SILVER SPRING, Md.,
Feb. 26, 2019 /PRNewswire/ -- Discovery, Inc.
("Discovery" or the "Company") (NASDAQ: DISCA, DISCB, DISCK) today
reported financial results for the full year and fourth quarter
ended December 31, 2018.
2018 Operational Highlights
- Completed the acquisition and integration of Scripps
Networks;
- Successfully broadcast the first of four Olympic Games across
Europe;
- Announced a distinctive golf service in partnership with the
PGA TOUR to become the new international home for golf;
- Formed a new streaming partnership with broadcaster ProSieben
in Germany; and
- Secured additional, favorable U.S. streaming agreements with
Hulu and Sling TV.
"2018 was a transformational year for Discovery, highlighted by
our operational accomplishments, our strong progress in synergy
generation and our overall solid financial performance, as we
continued powering people's passions around the world," said
David Zaslav, President and Chief
Executive Officer for Discovery. "Discovery is a differentiated
global content company, and we are optimistic that we will continue
to build on all of our operating momentum to drive additional
shareholder value into the future."
Full Year Financial Results
Full year revenues
increased 54% to $10.6 billion on a
reported basis compared with the prior year. Excluding the impact
of foreign currency fluctuations(1) and the Scripps
Networks Interactive, Inc. ("Scripps Networks"), MotorTrend Group,
LLC ("MTG") and Oprah Winfrey Network ("OWN") transactions
(collectively, "the Transactions")(2), revenues
increased 3%, as an 8% increase in International Networks and a 1%
increase in U.S. Networks were partially offset by a significant
decrease in Education and Other revenues due to the sale of the
education business on April 30, 2018.
On a pro forma(3) combined basis, excluding the impact
of foreign currency fluctuations, total company revenues increased
3%, as International Networks increased 8% and U.S. Networks
increased 2%, partially offset by a significant decrease in
Education and Other revenues due to the sale of the education
business.
Full year Adjusted Operating Income Before Depreciation and
Amortization ("Adjusted OIBDA")(4) increased 64% to
$4.1 billion on a reported basis
compared with the prior year. Excluding the impact of the
Transactions and foreign currency fluctuations, Adjusted OIBDA
increased 1%, as U.S. Networks increased 3% and International
Networks increased 2%, partially offset by a 16% decrease in
Corporate and Other. On a pro forma combined basis, excluding the
impact of foreign currency fluctuations, Adjusted OIBDA increased
8%, as U.S. Networks increased 8% and International Networks
increased 7%.
(1)
|
|
Refer to page 7 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(2)
|
|
The Transactions
refer to the Company's acquisition of Scripps Networks on March 6,
2018, the acquisition of a controlling interest in OWN on November
30, 2017 and the contribution of businesses from MTG on September
25, 2017.
|
(3)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for the full list of pro forma
adjustments and to pages 13-20 for pro forma operating
results.
|
(4)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
Full year net income available to Discovery increased to
$594 million, compared with a
$337 million loss in the prior year,
due to higher operating results primarily due to the Transactions,
partially offset by higher restructuring and other charges
associated with the integration of Scripps Networks, higher tax
expenses and higher interest expense. In addition, a non-cash
goodwill impairment charge was recognized in the prior year.
Diluted earnings per share(1) increased to $0.86, primarily due to higher net income.
Adjusted Earnings Per Diluted Share ("Adjusted
EPS")(1),(2), which excludes the impact of amortization
of acquisition-related intangible assets, net of tax was
$2.11. Adjusted EPS excluding
$618 million (or $0.89 per share) of after-tax restructuring and
other charges was $3.00.
Free cash flow(3) increased to $2.4 billion for the full year as cash flow from
operations increased to $2.6 billion
while capital expenditures of $147
million were slightly higher compared with the prior year
primarily due to the integration of Scripps Networks. Full year
cash flow from operations increased primarily as a result of higher
operating results primarily due to the Transactions, partially
offset by higher content and restructuring costs and higher
interest expense.
Fourth Quarter 2018 Financial Results
Fourth quarter
revenues of $2.8 billion increased
51% on a reported basis compared with the prior year quarter.
Excluding the impact of the Transactions(4) and foreign
currency fluctuations, revenues decreased 2% as a 1% increase in
U.S. Networks and flat revenues in International Networks were more
than offset by a significant decrease in Education and Other
revenues due to the sale of the education business. On a pro forma
combined basis, excluding the impact of foreign currency
fluctuations, total company fourth quarter revenues decreased 1%,
as a 2% increase in U.S. Networks and flat revenues in
International Networks were more than offset by a significant
decrease in Education and Other revenues due to the sale of the
education business.
Fourth quarter Adjusted OIBDA increased 86% to $1.2 billion on a reported basis compared with
the prior year quarter. Excluding the impact of the Transactions
and foreign currency fluctuations, Adjusted OIBDA increased 5%
compared with the prior year quarter, as International Networks
increased 13% and U.S. Networks increased 6%, partially offset by a
29% decrease in Corporate and Other. On a pro forma combined basis,
excluding the impact of foreign currency fluctuations, fourth
quarter Adjusted OIBDA increased 16%, as U.S. Networks Adjusted
OIBDA increased 17% and International Networks' Adjusted OIBDA
increased 15%.
Fourth quarter net income available to Discovery was
$269 million, compared with a loss of
$1.1 billion in the prior year
quarter, due to higher operating results, primarily due to the
integration of Scripps Networks partially offset by higher
restructuring and other charges, higher tax expenses and higher
interest expense. In addition, a non-cash goodwill impairment
charge was recognized in the prior year's quarter. Diluted earnings
per share increased to $0.38
primarily due to higher DCI Net Income. Adjusted EPS, which
excludes the impact of amortization of acquisition-related
intangible assets, net of tax was $0.74. Adjusted EPS excluding $62 million (or $0.08 per share) of after-tax restructuring and
other charges was $0.82.
Free cash flow increased to $888
million for the fourth quarter of 2018 as cash flow from
operations increased to $929 million
while capital expenditures of $41
million were slightly higher compared with the prior year
quarter primarily due to the integration of Scripps Networks.
Fourth quarter cash flow from operations increased as a result of
higher operating results due to the integration of Scripps
Networks, partially offset by higher content and restructuring
costs and higher interest expense.
(1)
|
|
All per
share amounts are calculated using net income. Refer to table on
page 25 for the full schedule.
|
(2)
|
|
See full definition
of Adjusted EPS on page 7.
|
(3)
|
|
Free cash flow is
defined as cash provided by operating activities less purchases of
property and equipment.
|
(4)
|
|
In the fourth
quarter, the Transactions refer to just the Company's acquisition
of Scripps Networks on March 6, 2018 and the acquisition of a
controlling interest in OWN on November 30, 2017.
|
SEGMENT RESULTS
Total
Company
|
|
(dollars in
millions)
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2018
|
|
2017
|
|
Change
|
|
Pro
Forma
Change(1)
|
|
2018
|
|
2017
|
|
Change
|
|
Pro
Forma
Change(1)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
1,722
|
|
|
$
|
892
|
|
|
93
|
%
|
|
2
|
%
|
|
$
|
6,350
|
|
|
$
|
3,434
|
|
|
85
|
%
|
|
2
|
%
|
International
Networks
|
|
1,084
|
|
|
927
|
|
|
17
|
%
|
|
—
|
%
|
|
4,149
|
|
|
3,281
|
|
|
26
|
%
|
|
8
|
%
|
Education and
Other
|
|
2
|
|
|
45
|
|
|
(96)
|
%
|
|
(96)
|
%
|
|
54
|
|
|
158
|
|
|
(66)
|
%
|
|
(66)
|
%
|
Corporate and
Inter-Segment
Eliminations
|
|
1
|
|
|
—
|
|
|
NM
|
|
NM
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Total
revenues
|
|
$
|
2,809
|
|
|
$
|
1,864
|
|
|
51
|
%
|
|
(1)
|
%
|
|
$
|
10,553
|
|
|
$
|
6,873
|
|
|
54
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
964
|
|
|
$
|
478
|
|
|
NM
|
|
17
|
%
|
|
$
|
3,500
|
|
|
$
|
2,026
|
|
|
73
|
%
|
|
8
|
%
|
International
Networks
|
|
350
|
|
|
249
|
|
|
41
|
%
|
|
15
|
%
|
|
1,077
|
|
|
859
|
|
|
25
|
%
|
|
7
|
%
|
Education and
Other
|
|
—
|
|
|
7
|
|
|
NM
|
|
NM
|
|
3
|
|
|
6
|
|
|
(50)
|
%
|
|
(50)
|
%
|
Corporate and
Inter-Segment
Eliminations
|
|
(130)
|
|
|
(98)
|
|
|
(33)
|
%
|
|
(8)
|
%
|
|
(441)
|
|
|
(360)
|
|
|
(23)
|
%
|
|
(1)
|
%
|
Total Adjusted
OIBDA
|
|
$
|
1,184
|
|
|
$
|
636
|
|
|
86
|
%
|
|
16
|
%
|
|
$
|
4,139
|
|
|
$
|
2,531
|
|
|
64
|
%
|
|
8
|
%
|
|
U.S.
Networks
|
|
(dollars in
millions)
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2018
|
|
2017
|
|
Change
|
|
Pro
Forma
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Pro
Forma
Change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
644
|
|
|
$
|
402
|
|
|
60
|
%
|
|
1
|
%
|
|
$
|
2,456
|
|
|
$
|
1,612
|
|
|
52
|
%
|
|
1
|
%
|
Advertising
|
|
1,041
|
|
|
456
|
|
|
NM
|
|
3
|
%
|
|
3,749
|
|
|
1,740
|
|
|
NM
|
|
3
|
%
|
Other
|
|
37
|
|
|
34
|
|
|
9
|
%
|
|
(16)
|
%
|
|
145
|
|
|
82
|
|
|
77
|
%
|
|
(2)
|
%
|
Total
revenues
|
|
$
|
1,722
|
|
|
$
|
892
|
|
|
93
|
%
|
|
2
|
%
|
|
$
|
6,350
|
|
|
$
|
3,434
|
|
|
85
|
%
|
|
2
|
%
|
Adjusted
OIBDA
|
|
$
|
964
|
|
|
$
|
478
|
|
|
NM
|
|
17
|
%
|
|
$
|
3,500
|
|
|
$
|
2,026
|
|
|
73
|
%
|
|
8
|
%
|
Full Year Financial Results
U.S. Networks' revenues
for the full year of 2018 increased 85% to $6.4 billion on a reported basis compared with
the prior year. Excluding the impact of the Transactions, revenues
increased 1%, as a 3% increase in advertising revenues and a 1%
increase in distribution revenues were partially offset by a 27%
decrease in Other revenues due to lower program and merchandising
sales. On a pro forma combined basis, U.S. Networks' revenues for
the full year increased 2%. Pro forma advertising revenues
increased 3% primarily driven by the continued monetization of our
digital content offerings and an increase in pricing, partially
offset by the impact of audience declines on our linear networks.
