- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
---------------------------
FORM 11-K
(Mark One)
/ X / Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the year ended December 31, 1996 Commission file number 1-9553
OR
/ / Transition Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
VIACOM INVESTMENT PLAN
------------------------------------------------------------------------
(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
------------------------------------------------------------------------
(Address of principal executive offices)
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- --------------------------------------------------------------------------------
VIACOM INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1996
INDEX
Pages
---------
(a) Financial Statements:
Report of Independent Accountants....................................... 1
Statement of net assets available for benefits, with fund
information at December 31, 1996...................................... 2 - 3
Statement of net assets available for benefits, with fund
information at December 31, 1995...................................... 4
Statement of changes in net assets available for benefits, with
fund information for the year ended December 31, 1996................. 5 - 6
Statement of changes in net assets available for benefits, with
fund information for the year ended December 31, 1995................. 7
Notes to financial statements........................................... 8 - 17
Schedules
---------
Additional information:
Item 27a--Schedule of assets held for investment purposes
at December 31, 1996................................................ I
Item 27d--Schedule of reportable transactions for the year ended
December 31, 1996................................................... II
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.
VIACOM INVESTMENT PLAN
Date: July 2, 1997 By: /s/ Barbara Mickowski
----------------------------------
Barbara Mickowski
Member of the Retirement Committee
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and
Administrator of the
Viacom Investment Plan
In our opinion, the financial statements in the accompanying index
present fairly, in all material respects, the net assets available for
benefits of the Viacom Investment Plan (the "Plan") at December 31, 1996 and
1995, and the changes in net assets available for benefits for the years then
ended, in conformity with generally accepted accounting principles. 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
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 the Financial Statements, effective January 1,
1996 Paramount Communications Inc. Employees' Savings Plan, Prentice Hall
Computer Publishing Division Retirement Plan and Blockbuster Entertainment
Retirement and Savings Plan were merged with and into the Plan.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The additional information
listed in the accompanying index is presented for purpose of additional
analysis and is not a required part of the basic financial statements but is
additional information required by the Employee Retirement Income Security
Act of 1974 (ERISA). The Fund Information in the statement of net assets
available for benefits and the statement of changes in net assets available
for benefits is presented for purposes of additional analysis rather than to
present the net assets available for plan benefits and changes in net assets
available for benefits for each fund. The supplemental schedules and the Fund
Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PRICE WATERHOUSE LLP
New York, New York
July 2, 1997
VIACOM INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
-----------------
(Continued on Page 3)
Participant Directed
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Putnam Certus Putnam
Putnam Putnam Putnam Fund U.S. Gov't Interest Money
Voyager Vista For Growth & Income Income Market Europacific
Fund Fund Income Trust Fund Fund Growth Fund
------------ ---------- ------------ ----------- ----------- ---------- -----------
Assets:
- ------
Investments:
Registered investment companies... $103,723,011 $6,774,257 $68,536,260 $2,571,476 $936,423 $21,502,001
Plan's interest in Master Trust... $98,881,919
Viacom Inc. common stock..........
Investments in other..............
Loans to participants.............
------------ ---------- ------------ ----------- ----------- ---------- -----------
Total investments............... 103,723,011 6,774,257 68,536,260 2,571,476 98,881,919 936,423 21,502,001
------------ ---------- ------------ ----------- ----------- ---------- -----------
Cash and cash equivalents........... 34,550
Receivables:
Investment income...............
Contributions:
Employer......................
Employee...................... 452,451 240,849 125,782 146,244
------------ ---------- ------------ ----------- ----------- ---------- -----------
Net assets available for benefits... $104,175,462 $6,774,257 $68,777,109 $2,571,476 $99,042,251 $936,423 $21,648,245
------------ ---------- ------------ ----------- ----------- ---------- -----------
------------ ---------- ------------ ----------- ----------- ---------- -----------
See accompanying notes to financial statements.
-2-
VIACOM INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
-----------------
(continued)
Non - Participant
Participant Directed Directed
------------------------------------------------------------------- -------------
Putnam Putnam Viacom Inc. Viacom Inc.
George Putnam Investors Income Common Stock Loan Common Stock
Fund of Boston Fund Fund Fund Fund Fund Fund Totals
-------------- ----------- ----------- ------------ ----------- ------------ ------------
Assets:
- ------
Investments:
Registered investment companies.. $23,675,858 $44,743,659 $24,263,868 $296,726,813
Plan's interest in Master Trust.. 98,881,919
Viacom Inc. common stock......... $29,149,838 $117,477,020 146,626,858
Investments in other............. 158,582 319,024 477,606
Loans to participants............ $19,433,712 19,433,712
-------------- ----------- ----------- ------------ ----------- ------------ ------------
Total investments.............. 23,675,858 44,743,659 24,263,868 29,308,420 19,433,712 117,796,044 562,146,908
-------------- ----------- ----------- ------------ ----------- ------------ ------------
Cash and cash equivalents.......... 1,459,798 1,494,348
Receivables:
Investment income.............. 102,776 102,776
Contributions:
Employer..................... 635,957 635,957
Employee..................... 96,173 209,189 72,064 328,861 1,671,613
-------------- ----------- ----------- ------------ ----------- ------------ ------------
Net assets available for benefits.. $23,772,031 $44,952,848 $24,335,932 $29,637,281 $19,536,488 $119,891,799 $566,051,602
-------------- ----------- ----------- ------------ ----------- ------------ ------------
-------------- ----------- ----------- ------------ ----------- ------------ ------------
See accompanying notes to financial statements.
