BURBANK, CALIF., August 1 /CNW/ - The Walt Disney Company (NYSE:DIS)
today reported earnings for the third quarter and nine months ended June 30,
2007. Diluted earnings per share (EPS) from continuing operations for the
third quarter increased 14% to $0.58, compared to $0.51 in the prior-year
quarter. Higher earnings for the quarter were driven by double-digit growth in
operating income at the Media Networks, Parks and Resorts and Consumer
Products segments. Net income for the prior-year quarter was favorably
impacted by a $30 million net benefit associated with the completion of the
Pixar acquisition ($0.01 per share). As discussed below, the Company completed
the spin-off of its ABC Radio business during the quarter, and results from
that business are now reflected as discontinued operations for both the
current and prior-year periods.
"We've again achieved strong results by focusing on doing what we do
best: building high-quality creative franchises across multiple platforms and
multiple markets," said Disney president and chief executive Robert A. Iger.
The following table summarizes the third quarter and nine-month results
for fiscal 2007 and 2006 (in millions, except per share amounts):Quarter Ended Nine Months Ended
---------------- -----------------
June 30, July 1, June 30, July 1,
2007 2006 Change 2007 2006 Change
-------- ------- ------ -------- -------- ------
Revenues $9,045 $8,474 7% $26,580 $25,095 6%
Segment operating
income (1) $2,289 $1,999 15% $ 6,009 $ 4,762 26%
Income from
continuing
operations $1,196 $1,095 9% $ 3,791 $ 2,532 50%
Diluted EPS from
continuing
operations $ 0.58 $ 0.51 14% $ 1.80 $ 1.25 44%
Cash provided by
continuing operating
activities $1,127 $1,456 (23)% $ 3,825 $ 3,575 7%
Free cash flow (1) $ 687 $1,149 (40)% $ 2,839 $ 2,808 1%(1) Aggregate segment operating income and free cash flow are non-GAAP
financial measures. See the discussion of non-GAAP financial measures that
follows below.
Results for the current nine-month period included gains on sales of the
Company's interests in E! Entertainment and Us Weekly totaling $1.1 billion
($657 million after-tax or $0.31 per share) and an equity-based compensation
plan modification charge of $48 million ($30 million after-tax or $0.01 per
share) associated with the ABC Radio transaction, all of which were recognized
in the first quarter of fiscal 2007.
In addition to the gain related to the Pixar acquisition, the prior-year
nine-month period also included gains on sales of a Spanish cable equity
investment and Discover Magazine totaling $70 million ($44 million after-tax
or $0.02 per share), both of which were recognized in the first quarter of
fiscal 2006.
Collectively, these items increased EPS for the current and prior-year
nine-month periods by $0.30 and $0.04, respectively. Excluding these items,
EPS from continuing operations in the current nine-month period increased 24%
to $1.50 from $1.21 in the prior-year nine-month period.
SEGMENT RESULTS
The following table summarizes the third quarter and nine-months segment
operating results for fiscal 2007 and 2006 (in millions). Operating results of
the ABC Radio business are reported as discontinued operations for the current
and prior-year periods and therefore have been excluded from these segment
results.Quarter Ended Nine Months Ended
---------------- -----------------
June 30, July 1, June 30, July 1,
2007 2006 Change 2007 2006 Change
-------- ------- ------ -------- -------- ------
Revenues:
Media Networks $3,817 $3,594 6% $11,026 $10,559 4%
Parks and Resorts 2,904 2,730 6% 7,839 7,383 6%
Studio
Entertainment 1,775 1,705 4% 5,958 5,524 8%
Consumer Products 549 445 23% 1,757 1,629 8%
-------- ------- -------- --------
$9,045 $8,474 7% $26,580 $25,095 6%
-------- ------- -------- --------
Segment operating
income:
Media Networks $1,358 $1,105 23% $ 3,220 $ 2,630 22%
Parks and Resorts 621 549 13% 1,280 1,138 12%
Studio
Entertainment 192 240 (20)% 1,031 515 100%
Consumer Products 118 105 12% 478 479 --
-------- ------- -------- --------
$2,289 $1,999 15% $ 6,009 $ 4,762 26%
-------- ------- -------- --------Media Networks
Media Networks revenues for the quarter increased 6% to $3.8 billion and
segment operating income increased 23% to $1.4 billion. The following table
provides further detail of Media Networks results (in millions):Quarter Ended Nine Months Ended
---------------- -----------------
June 30, July 1, June 30, July 1,
2007 2006 Change 2007 2006 Change
-------- ------- ------ -------- -------- ------
Revenues (1):
Cable Networks $2,305 $2,206 4% $ 6,372 $ 5,914 8%
Broadcasting 1,512 1,388 9% 4,654 4,645 --
-------- ------- -------- --------
$3,817 $3,594 6% $11,026 $10,559 4%
-------- ------- -------- --------
Segment operating
income (1):
Cable Networks $1,063 $ 975 9% $ 2,487 $ 2,165 15%
Broadcasting 295 130 (greater than)100% 733
465 58%
-------- ------- -------- --------
$1,358 $1,105 23% $ 3,220 $ 2,630 22%
-------- ------- -------- --------(1) Operating results of the ESPN Radio and Radio Disney network and
stations businesses are now reported within Cable Networks in the Media
Networks segment for the current and prior periods. Previously, the Company's
radio businesses were reported within Broadcasting in the Media Networks
segment.
