x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2016 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
DELAWARE | 20-3515052 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Class of Stock | Shares Outstanding as of July 15, 2016 | ||
Class A common stock, par value $0.001 per share | 49,431,379 | ||
Class B common stock, par value $0.001 per share | 347,224,638 |
Page | ||
Consolidated Statements of Earnings for the quarter and nine months ended June 30, 2016 and 2015 | ||
Consolidated Statements of Comprehensive Income for the quarter and nine months ended June 30, 2016 and 2015 | ||
Consolidated Balance Sheets as of June 30, 2016 and September 30, 2015 | ||
Consolidated Statements of Cash Flows for the nine months ended June 30, 2016 and 2015 | ||
Quarter Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
(in millions, except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Revenues | $ | 3,107 | $ | 3,058 | $ | 9,262 | $ | 9,480 | |||||||
Expenses: | |||||||||||||||
Operating | 1,575 | 1,252 | 4,822 | 4,931 | |||||||||||
Selling, general and administrative | 708 | 666 | 2,080 | 2,118 | |||||||||||
Depreciation and amortization | 55 | 56 | 166 | 168 | |||||||||||
Restructuring | — | — | — | 206 | |||||||||||
Total expenses | 2,338 | 1,974 | 7,068 | 7,423 | |||||||||||
Operating income | 769 | 1,084 | 2,194 | 2,057 | |||||||||||
Interest expense, net | (156 | ) | (166 | ) | (466 | ) | (492 | ) | |||||||
Equity in net earnings of investee companies | 19 | 28 | 85 | 103 | |||||||||||
Other items, net | 3 | — | (1 | ) | (30 | ) | |||||||||
Earnings before provision for income taxes | 635 | 946 | 1,812 | 1,638 | |||||||||||
Provision for income taxes | (195 | ) | (301 | ) | (602 | ) | (528 | ) | |||||||
Net earnings (Viacom and noncontrolling interests) | 440 | 645 | 1,210 | 1,110 | |||||||||||
Net earnings attributable to noncontrolling interests | (8 | ) | (54 | ) | (26 | ) | (72 | ) | |||||||
Net earnings attributable to Viacom | $ | 432 | $ | 591 | $ | 1,184 | $ | 1,038 | |||||||
Basic earnings per share attributable to Viacom | $ | 1.09 | $ | 1.49 | $ | 2.99 | $ | 2.57 | |||||||
Diluted earnings per share attributable to Viacom | $ | 1.09 | $ | 1.47 | $ | 2.98 | $ | 2.54 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 396.5 | 397.5 | 396.4 | 403.6 | |||||||||||
Diluted | 398.0 | 401.2 | 397.9 | 408.0 | |||||||||||
Dividends declared per share of Class A and Class B common stock | $ | 0.40 | $ | 0.40 | $ | 1.20 | $ | 1.06 | |||||||
Quarter Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net earnings (Viacom and noncontrolling interests) | $ | 440 | $ | 645 | $ | 1,210 | $ | 1,110 | |||||||
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments | (75 | ) | 73 | (93 | ) | (189 | ) | ||||||||
Defined benefit pension plans | 1 | 43 | (3 | ) | 22 | ||||||||||
Cash flow hedges | (2 | ) | 2 | (1 | ) | 2 | |||||||||
Available for sale securities | — | 1 | — | — | |||||||||||
Other comprehensive income/(loss) (Viacom and noncontrolling interests) | (76 | ) | 119 | (97 | ) | (165 | ) | ||||||||
Comprehensive income | 364 | 764 | 1,113 | 945 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interest | 11 | 57 | 25 | 69 | |||||||||||
Comprehensive income attributable to Viacom | $ | 353 | $ | 707 | $ | 1,088 | $ | 876 | |||||||
(in millions, except par value) | June 30, 2016 | September 30, 2015 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 192 | $ | 506 | |||
Receivables, net | 2,973 | 2,807 | |||||
Inventory, net | 829 | 786 | |||||
Prepaid and other assets | 615 | 479 | |||||
Total current assets | 4,609 | 4,578 | |||||
Property and equipment, net | 852 | 947 | |||||
Inventory, net | 4,106 | 3,616 | |||||
Goodwill | 11,411 | 11,456 | |||||
Intangibles, net | 326 | 340 | |||||
Other assets | 1,301 | 1,206 | |||||
Total assets | $ | 22,605 | $ | 22,143 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 277 | $ | 506 | |||
Accrued expenses | 702 | 748 | |||||
Participants' share and residuals | 773 | 860 | |||||
Program obligations | 634 | 703 | |||||
Deferred revenue | 428 | 481 | |||||
Current portion of debt | 1,369 | 18 | |||||
Other liabilities | 452 | 537 | |||||
Total current liabilities | 4,635 | 3,853 | |||||
Noncurrent portion of debt | 10,996 | 12,267 | |||||
Participants' share and residuals | 380 | 351 | |||||
Program obligations | 326 | 356 | |||||
Deferred tax liabilities, net | 632 | 150 | |||||
Other liabilities | 1,281 | 1,348 | |||||
Redeemable noncontrolling interest | 203 | 219 | |||||
Commitments and contingencies (Note 6) | |||||||
Viacom stockholders' equity: | |||||||
Class A common stock, par value $0.001, 375.0 authorized; 49.4 and 50.1 outstanding, respectively | — | — | |||||
Class B common stock, par value $0.001, 5,000.0 authorized; 347.4 and 348.0 outstanding, respectively | — | — | |||||
Additional paid-in capital | 10,059 | 10,017 | |||||
Treasury stock, 399.5 and 398.0 common shares held in treasury, respectively | (20,804 | ) | (20,725 | ) | |||
Retained earnings | 15,467 | 14,780 | |||||
Accumulated other comprehensive loss | (630 | ) | (534 | ) | |||
Total Viacom stockholders' equity | 4,092 | 3,538 | |||||
Noncontrolling interests | 60 | 61 | |||||
Total equity | 4,152 | 3,599 | |||||
Total liabilities and equity | $ | 22,605 | $ | 22,143 | |||
Nine Months Ended June 30, | |||||||
(in millions) | 2016 | 2015 | |||||
OPERATING ACTIVITIES | |||||||
Net earnings (Viacom and noncontrolling interests) | $ | 1,210 | $ | 1,110 | |||
Reconciling items: | |||||||
Depreciation and amortization | 166 | 168 | |||||
Feature film and program amortization | 3,253 | 3,475 | |||||
Equity-based compensation | 71 | 72 | |||||
Equity in net earnings and distributions from investee companies | (81 | ) | (99 | ) | |||
Deferred income taxes | 470 | 38 | |||||
Operating assets and liabilities, net of acquisitions: | |||||||
Receivables | (137 | ) | 317 | ||||
Inventory, program rights and participations | (3,915 | ) | (3,885 | ) | |||
Accounts payable and other current liabilities | (482 | ) | (23 | ) | |||
Other, net | (155 | ) | (93 | ) | |||
Net cash provided by operating activities | 400 | 1,080 | |||||
INVESTING ACTIVITIES | |||||||
Acquisitions and investments, net | (59 | ) | 5 | ||||
Capital expenditures | (80 | ) | (90 | ) | |||
Net cash flow used in investing activities | (139 | ) | (85 | ) | |||
FINANCING ACTIVITIES | |||||||
Borrowings | — | 990 | |||||
Debt repayments | (368 | ) | (600 | ) | |||
Commercial paper | 453 | — | |||||
Purchase of treasury stock | (100 | ) | (1,548 | ) | |||
Dividends paid | (476 | ) | (405 | ) | |||
Excess tax benefits on equity-based compensation awards | — | 45 | |||||
Exercise of stock options | 10 | 142 | |||||
Other, net | (64 | ) | (131 | ) | |||
Net cash flow used in financing activities | (545 | ) | (1,507 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (30 | ) | (67 | ) | |||
Net change in cash and cash equivalents | (314 | ) | (579 | ) | |||
Cash and cash equivalents at beginning of period | 506 | 1,000 | |||||
Cash and cash equivalents at end of period | $ | 192 | $ | 421 | |||
• | ASU 2016-13 introduces a new impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a forward-looking “expected loss” model that will replace the current “incurred loss” model and generally will result in earlier recognition of allowances for losses. The guidance will be effective for the first interim period of our 2021 fiscal year, with early adoption in fiscal year 2020 permitted. |
• | ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Among other provisions, the new guidance requires the fair value measurement of investments in certain equity securities. For investments without readily determinable fair values, entities have the option to either measure these investments at fair value or at cost adjusted for changes in observable prices minus impairment. All changes in measurement will be recognized in net income. The guidance will be effective for the first interim period of our 2019 fiscal year. Early adoption is not permitted, except for certain provisions relating to financial liabilities. |
Inventory (in millions) | June 30, 2016 | September 30, 2015 | |||||
Film inventory: | |||||||
Released, net of amortization | $ | 695 | $ | 576 | |||
Completed, not yet released | 160 | 55 | |||||
In process and other | 1,018 | 806 | |||||
Total film inventory, net of amortization | 1,873 | 1,437 | |||||
Television productions | 85 | 8 | |||||
Total film and television production inventory | 1,958 | 1,445 | |||||
Original programming: | |||||||
Released, net of amortization | 1,164 | 1,161 | |||||
In process and other | 599 | 599 | |||||
Total original programming, net of amortization | 1,763 | 1,760 | |||||
