The Walt Disney Company Reports Second Quarter and Six Months Earnings for Fiscal 2017

CONFERENCE CALL INFORMATION

In conjunction with this release, The Walt Disney Company will host a conference call today, May 9, 2017, at 4:30 PM EDT/1:30 PM PDT via a live Webcast. To access the Webcast go to www.disney.com/investors. The discussion will be archived.

FORWARD-LOOKING STATEMENTS

Management believes certain statements in this earnings release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made. Management does not undertake any obligation to update these statements.

Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions), as well as from developments beyond the Company’s control, including:

  • changes in domestic and global economic conditions, competitive conditions and consumer preferences;
  • adverse weather conditions or natural disasters;
  • health concerns;
  • international, political, or military developments; and
  • technological developments.

Such developments may affect entertainment, travel and leisure businesses generally and may, among other things, affect:

  • the performance of the Company’s theatrical and home entertainment releases;
  • the advertising market for broadcast and cable television programming;
  • demand for our products and services;
  • expenses of providing medical and pension benefits; and
  • performance of some or all company businesses either directly or through their impact on those who distribute our products.

Additional factors are set forth in the Company’s Annual Report on Form 10-K for the year ended October 1, 2016 under Item 1A, “Risk Factors,” and subsequent reports.

 
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)
 
  Quarter Ended   Six Months Ended
April 1,   April 2, April 1,   April 2,
2017 2016 2017 2016
Revenues:
Services $ 11,487 $ 11,171 $ 23,893 $ 23,793
Products 1,849   1,798   4,227   4,420  
Total revenues 13,336 12,969 28,120 28,213
Costs and expenses:
Cost of services (exclusive of depreciation and amortization) (5,839 ) (5,566 ) (12,859 ) (12,622 )
Cost of products (exclusive of depreciation and amortization) (1,130 ) (1,298 ) (2,516 ) (2,865 )
Selling, general, administrative and other (1,941 ) (2,137 ) (3,926 ) (4,162 )
Depreciation and amortization (676 ) (605 ) (1,363 ) (1,212 )
Total costs and expenses (9,586 ) (9,606 ) (20,664 ) (20,861 )
Restructuring and impairment charges (81 )
Interest expense, net (84 ) (67 ) (183 ) (91 )
Equity in the income of investees 85   150   203   624  
Income before income taxes 3,751 3,446 7,476 7,804
Income taxes (1,212 ) (1,170 ) (2,449 ) (2,618 )
Net income 2,539 2,276 5,027 5,186
Less: Net income attributable to noncontrolling interests (151 ) (133 ) (160 ) (163 )
Net income attributable to The Walt Disney Company (Disney) $ 2,388   $ 2,143   $ 4,867   $ 5,023  
 
Earnings per share attributable to Disney:
Diluted $ 1.50   $ 1.30   $ 3.05   $ 3.04  
 
Basic $ 1.51   $ 1.31   $ 3.07   $ 3.06  
 
Weighted average number of common and common equivalent shares outstanding:
Diluted 1,591   1,643   1,597   1,655  
 
Basic 1,580   1,633   1,586   1,643  
 
Dividends declared per share $   $   $ 0.78   $ 0.71  
 
 
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
 
  April 1,   October 1,
2017 2016
ASSETS
Current assets
Cash and cash equivalents $ 3,800 $ 4,610
Receivables 9,293 9,065
Inventories 1,304 1,390
Television costs and advances 1,133 1,208
Other current assets 740   693  
Total current assets 16,270 16,966
Film and television costs 6,974 6,339
Investments 4,155 4,280
Parks, resorts and other property
Attractions, buildings and equipment 50,785 50,270
Accumulated depreciation (27,646 ) (26,849 )
23,139 23,421
Projects in progress 3,023 2,684
Land 1,237   1,244  
27,399 27,349
Intangible assets, net 6,845 6,949
Goodwill 27,831 27,810
Other assets 2,333   2,340  
Total assets $ 91,807   $ 92,033  
 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities $ 8,077 $ 9,130
Current portion of borrowings 4,865 3,687
Unearned royalties and other advances 4,423   4,025  
Total current liabilities 17,365 16,842
Borrowings 16,788 16,483
Deferred income taxes 4,006 3,679
Other long-term liabilities 6,381 7,706
Commitments and contingencies
Equity
Preferred stock, $.01 par value, Authorized – 100 million shares, Issued – none
Common stock, $.01 par value,
Authorized – 4.6 billion shares, Issued – 2.9 billion shares
36,100 35,859
Retained earnings 69,708 66,088
Accumulated other comprehensive loss (3,880 ) (3,979 )
101,928 97,968
Treasury stock, at cost, 1.3 billion shares (58,144 ) (54,703 )
Total Disney Shareholders’ equity 43,784 43,265
Noncontrolling interests 3,483   4,058  
Total equity 47,267   47,323  
Total liabilities and equity $ 91,807   $ 92,033  
 
 
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
 
  Six Months Ended
April 1,   April 2,
2017 2016
OPERATING ACTIVITIES
Net income $ 5,027 $ 5,186
Depreciation and amortization 1,363 1,212
Deferred income taxes 126 797
Equity in the income of investees (203 ) (624 )
Cash distributions received from equity investees 397 383
Net change in film and television costs and advances (428 ) 35
Equity-based compensation 189 205
Other 261 320
Changes in operating assets and liabilities:
Receivables (284 ) (542 )
Inventories 90 218
Other assets 103 63
Accounts payable and other accrued liabilities (1,934 ) (746 )
Income taxes (9 ) (522 )
Cash provided by operations 4,698   5,985  
 
INVESTING ACTIVITIES
Investments in parks, resorts and other property (1,923 ) (2,556 )
Acquisitions (557 ) (400 )
Other 90   (82 )
Cash used in investing activities (2,390 ) (3,038 )
 
FINANCING ACTIVITIES
Commercial paper borrowings, net 914 709
Borrowings 2,053 3,766
Reduction of borrowings (1,233 ) (626 )
Dividends (1,237 ) (1,168 )
Repurchases of common stock (3,500 ) (4,391 )
Proceeds from exercise of stock options 186 160
Other (232 ) (654 )
Cash used in financing activities (3,049 ) (2,204 )
 
Impact of exchange rates on cash and cash equivalents (69 ) 3  
 
Change in cash and cash equivalents (810 ) 746
Cash and cash equivalents, beginning of period 4,610   4,269  
Cash and cash equivalents, end of period $ 3,800   $ 5,015  
 

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