SILVER SPRING, Md., Nov. 2, 2010 /PRNewswire-FirstCall/ --
Third Quarter 2010 Financial Highlights:
- Revenues increased 11% to $926 million
- Adjusted OIBDA increased 14% to $418 million
- Net Income from continuing operations increased 73% to $161 million
- Free Cash Flow increased $308 million to $346 million
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Discovery Communications, Inc. ("Discovery" or the "Company") (Nasdaq: DISCA, DISCB, DISCK) today reported financial results for the third quarter ended September 30, 2010.
David Zaslav, Discovery's President and Chief Executive Officer said, "Discovery continues to enjoy strong operational momentum across our businesses. Our ability to execute, combined with a robust advertising environment, enabled us to deliver third quarter results that exceeded our expectations. Most importantly, our revenue growth is translating into margin expansion and free cash flow growth as we remain focused on thoughtfully investing in our business and refining our cost structure. We are committed to building the next generation of growth drivers and are producing real returns from additional investments in Animal Planet, ID and our international networks, while launching our joint ventures, The Hub and OWN. We are excited by the opportunities these investments present to further grow our business long-term and generate increased value for shareholders."
Third quarter revenues of $926 million increased $89 million, or 11%, over the third quarter a year ago, led by 11% growth at U.S. Networks and 10% growth at International Networks. Adjusted Operating Income Before Depreciation and Amortization.(1) ("OIBDA") grew 14% to $418 million, driven by a 12% increase at U.S. Networks and an 23% increase at International Networks.
Third quarter net income from continuing operations available to Discovery Communications, Inc. stockholders of $161 million ($0.37 per diluted share) increased $68 million compared to $93 million ($0.22 per diluted share) for the third quarter a year ago. The current quarter results reflect the strong operating performance and $43 million of lower expense in the current year from the unrealized change in the fair value of mark-to-market share-based compensation.
Free cash flow was $346 million for the third quarter, an increase of $308 million from the third quarter of 2009, primarily reflecting the increased operating performance and higher cash tax payments a year ago of $81 million related to the sale of Discovery Kids as well as $59 million of tax payments in 2009 related to prior periods. Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.
(1) See the definition of Adjusted Operating Income Before Depreciation and Amortization on page 4.
SEGMENT RESULTS
(dollars in millions) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2010 |
2009(a) |
Change |
2010 |
2009(a) |
Change |
|||||||||||
Revenues: |
||||||||||||||||
U.S. Networks |
$ |
585 |
$ |
525 |
11% |
$ |
1,751 |
$ |
1,609 |
9% |
||||||
International Networks |
304 |
276 |
10% |
893 |
787 |
13% |
||||||||||
Education and Other |
38 |
35 |
9% |
108 |
106 |
2% |
||||||||||
Corporate and Eliminations |
(1) |
1 |
NM |
6 |
6 |
— |
||||||||||
Total Revenues |
$ |
926 |
$ |
837 |
11% |
$ |
2,758 |
$ |
2,508 |
10% |
||||||
Adjusted OIBDA: |
||||||||||||||||
U.S. Networks |
$ |
346 |
$ |
309 |
12% |
$ |
1,018 |
$ |
930 |
9% |
||||||
International Networks |
130 |
106 |
23% |
384 |
295 |
30% |
||||||||||
Education and Other |
1 |
2 |
(50%) |
7 |
9 |
(22%) |
||||||||||
Corporate and Eliminations |
(59) |
(50) |
(18%) |
(171) |
(144) |
(19%) |
||||||||||
Total Adjusted OIBDA |
$ |
418 |
$ |
367 |
14% |
$ |
1,238 |
$ |
1,090 |
14% |
||||||
(a) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
||||||||||||||||
U.S. Networks
(dollars in millions) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
2010 |
2009 |
Change |
2010 |
2009 |
Change |
|||||||||||||
Revenues: |
||||||||||||||||||
Distribution |
$ |
264 |
$ |
242 |
9% |
$ |
786 |
$ |
737 |
7% |
||||||||
Advertising |
304 |
261 |
16% |
899 |
795 |
13% |
||||||||||||
Other |
17 |
22 |
(23%) |
66 |
77 |
(14%) |
||||||||||||
Total Revenues |
$ |
585 |
$ |
525 |
11% |
$ |
1,751 |
$ |
1,609 |
9% |
||||||||
Adjusted OIBDA |
$ |
346 |
$ |
309 |
12% |
$ |
1,018 |
$ |
930 |
9% |
||||||||
Adjusted OIBDA Margin |
59% |
59% |
58% |
58% |
||||||||||||||
U.S. Networks' revenues in the third quarter of 2010 increased 11% to $585 million as advertising and distribution growth more than offset lower representation revenue. Advertising revenue increased 16% driven by higher ratings and sellouts as well as increased pricing. Distribution revenue grew 9% largely from higher rates, subscriber growth primarily from networks carried on the digital tier and lower launch-support amortization.
