UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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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):
July 26, 2001
VIACOM INC.
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(Exact name of registrant as
specified in its charter)
Delaware 1-9553 04-2949533
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(State or other Commission (IRS Employer
jurisdiction File Number Identification
of incorporation) Number)
1515 Broadway, New York, NY 10036
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(Address of principal executive offices) (Zip Code)
(212) 258-6000
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(Registrant's telephone number, including area code)
Item 5. Other Events
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On July 26, 2001, the Registrant issued earnings information for the
second quarter and six months ending June 30, 2001. Earnings information is
attached hereto as Exhibit 99.1 and is incorporated herein in its entirety.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
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(c) Exhibits
Exhibit No.
99.1 Earnings information issued by the Registrant
on July 26, 2001, for the second quarter and six
months ending June 30, 2001, is filed as Exhibit 99.1
to this Report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIACOM INC.
(Registrant)
By: /s/ Michael D. Fricklas
--------------------------
Michael D. Fricklas
Executive Vice President,
General Counsel
and Secretary
Date: July 27, 2001
EXHIBIT INDEX
Exhibit No.
99.1 Earnings information issued by the
Registrant on July 26, 2001, for the second
quarter and six months ended June 30, 2001.
EXHIBIT 99.1
EARNINGS INFORMATION - VIACOM INC.
Reflecting strong double-digit EBITDA growth, Viacom Inc. (NYSE: VIA and VIA.B)
today reported record results for the second quarter ended June 30, 2001. The
Company also posted a 33% increase in pro forma free cash flow to $936 million.
Free cash flow is an important measure of performance because it reflects the
resources available to the Company after interest, taxes and capital
expenditures that can be used to invest in the business, acquire additional
assets, strengthen the balance sheet and repurchase stock.
Viacom's second quarter 2001 results were led by double-digit EBITDA gains in
the Company's Cable Networks, Television and Entertainment segments. Viacom's
reported revenues rose 18% to $5.72 billion from $4.85 billion in the same
quarter last year, and reported EBITDA (earnings before interest, taxes,
depreciation and amortization) increased to $1.36 billion, up from $273 million,
including merger-related charges of $698 million, in the second quarter of 2000.
Reported free cash flow for the second quarter of 2001 was up 534% from the same
quarter last year and after-tax cash flow climbed 211% over the same quarter
last year.
On a pro forma basis, second quarter 2001 EBITDA rose 12% to $1.36 billion on
revenues of $5.71 billion, compared with EBITDA of $1.21 billion and revenues of
$5.67 billion for the second quarter of 2000. Pro forma free cash flow per share
for the second quarter of 2001 climbed 33% to $.52 per diluted share, or $936
million, versus pro forma free cash flow of $.39 per diluted share, or $706
million, in the second quarter last year. Pro forma after-tax cash flow for the
second quarter of 2001 increased 15% to $1.04 billion, or $.58 per diluted
share, compared with pro forma after-tax cash flow of $904 million, or $.50 per
diluted share, for the same quarter last year.
Cable Networks reported EBITDA increased 36% to $389 million from $286 million
and pro forma EBITDA of $390 million increased 25% from $312 million in the
second quarter of 2000. Television reported and pro forma EBITDA of $361 million
rose 119% and 16%, respectively, from $165 million and $311 million in the same
quarter last year. The Entertainment segment reported EBITDA increased 15% to
$132 million compared with $114 million in the second quarter of 2000.
Blockbuster's reported EBITDA rose 5% to $118 million from $113 million in the
second quarter of 2000. Infinity also made major EBITDA contributions in the
quarter, despite challenges created by the
steep fall-off of advertising in the technology sector which contributed to an
unusually robust advertising market last year.
Viacom reported net earnings of $17 million, or $.01 per share, for the second
quarter of 2001. This compares with a net loss of $496 million, or a loss of
$.41 per share, in the second quarter of 2000. The second quarter of 2000
reflects merger-related charges of $698 million (after-tax $505 million).
SEGMENT RESULTS (Second Quarter 2001 versus Second Quarter 2000)
The table below presents second quarter 2001 and 2000 Revenues and EBITDA on a
reported and pro forma basis.
