Document/Exhibit Description Pages Size
1: 10-K Annual Report 52 281K
2: EX-3.B Bylaws of the Company 16 55K
3: EX-4.C Amended and Restated Credit Agmnt., as of 10/3/94 44 227K
4: EX-10.L Disney Salaried Retirement Plan, Amended - 3/1/94 65 160K
5: EX-21 Subsidiaries of the Registrant 1 5K
6: EX-27 Financial Data Schedule (Pre-XBRL) 2 7K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1994 Commission File Number 1-4083
THE WALT DISNEY COMPANY
Incorporated in Delaware I.R.S. Employer Identification No.
500 South Buena Vista Street 95-0684440
Burbank, California 91521
(818) 560-1000
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock, $.025 par value New York Stock Exchange
Pacific Stock Exchange
Swiss Stock Exchange
Tokyo Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None.
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes..X.. No....
Indicate by check mark if disclosure of delinquent filers pursuant to Rule
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. .....
As of November 30, 1994, the aggregate market value of registrant's common
stock held by non-affiliates (based on the closing price on such date as
reported on the New York Stock Exchange-Composite Transactions) was
$20.7 billion. All executive officers and directors of registrant and all
persons filing a Schedule 13D with the Securities and Exchange Commission in
respect to registrant's common stock have been deemed, solely for the purpose
of the foregoing calculation, to be "affiliates" of the registrant.
There were 517,054,527 shares of common stock outstanding as of December 9,
1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual Meeting of Stockholders
are incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
The Walt Disney Company, together with its subsidiaries (the "Company"), is a
diversified international entertainment company with operations in three
business segments: Filmed Entertainment, Theme Parks and Resorts and Consumer
Products. Information on revenues, operating income, identifiable assets and
supplemental revenue data of the Company's business segments appears in the
Consolidated Statement of Income and in Note 12 of Notes to Consolidated
Financial Statements included in Item 8 hereof. The Company employs
approximately 65,000 people.
FILMED ENTERTAINMENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, television and home video markets. The
Company also produces original television programming for the network and first-
run syndication markets. In addition, the Company provides programming for and
operates The Disney Channel, a pay television programming service, and KCAL-TV,
a Los Angeles, California television station.
The success of all the Company's theatrical motion pictures and television
programming is heavily dependent upon public taste, which is unpredictable and
subject to change without warning. In addition, filmed entertainment operating
results fluctuate due to the timing of theatrical and home video releases.
Release dates are determined by several factors, including timing of vacation
and holiday periods and competition in the market.
THEATRICAL FILMS
Walt Disney Pictures and Television, a wholly-owned subsidiary of the
Company, produces and acquires live-action motion pictures that are distributed
under the names Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures
and Caravan Pictures. The Company's Miramax Film Corp. subsidiary distributes
films under its own banner. In addition, the Company distributes films produced
or acquired by the independent production companies Cinergi Pictures
Entertainment, Interscope Communications and Merchant-Ivory Productions. The
Company also produces animated motion pictures under the name Walt Disney
Pictures.
The Company plans to distribute approximately 20 to 30 feature films each
year under the total Walt Disney Company banners, including several live-action
family feature films each year and one to two full-length animated films every
eighteen months under the Walt Disney Pictures name, together with a total of
between fifteen and twenty-five teenage and adult films each year under the
various motion picture banners. The Company also expects that Miramax will
independently acquire and produce up to 25 films per year. In addition, the
Company periodically reissues previously released animated films. As of
September 30, 1994, the Company had released 285 full-length live-action
(primarily color) features, 32 full-length animated color features and
approximately 536 cartoon shorts.
The Company distributes its filmed products through its own distribution and
marketing companies in the United States and most foreign markets.
HOME VIDEO
The Company distributes directly home video releases from each of its studios
in the domestic market. In the international market, the Company distributes
both directly and through foreign distribution companies. In addition, the
Company acquires and produces original programming for direct-to-video release.
As of September 30, 1994, approximately 591 titles, including 143 feature films
and 207 cartoon shorts and features were available to the domestic marketplace.
Approximately 498 titles, including 191 feature films and 237 cartoon and
animated features were available to the international home entertainment market.
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NETWORK TELEVISION
The Company's network television operation develops, produces and distributes
television programming to network and other broadcasters, under the Touchstone
Television and Walt Disney Television labels. Program development is carried
out in collaboration with a number of independent writers, producers and
creative teams under exclusive development arrangements. Since 1991, the
Company has focused on the development, production and distribution of half-hour
comedies for network prime-time broadcast, including such series as HOME
IMPROVEMENT, EMPTY NEST, BLOSSOM, BOY MEETS WORLD and ELLEN. The Company seeks
to syndicate in the domestic market those series that produce enough programs to
permit syndicated "strip" broadcasting on a five-days-per-week basis.
The Company licenses television series developed for United States networks
in a number of foreign markets, including Canada, Italy, the United Kingdom,
Spain, Germany and Australia.
Walt Disney Television currently distributes two animated cartoon series for
Saturday morning: ALADDIN and THE LITTLE MERMAID. The Company also offers a
variety of prime-time specials for exhibition on network television.
The Company believes that its television programs complement the marketing
and distribution of its theatrical motion pictures, the Walt Disney World
destination resort, Disneyland and other businesses.
PAY TELEVISION AND TELEVISION SYNDICATION
The Company licenses a number of feature films to pay television services,
including its wholly-owned subsidiary, The Disney Channel.
The Company's Buena Vista Television subsidiary licenses the theatrical and
television film library to the domestic television syndication market. Major
packages of the Company's feature films and television programming have been
licensed for broadcast and basic cable continuing over several years.
The Company currently licenses its feature films for pay television on an
output basis in several geographic markets, including the United Kingdom and
Scandinavia, and has an arrangement with Showtime through 1996 for the United
States. In 1993, the Company entered into an agreement to license to the Encore
pay television service, over a multi-year period, exclusive domestic pay
television rights to Miramax films beginning in 1994 and Touchstone Pictures and
Hollywood Pictures films starting in 1997.
The Company also produces first-run animated and live-action syndicated
programming. The Disney Afternoon is a two-hour block of cartoons airing five
days per week including DARKWING DUCK, GOOF TROOP, BONKERS, and the recently
added ALADDIN and GARGOYLES series. TALE SPIN, DUCK TALES and CHIP 'N DALE are
also syndicated nationally. Live action programming includes: LIVE WITH REGIS
AND KATHIE LEE, MIKE & MATY and JUDGE FOR YOURSELF, one-hour daily talk shows;
SISKEL & EBERT, a weekly half-hour motion picture review program; BILL NYE THE
SCIENCE GUY, a weekly half-hour educational program for children; and THE
CRUSADERS, a weekly one-hour investigative news show. The Company also has two
off-network programs in syndication, GOLDEN GIRLS and EMPTY NEST.
Certain of the Company's television programs are also syndicated by the
Company abroad, including THE DISNEY CLUB, a weekly series that the Company
produces for foreign markets. The Company's television programs are telecast
regularly in many countries, including Australia, Brazil, Canada, China, France,
Germany, Italy, Japan, Mexico, Spain and the United Kingdom. The Company has
also teamed with Compagnie Luxembourgeoise de Telediffusion to develop a new
family-oriented channel in Germany.
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THE DISNEY CHANNEL
The Disney Channel, which has more than eight million subscribers, is the
Company's nationwide premium television service. New shows developed for
original use by The Disney Channel include dramatic, adventure, comedy and
educational series, as well as documentaries and first-run television movies.
In addition, entertainment specials include shows originating from both the Walt
Disney World destination resort and Disneyland. The balance of the programming
consists of products acquired from third parties and products from the Company's
theatrical film and television programming library.
KCAL-TV
The Company operates KCAL-TV, an independent commercial station on VHF
channel 9 in the Los Angeles area. Its revenues are derived from the sale of
advertising time to local, regional and national advertisers.
WALT DISNEY THEATRICAL PRODUCTIONS
In 1994, the Company produced a Broadway-style stage musical based on the
animated feature film BEAUTY AND THE BEAST. The stage adaptation, currently
playing in New York City, is scheduled to open in additional cities around the
world beginning in 1995.
COMPETITIVE POSITION
The Company's filmed entertainment businesses (including theatrical films,
product distributed through the network, syndication and pay television and home
video markets, and The Disney Channel) compete with all forms of entertainment.
The Company also competes to obtain creative talents, story properties,
advertiser support, broadcast rights and market share, which are essential to
the success of all of the Company's filmed entertainment businesses.
A significant number of companies produce and/or distribute theatrical and
television films, exploit products in the home video market and provide pay
television programming service. The Company produces and distributes films
designed for family audiences and believes that it is a significant source of
such films.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World [REGISTERED TRADEMARK] destination
resort in Florida and the Disneyland Park [REGISTERED TRADEMARK] and the
Disneyland Hotel in California. The Company earns royalties on revenues
generated by the Tokyo Disneyland theme park.
All of the theme parks and most of the associated resort facilities are
operated on a year-round basis. Historically, the theme parks and resorts
business experiences fluctuations in park attendance and resort occupancy
resulting from the nature of vacation travel. Peak attendance and resort
occupancy generally occur during the summer months when school vacations occur
and during early-winter and spring holiday periods.
WALT DISNEY WORLD DESTINATION RESORT
The Walt Disney World destination resort is located on approximately 29,900
acres of land owned by the Company 15 miles southwest of Orlando, Florida. The
resort includes three theme parks (the Magic Kingdom, Epcot and the Disney-MGM
Studios Theme Park), hotels and villas, an entertainment complex, a shopping
village, conference centers, campgrounds, golf courses, water parks and other
recreational facilities designed to attract visitors for an extended stay. The
Company markets the entire Walt Disney World destination resort through a
variety of national, international and local advertising and promotional
activities. A number of attractions in each of the theme parks are sponsored by
corporate participants through long-term participation agreements.
MAGIC KINGDOM -- The Magic Kingdom, which opened in 1971, consists of seven
principal areas: Main Street, Liberty Square, Frontierland, Tomorrowland,
Fantasyland, Adventureland and Mickey's Starland. These areas feature themed
rides and attractions, restaurants, refreshment stands and merchandise shops.
