- Adjusted Operating Income Grew 24% in the Fourth Quarter with
Gains in Filmed Entertainment and Media Networks - Adjusted Net
Earnings from Continuing Operations and Adjusted Diluted EPS from
Continuing Operations Both Rose 43% in Fourth Quarter NEW YORK,
Feb. 11 /PRNewswire-FirstCall/ -- Viacom Inc. (NYSE:VIANYSE:VIA.B)
today reported strong double-digit growth in its fourth quarter
2009 adjusted operating income, adjusted net earnings from
continuing operations and adjusted diluted earnings per share
(EPS), reflecting an outstanding performance in its Filmed
Entertainment segment and solid growth in Media Networks. 2009
Results Quarter Ended Year Ended December 31, B/(W) December 31,
B/(W) ------------- ----- ------------ ----- (in millions, except
2009 vs. 2009 vs. per share amounts) 2009 2008 2008 2009 2008 2008
---- ---- -------- ---- ---- -------- Revenues $4,098 4,243 (3%)
$13,619 14,625 (7%) Operating income 1,092 475 N/M 2,904 2,523 15%
Adjusted operating income(1) 1,152 929 24% 2,997 2,977 1% Net
earnings from continuing operations attributable to Viacom 694 172
N/M 1,591 1,233 29% Adjusted net earnings from continuing
operations attributable to Viacom(1) 663 464 43% 1,559 1,491 5%
Diluted EPS from continuing Operations 1.14 0.28 N/M 2.62 1.97 33%
Adjusted diluted EPS from continuing operations(1) $1.09 0.76 43%
$2.56 2.38 8% N/M = Not Meaningful (1) Adjusted measures referenced
in this release are detailed in the Supplemental Disclosures at the
end of this release. Revenues in the fourth quarter ended December
31, 2009 declined 3% to $4.1 billion with lower results in Media
Networks and Filmed Entertainment. Adjusted operating income of
$1.15 billion was up 24% over the fourth quarter 2008 results,
reflecting a significant increase in profitability in the Filmed
Entertainment segment and cost containment measures across the
Company. Adjusted net earnings from continuing operations
attributable to Viacom increased 43% to $663 million and adjusted
diluted EPS from continuing operations were $1.09, up 43% over the
fourth quarter 2008 results. Revenues for the full year 2009
decreased 7% to $13.62 billion as growth in affiliate revenues was
offset by decreases in feature film, ancillary and advertising
revenues. The 1% gain in adjusted operating income of $3.0 billion
for the year was driven by a $148 million increase in the Filmed
Entertainment segment. Adjusted net earnings from continuing
operations attributable to Viacom grew 5% to $1.56 billion and
adjusted diluted earnings per share were $2.56, an 8% increase over
the prior year's adjusted results of $2.38 per share. Sumner M.
Redstone, Executive Chairman of Viacom, said, "Viacom's results
over the past year have been extraordinary and illustrate the value
of a well planned strategy and execution. Despite the economic
challenges, we performed extremely well across our media networks
and motion picture operations. As a result of the quality of our
operations and wealth of creative talent throughout the Company, we
are well positioned for success not only today but long into the
future." Philippe Dauman, President and Chief Executive Officer of
Viacom, said, "Our disciplined and content-focused strategy helped
Viacom close out the year with a stronger balance sheet, a
streamlined cost structure and a reinvigorated creative mandate
across the company. Despite a global recession that impacted all
aspects of our business, the multiple revenue streams of our cable
networks helped temper the impact of an industry-wide downturn in
advertising and retail, and also allowed us to continue to invest
in new programming to build our brands. The resurgence of BET and
MTV's recent ratings gains are strong examples of the relevance our
brands have with their target audiences. "Paramount Pictures
significantly boosted its profitability in 2009 as the studio's
strategy of producing a smaller slate of films, anchored by
franchises, began to pick up momentum. We also were pleased to see
renewed consumer demand for our new DVD and Blu-ray releases in the
fourth quarter. Looking ahead, Paramount has built a very strong
slate for 2010, kicking off next week with the release of Martin
Scorsese's Shutter Island." Revenues Revenues Quarter Ended Year
Ended December 31, B/(W) December 31, B/(W) ------------- -----
------------ ----- 2009 vs. 2009 vs. (in millions) 2009 2008 2008
2009 2008 2008 ---- ---- -------- ---- ---- -------- Media Networks
$2,333 $2,475 (6%) $8,288 $8,756 (5%) Filmed Entertainment 1,791
1,807 (1%) 5,482 6,033 (9%) Eliminations (26) (39) N/M (151) (164)
N/M --- --- ---- ---- Total revenues $4,098 $4,243 (3%) $13,619
$14,625 (7%) ------ ------ ------- ------- N/M = Not Meaningful
Fourth Quarter 2009 revenues of $4.1 billion declined 3% from $4.24
billion in fourth quarter 2008. Media Networks revenues of $2.33
billion, a 6% decrease from the prior year's fourth quarter
results, reflect a 37% decline in ancillary revenues to $290
million. This was driven primarily by lower sales of Rock Band
bundles. Worldwide advertising revenues declined 3% in the quarter
to $1.30 billion with domestic advertising revenues down 4%.
