UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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, 2014

or

o	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: 001-36367

CBS OUTDOOR AMERICAS INC.

(Exact name of registrant as specified in its charter)

Maryland	46-4494703
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
405 Lexington Avenue, 17th Floor New York, NY	10174
(Address of principal executive offices)	(Zip Code)

(212) 297-6400

(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.     xYes        oNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        xYes     o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    oYes    xNo

As of August 6, 2014, the number of shares outstanding of the registrant’s common stock was 120,000,000.

CBS OUTDOOR AMERICAS INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2014

TABLE OF CONTENTS

PART I	3
Item 1. Financial Statements (Unaudited)	3
Consolidated Statements of Financial Position as of June 30, 2014, and December 31, 2013	3
Consolidated Statements of Operations for the three months and six months ended June 30, 2014 and 2013	4
Consolidated Statements of Comprehensive Income (Loss) for the three months and six months ended June 30, 2014 and 2013	5
Consolidated Statements of Invested Equity/Stockholders’ Equity for the six months ended June 30, 2014 and 2013	6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	45
Item 4. Controls and Procedures	46
PART II	47
Item 1. Legal Proceedings	47
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3. Defaults Upon Senior Securities	49
Item 4. Mine Safety Disclosures	49
Item 5. Other Information	49
Item 6. Exhibits	49
SIGNATURES	50

PART 1

Item 1.    Financial Statements.

CBS OUTDOOR AMERICAS INC.

Consolidated Statements of Financial Position

(Unaudited)

	As of
(in millions)	June 30, 2014			December 31, 2013
Assets:
Current assets:
Cash and cash equivalents	$	223.4		$	29.8
Receivables, less allowance ($15.3 in 2014 and $15.7 in 2013)	169.6			178.8
Deferred income tax assets, net	24.6			24.5
Prepaid lease and transit franchise costs	96.1			62.7
Other prepaid expenses	22.7			15.5
Other current assets	14.1			5.9
Total current assets	550.5			317.2
Property and equipment, net (Note 4)	721.3			755.4
Goodwill	1,864.8			1,865.7
Intangible assets (Note 5)	335.2			364.4
Other assets	72.2			52.8
Total assets	$	3,544.0		$	3,355.5
Liabilities:
Current liabilities:
Accounts payable	$	60.4		$	80.0
Accrued compensation	16.4			28.2
Accrued lease costs	15.7			17.7
Other accrued expenses	51.5			37.8
Deferred revenues	26.3			22.9
Other current liabilities	32.8			25.6
Total current liabilities	203.1			212.2
Long-term debt (Note 8)	1,598.1			—
Deferred income tax liabilities, net	275.7			288.5
Asset retirement obligation (Note 6)	32.4			31.7
Other liabilities	65.6			68.7
Total liabilities	2,174.9			601.1
Commitments and contingencies (Note 15)
Stockholders’ equity/invested equity (Note 10):
Common stock (2014 - 450.0 shares authorized, and 120.0 shares issued
and outstanding; 2013 - no shares authorized, issued or outstanding)	1.2			—
Additional paid-in capital	1,452.9			—
Distribution in excess of earnings	(15.2		)	—
Invested capital	—			2,829.5
Accumulated other comprehensive loss	(69.8		)	(75.1		)
Total stockholders’ equity	1,369.1			—
Total invested equity	—			2,754.4
Total liabilities and stockholders’ equity/invested equity	$	3,544.0		$	3,355.5

See accompanying notes to unaudited consolidated financial statements.

3

CBS OUTDOOR AMERICAS INC.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions, except per share amounts)	2014			2013			2014			2013
Revenues:
Billboard	$	245.3		$	241.4		$	453.0		$	446.7
Transit and other	89.1			91.3			169.3			165.2
Total revenues	334.4			332.7			622.3			611.9
Expenses:
Operating	171.6			171.4			335.1			333.6
Selling, general and administrative	55.4			49.8			106.0			93.0
Net (gain) loss on dispositions	—			0.1			(0.9		)	(9.7		)
Depreciation	26.5			25.9			52.6			51.9
Amortization	22.6			22.7			44.5			45.6
Total expenses	276.1			269.9			537.3			514.4
Operating income	58.3			62.8			85.0			97.5
Interest expense	(18.5		)	—			(31.0		)	(0.1		)
Other expense, net	—			(0.1		)	(0.5		)	(0.2		)
Income before provision for income taxes and equity in earnings of investee companies	39.8			62.7			53.5			97.2
Provision for income taxes	(17.6		)	(27.1		)	(23.5		)	(42.0		)
Equity in earnings of investee companies, net of tax	0.2			0.8			0.8			1.1
Net income	$	22.4		$	36.4		$	30.8		$	56.3
Net income per common share:
Basic	$	0.19		$	0.30		$	0.28		$	0.52
Diluted	$	0.19		$	0.30		$	0.28		$	0.52
Weighted average shares outstanding:
Basic	119.7			119.7			108.4			108.4
Diluted	119.9			119.9			108.6			108.6
Dividends declared per common share	$	0.37		$	—		$	0.37		$	—

See accompanying notes to unaudited consolidated financial statements.

4

CBS OUTDOOR AMERICAS INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three months ended					Six months ended
	June 30,					June 30,
(in millions)	2014		2013			2014		2013
Net income	$	22.4	$	36.4		$	30.8	$	56.3
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	3.3		(9.9		)	5.1		(12.2		)
Amortization of net actuarial loss	—		0.1			0.2		0.3
Total other comprehensive income (loss), net of tax	3.3		(9.8		)	5.3		(11.9		)
Total comprehensive income	$	25.7	$	26.6		$	36.1	$	44.4

See accompanying notes to unaudited consolidated financial statements.

5

CBS OUTDOOR AMERICAS INC.

Consolidated Statements of Invested Equity/Stockholders’ Equity

(Unaudited)

(in millions, except per share amounts)	Shares of Common Stock	Common Stock ($0.01 per share par value)		Additional Paid-In Capital			Distribution in Excess of Earnings			Invested Capital			Accumulated Other Comprehensive Loss			Total Invested Equity/ Stockholders’ Equity
Balance as of December 31, 2012	—	$	—	$	—		$	—		$	2,909.9		$	(66.0	)	$	2,843.9
Net income	—	—		—			—			56.3			—			56.3
Other comprehensive loss	—	—		—			—			—			(11.9		)	(11.9		)
Net distribution to CBS	—	—		—			—			(54.2		)	—			(54.2		)
Balance as of June 30, 2013	—	$	—	$	—		$	—		$	2,912.0		$	(77.9	)	$	2,834.1
Balance as of December 31, 2013	—	$	—	$	—		$	—		$	2,829.5		$	(75.1	)	$	2,754.4
Net income	—	—		—			29.7			1.1			—			30.8
Other comprehensive income	—	—		—			—			—			5.3			5.3
Initial public offering (“IPO”)	23.0	0.2		614.8			—			—			—			615.0
Share-based payments:
Amortization	—	—		2.8			—			—			—			2.8
Conversion to stockholders’ equity (Note 10)	97.0	1.0		2,829.6			—			(2,830.6		)	—			—
Distribution of debt and IPO proceeds to CBS	—	—		(2,038.8		)	—			—			—			(2,038.8		)
Dividends ($0.37 per share)	—	—		—			(44.9		)	—			—			(44.9		)
Net contribution from CBS	—	—		44.5			—			—			—			44.5
Balance as of June 30, 2014	120.0	$	1.2	$	1,452.9		$	(15.2	)	$	—		$	(69.8	)	$	1,369.1

See accompanying notes to unaudited consolidated financial statements.

