-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E1FaLYH/L0qZI4NRBp6V6JHIXn23jKEZKb/aoVEDi+B1ee+1SsJN+rQNzFWrP0Z/ Bm2wXvp91GQfxB8zB7Fo9g== 0000950128-96-000467.txt : 19960816 0000950128-96-000467.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950128-96-000467 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTINGHOUSE ELECTRIC CORP CENTRAL INDEX KEY: 0000106413 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 250877540 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00977 FILM NUMBER: 96615225 BUSINESS ADDRESS: STREET 1: WESTINGHOUSE BLDG STREET 2: 11 STANWIX STREET CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122442000 FORMER COMPANY: FORMER CONFORMED NAME: WESTINGHOUSE ELECTRIC & MANUFACTURING CO DATE OF NAME CHANGE: 19710510 10-Q 1 WESTINGHOUSE ELEC. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549-1004 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ----- to -------- Commission file number 1-977 ----- WESTINGHOUSE ELECTRIC CORPORATION -------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-0877540 ------------ ---------- (State of Incorporation) (I.R.S. Employer Identification No.) Westinghouse Building, 11 Stanwix Street, Pittsburgh, Pa. 15222-1384 ---------------------------------------------------------------------- (Address of principal executive offices, zip code) (412) 244-2000 ---------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Common stock 420,803,641 shares outstanding at July 31, 1996 --------------------------------------------------------------------- -1- 2 WESTINGHOUSE ELECTRIC CORPORATION INDEX ---------------------------------
PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statement of Income 3 Condensed Consolidated Balance Sheet 4 Condensed Consolidated Statement of Cash Flows 5 Notes to the Condensed Consolidated Financial Statements 6-13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13-27 PART II. OTHER INFORMATION Item 1. Legal Proceedings 27-28 Item 4. Submission of Matters to a Vote of Security Holders 28-29 Item 6. Exhibits and Reports on Form 8-K 29-31 SIGNATURE 32
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WESTINGHOUSE ELECTRIC CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME ------------------------------------------ (in millions except per share amounts) (unaudited)
Three Months Ended Six Months Ended June 30 June 30 ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ----- ---- Sales of products and services $ 2,224 $ 1,445 $ 4,180 $ 2,647 Costs of products and services (1,442) (1,014) (2,957) (1,876) Restructuring, litigation and other matters (notes 2, 3, and 10) (175) (6) (870) (6) Marketing, administration, and general expenses (637) (337) (1,239) (643) ------- ------- ------- ------- Operating profit (loss) (30) 88 (886) 122 Other income (expenses), net (note 4) 7 1 (139) (1) Interest expense (109) (47) (255) (95) ------- ------- ------- ------- Income (loss) from Continuing Operations before income taxes and minority interest in income of consolidated subsidiaries (132) 42 (1,280) 26 Income tax benefit (expense) 44 (14) 429 (5) Minority interest in income of consolidated subsidiaries (1) (3) (2) (5) ------- ------- ------- ------- Income (loss) from Continuing Operations (89) 25 (853) 16 ------- ------- ------- ------- Discontinued Operations, net of income taxes (note 9): Income (loss) from Discontinued Operations - 34 (10) 58 Estimated net gain on disposal of Discontinued Operations - - 1,018 - ------- ------ ------- ------- Income from Discontinued Operations - 34 1,008 58 Extraordinary item: Loss on early extinguishment of debt (note 5) - - (63) - ------- ------- ------- ------- Net income (loss) $ (89) $ 59 $ 92 $ 74 ======= ======= ======= ======= Earnings (loss) per common share: Continuing Operations $ (0.20) $ 0.03 $ (1.94) $ (0.02) Discontinued Operations - 0.09 2.29 0.14 Extraordinary item - - (0.14) - ------- ------- ------- ------- Earnings (loss) per common share $ (0.20) $ 0.12 $ 0.21 $ 0.12 ======= ======= ======= ======= Cash dividends per common share $ 0.05 $ 0.05 $ 0.10 $ 0.10 ======= ======= ======= =======
See Notes to the Condensed Consolidated Financial Statements -3- 4 WESTINGHOUSE ELECTRIC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET ------------------------------------ (in millions)
June 30, 1996 December 31, 1995 ------------- ----------------- ASSETS (unaudited) - ------ Cash and cash equivalents $ 157 $ 196 Customer receivables 1,511 1,494 Inventories (note 6) 811 852 Uncompleted contracts costs over related billings 699 584 Program rights 314 301 Deferred income taxes 656 547 Prepaid and other current assets 251 261 ------ ------- Total current assets 4,399 4,235 Plant and equipment, net 1,850 1,924 Intangible and other noncurrent assets (note 7) 9,053 8,827 Net assets of Discontinued Operations (note 9) - 1,669 ------- ------- Total assets $15,302 $16,655 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Revolving credit borrowings and other short-term debt $ 1,768 $ 309 Current maturities of long-term debt 26 330 Accounts payable 582 829 Uncompleted contracts billings over related costs 383 322 Other current liabilities (note 8) 2,036 2,123 ------- ------- Total current liabilities 4,795 3,913 Long-term debt 3,649 7,226 Net liabilities of Discontinued Operations (note 9) 64 - Other noncurrent liabilities (note 8) 5,007 3,997 ------- ------- Total liabilities 13,515 15,136 ------- ------- Contingent liabilities and commitments (note 10) Minority interest in equity of consolidated subsidiaries 12 11 Shareholders' equity (note 11): Preferred stock, $1.00 par value (25 million shares authorized): Series A preferred (no shares issued) - - Series C conversion preferred (4 million shares issued) 4 4 Common stock, $1.00 par value (630 million shares authorized, 426 million shares issued) 426 426 Capital in excess of par value 1,820 1,848 Common stock held in treasury (625) (720) Minimum pension liability adjustment (1,050) (1,220) Cumulative foreign currency translation adjustments (10) (11) Retained earnings 1,210 1,181 ------- ------- Total shareholders' equity 1,775 1,508 ------- ------- Total liabilities and shareholders' equity $15,302 $16,655 ======= =======
See Notes to the Condensed Consolidated Financial Statements -4- 5 WESTINGHOUSE ELECTRIC CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ---------------------------------------------- (in millions) (unaudited)
Six Months Ended June 30 ------------------------ 1996 1995 ---- ---- Cash used for operating activities of Continuing Operations $ (657) $ (196) Cash provided (used) for operating activities of Discontinued Operations (349) 56 Cash flows from investing activities: Business acquisitions (101) (37) Business divestitures 3,570 65 Liquidation of assets of Discontinued Operations 49 159 Capital expenditures (94) (97) Liquidations of trust investments - 239 ------- ------- Cash provided by investing activities 3,424 329 ------- ------- Cash flows from financing activities: Bank revolver borrowings 4,689 508 Bank revolver repayments (3,210) (460) Net change in other short-term debt (371) (16) Repayments of long-term debt (3,580) (39) Treasury stock reissued 67 33 Dividends paid (63) (84) Other (10) (6) ------- ------- Cash used for financing activities (2,478) (64) ------- ------- Increase (decrease) in cash and cash equivalents (60) 125 Cash and cash equivalents at beginning of period 226 344 ------- ------- Cash and cash equivalents at end of period $ 166 $ 469 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid: Continuing Operations $ 266 $ 85 Discontinued Operations 35 77 ------- ------- Total interest paid $ 301 $ 162 ======= ======= Income taxes paid $ 64 $ 47 ======= =======
See Notes to the Condensed Consolidated Financial Statements -5- 6 WESTINGHOUSE ELECTRIC CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -------------------------------------------------------- 1. GENERAL The condensed consolidated financial statements include the accounts of Westinghouse Electric Corporation (Westinghouse) and its subsidiary companies (together, the Corporation) after elimination of intercompany accounts and transactions. When reading the financial information contained in this Quarterly Report, reference should be made to the financial statements, schedules and notes contained in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1995 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 1996. Certain amounts pertaining to the six months ended June 30, 1995 and the year ended December 31, 1995 have been restated or reclassified for comparative purposes. Reference also should be made to the Corporation's Current Report on Form 8-K dated May 2, 1996 containing certain restated financial information. In March 1996, the Corporation adopted a plan to exit its environmental services line of business that was previously reported as part of the Government & Environmental Services business segment in Continuing Operations. As a result, financial information previously issued has been restated to give effect to the classification of the environmental services business as a Discontinued Operation in accordance with Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations--Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" (APB 30). See note 9 to the financial statements. The Corporation previously classified as Discontinued Operations, WCI Communities, Inc. (WCI), The Knoll Group (Knoll), the defense and electronic systems business, the Distribution and Control Business Unit (DCBU), Westinghouse Electric Supply Company (WESCO), and the financial services business. In the opinion of management, the Condensed Consolidated Financial Statements include all material adjustments necessary to present fairly the Corporation's financial position, results of operations and cash flows. Such adjustments are of a normal recurring nature. The results for this interim period are not necessarily indicative of results for the entire year or any other interim period. 2. RESTRUCTURING, LITIGATION, AND OTHER MATTERS During the second quarter of 1996, the Corporation completed a comprehensive review of its environmental remediation obligations and recorded a charge to operating profit of $175 million. See note 10. During the first quarter of 1996, the Corporation took several actions to streamline its businesses and reduce the future financial impact of certain matters. Certain of these actions resulted in the recognition of charges to operating profit. Costs for new restructuring projects of $125 million were recognized primarily for consolidation of facilities and the separation of employees. A charge of $486 million was recognized for pending litigation matters. As discussed in note 3, impairment of $54 million was recognized based on a modification of the projected recoverability of certain long-lived assets. Other costs of $30 million recognized in the first quarter generally relate to previously divested businesses. 3. IMPAIRMENT OF LONG-LIVED ASSETS During the first quarter of 1996, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121 requires that long-lived assets, including related goodwill, be reviewed for impairment and written down to their estimated fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The adoption of SFAS No. 121 resulted in an impairment charge included in operating profit of $54 million. -6- 7 4. OTHER INCOME AND EXPENSES, NET (in millions) (unaudited)
Three Months Ended Six Months Ended June 30 June 30 ------------------ ---------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net gain (loss) on disposition of assets $ 1 $ - $ (150) $ (5) Miscellaneous, net 6 1 11 4 ----- ----- ------ ------ Other income (expenses), net $ 7 $ 1 $ (139) $ (1) ===== ===== ====== ======
The net loss on disposition of assets for the six months ended June 30, 1996, includes an estimated loss of $152 million resulting from a decision to sell certain miscellaneous non-strategic assets. 5. EXTRAORDINARY ITEM On March 1, 1996, the Corporation extinguished prior to its maturity $3,565 million of debt under the $7.5 billion credit agreement. Term Loan I was repaid in full and $1,065 million of Term Loan II was repaid. As a result of the early extinguishment of debt and the writeoff of related debt issue costs in the first quarter, the Corporation incurred an extraordinary loss of $63 million, net of a tax benefit of $41 million. 6. INVENTORIES (in millions)
June 30, 1996 December 31, 1995 ------------- ----------------- (unaudited) Raw materials $ 94 $ 88 Work in process 513 446 Finished goods 132 122 ----- ------ 739 656 Long-term contracts in process 831 1,002 Progress payments to subcontractors 49 21 Recoverable engineering and development costs 85 60 Less: Inventoried costs related to contracts with progress billing terms (893) (887) ----- ------ Inventories, net $ 811 $ 852 ===== ======
7. INTANGIBLE AND OTHER NONCURRENT ASSETS (in millions)
June 30, 1996 December 31, 1995 ------------- ----------------- (unaudited) Deferred income taxes $1,268 $1,209 Goodwill 5,251 5,303 FCC licenses 1,248 1,242 Other intangible assets 159 162 Intangible pension asset 54 63 Deferred charges 251 353 Joint ventures and affiliates 82 70 Noncurrent receivables 392 172 Program rights 135 21 Other 213 232 ------ ------ Total intangible and other noncurrent assets $9,053 $8,827 ====== ======
-7- 8 8. OTHER CURRENT AND NONCURRENT LIABILITIES (in millions)
June 30, 1996 December 31, 1995* ------------- ----------------- (unaudited) Other current liabilities: - ------------------------- Accrued employee compensation $ 188 $ 215 Income taxes currently payable 148 182 Liabilities for talent and program rights 211 254 Accrued product warranty 56 58 Accrued taxes, interest, and insurance 216 190 Accrued restructuring costs 159 153 Liability for asset dispositions 111 93 Accrued expenses 732 802 Environmental liabilities 55 47 Other 160 129 ------ ------ Total other current liabilities $2,036 $2,123 ====== ====== Other noncurrent liabilities: - ---------------------------- Postretirement and postemployment benefits $1,307 $1,311 Pension liability 1,563 1,426 Accrued restructuring 75 8 Liability for asset dispositions 99 19 Liabilities for talent and program rights 51 47 Accrued expenses 883 661 Environmental liabilities 432 238 Other 597 287 ------ ------ Total other noncurrent liabilities $5,007 $3,997 ====== ======
*Certain amounts have been reclassified for comparative purposes. 9. DISCONTINUED OPERATIONS During the first quarter of 1996, the Corporation completed the sales of both Knoll and the defense and electronic systems business. These sales resulted in a combined after-tax gain of $1.2 billion. The net proceeds from these transactions were used to repay a significant portion of the debt incurred to finance the acquisition of CBS, all of which was classified as debt of Continuing Operations. In March 1996, the Corporation adopted a plan to exit its environmental services line of business included in its former Government & Environmental Services segment. The Corporation recorded an after-tax charge for the estimated loss on disposal of $146 million. During the third quarter of 1995, the Corporation exited its land development business segment by selling WCI. The proceeds were used to repay debt of Discontinued Operations. In November 1992, the Corporation announced a plan that included exiting Financial Services through the disposition of its $9 billion asset portfolios and selling DCBU and WESCO. The Corporation has since completed the sales of DCBU and WESCO and liquidated substantially all of Financial Services real estate and corporate portfolios. The liquidation of Financial Services leasing portfolio is expected to occur over a longer period of time in accordance with its contractual terms. -8- 9 The operating results for Discontinued Operations for the six months ended June 30, 1996 and 1995 are grouped by measurement date as follows:
Discontinued Operation Measurement Date - -------------------------------------------------------------------------------- Environmental Services March 1996 Defense and Electronic Systems December 1995 Knoll December 1995 WCI July 1995 Financial Services November 1992
Operating results for a discontinued operation subsequent to its measurement date are recorded directly to the liability for estimated loss on disposal. OPERATING RESULTS OF DISCONTINUED OPERATIONS (in millions) (unaudited) For the six months ended June 30, 1996
Measurement Date ---------------------------------------- 1996 1995 1992 Total ---- ---- ---- ----- Sales of products and services $ 114 $ 352 $ 13 $ 479 Loss before income taxes (15) (15) Income tax benefit 5 5 Net loss prior to measurement date (10) (10) Operating losses after measurement date charged to liability for estimated loss on disposal (32) (14) (11) (57)
For the six months ended June 30, 1995
Measurement Date ---------------------------------------- 1996 1995 1992 Total ---- ---- ---- ----- Sales of products and services $ 146 $1,528 $ 17 $1,691 Income (loss) before income taxes (6) 108 102 Income tax benefit (expense) 2 (46) (44) Net income (loss) prior to measurement date (4) 62 58 Operating losses after measurement date charged to liability for estimated loss on disposal (35) (35)
-9- 10 The assets and liabilities of Discontinued Operations have been separately classified on the consolidated balance sheet as net assets (liabilities) of Discontinued Operations. A summary of these assets and liabilities follows: NET ASSETS (LIABILITIES) OF DISCONTINUED OPERATIONS
(in millions) June 30, 1996 December 31, 1995 ------------- ----------------- (unaudited) ASSETS: Cash and cash equivalents $ 9 $ 30 Receivables 46 448 Inventories 9 283 Portfolio investments 887 901 Other investments 184 212 Other assets 237 1,200 Deferred income taxes - 432 ------ ------ Total assets -- Discontinued Operations 1,372 3,506 ------ ------ LIABILITIES: Revolving credit facility borrowings 257 81 Current maturities of long-term debt 42 265 Liability for estimated loss on disposal 660 212 Long-term debt 154 157 Other liabilities 306 1,122 Deferred income taxes 17 - ------ ------ Total liabilities -- Discontinued Operations 1,436 1,837 ------ ------ Net assets (liabilities) of Discontinued Operations $ (64) $1,669 ====== ======
Portfolio investments consist primarily of receivables related to the leasing portfolio of Financial Services. Also included are real estate properties and investments in leasing partnerships. The leasing portfolio is expected to liquidate through 2015 in accordance with contractual terms. Leasing receivables consist of direct financing and leveraged leases. At June 30, 1996 and December 31, 1995, 83% and 84%, respectively, related to aircraft and 17% and 16%, respectively, related to cogeneration facilities. Other investments include mortgage receivables and other notes or securities acquired or retained in divestiture transactions. Other assets of Discontinued Operations relate primarily to the environmental services businesses, which are in the process of being divested. 10. CONTINGENT LIABILITIES AND COMMITMENTS Litigation - ---------- Steam Generators The Corporation has been defending various lawsuits brought by utilities claiming a substantial amount of damages in connection with alleged tube degradation in steam generators sold by the Corporation as components of nuclear steam supply systems. Since 1993, settlement agreements have been entered resolving nine litigation claims. These agreements generally require the Corporation to provide certain products and services at prices discounted at varying rates. Two cases were resolved in favor of the Corporation after trial or arbitration. Two active steam generator lawsuits remain. -10- 11 The Corporation is also a party to five tolling agreements with utilities or utility plant owners' groups which have asserted steam generator claims. The tolling agreements delay initiation of any litigation for various specified periods of time and permit the parties time to engage in discussion. Securities Class Actions - Financial Services The Corporation is defending derivative and class action lawsuits alleging federal securities law and common law violations arising out of purported misstatements or omissions contained in the Corporation's public filings concerning the financial condition of the Corporation and certain of its former subsidiaries in connection with charges to earnings of $975 million in 1990 and $1,680 million in 1991 and a public offering of Westinghouse common stock in 1991. The court dismissed both the derivative claim and the class action claims in their entirety. These dismissals were appealed. In July 1996, the United States Court of Appeals for the Third Circuit (the Circuit Court) affirmed the court's dismissal of the derivative claim. In addition, the Circuit Court affirmed in part and reversed in part the class action claims. Those portions of the class action claims which were reversed have been remanded to the Western District of Pennsylvania for further proceedings. Asbestos The Corporation is a defendant in numerous lawsuits claiming various asbestos-related personal injuries, which allegedly occurred from use or inclusion of asbestos in certain of the Corporation's products, generally in the pre-1970 time period. Typically, these lawsuits are brought against multiple defendants. The Corporation was neither a manufacturer nor a producer of asbestos and is oftentimes dismissed from these lawsuits on the basis that the Corporation has no relationship to the products in question or the claimant did not have exposure to the Corporation's product. On May 2, 1996, 15,000 claims pending in a multidistrict litigation in the Eastern District of Pennsylvania were dismissed. Plaintiffs may appeal this dismissal. At June 30, 1996, the Corporation has approximately 90,000 claims outstanding against it. In court actions which have been resolved, the Corporation has prevailed in the majority of the asbestos claims and has resolved others through settlement. Furthermore, the Corporation has brought suit against certain of its insurance carriers with respect to these asbestos claims. Under the terms of a settlement agreement resulting from this suit, carriers that have agreed to the settlement are now reimbursing the Corporation for a substantial portion of its current costs and settlements associated with asbestos claims. Litigation is inherently uncertain and always difficult to predict. Substantial damages are sought in the steam generator claims, the securities class action and certain groupings of asbestos claims and, although management believes a significant adverse judgment is unlikely, any such judgment could have a material adverse effect on the Corporation's results of operations for a quarter or a year. However, based on its understanding and evaluation of the relevant facts and circumstances, management believes that the Corporation has meritorious defenses to the litigation described above and that the Corporation has adequately provided for costs arising from potential settlement of these matters when in the best interest of the Corporation. Management believes that the litigation should not have a material adverse effect on the financial condition of the Corporation. Environmental Matters - --------------------- Compliance with federal, state, and local laws and regulations relating to the discharge of pollutants into the environment, the disposal of hazardous wastes and other related activities affecting the environment have had and will continue to have an impact on the