-3-
VIACOM INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
-----------------
Participant Directed
--------------------------------------------------------------
Putnam Putnam Certus
Putnam Putnam Fund U.S. Gov't Interest
Voyager Vista For Growth Income Income
Fund Fund and Income Trust Fund
----------- ----------- ----------- ---------- -----------
Assets:
- ------
Investments:
Registered investment companies.. $44,415,248 $21,793,509 $27,829,153 $9,785,722
Plan's interest in Master Trust.. $26,239,822
Viacom Inc. common stock.........
Loans to participants............
----------- ----------- ----------- ---------- -----------
Total investments.............. 44,415,248 21,793,509 27,829,153 9,785,722 26,239,822
----------- ----------- ----------- ---------- -----------
Cash and cash equivalents.......... 34,550
Receivables:
Investment income..............
Contributions:
Employer.....................
Employee..................... 325,292 170,956 177,809 63,750 123,483
----------- ----------- ----------- ---------- -----------
Total assets available
for benefits............. $44,740,540 $21,964,465 $28,006,962 $9,849,472 $26,397,855
----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ---------- -----------
Non-Participant
Participant Directed Directed
------------------------------------ -------------
Putnam
Money Viacom Inc. Viacom Inc.
Market Common Stock Loan Common Stock
Fund Fund Fund Fund Total
---------- ------------ ---------- ------------- ------------
Assets:
- ------
Investments:
Registered investment companies.. $3,575,658 $107,399,290
Plan's interest in Master Trust.. 26,239,822
Viacom Inc. common stock......... $2,017,323 $31,258,321 33,275,644
Loans to participants............ $7,263,971 7,263,971
---------- ------------ ---------- ------------- ------------
Total investments.............. 3,575,658 2,017,323 7,263,971 31,258,321 174,178,727
---------- ------------ ---------- ------------- ------------
Cash and cash equivalents.......... 34,550
Receivables:
Investment income..............
Contributions: 45,220 45,220
Employer..................... 259,321 259,321
Employee..................... 26,770 32,672 920,732
---------- ------------ ---------- ------------- ------------
Total assets available
for benefits............. $3,602,428 $2,049,995 $7,309,191 $31,517,642 175,438,550
---------- ------------ ---------- ------------- ------------
---------- ------------ ---------- ------------- ------------
See accompanying notes to financial statements.
-4-
VIACOM INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1996
----------------------------
(Continued on Page 6)
Participant Directed
-----------------------------------------------------------------------------------------------
Putnam Putnam Putnam Fund Putnam Certus Interest Putnam Money Europacific
Voyager Vista for Growth U.S. Gov't Income Market Growth
Fund Fund and Income Income Trust Fund Fund Fund
------------ ------------- ------------ ------------ --------------- ------------- -----------
Additions (deductions)
to net assets attributed to:
Contributions:
Employer.........................
Employees........................ $ 17,435,967 $ 317,304 $ 9,388,501 $ 139,236 $ 5,099,406 $ 62,331 $ 5,193,637
Rollover......................... 1,537,860 697 895,958 595 641,378 -- 477,640
Investment income.................. 6,573,080 409,017 5,676,256 191,344 44,493 49,612 988,394
Plan's interest in Master Trust
investment income................ 7,921,747
Net appreciation (depreciation) in
fair value of investments........ 2,080,593 917,468 4,664,371 (83,062) 1,274,334
Interfund transfers and loan
activity, net.................... 40,508,181 (15,337,929) 25,552,344 (6,882,355) (104,351,884) (2,646,309) 14,764,674
------------- ------------- ------------ ----------- ------------- ------------- ------------
Total additions (deductions)... 68,135,681 (13,693,443) 46,177,430 (6,634,242) (90,644,860) (2,534,366) 22,698,679
------------- ------------- ------------ ----------- ------------- ------------- ------------
Deductions to net assets
attributed to:
Participants benefits paid....... 8,691,971 1,495,393 5,402,906 643,280 20,685,857 131,437 1,049,840
Plan expenses.................... 8,788 1,372 4,377 474 49,363 202 594
------------- ------------- ------------ ----------- ------------- ------------- ------------
Total deductions............... 8,700,759 1,496,765 5,407,283 643,754 20,735,220 131,639 1,050,434
------------- ------------- ------------ ----------- ------------- ------------- ------------
Net increase (decrease)........ 59,434,922 (15,190,208) 40,770,147 (7,277,996) (111,380,080) (2,666,005) 21,648,245
Transfer from Other Plans.......... 184,024,476
Net assets available for
benefits, beginning of year...... 44,740,540 21,964,465 28,006,962 9,849,472 26,397,855 3,602,428
------------- ------------- ------------ ----------- ------------- ------------- ------------
Net assets available for
benefits, end of year............ $104,175,462 $ 6,774,257 $ 68,777,109 $ 2,571,476 $ 99,042,251 $ 936,423 $ 21,648,245
------------- ------------- ------------ ----------- ------------- ------------- ------------
------------- ------------- ------------ ----------- ------------- ------------- ------------
See accompanying notes to the financial statements.
