SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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Commission file number 1-9553
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VIACOM INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-2949533
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification)
1515 Broadway, New York, New York 10036
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 258-6000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
----- -----
Number of shares of Common Stock Outstanding at July 31, 1995:
Class A Common Stock, par value $.01 per share - 74,797,590
Class B Common Stock, par value $.01 per share - 286,168,974
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited; all amounts, except per share amounts, are in millions)
Three months ended
June 30,
--------------------
1995 1994
---- ----
Revenues .................................................................. $ 2,865.2 $ 1,612.6
Expenses:
Operating ............................................................. 1,731.2 848.9
Selling, general and administrative ................................... 538.9 475.1
Depreciation and amortization ......................................... 206.9 102.7
--------- --------
Total expenses ........................................................ 2,477.0 1,426.7
--------- --------
Earnings from continuing operations ........................................ 388.2 185.9
Other income (expense):
Interest expense, net ................................................. (206.3) (102.7)
Other items, net (See Note 5).......................................... (1.2) 268.0
--------- --------
Earnings from continuing operations before income taxes .................... 180.7 351.2
Provision for income taxes ............................................ (112.4) (91.8)
Equity in earnings (loss) of affiliated companies, net of tax ......... (16.0) .2
Minority interest ..................................................... .7 6.0
--------- --------
Net earnings from continuing operations .................................... 53.0 265.6
Loss from discontinued operations, net of tax (See Note 4) ............ -- (1.0)
--------- --------
Net earnings before extraordinary loss ..................................... 53.0 264.6
Extraordinary loss (See Note 7)....................................... -- (20.4)
--------- --------
Net earnings ............................................................... 53.0 244.2
Cumulative convertible preferred stock dividend requirement ........... (15.0) (22.5)
--------- --------
Net earnings attributable to common stock .................................. $ 38.0 $ 221.7
========= ========
Weighted average number of common shares:
Primary ............................................................... 386.1 143.5
Fully diluted ......................................................... 386.8 169.7
Primary earnings per common share:
Net earnings from continuing operations ............................... $ .10 $ 1.69
Net earnings .......................................................... $ .10 $ 1.55
Fully diluted earnings per common share:
Net earnings from continuing operations ............................... $ .10 $ 1.57
Net earnings .......................................................... $ .10 $ 1.44
See notes to consolidated financial statements.
-2-
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited; all amounts, except per share amounts, are in millions)
Six months ended
June 30,
---------------------
1995 1994
---- ----
Revenues $ 5,560.8 $ 2,450.4
Expenses:
Operating ..................................................... 3,433.0 1,638.3
Selling, general and administrative ........................... 1,016.9 772.1
Depreciation and amortization ................................. 387.6 160.9
--------- ---------
Total expenses ................................................ 4,837.5 2,571.3
--------- ---------
Earnings (loss) from continuing operations ......................... 723.3 (120.9)
Other income (expense):
Interest expense, net ......................................... (403.1) (150.0)
Other items, net (See Note 5).................................. 26.3 263.3
--------- ---------
Earnings (loss) from continuing operations before income taxes ..... 346.5 (7.6)
Provision for income taxes .................................... (211.3) (184.2)
Equity in earnings (loss) of affiliated companies, net of tax . (15.2) 3.7
Minority interest ............................................. (3.4) 18.3
--------- ---------
Net earnings (loss) from continuing operations ..................... 116.6 (169.8)
Earnings from discontinued operations, net of tax (See Note 4). 7.6 2.8
--------- ---------
Net earnings (loss) before extraordinary loss ...................... 124.2 (167.0)
Extraordinary loss (See Note 7)................................ -- (20.4)
--------- ---------
Net earnings (loss) ................................................ 124.2 (187.4)
Cumulative convertible preferred stock dividend requirement ... (30.0) (45.0)
--------- ---------
Net earnings (loss) attributable to common stock ................... $ 94.2 $ (232.4)
========= =========
Weighted average number of common shares:
Primary ....................................................... 385.6 135.0
Fully diluted ................................................. 386.2 135.0
Primary and fully diluted earnings (loss) per common share:
Net earnings (loss) from continuing operations ................ $ .22 $ (1.59)
Net earnings (loss) ........................................... $ .24 $ (1.72)
See notes to consolidated financial statements.
-3-
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(Unaudited; all amounts, except per share amounts, are in millions)
June 30, December 31,
1995 1994
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Assets
Current Assets:
Cash and cash equivalents ................................................... $ 435.0 $ 597.7
Receivables, less allowances of $103.5 (1995) and $75.8 (1994) .............. 1,937.1 1,638.8
Inventory (See Note 8) ...................................................... 1,960.6 1,817.8
Other current assets ........................................................ 656.4 503.5
Net assets of discontinued operations (See Note 4) .......................... -- 697.4
--------- ---------
Total current assets ................................................ 4,989.1 5,255.2
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Property and equipment, at cost ............................................... 3,598.6 3,099.6
Less accumulated depreciation ........................................... 648.5 516.5
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Net property and equipment ......................................... 2,950.1 2,583.1
--------- ---------
Inventory (See Note 8) ........................................................ 2,119.7 1,944.5
Intangibles, at amortized cost ................................................ 16,109.1 16,111.7
Other assets .................................................................. 2,655.2 2,379.2
--------- ---------
$28,823.2 $28,273.7
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable ........................................................ $ 650.7 $ 770.9
Accrued interest ........................................................ 141.3 234.9
Accrued compensation .................................................... 312.4 340.6
Participants' share, residuals and royalties payable .................... 751.5 630.0
Other current liabilities ............................................... 2,294.7 2,154.8
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Total current liabilities .......................................... 4,150.6 4,131.2
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Long-term debt ............................................................... 10,661.7 10,402.4
Other liabilities ............................................................ 2,054.6 1,948.5
Commitments and contingencies (See Note 10)
Shareholders' Equity:
Preferred Stock, par value $.01 per share; 200.0 shares
authorized; 24.0 shares issued and outstanding ..................... 1,200.0 1,200.0
Class A Common Stock, par value $.01 per share;
200.0 shares authorized; 74.7 (1995) and 74.6 (1994)
shares issued and outstanding ...................................... .8 .7
Class B Common Stock, par value $.01 per share;
1,000.0 shares authorized; 285.5 (1995) and 284.1 (1994)
shares issued and outstanding ...................................... 2.8 2.8
Additional paid-in capital .............................................. 10,644.8 10,579.5
Retained earnings ....................................................... 104.8 10.6
Cumulative translation adjustment ....................................... 3.1 (2.0)
--------- ---------
11,956.3 11,791.6
--------- ---------
$28,823.2 $28,273.7
========= =========
See notes to consolidated financial statements.
-4-
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited; all amounts are in millions)
Six months ended June 30,
1995 1994
---- ----
Net cash from operating activities:
Net earnings (loss).......................................... $ 124.2 $ (187.4)
Adjustments to reconcile net earnings to net cash
flow from operating activities:
Depreciation and amortization.............................. 387.6 167.1
Gain on the sale of an investment held at cost (See Note 5) (26.9) --
Merger-related charges (See Note 2)........................ -- 332.1
Gain on sale of Lifetime, net of tax (See Note 5).......... -- (164.4)
Extraordinary loss, net of tax (See Note 7)................ -- 20.4
Increase in receivables.................................... (298.3) (75.0)
Increase in inventory and related liabilities, net......... (98.3) (152.1)
Decrease in accounts payable and accrued expenses.......... (444.4) (124.5)
Increase (decrease) in income taxes payable and
deferred income taxes, net.............................. 1.5 (39.3)
(Increase) decrease in pre-publication costs, net.......... (46.1) 23.8
Increase in prepaid expenses and other current assets...... (124.5) (59.8)
(Increase) decrease in unbilled receivables................ (61.0) 15.1
Other, net................................................. (95.0) (49.2)
----------- ------------
Net cash flow from operating activities........................ (681.2) (293.2)
----------- ------------
Investing Activities:
Proceeds from dispositions................................. 1,127.1 317.6
Acquisitions, net of cash acquired......................... (291.4) (6,291.0)
Capital expenditures....................................... (368.0) (123.0)
Investments in and advances to affiliated companies........ (48.5) (32.2)
Distributions from affiliated companies.................... 42.4 25.1
Proceeds from sale of short-term investments............... 212.7 105.9
Payments for purchase of short-term investments............ (227.4) (56.3)
Other, net................................................. (6.1) (27.8)
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Net cash flow from investing activities........................ 440.8 (6,081.7)
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Financing Activities:
Short-term borrowings from (repayments to) banks, net...... (927.4) 3,721.1
Proceeds from issuance of 7.75% Senior Notes............... 990.4 --
Proceeds from issuance of Class B Common Stock............. -- 1,250.0
Payment of Preferred Stock dividends....................... (30.0) (35.3)
Proceeds from exercise of stock options.................... 65.2 1.1
Deferred financing fees.................................... (10.8) (9.4)
Other, net................................................. (9.7) (21.1)
----------- ------------
Net cash flow from financing activities........................ 77.7 4,906.4
----------- ------------
Net decrease in cash and cash equivalents.................. (162.7) (1,468.5)
Cash and cash equivalents at beginning of the period....... 597.7 1,882.4
----------- ------------
Cash and cash equivalents at end of period..................... $ 435.0 $ 413.9
=========== ============
Supplemental cash flow information:
Cash payments for interest, net of amounts capitalized...... $ 530.2 $ 153.2
Cash payments for income taxes.............................. 170.9 76.4
Property and equipment acquired under capitalized leases.... 222.3 --
See notes to consolidated financial statements.
-5-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
Viacom Inc. (the "Company") is a diversified entertainment and publishing
company with operations in five segments: (i) Networks and Broadcasting,
(ii) Entertainment, (iii) Video and Music/Theme Parks, (iv) Publishing and
(v) Cable Television. Paramount Communications Inc. and subsidiaries
("Paramount") and Blockbuster Entertainment Corporation and subsidiaries
("Blockbuster") results of operations are included in the Company's
consolidated results of operations commencing March 1, 1994 and October
1, 1994, respectively. (See Note 2.)
The accompanying unaudited consolidated financial statements of the Company have
been prepared pursuant to the rules of the Securities and Exchange Commission.
These financial statements should be read in conjunction with the more detailed
financial statements and notes thereto included in the Company's most recent
annual report on Form 10-K.
The financial statements reflect, in the opinion of management, all normal
recurring adjustments necessary to present fairly the financial position and
results of operations of the Company. Certain previously reported amounts have
been reclassified to conform with the current presentation.
Net earnings (loss) per common share -- Primary net earnings (loss) per common
share is calculated based on the weighted average number of common shares
outstanding during each period and, if dilutive, the effects of common shares
potentially issuable in connection with variable common rights, contingent value
rights, stock options and warrants. For the second quarter of 1994, fully
diluted earnings per common share also reflects the effect of the assumed
conversion of the Preferred Stock. For each of the other periods presented, the
effect of the assumed conversion of the Preferred Stock is antidilutive and,
therefore, is not reflected in fully diluted net earnings per common share.
2) PARAMOUNT MERGER, BLOCKBUSTER MERGER AND RELATED TRANSACTIONS
On March 11, 1994, the Company acquired a majority of the Paramount common stock
outstanding at a price of $107 per share in cash. On July 7, 1994, Paramount
became a wholly owned subsidiary of the Company (the "Paramount Merger") at the
effective time of the merger between Paramount and a subsidiary of the Company.
On January 3, 1995, Paramount was merged into Viacom International Inc. ("Viacom
International"), a wholly owned subsidiary of the Company.
Results of operations for the six months ended June 30, 1994 include certain
merger-related charges to the Company's pre-merger businesses reflecting the
integration with similar Paramount units, and related management and strategic
changes principally related to the merger with Paramount. The merger-related
charges of $90.7 million for Networks and Broadcasting, and $224.0 million for
Entertainment principally relate to adjustments of programming assets based upon
new management strategies and additional programming sources resulting from the
merger with Paramount, and also include a charge of $17.4 million to reflect the
combination of Viacom International and Paramount staffs.
On September 29, 1994, Blockbuster was merged with and into the Company (the
"Blockbuster Merger").
