As filed with the Securities and Exchange Commission on July 13, 2001
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
VIACOM INC. VIACOM INTERNATIONAL INC.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Delaware Delaware
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
04-2949533 13-3844753
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1515 Broadway 1515 Broadway
New York, NY 10036 New York, NY 10036
(212) 258-6000 (212) 258-6000
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including area code, of Registrants' principal including area code, of Registrants' principal
executive offices) executive offices)
-------------------
Michael D. Fricklas, Esq.
Executive Vice President,
General Counsel and Secretary
Viacom Inc.
1515 Broadway
New York, New York 10036
(212) 258-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
Copies to:
Stephen T. Giove, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
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Approximate date of commencement of proposed sale to the public: Upon
consummation of the Exchange Offer described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered registered Per Security Offering Price(1) Registration Fee
-----------------------------------------------------------------------------------------------------------------------
6.40% senior notes due 2006 $400,000,000 100% $400,000,000
6.625% senior notes due 2011 $1,000,000,000 100% $1,000,000,000
6.40% senior notes due 2006 $3,075,000 100% $3,075,000
7.70% senior notes due 2010 $1,000,000 100% $1,000,000 $351,068.75(2)
7.875% senior debentures due 2030 $200,000 100% $200,000
Guarantees of all senior securities --- --- ---
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(1) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
(2) Calculated based upon the market value of the securities to be received by
the registrants in the exchange in accordance with Rule 457(f). Pursuant to
Rule 457(n), no registration fee will be paid in connection with the
guarantees. $1,068.75 of the currently due registration fee has been
previously paid in connection with the filing of Registration Statement
No. 333-54626 on January 30, 2001 and is offset against the currently due
registration fee pursuant to Rule 457(p).
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
================================================================================
EXPLANATORY NOTE
This registration statement contains two separate prospectuses.
The first prospectus relates to an offer to exchange (i) the
unregistered 6.40% senior notes due 2006 ($400,000,000 aggregate principal
amount outstanding) which were issued on May 17, 2001 for an equal amount of
6.40% senior notes due 2006 which have been registered under the Securities Act
of 1933, and (ii) the unregistered 6.625% senior notes due 2011 ($1,000,000,000
aggregate principal amount outstanding) which were issued on May 17, 2001 for an
equal amount of 6.625% senior notes due 2011 which have been registered under
the Securities Act of 1933.
The second prospectus relates to an offer to exchange (i) the remaining
unregistered 6.40% senior notes due 2006 ($3,075,000 aggregate principal amount
outstanding) which were issued January 17, 2001 for an equal amount of 6.40%
senior notes due 2006 which have been registered under the Securities Act of
1933, (ii) the remaining unregistered 7.70% senior notes due 2010 ($1,000,000
aggregate principal amount outstanding) for an equal amount of 7.70% senior
notes due 2010 which have been registered under the Securities Act of 1933 and
(iii) the remaining unregistered 7.875% senior debentures due 2030 ($200,000
aggregate principal amount outstanding) for an equal amount of 7.875% senior
debentures due 2030 which have been registered under the Securities Act of 1933.
Pursuant to a registered exchange offer consummated on March 19, 2001,
additional unregistered senior securities issued on January 17, 2001 were
exchanged, and $396,925,000 registered 6.40% senior notes due 2006, $499,000,000
registered 7.70% senior notes due 2010 and $749,800,000 registered 7.875% senior
debentures due 2030 are currently outstanding.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion dated July 13, 2001
VIACOM INC.
OFFER TO EXCHANGE
6.40% Senior Notes due 2006
($400,000,000 aggregate principal amount issued May 17, 2001)
for
6.40% Senior Notes due 2006
that have been registered under the Securities Act of 1933
and
6.625% Senior Notes due 2011
($1,000,000,000 aggregate principal amount issued May 17, 2001)
for
6.625% Senior Notes due 2011
that have been registered under the Securities Act of 1933
---------------
Unconditionally guaranteed as to payment of principal
and interest by Viacom International Inc.
(a wholly owned subsidiary of Viacom Inc.)
---------------
TERMS OF EXCHANGE OFFER
o The exchange offer will expire at 5:00 p.m., New York City time, on ,
2001, unless we extend the offer.
o Tenders of outstanding unregistered senior securities may be withdrawn at
any time before 5:00 p.m. on the date of expiration of the exchange offer.
o All outstanding unregistered senior securities that are validly tendered
and not validly withdrawn will be exchanged.
o The terms of the exchange senior securities to be issued are substantially
similar to the unregistered senior securities, except for being registered
under the Securities Act of 1933 and not having any transfer restrictions,
registration rights or rights to additional interest.
o The exchange of senior securities will not be a taxable exchange for U.S.
federal income tax purposes.
o We will not receive any proceeds from the exchange offer.
o Application has been made to list the exchange senior securities on the
Luxembourg Stock Exchange.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the senior securities to be
distributed in the exchange offer, nor have any of these organizations
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 2001
Each holder of an unregistered senior security wishing to accept the
exchange offer must deliver the unregistered senior securities to be exchanged,
together with the letter of transmittal that accompanies this prospectus and any
other required documentation, to the exchange agent identified in this
prospectus. Alternatively, you may effect a tender of unregistered senior
securities by book-entry transfer into the exchange agent's account at Euroclear
Bank S.A./N.A., as operator of the Euroclear System ("Euroclear"), Clearstream
Banking, societe anonyme, Luxembourg ("Clearstream Luxembourg") or The
Depository Trust Company ("DTC"). All deliveries are at the risk of the holder.
You can find detailed instructions concerning delivery in the section called
"The Exchange Offer" in this prospectus and in the accompanying letter of
transmittal.
---------------
If you are a broker-dealer that receives exchange senior securities for
your own account you must acknowledge that you will deliver a prospectus in
connection with any resale of the exchange senior securities. The letter of
transmittal accompanying this prospectus states that by so acknowledging and by
delivering a prospectus, you will not be deemed to admit that you are an
"underwriter" within the meaning of the Securities Act. You may use this
prospectus, as we may amend or supplement it in the future, for your resales of
exchange senior securities. We will make this prospectus available to any
broker-dealer for use in connection with any such resale for a period of 180
days after the date of expiration of this exchange offer.
You should rely only on the information contained in or incorporated by
reference in this prospectus. Neither we nor Viacom International has authorized
anyone to provide you with different or additional information. If anyone
provides you with different or additional information, you should not rely on
it. You should assume that the information contained or incorporated by
reference in this prospectus is accurate only as of the date of this prospectus
or the date of the document incorporated by reference. Our business, financial
condition, results of operations and prospects may have changed since then.
Neither we nor Viacom International is making an offer of the senior securities
in any jurisdiction where the offer is not permitted.
TABLE OF CONTENTS
Page
----
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS...................ii
WHERE YOU CAN FIND MORE INFORMATION..........................................iv
PROSPECTUS SUMMARY............................................................1
SUMMARY OF THE EXCHANGE OFFER.................................................3
SUMMARY DESCRIPTION OF THE EXCHANGE SENIOR SECURITIES.........................8
CAPITALIZATION...............................................................10
SUMMARY HISTORICAL FINANCIAL DATA............................................11
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION...................12
RATIO OF EARNINGS TO FIXED CHARGES...........................................13
USE OF PROCEEDS..............................................................14
THE EXCHANGE OFFER...........................................................15
DESCRIPTION OF SENIOR SECURITIES.............................................28
UNITED STATES TAX CONSIDERATIONS.............................................44
PLAN OF DISTRIBUTION.........................................................49
LEGAL MATTERS................................................................50
EXPERTS......................................................................50
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References to "Viacom," "we," "us" and "our" in this prospectus are
references to Viacom Inc. References to "Viacom International" are references to
Viacom International Inc. References to "$" and "dollars" are to United States
dollars.
Whenever we refer in this prospectus to the 6.40% senior notes due 2006
issued on May 17, 2001 or the 6.625% senior notes due 2011 issued on May 17,
2001, we will refer to them as the "unregistered 2006 senior notes" or the
"unregistered 2011 senior notes", respectively, and collectively as the
"unregistered senior securities". Whenever we refer in this prospectus to the
registered 6.40% senior notes due 2006 or the registered 6.625% senior notes due
2011, we will refer to them as the "exchange 2006 senior notes" or the "exchange
2011 senior notes", respectively, and collectively as the "exchange senior
securities". The unregistered 2006 senior notes and the exchange 2006 senior
notes are collectively referred to as the "2006 senior notes" and the
unregistered 2011 senior notes and the exchange 2011 senior notes are
collectively referred to as the "2011 senior notes". The unregistered senior
securities and the exchange senior securities are collectively referred to as
the "senior securities".
i
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain both historical and forward-looking statements. All
statements other than statements of historical fact are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are not based on historical facts, but rather reflect
our current expectations concerning future results and events. These
forward-looking statements generally can be identified by the use of statements
that include phrases such as "believe," "expect," "anticipate," "intend,"
"plan," "foresee," "likely," "will" or other similar words or phrases.
Similarly, statements that describe our objectives, plans or goals are or may be
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be different from any future results,
performance and achievements expressed or implied by these statements. You
should review carefully all information, including the financial statements and
the notes to the financial statements, included or incorporated by reference
into this prospectus.
The following important factors, among others, could affect our future
results, causing these results to differ materially from those expressed in our
forward-looking statements:
o We derive substantial revenues from the sale of advertising time on
our over-the-air networks, basic cable networks, television stations,
radio stations and outdoor businesses. The advertising market has
recently experienced softness. The sale of advertising time is
affected by viewer demographics, viewer ratings and market conditions
for advertising time. Adverse changes to any of these factors could
have a negative effect on revenues.
o Operating results derived from our motion picture and television
production fluctuate depending primarily upon cost of such productions
and acceptance of such productions by the public, which are difficult
to predict. Motion picture and television production has experienced
cycles in which increased costs of talent and other factors have
resulted in higher production costs. In addition, the commercial
success of our motion picture and television productions also depends
upon the quality and acceptance of other competing productions, and
the availability of alternative forms of entertainment and leisure
time activities.
o Our operating results also fluctuate due to the timing and
availability of theatrical and home video releases, as well as a
result of the recording of license fees for television exhibition of
motion pictures and for syndication and basic cable exhibition of
television programming in the period that the products are available
for such exhibition.
o Our basic cable network and premium subscription television networks
are dependent on affiliation agreements with cable and direct
broadcast satellite distributors on acceptable terms. The loss of
carriage on such distributors, or continued carriage on less favorable
terms, could adversely affect, with respect to basic cable networks,
revenues from subscribers fees and the ability to sell advertising
time, and with respect to premium subscription television networks,
subscribers fee revenues.
o Some of our businesses are seasonal. More specifically, the home video
business and consumer publishing business are subject to increased
periods of demand coinciding with summer and winter holidays, while a
substantial majority of the theme parks operating income is generated
from May through September. In addition, the home video and theme
parks businesses' revenues are influenced by weather.
ii
o Changes in FCC laws and regulations could, directly or indirectly,
adversely affect the operations and ownership of our properties.
o We have contingent liabilities related to discontinued operations,
including environmental liabilities and pending litigation. While
there can be no assurance in this regard, the pending or potential
litigation, environmental and other liabilities should not have a
material adverse effect on us.
o We may be adversely affected by changes in technology and its effect
on competition in our markets.
o Labor agreements covering the services of actors whom we utilize in
our motion picture and television businesses are currently scheduled
to expire during 2001. Work stoppages and/or higher costs in
connection with these agreements could adversely impact our ability to
produce or acquire new programming.
o Other economic, business, competitive and/or regulatory factors
affecting our businesses generally.
These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in any of
our forward-looking statements. Other unknown or unpredictable factors also
could have material adverse effects on our future results. The forward-looking
statements included in this prospectus are made only as of the date of this
prospectus and under Section 27A of the Securities Act and Section 21E of the
Exchange Act and we do not have any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances. We
cannot assure you that projected results or events will be achieved.
iii
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov.
Our Class A common stock and Class B common stock are listed on the New
York Stock Exchange. Information about us also is available at the New York
Stock Exchange. In accordance with U.S. securities laws, Viacom International is
not obligated to file annual, quarterly and current reports, proxy statements
and other information with the SEC. Accordingly, Viacom International does not
file separate financial statements with the SEC and does not independently
publish its financial statements. Viacom International's financial condition,
results of operations and cash flows are consolidated into the financial
statements of Viacom.
We are "incorporating by reference" specified documents that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Later information that we file with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 by us until the exchange offer is
completed.
o Our Annual Report on Form 10-K for the year ended December 31,
2000.
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001.
o Our Current Report on Form 8-K dated May 4, 2000, as amended on
July 17, 2000, and our Current Reports on Form 8-K dated January
5, 2001, January 8, 2001, February 15, 2001, February 21, 2001,
May 30, 2001, June 1, 2001 and July 3, 2001.
o Our definitive Proxy Statement dated April 16, 2001.
o CBS Corporation Annual Report on Form 10-K for the year ended
December 31, 1999, as amended on April 28, 2000.
o The consolidated financial statements of Infinity Broadcasting
Corporation, as set forth in Item 8 and the notes thereto to
Infinity's Annual Report on Form 10-K for the year ended December
31, 1999.
o The condensed financial statements of Infinity, as set forth in
Item 1 to Infinity's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000.
o Our Registration Statement on Form S-4 dated January 12, 2001.
iv
You may obtain a copy of these filings at no cost, by writing or
telephoning us at the following address:
Viacom Inc.
1515 Broadway
52nd Floor
New York, New York 10036
Attn: Investor Relations
Telephone Number: (212) 258-6000
In addition, copies of all documents that we incorporate into this
prospectus by reference may be obtained free of charge at the offices of
Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg, our
Luxembourg paying and transfer agent.
v
PROSPECTUS SUMMARY
The following summary highlights selected information from this
prospectus and does not contain all of the information that you should consider
before participating in this exchange offer. You should read the entire
prospectus, accompanying letter of transmittal and documents incorporated by
reference carefully.
THE COMPANY
We, together with our subsidiaries, are a diversified worldwide
entertainment company with operations in six segments: Cable Networks,
Television, Infinity, Entertainment, Video and Publishing. The Cable Networks
segment operates MTV: MUSIC TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT
NITE(R), VH1 MUSIC FIRST(R), TV LAND(R), TNN: THE NATIONAL NETWORK,TM CMT:
COUNTRY MUSIC TELEVISIONTM and BET: BLACK ENTERTAINMENT TELEVISION(R), among
other program services. The Television segment consists of CBS(R) and UPN(R)
television networks, 39 owned broadcast television stations and Viacom's
television production and syndication business, including KING WORLD
PRODUCTIONS(TM) and PARAMOUNT TELEVISION(TM). The Infinity segment operates
approximately 184 radio stations through INFINITY BROADCASTING(R) and outdoor
advertising properties through INFINITY OUTDOOR(TM) and TDI(R). The
Entertainment segment includes PARAMOUNT PICTURES(R), which produces and
distributes theatrical motion pictures; PARAMOUNT PARKS(R), which owns and
operates five theme parks and a themed attraction in the United States and
Canada; and movie theater and music publishing operations. The Video segment
consists of an approximately 82% equity interest in Blockbuster Inc., which
operates and franchises BLOCKBUSTER(R) video stores worldwide. The remainder of
Blockbuster's common stock was sold to the public in August 1999. The Publishing
segment publishes and distributes consumer books and related multimedia
products, under such imprints as SIMON & SCHUSTER(R), POCKET BOOKS(TM),
SCRIBNER(R) and THE FREE PRESS(TM). We were organized under the laws of the
State of Delaware in 1986. Viacom's principal offices are located at 1515
Broadway, New York, New York 10036 and our telephone number is (212) 258-6000.
THE GUARANTOR
Viacom International, the guarantor of the senior securities, was
organized under the laws of the State of Delaware in 1995 and has its corporate
headquarters at 1515 Broadway, New York, New York 10036. Viacom International
has 100 shares of common stock outstanding, all of which are held by Viacom. The
operating assets of Viacom International and its subsidiaries include MTV: MUSIC
TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT NITE(R), VH1 MUSIC FIRST(R),
TV LAND(R), approximately 18 broadcast television stations, all interests in the
businesses of the Video, Entertainment and Publishing segments and certain
related Internet sites.
1
CERTAIN SUBSIDIARIES
Viacom has one subsidiary, Blockbuster, Inc., which is subject to the
reporting requirements of the Exchange Act. Blockbuster, incorporated under the
laws of the State of Delaware in 1989, has its corporate headquarters at 1201
Elm Street, Dallas, Texas 75270. As of March 31, 2001, Blockbuster had
31,014,696 shares of Class A common stock and 144,000,000 shares of Class B
common stock outstanding. Blockbuster is a retailer of rentable home
videocassettes, DVDs and video games, and has stores throughout the United
States and in many other countries. Blockbuster operates primarily under the
Blockbuster brand name. Blockbuster's financial condition, results of operations
and cash flows are consolidated into the financial statements of Viacom. We own
all of Blockbuster's Class B common stock representing an approximately 82%
equity interest in Blockbuster.
RECENT DEVELOPMENTS
As a result of Viacom's merger with CBS Corporation on May 4, 2000,
Viacom acquired an approximate 64.2% equity interest in Infinity Broadcasting
Corporation. On February 21, 2001, Infinity merged with and into a wholly owned
subsidiary of Viacom. In connection with the Viacom/Infinity merger, Viacom
issued 0.592 of a share of its Class B common stock for each issued and
outstanding share of Infinity Class A common stock resulting in the issuance of
approximately 232 million shares of Viacom Class B common stock.
On November 3, 2000, Viacom announced an agreement to acquire BET
Holdings II, Inc., which operates the BET: BLACK ENTERTAINMENT TELEVISION(R)
cable networks. On January 23, 2001, we completed our acquisition of BET for a
total purchase price of approximately $3.0 billion, which principally represents
the issuance of approximately 43.4 million shares of Viacom Class B common stock
and the assumption by Viacom of approximately $590 million in debt.
2
SUMMARY OF THE EXCHANGE OFFER
On May 17, 2001, we issued $400 million aggregate principal amount of
unregistered 6.40% senior notes due 2006 and $1 billion aggregate principal
amount of unregistered 6.625% senior notes due 2011. The unregistered senior
securities are unconditionally guaranteed as to payment of principal and
interest by Viacom International. On the same day, we and the initial purchasers
of the unregistered senior securities entered into a registration rights
agreement in which we agreed that you, as a holder of unregistered senior
securities, would be entitled to exchange your unregistered senior securities
for exchange senior securities registered under the Securities Act but otherwise
having substantially identical terms to the unregistered senior securities. This
exchange offer is intended to satisfy these rights. After the exchange offer is
completed, you will no longer be entitled to any registration rights with
respect to your senior securities. The exchange senior securities will be our
obligations and will be entitled to the benefits of the indenture and
supplemental indentures relating to the unregistered senior securities. The
exchange senior securities will also be unconditionally guaranteed as to payment
of principal and interest by Viacom International. The form and terms of the
exchange senior securities are identical in all material respects to the form
and terms of unregistered senior securities, except:
o the exchange senior securities have been registered under the Securities
Act, and therefore will contain no restrictive legends;
o the exchange senior securities will not have registration rights; and
o the exchange senior securities will not have rights to additional interest.
For additional information on the terms of the exchange offer, see "The
Exchange Offer."
The Exchange Offer............... We are offering to exchange $1,000 principal
amount of:
o 6.40% senior notes due 2006 which
have been registered under the
Securities Act of 1933 for each
$1,000 principal amount of our
outstanding unregistered 2006
senior notes that were issued on
May 17, 2001. As of the date of
this prospectus, $400 million in
aggregate principal amount of our
unregistered 2006 senior notes are
outstanding;
o 6.625% senior notes due 2011 which
have been registered under the
Securities Act of 1933 for each
$1,000 principal amount of our
outstanding unregistered 2011
senior notes that were issued on
May 17, 2001. As of the date of
this prospectus, $1 billion in
aggregate principal amount of our
unregistered 2011 senior notes are
outstanding.
Expiration of Exchange
Offer......................... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2001, unless we
decide to extend the expiration date.
3
Conditions of the Exchange
Offer......................... We will not be required to accept for
exchange any unregistered senior securities,
and we may amend or terminate the exchange
offer if any of the following conditions or
events occurs:
o the exchange offer, or the making
of any exchange by a senior
security holder, violates
applicable law or any applicable
interpretation of the staff of the
SEC;
o any action or proceeding shall have
been instituted or threatened with
respect to the exchange offer
which, in our judgment or the
judgment of Viacom International,
would impair our ability to proceed
with the exchange offer; and
o any law, rule or regulation or
applicable interpretations of the
staff of the SEC have been issued
or promulgated which, in our good
faith determination or the good
faith determination of Viacom
International, does not permit us
to effect the exchange offer.
We will give oral or written notice of any
non-acceptance, amendment or termination to
the registered holders of the unregistered
senior securities as promptly as
practicable. We reserve the right to waive
any conditions of the exchange offer.
Resale of Exchange Senior
Securities.................... Based on interpretative letters of the SEC
staff to third parties unrelated to us, we
believe that you can resell and transfer the
exchange senior securities you receive
pursuant to this exchange offer, without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that:
o any exchange senior securities to
be received by you will be acquired
in the ordinary course of your
business;
o you are not engaged in, do not
intend to engage in and have no
arrangement or understanding with
any person to participate in the
distribution of the unregistered
senior securities or exchange
senior securities;
o you are not an "affiliate" (as
defined in Rule 405 under the
Securities Act) of Viacom or Viacom
International or, if you are such
an affiliate, you will comply with
the registration and prospectus
delivery requirements of the
Securities Act to the extent
applicable;
o if you are a broker-dealer, you
have not entered into any
arrangement or understanding with
Viacom or Viacom International or
any "affiliate" of Viacom or Viacom
International (within the meaning
of Rule 405 under the Securities
Act) to distribute the exchange
4
senior securities;
o if you are a broker-dealer, you
will receive exchange senior
securities for your own account in
exchange for unregistered senior
securities that were acquired as a
result of market-making activities
or other trading activities and
that you will deliver a prospectus
in connection with any resale of
such exchange senior securities;
and
o you are not acting on behalf of any
person or entity that could not
truthfully make these
representations.
If you wish to accept the exchange offer,
you must represent to us that these
conditions have been met.
If our belief is inaccurate and you transfer
any exchange senior security without
delivering a prospectus meeting the
requirements of the Securities Act or
without an exemption from registration under
the Securities Act, you may incur liability
under the Securities Act. We do not assume
or indemnify you against such liability, but
we do not believe that any such liability
should exist.
Accrued Interest on the
Exchange Senior Securities
and Unregistered Senior
Securities.................... The exchange senior securities will accrue
interest from the date interest was last
paid on the unregistered senior securities.
If no interest was paid on your unregistered
senior securities, your exchange senior
securities will accrue interest from and
including May 17, 2001. We will pay interest
on the exchange 2006 senior notes
semi-annually on January 30 and July 30 of
each year. We will pay interest on the
exchange 2011 senior notes semi-annually on
May 15 and November 15 of each year.
Holders of unregistered senior securities
that are accepted for exchange will be
deemed to have waived the right to receive
any payment in respect of interest accrued
from the date of the last interest payment
date that was made in respect of the
unregistered senior securities until the
date of the issuance of the exchange senior
securities. Consequently, holders of
exchange senior securities will receive the
same interest payments that they would have
received had they not accepted the exchange
offer.
Procedures for Tendering
Unregistered Senior
Securities.................... If you wish to participate in the exchange
offer, you must transmit a properly
completed and signed letter of transmittal,
and all other documents required by the
letter of transmittal, to the exchange agent
at the address set forth in the letter of
5
transmittal. These materials must be
received by the exchange agent before 5:00
p.m., New York City time, on , 2001, the
expiration date of the exchange offer. You
must also provide:
o a confirmation of any book-entry
transfer of unregistered senior
securities tendered electronically
into the exchange agent's account
with DTC, Euroclear or Clearstream
Luxembourg. You must comply with
DTC's, Euroclear's or Clearstream
Luxembourg's respective standard
operating procedures for electronic
tenders, by which you will agree to
be bound in the letter of
transmittal; or
o physical delivery of your
unregistered senior securities to
the exchange agent's address as set
forth in the letter of transmittal.
The letter of transmittal must also contain
the representations you must make to us as
described under "The Exchange
Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners............. If you are a beneficial owner of
unregistered senior securities that are held
through a broker, dealer, commercial bank,
trust company or other nominee and you wish
to tender such unregistered senior
securities, you should contact the person
promptly and instruct the person to tender
your unregistered senior securities on your
behalf.
Guaranteed Delivery
Procedures for
Unregistered Senior
Securities.................... If you cannot meet the expiration deadline,
or you cannot deliver your unregistered
senior securities, the letter of transmittal
or any other required documentation, or
comply with DTC's, Euroclear's or
Clearstream Luxembourg's respective standard
operating procedures for electronic tenders
on time, you may tender your unregistered
senior securities according to the
guaranteed delivery procedures set forth
under "The Exchange Offer-Guaranteed
Delivery Procedures."
Withdrawal Rights................ You may withdraw the tender of your
unregistered senior securities at any time
prior to 5:00 p.m., New York City time, on
,2001, the expiration date.
Consequences of Failure to
Exchange...................... If you are eligible to participate in this
exchange offer and you do not tender your
unregistered senior securities as described
in this prospectus, you will not have any
further registration rights. In that case,
your unregistered senior securities will
continue to be subject to restrictions on
transfer. As a result of the restrictions on
transfer and the availability of exchange
6
senior securities, the unregistered senior
securities are likely to be much less liquid
than before the exchange offer. The
unregistered senior securities will, after
the exchange offer, bear interest at the
same rate as the exchange senior securities.
Certain U.S. Federal Income
Tax Consequences.............. The exchange of the unregistered senior
securities for exchange senior securities
pursuant to the exchange offer will not be a
taxable exchange for U.S. federal income tax
purposes.
Use of Proceeds.................. We will not receive any proceeds from the
issuance of exchange senior securities
pursuant to the exchange offer.
Exchange Agents for
Unregistered Senior Securities... Citibank, N.A., the trustee under the
indenture for the unregistered senior
securities, is serving as the principal
exchange agent in connection with the
exchange offer. Citibank can be reached at
111 Wall Street, 15th Floor, New York, New
York 10005; its telephone number is (800)
422-2066 and its facsimile number is (212)
825-3483.
Kredietbank S.A. Luxembourgeoise, our
Luxembourg listing, paying and transfer
agent, will also act as Luxembourg exchange
agent. In its capacity as Luxembourg
exchange agent, Kredietbank will act solely
as an intermediary between Citibank, as the
principal exchange agent, and holders of
unregistered senior securities wishing to
accept the exchange offer. Kredietbank will
forward the tenders it receives to the
principal exchange agent. Kredietbank can be
reached at 43, Boulevard Royal, L-2955
Luxembourg; its telephone number is (352) 47
97 3933 and its facsimile number is (352) 47
97 73 951.
7
SUMMARY DESCRIPTION OF THE EXCHANGE SENIOR SECURITIES
The following summarized description of the exchange senior securities
is subject to a number of important exceptions and qualifications. For
additional information on the terms of the exchange senior securities, see
"Description of Senior Securities."
Exchange Senior Securities....... o $400,000,000 aggregate principal
amount of registered 6.40% senior
notes due 2006.
o $1,000,000,000 aggregate principal
amount of registered 6.625% senior
notes due 2011.
Further Issuance................. The unregistered 2006 senior notes will be,
upon their exchange for exchange 2006 senior
notes registered under the Securities Act, a
further issuance of our 6.40% senior notes
due 2006, $396,925,000 of which were issued
on March 19, 2001.
Maturity Dates................... o January 30, 2006 for the exchange
2006 senior notes.
o May 15, 2011 for the exchange 2011
senior notes.
Interest Payment Dates........... o January 30 and July 30 of each year
for the exchange 2006 senior notes.
o May 15 and November 15 of each year
for the exchange 2011 senior notes.
Interest will be paid beginning on the
interest payment date immediately following
the last interest payment date for which
interest was paid on unregistered senior
securities.
Optional Redemption.............. The exchange 2011 senior notes are
redeemable at our option, in whole or in
part, at any time. The redemption price is
the principal amount of the exchange 2011
senior notes redeemed, plus accrued and
unpaid interest, plus a make-whole premium
based on a discount rate of 25 basis points,
over an appropriate treasury rate.
Covenants........................ The indenture governing the exchange senior
securities contains covenants that, among
other things, limit our ability to:
o create certain liens;
o enter into certain sale and
leaseback transactions; and
o consolidate, merge or sell all or
substantially all of our assets,
unless certain conditions are met.
8
Events of Default................ The indenture provides for events of
default, subject to applicable cure periods,
including:
o we do not pay interest on a senior
security within 30 days of its due
date;
o we do not pay the principal of or
any premium on a senior security on
its due date;
o we remain in breach of a covenant
or warranty in respect of the
indenture for 60 days after we
receive a written notice of
default. The notice must be sent by
either the trustee or holders of at
least 25% in principal amount of a
series of outstanding senior
securities;
o we are in default under agreements
under which we have indebtedness
outstanding in excess of $250
million in the aggregate and which
indebtedness is due either at
maturity or has been declared due
prior to maturity and remains
unpaid;
o we fail to pay a money judgment in
excess of $250 million for a period
of 60 days after it becomes final
and not subject to further appeal;
or
o we or Viacom International file for
bankruptcy, or other specified
events of bankruptcy, insolvency or
reorganization occur.
Trustee.......................... Citibank, N.A.
Listing.......................... Application has been made to list the
exchange senior securities on the Luxembourg
Stock Exchange.
9
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2001:
o on a historical basis, as reported by Viacom and
o on a pro forma basis to reflect the issuance and sale of
unregistered 6.40% senior notes due 2006 and unregistered
6.625% senior notes due 2011 on May 17, 2001, the issuance and
sale of registered 7.25% senior notes due 2051 on June 27,
2001, and the application of the net proceeds from the sale of
these senior notes to the repayment of outstanding commercial
paper indebtedness.
We will not receive any proceeds from this exchange offer.
