2014

Viacom Reports Quarterly Results -- Adjusted Operating Income Climbs 28% on Strong Growth in Media Networks and Filmed Entertainment Segments

-- Adjusted Net Earnings and Adjusted Diluted EPS from Continuing Operations Increased 40% and 39% Respectively in the Quarter

NEW YORK, Aug. 5 /PRNewswire-FirstCall/ -- Viacom Inc. (NYSE: VIA, VIA.B) today reported strong growth in operating income and profit on improving trends in the advertising market, continued strength of its affiliate revenues and lower film and distribution costs for the quarter ended June 30, 2010.

2010 Results







Quarter Ended
June 30,


B/(W)


Six Months Ended
June 30,


B/(W)


(in millions, except per share amounts)


2010


2009


2010 vs. 2009


2010


2009


2010 vs. 2009














Revenues

$

3,301

$

3,299


-

$

6,087

$

6,204


(2%)

Operating income


794


586


35%


1,328


1,028


29%

Adjusted operating income(1)


794


619


28%


1,328


1,061


25%

Net earnings from continuing operations attributable to Viacom


418


277


51%


661


454


46%

Adjusted net earnings from continuing operations attributable to Viacom(1)


418


298


40%


661


475


39%

Diluted EPS from continuing operations


0.68


0.46


48%


1.08


0.75


44%

Adjusted diluted EPS from continuing operations(1)

$

0.68

$

0.49


39%

$

1.08

$

0.78


38%














(1)Adjusted measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.




Consolidated revenues for the quarter were $3.30 billion, essentially flat with the prior year, as growth in affiliate, theatrical and advertising revenues offset lower home entertainment revenues.  Adjusted operating income grew 28% to $794 million versus the prior year, reflecting 14% growth in Media Networks and a $77 million increase in the Filmed Entertainment segment.  Viacom generated $418 million in adjusted net earnings from continuing operations attributable to Viacom, a 40% increase over the second quarter of 2009, and adjusted diluted earnings per share (EPS) of $0.68, up 39% year-over-year.  

Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom's strong bottom-line results reflect our focused strategy, our creative ingenuity and our disciplined financial approach.  We are very pleased with our consistent progress and the solid results that Viacom continues to deliver for shareholders."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Viacom has significantly strengthened its financial position, driving free cash flow and continuing to expand our operating margins, culminating this quarter with the delivery of Viacom's first quarterly cash dividend.  Importantly, this was achieved without sacrificing our investment in programming, which allows us to further build our brands, launch major new hits and create even stronger connections with our audiences.  As a result, we are well positioned to capitalize on improving trends in the advertising market.  We have strong slates of new and returning programming debuting in the coming months on MTV, Nickelodeon, BET, Spike, Comedy Central and other networks, which we continue to deliver to audiences on multiple screens and devices.

"At Paramount Pictures, our film slate strategy focused on franchise opportunities coupled with the studio's continued bottom-line vigilance is generating strong results.  Our tentpole releases, Marvel Studios' Iron Man 2 and DreamWorks Animation's Shrek Forever After, both rank among the top five films in domestic box office for the year."  

Revenues



Revenues

Quarter Ended
June 30,


B/(W)


Six Months Ended
June 30,


B/(W)




(in millions)


2010


2009


2010 vs. 2009


2010


2009


2010 vs. 2009














Media Networks

$

2,091

$

1,966


6%

$

4,029

$

3,831


5%

Filmed Entertainment


1,245


1,380


(10%)


2,131


2,467


(14%)

Eliminations


(35)


(47)


N/M


(73)


(94)


N/M

 Total revenues

$

3,301

$

3,299


--

$

6,087

$

6,204


(2%)














N/M = Not Meaningful




Quarterly revenues of $3.30 billion were on par with the $3.299 billion generated in 2009.  Solid growth in affiliate and advertising revenues resulted in a 6% increase in Media Networks revenues.  Domestic advertising revenues increased 4% as the strong scatter market more than offset the impact of a weaker 2009 upfront.  Worldwide advertising revenues were also up 4%.  Worldwide affiliate revenues grew 11% in the quarter, primarily due to rate growth.  Worldwide ancillary revenues were flat as growth in online content licensing fees and consumer products sales was offset by lower music video game royalties.  Filmed Entertainment revenues were down 10% to $1.25 billion primarily due to lower home entertainment revenues, which declined 43% in the quarter.  This decline reflects lower revenues from third party distribution arrangements as well as the release of three titles in the current quarter versus six titles in the comparable 2009 quarter.  Worldwide theatrical revenues grew 10% in the quarter reflecting the solid performance of Marvel Studios' Iron Man 2 and DreamWorks Animation's Shrek Forever After as well as the solid carryover revenues from the previous quarter's major releases.  Worldwide television license fees decreased 2% primarily due to lower international syndicated television revenues.    

