The Walt Disney Company (NYSE: DIS) today reported earnings for
its first fiscal quarter ended January 2, 2021. Diluted earnings
per share (EPS) from continuing operations for the quarter
decreased 98% to $0.02 from $1.17 in the prior-year quarter.
Excluding certain items,(1) diluted EPS for the quarter decreased
79% to $0.32 from $1.53 in the prior-year quarter. Results in the
quarter ended January 2, 2021 were adversely impacted by the novel
coronavirus (COVID-19). The most significant impact was at the
Disney Parks, Experiences and Products segment where since late in
the second quarter of fiscal 2020, our parks and resorts have been
closed or operating at significantly reduced capacity and our
cruise ship sailings have been suspended.
“We believe the strategic actions we’re taking to transform our
Company will fuel our growth and enhance shareholder value, as
demonstrated by the incredible strides we’ve made in our DTC
business, reaching more than 146 million total paid subscriptions
across our streaming services at the end of the quarter,” said Bob
Chapek, Chief Executive Officer, The Walt Disney Company. “We’re
confident that, with our robust pipeline of exceptional,
high-quality content and the upcoming launch of our new
Star-branded international general entertainment offering, we are
well-positioned to achieve even greater success going forward.”
The following table summarizes the first quarter results for
fiscal 2021 and 2020 (in millions, except per share amounts):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Revenues
$
16,249
$
20,877
(22) %
Income from continuing operations before
income taxes
$
46
$
2,626
(98) %
Total segment operating income(1)
$
1,332
$
3,996
(67) %
Net income from continuing
operations(2)
$
29
$
2,128
(99) %
Diluted EPS from continuing
operations(2)
$
0.02
$
1.17
(98) %
Diluted EPS excluding certain items(1)
$
0.32
$
1.53
(79) %
Cash provided by continuing operations
$
75
$
1,630
(95) %
Free cash flow(1)
$
(685)
$
292
nm
(1)
Diluted EPS excluding certain
items, total segment operating income and free cash flow are
non-GAAP financial measures. The comparable GAAP measures are
diluted EPS from continuing operations, income from continuing
operations before income taxes, and cash provided by continuing
operations, respectively. See the discussion on page 2 and on pages
9 through 11.
(2)
Reflects amounts attributable to
shareholders of The Walt Disney Company, i.e. after deduction of
income attributable to noncontrolling interests.
SEGMENT RESULTS
The Company evaluates the performance of its operating segments
based on segment operating income, and management uses total
segment operating income as a measure of the performance of
operating businesses separate from non-operating factors. The
Company believes that information about total 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.
The following is a reconciliation of income from continuing
operations before income taxes to total segment operating income
(in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Income from continuing operations before
income taxes
$
46
$
2,626
(98) %
Add (subtract):
Corporate and unallocated shared
expenses
232
237
2 %
Restructuring and impairment charges
113
150
25 %
Interest expense, net
324
283
(14) %
Amortization of TFCF and Hulu intangible
assets and fair value step-up on film and television costs
617
700
12 %
Total Segment Operating Income
$
1,332
$
3,996
(67) %
Since late in the second quarter of fiscal 2020 and continuing
into fiscal 2021, COVID-19 and measures to prevent its spread have
impacted our segments in a number of ways, most significantly at
Disney Parks, Experiences and Products. In the current quarter, our
theme parks were closed or operating at significantly reduced
capacity and cruise ship sailings and guided tours were suspended.
In addition, we have delayed, or in some cases, shortened or
canceled, theatrical releases, and stage play performances have
been suspended. We have experienced disruptions in the production
and availability of content, including the cancellation or shift of
key live sports programming from fiscal 2020 into fiscal 2021, as
well as the suspension of production of most film and television
content. Although most film and television production resumed
beginning in the fourth quarter of fiscal 2020, we continue to see
disruption of film and television production depending on local
circumstances. We have incurred, and will continue to incur,
additional costs to address government regulations and implement
safety measures for our employees, talent and guests. The timing,
duration and extent of these costs will depend on the timing and
scope of our operations as they resume. We currently estimate these
costs may total approximately $1 billion in fiscal 2021. Some of
these costs may be capitalized and amortized over future
periods.
