~~II-26~~Impairment of Goodwill and Intangible Assets

The Company performs a fair value-based impairment test of goodwill and intangible assets with indefinite lives, comprised of FCC licenses, annually during the fourth quarter and also between annual tests if an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit or an indefinite-lived intangible asset below its carrying value. Goodwill is tested for impairment at the reporting unit level. The Company’s reporting units are one level below its operating segments, except for the Publishing reporting unit, which is the same as its operating segment because this operating segment has only one component. FCC licenses are tested for impairment at the geographic market level. The Company considers each geographic market, which is comprised of

~~Management's~~Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~Impairment of Goodwill and Intangible Assets~~

The Company tests goodwill and intangible assets with indefinite lives, comprised of FCC licenses, for impairment during the fourth quarter of each year, and on an interim date should factors or indicators become apparent that would require an interim test.

~~Goodwill—~~Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. For 2014, the Company performed qualitative assessments for five reporting units which management estimates each have fair values that exceed their respective carrying values by 20% or more. For each reporting unit, the Company weighed the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. The reporting unit specific factors that were considered included financial performance and changes to the reporting units’ carrying amounts since the most recent impairment tests. For each industry in which the reporting units operate, the Company considered growth projections from independent sources and significant developments or transactions within the industry. The Company also determined that the impact of macroeconomic factors on the discount rates and growth rates used for the most recent impairment tests would not significantly affect the fair value of the reporting units. Based on this qualitative assessment, considering the aggregation of these factors, the Company concluded that for these five reporting units, it is not more likely than not that the fair value of each reporting unit is less than its carrying amount and therefore performing the two-step impairment test was unnecessary.

The Company performed the first step of the goodwill impairment test for the remaining two reporting units. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. The estimated fair value of each reporting unit is computed based upon the present value of future cash flows (“Discounted Cash Flow Method”) and both the traded and transaction values of comparable businesses (“Market Comparable Method”). For 2014, the Discounted Cash Flow Method and Market Comparable Method resulted in substantially equal fair values. The Discounted Cash Flow Method adds the present value of the estimated annual cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This technique requires the use of significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections. The discount rates are determined based on the average of the weighted average cost of capital of comparable entities. Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in the advertising market or a decrease in audience acceptance of programming, could result in changes to these assumptions and judgments. A downward revision of these assumptions could cause the fair values of the reporting units to fall below their respective carrying values. The Company would then perform the second step of the goodwill impairment test to determine the amount of any non-cash impairment charge. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.

~~II-27~~

~~Management's Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Based on the 2014 annual impairment test, the Company concluded that the fair value of each of the two reporting units for which the Company performed the first step of the goodwill impairment test exceeded their respective carrying values. The carrying value of the following reporting unit, which had a goodwill balance of $1.86 billion at December 31, 2014, was within 10% of its estimated fair value:

Significant Assumptions
Reporting Unit Fair Perpetual
Value in Excess of Nominal Discount
Reporting Unit Carrying Value Growth Rate Rate
CBS Radio 5% 1.5% 8.0%

An increase to the discount rate of 35 basis points or a decrease to the perpetual nominal growth rate of 45 basis points, assuming no changes to other factors, would cause the fair value of the CBS Radio reporting unit to fall below its carrying value.

~~FCC Licenses—FCC licenses are tested for impairment at the geographic market level. The Company considers each geographic market, which is comprised of~~ all of the Company’s radio or television stations within that geographic market, to be a single unit of accounting because the FCC licenses at this level represent their highest and best use. At December 31, 2016 the Company had 11 reporting units and FCC license book values for stations in 14 television markets and 25 radio markets.

In preparation for the planned separation of its radio business, the Company changed the manner in which it manages its television and radio operations during the third quarter of 2016. Accordingly, the Company’s previously reported operating segment, Local Broadcasting, which had been comprised of two reporting units, was separated into two operating segments, Local Media and Radio, each with three reporting units. The Company allocated goodwill to each of the new reporting units based on their relative fair values. Beginning in the fourth quarter of 2016, the former Radio operating segment has been presented as a discontinued operation. See Note 4 for discussion of impairment tests for the three reporting units and FCC licenses under the former Radio operating segment.

Television FCC Licenses—For its annual impairment test, ~~performed in the fourth quarter of 2014,~~ the Company ~~performed~~performs qualitative assessments for ~~five radio markets and ten television markets which~~each market that management estimates ~~each have~~has an aggregate fair value of FCC licenses that significantly exceed their respective carrying ~~values by 20% or more.~~values. In selecting markets for a qualitative assessment the Company also considers the duration of time since a quantitative test was performed. For the 2016 annual impairment test, the Company performed qualitative assessments for 3 television markets. For each ~~market,~~of these markets, the Company weighed the relative impact of market-specific and macroeconomic factors. The market-specific factors considered include recent projections by geographic market from both independent and internal sources for advertising revenue and operating costs, as well as market share and capital expenditures. The Company also considered the macroeconomic impact on discount rates and growth rates. Based on ~~this~~the qualitative ~~assessment,~~assessments, considering the aggregation of ~~these~~the relevant factors, the Company concluded that it is not more likely than not that the ~~aggregate~~ fair values of the FCC licenses in each of these ~~radio and~~ television markets are less than their respective carrying values. Therefore, performing the quantitative impairment test was unnecessary.

For ~~each of~~FCC licenses in the remaining ~~radio and~~ television markets, the Company performed a quantitative impairment test that compares the estimated fair value of the FCC licenses by geographic market with their respective carrying values. The estimated fair value of each FCC license is computed using the Greenfield Discounted Cash Flow Method (‘‘Greenfield Method’’), which attempts to isolate the income that is attributable to the license alone. The Greenfield Method is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method adds the present value of the estimated annual cash flows of the start-up station over a projection period to the residual value at the end of the projection period. The annual cash flows over the projection period include assumptions for overall advertising revenues in the relevant geographic market, the start-up station’s operating costs and capital expenditures, and a three-year build-up period for the start-up station to reach a normalized state of operations, which reflects the point at which it achieves an average market share. ~~In order to estimate the revenues of a start-up station, the total~~The overall market advertising revenue in the subject market is estimated based on recent industry projections. Operating costs and capital expenditures are estimated based on both industry and internal data. The residual value is calculated using a perpetual nominal growth rate, which is based on projected long-range inflation in the U.S. and long-term industry projections. The discount rate is determined based on the average of the weighted average cost of capital of comparable entities in the broadcast industry. The discount rates and perpetual nominal growth rates used for each television station for 2016 were 8.0% and 2.5%, respectively.

~~II-28~~For the 11 television markets for which a quantitative test was performed in 2016, the Company concluded that the estimated fair values of FCC licenses in each market exceeded their respective carrying values and therefore no impairment charge was necessary. The estimated fair value of one television market, which had a carrying value of FCC licenses of $74 million, exceeded its carrying value by 9%. In each of the remaining television markets, the estimated fair value of FCC licenses was in excess of the respective carrying values by more than 10%.

~~Management's~~Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~The discount rates and perpetual nominal growth rates used for each television and radio station for 2014 were as follows:~~

Discount Perpetual Nominal
Rate Growth Rate
Television stations 8.0% 2.5%
Radio stations 8.0% 1.5%

The assumptions used in determining the fair values of the FCC licenses require management to make significant judgments. Certain events and circumstances, including deterioration of market conditions, higher cost of capital or a decline in the local radio or television advertising markets, could result in changes to these assumptions and judgments. The estimated fair values of the FCC licenses are highly dependent on the assumptions of future economic conditions in the individual geographic markets in which the Company owns and operates television stations. Certain future events and ~~radio stations. Deterioration~~circumstances, including deterioration of market conditions, higher cost of capital, or a decline in the local television advertising marketplace could result in a downward revision to the Company’s current assumptions and judgments. Various factors may contribute to a future decline in any local television advertising marketplace including declines in economic ~~conditions or a change~~conditions; an other-than-temporary decrease in population size of any individual geographic market could adversely impact advertisers’ ability or willingness to purchase advertising on the radio and television stations in that market. Advertising expendituresspending by ~~companies~~advertisers in certain industries ~~including automotive, entertainment and retail,~~that have historically represented a significant portion of the local ~~radio and~~ television advertising ~~revenues in all geographic markets. As~~revenues; a ~~result, an other-than-temporary decrease in spending~~shift by advertisers to competing advertising platforms; changes in ~~these categories~~ consumer behavior; and/or ~~adverse economic conditions, particularly~~a change in larger markets such as New York, Los Angeles, Chicago and San Francisco, where the Company holds FCC licenses with substantial carrying values, could have a significant impact on the fair value of the FCC licenses.

Based on the 2014 annual impairment test, the Company concluded that the estimated fair value of the FCC licenses in each radio and television market for which the Company performed the quantitative assessment exceeded their respective carrying values and therefore no impairment charge was necessary. Three radio markets, which had an aggregate carrying value of FCC licenses of $729 million, were each within 5% of their respective estimated fair value, and eight radio markets, which had an aggregate carrying value of FCC licenses of $1.30 billion, were each within 10% of their respective estimated fair value. In addition, one television market, which had a carrying value of FCC licenses of $167 million, was within 10% of its estimated fair value. In each of the remaining radio and television markets, the estimated fair value of FCC licenses was in excess of the respective carrying values by more than 10%.population size. A downward revision to the present value of future cash flows could result in impairment and a ~~non-cash~~noncash charge would be required. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.

Goodwill—For its annual impairment test, the Company performs qualitative assessments for each reporting unit that management estimates have fair values that significantly exceed their respective carrying values. For the 2016 annual impairment test, the Company performed qualitative assessments for seven reporting units. For each of these reporting units, the Company weighed the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. The reporting unit specific factors that were considered included financial performance and changes to the reporting units’ carrying amounts since the most recent impairment tests. For each industry in which the reporting units operate, the Company considered growth projections from independent sources and significant developments or transactions within the industry. The Company also determined that the impact of macroeconomic factors on the discount rates and growth rates used for the most recent impairment tests would not significantly affect the fair value of the reporting units. Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that for these seven reporting units, it is not more likely than not that the fair value of each reporting unit is less than its respective carrying amount and therefore performing the quantitative impairment test was unnecessary.

For 2016, the Company performed the quantitative goodwill impairment test for the CBS Sports Network reporting unit. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. The estimated fair value of each reporting unit is computed based upon the present value of future cash flows (“Discounted Cash Flow Method”) and the traded or transaction values of comparable businesses (“Market Comparable Method”). The Discounted Cash Flow Method and Market Comparable Method resulted in similar estimated fair values. The Discounted Cash Flow Method adds the present value of the estimated annual cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This technique requires the use of significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections and for 2016 was 2.0%. The discount rate was determined based on the average of the weighted average cost of capital of comparable entities and for 2016 was 9.0%.

For the 2016 annual impairment test the Company concluded that the estimated fair value of the CBS Sports Network reporting unit exceeded its carrying value and therefore the second step of the impairment test was unnecessary. The estimated fair value of the CBS Sports Network reporting unit exceeded its carrying value by more than 10%.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in the advertising market, a decrease in audience acceptance of programming, a shift by advertisers to competing advertising platforms; and/or changes in consumer behavior could result in changes to the Company’s assumptions and judgments used in its goodwill impairment tests. A downward revision of these assumptions could cause the fair values of the reporting units to fall below their respective carrying values and noncash impairment charge would be required. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.

Reserves and Legal Matters

Estimates of reserves and liabilities related to legal issues and discontinued businesses, including asbestos and environmental matters, require significant judgments by management. The Company continually evaluates these estimates based on changes in the relevant facts and circumstances and events that may impact estimates. While management believes that the current reserves for matters related to predecessor operations of the Company, including environmental and asbestos, are adequate, there can be no assurance that circumstances will not change in future periods. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims.

Pensions

~~II-29~~

~~Management's Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

to provide cash flows necessary to meet the Company’s pension ~~plan’s~~plans’ expected future benefit payments, as determined for the projected benefit obligation. The expected return on plan assets assumption is derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets. As of December 31, ~~2014,~~2016, the unrecognized actuarial losses ~~increased~~included in accumulated other comprehensive income decreased from the prior year end due primarily to a ~~decrease~~lump-sum distribution offered to plan participants which accelerated recognition of unamortized losses in the ~~discount rate partially offset by~~plan, as well as the favorable performance of pension plan assets. These events were offset by a decrease in the discount rate. A decrease in the discount rate would increase the projected benefit obligation. A 25 basis point change in the discount rate will result in an estimated change to the projected benefit obligation of approximately ~~$120~~$113 million and ~~will~~would not have a material impact on ~~the 2014~~2017 pension expense. A decrease in the expected rate of return on plan assets would increase pension expense. The estimated impact of a 25 basis point change in the expected rate of return on plan assets is a change of approximately ~~$10~~$8 million to ~~2015~~2017 pension expense.

Income Taxes

The Company is subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. When recording the worldwide provision for income taxes, an estimated effective tax rate for the year is applied to interim operating results. In the event there is a significant or unusual item recognized in the quarterly operating results, the tax attributable to that item is separately calculated and recorded in the same quarter. A number of years may elapse before a tax return containing tax matters for which a reserve has been established is audited and finally resolved. ~~During 2014 and 2013, the Company recognized tax benefits of $7 million and $17 million, respectively, related to the net impact of the settlement of certain prior year tax audits.~~ For positions taken in a previously filed tax return or expected to be taken in a future tax return, the Company evaluates each position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is subject to a measurement assessment to determine the amount of benefit to recognize in the Consolidated Statement of Operations and the appropriate reserve to establish, if any. If a tax position does not meet the more-likely-than-not recognition threshold

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

a tax reserve is established and no benefit is recognized. The Company is continually audited by U.S. federal and state as well as foreign tax authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserve for uncertain tax positions of ~~$140~~$102 million at December 31, ~~2014~~2016 is properly recorded pursuant to the recognition and measurement provisions of FASB guidance for uncertainty in income taxes.

Legal Matters

General. On an ongoing basis, the Company vigorously defends itself in numerous lawsuits and proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the Company without merit, is inherently uncertain and always difficult to predict. However, based on its understanding and evaluation of the relevant facts and circumstances, the Company believes that the below-described legal matters and other litigation to which it is a party are not likely, in the aggregate, to have a material adverse effect on its results of operations, financial position or cash flows. Under the Separation Agreement between the Company and Viacom Inc., the Company and Viacom Inc. have agreed to defend and indemnify the other in certain litigation in which the Company and/or Viacom Inc. is named.

Claims Related to Former Businesses: Asbestos. The Company is a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which allegedly occurred principally as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. The Company is typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the plaintiffs have not identified which of the Company’s products is the basis of a claim. Claims against the Company in which a product

~~II-30~~

~~Management's Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

has been identified principally relate to exposures allegedly caused by asbestos-containing insulating material in turbines sold for power-generation, industrial and marine use.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. The Company does not report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of December 31, ~~2014~~,2016, the Company had pending approximately ~~41,100~~33,610 asbestos claims, as compared with approximately ~~45,150~~36,030 as of December 31, ~~2013~~2015 and ~~45,900~~41,100 as of December 31, ~~2012~~.2014. During ~~2014~~,2016, the Company received approximately ~~3,880~~4,160 new claims and closed or moved to an inactive docket approximately ~~7,930~~6,580 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the ~~claim,~~claims, the quality of evidence supporting the claims and other factors. ~~The~~In 2016, the Company’s ~~total~~ costs ~~for the years 2014 and 2013~~ for settlement and defense of asbestos claims after insurance ~~recoveries~~ and ~~net of tax benefits~~taxes were approximately ~~$11 million~~$48 million. In 2015, as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and ~~$29 million, respectively.~~defense of asbestos claims by approximately $5 million. The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of claims against the Company are non-cancer claims. ~~In a substantial number of the pending claims, the plaintiff has not yet identified the claimed injury.~~ The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

claim filings, costs per claim of resolution and the filing of new claims. While the number of asbestos claims filed against the Company has ~~trended down in the past five to ten years and has~~ remained generally flat in recent years, it is difficult to predict future asbestos liabilities, as events and circumstances may occur including, among others, the number and types of claims and average cost to resolve such claims, which could affect the ~~Company's~~Company’s estimate of its asbestos liabilities.

Other. The Company from time to time receives claims from federal and state environmental regulatory agencies and other entities asserting that it is or may be liable for environmental cleanup costs and related damages principally relating to historical and predecessor operations of the Company. In addition, the Company from time to time receives personal injury claims including toxic tort and product liability claims (other than asbestos) arising from historical operations of the Company and its predecessors.

Market Risk

The Company is exposed to fluctuations in foreign currency exchange rates and interest rates and uses derivative financial instruments to modify this exposure. In accordance with its policy, the Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes.

Foreign Exchange Risk

The Company conducts business in various countries outside the U.S., resulting in exposure to movements in foreign exchange rates when translating from the foreign local currency to the U.S. dollar. In order to hedge anticipated cash flows ~~generally within the next twelve months,~~ in currencies such as the British Pound, the Euro, the Canadian

~~II-31~~

~~Management's Discussion and Analysis of~~

~~Results of Operations and Financial Condition (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Dollar and the Australian Dollar, foreign currency forward contracts, for periods generally up to 24 months, are used. Additionally, the Company designates forward contracts used to hedge ~~projected future television production costs~~committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of designated cash flow hedges are initially recorded in other comprehensive income (loss) and reclassified to the statement of operations when the hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows. The change in fair value of the non-designated contracts is included in “Other items, net” in the Consolidated Statements of Operations. The Company manages the use of foreign exchange derivatives centrally.

At December 31, ~~2014~~2016 and ~~2013,~~2015, the notional amount of all foreign currency contracts was ~~$152~~$433 million and ~~$136~~$291 million, respectively, which represents hedges of expected foreign currency cash flows.

Interest Risk

All of the Company’s long-term debt has been issued under fixed interest rate agreements. During 2014, in connection with the issuance of its $600 million of 2.30% senior notes due 2019, the Company entered into $600 million notional amount of fixed-to-floating rate swap agreements to hedge this debt. ~~The fair value of~~During 2015, prior to maturity, the Company settled these interest rate swaps ~~is included within~~and received $12 million in cash, plus accrued interest. The resulting increase in the carrying value of the previously hedged debt ~~attributable~~is being amortized as a reduction to interest expense over the ~~risk being hedged, and in other assets or other liabilities on~~remaining term of the ~~Consolidated Balance Sheet. Gains or losses on~~debt. The Company did not have any interest rate swaps ~~are recognized within interest expense. The swaps expose the Company to movements in short-term interest rates. Based on the amount of fixed-to-floating rate swaps~~outstanding at December 31, ~~2014, a 100 basis point change~~2016 or December 31, 2015 but in the future may use derivatives to modify its exposure to interest ~~rates would cause a $6 million change to pretax earnings.~~rates.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Credit Risk

The Company continually monitors its positions with, and credit quality of, the financial institutions that are counterparties to its financial instruments. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company does not anticipate nonperformance by the counterparties.

The Company’s receivables do not represent significant concentrations of credit risk at December 31, ~~2014~~2016 or ~~2013,~~2015, due to the wide variety of customers, markets and geographic areas to which the Company’s products and services are sold.

Related Parties

For a discussion of related parties, see Note 7 to the consolidated financial statements.

Recent Pronouncements and Adoption of New Accounting Standards

See Note 1 to the consolidated financial statements.

~~II-32~~



Item 8.	Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

The following Consolidated Financial Statements and schedule of the registrant and its subsidiaries are submitted herewith as part of this report:



		Reference (Page/s)
Item 15(a)(1) Financial Statements:
1.	~~Management's~~Management’s Report on Internal Control Over Financial Reporting	II-3443
2.	Report of Independent Registered Public Accounting Firm	II-3544
3.	Consolidated Statements of Operations for the years ended December 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014	II-3645
4.	Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014	II-3746
5.	Consolidated Balance Sheets at December 31, ~~2014~~2016 and ~~2013~~2015	II-3847
6.	Consolidated Statements of Cash Flows for the years ended December 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014	II-3948
7.	Consolidated Statements of Stockholders’ Equity for the years ended December 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014	II-4049
8.	Notes to Consolidated Financial Statements	II-4150
Item 15(a)(2) Financial Statement Schedule:
	II. Valuation and Qualifying Accounts	F-1

All other Schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule.

~~II-33~~

~~Item 8.~~ ~~Financial Statements and Supplementary Data.~~

MANAGEMENT’ S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the effectiveness of internal control over financial reporting, as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act. Our internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the ~~Company's~~Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the ~~Company's~~Company’s internal control over financial reporting as of December 31, ~~2014~~2016 based on the framework set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the ~~Company's~~Company’s internal control over financial reporting was effective as of December 31, ~~2014.~~2016.

The effectiveness of our internal control over financial reporting as of December 31, ~~2014~~2016 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.



		CBS CORPORATION

		By:	/s/ Leslie Moonves
			Leslie Moonves Chairman of the Board, President and Chief Executive Officer

		By:	/s/ Joseph R. Ianniello
			Joseph R. Ianniello Chief Operating Officer

		By:	/s/ Lawrence Liding
			Lawrence Liding Executive Vice President, Controller and Chief Accounting Officer

~~II-34~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of CBS Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows, and ~~stockholders'~~stockholders’ equity present fairly, in all material respects, the financial position of CBS Corporation and its subsidiaries at December 31, ~~2014~~2016 and ~~2013,~~2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2014~~2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index ~~appearing under Item 15(a)(2)~~ presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2014,~~2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The ~~Company's~~Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the ~~Company's~~Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

New York, New York

February ~~13, 2015~~17, 2017

~~II-35~~

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)


	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2016			2015			2014
Revenues	$	13,806		$	14,005		$	12,820		$	13,166		$	12,671		$	12,519
Expenses:
Costs and expenses:
Operating	8,089			8,124			7,264			7,956			7,911			7,689
Selling, general and administrative	2,462			2,546			2,442			2,124			1,961			1,971
Restructuring charges (Note 5)	26			20			19
Impairment charges (Note 3)	52			—			11
Depreciation and amortization	281			290			306			225			235			250
Total expenses	10,910			10,980			10,042
Pension settlement charge (Note 15)										211			—			—
Restructuring and merger and acquisition-related costs (Note 5)										38			45			19
Other operating items, net										(9		)	(139		)	—
Total costs and expenses										10,545			10,013			9,929
Operating income	2,896			3,025			2,778			2,621			2,658			2,590
Interest expense	(363		)	(375		)	(401		)	(411		)	(392		)	(363		)
Interest income	13			8			5			32			24			13
Net loss on early extinguishment of debt (Note 9)	(352		)	—			(32		)
Loss on early extinguishment of debt										—			—			(352		)
Other items, net	(30		)	7			7			(12		)	(26		)	(30		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	2,164			2,665			2,357			2,230			2,264			1,858
Provision for income taxes	(762		)	(878		)	(812		)	(628		)	(676		)	(659		)
Equity in loss of investee companies, net of tax	(48		)	(49		)	(37		)	(50		)	(34		)	(48		)
Net earnings from continuing operations	1,354			1,738			1,508			1,552			1,554			1,151
Net earnings from discontinued operations, net of tax (Note 4)	1,605			141			66
Net earnings (loss) from discontinued operations, net of tax (Note 4)										(291		)	(141		)	1,808
Net earnings	$	2,959		$	1,879		$	1,574		$	1,261		$	1,413		$	2,959
Basic net earnings per common share:
Basic net earnings (loss) per common share:
Net earnings from continuing operations	$	2.46		$	2.86		$	2.35		$	3.50		$	3.21		$	2.09
Net earnings from discontinued operations	$	2.92		$	.23		$	.10
Net earnings (loss) from discontinued operations										$	(.66	)	$	(.29	)	$	3.29
Net earnings	$	5.38		$	3.09		$	2.45		$	2.84		$	2.92		$	5.38

Diluted net earnings per common share:
Diluted net earnings (loss) per common share:
Net earnings from continuing operations	$	2.41		$	2.79		$	2.29		$	3.46		$	3.18		$	2.05
Net earnings from discontinued operations	$	2.86		$	.23		$	.10
Net earnings (loss) from discontinued operations										$	(.65	)	$	(.29	)	$	3.22
Net earnings	$	5.27		$	3.01		$	2.39		$	2.81		$	2.89		$	5.27

Weighted average number of common shares outstanding:
Basic	550			608			642			444			484			550
Diluted	561			624			659			448			489			561

Dividends per common share	$	.54		$	.48		$	.44		$	.66		$	.60		$	.54

See notes to consolidated financial statements.

~~II-36~~

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2016			2015			2014
Net earnings	$	2,959		$	1,879		$	1,574		$	1,261		$	1,413		$	2,959
Other comprehensive income (loss) from continuing operations, net of tax:
Cumulative translation adjustments	(8		)	(2		)	9			(1		)	(5		)	(9		)
Net actuarial gain (loss) and prior service costs (Note 14)	(163		)	207			(136		)
Unrealized gain on securities	(3		)	1			—
Changes in fair value of cash flow hedges	(1		)	—			—
Net actuarial gain (loss) and prior service costs (Note 15)										4			(30		)	(163		)
Unrealized loss on securities										—			—			(3		)
Other comprehensive income (loss) from continuing operations, net of tax	(175		)	206			(127		)	3			(35		)	(175		)
Other comprehensive income (loss) from discontinued operations, before reclassifications	15			(4		)	(3		)
Other comprehensive income from discontinued operations, before reclassifications										—			—			15
Reclassification from accumulated other comprehensive income (loss) from discontinued operations to net earnings	(30		)	(178		)	—			—			—			(30		)
Total other comprehensive income (loss), net of tax	(190		)	24			(130		)	3			(35		)	(190		)
Total comprehensive income	$	2,769		$	1,903		$	1,444		$	1,264		$	1,378		$	2,769

See notes to consolidated financial statements.