Adjusted OIBDA increased 12% to $346 million reflecting the 11% revenue growth partially offset by 9% higher operating expenses primarily due to higher programming expense, higher sales commissions and increased marketing costs.
International Networks
(dollars in millions) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2010 |
2009 |
Change |
2010 |
2009 |
Change |
|||||||||||
Revenues: |
||||||||||||||||
Distribution |
$ |
188 |
$ |
180 |
4% |
$ |
560 |
$ |
529 |
6% |
||||||
Advertising |
98 |
80 |
23% |
286 |
214 |
34% |
||||||||||
Other |
18 |
16 |
13% |
47 |
44 |
7% |
||||||||||
Total Revenues |
$ |
304 |
$ |
276 |
10% |
$ |
893 |
$ |
787 |
13% |
||||||
Adjusted OIBDA |
$ |
130 |
$ |
106 |
23% |
$ |
384 |
$ |
295 |
30% |
||||||
Adjusted OIBDA Margin |
43% |
38% |
43% |
37% |
||||||||||||
International Networks' revenues for the third quarter increased 10% to $304 million primarily led by advertising revenue growth of 23% and distribution revenue growth of 4%. Excluding the impact of foreign currency fluctuations, revenues increased 12% led by 26% advertising revenue growth, primarily from higher sellouts and increased viewership supported by subscriber growth across all international regions. Affiliate revenue in local currency terms was up 8% during the third quarter mainly from increased subscribers primarily in Latin America and EMEA.
Adjusted OIBDA increased 23% to $130 million reflecting the 10% revenue growth partially offset by a 2% increase in operating expenses. Excluding the impact of foreign currency, Adjusted OIBDA increased 29% as the 12% revenue growth was partially offset by a 3% increase in operating expenses primarily due to higher personnel costs.
Education and Other
(dollars in millions) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2010 |
2009 |
Change |
2010 |
2009 |
Change |
|||||||||||
Revenues |
$ |
38 |
$ |
35 |
9% |
$ |
108 |
$ |
106 |
2% |
||||||
Adjusted OIBDA |
$ |
1 |
$ |
2 |
(50%) |
$ |
7 |
$ |
9 |
(22%) |
||||||
Adjusted OIBDA Margin |
3% |
6% |
6% |
8% |
||||||||||||
Education and Other third quarter revenues increased 9% to $38 million, primarily reflecting increased education revenue from higher streaming volumes. Adjusted OIBDA was in-line with the third quarter of 2009 as the revenue growth was more than offset by higher personnel costs and lower results from the Creative Sound Service business.
Corporate and Eliminations
Adjusted OIBDA decreased $9 million when compared to the third quarter a year ago, primarily due to increased stock-based compensation expense.