Acquired program rights, net of amortization | 1,123 | 1,108 | |||||
Home entertainment inventory | 91 | 89 | |||||
Total inventory, net | 4,935 | 4,402 | |||||
Less: current portion | (829 | ) | (786 | ) | |||
Total inventory-noncurrent, net | $ | 4,106 | $ | 3,616 | |||
Debt (in millions) | June 30, 2016 | September 30, 2015 | |||||
Senior Notes and Debentures: | |||||||
Senior notes due April 2016, 6.250% | — | 368 | |||||
Senior notes due December 2016, 2.500% | 400 | 399 | |||||
Senior notes due April 2017, 3.500% | 499 | 498 | |||||
Senior notes due October 2017, 6.125% | 499 | 499 | |||||
Senior notes due September 2018, 2.500% | 497 | 497 | |||||
Senior notes due April 2019, 2.200% | 399 | 398 | |||||
Senior notes due September 2019, 5.625% | 550 | 550 | |||||
Senior notes due December 2019, 2.750% | 399 | 398 | |||||
Senior notes due March 2021, 4.500% | 495 | 494 | |||||
Senior notes due December 2021, 3.875% | 593 | 592 | |||||
Senior notes due June 2022, 3.125% | 296 | 296 | |||||
Senior notes due March 2023, 3.250% | 297 | 297 | |||||
Senior notes due September 2023, 4.250% | 1,234 | 1,233 | |||||
Senior notes due April 2024, 3.875% | 544 | 543 | |||||
Senior debentures due December 2034, 4.850% | 593 | 592 | |||||
Senior debentures due April 2036, 6.875% | 1,066 | 1,066 | |||||
Senior debentures due October 2037, 6.750% | 75 | 75 | |||||
Senior debentures due February 2042, 4.500% | 244 | 244 | |||||
Senior debentures due March 2043, 4.375% | 1,089 | 1,085 | |||||
Senior debentures due June 2043, 4.875% | 246 | 246 | |||||
Senior debentures due September 2043, 5.850% | 1,228 | 1,228 | |||||
Senior debentures due April 2044, 5.250% | 545 | 544 | |||||
Commercial paper | 453 | — | |||||
Capital lease and other obligations | 124 | 143 | |||||
Total debt | 12,365 | 12,285 | |||||
Less: current portion | (1,369 | ) | (18 | ) | |||
Total noncurrent portion of debt | $ | 10,996 | $ | 12,267 | |||
Net Periodic Benefit Cost (in millions) | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest cost | $ | 9 | $ | 10 | $ | 26 | $ | 32 | |||||||
Expected return on plan assets | (10 | ) | (11 | ) | (29 | ) | (35 | ) | |||||||
Recognized actuarial loss | 1 | 2 | 4 | 5 | |||||||||||
Loss on pension settlement | — | — | — | 24 | |||||||||||
Net periodic benefit cost | $ | — | $ | 1 | $ | 1 | $ | 26 | |||||||
Redeemable Noncontrolling Interest | Nine Months Ended June 30, | ||||||
(in millions) | 2016 | 2015 | |||||
Beginning balance | $ | 219 | $ | 216 | |||
Net earnings | 12 | 11 | |||||
Distributions | (16 | ) | (16 | ) | |||
Translation adjustment | (30 | ) | (9 | ) | |||
Redemption value adjustment | 18 | 4 | |||||
Ending Balance | $ | 203 | $ | 206 | |||
• | declaring any spin-off or other similar distribution of capital stock of Viacom or distributing any securities or assets of Viacom, other than Viacom’s regular quarterly dividend; |
• | authorizing or entering into agreements with third parties not otherwise permitted by the status quo order, except for agreements entered into in the ordinary course of business consistent with past practice which do not effect a change in (i) the current business operations material to the Consolidated Company or (ii) the voting control or equity ownership of Viacom; |
• | authorizing, creating or amending securities of the Consolidated Company, subject to certain exceptions including if such action is taken in the ordinary course of business consistent with past practice or pursuant to existing agreements; |
• | authorizing or entering into agreements to issue, sell or dispose of securities of the Consolidated Company, subject to certain exceptions including if such action is taken in the ordinary course of business consistent with past practice or pursuant to mandatory provisions of existing agreements in existence as of June 15, 2016 (provided that under no circumstances may Viacom issue, sell or dispose of any Class A Common Stock or Class B Common Stock of Viacom); |
• | authorizing or entering into any action or transaction that would require Viacom stockholder approval; |
• | authorizing or entering into any transaction that is material to the business of Paramount and that is not in the ordinary course of business consistent with past practice, for any disposition of equity or assets of Paramount and its subsidiaries to a party other than the Consolidated Company; |
• | increasing the compensation and benefits payable to current officers and employees, hiring new officers or employees, or terminating or amending existing employment agreements, subject to certain exceptions including if such action is pursuant to agreements in existence as of June 15, 2016 or would not have required the approval of the Board of Directors or a committee of the Board of Directors prior to June 27, 2016; |
• | hiring a financial advisor where the aggregate fees would reasonably be expected to exceed $10 million; |
• | entering into an agreement that is reasonably likely to result in Viacom incurring liability or making any payment based upon the resolution of the claims alleged in the Delaware Actions regarding the validity of the June 6 purported Bylaw amendments or the June 16 purported Bylaw amendments; |
• | instituting or funding legal proceedings seeking the relief sought in the consolidated action, Dauman et al. v. Redstone, et al. pending in Probate and Family Court in Norfolk County, Massachusetts, or Mr. Redstone’s petition pending in California Superior Court, subject to certain exceptions including the defense of legal proceedings seeking the relief sought in those actions and any advancement or indemnification obligations of the Consolidated Company in effect on June 16, 2016; and |
• | amending the Bylaws by action of the Board of Directors. |
Nine Months Ended June 30, 2016 | Nine Months Ended June 30, 2015 | ||||||||||||||||||||||
Stockholders’ Equity (in millions) | Total Viacom Stockholders' Equity | Noncontrolling Interests | Total Equity | Total Viacom Stockholders' Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||
Beginning Balance | $ | 3,538 | $ | 61 | $ | 3,599 | $ | 3,719 | $ | 28 | $ | 3,747 | |||||||||||
Net earnings | 1,184 | 26 | 1,210 | 1,038 | 72 | 1,110 | |||||||||||||||||
Other comprehensive loss (1) | (96 | ) | (1 | ) | (97 | ) | (162 | ) | (3 | ) | (165 | ) | |||||||||||
Noncontrolling interests | (18 | ) | (26 | ) | (44 | ) | (4 | ) | (29 | ) | (33 | ) | |||||||||||
Dividends declared | (478 | ) | — | (478 | ) | (428 | ) | — | (428 | ) | |||||||||||||
Purchase of treasury stock | (100 | ) | — | (100 | ) | (1,500 | ) | — | (1,500 | ) | |||||||||||||
Equity-based compensation and other | 62 | — | 62 | 209 | — | 209 | |||||||||||||||||
Ending Balance | $ | 4,092 | $ | 60 | $ | 4,152 | $ | 2,872 | $ | 68 | $ | 2,940 | |||||||||||
(in millions) | Media Networks | Filmed Entertainment | Corporate | Total | |||||||||||
September 30, 2015 | $ | 87 | $ | 51 | $ | 9 | $ | 147 | |||||||
Severance payments | (41 | ) | (24 | ) | (4 | ) | (69 | ) | |||||||
Revisions to initial estimates | — | (5 | ) | — | (5 | ) | |||||||||
June 30, 2016 | $ | 46 | $ | 22 | $ | 5 | $ | 73 | |||||||
Weighted Average Number of Common Shares Outstanding and Anti-dilutive Common Shares | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||
Weighted average number of common shares outstanding, basic | 396.5 | 397.5 | 396.4 | 403.6 | |||||||
Dilutive effect of equity awards | 1.5 | 3.7 | 1.5 | 4.4 | |||||||
Weighted average number of common shares outstanding, diluted | 398.0 | 401.2 | 397.9 | 408.0 | |||||||
Anti-dilutive common shares | 17.0 | 8.1 | 14.3 | 5.6 | |||||||
Supplemental Cash Flow Information | Nine Months Ended June 30, | ||||||
(in millions) | 2016 | 2015 | |||||
Cash paid for interest | $ | 464 | $ | 479 | |||
Cash paid for income taxes | $ | 253 | $ | 388 |
Financial Asset/(Liability) | Quoted Prices In Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||
(in millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
June 30, 2016 | |||||||||||||||
Marketable securities | $ | 111 | $ | 111 | $ | — | $ | — | |||||||
Derivatives | (4 | ) | — | (4 | ) | — | |||||||||
Total | $ | 107 | $ | 111 | $ | (4 | ) | $ | — | ||||||
September 30, 2015 | |||||||||||||||
Marketable securities | $ | 100 | $ | 100 | $ | — | $ | — | |||||||
Derivatives | (10 | ) | — | (10 | ) | — | |||||||||
Total | $ | 90 | $ | 100 | $ | (10 | ) | $ | — | ||||||
Revenues by Segment | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Media Networks | $ | 2,513 | $ | 2,597 | $ | 7,459 | $ | 7,703 | |||||||
Filmed Entertainment | 621 | 479 | 1,888 | 1,858 | |||||||||||
Eliminations | (27 | ) | (18 | ) | (85 | ) | (81 | ) | |||||||
