DAPs Magic Disney News – PRESS RELEASE
- EPS for the year increased 24% to a record $2.52 compared to $2.03 in the prior year
- Net income for the year increased 21% to a record $4.8 billion
BURBANK, Calif. – The Walt Disney Company today reported earnings for
its fiscal year and fourth quarter ended October 1, 2011. Diluted earnings per share
(EPS) for the year increased 24% to $2.52 from $2.03 in the prior year. For the
quarter, diluted EPS was $0.58 compared to $0.43 in the prior-year quarter.
“Fiscal 2011 was a great year financially and strategically, demonstrating the
strength of our brands and businesses with record revenue, net income and earnings
per share,” said Disney President and CEO Robert A. Iger. “We are confident the
Company is well-positioned to deliver long-term value for our shareholders with
our focus on quality content, compelling uses of technology and global asset
growth.”
The following table summarizes the fourth quarter and full year results for
fiscal 2011 and 2010 (in millions, except per share amounts):
Year Ended Quarter Ended
October 1,
2011
October 2,
2010 Change
October 1,
2011
October 2,
2010 Change
Revenues $ 40,893 $ 38,063 7 % $ 10,425 $ 9,742 7 %
Segment operating income
(1)
$ 8,825 $ 7,586 16 % $ 2,113 $ 1,717 23 %
Net income
(2)
$ 4,807 $ 3,963 21 % $ 1,087 $ 835 30 %
Diluted EPS
(2)
$ 2.52 $ 2.03 24 % $ 0.58 $ 0.43 35 %
Cash provided by operations $ 6,994 $ 6,578 6 % $ 2,104 $ 2,206 (5 ) %
Free cash flow
(1)
$ 3,435 $ 4,468 (23 ) % $ 1,106 $ 1,409 (22 ) %
(1) Aggregate segment operating income and free cash flow are non-GAAP financial measures. See the
discussion of non-GAAP financial measures below.
(2) Reflects amounts attributable to shareholders of The Walt Disney Company, i.e. after deduction of
noncontrolling (minority) interests.
2
EPS for the current year includes restructuring and impairment charges ($55
million) and gains on the sales of Miramax and BASS ($75 million). On an after-tax
basis, these items collectively had a net adverse impact of $0.02 on EPS. EPS for the
prior year included restructuring and impairment charges, gains on the sales of
investments and businesses, and an accounting gain related to the acquisition of The
Disney Store Japan, which collectively totaled $130 million on a pre-tax basis and
had a net adverse impact of $0.04 on EPS. The gains mentioned above are recorded
in “Other Income” in the Consolidated Statements of Income. Excluding these items,
EPS for the year increased 23% to $2.54 from $2.07 in the prior year.
The current and prior-year quarter included $9 million and $58 million,
respectively, of the restructuring and impairment charges referred to above.
Excluding these charges, EPS for the quarter increased 31% to $0.59 from $0.45 in the
prior-year quarter.
SEGMENT RESULTS
The following table summarizes the full year and fourth quarter segment
operating results for fiscal 2011 and 2010 (in millions):
Year Ended Quarter Ended
October 1,
2011
October 2,
2010 Change
October 1,
2011
October 2,
2010 Change
Revenues:
Media Networks $ 18,714 $ 17,162 9 % $ 4,798 $ 4,414 9 %
Parks and Resorts
11,797 10,761 10 % 3,129 2,819 11 %
Studio Entertainment 6,351 6,701 (5 ) % 1,459 1,591 (8 ) %
Consumer Products 3,049 2,678 14 % 816 730 12 %
Interactive Media 982 761 29 % 223 188 19 %
$ 40,893 $ 38,063 7 % $ 10,425 $ 9,742 7 %
Segment operating income (loss):
Media Networks $ 6,146 $ 5,132 20 % $ 1,462 $ 1,217 20 %
Parks and Resorts 1,553 1,318 18 % 421 316 33 %
Studio Entertainment 618 693 (11 ) % 117 104 13 %
Consumer Products 816 677 21 % 207 184 13 %
Interactive Media (308) (234) (32 ) % (94 ) (104 ) 10 %
$ 8,825 $ 7,586 16 % $ 2,113 $ 1,717 23 %
3
Media Networks
Media Networks revenues for the year increased 9% to $18.7 billion and
segment operating income increased 20% to $6.1 billion. For the quarter, revenues
increased 9% to $4.8 billion and segment operating income increased 20% to $1.5
billion. The following table provides further detail of the Media Networks results (in
millions):
Year Ended Quarter Ended
October 1,
2011
October 2,
2010 Change
October 1,
2011
October 2,
2010 Change
Revenues:
Cable Networks $ 12,877 $ 11,475 12 % $ 3,467 $ 3,129 11 %
Broadcasting 5,837 5,687 3 % 1,331 1,285 4 %
$ 18,714 $ 17,162 9 % $ 4,798 $ 4,414 9 %
Segment operating income:
Cable Networks $ 5,233 $ 4,473 17 % $ 1,261 $ 1,070 18 %
Broadcasting 913 659 39 % 201 147 37 %