~~II-37~~

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)


	At December 31,						At December 31,
	2014			2013			2016			2015
ASSETS
Current Assets:
Cash and cash equivalents	$	428		$	368		$	598		$	317
Receivables, less allowances of $50 (2014) and $60 (2013)	3,459			3,234
Receivables, less allowances of $60 (2016) and $59 (2015)							3,314			3,375
Programming and other inventory (Note 6)	922			772			1,427			1,270
Deferred income tax assets, net (Note 13)	104			152
Prepaid income taxes	161			—			30			101
Prepaid expenses	129			109			185			133
Other current assets	386			384			204			228
Current assets of discontinued operations (Note 4)	—			351			305			323
Total current assets	5,589			5,370			6,063			5,747
Property and equipment	3,164			3,060			2,935			2,880
Less accumulated depreciation and amortization	1,731			1,599			1,694			1,627
Net property and equipment (Note 2)	1,433			1,461			1,241			1,253
Programming and other inventory (Note 6)	1,817			1,697			2,439			1,957
Goodwill (Note 3)	6,698			6,588			4,864			4,789
Intangible assets (Note 3)	6,008			5,870			2,633			2,639
Other assets (Note 1)	2,488			1,963			2,707			2,633
Assets held for sale (Note 3)	—			314
Assets of discontinued operations (Note 4)	39			3,124			4,291			4,747
Total Assets	$	24,072		$	26,387		$	24,238		$	23,765
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	302		$	286		$	148		$	159
Accrued expenses	605			595			632			561
Accrued compensation	333			376			369			306
Participants’ share and royalties payable	999			1,008			1,024			1,013
Program rights	404			398			290			372
Deferred revenues	206			269			152			294
Income taxes payable	—			54
Commercial paper (Note 9)	616			475			450			—
Current portion of long-term debt (Note 9)	20			20			23			222
Other current liabilities	522			472			465			490
Current liabilities of discontinued operations (Note 4)	26			254			155			143
Total current liabilities	4,033			4,207			3,708			3,560
Long-term debt (Note 9)	6,510			5,940			8,902			8,226
Participants’ share and royalties payable	1,267			1,122			1,322			1,318
Pension and postretirement benefit obligations (Note 14)	1,564			1,327
Deferred income tax liabilities, net (Note 13)	1,530			1,314
Pension and postretirement benefit obligations (Note 15)							1,769			1,575
Deferred income tax liabilities, net (Note 14)							590			495
Other liabilities	2,080			2,034			1,807			1,889
Liabilities of discontinued operations (Note 4)	118			477			2,451			1,139

Commitments and contingencies (Note 15)
Commitments and contingencies (Note 16)

Stockholders’ Equity:
Class A Common Stock, par value $.001 per share; 375 shares authorized; 38 (2014) and 39 (2013) shares issued	—			—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 818 (2014) and 801 (2013) shares issued	1			1
Class A Common Stock, par value $.001 per share; 375 shares authorized; 38 (2016 and 2015) shares issued							—			—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 829 (2016) and 826 (2015) shares issued							1			1
Additional paid-in capital	44,041			43,474			43,913			44,055
Accumulated deficit	(21,931		)	(24,890		)	(19,257		)	(20,518		)
Accumulated other comprehensive loss (Note 1)	(735		)	(545		)
Accumulated other comprehensive loss (Note 12)							(767		)	(770		)
	21,376			18,040			23,890			22,768
Less Treasury Stock, at cost; 349 (2014) and 244 (2013) Class B Shares	14,406			8,074
Less treasury stock, at cost; 455 (2016) and 401 (2015) Class B Shares							20,201			17,205
Total Stockholders’ Equity	6,970			9,966			3,689			5,563
Total Liabilities and Stockholders' Equity	$	24,072		$	26,387
Total Liabilities and Stockholders’ Equity							$	24,238		$	23,765

See notes to consolidated financial statements.

~~II-38~~

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Year Ended December 31,									Year Ended December 31,
	2014			2013			2012			2016			2015			2014
Operating Activities:
Net earnings	$	2,959		$	1,879		$	1,574		$	1,261		$	1,413		$	2,959
Less: Net earnings from discontinued operations	1,605			141			66
Less: Net earnings (loss) from discontinued operations										(291		)	(141		)	1,808
Net earnings from continuing operations	1,354			1,738			1,508			1,552			1,554			1,151
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	281			290			306			225			235			250
Impairment charges	52			—			11
Deferred tax provision	692			433			453			144			445			592
Stock-based compensation	154			222			147			165			157			137
Redemption of debt	(8		)	—			(28		)
Net gain on disposition and write-down of assets	(12		)	(3		)	(2		)	(18		)	(139		)	(11		)
Equity in loss of investee companies, net of tax and distributions	57			57			48			53			37			57
Amortization of deferred financing costs	9			10			12
Change in assets and liabilities, net of investing and financing activities
Increase in receivables	(600		)	(777		)	(237		)
(Increase) decrease in inventory and related program and participation liabilities, net	(213		)	48			(414		)
Decrease (increase) in other assets	34			(19		)	28
Decrease in accounts payable and accrued expenses	(152		)	(135		)	(25		)
Decrease in pension and postretirement benefit obligations	(34		)	(188		)	(190		)
(Decrease) increase in income taxes	(390		)	9			(75		)
Decrease (increase) in receivables										36			(376		)	(599		)
Increase in inventory and related program and participation liabilities, net										(804		)	(498		)	(214		)
(Increase) decrease in other assets										(85		)	23			53
Increase (decrease) in accounts payable and accrued expenses										23			(220		)	(152		)
Increase (decrease) in pension and postretirement benefit obligations										205			(46		)	(34		)
Increase (decrease) in income taxes										94			(56		)	(298		)
(Decrease) increase in deferred revenue	(47		)	90			(29		)	(137		)	66			(47		)
Other, net	33			4			(8		)	1			7			31
Net cash flow provided by operating activities from continuing operations	1,210			1,779			1,505			1,454			1,189			916
Net cash flow provided by operating activities from discontinued operations	65			94			310			231			205			359
Net cash flow provided by operating activities	1,275			1,873			1,815			1,685			1,394			1,275
Investing Activities:
Acquisitions, net of cash acquired	(27		)	(20		)	(146		)
Acquisitions										(92		)	(12		)	(2		)
Capital expenditures	(206		)	(212		)	(200		)	(196		)	(171		)	(178		)
Investments in and advances to investee companies	(98		)	(176		)	(91		)	(81		)	(98		)	(98		)
Proceeds from sale of investments	12			30			13			—			80			12
Proceeds from dispositions	7			164			49			20			383			4
Other investing activities	(4		)	—			—			15			(3		)	(4		)
Net cash flow used for investing activities from continuing operations	(316		)	(214		)	(375		)
Net cash flow (used for) provided by investing activities from continuing operations										(334		)	179			(266		)
Net cash flow used for investing activities from discontinued operations	(285		)	(58		)	(76		)	(6		)	(25		)	(335		)
Net cash flow used for investing activities	(601		)	(272		)	(451		)
Net cash flow (used for) provided by investing activities										(340		)	154			(601		)
Financing Activities:
Proceeds from short-term debt borrowings, net	141			475			—
Proceeds from issuance of notes	1,728			—			1,566
Proceeds from (repayments of) short-term debt borrowings, net										450			(616		)	141
Proceeds from issuance of senior notes										684			1,959			1,728
Repayment of notes and debentures	(1,152		)	—			(1,583		)	(199		)	—			(1,152		)
Proceeds from debt borrowings of CBS Radio (2016) and Outdoor Americas (2014)										1,452			—			1,569
Repayment of debt borrowings of CBS Radio										(110		)	—			—
Proceeds from IPO of Outdoor Americas										—			—			613
Payment of capital lease obligations	(17		)	(17		)	(19		)	(18		)	(17		)	(17		)
Payment of contingent consideration	—			(30		)	(33		)
Dividends	(292		)	(300		)	(276		)	(288		)	(300		)	(292		)
Purchase of Company common stock	(3,595		)	(2,185		)	(1,137		)	(2,997		)	(2,813		)	(3,595		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(146		)	(145		)	(105		)	(58		)	(96		)	(146		)
Proceeds from exercise of stock options	283			146			168			21			142			283
Excess tax benefit from stock-based compensation	243			148			103			17			88			243
Other financing activities	(3		)	(4		)	—			—			—			(18		)
Net cash flow used for financing activities from continuing operations	(2,810		)	(1,912		)	(1,316		)
Net cash flow provided by financing activities from discontinued operations	2,167			—			—
Net cash flow used for financing activities	(643		)	(1,912		)	(1,316		)	(1,046		)	(1,653		)	(643		)
Net increase (decrease) in cash and cash equivalents	31			(311		)	48			299			(105		)	31
Cash and cash equivalents at beginning of year (includes $29 (2014), $21 (2013) and $38 (2012) of discontinued operations cash)	397			708			660
Cash and cash equivalents at end of year (includes $29 (2013) and $21 (2012) of discontinued operations cash)	$	428		$	397		$	708
Cash and cash equivalents at beginning of year (includes $6 (2016 and 2015) and $33 (2014) of discontinued operations cash)										323			428			397
Cash and cash equivalents at end of year (includes $24 (2016) and $6 (2015 and 2014) of discontinued operations cash)										$	622		$	323		$	428

Adoption of New Accounting Standards

~~II-46~~Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

During the fourth quarter of 2016, the Company adopted Financial Accounting Standards Board (“FASB”) guidance which requires management to evaluate, for each interim and annual reporting period, whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. If management identifies conditions or events that raise substantial doubt, disclosures are required in the financial statements, including any plans that will alleviate the substantial doubt

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

~~The following table summarizes the Company’s stock-based compensation expense for the years ended December 31, 2014, 2013 and 2012.~~

Year Ended December 31, 2014 2013 2012
RSUs and PSUs $ 131
$ 129
$ 105
Stock options and equivalents 23
93
42
Stock-based compensation expense, before income taxes 154
222
147
Related tax benefit (60 ) (86 ) (57 )
Stock-based compensation expense, net of tax benefit $ 94
$ 136
$ 90

~~Stock-based compensation included in net earnings from discontinued operations was $5 million, $15 million and $7 million for 2014, 2013, and 2012, respectively.~~

~~Adoption of New Accounting Standards~~

~~Presentation of Reserves for Uncertain Tax Positions when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists~~

~~During~~about the first quarter of 2014, the Company adopted Financial Accounting Standards Board ("FASB") guidance on the presentation of the reserve for uncertain tax positions when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance requires the reserve for uncertain tax positionsentity’s ability to ~~be presented in the financial statements~~continue as a reduction to the deferred tax asset for a tax loss or other tax carryforward that would be applied in the settlement of the uncertain tax position. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

~~Obligations Resulting from Joint and Several Liability Arrangements~~

During the first quarter of 2014, the Company adopted FASB guidance on the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. Under this guidance, the Company is required to measure its obligations under such arrangements as the sum of the amount it agreed to pay in the arrangement among its co-obligors and any additional amount the Company expects to pay on behalf of its co-obligors. The Company is also required to disclose the nature and amount of the obligation.going concern. The adoption of this guidance did not have an effect on the ~~Company's~~Company’s consolidated financial statements.

Simplifying the Accounting for Measurement Period Adjustments

During the first quarter of 2016, the Company adopted amended FASB guidance which eliminates the requirement to retrospectively account for adjustments to provisional amounts recognized in a business combination when new information is obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Under the amended guidance, the acquirer is required to recognize such adjustments in the reporting period in which the adjustment amounts are identified. Such adjustments also include the effect on earnings from any changes in depreciation, amortization, or other income effects resulting from the change to provisional amounts, as if the change occurred at the acquisition date. The amendment also requires disclosure or separate presentation on the face of the income statement of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

During the first quarter of 2016, the Company adopted amended FASB guidance which eliminates the concept of extraordinary items. This guidance removes the requirement to assess whether an event or transaction is both unusual in nature and infrequent in occurrence and to separately present any such items on the statement of operations after income from continuing operations. Rather, such items are required to be presented as a separate component of income from continuing operations or disclosed in the notes to the financial statements. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

During the first quarter of 2016, the Company adopted FASB guidance on the accounting for stock-based compensation when the terms of an award provide that a performance target that affects vesting could be achieved after the requisite service period. Under this guidance, such performance target should not be reflected in estimating the grant-date fair value of the award. The Company should begin recognizing compensation cost in the period in which it becomes probable that the performance target will be achieved, for the cumulative amount of compensation cost attributable to the period(s) for which the requisite service has already been rendered. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent)

During the first quarter of 2016, the Company adopted amended FASB guidance which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient. The amended guidance also limits disclosures about investments that are eligible to be measured at fair value using the NAV per share practical expedient to those investments for which the entity has elected to measure the fair value using this practical expedient. The Company applied this guidance retrospectively to all comparative periods presented (See Note 15).

~~Recent Pronouncements~~Credit Facility

~~Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items~~

~~In January 2015, the FASB issued amended guidance which eliminates the concept~~Management’s Discussion and Analysis of ~~extraordinary items. This guidance removes the requirement to assess whether an event or transaction is both unusual in nature~~

Results of Operations and infrequent in occurrence and to separately present any such items on the statement of operations after income from continuing operations. Rather, such items will either be presented as a separate component of income from continuing operations or disclosed in the notes to the financial statements. This guidance is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. Additionally, the Company is permitted to amend prior periods presented in the financial statements once the guidance is adopted.

~~II-47~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern~~

~~In August 2014,~~ the ~~FASB issued guidance~~previous credit facility, which ~~requires management~~was due to ~~evaluate, for~~expire in December 2019. The Company, at its option, may also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the Company’s option at the time of each ~~interim~~borrowing and ~~annual reporting period, whether there~~ are ~~conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after~~based generally on the ~~date the financial statements are issued. If management identifies conditions or events that raise substantial doubt, disclosures are required~~prime rate in the ~~financial statements, including any plans that will alleviate the substantial doubt about the entity’s ability to continue as~~U.S. or LIBOR plus a ~~going concern. This guidance, which is effective for the first annual period ending after December 15, 2016, is not expected to have an impact~~margin based on the Company’s ~~consolidated financial statements.~~senior unsecured debt rating. The Company pays a facility fee based on the total amount of the commitments.

~~Accounting for Share-Based Payments When~~The Credit Facility requires the ~~Terms~~Company to maintain a maximum Consolidated Leverage Ratio of ~~an Award Provide That a Performance Target Could Be Achieved after~~4.5x at the ~~Requisite Service Period~~end of each quarter as further described in the Credit Facility. At December 31, 2016, the Company’s Consolidated Leverage Ratio was approximately 2.9x.

~~In June 2014,~~

The Consolidated Leverage Ratio reflects the FASB issued guidance on the accounting for stock-based compensation when the terms of an award provide that a performance target that affects vesting could be achieved after the requisite service period. Under this guidance such performance target should not be reflected in estimating the grant-date fair valueratio of the ~~award. Compensation cost should be recognized~~Company’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company’s Consolidated EBITDA for the trailing four consecutive quarters. Consolidated EBITDA is defined in the ~~period in~~Credit Facility as operating income plus interest income and before depreciation, amortization and certain other noncash items.

The Credit Facility is used for general corporate purposes. At December 31, 2016, the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.49 billion.

Liquidity and Capital Resources

The Company continually projects anticipated cash requirements for its operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs. The Company’s operating needs include, among other items, commitments for sports programming rights, television and film programming, talent contracts, operating leases, interest payments, and pension funding obligations. The Company’s investing and financing spending includes capital expenditures, share repurchases, dividends and principal payments on its outstanding indebtedness. The Company believes that its operating cash flows, cash and cash equivalents, borrowing capacity under its Credit Facility, which ~~it becomes probable~~had $2.49 billion of remaining availability at December 31, 2016, and access to capital markets are sufficient to fund its operating, investing and financing requirements for the next twelve months.

The Company’s funding for short-term and long-term obligations will come primarily from cash flows from operating activities. Any additional cash funding requirements are financed with short-term borrowings, including commercial paper, and long-term debt. To the extent that ~~the performance target will be achieved and should represent the compensation cost attributable~~commercial paper is not available to the ~~period(s)~~Company, the existing Credit Facility provides sufficient capacity to satisfy short-term borrowing needs. The Company routinely assesses its capital structure and opportunistically enters into transactions to lower its interest expense, which could result in a charge from the early extinguishment of debt.

Funding for ~~which~~ the ~~requisite service has already been rendered. This guidance, which~~Company’s long-term debt obligations due over the next five years of $2.10 billion is ~~effective for interim and annual periods beginning after December 15, 2015, is not~~ expected to ~~have a material impact on~~come from the Company’s ~~consolidated financial statements.~~ability to refinance its debt and cash generated from operating activities.

~~Revenue from Contracts with Customers~~

~~In May 2014,~~At December 31, 2016, the ~~FASB issued guidance on~~Company had $4.11 billion of remaining availability under its share repurchase program. Share repurchases under the recognition of revenues which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expectsprogram are expected to be ~~entitled to in exchange for~~funded by cash flows from operations and, as appropriate, with short-term borrowings, including commercial paper, and/or the ~~transfer~~issuance of goods or services to customers. The Company is currently evaluating the impact of this guidance, which is effective for interim and annual reporting periods beginning after December 15, 2016 with early adoption not permitted.long-term debt.

~~Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity~~

In April 2014, the FASB issued amended guidance which changes the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations and disposals of components of an entity that do not qualify for discontinued operations reporting. Under this guidance, only a disposal of a component of an entity or a group of components of an entity that represent a strategic shift that has (or will have) a major effect on the company’s operations and financial results should be reported in discontinued operations. The guidance also expands the definition of a discontinued operation to include a business or nonprofit activity that, on acquisition, meets the criteria to be classified as held for sale and disposals of equity method investments~~that meet the definition of discontinued operations. This guidance is effective prospectively for interim and annual periods beginning after December 15, 2014.~~

~~II-48~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~2) PROPERTY AND EQUIPMENT~~Contractual Obligations

As of December 31, 2016 payments due by period under the Company’s significant contractual obligations, excluding obligations of discontinued operations, with remaining terms in excess of one year were as follows:

At December 31, 2014 2013
Land $ 240
$ 239
Buildings 717
691
Capital leases 165
165
Equipment and other 2,042
1,965
3,164
3,060
Less accumulated depreciation and amortization 1,731
1,599
Net property and equipment $ 1,433
$ 1,461



	Payments Due by Period
									2022 and
	Total		2017		2018-2019		2020-2021		thereafter
Programming and talent commitments ^(a)	$	11,078	$	1,987	$	3,794	$	3,000	$	2,297
Purchase obligations ^(b)	835		222		379		176		58
Operating leases ^(c)	763		134		211		142		276
Long-term debt obligations ^(d)	8,940		400		900		800		6,840
Interest commitments on long-term debt ^(e)	5,112		396		756		668		3,292
Capital lease obligations (including interest) ^(f)	83		19		33		26		5
Other long-term contractual obligations ^(g)	1,373		—		1,028		282		63
Total	$	28,184	$	3,158	$	7,101	$	5,094	$	12,831

~~Depreciation expense,~~(a) Programming and talent commitments of the Company primarily include $8.06 billion for sports programming rights, $2.26 billion relating to the production and licensing of television and film programming, and $758 million for talent contracts.

(b) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including ~~capitalized~~open purchase orders.

(c) Consists of long-term noncancellable operating lease ~~amortization, was $249 million in 2014, $251 million in 2013~~commitments for office space, equipment, transponders and ~~$261 million in 2012. Amortization expense related to~~studio facilities.

(d) Long-term debt obligations are presented at face value, excluding capital leases.

(e) Future interest based on scheduled debt maturities, excluding capital leases.

(f) Includes capital leases ~~was $17~~for satellite transponders.

(g) Reflects long-term contractual obligations recorded on the Company’s Consolidated Balance Sheet, including program liabilities, participations due to producers and residuals.

The table above excludes $102 million of reserves for uncertain tax positions and the related accrued interest and penalties, as the Company cannot reasonably predict the amount of and timing of cash payments relating to this obligation.

In January 2017, the Company made discretionary contributions of $100 million to pre-fund its qualified pension plans. In 2017, the Company expects to make contributions of approximately $54 million to its non-qualified pension plans to satisfy the benefit payments due under these plans. Also in 2017, the Company expects to contribute approximately $50 million to its other postretirement benefit plans to satisfy the Company’s portion of benefit payments due under these plans.

Guarantees

The Company has indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. At December 31, 2016, the outstanding letters of credit and surety bonds approximated $103 million and were not recorded on the Consolidated Balance Sheet.

In the course of its business, the Company both provides and receives indemnities which are intended to allocate certain risks associated with business transactions. Similarly, the Company may remain contingently liable for various obligations of a business that has been divested in the event that a third party does not live up to its obligations under an indemnification obligation. The Company records a liability for its indemnification obligations and other contingent liabilities when probable and reasonably estimable.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Critical Accounting Policies

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions.

The Company considers the following accounting policies to be the most critical as they are important to the Company’s financial condition and results of operations, and require significant judgment and estimates on the part of management in its application. For a summary of the Company’s significant accounting policies see the accompanying notes to the consolidated financial statements.

Programming and Production Costs

Accounting for the Company’s television production costs requires management’s judgment as it relates to total estimated revenues to be earned (“Ultimate Revenues”) and costs to be incurred throughout the life of each ~~of 2014 and 2013 and $19 million~~ in ~~2012. Accumulated~~television program. These estimates are used to determine the amortization of ~~capital leases was $78 million at December 31, 2014~~capitalized production costs, expensing of participation costs, and ~~$62 million at December 31, 2013.~~any necessary net realizable value adjustments to capitalized production costs. For each television program, management bases these estimates on the performance in the initial markets, the existence of future firm commitments to sell and the past performance of similar television programs.

~~3) GOODWILL AND OTHER INTANGIBLE ASSETS~~

The costs incurred in acquiring television series and feature film programming are capitalized when the program is accepted and available for airing and the costs of programming rights licensed under multi-year sports programming agreements are capitalized if the rights payments are made before the related economic benefit has been received. These costs are expensed over the period in which an economic benefit is expected to be derived. The economic benefit is determined based on management’s estimates of revenues to be derived from the programming. Management’s judgment is required in determining the value of the future economic benefit and timing of the expensing of these costs.

Ultimate revenue estimates for internally produced television programming, and the estimated economic benefit for acquired programming, which includes television series, feature films and sports, are updated regularly based on information available as the television program or film progresses through its life cycle or contractual term. Overestimating Ultimate Revenues for internally produced programming or a failure to adjust for a downward revision in the estimated economic benefit to be generated from acquired programming could result in the understatement of the amortization of capitalized production or programming costs, future net realizable value adjustments and/or estimated accruals for participation expense.

Impairment of Goodwill and Intangible Assets

The Company performs ~~an annual~~a fair value-based impairment test of goodwill and intangible assets with indefinite lives, comprised of FCC licenses, annually during the fourth quarter and also between annual tests if an event occurs or if circumstances change that would more likely than not reduce the fair value of a reporting unit or an indefinite-lived intangible asset below its carrying value. Goodwill is tested for impairment at the reporting unit ~~level, which is~~level. The Company’s reporting units are one level below orits operating segments, except for the Publishing reporting unit, which is the same as anits operating ~~segment.~~segment because this operating segment has only one component. FCC licenses are tested for impairment at the geographic market level. The Company considers each geographic market, which is comprised of

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

all of the Company’s radio or television stations within that geographic market, to be a single unit of accounting because the FCC licenses at this level represent their highest and best use. At December 31, 2016 the Company had 11 reporting units and FCC license book values for stations in 14 television markets and 25 radio markets.

Television FCC Licenses—For ~~2014,~~its annual impairment test, the Company performs qualitative assessments for each market that management estimates has an aggregate fair value of FCC licenses that significantly exceed their respective carrying values. In selecting markets for a qualitative assessment the Company also considers the duration of time since a quantitative test was performed. For the 2016 annual impairment test, the Company performed qualitative assessments for ~~five reporting units, five radio markets, and ten~~3 television ~~markets which management estimates each have fair values that exceed their respective carrying values by 20% or more.~~markets. For each ~~reporting unit, the Company weighed the relative impact~~ of ~~factors that are specific to the reporting unit as well as industry and macroeconomic factors. For each radio and television market,~~these markets, the Company weighed the relative impact of market-specific and macroeconomic factors. The market-specific factors considered include recent projections by geographic market from both independent and internal sources for advertising revenue and operating costs, as well as market share and capital expenditures. The Company also considered the macroeconomic impact on discount rates and growth rates. Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that it is not more likely than not that the fair values of ~~these reporting units and~~ the ~~fair value of~~ FCC licenses ~~within~~in each ~~market~~of these television markets are less than their respective carrying ~~amounts.~~values. Therefore, performing the quantitative impairment test was unnecessary.

For 2014, the Company performed the two-step quantitative goodwill impairment test for the remaining two reporting units, CBS Interactive and CBS Radio. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. If the carrying value exceeds the fair value, the second step of the test compares the implied fair value of a reporting unit’s goodwill with the carrying value of its goodwill to determine the amount of impairment charge, if any. The estimated fair value of each reporting unit for which step one of the impairment test is performed is computed based upon the present value of future cash flows (“Discounted Cash Flow Method”) and both the traded and transaction values of comparable businesses (“Market Comparable Method”). The Discounted Cash Flow Method and Market Comparable Method resulted in substantially equal fair values. The Discounted Cash Flow Method includes the Company’s assumptions for growth rates, operating margins and capital expenditures for the projection period plus the residual value of the business at the end of the projection period. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections, and for 2014 was 3.0% for CBS Interactive and 1.5% for CBS Radio. The discount rates, which for 2014 were 9.5%

~~II-49~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~for CBS Interactive and 8.0% for CBS Radio, are determined based on the average of the weighted average cost of capital of comparable entities.~~

Based on the 2014 annual impairment test, for each of the two reporting units for which the Company performed the first step of the impairment test, the estimated fair values exceeded the respective carrying values and therefore the second step of the impairment test was unnecessary.

