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Viacom Reports Higher Results For Second Quarter 2012

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NEW YORK, May 3, 2012 /PRNewswire-FirstCall/ --

  • Operating Income Up 23%, Led by Strong Increases in Media Networks and Filmed Entertainment
  • Adjusted Net Earnings Rose 24% to $535 Million
  • Adjusted Diluted Earnings Per Share Up 36% to $0.98

 Fiscal Year 2012 Results






























































Quarter Ended





Six Months Ended






March 31,


B/(W)



March 31,


B/(W)










2012 vs.








2012 vs.


(in millions, except per share amounts)



2012


2011


2011


2012


2011


2011






















Revenues


$

3,331


$

3,267


2

%


$

7,283


$

7,095


3

%


Operating income



932



760


23




1,948



1,800


8



Net earnings from continuing operations attributable to Viacom



588



376


56




1,179



996


18



Adjusted net earnings from continuing operations attributable to Viacom*



535



430


24




1,126



1,050


7



Diluted EPS from continuing operations



1.08



0.63


71




2.14



1.65


30



Adjusted diluted EPS from continuing operations*


$

0.98


$

0.72


36

%


$

2.04


$

1.74


17

%






















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







Viacom Inc. (NASDAQ: VIA, VIAB) today reported a significant increase in profits and higher consolidated revenues for the fiscal second quarter, which ended March 31, 2012.  Revenues in the second quarter increased 2% to $3.33 billion, driven primarily by higher Media Networks affiliate revenues.  Operating income grew 23% to $932 million, reflecting the overall increase in revenues, as well as lower expenses principally related to the Filmed Entertainment segment.  Adjusted net earnings from continuing operations attributable to Viacom rose 24% in the quarter to $535 million and adjusted diluted EPS from continuing operations increased $0.26 per diluted share to $0.98 for the quarter.

(Logo: http://photos.prnewswire.com/prnh/20110811/NY51392LOGO)

Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom continues its strong track record of growth and innovation, creating the world's best entertainment content and operating more efficiently every day.  Throughout the Company, our leaders tirelessly build Viacom's outstanding global properties in order to drive superior value for shareholders."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "In the second quarter, Viacom continued its steady growth and delivered notably higher profitability, driven by relentless investment in our exceptional brands, and an ongoing focus on operational excellence. MTV, Nickelodeon and Comedy Central remain the number one cable destinations for their audiences, and up-and-coming brands such as VH1 and CMT are adding viewers with exciting new original shows.  Driven by our popular programming, Viacom's media networks are also forging new and lucrative opportunities in digital distribution, while continuing to create increasing value with our traditional affiliate partners.  Our international media networks continue to expand in scope and profitability, with this quarter marking the launch of the first of many Paramount Channels around the world.  Paramount Pictures turned in outstanding bottom line results, with a targeted slate of films, a smart strategy that embraces new digital opportunities and an ongoing focus on efficiency.  In the current quarter, Titanic in 3-D became a worldwide hit for the second time, and we look forward to the release of The Dictator, G.I. Joe: Retaliation and Madagascar 3: Europe's Most Wanted later in the quarter.

"Viacom's substantial EPS growth is the result of revenue growth, improved margins, and our $10 billion stock repurchase program, which returned $700 million in equity to shareholders in the quarter.  In the second quarter we also reduced our debt costs, which further strengthened our rock-solid balance sheet."

 


Revenues


























































Quarter Ended





Six Months Ended





March 31,


B/(W)



March 31,


B/(W)









2012 vs.








2012 vs.


(in millions)


2012


2011


2011


2012


2011


2011





















Media Networks

$

2,190


$

2,082


5

%


$

4,638


$

4,462


4

%


Filmed Entertainment


1,169



1,226


(5)




2,727



2,723


-



Eliminations


(28)



(41)


NM




(82)



(90)


NM






















        Total revenues

$

3,331


$

3,267


2

%


$

7,283


$

7,095


3

%





















NM - Not Meaningful


















 

Quarterly revenues increased 2% to $3.33 billion from $3.27 billion in the prior year.  Media Networks revenue growth of 5% was driven by an increase in affiliate fee revenues, partially offset by a decrease in ancillary revenues.  Domestic affiliate revenues increased 15% and worldwide affiliate revenues grew 17% in the quarter, in each case reflecting higher revenues from digital distribution agreements, as well as rate increases.  Domestic advertising revenues increased 1%.  Worldwide advertising revenues were flat at $1.07 billion for the quarter. 

