SILVER SPRING, Md., May 2,
2019 /PRNewswire/ -- Discovery, Inc. ("Discovery" or the "Company")
(NASDAQ: DISCA, DISCB, DISCK) today reported financial results for
the quarter ended March 31, 2019.
Operational Highlights
- Announced a 10-year global partnership with the BBC for factual
SVOD content as well as a resolution of the UKTV joint
venture;
- Delivered the top-four cable networks for women 25-54 in the
U.S. with ID, HGTV, Food Network and TLC, for the first quarter of
2019(1);
- Successfully launched digital streaming video platform GOLFTV
internationally;
- Announced a multi-platform media joint venture with
Chip and Joanna Gaines that will
rebrand DIY Network, with the new brand expected to be unveiled in
Summer 2020;
- Acquired a controlling interest in digital cycling platform
Play Sports Group; and
- Secured a new distribution agreement in the U.S. with YouTube
TV, adding to broad inclusion across virtual MVPD services.
"In the first quarter we delivered a solid start to 2019, as we
continue to power people's passions through our loved brands and
our owned global IP in genres that nourish audiences around the
world," said David Zaslav, President
and Chief Executive Officer for Discovery. "We are a differentiated
media company and have the right strategy, assets, brands, and
management team necessary to drive additional shareholder
value."
First Quarter 2019 Financial Results
First quarter
revenues of $2,707 million increased
17% on a reported basis compared with the prior year's quarter.
Excluding the impact of foreign currency
fluctuations(2), revenues increased 21%. On a pro
forma(3) combined basis, excluding the impact of foreign
currency fluctuations, total company revenues decreased 5%, as a 3%
increase in U.S. Networks was more than offset by a 15% decrease in
International Networks primarily due to revenues from the Olympics
in the first quarter of 2018 and a significant decrease in Other
due to the sale of the education business(4).
First quarter Adjusted Operating Income Before Depreciation and
Amortization ("Adjusted OIBDA")(5) of $1,159 million increased 63% on a reported basis
compared with the prior year's quarter. Excluding the impact of
foreign currency fluctuations, Adjusted AOIBDA increased 67%. On a
pro forma combined basis, excluding the impact of foreign currency
fluctuations, total company Adjusted OIBDA increased 21%, as U.S.
Networks increased 17% and International Networks increased 46%,
primarily due to the Olympics in the first quarter of 2018.
(1)
|
Source: Nielsen, C3
delivery (000), Q1 2019 (12/31/2018 - 3/31/2019) in Sales Prime
(M-Su 8p-12a) for women ages 25-54.
|
(2)
|
Refer to page 6 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(3)
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks 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 6 for the
full list of pro forma adjustments and to pages 11-14 for full
detail on pro forma operating results.
|
(4)
|
The Company sold a
majority stake in the education business on April 30,
2018.
|
(5)
|
See full definition
of Adjusted OIBDA on page 5.
|
First quarter net income available to Discovery, Inc. was
$384 million, compared with a loss of
$8 million in the prior year's
quarter. The improvement in net income was a result of higher
operating results primarily driven by the integration of Scripps
Networks and to a lesser extent income from equity investments
versus a loss in the first quarter of 2018, partially offset by
higher tax expenses versus a tax benefit in the first quarter of
2018. Diluted earnings per share(1) increased to
$0.53 due to higher net income.
Adjusted Earnings Per Share ("Adjusted EPS")(1),(2),
which excludes the impact of amortization of acquisition-related
intangible assets, net of tax was $0.87. Adjusted EPS excluding $10 million, or $0.01 per share, of after-tax restructuring and
other charges, and $(22) million, or
$(0.03) per share, from a one-time
settlement of a withholding tax claim, net of tax was $0.85.
Free cash flow(3) increased to $498 million for the first quarter of 2019 as
cash flow from operations increased to $542
million while capital expenditures of $44 million were consistent with the prior year's
quarter. Cash flow from operations increased primarily due to the
full quarter impact from the integration of Scripps Networks as
well as lower cash restructuring charges.
SEGMENT RESULTS
Total
Company
|
|
|
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
Change
|
|
Pro Forma
Change(4)
|
Revenues:
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
1,752
|
|
$
|
1,174
|
|
49
|
%
|
|
3
|
%
|
International
Networks
|
|
952
|
|
1,098
|
|
(13)
|
%
|
|
(15)
|
%
|
Other
|
|
3
|
|
35
|
|
(91)
|
%
|
|
(91)
|
%
|
Corporate and
Inter-Segment Eliminations
|
|
—
|
|
—
|
|
—
|
%
|
|
—
|
%
|
Total
revenues
|
|
$
|
2,707
|
|
$
|
2,307
|
|
17
|
%
|
|
(5)
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA:
|
|
|
|
|
|
|
|
|
U.S.
Networks
|
|
$
|
1,061
|
|
$
|
652
|
|
63
|
%
|
|
17
|
%
|
International
Networks
|
|
219
|
|
137
|
|
60
|
%
|
|
46
|
%
|
Other
|
|
1
|
|
3
|
|
(67)
|
%
|
|
(67)
|
%
|
Corporate and
Inter-Segment Eliminations
|
|
(122)
|
|
(83)
|
|
(47)
|
%
|
|
(18)
|
%
|
Total Adjusted
OIBDA
|
|
$
|
1,159
|
|
$
|
709
|
|
63
|
%
|
|
21
|
%
|
|
|
|
|
|
|
U.S.
