NEW YORK, May 2 /PRNewswire-FirstCall/ -- Viacom Inc.
(NYSE: VIA and VIA.B) today reported financial results for the first quarter
ended March 31, 2008.
First Quarter 2008 Results
Quarter Ended
March 31, B/(W)
(in millions, except per share amounts) 2008 2007 2008 vs. 2007
Revenues $3,117 $2,718 15 %
Operating income 567 441 29 %
Net earnings from continuing operations 270 202 34 %
Diluted EPS from continuing operations $0.42 $0.29 45 %
Discontinued operations, net of tax - 1 N/M
Net earnings 270 203 33 %
Diluted EPS $0.42 $0.29 45 %
N/M = Not Meaningful
During the first quarter of 2008, revenues increased 15% to $3.12 billion
with double-digit growth in both the Media Networks and Filmed Entertainment
segments. Operating income also grew double digits versus a year ago, up 29%
to $567 million. Excluding the impact of Media Networks restructuring charges
in the first quarter 2007, adjusted operating income rose 14% in the first
quarter of 2008. Net earnings rose 33% to $270 million with diluted earnings
per share (EPS) of $0.42. On an adjusted basis, diluted EPS grew 29% to $0.44
in the first quarter of 2008. The adjusted results exclude a $0.02 per share
reduction related to a non-cash impairment of a minority investment in the
first quarter of 2008 and the Media Networks restructuring charges taken in
the first quarter of 2007. Adjustments are detailed in the Supplemental
Disclosures tables at the end of this release.
Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom entered
2008 at an aggressive pace, delivering strong results in the first quarter.
We continue to unlock new value in our businesses as we create innovative ways
for our audience to engage with our unparalleled entertainment brands. I am
more confident than ever that we have the right strategies and the best
management to deliver on our commitment to grow shareholder value over time."
Philippe Dauman, President and Chief Executive Officer of Viacom, said,
"Content creation is our central mission and our ongoing investments in
programming are paying off as we see our television ratings continue to
improve. Successful new programming across our networks during the first
quarter included MTV's Randy Jackson Presents: America's Best Dance Crew, TV
Land's High School Reunion and BET's Iron Ring among others, which joined new
seasons of several proven audience favorites. Audiences are also responding
to our digital content, which is moving beyond our own branded sites through
smart distribution deals with leading online and mobile partners. Already
this year, we took a significant step to advance our casual gaming strategy as
Nickelodeon prepares to add approximately 1,600 new online games to its
growing portfolio. Additionally, our Rock Band video game is continuing its
successful tour and is emerging as a valuable long-term franchise. We expect
to further that success with the upcoming release of Rock Band on the Wii home
video game system and our launch in Europe.
"Our motion picture operations continue to make great progress.
Paramount's Cloverfield was a solid hit in the first quarter and we're looking
forward to a strong slate of releases during the remainder of the year,
including today's premiere of Iron Man. Additionally, we have announced an
innovative new premium service that combines the significant creative fire
power of Paramount, MGM and Lionsgate. We are reinventing the pay television
window, taking control of our content and how it is being distributed and
marketed - offering maximum flexibility for us and for our audiences."
Revenues
Revenues Quarter Ended
March 31, B/(W)
(in millions) 2008 2007 2008 vs. 2007
Media Networks $2,017 $1,733 16%
Filmed Entertainment 1,146 1,024 12%
Eliminations (46) (39) (18%)
Total revenues $3,117 $2,718 15%
First Quarter 2008 revenues of $3.12 billion grew 15% from $2.72 billion
in 2007. Media Networks revenues rose 16% to $2.02 billion, principally
driven by strong sales of the music video game Rock Band. Worldwide ancillary
revenues grew 72% in the first quarter. Worldwide advertising revenues were
up 8% to $1.05 billion driven by Nickelodeon, COMEDY CENTRAL and TV Land.
Affiliate revenues increased 13% on a worldwide basis. Filmed Entertainment
revenues were up 12% to $1.15 billion in the quarter primarily due to a 22%
increase in home entertainment revenues. Home entertainment growth reflects
increased revenues from third-party distribution arrangements, including $29
million in revenue recognized in connection with the conclusion of an HD-DVD
exclusivity arrangement. Television license fees rose 10% primarily due to an
increase in international pay TV and international syndicated television
license fees. Worldwide theatrical revenues decreased 7% to $247 million due
to the lower box office performance of the films in theatrical release during
the first quarter of 2008 versus the prior year quarter.