At March 31, 2001(1)
(Unaudited)
---------------------------------
Historical Pro Forma
---------- ---------
(in millions, except per share
amounts)
Long-term Debt:
Continuing operations:
Notes payable to banks (including commercial paper)................... $ 4,532 $ 2,815
Senior notes and debentures (6.75% - 10.50%, due 2002-2030) .......... 6,953 6,953
Senior subordinated notes (8.875%-10.25%, due 2001-2007).............. 564 564
Subordinated exchange debentures (11.375%, due 2009).................. 39 39
Other .............................................................. 42 42
Obligations under capital leases...................................... 508 508
6.40% senior notes due 2006 .......................................... 399 805
6.625% senior notes due 2011 ......................................... --- 993
7.25% senior notes due 2051 .......................................... --- 335
---------- ---------
Total debt...................................................... 13,037 13,054
---------- ---------
Stockholders' Equity:
Class A common stock, par value $.01 per share; 500 shares
authorized; 139 shares issued(1)...................................... 1 1
Class B common stock, par value $.01 per share; 3,000 shares
authorized; 1,689 shares issued(1).................................... 17 17
Additional paid-in capital................................................. 64,726 64,726
Retained earnings.......................................................... 1,425 1,425
Accumulated other comprehensive loss....................................... (201) (201)
Less: Treasury stock....................................................... (2,510) (2,510)
---------- ---------
Total stockholders' equity...................................... 63,458 63,458
---------- ---------
Total capitalization............................................ $ 76,495 $ 76,512
========== =========
---------------
(1) Except as set forth above and except as otherwise disclosed in any
documents incorporated herein by reference, there has been no material
change in the total capitalization of Viacom since March 31, 2001.
10
SUMMARY HISTORICAL FINANCIAL DATA
The summary consolidated financial data presented below have been
derived from, and should be read together with, our audited consolidated
financial statements and the accompanying notes included in our annual report on
Form 10-K for the year ended December 31, 2000 and the unaudited interim
consolidated financial statements and the accompanying notes included in our
quarterly report on Form 10-Q for the quarter ended March 31, 2001, both of
which are incorporated by reference into this prospectus.
Three Months
Ended March 31,
(Unaudited) Year Ended December 31,
-------------------- --------------------------------------------------------
2001(a) 2000 2000(a) 1999 1998 1997 1996
------- ---- ------- ---- ---- ---- ----
(in millions, except per share amounts)
Statement of Operations Data:
Revenues ............................... $ 5,752 $ 3,026 $ 20,044 $ 12,859 $12,096 $ 10,685 $ 9,684
Depreciation............................ 214 135 800 497 442 447 331
Amortization of intangibles............. 531 95 1,424 348 336 325 323
Operating income........................ 404 240 1,321 1,247 752 685 1,197
Earnings (loss) from continuing
operations ........................ (7) 68 (364) 372 (44) 374 152
Net earnings (loss)..................... (7) (384) (816) 334 (122) 794 1,248
Net earnings (loss) attributable to
common stock....................... (7) (384) (816) 322 (150) 734 1,188
Earnings (loss) per common share:
Basic:
Earnings (loss) from continuing
operations......................... $ __ $ 0.10 $ (0.30) $ 0.52 $ (0.10) $ 0.44 $ 0.13
Net earnings (loss)................ $ __ $ (0.55) $ (0.67) $ 0.46 $ (0.21) $ 1.04 $ 1.63
Diluted:
Earnings (loss) from continuing
operations......................... $ __ $ 0.10 $ (0.30) $ 0.51 $ (0.10) $ 0.44 $ 0.13
Net earnings (loss)................ $ __ $ (0.54) $ (0.67) $ 0.45 $ (0.21) $ 1.04 $ 1.62
Weighted average shares outstanding:
Basic.............................. 1,628 695 1,225 695 709 706 728
Diluted............................ 1,628 711 1,225 710 709 709 735
Other Data:
EBITDA(b)............................... $ 1,149 $ 470 $ 3,544 $ 2,092 $ 1,530 $ 1,457 $ 1,851
At December 31,
At March 31, 2001 ----------------------------------------------------------
(Unaudited)(a) 2000(a) 1999 1998 1997 1996
--------------- ------- ---- ---- ---- ----
(in millions)
Balance Sheet Data:
Cash and cash equivalents............... $ 948 $ 935 $ 681 $ 767 $ 292 $ 209
Intangibles, net........................ 71,867 62,004 11,479 11,557 14,700 14,894
Total assets............................ 92,550 82,646 24,486 23,613 28,289 28,834
Long-term debt, net of current portion.. 12,887 12,474 5,698 3,813 7,423 9,856
Stockholders' equity ................... 63,458 47,967 11,132 12,050 13,384 12,587
---------------
(a) Includes financial information for CBS Corporation from May 4, 2000, the
date of its merger with and into Viacom. Accordingly, operating results and
financial position are not necessarily comparable on a year-to-year basis.
(b) We define EBITDA as operating income before depreciation and amortization,
principally of goodwill related to business combinations. We believe that
EBITDA is an appropriate measure for evaluating our operating performance.
However, EBITDA should be considered in addition to, not as a substitute
for or superior to, operating income, net earnings, cash flow and other
measures of financial performance prepared in accordance with generally
accepted accounting principles. As EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles,
this measure may not be comparable to similarly titled measures employed by
other companies.
11
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma combined financial
information is based upon the historical financial statements of Viacom,
adjusted for the Viacom/CBS merger, BET acquisition, Viacom/Infinity merger and
certain other transactions. The unaudited pro forma combined condensed statement
of operations data for the three months ended March 31, 2001 and the year ended
December 31, 2000 is presented as if the above transactions had occurred on
January 1, 2000.
The summary unaudited pro forma combined condensed financial data is
for illustrative purposes only and does not necessarily indicate the operating
results that would have been achieved had the Viacom/CBS merger, BET
acquisition, Viacom/Infinity merger and certain other transactions been
completed as of the dates indicated or of the results that may be obtained in
the future. In addition, the data does not reflect synergies that might be
achieved from combining these operations.
Unaudited Pro Forma Combined Statement of Operations Data
Three Months
Ended Year Ended
March 31, December
2001 31, 2000
-------------- ----------------
Statement of Operations Data: (in millions, except per share
amounts)
Revenues .............................................................. $ 5,768 $ 23,620
Operating income....................................................... 378 1,908
Earnings from continuing operations before income taxes................ 121 971
Loss from continuing operations........................................ (30) (189)
Basic and diluted loss from continuing operations per share............ (0.02) (0.11)
Basic and diluted weighted average shares outstanding.................. 1,770 1,774
Other Data:
EBITDA(a) ............................................................. $ 1,154 $ 5,047
---------------
(a) We define EBITDA as operating income before depreciation and amortization,
principally of goodwill related to business combinations. We believe that
EBITDA is an appropriate measure for evaluating our operating performance.
However, EBITDA should be considered in addition to, not as a substitute
for or superior to, operating income, net earnings, cash flow and other
measures of financial performance prepared in accordance with generally
accepted accounting principles. As EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles,
this measure may not be comparable to similarly titled measures employed by
other companies.
12
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
The ratio of earnings to fixed charges for Viacom are set forth below,
on a pro forma basis, for the three months ended March 31, 2001 and the year
ended December 31, 2000 to give effect to the Viacom/CBS merger, BET
acquisition, Viacom/Infinity merger and certain other transactions, as if the
transactions each occurred on January 1, 2000, and on a historical basis for the
three months ended March 31, 2001 and for each year in the five-year period
ended December 31, 2000.
For purposes of computing the following ratios, earnings represents
income from continuing operations before fixed charges and taxes. Fixed charges
represent interest expense, amortization of capitalized interest and such
portion of rental expense, which represents an appropriate interest factor.
Three Months Ended Year Ended December 31,
March 31, 2001 2000 Viacom Historical
---------------------- ---------------------------------------------
Historical Pro Forma Pro Forma 2000 1999 1998 1997 1996
---------- --------- --------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges............... 1.5x 1.4x 1.2x 1.5x 2.2x 1.1x 2.0x 1.4x
13
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In
consideration for issuing the exchange senior securities contemplated by this
prospectus, we will receive unregistered senior securities from you in like
principal amount. The unregistered senior securities surrendered in exchange for
the exchange senior securities will be retired and canceled and cannot be
reissued. Accordingly, issuance of the exchange senior securities will not
result in any change in our indebtedness.
14
THE EXCHANGE OFFER
Purpose and Effect of Exchange Offer; Registration Rights
We sold the unregistered senior securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc., as representatives of
the initial purchasers, on May 17, 2001. The initial purchasers then resold the
unregistered senior securities under an offering memorandum dated May 10, 2001
in reliance on Rule 144A and Regulation S under the Securities Act. On May 17,
2001, we entered into a registration rights agreement with the initial
purchasers. Under the registration rights agreement, we agreed:
o to file with the SEC a registration statement relating to the exchange
offer under the Securities Act no later than July 16, 2001;
o to use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the Securities
Act on or before November 13, 2001; and
o to use our reasonable best efforts to cause the exchange offer to be
consummated not later than 45 days following the date of effectiveness
of the exchange offer registration statement, but not before July 30,
2001.
If you participate in the exchange offer, you will, with limited
exceptions, receive senior securities that are freely tradable and not subject
to restrictions on transfer. You should read the information in this prospectus
under the heading "-Resales of Exchange Senior Securities" for more information
relating to your ability to transfer exchange senior securities.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of unregistered senior securities in any jurisdiction in
which the exchange offer or the acceptance of the exchange offer would not be in
compliance with the securities laws or blue sky laws of such jurisdiction.
If you are eligible to participate in this exchange offer and you do
not tender your unregistered senior securities as described in this prospectus,
you will not have any further registration rights. In that case, your
unregistered senior securities will continue to be subject to restrictions on
transfer under the Securities Act.
Shelf Registration
In the registration rights agreement, we agreed to file a shelf
registration statement only if:
o after May 17, 2001, there is a change in law or applicable
interpretations of the law by the staff of the SEC, and as a result we
are not permitted to complete the exchange offer as contemplated by
the registration rights agreement;
o any holder of unregistered senior securities is not able to
participate in the exchange offer;
o any holder of unregistered senior securities does not receive fully
transferable exchange senior securities;
15
o the exchange offer registration statement is not declared effective by
November 13, 2001 or the exchange offer is not consummated within 45
days after the exchange offer registration statement is declared
effective, but not earlier than July 30, 2001, although we may
terminate the shelf registration statement at any time, without
penalty, if the exchange offer registration statement is declared
effective or the exchange offer is consummated; or
o upon the request of any of the initial purchasers made within 90 days
after the consummation of the exchange offer with respect to
unregistered senior securities not eligible to be exchanged in the
exchange offer and held by it following the consummation of the
exchange offer.
If a shelf registration statement is required, we will use our
reasonable best efforts to:
o file the shelf registration statement with the SEC no later than (a)
December 13, 2001 or (b) the 60th day after such filing obligation
arises, whichever is later;
o use our reasonable efforts to cause the shelf registration statement
to be declared effective by the SEC no later than January 14, 2002;
and
o use our reasonable efforts to keep the shelf registration statement
effective until two years after the effective date, or if earlier
until all of the unregistered senior securities covered by the shelf
registration statement are sold thereunder or are already freely
tradable.
During any 365-day period, we will have the ability to suspend the
availability of the shelf registration statement for up to 4 periods of up to 45
consecutive days (except for the consecutive 45-day period immediately prior to
the maturity of the senior securities), but no more than an aggregate of 90 days
during any 365-day period, if our board of directors determines in good faith
that there is a valid purpose for the suspension.
The shelf registration statement will permit only certain holders to
resell their unregistered senior securities from time to time. In particular,
such holders must:
o provide specified information in connection with the shelf
registration statement; and
o agree in writing to be bound by all provisions of the registration
rights agreement (including the applicable indemnification
obligations).
If we are required to file a shelf registration statement, we will
provide to each holder of unregistered senior securities that are covered by the
shelf registration statement copies of the prospectus that is a part of the
shelf registration statement and notify each such holder when the shelf
registration statement becomes effective. A holder who sells unregistered senior
securities pursuant to the shelf registration statement will be required to be
named as a selling securityholder in the prospectus and to deliver a copy of the
prospectus to purchasers. Such holder will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales, and
will be bound by the provisions of the registration rights agreement which are
applicable to such a holder (including the applicable indemnification
obligations).
Additional Interest
If a registration default (as defined below) occurs, we will be
required to pay additional interest to each holder of unregistered senior
securities. During the first 90-day period that a registration default
16
occurs, we will pay additional interest equal to 0.25% per annum. At the
beginning of the second and any subsequent 90-day period that a registration
default is continuing, the amount of additional interest will increase by an
additional 0.25% per annum until all registration defaults have been cured.
However, in no event will the rate of additional interest exceed 0.50% per annum
for each of the unregistered senior securities. Such additional interest will
accrue only for those days that a registration default occurs and is continuing.
All accrued additional interest will be paid to the holders of the unregistered
senior securities in the same manner as interest payments on the unregistered
senior securities are made, with payments being made on the interest payment
dates for the senior securities. Following the cure of all registration
defaults, no more additional interest will accrue. You will not be entitled to
receive any additional interest if you were, at any time while the exchange
offer was pending, eligible to exchange, and did not validly tender your
unregistered senior securities for exchange senior securities in the exchange
offer.
A "registration default" includes any of the following:
o we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for such
filing;
o any of such registration statements is not declared effective by the
SEC on or prior to the date specified for such effectiveness;
o we fail to complete the exchange offer on or prior to the date
specified for such completion; or
o the shelf registration statement or the exchange offer registration
statement is declared effective but thereafter ceases to be effective
or usable in connection with resales of the senior securities during
the period specified in the registration rights agreement, subject to
certain exceptions for limited periods of time with respect to the
shelf registration statement.
The exchange offer is intended to satisfy our exchange offer
obligations under the registration rights agreement. The above summary of the
registration rights agreement is not complete and is subject to, and qualified
by reference to, all the provisions of the registration rights agreement. A copy
of the registration rights agreement is filed as an exhibit to the registration
statement that includes this prospectus.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this
prospectus and in the accompanying letter of transmittal, we are offering to
exchange $1,000 principal amount of exchange senior securities for each $1,000
principal amount of unregistered senior securities. You may tender some or all
of your unregistered senior securities only in integral multiples of $1,000. As
of the date of this prospectus, $400 million aggregate principal amount of the
unregistered 2006 senior notes issued May 17, 2001 and $1 billion aggregate
principal amount of the unregistered 2011 senior notes issued May 17, 2001 are
outstanding.
The terms of the exchange senior securities to be issued are
substantially similar to the unregistered senior securities, except that the
exchange senior securities have been registered under the Securities Act and,
therefore, the certificates for the exchange senior securities will not bear
legends restricting their transfer. The exchange senior securities will be
issued under and be entitled to the benefits of the Indenture, dated as of May
15, 1995, among us, our wholly owned subsidiary, Viacom International, as
guarantor, and Citibank, N.A., as successor to State Street Bank and Trust
Company and The First National Bank of Boston, Trustee. The Indenture was
supplemented by the First Supplemental
17
Indenture, dated as of May 24, 1995, was supplemented and amended by the Second
Supplemental Indenture and Amendment No. 1, dated as of December 15, 1995, was
supplemented by the Third Supplemental Indenture, dated as of July 22, 1996, was
supplemented by the Fourth Supplemental Indenture, dated as of August 1, 2000,
was supplemented by the Fifth Supplemental Indenture, dated as of January 17,
2001, was supplemented, in connection with the issuance of the unregistered
senior securities, by the Sixth Supplemental Indenture, dated as of May 17, 2001
and was supplemented by the Seventh Supplemental Indenture, dated as of May 31,
2001. We refer to the Indenture, as so supplemented and amended, as the
"Indenture."
In connection with the issuance of the unregistered senior securities,
we arranged for the unregistered senior securities to be issued and transferable
in book-entry form through the facilities of Euroclear, Clearstream Luxembourg
and DTC, acting as a depositary. The exchange senior securities will also be
issuable and transferable in book-entry form through Euroclear, Clearstream
Luxembourg and DTC.
There will be no fixed record date for determining the eligible holders
of the unregistered senior securities that are entitled to participate in the
exchange offer. We will be deemed to have accepted for exchange validly tendered
unregistered senior securities when and if we have given oral (promptly
confirmed in writing) or written notice of acceptance to the exchange agent. The
exchange agent will act as agent for the tendering holders of unregistered
senior securities for the purpose of receiving exchange senior securities from
us and delivering them to such holders.
If any tendered unregistered senior securities are not accepted for
exchange because of an invalid tender or the occurrence of certain other events
described herein, certificates for any such unaccepted unregistered senior
securities will be returned, without expenses, to the tendering holder thereof
as promptly as practicable after the expiration of the exchange offer.
Holders of unregistered senior securities who tender in the exchange
offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the letter of transmittal, transfer taxes with respect to
the exchange of unregistered senior securities for exchange senior securities
pursuant to the exchange offer. We will pay all charges and expenses, other than
certain applicable taxes, in connection with the exchange offer. It is important
that you read the section "- Fees and Expenses" below for more details regarding
fees and expenses incurred in the exchange offer.
If we successfully complete this exchange offer, any unregistered
senior securities which holders do not tender or which we do not accept in the
exchange offer will remain outstanding and will continue to be subject to
restrictions on transfer. The unregistered senior securities will continue to
accrue interest, but, in general, the holders of unregistered senior securities
after the exchange offer will not have further rights under the registration
rights agreement, and we will not have any further obligation to register the
unregistered senior securities under the Securities Act. In that case, holders
wishing to transfer unregistered senior securities would have to rely on
exemptions from the registration requirements of the Securities Act.
Conditions of the Exchange Offer
You must tender your unregistered senior securities in accordance with
the requirements of this prospectus and the letter of transmittal in order to
participate in the exchange offer. Notwithstanding any other provision of the
exchange offer, or any extension of the exchange offer, we will not be required
to accept for exchange any unregistered senior securities, and may amend or
terminate the exchange offer if:
18
o the exchange offer, or the making of any exchange by a senior security
holder, violates applicable law or any applicable interpretation of
the staff of the SEC;
o any action or proceeding shall have been instituted or threatened with
respect to the exchange offer which, in our judgment or the judgment
of Viacom International, would impair our ability to proceed with the
exchange offer; and
o any law, rule or regulation or applicable interpretations of the staff
of the SEC have been issued or promulgated which, in our good faith
determination or the good faith determination of Viacom International,
does not permit us to effect the exchange offer.
Expiration Date; Extensions; Amendment; Termination
The exchange offer will expire 5:00 p.m., New York City time, on ,
2001, unless, in our sole discretion, we extend it. In the case of any
extension, we will notify the exchange agent orally (promptly confirmed in
writing) or in writing of any extension. We will also notify the registered
holders of unregistered senior securities of the extension no later than 9:00
a.m., New York City time, on the business day after the previously scheduled
expiration of the exchange offer.
To the extent we are legally permitted to do so, we expressly reserve
the right, in our sole discretion, to:
o delay accepting any unregistered senior security;
o waive any condition of the exchange offer; and
o amend the terms of the exchange offer in any manner.
We will give oral or written notice of any non-acceptance or amendment
to the registered holders of the unregistered senior securities as promptly as
practicable. If we consider an amendment to the exchange offer to be material,
we will promptly inform the registered holders of unregistered senior securities
of such amendment in a reasonable manner.
If we or Viacom International determine in our sole discretion that any
of the events or conditions described in "- Conditions of the Exchange Offer"
has occurred, we may terminate the exchange offer. If we decide to terminate the
exchange offer, we may:
o refuse to accept any unregistered senior securities and return any
unregistered senior securities that have been tendered to the holders;
o extend the exchange offer and retain all unregistered senior
securities tendered prior to the expiration of the exchange offer,
subject to the rights of the holders of tendered unregistered senior
securities to withdraw their tendered unregistered senior securities;
or
o waive the termination event with respect to the exchange offer and
accept all properly tendered unregistered senior securities that have
not been withdrawn.
If any such waiver constitutes a material change in the exchange offer,
we will disclose the change by means of a supplement to this prospectus that
will be distributed to each registered holder of unregistered senior securities,
and we will extend the exchange offer for a period of five to ten business
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days, depending upon the significance of the waiver and the manner of disclosure
to the registered holders of the unregistered senior securities, if the exchange
offer would otherwise expire during that period.
Any determination by us concerning the events described above will be
final and binding upon parties. Without limiting the manner by which we may
choose to make public announcements of any extension, delay in acceptance,
amendment or termination of the exchange offer, we will have no obligation to
publish, advertise, or otherwise communicate any public announcement, other than
by making a timely release to a financial news service.
Interest on the Exchange Senior Securities
The exchange senior securities will accrue interest from the date
interest was last paid on the unregistered senior securities. If no interest was
paid on your unregistered senior securities, your exchange senior securities
will accrue interest from and including May 17, 2001. Interest will be paid on
the exchange 2006 senior notes semi-annually on January 30 and July 30 of each
year. Interest will be paid on the exchange 2011 senior notes semi-annually on
May 15 and November 15 of each year. Holders of unregistered senior securities
that are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest accrued from the date of the last
interest payment date that was made in respect of the unregistered senior
securities until the date of the issuance of the exchange senior securities.
Consequently, holders of exchange senior securities will receive the same
interest payments that they would have received had they not accepted the
exchange offer.
Resale of Exchange Senior Securities
Based upon existing interpretations of the staff of the SEC set forth
in several no-action letters issued to third parties unrelated to us, we believe
that the exchange senior securities issued pursuant to the exchange offer in
exchange for the unregistered senior securities may be offered for resale,
resold and otherwise transferred by their holders, without complying with the
registration and prospectus delivery provisions of the Securities Act, provided
that:
o any exchange senior securities to be received by you will be acquired
in the ordinary course of your business;
o you are not engaged in, do not intend to engage in or have any
arrangement or understanding with any person to participate in the
distribution of the unregistered senior securities or exchange senior
securities;
o you are not an "affiliate" (as defined in Rule 405 under the Securities
Act) of Viacom or Viacom International or, if you are such an
affiliate, you will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable;
o if you are a broker-dealer, you have not entered into any arrangement
or understanding with Viacom or Viacom International or any "affiliate"
of Viacom or Viacom International (within the meaning of Rule 405 under
the Securities Act) to distribute the exchange senior securities;
o if you are a broker-dealer, you will receive exchange senior securities
for your own account in exchange for unregistered senior securities
that were acquired as a result of market-making activities or other
trading activities and that you will deliver a prospectus in connection
with any resale of such exchange senior securities; and
o you are not acting on behalf of any person or entity that could not
truthfully make these representations.
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If you wish to participate in the exchange offer, you will be required
to make these representations to us in the letter of transmittal.
If you are a broker-dealer that receives exchange senior securities in
exchange for unregistered senior securities held for your own account, as a
result of market-making or other trading activities, you must acknowledge that
you will deliver a prospectus in connection with any resale of the exchange
senior securities. The letter of transmittal states that by so acknowledging and
by delivering a prospectus, you will not be deemed to admit that you are an
"underwriter" within the meaning of the Securities Act. The prospectus, as it
may be amended or supplemented from time to time, may be used by any
broker-dealers in connection with resales of exchange senior securities received
in exchange for unregistered senior securities. We have agreed that, for a
period of 180 days after the expiration of the exchange offer, we will make this
prospectus and any amendment or supplement to this prospectus available to any
such broker-dealer for use in connection with any resale.
Clearing of the Exchange Senior Securities
Upon consummation of the exchange offer, the exchange senior securities
will have different CUSIP, Common Code and ISIN numbers from the unregistered
senior securities. Upon consummation of the exchange offer, the exchange 2006
senior securities will have the same CUSIP, Common Code and ISIN numbers given
to our registered 6.40% senior notes due 2006 which were issued on March 19,
2001.
Senior securities that were issued under Regulation S that are not
tendered for exchange will continue to clear through Euroclear and Clearstream
Luxembourg under their original Common Codes and their ISIN numbers will remain
the same. Regulation S senior securities (unless acquired by a manager as part
of their original distribution) may now be sold in the United States or to U.S.
persons and, upon any such transfer, a beneficial interest in the Regulation S
global senior securities will be able to be exchanged for an interest in the
exchange global senior security in accordance with procedures established by
Euroclear or Clearstream Luxembourg and DTC.
Beneficial interests in the restricted Regulation S global senior
securities may be transferred to a person who takes delivery in the form of an
interest in the Regulation S global senior securities upon receipt by the
trustee of a written certification from the transferor, in the form provided in
the Indenture, to the effect that the transfer is being made in accordance with
Rule 903 or 904 of Regulation S.
We cannot predict the extent to which beneficial owners of an interest
in the Regulation S global senior securities will participate in the exchange
offer. Beneficial owners should consult their own financial advisors as to the
benefits to be obtained from exchange.
Procedures for Tendering
The term "holder" with respect to the exchange offer means any person
in whose name unregistered senior securities are registered on our agent's books
or any other person who has obtained a properly completed bond power from the
registered holder, or any person whose unregistered senior securities are held
of record by DTC, Euroclear or Clearstream Luxembourg who desires to deliver
such unregistered senior securities by book-entry transfer at DTC, Euroclear or
Clearstream Luxembourg as the case may be.
Except in limited circumstances, only a Euroclear participant,
Clearstream Luxembourg participant or a DTC participant listed on a DTC
securities position listing with respect to the unregistered
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senior securities may tender its unregistered senior securities in the exchange
offer. To tender unregistered senior securities in the exchange offer:
o holders of unregistered senior securities that are DTC participants
may follow the procedures for book-entry transfer as provided for
below under "-Book-Entry Transfer" and in the letter of transmittal.
o Euroclear participants and Clearstream Luxembourg participants on
behalf of the beneficial owners of unregistered senior securities are
required to use book-entry transfer pursuant to the standard operating
procedures of Euroclear or Clearstream Luxembourg, as the case may be,
which include transmission of a computer-generated message to
Euroclear or Clearstream Luxembourg, as the case may be, in lieu of a
letter of transmittal. See the term "agent's message" under
"-Book-Entry Transfer."
In addition, either:
o the exchange agent must receive any corresponding certificate or
certificates representing unregistered senior securities along with
the letter of transmittal; or
o the exchange agent must receive, before expiration of the exchange
offer, a timely confirmation of book-entry transfer of unregistered
senior securities into the exchange agent's account at DTC, Euroclear
or Clearstream Luxembourg according to their respective standard
operating procedures for electronic tenders described below and a
properly transmitted agent's message described below; or
o the holder must comply with the guaranteed delivery procedures
described below.
The tender by a holder of unregistered senior securities will
constitute an agreement between such holder and us in accordance with the terms
and subject to the conditions set forth in this prospectus and in the letter of
transmittal. If less than all the unregistered senior securities held by a
holder of unregistered senior securities are tendered, a tendering holder should
fill in the amount of unregistered senior securities being tendered in the
specified box on the letter of transmittal. The entire amount of unregistered
senior securities delivered to the exchange agent will be deemed to have been
tendered unless otherwise indicated.
The method of delivery of unregistered senior securities, the letter of
transmittal and all other required documents or transmission of an agent's
message, as described under "-Book Entry Transfer," to the exchange agent is at
the election and risk of the holder. Instead of delivery by mail, we recommend
that holders use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure timely delivery prior to the expiration of the
exchange offer. No letter of transmittal or unregistered senior securities
should be sent to Viacom but must instead be delivered to the exchange agent.
Delivery of documents to DTC, Euroclear or Clearstream Luxembourg in accordance
with their respective procedures will not constitute delivery to the exchange
agent.
If you are a beneficial owner of unregistered senior securities that
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee and you wish to tender your unregistered senior securities, you
should contact the registered holder promptly and instruct the registered holder
to tender on your behalf. If you wish to tender on your own behalf, you must,
prior to completing and executing the letter of transmittal and delivering your
unregistered senior securities, either:
22
o make appropriate arrangements to register ownership of the
unregistered senior securities in your name; or
o obtain a properly completed bond power from the registered holder.
The transfer of record ownership may take considerable time and may not
be completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal as
described in "--Withdrawal of Tenders" below, as the case may be, must be
guaranteed by a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange
Act, unless the unregistered senior securities tendered pursuant thereto are
tendered:
o by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
o for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the
registered holder of any unregistered senior securities listed therein, the
unregistered senior securities must be endorsed or accompanied by appropriate
bond powers which authorize the person to tender the unregistered senior
securities on behalf of the registered holder, in either case signed as the name
of the registered holder or holders appears on the unregistered senior
securities. If the letter of transmittal or any unregistered senior securities
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by us, evidence satisfactory to us of their authority to so act
must be submitted with the letter of transmittal.
We will determine in our sole discretion all the questions as to the
validity, form, eligibility (including time of receipt), acceptance and
withdrawal of the tendered unregistered senior securities. Our determinations
will be final and binding. We reserve the absolute right to reject any and all
unregistered senior securities not validly tendered or any unregistered senior
securities our acceptance of which would, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any irregularities or
conditions of tender as to particular unregistered senior securities. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of unregistered senior securities must be cured within such time as we will
determine. Neither we, the exchange agent nor any other person shall be under
any duty to give notification of defects or irregularities with respect to
tenders of unregistered senior securities nor shall any of them incur any
liability for failure to give such notification. Tenders of unregistered senior
securities will not be deemed to have been made until such irregularities have
been cured or waived. Any unregistered senior securities received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost by
the exchange agent to the tendering holder of such unregistered senior
securities unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date of the exchange offer.
In addition, we reserve the right in our sole discretion to (a)
purchase or make offers for any unregistered senior securities that remain
outstanding subsequent to the expiration date, and (b) to the extent permitted
by applicable law, purchase unregistered senior securities in the open market,
in
23
privately negotiated transactions or otherwise. The terms of any such purchases
or offers may differ from the terms of the exchange offer.