Worldwide affiliate revenues grew 11% to $741 million. Filmed
Entertainment revenues declined 1% to $1.79 billion primarily due
to a 73% year-over-year decrease in theatrical revenues to $93
million, which reflects a difficult comparison with the number and
mix of films released in the fourth quarter of last year. Worldwide
home entertainment revenues of $1.15 billion represent a 12%
increase over the prior year's fourth quarter results and reflect
the strong performance of the DVD and Blu-ray releases of
Transformers 2: Revenge of the Fallen, Star Trek and G.I. Joe: The
Rise of Cobra. Worldwide television license fees grew 27% to $445
million. Full Year 2009 revenues of $13.62 billion declined 7% from
$14.63 billion in 2008. Media Networks revenues were down 5% to
$8.29 billion due to lower ancillary and advertising revenues,
which were partially offset by growth in affiliate fees. Worldwide
affiliate revenues increased 11% to $2.90 billion in 2009. Lower
year-over-year sales of Rock Band contributed to a 31% decline in
worldwide ancillary revenues to $982 million. Worldwide advertising
sales of $4.41 billion represent a 7% decrease versus the prior
year, including a 6% decline in domestic advertising revenues,
which reflects softness in the global advertising market. Filmed
Entertainment revenues declined 9% to $5.48 billion for the year
primarily due to lower theatrical and home entertainment revenues,
which were partially offset by year-over-year growth in television
revenues. A smaller slate of films was the primary driver of the
23% decrease in worldwide theatrical revenues of $1.32 billion.
Worldwide home entertainment revenues were down 8% to $2.50 billion
for the year reflecting fewer releases as well as continuing
softness in the market. Higher pay TV fees helped fuel a 4%
increase in television license fees to $1.38 billion. Operating
Income Operating Income (Loss) Quarter Ended Year Ended December
31, B/(W) December 31, B/(W) ------------- ----- ------------ -----
2009 vs. 2009 vs. (in millions) 2009 2008 2008 2009 2008 2008 ----
---- -------- ---- ---- -------- Media Networks $921 $898 3% $3,010
$3,118 (3%) Filmed Entertainment 298 84 N/M 236 88 N/M Corporate
(67) (55) (22%) (248) (231) (7%) Eliminations - 2 N/M (1) 2 N/M ---
--- --- --- Total adjusted operating income $1,152 $929 24% $2,997
$2,977 1% ------ ---- ------ ------ Adjustments(1) (60) (454) N/M
(93) (454) N/M --- ---- --- ---- Total operating income $1,092 $475
N/M $2,904 $2,523 15% ------ ---- ------ ------ N/M = Not
Meaningful (1) Adjustments are detailed in the Supplemental
Disclosures at the end of this release. Fourth Quarter 2009
adjusted operating income increased 24% to $1.15 billion compared
with $929 million in the prior year's fourth quarter. This result
was driven by a $214 million increase in profitability in the
Filmed Entertainment segment, reflecting a higher year-over-year
contribution from the fourth quarter domestic DVD and Blu-ray
releases, the strong theatrical performance of Paranormal Activity
and ongoing cost-saving initiatives. Media Networks operating
income grew 3% to $921 million driven by higher affiliate revenues.
