DISCOVERY COMMUNICATIONS REPORTS SECOND QUARTER 2009 RESULTS
Second Quarter 2009 Financial Highlights:
•
Adjusted OIBDA increased to $381 million
•
Net income available to Discovery stockholders increased to $183 million
•
Free Cash Flow increased to $166 million
Silver Spring, Maryland – August 4, 2009:Discovery Communications, Inc. (“Discovery” or the “Company”) (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the second quarter ended June 30, 2009. The discussion below assumes the transaction between Discovery Holding Company (“DHC”), Discovery Communications Holding, LLC (“DCH”), and Advance/Newhouse Programming Partnership that resulted in Discovery becoming a public company, as described in the Other Items section, occurred on January 1, 2008, and as such includes 100% of Discovery’s results.
David Zaslav, Discovery’s President and Chief Executive Officer, said “Discovery’s second quarter results demonstrate our ability to execute on our business plan and strategic initiatives in a difficult operating environment. We delivered 12% ratings growth across our domestic networks and increased international subscribers 11% while offsetting our continued investment in programming with reductions to the selling, general and administrative cost base. The result was demonstrable operating leverage, with Adjusted OIBDA growth of 13% despite the challenging economy and adverse foreign currency fluctuations. At the same time, we took several strategic steps to better position the Company including partnering with Hasbro on a new children’s venture and monetizing an underutilized part of our valuable distribution platform. We also considerably strengthened our balance sheet, paying down $772 million in debt and reducing our leverage to 2.5 times, providing us additional financial flexibility. While the operating environment remains uncertain, with a strengthened balance sheet, operational momentum and sustained operating leverage, we expect to continue to deliver on our commitments to shareholders in the second half of 2009.”
Second quarter revenues of $881 million were down slightly compared with the second quarter a year ago as 2% growth at U.S. Networks was offset by a 5% decline at International Networks, primarily the result of a $34 million unfavorable impact from foreign currency fluctuations. Adjusted Operating Income Before Depreciation and Amortization (1) (“OIBDA”) grew 13% to $381 million, driven by a 11% increase at U.S. Networks partially offset by a 5% decline at International Networks due primarily to a $12 million unfavorable impact from foreign currency fluctuations. Total company Adjusted OIBDA margin increased to 43% for the second quarter from 38% for the same period a year ago.
Second quarter net income available to Discovery Communications, Inc. stockholders of $183 million ($0.43 per share) increased $140 million compared to $43 million ($0.16 per share) for the second quarter a year ago. The increased results primarily reflect the $45 million growth in Adjusted OIBDA and a net of tax gain of $46 million as a result of the sale of 50% of the Discovery Kids channel.
Free cash flow was $166 million for the second quarter, an increase of $71 million from the second quarter of 2008. 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.
1
SEGMENT RESULTS
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2009
2008(a) Change
2009
2008(a)
Change
Revenues:
U.S. Networks
$
557
$
544
2
%
$
1,066
$
1,028
4
%
International Networks
283
298
(5
%)
538
564
(5
%)
Commerce, Education, and Other
40
41
(2
%)
89
81
10
%
Corporate
1
2
(50
%)
5
21
(76
%)
Total Revenues
$
881
$
885
0
%
$
1,698
$
1,694
0
%
Adjusted OIBDA:
U.S. Networks
$
330
$
296
11
%
$
605
$
554
9
%
International Networks
92
97
(5
%)
188
177
6
%
Commerce, Education, and Other
5
(3
)
NM
11
(3
)
NM
Corporate
(46
)
(54
)
15
%
(94
)
(91
)
(3
%)
Total Adjusted OIBDA
$
381
$
336
13
%
$
710
$
637
11
%
(a)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
U.S. Networks
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2009
2008
Change
2009
2008
Change
Revenues:
Distribution
$
247
$
236
5
%
$
495
$
460
8
%
Advertising
290
288
1
%
534
527
1
%
Other
20
20
0
%
37
41
(10
%)
Total Revenues
$
557
$
544
2
%
$
1,066
$
1,028
4
%
Adjusted OIBDA
$
330
$
296
11
%
$
605
$
554
9
%
Adjusted OIBDA Margin
59
%
54
%
57
%
54
%
U.S. Networks’ revenues in the second quarter of 2009 increased 2% to $557 million primarily driven by distribution and advertising revenue growth. Distribution revenue grew 5% largely from higher rates, subscriber growth primarily from networks carried on the digital tier and lower launch-incentives amortization, offset by the absence of $5 million due to the removal of Discovery Kids from the consolidated results following the sale of 50% of the entity on May 22, 2009, and an $8 million one-time revenue item recorded in the second quarter of 2008. Adjusting for these items, distribution revenue grew 10% compared with second quarter a year ago. Advertising revenue increased 1% as a result of higher pricing and increased ratings, partially offset by lower cash sellouts due to softness in the economy.