$ 6,146 $ 5,132 20 % $ 1,462 $ 1,217 20 %
Cable Networks
Operating income at Cable Networks increased $760 million to $5.2 billion for
the year due to growth at ESPN and the worldwide Disney Channels and an
increase in equity income. The increase at ESPN reflected higher advertising and
affiliate revenue, partially offset by higher programming and production, labor and
marketing costs. Higher advertising revenue was driven by higher rates while the
increase in affiliate revenue reflected contractual rate increases. The programming
and production cost increase was driven by the addition of college football
programming including Bowl Championship Series games and contractual rate
increases for NFL, college football, NASCAR and Major League Baseball
programming. These increases were partially offset by the absence of programming
costs for the FIFA World Cup which was broadcast in the prior year. Growth at the
worldwide Disney Channels was driven by higher affiliate revenue due to higher
contractual rates domestically and subscriber growth internationally, sales of Disney
Channel programming and increased advertising revenues internationally. These
increases were partially offset by higher programming and production costs due to
more episodes of original programming. Increased equity income was driven by the
absence of programming write-offs and higher advertising and affiliate revenues at
A&E/Lifetime (AETN).
For the quarter, operating income at Cable Networks increased by $191
million to $1.3 billion due to growth at the worldwide Disney Channels, increased
equity income and an improvement at ESPN. The increase at the worldwide Disney
Channels was driven by sales of Disney Channel programming, higher affiliate
revenue due to contractual rate increases domestically and advertising revenue
growth internationally. The increase at ESPN reflected higher contractual rates for
affiliate fees and, to a lesser extent, growth in advertising revenue, partially offset by 4
an increase in programming and production, labor and marketing costs. Advertising
revenue growth was driven by higher rates, partially offset by fewer units sold and
lower ratings, in part reflecting the absence of the FIFA World Cup. Programming
and production cost increases were driven by higher contractual rates for college
football and NFL programming, partially offset by the absence of programming
costs for the FIFA World Cup. Increased equity income reflected the absence of
programming write-offs at AETN.
Broadcasting
Operating income at Broadcasting increased $254 million to $913 million for
the year driven by lower programming and production costs at the ABC Television
Network, higher advertising revenues at the Network and owned television stations,
and higher affiliate fees, partially offset by a decrease in the cost charged to ESPN
for programming aired on the Network. Decreased Network programming and
production costs reflected a lower cost mix of programming in primetime due to a
shift in hours from original scripted programming to reality programming, the shift
of the Rose Bowl and BCS National Championship game to ESPN and lower news
and daytime production costs. Higher Network advertising revenues reflected
higher rates, partially offset by lower ratings.
For the quarter, operating income at Broadcasting increased $54 million to
$201 million driven by lower programming and production costs and higher
Network advertising revenues, partially offset by decreased political advertising at
the owned television stations. Lower programming costs were driven by decreased
write-offs. Higher Network advertising revenues were due to higher rates,
improved news ratings and higher sports units sold, partially offset by lower
primetime ratings.
Parks and Resorts
Parks and Resorts revenues for the year increased 10% to $11.8 billion and
segment operating income increased 18% to $1.6 billion. For the quarter, revenues
increased 11% to $3.1 billion and segment operating income increased 33% to $421
million.
Results for the year reflected increases at our domestic parks and resorts and
at Hong Kong Disneyland Resort. These increases were partially offset by costs for
our new Aulani hotel and vacation club resort in Hawaii, which opened during the
quarter, and a decrease at Tokyo Disney Resort driven by the temporary closure of
the resort following the March 2011 earthquake in Japan.
