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Discovery Communications Reports Third Quarter 2008 Results
- Revenues increased to $845 million
By: PR Newswire
Nov. 7, 2008 07:00 AM
(Logo: http://www.newscom.com/cgi-bin/prnh/20080918/NETH035LOGO ) Revenues of Third quarter net income from continuing operations of Free cash flow was
(1) See the as adjusted financial statements beginning on page 13 for 2007
results.
SEGMENT RESULTS
($ in millions) Three Months Ended Nine Months Ended
September 30, September 30,
2007 2007
(As (As
2008 adjusted) Change 2008 adjusted) Change
Revenues (1)(2)(3)
U.S. Networks
$ 498 $ 468 6 % $ 1,526 $ 1,381 10 %
International
Networks 300 258 16 % 864 723 20 %
Commerce,
Education &
Other 45 35 29 % 126 134 (6%)
Corporate 2 (1) N/M 23 -- N/M
$ 845 $ 760 11 % $ 2,539 $ 2,238 13 %
Adjusted OIBDA (1)(2)(3)
U.S. Networks $ 257 $ 235 9 % $ 811 $ 698 16 %
International
Networks 103 65 58 % 280 173 62 %
Commerce, N/M
Education &
Other 5 (3) 2 4 (50%)
Corporate (54) (44) (23%) (145) (136) (7%)
$ 311 $ 253 23 % $ 948 $ 739 28 %
(1) 2007 excludes Travel Channel results through its disposition on (2) All results exclude the Discovery Channel Stores which ceased operations in the third quarter of 2007 and have been treated as part of discontinued operations. (3) See the supplemental financial schedules for reconciliations of adjusted OIBDA to operating income as well as 2007 financial data to previously reported results from Discovery Holding Company.
U.S. Networks
($ in millions) Three Months Ended Nine Months Ended
September 30, September 30,
2007 2007
(As (As
2008 adjusted) Change 2008 adjusted) Change
Revenues
Advertising $ 249 $ 238 5 % $ 776 $ 710 9 %
Distribution 231 213 8 % 691 631 10 %
Other 18 17 6 % 59 40 48 %
$ 498 $ 468 6 % $1,526 $ 1,381 10 %
Adjusted OIBDA $ 257 $ 235 9 % $ 811 $ 698 16 %
Adjusted OIBDA
Margin 52 % 50 % 53 % 51 %
U.S. networks' revenue in the third quarter of 2008 increased 6% to Adjusted OIBDA increased 9% to
International Networks
($ in millions) Three Months Ended Nine Months Ended
September 30, September 30,
2007 2007
(As (As
2008 adjusted) Change 2008 adjusted) Change
Revenues
Advertising $ 83 $ 83 0 % $ 237 $ 218 9 %
Distribution 188 154 22 % 548 447 23 %
Other 29 21 38 % 79 58 36 %
$ 300 $ 258 16 % $ 864 $ 723 20 %
Adjusted OIBDA $ 103 $ 65 58 % $ 280 $ 173 62 %
Adjusted OIBDA
Margin 34 % 25 % 32 % 24 %
International networks' revenue for the third quarter increased 16% to
Adjusted OIBDA increased 58% to
Commerce, Education and Other
($ in millions) Three Months Ended Nine Months Ended
September 30, September 30,
2007 2007
(As (As
2008 adjusted) Change 2008 adjusted) Change
Revenues $ 45 $ 35 29 % $ 126 $ 134 (6%)
Adjusted OIBDA $ 5 $ (3) N/M $ 2 $ 4 (50%)
Adjusted OIBDA
Margin 11 % N/M N/M 3 %
Commerce, Education and Other revenue increased 29% to The current quarter also included revenues of Corporate Corporate expenses increased OTHER ITEMS In FULL YEAR 2008 OUTLOOK For the full year ended NON-GAAP FINANCIAL MEASURES Adjusted OIBDA and Free Cash Flow In addition to the results prepared in accordance with GAAP provided in this release, the Company has presented Adjusted OIBDA and free cash flow. The Company defines Adjusted OIBDA as revenue less cost of revenue and selling, general and administrative expense excluding marked to market equity- based compensation under our long-term incentive plans and amortization of deferred launch incentives. The Company excludes equity-based compensation under long-term incentive plans due to its significant volatility from being marked to market. The Company excludes the amortization of deferred launch incentive payments because these payments are infrequent and the amortization does not represent cash payments in the current reporting period. In addition to these items, Adjusted OIBDA also excludes depreciation and amortization, restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Management uses Adjusted OIBDA to assess the operational strength and performance of its operating segments, as well as the Company as a whole, and to view operating results, perform analytical