Corporation. It is difficult to estimate the timing and ultimate costs to be incurred in the future due to uncertainties about the status of laws, regulations and technology, the adequacy of information available for individual sites, the extended time periods over which site remediation occurs, and the identification of new sites. The Corporation has, however, recognized an estimated liability, measured in current dollars, for those sites where it is -11- 12 probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Corporation recognizes changes in estimates as new remediation requirements are defined or as more information becomes available. With regard to remedial actions under federal and state Superfund laws, the Corporation has been named a potentially responsible party (PRP) at numerous sites located throughout the country. At many of these sites, the Corporation is either not a responsible party or its site involvement is very limited or de minimis. However, the Corporation may have varying degrees of cleanup responsibilities at approximately 85 sites, including the sites located in Bloomington, Indiana. The Corporation believes that any liability incurred for cleanup at these sites will be satisfied over a number of years and, in many cases, the costs will be shared with other responsible parties. These sites include certain sites for which the Corporation, as part of an agreement for sale, has retained obligations for remediation of environmental contamination and for other Comprehensive Environmental Response Compensation and Liability Act (CERCLA) issues. In the second quarter of 1996, the Corporation and its external consultants completed a study to evaluate the Corporation's environmental remediation strategies. Based on the costs associated with the most probable alternative remediation strategy for the above mentioned sites, including Bloomington, the Corporation has an accrued liability of $487 million, including $175 million that was recognized in the second quarter of 1996. Depending on the remediation alternatives ultimately selected, the costs related to these sites could differ from the amounts currently accrued. The accrued liability includes $361 million for site investigation and remediation, and $126 million for post closure and monitoring activities. Management anticipates that the majority of expenditures for site investigation and remediation will occur during the next 5 - 10 years. Expenditures for post closure and monitoring activities will be made over periods up to 30 years. Commitments -- Continuing Operations - ------------------------------------ In the ordinary course of business, standby letters of credit are issued by commercial banks on behalf of the Corporation related to performance obligations primarily under contracts with customers. The Corporation routinely enters into commitments to purchase the rights to broadcast programs, including feature films and sporting events. These contracts permit the broadcast of such properties for various periods ending no later than April 2002. As of June 30, 1996, the Corporation was committed to make payments totalling $3,497 million under such broadcasting contracts. Commitments -- Discontinued Operations - -------------------------------------- Financial Services commitments with off-balance-sheet credit risk represent financing commitments to provide funds, including loan or investment commitments, guarantees, standby letters of credit and standby commitments, generally in exchange for fees. The remaining commitments have fixed expiration dates from 1996 through 2002. At June 30, 1996, commitments totalled $40 million compared to $45 million at year-end 1995. Management expects these commitments to expire unfunded or be funded with the resulting assets being sold shortly after funding. 11. SHAREHOLDERS' EQUITY As a result of the first quarter 1996 sale of the defense and electronic systems business and the buyer's assumption of certain pension obligations, the Corporation's unfunded accumulated benefit obligation was reduced by approximately $400 million. This decrease in the unfunded pension liability increased shareholders' equity by $170 million by reducing the amount of minimum pension liability required to be recognized. -12- 13 The Corporation's Series C Conversion Preferred Stock will automatically convert into 36,000,000 shares of common stock on June 1, 1997 unless called on May 30, 1997 by the Corporation or converted at any time prior to June 1, 1997 by the holder. In accordance with prevalent practice at the time of sale, these shares were treated as outstanding common stock for the calculation of earnings per share. If the Series C Preferred had been treated as common stock equivalents for the calculation of earnings per share, the Corporation's earnings per share for the three months and six months ended June 30, 1996 would have been a loss of 25 cents and income of 17 cents compared to income for the same periods last year of 10 cents and 7 cents. On June 20, 1996, the Corporation announced a definitive merger agreement with Infinity Broadcasting Corporation (Infinity) under which Infinity shareholders will receive 1.71 shares of Westinghouse common stock in exchange for each share of Infinity stock. This transaction involves the issuance by the Corporation of approximately 205 million additional shares assuming the exercise of all existing Infinity options and warrants. The consummation of the merger is contingent on various approvals, including the Federal Communications Commission and certain shareholder actions of both Westinghouse and Infinity. Closing could occur as early as the end of 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Progress continued in the Corporation's strategic redirection of its business portfolio. The continued strength of the radio group's performance reinforced the decision to focus on this core business as a growth vehicle. During the second quarter of 1996, the Corporation announced a definitive merger agreement with Infinity Broadcasting Corporation (Infinity). Following the acquisition of Infinity, the Corporation will have established the preeminent radio broadcasting group in the United States. After concluding the previously disclosed review of its environmental remediation activities, the Corporation recognized a charge to operating profit of $175 million, or $0.26 per share. During the first quarter of 1996, the Corporation completed the sales of its defense and electronic systems business and The Knoll Group (Knoll), its office furnishings unit, and recorded a combined after-tax gain of $1.2 billion. The cash proceeds from these divestitures, which totalled nearly $3.6 billion, were used to repay ahead of schedule a significant portion of the debt incurred to finance the CBS acquisition. The Corporation further streamlined its businesses and reduced the future financial impact of legacies in the first quarter of 1996. Management adopted a plan to exit its environmental services line of business resulting in the transfer of the environmental services businesses to Discontinued Operations and the recognition of an estimated loss on disposal. The Corporation recognized costs associated with additional restructuring actions and outstanding litigation matters. The Corporation also recognized impairment of assets that will continue to be used in the business as well as certain assets that have been identified for sale, and modified its application of contract accounting principles. The -13- 14 special items included in the Corporation's results for the first six months of 1996 are summarized below: SPECIAL ITEMS INCLUDED IN RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 (in millions except per share amounts) (unaudited)
Pre-Tax After-Tax Per-Share Amount Amount Impact ------- --------- --------- Continuing Operations: Operating Profit: Restructuring $ (125) Litigation matters (486) Impairment of assets (54) Environmental remediation activities (175) Contract accounting adjustments (128) Other (30) ------ Total impact on operating profit (998) $(663) Other income and expense: Loss on assets held for sale (152) (101) ------ ----- Total impact on Continuing Operations (1,150) (764) $(1.74) Discontinued Operations: Estimated loss on disposal of environmental services business (146) Gain on disposal of the defense and electronic systems business and Knoll 1,164 ----- Net gain on disposal of businesses 1,018 2.32 Extraordinary Item: Loss on early extinguishment of debt (63) (0.14) ----- ----- Net amount of special items $ 191 $0.44 ===== =====
Net income for the second quarter of 1996 was a loss of $89 million, or $0.20 per share, compared to income of $59 million, or $0.12 per share for the 1995 second quarter. Income from Continuing Operations for the 1996 second quarter was a loss of $89 million, or $0.20 per share, compared to income of $25 million or $0.03 per share in the 1995 second quarter. Excluding the special items, Income from Continuing Operations was $27 million, or $0.06 per share, compared to $29 million, or $0.04 per share for the 1995 second quarter. Amounts for 1995 were adjusted for a $6 million restructuring charge ($4 million after tax or $0.01 per share). Net income for the six months ended June 30, 1996 was $92 million, or $0.21 per share, compared to $74 million, or $0.12 per share for the 1995 period. Continuing Operations reported a loss of $853 million for the first six months of 1996, compared to income of $16 million for the 1995 period. Excluding special items, Continuing Operations' loss was $89 million, compared to income of $20 million for the first six months of 1996 and 1995. On a per share basis, excluding special items, Continuing Operations reported a loss of $0.20 per share compared to a loss of $0.01 per share for the same period last year. The calculation of the per share amounts for the 1995 period includes a reduction for dividends on the Series B Preferred stock, which converted to common stock on September 1, 1995. -14- 15 Interest expense was significantly higher in the 1996 periods reflecting the cost of the debt that was incurred to finance the CBS acquisition, although the repayment of a significant portion of that debt in March 1996 reduced the magnitude of the increase in interest costs. In addition, higher amortization of intangible assets, principally FCC licenses and goodwill acquired with CBS, have and will continue to impact earnings. RECENT DEVELOPMENTS On June 20, 1996, the Corporation announced a definitive merger agreement with Infinity under which Infinity shareholders will receive 1.71 shares of Westinghouse common stock in exchange for each share of Infinity stock. This transaction involves the issuance by the Corporation of approximately 205 million additional shares assuming the exercise of all existing Infinity options and warrants. The consummation of the merger is contingent on various approvals, including the Federal Communications Commission and certain shareholder actions of both Westinghouse and Infinity. Closing could occur as early as the end of 1996. In light of the Corporation's dramatic portfolio shift in the past year, the Corporation recently announced that it is considering actions to separate its broadcasting and industrial businesses. The Corporation expects to conclude its assessment of the legal, financial, tax and human resources issues and announce its strategy in the fourth quarter of 1996. The Corporation expects that the 1996 third quarter results compared to the second quarter will be down due to anticipated weakness at the CBS Network reflecting the costs of covering the presidential conventions and lower ratings and pricing due to competition from the Olympics broadcast. In addition, softness in the demand for outage services in Energy Systems is expected to continue and adversely affect profitability. -15- 16 RESULTS OF OPERATIONS The following represents the segment results for the Corporation's Continuing Operations for the three months and six months ended June 30, 1996 and 1995. Segment Results ($ in millions)(unaudited) ------------------------------------------
Operating Profit (Loss) Sales of Products Operating Profit Excluding & Services (Loss) Special Charges ----------------- ---------------- ---------------- Three Months Ended June 30 1996 1995 1996 1995 1996 1995 ------------------ ---- ---- ---- ---- ---- ---- Broadcasting: Television $ 226 $ 90 $ 90 $ 42 $ 90 $ 42 Network 681 0 87 0 87 0 Radio 145 50 47 16 47 16 Other Broadcasting 48 43 (32) 5 (32) 5 ------ ------ ------ ------ ------ ------ Total Broadcasting 1,100 183 192 63 192 63 Power Systems: Energy Systems 304 332 2 27 13 33 Power Generation 465 440 (20) (13) (20) (13) Other Power Systems (37) (28) (17) (17) (17) (17) ------ ------ ------ ------ ------ ------ Total Power Systems 732 744 (35) (3) (24) 3 Thermo King 265 284 46 47 46 47 Government Operations 26 34 13 19 13 19 Communication & Information Systems 86 81 0 (1) 0 (1) Corporate & Other 34 139 (246) (37) (82) (37) Intersegment sales (19) (20) - - - - ------ ------ ------ ------ ------ ------ Total $2,224 $1,445 $ (30) $ 88 $ 145 $ 94 ====== ====== ====== ====== ====== ======
-16- 17 Segment Results ($ in millions)(unaudited) ------------------------------------------
Operating Profit (Loss) Sales of Products Operating Profit Excluding & Services (Loss) Special Charges ----------------- ---------------- ---------------- Six Months Ended June 30 1996 1995 1996 1995 1996 1995 ---------------- ---- ---- ---- ---- ---- ---- Broadcasting: Television $ 414 $ 164 $ 144 $ 68 $ 144 $ 68 Network 1,447 0 87 0 87 0 Radio 266 93 67 23 67 23 Other Broadcasting 91 77 (104) 5 (63) 5 ------ ------ ------ ------ ------ ------ Total Broadcasting 2,218 334 194 96 235 96 Power Systems: Energy Systems 535 616 (24) 33 8 39 Power Generation* 742 762 (245) (44) (62) (44) Other Power Systems (87) (65) (323) (31) (34) (31) ------ ------ ------ ------ ------ ------ Total Power Systems* 1,190 1,313 (592) (42) (88) (36) Thermo King 522 557 91 91 91 91 Government Operations 51 61 31 34 31 34 Communication & Information Systems 168 151 (42) 1 (1) 1 Corporate & Other 67 272 (568) (58) (156) (58) Intersegment sales (36) (41) - - - - ------ ------ ------ ------ ------ ------ Total* $4,180 $2,647 $ (886) $ 122 $ 112 $ 128 ====== ====== ====== ====== ====== ======
*First quarter 1996 sales were reduced by a $180 million one-time adjustment to previous accounting for certain long-term contracts. The Corporation's reported sales increased $779 million, or 54%, for the second quarter of 1996 compared to the 1995 second quarter and $1,533 million, or 58% for the first six months of 1996 compared to the same period of 1995. Excluding the effects of the CBS acquisition and the special one-time accounting adjustment at Power Generation, sales were down slightly for the quarter and flat for the six month period. The improvements achieved by certain businesses, including Power Generation and Broadcasting, were essentially offset by the loss of sales from Energy Systems, Thermo King, and certain miscellaneous businesses that were divested in 1995, including MICROS Systems, Inc. (MICROS). Generally, operating profits for many of the Corporation's major businesses were consistent with the prior-year results. The radio group of the Broadcasting segment reported very strong results for the second quarter and first six months of 1996 with operating profit up significantly over the 1995 periods. However, reduced profitability for the Power Systems segment for the quarter and six months continued to reflect the difficult market conditions under which these businesses are operating. The Corporation's continuing pension obligation for retired individuals who were part of the defense and electronic systems business sold in March 1996 contributed, in part, to the decrease in operating profit for the quarter and six months. -17- 18 Broadcasting Due to the acquisition of CBS in November 1995, the results for Broadcasting for the second quarter and first six months of 1996 include CBS financial data, while the 1995 periods do not. Where appropriate, the discussion below provides a comparison of the actual results for the second quarter and first six months of 1996 with the combined Group W and CBS actual results for the second quarter and first six months of 1995. Reported revenues for the television group reflect the ownership of 15 television stations during the second quarter and first six months of 1996 compared to five stations during the same periods last year. On a comparable basis, revenues for the stations fell slightly due to lower network ratings and affiliation changes at certain stations. Operating profit on a comparable basis also declined reflecting the lower revenues and affiliation changes, although cost improvements at the stations helped lessen the impact. On July 1, 1996, WPRI, the Providence, Rhode Island, television station acquired with CBS was sold. No gain or loss will be reported on this sale. The network, which was acquired with CBS, experienced increased revenues of 3% and 6%, respectively, for the second quarter and first six months of 1996 compared to the same periods last year. Higher prices, increased syndication revenues and the addition of college football were the primary driving factors. Operating profit also increased as the favorable effects of higher prices and increased syndication revenues offset lower ratings and increased programming and affiliate compensation costs. The reported results for the radio group included 39 radio stations for the 1996 periods, including two Chicago radio stations acquired January 2, 1996, compared to 16 stations for the 1995 periods. On a comparable basis, revenues grew approximately 10% for the second quarter and first six months of 1996 compared to last year. Operating profit increased 47% and 40% for the same periods on the higher revenues and benefits from cost reductions. Other Broadcasting includes operating results for Group W Satellite Communications (GWSC) and Eyemark Entertainment, costs for the Broadcasting group's headquarters, and amortization of all goodwill arising from the CBS acquisition. Eyemark combines the activities of Group W Productions, and Maxam, a production company acquired in February 1996. For the first quarter of 1996, Other Broadcasting also included a $41 million restructuring charge for Group W's actions to obtain operational synergies between CBS and Group W. The cost of the CBS actions was recognized on the CBS opening balance sheet at the date of the acquisition. Revenues and operating profit for GWSC showed strong increases over the prior-year periods due to certain cable channel and network services acquired from CBS coupled with improved advertising revenues and delayed marketing expenditures. Results for production operations were down compared to the prior year due to absorbing the MAXAM operations. Goodwill amortization totalled $30 million for the second quarter and $60 million for the first six months of 1996. For the entire Broadcasting group, earnings before interest, taxes, depreciation, and amortization (EBITDA) and excluding the restructuring charge totalled $267 million for the second quarter of 1996 and $377 million for the first six months of 1996. On a combined basis, EBITDA for the 1995 periods was $209 million and $310 million. EBITDA differs from operating cash flows for the group primarily because it does not consider certain changes in assets and liabilities from period to period and it includes reversal of reserves of $42 million and $104 million for the second quarter and first six months of 1996 arising from purchase accounting adjustments related to program rights. Power Systems Power Systems includes results for the Energy Systems and Power Generation business units. Energy Systems sales and operating profit decreased for the second quarter and first six months of 1996 compared to the same periods last year. Sales decreased $28 million in the second quarter and $81 million for the first six months of 1996, primarily due to reduced outage work as well as a reduced scope of outage -18 19 services for utility customers. The reduced scope of outage services to be performed this year generally results from fewer major repair initiatives at power plants. Included in operating profit for the second quarter of 1996 is a charge of $11 million for environmental remediation activities. As a result of ongoing efforts to reduce costs, a restructuring charge of $21 million was recognized in the first quarter of 1996. A restructuring charge of $6 million was recorded in the second quarter of 1995. Excluding these special items, operating profit for the second quarter and first six months of 1996 decreased $20 million and $31 million, respectively, compared to the same periods last year, primarily as a result of the lower revenues. Power Generation's orders for the second quarter and first six months of 1996 increased $341 million and $250 million compared to the prior-year periods reflecting major international orders. Sales increased $25 million compared to the second quarter of 1995 as a result of revenues from previous orders for new apparatus and major projects. The operating loss increased by $7 million, however, as the lower margins from new apparatus business replaced higher margins from the operating plant and service business. In light of changing market conditions and pricing pressures in the Power Generation business, the business unit modified its application of contract accounting principles to reflect a more conservative approach. Accordingly, during the first quarter of 1996, a one-time accounting adjustment was made to reduce sales by $180 million and operating profit by $128 million. Application of the new approach is not expected to have a material effect on any individual quarter's results. Also during the first quarter, a $50 million restructuring charge, required primarily as a result of a decision to close the Pensacola, Florida manufacturing facility, was recognized. Excluding these special items, during the first six months of 1996 sales increased $160 million and the operating loss increased $18 million compared to the prior year. The favorable impact of the higher revenues was more than offset by erosion of product margins and mix. The operating loss for the second quarter of 1996 for Other Power Systems, which primarily reflects discounts on prior litigation settlements, was flat compared to the second quarter of 1995. A $289 million charge for litigation and other matters was recognized in the first quarter of 1996. Excluding this charge, the operating loss for the first six months of 1996 was consistent with the same period of 1995. Thermo King Orders and revenues for the second quarter and first six months of 1996 declined compared to the same periods in 1995 primarily as a result of a slowdown in the United States truck and trailer market and reduced container volume. Operating profit for the same periods remained flat, however, as higher margins on service parts sales, factory productivity improvements, and other product cost improvements mitigated the effects of the lower volume. Government Operations Sales for the second quarter and first six months of 1996 decreased compared to the same periods of 1995 primarily due to the loss of a Navy contract in late 1995. Operating profit declined for the same periods resulting from the lower revenues, timing of fees from performance based indicators, increased bid and proposal cost, and sales mix for the radioactive waste container