Adjusted OIBDA increased 11% to $330 million reflecting the 2% revenue growth and a 10% decline in operating expenses as lower marketing, selling and administrative costs were partially offset by a slight increase in programming spending. Operating expenses would have declined 13% excluding $7 million of costs related to OWN incurred in the current quarter.
2
International Networks
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2009
2008
Change
2009
2008
Change
Revenues:
Distribution
$
179
$
182
(2
%)
$
356
$
360
(1
%)
Advertising
78
90
(13
%)
135
155
(13
%)
Other
26
26
0
%
47
49
(4
%)
Total Revenues
$
283
$
298
(5
%)
$
538
$
564
(5
%)
Adjusted OIBDA
$
92
$
97
(5
%)
$
188
$
177
6
%
Adjusted OIBDA Margin
33
%
33
%
35
%
31
%
International Networks’ revenues for the second quarter decreased 5% to $283 million as a $34 million unfavorable impact from foreign currency fluctuations resulted in a 13% decline in advertising revenue and slightly lower distribution revenue. Excluding the impact of foreign currency fluctuations, revenues increased 7% led by 9% affiliate revenue growth, primarily from subscriber increases in Latin America, EMEA and Asia-Pacific. Advertising revenue in local currency terms was up 3% led by growth in EMEA and the UK.
Adjusted OIBDA decreased 5% to $92 million as the 5% revenue decline was partially offset by a 6% decline in operating expenses which included a content charge of $11 million in the quarter, primarily at our German operations, and $12 million unfavorable impact related to foreign exchange. Excluding the impact of foreign currency and the content charge, Adjusted OIBDA increased 21% reflecting the 7% revenue growth partially offset by 1% higher operating expenses as increased programming expenses were mostly offset by lower marketing and personnel costs.
Commerce, Education, and Other
(dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2009
2008
Change
2009
2008
Change
Revenues
$
40
$
41
(2
%)
$
89
$
81
10
%
Adjusted OIBDA
$
5
$
(3
)
NM
$
11
$
(3
)
NM
Commerce, Education and Other second quarter revenues of $40 million were slightly lower than the second quarter of 2008, as increased education revenues from higher streaming volumes was offset by lower commerce revenues as a result of the transition to a new licensing model. Adjusted OIBDA increased to $5 million as compared with a loss of $3 million a year ago as commerce operating costs declined due to lower personnel costs and the new licensing model.
Corporate
Adjusted OIBDA increased $8 million when compared to the second quarter a year ago due primarily to lower consulting costs.
3
FULL YEAR 2009 OUTLOOK
For the full year ended December 31, 2009, Discovery Communications, Inc., expects total revenue between $3,375 million and $3,500 million, Adjusted OIBDA between $1,350 million and $1,400 million, an increase to the bottom end of the range, and net income available to Discovery Communications, Inc. stockholders of $500 million to $600 million, increased primarily to reflect the net of tax gain on the Discovery Kids transaction. Our outlook incorporates current foreign exchange rates for revenues and expenses, the removal of Discovery Kids from our consolidated operations and current share price for mark-to-market share-based compensation calculations, while excluding the impact of OWN.
NON-GAAP FINANCIAL MEASURES
Adjusted OIBDA and Free Cash Flow
In addition to the results prepared in accordance with 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 segments based on financial measures such as revenues and Adjusted OIDBA. Adjusted OIBDA is defined as revenues less cost of revenues and selling, general and administrative expense excluding (i) mark-to-market share-based compensation expense, (ii) amortization of deferred launch incentives, (iii) restructuring and impairment charges, and (iv) gains (losses) on asset and dispositions. Management uses Adjusted OIBDA to assess the operational strength and performance of its segments and the Company as a whole. Management uses this measure to view operating results, 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 operating performance of each segment using the same metric management uses and also provides investors a measure to analyze operating performance of each segment against historical data. The Company excludes mark-to-market compensation expense and restructuring and impairment charges from the calculation of Adjusted OIBDA due to their volatility or non-recurring nature. The Company also 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.
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.
Because 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 U.S. GAAP. Please review the supplemental financial schedules beginning on page 9 for reconciliations to GAAP measures.