The most significant impact on operating income in the current
quarter from COVID-19 was an estimated detriment of approximately
$2.6 billion at the Disney Parks, Experiences and Products segment
due to revenue lost as a result of the closures and reduced
operating capacities. The impacts of COVID-19 on our Disney Media
and Entertainment Distribution segment were less significant.
Higher sports programming costs reflecting the shift of key
sporting events from prior quarters to the current quarter were
largely offset by higher advertising revenue related to broadcast
of the events. Lower revenues due to the deferral or cancellation
of significant film releases as a result of theater closures were
largely offset by the related reduction in film cost amortization,
marketing and distribution costs.
The following table summarizes the first quarter segment revenue
and segment operating income for fiscal 2021 and 2020 (in
millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Revenues:
Disney Media and Entertainment
Distribution
$
12,661
$
13,297
(5) %
Disney Parks, Experiences and Products
3,588
7,580
(53) %
Total Revenues
$
16,249
$
20,877
(22) %
Segment operating income (loss):
Disney Media and Entertainment
Distribution
$
1,451
$
1,474
(2) %
Disney Parks, Experiences and Products
(119)
2,522
nm
Total Segment Operating Income
$
1,332
$
3,996
(67) %
Disney Media and Entertainment
Distribution
Revenue and operating results for the Disney Media and
Entertainment Distribution segment are as follows (in
millions):
Quarter Ended
Change
January 2, 2021
December 28, 2019
Revenues:
Linear Networks
$
7,693
$
7,536
2 %
Direct-to-Consumer
3,504
2,025
73 %
Content Sales/Licensing and Other
1,702
3,910
(56) %
Elimination of Intrasegment Revenue(1)
(238)
(174)
(37) %
$
12,661
$
13,297
(5) %
Operating income (loss):
Linear Networks
$
1,729
$
1,808
(4) %
Direct-to-Consumer
(466)
(1,110)
58 %
Content Sales/Licensing and Other
188
776
(76) %
$
1,451
$
1,474
(2) %
(1) Reflects fees received from other DMED
businesses for the right to air the linear networks and related
services.
Linear Networks
Linear Networks revenues for the quarter increased 2% to $7.7
billion, and operating income decreased 4% to $1.7 billion. The
following table provides further detail of the Linear Networks
results (in millions):
Quarter Ended
Change
January 2, 2021
December 28, 2019
Supplemental revenue detail
Domestic Channels
$
6,070
$
5,993
1 %
International Channels
1,623
1,543
5 %
$
7,693
$
7,536
2 %
Supplemental operating income detail
Domestic Channels
$
1,120
$
1,206
(7) %
International Channels
375
388
(3) %
Equity in the income of investees
234
214
9 %
$
1,729
$
1,808
(4) %
Domestic Channels
Domestic Channels revenues for the quarter increased 1% to $6.1
billion and operating income decreased 7% to $1.1 billion. The
decrease in operating income was due to lower results at our cable
business, partially offset by an increase at our broadcasting
business.
The decrease at cable was due to higher programming and
production costs and lower advertising revenue, partially offset by
affiliate revenue growth. The increase in programming and
production costs was due to the timing of the College Football
Playoffs (CFP) relative to our fiscal periods and higher NBA
programming costs. The current quarter included six CFP bowl games
compared to three in the prior-year quarter. As a result of delays
due to COVID-19, four NBA Finals games were played in the current
quarter, whereas these games would have normally occurred in the
third quarter of the prior year. Lower advertising revenue was due
to lower average viewership, partially offset by an increase in
rates. Affiliate revenue growth was due to an increase in
contractual rates, partially offset by fewer subscribers.
The increase at broadcasting was due to higher political
advertising revenue at the owned television stations, partially
offset by a decrease at the ABC Television Network. The decrease at
the Network was due to lower advertising revenue and higher
marketing costs, partially offset by affiliate revenue growth. The
decrease in advertising revenue was due to lower impressions,
reflecting lower average viewership, and lower rates, partially
offset by a benefit from airing New Year’s Rockin’ Eve in the
current quarter, whereas in the prior fiscal year it aired in the
second quarter. Affiliate revenue growth was due to an increase in
contractual rates.