comparisons, identify strategies to improve performance and allocate resources to each operating segment. The Company believes Adjusted OIBDA is an important measure to investors because it allows them to analyze operating performance of each business and the Company overall using the same metric management uses and provides investors a measure to analyze operating performance of each business division and the Company overall against historical data. The Company defines free cash flow as cash provided by operations 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 shareholders. Since Adjusted OIBDA and free cash flow are non-GAAP measures, they should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance reported in accordance with GAAP. Please review the supplemental financial schedules beginning on page 10 for reconciliations to GAAP measures. 2007 Results See page 13 for an explanation of how as adjusted results for 2007 have been calculated and why management believes this presentation would be meaningful to investors. Travel Channel The Company presents 2007 results without the Travel Channel, which was
exchanged on Conference Call Information Discovery Communications will host a conference call today at 8:30 a.m EST to discuss its third quarter 2008 results. To listen to the call, visithttp://www.discoverycommunications.com. Cautionary Statement Concerning Forward-Looking Statements This press release contains certain forward-looking statements based on
current expectations, forecasts and assumptions that involve risks and
uncertainties. These statements are based on information available to the
Company as of the date hereof, and the Company's actual results could differ
materially from those stated or implied, due to risks and uncertainties
associated with its business, which include the risk factors disclosed in its
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission on
DISCOVERY COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited; amounts in millions, except share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
2008 2007(a) 2008 2007(a)
Revenues
Advertising $ 332 $ -- $ 1,014 $ --
Distribution 419 -- 1,239 --
Other 94 15 286 59
Total revenues 845 15 2,539 59
Cost of revenues 262 11 758 37
Selling, general and
administrative 224 7 845 24
Depreciation and amortization 50 1 146 2
Exit and restructuring costs 13 -- 17 --
Total operating costs and
expenses 549 19 1,766 63
Operating income (loss) 296 (4) 773 (4)
Other (expense) income
Equity in earnings of
Discovery Communications -- 10 -- 158
Holding, LLC
Equity in loss of
unconsolidated affiliates (1) -- (2) --
Interest expense, net (61) -- (196) --
Other, net (7) -- (2) 6
Total other (expense) income,
net (69) 10 (200) 164
Income from continuing
operations before income
taxes and minority interest 227 6 573 160
Provision for income taxes (93) (4) (285) (62)
Minority interests in
consolidated subsidiaries,
net of tax (40) -- (119) --
Net income from continuing
operations 94 2 169 98
Net income from discontinued
operations 40 5 42 4
Net Income $ 134 $ 7 $ 211 $ 102
Net Income Per Common Share
Basic and fully diluted:
Net income from
continuing operations $ 0.31 $ 0.01 $ 0.59 $ 0.35
Net income from
discontinued operations 0.13 0.02 0.15 0.01
Net income $ 0.44 $ 0.03 $ 0.74 $ 0.36
Basic and fully diluted
average shares outstanding 302 280 287 280
(a) The 2007 results presented are on a GAAP basis and are those of our
predecessor, Discovery Holding Company, which accounted for its investment in
Discovery using the equity method. See page 14 for the as adjusted statement
of operations for the three months ended
DISCOVERY COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; amounts in millions)
September 30, December 31,
2008 2007(a)
ASSETS
Current assets
Cash and cash equivalents $ 92 $ 8
Accounts receivable, net 764 10
Content rights, net 79 --
Other current assets 171 2
Assets of discontinued
operations -- 352
Total current assets 1,106 372
Investment in Discovery -- 3,272
Communications Holdings, LLC
Investments in and advances to
unconsolidated affiliates 80 --
Noncurrent content rights, net 1,149 --