Total revenues | $ | 3,107 | $ | 3,058 | $ | 9,262 | $ | 9,480 | |||||||
Adjusted Operating Income/(Loss) | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Media Networks | $ | 872 | $ | 1,114 | $ | 2,734 | $ | 3,121 | |||||||
Filmed Entertainment | (26 | ) | 48 | (308 | ) | (11 | ) | ||||||||
Corporate expenses | (60 | ) | (58 | ) | (163 | ) | (176 | ) | |||||||
Eliminations | 2 | 1 | 2 | 3 | |||||||||||
Equity-based compensation | (19 | ) | (21 | ) | (71 | ) | (72 | ) | |||||||
Restructuring and programming charges | — | — | — | (784 | ) | ||||||||||
Loss on pension settlement | — | — | — | (24 | ) | ||||||||||
Operating income | 769 | 1,084 | 2,194 | 2,057 | |||||||||||
Interest expense, net | (156 | ) | (166 | ) | (466 | ) | (492 | ) | |||||||
Equity in net earnings of investee companies | 19 | 28 | 85 | 103 | |||||||||||
Other items, net | 3 | — | (1 | ) | (30 | ) | |||||||||
Earnings before provision for income taxes | $ | 635 | $ | 946 | $ | 1,812 | $ | 1,638 | |||||||
Total Assets | June 30, 2016 | September 30, 2015 | |||||
(in millions) | |||||||
Media Networks | $ | 16,669 | $ | 17,088 | |||
Filmed Entertainment | 6,476 | 5,914 | |||||
Corporate/Eliminations | (540 | ) | (859 | ) | |||
Total assets | $ | 22,605 | $ | 22,143 | |||
Revenues by Component | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Advertising | $ | 1,216 | $ | 1,223 | $ | 3,659 | $ | 3,762 | |||||||
Affiliate fees | 1,148 | 1,244 | 3,396 | 3,522 | |||||||||||
Feature film | 580 | 433 | 1,760 | 1,712 | |||||||||||
Ancillary | 190 | 176 | 532 | 565 | |||||||||||
Eliminations | (27 | ) | (18 | ) | (85 | ) | (81 | ) | |||||||
Total revenues | $ | 3,107 | $ | 3,058 | $ | 9,262 | $ | 9,480 | |||||||
CBS Related Party Transactions | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Consolidated Statements of Earnings | |||||||||||||||
Revenues | $ | 26 | $ | 32 | $ | 91 | $ | 124 | |||||||
Operating expenses | $ | 39 | $ | 42 | $ | 127 | $ | 190 | |||||||
June 30, 2016 | September 30, 2015 | ||||||||||||||
Consolidated Balance Sheets | |||||||||||||||
Accounts receivable | $ | 2 | $ | 5 | |||||||||||
Accounts payable | $ | — | $ | 1 | |||||||||||
Participants’ share and residuals, current | 64 | 77 | |||||||||||||
Program obligations, current | 60 | 62 | |||||||||||||
Program obligations, noncurrent | 40 | 55 | |||||||||||||
Other liabilities | 2 | 2 | |||||||||||||
Total due to CBS | $ | 166 | $ | 197 | |||||||||||
Other Related Party Transactions | Quarter Ended June 30, | Nine Months Ended June 30, | |||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Consolidated Statements of Earnings | |||||||||||||||
Revenues | $ | 37 | $ | 24 | $ | 67 | $ | 82 | |||||||
Operating expenses | $ | 23 | $ | 9 | $ | 39 | $ | 30 | |||||||
Selling, general and administrative | $ | (5 | ) | $ | (5 | ) | $ | (11 | ) | $ | (11 | ) | |||
June 30, 2016 | September 30, 2015 | ||||||||||||||
Consolidated Balance Sheets | |||||||||||||||
Accounts receivable | $ | 85 | $ | 60 | |||||||||||
Other assets | 1 | 1 | |||||||||||||
Total due from other related parties | $ | 86 | $ | 61 | |||||||||||
Accounts payable | $ | 6 | $ | 5 | |||||||||||
Other liabilities | 59 | 55 | |||||||||||||
Total due to other related parties | $ | 65 | $ | 60 | |||||||||||
Quarter Ended June 30, | Better/(Worse) | Nine Months Ended June 30, | Better/(Worse) | ||||||||||||||||||||||||||
(in millions, except per share amounts) | 2016 | 2015 | $ | % | 2016 | 2015 | $ | % | |||||||||||||||||||||
GAAP | |||||||||||||||||||||||||||||
Revenues | $ | 3,107 | $ | 3,058 | $ | 49 | 2 | % | $ | 9,262 | $ | 9,480 | $ | (218 | ) | (2 | )% | ||||||||||||
Operating income | 769 | 1,084 | (315 | ) | (29 | ) | 2,194 | 2,057 | 137 | 7 | |||||||||||||||||||
Net earnings attributable to Viacom | 432 | 591 | (159 | ) | (27 | ) | 1,184 | 1,038 | 146 | 14 | |||||||||||||||||||
Diluted earnings per share | 1.09 | 1.47 | (0.38 | ) | (26 | ) | 2.98 | 2.54 | 0.44 | 17 | |||||||||||||||||||
Non-GAAP* | |||||||||||||||||||||||||||||
Adjusted operating income | $ | 769 | $ | 1,084 | $ | (315 | ) | (29 | )% | $ | 2,194 | $ | 2,865 | $ | (671 | ) | (23 | )% | |||||||||||
Adjusted net earnings attributable to Viacom | 419 | 591 | (172 | ) | (29 | ) | 1,192 | 1,596 | (404 | ) | (25 | ) | |||||||||||||||||
Adjusted diluted earnings per share | 1.05 | 1.47 | (0.42 | ) | (29 | ) | 3.00 | 3.91 | (0.91 | ) | (23 | ) | |||||||||||||||||
* See "Factors Affecting Comparability" section below for a reconciliation of our reported results to our adjusted results, which are calculated on a non-GAAP basis. |
(in millions, except per share amounts) | |||||||||||||||||||
Quarter Ended June 30, 2016 | |||||||||||||||||||
Operating Income | Earnings Before Provision for Income Taxes | Provision for Income Taxes * | Net Earnings Attributable to Viacom | Diluted EPS | |||||||||||||||
Reported results (GAAP) | $ | 769 | $ | 635 | $ | 195 | $ | 432 | $ | 1.09 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Discrete tax benefit | — | — | 13 | (13 | ) | (0.04 | ) | ||||||||||||
Adjusted results (Non-GAAP) | $ | 769 | $ | 635 | $ | 208 | $ | 419 | $ | 1.05 | |||||||||
(in millions, except per share amounts) | |||||||||||||||||||
Nine Months Ended June 30, 2016 | |||||||||||||||||||
Operating Income | Earnings Before Provision for Income Taxes | Provision for Income Taxes * | Net Earnings Attributable to Viacom | Diluted EPS | |||||||||||||||
Reported results (GAAP) | $ | 2,194 | $ | 1,812 | $ | 602 | $ | 1,184 | $ | 2.98 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Discrete tax expense | — | — | (8 | ) | 8 | 0.02 | |||||||||||||
Adjusted results (Non-GAAP) | $ | 2,194 | $ | 1,812 | $ | 594 | $ | 1,192 | $ | 3.00 | |||||||||
(in millions, except per share amounts) | |||||||||||||||||||
Nine Months Ended June 30, 2015 | |||||||||||||||||||
Operating Income | Earnings Before Provision for Income Taxes | Provision for Income Taxes * | Net Earnings Attributable to Viacom | Diluted EPS | |||||||||||||||
Reported results (GAAP) | $ | 2,057 | $ | 1,638 | $ | 528 | $ | 1,038 | $ | 2.54 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Restructuring and programming charges | 784 | 784 | 264 | 520 | 1.27 | ||||||||||||||
Loss on pension settlement | 24 | 24 | 9 | 15 | 0.04 | ||||||||||||||
Discrete tax expense | — | — | (23 | ) | 23 | 0.06 | |||||||||||||
Adjusted results (Non-GAAP) | $ | 2,865 | $ | 2,446 | $ | 778 | $ | 1,596 | $ | 3.91 | |||||||||
Quarter Ended June 30, | Better/(Worse) | Nine Months Ended June 30, | Better/(Worse) | ||||||||||||||||||||||||||
(in millions) | 2016 | 2015 | $ | % | 2016 | 2015 | $ | % | |||||||||||||||||||||
Revenues by Component | |||||||||||||||||||||||||||||
Advertising | $ | 1,216 | $ | 1,223 | $ | (7 | ) | (1 | )% | $ | 3,659 | $ | 3,762 | $ | (103 | ) | (3 | )% | |||||||||||
Affiliate fees | 1,148 | 1,244 | (96 | ) | (8 | ) | 3,396 | 3,522 | (126 | ) | (4 | ) | |||||||||||||||||
Ancillary | 149 | 130 | 19 | 15 | 404 | 419 | (15 | ) | (4 | ) | |||||||||||||||||||
Total revenues by component | $ | 2,513 | $ | 2,597 | $ | (84 | ) | (3 | )% | $ | 7,459 | $ | 7,703 | $ | (244 | ) | (3 | )% | |||||||||||
Expenses | |||||||||||||||||||||||||||||
Operating | $ | 1,036 | $ | 944 | $ | (92 | ) | (10 | )% | $ | 2,989 | $ | 2,888 | $ | (101 | ) | (3 | )% | |||||||||||
Selling, general and administrative | 564 | 497 | (67 | ) | (13 | ) | 1,612 | 1,570 | (42 | ) | (3 | ) | |||||||||||||||||
Depreciation and amortization | 41 | 42 | 1 | 2 | 124 | 124 | — | — | |||||||||||||||||||||
Total expenses | $ | 1,641 | $ | 1,483 | $ | (158 | ) | (11 | )% | $ | 4,725 | $ | 4,582 | $ | (143 | ) | (3 | )% | |||||||||||
Adjusted Operating Income | $ | 872 | $ | 1,114 | $ | (242 | ) | (22 | )% | $ | 2,734 | $ | 3,121 | $ | (387 | ) | (12 | )% | |||||||||||
Quarter Ended June 30, | Better/(Worse) | Nine Months Ended June 30, | Better/(Worse) | ||||||||||||||||||||||||||
(in millions) | 2016 | 2015 | $ | % | 2016 | 2015 | $ | % | |||||||||||||||||||||
Revenues by Component | |||||||||||||||||||||||||||||
Theatrical | $ | 91 | $ | 20 | $ | 71 | 355 | % | $ | 402 | $ | 394 | $ | 8 | 2 | % | |||||||||||||
Home entertainment | 192 | 199 | (7 | ) | (4 | ) | 584 | 709 | (125 | ) | (18 | ) | |||||||||||||||||
License fees | 297 | 214 | 83 | 39 | 774 | 609 | 165 | 27 | |||||||||||||||||||||
Ancillary | 41 | 46 | (5 | ) | (11 | ) | 128 | 146 | (18 | ) | (12 | ) | |||||||||||||||||
Total revenues by component | $ | 621 | $ | 479 | $ | 142 | 30 | % | $ | 1,888 | $ | 1,858 | $ | 30 | 2 | % | |||||||||||||
Expenses | |||||||||||||||||||||||||||||
Operating | $ | 567 | $ | 328 | $ | (239 | ) | (73 | )% | $ | 1,920 | $ | 1,550 | $ | (370 | ) | (24 | )% | |||||||||||