OTHER ITEMS
In May 2009, the Company completed the issuance of $500 million of indebtedness pursuant to a supplement to its Term Loan B credit agreement, referred to as Term Loan C. Net proceeds were used to repay outstanding debt.
Also in May 2009, the Company closed its sale of a 50% interest in a joint venture which holds the Discovery Kids channel. Proceeds from the sale were $300 million and as of May 22, 2009 Discovery Kids is no longer consolidated in the Company’s financial statements.
In September 2008, Discovery Holding Company, Inc. (“DHC”) and Advance/Newhouse Programming Partnership (“Advance/Newhouse”) closed a transaction that included the combination of DHC’s approximate 67% interest in Discovery Communications Holding, LLC (“DCH”) with Advance/Newhouse’s approximate 33% interest in DCH. In connection with the transaction, DHC spun-off its interests in Ascent Media Corporation (“AMC”) except for certain businesses that provide sound-related services, which remain with Discovery. As a result of the transaction, DHC ceased to be a reporting company and Discovery became the successor reporting entity to DHC. The attached condensed consolidated statements of operations, condensed consolidated balance sheets and condensed consolidated statements of cash flows assume the above transaction occurred as of January 1, 2008, in accordance with U.S. GAAP. Additionally, the results of AMC, with the exception of the Creative Sound Services business, have been treated as discontinued operations for 2008. AMC’s results of operations are not separately presented as discontinued operations in the condensed consolidated statements of operations because its net operating results were not significant for the three and six months ended June 30, 2008. See our Form 10-Q filed with the Securities and Exchange Commission on August 4, 2009 for a more detailed description of the transaction and for further explanation of the financial statement presentation.
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. This recast reflects (i) the gross combined financial information of both DHC and DCH as though the transaction was consummated on January 1, 2008, (ii) adjustments to revenues and expenses to exclude amounts for AMC and (iii) the adoption of Financial Accounting Standards Board Statement No. 160,Non-controlling Interests in Consolidated Financial Statement – an Amendment of ARB No. 51.
Conference Call Information
Discovery Communications, Inc. will host a conference call today at 8:30 a.m. EDT to discuss its second quarter 2009 results. To listen to the call, visit http://www.discoverycommunications.com.
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 onForm 10-K filed with the SEC on February 25, 2009. 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 2009 outlook. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
DISCOVERY COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; amounts in millions, except per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2009
2008(a) 2009
2008(a)
Revenues:
Distribution
$
426
$
418
$
851
$
820
Advertising
368
378
669
682
Other
87
89
178
192
Total revenues
881
885
1,698
1,694
Cost of revenues, excluding depreciation and amortization listed below
257
254
510
496
Selling, general and administrative
310
370
591
621
Depreciation and amortization
40
49
78
96
Asset impairments
26
—
26
—
Exit and restructuring charges
14
4
17
4
Gain on business disposition
(252
)
—
(252
)
—
395
677
970
1,217
Operating income
486
208
728
477
Interest expense
(60
)
(66
)
(117
)
(135
)
Other non-operating income, net
20
22
28
6
Income before income taxes
446
164
639
348
Provision for income taxes
(267
)
(82
)
(337
)
(192
)
Net income
179
82
302
156
Less: Net loss (income) attributable to non-controlling interests
6
(39
)
2
(79
)
Net income attributable to Discovery Communications, Inc.
185
43
304
77
Stock dividends to preferred interests
(2
)
—
(2
)
—
Net income available to Discovery Communications, Inc. stockholders
$
183
$
43
$
302
$
77
Net income per share available to Discovery Communications, Inc. stockholders:
Basic
$
0.43
$
0.16
$
0.72
$
0.28
Diluted
$
0.43
$
0.16
$
0.71
$
0.28
Weighted average number of shares outstanding:
Basic
422
282
422
282
Diluted
424
282
423
282
(a)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
5
DISCOVERY COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; amounts in millions)
June 30,
December 31,
2009
2008(a)
ASSETS
Current assets:
Cash and cash equivalents
$
339
$
100
Receivables, net
759
780
Content rights, net
78
73
Prepaid expenses and other current assets
155
156
Total current assets
1,331
1,109
Noncurrent content rights, net
1,230
1,163
Property and equipment, net
410
395
Goodwill
6,439
6,891
Intangible assets, net
665
716
Other noncurrent assets
621
210
Total assets
$
10,696
$
10,484
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS IN SUBSIDIARIES, AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$
564
$
421
Current portion of long-term debt
421
458
Other current liabilities
242
191
Total current liabilities
1,227
1,070
Long-term debt
3,053
3,331
Other noncurrent liabilities
449
473
Total liabilities
4,729
4,874
Commitments and contingencies
Redeemable non-controlling interests in subsidiaries
49
49
Equity:
Preferred stock
2
2
Common stock
3
3
Additional paid-in capital
6,555
6,545
Accumulated deficit
(632
)
(936
)
Accumulated other comprehensive loss
(25
)
(78
)
Equity attributable to Discovery Communications, Inc.
