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Viacom Reports Fourth Quarter and Full Year Results

November 14, 2019
1 of 4
Viacom Reports Fourth Quarter and Full Year Results
1 of 4
Viacom Reports Fourth Quarter and Full Year Results

NEW YORK--(BUSINESS WIRE)--Nov 14, 2019--

Viacom Inc. (NASDAQ: VIAB, VIA) today reported financial results for the quarter and full year ended September 30th, 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20191114005222/en/

Domestic advertising revenue grew 6% in the quarter, driven by the continued success of Advanced Marketing Solutions. (Photo: Business Wire)

Statement from Bob Bakish, President & CEO

“Our strong performance in the fourth quarter capped off a pivotal year for Viacom and reflects the successful execution of our strategic priorities to evolve the company for the future. We achieved several important milestones. First, we grew domestic ad sales for the full year, driven by the continued acceleration of Advanced Marketing Solutions. We also grew full year domestic affiliate revenue, driven by the extended reach of Viacom’s distribution across more viewing platforms. And, for the first time in four years, we returned Paramount to full year profitability – a testament to the strength of our strategy and content slate. As we look to the future of a combined ViacomCBS, we’re thrilled with the momentum we have to create one of the world’s preeminent content companies.”

Quarter Ended September 30Full Year Ended September 30

2019

2018

B/(W) %FX
IMPACT
%
CONSTANT
CURRENCY
BASIS %†

2019

2018

B/(W)%FX Impact %CONSTANT
CURRENCY
BASIS %†
GAAP
Revenues

$

3,433

$

3,485

(1

)

%

(1

)

%

-

%

$

12,838

$

12,943

(1

)

%

(2

)

%

1

%
Operating income

530

646

(18

)

2,462

2,572

(4

)

Net earnings from continuing operations attributable to Viacom

303

386

(22

)

1,522

1,688

(10

)

Diluted EPS from continuing operations

0.75

0.96

(22

)

3.77

4.19

(10

)

 
Non-GAAP†
Adjusted operating income

$

572

$

671

(15

)

%

(3

)

%

(12

)

%

$

2,716

$

2,797

(3

)

%

(1

)

%

(2

)

%
Adjusted net earnings from continuing operations attributable to Viacom

321

400

(20

)

(6

)

(14

)

1,641

1,659

(1

)

(3

)

2

Adjusted diluted EPS from continuing operations

0.79

0.99

(20

)

(6

)

(14

)

4.06

4.12

(1

)

(2

)

1

 
† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.

FILMED ENTERTAINMENT

Paramount delivered three straight years of year-over-year adjusted operating income improvement and achieved full year profitability for the first time in four years.

Financial Results

$ millions

 
FQ4'19TOTALB/(W)%DOMESTICB/(W)%INT'LB/(W)%
Revenues

$

851

(14

)

%

$

474

19

%

$

377

(35

)

%
Theatrical

94

(72

)

48

(56

)

46

(80

)

Home Entertainment

153

(3

)

101

(2

)

52

(4

)

Licensing

550

26

284

92

266

(7

)

Ancillary

54

(2

)

41

-

13

(7

)

Expenses

797

16

Adjusted OI

$

54

42

%
FY'19TOTALB/(W)%DOMESTICB/(W)%INT'LB/(W)%
Revenues

$

3,079

1

%

$

1,639

8

%

$

1,440

(6

)

%
Theatrical

567

(18

)

268

(19

)

299

(18

)

Home Entertainment

646

4

425

11

221

(8

)

Licensing

1,606

5

776

18

830

(5

)

Ancillary

260

33

170

20

90

70

Expenses

3,001

3

Adjusted OI

$

78

NM

%
 
All figures are presented on a reported segment basis as impact from foreign exchange is not material.
NM - Not Meaningful

− For the quarter, adjusted OI increased 42% to $54 million.

− Licensing revenue increased by 5% for the full year and 26% for the quarter, driven by growth in TV production.

− Ancillary revenue grew 33% for the full year, driven by higher licensing fees from international theme parks and a new music rights agreement.

− Theatrical revenue declined reflecting the comparison to Mission: Impossible – Fallout in the prior year.

Operational Highlights

Crawl generated over $90 million worldwide.

Dora and the Lost City of Gold drove over $116 million worldwide.

− Looking forward, highly anticipated releases include A Quiet Place Part II, The Spongebob Movie: Sponge on the Run and Top Gun: Maverick.

