement medical and life insurance plans were
based on an actuarial assumption of a medical inflation rate of 14.0 percent
in 1993, grading down to 7.0 percent in the year 2000. The effect of a one-
percentage-point annual increase in the assumed medical inflation rates would
increase the APBO by approximately $1.7; the annual service cost would not be
materially affected.
-36 (Page 1 of 2)-
The actuarial assumptions used in computing the funded status of the
pension plans and the postretirement medical and life insurance plans were as
follows:
1993 1992 1991
Weighted average discount rate . . . . 7.5% 8.0% 8.0%
Rate of compensation increase. . . . . 6.0% 6.5% 6.5%
Weighted average long-term rate
of return on plan assets . . . . . . 8.0% 8.0% 8.0%
All costs in this note relate to the covered employees of both the
continuing and discontinued operations of the Company.
-36 (Page 2 of 2)-<PAGE>
12. Common Stock (Dollars in millions, except per share amounts)
As a result of a tender offer in December 1990, the Company purchased 10.5
million of its shares, at $190 per share, in February 1991 and funded the
purchase from available cash and the sale of marketable securities.
In 1993, the Company converted $389.6 of its 5% convertible debentures
into 1,947,975 shares of its common stock, issued from its treasury shares
(note 8).
Changes in common stock during 1991, 1992 and 1993 were as follows:
Issued Treasury
Shares Amount Shares Amount
(Shares in thousands)
Balance - December 31, 1990 . . . . . . . 24,644 $60.5 960 $ 72.6
Conversions of preference stock . . . . . (4) (.3)
Issuances under employee benefit plans. . 31 .1 (8) (.4)
Repurchases of common stock . . . . . . . 10,556 2,005.1
Conversions of convertible debentures . . 47 .1
Reclassification of common stock subject
to redemption (note 13). . . . . . . . . 1.1
Balance - December 31, 1991 . . . . . . . 24,722 61.8 11,504 2,077.0
Conversions of preference stock . . . . . (7) (1.3)
Issuances under employee benefit plans. . 17 (4) (.2)
Repurchases of common stock . . . . . . . 22 3.0
Acquisition of Midwest (note 2) . . . . . (230) (41.6)
Balance - December 31, 1992 . . . . . . . 24,739 61.8 11,285 2,036.9
Issuances under employee benefit plans. . 78 .2 (4) (.2)
Conversions of convertible debentures . . (1,948) (352.2)
Balance - December 31, 1993 . . . . . . . 24,817 $62.0 9,333 $1,684.5
See notes 8 and 15 for additional information about the Company's common
stock.
-37 (Page 1 of 2)-<PAGE>
13. Common Stock Subject to Redemption
In July 1985, the Company offered to repurchase 6.365 million shares of its
common stock. In consideration for not tendering their shares pursuant to the
offer, William S. Paley, certain members of his family and other related
entities received the right to sell to the Company a maximum of 434,489
shares at $150 per share. Certain of these rights were relinquished in
connection with the Company's December 1990 tender offer (note 12) and the
remaining rights expired in October 1991. The common stock subject to
redemption was therefore reclassified to the appropriate components of
shareholders' equity, as indicated in the Consolidated Statements of Retained
Earnings and Additional Paid-In Capital and in note 12.
-37 (Page 2 of 2)-<PAGE>
14. Preference Stock
The Company's certificate of incorporation provides authority for the
issuance of 6.0 million shares of preference stock, $1 par value.
In 1985, the Company issued 1.25 million shares of preference stock,
specifically authorized and designated as $10 Convertible Series B preference
stock. The net proceeds of the issuance was $123.1 million. The issue has
an aggregate liquidation preference of $125.0 million. The difference
between the redemption value and the net proceeds from the issue is being
amortized to retained earnings over 10 years.
Each share is entitled to receive cumulative cash dividends at the rate
of $10 per year, payable in equal quarterly installments, is subject to
mandatory redemption on August 1, 1995, and is convertible, at the option of
the holder, into .6915 of a share of common stock. At December 31, 1993
there were 1.25 million shares of Series B preference stock outstanding, for
which there were 864,375 common shares reserved for issuance upon conversion.
Upon redemption, or in the event of voluntary or involuntary liquidation,
each shareholder will be entitled to $l00 per share plus any accrued or
unpaid dividends.
The terms of the Series B preference stock provide that the Company may
not take any action that would result in the Company's ratio of total debt to
total capitalization exceeding .75 to 1. As of December 31, 1993, this ratio
was .32 to 1.
-38 (Page 1 of 2)-<PAGE>
15. Stock Rights Plan
The Company's 1983 Stock Rights Plan (as amended) has been approved by the
Company's shareholders. It is administered by the Compensation Committee of
the Board of Directors (the "Committee"), consisting entirely of outside
directors, and under the terms of the plan certain key employees (including
officers, who may also be directors) of the Company may be granted
nonqualified stock options at an exercise price not less than 100 percent of
the closing market price of a share of common stock on the date of the grant.
These are ten-year options that become exercisable in installments of 25
percent per year, with the first installment commencing one year following
the date of grant. The plan also provides that option grants to any one
participant in a calendar year may not exceed 15,000 underlying shares of
common stock.
Prior to May 7, 1991, options granted to officers subject to the "short
swing" profit provisions of Section 16 of the Securities and Exchange Act of
1934 (as amended) were coupled with alternative stock appreciation rights
(SAR's) which enabled such holder to receive in cash or shares the excess of
the common stock price on the date of exercise over the option price (the
"spread"). Due to the manner in which the grant of an option to a person
subject to the provisions of Section 16 is now treated by the Securities and
Exchange Commission, the Committee has taken action to provide that options
granted after May 7, 1991 would not be coupled with SAR's.
In November 1985, the Plan was amended to provide that then outstanding
options not coupled with SAR's would be subject to limited SAR's. (Such
limited SAR's provided for treatment of the spread similar to that of
alternative SAR's and became exercisable only if certain defined changes in
control or concentration of equity ownership of the Company occurred.) The
limited SAR feature was not extended to any option grants subsequent to 1986.
The Plan provides that the Committee can authorize dividend share
credits on outstanding options and on previously issued dividend share
credits. Such credits are recorded in shares of common stock based on cash
dividends paid to holders of common stock. In 1986, the Committee
permanently suspended granting dividend share credits.
The Plan provides that a maximum of 1.5 million shares in the aggregate
are available for option grants and dividend share credits. Options granted
to purchase 171,376 shares of common stock were exercisable at December 31,
1993. The number of shares available for option grants and dividend share
credits, should the Committee choose to reintroduce the granting of such
credits, was 369,200 shares, 550,745 shares and 634,945 shares at December
31, 1993, 1992 and 1991, respectively. To record the estimated cost of the
Plan, in 1993 and 1992, $6.1 and $.7 million, respectively, were charged to
income and, in 1991, $.5 million was credited to income (to adjust prior
accruals).
The Plan also provides that, absent shareholder approval, options may
not be granted after 2001, options for more than 15,000 underlying shares may
not be granted to any one participant in any calendar year, and options for
an aggregate of 1.5 million underlying shares may not be granted.
-38 (Page 2 of 2)-<PAGE>
15. Stock Rights Plan (continued)
The following table summarizes the activity under the Plan during the years
ended December 31, 1991, 1992 and 1993:
Options
With
Stock Appreciation
Rights Other*
Dividend
Common Common Share
Shares Exercise Price Shares Exercise Price Credits
Outstanding -
December 31, 1990 68,050 $72 -$191 1/2 219,618 $56 1/4-$191 1/2 3,201
Granted. . . 85,600 159 7/8
Exercised. . ( 700) 118 3/4 (30,781) 56 1/4- 163 5/8 (1,678)
Cancelled. . (4,500) 163 5/8- 191 1/2 (18,450) 159 7/8- 191 1/2 _____
Outstanding -
December 31, 1991 62,850 72 - 191 1/2 255,987 56 1/4- 191 1/2 1,523
Granted. . . 91,600 191 1/2
Exercised. . (2,000) 118 3/4- 163 5/8 (16,762) 56 1/4- 191 1/2 (325)
Cancelled. . ______ (8,400) 159 7/8- 191 1/2
Outstanding -
December 31, 1992 60,850 72 - 191 1/2 322,425 56 1/4- 191 1/2 1,198
Granted. . . 93,000 237 1/8
Exercised. . (20,500) 72 - 191 1/2 (77,550) 56 1/4- 191 1/2 (883)
Cancelled. . ______ (5,750) 159 7/8- 237 1/8 _____
Outstanding -
December 31, 1993 40,350 $163 5/8-$191 1/2 332,125 $76 3/4-$237 1/8 315
*All grants outstanding which were issued prior to January 1, 1987 contain
limited stock appreciation rights as explained above. At December 31, 1993,
there were 12,450 options of this type outstanding with exercise prices
between $76 3/4 and $136 5/8.
-39 (Page 1 of 2)-<PAGE>
16. Litigation
Various 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. The Company believes that the liabilities, if
any, which may result from such litigation, proceedings or claims are not
reasonably likely to have a material adverse effect on its consolidated
financial position, results of operations, or liquidity.
-39 (Page 2 of 2)-<PAGE>
OTHER FINANCIAL INFORMATION
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
(Dollars in millions, except per share amounts)
The quarterly results of operations for the years ended December 31, 1993 and
1992 were as follows:
1993 1992 1993 1992
Net Sales Operating Income
1st Quarter . . . . . . . $ 878.7 $1,082.6 $ 62.5 $ 17.6
2nd Quarter . . . . . . . 835.7 779.9 153.2 83.7
3rd Quarter . . . . . . . 752.9 672.2 132.8 39.0
4th Quarter . . . . . . . 1,042.8 968.3 62.7 39.8
$3,510.1 $3,503.0 $411.2 $180.1
Income from
Continuing Operations Net Income (Loss)
1st Quarter . . . . . . . $ 54.2 $ 17.5 $ 54.2 $(64.0)
2nd Quarter . . . . . . . 107.4 69.0 107.4 69.0
3rd Quarter . . . . . . . 118.2 42.7 118.2 42.7
4th Quarter . . . . . . . 46.4 33.3 46.4 33.3
$ 326.2 $162.5 $326.2 $ 81.0
Income from
Continuing Operations Net Income (Loss)
Per Common Share Per Common Share
1st Quarter . . . . . . . $ 3.50 $ 1.14 $ 3.50 $(4.18)
2nd Quarter . . . . . . . 6.73 4.46 6.73 4.46
3rd Quarter . . . . . . . 7.39 2.76 7.39 2.76
4th Quarter . . . . . . . 2.77 2.14 2.77 2.14
$20.39 $10.51 $20.39 $ 5.23
The first quarter of 1992 included a net charge of $81.5 ($5.32 per share)
to net income for the adoption of SFAS No. 106, SFAS No. 109 and SFAS No. 112
(note 1).
Quarterly and full year per share amounts are calculated independently
based on the adjusted weighted average number of outstanding common shares
applicable to each period. In 1992, because of the issuance of shares in
connection with the acquisition of Midwest (note 2), the sum of the four
quarters per common share does not equal the full year.
-40-<PAGE>
SHAREHOLDER REFERENCE INFORMATION
Stock Data
The principal market for CBS common stock is the New York Stock Exchange. It
is also traded on the Pacific Stock Exchange. There were 11,629 holders of
record of CBS common stock as of December 31, 1993. The following table
indicates the quarterly high and low prices for CBS common stock as reported
in the quotations of consolidated trading for issues on the New York Stock
Exchange during the past two years:
1993 1992 1993 1992
High Low
1st Quarter . . . . . . . $217 3/4 $176 7/8 $186 1/8 $136
2nd Quarter . . . . . . . 250 1/2 209 7/8 214 164 5/8
3rd Quarter . . . . . . . 277 7/8 217 228 182 1/4
4th Quarter . . . . . . . 326 1/2 220 1/2 268 5/8 176
Dividends
Dividends on CBS common stock were paid quarterly at $.25 per share in 1992 and
for the first three quarters of 1993, and at $.50 per share for the fourth
quarter of 1993. In 1993 and 1992, dividends were paid quarterly at $2.50 per
share on CBS Series B preference stock.
Transfer Agent and Registrar Independent Certified Public Accountants
First Chicago Trust Company Coopers & Lybrand
of New York 1301 Avenue of the Americas
P.O. Box 2500 New York, New York 10019
Jersey City, New Jersey 07303-2500
Annual Meeting
The 1994 annual meeting of shareholders of CBS Inc. will be held at 11 A.M.,
Wednesday, May 11, 1994, at The Museum of Modern Art, 11 West 53 Street, New
York, New York.
Form 10-K Annual Report
The Form 10-K Annual Report for the Company's 1993 fiscal year, filed with the
Securities and Exchange Commission, contains certain financial information and,
when appropriate, other matters concerning the Company which are required to be
reported to the SEC. Shareholders who wish a copy of this report may obtain
one, without charge, upon request to the CBS Shareholder Relations Department,
51 West 52 Street, New York, New York 10019.
-41-<PAGE>
Schedule I
(Page 1 of 4)
CBS INC. and SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
As of December 31, 1993
(In Thousands)
____________________
Col. A Col. B
Number of
Shares or
Units - Principal
Name of Issuer and Amount of
Title of Each Issue Bonds and Notes
U.S. Government and
its Agencies $122,430
States and their Agencies 2,140
Corporations
Bonds:
Time Warner 23,985
Other 52,656
Money Markets:
Bank of America 18,000
Other 60,478
Asset Backed Securities 41,880
Notes 41,300
Other 36,250
-42 (Page 1 of 2)-<PAGE>
Schedule I
(Page 2 of 4)
CBS INC. and SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
As of December 31, 1993
(In Thousands)
____________________
Col. A Col. C Col. D Col. E
Amount at Which
Each Portfolio of
Equity Security
Issues and Each
Market Value of Other Security
Name of Issuer and Cost of Each Issue at Issue is Carried in
Title of Each Issue Each Issue Balance Sheet Date the Balance Sheet
U.S. Government and
its Agencies $121,998 $123,715 $121,998
States and their Agencies 2,140 2,140 2,140
Corporations
Bonds:
Time Warner 23,209 24,714 23,209
Other 53,420 54,023 53,420
Money Markets:
Bank of America 18,006 18,045 18,006
Other 60,458 60,633 60,458
Asset Backed Securities 41,945 41,967 41,945
Notes 42,921 43,198 42,921
Other 36,221 36,522 36,221
$400,318 $404,957 400,318
Accrued Interest on
Short-Term and
Long-Term Securities 20,406
TOTAL SHORT-TERM
MARKETABLE SECURITIES $420,724
-42 (Page 2 of 2)-
<PAGE>
Schedule I
(Page 3 of 4)
CBS INC. and SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
As of December 31, 1993
(In Thousands)
____________________
Col. A Col. B
Number of
Shares or
Units - Principal
Name of Issuer and Amount of
Title of Each Issue Bonds and Notes
Amount Shares
U.S. Government and
its Agencies $296,000
States and their Agencies 61,365
Political Subdivisions of
States, and their Agencies
Utah 40,070
Florida 23,675
Georgia 21,525
Washington 20,975
New Mexico 18,395
California 17,530
New York 13,575
Alabama 13,515
Texas 13,495
Illinois 12,935
Other 52,390
Corporations
Preferred Stock
Banks 1,108
Other 1,326
Time Warner Convertible Bonds 21,592
Asset Backed Securities 30,382
Other 64,657
-43 (Page 1 of 2)-<PAGE>
Schedule I
(Page 4 of 4)
CBS INC. and SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
As of December 31, 1993
(In Thousands)
____________________
Col. A Col. C Col. D Col. E
Amount at Which
Each Portfolio of
Equity Security
Issues and Each
Market Value of Other Security
Name of Issuer and Cost of Each Issue at Issue is Carried in
Title of Each Issue Each Issue Balance Sheet Date the Balance Sheet
U.S. Government and
its Agencies $286,914 $308,306 $286,914
States and their Agencies 66,324 68,324 66,324 (a)
Political Subdivisions of
States, and their Agencies
Utah 42,332 44,400 42,332
Florida 25,708 26,795 25,708 (b)
Georgia 22,966 23,887 22,966
Washington 23,384 24,477 23,384
New Mexico 21,005 20,897 21,005
California 19,955 20,441 19,955 (c)
New York 14,572 15,434 14,572 (d)
Alabama 15,268 15,211 15,268
Texas 14,247 14,762 14,247 (e)
Illinois 14,265 14,921 14,265 (f)
Other 56,069 59,030 56,069 (g)
Corporations
Preferred Stock
Banks 38,915 53,025 38,915
Other 45,215 49,352 45,215
Time Warner Convertible Bonds 22,475 22,726 22,475
Asset Backed Securities 30,475 30,466 30,475
Other 65,915 66,093 65,915
TOTAL LONG-TERM MARKETABLE
SECURITIES $826,004 $878,547 $826,004
(a) Includes $18,596 (Maryland $8,335, New York $5,561, and Massachusetts
$4,700) for which insurance exists if the issuer defaults.
(b) Includes $16,502 for which insurance exists if the issuer defaults.
(c) Includes $7,785 for which insurance exists if the issuer defaults.
(d) Includes $4,455 for which insurance exists if the issuer defaults.
(e) Includes $14,247 for which insurance exists if the issuer defaults.
(f) Includes $2,120 for which insurance exists if the issuer defaults.
(g) Includes $7,654 (Maryland $4,000, Washington, D.C. $2,160 and Minnesota
$1,494) for which insurance exists if the issuer defaults.
-43 (Page 2 of 2)-<PAGE>
Schedule II
CBS INC. and SUBSIDIARIES
AMOUNTS RECEIVABLE from RELATED PARTIES and UNDERWRITERS,
PROMOTERS, and EMPLOYEES other than RELATED PARTIES
for the years ended December 31, 1993, 1992 and 1991
(Dollars in Thousands)
____________________
Col. A Col. B Col. C
Balance at
Beginning
Name of Debtor of Period Additions
Year ended December 31, 1993:
Peter Tortorici - $350 (A)
Martin Franks $243 $ 19
Year ended December 31, 1992:
Martin Franks $ 61 $183 (B)
Year ended December 31, 1991:
Martin Franks - $ 61 (B)
Col. A Col. D Col. E
Deductions
Amounts Amounts Balance at End of Period
Name of Debtor Collected Written Off Current Not Current
Year ended December 31, 1993:
Peter Tortorici - - $350 -
Martin Franks - - $ 87 $175
Year ended December 31, 1992:
Martin Franks $ 1 - $ 68 $175
Year ended December 31, 1991:
Martin Franks - - $ 61 -
(A) A note receivable for $350.0 at 8% dated 12/1/93 and due 11/30/94.
(B) Includes a note receivable for $60.0 at 8% dated 9/25/91, a note receivable
for $175.0 at 8% dated 10/13/92, and related accrued interest. By
agreement dated January 3, 1994, Registrant will forgive 25% of these loans
(and accrued interest) in each of January 1994, 1995, 1996 and 1997.
-44-<PAGE>
Schedule X
CBS INC. and SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the years ended December 31, 1993, 1992, and 1991
(Dollars in Thousands)
____________________
Col. A Col. B
Item Charged to Costs and Expenses
1993 1992 1991
Advertising costs $107,129 $98,781 $93,957
Depreciation and amortization $70,983 $66,689 $59,882
-45-<PAGE>
INDEX TO EXHIBITS
Number Description
______ ___________
3-A Restated Certificate of Incorporation of registrant, as amended May
13, 1988 and filed as Exhibit 3 to Form 10-Q for the quarter ended
June 30, 1988.*
3-B By-Laws of registrant, as amended to March 11, 1994, is filed
herewith.
4-A See Article 3 of Restated Certificate of Incorporation, as amended,
filed as Exhibit 3-A to Form 10-K for 1992.*
4-B(i) Indenture dated as of January 2, 1992 between Registrant and The
Chase Manhattan Bank (National Association), as Trustee, filed as
Exhibit 4-F(i) to Form 10-K for 1991.*
(ii) Specimen Form of 7-5/8% Senior Note Due 2002, filed as Exhibit
4-F(ii) to Form 10-K for 1991.*
(iii) Specimen Form of 8-7/8% Senior Debenture Due 2022, issued May 21,
1992, filed as Exhibit 4-D(iii) to Form 10-K for 1992.*
(iv) Specimen Form of 7-3/4% Senior Note Due 1999, issued May 21, 1992,
filed as Exhibit 4-D(iv) to Form 10-K for 1992.*
(v) Specimen Form of 7-1/8% Senior Note Due 2023, issued October 28,
1993, is filed herewith.
4-C Pursuant to Regulation S-K Item 601(b)(4), CBS agrees to furnish to
the Securities and Exchange Commission, upon request, a copy of other
instruments defining the rights of holders of long-term debt of CBS.
10-A CBS Additional Compensation Plan, filed as Exhibit 10-A to Form 10-K
for 1980.*
10-B CBS Stock Rights Plan, as amended effective March 13, 1991, filed as
Exhibit 10-B to Form 10-K for 1991.*
10-C CBS Pension Plan, dated as of October 1, 1969, and all amendments
through March 11, 1992, filed as Exhibit 10-C to Form 10-K for 1992.*
Amendment No. 13 to such Plan, dated July 14, 1993 and effective as
of April 1, 1992, is filed herewith.
10-D(i) CBS Supplemental Executive Retirement Plan, as amended October 14,
1987, filed as Exhibit 10-C to Registrant's Form 10-K for 1987.*
(ii) CBS Supplemental Executive Retirement Plan #2, dated as of January
1, 1989, as amended January 1, 1993, filed as Exhibit 10-D(ii) to
Form 10-K for 1992.*
10-E CBS Excess Benefit Plan, dated as of March 9, 1976, effective January
1, 1976, filed as Exhibit 10-E to Form 10-K for 1992.*
____________
* Previously filed as indicated and incorporated herein by reference.
- 46 -<PAGE>
10-F Senior Executive Life Insurance Plan, dated July 9, 1990, filed as
Exhibit 10-D to Registrant's Form 10-K for 1990.*
10-G CBS Deferred Compensation Plan for Non-Employee Directors, dated as
of November 2, 1981, filed as Exhibit 10-G to Form 10-K for 1992.*
10-H CBS Employee Investment Fund, dated as of June 29, 1969, restated to
include all amendments through December 30, 1993, is filed herewith.
10-I CBS Retirement Plan for Outside Directors, as amended May 9,1990,
filed as Exhibit 10-E to Registrant's Form 10-K for 1990.*
10-J Restricted Stock Plan for Eligible Directors is filed herewith.
10-K Employment Agreement between CBS Inc. and Howard Stringer, dated
December 27, 1992, filed as Exhibit 10-J to Form 10-K for 1992.*
10-L Employment Agreement between CBS Inc. and Edward Grebow, dated as of
November 8, 1993, is filed herewith.
10-M Employment Agreement between CBS Inc. and Eric W. Ober, dated as of
September 1, 1990, filed as Exhibit 10-H to Form 10-K for 1990.*
10-N Employment Agreement between CBS Inc. and Jeffrey F. Sagansky, dated
as of July 1, 1992, filed as Exhibit 10-M to Form 10-K for 1992.*
10-O Employment Agreement between CBS Inc. and James A. Warner, dated
January 28, 1992, filed as Exhibit 10-J to Form 10-K for 1991.*
10-P Employment Agreement between CBS Inc. and Peter A. Lund, dated as of
January 31, 1994, is filed herewith.
10-Q Employment Agreement between CBS Inc. and Johnathan Rodgers, dated as
of September 1, 1990, filed as Exhibit 10-O to Form 10-K for 1990.*
11 Computation of per share income is filed herewith.
12 Computation of ratios is filed herewith.
13 Registrant's 1994 Notice of Annual Meeting and Proxy Statement (to
be filed on or about April 8, 1994), which except for those
portions thereof expressly incorporated by reference elsewhere in
this Form 10-K is furnished for the information of the Securities
and Exchange Commission and is not to be deemed "filed" as part of
the filing.
21 List of registrant's subsidiaries is filed herewith.
23 Consent of Independent Certified Public Accountants is filed
herewith (p. 22).
99 Form S-8 Undertakings pursuant to Item 512 of Regulation S-K is
filed herewith.
___________________
* Previously filed as indicated and incorporated herein by reference.
- 47 -<PAGE>
NOTE
Copies of the Exhibits filed may be inspected at the Library of the New York
Stock Exchange, 11 Wall Street, New York, NY 10005; at the Pacific Stock
Exchange, 301 Pine Street, San Francisco, CA 94104; or at the Public
Reference Room of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549.
- 48 -
<PAGE>
CBS INC.
BY-LAWS
AS AMENDED MARCH 9, 1994
(EFFECTIVE MAY 11, 1994)
<PAGE>
CBS INC.
BY-LAWS
ARTICLE I
Shareholders
SECTION 1. Annual Meeting. A meeting of the shareholders of the
Corporation shall be held annually on the third Wednesday in April at two
o'clock in the afternoon, then current New York Time, or on such other date
or at such other time as may be fixed by the Board of Directors, for the
purpose of electing directors and for the transaction of such other
business as may properly be brought before the meeting.
SECTION 2. Special Meetings. Special meetings of the shareholders of
the Corporation may be called by the Chairman of the Board and the Chairman
of the Executive Committee jointly or by the vote of a majority of the
entire Board of Directors, and shall be called by the proper officers as
provided in the Certificate of Incorporation. In addition, a special
meeting of shareholders shall be called by the proper officers of the
Corporation at the request of any two members of the Board of Directors
(other than the Chairman of the Board and the Chairman of the Executive
Committee jointly) if they shall have first presented their reasons for
such request to a meeting of the Board of Directors at which a quorum is
present after at least five days prior written notice of such request to
all the directors. A special meeting of shareholders called as provided in
this Section 2 shall be held on such date and at such time as shall be
specified in the written notice of such special meeting.
SECTION 3. Place of Meetings. Each annual or special meeting of the
shareholders of the Corporation shall be held at such place within or
outside the State of New York, but within the United States, as may be
fixed by the Board of Directors, or, if not so fixed, at the office of the
Corporation in the State of New York.
SECTION 4. Notice of Meetings; Business to be Conducted at Meetings.
Written notice of each annual or special meeting of the shareholders of the
Corporation stating the day, hour and place thereof, and in general terms
the business to be transacted thereat shall be delivered personally or
mailed, not less than ten nor more than fifty days before the proposed date
of such meeting, to each person who appears on the books of the Corporation
as a shareholder entitled to vote at such meeting. Such notice if mailed
shall be <PAGE>
- 2 -
directed to such shareholder at his or her address as the same appears on
the stock book of the Corporation. Whenever all the shareholders entitled
to vote at the said meeting shall meet in person or by proxy, or shall have
waived notice of the meeting, such meeting shall be valid for all purposes.
If the notice of a special meeting shall state as a purpose of the meeting
the transaction of any business whatsoever, then at such meeting any
corporate action may validly be taken. At any annual meeting any business
whatsoever that shall be brought before the meeting may be transacted
whether or not referred to in the notice of the meeting.
SECTION 5. Quorum. Except as otherwise provided by statute, the
holders of a majority of the shares entitled to vote thereat shall
constitute a quorum at a meeting of shareholders of the Corporation for the
transaction of any business, provided that when a specified item of
business is required to be voted on by a class or series, voting as a
class, the holders of a majority of the shares of such class or series
shall constitute a quorum for the transaction of such specified item of
business. If the holders of the number of shares necessary to constitute a
quorum shall fail to attend in person or by proxy at the time and place
fixed for a meeting of the shareholders of the Corporation, the holders of
a majority in number of the shares entitled to vote, present in person or
represented by proxy, may adjourn such meeting from time to time without
further notice to shareholders, unless a new record date is fixed for an
adjourned meeting, until holders of the number of shares requisite to
constitute a quorum shall attend. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have
been transacted on the original date of the meeting.
SECTION 6. Order of Business. The order of business at each meeting
of the shareholders of the Corporation shall be determined by the chairman
of the meeting. The chairman of the meeting shall have the right and
authority to prescribe such rules, regulations and procedures and to do all
such acts and things as are necessary or desirable for the proper conduct
of the meeting, including, without limitation, the establishment of
procedures for the dismissal of business not properly presented, the
maintenance of order and safety, limitations on the time allotted to
questions or comments on the affairs of the Corporation, restrictions on
entry to such meeting after the time prescribed for the commencement
thereof and the opening and closing of the voting polls.
SECTION 7. Voting. Except as otherwise expressly provided in the
Certificate of Incorporation or in these By-Laws or in a resolution of the
Board of Directors authorized under the Certificate of Incorporation, each
shareholder of record entitled to vote on any matter before a meeting of
the shareholders of the <PAGE>
- 3 -
Corporation, present in person or represented by proxy, shall have the
right to one vote upon such matter for each share standing in such
shareholder's name on the record of shareholders of the Corporation as of
the record date fixed for such meeting. The Board of Directors may
prescribe a period, not exceeding fifty days prior to a meeting of the
shareholders of the Corporation, during which no transfer of stock on the
books of the Corporation may be made; or in lieu of prohibiting the
transfer of stock, may fix a date not less than ten nor more than fifty
days prior to the holding of any meeting of shareholders of the Corporation
as the record date as of which shareholders entitled to notice of and to
vote at such meeting shall be determined, and, except as otherwise
expressly provided in Section 8 of this Article I of these By-Laws, all
persons who are holders of record of voting stock at such time and no
others shall be entitled to notice of and to vote at such meeting.
