===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 001-9553
(A) FULL TITLE OF THE PLAN AND THE ADDRESS OF THE PLAN, IF DIFFERENT FROM THAT
OF THE ISSUER NAME BELOW.
VIACOM OUTDOOR INC. 401(k) PLAN
(B) NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS
OF ITS PRINCIPAL EXECUTIVE OFFICE:
VIACOM INC.
1515 BROADWAY, NEW YORK, NY 10036
REQUIRED INFORMATION
(a) FINANCIAL STATEMENTS. FILED AS PART OF THIS REPORT ON FORM 11-K ARE THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO OF THE VIACOM OUTDOOR INC.
401(k) PLAN AS REQUIRED BY FORM 11-K, TOGETHER WITH THE REPORT THEREON OF
PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS, DATED JUNE 18, 2002.
(b) EXHIBITS. A CONSENT OF PRICEWATERHOUSECOOPERS LLP IS BEING FILED AS EXHIBIT
23 TO THIS REPORT.
===============================================================================
VIACOM OUTDOOR INC.
401(k) PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
------------------------------------------------------------------------------
PAGE
Report of Independent Accountants 1
Statements of Net Assets Available for Benefits
at December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2001 3
Notes to Financial Statements 4-9
Supplemental Schedule *:
Schedule of Assets (Held at End of Year)
at December 31, 2001 11
* Other schedules required by the Department of Labor Rules and Regulations for
reporting and disclosure under ERISA have been omitted because they are not
applicable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Viacom Outdoor Inc. 401(k) Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Viacom Outdoor Inc. 401(k) Plan (the "Plan") at December 31, 2001 and
2000, and the changes in net assets available for benefits for the year ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As discussed in Notes 2 and 3 to the financial statements, the 2001 and 2000
financial statements include investments valued at $1,057,393 (approximately 5%
of net assets) and $948,681 (approximately 5% of net assets), respectively, in
deeds of trust whose fair values have been estimated by the Board of Trustees in
the absence of readily determinable market values. We have examined the
procedures used by the Board of Trustees in arriving at its estimate of the
value of such investments and have inspected underlying documentation. In the
circumstances, we believe that such procedures are reasonable and the
documentation appropriate; however, because of the inherent uncertainty of
valuation, those estimated values may differ significantly from the values that
would have been used had a ready market for the investments existed.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
June 18, 2002
Phoenix, Arizona
-1-
VIACOM OUTDOOR INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------
2001 2000
ASSETS
Investments, at fair value: $20,324,293 $20,784,794
----------- -----------
Contributions receivable:
Employer 303,894 468,901
Participant 134,008 179,636
----------- -----------
Total contributions receivable 437,902 648,537
----------- -----------
Net assets available for benefits $20,762,195 $21,433,331
=========== ===========
The accompanying notes are an integral part of these financial statements.
- 2 -
VIACOM OUTDOOR INC. 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
------------------------------------------------------------------------------
2001
Additions to net assets attributed to:
Investment income (loss):
Net depreciation in fair value of investments $(2,150,076)
Interest income 187,928
-----------
Total investment loss (1,962,148)
Contributions:
Participant contributions 3,135,110
Employer contributions 303,894
-----------
3,439,004
-----------
Total additions 1,476,856
Deductions from net assets attributed to:
Benefits paid to participants (2,147,992)
-----------
Net decrease in net assets available for benefits (671,136)
Net assets available for benefits:
Beginning of year 21,433,331
-----------
End of year $20,762,195
===========
The accompanying notes are an integral part of these financial statements.
- 3 -
VIACOM OUTDOOR INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Viacom Outdoor Inc. 401(k) Plan (the
"Plan") provides only general information. Participants should refer to
the Plan document for a more complete description of the Plan's
provisions. The Plan was formerly known as the Infinity Outdoor, Inc.
401(k) Plan and the Outdoor Systems, Inc. 401(k) Plan. Effective
September 1, 2001, it was renamed the Viacom Outdoor Inc. 401(k) Plan.
