Viacom Reports Earnings Growth for Fourth Quarter and Full-Year Fiscal 2012
NEW YORK, Nov. 15, 2012 /PRNewswire-FirstCall/ –
2012 Results
Quarter Ended Year Ended
September 30, B/(W) September 30, B/(W)
------------- ----- ------------- -----
2012 vs. 2012 vs.
(in millions, except per share amounts) 2012 2011 2011 2012 2011 2011
---- ---- ---- ---- ---- ----
Revenues $3,363 $4,053 (17)% $13,887 $14,914 (7)%
Operating income 1,050 929 13 3,901 3,710 5
Adjusted operating income* 1,050 1,059 (1) 3,901 3,854 1
Net earnings from continuing operations attributable to Viacom 643 576 12 2,345 2,146 9
Adjusted net earnings from continuing operations attributable to Viacom* 626 614 2 2,264 2,247 1
Diluted EPS from continuing operations 1.24 1.00 24 4.36 3.61 21
Adjusted diluted EPS from continuing operations* $1.21 $1.06 14% $4.21 $3.78 11%
* 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 results for the fiscal 2012 fourth quarter and full year ended September 30, 2012, with bottom line growth and substantial increases in earnings per share.
(Logo: http://photos.prnewswire.com/prnh/20110811/NY51392LOGO)
Revenues in the fourth quarter declined 17% to $3.36 billion, due to lower Filmed Entertainment revenues. Adjusted operating income of $1.05 billion was essentially flat compared to the prior year’s comparable quarter as the revenue decrease was substantially offset by lower expenses. Adjusted net earnings from continuing operations attributable to Viacom in the fourth quarter rose 2% to $626 million, and adjusted diluted earnings per share from continuing operations increased 14% to $1.21.
Revenues for the full year were $13.89 billion, down 7% from the previous year, reflecting higher Media Networks revenues, more than offset by lower Filmed Entertainment revenues. Full-year adjusted operating income grew 1% to $3.9 billion, principally reflecting higher Media Networks revenues. Full-year adjusted net earnings from continuing operations attributable to Viacom rose 1% to $2.26 billion and full-year adjusted diluted earnings per share from continuing operations increased 11% to $4.21 per diluted share, reflecting the impact of the company’s ongoing share repurchase program.
Sumner M. Redstone, Executive Chairman of Viacom, said, “Viacom continues to create many of the world’s best known and most exciting media properties, and delights audiences across the globe with content for every screen imaginable. Our unparalleled creative minds and Philippe’s outstanding management position Viacom perfectly for long-term growth.”
Philippe Dauman, President and Chief Executive Officer of Viacom, said, “Viacom is executing on its goals of continued investment in great content, ongoing operational excellence and ever-increasing returns to shareholders. Our Media Networks drove value in the quarter and the year through steady growth in distribution revenues, and the production of new and engaging programming that connects with valuable audiences. Viacom’s media brands have built unrivaled connections with their fans, creating unique experiences and powerful opportunities for advertisers. We continue to invest in our future across all platforms and geographies. Paramount also continued to achieve solid margin growth in the fourth quarter and full year, and has an exciting pipeline in place with eight films in the first fiscal quarter, including Jack Reacher, DreamWorks Animation’s Rise of the Guardians and the recently released Flight.
“Viacom’s balance sheet remains strong, providing the flexibility to invest in our business while delivering capital directly to shareholders. Our shareholders received $3.4 billion in capital in fiscal 2012 through our share repurchase and dividends, and Viacom is firmly committed to achieving its strong capital return goals.”
Revenues
Quarter Ended Year Ended
September 30, B/(W) September 30, B/(W)
------------- ----- ------------- -----
2012 vs. 2012 vs.