Selling, general and administrative | 68 | 90 | 22 | 24 | 238 | 280 | 42 | 15 | |||||||||||||||||||||
Depreciation and amortization | 12 | 13 | 1 | 8 | 38 | 39 | 1 | 3 | |||||||||||||||||||||
Total expenses | $ | 647 | $ | 431 | $ | (216 | ) | (50 | )% | $ | 2,196 | $ | 1,869 | $ | (327 | ) | (17 | )% | |||||||||||
Adjusted Operating Income/(Loss) | $ | (26 | ) | $ | 48 | $ | (74 | ) | NM | $ | (308 | ) | $ | (11 | ) | $ | (297 | ) | NM | ||||||||||
NM - Not Meaningful |
Exhibit No. | Description of Exhibit | |
3.2* | Bylaws of Viacom Inc., as purportedly amended as of June 6, 2016 and June 16, 2016. | |
10.1* | Summary of Viacom Inc. Compensation for Outside Directors. | |
10.2* | Viacom Inc. 2011 RSU Plan for Outside Directors, as amended and restated as of January 1, 2016, and as further amended and restated as of May 18, 2016. | |
10.3* | Viacom Inc. 2016 LTMIP: Form of Terms and Conditions to the Stock Option Certificate. | |
10.4* | Viacom Inc. 2016 LTMIP: Form of Terms and Conditions to the Restricted Share Units Certificate. | |
10.5* | Viacom Inc. 2016 LTMIP: Form of Terms and Conditions to the Performance Share Units Certificate. | |
10.6* | Agreement dated as of June 13, 2016 between George S. Abrams and Viacom Inc. | |
10.7* | Agreement dated as of June 13, 2016 between Philippe P. Dauman and Viacom Inc. | |
31.1* | Certification of the Chief Executive Officer of Viacom Inc. pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of the Chief Financial Officer of Viacom Inc. pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification of the Chief Executive Officer of Viacom Inc. furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2* | Certification of the Chief Financial Officer of Viacom Inc. furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema Document. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |
* | Filed herewith |
VIACOM INC. | |||
Date: August 4, 2016 | By: | /s/ WADE DAVIS | |
Wade Davis | |||
Executive Vice President, Chief Financial Officer | |||
Date: August 4, 2016 | By: | /s/ KATHERINE GILL-CHAREST | |
Katherine Gill-Charest | |||
Senior Vice President, Controller (Chief Accounting Officer) |
• | The Vice Chair of the Board receives an annual retainer of $200,000, and each other outside director receives an annual retainer of $100,000, in each case payable in equal installments quarterly in advance. |
• | The Chairs of the Audit and Compensation Committees each receive an annual retainer of $20,000, payable in equal installments quarterly in advance, and the members of those Committees receive a per meeting attendance fee of $2,000. |
• | The Chair of the Governance and Nominating Committee receives an annual retainer of $15,000, payable in equal installments quarterly in advance, and the members of that Committee receive a per meeting attendance fee of $1,500. |
• | Each outside director receives an annual grant on January 31st of each year of Restricted Share Units (RSUs), the number of which is determined by dividing (i) $175,000 by (ii) the fair market value of one share of Class B Common Stock on The NASDAQ Global Select Market (NASDAQ) on the date of grant. |
• | In addition, the Lead Independent Director receives an annual grant on January 31st of each year of RSUs, the number of which is determined by dividing (i) $50,000 by (ii) the fair market value of one share of Class B Common Stock on NASDAQ on the date of grant. |
• | All RSUs vest one year from the date of grant and are payable to outside directors in shares of Class B Common Stock upon vesting unless the outside director has previously elected to defer settlement of the RSUs to a future date. Outside directors are entitled to receive dividend equivalents on the RSUs in the event the Company pays a regular cash dividend on its Class B Common Stock. |
Schedule |
• If the Company achieves less than the 25th percentile TSR, the award of Performance Share Units will be forfeited. |
• If the Company achieves the 25th percentile TSR, the number of shares to be delivered under the award will be 25% of the Target Award. |
• If the Company achieves the 50th percentile TSR, the number of shares to be delivered under the award will be 100% of the Target Award. |
• If the Company achieves the 100th percentile TSR (that is, if it is the first ranked company in the Reference Group for TSR), the number of shares to be delivered under the award will be 300% of the Target Award. |
1. | Payment and Reimbursement. Viacom will pay (as incurred) or, if paid by Abrams, promptly reimburse him for costs and expenses (including attorney's fees, expert witness fees and fees of public relations and other consultants) actually and reasonably incurred by Abrams in connection with the Actions ("Payment Amounts"). |
2. | Repayment. Abrams will repay Viacom all Payment Amounts to the extent it is finally determined by a court of competent jurisdiction that, in instituting the Massachusetts lawsuit, Abrams has acted in breach of his fiduciary or other duties to Viacom or that he has not acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of Viacom. |
3. | Other Sources. Without limiting his rights under this Agreement, Abrams will also take reasonable steps to seek (through advancement, indemnification or other rights he has) to recoup Payment Amounts from NAI and the Trust as authorized under the respective governing documents of those entities and any agreements entered into by Abrams and those entities and promptly upon such recoupment or other economic recovery from NAI and the Trust related in any way to the subject matter of the Actions shall repay such amounts to Viacom. |
4. | Amendments. No modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. |
5. | Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason, (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to the terms of this Agreement. |
6. | Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. |
7. | Governing Law. This Agreement shall be governed by and construed in accordance with |
/s/ George Abrams | /s/ Michael D. Fricklas | |||
George Abrams | Michael D. Fricklas, Executive Vice President, General Counsel and Secretary, Viacom Inc. |
1. | Payment and Reimbursement. Viacom will pay (as incurred) or, if paid by Dauman, promptly reimburse him for costs and expenses (including attorney's fees, expert witness fees and fees of public relations and other consultants) actually and reasonably incurred by Dauman in connection with the Actions ("Payment Amounts"). |
2. | Repayment. Dauman will repay Viacom all Payment Amounts to the extent it is finally determined by a court of competent jurisdiction that, in instituting the Massachusetts lawsuit, Dauman has acted in breach of his fiduciary or other duties to Viacom or that he has not acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of Viacom. |
3. | Other Sources. Without limiting his rights under this Agreement, Dauman will also take reasonable steps to seek (through advancement, indemnification or other rights he has) to recoup Payment Amounts from NAI and the Trust as authorized under the respective governing documents of those entities and any agreements entered into by Dauman and those entities and promptly upon such recoupment or other economic recovery from NAI and the Trust related in any way to the subject matter of the Actions shall repay such amounts to Viacom. |
4. | Amendments. No modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. |
5. | Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason, (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to the terms of this Agreement. |
6. | Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. |
7. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to principles of conflicts of laws. Any dispute relating to this Agreement shall be subject to the exclusive jurisdiction of the courts of Delaware or the Federal Courts located therein, and the parties agree not to contest the jurisdiction of such courts. The parties hereby waive their respective rights to a trial by jury. |
/s/ Philippe P. Dauman | /s/ Michael D. Fricklas | |||
Philippe Dauman | Michael D. Fricklas, Executive Vice President, General Counsel and Secretary, Viacom Inc. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Viacom Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ PHILIPPE P. DAUMAN | |
Executive Chairman, President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Viacom Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ WADE DAVIS | |
Executive Vice President, Chief Financial Officer |
1. | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ PHILIPPE P. DAUMAN | |
Philippe P. Dauman | |
August 4, 2016 |
1. | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ WADE DAVIS | |