-5-
VIACOM INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1996
----------------------------
(Continued)
Non - Participant
Participant Directed Directed
------------------------------------------------------------------------ ------------
Putnam Viacom Inc.
George Putnam Investors Putnam Income Common Stock Loan Viacom Inc. Funds
Fund of Boston Fund Fund Fund Fund Stock Fund Total
-------------- ----------- ------------- ------------ ----------- ------------ ------------
Additions (deductions) to
net assets attributed to:
Contributions:
Employer................ $ 18,946,634 $ 18,946,634
Employees............... $ 3,231,336 $ 7,436,535 $ 3,125,323 $ 6,963,348 58,392,924
Rollover................ 310,195 777,827 270,701 567,246 5,480,097
Investment income......... 2,164,454 5,272,581 1,279,460 3,658 $ 1,460,785 191,459 24,304,593
Plan's interest in Master
Trust investment income. 7,921,747
Net appreciation
(depreciation) in fair
value of investments.... 1,563,741 1,094,806 229,300 (9,323,759) (44,784,901) (42,367,109)
Interfund transfers and
loan activity, net....... (9,462,342) 28,378,467 19,378,526 4,297,816 (344,315) 6,145,126 --
------------ ----------- ------------- ------------ ----------- ------------ ------------
Total additions
(deductions)....... (2,192,616) 42,960,216 24,283,310 2,508,309 1,116,470 (19,501,682) 72,678,886
-------------- ----------- ------------- ------------ ----------- ------------ ------------
Deductions to net assets
attributed to:
Participants benefits
paid.................. 2,627,457 2,453,928 1,592,800 1,946,587 1,283,905 12,887,934 60,893,295
Plan expenses........... 1,235 2,379 1,000 818 10 70,612
-------------- ----------- ------------- ------------ ----------- ------------ ------------
Total deductions.... 2,628,692 2,456,307 1,593,800 1,947,405 1,283,905 12,887,944 60,963,907
-------------- ----------- ------------- ------------ ----------- ------------ ------------
Net increase
(decrease)........ (4,821,308) 40,503,909 22,689,510 560,904 (167,435) (32,389,626) 11,714,979
Transfer from Other Plans. 28,593,339 4,448,939 1,646,422 27,026,382 12,394,732 120,763,783 378,898,073
Net assets available for
benefits, beginning of
year.................... -- -- -- 2,049,995 7,309,191 31,517,642 175,438,550
-------------- ----------- ------------- ------------ ----------- ------------ ------------
Net assets available for
benefits, end of year... $23,772,031 $44,952,848 $24,335,932 $29,637,281 $19,536,488 $119,891,799 $566,051,602
-------------- ----------- ------------- ------------ ----------- ------------ ------------
-------------- ----------- ------------- ------------ ----------- ------------ ------------
See accompanying notes to the financial statements.
-6-
VIACOM INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1995
----------------------------
Participant Directed
----------------------------------------------------------------------------------------
Putnam Putnam Putnam Fund Putnam Certus Interest Putnam Money
Voyager Vista for Growth and U.S. Gov't Income Market
Fund Fund Income Income Trust Fund Fund
----------- ----------- -------------- ------------ --------------- ------------
Additions (deductions) to net
assets attributed to:
Contributions:
Employer.......................
Employees...................... $ 5,522,360 $ 2,934,589 $ 3,279,011 $1,206,020 $ 2,084,583 $ 472,816
Rollover....................... 291,346 180,924 203,866 86,559 77,668 9,046
Investment income................ 2,374,727 1,892,410 1,831,488 661,502 1,860 182,157
Plan's interest in Master Trust
investment income.............. 1,814,940
Net appreciation (depreciation )
in fair value of investments... 10,057,128 4,074,095 5,456,692 732,129
Interfund transfers and loan
activity, net.................. (1,019,985) (49,489) 18,663 (784,201) (904,621) 182,358
----------- ----------- -------------- ------------ --------------- ------------
Total additions............ 17,225,576 9,032,529 10,789,720 1,902,009 3,074,430 846,377
----------- ----------- -------------- ------------ --------------- ------------
Deductions to net assets attributed
to:
Participants benefits paid....... 2,121,500 867,383 1,381,816 509,352 2,300,492 109,929
Transfer to other plan........... 522,944 410,813 469,448 104,297 877,146 114,008
Plan expenses.................... 6,818 2,969 3,450 1,038 6,944 621
----------- ----------- -------------- ------------ --------------- ------------
Total deductions........... 2,651,262 1,281,165 1,854,714 614,687 3,184,582 224,558
----------- ----------- -------------- ------------ --------------- ------------
Net additions (deductions). 14,574,314 7,751,364 8,935,006 1,287,322 (110,152) 621,819
Net assets available for benefits,
beginning of year.............. 30,166,226 14,213,101 19,071,956 8,562,150 26,508,007 2,980,609
----------- ----------- -------------- ------------ --------------- ------------
Net assets available for benefits,
end of year.................... $44,740,540 $21,964,465 $28,006,962 $9,849,472 $26,397,855 $3,602,428
----------- ----------- -------------- ------------ --------------- ------------
----------- ----------- -------------- ------------ --------------- ------------
-7-
VIACOM INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
YEAR ENDED DECEMBER 31, 1995
----------------------------
Non-Participant
Directed
------------------------ -------------
Viacom Inc. Viacom Inc.