Each shareholder entitled to vote at any meeting of shareholders of the
Corporation may authorize not more than four persons to act for such
shareholder by a proxy signed by such shareholder or such shareholder's
attorney-in-fact. Any such proxy shall be delivered to the secretary of
such meeting at or prior to the time designated by the chairman of the
meeting or in the order of business for so delivering such proxies. Except
as otherwise provided by statute or the Certificate of Incorporation, any
corporate action to be taken by vote of the shareholders shall be
authorized by a majority of the votes cast at a meeting of shareholders by
the holders of shares present in person or represented by proxy and
entitled to vote on such action. Unless required by statute or determined
by the chairman of the meeting to be advisable, the vote on any question
need not be by ballot. On a vote by ballot, each ballot shall be signed by
the shareholder voting or by such shareholder's proxy, if there be such
proxy.
SECTION 8. Voting by Alien Shareholders. Except as otherwise
provided by law, not more than twenty percent of the aggregate number of
shares of stock of the Corporation outstanding in any class or series
entitled to vote on any matter before a meeting of shareholders of the
Corporation shall at any time be voted by or for the account of aliens or
their representatives or by or for the account of a foreign government or
representative thereof, or by or for the account of any corporation
organized under the laws of a foreign country. The Board of Directors may
make such rules and regulations as it shall deem necessary or appropriate
to enforce the foregoing provisions of this Section 8.
ARTICLE II
Board of Directors
SECTION 1. Number, Election and Term of Office. The number of
directors of the Corporation will be eleven. By vote of <PAGE>
- 4 -
a majority of the entire Board of Directors, the number of directors may be
increased, or decreased to not less than three, by amendment of these
By-Laws. Each director of the Corporation shall be elected at the annual
meeting of shareholders of the Corporation and shall hold office until the
next annual meeting and until his or her successor shall be elected and
shall qualify or until such director's death or until the effectiveness of
the resignation of such director. Directors need not be shareholders of
the Corporation. Every director shall be a citizen of the United States.
SECTION 2. Vacancies. If at any time there shall be a vacancy or
vacancies on the Board of Directors whether by reason of the death or
resignation of one or more directors, or otherwise, the remaining
directors, by a majority vote of those then in office, though less than a
quorum, may elect a successor to hold office for the unexpired portion of
the term of each director whose place shall be vacant.
SECTION 3. Meetings. Regular meetings of the Board of Directors may
be held, without call or notice, at such time and place as shall from time
to time be determined by the Board of Directors. Special meetings of the
Board of Directors may be held whenever called by the Chairman of the
Board, the President or by not less than three directors then in office.
Notice of each special meeting shall be mailed or telegraphed at least
forty eight hours before the meeting to each director, but such notice need
not be given to any director who shall, either before or after such
meeting, submit a signed waiver of such notice or who attends such meeting
without protesting, prior thereto or at its commencement, the lack of
notice. In any case, any acts or proceedings taken at a meeting not
validly called or constituted may be made valid and fully effective by
ratification at a subsequent meeting that is legally and validly called.
Notices and waivers of notice of meetings of the Board of Directors need
not state the purposes of the meeting, and at any such meeting duly held as
provided in these By-Laws, any business within the general province and
authority of the Board of Directors may be transacted.
SECTION 4. Quorum. One-half in number of the entire Board of
Directors for the time being in office, but not less than one-third of the
entire Board of Directors, shall constitute a quorum for the transaction of
business. If at any meeting of the Board of Directors there shall be less
than a quorum present, the majority of the directors present may adjourn
the meeting to another time and place. At any adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called.
SECTION 5. Powers. Subject to the provisions of law and the
Certificate of Incorporation, but in furtherance and not <PAGE>
- 5 -
in limitation of any rights and powers thereby conferred, the directors of
the Corporation shall have the general management and control of the
business and affairs of the Corporation and shall exercise all the powers
that may be exercised or performed by the Corporation; provided, however,
that one or more directors may be denied access, by resolution of the Board
of Directors, to classified matter and, in such event, the directors who
have not so been denied access to such matter shall have the general
management and control of the business and affairs of the Corporation and
shall exercise all the powers that may be exercised or performed by the
Corporation insofar as such business and affairs shall relate to such
classified matter.
SECTION 6. Compensation and Reimbursement of Expenses. Directors
shall be paid such compensation including retainers or attendance fees or
both as shall be determined from time to time by vote of the Board of
Directors as compensation for their services as directors, as members of
committees of the Board of Directors and as directors of other corporations
at the request of the Chairman of the Board or the President of the
Corporation. At the discretion of the Board of Directors any such retainer
or attendance fee may be payable only to directors who are not officers or
employees of the Corporation or any subsidiary thereof or compensated for
serving under contract as a consultant to the Corporation. Any director
not maintaining a residence or business office within one hundred miles of
the principal office of the Corporation shall be reimbursed his or her
actual expenses incurred in traveling between his or her residence and such
principal office of the Corporation in connection with his or her
attendance at any meeting of the Board of Directors or of any committee
thereof on which such director serves.
SECTION 7. Committees. The Board of Directors, by resolution adopted
by a majority of the entire Board of Directors, may designate from among
its members an Executive Committee and other committees, each consisting of
three or more directors, and each of which, to the extent provided in such
resolution, shall have all the authority of the Board of Directors, except
that no such committee shall have authority as to any matter with respect
to which any law of the State of New York states that it shall not have
authority. The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent member
or members at any meeting of such committee. Each such committee shall
serve at the pleasure of the Board of Directors. A majority of the entire
membership (exclusive of alternates) of any such committee shall constitute
a quorum for the transaction of business, or of any specified item of
business, and, solely for the purpose of determining whether a quorum is
present at any time, an absent member of the committee shall be deemed to
have been present if replaced at that time by an alternate member of such
committee.
<PAGE>
- 6 -
SECTION 8. Action Without Meeting. Any action required or permitted
to be taken by the Board of Directors or by any committee thereof may be
taken without a meeting if all of the members of the Board of Directors or
of the committee, as the case may be, consent in writing to the adoption of
a resolution authorizing the action. Such resolution and the written
consents thereto shall be filed with the minutes of the proceedings of the
Board of Directors or committee, as the case may be.
SECTION 9. Attendance by Electronic Means. Any one or more directors
may participate in a meeting of the Board of Directors, and any one or more
members of any committee of the Board of Directors may participate in a
meeting of such committee, by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
ARTICLE III
Officers
SECTION 1. Election, Term of Office and Removal. The officers of the
Corporation shall be a Chairman of the Board, a President, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more
Vice Presidents, a Secretary, one or more Assistant Secretaries, a
Treasurer, one or more Assistant Treasurers, a Controller, one or more
Assistant Controllers, a Director of Taxes, a General Auditor and such
other officers as shall from time to time be provided for by the Board of
Directors. Any two or more of such offices may be held by the same person,
except the offices of President and Secretary. Such officers shall have
such authority and perform such duties in the management of the Corporation
as provided in these By-Laws or, to the extent not provided, by the Board
of Directors. Such officers shall be elected at any meeting of the Board
of Directors and, unless removed as hereinafter provided, shall hold office
until their respective successors shall be elected and shall qualify, or
until such officer's death or resignation or until such officer's removal
in the manner hereinafter provided. Every officer shall be a citizen of
the United States. All officers, agents and employees of the Corpation
shall be subject to removal with or without cause at any time by the Board
of Directors.
SECTION 2. Powers and Duties of the Chairman of the Board. The
Chairman of the Board shall preside at all meetings of the Board of
Directors and at all meetings of the shareholders. With the Secretary or
any Assistant Secretary or with the Treasurer or any Assistant Treasurer,
the Chairman of the Board may sign certificates of the shares of the
capital stock of the <PAGE>
- 7 -
Corporation. The Chairman of the Board shall perform such other duties as
may from time to time be assigned to him or her by the Board of Directors.
SECTION 3. Powers and Duties of the President. The President shall
be the chief executive officer of the Corporation. The President shall
have the powers and shall perform the duties of the Chairman of the Board
in the absence or disability of the Chairman of the Board. With the
Secretary or any Assistant Secretary or with the Treasurer or any Assistant
Treasurer, the President may sign certificates of the shares of the capital
stock of the Corporation. The President shall perform such other duties as
may from time to time be assigned to him or her by the Board of Directors.
SECTION 4. Powers and Duties of the Executive Vice Presidents and of
the Senior Vice Presidents. Each of the Executive Vice Presidents, and
each of the Senior Vice Presidents, shall perform such duties as may from
time to time be assigned to him or her by the Board of Directors. With the
Secretary or any Assistant Secretary or with the Treasurer or any Assistant
Treasurer, each of the Executive Vice Presidents, and each of the Senior
Vice Presidents, may sign certificates of the shares of the capital stock
of the Corporation.
SECTION 5. Powers and Duties of the Vice Presidents. Each of the
Vice Presidents shall perform such duties as may from time to time be
assigned to him or her by the Board of Directors. With the Secretary or
any Assistant Secretary or with the Treasurer or any Assistant Treasurer,
each Vice President may sign certificates of the shares of the capital
stock of the Corporation.
SECTION 6. Powers and Duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the shareholders of the Corporation
and, if requested, the minutes of meetings of the Board of Directors. The
Secretary shall attend to the giving and serving of all notices by the
Corporation. The Secretary shall be the custodian of and shall make or
cause to be made the proper entries in the minute book of the Corporation,
and such other books and papers as the Board of Directors may direct. The
Secretary shall be the custodian of the corporate seal and shall affix such
seal to such contracts and other instruments as the Board of Directors or
any committee thereof may direct. With the Chairman of the Board or the
President or any Executive Vice President or any Senior Vice President or
any Vice President, the Secretary may sign certificates of the shares of
the capital stock of the Corporation. The Secretary shall perform such
other duties as may from time to time be assigned to him or her by the
Board of Directors.
SECTION 7. Powers and Duties of the Assistant Secretaries. Each of
the Assistant Secretaries shall have such powers <PAGE>
- 8 -
and perform such duties as may from time to time be assigned to him or her
by the Board of Directors. With the Chairman of the Board or the President
or any Executive Vice President or any Senior Vice President or any Vice
President, any Assistant Secretary may sign certificates of the shares of
the capital stock of the Corporation.
SECTION 8. Powers and Duties of the Treasurer. The Treasurer shall
be responsible for the custody and investment of all of the funds and
securities of the Corporation. With the Chairman of the Board or the
President or any Executive Vice President or any Senior Vice President or
any Vice President, the Treasurer may sign certificates of the shares of
the capital stock of the Corporation. The Treasurer shall perform such
other duties as may from time to time be assigned to him or her by the
Board of Directors.
SECTION 9. Powers and Duties of the Assistant Treasurers. Each of
the Assistant Treasurers shall have such powers and perform such duties as
may from time to time be assigned to him or her by the Board of Directors.
With the Chairman of the Board or the President or any Executive Vice
President or any Senior Vice President or any Vice President, any Assistant
Treasurer may sign certificates of the shares of the capital stock of the
Corporation.
SECTION 10. Powers and Duties of the Controller. The Controller shall
be responsible for keeping full and accurate accounts of the Corporation.
The Controller shall perform such other duties as may from time to time be
assigned to him or her by the Board of Directors.
SECTION 11. Powers and Duties of the Assistant Controllers. Each of
the Assistant Controllers shall have such powers and perform such duties as
may from time to time be assigned to him or her by the Board of Directors.
SECTION 12. Powers and Duties of the Director of Taxes. The Director
of Taxes shall have responsibility for advising the officers of the
Corporation with respect to tax matters, for the preparation and filing of
all tax returns required to be filed by the Corporation and shall have
authority to represent the Corporation in all tax matters. The Director of
Taxes shall perform such other duties as may from time to time be assigned
to him or her by the Board of Directors.
SECTION 13. Powers and Duties of the General Auditor. The General
Auditor shall be responsible for establishing and administering internal
audit procedures and programs of the Corporation, and in connection
therewith, shall audit or cause to be audited all of the accounts of the
Corporation. The General Auditor shall make such reports to the Board of
Directors, the <PAGE>
- 9 -
Audit Committee of the Board of Directors, the Chairman of the Board and
the President as may be requested. The General Auditor shall perform such
other duties as may from time to time be assigned to him or her by the
Board of Directors.
SECTION 14. Delegation of Powers. In case of the absence of any
officer or agent of the Corporation, or for any other reason that the Board
of Directors may deem sufficient, the Board of Directors may, at any time
and from time to time, delegate all or any part of the powers or duties of
any officer or agent to any other officer or agent.
ARTICLE IV
Indemnification of Directors, Officers and Employees
SECTION 1. Indemnification. The Corporation shall to the fullest
extent permitted by statute and subject to such conditions, not
inconsistent with statute, as the Board of Directors may impose in general
or particular cases or classes, indemnify any person made, or threatened to
be made, a party to an action or proceeding, civil or criminal (including
an action by or in the right of the Corporation or any other corporation of
any type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or other enterprise, which any director,
officer or employee of the Corporation served in any capacity at the
request of the Corporation), by reason of the fact that such person, his or
her testator or his or her intestate was a director, officer or employee of
the Corporation (or served such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity),
against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually and necessarily incurred as a
result of such action or proceeding, or any appeal therein, and the
Corporation may pay, in advance of final disposition of any such action or
proceeding, expenses incurred by such person in defending such action or
proceeding; provided however that no indemnification may be made to or on
behalf of such person if (i) such person's acts were committed in bad faith
or were the result of such person's active and deliberate dishonesty and
were material to such action or proceeding or (ii) such person personally
gained in fact a financial profit or other advantage to which such person
was not legally entitled.
SECTION 2. Reliance. Each person who was at the time of the adoption
of this Article IV of these By-Laws such director, officer or employee
shall be deemed to have continued to serve in such office or employment in
reliance upon the indemnity provided by Section 1 of this Article IV, and
each person who shall at any time subsequent to such adoption have become
such director, officer or employee shall be deemed to have accepted such
office <PAGE>
- 10 -
or employment in reliance upon the indemnity provided by said Section 1.
SECTION 3. Insurance. To the extent permitted by law, the
Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer or employee of the Corporation, or is or was
serving any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity at the request of the Corporation, against any
liability asserted against such person and incurred by such person in any
such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power to indemnify such person against
such liability under the provisions of this Article IV of these By-laws.
SECTION 4. Separability. The provisions of this Article IV of these
By-Laws shall be separable, and if any of the provisions of any Section of
this Article IV shall be finally adjudged to be invalid, or shall for any
other reason be inapplicable or ineffective, such invalidity,
inapplicability or ineffectiveness shall not affect any other provisions or
applications of such Section or of any other Section of this Article IV
which can be given effect without the invalid, inapplicable or ineffective
provision.
ARTICLE V
Capital Stock
SECTION 1. Certificates of Shares. Except as otherwise expressly
contemplated by Section 3 of this Article V of these By-Laws, each holder
of shares of stock of the Corporation shall be entitled to a certificate
representing such stock. Each such certificate shall be signed by one of
the Chairman of the Board, the President, any Executive Vice President, any
Senior Vice President or any Vice President and also by one of the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer. Where any such certificate is countersigned by a transfer agent
or registered by a registrar other than the Corporation or its employee,
the signatures of the Chairman of the Board, the President, any Executive
Vice President, any Senior Vice President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer and any Assistant
Treasurer upon such certificate may be facsimiles, engraved or printed. In
case any officer or officers who have signed, or whose facsimile signature
or signatures have been placed on, any such certificate or certificates,
shall cease to be such officer or officers of the Corporation, whether
because of death, resignation or otherwise, before such certificate or
certificates have been issued by the Corporation, such certificate or
certificates may nevertheless be issued by the Corporation with the same
effect as if such former officer or officers were still in office at the
date of issue. Shares of stock issued to or held <PAGE>
- 11 -
by or for the account of aliens and their representatives, foreign
governments and representatives thereof, and corporations organized under
the laws of foreign countries shall be represented by Foreign Share
Certificates. All other shares of stock shall be represented by Domestic
Share Certificates. All of such certificates shall be in such form not
inconsistent with the Certificate of Incorporation and these By-Laws as
shall be prepared or approved by the Board of Directors.
SECTION 2. Transfer of Shares. Shares of stock of any class or
series of the Corporation shall be transferred only on the books of the
Corporation by the holder thereof in person or by his or her attorney duly
authorized in writing, and upon surrender of the certificate or
certificates representing such shares, duly endorsed, or accompanied by a
duly executed stock transfer power, and the payment of all taxes thereon.
Every certificate exchanged, returned or surrendered to the Corporation
shall be canceled. The Board of Directors shall have power and authority
to make all such rules and regulations as it deems expedient concerning the
issue, transfer and registration of certificates for shares of the stock of
the Corporation. In the event of the declaration of dividends, the stock
transfer books need not be closed but the Board of Directors may fix a
record date, not more than fifty days preceding the date fixed for the
payment of any dividend, for the purpose of determining the shareholders
entitled to the payment of dividends. If such record date shall not have
been so fixed, then the record date for the determination of shareholders
entitled to payment of such dividends shall be at the close of business on
the day on which the dividend is declared by the Board of Directors. Prior
to due presentment for registration of transfer, the person in whose name
shares of stock shall stand on the record of shareholders of the
Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation; provided, however, that whenever any transfer of shares
shall be made for collateral security and not absolutely, and written
notice thereof shall be given to the Secretary of the Corporation or to
such transfer agent, such fact shall be stated in the entry of the
transfer. No transfer of shares shall be valid as against the Corporation,
its shareholders and creditors for any purpose, except to render the
transferee liable for the debts of the Corporation to the extent provided
by law, until it shall have been entered in the stock records of the
Corporation by an entry showing from and to whom transferred.
SECTION 3. Transfer of Shares to Alien Shareholders. Except as
otherwise provided by law, not more than twenty percent of the aggregate
number of shares of stock of the Corporation outstanding in any class or
series shall at any time be owned of record by or for the account of aliens
or their representatives or by or for the account of a foreign government
or representatives thereof, or by or for the account of any corporation
organized under the laws of a foreign country. Shares of stock shall not
be <PAGE>
- 12 -
transferable on the books of the Corporation to aliens and their
representatives, foreign governments and representatives thereof, and
corporations organized under the laws of foreign countries if, as a result
of such transfer, the aggregate number of shares of stock in any class or
series owned by or for the account of aliens and their representatives,
foreign governments and representatives thereof, and corporations organized
under the laws of foreign countries shall be twenty percent or more of the
number of shares of stock then outstanding in such class or series. The
Board of Directors may make such rules and regulations as it shall deem
necessary or appropriate to enforce the foregoing provisions of this
Section 3.
SECTION 4. Record of Alien Ownership. The Board of Directors may
make such rules and regulations as it shall deem necessary or appropriate
so that accurate records may be kept of the shares of stock of the
Corporation owned of record and/or voted by or for the account of aliens or
their representatives or by or for the account of a foreign government or
representative thereof, or by or for the account of any corporation
organized under the laws of a foreign country.
ARTICLE VI
Corporate Seal
A seal with the words "CBS INC., Corporate Seal, New York, 1927" upon
it shall be the common corporate seal of the Corporation and shall be in
the custody of the Secretary of the Corporation. The Board of Directors
may, from time to time, approve a different form of seal and any such seal
so approved shall be the common corporate seal of the Corporation.
ARTICLE VII
Accounting Periods
Each of the Corporation's accounting years and each of the
Corporation's quarterly and monthly accounting periods shall coincide with
a calendar year, calendar quarter and calendar month.
ARTICLE VIII
Amendment of By-Laws
Except as otherwise specifically provided by statute or the Certificate
of Incorporation, these By-Laws or any of them (including any by-law
adopted by the shareholders) may be amended or repealed or new by-laws may
be adopted by the Board of Directors at any meeting thereof by such vote of
the Board of Directors as specified in the Certificate of Incorporation.
By-laws adopted or amended by the Board of Directors shall be subject to
repeal or amendment by the shareholders at any annual or special meeting.
SPECIMEN/Page 1
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
CBS INC.
7-1/8% NOTE DUE 2023
REGISTERED CUSIP 124845 AF 5
NO. R-1
CBS INC., a corporation duly organized and existing under the laws of the
State of New York (herein called the "Company", which term includes any
successor under the Indenture hereinafter referred to), for value received,
hereby promises to pay to CEDE & CO., or registered assigns, the principal
sum of $100,000,000 at the office of agency of the Company in The City of New
York on November 1, 2023, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest on said principal sum
semiannually on May 1 and November 1 of each year, at said office or agency,
in like coin or currency, at the rate per annum specified in the title
hereof, from the May 1 or the November 1, as the case may be, next preceding
the date of this Note to which interest on the Notes has been paid (unless
the date hereof is the date to which interest on the Notes has been paid, in
which case from the date of this Note), or, if no interest has been paid on
the Notes since the original issue date of this Note, from the May 1 or
November 1 next preceding such original issue date, until payment of said
principal sum has been made or duly provided for. Notwithstanding the
foregoing, if the date hereof is after the 15th day of any April or October
and before the first day of the next succeeding May or November, this Note
shall bear interest from such May 1 or November 1; provided, however, that if
the Company shall default in the payment of interest due on such May 1 or
November 1, then this Note shall bear interest from the next preceding
November 1 or May 1 to which interest on the Notes has been paid, or, if no
interest has been paid on the Notes since the original issue date of this
Note, from the May 1 or November 1 next preceding such original issue date.
The interest so payable, and punctually paid or duly provided for, on any May
1 or November 1 will, except as provided in the Indenture dated as of January
2, 1992 <PAGE>
SPECIMEN/Page 2
(herein called the "Indenture"), duly executed and delivered by the Company
to The Chase Manhattan Bank, N.A., as Trustee (herein called the "Trustee"),
be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the 15th day of the
next preceding April or October (herein called the "Regular Record Date")
whether or not a Business Day, and may, at the option of the Company, be paid
by check mailed to the registered address of such Person. Any such interest
which is payable, but is not so punctually paid or duly provided for, shall
forthwith cease to be payable to the registered Holder on such Regular Record
Date and may be paid either to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed and upon such notice as may be
required by such exchange, if such manner of payment shall be deemed
practical by the Trustee, all as more fully provided in the Indenture.
Initially, the Trustee will be the Paying Agent and the Security Registrar
with respect to this Note. The Company reserves the right at any time to
vary or terminate the appointment of any Paying Agent or Security Registrar,
to appoint additional or other Paying Agents and other Security Registrars
and to approve any change in the office through which any Paying Agent or
Security Registrar acts; provided that there will at all times be a Paying
Agent in the City of New York.
This Note is one of the duly authorized issue of debentures, notes, bonds or
other evidences of indebtedness (hereinafter called the "Securities") of the
Company, of the series hereinafter specified, all issued or to be issued
under and pursuant to the Indenture, to which Indenture and all other
indentures supplemental thereto reference is hereby made for a statement of
the rights and limitations of rights, obligations, duties and immunities
thereunder of the Trustee and any agent of the Trustee, any Paying Agent, the
Company and the Holders of the Securities and the terms upon which the
Securities are issued and are to be authenticated and delivered.
The Securities may be issued in one or more series, which different series
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest (if any) at difference rates, may be subject to
different redemption provisions (if any), may be subject to different
sinking, purchase or analogous funds (if any), may be subject to different
covenants and Events of Default and may otherwise vary as provided or
permitted in the Indenture. This Note is one of the series of Securities of
the Company issued pursuant <PAGE>
SPECIMEN/Page 3
to the Indenture designated as the 7-1/8% Senior Notes Due 2023 (herein
called the "Notes"), limited in aggregate principal amount to $100,000,000.
The Notes of this series are not redeemable prior to the Stated Maturity of
the principal hereof and will not be subject to any sinking fund.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of all of the Notes may be declared due and payable
in the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee to enter into supplemental indentures to the
Indenture for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of modifying
in an manner the rights of the Holders of the Securities of each series under
the Indenture with the consent of the Holders of not less than a majority in
principal amount of the Securities at the time Outstanding of each series to
be affected thereby on behalf of the Holders of all Securities of such
series. The Indenture also permits the Holders of a majority in principal
amount of the Securities at the time Outstanding of each series on behalf of
the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
and their consequences with respect to such series under the Indenture. Any
such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof, whether or not notation of such consent or waiver is made
upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal and any premium of and any
interest on this Note at the place, rate and respective times and in the coin
or currency herein and in the Indenture prescribed.
As provided in the Indenture and subject to the satisfaction of certain
conditions therein set forth, including the deposit of certain trust funds in
trust, at the Company's option, either the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and the
obligations under, the Securities of any series and to have satisfied all the
obligations (with certain exceptions) under the Indenture relating to the
Securities of such series or the Company shall cease to be under any
obligation to comply with any term, provision or condition of certain
restrictive covenants or provisions with respect to the Securities of such
series.
<PAGE>
SPECIMEN/Page 4
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any integral multiple of $1,000. Notes may be exchanged for a
like aggregate principal amount and Stated Maturity of Notes of other
authorized denominations at the office or agency of the Company in The City
of New York and in the manner subject to the limitations provided in the
Indenture.
Upon due presentment for registration of transfer of this Note at the office
or agency of the Company in The City of New York, a new Note or Notes of
authorized denominations for a like aggregate principal amount and Stated
Maturity will be issued to the transferee in exchange therefor, subject to
the limitations provided in the Indenture.
No charge shall be made for any such transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
Unless otherwise defined herein, all terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
Unless the certificate of authentication hereon has been manually executed
by or on behalf of the Trustee under the Indenture, this Note shall not be
entitled to any benefits under the Indenture, or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, CBS INC. has caused this Note to be duly executed under
its corporate seal.
Dated: November 4, 1993 CBS INC.,
By:
Senior Vice President, Finance
[SEAL] ATTEST:
By:
Assistant Secretary
<PAGE>
SPECIMEN/Page 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in
the within-mentioned Indenture.
The Chase Manhattan Bank,
N.A., As Trustee,
By:
Authorized Officer
Amdt. #13
Amendment to the CBS Pension Plan (and its related Trust Agreement),
adopted by the Minor Amendments Committee by Unanimous Written Consent
dated July 14, 1993, effective April 1, 1992, and pertaining to the
transfer of employees from CBS News Special Projects Inc. to CBS Inc.,
accompanied by the transfer of their accrued benefits (account balances)
from the CBS News Special Projects Inc. Pension Plan to the CBS Pension,
without loss of benefits.
RESOLVED that the CBS Pension Plan, as heretofore amended, be and it
hereby is further amended, effective with respect to participants whose
employment was transferred from CBS News Special Projects Inc. to CBS Inc.
on or after April 1, 1992, in the following particulars:
(1) A new Section 2.05 is added, to read as follows:
"2.05 Each person who becomes an employee and who was a participant in
the CBS News Special Projects Inc. Pension Plan immediately prior to the
date such person becomes an employee shall become a participant in the Plan
as of the date such person satisfies the conditions of Section 2.02A. Upon
the transfer of assets and liabilities from the CBS News Special Projects
Inc. Pension Plan to this Plan, all periods of such person's prior benefit
service and vesting service under the CBS News Special Projects Inc.
Pension Plan shall count in determining such person's continuous employment
period and years of service under the Plan, subject to the following:
(a) The person's regular compensation during the period of
participation in the CBS News Special Projects Inc. Pension Plan before
the date such person becomes a participant in the Plan shall be used,
to the extent necessary, to calculate the participant's average
compensation under the Plan, and when so used regular compensation
shall have the meaning defined in Section 13.08 of this Plan.
(b) The participant's primary Social Security benefit at the date
of retirement or the date of termination of employment, as the case may
be, shall be calculated pursuant to the Plan and will take into account
the participant's prior period of employment with CBS News Special
Projects Inc.
(c) If such participant shall have been a 1942 participant prior to
his transfer to CBS News Special Projects Inc., the provisions of the
Plan applicable to such participant shall continue to be so applicable,
notwithstanding such participant's employment by CBS News Special
Projects Inc.
(d) Notwithstanding anything to the contrary in this Section 2.05,
in no event shall the aggregate of the participant's benefit service
under the CBS News Special Projects Inc. Pension Plan and the
participant's continuous employment period in the Plan exceed 35
years."
<PAGE>
- 2 -
(2) A second paragraph is added to Section 8.06A, to read as follows:
"Subject to the approval of the Plans Administration Committee, the
Trustee shall accept a transfer of assets and liabilities accrued by a
participant under any other plan which transfer shall be in accordance with
the requirements of Section 414(1) of the Code. In no event shall the
accrued benefit of any such participant under this Plan immediately after
such transfer be less than the accrued benefit of such participant under
the transferor plan immediately prior to such transfer. In addition, and
distribution, withdrawal, or other rights available to each affected
participant under the terms of the transferor plan as of the date of such
transfer which are protected under Section 411(d)(6) of the Code shall
continue to be available with respect to such transferred accrued
benefits."
