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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent 7/30/08 Walt Disney Co 10-Q 6/28/08 6:98 RR Donnelley/FA
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 587K
2: EX-10.1 Description of Directors Compensation HTML 11K
3: EX-31.(A) Certification of Ceo in Accordance With Section HTML 13K
302
4: EX-31.(B) Certification of Cfo in Accordance With Section HTML 12K
302
5: EX-32.(A) Certification of Ceo in Accordance With Section HTML 8K
906
6: EX-32.(B) Certification of Cfo in Accordance With Section HTML 8K
906
| Form 10-Q |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
| For the Quarterly Period Ended |
Commission File Number 1-11605 | |
| Incorporated in Delaware |
I.R.S. Employer Identification | |
| No. 95-4545390 |
500 South Buena Vista Street, Burbank, California 91521
(818) 560-1000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
| Large accelerated filer |
X | Accelerated filer | ||||||||
| Non-accelerated filer (do not check if |
Smaller reporting company | |||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes No X
There were 1,876,424,814 shares of common stock outstanding as of July 25, 2008.
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)
| Quarter Ended | Nine Months Ended | |||||||||||||||
| June 28, 2008 |
June 30, 2007 |
June 28, 2008 |
June 30, 2007 |
|||||||||||||
| Revenues |
$ | 9,236 | $ | 9,045 | $ | 28,398 | $ | 26,580 | ||||||||
| Costs and expenses |
(7,215 | ) | (7,022 | ) | (22,446 | ) | (21,370 | ) | ||||||||
| Other income |
32 | — | 32 | 1,052 | ||||||||||||
| Net interest expense |
(141 | ) | (143 | ) | (411 | ) | (430 | ) | ||||||||
| Equity in the income of investees |
175 | 147 | 442 | 389 | ||||||||||||
| Income from continuing operations before income taxes and minority interests |
2,087 | 2,027 | 6,015 | 6,221 | ||||||||||||
| Income taxes |
(712 | ) | (762 | ) | (2,183 | ) | (2,353 | ) | ||||||||
| Minority interests |
(91 | ) | (69 | ) | (165 | ) | (77 | ) | ||||||||
| Income from continuing operations |
1,284 | 1,196 | 3,667 | 3,791 | ||||||||||||
| Income (loss) from discontinued operations, net of tax |
— | (18 | ) | — | 19 | |||||||||||
| Net income |
$ | 1,284 | $ | 1,178 | $ | 3,667 | $ | 3,810 | ||||||||
| Diluted earnings per share: |
||||||||||||||||
| Earnings per share, continuing operations |
0.66 | 0.58 | 1.87 | 1.80 | ||||||||||||
| Earnings per share, discontinued operations |
— | (0.01 | ) | — | 0.01 | |||||||||||
| Earnings per share |
$ | 0.66 | $ | 0.57 | $ | 1.87 | $ | 1.81 | ||||||||
| Basic earnings per share: |
||||||||||||||||
| Earnings per share, continuing operations |
0.68 | 0.60 | 1.93 | 1.87 | ||||||||||||
| Earnings per share, discontinued operations |
— | (0.01 | ) | — | 0.01 | |||||||||||
| Earnings per share |
$ | 0.68 | $ | 0.59 | $ | 1.93 | $ | 1.88 | ||||||||
| Weighted average number of common and common equivalent shares outstanding: |
||||||||||||||||
| Diluted |
1,940 | 2,070 | 1,963 | 2,115 | ||||||||||||
| Basic |
1,900 | 1,982 | 1,896 | 2,027 | ||||||||||||
See Notes to Condensed Consolidated Financial Statements
2
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except per share data)
| June 28, 2008 |
September 29, 2007 |
|||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 2,589 | $ | 3,670 | ||||
| Receivables |
5,669 | 5,032 | ||||||
| Inventories |
992 | 641 | ||||||
| Television costs |
508 | 559 | ||||||
| Deferred income taxes |
862 | 862 | ||||||
| Other current assets |
623 | 550 | ||||||
| Total current assets |
11,243 | 11,314 | ||||||
| Film and television costs |
5,183 | 5,123 | ||||||
| Investments |
1,418 | 995 | ||||||
| Parks, resorts and other property, at cost |
||||||||
| Attractions, buildings and equipment |
31,702 | 30,260 | ||||||
| Accumulated depreciation |
(16,321 | ) | (15,145 | ) | ||||
| 15,381 | 15,115 | |||||||
| Projects in progress |
980 | 1,147 | ||||||
| Land |
1,189 | 1,171 | ||||||
| 17,550 | 17,433 | |||||||
| Intangible assets, net |
2,474 | 2,494 | ||||||
| Goodwill |
22,121 | 22,085 | ||||||
| Other assets |
1,593 | 1,484 | ||||||
| $ | 61,582 | $ | 60,928 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable and other accrued liabilities |
$ | 5,246 | $ | 5,949 | ||||
| Current portion of borrowings |
2,050 | 3,280 | ||||||
| Unearned royalties and other advances |
2,743 | 2,162 | ||||||
| Total current liabilities |
10,039 | 11,391 | ||||||
| Borrowings |
11,522 | 11,892 | ||||||
| Deferred income taxes |
2,258 | 2,573 | ||||||
| Other long-term liabilities |
3,748 | 3,024 | ||||||
| Minority interests |
1,236 | 1,295 | ||||||
| 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 |
26,274 | 24,207 | ||||||
| Retained earnings |
27,660 | 24,805 | ||||||
| Accumulated other comprehensive loss |
(59 | ) | (157 | ) | ||||
| 53,875 | 48,855 | |||||||
| Treasury stock, at cost, 730.3 million shares at June 28, 2008 |
(21,096 | ) | (18,102 | ) | ||||
| 32,779 | 30,753 | |||||||
| $ | 61,582 | $ | 60,928 | |||||
See Notes to Condensed Consolidated Financial Statements
3