Wade Davis | |
August 4, 2016 |
Document entity information - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 15, 2016 |
|
Entity Information [Abstract] | ||
Entity Registrant Name | Viacom Inc. | |
Entity Central Index Key | 0001339947 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Common Class A | ||
Entity Common Stock, Shares Outstanding | 49,431,379 | |
Common Class B | ||
Entity Common Stock, Shares Outstanding | 347,224,638 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings (Viacom and noncontrolling interests) | $ 440 | $ 645 | $ 1,210 | $ 1,110 |
Other comprehensive income/(loss), net of tax: | ||||
Foreign currency translation adjustments | (75) | 73 | (93) | (189) |
Defined benefit pension plans | 1 | 43 | (3) | 22 |
Cash flow hedges | (2) | 2 | (1) | 2 |
Available for sale securities | 0 | 1 | 0 | 0 |
Other comprehensive income/(loss) (Viacom and noncontrolling interests) | (76) | 119 | (97) | (165) |
Comprehensive income | 364 | 764 | 1,113 | 945 |
Less: Comprehensive income attributable to noncontrolling interest | 11 | 57 | 25 | 69 |
Comprehensive income attributable to Viacom | $ 353 | $ 707 | $ 1,088 | $ 876 |
CONSOLIDATED BALANCE SHEET (Parenthetical) (unaudited) - $ / shares shares in Millions |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Treasury Stock (shares) | 399.5 | 398.0 |
Common Class A | ||
Common Stock, Par or Stated Value Per Share (in usd per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 375.0 | 375.0 |
Common Stock, Shares, Outstanding | 49.4 | 50.1 |
Common Class B | ||
Common Stock, Par or Stated Value Per Share (in usd per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 5,000.0 | 5,000.0 |
Common Stock, Shares, Outstanding | 347.4 | 348.0 |
Description of Business and Basis of Presentation |
9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Basis of Presentation | BASIS OF PRESENTATION Description of Business Viacom is home to premier global media brands that create compelling television programs, motion pictures, short-form content, apps, games, consumer products, social media experiences and other entertainment content for audiences in 180 countries. Viacom operates through two reporting segments: Media Networks, which includes the Music & Entertainment Group, the Kids & Family Group and BET Networks, and Filmed Entertainment. The Media Networks segment provides entertainment content and related branded products for consumers in targeted demographics attractive to advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands. References in this document to “Viacom,” “Company,” “we,” “us” and “our” mean Viacom Inc. and our consolidated subsidiaries, unless the context requires otherwise. Unaudited Interim Financial Statements The accompanying unaudited consolidated quarterly financial statements have been prepared on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited financial statements reflect all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of our results of operations, financial position and cash flows for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results expected for the fiscal year ending September 30, 2016 (“fiscal 2016”) or any future period. These financial statements should be read in conjunction with our Form 10-K for the year ended September 30, 2015, as filed with the SEC on November 12, 2015 (the “2015 Form 10-K”). Use of Estimates Preparing financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the dates presented and the reported amounts of revenues and expenses during the periods presented. Significant estimates inherent in the preparation of the accompanying Consolidated Financial Statements include estimates of film ultimate revenues, product returns, potential outcome of uncertain tax positions, fair value of acquired assets and liabilities, fair value of equity-based compensation and pension benefit assumptions. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates. Reclassification Certain prior year amounts have been reclassified to conform to the fiscal 2016 presentation. Recent Accounting Pronouncements In connection with its financial instruments project, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 - Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments in June 2016 and ASU 2016-01 - Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities in January 2016.
We are currently evaluating the impact of the new standards. In March 2016, the FASB issued ASU 2016-09 - Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, such as requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and allowing a policy election to account for forfeitures as they occur. In addition, all related cash flows resulting from share-based payments will be reported as operating activities on the statement of cash flows. The guidance will be effective for the first interim period of our 2018 fiscal year, with early adoption permitted. The new standard will impact our financial statements by increasing or decreasing our income tax provision and increasing cash flow from operating activities. In February 2016, the FASB issued ASU 2016-02 - Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. For income statement purposes, leases will be classified as either operating or finance, generally resulting in straight-line expense recognition for operating leases (similar to current operating leases) and accelerated expense recognition for financing leases (similar to current capital leases). The guidance will be effective for the first interim period of our 2020 fiscal year, with early adoption permitted. We are currently evaluating the impact of the new standard. In November 2015, the FASB issued ASU 2015-17 - Income Taxes: Balance Sheet Classification of Deferred Taxes, which requires that all deferred taxes be classified as noncurrent in the balance sheet. The guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted on either a prospective or retrospective basis. In the quarter ended December 31, 2015, we adopted the new guidance on a retrospective basis. As a result, our $99 million net deferred tax liability in the Consolidated Balance Sheet as of September 30, 2015 is presented as a deferred tax asset of $51 million within Other assets and $150 million in Deferred tax liabilities, net. In May 2014, the FASB issued ASU 2014-09 - Revenue from Contracts with Customers, a comprehensive revenue recognition model that supersedes the current revenue recognition requirements and most industry-specific guidance. Subsequent accounting standard updates have also been issued which amend and/or clarify the application of ASU 2014-09. The guidance provides a five step framework to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The guidance will be effective for the first interim period of our 2019 fiscal year (with early adoption permitted beginning fiscal year 2018), and allows adoption either under a full retrospective or a modified retrospective approach. We are currently evaluating the impact of the new standard. |
Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | INVENTORY Our total inventory consists of the following:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT Our total debt consists of the following:
In the third quarter, we repaid the $368 million aggregate principal amount of our 6.250% Senior Notes due April 2016. The total unamortized discount and issuance fees and expenses related to our senior notes and debentures was $464 million as of June 30, 2016 and $478 million as of September 30, 2015. The fair value of our senior notes and debentures was approximately $12.3 billion as of June 30, 2016. The valuation of our publicly traded debt is based on quoted prices in active markets. Credit Facility At June 30, 2016, there were no amounts outstanding under our $2.5 billion revolving credit facility due November 2019. The credit facility is used for general corporate purposes and to support commercial paper outstanding. The amount of unused capacity under the credit facility, after deducting commercial paper outstanding of $453 million with a weighted average maturity of 29 days and weighted average interest rate of 1.24%, was $2.05 billion as of June 30, 2016. The credit facility has one principal financial covenant that requires our interest coverage for the most recent four consecutive fiscal quarters to be at least 3.0x, which we met as of June 30, 2016. |
Pension and Other Postretirement Benefits |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Benefits | PENSION BENEFITS The components of net periodic benefit cost for our defined benefit pension plans, which are currently frozen to future benefit accruals, are set forth below.
