The Walt Disney Company (NYSE: DIS) today reported earnings for
its fourth quarter and fiscal year ended September 30, 2017.
Diluted earnings per share (EPS) for the fourth quarter increased
3% from $1.10 in the prior-year quarter to $1.13 in the current
quarter. Excluding certain items affecting comparability(1), EPS
for the quarter decreased 3% from $1.10 in the prior-year quarter
to $1.07. Diluted EPS for the year decreased from $5.73 in the
prior year to $5.69. Excluding certain items affecting
comparability(1), EPS for the year decreased from $5.72 in the
prior year to $5.70.
“No other entertainment company is better equipped to navigate
the ever-evolving media landscape, thanks to our unparalleled
collection of brands and franchises and our ability to leverage IP
across our entire company,” said Robert A. Iger, Chairman and Chief
Executive Officer, The Walt Disney Company. “We look forward to
launching our first direct-to-consumer streaming service in the new
year, and we will continue to invest for the future and take the
smart risks required to deliver shareholder value.”
The following table summarizes the fourth quarter and full year
results for fiscal 2017 and 2016 (in millions, except per share
amounts):
Quarter Ended Year Ended
Sept. 30,2017
Oct. 1,2016
Change
Sept. 30,2017
Oct. 1,2016
Change Revenues $ 12,779 $ 13,142 (3 ) % $ 55,137 $ 55,632 (1 )%
Segment operating income(1) $ 2,812 $ 3,176 (11 ) % $ 14,775 $
15,721 (6 )% Net income(2)(3) $ 1,747 $ 1,771 (1 ) % $ 8,980 $
9,391 (4 )% Diluted EPS(2)(3) $ 1.13 $ 1.10 3 ) % $ 5.69 $ 5.73 (1
)% EPS excluding certain items affecting comparability(1)(3) $ 1.07
$ 1.10 (3 ) % $ 5.70 $ 5.72 — % Cash provided by operations $ 3,586
$ 3,707 (3 ) % $ 12,343 $ 13,136 (6 )% Free cash flow(1) $ 2,691 $
2,625 3 ) % $ 8,720 $ 8,363 4 %
(1) EPS excluding certain items affecting comparability, segment
operating income and free cash flow are non-GAAP financial
measures. Certain items affecting comparability during the fourth
quarter of fiscal 2017 included a non-cash net gain in connection
with the acquisition of a controlling interest in BAMTech LLC ($255
million) and restructuring and impairment charges ($98 million).(2)
Reflects amounts attributable to shareholders of The Walt Disney
Company, i.e. after deduction of noncontrolling interests.(3)
Includes an income tax benefit related to the adoption of new
accounting rules for the tax effects of employee share-based
awards, which requires that excess tax benefits or tax deficiencies
on employee share-based awards be included in “Income taxes” in the
Condensed Consolidated Statement of Income. These amounts were
previously recorded in “Common stock” in the Condensed Consolidated
Balance Sheet. An excess tax benefit arises when the value of an
employee share-based award on the exercise or vesting date is
higher than the fair value on the grant date. A tax deficiency
arises when the value on the exercise or vesting date is lower than
the grant date fair value.