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EPCOT -- Epcot, which opened in 1982, consists of two major themed areas:
Future World and World Showcase. Future World dramatizes certain historical
developments and addresses the challenges facing the world today through major
pavilions, displaying high-tech products of the future ("Innoventions"),
communication and technological exhibitions ("Spaceship Earth"), energy,
transportation, imagination, life and health, the land and seas. World Showcase
presents a community of nations focusing on the culture, traditions and
accomplishments of people around the world. World Showcase includes as a
central showpiece the American Adventure pavilion, which highlights the history
of the American people. Other nations represented are Canada, Mexico, Japan,
China, France, the United Kingdom, Germany, Italy, Morocco and Norway. Both
areas feature themed rides and attractions, restaurants, refreshment stands and
merchandise shops.
DISNEY-MGM STUDIOS THEME PARK -- The Disney-MGM Studios Theme Park, which
opened in 1989, consists of a theme park and a production facility. The theme
park centers around Hollywood as it was during the 1930's and 1940's and
features a backstage tour of the production facilities in addition to themed
food service and merchandise facilities and other attractions. The production
facility consists of three sound stages, merchandise shops and a back lot area
and currently hosts both feature film and television productions.
RESORT FACILITIES -- As of September 30, 1994, the Company owned and operated
10 resort hotels and a complex of villas and suites at the Walt Disney World
destination resort, with a total of approximately 12,400 rooms. An additional
resort hotel, Disney's All-Star Music Resort, is expected to open in 1995 with a
capacity of more than 1,900 rooms. In addition, Disney's Fort Wilderness
camping and recreational area offers approximately 1,200 campsites and
wilderness homes. Several of the resort hotels also contain conference centers
and related facilities.
Recreational activities available at the resort facilities include five
championship golf courses, a zoological park, tennis, sailing, water skiing,
swimming, horseback riding and a number of noncompetitive sports and leisure
time activities. The Company also operates two water parks, River Country and
Typhoon Lagoon. An additional themed water park, Blizzard Beach, is expected to
open in 1995.
The Company has also developed a shopping facility known as the Disney
Village Marketplace. Pleasure Island, an evening entertainment center which
opened in 1989, is adjacent to Disney Village Marketplace and includes
restaurants, night clubs and shopping facilities. Currently under development
are Celebration, a 5,000-acre town; Disney's Boardwalk, a major new mixed-use
resort built around a turn-of-the-century Atlantic boardwalk theme; and the
Disney Institute, a resort community offering participatory programs and
enriching experiences.
At the Disney Village Marketplace Hotel Plaza, seven independently operated
hotels are situated on property leased from the Company. These hotels have a
capacity of approximately 3,700 rooms. Additionally, two hotels--the Walt
Disney World Swan and the Walt Disney World Dolphin, with an aggregate capacity
of approximately 2,300 rooms--are independently operated on property leased from
the Company near Epcot. Another hotel, the 290-room Shades of Green on Walt
Disney World Resort, is leased from the Company and operated by a non-profit
organization as an armed forces recreation center.
DISNEY VACATION CLUB
In 1994, Disney Vacation Development, Inc., a wholly-owned subsidiary of the
Company, neared completion of its 531-unit Disney Vacation Club at the Walt
Disney World Resort. In addition, sales have commenced and construction has
begun on a 436-unit Disney Vacation Club in Vero Beach, Florida. Both
facilities are intended to be sold under a vacation ownership plan and operated
partially as rental property until the units are completely sold. Disney
Vacation Development, Inc. has begun development of a resort site on Hilton Head
Island, South Carolina and an additional property at Walt Disney World. Plans
have also been announced to build a resort in Newport Beach, California.
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DISNEYLAND
The Company owns 330 acres and has under long-term lease an additional 39
acres of land in Anaheim, California. Disneyland, which opened in 1955,
consists of eight principal areas: Toontown, Fantasyland, Adventureland,
Frontierland, Tomorrowland, New Orleans Square, Main Street and Critter Country.
These areas feature themed rides and attractions, restaurants, refreshment
stands and merchandise shops. A number of the Disneyland attractions are
sponsored by corporate participants. The Company markets Disneyland through
national and local advertising and promotional activities. The Company also
owns and operates the 1,100-room Disneyland Hotel near Disneyland.
TOKYO DISNEYLAND
The Company earns royalties on revenues generated by the Tokyo Disneyland
theme park, which is owned and operated by Oriental Land Co., Ltd., an unrelated
Japanese corporation. The park, which opened in 1983, is similar in size and
concept to Disneyland and is located approximately six miles from downtown
Tokyo, Japan.
DISNEY DESIGN AND DEVELOPMENT
Disney Design and Development, encompassing the Company's two major design
and development organizations, Walt Disney Imagineering and Disney Development
Company, provides master planning, real estate development, attraction and show
design, engineering support, production support, project management and other
development services for the Company's operations.
COMPETITIVE POSITION
The Company's theme parks and resorts compete with all other forms of
entertainment, lodging, tourism and recreational activities. The profitability
of the leisure-time industry is influenced by various factors which are not
directly controllable, such as economic conditions, amount of available leisure
time, oil and transportation prices and weather patterns. The Company believes
its theme parks and resorts benefit substantially from the Company's reputation
in the entertainment industry for excellent quality and from synergy with
activities in other business segments of the Company.
CONSUMER PRODUCTS
The Company licenses the name Walt Disney, as well as the Company's
characters, visual and literary properties and songs and music, to various
consumer manufacturers, retailers, show promoters and publishers throughout the
world. The Company also engages in direct retail distribution through The
Disney Stores and consumer catalogs, and is a publisher of books, magazines and
comics in the United States and Europe. In addition, the Company produces audio
and computer software for all markets, as well as film and video products for
the educational marketplace. Operating results for the consumer products
business are influenced by seasonal consumer purchasing behavior and by the
timing of animated theatrical releases.
CHARACTER MERCHANDISE AND PUBLICATIONS LICENSING
The Company's domestic and foreign licensing activities generate royalties
which are usually based on a fixed percentage of the wholesale or retail selling
price of the licensee's products. The Company licenses characters based upon
both traditional and newly-created film properties. Character merchandise
categories which have been licensed include apparel, watches, toys, gifts,
housewares, stationery, sporting goods and domestic items such as sheets and
towels. Publication categories which have been licensed include continuity-
series books, book sets, art and picture books, magazines and newspaper comic
strips.
In addition to receiving licensing fees, the Company is actively involved in
the development and approval of licensed merchandise and in the
conceptualization, development, writing and illustration of licensed
publications. The Company continually seeks to create new characters to be used
in licensed products.
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PUBLISHING
The Company has book imprints in the United States offering trade books for
children (Mouse Works, Disney Press and Hyperion Books for Children) and adults
(Hyperion Press). In addition, the Company is a joint venture partner in Disney
Hachette Editions, which produces children's books, and Disney Hachette Presse,
which produces children's magazines and computer software magazines in France.
In the United States, Italy and France, the Company publishes comic magazines
for children. The Company also publishes the children's magazine DISNEY
ADVENTURES, the general science magazine DISCOVER and the family entertainment
and informational magazines FAMILYFUN and FAMILY PC.
THE DISNEY STORES
The Company markets Disney-related products directly through its retail
facilities operated under "The Disney Store" name. These facilities are
generally located in leading shopping malls and similar retail complexes. The
stores carry a wide variety of Disney merchandise and promote other businesses
of the Company. During fiscal 1994, the Company opened 59 new Disney Stores in
the United States and Canada, 18 in Europe and 8 in Japan, bringing the total
number to 324 as of September 30, 1994. The Company expects to open additional
stores in the future in selected markets throughout the country, as well as in
Japan and other Asian, European, and Latin American countries.
AUDIO PRODUCTS AND MUSIC PUBLISHING
Walt Disney Records, a division of the Company, produces and distributes
records, audio cassettes and compact discs primarily directed at the children's
market in the United States and France, consisting primarily of soundtracks for
animated films and read-along products, and licenses the creation of similar
products throughout the rest of the world. In addition, the Company commissions
new music for its motion pictures, television programs and records and exploits
the song copyrights created for the Company by means of printed music, records,
audiovisual devices and public performances.
Domestic retail sales of records, compact discs, audio cassettes and related
materials are the largest source of revenues, while direct marketing, which
utilizes catalogs, coupon packages and television, is a secondary means of
distribution for the Company. In both the United States and abroad, the Company
signs, produces and promotes entertainers primarily for the children's market.
OTHER ACTIVITIES
The Company produces audiovisual materials for the educational market,
including videocassettes and film strips. It also licenses the manufacture and
sale of posters and other teaching aids. The Company markets and distributes,
through various channels, animation cel art and other animation-related artwork.
In addition, the Company licenses the manufacture of software products for video
game machines and publishes its own software programs for personal computers in
the areas of entertainment, creativity and children's programs.
The Company is a direct marketer of children's educational toys, play
equipment, classroom furniture and activewear apparel through THE DISNEY
CATALOG, CHILDCRAFT, JUST FOR KIDS and PLAYCLOTHES.
COMPETITIVE POSITION
The Company competes in its character merchandising and other licensing,
publishing and retail activities with other licensors, publishers and retailers
of character, brand and celebrity names. In the record and music publishing
business the Company competes with several other companies. Although public
information is limited, the Company believes it is the largest worldwide
licensor of character-based merchandise and producer/distributor of children's
audio products.
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OTHER OPERATIONS
HOLLYWOOD RECORDS
Hollywood Records seeks to develop and market recordings from new talent
across the spectrum of popular music, as well as soundtracks from the Company's
live-action motion pictures. Domestic and foreign distribution is handled by
PolyGram Group Distribution.
DISNEY SPORTS ENTERPRISES
Disney Sports Enterprises provides management and development services for
the Company's National Hockey League franchise, the Mighty Ducks of Anaheim.
DISNEYLAND PARIS
Disneyland Paris (formerly referred to as the Euro Disney Resort) is located
on a 4,800-acre site at Marne-la-Vallee, approximately 20 miles east of Paris,
France. The project has been developed pursuant to a 1987 master agreement with
French governmental authorities by Euro Disney S.C.A., a publicly held French
company in which the Company holds a 39% equity interest and which is managed by
a subsidiary of the Company.
The Disneyland Paris theme park, which opened in April 1992, draws on a
number of European traditions in its five themed lands. Six themed hotels, with
a total of approximately 5,200 rooms, are part of the resort complex, together
with an entertainment center offering a variety of retail, dining and show
facilities and a 595-space camping area. The complex is served by direct rail
transport to Paris and by high-speed TGV train service.