International Channels
International Channels revenues for the quarter increased 5% to
$1.6 billion and operating income decreased 3% to $375 million. The
decrease in operating income was due to higher programming and
production costs and lower affiliate revenue, partially offset by
advertising revenue growth and a reduction in non-programming
costs. Higher programming and production costs and advertising
revenue reflected a shift in the timing of Indian Premier League
(IPL) cricket matches from the third quarter of fiscal 2020 to the
first quarter of fiscal 2021 as a result of COVID-19. IPL cricket
matches generally occur during our third fiscal quarter. The
decrease in affiliate revenue was primarily due to channel
closures.
Equity in the Income of
Investees
Income from equity investees increased $20 million, to $234
million from $214 million, driven by higher income from A+E
Television Networks due to higher program sales, partially offset
by lower advertising revenue.
Direct-to-Consumer
Direct-to-Consumer revenues for the quarter increased 73% to
$3.5 billion and operating loss decreased from $1.1 billion to $466
million. The decrease in operating loss was due to improved results
at Hulu, and to a lesser extent, at Disney+ and ESPN+.
The increase at Hulu was due to subscriber growth and increased
advertising revenues driven by higher impressions, partially offset
by an increase in programming and production costs due to higher
subscriber-based fees for programming the live television
service.
The improvement at Disney+ was driven by an increase in
subscribers, partially offset by higher programming and production
cost amortization and increased marketing and technology costs. The
increases in subscribers and costs reflected the ongoing expansion
of Disney+ including launching in additional markets. The current
quarter included three months of Disney+ operations whereas the
prior-year quarter included two months.
Higher results at ESPN+ were driven by subscriber growth,
partially offset by higher sports programming costs.
The following table presents the number of paid subscribers(1)
(in millions) for Disney+, ESPN+ and Hulu as of:
January 2, 2021
December 28, 2019
Change
Disney+(3)
94.9
26.5
>100 %
ESPN+
12.1
6.6
83 %
Hulu
SVOD Only
35.4
27.2
30 %
Live TV + SVOD
4.0
3.2
25 %
Total Hulu
39.4
30.4
30 %
The following table presents the average monthly revenue per
paid subscriber(2) for the quarter ended:
January 2, 2021
December 28, 2019
Change
Disney+(3) (4)
$
4.03
$
5.56
(28) %
ESPN+(5)
$
4.48
$
4.44
1 %
Hulu
SVOD Only
$
13.51
$
13.15
3 %
Live TV + SVOD
$
75.11
$
59.47
26 %
(1)
A subscriber for which we
recognized subscription revenue. A subscriber ceases to be a paid
subscriber as of their effective cancellation date or as a result
of a failed payment method. A subscription bundle is considered a
paid subscriber for each service included in the bundle.
Subscribers include those who receive the service through wholesale
arrangements in which we receive a fee for the distribution of
Disney+ to each subscriber to an existing content distribution
tier. When we aggregate the total number of paid subscribers across
our direct-to-consumer services, whether acquired individually,
through a wholesale arrangement or via the bundle, we refer to them
as paid subscriptions.
(2)
Revenue per paid subscriber is
calculated based upon the average of the monthly average paid
subscribers for each month in the period. The monthly average paid
subscribers is calculated as the sum of the beginning of the month
and end of the month paid subscriber count, divided by two. Disney+
average monthly revenue per paid subscriber is calculated using a
daily average of paid subscribers for the period. The average
revenue per subscriber is net of discounts offered on bundled
services. The bundled discount is allocated to each service based
on the relative retail price of each service on a standalone basis.
In general, wholesale arrangements have a lower average monthly
revenue per paid subscriber than subscribers that we acquire
directly or through third party platforms like Apple.
(3)
Disney+ Hotstar launched on April
3, 2020 and September 5, 2020 in India and Indonesia, respectively,
(as a conversion of the preexisting Hotstar service) and is
included in the number of paid subscribers and average monthly
revenue per paid subscriber. The average monthly revenue per paid
subscriber for Disney+ Hotstar is significantly lower than the
average monthly revenue per paid subscriber for Disney+ in other
markets.
(4)
Excludes Premier Access
revenue.
(5)
Excludes Pay-Per-View
revenue.
The average monthly revenue per paid subscriber for Disney+
decreased from $5.56 to $4.03 due to the launch of Disney+
Hotstar.
The average monthly revenue per paid subscriber for ESPN+
increased from $4.44 to $4.48 due to an increase in retail pricing,
partially offset by a higher mix of subscribers to the bundled
offering available in the U.S.