business. On August 6, 1996, the Corporation announced that a Westinghouse-led team had been awarded a five-year contract for managing the Department of Energy's (DOE) Savannah River Site. Also, on August 6, 1996, the DOE announced the award of the former Westinghouse Hanford contract to Fluor Daniel Hanford, Inc. The result of these two actions is not expected to impact operating profit for 1996, although the loss of the Hanford contract will unfavorably affect future profits. -19- 20 Communication & Information Systems Sales increased 6% and 11% for the second quarter and first six months of 1996 compared to the same periods last year due primarily to increased revenues in the residential security and wireless communications business. Operating profit, excluding a first quarter 1996 charge of $41 million for restructuring and asset impairment, was flat for the quarter and the first six months compared to last year as additional strategic spending for sales branches, primarily residential security, offset the higher volume. Corporate & Other Revenues declined in the second quarter and first six months of 1996 compared to last year as non-strategic businesses, including MICROS, were sold in the second half of 1995. The operating loss for the second quarter of 1996 included a $164 million charge for environmental remediation obligations related primarily to businesses previously divested. The operating loss for the first quarter of 1996 included $248 million of special charges for restructuring, litigation contingencies, and asset impairment. Corporate costs also include costs associated with retiree pension obligations retained in certain recent divestitures. RESTRUCTURING AND OTHER ACTIONS In recent years, the Corporation has restructured many businesses and its corporate headquarters in an effort to reduce costs and remain competitive in its markets. Restructuring activities primarily involve the separation of employees, the closing of facilities, the termination of leases, and the exiting of product lines. Costs for restructuring activities are limited to incremental costs that directly result from the restructuring activities and that provide no future benefit to the Corporation. During the first quarter of 1996, management approved new restructuring projects with costs totalling $125 million primarily for consolidation of facilities and the separation of employees. As of June 30, 1996, $9 million had been expended on the 1996 programs, $5 million of which is cash. Cash expenditures, which are primarily tied to announced facility consolidations, are estimated to approximate $25 million for the remainder of 1996, $44 million for 1997, and $32 million for 1998 and beyond. In addition to the reserve established in the first quarter of 1996, restructuring reserves were also established in each of the years 1993 through 1995. The employee separations included in the plans for the years 1993 and 1994 are complete. Remaining costs under those plans of approximately $9 million represent 1996 cash expenditures for exit costs. The employee separations included in the 1995 plan are 85% complete with the remainder of separations to occur during 1996. Remaining total costs under this plan of approximately $17 million represent cash expenditures, the majority of which will occur in 1996. Implementation of the CBS restructuring plan is expected to continue over the next two years. Annualized savings from the 1993, 1994, and 1995 restructuring programs other than the CBS plan are estimated to total approximately $140 million; however, competitive pressures causing price compression in certain of the Corporation's markets have absorbed a significant portion of the savings achieved through restructuring actions. Annualized savings from the 1996 plan, which generally will not be realized in the near term, are estimated at $50 million. The Corporation expects to continue to identify restructuring initiatives at its business units and its Corporate headquarters in an ongoing effort to reduce its overall cost structure and improve competitiveness. -20- 21 DISCONTINUED OPERATIONS The reshaping of the Corporation's portfolio of businesses has resulted in a number of disposals of business segments in recent years. In November 1992, the Corporation announced a plan that included exiting the financial services business and selling both the Distribution and Control Business Unit (DCBU) and Westinghouse Electric Supply Company (WESCO). The portfolio investments of Financial Services have decreased from $8,967 million at year-end 1992, to $887 million at June 30, 1996, a decrease of $8,080 million. The remaining assets, consisting primarily of the leasing portfolio, are expected to liquidate through 2015 in accordance with their contractual terms. The Corporation completed the sales of DCBU and WESCO in 1994. Under a July 1995 plan, the Corporation sold WCI Communities, Inc. (WCI), its land development subsidiary, in 1995. During the first quarter of 1996, the Corporation completed the sales of Knoll and the defense and electronic systems business in accordance with a December 1995 plan and recognized a combined after-tax gain of $1,164 million. The Corporation also adopted a plan to exit its environmental services line of business and recorded a $146 million after-tax provision for the estimated loss on disposal of these businesses. This estimate was based on management's preliminary estimates of proceeds, results of operations through the disposal date, and other relevant factors. The divestiture process is continuing although performance of certain environmental services businesses in recent periods is below expectations. The liability for the estimated loss on the disposal of Discontinued Operations, totalling $660 million at June 30, 1996, represents amounts necessary to cover remaining costs and obligations associated with the 1992, 1995 and 1996 plans. Remaining costs include interest on debt, estimated credit losses on the portfolio investments of financial services, and future disposition costs and obligations relating to the environmental services businesses, Knoll, the defense and electronic systems business, DCBU and WESCO. These costs and related items include purchase price adjustments, transaction costs, insurance liabilities, and potential environmental remediation costs. Management believes that the total liability for the estimated loss on disposal of Discontinued Operations is adequate. Any variances from estimates which may occur for one component will be considered in conjunction with other components in determining whether an adjustment of the total liability is necessary. The adequacy of the liability is evaluated each quarter. The Corporation believes that the debt of Discontinued Operations at June 30, 1996 is supportable by the assets of Discontinued Operations and can be repaid as the portfolio liquidates over its contractual terms. OTHER INCOME AND EXPENSES Other income and expenses generated income of $7 million in the second quarter of 1996 and a loss of $139 million for the first six months of 1996 compared to income of $1 million and a loss of $1 million for the same periods of 1995. During the first quarter of 1996, a comprehensive review was undertaken by the Corporation to identify for sale a variety of non-strategic assets. A charge of $152 million was recognized during the quarter for losses expected upon sale of those assets. INTEREST EXPENSE Interest expense for Continuing Operations for the second quarter and first half of 1996 was $109 million and $255 million, respectively, compared to $47 million and $95 million for the same periods of 1995. The increase in interest expense is primarily a result of $5.4 billion of debt incurred for the acquisition of CBS in the fourth quarter of 1995. The Corporation repaid $3,565 million of this debt in the first quarter of 1996 through proceeds from the divestitures of Knoll and the defense and electronic systems business. This decrease in debt was offset somewhat by additional borrowings to cover working capital requirements. -21- 22 INCOME TAXES The Corporation's effective income tax rate for the second quarter and first six months of 1996 was a benefit of 33% and 34%, respectively, compared to tax expense of 32% and 17% for the same periods of 1995. Because of the amortization of non-deductible goodwill for CBS and the impact of special transactions, these rates can vary dramatically depending on the Corporation's income or loss levels. At June 30, 1996, the Corporation had recorded net deferred income tax benefits totalling $1,907 million compared to $2,188 million at December 31, 1995. As a result of these net deferred income tax benefits, cash payments for federal income taxes are minimal. Management believes that the Corporation will have sufficient future taxable income to make it more likely than not that the net deferred tax asset will be realized. LIQUIDITY AND CAPITAL RESOURCES Overview The Corporation manages its liquidity as a consolidated enterprise without regard to whether assets or debt are classified for balance sheet purposes as part of Continuing Operations or Discontinued Operations. As a result, the discussion below focuses on the Corporation's consolidated cash flows and capital structure. Late in 1995, the Corporation acquired CBS for $5.4 billion and financed the entire purchase price with debt. In the first quarter of 1996, the Corporation completed the sales of Knoll and the defense and electronic systems business and repaid approximately 65% of the acquisition debt. In an effort to continue to improve liquidity, the Corporation has and will continue to monetize non-strategic assets. In March 1996, the Corporation adopted a plan to sell its environmental services businesses. The Corporation also completed a comprehensive review and identified additional non-strategic assets for sale. In total, sales of various non-strategic assets are expected to generate cash proceeds of $300 million to $500 million. Operating activities of Continuing Operations required substantial cash outflows in the first six months of 1996. Management is focusing significant attention on minimizing working capital requirements and improving cost structures. Management expects that it will have sufficient liquidity to meet ordinary future business needs. Sources of liquidity generally available to the Corporation include cash from operations, availability under its credit facilities, cash and cash equivalents, proceeds from sales of non-strategic assets, borrowings from other sources, including funds from the capital markets, and the issuance of additional capital stock. -22- 23 Operating Activities The following table provides a reconciliation of net income to cash provided by operating activities of Continuing Operations for the six months ended June 30, 1996 and 1995: CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS (in millions) (unaudited)
Six Months Ended June 30 ------------------------ 1996 1995 ---- ---- Net income (loss) from Continuing Operations $(853) $ 16 Adjustments to reconcile net income (loss) from Continuing Operations to net cash used for operating activities: Depreciation and amortization 229 93 Losses on asset dispositions 150 5 Noncash restructuring charges 30 - Other noncash provisions and accounting adjustments 182 - Changes in assets and liabilities, net of effects of acquisitions and divestitures of businesses: Receivables, current and noncurrent 36 18 Inventories (89) (3) Progress payments net of costs on uncompleted contracts (54) (217) Accounts payable (250) (80) Deferred and current income taxes (213) (108) Program rights (61) - Other assets and liabilities 236 80 ----- ----- Cash used for operating activities of Continuing Operations $(657) $(196) ===== =====
The operating activities of Continuing Operations used $657 million of cash during the first six months of 1996, an increase of $461 million from the amount used during the first six months of 1995. Major factors contributing to the additional use of cash were higher interest payments, certain contractual prepayments for program rights and program development, and higher levels of working capital for the businesses. Interest payments for Continuing Operations during the first six months of 1996 were $266 million compared to $85 million during the same period of 1995. This increase in interest payments was primarily attributable to the higher debt associated with the CBS acquisition. During the first six months of 1996, the Broadcasting business segment, in its drive to improve CBS programming and ratings, successfully negotiated certain long-term contracts requiring the Corporation to make prepayments for future program rights and program development. Working capital levels increased for the businesses relative to the first six months of 1995. An increase in inventory and a significant reduction in accounts payable were the major contributors to the higher working capital. No contributions were made to the Corporation's pension plans during the first six months of 1996 or 1995. The Corporation's contribution level for 1996 is expected to be $200 million to $250 million, which is consistent with the Corporation's goal to fully fund its qualified plans over the next several years. The operating activities of Discontinued Operations used $349 million of cash during the first six months of 1996 and generated $56 million of cash for the same period of 1995. The increase in the use of cash during 1996 primarily related to the divestiture costs of Knoll and the defense and electronic systems -23- 24 business as well as the cash used in the operations of these businesses and in the operations of the environmental services business. Future cash requirements of Discontinued Operations will consist primarily of interest costs on debt, remaining costs associated with the completed divestitures, and operating and disposal costs associated with the Corporation's environmental services business. Investing Activities Investing activities provided $3.4 billion of cash during the first six months of 1996 compared to $329 million of cash provided during the same period of 1995. In the first six months of 1996, the Corporation completed the sales of Knoll and its defense and electronic systems business, generating $3.6 billion of cash. Asset liquidations of Discontinued Operations generated additional cash proceeds of $49 million. Investing activities in the first six months of 1996 included the purchase of two Chicago radio stations and a Spanish-language 24-hour news service, TeleNoticias, as well as investments in several joint ventures, primarily in China. In the first six months of 1995, the Corporation completed the sale of Aptus, Inc., an environmental services subsidiary, and the transfer of its 75 percent interest in the Westinghouse Motor Company. A significant portion of the proceeds for these transactions consisted of notes. Also, asset liquidations of Discontinued Operations generated cash proceeds of $159 million. The Corporation purchased the Plant Services Division of Vectra Technologies, Inc. a provider of chemical decontamination and cleaning services and made an additional payment in connection with the 1994 acquisition of Norden Systems during this time period. Also, during the second quarter of 1995, the Corporation received cash proceeds of $239 million from the sale of investments held in two trusts established to fund employee benefit plans and replaced the trust investments with Westinghouse common stock. Capital expenditures were $94 million for the first six months of 1996, a decrease of $3 million from the same period of 1995. Capital spending in 1996 is expected to be at or slightly below the spending levels of 1995. Financing Activities Cash used by financing activities during the first six months of 1996 totalled $2.5 billion compared to cash used of $64 million during the same period of 1995. The increase in the financing cash outflows was primarily attributable to the early extinguishment of $3,565 million of the term loans under the $7.5 billion credit agreement and the repayment of various medium term notes and debentures. Short-term net borrowings increased $1,431 million compared to the same period of 1995. Total debt for the Corporation was $5.9 billion at June 30, 1996, a decrease of $2.5 billion from December 31, 1995. Total borrowings under the Corporation's $2.5 billion revolving credit facility were $1,914 million at June 30, 1996 (see Revolving Credit Facilities). These borrowings carried a composite interest rate of 6.6% at June 30, 1996 which was based on the London Interbank Offer Rate (LIBOR), plus a margin based on the Corporation's senior unsecured debt rating and leverage. Dividends paid in the first six months of 1996 included approximately $23 million for Series C preferred stock, with the remaining $40 million representing common stock dividends. Dividends paid in the first six months of 1995 included approximately $23 million for Series C preferred stock, $25 million for Series B preferred shares, which converted to common shares in the third quarter of 1995, and approximately $36 million representing common stock dividends. At June 30, 1996, the Corporation had a shelf registration statement for debt securities with an unused amount of $400 million. -24- 25 Revolving Credit Facilities In September 1995, the Corporation entered into three new bank facilities under a credit agreement with a total commitment level of $7.5 billion. These credit facilities included two term loans of $2.5 billion each, the first of which was totally prepaid in March 1996. The second term loan, of which approximately $1 billion was prepaid in March 1996, is payable in quarterly installments beginning in August 1998 through November 2002. This term loan is subject to certain mandatory prepayment provisions. Amounts repaid under both term loans may not be reborrowed. In addition to these term loans, the credit agreement includes a $2.5 billion revolving credit facility with a seven-year maturity. The unused capacity under the revolving credit facility equalled $586 million as of June 30, 1996. Borrowing availability under the revolver is subject to compliance with certain covenants, representations and warranties, including a no material adverse change provision with respect to the Corporation taken as a whole, restrictions on the incurrence of liens, a maximum leverage ratio, minimum interest coverage ratio, and minimum consolidated net worth. Certain of these covenants become more restrictive over the term of the agreement. At June 30, 1996, the Corporation was in compliance with these covenants. The Corporation is currently pursuing a new revolving credit facility to replace its existing credit agreement. In addition to replacing borrowings under the current agreement, the new facility will refinance the existing Infinity debt and will provide funds for general corporate purposes. The new credit facility is expected to have more favorable terms, covenants, and rates than the existing agreement and is anticipated to be in place by the end of the third quarter of 1996. Upon completion of the new credit facility, the Corporation will write off the remaining unamortized deferred financing fees associated with the existing credit facility, which approximate $50 million at June 30, 1996. Hedging Activities The Corporation has entered into interest rate exchange agreements to manage the interest rate risk associated with various debt instruments. No transactions were speculative or leveraged. Given their nature, these agreements have been accounted for as hedging transactions. The notional amount of interest rate exchange agreements outstanding at June 30, 1996 was $1,132 million, all of which was associated with long-term debt of Continuing Operations. The average remaining maturity of interest rate exchange agreements was 9 months at June 30, 1996. The total notional amount outstanding at June 30, 1996 relates to interest rate exchange agreements with rate and maturity characteristics set forth in the table below: CONTRACTUAL MATURITIES OF INTEREST RATE EXCHANGE AGREEMENTS (in millions)(unaudited)
Six months ended June 30 Total 1996 1997 1998 1999 2000 ----- ---- ---- ---- ---- ---- Notional amount $1,132 $1,002 $ - $ 50 $ 55 $ 25 Wtd. avg. fixed rate paid 5.79% 5.39% - 8.73% 8.86% 9.36%