SEGMENT RESULTS
The following table summarizes the fourth quarter and full year
segment operating results for fiscal 2017 and 2016 (in
millions):
Quarter Ended Year Ended
Sept. 30,2017
Oct. 1,2016 Change
Sept. 30,2017
Oct. 1,2016
Change Revenues: Media Networks $ 5,465 $ 5,658 (3 )% $ 23,510 $
23,689 (1 )% Parks and Resorts 4,667 4,386 6 % 18,415 16,974 8 %
Studio Entertainment 1,432 1,811 (21 )% 8,379 9,441 (11 )% Consumer
Products & Interactive Media 1,215 1,287 (6 )%
4,833 5,528 (13 )% $ 12,779 $ 13,142 (3
)% $ 55,137 $ 55,632 (1 )% Segment operating income:
Media Networks $ 1,475 $ 1,672 (12 )% $ 6,902 $ 7,755 (11 )% Parks
and Resorts 746 699 7 % 3,774 3,298 14 % Studio Entertainment 218
381 (43 )% 2,355 2,703 (13 )% Consumer Products & Interactive
Media 373 424 (12 )% 1,744 1,965 (11 )%
$ 2,812 $ 3,176 (11 )% $ 14,775 $ 15,721
(6 )%
DISCUSSION OF FULL YEAR CONSOLIDATED RESULTS
For the year, the decrease in diluted EPS was due to lower
segment operating income and higher net interest expense. These
decreases were partially offset by a decrease in weighted average
shares outstanding as a result of our share repurchase program and
a lower effective income tax rate due to a lower rate on foreign
earnings and a favorable impact from the adoption of a new
accounting pronouncement for the tax effects of employee
share-based awards ($125 million). The increase in net interest
expense was due to higher average debt balances, lower capitalized
interest and higher average interest rates.
Lower segment operating income was due to decreases at Media
Networks, Studio Entertainment and Consumer Products &
Interactive Media, partially offset by growth at Parks and Resorts.
The decrease at Media Networks was due to contractual rate
increases for sports programming, lower advertising revenue and
higher losses from our equity investments in BAMTech LLC (BAMTech)
and Hulu LLC (Hulu), partially offset by higher affiliate revenue.
Lower Studio Entertainment and Consumer Products & Interactive
Media results were due to the exceptional performance of the Star
Wars franchise in the prior year, which benefited all of our key
distribution channels. Growth at Parks and Resorts was due to
increases at our international and domestic operations.
Internationally, we benefited from a full year of operations at
Shanghai Disney Resort and higher attendance and guest spending at
Disneyland Paris driven by the 25th Anniversary celebration in the
current year. The increase at our domestic operations was due to
higher guest spending for admissions to our theme parks and
sailings on our cruise ships and higher attendance, partially
offset by cost inflation and higher expenses for operations support
and new guest offerings. Growth at our domestic operations was
adversely impacted by Hurricane Irma and Hurricane Matthew in the
current year.
DISCUSSION OF FOURTH QUARTER SEGMENT RESULTS
Media Networks
Media Networks revenues for the quarter decreased 3% to $5.5
billion, and segment operating income decreased 12% to $1.5
billion. The following table provides further detail of the Media
Networks results (in millions):
Quarter Ended Year Ended
Sept. 30,2017
Oct. 1,2016
Change
Sept. 30,2017
Oct. 1,2016
Change Revenues: Cable Networks $ 3,951 $ 3,956 — % $ 16,527 $
16,632 (1 )% Broadcasting 1,514 1,702 (11 )% 6,983
7,057 (1 )% $ 5,465 $ 5,658 (3 )% $
23,510 $ 23,689 (1 )% Segment operating income: Cable
Networks $ 1,236 $ 1,251 (1 )% $ 5,353 $ 5,965 (10 )% Broadcasting
229 271 (15 )% 1,205 1,193 1 % Equity in the income of investees 10
150 (93 )% 344 597 (42 )% $ 1,475
$ 1,672 (12 )% $ 6,902 $ 7,755 (11 )%
Cable Networks
Operating income at Cable Networks decreased $15 million to $1.2
billion for the quarter due to a decrease at Freeform, partially
offset by growth at the Disney Channels due to higher program
sales.
The decrease at Freeform was driven by lower advertising revenue
primarily due to a decrease in average viewership.
Results at ESPN were comparable to the prior-year quarter as
higher programming costs and lower advertising revenue were offset
by higher affiliate revenue. The programming cost increase was
driven by contractual rate increases for NFL, college sports and
MLB, partially offset by the absence of costs for Olympics
programming internationally and the World Cup of Hockey. Lower
advertising revenue was due to a decrease in average viewership and
lower units delivered, partially offset by higher rates. Affiliate
revenue growth resulted from contractual rate increases, partially
offset by a decline in subscribers.
Broadcasting
Operating income at Broadcasting decreased $42 million to $229
million for the quarter driven by lower advertising revenue and a
decrease in program sales, partially offset by an increase in
affiliate revenue, due to rate increases, and lower programming
costs.
