SEC Filing - ViacomCBS Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-09553

ViacomCBS Inc.

(Exact name of registrant as specified in its charter)



Delaware			04-2949533
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1515 Broadway	New York,	New York	10036
(Address of principal executive offices)			(Zip Code)

(212) 258-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbols		Name of each exchange on which registered
Class A Common Stock, $0.001 par value		VIACA		The Nasdaq Stock Market LLC
Class B Common Stock, $0.001 par value		VIAC		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at August 3, 2020:

Class A Common Stock, par value $.001 per share— 52,266,444

Class B Common Stock, par value $.001 per share— 563,771,436

VIACOMCBS INC.

INDEX TO FORM 10-Q



		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019	3

	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019	4

	Consolidated Balance Sheets (Unaudited) at June 30, 2020 and December 31, 2019	5

	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2020 and June 30, 2019	6

	Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019	7

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition.	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	66

Item 4.	Controls and Procedures.	66

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	67

Item 1A.	Risk Factors.	67

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	68

Item 6.	Exhibits.	69

- 2-

PART I – FINANCIAL INFORMATION



Item 1.	Financial Statements.

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenues	$	6,275		$	7,143		$	12,944		$	14,243
Costs and expenses:
Operating	3,485			4,210			7,550			8,458
Selling, general and administrative	1,222			1,371			2,563			2,684
Depreciation and amortization	124			109			237			215
Restructuring and other corporate matters	158			7			391			185
Total costs and expenses	4,989			5,697			10,741			11,542
Gain on sale of assets	—			—			—			549
Operating income	1,286			1,446			2,203			3,250
Interest expense	(263		)	(237		)	(504		)	(477		)
Interest income	11			15			25			34
Loss on extinguishment of debt	(103		)	—			(103		)	—
Other items, net	6			15			(27		)	25
Earnings from continuing operations before income taxes and equity in loss of investee companies	937			1,239			1,594			2,832
(Provision) benefit for income taxes	(202		)	(241		)	(339		)	135
Equity in loss of investee companies, net of tax	(12		)	(21		)	(21		)	(39		)
Net earnings from continuing operations	723			977			1,234			2,928
Net earnings from discontinued operations, net of tax	3			6			11			19
Net earnings (ViacomCBS and noncontrolling interests)	726			983			1,245			2,947
Net earnings attributable to noncontrolling interests	(245		)	(6		)	(248		)	(11		)
Net earnings attributable to ViacomCBS	$	481		$	977		$	997		$	2,936

Amounts attributable to ViacomCBS:
Net earnings from continuing operations	$	478		$	971		$	986		$	2,917
Net earnings from discontinued operations, net of tax	3			6			11			19
Net earnings attributable to ViacomCBS	$	481		$	977		$	997		$	2,936

Basic net earnings per common share attributable to ViacomCBS:
Net earnings from continuing operations	$	.78		$	1.58		$	1.60		$	4.74
Net earnings from discontinued operations	$	—		$	.01		$	.02		$	.03
Net earnings	$	.78		$	1.59		$	1.62		$	4.77

Diluted net earnings per common share attributable to ViacomCBS:
Net earnings from continuing operations	$	.77		$	1.57		$	1.60		$	4.73
Net earnings from discontinued operations	$	—		$	.01		$	.02		$	.03
Net earnings	$	.78		$	1.58		$	1.62		$	4.76

Weighted average number of common shares outstanding:
Basic	615			615			615			615
Diluted	617			617			617			617

See notes to consolidated financial statements.

-3-

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions)



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2020		2019			2020			2019
Net earnings (ViacomCBS and noncontrolling interests)	$	726	$	983		$	1,245		$	2,947
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	37		(8		)	(67		)	8
Net actuarial loss and prior service costs	18		15			35			29
Other comprehensive income (loss), net of tax (ViacomCBS and noncontrolling interests)	55		7			(32		)	37
Comprehensive income	781		990			1,213			2,984
Less: Comprehensive income attributable to noncontrolling interests	245		5			245			13
Comprehensive income attributable to ViacomCBS	$	536	$	985		$	968		$	2,971

See notes to consolidated financial statements.

