|
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|
|
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended December 31, 2018
|
¨
|
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 January 31, 2019
|
|
Class A common stock, par value $0.001 per share
|
|
49,430,901
|
|
Class B common stock, par value $0.001 per share
|
|
353,639,515
|
|
|
|
|
Page
|
|
||
|
||
|
Consolidated Statements of Earnings for the quarter
s ended December 31, 2018 and 2017
|
|
|
Consolidated Statements of Comprehensive Income for the quarter
s ended December 31, 2018 and 2017
|
|
|
Consolidated Balance Sheets as of
December 31, 2018 and September 30, 2018
|
|
|
Consolidated Statements of Cash Flows for the
quarters ended December 31, 2018 and 2017
|
|
|
Consolidated Statements of Stockholders’ Equity
for the quarters ended December 31, 2018 and 2017
|
|
|
||
|
|
|
|
||
|
Quarter Ended
December 31, |
||||||
(in millions, except per share amounts)
|
2018
|
|
2017
|
||||
Revenues
|
$
|
3,090
|
|
|
$
|
3,073
|
|
Expenses:
|
|
|
|
||||
Operating
|
1,683
|
|
|
1,563
|
|
||
Selling, general and administrative
|
684
|
|
|
739
|
|
||
Depreciation and amortization
|
50
|
|
|
53
|
|
||
Restructuring and related costs
|
71
|
|
|
—
|
|
||
Total expenses
|
2,488
|
|
|
2,355
|
|
||
Operating income
|
602
|
|
|
718
|
|
||
Interest expense, net
|
(127
|
)
|
|
(147
|
)
|
||
Equity in net earnings of investee companies
|
1
|
|
|
1
|
|
||
Loss on marketable securities
|
(46
|
)
|
|
—
|
|
||
Gain on extinguishment of debt
|
18
|
|
|
25
|
|
||
Other items, net
|
(7
|
)
|
|
(4
|
)
|
||
Earnings from continuing operations before provision for income taxes
|
441
|
|
|
593
|
|
||
Provision for income taxes
|
(110
|
)
|
|
(42
|
)
|
||
Net earnings from continuing operations
|
331
|
|
|
551
|
|
||
Discontinued operations, net of tax
|
3
|
|
|
2
|
|
||
Net earnings (Viacom and noncontrolling interests)
|
334
|
|
|
553
|
|
||
Net earnings attributable to noncontrolling interests
|
(13
|
)
|
|
(16
|
)
|
||
Net earnings attributable to Viacom
|
$
|
321
|
|
|
$
|
537
|
|
Amounts attributable to Viacom:
|
|
|
|
||||
Net earnings from continuing operations
|
$
|
318
|
|
|
$
|
535
|
|
Discontinued operations, net of tax
|
3
|
|
|
2
|
|
||
Net earnings attributable to Viacom
|
$
|
321
|
|
|
$
|
537
|
|
Basic earnings per share attributable to Viacom:
|
|
|
|
||||
Continuing operations
|
$
|
0.79
|
|
|
$
|
1.33
|
|
Discontinued operations
|
0.01
|
|
|
—
|
|
||
Net earnings
|
$
|
0.80
|
|
|
$
|
1.33
|
|
Diluted earnings per share attributable to Viacom:
|
|
|
|
||||
Continuing operations
|
$
|
0.79
|
|
|
$
|
1.33
|
|
Discontinued operations
|
0.01
|
|
|
—
|
|
||
Net earnings
|
$
|
0.80
|
|
|
$
|
1.33
|
|
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
403.1
|
|
|
402.5
|
|
||
Diluted
|
403.5
|
|
|
402.6
|
|
||
|
|
|
|
|
Quarter Ended
December 31, |
||||||
(in millions)
|
2018
|
|
2017
|
||||
Net earnings (Viacom and noncontrolling interests)
|
$
|
334
|
|
|
$
|
553
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(54
|
)
|
|
9
|
|
||
Defined benefit pension plans
|
1
|
|
|
2
|
|
||
Cash flow hedges
|
2
|
|
|
1
|
|
||
Available-for-sale securities
|
—
|
|
|
30
|
|
||
Other comprehensive income/(loss) (Viacom and noncontrolling interests)
|
(51
|
)
|
|
42
|
|
||
Comprehensive income
|
283
|
|
|
595
|
|
||
Less: Comprehensive income attributable to noncontrolling interest
