<PAGE>   1


                                      1995
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549-1004

                                   FORM 10-K

(MARK ONE)

[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
       ACT OF 1934 [FEE REQUIRED]

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
                                            -----------------
                                       OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

            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, PENNSYLVANIA 15222-1384
 -----------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (412) 244-2000
                                 --------------
                                (Telephone No.)


SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                           NAME OF EACH EXCHANGE ON 
TITLE OF EACH CLASS                        WHICH REGISTERED
-------------------                        ------------------------
Common Stock, par value $1.00 per Share    New York Stock Exchange
                                           Pacific Stock Exchange
                                           Chicago Stock Exchange
                                           Boston Stock Exchange
                                           Philadelphia Stock Exchange

7 3/4% Notes due April 15, 1996            New York Stock Exchange


SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
<PAGE>   2
    Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X   No
                                              ---     ---

    Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  ______

    Westinghouse Electric Corporation had 417,177,880 shares of common stock
outstanding at January 31, 1996. As of that date, the aggregate market value of
common stock held by non-affiliates was $8.1 billion.

DOCUMENT INCORPORATED BY REFERENCE INTO THE PARTS OF THIS REPORT INDICATED:

1.  Portions of Westinghouse Electric Corporation's Notice of 1996 Annual
    Meeting and Proxy Statement filed with the Commission pursuant to
    Regulation 14A of the Securities and Exchange Act of 1934 (the Proxy
    Statement). (Parts I and III).


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     The terms "Westinghouse" and "Company" as used in this Report on Form 10-K
refer to Westinghouse Electric Corporation and its consolidated subsidiaries
unless the context indicates otherwise.


                                     PART I

ITEM 1. BUSINESS

GENERAL

  Westinghouse Electric Corporation was founded in 1886 and operates under a
corporate charter granted by the Commonwealth of Pennsylvania in 1872.  Today,
Westinghouse is a diversified, global company which engages in a wide variety
of businesses through its Westinghouse/CBS Group and its Industries &
Technology Group.  The Westinghouse/CBS Group combines the broadcasting
operations of CBS Inc. (CBS), which the Company acquired in 1995, and Group W
Broadcasting.  The Industries & Technology Group provides services, fuel, and
equipment for the nuclear energy market, services and equipment for the power
generation market, transport refrigeration services,  environmental services
and management services at government-owned facilities, and communication and
information systems.

  The Company dramatically redefined its business portfolio and future
direction by acquiring CBS in November 1995.  As a result, Westinghouse became
the largest television and radio broadcaster in the United States, with 15
television stations and 39 radio stations.  As part of this strategic
redirection, in December 1995, management announced plans to divest the
Company's defense and electronic systems business and The Knoll Group (Knoll),
its office furniture unit.  The sales of Knoll and the defense and electronic
systems business were completed in February and March 1996, respectively.  WCI
Communities, Inc. (WCI), the Company's land development business, was sold in
July 1995.  In accordance with a November 1992 plan, the Company previously
liquidated the majority of its Financial Services business, as well as divested
its Distribution and Control Business Unit (DCBU) and Westinghouse Electric
Supply Company (WESCO).  Financial results for 1995 and prior years include all
of these divested businesses as Discontinued Operations.  For information about
principal acquisitions and divestitures see notes 2 and 3 to the financial
statements included in Part II, Item 8 of this report.  Other divestitures in
1995 included Aptus, Inc., an environmental subsidiary, and the Company's 62%
interest in MICROS Systems, Inc.

  For financial reporting purposes, the Company's Continuing Operations are
aligned into six segments: Broadcasting, Power Systems, Thermo King, Government
& Environmental Services, Communication & Information Systems, and Other
Businesses.  Except for Broadcasting, all of these reporting segments operate
as part of the Industries & Technology Group.  Results of international
manufacturing entities, export sales, and foreign licensee income are included
in the financial information of the segment that has operating responsibility.
Financial and other information by segment and geographic area is included in
note 21 to the financial statements included in Part II, Item 8 of this report.

  During 1995, the largest single customer of Westinghouse was the United
States Government and its agencies, whose purchases accounted for 6% of 1995
consolidated sales of products and services of Continuing Operations.  In
addition, the United States Government and its agencies was the largest single
customer of the defense and electronic systems business, which was divested
March 1, 1996.  Although revenues may fluctuate from quarter to quarter, no
material portion of the Company's business was seasonal in nature.





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OPERATING SEGMENTS

WESTINGHOUSE/CBS GROUP

  The Westinghouse/CBS Group combines the operations of CBS and Group W
Broadcasting.  Its principal businesses include the furnishing of network
television services to affiliated television stations primarily throughout the
United States, the production of news, sports and entertainment programming,
and the operation, under licenses from the Federal Communications Commission
(FCC), of 15 television broadcast stations and 39 radio stations.  The approval
by the FCC of the Company's acquisition of CBS contained a number of temporary
waivers of the FCC's television and radio ownership rules.  The recently
enacted Telecommunications Act of 1996 (the Act) deregulates some of these
rules and makes certain, but not all, of the waivers unnecessary.  Generally,
where waivers continue to be required, the Company intends to file applications
with the FCC seeking permanent waivers.  Other group owners have been granted
similar waivers in recent years.  Based on current FCC policy and precedent,
the Company believes the FCC will grant these waivers.  If these permanent
waivers are not granted, the Company would be required to divest certain of its
television and radio properties.

  The Westinghouse/CBS Group includes the CBS Network; CBS Entertainment, News
and Sports; the CBS Station Group; CBS Production and Distribution; and Group W
Satellite Communications.

  Through the CBS Network, the Westinghouse/CBS Group distributes a
comprehensive schedule of news and public affairs broadcasts, entertainment and
sports programming and feature films to over 200 independently-owned affiliated
stations and its 15 owned and operated television stations, which in the
aggregate serve the 50 states and the District of Columbia, and to certain
overseas affiliated stations.  The CBS Network is responsible for sales of
advertising time for the CBS Network broadcasts and related merchandising and
sales promotion activities.  This division is also responsible for managing the
full range of ongoing activities and areas of mutual concern between the
television network and the independently-owned affiliated stations.

  The CBS Entertainment division produces and otherwise acquires entertainment
series and other programs for all time periods, and acquires feature films for
distribution by the CBS Network for broadcast.  The CBS News division operates
a worldwide news organization which produces regularly scheduled news and
public affairs broadcasts and special reports for the CBS Television and Radio
Station Groups.  This division also produces certain news-oriented programming
for broadcast in the early morning daypart and in designated hours during
primetime.  A unit of the CBS News division produces documentaries for sale to
other media outlets.  The CBS Sports division produces and otherwise acquires
sports programs for distribution by the television network for broadcast.

  The CBS Station Group includes the CBS Television Station and the CBS Radio
Station Groups.  The Television Station Group operates and serves as national
sales representative for the 15 owned television stations.  The larger markets
served by the owned television stations include New York, Los Angeles, Chicago,
Philadelphia, San Francisco, and Boston.  The CBS Radio Station Group operates
18 owned AM radio stations and 21 owned FM radio stations.  The division also
serves as broadcast sales representative for independently-owned AM and FM
radio stations and operates the CBS Radio Network, which serves approximately
585 affiliated stations nationwide.

  CBS Production and Distribution produces and distributes syndicated and
off-network programming for the domestic and international marketplace.  At
year-end 1995, CBS agreed to acquire MAXAM Entertainment, a programmer and
distributor.





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  Group W Satellite Communications (GWSC) is Westinghouse/CBS Group's cable
television programming, satellite distribution and new media division.  GWSC
provides sports programming and the marketing and advertising for two country
music entertainment channels.

  The network broadcast environment is highly competitive.  The
Telecommunications Act of 1996 provides both new opportunities and potential
new competition for the Westinghouse/CBS Group.  By deregulating station
ownership limits, the Act will allow the Company to pursue strategic growth in
its Radio and Television Station Groups.  The entry of telephone companies into
the video programming and distribution businesses will mean new competition in
program sales, but will also provide new opportunities for the distribution of
CBS programming.

  The CBS Network and the CBS Television Station Group compete for audiences
with other television networks and television stations, as well as with other
video media, including cable television, satellite television services and
videocassettes.  In the sale of advertising, the CBS Network and the CBS
Television Station Group compete with other broadcast networks, other
television stations, cable television systems, and other advertising media.
The CBS Network and the CBS Television Station Group also compete with other
video media for distribution rights to television programming.

  In addition, the CBS Network competes with other television networks to
secure affiliations with independently-owned television stations in markets
across the country, which are necessary to ensure the effective distribution of
network programming to a nationwide audience.  In recent years, competition
among the networks for affiliates has intensified.

  Current and future technological developments may affect competition within
the television field.  Developments in advanced digital technology may enable
competitors to provide "high definition" pictures and sound qualitatively
superior to what television stations now provide.  Development of the
technology to compress digital signals may also permit the same broadcast or
cable channel or satellite transponder to carry multiple video and data
services, and could result in an expanded field of competing services.

  The CBS Radio Station Group competes with other radio networks, independent
radio stations, suppliers of radio programming, and other advertising media.
Developments in radio technology could affect competition in the radio field.
New radio technology, known as "digital audio broadcasting," can provide sound
of the quality of compact discs, which is significantly higher than that now
provided by radio networks and stations using analog technology.

INDUSTRIES & TECHNOLOGY GROUP

  The Industries & Technology Group consists of the following businesses:
Power Systems, Thermo King, Government & Environmental Services, Communication
& Information Systems, and Other Businesses.

Power Systems

  The Power Systems segment consists of the Energy Systems and Power Generation
Business Units which together serve the worldwide market for electrical power
generation.

  The Energy Systems Business Unit primarily serves the worldwide nuclear
energy market through three major areas: operating plant, process control, and
new plant.  About 40% of the world's operating commercial nuclear power
plants incorporate Westinghouse technology.  The business unit supplies a wide
range of operating plant services, ranging from performance-based maintenance
programs to new products and


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services that enhance plant performance.  It also has complete capabilities for
supplying customers with nuclear fuel for pressurized water reactors.  The
annual market for operating plant services and fuel is over $10 billion in the
United States and $30 billion globally.  The business unit designs and develops
process control systems for nuclear as well as fossil-fueled power plants and
industrial facilities.  The business unit is actively marketing new nuclear
power plants and components for new plants to the worldwide market.  The
business unit is also working with government agencies and industry leaders to
revitalize the nuclear energy option, and is developing a simplified nuclear
power plant design that incorporates passive safety systems.

  The Power Generation Business Unit designs, manufactures and services steam
turbine-generators for nuclear and fossil-fueled power plants, combustion
turbine-generators for natural gas and oil-fired power plants, and constructs
turnkey power plants worldwide.  In addition to serving the electric utility
industry, the business unit supplies, services and operates power plants for
independent power producers and supplies power generation equipment and
services to other non-utility customers.  Growing demand for electrical energy
has contributed to the business unit's growth.  In 1995, the business unit was
awarded orders for approximately 7,000 megawatts of new power generating
capacity.  The domestic market for new generating equipment over the next ten
years is expected to be nearly 80 gigawatts; the international market is
expected to be over 10 times the size of the domestic market.  Manufacturing
joint ventures between subsidiaries of the Company and Shanghai Electric
Corporation (SEC) in the People's Republic of China received final government
approvals in 1995.  Westinghouse holds ownership positions varying between 30
and 40 percent in these ventures.  SEC is China's largest domestic supplier of
turbine generators.  The Power Generation Business Unit is a participant in the
development of emerging technologies which could impact the future power
generation business.

  The United States electric utility industry is restructuring in response
to a new competitive environment brought on by regulatory changes.  Power
Systems has a number of domestic and foreign competitors in the power
generation industry where Westinghouse is recognized as a significant supplier.
Positive factors with respect to competitive position are technology, product
reliability, service capability, and worldwide presence. Negative factors
include reduced opportunities for operating fleet products and services,
continued softness in the domestic electric utility sector, and intense
competition for new unit sales worldwide.  In addition, the worldwide nuclear
industry is a mature business with intense competition.  The principal methods
of competition are technology, product development and performance,
responsiveness, customer service, pricing, and financing.

Thermo King

  Thermo King Company (Thermo King) manufactures a complete line of
transport temperature control equipment, including units for trucks, trailers,
container ships, buses and railway cars, as well as service parts to support
these units, and it supplies mapping software for the truck industry through
its Innovating Computing Corporation subsidiary.  The transport refrigeration
units are powered by diesel fuel, gasoline, propane, or electricity.  Thermo
King maintains five domestic facilities and has international manufacturing
plants in Ireland, Brazil, Spain, Puerto Rico, the United Kingdom, the Czech
Republic, and the People's Republic of China.  It sells products principally
through dealerships located around the world, and its equipment is used in
virtually every country.


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  Thermo King is subject to competition worldwide for all of its products.  Its
products compete on the basis of reliability, service, technology, warranty,
product performance, and cost.  In addition, Thermo King's customers and end
users are concerned about environmental issues, especially chlorofluorocarbons,
noise pollution, and engine emissions.  Thermo King designs its products to
meet or exceed all environmental requirements.

Government & Environmental Services

  The Westinghouse Government & Environmental Services Company includes
Environmental Services and the management of certain government-owned
facilities and the U.S. naval nuclear reactors programs.

  Environmental Services provides a variety of environmental remediation and
toxic, hazardous and radioactive waste treatment services and municipal solid
waste incineration services.  Westinghouse Remediation Services, Inc. provides
comprehensive toxic and hazardous waste remediation services, including mobile,
on-site environmental treatment technologies.  The Scientific Ecology Group,
Inc.  offers a broad range of on- and off-site services to manage radioactive
materials and mixed wastes, including the only commercially-licensed
radioactive waste incinerator and the only recycling facility for radioactively
contaminated metals in the United States.  Resource Energy Systems operates
power plants that provide municipal incinerator services.  In March 1995, the
Company sold Aptus, Inc., which provided toxic and hazardous waste
incineration, treatment, transportation, storage, and analysis services.  The
Company continues to review its portfolio of environmental businesses to
determine how best to focus its efforts.

  Through the following subsidiaries and divisions of Westinghouse Government &
Environmental Services Company, the Company manages four government-owned
facilities under contracts with the United States Department of Energy (DOE):
Westinghouse Savannah River Company, Inc., Westinghouse Hanford Company, West
Valley Nuclear Services, Inc., and the Waste Isolation Division.  In addition,
the Company was awarded a major five year subcontract at the DOE Rocky Flats
facility in May 1995.  The principal mission at these sites is cleanup, waste
management and the safe management of the nation's nuclear materials inventory.
In March 1996, the Company was awarded a nine-year Department of Defense (DoD)
contract to destroy chemical weapons at the Anniston Army Depot in Anniston,
Alabama.  The federal government reserves the right to terminate these
contracts for convenience.

  The government-funded U.S. naval nuclear reactors programs consist of the
Company's Navy nuclear and technical support businesses.  These businesses
include the Bettis Atomic Power Laboratory, the Plant Apparatus Division, the
Machinery Apparatus Operation, and the Machinery Technology Division, which
provides technical engineering services to the Naval Sea Systems Command.  In
December 1995, Westinghouse announced the closing of the Machinery Technology
Division due to the loss of the prime contract with the Navy.

  Competition for services provided by businesses in the Government &
Environmental Services segment is based on price, technology preference,
environmental experience, performance reputation and, with respect to certain
businesses, availability of permitted treatment or disposal facilities.


Communication & Information Systems

  The Communication and Information Systems Company (CISCO) was formed in
November 1995 to focus attention on a number of smaller, yet high potential
businesses.  CISCO includes businesses that previously resided in various
larger divisions within the Company.  This segment is grouped around three
businesses: security, network communications and wireless communications.


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  The security business is a leading, national provider of monitored home
and vehicle security products and services.  It provides electronic access
control systems to commercial customers and integrated surveillance equipment
to federal, state and local law enforcement agencies around the world.

  Network communications provides voice, data, video and network
communication services to small and medium sized customers.  CISCO provides
these services through its network infrastructure as well as through purchase
resale.

  Wireless communications consists of a number of businesses ranging from
satellite ground station networks to mobile satellite terminals to wireless
mobile services.  Many of the businesses' core skills and capabilities were
derived from Westinghouse's experience in the defense electronics arena.

  CISCO is subject to a wide range of both domestic and international
competition for many of its products and services including major long distance
providers and smaller purchase/resellers.  Its products compete on the bases of
product features, reliability, technology, product performance, customer
service, and cost.

Other Businesses

  These businesses generally were deemed non-strategic.  The divestitures of
these businesses are essentially complete.


DISCONTINUED OPERATIONS

  During 1995, Discontinued Operations consisted of Knoll, the defense and
electronic systems business, Financial Services and WCI.  Knoll and the defense
and electronic systems business were part of a plan adopted in December 1995;
these divestitures were completed in the first quarter of 1996.  The disposal
of WCI was included in a July 1995 plan.

  During 1995, the Company continued to liquidate Financial Services.  The
remaining assets consist of the leasing portfolio and are expected to liquidate
in accordance with contractual terms.


RAW MATERIALS

  The Company has experienced no significant difficulty with respect to sources
and availability of raw materials essential to its businesses.

PATENTS

  Westinghouse owns or is licensed under a large number of patents and patent
applications in the United States and other countries that, taken together, are
of material importance to its businesses. Such patent rights are, in the
judgment of the Company, adequate for the conduct of its business. None of its
important products, however, are covered by exclusive controlling patent rights
that preclude the manufacture of competitive products by others.

BACKLOG

  The backlog of firm orders of the Company's Continuing Operations,
excluding amounts associated with litigation settlements, was $6,682 million
and $6,580 million at December 31, 1995 and 1994, respectively.  Of the 1995
backlog, $4,319 million is expected to be liquidated after 1996.  In addition
to the reported backlog, the Company provides certain non-Westinghouse products
primarily for nuclear steam supply customers.


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Backlog for the Company is as follows:

  Power Systems backlog at year-end 1995 and 1994 was $5,698 million and
$5,305 million, respectively.  Energy Systems backlog at year-end 1995 and 1994
was $2,592 million and $2,623 million, respectively.  Power Generation backlog
at year-end 1995 and 1994 was $3,106 million and $2,682 million, respectively.
Backlog of $3,639 million is expected to be liquidated after 1996.

  Thermo King backlog at year-end 1995 and 1994 was $174 million and $280
million, respectively.  Backlog of $67 million is expected to be liquidated
after 1996.

  Government and Environmental Services backlog at year-end 1995 and 1994
was $674 million and $718 million, respectively.  Backlog of $582 million is
expected to be liquidated after 1996.

  Communication and Information Systems backlog at year-end 1995 and 1994
was $97 million and $154 million, respectively.  Backlog of $19 million is
expected to be liquidated after 1996.

  Other Businesses backlog at year-end 1995 and 1994 was $8 million and $65
million, respectively.  Backlog of $2 million is expected to be liquidated
after 1996.

  Also included in backlog at year-end 1995 and 1994 was $31 million and $58
million, respectively, attributable to Corporate and Other, of which $10
million is expected to be liquidated after 1996.  This backlog primarily
relates to research activities for outside customers.


ENVIRONMENTAL MATTERS

  Information with respect to Environmental Matters is incorporated herein by
reference to Management's Discussion and Analysis -- Environmental Matters
included in Part II, Item 7 and in note 17 to the financial statements included
in Part II, Item 8 of this report.


RESEARCH AND DEVELOPMENT

  Data with respect to research and development is incorporated herein by
reference to note 21 to the financial statements included in Part II, Item 8 of
this report.


EMPLOYEE RELATIONS

  During 1995, Westinghouse employed an average of 77,813 people, of whom
approximately 64,000 were located in the United States.  Included in the 1995
average employees were 26,290 employees associated with government-owned
facilities and the U.S. naval nuclear reactors programs and 17,533 employees in
Discontinued Operations.  During the same period, approximately 8,800 domestic
employees were represented in collective bargaining by 21 labor organizations.
Of these employees, 36% were represented by unions that are affiliated with,
and/or bargain in conjunction with, one of three national unions, namely, the
International Brotherhood of Electrical Workers; the International Union of
Electronic, Electrical, Salaried, Machine and Furniture Workers; and the
Federation of Independent Salaried Unions.


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  In August 1994, the Company negotiated four-year agreements with these
unions, currently representing about 6,300 employees.  The basic agreements
provided lump sum wage increases of $1,000 in 1994 and $500 in 1995 and wage
increases of 2.5% each in August 1995 and 1996, and 3% in August 1997.  In
addition, there are seven potential cost-of-living increases.  The agreements
also included major restructuring of the health care delivery system
introducing new managed care networks; restructuring of the employee security
and protection plan; and a restructured pension plan to enable the Company to
address issues related to underfunding.  Management believes that the 1994
labor agreements represent a balanced and competitive package of pay and
benefits particularly well suited for Westinghouse and its employees.


FOREIGN AND DOMESTIC OPERATIONS

  Information with respect to foreign and domestic operations and export sales
is incorporated herein by reference to note 21 to the financial statements
included in Part II, Item 8 of this report.


ITEM 2.  PROPERTIES.

  At December 31, 1995, the Company's Continuing Operations owned or leased
697 locations totalling more than 30 million square feet of floor area in the
United States and 38 foreign countries.  Domestic locations of Continuing
Operations comprised approximately 86% of the total space.

  Facilities leased in the United States accounted for approximately 23% of
the total space occupied by Continuing Operations and facilities leased in
foreign countries accounted for approximately 5% of the total space occupied by
Continuing Operations. No individual lease was material.

  A number of manufacturing plants and other facilities formerly used in
operations are either vacant, partially utilized, or leased to others. All of
these plants are expected to be sold, leased, or otherwise utilized.  Except
for these facilities, the Company's physical properties are adequate and
suitable, with an appropriate level of utilization, for the conduct of its
business in the future.


ITEM 3.  LEGAL PROCEEDINGS


  (a)  In October 1990, Houston Lighting and Power Company and its co-owners
filed a lawsuit against the Company and two individual defendants (one current
and one retired employee of the Company) in the District Court of Matagorda
County, Texas, relating to the Company's supply of nuclear steam supply systems
for the South Texas Project.  Trial commenced in this action on July 5, 1995.
On December 7, 1995, the parties reached an agreement resolving all claims
asserted in this matter.

  (b) In October 1990, Commonwealth Edison Company (Commonwealth Edison)
filed a lawsuit against the Company in the Circuit Court in Cook County,
Illinois, for an unspecified amount of damages, including treble and punitive
damages, based on the Company's supply of nuclear steam supply systems for
Commonwealth Edison's Zion, Byron, and Braidwood plants.  Commonwealth Edison's
Second Amended Complaint sets forth counts of common law fraud, violation of
the Illinois Consumer Fraud and Deceptive Practices Act, and violations of the
Federal Racketeer Influenced and Corrupt Organization Act (RICO) statute.
Subsequently, Commonwealth Edison disclosed that it was seeking approximately
$1.2 billion of damages.  A trial date is scheduled for July 1996.


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  (c)  In February 1993, Portland General Electric Company (Portland) filed a
lawsuit against the Company in the United States District Court (USDC) for the
Western District of Pennsylvania seeking unspecified damages based on claims
for breach of contract, negligence, fraud, negligent misrepresentation, and
violations of the federal RICO statute and the Oregon RICO statute, relating to
the Company's design, manufacture and installation of steam generators at the
Trojan Nuclear Plant, an electric generating facility located in Ranier,
Oregon.  Also in February 1993, the Eugene Water & Electric Board (the Board),
a 30% owner of the Trojan Nuclear Plant, filed a suit containing essentially
the same allegations and seeking unspecified damages.   A declaratory judgment
that the steam generators are defective and the Company is liable for expenses,
including replacement power, incurred as a result of the alleged defects, was
also sought in both cases.  Although the Board's suit was filed in the USDC for
the District of Oregon, its motion to change the venue to the USDC for the
Western District of Pennsylvania was granted.  In April 1993, on Portland's
motion, the Board's case was consolidated with the Portland case.  The
consolidated claims sought total damages of approximately $350 million.  In
June 1993, the court granted the Company's motion to dismiss plaintiffs' claims
for negligence and negligent misrepresentation.  The court also dismissed, in
part, the plaintiffs' claims under Section 1962(b) of the federal RICO statute
relating to the Trojan project enterprise.  On May 17, 1995, the USDC dismissed
the Board's claims after the Company and the Board agreed on a settlement.  The
claims of Portland are scheduled for trial in 1996.

  (d)  In July 1993, Northern States Power Company (NSP) filed a lawsuit
against the Company in the USDC for the District of Minnesota for an unspecified
amount of damages, including treble and punitive damages, based on the Company's
supply of steam generators at NSP's Prairie Island Nuclear Plant. The complaint
sets forth counts for breach of contract, fraud, negligent misrepresentation,
violations of the RICO statute and violations of the Minnesota Prevention of
Consumer Fraud Act.  Subsequently, NSP disclosed that it is seeking
approximately $317 million of damages.  This case is scheduled for trial in
March 1996.

  (e)  On February 27, 1996, suit was brought against the Company in the USDC
for the District of New Jersey by Public Service Electric & Gas Company, PECO
Energy Company, Atlantic City Electric Company, and Delaware Power & Light
Company, the owners of the Salem Generating Station.  The suit alleges counts
under the RICO statute, for fraud and for negligent misrepresentation and for
breach of contract in connection with the Company's supply of steam generators
and for service orders in 1993 and 1995 related to these steam generators.

