Viacom Reports Results For Second Quarter 2013

Viacom Reports Results For Second Quarter 2013

-- Media Networks Revenues Increase 2% to $2.23 Billion, Driven by Higher Advertising, Affiliate and Ancillary Revenues

-- Operating Income of $847 Million, Adjusted Diluted EPS of $0.96

-- Stock Repurchase Program and Dividend Returned $1.7 Billion to Shareholders in the First Half of the Fiscal Year

NEW YORK, May 1, 2013 /PRNewswire-FirstCall/ --




Fiscal Year 2013 Results



Quarter Ended Six Months Ended

March 31, B/(W) March 31, B/(W)
--------- ----- --------- -----

2013 vs. 2013 vs.

(in millions, except
per share amounts) 2013 2012 2012 2013 2012 2012
---- ---- ---- ---- ---- ----


Revenues $3,135 $3,331 (6)% $6,449 $7,283 (11)%

Operating income 847 932 (9) 1,644 1,948 (16)

Net earnings from
continuing
operations
attributable to
Viacom 481 588 (18) 954 1,179 (19)

Adjusted net earnings
from continuing
operations
attributable to
Viacom* 481 535 (10) 942 1,126 (16)

Diluted EPS from
continuing
operations 0.96 1.08 (11) 1.89 2.14 (12)

Adjusted diluted EPS
from continuing
operations* $0.96 $0.98 (2)% $1.87 $2.04 (8)%


* Adjusted measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.


Viacom Inc. (NASDAQ: VIAB, VIA) today reported financial results for the fiscal second quarter, which ended March 31, 2013. Revenues decreased 6% to $3.14 billion, primarily due to lower Filmed Entertainment revenues and partially offset by an increase in Media Networks revenues as advertising revenue increased over the prior year. Operating income declined 9% to $847 million, reflecting lower Filmed Entertainment results and an increase in Media Networks programming investment expense, partially offset by the increase in advertising and affiliate revenues. Adjusted net earnings from continuing operations attributable to Viacom were $481 million, and adjusted diluted earnings per share from continuing operations were $0.96 per diluted share.

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Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom continues to build momentum by developing unparalleled entertainment content for audiences throughout the world. I am fully confident that our proven executive team will deliver even greater success, by driving Viacom's vibrant businesses and returning outstanding value for shareholders."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Viacom's ongoing strategy of focused investment in creative content and broad multiplatform distribution of our brands accelerated improvement in our business in the quarter. Viacom's media networks are continuing to develop innovative new original programming for all of our audiences, and building unique experiences for our established brands that move beyond the television screen. As a result, ratings are up at several networks, and advertising revenues have returned to year-over-year growth, up two percent, with eight points of sequential improvement over the December quarter. Paramount is also executing on its strategic plan, and successfully positioned G.I. Joe: Retaliation, Hansel and Gretel: Witch Hunters and Pain & Gain for global success, and the year ahead remains strong, with audiences eagerly awaiting our upcoming tentpole releases - Star Trek Into Darkness and World War Z."




Revenues



Quarter Ended Six Months Ended

March 31, B/(W) March 31, B/(W)
--------- ----- --------- -----

2013 vs. 2013 vs.

(in millions) 2013 2012 2012 2013 2012 2012
---- ---- ---- ---- ---- ----


Media Networks $2,233 $2,190 2% $4,627 $4,638 -

Filmed Entertainment 941 1,169 (20) 1,916 2,727 (30)%

Eliminations (39) (28) NM (94) (82) NM
--- --- --- ---


Total revenues $3,135 $3,331 (6)% $6,449 $7,283 (11)%
====== ====== ====== ======


NM - Not Meaningful


Quarterly revenues of $3.14 billion represented a 6% decline from the prior year. Media Networks revenues rose 2% to $2.23 billion, due to an increase in advertising, affiliate and ancillary revenues. Domestic and worldwide advertising revenues both increased 2%, benefitting from recent improvements in ratings at select networks. Domestic affiliate revenues increased 3%. Excluding the impact of digital distribution arrangements, which are affected by the timing of available programming, the domestic affiliate revenue growth rate was in the low-double digits. Worldwide affiliate revenues increased 2%.

Filmed Entertainment revenues declined 20% to $941 million. Worldwide theatrical revenues decreased 15% from the prior year, principally reflecting lower carryover revenues in the quarter compared to carryover contributions from Mission Impossible - Ghost Protocol in the fiscal second quarter of 2012. Revenues from current quarter releases Hansel and Gretel: Witch Hunters and G.I. Joe: Retaliation were higher than revenues from titlesreleased in the prior year quarter. Worldwide home entertainment revenues declined 38%, due to the number and mix of titles released, and lower carryover and catalog revenues.




Operating Income (Loss)



Quarter Ended Six Months Ended

March 31, B/(W) March 31, B/(W)
--------- ----- --------- -----

2013 vs. 2013 vs.