|
10
|
|
|
16
|
|
||
Comprehensive income attributable to Viacom
|
$
|
273
|
|
|
$
|
579
|
|
|
|
|
|
(in millions, except par value)
|
December 31,
2018 |
|
September 30,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
534
|
|
|
$
|
1,557
|
|
Receivables, net
|
3,205
|
|
|
3,141
|
|
||
Inventory, net
|
829
|
|
|
896
|
|
||
Prepaid and other assets
|
468
|
|
|
482
|
|
||
Total current assets
|
5,036
|
|
|
6,076
|
|
||
Property and equipment, net
|
893
|
|
|
919
|
|
||
Inventory, net
|
3,930
|
|
|
3,848
|
|
||
Goodwill
|
11,606
|
|
|
11,609
|
|
||
Intangibles, net
|
305
|
|
|
313
|
|
||
Other assets
|
974
|
|
|
1,018
|
|
||
Total assets
|
$
|
22,744
|
|
|
$
|
23,783
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
305
|
|
|
$
|
433
|
|
Accrued expenses
|
732
|
|
|
848
|
|
||
Participants’ share and residuals
|
707
|
|
|
719
|
|
||
Program obligations
|
729
|
|
|
662
|
|
||
Deferred revenue
|
424
|
|
|
398
|
|
||
Current portion of debt
|
326
|
|
|
567
|
|
||
Other liabilities
|
610
|
|
|
427
|
|
||
Total current liabilities
|
3,833
|
|
|
4,054
|
|
||
Noncurrent portion of debt
|
8,635
|
|
|
9,515
|
|
||
Participants’ share and residuals
|
428
|
|
|
523
|
|
||
Program obligations
|
437
|
|
|
498
|
|
||
Deferred tax liabilities, net
|
274
|
|
|
296
|
|
||
Other liabilities
|
1,174
|
|
|
1,186
|
|
||
Redeemable noncontrolling interest
|
239
|
|
|
246
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
|
|
||
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; 353.7 and 353.7 outstanding, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
10,154
|
|
|
10,145
|
|
||
Treasury stock, 393.1 and 393.1 common shares held in treasury, respectively
|
(20,561
|
)
|
|
(20,562
|
)
|
||
Retained earnings
|
18,916
|
|
|
18,561
|
|
||
Accumulated other comprehensive loss
|
(839
|
)
|
|
(737
|
)
|
||
Total Viacom stockholders’ equity
|
7,670
|
|
|
7,407
|
|
||
Noncontrolling interests
|
54
|
|
|
58
|
|
||
Total equity
|
7,724
|
|
|
7,465
|
|
||
Total liabilities and equity
|
$
|
22,744
|
|
|
$
|
23,783
|
|
|
|
|
|
|
Quarter Ended
December 31, |
||||||
(in millions)
|
2018
|
|
2017
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net earnings (Viacom and noncontrolling interests)
|
$
|
334
|
|
|
$
|
553
|
|
Discontinued operations, net of tax
|
(3
|
)
|
|
(2
|
)
|
||
Net earnings from continuing operations
|
331
|
|
|
551
|
|
||
Reconciling items:
|
|
|
|
||||
Depreciation and amortization
|
50
|
|
|
53
|
|
||
Feature film and program amortization
|
1,082
|
|
|
1,047
|
|
||
Equity-based compensation
|
9
|
|
|
14
|
|
||
Equity in net earnings and distributions from investee companies
|
2
|
|
|
4
|
|
||
Deferred income taxes
|
(36
|
)
|
|
(91
|
)
|
||
Loss on marketable securities
|
46
|
|
|
—
|
|
||
Operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Receivables
|
(12
|
)
|
|
(93
|
)
|
||
Production and programming
|
(1,125
|
)
|
|
(1,191
|
)
|
||
Accounts payable and other current liabilities
|
(78
|
)
|
|
(232
|
)
|
||
Other, net
|
(41
|
)
|
|
(50
|
)
|
||
Net cash provided by operating activities
|
228
|
|
|
12
|
|
||
|
|
|
|
||||
INVESTING ACTIVITIES
|
|
|
|
||||
Acquisitions and investments, net
|
(14
|
)
|
|
(2
|
)
|
||
Capital expenditures
|
(37
|
)
|
|
(28
|
)
|
||
Proceeds received from asset sales
|
5
|
|
|
23
|
|
||
Grantor trust proceeds
|
2
|
|
|
2
|
|
||
Net cash used in investing activities
|
(44
|
)
|
|
(5
|