*****
RESOLVED that ... the Trust Agreement entered into as of September 1,
1986 between CBS Inc. and Boston Safe Deposit and Trust Company with
respect to the CBS Pension Plan and amended effective as of January 1, 1991
to constitute a Master Pension Trust ... is hereby amended, effective with
respect to participants whose employment was transferred from CBS News
Special Projects Inc. to CBS Inc. on or after April 1, 1992, by the
addition of a new paragraph, to constitute a fifth paragraph of Article
SEVENTEENTH, to read as follows:
"Upon the written direction of CBS News Special Projects Inc., the
Trustee shall transfer and deliver to the trustee of the trust under the
CBS Pension Plan established by CBS Inc. and qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended, such part of the assets
of the Trust Fund on such date, in such amount, and in such form as CBS
News Special Projects Inc. shall so direct. The provisions of the two
final sentences of the first paragraph of this Article shall apply to the
transfer authorized by this paragraph."
CBS EMPLOYEE INVESTMENT FUND
FOR ELIGIBLE EMPLOYEES OF CBS INC. AND
CERTAIN OF ITS SUBSIDIARIES
June 29, 1969
AS RESTATED THROUGH DECEMBER 30, 1993
<PAGE>
CBS EMPLOYEE INVESTMENT FUND
Contents
Article Page
I. THE PURPOSE OF THE PLAN; THE TRUST ............................ 1
A. The Investment Fund ..................................... 1
B. The Trust ............................................... 1
C. Application ............................................. 1
D. Definitions (applicable to the Plan and the Trust) ...... 1
II. PARTICIPATION ................................................. 1
A. Eligibility ............................................. 1
B. Participation ........................................... 2
III. ACCOUNTS ...................................................... 2
A. Participants' A accounts ................................ 2
B. Participants' B accounts ................................ 2
C. Participants' C accounts ................................ 3
D. Employers' C accounts ................................... 3
E. Participants' D accounts ................................ 3
F. Participants' E accounts ................................ 3
G. Participants' numbered C and D accounts ................. 3
IV. EMPLOYEE CONTRIBUTIONS; CONTRIBUTION ELECTIONS; INVESTMENT
DIRECTIONS; CONVERSION DIRECTIONS ............................. 3
Contribution Elections Generally .............................. 3
(i) The required basic contribution and the voluntary
supplemental contribution ................................ 4
A. Nature ............................................. 4
1. Election of required basic contribution;
Modifications ................................ 4
2. Election of voluntary supplemental
contribution; Modifications .................. 4
3. Suspension ................................... 5
B. Investment Direction ............................... 5
1. Crediting units to A, B and/or E accounts .... 5
2. Modification ................................. 5
C. Withholding by Employers and/or deferral, and
payment to Trustee ................................. 5
(ii) The periodic special contribution ....................... 6
A. Nature ............................................. 6
1. Cash payment ................................. 6
2. Limitation of amount ......................... 6
3. Investment direction ......................... 6
(iii) Limitations ............................................. 7
A. Special Rules - Actual Deferral Percentage Tests ... 7
B. General Rules ...................................... 11
C. Limitation on Before-Tax Contributions ............. 11
D. Actual Contribution Percentage Tests ............... 12
(iv) Conversion Directions .................................... 15
(i)<PAGE>
Article Page
V. EMPLOYERS' MATCHING CONTRIBUTIONS ............................. 15
VI. TERMINATION OF PARTICIPATION; WITHDRAWALS; DETERMINATION
AND PAYMENT OF BENEFITS ....................................... 17
A. Termination of participation ............................ 17
B. Withdrawals ............................................. 17
1. Request for withdrawal; Payment ................... 17
2. Withdrawal before five years or twice within
five-year period; Suspension of authorization ..... 18
3. Restrictions on withdrawals before age 59-1/2 ..... 18
C. Termination benefit ..................................... 20
1. Termination of employment - A, B , D, and E units . 20
2. Termination of employment after three years,
after 65th birthday, or by reason of death or
disability - C units .............................. 20
3. Other termination of employment - C units ......... 20
4. Re-employment after termination ................... 20
5. Inclusion of numbered units and accounts .......... 21
D. Amounts withheld or deferred in month of termination .... 21
E. Manner of payment; Elections ............................ 21
1. Distribution election ............................. 21
2. Lump sum death benefit election ................... 22
3. Modification or revocation of election ............ 22
4. Spousal consent in certain cases .................. 23
F. Payment by Trustee ...................................... 23
1. Distribution election - lump sum payment .......... 23
(a) Cash ........................................ 23
(b) CBS Stock ................................... 24
2. Distribution election - installment payment ....... 24
(a) Cash ........................................ 24
(b) CBS Stock ................................... 25
3. Withholding ....................................... 26
4. Commencement of payment ........................... 26
5. No contributions after age 70 ..................... 26
6. Inclusion of numbered units and accounts .......... 26
7. Unclaimed benefit payment ......................... 27
G. Loans to Participants ................................... 27
1. Governing rules ................................... 27
2. Collateral ........................................ 27
3. Deduction of loan proceeds ........................ 28
4. Interest rate(s) .................................. 28
5. Repayment ......................................... 28
6. Default; Collection of unpaid amount .............. 28
7. Loan requests ..................................... 29
8. Reinvestment of repayments ........................ 29
9. Qualified domestic relations order(s) ............. 29
10. Payment to beneficiaries/alternate payees ......... 29
H. Direct Rollover Distributions ........................... 29
(ii)<PAGE>
Article Page
VII. THE COMMITTEE ................................................. 31
A. Appointment and removal; Investment managers ............ 31
B. Additional members; Successors .......................... 31
C. Majority decision ....................................... 31
D. Powers and duties of additional and successor members ... 31
E. Absence of requirement for security ..................... 31
VIII. ADMINISTRATION ................................................ 31
A. Committee as "administrator" ............................ 31
B. Retention of auditors, accountants, legal counsel ....... 32
C. Allocation and delegation of authority .................. 32
D. Compensation ............................................ 32
E. Communications, forms ................................... 32
F. Determinations; Discretion, non-discrimination .......... 32
G. Determinations, binding ................................. 33
H. Claims; Procedure on denial of claims ................... 33
I. Relations with Trustee .................................. 33
J. Fiduciary duties ........................................ 34
K. Non-assignability of benefits ........................... 34
L. Pass-through rights as to CBS Stock ..................... 34
1. Voting ............................................ 34
2. Tender or exchange offers ......................... 35
IX. DEFINITIONS ................................................... 35
A. Definitions (in alphabetical order) ..................... 35
B. Construction ............................................ 44
X. ADOPTION BY SUBSIDIARIES ...................................... 45
A. Adoption - CBS consent .................................. 45
B. Party to Trust Agreement ................................ 45
XI. AMENDMENT; TERMINATION ........................................ 45
A. Amendment by CBS ........................................ 45
B. Termination - effect on accounts ........................ 46
C. Merger, consolidation, transfer ......................... 47
1. CBS News Special Projects Inc. .................... 47
2. CBS News Special Projects Inc. .................... 47
3. Transfer of assets and liabilities accrued under
another plan ...................................... 47
D. Return of matching Employer contributions ............... 47
XII. LIMITATIONS ................................................... 48
A. Maximum annual addition ................................. 48
B. "Annual addition" ....................................... 48
C. Participation in another defined contribution plan or
in more than one defined benefit plan maintained by
Employer; "Employer" .................................... 48
D. Participation in Investment Fund and CBS Pension Plan
or other applicable defined benefit plan ................ 49
(iii)<PAGE>
Article Page
E. Definitions .............................................. 49
1. Defined benefit plan fraction ...................... 49
2. Defined contribution plan fraction ................. 49
F. Non-applicability ........................................ 49
G. Reduction of contributions in event of exceeding
limitation on annual additions or limitation applicable
to combination of plans .................................. 50
H. Reduction/freezing of benefits under defined benefit
plan prior to making adjustments ......................... 50
I. Treatment of excess arising from errors .................. 50
XIII. INTERPRETATION; CONSTRUCTION ................................... 51
XIV. TOP-HEAVY PLAN ................................................. 51
A. Effective date if Investment Fund determined to be
a top-heavy plan ......................................... 51
B. Determination of a top-heavy plan ........................ 51
C. Definitions .............................................. 52
D. Requirements if Investment Fund determined to be a
top-heavy plan ........................................... 53
XV. MIDWEST COMMUNICATIONS, INC. TRANSACTION ....................... 54
A. Transfer of Accounts from Midwest Communications, Inc.
Retirement Savings Plan to Investment Fund ............... 54
1. Eligibility of Midwest's non-union employees to
participate in Investment Fund; Transfer;
"Transferred Amount(s)" ............................ 54
2. Eligibility of Midwest's union employees to
participate in Investment Fund; Transfer;
"Transferred Amount(s)" ............................ 54
3. Procedures for Transferred Amounts ................. 54
B. Merger of WCCO Television, Inc. AFTRA 401(k) Plan into
Investment Fund .......................................... 55
1. Eligibility of WCCO Television, Inc. employees
to participate in Investment Fund; transfer;
"Transferred Amount(s)" ............................ 55
2. Procedures for Transferred Amounts ................. 56
(iv)
<PAGE>
CBS EMPLOYEE INVESTMENT FUND
I. The Purpose of the Plan; the Trust.
A. The purpose of the Investment Fund, the plan embodied herein, is to
provide Employees of CBS and certain of its subsidiaries who are eligible
to participate therein a convenient way both to save for their retirement
and to become shareholders of CBS. It is intended that at all times the
Investment Fund and the related Trust will constitute a plan qualified
under Section 401(a) and exempt under Section 501(a) of the Internal
Revenue Code, as amended ("the Code"), and will comply with the
requirements of Section 401(k) of the Code and of the Employee Retirement
Income Security Act of 1974 ("ERISA"). The Investment Fund embodied herein
constitutes an amendment to and restatement of the Investment Fund in
effect on July 31, 1993. Nothing in this amendment and restatement shall
have the effect of reducing any participant's rights to accrued benefits
(including optional forms of benefit) under the terms of the Investment
Fund in effect on July 31, 1993. With respect to periods prior to
August 1, 1993, certain provisions of the Investment Fund applied solely to
individuals who participated in the CBS Stock Purchase Plan prior to its
termination and to former participants who were CRG employees affected by
the sale of CBS Records Inc. to Sony Corporation. Such participants' or
former participants' rights with respect to these provisions shall be
governed by the terms of the Investment Fund in effect on July 31, 1993.
B. As a part of the Investment Fund, and solely to aid in the proper
execution thereof, CBS and the other Employers have entered into the Trust
Agreement. The Trust has been created solely to aid in the proper
execution of the Investment Fund and shall be availed of solely for such
purpose. Each provision of the Trust Agreement shall be deemed to be a
provision hereof as fully as if it were set forth herein.
C. The Investment Fund, as amended to July 31, 1993, shall continue to
be applicable to all former Employees whose employment (and participation)
terminated prior to August 1, 1993, except as otherwise provided herein.
The Investment Fund, as amended as of August 1, 1993 and as may be amended
thereafter, shall be applicable to all Employees who are or become eligible
to participate therein on or after such date. Nothing contained in the
Investment Fund shall be deemed to increase the number or value of the C
units credited as of July 31, 1993 to the account of any participant or any
former participant whose participation terminated prior to August 1, 1993.
D. Certain terms used herein and in the Trust Agreement are defined and
set forth in alphabetical order in Paragraph A of Article IX hereof.
II. Participation.
A. Each person who, on August 1, 1993 or on the first day of any monthly
accounting period commencing subsequent to such date,
(1) is an Employee of one or more of the Employers and either (a)
during the 12-month period preceding such date or, in the case of an
Employee employed on other than a full-time basis, during any 12-month
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period subsequent to December 31, 1975 preceding such date has been such
an Employee, or (b) is included in a group determined by the Board to be
eligible to participate in the Investment Fund after employment by one or
more of the Employers during such period of less than one year as the
Board has determined, and during such period has continuously been such an
Employee, and
(2) has completed a year of service
shall become eligible to participate in the Investment Fund on the first
day of his earliest payroll period commencing with or within such monthly
accounting period. Any participant and any Employee eligible to
participate in the Investment Fund whose employment terminated or who
incurs a break in service and who shall become an Employee after July 31,
1993 shall be eligible to participate in the Investment Fund on the date
he is reemployed or returns from a break in service, as the case may be.
Any person eligible to participate in the CBS News Special Projects Inc.
Employee Investment Fund shall be excluded from participation in this
Investment Fund as of the date such person becomes eligible to participate
in the CBS News Special Projects Inc. Employee Investment Fund. Any
person who was eligible to participate in the CBS News Special Projects
Inc. Employee Investment Fund and is subsequently employed or reemployed
by CBS shall be immediately eligible to participate in this Investment
Fund upon such date of employment or reemployment.
B. Each new Employee who shall become eligible to participate in the
Investment Fund and who shall file with CBS his election to do so shall
become a participant therein. A participant may be such by reason of his
concurrent employment by two or more Employers. Any such participant shall
be entitled to participate in the Investment Fund as an Employee of each
such Employer. In no event, however, shall a "leased employee," as defined
in Section 414(n) of the Internal Revenue Code, be entitled to participate
in the Investment Fund.
III. Accounts.
A. CBS shall cause to be established a separate A account for each
participant, and within such account a separate after-tax subaccount and a
separate before-tax subaccount to account respectively for contributions to
the account made on an after-tax and made on a before-tax basis, which
shall be used in connection with the investment by the Trustee of specified
portions (if any) of such participant's contributions in securities and
other properties of every nature other than securities issued by CBS or any
of its subsidiaries.
B. CBS shall cause to be established a separate B account for each
participant, and within such account a separate after-tax subaccount and a
separate before-tax subaccount to account respectively for contributions to
the account made on an after-tax and made on a before-tax basis, which
shall be used in connection with the investment by the Trustee of specified
portions (if any) of such participant's contributions in securities and
other properties of every nature other than common stocks and other than
securities issued by CBS or any of its subsidiaries.
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C. CBS shall cause to be established a separate C account for each
participant which shall be used in connection with the investment by the
Trustee of Employers' matching contributions allocated to such participant
in CBS Stock.
D. CBS shall cause to be established a separate C account for each
Employer which shall be used with respect to such Employer's matching
contributions and the allocation thereof to the participants who shall be
Employees of such Employer.
E. CBS shall cause to be established a separate D account for each
participant, and within such account a separate after-tax subaccount and a
separate before-tax subaccount to account respectively for contributions to
the account made on an after-tax and made on a before-tax basis, which
shall be used in connection with the investment in CBS Stock by the Trustee
of specified portions (if any) of such participant's contributions.
F. CBS shall cause to be established a separate E account for each
participant, and within such account a separate after-tax subaccount and a
separate before-tax subaccount to account respectively for contributions to
the account made on an after-tax and made on a before-tax basis, which
shall be used in connection with the investment by the Trustee of specified
portions (if any) of such participant's contributions in securities and
other properties of every nature other than securities issued by CBS or any
of its subsidiaries.
G. When a tender or exchange offer or other offer to purchase CBS Stock
(other than on an all-cash basis) is made, CBS shall cause to be
established a separate, numerically designated C account and D account
(hereinafter described as a C-# and D-# account, respectively) for each
participant who shall have instructed the Trustee, pursuant to
subparagraph 2 of Paragraph L of Article VIII, to tender or sell shares of
CBS Stock representing C units credited to such participant's C account and
D units credited to such participant's D account. Such newly established,
numerically designated C and D accounts shall be used only in connection
with the investment by the Trustee of the securities or other property
received by the Trustee with respect to such participant's C and D units,
and held by the Trustee in separate, numerically designated C and D Funds
(hereafter respectively described as a C-# and D-# Fund), as a consequence
of the closing of such a transaction. The C-# and the D-# account of a
participant shall be respectively credited with numerically designated C
and D units (hereinafter described as C-# and D-# units) representing such
participant's proportional share of the C-# and D-# Funds, as initially
valued and as periodically thereafter valued on a valuation date.
IV. Employee Contributions; Contribution Elections;
Investment Directions; Conversion Directions.
Three methods of making contributions to the Investment Fund are provided:
the required basic contribution and the voluntary supplemental contribution
(both pursuant to contribution elections) and the periodic special
contribution.
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<PAGE>
Each contribution election of a participant with respect to the required
basic contribution and the voluntary supplemental contribution shall be
made on such form as CBS may from time to time prescribe and shall specify
the participant's: (i) designation of the percent of his salary to
constitute the contribution amount; (ii) investment direction as to the
mode of investment of such contribution and (iii) election (a) to have such
contribution amount (or, with respect to the voluntary supplemental
contribution, a portion thereof) treated as an "after-tax" contribution and
his authorization to his Employer to withhold from his salary and pay to
the Trustee the contribution amount for conversion to unit credits in his
after-tax subaccount(s) and/or (b) to have such contribution amount (or,
with respect to the voluntary supplemental contribution, a portion thereof)
treated as a "before-tax" contribution and his salary deferral agreement
with his Employer to defer payment to him of, and to pay to the Trustee,
the contribution amount for conversion to unit credits in his before-tax
subaccount(s). For purposes of Section 401(k) of the Code only, all
amounts designated by a participant as before-tax contributions and
credited to his before-tax subaccounts shall be considered Employer
contributions made pursuant to a participant's election.
(i) The required basic contribution and the voluntary supplemental
contribution:
A. 1. As a part of, or concurrently with, his participation election,
each Employee shall file with CBS a contribution election, with respect to
such Employee's required basic contribution for and during those of such
Employee's payroll periods for which such contribution election shall be in
effect, which shall designate either 1, 1-1/2, 2, 2-1/2, or, if applicable,
3 or 4 percent of such Employee's salary from his Employer during such
periods as such contribution and which shall include an election to have
all of such contribution amount treated either as an after-tax or as a
before-tax contribution. At any time after filing a contribution election
with respect to a required basic contribution, except as otherwise provided
in Paragraph A of Article VI hereof or subparagraph 2 of Paragraph B of
said Article VI, a participant may file a modification thereof either to
designate a different permitted percent of his salary as his required basic
contribution, or to change his election as to the after-tax or before-tax
treatment of such contribution amount, or both.
2. At the time of his participation election, or at any time
thereafter (except during any period when a suspension of his contribution
election for his required basic contribution is in effect), a participant
whose required basic contribution is the maximum basic contribution may
also file with CBS a contribution election providing for his Employer to
pay to the Trustee as such Employee's voluntary supplemental contribution
to the Investment Fund the percentage therein specified, which may be any
whole or half number from one-half to ten, of such Employee's salary from
such Employer for those of such Employee's payroll periods for which
contribution elections for his required basic contribution and for a
voluntary supplemental contribution shall be in effect. Any participant
who has filed a contribution election for a voluntary supplemental
contribution may at any time thereafter file with CBS a modification of
such contribution election for his voluntary supplemental contribution as
then in effect which shall provide that his Employer shall pay to the
Trustee as such participant's voluntary supplemental contribution to the
Investment Fund a specified
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percentage of such participant's salary from such Employer different from
the percentage provided in such participant's voluntary supplemental
contribution contribution election as then in effect. The percentage
specified in such a modification shall be any whole or half number from
zero to ten. A participant, in filing a contribution election (or
modification thereof) with respect to his voluntary supplemental
contribution, shall designate which portion (which may be all, or none, or
any percentage thereof divisible by five) of the amount of his salary so
designated shall be treated as an after-tax contribution and which portion
treated as a before-tax contribution, the total of such portions not to
exceed 100 percent of the voluntary supplemental contribution amount.
3. Any participant may also at any time file with CBS a suspension
of such participant's contribution election for his required basic
contribution as then in effect which shall provide that his Employer shall
not pay to the Trustee as such participant's required basic contribution to
the Investment Fund any portion of such participant's salary from such
Employer. Such a suspension of a participant's contribution election for
his required basic contribution shall automatically cause a suspension of
his contribution election, if any, then in effect for a voluntary
supplemental contribution. Except as otherwise provided in Paragraph A of
Article VI hereof or subparagraph 2 of Paragraph B of said Article VI, any
such participant may at any time file a new contribution election with CBS.
B. 1. As a part of every contribution election each Employee shall
also file with CBS such Employee's direction with respect to the portion of
such Employee's required basic contribution (and voluntary supplemental
contribution, if any) for each of his payroll periods for which such
investment direction shall be in effect which is to be (a) converted to A
units and credited to such Employee's A account, (b) converted to B units
and credited to such Employee's B account, (c) converted to D units and
credited to such Employee's D account and (d) converted to E units and
credited to such Employee's E account. Up to 100 percent of the total of
an Employee's required basic contribution and, if any, voluntary
supplemental contribution may be directed to be converted to A units, B
units, D units or E units. All conversions under the Investment Fund shall
be effected in accordance with the provisions of subparagraph 5 of
Paragraph B of Article IX hereof.
2. Subject to such conditions as CBS shall prescribe on a uniform
basis, any participant may from time to time file with CBS a modification
of such participant's investment direction as made in connection with a
contribution election or elections then in effect. Such modification shall
become effective on the next date (of which there shall be not fewer than
two in any calendar year) which CBS shall specify for the effective date of
such modifications.
C. Each Employer shall withhold and/or defer from the payment of the
salary of each participant for each payroll period with respect to which
there shall be a contribution election or elections of such participant in
effect the percentage of the salary of such participant specified in such
election or elections and, as of and as promptly as shall be practicable
after the valuation date which shall be nearest to the last day of the
monthly accounting period in which such payroll period shall end, (1) such
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<PAGE>
Employer shall pay to the Trustee the aggregate amount of such Employer's
said withholdings and/or deferrals for the payroll periods ending in such
monthly accounting period, and (2) CBS or its designee shall convert the
amounts so paid to it into A units, B units, D units and E units, credit
such units to the A accounts, B accounts, D accounts and E accounts of the
respective participants whose contributions are so paid to it and credit
such amounts to the A Fund, the B Fund, the D Fund and the E Fund, all in
conformity with the respective investment directions of such participants
for such payroll periods. Such credits as result from contributions
elected to be made on an after-tax basis shall be credited to the after-tax
subaccounts of the A, B, D and E accounts of the respective participants,
and such credits as result from contributions elected to be made on a
before-tax basis shall be credited to the before-tax subaccounts of the A,
B, D and E accounts of the respective participants.
(ii) the periodic special contribution:
A. 1. At such intervals and subject to such conditions as CBS shall
prescribe on a uniform basis, each participant who at that time has in
effect a contribution election for a required basic contribution shall be
provided the opportunity to make a periodic special contribution, on an
after-tax basis, by a cash payment to the Investment Fund.
2. The amount of any periodic special contribution of a participant
may be in such amount as such participant shall elect but not in excess of:
(a) 140 percent of the total of all his actual contributions,
if any, made by him to the Investment Fund through payroll
authorizations at any time from the date he first became a
participant in the Investment Fund to June 30, 1977 (which amount
shall be described as a participant's "past frozen credit"), plus
(b) the difference, if any, between (i) the total of (y) the
aggregate amount he could have contributed to the Investment Fund as
required basic contributions and voluntary supplemental contributions
subsequent to June 30, 1977 if at all times subsequent to that date
he had had in effect payroll authorizations (throughout the period
ended December 31, 1983) and contribution elections (throughout the
period commencing January 1, 1984) for the required basic
contribution and the voluntary supplemental contribution for the
maximum percentage of base salary permitted plus (z) the withdrawals
made by him subsequent to June 30, 1977, and (ii) the total of all
his actual contributions made as required basic contributions,
voluntary supplemental contributions and periodic special
contributions to the Investment Fund subsequent to June 30, 1977.
3. At the time of making a periodic special contribution, a
participant shall also file with CBS an investment direction with respect
to the portion, if any, of such contribution which is to be converted to A
units and credited to such participant's after-tax subaccount of his A
account and with respect to the portion, if any, of such contribution which
is to be converted to B units and credited to such participant's after-tax
subaccount of his B account and with respect to the portion, if any, of
such
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<PAGE>
contribution which is to be converted to D units and credited to such
participant's after-tax subaccount of his D account and with respect to the
portion, if any, of such contribution which is to be converted to E units
and credited to such participant's after-tax subaccount of his E account.
Such proportion, if any, elected in such an investment direction shall be a
percentage of 100 percent which is a whole number divisible by five.
(iii) limitations:
A. Notwithstanding anything contained in the foregoing provisions of
this Article IV, the following rules and limitations shall apply to a
participant's before-tax basic required contributions and, if applicable,
before-tax voluntary supplemental contributions. If the Committee shall at
any time determine that the spread between the then-current percentage of
salary being contributed to the Investment Fund by means of before-tax
contributions for (i) "highly compensated eligible Employees" and (ii) the
remaining eligible Employees, is such that before-tax contributions under
the Investment Fund would fail to satisfy either of the "actual deferral
percentage tests" for the current plan year (assuming such percentages had
been and would continue in constant effect for the entire plan year), the
Committee, in its sole discretion, may unilaterally reduce, on a
prospective basis, the maximum percentage of salary with respect to which
such "highly compensated eligible Employees" elected to defer as before-tax
contributions under the Investment Fund. The participant's salary deferral
agreement incorporated in his contribution election shall be automatically
adjusted, without any further action on the part of such participant or his
Employer, to conform to the new limitation imposed by the Committee and
unless such participant otherwise instructs the Committee in a written
notice, his after-tax contribution agreement incorporated in his
contribution election (if one is then in effect) also shall be
automatically adjusted so as to increase the percentage of his salary which
shall be contributed pursuant thereto by the amount of such automatic
adjustment. The Committee, in its sole discretion, may at any time remove
any limitation imposed by it under this provision and any modifications to
the participant's contribution election resulting from such limitation
shall automatically cease to be effective and such contribution election
shall continue in effect under the terms that existed immediately prior to
such modifications.
For purposes of this Paragraph A, the following terms shall have the
following meanings:
"actual deferral percentage tests" shall mean either of the following:
1. the "actual deferral percentage" for the group of "highly compensated
eligible Employees" is not more than the "actual deferral percentage"
for all other eligible Employees multiplied by 1.25; or
2. the excess of the "actual deferral percentage" for the group of
"highly compensated eligible Employees" over that of all other
eligible Employees is not more than two percentage points, and the
"actual deferral percentage" for the group of "highly compensated
eligible Employees" is not more than the "actual deferral percentage"
of all other eligible Employees multiplied by 2.0.
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<PAGE>
"Actual deferral percentage" with respect to any group of active
eligible Employees for a plan year shall mean the average of the ratios
(calculated separately for each eligible Employee in the group) of
1. the amount of before-tax contributions authorized by the eligible
Employee to be paid to the Investment Fund for such plan year, to
2. the eligible Employee's salary for such plan year.
For purposes of determining "actual deferral percentages", any
eligible Employee who is suspended from participation shall be treated as
an eligible Employee.
In the case of a "highly compensated eligible Employee" who is
subject to the family aggregation requirements of Section 414(q)(6) of the
Code, the combined "actual deferral percentage" for the family group
(which is treated as one "highly compensated eligible Employee") is
determined by combining the before-tax contributions that are paid to the
Investment Fund on behalf of all eligible family members for such plan
year. In all events, "actual deferral percentages" will be determined in
accordance with all of the applicable requirements (including to the
extent applicable, the plan aggregation requirements) of Section 401(k) of
the Code, and the regulations issued thereunder.
The term "highly compensated eligible Employees" include those
participants who meet the definition of "highly compensated Employee" as
determined under Section 414(q) of the Code and the regulations issued
thereunder. The term "highly compensated Employee" includes highly
compensated active Employees and highly compensated former Employees. A
highly compensated active Employee means an Employee of the Employer or an
affiliated company who performs services for the Employer or an affiliated
company during the current plan year (the "determination year") and who,
during the preceding plan year (the "look-back year"), was an Employee who
(i) received compensation in excess of $75,000 (adjusted at the same time
and in the same manner as under Section 415(d) of the Code), (ii) received
compensation in excess of $50,000 (adjusted at the same time and in the
same manner as under Section 415(d) of the Code) and was a member of the
"top-paid group," or (iii) was an officer earning more than 50 percent of
the dollar limitation under Section 415(b)(1)(A) of the Code. A "highly
compensated active Employee" also includes an Employee described in the
preceding sentence if (i) the term "determination year" is substituted for
the term "look-back year" and the Employee was one of the 100 Employees
who earned the most compensation during the determination year, or (ii)
the Employee was at any time during the determination year or the
look-back year a five-percent owner of the Employer as defined in Section
416(i)(1) of the Code.
