<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A NO. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the 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
incorporation or organization)
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.
<TABLE>
<CAPTION>
Class Outstanding at September 22, 1995
- ---------------------------- ---------------------------------
<S> <C>
Common Stock $2.50 par value 64,826,138
</TABLE>
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1 TO QUARTERLY REPORT
FILED PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
CBS INC.
-------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends its Report for the Quarter
ended June 30, 1995 on Form 10-Q as follows.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Under the sub-heading "Operations" (page 9) each of the present paragraphs
two through six become paragraphs four through eight, respectively, and two new
paragraphs (numbers two and three) are inserted between the first and the new
fourth paragraph. The text of each such new paragraph reads in its entirety as
follows.
"The increase in cost of sales in the second quarter of 1995 compared with the
same quarter in 1994 was due largely to increases in compensation paid to the
Company's affiliated television stations and higher programming costs for
entertainment series and miniseries. The decrease in cost of sales for the first
six months of 1995 compared with the same period in 1994 was due primarily to
the broadcast of the Olympic Winter Games in 1994."
"The increase in selling, general and administrative expenses in the second
quarter and for the first six months of 1995, as compared with the same periods
in 1994, resulted mainly from a pretax charge in 1995 of $32.3 million for staff
reduction costs including the costs related to an early retirement program."
By reason of the foregoing amendment, the text and related financial tables that
constitutes the Management's Discussion and Analysis of Financial Condition and
Results of Operations, which is included in Part I of the registrant's Report,
are restated in their respective entireties as follows.
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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.
The increase in cost of sales in the second quarter of 1995 compared with the
same quarter in 1994 was due largely to increases in compensation paid to the
Company's affiliated television stations and higher programming costs for
entertainment series and miniseries. The decrease in cost of sales for the first
six months of 1995 compared with the same period in 1994 was due primarily to
the broadcast of the Olympic Winter Games in 1994.
The increase in selling, general and administrative expenses in the second
quarter and for the first six months of 1995, as compared with the same periods
in 1994, resulted mainly from a pretax charge in 1995 of $32.3 million for staff
reduction costs including the costs related to an early retirement program.
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.
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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.
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
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<PAGE> 5
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):
<TABLE>
<CAPTION>
As of
------------------------------------
June 30 December 31 June 30
1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
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"
======== ======== ========
</TABLE>
PART II
2. In Item 1 under the heading "Legal Proceedings", paragraphs "c.", "d.", and
"f.", are deleted in their entirety and the following paragraphs "c.", "d.", and
"f.", are substituted in lieu of the applicable deleted paragraph.
"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 an Asset Purchase Agreement to acquire WGPR-TV, Detroit, Michigan from
WGPR Inc. ("WGPR"). On October 27, 1994, CBS and WGPR filed an application with
the FCC for consent to the assignment of the broadcast license for the station
to CBS.
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Petitions to deny that application were separately filed on December 22, 1994 by
Spectrum Detroit, Inc. ("Spectrum"), a Michigan corporation, and Alexander
Serafyn, a resident of the Detroit area. The Spectrum petition alleged that
registrant had assumed premature control of the station in violation of the
Communications Act by virtue of a local marketing agreement with the then-
licensee of WGPR-TV pursuant to which registrant was at that time programming
the station. The Serafyn petition was based on claims of intentional news
distortion in a segment of the CBS News broadcast 60 MINUTES concerning
anti-Semitism in the Republic of the Ukraine. 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. Both
Spectrum and Serafyn have appealed the FCC's decision to the United States Court
of Appeals for the District of Columbia Circuit (the "D.C. Circuit"). In
addition, Oleg Nikolyszyn, who opposed FCC approval of registrant's acquisition
of WPRI-TV, Providence, Rhode Island (see item d. below), filed an appeal of the
FCC decision regarding WGPR-TV with the D.C. Circuit. Registrant has intervened
in these appeals, which have been consolidated by the Court. On September 20,
1995, registrant's acquisition of WGPR-TV (now WWJ-TV) was consummated."
"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. The petition was based on claims of intentional news
distortion in a segment of the CBS News broadcast 60 MINUTES concerning
anti-Semitism in the Republic of the Ukraine, and also argued that action on the
application should be delayed pending the resolution of certain issues raised in
petitions to deny registrant's application to acquire WGPR-TV, Detroit (see item
c. above). 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 the issues
raised in the WGPR proceeding. 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. Registrant's acquisition of WPRI-TV was consummated on September
10, 1995."
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<PAGE> 7
"f. The registrant, the individual members of its Board of directors and, in
certain instances, Westinghouse and its Chairman and Chief Executive Officer,
Michael H. Jordan, have been named as defendants in the following eight
lawsuits filed in the Supreme Court of the State of New York, New York County:
Carol B. Miller IRA Account v. CBS (date filed: July 18, 1995); Roger B.
Minkoff v. CBS (July 28, 1995); Moise Katz v. CBS (August 1, 1995); Max Grill
v. CBS (August 1, 1995); William Stevens v. CBS (August 1, 1995); John Stack v.
CBS (August 2, 1995); Kenneth Steiner v. CBS (August 2, 1995); and Ron Stern v.
