SILVER SPRING, Md., May 9,
2017 /PRNewswire/ -- Discovery Communications, Inc.
("Discovery" or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today
reported financial results for the first quarter ended
March 31, 2017.
"Improved ratings across many of Discovery's key distinctive
programs and brands, coupled with strong global distribution
growth, led to solid organic growth in the first quarter," said
President and CEO David Zaslav.
"Beyond our linear business, we continue to focus on new strategic
partnerships and investments to help drive our multiplatform growth
strategy and ensure that we reach our global superfans on every
screen."
First Quarter Results
First quarter revenues of $1,613
million increased 3% compared to the prior year primarily
due to 5% growth at International Networks and 3% growth at U.S.
Networks. Adjusted Operating Income Before Depreciation and
Amortization ("OIBDA")(1) increased 5% to $603 million primarily due to 6% growth at U.S.
Networks and 7% growth at International Networks. Excluding
currency effects, total Company revenues grew 5% and Adjusted OIBDA
grew 4%.
First quarter net income available to Discovery Communications,
Inc. ("DCI Net Income") decreased 18% to $215 million as higher operating results and
lower income tax expense were more than offset by higher losses
from equity investees primarily due to the timing of our solar
investments, which had a negative impact on net income in the first
quarter but are expected to have a positive impact on net income
for the full year, a $34 million (or
$0.06 per share) after-tax debt
extinguishment charge and higher restructuring charges than in the
prior year. Diluted earnings per share(2)
decreased $0.05, or 12%, to
$0.37 due to lower DCI Net Income,
partially offset by fewer shares outstanding. Adjusted
Earnings Per Diluted Share ("Adjusted EPS")(1), which
excludes the impact of amortization of acquisition-related
intangible assets, decreased $0.05,
or 11%, to $0.41. Adjusted EPS
excluding currency effects decreased $0.05, or 11%, and Adjusted EPS excluding
currency effects and the debt extinguishment charge increased
$0.01, or 2%.
Free cash flow increased to $208
million for the first quarter of 2017 from $47 million in the prior year as cash flow from
operations increased significantly to $255
million from $62 million while
capital expenditures increased to $47
million from $15
million. Cash flow from operations increased primarily
driven by improved operating results and lower cash taxes due
partially to the timing of cash tax payments. Capital
expenditures increased primarily due to timing and higher
technology and infrastructure spending. Free cash flow
excluding the impact of currency effects increased 167%. Free
cash flow is defined as cash provided by operating activities less
purchases of property and equipment.
(1)
|
See full definitions
of Adjusted Operating Income Before Depreciation and Amortization
and Adjusted Earnings Per Diluted Share on page 5.
|
(2)
|
All per share amounts
are calculated using DCI Net Income. See table on page 12 for the
full schedule.
|
SEGMENT RESULTS
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
Change
|
Revenues:
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
829
|
|
|
$
|
807
|
|
|
3
|
%
|
International
Networks
|
|
747
|
|
|
711
|
|
|
5
|
%
|
Education and
Other
|
|
37
|
|
|
44
|
|
|
(16)
|
%
|
Corporate and
Inter-Segment Eliminations
|
|
—
|
|
|
(1)
|
|
|
NM
|
|
Total
Revenues
|
|
$
|
1,613
|
|
|
$
|
1,561
|
|
|
3
|
%
|
|
|
|
|
|
|
|
Adjusted
OIBDA:
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
501
|
|
|
$
|
473
|
|
|
6
|
%
|
International
Networks
|
|
194
|
|
|
182
|
|
|
7
|
%
|
Education and
Other
|
|
(6)
|
|
|
(1)
|
|
|
NM
|
|
Corporate and
Inter-Segment Eliminations
|
|
(86)
|
|
|
(80)
|
|
|
(8)
|
%
|
Total Adjusted
OIBDA
|
|
$
|
603
|
|
|
$
|
574
|
|
|
5
|
%
|
U.S. Networks
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
Change
|
Revenues:
|
|
|
|
|
|
|
Distribution
|
|
$
|
408
|
|
|
$
|
390
|
|
|
5
|
%
|
Advertising
|
|
405
|
|
|
402
|
|
|
1
|
%
|
Other
|
|
16
|
|
|
15
|
|
|
7
|
%
|
Total
Revenues
|
|
$
|
829
|
|
|
$
|
807
|
|
|
3
|
%
|
Adjusted
OIBDA
|
|
$
|
501
|
|
|
$
|
473
|
|
|
6
|
%
|
Adjusted OIBDA
Margin
|
|
60
|
%
|
|
59
|
%
|
|
|
U.S. Networks' revenues for the first quarter 2017 increased 3%
to $829 million, driven by 5%
distribution growth and 1% advertising growth. Distribution
revenue growth was primarily driven by higher rates partially
offset by a slight decline in subscribers and, to a lesser extent
the growth was driven by contributions from other distribution
revenues. Other distribution revenues were comprised of
content deliveries under licensing agreements. Advertising
revenues increased 1% primarily due to higher pricing and continued
monetization of our GO platform, partially offset by lower delivery
and the impact of the Group Nine transaction(1).