In connection with the project, the Company has licensed various intellectual
property rights to Euro Disney, for which the Company is entitled to royalties
on certain revenues generated by Disneyland Paris. In addition, the subsidiary
of the Company that manages Euro Disney is entitled to management fees based on
the revenues and incentive fees based on cash flows of Euro Disney. In 1992,
the Company agreed to defer receipt of its base management fees for 1992 and
1993 until Disneyland Paris achieved profitability. In 1994, the Company, Euro
Disney, Euro Disney's principal creditors and Euro Disney's shareholders
approved a financial restructuring that included an offering of new shares, to
which the Company subscribed 49%, and various other contributions and
concessions by and from the Company and Euro Disney's creditors. In connection
with the restructuring, the Company agreed to waive its royalties and base
management fees through September 30, 1998. (See Note 2 of Notes to
Consolidated Financial Statements and Management's Discussion and Analysis on
page 15 for further information.)
ITEM 2. PROPERTIES
The Walt Disney World destination resort, Disneyland Park and other
California and Florida properties are described in Item 1 under the caption
THEME PARKS AND RESORTS. Film library properties are described in Item 1 under
the caption FILMED ENTERTAINMENT.
The Company owns approximately 51 acres of land in Burbank, California on
which are located its studios and executive offices. The studio facilities are
used for the production of both live-action and animated motion pictures and
television products. In addition, the Company leases office and warehouse space
for certain of its studio and corporate activities. The Company's KCAL-TV
facilities are located in Hollywood, California.
It is the Company's practice to obtain United States and foreign legal
protection for its theatrical and television product and its other original
works, including the various names and designs of the animated characters and
the publications and music which have been created in connection with the
Company's filmed products. The Company owns all rights to the name, likeness
and portrait of Walt Disney.
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ITEM 3. LEGAL PROCEEDINGS
The Company, together with, in some instances, certain of its directors and
officers, is a defendant or co-defendant in various legal actions involving
copyright, breach of contract and various other claims incident to the conduct
of its businesses. Management does not expect the Company to suffer any
material liability by reason of such actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth quarter
of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are elected each year at the
organizational meeting of the Board of Directors which follows the annual
meeting of the stockholders and at such other meetings as appropriate. Each of
the executive officers has been employed by the Company in the position or
positions indicated in the list and pertinent notes below. Messrs. Eisner,
Disney, Murphy and Shapiro have been employed by the Company as executive
officers for more than five years.
At September 30, 1994, the executive officers were as follows:
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Executive
Officer
Name Age Title Since
------------------------- ----- ------------------------------------------------------------ ------------
Michael D. Eisner 52 Chairman of the Board, Chief Executive Officer 1984
and President (1)
Roy E. Disney 64 Vice Chairman of the Board 1984
Sanford M. Litvack 58 Senior Executive Vice President and Chief of Corporate 1991
Operations (2)
Lawrence P. Murphy 42 Executive Vice President-Strategic Planning 1985
and Development
Richard D. Nanula 34 Executive Vice President and Chief Financial Officer (3) 1990
Joe Shapiro 48 Executive Vice President (4) 1985
John J. Garand 47 Vice President-Planning and Control (5) 1992
<FN>
____________________
(1) Frank G. Wells served as President and Chief Operating Officer of the
Company until his death in April 1994.
(2) Mr. Litvack joined the Company as Senior Vice President-General Counsel in
1991. He was named Executive Vice President-Law and Human Resources in
1992 and was named Senior Executive Vice President and Chief of Corporate
Operations in August 1994. Mr. Litvack was previously a member of the
executive committee and chairman of the litigation department of the law
firm of Dewey Ballantine, of which he was a partner from January 1987 until
April 1991.
(3) Mr. Nanula joined the Company's strategic planning operation in 1986 and
was named Vice President-Treasurer of the Company in January 1990. He was
named Senior Vice President and Chief Financial Officer in August 1991 and
was named Executive Vice President in February 1994.
(4) Mr. Shapiro retired from the Company effective October 1, 1994.
(5) Mr. Garand was previously Senior Vice President and Chief Financial Officer
for Morse Shoe, Inc. from April 1990 until March 1992. Prior to that, Mr.
Garand served in various positions at the corporate and subsidiary offices
of PepsiCo, Inc. from 1981 until March 1990.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the New York, Pacific, Swiss and
Tokyo stock exchanges (NYSE symbol DIS). The following sets forth the high and
low composite sale prices for the fiscal periods indicated.
[Download Table]
Sales Price
---------------------------
High Low
------------ ------------
1994
1st Quarter..................................... $ 45 3/8 $ 37 1/8
2nd Quarter..................................... 48 5/8 40 7/8
3rd Quarter..................................... 45 1/8 39 5/8
4th Quarter..................................... 44 1/4 38 3/4
1993
1st Quarter..................................... $ 45 1/4 $ 33 1/4
2nd Quarter..................................... 47 7/8 41 3/4
3rd Quarter..................................... 45 1/8 38 1/4
4th Quarter..................................... 41 3/8 36
The Company declared one quarterly dividend of $.0625 per share and three
quarterly dividends of $.075 per share in 1994, and in 1993 declared one
quarterly dividend of $.0525 per share and three quarterly dividends of $.0625.
As of September 30, 1994, the approximate number of record holders of the
Company's common stock was 458,900.
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ITEM 6. SELECTED FINANCIAL DATA
[Enlarge/Download Table]
(In millions, except per share data)
1994 1993 * 1992 1991 1990
------------ ------------ ------------ ------------ ------------
Statement of Income
Revenues $ 10,055.1 $ 8,529.2 $ 7,504.0 $ 6,112.0 $ 5,757.3
Operating income 1,965.7 1,724.5 1,435.3 1,094.5 1,339.1
Income before cumulative effect
of accounting changes 1,110.4 671.3 816.7 636.6 824.0
Cumulative effect of accounting
changes (371.5)
Net income 1,110.4 299.8 816.7 636.6 824.0
Per Share
Earnings before cumulative effect
of accounting changes $ 2.04 $ 1.23 $ 1.52 $ 1.20 $ 1.50
Cumulative effect of accounting
changes (.68)
Earnings 2.04 .55 1.52 1.20 1.50
Cash dividends .29 .24 .20 .17 .14
Balance Sheet
Total assets $ 12,826.3 $11,751.1 $10,861.7 $ 9,428.5 $ 8,022.3
Borrowings 2,936.9 2,385.8 2,222.4 2,213.8 1,584.6
Stockholders' equity 5,508.3 5,030.5 4,704.6 3,871.3 3,488.6
Statement of Cash Flows
Cash flow from operations $ 2,807.3 $ 2,145.2 $ 1,838.1 $ 1,496.7 $ 1,358.9
Investing activities (2,886.7) (2,659.7) (1,923.7) (1,726.3) (1,181.9)
Financing activities (96.7) 112.7 (35.7) 295.9 262.0
<FN>
* See Notes 1, 6, 7, and 11 of Notes to Consolidated Financial Statements for
description of accounting changes adopted in the third quarter of 1993,
retroactive to October 1, 1992.
-10-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
1994 VS. 1993
Revenues increased 18% or $1.53 billion to a record $10.06 billion in 1994,
driven by $1.12 billion of growth in Filmed Entertainment, primarily due to the
success of home video releases worldwide, the theatrical release of THE LION
KING worldwide, except for Europe, and growth in the number of titles available
for theatrical and television distribution, and $383.1 million of growth in
Consumer Products, reflecting continued expansion of the Disney Stores and the
strength of character merchandise licensing worldwide. Revenues of $2.36 billion
from foreign operations in all business segments increased 30% or $539.1 million
in 1994 and represented 23% of total revenues, an increase of two percentage
points over 1993.
Operating income rose 14% or $241.2 million to a record $1.97 billion in
1994, driven by increases in Filmed Entertainment and Consumer Products
operating income of $233.9 million and $70.1 million, respectively, partially
offset by Theme Parks and Resorts results, which declined $62.8 million. Filmed
Entertainment growth was generated primarily by the success of home video
activities, including the worldwide release of ALADDIN, the domestic releases of
THE FOX AND THE HOUND and THE RETURN OF JAFAR, and the international releases of
THE JUNGLE BOOK and BAMBI. The strong performance of THE LION KING (excluding
Europe) also contributed to growth. Increased Consumer Products operating income
was driven by worldwide character merchandise licensing growth generated by
traditional Disney characters and new animated film properties, including
ALADDIN and THE LION KING. Theme Parks and Resorts operating income reflected
lower attendance at Florida and California theme parks, partially offset by
higher guest spending and increased occupied rooms in Florida.
Costs and expenses increased 19% or $1.28 billion in 1994, reflecting higher
film cost amortization, increased distribution and selling costs related to home
video and theatrical product, increased operating costs related to expansion of
the Disney Stores, and increased operating costs associated with the expansion
of theme park attractions and resorts in Florida.
Income increased 65% to a record $1.11 billion and earnings per share
increased 66% to a record $2.04 from $671.3 million and $1.23, respectively,
before the cumulative effect of accounting changes in 1993. Excluding Euro
Disney reserves, which negatively impacted 1993 results, income and earnings per
share grew 25%.
1993 VS. 1992
Revenues increased 14% or $1.03 billion to $8.53 billion in 1993, driven by
$558.2 million of growth in Filmed Entertainment, resulting primarily from
successful home video releases and increased international theatrical
distribution activities, and $333.2 million of growth in Consumer Products,
reflecting continued expansion of the Disney Stores worldwide and increased
character merchandise licensing activities. Revenues of $1.82 billion from
foreign operations in all business segments increased 25% or $362.1 million in
1993 and represented 21% of total revenues, an increase of two percentage points
over 1992.
Operating income increased 20% or $289.2 million to $1.72 billion in 1993,
reflecting Filmed Entertainment growth of $113.9 million, Theme Parks and
Resorts growth of $102.9 million, and Consumer Products growth of $72.4 million.
Higher Filmed Entertainment operating income was due to the successful worldwide
home video and international theatrical release of BEAUTY AND THE BEAST, the
strong theatrical release of ALADDIN worldwide, except for Europe, the domestic
home video release of PINOCCHIO, and greater product availabilities in pay
television and worldwide television syndication. Theme Parks and Resorts
operating income grew as a result of increased theme park per capita spending
and higher occupied rooms at Florida resorts together with increased sales at
the Disney Vacation Club and higher royalties from Tokyo Disneyland. Consumer
Products results primarily reflected increased demand for Disney licensed
products in worldwide markets.
Costs and expenses increased 12% or $736.0 million in 1993, reflecting
higher film cost amortization, distribution and selling costs related to
increased product availabilities in Filmed Entertainment, increased costs
associated with the expansion of resort properties in Florida, and increased
operating and start-up costs related to expansion of the Disney Stores and new
business ventures in Consumer Products.