  (f)  In August 1988, the Pennsylvania Department of Environmental Resources
(PDER) filed a complaint against the Company alleging violations of the
Pennsylvania Clean Streams Law at the Company's Gettysburg, Pennsylvania,
elevator plant.  The PDER requested that the Environmental Hearing Board assess
a penalty in the amount of $9 million.  The Company has denied these
allegations.  The parties completed discovery and a portion of the hearing on
the complaint began in 1991.  The hearing resumed in 1992 and concluded in
February 1993.  All post-trial briefs have been filed and the parties await a
decision.

  (g)  In March 1993, the Pennsylvania Department of Environmental Resources
(PDER) filed a complaint against CBS with the Pennsylvania Environmental
Hearing Board, seeking the imposition of penalties for violations of the Clean
Streams Law and the Solid Waste Management Act.  The complaint alleged that the
violations occurred in the toy manufacturing plant located in East Lampeter
Township, Lancaster County, Pennsylvania.  The PDER sought penalties of $6
million.  In February 1996,  PDER and CBS reached an agreement to settle this
enforcement action.  Under the terms of the agreement, CBS will pay a penalty
in the amount of $150,000, and provide $300,000 to PDER in order to enable it
to fund community environmental improvement projects.


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  (h)  The Company has been defending, in the USDC for the Western District of
Pennsylvania (the District Court), consolidated class and derivative actions
and an individual lawsuit brought by shareholders of the Company against the
Company, Westinghouse Financial Services, Inc.  (WFSI) and Westinghouse Credit
Corporation (WCC), previously subsidiaries of the Company, and/or certain
present and former directors and officers of the Company, 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 Company's public filings concerning the financial condition of
the Company, 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 Company, WFSI and WCC.  In July 1993, the 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 court again dismissed the derivative
complaint in its entirety with prejudice.  On February 8, 1995, this dismissal
was appealed.  Also on January 20, 1995, the court dismissed the class action
claims, but granted plaintiffs the right to replead certain of the class action
claims.  Plaintiffs, in the class action, did not replead the claims and on
February 28, 1995, the court dismissed these claims in their entirety.
Plaintiffs in both the derivative and class action suits appealed the rulings
and dismissals of their claims by the District Court.  Oral arguments were made
before the United States Court of Appeals for the Third Circuit on November 2,
1995 and the parties await a decision.

  (i)  In February 1993, the Company was sued by 108 former employees who were
laid off subsequent to the cancellation by the federal government of all
contracts pertaining to the carrier-based A-12 aircraft program.  The complaint
alleges age discrimination on the part of the Company.  The suit was filed in
the USDC for the District of Maryland.  The plaintiffs seek back pay with
benefits and reinstatement of jobs or front pay.  In April 1993, the Equal
Employment Opportunity Commission (EEOC) filed a class-action, age
discrimination suit against Westinghouse in the USDC for the District of
Maryland on behalf of 388 former Westinghouse employees (which includes the
aforementioned 108 employees) who were laid off or involuntarily terminated
from employment subsequent to the federal government's cancellation of all
contracts pertaining to the carrier-based A-12 aircraft program.  The suit
alleges age discrimination and discriminatory employment practices.  The suit
seeks back pay, interest, liquidated damages, reinstatement of jobs, court
costs and other appropriate relief.  In May 1993, these two cases were
consolidated by the court.  The court has adopted a trial structure which
contemplates separate trials for plaintiffs in each of the 10 business segments
within the Electronic Systems Group (ESG) at the time of the February 1991
reduction-in-force.  The first of these trials is expected to begin some time
during the second quarter of 1996; additional trials have not yet been
scheduled.  In preparation for the first trial, the parties have engaged in
extensive discovery, which was largely concluded in June 1995.  Approximately
125 plaintiffs have been dismissed with prejudice from the action.

  (j)  The Company 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 Company's products, generally in the
pre-1970 time period.  Typically, these lawsuits are brought against multiple
defendants.  The Company was neither a manufacturer nor a producer of asbestos
and is often-times dismissed from these lawsuits on the basis that the Company
has no relationship to the products in question or the claimant did not have
exposure to the Company's product.  At December 31, 1995, the Company had
approximately 75,000 claims outstanding against it.  In court actions which
have been resolved, the Company has prevailed in the vast majority of the
asbestos claims and has resolved others through settlement.  Furthermore, the
Company has brought suit against certain of


                                       12
<PAGE>   13
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 Company for a substantial portion of
its current costs and settlements associated with asbestos claims.

  A number of the asbestos-related cases pending against the Company,
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 Company to be liable for damages to any particular
claimant, that individual claimant must 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.

  (k)  In August of 1993, the bankruptcy Trustee for the Bonneville Pacific
Corporation (Bonneville) sued over 70 defendants, including Westinghouse, in
federal district court in Salt Lake City, Utah.  The Trustee's claims against
the group of defendants, including Westinghouse; Deloitte & Touche; Mayer,
Brown & Platt; Piper Jaffray, Inc.; and Kidder Peabody and Company, are
numerous, but consist primarily of common law fraud and aiding and abetting in
breaches of fiduciary duty on the part of former officers and directors of
Bonneville.  There are also claims by the Trustee for the tort of conspiracy
and civil RICO violations.  Westinghouse has filed numerous motions seeking
dismissal of the claims and has filed a denial of the allegations.  The
Company's involvement with Bonneville consisted of four sale- leaseback
transactions in co-generation projects through its former subsidiary, WCC.  On
October 6, 1994, the Trustee filed its preliminary damage calculation which
totalled $647 million against a group of defendants, including Westinghouse, on
a theory of joint and several liability.  The Trustee is also seeking treble
damages based upon the Trustee's position that a violation of civil RICO has
occurred.  Westinghouse continues to reject the validity of the claims and
believes that the preliminary damage calculations are without merit.  At this
time, the parties are engaged in discovery.

  (l)  A description of the derivative litigation involving certain of the
Company's current and past directors is incorporated herein by reference to
"Litigation Involving Derivative Claims Against Directors" in the Proxy
Statement.

  (m)  The Company 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 Company 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 Company seeking damages in connection with
loans to, and equity investments in, Phar-Mor.  On May 2, 1995, the Company
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
Company and these parties.  Remaining were the Company's claims against Coopers
& Lybrand (Coopers), Phar-Mor's former accountants, for securities violations,
fraud, negligent misrepresentation, and breach of contracts to which the
Company was a third-party beneficiary.  Coopers


                                       13
<PAGE>   14
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.  The damage portion of the
trial is expected to commence in April 1996.

  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 Company'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 Company has meritorious defenses to the litigation described in items (b)
through (l) above, and management believes that the litigation should not have
a material adverse effect on the financial condition of the Company.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None during the fourth quarter of 1995.

EXECUTIVE OFFICERS

  The names, offices, and positions held during the past five years by each of
the executive officers of the Company as of March 1, 1996 are listed below.
Officers are elected annually.  There are no family relationships among any of
the executive officers of the Company.

<TABLE>
<CAPTION>
                                                                         AGE AT
NAME, OFFICES, AND POSITIONS                                          MARCH 1, 1996
----------------------------                                          -------------
<S>                                                                          <C>
Michael H. Jordan - Chairman and Chief Executive Officer                     59
      since June 30, 1993; Partner with Clayton, Dublier &
      Rice, Inc. from September 1992 to June 1993;
      Chairman of PepsiCo International Foods and
      Beverages Division from December 1990 to
      September 1992.  Prior to December 1990, Mr. Jordan
      held numerous other management positions of
      increasing responsibility at PepsiCo International.

Gary M. Clark - President since June 30, 1993; President and                 60
      Acting Chief Executive Officer from January 27, 1993 to
      June 30, 1993; Member of President's Office from
      January 1, 1993 to January 27, 1993; Executive Vice President,
      Industries and Corporate Resources from December 1990 to
      January 1993; Executive Vice President, Industries from
      January 1989 to December 1990.

Frank R. Bakos - President, Power Generation since August 1994;              58
      Vice President and General Manager, Power Generation
      from January 1989 to August 1994.

Louis J. Briskman - Senior Vice President and General Counsel                47
      since January 1994; Senior Vice President, Secretary and
      General Counsel from January 1993 to January 1994;
      Deputy General Counsel from January 1989 to January 1993.
</TABLE>


                                       14
<PAGE>   15
<TABLE>
<S>                                                                          <C>
Francis J. Harvey - Executive Vice President and Chief Operating             52
    Officer, Industry & Technology Group since March 1, 1996;
    President, Electronic Systems from March 1, 1995 to February 29,
    1996; President, Westinghouse Government and Environmental
    Services Co. from January 1994 to March 1, 1995; Vice President,
    Science and Technology from July 1993 to January 1994; General
    Manager, Marine Division from July 1986 to July 1993.

Peter A. Lund - Chief Executive Officer and President of CBS Inc. since      55
    November 28, 1995; President, CBS/Broadcast Group, from February
    1995 to November 27, 1995; President, CBS Television Network, from
    March 1994 to February 1995; Executive Vice President of
    CBS/Broadcast Group, from October 1990 to March 1994.

James S. Moore - President, Westinghouse Government & Environmental          59
    Services Company since March 1, 1995; Senior Vice President,
    Corporate Human Resources and Total Quality from January 1993 to
    March 1, 1995; Vice President of Executive Resources and Development
    from July 1991 to January 1993; President, Westinghouse Savannah
    River Company from September 1988 to July 1991.

Fredric G. Reynolds - Executive Vice President and Chief Financial           45
    Officer since March 1994; Senior Vice President, Finance, and
    Chief Financial Officer, PepsiCo International Foods from
    December 1990 to March 1994; Senior Vice President, Finance,
    and Chief Financial Officer, Frito-Lay from May 1989 to December
    1990.

James F. Watson, Jr. - President, Thermo King since February 1993;           58
    Vice President and General Manager, North American Division
    of Thermo King from October 1983 to February 1993.

Nathaniel D. Woodson - President, Energy Systems since August 1994;          54
    Vice President and General Manager, Energy Systems from November
    1990 to August 1994; President, International from March 1989 to
    November 1990.
</TABLE>


                                PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

  The principal markets for the Company's common stock are identified on
page 1 of this report.  The remaining information required by this item appears
on page 58 of this report and is incorporated herein by reference.


ITEM 6. SELECTED FINANCIAL DATA.

  The information required by this item appears on page 58 of this report
and is incorporated herein by reference.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

  The information required by this item appears on pages 17 through 29 of
this report and is incorporated herein by reference.


                                       15
<PAGE>   16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  The information required by this item, together with the report of Price
Waterhouse LLP dated February 12, 1996, appears on pages 30 through 58 of this
report and is incorporated herein by reference.
<TABLE>
<CAPTION>
                                                                                PAGE
      <S>                                                                        <C>
      Report of Management                                                       30

      Report of Independent Accountants                                          30

      Consolidated Statement of Income for each of the three years in the        31
        period ended December 31, 1995

      Consolidated Balance Sheet at December 31, 1995 and 1994                   32

      Consolidated Statement of Cash Flows for each of the three years in the    33
        period ended December 31, 1995

      Notes to the Financial Statements                                          34

      Quarterly Financial Information (unaudited)                                57

      Five-Year Summary Selected Financial and Statistical Data (unaudited)      58
</TABLE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

        None.


                                       16
<PAGE>   17
MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

During 1995, the Corporation made a dramatic shift in its business portfolio
and future direction. This transformation was hallmarked by the $5.4 billion
acquisition of CBS Inc. (CBS) in November 1995. As a result, Westinghouse
became the largest television and radio broadcaster in the country, with 15
television stations reaching 33% of U.S. households and 39 radio stations
covering 35% of the nation. The CBS Television Network is a long-standing,
branded consumer trademark with a strong heritage and worldwide recognition.

To finance the acquisition of CBS and replace existing credit facilities, the
Corporation successfully obtained new credit facilities under a credit
agreement with a commitment level of $7.5 billion in September 1995. This
financing was substantially oversubscribed by lenders.

As part of this strategic redirection, in December 1995, the Corporation
announced a plan to divest its defense and electronic systems business and The
Knoll Group (Knoll), its office furnishings unit. Proceeds from the sales of
these units will be used to repay approximately 65% of the debt incurred to
finance the CBS acquisition. This action will provide added financial
flexibility to invest in broadening the scope and global reach of the
Corporation's media and other businesses.

In December 1995, the Corporation reached a definitive agreement to sell Knoll
for $565 million of cash. In January 1996, an agreement was executed for the
sale of the Corporation's defense and electronic systems business for $3
billion of cash, and the assumption of approximately $500 million of pension
and postretirement benefit liabilities associated with active employees of the
business. The substantial turnaround of Knoll's operations in 1995 and the
strategic technology and defense programs of the defense and electronic systems
business, coupled with strong operating performance, enabled management to
obtain attractive values for these businesses. These transactions are expected
to be completed during the first quarter of 1996.

During 1995, the Corporation made substantial progress in paying down
non-acquisition debt. In total, more than $1.4 billion of assets were
monetized, enabling the Corporation to exceed its $1 billion debt repayment
target established a year ago. During 1995, the Corporation sold:

-  WCI Communities, Inc. (WCI) for $430 million of cash and retained
   approximately $125 million of mortgage notes receivable and securities,

-  the majority of the remaining real estate portfolio investments of Financial
   Services generating cash proceeds of more than $360 million,

-  investments held in two trusts established to fund non-qualified executive
   benefit plans for proceeds of $305 million, and

-  other non-strategic businesses for proceeds approximating $300 million of
   cash.

These strategic changes and debt reduction activities affected the presentation
of the Corporation's financial information included in this report as follows:

-  results for CBS are included in the Corporation's financial statements
   subsequent to the acquisition date of November 24, 1995,

-  the operating results for the defense and electronic systems business, Knoll
   and WCI are presented as Discontinued Operations separately from Continuing
   Operations for all periods, and

-  all of the Corporation's debt is included in Continuing Operations except
   for the remaining Financial Services debt that is expected to be repaid 
   through the liquidation of the leasing portfolio. However, in connection 
   with the transfer of the defense and electronic systems business and Knoll 
   to Discontinued Operations, interest expense was allocated to Discontinued
   Operations for all periods. See note 3 to the financial statements.

The Corporation reported net income of $15 million in 1995 and $77 million in
1994 and a loss of $326 million in 1993. Net income (loss) includes results
from Continuing Operations, Discontinued Operations, and the cumulative effect
of a change in an accounting principle as presented below:


Components of Net Income (Loss) (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                  1995    1994    1993
------------------------------------------------------------
<S>                                    <C>     <C>     <C>
Loss from Continuing Operations        $(44)   $(13)   $(246)
Income (loss) from Discontinued
  Operations                             59      90      (24)
Cumulative effect of change in
  accounting principle                    -       -      (56)
------------------------------------------------------------
Net income (loss)                      $ 15    $ 77    $(326)
------------------------------------------------------------
</TABLE>

Included in 1995 results for Continuing Operations were pre-tax provisions of
$86 million ($53 million after tax) for restructuring activities, $236 million
($147 million after tax) related to the Philippines and steam generator
litigation matters, and a gain from the sale of MICROS Systems, Inc. (MICROS)
of $115 million ($66 million after tax). Included in the 1995 results of
Discontinued Operations were after-tax charges of $30 million for additional
restructuring and $76 million for the estimated loss on the disposal of WCI.


                                  17

<PAGE>   18

Included in 1994 results were pre-tax provisions related to Continuing
Operations of $23 million ($14 million after tax) for additional restructuring
activities and $308 million ($195 million after tax) for the settlement of a
portion of the Corporation's pension obligation.  In 1994, the results of
Discontinued Operations included an after-tax charge of $37 million related to
restructuring activities.

The 1993 results included pre-tax provisions related to Continuing Operations
of $249 million ($162 million after tax) for restructuring and $400 million
($265 million after tax) for the disposition of non-strategic businesses and
costs for certain litigation and environmental contingencies. The 1993 results
of Discontinued Operations included after-tax provisions of $66 million for
restructuring and $95 million for estimated disposal costs of Discontinued
Operations. The 1993 results also included an after-tax charge of $56 million
for the adoption of Statement of Financial Accounting Standards (SFAS) No. 112,
"Employers' Accounting for Postemployment Benefits." See the notes to the
financial statements for further discussion of these matters.

Excluding the after-tax effect of certain special charges described above,
income from Continuing Operations was $90 million for 1995 compared to $196
million for 1994 and $181 million for 1993. Excluding all of the special
charges described above, net income was $255 million for 1995 compared to $323
million for 1994 and $318 million for 1993.

Earnings per share data appear below. The computation of fully diluted earnings
per share assumes that the conversion of the Series B Conversion Preferred
Stock (Series B Preferred), which converted to common stock on September 1,
1995, occurred at the beginning of the year. See note 15 to the financial
statements.

Earnings (loss) Per Common Share
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                   1995       1994        1993
------------------------------------------------------------------------------------
<S>                                                    <C>         <C>        <C>
Primary earnings (loss) per common share:
  Continuing Operations                                 $(.19)     $(.16)     $ (.84)
  Discontinued Operations                                 .14        .23        (.07)
  Cumulative effect of change in
    accounting principle                                    -          -        (.16)
------------------------------------------------------------------------------------
  Primary earnings (loss) per common share              $(.05)     $ .07      $(1.07)
------------------------------------------------------------------------------------
Fully diluted earnings (loss) per common share:
  Continuing Operations                                 $(.10)     $(.16)     $ (.84)
  Discontinued Operations                                 .13        .23        (.07)
  Cumulative effect of change in
    accounting principle                                    -          -        (.16)
------------------------------------------------------------------------------------
  Fully diluted earnings (loss)  per common share       $ .03      $ .07      $(1.07)
------------------------------------------------------------------------------------
</TABLE>

RESULTS OF OPERATIONS-CONTINUING OPERATIONS

RESULTS OF OPERATIONS-CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
                                                                                                           Operating Profit (Loss)
                                          Sales of Products and Services   Operating Profit (Loss)        Excluding Special Charges
-----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31                       1995      1994      1993     1995      1994      1993       1995       1994       1993
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>       <C>       <C>       <C>       <C>       <C>        <C>        <C>        <C>
Broadcasting:
  Television                               $  691    $  379    $  335    $ 161     $ 130     $  92      $ 161      $ 130      $  92
  Radio                                       251       208       215       55        47        44         55         47         44
  Other Broadcasting                          166       155       155       (4)       20         3         (4)        18         15
-----------------------------------------------------------------------------------------------------------------------------------
Total Broadcasting                          1,108       742       705      212       197       139        212        195        151
-----------------------------------------------------------------------------------------------------------------------------------
Power Systems:
  Energy Systems                            1,369     1,364     1,420      114       114       164        130        140        209
  Power Generation                          1,769     1,715     1,786      (16)      130        (2)        12        125        124
  Other Power Systems                        (138)     (149)     (123)    (305)      (79)     (201)       (69)       (79)       (76)
-----------------------------------------------------------------------------------------------------------------------------------
Total Power Systems                         3,000     2,930     3,083     (207)      165       (39)        73        186        257
-----------------------------------------------------------------------------------------------------------------------------------
Thermo King                                 1,065       877       719      176       135       113        176        135        113
-----------------------------------------------------------------------------------------------------------------------------------
Government & Environmental Services:
  Government Operations                       144       116       104       86        76        71         86         76         71
  Environmental Services                      302       341       313      (62)      (18)      (43)       (62)       (14)       (11)
-----------------------------------------------------------------------------------------------------------------------------------
Total Government & Environmental Services     446       457       417       24        58        28         24         62         60
-----------------------------------------------------------------------------------------------------------------------------------
Communication & Information Systems           361       312       279       (1)        7        (3)         2          7          8
Other Businesses                              305       524       533        9         2       (38)         9          2        (33)
Corporate and Other                            90       153       155     (169)     (159)     (234)      (130)      (159)      (136)
Intersegment Sales                            (79)     (106)     (112)       -         -         -          -          -          -
-----------------------------------------------------------------------------------------------------------------------------------
Total                                      $6,296    $5,889    $5,779    $  44     $ 405     $ (34)     $ 366      $ 428      $ 420
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                      18

<PAGE>   19

With the strategic redirection of the Corporation and the shift in the
Corporation's business portfolio, management realigned the business segments
for financial reporting purposes. In 1995, a new segment, Communication
& Information Systems, was created that includes Westinghouse Communications,
formerly a part of the Broadcasting segment, and the communication and
information systems divisions of the former Electronic Systems segment. In
addition, Resource Energy Systems, previously included in the Other Businesses
segment, has been included in the Government & Environmental Services segment.
Corporate overhead costs, which were formerly allocated to the individual
segments, are now included in Corporate and Other. Segment information for 1994
and 1993 has been restated to reflect these changes.

The Corporation's consolidated revenues from sales of products and services
increased $407 million in 1995 compared to 1994 primarily due to the
acquisition of CBS and increased volume at Thermo King, offset partially by the
divestiture of non-strategic businesses. The Corporation's consolidated
revenues were essentially flat in 1994 compared to 1993, totalling
approximately $5.8 billion. Operating profit for each of the last three years
included special charges related to restructuring activities, which totalled
$86 million in 1995, $23 million in 1994, and $249 million in 1993. Other
special charges of $236 million for litigation matters were included in
operating profit in 1995. In 1993, other special charges included in operating
profit were $125 million for litigation costs, $60 million for Corporate
environmental costs and $20 million for asset writeoffs associated with
projects that were discontinued.

The improvements in 1995 segment operating profit resulting from Thermo King's
increased volume and reduced corporate overhead costs were more than offset by
the decline in profitability of the Power Systems segment. The recognition of
higher costs for disposal of secondary waste in the Environmental Services unit
also contributed to the decline in profits in 1995.

Results for the Corporation continue to be affected by higher pension costs
resulting from unfunded pension obligations and by the costs associated with
litigation matters. Although the Corporation's objective is to reduce these
earnings constraints over the next few years, management expects that they will
continue to negatively affect operating results in 1996.

Broadcasting

The results for CBS subsequent to the completion of the acquisition on November
24, 1995 are included in the results for the Broadcasting segment. Sales and
operating profit for CBS for this 37-day period totalled $303 million and $9
million, respectively.

The results for television include those for 15 television stations, as well as
the CBS Television Network. The reported results for television and radio
include depreciation and amortization of specifically identifiable assets based
on their fair values when acquired. Amortization of goodwill arising from the
CBS acquisition is not readily separable among the CBS operations. As a result,
all of the amortization of this goodwill, which approximates $120 million per
year, is included in the results for "Other Broadcasting."

The approval by the Federal Communications Commission (FCC) of the
Corporation's acquisition of CBS contained a number of temporary waivers of the
FCC's television and radio ownership rules. The recently enacted
Telecommunications Act of 1996 deregulates some of these rules and makes
certain, but not all of the waivers unnecessary.

Generally, where waivers continue to be required, the Corporation intends to
file applications with the FCC seeking permanent waivers. Other group owners
have been granted similar waivers in recent years. Based on current FCC policy
and precedent, the Corporation believes the FCC will grant these waivers. If
these permanent waivers are not granted, the Corporation would be required to
divest certain of its television and radio properties.

Performance for the year for Broadcasting excluding CBS was strong. Revenues
increased 8% from 1994 to $805 million. Operating profit, excluding a $2
million adjustment for restructuring costs in 1994, increased 4% to $203
million. For the year, strong performances from radio and television operations
and Group W Satellite Communications were partially offset by additional
program development costs at the production company. However, during the fourth
quarter of 1995, a weak advertising market, driven by a lack of political
campaign advertising and lower ratings, caused television profits to decline
slightly.

Revenues for Broadcasting increased 5% to $742 million in 1994 compared to $705
million in 1993 reflecting growth in advertising revenues, particularly in
television. The 1994 Olympics and political campaigns contributed to the
increased advertising revenues. Group W Satellite Communications (GWSC) also
reported higher revenues.  


                                     19
<PAGE>   20

Included in 1993 operating profit was $12 million
for restructuring costs, of which $2 million was subsequently not required and
adjusted in 1994. Excluding restructuring amounts, operating profit increased
29% to $195 million in 1994 compared to $151 million in 1993 due to the
increased advertising revenues and improvements in productivity resulting from
cost-reduction programs.

The future operating results of Broadcasting depend on realization of
post-acquisition benefits from combined operations, demand for television
advertising, competitive changes in media businesses, and the television
network's audience share in all dayparts.

Earnings before interest expense, income taxes, depreciation, amortization, and
special charges totalled $269 million for 1995, $226 million for 1994, and $183
million for 1993.

Power Systems

Power Systems consists of Energy Systems and Power Generation, the
Corporation's nuclear and fossil-fueled power generation businesses. The
results for the Power Systems segment in total reflect the impact of discounts
on goods and services provided to customers under litigation settlements.
However, the results for Energy Systems and Power Generation are presented as
if the sales had been made at normal commercial rates. The impact of these
discounts is presented in "Other Power Systems."