Book-Entry Transfer
We understand that the exchange agent will make a request promptly
after the date of this document to establish accounts with respect to the
unregistered senior securities at DTC, Euroclear or Clearstream Luxembourg for
the purpose of facilitating the exchange offer. Any financial institution that
is a participant in DTC's system may make book-entry delivery of unregistered
senior securities by causing DTC to transfer such unregistered senior securities
into the exchange agent's DTC account in accordance with DTC's Automated Tender
Offer Program procedures for such transfer. Any participant in Euroclear or
Clearstream Luxembourg may make book-entry delivery of Regulation S unregistered
senior securities by causing Euroclear or Clearstream Luxembourg to transfer
such senior securities into the exchange agent's account in accordance with
established Euroclear or Clearstream Luxembourg procedures for transfer. The
exchange for tendered unregistered senior securities will only be made after a
timely confirmation of a book-entry transfer of the unregistered senior
securities into the exchange agent's account, and timely receipt by the exchange
agent of an agent's message.
The term "agent's message" means a message, transmitted by DTC,
Euroclear or Clearstream Luxembourg, as the case may be, and received by the
exchange agent and forming part of the confirmation of a book-entry transfer,
which states that DTC, Euroclear or Clearstream Luxembourg, as the case may be,
has received an express acknowledgment from a participant tendering unregistered
senior securities and that such participant has received an appropriate letter
of transmittal and agrees to be bound by the terms of the letter of transmittal,
and we may enforce such agreement against the participant. Delivery of an
agent's message will also constitute an acknowledgment from the tendering DTC,
Euroclear or Clearstream Luxembourg participant, as the case may be, that the
representations contained in the appropriate letter of transmittal and described
above are true and correct.
Guaranteed Delivery Procedures
Holders who wish to tender their unregistered senior securities and (i)
whose unregistered senior securities are not immediately available, or (ii) who
cannot deliver their unregistered senior securities, the letter of transmittal,
or any other required documents to the exchange agent prior to the expiration
date, or if such holder cannot complete DTC's, Euroclear's or Clearstream
Luxembourg's respective standard operating procedures for electronic tenders
before expiration of the exchange offer, may tender their unregistered senior
securities if:
o the tender is made through an eligible institution;
o before expiration of the exchange offer, the exchange agent receives
from the eligible institution either a properly completed and duly
executed notice of guaranteed delivery in the form accompanying this
prospectus, by facsimile transmission, mail or hand delivery, or a
properly transmitted agent's message in lieu of notice of guaranteed
delivery:
o setting forth the name and address of the holder and the
registered number(s), the certificate number or numbers of the
unregistered senior securities tendered and the principal amount
of unregistered senior securities tendered;
o stating that the tender offer is being made by guaranteed
delivery; and
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o guaranteeing that, within three (3) business days after
expiration of the exchange offer, the letter of transmittal, or
facsimile of the letter of transmittal, together with the
unregistered senior securities tendered or a book-entry
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible institution with
the exchange agent; and
o the exchange agent receives the properly completed and executed letter
of transmittal, or facsimile of the letter of transmittal, as well as
all tendered unregistered senior securities in proper form for
transfer or a book-entry confirmation, and all other documents
required by the letter of transmittal, within three (3) business days
after expiration of the exchange offer.
Upon request to the exchange agent, a notice of guaranteed delivery
will be sent to holders who wish to tender their unregistered senior securities
according to the guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of unregistered senior
securities may be withdrawn at any time prior to 5:00 p.m., New York City time,
on , 2001, the expiration date of the exchange offer.
For a withdrawal to be effective:
o the exchange agent must receive a written notice, which may be by
telegram, telex, facsimile transmission or letter, of withdrawal at
the address set forth below under "Exchange Agent"; or
o for DTC, Euroclear or Clearstream Luxembourg participants, holders
must comply with their respective standard operating procedures for
electronic tenders and the exchange agent must receive an electronic
notice of withdrawal from DTC, Euroclear or Clearstream Luxembourg.
Any notice of withdrawal must:
o specify the name of the person who tendered the unregistered senior
securities to be withdrawn;
o identify the unregistered senior securities to be withdrawn, including
the certificate number or numbers and principal amount of the
unregistered senior securities to be withdrawn;
o be signed by the person who tendered the unregistered senior
securities in the same manner as the original signature on the letter
of transmittal, including any required signature guarantees; and
o specify the name in which the unregistered senior securities are to be
re-registered, if different from that of the withdrawing holder.
If unregistered senior securities have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at DTC, Euroclear or Clearstream
Luxembourg to be credited with the withdrawn unregistered senior securities and
otherwise comply with the procedures of the facility. We will determine all
questions as to the validity, form and eligibility (including time of receipt)
for such withdrawal notices, and our determination shall be final and binding on
all parties. Any unregistered senior securities so withdrawn will be deemed not
to have been validly tendered for purposes of the exchange offer, and no
exchange senior securities will be issued with respect thereto unless the
unregistered senior securities so withdrawn
25
are validly re-tendered. Any unregistered senior securities which have been
tendered but which are not accepted for exchange will be returned to the holder
without cost to such holder as soon as practicable after withdrawal. Properly
withdrawn unregistered senior securities may be re-tendered by following the
procedures described above under "-Procedures for Tendering" at any time prior
to the expiration date.
Consequences of Failure to Exchange
If you do not tender your unregistered senior securities to be
exchanged in this exchange offer, they will remain "restricted securities"
within the meaning of Rule 144(a)(3) of the Securities Act. Accordingly, they:
o may be resold only if (i) registered pursuant to the Securities Act,
(ii) an exemption from registration is available or (iii) neither
registration nor an exemption is required by law; and
o shall continue to bear a legend restricting transfer in the absence of
registration or an exemption therefrom.
As a result of the restrictions on transfer and the availability of the
exchange senior securities, the unregistered senior securities are likely to be
much less liquid than before the exchange offer. Following the consummation of
the exchange offer, in general, holders of unregistered senior securities will
have no further registration rights under the registration rights agreement.
Exchange Agent
Citibank, N.A. has been appointed as the principal exchange agent and
Kredietbank S.A. Luxembourgeoise has been appointed as the Luxembourg exchange
agent for the exchange of the unregistered senior securities. In its capacity as
Luxembourg exchange agent, Kredietbank will act solely as an intermediary
between Citibank, as the principal exchange agent and the holders of
unregistered senior securities wishing to accept the exchange offer. Kredietbank
will forward the tenders it receives to the principal exchange agent. Questions
and requests for assistance relating to the exchange of the unregistered senior
securities should be directed to the exchange agents addressed as follows:
--------------------------------------- ----------------------------------------
Citibank, N.A. Kredietbank S.A. Luxembourgeoise
111 Wall Street, 15th Floor 43, Boulevard Royal
New York, New York 10005 L-2955 Luxembourg
Telephone number: (800) 422-2066 Telephone number: (352) 47 97 3933
Facsimile number: (212) 825-3483 Facsimile number: (352) 47 97 73 951
--------------------------------------- ----------------------------------------
Fees and Expenses
We will bear the expenses of soliciting tenders pursuant to the
exchange offer. The principal solicitation for tenders pursuant to the exchange
offer is being made by mail. Additional solicitations may be made by our
officers and regular employees and our affiliates in person, by telegraph or
telephone.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We, however, will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its related reasonable out-of-pocket expenses and accounting
and legal fees. We may also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this prospectus, letters of
26
transmittal and related documents to the beneficial owners of the unregistered
senior securities and in handling or forwarding tenders for exchange.
We will pay all transfer taxes, if any, applicable to the exchange of
unregistered senior securities pursuant to the exchange offer. The tendering
holder, however, will be required to pay any transfer taxes whether imposed on
the registered holder or any other person, if:
o certificates representing exchange senior securities or unregistered
senior securities for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be registered or issued in
the name of, any person other than the registered holder of
unregistered senior securities tendered;
o tendered unregistered senior securities are registered in the name of
any person other than the person signing the letter of transmittal; or
o a transfer tax is imposed for any reason other than the exchange of
unregistered senior securities under the exchange offer.
If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
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DESCRIPTION OF SENIOR SECURITIES
General
We issued the unregistered senior securities and will issue the
exchange senior securities under the Indenture, dated as of May 15, 1995, among
us, our wholly owned subsidiary, Viacom International, as guarantor, and
Citibank, N.A., as successor to State Street Bank and Trust Company and The
First National Bank of Boston, Trustee. The Indenture was supplemented by the
First Supplemental Indenture, dated as of May 24, 1995, was supplemented and
amended by the Second Supplemental Indenture and Amendment No.1, dated as of
December 15, 1995, was supplemented by the Third Supplemental Indenture, dated
as of July 22, 1996, was supplemented by the Fourth Supplemental Indenture,
dated as of August 1, 2000, was supplemented by a Fifth Supplemental Indenture,
dated as of January 17, 2001, was supplemented, in connection with the issuance
of the unregistered senior securities, by the Sixth Supplemental Indenture,
dated as of May 17, 2001 and was supplemented by the Seventh Supplemental
Indenture, dated as of May 31, 2001. We refer to the Indenture, as so
supplemented and amended, as the "Indenture."
The terms of the exchange senior securities to be issued are
substantially similar to the unregistered senior securities, except that the
exchange senior securities have been registered under the Securities Act of
1933, the certificates for the exchange senior securities will not bear legends
restricting their transfer and the exchange senior securities will not have
registration rights or any rights to additional interest.
The senior securities initially are limited to $1,400,000,000 principal
amount, consisting of $400,000,000 principal amount of 2006 senior notes and
$1,000,000,000 principal amount of 2011 senior notes. The unregistered 2006
senior notes will be, upon their exchange for exchange 2006 senior notes
registered under the Securities Act, a further issuance of our 6.40% senior
notes due 2006, $396,925,000 of which were issued on March 19, 2001.
Each exchange senior security will bear interest at the applicable
annual rate noted on the cover page of this prospectus. Interest will be payable
on the senior notes due 2006 on January 30 and July 30 of each year beginning on
July 30, 2001 and will be computed on the basis of a 360-day year of 30-day
months. Interest on the senior notes due 2006 will accrue from and including the
settlement date and will be paid to holders of record on the July 15 or January
15 immediately before the interest payment date. Interest will be payable on the
senior notes due 2011 on May 15 and November 15 of each year, beginning on
November 15, 2001, and will be computed on the basis of a 360-day year of 30-day
months. Interest on the senior notes due 2011 will accrue from and including the
settlement date and will be paid to holders of record on May 1 or November 1
immediately before the interest payment date. Holders of unregistered senior
securities that are accepted for exchange will be deemed to have waived the
right to receive any payment in respect of interest accrued from the date of the
last interest payment date that was made in respect of the unregistered senior
securities until the date of the issuance of the exchange senior securities.
Consequently, holders of exchange senior securities will receive the same
interest payments that they would have received had they not accepted the
exchange offer.
The 2006 senior notes will mature on January 30, 2006. The 2011 senior
notes will mature on May 15, 2011. On the maturity dates of the senior
securities, the holders will be entitled to receive 100% of the principal amount
of the applicable exchange senior securities. We may redeem the 2011 senior
notes at any time at their principal amount, plus the applicable premium and
accrued interest. The senior securities do not provide for any sinking fund.
28
The senior securities are issued in denominations of not less than
$1,000 and integral multiples thereof.
Viacom's rights and the rights of its creditors, including holders of
senior securities, to participate in any distribution of assets of any Viacom
subsidiary upon its liquidation or reorganization or otherwise is subject to the
prior claims of creditors of the subsidiary, except to the extent that Viacom's
claims as a creditor of the subsidiary may be recognized.
Guarantees
Viacom International will unconditionally guarantee the due and
punctual payment of the principal of, premium, if any, and any interest on the
senior securities when and as the same shall become due and payable, whether at
maturity, upon redemption, upon acceleration or otherwise. The guarantees of the
senior securities are endorsed on the senior securities.
Various federal and state fraudulent conveyance laws have been enacted
for the protection of creditors and may be utilized by a court of competent
jurisdiction to subordinate or avoid all or part of any guarantee issued by
Viacom International. The Indenture provides that in the event that the
guarantees would constitute or result in a fraudulent transfer or conveyance for
purposes of, or result in a violation of, any United States federal, or
applicable United States state, fraudulent transfer or conveyance or similar
law, then the liability of Viacom International under the guarantees shall be
reduced to the extent necessary to eliminate such fraudulent transfer or
conveyance or violation under the applicable fraudulent transfer or conveyance
or similar law. Application of this clause could limit the amount which holders
of senior securities may be entitled to collect under the guarantees. Holders,
by their acceptance of the senior securities, will have agreed to such
limitations.
To the extent that a court were to find that (x) a guarantee was
incurred by Viacom International with the intent to hinder, delay or defraud any
present or future creditor or (y) Viacom International did not receive fair
consideration or reasonably equivalent value for issuing its guarantee and
Viacom International (i) was insolvent or rendered insolvent by reason of the
issuance of the guarantee, (ii) was engaged or about to engage in a business or
transaction for which the remaining assets of Viacom International constituted
unreasonably small capital to carry on its business or (iii) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured, the court could subordinate or avoid all or part of such guarantee
in favor of Viacom International's other creditors. To the extent any guarantee
issued by Viacom International were voided as a fraudulent conveyance or held
unenforceable for any other reason, the holders of the senior securities
guaranteed by Viacom International could cease to have any claim against Viacom
International and would be creditors solely of Viacom.
We and Viacom International believe that the issuances of the
guarantees by Viacom International are not fraudulent conveyances. There can be
no assurance, however, that a court passing on such questions would reach the
same conclusions. In rendering their opinions on the validity of the senior
securities and, if applicable, the related guarantees, neither our counsel,
counsel for Viacom International nor counsel for the initial purchasers of the
unregistered senior securities will express any opinion as to federal or state
laws relating to fraudulent transfers.
Ranking
The senior securities are senior unsecured obligations of Viacom and
rank equally in right of payment with all of Viacom's other unsecured and
unsubordinated indebtedness. The guarantees on the
29
senior securities are senior unsecured obligations of Viacom International and
rank equally in right of payment with all of Viacom International's other
unsecured and unsubordinated indebtedness.
The senior securities and the guarantees are effectively subordinated
to any secured indebtedness of Viacom or Viacom International, as the case may
be, to the extent of the value of the assets securing such indebtedness. The
Indenture does not limit the amount of debt that Viacom, Viacom International or
their respective subsidiaries can incur.
In addition, both Viacom International and Viacom conduct their
operations through subsidiaries, which generate a substantial portion of their
respective operating income and cash flow. As a result, distributions or
advances from subsidiaries of Viacom and Viacom International are a major source
of funds necessary to meet their respective debt service and other obligations.
Contractual provisions, laws or regulations, as well as our subsidiaries'
financial condition and operating requirements, may limit the ability of Viacom
or Viacom International to obtain cash required to pay Viacom's debt service
obligations, including payments on the senior securities, or Viacom
International's payment obligations under the guarantees. The senior securities
will be structurally subordinated to all obligations of Viacom's subsidiaries
(other than Viacom International) including claims with respect to trade
payables. The guarantees will be structurally subordinated to all obligations of
Viacom International's subsidiaries, including claims with respect to trade
payables. This means that holders of the senior securities of Viacom will have a
junior position to the claims of creditors of Viacom's subsidiaries (other than
Viacom International) on the assets and earnings of such subsidiaries. Holders
of guarantees of Viacom International will have a junior position to the claims
of creditors of Viacom International's subsidiaries on the assets and earnings
of such subsidiaries and will have no claim by virtue of such guarantees against
Viacom or any subsidiary of Viacom that is not a subsidiary of Viacom
International.
As of March 31, 2001, our subsidiaries, other than Viacom
International, had approximately $2.3 billion of indebtedness outstanding. This
indebtedness was primarily incurred by Infinity and its subsidiaries and
Blockbuster. We own several operating subsidiaries, including Viacom
International, the guarantor of the senior securities, Infinity and Blockbuster.
Viacom International is a wholly owned subsidiary of Viacom, with approximately
$766 million of indebtedness outstanding as of March 31, 2001. Viacom
International's subsidiaries had approximately $1.4 billion of indebtedness
outstanding as of March 31, 2001.
Optional Redemption
Prior to maturity, we may redeem the 2011 senior notes at any time, at
our option, in whole or in part, on not less than 30 nor more than 60 days'
prior notice, prior to their maturity at a redemption price equal to the sum of
their principal amount, the Make-Whole Amount described below and any accrued
and unpaid interest to the date of redemption. Holders of record on a record
date that is on or prior to a redemption date will be entitled to receive
interest due on the interest payment date.
The term "Make-Whole Amount" means, the excess, if any, of (i) the
aggregate present value as of the date of the redemption of principal being
redeemed and the amount of interest (exclusive of interest accrued to the date
of redemption) that would have been payable if redemption had not been made,
determined by discounting, on a semiannual basis, the remaining principal and
interest at the Reinvestment Rate described below (determined on the third
business day preceding the date notice of redemption is given) from the dates on
which the principal and interest would have been payable if the redemption had
not been made, to the date of redemption, over (ii) the aggregate principal
amount of the 2011 senior notes being redeemed.
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The term "Reinvestment Rate" means 0.25% for the 2011 senior notes plus
the arithmetic mean of the yields under the heading "Week Ending" published in
the most recent Federal Reserve Statistical Release H.15 under the caption
"Treasury Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to the
maturity, yields for the two published maturities most closely corresponding to
the maturity would be so calculated and the Reinvestment Rate would be
interpolated or extrapolated on a straight-line basis, rounding to the nearest
month. The most recent Federal Reserve Statistical Release H.15 published prior
to the date of determination of the Make-Whole Amount will be used for purposes
of calculating the Reinvestment Rate.
The Make-Whole Amount will be calculated by an independent investment
banking institution of national standing appointed by us. If we fail to make the
appointment at least 45 business days prior to the date of redemption, or if the
institution is unwilling or unable to make the calculation, the calculation will
be made by an independent investment banking institution of national standing
appointed by the Trustee.
If the Reinvestment Rate is not available as described above, the
Reinvestment Rate will be calculated by interpolation or extrapolation of
comparable rates selected by the independent investment banking institution.
In the case of any partial redemption, selection of the 2011 senior
notes for redemption will be made by the Trustee in compliance with the
requirements of the principal U.S. national securities exchange, if any, on
which the 2011 senior notes are listed or, if they are not listed on a U.S.
national securities exchange, by lot or by such other method as the Trustee in
its sole discretion deems to be fair and appropriate. The Luxembourg Stock
Exchange has no such requirements.
Further Issues
We may from time to time without notice to, or the consent of, the
holders of a series of senior securities, create and issue further senior
securities of the same series, equal in rank to the senior securities in all
respects (or in all respects except for the payment of interest accruing prior
to the issue date of the new securities or except for the first payment of
interest following the issue date of the new securities) so that the new
securities may be consolidated and form a single series with the relevant series
of senior securities and have the same terms as to status, redemption or
otherwise as the relevant series of senior securities. In the event that we
issue additional senior securities of the same series, we will prepare a new
offering memorandum or prospectus and make a new application to list such
securities on the Luxembourg Stock Exchange.
Payment of Additional Amounts
We will, subject to the exceptions and limitations set forth below, pay
as additional interest on the senior securities such additional amounts as are
necessary in order that the net payment by us or a paying agent of the principal
of and interest on the senior securities to a holder who is a non-United States
person (as defined under this heading below), after deduction for any present or
future tax, assessment or other governmental charge of the United States or a
political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount
provided in the series of senior securities to be then due and payable;
provided, however, that the foregoing obligation to pay additional amounts shall
not apply:
(1) to any tax, assessment or other governmental charge that is
imposed or withheld solely by reason of the holder, or a fiduciary,
settlor, beneficiary, member or shareholder of the holder if
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the holder is an estate, trust, partnership or corporation, or a person
holding a power over an estate or trust administered by a fiduciary holder,
being considered as:
(a) being or having been present or engaged in a trade or
business in the United States or having had a permanent establishment
in the United States;
(b) having a current or former relationship with the United
States, including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that
has accumulated earnings to avoid United States federal income tax;
(d) being or having been a "10-percent shareholder" of ours as
defined in Section 871(h)(3) of the Code (as defined in "United States
Tax Considerations") or any successor provision; or
(e) being a bank receiving payments on an extension of credit
made pursuant to a loan agreement entered into in the ordinary course
of its trade or business;
(2) to any holder that is not the sole beneficial owner of a senior
security, or a portion thereof, or that is a fiduciary or partnership, but
only to the extent that a beneficiary or settlor with respect to the
fiduciary, a beneficial owner or member of the partnership would not have
been entitled to the payment of an additional amount had the beneficiary,
settlor, beneficial owner or member received directly its beneficial or
distributive share of the payment;
(3) to any tax, assessment or other governmental charge that is
imposed or withheld by reason of the failure of the holder or any other
person to comply with certification, identification or information
reporting requirements concerning the nationality, residence, identity or
connection with the United States, or otherwise with respect to the status,
of the holder or beneficial owner of such senior security (or any
beneficiary, settlor, beneficial owner or member thereof), if compliance is
required by statute, by regulation of the United States Treasury Department
or by an applicable income tax treaty to which the United States is a
party, or by any official interpretation or ruling promulgated pursuant to
any of the foregoing, as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to any tax, assessment or other governmental charge that is
imposed otherwise than by withholding by us or a paying agent from the
payment;
(5) to any tax, assessment or other governmental charge that is
imposed or withheld solely by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes effective more than
15 days after the payment becomes due or is duly provided for, whichever
occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or similar tax, assessment or other governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any senior security, if such payment can be made without such
withholding by any other paying agent; or
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(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
The senior securities are subject in all cases to any tax, fiscal or
other law or regulation or administrative or judicial interpretation applicable
thereto. Except as specifically provided under this heading "Payment of
Additional Amounts" and under the heading "Redemption for Tax Reasons," we shall
not be required to make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or a political subdivision or
taxing authority thereof or therein.
We will also not pay additional amounts on the senior securities
o where withholding or deduction is imposed on a payment to an
individual and is required to be made pursuant to any European
Union Directive on the taxation of savings implementing the
conclusions of the ECOFIN Council meeting of November 26 and 27,
2000 or any law implementing or complying with, or introduced in
order to conform to, that Directive; or
o presented for payment by or on behalf of a beneficial owner who
would have been able to avoid the withholding or deduction by
presenting the relevant global note to another paying agent in a
member state of the European Union.
The European Union is currently considering a proposal for a new
directive regarding the taxation of savings income. Subject to a number of
important conditions being met, it is proposed that member states of the
European Union will be required to provide to the tax authorities of another
member state details of payments of interest or other similar income paid by a
person within its jurisdiction to an individual resident in that other member
state, subject to the right of certain member states to opt instead for a
withholding system for a transitional period in relation to these payments and
subject to the proposals not being required to be applied to the global notes.
As used under this heading, "--Payment of Additional Amounts", and
under the headings, "--Redemption for Tax Reasons" and "United States Tax
Considerations", the terms "United States" and "U.S." mean
the United States of America (including the States thereof and the District of
Columbia) and its territories, its possessions and other areas subject to its
jurisdiction, and the term "United States person" means any individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States, any State
thereof or the District of Columbia (other than a partnership that is not
treated as a United States person under any applicable United States Treasury
regulations), any estate the income of which is subject to United States federal
income taxation regardless of its source, or any trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have the authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in the Treasury regulations, certain trusts in existence
on August 20, 1996, and treated as United States persons prior to such date that
elect to continue to be treated as United States persons, will also be United
States persons. A "non-United States person" means a person who is not a United
States person.
Redemption for Tax Reasons
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, an official position regarding the application or
interpretation of such laws, regulations or rulings, which change or amendment
is announced or becomes effective on or after the date of this prospectus, we
become or, based upon a written opinion of
33
independent counsel selected by us, will become obligated to pay additional
amounts as described herein under the heading "Payment of Additional Amounts"
with respect to a series of senior securities, we may, at our option, redeem,
as a whole, but not in part, the relevant series of senior securities on not
less than 30 nor more than 60 days' prior notice, at a redemption price equal to
100% of their principal amount together with interest accrued but unpaid thereon
to the date fixed for redemption.
Merger, Consolidation or Sale of Assets
Under the terms of the Indenture, we and Viacom International generally
would be permitted to consolidate or merge with another corporation. We and
Viacom International would also be permitted to sell all or substantially all of
our assets to another person. However, neither we nor Viacom International may
take any of these actions unless all the following conditions are met:
(1) the merger, consolidation or sale of assets must not cause an
Event of Default. See "--Defaults and Remedies" below. An Event of Default
for this purpose would also include any event that would be an Event of
Default if the notice or time requirements were disregarded;
(2) the person we would merge or consolidate with or sell all or
substantially all of our assets to must be organized under the laws of the
United States or any state thereof;
(3) the person we would merge or consolidate with or sell all or
substantially all of our assets to must agree to be legally responsible for
the outstanding securities issued under the Indenture; and
(4) we or Viacom International must deliver specified certificates and
documents to the trustee.
We and Viacom International may merge or consolidate with, or sell all
or substantially all of our assets to each other or any of our Subsidiaries.
When we make reference in this section to the sale of "all or
substantially all of our assets," we mean property and assets generating
revenues representing, in the aggregate, at least 80%of our total consolidated
revenues.
Limitations on Liens
We covenant in the Indenture that we will not create, assume or permit
any Lien on any of our properties or assets, unless we secure the senior
securities at least equally and ratably to the secured Indebtedness. The
foregoing only applies to Liens that in the aggregate exceed 15% of our total
consolidated assets, reduced by the Attributable Debt related to any permitted
sale leaseback arrangement. See "--Limitations on Sale and Leaseback
Transactions" below. The restrictions do not apply to Capitalized Leases or
Indebtedness that is secured by:
(1) Liens existing, in the case of the 2006 senior notes, on January
17, 2001, and in the case of the 2011 senior notes, on May 17, 2001;
(2) Liens on any property or any Indebtedness of a person existing at
the time the person becomes a Subsidiary (whether by acquisition, merger or
consolidation);
(3) Liens in favor of us or our Subsidiaries; and
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(4) Liens existing at the time of acquisition of the assets secured
thereby and purchase money Liens.
The restrictions do not apply to extensions, renewals or replacements
of any of the foregoing types of Liens.
Limitations on Sale and Leaseback Transactions
We covenant in the Indenture that neither we nor any Restricted
Subsidiary will enter into any arrangement with any person to lease a Principal
Property (except for any arrangements that exist, in the case of the 2006 senior
notes, on January 17, 2001 and, in the case of the 2011 senior notes, on May 17,
2001; or that exist at the time any person that owns a Principal Property
becomes a Restricted Subsidiary) which has been or is to be sold by us or the
Restricted Subsidiary to the Person unless:
(1) the sale and leaseback arrangement involves a lease for a term of
not more than three years;
(2) the sale and leaseback arrangement is entered into between us and
any Subsidiary or between our Subsidiaries;
(3) we or the Restricted Subsidiary would be entitled to incur
indebtedness secured by a Lien on the Principal Property at least equal in
amount to the Attributable Debt permitted pursuant to the first paragraph
under "--Limitations on Liens" without having to secure equally and ratably
the senior securities;
(4) the proceeds of the sale and leaseback arrangement are at least
equal to the fair market value (as determined by our Board of Directors in
good faith) of the property and we apply within 180 days after the sale an
amount equal to the greater of the net proceeds of the sale or the
Attributable Debt associated with the property to (i) the retirement of
long-term debt for borrowed money that is not subordinated to the senior
securities and that is not debt to us or a Subsidiary, or (ii) the purchase
or development of other comparable property; or
(5) the sale and leaseback arrangement is entered into within 180 days
after the initial acquisition of the Principal Property subject to the sale
and leaseback arrangement.
The term "Attributable Debt," with regard to a sale and leaseback
arrangement of a Principal Property, is defined in the Indenture as an amount
equal to the lesser of: (a) the fair market value of the property (as determined
in good faith by our Board of Directors); and (b) the present value of the total
net amount of rent payments to be made under the lease during its remaining
term, discounted at the rate of interest set forth or implicit in the terms of
the lease, compounded semi-annually. The calculation of the present value of the
total net amount of rent payments is subject to adjustments specified in the
Indenture. The term "Principal Property" is defined in the Indenture to include
any parcel of our or our Restricted Subsidiaries' real property and related
fixtures or improvements located in the United States, the aggregate book value
of which on the date of determination exceeds $1.0 billion. The term "Principal
Property" does not include any telecommunications equipment or parcels of real
property and related fixtures or improvements which are determined in good faith
by our Board of Directors, not to be of material importance to our and our
Subsidiaries' total business. As of the date of this prospectus, neither we nor
any of our Subsidiaries own any Principal Property.
Defaults and Remedies
35
You have specified rights if an Event of Default occurs in respect of
the senior securities of your series, as described below. The term "Event of
Default" in respect of the senior securities of your series means any of the
following:
(1) we do not pay interest on a senior security of such series within
30 days of its due date;
(2) we do not pay the principal of or any premium on a senior security
of such series on its due date;
(3) we remain in breach of a covenant or warranty in respect of the
Indenture for 60 days after we receive a written notice of default. The
notice must be sent by either the trustee or holders of at least 25% in
principal amount of a series of outstanding senior securities;
(4) we are in default under agreements under which we have
Indebtedness outstanding in excess of $250 million in the aggregate and
which Indebtedness is due either at maturity or has been declared due prior
to maturity and remains unpaid;
(5) we fail to pay a money judgment in excess of $250 million for a
period of 60 days after it becomes final and not subject to further appeal;
or
(6) we or Viacom International file for bankruptcy, or other specified
events of bankruptcy, insolvency or reorganization occur.
If an Event of Default has occurred, the trustee or the holders of at
least 25% in principal amount of the senior securities of the affected series
may declare the entire principal amount and premium, if any, and all the accrued
interest on, the senior securities of that series to be due and immediately
payable. This is called a declaration of acceleration of maturity. There is no
action on the part of the trustee or any holder of senior securities required
for such declaration if the Event of Default is a bankruptcy, insolvency or
reorganization. Holders of a majority in principal amount of the senior
securities of a series may also waive certain past defaults under the Indenture
on behalf of all of the holders of such series of senior securities. A
declaration of acceleration of maturity may be canceled, under specified
circumstances, by the holders of at least a majority in principal amount of a
series of senior securities.
Except in cases of default, where the trustee has special duties, the
trustee is not required to take any action under the Indenture at the request of
holders unless the holders offer the trustee reasonable protection from expenses
and liability satisfactory to the trustee. If a reasonable indemnity is
provided, the holders of a majority in principal amount of a series of senior
securities may direct the time, method and place of conducting any lawsuit or
other formal legal action seeking any remedy available to the trustee. The
trustee may refuse to follow those directions in specified circumstances. No
delay or omission in exercising any right or remedy will be treated as a waiver
of the right, remedy or Event of Default.
