The Walt Disney Company (NYSE: DIS) today reported quarterly
earnings for its third fiscal quarter ended July 1, 2017.
Diluted earnings per share (EPS) for the quarter decreased 5% to
$1.51 from $1.59 in the prior-year quarter. Excluding certain items
affecting comparability(1), EPS for the quarter decreased 2% to
$1.58 from $1.62 in the prior-year quarter. Diluted EPS for the
nine months ended July 1, 2017 decreased to $4.55 from $4.63.
Excluding certain items affecting comparability(1), EPS for the
nine months increased to $4.63 from $4.61.
“Today we announced a strategic shift in the way we distribute
our content. The media landscape is increasingly defined by
direct relationships between content creators and consumers, and
our control of BAMTech’s full array of innovative
technology will give us the power to forge those
connections, along with the flexibility to quickly adapt to shifts
in the market,” said Robert A. Iger, Chairman and Chief Executive
Officer, The Walt Disney Company. “This acquisition and the
launch of our direct-to-consumer services mark an entirely new
growth strategy for the Company, one that takes advantage of the
incredible opportunity that changing technology provides us to
leverage the strength of our great brands.”
“Our results for the quarter reflect the underlying strength of
our brands and franchises, and our continued investment in
high-quality content. Our ability to successfully execute on our
core strategy, coupled with our plans for new direct-to-consumer
offerings, give us continued confidence in our ability to drive
shareholder value,” said Christine M. McCarthy, Senior Executive
Vice President and Chief Financial Officer, The Walt Disney
Company.
The following table summarizes the third quarter and nine-month
results for fiscal 2017 and 2016 (in millions, except per share
amounts):
Quarter Ended Nine Months Ended July
1,2017 July 2,2016 Change July 1,2017 July 2,2016
Change Revenues $ 14,238 $ 14,277 — % $ 42,358 $ 42,490 — % Segment
operating income (1) $ 4,011 $ 4,456 (10 )% $ 11,963 $ 12,545 (5 )%
Net income (2)(3) $ 2,366 $ 2,597 (9 )% $ 7,233 $ 7,620 (5 )%
Diluted EPS (2)(3) $ 1.51 $ 1.59 (5 )% $ 4.55 $ 4.63 (2 )% EPS
excluding certain items affecting comparability (1)(3) $ 1.58 $
1.62 (2 )% $ 4.63 $ 4.61 — % Cash provided by operations $ 4,133 $
3,630 14 % $ 8,831 $ 9,615 (8 )% Free cash flow (1) $ 3,328 $ 2,495
33 % $ 6,103 $ 5,924 3 %
(1) EPS excluding certain items affecting comparability, segment
operating income and free cash flow are non-GAAP financial
measures. See the discussion on pages 7 through 9. For the quarter
and nine month periods ended July 1, 2017, items affecting
comparability related to a charge, net of committed insurance
recoveries, incurred in connection with the settlement of
litigation ($177 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 (see further discussion under Income
Taxes on page 5).
SEGMENT RESULTS
The following table summarizes the third quarter and nine-month
segment operating results for fiscal 2017 and 2016 (in
millions):
Quarter Ended Nine Months Ended July
1,2017 July 2,2016 Change July 1,2017 July 2,2016
Change Revenues: Media Networks $ 5,866 $ 5,906 (1 )% $ 18,045 $
18,031 — % Parks and Resorts 4,894 4,379 12 % 13,748 12,588 9 %
Studio Entertainment 2,393 2,847 (16 )% 6,947 7,630 (9 )% Consumer
Products & Interactive Media 1,085 1,145 (5 )%
3,618 4,241 (15 )% $ 14,238 $ 14,277 —
% $ 42,358 $ 42,490 — % Segment operating income:
Media Networks $ 1,842 $ 2,372 (22 )% $ 5,427 $ 6,083 (11 )% Parks
and Resorts 1,168 994 18 % 3,028 2,599 17 % Studio Entertainment
639 766 (17 )% 2,137 2,322 (8 )% Consumer Products &
Interactive Media 362 324 12 % 1,371 1,541
(11 )% $ 4,011 $ 4,456 (10 )% $ 11,963
$ 12,545 (5 )%
Media Networks
Media Networks revenues for the quarter decreased 1% to $5.9
billion and segment operating income decreased 22% to $1.8
billion.