Excluding the impact of the Group Nine transaction, advertising
revenues would have increased 2%.
Operating expenses decreased 2% compared to the prior year
primarily due to lower content amortization and impairment costs,
lower personnel costs, and the impact of the Group Nine
transaction, partially offset by higher marketing and research
costs. Adjusted OIBDA increased 6% to $501 million due to higher revenues and lower
operating costs.
(1)
|
The Company completed
its investment, including the contribution and, therefore,
deconsolidation of Seeker and SourceFed, in Group Nine on December
2, 2016.
|
International Networks
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
Change
|
Revenues:
|
|
|
|
|
|
|
Distribution
|
|
$
|
447
|
|
|
$
|
411
|
|
|
9
|
%
|
Advertising
|
|
282
|
|
|
285
|
|
|
(1)
|
%
|
Other
|
|
18
|
|
|
15
|
|
|
20
|
%
|
Total
Revenues
|
|
$
|
747
|
|
|
$
|
711
|
|
|
5
|
%
|
Adjusted
OIBDA
|
|
$
|
194
|
|
|
$
|
182
|
|
|
7
|
%
|
Adjusted OIBDA
Margin
|
|
26
|
%
|
|
26
|
%
|
|
|
International Networks' revenues for the first quarter increased
5% to $747 million and Adjusted OIBDA
increased 7% to $194 million.
Changes in foreign currency exchange rates reduced International
Networks' revenue growth by 3% and increased Adjusted OIBDA growth
by 3%. Excluding currency effects, total revenues increased
8%. Distribution revenues, excluding the impact of currency
effects, grew 10% mostly due to higher affiliate rates in
Europe as a result of our
continuing investment in sports, as well as a higher number of
subscribers and higher affiliate rates in Latin America.
Advertising revenues, excluding the impact of currency effects,
increased 3% due to growth in the Nordics (primarily due to the
absence of the Telenor blackout that occurred in the first quarter
of 2016) as well as growth in CEEMEA and Latin America, partially offset by declines in
the U.K. and Asia due to ratings
and market challenges.
Operating expenses increased 5%, or 9% excluding the impact of
foreign currency exchange rates, primarily due to increased sports
and other content and production costs. Excluding the impact of
foreign currency exchange rates, Adjusted OIBDA increased 4%,
reflecting revenue growth, partially offset by higher operating
expenses.
Education and Other
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
Change
|
Revenues
|
|
$
|
37
|
|
|
$
|
44
|
|
|
(16)
|
%
|
Adjusted
OIBDA
|
|
$
|
(6)
|
|
|
$
|
(1)
|
|
|
NM
|
|
Education and Other revenues for the first quarter 2017
decreased $7 million compared to the
prior year primarily due to the timing of production deliveries at
the Studios production business. Adjusted OIBDA decreased
$5 million primarily due to lower
Studios revenues and additional investments in the Education
business.
Corporate and Inter-Segment Eliminations
Adjusted OIBDA for the first quarter 2017 decreased $6 million compared to the prior year due to
higher personnel and legal costs.