− Third season of 13 Reasons Why premiered on Netflix in August.

Looking For Alaska premiered on Hulu in October.

− Second season of Tom Clancy’s Jack Ryan premiered on Amazon Prime Video in November.

MEDIA NETWORKS

Viacom Media Networks achieved full year growth in domestic advertising and affiliate revenue, driven by continued acceleration in Advanced Marketing Solutions and advancement in Viacom’s distribution strategy.

Financial Results

$ millions 
FQ4'19

TOTAL

 

B/(W)%

 

FX
Impact
%

 

Constant
Currency
Basis†

 

DOMESTIC

 

B/(W)%

INT'L

B/(W)%

 

FX
Impact
%

 

Constant
Currency
Basis†

Revenues

$

2,614

4

%

(2

)

%

6

%

$

2,028

3

%

$

586

6

%

(9

)

%

15

%
Advertising

1,163

1

(3

)

4

946

6

217

(14

)

(12

)

(2

)

Affiliate

1,331

6

(2

)

8

1,004

1

327

27

(7

)

34

Consumer Products,

120

(1

)

(2

)

1

78

3

42

(7

)

(5

)

(2

)

Recreation & Live Events*
Expenses

2,017

(11

)

2

(13

)

Adjusted OI

$

597

(16

)

%

(3

)

%

(13

)

%
FY'19

TOTAL

 

B/(W)%

 

FX
Impact
%

 

Constant
Currency
Basis†

 

DOMESTIC

 

B/(W)%

INT'L

B/(W)%

 

FX
Impact
%

 

Constant
Currency
Basis†

Revenues

$

9,883

(1

)

%

(2

)

%

1

%

$

7,806

1

%

$

2,077

(8

)

%

(10

)

%

2

%
Advertising

4,652

(2

)

(3

)

1

3,649

1

1,003

(13

)

(13

)

-

Affiliate

4,828

1

(1

)

2

3,897

1

931

1

(7

)

8

Consumer Products,

403

(12

)

(2

)

(10

)

260

(6

)

143

(21

)

(5

)

(16

)

Recreation & Live Events*
Expenses

6,943

(1

)

3

(4

)

Adjusted OI

$

2,940

(6

)

%

(1

)

%

(5

)

%
 
* Beginning Q1 2019, Media Networks revenue components previously reported as Ancillary were renamed to Consumer Products, Recreation and Live Events. Furthermore, certain components previously reported as Ancillary were reclassified to Affiliate. Prior period amounts have been recast to conform to the current presentation.
† Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.

− AMS revenue grew 76% for the full year.

− For the quarter, domestic advertising revenue grew 6%, benefiting from 83% growth in AMS revenue.

− On a constant currency basis, international revenue grew 2% for the full year and 15% for the quarter. †

Operational Highlights

− Domestic Media networks continued to gain audience share with the total portfolio up 2% YOY for the quarter and achieving growth for the full year.

− Viacom owned more top 30 original cable series in the quarter than any other cable family among key demos.

− Internationally, Telefe remained #1 in ratings, while Channel 5, MTV and Paramount Network International grew YOY share in the quarter.

− Licensed South Park streaming rights to HBO Max, demonstrating the appeal and value of Viacom IP.

− Viacom expanded its suite of streaming products, with the launch of BET+.

− Viacom International Media Networks reached several new distribution deals for Viacom’s owned and operated SVOD and mobile apps.

− Monthly active users rose to approximately 20 million domestically, up nearly 70% this calendar year.

− Launched 43 new channels, including 24 Viacom-branded channels in the quarter.

− Pluto Latino now has 22 channels with over 4,000 hours of Spanish and Portuguese programming.

− Media Networks studio production continues to expand, with 17 domestic series ordered to or in production, up from 6 last year.

− Nickelodeon Studios announced a new multi-year output deal to produce original animated films and series for Netflix.

− Driven by Viacom Digital Studios, Viacom reached its highest ever social video consumption, rising to #5 in Tubular’s Media & Entertainment ranking in September, up from 26 two years ago.

− Viacom increased global live event attendance +14% to more than 4 million people for the fiscal year.

BALANCE SHEET AND LIQUIDITY

Viacom continued to strengthen its balance sheet in FY 2019.