Common Stock Loan Common Stock
Fund Fund Fund Total
------------ ---------- ------------- ------------
Additions (deductions) to net
assets attributed to:
Contributions:
Employer....................... $ 4,168,521 $ 4,168,521
Employees...................... $ 224,239 15,723,618
Rollover....................... 65,078 914,487
Investment income................ 350 $ 499,080 6,328 7,449,902
Plan's interest in Master Trust
investment income.............. 1,814,940
Net appreciation (depreciation )
in fair value of investments... (49,153) 3,520,517 23,791,408
Interfund transfers and loan
activity, net.................. 1,831,707 725,086 482 --
------------ ---------- ------------- ------------
Total additions............ 2,072,221 1,224,166 7,695,848 53,862,876
------------ ---------- ------------- ------------
Deductions to net assets attributed
to:
Participants benefits paid....... 4,452 369,496 2,089,163 9,753,583
Transfer to other plan........... 17,621 160,437 536,727 3,213,441
Plan expenses.................... 153 21,993
------------ ---------- ------------- ------------
Total deductions........... 22,226 529,933 2,625,890 12,989,017
------------ ---------- ------------- ------------
Net additions
(deductions)............... 2,049,995 694,233 5,069,958 40,873,859
Net assets available for benefits,
beginning of year................ -- 6,614,958 26,447,684 134,564,691
------------ ---------- ------------- ------------
Net assets available for benefits,
end of year................... $2,049,995 $7,309,191 $31,517,642 $175,438,550
------------ ----------- ------------- ------------
------------ ----------- ------------- ------------
See accompanying notes to the financial statements.
-7A-
VIACOM INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1--PLAN DESCRIPTION:
- ------------------------
The following is a brief description of the Viacom 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.
The Plan is a defined contribution plan offered on a voluntary basis to
substantially all employees of Viacom International Inc. (the "Company"), a
wholly-owned subsidiary of Viacom Inc.
Effective January 1, 1996, the Company merged the following defined
contribution plans sponsored by subsidiaries of Viacom Inc., with and into
the Plan: Paramount Communications Inc. Employees' Savings Plan ("PCI Savings
Plan"), Prentice Hall Computer Publishing Division Retirement Plan, and
Blockbuster Entertainment Retirement and Savings Plan (collectively, the
"Merged Plans"). Effective January 1, 1996, the Plan was amended and
restated, including amendments to reflect the Plan mergers, to change the
method used to determine employer matching contributions, to change the
vesting schedule and to change the funds available for investment of employee
contributions.
Effective October 1, 1995, certain collective bargaining employees of the
Company ceased participation in the Plan and became eligible to participate in a
separate collective bargaining plan ("CBP").
Eligible employees may become participants in the Plan following the
attainment of age 21 and completion of twelve months of employment service,
generally measured from date of hire. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and is administered by a committee (the "Administrator") appointed by the
Board of Directors of the Company. Although the Company anticipates that the
Plan will continue indefinitely, it reserves the right by action of its Board
of Directors to amend or terminate the Plan provided that such action does
not retroactively reduce earned participant benefits.
Investment and participant accounts
- -----------------------------------
Putnam Fiduciary Trust Company (the "Trustee") is the trustee and custodian
of Plan assets.
Effective January 1, 1996, Plan participants have the option of investing
their contributions or existing account balance among the following funds:
(1) Putnam Voyager Fund; (2) Putnam Fund for Growth and Income; (3) Certus
Interest Income Fund; (4) Europacific Growth Fund; (5) George Putnam Fund of
Boston; (6) Putnam Investors Fund; (7) Putnam Income Fund; and (8) Viacom
Inc. Common Stock Fund. Each of the funds, except for the Certus Interest
Income Fund, the Europacific Growth Fund and the Viacom Inc. Common Stock
Fund are registered investment companies managed by Putnam Management
Company, Inc. and, therefore, are identified as parties-in-interest. The
Europacific Growth Fund is a registered investment company managed by Capital
Research and Management Company. The Certus Interest Income Fund, which is
managed by the Certus Financial Corporation ("Certus"), primarily invests in
guaranteed investment contracts and bank investment contracts, some of which
are created by way of the concurrent purchase of a bank guarantee contract
and a United States government security (the "pass through" contract).