Sales for Power Systems remained relatively stable over the last three years.
Operating profit, however, declined substantially in 1995 compared to 1994
because of the recognition of costs for litigation matters, lower profitability
for the Power Generation business unit, and restructuring costs.

Sales for Energy Systems in 1995 were consistent with the prior year. Revenues
in 1994 decreased 4% to $1,364 million due to reduced licensee income and the
favorable 1993 effect of a change in accounting for nuclear fuel revenues.

Included in 1995 operating profit was $16 million for restructuring activities
related to the separation of approximately 200 employees.  Operating profit for
1994 included $26 million for restructuring activities related to the
separation of approximately 400 employees in late 1994. Included in the 1993
operating profit was $45 million for restructuring. Excluding special charges
in all years, operating profit decreased 7% to $130 million in 1995 compared to
1994 and 33% to $140 million in 1994 compared to 1993. The decreases in
operating profit in 1995 and 1994 were attributable primarily to lower licensee
income. Operating profit for 1994 also reflected the change in accounting for
nuclear fuel revenues in 1993. Cost savings from restructuring activities have
been essentially offset by price compression.

Revenues for Power Generation in 1995 increased 3% to $1,769 million compared
to 1994. Revenues decreased 4% or $71 million in 1994 compared to 1993. Higher
field service revenues and new apparatus sales offset decreased revenues from
major factory repair and service activities.

The operating loss for 1995 included $28 million for the separation of
approximately 550 employees. The operating loss in 1993 included $126 million
for restructuring activities, of which $5 million was redeployed in 1994 to
other businesses. Excluding the impact of restructuring in all years, operating
profit in 1995 decreased $113 million to $12 million after remaining flat in
1994 and 1993. The shift from high-margin service, which has declined due to a
combination of improved equipment reliability and deferral of maintenance by
utilities, to lower margin new apparatus business has more than offset cost
improvements from restructuring activities.

In 1995, orders of $2.4 billion, although strong, were down 5% from 1994
reflecting increased competitive pressures. Approximately 55% of the orders
were from customers outside the United States reflecting Power Generation's
focus on international opportunities.

Other Power Systems includes eliminations of sales between Energy Systems and
Power Generation, as well as activities related to uranium, steam generator and
Philippines litigation matters, including legal fees incurred, estimated losses
for settlements, and discounts. In 1995, a special charge of $236 million was
recognized for steam generator matters and the settlement of the Philippines
litigation. The operating loss for 1993 included a special charge of $125
million for litigation matters. Excluding the special charges, the operating
loss, which represents discounts from commercial prices on goods and services
supplied under previous settlement arrangements, was relatively flat.

Thermo King

Excellent results were reported by Thermo King for 1995. Sales increased 21%
driven by strong international demand, particularly in Europe. Operating profit
increased 30% as a result of the higher volume and benefits from product cost
improvement programs. International orders accounted for nearly 50% of Thermo
King's total orders in 1995. The slowdown in North American truck and trailer
business, which began in the third quarter of 1995, caused orders to decline
late in the year, although total-year orders were slightly ahead of 1994.


                                     20
<PAGE>   21

Revenues for Thermo King increased 22% to $877 million in 1994 due to volume
increases in both the domestic and international truck and trailer product
lines, as well as service parts and seagoing container product lines. Operating
profit increased 19% to $135 million in 1994 compared to 1993 primarily as a
result of the increased volume.

Government & Environmental Services

Sales and operating profits for the management of government sites were strong
for 1995 with sales up 24% and operating profit up 13% compared to 1994.
Benefits from the U. S. Department of Energy's (DOE) new performance based
contracts were partially offset by the loss of a management contract at a DOE
facility in Idaho. Sales and operating profit in 1994 were up 12% and 7%,
respectively, compared to 1993, as a result of higher award fees at several DOE
sites and increased work scope and fees for the naval nuclear program.

The DOE is continuing to open for bid certain of its operating and maintenance
contracts as they expire. The Corporation intends to pursue vigorously the
retention of its current contracts and selectively bid on sites not currently
managed by the Corporation.

The environmental services business reported a decrease in sales for 1995 of
$39 million, primarily as a result of the sale of Aptus in March 1995. Revenues
in 1994 increased $28 million compared to 1993 due to increased volume in
hazardous waste remediation services and radioactive waste incineration.

Included in 1994 and 1993 operating losses were charges of $4 million and $32
million, respectively, for restructuring activities and other actions.
Excluding special charges, the operating loss of the environmental services
business increased $48 million in 1995 compared to 1994 and $3 million in 1994
compared to 1993. In addition to the special charges described above, the
operating loss in 1995 was unfavorably affected by a one-time charge of $30
million to recognize higher costs for disposal of secondary waste at the
Corporation's low-level radioactive waste treatment business. The operating
loss in 1994 increased primarily due to price compression in the hazardous
waste remediation and incineration markets.

The Corporation continues to review its portfolio of environmental businesses
to determine how best to focus its efforts.

Communication & Information Systems

This newly created segment includes Westinghouse Communications, formerly a
part of the Broadcasting segment, and the communication and information systems
divisions of the former Electronic Systems segment. Sales in 1995 increased 16%
compared to 1994, while sales in 1994 increased 12% compared to the prior year.

The operating loss for 1995 included $3 million for restructuring activities,
while the operating loss in 1993 included $11 million for restructuring.
Excluding special charges in all years, operating profit declined $5 million in
1995 and was essentially flat in 1994 compared to the prior year. The decrease
in operating profit in 1995 is attributable primarily to reduced margins on
wireless communications contracts.

Other Businesses

During the year, the Corporation completed divestitures of several businesses
included in its former Industrial Products and Services business unit, and its
majority interest in MICROS. In addition, the Corporation closed a plant in
Abingdon, Virginia. Controlmatic and Gladwin were divested in 1994.

The decline in revenues and the fluctuations in operating profits for this
segment reflect these divestitures. Divestitures of most of the non-strategic
businesses were essentially complete by year-end 1995.

RESTRUCTURING OF OPERATIONS

The Corporation is committed to strengthening its businesses and improving its
profitability through restructuring actions ranging from changes in business
and product-line strategies to downsizing for process reengineering and
productivity improvements. To the extent possible, the Corporation is committed
to reducing its workforce through normal attrition. See note 20 to the
financial statements.

During the last three years, the Corporation has undertaken restructuring
programs at its corporate headquarters as well as at several of its major
businesses. In particular, Power Systems has identified initiatives at both its
Power Generation and Energy Systems business units in an effort to remain
competitive in light of a reduction in the demand for services and intense
pricing pressures.  Restructuring actions for Continuing Operations, including
corporate headquarters, have resulted in the recognition of restructuring costs
totalling $86 million in 1995, $23 million in 1994 and $249 million in 1993.

                                     21
<PAGE>   22

The most significant cost component of the Corporation's restructuring plans
generally involves the elimination of positions and the separation of
employees. Approximately 3,850 positions were eliminated from Continuing
Operations during the last three years resulting in employee separation costs
totalling $293 million, including pension curtailment costs. Other cost
elements of these plans consist of asset write-downs of $38 million and costs
for facility closure or rationalization of $27 million. Included in these
amounts are cash expenditures totalling $298 million, consisting of $134
million in 1994, $100 million in 1995, $56 million in 1996, and $8 million in
1997. Employee separation costs generally are paid over a period of up to two
years following the separation.

The annual savings expected from these restructuring initiatives approximates
$40 million for the 1995 plan, $35 million for the 1994 plan, and $65 million
for the 1993 plan. Based on the timing of implementation of the initiatives,
actual savings approximated $100 million in 1995 and $50 million in 1994.
Competitive pressures causing price compression in certain of the Corporation's
markets have absorbed a significant portion of the savings achieved through
restructuring actions.

Restructuring actions for the Corporation's Discontinued Operations,
principally the defense and electronic systems business and Knoll, resulted in
additional costs totalling $49 million in 1995, $48 million in 1994 and $101
million in 1993. These actions involved the separation of nearly 3,000
employees and the exiting of various product lines and facilities.

In conjunction with the CBS acquisition, a plan was developed to integrate the
infrastructure of the CBS headquarters and the radio and television operations
with those of the Corporation. The estimated cost for restructuring the CBS
organization, including separating employees and closing facilities, is $100
million of which $3 million had been spent as of year-end 1995. The
consolidation plan as it relates to the Corporation's existing operations was
not yet finalized at December 31, 1995. Therefore, the costs associated with
this aspect of the plan are expected to be recognized when the plan is adopted
in early 1996.

Cost-reduction initiatives are undertaken when the resulting benefits are
substantial in relation to the cost of the programs and are realizable in the
near term. The Corporation expects to continue to implement restructuring
initiatives as competitive conditions dictate in an ongoing effort to reduce
its overall cost structure and improve its competitiveness.

1994 PENSION SETTLEMENT

The Corporation's restructuring activities contributed to a high level of
lump-sum cash distributions from the Corporation's pension fund during 1994.
The magnitude of these cash distributions required that the Corporation apply
the provisions of SFAS No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits,"
and recognize a settlement loss of $308 million. This noncash charge to income
represents the pro rata portion of unrecognized losses associated with the
pension obligation that was settled.

The settlement loss did not affect shareholders' equity because the decrease
resulting from the income statement provision was fully offset by a reduction
in the charge to shareholders' equity related to the minimum pension liability.
See note 4 to the financial statements.

OTHER INCOME AND EXPENSES

Other income for 1995 of $149 million included a pre-tax gain of $115 million
from the sale of the Corporation's 62% interest in MICROS and a $13 million
gain from the sale of an equity investment. The Corporation recorded an
additional $7 million provision for the estimated loss on disposition of
non-strategic businesses related to the disposition of Aptus.

For 1994, other income and expense, which was a net expense of $288 million,
consisted primarily of a $308 million charge for the settlement of a portion of
the Corporation's pension obligation. The Corporation recorded an additional
$17 million provision for the estimated loss on disposition of non-strategic
businesses to reflect actual sales experience and revised estimates of proceeds
and selling costs for the remaining businesses to be sold. These charges were
partially offset by a gain of $32 million from the sale of two radio stations.

For 1993, other income and expense, which was a net expense of $154 million,
consisted primarily of a $195 million provision for the estimated loss on
disposition of non-strategic businesses, most of which have since been
completed. This charge was offset by a $21 million gain on the sale of an
equity participation in a production company.

INTEREST EXPENSE

Interest expense attributable to Continuing Operations increased $99 million to
$233 million in 1995 because of two primary factors.  At year-end 1994, $625
million of debt was transferred to Continuing Operations from Discontinued
Operations, causing an increase in interest expense for 1995 of approximately
$40 million. Additional interest expense from CBS acquisition debt totalled $59
million.

                                     22
<PAGE>   23

To a lesser degree, interest expense in 1995 was affected by an increase in
average short-term interest rates. In addition, in conjunction with the
transfer of Knoll and the Corporation's defense and electronic systems business
to Discontinued Operations, interest expense totalling $48 million in 1995, 
$37 million in 1994 and $46 million in 1993 was allocated to Discontinued
Operations. See note 3 to the financial statements.  

Interest expense decreased $31 million to $134 million in 1994 compared to 
$165 million in 1993 primarily due to lower average outstanding short-term 
debt. Average outstanding short-term debt of Continuing Operations decreased 
$782 million in 1994 compared to 1993.  See note 11 to the financial statements.

INCOME TAXES

The Corporation's 1995 provision for income taxes in total was 62.7% of the
income before taxes and minority interest. The 1995 net provision totalled $44
million, consisting of a $7 million benefit from Continuing Operations and a
$51 million expense from Discontinued Operations.

The Corporation's 1994 provision for income taxes in total was 45.2% of the
income before taxes and minority interest. The 1994 net provision totalled $71
million, consisting of a $13 million benefit from Continuing Operations and a
$84 million expense from Discontinued Operations.

The Corporation's 1993 benefit for income taxes in total was 32.6% of the
losses from all sources. The 1993 benefit totalled $153 million, consisting of
$116 million from Continuing Operations, $7 million from Discontinued
Operations and $30 million from the cumulative effect of the change in
accounting principle.

The Corporation's effective tax rate has fluctuated dramatically depending on
the specific dollar amounts of permanent tax differences and the relationship
of those differences to income before income taxes and minority interest.
Numerous items have caused the effective tax rates to differ from the U.S.
statutory income tax rate of 35% for 1995, 1994 and 1993. An analysis of these
items related to Continuing Operations is set forth in note 6 to the financial
statements.

The net deferred tax asset at December 31, 1995 totalled $2,188 million for
Continuing and Discontinued Operations. The temporary differences that give
rise to deferred income taxes are shown in the Consolidated Deferred Income Tax
Sources table in note 6 to the financial statements.

The three significant components of the deferred tax asset balance are: (i) the
tax effect of net operating loss carryforwards of $3,229 million, of which $416
million will expire by the year 2007, $2,462 million by the year 2008 and the
balance by 2010, (ii) the tax effect of cumulative net temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes of $2,128 million
representing future net income tax deductions, and (iii) alternative minimum
tax credit carryforwards of $211 million that have no expiration date. Of the
net temporary difference of $2,128 million, approximately $1,410 million
represents a net pension obligation and $1,265 million represents an obligation
for postretirement and postemployment benefits. These are partially offset by
CBS temporary differences of approximately $872 million related primarily to
FCC licenses.

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. In making this assessment, management considered the net losses
generated in 1992 and 1993 as aberrations caused in part by the liquidation of
a substantial portion of Financial Services assets and by restructuring and
other unusual actions. Further, the expected 1996 sale of Knoll and the defense
and electronic systems business will substantially reduce the deferred tax
asset through the realization of reversing temporary differences and net
operating losses.

The reversal of temporary differences may cause tax losses in future years.
Each tax-loss year would receive a new 15-year carryforward period. Under a
conservative assumption that all net cumulative temporary differences other
than net operating loss carryforwards had reversed in 1995, the Corporation
would have through the year 2010 to recover the tax asset. This would require
the Corporation to generate average annual taxable income of at least $200
million assuming completion of the 1996 sales of Knoll and the Corporation's
defense and electronic systems business.  Management believes that average
annual future taxable income will exceed this minimum amount.

In addition, there are certain tax planning strategies that could be employed
to utilize a net operating loss carryforward that would otherwise expire. Some
of the strategies that would be most feasible are sale and leaseback of
facilities and change in the method of tax depreciation.


                                     23
<PAGE>   24

The following table shows a reconciliation of income or loss from Continuing
Operations before income taxes to taxable income from Continuing Operations:

RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES TO U.S.
FEDERAL TAXABLE INCOME (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                      1995         1994         1993
--------------------------------------------------------------------------
<S>                                       <C>           <C>          <C>
Loss from Continuing Operations           $  (40)       $ (17)       $(353)
Permanent differences:
  Foreign and Puerto Rico                   (168)        (136)        (101)
  State income tax                             5            6          (26)
  Goodwill                                    26           15           34
  Other                                       18          (25)          49
--------------------------------------------------------------------------
Net permanent differences                   (119)        (140)         (44)
--------------------------------------------------------------------------
Temporary differences:
  Pensions                                  (121)         272           12
  Long-term contracts                         72          (57)          34
  Depreciation                                29            7           20
  Provision for restructuring
    and other actions                        (43)         (87)         616
  Other                                      (30)         148          120
--------------------------------------------------------------------------
Net temporary differences                    (93)         283          802
--------------------------------------------------------------------------
Taxable income (loss)                     $ (252)       $ 126        $ 405
--------------------------------------------------------------------------
</TABLE>

DISCONTINUED OPERATIONS

In recent years, the Corporation has adopted several plans to dispose of major
segments of its business. Knoll and the defense and electronic systems business
were part of a plan adopted in December 1995. The disposal of WCI was included
in a July 1995 plan. Financial Services, DCBU, and WESCO were part of a plan
adopted in November 1992.

These businesses have been accounted for as discontinued operations 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).

In December 1995, the Corporation adopted a plan to reduce debt incurred for
the acquisition of CBS through proceeds from the sale of its office furniture
and defense and electronic systems businesses. In December 1995, a definitive
agreement was reached to sell Knoll to Warburg, Pincus Ventures, L.P., an
affiliate of E. M. Warburg, Pincus & Company, for $565 million of cash. In
January 1996, an agreement was executed with Northrop Grumman Corporation for
the sale of the defense and electronic systems business for $3 billion of cash.
In addition, Northrop Grumman will assume approximately $500 million of pension
and postretirement liabilities associated with the active employees of the
business. These transactions, which are expected to result in an after-tax gain
ranging from $1.2 to 1.4 billion, are expected to be completed during the first
quarter of 1996. The net proceeds from these transactions will be used to repay
debt of Continuing Operations.

In July 1995, the Corporation sold WCI for $430 million of cash and retained
approximately $125 million of mortgage notes receivable with maturities through
1997 and other securities. In addition, the buyer assumed $19 million of debt.
Concurrently, the Corporation invested $48 million for a 24% equity interest in
the new business. The Corporation is actively pursuing the divestiture of this
investment. The net cash proceeds from the divestiture of WCI were used to
repay debt of Discontinued Operations. A net loss of $76 million was recognized
on the disposal.

In November 1992, the Corporation announced a plan that included exiting
Financial Services through the disposition of its $9 billion asset portfolios
and the sales of the Corporation's Distribution and Control Business Unit
(DCBU) and Westinghouse Electric Supply Company (WESCO). The disposition of
Financial Services assets involved the sale of the real estate and corporate
finance portfolios over a three-year period and the liquidation of the leasing
portfolio over a longer period of time in accordance with contractual terms.

Based on its quarterly review of the assumptions used in determining the
estimated loss from Discontinued Operations that was recorded in 1992, the
Corporation recorded an additional pre-tax provision for loss on disposal of
Discontinued Operations of $148 million in 1993.

On January 31, 1994, the Corporation completed the sale of DCBU, excluding its
Australian subsidiary, to Eaton Corporation for a purchase price of $1.1
billion of cash and the assumption by the buyer of certain liabilities.  The
sale of the Australian subsidiary was completed in March 1994.

On February 28, 1994, the Corporation completed the sale of WESCO to an
affiliate of Clayton, Dubilier & Rice, Inc., a private investment firm, for a
purchase price of approximately $340 million. The proceeds consisted of
approximately $275 million of cash, approximately $50 million of first mortgage
notes, and the remainder of stock and options of the new company.

The real estate and corporate portfolio investments of Financial Services
essentially have been liquidated.  The leasing portfolio, which totalled $865
million at December 31, 1995, is expected to continue to liquidate through 2015
in accordance with contractual terms.


                                     24
<PAGE>   25
The net assets of Discontinued Operations totalled $1.4 billion at December 31,
1995. Following completion of the divestitures of Knoll and the defense and
electronic systems business in early 1996, the assets of Discontinued
Operations will consist primarily of the remaining leasing portfolio of
Financial Services and the remaining mortgage notes and securities of WCI.
Liabilities will consist primarily of short-term and long-term debt, deferred
income taxes related to the leveraged leases, and the liability for estimated
loss on disposal of Discontinued Operations.

In 1995, the Corporation reduced the debt of Discontinued Operations to that
amount which is supportable by the leasing portfolio and other miscellaneous
assets. The debt is expected to be repaid as the leasing portfolio liquidates
over its contractual term and through sales of such miscellaneous assets. To
match the maturities of assets and debt, the Corporation may from time to time
exchange debt obligations between Continuing and Discontinued Operations. 

The remaining liability for the estimated loss on disposal of Discontinued
Operations at December 31, 1995 totalled $134 million.  Management believes
that this liability is adequate to cover the future operating costs and
estimated credit losses related to Financial Services and the remaining costs
associated with WCI, DCBU and WESCO.

The following table presents sales and operating profit (loss) for Discontinued
Operations for each of the three years in the period ended December 31, 1995:

RESULTS OF OPERATIONS (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                   1995       1994       1993
-------------------------------------------------------------------
<S>                                     <C>       <C>        <C>
Sales of products and services:
  DCBU and WESCO                        $   -     $  319     $2,384
  Financial Services                       31         41        305
  WCI                                     108        248        253
  Defense and Electronic Systems        2,549      2,189      2,361
  Knoll                                   621        562        510

Operating profit (loss):
  DCBU and WESCO                            -          4         68
  Financial Services                      (52)      (204)      (212)
  WCI                                      29         69         61
  Defense and Electronic Systems          195        207        150
  Knoll                                    60        (61)       (31)
-------------------------------------------------------------------
</TABLE>

DCBU and WESCO

Operating results for the year ended December 31, 1994 include the operating
results of DCBU for the month ended January 31, 1994 and of WESCO for the two
months ended February 28, 1994, their respective dates of sale.

Financial Services

During 1995, the Corporation continued to liquidate Financial Services,
reducing both assets and debt. Financial Services revenues of $31 million for
1995 decreased $10 million compared to 1994, reflecting the reduction in assets
through dispositions during 1995 and 1994. Revenues of $41 million for 1994
decreased $264 million compared to 1993 due primarily to a reduction of assets
through dispositions.

At December 31, 1995, Financial Services portfolio investments totalled $901
million, a decrease of $329 million from $1,230 million at year-end 1994.
Portfolio investments at December 31, 1995 and 1994, included $822 million and
$913 million, respectively, of receivables, and $79 million and $317 million,
respectively, of other portfolio investments. The receivables at year-end 1995
and 1994 consisted primarily of leasing receivables, while other portfolio
investments included real estate properties and investments in leasing and real
estate partnerships.

Leasing receivables consist of direct financing and leveraged leases. At
December 31, 1995 and 1994, 84% and 81%, respectively, related to aircraft, and
16% and 18%, respectively, related to cogeneration facilities.

WCI

In 1995, revenues for WCI, until its sale in July 1995, were $108 million.
Operating profit for the same period was $29 million.

Revenues for WCI decreased slightly to $248 million in 1994 compared to 1993
due to the continued weak real estate markets in California. These depressed
markets were partially offset by strong land and condominium sales in Coral
Springs and Naples, Florida. Included in 1994 operating profit was a $3 million
reduction of a $10 million restructuring charge taken in 1992.  Included in
1993 operating profit was a restructuring charge of $4 million. Excluding the
impact of restructuring, operating profit was flat at $65 million in 1994
compared to 1993.

Defense and Electronic Systems

Revenues for the defense and electronic systems business increased 16% to
$2,549 million in 1995 compared to 1994 and decreased 7% to $2,189 million in
1994 compared to 1993. In 1995, increased volume from the defense electronics
operations, including the Norden acquisition, air traffic control, and mail
processing systems, drove higher revenues. Lower revenues from Department of
Defense (DoD) contracts in 1994 were the primary cause of the decreased
revenues in that year.


                                     25

<PAGE>   26

Operating profit reflected restructuring charges of $49 million, $11 million
and $91 million in 1995, 1994 and 1993, respectively.  Excluding these charges
in each of the three years, operating profit increased 12% in 1995 as a result
of the higher revenues. Operating profit decreased 10% to $218 million in 1994
compared to $241 million in 1993, primarily as a result of lower DoD revenues,
which were partially offset by savings from cost-reduction programs.

Knoll

In 1995, revenues for Knoll increased 10% to $621 million compared to 1994.
Increases in Knoll North America orders were the primary force behind the
increased revenues. Revenues for Knoll increased 10% to $562 million in 1994
compared to 1993 due to both market and market share growth in North America.

Knoll's operating profit of $60 million for 1995 represented a dramatic
turnaround of this business. A major restructuring program, resulting in
restructuring charges totalling $40 million in 1994 and $6 million in 1993, was
implemented beginning in mid-1994 and was substantially completed in 1995. The
results of this program were evident in both the North American and European
results for 1995. Excluding restructuring charges in all years, Knoll's
operating profit increased $81 million in 1995 compared to 1994 and the
operating loss for 1994 decreased $4 million compared to 1993. New products,
strong sales across all product lines and quick delivery programs contributed
to the dramatic improvement in operating profit in 1995.

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.

During 1994, the Corporation took several actions to reduce its leverage and
rebuild its capital structure, including the continued liquidations of assets
of Discontinued Operations, the issuance of preferred stock and the reduction
of the common stock dividend. As a result, net debt (total debt less cash and
cash equivalents) was reduced by $1.7 billion.

Because of those actions taken in 1994 and the continued monetization in 1995
of non-strategic assets, the Corporation was able to embark on a major
transformation of its business portfolio. The Corporation acquired CBS for $5.4
billion and announced divestitures of its defense and electronic systems
business and Knoll for $3.6 billion of cash plus the assumption by one of the
buyers of employee benefit liabilities approximating $500 million. This major
portfolio shift to focus on broadcasting operations is expected to impact the
nature of the Corporation's cash flows in future periods.

To complete the CBS acquisition, the Corporation negotiated a new credit
agreement to finance the entire purchase price of CBS, including transaction
fees, and to replace borrowings under the then existing revolving credit
agreements of both Westinghouse and CBS. In the first quarter of 1996, the
Corporation expects to complete the divestitures of both the defense and
electronic systems business and Knoll and to repay approximately 65% of the
acquisition debt.

Management believes that the higher financial leverage following the portfolio
transformation is supportable by the level of cash flows expected to be
generated by the Corporation's Continuing Operations.

