Company Press Release
Disney Reports Increased Second-Quarter Earnings
BURBANK, Calif.--(BUSINESS WIRE)--April 22, 1998--The Walt Disney Co. Wednesday reported increased earnings for both the second quarter and six months ended March 31, 1998.
Compared with prior-year pro forma amounts, revenues for the quarter were unchanged, and operating income increased 3 percent to $849 million. Net income for the quarter increased 22 percent to $384 million, and diluted earnings per share increased 20 percent to 55 cents.
Revenues for the six months increased 3 percent to $11.6 billion, and operating income increased 6 percent to $2.3 billion. Net income for the six months increased 19 percent to $1.1 billion, and diluted earnings per share increased 18 percent to $1.65.
The results for the quarter and six months were strengthened by a gain on the sale of the company's interest in Scandinavian Broadcasting System (Nasdaq:SBTVF - news; SBS). The SBS transaction resulted in $24 million of net income and 3 cents of diluted earnings per share.
Michael D. Eisner, Disney chairman and chief executive officer, said: ''Our Theme Parks and Resorts division continued to lead the company forward during the second quarter. This performance was especially noteworthy in that it was achieved despite increased start-up costs for our newest park, Disney's Animal Kingdom, and Disney Cruise Line. Our cable-television operations were also strong contributors to the quarter's results.''
During fiscal 1997, the company disposed of certain ABC publishing assets; finalized the ABC purchase price allocation; and sold KCAL, a Los Angeles television station. To enhance comparability, the operating results for the quarter and six months ended March 31, 1997, are discussed on a pro forma basis, which assumes these events all occurred at the beginning of fiscal 1997.
Theme Parks and Resorts posted record operating results for the quarter and six months. Revenues for the quarter increased 3 percent to $1.2 billion, and operating income grew 15 percent to $271 million. For the six months, revenues increased 6 percent to $2.5 billion, and operating income increased 18 percent to $558 million.
Theme Parks and Resorts results for the quarter and six months reflected higher guest spending and increased occupied room nights at the Walt Disney World Resort, partially offset by lower attendance reflecting the conclusion of the prior-year's 25th Anniversary Celebration and start-up costs for Disney Cruise Line and Disney's Animal Kingdom.
Increased guest spending reflected growth throughout the property and expanded retail and restaurant attractions at Downtown Disney. Increased occupied room nights reflected additional capacity resulting from the August 1997 opening of Disney's Coronado Springs Resort.
Creative Content revenues for the quarter decreased 3 percent to $2.4 billion, and operating income decreased 4 percent to $339 million. For the six months, revenues were unchanged at $5.4 billion, and operating income increased 2 percent to $1 billion.
Creative Content results for the quarter reflected the domestic theatrical success of the Academy Award-winning ''Good Will Hunting,'' and increased results in the domestic home-video market from the release of ''The Little Mermaid,'' ''Peter Pan'' and ''Hercules.''
The quarter also benefited from increased results at The Disney Store, which reflected higher comparative store sales in North America. International theatrical and home-video results for the quarter were lower than the prior year, which benefited from the success of ''101 Dalmatians'' and ''Ransom'' in the theatrical market and ''Toy Story'' and ''Aladdin and the King of Thieves'' in the video market.
The results for the six months reflected growth in the distribution of film and television product in the domestic television market, as well as growth in domestic merchandise licensing and at The Disney Store.
Theatrical results for the six months reflected difficult comparisons to the prior year, which benefited from the release of ''Scream'' and ''The English Patient'' domestically and ''101 Dalmatians'' and ''Ransom'' worldwide.
Home-video results for the six months reflected the successful release of ''The Little Mermaid,'' ''Hercules'' and ''Peter Pan'' domestically, while results internationally were lower overall compared with the prior year, which benefited from the release of ''Toy Story'' and ''Pocahontas.''
Broadcasting revenues for the quarter increased 4 percent to $1.6 billion, and operating income remained unchanged. For the six months, revenues increased 7 percent to $3.7 billion, and operating income increased 5 percent to $744 million.
Broadcasting results for the quarter and six months were driven by increased revenues at the cable networks due primarily to higher advertising revenues and subscriber growth. In addition, the owned television stations benefited from stronger demand for advertising.
Results at the television network decreased due to the impact of higher program amortization, primarily due to a reduction in benefits arising from the ABC acquisition, and decreased advertising revenues due to lower broadcast-network ratings and the impact of the Olympic Winter Games.
Corporate activities and other decreased 56 percent to $48 million for the quarter and 36 percent to $126 million for the six months, primarily reflecting the gain on the sale of the company's SBS investment and growth from E! Entertainment Television, A&E Television and Lifetime Television.
Results for the current quarter and six months also reflected decreases in net interest expense of 18 percent to $150 million and 20 percent to $284 million, respectively, due primarily to lower average debt balances. Results for the six months also reflected gains on the sales of certain investments in the first quarter.
Compared with prior-year as-reported results, net income for the quarter increased 15 percent, and diluted earnings per share increased 12 percent. For the six months, net income increased 5 percent, and diluted earnings per share increased 4 percent.