-4-

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)



	At				At
	June 30, 2020				December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents		$	2,288			$	632
Receivables, net		7,139				7,206
Programming and other inventory		1,837				2,876
Prepaid and other current assets		1,175				1,188
Total current assets		12,439				11,902
Property and equipment, net		1,995				2,085
Programming and other inventory		9,728				8,652
Goodwill		17,077				16,980
Intangible assets, net		2,948				2,993
Operating lease assets		1,841				1,939
Deferred income tax assets, net		919				939
Other assets		4,212				4,006
Assets held for sale		29				23
Total Assets		$	51,188			$	49,519

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	422			$	667
Accrued expenses		1,553				1,760
Participants’ share and royalties payable		2,090				1,977
Accrued programming and production costs		1,189				1,500
Deferred revenues		695				739
Debt		364				717
Other current liabilities		1,672				1,688
Total current liabilities		7,985				9,048
Long-term debt		19,704				18,002
Participants’ share and royalties payable		1,485				1,546
Pension and postretirement benefit obligations		2,070				2,121
Deferred income tax liabilities, net		708				500
Operating lease liabilities		1,816				1,909
Program rights obligations		252				356
Other liabilities		2,344				2,494
Redeemable noncontrolling interest		274				254

Commitments and contingencies (Note 15)

ViacomCBS stockholders’ equity:
Class A Common Stock, par value $.001 per share; 55 shares authorized; 52 (2020 and 2019) shares issued		—				—
Class B Common Stock, par value $.001 per share; 5,000 shares authorized; 1,066 (2020) and 1,064 (2019) shares issued		1				1
Additional paid-in capital		29,680				29,590
Treasury stock, at cost; 502 (2020) and 501 (2019) Class B shares		(22,958		)		(22,908		)
Retained earnings		9,150				8,494
Accumulated other comprehensive loss		(1,999		)		(1,970		)
Total ViacomCBS stockholders’ equity		13,874				13,207
Noncontrolling interests		676				82
Total Equity		14,550				13,289
Total Liabilities and Equity		$	51,188			$	49,519

See notes to consolidated financial statements.

-5-

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)



	Six Months Ended
	June 30,
	2020			2019
Operating Activities:
Net earnings (ViacomCBS and noncontrolling interests)	$	1,245		$	2,947
Less: Net earnings from discontinued operations, net of tax	11			19
Net earnings from continuing operations	1,234			2,928
Adjustments to reconcile net earnings from continuing operations to net cash flow provided by operating activities:
Depreciation and amortization	237			215
Deferred tax provision (benefit)	224			(535		)
Stock-based compensation	145			106
Gain on sale of assets	—			(549		)
Gains from investments	(32		)	(77		)
Loss on extinguishment of debt	103			—
Equity in loss of investee companies, net of tax and distributions	22			41
Change in assets and liabilities	(782		)	(940		)
Net cash flow provided by operating activities	1,151			1,189
Investing Activities:
Investments	(60		)	(132		)
Capital expenditures	(132		)	(142		)
Acquisitions, net of cash acquired	(141		)	(361		)
Proceeds from dispositions	146			751
Other investing activities	—			4
Net cash flow (used for) provided by investing activities	(187		)	120
Financing Activities:
Repayments of short-term debt borrowings, net	(698		)	(674		)
Proceeds from issuance of senior notes	4,370			493
Repayment of notes and debentures	(2,535		)	(600		)
Dividends	(301		)	(299		)
Purchase of Company common stock	(58		)	(14		)
Payment of payroll taxes in lieu of issuing shares for stock-based compensation	(59		)	(52		)
Other financing activities	(70		)	(81		)
Net cash flow provided by (used for) financing activities	649			(1,227		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(17		)	2
Net increase in cash, cash equivalents and restricted cash	1,596			84
Cash, cash equivalents and restricted cash at beginning of period (includes $202 (2020) and $120 (2019) of restricted cash)	834			976
Cash, cash equivalents and restricted cash at end of period (includes $142 (2020) and $122 (2019) of restricted cash)	$	2,430		$	1,060

See notes to consolidated financial statements.