The "top-paid group" shall include all Employees who are in the top
20 percent of all Employees on the basis of compensation. For purposes of
determining the number of Employees in the "top-paid group," the following
Employees shall be excluded: (i) Employees who have not completed six
months of service; (ii) Employees who normally work less than 17-1/2 hours
per week; (iii) Employees who normally work during not more than six
months during any calendar year; (iv) Employees who have
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<PAGE>
not attained age 21; and (v) Employees who are nonresident aliens
receiving no United States source income within the meaning of Section
861(a)(3) and Section 911(d)(2) of the Code.
For purposes of determining the number of Employees who will be
considered "officers," no more than 50 Employees (or if less, the greater
of three Employees or 10 percent of the Employees), excluding those
Employees who are excluded for purposes of determining the "top-paid
group" under the preceding paragraph, shall be treated as officers. If,
for any year, no officer has earned more than 50 percent of the dollar
limitation under Section 415(b)(1)(A) of the Code, the highest paid
officer of the Employer or an affiliated company shall be treated as
having earned such amount.
A "highly compensated former Employee" means an Employee who
separated from service prior to the determination year, who performed no
services for an Employer during the determination year, and who was a
highly compensated active Employee for either such Employee's separation
year or any determination year ending on or after the Employee's 55th
birthday. An Employee who separated from service before January 1, 1987
will be a highly compensated former Employee only if the Employee was a
five-percent owner or received compensation in excess of $50,000 during
the Employee's separation year (or the year preceding such separation
year) or any year ending on or after such Employee's 55th birthday (or the
last year ending before such Employee's 55th birthday).
If during the determination year, a highly compensated Employee is a
five-percent owner or one of the 10 most highly compensated Employees on
the basis of compensation paid during such determination year, then such
Employee shall be subject to the family aggregation requirements of
Section 414(q)(6) of the Code, and the compensation and contributions paid
to or on behalf of all family members who are Employees shall be
aggregated with and attributable to the highly compensated Employee.
Except as otherwise provided in the Plan, family members shall include the
highly compensated Employee's spouse and lineal ascendants or descendants
and the spouse of such lineal ascendants or descendants.
For purposes of determining highly compensated Employees,
"compensation" shall be determined in the same manner as "annual
compensation" in Article XII of the Plan, increased by before-tax
contributions under a cafeteria plan (as defined in Section 125 of the
Code) maintained by the Employer or an affiliated company.
The determination of highly compensated eligible Employees may be
made by the Committee on the basis of the calendar year election or the
substantiation guidelines in accordance with such regulations, notices or
other guidance issued under Section 414(q) of the Code.
If after the close of any plan year the Committee shall determine
that the Investment Fund failed to satisfy either of the "actual deferral
percentage tests", the Committee may utilize any combination of the
following methods to assure that the Investment Fund complies with one or
both of the "actual deferral percentage tests":
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1. The "excess deferrals" and the income allocable thereto shall be
distributed to the applicable "highly compensated eligible Employees"
as soon as practicable after the end of such plan year, but no later
than 12 months after the close of such plan year; the amount of
income allocable to each affected highly compensated eligible
Employee's excess deferrals shall be determined by multiplying the
income for the plan year allocable to the eligible Employee's
before-tax contributions (defined below) by a fraction, the numerator
of which is the highly compensated eligible Employee's excess
deferrals for the plan year and the denominator of which is the sum
of: (A) the eligible Employee's account balance attributable to
before-tax contributions as of the first day of the plan year, plus
(B) the eligible Employee's before-tax contributions for the plan
year. The income for the plan year allocable to each affected highly
compensated eligible Employee's before-tax contributions shall be
determined by subtracting the amount in the denominator of the
above-described fraction from the account balance attributable to
before-tax contributions determined as of the last day of the plan
year. The amount of excess deferrals that may be distributed under
this Paragraph A with respect to any participant for any plan year
shall be reduced by the amount of any excess before-tax contributions
previously distributed pursuant to Paragraph C, if any, for such plan
year; or
2. The "excess deferrals" shall be recharacterized as after-tax
contributions in accordance with regulations issued under
Section 401(k)(3) of the Code to the extent required to comply with
either of the "actual deferral percentage tests".
"Excess deferrals" shall mean, with respect to each "highly
compensated eligible Employee", the amount equal to total before-tax
contributions made on behalf of the eligible Employee (determined prior to
the application of the leveling procedure described below) minus the
product of the eligible Employee's "actual deferral percentage"
(determined after application of the leveling procedure described below)
multiplied by the eligible Employee's salary. In accordance with the
regulations issued under Section 401(k) of the Code, "excess deferrals"
shall be determined by a leveling procedure under which the "actual
deferral percentage" of the "highly compensated eligible Employee" with
the highest such percentage shall be reduced to the extent required to
satisfy either of the "actual deferral percentage tests" or, if it results
in a lower reduction, to the extent required to cause such "highly
compensated eligible Employee's" "actual deferral percentage" to equal the
"actual deferral percentage" of the "highly compensated eligible Employee"
with the next highest "actual deferral percentage". This leveling
procedure shall be repeated until the requirements of either of the
"actual deferral percentage tests" are first satisfied. The determination
and correction of excess deferrals of a highly compensated eligible
Employee whose actual deferral percentage is determined under the family
aggregation requirements of Section 401(k) and Section 414(q)(6) of the
Code is accomplished by reducing the family unit's actual deferral
percentage under the leveling procedure described in this paragraph and
allocating the excess deferrals among the family group in proportion to
the before-tax contributions made on behalf of
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<PAGE>
each family member that are combined to determine the family unit's actual
deferral percentage.
B. Notwithstanding anything contained in the foregoing provisions of
this Article IV or in the provisions of Article V, the provisions on
limitations set forth in Article XII shall apply to limit Employee and
Employer matching contributions in any calendar year which exceed those
specified in Article XII.
C. Notwithstanding anything contained in the foregoing provisions of
this Article IV or in the provisions of Article V, in no event may the
amount of an eligible Employee's before-tax contributions to the Plan, in
addition to all such before-tax contributions under all other cash or
deferred arrangements (as defined in Section 401(k) of the Code) in which
an eligible Employee participates, exceed $7,000 (adjusted for increases in
the cost-of-living under Section 402(g) of the Code) in any calendar year.
If in any calendar year an eligible Employee's total before-tax
contributions under the Investment Fund, in addition to all such salary
reduction contributions under all other qualified cash or deferred
arrangements (as defined in Section 401(k) of the Code) maintained by the
Employer or an affiliated company in which the eligible Employee
participates, exceed $7,000 (as adjusted), the excess before-tax
contributions (before-tax contributions in excess of $7,000 (as adjusted))
together with earnings thereon shall be distributed to the eligible
Employee as soon as practicable after the Committee determines that the
excess before-tax contribution was made, but no later than April 15 of the
calendar year following the calendar year in which the excess before-tax
contribution was made. If an eligible Employee participates in another
cash or deferred arrangement which is not maintained by an Employer or an
affiliated company in any calendar year and his total before-tax
contributions under the Investment Fund and such other plan exceed $7,000
(as adjusted) in a calendar year, he may request to receive a distribution
of the amount of the excess before-tax contributions (a deferral in excess
of $7,000 (as adjusted)) that is attributable to before-tax contributions
in the Investment Fund together with earnings thereon, notwithstanding any
limitations on distributions contained in the Investment Fund. Such
distribution shall be made by the April 15 following the plan year of the
excess before-tax contributions provided that the eligible Employee
notifies the Committee of the amount of the excess before-tax contributions
that is attributable to before-tax contributions to the Investment Fund and
requests such a distribution. The eligible Employee's notice must be
received by the Committee no later than the March 1 following the plan year
of the excess before-tax contributions. In the absence of such notice, the
amount of such excess before-tax contributions attributable to before-tax
contributions to the Investment Fund shall be subject to all requirements
on withdrawals and distributions in the Investment Fund. The amount of
excess before-tax contributions that may be distributed under this
Paragraph C with respect to any eligible Employee for any calendar year
shall be reduced by the amount of any excess deferrals previously
distributed pursuant to Paragraph A of this Article IV, if any, for such
year. The amount of earnings allocable to each affected Employee's excess
before-tax contributions shall be determined by multiplying the income for
the plan year allocable to the Employee's before-tax contributions by a
fraction, the numerator of which is the Employee's excess before-tax
contributions for the calendar year, and the denominator of which is the
sum of: (A) the Employee's account balance
- 11 -<PAGE>
attributable to before-tax contributions as of the first day of the
calendar year, plus (B) the Employee's before-tax contributions for the
calendar year. The earnings for the calendar year allocable to each
affected Employee's before-tax contributions shall be determined by
subtracting the amount in the denominator of the above-described fraction
from the account balance attributable to before-tax contributions
determined as of the last day of the calendar year.
D. Notwithstanding anything contained in the foregoing provisions of
this Article IV or in the provisions of Article V, the following rules and
limitations shall apply to a participant's after-tax basic required
contributions, after-tax voluntary supplemental contributions, Employers'
matching contributions, and, if applicable, after-tax periodic special
contributions. If the Committee shall at any time determine that the
spread between the Employers' matching contributions and the then current
percentage of salary being contributed to the Investment Fund by means of
after-tax contributions for (1) "highly compensated eligible Employees" of
the Employers, and (2) the remaining eligible Employees is such that
Employers' matching contributions and after-tax contributions under the
Investment Fund would fail to satisfy either of the "actual contribution
percentage tests" or the "multiple use test" for the current plan year
(assuming such percentages had been and would continue in constant effect
for the plan year), the Committee, in its sole discretion, may unilaterally
reduce, on a prospective basis, the maximum percentage of salary with
respect to which "highly compensated eligible Employees" elected to
contribute as after-tax contributions under the Investment Fund. The
participant's after-tax contribution agreement incorporated in his
contribution election shall be automatically adjusted, without any further
action on the part of such participant or his Employer, to conform to the
new limitation imposed by the Committee. The Committee, in its sole
discretion, may at any time remove any limitation imposed by it under this
provision and any modifications to the participant's contribution election
resulting from such limitation shall automatically cease to be effective
and such contribution election shall continue in effect under the terms
that existed immediately prior to such modifications.
For purposes of this Paragraph D, the following terms shall have the
following meanings:
"Actual contribution percentage test" shall mean either of the following:
1. The "actual contribution percentage" for the group of "highly
compensated eligible Employees" is not more than the "actual
contribution percentage" for all other eligible Employees multiplied
by 1.25; or
2. The excess of the "actual contribution percentage" for the group of
"highly compensated eligible Employees" over that of all other
eligible Employees is not more than two percentage points, and the
"actual contribution percentage" for the group of "highly compensated
eligible Employees" is not more than the "actual contribution
percentage" of all other eligible Employees multiplied by 2.0.
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<PAGE>
"Actual contribution percentage" with respect to any specified group of
active eligible Employees for a plan year shall mean the average of the
ratios (calculated separately for each eligible Employee in the group) of:
1. the amount of Employers' matching contributions and after-tax
contributions, plus the amount of any before-tax contributions
recharacterized pursuant to Article IV, the amount of any before-tax
contributions treated as Employers' matching contributions for
purposes of the "actual contribution percentage test", contributed to
the Investment Fund on behalf of each such eligible Employee for such
plan year, to
2. the eligible Employee's salary for such plan year.
For purposes of determining "actual contribution percentages", any
eligible Employee who is suspended from participation shall be treated as
an eligible Employee. In the case of a "highly compensated eligible
Employee" who is subject to the family aggregation requirements of Section
414(q)(6) of the Code, the combined "actual contribution percentage" for
the family group (which is treated as one "highly compensated eligible
Employee") is determined by combining the matching contributions,
after-tax contributions, recharacterized before-tax contributions, and
before-tax contributions used as Employers' matching contributions for
purposes of the "actual contribution percentage test" that are paid to the
Investment Fund on behalf of all eligible family members for such plan
year. In all events, "actual contribution percentages" will be determined
in accordance with all of the applicable requirements (including to the
extent applicable, the plan aggregation requirements) of Section 401(m) of
the Code and the regulations issued thereunder.
The term "highly compensated eligible Employee" shall have the same
meaning as in Article IV, Paragraph A.
The term "multiple use test" shall mean the rules prohibiting the
multiple use of the alternative limitation described in Section
401(k)(3)(A)(ii)(II) and Section 401(m)(2)(A)(ii) of the Code, and the
provisions of Treas. Reg. Section 1.401(m)-2(b) and any further guidance
issued thereunder.
If after the close of any plan year the Committee shall determine
that the Investment Fund failed to satisfy either of the "actual
contribution percentage tests", the Committee may utilize any combination
of the following methods to assure that the Investment Fund complies with
one or more of the "actual contribution percentage tests":
1. The "excess aggregate contributions" made with respect to "highly
compensated eligible Employees" with respect to such plan year, and
any income allocable thereto, determined in accordance with
regulations issued under Section 401(m) of the Code, shall be
distributed to the applicable "highly compensated eligible Employees"
in an amount equal to each such Employee's after-tax contributions
(including recharacterized before-tax contribution)
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<PAGE>
as soon as practicable after the end of such plan year, but no later
than 12 months after the close of such plan year.
2. If the Investment Fund fails to satisfy either of the "actual
contribution percentage tests" following the distribution of
after-tax contributions and income described under (1) above, the
remaining "excess aggregate contributions" made on behalf of "highly
compensated eligible Employees" with respect to such plan year, and
the income allocable thereto, determined in accordance with
regulations under Section 401(m) of the Code shall be distributed to
the applicable "highly compensated eligible Employees" as soon as
practicable after the end of such plan year, but no later than 12
months after the close of such plan year.
3. Before-tax contributions may be treated as Employer matching
contributions solely for the purposes of satisfying either of the
"actual contribution percentage tests".
"Excess aggregate contributions" shall mean with respect to each
"highly compensated eligible Employee," the amount equal to the total
Employer matching contributions made on his behalf and his after-tax
contributions (including the amount of any before-tax contributions
recharacterized pursuant to Article IV) determined prior to the
application of the leveling procedure described below minus the product of
the eligible Employee's contribution percentage, determined after the
application of the leveling procedure described below, multiplied by the
eligible Employee's compensation. Under the leveling procedure, the
contribution percentage of the "highly compensated eligible Employee" with
the highest such percentage is reduced to the extent required to enable
the Plan to satisfy either of the "actual contribution percentage tests",
or it results in a lower reduction, to the extent required to cause such
eligible Employee's contribution percentage to equal that of the "highly
compensated eligible Employee" with the next highest contribution
percentage. This leveling procedure is repeated until the Plan complies
with either of the "actual contribution percentage tests". In no case
shall the amount of "excess aggregate contributions" with respect to any
"highly compensated eligible Employee" exceed the after-tax contributions
and Employer matching contributions made on behalf of such eligible
Employee in any plan year.
E. Notwithstanding anything to the contrary in this Article IV, Employer
matching contributions, before-tax contributions and after-tax
contributions may not be made to this Investment Fund in violation of the
"multiple use test." If such multiple use occurs, the actual contribution
percentages for all "highly compensated eligible Employees" (determined
after applying the "actual deferral percentage" and "actual contribution
percentage" tests) shall be reduced in accordance with Treas. Reg. Section
1.401(m)-2(c) and any further guidance issued thereunder in order to
prevent such multiple use of the alternative limitation.
F. Notwithstanding anything in the Investment Fund to the contrary, if
the rate of the Employers' matching contributions (determined after
application of the corrective mechanisms described in Paragraph A,
Paragraph C and Paragraph D) discriminates in favor of "highly compensated
eligible Employees," the Employer matching contribution attributable to any
excess
- 14 -<PAGE>
deferrals, excess before-tax contributions of each affected "highly
compensated eligible Employee" shall be charged to the participant's C
account and credited to his Employer's C account so that the rate of
Employer matching contributions is nondiscriminatory. Any such charges
shall be made no later than the end of the plan year following the plan
year for which the Employer's matching contribution was made.
(iv) conversion directions:
Subject to such conditions as CBS shall prescribe on a uniform basis, any
participant may from time to time file with CBS a direction (i) to the
effect that, as of and as promptly as shall be practicable after the
valuation date nearest to the next date (of which there shall be not fewer
than two in any calendar year) which CBS shall specify for the purpose, CBS
or its designee shall charge to such participant's A account, D account or
E account all or the portion specified in such direction of the A units, D
units or E units credited to such account immediately prior to such
valuation date, shall convert the value of such A units, D units or E units
so charged to B units and shall credit such B units to such participant's B
account or (ii) to the effect that, as of and as promptly as shall be
practicable after such valuation date, CBS or its designee shall charge to
such participant's B account, D account or E account all or the portion
specified in such direction of the B units, D units or E units credited to
such account immediately prior to such valuation date, shall convert the
value of such B units, D units or E units so charged to A units and shall
credit such A units to such participant's A account or (iii) to the effect
that, as of and as promptly as shall be practicable after such valuation
date, CBS or its designee shall charge to such participant's A account, B
account or E account all or the portion specified in such direction of the
A units, B units or E units credited to such account immediately prior to
such valuation date, shall convert the value of such A units, B units or E
units so charged to D units and shall credit such D units to such
participant's D account, or (iv) to the effect that, as of and as promptly
as shall be practicable after such valuation date, CBS or its designee
shall charge to such participant's A account, B account or D account all or
the portion specified in such direction of the A units, B units or D units
credited to such account immediately prior to such valuation date, shall
convert the value of such A units, B units or D units so charged to E units
and shall credit such E units to such participant's E account, and CBS or
its designee shall so effect such charges, conversions and credits and
shall also effect corresponding credits and charges of the values of such
units to the A Fund, the B Fund, the D Fund or the E Fund. Following such
charges, conversions and credits, the units whose value have been thus
converted shall retain the after-tax or before-tax character which was
attributable to the units immediately prior to the conversion.
V. Employers' Matching Contributions.
Except as otherwise provided in the last sentence of this Article V, as of
and as promptly as shall be practicable after each valuation date, (a) each
Employer shall pay to the Trustee, as such Employer's matching
contribution, the amount which, together with the value of the C units
credited to such Employer's C account as of such valuation date (prior to
effecting the credits thereto as of such valuation date provided for in
- 15 -
<PAGE>
subparagraph 1 of Paragraph B of Article VI hereof and subparagraph 3 of
Paragraph C of said Article VI), will enable CBS or its designee to effect
the credits hereinafter in this Article V referred to in the C accounts of
those participants whose required basic contributions shall be or shall
have been paid to the Trustee by such Employer as of such valuation date,
and (b) CBS or its designee shall convert the amount of such Employer's
matching contribution so paid to it to C units, credit such C units to such
Employer's C account, credit to the C account of each of said participants
the number of C units the value of which shall be equal to 100 percent of
such participant's required basic contribution so paid to the Trustee,
charge to such Employer's C account all of the C units so credited to the C
accounts of said participants and credit the amount of such Employer's
matching contribution to the C Fund. Notwithstanding the foregoing
provisions of this Article V, no Employer shall make a matching
contribution as of any valuation date in excess of whichever shall be
greater of the amount of such Employer's earnings and profits for such
Employer's taxable year in which such valuation date shall occur or the
amount of such Employer's earnings and profits as of the end of such
taxable year, prior, in either case, to any charge for such contribution;
if and to the extent that any Employer shall not be able to make such a
matching contribution because it shall have insufficient such earnings and
profits, the other Employers shall, in such proportions as CBS shall
determine and subject to the same limitations based upon their earnings and
profits, make such matching contribution on behalf of such first-mentioned
Employer. With respect to a participant whose required basic contribution
is the maximum permitted amount of 2-1/2 percent of his or her salary and
for whom the numerical total of his or her attained years of age plus the
full years of his or her continuous employment period equals 55 or greater,
the Employer's matching contribution to be credited to such participant's C
account shall be increased to be of a value equal to (i) 120 percent of his
or her required basic contribution if the participant has not attained age
50 or (ii) 160 percent of his or her required basic contribution if the
participant has attained age 50. Such increased rate of Employer's
matching contribution shall become effective as of and as promptly as shall
be practicable after the valuation date following January 1 of the year in
which a participant shall satisfy the one or several requirements for
entitlement thereto, but shall be made only if the total of the
participant's required basic contribution election and voluntary
supplemental contribution election as then in effect, as a percentage of
the participant's salary, equals or exceeds such increased rate. The
manner for payment, conversion, charging and crediting of Employer's
matching contributions at such increased rates shall be identical to that
provided in the first sentence of this Article, and the making thereof
shall not be deemed to contravene the final sentence of this paragraph. No
Employer matching contributions shall be made with respect to voluntary
supplemental contributions or periodic special contributions of a
participant.
Subject to such conditions as CBS shall prescribe on a uniform basis, a
participant who has attained age 55 may thereafter from time to time, but
not more than twice, file with CBS a direction to the effect that, as of
and as promptly as shall be practicable after the valuation date nearest to
the next date (of which there shall be not fewer than two in any calendar
year) which CBS shall specify for the purpose, CBS or its designee shall
charge to such participant's C account all, or the portion designated by
the participant, of the vested C units credited to such account immediately
- 16 -<PAGE>
prior to such valuation date, shall convert the value of such vested C
units so charged to B units and shall credit such B units to such
participant's B account in a separate before-tax subaccount therein to be
designated the participant's "converted C/B unit subaccount". A
participant shall not have the right to withdraw any of the amounts
credited to such a subaccount prior to the termination of his or her
employment (and participation), and the limited conversion privilege herein
provided is separate and distinct from the "C unit conversion election"
relating to the payment of a termination benefit which is set forth in
subparagraph 3 of Paragraph E of Article VI of the Investment Fund.
VI. Termination of Participation; Withdrawals;
Determination and Payment of Benefits.
A. Nothing contained herein shall require any Employer to continue any
participant in its employ, or require any participant to continue in the
employ of any Employer, or require any Employer to continue to pay
compensation to any participant during a leave of absence, or require any
Employer to pay compensation to any participant during a leave of absence
at the same rate as prior to the commencement thereof. Except as otherwise
provided in the next sentence of this Paragraph A, if the employment of any
participant by an Employer shall terminate for any reason whatever,
including his death, his participation in the Investment Fund shall
terminate as of the date of such termination of employment. In any event,
(a) if, concurrently with the termination of the employment of a
participant by any of the Employers, such participant shall become an
employee of a non-Fund subsidiary, or (b) if a participant shall either
(i) be transferred to a group of employees not determined by the Board to
be eligible to participate in the Investment Fund or (ii) become an
employee whose principal terms and conditions of employment are subject to
the terms of a collective bargaining agreement which does not provide for
eligibility for participation in the Investment Fund, his participation in
the Investment Fund shall not terminate until the business day on which he
shall no longer be an Employee of any of the Employers or an employee of
any non-Fund subsidiary and he shall be deemed to have suspended his
contribution election as then in effect for those of his consecutive
payroll periods which shall be co-extensive with the period during which he
shall be an employee of a non-Fund subsidiary or any employee included in
such an ineligible group or an employee whose principal employment terms
and conditions are subject to such a collective bargaining agreement, as
the case may be, and such contribution election shall not be subject to
renewal during such payroll periods.
B. 1. Prior to any valuation date, a participant may file with CBS a
request to have paid to him as of such valuation date the amount equal to
whichever shall be the lesser of (a) the amount specified in, or computed
in accordance with, such request or (b) the amount equal to the sum of the
value as of such valuation date of the A units then credited to such
participant's after-tax subaccount of his A account, the B units then
credited so such participant's after-tax subaccount of his B account, the D
units then credited to such participant's after-tax subaccount of his D
account, and the E units then credited to such participant's after-tax
subaccount of his E account. Such request shall specify the extent, if
any, to which after-tax subaccount A units, after-tax subaccount B units,
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<PAGE>
after-tax subaccount D units and after-tax subaccount E units shall
respectively be charged to such participant's A account, B account, D
account and E account to effect such withdrawal. CBS or its designee
shall, as of and as promptly as shall be practicable after such valuation
date, effect the charges so specified to such accounts, effect
corresponding charges of the value of such units to the A Fund, the B Fund,
the D Fund and the E Fund and make such payment to such participant. After
a participant has attained age 59-1/2, the foregoing provisions limiting
the right of withdrawal to the value only of the A and/or B and/or D and/or
E units in his after-tax subaccounts shall lapse, and the withdrawal may be
requested and effected of amounts which include the value of the A and/or B
and/or D and/or E units in his before-tax as well as in his after-tax
subaccounts then credited to such participant's accounts, subject however
to the limitation of Section B.2 below.
2. If any participant shall effect a withdrawal of his required
basic contributions as of a valuation date which shall be less than five
full years subsequent to the valuation date (if any) as of which he shall
last have effected a withdrawal of his required basic contributions, such
withdrawal shall be deemed to be a suspension of all of such participant's
contribution election as then in effect for those of his consecutive
payroll periods the last of which shall be the last payroll period ending
within the twelfth monthly accounting period commencing subsequent to such
first-mentioned valuation date, and such contribution election shall not be
subject to renewal during such payroll periods.
3. Prior to his attainment of age 59-1/2, a participant who has
already withdrawn the maximum amount allowable under this Article VI may,
in accordance with the foregoing procedures, request a withdrawal, to meet
a bona fide financial emergency, of amounts which include all or a portion
of credits then credited as units in his A and/or B and/or D and/or E
accounts in the before-tax subaccounts thereof. In considering and making
determinations upon such hardship requests, the Committee will act on the
basis of positive evidence which the participant will be required to
furnish, and will make its determinations on a uniform and
nondiscriminatory basis. Consent for such hardship withdrawals will be
granted if and only to the extent that the Committee determines that
(i) the distribution is necessary in light of immediate and heavy financial
needs of the participant, (ii) the distribution will not exceed the amount
required to meet such financial needs, and (iii) funds to meet such
financial needs are not reasonably available from other resources of the
participant. Such determination shall be made in accordance with the
following guidelines:
(a) Demonstration of Need. The participant must establish an
immediate and heavy financial need for a withdrawal of funds pursuant to
this section. The Committee shall determine, in a nondiscriminatory
manner and in accordance with the provisions of Section 401(k) of the
Code, whether a participant has a financial hardship. For this purpose,
the term "financial hardship" shall be determined in accordance with the
regulations issued pursuant to Section 401(k) of the Code and any other
notices or rulings of general applicability issued under Section 401(k) of
the Code and, to the extent permitted by such regulations, shall be
limited to any financial need arising from: (1) medical expenses
previously incurred or expenses necessary to obtain medical care not
covered by insurance and arising from serious illness, accident or total
- 18 -<PAGE>
disability of the participant or any member of his family, (2) expenses
relating to the payment of tuition for the next 12 months of
post-secondary education of a participant, his spouse or dependent,
(3) the expenses (excluding mortgage payments) required for the purchase
of a primary residence for the participant, (4) expenses relating to the
need to prevent the eviction of the participant from his principal
residence or foreclosure on the mortgage of the participant's principal
residence, or (5) expenses arising from circumstances of sufficient
severity that a participant is confronted by present or impending
financial ruin or his family is clearly endangered by present or impending
want or deprivation.
(b) Amount of Hardship Withdrawal. The amount of any withdrawal by
a participant under subsection (a) above shall not exceed the amount
required to meet the immediate financial need created by the hardship. In
no event may the amount of any withdrawal exceed the lesser of: (1) the
total value of the participant's before-tax contributions determined as of
December 31, 1988 (taking into account earnings and losses attributable to
such amounts), plus the total amount of the participant's before-tax
contributions that are made after December 31, 1988, or (2) the value of
all before-tax contributions made to the Plan (taking into account
earnings and losses attributable to such amounts).
(c) Availability of Other Resources. In order to make a withdrawal
under this paragraph, the participant must establish that he cannot
relieve the financial hardship with assets that are reasonably available
to the participant from other resources of the participant. For this
purpose, the Committee may reasonably rely upon a participant's
representation that the financial hardship cannot be relieved through:
(i) reimbursement or compensation by insurance or otherwise, (ii)
reasonable liquidation of the participant's assets, to the extent such
liquidation would not itself cause an immediate and heavy financial need,
(iii) cessation of before-tax contributions and after-tax contributions
under the Investment Fund, or (iv) nontaxable (at the time of the loan)
loans from plans maintained by the Employer or by any other employer or by
borrowing from commercial sources on reasonable commercial terms (except
to the extent any such borrowing would fail to alleviate the hardship or
the repayment of such borrowing would cause a financial hardship). A
participant's resources shall be deemed to include those assets of his
spouse and minor children that are reasonably available to the
participant. In the absence of such representations, a participant shall
be deemed to have no other resources reasonably available if: (i) the
participant has obtained all withdrawals, distributions and loans
currently available to the participant under the Investment Fund and all
other plans maintained by the Employer or an affiliated company (except to
the extent any such borrowing would fail to alleviate the hardship or the
repayment of such borrowing would cause a financial hardship); (ii) the
participant agrees to cease all before-tax contributions and after-tax
contributions under the Investment Fund as well as all similar
contributions to all other plans maintained by the Employer or an
affiliated company for a period of at least 12 months from the date of the
hardship withdrawal; and (iii) the amount of the participant's before-tax
contributions under the Investment Fund and under all plans maintained by
the Employer or an affiliated company for the year following the year of
the withdrawal are
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<PAGE>
limited to the applicable limit under Section 402(g) of the Code for such
year minus the participant's before-tax contributions for the year of the
hardship withdrawal.