)
|
||
|
|
|
|
||||
FINANCING ACTIVITIES
|
|
|
|
||||
Debt repayments
|
(1,100
|
)
|
|
(1,000
|
)
|
||
Commercial paper
|
—
|
|
|
100
|
|
||
Dividends paid
|
(81
|
)
|
|
(80
|
)
|
||
Other, net
|
(21
|
)
|
|
(22
|
)
|
||
Net cash used in financing activities
|
(1,202
|
)
|
|
(1,002
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(5
|
)
|
|
—
|
|
||
Net change in cash and cash equivalents
|
(1,023
|
)
|
|
(995
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,557
|
|
|
1,389
|
|
||
Cash and cash equivalents at end of period
|
$
|
534
|
|
|
$
|
394
|
|
|
|
|
|
|
Quarter Ended
December 31, 2017 |
|||||||||||||||||||||||||||||
(in millions, except per share amounts)
|
Common
Stock
(shares)
|
|
Common
Stock/
Additional Paid-In Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total Viacom
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|||||||||||||||
September 30, 2017
|
402.4
|
|
|
$
|
10,119
|
|
|
$
|
(20,590
|
)
|
|
$
|
17,124
|
|
|
$
|
(618
|
)
|
|
$
|
6,035
|
|
|
$
|
84
|
|
|
$
|
6,119
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
537
|
|
|
—
|
|
|
537
|
|
|
16
|
|
|
553
|
|
|||||||
Other comprehensive income, net of income tax expense of $18
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
(19
|
)
|
|
(17
|
)
|
|||||||
Dividends declared ($0.20 per share for both Class A and B)
|
—
|
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
|
(81
|
)
|
|||||||
Equity-based compensation and other
|
0.1
|
|
|
10
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||||
December 31, 2017
|
402.5
|
|
|
$
|
10,129
|
|
|
$
|
(20,585
|
)
|
|
$
|
17,582
|
|
|
$
|
(576
|
)
|
|
$
|
6,550
|
|
|
$
|
81
|
|
|
$
|
6,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31, 2018 |
|||||||||||||||||||||||||||||
(in millions, except per share amounts)
|
Common
Stock
(shares)
|
|
Common
Stock/
Additional Paid-In Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total Viacom
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|||||||||||||||
September 30, 2018
|
403.1
|
|
|
$
|
10,145
|
|
|
$
|
(20,562
|
)
|
|
$
|
18,561
|
|
|
$
|
(737
|
)
|
|
$
|
7,407
|
|
|
$
|
58
|
|
|
$
|
7,465
|
|
Adoption of New Accounting Pronouncements
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
(54
|
)
|
|
59
|
|
|
—
|
|
|
59
|
|
|||||||
Adjusted beginning balance,
October 1, 2018
|
403.1
|
|
|
10,145
|
|
|
(20,562
|
)
|
|
18,674
|
|
|
(791
|
)
|
|
7,466
|
|
|
58
|
|
|
7,524
|
|
|||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
321
|
|
|
—
|
|
|
321
|
|
|
13
|
|
|
334
|
|
|||||||
Other comprehensive loss, net of income tax expense of $1
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
(48
|
)
|
|
(3
|
)
|
|
(51
|
)
|
|||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
(14
|
)
|
|
(13
|
)
|
|||||||
Dividends declared ($0.20 per share for both Class A and B)
|
—
|
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
|
(81
|
)
|
|||||||
Equity-based compensation and other
|
—
|
|
|
9
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||||
December 31, 2018
|
403.1
|
|
|
$
|
10,154
|
|
|
$
|
(20,561
|
)
|
|
$
|
18,916
|
|
|
$
|
(839
|
)
|
|
$
|
7,670
|
|
|
$
|
54
|
|
|
$
|
7,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Earnings Impact
(in millions, except per share amounts)
|
Quarter Ended
December 31, 2018 |
||
Revenues
|
$
|
(11
|
)
|
Operating expenses
|
(4
|
)
|
|
Operating income
|
(7
|
)
|
|
