SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
Commission file number 1-2931
CBS Inc.
(Exact name of registrant as specified in its charter)
New York 13-0590730
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 West 52 Street, New York, N.Y. 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 975-4321
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 4, 1995
Common Stock $2.50 par value 64,804,013
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PART I. FINANCIAL INFORMATION
CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in millions, except per share amounts)
ASSETS
June 30 December 31 June 30
1995 1994 1994
CURRENT ASSETS:
Cash and cash equivalents $ 3.3 $ 15.3 $ 340.2
Marketable securities (note 2) 46.2 86.9 386.0
Accounts receivable, less allowances: 416.6 423.0 417.3
$13.4 - June 1995
$12.8 - December 1994
$9.7 - June 1994
Program rights 361.3 404.4 338.1
Other 22.2 18.3 24.0
TOTAL CURRENT ASSETS 849.6 947.9 1,505.6
MARKETABLE SECURITIES (note 2) 296.3 272.6 962.5
PROPERTY, PLANT AND EQUIPMENT:
Land 81.9 81.9 81.4
Buildings, improvements and equipment 932.6 923.5 920.2
1,014.5 1,005.4 1,001.6
Less accumulated depreciation 508.5 485.6 487.3
NET PROPERTY, PLANT AND EQUIPMENT 506.0 519.8 514.3
OTHER ASSETS:
Program rights 130.4 111.1 161.8
Goodwill, net of amortization 260.6 264.3 268.5
Other 45.1 44.4 23.1
TOTAL OTHER ASSETS 436.1 419.8 453.4
TOTAL ASSETS $2,088.0 $2,160.1 $3,435.8
See accompanying notes to consolidated condensed financial statements.
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CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in millions, except per share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 December 31 June 30
1995 1994 1994
CURRENT LIABILITIES:
Accounts payable $ 37.9 $ 37.9 $ 35.2
Accrued salaries, wages and benefits 72.4 77.6 66.0
Liabilities for talent and program rights 203.6 245.2 227.5
Liabilities for securities sold under
repurchase agreements 69.6 72.8 364.6
Debt 30.8 151.5 .7
Income taxes 10.7 3.9 44.2
Other 220.7 204.1 177.0
TOTAL CURRENT LIABILITIES 645.7 793.0 915.2
LONG-TERM DEBT 507.0 507.3 590.1
OTHER LIABILITIES 400.1 408.5 410.4
DEFERRED INCOME TAXES 90.4 84.3 108.8
PREFERENCE STOCK, SERIES B, PAR VALUE
$1.00 PER SHARE, SUBJECT TO
REDEMPTION (note 5) 28.0 89.9 112.8
SHAREHOLDERS' EQUITY (note 5):
Common stock, par value $2.50 per share: 202.8 197.0 62.1
authorized: 100,000,000 shares
issued: 81,114,518 shares - June 1995
Additional paid-in capital 111.6 49.9 319.4
Unrealized holding gains (losses) (note 2) 5.7 (8.7) (5.3)
Retained earnings 1,234.5 1,177.7 2,598.1
1,554.6 1,415.9 2,974.3
Less shares of common stock in treasury,
at cost: 17,485,230 shares - June 1995 1,137.8 1,138.8 1,675.8
_______ _______ _______
TOTAL SHAREHOLDERS' EQUITY 416.8 277.1 1,298.5
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,088.0 $2,160.1 $3,435.8
See accompanying notes to consolidated condensed financial statements.
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CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Three months ended Six months ended
June 30 June 30
1995 1994 1995 1994
Net sales $890.2 $882.7 $1,787.3 $2,129.6
Cost of sales (644.7) (591.6) (1,381.5) (1,616.0)
Selling, general and
administrative expenses (note 3) (159.7) (118.5) (280.3) (239.9)
Other income, net 3.2 1.9 4.2 3.1
Operating income 89.0 174.5 129.7 276.8
Interest income on investments,
net (note 2) 5.7 19.0 12.4 42.3
Interest expense on debt, net (12.9) (11.0) (25.6) (22.2)
Interest, net (7.2) 8.0 (13.2) 20.1
Income before income taxes 81.8 182.5 116.5 296.9
Income taxes (note 4) (29.9) (73.2) (42.8) (118.3)
Net income $ 51.9 $109.3 $ 73.7 $ 178.6
Earnings per common share $ .80 $ 1.36 $ 1.12 $ 2.21
See accompanying notes to consolidated condensed financial statements.