Before holders are allowed to bypass the trustee and bring a lawsuit or
other formal legal action or take other steps to enforce their rights or protect
their interests relating to the senior securities, the following must occur:
o holders must give the trustee written notice that an Event of
Default has occurred and remains uncured;
36
o holders of at least 25% in principal amount of the outstanding
senior securities of a series must make a written request that
the trustee take action because of the default and must offer the
trustee indemnity satisfactory to the trustee against the cost
and other liabilities of taking that action;
o the trustee must have failed to take action for 60 days after
receipt of the notice and offer of indemnity; and
o holders of a majority in principal amount of the senior
securities of a series must not have given the trustee a
direction inconsistent with the above notice.
However, you are entitled at any time to bring a lawsuit for the
payment of money due on your senior securities on or after the due date.
We are required to furnish to the trustee an annual statement as to our
performance of our obligations under the Indenture and as to any default in such
performance. We are also required to notify the trustee of any event that is, or
after notice or lapse of time or both would become, an Event of Default.
Book Entry, Delivery and Form
Each series of senior securities will be issued in one or more fully
registered global securities which will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depository") and registered
in the name of Cede & Co., the Depository's nominee. We will not issue senior
securities in certificated form. Beneficial interests in the global securities
will be represented through book-entry accounts of financial institutions acting
on behalf of beneficial owners as direct and indirect participants in the
Depository (the "Depository Participants"). Investors may elect to hold
interests in the global securities through either the Depository (in the United
States), or Clearstream Luxembourg or Euroclear (in Europe) if they are
participants of those systems, or, indirectly, through organizations that are
participants in those systems. Clearstream Luxembourg and Euroclear will hold
interests on behalf of their participants through customers' securities accounts
in Clearstream Luxembourg's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of the Depository.
At the present time, Citibank, N.A. acts as U.S. depositary for Clearstream
Luxembourg and The Chase Manhattan Bank acts as U.S. depositary for Euroclear
(the "U.S. Depositaries"). Beneficial interests in the global securities will be
held in denominations of $1,000 and integral multiples thereof. Except as set
forth below, the global securities may be transferred, in whole but not in part,
only to another nominee of the Depository or to a successor of the Depository or
its nominee.
Clearstream Luxembourg has advised us that it is incorporated under the
laws of Luxembourg as a professional depositary. Clearstream Luxembourg holds
securities for its participating organizations ("Clearstream Luxembourg
Participants") and facilitates the clearance and settlement of securities
transactions between Clearstream Luxembourg Participants through electronic
book-entry changes in accounts of Clearstream Luxembourg Participants, thereby
eliminating the need for physical movement of certificates. Clearstream
Luxembourg provides to Clearstream Luxembourg Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream Luxembourg interfaces with domestic markets in several countries. As
a professional depositary, Clearstream Luxembourg is subject to regulation by
the Luxembourg Monetary Institute. Clearstream Luxembourg Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the initial purchasers or their
affiliates. Indirect access to Clearstream Luxembourg is also available to
others, such as banks,
37
brokers, dealers and trust companies that clear through, or maintain a custodial
relationship with, a Clearstream Luxembourg Participant either directly or
indirectly.
Distributions with respect to each series of senior securities held
beneficially through Clearstream Luxembourg will be credited to cash accounts of
Clearstream Luxembourg Participants in accordance with its rules and procedures,
to the extent received by the U.S. Depositary for Clearstream Luxembourg.
Euroclear has advised us that it was created in 1968 to hold securities
for its participants ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear provides various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. The Euroclear System is owned by Euroclear Clearance System Public
Limited Company (ECS plc) and operated through a license agreement by Euroclear
Bank S.A./N.V., a bank incorporated under the laws of the Kingdom of Belgium as
the "Euroclear operator".
The Euroclear operator holds securities and book-entry interests in
securities for participating organizations and facilitates the clearance and
settlement of securities transactions between Euroclear Participants, and
between Euroclear Participants and participants of certain other securities
intermediaries through electronic book-entry changes in accounts of such
participants or other securities intermediaries.
The Euroclear operator provides Euroclear Participants, among other
things, with safekeeping, administration, clearance and settlement, securities
lending and borrowing, and related services.
Non-participants of Euroclear may hold and transfer book-entry
interests in the securities through accounts with a direct participant of
Euroclear or any other securities intermediary that holds a book-entry interest
in the securities through one or more securities intermediaries standing between
such other securities intermediary and the Euroclear operator.
The Euroclear operator is regulated and examined by the Belgian Banking
and Finance Commission and the National Bank of Belgium.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System, and applicable Belgian
law (the "Terms and Conditions"). The Terms and Conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in Euroclear. All
securities in Euroclear are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants, and has no record of, or relationship with, persons holding
through Euroclear Participants.
Distributions with respect to each series of senior securities held
beneficially through Euroclear will be credited to the cash accounts of
Euroclear Participants in accordance with the Terms and Conditions, to the
extent received by the U.S. Depositary for Euroclear.
Global Clearance and Settlement Procedures
Secondary market trading between Depository Participants will occur in
the ordinary way in accordance with the Depository's rules and will be settled
in immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Clearstream Luxembourg Participants and
Euroclear Participants will occur in the ordinary way in accordance with the
38
applicable rules and operating procedures of Clearstream Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through
Clearstream Luxembourg or Euroclear Participants, on the other, will be effected
within the Depository in accordance with the Depository `s rules on behalf of
the relevant European international clearing system by its U. S. Depository;
however, such cross-market transactions will require delivery of instructions to
the relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (European time).
The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U. S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving senior securities in the Depository, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to the Depository. Clearstream Luxembourg Participants and Euroclear
Participants may not deliver instructions directly to their respective U.S.
Depositaries.
Because of time-zone differences, credits of senior securities received
in Clearstream Luxembourg or Euroclear as a result of a transaction with a
Depository Participants will be made during subsequent securities settlement
processing and dated the business day following the Depository settlement date.
Such credits, or any transactions in the senior securities settled during such
processing, will be reported to the relevant Euroclear Participants or
Clearstream Luxembourg Participants on that business day. Cash received in
Clearstream Luxembourg or Euroclear as a result of sales of senior securities by
or through a Clearstream Luxembourg Participant or a Euroclear Participant to a
Depository Participant will be received with value on the business day of
settlement in the Depository but will be available in the relevant Clearstream
Luxembourg or Euroclear cash account only as of the business day following
settlement in the Depository.
Although the Depository, Clearstream Luxembourg and Euroclear have
agreed to the foregoing procedures in order to facilitate transfers of
securities among participants of the Depository, Clearstream Luxembourg and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and they may discontinue the procedures at any time.
Payment and Paying Agents
Principal of, premium, if any, and interest on the senior securities
will be payable, subject to any applicable laws and regulations, at the office
of our paying agent or paying agents that we may designate from time to time,
except that at our option, payment of interest may be made by check mailed to
the address of the person entitled thereto at the address in the security
register. We will pay interest on the senior securities on any interest payment
date to the person in whose name the senior security (or predecessor senior
security) is registered at the close of business on the regular record date for
such interest.
The corporate trust office of the trustee will be designated as our
paying agent for payments with respect to the senior securities of each series.
We may at any time designate additional paying agents or rescind the designation
of any paying agent or approve a change in the office through which any paying
agent acts, except that we will be required to maintain a paying agent in each
place of payment for the series.
39
Any money paid by us or Viacom International, as guarantor, to a paying
agent for the payment of the principal of, premium, if any, or interest on any
senior security of any series that remains unclaimed at the end of two years
after such principal, premium or interest has become due and payable will be
repaid to us or Viacom International, as guarantor, as the case may be, and the
holder of such senior security may thereafter look only to us and Viacom
International for that payment.
Meetings, Modification and Waiver
Modifications and amendments of the Indenture may be made by us, Viacom
International, as guarantor, and the trustee with the consent of the holders of
not less than a majority in aggregate principal amount of the outstanding senior
securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
holders of each outstanding senior security affected thereby, (a) change the
stated maturity of the principal of, or any installment of principal of or
interest on, any senior security or the terms of any sinking fund or analogous
payment with respect to any senior security, (b) reduce the principal amount of,
or premium or interest on, any senior security, (c) change our obligation to pay
additional amounts, (d) reduce the amount of principal of an original issue
discount senior security payable upon acceleration of the maturity thereof or
provable in bankruptcy, (e) change the place of payment where, or the coin or
currency in which, any senior security or any premium or interest thereon is
payable, (f) impair the right to institute suit for the enforcement of any
payment on or with respect to any senior security, (g) reduce the percentage in
principal amount of outstanding senior securities of any series, the consent of
whose holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (h) reduce the requirements contained in the Indenture for
quorum or voting, (i) change our obligation to maintain an office or agency in
the places and for the purposes required by the Indenture, or (j) reduce the
obligations of Viacom International, if any, in respect of the due and punctual
payment of any principal of, premium or interest on any senior security or any
additional amounts in respect thereof.
The holders of at least a majority in aggregate principal amount of the
outstanding senior securities of a series may, on behalf of the holders of all
the senior securities of that series, waive, insofar as that series is
concerned, our compliance with specified provisions of the Indenture. The
holders of not less than a majority in aggregate principal amount of the
outstanding senior securities of a series may, on behalf of all holders of
senior securities of that series, waive any past default under the Indenture
with respect to senior securities of that series, except a default (a) in the
payment of principal of or any premium or interest on any senior security of
such series or (b) in respect of any other provision of the Indenture that
cannot be modified or amended without the consent of the holder of each
outstanding senior security of such series affected thereby.
The Indenture provides that, in determining whether the holders of the
requisite principal amount of the outstanding senior securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of holders of senior securities for quorum purposes,
the principal amount of an original issue discount senior security that shall be
deemed to be outstanding shall be the amount that would be due and payable as of
the date of such determination upon acceleration of the maturity thereof.
The Indenture contains provisions for convening meetings of the holders
of senior securities of any or all series. A meeting may be called at any time
by the trustee, and also, upon request, by us or the holders of at least 33 1/3%
in aggregate principal amount of the outstanding senior securities of such
series, in any such case upon notice given in accordance with "Notices" below.
Except for any consent that must be given by the holder of each outstanding
senior security affected thereby, as described above, any resolution presented
at a meeting or adjourned meeting at which a quorum is present may be adopted
40
by the affirmative vote of the holders of a majority in principal amount of the
outstanding senior securities of that series; provided, however, that, except
for any consent that must be given by the holder of each outstanding senior
security affected thereby, as described above, any resolution with respect to
any consent, waiver, request, demand, notice, authorization, direction or other
action that may be made, given or taken by the holders of not less than a
specified percentage in principal amount of the outstanding senior securities of
a series may be adopted at a meeting or an adjourned meeting at which a quorum
is present only by the affirmative vote of the holders of not less than such
specified percentage in principal amount of the outstanding senior securities of
that series. Any resolution passed or decision taken at any meeting of holders
of senior securities of any series duly held in accordance with the Indenture
will be binding on all holders of senior securities of that series. The quorum
at any meeting called to adopt a resolution, and at any adjourned meeting, will
be persons holding or representing a majority in principal amount of the
outstanding senior securities of a series; provided, however, that, if any
action is to be taken at such meeting with respect to a consent, waiver,
request, demand, notice, authorization, direction or other action that may be
given by the holders of not less than a specified percentage in principal amount
of the outstanding senior securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
senior securities of such series will constitute a quorum.
Defeasance and Covenant Defeasance
We may elect either (i) to defease and be discharged (and, if
applicable, to have Viacom International defeased and discharged) from any and
all obligations with respect to the senior securities (except as otherwise
provided in the Indenture) ("defeasance") or (ii) to be released from our
obligations with respect to certain covenants that are described in the
Indenture ("covenant defeasance"), upon the deposit with the trustee, in trust
for such purpose, of money and/or specified government obligations that through
the payment of principal and interest in accordance with their terms will
provide money in an amount sufficient, without reinvestment, to pay the
principal of, premium, if any and interest on the senior securities of such
series to maturity or redemption, as the case may be, and any mandatory sinking
fund or analogous senior payments thereon. As a condition to defeasance or
covenant defeasance, we must deliver to the trustee an opinion of counsel to the
effect that the holders of the senior securities of such series will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance or covenant defeasance
had not occurred. Such opinion of counsel, in the case of defeasance under
clause (i) above, must refer to and be based upon a ruling of the Internal
Revenue Service or a change in applicable United States federal income tax law
occurring after the date of the Indenture.
We may exercise our defeasance option with respect to the senior
securities of any series notwithstanding our prior exercise of our covenant
defeasance option. If we exercise our defeasance option, payment of the senior
securities of such series may not be accelerated because of an event of default
and the guarantees relating to such senior securities will cease to exist. If we
exercise our covenant defeasance option, payment of the senior securities of
such series may not be accelerated by reference to any covenant from which we
are released as described under clause (ii) above. However, if acceleration were
to occur for other reasons, the realizable value at the acceleration date of the
money and government obligations in the defeasance trust could be less than the
principal and interest then due on the senior securities of such series, in that
the required deposit in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors.
Notices
41
Notices to holders of senior securities will be given by mail to the
addresses of such holders as they appear in the security register.
Title
We, Viacom International, as guarantor, the trustee and any agent of
us, Viacom International, as guarantor, or the trustee may treat the registered
owner of any registered senior security as the absolute owner thereof (whether
or not the senior security shall be overdue and notwithstanding any notice to
the contrary) for the purpose of making payment and for all other purposes.
Replacement of Senior Securities
We will replace any mutilated senior security at the expense of the
holders upon surrender to the trustee. We will replace senior securities that
become destroyed, lost or stolen at the expense of the holder upon delivery to
the trustee of satisfactory evidence of the destruction, loss or theft thereof.
In the event of a destroyed, lost or stolen senior security, an indemnity or
security satisfactory to us and the trustee may be required at the expense of
the holder of the senior security before a replacement senior security will be
issued.
Governing Law
The Indenture, the senior securities and the guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York.
Regarding the Trustee
We and Viacom International maintain deposit accounts and banking and
borrowing relations with Citibank, N.A., the trustee under the Indenture, and
such trustee is currently a lender to us and Viacom International and certain of
our other subsidiaries. We may remove the trustee at any time with respect to
the senior securities of any series, provided that we immediately appoint a
successor trustee meeting the requirements for trustees specified in the
Indenture and provided further that no default with respect to such senior
securities has occurred and is continuing.
Certain Definitions
The following definitions are applicable to the Indenture:
"Capitalized Lease" means any obligation of a person to pay rent or
other amounts incurred with respect to real property or equipment acquired or
leased by such person and used in its business that is required to be recorded
as a capital lease in accordance with generally accepted accounting principles
consistently applied as in effect from time to time.
"Indebtedness" of any person means, without duplication (i) any
obligation of such person for money borrowed, (ii) any obligation of such person
evidenced by bonds, debentures, notes or other similar instruments, (iii) any
reimbursement obligation of such person in respect of letters of credit or other
similar instruments which support financial obligations which would otherwise
become Indebtedness, (iv) any obligation of such person under Capitalized Leases
(other than in respect of (x) telecommunications equipment including, without
limitation, satellite transponders, and (y) theme park equipment and
attractions), and (v) any obligation of any third party to the extent secured by
a Lien on the assets of such person; provided, however, that "Indebtedness" of
such person shall not include any obligation of such person (a) to any
Subsidiary of such person or to any person with respect to which such
42
person is a Subsidiary or (b) specifically with respect to the production,
distribution or acquisition of motion pictures or other programming rights,
talent or publishing rights. When used with respect to Viacom, the term
"Indebtedness" also includes any obligation of Viacom International specified in
clauses (i) through (v)above to the extent that said Indebtedness is guaranteed
by Viacom.
"Lien" means any pledge, mortgage, lien, encumbrance or other security
interest.
"Restricted Subsidiary" means a corporation all of the outstanding
voting stock of which is owned, directly or indirectly, by Viacom or by one or
more of its Subsidiaries, or by Viacom and one or more of its Subsidiaries,
which is incorporated under the laws of a State of the United States, and which
owns a Principal Property.
"Subsidiary" of any person means (i) a corporation a majority of the
outstanding voting stock of which is at the time, directly or indirectly, owned
by such person, by one or more Subsidiaries of such person, or by such person
and one or more Subsidiaries thereof or (ii)any other person (other than a
corporation), including, without limitation, a partnership or joint venture, in
which such person, one or more Subsidiaries thereof, or such person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other persons performing
similar functions).
43
UNITED STATES TAX CONSIDERATIONS
This description is based on the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed Treasury Regulations, and interpretations of
the foregoing, changes to any of which subsequent to the date of this prospectus
may affect the tax consequences described herein. These statements address only
the tax consequences to holders holding senior securities as capital assets
within the meaning of Section 1221 of the Code. They do not discuss all of the
tax consequences that may be relevant to holders in light of their particular
circumstances or to holders subject to special rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
United States Holders (as defined below) whose functional currency (as defined
in Code Section 985) is not the U.S. dollar, persons holding senior securities
in connection with a hedging transaction, "straddle", conversion transaction or
other integrated transaction, traders in securities that elect to mark to
market, holders liable for alternative minimum tax or persons who have ceased to
be United States citizens or to be taxed as resident aliens. Persons considering
the purchase of the senior securities should consult their tax advisors
concerning the application of United States federal income tax laws, as well as
the laws of any state, local or foreign taxing jurisdictions, to their
particular situations.
As used in this section, a "United States Holder" means a beneficial
owner of senior securities that is for United States federal income tax purposes
a holder that is a United States person (as defined in "Description of Senior
Securities--Payment of Additional Amounts").
As used in this section, the term "United States Alien Holder" means a
beneficial owner of senior securities that is, for United States federal income
tax purposes:
o a nonresident alien individual;
o a foreign corporation;
o a nonresident alien fiduciary of a foreign estate or trust; or
o a foreign partnership one or more of the members of which is a
nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust.
Exchange Offer
The exchange of unregistered senior securities for exchange senior
securities pursuant to the exchange offer will not be a taxable event for United
States federal income tax purposes. Accordingly, a holder will not recognize
taxable gain or loss as a result of such exchange and will have the same
adjusted tax basis and holding period in the exchange senior securities as such
holder had in the unregistered senior securities immediately before the
exchange.
Tax Consequences to United States Holders
Payments of Interest
Interest on senior securities will generally be taxable to a United
States Holder as ordinary interest income at the time it accrues or is received
in accordance with the United States Holder's method of accounting for federal
income tax purposes.
Sale, Exchange or Retirement
44
Upon the sale, exchange or retirement of senior securities, a United
States Holder will recognize gain or loss equal to the difference between the
amount realized on the sale, exchange or retirement of the senior securities and
such holder's adjusted tax basis in the senior securities. A United States
Holder's adjusted tax basis in senior securities will equal the cost of the
senior securities to such holder, subject to possible reduction by amortized
bond premium. The amount realized excludes any amounts attributable to unpaid
interest accrued between interest payment dates and not previously included in
income, which will be taxable as ordinary income. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if at the time
of the sale, exchange or retirement the senior securities have been held for
more than one year. Under current laws, the excess of the taxpayer's net
long-term capital gains over net short-term capital losses is taxed at a lower
rate than ordinary income for certain non-corporate taxpayers. The distinction
between capital gain or loss and ordinary income or loss is also relevant for
purposes of, among other things, the limitations on the deductibility of capital
losses.
Amortizable Bond Premium
In general, if a United States Holder purchases a senior security at a
premium (that is, for an amount in excess of the amount payable upon the
maturity thereof), such holder will be considered to have purchased such senior
security with "amortizable bond premium" equal to the amount of such excess.
Such holder may elect to amortize such bond premium as an offset to interest
income, and not as a separate deduction item, as it accrues under a
constant-yield method over the remaining term of the senior security. Such
holder's tax basis in the senior security will be reduced by the amount of the
amortized bond premium. Any such election shall apply to all debt instruments
(other than instruments the interest on which is excludible from gross income)
held by the United States Holder at the beginning of the first taxable year for
which the election applies or thereafter acquired and is irrevocable without the
consent of the Internal Revenue Service. Bond premium on senior securities held
by a United States Holder who does not elect to amortize the premium will
decrease the gain or increase the loss otherwise recognized on the disposition
of the senior securities.
Market Discount
If a United States Holder purchases a senior security for less than its
principal amount, the difference will be treated as a "market discount" for U.S.
federal income tax purposes subject to a de minimus exception.
Under the market discount rules, a United States Holder will be
required to treat any principal payment on a senior security, or any gain on its
sale, exchange, retirement or other disposition, as ordinary income to the
extent of the accrued market discount which was not previously included in gross
income. If the senior security is disposed of in a non-taxable transaction
(other than a nonrecognition transaction described in section 1276 of the Code),
accrued market discount will be taxable to the United States Holder as ordinary
income as if the United States Holder had sold the senior security at its fair
market value. In addition, a United States Holder may be required to defer,
until the maturity of a senior security or its earlier disposition (including a
non-taxable transaction other than a transaction described in section 1276 of
the Code), the deduction of all or a portion of the interest expense in respect
of any indebtedness incurred or continued to purchase or carry the senior
security. Market discount will be considered to accrue on a straight-line basis
during the period from the date of acquisition to the maturity date of the
senior security, unless the United States Holder elects to accrue on a
constant-yield basis.
A United States Holder may elect to include market discount in income
as it accrues --on either a ratable or constant-yield basis. If a United States
Holder makes this election, the rules regarding the
45
treatment of gain upon the disposition of the senior security and upon the
receipt of principal payments as ordinary income and regarding the deferral of
interest deductions will not apply. If a United States Holder elects to include
market discount in income as it accrues, the election will apply to all market
discount obligations acquired during or after the first taxable year to which
the election applies. This election may not be revoked without the consent of
the Internal Revenue Service.
Tax Consequences to United States Alien Holders
Under present United States federal tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal, interest and premium on the senior
securities by Viacom or its paying agent to any United States Alien Holder will
be exempt from the 30% United States federal withholding tax, provided that (i)
such holder does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of Viacom entitled to vote, (ii)
such holder is not a controlled foreign corporation related, directly or
indirectly, to Viacom through stock ownership, and (iii) the requirement to
certify such holder's non-U.S. status, as set forth in section 871(h) or section
881(c) of the Code, has been fulfilled with respect to the beneficial owner, as
discussed below;
(b) a United States Alien Holder of senior securities will not be
subject to United States federal income tax on gain realized on the sale,
exchange or retirement of such senior securities, unless (i) such holder is an
individual who is present in the United States for 183 days or more in the
taxable year of the disposition, and either the gain is attributable to an
office or other fixed place of business maintained by such individual in the
United States or, generally, such individual has a "tax home" in the United
States or (ii) such gain is effectively connected with such holder's conduct of
a trade or business in the United States (and, if an income tax treaty applies,
generally is attributable to a U.S. "permanent establishment" maintained by such
holder); and
(c) senior securities held by an individual who is not, for United
States estate tax purposes, a resident or citizen of the United States at the
time of his death will not be subject to United States federal estate tax,
provided that the individual does not own, actually or constructively, 10% or
more of the total combined voting power of all classes of stock of Viacom
entitled to vote and, at the time of such individual's death, payments with
respect to such senior securities would not have been effectively connected with
the conduct by such individual of a trade or business in the United States.
The certification requirement referred to in subparagraph (a) will be
fulfilled if the beneficial owner of senior securities certifies on Internal
Revenue Service Form W-8BEN or successor form under penalties of perjury, that
it is not a United States person and provides its name and address, and (i) such
beneficial owner files such Form W-8BEN or successor form with the withholding
agent or (ii) in the case of senior securities held on behalf of the beneficial
owners by a securities clearing organization, bank or other financial
institution holding customers' securities in the ordinary course of its trade or
business, such financial institution files with the withholding agent a
statement that it has received the Form W-8BEN or successor form from the United
States Alien Holder, furnishes the withholding agent with a copy thereof and
otherwise complies with the applicable Internal Revenue Service requirements.
Alternatively, these certification requirements will not apply if the
beneficial owner of the senior securities holds those securities directly
through a "qualified intermediary"(which is a non-U.S. office of a bank,
securities dealer or similar intermediary that has signed an agreement with the
Internal Revenue Service concerning withholding tax procedures), the qualified
intermediary has sufficient information in its files to indicate that the holder
is a United States Alien Holder and the intermediary complies with Internal
Revenue Service requirements. Special rules may apply with respect to senior
securities held by a
46
foreign partnership. Prospective investors, including foreign partnerships and
their partners and holders who hold their senior securities through a qualified
intermediary, should consult their tax advisers regarding possible reporting
requirements.
If a United States Alien Holder of senior securities is engaged in a
trade or business in the United States, and if interest on the senior securities
(or gain realized on their sale, exchange or other disposition) is effectively
connected with the conduct of such trade or business (and, if an income tax
treaty applies, generally is attributable to a U.S. "permanent establishment"
maintained by such holder), the United States Alien Holder, although exempt from
the withholding tax discussed in the preceding paragraphs, will be subject to
regular United States income tax on such effectively connected income, generally
in the same manner as if it were a United States Holder. See "Tax Consequences
to United States Holders" above. In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the
withholding agent a properly executed Internal Revenue Service Form W-8ECI or
successor form, as appropriate, to claim an exemption from withholding tax. In
addition, if such United States Alien Holder is a foreign corporation, it may be
subject to a 30% branch profits tax (unless reduced or eliminated by an
applicable treaty) on its earnings and profits for the taxable year attributable
to such effectively connected income, subject to certain adjustments.
Interest payments made to a United States Alien Holder will generally
be reported to such holder and to the Internal Revenue Service on Form 1042-S.
However, this reporting does not apply if such holder holds the senior
securities directly through a qualified intermediary.
Backup Withholding and Information Reporting
Under current United States federal income tax law, information
reporting requirements apply to certain payments of principal, premium, market
discount and interest made to, and to the proceeds of sales before maturity by,
non-corporate United States Holders. In addition, a 31% backup withholding tax
will apply if the noncorporate United States Holder (i) fails to furnish its
Taxpayer Identification Number ("TIN") which, for an individual, is his Social
Security Number, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments, or (iv) under certain circumstances fails
to certify, under penalties of perjury, that it has furnished a correct TIN and
has not been notified by the Internal Revenue Service that it is subject to
backup withholding for failure to report interest and dividend payments. Holders
should consult their tax advisers regarding their qualification for exemption
from backup withholding and the procedure for obtaining such an exemption if
applicable.
Backup withholding will not apply to payments made on senior securities
if the certifications required by Sections 871(h) and 881(c) as described above
are received or if the exemption for qualified intermediaries discussed above
applies, provided that Viacom or its paying agent or the qualified intermediary,
as the case may be, does not have actual knowledge or reason to know that the
payee is a United States person.
Under current Treasury Regulations, payments on the sale, exchange or
other disposition of senior securities made to or through a foreign office of a
broker generally will not be subject to backup withholding. However, if such
broker is:
o a United States person;
o a controlled foreign corporation for United States federal income
tax purposes;
47
o a foreign person 50% or more of whose gross income for certain
periods is effectively connected with a United States trade or
business; or
o a foreign partnership with certain connections to the United
States;
then information reporting will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption. Backup withholding may apply to any payment that such broker is
required to report if the broker has actual knowledge or reason to know that the
payee is a United States person. Payments to or through the United States office
of a broker will be subject to backup withholding and information reporting
unless such holder certifies, under penalties of perjury, that it is not a
United States person and the payor does not have actual knowledge or reason to
know that such holder is a United States person, or such holder otherwise
establishes an exemption.
United States Alien Holders of senior securities should consult their
tax advisers regarding the application of information reporting and backup
withholding in their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if available. Any
amounts withheld from a payment to a United States Alien Holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided that such holder files a United States income tax return and the
required information is furnished to the Internal Revenue Service.
48
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange senior securities for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange senior securities.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of exchange senior securities
received in exchange for unregistered senior securities where such unregistered
senior securities were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 180 days after the
expiration of the exchange offer, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until 90 days after the date of this prospectus, all
dealers effecting transactions in the exchange senior securities may be required
to deliver a prospectus.
We will not receive any proceeds from any sale of exchange senior
securities by broker-dealers. Exchange senior securities received by
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange senior
securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such exchange senior securities. Any broker-dealer that
resells exchange senior securities that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such exchange senior securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange senior securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the unregistered
senior securities) other than commissions, discounts or concessions of any
broker-dealers and will indemnify the holders of the unregistered senior
securities (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
49
LEGAL MATTERS
The validity of the exchange senior securities and the guarantees will
be passed upon for Viacom and Viacom International by Shearman & Sterling, New
York, New York.
EXPERTS
Our financial statements incorporated by reference in this prospectus
from our Annual Report on Form 10-K for the year ended December 31, 2000 have
been audited by PricewaterhouseCoopers LLP, independent accountants, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements and schedule of CBS as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, incorporated in this prospectus by reference from Item
8 of the CBS's Annual Report on Form 10-K for the year ended December 31, 1999,
have been audited by KPMG LLP, independent accountants, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements and schedule of Infinity as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999, incorporated in this prospectus by reference from Item
8 of Infinity's Annual Report on Form 10-K for the year ended December 31, 1999,
have been audited by KPMG LLP, independent accountants, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
50
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion dated July 13, 2001
VIACOM INC.
OFFER TO EXCHANGE
Unregistered 6.40% Senior Notes due 2006
($3,075,000 aggregate principal amount outstanding issued January 17, 2001)
Unregistered 7.70% Senior Notes due 2010
($1,000,000 aggregate principal amount outstanding issued January 17, 2001)
Unregistered 7.875% Senior Debentures due 2030
($200,000 aggregate principal amount outstanding issued January 17, 2001)
for
6.40% Senior Notes due 2006 ($3,075,000 aggregate principal amount)
7.70% Senior Notes due 2010 ($1,000,000 aggregate principal amount)
7.875% Senior Debentures due 2030 ($200,000 aggregate principal amount)
that have been registered under the Securities Act of 1933
---------------
Unconditionally guaranteed as to payment of principal
and interest by Viacom International Inc.