STOCK REPURCHASE
During the quarter, the Company, pursuant to its existing stock
repurchase program, repurchased 5.2 million shares of its Series C
common stock at an average price of $26.97 per share, for a total of $140 million. On February 16, 2017, the Company repurchased 1.2
million Series C convertible preferred shares from Advance/Newhouse
Programming Partnership ("ANPP") at $49.89 per share (or $24.95 per share on an as converted to common
basis), for a total of $60 million
pursuant to the previously announced share repurchase agreement
described below between the Company and ANPP. In total, the
Company spent $200 million on share
repurchases during the first quarter of 2017.
Through March 31, 2017, the Company had repurchased a total
of 155.0 million shares of Series C common stock and 2.8 million
shares of its Series A common stock under its stock repurchase
program. In aggregate, including the 34.4 million Series C
convertible preferred shares acquired from ANPP and from Advance
Programming Holdings, LLC, this represents $8.2 billion of the Company's shares since
buyback activity was authorized in 2010, at an average price of
$26.48 per share on an adjusted
basis(1). Note that the aggregate share numbers
have not been adjusted to reflect the stock dividend that was
distributed in August 2014.
On May 22, 2014, the Company
entered into a share repurchase agreement with ANPP to repurchase
its shares of the Company's Series C convertible preferred stock,
on a quarterly basis, in proportion to the Company's repurchases
under its stock repurchase program in a manner that is intended to
maintain ANPP's current ownership percentage of the Company.
This agreement was amended by letter agreement on August 25, 2014.
OTHER ITEMS
On April 28, 2017, the Company
sold its production studios Raw and Betty to All3Media, a
U.K.-based television, film and digital production and distribution
company. The Company owns 50% of All3Media and accounts for its
investment in All3Media under the equity method of accounting. The
Company expects to record a small gain for the disposition of Raw
and Betty in the quarter ending June 30, 2017.
On March 13, 2017, Discovery Communications, LLC ("DCL"), a
wholly-owned subsidiary of the Company, issued $450 million principal amount of 3.80% senior
notes due March 13, 2024 and an
additional $200 million principal
amount of its existing 4.90% senior notes due March 11, 2026 in a registered public
offering. DCL used the proceeds from the offering to
repurchase through a cash tender offer $511
million aggregate principal amount of DCL's 5.05% senior
notes due 2020 and $89 million
aggregate principal amount of DCL's 5.625% senior notes due 2019.
The repurchase resulted in a pretax loss on extinguishment of debt
of $54 million.
FULL YEAR 2017 OUTLOOK(2)
Discovery will provide forward-looking guidance in connection
with this quarterly earnings announcement on its quarterly earnings
conference call and webcast referenced hereafter.
(1)
|
The average
repurchase price was calculated by dividing a) the aggregate amount
spent on share repurchases since the inception of share repurchases
in 2010 ($8.2 billion) by b) the number of shares that would have
been repurchased if the Series C Common Stock special dividend paid
on August 6, 2014 occurred prior to the inception of share
repurchases in 2010. For each common share repurchased prior to
August 6, 2014, we assume one additional share of Class C Common
Stock was repurchased for no additional consideration. For each
Series C convertible preferred share repurchased, we assume each
preferred share would have converted into two Series C common
shares.
|
(2)
|
Discovery is unable
to provide a reconciliation of the forward-looking guidance to GAAP
measures as, at this time, Discovery cannot determine the
adjustments that would be required, including those related to
fluctuations in foreign currency exchange rates.
|
NON-GAAP FINANCIAL MEASURES
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, Adjusted EPS and
free cash flow. These non-GAAP measures should be considered
in addition to, but not as a substitute for, operating income, net
income, earnings per diluted share and other measures of financial
performance reported in accordance with GAAP. Please review
the supplemental financial schedules beginning on page 10 for
reconciliations to the most comparable GAAP measures.
Adjusted OIBDA and Adjusted OIBDA Excluding the Impact of
Currency Effects
The Company evaluates the operating
performance of its segments based on financial measures such as
revenues and Adjusted OIBDA. Adjusted OIBDA is defined as
operating income excluding: (i) mark-to-market share-based
compensation, (ii) depreciation and amortization, (iii)
restructuring and other charges, (iv) certain impairment charges,
(v) gains and losses on business and asset dispositions, and (vi)
certain inter-segment eliminations related to production
studios. For the current period presented, the Company no
longer excludes amortization of deferred launch incentives in
calculating total Adjusted OIBDA as this expense is not
material.