The average monthly revenue per paid subscriber for the Hulu
SVOD Only service increased from $13.15 to $13.51 due to higher
per-subscriber advertising revenue, a lower mix of wholesale
subscribers and an increase in per-subscriber premium and feature
add-on revenue. These increases were partially offset by a higher
mix of subscribers to the bundled offering. The average monthly
revenue per paid subscriber for the Hulu Live TV + SVOD service
increased from $59.47 to $75.11 due to increases in retail pricing,
higher per-subscriber advertising revenue and an increase in
per-subscriber premium and feature add-on revenue. These increases
were partially offset by a higher mix of subscribers to the bundled
offering.
Content Sales/Licensing and Other
Content Sales/Licensing and Other revenues for the quarter
decreased 56% to $1.7 billion and segment operating income
decreased 76% to $188 million. The decrease in operating income was
due to lower theatrical, TV/SVOD distribution and home
entertainment results.
Theatrical distribution was lower as there were no significant
worldwide theatrical releases in the current quarter compared to
Frozen II, which was released in the prior-year quarter. The
current quarter was negatively impacted by COVID-19 as many
theaters globally were either closed or operating at reduced
capacity.
Lower TV/SVOD distribution results were driven by the shift from
licensing our content to third parties to distribution on our
direct-to-consumer services.
The decrease in home entertainment results was due to lower unit
sales, partially offset by lower marketing costs. The prior-year
quarter reflected the performance of Toy Story 4, The Lion King and
Aladdin compared to no significant titles in the current
quarter.
Disney Parks, Experiences and
Products
Disney Parks, Experiences and Products revenues for the quarter
decreased 53% to $3.6 billion, and segment operating results
decreased $2.6 billion to a loss of $119 million. Lower operating
results for the quarter were due to decreases at both the domestic
and international parks and experiences businesses.
As a result of COVID-19, Disneyland Resort was closed and our
cruise business was suspended in the current quarter. Disneyland
Paris closed on October 30, 2020 and Hong Kong Disneyland Resort
closed on December 2, 2020. Walt Disney World Resort and Shanghai
Disney Resort were open in the current quarter. Our parks and
resorts that were open during the quarter operated at significantly
reduced capacities.
At our consumer products business, operating income growth was
driven by an increase in games licensing revenue reflecting the
release of Marvel’s Spider-Man: Miles Morales.
We estimate the total net adverse impact of COVID-19 on segment
operating income in the quarter was approximately $2.6 billion.
The following table presents supplemental revenue and operating
income (loss) detail for the Disney Parks, Experiences and Products
segment:
Quarter Ended
% Change Better (Worse)
(in millions)
January 2, 2021
December 28, 2019
Supplemental revenue detail
Parks & Experiences
Domestic
$
1,489
$
4,939
(70) %
International
378
950
(60) %
Consumer Products
1,721
1,691
2 %
$
3,588
$
7,580
(53) %
Supplemental operating income (loss)
detail
Parks & Experiences
Domestic
$
(798)
$
1,572
nm
International
(262)
51
nm
Consumer Products
941
899
5 %
$
(119)
$
2,522
nm
OTHER FINANCIAL INFORMATION
Restructuring and Impairment
Charges
During the current and prior-year quarters, the Company recorded
charges totaling $113 million and $150 million, respectively. The
current quarter charges were due to severance. The charges in the
prior-year quarter were due to severance in connection with the
acquisition and integration of TFCF.
Interest Expense, net
Interest expense, net was as follows (in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Interest expense
$
(404)
$
(362)
(12) %
Interest, investment income and other
80
79
1 %
Interest expense, net
$
(324)
$
(283)
(14) %
The increase in interest expense was due to higher average debt
balances, partially offset by lower average interest rates.
Interest income, investment income and other was comparable to
the prior-year quarter as higher pension and postretirement benefit
costs, other than service cost were offset by higher investment
gains.
Equity in the Income of
Investees
Equity in the income of investees was as follows (in
millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Amounts included in segment results:
Disney Media and Entertainment
Distribution
$
235
$
235
— %
Disney Parks, Experiences and Products
(8)
(3)
>(100) %
Amortization of TFCF intangible assets
related to equity investees
(3)
(8)
63 %
Equity in the income of investees
$
224
$
224
— %
Income Taxes
The effective income tax rate was as follows:
Quarter Ended
January 2, 2021
December 28, 2019
Change
Effective income tax rate - continuing
operations
34.8%
17.4%
(17.4)
ppt
The increase in the effective income tax rate was due to higher
foreign losses for which we are unable to recognize a tax benefit,
partially offset by higher excess tax benefits on employee
share-based awards. 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.