-6-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The unaudited condensed pro forma results of operations data for the six months
ended June 30, 1994 presented below assumes that the (i) Paramount Merger, (ii)
Blockbuster Merger, (iii) Paramount acquisition of the U.S. publishing assets of
Macmillan Inc. (i, ii, and iii being referred to as the "Mergers"), (iv) sale of
the one-third partnership interest in Lifetime and (v) sale of Madison Square
Garden Corporation (see Note 4) occurred on January 1, 1994. The unaudited
condensed pro forma results of operations data was prepared based upon the
historical consolidated results of operations of the Company for the six months
ended June 30, 1994, Paramount and Macmillan for the two months ended February
28, 1994, and Blockbuster for the six months ended June 30, 1994, adjusted to
exclude the non-recurring merger-related charges of $332.1 million. Financial
information for Paramount and Blockbuster subsequent to the dates of acquisition
are included in the Company's historical information. The following unaudited
pro forma information is not necessarily indicative of the combined results of
operations of the Company, Paramount and Blockbuster that would have occurred if
the completion of the transactions had occurred on the date previously indicated
nor are they necessarily indicative of future operating results of the combined
company (millions of dollars, except per share amounts):
Revenues $ 4,443.0
Earnings from continuing operations.................. 232.6
Net loss from continuing operations before
preferred stock dividends.......................... (227.0)
Net loss attributable to common stock................ (257.0)
Loss per common share................................ $ (0.69)
3) SUBSEQUENT EVENTS
On August 10, 1995 the Company announced its intent to sell Spelling
Entertainment Group Inc. ("Spelling"). The Company also announced its intent
to acquire Spelling's interest in Virgin Interactive Entertainment Limited
("Virgin"). An independent committee of Spelling's Board of Directors will be
formed to negotiate the terms of the Virgin transaction. The Company acquired
Spelling as a part of the Blockbuster Merger.
On July 7, 1995, the contingent value rights ("CVRs"), which were issued in
connection with the Paramount Merger, matured. The Company paid approximately
$83 million in cash, or approximately $1.44 per CVR, to settle its obligation
under the CVRs.
On July 25, 1995, the Company announced an agreement to spin-off its cable
systems to its shareholders through a dutch-auction exchange offer. The exchange
offer will allow shareholders to exchange shares of Viacom Inc. Class A and
Class B Common Stock for shares of cumulative, redeemable exchangeable preferred
stock of a subsidiary of Viacom that holds its cable systems. The Company also
announced that it signed a definitive agreement with Tele-Communications, Inc.
("TCI") under which a subsidiary of TCI, through a capital contribution of $350
million in cash, will purchase all of the common shares of such subsidiary
immediately following the spin-off. National Amusements, Inc., which owns
approximately 26% of Viacom Inc. Class A and Class B Common Stock on a combined
basis, will not participate in the exchange offer. The exchange offer and
related transactions are subject to several conditions, including regulatory
approvals, receipt of a tax ruling and consummation of the exchange offer.
The Company expects, if the conditions are met, the transactions will close in
the first quarter of 1996.
-7-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4) DISPOSITION
On March 10, 1995, the Company sold Madison Square Garden Corporation, which
included the Madison Square Garden Arena, The Paramount theater, the New York
Knickerbockers, the New York Rangers and the Madison Square Garden Network
(collectively "MSG") to a joint venture of ITT Corporation and Cablevision
Systems Corporation for closing proceeds of $1.009 billion, representing the
sale price of approximately $1.075 billion, less approximately $66 million in
working capital adjustments. The sale of MSG resulted in no after-tax book gain.
Proceeds from the sale of MSG and other dispositions were used to repay notes
payable to banks, of which approximately $600 million represents a permanent
reduction of the Company's bank commitments. The Company had acquired MSG as a
part of Paramount.
MSG has been accounted for as a discontinued operation and, accordingly, its
operating results and net assets have been separately disclosed in the
consolidated financial statements. Summarized results of operations and
financial position data for MSG are as follows (in millions, except per share
amounts):
Six months ended Three months ended
June 30, June 30,
---------------- --------
Results of operations: 1995 1994 1994
---- ---- ----
Revenues ....................................... $ 91.5 $156.5 $115.8
Earnings (loss) from operations before income
taxes ........................................ 12.7 4.7 (1.9)
Provision (benefit) for income taxes ........... 5.1 1.9 (0.9)
Net earnings (loss)............................. 7.6 2.8 (1.0)
Net earnings (loss) per common share ........... $.02 $.02 $(.01)
Financial position: ............................ December 31, 1994
-----------------
Current assets ................................. $ 107.8
Net property, plant and equipment .............. 312.9
Other assets ................................... 409.4
Total liabilities .............................. (132.7)
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Net assets of discontinued operations .......... $ 697.4
=======
5) OTHER ITEMS, NET
For the six months ended June 30, 1995, "Other Items, net" primarily reflects a
gain on the sale of an investment held at cost.
On April 4, 1994, the Company sold its one-third partnership interest in
Lifetime for $317.6 million, which resulted in a pre-tax gain of $267.4 million
for the second quarter of 1994. Proceeds from the sale were used to reduce
outstanding debt of Viacom International.
-8-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6) PROVISION FOR INCOME TAXES
The provision for income taxes represents federal, state and foreign income
taxes on earnings before income taxes. The annual effective tax rates of 61% for
1995 and 74% for 1994 continue to be affected by amortization of acquisition
costs in excess of amounts which are deductible for tax purposes.
Due to the unusual and non-recurring nature of the gain on the sale of the
one-third partnership interest in Lifetime, the full income tax effect of the
transaction was reflected in the second quarter of 1994, and was excluded from
the annual effective tax rate.
7) EXTRAORDINARY LOSS
During 1994, the Company and its subsidiaries entered into an aggregate $6.8
billion credit agreement. The proceeds from the credit agreement were used to
refinance the previously existing bank debt of the Company and Viacom
International. The Company recognized an extraordinary loss from the
extinguishment of debt of $20.4 million, net of a tax benefit of $11.9 million,
or $.15 per share for the six months ended June 30, 1994.
8) INVENTORIES
Inventories consist of the following:
June 30, 1995 December 31, 1994
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(In millions)
Prerecorded music and video cassettes ............. $ 473.6 $ 509.2
Video cassette rental inventory ................... 395.9 297.6
Publishing:
Finished goods .............................. 301.3 218.9
Work in process ............................. 37.4 35.8
Material and supplies ....................... 49.7 27.1
Other ............................................. 93.7 73.8
-------- --------
1,351.6 1,162.4
Less current portion ........................ 921.0 830.9
-------- --------
$ 430.6 $ 331.5
======== ========
Theatrical and television inventory:
Theatrical and television productions:
Released ............................... $1,537.4 $1,488.0
Completed, not released ................ 56.5 12.8
In process and other ................... 262.7 260.8
Program rights .............................. 872.1 838.3
-------- --------
2,728.7 2,599.9
Less current portion ........................ 1,039.6 986.9
-------- --------
$1,689.1 $1,613.0
======== ========
Total non-current inventory ....................... $2,119.7 $1,944.5
======== ========
-9-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
9) LONG-TERM DEBT
During May 1995, the Company issued an aggregate principal amount of $1 billion
of 7.75% Senior Notes due June 1, 2005 at a price to the public of 99.04%.
Proceeds from the issuance were used to repay notes payable to banks, of which
approximately $400 million was a permanent reduction of the Company's bank
commitments.
10) COMMITMENTS AND CONTINGENCIES
The commitments of the Company for program license fees which are not reflected
in the balance sheet as of June 30, 1995, estimated to aggregate approximately
$2.0 billion, principally reflect commitments under Showtime Networks Inc.'s
("SNI's") exclusive arrangements with several motion picture companies. This
estimate is based upon a number of factors. A majority of such fees are payable
over several years, as part of normal programming expenditures of SNI. These
commitments are contingent upon delivery of motion pictures, which are not yet
available for premium television exhibition and, in many cases, have not yet
been produced.
11) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Viacom International is a wholly owned subsidiary of the Company. The Company
has fully and unconditionally guaranteed Viacom International debt securities.
The Company has determined that separate financial statements and other
disclosures concerning Viacom International are not material to investors. On
January 3, 1995, Paramount Communications Inc. was merged into Viacom
International and, therefore, Viacom International holds the assets of Paramount
Communications Inc., subject to its liabilities including approximately $1.0
billion of issuances of long-term debt.
The following condensed consolidating financial statements as of and for the
three months and six months ended June 30, 1995 present the results of
operations, financial position and cash flows of Viacom (carrying investments in
Viacom International under the equity method), Viacom International (carrying
investments in non-guarantor affiliates under the equity method), and
non-guarantor affiliates of Viacom, and the eliminations necessary to arrive at
the information for the Company on a consolidated basis. Viacom International's
statement of operations for the three months and six months ended June 30, 1994
and statement of cash flows for the six months ended June 30, 1994, and the
condensed consolidating balance sheet of the Company as of December 31, 1994 as
previously filed on Form 10-Q and Form 10-K, respectively, are incorporated by
reference herein.