About Viacom

Viacom creates entertainment experiences that drive conversation and culture around the world. Through television, film, digital media, live events, merchandise and solutions, our brands connect with diverse, young and young at heart audiences in more than 180 countries.

For more information about Viacom and its businesses, visit www.viacom.com. Viacom may also use social media channels to communicate with its investors and the public about the company, its brands and other matters, and those communications could be deemed to be material information. Investors and others are encouraged to review posts on Viacom’s Twitter feed ( twitter.com/viacom ), Facebook page ( facebook.com/viacom ) and LinkedIn profile ( linkedin.com/company/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 our 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: technological developments, alternative content offerings and their effects in our markets and on consumer behavior; competition for content, audiences, advertising and distribution in a swiftly consolidating industry; the public acceptance of our brands, programs, films and other entertainment content on the various platforms on which they are distributed; the impact on our advertising revenues of declines in linear television viewing, deficiencies in audience measurement and advertising market conditions; the potential for loss of carriage or other reduction in the distribution of our content; evolving cybersecurity and similar risks; the failure, destruction or breach of our critical satellites or facilities; content theft; increased costs for programming, films and other rights; the loss of key talent; domestic and global political, economic and/or regulatory factors affecting our businesses generally; volatility in capital markets or a decrease in our debt ratings; a potential inability to realize the anticipated goals underlying our ongoing investments in new businesses, products, services and technologies; fluctuations in our results due to the timing, mix, number and availability of our films and other programming; potential conflicts of interest arising from our ownership structure with a controlling stockholder; the pending merger may not be completed on anticipated terms and timing; a condition to closing of the pending merger may not be satisfied; the anticipated tax treatment of the pending merger may not be obtained; the potential impact of unforeseen liabilities, future capital expenditures, revenues, costs, expenses, earnings, synergies, economic performance, indebtedness, financial condition and losses on the future prospects, business and management strategies for the management, expansion and growth of the combined business after the consummation of the pending merger; litigation relating to the pending merger against CBS Corporation (“CBS”), Viacom or their respective directors; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the pending merger; any negative effects of the announcement, pendency or consummation of the pending merger on the market price of CBS’ or Viacom’s common stock and on CBS’ or Viacom’s operating results; risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the pending merger; the risks and costs associated with the integration of, and the ability of CBS and Viacom to integrate, the businesses successfully and to achieve anticipated synergies; the risk that disruptions from the pending merger will harm CBS’ or Viacom’s business, including current plans and operations; the ability of CBS or Viacom to retain and hire key personnel and uncertainties arising from leadership changes; legislative, regulatory and economic developments; and other factors described in our news releases and filings with the Securities and Exchange Commission (the “SEC”), including but not limited to our Form 10-K for the fiscal year ended September 30, 2019 and reports on Form 10-Q and Form 8-K. The forward-looking statements included in this news release are made only as of the date of this news release, and we do 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 our website at ir.viacom.com.

Important Information About The Pending Merger Between CBS and Viacom and Where To Find It

In connection with the pending merger between CBS and Viacom, CBS has filed with the SEC a Registration Statement on Form S-4 (No. 333 234238) (the “Registration Statement”) that includes a joint consent solicitation statement of CBS and Viacom and that also constitutes a prospectus of CBS (the “joint consent solicitation statement / prospectus”). The Registration Statement was declared effective by the SEC on October 25, 2019. Viacom and CBS commenced mailing the definitive joint consent solicitation statement / prospectus to Viacom stockholders and CBS stockholders on or about October 28, 2019. This news release is not a substitute for the joint consent solicitation statement / prospectus or Registration Statement or any other document which CBS or Viacom may file with the SEC. INVESTORS AND SECURITY HOLDERS OF CBS AND VIACOM ARE URGED TO READ THE REGISTRATION STATEMENT, WHICH INCLUDES THE JOINT CONSENT SOLICITATION STATEMENT / PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PENDING MERGER AND RELATED MATTERS. Investors and security holders may obtain free copies of the Registration Statement, which includes the joint consent solicitation statement / prospectus, and other documents filed with the SEC by CBS and Viacom through the website maintained by the SEC at www.sec.gov or by contacting the investor relations department of CBS (+1-212-975-4321 or +1-877-227-0787; investorrelations@CBS.com ) or Viacom (+1-212-846-6700 or +1-800-516-4399; investor.relations@Viacom.com ).