Under the majority of the exchange agreements, the floating rate received is based on 30-day LIBOR for the relevant periods indicated in the agreements. This rate was 5.50% on June 30, 1996. The Corporation's credit exposure under these agreements is limited to the cost of replacing an agreement in the event of non-performance by its counterparty. To minimize this risk, the Corporation has selected high credit quality counterparties. As of June 30, 1996, the Corporation had no net credit exposure under its interest rate exchange agreements. For the six months ended June 30, 1996, outstanding interest rate exchange agreements resulted in a net increase in interest expense of Continuing Operations of approximately $2 million with a de minimus impact on the average borrowing rate. -25- 26 The Corporation continually monitors its economic exposure to changes in foreign exchange rates and enters into foreign exchange forward or option contracts to hedge its transaction exposure when appropriate. As a result, the Corporation's unhedged foreign exchange exposure is not significant. Furthermore, changes in foreign exchange rates whether favorable or unfavorable are not expected to have a significant impact on the Corporation's financial results or operating activities. With respect to the Corporation's operations in highly inflationary and unstable economies that are accounted for in accordance with SFAS No. 52, "Foreign Currency Translation," the combined total sales for those operations were less than 0.5% of the Corporation's sales for the first six months of 1996. OTHER MATTERS Environmental Matters Compliance with federal, state, and local laws and regulations relating to the discharge of pollutants into the environment, the disposal of hazardous wastes and other related activities affecting the environment have had and will continue to have an impact on the Corporation. It is difficult to estimate the timing and ultimate costs to be incurred in the future due to uncertainties about the status of laws, regulations and technology, the adequacy of information available for individual sites, the extended time periods over which site remediation occurs, and the identification of new sites. In the second quarter of 1996, the Corporation and its external consultants completed a study to evaluate the Corporation's environmental remediation strategies. Based on the costs associated with the most probable alternative remediation strategy for each of its 85 sites, including the sites located in Bloomington, Indiana, the Corporation has an accrued liability of $487 million. This amount includes $175 million that was recognized in the second quarter of 1996. Depending on the remediation alternatives ultimately selected, the costs related to these sites could differ from the amounts currently accrued. The accrued liability, measured in current dollars, includes $361 million for site investigation and remediation, and $126 million for post closure and monitoring activities. Management anticipates that the majority of expenditures for site investigation and remediation will occur during the next 5 - 10 years. Expenditures for post closure and monitoring activities will be made over periods up to 30 years. The Corporation recognizes changes in estimates as new remediation requirements are defined or as more information becomes available. The Corporation has and expects to continue to fund these environmental remediation expenditures from cash flows generated from operations. Legal Matters The Corporation is defending a number of lawsuits on various matters. See note 10 to the financial statements. In the first quarter of 1996, the Corporation recognized $486 million of costs for potential settlements of outstanding litigation matters. Since 1993, the Corporation has entered into agreements to resolve nine litigation claims in connection with alleged tube degradation in steam generators sold by the Corporation as components for nuclear steam supply systems. These agreements generally require the Corporation to provide certain products and services at prices discounted at varying rates. The future impact of these discounts on operating results will be incurred over the next 15 years with the greatest impact occurring during the next nine years. Litigation is inherently uncertain and always difficult to predict. Substantial damages are sought in certain of the Corporation's pending cases and although management believes a significant adverse judgment is unlikely, any such judgment could have a material adverse effect on the Corporation's results of operations for a quarter or a year. However, based on its understanding and evaluation of the relevant facts and circumstances, management believes that the Corporation -26- 27 has meritorious defenses to the litigation referenced in note 10 and that the Corporation has adequately provided for costs arising from potential settlement of these matters when in the best interest of the Corporation. Management believes that the litigation should not have a material adverse effect on the financial condition of the Corporation. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS (a) The Corporation has been defending, in the United States District Court for the Western District of Pennsylvania (the District Court), consolidated class and derivative actions and an individual lawsuit brought by shareholders of the Corporation against the Corporation, Westinghouse Financial Services, Inc. (WFSI) and Westinghouse Credit Corporation (WCC), previously subsidiaries of the Corporation, and/or certain present and former directors and officers of the Corporation, as well as other unrelated parties. Together, these actions allege various federal securities law and common law violations arising out of alleged misstatements or omissions contained in the Corporation's public filings concerning the financial condition of the Corporation, WFSI and WCC in connection with a $975 million charge to earnings announced on February 27, 1991, a public offering of Westinghouse common stock in May 1991, a $1,680 million charge to earnings announced on October 7, 1991, and alleged misrepresentations regarding the adequacy of internal controls at the Corporation, WFSI and WCC. In July 1993, the District Court dismissed in its entirety the derivative claim and dismissed most of the class action claims, with leave to replead certain claims in both actions. Both actions were subsequently repled. On January 20, 1995, the District Court again dismissed the derivative complaint in its entirety with prejudice. On February 28, 1995, the District Court dismissed the class action claims in their entirety. Plaintiffs in both the derivative and class action suits appealed the rulings and dismissal of their claims by the District Court. In July, 1996, the United States Court of Appeals for the Third Circuit (the Circuit Court) affirmed the District Court's dismissal of the derivative claim. In addition, the Circuit Court affirmed in part and reversed in part the class action claims. Those portions of the class action claims which were reversed have been remanded to the District Court for further proceedings. (b) The Corporation is a defendant in numerous lawsuits claiming various asbestos-related personal injuries, which allegedly occurred from use or inclusion of asbestos in certain of the Corporation's products, generally in the pre-1970 time period. Typically, these lawsuits are brought against multiple defendants. The Corporation was neither a manufacturer nor a producer of asbestos and is oftentimes dismissed from these lawsuits on the basis that the Corporation has no relationship to the products in question or the claimant did not have exposure to the Corporation's product. On May 2, 1996, 15,000 claims pending in the Multidistrict Litigation No. 875 in the United States District Court for the Eastern District of Pennsylvania were dismissed. Plaintiffs may appeal this dismissal. At June 30, 1996, the Corporation had approximately 90,000 claims outstanding against it. In court actions which have been resolved, the Corporation has prevailed in the majority of the asbestos claims and has resolved others through settlement. Furthermore, the Corporation has brought suit against certain of its insurance carriers with respect to these asbestos claims. Under the terms of a settlement agreement resulting from this suit, carriers which have agreed to the settlement are now reimbursing the Corporation for a substantial portion of its current costs and settlements associated with asbestos claims. A number of the asbestos-related cases pending against the Corporation, including those pending in Mississippi, Baltimore and West Virginia, are consolidated cases. In consolidated cases, the claims of a group of plaintiffs are tried together, and oftentimes limited findings with respect to common issues of fact and punitive damages are decided with respect to a representative grouping of plaintiffs and then applied to other individuals in the group. However, for the Corporation to be liable for damages to any particular claimant, that individual claimant must thereafter prove that he developed an asbestos-related disease, that he was exposed to a Westinghouse product, and that this exposure was a substantial factor in the development of the disease. -27- 28 (c) The Corporation was one of several defendants in a fraudulent conveyance action filed on August 16, 1994 by the unsecured creditors committee of Phar-Mor, Inc. seeking return of the proceeds of an August 1991, Phar-Mor tender offer in which the Corporation received about $30 million, and an additional $20 million from the tender of Phar-Mor stock by the DeBartolo Family Limited Partnership (DeBartolo) pursuant to a Westinghouse loan to DeBartolo secured by DeBartolo's Phar-Mor holdings. The fraudulent conveyance action was transferred from bankruptcy court in Cleveland to the Western District of Pennsylvania and consolidated with other Phar-Mor litigation. A defense motion for summary judgment in the fraudulent conveyance action was granted on August 22, 1995, and the unsecured creditors have appealed. Included in the consolidated cases pending in the Western District of Pennsylvania is an action by the Corporation seeking damages in connection with loans to, and equity investments in, Phar-Mor. On May 2, 1995, the Corporation concluded a settlement in this litigation with Phar-Mor's chief executive officer and controlling shareholder and certain other parties which resulted in the dismissal of all cross-claims and third-party complaints between the Corporation and these parties. Remaining were the Corporation's claims against Coopers & Lybrand (Coopers), Phar-Mor's former accountants, for securities violations, fraud, negligent misrepresentation, and breach of contracts to which the Corporation was a third-party beneficiary. Coopers obtained a summary judgment on the negligent misrepresentation claim, and on certain of the breach of contract claims. Trial commenced on September 27, 1995, and on February 14, 1996, a federal jury found Coopers liable for violations of securities laws and common law fraud. In July 1996, the Corporation and Coopers reached an agreement resolving all claims asserted between them in this matter. Litigation is inherently uncertain and always difficult to predict. Substantial damages are sought in each of the foregoing matters and although management believes a significant adverse judgment is unlikely, any such judgment could have a material adverse effect on the Corporation's results of operations for a quarter or a year. However, based on its understanding and evaluation of the relevant facts and circumstances, management believes that the Corporation has meritorious defenses to the litigation described above, and management believes that the litigation should not have a material adverse effect on the financial condition of the Corporation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of shareholders of the Corporation was held on April 24, 1996. (b) The following matters were submitted to a vote of the shareholders at the annual meeting: (i) In connection with the election of eleven directors, the following votes were cast for or withheld from the following candidates:
FOR WITHHELD Frank C. Carlucci 330,895,766 7,650,216 Robert E. Cawthorn 332,677,691 5,868,291 Gary M. Clark 332,592,812 5,953,170 George H. Conrades 332,635,614 5,910,368 William H. Gray III 331,820,395 6,725,587 Michael H. Jordan 332,393,804 6,152,178 David K. P. Li 332,526,507 6,019,475 David T. McLaughlin 332,009,043 6,536,939 Richard R. Pivirotto 331,696,582 6,849,400 Paula Stern 332,346,525 6,199,457 Robert D. Walter 332,751,040 5,794,942
(ii) A management proposal regarding the election of Price Waterhouse as independent accountants was presented at the meeting and 333,896,496 shares of common stock were voted for, 2,871,403 -28- 29 shares were voted against, and 1,778,083 shares abstained in connection with the adoption of this resolution, the text of which is set forth on page 31 of the Corporation's Proxy Statement dated March 12, 1996, and incorporated herein by reference. (iii) A management proposal concerning approval of an amendment to the Corporation's Deferred Compensation and Stock Plan for Directors was presented at the meeting, and 313,134,895 shares of common stock were voted for, 20,248,728 shares were voted against, and 5,162,359 shares abstained, in connection with the adoption of this proposal, the text of which is set forth on pages 32 through 38 of the Corporation's Proxy Statement dated March 12, 1996 and incorporated herein by reference. (iv) A shareholder's resolution concerning non-employee director nominee stock ownership was presented at the meeting and 31,042,789 shares of common stock were voted for, 210,836,273 shares were voted against, 7,782,717 shares abstained, and there were 88,884,203 broker non-votes in connection with this resolution, the text of which is set forth on pages 38 through 40 of the Corporation's Proxy Statement dated March 12, 1996, and incorporated herein by reference. (v) A shareholder's resolution concerning the number of boards on which directors serve was presented at the meeting and 34,374,256 shares of common stock were voted for, 207,028,991 were voted against, 8,280,529 shares abstained, and there were 88,862,206 broker non-votes in connection with this resolution, the text of which is set forth on pages 40 through 42 of the Corporation's Proxy Statement dated March 12, 1996, and incorporated herein by reference. (vi) A shareholder's resolution concerning base salary tied to stock value/bonuses was presented at the meeting and 37,326,896 shares of common stock were voted for, 206,148,794 were voted against, 6,188,085 shares abstained, and there were 88,882,207 broker non- votes in connection with this resolution, the text of which is set forth on pages 42 and 43 of the Corporation's Proxy Statement dated March 12, 1996, and incorporated herein by reference. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A) EXHIBITS (3) ARTICLES OF INCORPORATION AND BYLAWS (a) The Restated Articles of the Corporation as amended to January 8, 1996 are incorporated herein by reference to Exhibit 3(a) to Form 10-K for the year ended December 31, 1995. (b) The Bylaws of the Corporation, as amended to December 28, 1995, are incorporated herein by reference to Exhibit 3(c) to Form 10-K for the year ended December 31, 1995. (4) RIGHTS OF SECURITY HOLDERS (a) Except as set forth below, there are no instruments with respect to long-term debt of the Corporation that involve securities authorized thereunder exceeding 10% of the total assets of the Corporation and its subsidiaries on a consolidated basis. The Corporation agrees to provide to the Securities and Exchange Commission, upon request, a copy of instruments defining the rights of holders of long-term debt of the Corporation and its subsidiaries. -29 30 (1) Form of Senior Indenture, dated as of November 1, 1990, between the Corporation and Citibank, N.A. is incorporated herein by reference to Exhibit 4.1 to the Corporation's Registration Statement No. 33-41417. (b) Rights Agreement is incorporated herein by reference to Exhibit 1 to Form 8-A filed with the Securities and Exchange Commission on January 9, 1996. (10) MATERIAL CONTRACTS (a*) The Annual Performance Plan is incorporated herein by reference to Exhibit 10(a) to Form 10-K/A for the year ended December 31, 1992. (b*) The 1993 Long-Term Incentive Plan, as amended, is incorporated herein by reference to Exhibit 10(b) to Form 10-K for the year ended December 31, 1995. (c*) The 1984 Long-Term Incentive Plan, as amended, is incorporated herein by reference to Exhibit 10 (c) to Form 10-Q for the first quarter ended March 31, 1996. (d*) The Westinghouse Executive Pension Plan, as amended, is incorporated herein by reference to Exhibit 10(d) to Form 10-K for the year ended December 31, 1994. (e*) The Deferred Compensation and Stock Plan for Directors, as amended, dated April 24, 1996. (f*) The Advisory Director's Plan, as amended, dated April 30, 1996. (g) The Director's Charitable Giving Program, as amended, dated April 30, 1996. (h*) The 1991 Long-Term Incentive Plan, as amended, is incorporated herein by reference to Exhibit 10(h) to Form 10-K for the year ended December 31, 1995. (i*) Advisory Director's Plan Termination Fee Deferral Terms and Conditions, dated April 30, 1996. (j*) Employment Agreement between the Corporation and Michael H. Jordan is hereby incorporated by reference to Exhibit 10 to the Corporation's Form 8-K, dated September 1, 1993. (k*) Employment Agreement between the Corporation and Fredric G. Reynolds is incorporated herein by reference to Exhibit 10(j) to Form 10-K for the year ended December 31, 1994. (l) $7.5 billion Credit Agreement among Westinghouse Electric Corporation, the Lenders, Morgan Guaranty Trust Company of New York, and Chemical Bank, dated September 12, 1995, is incorporated herein by reference to Exhibit 10(n) to Form 10-Q for the quarter ended September 30, 1995. (m*) Employment Agreement between CBS Inc. and Peter Lund, dated as of November 28, 1995, is hereby incorporated by reference to Exhibit 10(l) to Form 10-Q for the quarter ended March 31, 1996. (n*) Employment Agreement between the Corporation and F. J. Harvey, dated as of April 30, 1996. (o) Agreement and Plan of Merger dated as of June 20, 1996 among the Corporation, R Acquisition Corp., and Infinity Broadcasting Corporation is hereby incorporated by reference to Schedule 13-D, filed by the Corporation on June 28, 1996. -30- 31 (p) Stockholder Agreement dated as of June 20, 1996, among the Corporation and certain shareholders of Infinity Broadcasting Corporation is hereby incorporated by reference to Schedule 13-D filed by the Corporation on June 28, 1996. * Identifies management contract or compensatory plan or arrangement. (11) Computation of Per Share Earnings (12)(a) Computation of Ratio of Earnings to Fixed Charges (12)(b) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends (27) Financial Data Schedule B) REPORTS ON FORM 8-K: A Current Report on Form 8-K (Items 5 and 7) dated April 19, 1996 filing a press release announcing certain financial actions. A Current Report on Form 8-K (Items 5 and 7) dated May 2, 1996 filing a press release concerning the Corporation's earnings for the quarter ended March 31, 1996 and realigned segment financial results and a restated condensed consolidated statement of income. A Current Report on Form 8-K (Items 4 and 7) dated June 5, 1996 to report a change in the Corporation's independent accountants. A Current Report on Form 8-K (Items 5 and 7) dated June 10, 1996 filing a press release announcing the Corporation's consideration of alternatives to separate its broadcasting and industrial businesses. A Current Report on Form 8-K (Items 5 and 7) dated June 20, 1996 filing a press release announcing the execution by the Corporation, a wholly-owned subsidiary of the Corporation, and Infinity Broadcasting Corporation of a merger agreement. -31- 32 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th day of August 1996. WESTINGHOUSE ELECTRIC CORPORATION /s/ CAROL V. SAVAGE --------------------------------- Vice President and Chief Accounting Officer -32- EX-10.E 2 WESTINGHOUSE ELEC. 10-Q 1 Exhibit 10.E DEFERRED COMPENSATION AND STOCK PLAN FOR DIRECTORS (as amended as of April 24, 1996) SECTION 1. INTRODUCTION 1.1 Establishment. Westinghouse Electric Corporation, a Pennsylvania corporation (the "Company"), has established the Deferred Compensation and Stock Plan for Directors as amended as of April 24, 1996 (the "Plan") for those directors of the Company who are neither officers nor employees of the Company. The Plan provides, among other things, for the payment of specified portions of the Annual Director's Fee in the form of Stock Options and Restricted Stock and for the payment of the Annual Committee Chair's Fee in the form of Restricted Stock, and the opportunity for the Directors to defer receipt of all or a part of their cash compensation. Unless otherwise provided for herein, the term Company includes Westinghouse Electric Corporation and its subsidiaries. 1.2 Purposes. The purposes of the Plan are to encourage the Directors to own shares of the Company's stock and thereby to align their interests more closely with the interests of the other shareholders of the Company, to encourage the highest level of Director performance, and to provide a financial incentive that will help attract and retain the most qualified Directors. -1- 2 SECTION 2. DEFINITIONS 2.1 Definitions. The following terms shall have the meanings set forth below: (a) "Annual Committee Chair's Fee" means the annual amount established from time to time by the Board as the annual fee to be paid to Directors for their services as chairs of standing committees of the Board. (b) "Annual Director's Fee" means the annual amount (which may be prorated for a Director serving less than a full calendar year, as in the case of a Director who will be retiring or not standing for reelection at the annual meeting of shareholders or a Director joining the Board after the beginning of the year) established from time to time by the Board as the annual fee to be paid to Directors for their services as directors. -2- 3 (c) "Attendance Percentage" for a Director with respect to a particular Grant Year means the percentage of the aggregate of all meetings of the Board and committees of which the Director was a member held during the Grant Year (or, for Directors who are elected after the beginning of the Grant Year, Directors who retire at the annual meeting of shareholders (as described in the Company's By-laws) held during the Grant Year, Directors who do not stand for reelection at the annual meeting of shareholders held during the Grant Year, or Directors who die during the Grant Year, the aggregate of all such meetings held for the portion of the Grant Year during which the Director served as a director), excluding any meeting not attended because of illness, which were attended by the Director. In the event that a Director ceases to be a director at any time during the Grant Year for any reason other than retirement at the annual meeting of shareholders, not standing for reelection at the annual meeting of shareholders, or death, all meetings held during the Grant Year of the Board and committees of which he was a member at the time of termination of service will continue to be included as meetings when calculating the Attendance Percentage. (d) "Board" means the Board of Directors of the Company. -3- 4 (e) "Cash Account" means the account established by the Company in respect of each Director pursuant to Section 6.3 hereof and to which deferred cash compensation has been or will be credited pursuant to the Plan. (f) "Cause" means any act of (a) fraud or intentional misrepresentation or (b) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any of its direct or indirect majority- owned subsidiaries. (g) "Change in Control" shall have the meaning assigned to it in Section 9.2 hereof. (h) "Committee" means the Compensation Committee of the Board or any successor established by the Board. (i) "Common Stock Equivalent" means a hypothetical share of Stock which shall have a value on any date equal to the mean of the high and low prices of the Stock as reported by the composite tape of the New York Stock Exchange on that date, except as otherwise provided under Section 9.1. (j) "Common Stock Equivalent Award" means an award of Common Stock Equivalents granted to a Director pursuant to Section 5 of the Plan prior to its amendment as of April 26, 1995. -4- 5 (k) "Debenture" means a hypothetical debenture of the Company that has a face value of $100, bears interest at a rate equal to the ten-year U.S. Treasury Bond rate (prior to January 1, 1995, the seven-year U.S. Treasury Bond rate) in effect the week prior to the regular January meeting of the Board (or, if no such meeting is held, the week prior to the first trading day of the New York Stock Exchange in February) in the year in respect of which deferred amounts are earned, and is convertible into Stock at a conversion rate determined by dividing $100 by the mean of the high and low prices of the Stock as reported by the composite tape of the New York Stock Exchange on the date the Debenture is credited to the Deferred Debenture Account pursuant to Section 6.3 hereof. (l) "Deferred Debenture Account" means the account established by the Company in respect of each Director pursuant to Section 6.3 hereof and to which has been or will be credited Debentures and other amounts pursuant to the Plan. (m) "Deferred Stock Account" means the account established by the Company in respect of each Director pursuant to Section 5.2 hereof and to which has been or will be credited Common Stock Equivalents pursuant to the Plan. -5- 6 (n) "Director" means a member of the Board who is neither an officer nor an employee of the Company. For purposes of the Plan, an employee is an individual whose wages are subject to the withholding of federal income tax under Section 3401 of the Internal Revenue Code, and an officer is an individual elected or appointed by the Board or chosen in such other manner as may be prescribed in the By-laws of the Company to serve as such. (o) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. (p) "Fair Market Value" means the mean of the high and low prices of the Stock as reported by the composite tape of the New York Stock Exchange (or such successor reporting system as shall be selected by the Committee) on the relevant date or, if no sale of the Stock shall have been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales. (q) "Grant Date" means, as to a Stock Option Award, the date of grant pursuant to Section 7.1 and as to a Restricted Stock Award, the date of grant pursuant to Section 8.1. (r) "Grant Year" means, as to a particular award, the calendar year in which the award was granted. -6- 7 (s) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. (t) "Restricted Stock" means shares of Stock awarded to a Director pursuant to Section 8 and subject to certain restrictions in accordance with the Plan. (u) "Restricted Stock Award" means an award of shares of Restricted Stock granted to a Director pursuant to Section 8 of the Plan. (v) "Stock" means the common stock, $1.00 par value, of the Company. (w) "Stock Option" means a non-statutory stock option to purchase shares of Stock for a purchase price per share equal to the Exercise Price (as defined in Section 7.2(a)) in accordance with the provisions of the Plan. (x) "Stock Option Award" means an award of Stock Options granted to a Director pursuant to Section 7 of the Plan. (y) "Stock Option Value" means the value of a Stock Option for one share of Stock on the relevant date as determined by an outside firm selected by the Company. -7- 8 2.2 Gender and Number. Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender, and the definition of any term herein in the singular shall also include the plural. SECTION 3. PLAN ADMINISTRATION (a) The Plan shall be administered by the Committee. The members of the Committee shall be members of the Board appointed by the Board, and any vacancy on the Committee shall be filled by the Board. The Committee shall keep minutes of its meetings and of any action taken by it without a meeting. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present shall be the acts of the Committee. Any action that may be taken at a meeting of the Committee may be taken without a meeting if a consent or consents in writing setting forth the action so taken shall be signed by all of the members of the Committee. The Committee shall make appropriate reports to the Board concerning the operations of the Plan. (b) Subject to the limitations of the Plan, the Committee shall have the sole and complete authority: (i) to impose such limitations, restrictions and conditions upon such -8- 9 awards as it shall deem appropriate; (ii) to interpret the Plan and to adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan; and (iii) to make all other determinations and to take all other actions necessary or advisable for the implementation and administration of the Plan. Notwithstanding the foregoing, the Committee shall have no authority, discretion or power to select the Directors who will receive awards pursuant to the Plan, determine the awards to be granted pursuant to the Plan, the number of shares of Stock to be issued thereunder or the price thereof or the time at which such awards are to be granted, establish the duration and nature of awards or alter any other terms or conditions specified in the Plan, except in the sense of administering the Plan subject to the provisions of the Plan. The Committee's determinations on matters within its authority shall be conclusive and binding upon the Company and all other persons. The Plan shall be interpreted and implemented in a manner so that Directors will not fail, by reason of the Plan or its implementation, to be "disinterested persons" within the meaning of Rule 16b-3 under Section 16 of the Exchange Act, as such rule may be amended, or any successor rule. (c) The Company shall be the sponsor of the Plan. All expenses associated with the Plan shall be borne by the Company. -9- 10 SECTION 4. STOCK SUBJECT TO THE PLAN 4.1 Number of Shares. 600,000 shares of Stock are authorized for issuance under the Plan in accordance with the provisions of the Plan, subject to adjustment and substitution as set forth in this Section 4. This authorization may be increased from time to time by approval of the Board and, if such approval is required, by the shareholders of the Company. The Company shall at all times during the term of the Plan retain as authorized and unissued Stock at least the number of shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder. 4.2 Other Shares of Stock. Any shares of Stock that are subject to a Common Stock Equivalent Award, a Stock Option Award, a Restricted Stock Award or a Debenture and which are forfeited, any shares of Stock that for any other reason are not issued to a Director, and any shares of Stock tendered by a Director to pay the Exercise Price of a Stock Option shall automatically become available again for use under the Plan if Rule 16b-3 under the Exchange Act, as such rule may be amended, or any successor rule, and interpretations thereof by the Securities and Exchange Commission or its staff permit such share replenishment. -10- 11 4.3 Adjustments Upon Changes in Stock. If there shall be any change in the Stock of the Company, through merger, consolidation, division, share exchange, combination, reorganization, recapitalization, stock dividend, stock split, spinoff, split up, dividend in kind or other change in the corporate structure or distribution to the shareholders, appropriate adjustments may be made by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) in the aggregate number and kind of shares subject to the Plan, and the number and kind of shares which may be issued under the Plan. Appropriate adjustments may also be made by the Committee in the terms of any awards or Debentures under the Plan to reflect such changes and to modify any other terms of outstanding awards on an equitable basis as the Committee in its discretion determines. SECTION 5. COMMON STOCK EQUIVALENT AWARDS 5.1 Grants of Common Stock Equivalent Awards. Common Stock Equivalents equal to a fixed number of shares of Stock were granted automatically to Directors on a formula basis under Section 5.1 of the Plan prior to its amendment as of April 26, 1995. All Common Stock Equivalents granted pursuant to Section 5.1 prior to its amendment as of April 26, 1995 shall be subject to adjustment as provided in Section 4.3. -11- 12 5.2 Deferred Stock Account. A Deferred Stock Account has been established for each Director elected prior to the annual meeting of shareholders held in 1995. The Deferred Stock Account shall consist of compensation in the form of Common Stock Equivalents which have been awarded to the Director hereunder by the Company plus Common Stock Equivalents credited to the Deferred Stock Account in respect of dividends and other distributions on the Stock pursuant to Sections 5.3 and 5.4. 5.3 Hypothetical Investment. Compensation awarded hereunder in the form of Common Stock Equivalents is assumed to be a hypothetical investment in shares of Stock, and will be subject to adjustment to reflect stock dividends, splits and reclassifications and as otherwise set forth in Section 4.3. 5.4 Hypothetical Dividends. Dividends and other distributions on Common Stock Equivalents shall be deemed to have been paid as if such Common Stock Equivalents were actual shares of Stock issued and outstanding on the respective record or distribution dates. Common Stock Equivalents shall be credited to the Deferred Stock Account in respect of cash dividends and any other securities or property issued on the Stock in connection with reclassifications, spinoffs and the like on the basis of the value of the dividend or other asset distributed and the value of the Common Stock Equivalents on the date of the announcement of the dividend or asset distribution, all at the -12- 13 same time and in the same amount as dividends or other distributions are paid or issued on the Stock. Such Common Stock Equivalents shall be subject to adjustment as provided in Section 4.3. Fractional shares shall be credited to a Director's Deferred Stock Account cumulatively but the balance of shares of Common Stock Equivalents in a Director's Deferred Stock Account shall be rounded to the next highest whole share for any payment to such Director pursuant to Section 5.6. 5.5 Statement of Account. A statement will be sent to each Director as to the balance of his Deferred Stock Account at least once each calendar year. 5.6 Payment of Deferred Stock. Upon termination of services as a Director, the balance of the Director's Deferred Stock Account shall be paid to such Director in Stock in January of the year following the year of termination of services as a director on the basis of one share of Stock for each Common Stock Equivalent in such Director's Deferred Stock Account. 5.7 Payments to a Deceased Director's Estate. In the event of a Director's death before the balance of his Deferred Stock Account is fully paid to him, payment of the balance of the Director's Deferred Stock Account shall then be made to the beneficiary designated by the Director pursuant to Section 5.8, or to his estate in the absence of such a beneficiary -13- 14 designation, in the time and manner selected by the Committee. The Committee may take into account the application of any duly appointed administrator or executor of a Director's estate and direct that the balance of the Director's Deferred Stock Account be paid to his estate in the manner requested by such application. 5.8 Designation of Beneficiary. A Director may designate a beneficiary in a form approved by the Committee. SECTION 6. DEFERRAL OF COMPENSATION 6.1 Amount of Deferral. A Director may elect to defer receipt of all or a specified portion of the cash compensation otherwise payable to the Director for services rendered to the Company as a director. 6.2 Manner of Electing Deferral. A Director shall make elections permitted hereunder by giving written notice to the Company in a form approved by the Committee. The notice shall include: (i) the percentage of cash compensation to be deferred; which amount must be stated in whole increments of five percent; and (ii) the time as of which deferral is to commence. -14- 15 6.3 Accounts. A Cash Account and a Deferred Debenture Account has been or shall be established for each Director electing to defer hereunder. Each Cash Account shall be credited with the amounts deferred on the date such compensation is otherwise payable and shall be debited with the amount of any such compensation forfeited in accordance with applicable Board policy. Such deferred amounts shall accrue interest from time to time at a rate equal to the ten-year U.S. Treasury Bond rate (prior to January 1, 1995, the seven-year U.S. Treasury Bond rate) in effect the week prior to the regular January meeting of the Board (or, if no such meeting is held, the week prior to the first trading day of the New York Stock Exchange in February) in the year in respect of which such deferred amounts are earned until the last trading day of the New York Stock Exchange prior to the regular January meeting of the Board (or, if no such meeting is held, until the first trading day of February) in the year following the year in respect of which deferred amounts are earned, at which time such deferred amounts, including interest, shall be invested in Debentures and credited to the Deferred Debenture Account. Deferred amounts shall be credited to the Deferred Debenture Account only in $100 amounts. Fractional amounts of $100 shall remain in the Cash Account and continue to accrue interest. 6.4 Time for Electing Deferral. Any election to (i) defer cash compensation, (ii) alter the portion of such amounts -15- 16 deferred, or (iii) revoke an election to defer such amounts, must be made no later than six months prior to the time such compensation is earned by the Director or, if permitted by the rules under Section 16 of the Exchange Act, no later than six months prior to the time such deferred compensation is invested in Debentures and credited to the Deferred Debenture Account pursuant to Section 6.3. An election to commence a deferral may be made at any time in accordance with the procedures set forth in Section 6.2. Any election so made shall remain in effect beginning six months from the date of election until the Director ceases to be a director or six months from the date the Director elects in writing to change his election. 6.5 Payment of Deferred Amounts. Payments from a Deferred Debenture Account shall be made in five consecutive annual installments beginning in the January following the Director's termination of service. Payments from a Deferred Debenture Account shall consist of accumulated interest on the Debentures (which amount shall only be payable in cash) plus the greater value of (i) the face value of the Debentures or (ii) the shares of Stock into which the Debentures are convertible. In the event the value of the payment is determined by the amount referred to in clause (i), payment shall be made in cash. In the event such value is determined by clause (ii), such payment shall be made in Stock, other than the value of fractional shares which will be paid in cash. -16- 17 6.6 Payments to a Deceased Director's Estate. In the event of a Director's death before the balance of his Cash Account or Deferred Debenture Account is fully paid to him, payment of the balance of the Cash Account or Deferred Debenture Account shall then be made to the beneficiary designated by the Director pursuant to Section 6.7, or to his estate in the absence of such beneficiary designation, in the time and manner selected by the Committee. The Committee may take into account the application of any duly appointed administrator or executor of a Director's estate and direct that the balance of the Director's Cash Account or Deferred Debenture Account be paid to his estate in the manner requested by such application. 6.7 Designation of Beneficiary. A Director may designate a beneficiary in a form approved by the Committee. SECTION 7. STOCK OPTION AWARDS 7.1 Grants of Stock Option Awards. (a) Stock Options for a fixed number of shares of Stock were granted automatically to Directors on a formula basis under Section 7.1(a) of the Plan prior to its amendment as of April 24, 1996. -17- 18 (b) Prior to the amendment of the Plan as of April 24, 1996, Stock Options for a fixed number of shares of Stock were granted automatically on a formula basis under Section 7.1(b) of the Plan to Directors serving as chairs of standing committees of the Board. (c) Beginning with the calendar year 1996, each Director will receive one-fourth of the value of his Annual Director's Fee in the form of a Stock Option Award. Such Stock Options shall be granted automatically each year on the last Wednesday in January of such year to each Director in office on such Grant Date. If a person is elected to the Board at any time after the last Wednesday in January of a given calendar year (beginning with 1996) but before the end of that calendar year, whether by action of the shareholders of the Company or the Board, such person upon becoming a Director shall be granted automatically one-fourth of the value of his Annual Director's Fee for that calendar year in the form of a Stock Option Award on the last Wednesday of the calendar month in which such person becomes a Director (or in the next following calendar month if such election occurs after the last Wednesday of the month). The total number of shares of Stock subject to any such Stock Option Award will be the number of shares determined by dividing the amount of the Annual Director's Fee to be paid in the form of a Stock Option Award by the Stock Option Value on the Grant Date, rounded up to the nearest whole share. -18- 19 (d) All Stock Options granted pursuant to Section 7.1 (whether before or after amendment of the Plan as of April 24, 1996) shall be subject to adjustment as provided in Section 4.3. 7.2 Terms and Conditions of Stock Options. Stock Options granted under the Plan shall be subject to the following terms and conditions: (a) EXERCISE PRICE. The purchase price per share at which a Stock Option may be exercised ("Exercise Price") shall be determined as follows: on any Grant Date, (1) Stock Options for two-thirds of the option shares granted on the Grant Date shall have an Exercise Price per share equal to 100% of Fair Market Value on the Grant Date, and (2) Stock Options for the remaining one-third of the option shares granted on the Grant Date shall have an Exercise Price per share equal to 125% of Fair Market Value on the Grant Date. (b) EXERCISABILITY. Subject to the terms and conditions of the Plan and of the agreement referred to in Section 7.2(j), a Stock Option may be exercised in whole or in part upon notice of exercise to the Company, (1) as to any Stock Option granted on or prior to January 1, 1996, commencing on the first day after the Grant Date and until it terminates, and (2) -19- 20 as to any Stock Option granted after January 1, 1996 that vests as provided in Section 7.2(c), commencing on January 1 of the calendar year next following the Grant Year. During a Director's lifetime, a Stock Option may be exercised only by the Director or the Director's guardian or legal representative. (c) VESTING OF STOCK OPTION AWARDS. Stock Options granted on or prior to January 1, 1996 vest immediately on grant. Stock Options granted after January 1, 1996 will vest on January 1 of the calendar year next following the Grant Year (the "Option Vesting Date") if the Director has an Attendance Percentage of at least seventy-five percent (75%) for the Grant Year. In the event that a Director has an Attendance Percentage of less than seventy-five percent (75%) for a Grant Year, Stock Options granted in that Grant Year for a number of shares equal to the Director's Attendance Percentage for that year multiplied by the total number of option shares granted for that year (rounded up to the nearest whole share) will vest on the Option Vesting Date, and Stock Options granted in that Grant Year as to the remaining option shares will be forfeited and will terminate as of the Option Vesting Date. Notwithstanding anything to the contrary herein, (1) in the event that a director is removed from office for Cause, all outstanding Stock Options will be forfeited immediately as of the time the grantee is so removed from office, and (2) upon the occurrence of a Change in Control, all outstanding Stock Options will vest and become immediately -20- 21 exercisable. (d) MANDATORY HOLDING OF STOCK. Except as otherwise provided in Section 7.5 or Section 10, any Stock acquired on exercise of a Stock Option must be held by the grantee for a minimum of (1) three years from the date of exercise, (2) two years from the date the grantee ceases to be a director of the Company, or (3) until the occurrence of a Change in Control, whichever first occurs (the "Option Shares Holding Period"). (e) OPTION TERM. The term of a Stock Option (the "Option Term") shall be the period of (1) ten years from its Grant Date, or (2) until the Option Vesting Date for a Stock Option that does not vest as provided in Section 7.2(c), or (3) until the time the Stock Option is forfeited as provided in Section 7.2(c)(1) in the event a director is removed from office for Cause, or (4) until the date the Stock Option ceases to be exercisable as provided in Section 7.2(h), whichever is earlier. -21- 22 (f) PAYMENT OF EXERCISE PRICE. Stock purchased on exercise of a Stock Option must be paid for as follows: (1) in cash or by check (acceptable to the Company), bank draft or money order payable to the order of the Company, (2) through the delivery of shares of Stock which are then outstanding and which have a Fair Market Value on the date of exercise equal to the Exercise Price per share multiplied by the number of shares as to which the Stock Option is being exercised (the "Aggregate Exercise Price"); (3) by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the Aggregate Exercise Price, or (4) by a combination of the permissible forms of payment; provided, however, that any portion of the Exercise Price representing a fraction of a share must be paid in cash and no share of Stock held for less than six months may be delivered in payment of the Aggregate Exercise Price. (g) RIGHTS AS A SHAREHOLDER. The holder of a Stock Option will not have any of the rights of a shareholder with respect to any shares of Stock subject to the Stock Option until such shares are issued by the Company following the exercise of the Stock Option. (h) TERMINATION OF ELIGIBILITY. If a grantee ceases to be a Director for any reason, any outstanding Stock Options shall be exercisable according to the following provisions: -22- 23 (1) If a grantee ceases to be a director for any reason other than removal for Cause or death, any outstanding Stock Options held by such grantee which are vested or which thereafter vest shall be exercisable by the grantee in accordance with their terms at any time prior to the expiration of the Option Term; (2) If a grantee is removed from office as a director of the Company for Cause, any outstanding vested Stock Options held by such grantee shall be exercisable by the grantee in accordance with their terms at any time prior to the earlier of (a) the time the grantee is so removed from office and (b) the expiration of the Option Term; and (3) Following the death of a grantee while a director or after the grantee ceased to be a director for any reason other than removal for Cause, any Stock Options that are outstanding and exercisable by such grantee at the time of death or which thereafter vest shall be exercisable in accordance with their terms by the person or persons entitled to do so under the grantee's will, by a properly designated beneficiary in the event of death, or by the person or persons entitled to do so under the applicable laws of descent and distribution at any time prior to the earlier of (a) the expiration of the Option Term and (b) two years after the date of death. -23- 24 (i) TERMINATION OF STOCK OPTION. A Stock Option shall terminate on the earlier of (1) exercise of the Stock Option in accordance with the terms of the Plan, and (2) expiration of the Option Term as specified in Sections 7.2(e) and 7.2(h). (j) STOCK OPTION AGREEMENT. All Stock Options will be confirmed by an agreement, or an amendment thereto, which shall be executed on behalf of the Company by the Chief Executive Officer, the President or any Vice President and by the grantee. (k) GENERAL RESTRICTIONS. (1) The obligation of the Company to issue Stock pursuant to Stock Options under the Plan shall be subject to the condition that, if at any time the Company shall determine that (a) the listing, registration or qualification of shares of Stock upon any securities exchange or under any state or federal law, or (b) the consent or approval of any government or regulatory body is necessary or desirable, then such Stock shall not be issued unless such listing, registration, qualification, consent or approval shall have been effected or obtained free from any conditions not acceptable to the Company. -24- 25 (2) Shares of Stock for use under the provisions of this Section 7 shall not be issued until they have been duly listed, upon official notice of issuance, upon the New York Stock Exchange and such other exchanges, if any, as the Board shall determine, and a registration statement under the Securities Act of 1933 with respect to such shares shall have become, and be, effective. Subject to the foregoing provisions of this Section 7.2 and the other provisions of the Plan, any Stock Option granted under the Plan shall be subject to such restrictions and other terms and conditions, if any, as shall be determined by the Committee, in its discretion, and set forth in the agreement referred to in Section 7.2(j), or an amendment thereto; provided, however, that in no event shall the Committee or the Board have any power or authority which would cause the Directors to cease to be "disinterested persons" or would cause transactions pursuant to the Plan to cease to be exempt from the provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3, as such rule may be amended, or any successor rule. 7.3 Annual Statement. A statement will be sent to each Director as to the status of his Stock Options at least once each calendar year. -25- 26 7.4 Designation of a Beneficiary. A Director may designate a beneficiary to hold and exercise outstanding Stock Options in accordance with the Plan in the event of the Director's death. 