Full Year 2009 adjusted operating income grew 1% to $3.0 billion
versus $2.98 billion in 2008, reflecting a significant increase in
profitability in the Filmed Entertainment segment primarily fueled
by the success of Transformers: Revenge of the Fallen, Star Trek
and Paranormal Activity as well as the benefit of restructuring and
other cost-containment initiatives. Filmed Entertainment operating
income grew from $88 million in 2008 to $236 million in 2009. Media
Networks operating income declined 3% to $3.01 billion as a result
of lower advertising revenues and Rock Band losses. Fourth Quarter
2009 adjusted net earnings from continuing operations attributable
to Viacom increased 43% to $663 million as compared with $464
million in the prior year's fourth quarter. This growth reflects
higher operating income, a favorable impact from foreign exchange
fluctuations and lower interest expense. Fourth quarter adjusted
diluted net EPS from continuing operations were $1.09, an increase
of 43% over the fourth quarter 2008 adjusted diluted net EPS from
continuing operations of $0.76. Full Year 2009 adjusted net
earnings from continuing operations attributable to Viacom
increased 5% to $1.56 billion versus $1.49 billion, principally due
to higher operating income. Full year 2009 adjusted diluted net EPS
from continuing operations were $2.56 compared with $2.38 in 2008.
Debt At December 31, 2009, total debt outstanding, including
capital leases, decreased to $6.77 billion compared with $8.0
billion at December 31, 2008. In addition, the Company paid down
the entire balance of its asset securitization program, which was
$950 million at December 31, 2008. The Company's cash balances
decreased to $298 million at December 31, 2009 compared with $792
million at December 31, 2008. About Viacom Viacom, consisting of
BET Networks, MTV Networks and Paramount Pictures, is the world's
leading entertainment content company. It engages audiences on
television, motion picture and digital platforms through many of
the world's best known entertainment brands, including MTV, VH1,
CMT, Logo, Nickelodeon, Nick at Nite, Nick Jr., COMEDY CENTRAL,
Spike TV, TV Land, BET, Rock Band, AddictingGames, Atom, Neopets,
Shockwave and Paramount Pictures. Viacom's global reach includes
approximately 170 channels and 430 digital media properties in more
than 160 countries and territories. For more information about
Viacom and its businesses, visit http://www.viacom.com/. Cautionary
Statement Concerning Forward-Looking Statements This news release
contains both historical and forward-looking statements. All
statements that are not statements of historical fact are, or may
be deemed to be, forward-looking statements. Forward-looking
statements reflect the Company's current expectations concerning
future results, objectives, plans and goals, and involve known and
unknown risks, uncertainties and other factors that are difficult
to predict and which may cause actual results, performance or
achievements to differ. These risks, uncertainties and other
factors include, among others: the public acceptance of the
Company's programs, motion pictures and games on the various
platforms on which they are distributed; economic conditions
generally, and in advertising and retail markets in particular;
competition for audiences and distribution; the impact of piracy;
technological developments and their effect in the Company's
markets and on consumer behavior; fluctuations in the Company's
results due to the timing, mix and availability of the Company's
motion pictures and games; changes in the Federal communications
laws and regulations; other domestic and global economic, business,
competitive and/or regulatory factors affecting the Company's
businesses generally; and other factors described in the Company's
news releases and filings with the Securities and Exchange
Commission, including its 2009 Annual Report on Form 10-K and
reports on Form 10-Q and Form 8-K. The forward-looking statements
included in this document are made only as of the date of this
document, and the Company does not have any obligation to publicly
update any forward-looking statements to reflect subsequent events
or circumstances. VIACOM INC. CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) Quarter Ended Year Ended December 31, December 31, (in
millions, except --------------- ----------------- earnings per
share amounts) 2009 2008 2009 2008 ---- ---- ---- ---- Revenues
$4,098 $4,243 $13,619 $14,625 Expenses: Operating 2,106 2,795 7,587
8,787 Selling, general and administrative 751 849 2,737 2,910
Depreciation and amortization 149 124 391 405 --- --- --- --- Total
expenses 3,006 3,768 10,715 12,102 Operating income 1,092 475 2,904