The Corporation made substantial progress during 1995 in repaying
non-acquisition debt, exceeding the $1 billion target established a year ago.
The monetization of approximately $1.4 billion of non-strategic assets produced
cash proceeds of $430 million from WCI, more than $360 million from the
majority of the remaining real estate portfolio investments of Financial
Services, $305 million from investments held in two trusts that funded
non-qualified executive benefit plans, and approximately $300 million from
other non-strategic businesses.

Management expects that cash from Continuing Operations and availability under
its $2.5 billion revolving credit facility will continue to be sufficient to
meet future business needs. Other sources of liquidity generally available to
the Corporation include cash and cash equivalents, proceeds from sales of
non-strategic assets and borrowings from other sources, including funds from
the capital markets.

Operating Activities

The operating activities of Continuing Operations provided $435 million of cash
during 1995, an increase of $412 million from the amount provided in 1994.
Major factors contributing to this increase were reduced levels of receivables
and inventories, lower income tax payments and lower cash restructuring
expenditures.

Results of the Corporation's efforts to improve working capital turnover are
becoming evident in certain areas. Collections of receivables and reductions of
inventories provided $243 million of operating cash flows during 1995 compared
to uses of cash of $237 million in 1994 and $185 million in 1993.


                                     26

<PAGE>   27

Customers continue to demand more favorable payment terms under major
contracts, particularly in the power generation business. As a result, a
significant use of operating cash in both 1995 and 1994 involved an increase in
the Corporation's investment in long-term contracts.

Income tax payments and cash restructuring expenditures were lower in 1995 than
in the prior year. Accrued restructuring costs totalled $161 million at
year-end 1995 compared to $85 million at year-end 1994 and $227 million at
year-end 1993. Although restructuring initiatives are expected to continue,
these programs are not implemented unless the savings are substantial in
relation to the cost and are realizable in the near term. In general, savings
from restructuring programs implemented in recent years are beginning to
surpass the expenditures.

Cash contributions to the Corporation's pension plans totalled $315 million in
1995, which is consistent with the 1994 cash contribution level. In 1993,
however, the contribution consisted primarily of assets of Discontinued
Operations. The Corporation's contribution level for 1996 is expected to be in
the $200 million to $300 million range following the divestitures of Knoll and
the defense and electronic systems business. This contribution level is
consistent with the Corporation's goal to fully fund its qualified pension
plans over the next several years.

The operating activities of Discontinued Operations provided $258 million of
cash during 1995, used $77 million during 1994, and provided $444 million
during 1993. These cash"flows consist primarily of cash provided by the
operations of the defense and electronic systems business, Knoll, and WCI,
offset by cash used in the operations of Financial Services and for activities
related to the divestitures of DCBU and WESCO. The use of cash in 1994 resulted
primarily from significantly higher levels of interest and from DCBU and WESCO
divestiture costs.

Following the completion of the divestitures of the defense and electronic
systems business and Knoll in early 1996, operating cash requirements of
Discontinued Operations will consist primarily of interest costs on debt, which
has decreased substantially, and remaining costs associated with the completed
divestitures.

Investing Activities

Investing activities used $4.3 billion of cash during 1995 after providing $1.4
billion of cash in 1994 and $2.7 billion in 1993. The completion of the CBS
acquisition in November 1995 for $5.4 billion of cash caused this significant
change. Acquisitions in 1994 included Norden Systems, a defense electronics
company; the KPIX-AM and FM radio stations in San Francisco; and a minority
interest in Group W radio for total cash expenditures of $109 million.

The Corporation completed the sales of several non-strategic businesses in
1995, generating cash proceeds of $683 million.  Divestitures included the sale
of its WCI segment, as well as its interest in MICROS, Aptus, Inc., and several
smaller businesses. Noncash proceeds of approximately $100 million, consisting
primarily of notes, also were received in certain sales. During 1994, the
Corporation sold DCBU and WESCO for cash proceeds of approximately $1.4
billion. In addition, the sale of two radio stations and two non-strategic
businesses (Gladwin Corporation and Controlmatic) generated cash proceeds of
$68 million.

The Corporation generated $362 million of cash in 1995 through the continued
liquidation of assets of Financial Services representing the majority of the
remaining real estate portfolio investments. Cash proceeds from portfolio
investment liquidations in 1994 totalled $323 million. In 1993, the early
success of the liquidation plan for Financial Services assets resulted in the
generation of $4.9 billion of cash, which was partially offset by required
fundings of $2 billion.

The Corporation's total capital expenditures remained relatively stable over
the three-year period at approximately $250 million to $300 million. Capital
expenditures for Continuing Operations approximated $200 million per year.

In 1995, the Corporation generated $305 million of cash through the sales of
investments held in two trusts that were established to fund executive benefit
plans. The trust investments were replaced with the Corporation's common stock.

The Corporation expects to continue to liquidate assets of Discontinued
Operations as well as its non-strategic assets. This includes completion of the
announced divestitures of the defense and electronic systems business and Knoll
for combined cash proceeds of $3.6 billion. Future acquisitions are expected to
be focused primarily in the broadcasting area.

Financing Activities

Cash provided by financing activities during 1995 totalled $3.5 billion
compared to cash used of $2.2 billion in 1994 and $3.8 billion in 1993. The
major fluctuation in 1995 was caused by the borrowings required to finance the
CBS acquisition. As a result, the Corporation's total debt increased $4.7
billion to $8.4 billion at December 31, 1995, from $3.7 billion at December 31,
1994.


                                     27
<PAGE>   28

In September 1995, the Corporation entered into three new bank facilities under
a credit agreement with a commitment level of $7.5 billion (see Credit
Facilities). Borrowings under the facilities, which occurred upon completion of
the CBS acquisition, were used to finance the purchase of CBS, including
transaction fees, and replace borrowings under existing revolvers. Total
borrowings under the new credit agreement were $5.1 billion at December 31,
1995.

In March 1994, the Corporation sold in a private placement depository shares
representing 3,600,000 shares of Series C preferred stock for net proceeds of
$505 million. These shares will convert to common shares in June 1997. The
Series B preferred stock, sold in June 1992, converted to 32,890,000 shares of
common stock on September 1, 1995.

At the beginning of 1994, the Corporation reduced its common stock dividend
from $.40 per share to $.20 per share. This reduction resulted in annual cash
savings to the Corporation of approximately $70 million. Dividends paid include
those for the Series C preferred stock issued in March 1994 and those for the
Series B preferred shares through their conversion date.

In 1992, the Corporation filed a registration statement on Form S-3 for the
issuance of up to $1 billion of debt securities. At December 31, 1995, $400
million of this shelf registration remained unused.

Credit Facilities

In September 1995, the Corporation entered into three new bank facilities under
a credit agreement with a commitment level of $7.5 billion. These credit
facilities include two term loans of $2.5 billion each. The first term loan is
payable in two installments: $2 billion in November 1997 and $500 million in
May 1998. The second term loan is payable in quarterly installments beginning
in August 1998 through November 2002. Both term loans are 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 that replaced
the Corporation's existing revolving credit facility as well as that of CBS.

Funds from these facilities have been used to finance the purchase of CBS, pay
certain transaction fees and replace borrowings under existing revolvers. The
interest rates for borrowings under the facilities are determined at the time
of each borrowing and are based on a floating rate index plus a margin based on
the Corporation's senior unsecured debt rating and leverage. See note 11 to the
financial statements.

The unused capacity under revolvers equalled $2,395 million and $1,581 million
at December 31, 1995 and 1994, respectively.  Borrowing availability under the
revolving credit facility 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 December 31, 1995, the
Corporation was in compliance with these covenants.

Hedging Activities

The Corporation has entered into interest rate and currency exchange agreements
to manage the interest rate and currency 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 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. At December 31, 1995, the aggregate credit exposure to
counterparties totalled approximately $72 million. This exposure resulted
primarily from an interest rate and currency swap with an A-rated counterparty.
The contract matured in February 1996.

In 1995, outstanding interest rate exchange agreements resulted in a net
increase in the average borrowing rate for Continuing Operations of 0.2% and a
net decrease in the average borrowing rate of Discontinued Operations of 0.2%.
Corresponding interest expense increased by approximately $6 million for
Continuing Operations and decreased by approximately $1 million for
Discontinued Operations.

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.


                                     28
<PAGE>   29

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 1995.

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. While 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, technology, and 
information available for individual sites, management has made estimates 
of the probable and reasonably possible remediation costs that could be 
incurred by the Corporation based on the facts and circumstances currently 
known. See note 17 to the financial statements.

At December 31, 1995, the Corporation had accrued liabilities totalling $166
million for sites where it has been either named a potentially responsible
party (PRP) or has other remedial responsibilities, $28 million for sites that
have been divested and the Corporation has remedial or compliance obligations,
$61 million for the Bloomington sites and $30 million for environmental closure
activities at facilities where the Corporation has ongoing operations. Also, in
conjunction with its Discontinued Operations, the Corporation has provided for
remediation costs related to past operations of certain sites.

Annual environmental costs include approximately $6 million for estimated
future environmental closure costs at operating sites and approximately $31
million related to current management of hazardous waste and pollutants.
Capital expenditures for environmental compliance, which totalled $6 million in
1995, may vary from year to year.

Management believes, based on its best estimate, that the Corporation has
adequately provided for its present environmental obligations and that
complying with existing government regulations will not materially impact the
Corporation's financial position, liquidity or results of operations.

LEGAL MATTERS

The Corporation is defending a number of lawsuits on various matters. See note
17 to the financial statements. Costs to defend these lawsuits are charged to
operations in the period in which the services are rendered.

Since 1993, the Corporation has entered into agreements to resolve seven
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 has meritorious defenses to the litigation referenced above,
and management believes that the litigation should not have a material adverse
effect on the financial condition of the Corporation.

INSURANCE RECOVERIES

Prior to 1995, the Corporation filed actions against more than 100 of its
insurance carriers seeking recovery for environmental, product and property
damage liabilities, and certain other matters. The Corporation has settled with
the majority of these carriers and has received recoveries related to these
actions. The Corporation has not accrued for any future insurance recoveries.

OTHER

In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," which establishes accounting standards for the impairment
of long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. This statement is effective
beginning in 1996. Although the Corporation has not yet completed its
evaluation of the effect that implementation of this new standard will have on
its results of operations and financial position, management believes that a
charge to operations upon adoption is reasonably possible.

In 1996, the Corporation also plans to adopt the pro forma disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." See 
note 1 to the financial statements.


                                     29


<PAGE>   30

REPORT OF MANAGEMENT

The Corporation has prepared the consolidated financial statements and related
financial information included in this report. Management has the primary
responsibility for the financial statements and other financial information and
for ascertaining that the data fairly reflect the financial position, results
of operations and cash flows of the Corporation. The financial statements were
prepared in accordance with generally accepted accounting principles
appropriate in the circumstances, and necessarily include amounts that are
based on best estimates and judgments with appropriate consideration given to
materiality. Financial information included elsewhere in this report is
presented on a basis consistent with the financial statements.

The Corporation maintains a system of internal accounting controls, supported
by adequate documentation, to provide reasonable assurance that assets are
safeguarded and that the books and records reflect the authorized transactions
of the Corporation. Limitations exist in any system of internal accounting
controls based on the recognition that the cost of the system should not exceed
the benefits derived. Westinghouse believes its system of internal accounting
controls, augmented by its corporate auditing function, appropriately balances
the cost/benefit relationship.

The independent accountants provide an objective assessment of the degree to
which management meets its responsibility for fair financial reporting. They
regularly evaluate elements of the internal control structure and perform such
tests and procedures as they deem necessary to express an opinion on the
fairness of the financial statements.

The Board of Directors pursues its responsibility for the Corporation's
financial statements through its Audit Review Committee composed of directors
who are not officers or employees of the Corporation. The Audit Review
Committee meets regularly with the independent accountants, management and the
corporate auditors. The independent accountants and the corporate auditors have
direct access to the Audit Review Committee, with and without the presence of
management representatives, to discuss the scope and results of their audit
work and their comments on the adequacy of internal accounting controls and the
quality of financial reporting.

We believe that the Corporation's policies and procedures, including its
system of internal accounting controls, provide reasonable assurance that the
financial statements are prepared in accordance with the applicable securities
laws and with a corresponding standard of business conduct.


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Westinghouse Electric Corporation

In our opinion, the accompanying consolidated financial statements appearing on
pages 47 through 72 of this Annual Report present fairly, in all material
respects, the financial position of Westinghouse Electric Corporation and its
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Corporation's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

As discussed in note 1 to these financial statements, the Corporation adopted
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," in 1993.


/s/ PRICE WATERHOUSE LLP


Price Waterhouse LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219-9954
February 12, 1996

                                     30
<PAGE>   31

CONSOLIDATED STATEMENT OF INCOME (in millions except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                            1995            1994            1993
------------------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>             <C> 
Product sales                                                  $ 3,355         $ 3,298         $ 3,236
Service sales                                                    2,941           2,591           2,543
------------------------------------------------------------------------------------------------------
Sales of products and services                                   6,296           5,889           5,779
------------------------------------------------------------------------------------------------------
Cost of products sold                                           (2,549)         (2,523)         (2,508)
Cost of services sold                                           (1,931)         (1,754)         (1,743)
------------------------------------------------------------------------------------------------------
Costs of products and services sold                             (4,480)         (4,277)         (4,251)
Provision for restructuring (note 20)                              (86)            (23)           (249)
Marketing, administration and general expenses                  (1,686)         (1,184)         (1,313)
Other income and expenses, net (note 19)                           149            (288)           (154)
Interest expense                                                  (233)           (134)           (165)
------------------------------------------------------------------------------------------------------
Loss from Continuing Operations before
  income taxes and minority interest
  in income of consolidated subsidiaries                           (40)            (17)           (353)
Income taxes (note 6)                                                7              13             116
Minority interest in income of consolidated subsidiaries           (11)             (9)             (9)
------------------------------------------------------------------------------------------------------
Loss from Continuing Operations                                    (44)            (13)           (246)
------------------------------------------------------------------------------------------------------
Discontinued Operations, net of income taxes (notes 1 and 3):
  Income from operations                                           135              90              71
  Estimated loss on disposal of Discontinued Operations            (76)              -             (95)
------------------------------------------------------------------------------------------------------
  Income (loss) from Discontinued Operations                        59              90             (24)
------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of change in
  accounting principle                                              15              77            (270)
Cumulative effect of change in accounting principle-
  Postemployment benefits (notes 1 and 5)                            -               -             (56)
------------------------------------------------------------------------------------------------------
Net income (loss)                                              $    15         $    77         $  (326)
------------------------------------------------------------------------------------------------------
Primary earnings (loss) per common share (note 15):
  Continuing Operations                                        $  (.19)        $  (.16)        $  (.84)
  Discontinued Operations                                          .14             .23            (.07)
  Cumulative effect of change in accounting principle                -               -            (.16)
------------------------------------------------------------------------------------------------------
Primary earnings (loss) per common share                       $  (.05)        $   .07         $ (1.07)
------------------------------------------------------------------------------------------------------
Fully diluted earnings (loss) per common share (note 15):
  Continuing Operations                                        $  (.10)        $  (.16)        $  (.84)
  Discontinued Operations                                          .13             .23            (.07)
  Cumulative effect of change in accounting principle                -               -            (.16)
------------------------------------------------------------------------------------------------------
Fully diluted earnings (loss) per common share                 $   .03         $   .07         $ (1.07)
------------------------------------------------------------------------------------------------------
Cash dividends per common share                                $   .20         $   .20         $   .40
------------------------------------------------------------------------------------------------------
</TABLE>

The Notes to the Financial Statements are an integral part of these financial
statements.

                                     31
<PAGE>   32

CONSOLIDATED BALANCE SHEET (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                                               1995     1994
------------------------------------------------------------------------------------------
<S>                                                                      <C>       <C>
ASSETS:
  Cash and cash equivalents (note 1)                                      $   213   $  329
  Customer receivables (note 7)                                             1,545    1,194
  Inventories (note 8)                                                        867      942
  Uncompleted contracts costs over related billings (note 8)                  582      351
  Program rights                                                              301        -
  Deferred income taxes (note 6)                                              547      432
  Prepaid and other current assets                                            251      150
------------------------------------------------------------------------------------------
  Total current assets                                                      4,306    3,398
  Plant and equipment, net (note 9)                                         2,027    1,282
  Intangible and other noncurrent assets (note 10)                          8,977    2,785
  Net assets of Discontinued Operations (note 3)                            1,442    1,705
------------------------------------------------------------------------------------------
Total assets                                                              $16,752   $9,170
------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
  Revolving credit borrowings and other short-term debt (note 11)         $   309   $  634
  Current maturities of long-term debt (note 13)                              330        7
  Accounts payable                                                            846      688
  Uncompleted contracts billings over related costs (note 8)                  324      402
  Other current liabilities (note 12)                                       2,124    1,181
------------------------------------------------------------------------------------------
  Total current liabilities                                                 3,933    2,912
  Long-term debt (note 13)                                                  7,226    1,865
  Other noncurrent liabilities (note 14)                                    4,074    2,548
------------------------------------------------------------------------------------------
Total liabilities                                                          15,233    7,325
------------------------------------------------------------------------------------------
Contingent liabilities and commitments (note 17)
Minority interest in equity of consolidated subsidiaries                       11       30
Shareholders' equity (note 15):
  Preferred stock, $1.00 par value (25 million shares authorized):
    Series A preferred (no shares issued)                                       -        -
    Series B conversion preferred (no shares and 8 million shares issued)       -        8
    Series C conversion preferred (4 million shares issued)                     4        4
  Common stock, $1.00 par value (630 million shares authorized,
   426 million and 393 million shares issued)                                 426      393
  Capital in excess of par value                                            1,848    1,932
  Common stock held in treasury                                              (720)    (870)
  Minimum pension liability adjustment (note 4)                            (1,220)    (962)
  Cumulative foreign currency translation adjustments                         (11)     (15)
  Retained earnings                                                         1,181    1,325
------------------------------------------------------------------------------------------
Total shareholders' equity                                                  1,508    1,815
------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                $16,752   $9,170
------------------------------------------------------------------------------------------
</TABLE>

The Notes to the Financial Statements are an integral part of these financial 
statements.

                                     32
<PAGE>   33

CONSOLIDATED STATEMENT OF CASH FLOWS (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                                               1995       1994       1993
---------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>       <C>        <C>
Cash flows from operating activities of Continuing Operations:
  Loss from Continuing Operations                                                 $   (44)  $    (13)  $   (246)
  Adjustments to reconcile loss from Continuing Operations
   to net cash provided by operating activities:
    Depreciation and amortization                                                     218        214        212
    Pension settlement loss                                                             -        308          -
    Noncash restructuring charges                                                       6          2         52
    Losses (gains) on asset dispositions                                             (125)       (10)       175
    Provision for environmental and litigation expenses                               236          -        205
    Changes in assets and liabilities, net of effects of acquisitions
     and divestitures of businesses:
      Receivables, current and noncurrent                                             209       (177)      (124)
      Inventories                                                                      34        (60)       (61)
      Progress payments net of costs on uncompleted contracts                        (309)      (253)      (122)
      Accounts payable                                                                110        133        108
      Deferred and current income taxes                                               (10)      (196)      (333)
      Accrued taxes, interest and insurance                                           (91)        24         34
      Accrued restructuring costs                                                     (23)       (95)       197
      Accrued employee compensation                                                   103        (60)       (25)
      Other assets and liabilities                                                    121        206        264
---------------------------------------------------------------------------------------------------------------
Cash provided by operating activities of Continuing Operations                        435         23        336
---------------------------------------------------------------------------------------------------------------
Cash provided (used) by operating activities of Discontinued Operations               258        (77)       444
---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Business acquisitions                                                            (5,411)      (109)         -
  Business divestitures                                                               683      1,462          -
  Liquidation of assets of Financial Services                                         362        323      4,882
  Asset fundings of Financial Services                                                  -        (86)    (2,015)
  Capital expenditures (note 21)                                                     (290)      (259)      (272)
  Asset liquidations of trust investments                                             305          -          -
  Other                                                                                15         22         73
---------------------------------------------------------------------------------------------------------------
Cash provided (used) by investing activities                                       (4,336)     1,353      2,668
---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Short-term bank borrowings                                                        7,480      9,143     12,935
  Short-term bank repayments                                                       (8,294)   (11,079)   (15,575)
  Net reduction in other short-term debt                                             (416)      (599)      (532)
  Repayments of long-term debt                                                         (9)       (81)    (1,037)
  Long-term borrowings                                                              5,009         16        603
  Sale of equity securities                                                             -        505          -
  Treasury stock reissued                                                              89         58         81
  Debt issue costs                                                                   (176)       (15)       (37)
  Dividends paid                                                                     (159)      (153)      (190)
  Other                                                                                 1          2         (2)
---------------------------------------------------------------------------------------------------------------
Cash provided (used) by financing activities                                        3,525     (2,203)    (3,754)
---------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                                                (118)      (904)      (306)
Cash and cash equivalents at beginning of period (note 1)                             344      1,248      1,554
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period (note 1)                               $   226   $    344   $  1,248
---------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
  Interest paid-Continuing Operations                                             $   214   $    134   $    163
  Interest paid-Discontinued Operations                                               139        259        475
  Income taxes paid                                                                    61        123         75
---------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements and include descriptions of noncash transactions.


                                     33
<PAGE>   34
NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

CONSOLIDATION

The 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.
Investments in joint ventures and other companies in which the Corporation does
not control but has the ability to exercise significant management influence
over operating and financial policies are accounted for by the equity method.

Certain previously reported amounts have been reclassified to conform to the
1995 presentation.

DISCONTINUED OPERATIONS

In December 1995, the Corporation announced a plan to divest its defense and
electronic systems business and The Knoll Group (Knoll), its office furniture
unit. In July 1995, the Corporation sold WCI Communities, Inc. (WCI), its land
development subsidiary. The Corporation's defense and electronic systems
business represented a separate major line of business that comprised
approximately 90% of the former Electronic Systems segment. Knoll and WCI were
previously reported as separate industry segments in Continuing Operations. As
a result, certain financial information previously issued has been restated to
give effect to the classification of these businesses as discontinued 
operations in accordance with Accounting Principles Board Opinion No. 30, 
"Reporting the Effects of Disposal of a Segment of a Business and 
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" 
(APB 30). See note 3 to the financial statements. The Corporation previously 
classified as Discontinued Operations its Distribution and Control Business 
Unit (DCBU), Westinghouse Electric Supply Company (WESCO) and its Financial 
Services businesses in conjunction with a 1992 plan to exit these businesses.

REVENUE RECOGNITION

Sales are recorded primarily as products are shipped and services are rendered.
The percentage-of-completion method of accounting is used for major power
generation systems with a cycle time in excess of one year and major nuclear
fuel and related equipment orders.

AMORTIZATION OF INTANGIBLE ASSETS

Identifiable intangible assets related to the Corporation's broadcasting
business primarily include Federal Communications Commission (FCC) licenses,
which are limited as to availability and have historically appreciated in value
with the passage of time. These identifiable intangible assets and goodwill are
amortized using the straight-line method over their estimated lives but not in
excess of 40 years.

For the Corporation's industry and technology businesses, goodwill and other
acquired intangible assets are amortized using the straight-line method over
their estimated lives but not in excess of 40 years for assets acquired prior
to January 1, 1994 and not in excess of 15 years for assets acquired after
December 31, 1993.

Subsequent to the acquisition of an intangible asset, the Corporation
continually evaluates whether later events and circumstances indicate the
remaining estimated useful life of an intangible asset may warrant revision or
that the remaining balance of such an asset may not be recoverable. When
factors indicate that an intangible asset should be evaluated for possible
impairment, the Corporation uses an estimate of the related business'
undiscounted future cash flows over the remaining life of the asset in
measuring whether the intangible asset is recoverable. If such an analysis
indicates that impairment has in fact occurred, the Corporation writes down the
book value of the intangible asset to its fair market value.

CASH AND CASH EQUIVALENTS

The Corporation considers all investment securities with a maturity of three
months or less when acquired to be cash equivalents. All cash and temporary
investments are placed with high-credit quality financial institutions, and the
amount of credit exposure to any one financial institution is limited. At
December 31, 1995 and 1994, cash and cash equivalents included restricted funds
of $42 million and $61 million, respectively.

INVENTORIES

Inventories are stated at the lower of standard cost, which approximates actual
cost on a first-in, first-out (FIFO) basis, or market. The elements of cost
included in inventories are direct labor, direct material and certain overheads
including factory depreciation. Long-term contracts in process include costs
incurred plus estimated profits on contracts accounted for using the
percentage-of-completion method.


                                     34
<PAGE>   35

PLANT AND EQUIPMENT

Plant and equipment assets are recorded at cost and depreciated generally using
the straight-line method over their estimated useful lives. Depreciation is
generally computed on the straight-line method based on useful lives of 27.5-60
years for buildings, 20 years for land improvements, 3-10 years for office
equipment, and 3-12 years for machinery and transportation equipment. Leasehold
improvements are amortized over the terms of the respective leases.
Expenditures for additions and improvements are capitalized, and costs for
repairs and maintenance are charged to operations as incurred. The Corporation
limits capitalization of newly acquired assets to those assets with cost in
excess of $1,500.