For ~~each of~~FCC licenses in the remaining ~~21 radio and four~~ television markets, the Company performed ~~the~~a quantitative impairment test that compares the estimated fair value of the FCC licenses by geographic market with their respective carrying values. The estimated fair value of each FCC license is computed using the Greenfield Discounted Cash Flow Method (‘‘Greenfield Method’’), which attempts to isolate the income that is attributable to the license alone. The Greenfield Method is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method adds the present value of the estimated annual cash flows of the start-up station over a projection period to the residual value at the end of the projection period. The annual cash flows over the projection period include assumptions for overall advertising revenues in the relevant geographic market, the start-up station’s operating costs and capital expenditures, and a three-year build-up period for the start-up station to reach a normalized state of operations, which reflects the point at which it achieves an average market share. ~~In order to estimate the revenues of a start-up station, the total~~The overall market advertising revenue in the subject market is estimated based on recent industry projections. Operating costs and capital expenditures are estimated based on both industry and internal data. The residual value is calculated using a perpetual nominal growth rate, which is based on projected long-range inflation in the U.S. and long-term industry projections. The discount rate is determined based on the average of the weighted average cost of capital of comparable entities in the broadcast industry. ~~For each television station~~The discount rates and ~~radio station, the discount rate used for 2014 was 8.0% and the~~ perpetual nominal growth rates used for each television station for 2016 were ~~2.5%~~8.0% and ~~1.5%~~2.5%, respectively.

For ~~its 2014 annual impairment~~the 11 television markets for which a quantitative test was performed in 2016, the Company concluded that the estimated fair values of ~~the indefinite-lived intangible assets for which it performed a quantitative assessment~~FCC licenses in each market exceeded ~~the~~their respective carrying values and therefore no impairment charge was ~~required.~~

~~In December 2014, in connection with its strategy to grow its major~~necessary. The estimated fair value of one television market, ~~presence, the Company completed~~which had a radio station swap with Beasley Broadcast Group, Inc. through which the Company exchanged 13 of its radio stations in Tampa and Charlotte as well as one radio station in Philadelphia, for two radio stations in Philadelphia and three radio stations in Miami. In connection with the radio station swap, the Company recorded a pretax noncash impairment charge of $52 million to reduce the carrying value of ~~the allocated goodwill. The assets associated with the disposed radio stations, which primarily consist of goodwill and~~ FCC licenses ~~have been presented as held for sale on the Company’s Consolidated Balance Sheets for all periods prior to the closing~~of $74 million, exceeded its carrying value by 9%. In each of the ~~transaction.~~remaining television markets, the estimated fair value of FCC licenses was in excess of the respective carrying values by more than 10%.

During 2012, in connection with the sale of its five owned radio stations in West Palm Beach, the Company recorded a pretax noncash impairment charge of $11 million to reduce the carrying value of the allocated goodwill.

~~II-50~~

Management’s Discussion and Analysis of

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

The estimated fair values of the FCC licenses are highly dependent on the assumptions of future economic conditions in the individual geographic markets in which the Company owns and operates television stations. Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, or a decline in the local television advertising marketplace could result in a downward revision to the Company’s current assumptions and judgments. Various factors may contribute to a future decline in any local television advertising marketplace including declines in economic conditions; an other-than-temporary decrease in spending by advertisers in certain industries that have historically represented a significant portion of the local television advertising revenues; a shift by advertisers to competing advertising platforms; changes in consumer behavior; and/or a change in population size. A downward revision to the present value of future cash flows could result in impairment and a noncash charge would be required. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.

For the ~~years ended December 31, 2014 and 2013,~~2016 annual impairment test the ~~changes in~~Company concluded that the ~~book~~estimated fair value of ~~goodwill~~the CBS Sports Network reporting unit exceeded its carrying value and therefore the second step of the impairment test was unnecessary. The estimated fair value of the CBS Sports Network reporting unit exceeded its carrying value by ~~segment were as follows:~~more than 10%.

Balance at Balance at
December 31, 2013 Acquisitions December 31, 2014
Entertainment:
Goodwill $ 9,467
$ —
$ 9,467

Accumulated impairment losses (6,294 ) —
(6,294 )
Goodwill, net of impairment 3,173
—
3,173

Cable Networks:

Goodwill 480
—
480

Accumulated impairment losses —
—
—

Goodwill, net of impairment 480
—
480

Publishing:

Goodwill 406
—
406

Accumulated impairment losses —
—
—

Goodwill, net of impairment 406
—
406

Local Broadcasting:

Goodwill 22,244
110
^(a)
22,354

Accumulated impairment losses (19,715 ) —
(19,715 )
Goodwill, net of impairment 2,529
110
2,639

Total:

Goodwill 32,597

110
32,707

Accumulated impairment losses (26,009 )
—

(26,009 )
Goodwill, net of impairment $ 6,588
$ 110
$ 6,698

(a) Amount primarily reflects goodwill acquired in the radio station swap with Beasley Broadcast Group, Inc. At December 31, 2013, the allocated goodwill, net of accumulated impairment relating to the stations disposed of in the swap was included in “Assets held for sale” on the Consolidated Balance Sheet and as a result is not included in the changes in book value above.

Balance at Balance at
December 31, 2012 Acquisitions Other December 31, 2013
Entertainment:
Goodwill $ 9,460
$ 7
$ —
$ 9,467

Accumulated impairment losses (6,294 ) —
—
(6,294 )
Goodwill, net of impairment 3,166
7
—
3,173

Cable Networks:

Goodwill 480
—
—
480

Accumulated impairment losses —
—
—
—

Goodwill, net of impairment 480
—
—
480

Publishing:

Goodwill 407
—
(1 ) 406

Accumulated impairment losses —
—
—
—

Goodwill, net of impairment 407
—
(1 ) 406

Local Broadcasting:

Goodwill 22,244
—
—
22,244

Accumulated impairment losses (19,715 ) —
—
(19,715 )
Goodwill, net of impairment 2,529
—
—
2,529

Total:

Goodwill 32,591

7

(1 ) 32,597

Accumulated impairment losses (26,009 )
—

—
(26,009 )
Goodwill, net of impairment $ 6,582
$ 7
$ (1 ) $ 6,588

~~II-51~~

~~CBS CORPORATION AND SUBSIDIARIES~~Management’s Discussion and Analysis of

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~The Company’s intangible assets were as follows:~~

Accumulated
At December 31, 2014 Gross Amortization Net
Intangible assets subject to amortization:
Trade names $ 220
$ (54 ) $ 166
Other intangible assets 167
(129 ) 38
Total intangible assets subject to amortization 387
(183 ) 204
FCC licenses ^(a)
5,804
—
5,804
Total intangible assets $ 6,191
$ (183 ) $ 6,008

Accumulated
At December 31, 2013 Gross Amortization Net
Intangible assets subject to amortization:
Trade names $ 222
$ (42 ) $ 180
Other intangible assets 211
(159 ) 52
Total intangible assets subject to amortization 433
(201 ) 232
FCC licenses ^(a)
5,638
—
5,638
Total intangible assets $ 6,071
$ (201 ) $ 5,870

~~(a) The increase~~Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in ~~FCC licenses from December 31, 2013~~the advertising market, a decrease in audience acceptance of programming, a shift by advertisers to ~~December 31, 2014 relates~~competing advertising platforms; and/or changes in consumer behavior could result in changes to the ~~radio stations acquired~~Company’s assumptions and judgments used in its goodwill impairment tests. A downward revision of these assumptions could cause the ~~radio station swap with Beasley Broadcast Group, Inc. At December 31, 2013,~~fair values of the ~~FCC licenses relating~~reporting units to ~~the radio stations disposed of in the swap were included in “Assets held for sale”~~fall below their respective carrying values and noncash impairment charge would be required. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.

~~Amortization expense was $32 million in 2014, $39 million in 2013~~

Reserves and ~~$45 million in 2012.~~Legal Matters

Estimates of reserves and liabilities related to legal issues and discontinued businesses, including asbestos and environmental matters, require significant judgments by management. The Company ~~expects its aggregate annual amortization expense~~continually evaluates these estimates based on changes in the relevant facts and circumstances and events that may impact estimates. While management believes that the current reserves for ~~existing intangible~~matters related to predecessor operations of the Company, including environmental and asbestos, are adequate, there can be no assurance that circumstances will not change in future periods. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims.

Pensions

Pension benefit obligations and net periodic pension costs are calculated using many actuarial assumptions. Two key assumptions used in accounting for pension liabilities and expenses are the discount rate and expected rate of return on plan assets. The discount rate is determined based on the yield on a portfolio of high quality bonds, constructed to provide cash flows necessary to meet the Company’s pension plans’ expected future benefit payments, as determined for the projected benefit obligation. The expected return on plan assets assumption is derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets. As of December 31, 2016, the unrecognized actuarial losses included in accumulated other comprehensive income decreased from the prior year end due primarily to a lump-sum distribution offered to plan participants which accelerated recognition of unamortized losses in the plan, as well as the favorable performance of pension plan assets. These events were offset by a decrease in the discount rate. A decrease in the discount rate would increase the projected benefit obligation. A 25 basis point change in the discount rate will result in an estimated change to the projected benefit obligation of approximately $113 million and would not have a material impact on 2017 pension expense. A decrease in the expected rate of return on plan assets would increase pension expense. The estimated impact of a 25 basis point change in the expected rate of return on plan assets is a change of approximately $8 million to 2017 pension expense.

Income Taxes

The Company is subject to ~~amortization~~income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. When recording the worldwide provision for income taxes, an estimated effective tax rate for the year is applied to interim operating results. In the event there is a significant or unusual item recognized in the quarterly operating results, the tax attributable to that item is separately calculated and recorded in the same quarter. A number of years may elapse before a tax return containing tax matters for which a reserve has been established is audited and finally resolved. For positions taken in a previously filed tax return or expected to be taken in a future tax return, the Company evaluates each position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the ~~years, 2015 through 2019,~~position. A tax position that meets the more-likely-than-not recognition threshold is subject to ~~be as follows:~~

2015 2016 2017 2018 2019
Amortization expense $ 24
$ 19
$ 15
$ 13
$ 13

~~4) DISCONTINUED OPERATIONS~~

~~On July 16, 2014,~~a measurement assessment to determine the ~~Company completed the disposition~~amount of ~~Outdoor Americas and, as a result, Outdoor Americas has been presented as a discontinued operation~~benefit to recognize in the ~~Company’s consolidated financial statements for all periods presented. In aggregate,~~Consolidated Statement of Operations and the ~~Company received $4.76 billion from~~appropriate reserve to establish, if any. If a tax position does not meet the disposition of Outdoor Americas, including $2.04 billion of cash and $2.72 billion in shares of CBS Corp. Class B Common Stock that were accepted in the Split-Off. The disposition was completed in three phases. First, in January 2014, Outdoor Americas borrowed $1.60 billion and provided $1.52 billion of the proceeds to the Company. Next, on April 2, 2014, Outdoor Americas completed an IPO through which it sold 23.0 million shares, or approximately 19%, of its common stock for $28.00 per share. Proceeds from the IPO, net of underwriting discounts and commissions, aggregated $615 million, of which $515 million was provided to the Company. Upon completion of the IPO, the Company owned 97.0 million shares, or approximately 81% of Outdoor Americas. Finally, on July 16, 2014, the Company completed the disposition of its 81% ownership of Outdoor Americas common stock through a Split-Off. In connection with the Split-Off, the Companymore-likely-than-not recognition threshold

~~II-52~~

~~CBS CORPORATION AND SUBSIDIARIES~~Management’s Discussion and Analysis of

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

accepted 44.7 million shares of CBS Corp. Class B Common Stock from its stockholders in exchange for the 97.0 million shares of Outdoor Americas common stock that it owned. This transaction resulted in a gain of $1.56 billion for the year ended December 31, 2014 which is calculated as follows:

Fair value of CBS Corp. Class B Common Stock accepted $ 2,721
(44,723,131 shares at $60.85 per share on July 16, 2014)
Carrying value of Outdoor Americas (1,162 )
Accumulated other comprehensive income 30
Transaction costs (32 )
Net gain on split-off of Outdoor Americas $ 1,557

~~The Split-Off was a tax-free transaction and therefore, there is no tax impact on the gain.~~

~~During 2013,~~a tax reserve is established and no benefit is recognized. The Company is continually audited by U.S. federal and state as well as foreign tax authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company ~~completed the sale~~believes that its reserve for uncertain tax positions of Outdoor Europe for $225 million. Outdoor Europe has been presented as a discontinued operation for all periods presented. For 2013, net earnings from discontinued operations include a gain on the disposal of Outdoor Europe and an after-tax charge of $110 million related to Outdoor Europe. This charge was associated with exiting an unprofitable contractual arrangement and the estimated fair value of guarantees, which historically were intercompany but upon the closing of the transaction became third-party guarantees (See Note 15).

~~The following table sets forth details of net earnings from discontinued operations for the years ended December 31, 2014, 2013 and 2012.~~

Year Ended December 31, 2014 2013 2012
Revenues from discontinued operations $ 677
$ 1,695
$ 1,873
Earnings (loss) from discontinued operations $ 79
$ (12 ) $ 128
Income tax provision (26 ) —
(62 )
Earnings (loss) from discontinued operations, net of tax 53
(12 ) 66
Gain on disposal 1,557
159
—
Income tax provision —
(6 ) —
Gain on disposal, net of tax 1,557
153
—
Less: Net earnings from discontinued operations attributable to noncontrolling interest, net of tax 5
—
—
Net earnings from discontinued operations attributable to CBS Corp. $ 1,605
$ 141
$ 66

~~The following table presents the major classes of assets and liabilities of the Company’s discontinued operations.~~

At December 31, 2014 2013
Current assets $ —
$ 351
Goodwill —
1,866
Intangible assets —
366
Net property and equipment —
763
Other assets 39
129
Total Assets $ 39
$ 3,475
Current liabilities $ 26
$ 254
Other liabilities 118
477
Total Liabilities $ 144
$ 731

~~Other liabilities of discontinued operations of $118 million and $477~~$102 million at December 31, ~~2014~~2016 is properly recorded pursuant to the recognition and ~~2013, respectively, primarily include tax reserves~~measurement provisions of FASB guidance for uncertainty in income taxes.

Legal Matters

Claims Related to Former Businesses: Asbestos. The Company is a defendant in lawsuits claiming various personal injuries related to ~~previously disposed businesses~~asbestos and other materials, which allegedly occurred principally as a result of exposure caused by various products manufactured by Westinghouse, a predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of asbestos. The Company is typically named as one of a large number of defendants in both state and federal cases. In the majority of asbestos lawsuits, the plaintiffs have not identified which of the Company’s products is the basis of a claim. Claims against the Company in which a product has been identified principally relate to exposures allegedly caused by asbestos-containing insulating material in turbines sold for power-generation, industrial and marine use.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the ~~carrying value~~number of pending claims, subject to significant fluctuation from period to period. The Company does not report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of December 31, 2016, the Company had pending approximately 33,610 asbestos claims, as compared with approximately 36,030 as of December 31, 2015 and 41,100 as of December 31, 2014. During 2016, the Company received approximately 4,160 new claims and closed or moved to an inactive docket approximately 6,580 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the ~~guarantee liability associated with~~injuries that form the ~~disposition~~basis of ~~Outdoor Europe~~the claims, the quality of evidence supporting the claims and other factors. In 2016, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately ~~$28 million~~$48 million. In 2015, as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and ~~$40 million,~~defense of asbestos claims by approximately $5 million. The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of claims against the Company are non-cancer claims. The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic

~~II-53~~

~~CBS CORPORATION AND SUBSIDIARIES~~Management’s Discussion and Analysis of

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

~~respectively. At December 31, 2013, other liabilities~~claim filings, costs per claim of ~~discontinued operations also included deferred tax liabilities related to Outdoor Americas.~~

~~5) RESTRUCTURING CHARGES~~

~~During~~resolution and the ~~year ended December 31, 2014, in a continued effort to reduce its cost structure,~~filing of new claims. While the number of asbestos claims filed against the Company ~~initiated restructuring plans across several~~has remained generally flat in recent years, it is difficult to predict future asbestos liabilities, as events and circumstances may occur including, among others, the number and types of claims and average cost to resolve such claims, which could affect the Company’s estimate of its businesses, primarily for the reorganization or closure of certain business operations. As a result, the Company recorded restructuring charges of $26 million, reflecting $17 million of severance costs and $9 million of costs associated with exiting contractual obligations. During the year ended December 31, 2013, the Company recorded restructuring charges of $20 million, reflecting $14 million of severance costs and $6 million of costs associated with exiting contractual obligations. As of December 31, 2014, the cumulative amount paid for the 2014 and 2013 restructuring charges was $24 million, of which $17 million was for the severance costs and $7 million related to costs associated with exiting contractual obligations. The 2013 restructuring reserve was substantially utilized at December 31, 2014. The Company expects to substantially utilize the 2014 restructuring reserve by the end of 2015.

Balance at 2014 2014 Balance at
December 31, 2013 Charges Payments December 31, 2014
Entertainment $ 8
$ 8
$ (8 ) $ 8

Cable Networks 1

—
(1 ) —

Publishing 1
1
(2 ) —

Local Broadcasting 4
14
(6 ) 12

Corporate 1
3
(2 ) 2

Total $ 15
$ 26
$ (19 ) $ 22

2013 2013 Balance at
Charges Payments December 31, 2013
Entertainment $ 12
$ (4 ) $ 8

Cable Networks 1
—
1

Publishing 1
—
1

Local Broadcasting 5
(1 ) 4

Corporate 1
—
1

Total $ 20
$ (5 ) $ 15

~~6) PROGRAMMING AND OTHER INVENTORY~~

At December 31, 2014 2013
Program rights $ 1,471
$ 1,331
Television programming:
Released (including acquired libraries) 983
878
In process and other 179
139
Theatrical programming:
Released 23
38
In process and other 36
32
Publishing, primarily finished goods 47
51
Total programming and other inventory 2,739
2,469
Less current portion 922
772
Total noncurrent programming and other inventory $ 1,817
$ 1,697

~~II-54~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~7) RELATED PARTIES~~

~~National Amusements, Inc.~~ National Amusements, Inc. (“NAI”) is the controlling stockholder of CBS Corp. and Viacom Inc. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, is the Executive Chairman of the Board of Directors and founder of both CBS Corp. and Viacom Inc. In addition, Ms. Shari Redstone, Mr. Sumner M. Redstone’s daughter, is the president and a director of NAI and the vice chair of the Board of Directors of both CBS Corp. and Viacom Inc. Mr. David R. Andelman is a director of CBS Corp. and serves as a director of NAI. Mr. Frederic V. Salerno is a director of CBS Corp. and serves as a director of Viacom Inc. At December 31, 2014, NAI directly or indirectly owned approximately 79.6% of CBS Corp.’s voting Class A Common Stock and owned approximately 7.8% of CBS Corp.’s Class A Common Stock and non-voting Class B Common Stock on a combined basis.asbestos liabilities.

~~Viacom Inc.~~ As part of its normal course of business, the Company licenses its television content, leases production facilities and sells advertising spots to various subsidiaries of Viacom Inc. Viacom Inc. also distributes certain of the Company's television programs in the home entertainment market. The Company’s total revenues from these transactions were $183 million, $185 million and $211 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company places advertisements with and leases production facilities from various subsidiaries of Viacom Inc. The total amounts for these transactions were $19 million, $21 million and $26 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The following table presents the amounts due from Viacom Inc. in the normal course of business as reflected on the Company’s Consolidated Balance Sheets. Amounts due to Viacom Inc. were minimal at December 31, 2014 and 2013.

At December 31, 2014 2013
Receivables $ 107
$ 84
Other assets (Receivables, noncurrent) 76
115
Total amounts due from Viacom Inc. $ 183
$ 199

~~Other Related Parties~~Other. The Company ~~has equity interests in two domestic television networks~~from time to time receives claims from federal and ~~several international joint ventures~~state environmental regulatory agencies and other entities asserting that it is or may be liable for ~~television channels, from which the Company earns revenues primarily by selling its television programming. Total revenues earned from sales~~environmental cleanup costs and related damages principally relating to ~~these joint ventures were $122 million, $108 million~~historical and ~~$157 million for the years ended December 31, 2014, 2013 and 2012, respectively.~~

~~The Company, through the normal course of business, is involved in transactions with other related parties that have not been material in any~~predecessor operations of the ~~periods presented.~~

~~8) INVESTMENTS~~

Market Risk

The Company is exposed to fluctuations in ~~several international television joint ventures including a 49%~~foreign currency exchange rates and interest rates and uses derivative financial instruments to modify this exposure. In accordance with its policy, the Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes.

Foreign Exchange Risk

The Company conducts business in ~~a joint venture with a subsidiary~~various countries outside the U.S., resulting in exposure to movements in foreign exchange rates when translating from the foreign local currency to the U.S. dollar. In order to hedge anticipated cash flows in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar, foreign currency forward contracts, for periods generally up to 24 months, are used. Additionally, the Company designates forward contracts used to hedge committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of ~~AMC Networks Inc., which owns~~designated cash flow hedges are initially recorded in other comprehensive income (loss) and ~~operates six cable and satellite channels~~reclassified to the statement of operations when the hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows. The change in fair value of the non-designated contracts is included in “Other items, net” in the ~~United Kingdom and Ireland, including CBS branded channels; a 30% interest in a joint venture with another subsidiary~~Consolidated Statements of ~~AMC Networks Inc., which owns and operates nine cable and satellite channels in Europe,~~Operations. The Company manages the ~~Middle East and Africa; a 33% interest in a joint venture with a subsidiary~~use of ~~Ten Network~~

~~II-55~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

Holdings Limited to provide content to ELEVEN, a digital television channel service in Australia; and a 30% interest in a joint venture with RTL Group which owns and operates two cable channels in South East Asia.foreign exchange derivatives centrally.

At December 31, ~~2014~~2016 and ~~2013, respectively,~~2015, the ~~Company had $199~~notional amount of all foreign currency contracts was $433 million and ~~$188~~$291 million, respectively, which represents hedges of ~~equity investments that are included in “Other assets” on the Consolidated Balance Sheets.~~expected foreign currency cash flows.

Investments of 20% or less, over which the Company has no significant influence, that do not have a readily determinable fair value are accounted for under the cost method. At December 31, 2014 and 2013, respectively, the Company had $23 million and $16 million of cost investments that are included in “Other assets” on the Consolidated Balance Sheets.

~~The Company invested $98 million, $176 million and $91 million into its equity and cost investments during the years ended December 31, 2014, 2013 and 2012, respectively.~~

~~9) BANK FINANCING AND DEBT~~

~~The Company's debt consists of the following~~ ^(a):

At December 31, 2014 2013
Commercial paper $ 616
$ 475
8.875% Notes due 2014 —
99
7.625% Senior Debentures due 2016 200
200
1.95% Senior Notes due 2017 398
397
4.625% Senior Notes due 2018 313
317
8.875% Senior Notes due 2019 —
592
2.30% Senior Notes due 2019 598
—
5.75% Senior Notes due 2020 500
500
4.30% Senior Notes due 2021 300
300
3.375% Senior Notes due 2022 695
695
7.875% Debentures due 2023 187
224
7.125% Senior Notes due 2023 ^(b)
46
52
3.70% Senior Notes due 2024 599
—
7.875% Senior Debentures due 2030 839
1,270
5.50% Senior Debentures due 2033 428
428
5.90% Senior Notes due 2040 299
299
4.85% Senior Notes due 2042 488
488
4.90% Senior Notes due 2044 543
—
Obligations under capital leases 97
113
Total debt ^(c)
7,146
6,449
Less discontinued operations debt ^(d)
—
14
Total debt from continuing operations 7,146
6,435
Less commercial paper 616
475
Less current portion 20
20
Total long-term debt from continuing operations, net of current portion $ 6,510
$ 5,940

~~(a) Unless otherwise noted, the long-term debt instruments are issuances of CBS Corp. and are guaranteed by CBS Operations Inc.~~

~~(b) Debt instrument is an issuance of CBS Broadcasting Inc., a wholly owned subsidiary of CBS Corp., and has no guarantor.~~

(c) At December 31, 2014 and December 31, 2013, the senior debt balances included (i) a net unamortized discount of $21 million and $13 million, respectively, and (ii) an increase in the carrying value of the debt relating to previously settled fair value hedges of $14 million and $18 million, respectively. The face value of the Company’s total debt was $7.15 billion at December 31, 2014 and $6.44 billion at December 31, 2013.

~~(d) Included in "Liabilities of discontinued operations" on the Consolidated Balance Sheets.~~

~~II-56~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~For the year ended December 31, 2014, debt issuances, redemptions and repurchases were as follows:~~

~~Debt Issuances~~

~~August 2014, $600 million 2.30% senior notes due 2019~~

~~August 2014, $600 million 3.70% senior notes due 2024~~

~~August 2014, $550 million 4.90% senior notes due 2044~~

~~Debt Redemptions~~

~~$99 million 8.875% notes due 2014~~

~~$264 million 8.875% senior notes due 2019~~

~~Debt Repurchases~~

~~$336 million 8.875% senior notes due 2019, through a tender offer~~

~~$37 million 7.875% debentures due 2023, through a tender offer~~

~~$6 million 7.125% senior notes due 2023, through a tender offer~~

~~$423 million 7.875% senior debentures due 2030, through a tender offer~~

~~The debt repurchases and early debt redemption resulted in a pretax loss on early extinguishment of debt of $352 million ($219 million, net of tax) for the year ended December 31, 2014.~~

During January 2015, the Company issued $600 million of 3.50% senior notes due 2025 and $600 million of 4.60% senior notes due 2045 and used the net proceeds for the repurchase of CBS Corp. Class B Common Stock and repayment of short-term borrowings, including commercial paper.