(a wholly owned subsidiary of Viacom Inc.)
---------------
TERMS OF EXCHANGE OFFER
o The exchange offer will expire at 5:00 p.m., New York City time, on ,
2001, unless we extend the offer.
o Tenders of outstanding unregistered senior securities may be withdrawn at
any time before 5:00 p.m. on the date of expiration of the exchange offer.
o All outstanding unregistered senior securities that are validly tendered
and not validly withdrawn will be exchanged.
o The terms of the exchange senior securities to be issued are substantially
similar to the unregistered senior securities, except for being registered
under the Securities Act of 1933 and not having any transfer restrictions.
o The exchange of senior securities will not be a taxable exchange for U.S.
federal income tax purposes.
o We will not receive any proceeds from the exchange offer.
o Application has been made to list the exchange senior securities on the
Luxembourg Stock Exchange.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the senior securities to be
distributed in the exchange offer, nor have any of these organizations
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 2001
Each holder of an unregistered senior security wishing to accept the
exchange offer must deliver the unregistered senior securities to be exchanged,
together with the letter of transmittal that accompanies this prospectus and any
other required documentation, to the exchange agent identified in this
prospectus. Alternatively, you may effect a tender of unregistered senior
securities by book-entry transfer into the exchange agent's account at Euroclear
Bank S.A./N.A., as operator of the Euroclear System ("Euroclear"), Clearstream
Banking, societe anonyme, Luxembourg ("Clearstream Luxembourg") or The
Depository Trust Company ("DTC"). All deliveries are at the risk of the holder.
You can find detailed instructions concerning delivery in the section called
"The Exchange Offer" in this prospectus and in the accompanying letter of
transmittal.
---------------
If you are a broker-dealer that receives exchange senior securities for
your own account you must acknowledge that you will deliver a prospectus in
connection with any resale of the exchange senior securities. The letter of
transmittal accompanying this prospectus states that by so acknowledging and by
delivering a prospectus, you will not be deemed to admit that you are an
"underwriter" within the meaning of the Securities Act. You may use this
prospectus, as we may amend or supplement it in the future, for your resales of
exchange senior securities. We will make this prospectus available to any
broker-dealer for use in connection with any such resale for a period of 180
days after the date of expiration of this exchange offer.
You should rely only on the information contained in or incorporated by
reference in this prospectus. Neither we nor Viacom International has authorized
anyone to provide you with different or additional information. If anyone
provides you with different or additional information, you should not rely on
it. You should assume that the information contained or incorporated by
reference in this prospectus is accurate only as of the date of this prospectus
or the date of the document incorporated by reference. Our business, financial
condition, results of operations and prospects may have changed since then.
Neither we nor Viacom International is making an offer of the senior securities
in any jurisdiction where the offer is not permitted.
TABLE OF CONTENTS
Page
----
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS....................ii
WHERE YOU CAN FIND MORE INFORMATION...........................................iv
PROSPECTUS SUMMARY.............................................................1
SUMMARY OF THE EXCHANGE OFFER..................................................3
SUMMARY DESCRIPTION OF THE EXCHANGE SENIOR SECURITIES..........................8
CAPITALIZATION................................................................10
SUMMARY HISTORICAL FINANCIAL DATA.............................................11
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION....................12
RATIO OF EARNINGS TO FIXED CHARGES............................................13
USE OF PROCEEDS...............................................................14
THE EXCHANGE OFFER............................................................15
DESCRIPTION OF SENIOR SECURITIES..............................................25
UNITED STATES TAX CONSIDERATIONS..............................................41
PLAN OF DISTRIBUTION..........................................................46
LEGAL MATTERS.................................................................47
EXPERTS.......................................................................47
---------------
References to "Viacom," "we," "us" and "our" in this prospectus are
references to Viacom Inc. References to "Viacom International" are references to
Viacom International Inc. References to "$" and "dollars" are to United States
dollars.
Whenever we refer in this prospectus to the 6.40% senior notes due 2006
issued on January 17, 2001, the 7.70% senior notes due 2010 issued on January
17, 2001 or the 7.875% senior debentures due 2030 issued on January 17, 2001, we
will refer to them as the "unregistered 2006 senior notes", the "unregistered
2010 senior notes", or the "unregistered senior debentures", respectively, and
collectively as the "unregistered senior securities". Whenever we refer in this
prospectus to the registered 6.40% senior notes due 2006, 7.70% senior notes due
2010 or 7.875% senior debentures due 2030, we will refer to them as the
"exchange 2006 senior notes", the "exchange 2010 senior notes" or the "exchange
senior debentures", respectively, and collectively as the "exchange senior
securities". The unregistered 2006 senior notes and the exchange 2006 senior
notes are collectively referred to as the "2006 senior notes", the unregistered
2010 senior notes and the exchange 2010 senior notes are collectively referred
to as the "2010 senior notes" and the unregistered senior debentures and the
exchange senior debentures are collectively referred to as the "senior
debentures". The unregistered senior securities and the exchange senior
securities are collectively referred to as the "senior securities".
i
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain both historical and forward-looking statements. All
statements other than statements of historical fact are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are not based on historical facts, but rather reflect
our current expectations concerning future results and events. These
forward-looking statements generally can be identified by the use of statements
that include phrases such as "believe," "expect," "anticipate," "intend,"
"plan," "foresee," "likely," "will" or other similar words or phrases.
Similarly, statements that describe our objectives, plans or goals are or may be
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be different from any future results,
performance and achievements expressed or implied by these statements. You
should review carefully all information, including the financial statements and
the notes to the financial statements, included or incorporated by reference
into this prospectus.
The following important factors, among others, could affect our future
results, causing these results to differ materially from those expressed in our
forward-looking statements:
o We derive substantial revenues from the sale of advertising time on
our over-the-air networks, basic cable networks, television stations,
radio stations and outdoor businesses. The advertising market has
recently experienced softness. The sale of advertising time is
affected by viewer demographics, viewer ratings and market conditions
for advertising time. Adverse changes to any of these factors could
have a negative effect on revenues.
o Operating results derived from our motion picture and television
production fluctuate depending primarily upon cost of such productions
and acceptance of such productions by the public, which are difficult
to predict. Motion picture and television production has experienced
cycles in which increased costs of talent and other factors have
resulted in higher production costs. In addition, the commercial
success of our motion picture and television productions also depends
upon the quality and acceptance of other competing productions, and
the availability of alternative forms of entertainment and leisure
time activities.
o Our operating results also fluctuate due to the timing and
availability of theatrical and home video releases, as well as a
result of the recording of license fees for television exhibition of
motion pictures and for syndication and basic cable exhibition of
television programming in the period that the products are available
for such exhibition.
o Our basic cable network and premium subscription television networks
are dependent on affiliation agreements with cable and direct
broadcast satellite distributors on acceptable terms. The loss of
carriage on such distributors, or continued carriage on less favorable
terms, could adversely affect, with respect to basic cable networks,
revenues from subscribers fees and the ability to sell advertising
time, and with respect to premium subscription television networks,
subscribers fee revenues.
o Some of our businesses are seasonal. More specifically, the home video
business and consumer publishing business are subject to increased
periods of demand coinciding with summer and winter holidays, while a
substantial majority of the theme parks operating income is generated
from May through September. In addition, the home video and theme
parks businesses' revenues are influenced by weather.
ii
o Changes in FCC laws and regulations could, directly or indirectly,
adversely affect the operations and ownership of our properties.
o We have contingent liabilities related to discontinued operations,
including environmental liabilities and pending litigation. While
there can be no assurance in this regard, the pending or potential
litigation, environmental and other liabilities should not have a
material adverse effect on us.
o We may be adversely affected by changes in technology and its effect
on competition in our markets.
o Labor agreements covering the services of actors whom we utilize in
our motion picture and television businesses are currently scheduled
to expire during 2001. Work stoppages and/or higher costs in
connection with these agreements could adversely impact our ability to
produce or acquire new programming.
o Other economic, business, competitive and/or regulatory factors
affecting our businesses generally.
These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in any of
our forward-looking statements. Other unknown or unpredictable factors also
could have material adverse effects on our future results. The forward-looking
statements included in this prospectus are made only as of the date of this
prospectus and under Section 27A of the Securities Act and Section 21E of the
Exchange Act and we do not have any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances. We
cannot assure you that projected results or events will be achieved.
iii
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov.
Our Class A common stock and Class B common stock are listed on the New
York Stock Exchange. Information about us also is available at the New York
Stock Exchange. In accordance with U.S. securities laws, Viacom International is
not obligated to file annual, quarterly and current reports, proxy statements
and other information with the SEC. Accordingly, Viacom International does not
file separate financial statements with the SEC and does not independently
publish its financial statements. Viacom International's financial condition,
results of operations and cash flows are consolidated into the financial
statements of Viacom.
We are "incorporating by reference" specified documents that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Later information that we file with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 by us until the exchange offer is
completed.
o Our Annual Report on Form 10-K for the year ended December 31,
2000.
o Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2001.
o Our Current Report on Form 8-K dated May 4, 2000, as amended
on July 17, 2000, and our Current Reports on Form 8-K dated
January 5, 2001, January 8, 2001, February 15, 2001, February
21, 2001, May 30, 2001, June 1, 2001 and July 3, 2001.
o Our definitive Proxy Statement dated April 16, 2001.
o CBS Corporation Annual Report on Form 10-K for the year ended
December 31, 1999, as amended on April 28, 2000.
o The consolidated financial statements of Infinity Broadcasting
Corporation, as set forth in Item 8 and the notes thereto to
Infinity's Annual Report on Form 10-K for the year ended
December 31, 1999.
o The condensed financial statements of Infinity, as set forth
in Item 1 to Infinity's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000.
o Our Registration Statement on Form S-4 dated January 12, 2001.
iv
You may obtain a copy of these filings at no cost, by writing or
telephoning us at the following address:
Viacom Inc.
1515 Broadway
52nd Floor
New York, New York 10036
Attn: Investor Relations
Telephone Number: (212) 258-6000
In addition, copies of all documents that we incorporate into this
prospectus by reference may be obtained free of charge at the offices of
Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg, our
Luxembourg paying and transfer agent.
v
PROSPECTUS SUMMARY
The following summary highlights selected information from this
prospectus and does not contain all of the information that you should consider
before participating in this exchange offer. You should read the entire
prospectus, accompanying letter of transmittal and documents incorporated by
reference carefully.
THE COMPANY
We, together with our subsidiaries, are a diversified worldwide
entertainment company with operations in six segments: Cable Networks,
Television, Infinity, Entertainment, Video and Publishing. The Cable Networks
segment operates MTV: MUSIC TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT
NITE(R), VH1 MUSIC FIRST(R), TV LAND(R), TNN: THE NATIONAL NETWORK,TM CMT:
COUNTRY MUSIC TELEVISIONTM and BET: BLACK ENTERTAINMENT TELEVISION(R), among
other program services. The Television segment consists of CBS(R) and UPN(R)
television networks, 39 owned broadcast television stations and Viacom's
television production and syndication business, including KING WORLD
PRODUCTIONS(TM) and PARAMOUNT TELEVISION(TM). The Infinity segment operates
approximately 184 radio stations through INFINITY BROADCASTING(R) and outdoor
advertising properties through INFINITY OUTDOOR(TM) and TDI(R). The
Entertainment segment includes PARAMOUNT PICTURES(R), which produces and
distributes theatrical motion pictures; PARAMOUNT PARKS(R), which owns and
operates five theme parks and a themed attraction in the United States and
Canada; and movie theater and music publishing operations. The Video segment
consists of an approximately 82% equity interest in Blockbuster Inc., which
operates and franchises BLOCKBUSTER(R) video stores worldwide. The remainder of
Blockbuster's common stock was sold to the public in August 1999. The Publishing
segment publishes and distributes consumer books and related multimedia
products, under such imprints as SIMON & SCHUSTER(R), POCKET BOOKS(TM),
SCRIBNER(R) and THE FREE PRESS(TM). We were organized under the laws of the
State of Delaware in 1986. Viacom's principal offices are located at 1515
Broadway, New York, New York 10036 and our telephone number is (212) 258-6000.
THE GUARANTOR
Viacom International, the guarantor of the senior securities, was
organized under the laws of the State of Delaware in 1995 and has its corporate
headquarters at 1515 Broadway, New York, New York 10036. Viacom International
has 100 shares of common stock outstanding, all of which are held by Viacom. The
operating assets of Viacom International and its subsidiaries include MTV: MUSIC
TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT NITE(R), VH1 MUSIC FIRST(R),
TV LAND(R), approximately 18 broadcast television stations, all interests in the
businesses of the Video, Entertainment and Publishing segments and certain
related Internet sites.
1
CERTAIN SUBSIDIARIES
Viacom has one subsidiary, Blockbuster, Inc., which is subject to the
reporting requirements of the Exchange Act. Blockbuster, incorporated under the
laws of the State of Delaware in 1989, has its corporate headquarters at 1201
Elm Street, Dallas, Texas 75270. As of March 31, 2001, Blockbuster had
31,014,696 shares of Class A common stock and 144,000,000 shares of Class B
common stock outstanding. Blockbuster is a retailer of rentable home
videocassettes, DVDs and video games, and has stores throughout the United
States and in many other countries. Blockbuster operates primarily under the
Blockbuster brand name. Blockbuster's financial condition, results of operations
and cash flows are consolidated into the financial statements of Viacom. We own
all of Blockbuster's Class B common stock representing an approximately 82%
equity interest in Blockbuster.
RECENT DEVELOPMENTS
As a result of Viacom's merger with CBS Corporation on May 4, 2000,
Viacom acquired an approximate 64.2% equity interest in Infinity Broadcasting
Corporation. On February 21, 2001, Infinity merged with and into a wholly owned
subsidiary of Viacom. In connection with the Viacom/Infinity merger, Viacom
issued 0.592 of a share of its Class B common stock for each issued and
outstanding share of Infinity Class A common stock resulting in the issuance of
approximately 232 million shares of Viacom Class B common stock.
On November 3, 2000, Viacom announced an agreement to acquire BET
Holdings II, Inc., which operates the BET: BLACK ENTERTAINMENT TELEVISION(R)
cable networks. On January 23, 2001, we completed our acquisition of BET for a
total purchase price of approximately $3.0 billion, which principally represents
the issuance of approximately 43.4 million shares of Viacom Class B common stock
and the assumption by Viacom of approximately $590 million in debt.
2
SUMMARY OF THE EXCHANGE OFFER
On January 17, 2001, we issued $400 million aggregate principal amount
of unregistered 6.40% senior notes due 2006, $500 million aggregate principal
amount of unregistered 7.70% senior notes due 2010 and $750 million aggregate
principal amount of unregistered 7.875% senior debentures due 2030. The
unregistered senior securities are unconditionally guaranteed as to payment of
principal and interest by Viacom International. The exchange senior securities
will be our obligations and will be entitled to the benefits of the indenture
and supplemental indentures relating to the unregistered senior securities. The
exchange senior securities will also be unconditionally guaranteed as to payment
of principal and interest by Viacom International. The form and terms of the
exchange senior securities are identical in all material respects to the form
and terms of unregistered senior securities, except that the exchange senior
securities have been registered under the Securities Act, and therefore will
contain no restrictive legends. For additional information on the terms of the
exchange offer, see "The Exchange Offer."
The Exchange Offer................ We are offering to exchange $1,000 principal
amount of:
o 6.40% senior notes due 2006 which
have been registered under the
Securities Act of 1933 for each
$1,000 principal amount of our
outstanding unregistered 2006
senior notes that were issued on
January 17, 2001. As of the date of
this prospectus, $3,075,000 in
aggregate principal amount of our
unregistered 2006 senior notes are
outstanding;
o 7.70% senior notes due 2010 which
have been registered under the
Securities Act of 1933 for each
$1,000 principal amount of our
outstanding unregistered 2010
senior notes that were issued on
January 17, 2001. As of the date of
this prospectus, $1,000,000 in
aggregate principal amount of our
unregistered 2010 senior notes are
outstanding; and
o 7.875% senior debentures due 2030
which have been registered under
the Securities Act of 1933 for each
$1,000 principal amount of our
outstanding unregistered 2030
senior debentures that were issued
on January 17, 2001. As of the date
of this prospectus, $200,000 in
aggregate principal amount of our
unregistered senior debentures are
outstanding.
Expiration of Exchange
Offer........................... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2001, unless we
decide to extend the expiration date.
3
Conditions of the Exchange
Offer........................... We will not be required to accept for
exchange any unregistered senior securities,
and we may amend or terminate the exchange
offer if any of the following conditions or
events occurs:
o the exchange offer, or the making
of any exchange by a senior
security holder, violates
applicable law or any applicable
interpretation of the staff of the
SEC;
o any action or proceeding shall have
been instituted or threatened with
respect to the exchange offer
which, in our judgment or the
judgment of Viacom International,
would impair our ability to proceed
with the exchange offer; and
o any law, rule or regulation or
applicable interpretations of the
staff of the SEC have been issued
or promulgated which, in our good
faith determination or the good
faith determination of Viacom
International, does not permit us
to effect the exchange offer.
We will give oral or written notice of any
non-acceptance, amendment or termination to
the registered holders of the unregistered
senior securities as promptly as
practicable. We reserve the right to waive
any conditions of the exchange offer.
Resale of Exchange Senior
Securities...................... Based on interpretative letters of the SEC
staff to third parties unrelated to us, we
believe that you can resell and transfer the
exchange senior securities you receive
pursuant to this exchange offer, without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that:
o any exchange senior securities to
be received by you will be acquired
in the ordinary course of your
business;
o you are not engaged in, do not
intend to engage in and have no
arrangement or understanding with
any person to participate in the
distribution of the unregistered
senior securities or exchange
senior securities;
o you are not an "affiliate" (as
defined in Rule 405 under the
Securities Act) of Viacom or Viacom
International or, if you are such
an affiliate, you will comply with
the registration and prospectus
delivery requirements of the
Securities Act to the extent
applicable;
o if you are a broker-dealer, you
have not entered into any
arrangement or understanding with
Viacom or Viacom International or
any "affiliate" of Viacom or Viacom
International (within the meaning
of Rule 405 under the Securities
Act) to distribute the exchange
4
senior securities;
o if you are a broker-dealer, you
will receive exchange senior
securities for your own account in
exchange for unregistered senior
securities that were acquired as a
result of market-making activities
or other trading activities and
that you will deliver a prospectus
in connection with any resale of
such exchange senior securities;
and
o you are not acting on behalf of any
person or entity that could not
truthfully make these
representations.
If you wish to accept the exchange offer,
you must represent to us that these
conditions have been met.
If our belief is inaccurate and you transfer
any exchange senior security without
delivering a prospectus meeting the
requirements of the Securities Act or
without an exemption from registration under
the Securities Act, you may incur liability
under the Securities Act. We do not assume
or indemnify you against such liability, but
we do not believe that any such liability
should exist.
Accrued Interest on the
Exchange Senior Securities
and Unregistered Senior
Securities...................... The exchange senior securities will accrue
interest from the date interest was last
paid on the unregistered senior securities.
If no interest was paid on your unregistered
senior securities, your exchange senior
securities will accrue interest from and
including January 17, 2001. We will pay
interest on the exchange senior securities
semi-annually on January 30 and July 30 of
each year, except that there was no January
30, 2001 interest payment date for the 2006
senior notes.
Holders of unregistered senior securities
that are accepted for exchange will be
deemed to have waived the right to receive
any payment in respect of interest accrued
from the date of the last interest payment
date that was made in respect of the
unregistered senior securities until the
date of the issuance of the exchange senior
securities. Consequently, holders of
exchange senior securities will receive the
same interest payments that they would have
received had they not accepted the exchange
offer.
Procedures for Tendering
Unregistered Senior
Securities...................... If you wish to participate in the exchange
offer, you must transmit a properly
completed and signed letter of transmittal,
and all other documents required by the
letter of transmittal, to the exchange agent
at the address set forth in the letter of
transmittal. These materials must be
received by the exchange
5
agent before 5:00 p.m., New York City time,
on , 2001, the expiration date of the
exchange offer. You must also provide:
o a confirmation of any book-entry
transfer of unregistered senior
securities tendered electronically
into the exchange agent's account
with DTC, Euroclear or Clearstream
Luxembourg. You must comply with
DTC's, Euroclear's or Clearstream
Luxembourg's respective standard
operating procedures for electronic
tenders, by which you will agree to
be bound in the letter of
transmittal; or
o physical delivery of your
unregistered senior securities to
the exchange agent's address as set
forth in the letter of transmittal.
The letter of transmittal must also contain
the representations you must make to us as
described under "The Exchange
Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners............... If you are a beneficial owner of
unregistered senior securities that are held
through a broker, dealer, commercial bank,
trust company or other nominee and you wish
to tender such unregistered senior
securities, you should contact the person
promptly and instruct the person to tender
your unregistered senior securities on your
behalf.
Guaranteed Delivery Procedures
for Unregistered Senior
Securities...................... If you cannot meet the expiration deadline,
or you cannot deliver your unregistered
senior securities, the letter of transmittal
or any other required documentation, or
comply with DTC's, Euroclear's or
Clearstream Luxembourg's respective standard
operating procedures for electronic tenders
on time, you may tender your unregistered
senior securities according to the
guaranteed delivery procedures set forth
under "The Exchange Offer-Guaranteed
Delivery Procedures."
Withdrawal Rights................. You may withdraw the tender of your
unregistered senior securities at any time
prior to 5:00 p.m., New York City time,
on , 2001, the expiration date.
Consequences of Failure to
Exchange........................ If you are eligible to participate in this
exchange offer and you do not tender your
unregistered senior securities as described
in this prospectus, your unregistered senior
securities will continue to be subject to
restrictions on transfer. As a result of the
restrictions on transfer and the
availability of exchange senior securities,
the unregistered senior securities are
likely to be much less liquid than before
the exchange offer. The unregistered senior
securities will, after the exchange offer,
6
bear interest at the same rate as the
exchange senior securities.
Certain U.S. Federal Income
Tax Consequences................ The exchange of the unregistered senior
securities for exchange senior securities
pursuant to the exchange offer will not be a
taxable exchange for U.S. federal income tax
purposes.
Use of Proceeds................... We will not receive any proceeds from the
issuance of exchange senior securities
pursuant to the exchange offer.
Exchange Agents for
Unregistered Senior
Securities...................... Citibank, N.A., the trustee under the
indenture for the unregistered senior
securities, is serving as the principal
exchange agent in connection with the
exchange offer. Citibank can be reached at
111 Wall Street, 15th Floor, New York, New
York 10005; its telephone number is (800)
422-2066 and its facsimile number is (212)
825-3483.
Kredietbank S.A. Luxembourgeoise, our
Luxembourg listing, paying and transfer
agent, will also act as Luxembourg exchange
agent. In its capacity as Luxembourg
exchange agent, Kredietbank will act solely
as an intermediary between Citibank, as the
principal exchange agent, and holders of
unregistered senior securities wishing to
accept the exchange offer. Kredietbank will
forward the tenders it receives to the
principal exchange agent. Kredietbank can be
reached at 43, Boulevard Royal, L-2955
Luxembourg; its telephone number is (352) 47
97 3933 and its facsimile number is (352) 47
97 73 951.
7
SUMMARY DESCRIPTION OF THE EXCHANGE SENIOR SECURITIES
The following summarized description of the exchange senior securities
is subject to a number of important exceptions and qualifications. For
additional information on the terms of the exchange senior securities, see
"Description of Senior Securities."
Exchange Senior Securities........ o $3,075,000 aggregate principal
amount of registered 6.40% senior
notes due 2006.
o $1,000,000 aggregate principal
amount of registered 7.70% senior
notes due 2010.
o $200,000 aggregate principal amount
of registered 7.875% senior
debentures due 2030.
Further Issuance.................. The unregistered 2006 senior notes will be,
upon their exchange for exchange 2006 senior
notes registered under the Securities Act, a
further issuance of our 6.40% senior notes
due 2006, $396,925,000 of which were issued
on March 19, 2001. The unregistered 2010
senior notes will be, upon their exchange
for exchange 2010 senior notes registered
under the Securities Act, a further issuance
of our 7.70% senior notes due 2010,
$1,150,000,000 of which were issued on
August 1, 2000 and $499,000,000 of which
were issued on March 19, 2001. The
unregistered senior debentures will be, upon
their exchange for exchange senior
debentures registered under the Securities
Act, a further issuance of our 7.875% senior
debentures due 2030, $500,000,000 of which
were issued on August 1, 2000 and
$749,800,000 of which were issued on March
19, 2001.
Maturity Dates.................... o January 30, 2006 for the exchange
2006 senior notes.
o July 30, 2010 for the exchange 2010
senior notes.
o July 30, 2030 for the exchange
senior debentures.
Interest Payment Dates............ January 30 and July 30 of each year,
beginning on the interest payment date
immediately following the last interest
payment date for which interest was paid on
unregistered senior securities which were
exchanged pursuant to the exchange offer,
except that there was no January 30, 2001
interest payment date for the 2006 senior
notes.
Optional Redemption............... The exchange 2010 senior notes and the
exchange senior debentures are redeemable at
our option, in whole or in part, at any
time. The redemption price is the principal
amount of the exchange senior securities
redeemed, plus accrued and unpaid interest,
plus a make-whole premium based on a
discount rate of 25 basis points, in the
case of the exchange 2010 senior
8
notes, and 35 basis points, in the case of
the exchange senior debentures, over an
appropriate treasury rate.
Covenants......................... The indenture governing the exchange senior
securities contains covenants that, among
other things, limit our ability to:
o create certain liens;
o enter into certain sale and
leaseback transactions; and
o consolidate, merge or sell all or
substantially all of our assets,
unless certain conditions are met.
Events of Default................. The indenture provides for events of
default, subject to applicable cure periods,
including:
o we do not pay interest on a senior
security within 30 days of its due
date;
o we do not pay the principal of or
any premium on a senior security on
its due date;
o we remain in breach of a covenant
or warranty in respect of the
indenture for 60 days after we
receive a written notice of
default. The notice must be sent by
either the trustee or holders of at
least 25% in principal amount of a
series of outstanding senior
securities;
o we are in default under agreements
under which we have indebtedness
outstanding in excess of $250
million in the aggregate and which
indebtedness is due either at
maturity or has been declared due
prior to maturity and remains
unpaid;
o we fail to pay a money judgment in
excess of $250 million for a period
of 60 days after it becomes final
and not subject to further appeal;
or
o we or Viacom International file for
bankruptcy, or other specified
events of bankruptcy, insolvency or
reorganization occur.
Trustee........................... Citibank, N.A.
Listing........................... Application has been made to list the
exchange senior securities on the Luxembourg
Stock Exchange.
9
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2001:
o on a historical basis, as reported by Viacom and
o on a pro forma basis to reflect the issuance and sale of
unregistered 6.40% senior notes due 2006 and unregistered
6.625% senior notes due 2011 on May 17, 2001, the issuance and
sale of registered 7.25% senior notes due 2051 on June 27,
2001, and the application of the net proceeds from the sale of
these senior notes to the repayment of outstanding commercial
paper indebtedness.
We will not receive any proceeds from this exchange offer.
At March 31, 2001(1)
(Unaudited)
----------------------------------
Historical Pro Forma
---------- ---------
(in millions, except per share
amounts)
Long-term Debt:
Continuing operations:
Notes payable to banks (including commercial paper)................... $ 4,532 $ 2,815
Senior notes and debentures (6.75% - 10.50%, due 2002-2030) .......... 6,953 6,953
Senior subordinated notes (8.875%-10.25%, due 2001-2007).............. 564 564
Subordinated exchange debentures (11.375%, due 2009).................. 39 39
Other ................................................................ 42 42
Obligations under capital leases...................................... 508 508
6.40% senior notes due 2006 .......................................... 399 805
6.625% senior notes due 2011 ......................................... --- 993
7.25% senior notes due 2051 .......................................... --- 335
---------- ---------
Total debt...................................................... 13,037 13,054
---------- ---------
Stockholders' Equity:
Class A common stock, par value $.01 per share; 500 shares
authorized; 139 shares issued(1)...................................... 1 1
Class B common stock, par value $.01 per share; 3,000 shares
authorized; 1,689 shares issued(1).................................... 17 17
Additional paid-in capital................................................. 64,726 64,726
Retained earnings.......................................................... 1,425 1,425
Accumulated other comprehensive loss....................................... (201) (201)
Less: Treasury stock....................................................... (2,510) (2,510)
---------- ---------
Total stockholders' equity...................................... 63,458 63,458
---------- ---------
Total capitalization............................................ $ 76,495 $ 76,512
========== =========
---------------
(1) Except as set forth above and except as otherwise disclosed in any
documents incorporated herein by reference, there has been no material
change in the total capitalization of Viacom since March 31, 2001.
10
SUMMARY HISTORICAL FINANCIAL DATA
The summary consolidated financial data presented below have been
derived from, and should be read together with, our audited consolidated
financial statements and the accompanying notes included in our annual report on
Form 10-K for the year ended December 31, 2000 and the unaudited interim
consolidated financial statements and the accompanying notes included in our
quarterly report on Form 10-Q for the quarter ended March 31, 2001, both of
which are incorporated by reference into this prospectus.