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CBS Inc. and subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
Six months ended
June 30
1995 1994
Operating activities:
Net income $ 73.7 $178.6
Adjustments:
Depreciation and amortization 39.7 38.4
Gain on sale of marketable securities, net (1.1) (6.7)
Changes in assets and liabilities*:
Accounts receivable 6.4 37.2
Program rights, net (33.1) 78.7
Other, net 16.8 9.9
102.4 336.1
Investing activities:
Marketable securities:
Gross sales 248.4 782.5
Gross purchases (206.3) (886.5)
Liabilities for securities sold under
repurchase agreements (3.2) (10.1)
Capital expenditures (22.0) (30.1)
16.9 (144.2)
Financing activities:
Short-term debt (120.7) -
Dividends to shareholders (16.8) (21.3)
Other, net 6.2 (3.8)
(131.3) (25.1)
Net (decrease) increase in cash and cash equivalents (12.0) 166.8
Cash and cash equivalents at beginning of period 15.3 173.4
Cash and cash equivalents at end of period $ 3.3 $340.2
See accompanying notes to consolidated condensed financial statements.
*Excludes effect of items included in Adjustments.
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CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. The accompanying unaudited consolidated condensed financial
statements have been prepared by the Company pursuant to the rules of the
Securities and Exchange Commission (SEC) and, in the opinion of the Company,
include all adjustments necessary for a fair presentation of financial
position, results of operations and cash flows. There are no material
adjustments other than those that are normal and recurring except for a
pretax charge related to staff reductions (note 3). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such SEC rules. The Company believes that the
disclosures made are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's 1994 Annual Report on Form 10-K and subsequent quarterly filing.
Note 2. Investment income from marketable securities classified as interest
income on investments, net, consisted of the following (in millions):
Three months Six months
ended June 30 ended June 30
1995 1994 1995 1994
Interest income $4.9 $20.4 $10.1 $38.4
Dividend income 1.7 1.9 3.3 3.7
Interest expense on repurchase agreements (1.0) (3.3) (2.1) (6.5)
Gross realized gains .5 3.1 2.0 13.2
Gross realized losses (.4) (3.1) (.9) (6.5)
$5.7 $19.0 $12.4 $42.3
The cost of marketable securities sold was determined by specific
identification.
During the first six months of 1995 there were no trading securities or
securities held-to-maturity. The marketable securities as of June 30, 1995
consisted of the following (in millions):
Fair Unrealized Holding
Value Gains Losses
U.S. Government and its Agencies $123.0 $ 7.0 $ .1
Corporate securities:
Equity 106.5 7.2 2.6
Debt 80.5 .1 3.0
Other Securities 32.5 1.1 .2
$342.5 $15.4 $5.9
The above unrealized holding gains and losses, net of income taxes of $3.8
million, are reflected as "Unrealized holding gains" in shareholders' equity.
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CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 3. In the second quarter of 1995, the Company recorded a pretax charge
of $32.3 million for staff reduction costs including the costs related to an
early retirement program--a special one-time opportunity for certain eligible
employees to voluntarily retire early with increased benefits.