(in millions) 2012 2011 2011 2012 2011 2011
---- ---- ---- ---- ---- ----
Media Networks $2,290 $2,292 - $9,194 $9,145 1%
Filmed Entertainment 1,087 1,793 (39) 4,820 5,923 (19)
Eliminations (14) (32) NM (127) (154) NM
--- --- ---- ----
Total revenues $3,363 $4,053 (17)% $13,887 $14,914 (7)%
====== ====== ======= =======
NM - Not Meaningful
Quarterly revenues were $3.36 billion, a decrease of 17% from $4.05 billion in the prior year. Media Networks revenues were flat at $2.29 billion, principally reflecting increased affiliate fees offset by lower advertising and ancillary revenues. Domestic affiliate revenues increased 12%, driven by rate increases and higher digital revenues. Worldwide affiliate revenues increased 11%. Domestic advertising revenues declined 6% and worldwide advertising revenues decreased 7%. Filmed Entertainment revenues declined 39% to $1.09 billion, principally due to the number and mix of theatrical and home entertainment titles released in the quarter, and reflecting difficult comparisons with the significant impact of Transformers: Dark of the Moon in the fourth quarter of 2011. TV and ancillary revenues in the Filmed Entertainment segment rose by 19% and 21%, respectively.
Full-year revenues were $13.89 billion, a 7% decline compared to the prior fiscal year, driven by lower theatrical and home entertainment revenues in the Filmed Entertainment segment. Media Networks revenues rose $49 million to $9.19 billion, reflecting an 11% increase in affiliate revenue to $3.89 billion that was partially offset by a 5% decrease in advertising revenues to $4.76 billion. Domestic affiliate revenues increased 10% and domestic advertising revenues declined 4%. Filmed Entertainment revenues decreased 19% to $4.82 billion.
Operating Income
Quarter Ended Year Ended
September 30, B/(W) September 30, B/(W)
------------- ----- ------------- -----
2012 vs. 2012 vs.
(in millions) 2012 2011 2011 2012 2011 2011
---- ---- ---- ---- ---- ----
Media Networks $933 $958 (3)% $3,889 $3,848 1%
Filmed Entertainment 195 185 5 325 341 (5)
Corporate expenses (48) (47) (2) (192) (207) 7
Equity-based compensation (30) (35) 14 (122) (128) 5
Eliminations - (2) NM 1 - NM
--- --- --- ---
Adjusted operating income $1,050 $1,059 (1) $3,901 $3,854 1
Restructuring - (130) NM - (144) NM
Operating income $1,050 $929 13% $3,901 $3,710 5%
====== ==== ====== ======
NM - Not Meaningful
Quarterly adjusted operating income was essentially flat at $1.05 billion, due to a 3% decline in the Media Networks segment partially offset by an increase in Filmed Entertainment. Media Networks results reflected a slight increase in expenses driven by higher operating costs associated with increased programming investment, substantially offset by lower selling, general and administrative expenses. The 5% growth at Filmed Entertainment was driven by higher TV and digital revenues and the beneficial impact of previously announced strategic cost savings initiatives.
Full-year adjusted operating income increased $47 million, or 1%, to $3.90 billion from $3.85 billion last year. Media Networks adjusted operating income increased $41 million, principally reflecting the net increase in revenues. Higher operating expenses driven by programming investment were substantially offset by decreases in selling, general and administrative expenses and lower depreciation and amortization. Filmed Entertainment adjusted operating income decreased $16 million, principally reflecting a difficult comparison with the one-time benefit from the sale of certain Marvel distribution rights in the prior year, partially offset by this year’s increased digital revenues.
Quarterly adjusted net earnings from continuing operations attributable to Viacom rose 2% to $626 million. The increase reflects gains from foreign exchange and a lower effective corporate tax rate. Adjusted diluted earnings per share from continuing operations for the quarter were $1.21, a 14% increase from $1.06 in the prior year’s comparable quarter.
Full-year adjusted net earnings from continuing operations attributable to Viacom rose to $2.264 billion, an increase of 1% over the prior fiscal year. The improvement was principally due to growth in adjusted operating income. Full-year adjusted diluted earnings per share from continuing operations increased 11% to $4.21, principally reflecting fewer outstanding shares.
Stock Repurchase Program
For the quarter ended September 30, 2012, Viacom repurchased 14.2 million shares under its stock repurchase program, for an aggregate purchase price of $700 million. During the year ended September 30, 2012, Viacom repurchased 59.9 million shares for an aggregate price of $2.8 billion. As of November 14, 2012, Viacom had $4.420 billion remaining in its $10 billion stock repurchase program.