The Company uses Adjusted OIBDA to assess the 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. The Company excludes mark-to-market
share-based compensation, restructuring and other charges, certain
impairment charges, and gains and losses on business and asset
dispositions from the calculation of Adjusted OIBDA due to their
volatility. The Company also excludes depreciation of fixed
assets and amortization of intangible assets as these amounts do
not represent cash payments in the current reporting period.
Additionally, certain corporate expenses are excluded from segment
results to enable executive management to evaluate segment
performance based upon the decisions of segment executives.
Refer to page 6 for our methodology for calculating growth rates
excluding the impact of currency effects.
Adjusted EPS and Adjusted EPS Excluding the Impact of
Currency Effects
Adjusted EPS is defined as earnings
excluding the impact of amortization of acquisition-related
intangible assets per diluted share. Note that given the
change in conversion ratio for our preferred stock, the preferred
shares are now only included in the diluted share count. The
Company believes Adjusted EPS is relevant to investors because this
metric allows them to evaluate the performance of the Company's
operations exclusive of the non-cash amortization of
acquisition-related intangible assets that impact the comparability
of results from period to period. Refer to page 6 for our
methodology for calculating growth rates excluding the impact of
currency effects.
Free Cash Flow and Free Cash Flow Excluding the Impact of
Currency Effects
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.
Refer to page 6 for our methodology for calculating growth rates
excluding the impact of currency effects.
Methodology for Calculating Growth Rates Excluding the Impact
of Currency Effects
The impact of exchange rates on our
business is an important factor in understanding period to period
comparisons of our results. For example, our international revenues
are favorably impacted as the U.S. dollar weakens relative to other
foreign currencies, and unfavorably impacted as the U.S. dollar
strengthens relative to other foreign currencies. We believe the
presentation of results on a constant currency basis ("ex-FX"), in
addition to results reported in accordance with GAAP, provides
useful information about our operating performance because the
presentation ex-FX excludes the effects of foreign currency
volatility and highlights our core operating results. The
presentation of results on a constant currency basis should be
considered in addition to, but not a substitute for, measures of
financial performance reported in accordance with GAAP.
The ex-FX change represents the percentage change on a
period-over-period basis adjusted for foreign currency impacts. The
ex-FX change is calculated as the difference between the current
year amounts translated at a baseline rate (which is based on a
spot rate for each of our currencies determined early in the fiscal
year as part of our forecasting process) (the "2017 Baseline Rate")
and the prior year amounts translated at the same 2017 Baseline
Rate. In addition, consistent with the assumption of a constant
currency environment, our ex-FX results exclude the impact of our
foreign currency hedging activities as well as realized and
unrealized foreign currency transaction gains and losses. Results
on a constant currency basis, as we present them, may not be
comparable to similarly titled measures used by other
companies.
Conference Call Information
Discovery Communications, Inc. will host a conference call
today, May 9, 2017 at 8:30 a.m.
ET to discuss its first quarter results. To listen to
the call, visit http://discoverycommunications.com or dial
1-844-452-2811 inside the U.S. and 1-574-990-9832 outside of the
U.S., using the following passcode: DISCA.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
current expectations, forecasts and assumptions that involve risks
and uncertainties and on information available to the Company as of
the date hereof. 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 14, 2017.
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, statements regarding investing in our programming and
strategic growth initiatives. 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.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited; in
millions, except per share amounts)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
Distribution
|
|
$
|
855
|
|
|
$
|
801
|
|
Advertising
|
|
687
|
|
|
687
|
|
Other
|
|
71
|
|
|
73
|
|
Total
revenues
|
|
1,613
|
|
|
1,561
|
|
Costs and
expenses:
|
|
|
|
|
Costs of revenues,
excluding depreciation and amortization
|
|
607
|
|
|
592
|
|
Selling, general and
administrative
|
|
415
|
|
|
408
|
|
Depreciation and
amortization
|
|
80
|
|
|
79
|
|
Restructuring and
other charges
|
|
24
|
|
|
6
|
|
Gain on
disposition
|
|
—
|
|
|
(13)
|
|
Total costs and
expenses
|
|
1,126
|
|
|
1,072
|
|
Operating
income
|
|
487
|
|
|
489
|
|
Interest
expense
|
|
(91)
|
|
|
(85)
|
|
Loss on
extinguishment of debt
|
|
(54)
|
|
|
—
|
|
Loss from equity
investees, net
|
|
(53)
|
|
|
(8)
|
|
Other expense,
net
|
|
(13)
|
|
|
(16)
|
|
Income before income
taxes
|
|
276
|
|
|
380
|
|
Income tax
expense
|
|
(55)
|
|
|
(111)
|
|
Net income
|
|
221
|
|
|
269
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(6)
|
|
|
(6)
|
|
Net income available
to Discovery Communications, Inc.
