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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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FORM 11-K
(Mark One)
[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the period ended September 1, 2001 Commission file number 1-9553
OR
[_] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
MTVi GROUP INVESTMENT PLAN
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(Full title of the plan)
VIACOM INC.
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(Name of issuer of the securities held pursuant to the plan)
1515 Broadway
New York, New York 10036
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(Address of principal executive offices)
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MTVi GROUP INVESTMENT PLAN
FINANCIAL STATEMENTS
SEPTEMBER 1, 2001
INDEX
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Pages
-----
(a) Financial Statements:
Report of Independent Accountants ........................................ 1
Statement of net assets available for benefits
at September 1, 2001 and December 31, 2000 .......................... 2
Statement of changes in net assets available for benefits
for the eight months ended September 1, 2001 ........................ 3
Notes to financial statements ............................................ 4-10
Schedule
--------
Supplemental Schedule:
Schedule of reportable transactions
for the eight months ended September 1, 2001 .................... I
All other schedules are omitted as not applicable or not required.
(b) Exhibit:
I - Consent of Independent Accountants
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
persons who administer the Plan have duly caused this annual report to be signed
on its behalf by the undersigned, hereunto duly authorized.
MTVi GROUP INVESTMENT PLAN
Date: February 22, 2002 By: /s/ Barbara Mickowski
----------------------------------
Barbara Mickowski
Member of the Retirement Committee
Report of Independent Accountants
---------------------------------
To the Participants and
Administrator of the
MTVi Group Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the MTVi Group Investment Plan (the "Plan") at September 1, 2001 and December
31, 2000, and the changes in net assets available for benefits for the eight
month period ended September 1, 2001 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan'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 auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audits 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule, as listed in
the accompanying index, is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Effective September 1, 2001, the net assets of the Plan were merged with the
Viacom 401(k) Plan.
PricewaterhouseCoopers LLP
New York, New York
February 14, 2002
1
MTVi GROUP INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
At September 1, 2001 At December 31, 2000
-------------------- --------------------
Assets
------
Investments, at fair value:
Registered investment companies ............ $ -- $ 2,221,183
Viacom Inc. Common Stock ................... -- 800,328
Loans to participants ...................... -- 16,395
Investments, at contract value:
Plan's interest in Master Trust ............ -- 74,083
-------------------- --------------------
Total investments .................. -- 3,111,989
-------------------- --------------------
Receivables:
Investment income ......................... -- 55
Contributions:
Employee ................................ -- 26,319
Employer ................................ -- 8,561
-------------------- --------------------
Total receivables .................... -- 34,935
-------------------- --------------------
Total assets .................................. -- 3,146,924
Liabilities
-----------
Accrued expenses .............................. -- 9,244
-------------------- --------------------
Net assets available for benefits ............. $ -- $ 3,137,680
==================== ====================
The accompanying notes are an integral part of these financial statements.
2
MTVi GROUP INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Eight
Month Period from
January 1, 2001 through
September 1, 2001
-----------------------
Additions to net assets attributed to:
Contributions:
Employee .............................................. $ 649,818
Employer .............................................. 211,407
Rollover .............................................. 57,197
Investment income ......................................... 11,783
Plan's interest in Master Trust investment income ......... 4,702
-----------------------
Total additions ........................................ 934,907
-----------------------
Deductions to net assets attributed to:
Benefits paid to participants ............................. (172,944)
Plan expenses ............................................. (4,887)
Net depreciation in fair value of investments ............. (584,533)
-----------------------
Total deductions ....................................... (762,364)
-----------------------
Net increase ........................................... 172,543
Transfer to Viacom 401(k) Plan (Note 1) ....................... (3,310,223)
Net assets available for benefits, beginning of the period .... 3,137,680
-----------------------
Net assets available for benefits, end of the period .......... $ --
=======================
The accompanying notes are an integral part of these financial statements.
3
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION
The following is a brief description of the MTVi Group Investment Plan (the
"Plan") and is provided for general information only. Participants should refer
to the Plan document for more complete information regarding the Plan.