PROGRAM RIGHTS

Costs incurred in connection with the production of, or the purchase of rights
to, programs to be broadcast within one year are classified as current assets
while costs of those programs to be broadcast subsequently are considered
noncurrent. Program costs are charged to expense as the respective programs are
broadcast.

ENVIRONMENTAL COSTS

The Corporation expenses or capitalizes, if appropriate under the Corporation's
capitalization policy, environmental expenditures that relate to current
operations. Expenditures that relate to an existing condition caused by past
operations and that do not contribute to current or future revenue generation
are expensed. The Corporation records liabilities when environmental
assessments or remedial efforts are probable, and the costs can be reasonably
estimated. Such estimates are adjusted if necessary based on the completion of
a formal study or the Corporation's commitment to a formal plan of action.

The Corporation accrues over their estimated remaining useful lives the
anticipated future costs of environmental closure activities, such as
dismantling incinerators and decommissioning nuclear licensed sites.

OFF-BALANCE-SHEET HEDGING

Debt Instruments

The Corporation has entered into interest rate and currency exchange agreements
to manage exposure to fluctuations in interest and foreign exchange rates.
Interest rate exchange agreements generally involve the exchange of interest
payments without exchange of the underlying principal amounts. The Corporation
does not enter into speculative or leveraged derivative transactions.

The differentials paid or received on interest rate swap agreements are accrued
and recognized as adjustments to interest expense; gains and losses realized
upon early settlement of these agreements are deferred and amortized to
interest expense over the term of the original agreement if the underlying
hedged debt instrument remains owtstanding or expensed immediately if the
underlying hedged instrument is settled.  At December 31, 1995 and 1994, the
Corporation had no deferred gains or losses from terminated interest rate swaps
recorded on its balance sheet.

Foreign Exchange

The Corporation's foreign exchange policy includes matching purchases and sales
in national currencies when possible and hedging unmatched transactions in
excess of $250,000. In accordance with this policy, the Corporation has entered
into various foreign exchange agreements in which it sells a currency forward
to hedge a receivable or purchases a currency forward to hedge a payable.

Gains and losses on foreign currency contracts offset gains and losses
resulting from currency fluctuations inherent in the underlying transactions.
Gains and losses on contracts that hedge specific foreign currency commitments
are deferred and recognized in net income in the period in which the
transaction is consummated.

Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. On an ongoing basis,
management reviews its estimates, including those related to litigation and
environmental liabilities, based on currently available information. Changes in
facts and circumstances may result in revised estimates.

CHANGES IN ACCOUNTING PRINCIPLES

In December 1993, the Corporation adopted, retroactive to January 1, 1993,
Statement of Financial Accounting Standards (SFAS) No.  112, "Employers'
Accounting for Postemployment Benefits." This statement requires employers to
adopt accrual accounting for workers' compensation, salary continuation,
medical and life insurance continuation, severance benefits and disability
benefits provided to former or inactive employees after employment but before
retirement. The Corporation's previous practice was to expense these costs as
incurred. See note 5 to the financial statements.


                                     35
<PAGE>   36

In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," which establishes accounting standards for the impairment
of long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires that those
assets to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable, and those assets to be disposed of be reported at
the lower of carrying amount or fair value less cost to sell. This statement is
effective beginning in 1996. The Corporation is currently evaluating the effect
that implementation of this new standard will have on its results of operations
and financial position.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which establishes financial accounting and reporting standards
for stock-based employee compensation plans. The statement defines a fair value
based method of accounting for an employee stock option and allows companies to
continue to measure compensation cost for such plans using the intrinsic value
based method of accounting prescribed in APB Opinion No. 25, "Accounting for
Stock Issued to Employees." Beginning in 1996, companies electing to remain
with accounting under APB 25 must make pro forma disclosures of net income and
earnings per share as if the fair value based method of accounting had been
applied. The Corporation plans to continue accounting for its stock-based
employee compensation plans under APB 25 and will present the pro forma
disclosures required under this statement in 1996.

NOTE 2: CBS ACQUISITION

On November 24, 1995, pursuant to the terms of a merger agreement, the
Corporation acquired CBS Inc. (CBS) for a purchase price of approximately $5.4
billion. The acquisition was financed by borrowings under a $7.5 billion credit
agreement executed in September 1995.

The acquisition has been accounted for by the purchase method. Accordingly, the
purchase price was allocated to assets acquired and liabilities assumed based
on their estimated fair values as of the date of acquisition. The excess of the
consideration paid over the estimated fair value of net assets acquired,
totalling $4.8 billion, has been recorded as goodwill and is being amortized on
a straight-line basis over 40 years.

The estimated fair values of assets acquired and liabilities assumed are
summarized in the table below:

FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED (in millions)
<TABLE>
<CAPTION>
AT NOVEMBER 24                                        1995
----------------------------------------------------------
<S>                                                 <C>
Receivables                                         $  643
Program rights                                         301
Investments                                            233
Plant and equipment                                    777
Identifiable intangible assets:
  FCC licenses                                         994
  Film library and other                               162
Goodwill                                             4,794
Other assets                                            25
Liabilities for talent, program rights
  and similar contracts                               (716)
Debt                                                  (850)
Deferred income taxes                                 (270)
Pension, postretirement and
  postemployment benefits                             (244)
Accrued restructuring costs                           (100)
Other liabilities                                     (398)
----------------------------------------------------------
Total purchase price                                $5,351
----------------------------------------------------------
</TABLE>

The Corporation's Consolidated Statement of Income for the year ended December
31, 1995 includes the operating results of CBS from the acquisition date. The
following unaudited pro forma information combines the consolidated results of
operations of the Corporation with those of CBS as if the acquisition had
occurred at the beginning of 1995 and 1994, after giving effect to certain
purchase accounting adjustments, including additional depreciation expense
resulting from a step-up in basis of fixed assets, additional amortization
expense from goodwill and other identified intangible assets, increased
interest expense from acquisition debt and related income tax effects.

PRO FORMA RESULTS (UNAUDITED) (in millions except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                     1995        1994
----------------------------------------------------------------------------
<S>                                                      <C>         <C>
Sales                                                    $9,326      $9,601
Interest expense                                           (706)       (529)
Loss from Continuing Operations                            (527)       (108)
Primary loss per common share-
  Continuing Operations                                   (1.37)       (.41)
Fully diluted loss per common share-
  Continuing Operations                                   (1.22)       (.41)
---------------------------------------------------------------------------
</TABLE>


This pro forma financial information is presented for comparative purposes only
and is not necessarily indicative of the operating results that actually would
have occurred had the CBS acquisition been consummated on January 1, 1995 or
1994. In addition, these results are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operations.

                                     36
<PAGE>   37

NOTE 3: DISCONTINUED OPERATIONS

In December 1995, the Corporation adopted a plan to reduce debt incurred for
the acquisition of CBS through the sale of Knoll and its defense and electronic
systems business. In December 1995, a definitive agreement was reached to sell
Knoll to Warburg, Pincus Ventures, L.P., an affiliate of E. M. Warburg, Pincus
& Company, for $565 million of cash. In January 1996, an agreement was executed
with Northrop Grumman Corporation for the sale of the defense and electronic
systems business for $3 billion of cash. In addition, Northrop Grumman will
assume approximately $500 million of pension and postretirement benefit
liabilities associated with the active employees of the business. These
transactions, which are expected to result in a combined after-tax gain ranging
from $1.2 to $1.4 billion, are expected to be completed during the first
quarter of 1996. The gain will be recognized when realized. The net proceeds
from these transactions will be used to repay debt of Continuing Operations.

In July 1995, the Corporation sold WCI for $430 million of cash and retained
approximately $125 million of mortgage notes receivable with maturities through
1997 and other securities. In addition, the buyer assumed $19 million of debt.
Concurrently, the Corporation invested $48 million for a 24% equity interest in
the new business. The Corporation is actively pursuing the divestiture of this
investment. The net cash proceeds from the divestiture of WCI were used to
repay debt of Discontinued Operations. A net loss of $76 million was recognized
on the disposal.

In November 1992, the Corporation announced a plan that included exiting
Financial Services through the disposition of its $9 billion asset portfolios
and the sales of DCBU and WESCO. The disposition of Financial Services assets
involved the sale of the real estate and corporate finance portfolios over a
three-year period and the liquidation of the leasing portfolio over a longer
period of time in accordance with contractual terms.

Based on its quarterly review of the assumptions used in determining the
estimated loss from Discontinued Operations that was recorded in 1992, the
Corporation recorded an additional pre-tax provision for loss on disposal of
Discontinued Operations of $148 million in 1993. This change in the estimated
loss resulted from a reduction of the expected selling prices of WESCO and an
Australian subsidiary of DCBU; a decision to sell in bulk a Financial Services
residential development that the Corporation, upon adoption of the Plan, had
intended to develop; and a revision to the estimated interest costs expected to
be incurred by the Discontinued Operations during the disposal period.

During the first quarter of 1994, the Corporation completed the sales of DCBU
and WESCO for proceeds in excess of $1.1 billion and approximately $340
million, respectively.

The assets and liabilities of Discontinued Operations have been separately
classified on the balance sheet as net assets of Discontinued Operations. A
summary of these assets and liabilities follows:

NET ASSETS OF DISCONTINUED OPERATIONS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                           1995         1994
--------------------------------------------------------------------------
<S>                                                    <C>          <C>
ASSETS:
Cash and cash equivalents                              $   13       $   15
Customer receivables                                      397          361
Inventories                                               239          612
Uncompleted contracts costs over
  related billings                                        152          205
Plant and equipment                                       558          616
Portfolio investments                                     901        1,230
Deferred income taxes (note 6)                            410          439
Land not developed                                          -          244
Other assets                                              634          651
--------------------------------------------------------------------------
Total assets-Discontinued Operations                    3,304        4,373
--------------------------------------------------------------------------
LIABILITIES:
Accounts payable                                          156          153
Uncompleted contracts billings
  over related costs                                      119           69
Other current liabilities                                 430          586
Short-term debt (note 11)                                  81          402
Current maturities of long-term debt (note 13)            265          240
Liability for estimated loss on disposal                  134          145
Postretirement benefits liability (note 5)                108          111
Pension liability (note 4)                                398          333
Other noncurrent liabilities                               14           40
Long-term debt (note 13)                                  157          589
--------------------------------------------------------------------------
Total liabilities-Discontinued Operations               1,862        2,668
--------------------------------------------------------------------------
Net assets of Discontinued Operations                  $1,442       $1,705
--------------------------------------------------------------------------
</TABLE>


In 1995, the Corporation reduced the debt of Discontinued Operations to that
amount which it believes is supportable by the leasing portfolio and other
miscellaneous assets. The debt is expected to be repaid as the leasing
portfolio liquidates over its contractual term and through sales of such
miscellaneous assets.

Management believes that the net proceeds anticipated from the continued
liquidation of assets of Discontinued Operations will be sufficient to fund
Discontinued Operations. Management further believes that the liability for the
estimated loss on disposal of Discontinued Operations is adequate to cover
future operating costs and estimated credit losses related to Financial
Services and the remaining costs associated with WCI, DCBU and WESCO. The
adequacy of this liability is evaluated each quarter.


                                     37
<PAGE>   38
INVENTORIES

Inventories of Discontinued Operations consisted of the following:

INVENTORIES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                      1995     1994
-----------------------------------------------------------------
<S>                                               <C>      <C>
Raw materials                                      $  47    $  60
Work in process                                      284      671
Finished goods                                         3        4
-----------------------------------------------------------------
                                                     334      735
Long-term contracts in process                       260      394
Progress payments to subcontractors                   53       58
Recoverable engineering and
 development costs                                   198      291
-----------------------------------------------------------------
                                                     845    1,478
Inventoried costs related to  
 contracts with progress billing terms              (606)    (866)
-----------------------------------------------------------------
Inventories                                        $ 239    $ 612
-----------------------------------------------------------------
</TABLE>

COSTS AND BILLINGS ON UNCOMPLETED CONTRACTS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                      1995     1994
-----------------------------------------------------------------
<S>                                               <C>      <C>
Costs included in inventories                      $ 555    $ 795
Progress billings on contracts                      (403)    (590)
-----------------------------------------------------------------
Uncompleted contracts costs over related billings  $ 152    $ 205
-----------------------------------------------------------------
Progress billings on contracts                     $ 170    $ 140
Costs included in inventories                        (51)     (71)
-----------------------------------------------------------------
Uncompleted contracts billings over related costs  $ 119    $  69
-----------------------------------------------------------------
</TABLE>


Substantially all inventories at December 31, 1995 related
to long-term contracts. Inventoried costs do not exceed realizable values.

PORTFOLIO INVESTMENTS

Portfolio investments by category of investment and financing at December 31,
1995 and 1994 are summarized in the table below:

PORTFOLIO INVESTMENTS (in millions)
<TABLE>
<CAPTION>
                                              Real Estate
                                     Leasing  & Corporate     Total
-------------------------------------------------------------------
<S>                                    <C>       <C>        <C>
AT DECEMBER 31, 1995
Receivables                             $820      $  2       $  822
Other portfolio investments               45        34           79
-------------------------------------------------------------------
Portfolio investments                   $865      $ 36       $  901
-------------------------------------------------------------------
AT DECEMBER 31, 1994
Receivables                             $886      $ 27       $  913
Other portfolio investments               38       279          317
-------------------------------------------------------------------
Portfolio investments                   $924      $306       $1,230
-------------------------------------------------------------------
</TABLE>

Other portfolio investments remaining at December 31, 1995 consisted of 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
December 31, 1995 and 1994, 84% and 81%, respectively, related to aircraft, and
16% and 18%, respectively, related to cogeneration facilities.

The components of the Corporation's net investment in leases at December 31,
1995 and 1994 are as follows:

NET INVESTMENT IN LEASES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995     1994
----------------------------------------------------------------
<S>                                              <C>      <C>
Rentals receivable (net of principal and
 interest on nonrecourse loans)                   $ 775    $ 864
Estimated residual value of leased assets           373      389
Unearned and deferred income                       (328)    (367)
----------------------------------------------------------------
Investment in leases                                820      886
Deferred taxes and deferred investment
 tax credits arising from leases                   (584)    (610)
----------------------------------------------------------------
Investment in leases, net                         $ 236    $ 276
----------------------------------------------------------------
</TABLE>

At December 31, 1995 and 1994, deferred investment tax credits totalled $23
million and $25 million, respectively. These deferred investment tax credits
are recognized as income over the contractual terms of the respective leases.

Contractual maturities for the Corporation's leasing receivables at December
31, 1995 are as follows:

CONTRACTUAL MATURITIES FOR LEASING RECEIVABLES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995                 YEAR OF MATURITY
--------------------------------------------------------------
                                                         AFTER
         Total   1996    1997    1998    1999    2000     2000
<S>      <C>     <C>     <C>     <C>     <C>     <C>     <C> 
--------------------------------------------------------------
Leasing   $820    $29     $23     $22     $24     $31     $691
--------------------------------------------------------------
</TABLE>


In accordance with APB 30, the consolidated financial statements reflect the
operating results of Discontinued Operations separately from Continuing
Operations. Interest expense totalling $48 million, $37 million and $46 million
for 1995, 1994 and 1993, respectively, has been allocated to Discontinued
Operations based on the ratio of the net assets of Knoll and the defense and
electronic systems business to the sum of total consolidated net assets plus
consolidated debt. Summarized operating results of Discontinued Operations
follow:


                                     38
<PAGE>   39

OPERATING RESULTS OF DISCONTINUED OPERATIONS-
1995 MEASUREMENT DATES (in millions)
<TABLE>
<CAPTION>
                                              Defense and
                                               Electronic
                                        WCI       Systems      Knoll      Total
-------------------------------------------------------------------------------
<S>                                    <C>         <C>          <C>      <C>
YEAR ENDED DECEMBER 31, 1995
Sales of products and services         $108        $2,549       $621     $3,278
Income before income taxes               23           163         30        216
Income taxes                             (8)          (57)       (16)       (81)
Net income                               15           106         14        135

YEAR ENDED DECEMBER 31, 1994
Sales of products and services         $248        $2,189       $562     $2,999
Income (loss) before income taxes        71           187        (84)       174
Income taxes                            (26)          (68)        10        (84)
Net income (loss)                        45           119        (74)        90

YEAR ENDED DECEMBER 31, 1993
Sales of products and services         $253        $2,361       $510     $3,124
Income (loss) before income taxes        57           115        (55)       117
Income taxes                            (19)          (44)        17        (46)
Net income (loss)                        38            71        (38)        71
-------------------------------------------------------------------------------
</TABLE>


OPERATING RESULTS OF DISCONTINUED OPERATIONS-
NOVEMBER 1992 MEASUREMENT DATE (in millions)
<TABLE>
<CAPTION>
                                             Financial       DCBU &
                                              Services        WESCO       Total
--------------------------------------------------------------------------------
<S>                                              <C>          <C>        <C>
YEAR ENDED DECEMBER 31, 1995
Sales of products and services                   $  31       $    -      $   31
Net loss                                           (52)           -         (52)

YEAR ENDED DECEMBER 31, 1994
Sales of products and services                   $  41       $  319      $  360
Net earnings (losses)                             (204)           4        (200)

YEAR ENDED DECEMBER 31, 1993
Sales of products and services                   $ 305       $2,384      $2,689
Net earnings (losses)                             (212)          66        (146)
-------------------------------------------------------------------------------
</TABLE>


NOTE 4: PENSIONS

The Corporation has a number of defined benefit pension plans covering
substantially all employees. Most plan benefits are based on either years of
service and compensation levels at the time of retirement or a formula based on
career earnings. Pension benefits are paid primarily from trusts funded by the
Corporation and employee contributions. The Corporation funds its qualified
U.S. pension plans at amounts equal to or greater than the minimum funding
requirements of the Employee Retirement Income Security Act of 1974.
Substantially all plan assets are invested in stocks, fixed income securities,
and real estate investments. The Corporation also participates in various
multi-employer, union-administered defined benefit plans that cover certain
broadcast employees as a result of the acquisition of CBS. Pension expense
related to these plans for 1995 was not material.

NET PERIODIC PENSION COSTS (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                               1995      1994     1993
----------------------------------------------------------------------------
<S>                                                 <C>       <C>      <C>
Service cost                                        $  53     $  79    $  65
Interest cost on projected
  benefit obligation                                  391       404      426
Amortization of unrecognized
  net obligation                                       35        36       41
Amortization of unrecognized prior
  service cost (benefit)                              (11)        6        5
Amortization of unrecognized net loss                  68       112       48
----------------------------------------------------------------------------
                                                      536       637      585
----------------------------------------------------------------------------
Return on plan assets:
Actual return on plan assets                         (584)      (18)    (414)
Deferred gain (loss)                                  245      (385)     (40)
----------------------------------------------------------------------------
Recognized return on plan assets                     (339)     (403)    (454)
----------------------------------------------------------------------------
Net periodic pension cost                           $ 197     $ 234    $ 131
----------------------------------------------------------------------------
</TABLE>

The Corporation's restructuring activities contributed to
a high level of lump-sum cash distributions from the Corporation's pension fund
during 1994. The magnitude of these cash distributions required that the
Corporation apply the provisions of SFAS No. 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," and recognize a settlement loss of $308 million in 1994.
This noncash charge to income represents the pro rata portion of unrecognized
losses associated with the pension obligation that was settled. The recognition
of this settlement loss in 1994 reduced the amortization of unrecognized net
loss included in net periodic pension cost for 1995.

A curtailment charge of $22 million related to the 1993 restructuring
activities was included in the loss from Continuing Operations for the year
ended December 31, 1993. See note 20 to the financial statements.

SIGNIFICANT PENSION PLAN ASSUMPTIONS
<TABLE>
<CAPTION>
AT DECEMBER 31                                    1995      1994      1993
---------------------------------------------------------------------------
<S>                                               <C>        <C>      <C>
Discount rate                                     6.75%      8.5%     7.25%
Compensation increase rate                           4%        4%        4%
Long-term rate of return on plan assets           9.75%     9.75%     9.75%
---------------------------------------------------------------------------
</TABLE>


The requirement of SFAS No. 87 to adjust the discount rate to reflect current
and expected-to-be available interest rates on high quality fixed income
investments resulted in a decrease in the Corporation's assumed discount rate
from 8.5% at December 31, 1994 to 6.75% at December 31, 1995.

Net periodic pension cost is determined using the assumptions as of the
beginning of the year. The funded status is determined using the assumptions as
of the end of the year.


                                     39
<PAGE>   40
The following table sets forth the funded status of the defined benefit plans
and amounts recognized in the Corporation's balance sheet at December 31, 1995
and 1994:

FUNDED STATUS-PENSION PLANS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                    1995                      1994
--------------------------------------------------------------------------
                             Assets  Accumulated       Assets  Accumulated
                             Exceed     Benefits       Exceed     Benefits
                        Accumulated       Exceed  Accumulated       Exceed
                           Benefits       Assets     Benefits       Assets
--------------------------------------------------------------------------
<S>                          <C>        <C>                <C>    <C>
Actuarial present
 value of benefit
 obligation:
  Vested                      $(561)     $(4,944)           -      $(4,412)
  Nonvested                     (31)        (328)           -         (319)
--------------------------------------------------------------------------
Accumulated benefit
 obligation                    (592)      (5,272)           -       (4,731)
Effect of projected future
 compensation levels           (122)        (261)           -         (273)
--------------------------------------------------------------------------
Projected benefit
 obligation for service
 rendered to date              (714)      (5,533)           -       (5,004)
Plan assets at fair value       730        3,407            -        3,557
--------------------------------------------------------------------------
Projected benefit obligation
 in excess of plan assets        16       (2,126)           -       (1,447)
Unrecognized net loss            25        2,120            -        1,736
Prior service benefit not
 yet recognized in net
 periodic pension cost            -          (95)           -         (136)
Unrecognized net
 transition obligation            -          161            -          250
--------------------------------------------------------------------------
Prepaid pension cost             41           60            -          403
Minimum pension liability         -       (1,925)           -       (1,577)
--------------------------------------------------------------------------
Pension asset (liability)
 included in consolidated
 balance sheet                $  41      $(1,865)           -      $(1,174)
--------------------------------------------------------------------------
</TABLE>

Included in plan assets at December 31, 1995 are 5,612,600 shares of the
Corporation's common stock having a market value of approximately $92 million.
Dividends paid by the Corporation during 1995 on shares held by the pension
fund totalled approximately $1 million.

During 1995 and 1994, respectively, the Corporation contributed $315 million
and $310 million of cash to its pension plans.

The accumulated benefit obligation in excess of assets at December 31, 1995
increased $691 million compared to December 31, 1994.  This increase represents
the net effect of numerous factors but was driven primarily by the change in
the discount rate assumption from 8.5% to 6.75%.

The Corporation sponsors various non-qualified supplemental pension plans that
provide additional benefits to certain employees and are paid from the
Corporation's assets held in rabbi trusts. The unfunded accumulated benefit
obligation under these plans at December 31, 1995 included in the table above
was $286 million.

The pending first quarter 1996 sale of the Corporation's defense and electronic
systems business is expected to reduce the Corporation's unfunded accumulated
benefit obligation by $398 million as certain pension obligations are being
assumed by the buyer. At December 31, 1995 and 1994, included in the balance
sheet of Continuing and Discontinued Operations are the following pension
assets and liabilities:

BALANCE SHEET STATUS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                    1995                      1994
--------------------------------------------------------------------------
                                  Net                     Net
                              Pension  Intangible     Pension   Intangible
                            Liability       Asset   Liability        Asset
--------------------------------------------------------------------------
<S>                          <C>             <C>     <C>        <C>
Continuing Operations         $(1,426)        $63     $  (841)        $ 97
--------------------------------------------------------------------------
Discontinued Operations          (398)          3        (333)          17
--------------------------------------------------------------------------
Total                         $(1,824)        $66     $(1,174)        $114
--------------------------------------------------------------------------
</TABLE>

For financial reporting purposes, a pension plan is considered unfunded when
the fair value of plan assets is less than the accumulated benefit obligation.
When that is the case, a minimum pension liability is recognized for the sum of
the unfunded amount plus any prepaid pension cost. In recognizing such a
liability, an intangible asset is usually recorded up to the sum of the prior
service cost not yet recognized and the unrecognized transition obligation.
When the liability to be recognized is greater than the intangible asset limit,
a charge is made to shareholders' equity for the difference, net of any tax
effects.

At December 31, 1995, a minimum pension liability of $1,925 million was
recognized for the sum of the unfunded amount of $1,865 million plus the
prepaid pension cost of $60 million.  An intangible asset of $66 million and a
charge to shareholders' equity of $1,859 million, which was reduced to $1,220
million due to deferred tax effects of $639 million, offset the pension
liability. As a result of this remeasurement, year-end 1995 shareholders'
equity was decreased by $258 million from December 31, 1994.

At December 31, 1994, a minimum pension liability of $1,577 million was
recognized for the sum of the unfunded amount of $1,174 million plus the
prepaid pension cost of $403 million. An intangible asset of $114 million and a
charge to shareholders' equity of $1,463 million, which was reduced to $962
million due to deferred tax effects of $501 million, offset the pension
liability. As a result of this remeasurement, year-end 1994 shareholders'
equity was increased by $253 million from December 31, 1993.