FULL YEAR 2010 OUTLOOK
For the full year ending December 31, 2010, Discovery Communications, Inc. expects total revenue between $3,750 million and $3,800 million, Adjusted OIBDA between $1,675 million and $1,725 million, and net income available to Discovery Communications, Inc. stockholders of $650 million to $700 million. Our outlook incorporates current foreign exchange rates for revenues and expenses and the current share price for mark-to-market stock-based compensation calculations.
STOCK REPURCHASE PROGRAM
During the quarter ended September 30, 2010, the Company repurchased a total of 1.12 million shares of its Series C common stock at an average price of $33.61 per share totaling approximately $38 million pursuant to its stock repurchase program announced in August 2010. Under the stock repurchase program, management is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
OTHER ITEMS
The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. This recast reflects the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 810, Consolidation (ASC 810), which amends the existing standards for variable interest entities, the classification of results of operations of our Antenna Audio business as discontinued operations, as well as the realignment of the Commerce business into the U.S. Networks segment.
During the third quarter of 2010, the Company sold its Antenna Audio business. Antenna Audio's results have been reflected as discontinued operations and are included in "Income (loss) from discontinued operations, net of taxes" on the Condensed Consolidated Statement of Operations. Assets, liabilities and cash flows of Antenna Audio have not been reflected as discontinued operations since the amounts are not material.
NON-GAAP FINANCIAL MEASURES
Adjusted OIBDA and Free Cash Flow
In addition to the results prepared in accordance with U.S. generally accepted accounting principles ("GAAP") provided in this release, the Company has presented Adjusted OIBDA and free cash flow. The Company evaluates the operating performance of its segments based on financial measures such as revenues and adjusted operating income before depreciation and amortization ("Adjusted OIBDA"). Adjusted OIBDA is defined as revenues less costs of revenues and selling, general and administrative expenses excluding: (i) mark-to-market stock-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) certain impairment charges, and (vi) gains (losses) on business and asset dispositions. The Company uses this measure to assess operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance and allocate resources to each segment. The Company believes Adjusted OIBDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses and also provides investors a measure to analyze the operating performance of each segment against historical data. The Company excludes mark-to-market stock-based compensation, exit and restructuring charges, certain impairment charges, and gains (losses) on business and asset dispositions from the calculation of Adjusted OIBDA due to their volatility or non-recurring nature. The Company also excludes depreciation of fixed assets and amortization of intangible assets and deferred launch incentive as these amounts do not represent cash payments in the current reporting period.
The Company defines free cash flow as cash provided by operating activities less acquisitions of property and equipment. The Company uses free cash flow as it believes it is an important indicator for management and investors of the Company's liquidity, including its ability to reduce debt, make strategic investments and return capital to stockholders.
Adjusted OIBDA and free cash flow are non-GAAP measures, and should be considered in addition to, but not as a substitute for, operating income, net income, cash flows provided by operating activities and other measures of financial performance reported in accordance with GAAP. Please review the supplemental financial schedules beginning on page 9 for reconciliations to GAAP measures.
