UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
FORM 8-K |
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Date of Report (Date of earliest event reported): August 3, 2017 |
VIACOM INC. | ||
(Exact name of registrant as specified in its charter) |
Delaware | 001-32686 | 20-3515052 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
1515 Broadway, New York, NY | 10036 | ||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 258-6000 |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information | |||
Item 2.02 | Results of Operations and Financial Condition. | ||
On August 3, 2017, Viacom Inc. issued a press release announcing earnings for the quarter ended June 30, 2017. A copy of the press release is furnished herewith as Exhibit 99 and is incorporated by reference herein in its entirety. | |||
Section 9 – Financial Statements and Exhibits | |||
Item 9.01 | Financial Statements and Exhibits. | ||
(d) Exhibits. The following exhibit is furnished as part of this Report on Form 8-K: | |||
Exhibit No. | Description of Exhibit | ||
99 | Press release of Viacom Inc. dated August 3, 2017 announcing earnings for the quarter ended June 30, 2017. |
VIACOM INC. | |||
By: | /s/ Christa A. D’Alimonte | ||
Name: Title: | Christa A. D’Alimonte Executive Vice President, General Counsel and Secretary |
Exhibit No. | Description of Exhibit | |
99 | Press release of Viacom Inc. dated August 3, 2017 announcing earnings for the quarter ended June 30, 2017. |
(in millions, except per share amounts) | Quarter Ended June 30, | B/(W) | Nine Months Ended June 30, | B/(W) | |||||||||||||||||
2017 | 2016 | 2017 vs. 2016 | 2017 | 2016 | 2017 vs. 2016 | ||||||||||||||||
GAAP | |||||||||||||||||||||
Revenues | $ | 3,364 | $ | 3,107 | 8 | % | $ | 9,944 | $ | 9,262 | 7 | % | |||||||||
Operating income | 746 | 769 | (3 | ) | 1,784 | 2,194 | (19 | ) | |||||||||||||
Net earnings from continuing operations attributable to Viacom | 680 | 432 | 57 | 1,197 | 1,184 | 1 | |||||||||||||||
Diluted EPS from continuing operations | 1.69 | 1.09 | 55 | 2.99 | 2.98 | — | |||||||||||||||
Non-GAAP* | |||||||||||||||||||||
Adjusted operating income | $ | 805 | $ | 769 | 5 | % | $ | 2,165 | $ | 2,194 | (1 | )% | |||||||||
Adjusted net earnings from continuing operations attributable to Viacom | 471 | 419 | 12 | 1,201 | 1,192 | 1 | |||||||||||||||
Adjusted diluted EPS from continuing operations | 1.17 | 1.05 | 11 | 3.00 | 3.00 | — | |||||||||||||||
• | The Company secured a groundbreaking partnership with Altice USA, which ensures continued distribution of Viacom's premiere networks in the Cablevision system, returns Viacom programming to Suddenlink customers, expands next-generation branded content offerings for viewers and leverages our industry-leading advertising products across multiple platforms and screens. |
• | Viacom entered a multi-year talent agreement with Tyler Perry that encompasses television, film, short-form and digital video. The partnership will bring Perry's signature brand of storytelling to Viacom's audiences. |
• | Sequential quarterly improvement in domestic ad sales revenues and momentum from the U.S. upfront indicate that the Company's flagship brand strategy and renewed commitment to partnerships are resonating. |
• | Under six months of new leadership, MTV recorded year-over-year ratings growth in June for the first time since 2011, and claimed four of the top 30 cable series in the quarter, including a rebooted Fear Factor - the network's highest rated new series in the last two years. |
• | BET experienced its strongest June year-over-year ratings growth in four years, and July was the network's second consecutive month of year-over-year growth. |
• | Comedy Central's The Daily Show with Trevor Noah continued its ratings climb as cable's number-one daily late night talk show with millennials, recording its highest-rated and most-watched quarter ever. |
• | Nickelodeon continued to dominate the ratings in its major demographics, with 9 of the top 10 shows for kids 2-11 and four of the top five shows for kids 2-5. It grew year-over-year ratings by 5% and has remained the number-one kids network for eight consecutive quarters. |