|
|
$
|
215
|
|
|
$
|
263
|
|
|
|
|
|
|
Net income per share
available to Discovery Communications, Inc. Series A, B and C
common stockholders:
|
|
|
|
|
Basic
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
Diluted(1)
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
Basic
|
|
389
|
|
|
413
|
|
Diluted(1)
|
|
588
|
|
|
630
|
|
|
|
(1)
|
Diluted shares adjust
for the potential dilution that would occur if common stock
equivalents, including convertible preferred stock and share-based
awards, were converted into common stock or exercised.
|
DISCOVERY
COMMUNICATIONS, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited; in
millions)
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
267
|
|
|
$
|
300
|
|
Receivables,
net
|
|
1,560
|
|
|
1,495
|
|
Content rights,
net
|
|
395
|
|
|
310
|
|
Prepaid expenses and
other current assets
|
|
369
|
|
|
397
|
|
Total current
assets
|
|
2,591
|
|
|
2,502
|
|
|
|
|
|
|
Noncurrent content
rights, net
|
|
2,038
|
|
|
2,089
|
|
Property and
equipment, net
|
|
504
|
|
|
482
|
|
Goodwill,
net
|
|
8,077
|
|
|
8,040
|
|
Intangible assets,
net
|
|
1,489
|
|
|
1,512
|
|
Equity method
investments, including note receivable
|
|
690
|
|
|
557
|
|
Other noncurrent
assets
|
|
473
|
|
|
490
|
|
Total
assets
|
|
$
|
15,862
|
|
|
$
|
15,672
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
200
|
|
|
$
|
241
|
|
Accrued
liabilities
|
|
1,008
|
|
|
1,075
|
|
Deferred
revenues
|
|
194
|
|
|
163
|
|
Current portion of
debt
|
|
132
|
|
|
82
|
|
Total current
liabilities
|
|
1,534
|
|
|
1,561
|
|
|
|
|
|
|
Noncurrent portion of
debt
|
|
7,970
|
|
|
7,841
|
|
Deferred income
taxes
|
|
429
|
|
|
467
|
|
Other noncurrent
liabilities
|
|
345
|
|
|
393
|
|
Total
liabilities
|
|
10,278
|
|
|
10,262
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
249
|
|
|
243
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Preferred
stock
|
|
2
|
|
|
2
|
|
Common
stock
|
|
5
|
|
|
5
|
|
Additional paid-in
capital
|
|
7,146
|
|
|
7,046
|
|
Treasury stock, at
cost
|
|
(6,496)
|
|
|
(6,356)
|
|
Retained
earnings
|
|
5,382
|
|
|
5,232
|
|
Accumulated other
comprehensive loss
|
|
(704)
|
|
|
(762)
|
|
Total
equity
|
|
5,335
|
|
|
5,167
|
|
Total liabilities and
equity
|
|
$
|
15,862
|
|
|
$
|
15,672
|
|
DISCOVERY
COMMUNICATIONS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited; in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Operating
Activities
|
|
|
|
Net income
|
$
|
221
|
|
|
$
|
269
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Share-based
compensation expense
|
21
|
|
|
24
|
|
Depreciation and
amortization
|
80
|
|
|
79
|
|
Content amortization
and impairment expense
|
458
|
|
|
441
|
|
Gain on
disposition
|
—
|
|
|
(13)
|
|
Equity in losses of
investee companies, net of cash distributions
|
54
|
|
|
9
|
|
Deferred income
taxes
|
(34)
|
|
|
(58)
|
|
Loss on
extinguishment of debt
|
54
|
|
|
—
|
|
Other, net
|
3
|
|
|
15
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables,
net
|
(44)
|
|
|
(7)
|
|
Content rights,
net
|
(474)
|
|
|
(488)
|
|
Accounts payable and
accrued liabilities
|
(121)
|
|
|
(148)
|
|
Share-based
compensation liabilities
|
(1)
|
|
|
(5)
|
|
Income taxes
receivable and prepaid income taxes
|
48
|
|
|
28
|
|
Foreign currency and
other, net
|
(10)
|
|
|
(84)
|
|
Cash provided by
operating activities
|
255
|
|
|
62
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Payments for
investments
|
(188)
|
|
|
—
|
|
Distributions from
equity method investees
|
5
|
|
|
15
|
|
Purchases of property
and equipment