Networks
|
|
|
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
Change
|
|
Pro Forma
Change
|
Revenues:
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
1,022
|
|
$
|
627
|
|
63
|
%
|
|
4
|
%
|
Distribution
|
|
697
|
|
514
|
|
36
|
%
|
|
4
|
%
|
Other
|
|
33
|
|
33
|
|
—
|
%
|
|
(18)
|
%
|
Total
revenues
|
|
$
|
1,752
|
|
$
|
1,174
|
|
49
|
%
|
|
3
|
%
|
Adjusted
OIBDA
|
|
$
|
1,061
|
|
$
|
652
|
|
63
|
%
|
|
17
|
%
|
|
|
(1)
|
All per share amounts
are calculated using net income. Refer to table on page 16 for the
full schedule.
|
(2)
|
See full definition
of Adjusted EPS on page 5.
|
(3)
|
Free cash flow is
defined as cash provided by operating activities less purchases of
property and equipment.
|
(4)
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks 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 6 for the
full list of pro forma adjustments and to pages 11-14 for full
detail on pro forma operating results.
|
U.S. Networks' revenues for the first quarter of 2019 increased
49% to $1,752 million on a reported
basis compared with the prior year's quarter. On a pro forma
combined basis, U.S. Networks' revenues increased 3%. Pro forma
advertising revenues increased 4%, primarily driven by an increase
in pricing and continued monetization of digital content offerings,
partially offset by the impact of audience declines on our linear
networks, in part driven by universe declines. Pro forma
distribution revenues increased 4% primarily reflecting increases
in contractual affiliate rates and additional carriage on streaming
platforms toward the end of 2018, partially offset by a decline in
overall subscribers as well as additional revenues from content
deliveries under SVOD arrangements in the first quarter of 2018. On
a pro forma combined basis, total portfolio subscribers for
March 2019 were 4% lower than
March 2018 while subscribers to our
fully distributed networks were 1% lower.
U.S. Networks' operating expenses increased to $691 million on a reported basis compared with
$522 million in the prior year's
quarter. On a pro forma combined basis, total operating expenses
decreased 12%, as costs of revenues decreased 11% and SG&A
expenses decreased 13%. The decrease in costs of revenues was
primarily attributable to content synergies related to the
integration of Scripps Networks while the decrease in SG&A was
primarily a result of lower personnel costs due to restructuring
and the integration of Scripps Networks.
U.S. Networks' Adjusted OIBDA increased to $1,061 million on a reported basis compared with
$652 million in the prior year's
quarter. 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
March 31,
|
|
|
2019
|
|
2018
|
|
Change
|
|
Pro Forma
Change(1)
|
Revenues:
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
393
|
|
$
|
385
|
|
2
|
%
|
|
(6)
|
%
|
Distribution
|
|
527
|
|
537
|
|
(2)
|
%
|
|
1
|
%
|
Other
|
|
32
|
|
176
|
|
(82)
|
%
|
|
(81)
|
%
|
Total
revenues
|
|
$
|
952
|
|
$
|
1,098
|
|
(13)
|
%
|
|
(15)
|
%
|
Adjusted
OIBDA
|
|
$
|
219
|
|
$
|
137
|
|
60
|
%
|
|
46
|
%
|
International Networks' revenues for the first quarter of 2019
decreased 13% to $952 million on a
reported basis compared with the prior year's quarter. Excluding
the impact of foreign currency fluctuations, revenues decreased 7%.
On a pro forma combined basis, excluding the impact of foreign
currency fluctuations, International Networks' revenues decreased
15%, as a 1% increase in distribution revenues was more than offset
by a 6% decrease in advertising revenues and an 81% decrease in
Other revenues. The decrease in pro forma advertising revenues was
primarily driven by the impact of the Olympics in 2018, partially
offset by continued monetization of our digital content offerings.
Pro forma distribution revenues increased primarily due to higher
pricing in Latin America, growth
in pricing, subscribers and higher digital subscription revenues in
Europe, partially offset by
declines in Asia primarily due to
additional revenues in the prior year quarter from digital
licensing. Other revenues decreased primarily due to the impact
from sublicensing the Olympics in the first quarter of 2018.
(1)
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks had occurred on January 1, 2017. Pro forma change excludes
the impact from foreign currency fluctuations. Refer to page 6 for
the full list of pro forma adjustments and to pages 11-14 for full
detail on pro forma operating results.
|
International Networks' operating expenses decreased to
$733 million compared with
$961 million on a reported basis in
the prior year's quarter. Excluding the impact of foreign currency
fluctuations, operating expenses decreased 19%. On a pro forma
combined basis, excluding currency effects, operating expenses
decreased 24%, as costs of revenues decreased 31%, primarily
attributable to the impact of costs related to the Olympics in the
first quarter of 2018, while SG&A decreased 3%, primarily due
to higher marketing spending for the Olympics and costs associated
with certain channel launches in Asia in the prior year quarter.
International Networks' Adjusted OIBDA increased 60% to
$219 million on a reported basis
compared with the prior year's quarter. Excluding the impact of
foreign currency fluctuations, Adjusted AOIBDA increased 79%. On a
pro forma combined basis, excluding currency effects, Adjusted
OIBDA increased 46%, primarily driven by the decrease in costs of
revenues.
