DISCOVERY COMMUNICATIONS REPORTS FIRST QUARTER 2011 RESULTS
First Quarter 2011 Financial Highlights:
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| · | Revenues increased 9% to $951 million |
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| · | Adjusted OIBDA increased 17% to $427 million |
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| · | Net income increased to $305 million (up 20% excluding one-time items) |
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| · | Free Cash Flow increased 81% to $206 million |
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| · | Repurchased 4.7 million shares for an aggregate purchase price of $167 million |
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Silver Spring, Maryland – April 28, 2011: Discovery Communications, Inc. (“Discovery” or the “Company”) (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the first quarter ended March 31, 2011.
David Zaslav, Discovery’s President and Chief Executive Officer said, “Discovery’s strong first quarter results reflect the operating momentum we are generating across our global portfolio in a continued favorable economic climate. Our consistent investment in content over the past four years, along with a drive to expand our subscriber base domestically and internationally, has enabled Discovery to grow our audiences across the globe. Once again this quarter, we recognized the value of our increased viewership through double digit advertising gains that further built upon the strength we demonstrated throughout 2010. Moving forward, with advertising revenues expanding and predictable distribution revenues continuing to grow, we remain focused on delivering sustained operating leverage and free cash flow growth, while also continuing to invest in Discovery's diverse set of brands and platforms around the world.”
First quarter revenues of $951 million increased $82 million, or 9%, over the first quarter a year ago, led by 8% growth at U.S. Networks and 14% growth at International Networks. Adjusted Operating Income Before Depreciation and Amortization(1)(“OIBDA”) grew 17% to $427 million, driven by a 14% increase at U.S. Networks and an 18% increase at International Networks. Adjusted OIBDA margin for the first quarter increased to 45% from 42% in the first quarter of 2010.
First quarter net income from continuing operations available to Discovery Communications, Inc. stockholders of $305 million ($0.74 per diluted share) increased $136 million compared to $169 million ($0.39 per diluted share) for the first quarter a year ago. The current quarter results reflect the strong operating performance, as well as a gain of $102 million, net of tax, as a result of contributing the domestic Discovery Health network to the OWN: Oprah Winfrey Network (“OWN”) joint venture, partially offset by an increased provision for income taxes.
Free cash flow was $206 million for the first quarter, an increase of $92 million from the first quarter of 2010, due to increased operating performance and lower taxes and interest payments. Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.
(1) See the definition of Adjusted Operating Income Before Depreciation and Amortization on page 4.
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| SEGMENT RESULTS | | | | | | | | | | |
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| (dollars in millions) | | | | Three Months Ended March 31, |
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| | | | | 2011 | | | | 2010 (a) | | Change |
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| Revenues: | | | | | | | | | | |
| U.S. Networks | | $ | | 587 | | $ | | 546 | | 8% |
| International Networks | | | | 323 | | | | 283 | | 14% |
| Education and Other | | | | 41 | | | | 37 | | 11% |
| Corporate and Eliminations | | | | — | | | | 3 | | NM |
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| Total Revenues | | $ | | 951 | | $ | | 869 | | 9% |
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| Adjusted OIBDA: | | | | | | | | | | |
| U.S. Networks | | $ | | 334 | | $ | | 293 | | 14% |
| International Networks | | | | 144 | | | | 122 | | 18% |
| Education and Other | | | | 8 | | | | 5 | | 60% |
| Corporate and Eliminations | | | | (59) | | | | (55) | | (7%) |
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| Total Adjusted OIBDA | | $ | | 427 | | $ | | 365 | | 17% |
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| (a) | The 2010 financial information has been recast so that the basis of presentation is consistent with that of the 2011 financial information. See Other Items on page 4 for additional detail. |
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| U.S. Networks | | | | | | | | | | |
| (dollars in millions) | | | | Three Months Ended March 31, |
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| | | | | 2011 | | | | 2010 | | Change |
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| Revenues: | | | | | | | | | | |
| Distribution | | $ | | 274 | | $ | | 259 | | 6% |
| Advertising | | | | 290 | | | | 266 | | 9% |
| Other | | | | 23 | | | | 21 | | 10% |
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| Total Revenues | | $ | | 587 | | $ | | 546 | | 8% |
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| Adjusted OIBDA | | $ | | 334 | | $ | | 293 | | 14% |
| Adjusted OIBDA Margin | | | | 57% | | | | 54% | | |
U.S. Networks’ revenues in the first quarter of 2011 increased 8% to $587 million primarily driven by advertising and distribution revenue growth. Advertising revenue increased 9% due to increased pricing as well as higher sellouts, partially offset by the absence of $14 million due to the removal of Discovery Health following its contribution into the OWN joint venture on January 1, 2011. Distribution revenue grew 6% largely from higher rates and subscriber growth primarily from networks carried on the digital tier, partially offset by $4 million due to the absence of Discovery Health. Excluding Discovery Health from the 2010 results, advertising revenues grew 15% and distribution revenues grew 7% compared with the first quarter a year ago.