Property and equipment, net 412 5
Goodwill and intangibles 7,488 1,783
Other assets 210 --
Assets of discontinued operations -- 434
Total assets $ 10,445 $ 5,866
LIABILITIES, REDEEMABLE INTERESTS
IN SUBSIDIARIES, AND
STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 418 $ 6
Current portion of long-term
debt 349 --
Other current liabilities 253 2
Liabilities of discontinued
operations -- 112
Total current liabilities 1,020 120
Long-term debt 3,555 --
Derivative financial instruments 48 --
Other liabilities 254 1,228
Liabilities of discontinued
operations -- 23
Total liabilities 4,877 1,371
Redeemable interests in
subsidiaries 49 --
Stockholder's equity
Preferred stock 2 --
Common stock 3 3
Additional paid-in capital 6,559 5,728
Accumulated deficit (1,042) (1,253)
Accumulated other (3) 17
comprehensive (loss) income
Total stockholder's equity 5,519 4,495
Total liabilities, redeemable
interests in subsidiaries, and
stockholder's equity $ 10,445 $ 5,866
(a) The 2007 results presented are on a GAAP basis and are those of our
predecessor, Discovery Holding Company, which accounted for its investment in
Discovery using the equity method. See page 16 for the
DISCOVERY COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; amounts in millions)
Nine Months Ended
September 30,
2008 2007(a)
Cash Flows from Operating Activities
Net income $ 211 $ 102
Adjustments to reconcile net income
to cash provided by operating
activities
Depreciation and amortization 248 50
Share-based compensation (47) 2
Equity in earnings of Discovery
Communications Holding, LLC -- (158)
Equity in loss of unconsolidated
affiliates 2 --
Deferred income taxes 122 63
Minority interests in consolidated
subsidiaries, net of tax 119 --
Gain on dispositions (76) --
Other charges 7 (8)
Changes in operating assets and
liabilities, net of Ascent Media
Corporation spin-off
Accounts receivable, net (29) (4)
Content rights, net (74) --
Accounts payable and accrued (18) (10)
liabilities
Other, net (42) (4)
Cash provided by operating activities 423 33
Cash Flows from Investing Activities
Net cash acquired from Newhouse
Transaction 45 --
Business acquisitions, net of cash
acquired (8) --
Acquisitions of property and
equipment (84) (36)
Proceeds from sale of securities 24 --
Proceeds from dispositions 139 --
Other investing activities, net -- 2
Cash provided by (used in) investing 116 (34)
activities
Cash Flows from Financing Activities
Ascent Media Corporation spin-off (356) --
Net repayments on revolver loan (80) --
Principal payments of long-term debt (200) --
Payments of capital leases (12) --
Net cash from option exercises -- 4
Other financing activities, net (10) --
Cash (used in) provided by financing
activities (658) 4
Effect of exchange rate changes on
cash and cash equivalents 2 --
Change in Cash and Cash Equivalents (117) 3
Cash and cash equivalents of
discontinued operations, beginning of
period 201 153
Cash and cash equivalents of
continuing operations, beginning of
period 8 1
Cash and Cash Equivalents, End of
Period $ 92 $ 157
(a) The 2007 results presented are on a GAAP basis and are those of our
predecessor, Discovery Holding Company, which accounted for its investment in
Discovery using the equity method. See page 17 for the nine months ended
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF TRAVEL CHANNEL RESULTS
(unaudited; amounts in millions)
Nine Months Ended September 30, 2007(a)
US Networks US Networks
excluding including
Travel Travel Travel
Channel Channel Channel
Revenues
Advertising $ 710 $ 40 $ 750
631 22 653
Distribution
Other 40 -- 40
Total
revenues $ 1,381 $ 62 $ 1,443
Adjusted OIBDA $ 698 $ 20 $ 718
Nine Months Ended September 30, 2007(a)
Total Total
Company Company
excluding including
Travel Travel Travel
Channel Channel Channel
Revenues
Advertising $ 928 $ 40 $ 968
1,078 22 1,100
Distribution
Other 232 -- 232
Total
revenues $ 2,238 $ 62 $ 2,300
Adjusted OIBDA $ 739 $ 20 $ 759
(a) The 2007 results presented are as adjusted. See page 13 for an explanation of how these results have been calculated and why management believes this presentation would be meaningful to investors.