The following table provides further detail of the Media
Networks results (in millions):
Quarter Ended Nine Months Ended July
1,2017 July 2,2016 Change July 1,2017 July 2,2016
Change Revenues: Cable Networks $ 4,086 $ 4,200 (3 )% $
12,576 $ 12,676 (1 )% Broadcasting 1,780 1,706 4 %
5,469 5,355 2 % $ 5,866 $ 5,906 (1 )% $
18,045 $ 18,031 — % Segment operating income: Cable
Networks $ 1,462 $ 1,893 (23 )% $ 4,117 $ 4,714 (13 )% Broadcasting
253 325 (22 )% 976 922 6 % Equity in the income of investees 127
154 (18 )% 334 447 (25 )% $ 1,842
$ 2,372 (22 )% $ 5,427 $ 6,083 (11 )%
Cable Networks
Cable Networks revenues for the quarter decreased 3% to $4.1
billion and operating income decreased 23% to $1.5 billion. Lower
operating income was due to a decline at ESPN.
The decrease at ESPN was due to higher programming costs, lower
advertising revenue and severance and contract termination costs,
partially offset by affiliate revenue growth. The programming cost
increase was due to a contractual rate increase for NBA
programming, partially offset by a decrease in the cost of time for
ESPN programming aired on the ABC Television Network. Lower
advertising revenue was due to a decrease in average viewership and
lower units delivered including the impact of two fewer NBA finals
games, partially offset by higher rates. Affiliate revenue growth
was due to contractual rate increases, partially offset by a
decline in subscribers.
Broadcasting
Broadcasting revenues for the quarter increased 4% to $1.8
billion and operating income decreased 22% to $253 million. The
decrease in operating income was due to lower advertising revenue,
a decrease in the cost charged to ESPN for programming aired on the
ABC Television Network and higher programming costs. These
decreases were partially offset by affiliate revenue growth. The
decrease in advertising revenues reflected lower network
impressions, partially offset by higher network rates. Lower
network impressions reflected a decrease in average viewership,
partially offset by an increase in units delivered. Higher
programming costs were due to a higher cost mix of programming
aired in the current quarter. Affiliate revenue growth was due to
contractual rate increases.
Equity in the Income of Investees
Equity in the income of investees decreased 18% to $127 million
due to a loss from our investment in BAMTech, which we acquired in
August 2016 and January 2017, and higher losses from Hulu,
partially offset by higher income at A +E Television Networks
(A+E). The loss at BAMTech reflected investments in their
technology platform and the launch of new clients. The decrease at
Hulu was due to higher marketing and labor costs, partially offset
by higher subscription revenue. The increase at A+E was due to
lower programming costs, partially offset by lower advertising
revenue.
Parks and Resorts
Parks and Resorts revenues for the quarter increased 12% to $4.9
billion and segment operating income increased 18% to $1,168
million. Operating income growth for the quarter reflected an
increase at our international operations, while results at our
domestic operations were comparable to the prior-year quarter.
Segment results benefited from the timing of the Easter holiday,
which fell in the third quarter of the current year compared to the
second quarter of the prior year.
Operating income growth at our international operations was due
to increases at Shanghai Disney Resort and Disneyland Paris. The
increase at Shanghai Disney Resort reflected a full quarter of
operations in the current year compared to the prior-year quarter,
which included pre-opening costs. Higher operating income at
Disneyland Paris was due to increases in guest spending and
attendance, partially offset by higher costs for new guest
offerings, including the 25th Anniversary celebration. The increase
in guest spending was primarily due to higher average ticket prices
and increases in food, beverage and merchandise spending.
At our domestic operations, increased costs were essentially
offset by increases in guest spending and volumes. Higher costs
were primarily due to labor and other cost inflation, increased
operations support costs, new guest offerings and the dry-dock of
the Disney Fantasy in the current quarter. Costs for new guest
offerings were driven by the launch of the expansion of Disney’s
Animal Kingdom at Walt Disney World Resort, including the related
marketing costs. Guest spending growth was due to increases in
average ticket prices for sailings on our cruise ships and
admission to our theme parks, as well as higher average daily hotel
room rates and food and beverage spending. Higher volumes were due
to attendance growth, partially offset by a decrease in occupied
room nights and lower passenger cruise days due to the dry-dock of
the Disney Fantasy. The decrease in occupied room nights was due to
refurbishments and conversions to vacation club units.
Studio Entertainment
Studio Entertainment revenues for the quarter decreased 16% to
$2.4 billion and segment operating income decreased 17% to $639
million. Lower operating income was due to decreased theatrical and
home entertainment distribution results, partially offset by growth
in TV/SVOD distribution and lower film cost impairments.