Adjusted OIBDA increased 14% to $334 million primarily reflecting the 8% revenue growth. Excluding Discovery Health from the 2010 results, Adjusted OIBDA increased 17%. Operating expenses for the quarter were flat as higher sales commissions were offset by lower selling, general and administrative expense due to a decrease in marketing costs. Excluding $18 million of higher content impairment charges in the first quarter of 2010, operating expenses would have increased 8% compared to a year ago.
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| International Networks | | | | | | | | |
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| (dollars in millions) | | | | Three Months Ended March 31, | | |
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| | | | | 2011 | | | | 2010 | | Change |
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| Revenues: | | | | | | | | | | |
| Distribution | | $ | | 206 | | $ | | 186 | | 11% |
| Advertising | | | | 102 | | | | 82 | | 24% |
| Other | | | | 15 | | | | 15 | | — |
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| Total Revenues | | $ | | 323 | | $ | | 283 | | 14% |
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| Adjusted OIBDA | | $ | | 144 | | $ | | 122 | | 18% |
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| Adjusted OIBDA Margin | | | | 45% | | | | 43% | | |
International Networks’ revenues for the first quarter increased 14% to $323 million primarily led by advertising revenue growth of 24% and distribution revenue growth of 11%. Excluding the impact of foreign currency fluctuations, revenues increased 11% led by 19% advertising revenue growth, primarily from higher pricing and sellouts in Western Europe as well as increased sellouts and viewership in Asia-Pacific and Latin America. Distribution revenue in local currency terms was up 8% during the first quarter mainly from increased subscribers and higher rates in Latin America and CEEMEA (Central and Eastern Europe, Middle East and Africa).
Adjusted OIBDA increased 18% to $144 million reflecting the 14% revenue growth partially offset by a 12% increase in operating expenses. Excluding the impact of foreign currency, Adjusted OIBDA increased 20% as the 11% revenue growth was partially offset by a 6% increase in operating expenses primarily due to higher programming costs as well as marketing spending on new channel launches. The first quarter a year ago included a $4 million one-time charge in cost of revenues related to the acquisition of a production facility in the U.K.
| Education and Other | | | | | | | | |
| (dollars in millions) | | | | Three Months Ended March 31, | | |
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| | | | | 2011 | | | | 2010 | | Change |
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| Revenues | | $ | | 41 | | $ | | 37 | | 11% |
| Adjusted OIBDA | | | | | | | | | | |
| | | $ | | 8 | | $ | | 5 | | 60% |
| Adjusted OIBDA Margin | | | | 20% | | | | 14% | | |
Education and Other first quarter revenues increased 11% to $41 million, primarily reflecting increased Education revenue from higher streaming volumes. Adjusted OIBDA increased $3 million compared to the first quarter of 2010 as the Education revenue and Adjusted OIBDA growth was partially offset by higher personnel costs.