Higher operating income at our domestic parks and resorts was driven by
increased guest spending and, to a lesser extent, attendance, partially offset by
increased costs. Increased guest spending reflected higher average ticket prices,
daily hotel room rates and food, beverage and merchandise spending. Increased
costs reflected labor cost inflation, enhancement and expansion costs, including new
guest offerings at Disney California Adventure, and investments in our systems
infrastructure. Additionally, higher pension and post-retirement medical expenses
contributed to increased costs. 5
Higher operating income at Hong Kong Disneyland Resort reflected higher
attendance and guest spending which was driven by higher daily hotel room rates,
merchandise, food and beverage spending, and average ticket prices. Results at
Disneyland Paris were comparable to the prior year as increased costs and the
absence of a prior-year sale of real estate were largely offset by increased guest
spending, attendance, and hotel occupancy. Increased costs at Disneyland Paris
were driven by labor cost inflation, volume-related costs, new guest offerings and
repairs and maintenance. Higher guest spending reflected higher daily hotel room
rates, food, beverage and merchandise spending, and average ticket prices.
For the quarter, results reflected increases at our domestic parks and resorts,
Disney Cruise Line, Hong Kong Disneyland Resort and Disneyland Paris, partially
offset by costs for our new Aulani hotel and vacation club resort and lower vacation
ownership sales at Disney Vacation Club.
Higher operating income at our domestic parks and resorts was driven by
higher guest spending, partially offset by increased costs. Increased guest spending
benefitted from higher average ticket prices, food, beverage and merchandise
spending, and daily hotel room rates. Higher costs reflected labor cost inflation,
increased support costs, higher pension and post-retirement medical expenses, and
new guest offerings at Disney California Adventure. Higher operating income at
Disney Cruise Line was due to increased passenger cruise ship days driven by the
Disney Dream, partially offset by the related operating costs. The decrease at Disney
Vacation Club was due to lower vacation ownership sales.
Higher operating income at Hong Kong Disneyland Resort was driven by
higher attendance and increased guest spending, while the increase at Disneyland
Paris reflected higher guest spending. Increased guest spending at Hong Kong
Disneyland Resort was driven by higher average daily hotel room rates,
merchandise, food and beverage spending and average ticket prices. At Disneyland
Paris, the increase in guest spending reflected higher average ticket prices and daily
hotel room rates.
Studio Entertainment
Studio Entertainment revenues for the year decreased 5% to $6.4 billion and
segment operating income decreased 11% to $618 million. For the quarter, revenues
decreased 8% to $1.5 billion and segment operating income increased 13% to $117
million.
Lower results for the year reflected decreased worldwide theatrical and home
entertainment results and higher technology infrastructure spending, partially offset
by lower film cost write-downs and a higher revenue share with the Consumer
Products segment primarily due to the performance of Cars merchandise. Decreased
theatrical results reflected the stronger overall performance of key prior-year titles,
Toy Story 3, Alice in Wonderland, Iron Man 2 and Princess and the Frog compared to the
current-year performance of Cars 2, Pirates of the Caribbean: On Stranger Tides,
Tangled, Thor and Captain America. This decrease was partially offset by the poor
performance of prior year summer releases, The Prince of Persia and Sorcerer’s
Apprentice. Decreased home entertainment results reflected a change in the transfer 6
pricing arrangement between Studio Entertainment and Media Networks for the
distribution of Media Networks home entertainment product and lower domestic
sales volume. These decreases were partially offset by higher unit sales and
improved net effective pricing internationally which benefitted from a higher Bluray sales mix.
Improved results for the quarter were driven by lower film cost write-downs
and improved domestic theatrical results, partially offset by decreased international
theatrical and worldwide home entertainment results. In both domestic and
international theatrical markets, Cars 2 did not perform in line with the strong prioryear performance of Toy Story 3. However, domestic theatrical results improved due
to the better overall performance of The Lion King 3D and The Help in the current
quarter, compared to The Sorcerer’s Apprentice, You Again and Step Up 3 in the prioryear quarter. Domestic theatrical results also benefitted from lower pre-release
marketing expense. Decreased home entertainment results reflected lower overall
sales volume domestically and decreased sales of catalog titles internationally.