Three Months
Ended March 31,
(Unaudited) Year Ended December 31,
-------------------- ----------------------------------------------------------
2001(a) 2000 2000(a) 1999 1998 1997 1996
------- ------ ------- ---- ---- ---- ----
(in millions, except per share amounts)
Statement of Operations Data:
Revenues ............................... $ 5,752 $ 3,026 $ 20,044 $ 12,859 $12,096 $ 10,685 $ 9,684
Depreciation............................ 214 135 800 497 442 447 331
Amortization of intangibles............. 531 95 1,424 348 336 325 323
Operating income........................ 404 240 1,321 1,247 752 685 1,197
Earnings (loss) from continuing
operations ............................. (7) 68 (364) 372 (44) 374 152
Net earnings (loss)..................... (7) (384) (816) 334 (122) 794 1,248
Net earnings (loss) attributable to
common stock........................... (7) (384) (816) 322 (150) 734 1,188
Earnings (loss) per common share:
Basic:
Earnings (loss) from continuing
operations......................... $ __ $ 0.10 $ (0.30) $ 0.52 $ (0.10) $ 0.44 $ 0.13
Net earnings (loss)................ $ __ $ (0.55) $ (0.67) $ 0.46 $ (0.21) $ 1.04 $ 1.63
Diluted:
Earnings (loss) from continuing
operations......................... $ __ $ 0.10 $ (0.30) $ 0.51 $ (0.10) $ 0.44 $ 0.13
Net earnings (loss)................ $ __ $ (0.54) $ (0.67) $ 0.45 $ (0.21) $ 1.04 $ 1.62
Weighted average shares outstanding:
Basic.............................. 1,628 695 1,225 695 709 706 728
Diluted............................ 1,628 711 1,225 710 709 709 735
Other Data:
EBITDA(b)............................... $1,149 $ 470 $ 3,544 $ 2,092 $ 1,530 $ 1,457 $ 1,851
At December 31,
At March 31, 2001 --------------------------------------------------------
(Unaudited)(a) 2000(a) 1999 1998 1997 1996
----------------- -------- ---- ---- ---- ----
(in millions)
Balance Sheet Data:
Cash and cash equivalents............... $ 948 $ 935 $ 681 $ 767 $ 292 $ 209
Intangibles, net........................ 71,867 62,004 11,479 11,557 14,700 14,894
Total assets............................ 92,550 82,646 24,486 23,613 28,289 28,834
Long-term debt, net of current portion.. 12,887 12,474 5,698 3,813 7,423 9,856
Stockholders' equity ................... 63,458 47,967 11,132 12,050 13,384 12,587
---------------
(a) Includes financial information for CBS Corporation from May 4, 2000, the
date of its merger with and into Viacom. Accordingly, operating results and
financial position are not necessarily comparable on a year-to-year basis.
(b) We define EBITDA as operating income before depreciation and amortization,
principally of goodwill related to business combinations. We believe that
EBITDA is an appropriate measure for evaluating our operating performance.
However, EBITDA should be considered in addition to, not as a substitute
for or superior to, operating income, net earnings, cash flow and other
measures of financial performance prepared in accordance with generally
accepted accounting principles. As EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles,
this measure may not be comparable to similarly titled measures employed by
other companies.
11
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma combined financial
information is based upon the historical financial statements of Viacom,
adjusted for the Viacom/CBS merger, BET acquisition, Viacom/Infinity merger and
certain other transactions. The unaudited pro forma combined condensed statement
of operations data for the three months ended March 31, 2001 and the year ended
December 31, 2000 is presented as if the above transactions had occurred on
January 1, 2000.
The summary unaudited pro forma combined condensed financial data is
for illustrative purposes only and does not necessarily indicate the operating
results that would have been achieved had the Viacom/CBS merger, BET
acquisition, Viacom/Infinity merger and certain other transactions been
completed as of the dates indicated or of the results that may be obtained in
the future. In addition, the data does not reflect synergies that might be
achieved from combining these operations.
Unaudited Pro Forma Combined Statement of Operations Data
Three Months
Ended Year Ended
March 31, December 31,
2001 2000
--------------- -----------------
Statement of Operations Data: (in millions, except per share
amounts)
Revenues .............................................................. $ 5,768 $ 23,620
Operating income....................................................... 378 1,908
Earnings from continuing operations before income taxes................ 121 971
Loss from continuing operations........................................ (30) (189)
Basic and diluted loss from continuing operations per share............ (0.02) (0.11)
Basic and diluted weighted average shares outstanding.................. 1,770 1,774
Other Data:
EBITDA(a) ............................................................. $ 1,154 $ 5,047
---------------
(a) We define EBITDA as operating income before depreciation and amortization,
principally of goodwill related to business combinations. We believe that
EBITDA is an appropriate measure for evaluating our operating performance.
However, EBITDA should be considered in addition to, not as a substitute
for or superior to, operating income, net earnings, cash flow and other
measures of financial performance prepared in accordance with generally
accepted accounting principles. As EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles,
this measure may not be comparable to similarly titled measures employed by
other companies.
12
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
The ratio of earnings to fixed charges for Viacom are set forth below,
on a pro forma basis, for the three months ended March 31, 2001 and the year
ended December 31, 2000 to give effect to the Viacom/CBS merger, BET
acquisition, Viacom/Infinity merger and certain other transactions, as if the
transactions each occurred on January 1, 2000, and on a historical basis for the
three months ended March 31, 2001 and for each year in the five-year period
ended December 31, 2000.
For purposes of computing the following ratios, earnings represents
income from continuing operations before fixed charges and taxes. Fixed charges
represent interest expense, amortization of capitalized interest and such
portion of rental expense, which represents an appropriate interest factor.
Three Months Ended Year Ended December 31,
March 31, 2001 Viacom Historical
---------------------- 2000 ---------------------------------------------
Historical Pro Forma Pro Forma 2000 1999 1998 1997 1996
---------- --------- --------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges............... 1.5x 1.4x 1.2x 1.5x 2.2x 1.1x 2.0x 1.4x
13
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In
consideration for issuing the exchange senior securities contemplated by this
prospectus, we will receive unregistered senior securities from you in like
principal amount. The unregistered senior securities surrendered in exchange for
the exchange senior securities will be retired and canceled and cannot be
reissued. Accordingly, issuance of the exchange senior securities will not
result in any change in our indebtedness.
14
THE EXCHANGE OFFER
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this
prospectus and in the accompanying letter of transmittal, we are offering to
exchange $1,000 principal amount of exchange senior securities for each $1,000
principal amount of unregistered senior securities. You may tender some or all
of your unregistered senior securities only in integral multiples of $1,000. As
of the date of this prospectus, $3,075,000 aggregate principal amount of the
unregistered 2006 senior notes, $1,000,000 aggregate principal amount of the
unregistered 2010 senior notes and $200,000 aggregate principal amount of the
unregistered senior debentures are outstanding.
The terms of the exchange senior securities to be issued are
substantially similar to the unregistered senior securities, except that the
exchange senior securities have been registered under the Securities Act and,
therefore, the certificates for the exchange senior securities will not bear
legends restricting their transfer. The exchange senior securities will be
issued under and be entitled to the benefits of the Indenture, dated as of May
15, 1995, among us, our wholly owned subsidiary, Viacom International, as
guarantor, and Citibank, N.A., as successor to State Street Bank and Trust
Company and The First National Bank of Boston, Trustee. The Indenture was
supplemented by the First Supplemental Indenture, dated as of May 24, 1995, was
supplemented and amended by the Second Supplemental Indenture and Amendment No.
1, dated as of December 15, 1995, was supplemented by the Third Supplemental
Indenture, dated as of July 22, 1996, was supplemented by the Fourth
Supplemental Indenture, dated as of August 1, 2000, was supplemented, in
connection with the issuance of the unregistered senior securities, by the Fifth
Supplemental Indenture, dated as of January 17, 2001, was supplemented by the
Sixth Supplemental Indenture, dated as of May 17, 2001 and was supplemented by
the Seventh Supplemental Indenture, dated as of May 31, 2001. We refer to the
Indenture, as so supplemented and amended, as the "Indenture."
In connection with the issuance of the unregistered senior securities,
we arranged for the unregistered senior securities to be issued and transferable
in book-entry form through the facilities of Euroclear, Clearstream Luxembourg
and DTC, acting as a depositary. The exchange senior securities will also be
issuable and transferable in book-entry form through Euroclear, Clearstream
Luxembourg and DTC.
There will be no fixed record date for determining the eligible holders
of the unregistered senior securities that are entitled to participate in the
exchange offer. We will be deemed to have accepted for exchange validly tendered
unregistered senior securities when and if we have given oral (promptly
confirmed in writing) or written notice of acceptance to the exchange agent. The
exchange agent will act as agent for the tendering holders of unregistered
senior securities for the purpose of receiving exchange senior securities from
us and delivering them to such holders.
If any tendered unregistered senior securities are not accepted for
exchange because of an invalid tender or the occurrence of certain other events
described herein, certificates for any such unaccepted unregistered senior
securities will be returned, without expenses, to the tendering holder thereof
as promptly as practicable after the expiration of the exchange offer.
Holders of unregistered senior securities who tender in the exchange
offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the letter of transmittal, transfer taxes with respect to
the exchange of unregistered senior securities for exchange senior securities
pursuant to the exchange offer. We will pay all charges and expenses, other than
certain applicable taxes, in
15
connection with the exchange offer. It is important that you read the section "-
Fees and Expenses" below for more details regarding fees and expenses incurred
in the exchange offer.
Any unregistered senior securities which holders do not tender or which
we do not accept in the exchange offer will remain outstanding and continue to
accrue interest and will be subject to restrictions on transfer. We do not have
any obligation to register the unregistered senior securities under the
Securities Act. In that case, holders wishing to transfer unregistered senior
securities would have to rely on exemptions from the registration requirements
of the Securities Act.
Conditions of the Exchange Offer
You must tender your unregistered senior securities in accordance with
the requirements of this prospectus and the letter of transmittal in order to
participate in the exchange offer. Notwithstanding any other provision of the
exchange offer, or any extension of the exchange offer, we will not be required
to accept for exchange any unregistered senior securities, and may amend or
terminate the exchange offer if:
o the exchange offer, or the making of any exchange by a senior security
holder, violates applicable law or any applicable interpretation of the
staff of the SEC;
o any action or proceeding shall have been instituted or threatened with
respect to the exchange offer which, in our judgment or the judgment of
Viacom International, would impair our ability to proceed with the
exchange offer; and
o any law, rule or regulation or applicable interpretations of the staff
of the SEC have been issued or promulgated which, in our good faith
determination or the good faith determination of Viacom International,
does not permit us to effect the exchange offer.
Expiration Date; Extensions; Amendment; Termination
The exchange offer will expire 5:00 p.m., New York City time, on ,
2001, unless, in our sole discretion, we extend it. In the case of any
extension, we will notify the exchange agent orally (promptly confirmed in
writing) or in writing of any extension. We will also notify the registered
holders of unregistered senior securities of the extension no later than 9:00
a.m., New York City time, on the business day after the previously scheduled
expiration of the exchange offer.
To the extent we are legally permitted to do so, we expressly reserve
the right, in our sole discretion, to:
o delay accepting any unregistered senior security;
o waive any condition of the exchange offer; and
o amend the terms of the exchange offer in any manner.
We will give oral or written notice of any non-acceptance or amendment
to the registered holders of the unregistered senior securities as promptly as
practicable. If we consider an amendment to the exchange offer to be material,
we will promptly inform the registered holders of unregistered senior securities
of such amendment in a reasonable manner.
16
If we or Viacom International determine in our sole discretion that any
of the events or conditions described in "- Conditions of the Exchange Offer"
has occurred, we may terminate the exchange offer. If we decide to terminate the
exchange offer, we may:
o refuse to accept any unregistered senior securities and return any
unregistered senior securities that have been tendered to the holders;
o extend the exchange offer and retain all unregistered senior securities
tendered prior to the expiration of the exchange offer, subject to the
rights of the holders of tendered unregistered senior securities to
withdraw their tendered unregistered senior securities; or
o waive the termination event with respect to the exchange offer and
accept all properly tendered unregistered senior securities that have
not been withdrawn.
If any such waiver constitutes a material change in the exchange offer,
we will disclose the change by means of a supplement to this prospectus that
will be distributed to each registered holder of unregistered senior securities,
and we will extend the exchange offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders of the unregistered senior securities, if the exchange
offer would otherwise expire during that period.
Any determination by us concerning the events described above will be
final and binding upon parties. Without limiting the manner by which we may
choose to make public announcements of any extension, delay in acceptance,
amendment or termination of the exchange offer, we will have no obligation to
publish, advertise, or otherwise communicate any public announcement, other than
by making a timely release to a financial news service.
Interest on the Exchange Senior Securities
The exchange senior securities will accrue interest from the date
interest was last paid on the unregistered senior securities. If no interest was
paid on your unregistered senior securities, your exchange senior securities
will accrue interest from and including January 17, 2001. Interest will be paid
on the exchange senior securities semi-annually on January 30 and July 30 of
each year, except that there was no January 30, 2001 interest payment date for
the 2006 senior notes. Holders of unregistered senior securities that are
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of interest accrued from the date of the last interest
payment date that was made in respect of the unregistered senior securities
until the date of the issuance of the exchange senior securities. Consequently,
holders of exchange senior securities will receive the same interest payments
that they would have received had they not accepted the exchange offer.
Resale of Exchange Senior Securities
Based upon existing interpretations of the staff of the SEC set forth
in several no-action letters issued to third parties unrelated to us, we believe
that the exchange senior securities issued pursuant to the exchange offer in
exchange for the unregistered senior securities may be offered for resale,
resold and otherwise transferred by their holders, without complying with the
registration and prospectus delivery provisions of the Securities Act, provided
that:
o any exchange senior securities to be received by you will be acquired
in the ordinary course of your business;
17
o you are not engaged in, do not intend to engage in or have any
arrangement or understanding with any person to participate in the
distribution of the unregistered senior securities or exchange senior
securities;
o you are not an "affiliate" (as defined in Rule 405 under the Securities
Act) of Viacom or Viacom International or, if you are such an
affiliate, you will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable;
o if you are a broker-dealer, you have not entered into any arrangement
or understanding with Viacom or Viacom Internaional or any "affiliate"
of Viacom International (within the meaning of Rule 405 under the
Securities Act) to distribute the exchange senior securities;
o if you are a broker-dealer, you will receive exchange senior securities
for your own account in exchange for unregistered senior securities
that were acquired as a result of market-making activities or other
trading activities and that you will deliver a prospectus in connection
with any resale of such exchange senior securities; and
o you are not acting on behalf of any person or entity that could not
truthfully make these representations.
If you wish to participate in the exchange offer, you will be required
to make these representations to us in the letter of transmittal.
If you are a broker-dealer that receives exchange senior securities in
exchange for unregistered senior securities held for your own account, as a
result of market-making or other trading activities, you must acknowledge that
you will deliver a prospectus in connection with any resale of the exchange
senior securities. The letter of transmittal states that by so acknowledging and
by delivering a prospectus, you will not be deemed to admit that you are an
"underwriter" within the meaning of the Securities Act. The prospectus, as it
may be amended or supplemented from time to time, may be used by any
broker-dealers in connection with resales of exchange senior securities received
in exchange for unregistered senior securities. We have agreed that, for a
period of 180 days after the expiration of the exchange offer, we will make this
prospectus and any amendment or supplement to this prospectus available to any
such broker-dealer for use in connection with any resale.
Clearing of the Exchange Senior Securities
Upon consummation of the exchange offer, the exchange senior securities
will have different CUSIP, Common Code and ISIN numbers from the unregistered
senior securities. Upon consummation of the exchange offer, the exchange 2006
senior securities will have the same CUSIP, Common Code and ISIN numbers given
to our registered 6.40% senior notes due 2006 which were issued on March 19,
2001. Upon consummation of the exchange offer, the exchange 2010 senior
securities and the exchange debentures will have the same CUSIP, Common Code and
ISIN numbers given to our registered 7.70% senior notes due 2010 and our
registered 7.875% senior debentures due 2030, respectively, which were issued on
August 1, 2000 and March 19, 2001.
Senior securities that were issued under Regulation S that are not
tendered for exchange will continue to clear through Euroclear and Clearstream
Luxembourg under their original Common Codes and their ISIN numbers will remain
the same. Regulation S senior securities (unless acquired by a manager as part
of their original distribution) may now be sold in the United States or to U.S.
persons and, upon any such transfer, a beneficial interest in the Regulation S
global senior securities will be able to be exchanged for an interest in the
exchange global senior security in accordance with procedures established by
Euroclear or Clearstream Luxembourg and DTC.
18
Beneficial interests in the restricted Regulation S global senior
securities may be transferred to a person who takes delivery in the form of an
interest in the Regulation S global senior securities upon receipt by the
trustee of a written certification from the transferor, in the form provided in
the Indenture, to the effect that the transfer is being made in accordance with
Rule 903 or 904 of Regulation S.
We cannot predict the extent to which beneficial owners of an interest
in the Regulation S global senior securities will participate in the exchange
offer. Beneficial owners should consult their own financial advisors as to the
benefits to be obtained from exchange.
Procedures for Tendering
The term "holder" with respect to the exchange offer means any person
in whose name unregistered senior securities are registered on our agent's books
or any other person who has obtained a properly completed bond power from the
registered holder, or any person whose unregistered senior securities are held
of record by DTC, Euroclear or Clearstream Luxembourg who desires to deliver
such unregistered senior securities by book-entry transfer at DTC, Euroclear or
Clearstream Luxembourg as the case may be.
Except in limited circumstances, only a Euroclear participant,
Clearstream Luxembourg participant or a DTC participant listed on a DTC
securities position listing with respect to the unregistered senior securities
may tender its unregistered senior securities in the exchange offer. To tender
unregistered senior securities in the exchange offer:
o holders of unregistered senior securities that are DTC
participants may follow the procedures for book-entry transfer
as provided for below under "-Book-Entry Transfer" and in the
letter of transmittal.
o Euroclear participants and Clearstream Luxembourg participants
on behalf of the beneficial owners of unregistered senior
securities are required to use book-entry transfer pursuant to
the standard operating procedures of Euroclear or Clearstream
Luxembourg, as the case may be, which include transmission of
a computer-generated message to Euroclear or Clearstream
Luxembourg, as the case may be, in lieu of a letter of
transmittal. See the term "agent's message" under "-Book-Entry
Transfer."
In addition, either:
o the exchange agent must receive any corresponding certificate
or certificates representing unregistered senior securities
along with the letter of transmittal; or
o the exchange agent must receive, before expiration of the
exchange offer, a timely confirmation of book-entry transfer
of unregistered senior securities into the exchange agent's
account at DTC, Euroclear or Clearstream Luxembourg according
to their respective standard operating procedures for
electronic tenders described below and a properly transmitted
agent's message described below; or
o the holder must comply with the guaranteed delivery procedures
described below.
The tender by a holder of unregistered senior securities will
constitute an agreement between such holder and us in accordance with the terms
and subject to the conditions set forth in this prospectus and in the letter of
transmittal. If less than all the unregistered senior securities held by a
holder of unregistered
19
senior securities are tendered, a tendering holder should fill in the amount of
unregistered senior securities being tendered in the specified box on the letter
of transmittal. The entire amount of unregistered senior securities delivered to
the exchange agent will be deemed to have been tendered unless otherwise
indicated.
The method of delivery of unregistered senior securities, the letter of
transmittal and all other required documents or transmission of an agent's
message, as described under "-Book Entry Transfer," to the exchange agent is at
the election and risk of the holder. Instead of delivery by mail, we recommend
that holders use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure timely delivery prior to the expiration of the
exchange offer. No letter of transmittal or unregistered senior securities
should be sent to Viacom but must instead be delivered to the exchange agent.
Delivery of documents to DTC, Euroclear or Clearstream Luxembourg in accordance
with their respective procedures will not constitute delivery to the exchange
agent.
If you are a beneficial owner of unregistered senior securities that
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee and you wish to tender your unregistered senior securities, you
should contact the registered holder promptly and instruct the registered holder
to tender on your behalf. If you wish to tender on your own behalf, you must,
prior to completing and executing the letter of transmittal and delivering your
unregistered senior securities, either:
o make appropriate arrangements to register ownership of the
unregistered senior securities in your name; or
o obtain a properly completed bond power from the registered
holder.
The transfer of record ownership may take considerable time and may not
be completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal as
described in "--Withdrawal of Tenders" below, as the case may be, must be
guaranteed by a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange
Act, unless the unregistered senior securities tendered pursuant thereto are
tendered:
o by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
o for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the
registered holder of any unregistered senior securities listed therein, the
unregistered senior securities must be endorsed or accompanied by appropriate
bond powers which authorize the person to tender the unregistered senior
securities on behalf of the registered holder, in either case signed as the name
of the registered holder or holders appears on the unregistered senior
securities. If the letter of transmittal or any unregistered senior securities
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by us, evidence satisfactory to us of their authority to so act
must be submitted with the letter of transmittal.
20
We will determine in our sole discretion all the questions as to the
validity, form, eligibility (including time of receipt), acceptance and
withdrawal of the tendered unregistered senior securities. Our determinations
will be final and binding. We reserve the absolute right to reject any and all
unregistered senior securities not validly tendered or any unregistered senior
securities our acceptance of which would, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any irregularities or
conditions of tender as to particular unregistered senior securities. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of unregistered senior securities must be cured within such time as we will
determine. Neither we, the exchange agent nor any other person shall be under
any duty to give notification of defects or irregularities with respect to
tenders of unregistered senior securities nor shall any of them incur any
liability for failure to give such notification. Tenders of unregistered senior
securities will not be deemed to have been made until such irregularities have
been cured or waived. Any unregistered senior securities received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost by
the exchange agent to the tendering holder of such unregistered senior
securities unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date of the exchange offer.
In addition, we reserve the right in our sole discretion to (a)
purchase or make offers for any unregistered senior securities that remain
outstanding subsequent to the expiration date, and (b) to the extent permitted
by applicable law, purchase unregistered senior securities in the open market,
in privately negotiated transactions or otherwise. The terms of any such
purchases or offers may differ from the terms of the exchange offer.
Book-Entry Transfer
We understand that the exchange agent will make a request promptly
after the date of this document to establish accounts with respect to the
unregistered senior securities at DTC, Euroclear or Clearstream Luxembourg for
the purpose of facilitating the exchange offer. Any financial institution that
is a participant in DTC's system may make book-entry delivery of unregistered
senior securities by causing DTC to transfer such unregistered senior securities
into the exchange agent's DTC account in accordance with DTC's Automated Tender
Offer Program procedures for such transfer. Any participant in Euroclear or
Clearstream Luxembourg may make book-entry delivery of Regulation S unregistered
senior securities by causing Euroclear or Clearstream Luxembourg to transfer
such senior securities into the exchange agent's account in accordance with
established Euroclear or Clearstream Luxembourg procedures for transfer. The
exchange for tendered unregistered senior securities will only be made after a
timely confirmation of a book-entry transfer of the unregistered senior
securities into the exchange agent's account, and timely receipt by the exchange
agent of an agent's message.
The term "agent's message" means a message, transmitted by DTC,
Euroclear or Clearstream Luxembourg, as the case may be, and received by the
exchange agent and forming part of the confirmation of a book-entry transfer,
which states that DTC, Euroclear or Clearstream Luxembourg, as the case may be,
has received an express acknowledgment from a participant tendering unregistered
senior securities and that such participant has received an appropriate letter
of transmittal and agrees to be bound by the terms of the letter of transmittal,
and we may enforce such agreement against the participant. Delivery of an
agent's message will also constitute an acknowledgment from the tendering DTC,
Euroclear or Clearstream Luxembourg participant, as the case may be, that the
representations contained in the appropriate letter of transmittal and described
above are true and correct.
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Guaranteed Delivery Procedures
Holders who wish to tender their unregistered senior securities and (i)
whose unregistered senior securities are not immediately available, or (ii) who
cannot deliver their unregistered senior securities, the letter of transmittal,
or any other required documents to the exchange agent prior to the expiration
date, or if such holder cannot complete DTC's, Euroclear's or Clearstream
Luxembourg's respective standard operating procedures for electronic tenders
before expiration of the exchange offer, may tender their unregistered senior
securities if:
o the tender is made through an eligible institution;
o before expiration of the exchange offer, the exchange agent
receives from the eligible institution either a properly
completed and duly executed notice of guaranteed delivery in
the form accompanying this prospectus, by facsimile
transmission, mail or hand delivery, or a properly transmitted
agent's message in lieu of notice of guaranteed delivery:
o setting forth the name and address of the holder and
the registered number(s), the certificate number or
numbers of the unregistered senior securities
tendered and the principal amount of unregistered
senior securities tendered;
o stating that the tender offer is being made by
guaranteed delivery; and
o guaranteeing that, within three (3) business days
after expiration of the exchange offer, the letter of
transmittal, or facsimile of the letter of
transmittal, together with the unregistered senior
securities tendered or a book-entry confirmation, and
any other documents required by the letter of
transmittal will be deposited by the eligible
institution with the exchange agent; and
o the exchange agent receives the properly completed and
executed letter of transmittal, or facsimile of the letter of
transmittal, as well as all tendered unregistered senior
securities in proper form for transfer or a book-entry
confirmation, and all other documents required by the letter
of transmittal, within three (3) business days after
expiration of the exchange offer.
Upon request to the exchange agent, a notice of guaranteed delivery
will be sent to holders who wish to tender their unregistered senior securities
according to the guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of unregistered senior
securities may be withdrawn at any time prior to 5:00 p.m., New York City time,
on , 2001, the expiration date of the exchange offer.
For a withdrawal to be effective:
o the exchange agent must receive a written notice, which may be
by telegram, telex, facsimile transmission or letter, of
withdrawal at the address set forth below under "Exchange
Agent"; or
22
o for DTC, Euroclear or Clearstream Luxembourg participants,
holders must comply with their respective standard operating
procedures for electronic tenders and the exchange agent must
receive an electronic notice of withdrawal from DTC, Euroclear
or Clearstream Luxembourg.
Any notice of withdrawal must:
o specify the name of the person who tendered the unregistered
senior securities to be withdrawn;
o identify the unregistered senior securities to be withdrawn,
including the certificate number or numbers and principal
amount of the unregistered senior securities to be withdrawn;
o be signed by the person who tendered the unregistered senior
securities in the same manner as the original signature on the
letter of transmittal, including any required signature
guarantees; and
o specify the name in which the unregistered senior securities
are to be re-registered, if different from that of the
withdrawing holder.
If unregistered senior securities have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at DTC, Euroclear or Clearstream
Luxembourg to be credited with the withdrawn unregistered senior securities and
otherwise comply with the procedures of the facility. We will determine all
questions as to the validity, form and eligibility (including time of receipt)
for such withdrawal notices, and our determination shall be final and binding on
all parties. Any unregistered senior securities so withdrawn will be deemed not
to have been validly tendered for purposes of the exchange offer, and no
exchange senior securities will be issued with respect thereto unless the
unregistered senior securities so withdrawn are validly re-tendered. Any
unregistered senior securities which have been tendered but which are not
accepted for exchange will be returned to the holder without cost to such holder
as soon as practicable after withdrawal. Properly withdrawn unregistered senior
securities may be re-tendered by following the procedures described above under
"-Procedures for Tendering" at any time prior to the expiration date.
Consequences of Failure to Exchange
If you do not tender your unregistered senior securities to be
exchanged in this exchange offer, they will remain "restricted securities"
within the meaning of Rule 144(a)(3) of the Securities Act. Accordingly, they:
o may be resold only if (i) registered pursuant to the
Securities Act, (ii) an exemption from registration is
available or (iii) neither registration nor an exemption is
required by law; and
o shall continue to bear a legend restricting transfer in the
absence of registration or an exemption therefrom.
As a result of the restrictions on transfer and the availability of the
exchange senior securities, the unregistered senior securities are likely to be
much less liquid than before the exchange offer.
Exchange Agent
Citibank, N.A. has been appointed as the principal exchange agent and
Kredietbank S.A. Luxembourgeoise has been appointed as the Luxembourg exchange
agent for the exchange of the
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unregistered senior securities. In its capacity as Luxembourg exchange agent,
Kredietbank will act solely as an intermediary between Citibank, as the
principal exchange agent and the holders of unregistered senior securities
wishing to accept the exchange offer. Kredietbank will forward the tenders it
receives to the principal exchange agent. Questions and requests for assistance
relating to the exchange of the unregistered senior securities should be
directed to the exchange agents addressed as follows:
---------------------------------------- ---------------------------------------
Citibank, N.A. Kredietbank S.A. Luxembourgeoise
111 Wall Street, 15th Floor 43, Boulevard Royal
New York, New York 10005 L-2955 Luxembourg
Telephone number: (800) 422-2066 Telephone number: (352) 47 97 3933
Facsimile number: (212) 825-3483 Facsimile number: (352) 47 97 73 951
---------------------------------------- ---------------------------------------
Fees and Expenses
We will bear the expenses of soliciting tenders pursuant to the
exchange offer. The principal solicitation for tenders pursuant to the exchange
offer is being made by mail. Additional solicitations may be made by our
officers and regular employees and our affiliates in person, by telegraph or
telephone.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We, however, will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its related reasonable out-of-pocket expenses and accounting
and legal fees. We may also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this prospectus, letters of transmittal and related
documents to the beneficial owners of the unregistered senior securities and in
handling or forwarding tenders for exchange.
We will pay all transfer taxes, if any, applicable to the exchange of
unregistered senior securities pursuant to the exchange offer. The tendering
holder, however, will be required to pay any transfer taxes whether imposed on
the registered holder or any other person, if:
o certificates representing exchange senior securities or
unregistered senior securities for principal amounts not
tendered or accepted for exchange are to be delivered to, or
are to be registered or issued in the name of, any person
other than the registered holder of unregistered senior
securities tendered;
o tendered unregistered senior securities are registered in the
name of any person other than the person signing the letter of
transmittal; or
o a transfer tax is imposed for any reason other than the
exchange of unregistered senior securities under the exchange
offer.
If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
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DESCRIPTION OF SENIOR SECURITIES
General
We issued the unregistered senior securities and will issue the
exchange senior securities under the Indenture, dated as of May 15, 1995, among
us, our wholly owned subsidiary, Viacom International, as guarantor, and
Citibank, N.A., as successor to State Street Bank and Trust Company and The
First National Bank of Boston, Trustee. The Indenture was supplemented by the
First Supplemental Indenture, dated as of May 24, 1995, was supplemented and
amended by the Second Supplemental Indenture and Amendment No. 1, dated as of
December 15, 1995, was supplemented by the Third Supplemental Indenture, dated
as of July 22, 1996, was supplemented by the Fourth Supplemental Indenture,
dated as of August 1, 2000, was supplemented, in connection with the issuance of
the unregistered senior securities, by the Fifth Supplemental Indenture, dated
as of January 17, 2001, was supplemented by the Sixth Supplemental Indenture,
dated as of May 17, 2001 and was supplemented by the Seventh Supplemental
Indenture, dated as of May 31, 2001. We refer to the Indenture, as so
supplemented and amended, as the "Indenture".