|
(47)
|
|
|
(15)
|
|
Proceeds from
derivative instruments, net
|
5
|
|
|
—
|
|
Other investing
activities, net
|
1
|
|
|
(1)
|
|
Cash used in
investing activities
|
(224)
|
|
|
(1)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Commercial paper
borrowings (repayments), net
|
54
|
|
|
(93)
|
|
Borrowings under
revolving credit facility
|
150
|
|
|
95
|
|
Principal repayments
of revolving credit facility
|
(125)
|
|
|
(252)
|
|
Borrowings from debt,
net of discount and including premiums
|
659
|
|
|
498
|
|
Principal repayments
of debt, including discount payment and premiums to par
value
|
(650)
|
|
|
—
|
|
Principal repayments
of capital lease obligations
|
(13)
|
|
|
(12)
|
|
Repurchases of
stock
|
(200)
|
|
|
(373)
|
|
Cash settlement of
common stock repurchase contracts
|
58
|
|
|
—
|
|
Distributions to
redeemable noncontrolling interests
|
(3)
|
|
|
(2)
|
|
Share-based plan
payments, net
|
(8)
|
|
|
(5)
|
|
Other financing
activities, net
|
(6)
|
|
|
(11)
|
|
Cash used in
financing activities
|
(84)
|
|
|
(155)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
20
|
|
|
37
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
(33)
|
|
|
(57)
|
|
Cash and cash
equivalents, beginning of period
|
300
|
|
|
390
|
|
Cash and cash
equivalents, end of period
|
$
|
267
|
|
|
$
|
333
|
|
DISCOVERY
COMMUNICATIONS, INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
|
Three Months Ended
March 31, 2017
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment Eliminations
|
|
Total
|
Net income available
to Discovery Communications, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
215
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
6
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
55
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
13
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
53
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
|
54
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
91
|
|
Operating
income
|
|
483
|
|
|
123
|
|
|
(2)
|
|
|
(117)
|
|
|
487
|
|
Inter-segment
eliminations
|
|
6
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
|
—
|
|
Gain on
disposition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Restructuring and
other charges
|
|
4
|
|
|
17
|
|
|
1
|
|
|
2
|
|
|
24
|
|
Depreciation and
amortization
|
|
8
|
|
|
54
|
|
|
1
|
|
|
17
|
|
|
80
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
Total Adjusted
OIBDA
|
|
$
|
501
|
|
|
$
|
194
|
|
|
$
|
(6)
|
|
|
$
|
(86)
|
|
|
$
|
603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2016
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment Eliminations
|
|
Total
|
Net income available
to Discovery Communications, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
263
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
6
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
111
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
16
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
8
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
|
—
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
85
|
|
Operating
income
|
|
461
|
|
|
135
|
|
|
2
|
|
|
(109)
|
|
|
489
|
|
Inter-segment
eliminations
|
|
4
|
|
|
1
|
|
|
(5)
|
|
|
—
|
|
|
—
|
|
Gain on
disposition
|
|
—
|
|
|
(13)
|
|
|
—
|
|
|
—
|
|
|
(13)
|
|
Restructuring and
other charges
|
|
1
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Depreciation and
amortization
|
|
7
|
|
|
54
|
|
|
2
|
|
|
16
|
|
|
79
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
Total Adjusted