Consumer Products
Consumer Products revenues for the year increased 14% to $3.0 billion and
segment operating income increased 21% to $816 million. For the quarter, revenues
increased 12% to $816 million and segment operating income increased 13% to $207
million.
The increase in segment operating income for the year and quarter was
driven by higher Merchandise Licensing revenues reflecting the strong performance
of Cars merchandise and higher revenue from Marvel properties. The increase in
revenue from Marvel properties reflected the impact of acquisition accounting
which reduced revenue recognition in the prior-year periods. These increases were
partially offset by a higher revenue share with the Studio Entertainment segment
primarily due to the performance of Cars merchandise. The increase in revenue from
Marvel properties for the year also included an additional quarter of operations for
Marvel which was acquired at the end of the first quarter of the prior year.
Additionally, results for the year reflected an improvement at the Disney
Store North America driven by higher comparable store sales.
Interactive Media
Interactive Media revenues for the year increased 29% to $982 million and
operating results decreased $74 million to a loss of $308 million. For the quarter,
revenues increased 19% to $223 million and operating results improved $10 million
to a loss of $94 million.
Lower segment operating results for the year were driven by the inclusion of
a full period of operations for Playdom, which was acquired late in the fourth
quarter of fiscal 2010, partially offset by an improvement at our console game
business. Results for Playdom also included the adverse impact of acquisition
accounting. The improvement at our console game business reflected higher unit
sales and net effective pricing and lower product development costs. The increase in 7
unit sales was driven by the performance of Lego Pirates of the Caribbean, Epic Mickey
and Cars 2 in the current year compared to Toy Story 3 and Split Second in the prior
year while the increase in net effective pricing reflected a mix shift from catalog titles
to new releases. These increases were partially offset by the fees paid to the
developer of Lego Pirates of the Caribbean.
For the quarter, improved operating results were primarily due to lower
marketing expense and product development costs at our console games business,
partially offset by a full-period of results for Playdom.
OTHER FINANCIAL INFORMATION
Corporate and Unallocated Shared Expenses
Corporate and unallocated shared expenses increased $39 million to $459
million for the year and decreased $14 million to $124 million for the quarter. The
increase for the year was primarily due to the timing of expenses and compensation
related costs, while the decrease for the quarter was driven by timing of expenses.
Net Interest Expense
Net interest expense was as follows (in millions):
Year Ended Quarter Ended
October 1,
2011
October 2,
2010
October 1,
2011
October 2,
2010
Interest expense $ (435 ) $ (456 ) $ (111 ) $ (88 )
Interest and investment income 92 47 34 1
Net interest expense $ (343) $ (409 ) $ (77 ) $ (87 )
The decrease in interest expense for the year reflected lower effective interest
rates, while the increase for the quarter was driven by higher average debt balances.
The increase in interest and investment income for the year was driven by
gains on sales of investments. For the quarter, the increase in interest and
investment income was driven by investment impairments recorded in the prioryear quarter. 8
Income Taxes
The effective income tax rate is as follows:
Year Ended Quarter Ended
October 1,
2011
October 2,
2010
October 1,
2011
October 2,
2010
Effective Income Tax Rate 34.6% 34.9% 34.3% 32.6%
The effective tax rate for the year was essentially flat as a charge related to the
health care reform legislation in the prior year and a benefit from an increase in the
domestic production deduction rate were largely offset by a decrease in favorable
adjustments to prior-year tax matters. For the quarter, the increase in the effective
tax rate was primarily due to a decrease in favorable adjustments to prior-year tax
matters, partially offset by the benefit of an increase in the domestic production
deduction rate.
Noncontrolling Interests
Net income attributable to noncontrolling interests for the year increased $101
million to $451 million and for the quarter increased $33 million to $164 million.
These increases were both due to improved operating results at ESPN and Hong
Kong Disneyland Resort. The net income attributable to noncontrolling interests is
determined based on income after royalties, financing costs and income taxes.
Cash Flow
Cash provided by operations and free cash flow were as follows (in millions):
Year Ended
October 1,
2011
October 2,
2010 Change
Cash provided by operations $ 6,994 $ 6,578 $ 416
Investments in parks, resorts and
other property (3,559) (2,110) (1,449)
Free cash flow
(1)
$ 3,435 $ 4,468 $ (1,033)
(1)
Free cash flow is not a financial measure defined by GAAP. See the discussion of non-GAAP financial
measures that follows below.