Debt
At September 30, 2012, total debt outstanding, including capital lease obligations, was $8.15 billion, compared with $7.37 billion at September 30, 2011. The Company’s cash balances decreased to $848 million at September 30, 2012, compared with $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 100(th) 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 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 Year Ended
September 30, September 30,
------------- -------------
(in millions, except per share amounts) 2012 2011 2012 2011
---- ---- ---- ----
Revenues $3,363 $4,053 $13,887 $14,914
Expenses:
Operating 1,564 2,185 6,993 7,868
Selling, general and administrative 691 741 2,757 2,921
Depreciation and amortization 58 68 236 271
Restructuring - 130 - 144
Total expenses 2,313 3,124 9,986 11,204
Operating income 1,050 929 3,901 3,710
Interest expense, net (105) (102) (417) (412)
Equity in net earnings (losses) of investee companies (13) (11) 12 40
Loss on extinguishment of debt - - (21) (87)
Other items, net 7 (9) (5) (6)
--- --- --- ---
Earnings from continuing operations before provision for income taxes 939 807 3,470 3,245
Provision for income taxes (290) (224) (1,085) (1,062)
---- ---- ------ ------
Net earnings from continuing operations 649 583 2,385 2,183
Discontinued operations, net of tax 7 - (364) (10)
--- --- ---- ---
Net earnings (Viacom and noncontrolling interests) 656 583 2,021 2,173
Net (earnings) losses attributable to noncontrolling interests (6) (7) (40) (37)
--- --- --- ---
Net earnings attributable to Viacom $650 $576 $1,981 $2,136
==== ==== ====== ======
Amounts attributable to Viacom:
Net earnings from continuing operations $643 $576 $2,345 $2,146
Discontinued operations, net of tax 7 - (364) (10)
--- --- ---- ---
Net earnings attributable to Viacom $650 $576 $1,981 $2,136
==== ==== ====== ======
Basic earnings per share attributable to Viacom:
Continuing operations $1.26 $1.01 $4.42 $3.65
Discontinued operations $0.01 $ - $(0.69) $(0.01)
----- --- --- ------ ------
Net earnings $1.27 $1.01 $3.73 $3.64
===== ===== ===== =====
Diluted earnings per share attributable to Viacom:
Continuing operations $1.24 $1.00 $4.36 $3.61
Discontinued operations $0.02 $ - $(0.67) $(0.02)
----- --- --- ------ ------
Net earnings $1.26 $1.00 $3.69 $3.59
===== ===== ===== =====
Weighted average number of common shares outstanding:
Basic 511.1 569.2 530.7 587.3
Diluted 517.9 577.0 537.5 594.3
Dividends declared per share of Class A and Class B common stock $0.275 $0.25 $1.05 $0.80
VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
----------
September 30,
(in millions, except par value) 2012 2011
---- ----
ASSETS
Current assets:
Cash and cash equivalents $848 $1,021
Receivables, net 2,533 2,732
Inventory, net 832 828
Deferred tax assets, net 68 41
Prepaid and other assets 572 639
Total current assets 4,853 5,261
Property and equipment, net 1,068 1,057
Inventory, net 4,205 4,239
Goodwill 11,045 11,064
Intangibles, net 328 392
Other assets 751 788
Total assets $22,250 $22,801
======= =======
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $255 $386
Accrued expenses 943 1,193
Participants' share and residuals 989 1,158
Program rights obligations 569 475
Deferred revenue 230 187
Current portion of debt 18 23
Other liabilities 826 520
Total current liabilities 3,830 3,942
Noncurrent portion of debt 8,131 7,342
Participants' share and residuals 533 487
Program rights obligations 642 771
Deferred tax liabilities, net 5 123
Other liabilities 1,491 1,351
Redeemable noncontrolling interest 179 152
Commitments and contingencies
Viacom stockholders' equity:
Class A Common stock, par value $0.001, 375.0 authorized; 51.1 and 51.4
outstanding, respectively - -
Class B Common stock, par value $0.001, 5,000.0 authorized; 455.9 and 506.9
outstanding, respectively 1 1
Additional paid-in capital 8,916 8,614
Treasury stock, 267.1 and 207.2 common shares held in treasury, respectively (11,025) (8,225)
Retained earnings 9,820 8,418
Accumulated other comprehensive loss (264) (164)
---- ----