Other
|
(dollars in
millions)
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
Change
|
Revenues
|
|
$
|
3
|
|
$
|
35
|
|
(91)
|
%
|
Adjusted
OIBDA
|
|
$
|
1
|
|
$
|
3
|
|
(67)
|
%
|
The Other segment saw significant decreases in revenues and
Adjusted OIBDA for the first quarter of 2019 primarily due to the
sale of the education business.
Corporate and Inter-Segment Eliminations
Adjusted
OIBDA for the first quarter of 2019 decreased 47% on a reported
basis compared with the prior year's quarter. On a pro forma
combined basis, Adjusted OIBDA decreased 18%, primarily due to
higher professional service fees and higher technology costs.
OTHER ITEMS
Share Buyback Authorization
The Company's Board of
Directors has authorized additional stock purchases of up to
$1 billion. Under this stock
authorization, management is authorized to purchase shares from
time to time through open market purchases at prevailing prices or
privately negotiated purchases subject to market conditions and
other factors.
Play Sports Group
On January 8, 2019, the Company
paid $41 million in cash to acquire a
controlling interest in digital cycling platform Play Sports Group
Limited, increasing Discovery's ownership stake from 20.1% to
70.7%. The Company recognized a gain of $8
million, which represents the difference between the
carrying value and the fair value of the previously held 20.1%
equity method investment.
Debt - Senior Notes
On March 21, 2019, the
Company redeemed $411
million aggregate principal amount of
its 5.625% senior notes that had an original maturity
of August 15, 2019. The repayment included $5 million for premium over par on
the 5.625% senior notes and resulted in a loss on
extinguishment of debt of $5
million.
UKTV
On April 1, 2019, the Company announced a
series of agreements with BBC, which included a ten-year licensing
agreement, a new co-production deal and resolution of the UKTV
joint venture in which the Company will take full control of three
lifestyle channels - Good Food, Home, and Really. BBC will make
payments to the Company totaling approximately $240 million based on exchange rates in effect on
April 1, 2019, which includes payment
related to the channels acquisition, repayment of a portion of the
debt that is currently financed by the Company, and a portion of
the cash currently on UKTV's balance sheet. The transaction for the
unwinding of the UKTV joint venture is expected to close in the
second quarter of 2019.
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.
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 on page 15 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) 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, (vii) third-party transaction costs directly
related to the acquisition and integration of Scripps Networks, and
(viii) other items impacting comparability, such as the non-cash
settlement of a withholding tax claim.
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 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. 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 the methodology
to calculate growth rates excluding foreign 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 was excluded previously. Over time, the Company has
moved to a higher percentage of equity classified awards (in lieu
of liability classified awards, which require mark-to-market
accounting) under its stock incentive plans and expects to continue
this action in future periods. Since most equity classified awards
are non-cash expenses not entirely under management control, the
Company has elected to exclude all share-based compensation from
Adjusted OIBDA beginning in 2019. The revised definition of
Adjusted OIBDA will be used by our chief operating decision maker
in evaluating segment performance in 2019. Accordingly, prior
period amounts have been recast to reflect the current
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 the methodology used to
calculate growth rates excluding foreign currency effects.
(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.
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 "2019 Baseline Rate"), and the
prior year amounts translated at the same 2019 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 expenses exclude 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 11 compare our actual and pro forma combined
results as if the acquisition of Scripps Networks 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 prior year acquisition of Scripps
Networks as if it 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 acquisition of
Scripps Networks 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 months ended March 31, 2019 include the results of operations
for Discovery and Scripps Networks, which was acquired on
March 6, 2018.
Certain updates were made to previously disclosed pro forma
adjustments as a result of further information identified after
May 10, 2018, the date the
March 31, 2018 quarterly report on
Form 10-Q was filed. These changes impact costs of revenue,
depreciation and amortization and restructuring and other charges.
The pro forma adjustments discussed above are inclusive of these
updates and therefore may not reconcile to previously disclosed
amounts.
CONFERENCE CALL INFORMATION
Discovery will host a
conference call today, May 2, 2019 at 8:30 a.m. ET to discuss its first 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 March 1, 2019.
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; a landmark natural history and factual content
partnership with the BBC; 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
March 31,
|
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
Advertising
|
|
$
|
1,415
|
|
$
|
1,012
|
Distribution
|
|
1,224
|
|
1,051
|
Other
|
|
68
|
|
244
|
Total
revenues
|
|
2,707
|
|
2,307
|
Costs and
expenses:
|
|
|
|
|
Costs of revenues,
excluding depreciation and amortization
|
|
930
|
|
1,060
|
Selling, general and
administrative
|
|
626
|
|
609
|
Depreciation and
amortization
|
|
372
|
|
193
|
Restructuring and
other charges
|
|
5
|
|
241
|
Total costs and
expenses
|
|
1,933
|
|
2,103
|
Operating
income
|
|
774
|
|
204
|
Interest expense,
net
|
|
(182)
|
|
(177)
|
Loss on
extinguishment of debt
|
|
(5)
|
|
—
|
Income (loss) from
equity investees, net
|
|
11
|
|
(22)
|
Other expense,
net
|
|
(27)
|
|
(22)
|
Income (loss) before
income taxes
|
|
571
|
|
(17)
|
Income tax (expense)
benefit
|
|
(153)
|
|
20
|
Net income
|
|
418
|
|
3
|
Net income
attributable to noncontrolling interests
|
|
(29)
|
|
(5)
|
Net income
attributable to redeemable noncontrolling interests
|
|
(5)
|
|
(6)
|
Net income (loss)
available to Discovery, Inc.