Cash provided by operating activities for fiscal 2011 increased 6% or $416
million to $7 billion as compared to fiscal 2010. The increase in cash provided by
operations was driven by higher segment operating results, partially offset by higher
contributions to our pension plans and higher income tax payments.
The increase in capital expenditures was primarily due to the final payment
on our new cruise ship, theme park and resort expansions and other new guest 9
offerings at Walt Disney World Resort and Hong Kong Disneyland Resort and the
development of Shanghai Disney Resort.
Capital Expenditures and Depreciation Expense
Investments in parks, resorts and other property were as follows (in millions):
Year Ended
October 1,
2011
October 2,
2010
Media Networks
Cable Networks $ 179 $ 132
Broadcasting 128 92
Total Media Networks 307 224
Parks and Resorts
Domestic 2,294 1,295
International 429 238
Total Parks and Resorts 2,723 1,533
Studio Entertainment 118 102
Consumer Products 115 97
Interactive Media 21 17
Corporate 275 137
Total investments in parks, resorts and other property $ 3,559 $ 2,110
Depreciation expense was as follows (in millions):
Year Ended
October 1,
2011
October 2,
2010
Media Networks
Cable Networks $ 134 $ 118
Broadcasting 95 95
Total Media Networks 229 213
Parks and Resorts
Domestic 842 807
International 323 332
Total Parks and Resorts 1,165 1,139
Studio Entertainment 53 56
Consumer Products 48 33
Interactive Media 16 19
Corporate 148 142
Total depreciation expense $ 1,659 $ 1,602 10
Borrowings
Total borrowings and net borrowings are detailed below (in millions):
October 1,
2011
October 2,
2010 Change
Current portion of borrowings $ 3,055 $ 2,350 $ 705
Long-term borrowings 10,922 10,130 792
Total borrowings 13,977 12,480 1,497
Less: cash and cash equivalents (3,185) (2,722) (463)
Net borrowings
(1)
$ 10,792 $ 9,758 $ 1,034
(1) Net borrowings is a non-GAAP financial measure. See the discussion of non-GAAP financial
measures that follows.
The total borrowings shown above include $2,311 million and $2,586 million
attributable to our consolidated international theme parks as of October 1, 2011 and
October 2, 2010, respectively. Cash and cash equivalents attributable to our
consolidated international theme parks totaled $778 million and $657 million as of
October 1, 2011 and October 2, 2010, respectively.
Non-GAAP Financial Measures
This earnings release presents earnings per share excluding the impact of
certain items, net borrowings, free cash flow, and aggregate segment operating
income, all of which are important financial measures for the Company but are not
financial measures defined by GAAP.
These measures should be reviewed in conjunction with the relevant GAAP
financial measures and are not presented as alternative measures of earnings per
share, borrowings, cash flow or net income as determined in accordance with
GAAP. Net borrowings, free cash flow, and aggregate segment operating income as
we have calculated them may not be comparable to similarly titled measures
reported by other companies.
Earnings per share excluding certain items – The Company uses earnings per share
excluding certain items to evaluate the performance of the Company’s operations
exclusive of certain items that impact the comparability of results from period to
period. The Company believes that information about earnings per share exclusive
of these impacts is useful to investors, particularly where the impact of the excluded
items is significant in relation to reported earnings, because the measure allows for
comparability between periods of the operating performance of the Company’s
business and allows investors to evaluate the impact of these items separately from
the impact of the operations of the business. The following table reconciles reported
earnings per share to earnings per share excluding certain items: 11
Year Ended Quarter Ended
October 1,
2011
October 2,
2010 Change
October 1,
2011
October 2,
2010 Change
Diluted EPS as reported $ 2.52 $ 2.03 24 % $ 0.58 $ 0.43 35 %
Exclude:
Restructuring and impairment charges
(1)
− 0.09 nm − 0.02 nm
Other income
(2)
0.02 (0.05) nm − − nm
Diluted EPS excluding certain items
(3)
$ 2.54 $ 2.07 23 % $ 0.59 $ 0.45 31 %
(1) Restructuring and impairment charges for the current quarter totaled $9 million primarily for radio FCC
license impairments. Restructuring and impairment charges for the prior-year quarter totaled $58 million
and were primarily for severance and related costs and write-offs related to the closure of a studio
production facility.