MTVi Group, L.P. (the "Partnership"), the sponsor of the Plan until September 1,
2001, is a limited partnership in which Viacom International Inc. owns a
majority interest. Viacom Inc. is the parent company of Viacom International
Inc. Effective September 1, 2001, the Plan was merged into the Viacom 401(k)
Plan, formerly known as the Viacom Investment Plan, a defined contribution
401(k) plan sponsored by Viacom Inc., and all net assets were transferred to the
Viacom 401(k) Plan.
The Plan became effective on April 1, 2000. Eligible employees became
participants in the Plan following the attainment of age 18 and completion of 90
days of employment service, generally measured from date of hire. Effective
January 1, 2001, the service requirement for full-time employees was eliminated.
In addition, part-time employees were eligible to participate in the Plan upon
completion of 250 hours of service within a consecutive twelve-month period. The
Plan was subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and was administered by a committee appointed
by the Executive Committee of the Partnership. Prior to April 1, 2000, eligible
Partnership employees participated in the Viacom 401(k) Plan.
Investment and Participant Accounts
-----------------------------------
Putnam Fiduciary Trust Company (the "Trustee") was the trustee and custodian of
Plan assets. Certain Plan investments were shares of funds managed by the
Trustee and therefore qualified as party-in-interest transactions. Subsequent to
September 1, 2001, the Trustee was replaced by Mellon Bank, N.A. Employer
matching contributions were invested entirely in Viacom Inc. Class B Common
Stock.
Plan participants had the option of investing their contributions and account
balances among the following funds:
Growth
------
Capital Guardian Emerging Markets Equity Fund
Europacific Growth Fund
Miller, Anderson & Sherrerd, LLP (MAS) Small Cap Fund
Morgan Stanley Dean Witter (MSDW) Institutional Fund Technology Portfolio
Morgan Stanley Dean Witter (MSDW) Institutional Fund U.S. Real Estate
Portfolio
Putnam International Voyager Fund
Putnam Investors Fund
Putnam S&P 500 Index Fund
Putnam Voyager Fund
Trust Company of the West (TCW) Galileo Small Cap Growth Fund
Viacom Company Stock Fund
4
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
Growth and Income
-----------------
George Putnam Fund of Boston
Putnam Fund for Growth and Income
Vanguard Lifestrategy Growth Fund
Vanguard Lifestrategy Income Fund
Vanguard Lifestrategy Moderate Growth Fund
Fixed - Income
--------------
Mellon Bank Daily Liquidity Aggregate Bond Index Fund
Pacific Investment Management Company (PIMCO) High Yield Fund
Capital Preservation
--------------------
Certus Interest Income Fund
Effective January 1, 1994, Viacom Inc. entered into a master trust agreement
(the "Master Trust") with the Trustee to combine certain investments of the
Viacom 401(k) Plan, affiliated companies' plans, and, effective October 1, 1995,
a separate Collective Bargaining Plan (the "CBP"). The Master Trust held assets
for the Plan, the Viacom 401(k) Plan, formerly known as the Viacom Investment
Plan, affiliated companies' plans and the CBP. The Plan, upon its establishment,
was included in the Master Trust. The Master Trust assets were managed by Certus
Asset Advisors. Subsequent to September 1, 2001, Certus Asset Advisors were
replaced by Primco Capital Management. Net investment assets and net investment
earnings on the investments of the Master Trust are allocated daily to the plans
participating in the Master Trust. Such allocation is based on the ratio of net
investment assets of each of the participating plans to total net investment at
the time the Master Trust was formed, adjusted for any contributions or
disbursements attributable to specific participating plans. Note 6 sets forth
the Plan's proportionate interest in the Master Trust and certain financial
information of the Master Trust.