2,523 Interest expense, net (105) (119) (430) (482) Equity in net
losses of investee companies (20) (26) (77) (74) Loss on
extinguishment of debt - - (84) - Other items, net 10 (74) (37)
(112) --- --- --- ---- Earnings from continuing operations before
provision for income taxes 977 256 2,276 1,855 Provision for income
taxes (316) (79) (708) (605) ---- --- ---- ---- Net earnings from
continuing operations 661 177 1,568 1,250 Discontinued operations,
net of tax - 1 20 18 --- --- --- --- Net earnings (Viacom and
noncontrolling interests) 661 178 1,588 1,268 Net losses (earnings)
attributable to noncontrolling interest 33 (5) 23 (17) --- --- ---
--- Net earnings attributable to Viacom $694 $173 $1,611 $1,251
==== ==== ====== ====== Amounts attributable to Viacom: Net
earnings from continuing operations $694 $172 $1,591 $1,233
Discontinued operations, net of tax - 1 20 18 --- --- --- --- Net
earnings attributable to Viacom $694 $173 $1,611 $1,251 ==== ====
====== ====== Basic earnings per share attributable to Viacom:
Continuing operations $1.14 $0.28 $2.62 $1.97 Discontinued
operations $- $- $0.03 $0.03 Net earnings per share of Viacom $1.14
$0.28 $2.65 $2.00 Diluted earnings per share attributable to
Viacom: Continuing operations $1.14 $0.28 $2.62 $1.97 Discontinued
operations $- $- $0.03 $0.03 Net earnings per share of Viacom $1.14
$0.28 $2.65 $2.00 Weighted average number of common shares
outstanding: Basic 607.4 611.2 607.1 624.7 Diluted 609.4 611.5
608.3 625.4 VIACOM INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31, December 31, (in millions, except par value) 2009 2008
------------ ------------ ASSETS Current assets: Cash and cash
equivalents $298 $792 Receivables, net (including retained
interests in securitizations) 2,881 2,271 Inventory, net 779 881
Deferred tax assets, net 147 203 Prepaid and other assets 325 355
--- --- Total current assets 4,430 4,502 Property and equipment,
net 1,179 1,145 Inventory, net 3,731 4,133 Goodwill 11,401 11,470
Intangibles, net 570 674 Other assets 589 563 --- --- Total assets
$21,900 $22,487 ======= ======= LIABILITIES AND EQUITY Current
liabilities: Accounts payable $248 $574 Accrued expenses 1,169
1,304 Participants' share and residuals 1,090 1,537 Program rights
obligations 404 384 Deferred revenue 323 442 Current portion of
debt 123 105 Other liabilities 394 496 --- --- Total current
liabilities 3,751 4,842 Noncurrent portion of debt 6,650 7,897
Participants' share and residuals 739 488 Program rights
obligations 523 621 Deferred tax liabilities, net 89 12 Other
liabilities 1,303 1,556 Redeemable noncontrolling interest 168 148
Commitments and contingencies Viacom stockholders' equity: Class A
Common stock, par value $0.001, 375.0 authorized; 52.4 and 57.4
outstanding, respectively - - Class B Common stock, par value
$0.001, 5,000.0 authorized; 555.0 and 549.4 outstanding,
respectively 1 1 Additional paid-in capital 8,287 8,186 Treasury
stock, 151.5 common shares held in treasury (5,725) (5,725)
Retained earnings 6,106 4,496 Accumulated other comprehensive
income (loss) 35 (49) -- -- Total Viacom stockholders' equity 8,704
6,909 Noncontrolling interests (27) 14 --- -- Total equity 8,677
6,923 ----- ----- Total liabilities and equity $21,900 $22,487
======= ======= VIACOM INC. SUPPLEMENTAL DISCLOSURES REGARDING
NON-GAAP FINANCIAL INFORMATION The following tables reconcile the
Company's results for the quarter and years ended December 31, 2009
and 2008, respectively, to adjusted results that exclude the impact
of restructuring and other charges, impairment charges, early
extinguishment of debt and net discrete tax benefits. The Company
uses adjusted operating income, adjusted net earnings from
continuing operations attributable to Viacom and adjusted diluted
EPS as applicable, among other measures, to evaluate the Company's
operating performance and for planning and forecasting of future
periods. The Company believes that the adjusted results provide
relevant and useful information for investors because they clarify
the Company's actual operating performance, make it easier to
compare Viacom's results with those of other companies and allow
investors to review performance in the same way as the Company's
management. Since adjusted operating income, adjusted net earnings
from continuing operations attributable to Viacom and adjusted
diluted EPS are not measures of performance calculated in
accordance with GAAP, they should not be considered in isolation of
or as a substitute for operating income, net earnings from
continuing operations attributable to Viacom and diluted EPS as
indicators of operating performance and they may not be comparable
to similarly titled measures employed by other companies.