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Redeemable Noncontrolling Interest |
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Noncontrolling Interest Disclosure | REDEEMABLE NONCONTROLLING INTEREST We are subject to a redeemable put option, payable in a foreign currency, with respect to an international subsidiary. The put option expires in December 2022 and is classified as Redeemable noncontrolling interest in the Consolidated Balance Sheets. The activity reflected within redeemable noncontrolling interest is as follows:
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Commitments and Contingencies |
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Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Commitments As more fully described in Note 11 of the 2015 Form 10-K, our commitments primarily consist of programming and talent commitments, operating and capital lease arrangements, and purchase obligations for goods and services. These arrangements result from our normal course of business and represent obligations that may be payable over several years. Contingencies We have certain indemnification obligations with respect to leases primarily associated with the previously discontinued operations of Famous Players Inc. (“Famous Players”). In addition, we have certain indemnities provided by the acquirer of Famous Players. These lease commitments amounted to approximately $242 million as of June 30, 2016. The amount of lease commitments varies over time depending on expiration or termination of individual underlying leases, or of the related indemnification obligation, and foreign exchange rates, among other things. We may also have exposure for certain other expenses related to the leases, such as property taxes and common area maintenance. We have recorded a liability of $192 million with respect to such obligations as of June 30, 2016. We believe our accrual is sufficient to meet any future obligations based on our consideration of available financial information, the lessees’ historical performance in meeting their lease obligations and the underlying economic factors impacting the lessees’ business models. Legal Matters Various Litigations Involving National Amusements, Inc. and the Sumner M. Redstone National Amusements Trust National Amusements, Inc. (“National Amusements”), directly and indirectly, is the controlling stockholder of Viacom. National Amusements owns shares in Viacom representing approximately 79.8% of the voting interest in Viacom and approximately 10% of Viacom’s combined common stock. National Amusements is controlled by Sumner M. Redstone, our Chairman Emeritus, who is the Chairman and Chief Executive Officer of National Amusements, through the Sumner M. Redstone National Amusements Trust (the “SMR Trust”), which owns shares in National Amusements representing 80% of the voting interest of National Amusements. The shares representing the other 20% of the voting interest of National Amusements are held through a trust controlled by Shari E. Redstone, who is Mr. Redstone’s daughter and the non-executive Vice Chair of Viacom and the President and a member of the Board of Directors of National Amusements. The shares of National Amusements held by the SMR Trust are voted solely by Mr. Redstone until such time as his incapacity or death. Upon Mr. Redstone’s incapacity or death, (1) Ms. Redstone will also become a trustee of the SMR Trust and (2) the shares of National Amusements held by the SMR Trust will be voted by the trustees of the SMR Trust. Prior to May 20, 2016, the trustees of the SMR Trust were Mr. Dauman and George Abrams, a member of the Board of Directors, as well as Mr. Redstone, Phyllis Redstone, David R. Andelman, Norman Jacobs, and Leonard Lewin. The Board of Directors of National Amusements consisted of Mr. Redstone, Shari Redstone, Mr. Abrams, Mr. Andelman, Mr. Dauman, and Tyler Korff, Ms. Redstone’s son and Mr. Redstone’s grandson. On May 20, 2016, Messrs. Dauman and Abrams received notices stating that they had been removed as Trustees of the SMR Trust and as directors and managers of National Amusements and its subsidiaries and replaced, as to the SMR Trust, by Thaddeus Jankowski, the general counsel of National Amusements, and Jill Krutick; and as to National Amusements, by Ms. Krutick and Kimberlee Korff Ostheimer, Ms. Redstone’s daughter and Mr. Redstone’s granddaughter (the May 20, 2016 removals collectively, the “Purported Removals”). On May 23, 2016, Messrs. Dauman and Abrams filed a lawsuit (the “Massachusetts Action”) in the Probate and Family Court in Norfolk County, Massachusetts, in which they challenged the Purported Removals on the grounds that such removals were the result of Mr. Redstone’s incapacity and/or the product of undue influence or other improper conduct by Ms. Redstone or others. After commencing the Massachusetts Action, Messrs. Dauman and Abrams moved the court for expedited discovery and trial, as well as an evaluation of Mr. Redstone’s mental competency, and the defendants moved to dismiss the action. On July 28, 2016, the Massachusetts court denied the defendants’ motion to dismiss, and ordered defendants to produce certain medical records of Mr. Redstone. The case will now proceed to the discovery phase and the Massachusetts court noted that it would schedule a trial on the merits in October 2016. Also on May 23, 2016, attorneys for Mr. Redstone filed a petition in the Superior Court of California, Los Angeles County (the “California Action”), seeking that court’s confirmation that the Purported Removals were valid. On June 6, 2016, National Amusements and NAI Entertainment Holdings LLC (together, “NAI”) delivered to Viacom stockholder written consents purporting to amend certain provisions of our Amended and Restated Bylaws (the “Bylaws”), (i) requiring that any sale or financial transaction affecting all or a portion of Paramount Pictures Corporation (“Paramount”) and various other Viacom subsidiaries that are utilized in the conduct of business of Paramount must be unanimously approved by all of the members of the Board of Directors then in office, (ii) specifying that the Board of Directors can amend the Bylaws only by an affirmative vote of all members of the Board of Directors then in office, and (iii) modifying, in certain respects, Viacom’s existing Bylaws provision requiring that the Court of Chancery of the State of Delaware (the “Delaware Chancery Court”) is the exclusive jurisdiction for certain types of corporate litigation. On June 13, 2016, Viacom entered into a costs and expenses agreement with each of Mr. Dauman and Mr. Abrams (together, the “Agreements”), each of which was approved in advance by a committee comprised of independent members of the Board of Directors. Under the Agreements, Viacom will pay or promptly reimburse Mr. Dauman’s and Mr. Abrams’ costs and expenses (including attorneys’ fees, expert witness fees and fees of public relations and other consultants) actually and reasonably incurred in connection with the Massachusetts Action and the California Action. Under the Agreements, each of Messrs. Dauman and Abrams is required to repay to Viacom (1) all amounts received from Viacom to the extent it is finally determined by a court of competent jurisdiction that, in instituting the Massachusetts Action, he acted in breach of his fiduciary or other duties to Viacom or that he has not acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of Viacom and (2) any amounts received after taking reasonable steps, as required under the Agreements, to seek recoupment or other economic recovery of costs and expenses related to the subject matter of the Massachusetts Action and the California Action from the SMR Trust and National Amusements and its subsidiaries as authorized under the respective governing documents of, and agreements with, those entities. On June 16, 2016, NAI delivered to Viacom stockholder written consents purporting to amend additional provisions of the Bylaws to provide that any and all vacancies on the Board of Directors occurring as a result of stockholder action to remove directors or to increase the number of authorized directors shall be filled only by the affirmative vote of stockholders representing at least a majority of stock entitled to vote generally in the election of directors, except that in the case of a vacancy for any other reason, a majority of the Board of Directors then in office, though less than a quorum, or a sole remaining director shall fill such vacancy if not filled by stockholder action within 30 days of the occurrence of such other vacancy. The June 16th written consents also claimed to remove from the Board of Directors, without cause, Mr. Abrams, Mr. Dauman, Blythe J. McGarvie, Frederic V. Salerno and William Schwartz and to fill the resulting vacancies with Kenneth Lerer, Thomas J. May, Judith McHale, Ronald Nelson and Nicole Seligman (the “Purported Director Replacements”). On June 16, 2016, NAI filed a lawsuit (the “NAI Delaware Action”) in the Delaware Chancery Court pursuant to 8 Del. C. § 225, (1) seeking the court’s confirmation of the validity and effectiveness of the stockholder written consents delivered by NAI to Viacom on June 6th and June 16th and (2) requesting that, pending a final court ruling, the court maintain the existing Board of Directors and prohibit the Board of Directors from taking any action not in the ordinary course of business. Also on June 16, 2016, Mr. Salerno, Viacom’s lead independent director, filed a lawsuit in the Delaware Chancery Court pursuant to 8 Del. C. § 225 (the “Salerno Delaware Action” and, together with the NAI Delaware Action, the “Delaware Actions”), with the support of the independent directors of the Board of Directors, seeking an expedited determination (1) that the Purported Director Replacements are invalid, (2) that the Board of Directors remains as currently comprised, (3) enjoining NAI from taking further wrongful actions under the authority of Mr. Redstone and (4) entering a status quo order providing that NAI shall not take any actions that would disrupt the Board of Directors’ continuing management of the business and affairs of the Company in the ordinary course. The Delaware Actions are being managed under a coordination order. The Company is paying the expenses incurred in contesting the actions purportedly taken by NAI pursuant to its written consents. On June 27, 2016, the Delaware Chancery Court entered a status quo order preserving the Board of Directors as constituted prior to the Purported Director Replacements during the pendency of the Delaware Actions. The status quo order further provides that none of Viacom, the Board of Directors, any committee of the Board of Directors, any member of the Board of Directors or any Viacom executive officer, or any person acting at the direction of any of them, shall authorize, agree to, knowingly cause or permit or take, directly or indirectly, any action that is outside the routine day-to-day operations of Viacom and its subsidiaries taken as a whole (the “Consolidated Company”) without providing five business days’ prior written notice to NAI (which notice shall be treated confidentially). For purposes of the status quo order, “action that is outside the routine day-to-day operations” of the Consolidated Company includes in summary, but is not limited to:
The status quo order will remain in place until a final judgment is entered in the Delaware Actions (or until the Delaware Chancery Court enters a superseding order). On July 1, 2016, Viacom filed an answer in the NAI Delaware Action, contesting the validity and effectiveness of the stockholder written consents delivered by NAI to Viacom on June 6th and June 16th. Mr. Salerno filed a joinder in that answer and asserted additional affirmative defenses. On July 11, 2016, the plaintiffs in the NAI Delaware Action filed motions for Judgment on the Pleadings in the NAI Delaware Action and motions to dismiss in the Salerno Delaware Action. On July 29, 2016, the Delaware Chancery Court denied all of the material motions. The case will now proceed to the discovery phase and the Delaware Chancery Court noted that it would schedule trial for the week of October 17, 2016. On July 15, 2016, Viacom received “reservation of rights” letters from counsel to each of Mr. Dauman and Mr. Dooley. The letters were delivered in light of the Purported Director Replacements and note that Messrs. Dauman and Dooley are highly engaged in overseeing Viacom's operations and are committed to pursuing and executing Viacom's strategic plan for the duration of their respective employment agreements. The letters refer to each executive's right under his employment agreement to resign upon the occurrence of certain events that constitute “Good Reason” (subject to Viacom's opportunity to cure). The letters note the belief of the authors and each executive that such events have not occurred, but, in order to preserve their rights, each executive exercises the right to resign for “Good Reason” effective 31 days after the entry of a judicial order from which no appeal may be taken establishing the validity of the Purported Director Replacements, which could potentially result in significant costs to Viacom. The letters further note that if there is an entry of a judicial order from which no appeal may be taken establishing the invalidity of the Purported Director Replacements, the executives' resignation of employment shall not take effect. Purported Class and Derivative Actions Between June 17, 2016 and August 1, 2016, three substantially similar purported class action complaints were filed in the Delaware Chancery Court by purported Viacom stockholders, against Viacom, Viacom’s directors, NAI and the purported new directors named in NAI’s June 16th written consents. The complaints - brought on behalf of the class of all holders of Viacom Class B common stock except the named defendants and any person or entity affiliated with any of the defendants - allege claims for breaches of fiduciary duty against the incumbent director defendants and NAI. The purported new directors named in NAI’s June 16th written consents are alleged to have aided and abetted these breaches. In addition to damages and attorneys’ fees, the complaints seek declarations invalidating the June 2016 purported Bylaw amendments described above and “such other and further relief as the Court deems just and proper.” Viacom and certain Viacom directors have moved to dismiss the first two complaints and expect to shortly move to dismiss the third. On July 20, 2016, a purported derivative action was commenced in Delaware Chancery Court by a purported Viacom stockholder against Viacom and its directors. The complaint alleges that Viacom’s directors breached their fiduciary duties to Viacom in connection with compensation paid to Mr. Redstone. These breaches, it is alleged, permitted a waste of corporate assets and the unjust enrichment of Mr. Redstone. European Commission Statement of Objections In July 2015, the Directorate-General for Competition (“DG Comp”) of the European Commission (the “Commission”) issued a Statement of Objections (the “SO”) to the six major Hollywood film studios, including Paramount, and to Sky UK (“Sky”), in connection with DG Comp's investigation into whether conventional territorial restrictions in agreements licensing content to pay television broadcasters impeded European Union (“EU”) single market imperatives in an anti-competitive way. The SO directed at Paramount takes issue with certain geo-filtering provisions in Paramount’s 2009 and 2014 agreements with Sky, which were designed to enforce the territorial nature of the content Paramount licenses for distribution on Sky’s online and mobile pay television platforms. In addition, the SO challenges certain provisions in the 2009 agreement regarding Sky’s satellite distribution of Paramount content. While we believe that Paramount's licensing practices in the EU have been consistent with the region's competition and other rules, rather than prolong the dispute, Viacom and Paramount have chosen to reach agreement with the Commission in the form of binding commitments related to the types of geo-filtering clauses permitted in premium pay television license agreements with broadcasters to the extent they restrict European Economic Area (“EEA”) broadcasters from responding to unsolicited requests by consumers located in a different territory in the EEA. The commitments permit Paramount to continue to license films through premium pay television license agreements in Europe on an exclusive territorial basis. No admission of liability has been made. In addition, the commitments eliminate the possibility of fines and enable the Commission to close similar pending cases against Viacom and Paramount relating to broadcasters in Italy, France, Germany and Spain. The Commission adopted the commitments on July 26, 2016, bringing the matter to conclusion apart from ongoing compliance monitoring. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders Equity | STOCKHOLDERS’ EQUITY The components of stockholders’ equity are as follows:
(1) The components of other comprehensive loss are net of tax expense of $4 million and $16 million for the nine months ended June 30, 2016 and 2015, respectively. Equity Awards During the quarter ended June 30, 2016, we granted 3.8 million stock options and 1.3 million restricted share units to employees with a weighted average grant date fair value of $8.65 and $38.86 per share, respectively. |
Restructuring |
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Restructuring | RESTRUCTURING Our restructuring liability as of June 30, 2016 by reporting segment is as follows:
The liability as of June 30, 2016 is related to future severance payments in connection with the restructuring plan undertaken in fiscal 2015, as further described in Note 14 of the 2015 Form 10-K. We anticipate that most of the liability associated with the restructuring plan will be paid by September 30, 2016. |
Earnings Per Share |
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Earnings Per Share | EARNINGS PER SHARE Basic earnings per common share is computed by dividing Net earnings attributable to Viacom by the weighted average number of common shares outstanding during the period. The determination of diluted earnings per common share includes the weighted average number of common shares plus the dilutive effect of equity awards based upon the application of the treasury stock method. Anti-dilutive common shares were excluded from the calculation of diluted earnings per common share. The following table sets forth the weighted average number of common shares outstanding used in determining basic and diluted earnings per common share and anti-dilutive common shares:
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Supplemental Cash Flow and Other Information |
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Supplemental Cash Flow and Other Information | SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION Our supplemental cash flow information is as follows:
Accounts Receivable We had $549 million and $577 million of noncurrent trade receivables as of June 30, 2016 and September 30, 2015, respectively. Accounts receivables are principally related to long-term television license arrangements at Filmed Entertainment and content distribution arrangements at Media Networks. These amounts are included within Other assets - noncurrent in our Consolidated Balance Sheets. Such amounts are due in accordance with the underlying terms of the respective agreements with companies that are investment grade or with which we have historically done business under similar terms. We have determined that credit loss allowances are generally not considered necessary for these amounts. Variable Interest Entities In the normal course of business, we enter into joint ventures or make investments with business partners that support our underlying business strategy and provide us the ability to enter new markets to expand the reach of our brands, develop new programming and/or distribute our existing content. In certain instances, an entity in which we make an investment may qualify as a variable interest entity (“VIE”). In determining whether we are the primary beneficiary of a VIE, we assess whether we have the power to direct matters that most significantly impact the activities of the VIE and have the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Unconsolidated Variable Interest Entities: We have an unconsolidated investment in Prism TV Private Limited (“Prism”), a 50% owned joint venture in India that qualifies as a VIE. In connection with our investment, we do not have the power to direct matters that most significantly impact the activities of Prism and therefore we do not qualify as the primary beneficiary. Our carrying value in Prism was $156 million and $145 million as of June 30, 2016 and September 30, 2015, respectively. Consolidated Variable Interest Entities: Our Consolidated Balance Sheets include amounts related to consolidated VIEs totaling $194 million in assets and $57 million in liabilities as of June 30, 2016, and $207 million in assets and $54 million in liabilities as of September 30, 2015. The consolidated VIEs’ revenues, expenses and operating income were not significant for all periods presented. Income Taxes Our effective income tax rate was 30.7% and 33.2% in the quarter and nine months ended June 30, 2016, respectively. Net discrete tax benefit of $13 million reduced the effective income tax rate by 2.1 percentage points in the quarter and net discrete tax expense of $8 million contributed 0.4 percentage points to the effective income tax rate in the nine months. The net discrete tax benefit in the quarter was principally related to the release of tax reserves upon the remeasurement of excess foreign tax credits associated with the reorganization of certain non-U.S. subsidiaries in the fourth quarter of 2015. The net discrete tax expense in the nine month period was principally related to a reduction in qualified production activity tax benefits as a result of retroactively reenacted legislation, partially offset by reserve releases. Our effective income tax rate was 31.8% and 32.2% in the quarter and nine months ended June 30, 2015, respectively. Net discrete tax expense of $23 million in the nine months, taken together with restructuring and programming charges and a pension settlement loss, contributed 0.4 percentage points to the effective income tax rate. This net discrete tax expense was principally related to a reduction in qualified production activity tax benefits as a result of retroactively reenacted legislation, partially offset by reserve releases. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following table summarizes our financial assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2016 and September 30, 2015:
The fair value for marketable securities is determined utilizing a market approach based on quoted market prices in active markets at period end and the fair value for derivatives is determined utilizing a market-based approach. The notional value of all foreign exchange contracts was $1.164 billion and $1.040 billion as of June 30, 2016 and September 30, 2015, respectively. At June 30, 2016, $752 million related to our foreign currency balances and $412 million related to future production costs. At September 30, 2015, $769 million related to our foreign currency balances and $271 million related to future production costs. |