Note 4. Total tax expense on income before income taxes for the six months
ended June 30, 1995 amounted to $42.8 million (an effective rate of 36.7%)
compared with $118.3 million (an effective rate of 39.8%) for the comparable
period in 1994. A reconciliation between the statutory Federal income tax
rate and the Company's effective income tax rate as a percentage of income
before income taxes is as follows:
Six months ended June 30
1995 1994
Statutory Federal income tax rate 35.1% 35.1%
Income from tax preference securities (1.3) (1.4)
State and local taxes 5.4 5.2
Other, net (2.5) .9
Effective income tax rate 36.7% 39.8%
Note 5. In the first six months of 1995, the Company issued 2,143,650 shares
of its common stock for the conversion of 620,000 shares of Series B
Preference Stock. The difference between the carrying value of these
converted shares and the par value of the common stock issued was credited to
additional paid-in capital. In 1994, the Company issued 1,037,250 shares of
its common stock from its treasury shares for the conversion of 300,000
shares of Series B Preference Stock. The difference between the carrying
value of the shares converted in 1994 and the average cost of the treasury
shares issued was charged to additional paid-in capital.
As of June 30, 1995, a total of 920,000 shares out of the original issue of
1,250,000 shares of Series B Preference Stock were converted into the
Company's common stock. In addition, in 1994, the Company purchased the
rights to receive principal and dividends on 50,000 shares of Series B
Preference Stock which was accounted for as a redemption of these shares.
However, the right of conversion related to these shares held by outside
investors was exercised on August 1, 1995 and the Company received $5.0
million for such exercise, and issued 172,875 shares of its common stock.
As of August 1, 1995, the mandatory redemption date of Series B Preference
Stock, the remaining 280,000 shares of Series B Preference Stock were
converted into 968,100 shares of the Company's common stock.
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CBS Inc. and subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 6. Subsequent Event.
On August 1, 1995, the Company and Westinghouse Electric Corporation
(Westinghouse) announced that Westinghouse had agreed to acquire all of the
outstanding shares of the Company for a cash consideration of $81 per share.
In addition the Company's shareholders will receive a special payment which
will be calculated at the rate of six percent per annum of the cash
consideration commencing from August 31, 1995 until the closing of the
transaction, less any dividends which otherwise would be payable. The value
of the transaction is expected to total approximately $5.4 billion. This
agreement is subject to various regulatory approvals, the approval of the
Company's shareholders and completion of financing by Westinghouse. Chemical
Bank and J.P. Morgan have each committed to lend $1 billion and have agreed
to arrange the remainder of the financing. Westinghouse expects to receive
the necessary Federal Communications Commission's approvals or waivers and
complete the transaction by the end of 1995 or early 1996.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
On August 1, 1995, the Company and Westinghouse Electric Corporation
(Westinghouse) announced that Westinghouse had agreed to acquire all of the
outstanding shares of the Company for a cash consideration of $81 per share plus
certain additional consideration depending upon the timing of the closing. The
value of the transaction is expected to total approximately $5.4 billion. The
agreement is subject to various regulatory approvals, the approval of the
Company's shareholders and completion of financing by Westinghouse (note 6).
Operations
The Company's net sales in the second quarter of 1995 increased slightly
compared with net sales in the second quarter of 1994. However, net sales
decreased 16 percent for the first six months of 1995 compared with the same
period in 1994 because of the absence of the Television Network's broadcast of
the Olympic Winter Games and the National Football League post-season games both
of which aired in the first quarter of 1994.
In the second quarter of 1995, operating income decreased to $89.0 million from
$174.5 million in the second quarter of 1994, due primarily to lower operating
results at the Television Network, as well as a pretax charge of $32.3 million
for staff reduction costs including the costs related to an early retirement
program--a special one-time opportunity for certain eligible employees to
voluntarily retire early with increased benefits. The Television Network
reported a decrease in operating income due largely to a decline in primetime
and daytime audience delivery, an increase in compensation paid to its
affiliated television stations and higher programming costs for entertainment
series and miniseries. Sales and profits for the Television Stations Division
increased, led by improved results at WCBS-TV (New York). Sales and operating
income increased at the Radio Division led by improved results at the FM Radio
Group.