Consolidated Results (in millions, except Quarter Ended per share
amounts) December 31, 2009
------------------------------------------------- Net Earnings
Pre-tax from Earnings Continuing from Operations Continuing
Attributable Operating Operations to Viacom Income (1) (2) Diluted
EPS --------- ---------- ------------ ----------- Reported results
$1,092 $977 $694 $1.14 Adjustments: Asset Impairment(3) 60 60 19
0.03 Discrete tax benefits(5) - - (50) (0.08) --- --- --- -----
Adjusted results $1,152 $1,037 $663 $1.09 ------ ------ ---- -----
(in millions, except Year Ended per share amounts) December 31,
2009 ------------------------------------------------ Net Earnings
Pre-tax from Earnings Continuing from Operations Continuing
Attributable Operating Operations to Viacom Income (1) (2) Diluted
EPS --------- ---------- ------------ ----------- Reported results
$2,904 $2,276 $1,591 $2.62 Adjustments: Restructuring and other
charges(3) 93 93 40 0.06 Extinguishment of debt(4) - 84 52 0.09
Discrete tax benefits(5) - - (124) (0.21) --- --- ---- -----
Adjusted results $2,997 $2,453 $1,559 $2.56 ------ ------ ------
----- VIACOM INC. SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP
FINANCIAL INFORMATION Consolidated Results, con't. (in millions,
except Quarter Ended per share amounts) December 31, 2008
------------------------------------------------ Net Earnings
Pre-tax from Earnings Continuing from Operations Continuing
Attributable Operating Operations to Viacom Income (1) (2) Diluted
EPS --------- ---------- ------------ ----------- Reported results
$475 $256 $172 $0.28 Adjustments: Discrete tax benefits(5) - - (9)
(0.01) Restructuring and other charges(6) 454 454 286 0.47
Impairment of investments(7) - 15 15 0.02 --- --- --- ---- Adjusted
results $929 $725 $464 $0.76 ---- ---- ---- ----- (in millions,
except Year Ended per share amounts) December 31, 2008
------------------------------------------------ Net Earnings
Pre-tax from Earnings Continuing from Operations Continuing
Attributable Operating Operations to Viacom Income (1) (2) Diluted
EPS --------- ---------- ------------ ----------- Reported results
$2,523 $1,855 $1,233 $1.97 Adjustments: Discrete tax benefits(5) -
- (55) (0.09) Restructuring and other charges(6) 454 454 286 0.46
Impairment of investments(7) - 27 27 0.04 --- --- --- ---- Adjusted
results $2,977 $2,336 $1,491 $2.38 ------ ------ ------ ----- (1)
Pre-tax earnings from continuing operations represent earnings
before provision for income taxes. (2) The tax impact of
adjustments has been calculated where appropriate using the
applicable rates in effect for the period presented. (3) For the
quarter ended December 31 2009, adjusted results exclude a $60
million non-cash impairment charge related to certain broadcast
licenses held by a 32%-owned consolidated entity in the Media
Networks segment. For the year ended December 31, 2009, adjusted
results also exclude $33 million of severance charges attributable
to the Media Networks and Filmed Entertainment segments, which
occurred in the second quarter of 2009. (4) For the year ended
December 31, 2009, adjusted results exclude an $84 million pre-tax
loss on the early extinguishment of a portion of the Company's
5.75% Senior Notes due 2011. (5) 2009 adjusted results exclude $50
million and $124 million of net discrete tax benefits for the
quarter and year ended December 31, 2009, respectively. 2008
adjusted results exclude $9 million and $55 million of net discrete
tax benefits for the quarter and year ended December 31, 2008,