-10-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Three Months Ended June 30, 1995
------------------------------------------------------------------------
Non- The
Viacom Guarantor Company
Viacom International Affiliates Eliminations Consolidated
------ ------------- ---------- ------------ ------------
(In millions)
Revenues..................................... $ 817.4 $ 221.8 $ 1,829.8 $ (3.8) $ 2,865.2
Expenses:
Operating................................ 532.6 70.6 1,131.8 (3.8) 1,731.2
Selling, general and administrative...... 86.9 99.7 352.3 -- 538.9
Depreciation and amortization............ 77.9 10.0 119.0 -- 206.9
--------- -------- --------- --------- --------
Total expenses...................... 697.4 180.3 1,603.1 (3.8) 2,477.0
--------- -------- --------- --------- --------
Earnings from continuing operations.......... 120.0 41.5 226.7 -- 388.2
Other income (expense):
Interest expense, net.................... (176.9) (23.6) (5.8) -- (206.3)
Other items, net......................... (.3) (.2) (.7) -- (1.2)
--------- -------- --------- --------- --------
Earnings (loss) from continuing operations
before income taxes...................... (57.2) 17.7 220.2 -- 180.7
Benefit (provision) for income taxes..... 1.4 (2.6) (111.2) -- (112.4)
Equity in earnings of affiliated
companies, net of tax.................. 108.1 113.2 21.6 (258.9) (16.0)
Minority interest........................ .7 -- -- -- .7
--------- -------- --------- --------- --------
Net earnings from continuing operations...... 53.0 128.3 130.6 (258.9) 53.0
Cumulative convertible preferred
stock dividend requirement............. (15.0) -- -- -- (15.0)
--------- -------- --------- --------- --------
Net earnings attributable to common stock.... $ 38.0 $ 128.3 $ 130.6 $ (258.9) $ 38.0
======== ======== ========= ========== ========
-11-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Six Months Ended June 30, 1995
------------------------------------------------------------------------
Non- The
Viacom Guarantor Company
Viacom International Affiliates Eliminations Consolidated
------ ------------- ---------- ------------ ------------
(In millions)
Revenues......................................... $1,705.9 $ 418.1 $ 3,442.1 $ (5.3) $ 5,560.8
Expenses:
Operating.................................... 1,116.0 134.5 2,187.8 (5.3) 3,433.0
Selling, general and administrative.......... 147.8 195.0 674.1 -- 1,016.9
Depreciation and amortization................ 144.2 19.8 223.6 -- 387.6
--------- -------- --------- --------- --------
Total expenses.......................... 1,408.0 349.3 3,085.5 (5.3) 4,837.5
--------- -------- --------- --------- --------
Earnings from continuing operations.............. 297.9 68.8 356.6 -- 723.3
Other income (expense):
Interest expense, net........................ (344.8) (46.4) (11.9) -- (403.1)
Other items, net............................. -- 27.3 (1.0) -- 26.3
--------- -------- --------- --------- --------
Earnings (loss) from continuing operations
before income taxes.......................... (46.9) 49.7 343.7 -- 346.5
Provision for income taxes................... (8.4) (27.8) (175.1) -- (211.3)
Equity in earnings of affiliated
companies, net of tax...................... 182.9 181.2 23.6 (402.9) (15.2)
Minority interest............................ (3.4) -- -- -- (3.4)
--------- -------- --------- --------- --------
Net earnings from continuing operations.......... 124.2 203.1 192.2 (402.9) 116.6
Earnings from discontinued
operations, net of tax .................... -- -- 7.6 -- 7.6
--------- -------- --------- --------- --------
Net earnings..................................... 124.2 203.1 199.8 (402.9) 124.2
Cumulative convertible preferred
stock dividend requirement................. (30.0) -- -- -- (30.0)
--------- -------- --------- --------- --------
Net earnings attributable to common stock........ $ 94.2 $ 203.1 $ 199.8 $ (402.9) $ 94.2
======== ======== ========= ========== ========
-12-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
June 30, 1995
---------------------------------------------------------------------------------
Non- The
Viacom Guarantor Company
Viacom International Affiliates Elimination Consolidated
------ ------------- ---------- ----------- ------------
(In millions)
Assets
Current Assets:
Cash and cash equivalents............ $ 132.5 $ 231.4 $ 71.1 $ -- $ 435.0
Receivables, less allowances......... 221.6 199.2 1,533.3 (17.0) 1,937.1
Inventory............................ 650.5 98.2 1,211.9 -- 1,960.6
Other current assets................. 102.6 116.8 500.0 (63.0) 656.4
---------- ------------- ---------- -------------- ---------------
Total current assets.............. 1,107.2 645.6 3,316.3 (80.0) 4,989.1
---------- ------------- ---------- -------------- ---------------
Property and equipment..................... 957.3 193.6 2,447.7 -- 3,598.6
Less accumulated depreciation........ 80.5 32.6 535.4 -- 648.5
---------- ------------- ---------- -------------- ---------------
Net property and equipment......... 876.8 161.0 1,912.3 -- 2,950.1
---------- ------------- ---------- -------------- ---------------
Inventory.................................. 527.1 152.8 1,439.8 -- 2,119.7
Intangibles, at amortized cost............. 6,876.3 578.7 8,654.1 -- 16,109.1
Investments in consolidated subsidiaries... 3,875.1 11,015.4 -- (14,890.5) --
Other assets............................... 1,165.6 370.1 1,593.1 (473.6) 2,655.2
---------- ------------- ---------- -------------- ---------------
$ 14,428.1 $ 12,923.6 $ 16,915.6 $(15,444.1) $ 28,823.2
========== ============= ========== ============== ===============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable...................... $ 253.1 $ 13.0 $ 387.5 $ (2.9) $ 650.7
Accrued interest...................... 90.7 49.5 1.1 141.3
Accrued compensation.................. 38.6 81.6 192.2 312.4
Participants' share, residuals and
royalties payable................. 68.8 -- 682.7 751.5
Other current liabilities............. 627.3 1,315.4 1,312.0 (960.0) 2,294.7
---------- ------------- ---------- -------------- ---------------
Total current liabilities........... 1,078.5 1,459.5 2,575.5 (962.9) 4,150.6
---------- ------------- ---------- -------------- ---------------
Long-term debt............................. 8,755.1 1,544.4 542.6 (180.4) 10,661.7
Other liabilities.......................... (8,100.0) (1,004.8) 11,634.4 (475.0) 2,054.6
Shareholders' equity:
Preferred Stock....................... 1,200.0 -- -- 1,200.0
Common Stock.......................... 3.6 335.1 722.9 (1,058.0) 3.6
Additional paid-in capital............ 10,644.8 9,664.5 1,162.4 (10,826.9) 10,644.8
Retained earnings..................... 848.5 925.7 294.8 (1,964.2) 104.8
Cumulative translation adjustment..... (2.4) (.8) (17.0) 23.3 3.1
---------- ------------- ---------- -------------- ---------------
Total shareholders' equity.... 12,694.5 10,924.5 2,163.1 (13,825.8) 11,956.3
---------- ------------- ---------- -------------- ---------------
$ 14,428.1 $ 12,923.6 $ 16,915.6 $(15,444.1) $ 28,823.2
========== ============= ========== ============== ===============
-13-
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Six Months Ended June 30, 1995
------------------------------------------------------------------------
Non- The
Viacom Guarantor Company
Viacom International Affiliates Elimination Consolidated
------ ------------- ---------- ----------- ------------
(In millions)
Net cash flow from operating activities ......... $ (633.5) $ 83.4 $(169.7) $ 38.6 $ (681.2)
---------- --------- ------- --------- --------
Investing Activities:
Proceeds from dispositions ...................... -- 1,036.1 91.0 -- 1,127.1
Acquisitions, net of cash acquired .............. (123.7) -- (167.7) -- (291.4)
Capital expenditures ............................ (178.8) (49.3) (139.9) -- (368.0)
Investments in and advances to
affiliated companies ........................ -- (33.4) (15.1) -- (48.5)
Distributions from affiliated companies ......... -- -- 42.4 -- 42.4
Proceeds from sale of short-term investments .... -- 212.7 -- -- 212.7
Payments for purchase of short-term
investments ................................. -- (227.4) -- -- (227.4)
Other, net ...................................... 9.5 -- (15.6) -- (6.1)
---------- --------- ------- --------- --------
Net cash flow from investing activities ......... (293.0) 938.7 (204.9) -- 440.8
---------- --------- ------- --------- --------
Financing Activities:
Short-term borrowings from (repayments to)
banks, net .................................. (931.4) -- 4.0 -- (927.4)
Proceeds from issuance of notes ................. 990.4 -- -- -- 990.4
Increase (decrease) in intercompany
payables .................................... 840.0 (849.2) 47.8 (38.6) --
Payment of Preferred Stock dividends ............ (30.0) -- -- -- (30.0)
Proceeds from exercise of stock options ......... 65.2 -- -- -- 65.2
Deferred financing fees ......................... (10.8) -- -- -- (10.8)
Other, net ...................................... -- (4.9) (4.8) -- (9.7)
---------- --------- ------- --------- --------
Net cash flow from financing activities ......... 923.4 (854.1) 47.0 (38.6) 77.7
---------- --------- ------- --------- --------
Net increase (decrease) in cash and
cash equivalents ....................... (3.1) 168.0 (327.6) -- (162.7)
Cash and cash equivalents at beginning
of period .............................. 135.6 63.4 398.7 -- 597.7
---------- --------- ------- --------- --------
Cash and cash equivalents at end of period ...... $ 132.5 $ 231.4 $ 71.1 $ -- $ 435.0
========== ========= ======= ========= ========
-14-
Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Management's discussion and analysis of the combined results of operations and
financial condition should be read in conjunction with the Consolidated
Financial Statements and related Notes.
During 1994, the Company made two significant acquisitions. Where appropriate
the Company has merged the operations of previously existing and acquired
businesses. Comparisons of results of operations have been significantly
affected by such acquisitions and merging of operations. On March 11, 1994, the
Company acquired a majority of the Paramount common stock outstanding, at a
price of $107 per share in cash. On July 7, 1994, Paramount became a wholly
owned subsidiary of the Company at the effective time of the merger between
Paramount and a subsidiary of the Company. On September 29, 1994, Blockbuster
was merged with and into the Company. On January 3, 1995, Paramount was merged
into Viacom International, a wholly owned subsidiary of the Company. Paramount's
and Blockbuster's results of operations are included in the consolidated results
of operations commencing March 1, 1994 and October 1, 1994, respectively.
The following tables set forth revenues; earnings (loss) from continuing
operations before interest, taxes, depreciation and amortization ("EBITDA"); and
earnings (loss) from continuing operations, by business segment, with the second
quarter and six months ended June 30, 1994 presented on a pro forma basis (as
described in Note 2 of Notes to Consolidated Financial Statements) and on a
historical basis. The pro forma information is provided in addition to
historical information solely to assist in the comparison of results of
operations and is not necessarily indicative of the combined results of
operations of Viacom, Paramount and Blockbuster that would have occurred if the
completion of the Mergers and related transactions had occurred on January 1,
1994. The prior period historical segment presentation has been reclassified to
conform to the current presentation.
Three months ended June 30, Percent Three months ended
---------------------------
1995 1994 Change June 30, 1994
---- ---- ------ ------------
Pro forma Historical
Revenues (Dollars in millions)
Networks and Broadcasting ......................................... $ 528.0 $ 456.7 16% $ 456.7
Entertainment ..................................................... 935.3 548.5 71 464.3
Video and Music/Theme Parks ....................................... 813.9 721.0 13 129.0
Publishing ........................................................ 490.5 469.1 5 469.1
Cable Television .................................................. 110.0 103.5 6 103.5
Intercompany ...................................................... (12.5) (10.1) (24) (10.0)
-------- -------- --------
Total ......................................................... $2,865.2 $2,288.7 25 $1,612.6
======== ======== ========
EBITDA:
Networks and Broadcasting ......................................... $ 173.9 $ 135.2 29% $ 135.3
Entertainment ..................................................... 148.1 79.6 86 55.9
Video and Music/Theme Parks ....................................... 204.7 150.8 36 25.1
Publishing ........................................................ 57.1 56.6 1 56.6
Cable Television .................................................. 45.0 40.8 10 40.8
Corporate ......................................................... (33.7) (25.0) (35) (25.2)
-------- -------- --------
Total ......................................................... $ 595.1 $ 438.0 36 $ 288.5
======== ======== ========
Earnings (loss) from continuing operations:
Networks and Broadcasting ......................................... $ 146.2 $ 110.7 32% $ 111.6
Entertainment ..................................................... 115.1 50.8 127 38.0
Video and Music/Theme Parks ....................................... 117.0 69.3 69 11.3
Publishing ........................................................ 20.7 24.0 (14) 30.6
Cable Television .................................................. 24.6 21.4 15 21.4
Corporate ......................................................... (35.4) (26.8) (32) (27.0)
-------- -------- --------
Total ......................................................... $ 388.2 $ 249.4 56 $ 185.9
======== ======== ========
-15-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Six months ended June 30, Percent Six months ended
---------------------------
1995 1994 Change June 30, 1994
---- ---- ------ ------------
Pro forma Historical
(Dollars in millions)
Revenues:
Networks and Broadcasting ........................................... $ 985.2 $ 866.3 14% $ 835.4
Entertainment ....................................................... 2,006.9 1,210.3 66 693.6
Video and Music/Theme Parks ......................................... 1,508.8 1,344.6 12 136.4
Publishing .......................................................... 865.5 840.3 3 599.2
Cable Television .................................................... 216.0 204.2 6 204.2
Intercompany ........................................................ (21.6) (22.7) 5 (18.4)
-------- -------- --------
Total ........................................................... $5,560.8 $4,443.0 25 $2,450.4
======== ======== ========
EBITDA:
Networks and Broadcasting ........................................... $ 299.5 $ 239.2 25% $ 143.6
Entertainment ....................................................... 337.9 55.8 506 (191.8)
Video and Music/Theme Parks ......................................... 409.9 280.1 46 24.2
Publishing .......................................................... 46.8 7.5 524 49.5
Cable Television .................................................... 87.3 81.0 8 81.0
Corporate ........................................................... (70.5) (59.0) (19) (66.5)
-------- -------- --------
Total ........................................................... $1,110.9 $ 604.6 84 $ 40.0
======== ======== ========
Earnings (loss) from continuing operations:
Networks and Broadcasting ........................................... $ 246.7 $ 190.4 30% $ 100.5
Entertainment ....................................................... 270.2 (7.8) N/M (219.5)
Video and Music/Theme Parks ......................................... 258.8 126.3 105 8.9
Publishing .......................................................... (25.7) (56.6) 55 16.0
Cable Television .................................................... 46.9 42.6 10 42.6
Corporate ........................................................... (73.6) (62.3) (18) (69.4)
-------- -------- --------
Total ........................................................... $ 723.3 $ 232.6 211 $ (120.9)
======== ======== ========
Also included is a comparison of actual EBITDA to pro forma EBITDA, which does
not reflect the effect of significant amounts of amortization of goodwill
related to the Mergers, and other business combinations accounted for under the
purchase method of accounting. While many in the financial community consider
EBITDA to be an important measure of comparative operating performance, it
should be considered in addition to, but not as a substitute for or superior to,
earnings from continuing operations, net income, cash flow and other measures of
financial performance.