Pro forma distribution revenues increased 1%, reflecting increases
in contractual affiliate rates, partially offset by a decline in
subscribers and to a lesser extent, the timing of lower
contributions from content deliveries under licensing
agreements.
NM: Not
Meaningful
|
(1)
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Pro forma change for Total Company and the
International Networks segment excludes the impact from foreign
currency fluctuations. Refer to page 8 for the full list of pro
forma adjustments and to pages 13-20 for full detail on pro forma
operating results.
|
Operating expenses for U.S. Networks increased to $2.9 billion on a reported basis compared with
$1.4 billion in the prior year.
Excluding the impact of the Transactions, operating expenses
decreased 1%, as costs of revenues decreased 4% while SG&A
expenses increased 4%. On a pro forma combined basis, total
operating expenses decreased 4%, as costs of revenues decreased 5%
and SG&A expenses decreased 3%. The decrease in pro forma
combined operating expenses was primarily attributable to higher
content impairment expenses recorded in the prior year, lower
personnel costs due to restructuring as well as content synergies
following the acquisition of Scripps Networks.
U.S. Networks' Adjusted OIBDA increased 73% to $3.5 billion on a reported basis compared with
the prior year. Excluding the impact of the Transactions, U.S.
Networks' Adjusted OIBDA increased 3%. On a pro forma combined
basis, Adjusted OIBDA increased 8%, driven by an increase in
revenues combined with a decrease in operating expenses.
Fourth Quarter Financial Results
U.S. Networks'
revenues for the fourth quarter of 2018 increased 93% to
$1.7 billion on a reported basis
compared with the prior year quarter. Excluding the impact of the
Transactions, revenues increased 1%, as distribution revenues
increased 3%, advertising revenues remained consistent and Other
revenues decreased $9 million
compared with the prior year quarter. On a pro forma combined
basis, U.S. Networks' revenues for the fourth quarter increased 2%.
Pro forma advertising revenues increased 3%, primarily driven by
continued monetization of digital content offerings and an increase
in pricing, partially offset by the impact of audience declines on
our linear networks. Pro forma distribution revenues increased 1%
primarily reflecting increases in contractual affiliate rates,
partially offset by a decline in overall subscribers. On a pro
forma combined basis, total portfolio subscribers for December 2018 were 4% lower than December 2017 and subscribers to our fully
distributed networks were flat with the prior year, primarily due
to additional carriage on streaming platforms toward the end of the
year, which offset the overall trend of subscriber declines.
Operating expenses for U.S. Networks increased to $758 million on a reported basis compared with
$414 million in the prior year
quarter. Excluding the impact of the Transactions, operating
expenses decreased 6%, as costs of revenues decreased 15% and
SG&A expenses increased 11%. On a pro forma combined basis,
total operating expenses decreased 13%, as costs of revenues
decreased 18% and SG&A expenses decreased 4%. The decrease in
pro forma combined operating expenses was primarily attributable to
content synergies and higher impairments recorded in the prior year
quarter along with lower personnel costs due to restructuring and
the integration of Scripps Networks.
U.S. Networks' Adjusted OIBDA for the fourth quarter increased
to $964 million on a reported basis
compared with $478 million in the
prior year quarter. Excluding the impact of the Transactions, U.S.
Networks' Adjusted OIBDA increased 6%. On a pro forma combined
basis, Adjusted OIBDA increased 17%, driven by an increase in
revenues combined with a decrease in operating expenses.
International
Networks
|
|
(dollars in
millions)
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2018
|
|
2017
|
|
Change
|
|
Pro
Forma
Change(1)
|
|
2018
|
|
2017
|
|
Change
|
|
Pro
Forma
Change(1)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
505
|
|
|
$
|
479
|
|
|
5
|
%
|
|
2
|
%
|
|
$
|
2,082
|
|
|
$
|
1,862
|
|
|
12
|
%
|
|
5
|
%
|
Advertising
|
|
533
|
|
|
419
|
|
|
27
|
%
|
|
—
|
%
|
|
1,765
|
|
|
1,332
|
|
|
33
|
%
|
|
3
|
%
|
Other
|
|
46
|
|
|
29
|
|
|
59
|
%
|
|
(21)
|
%
|
|
302
|
|
|
87
|
|
|
NM
|
|
88
|
%
|
Total
revenues
|
|
$
|
1,084
|
|
|
$
|
927
|
|
|
17
|
%
|
|
—
|
%
|
|
$
|
4,149
|
|
|
$
|
3,281
|
|
|
26
|
%
|
|
8
|
%
|
Adjusted
OIBDA
|
|
$
|
350
|
|
|
$
|
249
|
|
|
41
|
%
|
|
15
|
%
|
|
$
|
1,077
|
|
|
$
|
859
|
|
|
25
|
%
|
|
7
|
%
|
NM: Not
Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Pro forma is
defined as the results of the Company as if the Transactions had
occurred on January 1, 2017. Pro forma change excludes the impact
from foreign currency fluctuations. Refer to page 8 for the full
list of pro forma adjustments and to pages 13-20 for full detail on
pro forma operating results.
|
Full Year Financial Results
International Networks'
revenues for the full year of 2018 increased 26% to $4.1 billion on a reported basis compared with
the prior year. Excluding the impact of the acquisition of Scripps
Networks and foreign currency fluctuations, International Networks'
revenues increased 8%, driven by a 5% increase in distribution
revenues, a 2% increase in advertising revenues and a significant
increase in Other revenues due to the sublicensing of the Olympic
Games in the first quarter. On a pro forma combined basis,
excluding the impact of foreign currency fluctuations,
International Networks' revenues increased 8%, driven by a 5%
increase in distribution revenues and a 3% increase in advertising
revenues, and an 88% increase in other revenues due to the
sublicensing of the Olympics. Pro forma distribution revenue growth
was primarily driven by increases in subscribers to our linear
networks and higher digital subscription revenues in Europe and increases in pricing in
Latin America and Europe, partially offset by pricing declines
in Asia. Pro forma advertising
revenue growth was primarily attributable to revenues associated
with the Olympics in the first quarter, strength in certain
European markets, and to a lesser extent, continued monetization of
our digital distribution offerings, partially offset by linear
viewership declines in Latin
America.
Operating expenses for International Networks increased to
$3.1 billion compared with
$2.4 billion on a reported basis in
the prior year. Excluding the impact of the acquisition of Scripps
Networks and foreign currency fluctuations, operating expenses
increased 11%, as costs of revenues increased 12% and SG&A
increased 7%. On a pro forma combined basis, excluding the impact
of foreign currency fluctuations, operating expenses increased 8%.
Costs of revenues increased 11%, primarily attributable to spending
on the Olympics, partially offset by content synergies from the
integration of Scripps Networks. SG&A increased 2%, due to
increased marketing spend, particularly related to our digital
distribution offerings, and Olympics-related expenses, partially
offset by cost savings from the integration of Scripps
Networks.
International Networks' Adjusted OIBDA increased 25% to
$1.1 billion on a reported basis
compared with the prior year. Excluding the impact of the
acquisition of Scripps Networks and foreign currency fluctuations,
International Networks' Adjusted OIBDA increased 2%. On a pro forma
combined basis, excluding the impact of foreign currency
fluctuations, Adjusted OIBDA increased 7%. The increase in pro
forma combined Adjusted OIBDA was primarily driven by the growth in
revenues, which outpaced the increases in costs of revenues and
SG&A expenses.
Fourth Quarter Financial Results
International
Networks' revenues for the fourth quarter of 2018 increased 17% to
$1.1 billion on a reported basis
compared with the prior year quarter. Excluding the impact of the
acquisition of Scripps Networks and foreign currency fluctuations,
International Networks' revenues were flat, driven by a 2% increase
in distribution revenues, while advertising revenues were flat and
Other revenues decreased 13%. On a pro forma combined basis,
excluding the impact of foreign currency fluctuations,
International Networks' revenues were flat, driven by a 2% increase
in distribution revenues while advertising revenues were flat,
offset by a 21% decrease in Other revenues due to the timing of
certain content distribution and licensing revenues. Pro forma
distribution revenue growth was primarily driven by increases in
Europe, mostly due to higher
pricing, and higher pricing and subscriber increases in
Latin America, partially offset by
pricing declines in Asia. Pro
forma advertising revenues were flat, as increases in Europe, mostly due to higher pricing, were
offset by viewership declines in Latin
America.
Operating expenses for International Networks increased to
$734 million compared with
$678 million on a reported basis in
the prior year quarter. Excluding the impact of the acquisition of
Scripps Networks and foreign currency fluctuations, operating
expenses decreased 5%, as costs of revenues decreased 9% partially
offset by an increase in SG&A of 4%. On a pro forma combined
basis, excluding currency effects, operating expenses decreased 6%,
as costs of revenues decreased 9%, primarily attributable to
content synergies following the acquisition of Scripps Networks,
while SG&A was flat, primarily due to reductions in personnel
costs from restructuring and the integration of Scripps Networks
offset by increased personnel spending related to digital
distribution offerings.
International Networks' Adjusted OIBDA increased 41% to
$350 million on a reported basis
compared with the prior year quarter. Excluding the impact of the
acquisition of Scripps Networks and foreign currency fluctuations,
International Networks' Adjusted OIBDA increased 13%. On a pro
forma combined basis, excluding currency effects, Adjusted OIBDA
increased 15%. The increase in pro forma combined Adjusted OIBDA
was primarily driven by the decrease in costs of revenues.