-11-
Income and earnings per share before the cumulative effect of accounting
changes in 1993 (described below) decreased 18% to $671.3 million and 19% to
$1.23, respectively, from $816.7 million and $1.52 in 1992. The decrease
reflected the impact of a $350.0 million charge to fully reserve the Company's
current receivables and funding commitment to Euro Disney and the Company's
equity share of Euro Disney's operating loss. (See Note 2 of Notes to
Consolidated Financial Statements.) The Company's 1993 net income and earnings
per share were significantly impacted by the change in accounting method for
pre-opening costs and the impact of adopting two new required Statements of
Financial Accounting Standards, EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS (SFAS 106) and ACCOUNTING FOR INCOME TAXES (SFAS
109).
The cumulative effect of the change in accounting method for pre-opening
costs resulted in a charge of $271.2 million or $.50 per share. In addition, the
cumulative effect of adopting SFAS 106 was a charge of $130.3 million or $.24
per share, partially offset by the $30.0 million or $.06 per share benefit from
adopting SFAS 109. (See Notes 1, 6, 7 and 11 of Notes to Consolidated Financial
Statements.)
Net income after the cumulative effect of accounting changes in 1993
decreased 63% to $299.8 million from $816.7 million in 1992 and earnings per
share fell 64% to $.55 from $1.52.
FILMED ENTERTAINMENT
1994 VS. 1993
Revenues increased 30% or $1.12 billion to $4.79 billion in 1994, driven by
growth of $731 million in worldwide home video revenues, $224 million in
worldwide theatrical revenues, and $99 million in television revenues. Domestic
home video revenues were driven by ALADDIN, THE FOX AND THE HOUND and THE RETURN
OF JAFAR compared to BEAUTY AND THE BEAST and PINOCCHIO in 1993, while
international home video revenues were driven by THE JUNGLE BOOK, ALADDIN and
BAMBI compared to BEAUTY AND THE BEAST and CINDERELLA in the prior year.
Theatrical revenues increased due to the worldwide release of THE LION KING,
except for Europe, ALADDIN in Europe, and continued expansion of theatrical
productions, including full-year operations of Miramax, which was acquired in
June 1993. Television revenues grew due to increased title availabilities
worldwide.
Operating income increased 38% or $233.9 million to $856.1 million in 1994,
driven by growth in worldwide home video activity and television, partially
offset by lower worldwide theatrical operating income, reflecting lower results
per film in 1994. Theatrical results in 1993 were driven by the worldwide
release of ALADDIN, except for Europe, and international releases of BEAUTY AND
THE BEAST, SISTER ACT and THE JUNGLE BOOK compared to the current year's release
of THE LION KING, the European release of ALADDIN, and the international release
of COOL RUNNINGS. Costs and expenses increased 29% or $886.0 million,
principally due to higher film cost amortization, and increased distribution and
selling costs, resulting from increased home video and theatrical activities.
1993 VS. 1992
Revenues grew 18% or $558.2 million to $3.67 billion in 1993, driven by
growth of $283 million in worldwide home video revenues, $137 million in
international theatrical revenues, and $107 million in television revenues.
Worldwide home video growth was driven by BEAUTY AND THE BEAST and PINOCCHIO
domestically and BEAUTY AND THE BEAST and CINDERELLA internationally. Higher
theatrical revenues reflected the release of ALADDIN and the international
releases of BEAUTY AND THE BEAST, SISTER ACT and THE JUNGLE BOOK, offset by the
disappointing performances of certain domestic live-action releases. Television
revenues increased primarily as a result of growth in pay television and
worldwide syndication, reflecting increased activity as more product was made
available to those markets.
Operating income rose 22% or $113.9 million to $622.2 million in 1993,
primarily due to growth in worldwide home video and television distribution.
Results also reflected the positive impact of continued growth in The Disney
Channel subscriber base. Strong international theatrical performances were
offset by lower domestic theatrical results. Costs and expenses increased 17% or
$444.3 million, principally due to higher film cost amortization and increased
distribution and selling costs, resulting from increased home video and
theatrical activities.
-12-
THEME PARKS AND RESORTS
1994 VS. 1993
Revenues of $3.46 billion in 1994 were substantially unchanged from the
prior year, as $86 million of growth in guest spending at Florida theme parks
and resorts and $47 million of growth from increased occupied rooms at Florida
resorts offset the $114 million impact of lower attendance at Florida and
California theme parks. Guest spending rose, primarily due to expanded product
offerings and certain price increases, while the increase in occupied rooms
reflected absorption of additional capacity from the third quarter openings of
Disney's Wilderness Lodge and Disney's All-Star Sports Resort, and expansion at
the Disney Vacation Club. Lower attendance was driven by reduced international
tourism.
Operating income decreased 8% or $62.8 million to $684.1 million in 1994,
reflecting the impact of reduced revenues from lower theme park attendance.
Costs and expenses, which consist principally of labor, costs of merchandise,
food and beverages sold, depreciation, repairs and maintenance, entertainment
and marketing, increased 3% or $85.7 million, primarily due to expansion of
theme park attractions and resorts in Florida and a charge recorded in the
fourth quarter to write off certain development costs associated with Disney's
America, as a result of the Company's decision to seek a new site for the theme
park.
1993 VS. 1992
Revenues rose 4% or $133.8 million to $3.44 billion in 1993, primarily due
to $40 million of growth in per capita spending at the theme parks, $25 million
of growth from increased occupied rooms at Florida resorts, and $52 million of
growth from sales of ownership interests at the Disney Vacation Club and
increased royalties from Tokyo Disneyland. Per capita spending was higher
primarily due to price increases. The increase in occupied rooms resulted from
the absorption of additional capacity from the Dixie Landings Resort. Total
attendance was flat with the prior year, as the impact of the opening of
Mickey's Toontown at Disneyland and the Splash Mountain attraction at Tokyo
Disneyland was offset by weakness in the international tourism market at Walt
Disney World, due to the poor European economy.
Operating income increased 16% or $102.9 million to $746.9 million in 1993,
driven by increased per capita spending at the parks, increased occupied rooms
and higher room rates at Florida resorts, continued development and sales of
ownership interests at the Disney Vacation Club, and increased royalties from
Tokyo Disneyland. Costs and expenses increased 1% or $30.9 million, reflecting
increased costs related primarily to resort expansion in Florida, partially
offset by decreased current year development spending at Walt Disney
Imagineering. In addition, year-over-year comparisons were positively impacted
by the prior-year charge relating to the termination of the lease on the Queen
Mary hotel and attraction.
CONSUMER PRODUCTS
1994 VS. 1993
Revenues increased 27% or $383.1 million to $1.80 billion in 1994, driven by
growth of $166 million from the Disney Stores, $109 million from worldwide
character merchandise licensing, and $87 million from publications, catalogs,
and records and audio entertainment. Full-year operations at 62 stores opened in
1993 and 7% higher sales at 177 existing stores generated 58% of Disney Stores'
revenue growth; sales from 85 new stores worldwide contributed the remaining
42%. Worldwide merchandise licensing growth was generated by increased demand
for traditional Disney characters and new animated film properties, including
ALADDIN and THE LION KING.
Operating income increased 20% or $70.1 million to $425.5 million in 1994,
primarily due to the worldwide success of character merchandise licensing and
expansion of the Disney Stores, partially offset by higher costs and expenses.
Costs and expenses, which consist principally of costs of goods sold, labor and
publicity and promotion, increased 30% or $313.0 million, primarily reflecting
expansion and revenue growth of the Disney Stores and higher expenses in catalog
businesses.
-13-
1993 VS. 1992
Revenues increased 31% or $333.2 million to $1.42 billion in 1993,
reflecting growth of $161 million from worldwide expansion of the Disney Stores,
$78 million from worldwide character merchandise licensing activities, and $87
million from publications, catalogs and records and audio entertainment.
Full-year operations at 64 stores opened in 1992 and 11% higher sales at 113
existing stores generated 60% of Disney Stores' revenue growth; sales from 62
new stores worldwide contributed the remaining 40%.
Operating income increased 26% or $72.4 million to $355.4 million in 1993,
driven by strong sales of ALADDIN and BEAUTY AND THE BEAST character merchandise
in domestic publications, records and audio entertainment and in the Disney
Stores domestically. Additionally, increased sales of both film and standard
character properties contributed to the favorable results in domestic and
international licensing. Costs and expenses increased 33% or $260.8 million,
primarily due to domestic expansion and start-up costs associated with
international expansion of the Disney Stores. Growth in domestic publications
and catalog businesses also resulted in higher expenses.
CORPORATE ACTIVITIES
GENERAL AND ADMINISTRATIVE EXPENSES
1994 VS. 1993
General and administrative expenses decreased 1% or $2.0 million to $162.2
million in 1994, reflecting operating income from Disney Sports Enterprises (The
Mighty Ducks of Anaheim) and lower losses incurred by Hollywood Records,
partially offset by higher corporate general and administrative expenses
incurred to support growth in the Company's operations and performance-related
incentive programs.
1993 VS. 1992
General and administrative expenses rose 11% or $16.0 million to $164.2
million in 1993. While corporate general and administrative expenses remained
virtually flat, the increase reflected higher operating losses at Hollywood
Records in contrast to the prior year, which reflected the success of the QUEEN
catalog.
INVESTMENT AND INTEREST INCOME AND INTEREST EXPENSE
1994 VS. 1993
Total investment and interest income decreased 30% or $56.2 million to
$129.9 million in 1994. The decrease reflected both lower average investment
balances and yields.
Interest expense decreased 24% or $37.8 million to $119.9 million in 1994,
primarily due to the 1993 write-off of unamortized issuance costs related to
subordinated notes redeemed by the Company, and increased capitalized interest,
resulting from higher capital expenditures in the current year.
1993 VS. 1992
Total investment and interest income increased 43% or $55.8 million to
$186.1 million in 1993. The increase reflected higher average investment
balances, gains on termination of interest rate swap agreements and the
favorable impact of leveraged leasing activities.
Interest expense increased 24% or $30.9 million to $157.7 million in 1993,
primarily due to the write-off of unamortized issuance costs on subordinated
notes, which were redeemed during the year, and higher average borrowing
balances, partially offset by the impact of lower average rates. The average
borrowing rate decreased from 7.2% in 1992 to 6.9% in 1993. Capitalized interest
was flat compared to the prior year.