RESULTS OF OPERATIONS - SECOND QUARTER 1995 VERSUS SECOND QUARTER 1994
----------------------------------------------------------------------
Revenues increased to $2.9 billion for the second quarter of 1995 from $1.6
billion for the second quarter of 1994. EBITDA increased to $595.1 million for
the second quarter of 1995 from $288.5 million for the second quarter of 1994.
Earnings from continuing operations increased to $388.2 million for the second
quarter of 1995 from $185.9 million for the second quarter of 1994.
The comparability of results of operations for 1995 and 1994 has been affected
by the Mergers and the non-recurring merger-related charges (see Note 2 of Notes
to Consolidated Financial Statements). The following discussion of segment
results of operations includes the 1994 results of operations presented on a pro
forma basis, as if the Mergers occurred on January 1, 1994, and are adjusted to
exclude non-recurring merger-related charges.
-16-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Revenues increased 25% to $2.9 billion for the second quarter of 1995 from pro
forma revenues of $2.3 billion for the second quarter of 1994. EBITDA increased
36% to $595.1 million for the second quarter of 1995 from pro forma EBITDA of
$438.0 million for the second quarter of 1994. Earnings from continuing
operations increased 56% to $388.2 million for the second quarter of 1995 from
pro forma earnings from operations of $249.4 million for the second quarter of
1994.
Segment Results of Operations - Historical 1995 versus Pro Forma 1994
---------------------------------------------------------------------
Networks and Broadcasting (Basic Cable and Premium Television Networks,
Television and Radio Stations)
The Networks and Broadcasting segment is comprised of MTV Networks ("MTVN"),
SNI, television stations and radio stations. Revenues increased 16% to $528.0
million for the second quarter of 1995 from $456.7 million for the second
quarter of 1994. EBITDA increased 29% to $173.9 million for the second quarter
of 1995 from $135.2 million for the second quarter of 1994. Earnings from
operations increased 32% to $146.2 million for the second quarter of 1995 from
$110.7 million for the second quarter of 1994. The gains in results of
operations stemmed from increased MTVN advertising revenues and increased
operating results of the television stations and radio stations. MTVN revenues
of $236.4 million, EBITDA of $94.2 million and earnings from operations of $81.9
million increased 19%, 20% and 20%, respectively. The increase in MTVN's
revenues was principally attributable to higher advertising revenues due to rate
increases. MTVN's EBITDA and earnings from operations gains were driven by the
increased advertising revenues partially offset by higher operating costs, as
well as aggregate losses of $4.8 million and $3.4 million for 1995 and 1994,
respectively, associated with the development of MTV Latino, VH-1 UK,
Nickelodeon Magazine and The Goods.
Entertainment (Motion pictures and television programming, movie theaters, and
new media and interactive services)
The Entertainment segment is comprised of Paramount Pictures, Spelling
Entertainment Group Inc. ("Spelling"), and the former Viacom Entertainment.
Revenues increased 71% to $935.3 million for the second quarter of 1995 from
$548.5 million for the second quarter of 1994. EBITDA increased 86% to $148.1
million for the second quarter of 1995 from $79.6 million for the second quarter
of 1994. Earnings from operations increased 127% to $115.1 million for the
second quarter of 1995 from $50.8 million for the second quarter of 1994. The
higher results of operations are attributable to a number of factors, notably
the strong home video and foreign box office performance of Paramount Pictures'
Forrest Gump, the domestic release of Congo and Braveheart, as well as the sale
of certain syndication rights of the Carsey Werner produced television shows to
Carsey Werner.
Video and Music/Theme Parks
The Video and Music/Theme Parks segment is comprised of Blockbuster Video and
Music, and Paramount Parks. Revenues increased 13% to $813.9 million for the
second quarter of 1995 from $721.0 million for the second quarter of 1994.
EBITDA increased 36% to $204.7 million for the second quarter of 1995 from
$150.8 million for the second quarter of 1994. Earnings from operations
increased 69% to $117.0 million for the second quarter of 1995 from $69.3
million for the second quarter of 1994. The gains in results of operations
primarily reflect the increased number of domestic Company-owned
-17-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
video stores in operation in 1995 as compared to 1994, as well as modest
increases in same-store sales, partially offset by increased overall operating
and overhead expenses. Music stores revenues increased $4.7 million, EBITDA
and earnings from operations decreased $8.7 million and $11.0 million,
respectively, reflecting the highly competitive music retail environment. The
Theme Parks are primarily open during the second and third quarters and
therefore typically record the majority of revenues, EBITDA and earnings from
operations during those periods. Theme Parks revenues increased $5.4 million,
EBITDA increased $.3 million and earnings from operations decreased $1.0
million reflecting increased attendance partially offset by increased
operating and depreciation expenses.
Publishing (Education; Consumer; and International, Business and Professional)
Revenues increased 5% to $490.5 million for the second quarter of 1995 from
$469.1 million for the second quarter of 1994. EBITDA increased 1% to $57.1
million for the second quarter of 1995 from $56.6 million for the second
quarter of 1994. Earnings from operations decreased 14% to $20.7 million for
the second quarter of 1995 from $24.0 million for the second quarter of
1994. Results of operations primarily reflect increased Educational Group
sales with the strongest improvements in the Elementary and Secondary groups
due to increased adoption opportunities, partially offset by lower operating
results for the Consumer group, reflecting a generally weaker mix of titles in
1995 as compared to 1994, and lower operating results of the Business and
Professional Group due to increased operating and development costs partially
offset by stronger sales.
Cable Television (Cable Television Systems)
Cable Television revenues increased 6% to $110.0 million for the second quarter
of 1995 from $103.5 million for the second quarter of 1994, primarily
attributable to increased primary and premium revenues. EBITDA increased 10% to
$45.0 million for the second quarter of 1995 from $40.8 million for the second
quarter of 1994. Earnings from operations increased 15% to $24.6 million for the
second quarter of 1995 from $21.4 million for the second quarter of 1994. The
increased results of operations reflect a 16% and 4% increase in average premium
and primary customers, respectively, partially offset by an 8% decrease for the
average premium rate. Average rates for primary customers increased slightly.
Total revenues per primary customer per month increased 2% to $31.61 for the
second quarter of 1995 from $30.94 for the second quarter of 1994.
On July 25, 1995, Viacom announced a multi-step transaction which, if completed,
would result in the spin-off of its cable operations and their subsequent
acquisition by Tele Communications, Inc (see Note 3 of Notes to Consolidated
Financial Statements).
Other Income and Expense Information
------------------------------------
Interest Expense, net
Net interest expense of $206.3 million for the second quarter of 1995 compared
to $102.7 million for the second quarter of 1994 reflects increased average bank
borrowings, the issuance of the 8% exchangeable subordinated debentures and
7.75% senior notes, and debt acquired as part of the Blockbuster Merger. The
Company had approximately $10.7 billion and $7.2 billion principal amount of
debt outstanding (including current maturities) as of June 30, 1995 and June 30,
1994, respectively, at weighted average interest rates of 7.7% and 6.2%,
respectively.
-18-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Other Items, net
On April 4, 1994, the Company sold its one-third partnership interest in
Lifetime for approximately $317.6 million, which resulted in a pre-tax gain of
approximately $267.4 million for the second quarter of 1994. Proceeds from the
sale were used to reduce outstanding debt of Viacom International.
Provision for Income Taxes
The provision for income taxes represents federal, state and foreign income
taxes on earnings before income taxes. The annual effective tax rates of 61% for
1995 and 74% for 1994 continue to be affected by amortization of acquisition
costs in excess of amounts which are deductible for tax purposes.
Due to the unusual and non-recurring nature of the gain on the sale of the
one-third partnership interest in Lifetime, the full income tax effect of the
transaction was reflected for the second quarter of 1994, and was excluded from
the annual effective tax rate.
Equity In Earnings of Affiliates
"Equity in loss of affiliated companies, net of tax" was $16.0 million for the
second quarter of 1995 as compared to "equity in earnings of affiliated
companies, net of tax" of $.2 million for the second quarter of 1994, primarily
reflecting an equity loss of $20.7 million related to the Company's 49.9%
interest in Discovery Zone and net losses of equity investments established in
1995, partially offset by improved operating results of USA Networks.
Minority Interest
Minority interest primarily represents the minority ownership of Spelling common
stock for 1995 and the minority ownership of Paramount's outstanding common
stock for 1994.
Discontinued Operations
Discontinued operations reflects the results of operations of MSG which was sold
March 10, 1995. The Company had acquired MSG during March 1994 as part of
Paramount. (See Note 4 of Notes to Consolidated Financial Statements.)
Extraordinary Loss
During 1994, the Company and its subsidiaries entered into an aggregate $6.8
billion credit agreement. The proceeds from the credit agreement were used to
refinance the previously existing bank debt of the Company and Viacom
International. The Company recognized an extraordinary loss from the
extinguishment of debt of $20.4 million, net of a tax benefit of $11.9 million.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995 VERSUS SIX MONTHS
------------------------------------------------------------------------
ENDED JUNE 30, 1994
-------------------
Revenues increased to $5.6 billion for the six months ended June 30, 1995 from
$2.5 billion for the six months ended June 30, 1994. EBITDA increased to $1.1
billion for the six months ended June 30, 1995 from $40.0 million for the six
months ended June 30, 1994. Earnings from continuing operations increased to
$723.3 million for the six months ended June 30, 1995 from a loss from
continuing operations of $120.9 million for the six months ended June 30, 1994.
Revenues increased 25% to $5.6 billion for the six months ended June 30, 1995
from pro forma revenues of
-19-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
$4.4 billion for the six months ended June 30, 1994. EBITDA increased 84% to
$1.1 billion for the six months ended June 30, 1995 from pro forma EBITDA of
$604.6 million for the six months ended June 30, 1994. Earnings from
continuing operations increased 211% to $723.3 million for the six months
ended June 30, 1995 from pro forma earnings from operations of $232.6 million
for the six months ended June 30, 1994.
Segment Results of Operations - Historical 1995 versus Pro Forma 1994
---------------------------------------------------------------------
Networks and Broadcasting (Basic Cable and Premium Television Networks,
Television and Radio Stations)
Revenues increased 14% to $985.2 million for the six months ended June 30, 1995
from $866.3 million for the six months ended June 30, 1994. EBITDA increased 25%
to $299.5 million for the six months ended June 30, 1995 from $239.2 million for
the six months ended June 30, 1994. Earnings from operations increased 30% to
$246.7 million for the six months ended June 30, 1995 from $190.4 million for
the six months ended June 30, 1994. The gains in results of operations stemmed
from increased MTVN advertising revenues and increases in operating results of
the television stations and radio stations. MTVN revenues of $443.2 million,
EBITDA of $172.2 million and earnings from operations of $148.8 million
increased 19%, 21% and 20%, respectively. The increase in MTVN's revenues was
principally attributable to higher advertising revenues due to rate increases.
MTVN's EBITDA and earnings from operations gains were driven by the increased
advertising revenues partially offset by higher operating costs, as well as
aggregate losses of $10.4 million and $6.0 million for 1995 and 1994,
respectively, associated with the development of MTV Latino, VH-1 UK,
Nickelodeon Magazine and The Goods.
Entertainment (Motion pictures and television programming, movie theaters, and
new media and interactive services)
Revenues increased 66% to $2.0 billion for the six months ended June 30, 1995
from $1.2 billion for the six months ended June 30, 1994. EBITDA increased 506%
to $337.9 million for the six months ended June 30, 1995 from $55.8 million for
the six months ended June 30, 1994. Earnings from operations increased to $270.2
million for the six months ended June 30, 1995 from a loss of $7.8 million for
the six months ended June 30, 1994. The higher results of operations are
attributable to a number of factors, notably the strong home video and foreign
box office performance of Paramount Pictures' Forrest Gump, other generally
stronger theatrical box office performers in 1995 as compared to 1994, as well
as the sale of certain syndication rights of the Carsey Werner produced
television shows to Carsey Werner. The Company also recognized approximately
$250.0 million of revenues and $68.0 million of EBITDA and earnings from
operations for the six months ended June 30, 1995 resulting from the conforming
of accounting policies pertaining to the television programming libraries of
Viacom Entertainment, Spelling and Paramount.