GENERAL
The Plan, established on January 1, 1987, is a defined contribution
plan of Viacom Outdoor Inc. (the "Company", "Employer", or "Plan
Sponsor"). It is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). In December 1999, the Company
was acquired by Infinity Broadcasting Corporation ("Infinity"). As a
result of the acquisition, the Company became a wholly-owned subsidiary
of Infinity. In connection with the acquisition, each share of the
Company stock was exchanged for 1.25 shares of Infinity Class A common
stock ("Infinity Stock").
Prior to May 4, 2000, Infinity was a subsidiary of CBS Corporation
("CBS"). On May 4, 2000, CBS merged with Viacom Inc. ("Viacom") and, as
a result of the merger, Infinity became a majority-owned subsidiary of
Viacom. On February 21, 2001, Viacom completed its merger with Infinity
by purchasing the remaining minority interest that it did not already
own. As a result of the merger, each share of Infinity Stock was
converted into 0.592 of a share of Viacom Class B Common Stock ("Viacom
Stock"). Immediately prior to the completion of the merger, all of the
outstanding common stock of the Company was transferred to Infinity
Media Corporation, a wholly owned subsidiary of Infinity. The Plan
held $983,158 of Viacom Stock at December 31, 2001.
As of December 31, 2001 the Plan offered participants the following
funds as described in the individual fund's prospectus, to invest
pre-tax and rollover contributions:
o THE FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - This fund
primarily invests in growth, cyclical and value stocks, and
securities convertible to common stocks. The fund may also
invest in other securities, such as preferred stocks and
bonds.
o THE FIDELITY ADVISOR HIGH YIELD A FUND - This fund primarily
invests in high-yielding, fixed income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stock.
o FEDERATED BOND FUND - This fund invests at least 65% of its
assets in investment-grade corporate bonds, U.S. government
securities, preferred stock, convertibles and cash. It may
invest up to 35% of assets in debt rated as low as B. It may
invest up to 25% in debt securities of foreign governments.
o NATIONWIDE FUND - This fund invests primarily in common
stocks, but may also include convertible issues, bonds and
money market instruments.
o THE TWENTIETH CENTURY ULTRA INVESTORS FUND - This fund invests
primarily in domestic common stocks considered to have
better-than-average prospects for appreciation.
o THE TEMPLETON FOREIGN FUND - This fund primarily invests in
stock and debt obligations of companies and governments
outside the United States.
o THE FIXED ACCOUNT FUND - This fund represents investments in a
guaranteed return contract that provides an annual interest
guarantee.
o THE WARBURG PINCUS EMERGING GROWTH FUND - This fund primarily
invests in equity securities of small-to-medium sized
companies in the United States.
o THE NATIONWIDE MONEY MARKET FUND - This fund primarily invests
in commercial paper and U.S. Government obligations.
o THE NATIONWIDE S&P 500 INDEX FUND - This fund seeks investment
results that corresponds with the price and yield performance
of the S&P 500 Index
o OPPENHEIMER GLOBAL FUND - This fund seeks capital appreciation
investing in U.S. and International stocks.
-4-
VIACOM OUTDOOR INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN (CONTINUED)
o PERSONAL PORTFOLIOS - These funds invest in balanced
portfolios of cash, bonds and stock.
o THE VIACOM INC. COMMON STOCK FUND - This fund invests in
the common stock of Viacom Inc., the parent company of
Infinity, which is the parent company of Infinity Media
Corporation, which is the parent company of Viacom Outdoor
Inc., the Plan sponsor.
The Plan previously offered participants the following funds, to invest
pre-tax and rollover contributions, (balances are still within these
funds as participants were not required to transfer their investments):
o THE NEUBERGER & BERMAN GUARDIAN TRUST FUND - This fund
primarily invests in stocks of established companies believed
to be undervalued in comparison to stocks of similar
companies.
o THE FIDELITY ASSET MANGER FUND - This fund primarily invests
in stocks, bonds and short-term instruments.
o THE DREYFUS A BONDS PLUS FUND - This fund primarily invests in
corporate bonds and notes and short-term securities.
o THE NEUBERGER & BERMAN PARTNERS TRUST FUND - This fund
primarily invest in common stocks, bonds, and debentures
believed to have potential for appreciation in value.
o DEEDS OF TRUST - These investments are in first deeds of
trust. All deeds of trust are held in conjunction with related
parties. Effective January 1, 1995, this investment option is
no longer open to participant contributions; however, all
income earned on this investment will continue to be
reinvested in the fund.