|
|
$
|
384
|
|
$
|
(8)
|
Net income (loss) per
share allocated to Discovery, Inc. Series A, B and C common
stockholders:
|
|
|
|
|
Basic
|
|
$
|
0.53
|
|
$
|
(0.01)
|
Diluted(1)
|
|
$
|
0.53
|
|
$
|
(0.01)
|
Weighted average
shares outstanding:
|
|
|
|
|
Basic
|
|
524
|
|
422
|
Diluted(1)
|
|
714
|
|
609
|
|
|
(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)
|
|
|
March 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
745
|
|
$
|
986
|
Receivables,
net
|
2,625
|
|
2,620
|
Content rights,
net
|
364
|
|
313
|
Prepaid expenses and
other current assets
|
291
|
|
312
|
Total current
assets
|
4,025
|
|
4,231
|
Noncurrent content
rights, net
|
3,098
|
|
3,069
|
Property and
equipment, net
|
802
|
|
800
|
Goodwill,
net
|
13,037
|
|
13,006
|
Intangible assets,
net
|
9,366
|
|
9,674
|
Equity method
investments, including note receivable
|
955
|
|
935
|
Other noncurrent
assets
|
1,161
|
|
835
|
Total
assets
|
$
|
32,444
|
|
$
|
32,550
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
314
|
|
$
|
325
|
Accrued
liabilities
|
1,538
|
|
1,604
|
Deferred
revenues
|
236
|
|
249
|
Current portion of
debt
|
1,387
|
|
1,819
|
Total current
liabilities
|
3,475
|
|
3,997
|
Noncurrent portion of
debt
|
14,956
|
|
14,974
|
Deferred income
taxes
|
1,700
|
|
1,811
|
Other noncurrent
liabilities
|
1,573
|
|
1,251
|
Total
liabilities
|
21,704
|
|
22,033
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
440
|
|
415
|
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; 161 and 160 shares
issued; and 158 and 157 shares outstanding
|
2
|
|
2
|
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; 525 and 524 shares
issued; and 361 and 360 shares outstanding
|
5
|
|
5
|
Additional paid-in
capital
|
10,670
|
|
10,647
|
Treasury stock, at
cost: 167 shares
|
(6,737)
|
|
(6,737)
|
Retained
earnings
|
5,663
|
|
5,254
|
Accumulated other
comprehensive loss
|
(895)
|
|
(785)
|
Total Discovery, Inc.
stockholders' equity
|
8,708
|
|
8,386
|
Noncontrolling
interests
|
1,592
|
|
1,716
|
Total
equity
|
10,300
|
|
10,102
|
Total liabilities and
equity
|
$
|
32,444
|
|
$
|
32,550
|
DISCOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited; in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Operating
Activities
|
|
|
|
Net income
|
$
|
418
|
|
$
|
3
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Share-based
compensation expense
|
30
|
|
15
|
Depreciation and
amortization
|
372
|
|
193
|
Content rights
amortization and impairment
|
697
|
|
751
|
Remeasurement gain on
previously held equity interest
|
(8)
|
|
—
|
Equity in earnings of
equity method investee companies, net of cash
distributions
|
3
|
|
36
|
Deferred income
taxes
|
(43)
|
|
(35)
|
Other, net
|
44
|
|
67
|
Changes in operating
assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
Receivables,
net
|
(10)
|
|
(36)
|
Content rights and
payables, net
|
(816)
|
|
(698)
|
Accounts payable and
accrued liabilities
|
(211)
|
|
(171)
|
Prepaid income taxes
and income taxes receivable
|
41
|
|
(42)
|
Foreign currency and
other, net
|
25
|
|
77
|
Cash provided by
operating activities
|
542
|
|
160
|
Investing
Activities
|
|
|
|
Business
acquisitions, net of cash acquired
|
(22)
|
|
(8,565)
|
Payments for
investments, net
|
(34)
|
|
(22)
|
Purchases of property
and equipment
|
(44)
|
|
(48)
|
Proceeds from
(payments for) derivative instruments, net
|
5
|
|
(42)
|
Other investing
activities, net
|
1
|
|
2
|
Cash used in
investing activities
|
(94)
|
|
(8,675)
|
Financing
Activities
|
|
|
|
Borrowings under term
loan facilities
|
—
|
|
2,000
|
Principal repayments
of debt, including discount payment and premiums to par
value
|
(453)
|
|
—
|
Principal repayments
of finance lease obligations
|
(17)
|
|
(13)
|
Distributions to
noncontrolling interests and redeemable noncontrolling
interests
|
(163)
|
|
(2)
|
Share-based plan
(payments) proceeds, net
|
(15)
|
|
23
|
(Repayments)
borrowings under program financing line of credit, net
|
(3)
|
|
22
|
Other financing
activities, net
|
(1)
|
|
(11)
|
Cash (used in)
provided by financing activities
|
(652)
|
|
2,019
|
Effect of exchange
rate changes on cash and cash equivalents
|
(37)
|
|
(1)
|
Net change in cash
and cash equivalents
|
(241)
|
|
(6,497)
|
Cash and cash