Operating Income




Operating Income (Loss)

Quarter Ended




Six Months Ended




June 30,


B/(W)


June 30,


B/(W)

(in millions)


2010


2009


2010 vs. 2009


2010


2009


2010 vs. 2009














Media Networks

$

789

$

692


14%

$

1,484

$

1,329


12%

Filmed Entertainment


69


(8)


N/M


(14)


(129)


89%

Corporate


(45)


(47)


4%


(96)


(96)


Equity-based compensation


(20)


(19)


(5%)


(46)


(41)


(12%)

Eliminations


1


1


N/M


-


(2)


N/M

Adjusted operating income

$

794

$

619


28%

$

1,328

$

1,061


25%

Restructuring


-


(33)


N/M


-


(33)


N/M

Operating income

$

794

$

586


35%

$

1,328

$

1,028


29%














N/M = Not Meaningful




Quarterly adjusted operating income increased 28% to $794 million compared with $619 million in the second quarter of 2009.  This growth was led by a $97 million, or 14%, increase in Media Networks operating income, which was driven by higher affiliate and advertising revenues as well as lower losses from Rock Band.  This growth was partially offset by the Company's continued investment in programming.  The Filmed Entertainment segment delivered a $69 million profit, which represents a $77 million improvement over the second quarter 2009 result, driven by lower costs due to fewer theatrical and home entertainment releases.  

Quarterly adjusted net earnings from continuing operations attributable to Viacom increased $120 million, or 40%, to $418 million, principally due to higher operating income.  Adjusted diluted earnings per share for the quarter were $0.68, a 39% increase over adjusted diluted EPS of $0.49 in the second quarter of 2009.            

Debt

At June 30, 2010, total debt outstanding, including capital lease obligations, was $6.76 billion, compared with $6.77 billion at December 31, 2009.  The Company's cash balances increased to $677 million at June 30, 2010 compared with $298 million at December 31, 2009.

About Viacom

Viacom, consisting of BET Networks, MTV Networks and Paramount Pictures, is the world's leading entertainment content company.  It engages audiences on television, motion picture and digital platforms through many of the world's best known entertainment brands, including MTV, VH1, CMT, Palladia, Logo, Nickelodeon, Nick at Nite, Nick Jr., TeenNick, Nicktoons, COMEDY CENTRAL, Spike TV, TV Land, BET, CENTRIC, Rock Band, AddictingGames, Atom, Neopets, Shockwave and Paramount Pictures.  Viacom's global reach includes approximately 170 channels and 500 digital media properties in more than 160 countries and territories.

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 games on the various platforms on which they are distributed; economic conditions generally, and in advertising and retail markets in particular; competition for audiences and distribution; the impact of piracy; technological developments and their effect in the Company's markets and on consumer behavior; fluctuations in the Company's results due to the timing, mix and availability of the Company's motion pictures and games; 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 2009 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.

VIACOM INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)










Quarter Ended
June 30,

Six Months Ended
June 30,

(in millions, except per share amounts)

2010

2009

2010

2009






Revenues

$   3,301

$  3,299

$         6,087

$  6,204

Expenses:





Operating

1,742

1,943

3,263

3,691

Selling, general and administrative

687

657

1,340

1,290

Depreciation and amortization

78

80

156

162

Restructuring

33

33






Total expenses

2,507

2,713

4,759

5,176






Operating income

794

586

1,328

1,028

Interest expense, net

(104)

(109)

(217)

(218)

Equity in net losses of investee companies

(24)

(23)

(52)

(56)

Other items, net

(3)

(15)

(13)

(34)






Earnings from continuing operations before provision for income taxes

663

439

1,046

720

Provision for income taxes

(239)

(158)

(377)

(259)






Net earnings from continuing operations

424

281

669

461

Discontinued operations, net of tax

2

4






Net earnings (Viacom and noncontrolling interests)

426

281

673

461

Net earnings attributable to noncontrolling interests

(6)

(4)

(8)

(7)






Net earnings attributable to Viacom

$       420

$  277

$             665

$  454






Amounts attributable to Viacom:





Net earnings from continuing operations

$      418

$  277

$            661

$  454

Discontinued operations, net of tax

2

4






Net earnings attributable to Viacom

$      420

$  277

$            665

$  454






Basic earnings per share attributable to Viacom:





Continuing operations

$     0.69

$  0.46

$           1.09

$  0.75

Discontinued operations

$         —

$  —

$             —

$  —

Net earnings

$     0.69

$  0.46

$           1.09

$  0.75






Diluted earnings per share attributable to Viacom:





Continuing operations

$     0.68

$  0.46

$           1.08

$  0.75

Discontinued operations

$     0.01

$  —

$           0.01

$  —

Net earnings

$     0.69

$  0.46

$           1.09

$  0.75






Weighted average number of common shares outstanding:





Basic

607.9

607.0

607.8

606.9

Diluted

611.3

608.1

610.5

607.6






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

$     0.15

$        —

$          0.15

$            —









VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)





June 30,
2010

December 31,
2009




(in millions, except par value)






ASSETS



Current assets:



Cash and cash equivalents

$             677

$  298

Receivables, net

2,334

2,881

Inventory, net

802

779

Deferred tax assets, net

114

147

Prepaid and other assets

349

325




Total current assets

4,276

4,430

Property and equipment, net

1,091

1,179

Inventory, net

4,087

3,731

Goodwill

11,303

11,401

Intangibles, net

495

570

Other assets

549

589




Total assets

$        21,801

$  21,900




LIABILITIES AND EQUITY



Current liabilities:



Accounts payable

$             181

$  248

Accrued expenses

1,000

1,169

Participants' share and residuals

1,213

1,090

Program rights obligations

406

404

Deferred revenue

333

323

Current portion of debt

230

123

Other liabilities

417

394




Total current liabilities

3,780

3,751

Noncurrent portion of debt

6,528

6,650

Participants' share and residuals

489

739

Program rights obligations

535

523

Deferred tax liabilities, net

89

Other liabilities

1,205

1,303

Redeemable noncontrolling interest

149

168

Commitments and contingencies



Viacom stockholders' equity:



Class A Common stock, par value $0.001, 375.0 authorized; 52.0 and 52.4 outstanding, respectively

Class B Common stock, par value $0.001, 5,000.0 authorized; 556.4 and 555.0 outstanding, respectively

1

1

Additional paid-in capital

8,315

8,287

Treasury stock, 151.5 common shares held in treasury

(5,725)

(5,725)

Retained earnings

6,650

6,106

Accumulated other comprehensive income (loss)

(102)

35




         Total Viacom stockholders' equity

9,139

8,704




Noncontrolling interests

(24)

(27)




Total equity

9,115

8,677




Total liabilities and equity

$        21,801

$  21,900







SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following table reconciles the Company's results for the quarter and six months ended June 30, 2009, to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including restructuring charges.  There were no similar adjustments to our results for the quarter and six months ended June 30, 2010. The Company uses adjusted operating income, adjusted net earnings from continuing operations attributable to Viacom and adjusted diluted EPS from continuing operations, as applicable, among other measures, to evaluate the Company's 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 the Company's management.  Since these are not measures of performance calculated in accordance with 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.



Quarter Ended
June 30, 2009




(in millions, except per share amounts)


Operating Income


Pre-tax Earnings
from Continuing
Operations (1)


Net Earnings from
Continuing Operations
Attributable to
Viacom (2)


Diluted EPS from
Continuing Operations









Reported results

$     586


$     439


$      277


$     0.46

Factors Affecting Comparability:








   Restructuring charges(3)

33


33


21


0.03

Adjusted results

$     619


$     472


$      298


$     0.49














Six Months Ended
June 30, 2009




(in millions, except per share amounts)


Operating Income


Pre-tax Earnings
from Continuing
Operations (1)


Net Earnings from
Continuing Operations
Attributable to
Viacom (2)


Diluted EPS from
Continuing Operations









Reported results

$    1,028


$     720


$     454


$     0.75

Factors Affecting Comparability:








   Restructuring charges(3)

33


33


21


0.03

Adjusted results

$    1,061


$     753


$     475


$     0.78









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

(2) The tax impact of adjustments has been calculated where appropriate using the applicable rates in effect for the
period presented.

(3) For the quarter and six months ended June 30, 2009 adjusted results exclude $33 million of pre-tax severance
expenses attributable to the Media Networks and Filmed Entertainment segments.





SOURCE Viacom Inc.



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