Filmed Entertainment revenues decreased 5%, to $1.17 billion, reflecting lower theatrical and television license fee revenues, partially offset by higher ancillary revenues.  Worldwide theatrical revenues decreased 19% in the quarter, as the mix of films, which generally were less widely distributed, did not match the performance of releases in the same period last year.  The current quarter releases were The Devil Inside, A Thousand Words, and Jeff, Who Lives at Home, and the year prior featured significant hits Rango, No Strings Attached and Justin Bieber: Never Say Never.  Worldwide Filmed Entertainment ancillary revenues increased 41% to $111 million in the quarter, principally driven by higher digital revenues.  Home Entertainment revenues were up slightly.

 


Operating Income


























































Quarter Ended





Six Months Ended





March 31,


B/(W)



March 31,


B/(W)









2012 vs.








2012 vs.


(in millions)


2012


2011


2011


2012


2011


2011





















Media Networks

$

893


$

806


11

%


$

2,022


$

1,857


9

%


Filmed Entertainment


115



39


195




84



107


(21)



Corporate expenses


(48)



(53)


9




(101)



(102)


1



Equity-based compensation


(28)



(33)


15




(57)



(63)


10



Eliminations


-



1


NM




-



1


NM









































Operating income

$

932


$

760


23

%


$

1,948


$

1,800


8

%





















NM - Not Meaningful


















Quarterly operating income increased 23% to $932 million in the quarter.  Media Networks adjusted operating income increased 11% to $893 million, principally reflecting the increase in affiliate revenues.  Adjusted operating income in the Filmed Entertainment segment increased 195% to $115 million, driven principally by lower distribution costs, which more than offset lower revenues.  

Quarterly adjusted net earnings from continuing operations attributable to Viacom rose $105 million to $535 million, a gain of 24% over the same period last year.  The increase is principally due to the growth in operating income across the Company.  Adjusted diluted earnings per share from continuing operations for the quarter were $0.98, a 36% increase from $0.72 in the prior year's comparable quarter, reflecting the increase in adjusted net earnings from continuing operations and a reduction in outstanding shares due to the Company's ongoing stock repurchase program.

Stock Repurchase Program

For the quarter ended March 31, 2012, Viacom repurchased 14.7 million shares under its stock repurchase program, for an aggregate purchase price of $700 million. As of May 2, 2012, Viacom had $5.90 billion remaining in its $10 billion stock repurchase program. 

Debt

At March 31, 2012, total debt outstanding, including capital lease obligations, was $7.78 billion, compared with $7.37 billion at September 30, 2011.  The Company's cash balances were $1.14 billion at March 31, 2012, an increase from $1.02 billion at September 30, 2011.

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, celebrating its 100th year in 2012 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 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; 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; 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 2011 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)


2012


2011


2012


2011














Revenues


$

3,331


$

3,267


$

7,283


$

7,095

Expenses:













       Operating



1,645



1,721



3,830



3,738

       Selling, general and administrative



695



719



1,384



1,419

       Depreciation and amortization



59



67



121



138














       Total expenses



2,399



2,507



5,335



5,295














Operating income



932



760



1,948



1,800

Interest expense, net



(103)



(102)



(208)



(206)

Equity in net earnings of investee companies



5



15



15



39

Loss on extinguishment of debt



(21)



(87)



(21)



(87)

Other items, net



(1)



(7)



(5)



(7)














Earnings from continuing operations before provision for income taxes



812



579



1,729



1,539














Provision for income taxes



(213)



(197)



(529)



(528)














Net earnings from continuing operations



599



382



1,200



1,011

Discontinued operations, net of tax



(3)



-



(382)



(10)














Net earnings (Viacom and noncontrolling interests)



596



382



818



1,001














Net earnings attributable to noncontrolling interests



(11)



(6)



(21)



(15)














Net earnings attributable to Viacom


$

585


$

376


$

797


$

986














Amounts attributable to Viacom:













      Net earnings from continuing operations


$

588


$

376


$

1,179


$

996

      Discontinued operations, net of tax



(3)



-



(382)



(10)














      Net earnings attributable to Viacom


$

585


$

376


$

797


$

986














Basic earnings per share attributable to Viacom:













      Continuing operations


$

1.09


$

0.63


$

2.17


$

1.66

      Discontinued operations


$

-


$

-


$

(0.71)


$

(0.01)

      Net earnings


$

1.09


$

0.63


$

1.46


$

1.65














Diluted earnings per share attributable to Viacom:













      Continuing operations


$

1.08


$

0.63


$

2.14


$

1.65

      Discontinued operations


$

(0.01)


$

-


$

(0.69)


$

(0.02)

