Looks like another declining day--- time to exit stage right if it goes below 27---
Disney Reports 3rd Quarter Earnings
BURBANK, Calif.--(BUSINESS WIRE)--July 22, 1999--The Walt Disney Co. today reported
earnings for the third quarter and nine months ended June 30, 1999.
Revenues for the quarter increased 5% to $5.5 billion and operating income increased 3% to $951 million. Excluding the
impact of the company's November 1998 acquisition of a 43% interest in Infoseek Corp., net income increased 1% to $418
million and diluted earnings per share were unchanged at $0.20. Including Infoseek, net income and earnings per share were
$367 million and $0.18, respectively.
Revenues for the nine months increased 5% to $17.6 billion. Excluding the impact of Infoseek, which included a gain in the
first quarter related to the exchange of the company's investment in Starwave Corp., operating income decreased 17% to
$2.7 billion, net income decreased 26% to $1.2 billion and diluted earnings per share decreased 27% to $0.55. Including
Infoseek, operating income, net income and earnings per share were $3.1 billion, $1.2 billion and $0.58 for the nine-month
period, respectively.
``Our results for the quarter and, by and large, for the entire year, tell two concurrent stories,' said Michael Eisner, chairman
and chief executive officer. ``The first is one of relatively soft overall operating results. The second story is the solid
performance from a number of our core assets, reflecting the continued strength of our brands. `Tarzan' is having a
spectacular summer at the box office, and the opening of Asia at Disney's Animal Kingdom contributed to yet another
quarterly attendance record at Walt Disney World. While we are not satisfied with our current operating trends, we firmly
believe in the long-term strength and growth potential of the company's brands and franchises.
``In addition, we took a major step forward in implementing our Internet strategy earlier this month with a definitive
agreement to purchase the balance of Infoseek and create a single Internet business called go.com. We believe this better
positions the company to further develop its Internet assets and capitalize on the coming of broadband and the richer content
possibilities it will bring.'
Meanwhile during the quarter, the company began an across-the-board assessment of its cost structure and has already
announced operational realignments in its home video, television production, international and global merchandise licensing
businesses. Eisner said: ``Our reorganization strategy is focused on ways to leverage marketing and sales efforts, streamline
operations, develop new markets and reposition distribution channels, including our Internet sites, cable and television
networks and our Disney Stores. I am confident that, when completed, our operating units will be in a better position to
capitalize on our brand strength and generate long-term growth.'
Theme Parks and Resorts posted record operating results for the quarter and nine months. Revenues for the quarter increased
14% to $1.7 billion and operating income grew 12% to $478 million. For the nine months, revenues increased 14% to $4.6
billion and operating income increased 13% to $1.1 billion.
Theme Parks and Resorts results for the quarter and nine months reflected growth at the Walt Disney World Resort,
including higher guest spending, record attendance and increased occupied room nights driven by Disney's All Star Movies
Resort, which opened in the second quarter of the current year. Record attendance at Walt Disney World was driven by the
opening of Asia, the new land at Disney's Animal Kingdom, GM Test Track at Epcot and Fantasmic at Disney - MGM
Studios. Additionally, operating results included improvements at Disney Cruise Line, which launched in the prior-year
fourth quarter. Results at Disney Cruise Line reflected current period operations compared with prior-year pre-opening
costs. For the quarter, lower attendance at Disneyland partially offset the gains at the Walt Disney World Resort and Disney
Cruise Line.
Creative Content revenues for the quarter were unchanged at $2.0 billion and operating income decreased 33% to $74
million. For the nine months, revenues decreased 1% to $7.4 billion and operating income decreased 42% to $667 million.
While Creative Content results for the quarter reflected improvements in worldwide theatrical motion picture distribution
and home video, these improvements were more than offset by lower merchandise licensing results and increased costs in
network television production.
Worldwide theatrical motion picture distribution results reflected a stronger film slate, including the successful domestic
release of ``Tarzan.' Improved home video results were driven primarily by the release of ``A Bug's Life' in the current
quarter.
Decreases in merchandise licensing results principally reflected lower activity domestically and in Japan, partially offset by
growth in Europe. Higher costs in network television production included increased production deficits driven by four new
prime-time series, all of which have been renewed for next season, and increased development of pilot programs for next
season.
For the nine-month period, growth in worldwide theatrical motion picture distribution was more than offset by declines in
worldwide home video, worldwide merchandise licensing and the Disney Stores.
Improved worldwide theatrical motion picture distribution results were driven primarily by the box-office success of ``The
Waterboy,' ``A Bug's Life,' ``Enemy of the State' and ``Tarzan.' Lower worldwide home video results reflected lower
revenue, primarily attributable to a greater number of classic animated library releases in the prior-year period. In addition,
costs increased due to a greater proportion of recent releases, including direct-to-video titles, in the current period.
Lower worldwide merchandise licensing results for the nine months reflected lower activity domestically and continuing
softness internationally. Lower Disney Store results were driven by declines in comparative store sales, primarily
domestically.
Broadcasting revenues for the quarter increased 4% to $1.8 billion and operating income increased 4% to $399 million. For
the nine months, revenues increased 6% to $5.7 billion and operating income decreased 18% to $925 million.
Broadcasting results for the quarter and nine months were driven by increased revenues at the cable networks due to higher
advertising revenues at ESPN and increased subscriber growth at ESPN and the Disney Channel. These increases were
partially offset by declines at the television network due to higher programming costs, and decreases at the owned television
stations driven by ongoing softness in the local advertising market.
Results for the nine months also reflected higher sports programming costs associated with the new NFL contract, which
were only partially offset by revenue growth.
Net expense associated with corporate and other activities decreased $15 million to $34 million for the quarter and
decreased $4 million to $171 million for the nine months. Excluding the gain in the prior year on the sale of the company's
investment in Scandinavian Broadcasting System (``SBS'), net expense for the nine months decreased $42 million. The
decrease in net expense for the quarter and the nine months reflected improved results from the company's equity
investments, including Lifetime Television, A&E Television and Euro Disney.
Net interest expense increased 3% to $166 million for the quarter and 13% to $504 million for the nine-month period, due to
higher average debt balances in the current year and the absence of gains on the sale of investments in the current period
compared with the prior- year period, partially offset by lower interest rates. |