The decrease in theatrical distribution results was due to the
performance of our releases in the current quarter compared to the
prior-year quarter. This decrease was partially offset by the
impact of marketing costs in the prior-year quarter for DreamWorks’
The BFG, which released at the end of the third quarter of fiscal
2016. There was no comparable title in the current quarter as the
Company stopped distributing new DreamWorks releases after the
fourth quarter of fiscal 2016. Significant releases in the current
quarter included Guardians of the Galaxy Vol. 2, Pirates of the
Caribbean: Dead Men Tell No Tales and Cars 3, while the prior-year
quarter included Captain America: Civil War, The Jungle Book,
Finding Dory and Alice Through the Looking Glass.
The decrease in home entertainment results was due to lower unit
sales driven by the performance of Star Wars: The Force Awakens in
the prior-year quarter compared to Rogue One: A Star Wars Story in
the current quarter. Other significant titles in the current
quarter included Beauty and the Beast and Moana, whereas the
prior-year quarter included Zootopia.
Higher TV/SVOD distribution results were primarily due to an
increase in domestic rates, international growth and the timing of
domestic title availabilities.
Consumer Products & Interactive
Media
Consumer Products & Interactive Media revenues for the
quarter decreased 5% to $1.1 billion and segment operating income
increased 12% to $362 million. Higher operating income was due to
increases at our merchandise licensing and games businesses.
The increase at merchandise licensing was primarily due to lower
expenses driven by a decrease in general and administrative costs.
Higher operating income at our games business was due to decreased
product development costs and higher minimum guarantee shortfall
recognition.
OTHER FINANCIAL INFORMATION
Corporate and Unallocated Shared
Expenses
Corporate and unallocated shared expenses decreased $60 million
to $99 million in the current quarter due to lower incentive
compensation costs.
Interest expense, net
Interest expense, net was as follows (in millions):
Quarter Ended July 1,2017 July 2,2016 Change
Interest expense $ (134 ) $ (88 ) (52 )% Interest and investment
income 17 18 (6 )% Interest expense, net $ (117 ) $
(70 ) (67 )%
The increase in interest expense was due to higher average debt
balances, lower capitalized interest and higher average interest
rates. Capitalized interest was lower due to the completion of the
majority of construction at Shanghai Disney Resort in the
prior-year quarter.
Income Taxes
The effective income tax rate was as follows:
Quarter Ended July 1,2017 July 2,2016 Change
Effective income tax rate 31.6 % 35.2 % 3.6 ppt
The decrease in the effective income tax rate for the quarter
was primarily due to a favorable impact from a change in our
estimated full year effective income tax rate, a decrease in
foreign losses for which we are not recognizing a tax benefit and a
benefit from the adoption of a new accounting pronouncement.
The change in our estimated full year effective income tax rate
was driven by an increase in our estimated benefit related to
qualified domestic production activities. 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.
In the first quarter of the current year, the Company adopted
new accounting guidance, 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.
Noncontrolling Interests
Quarter Ended (in millions) July 1,2017 July
2,2016 Change Net income attributable to noncontrolling interests $
108 $ 115 6 %
The decrease in net income attributable to noncontrolling
interests for the quarter was driven by the impact of lower net
income at ESPN, partially offset by the impact of improvements at
Shanghai Disney Resort and Disneyland Paris.
Net income attributable to noncontrolling interests is
determined on income after royalties and management fees, financing
costs and income taxes.
Cash Flow
Cash provided by operations and free cash flow were as follows
(in millions):
Nine Months Ended July 1,2017 July 2,2016
Change Cash provided by operations $ 8,831 $ 9,615 $ (784 )
Investments in parks, resorts and other property (2,728 ) (3,691 )
963 Free cash flow (1) $ 6,103 $ 5,924 $ 179
(1) Free cash flow is not a financial measure defined by GAAP.
See the discussion on pages 7 through 9.
Cash provided by operations for the first nine months of fiscal
2017 decreased by $0.8 billion from $9.6 billion in the prior-year
period to $8.8 billion in the current period. The decrease was due
to lower segment operating results, higher film and television
production spending and higher pension plan contributions.
Capital Expenditures and Depreciation
Expense
Investments in parks, resorts and other property were as follows
(in millions):
Nine Months Ended July 1,2017 July 2,2016 Media
Networks Cable Networks $ 70 $ 55 Broadcasting 44 55 Total
Media Networks 114 110 Parks and Resorts Domestic 1,682
1,619 International 721 1,689 Total Parks and Resorts 2,403
3,308 Studio Entertainment 64 67 Consumer Products &
Interactive Media 17 33 Corporate 130 173 Total investments
in parks, resorts and other property $ 2,728 $ 3,691
Capital expenditures decreased by $963 million to $2.7 billion
due to lower spending at Shanghai Disney Resort.