Corporate and Eliminations
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For the first quarter Adjusted OIBDA decreased by $4 million primarily due to increased stock-based compensation expense.
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During the quarter, the Company, pursuant to its existing stock repurchase program repurchased 4.73 million shares of its Series C common stock at an average price of $35.20 per share for an aggregate purchase price of approximately $167 million.
From April 1, 2011 through April 27, 2011, the Company repurchased 1.35 million shares of its Series C common stock for approximately $48 million.
The Company has repurchased 9.07 million shares of Series C common stock under its $1.0 billion stock repurchase plan to date at an aggregate price of approximately $320 million. Under the stock repurchase program, management is authorized to purchase shares from time to time through open market purchases at prevailing prices or privately negotiated transactions, subject to market conditions and other factors.
The 2010 financial information has been recast so that the basis of presentation is consistent with that of the 2011 financial information. This recast reflects the classification of results of operations of our Antenna Audio business as discontinued operations.
For the full year ending December 31, 2011, Discovery Communications, Inc. expects total revenue between $4,025 million and $4,125 million, Adjusted OIBDA between $1,850 million and $1,925 million, and net income available to Discovery Communications, Inc. stockholders of $1,000 million to $1,075 million. Our outlook incorporates current foreign exchange rates for revenues and expenses and the current share price for mark-to-market stock-based compensation calculations.
NON-GAAP FINANCIAL MEASURES
Adjusted OIBDA and Free Cash Flow
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In addition to the results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) provided in this release, the Company has presented Adjusted OIBDA and free cash flow. The Company evaluates the operating performance of its segments based on financial measures such as revenues and adjusted operating income before depreciation and amortization (“Adjusted OIBDA”). Adjusted OIBDA is defined as revenues less costs of revenues and selling, general and administrative expenses excluding: (i) mark-to-market stock-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) certain impairment charges, and (vi) gains (losses) on business and asset dispositions. The Company uses this measure to assess operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance and allocate resources to each segment. The Company believes Adjusted OIBDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses and also provides investors a measure to analyze the operating performance of each segment against historical data. The Company excludes mark-to-market stock-based compensation, exit and restructuring charges, certain impairment charges, and gains (losses) on business and asset dispositions from the calculation of Adjusted OIBDA due to their volatility or non-recurring nature. The Company also excludes depreciation of fixed assets and amortization of intangible assets and deferred launch incentive as these amounts do not represent cash payments in the current reporting period.
The Company defines free cash flow as cash provided by operating activities less acquisitions of property and equipment. The Company uses free cash flow as it believes it is an important indicator for management and investors of the Company’s liquidity, including its ability to reduce debt, make strategic investments and return capital to stockholders.
4
Adjusted OIBDA and free cash flow are non-GAAP measures, and should be considered in addition to, but not as a substitute for, operating income, net income, cash flows provided by operating activities and other measures of financial performance reported in accordance with GAAP. Please review the supplemental financial schedules beginning on page 9 for reconciliations to GAAP measures.