Provision for income taxes
|
(2
|
)
|
|
Net earnings from continuing operations
|
$
|
(5
|
)
|
Net earnings (Viacom and noncontrolling interests)
|
$
|
(5
|
)
|
Net earnings attributable to Viacom
|
$
|
(5
|
)
|
Basic EPS from continuing operations
|
$
|
(0.01
|
)
|
Diluted EPS from continuing operations
|
$
|
(0.01
|
)
|
|
|
Consolidated Balance Sheet Impact
(in millions)
|
December 31, 2018
|
||
ASSETS
|
|
||
Receivables, net
|
$
|
7
|
|
Inventory, net
|
(15
|
)
|
|
Prepaid and other assets
|
(2
|
)
|
|
Other assets
|
112
|
|
|
LIABILITIES AND EQUITY
|
|
||
Accrued expenses
|
$
|
10
|
|
Participants’ share and residuals (current)
|
32
|
|
|
Other liabilities (current)
|
(70
|
)
|
|
Deferred revenue
|
(4
|
)
|
|
Participants’ share and residuals (noncurrent)
|
56
|
|
|
Other liabilities (noncurrent)
|
(23
|
)
|
|
Retained earnings
|
101
|
|
|
|
|
Inventory
(in millions)
|
December 31,
2018 |
|
September 30,
2018 |
||||
Film inventory:
|
|
|
|
||||
Released, net of amortization
|
$
|
575
|
|
|
$
|
454
|
|
Completed, not yet released
|
31
|
|
|
11
|
|
||
In process and other
|
653
|
|
|
713
|
|
||
|
1,259
|
|
|
1,178
|
|
||
Television productions:
|
|
|
|
||||
Released, net of amortization
|
4
|
|
|
6
|
|
||
In process and other
|
224
|
|
|
201
|
|
||
|
228
|
|
|
207
|
|
||
Original programming:
|
|
|
|
||||
Released, net of amortization
|
1,032
|
|
|
1,124
|
|
||
In process and other
|
875
|
|
|
757
|
|
||
|
1,907
|
|
|
1,881
|
|
||
Acquired program rights, net of amortization
|
1,301
|
|
|
1,411
|
|
||
Home entertainment inventory
|
64
|
|
|
67
|
|
||
Total inventory, net
|
4,759
|
|
|
4,744
|
|
||
Less current portion
|
829
|
|
|
896
|
|
||
Noncurrent portion
|
$
|
3,930
|
|
|
$
|
3,848
|
|
|
|
|
|
Debt
(in millions)
|
December 31,
2018 |
|
September 30,
2018 |
||||
Senior Notes and Debentures:
|
|
|
|
||||
Senior notes due September 2019, 5.625%
|
$
|
221
|
|
|
$
|
550
|
|
Senior notes due December 2019, 2.750%
|
90
|
|
|
252
|
|
||
Senior notes due March 2021, 4.500%
|
498
|
|
|
497
|
|
||
Senior notes due December 2021, 3.875%
|
596
|
|
|
596
|
|
||
Senior notes due February 2022, 2.250%
|
49
|
|
|
102
|
|
||
Senior notes due June 2022, 3.125%
|
194
|
|
|
194
|
|
||
Senior notes due March 2023, 3.250%
|
181
|
|
|
181
|
|
||
Senior notes due September 2023, 4.250%
|
1,240
|
|
|
1,239
|
|
||
Senior notes due April 2024, 3.875%
|
489
|
|
|
488
|
|
||
Senior notes due October 2026, 3.450%
|
123
|
|
|
474
|
|
||
Senior debentures due December 2034, 4.850%
|
86
|
|
|
281
|
|
||
Senior debentures due April 2036, 6.875%
|
1,068
|
|
|
1,068
|
|
||
Senior debentures due October 2037, 6.750%
|
75
|
|
|
75
|
|
||
Senior debentures due February 2042, 4.500%
|
45
|
|
|
62
|
|
||
Senior debentures due March 2043, 4.375%
|
1,103
|
|
|
1,102
|
|
||
Senior debentures due June 2043, 4.875%
|
18
|
|
|
32
|
|
||
Senior debentures due September 2043, 5.850%
|
1,230
|
|
|
1,230
|
|
||
Senior debentures due April 2044, 5.250%
|
345
|
|
|
345
|
|
||
Junior Debentures:
|
|
|
|
||||
Junior subordinated debentures due February 2057, 5.875%
|
642
|
|
|
642
|
|
||
Junior subordinated debentures due February 2057, 6.250%
|
642
|
|
|
642
|
|
||
Capital lease and other obligations
|
26
|
|
|
30
|
|
||
Total debt
|
8,961
|
|
|
10,082
|
|
||
Less current portion
|
326
|
|
|
567
|
|
||
Noncurrent portion
|
$
|
8,635
|
|
|
$
|
9,515
|
|
|
|
|
|
Net Periodic Benefit Cost