(in millions) 2013 2012 2012 2013 2012 2012
---- ---- ---- ---- ---- ----


Media Networks $873 $893 (2)% $1,903 $2,022 (6)%

Filmed Entertainment 65 115 (43) (74) 84 NM

Corporate expenses (57) (48) (19) (117) (101) (16)

Equity-based compensation (29) (28) (4) (60) (57) (5)

Eliminations (5) - NM (8) - NM
--- --- --- ---



Operating income $847 $932 (9)% $1,644 $1,948 (16)%
==== ==== ====== ======


NM - Not Meaningful


Quarterly operating income decreased 9% to $847 million in the quarter, reflecting lower home entertainment and theatrical revenues and increased Media Networks programming expenses, partially offset by higher Media Networks revenues.

Quarterly adjusted net earnings from continuing operations attributable to Viacom were $481 million, a decline of 10%, principally driven by the decline in operating income. Adjusted diluted earnings per share from continuing operations for the quarter were $0.96, a 2% decline from the prior year's comparable quarter.

Stock Repurchase Program

For the quarter ended March 31, 2013, Viacom repurchased 11.7 million shares under its stock repurchase program, for an aggregate purchase price of $700 million. As of March 31, 2013, Viacom had 487 million shares of common stock outstanding. As of April 30, 2013, Viacom had $3.13 billion remaining in its $10 billion stock repurchase program.

Debt

At March 31, 2013, total debt outstanding, including capital lease obligations, was $8.93 billion, compared with $8.15 billion at September 30, 2012. The Company's cash balances were $1.26 billion at March 31, 2013, an increase from $848 million at September 30, 2012.

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 over 160 countries and territories. With media networks reaching approximately 700 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, Tr3s, Paramount Channel and VIVA. 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. Keep up with Viacom news by following Viacom's blog at blog.viacom.com and Twitter feed at www.twitter.com/Viacom.

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 future 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; competition for audiences and distribution; the impact of piracy; economic conditions generally, and in advertising and retail markets in particular; fluctuations in the Company's results due to the timing, mix and availability of the Company's motion pictures and other programming; 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 but not limited to its 2012 Annual 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. If applicable, reconciliations for any non-GAAP financial information contained in this news release are included in this news release or available on the Company's website at http://www.viacom.com .







VIACOM INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
----------


Quarter Ended Six Months Ended

March 31, March 31,
--------- ---------

(in millions, except per
share amounts) 2013 2012 2013 2012
---- ---- ---- ----


Revenues $3,135 $3,331 $6,449 $7,283

Expenses:

Operating 1,539 1,645 3,302 3,830

Selling, general and
administrative 689 695 1,386 1,384

Depreciation and
amortization 60 59 117 121
--- --- --- ---


Total expenses 2,288 2,399 4,805 5,335


Operating income 847 932 1,644 1,948

Interest expense, net (110) (103) (220) (208)

Equity in net earnings of
investee companies 16 5 40 15

Loss on extinguishment of
debt - (21) - (21)

Other items, net (6) (1) 1 (5)
--- --- --- ---


Earnings from continuing
operations before provision
for income taxes 747 812 1,465 1,729


Provision for income taxes (258) (213) (494) (529)
---- ---- ---- ----


Net earnings from continuing
operations 489 599 971 1,200

Discontinued operations, net
of tax (3) (3) (6) (382)
--- --- --- ----


Net earnings (Viacom and
noncontrolling interests) 486 596 965 818


Net earnings attributable to
noncontrolling interests (8) (11) (17) (21)
--- --- --- ---


Net earnings attributable to
Viacom $478 $585 $948 $797
==== ==== ==== ====


Amounts attributable to
Viacom:

Net earnings from continuing
operations $481 $588 $954 $1,179

Discontinued operations, net
of tax (3) (3) (6) (382)
--- --- --- ----


Net earnings attributable to
Viacom $478 $585 $948 $797
==== ==== ==== ====


Basic earnings per share
attributable to Viacom:

Continuing operations $0.98 $1.09 $1.92 $2.17

Discontinued operations (0.01) - (0.01) (0.71)
----- --- ----- -----

Net earnings $0.97 $1.09 $1.91 $1.46
===== ===== ===== =====


Diluted earnings per share
attributable to Viacom:

Continuing operations $0.96 $1.08 $1.89 $2.14

Discontinued operations - (0.01) (0.01) (0.69)
--- ----- ----- -----

Net earnings $0.96 $1.07 $1.88 $1.45
===== ===== ===== =====


Weighted average number of
common shares outstanding:

Basic 492.0 537.5 496.8 544.1

Diluted 500.3 544.4 504.7 550.8


Dividends declared per share
of Class A and Class B
common stock $0.275 $0.25 $0.55 $0.50







VIACOM INC.