Conference Call Information
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Discovery Communications, Inc. will host a conference call today at 10:00 a.m. EDT to discuss its first quarter results. To listen to the call, visit http://www.discoverycommunications.com or dial 1-866-730-5763 inside the U.S. and 1-857-350-1587 outside of the U.S., using the following passcode: 71154748.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. These statements are based on information available to the Company as of the date hereof, and the Company’s actual results could differ materially from those stated or implied, due to risks and uncertainties associated with its business, which include the risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on February 18, 2011. Forward-looking statements include statements regarding the Company’s expectations, beliefs, intentions or strategies regarding the future, and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “should,” “will” and “would” or similar words. Forward-looking statements in this release include, without limitation, the full year 2011 outlook and plans for stock repurchases. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
| Contacts: | | |
| Corporate Communications | | Investor Relations |
| Michelle Russo (240) 662-2901 | | Craig Felenstein (212) 548-5109 |
| michelle_russo@discovery.com | | craig_felenstein@discovery.com |
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| DISCOVERY COMMUNICATIONS, INC. | | | | | | | | |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | | | | |
| (unaudited; amounts in millions, except per share amounts) | | | | |
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| | | | | Three Months Ended |
| | | | | March 31, | | |
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| | | | | 2011 | | | | 2010(a) |
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| | | | | | | | | (recast) |
| Revenues: | | | | | | | | |
| Distribution | | $ | | 480 | | $ | | 445 |
| Advertising | | | | 392 | | | | 348 |
| Other | | | | 79 | | | | 76 |
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| Total revenues | | | | 951 | | | | 869 |
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| Cost of revenues, excluding depreciation and amortization listed below | | | | 273 | | | | 267 |
| Selling, general and administrative | | | | 269 | | | | 284 |
| Depreciation and amortization | | | | 30 | | | | 33 |
| Restructuring charges | | | | 1 | | | | 3 |
| Gains on dispositions | | | | (129) | | | | — |
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| | | | | 444 | | | | 587 |
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| Operating income | | | | 507 | | | | 282 |
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| Interest expense, net | | | | (49) | | | | (58) |
| Other expense, net | | | | (7) | | | | (4) |
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| Income before income taxes | | | | 451 | | | | 220 |
| Provision for income taxes | | | | (146) | | | | (47) |
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| Net income | | | | 305 | | | | 173 |
| Less net income attributable to noncontrolling interests | | | | — | | | | (4) |
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| Net income available to Discovery Communications, Inc. stockholders | | $ | | 305 | | $ | | 169 |
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| Net income per share available to Discovery Communications, Inc. stockholders: | | | | | | | | |
| Basic | | $ | | 0.75 | | $ | | 0.40 |
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| Diluted | | $ | | 0.74 | | $ | | 0.39 |
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| Weighted average shares outstanding: | | | | | | | | |
| Basic | | | | 409 | | | | 425 |
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| Diluted | | | | 414 | | | | 429 |
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| (a) | The 2010 financial information has been recast so that the basis of presentation is consistent with that of the 2011 financial information. See Other Items on page 4 for additional detail. |
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| DISCOVERY COMMUNICATIONS, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (unaudited; in millions) |
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| | | | | As of | | As of | | |
| | | | | March 31, | | December 31, |
| | | | | 2011 | | 2010 | | |
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| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | | 453 | | $ | | 466 |
| Receivables, net | | | | 866 | | | | 880 |
| Content rights, net | | | | 84 | | | | 83 |
| Deferred income taxes | | | | 76 | | | | 81 |
| Prepaid expenses and other current assets | | | | 150 | | | | 225 |
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| Total current assets | | | | 1,629 | | | | 1,735 |