Video and Music/Theme Parks
Revenues increased 12% to $1.5 billion for the six months ended June 30, 1995
from $1.3 billion for the six months ended June 30, 1994. EBITDA increased 46%
to $409.9 million for the six months ended June 30, 1995 from $280.1 million for
the six months ended June 30, 1994. Earnings from operations increased 105% to
$258.8 million for the six months ended June 30, 1995 from $126.3 million for
the six
-20-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
months ended June 30, 1994. The gains in results of operations primarily
reflect the increased number of domestic Company-owned video stores in operation
in 1995 as compared to 1994, as well as modest increases in same-store sales,
and slightly reduced operating and overhead expenses. Music stores revenues
increased $7.2 million, EBITDA and earnings from operations decreased $14.0
million and $17.2 million, respectively, reflecting the highly competitive music
retail environment. Theme Parks revenues increased $3.4 million, EBITDA remained
constant and earnings from operations decreased $1.0 million reflecting
increased attendance partially offset by increased operating and depreciation
expenses.
Publishing (Education; Consumer; and International, Business and Professional)
Revenues increased 3% to $865.5 million for the six months ended June 30, 1995
from $840.3 million for the six months ended June 30, 1994. EBITDA improved 524%
to $46.8 million for the six months ended June 30, 1995 from $7.5 million for
the six months ended June 30, 1994. Loss from operations improved 55% to a loss
of $25.7 million for the six months ended June 30, 1995 from a loss of $56.6
million for the six months ended June 30, 1994. Publishing typically has
seasonally stronger operating results in the last three quarters of the year.
Results of operations primarily reflect increased Educational Group sales with
strongest improvements in the Elementary Group due to increased adoption
opportunities and contributions from the Consumer Group front list titles at
Pocket Books. EBITDA and the loss from operations for the six months ended June
30, 1994 reflects an aggregate charge of $32.8 million attributable to certain
non-recurring transition costs and the pro forma results of operations of
Macmillan for the two months prior to acquisition.
Cable Television (Cable Television Systems)
Cable Television revenues increased 6% to $216.0 million for the six months
ended June 30, 1995 from $204.2 million for the six months ended June 30, 1994,
primarily attributable to increased primary and premium revenues. EBITDA
increased 8% to $87.3 million for the six months ended June 30, 1995 from $81.0
million for the six months ended June 30, 1994. Earnings from operations
increased 10% to $46.9 million for the six months ended June 30, 1995 from $42.6
million for 1994. The increased results of operations reflect a 20% and 4%
increase in average premium and primary customers, respectively, partially
offset by an 11% decrease in the average premium rate. Average rates for primary
customers remained constant. Total revenues per primary customer per month
increased 2% to $31.19 for the six months ended June 30, 1995 from $30.71 for
the six months ended June 30, 1994.
Other Income and Expense Information
------------------------------------
Other Items, net
For 1995, "Other Items, net" primarily reflects a gain on the sale of an
investment held at cost.
Interest Expense, net
Net interest expense of $403.1 million for the six months ended June 30, 1995
compared to $150.0 million for the six months ended June 30, 1994, reflects
increased average bank borrowings, the issuance of the 8% exchangeable
subordinated debentures and 7.75% senior notes, and debt acquired as part of the
Mergers.
-21-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Equity In Earnings of Affiliates
"Equity in losses of affiliated companies, net of tax" was $15.2 million for the
six months ended June 30, 1995 as compared to "equity in earnings of affiliated
companies, net of tax" of $3.7 million for the six months ended June 30, 1994,
primarily reflecting an equity loss of $20.7 million related to the Company's
49.9% interest in Discovery Zone, net losses of equity investments established
in 1995, the absence of Lifetime's earnings due to the sale of the Company's
one-third interest during April 1994, partially offset by improved operating
results of USA Networks.
Liquidity and Capital Resources
-------------------------------
The Company expects to fund its anticipated cash requirements (including the
anticipated cash requirements of its capital expenditures, joint ventures,
commitments and payments of principal, interest and dividends on its outstanding
indebtedness and preferred stock) with internally generated funds and from
various external sources, which may include the Company's existing credit
agreements, co-financing arrangements by the Company's various divisions,
additional financings and the sale of non-strategic assets as opportunities may
arise.
The Company's scheduled maturities of notes payable to banks and debentures
through December 31, 1999 assuming full utilization of the credit agreements are
$1.5 billion (1996), $151 million (1997), $1.0 billion (1998) and $1.5 billion
(1999).
The commitments of the Company for program license fees which are not reflected
in the balance sheet as of June 30, 1995, estimated to aggregate approximately
$2.0 billion, principally reflect commitments under SNI's exclusive arrangements
with several motion picture companies. This estimate is based upon a number of
factors. A majority of such fees are payable over several years, as part of
normal programming expenditures of SNI. These commitments are contingent upon
delivery of motion pictures, which are not yet available for premium television
exhibition and, in many cases, have not yet been produced.
The Company expects to record the majority of its operating cash flows during
the second half of the year due to the seasonality of the educational publishing
business, the typical timing of major motion picture releases, the summer
operation of Theme Parks, the positive effect of the holiday season on
advertising revenues and video stores revenues, and the impact of the
broadcasting television season on television production. Net cash flow from
operating activities was negative $681.2 million for the six months ended June
30, 1995 versus negative $293.2 million for the six months ended June 30,1994.
Such amounts are not comparable due to the Paramount Merger and Blockbuster
Merger. The operating cash flow for the six months ended June 30, 1995, includes
payments for a significant level of Blockbuster video product purchases
typically made in the first quarter of the year. Net cash flows from investing
activities of $440.8 million for the six months ended June 30, 1995 principally
reflects proceeds from the sale of MSG, partially offset by capital expenditures
and other acquisitions. Net cash expenditures for investing activities of $6.1
billion for the six months ended June 30,1994, principally reflects the
acquisition of the majority of the shares outstanding of Paramount and capital
expenditures, partially offset by proceeds from the sale of the Company's
one-third partnership interest in Lifetime. Financing activities principally
reflect borrowings and repayments of debt under the credit agreements during
each period presented, in 1995 the issuance of the 7.75% Senior Notes and in
1994, the sale of Class B Common Stock to Blockbuster.
-22-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
On July 7, 1995, the contingent value rights ("CVRs"), which were issued in
connection with the Paramount Merger, matured. The Company paid approximately
$83 million in cash, or approximately $1.44 per CVR, to settle its obligation
under the CVRs during the third quarter of 1995.
Capital Structure
The following table sets forth the Company's long-term debt, net of current
portion as of June 30, 1995 and December 31, 1994:
June 30, 1995 December 31,1994
------------- ----------------
(Millions of dollars)
Notes payable to banks ............... $ 6,782.1 $ 7,709.4
Senior debt .......................... 1,933.7 943.0
Senior subordinated debt ............. 634.9 633.1
Subordinated debt .................... 944.0 938.6
Obligations under capital leases ..... 345.1 127.5
Other debt ........................... 78.7 71.8
--------- ---------
10,718.5 10,423.4
Less current portion ................. 56.8 21.0
--------- ---------
$10,661.7 $10,402.4
========= =========
During May 1995, the Company issued an aggregate principal amount of $1 billion
of 7.75% Senior Notes due June 1, 2005 at a price to the public of 99.04%.
Proceeds from the issuance were used to repay notes payable to banks, of which
approximately $400 million was a permanent reduction of the Company's bank
commitments. The 7.75% Senior Notes were issued pursuant to the shelf
registration described below.
The Company and Viacom International were each in compliance with all covenants
and had satisfied all financial ratios and tests as of June 30, 1995 under their
respective credit agreements. The Company and Viacom International expect to
remain in compliance with such covenant ratios as may be applicable from time to
time during 1995.
Debt, including the current portion, as a percentage of total capitalization of
the Company was 47% at June 30, 1995 and December 31, 1994.
The Company enters into interest rate exchange agreements with off-balance sheet
risk in order to reduce its exposure to changes in interest rates on its
variable rate long-term debt and/or take advantage of changes in interest rates.
As of June 30, 1995, the Company and its subsidiaries had obtained interest rate
protection agreements with respect to approximately $1.9 billion of
indebtedness, of which $1.6 billion effectively change the Company's interest
rate on variable rate borrowings to fixed interest rates and $250 million
effectively change the Company's interest rate on fixed rate borrowings to
variable interest rates. The majority of the interest rate protection agreements
will mature over the next two years.
The Company filed a shelf registration statement with the Securities and
Exchange Commission registering debt securities, preferred stock and contingent
value rights of Viacom and guarantees of such debt securities by Viacom
International which may be issued for aggregate gross proceeds of $3.0 billion.
-23-
Management's Discussion and Analysis of Results of
Operations and Financial Condition
The registration statement was declared effective on May 10, 1995. The net
proceeds from the sale of the offered securities may be used by Viacom to repay,
redeem, repurchase or satisfy its obligations in respect of its outstanding
indebtedness or other securities; to make loans to its subsidiaries; for general
corporate purposes; or for such other purposes as may be specified in the
applicable Prospectus Supplement.
-24-
PART II -- OTHER INFORMATION
Item 4. Submission of Matters for a Vote of Security Holders.
The Annual Meeting of Stockholders of Viacom Inc. was held on May 25, 1995.
The following matters were voted upon at the meeting: (i) the election of
13 directors; (ii) the approval of amendments to the Viacom Inc. 1989 and
1994 Long-Term Management Incentive Plans; (iii) the approval of the Viacom
Inc. 1994 Stock Option Plan for Outside Directors; and (iv) the approval of
the appointment of Price Waterhouse LLP, as independent accountants of Viacom
for 1995.
The entire board of directors was reelected and the number of shares
cast for or to withhold authority for the election of each director were as
follows:
No. of Shares
No. of Shares Voted to Withhold
Name Voted for: Authority:
---- ---------- ----------
George S. Abrams 71,112,105 95,135
Steven R. Berrard 71,128,728 78,512
Frank J. Biondi, Jr. 71,114,198 93,042
Philippe P. Dauman 71,116,148 91,092
William C. Ferguson 71,129,309 77,931
H. Wayne Huizenga 71,112,803 94,437
George D. Johnson, Jr. 71,115,443 91,797
Ken Miller 71,114,231 93,009
Brent D. Redstone 71,104,073 103,167
Shari Redstone 71,122,345 84,895
Sumner M. Redstone 71,106,004 101,236
Frederic V. Salerno 71,128,813 78,427
William Schwartz 71,127,378 79,862
The votes cast for, against or abstaining from the approval of
amendments to the Viacom Inc. 1989 and 1994 Long-Term Management Incentive Plans
were as follows:
Votes For: Votes Against: Abstentions:
70,645,622 503,877 57,741
The votes cast for, against or abstaining from the approval of the
Viacom Inc. 1994 Stock Option Plan for Outside Directors were as follows:
Votes For: Votes Against: Abstentions:
69,769,173 779,516 658,551
The votes cast for, against or abstaining from the approval of the
appointment of Price
-25-
Waterhouse LLP to act as independent accountants of Viacom
Inc. for 1995 were as follows:
Votes For: Votes Against: Abstentions:
71,167,812 20,018 19,410
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Amendment No. 1, dated as of May 15, 1995, to the $1.8 billion
Credit Agreement, dated as of September 29, 1994, among Viacom Inc., each of the
several Banks, The Bank of New York, as a Managing Agent and as the
Documentation Agent, Citibank, N.A., as a Managing Agent and as the
Administrative Agent, Morgan Guaranty Trust Company of New York, as a Managing
Agent, JP Morgan Securities Inc., as the Syndication Agent, Bank of America
NT&SA, as a Managing Agent, and the Banks identified as Agents on the signature
pages thereof, as Agents.
10.2 Amendment No. 3, dated as of May 15, 1995, to the $6.489
billion Credit Agreement, dated as of July 1, 1994, as amended as of August
5, 1994 by Amendment No. 1 and as of September 29, 1994 by Amendment No. 2,
among Viacom Inc., each of the several Banks, The Bank of New York, as a
Managing Agent and as the Documentation Agent, Citibank, N.A., as a Managing
Agent and as the Administrative Agent, Morgan Guaranty Trust Company of New
York, as a Managing Agent, JP Morgan Securities Inc., as the Syndication
Agent, Bank of America NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified
as Co-Agents on the signature pages thereof, as Co-Agents; and Amendment No.
