Viacom Reports Sharply Higher Results For Fiscal 2011 Second Quarter

Viacom Reports Sharply Higher Results For Fiscal 2011 Second Quarter

-- Double-Digit Growth in Media Networks and Filmed Entertainment Revenues Drove a 37% Increase in Adjusted Operating Income

-- Adjusted Net Earnings Rose 69% to $430 Million with Adjusted Diluted EPS From Continuing Operations Up 71% to $0.72

-- Domestic Advertising Revenues Grew 11% Reflecting Strong Upfront and Scatter Markets

NEW YORK, April 28, 2011 /PRNewswire-FirstCall/ --

Fiscal Year 2011 Results

Quarter Ended
March 31, B/(W)
--------- -----
2011
vs.
(in millions, except per share amounts) 2011 2010 2010
--------------------------------------- ---- ---- ----
Revenues $3,267 $2,732 20%
Operating income 760 554 37
Adjusted operating income 760 554 37
Net earnings from continuing operations
attributable to Viacom 376 255 47
Adjusted net earnings from continuing
operations attributable to Viacom 430 255 69
Diluted EPS from continuing operations 0.63 0.42 50
Adjusted diluted EPS from continuing
operations $0.72 $0.42 71%

Six Months
Ended
March 31, B/(W)
--------- -----
2011
vs.
(in millions, except per share amounts) 2011 2010 2010
--------------------------------------- ---- ---- ----
Revenues $7,095 $6,751 5%
Operating income 1,800 1,695 6
Adjusted operating income 1,800 1,755 3
Net earnings from continuing operations
attributable to Viacom 996 979 2
Adjusted net earnings from continuing
operations attributable to Viacom 1,050 948 11
Diluted EPS from continuing operations 1.65 1.61 2
Adjusted diluted EPS from continuing
operations $1.74 $1.56 12%

Viacom Inc. (NYSE: VIA, VIA.B) today reported substantial increases in revenues and profit for the fiscal 2011 second quarter ended March 31, 2011, driven by strong growth across its Media Networks and Filmed Entertainment segments and improving profit margins. Revenues in the quarter increased 20% to $3.27 billion on double-digit growth in theatrical, advertising, home entertainment and television license revenues. Adjusted operating income grew 37% to $760 million, driven by increased profits in both Media Networks and Filmed Entertainment. Adjusted net earnings from continuing operations attributable to Viacom surged 69% to $430 million with adjusted diluted EPS from continuing operations of $0.72, a 71% improvement over the prior year's adjusted results of $0.42 per share.

Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom's proven creative firepower and disciplined financial management are fueling our profitability and allowing us to deliver increasing value to our shareholders."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "This was an outstanding quarter, reflecting our continued operating momentum. Our ability to translate industry-leading research and creative ingenuity into hit programming makes our branded networks a gateway to some of the most highly valued audiences around the globe. We attracted new advertisers in the quarter and expanded the reach of our content onto new distribution platforms.

"Our networks aired top-rated shows for nearly every demographic. MTV's Jersey Shore was the number one series across all of television with its target audience, which helped to boost the network's prime-time ratings nearly 65% for the quarter. Nickelodeon was once again the top-rated network for kids and total viewers with four of the top five preschool series on all television, cable's top three animated series and the number one show among tweens, global sensation iCarly. Record-breaking performances from Comedy Central original series and specials, such as Tosh.0 and its two late-night leaders, drove double-digit ratings gains in prime time. BET's investment in programming continued to yield audience gains, particularly in prime time.

"Paramount Pictures delivered outstanding results this past quarter as it benefited from a strong slate of films in theatres as well as home entertainment releases. The studio is looking forward to releasing several of the most anticipated movies of the summer, including next weekend's premiere of Marvel's Thor, which will be followed by DreamWorks Animation's Kung Fu Panda 2, J.J. Abrams' Super 8 and the third installment of our global franchise, Transformers: Dark of the Moon.

"The strength of our results has enabled us to accelerate the pace of our stock buyback program as we continue to focus on returning capital to our shareholders."