For the first six months of 1995, operating income decreased 53 percent compared
with 1994, due mainly to lower operating results at the Television Network, as
well as a pretax charge for staff reduction costs as noted above. Operating
income at the Television Network decreased as a result of lower primetime
ratings, an increase in compensation paid to its affiliated television stations,
and higher programming costs. Sales and profits for the Television Stations
Division decreased as a result of the absence of the Network's coverage of the
Olympic Winter Games which aired in 1994. However, excluding the impact of the
Olympic Winter Games, the Television Stations Division benefited from increased
sales from local television advertising. Operating profits at the Radio
Division increased principally as a result of sales gains at the Division's FM
Group of Stations.
Interest, net, in the second quarter and for the first six months of 1995, was
an expense of $7.2 million and $13.2 million, respectively, as opposed to income
of $8.0 million and $20.1 million in the comparable periods of 1994. Interest
income declined because of the Company's repurchase of its common stock for
$1.1 billion in cash in the third quarter of 1994.
Net income for the second quarter and first six months of 1995 was reduced by
53% and 59%, respectively, compared with the comparable periods a year earlier.
However, earnings per share for the second quarter and first six months of 1995
was reduced by only 41% and 49%, respectively, due to lower weighted average
shares outstanding in 1995, which resulted from the Company's repurchase of 17.5
million shares of its common stock in September 1994.
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Comparison of the results of the second quarter of 1995 with the first quarter
of 1995 is not meaningful because of the seasonal nature of the Company's
business.
Liquidity and capital resources:
During the six months ended June 30, 1995, cash and cash equivalents decreased
by $12.0 million and marketable securities, net of repurchase agreements,
decreased by $13.8 million for a net decrease in liquid assets of
$25.8 million. This decrease resulted primarily from cash outflows related
to the payment of short-term debt, partially offset by positive cash flows
from operating activities.
Year-to-date cash flows for 1995 and 1994 varied as follows:
Operating activities:
The $233.7 million lower positive cash flows in 1995, compared with the
same period in 1994 were due primarily to lower earnings in 1995 and the
cash flows related to program rights. The cash flow variance in program
rights was due mainly to the broadcasts of the Olympic Winter Games and
National Football League games in 1994 (for which payments were made in
prior periods) partially offset by a lower scheduled payment made in 1995
compared with 1994 as part of the acquisition of rights to the 1998
Olympic Winter Games.
Investing and financing activities:
The variance in cash flows from investing activities was due mainly to
the net decrease in investments in marketable securities. In 1995, the
decreased activity in sales and purchases of marketable securities was
due to the lower investment in marketable securities which resulted
primarily from the Company's repurchase of its common stock for
$1.1 billion in the third quarter of 1994.
The variance in cash flows from financing activities was due largely to
the reduction in short-term debt in 1995.
The Company's liquid assets include the following (in millions):
As of
June 30 December 31 June 30
1995 1994 1994
Cash and cash equivalents $ 3.3 $ 15.3 $ 340.2
Marketable securities:
Current 46.2 86.9 386.0
Noncurrent 296.3 272.6 962.5
Liabilities for securities sold
under repurchase agreements (69.6) (72.8) (364.6)
$276.2 $302.0 $1,324.1
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PART II
Item 1. Legal Proceedings.
a. In Item 1 of Registrant's Form 10-K for 1994 (under the caption "Material
Licenses and Federal Regulation"), Registrant reported that, on August 3, 1992,
it had filed with the Federal Communications Commission ("FCC") a timely
application to renew the television broadcast license for WBBM-TV, Chicago,
Illinois. Registrant further reported that, on or about August 18, 1992, Edward
Magnus, an individual, filed with the FCC a petition to deny the WBBM-TV
application, to which Registrant responded on September 24, 1992. By letter
dated November 14, 1994, the FCC dismissed the petition to deny. Registrant
also reported that a second petition to deny the WBBM-TV application was filed
on or about November 2, 1992, by the NAACP, and that on November 23, 1992,
Registrant filed its opposition. On May 3, 1995, the FCC denied the NAACP
petition and granted the WBBM-TV license renewal application.