Restructuring and impairment charges for the current year totaled $55 million and consisted of severance
and facilities costs totaling $39 million, a $10 million impairment charge related to the sale of assets and $6
million for the radio FCC license impairment. The assets that were sold had tax basis significantly in excess
of the book value, resulting in a $44 million tax benefit on the restructuring and impairment charges.
Restructuring and impairment charges for the prior year totaled $270 million and were related to
organizational and cost structure initiatives primarily at our Studio Entertainment and Media Networks
segments. Impairment charges were $132 million and consisted of write-offs of capitalized costs primarily
related to abandoned film projects and the closure of a studio production facility and the ESPN Zones.
Restructuring charges were $138 million and primarily reflected severance costs.
(2) Other income for the current year consists of gains on the sales of Miramax and BASS ($75 million). The tax
effect on these gains exceeded the pretax benefit resulting in a $32 million net loss. Other income for the
prior year consists of gains on the sales of our investments in television services in Europe ($75 million), an
accounting gain related to the acquisition of the Disney Stores in Japan ($22 million), and a gain on the sale
of the Power Rangers property ($43 million).
(3) Diluted EPS excluding certain items may not equal the sum of the column due to rounding.
Net borrowings – The Company believes that information about net borrowings
provides investors with a useful perspective on our financial condition. Net
borrowings reflect the subtraction of cash and cash equivalents from total
borrowings. Since we earn interest income on our cash balances that offsets a
portion of the interest expense we pay on our borrowings, net borrowings can be
used as a measure to gauge net interest expense. In addition, a portion of our cash
and cash equivalents is available to repay outstanding indebtedness when the
indebtedness matures or when other circumstances arise. However, we may not
immediately apply cash and cash equivalents to the reduction of debt, nor do we
expect that we would use all of our available cash and cash equivalents to repay
debt in the ordinary course of business.
Free cash flow – The Company uses free cash flow (cash provided by operations less
investments in parks, resorts and other property), among other measures, to
evaluate the ability of its operations to generate cash that is available for purposes
other than capital expenditures. Management believes that information about free
cash flow provides investors with an important perspective on the cash available to
service debt, make strategic acquisitions and investments and pay dividends or
repurchase shares. 12
Aggregate segment operating income – The Company evaluates the performance of
its operating segments based on segment operating income, and management uses
aggregate segment operating income as a measure of the performance of operating
businesses separate from non-operating factors. The Company believes that
information about aggregate segment operating income assists investors by allowing
them to evaluate changes in the operating results of the Company’s portfolio of
businesses separate from non-operational factors that affect net income, thus
providing separate insight into both operations and the other factors that affect
reported results.
A reconciliation of segment operating income to net income is as follows (in
millions):
Year Ended Quarter Ended
October 1,
2011
October 2,
2010
October 1,
2011
October 2,
2010
Segment operating income $ 8,825 $ 7,586 $ 2,113 $ 1,717
Corporate and unallocated shared expenses (459) (420) (124) (138)
Restructuring and impairment charges (55) (270) (9) (58)
Other income 75 140 − −
Net interest expense (343) (409) (77) (87)
Income before income taxes 8,043 6,627 1,903 1,434
Income taxes (2,785 ) (2,314 ) (652) (468)
Net income $ 5,258 $ 4,313 $ 1,251 $ 966
CONFERENCE CALL INFORMATION
In conjunction with this release, The Walt Disney Company will host a
conference call today, November 10, 2011, at 5:00 PM EST/2:00 PM PST via a live
Webcast. To access the Webcast go to www.disney.com/investors. The discussion
will be available via replay through November 24, 2011 at 7:00 PM EST/4:00 PM
PST. 13