-6-

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)



	Three Months Ended June 30, 2020
	Class A and B Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests				Total Equity
	(Shares)
March 31, 2020	615	$	1		$	29,633	$	(22,958	)		$	8,827			$	(2,054	)		$	13,449			$	72		$	13,521
Stock-based compensation activity and other	1	—			47		—				—				—				47				—			47
Dividends	—	—			—		—				(150		)		—				(150		)		—			(150		)
Noncontrolling interests	—	—			—		—				(8		)		—				(8		)		359		^(a)	351
Net earnings	—	—			—		—				481				—				481				245			726
Other comprehensive income	—	—			—		—				—				55				55				—			55
June 30, 2020	616	$	1		$	29,680	$	(22,958	)		$	9,150			$	(1,999	)		$	13,874			$	676		$	14,550



	Six Months Ended June 30, 2020
	Class A and B Common Stock				Additional Paid-In Capital			Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests					Total Equity
	(Shares)
December 31, 2019	615		$	1		$	29,590	$	(22,908	)		$	8,494			$	(1,970	)		$	13,207			$	82			$	13,289
Stock-based compensation activity and other	2		—			90		—				—				—				90				—				90
Class B Common Stock purchased	(1	)	—			—		(50		)		—				—				(50		)		—				(50		)
Dividends	—		—			—		—				(300		)		—				(300		)		—				(300		)
Noncontrolling interests	—		—			—		—				(41		)		—				(41		)		349			^(a)	308
Net earnings	—		—			—		—				997				—				997				248				1,245
Other comprehensive loss	—		—			—		—				—				(29		)		(29		)		(3		)		(32		)
June 30, 2020	616		$	1		$	29,680	$	(22,958	)		$	9,150			$	(1,999	)		$	13,874			$	676			$	14,550

(a) Primarily reflects the acquisition of Miramax. (See Note 2.)

See notes to consolidated financial statements.

-7-

VIACOMCBS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited; in millions)



	Three Months Ended June 30, 2019
	Class A and B Common Stock			Additional Paid-In Capital				Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests				Total Equity
	(Shares)
March 31, 2019	615	$	1		$	49,927		$	(43,412	)		$	7,594			$	(1,811	)		$	12,299			$	49		$	12,348
Stock-based compensation activity and other	—	—			27			13				—				—				40				—			40
Dividends	—	—			—			—				(149		)		—				(149		)		—			(149		)
Noncontrolling interests	—	—			(10		)	—				(4		)		—				(14		)		(11		)	(25		)
Net earnings	—	—			—			—				977				—				977				6			983
Other comprehensive income (loss)	—	—			—			—				—				8				8				(1		)	7
June 30, 2019	615	$	1		$	49,944		$	(43,399	)		$	8,418			$	(1,803	)		$	13,161			$	43		$	13,204



	Six Months Ended June 30, 2019
	Class A and B Common Stock			Additional Paid-In Capital				Treasury Stock			Retained Earnings				Accumulated Other Comprehensive Loss				Total ViacomCBS Stockholders’ Equity				Non-Controlling Interests				Total Equity
	(Shares)
December 31, 2018	613	$	1		$	49,907		$	(43,420	)		$	5,569			$	(1,608	)		$	10,449			$	54		$	10,503
Stock-based compensation activity and other	2	—			47			21				(4		)		—				64				—			64
Dividends	—	—			—			—				(299		)		—				(299		)		—			(299		)
Noncontrolling interests	—	—			(10		)	—				(14		)		—				(24		)		(24		)	(48		)
Net earnings	—