C. 1. Except as otherwise provided in Paragraph E of this Article VI,
each participant whose employment (and participation) shall terminate at
any time for any reason whatever shall be entitled to receive as a
termination benefit the amount equal to the value on the valuation date
immediately following or coincident with his termination date of the A
units credited to his A account, of the B units credited to his B account,
of the D units credited to his D account and of the E units credited to his
E account, all as of such termination date.
2. Except as otherwise provided in Paragraph E of this Article VI,
each participant whose employment (and participation) shall terminate
either (a) for any reason on or subsequent to his 65th birthday or (b) at
any time by reason of his death or his disability or (c) at any time prior
to his 65th birthday when his continuous employment period shall be three
or more years, shall be entitled to receive as a termination benefit the
amount equal to the value on the valuation date immediately following or
coincident with his termination date of the C units credited to his C
account as of such termination date.
3. Except as otherwise provided in Paragraph E of this Article VI,
each participant whose employment (and participation) shall terminate,
other than by reason of his death or his disability, at any time prior to
his 65th birthday when his continuous employment period shall be less than
three years, shall be entitled to receive as a termination benefit the
amount equal to the value on the valuation date immediately following or
coincident with his termination date of the vested C units credited to his
C account as of such termination date. CBS or its designee shall, as of
and as promptly as shall be practicable after such valuation date, charge
to such former participant's C account and credit to his Employer's C
account the unvested C units credited to such former participant's C
account as of such termination date; provided, however, that if such
participant returns to employment before incurring a one-year break in
service, he shall be entitled to repay to the Investment Fund the amount of
his termination benefit attributable to his C account if such repayment is
made prior to the second anniversary of his resumption of employment. In
that event, such participant shall have credited to his C account the
unvested C units which were credited to his account as of his prior
termination date and the Employer's C account shall be charged in an
identical amount.
4. If a participant whose employment terminated and who received a
termination benefit is reemployed and repays the full amount of his
termination benefit to the Investment Fund prior to incurring five
consecutive one-year breaks-in-service, there shall be restored to the
A account, B account, D account, E account and C account of such
participant the number of A units, B units, D units, E units and C units,
respectively, that have a value as of the valuation date immediately
following or coincident with the date of such repayment equal to the value
of the number of units that had been credited to each such account as of
the date of such termination of employment.
- 20 -<PAGE>
5. All references to "C units", "D units", "C accounts" and "D
accounts" above in this Paragraph C shall be deemed to include any and all
C-# units, D-# units, C-# accounts and D-# accounts which may be in
existence at the relevant time or times.
D. Upon the termination of a participant's employment (and
participation) at any time for any reason whatever, and upon the
termination of a participant's employment (but not his participation) under
the circumstances referred to in the third sentence of Paragraph A of this
Article VI, his Employer shall repay to such former participant (or, in the
event of his death, to his executors or administrators) or to such
participant any amounts withheld or deferred from his salary, pursuant to a
contribution election in effect prior to such termination, with respect to
payroll periods ending in the monthly accounting period in which his
termination date shall occur, or his employment shall terminate under said
circumstances, as the case may be.
E. 1. (a) Any participant may file with CBS an election to have his
termination benefit (other than a termination benefit payable by reason of
his death) paid in a single payment or in a series of monthly or annual
installments over a period not exceeding the lesser of 20 years or the life
expectancy of such participant or the life expectancy of such participant
and any individual designated as a beneficiary by such participant,
provided that if the beneficiary is not the spouse of the participant, the
present value of the installments payable to the participant shall at least
equal 50 percent of the present value of the total installments payable to
the participant and his beneficiary. Such single payment or the first such
installment payment shall be made at the time specified in such election
but not later than April 1 of the calendar year following the later of the
calendar year in which such participant attains age 70-1/2, or the year in
which such participant retires. If a participant is receiving his
termination benefit in a series of installments and dies before his entire
interest has been distributed to him, the balance of his termination
benefit shall continue to be paid in such installments or, if his
beneficiary so elects, in a single payment.
(b) Any participant may file with CBS an election to have a
termination benefit payable by reason of his death paid in a single payment
to be paid to his beneficiary at the time specified in such election but
not later than five years after the date of his death or in a series of
monthly or annual installments to an individual designated as his
beneficiary over a period not exceeding the lesser of 20 years or the life
expectancy of such beneficiary and beginning at the time specified in such
election but not later than one year after the date of his death (or if the
participant's beneficiary is his surviving spouse, the date on which the
participant would have attained age 70-1/2).
(c) Any participant may also, not less than 30 days prior to
his termination date, modify or revoke any distribution election
theretofore made by him. If any participant shall not have a distribution
election in effect on his termination date, his termination benefit shall,
subject to the provisions of a stock election of such former participant
then in effect, be paid to him (or in the event of his death, to his
beneficiaries) in a single payment, provided, that if the value on the
valuation date coincident with or immediately following such termination
date of the A
- 21 -<PAGE>
units credited to his A account as of such termination date, of the B units
credited to his B account as of such termination date, of the D units
credited to his D account as of such termination date, of the E units
credited to his E account as of such termination date and of the C units
credited to his C account as of such termination date shall exceed $3,500,
his termination benefit shall not be immediately distributed without his
consent. If any participant does not consent to such a distribution, his
termination benefit will not be paid until his attainment of age 70. The
value of his termination benefit shall be determined as of the earliest to
occur of the valuation date coincident with or (i) immediately following
his 70th birthday, or (ii) immediately following the receipt by CBS on or
prior to the 15th day of the month of his consent to an immediate
distribution.
2. (a) A distribution election shall be set forth in a written
notice given to the Committee and, if made, such notice shall be given
during the 90-day period before the date the payment of his termination
benefit shall commence, which period shall be extended, if necessary, to
include at least the 90 days after the date the information referred to in
section (b) of this subparagraph 2 shall have been given to such
participant; provided, however, that if such participant shall have given
notice less than 90 days before the date on which the payment of his
termination benefit shall commence of his intent to terminate employment,
such election period shall end on the later of such date or the 14th day
after the date on which such notice shall have been given, which period
shall be extended, if necessary, to include at least 15 days after the
information referred to in section (b) of this subparagraph 2 shall have
been given to such participant. Elections hereunder shall be revocable
during such election period.
(b) Within seven days after the commencement of such election
period, or, if earlier, nine months prior to a participant's attainment of
age 55, such participant shall be furnished with a notice written in
non-technical terms of the availability of the distribution election.
3. Any participant may, in accordance with the provisions of
section (a) of subparagraph 2 of this Paragraph E, file with CBS an
election to have that portion of his termination benefit consisting of the
value of the D units credited to his D account and/or the value of the
vested C units credited to his C account paid to him (or, in the event of
his death, to his beneficiaries), to the extent possible, in shares of CBS
Stock in lieu of in cash ("a stock election"), or, alternatively, to have
such value of such D units (a "D unit conversion election") and/or of such
vested C units (a "C unit conversion election") converted as of his
termination date to units in his A and/or B and/or E account(s) as he may
designate. (In the case of a C unit conversion election, such value shall
be converted to units in said participant's before-tax subaccount(s); in
the case of a D unit conversion election, that portion of such value
representing the before-tax subaccount in said participant's D account
shall be converted to units in his before-tax subaccount(s) and that
portion of such value representing the after-tax subaccount in his D
account shall be converted to units in his after-tax subaccount(s).) Any
participant may also, in accordance with such provisions of said
section (a), revoke any such election theretofore made by him.
- 22 -<PAGE>
4. Notwithstanding any other provisions of Paragraph E of this
Article VI, if a participant is married, any designation of a beneficiary
other than the participant's spouse shall be given effect only if such
spouse consents in writing to such designation and such consent
acknowledges that such spouse is thereby waiving in favor of such other
beneficiary the right to receive the amount payable hereunder upon the
death of the participant and such consent is witnessed by a notary public.
The preceding sentence shall not apply to a designation by a participant
who establishes to the satisfaction of the Committee that his spouse cannot
be located. No designation of a beneficiary made before a participant is
married shall be given effect after the participant becomes married.
F. 1. If any former participant shall have in effect a distribution
election referred to in section (b) of subparagraph 1 of Paragraph E of
this Article VI, or if any former participant shall have in effect a
distribution election referred to in section (a) of said subparagraph 1 and
shall die prior to the payment of his termination benefit in full:
(a) As of and as promptly as shall be practicable after the
valuation date immediately following or coincident with such former
participant's termination date (if such distribution election shall
be one referred to in said section (b)) or the valuation date
immediately following or coincident with the date of such former
participant's death (if such distribution election shall be one
referred to in said section (a) and such participant shall die prior
to the payment of his entire termination benefit in full), as the
case may be:
(i) CBS or its designee shall determine the value of the A
units credited to such former participant's A account as of such
termination date or as of the date of the death of such former
participant, as the case may be, the value of the B units
credited to such former participant's B account as of such date
and the value of the E units credited to such former
participant's E account as of such date, and, if a stock
election, a D unit conversion or a C unit conversion election of
such former participant shall not be in effect, also the value
of the D units and the vested C units credited to such former
participant's D account and C account, respectively, as of such
date.
(ii) CBS or its designee shall charge such units (whether A
units and/or B units and/or D units and/or E units and/or vested
C units) to such respective accounts and charge the respective
values thereof to the A Fund and/or the B Fund and/or the D Fund
and/or the E Fund and/or the C Fund, as the case may be.
(iii) If such distribution election shall be one referred to
in said section (a) or said section (b), the Trustee shall pay
to such former participant or his beneficiaries, as the case may
be, the amounts so charged to the A Fund and/or the B Fund
and/or the D Fund and/or the E Fund and/or the C Fund.
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<PAGE>
(b) If a stock election of such former participant shall be in
effect, as of and as promptly as shall be practicable after the
applicable valuation date referred to in section (a) of this
subparagraph 1:
(i) The Trustee shall distribute to such former
participant or his beneficiaries, as the case may be, the
largest possible number of full shares of CBS Stock, registered
in the name of such former participant or his beneficiaries, the
value of which shall be equal to or less than the value of the D
units and the vested C units credited to the D account and C
account, respectively, of such former participant as of his
termination date or as of the date of the death of such former
participant, as the case may be.
(ii) CBS or its designee shall charge the D units and the
vested C units the value of which is so distributed to the D
account and the C account, respectively, of such former
participant and charge the value thereof to the D Fund and the C
Fund, respectively.
(iii) The Trustee shall pay to such former participant or
his beneficiaries, as the case may be, the amount equal to the
value of the D units and the vested C units credited to the D
account and the C account of such former participant as of such
date and not so charged to such D account or C account and
charge such amount to the D Fund or the C Fund, as the case may
be.
2. If any former participant shall have in effect a distribution
election referred to in section (a) of subparagraph 1 of Paragraph E of
this Article VI:
(a) As of and as promptly as shall be practicable after the
valuation date immediately following or coincident with such former
participant's termination date or the filing by such participant of
the aforementioned distribution election, whichever shall be the
later, and (I) if such distribution election shall be one requiring
monthly installments, as of and as promptly as shall be practicable
after each subsequent valuation date or (II) if such distribution
election shall be one requiring annual installments, as of and as
promptly as shall be practicable after each subsequent valuation
occurring during the same calendar month as such first-mentioned
valuation date, and in either case, to and including the valuation
date as of which such former participant's termination benefit shall
have been paid in full, or to and including the valuation date
immediately following the date of such former participant's death (if
such former participant shall die prior to the payment of his
termination benefit in full), as the case may be:
(i) CBS or its designee shall determine the value of the A
units then credited to such former participant's A account and
the B units then credited to such former participant's B account
and the E units then credited to such former participant's E
account, and, if a stock election or a D unit
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<PAGE>
or C unit conversion election of such former participant shall
be in effect, also the value of the D units and the vested C
units then credited to such former participant's D account and C
account, respectively.
(ii) The Trustee shall pay to such former participant or
his beneficiaries, as the case may be, that fraction of the
respective amounts determined pursuant to the provisions of
subsection (i) of this section (a) the numerator of which shall
be one and the denominator of which shall be the total number of
installments specified to be paid in the distribution election
of such former participant minus the number of such installments
paid as of valuation dates prior to the valuation date first
referred to in this section (a).
(iii) CBS or its designee shall charge to the A account of
such former participant and to the B account of such former
participant and to the E account of such former participant,
and, if a stock election or a D unit or C unit conversion
election of such former participant shall not be in effect, also
to the D account and C account of such former participant, the
fraction determined pursuant to the provisions of
subsection (ii) of this section (a) of the respective numbers of
the A units and the B units and the E units, and, if such stock
election or a D unit or C unit conversion election shall not be
in effect, also any D units and vested C units credited to such
accounts as of the valuation date first referred to in this
section (a) and make corresponding charges to the A Fund and/or
the B Fund and/or the E Fund and/or the D Fund and/or the C
Fund.
(b) If a stock election of such former participant shall be in
effect as of and as promptly as shall be practicable after the
valuation date first referred to in section (a) of this subparagraph
2, and (I) if such former participant's distribution election shall
be one requiring monthly installments, as of and as promptly as shall
be practicable after each subsequent valuation date, or (II) if such
distribution election shall be one requiring annual installments, as
of and as promptly as shall be practicable after each subsequent
valuation date occurring during the same calendar month as such
first-mentioned valuation date, and, in either case to and including
the valuation date as of which such former participant's termination
benefit shall have been paid in full, or to and including the
valuation date next preceding the date of such former participant's
death (if such former participant shall die prior to the payment of
his termination benefit in full), as the case may be:
(i) The Trustee shall distribute to such former
participant or his beneficiaries, as the case may be, the
largest possible number of full shares of CBS Stock, registered
in the name of such former participant or his beneficiaries, as
the case may be, the value of which shall be equal to or less
than the value of the fraction determined pursuant to the
provisions of subsection (ii) of section (a)
- 25 -
<PAGE>
of this subparagraph 2 of the D units and the vested C units
credited to the D account and the C account of such former
participant as of such valuation date.
(ii) CBS or its designee shall charge the D units and the
vested C units the value of which is so distributed to the D
account and the C account of such former participant and charge
the value thereof to the D Fund and the C Fund, respectively.
(iii) If said distribution election is one referred to in
said section (a), concurrently with the last distribution of CBS
Stock to such former participant or his beneficiaries, as the
case may be, the Trustee shall pay to him or them the amount
equal to the value as of the valuation date as of which such
distribution is made of the D units and the vested C units
credited to the D account and the C account of such former
participant as of such valuation date and not theretofore
charged thereto and CBS or its designee shall charge such D
units and C units to such D account and C account and charge
such amount to the D Fund and the C Fund, respectively.
3. All payments made by the Trustee to any former participant
(and/or his beneficiaries) pursuant to the foregoing provisions of this
Paragraph F shall be subject to such withholding and to such other
deductions as shall at the time of such payment be required by reason of
any income tax or other law, whether of the United States or of any other
jurisdiction, and, in the case of payments to beneficiaries of former
participants, the delivery to the Trustee of all appropriate tax waivers
and other documents.
4. Notwithstanding anything contained herein to the contrary, the
payment of any benefits to any former participant (and/or his
beneficiaries) shall commence, unless such former participant (and/or his
beneficiaries) shall elect otherwise hereunder, not later than the 60th day
after the close of the calendar year in which occurs his 65th birthday or
his retirement in a calendar year thereafter, whichever shall last occur.
5. Notwithstanding anything contained herein to the contrary, if a
participant shall attain age 70 on or after January 1, 1988 and shall
thereafter continue to be an Employee, then, as of the first day of the
month following the month in which such age is attained such participant
may elect then or at any time thereafter to terminate permanently his or
her participation, which shall result in the participant's right to
commence to receive payment of his or her benefits, the value of which
shall be determined as of the valuation date coincident with or immediately
following such election. In the absence of such an election, such
participant shall continue to participate in the Investment Fund on the
same terms and conditions as any other Employee.
6. To the extent practicable, the foregoing provisions of this
Paragraph F pertinent to the valuation, charging and distributions with
respect to the D units of a participant shall be applicable to the D-#
units credited to a D-# account of a participant, and those with respect to
the
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<PAGE>
vested C units of a participant shall be applicable to the vested C-# units
credited to a C-# account of a participant, at the time in question, and if
the application of such provisions shall not be practicable in any given
circumstances, the Committee shall make or direct to be made an equitable
and reasonable determination of the matter.
7. Any benefits payable to a participant or beneficiary which are
not claimed for a period of five years from the date of entitlement, as
determined by the Committee and following a diligent effort to locate such
participant or beneficiary, shall with the approval of the Committee be
charged to such former participant's or beneficiary's accounts and credited
to his Employer's C account; provided, however, that if a claim for such
forfeited benefits is made by the participant or beneficiary, all such
amounts shall be reinstated to the accounts of the participant or
beneficiary.
G. 1. The Committee, as defined in Article VIIA, may determine to make
a loan to any participant who then qualifies as an Employee under
Article IX, Paragraph A, subparagraph 26, or is otherwise a "party in
interest" with respect to the Investment Fund under Section 3(14) of ERISA.
The total amount of each loan will be subject to the following rules:
(a) The loan must be for a minimum of $1,000. Loans above the
minimum amount may be made only in multiples of $100.
(b) The maximum amount of the loan will be limited to the
lesser of:
(i) $50,000 (reduced by the highest outstanding balance of
any loan from the Investment Fund during the one-year period
ending on the date before the date such loan is made), or
(ii) one-half of the market value of the vested portions of
all the participant's separate accounts on the date that such
loan was made.
(c) A participant may have only two outstanding loans at any
one time and may not have more than one loan per calendar year. One
of the outstanding loans must be for a primary residence.
2. Any loan to a participant shall be secured by the pledge of all
the participant's right, title and interest in the vested portion of the
participant's accounts in the Investment Fund, provided, however, that in
no event shall more than 50 percent of the vested portion of the
participant's account, determined at the time the loan is made, be pledged
as collateral for the loan. Such pledge shall be evidenced by the
execution of a promissory note by the participant, which promissory note
shall provide that, in the event of any default by the participant on a
loan repayment, the Committee shall be authorized (to the extent permitted
by law) to deduct the amount of the loan outstanding and any unpaid
interest due thereon from the participant's wages or salary to be
thereafter paid by the Employer, and to take any and all other actions
necessary and appropriate to enforce collection of the unpaid loan.
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<PAGE>
3. There shall be deducted from the accounts of a participant to
whom a loan is made an amount having a value equal to the principal amount
of the loan. The proceeds of any loan shall be charged against the
accounts of the borrowing participant according to the order in which items
(i) and (ii) are presented, as the amounts described in each successive
paragraph are exhausted: (i) before-tax subaccounts; and (ii) after-tax
subaccounts. The loan proceeds shall be deducted from the various
investment funds in which the participant's accounts are invested in
accordance with directions received from the participant and subject to
rules prescribed by the Committee.
4. The rate of interest charged on any loan to a participant shall
be a reasonable rate of interest determined by the Committee taking into
consideration interest rates being charged under generally prevailing
market conditions. The Committee shall not discriminate among participants
in the matter of interest rates, but loans granted at different times may
bear different interest rates if, in the opinion of the Committee, the
difference in rates is justified by a change in general economic
conditions.
5. Loans shall be repaid in accordance with the following
procedures:
(a) Any loan to a participant shall be repaid within five years
of the date on which the loan is made (or upon the participant's
termination of employment with Employer, if earlier), except that in
the case of a loan to a participant that is used to acquire a
principal residence of the participant, such loan may be repaid over
a longer period of time, not to exceed 15 years, as determined by the
Committee. Repayments of principal and interest on any loan shall be
made by substantially level payments (not less frequently than
quarterly) by payroll deduction and shall be applied to reduce the
principal as well as the accrued interest of the loan.
(b) The Committee shall have the sole responsibility for
assuring that a participant timely makes all loan repayments. Each
loan repayment shall be paid to the Investment Fund, and shall be
accompanied by written instructions from the Committee that: (1)
identify the participant on whose behalf the loan repayment is being
made; and (2) specify the separate accounts of the participant to
which the loan repayment should be credited and the investment of the
loan repayment in accordance with the investment procedures of
Article IV.
(c) A participant may prepay the entire outstanding loan
balance with respect to the loan at any time without penalty.
(d) The Committee may implement a reasonable loan set-up charge
for all loans.
6. In the event of a default by a participant on a loan repayment,
all remaining payments on the loan shall be immediately due and payable.
In the case of any participant who is not entitled to a distribution under
Article VI, the Committee shall, to the extent permitted by law, deduct the
total amount of the loan outstanding and any unpaid
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<PAGE>
interest due thereon from the wages or salary payable to the participant by
the Employer in accordance with the participant's promissory note. In
addition, the Committee shall take any and all other actions necessary and
appropriate to enforce collection of the unpaid loan, although foreclosure
on the note and attachment of security shall not occur until a
distributable event occurs under the Investment Fund with respect to
before-tax contributions. In the case of any participant or beneficiary
who is entitled to a distribution or withdrawal under Article VI, the
Committee shall deduct the total amount of the loan outstanding and any
unpaid interest due thereon from the amounts to be distributed from the
participant's separate accounts under the Investment Fund in order to
satisfy the amount due.
7. A request by a participant for a loan shall be made in writing
to the Committee [and shall specify the amount of the loan and the separate
accounts of the participant from which the loan should be made]. The terms
and conditions on which the Committee shall approve loans shall be applied
on a uniform and reasonably equivalent basis with respect to all
participants. If a participant's request for a loan is approved by the
Committee, the Committee shall cause the loan to be made in a lump sum
payment of cash to the participant.
8. All loan repayments by the participant shall be credited to such
separate accounts and reinvested in accordance with the Employee's
investment directions pursuant to Article IV, Paragraph (B).
9. Notwithstanding the foregoing, no loan shall be made to a
participant during the period in which the Committee is making a
determination of whether a domestic relations order affecting the
participant's account is a qualified domestic relations order, within the
meaning of Section 414(p) of the Code. Further, if the Committee is in
receipt of a qualified domestic relations order with respect to any
participant's accounts, it may prohibit such participant from obtaining a
loan until the alternate payee's rights under such order are satisfied.
10. In the event that a payment is required to be made to a
beneficiary upon the death of a participant or an alternate payee pursuant
to a qualified domestic relations order, within the meaning of Section
414(p) of the Code, while the participant whose account is the subject of
such order has a loan outstanding, the Committee, in its discretion, may
direct that the participant's promissory note be transferred to the
beneficiary or the alternate payee, as applicable.
H. 1. At the written request of a distributee (which shall mean a
participant, a surviving spouse of a participant, or a spouse or former
spouse of a participant that is an alternative payee under a qualified
domestic relations order), and upon receipt of the written consent of the
Committee, the Trustee shall effectuate a direct rollover distribution of
the amount requested by the distributee, in accordance with Section
401(a)(31) of the Code, to an eligible retirement plan (as defined in
Section 402(c)(8)(B) of the Code). Such amount may constitute all or part
of any distribution otherwise to be made hereunder to the distributee,
provided that such distribution constitutes an "eligible rollover
distribution," as defined in Section 402(c) of the Code and the regulations
and other guidance issued thereunder. All direct rollover distributions
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<PAGE>
shall be made in accordance with the following subparagraphs 2 through 6.
For purposes of this Paragraph H, the following terms have the following
meanings:
(a) The term "eligible rollover distribution" means any distribution
of all or any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or for a specified period of 10 years or
more; or any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; or any distribution to the extent
such distribution is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
Employer securities).
(b) The term "eligible retirement plan" means an individual
retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, or a qualified
trust described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to a surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
2. A direct rollover distribution shall only be made to one
eligible retirement plan; a distributee may not elect to have a direct
rollover distribution apportioned between or among more than one eligible
retirement plan.
3. Direct rollover distributions shall be made in cash in the form
of a check made out to the trustee of the eligible retirement plan, in
accordance with procedures established by the Committee, plus shares of CBS
Stock otherwise distributable hereunder to the distributee, which shares
shall be registered in a manner necessary to effectuate a direct rollover
under Section 401(a)(31) of the Code.
4. Amounts distributable to after-tax Employee contributions shall
be distributed directly to the distributee and may not be distributed in a
direct rollover distribution.
5. No direct rollover distribution shall be made unless the
distributee furnishes the Committee with such information as the Committee
shall require, including but not limited to: the name of the recipient
eligible retirement plan, a representation from a representative of the
recipient plan that it is an eligible retirement plan, and any account
number or other identifying information.
6. If a distributee's distribution is otherwise to be paid in the
form of installment payments, the distributee must make a separate direct
rollover distribution request with respect to each calendar year during
which installment payments are made.
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<PAGE>
VII. The Committee.
A. There shall at all times be at least three individuals, any or all of
whom may be participants, acting as a Committee hereunder to administer the
Investment Fund. Any Committee member may at any time resign by giving
written notice of such resignation to CBS, to the other Committee member or
Committee members, if any, then acting hereunder and to the Trustee; any
such resignation shall become effective immediately upon the delivery of
such notice to CBS. CBS may at any time remove any or all of the Committee
members then acting hereunder by giving written notice of such removal to
all of the Committee members then acting hereunder and to the Trustee; any
such removal shall become effective immediately upon the delivery of such
notice to the Committee member so removed. The Board of Directors of CBS
may at any time or from time to time appoint one or more investment
managers, each of which shall in its sole discretion direct the Trustee in
the investment or reinvestment of all or part of the Trust Fund under the
Trust Agreement as designated by such Board of Directors.
B. CBS may, at any time and from time to time, and, if there shall at
any time be less than three Committee members acting hereunder, CBS shall,
designate one or more individuals to act as an additional or successor
Committee member or additional or successor Committee members by giving
written notice of such designation to the Committee member or members, if
any, then acting hereunder, to each such designee and to the Trustee.
C. In the event of any disagreement among the Committee members at any
time acting hereunder and authorized to act with respect to any matter, the
decision of a majority of such Committee members authorized to act upon
such matter shall be controlling and shall be binding and conclusive upon
all persons, including, without in any manner limiting the generality of
the foregoing, the Employers, the other Committee member or Committee
members, the Trustee, all persons at any time in the employ of any of the
Employers and the participants, the former participants and their
respective beneficiaries, and upon the respective successors, assigns,
executors and administrators of all of the foregoing.
D. Each additional and each successor Committee member at any time
acting hereunder shall have all of the rights and powers (including
discretionary rights and powers) and all of the privileges and immunities
hereby conferred upon the original Committee members, and all of the duties
and obligations so imposed upon the original Committee members.
E. No Committee member at any time acting hereunder shall be required to
give any bond or other security for the faithful performance of his duties
as such Committee member.
VIII. Administration.
A. The Committee shall be the "administrator" of the Investment Fund
within the meaning of Section 3(16)(A) of the Act and shall have the power
to administer and construe the Investment Fund, determine questions of fact
and law arising under the Investment Fund, direct disbursements by the
Trustee and exercise the other rights and powers specified herein.
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<PAGE>
B. CBS and the Committee may each retain auditors, accountants and legal
counsel selected by it, and CBS and the Committee may each retain such
other persons as it deems appropriate in connection with administering the
Investment Fund. Any Committee member may himself act in any such
capacity, and any such auditors, accountants and legal counsel may be
persons acting in a similar capacity for any Employer and may be Employees
of any Employer. To the extent permitted by law, the opinion of any such
auditor, accountant or legal counsel shall be full and complete authority
and protection in respect of any action taken, suffered or omitted by the
Committee in good faith and in accordance with such opinion.
C. The Committee members may allocate responsibility among themselves,
and the Committee may designate other persons to carry out its fiduciary
responsibilities under the Investment Fund, and, without in any manner
limiting the generality of the foregoing, may, by a written instrument,
(1) designate each or any of the Committee members and/or any other person
or persons, severally or jointly, to execute, on behalf of the Committee,
all documents and other instruments proper, necessary or desirable in order
to effectuate the purposes of the Investment Fund and (2) revoke or change
any such designation theretofore made. Any Committee member, acting by
himself, may similarly revoke any such designation theretofore made. Any
third party may rely upon the continued effectiveness of any such
designation until such third party shall have notice of the change or
revocation thereof.
D. Each Committee member who shall not be an Employee shall be entitled
to receive, as compensation for his services hereunder, such fees as he and
CBS may from time to time agree. CBS shall pay such compensation and shall
also pay (and/or reimburse the Committee for) the reasonable expenses
incurred by it in the administration of the Investment Fund, including the
fees and compensation of the persons referred to in Paragraphs A and B of
this Article VIII.