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
(unaudited; amounts in millions)
Three Months Ended September 30, 2008
Adjusted
Operat-
ing Amort-
Income ization Marked
Before of to
Depre- Depre- cable Market
ciation ciation distri- Equity-
and and bution based Operat-
Amort- Amort- invest- Compen- Other ing
ization ization ments sation (b) Income
U.S. Networks $ 257 $ (12) $ (6) $ -- $(13) $ 226
International
Networks 103 (12) (11) -- -- 80
Commerce,
Education and
Other 5 (2) -- -- -- 3
Corporate (54) (24) -- 65 -- (13)
Total $ 311 $ (50) $ (17) $ 65 $(13) $ 296
Three Months Ended September 30, 2007(a)
Adjusted
Operat-
ing Amort-
Income ization Marked
Before of to
Depre- Depre- cable Market
ciation ciation distri- Equity-
and and bution based Operat-
Amort- Amort- invest- Compen- Other ing
ization ization ments sation (c) Income
U.S. Networks $ 235 $ (6) $ (13) $ -- $ -- $ 216
International
Networks 65 (9) (11) -- -- 45
Commerce,
Education and
Other (3) (2) -- -- -- (5)
Corporate (44) (15) -- (44) (4) (107)
Total $ 253 $ (32) $ (24) $ (44) $ (4) $ 149
(a) The 2007 results presented are as adjusted and include Travel Channel results. See page 13 for an explanation of how these results have been calculated and why management believes this presentation would be meaningful to investors. (b) For the three months ended (c) For the three months ended
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
(unaudited; amounts in millions)
Nine Months Ended September 30, 2008
Adjusted
Operat-
ing Amort-
Income ization Marked
Before of to
Depre- Depre- cable Market
ciation ciation distri- Equity-
and and bution based Operat-
Amort- Amort- invest- Compen- Other ing
ization ization ments sation (b) Income
U.S. Networks $ 811 $ (40) $ (26) $ -- $(13) $ 732
International
Networks 280 (32) (33) -- -- 215
Commerce,
Education and
Other 2 (7) -- -- (4) (9)
Corporate (145) (67) -- 47 -- (165)
Total $ 948 $ (146) $ (59) $ 47 $(17) $ 773
Nine Months Ended September 30, 2007(a)
Adjusted
Operat-
ing Amort-
Income ization Marked
Before of to
Depre- Depre- cable Market
ciation ciation distri- Equity-
and and bution based Operat-
Amort- Amort- invest- Compen- Other ing
ization ization ments sation (c) Income
U.S. Networks $ 718 $ (19) $ (42) $ -- $ -- $ 657
International
Networks 173 (26) (33) -- -- 114
Commerce,
Education and
Other 4 (13) -- -- (26) (35)
Corporate (136) (39) -- (129) 119 (186)
Total $ 759 $ (97) $ (75) $ (129) $ 93 $ 550
(a) The 2007 results presented are as adjusted and include Travel Channel results. See page 13 for an explanation of how these results have been calculated and why management believes this presentation would be meaningful to investors. (b) For the nine months ended (c) For the nine months ended
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
AS ADJUSTED FINANCIAL RESULTS
(unaudited; amounts in millions)
The following as adjusted financial statements assume the transaction
between DHC and Advance/Newhouse, as well as Discovery Communication's
exchange of the Travel Channel, were completed as of The as adjusted financial statements for 2007 have not been prepared in accordance with GAAP. Management believes that this presentation is meaningful to investors, because it presents the results of Discovery Communications, the reporting successor to DHC. Discovery Communications will be the reporting entity going forward and a comparison of DHC's results for 2007 to Discovery Communications' results for 2008 would not provide investors with meaningful information regarding changes in financial performance of Discovery Communications from 2007 to 2008. The information in the Discovery Holding Company historical and Discovery Communications historical columns in the following as adjusted financial statements is derived from the historical financial statements of Discovery Holding Company and Discovery Communications, respectively. Certain reclassifications, with no impact to operating income, have been made to the 2007 financial information to conform to the 2008 presentation.