-8-
VIACOM INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Participants employed by the Company's former cable operations have the
option of investing their existing account balances only in the investment
funds available at December 31, 1995 as follows: Putnam Fund for Growth &
Income, Putnam Voyager Fund, Certus Interest Income Fund, Viacom Inc. Common
Stock Fund, Putnam Vista Fund, Putnam U.S. Government Income Trust and the
Putnam Money Market. As of June 30, 1996, such participants were no longer
eligible to contribute to the Plan.
The Viacom Inc. Common Stock Fund invests in shares of Viacom Inc. Class B
Common Stock and therefore is identified as a party-in-interest. Investment
elections are required to be in multiples of 5% and can be changed at any time.
The Plan is intended to meet the requirements of ERISA Section 404 (c). Thus, to
the extent participants exercise control over the investment of contributions,
neither the Plan nor any other Plan fiduciary will be responsible for any losses
which may occur.
Effective January 1, 1994, the Company and certain affiliated companies
entered into a master trust agreement ("Master Trust") with the Trustee for
the purpose of permitting the commingling of investments of the Plan,
affiliated companies' plans, and, effective October 1, 1995, the CBP. The
Master Trust assets are managed by Certus. However, the Trustee records the
activity of each plan separately in order to distinguish the specific assets
available to each plan. 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 7 sets forth the Plan's proportionate interest in the Master Trust, and
certain financial information of the Master Trust.
Employer matching contributions are invested entirely in a fund consisting
of Viacom Inc. Class B Common Stock.
-9-
VIACOM INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Loans to Participants
- ---------------------
The Loan Fund is a separate fund established solely for the purpose of
administering loans to participants. Participants are eligible to receive
loans based on their account balances. The maximum loan available to a
participant is 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 is made. The minimum loan available to a participant is $500. The
interest rate on participant loans is established on the first day of the
calendar quarter at a rate of 1% above the prime commercial rate. Effective
January 1, 1996, only one loan may be outstanding at one time. Participants
who had one or two outstanding loans from the PCI Savings Plan must continue
to pay off the PCI Savings Plan loans while participating in the Plan and may
not take out additional loans until the PCI Savings Plan loans are completely
repaid. Participants may elect repayment periods from twelve to sixty months
through payroll deductions commencing as soon as administratively possible
following the distribution of the loan. The Plan allows participants to elect
a repayment term of up to 300 months for loans used for the acquisition of a
principle residence. Transfers of participant balances for loan disbursements
and repayments of loan principal and interest to the Loan Fund are
specifically identified in the respective participants' accounts within each
fund.
Contributions
- -------------
The Plan permits 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 Company's matching contribution is
equal to (i) 50% of the first 6% of annual compensation that is contributed on a
before-tax basis if base pay is $65,000 or less at a specified date or (ii) 50%
of the first 5% of annual compensation contributed on a before tax basis if base
pay is greater than $65,000.
The IRC limits the amount of annual contributions that can be made on a
before-tax basis; the limit was $9,500 and $9,240 for 1996 and 1995,
respectively. Compensation recognized under the plan may not exceed $150,000 for
1996 and 1995, respectively. The IRC also contains an annual limit on aggregate
participant and employer contributions to defined contribution plans equal to
the lesser of $30,000 or 25% of compensation. All contributions made to the Plan
on an annual basis may be further limited due to certain non-discrimination
tests prescribed by the IRC.
-10-
VIACOM INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Vesting
- -------
Participants in the Plan are immediately vested in their own
contributions and earnings thereon. After January 1, 1996, the employer's
matching contribution will vest at 20% per year of service, becoming fully
vested after five years of service. Employees who on December 31, 1995 were
participants in the Plan or the Merged Plans will be covered by the vesting
schedules in effect at that time if they are more favorable. If participants
terminate employment prior to being vested in their employer matching
contributions and receive a distribution of the vested portion of their
account, the non-vested portion of their account is forfeited and used to
reduce future employer matching contributions or defray administrative
expenses. Employer matching contributions of $579,468 and $39,616 during the
years ended December 31, 1996 and December 31, 1995, respectively, were
forfeited by terminating employees before those amounts became vested.
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, may 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 must receive a required minimum distribution upon
attainment of age 70 1/2 even if they are still employed.
Participants who have been in the Plan or affiliated plans at least five
years may elect to withdraw up to 100% of their employer matching contribution
account and earnings thereon, while those who have participated less than five
years are 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 may receive part or all of their after-tax and rollover
contributions. Upon attainment of age 59 1/2 participants may withdraw all or
part of their before-tax contributions and earnings thereon. All of the above
withdrawal elections are subject to a provision that a participant can make only
one such request during each calendar year.
A participant may obtain a hardship withdrawal of employer matching
contributions and before-tax contributions (including the pre-1989 earnings
thereon) provided that the requirements for hardship are met. There is no
restriction on the number of hardship withdrawals permitted.
Plan Expenses
- -------------
The Plan pays for expenses incurred in connection with the administration of
the Plan and the investment of Plan assets, to the extent not covered by
forfeitures.