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Interest cost
|
$
|
10
|
|
|
$
|
9
|
|
Expected return on plan assets
|
(10
|
)
|
|
(10
|
)
|
||
Recognized actuarial loss
|
1
|
|
|
2
|
|
||
Net periodic benefit cost
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
|
Redeemable Noncontrolling Interest
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Beginning balance
|
$
|
246
|
|
|
$
|
248
|
|
Net earnings
|
5
|
|
|
7
|
|
||
Distributions
|
(5
|
)
|
|
(6
|
)
|
||
Translation adjustment
|
(6
|
)
|
|
2
|
|
||
Redemption value adjustment
|
(1
|
)
|
|
(2
|
)
|
||
Ending Balance
|
$
|
239
|
|
|
$
|
249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Restructuring, Related Costs
and Programming Charges
(in millions)
|
Quarter Ended
December 31, 2018 |
||||||||||||||
Media Networks
|
|
Filmed Entertainment
|
|
Corporate
|
|
Total
|
|||||||||
Severance
(1)
|
$
|
23
|
|
|
$
|
14
|
|
|
$
|
4
|
|
|
$
|
41
|
|
Exit costs
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||
Other related costs
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Restructuring and related costs
|
50
|
|
|
14
|
|
|
7
|
|
|
71
|
|
||||
Programming
|
74
|
|
|
3
|
|
|
—
|
|
|
77
|
|
||||
Total
|
$
|
124
|
|
|
$
|
17
|
|
|
$
|
7
|
|
|
$
|
148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Severance Liability
(in millions)
|
Media Networks
|
|
Filmed Entertainment
|
|
Corporate
|
|
Total
|
||||||||
September 30, 2018
|
$
|
149
|
|
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
195
|
|
Accruals
|
22
|
|
|
14
|
|
|
4
|
|
|
40
|
|
||||
Severance payments
|
(37
|
)
|
|
(15
|
)
|
|
(11
|
)
|
|
(63
|
)
|
||||
December 31, 2018
|
$
|
134
|
|
|
$
|
22
|
|
|
$
|
16
|
|
|
$
|
172
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding and
Anti-dilutive Common Shares
(in millions)
|
Quarter Ended
December 31, |
||||
2018
|
|
2017
|
|||
Weighted average number of common shares outstanding, basic
|
403.1
|
|
|
402.5
|
|
Dilutive effect of equity awards
|
0.4
|
|
|
0.1
|
|
Weighted average number of common shares outstanding, diluted
|
403.5
|
|
|
402.6
|
|
|
|
|
|
||
Anti-dilutive common shares
|
19.8
|
|
|
19.1
|
|
|
|
|
|
Supplemental Cash Flow Information
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Cash paid for interest
|
$
|
104
|
|
|
$
|
123
|
|
Cash paid for income taxes
|
$
|
36
|
|
|
$
|
24
|
|
Revenues by Segment
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Media Networks
|
$
|
2,498
|
|
|
$
|
2,560
|
|
Filmed Entertainment
|
621
|
|
|
544
|
|
||
Eliminations
|
(29
|
)
|
|
(31
|
)
|
||
Total revenues
|
$
|
3,090
|
|
|
$
|
3,073
|
|
|
|
|
|
Adjusted Operating Income/(Loss)
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Media Networks
|
$
|
913
|
|
|
$
|
914
|
|
Filmed Entertainment
|
(90
|
)
|
|
(130
|
)
|
||
Corporate expenses
|
(60
|
)
|
|
(55
|
)
|
||
Eliminations
|
(4
|
)
|
|
3
|
|
||
Equity-based compensation
|
(9
|
)
|
|
(14
|
)
|
||
Restructuring, related costs and programming charges
(1)
|
(148
|
)
|
|
—
|
|
||
Operating income
|
602
|
|
|
718
|
|
||
Interest expense, net
|
(127
|
)
|
|
(147
|
)
|
||
Equity in net earnings of investee companies
|
1
|
|
|
1
|
|
||
Loss on marketable securities
|
(46
|
)
|
|
—
|
|
||
Gain on extinguishment of debt
|
18
|
|
|
25
|
|
||
Other items, net
|
(7
|
)
|
|
(4
|
)
|
||
Earnings from continuing operations before provision for income taxes
|
$
|
441
|
|
|
$
|
593
|
|