Education and
Other
|
|
(dollars in
millions)
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Revenues
|
|
$
|
2
|
|
|
$
|
45
|
|
|
(96)
|
%
|
|
$
|
54
|
|
|
$
|
158
|
|
|
(66)
|
%
|
Adjusted
OIBDA
|
|
$
|
—
|
|
|
$
|
7
|
|
|
NM
|
|
$
|
3
|
|
|
$
|
6
|
|
|
(50)
|
%
|
NM: Not
Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year Financial Results
Education and Other saw
significant decreases in revenues and Adjusted OIBDA for the full
year primarily due to the sale of the education business.
Fourth Quarter Financial Results
Education and Other
saw significant decreases in revenues and Adjusted OIBDA for the
fourth quarter primarily due to the sale of the education
business.
Corporate and Inter-Segment Eliminations
Full Year Financial Results
Corporate and
Inter-Segment Eliminations Adjusted OIBDA for the full year of 2018
decreased 23% on a reported basis compared with the prior year.
Excluding the impact of the Transactions and foreign currency
fluctuations, Adjusted OIBDA decreased 16%. On a pro forma combined
basis, excluding the impact of foreign currency fluctuations,
Adjusted OIBDA decreased 1% compared with the prior year primarily
due to an increase in SG&A expenses driven by higher technology
costs, tax advisory fees and share-based compensation, partially
offset by a reduction in personnel costs as a result of
restructuring and the integration of Scripps Networks.
Fourth Quarter Financial Results
Adjusted OIBDA for
the fourth quarter of 2018 decreased 33% on a reported basis
compared with the prior year quarter. Excluding the impact of the
Transactions and foreign currency fluctuations, Adjusted OIBDA
decreased 29%. On a pro forma combined basis, excluding the impact
of foreign currency fluctuations, Adjusted OIBDA decreased 8%
compared with the prior year quarter primarily due to the timing of
compensation expense and professional service fees and lower
inter-company allocations to operating segments offsetting lower
personnel costs as a result of restructuring and the integration of
Scripps Networks.
FULL YEAR 2019 OUTLOOK(1)
Discovery
will provide forward-looking guidance in connection with this
quarterly earnings announcement on its quarterly earnings
conference call and webcast referenced hereafter.
(1)
|
Discovery is unable
to provide a reconciliation of the forward-looking guidance to GAAP
measures as, at this time, Discovery cannot determine all of the
adjustments that would be required.
|
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 21 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, (vi) certain inter-segment
eliminations related to production studios, and (vii) third-party
transaction costs directly related to the acquisition and
integration of Scripps Networks.
The Company uses this measure 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, gains
and losses on business and asset dispositions and Scripps Networks
transaction and integration costs from the calculation of Adjusted
OIBDA due to their impact on comparability between periods. 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. Certain corporate
expenses are excluded from segment results to enable executive
management to evaluate segment performance based upon the decisions
of segment executives. Total Adjusted OIBDA should be considered in
addition to, but not a substitute for, operating income, net income
and other measures of financial performance reported in accordance
with GAAP. Refer to the comments that follow for our methodology
for calculating growth rates excluding the impact of currency
effects.
Effective January 1, 2019, our
definition of Adjusted OIBDA was modified to exclude all
share-based compensation, whereas only mark-to-market share-based
compensation is excluded for each of the periods presented herein.
See pages 23-24 for Adjusted OIBDA as historically reported and
under the revised definition.
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. 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 the comments that follow 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 a spot rate
for each of our currencies determined early in the fiscal year as
part of our forecasting process (the "2018 Baseline Rate"), and the
prior year amounts translated at the same 2018 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.
Selling, General and Administrative Expense
Selling,
general and administrative expense, as presented, currently
excludes mark-to-market share-based compensation and Scripps
Networks transaction and integration costs due to their impact on
comparability between periods.
Free Cash Flow
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.
Pro Forma Adjustments
The discussion and tables
beginning on page 13 compare our actual and pro forma combined
results as if the Transactions occurred on January 1, 2017. Management believes reviewing
our actual operating results in addition to combined pro forma
results is useful in identifying trends in, or reaching conclusions
regarding, the overall operating performance of our businesses. Our
combined U.S. Networks, International Networks and Corporate and
Inter-Segment Eliminations pro forma information is based on the
historical operating results of the respective businesses as
applicable to each segment and includes adjustments directly
attributable to the Transactions as if they had occurred on
January 1, 2017, such as:
- The impact of the purchase price allocation to the fair value
of assets, liabilities, and noncontrolling interests, such as
intangible amortization;
- Adjustments to remove items associated with the Transactions
that will not have a continuing impact on the combined entity, such
as transaction costs and the impact of employee retention
agreements; and
- Changes to align accounting policies.
Adjustments do not include costs related to integration
activities, cost savings or synergies that have been or may be
achieved by the combined businesses. Pro forma amounts are not
necessarily indicative of what our results would have been had we
operated the acquired businesses since January 1, 2017 and should not be taken as
indicative of the Company's future consolidated results of
operations.
Actual amounts for the three and twelve months ended
December 31, 2018 include the results
of operations for the Discovery and Scripps Networks, OWN and MTG
businesses for the period since each respective transaction.
Scripps Networks was acquired on March 6,
2018, OWN was consolidated on November 30, 2017 and MTG was consolidated on
September 25, 2017.
CONFERENCE CALL INFORMATION
Discovery will host a
conference call today, February 26, 2019 at 8:30 a.m. ET to discuss its fourth quarter
results. To listen to the call, visit
https://corporate.discovery.com or dial 1-844-452-2811 inside the
U.S. and 1-574-990-9832 outside of the U.S., using conference
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 28, 2018.
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 the Company's
programming, strategic growth initiatives, and the effects of the
Scripps Networks acquisition and related transactions. 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.
ABOUT DISCOVERY
Discovery, Inc. (Nasdaq: DISCA, DISCB,
DISCK) is a global leader in real life entertainment, serving a
passionate audience of superfans around the world with content that
inspires, informs and entertains. Discovery delivers over 8,000
hours of original programming each year and has category leadership
across deeply loved content genres around the world. Available in
220 countries and territories and in nearly 50 languages, Discovery
is a platform innovator, reaching viewers on all screens, including
TV Everywhere products such as the GO portfolio of apps;
direct-to-consumer streaming services such as Eurosport Player and
MotorTrend OnDemand; digital-first and social content from Group
Nine Media and a strategic alliance with PGA TOUR to create the
international home of golf. Discovery's portfolio of premium brands
includes Discovery Channel, HGTV, Food Network, TLC, Investigation
Discovery, Travel Channel, MotorTrend, Animal Planet, and Science
Channel, as well as OWN: Oprah Winfrey Network in the U.S.,
Discovery Kids in Latin America,
and Eurosport, the leading provider of locally relevant, premium
sports and Home of the Olympic Games across Europe. For more information, please visit
https://corporate.discovery.com and follow @DiscoveryIncTV across
social platforms.
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited; in
millions, except per share amounts)
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
Distribution
|
|
$
|
1,149
|
|
|
$
|
881
|
|
|
$
|
4,538
|
|
|
$
|
3,474
|
|
Advertising
|
|
1,574
|
|
|
876
|
|
|
5,514
|
|
|
3,073
|
|
Other
|
|
86
|
|
|
107
|
|
|
501
|
|
|
326
|
|
Total
revenues
|
|
2,809
|
|
|
1,864
|
|
|
10,553
|
|
|
6,873
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Costs of revenues,
excluding depreciation and amortization
|
|
946
|
|
|
745
|
|
|
3,935
|
|
|
2,656
|
|
Selling, general and
administrative
|
|
657
|
|
|
507
|
|
|
2,620
|
|
|
1,768
|
|
Impairment of
goodwill
|
|
—
|
|
|
1,327
|
|
|
—
|
|
|
1,327
|
|
Depreciation and
amortization
|
|
397
|
|
|
90
|
|
|
1,398
|
|
|
330
|
|
Restructuring and
other charges
|
|
98
|
|
|
32
|
|
|
750
|
|
|
75
|
|
(Gain) loss on
disposition
|
|
—
|
|
|
—
|
|
|
(84)
|
|
|
4
|
|
Total costs and
expenses
|
|
2,098
|
|
|
2,701
|
|
|
8,619
|
|
|
6,160
|
|
Operating income
(loss)
|
|
711
|
|
|
(837)
|
|
|
1,934
|
|
|
713
|
|
Interest expense,
net
|
|
(171)
|
|
|
(157)
|
|
|
(729)
|
|
|
(475)
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54)
|
|
Loss from equity
investees, net
|
|
(10)
|
|
|
(89)
|
|
|
(63)
|
|
|
(211)
|
|
Other (expense)
income, net
|
|
(36)
|
|
|
33
|
|
|
(120)
|
|
|
(110)
|
|
Income (loss) before
income taxes
|
|
494
|
|
|
(1,050)
|
|
|
1,022
|
|
|
(137)
|
|
Income tax
expense
|
|
(195)
|
|
|
(87)
|
|
|
(341)
|
|
|
(176)
|
|
Net income
(loss)
|
|
299
|
|
|
(1,137)
|
|
|
681
|
|
|
(313)
|
|
Net income
attributable to noncontrolling interests
|
|
(26)
|
|
|
—
|
|
|
(67)
|
|
|
—
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(4)
|
|
|
(7)
|
|
|
(20)
|
|
|
(24)
|
|
Net income (loss)
available to Discovery, Inc.