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| Noncurrent content rights, net | | | | 1,280 | | | | 1,245 |
| Property and equipment, net | | | | 389 | | | | 399 |
| Goodwill | | | | 6,301 | | | | 6,434 |
| Intangible assets, net | | | | 592 | | | | 605 |
| Investments | | | | 781 | | | | 455 |
| Other noncurrent assets | | | | 136 | | | | 146 |
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| Total assets | | $ | | 11,108 | | $ | | 11,019 |
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| LIABILITIES AND EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | | 62 | | $ | | 87 |
| Accrued liabilities | | | | 356 | | | | 393 |
| Deferred revenues | | | | 113 | | | | 114 |
| Current portion of stock-based compensation liabilities | | | | 60 | | | | 118 |
| Current portion of long-term debt | | | | 21 | | | | 20 |
| Other current liabilities | | | | 42 | | | | 53 |
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| Total current liabilities | | | | 654 | | | | 785 |
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| Long-term debt | | | | 3,591 | | | | 3,598 |
| Deferred income taxes | | | | 352 | | | | 304 |
| Other noncurrent liabilities | | | | 100 | | | | 99 |
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| Total liabilities | | | | 4,697 | | | | 4,786 |
| Commitments and contingencies | | | | | | | | |
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| Equity: | | | | | | | | |
| Preferred stock | | | | 2 | | | | 2 |
| Common stock | | | | 3 | | | | 3 |
| Additional paid-in capital | | | | 6,386 | | | | 6,358 |
| Treasury stock, at cost: 8 and 3 Series C common shares at 2011 and 2010, | | | | | | | | |
| respectively | | | | (272) | | | | (105) |
| Retained earnings | | | | 305 | | | | — |
| Accumulated other comprehensive loss | | | | (16) | | | | (33) |
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| Total Discovery Communications, Inc. stockholders’ equity | | | | 6,408 | | | | 6,225 |
| Noncontrolling interests | | | | 3 | | | | 8 |
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| Total equity | | | | 6,411 | | | | 6,233 |
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| Total liabilities and equity | | $ | | 11,108 | | $ | | 11,019 |
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| DISCOVERY COMMUNICATIONS, INC. | | | | | | | | |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | |
| (unaudited; in millions) | | | | | | | | | | |
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| | | | | Three Months Ended March 31, | | |
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| | | | | 2011 | | | | 2010 | | |
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| OPERATING ACTIVITIES | | | | | | | | | | |
| Net income | | $ | | 305 | | $ | | | | 173 |
| Adjustments to reconcile net income to cash provided by operating activities: | | | | | | | | | | |
| Content expense | | | | 185 | | | | | | 185 |
| Stock-based compensation | | | | 17 | | | | | | 44 |
| Depreciation and amortization | | | | 30 | | | | | | 34 |
| Gains on dispositions | | | | (129) | | | | | | — |
| Deferred income taxes | | | | 44 | | | | | | (16) |
| Other noncash expenses, net | | | | 19 | | | | | | 17 |
| Changes in operating assets and liabilities: | | | | | | | | | | |
| Receivables, net | | | | 14 | | | | | | 42 |
| Content rights | | | | (208) | | | | | | (170) |
| Accounts payable and accrued liabilities | | | | (69) | | | | | | (100) |
| Stock-based compensation liabilities | | | | (66) | | | | | | (49) |
| Other, net | | | | 75 | | | | | | (34) |
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| Cash provided by operating activities | | | | 217 | | | | | | 126 |
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| INVESTING ACTIVITIES | | | | | | | | | | |
| Purchases of property and equipment | | | | (11) | | | | | | (12) |
| Business acquisitions, net of cash acquired | | | | — | | | | | | (38) |
| Investments in and advances to equity investees | | | | (57) | | | | | | (15) |
| Other investing activities, net | | | | (2) | | | | | | — |
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| Cash used in by investing activities | | | | (70) | | | | | | (65) |
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| FINANCING ACTIVITIES | | | | | | | | | | |
| Principal repayments of long-term debt | | | | — | | | | | | (5) |
| Principal repayments of capital lease obligations | | | | (10) | | | | | | (3) |
| Repurchases of common stock | | | | (167) | | | | | | — |
| Cash distributions to noncontrolling interests | | | | (5) | | | | | | (2) |
| Proceeds from stock option exercises | | | | 10 | | | | | | 9 |
| Excess tax benefits from stock-based compensation | | | | 4 | | | | | | 1 |
| Other financing activities, net | | | | — | | | | | | 1 |