-11-
VIACOM INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- --------------------------------------------------
Accounting Method
- -----------------
The accrual method of accounting is used for financial statement
presentation. Certain previously reported amounts have been reclassified to
conform with the current presentation.
Investments
- -----------
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 American
Stock Exchange, Inc. 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
income contracts and bank investment contracts held by the Master Trust are
reported at contract value (cost plus interest at contract rate less
distributions to participants). Although the investment components of the
bank investment "pass through" contracts are stated at fair market value
based on quoted market prices, the addition of the guarantee component
results in such contracts being reported at contract value. Participant loans
consist of the outstanding principal of loans to Plan participants at
December 31, which approximate market value. The loans outstanding as of
December 31, 1996 and 1995 carry interest rates ranging from 7% to 11%. Cash
and cash equivalents are valued at cost plus accrued interest, which
approximate market value.
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.
Payment of Benefits
- -------------------
Benefits are 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.
-12-
VIACOM INVESTMENT PLAN
----------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
NOTE 3--INVESTMENTS:
- --------------------
Individual investments that represent greater than 5% of net assets
available for benefits are identified below:
December 31,
-----------------------------
1996 1995
-------------- -------------
Viacom Inc. Class B Common Stock......... $138,004,114 $20,035,565
Putnam Voyager Fund...................... 103,723,011 44,415,248
Plan's interest in Master Trust.......... 98,881,919 26,239,822
Putnam Vista Fund........................ -- 21,793,509
Putnam Fund for Growth and Income........ 68,536,260 27,829,153
Putnam Investors Fund.................... 44,743,659 --
During 1996 and 1995 the Plan's investments (including investments bought,
sold and held during the year) appreciated (depreciated), as follows:
Year Ended December 31,
-----------------------------
1996 1995
-------------- -------------
Putnam Voyager Fund...................... $ 2,080,593 $10,057,128
Putnam Vista Fund........................ 917,468 4,074,095
Putnam Fund for Growth and Income........ 4,664,371 5,456,692
Putnam U.S. Government Income Trust...... (83,062) 732,129
Europacific Growth Fund.................. 1,274,334 --
George Putnam Fund of Boston............. 1,563,741 --
Putnam Investors Fund.................... 1,094,806 --
Putnam Income Fund....................... 229,300 --
Viacom Inc. Class A Common Stock......... (3,257,119) 1,343,186
Viacom Inc. Class B Common Stock......... (50,851,541) 2,128,178
-------------- -------------
Net (depreciation) appreciation ....... $(42,367,109) $23,791,408
-------------- -------------
-------------- -------------
-13-
VIACOM INVESTMENT PLAN
----------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
The Plan uses daily valuations and assigns units to participants within
each of the respective funds. Total units, net asset value per unit and total
net assets available for benefits in each fund at December 31, 1996 and 1995
were as follows:
Net Asset Total Net
Available For Asset
Benefits per Available
Fund Total Units Unit for Benefits
---- ------------ -------------- -------------
December 31, 1996:
- -----------------
Participant Directed:
Putnam Voyager Fund.................... 6,434,430 $ 16.19 $104,175,462
Putnam Vista Fund...................... 648,254 10.45 6,774,257
Putnam Fund for Growth and Income...... 3,803,344 18.08 68,777,109
Putnam U. S. Government Income Trust... 200,427 12.83 2,571,476
Certus Interest Income Fund............ 99,042,251 1.00 99,042,251
Putnam Money Market Fund............... 936,423 1.00 936,423
Europacific Growth Fund................ 825,730 26.22 21,648,245
George Putnam Fund of Boston........... 1,443,650 16.47 23,772,031
Putnam Investors Fund.................. 4,858,161 9.25 44,952,848
Putnam Income Fund..................... 3,461,322 7.03 24,335,932
Viacom Inc. Common Stock Fund.......... 837,331 35.39 29,637,281
Loan Fund.............................. 19,536,488
Non-Participant Directed:
Viacom Inc. Common Stock Fund.......... 3,354,559 35.74 119,891,799
------------
$566,051,602
------------
------------
December 31, 1995:
- -----------------
Participant Directed:
Putnam Voyager Fund.................... 2,910,460 $ 15.37 $44,740,540
Putnam Vista Fund...................... 2,394,330 9.17 21,964,465
Putnam Fund for Growth and Income...... 1,718,408 16.30 28,006,962
Putnam U. S. Government Income Trust... 741,343 13.29 9,849,472
Certus Interest Income Fund............ 26,397,855 1.00 26,397,855
Putnam Money Market Trust.............. 3,602,428 1.00 3,602,428
Viacom Inc. Common Stock Fund.......... 42,582 48.14 2,049,995
Loan Fund.............................. 7,309,191
Non-Participant Directed:
Viacom Inc. Common Stock Fund.......... 668,529 47.14 31,517,642
------------
$175,438,550
------------
------------
-14-
VIACOM INVESTMENT PLAN
----------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
NOTE 4--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
- ------------------------------------------------------------
The following is a reconciliation of net assets available for benefits per
the December 31, 1996 financial statements to the Form 5500:
Net assets available for benefits per the financial
statements............................................... $ 566,051,602
Amounts allocated to withdrawing participants.............. (1,463,976)
-------------
Net assets available for benefits per the Form 5500........ $ 564,587,626
-------------
-------------
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1996:
Benefits paid to participants per the financial statements... $60,893,295
Add: Amounts allocated to withdrawing participants at
December 31, 1996.......................................... 1,463,976
Less: Amounts allocated to withdrawing participants at
December 31, 1995.......................................... (270,251)
-----------
Benefits paid to participants per the Form 5500.............. $62,087,020
-----------
-----------
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior to
December 31, 1996 but are not paid as of that date.