5,903
5,536
Equity attributable to non-controlling interests
15
25
Total equity
5,918
5,561
Total liabilities, redeemable non-controlling interests in subsidiaries, and equity
$
10,696
$
10,484
(a)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
6
DISCOVERY COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in millions)
Six Months Ended June 30,
2009
2008(a)
OPERATING ACTIVITIES
Net income
$
302
$
156
Adjustments to reconcile net income to cash provided by operating activities:
Share-based compensation expense
98
19
Depreciation and amortization
78
127
Asset impairments
26
—
Gain on business disposition
(252
)
—
Gain on sale of securities
(13
)
—
Deferred income taxes
15
77
Other noncash expenses, net
18
35
Changes in operating assets and liabilities, net of discontinued operations:
Receivables, net
15
(67
)
Accounts payable and accrued liabilities
106
(100
)
Other, net
(73
)
(65
)
Cash provided by operating activities
320
182
INVESTING ACTIVITIES
Purchases of property and equipment
(34
)
(42
)
Net cash acquired from Newhouse Transaction
—
45
Business acquisitions, net of cash acquired
—
(7
)
Proceeds from business disposition
300
—
Proceeds from sales of securities
22
24
Other investing activities, net
—
2
Cash provided by investing activities
288
22
FINANCING ACTIVITIES
Net (repayments of) borrowings from revolver loans
(315
)
92
Borrowings from long-term debt, net of discount and debt issuance costs
478
—
Principal repayments of long-term debt
(518
)
(187
)
Principal repayments of capital lease obligations
(5
)
(8
)
Cash distribution to non-controlling interest
(8
)
—
Other financing activities, net
(3
)
(9
)
Cash used in financing activities
(371
)
(112
)
Effect of exchange rate changes on cash and cash equivalents
2
7
CHANGE IN CASH AND CASH EQUIVALENTS
239
99
Cash and cash equivalents of continuing operations, beginning of period
100
8
Cash and cash equivalents of discontinued operations, beginning of period
—
201
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
339
$
308
(a)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
7
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (unaudited; amounts in millions)
Three Months Ended June 30, 2009
Adjusted
Operating
Income Before
Depreciation
Amortization of
Mark-to-Market
Depreciation and
and
Deferred Launch
Share-Based
Operating
Amortization
Amortization
Incentives
Compensation
Other(a)
Income
U.S. Networks
$
330
$
(8
)
$
(5
)
$
(2
)
$
225
$
540
International Networks
92
(11
)
(8
)
—
(9
)
64
Commerce, Education, and Other
5
(1
)
—
—
(1
)
3
Corporate
(46
)
(20
)
—
(52
)
(3
)
(121
)
Total
$
381
$
(40
)
$
(13
)
$
(54
)
$
212
$
486
Three Months Ended June 30, 2008(b)
Adjusted
Operating
Income Before
Depreciation
Amortization of
Mark-to-Market
Depreciation and
and
Deferred Launch
Share-Based
Operating
Amortization
Amortization
Incentives
Compensation
Other(a)
Income
U.S. Networks
$
296
$
(14
)
$
(10
)
$
(1
)
$
—
$
271
International Networks
97
(11
)
(11
)
—
—
75
Commerce, Education, and Other
(3
)
(3
)
—
—
(4
)
(10
)
Corporate
(54
)
(21
)
—
(53
)
—
(128
)
Total
$
336
$
(49
)
$
(21
)
$
(54
)
$
(4
)
$
208
(a)
For the three months ended June 30, 2009, amount represents the pre-tax gain on the sale of Discovery Kids of $252 million as well as asset impairments of $26 million and exit and restructuring charges of $14 million. For the three months ended June 30, 2008, amount represents exit and restructuring charges.
