Viacom Reports Double-Digit Revenue and Profit Growth for Fiscal 2011 Third Quarter

Viacom Reports Double-Digit Revenue and Profit Growth for Fiscal 2011 Third Quarter

- Revenues Increased 15% and Adjusted Operating Income Grew 22%

- Adjusted Net Earnings Increased 35% to $583 Million; Adjusted Diluted EPS Up 39% to $0.99

NEW YORK, Aug. 5, 2011 /PRNewswire-FirstCall/ --

Fiscal Year 2011 Results

Quarter Ended
June 30, B/(W)
-------- -----
2011
vs.
(in millions, except per
share amounts) 2011 2010 2010
------------------------ ---- ---- ----
Revenues $3,766 $3,275 15%
Operating income 981 816 20
Adjusted operating income 995 816 22
Net earnings from continuing
operations attributable to
Viacom 574 432 33
Adjusted net earnings from
continuing operations
attributable 583 432 35
to Viacom
Diluted EPS from continuing
operations 0.97 0.71 37
Adjusted diluted EPS from
continuing operations $0.99 $0.71 39%

Nine Months
Ended
June 30, B/(W)
-------- -----
2011
vs.
(in millions, except per share
amounts) 2011 2010 2010
------------------------------ ---- ---- ----
Revenues $10,861 $10,026 8%
Operating income 2,781 2,511 11
Adjusted operating income 2,795 2,571 9
Net earnings from continuing
operations attributable to Viacom 1,570 1,411 11
Adjusted net earnings from continuing
operations attributable 1,633 1,380 18
to Viacom
Diluted EPS from continuing operations 2.62 2.31 13
Adjusted diluted EPS from continuing
operations $2.72 $2.26 20%

Viacom Inc. (NYSE: VIA, VIA.B) today reported double-digit gains for the fiscal 2011 third quarter ended June 30, 2011. Consolidated revenues in the quarter grew 15% to $3.77 billion, primarily driven by growth in affiliate, advertising and television license revenues. Adjusted operating income increased 22% to $995 million, fueled by Media Networks profit growth. Adjusted net earnings from continuing operations attributable to Viacom were up 35% to $583 million with adjusted diluted EPS from continuing operations of $0.99, which represents a 39% increase over the prior year's results of $0.71 per share.

Sumner M. Redstone, Executive Chairman of Viacom, said, "I am very pleased with Viacom's outstanding results. Our strategic focus and consistent investment in creative content are continuing to drive our growth."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "The breadth of hit programming found across Viacom's media network portfolio continues to expand with top-rated shows and tentpole events on MTV, Nickelodeon, Comedy Central, BET and TV Land, as well as many of our international networks, all of which contributed to strong advertising growth and a robust advertising upfront performance. We are strengthening our global entertainment brands and expanding our reach through new international and digital distribution and bringing our audiences the content they want on new platforms.

"Paramount Pictures is the first studio ever to deliver a record six consecutive $100 million-plus domestic box office movies and it was the first studio to cross the $1 billion domestic box office threshold for the fifth year in a row.

"In addition to our creative and operational success, Viacom is in the best financial shape in its history and has furthered its commitment to return cash to our shareholders with the recent increase in our dividend and the acceleration of our stock buyback program."

Revenues

Quarter Ended
June 30, B/(W)
-------- -----
2011
vs.
(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $2,391 $2,065 16%
Filmed
Entertainment 1,407 1,245 13
Eliminations (32) (35) N/M
--- ---

Total revenues $3,766 $3,275 15%
====== ======

Nine Months
Ended
June 30, B/(W)
-------- -----
2011
vs.
(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $6,853 $6,203 10%
Filmed
Entertainment 4,130 3,922 5
Eliminations (122) (99) N/M
---- ---

Total revenues $10,861 $10,026 8%
======= =======

N/M = Not Meaningful

Quarterly revenues of $3.77 billion grew 15% from $3.28 billion in the prior year. Media Networks delivered $2.39 billion in revenues, a 16% increase over the prior year period, driven principally by growth in advertising and affiliate revenues. Worldwide advertising revenues were up 14% to $1.28 billion with domestic ad sales growing 12% in the quarter. Worldwide affiliate revenues increased 19% to $971 million, reflecting higher digital distribution revenues as well as rate increases. International growth drove worldwide ancillary revenues up 13% in the quarter to $145 million as higher consumer products revenues from international markets were partially offset by lower domestic home entertainment revenues.

Filmed Entertainment revenues grew 13% to $1.41 billion due principally to higher television license fees and home entertainment revenues. The Company's worldwide television license revenues were up 36% in the quarter to $416 million, driven by the number and mix of available titles. Home entertainment revenues increased 33% to $331 million, reflecting one additional release as compared with the prior year's quarter as well as the strength of the current year releases. Ancillary revenues also grew, up 57% to $72 million. These gains were partially offset by lower theatrical revenues, which were down 9% to $588 million, principally reflecting the timing of film releases. The prior year period benefited from strong carryover revenues from DreamWorks Animation's How to Train Your Dragon whereas Transformers: Dark of the Moon was released in the final week of the fiscal 2011 third quarter, which will result in the majority of the film's theatrical revenues occurring in the fiscal fourth quarter.