Revenues

Quarter Ended
March 31, B/(W)
--------- -----
2011
vs.
(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $2,082 $1,884 11%
Filmed Entertainment 1,226 886 38
Eliminations (41) (38) N/M
--- ---

Total revenues $3,267 $2,732 20%
====== ======

Six Months
Ended
March 31, B/(W)
--------- -----
2011
vs.
(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $4,462 $4,138 8%
Filmed Entertainment 2,723 2,677 2
Eliminations (90) (64) N/M
--- ---

Total revenues $7,095 $6,751 5%
====== ======

N/M = Not Meaningful

Quarterly revenues of $3.27 billion increased 20% from $2.73 billion in the prior year. Media Networks delivered $2.08 billion in revenues, an 11% improvement over the prior year period. This increase reflects continuing growth in advertising revenues, which were up 12% worldwide in the quarter. Domestic ad sales grew 11%, marking the fifth consecutive quarter of sequential improvement in Viacom's domestic ad sales growth rate. Worldwide affiliate revenues grew 9% to $851 million. Worldwide ancillary revenues were up 10% in the quarter to $155 million primarily due to growth in television syndication and consumer products revenues. Filmed Entertainment revenues increased 38% to $1.23 billion due principally to higher theatrical and home entertainment revenues. Viacom's theatrical revenues, which grew 50% to $401 million in the quarter, reflect a higher year-over-year contribution from carryover titles such as True Grit, Little Fockers and The Fighter, as well as increased revenues from the current quarter's releases, led by Rango. Home entertainment revenues rose 38% to $410 million due to the strength and increased number of releases in the quarter compared with the 2010 quarter. Television license fees grew 30% to $336 million, due to higher network television and syndication fees. Ancillary revenues improved 25% to $79 million.

Operating Income (Loss)

Quarter Ended
March 31, B/(W)
--------- -----
2011
vs.
(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $806 $715 13%
Filmed Entertainment 39 (83) N/M
Corporate (53) (51) (4)
Equity-based compensation (33) (26) (27)
Eliminations 1 (1) N/M
--- ---

Adjusted operating income $760 $554 37
Asset impairment - - -
--- ---

Operating income $760 $554 37%
==== ====

Six Months
Ended
March 31, B/(W)
--------- -----
2011
vs.
(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $1,857 $1,697 9%
Filmed Entertainment 107 219 (51)
Corporate (102) (103) 1
Equity-based compensation (63) (57) (11)
Eliminations 1 (1) N/M
--- ---

Adjusted operating income $1,800 $1,755 3
Asset impairment - (60) N/M
--- ---

Operating income $1,800 $1,695 6%
====== ======

N/M = Not Meaningful

Quarterly adjusted operating income of $760 million was up 37% versus the prior year's result of $554 million. Viacom's Media Networks segment delivered a 13% year-over-year improvement in profits driven primarily by higher advertising and affiliate revenues. Filmed Entertainment generated a $122 million increase in profits to $39 million. This growth reflects primarily higher income from home entertainment and television license fee revenues.

Quarterly adjusted net earnings from continuing operations attributable to Viacom were $430 million, an increase of 69%. These results principally reflect the after-tax impact of higher operating income and equity income, which was due primarily to the profitable performance of EPIX. Adjusted diluted earnings per share for the March quarter were $0.72, a 71% increase from the $0.42 earned in the prior year's comparable quarter.

Stock Repurchase Program

For the quarter ended March 31, 2011, Viacom repurchased 11.4 million shares for an aggregate purchase price of $500 million. As of April 27, 2011, Viacom had $2.94 billion remaining in its $4 billion stock repurchase program.

Debt

At March 31, 2011, total debt outstanding, including capital lease obligations, was $7.16 billion, compared with $6.75 billion at September 30, 2010. The Company's cash balances increased to $1.56 billion at March 31, 2011, compared with $837 million at September 30, 2010.