NOTE 5--INCOME TAX STATUS:
- -------------------------
The Plan, as amended through January 1, 1996, has not obtained a
determination letter, however, it is intended that the Plan qualify under
Section 401(a) of the IRC and will therefore, be exempt from federal income
taxes under the provisions of Section 501(a). The Plan, as amended through
December 1994, was found by the Internal Revenue Service ("IRS") in a letter
issued August 17, 1995, to be qualified under Section 401(a) of the IRC. The
Administrator believes that the Plan is currently designed and being operated
in compliance with the applicable requirements of the IRC. The Administrator
intends to apply for a determination letter during 1997.
During December 1995, the Company submitted an application for the
Voluntary Compliance Resolution Program established by the IRS to correct
errors in Plan operation relating to certain contributions made during 1994.
The matter was resolved in a manner satisfactory to the IRS and there was no
change in the qualified status of the Plan.
-15-
VIACOM INVESTMENT PLAN
----------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
NOTE 6--TERMINATION PRIORITIES:
- ------------------------------
In the event that the Plan is terminated, subject to conditions set forth
in ERISA, the Plan provides 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.
NOTE 7--INVESTMENT IN MASTER TRUST:
- ----------------------------------
The value of the Plan's interest in the total investments of the Master
Trust was 98.4% and 95.7% at December 31, 1996 and 1995, respectively, and the
allocated share of investment income was 99.6% and 99.2% for the respective
years then ended.
The following table presents the fair value of investments of the Master
Trust:
December 31,
-----------------------------
1996 1995
-------------- -------------
Guaranteed investment contracts........... $ 52,807,733 $ 10,069,048
Bank investment "pass through" contracts.. 41,701,819 13,960,645
Putnam short-term investment fund......... 6,092,420 3,176,052
Receivable for investments sold........... -- 211,205
Accrued plan expenses..................... (2,091) (8,405)
Payable for investments purchased......... (146,511) --
-------------- -------------
Net Investments in Master Trust......... $ 100,453,370 $ 27,408,545
-------------- -------------
-------------- -------------
Investment income of the Master Trust is as follows:
Year Ended December 31,
--------------------------
1996 1995
------------ ------------
Investment Income:
Guaranteed investment contracts........... $ 3,676,184 $ 877,860
Bank investment "pass through" contracts.. 2,686,416 905,644
Short-term investment fund................ 1,656,893 98,381
Investment manager fees................... (64,046) (51,526)
------------ ------------
Net Investment Income................... $ 7,955,447 $ 1,830,359
------------ ------------
------------ ------------
The guaranteed investment contracts and bank investment "pass through"
contracts are fully benefit-responsive and are therefore presented in the
financial statements at contract value. The Company does not expect any
employer initiated events that may cause premature liquidation to a contract
at market value. At December 31, 1996 and 1995, the fair value of such assets
in the aggregate was $100,359,722 and $27,322,047, respectively, with an
average yield of 6.31% and 6.85%, respectively. The return on assets for the
year ended December 31, 1996 and 1995 were 6.18% and 7.18%, respectively. The
bank investment "pass through" contracts interest rates reset quarterly, with
a minimum crediting interest rates of zero, based upon the interest rate
which, when applied to the current book value, will reproduce the expected
cash flows of the underlying asset.
-16-
VIACOM INVESTMENT PLAN
----------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
NOTE 8--SUBSEQUENT EVENTS:
- -------------------------
Effective January 1, 1997, the Company merged the Savings and Investment
Plan for Employees of PVI Transmission and Paramount Distribution Inc. with
and into the Plan.
Effective July 1, 1997, Plan participants have the option of investing their
contributions or existing account balances in a new fund, the Putnam S&P 500
Index Fund. The fund will be managed by Putnam Management Company, Inc. and,
therefore, is identified as a party-in-interest.