b. In Item 1 of Registrant's Form 10-K for 1994 (under the caption "Material
Licenses and Federal Regulation"), Registrant reported that, on April 1, 1994,
Registrant filed with the FCC a timely application to renew the television
broadcast license for WCAU-TV, Philadelphia, Pennsylvania. On July 13, 1994,
the Philadelphia Lesbian and Gay Task Force and other groups filed with the FCC
a petition to deny the WCAU-TV application, to which Registrant responded on
August 22, 1994. On June 22, 1995, the FCC denied the petition and granted the
WCAU-TV license renewal application.
c. In Item 1 of Part I of Registrant's Form 10-K for 1994 (under the caption
"Material Licenses and Federal Regulation"), Registrant reported that it had
entered into an Asset Purchase Agreement to acquire WGPR-TV, Detroit, Michigan
from WGPR Inc. ("WGPR"). On October 27, 1994, Registrant and WGPR filed an
application with the FCC for consent to the assignment of the broadcast license
for the station to Registrant. Petitions to deny that application were
separately filed on December 22, 1994 by Spectrum Detroit ("Spectrum"), a
Michigan corporation, and Alexander Serafyn, a resident of the Detroit area.
On January 17, 1995, Registrant filed a consolidated opposition to the
petitions. On July 27, 1995, the FCC approved the assignment of the broadcast
license for WGPR-TV to Registrant. On July 28, 1995, Serafyn filed a Notice of
Appeal with the United States Court of Appeals for the D.C. Circuit (the "D.C.
Circuit"). In addition, Spectrum has 30 days to seek reconsideration from the
FCC or to appeal to the D.C. Circuit.
d. In Item 1 of Part I of Registrant's Form 10-K for 1994 (under the caption
"Material Licenses and Federal Regulation"), Registrant reported that it had
entered into an Asset Purchase Agreement to acquire WPRI-TV, Providence, Rhode
Island from Narragansett Television L.P. An application for consent to the
assignment of the broadcast license for the station to Registrant was filed with
the FCC on March 16, 1995. On April 26, 1995, Oleg Nikolyszyn, a resident of
the Providence area, filed a petition to deny that application, to which
Registrant filed an opposition. On June 22, 1995, the FCC staff approved the
assignment of the broadcast license for WPRI-TV to Registrant, subject to
whatever action, if any, the FCC might deem appropriate in light of its
consideration of certain issues raised in the petitions to deny the application
for FCC consent to the assignment of the license for WGPR-TV, Detroit to
Registrant, which application is described in item c above. On June 29, 1995,
Nikolyszyn filed with the FCC staff a petition for reconsideration and motion
for stay, to which Registrant filed an opposition on July 6, 1995.
Subsequently, in granting the WGPR-TV assignment application described in item
c above, the FCC removed the condition which it had previously placed on its
grant of the WPRI-TV assignment application.
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e. On June 1, 1995, Registrant filed a timely application to renew the
broadcast license for WARW(FM), Bethesda, Maryland. Oppositions may be filed
until September 1, 1995.
f. Registrant and the individual members of its Board of Directors had been
served with summonses and complaints in the following eight legal proceedings
instituted in the Supreme Court of the State of New York, New York County:
Moise Katz v. CBS; Max Grill v. CBS; John Stack v. CBS; William Stevens v. CBS;
Roger Minkoff v. CBS; Kenneth Steiner v. CBS; Ron Stern v. CBS; and Carol B.
Miller IRA Account v. CBS. In each of these proceedings the plaintiff, on
behalf of himself/herself and other shareholders of Registrant, asserts that
Westinghouse Electric Corporation's pending acquisition of Registrant (announced
August 1, 1995) does not provide sufficient value to Registrant and its
shareholders and seeks damages, injunctive relief, that Registrant conduct an
auction to maximize shareholder value, an order imposing a "voting trust" on the
shares controlled by the directors, and other equitable relief. Registrant
believes that each of these actions is without merit and will have no adverse
affect on Registrant or the transaction with Westinghouse.