6

CBS OUTDOOR AMERICAS INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2014			2013
Operating activities:
Net income	$	30.8		$	56.3
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	97.1			97.5
Deferred tax benefit	(12.9		)	(4.8		)
Stock-based compensation	4.7			3.2
Provision for doubtful accounts	1.6			(0.3		)
Net gain on dispositions	(0.9		)	(9.7		)
Equity in earnings of investee companies, net of tax	(0.8		)	(1.1		)
Distributions from investee companies	3.2			2.2
Amortization of deferred financing costs and debt discount	1.9			—
Change in assets and liabilities, net of investing and financing activities	(59.9		)	(73.5		)
Net cash flow provided by operating activities	64.8			69.8
Investing activities:
Capital expenditures	(19.1		)	(14.9		)
Acquisitions	—			(9.6		)
Proceeds from dispositions	0.5			10.9
Net cash flow used for investing activities	(18.6		)	(13.6		)
Financing activities:
Proceeds from IPO	615.0			—
Proceeds from long-term debt borrowings	1,598.0			—
Deferred financing fees	(24.4		)	—
Excess tax benefit from stock-based compensation	—			5.4
Distribution of debt and IPO proceeds to CBS	(2,038.8		)	—
Net cash contribution from (distribution to) CBS	42.2			(63.4		)
Dividends	(44.4		)	—
Net cash flow provided by (used for) financing activities	147.6			(58.0		)
Effect of exchange rate changes on cash and cash equivalents	(0.2		)	(0.2		)
Net increase (decrease) in cash and cash equivalents	193.6			(2.0		)
Cash and cash equivalents at beginning of period	29.8			20.2
Cash and cash equivalents at end of period	$	223.4		$	18.2
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	28.3		$	46.5
Cash paid for interest	$	19.0		$	—

See accompanying notes to unaudited consolidated financial statements.

7

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

CBS Outdoor Americas Inc. (the “Company”) and its subsidiaries (collectively, “we,” “us” or “our”) was formed as an indirect wholly owned subsidiary of CBS Corporation (“CBS”). We provide advertising space (“displays”) on out-of-home advertising structures and sites in the U.S., Canada and Latin America. Our portfolio includes billboard displays, which are predominantly located in densely populated major metropolitan areas and along high-traffic expressways and major commuting routes. We also have a number of exclusive multi-year contracts to operate advertising displays in municipal transit systems. We have displays in all of the 25 largest markets in the U.S. and over 180 markets across the U.S., Canada and Latin America. We manage our business through two segments - United States (“U.S.”) and International.

On April 2, 2014, we completed an initial public offering (the “IPO”) of 23,000,000 shares of our common stock, including 3,000,000 shares of our common stock sold pursuant to the underwriters’ option to purchase additional shares. (See Note 2. Initial Public Offering.)

On April 16, 2014, CBS received a favorable private letter ruling from the Internal Revenue Service (“IRS”) with respect to certain issues relevant to our qualification as a real estate investment trust (“REIT”). On July 16, 2014, we ceased to be a member of the CBS consolidated tax group and on July 17, 2014, we began operating in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes for the tax year commencing July 17, 2014, and ending December 31, 2014.

As of June 30, 2014, CBS indirectly owned approximately 81% of the outstanding shares of our common stock.

On July 16, 2014, CBS completed a registered offer to exchange 97,000,000 shares of our common stock that were owned by CBS for outstanding shares of CBS Class B common stock (the “Exchange Offer”). In connection with the Exchange Offer, CBS disposed of all of its shares of our common stock and as of July 16, 2014, we were separated from CBS (the “Separation”) and were no longer a subsidiary of CBS.

On July 20, 2014, we entered into a definitive agreement to acquire certain outdoor advertising businesses from Van Wagner Communications, LLC (“Van Wagner”), for $690.0 million in cash. (See Note 17. Subsequent Events.)

On August 5, 2014, we announced that our board of directors approved a quarterly dividend of $0.37 per share. The dividend is payable on September 30, 2014, to stockholders of record of our common stock on September 9, 2014.

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”). In the opinion of our management, the accompanying unaudited financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of our financial position, results of operations and cash flows for the periods presented. Certain previously reported amounts have been reclassified to conform with the current presentation. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto, included in our prospectus, filed with the SEC on July 7, 2014.

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

Our 2013 financial statements were presented on a “carve-out” basis from CBS’s consolidated financial statements based on the historical results of operations, cash flows, assets and liabilities attributable to its Outdoor Americas operating segment. Management believes that the assumptions and estimates used in the preparation of the underlying consolidated financial statements are reasonable. However, the consolidated financial statements herein do not necessarily reflect what our financial position, results of operations or cash flows would have been if we had been a stand-alone company during the periods

8

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

presented. As a result, historical financial information is not necessarily indicative of our future results of operations, financial position or cash flows.

Note 2. Initial Public Offering

On March 27, 2014, our registration statement on Form S-11 related to our IPO of our common stock was declared effective by the SEC and on March 28, 2014, our common stock began trading on the New York Stock Exchange under the symbol “CBSO.” On April 2, 2014, we completed an IPO of 23,000,000 shares of our common stock, including 3,000,000 shares of our common stock sold pursuant to the underwriters’ option to purchase additional shares, at a price of $28.00 per share for total net proceeds, after underwriting discounts and commissions, of $615.0 million. Of the total net proceeds, $515.0 million was transferred to a wholly owned subsidiary of CBS as partial consideration for the contribution of the entities comprising CBS’s Outdoor Americas operating segment to us. The remaining $100.0 million was retained by us and will be used to pay the cash portion of the distribution to our stockholders of historical earnings and profits, in accordance with REIT tax requirements. Following the final payment of this required earnings and profits distribution, we will pay to CBS, or CBS will pay to us, as applicable, the difference between the actual cash portion of the distribution and the $100.0 million retained by us.

Note 3. New Accounting Standards

Adoption of New Accounting Standards

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

During the six months ended June 30, 2014, we adopted the Financial Accounting Standards Board’s (the “FASB’s”) guidance on the presentation of the reserve for uncertain tax positions when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance requires the reserve for uncertain tax positions to be presented in the financial statements as a reduction to the deferred tax asset for a tax loss or other tax carryforward that would be applied in the settlement of the uncertain tax position. This guidance did not have a material effect on our consolidated financial statements.

Obligations Resulting from Joint and Several Liability Arrangements

During the six months ended June 30, 2014, we adopted FASB guidance on the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. Under this guidance, we are required to measure our obligations under such arrangements as the sum of the amount we agreed to pay in the arrangement among our co-obligors and any additional amount we expect to pay on behalf of our co-obligors. We are also required to disclose the nature and amount of the obligation. This guidance did not have a material effect on our consolidated financial statements.

Recent Pronouncements

Service Concession Arrangements

In January 2014, the FASB issued guidance on the accounting for service concession arrangements with public sector entities. This guidance specifies that an operating entity should not account for a service concession arrangement as a lease and the infrastructure used in a service concession arrangement should not be recognized as property, plant and equipment. This guidance applies when the public sector entity controls the services that the operating entity must provide within the infrastructure and also controls any residual interest in the infrastructure at the end of the term of the arrangement. We are currently evaluating the impact of this guidance, which is effective for reporting periods beginning after December 15, 2014, on our consolidated financial statements.

9

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

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

In April 2014, the FASB issued guidance on reporting discontinued operations and disclosures of disposals of components of an entity. The new guidance changes the requirements, including additional disclosures, for reporting discontinued operations which may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. This guidance is effective for interim periods and annual periods beginning after December 31, 2014. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued or available for issuance. This guidance is not expected to have a material effect on our consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued principles-based guidance addressing revenue recognition issues. The guidance may be applied to all contracts with customers regardless of industry-specific or transaction specific fact patterns. This guidance is to be applied retrospectively and is effective for interim and annual periods beginning after December 15, 2016. Early adoption is not permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

Note 4. Property and Equipment

The table below presents the balances of major classes of assets and accumulated depreciation.

		As of
(in millions)	Estimated Useful Lives	June 30, 2014		December 31, 2013
Land		$	88.6	$	88.6
Building and improvements	20 to 40 years	46.7		45.0
Advertising structures	5 to 20 years	1,677.0		1,662.3
Furniture, equipment and other	3 to 10 years	79.7		77.2
Construction in progress		14.7		18.9
		1,906.7		1,892.0
Less: accumulated depreciation		1,185.4		1,136.6
Property and equipment, net		$	721.3	$	755.4

Depreciation expense was $26.5 million for the three months ended June 30, 2014, and $25.9 million for the three months ended June 30, 2013. Depreciation expense was $52.6 million for the six months ended June 30, 2014, and $51.9 million for the six months ended June 30, 2013.

