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Viacom Reports Results For Second Quarter 2013

May 1, 2013

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

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 titles released 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.


Source: PR Newswire