Interest Risk

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Credit Risk

The Company’s receivables do not represent significant concentrations of credit risk at December 31, ~~2014,~~2016 or 2015, due to the wide variety of customers, markets and geographic areas to which the Company’s ~~scheduled maturities~~products and services are sold.

Related Parties

For a discussion of ~~long-term debt at face value, excluding capital leases, were as follows:~~related parties, see Note 7 to the consolidated financial statements.

Recent Pronouncements and Adoption of New Accounting Standards

See Note 1 to the consolidated financial statements.

2020 and
2015 2016 2017 2018 2019 Thereafter
Long-term debt $ —
$ 200
$ 400
$ 300
$ 600
$ 4,940



Item 8.	Financial Statements and Supplementary Data.

~~Commercial Paper~~INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

The ~~Company had outstanding commercial paper borrowings under~~following Consolidated Financial Statements and schedule of the registrant and its ~~commercial paper program~~subsidiaries are submitted herewith as part of ~~$616 million~~this report:



		Reference (Page/s)
Item 15(a)(1) Financial Statements:
1.	Management’s Report on Internal Control Over Financial Reporting	II-43
2.	Report of Independent Registered Public Accounting Firm	II-44
3.	Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014	II-45
4.	Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014	II-46
5.	Consolidated Balance Sheets at December 31, 2016 and 2015	II-47
6.	Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014	II-48
7.	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2016, 2015 and 2014	II-49
8.	Notes to Consolidated Financial Statements	II-50
Item 15(a)(2) Financial Statement Schedule:
	II. Valuation and Qualifying Accounts	F-1

All other Schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule.

MANAGEMENT’ S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and ~~$475 million~~maintaining adequate internal control over financial reporting and for the effectiveness of internal control over financial reporting, as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act. Our internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 based on the framework set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2016.

The effectiveness of our internal control over financial reporting as of December 31, 2016 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.



		CBS CORPORATION

		By:	/s/ Leslie Moonves
			Leslie Moonves Chairman of the Board, President and Chief Executive Officer

		By:	/s/ Joseph R. Ianniello
			Joseph R. Ianniello Chief Operating Officer

		By:	/s/ Lawrence Liding
			Lawrence Liding Executive Vice President, Controller and Chief Accounting Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of CBS Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity present fairly, in all material respects, the financial position of CBS Corporation and its subsidiaries at December 31, ~~2014~~2016 and ~~2013, respectively,~~2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

New York, New York

February 17, 2017

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)



	Year Ended December 31,
	2016			2015			2014
Revenues	$	13,166		$	12,671		$	12,519
Costs and expenses:
Operating	7,956			7,911			7,689
Selling, general and administrative	2,124			1,961			1,971
Depreciation and amortization	225			235			250
Pension settlement charge (Note 15)	211			—			—
Restructuring and merger and acquisition-related costs (Note 5)	38			45			19
Other operating items, net	(9		)	(139		)	—
Total costs and expenses	10,545			10,013			9,929
Operating income	2,621			2,658			2,590
Interest expense	(411		)	(392		)	(363		)
Interest income	32			24			13
Loss on early extinguishment of debt	—			—			(352		)
Other items, net	(12		)	(26		)	(30		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	2,230			2,264			1,858
Provision for income taxes	(628		)	(676		)	(659		)
Equity in loss of investee companies, net of tax	(50		)	(34		)	(48		)
Net earnings from continuing operations	1,552			1,554			1,151
Net earnings (loss) from discontinued operations, net of tax (Note 4)	(291		)	(141		)	1,808
Net earnings	$	1,261		$	1,413		$	2,959
Basic net earnings (loss) per common share:
Net earnings from continuing operations	$	3.50		$	3.21		$	2.09
Net earnings (loss) from discontinued operations	$	(.66	)	$	(.29	)	$	3.29
Net earnings	$	2.84		$	2.92		$	5.38

Diluted net earnings (loss) per common share:
Net earnings from continuing operations	$	3.46		$	3.18		$	2.05
Net earnings (loss) from discontinued operations	$	(.65	)	$	(.29	)	$	3.22
Net earnings	$	2.81		$	2.89		$	5.27

Weighted average number of common shares outstanding:
Basic	444			484			550
Diluted	448			489			561

Dividends per common share	$	.66		$	.60		$	.54

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)



	Year Ended December 31,
	2016			2015			2014
Net earnings	$	1,261		$	1,413		$	2,959
Other comprehensive income (loss) from continuing operations, net of tax:
Cumulative translation adjustments	(1		)	(5		)	(9		)
Net actuarial gain (loss) and prior service costs (Note 15)	4			(30		)	(163		)
Unrealized loss on securities	—			—			(3		)
Other comprehensive income (loss) from continuing operations, net of tax	3			(35		)	(175		)
Other comprehensive income from discontinued operations, before reclassifications	—			—			15
Reclassification from accumulated other comprehensive income (loss) from discontinued operations to net earnings	—			—			(30		)
Total other comprehensive income (loss), net of tax	3			(35		)	(190		)
Total comprehensive income	$	1,264		$	1,378		$	2,769

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)



	At December 31,
	2016			2015
ASSETS
Current Assets:
Cash and cash equivalents	$	598		$	317
Receivables, less allowances of $60 (2016) and $59 (2015)	3,314			3,375
Programming and other inventory (Note 6)	1,427			1,270
Prepaid income taxes	30			101
Prepaid expenses	185			133
Other current assets	204			228
Current assets of discontinued operations (Note 4)	305			323
Total current assets	6,063			5,747
Property and equipment	2,935			2,880
Less accumulated depreciation and amortization	1,694			1,627
Net property and equipment (Note 2)	1,241			1,253
Programming and other inventory (Note 6)	2,439			1,957
Goodwill (Note 3)	4,864			4,789
Intangible assets (Note 3)	2,633			2,639
Other assets (Note 1)	2,707			2,633
Assets of discontinued operations (Note 4)	4,291			4,747
Total Assets	$	24,238		$	23,765
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	148		$	159
Accrued expenses	632			561
Accrued compensation	369			306
Participants’ share and royalties payable	1,024			1,013
Program rights	290			372
Deferred revenues	152			294
Commercial paper (Note 9)	450			—
Current portion of long-term debt (Note 9)	23			222
Other current liabilities	465			490
Current liabilities of discontinued operations (Note 4)	155			143
Total current liabilities	3,708			3,560
Long-term debt (Note 9)	8,902			8,226
Participants’ share and royalties payable	1,322			1,318
Pension and postretirement benefit obligations (Note 15)	1,769			1,575
Deferred income tax liabilities, net (Note 14)	590			495
Other liabilities	1,807			1,889
Liabilities of discontinued operations (Note 4)	2,451			1,139

Commitments and contingencies (Note 16)

Stockholders’ Equity:
Class A Common Stock, par value $.001 per share; 375 shares authorized; 38 (2016 and 2015) shares issued	—			—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 829 (2016) and 826 (2015) shares issued	1			1
Additional paid-in capital	43,913			44,055
Accumulated deficit	(19,257		)	(20,518		)
Accumulated other comprehensive loss (Note 12)	(767		)	(770		)
	23,890			22,768
Less treasury stock, at cost; 455 (2016) and 401 (2015) Class B Shares	20,201			17,205
Total Stockholders’ Equity	3,689			5,563
Total Liabilities and Stockholders’ Equity	$	24,238		$	23,765

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	Year Ended December 31,
	2016			2015			2014
Operating Activities:
Net earnings	$	1,261		$	1,413		$	2,959
Less: Net earnings (loss) from discontinued operations	(291		)	(141		)	1,808
Net earnings from continuing operations	1,552			1,554			1,151
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	225			235			250
Deferred tax provision	144			445			592
Stock-based compensation	165			157			137
Net gain on disposition and write-down of assets	(18		)	(139		)	(11		)
Equity in loss of investee companies, net of tax and distributions	53			37			57
Change in assets and liabilities, net of investing and financing activities
Decrease (increase) in receivables	36			(376		)	(599		)
Increase in inventory and related program and participation liabilities, net	(804		)	(498		)	(214		)
(Increase) decrease in other assets	(85		)	23			53
Increase (decrease) in accounts payable and accrued expenses	23			(220		)	(152		)
Increase (decrease) in pension and postretirement benefit obligations	205			(46		)	(34		)
Increase (decrease) in income taxes	94			(56		)	(298		)
(Decrease) increase in deferred revenue	(137		)	66			(47		)
Other, net	1			7			31
Net cash flow provided by operating activities from continuing operations	1,454			1,189			916
Net cash flow provided by operating activities from discontinued operations	231			205			359
Net cash flow provided by operating activities	1,685			1,394			1,275
Investing Activities:
Acquisitions	(92		)	(12		)	(2		)
Capital expenditures	(196		)	(171		)	(178		)
Investments in and advances to investee companies	(81		)	(98		)	(98		)
Proceeds from sale of investments	—			80			12
Proceeds from dispositions	20			383			4
Other investing activities	15			(3		)	(4		)
Net cash flow (used for) provided by investing activities from continuing operations	(334		)	179			(266		)
Net cash flow used for investing activities from discontinued operations	(6		)	(25		)	(335		)
Net cash flow (used for) provided by investing activities	(340		)	154			(601		)
Financing Activities:
Proceeds from (repayments of) short-term debt borrowings, net	450			(616		)	141
Proceeds from issuance of senior notes	684			1,959			1,728
Repayment of notes and debentures	(199		)	—			(1,152		)
Proceeds from debt borrowings of CBS Radio (2016) and Outdoor Americas (2014)	1,452			—			1,569
Repayment of debt borrowings of CBS Radio	(110		)	—			—
Proceeds from IPO of Outdoor Americas	—			—			613
Payment of capital lease obligations	(18		)	(17		)	(17		)
Dividends	(288		)	(300		)	(292		)
Purchase of Company common stock	(2,997		)	(2,813		)	(3,595		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(58		)	(96		)	(146		)
Proceeds from exercise of stock options	21			142			283
Excess tax benefit from stock-based compensation	17			88			243
Other financing activities	—			—			(18		)
Net cash flow used for financing activities	(1,046		)	(1,653		)	(643		)
Net increase (decrease) in cash and cash equivalents	299			(105		)	31
Cash and cash equivalents at beginning of year (includes $6 (2016 and 2015) and $33 (2014) of discontinued operations cash)	323			428			397
Cash and cash equivalents at end of year (includes $24 (2016) and $6 (2015 and 2014) of discontinued operations cash)	$	622		$	323		$	428

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)



	Year Ended December 31,
	2016					2015					2014
	Shares		Amount			Shares		Amount			Shares		Amount
Class A Common Stock:
Balance, beginning of year	38		$	—		38		$	—		39		$	—
Conversion of A shares into B shares	—		—			—		—			(1	)	—
Balance, end of year	38		—			38		—			38		—
Class B Common Stock:
Balance, beginning of year	826		1			818		1			801		1
Conversion of A shares into B shares	—		—			—		—			1		—
Restricted stock unit vests	3		—			4		—			5		—
Exercise of stock options	1		—			6		—			14		—
Retirement of treasury stock	(1	)	—			(2	)	—			(3	)	—
Balance, end of year	829		1			826		1			818		1
Additional Paid-In Capital:
Balance, beginning of year			44,055					44,041					43,474
Stock-based compensation			177					174					168
Tax benefit related to employee stock-based transactions			12					87					246
Exercise of stock options			21					142					282
Retirement of treasury stock			(58		)			(96		)			(146		)
Dividends			(294		)			(293		)			(296		)
Gain on Outdoor Americas IPO			—					—					313
Balance, end of year			43,913					44,055					44,041
Accumulated Deficit:
Balance, beginning of year			(20,518		)			(21,931		)			(24,890		)
Net earnings			1,261					1,413					2,959
Balance, end of year			(19,257		)			(20,518		)			(21,931		)
Accumulated Other Comprehensive Loss:
Balance, beginning of year			(770		)			(735		)			(545		)
Other comprehensive income (loss)			3					(35		)			(190		)
Balance, end of year			(767		)			(770		)			(735		)
Treasury Stock, at cost:
Balance beginning of year	401		(17,205		)	349		(14,406		)	244		(8,074		)
Class B Common Stock purchased	54		(2,997		)	52		(2,800		)	60		(3,612		)
Outdoor Americas Split-Off	—		—			—		—			45		(2,721		)
Shares paid for tax withholding for stock-based compensation	1		(58		)	2		(96		)	3		(146		)
Issuance of stock for deferred compensation	—		1			—		1			—		1
Retirement of treasury stock	(1	)	58			(2	)	96			(3	)	146
Balance, end of year	455		(20,201		)	401		(17,205		)	349		(14,406		)
Total Stockholders’ Equity			$	3,689				$	5,563				$	6,970

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business—CBS Corporation (together with its consolidated subsidiaries unless the context otherwise requires, the “Company” or “CBS Corp.”) is comprised of the following segments: Entertainment (CBS Television, comprised of the CBS Television Network, CBS Television Studios, CBS Studios International, and CBS Television Distribution; CBS Interactive; and CBS Films), Cable Networks (Showtime Networks, CBS Sports Network and Smithsonian Networks), Publishing (Simon & Schuster) and Local Media (CBS Television Stations and CBS Local Digital Media).

Discontinued Operations—On February 2, 2017, the Company entered into an agreement with Entercom Communications Corp. to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of the Company’s Class B Common Stock for shares of CBS Radio, which will then be immediately converted into shares of Entercom common stock at ~~weighted average interest rates~~the time of ~~0.46%~~the merger. Beginning in the fourth quarter of 2016, CBS Radio was classified as held for sale and ~~0.28%, respectively and with maturities of less than forty-five days.~~has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented (See Note 4). During ~~December~~ 2014, the Company ~~increased~~completed the disposition of CBS Outdoor Americas Inc., which was previously a subsidiary of the Company and has been renamed OUTFRONT Media, Inc. (“Outdoor Americas”). Outdoor Americas has been presented as a discontinued operation in the Company’s consolidated financial statements. In addition, certain businesses that were previously disposed of by the Company prior to January 1, 2002, were accounted for as discontinued operations in accordance with accounting rules in effect prior to 2002.

Principles of Consolidation—The consolidated financial statements include the accounts of CBS Corp. and all of its subsidiaries in which a controlling interest is maintained. Controlling interest is determined by majority ownership interest and the absence of substantive third party participating rights. Investments over which the Company has a significant influence or ownership of more than 20% but less than or equal to 50%, without a controlling interest, are accounted for under the equity method. Investments of 20% or less, over which the Company has no significant influence, are accounted for under the cost method if the fair value is not readily determinable and are accounted for as available for sale securities if the fair value is readily determinable. All significant intercompany transactions have been eliminated.

Reclassifications—Certain amounts reported for prior years have been reclassified to conform to the current year’s presentation.

Use of Estimates—The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents—Cash and cash equivalents consist of cash on hand and short-term (maturities of three months or less at the date of purchase) highly liquid investments, including money market funds, commercial paper ~~program from $2.0 billion to $2.5 billion.~~and bank time deposits.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Programming Inventory—The Company acquires rights to programming and produces programming to exhibit on its broadcast and cable networks, broadcast television stations, direct to consumers through its digital streaming services and the internet, and in theaters. The costs incurred in acquiring and producing programs are capitalized and amortized over the license period or projected useful life of the programming. Program rights and the related liabilities are recorded at the gross amount of the liabilities when the license period has begun, the cost of the program is determinable, and the program is accepted and available for airing.

Television production costs (which include direct production costs, production overhead and acquisition costs) are stated at the lower of unamortized cost or net realizable value. The Company then estimates total revenues to be earned and costs to be incurred throughout the life of each television program. For television programming, estimates for remaining total lifetime revenues are limited to the amount of revenue contracted for each episode in the initial market. Accordingly, television programming costs and participation costs incurred in excess of the amount of revenue contracted for each episode in the initial market are expensed as incurred on an episode by episode basis. Estimates for all secondary market revenues such as domestic and foreign syndication, basic cable, digital streaming, home entertainment and merchandising are included in the estimated lifetime revenues of such television programming once it can be demonstrated that a program can be successfully licensed in such secondary market. Television programming costs incurred subsequent to the establishment of the secondary market are initially capitalized and amortized, and estimated liabilities for participations are accrued, based on the proportion that current period revenues bear to the estimated remaining total lifetime revenues.

The costs incurred in acquiring television series and feature film programming are capitalized when the program is accepted and available for airing. These costs are amortized over the period in which an economic benefit is expected to be derived based on the timing of the Company’s usage of and benefit from such programming. The costs of programming rights licensed under multi-year sports programming agreements are capitalized if the rights payments are made before the related economic benefit has been received. These costs are expensed over the period in which an economic benefit is expected to be derived based on the relative value of the events broadcast by the Company during a period. The relative value for an event is determined based on the revenues generated for that event in relation to the estimated total revenues over the remaining term of the sports programming agreement.

Lifetime revenue estimates for internally produced television programming, and the estimated economic benefit for the acquired programming, including revenue projections for multi-year sports programming, are periodically reviewed. Adjustments, if any, will result in changes to amortization rates, future net realizable value adjustments and/or estimated accruals for participation expense.

Property and Equipment—Property and equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives as follows:



Buildings and building improvements	10 to 40 years
Leasehold Improvements	Shorter of lease term or useful life
Equipment and other (including capital leases)	3 to 20 years

Impairment of Long-Lived Assets—The Company assesses long-lived assets and intangible assets, other than goodwill and intangible assets with indefinite lives, for impairment whenever there is an indication that the carrying amount of the asset may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows expected to be generated by these assets, which is the estimated fair value, to their net carrying value. The amount of impairment loss, if any, will generally be measured by the difference between the net carrying value and the estimated fair value of the asset.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Impairment of Investments—Investments are reviewed for impairment on a quarterly basis by comparing their fair value to their respective carrying amounts. The Company determines the fair value of its public company investments by reference to their publicly traded stock price. With respect to private company investments, the Company makes its estimate of fair value by considering recent investee equity transactions, discounted cash flow analyses, recent operating results, estimates based on comparable public company operating cash flow multiples and, in certain situations, balance sheet liquidation values. If the fair value of the investment has dropped below the carrying amount, management considers several factors when determining whether an other-than-temporary decline has occurred. These factors include the length of time and the extent to which the estimated fair value or market value has been below the carrying value, the financial condition and the near-term prospects of the investee, the intent and ability of the Company to retain its investment in the investee for a period of time sufficient to allow for any anticipated recovery in market value, and other factors influencing the fair market value, such as general market conditions.

Goodwill and Intangible Assets—Goodwill is allocated to various reporting units, which are generally one level below the Company’s operating segments. Intangible assets with finite lives, which primarily consist of trade names, are generally amortized using the straight-line method over their estimated useful lives, which range from 4 to 40 years. Goodwill and other intangible assets with indefinite lives, which consist of FCC licenses, are not amortized but are tested for impairment on an annual basis and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value below its carrying amount. If the carrying value of goodwill or the intangible asset exceeds its fair value, an impairment loss is recognized as a noncash charge (See Note 3).

Other Assets—Other assets include noncurrent receivables of $2.11 billion at December 31, 2016 and $2.09 billion at December 31, 2015, which are primarily related to revenues recognized under long-term television licensing arrangements. Television license fee revenues are recognized at the beginning of the license period in which programs are made available to the licensee for exhibition, while the related cash is collected over the term of the license period.

Other Liabilities—Other liabilities consist primarily of the noncurrent portion of residual liabilities of previously disposed businesses, program rights obligations, deferred compensation and other employee benefit accruals.

Revenue Recognition—Advertising revenues, net of agency commissions, are recognized in the period during which advertising spots are aired or displayed. If there is a guarantee to deliver a targeted audience rating, revenues are recognized for the actual audience rating delivered, based on the ratings data published by independent audience ratings measurement companies. Revenues are deferred for any shortfall in the audience rating with respect to an advertising spot until such time as the required audience rating is delivered.

Revenues from the licensing of television programming are recognized in the period that the television series is made available to the licensee, which may cause fluctuations in operating results. Television series initially produced for networks and first-run syndication are generally licensed to domestic and international markets concurrently (“initial market”). Network series are also licensed to digital streaming providers, television stations, and cable networks (“secondary market”). Licensing in the secondary market typically occurs at a later date but can also be concurrent with sales in the initial market. The length of the revenue cycle for television series will vary depending on the number of seasons a series remains in active production.

Affiliate and subscription fees for cable and broadcast networks, television stations and online content, including digital streaming services, are recognized in the period the service is provided. Costs for advertising and marketing services provided to the Company by cable, satellite and other distributors are recorded in selling, general and administrative expenses.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Publishing revenues are recognized when merchandise is shipped or electronically delivered to the consumer. The Company records a provision for sales returns and allowances at the time of sale based upon historical trends which allow for a percentage of revenue recognized.

Deferred revenues primarily consist of revenues related to advertising arrangements and the licensing of television programming for which the revenues have not yet been earned. The amounts classified as current are expected to be earned within the next twelve months.

Sales of Multiple Products or Services—Revenues derived from a single sales contract that contains multiple products and services are allocated based on the relative fair value of each delivered item and recognized in accordance with the applicable revenue recognition criteria for the specific unit of accounting.

Collaborative Arrangements—Collaborative arrangements primarily consist of joint efforts with third parties to produce and distribute programming such as television series and live sporting events, including the agreement between the Company and Turner Broadcasting System, Inc. to telecast the NCAA Division I Men’s Basketball Championship (“NCAA Tournament”), which runs through 2032. In connection with this agreement for the NCAA Tournament, advertisements aired on the CBS Television Network are recorded as revenues and the Company’s share of the program rights fees and other operating costs are recorded as operating expenses.

For episodic television programming, co-production costs are initially capitalized as programming inventory and amortized over the television series’ estimated economic life. In such arrangements where the Company has distribution rights, all proceeds generated from such distribution are recorded as revenues and any participation profits due to third party collaborators are recorded as operating expenses. In co-production arrangements where third party collaborators have distribution rights, the Company’s net participating profits are recorded as revenues.

Amounts attributable to transactions arising from collaborative arrangements between participants were not material to the Company’s consolidated financial statements for all periods presented.

Advertising—Advertising costs are expensed as incurred. The Company incurred total advertising expenses of $373 million in 2016, $338 million in 2015 and $377 million in 2014.

Other Operating Items, Net—Other operating items, net for 2016 and 2015 includes gains from the sales of businesses, and for 2016, also includes a multiyear, retroactive impact of a new operating tax.

Interest—Costs associated with the refinancing or issuance of debt, as well as debt discounts or premiums, are recorded as interest over the term of its related debt. The Company may enter into interest rate exchange agreements; the amount to be paid or received under such agreements is accrued and recognized over the life of the agreements as an adjustment to interest expense.

Income Taxes—The provision for income taxes includes federal, state, local, and foreign taxes. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the financial statement carrying amounts and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be reversed. The Company evaluates the realizability of deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. For tax positions taken in a previously filed tax return or expected to be taken in a future tax return, the Company evaluates each position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is subject to a measurement assessment to determine the amount of benefit to be recognized in the Consolidated Statement of

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Operations and the appropriate reserve to establish, if any. If a tax position does not meet the more-likely-than-not recognition threshold a tax reserve is established and no benefit is recognized. A number of years may elapse before a tax return containing tax matters for which a reserve has been established is audited and finally resolved.

Foreign Currency Translation and Transactions—The Company’s assets and liabilities denominated in foreign currencies are translated at foreign exchange rates in effect at the balance sheet date, while results of operations are translated at average foreign exchange rates for the respective periods. The resulting translation gains or losses are included as a separate component of stockholders’ equity in accumulated other comprehensive income (loss). Foreign currency transaction gains and losses have been included in “Other items, net” in the Consolidated Statements of Operations.

Other Items, net—For all periods presented, “Other items, net” primarily consists of foreign exchange gains and losses.

Provision for Doubtful Accounts—The provision for doubtful accounts is estimated based on historical bad debt experience, the aging of accounts receivable, industry trends and economic indicators, as well as recent payment history for specific customers. The provision for doubtful accounts charged to expense was $12 million in 2016 and $9 million in each of the years 2015 and 2014.

Net Earnings (Loss) per Common Share—Basic earnings (loss) per share (“EPS”) is based upon net earnings (loss) divided by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted stock units (“RSUs”) only in the periods in which such effect would have been dilutive. Excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive, were 4 million stock options for each of the years ended December 31, 2016 and 2015 and 2 million stock options for the year ended December 31, 2014.

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.



Year Ended December 31,	2016	2015	2014
(in millions)
Weighted average shares for basic EPS	444	484	550
Dilutive effect of shares issuable under stock-based compensation plans	4	5	11
Weighted average shares for diluted EPS	448	489	561

Stock-based Compensation—The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost is recognized over the vesting period during which an employee is required to provide service in exchange for the award.