equivalents, beginning of period
|
986
|
|
7,309
|
Cash and cash
equivalents, end of period
|
$
|
745
|
|
$
|
812
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1,2)
|
(unaudited;
amounts in millions)
|
|
TOTAL COMPANY
REPORTED AND PRO FORMA FINANCIAL RESULTS
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(3)
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
1,415
|
|
$
|
1,012
|
$
|
425
|
$
|
1,437
|
|
$
|
403
|
40
|
%
|
|
$
|
(22)
|
(2)
|
%
|
|
1
|
%
|
Distribution
|
|
1,224
|
|
1,051
|
177
|
1,228
|
|
173
|
16
|
%
|
|
(4)
|
—
|
%
|
|
3
|
%
|
Other
|
|
68
|
|
244
|
21
|
265
|
|
(176)
|
(72)
|
%
|
|
(197)
|
(74)
|
%
|
|
(73)
|
%
|
Total
revenues
|
|
2,707
|
|
2,307
|
623
|
2,930
|
|
400
|
17
|
%
|
|
(223)
|
(8)
|
%
|
|
(5)
|
%
|
Costs of revenues,
excluding depreciation and amortization
|
|
930
|
|
1,060
|
200
|
1,260
|
|
(130)
|
(12)
|
%
|
|
(330)
|
(26)
|
%
|
|
(24)
|
%
|
Selling, general and
administrative
|
|
618
|
|
538
|
155
|
693
|
|
80
|
15
|
%
|
|
(75)
|
(11)
|
%
|
|
(7)
|
%
|
Adjusted
OIBDA(4)
|
|
$
|
1,159
|
|
$
|
709
|
$
|
268
|
$
|
977
|
|
$
|
450
|
63
|
%
|
|
$
|
182
|
19
|
%
|
|
21
|
%
|
RECONCILIATION OF
TOTAL COMPANY REPORTED AND PRO FORMA OPERATING INCOME TO ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating income
(loss)
|
|
$
|
774
|
|
$
|
204
|
$
|
147
|
$
|
351
|
|
$
|
570
|
NM
|
|
$
|
423
|
NM
|
Restructuring and
other charges
|
|
5
|
|
241
|
10
|
251
|
|
(236)
|
(98)
|
%
|
|
(246)
|
(98)
|
%
|
Depreciation and
amortization
|
|
372
|
|
193
|
134
|
327
|
|
179
|
93
|
%
|
|
45
|
14
|
%
|
Share-based
compensation
|
|
30
|
|
15
|
6
|
21
|
|
15
|
NM
|
|
9
|
43
|
%
|
Scripps Networks
transaction and integration costs
|
|
7
|
|
56
|
(28)
|
28
|
|
(49)
|
(88)
|
%
|
|
(21)
|
(75)
|
%
|
Settlement of a
withholding tax claim
|
|
(29)
|
|
—
|
—
|
—
|
|
(29)
|
NM
|
|
(29)
|
NM
|
Inter-segment
eliminations
|
|
—
|
|
—
|
(1)
|
(1)
|
|
—
|
NM
|
|
1
|
NM
|
Adjusted
OIBDA(4)
|
|
$
|
1,159
|
|
$
|
709
|
$
|
268
|
$
|
977
|
|
$
|
450
|
63
|
%
|
|
$
|
182
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks had occurred on January 1, 2017. Refer to page 6 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 on Form 10-Q 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 may not reconcile to previously disclosed
amounts.
|
(3)
|
Refer to page 6 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(4)
|
See full definition
of Adjusted OIBDA on page 5.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1,2)
|
(unaudited;
amounts in millions)
|
|
U.S. NETWORKS
REPORTED AND PRO FORMA FINANCIAL RESULTS
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
1,022
|
|
$
|
627
|
$
|
356
|
$
|
983
|
|
$
|
395
|
63
|
%
|
|
$
|
39
|
4
|
%
|
Distribution
|
|
697
|
|
514
|
156
|
670
|
|
183
|
36
|
%
|
|
27
|
4
|
%
|
Other
|
|
33
|
|
33
|
7
|
40
|
|
—
|
—
|
%
|
|
(7)
|
(18)
|
%
|
Total
revenues
|
|
1,752
|
|
1,174
|
519
|
1,693
|
|
578
|
49
|
%
|
|
59
|
3
|
%
|
Costs of revenues,
excluding depreciation and amortization
|
|
422
|
|
321
|
153
|
474
|
|
101
|
31
|
%
|
|
(52)
|
(11)
|
%
|
Selling, general and
administrative
|
|
269
|
|
201
|
108
|
309
|
|
68
|
34
|
%
|
|
(40)
|
(13)
|
%
|
Adjusted
OIBDA(3)
|
|
$
|
1,061
|
|
$
|
652
|
$
|
258
|
$
|
910
|
|
$
|
409
|
63
|
%
|
|
$
|
151
|
17
|
%
|
RECONCILIATION OF
U.S. NETWORKS REPORTED AND PRO FORMA OPERATING INCOME TO ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
income
|
|
$
|
787
|
|
$
|
515
|
$
|
140
|
$
|
655
|
|
$
|
272
|
53
|
%
|
|
$
|
132
|
20
|
%
|
Share-based
compensation
|
|
—
|
|
—
|
2
|
2
|
|
—
|
NM
|
|
(2)
|
NM
|
Depreciation and
amortization
|
|
273
|
|
100
|
114
|
214
|
|
173
|
NM
|
|
59
|
28
|
%
|
Restructuring and
other charges
|
|
4
|
|
34
|
6
|
40
|
|
(30)
|
(88)
|
%
|
|
(36)
|
(90)
|
%
|
Inter-segment
eliminations
|
|
(3)
|
|
3
|
(4)
|
(1)
|
|
(6)
|
NM
|
|
(2)
|
NM
|
Adjusted
OIBDA(3)
|
|
$
|
1,061
|
|
$
|
652
|
$
|
258
|
$
|
910
|
|
$
|
409
|
63
|
%
|
|
$
|
151
|
17
|
%
|
|
|
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks had occurred on January 1, 2017. Refer to page 6 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 on Form 10-Q 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 may not reconcile to previously disclosed
amounts.