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| Cash (used in) provided by financing activities | | | | (168) | | | | | | 1 |
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| Effect of exchange rate changes on cash and cash equivalents | | | | 8 | | | | | | 6 |
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| NET CHANGE IN CASH AND CASH EQUIVALENTS | | | | (13) | | | | | | 68 |
| Cash and cash equivalents, beginning of period | | | | 466 | | | | | | 623 |
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| CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | | 453 | | $ | | | | 691 |
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| DISCOVERY COMMUNICATIONS, INC. |
| SUPPLEMENTAL FINANCIAL DATA |
| RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE |
| DEPRECIATION AND AMORTIZATION |
| (unaudited; in millions) |
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| | | | | Three Months Ended March 31, 2011 | | | | | | | | |
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| | | Adjusted | | | | | | | | | | | | | | |
| | | Operating | | | | | | | | | | | | | | |
| | | Income Before | | Depreciation | | Amortization of | | Mark-to-Market | | | | | | |
| | | Depreciation and | | and | | Deferred Launch | | Stock-Based | | | | | | Operating |
| | | Amortization | | Amortization | | Incentives | | Compensation | | Other (a) | | Income |
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| U.S. Networks | | $ 334 | | $ (4) | | $ (2) | | $ | | — | | $ 128 | | $ 456 |
| International Networks | | 144 | | (10) | | (12) | | | | — | | | | — | | 122 |
| Education and Other | | 8 | | (2) | | — | | | | — | | | | — | | 6 |
| Corporate and Eliminations | | (59) | | (14) | | — | | | | (4) | | | | — | | (77) |
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| Total | | $ 427 | | $ (30) | | $ (14) | | $ | | (4) | | $ 128 | | $ 507 |
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| | | | | Three Months Ended March 31, 2010(b)(recast) | | | | | | |
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| | | Adjusted | | | | | | | | | | | | | | |
| | | Operating | | | | | | | | | | | | | | |
| | | Income Before | | Depreciation | | Amortization of | | Mark-to-Market | | | | | | |
| | | Depreciation and | | and | | Deferred Launch | | Stock-Based | | | | | | Operating |
| | | Amortization | | Amortization | | Incentives | | Compensation | | Other (a) | | Income |
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| U.S. Networks | | $ 293 | | $ (6) | | $ (2) | | $ | | — | | $ | | — | | $ 285 |
| International Networks | | 122 | | (8) | | (9) | | | | — | | | | (3) | | 102 |
| Education and Other | | 5 | | (1) | | — | | | | — | | | | — | | 4 |
| Corporate and Eliminations | | (55) | | (18) | | — | | | | (36) | | | | — | | (109) |
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| Total | | $ 365 | | $ (33) | | $ (11) | | $ (36) | | $ | | (3) | | $ 282 |
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| (a) | For the three months ended March 31, 2011, amounts primarily represent a pre-tax gain of $129 million as a result of contributing Discovery Health to the OWN joint venture. For the three months ended March 31, 2010, amounts represent exit and restructuring charges of $3 million. |
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| (b) | The 2010 financial information has been recast so that the basis of presentation is consistent with that of the 2011 financial information. See Other Items on page 4 for additional detail. |
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| | | DISCOVERY COMMUNICATIONS, INC. | | | | | | | | | | |
| SUPPLEMENTAL FINANCIAL DATA |
| | | (unaudited; in millions) | | | | | | | | | | |
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| CALCULATION OF FREE CASH FLOW | | | | | | | | | | | | | | |
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| | | | | Three Months Ended March 31, | | | | | | |
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| | | | | 2011 | | | | 2010 | | | | Change | | |
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| Cash provided by operating activities | | $ | | 217 | | $ | | 126 | | $ | | | | 91 |
| Acquisition of property and equipment | | | | (11) | | | | (12) | | | | | | 1 |
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| Free cash flow | | $ | | 206 | | $ | | 114 | | $ | | | | 92 |
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| RECONCILIATION OF 2011 OUTLOOK TO GAAP MEASURES | | | | | | | | |
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| | | | | Full Year 2011 |
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| Net income available to Discovery Communications, Inc. stockholders | | $ | | 1,000 | | To | | $ 1,075 |
| Interest expense, net | | | | 200 | | To | | 190 |
| Depreciation and amortization | | | | 125 | | To | | 115 |