The decrease in advertising revenue reflected lower network
impressions, lower political advertising at our owned television
stations and the absence of the Emmy Awards show, partially offset
by higher network rates. Lower network impressions were driven by a
decrease in average viewership, partially offset by an increase in
units delivered. The decrease in program sales was primarily due to
fewer significant titles in the current quarter compared to the
prior-year quarter. The current quarter included sales of The
Punisher and Designated Survivor, whereas the prior-year quarter
included sales of Luke Cage, Castle, Golden Girls and Quantico.
Programming costs reflected the benefit of one less week of new
programming due to the timing of our fall season launch and the
absence of costs for the Emmy Awards, partially offset by higher
write-downs.
Equity in the Income of Investees
Equity in the income of investees decreased to $10 million from
$150 million due to higher losses from BAMTech and Hulu and lower
income at A+E Television Networks (A+E). The BAMTech results
reflected a valuation adjustment to sports programming rights that
were prepaid prior to our acquisition of BAMTech and increased
costs for technology platform investments. The higher loss at Hulu
was due to higher labor, marketing and distribution costs,
partially offset by growth in subscription and advertising revenue.
The decrease at A +E was due to higher marketing costs, lower
program sales and lower advertising revenue.
Parks and Resorts
Parks and Resorts revenues for the quarter increased 6% to $4.7
billion, and segment operating income increased 7% to $746 million.
Operating income growth for the quarter was due to an increase at
our international operations, partially offset by a decrease at our
domestic operations, which were unfavorably impacted by Hurricane
Irma. As a result of the hurricane, Walt Disney World Resort was
closed for two days, and we canceled three cruise itineraries and
shortened two others.
Results at our international operations were due to growth at
Disneyland Paris and Shanghai Disney Resort. The improvement at
Disneyland Paris reflected increases in attendance, guest spending
and occupied room nights, partially offset by higher costs, driven
by the 25th Anniversary celebration, and a loss from its 50% joint
venture interest in Villages Nature. Guest spending growth was
primarily due to higher average ticket prices and food and beverage
spending. The increase at Shanghai Disney Resort was due to
attendance growth and lower marketing costs, partially offset by
lower average ticket prices. The decrease in marketing costs
reflected costs associated with the grand opening of Shanghai
Disney Resort in the prior year.
The decrease in operating income at our domestic operations was
driven by lower results at Walt Disney World Resort, partially
offset by an increase at our cruise line, growth at Disneyland
Resort and higher sales of vacation club units.
Lower results at Walt Disney World Resort were driven by higher
costs and fewer occupied room nights, partially offset by growth in
guest spending and attendance, although both were negatively
impacted by Hurricane Irma. Higher costs were primarily due to
increases in labor and employee benefits, depreciation and
marketing. Guest spending growth was due to increased food and
beverage spending and higher average daily hotel room rates.
Available hotel room nights were lower due to refurbishments and
conversions to vacation club units.
Growth at our cruise line resulted from higher average ticket
prices.
Higher results at Disneyland Resort were due to increases in
guest spending and attendance, partially offset by higher costs for
new guest offerings and marketing. The increase in guest spending
was primarily due to higher average ticket prices.
Studio Entertainment
Studio Entertainment revenues for the quarter decreased 21% to
$1.4 billion and segment operating income decreased $163 million to
$218 million. The decrease in operating income was due to higher
film cost impairments, lower TV/ SVOD distribution results and a
lower revenue share from the Consumer Products & Interactive
Media segment. Home entertainment and theatrical distribution
results were comparable to the prior-year quarter. However,
theatrical distribution revenues declined primarily due to the
performance of Cars 3 in the current quarter compared to Finding
Dory in the prior-year quarter.
The increase in film cost impairments resulted from a write-off
in the current quarter of an animated title that was in
development, which we do not plan to release.
Lower TV/SVOD distribution results were due to a domestic sale
of Star Wars Classic titles in the prior-year quarter.