Contributions
-------------
The Plan permitted participants to contribute up to 15% of annual compensation
on a before-tax, after-tax or combination basis, subject to the Internal Revenue
Code ("IRC") limitations set forth below. The employer's matching contribution
was equal to (i) 50% of the first 8% of annual compensation that was contributed
on a before-tax basis if base pay was $65,000 or less or (ii) 50% of the first
6% of annual compensation contributed on a before-tax basis if base pay was
greater than $65,000. Employer matching contributions were made to Viacom Inc.
Class B Common Stock and were nonparticipant directed.
A new employee was permitted to rollover into the Plan part or all of their
distributions from an individual retirement account, individual retirement
annuity or another qualified plan.
The IRC limits the amount of annual participant contributions that can be made
on a before-tax basis; the limit was $10,500 for 2001 and 2000. Total
compensation considered under the Plan, based on IRC limits, may not exceed
$170,000 for 2001 and 2000. The IRC also contains an annual limit on aggregate
participant and employer contributions to defined contribution plans equal to
the lesser of $35,000 or 25% of compensation. All contributions made to the Plan
on an annual basis may have been further limited due to certain
non-discrimination tests prescribed by the IRC.
5
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
Vesting
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Participants in the Plan were immediately vested in their own contributions and
earnings thereon. Employer matching contributions vested at 20% per year of
service, becoming fully vested after five years of service. If participants
terminated employment prior to being vested in their employer matching
contributions and received a distribution of the vested portion of their
account, the non-vested portion of their account was forfeited and used to pay
administrative expenses and to fund future employer matching contributions.
Employer matching contributions of $13,666 during the eight months ended
September 1, 2001 were forfeited by terminating employees before those amounts
became vested and were used to pay administrative expenses.
Loans to Participants
---------------------
The Loan Fund was a separate fund established solely for the purpose of
administering loans to participants. Participants were eligible to receive loans
based on their account balances. The maximum loan available to a participant was
the lesser of 50% of the participant's vested account balance or $50,000,
reduced by the highest outstanding balance of any Plan loan made to the
participant during the twelve-month period ending on the day before the loan was
made. The minimum loan available to a participant was $500. The interest rate on
participant loans was established on the first day of the calendar quarter at a
rate of 1% above the annual prime commercial rate and only one loan may have
been outstanding at one time. Participants could elect repayment periods from
twelve to sixty months through payroll deductions commencing as soon as
administratively possible following the issuance of the loan. The Plan allowed
participants to elect a repayment term of up to 300 months for loans used for
the acquisition of a principal residence. Transfers of participant balances for
loan issuance and repayments of loan principal and interest to the Loan Fund
were specifically identified in the respective participants' accounts and
allocated in accordance with their current investment elections.
Distributions and Withdrawals
-----------------------------
Earnings on both employee and employer contributions are not subject to income
tax until they are distributed or withdrawn from the Plan.
Participants in the Plan, or their beneficiaries, could receive their account
balances, in a lump sum or in installments over a period of up to 20 years, in
the event of retirement, termination of employment, disability or death.
Participants were required to receive a minimum distribution upon attainment of
age 70 1/2 unless they were still employed.
Participants who had been in the Plan or affiliated plans at least five years
could withdraw up to 100% of their employer matching contribution account and
earnings thereon, while those who had participated less than five years were
limited to withdrawing vested employer matching contributions made at least two
years prior to the withdrawal including earnings thereon. In addition,
participants in the Plan were permitted to receive part or all of their
after-tax and rollover contributions. Upon attainment of age 59 1/2,
participants may have withdrawn all or part of their before-tax contributions
and earnings thereon. All of the above withdrawal elections were subject to a
provision that a participant could make only one such request during each
calendar year.
6
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
A participant could obtain a hardship withdrawal of the vested portion of
employer matching contributions and before-tax contributions provided that the
requirements for hardship were met. There were no restrictions on the number of
hardship withdrawals permitted.
Termination Priorities
----------------------
The Partnership reserved the right by action of its Executive Committee to amend
or terminate the Plan provided that such action was in accordance with
applicable law. In the event that the Plan was terminated, subject to conditions
set forth in ERISA, the Plan provided that the net assets of the Plan be
distributed to participants in proportion to their respective vested interests
in such net assets at that date.