Depreciation expense was as follows (in millions):
Nine Months Ended July 1,2017 July 2,2016 Media
Networks Cable Networks $ 105 $ 111 Broadcasting 67 68 Total
Media Networks 172 179 Parks and Resorts Domestic 983 949
International 500 283 Total Parks and Resorts 1,483
1,232 Studio Entertainment 36 36 Consumer Products &
Interactive Media 46 46 Corporate 189 185 Total depreciation
expense $ 1,926 $ 1,678
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 quarter.
(in millions except EPS)
Pre-TaxIncome/
Loss
TaxBenefit/
Expense (1)
After-TaxIncome/
Loss (2)
EPS (3)
Change vs.prior yearperiod
Quarter Ended July 1, 2017: As reported $ 3,618 $ (1,144 ) $ 2,474
$ 1.51 (5 )% Exclude(4): Other expense 177 (65 ) 112
0.07 Excluding certain items affecting comparability $ 3,795
$ (1,209 ) $ 2,586 $ 1.58 (2 )% Quarter
Ended July 2, 2016: As reported $ 4,183 $ (1,471 ) $ 2,712 $ 1.59
Exclude(5): Restructuring and impairment charges 44 (2 ) 42
0.03 Excluding certain items affecting comparability
$ 4,227 $ (1,473 ) $ 2,754 $ 1.62 Nine
Months Ended July 1, 2017: As reported $ 11,094 $ (3,593 ) $ 7,501
$ 4.55 (2 )% Exclude(4): Other expense 177 (65 ) 112
0.07 Excluding certain items affecting comparability $
11,271 $ (3,658 ) $ 7,613 $ 4.63 -- %
Nine Months Ended July 2, 2016: As reported $ 11,987 $ (4,089 ) $
7,898 $ 4.63 Exclude(6): Vice Gain (332 ) 122 (210 ) (0.13 )
Infinity Charge 147 (54 ) 93 0.06 Restructuring and impairment
charges 125 (36 ) 89 0.05 Excluding certain
items affecting comparability $ 11,927 $ (4,057 ) $ 7,870
$ 4.61
(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 quarter and nine month period ended July 1, 2017 related
to a charge, net of committed insurance recoveries, incurred in
connection with the settlement of litigation ($177 million).(5) For
the quarter ended July 2, 2016, items effecting comparability
included restructuring and impairment charges ($44 million) in
connection with shutting down certain international film production
operations.(6) For the nine-month period ended July 2, 2016,
items affecting comparability included the Company’s share of a net
gain recognized by A+E Television Networks in connection with their
acquisition of an interest in Vice Group Holding, Inc. (Vice Gain)
($332 million), a charge in connection with the discontinuation of
our Infinity console game business (Infinity Charge) ($147 million)
and restructuring and impairment charges ($125 million) due to an
investment impairment, charges in connection with shutting down
certain international film production operations and contract
termination and severance costs.
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 Nine Months Ended July 1,2017
July 2,2016 July 1,2017 July 2,2016 Segment operating income
$ 4,011 $ 4,456 $ 11,963 $ 12,545 Corporate and unallocated shared
expenses (99 ) (159 ) (392 ) (457 ) Restructuring and impairment
charges — (44 ) — (125 ) Other expense (177 ) — (177 ) — Interest
expense, net (117 ) (70 ) (300 ) (161 ) Vice Gain — — — 332
Infinity Charge — — — (147 ) Income before
income taxes 3,618 4,183 11,094 11,987 Income taxes (1,144 ) (1,471
) (3,593 ) (4,089 ) Net income $ 2,474 $ 2,712 $
7,501 $ 7,898
CONFERENCE CALL INFORMATION
In conjunction with this release, The Walt Disney Company will
host a conference call today, August 8, 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 Nine Months Ended July 1,2017
July 2,2016 July 1,2017 July 2,2016 Revenues: Services $
12,097 $ 12,113 $ 35,990 $ 35,906 Products 2,141 2,164
6,368 6,584 Total revenues 14,238 14,277
42,358 42,490 Costs and expenses: Cost of services (exclusive of
depreciation and amortization) (6,469 ) (5,946 ) (19,328 ) (18,568
) Cost of products (exclusive of depreciation and amortization)
(1,248 ) (1,255 ) (3,764 ) (4,120 ) Selling, general,
administrative and other (2,022 ) (2,305 ) (5,948 ) (6,467 )
Depreciation and amortization (711 ) (626 ) (2,074 ) (1,838 ) Total