Operating Income
Operating Income Quarter Ended
March 31, B/(W)
(in millions) 2008 2007 2008 vs. 2007
Media Networks $694 $601 15%
Filmed Entertainment (63) (108) 42%
Corporate (64) (54) (19%)
Eliminations - 2 N/M
Total operating income $567 $441 29%
N/M = Not Meaningful
First Quarter 2008 operating income increased 29% to $567 million, versus
$441 million in the first quarter of 2007. Media Networks operating income
grew 15% to $694 million, including a 9 percentage point benefit related to
prior year restructuring charges. This also reflects the impact of higher
expenses in the current quarter, principally related to distribution costs for
the Rock Band video game. The Filmed Entertainment segment narrowed its
operating loss by 42% to $63 million, as higher revenues were partially offset
by a 7% increase in expenses, largely related to feature film amortization.
Corporate expenses increased $10 million, reflecting higher legal fees related
to litigation and employee-related expenses.
First Quarter 2008 net earnings increased $67 million, or 33%, to $270
million, reflecting higher operating income. Diluted earnings per share for
the quarter were $0.42, a 45% increase over EPS of $0.29 in the first quarter
of 2007, which included a $0.05 per share reduction from restructuring
charges. On an adjusted basis, diluted EPS were $0.44 in the first quarter of
2008, a 29% increase over the prior year's adjusted results.
Business Outlook
For the three-year period from 2008 through 2010, Viacom expects to
deliver low double-digit annual growth in diluted earnings per share from
continuing operations. This outlook is based on adjusted earnings and
reflects growth from 2007 adjusted diluted earnings per share from continuing
operations of $2.36.
Stock Repurchase Program
For the quarter ended March 31, 2008, 10.4 million shares were repurchased
for an aggregate purchase price of $414 million. As of May 1, 2008, the
Company has $2 billion remaining in its existing $4 billion share repurchase
program.
Debt
At March 31, 2008, total debt outstanding, including capital lease
obligations, increased to $8.61 billion, compared with $8.25 billion at
December 31, 2007.
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, Harmonix,
Nickelodeon, Noggin, Nick at Nite, AddictingGames, Neopets, COMEDY CENTRAL,
Spike TV, TV Land, AtomFilms, Gametrailers, BET, Paramount Pictures,
DreamWorks Pictures and Paramount Vantage. Viacom's global reach includes
approximately 160 channels and 325 online properties in 160 countries and
territories.
For more information about Viacom and its businesses, visit
www.viacom.com.
Cautionary Statement Concerning Forward-Looking Statements
This news release contains both historical and forward-looking statements.
All statements, including Business Outlook, which 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:
advertising market conditions; the public acceptance of and ratings for the
Company's feature films, programs, digital services and other content as well
as related advertisements; competition for advertising dollars; 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 programming, films and other content; changes in
the Federal communications laws and regulations; the impact of piracy; the
impact of increased scale in parties involved in the distribution and
aggregation of the Company's products and program services to consumers and
advertisers; the impact of union activity; 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 the Company's 2007 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.
Contacts
Press: Investors:
Carl Folta James Bombassei
Executive Vice President, Corporate Senior Vice President, Investor
Communications Relations
(212) 258-6352 (212) 258-6377
carl.folta@viacom.com james.bombassei@viacom.com
Kelly McAndrew Pamela Yi
Vice President, Corporate Director, Investor Relations
Communications (212) 846-7581
(212) 846-7455 pamela.yi@viacom.com
kelly.mcandrew@viacom.com
VIACOM INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Quarter Ended
March 31,
2008 2007
(in millions, except earnings per share amounts)
Revenues $3,117 $2,718
Expenses:
Operating 1,809 1,561
Selling, general and administrative 649 620
Depreciation and amortization 92 96
Total expenses 2,550 2,277
Operating income 567 441
Interest expense, net (117) (111)
Equity in earnings (losses) of investee companies (6) 4
Other items, net (3) (3)
Earnings from continuing operations before provision
for income taxes and minority interest 441 331
Provision for income taxes (167) (126)
Minority interest, net of tax (4) (3)
Net earnings from continuing operations 270 202
Discontinued operations, net of tax - 1
Net earnings $270 $203
Basic earnings per common share:
Earnings per share, continuing operations $0.42 $0.29
Earnings per share, discontinued operations $ - $ -
Net earnings per share $0.42 $0.29
Diluted earnings per common share:
Earnings per share, continuing operations $0.42 $0.29
Earnings per share, discontinued operations $ - $ -
Net earnings per share $0.42 $0.29
Weighted average number of common shares outstanding:
Basic 639.6 692.3
Diluted 641.0 694.1
VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2008 2007
(in millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents $812 $920
Receivables (includes retained
interests in securitizations) 1,838 2,617
Inventory 807 727
Deferred tax assets, net 243 248
Prepaid and other assets 397 321
Total current assets 4,097 4,833