• | Revenue weighted share for VIMN’s portfolio of flagship brands increased 6% internationally, while Channel 5 outperformed the market and grew share for a sixth straight quarter. The successful integration of Telefe continued as the network maintained its strong market leadership in Argentina. |
• | In June, Paramount announced the establishment of Paramount Players, a new production division that will develop, produce and market feature films in collaboration with Viacom's flagship brands. AwesomenessTV founder Brian Robbins will lead the division as President. |
• | The studio recently named accomplished filmmaker and producer Mireille Soria as President of Paramount Animation to oversee the group's operations and work with Viacom's teams to guide the creative development and production of its animated feature slate. |
• | Transformers: The Last Knight opened to number one in the U.S. and in 53 markets internationally, including China. |
• | Paramount TV continued to strengthen its portfolio, with 16 shows ordered to production and over 50 projects in development. Remaining fiscal 2017 releases include new seasons of Shooter, Berlin Station and Nickelodeon's School of Rock, which was recently nominated for a Primetime Emmy for Outstanding Children's Program. |
Contacts | ||
Press: | Investors: | |
Jeremy Zweig Vice President, Corporate Communications and Corporate Affairs (212) 846-7503 jeremy.zweig@viacom.com Alex Rindler Senior Manager, Corporate Communications (212) 846-4337 alex.rindler@viacom.com | James Bombassei Senior Vice President, Investor Relations (212) 258-6377 james.bombassei@viacom.com Kareem Chin Vice President, Investor Relations (212) 846-6305 kareem.chin@viacom.com | |
VIACOM INC. CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) | |||||||||||||||
Quarter Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
(in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Revenues | $ | 3,364 | $ | 3,107 | $ | 9,944 | $ | 9,262 | |||||||
Expenses: | |||||||||||||||
Operating | 1,788 | 1,575 | 5,551 | 4,822 | |||||||||||
Selling, general and administrative | 756 | 708 | 2,205 | 2,080 | |||||||||||
Depreciation and amortization | 53 | 55 | 167 | 166 | |||||||||||
Restructuring | 21 | — | 237 | — | |||||||||||
Total expenses | 2,618 | 2,338 | 8,160 | 7,068 | |||||||||||
Operating income | 746 | 769 | 1,784 | 2,194 | |||||||||||
Interest expense, net | (155 | ) | (156 | ) | (469 | ) | (466 | ) | |||||||
Equity in net earnings of investee companies | 47 | 19 | 78 | 85 | |||||||||||
Gain on sale of EPIX | 285 | — | 285 | — | |||||||||||
Gain/(loss) on extinguishment of debt | 16 | — | (20 | ) | — | ||||||||||
Other items, net | (18 | ) | 3 | (17 | ) | (1 | ) | ||||||||
Earnings from continuing operations before provision for income taxes | 921 | 635 | 1,641 | 1,812 | |||||||||||
Provision for income taxes | (233 | ) | (195 | ) | (417 | ) | (602 | ) | |||||||
Net earnings from continuing operations | 688 | 440 | 1,224 | 1,210 | |||||||||||
Discontinued operations, net of tax | 3 | — | 3 | — | |||||||||||
Net earnings (Viacom and noncontrolling interests) | 691 | 440 | 1,227 | 1,210 | |||||||||||
Net earnings attributable to noncontrolling interests | (8 | ) | (8 | ) | (27 | ) | (26 | ) | |||||||
Net earnings attributable to Viacom | $ | 683 | $ | 432 | $ | 1,200 | $ | 1,184 | |||||||
Amounts attributable to Viacom: | |||||||||||||||
Net earnings from continuing operations | $ | 680 | $ | 432 | $ | 1,197 | $ | 1,184 | |||||||
Discontinued operations, net of tax | 3 | — | 3 | — | |||||||||||
Net earnings attributable to Viacom | $ | 683 | $ | 432 | $ | 1,200 | $ | 1,184 | |||||||
Basic earnings per share attributable to Viacom: | |||||||||||||||
Continuing operations | $ | 1.69 | $ | 1.09 | $ | 3.00 | $ | 2.99 | |||||||
Discontinued operations | 0.01 | — | 0.01 | — | |||||||||||
Net earnings | $ | 1.70 | $ | 1.09 | $ | 3.01 | $ | 2.99 | |||||||
Diluted earnings per share attributable to Viacom: | |||||||||||||||
Continuing operations | $ | 1.69 | $ | 1.09 | $ | 2.99 | $ | 2.98 | |||||||
Discontinued operations | 0.01 | — | 0.01 | — | |||||||||||