E. To the extent that the Employers and/or the Committee shall prescribe
forms for use by the participants, the former participants and their
respective beneficiaries in communicating with any Employer, the Committee
or the Trustee, the Committee shall establish periods during which
communications may be received or shall designate representatives to whom
communications shall be delivered, and the Employer, the Committee and the
Trustee shall respectively be protected in disregarding any notice or
communication for which a form shall so have been prescribed and which
shall not be made in such form, and any notice or communication for the
receipt of which a period shall so have been established and which shall
not be received during such period, and any notice or communication for the
receipt of which a representative shall have been designated and which
shall not be received by such representative. Each Employer, the Committee
and the Trustee shall respectively also be protected in acting upon any
notice or other communication purporting to be signed by any person and
reasonably believed to be genuine and accurate.
F. To the extent permitted by law, all determinations hereunder by an
Employer or the Committee shall be made in the sole and absolute discretion
of such Employer or of the Committee, as the case may be. Neither any
Employer nor the Committee, in making any determination, or in taking any
action, in connection with the administration of the Investment Fund, shall
- 32 -<PAGE>
discriminate in favor of Employees who are officers or shareholders of any
Employer or persons whose principal duties consist of supervising the work
of other Employees or persons who are highly compensated Employees.
G. Subject to the applicable provisions of paragraph H of this
Article VIII, in the event that any disputed matter shall arise hereunder,
including, without in any manner limiting the generality of the foregoing,
any matter relating to the eligibility of any person to participate in the
Investment Fund, the participation of any person therein, the amounts
payable to any person hereunder and the applicability and interpretation of
the provisions hereof, the decision of the Committee upon such matter shall
be binding and conclusive upon all persons, including, without in any
manner limiting the generality of the foregoing, the Employers, the
Trustee, all persons at any time in the employ of any of the Employers and
the participants, the former participants and their respective
beneficiaries, and upon the respective successors, assigns, executors and
administrators of all of the foregoing.
H. All claims for benefits under the Investment Fund by a participant or
his beneficiary shall be made in writing to a person designated by the
Committee for such purpose. If the designated person receiving a claim for
benefits believes that the claim should be denied, he shall notify the
claimant in writing of the denial of the claim within 90 days after his
receipt thereof unless he shall prior to the end of such 90-day period
notify the claimant of any special circumstances requiring an extension of
time, not to exceed an additional 90-day period, to respond to such claim
and the date by which it is expected a decision will be rendered. Such
notice shall (1) set forth the specific reason or reasons for the denial,
making reference to the pertinent provisions of the Investment Fund or of
Investment Fund documents on which the denial is based, (2) describe any
additional material or information that must be received before the claim
request may be reconsidered and explain the reason why such material or
information, if any, is needed and (3) inform the claimant of his right
pursuant to this Paragraph H to request review of the decision by the
Committee. A claimant who believes that he has submitted all available and
relevant information may appeal the denial of a claim to the Committee by
submitting a written request for review to the Committee within 60 days
after the date on which such denial is received. Such period may be
extended by the Committee for good cause shown. The person making the
request for review may examine pertinent Investment Fund documents and the
request for review may discuss any issues relevant to the claim. The
Committee shall decide whether or not to grant the claim within 60 days
after receipt of the request for review, but this period may be extended by
the Committee for up to an additional 60 days in special circumstances.
The Committee's decision shall be in writing, shall include specific
reasons for the decision and shall refer to pertinent provisions of the
Investment Fund or of Investment Fund documents on which the decision is
based.
I. Notwithstanding anything in the Trust Agreement to the contrary, the
Board of Directors of CBS shall have the sole power to (1) appoint the
Trustee, (2) remove any Trustee then acting hereunder by giving written
notice of such removal to such Trustee, to the other Employers and to the
Committee and (3) approve or disapprove the accounting by a retiring
Trustee referred to in the Trust Agreement. The Trustee shall have sole
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responsibility for the Trust Fund, except as may otherwise be designated by
the Board of Directors of CBS in accordance with law.
J. Each fiduciary under the Investment Fund shall discharge his duties
with respect to the Investment Fund solely in the interests of the
participants and their beneficiaries with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims. No fiduciary
under the Investment Fund shall be liable for an act or omission of another
person in carrying out any fiduciary responsibility where such fiduciary
responsibility is allocated to such other person by the Investment Fund or
pursuant to a procedure established in the Investment Fund except as
otherwise provided in Section 405 of the Act. CBS hereby indemnifies each
member of the Committee, each officer, and each Employee of the Employers
against any liabilities or expenses, including attorneys' fees, reasonably
incurred by him in connection with any actual or threatened legal action to
which he might become a party by reason of being a fiduciary with respect
to the Investment Fund except to the extent that he shall be adjudged in
such action to be liable for gross negligence or willful misconduct in the
performance of his duties as a fiduciary. Any person or group of persons
may serve in more than one fiduciary capacity with respect to the
Investment Fund.
K. The sole interest of each participant, each former participant and
each beneficiary of a participant or former participant hereunder shall be
to receive the benefits provided for herein as and when the same shall
become due and payable in accordance with the terms hereof, and neither any
participant nor any former participant nor any beneficiary of a participant
or former participant shall have any right, title or interest in or to the
Trust Fund or to any other monies or other properties at any time held by
or receivable by the Trustee. The right of any participant or any former
participant and of any beneficiary of any participant or former participant
to receive or have applied to his use any payment becoming due hereunder
shall not be subject to alienation or assignment, and, if any such
participant or former participant or beneficiary shall attempt to assign,
transfer or otherwise dispose of any such right, or if any such right shall
be subjected to attachment, execution, garnishment, sequestration or other
seizure under any legal, equitable or other process, it shall, if and to
the extent that the Committee shall so determine, pass and be transferred
to such one or more as may be appointed by the Committee from among the
beneficiaries of such participant or former participant and the spouse and
blood relatives of such participant, former participant or beneficiary, and
in such proportions as the Committee shall determine.
Nothing contained in the foregoing paragraph shall prohibit the
payment of benefits to an "alternate payee" pursuant to a "qualified
domestic relations order", as said quoted terms are defined in, and in
accordance with, Section 206(d) of the Act.
L. 1. All CBS Stock (including fractional shares) representing D units
credited to a participant's D account and/or C units credited to a
participant's C account as of the valuation date preceding by the shortest
practicable interval a record date established generally for fixing the
right of holders of CBS Stock to vote shall be voted by the Trustee in
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accordance with instructions from such participant. CBS shall provide
participants with notices and proxy or information statements when voting
rights are to be exercised, the content of which must be generally the same
as that provided to record holders of CBS Stock. Fractional shares shall
be voted by the Trustee on a combined basis, so as to reflect the
instructions of the participants with respect to such shares. The Trustee
shall vote all CBS Stock for which it has not received participants'
instructions, including all CBS Stock held by it as of such record date but
which is not as of that date allocated to participants' accounts, in the
same manner as a majority of the CBS Stock representing all of the D units
and C units, together, credited to the D accounts and C accounts of
participants who have submitted voting instructions is voted.
2. In the event that a tender or exchange offer or other offer to
purchase CBS Stock is made by an individual or entity for all or a portion
of the outstanding CBS Stock or the CBS Stock held in the Trust Fund, the
Trustee shall not tender or sell any CBS Stock held by it in the D Fund or
the C Fund except upon specific written instructions from each participant
directing that the CBS Stock representing D units credited to the
participant's D account and/or C units credited to the participant's C
account be so tendered or sold. CBS shall provide participants with
notices and information with respect to any such offer in a timely fashion
so as to permit each participant an opportunity to submit instructions to
the Trustee with respect to his tendering or not tendering the CBS Stock
representing such D units and/or C units credited to such participant's D
account and/or C account.
IX. Definitions.
A. As used herein and in the Trust Agreement, the following terms shall
have the following respective meanings:
1. "A account", as used with respect to a participant, shall mean
the separate account which is required to be established with respect to
such participant as provided in Paragraph A of Article III hereof.
2. "Account", as used with respect to a participant, shall mean
each of his A account, his B account, his D account, his E account and his
C account, including any loans made to the participant under Article VI,
Paragraph G, the funds of which are attributable to such accounts, and, as
used with respect to an Employer, shall mean its C account.
2B. "Act" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
2C. "Affiliated company" shall mean a member with CBS of a
controlled group of corporations within the meaning of Section 1563(a) of
the Internal Revenue Code (the "Code"), determined without regard to
Sections 1563(a)(4) and (e)(3)(C) of the Code, or a member with CBS of a
group of trades or businesses (whether or not incorporated) under common
control as determined by the Secretary of the Treasury pursuant to
Regulations issued under Section 414(c) of the Code.
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2D. "After-tax subaccount", as used with respect to a participant,
shall mean the subaccount established within such participant's A, B, D
and E accounts, respectively, to account for contributions thereto made as
after-tax contributions.
3. "A Fund" shall mean the separate fund established pursuant to
the provisions of the Trust Agreement.
3B. "Anniversary year". The anniversary year of any Employee shall
be each 12-month period commencing on the first day of the calendar month
in which his employment commences.
4. "A unit" shall mean a unit in the A Fund.
5. "B account", as used with respect to a participant, shall mean
the separate account which is required to be established with respect to
such participant as provided in Paragraph B of Article III hereof.
5B. "Before-tax subaccount", as used with respect to a participant,
shall mean the subaccount established within such participant's A, B, D
and E accounts, respectively, to account for contributions thereto made as
before-tax contributions.
6. "Beneficiaries", as used with respect to a participant or a
former participant, shall mean the surviving spouse of such participant
or, if such participant has no spouse or if the spouse of such participant
shall have consented thereto in a writing acknowledging that such spouse
is thereby waiving in favor of such other beneficiaries the right to
receive the amount payable hereunder upon the death of such participant,
and such consent is witnessed by a notary public, the person or persons
designated by such participant or former participant to receive any
payments provided for in Paragraph F of Article VI hereof, and, if and to
the extent that such a designation shall not be in force at the time of
such payment, his spouse, or if he has no spouse, his executors or
administrators.
7. "B Fund" shall mean the separate fund established pursuant to
the provisions of the Trust Agreement.
8. "Board" shall mean both the Board of Directors of CBS and any
committee which shall be designated by said Board of Directors from among
its members and which shall have the authority of said Board of Directors
with respect to the Investment Fund and the Trust.
8B. "Break in service", as used with respect to an Employee, shall
mean any calendar year in which he completes less than 501 hours of
service.
Solely for purposes of determining whether a break in service
has occurred, if an Employee is absent from work by reason of her
pregnancy, the birth of a child of the Employee, or the placement of a
child with the Employee in connection with the adoption of such child by
the Employee or for purposes of caring for such child for a period
beginning immediately following such birth or placement, the Employee
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shall be credited with the hours of service which otherwise would normally
have been credited to the Employee but for such absence, but in no event
less than eight hours of service per day of such absence and more than 501
hours with respect to any one such pregnancy, birth or placement. Such
hours of service shall be credited to the calendar year in which the
absence from work begins only if the effect of so doing would be to
prevent the occurrence of a break in service in such calendar year, and in
any other case to the immediately following calendar year.
9. "B unit" shall mean a unit in the B Fund.
10. "Business day" shall mean a day which is not a Saturday, a
Sunday or a legal holiday.
11. "C account", as used with respect to a participant, shall mean
the separate account which is required to be established with respect to
such participant as provided in Paragraphs C and (except as such term is
used in Article V) E of Article III hereof, and, as used with respect to
an Employer, shall mean the separate account which the Trustee is required
to establish with respect to such Employer as provided in Paragraph D of
said Article III.
12. "CBS" shall mean CBS Inc.
13. "CBS fiscal year" shall mean the period of 12 consecutive
monthly accounting periods used by CBS in the maintenance of its accounts.
14. "CBS Pension Plan" shall mean the pension plan adopted by CBS
on December 16, 1942, as amended prior to December 26, 1968, and the
pension plan adopted by CBS stockholders on April 20, 1960, as amended
prior to December 26, 1968, as said pension plans were further amended and
combined, effective December 26, 1968, as in effect at the time with
respect to which said term is used.
15. "CBS Stock" shall mean the common stock of CBS, $2.50 par
value, or any other common stock which CBS is authorized to issue at the
time with respect to which such term is used.
16. "C Fund" shall mean the separate fund established pursuant to
the provisions of the Trust Agreement and (except as such term is used in
Article V) shall include any and all C-# Funds.
17. "Code" shall mean the Internal Revenue Code of 1954 as in
effect at the time with respect to which such term is used.
18. "Committee" shall mean the administrative committee provided
for in Paragraph A of Article VII hereof.
19. "Continuous employment period", as used with respect to a
participant, shall mean such participant's total years of service.
19B. "Contribution" shall mean, unless the context shall otherwise
clearly require, each of (a) a participant's contribution in any
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category, (b) an Employer contribution and (c) an Employer's matching
contribution. In particular, a participant's "required basic
contribution" shall mean that contribution described in subparagraph 1 of
Paragraph A of Part (i) of Article IV hereof; a participant's "voluntary
supplemental contribution" shall mean that contribution described in
subparagraph 2 of Paragraph A of Part (i) of Article IV hereof; and a
participant's "periodic special contribution" shall mean that contribution
described in Part (ii) of Article IV hereof.
20. "Contribution election", as used with respect to a participant
and with respect to any time, shall mean such participant's election
referred to in Article IV hereof.
21. "Conversion direction", as used with respect to a participant
and with respect to any time, shall mean such participant's conversion
direction referred to in Part (iv) of Article IV hereof, as modified prior
to the time with respect to which such term is used.
22. "C unit" shall mean a unit in the C Fund and (except as such
term is used in Article V) shall include any and all C-# units.
22B. "C unit conversion election", as used with respect to a
participant, shall mean such participant's election referred to in
subparagraph 3 of Paragraph E of Article VI hereof.
22C. "D account", as used with respect to a participant, shall mean
the separate account which is required to be established with respect to
such participant as provided in Paragraph E of Article III hereof.
22D. "D Fund" shall mean the separate fund established pursuant to
the provisions of the Trust Agreement and shall include any and all D-#
Funds.
22E. "Disability" shall mean a state of physical or mental
incapacity of a participant such that, in the opinion of the Committee
based upon a certificate from a physician or physicians satisfactory to
the Committee, such participant, by reason of injury, illness or disease,
is unable to fulfill the requirements of his position as an Employee of
his Employer.
22F. "Distribution election", as used with respect to a participant,
shall mean such participant's election referred to in subparagraph 1 of
Paragraph E of Article VI hereof or a determination of the Committee not
inconsistent with law in lieu thereof.
23. "D unit" shall mean a unit in the D Fund and shall include any
and all D-# units.
24. "D unit conversion election", as used with respect to a
participant, shall mean such participant's election referred to in
subparagraph 3 of Paragraph E of Article VI hereof.
25. "E account", as used with respect to a participant, shall mean
the separate account which is required to be established with
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respect to such participant as provided in Paragraph F of Article III
hereof.
25B. "Earnings and profits" shall have the same meaning as when used
in Section 316(a) of the Code.
25C. "E Fund" shall mean the separate fund established pursuant to
the provisions of the Trust Agreement.
26. "Employee" shall mean a person who (a) is principally employed
in the United States and/or is a citizen of the United States, (b) is not
included in a group determined by the Board not to be eligible for
participation in the Investment Fund and (c) is either (i) employed by one
or more of the Employers as an executive or an office employee or as an
employee in a classification of hourly employees specified by the Board
whose terms and conditions of employment are not subject to the provisions
of a collective bargaining agreement and who (in any such category of
employment) is a participant under the CBS Pension Plan or would have been
such but for his failure to meet the age requirements thereof or
(ii) employed by one or more of the Employers as an employee whose
principal terms and conditions of employment are subject to the provisions
of a collective bargaining agreement which provides for eligibility for
participation in the Investment Fund or (iii) employed by one or more of
the Employers in a group determined by the Board to be eligible for
participation in the Investment Fund. "Employee" shall also mean a person
(i) who is employed by any foreign subsidiary of CBS to which U.S. Social
Security coverage has been extended by an agreement entered into by CBS
under Section 3121(1) of the Internal Revenue Code, (ii) as to whom no
contributions under any other funded plan of deferred compensation are
being provided by any other person with respect to the remuneration paid
to such individual by the foreign subsidiary and (iii) who is a citizen of
the United States; for the purposes of the Investment Fund only, CBS shall
be deemed to be the Employer of such Employees, provided, however, that
"Employee" shall not include "leased employees" as defined in
Section 414(n) of the Code.
27. "Employer" shall mean each of (a) CBS, (b) each subsidiary
which executes the Trust Agreement as of June 29, 1969 and (c) each
subsidiary which adopts the Investment Fund and becomes a party to the
Trust Agreement as provided in Paragraphs A and B of Article X hereof.
27B. "Employer contributions", as used with respect to a
participant, shall mean those contributions made to such participant's A
account and/or B account and/or D account and/or E account on a before-tax
basis pursuant to a salary deferral agreement with his Employer forming
part of his contribution election as in effect from time to time.
28. "Employer's matching contribution" shall mean a payment made to
the Trustee by an Employer as provided in Article V hereof.
28B. "E unit" shall mean a unit in the E Fund.
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28C. "Fiduciary" shall mean any person to the extent that he
(a) exercises any discretionary authority or discretionary control
respecting management of the Investment Fund or exercises any authority or
control respecting management or disposition of its assets, (b) renders
investment advice for a fee or other compensation, direct or indirect,
with respect to any moneys or other property of the Investment Fund, or
has any authority or responsibility to do so, or (c) has any discretionary
authority or discretionary responsibility in the administration of the
Investment Fund.
29. "Former participant" shall mean a person whose participation in
the Investment Fund shall have terminated as provided in Paragraph A of
Article VI hereof.
30. "Fund" shall mean each of the A Fund, the B Fund, the D Fund,
the E Fund and the C Fund.
30B. "Hour of service", as used with respect to any person employed
in regularly scheduled part-time employment, shall mean each hour for
which he shall be directly or indirectly paid or entitled to payment
(a) for services he performs for CBS; or,
except as expressly provided in the Investment Fund, solely for purposes
of determining eligibility to participate therein and the extent to which
his C units shall have vested, and subject to the provisions of this
Section 30A,
(b) for services he performs for any affiliated company, or any
predecessor corporation of CBS, or corporation merged, consolidated, or
liquidated into CBS or its predecessor, or a corporation substantially all
of the assets of which were acquired by CBS to the extent the Board of
Directors of CBS so directs consistent with Regulations issued by the
Secretary of the Treasury.
With respect to every person employed on a full-time basis, 190
hours of service shall be credited for each calendar month in which he has
actually performed at least one hour of service.
In addition to the foregoing, the following provisions shall
apply, where appropriate, to the computation of hours of service. Any
Employee may be credited with hours of service for each calendar month in
which he has a leave of absence of at least one calendar day. Any
Employee may be credited with years of service for any period for which
back pay, irrespective of mitigation of damages, may be awarded or agreed
to by CBS or an affiliated company, in which event such hours of service
shall be credited to each anniversary year to which each such award
pertains. An Employee shall be credited with hours of service for any
period for which he is directly or indirectly paid or entitled to payment
by CBS or any affiliated company for reasons (such as vacations, sickness
or disability) other than for his performance of services, and such hours
of service and the computation period or periods to which such hours shall
be credited shall be determined in accordance with Section 2530.200b-2 of
the Regulations prescribed by the Secretary of
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Labor. Notwithstanding any other provision of the Investment Fund, in no
event shall any person be credited with hours of service for any period
prior to January 1, 1976 during which he was employed on other than a
full-time basis.
31. "Investment direction", as used with respect to a participant
and with respect to any time, shall mean such participant's direction
referred to in subparagraph 1 of Paragraph B of Part (i) or in
subparagraph 3 of Paragraph A of Part (ii) of Article IV hereof, as
modified prior to the time with respect to which such term is used.
32. "Investment Fund" shall mean the plan embodied herein.
32B. "Investment manager" shall mean a fiduciary appointed by the
Board of Directors of CBS who (a) has the authority to direct the
investment and reinvestment of all or any part of the Trust Fund under the
Trust Agreement; (b) is registered as an investment adviser under the
Investment Advisers Act of 1940, is a bank as defined in the Investment
Advisers Act of 1940 or is an insurance company qualified to perform
services described in clause (a) above under the laws of more than one
state; and (c) has acknowledged in writing that it is a fiduciary with
respect to the Investment Fund.
33. "Leave of absence" shall mean a leave of absence from the
employ of one or more of the Employers granted, prospectively or
retroactively, to an Employee at any time for a specific purpose.
34. "Monthly accounting period" shall mean each calendar month.
35. "Non-Fund subsidiary" shall mean a subsidiary which is not an
Employer.
36. "Participant", as used with respect to the Investment Fund,
shall mean an Employee of one or more of the Employers who shall have
become a participant in the Investment Fund as provided in Paragraph B of
Article II hereof and whose participation shall not have terminated as
provided in Paragraph A of Article VI hereof. Such term shall, if the
context shall permit, include a former participant.
37. "Participant's contributions", as used with respect to a
participant, shall mean the amount of such participant's salary withheld
and/or deferred by his Employer pursuant to such participant's
contribution election and paid to the Trustee by such Employer as provided
in Paragraph C of Part (i) of Article IV hereof.
38. "Participation election" shall mean the election of an Employee
to become a participant.
39. "Participation period", as used with respect to a participant,
shall mean the period during which such participant shall be a participant
in the Investment Fund.
40. "Payroll period", as used with respect to a participant, shall
mean the regular period (whether weekly or biweekly or semimonthly
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or otherwise) on the basis of which such participant's Employer pays such
participant's salary.
41. "Plan year" shall mean a calendar year.
42. "Salary", as used with respect to a participant, with respect
to an Employer and with respect to a payroll period, shall mean the
regular compensation paid by such Employer to such participant for such
payroll period, inclusive of all amounts of regular compensation deferred
by such participant in accordance with his contribution election which are
contributed to such participant's A account and/or B account and/or D
account and/or E account on a before-tax basis as Employer contributions,
but excluding bonus payments, overtime compensation, deferred compensation
and additional compensation of every other kind so paid, or, in the case
of certain categories of Employees whose regular compensation is not
payable entirely on a weekly or biweekly or semimonthly salary basis, such
other compensation as, and to the extent that, the Board shall determine.
In no event shall the amount of salary taken into account under the
Investment Fund for any plan year beginning after December 31, 1988, and
prior to January 1, 1994, exceed $200,000 or, for any plan year beginning
after December 31, 1993, $150,000 (or, with respect to either such dollar
amount, such larger amount as the Secretary of the Treasury may determine
for such plan year under Section 401(a)(17) of the Internal Revenue Code).
For purposes of this limitation only, in determining the salary of any
Employee, the rules of Section 414(q)(6) of the Internal Revenue Code
shall apply, except that in applying such rules, the term "family" shall
include only the spouse of the Employee and any lineal descendants of the
Employee who have not attained age 19 before the close of the year.
43. "Stock election", as used with respect to a participant, shall
mean such participant's election referred to in subparagraph 3 of
Paragraph E of Article VI hereof.
44. "Subsidiary" shall mean a corporation which is controlled by
CBS, directly or indirectly.
45. "Taxable year" shall have the same meaning as when used in
Section 441(b) of the Code.
46. "Termination benefit", as used with respect to a participant,
shall mean the benefit which such participant shall be entitled to receive
by reason of the termination of his participation (as provided in
Paragraphs C, E and F of Article VI hereof).
47. "Termination date", as used with respect to a participant,
shall mean the date of the termination of such participant's participation
as provided in Paragraph A of Article VI hereof.
48. "Trust" shall mean the trust created by and under the Trust
Agreement.
49. "Trust Agreement" shall mean the trust agreement by and among
the Employers and the Trustee, dated as of June 29, 1969, including the
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successor Trust Agreement dated September 1, 1986, as the same may at any
time and from time to time be amended.
50. "Trustee", as used with respect to any time, shall mean the
Trustee acting under the Trust Agreement at such time.
51. "Trust Fund" shall mean all property which shall be held by the
Trustee, as trustee under the Trust Agreement, at the time with respect to
which such term is used.
52. "Unit" shall mean each of an A unit, a B unit, a D unit, an E
unit and a C unit.
53. "Unvested C units", as used with respect to a participant and
with respect to any time, shall mean those of the C units credited to such
participant's C account as of such time which shall not be vested C units.
54. "Valuation date" shall mean the last business day of a calendar
month.
55. "Value", as used generally, shall mean fair market value, as
used with respect to a unit and as of July 31, 1969, shall mean $1.00 and
as used with respect to a unit and as of a date subsequent to July 31,
1969, shall mean the value of the Fund in which such unit is held at such
date divided by the number of units which are then held in said Fund.
56. "Vested C units", as used as of a valuation date or a
termination date with respect to (a) a participant whose continuous
employment period on such date is three or more years of service or (b) a
participant whose 65th birthday is not subsequent to such date or (c) a
former participant whose participation shall have terminated by reason of
his death or his disability, shall mean all of the C units credited to
such participant's C account as of such date; said term, as so used with
respect to a participant whose continuous employment period on such date
is less than three full years, whose 65th birthday is subsequent to such
date and whose participation shall not have terminated by reason of his
death or his disability, shall mean 33-1/3 percent of the C units credited
to such participant's C account as of such date multiplied by the number
of years of service included in his continuous employment period on such
date.
57. "Withdrawal" shall mean a payment made to a participant as
provided in subparagraph 1 of Paragraph B of Article VI hereof.
58. "Year" shall mean any period of 12 consecutive monthly
accounting periods.
59. "Year of service", as used with respect to an Employee or a
participant, as the case may be, shall mean each anniversary year in which
he shall complete at least 1,000 hours of service, subject, however, to
the following:
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(a) Solely with respect to eligibility of an Employee employed
on other than a full-time basis, such Employee shall be credited with a
year of service if he completes 1,000 hours of service in his first
anniversary year following December 31, 1975.
(b) Solely for the purpose of determining the extent to which
such participant shall have a vested interest in the C units, if such
participant shall not have completed a year of service in the anniversary
year in which he became a participant, or in the preceding plan year, he
shall nevertheless be credited with one year of service for the
anniversary year in which he became a participant.
(c) The period in which services shall have been performed by
an Employee prior to a break in service shall not be included in
determining his years of service unless
(i) such services shall have been performed prior to
January 1, 1976, in which event the period in which such services
shall have been performed shall be included in determining such
Employee's years of service in accordance with the break in service
rules under the Investment Fund in effect prior to such date or
(ii) such services shall have been performed after
December 31, 1975 by an Employee who shall have a vested interest in
the C units prior to such break in service, or, if no C units shall
have vested, the number of consecutive anniversary years during which
such break in service shall have continued shall be less than the
greater of five or the number of years of service that shall have
been accumulated immediately preceding such break in service.
(d) The period in which services shall have been performed by
an Employee after five or more consecutive one-year breaks in service
shall not be included in determining years of service for the purpose of
causing his vested interest in the C units, as of the date immediately
preceding such a break in service, to be increased.
60. The terms "C-# account", "C-# Fund" and "C-# units" shall mean
the account, Fund and units provided for and described in Paragraph G of
Article III.
61. The terms "D-# account", "D-# Fund" and "D-# units" shall mean
the account, Fund and units provided for and described in Paragraph G of
Article III.
B. For the purposes hereof:
1. To the extent that the context shall permit, any masculine
pronoun used herein shall be construed to include also the similar
feminine pronoun, any singular word so used shall be construed to include
also the similar plural word and any plural word so used shall be
construed to include also the similar singular word.
2. Any reference herein to any date or day shall be deemed to be a
reference to the close of business on such date or day.
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3. Terms used herein with respect to a participant which are
defined in Paragraph A of this Article IX shall have the same respective
meanings when used with respect to an Employee.
4. If any Employer shall at any time grant (or shall at any time
have granted) to an Employee a leave of absence from his employment by
such Employer, whether such leave shall commence (or shall have commenced)
and/or shall be granted (or shall have been granted) prior to, at the time
of, or subsequent to such Employee's having become a participant, such
Employee shall be deemed to be (or to have been) in the employ of such
Employer during such leave of absence. That portion of the period of such
leave of absence which shall commence on the actual commencement of such
leave of absence shall not be deemed to interrupt the continuity of such
participant's participation period, but shall not be included therein
unless such Employee shall receive a salary from his Employer during all
or a portion of such leave of absence and shall make contributions during
such period.
5. In order to convert an amount to a number of units as of any
date, such amount shall be divided by the value of one such unit on such
date, in order to convert a number of units to an amount as of any date,
such number shall be multiplied by the value of one such unit on such
date, and in order to convert a number of units of one classification,
whether A, B, D, E or C, into a number of units of another classification
as of any date, such first-mentioned number shall be multiplied by the
value of one unit of such classification first referred to on such date
and the product thus determined shall be divided by the value of one unit
of such other classification on such date.
X. Adoption by Subsidiaries.
A. Any subsidiary may, pursuant to a resolution of its board of
directors, with the consent of the Board, adopt the Investment Fund for the
exclusive benefit of its employees eligible to participate therein. Such
adoption shall be effective as of the first day of any monthly accounting
period specified by such subsidiary and consented to by the Board.
B. Each subsidiary adopting the Investment Fund as provided in
Paragraph A of this Article X shall enter into an agreement with the other
Employers and the Trustee pursuant to which such subsidiary shall become a
party to the Trust Agreement.