CONTRIBUTIONS
Plan contributions consist of three components: (1) eligible employee
deferral contributions of up to 15% of the participant's monthly pretax
compensation up to an annual before-tax dollar limitation in accordance
with the Internal Revenue Service ($10,500 for 2001), (2) discretionary
employer contributions, as determined annually by the Employer's Board
of Directors, and (3) rollover contributions representing qualifying
lump-sum distributions received by a participant from a plan sponsored
by another employer. Various accounts are maintained to record employee
contributions, discretionary employer contributions and rollover
contributions. The benefit to which a participant is entitled is the
total benefit provided from the combined amount of their participant
accounts.
FORFEITURES
Forfeitures representing the value of nonvested benefits of terminated
participants are reallocated to active participants of the Plan and
serve to reduce employer contributions to the Plan in the year in which
employment terminates. There were no forfeitures during 2001.
ELIGIBILITY
Employees are eligible to participate in the Plan upon meeting the
following criteria: (1) 21 years of age; (2) 90 days of service; and
(3) not a member of a collective bargaining unit for which retirement
benefits have been the subject of good faith bargaining unless the
respective bargaining agreement provides otherwise.
-5-
VIACOM OUTDOOR INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Participants are immediately 100% vested in their voluntary and
rollover contributions, plus actual earnings thereon. Vesting of
Employer contributions plus actual earnings thereon is based on years
of service, as follows:
0 - 2 years of service 0% vested
2 years and 1 day of service 100% vested
PARTICIPANT BENEFITS AND DISTRIBUTIONS
Employer contributions and net investment income are allocated
proportionally to individual participant accounts in accordance with
the provisions of the Plan. Benefits provided by the Plan are paid from
the net assets available for benefits. Participants separated from the
Plan due to retirement, total and permanent disability or death are
automatically fully vested in their Employer contributions and will
receive their benefits including their voluntary and rollover
contributions in equal annual installments or a lump sum payment.
Participants separated from the Plan due to termination receive a lump
sum payment including the full value of their voluntary and rollover
contributions and the vested portion of their employer contributions.
PARTICIPANT LOANS
Participants may borrow from the Plan subject to a maximum loan balance
of the lesser of: (1) 50% of their vested account balances, or (2)
$50,000 reduced by the excess of the highest outstanding loan balance
during the preceding 12-month period over the outstanding balance of
loans from the Plan to the participant on the date of the loan. All
loans must be repaid with interest within five years (however, loans
used to acquire a principal residence of the participant must be repaid
within fifteen years). Interest rates for loans are determined
periodically by the Plan trustee. Interest rates on loans outstanding
at December 31, 2001 ranged from 6.75% to 11.5%.
TERMINATION AND AMENDMENTS OF THE PLAN
The Company anticipates that the Plan will continue without
interruption but reserves the right to amend or terminate the Plan at
any time, subject to the provisions of the Plan document and ERISA. No
amendment may deprive any person of rights accrued prior to the
enactment of such an amendment. No amendment shall permit any part of
the assets of the Plan to revert to the Company or be used for or
diverted for purposes other than for the exclusive benefit of the
participants.
ADMINISTRATIVE EXPENSES
The Company pays all administrative expenses of the Plan. Accordingly,
these cost are not reflected in the accompanying financial statements.
-6-
VIACOM OUTDOOR INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
METHOD OF PRESENTATION
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles. Accordingly, income is recognized when earned and expenses
are recorded when incurred. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at December 31, 2001 and 2000 and the reported amounts
of additions to and deductions from net assets for the year ended
December 31, 2001. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Plan investments are valued at fair market value based on quoted market
prices with the exception of the Fixed Account Fund (as more fully
described below).