Net earnings | $ | 1.70 | $ | 1.09 | $ | 3.00 | $ | 2.98 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 402.0 | 396.5 | 399.1 | 396.4 | |||||||||||
Diluted | 402.6 | 398.0 | 400.0 | 397.9 | |||||||||||
Dividends declared per share of Class A and Class B common stock | $ | 0.20 | $ | 0.40 | $ | 0.60 | $ | 1.20 | |||||||
VIACOM INC. CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
(in millions, except par value) | June 30, 2017 | September 30, 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 425 | $ | 379 | |||
Receivables, net | 3,302 | 2,712 | |||||
Inventory, net | 930 | 844 | |||||
Prepaid and other assets | 477 | 587 | |||||
Total current assets | 5,134 | 4,522 | |||||
Property and equipment, net | 955 | 932 | |||||
Inventory, net | 4,074 | 4,032 | |||||
Goodwill | 11,648 | 11,400 | |||||
Intangibles, net | 325 | 315 | |||||
Other assets | 990 | 1,307 | |||||
Total assets | $ | 23,126 | $ | 22,508 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 325 | $ | 453 | |||
Accrued expenses | 878 | 773 | |||||
Participants' share and residuals | 848 | 801 | |||||
Program obligations | 746 | 692 | |||||
Deferred revenue | 406 | 419 | |||||
Current portion of debt | 70 | 17 | |||||
Other liabilities | 523 | 517 | |||||
Total current liabilities | 3,796 | 3,672 | |||||
Noncurrent portion of debt | 11,103 | 11,896 | |||||
Participants' share and residuals | 370 | 358 | |||||
Program obligations | 468 | 311 | |||||
Deferred tax liabilities, net | 337 | 381 | |||||
Other liabilities | 1,381 | 1,349 | |||||
Redeemable noncontrolling interest | 209 | 211 | |||||
Commitments and contingencies | |||||||
Viacom stockholders' equity: | |||||||
Class A common stock, par value $0.001, 375.0 authorized; 49.4 and 49.4 outstanding, respectively | — | — | |||||
Class B common stock, par value $0.001, 5,000.0 authorized; 353.0 and 347.6 outstanding, respectively | — | — | |||||
Additional paid-in capital | 10,108 | 10,139 | |||||
Treasury stock, 393.8 and 399.4 common shares held in treasury, respectively | (20,591 | ) | (20,798 | ) | |||
Retained earnings | 16,589 | 15,628 | |||||
Accumulated other comprehensive loss | (697 | ) | (692 | ) | |||
Total Viacom stockholders' equity | 5,409 | 4,277 | |||||
Noncontrolling interests | 53 | 53 | |||||
Total equity | 5,462 | 4,330 | |||||
Total liabilities and equity | $ | 23,126 | $ | 22,508 | |||
Nine Months Ended June 30, | |||||||
(in millions) | 2017 | 2016 | |||||
OPERATING ACTIVITIES | |||||||
Net earnings (Viacom and noncontrolling interests) | $ | 1,227 | $ | 1,210 | |||
Discontinued operations, net of tax | (3 | ) | — | ||||
Net earnings from continuing operations | 1,224 | 1,210 | |||||
Reconciling items: | |||||||
Depreciation and amortization | 167 | 166 | |||||
Feature film and program amortization | 3,475 | 3,253 | |||||
Equity-based compensation | 52 | 71 | |||||
Equity in net earnings and distributions from investee companies | (11 | ) | (81 | ) | |||
Gain on sale of EPIX | (285 | ) | — | ||||
Deferred income taxes | (118 | ) | 470 | ||||
Operating assets and liabilities, net of acquisitions: | |||||||
Receivables | (504 | ) | (137 | ) | |||
Production and programming | (3,252 | ) | (3,915 | ) | |||
Accounts payable and other current liabilities | (139 | ) | (482 | ) | |||
Other, net | 44 | (155 | ) | ||||
Net cash provided by operating activities | 653 | 400 | |||||
INVESTING ACTIVITIES | |||||||
Acquisitions and investments, net | (358 | ) | (59 | ) | |||
Capital expenditures | (139 | ) | (80 | ) | |||
Proceeds received from sale of EPIX | 593 | — | |||||
Proceeds received from grantor trusts | 52 | — | |||||
Sale of marketable securities | 108 | — | |||||
Net cash provided by/(used in) investing activities | 256 | (139 | ) | ||||
FINANCING ACTIVITIES | |||||||
Borrowings | 2,569 | — | |||||
Debt repayments | (3,300 | ) | (368 | ) | |||
Commercial paper | — | 453 | |||||
Purchase of treasury stock | — | (100 | ) | ||||
Dividends paid | (239 | ) | (476 | ) | |||
Excess tax benefits on equity-based compensation awards | 1 | — | |||||
Exercise of stock options | 172 | 10 | |||||
Other, net | (64 | ) | (64 | ) | |||
Net cash flow used in financing activities | (861 | ) | (545 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (2 | ) | (30 | ) | |||