                                     40
<PAGE>   41

NOTE 5: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND POSTEMPLOYMENT BENEFITS

The Corporation has defined benefit postretirement plans that provide medical,
dental and life insurance for eligible retirees and dependents.

The components of net periodic postretirement benefit cost follow:

NET PERIODIC POSTRETIREMENT BENEFIT COST (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                               <C>     <C>     <C>
Service cost, benefits attributed
 to employee service during the year               $ 13    $ 20    $ 15
Interest cost on accumulated
 postretirement benefit obligation                  100      93      96
Amortization of unrecognized
 net (gain) loss                                     (4)      4       -
Recognized return on plan assets                     (1)     (1)      -
-----------------------------------------------------------------------
Net periodic postretirement benefit cost           $108    $116    $111
-----------------------------------------------------------------------
</TABLE>


The assumptions used to develop the net periodic postretirement benefit cost
and the present value of benefit obligations are shown below:

SIGNIFICANT POSTRETIREMENT BENEFIT PLAN ASSUMPTIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                               <C>      <C>    <C>
Discount rate                                      6.75%    8.5%   7.25%
Health care cost trend rates                       10.5%*   11%*     12%*
Compensation increase rate                            4%      4%      4%
Long-term rate of return on plan assets               7%      7%   9.75%
-----------------------------------------------------------------------
<FN>
* From December 31, 1995, the rate was assumed to decrease ratably to 5% in
  2006, decrease to 4.75% in 2007 and remain at that level thereafter. From
  December 31, 1994 and 1993, the rate was assumed to decrease ratably to 6.5%
  and 7%, respectively, and remain at that level thereafter.
</TABLE>

Net periodic postretirement benefit cost is determined using the assumptions as
of the beginning of the year. The funded status is determined using the 
assumptions as of the end of the year.

The funded status and amounts recognized in the Corporation's balance sheet at
December 31, 1995 and 1994 were as follows:

FUNDED STATUS-POSTRETIREMENT BENEFITS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995     1994
----------------------------------------------------------------
<S>                                              <C>      <C>
Accumulated postretirement
 benefit obligation:
  Retirees                                      $(1,215) $  (893)
  Fully eligible, active plan participants          (40)     (32)
  Other active plan participants                   (352)    (253)
----------------------------------------------------------------
Total accumulated postretirement
 benefit obligation                              (1,607)  (1,178)
Unrecognized net loss                               257       36
Unrecognized prior service benefit                  (45)     (58)
Plan assets at fair value                            72       12
----------------------------------------------------------------
Accrued postretirement benefit cost             $(1,323) $(1,188)
----------------------------------------------------------------
</TABLE>

The accrued postretirement benefit cost for Discontinued Operations at December
31, 1995 and 1994 was $108 million and $111 million, respectively, which is
included in the net assets of Discontinued Operations. These liabilities are
being assumed by the buyers of the Corporation's defense and electronic systems
business and Knoll.

The funded assets consist primarily of interest bearing securities. The effect
of a 1% annual increase in the assumed health care cost trend rates would
increase the accumulated postretirement benefit obligation by approximately $95
million and would increase net periodic postretirement benefit cost by
approximately $8 million.  

Certain of the Corporation's non-U.S. subsidiaries have private and 
government-sponsored plans for retirees. The cost for these plans is not 
significant to the Corporation.

The Corporation provides certain postemployment benefits to former or inactive
employees and their dependents during the time period following employment but
before retirement. In December 1993, the Corporation adopted retroactive to
January 1, 1993, SFAS No.  112, "Employers' Accounting for Postemployment
Benefits." Prior to 1993, postemployment benefits were recognized primarily as
they were paid. The Corporation's charge for adoption of SFAS No. 112 at
January 1, 1993 was $56 million, net of $30 million of deferred taxes, and was
immediately recognized as the cumulative effect of a change in accounting for
postemployment benefits.

At December 31, 1995 and 1994, the Corporation's liability for postemployment
benefits totalled $98 million and $77 million, respectively. The liability for
postemployment benefits included in the net assets of Discontinued Operations
was $2 million at both December 31, 1995 and 1994.


                                     41
<PAGE>   42
NOTE 6: INCOME TAXES

Income tax expense (benefit) included in the consolidated financial statements
follows:

COMPONENTS OF CONSOLIDATED INCOME TAXES (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                                <C>    <C>    <C>
Continuing Operations                               $(7)   $(13)  $(116)
Discontinued Operations                              51      84      (7)
Cumulative effect of change in accounting
 principle for postemployment benefits                -       -     (30)
-----------------------------------------------------------------------
Income taxes (benefit)                              $44     $71   $(153)
-----------------------------------------------------------------------
</TABLE>

INCOME TAXES FROM CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                               <C>     <C>    <C>
Current:
  Federal                                          $(22)   $(77)  $  84
  State                                              (2)      6      10
  Foreign                                            22      28      21
-----------------------------------------------------------------------
Total income taxes current                           (2)    (43)    115
-----------------------------------------------------------------------
Deferred:
  Federal                                           (18)     53    (199)
  State                                              (3)    (11)     16
  Foreign                                            16     (12)    (48)
-----------------------------------------------------------------------
Total income taxes deferred                          (5)     30    (231)
-----------------------------------------------------------------------
Income taxes (benefit)                             $ (7)   $(13)  $(116)
-----------------------------------------------------------------------
</TABLE>

CONSOLIDATED INCOME TAXES (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                               <C>     <C>    <C>
Current:
  Federal                                          $ 18    $ 18   $ 138
  State                                               7      24      19
  Foreign                                            27      28      23
-----------------------------------------------------------------------
Total income taxes current                           52      70     180
-----------------------------------------------------------------------
Deferred:
  Federal                                           (21)     28    (294)
  State                                              (2)    (13)     14
  Foreign                                            15     (14)    (53)
-----------------------------------------------------------------------
Total income taxes deferred                          (8)      1    (333)
-----------------------------------------------------------------------
Income taxes (benefit)                             $ 44    $ 71   $(153)
-----------------------------------------------------------------------
</TABLE>

Deferred federal income taxes for 1993 include a benefit of $62 million
resulting from the enactment of an increase in the statutory federal income tax
rate from 34% to 35%.

In addition to the amounts in the tables above, during 1995, 1994 and 1993,
$138 million of income tax benefit, $132 million of income tax expense and $378
million of income tax benefit, respectively, were recorded in shareholders'
equity as part of the pension liability adjustment. See note 4 to the financial
statements.

The foreign portion of income or loss before income taxes and minority interest
in income of consolidated subsidiaries included in the consolidated statement
of income was income of $128 million in 1995 and losses of $34 million in 1994
and $6 million in 1993. Such income or loss consisted of profits and losses
generated from foreign operations (both Continuing and Discontinued) that can
be subject to both U.S. and foreign income taxes.

Deferred federal income taxes have not been provided on cumulative
undistributed earnings from foreign subsidiaries totalling $432 million at
December 31, 1995 in which the earnings have been reinvested for an indefinite
time. It is not practicable to determine the income tax liability that would
result were such earnings repatriated.

Income from Continuing Operations includes income of certain manufacturing
operations in Puerto Rico, which are eligible for tax credits against U.S.
federal income tax and partially exempt from Puerto Rican income tax under
grants of industrial tax exemptions.  These tax exemptions provided net tax
benefits of $17 million in 1995, $14 million in 1994 and $17 million in 1993.
The exemptions will expire at various dates from 2002 through 2007.

Deferred income taxes result from temporary differences in the financial bases
and tax bases of assets and liabilities. The types of differences that give
rise to significant portions of deferred income tax liabilities or assets are
shown in the accompanying table:

CONSOLIDATED DEFERRED INCOME TAX SOURCES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                      1995    1994
----------------------------------------------------------------
<S>                                              <C>     <C>
Provisions for expenses and losses                $1,133  $  812
Accumulated depreciation and amortization           (814)   (163)
Long-term contracts in process                        41      81
Leasing activities                                  (584)   (583)
Minimum pension liabilities                          474     403
Operating losses and credit carryforwards          1,405   1,360
Postretirement and postemployment benefits           590     477
Other deferred tax assets                            170     184
Other deferred tax liabilities                      (129)    (90)
Valuation allowance for deferred taxes               (98)   (101)
----------------------------------------------------------------
Deferred income taxes, net asset                  $2,188  $2,380
----------------------------------------------------------------
</TABLE>

The valuation allowance for deferred taxes represents foreign tax credits not
anticipated to be utilized and operating loss carryforwards of certain foreign
subsidiaries. The net balance of deferred income taxes is intended to offset
income taxes on future taxable income expected to be earned by the
Corporation's Continuing Operations.


                                       42
<PAGE>   43

At December 31, 1995, for federal income tax purposes, there were regular tax
net operating loss carryforwards of $416 million which expire by the year 2007,
$2,462 million which expire by the year 2008, and $351 million which expire by
the year 2010. At December 31, 1995, for alternative minimum tax purposes,
there were loss carryforwards of $151 million which expire by the year 2007,
$2,390 million which expire by the year 2008, $38 million which expire by the
year 2010 and alternative minimum tax credit carryforwards of $211 million
which have no expiration date. At December 31, 1995, there were $172 million of
net operating loss carryforwards attributable to foreign subsidiaries. Of this
total, approximately $41 million has no expiration date.  The remaining amount
will expire not later than 2002. A valuation allowance has been established for
$58 million of the deferred tax benefit related to those loss carryforwards for
which it is considered likely that the benefit will not be realized.

EFFECTIVE TAX (BENEFIT) RATE FOR CONTINUING OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                              <C>     <C>     <C>
Federal statutory income tax
 (benefit) rate                                   (35.0)% (35.0)% (35.0)%
Increase (decrease) in the tax
 (benefit) rate resulting from:
  Adjustment of deferred tax asset
   for increase in federal
   income tax rate                                    -       -   (15.5)
  Income taxes of prior years                      28.1    33.5    14.1
  Writeoff of intangible assets                    23.8    34.7     3.3
  Interest on prior years' federal
   income tax, net of federal effect                  -   (67.6)    4.2
  State income tax, net of
   federal effect                                  (7.7)  (24.1)    4.7
  Lower tax rate on income of
   foreign sales corporations                      (8.3)  (27.7)   (3.6)
  Lower tax rate on net income
   of Puerto Rican operations                     (42.4)  (82.1)   (4.8)
  Gain on sale of stock of
   subsidiary and affiliate                        30.6       -       -
  Valuation allowance for deferred taxes           (4.8)  (23.7)   (2.1)
  Adjustment of deferred tax asset
   included in equity for change in
   federal income tax rate                            -    17.4       -
  Loss of foreign tax credit                        7.5    46.2     3.1
  Foreign rate differential                       (24.9)  (45.7)   (1.9)
  Nondeductible expenses                           14.3    35.3     0.6
  Income from equity investments                   (2.0)    5.2     0.1
  Dividends from foreign subsidiaries               4.5    42.2     1.4
  Other                                             0.3    15.6    (1.4)
-----------------------------------------------------------------------
Effective tax (benefit) rate for
 Continuing Operations                            (16.0)% (75.8)% (32.8)%
-----------------------------------------------------------------------
</TABLE>

The federal income tax returns of the Corporation and its wholly owned
subsidiaries are settled through the year ended December 31, 1989. The
Corporation has reached an agreement with the Internal Revenue Service
regarding intercompany pricing adjustments applicable to operations in Puerto
Rico for the years 1990 through 1992 and a tentative agreement for 1993.
Management believes that adequate provisions for taxes have been made through
December 31, 1995.

NOTE 7: CUSTOMER RECEIVABLES

Customer receivables at December 31, 1995 included $133 million, which
represented the sales value of material shipped under long-term contracts but
not billed to the customer. Billings will occur upon shipment of major
components of the contract. Collection of these receivables is expected to be
substantially completed within one year.

Allowances for doubtful accounts of $39 million and $52 million at December 31,
1995 and 1994, respectively, were deducted from customer receivables. The
Corporation performs ongoing credit evaluations of its customers and generally
does not require collateral.

NOTE 8: INVENTORIES AND COSTS AND BILLINGS ON UNCOMPLETED CONTRACTS

INVENTORIES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                             <C>     <C>
Raw materials                                    $   88  $  102
Work in process                                     449     395
Finished goods                                      123     163
---------------------------------------------------------------
                                                    660     660
Long-term contracts in process                    1,005     472
Progress payments to subcontractors                  21      38
Recoverable engineering and development costs        68     155
---------------------------------------------------------------
                                                  1,754   1,325
Inventoried costs related to contracts
 with progress billing terms                       (887)   (383)
---------------------------------------------------------------
Inventories                                      $  867  $  942
---------------------------------------------------------------
</TABLE>

COSTS AND BILLINGS ON UNCOMPLETED CONTRACTS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                              <C>      <C>
Costs included in inventories                     $ 747   $ 347
Progress billings on contracts                     (165)      4
---------------------------------------------------------------
Uncompleted contracts costs
 over related billings                            $ 582   $ 351
---------------------------------------------------------------
Progress billings on contracts                    $ 464   $ 438
Costs included in inventories                      (140)    (36)
---------------------------------------------------------------
Uncompleted contracts billings
 over related costs                               $ 324   $ 402
---------------------------------------------------------------
</TABLE>


                                     43

<PAGE>   44

Raw materials, work in process, and finished goods included contract-related
costs of approximately $405 million at December 31, 1995, and $418 million at
December 31, 1994. Substantially all costs in long-term contracts in process,
progress payments to subcontractors, and recoverable engineering and
development costs were contract-related.

Inventories other than those related to long-term contracts are generally 
realized within one year. Inventoried costs do not exceed realizable values.

NOTE 9: PLANT AND EQUIPMENT

PLANT AND EQUIPMENT (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995     1994
----------------------------------------------------------------
<S>                                            <C>      <C>
Land and buildings                              $   938  $   554
Machinery and equipment                           2,514    2,260
Construction in progress                            201      151
----------------------------------------------------------------
Plant and equipment, at cost                      3,653    2,965
Accumulated depreciation                         (1,626)  (1,683)
----------------------------------------------------------------
Plant and equipment, net                        $ 2,027  $ 1,282
----------------------------------------------------------------
</TABLE>

For the years ended December 31, 1995 and 1994, depreciation expense totalled
$175 million and $182 million, respectively. Of these amounts, $125 million and
$129 million, respectively, is included in costs of products and services, and
$50 million and $53 million, respectively, is included in marketing,
administration and general expenses.

NOTE 10: INTANGIBLE AND OTHER
NONCURRENT ASSETS

INTANGIBLE AND OTHER NONCURRENT ASSETS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                             <C>     <C>
Deferred income taxes (note 6)                   $1,231  $1,509
Goodwill                                          5,379     550
FCC licenses                                      1,242     100
Other intangible assets                             198      89
Intangible pension asset (note 4)                    63      97
Deferred charges                                    353     110
Joint ventures and other affiliates                  70      83
Noncurrent receivables                              172     115
Other                                               269     132
---------------------------------------------------------------
Intangible and other noncurrent assets           $8,977  $2,785
---------------------------------------------------------------
</TABLE>

Goodwill and other acquired intangible assets are shown net of accumulated
amortization of $154 million and $116 million at December 31, 1995 and 1994,
respectively.

Included in deferred charges are unamortized debt issue costs of $162 million
and $2 million at December 31, 1995 and 1994, respectively, which are amortized
to expense on a straight-line basis over the term of the related indebtedness.

Joint ventures and other affiliates include investments in companies over which
the Corporation exercises significant influence but does not control.

NOTE 11: SHORT-TERM DEBT

In September 1995, the Corporation entered into three new bank facilities under
a credit agreement with a commitment level of $7.5 billion. These credit
facilities include two term loans of $2.5 billion each. The first term loan is
payable in two installments: $2 billion in November 1997 and $500 million in
May 1998. The second term loan is payable in quarterly installments from August
1998 through November 2002. See note 13 to the financial statements. In
addition to these term loans, the credit agreement includes a $2.5 billion
revolving credit facility with a seven-year maturity.

Funds from these facilities have been used to finance the purchase of CBS, pay
certain transaction fees, and replace borrowings under the previous revolvers.

Availability under the revolving credit facility 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 terms of the facilities.  
At December 31, 1995, the Corporation was in compliance with these covenants.

Interest rates for borrowings under the facilities are determined at the time
of each borrowing and are based generally on a floating rate index, the London
Interbank Offer Rate (LIBOR), plus a margin based on the Corporation's senior
unsecured debt rating and leverage. The cost of the facilities includes
commitment fees, which are based on the unutilized facilities and vary with the
Corporation's debt ratings and leverage.

There are no compensating balance requirements under the facilities.

                                     44
<PAGE>   45

SHORT-TERM DEBT-CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
                           AT DECEMBER 31              DURING THE YEAR
--------------------------------------------------------------------------------
                                  Composite    Max. Out-    Avg. Out-   Wtd. Avg.
                         Balance       Rate    standing      standing       Rate
--------------------------------------------------------------------------------
<S>                         <C>         <C>     <C>            <C>         <C>
1995 
Credit facilities           $185        7.0%    $1,039          $600        6.8%
Short-term foreign
  bank loans                  20        6.9%       103            76        6.0%
Other                        104        7.1%       178            41        6.0%
--------------------------------------------------------------------------------
Short-term debt             $309
--------------------------------------------------------------------------------
1994
Credit facilities           $545        6.7%    $  545          $113        4.3%
Short-term foreign
  bank loans                  88        6.3%       277           133        5.2%
Other                          1
--------------------------------------------------------------------------------
Short-term debt             $634
--------------------------------------------------------------------------------
</TABLE>


Average outstanding borrowings for Continuing Operations were determined based
on daily amounts outstanding for the credit facilities and on monthly balances
outstanding for short-term foreign bank loans.


SHORT-TERM DEBT-DISCONTINUED OPERATIONS (in millions)
<TABLE>
<CAPTION>
                           AT DECEMBER 31               DURING THE YEAR
--------------------------------------------------------------------------------
                                  Composite    Max. Out-    Avg. Out-   Wtd. Avg.
                         Balance       Rate    standing      standing       Rate
--------------------------------------------------------------------------------
<S>                         <C>        <C>      <C>            <C>         <C>
1995
Credit facilities           $ 78       7.6%     $  331          $209        6.8%
Other                          3
--------------------------------------------------------------------------------
Short-term debt             $ 81
--------------------------------------------------------------------------------
1994
Credit facilities           $374       6.7%     $2,355          $955        4.8%
Other                         28       8.1%         36            31        8.2%
--------------------------------------------------------------------------------
Short-term debt             $402
--------------------------------------------------------------------------------
</TABLE>

Average outstanding borrowings for Discontinued Operations were determined
based on daily amounts outstanding for credit facilities.

To manage interest costs on its short-term and long-term debt, the Corporation
has entered into various types of interest rate and currency exchange
agreements. A summary of notional amounts outstanding at December 31, 1995 and
1994 is presented in the table below:

INTEREST RATE AND CURRENCY EXCHANGE AGREEMENTS
NOTIONAL AMOUNTS OUTSTANDING (in millions)
<TABLE>
<CAPTION>
                                        Short-Term      Long-Term
                                              Debt           Debt      Total
----------------------------------------------------------------------------
<S>                                            <C>         <C>        <C>
AT DECEMBER 31, 1995 
Continuing Operations                         $  -         $3,208     $3,208
Discontinued Operations                          -             74         74
----------------------------------------------------------------------------
Notional amounts                              $  -         $3,282     $3,282
----------------------------------------------------------------------------
AT DECEMBER 31, 1994
Continuing Operations                         $272         $    -     $  272
Discontinued Operations                         25            374        399
Notional amounts                              $297         $  374     $  671
----------------------------------------------------------------------------
</TABLE>

The average remaining maturity of interest rate and currency exchange
agreements was 0.8 years and 1.5 years at December 31, 1995 and 1994,
respectively.

At year-end 1995, $3,208 million relates to interest rate swaps with rate and
maturity characteristics set forth in the table below:


CONTRACTUAL MATURITIES OF INTEREST RATE SWAPS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995                              Year of Maturity
-----------------------------------------------------------------------------
                             Total       1996    1997    1998    1999    2000
-----------------------------------------------------------------------------
<S>                         <C>        <C>        <C>     <C>     <C>     <C>
Fixed rate swaps
  (pay fixed):
Notional amount             $3,208     $3,078       -     $50     $55     $25
Wtd. avg. fixed
  rate paid                   5.68%      5.54%      -    8.73%   8.86%   9.36%
-----------------------------------------------------------------------------
</TABLE>


The $74 million notional amount outstanding for Discontinued Operations at
December 31, 1995 represents an interest rate and currency swap which matures
in February 1996.

At December 31, 1994, interest rate swap agreements in which the Corporation
paid a fixed interest rate totalled $272 million and had a weighted average
rate of 8.8% with an average maturity of 1.8 years. In addition to the fixed
interest rate swaps, the Corporation had a $150 million floating rate swap on
which it received a rate of 8.7%. The remaining $249 million notional amount
outstanding at December 31, 1994 consisted of a $25 million forward interest
rate swap agreement, a $150 million interest rate floor agreement and a $74
million interest rate and currency swap.


                                     45
<PAGE>   46

NOTE 12: OTHER CURRENT LIABILITIES

OTHER CURRENT LIABILITIES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                             <C>     <C>
Accrued employee compensation                    $  218  $  118
Income taxes currently payable                      158     129
Liabilities for talent and program rights           254       -
Accrued product warranty                             59      60
Accrued restructuring costs                         153      77
Liability for business dispositions                  46      90
Accrued taxes, interest and insurance               221     312
Accrued expenses                                    706     224
Environmental liabilities                            47      40
Other                                               262     131
---------------------------------------------------------------
Other current liabilities                        $2,124  $1,181
---------------------------------------------------------------
</TABLE>

NOTE 13: LONG-TERM DEBT

LONG-TERM DEBT-CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                             <C>     <C>
Term loans I & II                                $5,000  $    -
8-3/8% notes due 2002                               348     348
7-7/8% debentures due 2023                          325     325
7-3/4% notes due 1996                               300     300
6-7/8% notes due 2003                               275     275
8-5/8% debentures due 2012                          273     273
8-7/8% notes due 2001                               250     250
8-7/8% notes due 2014                               150       -
7-5/8% notes due 2002                               150       -
7-3/4% notes due 1999                               125       -
7-1/8% notes due 2023                                97       -
8-7/8% debentures due 2022                           92       -
Medium-term notes due through 2001                   92      95
Other                                                79       6
---------------------------------------------------------------
                                                  7,556   1,872
Current maturities                                 (330)     (7)
---------------------------------------------------------------
Long-term debt                                   $7,226  $1,865
---------------------------------------------------------------
</TABLE>

Included in the table above is $491 million of senior debt previously issued by
CBS. At December 31, 1995, interest rates on this debt ranged from 7.13% to
9.03% with maturities from 1998 to 2023.

The CBS 8-7/8% debentures due 2022 may be redeemed after June 1, 2002 at
specified redemption prices. Except for term loans I and II, none of the
remaining long-term debt outstanding at December 31, 1995 may be redeemed prior
to maturity.

At December 31, 1995, medium-term notes of Continuing Operations had interest
rates ranging from 8.5% to 9.4%, with an average interest rate of 8.9% and an
average remaining maturity of 2.6 years.

During 1995, Discontinued Operations exchanged $150 million of 8-7/8% notes due
2014 (redeemable by holders in 1999) for $150 million of short-term borrowings
of Continuing Operations to better match the monetization of assets with the
maturities of debt.

The Corporation maintains a $1 billion shelf registration, of which $400
million was unused as of December 31, 1995.  

The scheduled maturities of Continuing Operation's long-term debt outstanding 
at December 31, 1995 for each of the next five years are as follows: 
1996-$330 million; 1997-$2,006 million; 1998-$823 million; 1999-$686 million; 
and 2000-$675 million.

LONG-TERM DEBT-DISCONTINUED OPERATIONS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                              <C>     <C>
Medium-term notes due through 2001                $ 344   $ 424
8-7/8% notes due 2014                                 -     150
8-7/8% notes due 1995                                 -     150
Other                                                78     105
---------------------------------------------------------------
                                                    422     829
Current maturities                                 (265)   (240)
---------------------------------------------------------------
Long-term debt                                    $ 157   $ 589
---------------------------------------------------------------
</TABLE>

At December 31, 1995, medium-term notes of Discontinued Operations had interest
rates ranging from 7.9% to 9.4%, with an average interest rate of 8.9% and an
average remaining maturity of 1.6 years.

The scheduled maturities of Discontinued Operation's long-term debt outstanding
at December 31, 1995 for each of the next five years are as follows: 1996-$265
million; 1997-$2 million; 1998-$96 million; 1999-$46 million; and 2000-$11
million.