Plan Expenses
-------------
The Partnership paid for expenses incurred in connection with the administration
of the Plan and the investment of Plan assets, to the extent not covered by
forfeitures.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
-------------------
The accrual method of accounting is used for financial statement presentation.
Investment Valuation and Income Recognition
-------------------------------------------
Short-term money market obligations are carried at cost which approximates fair
value due to the short-term maturity of these investments. Viacom Inc. Class A
Common Stock and Class B Common Stock are reported at fair value based on the
quoted market price of the stock on the New York Stock Exchange. Investments
with registered investment companies are reported at fair value based upon the
market value of the underlying securities as priced by national security
exchanges. Guaranteed investment contracts and synthetic investment contracts
held by the Master Trust are reported at contract value, which represents the
aggregate amount of deposits thereto, plus interest at the contract rate, less
withdrawals. The loans outstanding during the eight month period ended September
1, 2001 carried interest rates ranging from 9.00% to 10.50%. Interest income is
accrued as earned and dividend income is recorded on the ex-dividend date.
Security Transactions
---------------------
Purchases and sales of securities are recorded on the trade date. The historical
average cost basis is used to determine gains or losses on security
dispositions.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
7
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
Payment of Benefits
-------------------
Benefits were recorded when paid.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan to make estimates and assumptions, such
as those regarding fair value, 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 changes in net assets
available for benefits during the reporting period. Actual results could differ
from those estimates.
NOTE 3 - INVESTMENTS
Individual investments that represent greater than 5% of net assets available
for benefits are identified below:
At December 31, 2000
-------------------------
Units Fair Value
------------ ----------
*Putnam Voyager Fund ....................... 35,860 $ 857,403
Viacom Inc. Class B Common Stock .......... 16,258 760,077
*Putnam Investors Fund ..................... 29,985 463,873
*Putnam Fund for Growth and Income ......... 13,006 254,401
Europacific Growth Fund ................... 6,553 205,438
*Identified as a party-in-interest.
8
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
During the eight-month period ended September 1, 2001, the Plan's investments
(including investments bought, sold and held during the year) appreciated
(depreciated) as follows:
Registered Investment Companies:
-------------------------------
Capital Guardian Emerging Markets Equity Fund .................................... $ 20
Europacific Growth Fund .......................................................... (24,217)
Miller, Anderson & Sherrerd, LLP (MAS) Small Cap Value Portfolio ................. (860)
Morgan Stanley Dean Witter (MSDW) Institutional Fund Technology Portfolio ........ (46,281)
Morgan Stanley Dean Witter (MSDW) Institutional Fund U.S. Real Estate Portfolio .. 3,607
*Putnam International Voyager Fund ................................................ (16,584)
*Putnam Investors Fund ............................................................ (117,403)
*Putnam S&P 500 Index Fund ........................................................ (27,237)
*Putnam Voyager Fund .............................................................. (197,743)
Trust Company of the West (TCW) Galileo Small Cap Growth Fund... ................. (11,082)
*George Putnam Fund of Boston ..................................................... (878)
*Putnam Fund for Growth and Income ................................................ (21,272)
Vanguard Lifestrategy Income Fund ................................................ (58)
Vanguard Lifestrategy Moderate Growth Fund... .................................... (669)
Vanguard Lifestrategy Growth Fund ................................................ (6,174)
Mellon Bank Daily Liquidity Aggregate Bond Fund .................................. 4,408
Pacific Investment Management Company (PIMCO) High Yield Fund .................... (215)
----------
(462,638)
Common Stock:
------------
Viacom Inc. Common Stock ......................................................... (121,895)
----------
Net depreciation ...................................................................... $(584,533)
==========
*Identified as a party-in-interest.
NOTE 4 - NONPARTICIPANT-DIRECTED INVESTMENTS
During 2001, employer matching contributions were invested entirely in Viacom
Inc. Class B Common Stock.