CONSOLIDATED BALANCE SHEETS
---------------------------

March 31, September 30,

2013 2012
---- ----

(in millions, except par
value) (Unaudited)


ASSETS

Current assets:

Cash and cash equivalents $1,260 $848

Receivables, net 2,545 2,533

Inventory, net 755 832

Deferred tax assets, net 47 68

Prepaid and other assets 687 572
--- ---


Total current assets 5,294 4,853

Property and equipment, net 1,023 1,068

Inventory, net 4,033 4,205

Goodwill 11,048 11,045

Intangibles, net 305 328

Other assets 735 751
--- ---


Total assets $22,438 $22,250
======= =======


LIABILITIES AND EQUITY


Current liabilities:

Accounts payable $220 $255

Accrued expenses 855 943

Participants' share and
residuals 839 989

Program rights obligations 589 569

Deferred revenue 248 230

Current portion of debt 18 18

Other liabilities 761 826
--- ---


Total current liabilities 3,530 3,830


Noncurrent portion of debt 8,915 8,131

Participants' share and
residuals 540 533

Program rights obligations 516 642

Deferred tax liabilities,
net 465 5

Other liabilities 1,430 1,491

Redeemable noncontrolling
interest 165 179


Commitments and
contingencies


Viacom stockholders' equity:

Class A Common stock, par
value $0.001, 375.0
authorized; 51.1 and 51.1
outstanding, respectively - -

Class B Common stock, par
value $0.001, 5,000.0
authorized; 435.6 and 455.9
outstanding, respectively - 1

Additional paid-in capital 9,127 8,916

Treasury stock, 292.1 and
267.1 common shares held in
treasury, respectively (12,425) (11,025)

Retained earnings 10,488 9,820

Accumulated other
comprehensive loss (301) (264)
---- ----


Total Viacom stockholders'
equity 6,889 7,448


Noncontrolling interests (12) (9)
--- ---


Total equity 6,877 7,439
----- -----


Total liabilities and equity $22,438 $22,250
======= =======



SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following tables reconcile our results for the six months ended March 31, 2013 and the quarter and six months ended March 31, 2012 to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including the extinguishment of debt and discrete tax benefits. We use 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 our actual operating performance and for planning and forecasting of future periods. We believe that the adjusted results provide relevant and useful information for investors because they clarify our 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 accounting principles generally accepted in the United States of America ("GAAP"), 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. There were no adjustments to our results for the quarter ended March 31, 2013.







(in millions, except per share amounts)


Six Months Ended

March 31, 2013
--------------

Diluted EPS

Pre-tax Earnings Net Earnings from from

Operating from Continuing Continuing Operations Continuing

Income Operations(1) Attributable to Viacom Operations
------ ------------ ---------------------- ----------


Reported results $1,644 $1,465 $954 $1.89

Factors Affecting
Comparability:

Discrete tax
benefits(2) - - (12) (0.02)
--- --- --- -----


Adjusted results $1,644 $1,465 $942 $1.87
====== ====== ==== =====



Quarter Ended

March 31, 2012
--------------

Diluted EPS

Pre-tax Earnings Net Earnings from from

Operating from Continuing Continuing Operations Continuing

Income Operations(1) Attributable to Viacom(3) Operations
------ ------------ ------------------------ ----------


Reported results $932 $812 $588 $1.08

Factors Affecting
Comparability:

Extinguishment of
debt(4) - 21 13 0.02

Discrete tax
benefits(2) - - (66) (0.12)
--- --- --- -----


Adjusted results $932 $833 $535 $0.98
==== ==== ==== =====





Six Months Ended

March 31, 2012
--------------

Diluted EPS

Pre-tax Earnings Net Earnings from from

Operating from Continuing Continuing Operations Continuing

Income Operations(1) Attributable to Viacom(3) Operations
------ ------------ ------------------------ ----------


Reported results $1,948 $1,729 $1,179 $2.14

Factors Affecting
Comparability:

Extinguishment of
debt (4) - 21 13 0.02

Discrete tax
benefits(2) - - (66) (0.12)
--- --- --- -----


Adjusted results $1,948 $1,750 $1,126 $2.04
====== ====== ====== =====




(1) Pre-tax earnings from continuing
operations represent earnings
before provision for income taxes.

(2) Adjusted results for the six months
ended March 31, 2013 exclude $12
million of discrete tax benefits,
principally reflecting the release
of tax reserves with respect to
certain effectively settled tax
positions. Adjusted results for
the quarter and six months ended
March 31, 2012 exclude $66 million
of discrete tax benefits
principally related to certain
operating and capital loss
carryforwards.

(3) The tax impact has been calculated
using the rates applicable to the
adjustments presented.

(4) Adjusted results for the quarter and
six months ended March 31, 2012
exclude a pre-tax debt
extinguishment loss of $21 million
on the redemption of all $750
million of our outstanding 6.850%
Senior Notes due 2055.


SOURCE Viacom Inc.

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Viacom Inc.

CONTACT: Press: Jeremy Zweig, Vice President, Corporate Communications, (212) 846-7503, jeremy.zweig@viacom.com; Mark Jafar, Vice President, Corporate Communications, (212) 846-8961, mark.jafar@viacom.com; Investors: James Bombassei, Senior Vice President, Investor Relations, (212) 258-6377, james.bombassei@viacom.com; Pamela Yi, Director, Investor Relations, (212) 846-7581, pamela.yi@viacom.com

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


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