The investments with Nationwide Life Insurance Company ("Nationwide")
represent pooled separate accounts which are governed under a variable
return contract consisting of numerous mutual fund options with a range
of investment objectives. Each participant in the Plan is assigned a
number of units based on the dollar amount invested by the participant
including amounts matched by the Employer and the daily unit value of
the selected investment funds. A daily unit value is calculated for
each Nationwide Investment fund based on the net asset value of the
underlying mutual fund plus declared dividends and capital gains
distributions less asset management fees for the day.
The Plan has a benefit-responsive investment contract within the Fixed
Account Fund held with Nationwide. Nationwide maintains the
contributions in a general account. The account is credited with
earnings on the underlying investments and charged for participant
withdrawals and administrative expenses. The contract is included in
the financial statements at contract value (which approximates fair
value) as reported to the Plan by Nationwide. Contract value represents
contributions made under the contract, plus earnings, less participant
withdrawals and administrative expenses. Participants may ordinarily
direct the withdrawal or transfer of all or a portion of their
investment at contract value. There are no reserves against contract
value for credit risk of the contract issuer or otherwise. The average
yield and crediting interest rates were approximately 5.7% and 5.5%
for 2001 and 2000, respectively. Nationwide has guaranteed a crediting
interest rate of 4.75% for 2002.
The Plan's investments in individual deeds of trust (Note 3) represent
a percentage of the entire applicable deed of trust, the remainder of
which is held by related plans with a common trustee. These investments
are collateralized by real property, the majority of which is located
in Maricopa County, Arizona. There is no unrealized appreciation/
depreciation on deeds of trust as management believes the cost of
the investments represents a reasonable estimate of their fair market
values. Further, the deeds of trust have no secondary market and,
therefore, are stated at their cost which management believes
represents a reasonable estimate of their fair market value.
-7-
VIACOM OUTDOOR INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION, CONTINUED
The Plan presents in the statement of changes in net assets available
for benefits the net appreciation (depreciation) in the fair value of
its investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
3. INVESTMENTS
The following presents investments that represent 5% or more of the
Plan's net assets at December 31, 2001 and 2000.
2001 2000
--------- ----------
Fidelity Advisor Growth
Opportunities Fund 2,045,022 $2,298,519
Neuberger & Berman Partners Trust Fund 1,337,070 1,386,781
Twentieth Century Ultra Investors Fund 3,380,577 3,707,110
Templeton Foreign Fund 2,168,725 2,367,684
Warburg Pincus Emerging Growth Fund 2,076,621 2,580,494
Neuberger & Berman Guardian Trust Fund 1,227,369 1,227,952
Deeds of Trust (Note 2) 1,057,393 --
Fixed Account Fund 1,117,969 --
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
depreciated in value by $2,150,076 as follows:
2001
-----------
Mutual funds $(2,094,739)
Money market funds 10,574
Viacom Inc. Common Stock (65,911)
-----------
$(2,150,076)
===========
4. TAX STATUS OF THE PLAN
The Internal Revenue Service ("IRS") has determined and informed the
Plan Sponsor by letter dated January 8, 1998 that the Plan and related
trust meet the requirements of Section 401(k) of the Internal Revenue
Code ("IRC") and are exempt from federal income tax under Section 501
(a) of the IRC. The Plan has been amended since receiving the
determination letter and the Plan Sponsor and legal counsel believe
that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC.
On February 18, 2002, an application, which is currently pending, was
submitted to the IRS for an updated determination letter.
-8-
VIACOM OUTDOOR INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------------------------------------------------------------------------
5. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of funds managed by Nationwide Life
Insurance Company. Nationwide Life Insurance Company is the Custodian
as defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions. Other Plan investments are held in
deeds of trust which are held in conjunction with related plans with a
common trustee. Certain Plan assets are invested in the common stock of
Viacom Inc. Viacom is the parent company of Infinity, which is the
parent company of Infinity Media Corporation, which is the parent
company of the Plan Sponsor, Viacom Outdoor Inc. These transactions
also qualify as party-in-interest transactions to the Plan. The
transactions are permitted under the instruments under which the plan
is maintained.