Second Quarter
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(dollars in millions) Reported Pro Forma
2001 2000 B/(W)% 2001 2000 B/(W)%
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Revenues:
Cable Networks $1,062.0 $ 961.2 10% $1,057.6 $ 993.2 6%
Television 1,626.4 1,225.7 33 1,626.4 1,649.5 (1)
Infinity 985.4 672.6 47 984.9 1,030.7 (4)
Entertainment 772.8 748.7 3 772.8 748.7 3
Video 1,226.0 1,214.4 1 1,226.0 1,214.4 1
Publishing 149.4 133.2 12 149.4 133.2 12
Intercompany eliminations (105.1) (104.9) -- (105.1) (96.6) (9)
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Total Revenues $5,716.9 $4,850.9 18% $5,712.0 $5,673.1 1%
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EBITDA:
Cable Networks $ 388.7 $ 286.2 36% $ 389.6 $ 312.2 25%
Television 360.8 164.5 119 360.8 310.8 16
Infinity 436.4 324.1 35 436.3 460.8 (5)
Entertainment 132.0 114.4 15 132.0 114.4 15
Video 118.4 113.2 5 118.4 113.2 5
Publishing 9.2 8.5 8 9.2 8.5 8
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Segment Total 1,445.5 1,010.9 43 1,446.3 1,319.9 10
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Corporate expenses/
eliminations (65.5) (719.5) 91 (65.5) (75.3) 13
Residual costs of
discontinued operations (18.3) (18.6) 2 (18.3) (30.4) 40
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Total EBITDA $1,361.7 $ 272.8 399% $1,362.5 $1,214.2 12%
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Cable Networks (MTV Networks (MTVN) including MTV, VH1, Nickelodeon, Nick at
Nite, TV Land, TNN: The National Network and CMT; BET; and Showtime Networks
Inc.)
Cable Networks pro forma EBITDA increased 25% to $390 million on pro forma
revenues of $1.06 billion, an increase of 6%. Higher pro forma revenues and
EBITDA principally reflect double-digit increases in cable affiliate fees and
DBS revenues and increased efficiencies. For the 17th consecutive quarter, MTV
was the No. 1 cable network for the core 12-24 year old audience. MTV was also
the No. 1 cable network for the 18-24 year old audience as well as the broader
12-34 year old audience. In the second quarter, TNN's primetime household
ratings grew 52% - the largest increase among all
cable networks in primetime versus the comparable prior year's quarter. The
first annual BET Awards premiered in June and was the most-watched entertainment
special in BET's 21-year history with a 4.26 rating. Showtime subscriptions
increased 21% over the prior year by approximately 5.0 million to 29.2 million
subscriptions at June 30, 2001. Pro forma results assume the acquisition of the
CBS Cable Networks, TNN and CMT, the acquisition of BET, and dispositions had
occurred on January 1, 2000.
Television (CBS and UPN Television Networks and Stations; Television Production
and Syndication)
Television's pro forma EBITDA of $361 million increased 16% while pro forma
revenues decreased 1% to $1.63 billion. Television's EBITDA growth was led by
the CBS Network, which delivered double-digit revenue growth in primetime
principally due to increased pricing. Strong second quarter programming on the
CBS Network included the winning combination of Survivor: The Australian Outback
and CSI: Crime Scene Investigation on Thursday nights and its successful Monday
night lineup. The CBS Network won the primetime May Sweep, finishing first in
household ratings and second among adults age 25-54. The Network posted
double-digit ratings increases among adults 25-54 and adults 18-49. CBS
Network's strong primetime revenue growth was partially offset by the timing of
the National Semifinals of the NCAA Men's Basketball Tournament which took place
in the second quarter last year but in the first quarter this year. Television's
results also benefited from higher revenues for continuing network shows and
first-run syndication, including Paramount Television Group's Frasier, Judge
Judy, Judge Joe Brown and Moesha and also included revenues from new series
including Ed and That's Life. The revenue increases in television production and
syndication were more than offset by lower advertising sales for the television
stations which faced difficult comparisons with last year's exceptionally strong
advertising environment.
Pro forma results assume that the CBS merger and the acquisition of the
remaining 50% interest of UPN had occurred on January 1, 2000. Pro forma results
for second quarter 2000 are also adjusted to exclude certain transactions with
divested investments and losses of approximately $33 million for iWon.com, which
was previously a minority-owned, consolidated subsidiary. In 2001, iWon.com is
accounted for as a deconsolidated investment.
Infinity (Radio Stations, Outdoor Advertising Properties)
Infinity's pro forma EBITDA of $436 million decreased 5% on pro forma revenues
of $985 million, a decrease of 4%, reflecting difficult comparisons with the
second quarter of 2000, which benefited from an exceptionally strong advertising
environment including very strong demand from the technology
sector. In the second quarter of 2001, Infinity continued to gain market share
by outpacing the out-of-home market and was No. 1 in radio revenue billings in
seven of the top 10 markets.
Pro forma results assume the acquisition of Infinity as part of the CBS merger,
and the subsequent acquisition of the minority interest of Infinity, had
occurred on January 1, 2000 and also assume the completion of all acquisitions
and related divestitures of radio and outdoor properties by Infinity had
occurred at the beginning of each period presented. Pro forma results for 2000
are also adjusted to exclude transactions with divested investments.