Cable Networks
Operating income at Cable Networks increased $88 million to $1.1 billion
for the quarter primarily due to growth at ESPN and at the domestic Disney/ABC
Cable Networks. The growth at ESPN was driven by higher affiliate revenues due
to contractual rate increases and subscriber growth, partially offset by
decreased recognition of previously deferred revenues related to annual
programming commitments. Operating income at ESPN also benefited from lower
costs associated with mobile phone operations, which have transitioned to a
licensing model since the prior-year period. During the quarter, ESPN
recognized $49 million of previously deferred revenues compared to $106
million in the prior-year quarter. The remaining deferred revenues totaling
$359 million as of the end of the current quarter are expected to be
recognized in the fourth quarter of the fiscal year compared to $171 million
of deferred revenues which were recognized in the fourth quarter of the prior
year. Increased operating income at the domestic Disney/ABC Cable Networks
reflected higher affiliate and advertising revenues. Growth in affiliate
revenues was primarily due to higher contractual rates and subscriber growth.
Broadcasting
Operating income at Broadcasting increased $165 million to $295 million
for the quarter primarily due to strong sales of ABC Studios productions,
lower programming and production costs, including a decrease in the number of
pilot productions, and higher advertising revenue at the ABC Television
Network. These increases were partially offset by increased costs associated
with the Disney-branded mobile phone service. The growth at ABC Studios
reflected higher international, domestic syndication and DVD sales led by
Lost, Desperate Housewives and Scrubs. Increased advertising revenues at the
ABC Television Network were due to higher advertising rates and higher sold
inventory, partially offset by the impact of lower ratings.
Parks and Resorts
Parks and Resorts revenues for the quarter increased 6% to $2.9 billion
and segment operating income increased 13% to $621 million. Higher segment
operating income reflected increases at Walt Disney World and Disneyland
Resort.
Higher operating income at Walt Disney World was due to increased guest
spending and higher attendance, partially offset by higher operating costs.
Guest spending increases were due to higher average daily room rates and
higher merchandise sales. Increased operating costs were driven by labor cost
inflation and new guest offerings, partially offset by lower pension and
postretirement medical expense and decreased marketing costs.
Higher operating income at Disneyland Resort was due to increased guest
spending, primarily due to higher average ticket prices, partially offset by
higher operating costs. Cost increases at Disneyland Resort were due to labor
cost inflation and new guest offerings, partially offset by lower pension and
postretirement medical expense.
Studio Entertainment
Studio Entertainment revenues for the quarter increased 4% to $1.8
billion and segment operating income decreased 20% to $192 million. Lower
segment operating income was primarily due to a decrease in worldwide home
entertainment partially offset by an increase in international theatrical
distribution.
The decrease in worldwide home entertainment was primarily due to lower
DVD sales, reflecting the strong performance of The Chronicles of Narnia: The
Lion, The Witch and The Wardrobe in the prior-year quarter.
The improvement in international theatrical distribution was driven by
the strong performance of Pirates of the Caribbean: At World's End in the
current quarter. At domestic theatrical distribution, the strong performance
of Pirates of the Caribbean: At World's End was offset by higher distribution
costs driven by marketing expenses for Disney/Pixar's Ratatouille, which was
released late in the current quarter.