No Offer Or Solicitation

This news release is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

VIACOM INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

Quarter Ended
September 30,

 

Year Ended
September 30,

(in millions, except per share amounts)

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Revenues

$

3,433

 

 

$

3,485

 

 

$

12,838

 

 

$

12,943

 

Expenses:

 

 

 

 

 

 

 

Operating

1,914

 

 

1,954

 

 

6,838

 

 

6,879

 

Selling, general and administrative

891

 

 

806

 

 

3,146

 

 

3,054

 

Depreciation and amortization

56

 

 

54

 

 

215

 

 

213

 

Restructuring and other corporate matters

42

 

 

25

 

 

177

 

 

225

 

Total expenses

2,903

 

 

2,839

 

 

10,376

 

 

10,371

 

Operating income

530

 

 

646

 

 

2,462

 

 

2,572

 

Interest expense, net

(125

)

 

(132

)

 

(489

)

 

(560

)

Equity in net earnings of investee companies

9

 

 

4

 

 

10

 

 

9

 

Other items, net

(2

)

 

(8

)

 

24

 

 

(24

)

Earnings from continuing operations before provision for income taxes

412

 

 

510

 

 

2,007

 

 

1,997

 

Provision for income taxes

(93

)

 

(111

)

 

(445

)

 

(269

)

Net earnings from continuing operations

319

 

 

399

 

 

1,562

 

 

1,728

 

Discontinued operations, net of tax

4

 

 

8

 

 

26

 

 

31

 

Net earnings (Viacom and noncontrolling interests)

323

 

 

407

 

 

1,588

 

 

1,759

 

Net earnings attributable to noncontrolling interests

(16

)

 

(13

)

 

(40

)

 

(40

)

Net earnings attributable to Viacom

$

307

 

 

$

394

 

 

$

1,548

 

 

$

1,719

 

Amounts attributable to Viacom:

 

 

 

 

 

 

 

Net earnings from continuing operations

$

303

 

 

$

386

 

 

$

1,522

 

 

$

1,688

 

Discontinued operations, net of tax

4

 

 

8

 

 

26

 

 

31

 

Net earnings attributable to Viacom

$

307

 

 

$

394

 

 

$

1,548

 

 

$

1,719

 

Basic earnings per share attributable to Viacom:

 

 

 

 

 

 

 

Continuing operations

$

0.75

 

 

$

0.96

 

 

$

3.77

 

 

$

4.19

 

Discontinued operations

0.01

 

 

0.02

 

 

0.07

 

 

0.08

 

Net earnings

$

0.76

 

 

$

0.98

 

 

$

3.84

 

 

$

4.27

 

Diluted earnings per share attributable to Viacom:

 

 

 

 

 

 

 

Continuing operations

$

0.75

 

 

$

0.96

 

 

$

3.77

 

 

$

4.19

 

Discontinued operations

0.01

 

 

0.02

 

 

0.06

 

 

0.08

 

Net earnings

$

0.76

 

 

$

0.98

 

 

$

3.83

 

 

$

4.27

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

403.7

 

 

403.1

 

 

403.4

 

 

402.7

 

Diluted

403.9

 

 

403.3

 

 

403.8

 

 

403.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VIACOM INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except par value)

September 30,
2019

 

September 30,
2018

 

 

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

760

 

 

$

1,557

 

Receivables, net

3,299

 

 

3,141

 

Inventory, net

775

 

 

896

 

Prepaid and other assets

460

 

 

482

 

Total current assets

5,294

 

 

6,076

 

Property and equipment, net

922

 

 

919

 

Inventory, net

4,023

 

 

3,848

 

Goodwill

11,857

 

 

11,609

 

Intangibles, net

354

 

 

313

 

Other assets

1,221

 

 

1,018

 

Total assets

$

23,671

 

 

$

23,783

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

482

 

 

$

433

 

Accrued expenses

927

 

 

848

 

Participants’ share and residuals

740

 

 

719

 

Program obligations

667

 

 

662

 

Deferred revenue

438

 

 

398

 

Current portion of debt

98

 

 

567

 

Other liabilities

472

 

 

427

 

Total current liabilities

3,824

 

 

4,054

 

Noncurrent portion of debt

8,640

 

 

9,515

 

Participants’ share and residuals

492

 

 

523

 

Program obligations

297

 

 

498

 

Deferred tax liabilities, net

265

 

 