Conference Call Information
Discovery Communications, Inc. will host a conference call today at 4:30 p.m. EDT to discuss its third quarter 2010 results. To listen to the call, visit http://www.discoverycommunications.com or dial 1-866-831-6272 inside the U.S. and 1-617-213-8859 outside of the U.S., using the following passcode: 70250534.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. These statements are based on information available to the Company as of the date hereof, and the Company's actual results could differ materially from those stated or implied, due to risks and uncertainties associated with its business, which include the risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on February 22, 2010. Forward-looking statements include statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future, and can be identified by forward-looking words such as "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. Forward-looking statements in this release include, without limitation, the full year 2010 outlook and plans for stock repurchases. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
DISCOVERY COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in millions, except per share amounts) |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
September 30, |
September 30, |
|||||||
2010 |
2009(a) |
2010 |
2009(a) |
|||||
(recast) |
(recast) |
|||||||
Revenues: |
||||||||
Distribution |
$ 452 |
$ 422 |
$ 1,346 |
$ 1,266 |
||||
Advertising |
402 |
341 |
1,185 |
1,009 |
||||
Other |
72 |
74 |
227 |
233 |
||||
Total revenues |
926 |
837 |
2,758 |
2,508 |
||||
Costs of revenues, excluding depreciation and amortization listed below |
261 |
251 |
782 |
751 |
||||
Selling, general and administrative |
306 |
324 |
894 |
885 |
||||
Depreciation and amortization |
32 |
39 |
98 |
115 |
||||
Restructuring and impairment charges |
15 |
2 |
18 |
40 |
||||
Gains on dispositions |
— |
— |
— |
(252) |
||||
614 |
616 |
1,792 |
1,539 |
|||||
Operating income |
312 |
221 |
966 |
969 |
||||
Interest expense, net |
(49) |
(65) |
(155) |
(182) |
||||
Loss on extinguishment of debt |
— |
— |
(136) |
— |
||||
Other (expense) income, net |
(16) |
(1) |
(57) |
10 |
||||
Income from continuing operations before income taxes |
247 |
155 |
618 |
797 |
||||
Provision for income taxes |
(83) |
(52) |
(171) |
(387) |
||||
Income from continuing operations, net of taxes |
164 |
103 |
447 |
410 |
||||
Income (loss) from discontinued operations, net of taxes |
25 |
1 |
25 |
(2) |
||||
Net income |
189 |
104 |
472 |
408 |
||||
Less net income attributable to noncontrolling interests |
(3) |
(4) |
(10) |
(10) |
||||
Net income attributable to Discovery Communications, Inc. |
186 |
100 |
462 |
398 |
||||
Stock dividends to preferred interests |
— |
(6) |
(1) |
(8) |
||||
Net income available to Discovery Communications, Inc. stockholders |
$ 186 |
$ 94 |
$ 461 |
$ 390 |
||||
Income per share from continuing operations available to Discovery Communications, Inc. stockholders: |
||||||||
Basic |
$ 0.38 |
$ 0.22 |
$ 1.03 |
$ 0.93 |
||||
Diluted |
$ 0.37 |
$ 0.22 |
$ 1.01 |
$ 0.92 |
||||
Income (loss) per share from discontinued operations available to Discovery Communications, Inc. stockholders: |
||||||||
Basic |
$ 0.06 |
$ — |
$ 0.06 |
$ — |
||||
Diluted |
$ 0.06 |
$ — |
$ 0.06 |
$ — |
||||
Net income per share available to Discovery Communications, Inc. stockholders: |
||||||||
Basic |
$ 0.44 |
$ 0.22 |
$ 1.08 |
$ 0.92 |
||||
Diluted |
$ 0.43 |
$ 0.22 |
$ 1.07 |
$ 0.92 |
||||
Weighted average shares outstanding: |
||||||||
Basic |
426 |
424 |
425 |
423 |
||||
Diluted |
431 |
427 |
431 |
424 |
||||