About Viacom

Viacom is home to the world's premier entertainment brands. Through its BET Networks, MTV Networks and Paramount Pictures divisions, Viacom connects with audiences through compelling content across television, motion picture, online and mobile platforms in more than 160 countries and territories. With approximately 170 media networks reaching more than 600 million global subscribers, Viacom's leading brands include MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, COMEDY CENTRAL, TV Land, Spike TV and Tr3s. Paramount Pictures, America's oldest film studio and creator of many of the most beloved motion pictures, continues today as a major global producer and distributor of filmed entertainment. Viacom operates a large portfolio of branded digital media experiences, including many of the world's most popular properties for entertainment, community and casual online gaming.

For more information about Viacom and its businesses, visit www.viacom.com.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements reflect the Company's current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause actual results, performance or achievements to differ. These risks, uncertainties and other factors include, among others: the public acceptance of the Company's programs, motion pictures and other entertainment content on the various platforms on which they are distributed; technological developments and their effect in the Company's markets and on consumer behavior; the impact of piracy; competition for audiences and distribution; fluctuations in the Company's results due to the timing, mix and availability of the Company's motion pictures; economic conditions generally, and in advertising and retail markets in particular; changes in the Federal communications laws and regulations; other domestic and global economic, business, competitive and/or regulatory factors affecting the Company's businesses generally; and other factors described in the Company's news releases and filings with the Securities and Exchange Commission, including its Fiscal Year 2010 Transition Report on Form 10-K and reports on Form 10-Q and Form 8-K. The forward-looking statements included in this document are made only as of the date of this document, and the Company does not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

VIACOM INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

Quarter Ended
March 31,
---------
(in millions, except per share amounts) 2011 2010
---- ----

Revenues $3,267 $2,732
Expenses:
Operating 1,721 1,464
Selling, general and administrative 719 639
Depreciation and amortization 67 75
Asset impairment - -
--- ---

Total expenses 2,507 2,178

Operating income 760 554
Interest expense, net (102) (113)
Equity in net earnings (losses) of investee
companies 15 (28)
Loss on extinguishment of debt (87) -
Other items, net (7) (10)
--- ---

Earnings from continuing operations before
provision for income taxes 579 403

Provision for income taxes (197) (146)
---- ----

Net earnings from continuing operations 382 257
Discontinued operations, net of tax - (10)
--- ---

Net earnings (Viacom and noncontrolling
interests) 382 247

Net (earnings) losses attributable to
noncontrolling interests (6) (2)
--- ---

Net earnings attributable to Viacom $376 $245
==== ====

Amounts attributable to Viacom:
Net earnings from continuing operations $376 $255
Discontinued operations, net of tax - (10)
--- ---

Net earnings attributable to Viacom $376 $245
==== ====

Basic earnings per share attributable to
Viacom:
Continuing operations $0.63 $0.42
Discontinued operations $ - $(0.02)
Net earnings $0.63 $0.40

Diluted earnings per share attributable to
Viacom:
Continuing operations $0.63 $0.42
Discontinued operations $ - $(0.02)
Net earnings $0.63 $0.40

Weighted average number of common shares
outstanding:
Basic 594.4 607.6
Diluted 601.1 609.6

Dividends declared per share of Class A and
Class B common stock $0.15 $ -

Six Months Ended
March 31,
---------
(in millions, except per share amounts) 2011 2010
---- ----

Revenues $7,095 $6,751
Expenses:
Operating 3,738 3,469
Selling, general and administrative 1,419 1,366
Depreciation and amortization 138 161
Asset impairment - 60
--- ---

Total expenses 5,295 5,056

Operating income 1,800 1,695
Interest expense, net (206) (218)
Equity in net earnings (losses) of investee
companies 39 (48)
Loss on extinguishment of debt (87) -
Other items, net (7) -
--- ---

Earnings from continuing operations before
provision for income taxes 1,539 1,429

Provision for income taxes (528) (481)
---- ----

Net earnings from continuing operations 1,011 948
Discontinued operations, net of tax (10) (40)
--- ---

Net earnings (Viacom and noncontrolling
interests) 1,001 908

Net (earnings) losses attributable to
noncontrolling interests (15) 31
--- ---

Net earnings attributable to Viacom $986 $939
==== ====

Amounts attributable to Viacom:
Net earnings from continuing operations $996 $979
Discontinued operations, net of tax (10) (40)
--- ---