Operating Income

Quarter Ended
June 30, B/(W)
-------- -----
2011
vs.

(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $1,033 $811 27%
Filmed Entertainment 49 69 (29)
Corporate expenses (58) (45) (29)
Equity-based
compensation (30) (20) (50)
Eliminations 1 1 -
--- ---

Adjusted operating
income $995 $816 22
Restructuring (14) - N/M
Asset impairment - - -
--- ---

Operating income $981 $816 20%
==== ====

Nine Months
Ended
June 30, B/(W)
-------- -----
2011
vs.

(in millions) 2011 2010 2010
------------- ---- ---- ----
Media Networks $2,890 $2,508 15%
Filmed Entertainment 156 288 (46)
Corporate expenses (160) (148) (8)
Equity-based
compensation (93) (77) (21)
Eliminations 2 - N/M
--- ---

Adjusted operating
income $2,795 $2,571 9
Restructuring (14) - N/M
Asset impairment - (60) N/M
--- ---

Operating income $2,781 $2,511 11%
====== ======

N/M = Not Meaningful

Quarterly adjusted operating income of $995 million grew 22% over the prior year's result of $816 million. This growth was driven by a 27% increase in the Media Networks segment, driven primarily by higher affiliate and advertising revenues. Filmed Entertainment profits were down 29% to $49 million, principally due to the timing and mix of theatrical releases.

Quarterly adjusted net earnings from continuing operations attributable to Viacom were $583 million, an increase of 35%. These results reflect the after-tax impact of higher operating income and equity income. Adjusted diluted earnings per share for the quarter were $0.99, a 39% increase from the $0.71 earned in the prior year's comparable quarter.

Stock Repurchase Program

For the quarter ended June 30, 2011, Viacom repurchased 14.2 million shares for an aggregate purchase price of $700 million. As of August 4, 2011, Viacom had $2.18 billion remaining in its $4 billion stock repurchase program.

Debt

At June 30, 2011, total debt outstanding, including capital lease obligations, was $6.95 billion, compared with $6.75 billion at September 30, 2010. The Company's cash balances increased to $955 million at June 30, 2011, compared with $837 million at September 30, 2010.

About Viacom

Viacom is home to the world's premier entertainment brands that connect 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
June 30,
--------
(in millions, except per share amounts) 2011 2010
---- ----

Revenues $3,766 $3,275
Expenses:
Operating 1,945 1,710
Selling, general and administrative 761 674
Depreciation and amortization 65 75
Restructuring 14 -
Asset impairment - -
--- ---

Total expenses 2,785 2,459

Operating income 981 816
Interest expense, net (104) (104)
Equity in net earnings (losses) of
investee companies 12 (24)
Loss on extinguishment of debt - -
Other items, net 10 (3)
--- ---

Earnings from continuing operations
before provision for income taxes 899 685

Provision for income taxes (310) (247)
---- ----

Net earnings from continuing operations 589 438
Discontinued operations, net of tax - (12)
--- ---

Net earnings (Viacom and noncontrolling
interests) 589 426

Net (earnings) losses attributable to
noncontrolling interests (15) (6)
--- ---

Net earnings attributable to Viacom $574 $420
==== ====

Amounts attributable to Viacom:
Net earnings from continuing operations $574 $432
Discontinued operations, net of tax - (12)
--- ---

Net earnings attributable to Viacom $574 $420
==== ====

Basic earnings per share attributable to
Viacom:
Continuing operations $0.99 $0.71
Discontinued operations $ - $(0.02)
Net earnings $0.99 $0.69

Diluted earnings per share attributable
to Viacom:
Continuing operations $0.97 $0.71
Discontinued operations $ - $(0.02)
Net earnings $0.97 $0.69

Weighted average number of common shares
outstanding:
Basic 582.7 607.9
Diluted 591.6 611.3

Dividends declared per share of Class A
and Class B common stock $0.25 $0.15

Nine Months Ended
June 30,
--------
(in millions, except per share amounts) 2011 2010
---- ----

Revenues $10,861 $10,026
Expenses:
Operating 5,683 5,179
Selling, general and administrative 2,180 2,040
Depreciation and amortization 203 236
Restructuring 14 -
Asset impairment - 60
--- ---

Total expenses 8,080 7,515

Operating income 2,781 2,511
Interest expense, net (310) (322)
Equity in net earnings (losses) of
investee companies 51 (72)
Loss on extinguishment of debt (87) -
Other items, net 3 (3)
--- ---

Earnings from continuing operations
before provision for income taxes 2,438 2,114

Provision for income taxes (838) (728)
---- ----

Net earnings from continuing operations 1,600 1,386
Discontinued operations, net of tax (10) (52)
--- ---

Net earnings (Viacom and noncontrolling
interests) 1,590 1,334

Net (earnings) losses attributable to
noncontrolling interests (30) 25
--- ---

Net earnings attributable to Viacom $1,560 $1,359
====== ======

Amounts attributable to Viacom:
Net earnings from continuing operations $1,570 $1,411
Discontinued operations, net of tax (10) (52)
--- ---