Consumer Products
Consumer Products revenues for the quarter increased 23% to $549 million
and segment operating income increased 12% to $118 million.
Higher segment operating income for the quarter was driven by increased
unit volumes at Disney Interactive Studios, higher earned revenues at
Merchandise Licensing and by Disney Store North America license royalties,
which commenced in the first quarter of fiscal 2007. These gains were
partially offset by a higher revenue share with the Studio Entertainment
segment, increased marketing and video game development costs at Disney
Interactive Studios and higher operating costs at Merchandise Licensing.
Unit volume growth at Disney Interactive Studios reflected the success of
the self-published video game based on Pirates of the Caribbean: At World's
End while earned revenues at Merchandise Licensing grew across multiple
product categories led by Cars merchandise.
Consumer Products segment revenues generated from recent Studio
Entertainment properties are shared with the Studio segment. The increased
revenues from Studio properties, primarily Cars and Pirates of the Caribbean,
resulted in an increase in this allocation in the current quarter.
OTHER FINANCIAL INFORMATION
Net Interest Expense
Net interest expense was as follows (in millions):Quarter Ended
------------------------------
June 30, 2007 July 1, 2006
--------------- --------------
Interest expense $ (183) $ (158)
Interest and investment income 40 25
--------------- --------------
Net interest expense $ (143) $ (133)
--------------- --------------Net interest expense increased $10 million driven by higher effective
interest rates, partially offset by favorable market value adjustments on
certain investments in the current quarter and increased interest income on
higher average cash balances.
Income Taxes
The effective income tax rate for the quarter increased to 37.6% from
33.7% in the prior-year quarter. The increase was primarily due to a reduction
in the tax benefits realized from an exclusion of certain foreign source
income. The prior-year quarter rate also benefited from a non-taxable gain
recorded in connection with the Pixar acquisition.
The exclusion of certain foreign source income was repealed on a
phase-out basis as part of the American Jobs Creation Act of 2004. No
exclusion is available for transactions originating after the first quarter of
fiscal 2007.
Radio Disposition
On June 12, 2007, the Company completed the spin-off of its ABC Radio
business, which was then merged into a subsidiary of Citadel Broadcasting
Corporation (Citadel). The ABC Radio business includes 22 of the Company's
owned radio stations and the ABC Radio Network. As a result of the spin-off,
the operating results of the ABC Radio business will be reported as
discontinued operations in the current and prior periods. The transaction did
not include the Company's ESPN Radio and Radio Disney network and station
businesses.
Summarized financial information for the discontinued operations is as
follows (in millions, except per share data):Nine Months
Quarter Ended Ended
---------------- ----------------
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
-------- ------- -------- -------
Revenues $ 109 $ 146 $ 372 $ 406
Income (loss) from discontinued
operations before income taxes (11) 48 51 95
Income (loss) from discontinued
operations, net of tax (18) 30 19 60
Diluted EPS, discontinued operations (0.01) 0.01 0.01 0.03Cash Flow
Cash provided by continuing operating activities and free cash flow are
detailed below (in millions):Nine Months Ended
--------------------------
June 30, 2007 July 1, 2006 Change
------------- ------------ ------
Cash provided by continuing
operating activities $3,825 $3,575 $ 250
Investments in parks, resorts and
other property (986) (767) (219)
------------- ------------ ------
Free cash flow (1) $2,839 $2,808 $ 31
------------- ------------ ------(1) Free cash flow is a non-GAAP financial measure. See the discussion of
non-GAAP financial measures that follows below.
The Company generated $2.8 billion in free cash flow during the current
nine-month period, which was essentially flat compared to the prior-year
period as an increase of $250 million in cash provided by operating activities
was largely offset by an increase of $219 million in capital expenditures.
The increase in cash provided by operating activities was primarily due
to higher operating performance at Studio Entertainment, Parks and Resorts and
Media Networks and lower NFL payments, partially offset by higher income tax
payments.
The increase in capital expenditures was driven by a deposit on two new
cruise ships and new rides and attractions at Disneyland Resort including the
Finding Nemo Submarine Voyage.