Net earnings attributable to Viacom $986 $939
==== ====

Basic earnings per share attributable to
Viacom:
Continuing operations $1.66 $1.61
Discontinued operations $(0.01) $(0.06)
Net earnings $1.65 $1.55

Diluted earnings per share attributable to
Viacom:
Continuing operations $1.65 $1.61
Discontinued operations $(0.02) $(0.07)
Net earnings $1.63 $1.54

Weighted average number of common shares
outstanding:
Basic 599.0 607.5
Diluted 604.6 609.5

Dividends declared per share of Class A and
Class B common stock $0.30 $ -

VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31,
(in millions, except par value) 2011
----

ASSETS
Current assets:
Cash and cash equivalents $1,555
Receivables, net 2,399
Inventory, net 827
Deferred tax assets, net 74
Prepaid and other assets 335
Assets held for sale -
---

Total current assets 5,190
Property and equipment, net 1,055
Inventory, net 4,082
Goodwill 11,072
Intangibles, net 438
Deferred tax assets, net -
Other assets 778
Assets held for sale -
---

Total assets $22,615
=======

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable $299
Accrued expenses 1,044
Participants' share and residuals 1,087
Program rights obligations 431
Deferred revenue 266
Current portion of debt 222
Other liabilities 488
Liabilities held for sale -
---

Total current liabilities 3,837

Noncurrent portion of debt 6,935
Participants' share and residuals 468
Program rights obligations 589
Deferred tax liabilities, net 17
Other liabilities 1,304
Redeemable noncontrolling interest 132

Commitments and contingencies

Viacom stockholders' equity:
Class A Common stock, par value $0.001, 375.0
authorized; 51.6 and 52.0
outstanding, respectively -
Class B Common stock, par value $0.001, 5,000.0
authorized; 536.5 and 556.5
outstanding, respectively 1
Additional paid-in capital 8,434
Treasury stock, 173.3 and 151.5 common shares
held in treasury, respectively (6,625)
Retained earnings 7,579
Accumulated other comprehensive loss (36)
---

Total Viacom stockholders' equity 9,353

Noncontrolling interests (20)
---

Total equity 9,333
-----

Total liabilities and equity $22,615
=======

September
30,
(in millions, except par value) 2010
----

ASSETS
Current assets:
Cash and cash equivalents $837
Receivables, net 2,417
Inventory, net 861
Deferred tax assets, net 77
Prepaid and other assets 281
Assets held for sale 76
---

Total current assets 4,549
Property and equipment, net 1,102
Inventory, net 4,145
Goodwill 11,035
Intangibles, net 467
Deferred tax assets, net 156
Other assets 568
Assets held for sale 74
---

Total assets $22,096
=======

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable $210
Accrued expenses 1,000
Participants' share and residuals 1,059
Program rights obligations 390
Deferred revenue 256
Current portion of debt 31
Other liabilities 435
Liabilities held for sale 117
---

Total current liabilities 3,498

Noncurrent portion of debt 6,721
Participants' share and residuals 453
Program rights obligations 691
Deferred tax liabilities, net -
Other liabilities 1,343
Redeemable noncontrolling interest 131

Commitments and contingencies

Viacom stockholders' equity:
Class A Common stock, par value $0.001, 375.0
authorized; 51.6 and 52.0
outstanding, respectively -
Class B Common stock, par value $0.001, 5,000.0
authorized; 536.5 and 556.5
outstanding, respectively 1
Additional paid-in capital 8,346
Treasury stock, 173.3 and 151.5 common shares
held in treasury, respectively (5,725)
Retained earnings 6,775
Accumulated other comprehensive loss (114)
----