(b)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
8
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (unaudited; amounts in millions)
Six Months Ended June 30, 2009
Adjusted
Operating
Income Before
Depreciation
Amortization of
Mark-to-Market
Depreciation and
and
Deferred Launch
Share-Based
Operating
Amortization
Amortization
Incentives
Compensation
Other(a)
Income
U.S. Networks
$
605
$
(16
)
$
(11
)
$
(1
)
$
225
$
802
International Networks
188
(21
)
(16
)
—
(10
)
141
Commerce, Education, and Other
11
(2
)
—
—
(1
)
8
Corporate
(94
)
(39
)
—
(85
)
(5
)
(223
)
Total
$
710
$
(78
)
$
(27
)
$
(86
)
$
209
$
728
Six Months Ended June 30, 2008(b)
Adjusted
Operating
Income Before
Depreciation
Amortization of
Mark-to-Market
Depreciation and
and
Deferred Launch
Share-Based
Operating
Amortization
Amortization
Incentives
Compensation
Other(a)
Income
U.S. Networks
$
554
$
(28
)
$
(20
)
$
(6
)
$
—
$
500
International Networks
177
(20
)
(22
)
—
—
135
Commerce, Education, and Other
(3
)
(5
)
—
—
(4
)
(12
)
Corporate
(91
)
(43
)
—
(12
)
—
(146
)
Total
$
637
$
(96
)
$
(42
)
$
(18
)
$
(4
)
$
477
(a)
For the six months ended June 30, 2009, amount represents the pre-tax gain on the sale of Discovery Kids of $252 million as well as asset impairments of $26 million and exit and restructuring charges of $17 million. For the six months ended June 30, 2008, amount represents exit and restructuring charges.
(b)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
9
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA (unaudited; amounts in millions)
CALCULATION OF FREE CASH FLOW
Three Months Ended June 30,
Six Months Ended June 30,
2009
2008(a) Change
2009
2008(a)
Change
Cash provided by operating activities
$
180
$
115
$
65
$
320
$
182
$
138
Acquisition of property and equipment
(14
)
(20
)
6
(34
)
(42
)
8
Free cash flow
$
166
$
95
$
71
$
286
$
140
$
146
(a)
The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009 financial information. See Other Items on page 4 for additional detail.
RECONCILIATION OF 2009 OUTLOOK TO GAAP MEASURES
Full Year 2009
Net income available to Discovery Communications, Inc.
$
500
To
$
600
Interest expense, net
260
To
230
Depreciation and amortization
170
To
160
Other expense, including amortization of deferred launch
420
To
410
incentives, mark-to-market share-based compensation, asset impairment, restructuring costs, gain (loss) on business disposition gain (loss) on sale of securities, equity earnings in unconsolidated affiliates, unrealized and realized gains and losses from derivatives, income tax expense, net loss (income) attributable to non-controlling interests, and stock dividends to preferred interests
Adjusted OIBDA
$
1,350
To
$
1,400
10
DISCOVERY COMMUNICATIONS, INC. SUPPLEMENTAL FINANCIAL DATA SELECTED FINANCIAL DETAIL (unaudited; amounts in millions)
BORROWINGS
As of
June 30, 2009
$1.0 billion Term Loan A, due quarterly December 2008 to October 2010
$
428
$1.5 billion Term Loan B, due quarterly September 2007 to May 2014
1,470
$500 million Term Loan C, due quarterly June 2009 to May 2014
499
$1.6 billion Revolving Loan, due October 2010
—
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 (2.0% at June 30, 2009)
90
6.01% Senior Notes, semi-annual interest, due December 2015
390
Obligations under capital leases
98
Other notes payable
1
Total debt outstanding
3,486
Unamortized discount
(12
)
Total debt outstanding, net
3,474
Current portion
(421
)
Long-term debt
$
3,053
SHARE—BASED COMPENSATION
As of June 30, 2009
Total Units
Weighted
Vested Units
Weighted
Long-Term
Outstanding
Average
Outstanding
Average
Incentive Plans
(in millions)
Exercise Price
(in millions)
Exercise Price
Discovery Appreciation Plan
17.4
$
18.84
0.1
$
21.64
Stock Appreciation Rights
4.2
14.44
1.3
14.39
Stock options
18.4
15.36
2.7
14.06
Total share-based compensation plans
40.0
$
16.78
4.1
$
14.35
NET OF TAX GAIN RECONCILIATION FOR DISCOVERY KIDS TRANSACTION
Pre-tax gain on sale of 50% of Discovery Kids
$
252
Tax recorded on book gain
(93
)
Tax recorded on goodwill allocated to the 50% of Discovery Kids sold
(81
)
Tax recorded on step-up of book value for the retained 50% of Discovery Kids
(32
)
Net of tax gain
$
46
11
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