The decrease in revenue share with the Consumer Products &
Interactive Media segment was primarily due to stronger performance
of merchandise based on Star Wars, Frozen and Finding Dory in the
prior-year quarter, partially offset by Cars merchandise in the
current quarter.
Home entertainment results in the current quarter included the
release of Guardians of the Galaxy Vol. 2 and the continuing
performances of Beauty and the Beast and Moana, whereas the
prior-year quarter included the release of Captain America: Civil
War and The Jungle Book and the continuing performance of
Zootopia.
Theatrical distribution results were comparable to the
prior-year quarter as the continuing performance of Pirates of the
Caribbean: Dead Men Tell No Tales and Cars 3 in the current quarter
were offset by the continuing performance Finding Dory and the
release of Pete’s Dragon in the prior-year quarter.
Consumer Products & Interactive
Media
Consumer Products & Interactive Media revenues for the
quarter decreased 6% to $1.2 billion, and segment operating income
decreased 12% to $373 million due to a decrease at our merchandise
licensing business.
Lower results at our merchandise licensing business were
primarily due to a decrease in earned licensing revenues, higher
third-party royalty expense and an unfavorable impact from foreign
currency translation. Lower earned licensing revenues were due to
decreased sales of merchandise based on Star Wars, Frozen and
Finding Dory, partially offset by increases from merchandise based
on Cars and Spider-Man.
OTHER QUARTERLY FINANCIAL INFORMATION
Corporate and Unallocated Shared
Expenses
Corporate and unallocated shared expenses increased $7 million
to $190 million for the quarter due to higher charitable
contributions including contributions to disaster relief
efforts.
Interest Expense, net
Interest expense, net was as follows (in millions):
Quarter Ended
Sept. 30,2017
Oct. 1,2016
Change Interest expense $ (137 ) $ (119 ) (15 )% Interest and
investment income 52 20 >100 % Interest expense,
net $ (85 ) $ (99 ) 14 %
The increase in interest expense for the quarter was due to
higher average debt balances and an increase in average interest
rates.
The increase in interest and investment income for the quarter
was due to gains on investments in the current quarter.
Income Taxes
The effective income tax rate was as follows:
Quarter Ended
Sept. 30,2017
Oct. 1,2016
Change Effective income tax rate 30.8 % 34.3 % 3.5 ppt
The decrease in the effective income tax rate for the quarter
was due to the impact of a change in our full year effective tax
rate. The estimated full year effective rate is used to determine
the quarterly income tax provision and is adjusted each quarter
based on information available at the end of that quarter. The
impact was favorable in the current quarter whereas it was
unfavorable in the prior-year quarter. The change in our full year
effective tax rate in both years was driven by a change in the
estimated rate on foreign earnings. The decrease was partially
offset by a benefit in the prior-year quarter from the favorable
resolution of certain tax matters.
FULL YEAR CASH FLOW STATEMENT INFORMATION
Cash Flow
Cash provided by operations and free cash flow were as follows
(in millions):
Year Ended
Sept. 30,2017
Oct. 1,2016
Change Cash provided by operations $ 12,343 $ 13,136 $ (793 )
Investments in parks, resorts and other property (3,623 ) (4,773 )
1,150 Free cash flow(1) $ 8,720 $ 8,363 $ 357
(1) Free cash flow is not a financial measure defined by GAAP.
See the discussion on pages 8 through 10.
Cash provided by operations for fiscal 2017 decreased 6% or $0.8
billion to $12.3 billion compared to fiscal 2016. The decrease in
cash provided by operations was due to higher film and television
production spending, lower segment operating results and higher
pension plan contributions, partially offset by lower tax
payments.
Cash flow information for fiscal 2016 has been restated to
reflect the adoption of two new accounting standards during fiscal
2017. One standard requires cash paid for shares withheld to
satisfy employee payroll tax obligations related to equity based
compensation vestings to be classified as a financing activity
instead of as an operating activity. The other standard requires
restricted cash to be reported as part of cash and cash equivalents
in the Consolidated Statement of Cash Flows, and thus the change in
restricted cash will no longer be reported as an activity in the
statement of cash flows. As a result of adopting these standards,
fiscal 2016 cash provided by operations was reduced by $77
million.