Note 5. Intangible Assets

Our identifiable intangible assets primarily consist of acquired permits and leasehold agreements and franchise agreements which grant us the right to operate out-of-home structures in specified locations and the right to provide advertising space on railroad and municipal transit properties. Identifiable intangible assets are amortized on a straight-line basis over their estimated useful life, which is the respective life of the agreement that in some cases includes historical experience of renewals.

10

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

Our identifiable intangible assets consist of the following:

(in millions)	Gross		Accumulated Amortization			Net
As of June 30, 2014:
Permits and leasehold agreements	$	881.9	$	(678.0	)	$	203.9
Franchise agreements	445.8		(315.5		)	130.3
Other intangible assets	2.1		(1.1		)	1.0
Total intangible assets	$	1,329.8	$	(994.6	)	$	335.2
As of December 31, 2013:
Permits and leasehold agreements	$	880.6	$	(659.0	)	$	221.6
Franchise agreements	462.4		(320.7		)	141.7
Other intangible assets	2.1		(1.0		)	1.1
Total intangible assets	$	1,345.1	$	(980.7	)	$	364.4

All of our intangible assets, except goodwill, are subject to amortization. Amortization expense was $22.6 million for the three months ended June 30, 2014, and $22.7 million for the three months ended June 30, 2013, which includes the amortization of direct lease acquisition costs of $8.4 million for the three months ended June 30, 2014, and $7.7 million for the three months ended June 30, 2013. Amortization expense was $44.5 million for the six months ended June 30, 2014, and $45.6 million for the six months ended June 30, 2013, which includes the amortization of direct lease acquisition costs of $15.4 million for the six months ended June 30, 2014, and $15.5 million for the six months ended June 30, 2013. Direct lease acquisition costs are amortized on a straight-line basis over the related customer lease term, which generally ranges from four weeks to one year.

Note 6. Asset Retirement Obligation

The following table sets forth the change in the asset retirement obligations associated with our advertising structures located on leased properties. The obligation is calculated based on the assumption that all of our advertising structures will be removed within the next 50 years. The estimated annual costs to dismantle and remove the structures upon the termination or non-renewal of our leases are consistent with our historical experience.

(in millions)
As of December 31, 2013	$	31.7
Accretion expense	1.1
Additions	0.2
Liabilities settled	(0.5		)
Foreign currency translation adjustments	(0.1		)
As of June 30, 2014	$	32.4

11

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

Note 7. Related Party Transactions

CBS Corporation

Our financial statements as of and for the six months ended June 30, 2014, include charges from CBS for services, such as tax, internal audit, cash management, insurance, technology systems and other services. In addition, prior to 2014, CBS provided benefits to our employees, including certain post-employment benefits, medical, dental, life and disability insurance and participation in a 401(k) savings plan. Charges for these services and benefits are reflected in the consolidated financial statements based on the specific identification of costs, assets and liabilities or based on various allocation methods, including factors such as headcount, time and effort spent on matters relating to us, and the number of CBS operating entities benefiting from such services. Charges for these services and benefits have been included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Operations and totaled $2.8 million in the three months ended June 30, 2014, and $13.0 million in the same prior-year period. Charges for these services and benefits totaled $9.2 million in the six months ended June 30, 2014, and $30.7 million in the same prior-year period. Also included in these charges are professional fees associated with our planned election to be taxed as a REIT. Our expenses as a stand-alone company may be different from those reflected in the Consolidated Statements of Operations prior to the IPO. Effective January 1, 2014, our employees began participating in employee benefit plans maintained by us. As a result, there were no benefits provided by CBS in the six months ended June 30, 2014. In addition, during 2014, certain other services previously provided by CBS have been transitioned to us.

As of June 30, 2014, receivables from CBS were $2.9 million and payables to CBS were $1.2 million, which were included in Other current assets and Other current liabilities, respectively, on our Consolidated Statement of Financial Position. As of December 31, 2013, there were no receivables or payables from CBS on our Consolidated Statement of Financial Position.

On April 2, 2014, we entered into a transition services agreement with CBS, pursuant to which CBS will temporarily provide us with certain services (including legal, finance, information technology, insurance, tax and employment functions), and we will provide certain limited services to CBS. Also on April 2, 2014, we entered into a license agreement with a wholly owned subsidiary of CBS, pursuant to which we have the right to use “CBS” in the corporate names of the Company and our subsidiaries and have the right to use the “CBS” mark and logo on our advertising billboards. On July 16, 2014, we amended the transition services agreement to extend the time periods in which CBS will provide the transition services described above to September 30, 2014, the six months following the Separation or the twelve months following the Separation, as applicable depending on the services being provided. Also on July 16, 2014, we amended the license agreement to extend the time period in which we have the right to use “CBS” in the corporate names of the Company and our subsidiaries to December 31, 2014, and have the right to use the “CBS” mark and logo on our advertising displays to March 31, 2016.

Prior to the incurrence of indebtedness on January 31, 2014, intercompany transactions between CBS and us were considered to be effectively settled in cash in the financial statements. The net effect of the settlement of these intercompany transactions, in addition to cash transfers to and from CBS, are reflected in Net cash contribution from (distribution to) CBS on the Condensed Consolidated Statements of Cash Flows and Net contribution from (distribution to) CBS on the Consolidated Statements of Invested Equity/Stockholders’ Equity. The amounts on these financial statement line items differ due to non-cash transactions, such as stock-based compensation expense.

For advertising spending placed by CBS and its subsidiaries, we recognized total revenues of $5.1 million for the three months ended June 30, 2014, and $2.5 million for the same prior-year period. For the six months ended June 30, 2014, we recognized total revenues of $7.0 million related to advertising spending placed by CBS and its subsidiaries and $5.0 million for the same prior-year period.

On July 16, 2014, CBS completed the Separation and as a result of this transaction, CBS and their affiliates ceased to be related parties.

Other Related Parties

Viacom Inc. is controlled by National Amusements, Inc., the controlling stockholder of CBS. Revenues recognized for advertising spending placed by various subsidiaries of Viacom Inc. were $2.0 million for the three months ended June 30, 2014, and $2.6 million for the same prior-year period. For the six months ended June 30, 2014, we recognized total revenues of $3.6 million for advertising spending placed by various subsidiaries of Viacom and $5.0 million for the same prior-year period.

12

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

We have a 50% ownership interest in two joint ventures that operate transit shelters in Los Angeles and Vancouver. These ventures are accounted for as equity investments. These investments totaled $22.0 million as of June 30, 2014, and $24.1 million as of December 31, 2013, and are included in Other assets on the Consolidated Statements of Financial Position. We provide management services to these joint ventures.

Note 8. Long-Term Debt

Long-term debt consists of the following:

	As of
(in millions, except percentages)	June 30, 2014			December 31, 2013
Term loan, due 2021	$	798.1		$	—
Senior unsecured notes:
5.250% senior unsecured notes, due 2022	400.0			—
5.625% senior unsecured notes, due 2024	400.0			—
Total senior unsecured notes	800.0			—
Total long-term debt	$	1,598.1		$	—
Weighted average cost of debt	4.2		%	—		%

Term Loan

On January 31, 2014, two of our wholly owned subsidiaries, CBS Outdoor Americas Capital LLC (“Capital LLC”) and CBS Outdoor Americas Capital Corporation (“Finance Corp,” and together with Capital LLC, the “Borrowers”), borrowed $800.0 million under a term loan due in 2021 (the “Term Loan,” together with the Revolving Credit Facility (as defined below), the “Senior Credit Facilities”). The Senior Credit Facilities are governed by a credit agreement, dated as of January 31, 2014, (the “Credit Agreement”). The Term Loan is unconditionally guaranteed by us and our material existing and future direct and indirect wholly owned domestic subsidiaries (except the Borrowers), subject to certain exceptions. The Term Loan is secured, subject to certain exceptions, by substantially all of the assets of the Borrowers and the guarantors, including a first-priority pledge of all the capital stock of our subsidiaries directly held by the Borrowers and the guarantors under the Term Loan.