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)
| Nine Months Ended | ||||||||
| June 28, 2008 |
June 30, 2007 |
|||||||
| OPERATING ACTIVITIES OF CONTINUING OPERATIONS |
||||||||
| Net income |
$ | 3,667 | $ | 3,810 | ||||
| Income from discontinued operations |
— | (19 | ) | |||||
| Depreciation and amortization |
1,178 | 1,109 | ||||||
| Gains on sales of equity investments and business |
(14 | ) | (1,052 | ) | ||||
| Deferred income taxes |
(48 | ) | (77 | ) | ||||
| Equity in the income of investees |
(442 | ) | (389 | ) | ||||
| Cash distributions received from equity investees |
367 | 339 | ||||||
| Minority interests |
165 | 77 | ||||||
| Net change in film and television costs |
(67 | ) | 191 | |||||
| Equity-based compensation |
290 | 319 | ||||||
| Other |
(169 | ) | (133 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Receivables |
(700 | ) | (508 | ) | ||||
| Inventories |
(224 | ) | 85 | |||||
| Other assets |
(23 | ) | 96 | |||||
| Accounts payable and other accrued liabilities |
230 | (331 | ) | |||||
| Income taxes |
(9 | ) | 308 | |||||
| Cash provided by continuing operations |
4,201 | 3,825 | ||||||
| INVESTING ACTIVITIES OF CONTINUING OPERATIONS |
||||||||
| Investments in parks, resorts and other property |
(949 | ) | (986 | ) | ||||
| Proceeds from sales of equity investments and business |
14 | 1,530 | ||||||
| Acquisitions (including equity investments) |
(488 | ) | (231 | ) | ||||
| Other |
42 | 92 | ||||||
| Cash (used) provided by continuing investing activities |
(1,381 | ) | 405 | |||||
| FINANCING ACTIVITIES OF CONTINUING OPERATIONS |
||||||||
| Commercial paper (repayments) / borrowings, net |
(1,447 | ) | 1,680 | |||||
| Borrowings |
1,000 | 1,632 | ||||||
| Reduction of borrowings |
(288 | ) | (1,916 | ) | ||||
| Dividends |
(664 | ) | (637 | ) | ||||
| Repurchases of common stock |
(2,994 | ) | (5,198 | ) | ||||
| Exercise of stock options and other |
492 | 1,158 | ||||||
| Cash used by continuing financing activities |
(3,901 | ) | (3,281 | ) | ||||
| CASH FLOW OF DISCONTINUED OPERATIONS |
||||||||
| Net cash provided by operating activities of discontinued operations |
— | 29 | ||||||
| Net cash used in investing activities of discontinued operations |
— | (3 | ) | |||||
| Net cash provided by financing activities of discontinued operations |
— | 78 | ||||||
| (Decrease)/increase in cash and cash equivalents |
(1,081 | ) | 1,053 | |||||
| Cash and cash equivalents, beginning of period |
3,670 | 2,411 | ||||||
| Cash and cash equivalents, end of period |
$ | 2,589 | $ | 3,464 | ||||
See Notes to Condensed Consolidated Financial Statements
4
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)
| 1. |
Principles of Consolidation |
These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, normal recurring adjustments considered necessary for a fair presentation have been reflected in these Condensed Consolidated Financial Statements. Operating results for the quarter and nine months ended June 28, 2008 are not necessarily indicative of the results that may be expected for the year ending September 27, 2008. Certain reclassifications have been made in the prior year financial statements to conform to the current year presentation.
These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended September 29, 2007.
In December 1999, DVD Financing, Inc. (DFI), a subsidiary of Disney Vacation Development, Inc. and an indirect subsidiary of the Company, completed a receivables sale transaction which established a facility that permits DFI to sell receivables arising from the sale of vacation club memberships on a periodic basis. In connection with this facility, DFI prepares separate financial statements, although its separate assets and liabilities are also consolidated in these financial statements.
The terms “Company,” “we,” “us,” 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.
| 2. |
Segment Information |
The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance. The Company reports the performance of its operating segments including equity in the income of investees, which consists primarily of cable businesses included in the Media Networks segment.
5
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except for per share data)
| Quarter Ended | Nine Months Ended | |||||||||||
| June 28, 2008 |
June 30, 2007 |
June 28, 2008 |
June 30, 2007 | |||||||||
| Revenues (1)(2) : |
||||||||||||
| Media Networks |
$ | 4,123 | $ | 3,829 | $ | 11,904 | $ | 11,071 | ||||
| Parks and Resorts |
3,038 | 2,904 | 8,535 | 7,839 | ||||||||
| Studio Entertainment |
1,433 | 1,775 | 5,896 | 5,958 | ||||||||
| Consumer Products |
642 | 537 | 2,063 | 1,712 | ||||||||
| $ | 9,236 | $ | 9,045 | $ | 28,398 | $ | 26,580 | |||||
| Segment operating income (1)(2) : |
||||||||||||
| Media Networks |
$ | 1,472 | $ | 1,356 | $ | 3,697 | $ | 3,216 | ||||
| Parks and Resorts |
641 | 621 | 1,485 | 1,280 | ||||||||
| Studio Entertainment |
97 | 190 | 988 | 1,027 | ||||||||
| Consumer Products |
113 | 118 | 542 | 476 | ||||||||
| $ | 2,323 | $ | 2,285 | $ | 6,712 | $ | 5,999 | |||||