-14-
INVESTMENT IN EURO DISNEY
1994 VS. 1993
The Company's investment in Euro Disney resulted in a loss of $110.4 million
in 1994. The loss consisted of a $52.8 million charge recognized in the third
quarter as a result of the Company's participation in the Euro Disney financial
restructuring, and the Company's equity share of fourth quarter operating
results. The prior year loss reflected the Company's equity share of Euro
Disney's operating results and a $350.0 million charge to fully reserve
receivables from and a funding commitment to Euro Disney, partially offset by
royalties and gain amortization related to the investment. The funding
commitment was intended to help support Euro Disney for a limited period, while
Euro Disney pursued a financial restructuring.
A proposed restructuring plan for Euro Disney was announced in March 1994.
During the third quarter of 1994, the Company entered into agreements with Euro
Disney and the Euro Disney lenders participating in the restructuring (the
"Lenders"), to provide certain debt, equity and lease financing to Euro Disney.
Under the restructuring agreements, which specify amounts denominated in
French francs, the Company committed to increase its equity investment in Euro
Disney by subscribing for 49% of a $1.1 billion rights offering of new shares;
to provide long-term lease financing at a 1% interest rate for approximately
$255 million of theme park assets; and to subscribe, in part through an offset
against fully-reserved advances previously made to Euro Disney under the
Company's funding commitment, for securities reimbursable in shares with a face
value of approximately $180 million and a 1% coupon. In addition, the Company
agreed to cancel fully-reserved receivables from Euro Disney of approximately
$210 million, to waive royalties and base management fees for a period of five
years and to reduce such amounts for specified periods thereafter, and to modify
the method by which management incentive fees will be calculated. During the
fourth quarter of 1994, the financial restructuring was completed and the
Company funded its commitments.
In addition to the commitments described above, the Company agreed to
arrange for the provision of a 10-year unsecured standby credit facility of
approximately $210 million, upon request, bearing interest at PIBOR. As of
September 30, 1994, Euro Disney had not requested the Company to establish this
facility.
As part of the restructuring, the Company received 10-year warrants for the
purchase of up to 27.8 million shares of Euro Disney at a price of FF 40 per
share. The terms of the restructuring also provide that, in the event that Euro
Disney decides to launch the second phase of the development of its theme park
and resort complex, and commitments for the necessary financing have been
obtained, the Company will be entitled to a development fee of approximately
$225 million. Upon receipt of the development fee, the Company's entitlement to
purchase Euro Disney shares by exercise of the warrants described above will be
reduced to 15 million shares.
In connection with the restructuring, Euro Disney Associes S.N.C. ("Disney
SNC"), an indirect wholly-owned affiliate of the Company, entered into a lease
arrangement (the "Lease") with the entity (the "Park Financing Company") which
financed substantially all of the Disneyland Paris theme park assets, and then
entered into a sublease agreement (the "Sublease") with Euro Disney. Under the
Lease, which replaced an existing lease between Euro Disney and the Park
Financing Company, Disney SNC leased the theme park assets of the Park Financing
Company for a noncancelable term of 12 years. Aggregate lease rentals of FF 10.5
billion ($2.0 billion) receivable from Euro Disney under the Sublease, which has
a 12-year term, will approximate the amounts payable by Disney SNC under the
Lease.
At the conclusion of the Sublease term, Euro Disney will have the option to
assume Disney SNC's rights and obligations under the Lease. If Euro Disney does
not exercise its option, Disney SNC may continue to lease the assets, with an
ongoing option to purchase them for an amount approximating the balance of the
Park Financing Company's outstanding debt. Alternatively, Disney SNC may
terminate the Lease, in which case Disney SNC would pay the Park Financing
Company an amount equal to 75% of its then-outstanding debt, estimated to be
$1.4 billion; Disney SNC could then sell or lease the assets on behalf of the
Park Financing Company in order to satisfy the remaining debt, with any excess
proceeds payable to Disney SNC.
-15-
As part of the overall restructuring, the Lenders agreed to underwrite 51%
of the Euro Disney rights offering, to forgive certain interest charges for the
period from April 1, 1994 to September 30, 2003, having a present value of
approximately $300 million, and to defer all principal payments until three
years later than originally scheduled. As consideration for their participation
in the financial restructuring, Euro Disney issued to the Lenders 10-year
warrants for the purchase of up to 40 million shares of Euro Disney stock at a
price of FF 40 per share.
Euro Disney has reported that it expects to incur a loss in 1995, which will
have a negative impact on the Company's results. The impact on the Company's
earnings, however, will be reduced as a result of the sale by the Company in
October 1994 of approximately 75 million shares, or 20% of its investment in
Euro Disney, to Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud. The sale will
reduce the Company's ownership interest in Euro Disney to approximately 39%.
Beginning in 1995, the Company will record its equity share of Euro Disney's
operating results based upon its reduced ownership interest. The Company has
agreed, so long as any obligations to the Lenders are outstanding, to maintain
ownership of at least 34% of the outstanding common stock of Euro Disney until
June 1999, at least 25% for the subsequent five years and at least 16.67% for an
additional term thereafter.
1993 VS. 1992
The Company's investment in Euro Disney resulted in a loss of $514.7 million
in 1993, including the charge referred to below, after being partially offset by
royalties and gain amortization related to the investment. The operating results
of Euro Disney were lower than expected, due in part to the European recession
affecting Euro Disney's largest markets.
During 1993, Euro Disney, its principal lenders and the Company began
exploring a financial restructuring for Euro Disney. The Company agreed to help
fund Euro Disney for a limited period, to afford Euro Disney time to pursue the
financial restructuring. The operating results for the fourth quarter and the
year, and the need for a financial restructuring, created uncertainty regarding
the Company's ability to collect its current receivables and the funding
commitment to Euro Disney. Consequently, the Company recorded a charge of $350.0
million in the fourth quarter to fully reserve its current receivables and
funding commitment.
In 1992, the Company's investment in Euro Disney contributed income of $11.2
million. Although Euro Disney incurred a loss for 1992, the Company's 49% share
of the net loss was offset by royalties and gain amortization related to the
investment.
LIQUIDITY AND CAPITAL RESOURCES
The Company generates significant cash from operations and has substantial
borrowing capacity to meet its operating and discretionary cash requirements.
Cash provided by operations increased 31% or $662.1 million to $2.81 billion
in 1994, primarily due to the success of home video releases in Filmed
Entertainment and expanded character merchandise licensing activities worldwide
in Consumer Products.
Net borrowings (the Company's borrowings less cash and liquid investments)
increased $1.32 billion to $1.73 billion, reflecting incremental financing
activity during the year and the sale of investments to fund cash requirements.
New borrowings during the year included $475 million of senior participating
notes (described further below), $285 million of Japanese yen bonds, and $164
million of medium-term notes.
-16-
In 1994, the Company invested $1.43 billion to develop and produce film and
television properties and $1.03 billion to design and develop new theme park
attractions and resort properties, including Sunset Boulevard and the Twilight
Zone Tower of Terror at the Disney-MGM Studios Theme Park, Disney's Wilderness
Lodge and initial phases of Disney's All-Star Resorts in Florida, and the
Indiana Jones Adventure at Disneyland. The Company also participated in the
financial restructuring completed by Euro Disney in 1994, pursuant to which the
Company provided $971.1 million of equity capital and long-term financing to
Euro Disney, and agreed to arrange for, upon Euro Disney's request, a 10-year FF
1.1 billion ($210 million) unsecured standby credit facility. In addition,
pursuant to agreements executed in connection with the restructuring, the
Company sold approximately 75 million (20%) of its Euro Disney shares to Prince
Alwaleed Bin Talal Bin Abdulaziz Al Saud for approximately $145 million in
October 1994.
The Company repurchased 13.8 million shares of its common stock for $570.7
million in 1994, and has repurchased an additional 8.9 million shares for $348.7
million through November 1994. Under its share repurchase program, the Company
is authorized to purchase up to an additional 104 million shares, including 90
million shares authorized by the Board of Directors in November 1994. The
Company evaluates share repurchase decisions on an ongoing basis, taking into
account borrowing capacity, management's target capital structure, and other
investment opportunities. The Company also used $153 million to fund dividend
payments during the year.
The Company currently maintains significant borrowing capacity to take
advantage of growth and investment opportunities. The Company focuses on net
borrowings, which take into account its cash and investment balances, when
monitoring borrowing capacity. The Company's borrowing capacity includes a $525
million line of credit which is available for general corporate purposes and to
support commercial paper issuance.
The Company's financial condition remains strong. The Company believes that
its cash, other liquid assets, operating cash flows, access to equity capital
markets and borrowing capacity taken together provide more than adequate
resources to fund ongoing operating requirements and future capital expenditures
related to the expansion of existing businesses and development of new projects.
Expansion of existing businesses includes the design and development of theme
park attractions, resort properties, and other real estate developments,
expansion of the Disney Stores worldwide, and continued film and television
production. Theme park and resort projects currently under development include
Blizzard Beach, Celebration, Disney's Boardwalk Resort, the Disney Institute,
and additional Disney Vacation Club sites. In addition, the Company continually
evaluates discretionary investments in new projects which complement its
existing businesses.
RISK MANAGEMENT STRATEGIES
The Company employs a variety of on-and off-balance-sheet financial
instruments to manage its business and financial market risks.
During 1994 and 1993, the Company raised $475 million and $400 million,
respectively, from the issuance of senior participating notes. The notes, due
2001 with a minimum yield of 4.2% and due 2000 with a minimum yield of 1.5%,
respectively, are unique in that a portion of the interest paid is contingent
upon the performance of a portfolio of live-action films from Walt Disney
Pictures, Hollywood Pictures, Touchstone Pictures, Caravan Pictures, and
Miramax. In the future, the Company will continue to seek partners that will
share the risks and rewards of its live-action film business.
The Company's foreign currency revenues continue to grow and management
believes it is prudent to reduce the risk associated with fluctuations in the
value of the U.S. dollar in the foreign exchange markets. The Company uses
foreign currency forward contracts, purchased options and option combinations to
reduce the impact of changes in the value of its existing foreign currency
assets and liabilities and its anticipated future foreign currency revenues
denominated in Japanese yen, French francs, German marks, British pounds, and
other currencies. The primary focus of the Company's foreign exchange risk
management program is to reduce earnings volatility. By policy, the Company
maintains hedge coverages between minimum and maximum percentages of its
anticipated foreign exchange exposures for each of the next five fiscal years.