respectively. The majority of the discrete tax benefits were the
result of effectively settled audits. (6) 2008 adjusted results
exclude $454 million for the quarter and year ended December 31,
2008 of restructuring and other charges across all segments. The
charge principally relates to programming abandonments, severance,
the write-down of film inventory and other charges. (7) 2008
adjusted results exclude $15 million and $27 million, respectively,
of pre-tax non-cash investment impairment charges for the quarter
and year ended December 31, 2008. VIACOM INC. SUPPLEMENTAL
DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION Segment
Operating Income (Loss) Quarter Ended (in millions) December 31,
2009 ---------------------------------------------------------
Total Media Filmed Operating Networks Entertainment Corporate
Eliminations Income -------- ------------- --------- ------------
--------- Reported results $861 $298 $(67) $- $1,092 Adjustments:
Asset Impairment(1) 60 - - - 60 --- --- --- --- --- Adjusted
results $921 $298 $(67) $- $1,152 ---- ---- ---- --- ------ Year
Ended (in millions) December 31, 2009
--------------------------------------------------------- Total
Media Filmed Operating Networks Entertainment Corporate
Eliminations Income -------- ------------- --------- ------------
--------- Reported results $2,934 $219 $(248) $(1) $2,904
Adjustments: Restructuring charges(1) 76 17 - - 93 --- --- --- ---
--- Adjusted results $3,010 $236 $(248) $(1) $2,997 ------ ----
----- --- ------ Quarter Ended (in millions) December 31, 2008
--------------------------------------------------------- Total
Media Filmed Operating Networks Entertainment Corporate
Eliminations Income -------- ------------- --------- ------------
-------- Reported results $509 $22 $(58) $2 $475 Adjustments:
Restructuring and other charges(2) 389 62 3 - 454 --- --- --- ---
--- Adjusted results $898 $84 $(55) $2 $929 ---- --- ---- --- ----
Year Ended (in millions) December 31, 2008
---------------------------------------------------------- Total
Media Filmed Operating Networks Entertainment Corporate
Eliminations Income -------- ------------- --------- ------------
--------- Reported results $2,729 $26 $(234) $2 $2,523 Adjustments:
Restructuring and other charges(2) 389 62 3 - 454 --- --- --- ---
--- Adjusted results $3,118 $88 $(231) $2 $2,977 ------ --- -----
--- ------ (1) For the quarter ended December 31, 2009, adjusted
operating income excludes a $60 million non-cash impairment charge
related to certain broadcast licenses held by a 32%-owned
consolidated entity in the Media Networks segment. For the year
ended December 31, 2009, adjusted operating income also excludes
$33 million of severance expenses attributable to the Media
Networks and Filmed Entertainment segments, which occurred in the
second quarter of 2009. (2) 2008 adjusted operating income excludes
$454 million, for the quarter and year ended December 31, 2008 of
restructuring and other charges across all segments. The charge
principally relates to programming abandonments, severance, the
write-down of film inventory and other charges. DATASOURCE: Viacom
Inc. CONTACT: Press, Carl Folta, Executive Vice President,
Corporate Communications, +1-212-258-6352, , or Kelly McAndrew,
Vice President, Corporate Communications, +1-212-846-7455, , or
investors, James Bombassei, Senior Vice President, Investor
Relations, +1-212-258-6377, , or Pamela Yi, Director, Investor
Relations, +1-212-846-7581, , all of Viacom Web Site:
http://www.viacom.com/
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