The Term Loan bears interest at a rate per annum equal to 2.25%plus the greater of the London Interbank Offered Rate (“LIBOR”) or 0.75%. The interest rate on the Term Loan was 3.00% per annum as of June 30, 2014. Interest on the term loan is payable at the end of each LIBOR period, but in no event less frequently than quarterly. The Term Loan was issued at a discount which we are amortizing through Interest expense on the Consolidated Statement of Operations over the life of the Term Loan. As of June 30, 2014, $1.9 million remains unamortized.

Senior Unsecured Notes

Also on January 31, 2014, the Borrowers issued $400.0 million aggregate principal amount of 5.250% Senior Unsecured Notes due 2022 and $400.0 million aggregate principal amount of 5.625% Senior Unsecured Notes due 2024 (together, the “Senior Notes”) in a private placement. The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and each of its direct and indirect wholly owned domestic subsidiaries that guarantee the Senior Credit Facilities. Interest on the Senior Notes is payable on May 15 and November 15 of each year, beginning on May 15, 2014.

On or after February 15, 2017, the Borrowers may redeem at any time, or from time to time, some or all of the 5.250% Senior Unsecured Notes due 2022, and on or after February 15, 2019, the Borrowers may also redeem at any time, or from time to time, some or all of the 5.625% Senior Unsecured Notes due 2024. Prior to such dates, the Borrowers may redeem some or all of the Senior Notes subject to a customary make-whole premium. In addition, prior to February 15, 2017, the Borrowers may redeem up to 35% of the aggregate principal amount of each series of Senior Notes with the proceeds of certain equity offerings.

Pursuant to a registration rights agreement dated January 31, 2014, we and the Borrowers have agreed to use commercially reasonable efforts to cause a registration statement to become effective with the SEC by January 31, 2015, relating to an offer to exchange the Senior Notes for registered Senior Notes having substantially identical terms, or, in certain cases, to register the

13

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

Senior Notes for resale. If we and the Borrowers do not register or exchange the Senior Notes pursuant to the terms of the registration rights agreement, the Borrowers will be required to pay additional interest to the holders of the Senior Notes under certain circumstances.

Revolving Credit Facility

On January 31, 2014, the Borrowers also entered into a $425.0 million Revolving Credit Facility, which matures in 2019 (the “Revolving Credit Facility”). Borrowing rates under the Revolving Credit Facility are based on LIBOR plus a margin based on our Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0 million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four consecutive quarters. Interest on the Revolving Credit Facility is payable at the end of each LIBOR period, but in no event less frequently than quarterly. The commitment fee based on the amount of unused commitments under the Revolving Credit Facility in the six months ended June 30, 2014, was $0.9 million. As of June 30, 2014, there were no outstanding borrowings under the Revolving Credit Facility. In June 2014, we issued a letter of credit of approximately $0.1 million against the Revolving Credit Facility and in July 2014, we issued a letter of credit for approximately $19.3 million against the Revolving Credit Facility in connection with the renewal of a transit franchise agreement. The Revolving Credit Facility is unconditionally guaranteed by us and our material existing and future direct and indirect wholly owned domestic subsidiaries (except the Borrowers), subject to certain exceptions. The Revolving Credit Facility is secured, subject to certain exceptions, by substantially all of the assets of the Borrowers and the guarantors, including a first-priority pledge of all the capital stock of our subsidiaries directly held by the Borrowers and the guarantors under the Revolving Credit Facility.

The Credit Agreement contains certain customary affirmative and negative covenants. As of June 30, 2014, the terms of the Revolving Credit Facility require that we maintain a Maximum Consolidated Net Secured Leverage Ratio of no greater than 3.5 to 1.0. On September 30, 2014, as an entity being taxed as a REIT, we will be required to maintain a Maximum Consolidated Net Secured Leverage Ratio of no greater than 4.0 to 1.0. As of June 30, 2014, our Maximum Consolidated Net Secured Leverage Ratio was 1.6 to 1.0. The Credit Agreement requires, in connection with the incurrence of certain indebtedness, that we maintain a Consolidated Total Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive quarters, of no greater than 6.0 to 1.0. As of June 30, 2014, our Consolidated Total Leverage Ratio was 3.9 to 1.0. 

Letter of Credit Facility

On January 31, 2014, the Borrowers also entered into a letter of credit facility, pursuant to which we may obtain letters of credit from time to time in an aggregate outstanding face amount of up to $80.0 million. After the first year, the letter of credit facility will automatically extend for successive one-year periods unless either the Borrowers or the issuing bank under it elect not to extend it. The letter of credit facility is unconditionally guaranteed by us and our material existing and future direct and indirect wholly owned domestic subsidiaries (except the Borrowers), subject to certain exceptions, and is secured on an equal and ratable basis by the same collateral that secures the Senior Credit Facilities. The fee under the letter of credit facility in the six months ended June 30, 2014, was immaterial.

Deferred Financing Costs

We deferred $29.2 million in fees and expenses associated with the Senior Credit Facilities, Senior Notes and letter of credit facility. We are amortizing the deferred fees through Interest expense on the Consolidated Statement of Operations over the term of each debt facility.

Use of Proceeds

On January 31, 2014, we transferred approximately $1.5 billion of the combined proceeds from the Term Loan and the Senior Notes to a wholly owned subsidiary of CBS, which is an amount equal to the net proceeds from the total indebtedness less $50.0 million, which remained with us for general corporate purposes.

14

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

Fair Value

Under the fair value hierarchy, observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities are defined as Level 1; observable inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability are defined as Level 2; and unobservable inputs for the asset or liability are defined as Level 3. The aggregate fair value of our debt, which is estimated based on quoted market prices of similar liabilities, was approximately $1.6 billion as of June 30, 2014. The fair value of our debt is classified as Level 2.

Note 9. Accumulated Other Comprehensive Income

(in millions)	Cumulative Translation Adjustments			Net Actuarial Gain (Loss)			Accumulated Other Comprehensive Income (Loss)
As of December 31, 2013	$	(69.2	)	$	(5.9	)	$	(75.1	)
Other comprehensive income before reclassifications	5.1			—			5.1
Amortization of actuarial losses reclassified to net income	—			0.2			0.2
Total other comprehensive income, net of tax	5.1			0.2			5.3
As of June 30, 2014	$	(64.1	)	$	(5.7	)	$	(69.8	)
As of December 31, 2012	$	(54.3	)	$	(11.7	)	$	(66.0	)
Other comprehensive income before reclassifications	(12.2		)	—			(12.2		)
Amortization of actuarial losses reclassified to net income	—			0.3			0.3
Total other comprehensive income (loss), net of tax	(12.2		)	0.3			(11.9		)
As of June 30, 2013	$	(66.5	)	$	(11.4	)	$	(77.9	)

Note 10. Equity

On January 15, 2014, 100 shares of our common stock were issued to CBS. On March 14, 2014, our board of directors declared a 970,000 to 1 stock split. As a result of the stock split, the 100 shares of our common stock then outstanding were converted into 97,000,000 shares of our common stock. The effects of the stock split have been applied retroactively. For purposes of calculating earnings per share, 97,000,000 shares were considered outstanding for all periods presented.

On March 25, 2014, our board of directors granted CBS and certain of its affiliates a waiver of the ownership restrictions contained in our charter, subject to certain initial and ongoing conditions designed to protect our status as a REIT.

On March 27, 2014, our registration statement on Form S-11 related to our IPO of our common stock was declared effective by the SEC. On April 2, 2014, we completed an IPO of 23,000,000 shares of our common stock, including 3,000,000 shares of our common stock sold pursuant to the underwriters’ option to purchase additional shares, at a price of $28.00 per share. Our total shares issued and outstanding upon completion of the IPO was 120,000,000. (See Note 2. Initial Public Offering.)

As of June 30, 2014, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 120,000,000 shares were issued and outstanding; and 50,000,000 shares of our preferred stock, par value $0.01 per share, were authorized with no shares issued and outstanding.

Note 11. Stock-Based Compensation

On March 18, 2014, our board of directors approved the Omnibus Stock Incentive Plan (the “Stock Plan”) and reserved 8,000,000 shares of our common stock for stock-based awards. Under the Stock Plan, the board of directors is authorized to grant awards of options to purchase shares of our common stock (the “Outdoor Options”), stock appreciation rights, restricted and unrestricted stock, restricted share units (“RSUs”), dividend equivalents, performance awards, including performance-based restricted share units (“PRSUs”), and other equity-related awards and cash payments to all of our employees and non-employee directors and employees of our subsidiaries. In addition, consultants and advisors who perform services for us and our subsidiaries may, under certain conditions, receive grants under our Stock Plan.