NOTE 14: OTHER NONCURRENT LIABILITIES

OTHER NONCURRENT LIABILITIES (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                                     1995    1994
---------------------------------------------------------------
<S>                                             <C>     <C>
Postretirement benefits (note 5)                 $1,215  $1,077
Postemployment benefits (note 5)                     96      75
Pension liability (note 4)                        1,426     841
Accrued restructuring costs                           8       8
Liability for business dispositions                  94      75
Liabilities for talent and program rights            47       -
Accrued expenses                                    650     148
Environmental liabilities                           239     157
Other                                               299     167
---------------------------------------------------------------
Other noncurrent liabilities                     $4,074  $2,548
---------------------------------------------------------------
</TABLE>

                                     46

<PAGE>   47

NOTE 15: SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY (in millions)
<TABLE>
<CAPTION>
                                                   1995       1994       1993
-----------------------------------------------------------------------------
<S>                                             <C>        <C>        <C>
Preferred stock:
Balance at January 1                            $    12    $     8    $     8
Series B preferred shares converted                  (8)         -          -
Series C preferred shares issued                      -          4          -
-----------------------------------------------------------------------------
Balance at December 31                          $     4    $    12    $     8
-----------------------------------------------------------------------------
Common stock:
Balance at January 1                                393        393        393
Shares issued                                        33          -          -
-----------------------------------------------------------------------------
Balance at December 31                          $   426    $   393    $   393
-----------------------------------------------------------------------------
Capital in excess of par value:
Balance at January 1                            $ 1,932    $ 1,475    $ 1,523
Series B preferred shares converted                 (25)         -          -
Series C preferred shares issued                      -        501          -
Shares issued under various
  compensation and benefit plans                    (55)       (37)       (37)
Shares issued under dividend
  reinvestment plan                                  (4)        (7)       (11)
-----------------------------------------------------------------------------
Balance at December 31                          $ 1,848    $ 1,932    $ 1,475
-----------------------------------------------------------------------------
Common stock held in treasury:
Balance at January 1                            $  (870)   $  (972)   $(1,102)
Shares issued under various
  compensation and benefit plans                    139         87        104
Shares issued under dividend
  reinvestment plan                                  11         15         26
-----------------------------------------------------------------------------
Balance at December 31                          $  (720)   $  (870)   $  (972)
-----------------------------------------------------------------------------
Minimum pension liability:
Balance at January 1                            $  (962)   $(1,215)   $  (496)
Pension liability adjustments,
  net of deferred taxes (note 4)                   (258)       253       (719)
-----------------------------------------------------------------------------
Balance at December 31                          $(1,220)   $  (962)   $(1,215)
-----------------------------------------------------------------------------
Cumulative foreign currency
  translation adjustments:
Balance at January 1                            $   (15)   $   (28)   $    (8)
Currency translation activity                         4         13        (20)
-----------------------------------------------------------------------------
Balance at December 31                          $   (11)   $   (15)   $   (28)
-----------------------------------------------------------------------------
Retained earnings:
Balance at January 1                            $ 1,325    $ 1,401    $ 1,917
Net income (loss)                                    15         77       (326)
Dividends paid                                     (159)      (153)      (190)
-----------------------------------------------------------------------------
Balance at December 31                          $ 1,181    $ 1,325    $ 1,401
-----------------------------------------------------------------------------
Shareholders' equity                            $ 1,508    $ 1,815    $ 1,062
-----------------------------------------------------------------------------
</TABLE>

In March 1994, the Corporation sold, in a private placement, 36,000,000
depository shares (the $1.30 Depository Shares) at $14.44 per share. Each of
the $1.30 Depository Shares represents ownership of one-tenth of a share of the
Corporation's $1.00 par value Series C Conversion Preferred Stock (Series C
Preferred) and entitles the owner to all of the proportionate rights,
preferences and privileges of the Series C Preferred. A total of 3,600,000
Series C Preferred shares was deposited, all of which were outstanding at
December 31, 1995 and 1994.

The net proceeds to the Corporation, after commissions, fees and out-of-pocket
expenses, totalled $505 million. As a result, the par value of Series C
Preferred was established for $4 million, and capital in excess of par was
increased by $501 million.

The annual dividend rate for each $1.30 Depository Share is $1.30 (equivalent
to $13.00 for each Series C Preferred), payable quarterly in arrears on the
first day of March, June, September and December. Dividends are cumulative and
must be declared by the Board of Directors to be payable. Payments commenced on
June 1, 1994.

Each $1.30 Depository Share will automatically convert into one share 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. Conversion will also
occur upon certain mergers, consolidations or similar extraordinary
transactions involving the Corporation or in certain other events.

On September 1, 1995, the Corporation's 8,222,500 shares of Series B Conversion
Preferred Stock (Series B Preferred), outstanding since 1992, mandatorily
converted into 32,890,000 shares of common stock.

COMMON SHARES (shares in thousands)
<TABLE>
<CAPTION>
                                                            In            Out-
                                       Issued         Treasury        standing
------------------------------------------------------------------------------
<S>                                   <C>               <C>            <C>
Balance at January 1, 1993            392,998           46,556         346,442
Shares issued for dividend
  reinvestment plan                         -           (1,112)          1,112
Shares issued for employee plans            -           (4,540)          4,540
Other                                      82                -              82
------------------------------------------------------------------------------
Balance at December 31, 1993          393,080           40,904         352,176
Shares issued for dividend
  reinvestment plan                         -             (621)            621
Shares issued for employee plans            -           (3,975)          3,975
Other                                       -              (20)             20
------------------------------------------------------------------------------
Balance at December 31, 1994          393,080           36,288         356,792
Shares issued for dividend
  reinvestment plan                         -             (450)            450
Shares issued for employee plans            -           (5,886)          5,886
Shares issued for conversion of
  Series B Preferred                   32,890                -          32,890
------------------------------------------------------------------------------
Balance at December 31, 1995          425,970           29,952         396,018
------------------------------------------------------------------------------
</TABLE>

Of the common stock held in treasury at December 31, 1995, 21,132,376 shares
were held by the Corporation's rabbi trusts for the payment of benefits under
executive benefit plans.


                                     47
<PAGE>   48
 
Earnings (loss) per common share was computed by dividing income or loss
available to common shareholders by the weighted average number of common
shares outstanding during the year plus the weighted average common stock
equivalents. Common stock equivalents consist of shares subject to stock
options, shares potentially issuable under deferred compensation programs, and
as discussed below, the Series B Preferred. For this computation, net income or
loss was adjusted for the after-tax interest expense applicable to the deferred
compensation programs.

The Series B Preferred were considered common stock equivalents at a rate of
four Series B Preferred to one common share. Because such treatment has an
anti-dilutive effect on earnings per share for 1995, 1994 and 1993, these
common stock equivalent shares were excluded from weighted average shares
outstanding, and the dividend requirement was deducted from net income in
computing earnings available to common shareholders.

For the calculation of primary earnings per share, the common shares issued
upon conversion of the Series B Preferred were included in weighted average
shares outstanding from the conversion date, September 1, 1995.  For the
calculation of fully diluted earnings per share, the Series B Preferred were
treated as common shares outstanding from January 1, 1995, the first day of the
period of conversion.

Consistent with prevalent practice at the time of issuance, the Series C
Preferred were considered outstanding common stock at a rate of ten Series C
Preferred to one common share for both primary and fully diluted earnings per
share. If the Series C Preferred had been treated as common stock equivalents
for the calculation of net income per share, the Corporation's 1995 and 1994
primary per share results would have been a loss of $.18 and $.02,
respectively. Fully diluted per share results would have been a loss of $.08
for 1995 and $.02 for 1994.

The weighted average number of common shares used for computing primary
earnings or loss per share was 410,138,000 in 1995, 383,736,000 in 1994, and
352,902,000 in 1993. The weighted average number of common shares used for
computing fully diluted earnings or loss per share was 433,191,000 in 1995,
383,790,000 in 1994, and 355,358,000 in 1993.

On December 29, 1995, the Board of Directors adopted a shareholder rights plan
providing for the distribution of one right for each share of common stock
outstanding on January 9, 1996. The rights become exercisable only in the
event, with certain exceptions, an acquiring party accumulates 15% or more of
the Corporation's voting stock or a party announces an offer to acquire 30% or
more of the voting stock. The rights have an exercise price of $64 per share
and expire on January 9, 2006. Upon the occurrence of certain events, holders
of the rights will be entitled to purchase either Westinghouse preferred shares
or shares in an acquiring entity at half of market value. The Corporation is
entitled to redeem the rights at a value of $.01 per right at any time until
the tenth day following the acquisition of a 15% position in its voting stock.

NOTE 16: STOCK OPTIONS

The 1993 and 1991 Long-Term Incentive Plans provide for the granting of stock
options and other performance awards to employees of the Corporation.

At December 31, 1995 and 1994, approximately 11.1 million and 7.5 million
shares, respectively, had been authorized for awards under the 1993 Plan.
Shares available for stock options and other awards under the 1993 Plan at
December 31, 1995 and 1994 totalled 3,249,228 and 3,435,107, respectively. At
December 31, 1995 and 1994, a total of 16.5 million and 9 million shares,
respectively, had been authorized for awards under the 1991 Plan. Shares
available for stock options and other awards under the 1991 Plan at December
31, 1995 and 1994 totalled 3,407,931 and 775,671, respectively.

Stock options are also outstanding under the 1984 Long-Term Incentive Plan;
however, no additional grants are permitted under that plan.

The option price under the Plans may not be less than the fair market value of
the shares on the grant date. The options were granted for terms of 10 years or
less and generally become exercisable in whole or in part after the
commencement of the second year of the term.

Generally, options outstanding under the 1993, 1991 and 1984 Plans, except
those granted during 1995, were exercisable at December 31, 1995. Options
granted during 1995 under the 1993 and 1991 Plans generally will not be
exercisable until 1996. Outstanding options have expiration dates ranging from
1996 through 2005.


                                     48
<PAGE>   49

Of the options granted by the Corporation in 1995, 2,423,060 were performance
stock options. The vesting of these options is contingent on attainment of
specific performance targets. If the targets are not met, the options
terminate; if they are met, the options become exercisable. One-half of these
options lapsed in January 1996 because the stretch performance targets for 1995
were not met.  The remaining performance options are contingent on 1996
performance.

STOCK OPTION INFORMATION (shares in thousands)
<TABLE>
<CAPTION>
                                                   1995     1994     1993
-------------------------------------------------------------------------
<S>                                            <C>      <C>      <C>
Shares subject to option:
Balance at January 1                             20,504   16,082   11,675
Options granted                                   8,945    5,079    5,230
Options exercised                                  (481)     (24)     (67)
Options terminated                                 (584)    (633)    (756)
-------------------------------------------------------------------------
Balance at December 31                           28,384   20,504   16,082
-------------------------------------------------------------------------
Weighted average option
 price in dollars:
At January 1                                    $ 18.66  $ 20.70  $ 22.81
Options granted                                   14.17    11.89    15.90
Options exercised                                 11.75    10.40    12.37
Options terminated                                16.15    16.59    20.84
At December 31                                    17.41    18.66    20.70
-------------------------------------------------------------------------
</TABLE>

In 1995, the shareholders approved stock options for non-employee directors.
The Deferred Compensation and Stock Plan for Directors generally provides for
an annual grant of 3,000 options to each non-employee director and an
additional grant of 750 options to committee chairs. For each of the grants,
two-thirds of the options have an exercise price equal to the fair market value
of the common stock on the grant date. The remaining one-third of the options
have an exercise price equal to 125% of the fair market value on the grant
date. These options may be exercised by each of the directors immediately
following the grant date.

NOTE 17: CONTINGENT LIABILITIES AND COMMITMENTS

URANIUM SETTLEMENTS

In the late seventies, the Corporation provided for the estimated future costs
for the resolution of all uranium supply contract suits and related litigation.
The remaining uranium reserve balance includes assets required for certain
settlement obligations and reserves for estimated future costs. The reserve
balance at December 31, 1995, is deemed adequate considering all facts and
circumstances known to management. The future obligations require providing the
remainder of the fuel deliveries running through 2013. The supply of equipment
and services is essentially complete. Variances from estimates which may occur
are considered in determining if an adjustment of the liability is necessary.

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 seven 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. Four steam generator lawsuits remain.

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 discussions.

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 have been appealed.

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. At December 31, 1995, the
Corporation had approximately 75,000 claims outstanding against it.


                                     49
<PAGE>   50

In court actions which have been resolved, the Corporation has prevailed in the
vast 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.

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 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. While 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, technology and information
available for individual sites, management has estimated the probable and
reasonably possible remediation costs that could be incurred by the Corporation
based on the facts and circumstances currently known.

PRP Sites and Other Remedial Activities

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 73 sites, including 18 CBS sites. With regard to cleanup
costs at these sites, in many cases the Corporation will share these costs with
other responsible parties, and the Corporation believes that any liability
incurred will be satisfied over a number of years. Management believes that the
Corporation's total remaining probable cost for remedial actions of these sites
as of December 31, 1995 is approximately $166 million, all of which has been
accrued.

As part of the agreements for the sale of certain of its businesses or sites,
the Corporation has agreed to retain obligations for remediation of
contamination existing at these sites, other Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) issues, and compliance
matters. Management believes that the total cost for these obligations is
approximately $28 million, all of which has been accrued. In addition, the
Corporation has accrued for the estimated remediation costs associated with
Discontinued Operations.

Bloomington Sites

The Corporation is a party to a 1985 Consent Decree relating to remediation of
six sites in Bloomington, Indiana. In the Consent Decree, the Corporation
agreed to construct and operate an incinerator, which would be permitted under
federal and state law, to burn excavated material.  On February 8, 1994, the
Consent Decree parties filed with the court a status report advising of the
parties' intention to investigate alternatives. The Corporation believes it is
probable that the Consent Decree will be modified to an alternative remedial
action, which could include a combination of containment, treatment,
remediation and monitoring. The parties also recognize that the Consent Decree
shall remain in full force during this process.

One of the six sites covered by the Consent Decree has been remediated. The
Corporation estimates that its total cost to implement the most reasonable
alternative for the five remaining sites covered by the Consent Decree is
approximately $61 million, all of which has been accrued. Included in this
amount is approximately $43 million for site construction and other related
costs valued as of the year of expenditure. The remaining $18 million is the
present value, assuming a 5% discount rate, of approximately $46 million of
operating and maintenance costs that will be incurred during a 30-year period.
Other reasonable remediation alternatives, while considered less likely, could
cause the total costs to be as much as $115 million.


                                     50
<PAGE>   51

Other

The Corporation is involved with several administrative actions alleging
violations of federal, state or local environmental regulations.  For these
matters, the Corporation has estimated its remaining reasonably possible costs
and determined them to be immaterial.

The Corporation currently manages under contract several government-owned
facilities, which among other things are engaged in the remediation of
hazardous and nuclear wastes. To date, under the terms of the contracts, the
Corporation is not responsible for costs associated with environmental
liabilities, including environmental cleanup costs, except under certain
circumstances associated with the willful misconduct or lack of good faith of
its managers or their failure to exercise prudent business judgment. There are
currently no material claims for which the Corporation believes it is
responsible.

The Corporation has or will have responsibilities for environmental closure
activities, such as dismantling incinerators or decommissioning nuclear
licensed sites. The Corporation has estimated the total potential cost to be
incurred for these actions to approximate $135 million, of which $30 million
had been accrued at December 31, 1995. The Corporation's policy is to accrue
these costs over the estimated life of the individual facilities, which in most
cases is approximately 20 years. The anticipated annual costs currently being
accrued are $6 million.

Capital expenditures related to environmental compliance in 1995 and 1994
totalled $6 million and $8 million, respectively. Operating expenses which are
recurring and associated with managing hazardous waste and pollutants in
ongoing operations in 1995 and 1994 totalled $31 million and $23 million,
respectively.

Management believes, based on its best estimate, that the Corporation has
adequately provided for its present environmental obligations and that
complying with existing government regulations will not materially impact the
Corporation's financial position, liquidity or results of operations.

INSURANCE RECOVERIES

Prior to 1995, the Corporation filed actions against more than 100 of its
insurance carriers seeking recovery for environmental, product and property
damage liabilities, and certain other matters. The Corporation has settled with
the majority of these carriers and has received recoveries related to these
actions. The Corporation has not accrued for any future insurance recoveries.

FINANCING 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 sports events. These contracts
permit the broadcast of such properties for various periods ending no later
than April 2002. As of December 31, 1995, the Corporation was committed to make
payments of $3,412 million under such broadcasting contracts.

The Corporation's other commitments consist primarily of those for the purchase
of plant and equipment totalling approximately $40 million at December 31,
1995.

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 December 31, 1995, Financial Services commitments, consisting of guarantees,
credit enhancements, other standby agreements and commitments to extend credit
totalled $45 million compared to $80 million at year-end 1994. Management
expects the remaining commitments to expire unfunded or be funded with the
resulting assets being sold shortly after funding.

The defense and electronic systems business provides guarantees to customers in
the form of standby letters of credit for bids, advance payments and
performance of contractual obligations. Such guarantees are supported by the
Corporation's lines of credit.  At December 31, 1995, approximately $202
million of guarantees were outstanding. The cost for the lines of credit that
support the guarantees is inventoried if specifically related to an ongoing
contract or otherwise expensed as incurred.


                                     51
<PAGE>   52

NOTE 18: LEASES

The Corporation has commitments under operating leases for certain machinery
and equipment and facilities used in various operations. Rental expense for
Continuing Operations in 1995, 1994 and 1993 was $132 million, $138 million and
$165 million, respectively. These amounts include immaterial amounts for
contingent rentals. Rental expense included sublease income totalling $17
million, $16 million and $5 million for 1995, 1994 and 1993, respectively.

MINIMUM RENTAL PAYMENTS-CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                  1995
------------------------------------
<S>                          <C>
1996                          $  138
1997                             118
1998                             106
1999                              95
2000                              97
Subsequent years                 750
------------------------------------
Minimum rental payments       $1,304
------------------------------------
</TABLE>

NOTE 19: OTHER INCOME AND EXPENSES, NET

OTHER INCOME AND EXPENSES, NET (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                               <C>    <C>     <C>
Interest on securities                             $ 12   $  13   $  18
Miscellaneous interest income                         7       3       6
Gain (loss) on disposition of other assets          132      27      20
Operating results-non-consolidated
 affiliates                                           1      (4)     (4)
Foreign currency transaction and
 high-inflation translation effect                   (8)     (6)      4
Estimated loss on disposition of
 non-strategic businesses                            (7)    (17)   (195)
Pension settlement loss (note 4)                      -    (308)      -
Other                                                12       4      (3)
-----------------------------------------------------------------------
Other income and expenses, net                     $149   $(288)  $(154)
-----------------------------------------------------------------------
</TABLE>

The gain on disposition of other assets for 1995 includes a gain of $115
million from the sale of the Corporation's 62% interest in MICROS Systems, Inc.
and $13 million from the sale of an equity investment. The gain on disposition
of other assets for 1994 includes a gain of $32 million from the sale of two
Sacramento, California radio stations. The 1993 gain on disposition of other
assets includes $21 million from the sale of an equity participavion in a
production company.

NOTE 20: RESTRUCTURING

In recent years, the Corporation has restructured many of its businesses and
its corporate headquarters in an effort to reduce its cost structure 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.

A summary of restructuring charges by business segment follows:

RESTRUCTURING COSTS (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                                <C>     <C>    <C>
Broadcasting                                        $ -     $(2)   $ 12
Power Systems                                        44      21     171
Government & Environmental Services                   -       4      12
Communication & Information Systems                   3       -      11
Other Businesses                                      -       -       5
Corporate and Other                                  39       -      38
-----------------------------------------------------------------------
Total                                               $86     $23    $249
-----------------------------------------------------------------------
</TABLE>

Generally, separated employees receive benefits under the Corporation's
Employee Security and Protection Plan or similar arrangement, including
permanent job separation benefits, retraining, and outplacement assistance. The
amount included for these benefits in the restructuring charge represents the
incremental cost of such benefits over those amounts previously accrued under
SFAS No. 112.  

Based on the Corporation's current estimates, summarized below are the 
restructuring costs for Continuing Operations:

RESTRUCTURING COSTS BY CATEGORY OF EXPENDITURE (dollars in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994    1993
-----------------------------------------------------------------------
<S>                                              <C>      <C>    <C>
Number of involuntary separations                 1,091     541   2,217
-----------------------------------------------------------------------
Employee separation costs                           $77    $ 39    $155
Pension curtailment costs                             -       -      22
Asset write-downs                                     6       2      30
Facility closure/rationalization costs                3       -      24
Adjustments                                           -     (18)     18
-----------------------------------------------------------------------
Total charge to operations                          $86    $ 23    $249
-----------------------------------------------------------------------
</TABLE>

Of the 3,849 employee separations over the three-year period, 90% were
completed at December 31, 1995. The remaining separations are expected to be
completed in early 1996. Employee separation costs generally are paid over a
period of up to two years following the separation.


                                     52
<PAGE>   53

In connection with the acquisition of CBS, the Corporation developed a
restructuring plan to integrate the operations of CBS with those of the
Corporation, and eliminate duplicate facilities and functions. The cost of that
plan, which is estimated to total approximately $100 million, was recorded in
connection with the purchase.

The following is a reconciliation of the restructuring liability for Continuing
Operations:

RECONCILIATION OF RESTRUCTURING LIABILITY (in millions)
<TABLE>
---------------------------------------------------
<S>                                          <C>
Balance at January 1, 1993                    $   -
Provision for restructuring                     249
Noncash expenditures                            (22)
---------------------------------------------------
Balance at December 31, 1993                    227
---------------------------------------------------
Provision for restructuring                      23
Cash expenditures                              (134)
Noncash expenditures                            (31)
---------------------------------------------------
Balance at December 31, 1994                     85
---------------------------------------------------
Provision for restructuring                      86
CBS acquisition plan                            100
Cash expenditures                              (103)
Noncash expenditures                             (7)
---------------------------------------------------
Balance at December 31, 1995                  $ 161
---------------------------------------------------
</TABLE>

Additional restructuring costs totalling $49 million in 1995, $48 million in
1994, and $101 million in 1993, were included in the results of Discontinued
Operations primarily for the separation of approximately 3,000 employees and
the exiting of various product lines and facilities.

NOTE 21: SEGMENT INFORMATION

Westinghouse is a diversified, global, technology-based corporation operating
in the principal business areas of television and radio broadcasting,
communications, environmental services, transport refrigeration and the
electric utility markets. The Corporation's continuing businesses are aligned
for reporting purposes into the following six segments: Broadcasting, Power
Systems, Thermo King, Government & Environmental Services, Communication &
Information Systems, and Other Businesses. Results of international
manufacturing entities, export sales and foreign licensee income are included
in the financial information of the segment that has operating responsibility.

Broadcasting provides a variety of communications services consisting primarily
of commercial broadcasting, program production, and distribution. It operates
the CBS Television Network, a programming provider for more than 200
affiliates. It sells advertising time to radio, television and cable
advertisers through national and local sales organizations. Broadcasting
currently owns and operates 15 television broadcasting stations and 39 radio
stations. Broadcasting also provides programming and distribution services to
the cable television industry. Group W Satellite Communications (GWSC) provides
sports programming and the marketing and advertising for two country music
entertainment channels.

The Power Systems segment designs, develops, manufactures and services nuclear
and fossil-fueled power generation systems and is a leading supplier of reload
nuclear fuel to the global electric utility market.

Thermo King is a leading supplier of mobile temperature control equipment for
trucks, trailers and seagoing containers, as well as air conditioning for buses
and rail cars.

The Government & Environmental Services segment combines the Corporation's
toxic, hazardous and radioactive waste services, the management and operation
of several government-owned facilities and the U.S. naval nuclear reactors
program.

The Communication & Information Systems segment's primary businesses include
long-distance telephone network management, network infrastructure development
for providers of mobile satellite services and personal communications
services, and residential and commercial security.

The Other Businesses segment consists of businesses deemed to be non-strategic
that are expected to be sold.

The Corporate and Other segment includes corporate activities that are managed
for the benefit of the entire Corporation.

Segment sales of products and services include products that are transferred
between segments, generally at inventory cost plus a margin. Segment operating
profit or loss consists of sales of products and services less segment
operating expenses, which include costs of products and services, marketing,
administration and general expenses, depreciation and amortization, and
restructuring costs.