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF DISCOVERY HOLDING COMPANY HISTORICAL
TO DISCOVERY COMMUNICATIONS
(unaudited; amounts in millions, except share amounts)
Three Months Ended September 30, 2007
Add: Dis-
Dis- covery
covery Less: Communi-
DHC Communi- Minority cations,
Historical cations Interest Inc.
(a) Historical Adjustment as adjusted
Revenues
Advertising $-- $321 $-- $321
Distribution -- 367 -- 367
Other 15 57 -- 72
Total revenues 15 745 -- 760
Cost of revenues 11 239 -- 250
Selling, general and
administrative 7 318 -- 325
Depreciation and
amortization 1 31 -- 32
Exit and restructuring
costs -- 4 -- 4
Total operating costs
and expenses 19 592 -- 611
Operating (loss) income (4) 153 -- 149
Other income (expense)
Equity in earnings of
unconsolidated affiliates 10 2 (10) (b) 2
Interest expense, net -- (72) -- (72)
Other, net -- (4) -- (4)
Total other income
(expense), net 10 (74) (10) (74)
Income from continuing
operations before income
taxes and minority
interests 6 79 (10) 75
Provision for income taxes (4) (34) (38)
Minority interests in
consolidated subsidiaries,
net of tax -- (1) (6) c) (7)
Net income from
continuing operations 2 44 (16) 30
Net income (loss)
from discontinued
operations 5 (28) -- (23)
Net income $7 16 (16) 7
Net income per share from
continuing operations,
basic and fully
diluted $0.01 $0.11
Net income per share from
discontinued operations,
basic and fully diluted 0.02 (0.08)
Net income per share,
basic and fully diluted 0.03 $0.03
Average shares outstanding,
basic and fully
diluted 280 280
(a) DHC results of operations include DHC corporate costs and the results of Creative Sound Services, with the results of Ascent Media Corporation recorded as discontinued operations. (b) Represents the elimination of DHC's historical share of earnings of
Discovery for the three months ended (c) Represents the minority interest expense for the proportion of
Discovery's historical share of earnings not recognized by DHC for the three
months ended
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF DISCOVERY HOLDING COMPANY TO
DISCOVERY COMMUNICATIONS
(unaudited; amounts in millions, except share amounts)
Nine Months Ended September 30, 2007
Add: Dis-
Dis- covery
covery Less: Communi-
DHC Communi- Minority cations,
Historical cations Interest Inc.