| Other expense, including amortization of deferred launch incentives, mark-to-market stock-based | | | | 525 | | To | | 545 |
| compensation, asset impairment, exit and restructuring costs, gains (losses) on business | | | | | | | | |
| disposition, gains (losses) on sale of securities, equity earnings (losses) in unconsolidated | | | | | | | | |
| affiliates, unrealized and realized gains (losses) from derivatives, income tax expense, net loss | | | | | | | | |
| (income) attributable to noncontrolling interests, and stock dividends to preferred interests | | | | | | | | |
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| Adjusted OIBDA | | $ | | 1,850 | | To | | $ 1,925 |
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| NET INCOME AVAILABLE TO DISCOVERY COMMUNICATIONS, INC. STOCKHOLDERS | | | | | | | | |
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| | | | | Three Months | | |
| | | | | Ended March 31, |
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| | | | | 2011 | | | | 2010(a) |
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| | | | | | | | | (recast) |
| Net income available to Discovery Communications, Inc. stockholders, excluding one-time items | | $ | | 203 | | $ | | 169 |
| Gain, net of taxes, from contribution of Discovery Health | | | | 102 | | | | — |
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| Net income available to Discovery Communications, Inc. stockholders | | $ | | 305 | | $ | | 169 |
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| (a) | The 2010 financial information has been recast so that the basis of presentation is consistent with that of the 2011 financial information. See Other Items on page 4 for additional detail. |
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| | | DISCOVERY COMMUNICATIONS, INC. | | | | | | |
| | | SUPPLEMENTAL FINANCIAL DATA | | | | | | |
| | | SELECTED FINANCIAL DETAIL | | | | | | |
| | | (unaudited; in millions) | | | | | | |
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| BORROWINGS | | | | | | | | | | | | |
| | | | | | | | | | | As of |
| | | | | | | | | | | March 31, 2011 |
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| 3.70% Senior Notes, semi-annual interest, due June 2015 | | | | | | | | $ | | 850 |
| 5.625% Senior Notes, semi-annual interest, due August 2019 | | | | | | | | | | 500 |
| 5.05% Senior Notes, semi-annual interest, due June 2020 | | | | | | | | | | 1,300 |
| 6.35% Senior Notes, semi-annual interest, due June 2040 | | | | | | | | | | 850 |
| Capital lease and other obligations | | | | | | | | | | | | 120 |
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| Total long-term debt | | | | | | | | | | | | 3,620 |
| Unamortized discount | | | | | | | | | | | | (8) |
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| Long-term debt, net | | | | | | | | | | | | 3,612 |
| Less current portion of long-term debt | | | | | | | | | | | | 21 |
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| Noncurrent portion of long-term debt | | | | | | | | | | $ | | 3,591 |
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| STOCK-BASED COMPENSATION | | | | | | | | | | | | |
| | | | | | | As of March 31, 2011 | | | | |
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| | | Total Units | | Weighted | | Vested Units | | | | Weighted |
| Long-Term | | Outstanding | | Average | | Outstanding | | | | Average |
| Incentive Plans | | (in millions) | | Grant Price | | (in millions) | | Grant Price |
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| Discovery Appreciation Plan | | 8.4 | | $ | | 28.20 | | 0.9 | | $ | | 19.36 |
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| Stock Appreciation Rights | | 0.1 | | | | 23.94 | | —— | | | | —— |
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| Stock Options | | 16.0 | | | | 20.65 | | 5.7 | | | | 16.79 |
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| Performance-based Restricted Stock Units | | 1.7 | | | | 35.26 | | —— | | | | —— |
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| Service-based Restricted Stock Units | | 0.8 | | | | 34.88 | | —— | | | | —— |
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| Total Stock-based Compensation Plans | | 27.0 | | $ | | 24.35 | | 6.6 | | $ | | 17.14 |
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| SHARE COUNT ROLL FORWARD | | Common | | Preferred | | Total |
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| (Basic shares, in millions) | | | | | | |
| Total shares outstanding as of December 31, 2010 | | 283.76 | | 127.46 | | 411.22 |
| Shares repurchased | | (4.73) | | —— | | (4.73) |
| Shares issued – stock option exercises | | 0.61 | | —— | | 0.61 |
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| Total shares outstanding as of March 31, 2011 | | 279.64 | | 127.46 | | 407.10 |
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