Adoption of New Accounting Standards

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

about the entity’s ability to continue as a going concern. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Simplifying the Accounting for Measurement Period Adjustments

Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent)

Credit Facility

During ~~December 2014,~~June 2016, the Company amended and restated its $2.5 billion revolving credit facility (the “Credit Facility”) ~~to increase the capacity from $2.0 billion to $2.5 billion~~. The amended Credit Facility expires in June 2021 and ~~extend the expiration to December 2019. The~~contains provisions ~~of the Credit Facility~~that are substantially similar to ~~those under~~

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

the ~~Company's~~ previous credit ~~facility.~~facility, which was due to expire in December 2019. The Company, at its option, may also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the Company’s option at the time of each borrowing and are based

~~II-57~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

generally on the prime rate in the U.S. or ~~the London Interbank Offer Rate (“LIBOR”)~~LIBOR plus a margin based on the Company’s senior unsecured debt rating. The Company pays a facility fee based on the total amount of the commitments.

The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.5x at the end of each quarter as further described in the Credit Facility. At December 31, ~~2014,~~2016, the Company’s Consolidated Leverage Ratio was approximately ~~2.1x.~~2.9x.

The Consolidated Leverage Ratio reflects the ratio of the Company’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company’s Consolidated EBITDA for the trailing four consecutive quarters. Consolidated EBITDA is defined in the Credit Facility as operating income plus interest income and before depreciation, amortization and certain other noncash items.

The Credit Facility is used for general corporate purposes. At December 31, ~~2014,~~2016, the Company had no borrowings outstanding under the Credit Facility and the remaining availability under the Credit Facility, net of outstanding letters of credit, was $2.49 billion.

~~10) FINANCIAL INSTRUMENTS~~

Liquidity and Capital Resources

The Company continually projects anticipated cash requirements for its operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs. The Company’s operating needs include, among other items, commitments for sports programming rights, television and film programming, talent contracts, operating leases, interest payments, and pension funding obligations. The Company’s investing and financing spending includes capital expenditures, share repurchases, dividends and principal payments on its outstanding indebtedness. The Company believes that its operating cash flows, cash and cash equivalents, borrowing capacity under its Credit Facility, which had $2.49 billion of remaining availability at December 31, 2016, and access to capital markets are sufficient to fund its operating, investing and financing requirements for the next twelve months.

The Company’s funding for short-term and long-term obligations will come primarily from cash flows from operating activities. Any additional cash funding requirements are financed with short-term borrowings, including commercial paper, and long-term debt. To the extent that commercial paper is not available to the Company, the existing Credit Facility provides sufficient capacity to satisfy short-term borrowing needs. The Company routinely assesses its capital structure and opportunistically enters into transactions to lower its interest expense, which could result in a charge from the early extinguishment of debt.

Funding for the Company’s long-term debt obligations due over the next five years of $2.10 billion is expected to come from the Company’s ability to refinance its debt and cash generated from operating activities.

At December 31, 2016, the Company had $4.11 billion of remaining availability under its share repurchase program. Share repurchases under the program are expected to be funded by cash flows from operations and, as appropriate, with short-term borrowings, including commercial paper, and/or the issuance of long-term debt.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Contractual Obligations



	Payments Due by Period
									2022 and
	Total		2017		2018-2019		2020-2021		thereafter
Programming and talent commitments ^(a)	$	11,078	$	1,987	$	3,794	$	3,000	$	2,297
Purchase obligations ^(b)	835		222		379		176		58
Operating leases ^(c)	763		134		211		142		276
Long-term debt obligations ^(d)	8,940		400		900		800		6,840
Interest commitments on long-term debt ^(e)	5,112		396		756		668		3,292
Capital lease obligations (including interest) ^(f)	83		19		33		26		5
Other long-term contractual obligations ^(g)	1,373		—		1,028		282		63
Total	$	28,184	$	3,158	$	7,101	$	5,094	$	12,831

(a) Programming and talent commitments of the Company primarily include $8.06 billion for sports programming rights, $2.26 billion relating to the production and licensing of television and film programming, and $758 million for talent contracts.

(b) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including open purchase orders.

(c) Consists of long-term noncancellable operating lease commitments for office space, equipment, transponders and studio facilities.

(d) Long-term debt obligations are presented at face value, excluding capital leases.

(e) Future interest based on scheduled debt maturities, excluding capital leases.

(f) Includes capital leases for satellite transponders.

(g) Reflects long-term contractual obligations recorded on the Company’s Consolidated Balance Sheet, including program liabilities, participations due to producers and residuals.

Guarantees

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Critical Accounting Policies

Programming and Production Costs

Accounting for the Company’s television production costs requires management’s judgment as it relates to total estimated revenues to be earned (“Ultimate Revenues”) and costs to be incurred throughout the life of each television program. These estimates are used to determine the amortization of capitalized production costs, expensing of participation costs, and any necessary net realizable value adjustments to capitalized production costs. For each television program, management bases these estimates on the performance in the initial markets, the existence of future firm commitments to sell and the past performance of similar television programs.

Impairment of Goodwill and Intangible Assets

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Television FCC Licenses— For its annual impairment test, the Company performs qualitative assessments for each market that management estimates has an aggregate fair value of FCC licenses that significantly exceed their respective carrying values. In selecting markets for a qualitative assessment the Company also considers the duration of time since a quantitative test was performed. For the 2016 annual impairment test, the Company performed qualitative assessments for 3 television markets. For each of these markets, the Company weighed the relative impact of market-specific and macroeconomic factors. The market-specific factors considered include recent projections by geographic market from both independent and internal sources for advertising revenue and operating costs, as well as market share and capital expenditures. The Company also considered the macroeconomic impact on discount rates and growth rates. Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that it is not more likely than not that the fair values of the FCC licenses in each of these television markets are less than their respective carrying values. Therefore, performing the quantitative impairment test was unnecessary.

For FCC licenses in the remaining television markets, the Company performed a quantitative impairment test that compares the estimated fair value of the FCC licenses by geographic market with their respective carrying values. The estimated fair value of each FCC license is computed using the Greenfield Discounted Cash Flow Method (‘‘Greenfield Method’’), which attempts to isolate the income that is attributable to the license alone. The Greenfield Method is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method adds the present value of the estimated annual cash flows of the start-up station over a projection period to the residual value at the end of the projection period. The annual cash flows over the projection period include assumptions for overall advertising revenues in the relevant geographic market, the start-up station’s operating costs and capital expenditures, and a three-year build-up period for the start-up station to reach a normalized state of operations, which reflects the point at which it achieves an average market share. The overall market advertising revenue in the subject market is estimated based on recent industry projections. Operating costs and capital expenditures are estimated based on both industry and internal data. The residual value is calculated using a perpetual nominal growth rate, which is based on projected long-range inflation in the U.S. and long-term industry projections. The discount rate is determined based on the average of the weighted average cost of capital of comparable entities in the broadcast industry. The discount rates and perpetual nominal growth rates used for each television station for 2016 were 8.0% and 2.5%, respectively.

For the 11 television markets for which a quantitative test was performed in 2016, the Company concluded that the estimated fair values of FCC licenses in each market exceeded their respective carrying values and therefore no impairment charge was necessary. The estimated fair value of one television market, which had a carrying value of ~~financial instruments approximates~~FCC licenses of $74 million, exceeded its carrying value by 9%. In each of the remaining television markets, the estimated fair value of FCC licenses was in excess of the respective carrying values by more than 10%.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Goodwill—For its annual impairment test, the Company performs qualitative assessments for ~~differences with respect~~each reporting unit that management estimates have fair values that significantly exceed their respective carrying values. For the 2016 annual impairment test, the Company performed qualitative assessments for seven reporting units. For each of these reporting units, the Company weighed the relative impact of factors that are specific to ~~notes~~the reporting unit as well as industry and ~~debentures. At December 31, 2014~~macroeconomic factors. The reporting unit specific factors that were considered included financial performance and ~~2013,~~changes to the reporting units’ carrying amounts since the most recent impairment tests. For each industry in which the reporting units operate, the Company considered growth projections from independent sources and significant developments or transactions within the industry. The Company also determined that the impact of macroeconomic factors on the discount rates and growth rates used for the most recent impairment tests would not significantly affect the fair value of the reporting units. Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that for these seven reporting units, it is not more likely than not that the fair value of each reporting unit is less than its respective carrying amount and therefore performing the quantitative impairment test was unnecessary.

For 2016, the Company performed the quantitative goodwill impairment test for the CBS Sports Network reporting unit. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. The estimated fair value of each reporting unit is computed based upon the ~~Company's senior debt was $6.43 billion and $5.86 billion, respectively,~~present value of future cash flows (“Discounted Cash Flow Method”) and the traded or transaction values of comparable businesses (“Market Comparable Method”). The Discounted Cash Flow Method and Market Comparable Method resulted in similar estimated fair values. The Discounted Cash Flow Method adds the present value ~~which~~of the estimated annual cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This technique requires the use of significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends. The residual value is estimated based on ~~quoted~~a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections and for 2016 was 2.0%. The discount rate was determined based on the average of the weighted average cost of capital of comparable entities and for 2016 was 9.0%.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Certain future events and circumstances, including deterioration of market ~~prices~~conditions, higher cost of capital, a decline in the advertising market, a decrease in audience acceptance of programming, a shift by advertisers to competing advertising platforms; and/or changes in consumer behavior could result in changes to the Company’s assumptions and judgments used in its goodwill impairment tests. A downward revision of these assumptions could cause the fair values of the reporting units to fall below their respective carrying values and noncash impairment charge would be required. Such a charge could have a material effect on the Company’s Consolidated Statement of Operations and Consolidated Balance Sheet.

Reserves and Legal Matters

Estimates of reserves and liabilities related to legal issues and discontinued businesses, including asbestos and environmental matters, require significant judgments by management. The Company continually evaluates these estimates based on changes in the relevant facts and circumstances and events that may impact estimates. While management believes that the current reserves for ~~similar~~matters related to predecessor operations of the Company, including environmental and asbestos, are adequate, there can be no assurance that circumstances will not change in future periods. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims.

Pensions

Pension benefit obligations and net periodic pension costs are calculated using many actuarial assumptions. Two key assumptions used in accounting for pension liabilities ~~(Level 2)~~ and ~~includes accrued interest, was $7.15 billion~~expenses are the discount rate and ~~$6.69 billion, respectively.~~expected rate of return on plan assets. The discount rate is determined based on the yield on a portfolio of high quality bonds, constructed to provide cash flows necessary to meet the Company’s pension plans’ expected future benefit payments, as determined for the projected benefit obligation. The expected return on plan assets assumption is derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets. As of December 31, 2016, the unrecognized actuarial losses included in accumulated other comprehensive income decreased from the prior year end due primarily to a lump-sum distribution offered to plan participants which accelerated recognition of unamortized losses in the plan, as well as the favorable performance of pension plan assets. These events were offset by a decrease in the discount rate. A decrease in the discount rate would increase the projected benefit obligation. A 25 basis point change in the discount rate will result in an estimated change to the projected benefit obligation of approximately $113 million and would not have a material impact on 2017 pension expense. A decrease in the expected rate of return on plan assets would increase pension expense. The estimated impact of a 25 basis point change in the expected rate of return on plan assets is a change of approximately $8 million to 2017 pension expense.

Income Taxes

The Company ~~uses derivative~~is subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. When recording the worldwide provision for income taxes, an estimated effective tax rate for the year is applied to interim operating results. In the event there is a significant or unusual item recognized in the quarterly operating results, the tax attributable to that item is separately calculated and recorded in the same quarter. A number of years may elapse before a tax return containing tax matters for which a reserve has been established is audited and finally resolved. For positions taken in a previously filed tax return or expected to be taken in a future tax return, the Company evaluates each position to determine whether it is more likely than not that the tax position will be sustained upon examination, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is subject to a measurement assessment to determine the amount of benefit to recognize in the Consolidated Statement of Operations and the appropriate reserve to establish, if any. If a tax position does not meet the more-likely-than-not recognition threshold

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

a tax reserve is established and no benefit is recognized. The Company is continually audited by U.S. federal and state as well as foreign tax authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserve for uncertain tax positions of $102 million at December 31, 2016 is properly recorded pursuant to the recognition and measurement provisions of FASB guidance for uncertainty in income taxes.

Legal Matters

General. On an ongoing basis, the Company vigorously defends itself in numerous lawsuits and proceedings and responds to various investigations and inquiries from federal, state, local and international authorities (collectively, ‘‘litigation’’). Litigation may be brought against the Company without merit, is inherently uncertain and always difficult to predict. However, based on its understanding and evaluation of the relevant facts and circumstances, the Company believes that the below-described legal matters and other litigation to which it is a party are not likely, in the aggregate, to have a material adverse effect on its results of operations, financial ~~instruments primarily~~position or cash flows. Under the Separation Agreement between the Company and Viacom Inc., the Company and Viacom Inc. have agreed to ~~modify its~~defend and indemnify the other in certain litigation in which the Company and/or Viacom Inc. is named.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and the number of pending claims, subject to significant fluctuation from period to period. The Company does not report as pending those claims on inactive, stayed, deferred or similar dockets which some jurisdictions have established for claimants who allege minimal or no impairment. As of December 31, 2016, the Company had pending approximately 33,610 asbestos claims, as compared with approximately 36,030 as of December 31, 2015 and 41,100 as of December 31, 2014. During 2016, the Company received approximately 4,160 new claims and closed or moved to an inactive docket approximately 6,580 claims. The Company reports claims as closed when it becomes aware that a dismissal order has been entered by a court or when the Company has reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other factors. In 2016, the Company’s costs for settlement and defense of asbestos claims after insurance and taxes were approximately $48 million. In 2015, as the result of an insurance settlement, insurance recoveries exceeded the Company’s after tax costs for settlement and defense of asbestos claims by approximately $5 million. The Company’s costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds are not always recovered in the same period as the insured portion of the expenses.

Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly increased by exposure to ~~market risks~~asbestos; lung cancer, a cancer which may be caused by various factors, one of which is alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. The predominant number of claims against the Company are non-cancer claims. The Company believes that its reserves and insurance are adequate to cover its asbestos liabilities. This belief is based upon many factors and assumptions, including the number of outstanding claims, estimated average cost per claim, the breakdown of claims by disease type, historic

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

claim filings, costs per claim of resolution and the filing of new claims. While the number of asbestos claims filed against the Company has remained generally flat in recent years, it is difficult to predict future asbestos liabilities, as events and circumstances may occur including, among others, the number and types of claims and average cost to resolve such claims, which could affect the Company’s estimate of its asbestos liabilities.

Market Risk

The Company is exposed to fluctuations in foreign currency exchange rates and interest ~~rates. The~~rates and uses derivative financial instruments to modify this exposure. In accordance with its policy, the Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes.

Foreign Exchange Risk

The Company conducts business in various countries outside the U.S., resulting in exposure to movements in foreign exchange rates when translating from the foreign local currency to the U.S. dollar. In order to hedge anticipated cash flows in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian Dollar, foreign currency forward contracts, for periods generally up to 24 months, are used. Additionally, the Company designates forward contracts used to hedge committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of designated cash flow hedges are initially recorded in other comprehensive income (loss) and reclassified to the statement of operations when the hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows. The change in fair value of the non-designated contracts is included in “Other items, net” in the Consolidated Statements of Operations. The Company manages the use of foreign exchange derivatives centrally.

At December 31, 2016 and 2015, the notional amount of all foreign currency contracts was $433 million and $291 million, respectively, which represents hedges of expected foreign currency cash flows.

Interest Risk

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Credit Risk

The Company’s receivables do not represent significant concentrations of credit risk at December 31, 2016 or 2015, due to the wide variety of customers, markets and geographic areas to which the Company’s products and services are sold.

Related Parties

For a discussion of related parties, see Note 7 to the consolidated financial statements.

Recent Pronouncements and Adoption of New Accounting Standards

See Note 1 to the consolidated financial statements.



Item 8.	Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

The following Consolidated Financial Statements and schedule of the registrant and its subsidiaries are submitted herewith as part of this report:



		Reference (Page/s)
Item 15(a)(1) Financial Statements:
1.	Management’s Report on Internal Control Over Financial Reporting	II-43
2.	Report of Independent Registered Public Accounting Firm	II-44
3.	Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014	II-45
4.	Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014	II-46
5.	Consolidated Balance Sheets at December 31, 2016 and 2015	II-47
6.	Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014	II-48
7.	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2016, 2015 and 2014	II-49
8.	Notes to Consolidated Financial Statements	II-50
Item 15(a)(2) Financial Statement Schedule:
	II. Valuation and Qualifying Accounts	F-1

All other Schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule.

MANAGEMENT’ S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the effectiveness of internal control over financial reporting, as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act. Our internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.



		CBS CORPORATION

		By:	/s/ Leslie Moonves
			Leslie Moonves Chairman of the Board, President and Chief Executive Officer

		By:	/s/ Joseph R. Ianniello
			Joseph R. Ianniello Chief Operating Officer

		By:	/s/ Lawrence Liding
			Lawrence Liding Executive Vice President, Controller and Chief Accounting Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of CBS Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity present fairly, in all material respects, the financial position of CBS Corporation and its subsidiaries at December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

New York, New York

February 17, 2017

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)



	Year Ended December 31,
	2016			2015			2014
Revenues	$	13,166		$	12,671		$	12,519
Costs and expenses:
Operating	7,956			7,911			7,689
Selling, general and administrative	2,124			1,961			1,971
Depreciation and amortization	225			235			250
Pension settlement charge (Note 15)	211			—			—
Restructuring and merger and acquisition-related costs (Note 5)	38			45			19
Other operating items, net	(9		)	(139		)	—
Total costs and expenses	10,545			10,013			9,929
Operating income	2,621			2,658			2,590
Interest expense	(411		)	(392		)	(363		)
Interest income	32			24			13
Loss on early extinguishment of debt	—			—			(352		)
Other items, net	(12		)	(26		)	(30		)
Earnings from continuing operations before income taxes and equity in loss of investee companies	2,230			2,264			1,858
Provision for income taxes	(628		)	(676		)	(659		)
Equity in loss of investee companies, net of tax	(50		)	(34		)	(48		)
Net earnings from continuing operations	1,552			1,554			1,151
Net earnings (loss) from discontinued operations, net of tax (Note 4)	(291		)	(141		)	1,808
Net earnings	$	1,261		$	1,413		$	2,959
Basic net earnings (loss) per common share:
Net earnings from continuing operations	$	3.50		$	3.21		$	2.09
Net earnings (loss) from discontinued operations	$	(.66	)	$	(.29	)	$	3.29
Net earnings	$	2.84		$	2.92		$	5.38

Diluted net earnings (loss) per common share:
Net earnings from continuing operations	$	3.46		$	3.18		$	2.05
Net earnings (loss) from discontinued operations	$	(.65	)	$	(.29	)	$	3.22
Net earnings	$	2.81		$	2.89		$	5.27

Weighted average number of common shares outstanding:
Basic	444			484			550
Diluted	448			489			561

Dividends per common share	$	.66		$	.60		$	.54

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)



	Year Ended December 31,
	2016			2015			2014
Net earnings	$	1,261		$	1,413		$	2,959
Other comprehensive income (loss) from continuing operations, net of tax:
Cumulative translation adjustments	(1		)	(5		)	(9		)
Net actuarial gain (loss) and prior service costs (Note 15)	4			(30		)	(163		)
Unrealized loss on securities	—			—			(3		)
Other comprehensive income (loss) from continuing operations, net of tax	3			(35		)	(175		)
Other comprehensive income from discontinued operations, before reclassifications	—			—			15
Reclassification from accumulated other comprehensive income (loss) from discontinued operations to net earnings	—			—			(30		)
Total other comprehensive income (loss), net of tax	3			(35		)	(190		)
Total comprehensive income	$	1,264		$	1,378		$	2,769

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)



	At December 31,
	2016			2015
ASSETS
Current Assets:
Cash and cash equivalents	$	598		$	317
Receivables, less allowances of $60 (2016) and $59 (2015)	3,314			3,375
Programming and other inventory (Note 6)	1,427			1,270
Prepaid income taxes	30			101
Prepaid expenses	185			133
Other current assets	204			228
Current assets of discontinued operations (Note 4)	305			323
Total current assets	6,063			5,747
Property and equipment	2,935			2,880
Less accumulated depreciation and amortization	1,694			1,627
Net property and equipment (Note 2)	1,241			1,253
Programming and other inventory (Note 6)	2,439			1,957
Goodwill (Note 3)	4,864			4,789
Intangible assets (Note 3)	2,633			2,639
Other assets (Note 1)	2,707			2,633
Assets of discontinued operations (Note 4)	4,291			4,747
Total Assets	$	24,238		$	23,765
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	148		$	159
Accrued expenses	632			561
Accrued compensation	369			306
Participants’ share and royalties payable	1,024			1,013
Program rights	290			372
Deferred revenues	152			294
Commercial paper (Note 9)	450			—
Current portion of long-term debt (Note 9)	23			222
Other current liabilities	465			490
Current liabilities of discontinued operations (Note 4)	155			143
Total current liabilities	3,708			3,560
Long-term debt (Note 9)	8,902			8,226
Participants’ share and royalties payable	1,322			1,318
Pension and postretirement benefit obligations (Note 15)	1,769			1,575
Deferred income tax liabilities, net (Note 14)	590			495
Other liabilities	1,807			1,889
Liabilities of discontinued operations (Note 4)	2,451			1,139

Commitments and contingencies (Note 16)

Stockholders’ Equity:
Class A Common Stock, par value $.001 per share; 375 shares authorized; 38 (2016 and 2015) shares issued	—			—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 829 (2016) and 826 (2015) shares issued	1			1
Additional paid-in capital	43,913			44,055
Accumulated deficit	(19,257		)	(20,518		)
Accumulated other comprehensive loss (Note 12)	(767		)	(770		)
	23,890			22,768
Less treasury stock, at cost; 455 (2016) and 401 (2015) Class B Shares	20,201			17,205
Total Stockholders’ Equity	3,689			5,563
Total Liabilities and Stockholders’ Equity	$	24,238		$	23,765

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	Year Ended December 31,
	2016			2015			2014
Operating Activities:
Net earnings	$	1,261		$	1,413		$	2,959
Less: Net earnings (loss) from discontinued operations	(291		)	(141		)	1,808
Net earnings from continuing operations	1,552			1,554			1,151
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities from continuing operations:
Depreciation and amortization	225			235			250
Deferred tax provision	144			445			592
Stock-based compensation	165			157			137
Net gain on disposition and write-down of assets	(18		)	(139		)	(11		)
Equity in loss of investee companies, net of tax and distributions	53			37			57
Change in assets and liabilities, net of investing and financing activities
Decrease (increase) in receivables	36			(376		)	(599		)
Increase in inventory and related program and participation liabilities, net	(804		)	(498		)	(214		)
(Increase) decrease in other assets	(85		)	23			53
Increase (decrease) in accounts payable and accrued expenses	23			(220		)	(152		)
Increase (decrease) in pension and postretirement benefit obligations	205			(46		)	(34		)
Increase (decrease) in income taxes	94			(56		)	(298		)
(Decrease) increase in deferred revenue	(137		)	66			(47		)
Other, net	1			7			31
Net cash flow provided by operating activities from continuing operations	1,454			1,189			916
Net cash flow provided by operating activities from discontinued operations	231			205			359
Net cash flow provided by operating activities	1,685			1,394			1,275
Investing Activities:
Acquisitions	(92		)	(12		)	(2		)
Capital expenditures	(196		)	(171		)	(178		)
Investments in and advances to investee companies	(81		)	(98		)	(98		)
Proceeds from sale of investments	—			80			12
Proceeds from dispositions	20			383			4
Other investing activities	15			(3		)	(4		)
Net cash flow (used for) provided by investing activities from continuing operations	(334		)	179			(266		)
Net cash flow used for investing activities from discontinued operations	(6		)	(25		)	(335		)
Net cash flow (used for) provided by investing activities	(340		)	154			(601		)
Financing Activities:
Proceeds from (repayments of) short-term debt borrowings, net	450			(616		)	141
Proceeds from issuance of senior notes	684			1,959			1,728
Repayment of notes and debentures	(199		)	—			(1,152		)
Proceeds from debt borrowings of CBS Radio (2016) and Outdoor Americas (2014)	1,452			—			1,569
Repayment of debt borrowings of CBS Radio	(110		)	—			—
Proceeds from IPO of Outdoor Americas	—			—			613
Payment of capital lease obligations	(18		)	(17		)	(17		)
Dividends	(288		)	(300		)	(292		)
Purchase of Company common stock	(2,997		)	(2,813		)	(3,595		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(58		)	(96		)	(146		)
Proceeds from exercise of stock options	21			142			283
Excess tax benefit from stock-based compensation	17			88			243
Other financing activities	—			—			(18		)
Net cash flow used for financing activities	(1,046		)	(1,653		)	(643		)
Net increase (decrease) in cash and cash equivalents	299			(105		)	31
Cash and cash equivalents at beginning of year (includes $6 (2016 and 2015) and $33 (2014) of discontinued operations cash)	323			428			397
Cash and cash equivalents at end of year (includes $24 (2016) and $6 (2015 and 2014) of discontinued operations cash)	$	622		$	323		$	428

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)



	Year Ended December 31,
	2016					2015					2014
	Shares		Amount			Shares		Amount			Shares		Amount
Class A Common Stock:
Balance, beginning of year	38		$	—		38		$	—		39		$	—
Conversion of A shares into B shares	—		—			—		—			(1	)	—
Balance, end of year	38		—			38		—			38		—
Class B Common Stock:
Balance, beginning of year	826		1			818		1			801		1
Conversion of A shares into B shares	—		—			—		—			1		—
Restricted stock unit vests	3		—			4		—			5		—
Exercise of stock options	1		—			6		—			14		—
Retirement of treasury stock	(1	)	—			(2	)	—			(3	)	—
Balance, end of year	829		1			826		1			818		1
Additional Paid-In Capital:
Balance, beginning of year			44,055					44,041					43,474
Stock-based compensation			177					174					168
Tax benefit related to employee stock-based transactions			12					87					246
Exercise of stock options			21					142					282
Retirement of treasury stock			(58		)			(96		)			(146		)
Dividends			(294		)			(293		)			(296		)
Gain on Outdoor Americas IPO			—					—					313
Balance, end of year			43,913					44,055					44,041
Accumulated Deficit:
Balance, beginning of year			(20,518		)			(21,931		)			(24,890		)
Net earnings			1,261					1,413					2,959
Balance, end of year			(19,257		)			(20,518		)			(21,931		)
Accumulated Other Comprehensive Loss:
Balance, beginning of year			(770		)			(735		)			(545		)
Other comprehensive income (loss)			3					(35		)			(190		)
Balance, end of year			(767		)			(770		)			(735		)
Treasury Stock, at cost:
Balance beginning of year	401		(17,205		)	349		(14,406		)	244		(8,074		)
Class B Common Stock purchased	54		(2,997		)	52		(2,800		)	60		(3,612		)
Outdoor Americas Split-Off	—		—			—		—			45		(2,721		)
Shares paid for tax withholding for stock-based compensation	1		(58		)	2		(96		)	3		(146		)
Issuance of stock for deferred compensation	—		1			—		1			—		1
Retirement of treasury stock	(1	)	58			(2	)	96			(3	)	146
Balance, end of year	455		(20,201		)	401		(17,205		)	349		(14,406		)
Total Stockholders’ Equity			$	3,689				$	5,563				$	6,970

See notes to consolidated financial statements.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollars in millions, except per share amounts)

1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Discontinued Operations—On February 2, 2017, the Company entered into an agreement with Entercom Communications Corp. to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of the Company’s Class B Common Stock for shares of CBS Radio, which will then be immediately converted into shares of Entercom common stock at the time of the merger. Beginning in the fourth quarter of 2016, CBS Radio was classified as held for sale and has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented (See Note 4). During 2014, the Company completed the disposition of CBS Outdoor Americas Inc., which was previously a subsidiary of the Company and has been renamed OUTFRONT Media, Inc. (“Outdoor Americas”). Outdoor Americas has been presented as a discontinued operation in the Company’s consolidated financial statements. In addition, certain businesses that were previously disposed of by the Company prior to January 1, 2002, were accounted for as discontinued operations in accordance with accounting rules in effect prior to 2002.