2, dated as of May 15, 1995, to the $311 million Credit Agreement, dated as of
July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1, among Viacom
Cablevision of Dayton Inc., WNYT Inc., WMZQ Inc., WVIT Inc. and Viacom
International Inc., each of the several Banks, The Bank of New York, as a
Managing Agent and as the Documentation Agent, Citibank, N.A., as a Managing
Agent and as the Administrative Agent, Morgan Guaranty Trust Company of New
York, as a Managing Agent, JP Morgan Securities Inc., as the Syndication
Agent, Bank of America NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified
as Co-Agents on the signature pages thereof, as Co-Agents.
11 Statement re Computation of Net Earnings Per Share.
27 Financial Data Schedule.
99.1 Statement of Operations of Viacom International Inc. for
the three months and six months ended June 30, 1994 (incorporated by reference
to Item 1 of the Quarterly Report on Form 10-Q of Viacom International Inc.
for the quarter ended June 30, 1994) (File No. 1-9554).
-26-
99.2 Statement of Cash Flows of Viacom International Inc. for the
six months ended June 30, 1994 (incorporated by reference to Item 1 of the
Quarterly Report on Form 10-Q of Viacom International Inc. for the quarter
ended June 30, 1994) (File No. 1-9554).
99.3 Condensed Consolidating Balance Sheet of Viacom Inc. as of
December 31, 1994 (incorporated by reference to Item 8 of the Annual Report
on Form 10-K of Viacom Inc. for the fiscal year ended December 31, 1994)
(File No. 1-9553).
(b) Reports on Form 8-K for Viacom Inc.
Current Report on Form 8-K of Viacom Inc. filed on April
13, 1995 relating to the filing of certain financial information in connection
with the registration statements of Viacom Inc. or Viacom International Inc.
filed under the Securities Act of 1933, as amended, including the Registration
Statement on Form S-3 (Reg. No. 33-53485) of Viacom Inc. and Viacom
International Inc.
Current Report on Form 8-K of Viacom Inc. filed on May 5,
1995 relating to the filing of certain financial information in connection
with the registration statements of Viacom Inc. or Viacom International Inc.
filed under the Securities Act of 1933, as amended, including the Registration
Statement on Form S-3 (Reg. No. 33-53485) of Viacom Inc. and Viacom
International Inc.
Current Report on Form 8-K of Viacom Inc. filed on May 25,
1995 relating to an underwriting agreement between Viacom Inc. and Viacom
International Inc. and Bear, Stearns & Co. Inc., dated May 18, 1995, pursuant
to which, on May 25, 1995, Viacom Inc. issued and sold $1 billion aggregate
principal amount of Viacom Inc.'s 7.75% Senior Notes due 2005, unconditionally
guaranteed as to payment of principal and interest by Viacom International Inc.
Current Report on Form 8-K of Viacom Inc. filed on June 29,
1995 relating to Viacom Inc.'s determination not to extend the July 7, 1995
maturity date on its Contingent Value Rights ("CVRs") and its election to pay
in cash the value of the CVRs upon maturity on July 7, 1995 in accordance with
the CVR's terms.
-27-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIACOM INC.
--------------------------------
(Registrant)
Date August 14, 1995 /s/ Frank J. Biondi, Jr.
--------------- --------------------------------
Frank J. Biondi, Jr.
President,
Chief Executive Officer
Date August 14, 1995 /s/ George S. Smith, Jr.
--------------- --------------------------------
George S. Smith, Jr.
Senior Vice President,
Chief Financial Officer
-28-
Exhibit Index
-------------
10.1 Amendment No. 1, dated as of May 15, 1995, to the $1.8 billion
Credit Agreement, dated as of September 29, 1994, among Viacom Inc., each of the
several Banks, The Bank of New York, as a Managing Agent and as the
Documentation Agent, Citibank, N.A., as a Managing Agent and as the
Administrative Agent, Morgan Guaranty Trust Company of New York, as a Managing
Agent, JP Morgan Securities Inc., as the Syndication Agent, Bank of America
NT&SA, as a Managing Agent, and the Banks identified as Agents on the signature
pages thereof, as Agents.
10.2 Amendment No. 3, dated as of May 15, 1995, to the $6.489
billion Credit Agreement, dated as of July 1, 1994, as amended as of August 5,
1994 by Amendment No. 1 and as of September 29, 1994 by Amendment No. 2, among
Viacom Inc., each of the several Banks, The Bank of New York, as a Managing
Agent and as the Documentation Agent, Citibank, N.A., as a Managing Agent and as
the Administrative Agent, Morgan Guaranty Trust Company of New York, as a
Managing Agent, JP Morgan Securities Inc., as the Syndication Agent, Bank of
America NT&SA, as a Managing Agent, the Banks identified as Agents on the
signature pages thereof, as Agents, and the Banks identified as Co-Agents on the
signature pages thereof, as Co-Agents; and Amendment No. 2, dated as of May 15,
1995, to the $311 million Credit Agreement, dated as of July 1, 1994, as amended
as of August 5, 1994 by Amendment No. 1, among Viacom Cablevision of Dayton
Inc., WNYT Inc., WMZQ Inc., WVIT Inc. and Viacom International Inc., each of the
several Banks, The Bank of New York, as a Managing Agent and as the
Documentation Agent, Citibank, N.A., as a Managing Agent and as the
Administrative Agent, Morgan Guaranty Trust Company of New York, as a Managing
Agent, JP Morgan Securities Inc., as the Syndication Agent, Bank of America
NT&SA, as a Managing Agent, the Banks identified as Agents on the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
11 Statement re Computation of Net Earnings Per Share.
27 Financial Data Schedule.
99.1 Statement of Operations of Viacom International Inc. for the
three months and six months ended June 30, 1994 (incorporated by reference to
Item 1 of the Quarterly Report on Form 10-Q of Viacom International Inc. for the
quarter ended June 30, 1994) (File No. 1-9554).
99.2 Statement of Cash Flows of Viacom International Inc. for the
six months ended June 30, 1994 (incorporated by reference to Item 1 of the
Quarterly Report on Form 10-Q of Viacom International Inc. for the quarter
ended June 30, 1994) (File No. 1-9554).
99.3 Condensed Consolidating Balance Sheet of Viacom Inc. as of
December 31, 1994 (incorporated by reference to Item 8 of the Annual Report on
Form 10-K of Viacom Inc. for the fiscal year ended December 31, 1994) (File
No. 1-9553).
-29-
Exhibit 10.1
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of May 15, 1995 ("Amendment No. 1"), to
the $1.8 BILLION CREDIT AGREEMENT, dated as of September 29, 1994 (the
"Credit Agreement"), among VIACOM INC., a Delaware corporation ("Viacom"),
each of the several Banks, THE BANK OF NEW YORK, as a Managing Agent and as
the Documentation Agent, CITIBANK, N.A., as a Managing Agent and as the
Administrative Agent, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a
Managing Agent, JP MORGAN SECURITIES INC., as the Syndication Agent, BANK
OF AMERICA NT&SA, as a Managing Agent, and the Banks identified as Agents
on the signature pages thereof, as Agents.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Viacom has requested certain amendments to be made to
certain provisions of the Credit Agreement; and
WHEREAS, the parties who have heretofore entered into the Credit
Agreement now desire to amend such provisions of such agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The definition of EBIDT in Section
----------
1.1 of the Credit Agreement is hereby amended by:
(i) deleting clause (a)(ii) in its entirety and replacing it
with the following:
"(ii) amortization expense (including all amortization
expenses recognized in accordance with APB 16 and 17 but
excluding (A) all other amortization of programming, production
and pre-publication costs and (B) amortization of
videocassettes)";
and
(ii) deleting the phrase ", less (c) Net Video Tape Purchases"
----
after the word "definition" at the end of clause (b).
(b) Section 1.1 of the Credit Agreement is hereby amended to
delete the definition of Net Video Tape Purchases.
(c) The definition of "Applicable Eurodollar Rate Margin" in
Section 1.1 of the Credit Agreement is hereby
amended by deleting the proviso in its entirety and replacing it with the
following:
"provided, however, that if the ratings assigned by S&P and
-------- -------
Moody's shall differ, the Credit Rating shall be the rating which
is the higher rating".
(d) Section 3.4 (a) of the Credit Agreement is hereby amended by
deleting the proviso in its entirety and replacing it with the following:
"provided, however, that if the ratings assigned by S&P and
-------- -------
Moody's shall differ, the Credit Rating shall be the rating which
is the higher rating".
(e) Section 8.6 of the Credit Agreement is hereby amended by
replacing it in its entirety with the following:
"8.6. Subsidiary Indebtedness. The Borrower shall not
-----------------------
permit any of its Subsidiaries, other than a Guarantor
Subsidiary, to incur Indebtedness for borrowed money other than
(a) the Subsidiary Loans (as defined in the July Agreements), (b)
under existing facilities identified on Schedule 8.6 or any
replacement facilities thereto which in the aggregate do not
exceed the amounts of the commitments reflected on such Schedule
and (c) Indebtedness for borrowed money in the total amount of
$25 million for all Subsidiaries other than a Guarantor
Subsidiary."
(f) Section 8.7 of the Credit Agreement is hereby amended by
inserting the following after the words "Commercial Paper" in the
parentheses:
"and up to $500 million of Indebtedness with maturities of
no less than seven years from the date such Indebtedness is
incurred".
SECTION 2. Effectiveness. This Amendment No. 1 will be effec-
-------------
tive upon the execution thereof by each of Viacom, the Guarantor Subsidiary
and (i) except in the case of the amendments contained in Sections 1(c) and
(d) hereof, the Majority Banks and (ii) in the case of the amendments
contained in Sections 1(c) and (d) hereof, each of the Banks.
-2-
SECTION 3. Representations and Warranties. Each of the Borrower
------------------------------
and the Guarantor Subsidiary hereby represents and warrants that as of the
date hereof, both before and after giving effect to this Amendment No. 1,
no Default or Event of Default shall exist or be continuing under the
Credit Agreement.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and
-------------
not otherwise defined herein shall have the meanings ascribed to them in
the Credit Agreement.
(b) Except as amended hereby, all of the terms of the Credit
Agreement shall remain and continue in full force and effect and are hereby
confirmed in all respects.
(c) This Amendment No. 1 shall be a Loan Document for the
purposes of the Credit Agreement.
(d) This Amendment No. 1 may be signed in any number of
counterparts, each of which shall be an original, with the same effect as
if the signatures thereto were upon the same instrument. Delivery of an
executed counterpart of a signature page of this Amendment No. 1 by
telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment No. 1.
(e) THIS AMENDMENT NO. 1 AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below,
---------------------------------
the Guarantor Subsidiary hereby agrees to the terms of the foregoing
Amendment No. 1 and confirms that the VII Guarantee remains in full force
and effect.
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
VIACOM INC., as Borrower
VIACOM INTERNATIONAL INC., as
a Subsidiary Guarantor
By: /s/ Vaughn A. Clark
--------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
Managing Agents
---------------
THE BANK OF NEW YORK, as
Managing Agent, the
Documentation Agent and a Bank
By: /s/ Geoffrey C. Brooks
--------------------------
Name: Geoffrey C. Brooks
Title: Vice President
CITIBANK, N.A., as Managing
Agent, the Administrative
Agent and a Bank
By: /s/ Margaret C. Ullrich
--------------------------
Name: Margaret C. Ullrich
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Managing Agent
and a Bank
By: /s/ Mathias Blumschein
-------------------------
Name: Mathias Blumschein
Title: Associate
-4-
BANK OF AMERICA NT&SA, as
Managing Agent and a Bank
By:/s/ Amy S. Trapp
-----------------------
Name: Amy S. Trapp
Title: Vice President
Syndication Agent
-----------------
JP MORGAN SECURITIES INC., as
the Syndication Agent
By: /s/ Barbara J. Asch
-------------------------
Name: Barbara J. Asch
Title:Vice President
Agents
------
BANK OF MONTREAL, as Agent and
a Bank
By: /s/ Yvonne Bos
--------------------------
Name: Yvonne Bos
Title:Managing Director
THE BANK OF NOVA SCOTIA, as
Agent and a Bank
By: /s/ Vince J. Fitzgerald
--------------------------
Name: Vince J. Fitzgerald
Title: Senior Relationship Mgr.