Information about the net assets, at September 1, 2001, and the significant
components of the changes in net assets, for the eight-month period ended
September 1, 2001 relating to the nonparticipant-directed investments are as
follows:
Net Assets at December 31, 2000:
Viacom Inc. Class A Common Stock ................... $ 40,251
Viacom Inc. Class B Common Stock ................... 628,873
Changes in Net Assets:
Contributions ...................................... 211,407
Benefits paid to participants ...................... (20,833)
Net depreciation ................................... (96,128)
Other .............................................. (13,666)
Transfer to Viacom 401(k) Plan ..................... (749,904)
----------
Net assets at September 1, 2001 .................... $ --
==========
9
MTVi GROUP INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5 - INCOME TAX STATUS
The Partnership had planned to file an application for a favorable determination
letter from the Internal Revenue Service with respect to the qualified status of
the Plan under Section 401(a) of the Internal Revenue Code ("IRC"). An
application was not made due to the merger of the Plan with the Viacom 401(k)
Plan. However, the Plan administrator and the Plan's counsel believe that the
Plan was designed and operated in compliance with the applicable requirements of
the IRC. Therefore, they believe that the Plan was qualified and the related
trust was tax-exempt as of the financial statement dates.
NOTE 6 - INVESTMENT IN MASTER TRUST
The value of the Plan's interest in the total investments of the Master Trust
was 0% at September 1, 2001 and 0.1 % at December 31, 2000, and the allocated
share of investment income for the eight-month period ended September 1, 2001
and the year ended December 31, 2000 was 0.2% and 0.1%, respectively. The
allocated share of investment income percentage reflects the income earned over
the period that the Plan was part of the Master Trust over the total amount
earned by the Master Trust during the period.
The following table presents the investments of the Master Trust:
Certus Interest Income Fund: At September 1, 2001 At December 31, 2000
-------------------- --------------------
Guaranteed investment contracts .............. $ 17,676,915 $ 16,563,962
Synthetic investment contracts ............... 38,608,650 35,832,613
Putnam short-term investment fund ............ 3,168,830 2,576,896
------------- ---------------
Net Investments in Master Trust ........ $ 59,454,395 $ 54,973,471
============= ===============
Investment income of the Master Trust for the eight-month period ended September
1, 2001 is as follows:
Guaranteed investment contracts .............. $ 730,916
Synthetic investment contracts ............... 1,529,546
Putnam short-term investment fund ............ 144,695
Investment manager fees ...................... (13,589)
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Net Investment Income .............. $ 2,391,568
=============
The guaranteed investment contracts and synthetic investment contracts are fully
benefit-responsive and are therefore presented at contract value. At September
1, 2001 and December 31, 2000, the fair value of these investments in the Master
Trust in the aggregate was $60,945,385 and $55,572,187, respectively, with an
average yield of 6.28% and 6.61% for the periods then ended. The return on
assets for the eight-month period ended September 1, 2001 was 6.44%.
10
SCHEDULE I
MTVi GROUP INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE EIGHT MONTHS ENDED SEPTEMBER 1, 2001
Expenses Current Value
Incurred of Asset on
Description Purchase Selling Lease With Cost of Transaction Net Gain
of Asset Price Price Rental Transaction Asset Date (Loss)
---------------------------------------- -------- ------- ------ ----------- ------- ----------- -------------
Series Transactions:
-------------------
Viacom Inc. Class
B Common Stock ... 6,223 shares $320,246 N/A N/A $320,246 $320,246 --
1,347 shares $ 66,237 N/A N/A $ 70,014 $66,237 ($3,777)
The above transactions and series of transactions are in excess of 5 percent of
the fair value of the Plan's assets as of January 1, 2001, as defined in section
2520.103-6 of the Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA.
Exhibit I
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 333-88613, No. 333-55346 and No. 333-36440) of
Viacom Inc. of our report dated February 14, 2002, related to the financial
statements of the MTVi Group Investment Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
New York, New York
February 22, 2002