6. SUBSEQUENT EVENTS
Effective April 1, 2002, the Plan was merged into the Viacom 401(k)
Plan, a defined contribution 401(k) plan sponsored by Viacom, and all
net assets were transferred to the Viacom 401(k) Plan. The
participants' former investment accounts were transferred to funds of
the Viacom 401(k) Plan considered to be of similar quality and nature
as determined by Viacom. The transfer of the assets took place on
April 1, 2002.
-9-
SUPPLEMENTAL SCHEDULE
VIACOM OUTDOOR INC. 401(k) PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AT DECEMBER 31, 2001
----------------------------------------------------------------------------------------------------------------------------------
(a) (b) IDENTITY OF ISSUER, BORROWER, (c) DESCRIPTION OF INVESTMENT INCLUDING
LESSOR OR SIMILAR PARTY MATURITY DATE, RATE OF INTEREST, COLLATERAL, (e) CURRENT
PAR OR MATURITY VALUE (d) COST*** VALUE
----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Corporation The Dreyfus A Bonds Plus Fund $ -- $ 636,836
Fidelity Investment Company The Fidelity Advisor Growth Opportunities Fund -- 2,045,022
Fidelity Investment Company The Fidelity Advisor High Yield A Fund -- 821,676
Fidelity Investment Company The Fidelity Asset Manager Fund -- 100,751
Federated The Federated Bond Fund -- 169,328
* Nationwide Life Insurance Company The Nationwide Fund -- 822,585
The Neuberger & Berman Management, Inc. The Neuberger & Berman Guardian Trust Fund -- 1,227,369
* Nationwide Life Insurance Company The Nationwide Money Market Fund -- 627,094
The Neuberger & Berman Management, Inc. The Neuberger & Berman Partners Trust Fund -- 1,337,070
* Nationwide Life Insurance Company The Nationwide S&P 500 Index Fund -- 329,320
Oppenheimer Funds The Oppenheimer Global Fund -- 292,174
American Century The Twentieth Century Ultra Investors Fund -- 3,380,577
Franklin Templeton Group The Templeton Foreign Fund -- 2,168,725
* Nationwide Life Insurance Company The Fixed Account Fund -- 1,117,969
Warburg Pincus Funds The Warburg Pincus Emerging Growth Fund -- 2,076,621
* Nationwide Life Insurance Company Personal Portfolio VI -- 21,316
* Nationwide Life Insurance Company Personal Portfolio III -- 85,984
* Nationwide Life Insurance Company Personal Portfolio I -- 133,704
* Nationwide Life Insurance Company Personal Portfolio IV -- 24,960
* Nationwide Life Insurance Company Personal Portfolio V -- 138,483
* Nationwide Life Insurance Company Personal Portfolio II -- 45,072
** Viacom Inc. Viacom Inc. Common Stock Fund -- 983,158
** Pacific Coach, Inc. Investments in various deeds of Trust with
interest rates from 10.5% to 18.0%, maturing
between 6 months and collateralized by
real property -- 1,057,393
Participant Loans Various rates of interest from 6.75% to 11.5%,
maturing between 6 months and 15 years and
collateralized by the participants accounts
balance -- 681,106
---- -----------
$ -- $20,324,293
==== ===========
* A Custodian of the Plan and therefore, a party-in-interest for which a
statutory exemption exists.
** Investment qualifies as a party-in-interest for the Plan.
*** All investments are participant directed, therefore, disclosure of cost
is not required.
See Report of Independent Accountants
-11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on behalf of the
Plan by the undersigned thereunto duly authorized.
VIACOM OUTDOOR INC. 401(k) PLAN
By: /s/ WALLY KELLY
--------------------------------
Name: Wally Kelly
Title: President and CEO
Dated June 28, 2002
-12-