296

 

Other liabilities

1,392

 

 

1,186

 

Redeemable noncontrolling interest

241

 

 

246

 

Commitments and contingencies

 

 

 

Viacom stockholders’ equity:

 

 

 

Class A common stock, par value $0.001, 375.0 authorized; 49.4 and 49.4 outstanding, respectively

 

 

 

Class B common stock, par value $0.001, 5,000.0 authorized; 354.3 and 353.7 outstanding, respectively

 

 

 

Additional paid-in capital

10,181

 

 

10,145

 

Treasury stock, 392.5 and 393.1 common shares held in treasury, respectively

(20,541

)

 

(20,562

)

Retained earnings

19,887

 

 

18,561

 

Accumulated other comprehensive loss

(1,073

)

 

(737

)

Total Viacom stockholders’ equity

8,454

 

 

7,407

 

Noncontrolling interests

66

 

 

58

 

Total equity

8,520

 

 

7,465

 

Total liabilities and equity

$

23,671

 

 

$

23,783

 

 

 

 

 

VIACOM INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Year Ended
September 30,

(in millions)

2019

 

2018

OPERATING ACTIVITIES

 

 

 

Net earnings (Viacom and noncontrolling interests)

$

1,588

 

 

$

1,759

 

Discontinued operations, net of tax

(26

)

 

(31

)

Net earnings from continuing operations

1,562

 

 

1,728

 

Reconciling items:

 

 

 

Depreciation and amortization

215

 

 

213

 

Feature film and program amortization

4,539

 

 

4,785

 

Equity-based compensation

64

 

 

57

 

Gain on marketable securities

(32

)

 

 

Gain on asset sales

 

 

(16

)

Deferred income taxes

40

 

 

(45

)

Operating assets and liabilities, net of acquisitions:

 

 

 

Receivables

(196

)

 

(250

)

Production and programming

(4,664

)

 

(4,606

)

Accounts payable and other current liabilities

120

 

 

(45

)

Other, net

(72

)

 

1

 

Net cash provided by operating activities

1,576

 

 

1,822

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Acquisitions and investments, net

(424

)

 

(112

)

Capital expenditures

(194

)

 

(178

)

Proceeds received from asset sales

5

 

 

57

 

Grantor trust proceeds

5

 

 

9

 

Net cash used in investing activities

(608

)

 

(224

)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Debt repayments

(1,320

)

 

(1,000

)

Dividends paid

(322

)

 

(322

)

Exercise of stock options

 

 

2

 

Other, net

(102

)

 

(90

)

Net cash used in financing activities

(1,744

)

 

(1,410

)

Effect of exchange rate changes on cash and cash equivalents

(21

)

 

(20

)

Net change in cash and cash equivalents

(797

)

 

168

 

Cash and cash equivalents at beginning of period

1,557

 

 

1,389

 

Cash and cash equivalents at end of period

$

760

 

 

$

1,557

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

We utilize certain financial measures that are not in accordance with accounting principles generally accepted in the United States of America (“GAAP”), including consolidated adjusted operating income, adjusted earnings from continuing operations before provision for income taxes, adjusted provision for income taxes, adjusted net earnings from continuing operations attributable to Viacom and adjusted diluted earnings per share (“EPS”) from continuing operations, to evaluate our actual operating performance and for planning and forecasting of future periods.

We also utilize free cash flow, which is a non-GAAP financial measure, because we believe the use of this measure provides investors with an important perspective on our liquidity, including our ability to service debt and make investments in our business.

In addition, because foreign currency headwinds can be significant and unpredictable and are outside of our control, we provide certain financial information on a constant currency basis, excluding the impact of currency fluctuations, in order to provide a clearer view of our operating performance. This information compares results between periods as if exchange rates had remained constant period-over-period. We calculate this information by converting current-period local currency results using prior-year period average foreign currency exchange rates.

We believe that each of these adjusted measures provides relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies, facilitate period-to-period comparisons of our business performance and allow investors to review performance in the same way as our 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, earnings from continuing operations before provision for income taxes, provision for income taxes, net earnings from continuing operations attributable to Viacom, diluted EPS from continuing operations and net cash provided by operating activities as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

The following tables reconcile our results of operations reported in accordance with GAAP for the quarters and years ended September 30, 2019 and 2018 to adjusted results that exclude the impact of certain items identified as affecting comparability (non-GAAP).