|
(3)
|
|
See full definition
of Adjusted OIBDA on page 5.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1,2)
|
(unaudited;
amounts in millions)
|
|
INTERNATIONAL
NETWORKS REPORTED AND PRO FORMA FINANCIAL
RESULTS
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
Pro
Forma
Ex-FX(3)
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
393
|
|
$
|
385
|
$
|
69
|
$
|
454
|
|
$
|
8
|
2
|
%
|
|
$
|
(61)
|
(13)
|
%
|
|
(6)
|
%
|
Distribution
|
|
527
|
|
537
|
21
|
558
|
|
(10)
|
(2)
|
%
|
|
(31)
|
(6)
|
%
|
|
1
|
%
|
Other
|
|
32
|
|
176
|
14
|
190
|
|
(144)
|
(82)
|
%
|
|
(158)
|
(83)
|
%
|
|
(81)
|
%
|
Total
revenues
|
|
952
|
|
1,098
|
104
|
1,202
|
|
(146)
|
(13)
|
%
|
|
(250)
|
(21)
|
%
|
|
(15)
|
%
|
Costs of revenues,
excluding depreciation and amortization
|
|
507
|
|
727
|
47
|
774
|
|
(220)
|
(30)
|
%
|
|
(267)
|
(34)
|
%
|
|
(31)
|
%
|
Selling, general and
administrative
|
|
226
|
|
234
|
27
|
261
|
|
(8)
|
(3)
|
%
|
|
(35)
|
(13)
|
%
|
|
(3)
|
%
|
Adjusted
OIBDA(4)
|
|
$
|
219
|
|
$
|
137
|
$
|
30
|
$
|
167
|
|
$
|
82
|
60
|
%
|
|
$
|
52
|
31
|
%
|
|
46
|
%
|
RECONCILIATION OF
INTERNATIONAL NETWORKS OPERATING INCOME TO PRO FORMA ADJUSTED
OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating income
(loss)
|
|
$
|
159
|
|
$
|
(31)
|
$
|
6
|
$
|
(25)
|
|
$
|
190
|
NM
|
|
$
|
184
|
NM
|
Depreciation and
amortization
|
|
82
|
|
67
|
19
|
86
|
|
15
|
22
|
%
|
|
(4)
|
(5)
|
%
|
Restructuring and
other charges
|
|
4
|
|
100
|
2
|
102
|
|
(96)
|
(96)
|
%
|
|
(98)
|
(96)
|
%
|
Inter-segment
eliminations
|
|
3
|
|
1
|
3
|
4
|
|
2
|
NM
|
|
(1)
|
(25)
|
%
|
Settlement of a
withholding tax claim
|
|
(29)
|
|
—
|
—
|
—
|
|
(29)
|
NM
|
|
(29)
|
NM
|
Adjusted
OIBDA(4)
|
|
$
|
219
|
|
$
|
137
|
$
|
30
|
$
|
167
|
|
$
|
82
|
60
|
%
|
|
$
|
52
|
31
|
%
|
|
|
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks had occurred on January 1, 2017. Refer to page 6 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 on Form 10-Q 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 may not reconcile to previously disclosed
amounts.
|
(3)
|
|
Refer to page 6 for
our methodology for calculating growth rates excluding the impact
of currency effects.
|
(4)
|
|
See full definition
of Adjusted OIBDA on page 5.