-17-
The Company is exposed to interest rate risk related to its investments and
borrowings. The Company monitors the net interest rate sensitivity of its
portfolio of investments and borrowings and uses interest rate swaps,
exchange-traded futures, forwards and purchased options to manage the net
interest exposure and to lower overall borrowing costs. The Company's objective
is to manage the impact of interest rate changes on earnings and on the market
value of its investments and borrowings. The Company does not expect interest
rate movements to significantly affect its liquidity or operating results in the
foreseeable future. For 1994 and 1993, a 1% increase or decrease in interest
rates would not have had a material impact on the Company's liquidity or
operating results.
The Company continually monitors its positions with, and the credit quality
of, the financial institutions which are counterparties to its off-balance-sheet
financial instruments, and does not anticipate failure to perform by such
institutions. The Company enters into off-balance-sheet transactions only with
financial institution counterparties which have a credit rating of single A-or
better. The Company's current policy in agreements with financial institution
counterparties is generally to require collateral in the event credit ratings
fall below single A-. With respect to certain contracts, the Company has the
right to offset amounts payable to the counterparties to the extent of amounts
receivable, further reducing the risk associated with counterparty
nonperformance.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Supplemental Data on page 24.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-18-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information regarding directors appearing under the caption ELECTION OF
DIRECTORS in the Company's Proxy Statement for the 1995 Annual Meeting of
Stockholders (the "1995 Proxy Statement") is hereby incorporated by reference.
Information regarding executive officers is included in Part I of this
Form 10-K as permitted by General Instruction G(3).
ITEM 11. EXECUTIVE COMPENSATION
Information appearing under the captions DIRECTORS' REMUNERATION; ATTENDANCE
and EXECUTIVE COMPENSATION in the 1995 Proxy Statement is hereby incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information setting forth the security ownership of certain beneficial owners
and management appearing under the caption STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS and STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS in the 1995 Proxy
Statement is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain related transactions appearing under the
caption RELATED TRANSACTIONS in the 1995 Proxy Statement is hereby incorporated
by reference.
-19-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statements and Schedules
(1) Financial Statements and Schedules
See Index to Financial Statements and Supplemental Data at page 24.
(2) Exhibits
3(a) Restated Certificate of Incorporation of the Company, filed as
Exhibit 3(a) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1992, is hereby incorporated by
reference.
3(b) Bylaws of the Company, as amended, are filed herewith as
Exhibit 3(b).
4(a) Rights Agreement, dated as of June 21, 1989, between the
Company and Security Pacific National Bank, as Rights Agent
(including the form of Certificate of Designation of the Series
R Preferred Stock attached as Exhibit A thereto and the form of
Rights Certificate attached as Exhibit B thereto), filed as
Exhibit 1 to the Company's Current Report on Form 8-K, dated
June 21, 1989, is hereby incorporated by reference.
4(b) Indenture, dated as of November 30, 1990, between the Company
and Bankers Trust Company, as Trustee, with respect to certain
senior debt securities of the Company, filed as Exhibit 2 to
the Company's Current Report on Form 8-K, dated January 14,
1991, is hereby incorporated by reference.
4(c) Amended and Restated Credit Agreement, dated as of October 3,
1994, among the Company, Citicorp USA, Inc., as Agent, and
certain financial institutions is filed herewith as Exhibit
4(c).
4(d) Other long-term borrowing instruments issued by the Company are
omitted pursuant to Item 601(b) (4) (iii) of Regulation S-K.
The Company undertakes to furnish copies of such instruments to
the Commission upon request.
10(a) (i) Agreement on the Creation and the Operation of Euro
Disneyland en France, dated March 25, 1987, and (ii) Letter
relating thereto of Michael D. Eisner, Chairman of the Company,
dated March 24, 1987, filed as Exhibits 10(b) and 10(a),
respectively, to the Company's Current Report on Form 8-K filed
April 24, 1987, are hereby incorporated by reference.
10(b) Limited Recourse Financing Facility Agreement, dated as of
April 27, 1988, among the Company, Citibank Channel Island
Limited and Citicorp International, filed as Exhibit (10a) to
the Company's Current Report on Form 8-K filed April 29, 1988,
is hereby incorporated by reference.
10(c) (i) Employment Agreement, dated as of January 10, 1989, between
the Company and Michael D. Eisner, filed as Exhibit 10(a) to
the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1989; (ii) Agreement, dated March 1, 1985,
between the Company and Michael D. Eisner, filed as Exhibit 2
to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1985; and (iii) description of action by the
Compensation Committee taken on November 30, 1990, filed as
Exhibit 10(c) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1990, are hereby incorporated by
reference.
-20-
10(d) (i) Employment Agreement, dated January 10, 1989, between the
Company and Frank G. Wells, filed as Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1989; (ii) Agreement, dated March 1, 1985, between
the Company and Frank G. Wells, filed as Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1985; and (iii) description of action by the
Compensation Committee taken on November 30, 1990, filed as
Exhibit 10(c) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1990, are hereby incorporated by
reference.
10(e) Amended and Restated Employment Agreement, dated as of February
1, 1991, between the Company and Joe Shapiro, filed as Exhibit
1 to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1991, is hereby incorporated by reference.
10(f) (i) Contract, dated December 14, 1979, with E. Cardon Walker,
to purchase a 2% interest in certain motion pictures to be
produced by the Company and to acquire an additional 2% profit
participation; and (ii) Amendment thereto, dated August 8,
1980, filed as Exhibits 1 and 3, respectively, to the Company's
Annual Report on Form 10-K for the year ended September 30,
1980, are hereby incorporated by reference.
10(g) Form of Indemnification Agreement entered into or to be entered
into by certain officers and directors of the Company as
determined from time to time by the Board of Directors,
included as Annex C to the Proxy Statement for the Company's
1988 Annual Meeting of Stockholders, is hereby incorporated by
reference.
10(h) Loan Plan for Corporate Officers, filed as Exhibit 10(u) to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1986, is hereby incorporated by reference.
10(i) 1990 Stock Incentive Plan and the Rules relating to Stock
Options and Stock Appreciation Rights thereunder, filed as
Exhibits 28(a) and 28(b), respectively, to the Company's
Registration Statement on Form S-8 (No. 33-39770), dated April
5, 1991, are hereby incorporated by reference.
10(j) (i) 1987 Stock Incentive Plan and the Rules relating to Stock
Options and Stock Appreciation Rights thereunder, (ii) 1984
Stock Incentive Plan and the Rules relating to Stock Options
and Stock Appreciation Rights thereunder, (iii) 1981 Incentive
Plan and the Rules relating to Stock Options and Stock
Appreciation Rights thereunder and (iv) 1980 Stock Option Plan,
all as set forth as Exhibits 1(a), 1(b), 2(a), 2(b), 3(a), 3(b)
and 4, respectively, to the Prospectus contained in Part I of
the Company's Registration Statement on Form S-8 (No. 33-
26106), dated December 20, 1988, are hereby incorporated by
reference.
10(k) Contingent Stock Award Rules under the Company's 1984 Stock
Incentive Plan, filed as Exhibit 10(t) to the Company's Annual
Report on Form 10-K for the year ended September 30, 1986, is
hereby incorporated by reference.
10(l) Disney Salaried Retirement Plan, as amended through March 1,
1994, is filed herewith as Exhibit 10(l).
10(m) The Walt Disney Company and Associated Companies Key Employees
Deferred Compensation and Retirement Plan, filed as Exhibit
10(u) to the Company's Annual Report on Form 10-K for the year
ended September 30, 1985, is hereby incorporated by reference.
10(n) Supplemental Medical and Group Term Life Insurance Plan
(summary plan description), filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1985, is hereby incorporated by reference.
10(o) Group Personal Excess Liability Insurance Plan (summary plan
description), filed as Exhibit 10(z) to the Company's Annual
Report on Form 10-K for the year ended September 30, 1986, is
hereby incorporated by reference.
10(p) Family Income Assurance Plan (summary plan description), filed
as Exhibit 10(aa) to the Annual Report on Form 10-K for the
year ended September 30, 1986, is hereby incorporated by
reference.
-21-
10(q) Disney Salaried Savings and Investment Plan, as amended and
restated through June 1, 1990, filed as Exhibit 28 (a) to the
Company's Registration Statement on Form S-8 (No. 33-35405),
filed June 14, 1990, is hereby incorporated by reference.
10(r) Disney Salaried Savings and Investment Plan Trust Agreement,
dated June 30, 1992, filed as Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1992, is hereby incorporated by reference.
10(s) Master Trust Agreement for Employees Savings and Retirement
Plans, as amended and restated through June 1, 1990, between
the Company and Bankers Trust Company, as Trustee, filed as
Exhibit 28 (b) to the Company's Registration Statement on Form
S-8 (No. 33-35405), filed June 14, 1990, is hereby incorporated
by reference.
18 Letter from the Company's independent auditors, dated August 9,
1993, regarding preferability of the change in accounting
method for project-related pre-opening costs, filed as Exhibit
1 to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1993, is hereby incorporated by reference.
21 Subsidiaries of The Walt Disney Company.
23 Consent of Price Waterhouse LLP, the Company's independent
accountants, is included herein at page 25.
27 Financial Data Schedule (filed electronically only)
28 Financial statements required by Form 11-K with respect to the
Disney Salaried Savings and Investment Plan for the year ended
December 31, 1993, filed as Exhibit 28 to the Annual Report on
Form 10-K for the year ended September 30, 1993, as amended by
Amendment No. 1 on Form 10-K/A dated June 30, 1994, are hereby
incorporated by reference.
(b) Reports on Form 8-K
(1) The Company filed a Current Report on Form 8-K, dated March 14, 1994,
with respect to a joint press release, dated March 14, 1994, by the
Company, Euro Disney S.C.A. and the Steering Committee for the lenders
to Euro Disney S.C.A.
-22-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE WALT DISNEY COMPANY
-------------------------------------------------
(Registrant)
Date: December 14, 1994 By: MICHAEL D. EISNER
-------------------------------------------------
(Michael D. Eisner, Chairman, Chief Executive
Officer and President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
[Enlarge/Download Table]
SIGNATURE TITLE DATE
--------- ----- ----
PRINCIPAL EXECUTIVE OFFICERS
MICHAEL D. EISNER Chairman of the Board,
---------------------------------------------- Chief Executive Officer and
(Michael D. Eisner) President December 14, 1994
SANFORD M. LITVACK Senior Executive Vice
---------------------------------------------- President and Chief of
(Sanford M. Litvack) Corporate Operations December 14, 1994
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICERS
RICHARD D. NANULA Executive Vice President
---------------------------------------------- and Chief Financial Officer December 14, 1994
(Richard D. Nanula)
JOHN J. GARAND Vice President -
---------------------------------------------- Planning and Control December 14, 1994
(John J. Garand)
DIRECTORS
REVETA F. BOWERS Director December 14, 1994
----------------------------------------------
(Reveta F. Bowers)
ROY E. DISNEY Director December 14, 1994
----------------------------------------------
(Roy E. Disney)
MICHAEL D. EISNER Director December 14, 1994
----------------------------------------------
(Michael D. Eisner)
STANLEY P. GOLD Director December 14, 1994
----------------------------------------------
(Stanley P. Gold)
IGNACIO E. LOZANO, JR. Director December 14, 1994
----------------------------------------------
(Ignacio E. Lozano, Jr.)