|
|
|
|
Total Assets
(in millions)
|
December 31,
2018 |
|
September 30,
2018 |
||||
|
|||||||
Media Networks
|
$
|
17,464
|
|
|
$
|
17,576
|
|
Filmed Entertainment
|
5,427
|
|
|
5,297
|
|
||
Corporate/Eliminations
|
(147
|
)
|
|
910
|
|
||
Total assets
|
$
|
22,744
|
|
|
$
|
23,783
|
|
|
|
|
|
Revenues by Component
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Media Networks
|
|
|
|
||||
Advertising
|
$
|
1,230
|
|
|
$
|
1,308
|
|
Affiliate
|
1,169
|
|
|
1,139
|
|
||
Consumer products, recreation and live events
|
99
|
|
|
113
|
|
||
Filmed Entertainment
|
|
|
|
||||
Theatrical
|
149
|
|
|
100
|
|
||
Home entertainment
|
178
|
|
|
183
|
|
||
Licensing
|
220
|
|
|
213
|
|
||
Ancillary
|
74
|
|
|
48
|
|
||
Eliminations
|
(29
|
)
|
|
(31
|
)
|
||
Total revenues
|
$
|
3,090
|
|
|
$
|
3,073
|
|
|
|
|
|
CBS Related Party Transactions
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Consolidated Statements of Earnings
|
|
|
|
||||
Revenues
|
$
|
35
|
|
|
$
|
44
|
|
Operating expenses
|
$
|
36
|
|
|
$
|
52
|
|
|
|
|
|
||||
|
December 31,
2018 |
|
September 30,
2018 |
||||
Consolidated Balance Sheets
|
|
|
|
||||
Accounts receivable
|
$
|
5
|
|
|
$
|
7
|
|
|
|
|
|
||||
Accounts payable
|
$
|
1
|
|
|
$
|
—
|
|
Participants’ share and residuals, current
|
59
|
|
|
58
|
|
||
Program obligations, current
|
25
|
|
|
38
|
|
||
Program obligations, noncurrent
|
34
|
|
|
32
|
|
||
Other liabilities
|
1
|
|
|
2
|
|
||
Total due to CBS
|
$
|
120
|
|
|
$
|
130
|
|
|
|
|
|
Other Related Party Transactions
(in millions)
|
Quarter Ended
December 31, |
||||||
2018
|
|
2017
|
|||||
Consolidated Statements of Earnings
|
|
|
|
||||
Revenues
|
$
|
15
|
|
|
$
|
4
|
|
Operating expenses
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
||||
|
December 31,
2018 |
|
September 30,
2018 |
||||
Consolidated Balance Sheets
|
|
|
|
||||
Accounts receivable
|
$
|
46
|
|
|
$
|
43
|
|
Other assets
|
3
|
|
|
3
|
|
||
Total due from other related parties
|
$
|
49
|
|
|
$
|
46
|
|
|
|
|
|
||||
Accounts payable
|
$
|
8
|
|
|
$
|
7
|
|
Participants’ share and residuals, current
|
1
|
|
|
—
|
|
||
Other liabilities
|
—
|
|
|
2
|
|
||
Total due to other related parties
|
$
|
9
|
|
|
$
|
9
|
|
|
|
|
|
|
Quarter Ended
December 31, |
|
Better/(Worse)
|
|||||||||||
(in millions, except per share amounts)
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
GAAP
|
|
|
|
|
|
|
|
|||||||
Revenues
|
$
|
3,090
|
|
|
$
|
3,073
|
|
|
$
|
17
|
|
|
1
|
%
|
Operating income
|
602
|
|
|
718
|
|
|
(116
|
)
|
|
(16
|
)
|
|||
Net earnings from continuing operations attributable to Viacom
|
318
|
|
|
535
|
|
|
(217
|
)
|
|
(41
|
)
|
|||
Diluted earnings per share from continuing operations
|
0.79
|
|
|
1.33
|
|
|
(0.54
|
)
|
|
(41
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
Non-GAAP*
|
|
|
|
|
|
|
|
|||||||
Adjusted operating income
|
$
|
750
|
|
|
$
|
718
|
|
|
$
|
32
|
|
|
4
|
%
|
Adjusted net earnings from continuing operations attributable to Viacom
|
453
|
|
|
413
|
|
|
40
|
|
|
10
|
|
|||
Adjusted diluted earnings per share from continuing operations
|
1.12
|
|
|
1.03
|
|
|
0.09
|
|
|
9
|
|
|||
|
|
|
|
|
|
|
|
|||||||
* 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
December 31, 2017 |
||||||||||||||||||
|
Operating Income
|
|
Earnings from Continuing Operations Before Provision for Income Taxes
|
|
Provision for Income Taxes
|
|