Capital Expenditures and Depreciation
Expense
Investments in parks, resorts and other property were as follows
(in millions):
Year Ended
Sept. 30,2017
Oct. 1,2016
Media Networks Cable Networks $ 75 $ 86 Broadcasting 64 80
Total Media Networks 139 166 Parks and Resorts Domestic
2,375 2,180 International 816 2,035 Total Parks and Resorts
3,191 4,215 Studio Entertainment 85 86 Consumer Products
& Interactive Media 30 53 Corporate 178 253 Total
investments in parks, resorts and other property $ 3,623 $
4,773
Capital expenditures decreased from $4.8 billion to $3.6 billion
driven by lower spending at Shanghai Disney Resort and Hong Kong
Disneyland Resort, partially offset by higher spending at our
domestic parks.
Depreciation expense was as follows (in millions):
Year Ended
Sept. 30,2017
Oct. 1,2016
Media Networks Cable Networks $ 137 $ 147 Broadcasting 88 90
Total Media Networks 225 237 Parks and Resorts Domestic
1,336 1,273 International 660 445 Total Parks and Resorts
1,996 1,718 Studio Entertainment 50 51 Consumer Products
& Interactive Media 63 63 Corporate 252 251 Total
depreciation expense $ 2,586 $ 2,320
Non-GAAP Financial
Measures
This earnings release presents EPS excluding the impact of
certain items affecting comparability, 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 EPS, cash flow or net income as determined
in accordance with GAAP. EPS excluding certain items affecting
comparability, 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.
EPS excluding certain items affecting
comparability – The Company uses EPS excluding certain items
to evaluate the performance of the Company’s operations exclusive
of certain items affecting comparability of results from period to
period. The Company believes that information about EPS exclusive
of these items 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 EPS to EPS excluding
certain items affecting comparability for the fourth quarter:
(in millions except EPS)
Pre-TaxIncome/Loss
TaxBenefit/Expense (1)
After-TaxIncome/Loss (2)
EPS (3)
EPSChange vs.prior yearperiod
Quarter Ended September 30, 2017: As reported $ 2,694 $ (829 ) $
1,865 $ 1.13 3 % Exclude(4): Gain related to the acquisition of
BAMTech (255 ) 93 (162 ) (0.10 ) Restructuring and impairment
charges 98 (31 ) 67 0.04 Excluding certain
items affecting comparability $ 2,537 $ (767 ) $ 1,770
$ 1.07 (3 )% Quarter Ended October 1, 2016: As
reported $ 2,881 $ (989 ) $ 1,892 $ 1.10 Exclude(4): Infinity
Charge (18 ) 7 (11 ) (0.01 ) Restructuring and impairment charges
31 (11 ) 20 0.01 Excluding certain items
affecting comparability $ 2,894 $ (993 ) $ 1,901 $
1.10
(1) Tax benefit/expense adjustments are determined using the tax
rate applicable to the individual item affecting comparability.(2)
Before noncontrolling interest share.(3) Net of noncontrolling
interest share, where applicable. Total may not equal the sum of
the column due to rounding.(4) Items affecting comparability during
the fourth quarter of fiscal 2017 include a non-cash net gain in
connection with the acquisition of a controlling interest in
BAMTech ($255 million), which was recorded in “Other income, net”
in the Condensed Consolidated Statements of Income, and
restructuring and impairment charges ($98 million). In the
prior-year fourth quarter, the Company recorded a favorable
adjustment to charges taken in the second quarter of the prior year
in connection with the discontinuation of our Infinity console game
business (Infinity Charge) ($18 million) and restructuring and
impairment charges ($31 million).