CBS (August 3, 1995). In these proceedings, the plaintiffs, on behalf of
themselves and other shareholders of the registrant, primarily assert that (i)
the individual members of the registrant's Board of Directors have failed to
act in such a manner so as to maximize shareholder value, including by failing
to properly consider and solicit other bids for the registrant, and have acted
according to their own personal interests, instead of consistent with the
fiduciary obligations they owe to the registrant's shareholders, and (ii) the
merger of the registrant into Westinghouse does not provide sufficient value to
the registrant and its shareholders, especially in light of the registrant's
current financial condition and prospects for future growth and the trading
prices for the registrant's Common Stock immediately prior to announcement of
the merger of the registrant into Westinghouse. Certain of the plaintiffs also
allege that Westinghouse and Mr. Jordan aided and abetted the foregoing alleged
failures and breaches of the registrant's directors. The plaintiffs seek
primarily to enjoin the merger with Westinghouse and that the registrant
conduct an auction to maximize shareholder value, as well as an order imposing
a "voting trust" on the shares controlled by the directors, unquantified
damages and other equitable relief (including certain declaratory relief and
that the registrant disclose certain information before completing any change
of control transaction). The registrant has consulted with counsel and
believes that each of these lawsuits is without merit and, accordingly, will
have no adverse affect on the registrant or the merger with Westinghouse."
By reason of foregoing amendments, "Legal Proceedings" is restated in its
entirety as follows.
"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
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<PAGE> 8
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 an Asset Purchase Agreement to acquire WGPR-TV, Detroit, Michigan from
WGPR Inc. ("WGPR"). On October 27, 1994, CBS and WGPR filed an application with
the FCC for consent to the assignment of the broadcast license for the station
to CBS. Petitions to deny that application were separately filed on December 22,
1994 by Spectrum Detroit, Inc. ("Spectrum"), a Michigan corporation, and
Alexander Serafyn, a resident of the Detroit area. The Spectrum petition alleged
that registrant had assumed premature control of the station in violation of the
Communications Act by virtue of a local marketing agreement with the
then-licensee of WGPR-TV pursuant to which registrant was at that time
programming the station. The Serafyn petition was based on claims of intentional
news distortion in a segment of the CBS News broadcast 60 MINUTES concerning
anti-Semitism in the Republic of the Ukraine. 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. Both
Spectrum and Serafyn have appealed the FCC's decision to the United States Court
of Appeals for the District of Columbia Circuit (the "D.C. Circuit"). In
addition, Oleg Nikolyszyn, who opposed FCC approval of registrant's acquisition
of WPRI-TV, Providence, Rhode Island (see item d. below), filed an appeal of the
FCC decision regarding WGPR-TV with the D.C. Circuit. Registrant has intervened
in these appeals, which have been consolidated by the Court. On September 20,
1995, registrant's acquisition of WGPR-TV (now WWJ-TV) was consummated.
d. In Item 1 of Part I of registrant's Form 10-K for 1994 (under the caption
"Material Licenses and Federal Regulation"), registrant
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<PAGE> 9
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. The petition was
based on claims of intentional news distortion in a segment of the CBS News
broadcast 60 MINUTES concerning anti-Semitism in the Republic of the Ukraine,
and also argued that action on the application should be delayed pending the
resolution of certain issues raised in petitions to deny registrant's
application to acquire WGPR-TV, Detroit (see item c. above). 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 the issues raised in the WGPR proceeding. 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.
Registrant's acquisition of WPRI-TV was consummated on September 10, 1995.
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. The registrant, the individual members of its Board of directors and, in
certain instances, Westinghouse and its Chairman and Chief Executive Officer,
Michael H. Jordan, have been named as defendants in the following eight lawsuits
filed in the Supreme Court of the State of New York, New York County: Carol B.
Miller IRA Account v. CBS (date filed: July 18, 1995); Roger B. Minkoff v. CBS
(July 28, 1995); Moise Katz v. CBS (August 1, 1995); Max Grill v. CBS (August 1,
1995); William Stevens v. CBS (August 1, 1995); John Stack v. CBS (August 2,
1995); Kenneth Steiner v. CBS (August 2, 1995); and Ron Stern v. CBS (August 3,
1995). In these proceedings, the plaintiffs, on behalf of themselves and other
shareholders of the registrant, primarily assert that (i) the individual members
of the registrant's Board of Directors have failed to act in such a manner so as
to maximize shareholder value, including by failing to properly consider and
solicit other bids for the registrant, and have acted according to their own
personal interests, instead of consistent with the fiduciary obligations they
owe to the registrant's shareholders, and (ii) the merger of the registrant with
Westinghouse does not provide sufficient value to the registrant and its
shareholders, especially in light of the registrant's current financial
condition and prospects for future growth and the trading prices for the
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<PAGE> 10
registrant's Common Stock immediately prior to announcement of the merger of
the registrant into Westinghouse. Certain of the plaintiffs also allege that
Westinghouse and Mr. Jordan aided and abetted the foregoing alleged failures
and breaches of the registrant's directors. The plaintiffs seek primarily to
enjoin the merger with Westinghouse and that the registrant conduct an auction
to maximize shareholder value, as well as an order imposing a "voting trust" on
the shares controlled by the directors, unquantified damages and other
equitable relief (including certain declaratory relief and that the registrant
disclose certain information before completing any change of control
transaction). The registrant has consulted with counsel and believes that each
of these lawsuits is without merit and, accordingly, will have no adverse
affect on the registrant or the merger 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."
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
CBS INC.
(Registrant)
/s/ Peter W. Keegan
Dated: October 12, 1995 By -------------------------
Executive Vice President and
Chief Financial Officer
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