Net change in cash and cash equivalents | 46 | (314 | ) | ||||
Cash and cash equivalents at beginning of period | 379 | 506 | |||||
Cash and cash equivalents at end of period | $ | 425 | $ | 192 | |||
(in millions, except per share amounts) | |||||||||||||||||||
Quarter Ended June 30, 2017 | |||||||||||||||||||
Operating Income | Earnings from Continuing Operations Before Provision for Income Taxes | Provision for Income Taxes (1) | Net Earnings from Continuing Operations Attributable to Viacom | Diluted EPS from Continuing Operations | |||||||||||||||
Reported results (GAAP) | $ | 746 | $ | 921 | $ | 233 | $ | 680 | $ | 1.69 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Restructuring and programming charges (2) | 59 | 59 | 21 | 38 | 0.09 | ||||||||||||||
Gain on extinguishment of debt (3) | — | (16 | ) | (5 | ) | (11 | ) | (0.03 | ) | ||||||||||
Gain on sale of EPIX (4) | — | (285 | ) | (96 | ) | (189 | ) | (0.47 | ) | ||||||||||
Investment impairment (5) | — | 10 | 4 | 6 | 0.01 | ||||||||||||||
Discrete tax benefit (6) | — | — | 53 | (53 | ) | (0.12 | ) | ||||||||||||
Adjusted results (Non-GAAP) | $ | 805 | $ | 689 | $ | 210 | $ | 471 | $ | 1.17 | |||||||||
Nine Months Ended June 30, 2017 | |||||||||||||||||||
Operating Income | Earnings from Continuing Operations Before Provision for Income Taxes | Provision for Income Taxes (1) | Net Earnings from Continuing Operations Attributable to Viacom | Diluted EPS from Continuing Operations | |||||||||||||||
Reported results (GAAP) | $ | 1,784 | $ | 1,641 | $ | 417 | $ | 1,197 | $ | 2.99 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Restructuring and programming charges (2) | 381 | 381 | 135 | 246 | 0.62 | ||||||||||||||
Loss on extinguishment of debt (3) | — | 20 | 7 | 13 | 0.03 | ||||||||||||||
Gain on sale of EPIX (4) | — | (285 | ) | (96 | ) | (189 | ) | (0.47 | ) | ||||||||||
Investment impairment (5) | — | 10 | 4 | 6 | 0.02 | ||||||||||||||
Discrete tax benefit (6) | — | — | 72 | (72 | ) | (0.19 | ) | ||||||||||||
Adjusted results (Non-GAAP) | $ | 2,165 | $ | 1,767 | $ | 539 | $ | 1,201 | $ | 3.00 | |||||||||
Quarter Ended June 30, 2016 | |||||||||||||||||||
Operating Income | Earnings from Continuing Operations Before Provision for Income Taxes | Provision for Income Taxes (1) | Net Earnings from Continuing Operations Attributable to Viacom | Diluted EPS from Continuing Operations | |||||||||||||||
Reported results (GAAP) | $ | 769 | $ | 635 | $ | 195 | $ | 432 | $ | 1.09 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Discrete tax benefit (6) | — | — | 13 | (13 | ) | (0.04 | ) | ||||||||||||
Adjusted results (Non-GAAP) | $ | 769 | $ | 635 | $ | 208 | $ | 419 | $ | 1.05 | |||||||||
Nine Months Ended June 30, 2016 | |||||||||||||||||||
Operating Income | Earnings from Continuing Operations Before Provision for Income Taxes | Provision for Income Taxes (1) | Net Earnings from Continuing Operations Attributable to Viacom | Diluted EPS from Continuing Operations | |||||||||||||||
Reported results (GAAP) | $ | 2,194 | $ | 1,812 | $ | 602 | $ | 1,184 | $ | 2.98 | |||||||||
Factors Affecting Comparability: | |||||||||||||||||||
Discrete tax expense (7) | — | — | (8 | ) | 8 | 0.02 | |||||||||||||
Adjusted results (Non-GAAP) | $ | 2,194 | $ | 1,812 | $ | 594 | $ | 1,192 | $ | 3.00 | |||||||||
Reconciliation of net cash provided by operating activities to free cash flow and operating free cash flow (in millions) | Quarter Ended June 30, | Better/ (Worse) | Nine Months Ended June 30, | Better/ (Worse) | |||||||||||||||||||
2017 | 2016 | $ | 2017 | 2016 | $ | ||||||||||||||||||
Net cash provided by operating activities (GAAP) | $ | 248 | $ | 116 | $ | 132 | $ | 653 | $ | 400 | $ | 253 | |||||||||||
Capital expenditures | (44 | ) | (26 | ) | (18 | ) | (139 | ) | (80 | ) | (59 | ) | |||||||||||
Excess tax benefits | 1 | — | 1 | 1 | — | 1 | |||||||||||||||||
Free cash flow (Non-GAAP) | 205 | 90 | 115 | 515 | 320 | 195 | |||||||||||||||||
Debt retirement premium | — | — | — | 33 | — | 33 | |||||||||||||||||
Operating free cash flow (Non-GAAP) | $ | 205 | $ | 90 | $ | 115 | $ | 548 | $ | 320 | $ | 228 | |||||||||||