15

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

RSUs and PRSUs accrue dividend equivalents in amounts equal to the regular cash dividends paid on our common stock and will be paid in either cash or stock. Accrued dividend equivalents payable in stock shall convert to shares of our common stock on the date of vesting.

The Stock Plan also provides for the treatment of awards held by our employees that were originally granted under various CBS stock plans. Prior to our IPO, certain of our employees were granted awards of RSUs, PRSUs and stock options for CBS Class B common stock under the CBS equity incentive plans. At the time of the IPO, substantially all outstanding RSUs and PRSUs for CBS Class B common stock (the “CBS RSUs”) were converted into RSUs and PRSUs for our common stock (the “Outdoor RSUs”) under the Stock Plan.

Compensation expense for RSUs is determined based upon the market price of the shares underlying the awards on the date of grant and expensed over the vesting period, which is generally a three- to four-year service period. For PRSU awards, the number of shares an employee earns may range from 0% to 120% based on the outcome of a one year performance condition. Compensation expense is recorded based on the probable outcome of the performance condition. On an annual basis, the board of directors will review actual performance and certify the degree to which performance goals applicable to the award have been met. Forfeitures of RSUs are estimated on the date of grant based on historical forfeiture rates. On an annual basis, adjustments are made to compensation expense based on actual forfeitures and the forfeiture rates are revised as necessary.

The following table summarizes our stock-based compensation expense for the three months and six months ended June 30, 2014 and 2013.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2014			2013			2014			2013
RSUs and PRSUs	$	2.7		$	1.4		$	4.3		$	2.9
Stock options	0.2			0.2			0.4			0.3
Stock-based compensation expense, before income taxes	2.9			1.6			4.7			3.2
Tax benefit	(1.3		)	(0.6		)	(2.1		)	(1.3		)
Stock-based compensation expense, net of tax	$	1.6		$	1.0		$	2.6		$	1.9

As of June 30, 2014, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $24.0 million, which is expected to be recognized over a weighted average period of 3.0 years, and total unrecognized compensation cost related to non-vested stock options was $1.4 million, which is expected to be recognized over a weighted average period of 2.6 years.

16

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

RSUs and PRSUs

On March 27, 2014, 256,172 non-vested CBS RSUs held by our employees were converted into 561,021 non-vested Outdoor RSUs. The number of RSUs was converted at a ratio of approximately 2.2 to 1.0 to preserve the fair value of the awards both before and after conversion.

The following table summarizes the activity of the RSUs and PRSUs issued to our employees.

	CBS RSUs				Outdoor RSUs
	Activity		Weighted Average Per Share Grant Date Fair Market Value		Activity		Weighted Average Per Share Grant Date Fair Market Value		RSU and PRSU Dividend Equivalents
Non-vested as of December 31, 2013	472,490		$	32.09
Employee transfers and grants	11,875		34.66
Vested	(157,723	)	22.51
Forfeited	(2,909	)	37.67
Non-vested before conversion	323,733		36.80
CBS RSUs converted to Outdoor RSUs	(256,172	)	37.77
Non-vested Outdoor RSUs converted from CBS RSUs					561,021		$	17.24
Non-vested CBS RSUs not converted to Outdoor RSUs(a)	67,561		33.16
Granted:
RSUs					466,912		29.50
PRSUs					154,967		29.39
Dividend equivalents									4,623
Vested:
RSUs	(67,561	)	33.16		(52	)	29.50
Forfeitures:
RSUs					(10,689	)	21.68
Non-vested as of June 30, 2014	—		—		1,172,159		23.67		4,623

(a) Reflects CBS RSUs which vested in April 2014.

Stock Options

The following table summarizes the activity of CBS’ stock options issued to our employees.

	CBS Stock Options		CBS Weighted Average Exercise Price
Outstanding as of December 31, 2013	399,581		$	29.30
Exercised	(107,249	)	24.50
Forfeited	(38,167	)	30.78
Outstanding as of June 30, 2014	254,165		31.10
Exercisable as of June 30, 2014	113,132		17.61

17

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

On July 16, 2014, 219,741 outstanding CBS stock options held by our active employees were converted into 409,207 Outdoor Options. The CBS stock options were converted at a ratio of approximately 1.9 to 1.0 to preserve the intrinsic value of the award at the time of conversion.

Note 12. Retirement Benefits

The following table presents the components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for our pension plans:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2014			2013			2014			2013
Components of net periodic pension cost:
Service cost	$	0.4		$	0.5		$	0.7		$	0.9
Interest cost	0.5			0.5			1.1			1.0
Expected return on plan assets	(0.6		)	(0.6		)	(1.3		)	(1.2		)
Amortization of actuarial losses(a)	—			0.2			0.2			0.5
Net periodic pension cost	$	0.3		$	0.6		$	0.7		$	1.2

(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net income.

In the six months ended June 30, 2014, we contributed $0.8 million to our pension plans. In 2014, we expect to contribute approximately $2.0 million to our pension plans.

Note 13. Income Taxes

As of June 30, 2014, our U.S. operating results have been included in consolidated federal, and certain state and local income tax returns filed by CBS. The income tax expense reflected in the Consolidated Statements of Operations, deferred tax assets and liabilities included in the Consolidated Statements of Financial Position and income tax payments reflected in the Condensed Consolidated Statements of Cash Flows have been prepared as if these amounts were calculated on a separate tax return basis for us. We believe that the assumptions and estimates used to determine these tax amounts are reasonable. However, the consolidated financial statements herein may not necessarily reflect our income tax expense or tax payments, or what our tax amounts would have been if we had been a stand-alone company during the periods presented.

On April 2, 2014, we entered into a tax matters agreement, which governs the respective rights, responsibilities and obligations of CBS and us with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding taxes for the periods during which we are a member of the CBS consolidated tax group. The tax matters agreement also separately allocates among the parties any tax liability arising as a result of any failure of the Separation to qualify as a tax-free transaction based on actions taken during the two-year period following the Separation. On July 16, 2014, we ceased to be a member of the CBS consolidated tax group and on July 17, 2014, we began operating in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes for the tax year commencing July 17, 2014, and ending December 31, 2014. In the third quarter of 2014, as a result of our REIT conversion, a non-cash charge of substantially all Deferred income tax liabilities, net, will be reversed into Net income. As a result of our REIT conversion, our expected effective tax rate for the second half of 2014 will be substantially lower.

Our effective income tax rate represents a combined annual effective tax rate for federal, state, local and foreign taxes applied to interim operating results.

The effective income tax rate was 44.2% in the three months ended June 30, 2014, and 43.9% in the six months ended June 30, 2014. The effective income tax rate was 43.2% in both the three months and six months ended June 30, 2013.

18

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

The following table sets forth the change in the reserve for uncertain tax positions, excluding related accrued interest and penalties.

(in millions)
As of December 31, 2013	$	4.0
Reductions for prior year tax positions	(2.8		)
As of June 30, 2014	$	1.2

Reductions for prior year tax positions includes $2.1 million of liabilities which were transferred to CBS pursuant to our tax matters agreement. The reduction in this liability did not impact our provision for income taxes during the period. The reserve for uncertain tax positions of $1.2 million as of June 30, 2014, includes $0.8 million which would affect our effective income tax rate if and when recognized in future years.

Note 14. Earnings Per Share (“EPS”)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2014		2013		2014		2013
Net income	$	22.4	$	36.4	$	30.8	$	56.3
Weighted average shares for basic EPS	119.7		119.7		108.4		108.4
Dilutive potential shares from grants of RSUs and PRSUs	0.2		0.2		0.2		0.2
Weighted average shares for diluted EPS	119.9		119.9		108.6		108.6

Note 15. Commitments and Contingencies

Off-Balance Sheet Commitments

Our off-balance sheet commitments primarily consist of operating lease arrangements and guaranteed minimum franchise payments. These arrangements result from our normal course of business and represent obligations that are payable over several years.

We have long-term operating leases for office space, billboard sites and equipment, which expire at various dates. Certain leases contain renewal and escalation clauses.