Entertainment (Paramount Pictures, Famous Players, Famous Music Publishing and
Paramount Parks)
Entertainment's EBITDA of $132 million increased 15% on revenue increases of 3%
to $773 million, principally driven by higher Features, Theaters and Parks'
revenues. Paramount's successful domestic theatrical releases in the second
quarter included Lara Croft: Tomb Raider, which has grossed $126 million to
date, and Along Came a Spider, which has grossed $74 million to date. Features'
revenues were led by higher home video revenues which included domestic
contributions from What Women Want and Save the Last Dance and continuing
contributions from the successful foreign video release of Mission: Impossible
2. For the first half of 2001, Paramount is No. 1 in US box office market share.
Higher Theaters' revenues and EBITDA benefited from slightly higher attendance
and lower overhead. The Parks higher results reflect modest attendance growth
and higher per capita spending.
Video (Blockbuster)
Video's EBITDA increased 5% to $118 million on a revenue increase of 1% to $1.23
billion primarily driven by the increase in the number of company-operated
stores. Worldwide same store sales, including rental and retail product,
decreased 2.7%, reflecting weaker box office titles in video release versus the
same quarter last year which included The Sixth Sense, the top renting title in
Blockbuster's history. Blockbuster's gross profit margins improved in the
quarter due to strong growth in DVD rental revenue, which resulted in fewer
purchases under VHS revenue sharing arrangements, which generally have lower
gross profit margins, and growth in other revenue, which generates a higher
gross profit margin. Blockbuster's free cash flow doubled to $75 million from
the comparable prior year's quarter as a result of lower capital expenditures
and continued growth in the business. Blockbuster ended the second quarter of
2001 with 7,781 company-owned and franchise stores, a net increase of 405 stores
over the second quarter of 2000 of which 31 company-owned stores were added in
the second quarter 2001. Viacom owns approximately 82% of Blockbuster (NYSE:
BBI).
Publishing (Simon & Schuster)
Publishing's EBITDA increased 8% to $9 million on higher revenues of $149
million, an increase of 12%, principally due to increased sales in the Trade,
Pocket Books and Children's divisions. Publishing's best-selling titles in the
second quarter included John Adams by David McCullough, On the Street Where You
Live by Mary Higgins Clark and Temptation by Jude Deveraux.
Corporate Expenses/Eliminations
Pro forma corporate expenses, excluding intersegment profit eliminations,
decreased 23% to $44 million, principally due to effective cost containment
measures. Included in the corporate expenses/eliminations of $66 million for the
second quarter of 2001 are intersegment profit eliminations of $22 million.
Six-Month 2001 Results
For the six months ended June 30, 2001, Viacom reported a 46% increase in
revenues to $11.47 billion, compared with $7.88 billion for the first half of
2000. Viacom reported EBITDA for the first six months of 2001 of $2.51 billion
versus EBITDA of $742 million, including merger-related charges, in the same
period last year. Reported free cash flow for the six months ended June 30, 2001
was $1.52 billion, up from $365 million for the comparable prior-year period.
Reported after-tax cash flow for the first half of 2001 was $1.73 billion, an
increase of 163% over after-tax cash flow of $657 million for the same period
last year, despite the impact of significantly higher taxes paid in the first
six months of 2001.
On a pro forma basis, revenues for the first six months of 2001 increased 4% to
$11.45 billion compared with revenues of $11.03 billion for the same period last
year. Pro forma EBITDA for the first half of 2001 increased 13% to $2.52
billion, versus EBITDA of $2.22 billion for the same prior-year period. Pro
forma free cash flow for the six months ended June 30, 2001 was $1.59 billion,
an increase of 25% from $1.28 billion for the comparable prior-year period. Pro
forma after-tax cash flow for the first half of 2001 was $1.80 billion, an
increase of 10% over after-tax cash flow of $1.63 billion for the same period
last year. For the first half of 2001, Viacom reported net earnings of $9
million, or $.01 per share, compared with a net loss of $880 million, or a loss
of $.93 per share, in the same year-earlier period. Effective January 1, 2000,
the Company adopted a new accounting standard on motion picture accounting and
recorded a non-cash pre-tax charge of $754 million, or $452 million after-tax,
reported as a cumulative effect of a change in accounting.