(a) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
||||||||
DISCOVERY COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions) |
|||||
As of |
As of |
||||
September 30, |
December 31, |
||||
2010 |
2009(a) |
||||
(recast) |
|||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents (including $10 and $40 held by variable interest entities at 2010 and 2009, respectively) |
$ 1,016 |
$ 623 |
|||
Receivables, net |
843 |
812 |
|||
Content rights, net |
81 |
75 |
|||
Prepaid expenses and other current assets |
197 |
161 |
|||
Total current assets |
2,137 |
1,671 |
|||
Noncurrent content rights, net |
1,229 |
1,207 |
|||
Property and equipment, net |
389 |
409 |
|||
Goodwill |
6,435 |
6,433 |
|||
Intangible assets, net |
615 |
643 |
|||
Other noncurrent assets |
593 |
589 |
|||
Total assets |
$ 11,398 |
$ 10,952 |
|||
LIABILITIES AND EQUITY |
|||||
Current liabilities: |
|||||
Accounts payable and accrued liabilities |
$ 464 |
$ 446 |
|||
Current portion of long-term debt |
18 |
38 |
|||
Other current liabilities |
310 |
299 |
|||
Total current liabilities |
792 |
783 |
|||
Long-term debt |
3,595 |
3,457 |
|||
Other noncurrent liabilities |
267 |
443 |
|||
Commitments and contingencies |
|||||
Redeemable noncontrolling interests |
49 |
49 |
|||
Equity: |
|||||
Preferred stock |
2 |
2 |
|||
Common stock |
3 |
3 |
|||
Additional paid-in capital |
6,664 |
6,600 |
|||
Treasury stock, at cost: Series C common stock: 1.12 shares at 2010 |
(38) |
— |
|||
Retained earnings (accumulated deficit) |
75 |
(387) |
|||
Accumulated other comprehensive loss |
(23) |
(21) |
|||
Total Discovery Communications, Inc. stockholders' equity |
6,683 |
6,197 |
|||
Noncontrolling interests |
12 |
23 |
|||
Total equity |
6,695 |
6,220 |
|||
Total liabilities and equity |
$ 11,398 |
$ 10,952 |
|||
(a) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
|||||
DISCOVERY COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in millions) |
|||
Nine Months Ended September 30, |
|||
2010 |
2009(a) |
||
(recast) |
|||
OPERATING ACTIVITIES |
|||
Net income |
$ 472 |
$ 408 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|||
Stock-based compensation expense |
153 |
196 |
|
Depreciation and amortization |
100 |
118 |
|
Content amortization and write-offs |
526 |
515 |
|
Impairment charges |
11 |
26 |
|
Gains on dispositions |
(12) |
(252) |
|
Gains on sales of investments |
— |
(13) |
|
Deferred income taxes |
(89) |
(38) |
|
Noncash portion of loss on extinguishment of debt |
12 |
— |
|
Other noncash expenses, net |
46 |
51 |
|
Changes in operating assets and liabilities: |
|||
Receivables, net |
(41) |
1 |
|
Content rights |
(558) |
(562) |
|
Accounts payable and accrued liabilities |
(8) |
(32) |
|
Stock-based compensation liabilities |
(128) |
(24) |
|
Other, net |
(39) |
(10) |
|
Cash provided by operating activities |
445 |
384 |
|
INVESTING ACTIVITIES |
|||
Purchases of property and equipment |
(29) |
(41) |
|
Business acquisitions, net of cash acquired |
(38) |
— |
|
Proceeds from dispositions, net |
24 |
300 |
|
Proceeds from sales of investments |
— |
22 |
|
Investments in and advances to equity investees |
(71) |
(22) |
|
Cash (used in) provided by investing activities |
(114) |
259 |
|
FINANCING ACTIVITIES |
|||
Net repayments of revolver loans |
— |
(315) |
|
Borrowings from long-term debt, net of discount and issuance costs |
2,970 |
970 |
|
Principal repayments of long-term debt |
(2,883) |
(1,007) |
|
Principal repayments of capital lease obligations |
(8) |
(7) |
|
Repurchases of common stock |
(38) |
— |
|
Cash distributions to noncontrolling interests |
(21) |
(9) |
|
Proceeds from stock option exercises |
27 |
26 |
|