We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks, and transit platforms. Under most of these franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant revenues, net of agency fees, or a specified guaranteed minimum annual payment.

Letters of Credit

We have indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. The outstanding letters of credit and surety bonds approximated $80.9 million as of June 30, 2014, of which $1.2 million was indemnified by CBS, and $78.3 million as of December 31, 2013, all of which was indemnified by CBS, and were not recorded on the Consolidated Statements of Financial Position. In July 2014, we entered into new arrangements with respect to our letters of credit and surety bonds and all of our letters of credit and surety bonds are no longer indemnified by CBS.

Legal Matters

On an ongoing basis, we are engaged in lawsuits and governmental proceedings and respond to various investigations, inquiries, notices and claims from national, state and local governmental and other authorities (collectively, “litigation”). Litigation is inherently uncertain and always difficult to predict. Although it is not possible to predict with certainty the

19

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

eventual outcome of any litigation, in our opinion, none of our current litigation is expected to have a material adverse effect on our results of operations, financial position or cash flows.

Note 16. Segment Information

The following tables set forth our financial performance by segment. We manage our operations through two segments—U.S. and International.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2014		2013		2014		2013
Revenues:
U.S.	$	291.1	$	285.9	$	546.1	$	531.1
International	43.3		46.8		76.2		80.8
Total revenues	$	334.4	$	332.7	$	622.3	$	611.9

We present Operating income (loss) before Depreciation, Amortization, Net gain (loss) on dispositions and Stock-based compensation expense (“Adjusted OIBDA”) as the primary measure of profit and loss for our operating segments in accordance with FASB guidance for segment reporting.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2014			2013			2014			2013
Net income	$	22.4		$	36.4		$	30.8		$	56.3
Provision for income taxes	17.6			27.1			23.5			42.0
Equity in earnings of investee companies, net of tax	(0.2		)	(0.8		)	(0.8		)	(1.1		)
Interest expense	18.5			—			31.0			0.1
Other expense, net	—			0.1			0.5			0.2
Operating income	58.3			62.8			85.0			97.5
Net (gain) loss on dispositions	—			0.1			(0.9		)	(9.7		)
Depreciation and amortization	49.1			48.6			97.1			97.5
Stock-based compensation(a)	2.9			1.6			4.7			3.2
Total Adjusted OIBDA	$	110.3		$	113.1		$	185.9		$	188.5
Adjusted OIBDA:
U.S.	$	106.4		$	106.5		$	186.7		$	186.6
International	9.5			11.5			10.6			12.1
Corporate	(5.6		)	(4.9		)	(11.4		)	(10.2		)
Total Adjusted OIBDA	$	110.3		$	113.1		$	185.9		$	188.5

(a) Stock-based compensation is classified as a Corporate expense.

20

CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2014			2013			2014			2013
Operating income (loss):
U.S.	$	64.2		$	65.2		$	104.2		$	113.4
International	2.6			4.1			(3.1		)	(2.5		)
Corporate	(8.5		)	(6.5		)	(16.1		)	(13.4		)
Total operating income	$	58.3		$	62.8		$	85.0		$	97.5
Net (gain) loss on dispositions:
U.S.	$	—		$	0.1		$	(0.8	)	$	(9.8	)
International	—			—			(0.1		)	0.1
Total gain on dispositions	$	—		$	0.1		$	(0.9	)	$	(9.7	)
Depreciation and amortization:
U.S.	$	42.2		$	41.2		$	83.3		$	83.0
International	6.9			7.4			13.8			14.5
Total depreciation and amortization	$	49.1		$	48.6		$	97.1		$	97.5
Capital expenditures:
U.S.	$	9.7		$	8.0		$	16.7		$	13.3
International	1.2			0.9			2.4			1.6
Total capital expenditures	$	10.9		$	8.9		$	19.1		$	14.9

	As of
(in millions)	June 30, 2014		December 31, 2013
Assets:
U.S.	$	3,006.3	$	3,027.6
International	313.3		327.9
Corporate	224.4		—
Total assets	$	3,544.0	$	3,355.5

Note 17. Subsequent Events

Pending Acquisition

On July 20, 2014, we entered into a definitive Membership Interest Purchase Agreement (the “Purchase Agreement”) with Van Wagner, Van Wagner Twelve Holdings, LLC (the “Seller”) and Richard M. Schaps, pursuant to which we will acquire certain outdoor advertising businesses from Van Wagner (the “Acquired Business”) for $690.0 million in cash, subject to working capital and other adjustments (the “Transaction”). The consummation of the Transaction is subject to customary closing conditions, including, among others, regulatory approvals. The Transaction is expected to close following the satisfaction of all closing conditions, including regulatory approvals. In connection with the execution of the Purchase Agreement, on July 20, 2014, we entered into a commitment letter (the “Commitment Letter”) with Wells Fargo Securities, LLC and WF Investment Holdings, LLC (together, the “Lender”), pursuant to which, for a period of 300 days, the Lender committed to provide a senior unsecured bridge term loan facility in an aggregate principal amount of $715.0 million for the purpose of financing all or a portion of the cash consideration for the Transaction and to pay related fees and expenses (the “Bridge Facility”). We currently intend to finance the Transaction and related fees and expenses with cash on hand and the proceeds from the issuance of debt securities.

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CBS OUTDOOR AMERICAS INC.

Notes to Consolidated Financial Statements

(Unaudited)

Executive Departure

On July 23, 2014, we announced that Wally Kelly, President and Chief Operating Officer, will be leaving the Company.  As a result, we expect to record a severance charge of $6.3 million in the third quarter of 2014.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with the audited consolidated financial statements and the notes thereto appearing in our prospectus filed with the Securities and Exchange Commission (the “SEC”) on July 7, 2014, and the unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q. This MD&A contains forward-looking statements that involve numerous risks and uncertainties. The forward-looking statements are subject to a number of important factors, including, but not limited to, those factors discussed in the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in our prospectus filed with the SEC on July 7, 2014, and the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q, that could cause our actual results to differ materially from the results described herein or implied by such forward-looking statements.

Our prior period unaudited financial statements and the notes thereto, included in this Quarterly Report on Form 10-Q, were presented on a “carve-out” basis from the consolidated financial statements of CBS Corporation (“CBS”) using the historical results of operations, cash flows, assets and liabilities attributable to CBS’s Outdoor Americas operating segment and include allocations of expenses from CBS. These allocations reflect significant assumptions, and the financial statements do not necessarily reflect what our financial position, results of operations or cash flows would have been had we been a stand-alone company during the periods presented. As a result, historical financial information is not necessarily indicative of our future results of operations, financial position or cash flows.

Overview

CBS Outdoor Americas Inc. (the “Company”) and subsidiaries (collectively, “we,” “us” or “our”) was formed as an indirect wholly owned subsidiary of CBS. We provide advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”), Canada and Latin America. We manage our business through two segments - U.S. and International.

On April 2, 2014, we completed an initial public offering (the “IPO”) of 23,000,000 shares of our common stock, including 3,000,000 shares of our common stock sold pursuant to the underwriters’ option to purchase additional shares. (See the “Overview: Our Initial Public Offering” section of this MD&A.)

On April 16, 2014, CBS received a favorable private letter ruling from the Internal Revenue Service (the “IRS”) with respect to certain issues relevant to our qualification as a real estate investment trust (a “REIT”). On July 16, 2014, we ceased to be a member of the CBS consolidated tax group and on July 17, 2014, we began operating in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes for the tax year commencing July 17, 2014, and ending December 31, 2014.

As of June 30, 2014, CBS indirectly owned approximately 81% of the outstanding shares of our common stock.

On July 16, 2014, CBS completed a registered offer to exchange 97,000,000 shares of our common stock that were owned by CBS for outstanding shares of CBS Class B common stock (the “Exchange Offer”). In connection with the Exchange Offer, CBS disposed of all of its shares of our common stock and as of July 16, 2014, we were separated from CBS (the “Separation”) and were no longer a subsidiary of CBS.

On July 20, 2014, we entered into a definitive agreement to acquire certain outdoor advertising businesses from Van Wagner Communications, LLC (“Van Wagner”), for $690.0 million in cash. (See the “Overview: Pending Acquisition” section of this MD&A.)