The following table reconciles reported EPS to EPS excluding
certain items affecting comparability for the year:
(in millions except EPS)
Pre-TaxIncome/Loss
TaxBenefit/Expense (1)
After-TaxIncome/
Loss (2)
EPS (3)
EPSChange vs.prior yearperiod
Year Ended September 30, 2017: As reported $ 13,788 $ (4,422 ) $
9,366 $ 5.69 (1 )% Exclude(4): Gain related to the acquisition of
BAMTech (255 ) 93 (162 ) (0.10 ) Settlement of litigation 177 (65 )
112 0.07 Restructuring and impairment charges 98 (31 ) 67
0.04 Excluding certain items affecting comparability
$ 13,808 $ (4,425 ) $ 9,383 $ 5.70 — %
Year Ended October 1, 2016: As reported $ 14,868 $ (5,078 ) $ 9,790
$ 5.73 Exclude(4): Vice Gain (332 ) 122 (210 ) (0.13 ) Infinity
Charge 129 (47 ) 82 0.05 Restructuring and impairment charges 156
(43 ) 113 0.07 Excluding certain items
affecting comparability $ 14,821 $ (5,046 ) $ 9,775 $
5.72
(1) Tax benefit/expense adjustments are determined using the tax
rate applicable to the individual item affecting comparability.(2)
Before noncontrolling interest share.(3) Net of noncontrolling
interest share, where applicable. Total may not equal the sum of
the column due to rounding.(4) For the year ended September 30,
2017, items affecting comparability included a charge, net of
committed insurance recoveries, in connection with the settlement
of litigation ($177 million), restructuring and impairment charges
($98 million) and a non-cash net gain in connection with the
acquisition of a controlling interest in BAMTech ($255 million),
which was recorded in “Other income, net” in the Condensed
Consolidated Statements of Income. In the prior year, the Company
recorded the Company’s share of a net gain recognized by A+E in
connection with their acquisition of an interest in Vice Group
Holding, Inc. (Vice Gain) ($332 million), the Infinity Charge ($129
million) and restructuring and impairment charges ($156
million).
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
obligations, make strategic acquisitions and investments and pay
dividends or repurchase shares.
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):
Quarter Ended Year Ended
Sept. 30,2017
Oct. 1,2016
Sept. 30,2017
Oct. 1,2016
Segment operating income $ 2,812 $ 3,176 $ 14,775 $ 15,721
Corporate and unallocated shared expenses (190 ) (183 ) (582 ) (640
) Restructuring and impairment charges (98 ) (31 ) (98 ) (156 )
Interest expense, net (85 ) (99 ) (385 ) (260 ) Other income, net
255 — 78 — Vice Gain — — — 332 Infinity Charge — 18 —
(129 ) Income before income taxes 2,694 2,881 13,788 14,868
Income taxes (829 ) (989 ) (4,422 ) (5,078 ) Net income $ 1,865
$ 1,892 $ 9,366 $ 9,790
CONFERENCE CALL INFORMATION
In conjunction with this release, The Walt Disney Company will
host a conference call today, November 9, 2017, at 4:30 PM
EST/1:30 PM PST 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;
- income tax expense; 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 Year Ended
September 30,2017 October 1,2016 September 30,2017
October 1,2016 Revenues $ 12,779 $ 13,142 $ 55,137 $ 55,632 Costs
and expenses (10,150 ) (10,281 ) (41,264 ) (41,274 ) Restructuring
and impairment charges (98 ) (31 ) (98 ) (156 ) Other income, net
255 — 78 — Interest expense, net (85 ) (99 ) (385 ) (260 ) Equity
in the income (loss) of investees, net (7 ) 150 320
926 Income before income taxes 2,694 2,881 13,788 14,868
Income taxes (829 ) (989 ) (4,422 ) (5,078 ) Net income 1,865 1,892
9,366 9,790 Less: Net income attributable to noncontrolling
interests (118 ) (121 ) (386 ) (399 ) Net income attributable to
The Walt Disney Company (Disney) $ 1,747 $ 1,771 $
8,980 $ 9,391 Earnings per share attributable
to Disney: Diluted $ 1.13 $ 1.10 $ 5.69 $ 5.73