OIBDA
|
|
$
|
473
|
|
|
$
|
182
|
|
|
$
|
(1)
|
|
|
$
|
(80)
|
|
|
$
|
574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCOVERY
COMMUNICATIONS, INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
SELECTED TOTAL
COMPANY FINANCIAL METRICS - YEAR OVER YEAR GROWTH RATES REPORTED
AND EXCLUDING FOREIGN CURRENCY IMPACT
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
%
Change
(Reported)
|
|
%
Change
(ex-FX)(1)
|
Revenues
|
|
$
|
1,613
|
|
|
$
|
1,561
|
|
|
3
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA(2)
|
|
$
|
603
|
|
|
$
|
574
|
|
|
5
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
DCI Net
Income
|
|
$
|
215
|
|
|
$
|
263
|
|
|
(18)
|
%
|
|
(18)
|
%
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
(12)
|
%
|
|
(12)
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted
EPS(2)
|
|
$
|
0.41
|
|
|
$
|
0.46
|
|
|
(11)
|
%
|
|
(11)
|
%
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow(2)
|
|
$
|
208
|
|
|
$
|
47
|
|
|
343
|
%
|
|
167
|
%
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
INTERNATIONAL NETWORKS FINANCIAL METRICS - YEAR OVER YEAR GROWTH
RATES REPORTED AND EXCLUDING FOREIGN CURRENCY IMPACT
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
%
Change
(Reported)
|
|
%
Change
(ex-FX)(1)
|
Revenues
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
447
|
|
|
$
|
411
|
|
|
9
|
%
|
|
10
|
%
|
Advertising
|
|
282
|
|
|
285
|
|
|
(1)
|
%
|
|
3
|
%
|
Other
|
|
18
|
|
|
15
|
|
|
20
|
%
|
|
29
|
%
|
Total
Revenues
|
|
$
|
747
|
|
|
$
|
711
|
|
|
5
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA(2)
|
|
$
|
194
|
|
|
$
|
182
|
|
|
7
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Refer to Page 6
for our methodology for calculating growth rates excluding the
impact of currency effects.
|
(2) See full
definitions of Adjusted OIBDA, Adjusted EPS and Free Cash Flow on
page 5.
|
DISCOVERY
COMMUNICATIONS, INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
EARNINGS PER
SHARE
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
Numerator:
|
|
|
|
|
Net income
|
|
$
|
221
|
|
|
$
|
269
|
|
Less:
|
|
|
|
|
Allocation of
undistributed income to Series A convertible preferred
stock
|
|
(52)
|
|
|
(59)
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(6)
|
|
|
(6)
|
|
Net income available
to Discovery Communications, Inc. Series A, B and C common and
Series C convertible preferred stockholders for basic net income
per share
|
|
$
|
163
|
|
|
$
|
204
|
|
Allocation of net
income available to Discovery Communications Inc. Series A, B and C
common stockholders and Series C convertible preferred stockholders
for basic net income per share:
|
|
|
|
|
Series A, B and C
common stockholders
|
|
143
|
|
|
173
|
|
Series C convertible
preferred stockholders
|
|
20
|
|
|
31
|
|
Total
|
|
163
|
|
|
204
|
|
|
|
|
|
|
Add:
|
|
|
|
|
Allocation of
undistributed income to Series A convertible preferred
stockholders
|
|
52
|
|
|
59
|
|
Net income available
to Discovery Communications, Inc. Series A, B and C common
stockholders for diluted net income per share
|
|
$
|
215
|
|
|
$
|
263
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Weighted average
Series A, B and C common shares outstanding — basic
|
|
389
|
|
|
413
|
|
Weighted average
impact of assumed preferred stock conversion
|
|
195
|
|
|
214
|
|
Weighted average
dilutive effect of share-based awards
|
|
4
|
|
|
3
|
|
Weighted average
Series A, B and C common shares outstanding — diluted
|
|
588
|
|
|
630
|
|
Weighted average
Series C convertible preferred stock outstanding — basic and