Property and equipment, net 1,228 1,196
Inventory 4,258 4,108
Goodwill 11,415 11,375
Intangibles, net 678 684
Other assets 700 708
Total assets $22,376 $22,904
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $269 $497
Accrued expenses 1,197 1,563
Participants' share and residuals 1,262 1,545
Program rights obligations 372 370
Deferred revenue 428 406
Financing obligations 191 187
Other liabilities 785 705
Total current liabilities 4,504 5,273
Financing obligations 8,419 8,059
Program rights obligations 534 533
Participants' share and residual 340 285
Deferred tax liabilities, net 91 105
Other liabilities 1,430 1,501
Minority interests 39 37
Commitments and contingencies
Stockholders' equity:
Class A Common Stock, par value
$0.001, 375.0 authorized; 57.4 and
57.4 outstanding, respectively - -
Class B Common Stock, par value
$0.001, 5,000.0 authorized; 577.2 and
587.4 outstanding, respectively 1 1
Additional paid-in capital 8,101 8,079
Treasury stock (4,916) (4,502)
Retained earnings 3,677 3,407
Accumulated other comprehensive income 156 126
Total stockholders' equity 7,019 7,111
Total liabilities and stockholders' equity $22,376 $22,904
VIACOM INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
The following tables reconcile the Company's results for the quarters
ended March 31, 2008 and 2007 to adjusted results that exclude the impact of
an impairment of a minority investment and Media Networks restructuring
activities, respectively. The Company uses adjusted operating income, adjusted
net earnings and adjusted diluted EPS among other things, to evaluate the
Company's operating performance in the absence of these items and for planning
and forecasting of future periods. The Company believes that the adjusted
results provide relevant and useful information for investors because it
allows investors to view performance in a manner similar to the method used by
the Company's management, improves their ability to understand the Company's
operating performance and makes it easier to compare the Company's results
with other companies. Since adjusted operating income, adjusted net earnings
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 and diluted EPS as indicators of
operating performance and they may not be comparable to similarly titled
measures employed by other companies.
(in millions, except Quarter Ended
per share amounts) March 31, 2008
Pre-tax Net Earnings Diluted
Earnings from from EPS from
Operating Continuing Continuing Continuing
Income Operations(1) Operations(2) Operations
Reported results $567 $441 $270 $0.42
Adjustments:
Impairment of
investment(3) - 12 12 0.02
Adjusted results $567 $453 $282 $0.44
(in millions, except Quarter Ended
per share amounts) March 31, 2007
Pre-tax Net Earnings Diluted
Earnings from from EPS from
Operating Continuing Continuing Continuing
Income Operations(1) Operations(2) Operations
Reported results $441 $331 $202 $0.29
Adjustments:
Media Networks
restructuring
activities(4) 56 56 34 0.05
Adjusted results $497 $387 $236 $0.34
(1) Pre-tax earnings represent earnings from continuing operations before
provision for income taxes and minority interest.
(2) The tax impact of adjustments has been calculated where appropriate
using applicable rates in effect for the period presented.
(3) 2008 adjusted results exclude a $12 million non-cash impairment of an
investment in which the Company holds a minority interest.
(4) 2007 adjusted results exclude $56 million of expenses related to Media
Networks restructuring charges, principally severance, affecting MTV
Networks domestic and international operations.
The Company's business outlook is based on 2007 adjusted diluted earnings
per share from continuing operations of $2.36. The following table reconciles
the Company's results for the full year ended December 31, 2007 to the
adjusted results that exclude the impact of restructuring activities, the
realized gain on the sale of the Company's non-controlling interest in MTV
Russia, an impairment charge associated with the write-down of Amp'd Mobile
and net discrete tax benefits.
Year Ended
December 31, 2007
Pre-tax Net Earnings Diluted
Earnings from from EPS from
(in millions, except Operating Continuing Continuing Continuing
per share amounts) Income Operations(1) Operations(2) Operations
Reported results $2,936 $2,580 $1,630 $2.41
Adjustments:
Media Networks
restructuring
activities(3) 77 77 49 0.07
Gain on sale of
equity
investment(4) - (151) (95) (0.14)
Impairment of
investment(5) - 36 23 0.04
Discrete tax
benefits(6) - - (15) (0.02)
Adjusted results $3,013 $2,542 $1,592 $2.36
(1) Pre-tax earnings represent earnings from continuing
operations before
provision for income taxes and minority interest.
(2) The tax impact of adjustments has been calculated where
appropriate
using the applicable rates in effect for the period presented.
(3) 2007 adjusted results exclude $77 million of expenses related to
Media Networks restructuring charges, principally severance, affecting
MTV Networks domestic and international operations.
(4) The Company sold its non-controlling investment in MTV Russia for
$191 million and recognized a pre-tax gain of $151 million.
(5) The Company recorded a pre-tax impairment charge of $36 million
to
write off its investment in Amp'd Mobile which filed for bankruptcy.
(6) 2007 adjusted results exclude net discrete tax benefits of $15
million, which were principally the result of audit settlements
related to prior period tax returns.