Basic $ 1.14 $ 1.10 $ 5.73 $ 5.76
Weighted average number of common and common
equivalent shares outstanding: Diluted 1,547 1,615
1,578 1,639 Basic 1,538 1,606 1,568
1,629 Dividends declared per share $ —
$ — $ 1.56 $ 1.42
THE WALT
DISNEY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
September 30,2017 October 1,2016 ASSETS Current assets Cash
and cash equivalents $ 4,017 $ 4,610 Receivables 8,633 9,065
Inventories 1,373 1,390 Television costs and advances 1,278 1,208
Other current assets 588 693 Total current assets
15,889 16,966 Film and television costs 7,481 6,339 Investments
3,202 4,280 Parks, resorts and other property Attractions,
buildings and equipment 54,043 50,270 Accumulated depreciation
(29,037 ) (26,849 ) 25,006 23,421 Projects in progress 2,145 2,684
Land 1,255 1,244 28,406 27,349 Intangible assets, net
6,995 6,949 Goodwill 31,426 27,810 Other assets 2,390 2,340
Total assets $ 95,789 $ 92,033
LIABILITIES AND EQUITY Current liabilities Accounts payable and
other accrued liabilities $ 8,855 $ 9,130 Current portion of
borrowings 6,172 3,687 Deferred revenue and other 4,568
4,025 Total current liabilities 19,595 16,842
Borrowings 19,119 16,483 Deferred income taxes 4,480 3,679 Other
long-term liabilities 6,443 7,706 Commitments and contingencies
Redeemable noncontrolling interest 1,148 — Equity Preferred stock,
$.01 par valueAuthorized – 100 million shares, Issued – none — —
Common stock, $.01 par value, Authorized – 4.6 billion
shares,Issued – 2.9 billion shares 36,248 35,859 Retained earnings
72,606 66,088 Accumulated other comprehensive loss (3,528 ) (3,979
) 105,326 97,968 Treasury stock, at cost, 1.4 billion shares at
September 30, 2017 and 1.3 billion shares at October 1, 2016
(64,011 ) (54,703 ) Total Disney Shareholders’ equity 41,315 43,265
Noncontrolling interests 3,689 4,058 Total equity
45,004 47,323 Total liabilities and equity $ 95,789
$ 92,033
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
Year Ended September 30,2017 October 1,2016 OPERATING
ACTIVITIES Net income $ 9,366 $ 9,790 Depreciation and amortization
2,782 2,527 Gains on acquisitions and sales of investments (289 )
(26 ) Deferred income taxes 334 1,214 Equity in the income of
investees (320 ) (926 ) Cash distributions received from equity
investees 788 799 Net change in film and television costs and
advances (1,075 ) (101 ) Equity-based compensation 364 393 Other
503 674 Changes in operating assets and liabilities: Receivables
107 (393 ) Inventories (5 ) 186 Other assets (52 ) (443 ) Accounts
payable and other accrued liabilities (368 ) 40 Income taxes 208
(598 ) Cash provided by operations 12,343 13,136
INVESTING ACTIVITIES Investments in parks, resorts
and other property (3,623 ) (4,773 ) Acquisitions (417 ) (850 )
Other (71 ) (135 ) Cash used in investing activities (4,111 )
(5,758 ) FINANCING ACTIVITIES Commercial paper
borrowings/(repayments), net 1,247 (920 ) Borrowings 4,820 6,065
Reduction of borrowings (2,364 ) (2,205 ) Dividends (2,445 ) (2,313
) Repurchases of common stock (9,368 ) (7,499 ) Proceeds from
exercise of stock options 276 259 Other (1,125 ) (607 ) Cash used
in financing activities (8,959 ) (7,220 ) Impact of exchange
rates on cash and cash equivalents 31 (123 ) Change
in cash and cash equivalents and restricted cash (696 ) 35 Cash and
cash equivalents and restricted cash, beginning of year 4,760
4,725 Total cash and cash equivalents and restricted
cash $ 4,064 $ 4,760
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171109006572/en/
The Walt Disney CompanyZenia MuchaCorporate
Communications818-560-5300orLowell SingerInvestor
Relations818-560-6601
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