Six Months Ended June 30,
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(dollars in millions) Reported Pro Forma
2001 2000 B/(W)% 2001 2000 B/(W)%
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Revenues:
Cable Networks $ 2,044.4 $ 1,732.3 18% $ 2,030.6 $ 1,897.4 7%
Television 3,657.2 1,753.8 109 3,657.2 3,503.4 4
Infinity 1,821.0 672.6 171 1,819.8 1,899.5 (4)
Entertainment 1,368.0 1,271.3 8 1,368.0 1,271.3 8
Video 2,533.9 2,425.5 4 2,533.9 2,425.5 4
Publishing 271.3 246.0 10 271.3 246.0 10
Intercompany
eliminations (226.7) (224.8) (1) (226.7) (217.6) (4)
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Total Revenues $ 11,469.1 $ 7,876.7 46% $ 11,454.1 $11,025.5 4%
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EBITDA:
Cable Networks $ 748.1 $ 521.7 43% $ 759.7 $ 621.0 22%
Television 675.5 281.8 140 675.5 601.3 12
Infinity 759.5 324.1 134 758.1 796.9 (5)
Entertainment 195.8 169.1 16 195.8 169.1 16
Video 278.9 263.5 6 278.9 263.5 6
Publishing 11.4 6.8 68 11.4 6.8 68
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Segment Total 2,669.2 1,567.0 70 2,679.4 2,458.6 9
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Corporate expenses/
eliminations (116.8) (806.0) 86 (116.8) (174.9) 33
Residual costs of
discontinued
operations (41.8) (18.6)(125) (41.8) (61.9) 32
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Total EBITDA $ 2,510.6 $ 742.4 238% $ 2,520.8 2,221.8 13%
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Other Matters
During the first half of 2001, the Company repurchased approximately 8.5 million
shares of the Company's Class B common stock for approximately $432 million
under its stock repurchase programs of which $207 million was spent in the
second quarter.
Viacom is the No. 1 platform in the world for advertisers, with preeminent
positions in broadcast and cable television, radio, outdoor advertising, and
online. With programming that appeals to audiences in every demographic category
across virtually all media, the company is a leader in the creation, promotion,
and distribution of entertainment, news, sports, and music. Viacom's well-known
brands include CBS, MTV, Nickelodeon, VH1, BET, Paramount Pictures, Infinity,
UPN, TNN: The National Network, CMT, Showtime, Blockbuster and Simon & Schuster.
More information about Viacom and its businesses is available at
http://www.viacom.com.
Cautionary Statement Concerning Forward-looking Statements
This information contains both historical and forward-looking statements. All
statements, other than statements of historical fact are, or may be deemed to
be, forward-looking statements within the meaning of section 27A of the
Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are not based on historical facts, but rather
reflect the Company's current expectations concerning future results and events.
Similarly, statements that describe our objectives, plans or goals are or may be
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be different from any
future results, performance and achievements
expressed or implied by these statements. The following important factors, among
others, could affect future results, causing these results to differ materially
from those expressed in our forward-looking statements: advertising market
conditions; changes in the public acceptance of the Company's programming;
changes in technology and its effect on competition in the Company's markets;
changes in the Federal Communications Laws and Regulations and the outcome of
related court cases; and other economic, business, competitive and/or regulatory
factors affecting the Company's businesses generally. The forward-looking
statements included in this document are made only as of the date of this
document and under section 27A of the Securities Act and section 21E of the
Exchange Act, we do not have any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances.
VIACOM INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited; all amounts, except per share amounts, are in millions)
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Three months ended Six months ended
June 30, June 30,
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2001 2000 2001 2000
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Revenues $ 5,716.9 $ 4,850.9 $ 11,469.1 $ 7,876.7
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Operating income (loss) $ 585.8 $ (278.2) $ 989.5 $ (37.8)
Other income (expense):
Interest expense, net (255.2) (179.5) (500.7) (292.5)
Other items, net 2.0 (16.7) (7.8) (15.0)
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Earnings (loss) before
income taxes 332.6 (474.4) 481.0 (345.3)
Benefit (provision) for
income taxes (314.7) 12.1 (438.2) (46.0)
Equity in loss of affiliated
companies, net of tax (7.1) (21.3) (34.2) (27.4)
Minority interest, net of tax 5.9 (12.0) 0.8 (8.9)
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Net earnings (loss) before
cumulative effect of change
in accounting principle 16.7 (495.6) 9.4 (427.6)
Cumulative effect of change
in accounting principle,
net of tax -- -- -- (452.3)
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Net earnings (loss) $ 16.7 $ (495.6) $ 9.4 $ (879.9)
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Earnings (loss) per common share:
Basic:
Net earnings (loss) before
cumulative effect of
change in accounting
principle $ 0.01 $ (0.41) $ 0.01 $ (0.45)
Net earnings (loss) $ 0.01 $ (0.41) $ 0.01 $ (0.93)
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Diluted:
Net earnings (loss) before
cumulative effect of
change in accounting
principle $ 0.01 $ (0.41) $ 0.01 $ (0.45)
Net earnings (loss) $ 0.01 $ (0.41) $ 0.01 $ (0.93)
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Weighted average number of common shares:
Basic 1,768.6 1,207.6 1,698.9 951.2
Diluted 1,800.2 1,207.6 1,730.6 951.2
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