|
|
$
|
269
|
|
|
$
|
(1,144)
|
|
|
$
|
594
|
|
|
$
|
(337)
|
|
Net income (loss) per
share available to Discovery, Inc. Series A, B and
C common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.38
|
|
|
$
|
(1.99)
|
|
|
$
|
0.86
|
|
|
$
|
(0.59)
|
|
Diluted(1)
|
|
$
|
0.38
|
|
|
$
|
(1.99)
|
|
|
$
|
0.86
|
|
|
$
|
(0.59)
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
524
|
|
|
381
|
|
|
498
|
|
|
384
|
|
Diluted(1)
|
|
715
|
|
|
568
|
|
|
688
|
|
|
576
|
|
(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,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited; in
millions, except par value)
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
986
|
|
|
$
|
7,309
|
|
Receivables,
net
|
|
2,620
|
|
|
1,838
|
|
Content rights,
net
|
|
313
|
|
|
410
|
|
Prepaid expenses and
other current assets
|
|
312
|
|
|
434
|
|
Total current
assets
|
|
4,231
|
|
|
9,991
|
|
Noncurrent content
rights, net
|
|
3,069
|
|
|
2,213
|
|
Property and
equipment, net
|
|
800
|
|
|
597
|
|
Goodwill
|
|
13,006
|
|
|
7,073
|
|
Intangible assets,
net
|
|
9,674
|
|
|
1,770
|
|
Equity method
investments, including note receivable
|
|
935
|
|
|
335
|
|
Other noncurrent
assets
|
|
835
|
|
|
576
|
|
Total
assets
|
|
$
|
32,550
|
|
|
$
|
22,555
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
325
|
|
|
$
|
277
|
|
Accrued
liabilities
|
|
1,563
|
|
|
1,309
|
|
Deferred
revenues
|
|
249
|
|
|
255
|
|
Current portion of
debt
|
|
1,860
|
|
|
30
|
|
Total current
liabilities
|
|
3,997
|
|
|
1,871
|
|
Noncurrent portion of
debt
|
|
15,185
|
|
|
14,755
|
|
Deferred income
taxes
|
|
1,811
|
|
|
319
|
|
Other noncurrent
liabilities
|
|
1,040
|
|
|
587
|
|
Total
liabilities
|
|
22,033
|
|
|
17,532
|
|
Commitments and
contingencies
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
415
|
|
|
413
|
|
Equity:
|
|
|
|
|
Discovery, Inc.
stockholders' equity:
|
|
|
|
|
Series A-1
convertible preferred stock: $0.01 par value; 8 shares authorized,
issued, and
outstanding
|
|
—
|
|
|
—
|
|
Series C-1
convertible preferred stock: $0.01 par value; 6 shares
authorized, issued, and
outstanding
|
|
—
|
|
|
—
|
|
Series A common
stock: $0.01 par value; 1,700 shares authorized; 160 and 157
shares
issued; and 157 and 154 shares outstanding
|
|
2
|
|
|
1
|
|
Series B
convertible common stock: $0.01 par value; 100 shares authorized; 7
shares
issued and outstanding
|
|
—
|
|
|
—
|
|
Series C common
stock: $0.01 par value; 2,000 shares authorized; 524 and 383
shares
issued; and 360 and 219 shares outstanding
|
|
5
|
|
|
4
|
|
Additional paid-in
capital
|
|
10,647
|
|
|
7,295
|
|
Treasury stock, at
cost: 167 shares
|
|
(6,737)
|
|
|
(6,737)
|
|
Retained
earnings
|
|
5,254
|
|
|
4,632
|
|
Accumulated other
comprehensive loss
|
|
(785)
|
|
|
(585)
|
|
Total Discovery, Inc.
stockholders' equity
|
|
8,386
|
|
|
4,610
|
|
Noncontrolling interests
|
|
1,716
|
|
|
—
|
|
Total
equity
|
|
10,102
|
|
|
4,610
|
|
Total liabilities and
equity
|
|
$
|
32,550
|
|
|
$
|
22,555
|
|
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited; in
millions)
|
|
|
|
Year Ended December 31,
|
|
|
2018
|
|
2017
|
Operating
Activities
|
|
|
|
|
Net income
(loss)
|
|
$
|
681
|
|
|
$
|
(313)
|
|
Adjustments to
reconcile net income (loss) to cash provided by operating
activities:
|
|
|
|
|
Share-based
compensation expense
|
|
80
|
|
|
39
|
|
Depreciation and
amortization
|
|
1,398
|
|
|
330
|
|
Content rights
amortization and impairment
|
|
3,288
|
|
|
1,910
|
|
Impairment of
goodwill
|
|
—
|
|
|
1,327
|
|
(Gain) loss on
disposition
|
|
(84)
|
|
|
4
|
|
Remeasurement gain on
previously held equity interests
|
|
—
|
|
|
(34)
|
|
Equity in earnings
and distributions from equity method investee companies
|
|
138
|
|
|
223
|
|
Deferred income
taxes
|
|
(131)
|
|
|
(199)
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
54
|
|
Realized loss from
derivative instruments, net
|
|
—
|
|
|
98
|
|
Other, net
|
|
141
|
|
|
85
|
|
Changes in operating
assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
|
Receivables,
net
|
|
(84)
|
|
|
(258)
|
|
Content rights and
payables, net
|
|
(2,883)
|
|
|
(1,947)
|
|
Accounts payable and
accrued liabilities
|
|
(74)
|
|
|
265
|
|
Prepaid income taxes
and income taxes receivable
|
|
57
|
|
|
20
|
|
Foreign currency and
other, net
|
|
49
|
|
|
25
|
|
Cash provided by
operating activities
|
|
2,576
|
|
|
1,629
|
|
Investing
Activities
|
|
|
|
|
Business
acquisitions, net of cash acquired
|
|
(8,565)
|
|
|
(60)
|
|
Payments for
investments, net
|
|
(61)
|
|
|
(444)
|
|
Proceeds from
dispositions, net of cash disposed
|
|
107
|
|
|
29
|
|
Proceeds from sale of
assets
|
|
68
|
|
|
—
|
|
Purchases of property
and equipment
|
|
(147)
|
|
|
(135)
|
|
Distributions from
equity method investees
|
|
1
|
|
|
77
|
|
Payments for
derivative instruments, net
|
|
(2)
|
|
|
(101)
|
|
Other investing
activities, net
|
|
6
|
|
|
1
|
|
Cash used in
investing activities
|
|
(8,593)
|
|
|
(633)
|
|
Financing
Activities
|
|
|
|
|
Commercial paper
repayments, net
|
|
(5)
|
|
|
(48)
|
|
Borrowings under
revolving credit facility
|
|
—
|
|
|
350
|
|
Principal repayments
of revolving credit facility
|
|
(200)
|
|
|
(475)
|
|
Borrowings under term
loan facilities
|
|
2,000
|
|
|
—
|
|
Principal repayments
of term loans
|
|
(2,000)
|
|
|
—
|
|
Borrowings from debt,
net of discount and including premiums
|
|
—
|
|
|
7,488
|
|
Principal repayments
of debt, including discount payment and premiums to par
value
|
|
(16)
|
|
|
(650)
|
|
Payments for bridge
financing commitment fees
|
|
—
|
|
|
(40)
|
|
Principal repayments
of capital lease obligations
|
|
(50)
|
|
|
(33)
|
|
Repurchases of
stock
|
|
—
|
|
|
(603)
|
|
Cash settlement
(prepayments) of common stock repurchase contracts
|
|
—
|
|
|
58
|
|
Distributions to
noncontrolling interests and redeemable noncontrolling
interests
|
|
(76)
|
|
|
(30)
|
|
Share-based plan
proceeds, net
|
|
54
|
|
|
16
|
|
Borrowings under
program financing line of credit
|
|
22
|
|
|
—
|
|
Other financing
activities, net
|
|
(12)
|
|
|
(82)
|
|
Cash (used in)
provided by financing activities
|
|
$
|
(283)
|
|
|
$
|
5,951
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(23)
|
|
|
62
|
|
Net change in cash
and cash equivalents
|
|
(6,323)
|
|
|
7,009
|
|
Cash and cash
equivalents, beginning of period
|
|
7,309
|
|
|
300
|
|
Cash and cash
equivalents, end of period
|
|
986
|
|
|
7,309
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
TOTAL COMPANY
REPORTED AND PRO FORMA FINANCIAL RESULTS
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(2)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
1,149
|
|
$
|
—
|
|
$
|
1,149
|
|
|
$
|
881
|
|
$
|
265
|
|
$
|
1,146
|
|
|
$
|
268
|
|
30
|
%
|
|
$
|
3
|
|
—
|
%
|
|
1
|
%
|
Advertising
|
|
1,574
|
|
(1)
|
|
1,573
|
|
|
876
|
|
697
|
|
1,573
|
|
|
698
|
|
80
|
%
|
|
—
|
|
—
|
%
|
|
2
|
%
|
Other
|
|
86
|
|
1
|
|
87
|
|
|
107
|
|
44
|
|
151
|
|
|
(21)
|
|
(20)
|
%
|
|
(64)
|
|
(42)
|
%
|
|
(41)
|
%
|
Total
revenues
|
|
2,809
|
|
—
|
|
2,809
|
|
|
1,864
|
|
1,006
|
|
2,870
|
|
|
945
|
|
51
|
%
|
|
(61)
|
|
(2)
|
%
|
|
(1)
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
946
|
|
1
|
|
947
|
|
|
745
|
|
383
|
|
1,128
|
|
|
201
|
|
27
|
%
|
|
(181)
|
|
(16)
|
%
|
|
(14)
|
%
|
Selling, general
and
administrative
|
|
679
|
|
(1)
|
|
678
|
|
|
483
|
|
237
|
|
720
|
|
|
196
|
|
41
|
%
|
|
(42)
|
|
(6)
|
%
|
|
(3)
|
%
|
Adjusted
OIBDA(3)
|
|
$
|
1,184
|
|
$
|
—
|
|
$
|
1,184
|
|
|
$
|
636
|
|
$
|
386
|
|
$
|
1,022
|
|
|
548
|
|
86
|
%
|
|
162
|
|
16
|
%
|
|
16
|
%
|
TOTAL COMPANY
RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME TO
ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating income
(loss)
|
|
711
|
|
70
|
|
781
|
|
|
(837)
|
|
83
|
|
(754)
|
|
|
$
|
1,548
|
|
NM
|
|
$
|
1,535
|
|
NM
|
Restructuring and
other charges
|
|
98
|
|
—
|