Net earnings attributable to Viacom $1,560 $1,359
====== ======

Basic earnings per share attributable to
Viacom:
Continuing operations $2.65 $2.32
Discontinued operations $(0.02) $(0.08)
Net earnings $2.63 $2.24

Diluted earnings per share attributable
to Viacom:
Continuing operations $2.62 $2.31
Discontinued operations $(0.02) $(0.08)
Net earnings $2.60 $2.23

Weighted average number of common shares
outstanding:
Basic 593.5 607.6
Diluted 600.2 610.1

Dividends declared per share of Class A
and Class B common stock $0.55 $0.15

VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

September
June 30, 30,
(in millions, except par
value) 2011 2010
---- ----

ASSETS
Current assets:
Cash and cash equivalents $955 $837
Receivables, net 2,726 2,417
Inventory, net 803 861
Deferred tax assets, net 68 77
Prepaid and other assets 329 281
Assets held for sale - 76
--- ---

Total current assets 4,881 4,549
Property and equipment, net 1,040 1,102
Inventory, net 4,076 4,145
Goodwill 11,075 11,035
Intangibles, net 420 467
Deferred tax assets, net - 156
Other assets 818 568
Assets held for sale - 74
--- ---

Total assets $22,310 $22,096
======= =======

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable $315 $210
Accrued expenses 1,153 1,000
Participants' share and
residuals 1,099 1,059
Program rights obligations 422 390
Deferred revenue 217 256
Current portion of debt 26 31
Other liabilities 348 435
Liabilities held for sale - 117
--- ---

Total current liabilities 3,580 3,498

Noncurrent portion of debt 6,928 6,721
Participants' share and
residuals 501 453
Program rights obligations 579 691
Deferred tax liabilities,
net 99 -
Other liabilities 1,317 1,343
Redeemable noncontrolling
interest 152 131

Commitments and
contingencies

Viacom stockholders'
equity:
Class A Common stock, par
value $0.001, 375.0
authorized; 51.4 and 52.0
outstanding, respectively - -
Class B Common stock, par
value $0.001, 5,000.0
authorized; 525.3
and 556.5 outstanding,
respectively 1 1
Additional paid-in capital 8,531 8,346
Treasury stock, 187.5 and
151.5 common shares held
in treasury, respectively (7,325) (5,725)
Retained earnings 7,985 6,775
Accumulated other
comprehensive loss (29) (114)
--- ----

Total Viacom stockholders'
equity 9,163 9,283

Noncontrolling interests (9) (24)
--- ---

Total equity 9,154 9,259
----- -----

Total liabilities and
equity $22,310 $22,096
======= =======

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following table reconciles the Company's results for the quarter and nine months ended June 30, 2011 and the nine months ended June 30, 2010, to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including restructuring charges, extinguishment of debt, asset impairment and discrete tax benefits. There were no adjustments to our results for the quarter ended June 30, 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
June 30, 2011
-------------
Pre-tax
Operating Earnings
from
Income Continuing
Operations(1)
Reported results $981 $899
Factors Affecting
Comparability:
Restructuring (3) 14 14
--- ---

Adjusted results $995 $913
==== ====

(in millions, except
per share amounts)
--------------------

Quarter Ended
June 30, 2011
-------------
Net Earnings from Diluted
Continuing EPS
Operations
Attributable to from
Viacom(2) Continuing
Operations
Reported results $574 $0.97
Factors Affecting
Comparability:
Restructuring (3) 9 0.02
--- ----

Adjusted results $583 $0.99
==== =====

Nine Months Ended
June 30, 2011
-------------
Pre-tax
Operating Earnings
from
Income Continuing
Operations(1)
Reported results $2,781 $2,438
Factors Affecting
Comparability:
Restructuring (3) 14 14
Extinguishment of
debt(4) - 87
--- ---

Adjusted results $2,795 $2,539
====== ======

Nine Months Ended
June 30, 2011
-------------
Net Earnings from Diluted
Continuing EPS
Operations
Attributable to from
Viacom(2) Continuing
Operations
Reported results $1,570 $2.62
Factors Affecting
Comparability:
Restructuring (3) 9 0.01
Extinguishment of debt(4) 54 0.09
--- ----

Adjusted results $1,633 $2.72
====== =====

Nine Months Ended
June 30, 2010
-------------
Pre-tax
Operating Earnings
from
Income Continuing
Operations(1)
Reported results $2,511 $2,114
Factors Affecting
Comparability:
Asset Impairment(5) 60 60
Discrete tax
benefits(6) - -
--- ---

Adjusted results $2,571 $2,174
====== ======

Nine Months Ended
June 30, 2010
-------------
Net Earnings from Diluted
Continuing EPS
Operations
Attributable to from
Viacom(2) Continuing
Operations
Reported results $1,411 $2.31
Factors Affecting
Comparability:
Asset Impairment(5) 19 0.03
Discrete tax benefits(6) (50) (0.08)
--- -----

Adjusted results $1,380 $2.26
====== =====

(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 $14 million of employee separation costs
attributable to the Media Networks segment.
(4) 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.
(5) 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.
(6) 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; 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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