RICHARD A. NUNIS Director December 14, 1994
----------------------------------------------
(Richard A. Nunis)
IRWIN E. RUSSELL Director December 14, 1994
----------------------------------------------
(Irwin E. Russell)
ROBERT A.M. STERN Director December 14, 1994
----------------------------------------------
(Robert A.M. Stern)
E. CARDON WALKER Director December 14, 1994
----------------------------------------------
(E. Cardon Walker)
RAYMOND L. WATSON Director December 14, 1994
----------------------------------------------
(Raymond L. Watson)
GARY L. WILSON Director December 14, 1994
----------------------------------------------
(Gary L. Wilson)
-23-
THE WALT DISNEY COMPANY AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
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Page
----
Report of Independent Accountants and Consent of Independent Accountants . . . . . . . . . . . . . . . . 25
Consolidated Financial Statements of The Walt Disney Company and Subsidiaries
Consolidated Statement of Income for the Years Ended September 30, 1994, 1993 and 1992. . . . . . . . 26
Consolidated Balance Sheet as of September 30, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . 27
Consolidated Statement of Cash Flows for the Years Ended September 30, 1994, 1993 and 1992. . . . . . 28
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Quarterly Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Financial Statement Schedules
II. Amounts Receivable from Related Parties and Underwriters, Promoters and
Employees Other than Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
V. Property, Plant and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
VI. Accumulated Depreciation of Property, Plant and Equipment. . . . . . . . . . . . . . . . . . 49
IX. Short-term Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
X. Supplementary Income Statement Information . . . . . . . . . . . . . . . . . . . . . . . . . 51
Schedules other than those listed above are omitted for the reason that they are
not applicable or the required information is included in the financial
statements or related notes.
-24-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of The Walt Disney Company
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of The Walt Disney Company and its subsidiaries (the "Company") at
September 30, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes 1, 6, 7 and 11 to the consolidated financial
statements, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," and
SFAS No. 109, "Accounting for Income Taxes," and changed its method of
accounting for pre-opening costs in fiscal 1993.
PRICE WATERHOUSE LLP
Los Angeles, California
November 21, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectuses
constituting part of the Registration Statements on Form S-8 (Nos. 33-26106,
33-35405 and 33-39770) and Form S-3 (No. 33-49891) of The Walt Disney Company of
our report dated November 21, 1994 which appears above.
PRICE WATERHOUSE LLP
Los Angeles, California
December 14, 1994
-25-
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share data)
[Enlarge/Download Table]
Year ended September 30 1994 1993 1992
----------------------------------------------------------------------------------------------------------------
REVENUES
Filmed entertainment $ 4,793.3 $ 3,673.4 $ 3,115.2
Theme parks and resorts 3,463.6 3,440.7 3,306.9
Consumer products 1,798.2 1,415.1 1,081.9
--------- --------- ---------
10,055.1 8,529.2 7,504.0
--------- --------- ---------
COSTS AND EXPENSES
Filmed entertainment 3,937.2 3,051.2 2,606.9
Theme parks and resorts 2,779.5 2,693.8 2,662.9
Consumer products 1,372.7 1,059.7 798.9
--------- --------- ---------
8,089.4 6,804.7 6,068.7
--------- --------- ---------
OPERATING INCOME
Filmed entertainment 856.1 622.2 508.3
Theme parks and resorts 684.1 746.9 644.0
Consumer products 425.5 355.4 283.0
--------- --------- ---------
1,965.7 1,724.5 1,435.3
--------- --------- ---------
CORPORATE ACTIVITIES
General and administrative expenses 162.2 164.2 148.2
Interest expense 119.9 157.7 126.8
Investment and interest income (129.9) (186.1) (130.3)
--------- --------- ---------
152.2 135.8 144.7
--------- --------- ---------
INCOME (LOSS) FROM INVESTMENT IN EURO DISNEY (110.4) (514.7) 11.2
--------- --------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES 1,703.1 1,074.0 1,301.8
Income taxes 592.7 402.7 485.1
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,110.4 671.3 816.7
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs - (271.2) -
Postretirement benefits - (130.3) -
Income taxes - 30.0 -
--------- --------- ---------
NET INCOME $ 1,110.4 $ 299.8 $ 816.7
--------- --------- ---------
--------- --------- ---------
AMOUNTS PER COMMON SHARE
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 2.04 $ 1.23 $ 1.52
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs - (.50) -
Postretirement benefits - (.24) -
Income taxes - .06 -
--------- --------- ---------
EARNINGS PER SHARE $ 2.04 $ .55 $ 1.52
--------- --------- ---------
--------- --------- ---------
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 545.2 544.5 536.8
--------- --------- ---------
--------- --------- ---------
PRO FORMA AMOUNTS ASSUMING THE NEW ACCOUNTING METHOD FOR
PRE-OPENING COSTS IS APPLIED RETROACTIVELY
NET INCOME $ 571.0 $ 672.7
--------- ---------
--------- ---------
EARNINGS PER SHARE $ 1.05 $ 1.25
--------- ---------
--------- ---------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-26-
CONSOLIDATED BALANCE SHEET
(In millions)
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September 30 1994 1993
----------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 186.9 $ 363.0
Investments 1,323.2 1,888.5
Receivables 1,670.5 1,390.3
Merchandise inventories 668.3 608.9
Film and television costs 1,596.2 1,360.9
Theme parks, resorts and other property, at cost
Attractions, buildings and equipment 7,450.4 6,732.1
Accumulated depreciation (2,627.1) (2,286.4)
--------- ---------
4,823.3 4,445.7
Projects in progress 879.1 688.2
Land 112.1 94.3
--------- ---------
5,814.5 5,228.2
Investment in Euro Disney 629.9 -
Other assets 936.8 911.3
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other accrued liabilities $ 2,474.8 $ 2,530.1
Income taxes payable 267.4 291.0
Borrowings 2,936.9 2,385.8
Unearned royalty and other advances 699.9 840.7
Deferred income taxes 939.0 673.0
Stockholders' equity
Preferred stock, $.10 par value
Authorized - 100.0 million shares
Issued - none
Common stock, $.025 par value
Authorized - 1.2 billion shares
Issued - 567.0 million shares and 564.6 million shares 945.3 876.4
Retained earnings 5,790.3 4,833.1
Cumulative translation adjustments 59.1 36.7
--------- ---------
6,794.7 5,746.2
Less treasury stock, at cost - 42.9 million shares and
29.1 million shares 1,286.4 715.7
--------- ---------
5,508.3 5,030.5
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-27-
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
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Year ended September 30 1994 1993 1992
-------------------------------------------------------------------------------------------------------
Cash Provided by Operations Before Income Taxes $ 3,127.7 $ 2,453.9 $ 2,132.0
Income taxes paid (320.4) (308.7) (293.9)
--------- --------- ---------
2,807.3 2,145.2 1,838.1
--------- --------- ---------
INVESTING ACTIVITIES
Film and television costs (1,433.9) (1,264.6) (606.0)
Investments in theme parks, resorts and other property (1,026.1) (813.9) (599.1)
Euro Disney investment (971.1) (140.1) (68.3)
Purchases of investments (952.7) (1,313.5) (1,008.5)
Proceeds from sales of investments 1,494.1 841.0 409.0
Other 3.0 31.4 (50.8)
--------- --------- ---------
(2,886.7) (2,659.7) (1,923.7)
--------- --------- ---------
FINANCING ACTIVITIES
Borrowings 1,866.4 1,256.0 182.8
Reduction of borrowings (1,315.3) (1,119.2) (184.6)
Repurchases of common stock (570.7) (31.6) -
Dividends (153.2) (128.6) (105.3)
Other 76.1 136.1 71.4
--------- --------- ---------
(96.7) 112.7 (35.7)
--------- --------- ---------
Decrease in Cash and Cash Equivalents (176.1) (401.8) (121.3)
Cash and Cash Equivalents, Beginning of Year 363.0 764.8 886.1
--------- --------- ---------
Cash and Cash Equivalents, End of Year $ 186.9 $ 363.0 $ 764.8
--------- --------- ---------
--------- --------- ---------
The difference between Income Before Income Taxes and Cumulative Effect of
Accounting Changes as shown on the Consolidated Statement of Income and Cash
Provided by Operations Before Income Taxes is explained as follows.
[Enlarge/Download Table]
Income Before Income Taxes and Cumulative Effect of
Accounting Changes $ 1,703.1 $ 1,074.0 $ 1,301.8
--------- --------- ---------
Cumulative effect of accounting changes - (514.2) -
CHARGES TO INCOME NOT REQUIRING CASH OUTLAYS
Depreciation 409.7 364.2 317.3
Amortization of film and television costs 1,198.6 664.2 442.3
Euro Disney 110.4 350.0 -
Other 121.1 163.5 155.4
CHANGES IN
Receivables (280.2) (211.0) (161.5)
Merchandise inventories (59.4) (146.1) (151.2)
Other assets (81.5) 197.0 (121.3)
Accounts payable and other accrued liabilities 146.7 544.4 335.9
Unearned royalty and other advances (140.8) (32.1) 13.3
--------- --------- ---------
1,424.6 1,379.9 830.2
--------- --------- ---------
Cash Provided by Operations Before Income Taxes $ 3,127.7 $ 2,453.9 $ 2,132.0
--------- --------- ---------
--------- --------- ---------
Supplemental Cash Flow Information:
Interest paid $ 99.3 $ 77.3 $ 62.5
--------- --------- ---------
--------- --------- ---------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-28-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share data)
1 Description of the Business and Summary of Significant Accounting Policies
The Walt Disney Company, together with its subsidiaries (the "Company"), is
a diversified international entertainment company with operations or investments
in the following businesses.