|
98
|
|
|
32
|
|
—
|
|
32
|
|
|
66
|
|
NM
|
|
66
|
|
NM
|
Depreciation and
amortization
|
|
397
|
|
(70)
|
|
327
|
|
|
90
|
|
308
|
|
398
|
|
|
307
|
|
NM
|
|
(71)
|
|
(18)
|
%
|
Impairment of
goodwill
|
|
—
|
|
—
|
|
—
|
|
|
1,327
|
|
—
|
|
1,327
|
|
|
(1,327)
|
|
NM
|
|
(1,327)
|
|
NM
|
Mark-to-market
share-
based compensation
|
|
(25)
|
|
—
|
|
(25)
|
|
|
7
|
|
3
|
|
10
|
|
|
(32)
|
|
NM
|
|
(35)
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
3
|
|
—
|
|
3
|
|
|
17
|
|
(8)
|
|
9
|
|
|
(14)
|
|
(82)
|
%
|
|
(6)
|
|
(67)
|
%
|
Adjusted
OIBDA(3)
|
|
$
|
1,184
|
|
$
|
—
|
|
$
|
1,184
|
|
|
$
|
636
|
|
$
|
386
|
|
$
|
1,022
|
|
|
548
|
|
86
|
%
|
|
162
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
Refer to page 7 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(3)
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
U.S. NETWORKS
REPORTED AND PRO FORMA FINANCIAL RESULTS
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
644
|
|
$
|
—
|
|
$
|
644
|
|
|
$
|
402
|
|
$
|
234
|
|
$
|
636
|
|
|
$
|
242
|
|
60
|
%
|
|
$
|
8
|
|
1
|
%
|
Advertising
|
|
1,041
|
|
—
|
|
1,041
|
|
|
456
|
|
559
|
|
1,015
|
|
|
585
|
|
NM
|
|
26
|
|
3
|
%
|
Other
|
|
37
|
|
—
|
|
37
|
|
|
34
|
|
10
|
|
44
|
|
|
3
|
|
9
|
%
|
|
(7)
|
|
(16)
|
%
|
Total
revenues
|
|
1,722
|
|
—
|
|
1,722
|
|
|
892
|
|
803
|
|
1,695
|
|
|
830
|
|
93
|
%
|
|
27
|
|
2
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
(451)
|
|
(1)
|
|
(452)
|
|
|
(265)
|
|
(285)
|
|
(550)
|
|
|
(186)
|
|
(70)
|
%
|
|
98
|
|
18
|
%
|
Selling, general
and
administrative
|
|
(307)
|
|
—
|
|
(307)
|
|
|
(149)
|
|
(171)
|
|
(320)
|
|
|
(158)
|
|
NM
|
|
13
|
|
4
|
%
|
Adjusted
OIBDA(2)
|
|
964
|
|
(1)
|
|
963
|
|
|
478
|
|
347
|
|
825
|
|
|
486
|
|
NM
|
|
138
|
|
17
|
%
|
U.S. NETWORKS
RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME TO
ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
601
|
|
$
|
71
|
|
$
|
672
|
|
|
$
|
450
|
|
$
|
72
|
|
$
|
522
|
|
|
$
|
151
|
|
34
|
%
|
|
$
|
150
|
|
29
|
%
|
Restructuring and
other charges
|
|
63
|
|
(1)
|
|
62
|
|
|
12
|
|
—
|
|
12
|
|
|
51
|
|
NM
|
|
50
|
|
NM
|
Depreciation and
amortization
|
|
294
|
|
(70)
|
|
224
|
|
|
14
|
|
280
|
|
294
|
|
|
280
|
|
NM
|
|
(70)
|
|
(24)
|
%
|
Mark-to-market
share-
based compensation
|
|
(1)
|
|
—
|
|
(1)
|
|
|
—
|
|
1
|
|
1
|
|
|
(1)
|
|
NM
|
|
(2)
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
7
|
|
—
|
|
7
|
|
|
—
|
|
—
|
|
—
|
|
|
7
|
|
NM
|
|
7
|
|
NM
|
Inter-segment
eliminations
|
|
—
|
|
(1)
|
|
(1)
|
|
|
2
|
|
(6)
|
|
(4)
|
|
|
(2)
|
|
NM
|
|
3
|
|
75
|
%
|
Adjusted
OIBDA(2)
|
|
964
|
|
(1)
|
|
963
|
|
|
478
|
|
347
|
|
825
|
|
|
486
|
|
NM
|
|
138
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
INTERNATIONAL
NETWORKS REPORTED AND PRO FORMA FINANCIAL
RESULTS
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(2)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
505
|
|
$
|
—
|
|
$
|
505
|
|
|
$
|
479
|
|
$
|
31
|
|
$
|
510
|
|
|
$
|
26
|
|
5
|
%
|
|
$
|
(5)
|
|
(1)
|
%
|
|
2
|
%
|
Advertising
|
|
533
|
|
(1)
|
|
532
|
|
|
419
|
|
138
|
|
557
|
|
|
114
|
|
27
|
%
|
|
(25)
|
|
(4)
|
%
|
|
—
|
%
|
Other
|
|
46
|
|
1
|
|
47
|
|
|
29
|
|
34
|
|
63
|
|
|
17
|
|
59
|
%
|
|
(16)
|
|
(25)
|
%
|
|
(21)
|
%
|
Total
revenues
|
|
1,084
|
|
—
|
|
1,084
|
|
|
927
|
|
203
|
|
1,130
|
|
|
157
|
|
17
|
%
|
|
(46)
|
|
(4)
|
%
|
|
—
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
(494)
|
|
—
|
|
(494)
|
|
|
(463)
|
|
(99)
|
|
(562)
|
|
|
(31)
|
|
(7)
|
%
|
|
68
|
|
12
|
%
|
|
9
|
%
|
Selling, general
and
administrative
|
|
(240)
|
|
—
|
|
(240)
|
|
|
(215)
|
|
(43)
|
|
(258)
|
|
|
(25)
|
|
(12)
|
%
|
|
18
|
|
7
|
%
|
|
—
|
%
|
Adjusted
OIBDA(3)
|
|
350
|
|
—
|
|
350
|
|
|
249
|
|
61
|
|
310
|
|
|
101
|
|
41
|
%
|
|
40
|
|
13
|
%
|
|
15
|
%
|
INTERNATIONAL
NETWORKS RECONCILIATION OF OPERATING INCOME TO PRO FORMA
ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating income
(loss)
|
|
$
|
217
|
|
$
|
(1)
|
|
$
|
216
|
|
|
$
|
(311)
|
|
$
|
27
|
|
$
|
(284)
|
|
|
$
|
528
|
|
NM
|
|
$
|
500
|
|
NM
|
Restructuring and
other charges
|
|
45
|
|
—
|
|
45
|
|
|
14
|
|
—
|
|
14
|
|
|
31
|
|
NM
|
|
31
|
|
NM
|
Depreciation and
amortization
|
|
83
|
|
—
|
|
83
|
|
|
57
|
|
28
|
|
85
|
|
|
26
|
|
46
|
%
|
|
(2)
|
|
(2)
|
%
|
Impairment of
goodwill
|
|
—
|
|
—
|
|
—
|
|
|
489
|
|
—
|
|
489
|
|
|
(489)
|
|
NM
|
|
(489)
|
|
NM
|
Inter-segment
eliminations
|
|
5
|
|
1
|
|
6
|
|
|
—
|
|
6
|
|
6
|
|
|
5
|
|
NM
|
|
—
|
|
—
|
%
|
Adjusted
OIBDA(3)
|
|
350
|
|
—
|
|
350
|
|
|
249
|
|
61
|
|
310
|
|
|
101
|
|
41
|
%
|
|
40
|
|
13
|
%
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
Refer to page 7 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(3)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS REPORTED AND PRO FORMA FINANCIAL
RESULTS
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
$
|
1
|
|
$
|
—
|
|
$
|
1
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
1
|
|
NM
|
|
$
|
1
|
|
NM
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
(1)
|
|
—
|
|
$
|
(1)
|
|
|
(1)
|
|
1
|
|
—
|
|
|
—
|
|
—
|
%
|
|
(1)
|
|
NM
|
Selling, general and
administrative
|
|
(130)
|
|
1
|
|
(129)
|
|
|
(97)
|
|
(23)
|
|
(120)
|
|
|
(33)
|
|
(34)
|
%
|
|
(9)
|
|
(8)
|
%
|
Adjusted
OIBDA(2)
|
|
(130)
|
|
1
|
|
(129)
|
|
|
(98)
|
|
(22)
|
|
(120)
|
|
|
(32)
|
|
(33)
|
%
|
|
(9)
|
|
(8)
|
%
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS RECONCILIATION OF OPERATING INCOME TO
PRO
FORMA ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
loss
|
|
$
|
(113)
|
|
$
|
—
|
|
$
|
(113)
|
|
|
$
|
(984)
|
|
$
|
(16)
|
|
$
|
(1,000)
|
|
|
$
|
871
|
|
89
|
%
|
|
$
|
887
|
|
89
|
%
|
Restructuring and
other charges
|
|
(10)
|
|
1
|
|
(9)
|
|
|
6
|
|
—
|
|
6
|
|
|
(16)
|
|
NM
|
|
(15)
|
|
NM
|
Depreciation and
amortization
|
|
21
|
|
—
|
|
21
|
|
|
18
|
|
—
|
|
18
|
|
|
3
|
|
17
|
%
|
|
3
|
|
17
|
%
|
Impairment of
goodwill
|
|
—
|
|
—
|
|
—
|
|
|
838
|
|
—
|
|
838
|
|
|
(838)
|
|
NM
|
|
(838)
|
|
NM
|
Mark-to-market
share-
based compensation
|
|
(24)
|
|
—
|
|
(24)
|
|
|
7
|
|
2
|
|
9
|
|
|
(31)
|
|
NM
|
|
(33)
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
(4)
|
|
—
|
|
(4)
|
|
|
17
|
|
(8)
|
|
9
|
|
|
(21)
|
|
NM
|
|
(13)
|
|
NM
|
Loss on business
disposition
|
|
1
|
|
—
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
|
1
|
|
NM
|
|
1
|
|
NM
|
Inter-segment
eliminations
|
|
(1)
|
|
—
|
|
(1)
|
|
|
—
|
|
—
|
|
—
|
|
|
(1)
|
|
NM
|
|
(1)
|
|
NM
|
Adjusted
OIBDA(2)
|
|
(130)
|
|
1
|
|
(129)
|
|
|
(98)
|
|
(22)
|
|
(120)
|
|
|
(32)
|
|
(33)
|
%
|
|
(9)
|
|
(8)
|
%
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
TOTAL COMPANY
REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(3)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
4,538
|
|
$
|
178
|
|
$
|
4,716
|
|
|
$
|
3,474
|
|
$
|
1,090
|
|
$
|
4,564
|
|
|
$
|
1,064
|
|
31
|
%
|
|
$
|
152
|
|
3
|
%
|
|
3
|
%
|
Advertising
|
|
5,514
|
|
425
|
|
5,939
|
|
|
$
|
3,073
|
|
2,677
|
|
5,750
|
|
|
2,441
|
|
79
|
%
|
|
189
|
|
3
|
%
|
|
3
|
%
|
Other
|
|
501
|
|
20
|
|
521
|
|
|
326
|
|
150
|
|
476
|
|
|
175
|
|
54
|
%
|
|
45
|
|
9
|
%
|
|
8
|
%
|
Total
revenues
|
|
10,553
|
|
623
|
|
11,176
|
|
|
6,873
|
|
3,917
|
|
10,790
|
|
|
3,680
|
|
54
|
%
|
|
386
|
|
4
|
%
|
|
3
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
3,935
|
|
205
|
|
4,140
|
|
|
2,656
|
|
1,391
|
|
4,047
|
|
|
1,279
|
|
48
|
%
|
|
93
|
|
2
|
%
|
|
2
|
%
|
Selling, general
and
administrative
|
|
2,479
|
|
159
|
|
2,638
|
|
|
1,686
|
|
1,006
|
|
2,692
|
|
|
793
|
|
47
|
%
|
|
(54)
|
|
(2)
|
%
|
|
(3)
|
%
|
Adjusted
OIBDA(4)
|
|
4,139
|
|
259
|
|
4,398
|
|
|
2,531
|
|
1,520
|
|
4,051
|
|
|
1,608
|
|
64
|
%
|
|
347
|
|
9
|
%
|
|
8
|
%
|
TOTAL COMPANY
RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME TO
ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
1,934
|
|
352
|
|
2,286
|
|
|
713