Noncontrolling Interests
Net income attributable to noncontrolling interests was as
follows (in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Net income from continuing operations
attributable to noncontrolling interests
$
(1)
$
(40)
98 %
The decrease in net income from continuing operations
attributable to noncontrolling interests was due to lower operating
results at ESPN.
Net income attributable to noncontrolling interests is
determined on income after royalties and management fees, financing
costs and income taxes, as applicable.
Cash Flow
Cash provided by operations and free cash flow were as follows
(in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Cash provided by operations
$
75
$
1,630
$
(1,555
)
Investments in parks, resorts and other
property
(760
)
(1,338
)
578
Free cash flow(1)
$
(685
)
$
292
$
(977
)
(1) Free cash flow is not a financial measure defined by GAAP.
See the discussion on pages 9 through 11.
Cash provided by operations for fiscal 2021 decreased by $1.6
billion from $1.6 billion in the prior year to $0.1 billion in the
current year. The decrease in cash provided by operations was due
to lower segment operating results, partially offset by lower
spending for licensed and produced film and television content.
Capital Expenditures and Depreciation
Expense
Investments in parks, resorts and other property were as follows
(in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Disney Media and Entertainment
Distribution
$
177
$
188
Disney Parks, Experiences and Products
Domestic
336
820
International
183
229
Total Disney Parks, Experiences and
Products
519
1,049
Corporate
64
101
Total investments in parks, resorts and
other property
$
760
$
1,338
Capital expenditures decreased from $1.3 billion to $0.8 billion
driven by the temporary suspension of certain capital projects as a
result of COVID-19.
Depreciation expense was as follows (in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Disney Media and Entertainment
Distribution
$
167
$
142
Disney Parks, Experiences and Products
Domestic
388
398
International
176
169
Total Disney Parks, Experiences and
Products
564
567
Corporate
46
31
Total depreciation expense
$
777
$
740
NON-GAAP FINANCIAL
MEASURES
This earnings release presents free cash flow, diluted EPS
excluding the impact of certain items, and total 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 operating cash flow, diluted EPS or income
from continuing operations before income taxes as determined in
accordance with GAAP. Free cash flow, diluted EPS excluding certain
items and total segment operating income as we have calculated them
may not be comparable to similarly titled measures reported by
other companies. See further discussion of total segment operating
income on page 2.
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.
The following table presents a summary of the Company’s
consolidated cash flows (in millions):
Quarter Ended
January 2, 2021
December 28, 2019
Cash provided by operations - continuing
operations
$
75
$
1,630
Cash used in investing activities -
continuing operations
(732
)
(1,350
)
Cash provided by (used in) financing
activities - continuing operations
(333
)
1,117
Cash provided by (used in) operations -
discontinued operations
9
(19
)
Impact of exchange rates on cash, cash
equivalents and restricted cash
139
41
Change in cash, cash equivalents and
restricted cash
(842
)
1,419
Cash, cash equivalents and restricted
cash, beginning of period
17,954
5,455
Cash, cash equivalents and restricted
cash, end of period
$
17,112
$
6,874
The following table presents a reconciliation of the Company’s
consolidated cash provided by operations to free cash flow (in
millions):
Quarter Ended
January 2, 2021
December 28, 2019
Change
Cash provided by operations - continuing
operations
$
75
$
1,630
$
(1,555
)
Investments in parks, resorts and other
property
(760
)
(1,338
)
578
Free cash flow
$
(685
)
$
292
$
(977
)
Diluted EPS excluding certain
items
The Company uses diluted EPS excluding (1) certain items
affecting comparability of results from period to period and (2)
amortization of TFCF and Hulu intangible assets, including purchase
accounting step-up adjustments for released content, to facilitate
the evaluation of the performance of the Company’s operations
exclusive of these items, and these adjustments reflect how senior
management is evaluating segment performance.
The Company believes that providing diluted EPS exclusive of
certain items impacting comparability is useful to investors,
particularly where the impact of the excluded items is significant
in relation to reported earnings and 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.