      Net earnings


$

1.07


$

0.63


$

1.45


$

1.63














Weighted average number of common shares outstanding:













      Basic



537.5



594.4



544.1



599.0

      Diluted



544.4



601.1



550.8



604.6














Dividends declared per share of Class A and Class B common stock


$

0.25


$

0.15


$

0.50


$

0.30














 


 

VIACOM INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)



March 31,


 

September 30,

(in millions, except par value)


2012


2011








ASSETS







Current assets:







           Cash and cash equivalents


$

1,135


$

1,021

           Receivables, net



2,638



2,732

           Inventory, net



841



828

           Deferred tax assets, net



35



41

           Prepaid and other assets



318



639








                      Total current assets



4,967



5,261

Property and equipment, net



1,048



1,057

Inventory, net



4,213



4,239

Goodwill



11,041



11,064

Intangibles, net



356



392

Deferred tax assets, net



12



-

Other assets



790



788








Total assets


$

22,427


$

22,801








LIABILITIES AND EQUITY














Current liabilities:







           Accounts payable


$

313


$

427

           Accrued expenses



936



1,152

           Participants' share and residuals



1,104



1,158

           Program rights obligations



532



475

           Deferred revenue



215



187

           Current portion of debt



21



23

           Other liabilities



1,042



520








                      Total current liabilities



4,163



3,942








Noncurrent portion of debt



7,757



7,342

Participants' share and residuals



489



487

Program rights obligations



691



771

Deferred tax liabilities, net



-



123

Other liabilities



1,384



1,351

Redeemable noncontrolling interest



151



152








Commitments and contingencies














Viacom stockholders' equity:







           Class A Common stock, par value $0.001, 375.0 authorized; 51.4 and 51.4







                outstanding, respectively



-



-

           Class B Common stock, par value $0.001, 5,000.0 authorized; 478.8 and 506.9







                outstanding, respectively



1



1

           Additional paid-in capital



8,673



8,614

           Treasury stock, 238.1 and 207.2 common shares held in treasury, respectively



(9,625)



(8,225)

           Retained earnings



8,947



8,418

           Accumulated other comprehensive loss



(193)



(164)








                      Total Viacom stockholders' equity



7,803



8,644








Noncontrolling interests



(11)



(11)








Total equity



7,792



8,633








Total liabilities and equity


$

22,427


$

22,801









SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following table reconciles the Company's results for the quarter and six months ended March 31, 2012 and 2011 to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including extinguishment of debt and discrete tax benefits.  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, 2012












Diluted EPS






Pre-tax Earnings



Net Earnings from



from



Operating



from Continuing



Continuing Operations



Continuing



Income



Operations(1)



Attributable to Viacom(2)



Operations













Reported results

$

932


$

 812 


$

 588 


$

1.08

Factors Affecting Comparability:












               Extinguishment of debt (3)


-



21 



 13  



0.02

               Discrete tax benefits (4)


-



-



 (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(2)



Operations













Reported results

$

1,948


$

 1,729 


$

 1,179 


$

2.14

Factors Affecting Comparability:












               Extinguishment of debt(3)


-



21 



 13 



0.02

               Discrete tax benefits(4)


-



-



 (66)



(0.12)













Adjusted results

$

1,948


$

 1,750 


$

 1,126 


$

2.04



























Quarter Ended


March 31, 2011












Diluted EPS






Pre-tax Earnings



Net Earnings from



from



Operating



from Continuing  



Continuing Operations



Continuing



Income



Operations(1)



Attributable to Viacom(2)



Operations













Reported results

$

760


$

 579 


$

 376 


$

0.63

Factors Affecting Comparability:












               Extinguishment of debt(3)


-



87 



54 



0.09













Adjusted results

$

760


$

 666 


$

 430 


$

0.72



























Six Months Ended


March 31, 2011












Diluted EPS






Pre-tax Earnings



Net Earnings from



from



Operating



from Continuing



Continuing Operations



Continuing



Income



Operations(1)



Attributable to Viacom(2)



Operations













Reported results

$

1,800


$

 1,539 


$

 996 


$

1.65

Factors Affecting Comparability:












               Extinguishment of debt (3)


-



87 



54 



0.09













Adjusted results

$

1,800


$

 1,626 


$

 1,050 


$

1.74













 

(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 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.  Adjusted results for the quarter and six months ended March 31, 2011 exclude a pre-tax debt extinguishment loss of $87 million on the repurchase of $582 million of our 6.250% Senior Notes due 2016.

(4)   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.

 

SOURCE Viacom Inc.



RELATED LINKS
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