|
|
339
|
|
1,052
|
|
|
1,221
|
|
NM
|
|
1,234
|
|
NM
|
Restructuring and
other charges
|
|
750
|
|
10
|
|
760
|
|
|
75
|
|
—
|
|
75
|
|
|
675
|
|
NM
|
|
685
|
|
NM
|
Depreciation and
amortization
|
|
1,398
|
|
(76)
|
|
1,322
|
|
|
330
|
|
1,241
|
|
1,571
|
|
|
1,068
|
|
NM
|
|
(249)
|
|
(16)
|
%
|
Impairment of
goodwill
|
|
—
|
|
—
|
|
—
|
|
|
1,327
|
|
—
|
|
1,327
|
|
|
(1,327)
|
|
NM
|
|
(1,327)
|
|
NM
|
Mark-to-market
share-
based compensation
|
|
31
|
|
1
|
|
32
|
|
|
3
|
|
8
|
|
11
|
|
|
28
|
|
NM
|
|
21
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
110
|
|
(28)
|
|
82
|
|
|
79
|
|
(68)
|
|
11
|
|
|
31
|
|
39
|
%
|
|
71
|
|
NM
|
(Gain) loss on
disposition
|
|
(84)
|
|
—
|
|
(84)
|
|
|
4
|
|
—
|
|
4
|
|
|
(88)
|
|
NM
|
|
(88)
|
|
NM
|
Adjusted
OIBDA(4)
|
|
4,139
|
|
259
|
|
4,398
|
|
|
2,531
|
|
1,520
|
|
4,051
|
|
|
1,608
|
|
64
|
%
|
|
347
|
|
9
|
%
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
Certain updates were
made to previously disclosed pro forma adjustments as a result of
further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3)
|
|
Refer to page 7 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(4)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
U.S. NETWORKS
REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
2,456
|
|
$
|
156
|
|
$
|
2,612
|
|
|
$
|
1,612
|
|
$
|
974
|
|
$
|
2,586
|
|
|
$
|
844
|
|
52
|
%
|
|
$
|
26
|
|
1
|
%
|
Advertising
|
|
3,749
|
|
356
|
|
4,105
|
|
|
1,740
|
|
2,261
|
|
4,001
|
|
|
2,009
|
|
NM
|
|
104
|
|
3
|
%
|
Other
|
|
145
|
|
7
|
|
152
|
|
|
82
|
|
73
|
|
155
|
|
|
63
|
|
77
|
%
|
|
(3)
|
|
(2)
|
%
|
Total
revenues
|
|
6,350
|
|
519
|
|
6,869
|
|
|
3,434
|
|
3,308
|
|
6,742
|
|
|
2,916
|
|
85
|
%
|
|
127
|
|
2
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
(1,748)
|
|
(153)
|
|
(1,901)
|
|
|
(917)
|
|
(1,087)
|
|
(2,004)
|
|
|
(831)
|
|
(91)
|
%
|
|
103
|
|
5
|
%
|
Selling, general
and
administrative
|
|
(1,102)
|
|
(111)
|
|
(1,213)
|
|
|
(491)
|
|
(758)
|
|
(1,249)
|
|
|
(611)
|
|
NM
|
|
36
|
|
3
|
%
|
Adjusted
OIBDA(3)
|
|
3,500
|
|
255
|
|
3,755
|
|
|
2,026
|
|
1,463
|
|
3,489
|
|
|
1,474
|
|
73
|
%
|
|
266
|
|
8
|
%
|
U.S. NETWORKS
RECONCILIATION OF REPORTED AND PRO FORMA OPERATING INCOME TO
ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
2,182
|
|
$
|
350
|
|
$
|
2,532
|
|
|
$
|
1,961
|
|
$
|
359
|
|
$
|
2,320
|
|
|
$
|
221
|
|
11
|
%
|
|
$
|
212
|
|
9
|
%
|
Restructuring and
other charges
|
|
322
|
|
5
|
|
327
|
|
|
18
|
|
—
|
|
18
|
|
|
304
|
|
NM
|
|
309
|
|
NM
|
Depreciation and
amortization
|
|
985
|
|
(95)
|
|
890
|
|
|
35
|
|
1,132
|
|
1,167
|
|
|
950
|
|
NM
|
|
(277)
|
|
(24)
|
%
|
Mark-to-market
share-
based compensation
|
|
(1)
|
|
—
|
|
(1)
|
|
|
—
|
|
(1)
|
|
(1)
|
|
|
(1)
|
|
NM
|
|
—
|
|
—
|
%
|
Scripps Networks
transaction
and integration costs
|
|
14
|
|
—
|
|
14
|
|
|
—
|
|
—
|
|
—
|
|
|
14
|
|
NM
|
|
14
|
|
NM
|
Inter-segment
eliminations
|
|
(2)
|
|
(5)
|
|
(7)
|
|
|
12
|
|
(27)
|
|
(15)
|
|
|
(14)
|
|
NM
|
|
8
|
|
53
|
%
|
Adjusted
OIBDA(3)
|
|
3,500
|
|
255
|
|
3,755
|
|
|
2,026
|
|
1,463
|
|
3,489
|
|
|
1,474
|
|
73
|
%
|
|
266
|
|
8
|
%
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
Certain updates were
made to previously disclosed pro forma adjustments as a result of
further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
INTERNATIONAL
NETWORKS REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(3)
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
$
|
2,082
|
|
$
|
22
|
|
$
|
2,104
|
|
|
$
|
1,862
|
|
$
|
116
|
|
$
|
1,978
|
|
|
$
|
220
|
|
12
|
%
|
|
$
|
126
|
|
6
|
%
|
|
5
|
%
|
Advertising
|
|
1,765
|
|
69
|
|
1,834
|
|
|
1,332
|
|
416
|
|
1,748
|
|
|
433
|
|
33
|
%
|
|
86
|
|
5
|
%
|
|
3
|
%
|
Other
|
|
302
|
|
13
|
|
315
|
|
|
87
|
|
77
|
|
164
|
|
|
215
|
|
NM
|
|
151
|
|
92
|
%
|
|
88
|
%
|
Total
revenues
|
|
4,149
|
|
104
|
|
4,253
|
|
|
3,281
|
|
609
|
|
3,890
|
|
|
868
|
|
26
|
%
|
|
363
|
|
9
|
%
|
|
8
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
(2,169)
|
|
(52)
|
|
(2,221)
|
|
|
(1,677)
|
|
(304)
|
|
(1,981)
|
|
|
(492)
|
|
(29)
|
%
|
|
(240)
|
|
(12)
|
%
|
|
(11)
|
%
|
Selling, general
and
administrative
|
|
(903)
|
|
(27)
|
|
(930)
|
|
|
(745)
|
|
(150)
|
|
(895)
|
|
|
(158)
|
|
(21)
|
%
|
|
(35)
|
|
(4)
|
%
|
|
(2)
|
%
|
Adjusted
OIBDA(4)
|
|
1,077
|
|
25
|
|
1,102
|
|
|
859
|
|
155
|
|
1,014
|
|
|
218
|
|
25
|
%
|
|
88
|
|
9
|
%
|
|
7
|
%
|
INTERNATIONAL
NETWORKS RECONCILIATION OF OPERATING INCOME TO PRO FORMA
ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
434
|
|
$
|
—
|
|
$
|
434
|
|
|
$
|
106
|
|
$
|
21
|
|
$
|
127
|
|
|
$
|
328
|
|
NM
|
|
$
|
307
|
|
NM
|
Restructuring and
other charges
|
|
307
|
|
2
|
|
309
|
|
|
42
|
|
—
|
|
42
|
|
|
265
|
|
NM
|
|
267
|
|
NM
|
Depreciation and
amortization
|
|
315
|
|
19
|
|
334
|
|
|
222
|
|
107
|
|
329
|
|
|
93
|
|
42
|
%
|
|
5
|
|
2
|
%
|
Impairment of
goodwill
|
|
—
|
|
—
|
|
—
|
|
|
489
|
|
—
|
|
489
|
|
|
(489)
|
|
NM
|
|
(489)
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
3
|
|
—
|
|
3
|
|
|
—
|
|
—
|
|
—
|
|
|
3
|
|
NM
|
|
3
|
|
NM
|
Inter-segment
eliminations
|
|
18
|
|
4
|
|
22
|
|
|
—
|
|
27
|
|
27
|
|
|
18
|
|
NM
|
|
(5)
|
|
(19)
|
%
|
Adjusted
OIBDA(4)
|
|
1,077
|
|
25
|
|
1,102
|
|
|
859
|
|
155
|
|
1,014
|
|
|
218
|
|
25
|
%
|
|
88
|
|
9
|
%
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
Certain updates were
made to previously disclosed pro forma adjustments as a result of
further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3)
|
|
Refer to page 7 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(4)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1)
|
(unaudited;
amounts in millions)
|
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS REPORTED AND PRO FORMA FINANCIAL
RESULTS(2)
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
Costs of
revenues,
excluding depreciation
and amortization
|
|
(1)
|
|
—
|
|
(1)
|
|
|
(2)
|
|
—
|
|
(2)
|
|
|
1
|
|
50
|
%
|
|
1
|
|
50
|
%
|
Selling, general
and
administrative
|
|
(440)
|
|
(21)
|
|
(461)
|
|
|
(358)
|
|
(98)
|
|
(456)
|
|
|
(82)
|
|
(23)
|
%
|
|
(5)
|
|
(1)
|
%
|
Adjusted
OIBDA(3)
|
|
(441)
|
|
(21)
|
|
(462)
|
|
|
(360)
|
|
(98)
|
|
(458)
|
|
|
(81)
|
|
(23)
|
%
|
|
(4)
|
|
(1)
|
%
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS RECONCILIATION OF OPERATING INCOME TO
PRO
FORMA ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
loss
|
|
$
|
(779)
|
|
$
|
2
|
|
$
|
(777)
|
|
|
$
|
(1,360)
|
|
$
|
(41)
|
|
$
|
(1,401)
|
|
|
$
|
581
|
|
43
|
%
|
|
$
|
624
|
|
45
|
%
|
Restructuring and
other charges
|
|
120
|
|
3
|
|
123
|
|
|
12
|
|
—
|
|
12
|
|
|
108
|
|
NM
|
|
111
|
|
NM
|
Depreciation and
amortization
|
|
96
|
|
—
|
|
96
|
|
|
68
|
|
2
|
|
70
|
|
|
28
|
|
41
|
%
|
|
26
|
|
37
|
%
|
Impairment of
goodwill
|
|
—
|
|
—
|
|
—
|
|
|
838
|
|
—
|
|
838
|
|
|
(838)
|
|
NM
|
|
(838)
|
|
NM
|
Mark-to-market
share-
based compensation
|
|
32
|
|
1
|
|
33
|
|
|
3
|
|
9
|
|
12
|
|
|
29
|
|
NM
|
|
21
|
|
NM
|
Scripps Networks
transaction and
integration costs
|
|
93
|
|
(28)
|
|
65
|
|
|
79
|
|
(68)
|
|
11
|
|
|
14
|
|
18
|
%
|
|
54
|
|
NM
|
Loss on
disposition
|
|
1
|
|
—
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
|
1
|
|
NM
|
|
1
|
|
NM
|
Inter-segment
eliminations
|
|
(4)
|
|
1
|
|
(3)
|
|
|
—
|
|
—
|
|
—
|
|
|
(4)
|
|
NM
|
|
(3)
|
|
NM
|
Adjusted
OIBDA(3)
|
|
(441)
|
|
(21)
|
|
(462)
|
|
|
(360)
|
|
(98)
|
|
(458)
|
|
|
(81)
|
|
(23)
|
%
|
|
(4)
|
|
(1)
|
%
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the Transactions had occurred
on January 1, 2017. Refer to page 8 for full list of adjustments to
pro forma results.
|
(2)
|
|
Certain updates were
made to previously disclosed pro forma adjustments as a result of
further information identified after May 10, 2018, the date our
March 31, 2018 quarterly report was filed. These changes impact the