-17-
SCHEDULE I
VIACOM INVESTMENT PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
YEAR ENDED DECEMBER 31, 1996
----------------------------
(c) Unit/ Principal
Amount/Shares/
Maturity and (d) Cost of (e) Current
(b) Identity of issue, borrowing lessor or similar party Interest Rates Acquisitions Value
- -------------------------------------------------------- -------------------- ------------- ------------
Registered Investment Companies:
--------------------------------
* Putnam Voyager Fund.................................. 6,434,430 units $ 94,896,575 $103,723,011
* Putnam Vista Fund.................................... 648,254 units 5,457,060 6,774,257
* Putnam Fund for Growth and Income.................... 3,803,344 units 61,806,485 68,536,260
* Putnam U.S. Government Income Trust.................. 200,427 units 2,641,417 2,571,476
* Putnam Money Market Trust............................ 936,423 units 936,423 936,423
Europacific Growth Fund.............................. 825,730 units 20,210,049 21,502,001
* George Putnam Fund of Boston......................... 1,443,650 units 22,769,966 23,675,858
* Putnam Investors Fund................................ 4,858,161 units 43,888,788 44,743,659
* Putnam Income Fund................................... 3,461,322 units 23,972,838 24,263,868
COMMON STOCK FUND:
* Viacom Inc. Class A Common Stock..................... 249,934 shares 7,370,108 8,622,744
* Viacom Inc. Class B Common Stock..................... 3,936,729 shares 144,401,538 138,004,114
Investments in Other................................. 5,227 units 526,380 477,606
Various maturities
Loans to participants................................ and interest rates 19,433,712 19,433,712
------------ ------------
Total investments......................... $463,264,989
------------
------------
* Identified as a party-in-interest to the Plan.
S-1
Schedule II
VIACOM INVESTMENT PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
----------------------------
Description Purchase Selling Lease Expense Incurred
Identity of Party Involved of Asset Price Price Rental with Transaction
- -------------------------- --------------- ----------- ----------- ----------- ------------------
Single Transactions:
- -------------------
Transfer of assets ............................ 1,844,732 units $ 28,593,339 N/A N/A
of the George
Putnam Fund of
Boston
Series Transactions:
- -------------------
Putnam Voyager Fund............................ 4,695,312 units $ 76,460,497 N/A N/A
1,170,787 units $19,192,498 N/A N/A
Putnam Vista Fund.............................. 176,981 units $ 1,805,213 N/A N/A
1,923,074 units $17,737,383 N/A N/A
Putnam Fund for Growth & Income................ 2,898,326 units $ 49,972,647 N/A N/A
815,680 units $13,961,237 N/A N/A
George Putnam Fund of Boston................... 2,863,247 units $ 45,048,261 N/A N/A
1,376,098 units $21,955,793 N/A N/A
Putnam Investors Fund.......................... 6,378,971 units $ 57,180,672 N/A N/A
1,441,204 units $12,859,792 N/A N/A
Putnam Income Fund............................. 4,590,724 units $ 31,961,941 N/A N/A
1,118,089 units $ 7,845,938 N/A N/A
Current Value
of Asset on
Cost of Transaction Net Gain
Identity of Party Involved Asset Date (Loss)
- -------------------------- ----------- ------------- ----------
Single Transactions:
- -------------------
Transfer of assets ............................ $ 28,593,339
Series Transactions:
- -------------------
Putnam Voyager Fund............................ $ 76,460,497
$16,221,924 $ 19,192,498 $2,970,574
Putnam Vista Fund.............................. $ 1,805,213
$15,365,758 $ 17,737,383 $2,371,625
Putnam Fund for Growth & Income................ $ 49,972,647
$12,317,611 $ 13,961,237 $1,643,626
George Putnam Fund of Boston................... $ 45,048,261
$21,299,951 $ 21,955,793 $ 655,842
Putnam Investors Fund.......................... $ 57,180,672
$12,618,749 $ 12,859,792 $ 241,043
Putnam Income Fund............................. $ 31,961,941
$ 7,907,670 $ 7,845,938 $ (61,732)
S-2
Schedule II
VIACOM INVESTMENT PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS (continued)
YEAR ENDED DECEMBER 31, 1996
----------------------------
Description Purchase Selling Lease Expense Incurred
Identity of Party Involved of Asset Price Price Rental with Transaction
- -------------------------- --------------- ----------- ------------ -------- ------------------
Series Transactions (continued):
- -------------------------------
Europacific Growth Fund....................... 925,231 units $22,629,550 N/A N/A
99,622 units $ 2,497,964 N/A N/A
Viacom Inc. Class B........................... 1,163,065 units $46,740,000 N/A N/A
614,047 units $ 23,453,187 N/A N/A
Current Value
of Asset on
Cost of Transaction Net Gain
Identity of Party Involved Asset Date (Loss)
- -------------------------- ------------ ------------- ----------
Series Transactions (continued):
- -------------------------------
Europacific Growth Fund....................... $ 22,629,550
$ 2,422,489 $ 2,497,964 $ 75,475
Viacom Inc. Class B........................... $ 46,740,000
$ 22,781,676 $ 23,453,187 $ 671,511
S-3
Exhibit I
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-60943, 33-41934, 33-56088, 33-59049,
33-59141, 33-55173 and 33-55709) of Viacom Inc. of our report dated July 2,
1997, relating to the financial statements and schedules of the Viacom
Investment Plan appearing on page 1 of this Form 11-K.
PRICE WATERHOUSE LLP
New York, New York
July 2, 1997