The Company further believes that providing diluted EPS
exclusive of amortization of TFCF and Hulu intangible assets
associated with the acquisition in 2019 is useful to investors
because TFCF and Hulu acquisition was considerably larger than the
Company’s historic acquisitions with a significantly greater
acquisition accounting impact.
The following table reconciles reported diluted EPS from
continuing operations to diluted EPS excluding certain items for
the first quarter:
(in millions except EPS)
Pre-Tax Income/
Loss
Tax Benefit/
Expense(1)
After-Tax Income/
Loss(2)
Diluted EPS(3)
Change vs. prior year period
Quarter Ended January 2, 2021
As reported
$
46
$
(16)
$
30
$
0.02
(98) %
Exclude:
Amortization of TFCF and Hulu intangible
assets and fair value step-up on film and television costs(4)
617
(144)
473
0.25
Restructuring and impairment
charges(5)
113
(28)
85
0.05
Excluding certain items
$
776
$
(188)
$
588
$
0.32
(79) %
Quarter Ended December 28, 2019
As reported
$
2,626
$
(458)
$
2,168
$
1.17
Exclude:
Amortization of TFCF and Hulu intangible
assets and fair value step-up on film and television costs(4)
700
(162)
538
0.30
Restructuring and impairment
charges(5)
150
(35)
115
0.06
Excluding certain items
$
3,476
$
(655)
$
2,821
$
1.53
(1)
Tax benefit/expense is determined
using the tax rate applicable to the individual item.
(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 current quarter,
intangible asset amortization was $447 million, step-up
amortization was $167 million and amortization of intangible assets
related to TFCF equity investees was $3 million. For the prior-year
quarter, intangible asset amortization was $486 million, step-up
amortization was $206 million and amortization of intangible assets
related to TFCF equity investees was $8 million.
(5)
Charges in the current quarter
were primarily due to severance costs in connection with the
Company’s fiscal 2021 workforce reduction plan. Charges in the
prior-year quarter included severance costs related to the
acquisition and integration of TFCF.
CONFERENCE CALL INFORMATION
In conjunction with this release, The Walt Disney Company will
host a conference call today, February 11, 2021, 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
Certain statements and information in this communication may be
deemed to be “forward-looking statements” within the meaning of the
Federal Private Securities Litigation Reform Act of 1995, including
statements such as expected or estimated costs, the future impact
of COVID-19 on our businesses, business positioning, expected
growth, the future of our business or Company and other statements
that are not historical in nature. 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, asset acquisitions or dispositions,
new or expanded business lines or cessation of certain operations)
or other business decisions, as well as from developments beyond
the Company’s control, including:
- further changes in domestic and global economic conditions,
competitive conditions and consumer preferences;
- health concerns;
- international, regulatory, political, or military
developments;
- technological developments;
- labor markets and activities; and
- adverse weather conditions or natural disasters;
each such risk includes the current and future impacts of, and
is amplified by, COVID-19 and related mitigation efforts.
Such developments may further affect entertainment, travel and
leisure businesses generally and may, among other things, affect
(or further affect, as applicable):
- demand for our products and services;
- the performance of the Company’s theatrical and home
entertainment releases and other content;
- the advertising market for programming;
- construction;
- 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 3, 2020 under Item 1A,
“Risk Factors,” Item 7, “Management’s Discussion and Analysis,”
Item 1, “Business,” and subsequent reports, including, among
others, quarterly reports on Form 10-Q.
The terms “Company,” “we,” and “our” are used in this report to
refer collectively to the parent company and the subsidiaries
through which our various businesses are actually conducted.
THE WALT DISNEY
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(unaudited; in millions,
except per share data)
Quarter Ended
January 2, 2021
December 28, 2019
Revenues
$
16,249
$
20,877
Costs and expenses
(15,990
)
(18,042
)
Restructuring and impairment charges
(113
)
(150
)
Interest expense, net
(324
)
(283
)
Equity in the income of investees
224
224
Income from continuing operations before
income taxes
46
2,626
Income taxes on continuing operations
(16
)
(458
)
Net income from continuing operations
30
2,168
Loss from discontinued operations, net of
income tax benefit of $4 and $7, respectively
(12
)
(21
)
Net income
18
2,147
Net income from continuing operations
attributable to noncontrolling interests
(1
)
(40
)
Net income attributable to The Walt Disney
Company (Disney)
$
17
$
2,107
Earnings (loss) per share attributable to
Disney(1):
Diluted
Continuing operations
$
0.02
$
1.17
Discontinued operations
(0.01
)
(0.01
)
$
0.01
$
1.16
Basic
Continuing operations
$
0.02
$
1.18
Discontinued operations
(0.01
)
(0.01
)
$
0.01
$
1.17
Weighted average number of common and
common equivalent shares outstanding:
Diluted
1,823
1,817
Basic
1,812
1,805
(1) Total may not equal the sum of the column due to
rounding.