Reclassifications—Certain amounts reported for prior years have been reclassified to conform to the current year’s presentation.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Property and Equipment—Property and equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives as follows:



Buildings and building improvements	10 to 40 years
Leasehold Improvements	Shorter of lease term or useful life
Equipment and other (including capital leases)	3 to 20 years

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Amounts attributable to transactions arising from collaborative arrangements between participants were not material to the Company’s consolidated financial statements for all periods presented.

Advertising—Advertising costs are expensed as incurred. The Company incurred total advertising expenses of $373 million in 2016, $338 million in 2015 and $377 million in 2014.

Interest—Costs associated with the refinancing or issuance of debt, as well as debt discounts or premiums, are recorded as interest over the term of its related debt. The Company may enter into interest rate ~~swaps~~exchange agreements; the amount to be paid or received under such agreements is accrued and recognized over the life of the agreements as an adjustment to interest expense.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Other Items, net—For all periods presented, “Other items, net” primarily consists of foreign exchange gains and losses.

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted EPS.



Year Ended December 31,	2016	2015	2014
(in millions)
Weighted average shares for basic EPS	444	484	550
Dilutive effect of shares issuable under stock-based compensation plans	4	5	11
Weighted average shares for diluted EPS	448	489	561

Adoption of New Accounting Standards

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

about the entity’s ability to continue as a going concern. The adoption of this guidance did not have an effect on the Company’s consolidated financial statements.

Simplifying the Accounting for Measurement Period Adjustments

Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent)

Recent Pronouncements

Simplifying the Accounting for Goodwill Impairment

In January 2017, the FASB issued amended guidance to simplify the accounting for goodwill impairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective for interim and annual period beginning after December 15, 2019, with early adoption permitted for any impairment tests performed after January 1, 2017.

Clarifying the Definition of a Business

In January 2017, the FASB issued amended guidance on the accounting for business combinations which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would not represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The amended guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.

Intra-Entity Transfers of Assets Other than Inventory

In October 2016, the FASB issued amended guidance on the accounting for income taxes, which eliminates the exception in existing guidance which defers the recognition of the tax effects of intra-entity asset transfers other than inventory until the transferred asset is sold to a third party. Rather, the amended guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted as of the beginning of an annual reporting period. The Company is currently assessing the impact of this guidance on its consolidated financial statements.

Statement of Cash Flows: Classification of Cash Receipts and Cash Payments

In August 2016, the FASB issued amended guidance which clarifies how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The new guidance is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.

Improvements to Employee Share-Based Payment Accounting

In March 2016, the FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits will be classified with other income tax cash flows in operating activities. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification. The Company expects that the adoption of this guidance will introduce volatility into the Company’s income tax provision, which will be impacted by the timing of employee exercises and changes in the Company’s stock price. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted.

Leases

In February 2016, the FASB issued new guidance on the accounting for leases, which supersedes previous lease guidance. Under this guidance, for all leases with terms in excess of one year, including operating leases, the Company

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance. Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed. The Company is currently evaluating the impact of this guidance on its consolidated balance sheets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted.

Revenue from Contracts with Customers

In May 2014, the FASB issued guidance on the recognition of revenues which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. The Company has identified the predominant changes to its accounting policies resulting from the application of this guidance and is in the process of quantifying the impact on its consolidated financial statements. The cumulative effect of the initial adoption will be reflected as an adjustment to the opening balance of retained earnings as of the date of application of the guidance; however, the Company does not expect this guidance to have a significant impact on the Company’s consolidated financial statements on an annual basis. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016.

2) PROPERTY AND EQUIPMENT



At December 31,	2016		2015
Land	$	195	$	195
Buildings	733		696
Capital leases^(a)	164		162
Equipment and other	1,843		1,827
	2,935		2,880
Less accumulated depreciation and amortization	1,694		1,627
Net property and equipment	$	1,241	$	1,253

(a) Accumulated amortization of capital leases was $98 million and $89 million at December 31, 2016 and 2015, respectively.



Year Ended December 31,	2016		2015		2014
Depreciation expense, including capitalized lease amortization ^(a)	$	205	$	212	$	218

(a) Amortization expense related to capital leases was $17 million in 2016 and $16 million in each of the years 2015 and 2014.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

3) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and Intangible Assets Impairment Test

For its annual impairment test, the Company performs qualitative assessments for each reporting unit and market with FCC licenses that management estimates have fair values that significantly exceed their respective carrying values. In selecting markets and reporting units for a qualitative assessment, the Company also considers the duration of time since a quantitative test was performed. For the 2016 annual impairment test, the Company performed qualitative assessments for seven reporting units and three television markets. For each reporting unit, the Company weighed the relative impact of factors that are specific to the reporting unit as well as industry and macroeconomic factors. For each television market, the Company weighed the relative impact of market-specific and macroeconomic factors. Based on the qualitative assessments, considering the aggregation of the relevant factors, the Company concluded that it is not more likely than not that the fair values of these reporting units and the fair value of FCC licenses within each market are less than their respective carrying values. Therefore, performing the quantitative impairment test was unnecessary.

For FCC licenses in the remaining television markets, the Company performed the quantitative impairment test that compares the estimated fair value of the FCC licenses by geographic market with their respective carrying values. The estimated fair value of each FCC license is computed using the Greenfield Discounted Cash Flow Method (‘‘Greenfield Method’’), which attempts to isolate the income that is attributable to the license alone. The Greenfield Method is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method adds the present value of the estimated annual cash flows of the start-up station over a projection period to the residual value at the end of the projection period. The annual cash flows over the projection period include assumptions for overall advertising revenues in the relevant geographic market, the start-up station’s operating costs and capital expenditures, and a three-year build-up period for the start-up station to reach a normalized state of operations, which reflects the point at which it achieves an average market share. The overall market advertising revenue in the subject market is estimated based on recent industry projections. Operating costs and capital expenditures are estimated based on both industry and internal data. The residual value is calculated using a perpetual nominal growth rate, which is based on projected long-range inflation in the U.S. and long-term industry projections. The

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

discount rate is determined based on the average of the weighted average cost of capital of comparable entities in the broadcast industry. For each television station, the discount rate used for 2016 was 8.0% and the perpetual nominal growth rate was 2.5%. For the 2016 quantitative impairment test, the Company concluded that the estimated fair values of FCC licenses in each of the 11 television markets for which the quantitative test was performed exceeded their respective carrying values.

For 2016, the Company performed the quantitative goodwill impairment test for the CBS Sports Network reporting unit. The first step of the goodwill impairment test examines whether the carrying value of a reporting unit exceeds its fair value. If the carrying value exceeds the fair value, the second step of the test compares the implied fair value of a reporting unit’s goodwill with the carrying value of its goodwill to determine the amount of impairment charge, if any. The estimated fair value of each reporting unit is computed based upon the present value of future cash flows (“Discounted Cash Flow Method”) and the traded or transaction values of comparable businesses (“Market Comparable Method”). The Discounted Cash Flow Method and Market Comparable Method resulted in similar estimated fair values. The Discounted Cash Flow Method includes the Company’s assumptions for growth rates, operating margins and capital expenditures for the projection period plus the residual value of the business at the end of the projection period. The estimated growth rates, operating margins and capital expenditures for the projection period are based on the Company’s internal forecasts of future performance as well as historical trends. The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections and for 2016 was 2.0%. The discount rate is determined based on the average of the weighted average cost of capital of comparable entities and for 2016was9.0%

For the 2016 annual impairment test, the Company concluded that the estimated fair value of the CBS Sports Network reporting unit exceeded its carrying value and therefore the second step of the impairment test was unnecessary.

Transactions

In 2015, the Company disposed of internet businesses in China for $383 million, which resulted in gains of $139 million. The assets associated with the disposed businesses primarily consisted of goodwill of $217 million.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

For the years ended December 31, 2016 and 2015, the changes in the book value of goodwill by segment were as follows:



	Balance at											Balance at
	December 31, 2015				Acquisitions			Dispositions				December 31, 2016
Entertainment:
Goodwill		$	9,250		$	52	^(a)	$	(2	)	^(b)		$	9,300
Accumulated impairment losses		(6,294		)	—			—					(6,294		)
Goodwill, net of impairment		2,956			52			(2		)			3,006
Cable Networks:
Goodwill		480			—			—					480
Accumulated impairment losses		—			—			—					—
Goodwill, net of impairment		480			—			—					480
Publishing:
Goodwill		406			25		^(c)	—					431
Accumulated impairment losses		—			—			—					—
Goodwill, net of impairment		406			25			—					431
Local Media:
Goodwill		8,007			—			—					8,007
Accumulated impairment losses		(7,060		)	—			—					(7,060		)
Goodwill, net of impairment		947			—			—					947
Total:
Goodwill		18,143			77			(2		)			18,218
Accumulated impairment losses		(13,354		)	—			—					(13,354		)
Goodwill, net of impairment		$	4,789		$	77		$	(2	)			$	4,864



	Balance at								Balance at
	December 31, 2014				Dispositions				December 31, 2015
Entertainment:
Goodwill		$	9,467		$	(217	)	^(b)		$	9,250
Accumulated impairment losses		(6,294		)	—					(6,294		)
Goodwill, net of impairment		3,173			(217		)			2,956
Cable Networks:
Goodwill		480			—					480
Accumulated impairment losses		—			—					—
Goodwill, net of impairment		480			—					480
Publishing:
Goodwill		406			—					406
Accumulated impairment losses		—			—					—
Goodwill, net of impairment		406			—					406
Local Media:
Goodwill		8,007			—					8,007
Accumulated impairment losses		(7,060		)	—					(7,060		)
Goodwill, net of impairment		947			—					947
Total:
Goodwill		18,360			(217		)			18,143
Accumulated impairment losses		(13,354		)	—					(13,354		)
Goodwill, net of impairment		$	5,006		$	(217	)			$	4,789

(a) Amount reflects the acquisition of a sports-focused digital media business.

(b) Amount reflects the disposition of internet businesses in China.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The Company’s intangible assets were as follows:



			Accumulated
At December 31, 2016	Gross		Amortization			Net
Intangible assets subject to amortization:
Trade names	$	188	$	(41	)	$	147
Other intangible assets	147		(107		)	40
Total intangible assets subject to amortization	335		(148		)	187
FCC licenses	2,446		—			2,446
Total intangible assets	$	2,781	$	(148	)	$	2,633



			Accumulated
At December 31, 2015	Gross		Amortization			Net
Intangible assets subject to amortization:
Trade names	$	211	$	(59	)	$	152
Other intangible assets	161		(120		)	41
Total intangible assets subject to amortization	372		(179		)	193
FCC licenses	2,446		—			2,446
Total intangible assets	$	2,818	$	(179	)	$	2,639

Amortization expense was as follows:



Year Ended December 31,	2016			2015			2014
Amortization expense		$	20		$	23		$	32

The Company expects its aggregate annual amortization expense for existing intangible assets subject to amortization for each of the years, 2017 through 2021, to be as follows:



	2017			2018			2019			2020			2021
Future amortization expense		$	19		$	18		$	18		$	15		$	13

4) DISCONTINUED OPERATIONS

On February 2, 2017, the Company entered into an agreement with Entercom Communications Corp. to combine the Company’s radio business, CBS Radio, with Entercom in a merger to be effected through a Reverse Morris Trust transaction, which is expected to be tax-free to CBS Corp. and its stockholders. In connection with this transaction, the Company intends to split-off CBS Radio through an exchange offer, in which the Company’s stockholders may elect to exchange shares of the Company’s Class B Common Stock for shares of CBS Radio, which will then be immediately converted into shares of Entercom common stock at the time of the merger. This transaction is subject to customary approvals and closing conditions. The Company expects to complete the transaction during the second half of 2017. CBS Radio has been presented as a discontinued operation in the Company’s consolidated financial statements for all periods presented.

During 2014, the Company completed the disposition of Outdoor Americas. Outdoor Americas has been presented as a discontinued operation in the Company’s consolidated financial statements. On April 2, 2014, Outdoor Americas completed an initial public offering (“Outdoor IPO”) through which it sold approximately 19% of its common stock. On July 16, 2014, the Company completed the disposition of its 81% ownership of Outdoor Americas common stock through a tax-free split-off (the “Split-Off”) through which the Company accepted 44.7 million shares of CBS Corp. Class B Common Stock from its stockholders in exchange for the 97.0 million shares of Outdoor Americas common stock that it owned. In aggregate, the Company received $4.76 billion from the disposition of Outdoor Americas, including cash from the Outdoor IPO and proceeds from Outdoor Americas’ debt issuance, which totaled $2.04 billion, and the fair value of the shares of CBS. Corp. Class B Common Stock that were accepted in the Split-Off of $2.72

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

billion. The Split-Off resulted in a gain of $1.56 billion for the year ended December 31, 2014 which is included ~~within~~in net earnings from discontinued operations and is calculated as follows:



Fair value of CBS Corp. Class B Common Stock accepted	$	2,721
(44,723,131 shares at $60.85 per share on July 16, 2014)
Carrying value of Outdoor Americas	(1,162		)
Accumulated other comprehensive income	30
Transaction costs	(32		)
Net gain on Split-Off of Outdoor Americas	$	1,557

The Split-Off was a tax-free transaction and therefore, there is no tax impact on the gain.

The following tables set forth details of net earnings (loss) from discontinued operations for the years ended December 31, 2016, 2015 and 2014. Net earnings (loss) from discontinued operations included the operating results of CBS Radio for all periods presented. For 2016, net loss from discontinued operations also included a charge of $36 million from the resolution of a tax matter in a foreign jurisdiction relating to a previously disposed business that was accounted for as a discontinued operation. For 2015 and 2014, net earnings (loss) from discontinued operations also included decreases to the guarantee liability associated with the 2013 disposition of the Company’s outdoor advertising business in Europe (“Outdoor Europe”) as a result of a reduction to the risk associated with the guarantee. For 2014, net earnings from discontinued operations also included the operating results and the gain on the Split-Off of Outdoor Americas.



Year Ended December 31, 2016	CBS Radio			Other			Total
Revenues from discontinued operations	$	1,220		$	—		$	1,220
Costs and expenses:
Operating	397			—			397
Selling, general and administrative	497			—			497
Depreciation and amortization	26			—			26
Restructuring charges	8			—			8
Impairment charge	444			—			444
Total costs and expenses	1,372			—			1,372
Operating loss	(152		)	—			(152		)
Interest expense	(17		)	—			(17		)
Other income	2			—			2
Loss from discontinued operations	(167		)	—			(167		)
Income tax provision	(88		)	(36		)	(124		)
Net loss from discontinued operations, net of tax	$	(255	)	$	(36	)	$	(291	)

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)



Year Ended December 31, 2015	CBS Radio			Other			Total
Revenues from discontinued operations	$	1,223		$	—		$	1,223
Costs and expenses:
Operating	415			—			415
Selling, general and administrative	500			(17		)	483
Depreciation and amortization	29			—			29
Restructuring charges	36			—			36
Impairment charge	484			—			484
Total costs and expenses	1,464			(17		)	1,447
Operating income (loss)	(241		)	17			(224		)
Other income	1			—			1
Earnings (loss) from discontinued operations	(240		)	17			(223		)
Income tax benefit (provision)	89			(7		)	82
Net earnings (loss) from discontinued operations, net of tax	$	(151	)	$	10		$	(141	)



Year Ended December 31, 2014	CBS Radio			Outdoor Americas			Other			Total
Revenues from discontinued operations	$	1,295		$	677		$	—		$	1,972
Cost and expenses:
Operating	401			366			—			767
Selling, general and administrative	498			131			(21		)	608
Depreciation and amortization	31			88			—			119
Restructuring charges	7			—			—			7
Impairment charge	52			—			—			52
Total costs and expenses	989			585			(21		)	1,553
Operating income	306			92			21			419
Interest expense	—			(34		)	—			(34		)
Earnings from discontinued operations	306			58			21			385
Income tax provision	(103		)	(18		)	(8		)	(129		)
Net earnings from discontinued operations, net of tax	203			40			13			256
Gain on disposal	—			1,557			—			1,557
Less: Net earnings from discontinued operations attributable to noncontrolling interest, net of tax	—			5			—			5
Net earnings from discontinued operations attributable to CBS Corp.	$	203		$	1,592		$	13		$	1,808

During the year ended December 31, 2016, the Company recorded a pretax noncash impairment charge of $444 million ($427 million, net of tax) to reduce the carrying value of CBS Radio’s goodwill by $408 million ($405 million, net of tax) and FCC licenses in 11 radio markets by $36 million ($22 million, net of tax). The estimated fair value of FCC licenses was determined in connection with the Company’s annual impairment test, using the Greenfield Method (See Note 3). The goodwill impairment charge was determined based on the Company’s annual impairment test, which was performed at the reporting unit level (See Note 3). The carrying value of CBS Radio after the impairment charge of approximately $1.9 billion reflects the Company’s estimate of the value of the planned merger with Entercom. This estimated transaction value was derived by multiplying the historical trading multiples of Entercom and other similar companies by the total estimated earnings of the combined entity. The Company believes that this estimated transaction value is currently a better indicator of the transaction value than Entercom’s current stock price. However, the ultimate transaction value will be dependent on Entercom’s trading price at the time of the closing of the transaction. Entercom’s opening stock price on the day the transaction was announced indicates an estimated fair value of CBS Radio’s equity of approximately $1.7 billion. A 10% increase or decrease in the stock price would result in a change in the fair value of approximately $175 million.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

During the year ended December 31, 2015, the Company recorded a pretax noncash impairment charge of $484 million ($297 million, net of tax) to reduce the carrying value of radio FCC licenses in 18 markets to their fair value. In December 31, 2014, the Company completed a radio station swap with Beasley Broadcast Group, Inc. through which the Company exchanged 13 of its radio stations in Tampa and Charlotte as well as one radio station in Philadelphia, for two radio stations in Philadelphia and three radio stations in Miami. In connection with the radio station swap, the Company recorded a pretax noncash impairment charge of $52 million ($74 million, including a tax provision) to reduce the carrying value of the allocated goodwill.

During the years ended December 31, 2016, 2015 and 2014, in a continued effort to reduce the cost structure of its radio business, the Company initiated restructuring plans at CBS Radio, primarily for the reorganization of certain business operations. As a result, the Company recorded restructuring charges of $8 million, $36 million and $7 million in 2016, 2015 and 2014, respectively, reflecting severance costs and costs associated with exiting contractual obligations.

The following table presents the major classes of assets and liabilities of the Company’s discontinued operations.



At December 31,	2016		2015
Receivables, net	$	244	$	253
Other current assets	61		70
Goodwill	1,285		1,692
Intangible assets	2,832		2,875
Net property and equipment	145		152
Other assets	29		28
Total Assets	$	4,596	$	5,070
Current portion of long-term debt	$	10	$	—
Other current liabilities	145		143
Long-term debt	1,335		—
Deferred income tax liabilities	998		1,014
Other liabilities	118		125
Total Liabilities	$	2,606	$	1,282

CBS Radio Indebtedness

In connection with the Company’s previously announced plans to separate its radio business, in October 2016, CBS Radio borrowed $1.46 billion through a $1.06 billion senior secured term loan due 2023 (“Term Loan”) and the issuance of $400 million of 7.25% senior unsecured notes due 2024 through a private placement. The Term Loan bears interest at a rate equal to 3.50% plus the greater of the London Interbank Offered Rate (“LIBOR”) and 1.00%. During the fourth quarter of 2016, CBS Radio prepaid $100 million of the Term Loan, leaving $960 million outstanding at December 31, 2016.

The Term Loan is part of a credit agreement which also includes a $250 million senior secured revolving credit facility (the “Radio Revolving Credit Facility”) which expires in 2021. Interest on the Radio Revolving Credit Facility is based on either LIBOR or a base rate plus a margin based on CBS Radio’s Consolidated Net Secured Leverage Ratio. The Consolidated Net Secured Leverage Ratio reflects the ratio of CBS Radio’s secured debt (less up to $150 million of cash and cash equivalents) to CBS Radio’s consolidated EBITDA (as defined in the credit agreement). The Radio Revolving Credit Facility requires CBS Radio to maintain a maximum Consolidated Net Secured Leverage Ratio of 4.00 to 1.00. At December 31, 2016, the total outstanding borrowing under the Radio Revolving Credit Facility was $10 million.

This debt is guaranteed by certain subsidiaries of CBS Radio. The Company does not guarantee, or otherwise provide credit support for, the senior notes, Term Loan, or Radio Revolving Credit Facility.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

5) RESTRUCTURING AND MERGER AND ACQUISITION-RELATED COSTS

During the year ended December 31, 2016, in a continued effort to reduce its cost structure, the Company initiated restructuring plans across several of its businesses, primarily for the reorganization of certain business operations. As a result, the Company recorded restructuring charges of $30 million, reflecting $19 million of severance costs and $11 million of costs associated with exiting contractual obligations and other related costs. During the year ended December 31, 2015, the Company recorded restructuring charges of $45 million, reflecting $24 million of severance costs and $21 million of costs associated with exiting contractual obligations and other related costs. During the year ended December 31, 2014, the Company recorded restructuring charges of $19 million, reflecting $11 million of severance costs and $8 million of costs associated with exiting contractual obligations. As of December 31, 2016, the cumulative settlements for the 2016, 2015, and 2014 restructuring charges were $55 million, of which $33 million was for the severance costs and $22 million related to costs associated with exiting contractual obligations. The Company expects to substantially utilize its restructuring reserves by the end of 2018.



	Balance at			2016		2016				Balance at
	December 31, 2015			Charges		Settlements				December 31, 2016
Entertainment		$	19	$	16		$	(15	)		$	20
Cable Networks		—		4			—				4
Publishing		—		1			—				1
Local Media		11		6			(5		)		12
Corporate		1		3			(2		)		2
Total		$	31	$	30		$	(22	)		$	39



	Balance at			2015		2015				Balance at
	December 31, 2014			Charges		Settlements				December 31, 2015
Entertainment		$	6	$	26		$	(13	)		$	19
Local Media		5		19			(13		)		11
Corporate		2		—			(1		)		1
Total		$	13	$	45		$	(27	)		$	31

In 2016, the Company incurred professional fees of $8 million associated with merger and acquisition-related activities.

6) PROGRAMMING AND OTHER INVENTORY



At December 31,	2016		2015
Acquired program rights	$	1,773	$	1,532
Internally produced programming:
Released	1,746		1,261
In process and other	298		392
Publishing, primarily finished goods	49		42
Total programming and other inventory	3,866		3,227
Less current portion	1,427		1,270
Total noncurrent programming and other inventory	$	2,439	$	1,957

The Company expects to amortize approximately $775 million of its released internally produced programming during the year ended December 31, 2017. In addition, while it is difficult to determine the precise timing of the amortization of the remaining released internally produced programming, the Company estimates that substantially all of the December 31, 2016 balance will be amortized over the next three years.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

7) RELATED PARTIES

National Amusements, Inc. National Amusements, Inc. (“NAI”) is the controlling stockholder of CBS Corp. and Viacom Inc. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of NAI, is the Chairman Emeritus of CBS Corp. and the Chairman Emeritus of Viacom Inc. In addition, Ms. Shari Redstone, Mr. Sumner M. Redstone’s daughter, is the president and a director of NAI and the vice chair of the Board of Directors of each of CBS Corp. and Viacom Inc. Mr. David R. Andelman is a director of CBS Corp. and serves as a director of NAI. At December 31, 2016, NAI directly or indirectly owned approximately 79.5% of CBS Corp.’s voting Class A Common Stock and owned approximately 9.5% of CBS Corp.’s Class A Common Stock and non-voting Class B Common Stock on a combined basis. NAI is controlled by Mr. Redstone through the Sumner M. Redstone National Amusements Trust (the “SMR Trust”), which owns 80% of the voting interest of NAI, and such voting interest of NAI held by the SMR Trust is voted solely by Mr. Redstone until his incapacity or death. The SMR Trust provides that in the event of Mr. Redstone’s death or incapacity, voting control of the NAI voting interest held by the SMR Trust will pass to seven trustees, who will include CBS Corporation directors Ms. Shari Redstone and Mr. David R. Andelman. No member of the Company’s management is a trustee of the SMR Trust.

