In conjunction with this release, The Walt Disney Company will host a conference call today, May 9, 2017, at 4:30 PM EDT/1:30 PM PDT via a live Webcast. To access the Webcast go to www.disney.com/investors. The discussion will be archived.
FORWARD-LOOKING STATEMENTS
Management believes certain statements in this earnings release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made. Management does not undertake any obligation to update these statements.
Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions), as well as from developments beyond the Company’s control, including:
- changes in domestic and global economic conditions, competitive conditions and consumer preferences;
- adverse weather conditions or natural disasters;
- health concerns;
- international, political, or military developments; and
- technological developments.
Such developments may affect entertainment, travel and leisure businesses generally and may, among other things, affect:
- the performance of the Company’s theatrical and home entertainment releases;
- the advertising market for broadcast and cable television programming;
- demand for our products and services;
- expenses of providing medical and pension benefits; and
- performance of some or all company businesses either directly or through their impact on those who distribute our products.
Additional factors are set forth in the Company’s Annual Report on Form 10-K for the year ended October 1, 2016 under Item 1A, “Risk Factors,” and subsequent reports.
| THE WALT DISNEY COMPANY | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (unaudited; in millions, except per share data) | ||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||
| April 1, | April 2, | April 1, | April 2, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Services | $ | 11,487 | $ | 11,171 | $ | 23,893 | $ | 23,793 | ||||||||
| Products | 1,849 | 1,798 | 4,227 | 4,420 | ||||||||||||
| Total revenues | 13,336 | 12,969 | 28,120 | 28,213 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of services (exclusive of depreciation and amortization) | (5,839 | ) | (5,566 | ) | (12,859 | ) | (12,622 | ) | ||||||||
| Cost of products (exclusive of depreciation and amortization) | (1,130 | ) | (1,298 | ) | (2,516 | ) | (2,865 | ) | ||||||||
| Selling, general, administrative and other | (1,941 | ) | (2,137 | ) | (3,926 | ) | (4,162 | ) | ||||||||
| Depreciation and amortization | (676 | ) | (605 | ) | (1,363 | ) | (1,212 | ) | ||||||||
| Total costs and expenses | (9,586 | ) | (9,606 | ) | (20,664 | ) | (20,861 | ) | ||||||||
| Restructuring and impairment charges | — | — | — | (81 | ) | |||||||||||
| Interest expense, net | (84 | ) | (67 | ) | (183 | ) | (91 | ) | ||||||||
| Equity in the income of investees | 85 | 150 | 203 | 624 | ||||||||||||
| Income before income taxes | 3,751 | 3,446 | 7,476 | 7,804 | ||||||||||||
| Income taxes | (1,212 | ) | (1,170 | ) | (2,449 | ) | (2,618 | ) | ||||||||
| Net income | 2,539 | 2,276 | 5,027 | 5,186 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | (151 | ) | (133 | ) | (160 | ) | (163 | ) | ||||||||
| Net income attributable to The Walt Disney Company (Disney) | $ | 2,388 | $ | 2,143 | $ | 4,867 | $ | 5,023 | ||||||||
| Earnings per share attributable to Disney: | ||||||||||||||||
| Diluted | $ | 1.50 | $ | 1.30 | $ | 3.05 | $ | 3.04 | ||||||||
| Basic | $ | 1.51 | $ | 1.31 | $ | 3.07 | $ | 3.06 | ||||||||
| Weighted average number of common and common equivalent shares outstanding: | ||||||||||||||||
| Diluted | 1,591 | 1,643 | 1,597 | 1,655 | ||||||||||||
| Basic | 1,580 | 1,633 | 1,586 | 1,643 | ||||||||||||
| Dividends declared per share | $ | — | $ | — | $ | 0.78 | $ | 0.71 | ||||||||
| THE WALT DISNEY COMPANY | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (unaudited; in millions, except per share data) | ||||||||
| April 1, | October 1, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,800 | $ | 4,610 | ||||