7.5 Holding Period Applicable to a Deceased Grantee's Estate. As long as at least six months have elapsed since the Grant Date, a properly designated beneficiary, or a person holding a Stock Option under a deceased grantee's will or under the applicable laws of descent or distribution, exercising a Stock Option in accordance with Section 7.2(h) will not be subject to the Holding Period with respect to shares of Stock received on exercise of a Stock Option. SECTION 8. RESTRICTED STOCK AWARDS. 8.1 Grants of Restricted Stock Awards. (a) Beginning with the calendar year 1996, each Director will receive one-fourth of the value of his Annual Director's Fee in the form of a Restricted Stock Award. Such Restricted Stock shall be granted automatically each year to each Director in office on such Grant Date. If a person is elected to the Board at any time after the last Wednesday in January of a given calendar year (beginning with 1996) but before the end of that calendar year, whether by action of the shareholders of the Company or the Board, such person upon becoming a Director shall be granted automatically one-fourth of the value of his Annual -26- 27 Director's Fee for that calendar year in the form of a Restricted Stock Award on the last Wednesday in the calendar month in which such person becomes a Director (or in the next following calendar month if said election occurs after the last Wednesday of the month). (b) Beginning with the calendar year 1996, each Director who is the chair of a standing committee of the Board will receive the full value of his Annual Committee Chair's Fee in the form of a Restricted Stock Award. Such Restricted Stock shall be granted automatically each year immediately following the annual meeting of shareholders and the organization meeting of the Board related to such annual meeting of shareholders, beginning with the annual meeting of shareholders and related organization meeting held in 1996, to each Director who is elected at such organization meeting to serve as the chair of a standing committee of the Board. (c) The total number of shares of Stock representing any such Restricted Stock Award will be the number of shares determined by dividing the amount of the Annual Director's Fee or the Annual Committee Chair's Fee, as the case may be, to be paid in the form of a Restricted Stock Award by the Fair Market Value of a share of Stock on the Grant Date, rounded up to the nearest whole share. -27- 28 (d) Restricted Stock granted pursuant to Section 8.1 shall be subject to adjustment as provided in Section 4.3. 8.2 Terms and Conditions of Restricted Stock. Restricted Stock granted under the Plan shall be subject to the following terms and conditions: (a) RESTRICTION PERIOD. Restricted Stock will be subject to a Restriction Period ("Restriction Period") beginning on the Grant Date and continuing through December 31 of the Grant Year. (b) VESTING. (1) Except as set forth in Section 8.2(b)(3), a Director's right to ownership in shares of Restricted Stock granted to a Director pursuant to Section 8.1(a) will vest on the January 1 immediately following the expiration of the Restriction Period for such shares (the "Restricted Stock Vesting Date") if the Director has an Attendance Percentage of at least seventy-five percent (75%) for the Grant Year. In the event that a Director has an Attendance Percentage of less than seventy-five percent (75%) for a Grant Year, a number of shares of Restricted Stock equal to the Director's Attendance Percentage for the Grant Year multiplied by the total number of shares of Restricted Stock granted pursuant to Section 8.1(a) during the Grant Year (rounded -28- 29 up to the nearest whole share) will vest on the Restricted Stock Vesting Date and the remaining shares of Restricted Stock granted pursuant to Section 8.1(a) during the Grant Year will be forfeited as of the Restricted Stock Vesting Date. (2) Except as set forth in Section 8.2(b)(3) below, a Director's right to ownership in shares of Restricted Stock granted to a committee chair pursuant to Section 8.1(b) will vest on the Restricted Stock Vesting Date. (3) Notwithstanding anything to the contrary herein, (i) in the event that a director is removed from office for Cause prior to the Restricted Stock Vesting Date, all of said Director's shares of Restricted Stock that have not yet vested will be forfeited immediately as of the time the grantee is so removed from office and the Company will have the right to complete the blank stock power described below with respect to such shares, and (ii) upon the occurrence of a Change in Control, all shares of Restricted Stock that have not yet vested will immediately vest. -29- 30 (c) ISSUANCE OF SHARES. On the Grant Date, a certificate representing the shares of Restricted Stock will be registered in the Director's name and deposited by the Director, together with a stock power endorsed in blank, with the Company. Subject to the transfer restrictions set forth in Section 8.2(d) and to the last sentence of this Section 8.2(c), the Director as owner of shares of Restricted Stock will have the rights of the holder of such Restricted Stock during the Restriction Period. Following expiration of the Restriction Period, on the Restricted Stock Vesting Date, vested shares of Restricted Stock will be redelivered by the Company to the Director and non-vested shares of Restricted Stock will be forfeited and the Company will have the right to complete the blank stock power with respect to such shares. For shares of Restricted Stock granted prior to the effective date of the Plan as set forth in Section 14, no certificate will be issued, such shares will not be issued and outstanding, and the Director will not have any of the rights of an owner of the shares until such effective date has occurred. -30- 31 (d) TRANSFER RESTRICTIONS; MANDATORY HOLDING OF STOCK. Except as otherwise provided in Section 8.5 or Section 10, shares of Restricted Stock are not transferable during the Restriction Period. Once the Restriction Period lapses and shares vest, except as otherwise provided in Section 8.5 or Section 10, shares acquired as a Restricted Stock Award must be held by the grantee for a minimum of: (1) three years from the Grant Date, (2) two years from the date the grantee ceases to be a director of the Company, or (3) until the occurrence of a Change of Control, whichever first occurs (the "Restricted Shares Holding Period"). (e) RESTRICTED STOCK AGREEMENT. All Restricted Stock Awards will be confirmed by an agreement, or an amendment thereto, which will be executed on behalf of the Company by the Chief Executive Officer, the President or any Vice President and by the grantee. (f) GENERAL RESTRICTION. (1) The obligation of the Company to issue shares of Restricted Stock under the Plan shall be subject to the condition that, if at any time the Committee shall determine that (a) the listing, registration or qualification of shares of Restricted Stock upon any securities exchange or under any state or federal law, or (b) the consent or approval of any government or regulatory body is necessary or desirable, then such Restricted -31- 32 Stock shall not be issued unless such listing, registration, qualification, consent or approval shall have been effected or obtained free from any conditions not acceptable to the Company. (2) Shares of Stock for use under the provisions of this Section 8 shall not be issued until they have been duly listed, upon official notice of issuance, upon the New York Stock Exchange and such other exchanges, if any, as the Board shall determine, and a registration statement under the Securities Act of 1933 with respect to such shares shall have become, and be, effective. Subject to the foregoing provisions of this Section 8.2 and the other provisions of the Plan, any shares of Restricted Stock granted under the Plan shall be subject to such restrictions and other terms and conditions, if any, as shall be determined by the Committee, in its discretion, and set forth in the agreement referred to in Section 8.2(e), or an amendment thereto; provided, however, that in no event shall the Committee or the Board have any power or authority which would cause the Directors to cease to be "disinterested persons" or would cause transactions pursuant to the Plan to cease to be exempt from the provisions of Section 16(b) of the Exchange Act under Rule 16b-3, as such rule may be amended, or any successor rule. -32- 33 8.3 Annual Statement. A statement will be sent to each Director as to the status of his Restricted Stock at least once each calendar year. 8.4 Designation of a Beneficiary. A Director may designate a beneficiary to hold shares of Restricted Stock in accordance with the Plan in the event of the Director's death. 8.5 Holding Period Applicable to a Deceased Grantee's Estate. As long as at least six months have elapsed since the Grant Date, a properly designated beneficiary, or a person holding shares of Restricted Stock under a deceased grantee's will or under the applicable laws of descent or distribution, will not be subject to the Restricted Shares Holding Period with respect to such shares of Restricted Stock. SECTION 9. CHANGE IN CONTROL 9.1 Settlement of Compensation. In the event of a Change in Control of the Company as defined herein, (a) to the extent not already vested, all Stock Option Awards, Restricted Stock Awards and other benefits hereunder shall be vested immediately; and (b) the value of all unpaid benefits and deferred amounts shall be paid in cash to PNC Bank, National Association, the trustee pursuant to a trust agreement dated as of June 22, 1995, as amended from time to time, or any successor trustee, or otherwise on such terms as the Committee may prescribe or permit. -33- 34 For purposes of this Section 9.1, the value of deferred amounts shall be equal to the sum of (i) the value of all Common Stock Equivalent Awards then held in such Director's Deferred Stock Account (the value of which shall be based upon the highest price of the Stock as reported by the composite tape of the New York Stock Exchange during the 30 days immediately preceding the Change in Control), (ii) the value of the Director's Cash Account, and (iii) the greater value of (x) the cash amount equal to the face value of the Debentures plus cash equal to accrued interest or (y) the number of shares of Stock into which the Debentures are convertible (the value of which shall be based upon the highest price of the Stock as reported by the composite tape of the New York Stock Exchange during the 30 days immediately preceding the Change in Control), plus cash equal to accrued interest. 9.2 Definition of Change in Control. A Change in Control shall mean the occurrence of one or more of the following events: (a) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving -34- 35 corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or (b) the shareholders of the Company shall approve of any plan or proposal for the liquidation or dissolution of the Company, or (c) (i) any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity shall purchase any Stock of the Company (or securities convertible into the Company's Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, unless, prior to the making of such purchase of Stock (or securities convertible into Stock), the Board shall determine that the making of such purchase shall not constitute a Change in Control, or (ii) any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity (other than the Company or any benefit plan sponsored by the Company or any of its subsidiaries) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from any rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities), unless, prior to such -35- 36 person so becoming such beneficial owner, the Board shall determine that such person so becoming such beneficial owner shall not constitute a Change in Control, or (d) at any time during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board shall cease for any reason to constitute at least a majority thereof, unless the election or nomination for election of each new director during such two-year period is approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period. -36- 37 SECTION 10. ASSIGNABILITY The right to receive payments or distributions hereunder (including any "derivative security" issued pursuant to the Plan, as such term is defined by the rules promulgated under Section 16 of the Exchange Act), any shares of Restricted Stock granted hereunder during the Restriction Period, and any Stock Options granted hereunder shall not be transferable or assignable by a Director other than by will, by the laws of descent and distribution, to a properly designated beneficiary in the event of death, or pursuant to a domestic relations order as defined by Section 414(p)(1)(B) of the Internal Revenue Code or the rules thereunder that satisfies Section 414(p)(1)(A) of the Internal Revenue Code or the rules thereunder. In addition, Stock acquired on exercise of a Stock Option shall not be transferable prior to the end of the applicable Option Shares Holding Period, if any, set forth in Sections 7.2(d) and 7.5, and Stock acquired as Restricted Stock shall not be transferable prior to the end of the applicable Restricted Shares Holding Period, if any, set forth in Sections 8.2(d) and 8.5, in either case other than by will, by transfer to a properly designated beneficiary in the event of death, by the applicable laws of descent and distribution or pursuant to a domestic relations order as defined by Section 414(p)(1)(B) of the Internal Revenue Code or the rules thereunder that satisfies Section 414(p)(1)(A) of the Internal Revenue Code or the rules thereunder. -37- 38 SECTION 11. RETENTION; WITHHOLDING OF TAX 11.1 Retention. Nothing contained in the Plan or in any Stock Option Award or Restricted Stock Award granted under the Plan shall interfere with or limit in any way the right of the Company to remove any Director from the Board pursuant to the Restated Articles of Incorporation and the By-laws of the Company, nor confer upon any Director any right to continue in the service of the Company. 11.2 Withholding of Tax. To the extent required by applicable law and regulation, each Director must arrange with the Company for the payment of any federal, state or local income or other tax applicable to any payment or any delivery of Stock hereunder before the Company shall be required to make such payment or issue (or, in the case of Restricted Stock, deliver) such shares under the Plan. SECTION 12. PLAN AMENDMENT, MODIFICATION AND TERMINATION The Board may at any time terminate, and from time to time may amend or modify the Plan, provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the shareholders if shareholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements and provided further, that, unless otherwise permitted by the rules under -38- 39 Section 16 of the Exchange Act, no amendment or modification shall be made more than once every six months that would change the amount, price, or timing of the Common Stock Equivalent Awards, Stock Option Awards or Restricted Stock Awards hereunder, other than to comport with changes in the Internal Revenue Code, the Employment Retirement Income Security Act of 1974, as amended, or the rules promulgated thereunder. SECTION 13. REQUIREMENTS OF LAW 13.1 Federal Securities Law Requirements. Implementation and interpretations of, transactions pursuant to, the Plan shall be subject to all conditions required under Rule 16b-3, as such rule may be amended, or any successor rule, to qualify such transactions for any exemption from the provisions of Section 16(b) of the Exchange Act available under that rule, or any successor rule, and to permit the Directors to be "disinterested persons" within the meaning of that rule, or any successor rule, insofar as the Plan or its implementation shall impact such disinterested status. 13.2 Governing Law. The Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. -39- 40 SECTION 14. EFFECTIVE DATE OF AMENDMENT. This Plan shall be effective on the date on which the amendment to the Deferred Compensation and Stock Plan for Directors is approved by the common shareholders of the Company. Automatic grants of Stock Options and Restricted Stock to Directors for Annual Director's Fees will begin on January 31, 1996 but are subject to such shareholder approval, and, in the case of Restricted Stock Awards, said shares shall not be issued and outstanding until such approval is obtained. In the event that the amendment is not so approved, the Deferred Compensation and Stock Plan for Directors as in effect prior to the amendment shall remain in full force and effect, and the automatic grants made on January 31, 1996 shall be null and void. This Plan shall not preclude the adoption by appropriate means of any other compensation or deferral plan for directors. -40- EX-10.F 3 WESTINGHOUSE ELEC. 10-Q 1 Exhibit 10.F ADVISORY DIRECTOR'S PLAN As amended Effective April 30, 1996 2 ADVISORY DIRECTOR'S PLAN 1. PURPOSE The purpose of the Advisory Director's Plan, as amended as of April 30, 1996 (the "Plan"), for non-employee members of the Board of Directors of the Westinghouse Electric Corporation (the "Company") is to provide additional income to certain eligible directors upon their retirement from the Board of Directors of the Company (the "Board"). 2. ADMINISTRATION The Plan shall be administered by an Advisory Director's Plan Committee of the Company consisting of the Chief Executive Officer of the Company, the Chief Financial Officer of the Company and the Vice President and General Counsel of the Company (the "Advisory Director's Plan Committee"). The Advisory Director's Plan Committee shall have full power and authority to adopt, alter and repeal any administrative rules, regulations and practices governing the operation of the Plan as it shall deem advisable and to interpret the terms and provisions of the Plan. All decisions, interpretations or resolutions of the Advisory Director's Plan Committee shall be conclusive and binding on all interested parties. 3. ELIGIBILITY REQUIREMENTS A. In order to qualify for receipt of an Advisory Director's Fee under Section 4(A) hereof ("Advisory Director's Fee"), a director must comply with Section 7 hereof and must meet the following eligibility requirements: (i) the director shall have been a non-employee member of the Board for period of at least five years; (ii) the director shall have reached the mandatory retirement age of 70, unless retirement at an earlier age has been approved by the Advisory Director's Plan Committee; and (iii) the director shall have retired from the Board before April 30, 1996. - 1 - 3 B. In no event shall Advisory Director's Fees be paid to any person who is still a director on, or becomes a director of the Company after, April 30, 1996. C. Persons who are non-employee directors of the Company in office and with at least one full year of service as a director of the Company on April 30, 1996 shall be entitled to receive termination fees as provided under Section 4(B) hereof ("Termination Fees"). 4. PLAN PAYMENT PROVISIONS A. ADVISORY DIRECTOR'S FEE PAYMENTS A director will be credited with one "full year of Board service" for each complete year that the director was a member of the Board. Effective on or after May 1, 1988, the amount of the payments hereunder shall be computed by multiplying the director's annual cash retainer (as from time to time defined by the Advisory Director's Plan Committee and approved by the Board) in effect at the time of retirement (for directors retiring between January 1 and April 30, 1996, the director's annual cash retainer for 1995) by 100 percent and will be paid for the number of full years of the director's Board service but not more than 10 years. Payments will be made annually during the month of June. In the event of a director's death before any or all of the payments due hereunder are fully paid, payment of such amounts shall then be made to the beneficiary designated by the director in a form approved by the Advisory Director's Plan Committee and filed with the Secretary of the Company, or to the director's estate in the absence of such a beneficiary designation, in the time and manner selected by the Advisory Director's Plan Committee. The Advisory Director's Plan Committee may take into account the application of any duly appointed administrator or executor of a director's estate and direct any such payment be paid to the director's estate in the manner requested by such application. B. TERMINATION FEE Each non-employee director of the Company in office and - 2 - 4 with at least one full year of service as a director of the Company on April 30, 1996 shall be entitled to receive a Termination Fee, to be paid on a deferred, cash basis, in the amount set forth on a schedule maintained by the Secretary of the Company. The terms of the mandatory deferral and payment of the Termination Fee shall be as set forth in the Company's Advisory Director's Plan Termination Fee Deferral Terms and Conditions, a copy of which is maintained by the Secretary of the Company. 5. TRANSFERABILITY Payments hereunder shall be made from the general assets of the Company and the director's rights and interests herein may not be anticipated, assigned, encumbered or transferred in any manner whatsoever. 6. AMENDMENT AND DISCONTINUANCE The Company may at any time amend, suspend, or discontinue the Plan, but may not, without the consent of former directors affected thereby, amend or modify any provisions for a former director already receiving payments hereunder. 7. CONSULTATION Under the terms of the Plan, directors in receipt of Advisory Director's Fees shall be available for consultation at the request of the Board. Any incidental expenses associated with such required consultation will be fully reimbursed. 