diluted
|
|
27
|
|
|
36
|
|
|
|
|
|
|
Basic net income per
share available to Discovery Communications, Inc. Series A, B and C
common and Series C convertible preferred stockholders:
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
Series C convertible
preferred stockholders
|
|
$
|
0.74
|
|
|
$
|
0.84
|
|
|
|
|
|
|
Diluted net income
per share available to Discovery Communications, Inc. Series A, B
and C common and Series C convertible preferred
stockholders:
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
Series C convertible
preferred stockholders
|
|
$
|
0.74
|
|
|
$
|
0.84
|
|
DISCOVERY
COMMUNICATIONS, INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
CALCULATION OF
ADJUSTED EARNINGS PER DILUTED SHARE
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
|
|
Diluted net income
per share available to Discovery Communications, Inc. Series A, B
and C common stockholders
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
$
|
(0.05)
|
|
|
|
|
Amortization of
acquisition-related intangible assets (gross) per share
|
|
0.06
|
|
|
0.06
|
|
|
—
|
|
|
|
|
Tax effect on
amortization of acquisition-related intangible assets per
share
|
|
(0.02)
|
|
|
(0.02)
|
|
|
—
|
|
|
|
|
Adjusted earnings per
diluted share
|
|
$
|
0.41
|
|
|
$
|
0.46
|
|
|
$
|
(0.05)
|
|
|
|
|
|
|
CALCULATION OF
FREE CASH FLOW
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
Change
|
|
%
Change
|
Cash provided by
operating activities
|
|
$
|
255
|
|
|
$
|
62
|
|
|
$
|
193
|
|
|
311
|
%
|
Purchases of property
and equipment
|
|
(47)
|
|
|
(15)
|
|
|
(32)
|
|
|
213
|
%
|
Free cash
flow
|
|
$
|
208
|
|
|
$
|
47
|
|
|
$
|
161
|
|
|
343
|
%
|
DISCOVERY
COMMUNICATIONS, INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
|
|
BORROWINGS
|
|
|
March 31,
2017
|
5.625% Senior notes,
semi-annual interest, due August 2019
|
$
|
411
|
|
5.05% Senior notes,
semi-annual interest, due June 2020
|
789
|
|
4.375% Senior notes,
semi-annual interest, due June 2021
|
650
|
|
2.375% Senior notes,
euro denominated, annual interest, due March 2022
|
322
|
|
3.30% Senior notes,
semi-annual interest, due May 2022
|
500
|
|
3.25% Senior notes,
semi-annual interest, due April 2023
|
350
|
|
3.80% Senior notes,
semi-annual interest, due March 2024
|
450
|
|
3.45% Senior notes,
semi-annual interest, due March 2025
|
300
|
|
4.90% Senior notes,
semi-annual interest, due March 2026
|
700
|
|
1.90% Senior notes,
euro denominated, annual interest, due March 2027
|
644
|
|
6.35% Senior notes,
semi-annual interest, due June 2040
|
850
|
|
4.95% Senior notes,
semi-annual interest, due May 2042
|
500
|
|
4.875% Senior notes,
semi-annual interest, due April 2043
|
850
|
|
Revolving credit
facility
|
575
|
|
Commercial
paper
|
102
|
|
Capital lease
obligations
|
167
|
|
Total debt
|
8,160
|
|
Unamortized discount
and debt issuance costs
|
(58)
|
|
Debt, net
|
8,102
|
|
Current portion of
debt
|
(132)
|
|
Noncurrent portion of
debt
|
$
|
7,970
|
|
|
SHARE COUNT ROLL
FORWARD
|
|
Common
|
|
Preferred
|
|
Total
|
(Basic shares, in
millions)
|
|
|
|
|
|
|
Total shares
outstanding as of December 31, 2016
|
|
389.7
|
|
|
97.8
|
|
|
487.5
|
|
Shares
repurchased
|
|
(5.2)
|
|
|
(1.2)
|
|
|
(6.4)
|
|
Shares issued –
share-based compensation
|
|
2.3
|
|
|
—
|
|
|
2.3
|
|
Total shares
outstanding as of March 31, 2017
|
|
386.8
|
|
|
96.6
|
|
|
483.4
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/discovery-communications-reports-first-quarter-2017-results-300454051.html
SOURCE Discovery Communications, Inc.