Total Viacom stockholders' equity 7,448 8,644
Noncontrolling interests (9) (11)
--- ---
Total equity 7,439 8,633
----- -----
Total liabilities and equity $22,250 $22,801
======= =======
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
The following tables reconcile the Company’s results for the quarter and year ended September 30, 2012 and 2011 to adjusted results that exclude the impact of certain items identified as affecting comparability (“Factors Affecting Comparability”), including restructuring charges, 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
September 30, 2012
------------------
Operating Pre-tax Earnings Net Earnings from Continuing Diluted EPS
Income from Continuing Operations Attributable to from
Operations(1) Viacom(2) Continuing
Operations
----------
Reported results $1,050 $939 $643 $1.24
Factors Affecting Comparability:
Discrete tax benefits(5) - - (17) (0.03)
--- --- --- -----
Adjusted results $1,050 $939 $626 $1.21
====== ==== ==== =====
Quarter Ended
September 30, 2011
------------------
Operating Pre-tax Earnings Net Earnings from Continuing Diluted EPS
Income from Continuing Operations Attributable to from
Operations(1) Viacom(2) Continuing
Operations
----------
Reported results $929 $807 $576 $1.00
Factors Affecting Comparability:
Restructuring(4) 130 130 90 0.15
Discrete tax benefits(5) - - (52) (0.09)
--- --- --- -----
Adjusted results $1,059 $937 $614 $1.06
====== ==== ==== =====
Year Ended
September 30, 2012
------------------
Operating Pre-tax Earnings Net Earnings from Continuing Diluted EPS
Income from Continuing Operations Attributable to from
Operations(1) Viacom(2) Continuing
Operations
----------
Reported results $3,901 $3,470 $2,345 $4.36
Factors Affecting Comparability:
Extinguishment of debt(3) - 21 13 0.02
Discrete tax benefits(5) - - (94) (0.17)
--- --- --- -----
Adjusted results $3,901 $3,491 $2,264 $4.21
====== ====== ====== =====
Year Ended
September 30, 2011
------------------
Operating Pre-tax Earnings Net Earnings from Continuing Diluted EPS
Income from Continuing Operations Attributable to from
Operations(1) Viacom(2) Continuing
Operations
----------
Reported results $3,710 $3,245 $2,146 $3.61
Restructuring(4) 144 144 99 0.17
Extinguishment of debt(3) - 87 54 0.09
Discrete tax benefits(5) - - (52) (0.09)
--- --- --- -----
Adjusted results $3,854 $3,476 $2,247 $3.78
====== ====== ====== =====
(1) Pre-tax earnings from continuing operations represent earnings before provision for income taxes.
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(2) The tax impact has been calculated using the rates applicable to the adjustments presented.
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(3) Adjusted results for the year ended September 30, 2012 exclude a pre-tax debt extinguishment loss of $21 million on the
redemption of all $750 million our outstanding 6.850% Senior Note due 2055. Adjusted results for the year ended September 30,
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 ended September 30, 2011 exclude $77 million and $53 million of restructuring charges at the Media
Networks and Filmed Entertainment segments, respectively. Adjusted results for the year ended September 30, 2011 also exclude
$14 million of employee separation costs attributable to the Media Networks segment, which occurred in the third quarter.
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(5) Adjusted results for the quarter and year ended September 30, 2012 exclude $17 million and $94 million of discrete tax benefits,
respectively. The benefits recognized in the quarter are principally derived from operating loss carryforwards. Adjusted results for
the year ended September 30, 2012 also include benefits from capital loss carryforwards, as well as reserve releases resulting
from effectively settled audits. Adjusted results for the quarter and year ended September 30, 2011 exclude $52 million of discrete
tax benefits principally related to reserve releases resulting from effectively settled audits.
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SOURCE Viacom Inc.