(in millions, except per share amounts)

 

Quarter Ended
September 30, 2019

 

Operating Income

 

Earnings from
Continuing
Operations Before
Provision for
Income Taxes

 

Provision for
Income Taxes (1)

 

Net Earnings from
Continuing
Operations
Attributable to
Viacom

 

Diluted EPS from
Continuing
Operations

Reported results (GAAP)

$

530

 

 

$

412

 

 

$

93

 

 

$

303

 

 

$

0.75

 

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (2)

42

 

 

42

 

 

1

 

 

41

 

 

0.10

 

Gain on marketable securities (3)

 

 

(11

)

 

(3

)

 

(8

)

 

(0.02

)

Discrete tax benefit (4)

 

 

 

 

15

 

 

(15

)

 

(0.04

)

Adjusted results (Non-GAAP)

$

572

 

 

$

443

 

 

$

106

 

 

$

321

 

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

 

Year Ended
September 30, 2019

 

Operating Income

 

Earnings from
Continuing
Operations Before
Provision for
Income Taxes

 

Provision for
Income Taxes (1)

 

Net Earnings from
Continuing
Operations
Attributable to
Viacom

 

Diluted EPS from
Continuing
Operations

Reported results (GAAP)

$

2,462

 

 

$

2,007

 

 

$

445

 

 

$

1,522

 

 

$

3.77

 

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (2)

177

 

 

177

 

 

32

 

 

145

 

 

0.36

 

Programming charges (5)

77

 

 

77

 

 

18

 

 

59

 

 

0.14

 

Gain on extinguishment of debt (6)

 

 

(18

)

 

(4

)

 

(14

)

 

(0.03

)

Gain on marketable securities (3)

 

 

(32

)

 

(8

)

 

(24

)

 

(0.06

)

Discrete tax benefit (4)

 

 

 

 

47

 

 

(47

)

 

(0.12

)

Adjusted results (Non-GAAP)

$

2,716

 

 

$

2,211

 

 

$

530

 

 

$

1,641

 

 

$

4.06

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

 

Quarter Ended
September 30, 2018

 

Operating Income

 

Earnings from
Continuing
Operations Before
Provision for
Income Taxes

 

Provision for
Income Taxes (1)

 

Net Earnings
from Continuing Operations
Attributable to
Viacom

 

Diluted EPS from
Continuing
Operations

Reported results (GAAP)

$

646

 

 

$

510

 

 

$

111

 

 

$

386

 

 

$

0.96

 

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (2)

25

 

 

25

 

 

7

 

 

18

 

 

0.05

 

Discrete tax benefit (4)

 

 

 

 

 

4

 

 

(4

)

 

(0.02

)

Adjusted results (Non-GAAP)

$

671

 

 

$

535

 

 

$

122

 

 

$

400

 

 

$

0.99

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

 

Year Ended
September 30, 2018

 

Operating Income

 

Earnings from
Continuing
Operations Before
Provision for
Income Taxes

 

Provision for
Income Taxes (1)

 

Net Earnings from
Continuing
Operations
Attributable to
Viacom

 

Diluted EPS from
Continuing
Operations

Reported results (GAAP)

$

2,572

 

 

$

1,997

 

 

$

269

 

 

$

1,688

 

 

$

4.19

 

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

Restructuring and other corporate matters (2)

225

 

 

225

 

 

55

 

 

170

 

 

0.42

 

Gain on asset sale (7)

 

 

(16

)

 

 

 

(16

)

 

(0.04

)

Gain on extinguishment of debt (6)

 

 

(25

)

 

(6

)

 

(19

)

 

(0.05

)

Investment impairment (8)

 

 

46

 

 

10

 

 

36

 

 

0.09

 

Discrete tax benefit (4)

 

 

 

 

200

 

 

(200

)

 

(0.49

)

Adjusted results (Non-GAAP)

$

2,797

 

 

$

2,227

 

 

$

528

 

 

$

1,659

 

 

$

4.12

 

 

 

 

 

 

 

 

 

 

 

(1) The tax impact has been calculated by applying the tax rates applicable to the adjustments presented.

(2) In the quarter and year ended September 30, 2019, we recognized restructuring charges of $22 million and $114 million, respectively. In addition, we recognized $20 million and $63 million, respectively, in connection with other corporate matters. In the quarter, these consist of merger-related costs. In the year, the costs consist of merger-related costs of $20 million, restructuring-related costs of $3 million and $40 million in connection with the settlement of a commercial dispute.