-5-
THE BANK OF TOKYO TRUST
COMPANY, as Agent and a Bank
By: /s/ Charles Poer
-----------------------------------------
Name: Charles Poer
Title: Vice President & Manager
BANQUE PARIBAS, as Agent and a
Bank
By: /s/ Nicole Cawley
-------------------------
Name: Nicole Cawley
Title:Vice President
By: /s/ Cynthia D. Hewitt
-------------------------
Name: Cynthia D. Hewitt
Title: Vice President
BARCLAYS BANK PLC, as Agent
and a Bank
By: /s/ Michael W. Ballard
--------------------------
Name: Michael W. Ballard
Title:Associate Director
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as
Agent and a Bank
By: /s/ Bruce Longenkamp
--------------------------
Name: Bruce Longenkamp
Title:Vice President
-6-
CHEMICAL BANK, as Agent and a
Bank
By: /s/ Mary E. Cameron
--------------------------
Name: Mary E. Cameron
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, as Agent and a Bank
By: /s/ M. Bernadette Collins
--------------------------
Name: M. Bernadette Collins
Title:Authorized Signature
THE DAI-ICHI KANGYO BANK LTD.,
NEW YORK BRANCH, as Agent and
a Bank
By: /s/ Shinya Wako
--------------------------
Name: Shinya Wako
Title:Senior Vice President
and Department Head
THE FUJI BANK, LIMITED, as
Agent and a Bank
By: /s/ Kazuaki Kitabatake
--------------------------
Name: Kazuaki Kitabatake
Title:Joint General Manager
THE INDUSTRIAL BANK OF JAPAN,
LTD., as Agent and a Bank
By: /s/ Jeffrey Cole
--------------------------
Name: Jeffrey Cole
Title:Senior Vice President
-7-
LTCB TRUST COMPANY, as Agent
and a Bank
By: /s/ John A. Krob
--------------------------
Name: John A. Krob
Title: Senior Vice President
MELLON BANK, N.A., as Agent
and a Bank
By: /s/ G. Luis Ashley
--------------------------
Name: G. Luis Ashley
Title: First Vice President
THE MITSUBISHI BANK, LIMITED,
as Agent and a Bank
By: /s/ Paula Mueller
----------------------
Name: Paula Mueller
Title: Vice President
THE MITSUBISHI TRUST & BANKING
CORPORATION, as Agent and a
Bank
By: /s/ Patricia Loret de Mola
--------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A., as
Agent and a Bank
By: /s/ Chad E. Coben
----------------------
Name: Chad E. Coben
Title: Vice President
-8-
THE NIPPON CREDIT BANK, LTD.,
LOS ANGELES AGENCY, as Agent
and a Bank
By: /s/ Bernardo E. Correa-Henschke
---------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President and Manager
ROYAL BANK OF CANADA, as Agent
and a Bank
By: /s/ Eduardo Salazar
--------------------------
Name: Eduardo Salazar
Title: Senior Manager
THE SAKURA BANK, LIMITED, as
Agent and a Bank
By: /s/ Hiroshi Shimazaki
------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
and Manager
THE SANWA BANK, LTD., as Agent
and a Bank
By: /s/ Dominic J. Sorresso
-----------------------
Name: Dominic J. Sorresso
Title:Vice President
SOCIETE GENERALE, as Agent and a
Bank
By: /s/ Pascale Hainline
----------------------
Name: Pascale Hainline
Title:Vice President
-9-
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH, as Agent and a Bank
By: /s/ Shuntaro Hisashi
---------------------------
Name: Shuntaro Hisashi
Title: Joint General Manager
THE TOKAI BANK, LIMITED, NEW
YORK BRANCH, as Agent and a Bank
By: /s/ Masaharu Muto
----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
THE TORONTO-DOMINION BANK, as
Agent and a Bank
By: /s/ Neva Nesbitt
----------------------------
Name: Neva Nesbitt
Title:Manager Credit Admin.
UNION BANK, as Agent and a Bank
By: /s/ J. Kevin Sampson
---------------------------
Name: J. Kevin Sampson
Title:
-10-
UNION BANK OF SWITZERLAND, as
Agent and a Bank
By: /s/ James P. Kelleher
------------------------------
Name: James P. Kelleher
Title: Assistant Vice President
By: /s/ Peter B. Yearley
---------------------------
Name: Peter B. Yearley
Title: Vice President
CREDIT SUISSE, as Agent and a
Bank
By: /s/ Michael C. Mast
----------------------------
Name: Michael C. Mast
Title: Member of Senior
Management
By: /s/ Kristina Catlin
----------------------------
Name: Kristina Catlin
Title: Associate
DEUTSCHE BANK AG, through its
New York and/or Cayman Islands
Branch, as Agent and a Bank
By: /s/ Steven M. Godeke
----------------------------
Name: Steven M. Godeke
Title: Vice President
By: /s/ Bina R. Dabbah
---------------------------
Name: Bina R. Dabbah
Title: Vice President
-11-
FIRST INTERSTATE BANK OF
WASHINGTON, N.A.
By:/s/ Susan Hendrixson
------------------------------------------
Name: Susan Hendrixson
Title: Vice President
-12-
Exhibit 10.2
AMENDMENT
This Amendment ("Amendment"), dated as of May 15, 1995, shall be:
AMENDMENT NO. 3 to the $6.489 BILLION CREDIT AGREEMENT, dated as
of July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1 and as
of September 29, 1994 by Amendment No. 2 (the "Parent Facility"), among
VIACOM INC., a Delaware corporation ("Viacom"), each of the several Banks,
THE BANK OF NEW YORK, as a Managing Agent and as the Documentation Agent,
CITIBANK, N.A., as a Managing Agent and as the Administrative Agent, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as a Managing Agent, JP MORGAN
SECURITIES INC., as the Syndication Agent, BANK OF AMERICA NT&SA, as a
Managing Agent, the Banks identified as Agents on the signature pages
thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents; and
AMENDMENT NO. 2 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1 (the
"Subsidiary Facility"), among VIACOM CABLEVISION OF DAYTON INC., WNYT INC.,
WMZQ INC., WVIT INC. and VIACOM INTERNATIONAL INC., each a Delaware
corporation (collectively, "Subsidiary Borrowers"), each of the several
Banks, THE BANK OF NEW YORK, as a Managing Agent and as the Documentation
Agent, CITIBANK, N.A., as a Managing Agent and as the Administrative Agent,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Managing Agent, JP MORGAN
SECURITIES INC., as the Syndication Agent, BANK OF AMERICA NT&SA, as a
Managing Agent, the Banks identified as Agents on the signature pages
thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Viacom and the Subsidiary Borrowers have requested
certain amendments to be made to certain provisions of the Parent Facility
and the Subsidiary Facility, respectively; and
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend such provisions of
such agreements.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The definition of EBIDT in Section
----------
1.1 of the Parent Facility is hereby amended by:
(i) deleting clause (a)(ii) in its entirety and replacing it
with the following:
"(ii) amortization expense (including all amortization
expenses recognized in accordance with APB 16 and 17 but
excluding (A) all other amortization of programming, production
and pre-publication costs and (B) amortization of
videocassettes)";
and
(ii) deleting the phrase ", less (c) Net Video Tape Purchases"
----
after the word "definition" at the end of clause (b).
(b) Section 1.1 of the Parent Facility is hereby amended to
delete the definition of Net Video Tape Purchases.
(c) The definition of "Applicable Eurodollar Rate Margin" in
Section 1.1 of each of the Parent Facility and the Subsidiary Facility is
hereby amended by deleting the first proviso in its entirety and replacing
it with the following:
"provided, however, that if the ratings assigned by S&P and
-------- -------
Moody's shall differ, the Credit Rating shall be the rating which
is the higher rating".
(d) Section 2.3 (b) of the Parent Facility is hereby amended by:
(i) inserting the words "or Capital Market Transaction date"
after the words "related sale date" in clause (y) thereof;
(ii) deleting the number $250 million in clause (y)(C) thereof
and replacing it with the number $500 million;
(iii) replacing the word "reinvested", wherever it appears
therein, with the words "used to acquire assets";
-2-
(iv) replacing the word "reinvestment", in the first place it
appears therein, with the words "use for acquisitions"; and
(v) replacing the words "reinvestment of Net Cash Proceeds" with
the words "use of Net Cash Proceeds for acquisitions".
(e) Each of Section 5.4 (a) of the Parent Facility and Section
3.4 (a) of the Subsidiary Facility is hereby amended by deleting the
proviso in its entirety and replacing it with the following:
"provided, however, that if the ratings assigned by S&P and
-------- -------
Moody's shall differ, the Credit Rating shall be the rating which
is the higher rating".
(f) Section 10.6 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.6. Subsidiary Indebtedness. The Borrower shall not
-----------------------
permit any of its Subsidiaries, other than a Guarantor
Subsidiary, to incur Indebtedness for borrowed money other than
(a) the Subsidiary Loans (as defined in the Subsidiary Facility),
(b) under existing facilities identified on Schedule 10.6 to
Amendment No. 2 to this Agreement or any replacement facilities
thereto which in the aggregate do not exceed the amounts of the
commitments on such Schedule and (c) Indebtedness for borrowed
money in an aggregate amount at any time outstanding of not more
than $25 million for all of its Subsidiaries other than a
Guarantor Subsidiary".
(g) Section 7.4 of the Subsidiary Facility is hereby amended by
adding after the word "Agreement" the phrase "and other than Indebtedness
permitted pursuant to Section 10.6 of the Parent Facility".
(h) Each of Section 10.7 of the Parent Facility and Section 7.5
of the Subsidiary Facility is hereby amended by inserting the following
after the words "Commercial Paper" in the parentheses:
"and up to $500 million of Indebtedness with maturities of
no less than seven years from the date such Indebtedness is
incurred".
-3-
SECTION 2. Effectiveness. This Amendment will be effective upon
-------------
the execution hereof by each of Viacom, each Subsidiary Borrower, the
Guarantor Subsidiary and (i) except in the case of the amendments contained
in Sections 1(c) and (e) hereof, the Majority Banks and (ii) in the case of
the amendments contained in Sections 1(c) and (e) hereof, each of the
Banks.
SECTION 3. Representations and Warranties. Each of Viacom, the
------------------------------
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and
warrants that as of the date hereof, both before and after giving effect to
this Amendment, no Default or Event of Default shall exist or be continuing
under the Parent Facility or the Subsidiary Facility.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and
-------------
not otherwise defined herein shall have the meanings ascribed to them in
each of the Parent Facility and the Subsidiary Facility.
(b) Except as amended hereby, all of the terms of each of the
Parent Facility and the Subsidiary Facility shall remain and continue in
full force and effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below,
---------------------------------
the Guarantor Subsidiary hereby agrees to the terms of the foregoing
Amendment and confirms that the VII Guarantee remains in full force and
effect.
-4-
SECTION 6. Viacom Inc. Confirmation. By signing below, Viacom
------------------------
Inc., as guarantor under the Parent Guarantee ("Parent Guarantor"), hereby
agrees to the terms of the foregoing Amendment and confirms that the Parent
Guarantee remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
VIACOM INC., as Borrower and as
Parent Guarantor
By: /s/ Vaughn A. Clark
--------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
VIACOM INTERNATIONAL INC., as a
Subsidiary Borrower and as a
Guarantor Subsidiary
By: /s/ Vaughn A. Clark
--------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
On behalf of the following
Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.