costs of revenue, depreciation and amortization, and restructuring
and other charges line items. The pro forma adjustments disclosed
above are inclusive of these updates and therefore many not
reconcile to previously disclosed amounts.
|
(3)
|
|
See full definition
of Adjusted OIBDA on page 7.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
|
Three Months Ended
December 31, 2018
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
269
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
|
4
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
26
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
195
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
36
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
10
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
171
|
|
Operating
income
|
|
601
|
|
|
217
|
|
|
6
|
|
|
(113)
|
|
|
711
|
|
Restructuring and
other charges
|
|
63
|
|
|
45
|
|
|
—
|
|
|
(10)
|
|
|
98
|
|
Depreciation and
amortization
|
|
294
|
|
|
83
|
|
|
(1)
|
|
|
21
|
|
|
397
|
|
Mark-to-market
share-based compensation
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(24)
|
|
|
(25)
|
|
Scripps Networks
transaction and integration costs
|
|
7
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
3
|
|
(Gain) loss on
disposition
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
1
|
|
|
—
|
|
Inter-segment eliminations
|
|
—
|
|
|
5
|
|
|
(4)
|
|
|
(1)
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
$
|
964
|
|
|
$
|
350
|
|
|
$
|
—
|
|
|
$
|
(130)
|
|
|
$
|
1,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2017
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net loss available to
Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
(1,144)
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
|
7
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
—
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
87
|
|
Other (income),
net
|
|
|
|
|
|
|
|
|
|
(33)
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
89
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
|
—
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
157
|
|
Operating
income
|
|
450
|
|
|
(311)
|
|
|
8
|
|
|
(984)
|
|
|
(837)
|
|
Restructuring and
other charges
|
|
12
|
|
|
14
|
|
|
—
|
|
|
6
|
|
|
32
|
|
Depreciation and
amortization
|
|
14
|
|
|
57
|
|
|
1
|
|
|
18
|
|
|
90
|
|
Impairment of
goodwill
|
|
—
|
|
|
489
|
|
|
—
|
|
|
838
|
|
|
1,327
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
Scripps Networks
transaction and integration costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
Inter-segment eliminations
|
|
2
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
$
|
478
|
|
|
$
|
249
|
|
|
$
|
7
|
|
|
$
|
(98)
|
|
|
$
|
636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
|
(unaudited; in
millions)
|
|
|
|
Twelve Months
Ended December 31, 2018
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
594
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
|
20
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
67
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
341
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
120
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
63
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
729
|
|
Operating
income
|
|
2,182
|
|
|
434
|
|
|
97
|
|
|
(779)
|
|
|
1,934
|
|
Restructuring and
other charges
|
|
322
|
|
|
307
|
|
|
1
|
|
|
120
|
|
|
750
|
|
Depreciation and
amortization
|
|
985
|
|
|
315
|
|
|
2
|
|
|
96
|
|
|
1,398
|
|
Mark-to-market
share-based compensation
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
31
|
|
Scripps Networks
transaction and integration costs
|
|
14
|
|
|
3
|
|
|
—
|
|
|
93
|
|
|
110
|
|
(Gain) loss on
disposition
|
|
—
|
|
|
—
|
|
|
(85)
|
|
|
1
|
|
|
(84)
|
|
Inter-segment eliminations
|
|
(2)
|
|
|
18
|
|
|
$
|
(12)
|
|
|
(4)
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
$
|
3,500
|
|
|
$
|
1,077
|
|
|
$
|
3
|
|
|
$
|
(441)
|
|
|
$
|
4,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2017
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education and
Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Net loss available to
Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
(337)
|
|
Net income
attributable to redeemable noncontrolling
interests
|
|
|
|
|
|
|
|
|
|
24
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
—
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
176
|
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
110
|
|
Loss from equity
investees, net
|
|
|
|
|
|
|
|
|
|
211
|
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
|
54
|
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
475
|
|
Operating
income
|
|
1,961
|
|
|
106
|
|
|
6
|
|
|
(1,360)
|
|
|
713
|
|
Restructuring and
other charges
|
|
18
|
|
|
42
|
|
|
3
|
|
|
12
|
|
|
75
|
|
Depreciation and
amortization
|
|
35
|
|
|
222
|
|
|
5
|
|
|
68
|
|
|
330
|
|
Impairment of
goodwill
|
|
—
|
|
|
489
|
|
|
—
|
|
|
838
|
|
|
1,327
|
|
Mark-to-market
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
Scripps Networks
transaction and integration costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
79
|
|
Loss on
disposition
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Inter-segment eliminations
|
|
12
|
|
|
—
|
|
|
(12)
|
|
|
—
|
|
|
—
|
|
Total Adjusted
OIBDA
|
|
$
|
2,026
|
|
|
$
|
859
|
|
|
$
|
6
|
|
|
$
|
(360)
|
|
|
$
|
2,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION - HISTORICALLY REPORTED
AND
UNDER THE REVISED DEFINITION
|
(unaudited; in
millions)
|
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education
and Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Year Ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
3,500
|
|
|
$
|
1,077
|
|
|
$
|
3
|
|
|
$
|
(441)
|
|
|
$
|
4,139
|
|
Deduct:
Mark-to-market share-based compensation
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
31
|
|
Add: Total
share-based compensation
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|
80
|
|
Adjusted OIBDA, as
revised
|
|
3,500
|
|
|
1,077
|
|
|
3
|
|
|
(392)
|
|
|
$
|
4,188
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
2,026
|
|
|
$
|
859
|
|
|
$
|
6
|
|
|
$
|
(360)
|
|
|
$
|
2,531
|
|
Deduct:
Mark-to-market share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
Add: Total
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
39
|
|
Adjusted OIBDA, as
revised
|
|
2,026
|
|
|
859
|
|
|
6
|
|
|
(324)
|
|
|
$
|
2,567
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
1,922
|
|
|
$
|
835
|
|
|
$
|
(10)
|
|
|
$
|
(334)
|
|
|
$
|
2,413
|
|
Deduct:
Mark-to-market share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
38
|
|
Add: Total
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
69
|
|
Adjusted OIBDA, as
revised
|
|
1,922
|
|
|
835
|
|
|
(10)
|
|
|
(303)
|
|
|
$
|
2,444
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
RECONCILIATION OF
NET INCOME TO
|
ADJUSTED OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION - HISTORICALLY REPORTED
AND
UNDER THE REVISED DEFINITION
|
(unaudited; in
millions)
|
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Education
and Other
|
|
Corporate and
Inter-Segment
Eliminations
|
|
Total
|
Three Months Ended
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
652
|
|
|
$
|
137
|
|
|
$
|
3
|
|
|
$
|
(95)
|
|
|
$
|
697
|
|
Deduct:
Mark-to-market share-based compensation
|
|
—
|
|
|
—
|
|
|
|
|
3
|
|
|
$
|
3
|
|
Add: Total
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
$
|
15
|
|
Adjusted OIBDA, as
revised
|
|
652
|
|
|
137
|
|
|
3
|
|
|
(83)
|
|
|
$
|
709
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
983
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
$
|
(105)
|
|
|
$
|
1,214
|
|
Deduct:
Mark-to-market share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
26
|
|
Add: Total
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