8. CHANGE IN CONTROL In the event of a Change in Control as defined herein: (a) payments as to a period of time less than a full year may be made as the Advisory Director's Plan Committee may determine as of the date of such Change in Control and then paid on such basis and in such form as the Advisory Director's Plan Committee may prescribe; and (b) the value of all unpaid benefits shall be paid in cash to PNC Bank, National Association, the trustee for this Plan pursuant to a trust agreement dated June 22, 1995, as amended from time to time, or any successor trustee, or otherwise on such terms as the Advisory Director's Plan Committee may prescribe or permit. - 3 - 5 A Change in Control shall mean the occurrence of one or more of the following events: (a) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; (b) the shareholders of the Company shall approve of any plan or proposal for the liquidation or dissolution of the Company; (c) (i) any person (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), corporation or other entity shall purchase any Common Stock of the Company (or securities convertible into the Company's Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, unless, prior to the making of such purchase of Common Stock of the Company (or securities convertible into Common Stock of the Company), the Board shall determine that the making of such purchase shall not constitute a Change in Control, or (ii) any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity (other than the Company or any benefit plan sponsored by the Company or any of its subsidiaries) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from any rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire any such securities), unless, prior to such person so becoming such beneficial owner, the Board shall determine that such person so becoming such beneficial owner shall not constitute a Change in Control; or - 4 - 6 (d) at any time during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board shall cease for any reason to constitute at least a majority thereof, unless the election or nomination for election of each new director during such two-year period as approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period. 9. EFFECTIVE DATE This restatement of the Plan shall be effective as of April 30, 1996. - 5 - EX-10.G 4 WESTINGHOUSE ELEC. 10-Q 1 Exhibit 10.G DIRECTOR'S CHARITABLE GIVING PROGRAM As Amended Effective April 30, 1996 2 DIRECTOR'S CHARITABLE GIVING PROGRAM 1. PURPOSE The purpose of the Director's Charitable Giving Program, as amended as of April 30, 1996 (the "Program"), is to provide a unique opportunity for Westinghouse Electric Corporation (the "Company") and certain of its directors to jointly participate in a program of charitable giving. 2. ADMINISTRATION The Program shall be administered by a Committee of the Company consisting of the Chief Operating Officer, the Chief Financial Officer and the Chief Legal Officer of the Company (the "Program Committee"). The Program Committee shall have full power and authority to adopt, alter and repeal any administrative rules, regulations and practices governing the operation of the Program as it shall deem advisable and to interpret the terms and provisions of the Program. All decisions, interpretations or resolutions of the Program Committee shall be conclusive and binding on all interested parties. 3. ELIGIBILITY The following persons are eligible to participate in the Program: (a) all non-employee directors who were in office on July 28, 1988; (b) the Chairman and Chief Executive Officer of the Company as of July 28, 1988 and his immediate predecessor; (c) any person who became a non-employee director of the Company after July 28, 1988 and prior to - 1 - 3 July 31, 1995 and has completed or completes five years of service as a non-employee director of the Company on or prior to July 31, 1996; (d) any person who is a non-employee director of the Company on April 30, 1996 and has completed or completes one year of service as a non-employee director of the Company on or prior to July 31, 1996; and (e) any person who became or becomes the Chairman and Chief Executive Officer of the Company after July 28, 1988 and on or before July 31, 1996. The Program will not be available to any person who becomes a non-employee director or the Chairman and Chief Executive Officer of the Company after July 31, 1996 or to any then current director who has not yet met at least one of the eligibility requirements set forth above as of July 31, 1996. Any director of the Company eligible to participate in the Program as set forth in this Section 3 is hereafter referred to as a Director. 4. CHARITABLE DONATION The Company will make tax-deductible charitable donations in the total amount of $500,000 on behalf of each Director after the time of the Director's death to the eligible charitable or other non-profit organization(s) (the "Charity" or "Charities") selected by the Director in accordance with Section 5. Initially, to fund such donation, the Company will purchase a life insurance policy or policies insuring the lives of the Directors. The Company will pay the premiums for each such life insurance policy and will be the owner and beneficiary thereof. - 2 - 4 The Company and each Director shall execute a written agreement containing such terms and conditions as the Program Committee may determine are necessary and appropriate in furtherance of the Program. 5. DESIGNATION OF CHARITABLE/NON-PROFIT ORGANIZATION(S) (a) Each Director may designate not more than two Charities as donees of the $500,000 contribution to be made by the Company by filing with the Secretary of the Company a written designation in a form approved by the Program Committee, which designation shall be confirmed in writing by the Secretary. In the event that a Director selects two donees, each donation will be in the amount of $250,000. (b) Each such Charity designated as a donee in the manner described herein must be a tax-exempt organization qualified as such under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. (c) Each designated Charity will be sent a written notification of such designation, if such notification is authorized by the Director, in a form approved by the Program Committee. (d) Prior to death, the designation of a Charity as a donee by a Director as described herein may be revoked by the Director at any time by filing a written revocation or by filing a new written designation with the Secretary of the Company, which designation shall be confirmed in writing by the Secretary. 6. AMENDMENT AND DISCONTINUANCE The Company may at any time amend, suspend or discontinue the Program. - 3 - 5 7. CHANGE IN CONTROL In the event of a Change in Control as defined herein, the donations to Charities contemplated hereby may be made as the Program Committee may determine as of the date of such Change in Control and paid on such basis and in such form as the Program Committee may prescribe. A Change in Control shall mean the occurrence of one or more of the following events: (a) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; (b) the shareholders of the Company shall approve of any plan or proposal for the liquidation or dissolution of the Company; (c) (i) any person (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), corporation or other entity shall purchase any Common Stock of the Company (or securities convertible into the Company's Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, unless, prior to the making of such purchase of Common Stock of the Company (or securities convertible into Common Stock of the Company), the Board of Directors of the - 4 - 6 Company shall determine that the making of such purchase shall not constitute a Change in Control, or (ii) any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity (other than the Company or any benefit plan sponsored by the Company or any of its subsidiaries) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from any rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire any such securities), unless, prior to such person so becoming such beneficial owner, the Board of Directors of the Company shall determine that such person so becoming such beneficial owner shall not constitute a Change in Control; or (d) at any time during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board of Directors of the Company shall cease for any reason to constitute at least a majority thereof, unless the election or nomination for election of each new director during such two-year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period. 8. EFFECTIVE DATE This restatement of the Program shall be effective as of April 30, 1996. - 5 - EX-10.I 5 WESTINGHOUSE ELEC. 10-Q 1 Exhibit 10.I ADVISORY DIRECTOR'S PLAN TERMINATION FEE DEFERRAL TERMS AND CONDITIONS Effective April 30, 1996 2 ADVISORY DIRECTOR'S PLAN TERMINATION FEE DEFERRAL TERMS AND CONDITIONS The Board of Directors of Westinghouse Electric Corporation (the "Company") hereby adopts the following deferral terms and conditions (the "ADP Deferral Plan") for Termination Fees under the Company's Advisory Director's Plan. SECTION 1. DEFINITIONS 1.1 Definitions. The following terms shall have the meanings set forth below: (a) "BOARD" means the Board of Directors of the Company. (b) "CHANGE IN CONTROL" shall have the meaning assigned to it in Section 4.2. (c) "COMMITTEE" means the Compensation Committee of the Board or any successor established by the Board. (d) "DEBENTURE" means a hypothetical debenture of the Company that has a face value of $100, bears interest at a rate equal to the ten-year U.S. Treasury Bond rate in effect the week prior to April 30, 1996, and would be deemed to be convertible into Stock at a conversion rate determined by dividing $100 by the mean of the high and low prices of the Stock as reported by the composite tape of the New York Stock Exchange on April 30, 1996, the date the Debenture is credited to an ADP Deferred Debenture Account pursuant to Section 3.2. (e) "ADP DEFERRED DEBENTURE ACCOUNT" means the account established by the Company for a Director pursuant to Section 3.2 and to which Debentures are credited pursuant to the ADP Deferral Plan. - 1 - 3 (f) "DIRECTOR" means a non-employee member of the Board who is entitled to Termination Fees under the Company's Advisory Director's Plan. (g) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. (h) "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended from time to time. (i) "STOCK" means the common stock, $1.00 par value, of the Company. (j) "TERMINATION FEE" means a termination fee payment pursuant to the Company's Advisory Director's Plan. 1.2 Number. Except when otherwise indicated by the context the definition of any term herein in the singular shall also include the plural. SECTION 2. ADP DEFERRAL PLAN ADMINISTRATION (a) The ADP Deferral Plan shall be administered by the Committee. The members of the Committee shall be members of the Board appointed by the Board, and any vacancy on the Committee shall be filled by the Board. The Committee shall keep minutes of its meetings and of any action taken by it without a meeting. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present shall be the acts of the Committee. Any action that may be taken at a meeting of the Committee may be taken without a meeting if a consent or consents in writing setting forth the action so taken shall be signed by all of the members of the Committee. The Committee shall make appropriate reports to the Board concerning the operations of the ADP Deferral Plan. - 2 - 4 (b) Subject to the limitations of the ADP Deferral Plan, the Committee shall have the sole and complete authority: (i) to impose such limitations, restrictions and conditions on Debentures as it shall deem appropriate; (ii) to interpret the ADP Deferral Plan and to adopt, amend and rescind administrative guidelines and other rules and regulations relating to the ADP Deferral Plan; and (iii) to make all other determinations and to take all other actions necessary or advisable for the implementation and administration of the ADP Deferral Plan. The Committee's determinations on matters within its authority shall be conclusive and binding upon the Company and all other persons. (c) The Company shall be the sponsor of the ADP Deferral Plan. All expenses associated with the ADP Deferral Plan shall be borne by the Company. SECTION 3. DEFERRAL OF TERMINATION FEES 3.1 Amount of Deferral. Any Termination Fee payable to a Director under the Company's Advisory Director's Plan is subject to mandatory deferral under the terms of the ADP Deferral Plan. 3.2 ADP Deferred Debenture Accounts. An ADP Deferred Debenture Account has been or shall be established for each Director eligible to receive a Termination Fee. The amount of deferred Termination Fees for each Director on April 30, 1996, together with 1996 interest, shall be deemed to be invested in Debentures and shall be credited to the ADP Deferred Debenture Account for each such Director on April 30, 1996. Deferred amounts shall be credited to the ADP Deferred Debenture Account only in $100 amounts. 3.3 Payment of Deferred Amounts. Payments from an ADP Deferred Debenture Account shall be made in five consecutive annual installments beginning in the January following the Director's termination of service. Payments from an ADP Deferred Debenture Account shall all be made in cash and shall consist of accumulated interest on the Debentures plus the greater value of (i) the face value of the Debentures or (ii) the value of the - 3 - 5 shares of Stock into which the Debentures would be deemed to be convertible. 3.4 Payments to a Deceased Director's Estate. In the event of a Director's death before the balance of the Director's ADP Deferred Debenture Account is fully paid, payment of the balance of the Director's ADP Deferred Debenture Account shall then be made to the beneficiary designated by the Director pursuant to Section 3.5, or to the Director's estate in the absence of such a beneficiary designation, in the time and manner selected by the Committee. The Committee may take into account the application of any duly appointed administrator or executor of a Director's estate and direct that the balance of the Director's ADP Deferred Debenture Account be paid to the Director's estate in the manner requested by such application. 3.5 Designation of Beneficiary. A Director may designate a beneficiary in a form approved by the Committee and filed with the Secretary of the Company. SECTION 4. CHANGE IN CONTROL 4.1 Settlement of Compensation. In the event of a Change in Control of the Company as defined herein, the value of all unpaid deferred amounts shall be paid in cash to PNC Bank, National Association, the trustee pursuant to a trust agreement dated as of June 1995, as amended from time to time, or any successor trustee, or otherwise on such terms as the Committee may prescribe or permit. For purposes of this Section 4.1, the value of deferred amounts shall be equal to the greater value of (a) the cash amount equal to the face value of the Debentures plus cash equal to accrued interest or (b) the number of shares of Stock into which the Debentures would be deemed to be convertible (the value of which shall be based upon the highest price of the Stock as reported by the composite tape of the New York Stock Exchange during the thirty days immediately preceding the Change in Control) plus cash equal to accrued interest. - 4 - 6 4.2 Definition of Change in Control. A Change in Control shall mean the occurrence of one or more of the following events: (a) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or (b) the shareholders of the Company shall approve of any plan or proposal for the liquidation or dissolution of the Company; or (c) (i) any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity shall purchase any Stock of the Company (or securities convertible into the Company's Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, unless, prior to the making of such purchase of Stock (or securities convertible into Stock), the Board shall determine that the making of such purchase shall not constitute a Change in Control, or (ii) any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity (other than the Company or any benefit plan sponsored by the Company or any of its subsidiaries) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from any rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities), unless, prior to such person so becoming such beneficial owner, the Board shall determine that such person so - 5 - 7 becoming such beneficial owner shall not constitute a Change in Control; or (d) at any time during any period of two consecutive years individuals who at the beginning of such period constituted the entire Board shall cease for any reason to constitute at least a majority thereof, unless the election or nomination for election of each new director during such two-year period is approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period. SECTION 5. ASSIGNABILITY The right to receive payments or distributions hereunder and any Debentures granted hereunder shall not be transferable or assignable by a Director other than by will, by the laws of descent and distribution, to a properly designated beneficiary in the event of death, or pursuant to a domestic relations order as defined by Section 414(p)(1)(B) of the Internal Revenue Code or the rules thereunder that satisfies Section 414(p)(1)(A) of the Internal Revenue Code or the rules thereunder. SECTION 6. RETENTION; WITHHOLDING OF TAX 6.1 Retention. Nothing contained in the ADP Deferral Plan shall interfere with or limit in any way the right of the Company to remove any Director from the Board pursuant to the Restated Articles of Incorporation and the By-laws of the Company, nor confer upon any Director any right to continue in the service of the Company. 6.2 Withholding of Tax. To the extent required by applicable law and regulation, each Director must arrange with the Company for the payment of any federal, state or local income or other tax applicable to any payment hereunder before the Company shall be required to make such payment under the ADP Deferral Plan. - 6 - 8 SECTION 7. ADP DEFERRAL PLAN AMENDMENT, MODIFICATION AND TERMINATION The Board may from time to time amend or modify the ADP Deferral Plan and may at any time terminate the ADP Deferral Plan. SECTION 8. GOVERNING LAW The ADP Deferral Plan shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law principles. SECTION 9. EFFECTIVE DATE The ADP Deferral Plan shall be effective as of April 30, 1996. The ADP Deferral Plan shall not preclude the adoption by appropriate means of any other compensation or deferral plan for directors. - 7 - EX-10.N 6 WESTINGHOUSE ELEC. 10-Q 1 Exhibit 10.N WESTINGHOUSE LETTERHEAD CONFIDENTIAL April 30, 1996 Dr. Francis J. Harvey II Executive Vice President and Chief Operating Officer Industries & Technology Group 11 Stanwix Street Pittsburgh, Pennsylvania 15222 Dear Fran: As you know, in February of 1996, I asked you to take on the position of Executive Vice President and Chief Operating Officer of the Industries & Technology Group, with responsibility for the general management of that group. As an inducement to you to take on this responsibility, we discussed providing you with certain benefits if your employment were terminated under certain circumstances. You assumed the title of Executive Vice President and Chief Operating Officer of the Industries & Technology Group and assumed responsibility for that business group on March 1, 1996, and at that time we agreed to begin discussions in order to reach agreement on specific terms. This letter confirms our agreement. Certain terms and phrases used in this letter are defined in Paragraph 9 below. 1. You will be entitled to receive the benefits described in Paragraphs 2 through 7 of this letter if your employment, with the Corporation or its successor and all of its affiliates, is terminated by a Westinghouse Company before you reach age 60 (hereafter, a "Termination"). A Termination will not be deemed to have occurred under the above if: (i) your employment is terminated by reason of Special Retirement or death; (ii) you are terminated for Cause; (iii) you remain or become an employee of any Westinghouse Company; or 2 Dr. Francis J. Harvey April 30, 1996 Page 2 (iv) you are offered another senior-level executive position by a Westinghouse Company. 2. You will be entitled to receive each month after a Termination, for a period of 24 months or through the end of the month in which you reach age 60, whichever occurs first, an amount equal to your monthly base salary (as in effect immediately prior to Termination) reduced by 1.5% (with a maximum reduction of $2,250 per year) which, if you were an employee, would represent your contribution to the pension plan of the appropriate Westinghouse Company. 3. In the event of a Termination: A. You will also be entitled to receive an annual incentive award in each of the two Februaries immediately following such Termination in the amount of your target annual incentive opportunity for the year in which the Termination occurs. B. Notwithstanding anything to the contrary stated above: (1) any annual incentive award which may otherwise be payable to you in February of 2004, with respect to calendar year 2003 (the year in which you reach age 60), shall be reduced on a prorated basis by one-half (1/2); and (2) except as set forth in Paragraph 3(B)(1) above, you will be ineligible to receive any of the annual incentive awards referred to in this Paragraph 3 after January 1, 2004. C. The monthly payments referred to in Paragraph 2 and the annual incentive awards referred to in this Paragraph 3 will be in lieu of any other Westinghouse Company salary continuation or severance programs. 4. At the election of the Corporation, any obligation of the Corporation to make payments to you under Paragraphs 2 and 3 above in the event of a Termination may be satisfied by making a 3 Dr. Francis J. Harvey April 30, 1996 Page 3 single lump sum payment to you of an amount equal to the present value of those contractual payments discounted at a rate equal to the Corporation's target cost of capital, which is determined annually by the Corporation's Treasurer. Any such lump sum payment will not affect the timing or the amount of any benefits under Paragraphs 5 and 6 below. 5. At the end of the 24 month or shorter period designated in Paragraph 2 above, for purposes of the Westinghouse Executive Pension Plan only, the Westinghouse Executive Pension Plan requirement that you satisfy the age and service requirements for retirement eligibility of the Westinghouse Pension Plan prior to termination of your employment will be waived and you will be entitled to receive a pension benefit under the Westinghouse Executive Pension Plan as then in effect ("EPP") commencing at the end of the period designated in Paragraph 2 above with the following EPP modifications and subject to the reductions described in Paragraph 6 below: In calculating your Executive Pension Base under the EPP, (a) your Average Annual Compensation, as otherwise defined in the EPP, will be calculated using (i) the five highest of your December 1 monthly base salaries and December 1 monthly payments under Paragraph 2 above during the 10-year period immediately preceding the commencement of payments under this Paragraph 5, and (ii) the five highest of your annual incentive awards paid during the 10-year period including and immediately preceding the time for the second annual incentive award, if any, referred to in Paragraph 3 above, and (b) your Executive Benefit Service, as used in the EPP, will include the time during which you receive payments (or would have received payments had payment not been made in a lump sum at the Corporation's election) under Paragraph 2 above. This calculation of your Executive Pension Base, as otherwise defined under the EPP, will determine your EPP pension benefit on a single life annuity basis. You may elect to receive this EPP pension benefit in any form then permitted under the EPP. 4 Dr. Francis J. Harvey April 30, 1996 Page 4 6. Once you reach age 60, the single life annuity pension benefit amount referred to in Paragraph 5 above will be reduced by the monthly amount you would be entitled to receive at age 60 under the relevant qualified Westinghouse Company pension plan or plans, also on a single life annuity basis, whether or not you elect to begin receiving qualified pension plan benefits at age 60 and whether or not you elect the single life annuity payment option. You may elect at such time to receive this EPP pension benefit in any form then permitted under the EPP. 7. In the event of a Termination, your then outstanding, vested Westinghouse Company stock options will be treated as if you had terminated employment by reason of retirement. As to any then outstanding nonvested, regular Westinghouse Company stock options, such options will vest as of their normal vesting date and, once vested, will be treated as if you had terminated employment by reason of retirement. As to any then outstanding nonvested performance Westinghouse Company stock options, a pro rata portion of such options (based on the remaining term of the performance to be achieved) will terminate on the date of Termination. The remaining portion of said performance options will vest if and when the performance specified for said options is achieved as determined by the Compensation Committee and otherwise will be treated as if you had terminated employment by reason of retirement. 