|
NM: Not
Meaningful
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
UNAUDITED SELECTED
PRO FORMA FINANCIALS(1,2)
|
(unaudited;
amounts in millions)
|
|
CORPORATE AND
INTER-SEGMENT ELIMINATIONS REPORTED AND PRO FORMA FINANCIAL
RESULTS
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Costs of revenues,
excluding depreciation and amortization
|
|
$
|
1
|
|
$
|
1
|
$
|
—
|
$
|
1
|
|
$
|
—
|
—
|
%
|
|
$
|
—
|
—
|
%
|
Selling, general and
administrative
|
|
121
|
|
82
|
20
|
102
|
|
39
|
48
|
%
|
|
19
|
19
|
%
|
Adjusted
OIBDA(3)
|
|
$
|
(122)
|
|
$
|
(83)
|
$
|
(20)
|
$
|
(103)
|
|
$
|
(39)
|
(47)
|
%
|
|
(19)
|
(18)
|
%
|
RECONCILIATION OF
CORPORATE AND INTER-SEGMENT ELIMINATIONS OPERATING INCOME TO PRO
FORMA ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Actual
Change
|
|
Pro Forma
Combined
Change
|
|
|
Actual
|
|
Actual
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|
$
|
%
|
|
$
|
%
|
Operating
loss
|
|
$
|
(175)
|
|
$
|
(285)
|
$
|
1
|
$
|
(284)
|
|
$
|
110
|
39
|
%
|
|
$
|
109
|
38
|
%
|
Share-based
compensation
|
|
30
|
|
15
|
4
|
19
|
|
15
|
NM
|
|
11
|
58
|
%
|
Depreciation and
amortization
|
|
17
|
|
24
|
1
|
25
|
|
(7)
|
(29)
|
%
|
|
(8)
|
(32)
|
%
|
Restructuring and
other charges
|
|
(3)
|
|
107
|
2
|
109
|
|
(110)
|
NM
|
|
(112)
|
NM
|
Scripps Networks
transaction and integration costs
|
|
7
|
|
56
|
(28)
|
28
|
|
(49)
|
(88)
|
%
|
|
(21)
|
(75)
|
%
|
Inter-segment
eliminations
|
|
2
|
|
—
|
—
|
—
|
|
2
|
—
|
%
|
|
2
|
—
|
%
|
Adjusted
OIBDA(3)
|
|
$
|
(122)
|
|
$
|
(83)
|
$
|
(20)
|
$
|
(103)
|
|
$
|
(39)
|
(47)
|
%
|
|
$
|
(19)
|
(18)
|
%
|
|
|
|
(1)
|
|
Pro forma is defined
as the results of the Company as if the acquisition of Scripps
Networks had occurred on January 1, 2017. Refer to page 6 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 on Form 10-Q 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 may not reconcile to previously disclosed
amounts.
|
(3)
|
|
See full definition
of Adjusted OIBDA on page 5.
|
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
March 31, 2019
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Other
|
|
Corporate
and Inter-
Segment
Eliminations
|
|
Total
|
Net income available
to Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
384
|
Net income
attributable to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
5
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
29
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
153
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
27
|
Income from equity
investees, net
|
|
|
|
|
|
|
|
|
|
(11)
|
Loss on
extinguishment of debt
|
|
|
|
|
|
|
|
|
|
5
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
182
|
Operating income
(loss)
|
|
$
|
787
|
|
$
|
159
|
|
$
|
3
|
|
$
|
(175)
|
|
$
|
774
|
Share-based
compensation
|
|
—
|
|
—
|
|
—
|
|
30
|
|
30
|
Depreciation and
amortization
|
|
273
|
|
82
|
|
—
|
|
17
|
|
372
|
Restructuring and
other charges
|
|
4
|
|
4
|
|
—
|
|
(3)
|
|
5
|
Scripps Networks
transaction and integration costs
|
|
—
|
|
—
|
|
—
|
|
7
|
|
7
|
Settlement of a
withholding tax claim
|
|
—
|
|
(29)
|
|
—
|
|
—
|
|
(29)
|
Inter-segment eliminations
|
|
(3)
|
|
3
|
|
(2)
|
|
2
|
|
—
|
Total Adjusted
OIBDA
|
|
$
|
1,061
|
|
$
|
219
|
|
$
|
1
|
|
$
|
(122)
|
|
$
|
1,159
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2018
|
|
|
U.S.
Networks
|
|
International
Networks
|
|
Other
|
|
Corporate
and Inter-
Segment
Eliminations
|
|
Total
|
Net loss available to
Discovery, Inc.
|
|
|
|
|
|
|
|
|
|
$
|
(8)
|
Net income
attributable to redeemable noncontrolling interests
|
|
|
|
|
|
|
|
|
|
6
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
5
|
Income tax
(benefit)
|
|
|
|
|
|
|
|
|
|
(20)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
22
|
(Income) loss from
equity investees, net
|
|
|
|
|
|
|
|
|
|
22
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
177
|
Operating income
(loss)
|
|
$
|
515
|
|
$
|
(31)
|
|
$
|
5
|
|
$
|
(285)
|
|
$
|
204
|
Share-based
compensation
|
|
—
|
|
—
|
|
—
|
|
15
|
|
15
|
Depreciation and
amortization
|
|
100
|
|
67
|
|
2
|
|
24
|
|
193
|
Restructuring and
other charges
|
|
34
|
|
100
|
|
—
|
|
107
|
|
241
|
Scripps Networks
transaction and integration costs
|
|
—
|
|
—
|
|
—
|
|
56
|
|
56
|
Inter-segment eliminations
|
|
3
|
|
1
|
|
(4)
|
|
—
|
|
—
|
Total Adjusted
OIBDA
|
|
$
|
652
|
|
$
|
137
|
|
$
|
3
|
|
$
|
(83)
|
|
$
|
709
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions, except per share amounts)
|
|
EARNINGS PER
SHARE
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
Numerator:
|
|
|
|
|
Net income
|
|
$
|
418
|
|
$
|
3
|
Less:
|
|
|
|
|
Allocation of
undistributed (income) loss to Series A-1 convertible preferred
stock
|
|
(38)
|
|
1
|
Net income
attributable to noncontrolling interests
|
|
(29)
|