Adjusted OIBDA, as
revised
|
|
983
|
|
|
336
|
|
|
—
|
|
|
(97)
|
|
|
$
|
1,222
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
901
|
|
|
$
|
254
|
|
|
$
|
—
|
|
|
$
|
(111)
|
|
|
$
|
1,044
|
|
Deduct:
Mark-to-market share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
27
|
|
Add: Total
share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
43
|
|
Adjusted OIBDA, as
revised
|
|
901
|
|
|
254
|
|
|
—
|
|
|
(95)
|
|
|
$
|
1,060
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA, as
reported
|
|
$
|
964
|
|
|
$
|
350
|
|
|
$
|
—
|
|
|
$
|
(130)
|
|
|
$
|
1,184
|
|
Deduct:
Mark-to-market share-based compensation
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(24)
|
|
|
(25)
|
|
Add: Total
share-based compensation
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
(12)
|
|
Adjusted OIBDA, as
revised
|
|
964
|
|
|
350
|
|
|
—
|
|
|
(117)
|
|
|
$
|
1,197
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
EARNINGS PER
SHARE
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
299
|
|
|
$
|
(1,137)
|
|
|
$
|
681
|
|
|
$
|
(313)
|
|
Less:
|
|
|
|
|
|
|
|
|
Allocation of
undistributed income to Series A-1 convertible preferred
stock
|
|
(27)
|
|
|
142
|
|
|
(60)
|
|
|
41
|
|
Net income
attributable to noncontrolling interests
|
|
(26)
|
|
|
|
|
(67)
|
|
|
—
|
|
Net income
attributable to redeemable noncontrolling interests
|
|
(4)
|
|
|
(7)
|
|
|
(20)
|
|
|
(24)
|
|
Redeemable
noncontrolling interest adjustments to redemption value
|
|
1
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
Net income (loss)
available to Discovery, Inc. Series A, B and C common and Series
C-1
convertible preferred stockholders for basic net income per
share
|
|
$
|
243
|
|
|
$
|
(1,002)
|
|
|
$
|
529
|
|
|
$
|
(296)
|
|
Allocation of net
income (loss) available to Discovery, Inc. Series A, B and C
common
stockholders and Series C-1 convertible preferred stockholders for
basic net income per share:
|
|
|
|
|
|
|
|
|
Series A, B and C
common stockholders
|
|
199
|
|
|
(767)
|
|
|
429
|
|
|
(225)
|
|
Series C-1
convertible preferred stockholders
|
|
44
|
|
|
(235)
|
|
|
100
|
|
|
(71)
|
|
Total
|
|
243
|
|
|
(1,002)
|
|
|
529
|
|
|
(296)
|
|
Add:
|
|
|
|
|
|
|
|
|
Allocation of
undistributed income to Series A-1 convertible preferred
stockholders
|
|
27
|
|
|
(142)
|
|
|
60
|
|
|
(41)
|
|
Net income (loss)
available to Discovery, Inc. Series A, B and C common stockholders
for
diluted net income per share
|
|
$
|
270
|
|
|
$
|
(1,144)
|
|
|
$
|
589
|
|
|
$
|
(337)
|
|
|
|
|
|
|
|
|
|
|
Denominator —
weighted average:
|
|
|
|
|
|
|
|
|
Series A, B and C
common shares outstanding — basic
|
|
524
|
|
|
381
|
|
|
498
|
|
|
384
|
|
Impact of assumed
preferred stock conversion
|
|
187
|
|
|
187
|
|
|
187
|
|
|
192
|
|
Dilutive effect of
share-based awards
|
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
Series A, B and C
common shares outstanding — diluted
|
|
715
|
|
|
568
|
|
|
688
|
|
|
576
|
|
Series C-1
convertible preferred stock outstanding — basic and
diluted
|
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share available to Discovery, Inc. Series A, B and C
common and
Series C-1 convertible preferred stockholders:
|
|
|
|
|
|
|
|
|
Series A, B and C common
stockholders
|
|
$
|
0.38
|
|
|
$
|
(1.99)
|
|
|
$
|
0.86
|
|
|
$
|
(0.59)
|
|
Series C-1 convertible
preferred stockholders
|
|
$
|
7.36
|
|
|
$
|
(39.02)
|
|
|
$
|
16.65
|
|
|
$
|
(11.33)
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per share available to Discovery, Inc. Series A, B and C
common and
Series C-1 convertible preferred stockholders:
|
|
|
|
|
|
|
|
|
Series A, B and C common
stockholders
|
|
$
|
0.38
|
|
|
$
|
(1.99)
|
|
|
$
|
0.86
|
|
|
$
|
(0.59)
|
|
Series C-1 convertible
preferred stockholders
|
|
$
|
7.32
|
|
|
$
|
(39.02)
|
|
|
$
|
16.58
|
|
|
$
|
(11.33)
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
CALCULATION OF
ADJUSTED EARNINGS PER DILUTED SHARE
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Diluted net income
per share available to Discovery, Inc. Series A, B
and C common stockholders
|
|
$
|
0.38
|
|
|
$
|
(1.99)
|
|
|
$
|
2.37
|
|
|
$
|
0.86
|
|
|
$
|
(0.59)
|
|
|
$
|
1.45
|
|
Per share impact of
amortization of acquisition-related intangible
assets, net of tax
|
|
0.36
|
|
|
0.05
|
|
|
0.31
|
|
|
1.25
|
|
|
0.19
|
|
|
1.06
|
|
Adjusted earnings per
diluted share
|
|
$
|
0.74
|
|
|
$
|
(1.94)
|
|
|
$
|
2.68
|
|
|
$
|
2.11
|
|
|
$
|
(0.40)
|
|
|
$
|
2.51
|
|
CALCULATION OF
FREE CASH FLOW
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2018
|
|
2017
|
|
Change
|
|
%
Change
|
|
2018
|
|
2017
|
|
Change
|
|
%
Change
|
Cash provided by
operating activities
|
|
$
|
929
|
|
|
$
|
462
|
|
|
$
|
467
|
|
|
NM
|
|
$
|
2,576
|
|
|
$
|
1,629
|
|
|
$
|
947
|
|
|
58
|
%
|
Purchases of property
and equipment
|
|
(41)
|
|
|
(32)
|
|
|
(9)
|
|
|
(28)
|
%
|
|
(147)
|
|
|
(135)
|
|
|
(12)
|
|
|
(9)
|
%
|
Free cash
flow
|
|
$
|
888
|
|
|
$
|
430
|
|
|
$
|
458
|
|
|
NM
|
|
$
|
2,429
|
|
|
$
|
1,494
|
|
|
$
|
935
|
|
|
63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions)
|
|
BORROWINGS
|
|
|
December 31,
2018
|
|
December 31,
2017
|
5.625% Senior notes,
semi-annual interest, due August 2019
|
$
|
411
|
|
|
$
|
411
|
|
2.200% Senior notes,
semi-annual interest, due September 2019
|
500
|
|
|
500
|
|
Floating rate notes,
quarterly interest, due September 2019
|
400
|
|
|
400
|
|
2.750% Senior notes,
semi-annual interest, due November 2019
|
500
|
|
|
—
|
|
2.800% Senior notes,
semi-annual interest, due June 2020
|
600
|
|
|
—
|
|
5.050% Senior notes,
semi-annual interest, due June 2020
|
789
|
|
|
789
|
|
4.375% Senior notes,
semi-annual interest, due June 2021
|
650
|
|
|
650
|
|
2.375% Senior notes,
euro denominated, annual interest, due March 2022
|
344
|
|
|
358
|
|
3.300% Senior notes,
semi-annual interest, due May 2022
|
500
|
|
|
500
|
|
3.500% Senior notes,
semi-annual interest, due June 2022
|
400
|
|
|
—
|
|
2.950% Senior notes,
semi-annual interest, due March 2023
|
1,185
|
|
|
1,200
|
|
3.250% Senior notes,
semi-annual interest, due April 2023
|
350
|
|
|
350
|
|
3.800% Senior notes,
semi-annual interest, due March 2024
|
450
|
|
|
450
|
|
2.500% Senior notes,
sterling denominated, annual interest, due September
2024
|
507
|
|
|
538
|
|
3.900% Senior notes,
semi-annual interest, due November 2024
|
497
|
|
|
—
|
|
3.450% Senior notes,
semi-annual interest, due March 2025
|
300
|
|
|
300
|
|
3.950% Senior notes,
semi-annual interest, due June 2025
|
500
|
|
|
—
|
|
4.900% Senior notes,
semi-annual interest, due March 2026
|
700
|
|
|
700
|
|
1.900% Senior notes,
euro denominated, annual interest, due March 2027
|
688
|
|
|
717
|
|
3.950% Senior notes,
semi-annual interest, due March 2028
|
1,700
|
|
|
1,700
|
|
5.000% Senior notes,
semi-annual interest, due September 2037
|
1,250
|
|
|
1,250
|
|
6.350% Senior notes,
semi-annual interest, due June 2040
|
850
|
|
|
850
|
|
4.950% Senior notes,
semi-annual interest, due May 2042
|
500
|
|
|
500
|
|
4.875% Senior notes,
semi-annual interest, due April 2043
|
850
|
|
|
850
|
|
5.200% Senior notes,
semi-annual interest, due September 2047
|
1,250
|
|
|
1,250
|
|
Revolving credit
facility
|
225
|
|
|
425
|
|
Program financing
line of credit
|
22
|
|
|
—
|
|
Capital lease
obligations
|
252
|
|
|
225
|
|
Total debt
|
17,170
|
|
|
14,913
|
|
Unamortized discount,
premium and debt issuance costs, net
|
(125)
|
|
|
(128)
|
|
Debt, net of
unamortized discount, premium and debt issuance costs
|
17,045
|
|
|
14,785
|
|
Current portion of
debt
|
(1,860)
|
|
|
(30)
|
|
Noncurrent portion of
debt
|
$
|
15,185
|
|
|
$
|
14,755
|
|
View original
content:http://www.prnewswire.com/news-releases/discovery-inc-reports-full-year-and-fourth-quarter-2018-results-300802118.html
SOURCE Discovery, Inc.