In December 2016, the Company’s Board of Directors received a letter from NAI withdrawing NAI’s September 2016 request that the Company consider a potential combination of the Company and Viacom Inc. The Company has discontinued evaluating such potential transaction.

Viacom Inc. As part of its normal course of business, the Company licenses its television content, leases production facilities and sells advertising spots to various subsidiaries of Viacom Inc. Viacom Inc. also distributes certain of the Company’s television programs in the home entertainment market. The Company’s total revenues from these transactions were $120 million, $176 million and $180 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The Company places advertisements with and leases production facilities from various subsidiaries of Viacom Inc. The total amounts for these transactions were $24 million, $25 million and $19 million for the years ended December 31, 2016, 2015 and 2014, respectively.



At December 31,	2016		2015
Receivables	$	113	$	114
Other assets (Receivables, noncurrent)	35		38
Total amounts due from Viacom Inc.	$	148	$	152

Other Related Parties The Company has equity interests in two domestic television networks and several international joint ventures for television channels, from which the Company earns revenues primarily by selling its television programming. Total revenues earned from sales to these joint ventures were $112 million, $160 million and $122 million for the years ended December 31, 2016, 2015 and 2014, respectively. Total amounts due from these joint ventures were $47 million and $48 million at December 31, 2016 and 2015, respectively.

The Company, through the normal course of business, is involved in transactions with other related parties that have not been material in any of the periods presented.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

8) INVESTMENTS

The Company accounts for investments over which it has significant influence or ownership of more than 20% but less than or equal to 50%, without a controlling interest, under the equity method. Such investments include the Company’s 50% interests in the broadcast network, The CW, and the entertainment cable network, Pop. In addition, the Company has interests in several international television joint ventures including a 49% interest in a joint venture with a subsidiary of AMC Networks Inc., which owns and operates six channels in the United Kingdom and Ireland, including CBS branded channels; a 30% interest in a joint venture with another subsidiary of AMC Networks Inc., which owns and operates six cable and satellite channels in Europe, the Middle East and Africa; a 33% interest in a joint venture with a subsidiary of Ten Network Holdings Limited to provide content to ELEVEN, a digital television channel service in Australia; and a 30% interest in a joint venture with RTL Group which owns and operates two cable channels in Southeast Asia.

At December 31, 2016 and 2015, respectively, the Company had $227 million and $224 million of equity investments that are included in “Other assets” on the Consolidated Balance Sheets.

Investments of 20% or less, over which the Company has no significant influence, that do not have a readily determinable fair value are accounted for under the cost method. At December 31, 2016 and 2015, respectively, the Company had $34 million and $32 million of cost investments that are included in “Other assets” on the Consolidated Balance Sheets.

The Company invested $81 million during the year ended December 31, 2016 and $98 million during each of the years ended December 31, 2015 and 2014 into its equity and cost investments.

For 2016, equity in loss of investee companies, net of tax on the statement of operations included $10 million for the write-down of an international television joint venture to its fair value.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

9) BANK FINANCING AND DEBT

The Company’s debt consists of the following ^(a):



At December 31,	2016		2015
Commercial paper	$	450	$	—
7.625% Senior Debentures due 2016	—		200
1.95% Senior Notes due 2017	399		398
4.625% Senior Notes due 2018	305		309
2.30% Senior Notes due 2019	606		609
5.75% Senior Notes due 2020	499		498
4.30% Senior Notes due 2021	299		299
3.375% Senior Notes due 2022	695		694
7.875% Debentures due 2023	187		186
7.125% Senior Notes due 2023 ^(b)	46		46
3.70% Senior Notes due 2024	596		596
3.50% Senior Notes due 2025	587		585
4.00% Senior Notes due 2026	783		781
2.90% Senior Notes due 2027	683		—
7.875% Senior Debentures due 2030	833		833
5.50% Senior Debentures due 2033	425		425
5.90% Senior Notes due 2040	297		297
4.85% Senior Notes due 2042	485		484
4.90% Senior Notes due 2044	538		538
4.60% Senior Notes due 2045	587		587
Obligations under capital leases	75		83
Total debt ^(c)	9,375		8,448
Less commercial paper	450		—
Less current portion	23		222
Total long-term debt, net of current portion	$	8,902	$	8,226

(a) Unless otherwise noted, the long-term debt instruments are issuances of CBS Corp. and are guaranteed by CBS Operations Inc.

(b) Debt instrument is an issuance of CBS Broadcasting Inc., a wholly owned subsidiary of CBS Corp., and has no guarantor.

(c) At December 31, 2016 and 2015, the senior debt balances included (i) a net unamortized discount of $52 million and $45 million, respectively, (ii) unamortized deferred financing costs of $43 million and $44 million, respectively, and (iii) an increase in the carrying value of the debt ~~attributable~~relating to previously settled fair value hedges of $5 million and $14 million, respectively. The face value of the ~~risk being hedged,~~Company’s total debt was $9.47 billion at December 31, 2016 and $8.52 billion at December 31, 2015.

Long-term debt of $1.35 billion at December 31, 2016 is included in ~~other assets or other liabilities~~discontinued operations on the Consolidated Balance ~~Sheet. Gains or losses~~Sheets (See Note 4).

During July 2016, the Company issued $700 million of 2.90% senior notes due 2027.

During January 2016, the Company repaid its $200 million of outstanding 7.625% senior debentures upon maturity.

For the year ended December 31, 2015, debt issuances were as follows:

January 2015, $600 million 3.50% senior notes due 2025

January 2015, $600 million 4.60% senior notes due 2045

July 2015, $800 million 4.00% senior notes due 2026

The Company used the net proceeds from the 2016 and 2015 issuances for general corporate purposes, including the repurchase of CBS Corp. Class B Common Stock and repayment of short-term borrowings, including commercial paper.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

At December 31, 2016, the Company classified $399 million of debt maturing in July 2017 as long-term debt on the Consolidated Balance Sheet, reflecting its intent and ability to refinance this debt on a long-term basis.

At December 31, 2016, the Company’s scheduled maturities of long-term debt at face value, excluding capital leases, were as follows:



																2022 and
	2017			2018			2019			2020			2021			Thereafter
Long-term debt		$	400		$	300		$	600		$	500		$	300	$	6,840

Commercial Paper

At December 31, 2016 the Company had $450 million of outstanding commercial paper borrowings under its $2.5 billion commercial paper program, at a weighted average interest rate ~~swaps~~of 0.98% and with remaining maturities of less than 45 days. There were no outstanding commercial paper borrowings at December 31, 2015.

Credit Facility

During June 2016, the Company amended and restated its $2.5 billion revolving credit facility (the “Credit Facility”). The amended Credit Facility expires in June 2021 and contains provisions that are ~~recognized within~~substantially similar to the previous credit facility, which was due to expire in December 2019. The Company, at its option, may also borrow in certain foreign currencies up to specified limits under the Credit Facility. Borrowing rates under the Credit Facility are determined at the Company’s option at the time of each borrowing and are based generally on the prime rate in the U.S. or LIBOR plus a margin based on the Company’s senior unsecured debt rating. The Company pays a facility fee based on the total amount of the commitments.

The Credit Facility requires the Company to maintain a maximum Consolidated Leverage Ratio of 4.5x at the end of each quarter as further described in the Credit Facility. At December 31, 2016, the Company’s Consolidated Leverage Ratio was approximately 2.9x.

The Consolidated Leverage Ratio reflects the ratio of the Company’s indebtedness from continuing operations, adjusted to exclude certain capital lease obligations, at the end of a quarter, to the Company’s Consolidated EBITDA for the trailing four consecutive quarters. Consolidated EBITDA is defined in the Credit Facility as operating income plus interest ~~expense.~~income and before depreciation, amortization and certain other noncash items.

10) FINANCIAL INSTRUMENTS

The carrying value of financial instruments approximates fair value, except for notes and debentures, which are not recorded at fair value. At December 31, 2016 and 2015, the carrying value of the Company’s senior debt was $8.85 billion and $8.37 billion, respectively, and the fair value, which is estimated based on quoted market prices for similar liabilities (Level 2) and includes accrued interest, was $9.51 billion and $8.78 billion, respectively.

The Company uses derivative financial instruments primarily to modify its exposure to market risks from fluctuations in foreign currency exchange rates. The Company does not use derivative instruments unless there is an underlying exposure and, therefore, the Company does not hold or enter into derivative financial instruments for speculative trading purposes.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

Foreign Exchange Contracts

Foreign exchange forward contracts have principally been used to hedge projected cash flows, ~~generally within the next twelve months,~~ in currencies such as the British Pound, the Euro, the Canadian Dollar and the Australian ~~Dollar.~~Dollar, generally for periods up to 24 months. The Company designates foreign exchange forward contracts used to hedge ~~projected future television production costs~~committed and forecasted foreign currency transactions as cash flow hedges. Gains or losses on the effective portion of designated cash flow hedges are initially recorded in other comprehensive income (loss) and reclassified to the statement of operations when the hedged item is recognized. Additionally, the Company enters into non-designated forward contracts to hedge non-U.S. dollar denominated cash flows. ~~The change in fair value of the non-designated contracts is included in “Other items, net” in the Consolidated Statements of Operations.~~

At December 31, ~~2014~~2016 and ~~2013,~~2015, the notional amount of all foreign currency contracts was ~~$152~~$433 million and ~~$136~~$291 million, ~~respectively, which represents hedges of expected foreign currency cash flows.~~respectively.

Interest Rate Swaps

~~II-58~~Gains recognized on derivative financial instruments were as follows:

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~



Year Ended December 31,	2016			2015			Financial Statement Account
Non-designated foreign exchange contracts		$	33		$	22	Other items, net

Designated interest rate swaps		$	—		$	7	Interest expense

The fair value of the Company’s derivative instruments ~~and the related activity~~ was not material to the Consolidated Balance Sheets ~~and Consolidated Statements of Operations~~ for any of the periods presented.

The Company’s receivables do not represent significant concentrations of credit risk at December 31, ~~2014~~2016 and ~~2013,~~2015, due to the wide variety of customers, markets and geographic areas to which the Company’s products and services are sold.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

11) FAIR VALUE MEASUREMENTS

The following tables set forth the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, ~~2014~~2016 and ~~2013.~~2015. These assets and liabilities have been categorized according to the three-level fair value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.


At December 31, 2014	Level 1		Level 2		Level 3		Total
At December 31, 2016									Level 1		Level 2		Level 3		Total
Assets:
Investments	$	80	$	—	$	—	$	80
Foreign currency hedges	—		6		—		6		$	—	$	34	$	—	$	34
Total Assets	$	80	$	6	$	—	$	86	$	—	$	34	$	—	$	34
Liabilities:							$	—							$	—
Deferred compensation	$	—	$	307	$	—	$	307	$	—	$	347	$	—	$	347
Foreign currency hedges	—		2		—		2		—		1		—		$	1
Total Liabilities	$	—	$	309	$	—	$	309	$	—	$	348	$	—	$	348


At December 31, 2013	Level 1		Level 2		Level 3		Total
At December 31, 2015									Level 1		Level 2		Level 3		Total
Assets:
Investments	$	83	$	—	$	—	$	83
Foreign currency hedges	—		3		—		3		$	—	$	13	$	—	$	13
Total Assets	$	83	$	3	$	—	$	86	$	—	$	13	$	—	$	13
Liabilities:							$	—							$	—
Deferred compensation	$	—	$	268	$	—	$	268	$	—	$	312	$	—	$	312
Foreign currency hedges	—		4		—		4
Total Liabilities	$	—	$	272	$	—	$	272	$	—	$	312	$	—	$	312

~~The fair value of investments is determined based on publicly quoted market prices in active markets.~~ The fair value of foreign currency hedges is determined based on the present value of future cash flows using observable inputs including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based on the fair value of the investments elected by employees.

In connection with the disposal of Outdoor Europe in 2013, the Company recorded a pretax charge of $40 million in net earnings (loss) from discontinued operations, for the estimated fair value of guarantees, which historically have been intercompany but upon the closing of the transaction became third-party guarantees. The fair value of guarantee liabilities reflected the premium that would be required to issue such guarantee in a standalone arm’s length transaction and was calculated based on an assessment of the probability of the primary obligor's default under the obligation,

~~II-59~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

~~discounted to its present value (Level 3). At December 31, 2014, the guarantee liabilities were reduced to $28 million upon the expiration or settlement of obligations under the guarantees.~~

During 2014, in connection with a radio station swap, the Company recorded a pretax noncash impairment charge of $52 million to reduce the carrying value of the allocated goodwill to its fair value using other nonobservable inputs (Level 3). The fair value of the transaction was determined based on a valuation of comparable assets in the same geographic markets.

12) STOCKHOLDERS’ EQUITY

In general, CBS Corp. Class A Common Stock and CBS Corp. Class B Common Stock have the same economic rights; however, holders of CBS Corp. Class B Common Stock do not have any voting rights, except as required by law. Holders of CBS Corp. Class A Common Stock are entitled to one vote per share with respect to all matters on which the holders of CBS Corp. Common Stock are entitled to vote.

Dividends—On July 28, 2016, the Company announced that its Board of Directors approved a 20% increase to the quarterly cash dividend on its Class A and Class B Common Stock to $.18 from $.15 per share. The Company declared a quarterly cash dividend on its Class A and Class B Common Stock during each of the four quarters of ~~2014, 2013,~~2016, 2015, and ~~2012.~~2014. For the years ended December 31, ~~2014, 2013~~2016, 2015 and ~~2012,~~2014, the Company declared total per share dividends of ~~$.54, $.48,~~$.66, $.60, and ~~$.44,~~$.54, respectively, resulting in total annual dividends of ~~$296~~$294 million, ~~$295~~$293 million ~~and $287~~and$296 million, respectively. Dividends have been recorded as a reduction to additional paid-in capital as the Company has an accumulated deficit balance.

Purchase of Company Stock—On July 28, 2016, the Company announced that its Board of Directors approved an increase to the Company’s share repurchase program to a total availability of $6.0 billion. During ~~2014,~~2016, the Company repurchased ~~60.3~~54.3 million shares of CBS Corp. Class B Common Stock under its share repurchase program for ~~$3.61~~$3.0 billion, at an average cost of ~~$59.88~~$55.15 per share. At December 31, ~~2014, $4.80~~2016, $4.11 billion of authorization remained under the share repurchase program.

~~Also during 2014, the Company completed the Split-Off through which it received 44.7 million shares of~~

CBS ~~Corp. Class B Common Stock~~CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in ~~exchange for the 97.0 million shares of Outdoor Americas common stock that it owned (See Note 4).~~millions, except per share amounts)

Conversion Rights—Holders of Class A Common Stock have the right to convert their shares to Class B Common Stock as long as there are at least 5,000 shares of Class A Common Stock outstanding. Conversions of CBS Corp. Class A Common Stock into Class B Common Stock were 0.1 million for both 2016 and 2015 and 1.3 million for ~~2014, 4.0 million for 2013 and 0.3 million for 2012.~~2014.

~~Equity Incentive Plans~~Accumulated Other Comprehensive Income ——The following table presents the changes in the components of accumulated other comprehensive income (loss).



	Continuing Operations										Discontinued Operations
				Net Actuarial											Accumulated
	Cumulative			Gain (Loss)				Unrealized			Other				Other
	Translation			and Prior				Gain on			Comprehensive				Comprehensive
	Adjustments			Service Cost				Securities			Income (Loss)			^(a)	Loss
At December 31, 2013	$	166		$	(729	)		$	3		$	15			$	(545	)
Other comprehensive income (loss) before reclassifications	(9		)	(189		)		—			15				(183		)
Reclassifications to net earnings	—			26			^(b)	(3		)	(30		)	^(c)	(7		)
Other comprehensive loss	(9		)	(163		)		(3		)	(15		)		(190		)
At December 31, 2014	157			(892		)		—			—				(735		)
Other comprehensive income (loss) before reclassifications	(5		)	(66		)		—			—				(71		)
Reclassifications to net earnings	—			36			^(b)	—			—				36
Other comprehensive loss	(5		)	(30		)		—			—				(35		)
At December 31, 2015	152			(922		)		—			—				(770		)
Other comprehensive income (loss) before reclassifications	(1		)	(165		)		—			—				(166		)
Reclassifications to net earnings	—			169			^(b)	—			—				169
Other comprehensive income (loss)	(1		)	4				—			—				3
At December 31, 2016	$	151		$	(918	)		$	—		$	—			$	(767	)

(a) Primarily reflects cumulative translation adjustments.

(b) Reflects amortization of net actuarial losses (See Note 15).

The net actuarial gain (loss) and prior service cost related to pension and other postretirement benefit plans included in other comprehensive income (loss) is net of a tax (provision) benefit for the years ended December 31, 2016, 2015 and 2014 of $(3) million, $19 million and $105 million, respectively. The tax provision related to the other comprehensive loss from discontinued operations and the tax provision related to the unrealized gain on securities were minimal for all periods presented.

13) STOCK-BASED COMPENSATION

The Company has equity incentive plans (the “Plans”) under which stock options, ~~stock option equivalents,~~ RSUs and ~~PSUs~~market-based performance share units (“PSUs”) were issued.

The purpose of the Plans is to benefit and advance the interests of the Company by attracting, retaining and motivating participants and to compensate participants for their contributions to the financial success of the Company. The Plans provide for awards of stock options, stock appreciation rights, restricted and unrestricted shares, RSUs, dividend equivalents, performance awards and other equity-related awards. Upon exercise of stock options or vesting of RSUs and PSUs, the Company issues new shares from its existing authorization. At December 31, ~~2014,~~2016, there were 5848 million shares available for future grant under the Plans.

CBS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Tabular dollars in millions, except per share amounts)

The following table summarizes the Company’s stock-based compensation expense for the years ended December 31, 2016, 2015 and 2014.



Year Ended December 31,	2016			2015			2014
RSUs and PSUs	$	137		$	129		$	116
Stock options	28			28			21
Stock-based compensation expense, before income taxes	165			157			137
Related tax benefit	(63		)	(61		)	(55		)
Stock-based compensation expense, net of tax benefit	$	102		$	96		$	82

Included in net earnings (loss) from discontinued operations was stock-based compensation expense of $12 million for 2016 and $17 million for each of the years 2015 and 2014.

RSUs and PSUs

Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant and expensed over the vesting period, which is generally a one- to four-year service period. Certain RSU awards are also subject to satisfying performance conditions. Compensation expense is recorded based on the

~~II-60~~

~~CBS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Tabular dollars in millions, except per share amounts)~~

probable outcome of the performance conditions. Forfeitures for RSUs are estimated on the date of grant based on historical forfeiture rates. On an annual basis, the Company adjusts the compensation expense based on actual forfeitures and revises the forfeiture rate as necessary.

During ~~2012,~~2016, the Company also granted ~~awards of PSUs which vest based on the achievement of market performance targets.~~a PSU award. The number of shares that will be issued upon vesting of ~~PSUs can range from 0% to 300% of~~ the ~~target award,~~PSU is based on the ~~ranking of the total shareholder return (“TSR”) for CBS Corp. Class B Common Stock within the S&P 500 Index~~Company’s stock price performance over a designated ~~three-year~~ measurement period, ~~or in certain circumstances, based on~~as well as the achievement of established operating ~~performance~~ goals. The fair value of the ~~PSUs~~PSU award is determined using a Monte Carlo ~~Simulation~~simulation model. ~~This model generates simulated TSR of CBS Corp. Class B Common Stock versus each of the companies in the S&P 500 Index through the end of the relevant measurement period.~~ Compensation expense for ~~PSUs~~the PSU is expensed over the ~~vesting period, which is a three-year~~required employee service period.

The ~~total~~weighted average grant date fair value of RSUs was $47.30, $59.11 and ~~PSUs~~$62.70 in 2016, 2015, and 2014, respectively. The total market value of RSUs that vested during 2016, 2015, and 2014 ~~2013, and 2012~~ was ~~$319~~$129 million, ~~$324~~$212 million and ~~$251~~$319 million, respectively. Total unrecognized compensation cost related to non-vested RSUs at December 31, ~~2014~~2016 was ~~$182~~$181 million which is expected to be recognized over a weighted average period of 2.3 years.

The following table summarizes the Company’s RSU ~~and PSU~~ activity.


				Weighted Average						Weighted Average
	RSUs and PSUs			Grant Date Fair Value			RSUs			Grant Date Fair Value
Non-vested at December 31, 2013		9,519,224			$	31.20
Non-vested at December 31, 2015								5,745,080			$	54.88
Granted		2,789,721			$	62.70		3,702,313			$	47.30
Vested		(4,929,780	)		$	28.56		(2,731,513	)		$	50.04
Forfeited		(422,899	)		$	43.23		(258,260	)		$	55.19
Converted to Outdoor Americas RSUs		(256,172	)		$	37.77
Non-vested at December 31, 2014		6,700,094			$	45.26
Non-vested at December 31, 2016								6,457,620			$	52.57



	x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, ~~2014~~2016
	OR
	¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to



Title of Each Class			Name of Each Exchange on Which Registered
Class A Common Stock, $0.001 par value			New York Stock Exchange
Class B Common Stock, $0.001 par value			New York Stock Exchange
~~7.625% Senior Debentures due 2016~~			~~NYSE MKT~~



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o



		Television		~~Radio~~					CBS Local Digital Media⁽¹⁾
Market and Market Rank⁽²⁾		Stations	Type	Network Affiliation		~~Stations~~	~~AM/~~ FM	~~Format~~	Websites
New York, NY (#1)		WCBS‑TV	UHF	CBS		~~WCBS~~	AM	~~News~~	newyork.cbslocal.com
		WLNY‑TV	UHF	Independent		~~WCBS~~	FM	~~Classic Hits~~
~~#1—Television~~						~~WFAN~~	AM	~~Sports~~
~~#1—Radio~~						~~WFAN~~	FM	~~Sports~~
						~~WINS~~	AM	~~News~~
						~~WBMP~~	FM	~~Top 40~~
						~~WWFS~~	FM	~~Hot Adult Contemporary~~

Los Angeles, CA⁽³⁾(#2)		KCAL‑TV	VHF	Independent		~~KAMP~~	FM	~~Top 40~~	losangeles.cbslocal.com
		KCBS‑TV	UHF	CBS		~~KCBS~~	FM	~~Adult Hits~~
~~#2—Television~~						~~KNX~~	AM	~~News~~
~~#2—Radio~~						~~KROQ~~	FM	~~Alternative~~
						~~KRTH~~	FM	~~Classic Hits~~
						~~KTWV~~	FM	~~Smooth Adult Contemporary~~

Chicago, IL (#3)		WBBM‑TV	VHF	CBS		~~WBBM~~	AM	~~News~~	chicago.cbslocal.com
						~~WBBM~~	FM	~~Top 40~~
~~#3—Television~~						~~WCFS~~	FM	~~News~~
~~#3—Radio~~						~~WJMK~~	FM	~~Classic Hits~~
						~~WSCR~~	AM	~~Sports~~
						~~WUSN~~	FM	~~Country~~
						~~WXRT~~	FM	~~Adult Alternative~~

Philadelphia, PA (#4)		KYW‑TV	UHF	CBS		~~KYW~~	AM	~~News~~	philadelphia.cbslocal.com
		WPSG‑TV	UHF	The CW		~~WIP~~	FM	~~Sports~~
~~#4—Television~~						~~WOGL~~	FM	~~Classic Hits~~
~~#8—Radio~~						~~WPHT~~	AM	~~News/Talk~~
						~~WRDW~~	FM	~~Top 40~~
						~~WXTU~~	FM	~~Country~~

Dallas‑Fort Worth, TX (#5)		KTVT‑TV	UHF	CBS		~~KJKK~~	FM	~~Adult Hits~~	~~dallas.cbslocal.com~~dfw.cbslocal.com
		KTXA‑TV	UHF	Independent		~~KLUV~~	FM	~~Classic Hits~~
~~#5—Television~~						~~KMVK~~	FM	~~Spanish~~
~~#5—Radio~~						~~KRLD~~	AM	~~News~~
						~~KRLD~~	FM	~~Sports~~
						~~KVIL~~	FM	~~Hot Adult Contemporary~~

San Francisco, CA (#6)		KPIX‑TV	UHF	CBS		~~KCBS~~	AM	~~News~~	sanfrancisco.cbslocal.com
		KBCW‑TV	UHF	The CW		~~KFRC~~	FM	~~News~~
~~#6—Television~~						~~KITS~~	FM	~~Alternative~~
~~#4—Radio~~						~~KLLC~~	FM	~~Hot Adult Contemporary~~
						~~KMVQ~~	FM	~~Top 40~~
						~~KZDG~~⁽⁴⁾	AM	~~Indian Talk/Music~~