Segment operating profit for 1995, 1994, and 1993 includes special charges
consisting of costs for restructuring (note 20), litigation matters, and
environmental matters as follows:

SPECIAL CHARGES INCLUDED IN SEGMENT OPERATING PROFIT (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                             1995    1994     1993
------------------------------------------------------------------------
<S>                                               <C>      <C>     <C>
Broadcasting                                       $  -     $(2)    $ 12
Power Systems                                       280      21      296
Thermo King                                           -       -        -
Government & Environmental Services                   -       4       32
Communication & Information Systems                   3       -       11
Other Businesses                                      -       -        5
Corporate and Other                                  39       -       98
------------------------------------------------------------------------
Total                                              $322     $23     $454
------------------------------------------------------------------------
</TABLE>


                                     53

<PAGE>   54

SALES OF PRODUCTS AND SERVICES AND SEGMENT OPERATING PROFIT FROM CONTINUING
OPERATIONS (in millions)
<TABLE>
<CAPTION>
                                     Sales of Products and Services    Segment Operating Profit (Loss)
-----------------------------------------------------------------------------------------------------
Year ended December 31                    1995     1994     1993               1995     1994     1993
-----------------------------------------------------------------------------------------------------
<S>                                     <C>     <C>      <C>                 <C>      <C>      <C>
Broadcasting                            $1,108   $  742   $  705              $ 212    $ 197    $ 139
Power Systems                            3,000    2,930    3,083               (207)     165      (39)
Thermo King                              1,065      877      719                176      135      113
Government & Environmental Services        446      457      417                 24       58       28
Communication & Information Systems        361      312      279                 (1)       7       (3)
Other Businesses                           305      524      533                  9        2      (38)
Corporate and Other                         90      153      155               (169)    (159)    (234)
Intersegment Sales                         (79)    (106)    (112)                 -        -        -
-----------------------------------------------------------------------------------------------------
Total                                   $6,296   $5,889   $5,779              $  44    $ 405    $ (34)
-----------------------------------------------------------------------------------------------------
</TABLE>


OTHER FINANCIAL INFORMATION (in millions)
<TABLE>
<CAPTION>
                                           Identifiable Assets     Depreciation and Amortization   Capital Expenditures
-----------------------------------------------------------------------------------------------------------------------
AT AND FOR THE YEAR ENDED DECEMBER 31     1995    1994    1993          1995    1994    1993       1995    1994    1993
-----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>     <C>              <C>     <C>     <C>        <C>     <C>     <C>
Broadcasting                           $ 8,889 $   794 $   789          $ 57    $ 31    $ 32       $ 32    $ 35    $ 22
Power Systems                            2,120   2,136   1,985            93      95      96        101      87      80
Thermo King                                379     351     297            15      13      12         23      19      15
Government & Environmental Services        393     535     519            17      25      20         35      23      33
Communication & Information Systems        300     258     253            11      10      11          5       5       3
Other Businesses                            73     383     390             6      11      14          2       2      12
Corporate and Other                      3,156   3,008   3,485            19      29      27         18      20      16
-----------------------------------------------------------------------------------------------------------------------
Continuing Operations                   15,310   7,465   7,718           218     214     212        216     191     181
-----------------------------------------------------------------------------------------------------------------------
Discontinued Operations                  3,304   4,373   6,803            99     106      99         74      68      91
-----------------------------------------------------------------------------------------------------------------------
Total                                  $18,614 $11,838 $14,521          $317    $320    $311       $290    $259    $272
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Assets not identified to segments in the table above principally include cash
and marketable securities, deferred income taxes, prepaid pension cost, and the
intangible pension asset.

Included in income from Continuing Operations is income of subsidiaries located
outside the United States. These subsidiaries reported income of $81 million in
1995, $15 million in 1994, and a loss of $1 million in 1993. Subsidiaries
located outside the United States comprised 5% of total assets of Continuing
Operations in 1995, 11% in 1994, and 10% in 1993. Subsidiaries located outside
the United States comprised 2% of total liabilities of Continuing Operations in
1995 and 5% in 1994 and 1993.

The increase in assets and liabilities of Continwing Operations in 1995
reflects the acquisition of CBS.

FINANCIAL INFORMATION BY GEOGRAPHIC AREA (in millions)
<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED DECEMBER 31              1995    1994    1993
-----------------------------------------------------------------------
<S>                                            <C>      <C>     <C>
Sales of products and services from
Continuing Operations:
  U.S.                                          $ 5,364  $5,068  $4,940
  Outside the U.S.                                  932     821     839
-----------------------------------------------------------------------
Sales of products and services                  $ 6,296  $5,889  $5,779
-----------------------------------------------------------------------
Operating profit (loss) from
Continuing Operations:
  U.S.                                          $   (72) $  355  $  (43)
  Outside the U.S.                                  116      50       9
-----------------------------------------------------------------------
Operating profit (loss)                         $    44  $  405  $  (34)
-----------------------------------------------------------------------
Segment identifiable assets of
Continuing Operations:
  U.S.                                          $14,475  $6,655  $6,922
  Outside the U.S.                                  835     810     796
-----------------------------------------------------------------------
Segment identifiable assets                     $15,310  $7,465  $7,718
-----------------------------------------------------------------------
</TABLE>


                                  54
<PAGE>   55

The Corporation sells products manufactured domestically to customers
throughout the world using domestic divisions and subsidiaries doing business
primarily outside the United States. Generally, products manufactured outside
the United States are sold outside the United States.

SALES FROM PRODUCTS AND SERVICES SOLD OUTSIDE THE U.S.
FROM CONTINUING OPERATIONS (in millions)

<TABLE>
<CAPTION>
YEAR ENDED December 31     1995                 1994                  1993
-------------------------------------------------------------------------------
                                 % of                 % of                  % of
                      Amount    Sales      Amount    Sales       Amount    Sales
--------------------------------------------------------------------------------
<S>                   <C>         <C>      <C>         <C>         <C>     <C>
Subsidiaries
  outside the U.S.:
Europe, Africa,
  Middle East         $  585      9.3%     $  493      8.4%        $537     9.3%
Canada                   256      4.1%        234      4.0%         240     4.2%
All other                 91      1.4%         94      1.5%          62     1.0%
-------------------------------------------------------------------------------
Total                 $  932     14.8%     $  821     13.9%        $839    14.5%
-------------------------------------------------------------------------------
U.S. exports:
Europe, Africa,
  Middle East         $  331      5.3%     $  414      7.0%        $299     5.2%
Asia-Pacific             806     12.8%        508      8.6%         317     5.5%
All other                174      2.7%        218      3.7%         357     6.1%
-------------------------------------------------------------------------------
Total                 $1,311     20.8%     $1,140     19.3%        $973    16.8%
-------------------------------------------------------------------------------
</TABLE>

Purchases by the U.S. Government and its agencies accounted for 6% of sales of
products and services from Continuing Operations for the years 1993 through
1995. Sales to the utility segment accounted for 32% of sales of products and
services from Continuing Operations during 1995, 36% in 1994, and 37% in 1993.
No one customer made purchases totalling 10% or more of sales of products and
services.

RESEARCH AND DEVELOPMENT FROM CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                      1995       1994       1993
----------------------------------------------------------------------
<S>                                         <C>        <C>         <C>
Westinghouse-sponsored:
  Power Systems                             $ 40       $ 66       $ 59
  Other                                       14         22         31
Customer-sponsored:
  Power Systems                               66         47         52
  Other                                       46         52         50
----------------------------------------------------------------------
Total research and development
  expenditures                              $166       $187       $192
----------------------------------------------------------------------
</TABLE>


NOTE 22: FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of financial instruments has been determined by the
Corporation using the best available market information and appropriate
valuation methodologies. However, considerable judgment is necessary in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented are not necessarily indicative of the amounts that the
Corporation could realize in a current market exchange or the value that
ultimately will be realized by the Corporation upon maturity or disposition.
Additionally, because of the variety of valuation techniques permitted under
SFAS No. 107, "Disclosures about Fair Values of Financial Instruments,"
comparability of fair values among entities may not be meaningful. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

FAIR VALUE OF FINANCIAL INSTRUMENTS-
CONTINUING OPERATIONS (in millions)
<TABLE>
<CAPTION>
AT DECEMBER 31                         1995                        1994
--------------------------------------------------------------------------------
                                     Estimated                   Estimated
                               Carrying        Fair        Carrying        Fair
                                 Amount       Value          Amount       Value
--------------------------------------------------------------------------------
<S>                              <C>         <C>             <C>         <C>
ASSETS:
Cash and cash equivalents        $  213      $  213          $  329      $  329
Investments in marketable
  securities                         55          55               -           -
Noncurrent customer and
  other receivables                 172         161             115         102
LIABILITIES:
Short-term debt                     309         309             634         634
Current maturities of
  long-term debt                    330         330               7           7
Long-term debt                    7,226       7,239           1,865       1,701
OFF-BALANCE-SHEET FINANCIAL
  INSTRUMENTS-GAINS (LOSSES):
Interest rate swap agreements         -         (14)              -          (4)
Foreign currency exchange contracts   -           4               -          (6)
-------------------------------------------------------------------------------
</TABLE>


                                     55
<PAGE>   56

FAIR VALUE OF FINANCIAL INSTRUMENTS-
DISCONTINUED OPERATIONS (in millions)

<TABLE>
<CAPTION>
AT DECEMBER 31                          1995                        1994
--------------------------------------------------------------------------------
                                      Estimated                   Estimated
                               Carrying        Fair        Carrying        Fair
                                 Amount       Value          Amount       Value
--------------------------------------------------------------------------------
<S>                                <C>         <C>             <C>         <C>
ASSETS:
Cash and cash equivalents          $ 13        $ 13            $ 15        $ 15
Noncurrent customer and
  other receivables                  98          97             122         121
Portfolio investments:
  Real estate                        35          16             297         326
  Corporate                           1          (1)              9           1
LIABILITIES:
Short-term debt                      81          81             402         402
Current maturities of
  long-term debt                    265         341             240         238
Long-term debt                      157         164             589         660
OFF-BALANCE-SHEET FINANCIAL
  INSTRUMENTS-GAINS (LOSSES):
Interest rate and currency
  exchange agreements:
  Unrealized gains                    -          72               -          82
  Unrealized losses                   -           -               -          (5)
Financing commitments                 -           -               -           -
-------------------------------------------------------------------------------
</TABLE>

The following methods and assumptions were used to estimate the fair value of
financial instruments for which it was practicable to estimate that value.

Cash and cash equivalents

The carrying amount for cash and cash equivalents approximates fair value.

Investments in marketable securities

The fair value of investments in marketable securities is based on quoted
market prices.

Noncurrent customer and other receivables

The fair value of noncurrent customer and other receivables is estimated by
discounting the expected future cash flows at interest rates commensurate with
the creditworthiness of the customers and other third parties.

Portfolio investments

At December 31, 1995 and 1994, the fair value of portfolio investments was
determined using financial information prepared by independent third parties,
discounted cash flow projections, financial statements for investee companies
and letters of intent or other asset sale agreements.

Short-term debt

The carrying amount of the Corporation's borrowings under credit facilities and
other arrangements approximate fair value.

Long-term debt

The fair value of long-term debt has been estimated using quoted market prices
or discounted cash flow methods based on the Corporation's current borrowing
rates for similar types of borrowing arrangements with comparable terms and
maturities.

Interest rate and currency exchange agreements

The fair value of interest rate and currency exchange agreements is the amount
that the Corporation would receive or pay to terminate the agreements, based on
quoted market prices or discounted cash flow methods, considering current
interest rates, currency exchange rates and remaining maturities.

Financing commitments

Most of the unfunded commitments relate to, and are inseparable from, specific
portfolio investments.  When establishing the fair value for those portfolio
investments, consideration was given to the related financing commitments.

Foreign currency exchange contracts

The fair value of foreign exchange contracts is based on quoted market prices
to terminate the contracts.

                                     56
<PAGE>   57

QUARTERLY FINANCIAL INFORMATION (Unaudited, in millions except per 
 share amounts)
<TABLE>
<CAPTION>
                                        1995 Quarter Ended                  1994 Quarter Ended
------------------------------------------------------------------------------------------------------
                                 Dec. 31 Sept. 30 June 30 March 31   Dec. 31 Sept. 30 June 30 March 31
------------------------------------------------------------------------------------------------------
<S>                             <C>      <C>     <C>      <C>       <C>      <C>     <C>      <C>
Sales of products and services   $ 2,093  $ 1,378 $ 1,531  $ 1,294   $ 1,752  $ 1,469 $ 1,475  $ 1,193
Gross profit                         639      382     443      352       562      374     398      278
Income (loss) from
  Continuing Operations              (78)      22      23      (11)     (118)      46      41       18
Income (loss) from
  Discontinued Operations             71      (74)     36       26        11       27      34       18
Net income (loss)                     (7)     (52)     59       15      (107)      73      75       36
Primary earnings (loss)
 per common share:
  Continuing Operations             (.18)     .03     .03     (.06)     (.33)     .08     .07      .02
  Discontinued Operations            .16     (.18)    .09      .07       .03      .07     .09      .05
  Earnings (loss) per
   common share                     (.02)    (.15)    .12      .01      (.30)     .15     .16      .07
Fully diluted earnings (loss)
 per common share:
  Continuing Operations             (.18)     .05    .03      (.06)     (.33)     .08     .07      .02
  Discontinued Operations            .16     (.17)   .09       .07       .03      .07     .09      .05
  Earnings (loss) per
   common share                     (.02)    (.12)   .12       .01      (.30)     .15     .16      .07
Dividends paid                       .05      .05    .05       .05       .05      .05     .05      .05
New York Stock Exchange
 market price per share:
  High                            17-7/8   15-1/2  16-3/8   16        14-5/8   14-3/8  13-1/4   15-1/4
  Low                             13-3/8   12-5/8  13-7/8   12-1/8    11-3/4   11-1/2  10-7/8   11-1/2
------------------------------------------------------------------------------------------------------
</TABLE>


                                     57
<PAGE>   58

FIVE-YEAR SUMMARY

SELECTED FINANCIAL AND STATISTICAL DATA
(Unaudited, in millions except per share amounts)
<TABLE>
<CAPTION>
                                                     1995              1994              1993             1992            1991
------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>               <C>               <C>               <C>              <C>
Sales of products and services             $        6,296    $        5,889    $        5,779    $       5,800    $      5,681
Other income and expenses, net                        149              (288)             (154)             (37)             (6)   
Interest expense                                     (233)             (134)             (165)            (169)           (176)
Income (loss) from Continuing
  Operations before income taxes
   and minority interest                              (40)              (17)             (353)             275             193
Income taxes                                            7                13               116              (84)            (50)
Income (loss) from Continuing Operations              (44)              (13)             (246)             186             141
Income (loss) from Discontinued Operations             59                90               (24)          (1,242)         (1,227)
Cumulative effect of changes
 in accounting principles                               -                 -               (56)            (338)              -
Net income (loss)                                      15                77              (326)          (1,394)         (1,086)
------------------------------------------------------------------------------------------------------------------------------
Primary earnings (loss) per common share:
  Continuing Operations                    $         (.19)   $         (.16)   $         (.84)   $         .46    $        .45
  Discontinued Operations                             .14               .23              (.07)           (3.59)          (3.91)
  Cumulative effect of changes in
   accounting principles                                -                 -              (.16)            (.98)              -
  Earnings (loss) per common share                   (.05)              .07             (1.07)           (4.11)          (3.46)
Fully diluted earnings (loss)
 per common share:
  Continuing Operations                    $         (.10)   $         (.16)   $         (.84)   $         .46    $        .45
  Discontinued Operations                             .13               .23              (.07)           (3.59)          (3.91)
  Cumulative effect of changes in
   accounting principles                                -                 -              (.16)            (.98)              -
  Earnings (loss) per common share                    .03               .07             (1.07)           (4.11)          (3.46)
Dividends per common share                            .20               .20               .40              .72            1.40
------------------------------------------------------------------------------------------------------------------------------
Total assets-Continuing Operations         $       15,310    $        7,465    $        7,718    $       6,864    $      6,298
Total assets-Discontinued Operations                3,304             4,373             6,803           11,061          13,620
Total assets                                       18,614            11,838            14,521           17,925          19,918
Long-term debt-Continuing Operations                7,226             1,865             1,870            1,316           1,252
Long-term debt-Discontinued Operations                157               589               662            1,627           2,482
Total debt-Continuing Operations                    7,865             2,506             2,509            2,803           3,807
Total debt-Discontinued Operations                    503             1,231             3,841            7,130           7,349
Shareholders' equity                                1,508             1,815             1,062            2,235           3,748
------------------------------------------------------------------------------------------------------------------------------
Average common and common
 equivalent shares outstanding                410,137,941       383,736,249       352,901,670      346,103,408     313,984,242
Market price range per share               $17-7/8-12-1/8    $15-1/4-10-7/8    $17-1/8-12-3/4    $20-7/8-9-3/4    $  31-13-3/4
Market price at year end                           16-3/8            12-1/4            14-1/8           13-3/8              18
Common shareholders at year end                   125,962           125,376           125,806          127,559         120,833
Average number of employees                        77,813            84,399           103,063          109,050         113,664
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Previously reported amounts have been restated to segregate the results of 
Discontinued Operations from Continuing Operations.

                                     58
<PAGE>   59


                                      PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

  Part of the information concerning executive officers required by this
item is set forth in Part I pursuant to General Instruction G to Form 10-K and
part is incorporated herein by reference to "Security Ownership" in the Proxy
Statement.

  The information as to directors is incorporated herein by reference to
"Election of Directors" in the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION.

  The information required by this item is incorporated herein by reference
to "Executive Compensation" in the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

  The information required by this item is incorporated herein by reference
to "Security Ownership" in the Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

  The information required by this item is incorporated herein by reference
to "Transactions Involving Directors and Executive Officers" in the Proxy
Statement.


                                       59
<PAGE>   60
                                      PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.


(a)(1) FINANCIAL STATEMENTS

  The financial statements required by this item are listed under Part II,
Item 8, which list is incorporated herein by reference.

(a)(2) FINANCIAL STATEMENT SCHEDULES

  The following financial statement schedule for Westinghouse Electric
Corporation and the Report of Independent Accountants thereon are included in
Part IV of this report:
<TABLE>
<CAPTION>
                                                                     PAGE
                                                                     ----
      <S>                                                             <C>
      Report of Independent Accountants on Financial
        Statement Schedules                                           63

      For the three years ended December 31, 1995:
      Schedule VIII -- Valuation and Qualifying Accounts              64
</TABLE>

  Other schedules are omitted because they are not applicable or because the
required information is included in the financial statements or notes thereto.


(A) EXHIBITS

     (3)   ARTICLES OF INCORPORATION AND BYLAWS

           (a)    The Restated Articles of the Company as amended to January 8,
                  1996.

           (b)    Amendments to Restated Articles

           (c)    The Bylaws of the Company, as amended to December 28, 1995.

           (d)    Amendments to Bylaws

     (4)   RIGHTS OF SECURITY HOLDERS

           Except as set forth below, there are no instruments with respect to
           long-term debt of the Company that involve securities authorized
           thereunder exceeding 10% of the total assets of the Company and its
           subsidiaries on a consolidated basis.  The Company 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
           Company and its subsidiaries.

           (a)  Form of Senior Indenture, dated as of November 1, 1990,
                between the Company and Citibank, N.A. is incorporated herein by
                reference to Exhibit 4.1 to the Company'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.


                                       60
<PAGE>   61
      (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 to
                          February 28, 1996.

                 (c*)     The 1984 Long-Term Incentive Plan, as amended to
                          February 28, 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, is incorporated herein by
                          reference to Exhibit 10(e) to Form 10-Q for the
                          quarter ended March 31, 1995.

                 (f*)     The Advisory Director's Plan, as amended to April 26,
                          1989.

                 (g)      The Director's Charitable Giving Program is
                          incorporated herein by reference to Exhibit 10(g) to
                          Form 10-K for the year ended December 31, 1994.

                 (h*)     The 1991 Long-Term Incentive Plan, as amended to
                          February 28, 1996.
 
                 (i*)     Employment Agreement between the Company and Michael
                          H. Jordan is hereby incorporated by reference to
                          Exhibit 10 to the Company's Form 8-K, dated September
                          1, 1993.

                 (j*)     Employment Agreement between the Company and Fredric
                          G. Reynolds is incorporated herein by reference to
                          Exhibit 10(j) to Form 10-K for the year ended
                          December 31, 1994.

                 (k)      $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.

*  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

    (21)       Subsidiaries of the Registrant

    (23)       Consent of Independent Accountants

    (24)       Powers of Attorney and Extract of Resolution of Board of 
               Directors

    (27)       Financial Data Schedule


                                       61
<PAGE>   62
(b)   REPORTS ON FORM 8-K:

      A Current Report on Form 8-K (Items 5 and 7) dated November 24, 1995 to
      report a press release announcing the completion of the acquisition of CBS
      Inc.

      A Current Report on Form 8-K (Items 5 and 7) dated December 29, 1995 to
      report a press release announcing the adoption of a shareholder rights
      plan.

      A Current Report on Form 8-K (Item 7) dated January 9, 1996 filing a  
      Rights Agreement by and between Westinghouse Electric Corporation and
      First Chicago Trust Company of New York dated December 28, 1995.

      A Current Report on Form 8-K/A (Item 7) dated February 6, 1996, amending
      Item 7(b) of the Current Report on Form 8-K filed November 24, 1995.

      A Current Report on Form 8-K (Items 5 and 7) dated February 8, 1996,
      filing financial information for the redefined reporting segments of the
      Company.


                                       62
<PAGE>   63
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of Westinghouse Electric Corporation

     Our audits of the consolidated financial statements referred to in our
report dated February 12, 1996 appearing on page 30 of this Form 10-K of
Westinghouse Electric Corporation (which report and consolidated financial
statements are included in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form
10-K.  In our opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.


/s/ PRICE WATERHOUSE LLP

Price Waterhouse LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219-9954
February 12, 1996


                                       63
<PAGE>   64
                                 SCHEDULE VIII

                         VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>
                                                               DECEMBER 31          
                                                     -------------------------------
                                                      1995         1994         1993
 (IN MILLIONS)                                        ----         ----         ----
<S>                                                   <C>          <C>         <C>      
Customer receivables from Continuing Operations --   
  allowance for doubtful accounts:
    Balance at beginning of year....................  $ 52         $ 50        $ 44
    Charged to costs and expenses...................    13           11          11
    Charged to the allowance........................   (31)          (9)         (5)
    Other...........................................     5            -           -
                                                      ----         ----        ----
       Balance at end of year (a)...................  $ 39         $ 52        $ 50
                                                      ====         ====        ====
Deferred income taxes -- valuation allowance:
    Balance at beginning of year....................  $101         $ 90        $ 94
    Charged (credited) to costs and expenses........    (3)          11          (4)
                                                      ----         ----        ---- 
       Balance at end of year.......................  $ 98         $101        $ 90
                                                      ====         ====        ====

<FN>
(a)  At December 31, 1995, 1994 and 1993, all amounts were classified as
     current.
</TABLE>


                                       64
<PAGE>   65
                                     SIGNATURE


     Pursuant to the requirements of Section 13 or 15(d) 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 13th day of
March, 1996.


                                    WESTINGHOUSE ELECTRIC CORPORATION


                                         /s/ FREDRIC G. REYNOLDS
                                   By:--------------------------------
                                           Fredric G. Reynolds
                                       Executive Vice President and
                                         Chief Financial Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

         Signature and Title
         -------------------

Frank C. Carlucci, Director
Robert E. Cawthorn, Director
Gary M. Clark, President and Director
George H. Conrades, Director
William H. Gray, III, Director
Michael H. Jordan, Chairman and
   Chief Executive Officer
   (principal executive officer) and
   Director
Dr. David K.P. Li, Director
David T. McLaughlin, Director                     
Richard M. Morrow, Director                    By:  /s/ FREDRIC G. REYNOLDS
Richard R. Pivirotto, Director                     -------------------------
Dr. Paula Stern, Director                               Fredric G. Reynolds
Fredric G. Reynolds, Executive Vice President           Attorney-In-Fact 
   and Chief Financial Officer                          March 13, 1996
   (principal financial officer)
Robert D. Walter, Director


     Original powers of attorney authorizing Michael H. Jordan and Fredric G.
Reynolds, individually, to sign this report on behalf of the listed directors
and officers of the Company and a certified copy of a resolution of the Board
of Directors of the Company authorizing each of said persons to sign on behalf
of the Company have been filed with the Securities and Exchange Commission and
are included as Exhibit 24 to this report.


                                       65
<PAGE>   66
                                 EXHIBITS INDEX

(3)   ARTICLES OF INCORPORATION AND BYLAWS

      (a)    The Restated Articles of the Company as amended to January 8, 1996.

      (b)    Amendments to Restated Articles

      (c)    The Bylaws of the Company, as amended to December 28, 1995.

      (d)    Amendments to Bylaws

(4)   RIGHTS OF SECURITY HOLDERS

      Except as set forth below, there are no instruments with respect to
      long-term debt of the Company that involve securities authorized
      thereunder exceeding 10% of the total assets of the Company and its
      subsidiaries on a consolidated basis.  The Company 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
      Company and its subsidiaries.

     *(a)  Form of Senior Indenture, dated as of November 1, 1990, between the
           Company and Citibank, N.A. is incorporated herein by reference to
           Exhibit 4.1 to the Company'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 to February 28, 1996.

      (c)  The 1984 Long-Term Incentive Plan, as amended to February 28, 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,
           is incorporated herein by reference to Exhibit 10(e) to Form 10-Q for
           the quarter ended March 31, 1995.

     *(f)  The Advisory Director's Plan, as amended to April 26, 1989.

     *(g)  The Director's Charitable Giving Program is incorporated herein by
           reference to Exhibit 10(g) to Form 10-K for the year ended December
           31, 1994.

      (h)  The 1991 Long-Term Incentive Plan, as amended to February 28, 1996.

     *(i)  Employment Agreement between the Company and Michael H. Jordan is
           hereby incorporated by reference to Exhibit 10 to the Company's Form
           8-K, dated September 1, 1993.

     *(j)  Employment Agreement between the Company and Fredric G. Reynolds is
           incorporated herein by reference to Exhibit 10(j) to Form 10-K for
           the year ended December 31, 1994.

     *(k)  $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.

(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

(21)       Subsidiaries of the Registrant

(23)       Consent of Independent Accountants

(24)       Powers of Attorney and Extract of Resolution of Board of Directors

(27)       Financial Data Schedule

*  Incorporated by reference

                                       66