| Receivables | 9,293 | 9,065 | ||||||
| Inventories | 1,304 | 1,390 | ||||||
| Television costs and advances | 1,133 | 1,208 | ||||||
| Other current assets | 740 | 693 | ||||||
| Total current assets | 16,270 | 16,966 | ||||||
| Film and television costs | 6,974 | 6,339 | ||||||
| Investments | 4,155 | 4,280 | ||||||
| Parks, resorts and other property | ||||||||
| Attractions, buildings and equipment | 50,785 | 50,270 | ||||||
| Accumulated depreciation | (27,646 | ) | (26,849 | ) | ||||
| 23,139 | 23,421 | |||||||
| Projects in progress | 3,023 | 2,684 | ||||||
| Land | 1,237 | 1,244 | ||||||
| 27,399 | 27,349 | |||||||
| Intangible assets, net | 6,845 | 6,949 | ||||||
| Goodwill | 27,831 | 27,810 | ||||||
| Other assets | 2,333 | 2,340 | ||||||
| Total assets | $ | 91,807 | $ | 92,033 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other accrued liabilities | $ | 8,077 | $ | 9,130 | ||||
| Current portion of borrowings | 4,865 | 3,687 | ||||||
| Unearned royalties and other advances | 4,423 | 4,025 | ||||||
| Total current liabilities | 17,365 | 16,842 | ||||||
| Borrowings | 16,788 | 16,483 | ||||||
| Deferred income taxes | 4,006 | 3,679 | ||||||
| Other long-term liabilities | 6,381 | 7,706 | ||||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Preferred stock, $.01 par value, Authorized – 100 million shares, Issued – none | — | — | ||||||
|
Common stock, $.01 par value,
Authorized – 4.6 billion shares, Issued – 2.9 billion shares |
36,100 | 35,859 | ||||||
| Retained earnings | 69,708 | 66,088 | ||||||
| Accumulated other comprehensive loss | (3,880 | ) | (3,979 | ) | ||||
| 101,928 | 97,968 | |||||||
| Treasury stock, at cost, 1.3 billion shares | (58,144 | ) | (54,703 | ) | ||||
| Total Disney Shareholders’ equity | 43,784 | 43,265 | ||||||
| Noncontrolling interests | 3,483 | 4,058 | ||||||
| Total equity | 47,267 | 47,323 | ||||||
| Total liabilities and equity | $ | 91,807 | $ | 92,033 | ||||
| THE WALT DISNEY COMPANY | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (unaudited; in millions) | ||||||||
| Six Months Ended | ||||||||
| April 1, | April 2, | |||||||
| 2017 | 2016 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net income | $ | 5,027 | $ | 5,186 | ||||
| Depreciation and amortization | 1,363 | 1,212 | ||||||
| Deferred income taxes | 126 | 797 | ||||||
| Equity in the income of investees | (203 | ) | (624 | ) | ||||
| Cash distributions received from equity investees | 397 | 383 | ||||||
| Net change in film and television costs and advances | (428 | ) | 35 | |||||
| Equity-based compensation | 189 | 205 | ||||||
| Other | 261 | 320 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (284 | ) | (542 | ) | ||||
| Inventories | 90 | 218 | ||||||
| Other assets | 103 | 63 | ||||||
| Accounts payable and other accrued liabilities | (1,934 | ) | (746 | ) | ||||
| Income taxes | (9 | ) | (522 | ) | ||||
| Cash provided by operations | 4,698 | 5,985 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Investments in parks, resorts and other property | (1,923 | ) | (2,556 | ) | ||||
| Acquisitions | (557 | ) | (400 | ) | ||||
| Other | 90 | (82 | ) | |||||
| Cash used in investing activities | (2,390 | ) | (3,038 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Commercial paper borrowings, net | 914 | 709 | ||||||
| Borrowings | 2,053 | 3,766 | ||||||
| Reduction of borrowings | (1,233 | ) | (626 | ) | ||||
| Dividends | (1,237 | ) | (1,168 | ) | ||||
| Repurchases of common stock | (3,500 | ) | (4,391 | ) | ||||
| Proceeds from exercise of stock options | 186 | 160 | ||||||
| Other | (232 | ) | (654 | ) | ||||
| Cash used in financing activities | (3,049 | ) | (2,204 | ) | ||||
| Impact of exchange rates on cash and cash equivalents | (69 | ) | 3 | |||||
| Change in cash and cash equivalents | (810 | ) | 746 | |||||
| Cash and cash equivalents, beginning of period | 4,610 | 4,269 | ||||||
| Cash and cash equivalents, end of period | $ | 3,800 | $ | 5,015 | ||||