The terms of the exchange senior securities to be issued are
substantially similar to the unregistered senior securities, except that the
exchange senior securities have been registered under the Securities Act of 1933
and the certificates for the exchange senior securities will not bear legends
restricting their transfer.
The senior securities initially are limited to $1,650,000,000 principal
amount, consisting of $400,000,000 principal amount of 2006 senior notes,
$500,000,000 principal amount of 2010 senior notes and $750,000,000 principal
amount of senior debentures. The unregistered 2006 senior notes will be, upon
their exchange for exchange 2006 senior notes registered under the Securities
Act, a further issuance of our 6.40% senior notes due 2006, $396,925,000 of
which were issued on March 19, 2001. The unregistered 2010 senior notes will be,
upon their exchange for exchange 2010 senior notes registered under the
Securities Act, a further issuance of our 7.70% senior notes due 2010,
$1,150,000,000 of which were issued on August 1, 2000 and $499,000,000 of which
were issued on March 19, 2001. The unregistered senior debentures will be, upon
their exchange for exchange senior debentures registered under the Securities
Act, a further issuance of our 7.875% senior debentures due 2030, $500,000,000
of which were issued on August 1, 2000 and $749,800,000 of which were issued on
March 19, 2001.
Each exchange senior security will bear interest at the applicable
annual rate noted on the cover page of this prospectus. Interest will be payable
on the exchange senior securities on January 30 and July 30 of each year
beginning January 30, 2001, except that there was no January 30, 2001 interest
payment date for the 2006 senior notes. Holders of unregistered senior
securities that are accepted for exchange will be deemed to have waived the
right to receive any payment in respect of interest accrued from the date of the
last interest payment date that was made in respect of the unregistered senior
securities until the date of the issuance of the exchange senior securities.
Interest will be computed on the basis of a 360-day year of 30-day months.
Consequently, holders of exchange senior securities will receive the same
interest payments that they would have received had they not accepted the
exchange offer. Interest on the exchange senior securities will accrue from and
including the settlement date and will be paid to holders of record on the July
15 or January 15 immediately before the interest payment date.
The 2006 senior notes will mature on January 30, 2006. The 2010 senior
notes will mature on July 30, 2010. The senior debentures will mature on July
30, 2030. On the maturity dates of the senior securities, the holders will be
entitled to receive 100% of the principal amount of the applicable exchange
senior securities. We may redeem the 2010 senior notes and the senior debentures
at any time at their
25
principal amount, plus the applicable premium and accrued interest. The senior
securities do not provide for any sinking fund.
The senior securities are issued in denominations of not less than
$1,000 and integral multiples thereof.
Viacom's rights and the rights of its creditors, including holders of
senior securities, to participate in any distribution of assets of any Viacom
subsidiary upon its liquidation or reorganization or otherwise is subject to the
prior claims of creditors of the subsidiary, except to the extent that Viacom's
claims as a creditor of the subsidiary may be recognized.
Guarantees
Viacom International will unconditionally guarantee the due and
punctual payment of the principal of, premium, if any, and any interest on the
senior securities when and as the same shall become due and payable, whether at
maturity, upon redemption, upon acceleration or otherwise. The guarantees of the
senior securities are endorsed on the senior securities.
Various federal and state fraudulent conveyance laws have been enacted
for the protection of creditors and may be utilized by a court of competent
jurisdiction to subordinate or avoid all or part of any guarantee issued by
Viacom International. The Indenture provides that in the event that the
guarantees would constitute or result in a fraudulent transfer or conveyance for
purposes of, or result in a violation of, any United States federal, or
applicable United States state, fraudulent transfer or conveyance or similar
law, then the liability of Viacom International under the guarantees shall be
reduced to the extent necessary to eliminate such fraudulent transfer or
conveyance or violation under the applicable fraudulent transfer or conveyance
or similar law. Application of this clause could limit the amount which holders
of senior securities may be entitled to collect under the guarantees. Holders,
by their acceptance of the senior securities, will have agreed to such
limitations.
To the extent that a court were to find that (x) a guarantee was
incurred by Viacom International with the intent to hinder, delay or defraud any
present or future creditor or (y) Viacom International did not receive fair
consideration or reasonably equivalent value for issuing its guarantee and
Viacom International (i) was insolvent or rendered insolvent by reason of the
issuance of the guarantee, (ii) was engaged or about to engage in a business or
transaction for which the remaining assets of Viacom International constituted
unreasonably small capital to carry on its business or (iii) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured, the court could subordinate or avoid all or part of such guarantee
in favor of Viacom International's other creditors. To the extent any guarantee
issued by Viacom International were voided as a fraudulent conveyance or held
unenforceable for any other reason, the holders of the senior securities
guaranteed by Viacom International could cease to have any claim against Viacom
International and would be creditors solely of Viacom.
We and Viacom International believe that the issuances of the
guarantees by Viacom International are not fraudulent conveyances. There can be
no assurance, however, that a court passing on such questions would reach the
same conclusions. In rendering their opinions on the validity of the senior
securities and, if applicable, the related guarantees, neither our counsel,
counsel for Viacom International nor counsel for the initial purchasers of the
unregistered senior securities will express any opinion as to federal or state
laws relating to fraudulent transfers.
Ranking
26
The senior securities are senior unsecured obligations of Viacom and
rank equally in right of payment with all of Viacom's other unsecured and
unsubordinated indebtedness. The guarantees on the senior securities are senior
unsecured obligations of Viacom International and rank equally in right of
payment with all of Viacom International's other unsecured and unsubordinated
indebtedness.
The senior securities and the guarantees are effectively subordinated
to any secured indebtedness of Viacom or Viacom International, as the case may
be, to the extent of the value of the assets securing such indebtedness. The
Indenture does not limit the amount of debt that Viacom, Viacom International or
their respective subsidiaries can incur.
In addition, both Viacom International and Viacom conduct their
operations through subsidiaries, which generate a substantial portion of their
respective operating income and cash flow. As a result, distributions or
advances from subsidiaries of Viacom and Viacom International are a major source
of funds necessary to meet their respective debt service and other obligations.
Contractual provisions, laws or regulations, as well as our subsidiaries'
financial condition and operating requirements, may limit the ability of Viacom
or Viacom International to obtain cash required to pay Viacom's debt service
obligations, including payments on the senior securities, or Viacom
International's payment obligations under the guarantees. The senior securities
will be structurally subordinated to all obligations of Viacom's subsidiaries
(other than Viacom International) including claims with respect to trade
payables. The guarantees will be structurally subordinated to all obligations of
Viacom International's subsidiaries, including claims with respect to trade
payables. This means that holders of the senior securities of Viacom will have a
junior position to the claims of creditors of Viacom's subsidiaries (other than
Viacom International) on the assets and earnings of such subsidiaries. Holders
of guarantees of Viacom International will have a junior position to the claims
of creditors of Viacom International's subsidiaries on the assets and earnings
of such subsidiaries and will have no claim by virtue of such guarantees against
Viacom or any subsidiary of Viacom that is not a subsidiary of Viacom
International.
As of March 31, 2001, our subsidiaries, other than Viacom
International, had approximately $2.3 billion of indebtedness outstanding. This
indebtedness was primarily incurred by Infinity and its subsidiaries and
Blockbuster. We own several operating subsidiaries, including Viacom
International, the guarantor of the senior securities, Infinity and Blockbuster.
Viacom International is a wholly owned subsidiary of Viacom, with approximately
$766 million of indebtedness outstanding as of March 31, 2001. Viacom
International's subsidiaries had approximately $1.4 billion of indebtedness
outstanding as of March 31, 2001.
Optional Redemption
Prior to maturity, we may redeem the 2010 senior notes and the senior
debentures at any time, at our option, in whole or in part, on not less than 30
nor more than 60 days' prior notice, prior to their maturity at a redemption
price equal to the sum of their principal amount, the Make-Whole Amount
described below and any accrued and unpaid interest to the date of redemption.
Holders of record on a record date that is on or prior to a redemption date will
be entitled to receive interest due on the interest payment date.
The term "Make-Whole Amount" means, the excess, if any, of (i) the
aggregate present value as of the date of the redemption of principal being
redeemed and the amount of interest (exclusive of interest accrued to the date
of redemption) that would have been payable if redemption had not been made,
determined by discounting, on a semiannual basis, the remaining principal and
interest at the Reinvestment Rate described below (determined on the third
business day preceding the date notice of redemption is given) from the dates on
which the principal and interest would have been payable if the
27
redemption had not been made, to the date of redemption, over (ii) the aggregate
principal amount of the exchange 2010 senior notes or the exchange senior
debentures being redeemed.
The term "Reinvestment Rate" means 0.25% for the exchange 2010 senior
notes and 0.35% for the exchange senior debentures, in each case plus the
arithmetic mean of the yields under the heading" Week Ending" published in the
most recent Federal Reserve Statistical Release H.15 under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to the
maturity, yields for the two published maturities most closely corresponding to
the maturity would be so calculated and the Reinvestment Rate would be
interpolated or extrapolated on a straight-line basis, rounding to the nearest
month. The most recent Federal Reserve Statistical Release H.15 published prior
to the date of determination of the Make-Whole Amount will be used for purposes
of calculating the Reinvestment Rate.
The Make-Whole Amount will be calculated by an independent investment
banking institution of national standing appointed by us. If we fail to make the
appointment at least 45 business days prior to the date of redemption, or if the
institution is unwilling or unable to make the calculation, the calculation will
be made by an independent investment banking institution of national standing
appointed by the Trustee. If the Reinvestment Rate is not available as described
above, the Reinvestment Rate will be calculated by interpolation or
extrapolation of comparable rates selected by the independent investment banking
institution.
In the case of any partial redemption, selection of the 2010 senior
notes or the senior debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal U.S. national securities
exchange, if any, on which the 2010 senior notes or the exchange senior
debentures are listed or, if they are not listed on a U.S. national securities
exchange, by lot or by such other method as the Trustee in its sole discretion
deems to be fair and appropriate. The Luxembourg Stock Exchange has no such
requirements.
Further Issues
We may from time to time without notice to, or the consent of, the
holders of a series of senior securities, create and issue further senior
securities of the same series, equal in rank to the senior securities in all
respects (or in all respects except for the payment of interest accruing prior
to the issue date of the new securities or except for the first payment of
interest following the issue date of the new securities) so that the new
securities may be consolidated and form a single series with the relevant series
of senior securities and have the same terms as to status, redemption or
otherwise as the relevant series of senior securities. In the event that we
issue additional senior securities of the same series, we will prepare a new
offering memorandum or prospectus and make a new application to list such
securities on the Luxembourg Stock Exchange.
Payment of Additional Amounts
We will, subject to the exceptions and limitations set forth below, pay
as additional interest on the senior securities such additional amounts as are
necessary in order that the net payment by us or a paying agent of the principal
of and interest on the senior securities to a holder who is a non-United States
person (as defined under this heading below), after deduction for any present or
future tax, assessment or other governmental charge of the United States or a
political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount
provided in the series of senior securities to be then due and payable;
provided, however, that the foregoing obligation to pay additional amounts shall
not apply:
28
(1) to any tax, assessment or other governmental charge that
is imposed or withheld solely by reason of the holder, or a fiduciary,
settlor, beneficiary, member or shareholder of the holder if the holder
is an estate, trust, partnership or corporation, or a person holding a
power over an estate or trust administered by a fiduciary holder, being
considered as:
(a) being or having been present or engaged in a
trade or business in the United States or having had a
permanent establishment in the United States;
(b) having a current or former relationship with the
United States, including a relationship as a citizen or
resident thereof;
(c) being or having been a foreign or domestic
personal holding company, a passive foreign investment company
or a controlled foreign corporation with respect to the United
States or a corporation that has accumulated earnings to avoid
United States federal income tax;
(d) being or having been a "10-percent shareholder"
of ours as defined in Section 871(h)(3) of the Code (as
defined in "United States Tax Considerations") or any
successor provision; or
(e) being a bank receiving payments on an extension
of credit made pursuant to a loan agreement entered into in
the ordinary course of its trade or business;
(2) to any holder that is not the sole beneficial owner of a
senior security, or a portion thereof, or that is a fiduciary or
partnership, but only to the extent that a beneficiary or settlor with
respect to the fiduciary, a beneficial owner or member of the
partnership would not have been entitled to the payment of an
additional amount had the beneficiary, settlor, beneficial owner or
member received directly its beneficial or distributive share of the
payment;
(3) to any tax, assessment or other governmental charge that
is imposed or withheld by reason of the failure of the holder or any
other person to comply with certification, identification or
information reporting requirements concerning the nationality,
residence, identity or connection with the United States, or otherwise
with respect to the status, of the holder or beneficial owner of such
senior security (or any beneficiary, settlor, beneficial owner or
member thereof), if compliance is required by statute, by regulation of
the United States Treasury Department or by an applicable income tax
treaty to which the United States is a party, or by any official
interpretation or ruling promulgated pursuant to any of the foregoing,
as a precondition to exemption from such tax, assessment or other
governmental charge;
(4) to any tax, assessment or other governmental charge that
is imposed otherwise than by withholding by us or a paying agent from
the payment;
(5) to any tax, assessment or other governmental charge that
is imposed or withheld solely by reason of a change in law, regulation,
or administrative or judicial interpretation that becomes effective
more than 15 days after the payment becomes due or is duly provided
for, whichever occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer,
wealth or personal property tax or similar tax, assessment or other
governmental charge;
(7) to any tax, assessment or other governmental charge
required to be withheld by any paying agent from any payment of
principal of or interest on any senior security, if such payment can be
made without such withholding by any other paying agent; or
29
(8) in the case of any combination of items (1), (2), (3),
(4), (5), (6) and (7).
The senior securities are subject in all cases to any tax, fiscal or
other law or regulation or administrative or judicial interpretation applicable
thereto. Except as specifically provided under this heading "-- Payment of
Additional Amounts" and under the heading "-- Redemption for Tax Reasons," we
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or a political subdivision
or taxing authority thereof or therein.
We will also not pay additional amounts on the senior securities
o where withholding or deduction is imposed on a payment to an
individual and is required to be made pursuant to any European
Union Directive on the taxation of savings implementing the
conclusions of the ECOFIN Council meeting of November 26 and
27, 2000 or any law implementing or complying with, or
introduced in order to conform to, that Directive; or
o presented for payment by or on behalf of a beneficial owner
who would have been able to avoid the withholding or deduction
by presenting the relevant global note to another paying agent
in a member state of the European Union.
The European Union is currently considering a proposal for a new
directive regarding the taxation of savings income. Subject to a number of
important conditions being met, it is proposed that member states of the
European Union will be required to provide to the tax authorities of another
member state details of payments of interest or other similar income paid by a
person within its jurisdiction to an individual resident in that other member
state, subject to the right of certain member states to opt instead for a
withholding system for a transitional period in relation to these payments and
subject to the proposals not being required to be applied to the global notes.
As used under this heading, "--Payment of Additional Amounts," and
under the headings, "--Redemption for Tax Reasons" and "United States Tax
Considerations," the terms "United States" and "U.S." mean the United States of
America (including the States thereof and the District of Columbia) and its
territories, its possessions and other areas subject to its jurisdiction, and
the term "United States person" means any individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States, any State
thereof or the District of Columbia (other than a partnership that is not
treated as a United States person under any applicable United States Treasury
regulations), any estate the income of which is subject to United States federal
income taxation regardless of its source, or any trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have the authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in the Treasury regulations, certain trusts in existence
on August 20, 1996, and treated as United States persons prior to such date that
elect to continue to be treated as United States persons, will also be United
States persons. A "non-United States person" means a person who is not a United
States person.
Redemption for Tax Reasons
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, an official position regarding the application or
interpretation of such laws, regulations or rulings, which change or amendment
is announced or becomes effective on or after the date of this prospectus, we
become or, based upon a written opinion of independent counsel selected by us,
will become obligated to pay additional amounts as described herein
30
under the heading "Payment of Additional Amounts" with respect to a series of
senior securities, we may, at our option, redeem, as a whole, but not in part,
the relevant series of senior securities on not less than 30 nor more than 60
days' prior notice, at a redemption price equal to 100% of their principal
amount together with interest accrued but unpaid thereon to the date fixed for
redemption.
Merger, Consolidation or Sale of Assets
Under the terms of the Indenture, we and Viacom International generally
would be permitted to consolidate or merge with another corporation. We and
Viacom International would also be permitted to sell all or substantially all of
our assets to another person. However, neither we nor Viacom International may
take any of these actions unless all the following conditions are met:
(1) the merger, consolidation or sale of assets must not cause
an Event of Default. See "-- Defaults and Remedies" below. An Event of
Default for this purpose would also include any event that would be an
Event of Default if the notice or time requirements were disregarded;
(2) the person we would merge or consolidate with or sell all
or substantially all of our assets to must be organized under the laws
of the United States or any state thereof;
(3) the person we would merge or consolidate with or sell all
or substantially all of our assets to must agree to be legally
responsible for the outstanding securities issued under the Indenture;
and
(4) we or Viacom International must deliver specified
certificates and documents to the trustee.
We and Viacom International may merge or consolidate with, or sell all
or substantially all of our assets to each other or any of our Subsidiaries.
When we make reference in this section to the sale of " all or substantially all
of our assets," we mean property and assets generating revenues representing, in
the aggregate, at least 80% of our total consolidated revenues.
Limitations on Liens
We covenant in the Indenture that we will not create, assume or permit
any Lien on any of our properties or assets, unless we secure the senior
securities at least equally and ratably to the secured Indebtedness. The
foregoing only applies to Liens that in the aggregate exceed 15% of our total
consolidated assets, reduced by the Attributable Debt related to any permitted
sale leaseback arrangement. See "-- Limitations on Sale and Leaseback
Transactions" below. The restrictions do not apply to Capitalized Leases or
Indebtedness that is secured by:
(1) Liens existing, in the case of the 2006 senior notes, on
January 17, 2001, and in the case of the 2010 senior notes and the
senior debentures, on August 1, 2000;
(2) Liens on any property or any Indebtedness of a person
existing at the time the person becomes a Subsidiary (whether by
acquisition, merger or consolidation);
(3) Liens in favor of us or our Subsidiaries; and
(4) Liens existing at the time of acquisition of the assets
secured thereby and purchase money Liens.
31
The restrictions do not apply to extensions, renewals or replacements
of any of the foregoing types of Liens.
Limitations on Sale and Leaseback Transactions
We covenant in the Indenture that neither we nor any Restricted
Subsidiary will enter into any arrangement with any person to lease a Principal
Property (except for any arrangements that exist, in the case of the 2006 senior
notes, on January 17, 2001, and in the case of the 2010 senior notes and the
senior debentures, on August 1, 2000; or that exist at the time any person that
owns a Principal Property becomes a Restricted Subsidiary) which has been or is
to be sold by us or the Restricted Subsidiary to the Person unless:
(1) the sale and leaseback arrangement involves a lease for a
term of not more than three years;
(2) the sale and leaseback arrangement is entered into between
us and any Subsidiary or between our Subsidiaries;
(3) we or the Restricted Subsidiary would be entitled to incur
indebtedness secured by a Lien on the Principal Property at least equal
in amount to the Attributable Debt permitted pursuant to the first
paragraph under "Limitations on Liens" without having to secure equally
and ratably the senior securities;
(4) the proceeds of the sale and leaseback arrangement are at
least equal to the fair market value (as determined by our Board of
Directors in good faith) of the property and we apply within 180 days
after the sale an amount equal to the greater of the net proceeds of
the sale or the Attributable Debt associated with the property to (i)
the retirement of long-term debt for borrowed money that is not
subordinated to the senior securities and that is not debt to us or a
Subsidiary, or (ii) the purchase or development of other comparable
property; or
(5) the sale and leaseback arrangement is entered into within
180 days after the initial acquisition of the Principal Property
subject to the sale and leaseback arrangement.
The term "Attributable Debt," with regard to a sale and leaseback
arrangement of a Principal Property, is defined in the Indenture as an amount
equal to the lesser of: (a) the fair market value of the property (as determined
in good faith by our Board of Directors); and (b) the present value of the total
net amount of rent payments to be made under the lease during its remaining
term, discounted at the rate of interest set forth or implicit in the terms of
the lease, compounded semi-annually. The calculation of the present value of the
total net amount of rent payments is subject to adjustments specified in the
Indenture.
The term "Principal Property" is defined in the Indenture to include
any parcel of our or our Restricted Subsidiaries' real property and related
fixtures or improvements located in the United States, the aggregate book value
of which on the date of determination exceeds $1.0 billion. The term "Principal
Property" does not include any telecommunications equipment or parcels of real
property and related fixtures or improvements which are determined in good faith
by our Board of Directors, not to be of material importance to our and our
Subsidiaries' total business. As of the date of this prospectus, neither we nor
any of our Subsidiaries own any Principal Property.
Defaults and Remedies
32
You have specified rights if an Event of Default occurs in respect of
the senior securities of your series, as described below.
The term "Event of Default" in respect of the senior securities of your
series means any of the following:
(1) we do not pay interest on a senior security of such series
within 30 days of its due date;
(2) we do not pay the principal of or any premium on a senior
security of such series on its due date;
(3) we remain in breach of a covenant or warranty in respect
of the Indenture for 60 days after we receive a written notice of
default. The notice must be sent by either the trustee or holders of at
least 25% in principal amount of a series of outstanding senior
securities;
(4) we are in default under agreements under which we have
Indebtedness outstanding in excess of $250 million in the aggregate and
which Indebtedness is due either at maturity or has been declared due
prior to maturity and remains unpaid;
(5) we fail to pay a money judgment in excess of $250 million
for a period of 60 days after it becomes final and not subject to
further appeal; or
(6) we or Viacom International file for bankruptcy, or other
specified events of bankruptcy, insolvency or reorganization occur.
If an Event of Default has occurred, the trustee or the holders of at
least 25% in principal amount of the senior securities of the affected series
may declare the entire principal amount and premium, if any, and all the accrued
interest on, the senior securities of that series to be due and immediately
payable. This is called a declaration of acceleration of maturity. There is no
action on the part of the trustee or any holder of senior securities required
for such declaration if the Event of Default is a bankruptcy, insolvency or
reorganization.
Holders of a majority in principal amount of the senior securities of a
series may also waive certain past defaults under the Indenture on behalf of all
of the holders of such series of senior securities. A declaration of
acceleration of maturity may be canceled, under specified circumstances, by the
holders of at least a majority in principal amount of a series of senior
securities.
Except in cases of default, where the trustee has special duties, the
trustee is not required to take any action under the Indenture at the request of
holders unless the holders offer the trustee reasonable protection from expenses
and liability satisfactory to the trustee. If a reasonable indemnity is
provided, the holders of a majority in principal amount of a series of senior
securities may direct the time, method and place of conducting any lawsuit or
other formal legal action seeking any remedy available to the trustee. The
trustee may refuse to follow those directions in specified circumstances. No
delay or omission in exercising any right or remedy will be treated as a waiver
of the right, remedy or Event of Default.
Before holders are allowed to bypass the trustee and bring a lawsuit or
other formal legal action or take other steps to enforce their rights or protect
their interests relating to the senior securities, the following must occur:
33
o holders must give the trustee written notice that an Event of
Default has occurred and remains uncured;
o holders of at least 25% in principal amount of the outstanding
senior securities of a series must make a written request that
the trustee take action because of the default and must offer
the trustee indemnity satisfactory to the trustee against the
cost and other liabilities of taking that action;
o the trustee must have failed to take action for 60 days after
receipt of the notice and offer of indemnity; and
o holders of a majority in principal amount of the senior
securities of a series must not have given the trustee a
direction inconsistent with the above notice.
However, you are entitled at any time to bring a lawsuit for the
payment of money due on your senior securities on or after the due date.
We are required to furnish to the trustee an annual statement as to our
performance of our obligations under the Indenture and as to any default in such
performance. We are also required to notify the trustee of any event that is, or
after notice or lapse of time or both would become, an Event of Default.
Book Entry, Delivery and Form
Each series of senior securities will be issued in one or more fully
registered global securities which will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depository") and registered
in the name of Cede & Co., the Depository's nominee. We will not issue senior
securities in certificated form. Beneficial interests in the global securities
will be represented through book-entry accounts of financial institutions acting
on behalf of beneficial owners as direct and indirect participants in the
Depository (the "Depository Participants"). Investors may elect to hold
interests in the global securities through either the Depository (in the United
States), or Clearstream Luxembourg or Euroclear (in Europe) if they are
participants of those systems, or, indirectly, through organizations that are
participants in those systems. Clearstream Luxembourg and Euroclear will hold
interests on behalf of their participants through customers' securities accounts
in Clearstream Luxembourg's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of the Depository.
At the present time, Citibank, N.A. acts as U.S. depositary for Clearstream
Luxembourg and The Chase Manhattan Bank acts as U.S. depositary for Euroclear
(the "U.S. Depositaries"). Beneficial interests in the global securities will be
held in denominations of $1,000 and integral multiples thereof. Except as set
forth below, the global securities may be transferred, in whole but not in part,
only to another nominee of the Depository or to a successor of the Depository or
its nominee. Clearstream Luxembourg has advised us that it is incorporated under
the laws of Luxembourg as a professional depositary. Clearstream Luxembourg
holds securities for its participating organizations ("Clearstream Luxembourg
Participants") and facilitates the clearance and settlement of securities
transactions between Clearstream Luxembourg Participants through electronic
book-entry changes in accounts of Clearstream Luxembourg Participants, thereby
eliminating the need for physical movement of certificates.
Clearstream Luxembourg provides to Clearstream Luxembourg Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream Luxembourg interfaces with domestic markets in several
countries. As a professional depositary, Clearstream Luxembourg is subject to
regulation by the Luxembourg Monetary Institute. Clearstream Luxembourg
Participants are recognized financial
34
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the initial purchasers or their affiliates.
Indirect access to Clearstream Luxembourg is also available to others, such as
banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a Clearstream Luxembourg Participant either
directly or indirectly.
Distributions with respect to each series of senior securities held
beneficially through Clearstream Luxembourg will be credited to cash accounts of
Clearstream Luxembourg Participants in accordance with its rules and procedures,
to the extent received by the U.S. Depositary for Clearstream Luxembourg.
Euroclear has advised us that it was created in 1968 to hold securities
for its participants ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear provides various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. The Euroclear System is owned by Euroclear Clearance System Public
Limited Company (ECS plc) and operated through a license agreement by Euroclear
Bank S.A./N.V., a bank incorporated under the laws of the Kingdom of Belgium as
the "Euroclear operator".
The Euroclear operator holds securities and book-entry interests in
securities for participating organizations and facilitates the clearance and
settlement of securities transactions between Euroclear Participants, and
between Euroclear Participants and participants of certain other securities
intermediaries through electronic book-entry changes in accounts of such
participants or other securities intermediaries.
The Euroclear operator provides Euroclear Participants, among other
things, with safekeeping, administration, clearance and settlement, securities
lending and borrowing, and related services.
Non-participants of Euroclear may hold and transfer book-entry
interests in the securities through accounts with a direct participant of
Euroclear or any other securities intermediary that holds a book-entry interest
in the securities through one or more securities intermediaries standing between
such other securities intermediary and the Euroclear operator.
The Euroclear operator is regulated and examined by the Belgian Banking
and Finance Commission and the National Bank of Belgium.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System, and applicable Belgian
law (the "Terms and Conditions"). The Terms and Conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in Euroclear. All
securities in Euroclear are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants, and has no record of, or relationship with, persons holding
through Euroclear Participants.
Distributions with respect to each series of senior securities held
beneficially through Euroclear will be credited to the cash accounts of
Euroclear Participants in accordance with the Terms and Conditions, to the
extent received by the U.S. Depositary for Euroclear.
Global Clearance and Settlement Procedures
35
Secondary market trading between Depository Participants will occur in
the ordinary way in accordance with the Depository's rules and will be settled
in immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Clearstream Luxembourg Participants and
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Clearstream Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through
Clearstream Luxembourg or Euroclear Participants, on the other, will be effected
within the Depository in accordance with the Depository's rules on behalf of the
relevant European international clearing system by its U.S. Depository; however,
such cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (European time).
The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving senior securities in the Depository, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to the Depository. Clearstream Luxembourg Participants and Euroclear
Participants may not deliver instructions directly to their respective U.S.
Depositaries.
Because of time-zone differences, credits of senior securities received
in Clearstream Luxembourg or Euroclear as a result of a transaction with a
Depository Participants will be made during subsequent securities settlement
processing and dated the business day following the Depository settlement date.
Such credits, or any transactions in the senior securities settled during such
processing, will be reported to the relevant Euroclear Participants or
Clearstream Luxembourg Participants on that business day. Cash received in
Clearstream Luxembourg or Euroclear as a result of sales of senior securities by
or through a Clearstream Luxembourg Participant or a Euroclear Participant to a
Depository Participant will be received with value on the business day of
settlement in the Depository but will be available in the relevant Clearstream
Luxembourg or Euroclear cash account only as of the business day following
settlement in the Depository.
Although the Depository, Clearstream Luxembourg and Euroclear have
agreed to the foregoing procedures in order to facilitate transfers of
securities among participants of the Depository, Clearstream Luxembourg and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and they may discontinue the procedures at any time.
Payment and Paying Agents
Principal of, premium, if any, and interest on the senior securities
will be payable, subject to any applicable laws and regulations, at the office
of our paying agent or paying agents that we may designate from time to time,
except that at our option, payment of interest may be made by check mailed to
the address of the person entitled thereto at the address in the security
register. We will pay interest on the senior securities on any interest payment
date to the person in whose name the senior security (or predecessor senior
security) is registered at the close of business on the regular record date for
such interest.
The corporate trust office of the trustee will be designated as our
paying agent for payments with respect to the senior securities of each series.
We may at any time designate additional paying agents or rescind the designation
of any paying agent or approve a change in the office through which any paying
36
agent acts, except that we will be required to maintain a paying agent in each
place of payment for the series.
Any money paid by us or Viacom International, as guarantor, to a paying
agent for the payment of the principal of, premium, if any, or interest on any
senior security of any series that remains unclaimed at the end of two years
after such principal, premium or interest has become due and payable will be
repaid to us or Viacom International, as guarantor, as the case may be, and the
holder of such senior security may thereafter look only to us and Viacom
International for that payment.