THE WALT DISNEY
COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited; in millions,
except per share data)
January 2, 2021
October 3, 2020
ASSETS
Current assets
Cash and cash equivalents
$
17,068
$
17,914
Receivables
14,051
12,708
Inventories
1,480
1,583
Content advances
1,423
2,171
Other current assets
852
875
Total current assets
34,874
35,251
Produced and licensed content costs
25,929
25,022
Investments
4,037
3,903
Parks, resorts and other property
Attractions, buildings and equipment
63,017
62,111
Accumulated depreciation
(36,380
)
(35,517
)
26,637
26,594
Projects in progress
4,547
4,449
Land
1,079
1,035
32,263
32,078
Intangible assets, net
18,642
19,173
Goodwill
77,800
77,689
Other assets
8,343
8,433
Total assets
$
201,888
$
201,549
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued
liabilities
$
16,846
$
16,801
Current portion of borrowings
5,397
5,711
Deferred revenue and other
4,303
4,116
Total current liabilities
26,546
26,628
Borrowings
52,878
52,917
Deferred income taxes
7,201
7,288
Other long-term liabilities
17,205
17,204
Commitments and contingencies
Redeemable noncontrolling interests
9,330
9,249
Equity
Preferred stock
—
—
Common stock, $0.01 par value, Authorized
– 4.6 billion shares, Issued – 1.8 billion shares
54,663
54,497
Retained earnings
38,456
38,315
Accumulated other comprehensive loss
(8,141
)
(8,322
)
Treasury stock, at cost, 19 million
shares
(907
)
(907
)
Total Disney Shareholders’ equity
84,071
83,583
Noncontrolling interests
4,657
4,680
Total equity
88,728
88,263
Total liabilities and equity
$
201,888
$
201,549
THE WALT DISNEY
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited; in
millions)
Quarter Ended
January 2, 2021
December 28, 2019
OPERATING ACTIVITIES
Net income from continuing operations
$
30
$
2,168
Depreciation and amortization
1,298
1,299
Net gain on investments
(80
)
3
Deferred income taxes
(105
)
534
Equity in the income of investees
(224
)
(224
)
Cash distributions received from equity
investees
193
219
Net change in produced and licensed
content costs and advances
771
(77
)
Net change in operating lease right of use
assets / liabilities
36
(2
)
Equity-based compensation
134
115
Other
90
66
Changes in operating assets and
liabilities, net of business acquisitions:
Receivables
(1,324
)
(1,424
)
Inventories
94
81
Other assets
(136
)
(158
)
Accounts payable and other liabilities
(642
)
(714
)
Income taxes
(60
)
(256
)
Cash provided by operations - continuing
operations
75
1,630
INVESTING ACTIVITIES
Investments in parks, resorts and other
property
(760
)
(1,338
)
Other
28
(12
)
Cash used in investing activities -
continuing operations
(732
)
(1,350
)
FINANCING ACTIVITIES
Commercial paper borrowings (payments),
net
(179
)
1,172
Borrowings
1
51
Reduction of borrowings
(139
)
(46
)
Proceeds from exercise of stock
options
209
126
Other
(225
)
(186
)
Cash provided by (used in) financing
activities - continuing operations
(333
)
1,117
CASH FLOWS FROM DISCONTINUED
OPERATIONS
Cash provided by (used in) operations -
discontinued operations
9
(19
)
Impact of exchange rates on cash, cash
equivalents and restricted cash
139
41
Change in cash, cash equivalents and
restricted cash
(842
)
1,419
Cash, cash equivalents and restricted
cash, beginning of period
17,954
5,455
Cash, cash equivalents and restricted
cash, end of period
$
17,112
$
6,874
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210211005902/en/
Zenia Mucha Corporate Communications 818-560-5300
Lowell Singer Investor Relations 818-560-6601
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