g. 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
a. Registrant's Annual Meeting of Shareholders (the "Meeting") was held on
May 10, 1995.
b. At the Meeting, the following director-nominees were elected to the Board
of Directors: Laurence A. Tisch, Michel C. Bergerac, Harold Brown,
Ellen V. Futter, Henry A. Kissinger, Henry B. Schacht, Edson W. Spencer,
Franklin A. Thomas, Preston R. Tisch and Daniel Yankelovich.
c. (1) The election of directors was the first matter voted upon at the
Meeting. Directors so elected will hold office for one year and until
their successors shall be elected and shall qualify. The voting results
were:
Director-Nominee Votes For Votes Withheld
Laurence A. Tisch 46,522,414 3,862,207
Michel C. Bergerac 46,594,182 3,790,439
Harold Brown 46,555,379 3,829,242
Ellen V. Futter 42,567,347 7,817,274
Henry A. Kissinger 46,489,974 3,894,647
Henry B. Schacht 46,615,354 3,769,267
Edson W. Spencer 46,611,618 3,773,003
Franklin A. Thomas 46,593,160 3,791,461
Preston R. Tisch 46,557,043 3,827,578
Daniel Yankelovich 46,590,283 3,794,338
(2) The second matter voted upon was the election of Coopers & Lybrand
L.L.P. to serve as independent auditors until the next Annual Meeting of
Shareholders. The voting results were: Votes For - 50,043,157; Votes
Against - 234,825; Abstentions - 106,639.
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(3) The third matter voted upon was a shareholder proposal to limit
executives' and directors' annual compensation to $1 million. The voting
results were: Votes For - 4,293,241; Votes Against - 40,391,638;
Abstentions - 970,408; Broker Non-Votes - 4,729,334.
(4) The fourth matter voted upon was a shareholder proposal to mandate
that directors retire at age 72. The voting results were: Votes For -
5,195,920; Votes Against - 38,543,680; Abstentions - 1,915,687; Broker
Non-Votes - 4,729,334.
(5) The fifth matter voted upon was a shareholder proposal to eliminate
outside directors' meeting attendance fees. The voting results were:
Votes For - 4,189,059; Votes Against - 39,976,013; Abstentions -
1,490,215; Broker Non-Votes - 4,729,334.
(6) The sixth matter voted upon was a shareholder proposal to limit
terms for directors. The voting results were: Votes For - 4,078,673;
Votes Against - 41,156,160; Abstentions - 420,454; Broker Non-Votes -
4,729,334.
(7) The seventh matter voted upon was a shareholder proposal to
eliminate the outside directors' retirement plan. The voting results
were: Votes For - 11,801,212; Votes Against - 32,985,623; Abstentions -
868,452; Broker Non-Votes - 4,729,334.
(8) The eighth matter voted upon was a shareholder proposal to reserve
a Board seat for a non-executive employee representative. The voting
results were: Votes For - 4,372,745; Votes Against - 40,150,240;
Abstentions - 1,132,302; Broker Non-Votes - 4,729,334.
(9) The ninth and final matter voted upon was a shareholder proposal
concerning minimum stock ownership by directors. The voting results were:
Votes For - 5,267,291; Votes Against - 39,370,333; Abstentions -
1,017,663; Broker Non-Votes - 4,729,334.
d. Not applicable.
Item 6. Exhibits and Reports on Form 8-K
a. Filed herewith as Exhibit 11 is a statement regarding the computation of
earnings per common share and as Exhibit 12 is a computation of
consolidated ratio of earnings to fixed charges.
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b. Registrant filed a report on Form 8-K, dated August 1, 1995, reporting
that on such date Registrant entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Westinghouse Electric Corporation,
a Pennsylvania corporation ("Westinghouse"), and Group W Acquisition
Corp., a New York corporation ("Sub"), pursuant to which Sub will merge
with and into Registrant (the "Merger"). As a result of the Merger, the
outstanding shares of Registrant's common stock, par value $2.50 per
share ("Registrant Common Stock"), will be converted into the right to
receive $81 per share, in cash, plus an additional amount equal to
6% per annum of such purchase price beginning on August 31, 1995, less
any dividends declared and paid by Registrant for the period after
August 1, 1995. The Merger is conditioned upon, among other things,
approval by holders of a majority of the Registrant Common Stock and
upon receipt of certain regulatory and governmental approvals. The
Merger Agreement is attached as Exhibit 2 to such Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBS Inc.