(a) Historical Adjustment as adjusted
Revenues
Advertising $-- $968 $-- $968
Distribution -- 1,100 -- 1,100
Other 59 173 -- 232
Total revenues 59 2,241 -- 2,300
Cost of revenues 37 736 -- 773
Selling, general and
administrative 24 949 -- 973
Depreciation and
amortization 2 95 -- 97
Exit and restructuring
costs -- 16 -- 16
Asset Impairment -- 26 -- 26
Gain from disposition
of business -- (135) -- (135)
Total operating costs
and expenses 63 1,687 -- 1,750
Operating income (loss) (4) 554 -- 550
Other income (expense)
Equity in earnings of
unconsolidated
affiliates 158 6 (158) (b) 6
Interest expense, net -- (179) -- (179)
Other, net 6 2 -- 8
Total other income
(expense), net 164 (171) (158) (165)
Income from continuing
operations before
income taxes and
minority 160 383 (158) 385
Provision for income
taxes (62) (74) -- (136)
Minority interests in
consolidated subsidiaries,
net of tax -- (2) (88) (c) (90)
Net income from
continuing operations 98 307 (246) 159
Net income (loss)
from discontinued
operations 4 (61) -- (57)
Net income $102 246 (246) 102
Net income per share
from continuing
operations, basic
and fully diluted $0.35 $0.57
Net income per share
from discontinued
operations, basic
and fully 0.01 (0.21)
Net income per share,
basic and fully diluted $0.36 $0.36
Average shares
outstanding, basic
and fully diluted 280 280
(a) DHC results of operations include DHC corporate cost and the results of Creative Sound Services, with the results of Ascent Media Corporation recorded as discontinued operations. (b) Represents the elimination of DHC's historical share of earnings of
Discovery for the nine months ended (c) Represents the minority interest expense for the proportion of
Discovery's historical share of earnings not recognized by DHC for the nine
months ended
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF DISCOVERY HOLDING COMPANY TO
DISCOVERY COMMUNICATIONS
(unaudited; amounts in millions)
As of December 31, 2007
Dis-
covery Add: Dis-
Hold- Dis- covery
ing covery Less: Communi-
Com- Communi- Other cations,
pany cations Adjust- Inc.
Histor- Histor- ments as
ical ical (a) adjusted
ASSETS
Current assets
Cash and cash equivalents $8 $45 $-- $53
Accounts receivable, net 10 742 -- 752
Content rights, net -- 79 -- 79
Other current assets 2 211 -- 213
Assets of discontinued
operations 352 -- (352) --
Total current assets 372 1,077 (352) 1,097
Investment in and
advances to
unconsolidated
affiliates 3,272 101 (3,272) 101
Noncurrent content
rights, net -- 1,048 46 1,094
Property and equipment,
net 5 397 -- 402
Goodwill and other
intangibles, net 1,783 5,052 752 7,587
Other assets -- 285 -- 285
Assets of discontinued
operations 434 -- (434) --
Total assets $5,866 $7,960 $(3,260) $10,566
LIABILITIES, REDEEMABLE
INTERESTS IN SUBSIDIARIES,
AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable and
accrued liabilities $6 $533 $-- $539
Current portion of
long-term debt -- 275 -- 275
Other current liabilities 2 285 115 402
Liabilities of discontinued
operations 112 -- (112) -
Total current liabilities 120 1,093 3 1,216
Long-term debt -- 3,866 -- 3,866
Derivative financial
instruments -- 49 -- 49
Other liabilities 1,228 195 (1,106) 317
Liabilities of
discontinued operations 23 -- (23) --
Total liabilities 1,371 5,203 (1,126) 5,448
Redeemable interests
in subsidiaries -- 49 -- 49
Stockholder's equity
Preferred stock -- -- -- --
Common stock 3 -- -- 3
Members' equity -- 2,534 (2,534) --
Additional paid-in
capital 5,728 -- 586 6,314
Accumulated deficit (1,253) 184 (184) (1,253)
Accumulated other
comprehensive income
(loss) 17 (10) (2) 5
Total stockholder's
equity 4,495 2,708 (2,134) 5,069
Total liabilities,
redeemable interests
in subsidiaries,
and stockholder's
equity $5,866 $7,960 $(3,260) $10,566
(a) Represents elimination of Ascent Media Corporation, excluding Creative Sound Services, as well as DHC's historical investment in Discovery.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF DISCOVERY HOLDING COMPANY TO
DISCOVERY COMMUNICATIONS, INC.
(unaudited; amounts in millions)
Nine Months Ended September 30, 2007
Add: Dis-
Dis- covery
Discovery covery Communi-
Holding Communi- cations,
Company cations Inc.