Reporting Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reporting Segments | REPORTING SEGMENTS The following tables set forth our financial performance by reporting segment. Our reporting segments have been determined in accordance with our internal management structure. We manage our operations through two reporting segments: (i) Media Networks and (ii) Filmed Entertainment. Typical intersegment transactions include the purchase of advertising by the Filmed Entertainment segment on Media Networks’ properties and the purchase of Filmed Entertainment’s feature films and television programming exhibition rights by Media Networks. The elimination of such intercompany transactions in the Consolidated Financial Statements is included within eliminations in the tables below. Our measure of segment performance is adjusted operating income/(loss). Adjusted operating income/(loss) is defined as operating income/(loss), before equity-based compensation and certain other items identified as affecting comparability, including restructuring and programming charges, when applicable.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | RELATED PARTY TRANSACTIONS National Amusements, directly and indirectly, is the controlling stockholder of both Viacom and CBS Corporation (“CBS”). Note 6 to the Consolidated Financial Statements sets forth a detailed description of the relationships among National Amusements, the SMR Trust, Viacom, Mr. Redstone, Ms. Redstone and other directors of Viacom and National Amusements. In addition, Mr. Redstone serves as Chairman Emeritus of CBS and Ms. Redstone serves as non-executive Vice Chair of CBS. Transactions between Viacom and related parties are overseen by our Governance and Nominating Committee. Viacom and National Amusements Related Party Transactions National Amusements licenses films in the ordinary course of business for its motion picture theaters from all major studios, including Paramount. During the nine months ended June 30, 2016 and 2015, Paramount earned revenues from National Amusements in connection with these licenses in the aggregate amounts of approximately $5 million and $6 million, respectively. Viacom and CBS Corporation Related Party Transactions In the ordinary course of business, we are involved in transactions with CBS and its various businesses that result in the recognition of revenues and expenses by us. Transactions with CBS are settled in cash. Our Filmed Entertainment segment earns revenues and recognizes expenses associated with its distribution of certain television products into the home entertainment market on behalf of CBS. Pursuant to its agreement with CBS, Paramount distributes CBS’s library of television and other content on DVD and Blu-ray disc on a worldwide basis. Under the terms of the agreement, Paramount is entitled to retain a fee based on a percentage of gross receipts and is generally responsible for all out-of-pocket costs, which are recoupable together with any advance amounts paid. Paramount made advance payments of $60 million to CBS during the nine months ended June 30, 2016. Paramount also earns revenues from CBS through leasing of studio space and licensing of certain film products. Our Media Networks segment recognizes advertising revenues and purchases television programming from CBS. The cost of the programming purchases is initially recorded as acquired program rights inventory and amortized over the estimated period that revenues will be generated. Both of our segments recognize advertising expenses related to the placement of advertisements with CBS. The following table summarizes the transactions with CBS as included in our Consolidated Financial Statements:
Other Related Party Transactions In the ordinary course of business, we are involved in related party transactions with equity investees. These related party transactions primarily relate to the provision of advertising services, licensing of film and programming content, distribution of films and provision of certain administrative support services, for which the impact on our Consolidated Financial Statements is as follows:
All other related party transactions are not material in the periods presented. |
Inventory (Tables) |
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Inventory Balances | Our total inventory consists of the following:
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Debt (Tables) |
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Debt Balances | Our total debt consists of the following:
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Pension and Other Post Retirement (Tables) |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Periodic Benefit Cost Income (Table) | The components of net periodic benefit cost for our defined benefit pension plans, which are currently frozen to future benefit accruals, are set forth below.
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Redeemable Noncontrolling Interest (Tables) |
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Redeemable Noncontrolling Interest | The activity reflected within redeemable noncontrolling interest is as follows:
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Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholder Equity Components | The components of stockholders’ equity are as follows:
(1) The components of other comprehensive loss are net of tax expense of $4 million and $16 million for the nine months ended June 30, 2016 and 2015, respectively. |
Restructuring Rollforward (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs [Table Text Block] | Our restructuring liability as of June 30, 2016 by reporting segment is as follows:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Shares Outstanding and Anti-dilutive common shares | The following table sets forth the weighted average number of common shares outstanding used in determining basic and diluted earnings per common share and anti-dilutive common shares:
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Supplemental Cash Flow and Other Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Our supplemental cash flow information is as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value By Balance Sheet Grouping | The following table summarizes our financial assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2016 and September 30, 2015:
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Reporting Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues by Segment |
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Adjusted Operating Income (Loss) |
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Total Assets |
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Revenues by Component |
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Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Persons Transactions (Tables) | The following table summarizes the transactions with CBS as included in our Consolidated Financial Statements:
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Related Parties Transactions (Tables) | In the ordinary course of business, we are involved in related party transactions with equity investees. These related party transactions primarily relate to the provision of advertising services, licensing of film and programming content, distribution of films and provision of certain administrative support services, for which the impact on our Consolidated Financial Statements is as follows:
|
Description of Business and Basis of Presentation (Details) $ in Millions |
9 Months Ended | |
---|---|---|
Jun. 30, 2016
USD ($)
Segment
|
Sep. 30, 2015
USD ($)
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of Countries in which Entity Operates | 180 | |
Number of Operating Segments | Segment | 2 | |
Deferred Income Tax Liabilities, Net | $ 99 | |
Deferred Tax Assets, Net, Noncurrent | 51 | |
Deferred tax liabilities, net | $ 632 | $ 150 |
Inventory (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Film inventory: | ||
Released, net of amortization | $ 695 | $ 576 |
Completed, not yet released | 160 | 55 |
In process and other | 1,018 | 806 |
Total film inventory, net of amortization | 1,873 | 1,437 |
Television productions | 85 | 8 |
Total film and television production inventory | 1,958 | 1,445 |
Original programming: | ||
Released, net of amortization | 1,164 | 1,161 |
In process and other | 599 | 599 |
Total original programming, net of amortization | 1,763 | 1,760 |
Acquired program rights, net of amortization | 1,123 | 1,108 |
Home entertainment inventory | 91 | 89 |
Total inventory, net | 4,935 | 4,402 |
Less: current portion | (829) | (786) |
Total inventory-noncurrent, net | $ 4,106 | $ 3,616 |
Pension and Other Post Retirement (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Net Periodic Benefit Cost Abstract | ||||
Interest cost | $ 9 | $ 10 | $ 26 | $ 32 |
Expected return on plan assets | (10) | (11) | (29) | (35) |
Recognized actuarial loss | 1 | 2 | 4 | 5 |
Loss on pension settlement | 0 | 0 | 0 | 24 |
Net periodic benefit cost | $ 0 | $ 1 | $ 1 | $ 26 |
Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Redeemable Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 219 | $ 216 |
Net earnings | 12 | 11 |
Distributions | (16) | (16) |
Translation adjustment | (30) | (9) |
Redemption value adjustment | 18 | 4 |
Ending Balance | $ 203 | $ 206 |
Restructuring Reserve Rollforward (Details) $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | $ 147 |
Severance payments | (69) |
Revisions to initial estimates | (5) |
Restructuring reserve, ending balance | 73 |
Media Networks | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | 87 |
Severance payments | (41) |
Revisions to initial estimates | 0 |
Restructuring reserve, ending balance | 46 |
Filmed Entertainment | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | 51 |
Severance payments | (24) |
Revisions to initial estimates | (5) |
Restructuring reserve, ending balance | 22 |
Corporate | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | 9 |
Severance payments | (4) |
Revisions to initial estimates | 0 |
Restructuring reserve, ending balance | $ 5 |
Earnings Per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Common Shares Outstanding and Anti-dilutive Common Shares [Abstract] | ||||
Weighted average number of common shares outstanding, basic | 396.5 | 397.5 | 396.4 | 403.6 |
Dilutive effect of equity awards | 1.5 | 3.7 | 1.5 | 4.4 |
Weighted average number of common shares outstanding, diluted | 398.0 | 401.2 | 397.9 | 408.0 |
Anti-dilutive common shares | 17.0 | 8.1 | 14.3 | 5.6 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Financial Instruments [Line Items] | ||
Marketable securities | $ 111 | $ 100 |
Derivatives | (4) | (10) |
Total | 107 | 90 |
Foreign Currency Hedge Derivatives [Abstract] | ||
Notional value of all foreign exchange contracts | 1,164 | 1,040 |
Net Investments In Foreign Operations | ||
Foreign Currency Hedge Derivatives [Abstract] | ||
Notional value of all foreign exchange contracts | 752 | 769 |
Future Production Costs | ||
Foreign Currency Hedge Derivatives [Abstract] | ||
Notional value of all foreign exchange contracts | 412 | 271 |
Quoted Prices In Active Markets for Identical Assets Level 1 | ||
Financial Instruments [Line Items] | ||
Marketable securities | 111 | 100 |
Derivatives | 0 | 0 |
Total | 111 | 100 |
Significant Other Observable Inputs Level 2 | ||
Financial Instruments [Line Items] | ||
Marketable securities | 0 | 0 |
Derivatives | (4) | (10) |
Total | (4) | (10) |
Significant Unobservable Inputs Level 3 | ||
Financial Instruments [Line Items] | ||
Marketable securities | 0 | 0 |
Derivatives | 0 | 0 |
Total | $ 0 | $ 0 |
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