XI. Amendment; Termination.
A. CBS may, at any time and from time to time, pursuant to a resolution
of the Board, by a written instrument delivered to the Trustee and to the
other Employers, amend the Investment Fund, and any Employer may, pursuant
to a resolution of its board of directors, by a written instrument
delivered to the Trustee and to the other Employers, terminate the
Investment Fund with respect to its Employees; provided, however, that
(1) no such amendment or termination shall adversely affect the units
credited to any participant's or former participant's accounts on the date
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of such amendment or termination, nor shall, to the extent prohibited under
Section 411(d)(6) of the Code, any amendment result in depriving a
participant of the right to elect an optional form of benefit which, but
for the provisions of such amendment, such participant (or his or her
beneficiaries) would have been entitled to elect with respect to his or her
vested benefit, (2) no such amendment shall adversely affect any
participant's or former participant's interest in those of the C units
credited to his C account on the date of such amendment which would be
vested C units if the date of such amendment were his termination date,
(3) no such amendment shall result in a change in the substance of
Paragraph B of this Article XI with respect to participants who are such on
the date of such amendment, (4) notwithstanding any such amendment and
notwithstanding any such termination, it shall be impossible, whether by
operation or natural termination of the Trust or pursuant to the provisions
of this Paragraph A, or by the happening of a contingency or by arrangement
or by any other means, for any part of the corpus of or the income from the
Trust to be used for, or diverted to, purposes other than the exclusive
benefit of the participants, the former participants and their respective
beneficiaries, (5) no such amendment shall increase the duties,
responsibilities or obligations of any Committee member unless he shall
consent thereto, (6) no such amendment shall increase the duties,
responsibilities or obligations of the Trustee unless it shall consent
thereto and (7) no such amendment shall increase the duties,
responsibilities or obligations of an Employer unless it shall consent
thereto.
B. In the event of, and upon, an Employer's termination of the
Investment Fund or permanent discontinuance of contributions other than by
reason of being merged into, or consolidated with, another Employer,
whether or not the Trust shall also terminate concurrently therewith,
(1) the interest in his C account of each participant who shall be or shall
have been an Employee of such Employer shall vest and CBS or its designee
shall, as of and as promptly as shall be practicable after the valuation
date concurrent with, or next succeeding, the date of such termination or
permanent discontinuance, allocate the C units in such Employer's C account
pro rata to the C units in the C accounts of the participants who shall
have been Employees of such Employer on the date of such termination or
permanent discontinuance, and (2) the Trustee shall, as of and as promptly
as shall be practicable after the valuation date next succeeding whichever
shall occur first of such participant ceasing to be an Employee of CBS and
all subsidiaries and the termination of the Trust, pay or distribute to
such participant (or his beneficiaries) in the manner provided in
Paragraph F of Article VI hereof the benefits to which he is (or they are)
entitled. In the event of, and upon, the termination of the Investment
Fund by an Employer with respect to some but less than all of the Employees
of such Employer (a "partial termination"), (1) the interest in the C
account of each participant affected by such partial termination shall vest
and (2) as of and as promptly as shall be practicable after the valuation
date concurrent with, or next succeeding, the date of such partial
termination, (a) CBS or its designee shall allocate the C units in such
Employer's C account pro rata to the C units in the C accounts of the
participants affected by such partial termination and (b) the Trustee shall
pay or distribute to each such participant (or his beneficiaries) in the
manner provided in Paragraph F of Article VI hereof the benefits to which
he is (or they are) entitled.
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C. In the event of any merger or consolidation of the Investment Fund
and/or the Trust hereunder with, or transfer of the assets or liabilities
of the Investment Fund and/or Trust to, any other plan, the terms of such
merger, consolidation or transfer shall be such that each participant would
receive (in the event of termination of the Investment Fund or its
successor immediately thereafter) a benefit which is no less than he would
have received in the event of termination of the Investment Fund
immediately prior to such merger, consolidation or transfer.
1. Anything herein to the contrary notwithstanding, the Committee
shall direct the Trustee to transfer, as of January 1, 1991, to the trustee
of the trust established under the CBS News Special Projects Inc. Employee
Investment Fund maintained by CBS News Special Projects Inc. for the
benefit of employees of CBS News Special Projects Inc. who were Employees
of CBS Inc. participating in the Investment Fund immediately prior to
employ with CBS News Special Projects Inc. an amount from the Trust equal
to the balance in such participants' accounts determined as of the transfer
date. After December 31, 1990, the former CBS Inc. Employees described
above shall be entitled to no further allocations under this Investment
Fund.
2. Anything herein to the contrary notwithstanding, the Committee
shall direct the Trustee to transfer, as of the transfer date, to the
trustee of the trust established under the CBS News Special Projects Inc.
Employee Investment Fund maintained by CBS News Special Projects Inc. for
the benefit of employees of CBS News Special Projects Inc. who were
Employees of CBS Inc. participating in the Investment Fund immediately
prior to employ with CBS News Special Projects Inc., an amount from the
Trust equal to the balance in such participants' accounts determined as of
the transfer date. Effective with the transfer date, the former CBS Inc.
Employees described above shall be entitled to no further allocations under
this Investment Fund.
3. Subject to the approval of the Plans Administration Committee,
the Trustee shall accept a transfer of assets and liabilities accrued by a
participant under any other plan which transfer shall be in accordance with
the requirements of Section 414(1) of the Code. In no event shall the
accrued benefit of any such participant under this Investment Fund
immediately after such transfer be less than the accrued benefit of such
participant under the transferor plan immediately prior to such transfer.
In addition, any distribution, withdrawal, or other rights available to
each affected participant under the terms of the transferor plan as of the
date of such transfer which are protected under Section 411(d)(6) of the
Code shall continue to be available with respect to such transferred
account balances.
D. Notwithstanding anything hereinbefore to the contrary, a matching
contribution hereunder by any Employer which (1) was made under a mistake
of fact or (2) was conditioned upon deduction of such contribution under
Section 404 of the Internal Revenue Code (the "Code) and such deduction is
disallowed, shall be returned to the Employer within one year after the
payment of the contribution or the disallowance of the deduction (to the
extent disallowed), whichever may be applicable.
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XII. Limitations.
A. Subject to the adjustments hereinafter set forth, the maximum annual
addition to a participant's account shall in no event exceed the lesser of
(1) $30,000 (adjusted annually, effective January 1, 1988, to reflect
increases in the cost of living, in accordance with Regulations issued by
the Secretary of the Treasury under Section 415 of the Internal Revenue
Code ("Code")) or (2) 25 percent of his annual compensation. For purposes
of this Article XII, "annual compensation" shall mean wages within the
meaning of Section 3401(a) of the Code and all other payments of
compensation to an Employee by his Employer (in the course of the
Employer's trade or business) for which the Employer is required to furnish
the Employee a written statement under Section 6041(d), Section 6051(a)(3)
and Section 6052 of the Code, determined without regard to any rules under
Section 3401(a) of the Code that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2) of the
Code), and excluding amounts paid or reimbursed by the Employer for moving
expenses incurred by the Employee (but only to the extent that at the time
of such payment it is reasonable to believe that these amounts are
deductible by the Employee under Section 217 of the Code).
B. For the purpose of Paragraph A of this Article XII:
1. "Annual addition" shall mean, as used with respect to a
participant, the sum for any calendar year of (1) the Employer's
contributions (including before-tax required basic contributions,
before-tax voluntary supplemental contributions and Employer matching
contributions); (2) any forfeitures under the applicable terms, if any, of
the Investment Fund; (3) the participant's after-tax contributions; and (4)
amounts described in Section 415(l)(1) and Section 419(d)(2) of the
Internal Revenue Code. Notwithstanding the foregoing, annual additions for
any calendar year beginning before January 1, 1987 shall include a
participant's after-tax contributions only to the extent greater than the
lesser of (a) such participant's after-tax contributions in excess of six
percent of his compensation or (b) one-half of such participant's after-tax
contributions; provided, however, with respect to calendar years prior to
January 1, 1976, the amount of a participant's contributions for each year
shall be deemed to be an amount equal to the excess of the aggregate of the
participant's contributions prior to January 1, 1976 (without regard to
such contributions made on or after October 1, 1973 under the terms of the
Investment Fund in effect as of such date) over 10 percent of his
compensation for each calendar year of his participation in the Investment
Fund prior to such date, multiplied by a fraction, the numerator of which
shall be 1 and the denominator of which shall be the number of calendar
years during which he was a participant prior to January 1, 1976.
2. "Annual compensation" shall mean a participant's total annual
compensation as determined in accordance with Treasury Regulations Section
1.415-2(d)(2) and (d)(3).
C. The limitations set forth in this Article with respect to any
participant who at any time participates in any other defined contribution
plan maintained by the Employer or in more than one defined benefit plan
maintained by the Employer shall apply as if the total annual addition
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allocated to the participant under all such defined contribution plans in
which the participant so participates are allocated under a single plan and
as if the total benefits payable to the participant under all defined
benefit plans maintained by the Employer are payable from a single plan.
For purposes of this Article, the term "Employer" shall include any
affiliated company as defined in Paragraph 2B. of Article IX hereof and
modified by Section 415(h) of the Code.
D. In the case of a person who is a participant both in the Investment
Fund and the CBS Pension Plan or any other applicable defined plan, the sum
of the defined benefit plan fraction and the defined contribution plan
fraction (as each such term is hereinafter defined) for any calendar year
shall not exceed 1.0.
E. For the purpose of determining the sum referred to in Paragraph D of
this Article XII, the following shall apply:
(1) "Defined benefit plan fraction" shall mean a fraction, (i) the
numerator of which shall be the annual benefit payable with respect to a
participant under the CBS Pension Plan and any other applicable defined
benefit plan determined without regard to the limitation provisions
required by Section 415(b) of the Code and (ii) the denominator of which
shall be the maximum benefit payable under such Section, increased as
provided by Section 415(e)(2)(B) of the Code as amended by the Tax Equity
and Fiscal Responsibility Act of 1982 ("TEFRA"); provided, however, that in
the case of any participant in the CBS Pension Plan whose benefit is
described in Section 6.04C thereof prior to increasing the denominator of
the fraction pursuant to Section 415(e)(2)(B) of the Code, the numerator of
the defined benefit plan fraction shall be deemed not to exceed the
denominator of such fraction.
(2) "Defined contribution plan fraction" shall mean a fraction,
(i) the numerator of which shall be the aggregate annual additions (as
hereinafter defined), with respect to a participant in the Investment Fund
or any other defined contribution plan maintained by an Employer,
determined as of the close of the calendar year in which such additions
accrued, determined without regard to the limitation provisions required by
Section 415(c) of the Code, and (ii) the denominator of which shall be the
aggregate maximum annual additions determined by applying the provisions of
said Section 415(c) for each calendar year of the participant's service,
taking into account the transition rules for years ending prior to
January 1, 1983 prescribed under the Investment Fund or other applicable
plans and under the Act and TEFRA, including the rules of Section 415(e)(3)
of the Code as amended by TEFRA, unless the Committee elects to apply the
rules of Section 415(e)(6) of the Code, as added by TEFRA; provided,
however, that in the case of calendar years prior to January 1, 1976 prior
to increasing the denominator of the fraction pursuant to Section
415(e)(3)(B) or Section 415(e)(6)(B) of the Code, the numerator of the
defined contribution plan factor shall be deemed not to exceed the
denominator of such fraction.
F. The limitation referred to in Paragraph D of this Article XII shall
not apply with respect to any participant who on September 2, 1974 was a
participant both in the Investment Fund and the CBS Pension Plan if the
defined benefit fraction with respect to such a person shall not be
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increased, by amendment or otherwise, after September 2, 1974 and no
contributions to his account are made under the Investment Fund after such
date.
G. If, prior to the allocation of contributions on behalf of any
participant, it is determined that the limitation on annual additions
prescribed under Paragraph A hereof or the limitation applicable to a
combination of plans prescribed under Paragraph D hereof would be exceeded
in any year, contributions shall be reduced, in the following order, but
only to the extent necessary to satisfy the limitations:
(1) First, periodic special contributions shall be reduced;
(2) Second, after-tax voluntary supplemental contributions shall be
reduced;
(3) Third, before-tax voluntary supplemental contributions shall be
reduced;
(4) Fourth, after-tax required basic contributions shall be reduced;
(5) Fifth, before-tax required basic contributions shall be reduced;
(6) Sixth, Employer matching contributions shall be reduced.
Any amount which may not be allocated to the account of a participant
by reason of (2), (3), (4) or (5) hereof shall not be withheld and/or
deferred from his salary but shall be paid to him. Any amount which may
not be allocated to the account of a participant by reason of (6) hereof
shall be retained in the general assets of the Employer, if the Board of
Directors of CBS so directs, or paid to such participant upon such terms
and conditions as the Board of Directors of CBS may from time to time
prescribe.
H. Notwithstanding the provisions of Paragraph G, in the event that the
limitations prescribed under Paragraph D would be exceeded with respect to
any participant who participates in the Investment Fund and the CBS Pension
Plan or any other applicable defined benefit plan, the benefits under the
defined benefit plan shall be reduced or frozen prior to making any
adjustments under the Investment Fund.
I. In the event that, notwithstanding Paragraph G hereof, the
limitations with respect to annual additions prescribed hereunder are
exceeded with respect to any participant and such excess arises as a
consequence of the crediting of forfeitures to the participant's account or
a reasonable error in estimating the participant's compensation or a
reasonable error in determining the amount of before-tax contributions that
may be made with respect to any individual within the limits of Section 415
of the Code, such excess shall be disposed of by returning to the
participant his after-tax contributions, if any, for the year in which the
excess arose, together with the earnings thereon, but only to the extent
necessary to cause the annual additions to the participant's account to
equal, but not exceed, the limitations prescribed hereunder. In the event
that after such contributions and earnings are returned there remains an
excess, before-tax contributions, if any, for the year in which the excess
arose, shall be returned to the participant, but only to the extent
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necessary to cause the annual additions to the participant's account to
equal, but not exceed, the limitations prescribed hereunder. In the event
that after such contributions are returned there remains an excess, such
excess shall be held in a suspense account and allocated to the account of
the participant in succeeding years or, if his employment has terminated
and there remains an amount standing to his credit in a suspense account,
among the accounts of all participants. Any before-tax or after-tax
contributions that are returned to the participant in accordance with this
Paragraph shall not be taken into account in applying the limitations of
Paragraphs (iii)(A), (iii)(C) and (iii) (D) of Article IV.
XIII. Interpretation; Construction.
Anything in the Investment Fund or the Trust Agreement to the contrary
notwithstanding, no provision thereof shall be so construed as to violate
the requirements of the Act. To the extent that state law shall not be
preempted by the provisions of the Act or any other laws of the United
States heretofore or hereafter enacted, as the same may be amended from
time to time, the Investment Fund shall be administered, construed and
enforced according to the laws of the State of New York.
XIV. Top-Heavy Plan.
A. Effective January 1, 1984, the Investment Fund shall meet the
requirements of this Article XIV in the event that the Investment Fund is
or becomes a top-heavy plan.
B. 1. Subject to the aggregation rules set forth in subparagraph 2 of
this Paragraph B, the Investment Fund shall be considered a top-heavy plan
pursuant to Section 416(g) of the Code in any plan year beginning after
December 31, 1983 if, as of the determination date, the present value of
the cumulative accrued benefits of all Key Employees exceeds 60 percent of
the present value of the cumulative accrued benefits of all of the
Employees as of such date, excluding former Key Employees and, except for
the plan year beginning January 1, 1984, excluding any Employee who has not
received compensation from the Employer during the five consecutive plan
year period ending on the determination date, but taking into account in
computing the ratio any distributions made during the five consecutive plan
year period ending on the determination date. For purposes of the above
ratio, the present value of a Key Employee's accrued benefit shall be
counted only once each plan year, notwithstanding the fact that an
individual may be considered a Key Employee for more than one reason in any
plan year.
2. For purposes of determining whether the Investment Fund is a
top-heavy plan and for purposes of meeting the requirements of this Article
XIV, the Investment Fund shall be aggregated and coordinated with other
qualified plans in a required aggregation group and may be aggregated or
coordinated with other qualified plans in a permissive aggregation group.
If such required aggregation group is top-heavy, this Investment Fund shall
be considered a top-heavy plan. If such permissive aggregation group is
not top-heavy, this Investment Fund shall not be a top-heavy plan.
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C. For the purpose of determining whether the Investment Fund is
top-heavy, the following definitions shall be applicable:
1. Determination and Valuation Dates. The term "determination
date" shall mean, in the case of any plan year, the last day of the
preceding plan year. The amount of an individual's accrued benefit and the
present value thereof shall be determined as of the valuation date and
shall include any contribution actually made after such valuation date but
on or before the determination date. The term "valuation date" means the
most recent value determination date defined in subparagraph 54 of
Paragraph A of Article IX hereof occurring within a 12-month period ending
on the determination date.
2. Key Employee. An individual shall be considered a Key Employee
if he is an Employee or former Employee who at any time during the current
plan year or any of the four preceding plan years:
(a) was an officer of the Employer who has annual compensation
from the Employer in the applicable plan year in excess of 150 percent of
the dollar limitation under Section 415(c)(1)(A) of the Code; provided,
however, that the number of individuals treated as Key Employees by reason
of being officers hereunder shall not exceed the lesser of 50 or 10
percent of all Employees, and provided further that if the number of
Employees treated as officers is limited to 50 hereunder, the individuals
treated as Key Employees shall be those who, while officers, received the
greatest annual compensation in the applicable plan year and any of the
four preceding plan years (without regard to the limitation set forth in
Section 416(d) of the Code); or
(b) was one of the 10 Employees owning or considered as owning
the largest interests in the Employer who has annual compensation from the
Employer in the applicable plan year in excess of the dollar limitation
under Section 415(c)(1)(A) of the Code as increased under Section 415(d)
of the Code; or
(c) was a more than five percent owner of the Employer; or
(d) was a more than one percent owner of the Employer whose
annual compensation from the Employer in the applicable plan year exceeded
$150,000.
For purposes of determining who is a Key Employee, ownership shall
mean ownership of the outstanding stock of the Employer or of the total
combined voting power of all stock of the Employer, taking into account the
constructive ownership rules of Section 318 of the Code, as modified by
Section 416(i)(1) of the Code.
For purposes of section (a) of this subparagraph but not for purposes
of sections (b), (c) and (d) of this subparagraph (except for purposes of
determining compensation under section (d) of this subparagraph), the term
"Employer" shall include any entity aggregated with an Employer pursuant to
Section 414(b), (c) or (m) of the Code.
For purposes of section (b) of this subparagraph, an Employee (or
former Employee) who has some ownership interest is considered to be one of
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the top 10 owners unless at least 10 other Employees (or former Employees)
own a greater interest than such Employee (or former Employee); provided
that if an Employee has the same ownership interest as another Employee,
the Employee having greater annual compensation from the Employer is
considered to have the larger ownership interest.
3. Non-Key Employee. The term "Non-Key Employee" shall mean any
Employee who is a participant and who is not a Key Employee.
4. Beneficiary. Whenever the term "Key Employee", "former Key
Employee", or "Non-Key Employee" is used herein, it includes the
beneficiary or beneficiaries of such individual. If an individual is a Key
Employee by reason of the foregoing sentence as well as a Key Employee in
his own right, both the present value of his inherited accrued benefit and
the present value of his own accrued benefit will be considered his accrued
benefit for purposes of determining whether the Investment Fund is a
top-heavy plan.
5. Compensation and Compensation Limitation. For purposes of this
Article XIV, except as otherwise specifically provided, the term
"compensation" means the amount stated on an Employee's Form W-2 for the
calendar year that ends with or within the plan year; provided that the
annual compensation of a Key Employee taken into account under the
Investment Fund shall not exceed $200,000, for plan years beginning before
January 1, 1994, or $150,000, for plan years beginning after December 31,
1993, and in either case adjusted for increases in the cost of living
pursuant to regulations issued under Section 401(a)(17) of the Code.
6. Required Aggregation Group. The term "required aggregation
group" shall mean all other qualified defined benefit and defined
contribution plans, including terminated plans, maintained by the Employer
in which a Key Employee participates, and each other plan of the Employer
which enables any plan in which a Key Employee participates to meet the
requirements of Section 401(a)(4) or 410 of the Code.
7. Permissive Aggregation Group. The term "permissive aggregation
group" shall mean all other qualified defined benefit and defined
contribution plans maintained by the Employer that meet the requirements of
Sections 401(a)(4) and 410 of the Internal Revenue Code when considered
with a required aggregation group.
8. Present Value of Accrued Benefit. The present value of an
individual's accrued benefit shall mean the sum of the value as of the most
recent valuation date of the A units credited to his A account, the B units
credited to his B account, the D units credited to his D account, the E
units credited to his E account and the C units credited to his C account
as of the determination date and contributions due as of the determination
date.
D. In the event the Investment Fund is determined to be top-heavy for
any plan year, the following requirements shall be applicable.
1. Minimum Allocation. (a) In the case of a Non-Key Employee who
is covered under this Investment Fund but does not participate in any
qualified defined benefit plan maintained by the Employer, the minimum
allocation of contributions plus forfeitures allocated to the account of
each such Non-Key Employee who has not separated from service at the end of
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a plan year in which the Investment Fund is top-heavy shall equal the
lesser of three percent of compensation for such plan year or the largest
percentage of compensation provided on behalf of any Key Employee for such
plan year. The minimum allocation provided hereunder may not be suspended
or forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code. The
minimum allocation shall be made for a Non-Key Employee for each plan year
in which the Investment Fund is top-heavy, even if he has not completed a
year of service in such plan year or if he has declined to elect to have
salary reduction contributions made on his behalf.
(b) A Non-Key Employee who is covered under this Investment
Fund and under a qualified defined benefit plan maintained by the Employer
shall not be entitled to the minimum allocation under this Investment Fund
but shall receive the minimum benefit provided under the terms of the
qualified defined benefit plan.
2. Limitations on Annual Additions and Benefits. For purposes of
computing the defined benefit plan fraction and defined contribution plan
fraction as set forth in Sections 415(e)(2)(B) and 415(e)(3)(B) of the
Code, the dollar limitations on benefits and annual additions applicable to
a limitation year shall be multiplied by 1.0 rather than by 1.25.
XV. Midwest Communications, Inc. Transaction.
A. Transfer of Accounts from the Midwest Communications, Inc. Retirement
Savings Plan to Investment Fund:
1. All individuals who were salaried, nonunion employees of Midwest
Communications, Inc. and who were eligible to participate in the Midwest
Communications, Inc. Retirement Savings Plan as of February 5, 1992, shall
be eligible to participate in the Investment Fund with respect to
compensation earned after April 5, 1992. Amounts credited to the accounts
of such Participants of the Midwest Communications, Inc. Retirement Savings
Plan who are participants under the Investment Fund shall be transferred to
the Investment Fund effective April 30, 1992 ("Transferred Amount(s)").
2. All individuals who were union employees of Midwest
Communications, Inc. and who were eligible to participate in the Midwest
Communications, Inc. Retirement Savings Plan shall be eligible to
participate in the Investment Fund as of the date specified by the
individual collective bargaining agreement with respect to compensation
earned after the date specified in such agreement. Amounts credited to the
accounts of such Participants of the Midwest Communications, Inc.
Retirement Savings Plan who are participants under the Investment Fund
shall be transferred to the Investment Fund effective as of the valuation
date following the date specified in the particular collective bargaining
agreement for their eligibility to participate in the Investment Fund
("Transferred Amount(s)").
3. Transferred Amounts shall be subject to the following
procedures:
(i) Allocation and Accounting for Transferred Amounts: The
portion of a participant's Transferred Amount representing before-tax
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contributions shall be allocated to his Before-Tax Account; the portion
representing rollover contributions shall be allocated to his Rollover
Contribution Account; and the remaining portion shall be allocated to the
participant's Employer Matching Contribution Account.
(ii) Investment of Transferred Amounts: Transferred Amounts
shall be invested in Funds A, B, D and E as directed by the participant in
accordance with the investment provisions of Article III and IV. In the
event the participant fails to issue an investment direction, the
Transferred Amounts shall be invested in Fund B.
(iii) Vesting in Transferred Amounts: A participant's vested
interest in his Transferred Amount shall be determined in accordance with
the rules of subparagraph 56 of Paragraph A of Article IX hereof, provided
that all prior service credit with Midwest Communications, Inc. shall be
treated as service with CBS Inc., and further provided that a
participant's vested interest in the Transferred Amounts under the
Investment Fund shall be no less than his vested interest under the
Transferor Plan determined as of the date such amounts are transferred to
this Investment Fund.
(iv) Distribution and Withdrawals of Transferred Amounts: The
requirements of Article VI shall govern the withdrawal and distribution of
Transferred Amounts in the same manner as if such amounts were originally
contributed to this Investment Fund, provided that in the event former
Participants in the Midwest Communications, Inc. Retirement Savings Plan
had Rollover Contribution Accounts thereunder, these amounts will be
available for withdrawal under the withdrawal rules of Section 7.1 of that
Plan, to wit:
"Withdrawals from Rollover Account: A Participant may withdraw from his
Rollover Account an amount not less than the lesser of One Thousand
Dollars or the balance of such Account and not in excess of the amount of
such Account balance as of the Valuation Date that next follows by at
least thirty days (or such shorter period as the Administrator may by
uniform rule allow) the date on which the Administrator receives a
complete and accurate written withdrawal application from the Participant
in form prescribed by the Administrator. Such withdrawal distribution
shall be made by the Trustee as soon as administratively practicable
following such Valuation Date." Section 2.28 of the Midwest
Communications, Inc. Retirement Savings Plan provides that the Valuation
Date is the last day of each calendar month and such interim dates as the
Administrator may from time to time specify pursuant to Section 5.2(B).
B. Merger of WCCO Television, Inc. AFTRA 401(k) Plan into Investment
Fund:
1. All individuals who were Participants in the WCCO Television,
Inc. AFTRA 401(k) Plan as of August 21, 1992 shall be eligible to
participate in the Investment Fund with respect to compensation earned
after August 23, 1992. Amounts credited to the accounts of such
Participants of the WCCO Television, Inc. AFTRA 401(k) Plan who are
participants under the Investment Fund shall be transferred to the
Investment Fund effective September 2, 1992 ("Transferred Amount(s)").
- 55 -
<PAGE>
Effective August 31, 1992, the participants shall direct the Trustee of
the CBS Employee Investment Fund to transfer the total of their account
balance(s) in the WCCO Television, Inc. AFTRA 401(k) Plan to the
designated Fund account(s) under the Investment Fund.
2. Transferred Amounts shall be subject to the following
procedures:
(i) Allocation and Accounting for Transferred Amounts: The
portion of a participant's Transferred Amount representing before-tax
contributions shall be allocated to his Before-Tax Account; the portion
representing rollover contributions shall be allocated to his Rollover
Contribution Account.
(ii) Investment of Transferred Amounts: Transferred Amounts
shall be invested in Funds A, B and D as directed by the participant in
accordance with the investment provisions of Article III and IV. In the
event the participant fails to issue an investment direction, the
Transferred Amounts shall be invested in Fund B.
(iii) Vesting in Transferred Amounts: A participant's vested
interest in his Transferred Amount shall be determined in accordance with
the rules of subparagraph 56 of Paragraph A of Article IX hereof, provided
that all prior service credit with Midwest Communications, Inc. shall be
treated as service with CBS Inc., and further provided that a
participant's vested interest in the Transferred Amounts under the
Investment Fund shall be no less than his vested interest under the
Transferor Plan determined as of the date such amounts are transferred to
this Investment Fund.
(iv) Distribution and Withdrawals of Transferred Amounts: The
requirements of Article VI shall govern the withdrawal and distribution of
Transferred Amounts in the same manner as if such amounts were originally
contributed to this Investment Fund, provided that in the event former
Participants in the WCCO Television, Inc. AFTRA 401(k) Plan had Rollover
Contribution Accounts thereunder, these amounts will be available for
withdrawal under the withdrawal rules of Section 7.1 of that Plan, to wit:
"Withdrawals from Rollover Account: A Participant may withdraw from his
Rollover Account an amount not less than the lesser of One Thousand
Dollars or the balance of such Account and not in excess of the amount of
such Account balance as of the Valuation Date that next follows by at
least thirty days (or such shorter period as the Administrator may by
uniform rule allow) the date on which the Administrator receives a
complete and accurate written withdrawal application from the Participant
in form prescribed by the Administrator. Such withdrawal distribution
shall be made by the Trustee as soon as administratively practicable
following such Valuation Date." Section 2.27 of the WCCO Television, Inc.
AFTRA 401(k) Plan provides that the Valuation Date is the last day of each
calendar month and such interim dates as the Administrator may from time
to time specify pursuant to Section 5.2(B).
- 56 -
CBS INC.