(Registrant)
Date: August 7, 1995 By: S/Peter W. Keegan
Peter W. Keegan
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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CBS INC. and subsidiaries
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In millions, except per share amounts)
PRIMARY
Three months Six months
ended June 30 ended June 30
1995 1994 1995 1994
Earnings:
Net Income $51.9 $109.3 $73.7 $178.6
Dividends on Series B preference
stock (2.3) (3.1) (4.6) (6.8)
Net income applicable to common
shares $49.6 $106.2 $69.1 $171.8
Shares:
Weighted average number of common
shares outstanding 61.6 77.7 61.5 77.6
Per share:
Earnings per common share $ .80 $1.36 $1.12 $ 2.21
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CBS INC. and subsidiaries
EXHIBIT 11 (continued) - COMPUTATION OF EARNINGS PER COMMON SHARE (Unaudited)
(In millions, except per share amounts)
FULLY DILUTED
Three months Six months
ended June 30 ended June 30
1995 1994 1995 1994
Earnings:
Net Income $51.9 $109.3 $73.7 $178.6
Shares:
Weighted average number of common
shares outstanding 61.6 77.7 61.5 77.6
Common stock equivalents .5 .5 .5 .6
Assumed conversion of Series B
preference stock 3.1 4.1 3.2 4.1
Adjusted shares 65.2 82.3 65.2 82.3
Per share:
Earnings per common share $ .79(a) $1.33(a) $1.13(b) $ 2.17(a)
(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.
-16-<PAGE>
EXHIBIT 12
CBS Inc.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Six Months
Ended
June 30 YEAR ENDED DECEMBER 31,
1995** 1994(1) 1993 1992 1991 1990(3)
Income (loss) from
Continuing Operations
before Income Taxes $116.5 $437.0 $479.3 $227.0 ($178.6)$101.3
Add:
Fixed charges 34.8 64.7 65.6 89.8 78.3 88.2
Amortization of
Capitalized Interest 2.6 6.4 4.3 3.4 3.7 4.3
Less:
Capitalized Interest (1.7) (3.6) (6.4) (10.2) (8.4) (8.3)
Adjusted Earnings $152.2 $504.5 $542.8 $310.0 ($105.0)$185.5
Interest Cost (2) $27.3 $50.6 $48.8 $71.9 $58.8 $68.5
Interest Factor
Portion of Rentals 7.5 14.1 16.8 17.9 19.5 19.7
Fixed Charges $34.8 $64.7 $65.6 $89.8 $78.3 $88.2
Ratio of Earnings
to Fixed Charges 4.37:1 7.80:1 8.27:1 3.45:1 * 2.10:1
(1) In connection with its $1.1 billion common stock repurchase, consummated
in September 1994, the Company included unaudited pro forma net income
and earnings per share of common stock for the year ended December 31,
1994, in footnote 12 of its 1994 Annual Report. The Ratio of Earnings to
Fixed Charges for this pro forma information was 6.92 to 1.
(2) Includes amortization of debt discount and amortization of debt issue
expenses.
(3) In connection with its $2 billion common stock repurchase, consummated in
February 1991, the Company included a 1990 Unaudited Pro Forma
Consolidated Condensed Income Statement in footnote 15 of its 1990 Annual
Report. The Ratio of Earnings to Fixed Charges for this income statement
was .34 to 1.
* The ratio of earnings to fixed charges is less than a one-to-one coverage
and the earnings are inadequate to cover fixed charges. The amount of
coverage deficiency is $183.3.
** Unaudited
-17-<PAGE>
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