Historical Historical as adjusted
Cash Provided By Operating $ 33 $ 126 $ 159
Activities
Investing Activities
Business acquisitions, net of -- (12) (12)
cash acquired
Acquisition of property and (36) (55) (91)
equipment
Redemption of interests in -- (44) (44)
subsidiaries
Other investing activities, 2 -- 2
net
Cash provided by (used in) $ (34) $ (111) $ (145)
investing activities
Financing Activities
Net borrowings on revolver -- 1,332 1,332
loan
Payments of capital leases -- (5) (5)
Repurchase of member interest -- (1,322) (1,322)
Other financing activities, 4 (24) (20)
net
Cash provided by (used in) $ 4 $ (19) $ (15)
financing activities
Effect of exchange rate
changes on cash and cash
equivalents -- 7 7
Change in Cash and Cash 3 3 6
Equivalents
Cash and cash equivalents of
discontinued operations,
beginning of period 153 -- 153
Cash and cash equivalents of
continuing operations,
beginning of period 1 52 53
Ascent Media Corporation cash, -- -- (157)
as adjusted
Cash and Cash Equivalents, End $ 157 $ 55 $ 55
of Period
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited; amounts in millions)
CALCULATION OF FREE CASH FLOW
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007(a) Change 2008 2007(a) Change
Cash provided by $ 241 $ 163 $ 78 $ 423 $ 159 $ 264
operating activities
Acquisition of (41) (30) (11) (84) (91) 7
property and
equipment
Free cash flow $ 200 $ 133 $ 67 $ 339 $ 68 $ 271
(a) The 2007 results presented are as adjusted. See page 13 for an explanation of how these results have been calculated and why management believes this presentation would be meaningful to investors.
RECONCILIATION OF 2008 OUTLOOK TO GAAP MEASURES
Full Year 2008
Net income from continuing operations .... $ 300 To $ 340
Interest, net ............................ 265 To 255
Depreciation and amortization ............ 190 To 190
Other, including amortization of cable
distribution investments, marked to market equity
based compensation, restructuring costs, equity
earnings in unconsolidated affiliates, unrealized
and realized gains and losses from derivatives,
income tax expense, minority interests in
consolidated subsidiaries 500 To 520
Adjusted OIBDA ........................... $ 1,255 To $ 1,305
DISCOVERY COMMUNICATIONS, INC.
SUPPLEMENTAL FINANCIAL DATA
SELECTED FINANCIAL DETAIL
(unaudited; amounts in millions)
BORROWINGS
September 30,
2008
$1.0 billion Term Loan A, due quarterly December 2008
to October 2010 $ 1,000
$1.6 billion Revolving loan, due October 2010 340
Euro 260 million Revolving loan, due April 2009 11
$1.5 billion Term Loan B, due quarterly September
2007 to May 2014 1,481
7.45% Senior Notes, semi-annual interest, due September 2009 55
8.37% Senior Notes, semi-annual interest, due March 2011 220
8.13% Senior Notes, semi-annual interest, due
September 2012 235
Floating Rate Senior Notes, semi-annual interest, due
December 2012 90
6.01% Senior Notes, semi-annual interest, due
December 2015 390
Obligations under capital leases 81
Other notes payable 1
Total debt $ 3,904
Cash and cash equivalents (92)
Net debt $ 3,812
LONG-TERM INCENTIVE PLANS
As of October 31, 2008
Total Vested
Long-Term Units Units
Incentive Plans Out- Weighted Out- Weighted
standing Average standing Average
(in Exercise (in Exercise
millions) Price millions) Price
October 2005
Discovery
Appreciation Plan 20.8 $18.97 -- --
October 2008 Stock
Appreciation Rights
Vesting in March 2009 2.6 $14.45 -- --
Vesting in March 2010 2.6 $14.45 -- --
October 2008 Options 9.5 $15.24 3.0 $16.59
Total long-term
incentive plans 35.5 $16.22 3.0 $16.59
SOURCE Discovery Communications, Inc.
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