8. Payment of all of the separation benefits and the stock option treatment referred to in Paragraphs 2 through 7 above is also subject to the following: (a) your granting the Corporation, its Subsidiaries and its affiliates a general release, in the form attached to this letter as Exhibit A (with such changes, if any, as may be appropriate in light of any intervening changes in law in order to provide the Corporation, its Subsidiaries and its affiliates with the same level of protection as provided in the form attached), prior to your beginning to receive those benefits; (b) your not revoking the release referred to in Paragraph 8(a) above within the period provided therein; 5 Dr. Francis J. Harvey April 30, 1996 Page 5 (c) the ongoing condition that: (i) as, by reason of your position with the Corporation, you have been and may be given access to proprietary, confidential, trade secret, personnel, and other information not generally known to the public, as well as information protected by the attorney/client privilege, you agree, except as may be required under Paragraph 8(c)(iii) below, that you will continue to keep all such information confidential, both during and after the term of this letter agreement, that you will not disclose or use such information for any purpose whatsoever, and that you will not disclose any of the terms of this letter to anyone (except your spouse and your legal, tax and financial advisors and representatives to the extent necessary for them to render appropriate legal, tax and financial advice); (ii) you agree not to make any statements or to take any action which would reflect unfavorably upon any Westinghouse Company or which would be materially injurious to any Westinghouse Company; (iii) in the event that you are requested or required by interrogatories, subpoena, investigative demand or similar process to disclose any information about anything that you have gained knowledge about during the time you have been or are employed by a Westinghouse Company or about the matters set forth in this letter, you agree to promptly notify the Chief Executive Officer or General Counsel of the Corporation to allow the Corporation to determine whether or not any of its interests or rights are affected and, if so, to allow the Corporation to seek, with your cooperation, a court or administrative order protecting the Corporation's rights; and (iv) you agree to cooperate in all reasonable manner with the Westinghouse Companies in the defense of any litigation or other proceeding involving facts or circumstances which you became 6 Dr. Francis J. Harvey April 30, 1996 Page 6 aware of or may become aware of prior to a Termination, including, without limitation, providing assistance to counsel for the appropriate Westinghouse Company, with reimbursement of costs to be paid by the appropriate Westinghouse Company for all reasonable and appropriate expenses, and, if called, to testify by providing truthful testimony in such litigation or proceeding; and (d) the further ongoing condition that you shall not engage directly or indirectly in any business which is competitive with any business or part thereof, or activity conducted by any of the Westinghouse Companies or any other corporation, partnership, joint venture or other entity of which a Westinghouse Company directly or indirectly holds a 10% or greater interest (together, "Westinghouse"), in the area in which such business, or part thereof, or activity is conducted by Westinghouse, unless such condition is specifically waived with respect to you by the Corporation's Board of Directors. Breach of the ongoing condition contained in the preceding sentence shall be deemed to occur immediately upon your engaging in competitive activity. Payments suspended for breach of the ongoing condition shall not thereafter be resumed whether or not you terminate the competitive activity. You will be deemed to be engaged in such a business indirectly if you are an employee, officer, director, trustee, agent or partner of, or a consultant or advisor to or for, a person, firm, corporation, association, trust or other entity which is engaged in such a business or if you own, directly or indirectly, in excess of five percent of any such firm, corporation, association, trust or other entity. 9. These terms or phrases will have the following meanings when used in this letter: "A WESTINGHOUSE COMPANY" means the Corporation or its successor or any Subsidiary or other affiliate of the Corporation. 7 Dr. Francis J. Harvey April 30, 1996 Page 7 "CAUSE" means: (i) you are convicted of (x) a felony or (y) any lesser crime or offense than a felony which has caused demonstrable and serious injury to the Corporation and its affiliates, taken as a whole, and involves the property of the Corporation or any Subsidiary or other affiliate of the Corporation; or (ii) you are guilty of willful gross neglect of duties or other willful grave misconduct in carrying out your duties in the course of your employment by a Westinghouse Company. "CORPORATION" means Westinghouse Electric Corporation. "SPECIAL RETIREMENT" means retirement under the Special Retirement provisions of the Westinghouse Pension Plan or similar provisions of a qualified pension plan of another Westinghouse Company. "SUBSIDIARY" means any corporation or other entity of which a Westinghouse Company directly or indirectly has the power to elect a majority of the board of directors or other persons performing similar functions for the entity. 10. In the event that your employment terminates and you do not meet the criteria set forth in Paragraph 1 of this letter for a Termination, your benefits, if any, will be those benefits applicable without regard to this letter. If this letter is acceptable to you, please sign the original copy of the letter and return it to me. You should keep a copy of this letter for your records. By signing and returning a copy of this letter, you acknowledge that you understand and accept the terms and conditions set forth above. Sincerely, /s/ MICHAEL H. JORDAN --------------------- Michael H. Jordan 8 Dr. Francis J. Harvey April 30, 1996 Page 8 ACCEPTANCE I acknowledge that I have read, understood and agree to the terms and conditions stated in the foregoing letter. Dated: May 13, 1996 /s/ FRANCIS J. HARVEY II --------------------------- Dr. Francis J. Harvey II 9 EXHIBIT A SEPARATION AND GENERAL RELEASE AGREEMENT BY AND BETWEEN __________________ (HEREINAFTER THE "EMPLOYEE"), AND WESTINGHOUSE ELECTRIC CORPORATION, ITS RESPECTIVE SUBSIDIARIES AND RELATED ENTITIES (HEREINAFTER COLLECTIVELY THE "COMPANY"), W I T N E S S E T H: WHEREAS, Employee was employed by the Company as a __________________ in its __________________ Department, performing various __________________ services for its __________________ business unit located in _________________; and WHEREAS, Employee's employment with the Company will end effective __________________ as a result of ________________, such termination entitling the Employee to certain benefits under a letter agreement dated _______________, 1996 between Employee and Westinghouse Electric Corporation (the "1996 Letter Agreement"); and WHEREAS, the Employee has offered a General Release from all claims and liabilities in any way arising from or related to Employee's employment with the Company or his separation therefrom, which General Release the Company has agreed to accept; and WHEREAS, the parties, wishing to conclude between them all matters deemed pertinent to the Employee's separation from employment, AGREE AS FOLLOWS: 10 FIRST: NON-ADMISSION OF LIABILITY. The Company's acceptance of the Employee's General Release and its willingness to enter into this Agreement shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to Employee or any other person, or that Employee has any rights whatsoever against the Company, its officers, directors, employees, agents, affiliates, representatives and assigns (hereinafter "Releasees"), and further, all Releasees specifically disclaim any liability to or wrongful acts against Employee or any other person, on the part of the Releasees. SECOND: NO REEMPLOYMENT. Employee represents, understands and agrees that the Company has no obligation to reinstate Employee or to employ him in the future and that failure to reinstate or to employ him in the future will not subject the Company to liability of any kind. THIRD: NO OTHER CLAIMS. Employee covenants and represents that he has not filed any complaints, administrative charges of any kind or any lawsuits of any kind against any of the Releasees with any governmental agency or any court and that he will not file any future such charges against any Releasee at any time hereafter, nor will he participate in the filing of any such charge, claim or complaint; provided, however, this shall not limit Employee from pursuing claims for the sole purpose of enforcing his rights under this Agreement, the 1996 Letter Agreement or any other entitlements as set forth in Paragraph Ninth (b) below. FOURTH: PAYMENT. In consideration of the covenants herein made by the Employee, Employee will be entitled to receive the benefits set forth in the 1996 Letter Agreement, which the Employee agrees shall constitute good and valuable consideration for said 2 11 covenants. Said amount will be subject to all taxes and other deductions as may be required by law. FIFTH: TIME OF PAYMENT; REVOCATION BY EMPLOYEE. Employee agrees that he has previously been provided this Agreement for his review; has been informed that he may take up to forty-five (45) days to consider this Agreement if he so desires; has had the opportunity to review it; and enters into this Agreement voluntarily, of his own free will, without coercion or undue influence and upon the advice of competent counsel. The Employee understands that for a period of seven (7) days following the execution of this Agreement, the Employee may revoke it. The payments provided for in Paragraph Fourth above shall be payable beginning after the expiration of the revocation period, provided the Employee has not exercised his right to revoke this Agreement during that time. SIXTH: RETURN OF COMPANY MATERIALS AND PROPERTY. Employee represents that he has returned to the Company, or will promptly do so, all Company property in his possession or control, including credit cards, files, memoranda, records, computer records and other documents of any type which Employee received or created while in the course of his employment with the Company, other than personal notes, diaries, correspondence or Rolodexes. SEVENTH: SEVERABILITY. The provisions of this Agreement are severable, and if any part of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Agreement shall survive the termination of any arrangements contained herein. EIGHTH: CONSULTATION WITH COUNSEL. Employee represents and agrees that he has been encouraged by the Company to carefully read this Agreement and to consult 3 12 with legal counsel of his own choosing regarding its terms and conditions, and that he has had full and adequate opportunity to do so. NINTH: EMPLOYEE'S COMPLETE GENERAL RELEASE. As a material inducement to the Company to enter into the 1996 Letter Agreement and this Agreement, Employee hereby irrevocably and unconditionally waives, releases, and forever discharges Releasees and their respective successors, predecessors, subsidiaries, parents, shareholders, partners, affiliates, employees, agents, officers, directors, representatives and assigns, and also their attorneys and insurers, and all persons acting by, through, or in concert with any of them, from any and all: a. liability, claims, charges, complaints, suits in equity and actions and causes of action at law, of any nature whatever, tort or contract, and in any forum whatever, arising out of or in any way connected with his employment with the Company or the termination thereof, which he has or may have against any of them, whether such claims are known to exist or hereafter become known, including but not limited to claims under the Age Discrimination in Employment Act of 1967, as amended, and any other laws or regulations, federal, state, or local. Notwithstanding the provisions of any applicable state non-waiver statute to the contrary, and for the purpose of implementing a full and complete release and discharge of the Releasees, Employee expressly acknowledges that this General Release and waiver of claims is intended to include in its effect, without limitation, all claims which he does not know or suspect to exist in his favor at the time of execution hereof, and that this Agreement contemplates Employee's express waiver of any such state statute and the extinguishment of any such claim. 4 13 b. PROVIDED, HOWEVER, that this General Release shall not include any claims for indemnification which are included within the scope of the Westinghouse Electric Corporation By-laws regarding indemnification of officers and employees of that corporation or any other claims for indemnification he may have, or any claim for benefits (i) under the 1996 Letter Agreement, (ii) under any of a qualified Company pension plan, the Westinghouse Savings Program or the Westinghouse Electric Corporation Deferred Incentive Compensation Program in which the Employee was a participant at the time of his separation from employment, and (iii) under any vested, non-terminated options under a Company Long-Term Incentive Plan which Employee holds at the time of his separation from employment. TENTH: NO REPRESENTATIONS. Employee represents and acknowledges that in executing this Agreement he does not rely and has not relied upon any representation or statement not set forth herein made by any of the Releasees or by any of the Releasees' agents, representatives, or attorneys with regard to the subject matter, basis or effect of this Agreement or otherwise. ELEVENTH: COVENANT NOT TO SUE. Employee covenants and agrees that he will not, individually or with any person, or in any way, commence, aid, participate in, cooperate in any way in the process, prosecution, or commencement of any claim, charge, or cause of action based upon or connected with Employee' employment with the Company or his separation therefrom and/or based upon or connected with the employment or termination of any other person who was employed by the Releasees at any time during Employee's employment with the Company or was employed at the time of Employee's separation from the Company. Nothing herein shall prohibit Employee from responding to any lawfully issued subpoena or from pursuing claims for the sole 5 14 purpose of enforcing his rights under this Agreement, the 1996 Letter Agreement or any other entitlements as set forth in Paragraph Ninth (b) above. TWELFTH: ARBITRATION. This Agreement is made and entered into in the Commonwealth of Pennsylvania, and shall in all respects be interpreted, enforced and governed by and under the law of the Commonwealth of Pennsylvania without reference to the principles of conflict of laws. Any disputes regarding any aspect of this Agreement or the 1996 Letter Agreement or any act which allegedly has or would violate any provision of this Agreement or the 1996 Letter Agreement ("arbitrable dispute") will be submitted to arbitration in Pennsylvania before an experienced employment arbitrator licensed to practice law in Pennsylvania and selected in accordance with the rules of the American Arbitration Association, as the exclusive remedy for such claim or dispute. Should the Employee hereafter institute any legal action or administrative proceeding against any Releasee with respect to any claim waived by this Agreement or pursue any arbitrable dispute by any method other than said arbitration, the responding party shall be entitled to recover from the Employee all damages, costs, expenses and attorneys' fees incurred as a result of such action. THIRTEENTH: TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee agrees that he will hold inviolate and keep secret all confidential documents, materials, knowledge, business strategy, pricing and cost information of the Company, and other confidential business or technical information of the Company of any nature whatsoever disclosed to or developed by him during the course of his employment or to which he had access as a result of his employment, other than information that becomes generally known to the public through no fault of the Employee. Such 6 15 Confidential Information includes but is not limited to research and development, formulas, marketing, merchandising, selling, licensing, servicing, customer lists, records or financial information, manuals and policy documents of any kind or Company strategy considered by the Company to be confidential in nature, and any other confidences of the Company learned while in the Company's employ. Employee agrees that he will not use, disclose, disseminate, publish, reproduce or otherwise make available such Confidential Information to any person, firm, corporation or other entity, without the express written approval of a duly authorized agent of the Company; provided, however, he may do so when so required by a court of law, by any governmental agency having supervisory authority over the business of the Company, or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information, provided, however, that before Employee does so, he promptly notifies the Chief Executive Officer or General Counsel of Westinghouse Electric Corporation so that an appropriate protective order may be sought. FOURTEENTH: SOLE AND ENTIRE AGREEMENT. This Agreement and the 1996 Letter Agreement set forth the entire agreement between the parties hereto with respect to the subject matter thereof, and fully supersede any and all prior agreements or understandings between the parties hereto pertaining to such subject matter. FIFTEENTH: AGREEMENT MAY BE IN SEPARATE PARTS. This Agreement may be executed and delivered in two or more counterparts, each of which when so executed and delivered shall be the original, but such counterparts together shall constitute but one and the same instrument. 7 16 PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. Executed at _______________________________________, this ____________ day of __________________, 199_. ________________________ Employee Executed at Pittsburgh, Pennsylvania this __________________ day of __________________, 199_. For: Company, By: __________________ Date: __________________ 8 EX-11 7 WESTINGHOUSE ELEC. 10-Q 1 EXHIBIT (11) COMPUTATION OF PER SHARE EARNINGS (unaudited)
Three Months Ended Six Months Ended June 30 June 30 ------------------ ---------------- 1996 1995 1996 1995 ---- ---- ---- ---- EQUIVALENT SHARES: Average shares outstanding 399,232,141 358,545,020 398,307,494 357,980,371 Additional Shares due to: Stock options 7,368,773 4,619,587 6,558,043 4,488,900 Series C Preferred Shares 36,000,000 36,000,000 36,000,000 36,000,000 ----------- ----------- ----------- ----------- Total equivalent shares 442,600,914 399,164,607 440,865,537 398,469,271 =========== =========== =========== =========== ADJUSTED EARNINGS (in millions): Income (loss) from Continuing Operations $ (89) $ 25 $ (853) $ 16 Less: Series B preferred stock dividends - 12 - 25 ------ ----- ------ ------- Adjusted income (loss) from Continuing Operations $ (89) $ 13 $ (853) $ (9) Income from Discontinued Operations - 34 1,008 58 Extraordinary item - - (63) - ------ ----- ------ ------ Adjusted net income (loss) $ (89) $ 47 $ 92 $ 49 ====== ===== ====== ====== EARNINGS (LOSS) PER SHARE From Continuing Operations $(0.20) $0.03 $(1.94) $(0.02) From Discontinued Operations - 0.09 2.29 0.14 From Extraordinary item - - (0.14) - ------ ----- ------ ------ Earnings (loss) per share (a) $(0.20) $0.12 $ 0.21 $ 0.12 ====== ===== ====== ======
(a) For earnings per share using an alternative treatment for the Series C Preferred Shares, see note 11 to the condensed consolidated financial statements included in Part I of this report. -33- EX-12.A 8 WESTINGHOUSE ELEC. 10-Q 1 EXHIBIT (12)(a) COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (in millions) (unaudited)
Six Months Ended Year Ended June 30 December 31 ----------------- ---------------- 1996 1995 1995 ---- ---- ---- Income (loss) before income taxes and minority interest $(1,280) $ 26 $ 13 Less: Equity in income (loss) of 50 percent or less owned affiliates 1 - 2 Add: Fixed charges excluding capitalized interest 270 105 259 ------- ----- ----- Earnings as adjusted $(1,011) $ 131 $ 270 ======= ===== ===== Fixed charges: Interest expense $ 255 $ 95 $ 237 Rental expense 15 10 22 Capitalized interest - - - ------- ----- ----- Total fixed charges $ 270 $ 105 $ 259 ======= ===== ===== Ratio of earnings to fixed charges (a) 1.25x 1.04x ======= ===== =====
(a) Additional income before income taxes and minority interest of $1,281 million would be necessary to attain a ratio of earnings to fixed charges of 1.00x for the six months ended June 30, 1996. -34- EX-12.B 9 WESTINGHOUSE ELEC. 10-Q 1 EXHIBIT (12)(b) COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (in millions) (unaudited)
Six Months Ended Year Ended June 30 December 31 ------------------ ---------------- 1996 1995 1995 ---- ---- ---- Income (loss) before income taxes and minority interest $(1,280) $ 26 $ 13 Less: Equity in income (loss) of 50 percent or less owned affiliates 1 - 2 Add: Fixed charges excluding capitalized interest 305 180 383 ------- ---- ----- Earnings as adjusted $ (976) $206 $ 394 ======= ==== ===== Combined fixed charges and preferred dividends: Interest expense $ 255 $ 95 $ 237 Rental expense 15 10 22 Capitalized interest - - - Pre-tax earnings required to cover preferred dividend requirements (a) 35 75 124 ------- ---- ----- Total combined fixed charges and preferred dividends $ 305 $180 $ 383 ======= ==== ===== Ratio of earnings to combined fixed charges and preferred dividends (b) 1.14x 1.03x ====== ==== =====
(a) Dividend requirement divided by 100% minus effective income tax rate. (b) Additional income before income taxes and minority interest of $1,281 million would be necessary to attain a ratio of earnings to combined fixed charges and preferred dividends of 1.00x for the six months ended June 30, 1996. EX-27 10 WESTINGHOUSE ELEC. 10-Q
5 0000106413 WESTINGHOUSE ELEC. 1,000,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 157 0 1,555 44 811 4,399 3,458 1,608 15,302 4,795 3,649 4 0 426 1,345 15,302 4,180 4,180 2,957 2,957 2,109 0 255 (1,280) (429) (853) 1,008 (63) 0 92 .21 .21
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