Net Earnings from Continuing Operations Attributable to Viacom
|
|
Diluted EPS from Continuing Operations
|
||||||||||
Reported results (GAAP)
|
$
|
718
|
|
|
$
|
593
|
|
|
$
|
42
|
|
|
$
|
535
|
|
|
$
|
1.33
|
|
Factors Affecting Comparability:
|
|
|
|
|
|
|
|
|
|
||||||||||
Gain on extinguishment of debt
|
—
|
|
|
(25
|
)
|
|
(6
|
)
|
|
(19
|
)
|
|
(0.05
|
)
|
|||||
Discrete tax benefit
|
—
|
|
|
—
|
|
|
103
|
|
|
(103
|
)
|
|
(0.25
|
)
|
|||||
Adjusted results (Non-GAAP)
|
$
|
718
|
|
|
$
|
568
|
|
|
$
|
139
|
|
|
$
|
413
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Restructuring, Related Costs
and Programming Charges
(in millions)
|
Quarter Ended
December 31, 2018 |
||||||||||||||
Media Networks
|
|
Filmed Entertainment
|
|
Corporate
|
|
Total
|
|||||||||
Severance
|
$
|
23
|
|
|
$
|
14
|
|
|
$
|
4
|
|
|
$
|
41
|
|
Exit costs
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||
Other related costs
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Restructuring and related costs
|
50
|
|
|
14
|
|
|
7
|
|
|
71
|
|
||||
Programming
|
74
|
|
|
3
|
|
|
—
|
|
|
77
|
|
||||
Total
|
$
|
124
|
|
|
$
|
17
|
|
|
$
|
7
|
|
|
$
|
148
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31, |
|
Better/(Worse)
|
|||||||||||
(in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Revenues by Component
|
|
|
|
|
|
|
|
|||||||
Advertising
|
$
|
1,230
|
|
|
$
|
1,308
|
|
|
$
|
(78
|
)
|
|
(6
|
)%
|
Affiliate
|
1,169
|
|
|
1,139
|
|
|
30
|
|
|
3
|
|
|||
Consumer products, recreation and live events
|
99
|
|
|
113
|
|
|
(14
|
)
|
|
(12
|
)
|
|||
Total revenues by component
|
2,498
|
|
|
2,560
|
|
|
(62
|
)
|
|
(2
|
)
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Operating
|
1,008
|
|
|
1,013
|
|
|
5
|
|
|
—
|
|
|||
Selling, general and administrative
|
537
|
|
|
592
|
|
|
55
|
|
|
9
|
|
|||
Depreciation and amortization
|
40
|
|
|
41
|
|
|
1
|
|
|
2
|
|
|||
Total expenses
|
1,585
|
|
|
1,646
|
|
|
61
|
|
|
4
|
|
|||
Adjusted Operating Income
|
$
|
913
|
|
|
$
|
914
|
|
|
$
|
(1
|
)
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31, |
|
Better/(Worse)
|
|||||||||||
(in millions)
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Revenues by Component
|
|
|
|
|
|
|
|
|||||||
Theatrical
|
$
|
149
|
|
|
$
|
100
|
|
|
$
|
49
|
|
|
49
|
%
|
Home entertainment
|
178
|
|
|
183
|
|
|
(5
|
)
|
|
(3
|
)
|
|||
Licensing
|
220
|
|
|
213
|
|
|
7
|
|
|
3
|
|
|||
Ancillary
|
74
|
|
|
48
|
|
|
26
|
|
|
54
|
|
|||
Total revenues by component
|
621
|
|
|
544
|
|
|
77
|
|
|
14
|
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Operating
|
623
|
|
|
583
|
|
|
(40
|
)
|
|
(7
|
)
|
|||
Selling, general and administrative
|
79
|
|
|
81
|
|
|
2
|
|
|
2
|
|
|||
Depreciation and amortization
|
9
|
|
|
10
|
|
|
1
|
|
|
10
|
|
|||
Total expenses
|
711
|
|
|
674
|
|
|
(37
|
)
|
|
(5
|
)
|
|||
Adjusted Operating Loss
|
$
|
(90
|
)
|
|
$
|
(130
|
)
|
|
$
|
40
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
(in millions)
|
Quarter Ended
December 31, |
|
Better/(Worse)
|
||||||||
2018
|
|
2017
|
|
$
|
|||||||
Net cash provided by operating activities
|
$
|
228
|
|
|
$
|
12
|
|
|
$
|
216
|
|
Net cash used in investing activities
|
(44
|
)
|
|
(5
|
)
|
|
(39
|
)
|
|||
Net cash used in financing activities
|
(1,202
|
)
|
|
(1,002
|
)
|
|
(200
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
Decrease in cash and cash equivalents
|
$
|
(1,023
|
)
|
|
$
|
(995
|
)
