- Grew Domestic Advertising Revenue 6% for the Quarter and 1%
for the Full Year
- Achieved Domestic Affiliate Revenue Growth of 1% for Both
the Quarter and Full Year
- Returned Paramount to Profitability, with Full Year Adjusted
Operating Income Improvement of $117 Million
- Accelerated Viacom’s Evolution with Continued Growth at
Advanced Marketing Solutions – including Pluto TV – and Studio
Production
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 30 Full Year Ended September 30
2019
2018
B/(W) % FXIMPACT% CONSTANTCURRENCYBASIS %†
2019
2018
B/(W)% FX Impact % CONSTANTCURRENCYBASIS %†
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
FQ4'19 TOTAL B/(W)% DOMESTIC
B/(W)% INT'L B/(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'19 TOTAL B/(W)% DOMESTIC
B/(W)% INT'L B/(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
- Full year adjusted operating income grew by $117 million
YOY.
− For the quarter, adjusted OI increased 42%
to $54 million.
- Full year revenue growth of 1% was principally driven by
licensing and ancillary revenues, which were partially offset by
lower theatrical revenue.
− 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
- During the quarter, Crawl and Dora and the Lost City of Gold
performed well at the box office.
− Crawl generated over $90 million
worldwide.
− Dora and the Lost City of Gold drove over
$116 million worldwide.
- Paramount’s fiscal year 2020 film slate is at 17 films versus
11 in the prior year.
− Looking forward, highly anticipated
releases include A Quiet Place Part II, The Spongebob Movie: Sponge
on the Run and Top Gun: Maverick.
- Paramount Television continues to grow and deliver great
content, with 26 shows ordered to or in production.
− 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.
- Beyond its core business, Paramount expanded and reached new
theme park licensing deals in London, Korea, China and the Middle
East over the course of the fiscal year.
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.
- Driven by the continued success of Advanced Marketing Solutions
(AMS), domestic advertising revenue grew 1% for the full year,
representing its first full year of growth in six years.
− AMS revenue grew 76% for the full year.
− For the quarter, domestic advertising
revenue grew 6%, benefiting from 83% growth in AMS revenue.
- Domestic affiliate revenue increased 1% for the full year and
quarter, driven by higher OTT and studio production revenue and
contractual rate increases, which were partially offset by
subscriber declines.
- Viacom International Media Networks delivered strong revenue
growth, benefiting from SVOD and studio production gains.
− On a constant currency basis, international
revenue grew 2% for the full year and 15% for the quarter. †
- Adjusted OI was impacted by investments in key growth
initiatives, including Pluto TV and the launch of BET+.
Operational Highlights
- Viewing performance in the quarter and year:
− 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.
- Next generation platforms:
− 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.
- Pluto TV continued to scale:
− 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.
- Studio production & live events:
− 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.
- At September 30, 2019, gross debt outstanding was $8.74
billion, a 13% reduction from September 30, 2018. Adjusted gross
debt was $8.09 billion.
- For the full year ended September 30, 2019, net cash provided
by operating activities declined year-over-year to $1.58 billion
and free cash flow declined to $1.38 billion, driven by higher cash
taxes and lower operating income.
- Repaid $1.35 billion of senior notes and debentures, including
$220 million that matured in September.
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/
Press: Justin Dini Senior
Vice President, Corporate Communications (212) 846-2724
justin.dini@viacom.com
Justin Blaber Senior Director, Corporate Communications
(212) 846-3139 justin.blaber@viacom.com
Pranita Sookai Director, Corporate Communications (212)
846-7553 pranita.sookai@viacom.com
Investors: James Bombassei
Senior Vice President, Investor Relations and Treasurer (212)
258-6377 james.bombassei@viacom.com
Jaime Morris Vice President, Investor Relations (212)
846-5237 jaime.morris@viacom.com
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