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 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;
expenses of providing medical and pension benefits;
demand for our products; 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 2, 2010 under Item 1A, “Risk Factors,” and subsequent
reports. 14
The Walt Disney Company
CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)
Year Ended Quarter Ended
October 1,
2011
October 2,
2010
October 1,
2011
October 2,
2010
Revenues $ 40,893 $ 38,063 $ 10,425 $ 9,742
Costs and expenses (33,112) (31,337) (8,558) (8,221)
Restructuring and impairment charges (55) (270) (9) (58)
Other income 75 140 − −
Net interest expense (343) (409) (77) (87)
Equity in the income of investees 585 440 122 58
Income before income taxes 8,043 6,627 1,903 1,434
Income taxes (2,785) (2,314) (652) (468)
Net income 5,258 4,313 1,251 966
Less: Net income attributable to
noncontrolling interests (451) (350)
(164)
(131)
Net income attributable to The Walt Disney
Company (Disney) $ 4,807 $ 3,963 $ 1,087
$ 835
Earnings per share attributable to Disney:
Diluted $ 2.52 $ 2.03 $ 0.58 $ 0.43
Basic $ 2.56 $ 2.07 $ 0.59 $ 0.44
Weighted average number of common and
common equivalent shares outstanding:
Diluted 1,909 1,948 1,864 1,941
Basic 1,878 1,915 1,840 1,90915
The Walt Disney Company
CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
October 1,
2011
October 2,
2010
ASSETS
Current assets
Cash and cash equivalents $ 3,185 $ 2,722
Receivables 6,182 5,784
Inventories 1,595 1,442
Television costs 674 678
Deferred income taxes 1,487 1,018
Other current assets 634 581
Total current assets 13,757 12,225
Film and television costs 4,357 4,773
Investments 2,435 2,513
Parks, resorts and other property, at cost
Attractions, buildings and equipment 35,515 32,875
Accumulated depreciation (19,572) (18,373 )
15,943 14,502
Projects in progress 2,625 2,180
Land 1,127 1,124
Total parks, resorts and other property, at cost 19,695 17,806
Intangible assets, net 5,121 5,081
Goodwill 24,145 24,100
Other assets 2,614 2,708
$ 72,124 $ 69,206
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities $ 6,362 $ 6,109
Current portion of borrowings 3,055 2,350
Unearned royalties and other advances 2,671 2,541
Total current liabilities 12,088 11,000
Borrowings 10,922 10,130
Deferred income taxes 2,866 2,630
Other long-term liabilities 6,795 6,104
Commitments and contingencies
Disney Shareholders’ equity
Preferred stock, $.01 par value
Authorized – 100 million shares, Issued – none — —
Common stock, $.01 par value
Authorized – 4.6 billion shares, Issued – 2.7 billion shares 30,296 28,736
Retained earnings 38,375 34,327
Accumulated other comprehensive loss (2,630) (1,881 )
66,041 61,182
Treasury stock, at cost, 937.8 million shares at October 1, 2011
and 803.1 million shares at October 2, 2010 (28,656) (23,663 )
Total Disney Shareholders’ equity 37,385 37,519
Noncontrolling interests 2,068 1,823
Total equity 39,453 39,342
$ 72,124 $ 69,20616
The Walt Disney Company
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
Year Ended
October 1,
2011
October 2,
2010
OPERATING ACTIVITIES
Net income $ 5,258 $ 4,313
Depreciation and amortization 1,841 1,713
Gains on dispositions (75) (118)
Deferred income taxes 127 133
Equity in the income of investees (585) (440)
Cash distributions received from equity investees 608 473
Net change in film and television costs 332 238
Equity-based compensation 423 391
Impairment charges 16 132
Other 188 9
Changes in operating assets and liabilities:
Receivables (518) (686)
Inventories (199) (127)
Other assets (189) 42
Accounts payable and other accrued liabilities (367) 649
Income taxes 134 (144)
Cash provided by operations 6,994 6,578
INVESTING ACTIVITIES
Investments in parks, resorts and other property (3,559) (2,110)
Proceeds from dispositions 564 170
Acquisitions (184) (2,493)
Other (107) (90)
Cash used in investing activities (3,286) (4,523)
FINANCING ACTIVITIES
Commercial paper borrowings, net 393 1,190
Borrowings 2,350 −
Reduction of borrowings (1,096) (1,371)
Dividends (756) (653)
Repurchases of common stock (4,993) (2,669)
Proceeds from exercise of stock options 1,128 1,133
Other (259) (293)
Cash used in financing activities (3,233) (2,663)
Impact of exchange rates on cash and cash equivalents (12) (87)
Increase/(decrease) in cash and cash equivalents 463 (695)
Cash and cash equivalents, beginning of year 2,722 3,417
Cash and cash equivalents, end of year $ 3,185 $ 2,72217