Capital Expenditures and Depreciation Expense
Investments in parks, resorts and other property from continuing
operations by segment are as follows (in millions):Nine Months Ended
--------------------------
June 30, 2007 July 1, 2006
------------- ------------
Media Networks $123 $117
Parks and Resorts:
Domestic 536 385
International 193 182
------------- ------------
Total Parks and Resorts 729 567
------------- ------------
Studio Entertainment 49 24
Consumer Products 17 8
Corporate 68 51
------------- ------------
Total investments in parks, resorts and
other property from continuing operations $986 $767
------------- ------------Depreciation expense from continuing operations by segment is as follows
(in millions):Nine Months Ended
--------------------------
June 30, 2007 July 1, 2006
------------- ------------
Media Networks
Cable Networks $ 66 $ 64
Broadcasting 70 67
------------- ------------
Total Media Networks 136 131
------------- ------------
Parks and Resorts
Domestic 594 608
International 226 207
------------- ------------
Total Parks and Resorts 820 815
------------- ------------
Studio Entertainment 20 20
Consumer Products 13 15
Corporate 100 93
------------- ------------
Total depreciation expense from continuing
operations $1,089 $1,074
------------- ------------Share Repurchases
During the first nine months of fiscal 2007, the Company repurchased 151
million shares for $5.2 billion, of which 55 million shares were purchased for
$1.9 billion in the third quarter. As of June 30, 2007 the Company had
authorization in place to repurchase 374 million additional shares.
Borrowings
Total borrowings and net borrowings are detailed below (in millions):June 30, 2007 Sept. 30, 2006 Change
------------- -------------- --------
Current portion of borrowings $ 1,947 $ 2,682 $ (735)
Long-term borrowings 11,728 10,843 885
------------- -------------- --------
Total borrowings 13,675 13,525 150
Less: cash and cash equivalents (3,464) (2,411) (1,053)
------------- -------------- --------
Net borrowings (1) $10,211 $11,114 $ (903)
------------- -------------- --------(1) Net borrowings is a non-GAAP financial measure. See the discussion of
non-GAAP financial measures that follows below.
The total borrowings shown above include $3,426 million and $3,242
million attributable to Euro Disney and Hong Kong Disneyland as of June 30,
2007 and September 30, 2006, respectively. Cash and cash equivalents
attributable to Euro Disney and Hong Kong Disneyland totaled $420 million and
$599 million as of June 30, 2007 and September 30, 2006, respectively.
Non-GAAP Financial Measures
This earnings release presents earnings per share from continuing
operations excluding certain items related to dispositions and acquisitions,
net borrowings, 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 earnings
per share, borrowings, cash flow or income from continuing operations before
income taxes and minority interests as determined in accordance with GAAP.
Earnings per share from continuing operations excluding certain items related
to dispositions and acquisitions, net borrowings, 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.
Earnings per share from continuing operations excluding certain items
related to dispositions and acquisitions - The Company uses earnings per share
from continuing operations excluding certain items related to dispositions and
acquisitions to evaluate the performance of the Company's operations exclusive
of the impact of significant dispositions or acquisitions of interests in
businesses. During the current nine months, significant impacts included gains
on sales of equity investments in E! Entertainment and Us Weekly and a charge
related to modification of equity-based compensation plans in connection with
the ABC Radio transaction. In the prior nine-month period, significant impacts
included gains on sales of a Spanish cable equity investment and Discover
Magazine and a net gain associated with the completion of the Pixar
acquisition. The Company believes that earnings per share from continuing
operations exclusive of these impacts is useful to investors, particularly
where the impact of those 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 separately the impact of decisions regarding the sale and acquisition
of interests in businesses from the impact of the operations of the business.
The following table reconciles reported earnings per share from continuing
operations to earnings per share from continuing operations excluding certain
items related to dispositions and acquisitions:Nine Months Ended
--------------------------
June 30, 2007 July 1, 2006 Change
------------- ------------ ------
Diluted EPS from continuing
operations as reported $ 1.80 $ 1.25 44%
Exclude:
Gains on sales of equity nm
investments and business (0.31) (0.02)
Equity-based compensation plan nm
modification charge 0.01 --
Non-taxable gain on deemed
termination of Pixar distribution
agreement -- (0.02) nm
Impairment of Pixar related sequel nm
projects -- 0.01
------------- ------------
Diluted EPS from continuing
operations excluding certain items
related to dispositions and
acquisitions (1) $ 1.50 $ 1.21 24%
------------- ------------(1) Diluted EPS from continuing operations excluding certain items
related to dispositions and acquisitions may not equal the sum of the column
due to rounding.