Total Viacom stockholders' equity 9,283

Noncontrolling interests (24)
---

Total equity 9,259
-----

Total liabilities and equity $22,096
=======

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following table reconciles the Company's results for the quarter ended March 31, 2011, and the six months ended March 31, 2010 and 2011, to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including extinguishment of debt, asset impairment and discrete tax benefits. There were no adjustments to our results for the quarter ended March 31, 2010. The Company uses consolidated adjusted operating income, adjusted net earnings from continuing operations attributable to Viacom and adjusted diluted earnings per share ("EPS") from continuing operations, as applicable, among other measures, to evaluate the Company's actual operating performance and for planning and forecasting of future periods. The Company believes that the adjusted results provide relevant and useful information for investors because they clarify the Company's actual operating performance, make it easier to compare Viacom's results with those of other companies and allow investors to review performance in the same way as our management. Since these are not measures of performance calculated in accordance with generally accepted accounting principles, they should not be considered in isolation of, or as a substitute for, operating income, net earnings from continuing operations attributable to Viacom and diluted EPS as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies.

(in millions, except per share amounts)

Quarter Ended
March 31, 2011
--------------
Pre-tax
Operating Earnings
from
Income Continuing
Operations
------ (1)
-----------

Reported results $760 $579
Factors Affecting
Comparability:
Extinguishment of debt (3) - 87
--- ---

Adjusted results $760 $666
==== ====

Quarter Ended
March 31, 2011
--------------
Diluted
Net Earnings from EPS
Continuing
Operations from
Attributable to
Viacom (2) Continuing
---------------- Operations
----------

Reported results $376 $0.63
Factors Affecting
Comparability:
Extinguishment of debt (3) 54 0.09
--- ----

Adjusted results $430 $0.72
==== =====

Six Months Ended
March 31, 2011
--------------
Pre-tax
Operating Earnings
from
Income Continuing
Operations
------ (1)
-----------

Reported results $1,800 $1,539
Factors Affecting
Comparability:
Extinguishment of debt (3) - 87
--- ---

Adjusted results $1,800 $1,626
====== ======

Six Months Ended
March 31, 2011
--------------
Diluted
Net Earnings from EPS
Continuing
Operations from
Attributable to
Viacom (2) Continuing
---------------- Operations
----------

Reported results $996 $1.65
Factors Affecting
Comparability:
Extinguishment of debt (3) 54 0.09
--- ----

Adjusted results $1,050 $1.74
====== =====

Six Months Ended
March 31, 2010
--------------
Pre-tax
Operating Earnings
from
Income Continuing
Operations
------ (1)
-----------

Reported results $1,695 $1,429
Factors Affecting
Comparability:
Asset Impairment (4) 60 60
Discrete tax benefits (5) - -
--- ---

Adjusted results $1,755 $1,489
====== ======

Six Months Ended
March 31, 2010
--------------
Diluted
Net Earnings from EPS
Continuing
Operations from
Attributable to
Viacom (2) Continuing
---------------- Operations
----------

Reported results $979 $1.61
Factors Affecting
Comparability:
Asset Impairment (4) 19 0.03
Discrete tax benefits (5) (50) (0.08)
--- -----

Adjusted results $948 $1.56
==== =====

(1) Pre-tax earnings from continuing operations represent earnings
before provision for income taxes.
(2) The tax impact has been calculated using the rates applicable to
the adjustments presented.
(3) Adjusted results exclude a pre-tax debt extinguishment loss of
$87 million on the repurchase of $582 million of principal of our
6.25% Senior Notes due 2016 pursuant to a cash tender offer
completed in March 2011.
(4) Adjusted results exclude a $60 million non-cash impairment
charge in the Media Networks segment related to certain broadcast
licenses held by a 32%-owned consolidated entity.
(5) Adjusted results exclude $50 million of discrete tax benefits
principally due to reserve releases resulting from effectively
settled audits.

SOURCE Viacom Inc.

Viacom Inc.

CONTACT: Press: Carl Folta, Executive Vice President, Corporate Communications, +1-212-258-6352, carl.folta@viacom.com; or Kelly McAndrew, Senior Vice President, Corporate Communications, +1-212-846-7455, kelly.mcandrew@viacom.com; or Investors: James Bombassei, Senior Vice President, Investor Relations, +1-212-258-6377, james.bombassei@viacom.com

Web Site: http://www.viacom.com

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