costs and expenses (10,450 ) (10,132 ) (31,114 ) (30,993 )
Restructuring and impairment charges — (44 ) — (125 ) Other expense
(177 ) — (177 ) — Interest expense, net (117 ) (70 ) (300 ) (161 )
Equity in the income of investees 124 152 327
776 Income before income taxes 3,618 4,183 11,094 11,987
Income taxes (1,144 ) (1,471 ) (3,593 ) (4,089 ) Net income 2,474
2,712 7,501 7,898 Less: Net income attributable to noncontrolling
interests (108 ) (115 ) (268 ) (278 ) Net income attributable to
The Walt Disney Company (Disney) $ 2,366 $ 2,597 $
7,233 $ 7,620 Earnings per share attributable
to Disney: Diluted $ 1.51 $ 1.59 $ 4.55 $ 4.63
Basic $ 1.51 $ 1.60 $ 4.58 $
4.66 Weighted average number of common and common
equivalent shares outstanding: Diluted 1,572 1,631
1,588 1,647 Basic 1,562 1,621
1,578 1,636 Dividends declared per share $
0.78 $ 0.71 $ 1.56 $ 1.42
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited; in millions, except per
share data)
July 1,2017 October 1,2016 ASSETS Current assets Cash
and cash equivalents $ 4,336 $ 4,610 Receivables 9,636 9,065
Inventories 1,300 1,390 Television costs and advances 1,214 1,208
Other current assets 665 693 Total current assets
17,151 16,966 Film and television costs 6,798 6,339 Investments
4,141 4,280 Parks, resorts and other property Attractions,
buildings and equipment 52,934 50,270 Accumulated depreciation
(28,335 ) (26,849 ) 24,599 23,421 Projects in progress 1,889 2,684
Land 1,245 1,244 27,733 27,349 Intangible assets, net
6,797 6,949 Goodwill 27,835 27,810 Other assets 2,297 2,340
Total assets $ 92,752 $ 92,033
LIABILITIES AND EQUITY Current liabilities Accounts payable and
other accrued liabilities $ 9,374 $ 9,130 Current portion of
borrowings 3,338 3,687 Deferred revenue and other 4,382
4,025 Total current liabilities 17,094 16,842 Borrowings
18,849 16,483 Deferred income taxes 4,177 3,679 Other long-term
liabilities 6,581 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 36,119 35,859 Retained
earnings 70,863 66,088 Accumulated other comprehensive loss (3,864
) (3,979 ) 103,118 97,968 Treasury stock, at cost, 1.3 billion
shares (60,587 ) (54,703 ) Total Disney Shareholders’ equity 42,531
43,265 Noncontrolling interests 3,520 4,058 Total
equity 46,051 47,323 Total liabilities and equity $
92,752 $ 92,033
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited; in millions)
Nine Months Ended July 1,2017 July 2,2016 OPERATING
ACTIVITIES Net income $ 7,501 $ 7,898 Depreciation and amortization
2,074 1,838 Deferred income taxes 294 885 Equity in the income of
investees (327 ) (776 ) Cash distributions received from equity
investees 584 594 Net change in film and television costs and
advances (745 ) (224 ) Equity-based compensation 278 305 Other 373
605 Changes in operating assets and liabilities: Receivables (786 )
(821 ) Inventories 93 214 Other assets 130 (87 ) Accounts payable
and other accrued liabilities (781 ) (628 ) Income taxes 143
(188 ) Cash provided by operations 8,831 9,615
INVESTING ACTIVITIES Investments in parks, resorts and other
property (2,728 ) (3,691 ) Acquisitions (557 ) (400 ) Other (5 )
(135 ) Cash used in investing activities (3,290 ) (4,226 )
FINANCING ACTIVITIES Commercial paper repayments, net (112 ) (216 )
Borrowings 4,053 4,046 Reduction of borrowings (1,736 ) (672 )
Dividends (1,237 ) (1,168 ) Repurchases of common stock (5,944 )
(5,908 ) Proceeds from exercise of stock options 256 216 Other
(1,072 ) (618 ) Cash used in financing activities (5,792 ) (4,320 )
Impact of exchange rates on cash and cash equivalents (23 )
(111 ) Change in cash and cash equivalents (274 ) 958 Cash
and cash equivalents, beginning of period 4,610 4,269
Cash and cash equivalents, end of period $ 4,336 $ 5,227
View source
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The Walt Disney CompanyZenia MuchaCorporate
Communications818-560-5300orLowell SingerInvestor
Relations818-560-6601
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