Excess tax benefits from stock-based compensation |
9 |
— |
|
Other financing activities, net |
— |
(1) |
|
Cash provided by (used in) financing activities |
56 |
(343) |
|
Effect of exchange rate changes on cash and cash equivalents |
6 |
7 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
393 |
307 |
|
Cash and cash equivalents, beginning of period |
623 |
94 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ 1,016 |
$ 401 |
|
(a) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
|||
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (unaudited; in millions) |
|||||||
Three Months Ended September 30, 2010 |
|||||||
Adjusted Operating Income Before Depreciation and Amortization |
Depreciation and Amortization |
Amortization of Deferred Launch Incentives |
Mark-to-Market Stock-Based Compensation |
Other (a) |
Operating Income |
||
U.S. Networks |
$ 346 |
$ (5) |
$ (2) |
$ — |
$ — |
$ 339 |
|
International Networks |
130 |
(10) |
(9) |
— |
(3) |
108 |
|
Education and Other |
1 |
(2) |
— |
— |
(11) |
(12) |
|
Corporate and Eliminations |
(59) |
(15) |
— |
(48) |
(1) |
(123) |
|
Total |
$ 418 |
$ (32) |
$ (11) |
$ (48) |
$ (15) |
$ 312 |
|
Three Months Ended September 30, 2009(b)(recast) |
|||||||
Adjusted Operating Income Before Depreciation and Amortization |
Depreciation and Amortization |
Amortization of Deferred Launch Incentives |
Mark-to-Market Stock-Based Compensation |
Other (a) |
Operating Income |
||
U.S. Networks |
$ 309 |
$ (7) |
$ (5) |
$ — |
$ — |
$ 297 |
|
International Networks |
106 |
(10) |
(9) |
— |
(2) |
85 |
|
Education and Other |
2 |
(2) |
— |
— |
— |
— |
|
Corporate and Eliminations |
(50) |
(20) |
— |
(91) |
— |
(161) |
|
Total |
$ 367 |
$ (39) |
$ (14) |
$ (91) |
$ (2) |
$ 221 |
|
(a) For the three months ended September 30, 2010, amounts represent asset impairments of $11 million and exit and restructuring charges of $4 million. For the three months ended September 30, 2009, amounts represent exit and restructuring charges of $2 million. (b) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
|||||||
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (unaudited; in millions) |
|||||||
Nine Months Ended September 30, 2010 |
|||||||
Adjusted Operating Income Before Depreciation and Amortization |
Depreciation and Amortization |
Amortization of Deferred Launch Incentives |
Mark-to-Market Stock-Based Compensation |
Other (a) |
Operating Income |
||
U.S. Networks |
$ 1,018 |
$ (16) |
$ (6) |
$ — |
$ — |
$ 996 |
|
International Networks |
384 |
(29) |
(26) |
— |
(6) |
323 |
|
Education and Other |
7 |
(5) |
— |
— |
(11) |
(9) |
|
Corporate and Eliminations |
(171) |
(48) |
— |
(124) |
(1) |
(344) |
|
Total |
$ 1,238 |
$ (98) |
$ (32) |
$ (124) |
$ (18) |
$ 966 |
|
Nine Months Ended September 30, 2009(b)(recast) |
|||||||
Adjusted Operating Income Before Depreciation and Amortization |
Depreciation and Amortization |
Amortization of Deferred Launch Incentives |
Mark-to-Market Stock-Based Compensation |
Other (a) |
Operating Income |
||
U.S. Networks |
$ 930 |
$ (23) |
$ (16) |
$ (1) |
$ 230 |
$ 1,120 |
|
International Networks |
295 |
(29) |
(25) |
— |
(12) |
229 |
|
Education and Other |
9 |
(4) |
— |
— |
(1) |
4 |
|
Corporate and Eliminations |
(144) |
(59) |
— |
(176) |
(5) |
(384) |
|
Total |
$ 1,090 |
$ (115) |
$ (41) |
$ (177) |
$ 212 |
$ 969 |
|
(a) For the nine months ended September 30, 2010 amount represents asset impairments of $11 million and restructuring charges of $7 million. For the nine months ended September 30, 2009, amounts represent the pre-tax gain on the sale of Discovery Kids of $252 million as well as asset impairments of $26 million and exit and restructuring charges of $14 million. (b) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