We recognized restructuring costs of $13 million and $176 million in the quarter and year ended September 30, 2018, respectively. We also recognized $12 million and $49 million, respectively, of restructuring-related costs comprised primarily of third-party professional services associated with our cost transformation initiatives.

(3) Pursuant to our adoption of Accounting Standards Update 2016-01 - Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which requires the changes in fair value measurement of marketable securities to be recognized in the Consolidated Statements of Earnings, we recorded a non-operating gain on marketable securities of $11 million and $32 million in the quarter and year ended September 30, 2019, respectively, included within Other items, net in the Consolidated Statements of Earnings.

(4) The net discrete tax benefit in the quarter ended September 30, 2019 is associated with reconciling the recently filed tax returns to prior year estimates and the net discrete tax benefit in the year was principally related to the tax benefit triggered by the bankruptcy of an investee.

The net discrete tax benefit in the quarter ended September 30, 2018 was principally related to the recognition of certain loss carryforwards. In addition to the items in the quarter, the net discrete tax benefit in the year ended September 30, 2018 was principally related to tax reform, as well as a tax accounting method change granted by the Internal Revenue Service.

(5) In the year ended September 30, 2019, we recognized $77 million of programming charges associated with continuing initiatives primarily related to management changes and reorganization at Media Networks. The programming charges resulted from decisions by management newly in place, as part of our 2018 restructuring activities, to cease the use of certain programming, and are included within Operating expenses in the Consolidated Statement of Earnings.

(6) In the years ended September 30, 2019 and 2018, we redeemed senior notes and debentures prior to their maturity of $1.128 billion and $1.039 billion, respectively. As a result of these transactions, we recognized pre-tax extinguishment gains of $18 million and $25 million, respectively, in the Consolidated Statements of Earnings.

(7) We completed the sale of a 1% equity interest in Viacom18 to our joint venture partner for $20 million, resulting in a gain of $16 million in the year ended September 30, 2018, included within Other items, net in the Consolidated Statements of Earnings.

(8) We recognized a $46 million impairment loss in the year ended September 30, 2018, included within Other items, net in the Consolidated Statements of Earnings, in connection with the write off of certain cost method investments.

The following table reconciles our net cash provided by operating activities (GAAP) for the Year Ended months ended September 30, 2019 and 2018 to free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus capital expenditures.

Reconciliation of net cash provided by operating activities
to free cash flow
(in millions)

Quarter Ended
September 30,

 

Better/
(Worse)

 

Year Ended
September 30,

 

Better/
(Worse)

2019

 

2018

 

$

 

2019

 

2018

 

$

Net cash provided by operating activities (GAAP)

$

473

 

 

$

825

 

 

$

(352

)

 

$

1,576

 

 

$

1,822

 

 

$

(246

)

Capital expenditures

(75

)

 

(76

)

 

1

 

 

(194

)

 

(178

)

 

(16

)

Free cash flow (Non-GAAP)

$

398

 

 

$

749

 

 

$

(351

)

 

$

1,382

 

 

$

1,644

 

 

$

(262

)

 

 

 

 

 

 

 

 

 

 

 

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191114005222/en/

CONTACT: Press:

Justin Dini

Senior Vice President, Corporate Communications

(212) 846-2724

justin.dini@viacom.comJustin Blaber

Senior Director, Corporate Communications

(212) 846-3139

justin.blaber@viacom.comPranita Sookai

Director, Corporate Communications

(212) 846-7553

pranita.sookai@viacom.comInvestors:

James Bombassei

Senior Vice President, Investor Relations and Treasurer

(212) 258-6377

james.bombassei@viacom.comJaime Morris

Vice President, Investor Relations

(212) 846-5237

jaime.morris@viacom.com

KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: ENTERTAINMENT ADVERTISING ONLINE COMMUNICATIONS EVENTS/CONCERTS GENERAL ENTERTAINMENT TV AND RADIO FILM & MOTION PICTURES LICENSING (ENTERTAINMENT)

SOURCE: Viacom Inc.

Copyright Business Wire 2019.

PUB: 11/14/2019 07:00 AM/DISC: 11/14/2019 07:01 AM

http://www.businesswire.com/news/home/20191114005222/en