RESTRICTED STOCK PLAN FOR ELIGIBLE DIRECTORS
The Restricted Stock Plan (the "Plan") of CBS Inc. ("CBS" or the "Company")
is for the purpose of providing each eligible Director, who shall so elect,
with the opportunity to receive deferred compensation after termination of
service as a Director. The Plan is also intended to establish a method of
paying Directors' deferred compensation by giving to electing Directors the
opportunity to purchase and acquire shares of Common Stock, $2.50 par value
per share, of CBS Inc. ("Common Stock") with the proceeds of their
directors fees and retainers in accordance with the terms of the Plan. It
is believed that this will aid CBS in attracting and retaining, as members
of its Board of Directors, persons whose abilities, experience and judgment
can contribute to the continued progress of CBS.
Section 1. Definitions
(a)
"Board" means the Board of Directors of CBS.
(b)
"Committee" means the Committee appointed to administer this Plan, as
provided in Section 3 thereof.
(c)
"Committee Fees" means the fees payable to a Director for service on,
as a member or chairman of, a Committee of the Board.
(d)
"Deferred Compensation" means compensation previously deferred by
electing Directors pursuant to the Company's Deferred Additional
Compensation Plan for Directors established November 2, 1981, as amended.
(e)
"Deferred Compensation Account" means the account or accounting entry
which signifies the total amount of Deferred Compensation with respect
to each Participant who shall elect to have all or a portion of his or
her Deferred Compensation, if any, used to acquire shares of Common
Stock pursuant to the Plan.
(f)
"Director" or "Directors" means a member or members of the Board of the
Company.
(g)
"Director's Retainers" means each of the quarterly retainer payments
which are payable to Eligible Directors for service as a member of the
Board of Directors.
<PAGE>
- 2 -
(h)
"Eligible Director" means a Director who is not in the Company's
employ.
(i)
"Election Form" mean the form by which an Eligible Director elects to
become a Participant.
(j)
"Election Requirements" means the period of six months and one day
which is required (i) in the case of an Eligible Director, before any
election to commence participation in the Plan shall become effective
or (ii) in the case of a Participant, before any election to cease or
change the percentage of a Participant's participation in the Plan
shall become effective. If the applicable six months and one day
period ends on a date other than a Valuation Date, the event
contemplated by the relevant Election Form shall be effective as of the
first Valuation Date following the end of the Election Requirements
period.
(k)
"Market Value" of a share of Common Stock shall mean the closing sale
price for the Company's Common Stock on the New York Stock Exchange (or
if such Common Stock is no longer listed on such exchange on the
over-the-counter market) on each Valuation Date or, if no sale occurred
on such date, on the date prior thereto on which a sale last occurred,
all as determined in good faith by the Committee.
(l)
"Participant" means an Eligible Director who has complied with the
Election Requirements and has elected to participate in the Plan on the
terms and conditions set forth herein.
(m)
"Restricted Period" means the period of time commencing on the date on
which an Eligible Director becomes a Participant and ending on the date
on which he or she ceases to be a director under circumstances
described in Section 6.2(ii) that would not result in the forfeiture of
Restricted Shares.
(n)
"Restricted Shares" means shares of Common Stock acquired by a
Participant which are subject to the re- strictions and other provision
of Article 6 hereof.
(o)
"Total Disability" shall mean a mental or physical disability of a
Participant that the Committee, in its sole and reasonable discretion
and based upon such information as it reasonably deems appropriate,
determines willpermanently prevent such Participant from performing his
or her duties as a Director of the Company.<PAGE>
- 3 -
(p)
"Valuation Date" means the 15th day of February, May, August or
November (or if any such day shall not be a business day the next
following business day) on which date Committee Fees and director's
Retainers for the previously ended quarter are paid to Directors.
Section 2. Term; Amendment of the Plan.
The Plan shall be effective upon its approval by a majority of the
Stockholders of CBS present and voting at CBS's 1993 Annual Meeting of
Shareholders and shall, unless otherwise terminated, be in effect until
December 31, 2013 (or if such date shall not be a business day, the next
following business day). The Plan may be terminated, modified or amended
by the CBS shareholders, and the Board of Directors may also terminate the
Plan, or modify or amend the Plan in such respects as the Board shall deem
advisable, except that no change or modification can be made by the Board
which will result in (i) accelerating the vesting of any Restricted
Shares on behalf of a Participant, (ii) permitting a Participant to elect
to commence or terminate his participation other than in conformity with
the Election Requirements, or (iii) increasing the number of shares
available for purchase by Participants under the Plan. No amendment or
termination of the Plan shall adversely affect or alter any rights or
restrictions relating to Restricted Shares acquired under to the Plan prior
to such amendment or termination.
Section 3. Administration of the Plan - the Committee.
The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company. To the extent permitted by law, members
of the Committee shall not be precluded from becoming Participants in
accordance with the terms of the Plan.
Section 4. Participation.
In order to participate in the Plan, an Eligible Director must make a
valid election by executing and filing an Election Form with the Committee.
Such election shall become effective in conformity with the terms of such
form and in no event before the satisfaction of the Election Requirements.
Each Election Form shall:
(a)
be valid if and only if it contains a statement that the Eligible
Director elects to defer on a quarterly basis on each Valuation Date all
or a stated percentage equal to not less than 50% (in 10% increments of
50% or more) of the aggregate amount due to him or her as Committee Fees
and Directors Retainers;
<PAGE>
- 4 -
(b)
provide a one time opportunity to elect, within 60 days following the
Plan's effective date, to have a stated percentage (in increments of
10%) of Deferred Compensation used to acquire Restricted Shares on the
Valuation Date following the expiration of the Election Requirements as
to such election;
(c)
apply to such period of time during which the Participant continues to
be an Eligible Director or until the Participant files with the
Committee a revised Election Form or a written revocation of election
(which in either case shall become effective upon the first Valuation
Date to occur after the expiration of six months and one day after such
filing);
(d)
with respect to such period of time to which it applies pursuant to
paragraph (c) above, shall be irrevocable as to all matters described
in paragraph (a) above upon the election having become effective and
while the election is in effect; and
(e)
shall be irrevocable for a period of six months and one day.
Section 5. Available Shares.
100,000 shares of Common Stock shall be available for purchase by
Participants under the Plan from time to time. These shares may be either
treasury shares or authorized but unissued shares. The Board of Directors
may from time to time reduce the number of shares of Common Stock available
for issuance pursuant to the Plan or terminate the Plan but no such
reduction in the number of shares of Common Stock available under the Plan
shall affect any Restricted Shares previously issued under the Plan. The
number of shares available for issuance under the Plan may be increased
only pursuant to the affirmative vote of the Company's shareholders. If
any change is made in the number of shares of Common Stock outstanding or
in the rights of such outstanding shares (such as by stock dividend, stock
split, or stock consolidation), the Committee may make such adjustments in
the number of or rights relating to Restricted Shares previously issued
pursuant to the Plan as the Committee determines is equitable to preserve
the respective rights of the participants in the Plan.
Section 6. Restricted Stock.
Section 6.1 Acquisition of Restricted Shares.
(a)
On each Valuation Date a Participant shall be credited with the number
of full Restricted Shares that results <PAGE>
- 5 -
from dividing the aggregate amount of Director's Retainers and
Committee Fees that would have been paid to him or her on such
Valuation Date but which such Participant has elected to defer under
the Plan plus any amount held in the Director's suspense account by the
Market Value on such Valuation Date of one share of Common Stock. Any
cash not so used to acquire Restricted Shares, together with cash
dividends as provided in Section 6.2, shall be held in a suspense
account and funds so held in the suspense account shall be added to the
aggregate amount of the Participant's Director's Retainers and
Committee Fees deferred under the Plan on the next Valuation Date and
used to acquire additional full Restricted Shares on such date.
(b)
In the case of a Participant who has elected to have a percentage of
his Deferred Compensation used to acquire Restricted Shares pursuant to
Section 4(b), such Participant shall be credited with the number of
full Restricted Shares that results from dividing the amount of his
Deferred Compensation elected to be converted into Restricted Shares by
the Market Value of one share of Common Stock on the applicable
Valuation Date. Any cash not so used to acquire Restricted Shares
shall continue to be held as Deferred Compensation under the provision
of the Plan described in subparagraph (d) of Section 1.
(c)
On each Valuation Date, there shall be issued on behalf of each
Participant a stock certificate representing a number of shares of
Common Stock equal to the number of Restricted Shares acquired by the
Participant. Such certificate shall be registered in the Participant's
name but shall be held in custody by the Company for the
Participant's account.
Section 6.2. Provisions Relating to Restricted Shares.
The Participant shall generally have the rights and privileges of a
stockholder as to Restricted Shares, including the right to vote and
receive dividends, except that the following restrictions are applicable to
Restricted Shares: (i) the Participant shall not be entitled to delivery
of any certificate(s) until the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the
Committee; and (ii) all Restricted Shares shall be forfeited and all rights
of the Participant to such shares shall terminate without further
obligation on the part of the Company if the Participant shall cease to be
a Director prior to the later of attaining age 72 or serving not less
than five years from the effective date of this Plan, unless <PAGE>
- 6 -
a Director's ceasing to serve is triggered by (y) death, Total Disability
or the Company's shareholders failing to reelect such Participant to the
Board, or (z) resignation from the Board after furnishing the Board with an
opinion of counsel, reasonably satisfactory to the Company, to the effect
that continued membership on the Board by the Participant will result in
the Participant having a conflict of interest or suffering some other
significant legal infirmity. It is expressly acknowledged that, as to a
Participant who satisfies any of the requirements of subparagraph (ii)
above, the Restricted Period shall terminate.
Cash dividends and the proceeds of any non-stock dividends paid on a
Participant's Restricted Shares shall be held on behalf of such Participant
in a suspense account until the next Valuation Date, and on the next
Valuation Date, such aggregate amount (and any other cash in such account)
shall be used to acquire additional full Restricted Shares as provided
in Section 6.1(a).
Stock dividends (whether in Common Stock or in the stock of any other
company) paid on Restricted Shares of a Participant shall be subject to the
same restrictions as the Restricted Shares with respect to which the stock
dividend was paid.
Section 6.3. Lapse of Restrictions.
Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee, the
restrictions applicable to the Restricted Shares shall lapse and one or
more stock certificates for the number aggregate of shares of Restricted
Shares shall be delivered, free and clear of all restrictions, except that
may be imposed by law, to the Participant or the Participant's beneficiary
or estate, as the case may be. Certificate(s) for Restricted Shares shall
bear such legends, if any, as the Committee, on the advice of counsel,
shall deem necessary or appropriate. The Company shall not be required to
deliver any fractional share of Common Stock but will pay, in lieu thereof,
the Fair Market Value (determined as of the date the Restricted Period
ends) of such fractional share to the Participant or the Participant's
beneficiary or estate, as the may be. At the time of such delivery, the
amount of any cash in a Participant's suspense account shall be
simultaneously delivered.
No payment will be required from the Participant upon the issuance or
delivery of any shares of Restricted Stock, except that any amount
necessary to satisfy applicable federal, state or local tax requirements
shall be withheld <PAGE>
- 7 -
or paid promptly upon notification of the amount due and prior to or
concurrently with the issuance or delivery of certificate(s) representing
Restricted Shares. The Participants and their beneficiaries, distributors
and personal representation will bear any and all federal, state, local or
other income or other taxes imposed on Restricted Shares (or any cash)
distributed to them pursuant to this Plan.
Section 7. Consent.
By electing to become a Participant, each Director shall be deemed
conclusively to have accepted and consented to all terms of the Plan and
all actions or decisions made by the Company, the Company's shareholders,
the Board or the Committee with regard to the Plan. Such terms and consent
shall also apply to and be binding upon the beneficiaries, distributees and
personal representatives and other successors in interest of each
Participant.
Section 8. Miscellaneous.
Section 8.1. Additional Conditions.
Any shares of Common Stock issued or transferred under any provision of
the Plan as Restricted Shares may be issued or transferred subject to such
conditions, in addition to those specifically provided in the Plan, as the
Committee or the Company may reasonably impose.
Section 8.2. No Right to Continue to Serve.
Nothing in the Plan or in any instrument executed pursuant hereto shall
confer upon any Director any right to continue as a member of the Company's
Board or shall affect the right of the Board, to remove a Participant from
the Board or the Company's shareholders to not re-elect any Participant to
the Board.
Section 8.3. Legal Restrictions.
The Company will not be obligated to transfer to a Participant (or his
or her representative) Restricted Shares if counsel to the Company
determines that such issuance would violate any law or regulation of any
governmental authority or any agreement between the Company and any
national securities exchange upon which the Company's Common Stock is
listed. In connection with any stock issuance or transfer, the person
acquiring the shares shall, if requested by the Company, give assurances
satisfactory to counsel to the Company regarding such matters as the
Company may deem desirable to assure compliance with all legal
requirements.
<PAGE>
- 8 -
Section 8.4. Alienation.
(a)
Subject to the provisions of paragraph (b) of this Section 8, no
Restricted Shares (or cash in the suspense account) held in custody
under this Plan, shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, levy or
charge, and any attempt so to alienate, sell, transfer, assign, pledge,
encumber, levy or charge the same shall be void. No such amount shall
be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled to such
benefit.
(b)
The restraints in paragraph (a) of this Section 8.4 shall not apply to
a Participant's personal representative.
Section 8.5. Severability.
In the event any provision of this Plan would serve to invalidate the
Plan, that provision shall be deemed to be null and void, and the Plan
shall be construed as if it did not contain the particular provision that
would make it invalid.
CBS Inc.
51 West 52 St.
New York, NY 10019
Mr. Edward Grebow
30 Waterside Plaza
New York, New York 10010
As of November 8, 1993
Dear Ed:
This letter confirms the arrangements we have discussed
concerning your employment by CBS.
1. CBS agrees to continue to employ you as a senior
executive, with the title Senior Vice President for the period
beginning November 8, 1993 and ending December 31, 1995.
2. During your employment, CBS will pay you base salary at
an annual rate of not less than $350,000. In February of each of
the years 1994, 1995 and 1996, CBS will pay you as a bonus the
greater of A) $110,000 or B) the award granted to you under the
CBS Executive Incentive Plan relating to the preceding calendar
year.
3. If CBS shall have terminated your employment prior to
December 31, 1995 other than for "cause", it will thereupon pay
you the greater of your salary through December 31, 1995 or a
severance payment calculated in accordance with the CBS severance
policy in effect on this date. (If your employment continues
beyond December 31, 1995 only the CBS severance policy then in
effect will be applicable.) For purposes of this paragraph 3,
"cause" means (i) fraud, <PAGE>
- 2 -
misappropriation or embezzlement by you, (ii) your willful
failure to devote all of your customary business time and
attention to the affairs of CBS or (iii) your intentional breach
of your obligations to comply in all material respects with the
provisions of CBS policy, including but not limited to the Policy
Concerning Conflicts of Interest.
4. You shall be a participant in the CBS Pension Plan, and
shall, in accordance with the terms of that Plan, be paid such
amounts, to the extent that you become entitled to the same, at
such times as are therein provided generally to its participants.
In addition, CBS will provide you supplemental nonqualified
payments equal to the difference between (A) those pension
benefits you would have received had you remained employed by
Morgan Guaranty Trust Company and been covered under its plan as
it applied to you and existed on October 1, 1985 and (B) the sum
of (a) your vested accrued benefit as of the date of your
termination of employment with Morgan Guaranty Trust Company
($16,755), (b) your accrued benefit as of the date of your
termination of employment with Bowery Savings Bank calculated in
accordance with the supplemental non-qualified arrangement
between you and the Bowery Savings Bank in effect on that date
($36,264) and (c) any vested benefit under the CBS <PAGE>
- 3 -
Pension Plan. The attached schedule prepared by TPF&C
demonstrates the methodology to be utilized in calculating your
supplemental payments hereunder. You shall have the option to
receive the then equivalent value of such supplemental payments
in cash upon the termination of your CBS employment. The value
is to be based on the interest rate in the CBS Pension Plan in
effect at that time.
This agreement supersedes all terms and conditions of our
prior letter dated "As of August 5, 1991."
If the foregoing correctly states the understanding between
us, kindly so confirm by countersigning this letter and returning
a copy of it, which thereupon will become effective as the
agreement between us.
Sincerely,
Laurence A. Tisch
Laurence A. Tisch
Chairman, President and Chief Executive Officer
AGREED TO AND APPROVED:
Edward Grebow
EDWARD GREBOW
Date: As of November 8, 1993
AGREEMENT made as of the 31st day of January, 1994, by and between CBS Inc.
("CBS"), a New York corporation, having its principal office at 51 West 52
Street, New York, New York 10019, and PETER LUND ("Executive").
W I T N E S S E T H:
WHEREAS, Executive has been retained to perform services as an
executive of the CBS Broadcast Group ("CBG") of CBS; and
WHEREAS, CBS desires to secure the services of Executive as an
executive of CBG, and Executive is willing to perform such services, upon
the terms, provisions and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants hereinafter contained, it is agreed upon between CBS and
Executive as follows:
1. CBS hereby employs Executive, and Executive hereby accepts
employment, as an executive of CBG, currently as President of the CBS
Television Network ("CTN") and Executive Vice President of the CBS
Broadcast Group, for a four-year term commencing January 3, 1994 and ending
January 2, 1998. Currently, the following Divisions and Departments
report, or shortly after execution of this agreement shall report, to the
President of CTN: CBS Marketing, CBS Promotion, CBS Radio, CBS Television
Stations, Affiliate Relations and other responsibilities as may be
assigned. Executive shall perform such services as may from time to time
be assigned to him by the President, CBS/Broadcast Group.
2.a. CBS agrees to pay Executive, and Executive agrees to accept from
CBS, for his services hereunder base salary at the rate of five hundred
fifty thousand dollars ($550,000) per <PAGE>
- 2 -
annum for the period January 3, 1994 through January 2, 1996 and six
hundred fifty thousand dollars ($650,000) per annum for the period January
3, 1996 through January 2, 1998. Base salary shall be payable bi-weekly or
in such other manner as CBS may designate for employees generally.
b. In addition to the base salary set forth above, Executive shall
receive a minimum bonus consisting of a payment from the CBS Executive
Incentive Plan and, if necessary to reach the minimum, an additional
amount. The bonuses shall be payable in February of each of the years
1995, 1996, 1997 and 1998. The minimum bonuses payable shall be two
hundred fifty thousand dollars ($250,000), payable no later than March 1,
1995 and March 1, 1996, respectively, and two hundred seventy-five thousand
dollars ($275,000) payable no later than March 1, 1997 and March 1, 1998
respectively. The bonus payable to Executive in 1994 with respect to 1993
shall be $350,000.
3. The Company, as an inducement to execute this agreement, will
grant to Executive, deferred compensation totalling $1,000,000. Such
deferred compensation shall be granted, credited with interest, and paid in
a series of installments under the specific terms outlined below.
Executive shall not, at any time, have a right to accelerate any payments
related to this deferred compensation, and future installment payments of
such deferred compensation shall not be funded and the Company shall make
such payments out of general corporate assets.
<PAGE>
- 3 -
The Company shall grant Executive the deferred compensation of
$1,000,000 at contract execution. Interest will accrue on the $1,000,000
from the date granted, calculated initially at the rate in effect on the
date of grant for 13-week United States Treasury Bills and thereafter
adjusted on the first date of each succeeding calendar quarter to be, for
the following quarter, the rate in effect on that date for the 13-week
United States Treasury Bills.
The Company shall pay the Executive, on each of the following
dates, the specified portion of the then total of the above-described
deferred compensation and interest accrued to that date:
January 2, 1999 one fifth
January 2, 2000 one fourth
January 2, 2001 one third
January 2, 2002 one half
January 2, 2003 all that remains.
4. If prior to January 2, 1998:
a.) Executive's employment should terminate by reason of his
voluntary action (except as specified under paragraph #4c. below) or the
Company terminates Executive for Cause, as specified in paragraph #8a.
below, then Executive shall thereupon forfeit all rights to such deferred
compensation and accrued interest previously credited to him, and the
Company's obligations to make future payments shall thereupon terminate.
b.) Executive's employment should be terminated by <PAGE>
- 4 -
the Company other than for Cause, then the Company shall continue to be
obligated to make payments in accordance with the schedule in paragraph #3
hereof.
c.) Executive should terminate his employment by reason of his
voluntary action as a direct result of the Company's decision to
substantially reduce Executive's duties, notwithstanding Executive
continuing to be ready, willing and able to perform his duties, then the
Company shall continue to be obligated to make payments in accordance with
the schedule in paragraph #3 hereof.
d.) Executive's employment should terminate by reason of death or
disability, then payments shall be payable to Executive's estate in
accordance with the schedule in paragraph #3 hereof.
5. Executive shall be included in all plans now existing or hereafter
adopted for the general benefit of CBS employees, such as pension plans,
investment funds and group or other insurance plans and benefits, if and to
the extent that he is and remains eligible to participate thereunder, and
subject to the provisions of such plans as the same may be in effect from
time to time. Executive will also be eligible to be considered for
participation in other CBS benefit plans, including the Executive Incentive
Plan, Supplemental Executive Retirement Plan (SERP) and the Stock Rights
Plan or any successor plans thereto, in which participation is limited to
CBS executives in positions comparable to Executive's. To the extent
Executive <PAGE>
- 5 -
participates in any benefit plan, such participation shall be based upon
Executive's base salary. Since plans in this latter category are
administered under procedures that are not subject to contractual
arrangements, eligibility for consideration is no guarantee of actual
participation because the CBS Board of Directors' discretion, or that of
the appropriate committee of such Board, in granting participation, is
absolute.
6. Executive agrees to devote all of his business time and attention
to the affairs of CBG, except during vacation periods and reasonable
periods of illness or other incapacity consistent with the practices of CBS
for executives in comparable positions, and agrees that his services shall
be completely exclusive to CBS during the term hereof.
7. Executive acknowledges that he has been furnished a copy of the
Policy Notes from the President concerning Conflicts of Interest
("Conflicts Policy") dated December 13, 1989, and a copy of the "CBS Policy
Summary" issued in January 1979. Executive further acknowledges that he
has read and fully understands all of the requirements thereof, and
acknowledges that at all times during the term hereof, he shall perform his
services hereunder in full compliance with the Conflicts Policy and the CBS
Policy Summary and with any revisions thereof or additions thereto.
8.a. If, during the term of this Agreement, the employment of Executive
by CBS should be terminated by CBS for Cause, which for these purposes is
defined as (i) fraud, <PAGE>
- 6 -
misappropriation or embezzlement on the part of Executive, (ii) Executive's
willful failure to perform services hereunder or (iii) Executive's
intentional breach of the provisions of paragraph 6 or of paragraph 7
hereof, then CBS's obligations hereunder shall immediately thereupon
terminate.
b. If, during the term of this Agreement, the employment of Executive
by CBS should be terminated by CBS other than for cause, Executive shall be
entitled to receive severance pay in accordance with Company policy in
effect at the time of termination or one year's base salary plus bonus,
whichever is greater.
9. This Agreement contains the entire understanding of the parties
with respect to the subject matter thereof, supersedes any and all prior
agreements of the parties with respect to the subject matter thereof, and
cannot be changed or extended except by a writing signed by both parties
hereto. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective legal representatives, executors, heirs,
administrators, successors and assigns. This Agreement and all matters and
issues collateral thereto shall be governed by the laws of the State of New
York applicable to contracts performed entirely therein. If any provision
of this Agreement, as applied to either party or to any circumstance, shall
be adjudged by a court to be void or unenforceable, the same shall in no
way affect any other provision of this Agreement or the validity or
enforceability thereof.<PAGE>
- 7 -
10. All notices or other communications hereunder shall be given in
writing and shall be deemed given if served personally or mailed by
registered or certified mail, return receipt requested, to the parties at
their addresses above indicated, or at such other addresses as they may
hereafter designate in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CBS INC.
By Howard Stringer
Howard Stringer
Peter Lund
Peter Lund (Executive)
EXHIBIT 11
(page 1 of 2)
CBS INC. and Subsidiaries
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
___________________
PRIMARY
Year Ended December 31
1993 1992 1991
Earnings:
Income (loss) from continuing operations $326,188 $162,479 $(98,634)
Post-tax interest on convertible
debentures* 3,288 12,259 12,277
Dividends on preference stock (12,500) (12,500) (12,500)
Accretion on series B preference stock (188) (188) (188)
Income (loss) from continuing operations
applicable to common shares 316,788 162,050 (99,045)
Gain from discontinued operations 12,871
Cumulative effects of changes in
accounting principles (81,472)
Net income (loss) applicable to
common shares $316,788 $ 80,578 $(86,174)
Shares:
Weighted average number of common
shares outstanding 14,797 13,423 14,217
Common stock equivalents:
Conversion of debentures* 649 1,953 1,953
Other 92 40 35
Adjusted shares 15,538 15,416 16,205
Per share:
Continuing operations $20.39 $10.51 $(6.11)
Discontinued operations .79
Cumulative effects of changes in
accounting principles (5.28)
Net income (loss) $20.39 $ 5.23 $(5.32)
*The debentures were converted in May 1993. Conversion was assumed for all
prior periods.
<PAGE>
EXHIBIT 11
(page 2 of 2)
CBS INC. and Subsidiaries
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
____________________
FULLY DILUTED
Year Ended December 31
1993 1992 1991
Earnings:
Income (loss) from continuing operations $326,188 $162,479 $(98,634)
Post-tax interest on convertible
debentures* 3,288 12,259 12,277
Income (loss) from continuing operations
applicable to common shares 329,476 174,738 (86,357)
Gain from discontinued operations 12,871
Cumulative effects of changes in
accounting principles (81,472)
Net income (loss) applicable to
common shares $329,476 $ 93,266 $(73,486)
Shares:
Weighted average number of common
shares outstanding 14,797 13,423 14,217
Common stock equivalents:
Conversion of debentures* 649 1,953 1,953
Other 92 40 35
Assumed conversion of preference B stock 864 864 864
Adjusted shares 16,402 16,280 17,069
Per share:
Continuing operations $20.09 $10.73 $(5.06)
Discontinued operations .75
Cumulative effects of changes in
accounting principles (5.00)
Net income (loss) $20.09(a) $ 5.73(b) $(4.31)(b)
*The debentures were converted in May 1993. Conversion was assumed for all
prior periods.
(a) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is not required by APB Opinion No. 15 because it
results in dilution of less than 3%.
(b) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to APB Opinion No. 15 because it
produces an anti-dilutive effect.<PAGE>
EXHIBIT 12
CBS Inc.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990(1) 1989
Income from Continuing Operations
before Income Taxes $479.3 $227.0 ($178.6) $102.4 $455.7
Add:
Fixed charges 65.6 89.8 78.3 88.2 90.9
Amortization of Capitalized Interest 4.3 3.4 3.7 4.3 6.1
Less:
Capitalized Interest (6.4) (10.2) (8.4) (8.3) (5.6)
Adjusted Earnings $542.8 $310.0 ($105.0) $186.6 $547.1
Interest Cost (2) $48.8 $71.9 $58.8 $68.5 $72.6
Interest Factor Portion of Rentals 16.8 17.9 19.5 19.7 18.3
Fixed Charges $65.6 $89.8 $78.3 $88.2 $90.9
Ratio of Earnings to Fixed Charges 8.27:1 3.45:1 * 2.12:1 6.02:1
(1) In connection with its $2 billion common stock repurchase, consummated on
February 4, 1991, the Company included a 1990 Unaudited Pro Forma
Condensed Consolidated 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.
(2) Includes amortization of debt discount and amortization of debt issue
expenses.
(*) 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.
SUBSIDIARIES OF CBS INC.*
% of Voting
Shares Held
by Immediate
State or Country Controlling
of Incorporation Parent
________________ ___________
Amadea Film Productions, Inc. Texas l00
Aspenfair Music, Inc. California l00
Bala Cynwyd Associates** Pennsylvania 50
Beverlyfax Music, Inc. California l00
Black Rock Enterprises Inc. New York 100
Caroline Film Productions, Inc. California 100
CBS Broadcast International of
Canada Limited Canada 100
CBS Broadcast Services Ltd. England 100
CBS Pension Trustees U.K. Limited England 100
CBS FMX Stereo Inc. New York l00
CBS/FOX Company, The** New York 50
CBS News Communications Inc. New York 100
CBS News Special Projects Inc. New York 100
CBS Overseas Inc. New York 100
CBS Urban Renewal Corporation New Jersey l00
Columbia Television, Inc. New York l00
Granite Holdings Inc. New York 100
Katy Film Productions, Inc. North Carolina 100
Lauren Film Productions, Inc. New York 100
Meadowlands Parkway Associates** New Jersey 50
Midwest Sports Channel Inc. Minnesota l00
Network Television Association*** Delaware 33.33
Radford Productions Limited England 100
Radford Studio Center Inc. California 100
* Inactive subsidiaries of the Registrant are not included in this
listing.
** General partnership
*** Non-profit trade association
To Be Incorporated By Reference Into Form S-8
Registration Statements Nos. 2-87270, 2-58540 and 2-33-2098
UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.<PAGE>
- 2 -
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