Net borrowings - The Company believes that information about net
borrowings provides investors with a useful perspective on our financial
condition. Net borrowings reflect the subtraction of cash and cash equivalents
from total borrowings. Since we earn interest income on our cash balances that
offsets a portion of the interest expense we pay on our borrowings, net
borrowings can be used as a measure to gauge net interest expense. In
addition, a portion of our cash and cash equivalents is available to repay
outstanding indebtedness when the indebtedness matures or when other
circumstances arise. However, we may not immediately apply cash and cash
equivalents to the reduction of debt, nor do we expect that we would use all
of our available cash and cash equivalents to repay debt in the ordinary
course of business.
Free cash flow - The Company uses free cash flow (cash provided by
continuing operating activities 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, 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 income from continuing
operations before income taxes and minority interests is as follows (in
millions):Nine Months
Quarter Ended Ended
---------------- ----------------
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
-------- ------- -------- -------
Segment operating income $2,289 $1,999 $6,009 $4,762
Corporate and unallocated shared
expenses (115) (120) (352) (359)
Amortization of intangible assets (4) (3) (10) (8)
Equity-based compensation plan
modification charge -- -- (48) --
Gains on sales of equity investments
and business -- -- 1,052 70
Restructuring and impairment
(charges) and other credits, net -- 18 -- 18
Net interest expense (143) (133) (430) (441)
-------- ------- -------- -------
Income from continuing operations
before income taxes and minority
interests $2,027 $1,761 $6,221 $4,042
-------- ------- -------- -------CONFERENCE CALL INFORMATION
In conjunction with this release, The Walt Disney Company will host a
conference call today, August 1, 2007, at 1:30 PM PDT/4:30 PM EDT via a live
Webcast. To access the Webcast go to www.disney.com/investors. The discussion
will be available via replay through August 15, 2007 at 4:00 PM PDT/7:00 PM
EDT.
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:
-- adverse weather conditions or natural disasters;
-- health concerns;
-- international, political, or military developments;
-- technological developments; and
-- changes in domestic and global economic conditions, competitive
conditions and consumer preferences.
Such developments may affect 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;
-- expenses of providing medical and pension benefits;
-- demand for our products; 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 September 30, 2006 and in subsequent reports on Form
10-Q under Item 1A, "Risk Factors".The Walt Disney Company
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in millions, except per share data)
Quarter Ended Nine Months Ended
----------------- -------------------
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
-------- -------- --------- ---------
Revenues $ 9,045 $ 8,474 $ 26,580 $ 25,095
Costs and expenses (7,022) (6,734) (21,370) (21,055)
Gains on sales of equity
investments and business -- -- 1,052 70
Restructuring and impairment
(charges) and other credits,
net -- 18 -- 18
Net interest expense (143) (133) (430) (441)
Equity in the income of
investees 147 136 389 355
-------- -------- --------- ---------
Income from continuing
operations before income taxes
and minority interests 2,027 1,761 6,221 4,042
Income taxes (762) (593) (2,353) (1,409)
Minority interests (69) (73) (77) (101)
-------- -------- --------- ---------
Income from continuing
operations 1,196 1,095 3,791 2,532
Income (loss) from discontinued
operations, net of tax (18) 30 19 60
-------- -------- --------- ---------
Net income $ 1,178 $ 1,125 $ 3,810 $ 2,592
-------- -------- --------- ---------
Diluted Earnings per share:
Earnings per share,
continuing operations (1) $ 0.58 $ 0.51 $ 1.80 $ 1.25
Earnings per share,
discontinued operations (0.01) 0.01 0.01 0.03
-------- -------- --------- ---------
Earnings per share (1) (2) $ 0.57 $ 0.53 $ 1.81 $ 1.28
-------- -------- --------- ---------
Basic Earnings per share:
Earnings per share,
continuing operations $ 0.60 $ 0.53 $ 1.87 $ 1.28
Earnings per share,
discontinued operations (0.01) 0.01 0.01 0.03
-------- -------- --------- ---------
Earnings per share $ 0.59 $ 0.54 $ 1.88 $ 1.31
-------- -------- --------- ---------
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 2,070 2,147 2,115 2,045
-------- -------- --------- ---------
Basic 1,982 2,071 2,027 1,978
-------- -------- --------- ---------
(1) The calculation of diluted earnings per share assumes the
conversion of the Company's convertible senior notes and adds back
interest expense (net of tax) of $5 million and $16 million for the
quarter and nine months ended June 30, 2007, respectively, and $5
million and $16 million for the quarter and nine months ended July 1,
2006, respectively.