|||||||
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA (unaudited; in millions) CALCULATION OF FREE CASH FLOW |
||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
2010 |
2009(a) |
Change |
2010 |
2009(a) |
Change |
|||||||||||||
(recast) |
(recast) |
|||||||||||||||||
Cash provided by operating activities |
$ |
355 |
$ |
47 |
$ |
308 |
$ |
445 |
$ |
384 |
$ |
61 |
||||||
Acquisition of property and equipment |
(9) |
(9) |
— |
(29) |
(41) |
12 |
||||||||||||
Free cash flow |
$ |
346 |
$ |
38 |
$ |
308 |
$ |
416 |
$ |
343 |
$ |
73 |
||||||
(a) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
||||||||||||||||||
RECONCILIATION OF 2010 OUTLOOK TO GAAP MEASURES |
|||||||
Full Year 2010 |
|||||||
Net income available to Discovery Communications, Inc. stockholders |
$ |
650 |
To |
$ |
700 |
||
Interest expense, net |
205 |
To |
200 |
||||
Depreciation and amortization |
140 |
To |
130 |
||||
Other expense, including amortization of deferred launch incentives, mark-to-market stock-based compensation, asset impairment, exit and restructuring costs, gains (losses) on business disposition, gains (losses) on sale of securities, equity earnings in unconsolidated affiliates, unrealized and realized gains and losses from derivatives, income tax expense, net loss (income) attributable to noncontrolling interests, and stock dividends to preferred interests |
680 |
To |
695 |
||||
Adjusted OIBDA |
$ |
1,675 |
To |
$ |
1,725 |
||
NET INCOME AVAILABLE TO DISCOVERY COMMUNICATIONS, INC. STOCKHOLDERS |
|||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||
2010 |
2009(a) |
2010 |
2009(a) |
||
(recast) |
(recast) |
||||
Income from continuing operations, net of taxes |
$ 161 |
$ 93 |
$ 436 |
$ 392 |
|
Income (loss) from discontinued operations, net of taxes |
25 |
1 |
25 |
(2) |
|
Net income available to Discovery Communications, Inc. stockholders |
$ 186 |
$ 94 |
$ 461 |
$ 390 |
|
(a) The 2009 financial information has been recast so that the basis of presentation is consistent with that of the 2010 financial information. See Other Items on page 4 for additional detail. |
|||||
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA SELECTED FINANCIAL DETAIL (unaudited; in millions) |
|||
BORROWINGS |
|||
As of September 30, 2010 |
|||
5.625% Senior Notes, semi-annual interest, due August 2019 |
$ |
500 |
|
3.70% Senior Notes, semi-annual interest, due June 2015 |
850 |
||
5.05% Senior Notes, semi-annual interest, due June 2020 |
1,300 |
||
6.35% Senior Notes, semi-annual interest, due June 2040 |
850 |
||
Capital lease and other obligations |
121 |
||
Total long-term debt |
3,621 |
||
Unamortized discount |
(8) |
||
Long-term debt, net |
3,613 |
||
Less current portion of long-term debt |
18 |
||
Noncurrent portion of long-term debt |
$ |
3,595 |
|
STOCK-BASED COMPENSATION |
||||||||||||
As of September 30, 2010 |
||||||||||||
Long-Term Incentive Plans |
Total Units Outstanding (in millions) |
Weighted Average Grant Price |
Vested Units Outstanding (in millions) |
Weighted Average Grant Price |
||||||||
Discovery Appreciation Plan |
10.3 |
$ |
22.21 |
0.6 |
$ |
21.75 |
||||||
Stock Appreciation Rights |
0.1 |
20.31 |
—— |
—— |
||||||||
Stock Options |
16.6 |
18.12 |
3.4 |
15.02 |
||||||||
Performance-based Restricted Stock Units |
1.0 |
32.86 |
—— |
—— |
||||||||
Service-based Restricted Stock Units |
0.5 |
32.09 |
—— |
—— |
||||||||
Total stock-based compensation plans |
28.5 |
$ |
20.37 |
4.0 |
$ |
16.03 |
||||||
SOURCE Discovery Communications, Inc.
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