Business

We are one of the largest providers of advertising space on out-of-home advertising structures and sites across the U.S., Canada and Latin America. The majority of our inventory is billboard displays, which are primarily located on the most heavily traveled highways and roadways in the top Nielsen Media Research Designated Marketing Areas; and we operate a transit advertising displays with exclusive multi-year contracts with municipalities in large cities across the U.S. In total, we have displays in all of the 25 largest markets in the U.S. and over 180 markets in the U.S., Canada and Latin America. Our top market, high profile location focused portfolio includes sites such as the Bay Bridge in San Francisco, Sunset Boulevard in Los Angeles, and both Grand Central Station and Times Square in New York. With newly deployed metrics (“TAB Out of Home Ratings”), we are able to provide advertisers with the actual audience, in terms of audience size and demographic composition that is exposed to individual signs. The combination of location and audience delivery is a selling proposition unique to the out-of-home industry.

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The breadth and depth of our portfolio provides our customers with a multitude of options to address a wide range of marketing objectives from national, brand-building campaigns to hyper-local businesses that want to drive customers to their retail location “one mile down the road.”

We believe that out-of-home advertising is an attractive form of advertising as our displays are ALWAYS ON™ and cannot be turned off, skipped or fast-forwarded, and that it provides our customers with a differentiated advertising solution at an attractive price point relative to other forms of advertising. In addition to leasing displays, we provide other value-added services to our customers, such as pre-campaign category research, creative design support and post-campaign tracking and analytics. We use a real-time mobile operations reporting system that enables proof of performance to customers. We have a diversified base of customers across various industries. During the three months ended June 30, 2014, our largest categories of advertisers were retail, professional services and television, which represented 10%, 8% and 7% of our total U.S. revenues, respectively. During the six months ended June 30, 2014, our largest categories of advertisers were retail, healthcare/pharmaceuticals and television, which represented 9%, 8% and 8% of our total U.S. revenues, respectively.

We manage our business through the following two segments:

United States. As of June 30, 2014, we had the largest number of advertising displays of any out-of-home advertising company operating in the 25 largest markets in the U.S. Our U.S. segment generated 19% of its revenues in the New York City metropolitan area in each of the three months ended June 30, 2014 and 2013, and generated 12% in the Los Angeles metropolitan area in the three months ended June 30, 2014, and 13% in the three months ended June 30, 2013. Our U.S. segment generated 19% of its revenues in the New York City metropolitan area in each of the six months ended June 30, 2014 and 2013, and generated 12% in the Los Angeles metropolitan area in each of the six months ended June 30, 2014 and 2013. In the three months ended June 30, 2014, our U.S. segment generated $291.1 million of Revenues and $106.4 million of Operating income before Depreciation, Amortization, Net gains (losses) on dispositions and Stock-based compensation (“Adjusted OIBDA”). In the three months ended June 30, 2013, our U.S. segment generated $285.9 million of Revenues and $106.5 million of Adjusted OIBDA. In the six months ended June 30, 2014, our U.S. segment generated $546.1 million of Revenues and $186.7 million of Adjusted OIBDA. In the six months ended June 30, 2013, our U.S. segment generated $531.1 million of Revenues and $186.6 million of Adjusted OIBDA. (See the “Segment Results of Operations” section of this MD&A.)

International. Our International segment includes our operations in Canada and Latin America, including Mexico, Argentina, Brazil, Chile and Uruguay. In the three months ended June 30, 2014, our International segment generated $43.3 million of Revenues and $9.5 million of Adjusted OIBDA. In the three months ended June 30, 2013, our International segment generated $46.8 million of Revenues and $11.5 million of Adjusted OIBDA. In the six months ended June 30, 2014, our International segment generated $76.2 million of Revenues and $10.6 million of Adjusted OIBDA. In the six months ended June 30, 2013, our International segment generated $80.8 million of Revenues and $12.1 million of Adjusted OIBDA.

Our Initial Public Offering

On March 27, 2014, our registration statement on Form S-11 related to our IPO of our common stock was declared effective by the SEC. On April 2, 2014, we completed an IPO of 23,000,000 shares of our common stock, including 3,000,000 shares of our common stock sold pursuant to the underwriters’ option to purchase additional shares, at a price of $28.00 per share for total net proceeds, after underwriting discounts and commissions, of $615.0 million. Of the total net proceeds, $515.0 million was transferred to a wholly owned subsidiary of CBS as partial consideration for the contribution of the entities comprising CBS’ Outdoor Americas operating segment to us. The remaining $100.0 million was retained by us and will be used to pay the cash portion of the distribution to our stockholders of historical earnings and profits, in accordance with REIT tax requirements. Following the final payment of this required earnings and profits distribution, we will pay to CBS, or CBS will pay to us, as applicable, the difference between the actual cash portion of the distribution and the $100.0 million retained by us.

Pending Acquisition

On July 20, 2014, we entered into a definitive Membership Interest Purchase Agreement (the “Purchase Agreement”) with Van Wagner, Van Wagner Twelve Holdings, LLC (the “Seller”) and Richard M. Schaps, pursuant to which we will acquire certain outdoor advertising businesses from Van Wagner (the “Acquired Business”) for $690.0 million in cash, subject to working capital and other adjustments (the “Transaction”). The consummation of the Transaction is subject to customary closing conditions, including, among others, regulatory approvals. The Transaction is expected to close following the satisfaction of all closing conditions, including regulatory approvals. In connection with the execution of the Purchase

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Agreement, on July 20, 2014, we entered into a commitment letter (the “Commitment Letter”) with Wells Fargo Securities, LLC and WF Investment Holdings, LLC (together, the “Lender”), pursuant to which, for a period of 300 days , the Lender committed to provide a senior unsecured bridge term loan facility in an aggregate principal amount of $715.0 million for the purpose of financing all or a portion of the cash consideration for the Transaction and to pay related fees and expenses (the “Bridge Facility”). We currently intend to finance the Transaction and related fees and expenses with cash on hand and the proceeds from the issuance of debt securities.

Total 2013 revenues of the Acquired Business were $206.0 million. Substantially all of these revenues will be derived from REIT eligible assets.

Executive Departure

On July 23, 2014, we announced that Wally Kelly, President and Chief Operating Officer, will be leaving the Company.  As a result, we expect to record a severance charge of $6.3 million in the third quarter of 2014.

Economic Environment

Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other external events beyond our control.

Business Environment

We operate in a highly competitive industry. Increasing the number of digital billboard displays in our most heavily trafficked locations is an important element of our organic growth strategy. Digital billboard displays generate approximately three to four times more revenue per display on average than traditional static billboard displays and are attractive to our customers because they allow for the development of richer and more visually engaging messages, as well as provide our customers with the flexibility both to target audiences by time of day and to quickly launch new advertising campaigns.

Our revenues and profits may fluctuate due to seasonal advertising patterns and influences on advertising markets. Typically, our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as advertisers cut back on spending following the holiday shopping season.

Our large-scale portfolio allows our customers to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. In each of the three months and six months ended June 30, 2014 and 2013, we generated approximately 37% of our U.S. revenues from national advertising campaigns.

Our Tax Status

As of June 30, 2014, we were a member of CBS’s consolidated tax group and were taxable as a regular domestic C corporation for U.S. federal income tax purposes (i.e., we were subject to taxation at regular corporate rates). Pursuant to the tax matters agreement that we entered into with CBS, we are liable to pay CBS for any taxes imposed on or relating to us while we are a member of the CBS consolidated tax group. The tax matters agreement also separately allocates among the parties any tax liability arising as a result of any failure of the Separation to qualify as a tax-free transaction based on actions taken during the two-year period following the Separation. After the Separation, CBS ceased to own at least 80% of our outstanding common stock, and as a result, we were no longer a member of CBS’s consolidated tax group.

On April 16, 2014, CBS received a favorable private letter ruling from the IRS with respect to our plan to convert to a REIT. In connection with the Separation, on July 17, 2014, we began operating in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes for the tax year commencing July 17, 2014, and ending December 31, 2014, and we, together with one or more of our subsidiaries, jointly began operating such subsidiaries as taxable REIT subsidiaries. In the third quarter of 2014, as a result of our REIT conversion, a non-cash charge of substantially all Deferred income tax liabilities, net, will be reversed into Net income.