By: /s/ Vaughn A. Clark
--------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
-5-
Managing Agents
---------------
THE BANK OF NEW YORK, as Managing
Agent, the Documentation Agent and
a Bank
By: /s/ Geoffrey C. Brooks
--------------------------
Name: Geoffrey C. Brooks
Title: Vice President
CITIBANK, N.A., as Managing Agent,
the Administrative Agent and a Bank
By: /s/ Margaret C. Ullrich
--------------------------
Name: Margaret C. Ullrich
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Managing Agent and a
Bank
By: /s/ Mathias Blumschein
-------------------------
Name: Mathias Blumschein
Title: Associate
BANK OF AMERICA NT&SA, as Managing
Agent and a Bank
By:/s/ Amy S. Trapp
-----------------------
Name: Amy S. Trapp
Title: Vice President
-6-
Agents
------
BANK OF MONTREAL, as Agent and a
Bank
By: /s/ Yvonne Bos
--------------------------
Name: Yvonne Bos
Title:Managing Director
THE BANK OF NOVA SCOTIA, as Agent
and a Bank
By: /s/ Vince J. Fitzgerald
------------------------------
Name: Vince J. Fitzgerald
Title: Senior Relationship Mgr.
THE BANK OF TOKYO TRUST COMPANY, as
Agent and a Bank
By:/s/ Charles Poer
------------------------------------------
Name: Charles Poer
Title: Vice President & Manager
BARCLAYS BANK PLC, as Agent and a
Bank
By: /s/ Michael W. Ballard
--------------------------
Name: Michael W. Ballard
Title:Associate Director
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent and a Bank
By:/s/ John Tyler
------------------------------------------
Name: John Tyler
Title: Vice President
-7-
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent and a Bank
By: /s/ Bruce Longenkamp
--------------------------
Name: Bruce Longenkamp
Title:Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, as Agent and a Bank
By: /s/ M. Bernadette Collins
--------------------------
Name: M. Bernadette Collins
Title:Authorized Signature
THE FIRST NATIONAL BANK OF BOSTON,
as Agent and a Bank
By: /s/ Mary M. Barcus
-----------------------------------------
Name: Mary M. Barcus
Title: Vice President
THE FUJI BANK, LIMITED, as Agent
and a Bank
By: /s/ Kazuaki Kitabatake
--------------------------
Name: Kazuaki Kitabatake
Title:Joint General Manager
THE INDUSTRIAL BANK OF JAPAN, LTD.,
as Agent and a Bank
By: /s/ Jeffrey Cole
--------------------------
Name: Jeffrey Cole
Title:Senior Vice President
-8-
LTCB TRUST COMPANY, as Agent and a
Bank
By: /s/ John A. Krob
--------------------------
Name: John A. Krob
Title: Senior Vice President
MELLON BANK, N.A., as Agent
and a Bank
By: /s/ G. Luis Ashley
--------------------------
Name: G. Luis Ashley
Title: First Vice President
NATIONSBANK OF TEXAS, N.A., as
Agent and a Bank
By: /s/ Chad E. Coben
----------------------
Name: Chad E. Coben
Title: Vice President
SOCIETE GENERALE, as Agent and
a Bank
By: /s/ Pascale Hainline
----------------------
Name: Pascale Hainline
Title:Vice President
THE TORONTO-DOMINION BANK, as
Agent and a Bank
By: /s/ Neva Nesbitt
--------------------------
Name: Neva Nesbitt
Title:Manager Credit Admin.
-9-
UNION BANK, as Agent and a
Bank
By: /s/ J. Kevin Sampson
-------------------------
Name: J. Kevin Sampson
Title:
Co-Agents
---------
CREDIT SUISSE, as Co-Agent and
a Bank
By: /s/ Michael C. Mast
--------------------------
Name: Michael C. Mast
Title: Member of Senior
Management
By: /s/ Kristina Catlin
-------------------------
Name: Kristina Catlin
Title: Associate
THE DAI-ICHI KANGYO BANK LTD.,
NEW YORK BRANCH, as Co-Agent
and a Bank
By: /s/ Shinya Wako
--------------------------
Name: Shinya Wako
Title:Senior Vice President
and Department Head
THE MITSUBISHI BANK, LIMITED,
as Co-Agent and a Bank
By: /s/ Paula Mueller
----------------------
Name: Paula Mueller
Title: Vice President
-10-
THE MITSUBISHI TRUST & BANKING
CORPORATION, as Co-Agent and a
Bank
By: /s/ Patricia Loret de Mola
--------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
ROYAL BANK OF CANADA, as
Co-Agent and a Bank
By: /s/ Eduardo Salazar
--------------------------
Name: Eduardo Salazar
Title: Senior Manager
THE SANWA BANK, LTD., as
Co-Agent and a Bank
By: /s/ Dominic J. Sorresso
------------------------
Name: Dominic J. Sorresso
Title:Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH, as Co-Agent and a
Bank
By: /s/ Shuntaro Hisashi
---------------------------
Name: Shuntaro Hisashi
Title: Joint General Manager
-11-
UNION BANK OF SWITZERLAND, as
Co-Agent and a Bank
By: /s/ James P. Kelleher
----------------------------
Name: James P. Kelleher
Title: Assistant Vice
President
By: /s/ Peter B. Yearley
---------------------------
Name: Peter B. Yearley
Title: Vice President
Syndication Agent
-----------------
JP MORGAN SECURITIES INC., as
the Syndication Agent
By: /s/ Barbara J. Asch
-------------------------
Name: Barbara J. Asch
Title:Vice President
Lead Managers
-------------
CHEMICAL BANK, as Lead Manager
and a Bank
By: /s/ Mary E. Cameron
--------------------------
Name: Mary E. Cameron
Title: Vice President
-12-
DEUTSCHE BANK AG, through its
New York and/or Cayman Islands
Branch, as Lead Manager and a
Bank
By: /s/ Steven M. Godeke
----------------------------
Name: Steven M. Godeke
Title: Vice President
By: /s/ Bina R. Dabbah
---------------------------
Name: Bina R. Dabbah
Title: Vice President
Participants
------------
THE SAKURA BANK, LIMITED
By: /s/ Hiroshi Shimazaki
------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
and Manager
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE, NEW YORK
BRANCH
By:/s/ Brian O'Leary/Marcus Edward
----------------------------------
Name: Brian O'Leary/Marcus Edward
Title: Vice Presidents
PNC BANK N.A.
By: /s/ Karen M. Wolters
-----------------------------------------
Name: Karen M. Wolters
Title: Vice President
-13-
FIRST INTERSTATE BANK OF
WASHINGTON, N.A.
By:/s/ Susan Hendrixson
------------------------------------------
Name: Susan Hendrixson
Title: Vice President
GULF INTERNATIONAL BANK
By:/s/ Abdel-Fattah Tahoun
------------------------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By:/s/ Haytham F. Khalil
-----------------------------
Name: Haytham F. Khalil
Title: Assistant Vice President
THE TOKAI BANK, LIMITED, NEW
YORK BRANCH
By: /s/ Masaharu Muto
----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
THE YASUDA TRUST AND BANKING
CO., LTD., NEW YORK BRANCH
By:/s/ Neil T. Chau
------------------------------------------
Name: Neil T. Chau
Title: First Vice President
BANK BRUSSELS LAMBERT, NEW YORK
BRANCH
By: /s/ Denise Isherwood By: /s/ Eric Hollanders
---------------------- ---------------------------
Name: Denise Isherwood Name: Eric Hollanders
Title: Assistant Vice Title: Senior Vice President
President Credit Department
-14-
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR, NEW YORK BRANCH
By: /s/ Peter K. Harris
----------------------------
Name: Peter K. Harris
Title: Vice President
By: /s/ William Marer
---------------------------
Name: William Marer
Title: Vice President/Manager
DEN DANSKE BANK
By: /s/ George Wendell
----------------------------
Name: George Wendell
Title: Vice President
By: /s/ Mogens Sondergaard
---------------------------
Name: Mogens Sondergaard
Title: Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ William F. Laponte, III
----------------------------
Name: William F. Laponte, III
Title: Vice President
NIPPON CREDIT BANK, LTD., LOS
ANGELES AGENCY
By: /s/ Bernardo E. Correa-Henschke
---------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President and Manager
SHAWMUT BANK CONNECTICUT, N.A.
By: /s/ Robert F. West
------------------------------
Name: Robert F. West
Title: Director
-15-
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
-------------------------
Name: Jeffrey W. Maillet
Title: Vice President
& Portfolio Mgr.
FIRST HAWAIIAN BANK
By: /s/ William B. Schink
----------------------
Name: William B. Schink
Title: Vice President
BAYERISCHE VEREINS BANK, A.G.
By: /s/ John Carlson
--------------------------
Name: John Carlson
Title: Vice President
By: /s/ Sylvia Cheng
---------------------------
Name: Sylvia Cheng
Title: Vice President
BANK OF HAWAII
By: /s/ J. Bryan Scearce
------------------------------
Name: J. Bryan Scearce
Title: Associate Vice President
THE SUMITOMO TRUST BANKING COMPANY,
LTD.
By: /s/ Suraj P. Bhatia
----------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corp. Finance
-16-
Exhibit 11
Viacom Inc. and Subsidiaries
Computation of Net Earnings Per Share
-------------------------------------
(In millions, except per share amounts)
Quarter ended June 30, Six months ended June 30,
---------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
Earnings:
Net earnings from continuing operations........................... $ 53.0 $ 265.6 $ 116.6 $ (169.8)
Cumulative convertible preferred stock dividend requirement....... (15.0) (22.5) (30.0) (45.0)
--------- ----------- --------- -----------
Earnings from continuing operations attributable to
common stock................................................ 38.0 243.1 86.6 (214.8)
Earnings from discontinued operations, net of tax................. -- (1.0) 7.6 2.8
Extraordinary losses, net of tax.................................. -- (20.4) -- (20.4)
--------- ----------- --------- -----------
Net earnings attributable to common stock......................... $ 38.0 $ 221.7 $ 94.2 $ (232.4)
========= =========== ========= ===========
Primary Computation:
Shares:
Weighted average number of common shares..................... 360.0 143.3 359.6 135.0
Common shares potentially issuable in connection with:
Stock options and warrants (a)............................. 8.6 .2 8.5 --
Contingent value rights.................................... 1.8 -- 1.8 --
Variable common rights..................................... 15.7 -- 15.7 --
--------- ----------- --------- -----------
Weighted average common shares and common share
equivalents.............................................. 386.1 143.5 385.6 135.0
========= =========== ========= ===========
Net earnings (loss) per common share:
Net earnings (loss) from continuing operations.............. $ .10 $ 1.69 $ .22 $ (1.59)
Earnings from discontinued operations, net of tax........... -- (.01) .02 .02
Extraordinary losses, net of tax............................ -- (.13) -- (.15)
--------- ----------- --------- -----------
Net earnings (loss).......................................... $ .10 $ 1.55 $ .24 $ (1.72)
========= =========== ========= ===========
Fully Diluted Computation:
Shares:
Weighted average number of common shares outstanding......... 360.0 143.3 359.6 135.0
Common shares potentially issuable in connection with:
Stock options and warrants (a)........................... 9.3 .7 9.1 --
Preferred stock (b)...................................... -- 25.7 -- --
Contingent value rights.................................. 1.8 -- 1.8 --
Variable common rights................................... 15.7 -- 15.7 --
--------- ----------- --------- -----------
Weighted average common shares and common share equivalents.. 386.8 169.7 386.2 135.0
========= =========== ========= ===========
Net earnings (loss) per common share:
Net earnings (loss) from continuing operations...............
Earnings from discontinued operations, net of tax............ $ .10 $ 1.57 $ .22 $ (1.59)
Extraordinary losses, net of tax............................. -- (.01) .02 .02
Net earnings (loss).......................................... -- (.12) -- (.15)
--------- ----------- --------- -----------
$ .10 $ 1.44 $ .24 $ (1.72)
========= =========== ========= ===========
(a) The stock options and warrants had an antidilutive effect on net loss per
share for the six months ended June 30, 1994, and therefore, were excluded
from the primary and fully diluted earnings per share computations.
(b) The Preferred Stock and related dividend requirement had an antidilutive
effect on earnings per share for the second quarter and six months ended
June 30, 1995 and the six months ended June 30, 1994, and therefore, were
excluded from the fully diluted earnings per share computation.
5
1,000,000
6-MOS
DEC-31-1995
JUN-30-1995
435
0
2,041
104
1,961
4,989
3,599
649
28,823
4,151
10,662
4
0
1,200
10,753
28,823
5,561
5,561
3,433
4,838
0
0
403
347
211
117
8
0
0
94
.22
.24