Boston, MA (#9)		WBZ‑TV	UHF	CBS		~~WBMX~~	FM	~~Hot Adult Contemporary~~	boston.cbslocal.com
		WSBK‑TV	UHF	MyNetworkTV		~~WBZ~~	AM	~~News~~
~~#7—Television~~
~~WBZ~~	FM	~~Sports~~Atlanta, GA (#10)		WUPA‑TV	UHF	The CW	atlanta.cbslocal.com
~~#10—Radio~~
~~WODS~~	FM	~~Top 40~~Tampa‑St. Petersburg, FL (#11)		WTOG‑TV	UHF	The CW	tampa.cbslocal.com

Detroit, MI (#13)		WKBD‑TV	UHF	The CW	detroit.cbslocal.com
		WWJ‑TV	UHF	CBS

~~WZLX~~	FM	~~Classic Rock~~Seattle‑Tacoma, WA (#14)		KSTW‑TV	VHF	The CW	seattle.cbslocal.com

Minneapolis, MN (#15)		WCCO‑TV	UHF	CBS	minnesota.cbslocal.com
		KCCO‑TV⁽³⁾	VHF	CBS
		KCCW‑TV⁽⁴⁾	VHF	CBS

Miami-Ft. Lauderdale, FL (#16)		WFOR‑TV	UHF	CBS	miami.cbslocal.com
		WBFS‑TV	UHF	MyNetworkTV

Denver, CO (#17)		KCNC‑TV	UHF	CBS	denver.cbslocal.com

Sacramento, CA (#20)		KOVR-TV	UHF
CBS									sacramento.cbslocal.com



		Television		~~Radio~~						CBS Local Digital Media⁽¹⁾
Market and Market Rank⁽²⁾		Stations	Type	Network Affiliation		~~Stations~~	~~AM/~~ FM	~~Format~~		Websites
~~Washington, D.C.~~						~~WIAD~~	FM	~~Hot Adult Contemporary~~		~~washington.cbslocal.com~~
		KMAX-TV	UHF			~~WJFK~~	AM	~~Sports~~
~~#8—Television~~						~~WJFK~~	FM	~~Sports~~
~~#7—Radio~~						~~WLZL~~	FM	~~Spanish~~	The CW

~~WNEW~~	FM	~~News~~Pittsburgh, PA (#23)		KDKA-TV	UHF	CBS	pittsburgh.cbslocal.com
		WPCW-TV	VHF	The CW

~~WPGC~~	FM	~~Rhythmic Top 40~~Baltimore, MD (#26)		WJZ‑TV	VHF	CBS	baltimore.cbslocal.com

Indianapolis, IN (#27)		WBXI-CA⁽⁵⁾	UHF	Independent
~~Atlanta, GA~~		~~WUPA‑TV~~	~~UHF~~	Independent	~~The CW~~		~~WAOK~~	AM	~~News/Talk~~		~~atlanta.cbslocal.com~~
						~~WVEE~~	FM	~~Urban~~
~~#9—Television~~						~~WZGC~~	FM	~~Sports~~
~~#9—Radio~~

~~Houston, TX~~						~~KHMX~~	FM	~~Hot Adult Contemporary~~		~~houston.cbslocal.com~~
						~~KIKK~~	AM	~~Sports~~
~~#10—Television~~						~~KILT~~	AM	~~Sports~~
~~#6—Radio~~						~~KILT~~	FM	~~Country~~
						~~KKHH~~	FM	~~Top 40~~
						~~KLOL~~	FM	~~Spanish~~

~~Phoenix, AZ~~						~~KMLE~~	FM	~~Country~~
						~~KOOL~~	FM	~~Classic Hits~~
~~#11—Television~~						~~KZON~~	FM	~~Top 40~~
~~#14—Radio~~

~~Detroit, MI~~		~~WKBD‑TV~~	~~UHF~~	~~The CW~~		~~WDZH~~	FM	~~Top 40~~		~~detroit.cbslocal.com~~
		~~WWJ‑TV~~	~~UHF~~	~~CBS~~		~~WOMC~~	FM	~~Classic Hits~~
~~#12—Television~~						~~WWJ~~	AM	~~News~~
~~#12—Radio~~						~~WXYT~~	AM	~~Sports~~
						~~WXYT~~	FM	~~Sports~~
						~~WYCD~~	FM	~~Country~~

~~Tampa‑St. Petersburg, FL~~		~~WTOG‑TV~~	~~UHF~~	~~The CW~~						~~tampa.cbslocal.com~~

~~#13—Television~~
~~#19—Radio~~

~~Seattle‑Tacoma, WA~~		~~KSTW‑TV~~	~~VHF~~	~~The CW~~		~~KFNQ~~	AM	~~Sports~~		~~seattle.cbslocal.com~~
						~~KJAQ~~	FM	~~Adult Hits~~
~~#14—Television~~						~~KMPS~~	FM	~~Country~~
~~#13—Radio~~						~~KZOK~~	FM	~~Classic Rock~~

~~Minneapolis, MN~~		~~WCCO‑TV~~	~~UHF~~	~~CBS~~		~~KMNB~~	FM	~~Country~~		~~minnesota.cbslocal.com~~
		~~KCCO‑TV~~⁽⁵⁾	~~VHF~~	~~CBS~~		~~KZJK~~	FM	~~Adult Hits~~
~~#15—Television~~		~~KCCW‑TV~~⁽⁶⁾	~~VHF~~	~~CBS~~		~~WCCO~~	AM	~~News/Talk~~
~~#16—Radio~~

~~Miami-Ft. Lauderdale, FL~~		~~WFOR‑TV~~	~~UHF~~	~~CBS~~		~~WKIS~~	FM	~~Country~~		~~miami.cbslocal.com~~
		~~WBFS‑TV~~	~~UHF~~	~~MyNetworkTV~~		~~WPOW~~	FM	~~Top 40~~
~~#16—Television~~						~~WQAM~~	AM	~~Sports~~
~~#11—Radio~~

~~Denver, CO~~		~~KCNC‑TV~~	~~UHF~~	~~CBS~~						~~denver.cbslocal.com~~

~~#17—Television~~
~~#18—Radio~~

~~Orlando, FL~~						~~WJHM~~	FM	~~Top 40~~
						~~WOCL~~	FM	~~Classic Hits~~
~~#18—Television~~						~~WOMX~~	FM	~~Hot Adult Contemporary~~
~~#33—Radio~~

~~Cleveland, OH~~						~~WDOK~~	FM	~~Adult Contemporary~~		~~cleveland.cbslocal.com~~
						~~WKRK~~	FM	~~Sports~~
~~#19—Television~~						~~WNCX~~	FM	~~Classic Rock~~
~~#31—Radio~~						~~WQAL~~	FM	~~Hot Adult Contemporary~~

~~Sacramento, CA~~		~~KOVR-TV~~	~~UHF~~	~~CBS~~		~~KHTK~~	AM	~~Sports~~		~~sacramento.cbslocal.com~~
		~~KMAX-TV~~	~~UHF~~	~~The CW~~		~~KNCI~~	FM	~~Country~~
~~#20—Television~~						~~KSFM~~	FM	~~Rhythmic Top 40~~
~~#28—Radio~~						~~KYMX~~	FM	~~Adult Contemporary~~
						~~KZZO~~	FM	~~Hot Adult Contemporary~~



DELAWARE (State or other jurisdiction of incorporation or organization)		04-2949533 (I.R.S. Employer Identification Number)


•	ENTERTAINMENT: The Entertainment segment is composed of the CBS^® Television Network; CBS Television ~~Studios; CBS Global Distribution Group (composed of~~Studios^®; CBS Studios International™ and CBS Television ~~Distribution)~~Distribution™; CBS Interactive™; CBS Films^®; and the Company’s digital streaming services, CBS ~~Films~~All Access^®and CBSN^®.


•	PUBLISHING: The Publishing segment is composed of Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster^®, Pocket Books^®, Scribner^®, Gallery Books^®, Touchstone^® and Atria Books^®.



	~~Television~~			~~Radio~~			~~CBS Local Digital Media~~⁽¹⁾
~~Market and Market Rank~~⁽²⁾	~~Stations~~	~~Type~~	~~Network~~ ~~Affiliation~~	~~Stations~~	~~AM/~~ FM	~~Format~~	~~Websites~~
~~St. Louis, MO~~				~~KEZK~~	FM	~~Adult Contemporary~~	~~stlouis.cbslocal.com~~
				~~KMOX~~	AM	~~News/Talk~~
~~#21—Television~~				~~KYKY~~	FM	~~Hot Adult Contemporary~~
~~#22—Radio~~

~~Pittsburgh, PA~~	~~KDKA-TV~~	~~UHF~~	~~CBS~~	~~KDKA~~	AM	~~News/Talk~~	~~pittsburgh.cbslocal.com~~
	~~WPCW-TV~~	~~VHF~~	~~The CW~~	~~KDKA~~	FM	~~Sports~~
~~#22—Television~~				~~WBZZ~~	FM	~~Hot Adult Contemporary~~
~~#26—Radio~~				~~WDSY~~	FM	~~Country~~

~~Baltimore, MD~~	~~WJZ‑TV~~	~~VHF~~	~~CBS~~	~~WJZ~~	AM	~~Sports~~	~~baltimore.cbslocal.com~~
				~~WJZ~~	FM	~~Sports~~
~~#26—Television~~				~~WLIF~~	FM	~~Adult Contemporary~~
~~#21—Radio~~				~~WWMX~~	FM	~~Hot Adult Contemporary~~

~~Indianapolis, IN~~	~~WBXI-CA~~⁽⁷⁾	~~UHF~~	~~Independent~~
			~~Independent~~
~~#27—Television~~
~~#39—Radio~~

~~San Diego, CA~~				~~KEGY~~	FM	~~Top 40~~
				~~KYXY~~	FM	~~Adult Contemporary~~
~~#28—Television~~
~~#17—Radio~~

~~Riverside-San Bernardino, CA~~				~~KFRG~~	FM	~~Country~~
				~~KRAK~~	AM	~~Sports~~
~~#25—Radio~~				~~KVFG~~	FM	~~Classic Hits~~
				~~KXFG~~	FM	~~Country~~


(2)	Television market (DMA) rankings based on Nielsen Media Research Local Market Universe Estimates, September ~~2014. Radio market (DMA) rankings based on Nielsen Audio Radio Market Survey, Fall 2014.~~2016.


(3)	As required by the FCC, the Company assigned KFWB-AM to a divestiture trust. The Company is a beneficiary of the trust. The trustee is operating the radio station and is responsible for selling the radio station to a third party. (See “CBS Business Segments—Regulation—Broadcasting—Ownership Regulation—Radio‑Television Cross‑Ownership Rule”).


~~(4)~~	~~KZDG-AM in San Francisco, California, is programmed by a third party through a time brokerage agreement.~~


~~(5)~~	KCCO-TV is operated as a satellite station of WCCO-TV.


~~(6)~~(4)	KCCW-TV is operated as a satellite station of WCCO-TV.


~~(7)~~(5)	WBXI-CA is a Class A low power television station. Class A low power television stations do not implicate the FCC’s ownership rules.



Item 1.	Business.


	Voting Class A				Non-Voting Class B				Voting Class A				Non-Voting Class B
	Common Stock				Common Stock				Common Stock				Common Stock
	High		Low		High		Low		High		Low		High		Low

2014
2016
1st quarter	$	68.00	$	55.74	$	68.10	$	55.71	$	59.99	$	46.86	$	55.38	$	41.36
2nd quarter	$	63.82	$	55.33	$	63.96	$	55.01	$	61.77	$	53.13	$	57.89	$	50.53
3rd quarter	$	65.07	$	53.62	$	65.24	$	53.49	$	61.51	$	49.92	$	58.22	$	48.88
4th quarter	$	57.48	$	49.24	$	56.67	$	48.83	$	66.99	$	55.27	$	65.09	$	54.35
2013
2015
1st quarter	$	47.30	$	37.48	$	47.42	$	37.43	$	64.63	$	53.93	$	63.71	$	52.94
2nd quarter	$	52.34	$	43.84	$	52.46	$	43.77	$	72.50	$	57.02	$	63.95	$	55.21
3rd quarter	$	57.14	$	48.68	$	57.47	$	48.45	$	58.44	$	42.54	$	56.39	$	38.51
4th quarter	$	64.00	$	53.15	$	64.06	$	53.01	$	57.90	$	43.28	$	52.18	$	38.76



(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs		Remaining Authorization
October 1, 2014 - October 31, 2014		3.2	$52.50		3.2		$	5,432
November 1, 2014 - November 30, 2014		4.8	$52.86		4.8		$	5,178
December 1, 2014 - December 31, 2014		6.9	$54.60		6.9		$	4,800
Total		14.9	$53.59		14.9		$	4,800



(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Remaining Authorization
October 1, 2016 - October 31, 2016		7.3	$	56.18		7.3		$	5,193
November 1, 2016 - November 30, 2016		11.4	$	58.68		11.4		$	4,527
December 1, 2016 - December 31, 2016		6.7	$	62.72		6.7		$	4,107
Total		25.4				25.4		$	4,107



Name	Age	Title
~~Sumner M. Redstone~~Leslie Moonves	9167	~~Executive~~ Chairman of the Board, ~~of Directors and Founder~~
~~Leslie Moonves~~	65	President and Chief Executive Officer ~~and Director~~
Anthony G. Ambrosio	5456	Senior Executive Vice President, Chief Administrative Officer and Chief Human Resources Officer
Jonathan H. Anschell	48	Executive Vice President, Deputy General Counsel and Secretary
Joseph R. Ianniello	4749	Chief Operating Officer
Richard M. Jones	4951	Executive Vice President and General Tax Counsel
Lawrence Liding	4648	Executive Vice President, Controller and Chief Accounting Officer
Gil Schwartz	6365	Senior Executive Vice President and Chief Communications Officer
~~Angeline C. Straka~~	69	~~Executive Vice President, Deputy General Counsel and Secretary~~
Lawrence P. Tu	6062	Senior Executive Vice President and Chief Legal Officer



Item 5.	Market for CBS Corporation’s Common Equity, Related Stockholder Matters and Purchases of Equity Securities.


December 31,	2009	2010	2011	2012	2013	2014	2011	2012	2013	2014	2015	2016
CBS Corp. Class A Common Stock	$100	$137	$202	$281	$475	$423	$100	$139	$235	$210	$196	$247
CBS Corp. Class B Common Stock	$100	$137	$198	$282	$476	$417	$100	$142	$240	$210	$181	$248
S&P 500	$100	$115	$117	$136	$180	$205	$100	$116	$154	$175	$177	$198
Peer Group ^(a)	$100	$112	$121	$168	$254	$303	$100	$138	$210	$251	$237	$263


	Year Ended December 31, ^{(a) (b)}											Year Ended December 31, ^(a)
	2014^(c)		2013		2012		2011		2010			2016 ^{(b) (c)}			2015 ^{(b) (d)}			2014 ^(b) ^(e)		2013		2012
Revenues	$	13,806	$	14,005	$	12,820	$	12,381	$	12,271		$	13,166		$	12,671		$	12,519	$	12,713	$	11,514
Operating income	$	2,896	$	3,025	$	2,778	$	2,423	$	1,803		$	2,621		$	2,658		$	2,590	$	2,663	$	2,415
Net earnings from continuing operations	$	1,354	$	1,738	$	1,508	$	1,263	$	739		$	1,552		$	1,554		$	1,151	$	1,520	$	1,288
Net earnings (loss) from discontinued operations, net of tax	$	1,605	$	141	$	66	$	42	$	(15	)	$	(291	)	$	(141	)	$	1,808	$	359	$	286
Net earnings	$	2,959	$	1,879	$	1,574	$	1,305	$	724		$	1,261		$	1,413		$	2,959	$	1,879	$	1,574

Basic net earnings (loss) per common share:
Net earnings from continuing operations	$	2.46	$	2.86	$	2.35	$	1.90	$	1.09		$	3.50		$	3.21		$	2.09	$	2.50	$	2.01
Net earnings (loss) from discontinued operations, net of tax	$	2.92	$	.23	$	.10	$	.06	$	(.02	)	$	(.66	)	$	(.29	)	$	3.29	$	.59	$	.45
Net earnings	$	5.38	$	3.09	$	2.45	$	1.97	$	1.07		$	2.84		$	2.92		$	5.38	$	3.09	$	2.45

Diluted net earnings (loss) per common share:
Net earnings from continuing operations	$	2.41	$	2.79	$	2.29	$	1.85	$	1.06		$	3.46		$	3.18		$	2.05	$	2.44	$	1.95
Net earnings (loss) from discontinued operations, net of tax	$	2.86	$	.23	$	.10	$	.06	$	(.02	)	$	(.65	)	$	(.29	)	$	3.22	$	.58	$	.43
Net earnings	$	5.27	$	3.01	$	2.39	$	1.92	$	1.04		$	2.81		$	2.89		$	5.27	$	3.01	$	2.39

Dividends per common share	$	.54	$	.48	$	.44	$	.35	$	.20		$	.66		$	.60		$	.54	$	.48	$	.44

At Year End:
Total assets:
Continuing operations	$	24,033	$	22,912	$	22,473	$	22,059	$	21,828		$	19,642		$	18,695		$	18,372	$	17,191	$	17,072
Discontinued operations	39		3,475		3,993		4,161		4,336			4,596			5,070			5,563		9,014		9,121
Total assets	$	24,072	$	26,387	$	26,466	$	26,220	$	26,164		$	24,238		$	23,765		$	23,935	$	26,205	$	26,193
Total debt:
Continuing operations	$	7,146	$	6,435	$	5,921	$	5,981	$	5,998		$	9,375		$	8,448		$	7,112	$	6,403	$	5,886
Discontinued operations	—		14		14		22		23			1,345			—			—		14		14
Total debt	$	7,146	$	6,449	$	5,935	$	6,003	$	6,021		$	10,720		$	8,448		$	7,112	$	6,417	$	5,900
Total Stockholders’ Equity	$	6,970	$	9,966	$	10,213	$	9,908	$	9,821		$	3,689		$	5,563		$	6,970	$	9,966	$	10,213



Item 7.	Management’s Discussion and Analysis of Results of Operations and Financial Condition. (Tabular dollars in millions, except per share amounts)



Consolidated results of operations					Increase/(Decrease)
Year Ended December 31,	2016		2015		$			%
GAAP:
Revenues	$	13,166	$	12,671	$	495		4	%
Operating income	$	2,621	$	2,658	$	(37	)	(1	)%
Net earnings from continuing operations	$	1,552	$	1,554	$	(2	)	—	%
Net earnings	$	1,261	$	1,413	$	(152	)	(11	)%
Diluted EPS from continuing operations	$	3.46	$	3.18	$	.28		9	%
Diluted EPS	$	2.81	$	2.89	$	(.08	)	(3	)%

Non-GAAP: ^(a)
Adjusted operating income	$	2,861	$	2,564	$	297		12	%
Adjusted net earnings	$	1,840	$	1,618	$	222		14	%
Adjusted diluted EPS	$	4.11	$	3.31	$	.80		24	%



Total Number of Shares Purchased (in millions)		Average Price Per Share			Dollar Value of Shares Repurchased			Remaining Authorization
	54.3		$	55.15		$	3,000		$	4,107



Revenues by Type			% of Total					% of Total			Increase/(Decrease)
Year Ended December 31,	2016		Revenues			2015		Revenues			$			%
Advertising	$	6,288		48	%	$	5,824		46	%	$	464		8	%
Content licensing and distribution	3,673			28		3,903			31		(230		)	(6	)
Affiliate and subscription fees	2,978			22		2,724			21		254			9
Other	227			2		220			2		7			3
Total Revenues	$	13,166		100	%	$	12,671		100	%	$	495		4	%



	Year Ended December 31,
Percentage of Revenues by Type	2014		2013		2012
Advertising	52	%	54	%	56	%
Content licensing and distribution	29		29		27
Affiliate and subscription fees	17		15		15
Other	2		2		2
Total	100	%	100	%	100	%



			% of				% of				% of
Year Ended December 31,	2014		International		2013		International		2012		International
United Kingdom	$	270	15	%	$	359	20	%	$	245	16	%
Other Europe	657		37		607		33		498		32
Canada	241		13		270		15		260		17
Asia	262		15		225		12		198		13
Other	363		20		366		20		344		22
Total International Revenues	$	1,793	100	%	$	1,827	100	%	$	1,545	100	%


																			% of					% of
Operating Expenses by Type					Increase/(Decrease)							Increase/(Decrease)							Operating					Operating			Increase/(Decrease)
Year Ended December 31,	2014		2013		2014 vs. 2013					2012		2013 vs. 2012					2016		Expenses			2015		Expenses			$			%
Programming	$	2,938	$	3,047	$	(109	)	(4	)%	$	2,621	$	426		16	%	$	2,941		37	%	$	2,892		37	%	$	49		2	%
Production	2,493		2,491		2			—		2,149		342			16		2,658			34		2,604			33		54			2
Participation, distribution and royalty	1,185		1,112		73			7		1,004		108			11		1,058			13		1,109			14		(51		)	(5	)
Other	1,473		1,474		(1		)	—		1,490		(16		)	(1	)	1,299			16		1,306			16		(7		)	(1	)
Total Operating Expenses	$	8,089	$	8,124	$	(35	)	—	%	$	7,264	$	860		12	%	$	7,956		100	%	$	7,911		100	%	$	45		1	%



				% of Total						% of Total
				Segment						Segment
				Operating						Operating			Increase/(Decrease)
Year Ended December 31,	2016			Income			2015			Income			$			%
Segment Operating Income (Loss):
Entertainment	$	1,519			53	%	$	1,294			51	%	$	225		17	%
Cable Networks	959				33		945				37		14			1
Publishing	119				4		114				4		5			4
Local Media	618				22		487				19		131			27
Corporate	(354		)		(12	)	(276		)		(11	)	(78		)	(28	)
Total Segment Operating Income	2,861				100	%	2,564				100	%	297			12
Pension settlement charge	(211		)				—						(211		)	n/m
Restructuring and merger and acquisition-related costs	(38		)				(45		)				7			16
Other operating items, net	9						139						(130		)	(94	)
Total Operating Income	$	2,621					$	2,658					$	(37	)	(1	)%


(d)	The decrease is the result of the repayment of $200 million of outstanding senior debentures upon maturity in January 2016.



							Increase/ (Decrease)							Increase/ (Decrease)
Year Ended December 31,	2016			2015			2016 vs. 2015				2014			2015 vs. 2014
Cash provided by operating activities from:
Continuing operations	$	1,454		$	1,189			$	265		$	916			$	273
Discontinued operations	231			205				26			359				(154		)
Cash provided by operating activities	1,685			1,394				291			1,275				119
Cash (used for) provided by investing activities from:
Continuing operations	(334		)	179				(513		)	(266		)		445
Discontinued operations	(6		)	(25		)		19			(335		)		310
Cash (used for) provided by investing activities	(340		)	154				(494		)	(601		)		755
Cash used for financing activities	(1,046		)	(1,653		)		607			(643		)		(1,010		)
Net increase (decrease) in cash and cash equivalents	$	299		$	(105	)		$	404		$	31			$	(136	)



											2020 and
	2015		2016		2017		2018		2019		Thereafter
Long-term debt	$	—	$	200	$	400	$	300	$	600	$	4,940



		Significant Assumptions
	Reporting Unit Fair	Perpetual
	Value in Excess of	Nominal	Discount
Reporting Unit	Carrying Value	Growth Rate	Rate
CBS Radio	5%	1.5%	8.0%



	Discount	Perpetual Nominal
	Rate	Growth Rate
Television stations	8.0%	2.5%
Radio stations	8.0%	1.5%



Buildings and building improvements	2010 to 40 years
Leasehold Improvements	Shorter of lease term or useful life
Equipment and other (including capital leases)	3 to 20 years



	Balance at							Balance at
	December 31, 2013				Acquisitions			December 31, 2014
Entertainment:
Goodwill		$	9,467		$	—			$	9,467
Accumulated impairment losses		(6,294		)	—				(6,294		)
Goodwill, net of impairment		3,173			—				3,173
Cable Networks:
Goodwill		480			—				480
Accumulated impairment losses		—			—				—
Goodwill, net of impairment		480			—				480
Publishing:
Goodwill		406			—				406
Accumulated impairment losses		—			—				—
Goodwill, net of impairment		406			—				406
Local Broadcasting:
Goodwill		22,244			110		^(a)		22,354
Accumulated impairment losses		(19,715		)	—				(19,715		)
Goodwill, net of impairment		2,529			110				2,639
Total:
Goodwill		32,597			110				32,707
Accumulated impairment losses		(26,009		)	—				(26,009		)
Goodwill, net of impairment		$	6,588		$	110			$	6,698



	Balance at									Balance at
	December 31, 2012				Acquisitions		Other			December 31, 2013
Entertainment:
Goodwill		$	9,460		$	7	$	—			$	9,467
Accumulated impairment losses		(6,294		)	—		—				(6,294		)
Goodwill, net of impairment		3,166			7		—				3,173
Cable Networks:
Goodwill		480			—		—				480
Accumulated impairment losses		—			—		—				—
Goodwill, net of impairment		480			—		—				480
Publishing:
Goodwill		407			—		(1		)		406
Accumulated impairment losses		—			—		—				—
Goodwill, net of impairment		407			—		(1		)		406
Local Broadcasting:
Goodwill		22,244			—		—				22,244
Accumulated impairment losses		(19,715		)	—		—				(19,715		)
Goodwill, net of impairment		2,529			—		—				2,529
Total:
Goodwill		32,591			7		(1		)		32,597
Accumulated impairment losses		(26,009		)	—		—				(26,009		)
Goodwill, net of impairment		$	6,582		$	7	$	(1	)		$	6,588