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Key Performance Indicators

Our management reviews our performance by focusing on the indicators described below.

Several of our key performance indicators are not prepared in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”). We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for, their most directly comparable GAAP financial measures.

In addition, in the three months ended June 30, 2014, we incurred $6.4 million of costs associated with operating as a stand-alone public company ($5.2 million incrementally over 2013) and $18.5 million of interest expense relating to our entry into the Senior Credit Facilities (as defined herein) and the issuance of the Senior Notes (as defined herein). In the six months ended June 30, 2014, we incurred $11.5 million of costs associated with operating as a stand-alone public company ($9.0 million incrementally over 2013) and $30.9 million of interest expense relating to our entry into the Senior Credit Facilities (as defined herein) and the issuance of the Senior Notes (as defined herein). In the six months ended June 30, 2013, we incurred a significant net gain of $9.8 million on the disposition of most of our billboards in Salt Lake City in exchange for billboards in New Jersey. In an effort to help users evaluate our operating performance for three months and six months ended June 30, 2014 and 2013, where indicated, we present Operating income, Net income, Adjusted OIBDA, Funds from Operations (“FFO”) and Adjusted FFO (“AFFO”) and related adjusted weighted average per share amounts for the applicable 2013 periods on a comparable basis.

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except percentages)	2014		2013		% Change		2014		2013		% Change
Revenues	$	334.4	$	332.7	1	%	$	622.3	$	611.9	2	%
Constant dollar revenues(a)	334.4		329.1		2		622.3		604.8		3
Operating income
Reported	58.3		62.8		(7	)	85.0		97.5		(13	)
2013 on a comparable basis	58.3		57.7		1		85.0		78.8		8
Adjusted OIBDA(b):
Reported	110.3		113.1		(2	)	185.9		188.5		(1	)
2013 on a comparable basis	110.3		107.9		2		185.9		179.5		4
FFO(b):
Reported	66.4		79.4		(16	)	116.7		136.5		(15	)
2013 on a comparable basis	66.4		65.1		2		116.7		113.0		3
AFFO(b):
Reported	58.0		75.3		(23	)	98.8		121.8		(19	)
2013 on a comparable basis	58.0		62.2		(7	)	98.8		100.2		(1	)
Net income:
Reported	22.4		36.4		(38	)	30.8		56.3		(45	)
2013 on a comparable basis(c)	22.4		22.2		1		30.8		27.2		13

(a) Revenues on a constant dollar basis are calculated as reported revenues excluding the impact of foreign currency exchange rates between periods. We provide constant dollar revenues to understand the underlying growth rate of revenue excluding the impact of changes in foreign currency exchange rates between periods, which are not under management’s direct control. Our management believes constant dollar revenues are useful to users because it enables them to better understand the level of growth of our business period to period. Since constant dollar revenues are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Constant dollar revenues, as we calculate them, may not be comparable to similarly titled measures employed by other companies.

(b) See the “Reconciliation Tables” section of this MD&A for a reconciliation of Operating income to Adjusted OIBDA, Net income to FFO and AFFO, and results in the three months and six months ended June 30, 2013, on a comparable basis.

(c) See the “Net income” section of this MD&A for a reconciliation of 2013 Net income to 2013 Net income on a comparable basis.

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Adjusted OIBDA

We calculate Adjusted OIBDA as Operating income before Depreciation, Amortization, Net gains (losses) on dispositions and Stock-based compensation. We calculate Adjusted OIBDA margin by dividing Adjusted OIBDA by total revenues. Adjusted OIBDA and Adjusted OIBDA margin are among the primary measures we use for managing our business, evaluating our operating performance and planning and forecasting future periods, as each is an important indicator of our operational strength and business performance. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of Adjusted OIBDA and Adjusted OIBDA margin, as supplemental measures, are useful in evaluating our business because eliminating certain non-comparable items highlight operational trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is management’s opinion that these supplemental measures provide users with an important perspective on our operating performance and also make it easier for users to compare our results with other companies that have different financing and capital structures or tax rates.

FFO and AFFO

We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO reflects net income adjusted to exclude gains and losses from the sale of real estate assets, depreciation and amortization of real estate assets and amortization of direct lease acquisition costs, as well as the same adjustments for our equity-based investments, as applicable. We calculate AFFO as FFO adjusted to include cash paid for direct lease acquisition costs as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a regular basis. AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations. In addition, AFFO excludes certain non-cash items, including non-real estate depreciation and amortization, deferred income taxes, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent and amortization of deferred financing costs. We use FFO and AFFO measures for managing our business and for planning and forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared to other REITs. Our management believes users are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of FFO, AFFO, and FFO and AFFO per adjusted weighted average share, as supplemental measures, are useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating performance of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is management’s opinion that these supplemental measures provide users with an important perspective on our operating performance and also make it easier to compare our results to other companies in our industry, as well as to REITs.

Adjusted Weighted Average Shares

We present weighted average shares on an adjusted basis for basic earnings per share (“EPS”) to give effect to the 23,000,000 shares issued on April 2, 2014, in connection with the IPO and the 97,000,000 shares outstanding after our stock split, and on an adjusted basis for diluted EPS to also give effect to dilutive potential shares from grants of restricted share units (“RSUs”) and performance-based RSUs (“PRSUs”). We also present FFO, AFFO and Net income per adjusted weighted average share for basic and diluted EPS. Our management believes that these presentations are useful in evaluating our business because they allow users to evaluate our per share results after giving effect to the issuance of shares of our common stock in connection with our initial public offering, which increased our outstanding shares of common stock.

Comparable Basis for 2013 Adjustments

We calculate Operating income, Net income, Adjusted OIBDA, FFO and AFFO, and related per adjusted weighted average share amounts, in the three months and six months ended June 30, 2013, on a comparable basis by adjusting to exclude net gains (loss) on dispositions incurred in the three months and six months ended June 30, 2013, which included a significant net gain of $9.8 million incurred in the first six months of 2013 on the disposition of most of our billboards in Salt Lake City in exchange for billboards in New Jersey, and to include incremental costs associated with operating as a stand-alone public company of $5.2 million incurred in the three months ended June 30, 2014, and $9.0 million in the six months ended June 30, 2014, and interest expense of $18.5 million incurred in the three months ended June 30, 2014, and $30.9 million in the six months ended June 30, 2014, relating to our entry into the Senior Credit Facilities (as defined herein) and the issuance of the Senior Notes (as defined herein) in the first quarter of 2014. Our management believes these adjusted presentations are useful in

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evaluating our business because they allow users to compare our operating performance for 2013 against the operating performance of the periods presented for 2014, including certain significant costs arising as a result of our separation from CBS.

Since adjusted weighted average shares, Adjusted OIBDA, Adjusted OIBDA margin, FFO and AFFO, FFO, AFFO and Net income per adjusted weighted average share for basic and diluted EPS and, on a comparable basis for 2013, Operating income, Net income, Adjusted OIBDA, FFO and AFFO and related per adjusted weighted average share amounts, are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, weighted average shares outstanding for basic and diluted EPS, Operating income, Net income,Revenues and Net income per common share for basic and diluted EPS, the most directly comparable GAAP financial measures, as indicators of operating performance. These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies. In addition, these measures do not necessarily represent funds available for discretionary use and are not necessarily a measure of our ability to fund our cash needs.

Reconciliation of Non-GAAP Financial Measures

The following table reconciles Operating income to Adjusted OIBDA, and Net income to FFO and AFFO. The table also reconciles 2013 Adjusted OIBDA, FFO and AFFO to 2013 Adjusted OIBDA, FFO and AFFO on a comparable basis and includes FFO and AFFO per adjusted weighted average share (2013 on a comparable basis).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share amounts)	2014		2013		2014			2013
Operating income	$	58.3	$	62.8	$	85.0		$	97.5
Net gain on dispositions	0.0		0.1		(0.9		)	(9.7		)
Depreciation	26.5		25.9		52.6			51.9
Amortization	22.6		22.7		44.5			45.6
Stock-based compensation	2.9		1.6		4.7			3.2