Meetings, Modification and Waiver
Modifications and amendments of the Indenture may be made by us, Viacom
International, as guarantor, and the trustee with the consent of the holders of
not less than a majority in aggregate principal amount of the outstanding senior
securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
holders of each outstanding senior security affected thereby, (a) change the
stated maturity of the principal of, or any installment of principal of or
interest on, any senior security or the terms of any sinking fund or analogous
payment with respect to any senior security, (b) reduce the principal amount of,
or premium or interest on, any senior security, (c) change our obligation to pay
additional amounts, (d) reduce the amount of principal of an original issue
discount senior security payable upon acceleration of the maturity thereof or
provable in bankruptcy, (e) change the place of payment where, or the coin or
currency in which, any senior security or any premium or interest thereon is
payable, (f) impair the right to institute suit for the enforcement of any
payment on or with respect to any senior security, (g) reduce the percentage in
principal amount of outstanding senior securities of any series, the consent of
whose holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (h) reduce the requirements contained in the Indenture for
quorum or voting, (i) change our obligation to maintain an office or agency in
the places and for the purposes required by the Indenture, or (j) reduce the
obligations of Viacom International, if any, in respect of the due and punctual
payment of any principal of, premium or interest on any senior security or any
additional amounts in respect thereof.
The holders of at least a majority in aggregate principal amount of the
outstanding senior securities of a series may, on behalf of the holders of all
the senior securities of that series, waive, insofar as that series is
concerned, our compliance with specified provisions of the Indenture. The
holders of not less than a majority in aggregate principal amount of the
outstanding senior securities of a series may, on behalf of all holders of
senior securities of that series, waive any past default under the Indenture
with respect to senior securities of that series, except a default (a) in the
payment of principal of or any premium or interest on any senior security of
such series or (b) in respect of any other provision of the Indenture that
cannot be modified or amended without the consent of the holder of each
outstanding senior security of such series affected thereby.
The Indenture provides that, in determining whether the holders of the
requisite principal amount of the outstanding senior securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of holders of senior securities for quorum purposes,
the principal amount of an original issue discount senior security that shall be
deemed to be outstanding shall be the amount that would be due and payable as of
the date of such determination upon acceleration of the maturity thereof.
The Indenture contains provisions for convening meetings of the holders
of senior securities of any or all series. A meeting may be called at any time
by the trustee, and also, upon request, by us or the holders of at least 33 1/3%
in aggregate principal amount of the outstanding senior securities of such
37
series, in any such case upon notice given in accordance with "Notices" below.
Except for any consent that must be given by the holder of each outstanding
senior security affected thereby, as described above, any resolution presented
at a meeting or adjourned meeting at which a quorum is present may be adopted by
the affirmative vote of the holders of a majority in principal amount of the
outstanding senior securities of that series; provided, however, that, except
for any consent that must be given by the holder of each outstanding senior
security affected thereby, as described above, any resolution with respect to
any consent, waiver, request, demand, notice, authorization, direction or other
action that may be made, given or taken by the holders of not less than a
specified percentage in principal amount of the outstanding senior securities of
a series may be adopted at a meeting or an adjourned meeting at which a quorum
is present only by the affirmative vote of the holders of not less than such
specified percentage in principal amount of the outstanding senior securities of
that series.
Any resolution passed or decision taken at any meeting of holders of
senior securities of any series duly held in accordance with the Indenture will
be binding on all holders of senior securities of that series. The quorum at any
meeting called to adopt a resolution, and at any adjourned meeting, will be
persons holding or representing a majority in principal amount of the
outstanding senior securities of a series; provided, however, that, if any
action is to be taken at such meeting with respect to a consent, waiver,
request, demand, notice, authorization, direction or other action that may be
given by the holders of not less than a specified percentage in principal amount
of the outstanding senior securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
senior securities of such series will constitute a quorum.
Defeasance and Covenant Defeasance
We may elect either (i) to defease and be discharged (and, if
applicable, to have Viacom International defeased and discharged) from any and
all obligations with respect to the senior securities (except as otherwise
provided in the Indenture) ("defeasance") or (ii) to be released from our
obligations with respect to certain covenants that are described in the
Indenture ("covenant defeasance"), upon the deposit with the trustee, in trust
for such purpose, of money and/or specified government obligations that through
the payment of principal and interest in accordance with their terms will
provide money in an amount sufficient, without reinvestment, to pay the
principal of, premium, if any and interest on the senior securities of such
series to maturity or redemption, as the case may be, and any mandatory sinking
fund or analogous senior payments thereon. As a condition to defeasance or
covenant defeasance, we must deliver to the trustee an opinion of counsel to the
effect that the holders of the senior securities of such series will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance or covenant defeasance
had not occurred. Such opinion of counsel, in the case of defeasance under
clause (i) above, must refer to and be based upon a ruling of the Internal
Revenue Service or a change in applicable United States federal income tax law
occurring after the date of the Indenture.
We may exercise our defeasance option with respect to the senior
securities of any series notwithstanding our prior exercise of our covenant
defeasance option. If we exercise our defeasance option, payment of the senior
securities of such series may not be accelerated because of an event of default
and the guarantees relating to such senior securities will cease to exist. If we
exercise our covenant defeasance option, payment of the senior securities of
such series may not be accelerated by reference to any covenant from which we
are released as described under clause (ii) above. However, if acceleration were
to occur for other reasons, the realizable value at the acceleration date of the
money and government obligations in the defeasance trust could be less than the
principal and interest then due on the senior securities of such series, in that
the required deposit in the defeasance trust is based upon
38
scheduled cash flows rather than market value, which will vary depending upon
interest rates and other factors.
Notices
Notices to holders of senior securities will be given by mail to the
addresses of such holders as they appear in the security register.
Title
We, Viacom International, as guarantor, the trustee and any agent of
us, Viacom International, as guarantor, or the trustee may treat the registered
owner of any registered senior security as the absolute owner thereof (whether
or not the senior security shall be overdue and notwithstanding any notice to
the contrary) for the purpose of making payment and for all other purposes.
Replacement of Senior Securities
We will replace any mutilated senior security at the expense of the
holders upon surrender to the trustee. We will replace senior securities that
become destroyed, lost or stolen at the expense of the holder upon delivery to
the trustee of satisfactory evidence of the destruction, loss or theft thereof.
In the event of a destroyed, lost or stolen senior security, an indemnity or
security satisfactory to us and the trustee may be required at the expense of
the holder of the senior security before a replacement senior security will be
issued.
Governing Law
The Indenture, the senior securities and the guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York.
Regarding the Trustee
We and Viacom International maintain deposit accounts and banking and
borrowing relations with Citibank, N.A., the trustee under the Indenture, and
such trustee is currently a lender to us and Viacom International and certain of
our other subsidiaries. We may remove the trustee at any time with respect to
the senior securities of any series, provided that we immediately appoint a
successor trustee meeting the requirements for trustees specified in the
Indenture and provided further that no default with respect to such senior
securities has occurred and is continuing.
Certain Definitions
The following definitions are applicable to the Indenture:
"Capitalized Lease" means any obligation of a person to pay rent or
other amounts incurred with respect to real property or equipment acquired or
leased by such person and used in its business that is required to be recorded
as a capital lease in accordance with generally accepted accounting principles
consistently applied as in effect from time to time.
"Indebtedness" of any person means, without duplication (i) any
obligation of such person for money borrowed, (ii) any obligation of such person
evidenced by bonds, debentures, notes or other similar instruments, (iii) any
reimbursement obligation of such person in respect of letters of credit or other
similar instruments which support financial obligations which would otherwise
become
39
Indebtedness, (iv) any obligation of such person under Capitalized Leases
(other than in respect of (x) telecommunications equipment including, without
limitation, satellite transponders, and (y) theme park equipment and
attractions), and (v) any obligation of any third party to the extent secured by
a Lien on the assets of such person; provided, however, that "Indebtedness" of
such person shall not include any obligation of such person (a) to any
Subsidiary of such person or to any person with respect to which such person is
a Subsidiary or (b) specifically with respect to the production, distribution or
acquisition of motion pictures or other programming rights, talent or publishing
rights. When used with respect to Viacom, the term "Indebtedness" also includes
any obligation of Viacom International specified in clauses (i) through (v)
above to the extent that said Indebtedness is guaranteed by Viacom.
"Lien" means any pledge, mortgage, lien, encumbrance or other security
interest.
"Restricted Subsidiary" means a corporation all of the outstanding
voting stock of which is owned, directly or indirectly, by Viacom or by one or
more of its Subsidiaries, or by Viacom and one or more of its Subsidiaries,
which is incorporated under the laws of a State of the United States, and which
owns a Principal Property.
"Subsidiary" of any person means (i) a corporation a majority of the
outstanding voting stock of which is at the time, directly or indirectly, owned
by such person, by one or more Subsidiaries of such person, or by such person
and one or more Subsidiaries thereof or (ii) any other person (other than a
corporation), including, without limitation, a partnership or joint venture, in
which such person, one or more Subsidiaries thereof, or such person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other persons performing
similar functions).
40
UNITED STATES TAX CONSIDERATIONS
This description is based on the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed Treasury Regulations, and interpretations of
the foregoing, changes to any of which subsequent to the date of this prospectus
may affect the tax consequences described herein. These statements address only
the tax consequences to holders holding senior securities as capital assets
within the meaning of Section 1221 of the Code. They do not discuss all of the
tax consequences that may be relevant to holders in light of their particular
circumstances or to holders subject to special rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
United States Holders (as defined below) whose functional currency (as defined
in Code Section 985) is not the U.S. dollar, persons holding senior securities
in connection with a hedging transaction, "straddle", conversion transaction or
other integrated transaction, traders in securities that elect to mark to
market, holders liable for alternative minimum tax or persons who have ceased to
be United States citizens or to be taxed as resident aliens. Persons considering
the purchase of the senior securities should consult their tax advisors
concerning the application of United States federal income tax laws, as well as
the laws of any state, local or foreign taxing jurisdictions, to their
particular situations.
As used in this section, a "United States Holder" means a beneficial
owner of senior securities that is for United States federal income tax purposes
a holder that is a United States person (as defined in "Description of Senior
Securities--Payment of Additional Amounts").
As used in this section, the term "United States Alien Holder" means a
beneficial owner of senior securities that is, for United States federal income
tax purposes:
o a nonresident alien individual;
o a foreign corporation;
o a nonresident alien fiduciary of a foreign estate or trust; or
o a foreign partnership one or more of the members of which is a
nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust.
Exchange Offer
The exchange of unregistered senior securities for exchange senior
securities pursuant to the exchange offer will not be a taxable event for United
States federal income tax purposes. Accordingly, a holder will not recognize
taxable gain or loss as a result of such exchange and will have the same
adjusted tax basis and holding period in the exchange senior securities as such
holder had in the unregistered senior securities immediately before the
exchange.
Tax Consequences to United States Holders
Payments of Interest
Interest on senior securities will generally be taxable to a United
States Holder as ordinary interest income at the time it accrues or is received
in accordance with the United States Holder's method of accounting for federal
income tax purposes.
41
Sale, Exchange or Retirement
Upon the sale, exchange or retirement of senior securities, a United
States Holder will recognize gain or loss equal to the difference between the
amount realized on the sale, exchange or retirement of the senior securities and
such holder's adjusted tax basis in the senior securities. A United States
Holder's adjusted tax basis in senior securities will equal the cost of the
senior securities to such holder, subject to possible reduction by amortized
bond premium. The amount realized excludes any amounts attributable to unpaid
interest accrued between interest payment dates and not previously included in
income, which will be taxable as ordinary income. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if at the time
of the sale, exchange or retirement the senior securities have been held for
more than one year. Under current laws, the excess of the taxpayer's net
long-term capital gains over net short-term capital losses is taxed at a lower
rate than ordinary income for certain non-corporate taxpayers. The distinction
between capital gain or loss and ordinary income or loss is also relevant for
purposes of, among other things, the limitations on the deductibility of capital
losses.
Amortizable Bond Premium
In general, if a United States Holder purchases a senior security at a
premium (that is, for an amount in excess of the amount payable upon the
maturity thereof), such holder will be considered to have purchased such senior
security with "amortizable bond premium" equal to the amount of such excess.
Such holder may elect to amortize such bond premium as an offset to interest
income, and not as a separate deduction item, as it accrues under a
constant-yield method over the remaining term of the senior security. Such
holder's tax basis in the senior security will be reduced by the amount of the
amortized bond premium. Any such election shall apply to all debt instruments
(other than instruments the interest on which is excludible from gross income)
held by the United States Holder at the beginning of the first taxable year for
which the election applies or thereafter acquired and is irrevocable without the
consent of the Internal Revenue Service. Bond premium on senior securities held
by a United States Holder who does not elect to amortize the premium will
decrease the gain or increase the loss otherwise recognized on the disposition
of the senior securities.
Market Discount
If a United States Holder purchases a senior security for less than its
principal amount, the difference will be treated as a "market discount" for U.S.
federal income tax purposes subject to a de minimus exception.
Under the market discount rules, a United States Holder will be
required to treat any principal payment on a senior security, or any gain on its
sale, exchange, retirement or other disposition, as ordinary income to the
extent of the accrued market discount which was not previously included in gross
income. If the senior security is disposed of in a non-taxable transaction
(other than a nonrecognition transaction described in section 1276 of the Code),
accrued market discount will be taxable to the United States Holder as ordinary
income as if the United States Holder had sold the senior security at its fair
market value. In addition, a United States Holder may be required to defer,
until the maturity of a senior security or its earlier disposition (including a
non-taxable transaction other than a transaction described in section 1276 of
the Code), the deduction of all or a portion of the interest expense in respect
of any indebtedness incurred or continued to purchase or carry the senior
security. Market discount will be considered to accrue on a straight-line basis
during the period from the date of acquisition to the maturity date of the
senior security, unless the United States Holder elects to accrue on a
constant-yield basis.
42
A United States Holder may elect to include market discount in income
as it accrues --on either a ratable or constant-yield basis. If a United States
Holder makes this election, the rules regarding the treatment of gain upon the
disposition of the senior security and upon the receipt of principal payments as
ordinary income and regarding the deferral of interest deductions will not
apply. If a United States Holder elects to include market discount in income as
it accrues, the election will apply to all market discount obligations acquired
during or after the first taxable year to which the election applies. This
election may not be revoked without the consent of the Internal Revenue Service.
Tax Consequences to United States Alien Holders
Under present United States federal tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal, interest and premium on the senior
securities by Viacom or its paying agent to any United States Alien Holder will
be exempt from the 30% United States federal withholding tax, provided that (i)
such holder does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of Viacom entitled to vote, (ii)
such holder is not a controlled foreign corporation related, directly or
indirectly, to Viacom through stock ownership, and (iii) the requirement to
certify such holder's non-U.S. status, as set forth in section 871(h) or section
881(c) of the Code, has been fulfilled with respect to the beneficial owner, as
discussed below;
(b) a United States Alien Holder of senior securities will not be
subject to United States federal income tax on gain realized on the sale,
exchange or retirement of such senior securities, unless (i) such holder is an
individual who is present in the United States for 183 days or more in the
taxable year of the disposition, and either the gain is attributable to an
office or other fixed place of business maintained by such individual in the
United States or, generally, such individual has a "tax home" in the United
States or (ii) such gain is effectively connected with such holder's conduct of
a trade or business in the United States (and, if an income tax treaty applies,
generally is attributable to a U.S. "permanent establishment" maintained by such
holder); and
(c) senior securities held by an individual who is not, for United
States estate tax purposes, a resident or citizen of the United States at the
time of his death will not be subject to United States federal estate tax,
provided that the individual does not own, actually or constructively, 10% or
more of the total combined voting power of all classes of stock of Viacom
entitled to vote and, at the time of such individual's death, payments with
respect to such senior securities would not have been effectively connected with
the conduct by such individual of a trade or business in the United States.
The certification requirement referred to in subparagraph (a) will be
fulfilled if the beneficial owner of senior securities certifies on Internal
Revenue Service Form W-8BEN or successor form under penalties of perjury, that
it is not a United States person and provides its name and address, and (i) such
beneficial owner files such Form W-8BEN or successor form with the withholding
agent or (ii) in the case of senior securities held on behalf of the beneficial
owners by a securities clearing organization, bank or other financial
institution holding customers' securities in the ordinary course of its trade or
business, such financial institution files with the withholding agent a
statement that it has received the Form W-8BEN or successor form from the United
States Alien Holder, furnishes the withholding agent with a copy thereof and
otherwise complies with the applicable Internal Revenue Service requirements.
Alternatively, these certification requirements will not apply if the
beneficial owner of the senior securities holds those securities directly
through a "qualified intermediary"(which is a non-U.S. office of a bank,
securities dealer or similar intermediary that has signed an agreement with the
Internal Revenue Service concerning withholding tax procedures), the qualified
intermediary has sufficient information in
43
its files to indicate that the holder is a United States Alien Holder and the
intermediary complies with Internal Revenue Service requirements. Special rules
may apply with respect to senior securities held by a foreign partnership.
Prospective investors, including foreign partnerships and their partners and
holders who hold their senior securities through a qualified intermediary,
should consult their tax advisers regarding possible reporting requirements.
If a United States Alien Holder of senior securities is engaged in a
trade or business in the United States, and if interest on the senior securities
(or gain realized on their sale, exchange or other disposition) is effectively
connected with the conduct of such trade or business (and, if an income tax
treaty applies, generally is attributable to a U.S. "permanent establishment"
maintained by such holder), the United States Alien Holder, although exempt from
the withholding tax discussed in the preceding paragraphs, will be subject to
regular United States income tax on such effectively connected income, generally
in the same manner as if it were a United States Holder. See "Tax Consequences
to United States Holders" above. In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the
withholding agent a properly executed Internal Revenue Service Form W-8ECI or
successor form, as appropriate, to claim an exemption from withholding tax. In
addition, if such United States Alien Holder is a foreign corporation, it may be
subject to a 30% branch profits tax (unless reduced or eliminated by an
applicable treaty) on its earnings and profits for the taxable year attributable
to such effectively connected income, subject to certain adjustments.
Interest payments made to a United States Alien Holder will generally
be reported to such holder and to the Internal Revenue Service on Form 1042-S.
However, this reporting does not apply if such holder holds the senior
securities directly through a qualified intermediary.
Backup Withholding and Information Reporting
Under current United States federal income tax law, information
reporting requirements apply to certain payments of principal, premium, market
discount and interest made to, and to the proceeds of sales before maturity by,
non-corporate United States Holders. In addition, a 31% backup withholding tax
will apply if the noncorporate United States Holder (i) fails to furnish its
Taxpayer Identification Number ("TIN") which, for an individual, is his Social
Security Number, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments, or (iv) under certain circumstances fails
to certify, under penalties of perjury, that it has furnished a correct TIN and
has not been notified by the Internal Revenue Service that it is subject to
backup withholding for failure to report interest and dividend payments. Holders
should consult their tax advisers regarding their qualification for exemption
from backup withholding and the procedure for obtaining such an exemption if
applicable.
Backup withholding will not apply to payments made on senior securities
if the certifications required by Sections 871(h) and 881(c) as described above
are received or if the exemption for qualified intermediaries discussed above
applies, provided that Viacom or its paying agent or the qualified intermediary,
as the case may be, does not have actual knowledge or reason to know that the
payee is a United States person.
Under current Treasury Regulations, payments on the sale, exchange or
other disposition of senior securities made to or through a foreign office of a
broker generally will not be subject to backup withholding. However, if such
broker is:
o a United States person;
o a controlled foreign corporation for United States federal
income tax purposes;
44
o a foreign person 50% or more of whose gross income for certain
periods is effectively connected with a United States trade or
business; or
o a foreign partnership with certain connections to the United
States;
then information reporting will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption. Backup withholding may apply to any payment that such broker is
required to report if the broker has actual knowledge or reason to know that the
payee is a United States person. Payments to or through the United States office
of a broker will be subject to backup withholding and information reporting
unless such holder certifies, under penalties of perjury, that it is not a
United States person and the payor does not have actual knowledge or reason to
know that such holder is a United States person, or such holder otherwise
establishes an exemption.
United States Alien Holders of senior securities should consult their
tax advisers regarding the application of information reporting and backup
withholding in their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if available. Any
amounts withheld from a payment to a United States Alien Holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided that such holder files a United States income tax return and the
required information is furnished to the Internal Revenue Service.
45
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange senior securities for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange senior securities.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of exchange senior securities
received in exchange for unregistered senior securities where such unregistered
senior securities were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 180 days after the
expiration of the exchange offer, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until 90 days after the date of this prospectus, all
dealers effecting transactions in the exchange senior securities may be required
to deliver a prospectus.
We will not receive any proceeds from any sale of exchange senior
securities by broker-dealers. Exchange senior securities received by
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange senior
securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such exchange senior securities. Any broker-dealer that
resells exchange senior securities that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such exchange senior securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange senior securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
46
LEGAL MATTERS
The validity of the exchange senior securities and the guarantees will
be passed upon for Viacom and Viacom International by Shearman & Sterling, New
York, New York.
EXPERTS
Our financial statements incorporated by reference in this prospectus
from our Annual Report on Form 10-K for the year ended December 31, 2000 have
been audited by PricewaterhouseCoopers LLP, independent accountants, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements and schedule of CBS as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, incorporated in this prospectus by reference from Item
8 of the CBS's Annual Report on Form 10-K for the year ended December 31, 1999,
have been audited by KPMG LLP, independent accountants, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements and schedule of Infinity as of December 31,
1999 and 1998 and for each of the years in the three-year period ended December
31, 1999, incorporated in this prospectus by reference from Item 8 of Infinity's
Annual Report on Form 10-K for the year ended December 31, 1999, have been
audited by KPMG LLP, independent accountants, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
47
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify any of its directors or officers who was or is a party,
or is threatened to be made a party, to any third party proceeding by reason of
the fact that such person is or was a director or officer of the corporation,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reason to believe that such person's conduct was unlawful. In
a derivative action, i.e., one by or in the right of a corporation, the
corporation is permitted to indemnify directors and officers against expenses
(including attorneys' fees) actually and reasonably incurred by them in
connection with the defense or settlement of an action or suit if they acted in
good faith and in a manner that they reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification shall
be made if such person shall have been adjudged liable to the corporation,
unless and only to the extent that the court in which the action or suit was
brought shall determine upon application that the defendant directors or
officers are fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
Expenses, including attorneys' fees, incurred by any such person in
defending any such action, suit or proceeding may be paid or reimbursed by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the corporation.
Delaware law does not permit a corporation to indemnify persons against
judgments in actions brought by or in the right of the corporation unless the
Delaware Court of Chancery approves the indemnification.
Viacom's restated certificate of incorporation provides that each
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative, because that person is or was a Viacom director
or officer or is or was serving at Viacom's request as a director or officer of
another entity, shall be indemnified and held harmless by Viacom to the fullest
extent permitted by Delaware law. This right to indemnification also includes
the right to be paid by Viacom the expenses incurred in connection with that
proceeding in advance of its final disposition to the fullest extent authorized
by Delaware law. This right to indemnification is a contract right. Viacom's
restated certificate of incorporation authorizes its Board of Directors to
indemnify any of Viacom's employees or agents to the extent approved by the
Board of Directors and authorized under Delaware law.
Viacom intends to purchase and maintain insurance on behalf of any
person who is or was one of its directors, officers, employees or agents, or is
or was serving at the request of Viacom as a director, officer, employee or
agent of another entity against any liability asserted against him or her and
incurred by him or her in that capacity, or arising out of his or her status as
such, whether or not Viacom would have the power or the obligation to indemnify
him or her against that liability under the provisions of the restated
certificate of incorporation of Viacom.
II-i
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
See the index to exhibits that appears immediately following
the signature pages of this Registration Statement.
(b) Financial Statement Schedules
Not applicable.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-ii
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, pursuant to the provisions described in Item 20, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that the claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(6) To respond to requests for information that is incorporated by reference
into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed after the effective date of this Registration
Statement through the date of responding to the request.
(7) To supply by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein, that was not the
subject of and included in this Registration Statement when it became effective.
II-iii
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on July 13, 2001.
VIACOM INC.
By: /s/ Sumner M. Redstone
-----------------------------------------
Name: Sumner M. Redstone
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated.
Signatures Title Date
---------- ----- ----
/s/ Sumner M. Redstone Chairman of the Board of Directors, July 13, 2001
---------------------------------------- Chief Executive Officer and Director
Sumner M. Redstone (Principal Executive Officer)
/s/ Richard J. Bressler Senior Executive Vice President and July 13, 2001
---------------------------------------- Chief Financial Officer
Richard J. Bressler (Principal Financial Officer)
/s/ Susan C. Gordon Vice President, Controller and July 13, 2001
---------------------------------------- Chief Accounting Officer
Susan C. Gordon (Principal Accounting Officer)
* Director
----------------------------------------
George S. Abrams
* Director
----------------------------------------
David R. Andelman
* Director
----------------------------------------
George H. Conrades
* Director
----------------------------------------
Philippe P. Dauman
* Director
----------------------------------------
William H. Gray III
* Director
----------------------------------------
Mel Karmazin
Signatures Title Date
---------- ----- ----
* Director
----------------------------------------
Jan Leschly
* Director
----------------------------------------
David T. McLaughlin
* Director
----------------------------------------
Ken Miller
* Director
----------------------------------------
Leslie Moonves
* Director
----------------------------------------
Brent D. Redstone
* Director
----------------------------------------
Shari Redstone
* Director
----------------------------------------
Frederic V. Salerno
* Director
----------------------------------------
William Schwartz
* Director
----------------------------------------
Ivan Seidenberg
* Director
----------------------------------------
Patty Stonesifer
* Director
----------------------------------------
Robert D. Walter
*By: /s/ Michael D. Fricklas July 13, 2001
-------------------------------------
Michael D. Fricklas,
Attorney-in-Fact
For the Directors
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on July 13, 2001.
VIACOM INTERNATIONAL INC.
By: /s/ Mel Karmazin
---------------------------------
Name: Mel Karmazin
Title: President, Chief Executive
Officer and Chief
Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated.
Signatures Title Date
---------- ----- ----
/s/ Mel Karmazin President, July 13, 2001
---------------------------------------- Chief Executive Officer and
Mel Karmazin Chief Operating Officer
/s/ Richard J. Bressler Senior Executive Vice President, July 13, 2001
---------------------------------------- Chief Financial Officer,
Richard J. Bressler General Counsel, Secretary
and Director
/s/ Michael D. Fricklas Executive Vice President and Director July 13, 2001
----------------------------------------
Michael D. Fricklas
/s/ Susan C. Gordon Vice President, Controller and Chief July 13, 2001
---------------------------------------- Accounting Officer
Susan C. Gordon
INDEX TO EXHIBITS
Exhibit
Number Description
------------ ------------
1.1* Purchase Agreement, dated May 10, 2001, by and among Viacom
Inc., Viacom International Inc., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Smith Barney Inc., as
representatives of the several initial purchasers.
1.2 Purchase Agreement, dated January 9, 2001, by and among Viacom
Inc., Viacom International Inc., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Smith Barney Inc., as
representatives of the several initial purchasers
(incorporated herein by reference to Exhibit 1.1 of Viacom's
Form S-4 dated January 30, 2001).
4.1* Indenture, dated as of May 15, 1995, among Viacom, Viacom
International, as guarantor, and Citibank, N.A., as successor
to State Street Bank and Trust Company and The First National
Bank of Boston, Trustee.
4.2* First Supplemental Indenture, dated as of May 24, 1995.
4.3* Second Supplemental Indenture and Amendment No. 1, dated as of
December 15, 1995.
4.4* Third Supplemental Indenture, dated as of July 22, 1996.
4.5 Fourth Supplemental Indenture, dated as of August 1, 2000
(incorporated herein by reference to Exhibit 4.3 of Viacom's
Current Report on Form 8-K dated July 25, 2000).
4.6 Fifth Supplemental Indenture, dated as of January 17, 2001
(incorporated herein by reference to Exhibit 4.6 of Viacom's
registration statement on Form S-4 dated January 30, 2001).
4.7 Sixth Supplemental Indenture, dated as of May 17, 2001
(incorporated herein by reference to Exhibit 4.9 of Viacom's
registration statement on Form S-3 dated May 31, 2001).
4.8 Seventh Supplemental Indenture, dated as of May 31, 2001
(incorporated herein by reference to Exhibit 4.10 of Viacom's
registration statement on Form S-3 dated May 31, 2001).
4.9 Form of 2006 Exchange Note (incorporated herein by reference
to Exhibit 4.7 of Viacom's registration statement on Form S-4
dated January 30, 2001).
4.10* Form of 2011 Exchange Note.
4.11 Form of 2010 Exchange Note (incorporated herein by reference
to Exhibit 4.8 of Viacom's registration statement on Form S-4
dated January 30, 2001).
4.12 Form of Exchange Debenture (incorporated herein by reference
to Exhibit 4.9 of Viacom's registration statement on Form S-4
dated January 30, 2001).
4.13* Registration Rights Agreement dated as of May 17, 2001 among
Viacom Inc., Viacom International Inc. and the Initial
Purchasers.
5.1* Opinion and Consent of Shearman & Sterling regarding validity
of the exchange senior securities and the guarantees.
12.1 Statements regarding computation of ratios (incorporated
herein by reference to Exhibit 12.1 of Viacom's registration
statement on Form S-3 dated May 31, 2001).
23.1* Consent of PricewaterhouseCoopers LLP.
23.2* Consent of KPMG LLP.
23.3 Consent of Shearman & Sterling (included in Exhibit 5.1).
24.1* Powers of Attorney.
25.1* Statement of Eligibility of the Trustee on Form T-1.
99.1* Form of Letter of Transmittal for the 2006 Exchange Notes and
the 2011 Exchange Notes.
99.2* Form of Letter of Transmittal for the 2006 Exchange Notes,
2010 Exchange Notes and Exchange Debentures.
99.3* Form of Notice of Guaranteed Delivery for the 2006 Exchange
Notes and the 2011 Exchange Notes.
99.4* Form of Notice of Guaranteed Delivery for the 2006 Exchange
Notes, 2010 Exchange Notes and Exchange Debentures.
99.5* Form of Exchange Agent Agreement.
----------
* Filed herewith.