As-reported revenues and operating income for the quarter and six months differed from the pro forma amounts primarily due to the prior-year inclusion in the as-reported results of the ABC publishing operations and the gain on the sale of KCAL.
The company's income statements report diluted and basic earnings per share (EPS) in accordance with Statement and Financial Accounting Standards No. 128 ''Earnings Per Share,'' which the company adopted in the first quarter.
Diluted EPS includes the dilution that would occur if outstanding stock options were exercised and is comparable to the EPS the company has historically reported. Basic EPS is calculated by dividing net income by average common shares outstanding for the period.
EDITOR'S NOTE: The company makes available its quarterly earnings releases, annual report to shareholders, fact book and Securities and Exchange Commission filings on its Investor Relations Web site located at disney.com.
THE WALT DISNEY CO.
CONSOLIDATED STATEMENTS OF INCOME
For The Quarter Ended March 31
(Unaudited; in millions, except per-share data)
1998 1997 1997
(Pro Forma) (As Reported)
REVENUES $ 5,242 $ 5,218 $ 5,481
COSTS AND EXPENSES (4,393) (4,390) (4,617)
OPERATING INCOME 849 828 864
CORPORATE ACTIVITIES AND OTHER (48) (108) (108)
NET INTEREST EXPENSE (150) (184) (184)
INCOME BEFORE INCOME TAXES 651 536 572
INCOME TAXES (267) (220) (239)
NET INCOME $ 384 $ 316 $ 333
EARNINGS PER SHARE:
Diluted 55 cents 46 cents 49 cents
Basic 57 cents 47 cents 49 cents
Average number of common and
common equivalent shares
outstanding:
Diluted 693 686 686
Basic 679 674 674
THE WALT DISNEY CO.
CONSOLIDATED STATEMENTS OF INCOME
For The Six Months Ended March 31
(Unaudited; in millions, except per-share data)
1998 1997 1997
(Pro Forma) (As Reported)
REVENUES $ 11,581 $ 11,202 $ 11,759
COSTS AND EXPENSES (9,240) (8,999) (9,468)
GAIN ON SALE OF KCAL -- -- 135
OPERATING INCOME 2,341 2,203 2,426
CORPORATE ACTIVITIES AND OTHER (126) (198) (198)
NET INTEREST EXPENSE (284) (355) (355)
INCOME BEFORE INCOME TAXES 1,931 1,650 1,873
INCOME TAXES (792) (693) (791)
NET INCOME $ 1,139 $ 957 $ 1,082
EARNINGS PER SHARE:
Diluted $ 1.65 $ 1.40 $ 1.58
Basic $ 1.68 $ 1.42 $ 1.60
Average number of common and
common equivalent shares
outstanding:
Diluted 691 686 686
Basic 676 674 674
THE WALT DISNEY CO.
SEGMENT RESULTS
For The Quarter Ended March 31
(Unaudited; in millions)
1998 1997 1997
(Pro Forma) % Change (As Reported)
Revenues:
Creative Content $ 2,409 $ 2,487 (3)% $ 2,750
Broadcasting 1,589 1,528 4% 1,528
Theme Parks & Resorts 1,244 1,203 3% 1,203
Total $ 5,242 $ 5,218 0% $ 5,481
Operating Income: (1)(2)
Creative Content $ 339 $ 354 (4)% $ 390
Broadcasting 239 238 0% 238
Theme Parks & Resorts 271 236 15% 236
Total Operating Income $ 849 $ 828 3% $ 864
(1) Includes depreciation and amortization (excluding film costs) of:
Creative Content $ 50 $ 41
Broadcasting 135 131
Theme Parks & Resorts 104 90
$ 289 $ 262
(2) 1998 and pro forma 1997 amounts include intangible asset
amortization of $107 and $104, respectively.
THE WALT DISNEY CO.
SEGMENT RESULTS
For The Six Months Ended March 31
(Unaudited; in millions)
1998 1997 1997
(Pro Forma) % Change (As Reported)
Revenues:
Creative Content $ 5,424 $ 5,449 0% $ 5,985
Broadcasting 3,653 3,400 7% 3,421
Theme Parks & Resorts 2,504 2,353 6% 2,353
Total $11,581 $11,202 3% $11,759
Operating Income: (1)(2)
Creative Content $ 1,039 $ 1,022 2% $ 1,101
Broadcasting 744 707 5% 716
Theme Parks & Resorts 558 474 18% 474
2,341 2,203 6% 2,291
Gain on Sale of KCAL -- -- n/m 135
Total Operating Income $ 2,341 $ 2,203 6% $ 2,426
(1) Includes depreciation and amortization (excluding film costs) of:
Creative Content $ 102 $ 83
Broadcasting 269 260
Theme Parks & Resorts 202 187
$ 573 $ 530
(2) 1998 and pro forma 1997 amounts include intangible asset
amortization of $213 and $208, respectively.
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Contact:
The Walt Disney Co., Burbank
Winifred Markus Webb, 818/560-5758 |