|
|
$
|
(28
|
)
|
Reconciliation of net cash provided by operating activities
to free cash flow
|
|
|
|
|
|
||||||
Net cash provided by operating activities (GAAP)
|
$
|
228
|
|
|
$
|
12
|
|
|
$
|
216
|
|
Capital expenditures
|
(37
|
)
|
|
(28
|
)
|
|
(9
|
)
|
|||
Free cash flow (Non-GAAP)
|
$
|
191
|
|
|
$
|
(16
|
)
|
|
$
|
207
|
|
|
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
10.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
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
|
|
|
**
|
Represents a management contract or compensatory plan or arrangement required to be filed as an exhibit.
|
VIACOM INC.
|
|||
|
|
|
|
Date: February 5, 2019
|
By:
|
|
/s/ W
ADE
D
AVIS
|
|
|
|
Wade Davis
|
|
|
|
Executive Vice President,
Chief Financial Officer
|
|
|
|
|
Date: February 5, 2019
|
By:
|
|
/s/ K
ATHERINE
G
ILL
-C
HAREST
|
|
|
|
Katherine Gill-Charest
|
|
|
|
Senior Vice President, Controller and
Chief Accounting Officer
|
Schedule
|
• If the Company achieves less than the 25
th
percentile TSR, the Target TSR Shares will be forfeited pursuant to this Section 1.2(a)(1)
|
• If the Company achieves the 25
th
percentile TSR, a number of shares of Class B Common Stock equal to 25% of the target number of Target TSR Shares will be delivered pursuant to this Section 1.2(a)(1)
|
• If the Company achieves the 50
th
percentile TSR, a number of shares of Class B Common Stock equal to 100% of the Target TSR Shares will be delivered pursuant to this Section 1.2(a)(1)
|
• If the Company achieves the 100
th
percentile TSR (that is, if it is the first ranked company in the Reference Group for TSR), a number of shares of Class B Common Stock equal to 200% of the Target TSR Shares will be delivered pursuant to this Section 1.2(a)(1)
|
Schedule
|
•
If the Adjusted Diluted EPS from Continuing Operations for the FY19 Period is less than 80% of the Target Adjusted Diluted EPS from Continuing Operations for the FY19 Period, 100% of the Target EPS Shares will be forfeited pursuant to this Section 1.2(a)(2)
|
•
If the Adjusted Diluted EPS from Continuing Operations for the FY19 Period is 80% of the Target Adjusted Diluted EPS from Continuing Operations for the FY19 Period, a number of shares of Class B Common Stock equal to 50% of the Target EPS Shares will be delivered under the award pursuant to this Section 1.2(a)(2)
|
•
If the Adjusted Diluted EPS from Continuing Operations for the FY19 Period is 100% of the Target Adjusted Diluted EPS from Continuing Operations for the FY19 Period, a number of shares of Class B Common Stock equal to 100% of the Target EPS Shares will be delivered under the award pursuant to this Section 1.2(a)(2)
|
•
If the Adjusted Diluted EPS from Continuing Operations for the FY19 Period is 120% or more of the Target Adjusted Diluted EPS from Continuing Operations for the FY19 Period, a number of shares of Class B Common Stock equal to 200% of the target number of EPS Shares will be delivered under the award pursuant to this Section 1.2(a)(2)
|
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/
R
OBERT
M.
B
AKISH
|
|
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/ W
ADE
D
AVIS
|
|
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/
R
OBERT
M.
B
AKISH
|
|
Robert M. Bakish
|
|
February 5, 2019
|
|
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/ W
ADE
D
AVIS
|
|
Wade Davis
|
|
February 5, 2019
|
|