(2) Earnings per share may not equal the sum of the column due to
rounding.The Walt Disney Company
CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except per share data)
June 30, Sept. 30,
2007 2006
--------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 3,464 $ 2,411
Receivables 5,139 4,707
Inventories 608 694
Television costs 512 415
Deferred income taxes 588 592
Other current assets 507 743
--------- ---------
Total current assets 10,818 9,562
Film and television costs 4,967 5,235
Investments 934 1,315
Parks, resorts and other property, at cost
Attractions, buildings and equipment 29,703 28,843
Accumulated depreciation (14,721) (13,781)
--------- ---------
14,982 15,062
Projects in progress 929 913
Land 1,154 1,192
--------- ---------
17,065 17,167
Intangible assets, net 2,438 2,907
Goodwill 22,015 22,505
Other assets 1,430 1,307
--------- ---------
$ 59,667 $ 59,998
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued liabilities $ 5,137 $ 5,917
Current portion of borrowings 1,947 2,682
Unearned royalties and other advances 2,461 1,611
--------- ---------
Total current liabilities 9,545 10,210
Borrowings 11,728 10,843
Deferred income taxes 2,451 2,651
Other long-term liabilities 3,184 3,131
Minority interests 1,202 1,343
Commitments and contingencies -- --
Shareholders' equity
Preferred stock, $.01 par value
Authorized - 100 million shares, Issued -
none -- --
Common stock, $.01 par value
Authorized - 3.6 billion shares, Issued -
2.6 billion shares at June 30, 2007 and 2.5
billion shares at September 30, 2006 23,990 22,377
Retained earnings 23,926 20,630
Accumulated other comprehensive income (loss) 18 (8)
--------- ---------
47,934 42,999
Treasury stock, at cost, 586.9 million shares
at June 30, 2007 and 436.0 million shares at
September 30, 2006 (16,377) (11,179)
--------- ---------
31,557 31,820
--------- ---------
$ 59,667 $ 59,998
--------- ---------The Walt Disney Company
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Nine Months Ended
-----------------
June 30, July 1,
2007 2006
-------- --------
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income $ 3,810 $ 2,592
Income from discontinued operations (19) (60)
Depreciation and amortization 1,099 1,082
Gains on sales of equity investments and business (1,052) (70)
Deferred income taxes (189) (135)
Equity in the income of investees (389) (355)
Cash distributions received from equity investees 339 361
Minority interests 77 101
Net change in film and television costs 191 444
Equity-based compensation 308 277
Other (112) (133)
Changes in operating assets and liabilities:
Receivables (508) (139)
Inventories 85 (8)
Other assets 96 46
Accounts payable and other accrued
liabilities (331) (310)
Income taxes 420 (118)
-------- --------
Cash provided by continuing operating activities 3,825 3,575
-------- --------
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Investments in parks, resorts and other property (986) (767)
Sales of investments 4 1,073
Proceeds from sales of equity investments and
business 1,530 81
Acquisitions (231) (34)
Proceeds from sales of fixed assets and other 88 6
-------- --------
Cash provided by continuing investing activities 405 359
-------- --------
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Commercial paper borrowings, net 1,680 1,381
Borrowings 1,632 448
Reduction of borrowings (1,916) (1,724)
Dividends (637) (519)
Repurchases of common stock (5,198) (4,056)
Equity partner contribution -- 48
Exercise of stock options and other 1,158 629
-------- --------
Cash used by continuing financing activities (3,281) (3,793)
-------- --------
CASH FLOWS OF DISCONTINUED OPERATIONS
Net cash provided by operating activities of
discontinued operations 29 74
Net cash used in investing activities of
discontinued operations (3) (3)
Net cash provided by financing activities of
discontinued operations 78 18
-------- --------
Increase in cash and cash equivalents 1,053 230
Cash and cash equivalents, beginning of period 2,411 1,723
-------- --------
Cash and cash equivalents, end of period $ 3,464 $ 1,953
-------- --------
For further information: The Walt Disney Company Zenia Mucha, Corporate
Communications 818-560-5300 Jonathan Friedland, Corporate Communications
818-560-8306 Lowell Singer, Investor Relations 818-560-6601