|
(5)
|
Net income
attributable to redeemable noncontrolling interests
|
|
(5)
|
|
(6)
|
Redeemable
noncontrolling interest adjustments to redemption value
|
|
(5)
|
|
—
|
Net income (loss)
allocated to Discovery, Inc. Series A, B and C common and Series
C-1 convertible preferred stockholders for basic net income per
share
|
|
$
|
341
|
|
$
|
(7)
|
|
|
|
|
|
Allocation of net
income (loss) 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
|
|
279
|
|
(6)
|
Series C-1
convertible preferred stockholders
|
|
62
|
|
(1)
|
Total
|
|
341
|
|
(7)
|
Add:
|
|
|
|
|
Allocation of
undistributed income (loss) to Series A-1 convertible preferred
stockholders
|
|
38
|
|
(1)
|
Net income (loss)
allocated to Discovery, Inc. Series A, B and C common stockholders
for diluted net income per share
|
|
$
|
379
|
|
$
|
(8)
|
|
|
|
|
|
Denominator —
weighted average:
|
|
|
|
|
Series A, B and C
common shares outstanding — basic
|
|
524
|
|
422
|
Impact of assumed
preferred stock conversion
|
|
187
|
|
187
|
Dilutive effect of
share-based awards
|
|
3
|
|
—
|
Series A, B and C
common shares outstanding — diluted
|
|
714
|
|
609
|
Series C-1
convertible preferred stock outstanding — basic and
diluted
|
|
6
|
|
6
|
|
|
|
|
|
Basic net income
(loss) per share allocated to Discovery, Inc. Series A, B and C
common and Series C-1 convertible preferred
stockholders:
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
0.53
|
|
$
|
(0.01)
|
Series C-1
convertible preferred stockholders
|
|
$
|
10.31
|
|
$
|
(0.25)
|
|
|
|
|
|
Diluted net income
(loss) per share allocated to Discovery, Inc. Series A, B and C
common and Series C-1 convertible preferred
stockholders:
|
|
|
|
|
Series A, B and C
common stockholders
|
|
$
|
0.53
|
|
$
|
(0.01)
|
Series C-1
convertible preferred stockholders
|
|
$
|
10.27
|
|
$
|
(0.25)
|
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
March 31,
|
|
|
2019
|
|
2018
|
|
Change
|
Diluted net income
per share available to Discovery, Inc. Series A, B and C common
stockholders
|
|
$
|
0.53
|
|
$
|
(0.01)
|
|
$
|
0.54
|
Per share impact of
amortization of acquisition-related intangible assets, net of
tax
|
|
0.34
|
|
0.17
|
|
0.17
|
Adjusted earnings per
diluted share
|
|
$
|
0.87
|
|
$
|
0.16
|
|
$
|
0.71
|
CALCULATION OF
FREE CASH FLOW
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
Change
|
|
%
Change
|
Cash provided by
operating activities
|
|
$
|
542
|
|
$
|
160
|
|
$
|
382
|
|
NM
|
Purchases of property
and equipment
|
|
(44)
|
|
(48)
|
|
4
|
|
(8)
|
%
|
Free cash
flow
|
|
$
|
498
|
|
$
|
112
|
|
$
|
386
|
|
NM
|
DISCOVERY,
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
SELECTED FINANCIAL
DETAIL
|
(unaudited; in
millions)
|
|
BORROWINGS
|
|
|
March 31,
2019
|
|
December 31,
2018
|
5.625% Senior notes,
semi-annual interest, due August 2019
|
$
|
—
|
|
$
|
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
|
477
|
|
500
|
2.800% Senior notes,
semi-annual interest, due June 2020
|
600
|
|
600
|
5.050% Senior notes,
semi-annual interest, due June 2020
|
789
|
|
789
|
4.375% Senior notes,
semi-annual interest, due June 2021
|
640
|
|
650
|
2.375% Senior notes,
euro denominated, annual interest, due March 2022
|
337
|
|
344
|
3.300% Senior notes,
semi-annual interest, due May 2022
|
496
|
|
500
|
3.500% Senior notes,
semi-annual interest, due June 2022
|
400
|
|
400
|
2.950% Senior notes,
semi-annual interest, due March 2023
|
1,185
|
|
1,185
|
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
|
525
|
|
507
|
3.900% Senior notes,
semi-annual interest, due November 2024
|
497
|
|
497
|
3.450% Senior notes,
semi-annual interest, due March 2025
|
300
|
|
300
|
3.950% Senior notes,
semi-annual interest, due June 2025
|
500
|
|
500
|
4.900% Senior notes,
semi-annual interest, due March 2026
|
700
|
|
700
|
1.900% Senior notes,
euro denominated, annual interest, due March 2027
|
674
|
|
688
|
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
|
|
225
|
Program financing
line of credit
|
19
|
|
22
|
Total
debt(1)
|
16,464
|
|
16,918
|
Unamortized discount,
premium and debt issuance costs, net
|
(121)
|
|
(125)
|
Debt, net of
unamortized discount, premium and debt issuance costs
|
16,343
|
|
16,793
|
Current portion of
debt
|
(1,387)
|
|
(1,819)
|
Noncurrent portion of
debt
|
$
|
14,956
|
|
$
|
14,974
|
|
(1) As a result of
the adoption of ASU 2016-02, capital lease obligations totaling
$252 million as of December 31, 2018 (known as finance lease
liabilities effective January 1, 2019) were reclassified to
components of "Accrued liabilities" and "Other noncurrent
liabilities" on the consolidated balance sheet to conform with the
new presentation.
|
View original
content:http://www.prnewswire.com/news-releases/discovery-inc-reports-first-quarter-2019-results-300842637.html
SOURCE Discovery, Inc.