FILMED ENTERTAINMENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, television and home video markets. The
Company also produces original television programming for the network and
first-run syndication markets. The Company distributes its filmed product
through its own distribution and marketing companies in the United States and
most foreign markets. The Company provides programming for and operates The
Disney Channel, a pay television programming service, and a Los Angeles,
California television station.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World-R- destination resort in Florida
and the Disneyland Park-R- and Disneyland Hotel in California. The Walt Disney
World destination resort includes the Magic Kingdom, Epcot and the Disney-MGM
Studios Theme Park, ten resort hotels and a complex of villas and suites, a
nighttime entertainment complex, a shopping village, conference centers,
campgrounds, golf courses, water parks and other recreational facilities. The
Company earns royalties on revenues generated by the Tokyo Disneyland theme park
near Tokyo, Japan, which is owned and operated by an unrelated Japanese
corporation. The Company's Disney Design and Development unit designs and
develops new theme park concepts and attractions, as well as resort properties.
The Company also manages and markets vacation ownership interests in the Disney
Vacation Club.
CONSUMER PRODUCTS
The Company licenses the name Walt Disney, as well as the Company's
characters, visual and literary properties and songs and music, to various
consumer manufacturers, retailers, show promoters and publishers throughout the
world. The Company also engages in direct retail distribution through the Disney
Stores and consumer catalogs, and is a publisher of books, magazines and comics
in the United States and Europe. In addition, the Company produces audio and
computer software for all markets, as well as film and video products for the
educational marketplace.
INVESTMENT IN EURO DISNEY
The Company is an equity investor in Euro Disney S.C.A. ("Euro Disney"), the
operator of the Disneyland Paris Resort (see Note 2).
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
The Walt Disney Company and its subsidiaries after elimination of intercompany
accounts and transactions. Investments in affiliated companies are accounted for
using the equity method.
REVENUE RECOGNITION
Revenues from the theatrical distribution of motion pictures are recognized
when motion pictures are exhibited. Television licensing revenues are recorded
when the program material is available for telecasting by the licensee and when
certain other conditions are met. Revenues from video sales are recognized on
the date that video units are made widely available for sale by retailers.
Revenues from participants and sponsors at the theme parks are generally
recorded over the period of the applicable agreements commencing with the
opening of the related attraction.
-29-
CASH, CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents consist of cash on hand and marketable securities
with original maturities of three months or less.
Debt securities are carried at cost, adjusted for unamortized premium or
discount. Marketable equity securities are carried at the lower of aggregate
cost or market. Realized gains and losses are determined on an average cost
basis.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 115 ACCOUNTING FOR CERTAIN INVESTMENTS
IN DEBT AND EQUITY SECURITIES. The Company will adopt the new standard in the
first quarter of 1995, and does not expect the impact to be material to its
financial condition or results of operations.
MERCHANDISE INVENTORIES
Carrying amounts of merchandise, materials and supplies inventories are
generally determined on a moving average cost basis and are stated at the lower
of cost or market.
FILM AND TELEVISION COSTS
Film and television production and participation costs are expensed based on
the ratio of the current period's gross revenues to estimated total gross
revenues from all sources on an individual production basis. Estimates of total
gross revenues are reviewed periodically and amortization is adjusted
accordingly.
Television broadcast rights are amortized principally on an accelerated
basis over the estimated useful lives of the programs.
THEME PARKS, RESORTS AND OTHER PROPERTY
Theme parks, resorts and other property are carried at cost. Depreciation is
computed on the straight-line method based upon estimated useful lives ranging
from three to fifty years.
OTHER ASSETS
Rights to the name, likeness and portrait of Walt Disney, goodwill and other
intangible assets are amortized over periods ranging from two to forty years.
RISK MANAGEMENT CONTRACTS
In the normal course of business, the Company employs a variety of
off-balance-sheet financial instruments to manage its exposure to fluctuations
in interest and foreign currency exchange rates, including interest rate swap
agreements, futures, forwards and purchased options, and foreign currency
forward contracts, purchased options and option combinations. The Company
designates interest rate swaps as hedges of investments and debt, and accrues
the differential to be paid or received under the agreements as interest rates
change over the lives of the contracts. Gains and losses arising from interest
rate futures, forwards and options, and foreign currency forward contracts and
options are recognized in income as offsets of gains and losses resulting from
the underlying hedged transactions.
Cash flows from interest rate and foreign exchange risk management
activities are classified in the same category as the cash flows from the
related investment, borrowing or foreign exchange activity.
EARNINGS PER SHARE
Earnings per share amounts are based upon the weighted average number of
common and common equivalent shares outstanding during the year. Common
equivalent shares are excluded from the computation in periods in which they
have an anti-dilutive effect.
-30-
ACCOUNTING CHANGES
During the quarter ended June 30, 1993, the Company adopted SFAS 106
EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (see Note
7) and SFAS 109 ACCOUNTING FOR INCOME TAXES (see Note 6) and changed its method
of accounting for pre-opening costs (see Note 11). These changes, adopted
retroactive to October 1, 1992, had no cash impact.
The pro forma amounts reflect the effect of retroactive application of
expensing pre-opening costs on 1992 results.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1993 and 1992 financial
statements to conform to the 1994 presentation.
2 Investment in Euro Disney
Euro Disney, a publicly traded French company, operates the Disneyland Paris
theme park and resort complex on a 4,800-acre site near Paris, France. Euro
Disney commenced operations on April 12, 1992. The Company has accounted for its
49% ownership interest in Euro Disney using the equity method of accounting.
In 1993, Euro Disney, its principal lenders and the Company began exploring
a financial restructuring for Euro Disney. The Company agreed to help fund Euro
Disney for a limited period, to afford Euro Disney time to attempt a financial
restructuring by spring 1994. Euro Disney's 1993 operating results and the need
for a financial restructuring created uncertainty regarding the Company's
ability to collect its current receivables and the funding commitment to Euro
Disney. Consequently, the Company recorded a $350.0 million charge to income in
the fourth quarter of 1993 to fully reserve its outstanding receivables and
funding commitment.
During the third quarter of 1994, the Company entered into agreements with
Euro Disney and the lenders participating in its restructuring plan (the
"Lenders") to provide certain debt, equity and lease financing to Euro Disney as
part of its commitments under the restructuring plan, and recorded a charge of
$52.8 million to reflect its participation in the restructuring. In the fourth
quarter, the Company recorded a charge of $57.6 million to reflect its equity
share of Euro Disney's operating results for that period.
Under the restructuring agreements, which specify amounts denominated in
French francs, the Company committed to increase its equity investment in Euro
Disney by subscribing for 49% of a $1.1 billion rights offering of new shares;
to provide long-term lease financing at a 1% interest rate for approximately
$255 million of Disneyland Paris theme park assets; and to subscribe, in part
through an offset against fully-reserved advances previously made to Euro Disney
under the Company's funding commitment, for securities reimbursable in shares
with a face value of approximately $180 million and a 1% coupon. In addition,
the Company agreed to cancel fully-reserved receivables from Euro Disney of
approximately $210 million, to waive royalties and base management fees for a
period of five years and to reduce such amounts for specified periods
thereafter, and to modify the method by which management incentive fees will be
calculated. During the fourth quarter of 1994, the financial restructuring was
completed and the Company funded its commitments.
In addition to the commitments described above, the Company agreed to
arrange for the provision of a 10-year unsecured standby credit facility of
approximately $210 million, upon request, bearing interest at PIBOR. As of
September 30, 1994, Euro Disney had not requested the Company to establish this
facility.
-31-
As part of the restructuring, the Company received 10-year warrants for the
purchase of up to 27.8 million shares of Euro Disney at a price of FF 40 per
share. The terms of the restructuring also provide that, in the event that Euro
Disney decides to launch the second phase of the development of its theme park
and resort complex, and commitments for the necessary financing have been
obtained, the Company will be entitled to a development fee of approximately
$225 million. Upon receipt of the development fee, the Company's entitlement to
purchase Euro Disney shares by exercise of the warrants described above will be
reduced to 15 million shares.
The Company also agreed, so long as any obligations to the Lenders are
outstanding, to maintain ownership of at least 34% of the outstanding common
stock of Euro Disney until June 1999, at least 25% for the subsequent five years
and at least 16.67% for an additional term thereafter.
In connection with the restructuring, Euro Disney Associes S.N.C. ("Disney
SNC"), an indirect wholly-owned affiliate of the Company, entered into a lease
arrangement (the "Lease") with the entity (the "Park Financing Company") which
financed substantially all of the Disneyland Paris theme park assets, and then
entered into a sublease agreement (the "Sublease") with Euro Disney. Under the
Lease, which replaced an existing lease between Euro Disney and the Park
Financing Company, Disney SNC leased the theme park assets of the Park Financing
Company for a noncancelable term of 12 years. Aggregate lease rentals of FF 10.5
billion ($2.0 billion) receivable from Euro Disney under the Sublease, which has
a 12-year term, will approximate the amounts payable by Disney SNC under the
Lease. At the conclusion of the Sublease term, Euro Disney will have the option
to assume Disney SNC's rights and obligations under the Lease. If Euro Disney
does not exercise its option, Disney SNC may continue to lease the assets, with
an ongoing option to purchase them for an amount approximating the balance of
the Park Financing Company's outstanding debt. Alternatively, Disney SNC may
terminate the Lease, in which case Disney SNC would pay the Park Financing
Company an amount equal to 75% of its then-outstanding debt, estimated to be
$1.4 billion; Disney SNC could then sell or lease the assets on behalf of the
Park Financing Company in order to satisfy the remaining debt, with any excess
proceeds payable to Disney SNC.
As part of the overall restructuring, the Lenders agreed to underwrite 51%
of the Euro Disney rights offering, to forgive certain interest charges for the
period from April 1, 1994 to September 30, 2003, having a present value of
approximately $300 million, and to defer all principal payments until three
years later than originally scheduled. As consideration for their participation
in the financial restructuring, Euro Disney issued to the Lenders 10-year
warrants for the purchase of up to 40 million shares of Euro Disney stock at a
price of FF 40 per share.
Pursuant to agreements executed in May 1994 with Prince Alwaleed Bin Talal
Bin Abdulaziz Al Saud, Chairman of United Saudi Commercial Bank, the Company
sold Prince Alwaleed approximately 75 million Euro Disney shares for
approximately $145 million, in October 1994. As a result of the sale, the
Company's equity ownership in Euro Disney was reduced from 49% at September 30,
1994 to approximately 39%. Beginning in 1995, the Company will record its equity
share of Euro Disney's operating results based upon its reduced ownership
interest. The quoted market value of the Company's Euro Disney shares at
September 30, 1994 was approximately $566 million.
In October 1989, Euro Disney completed its initial public equity offering of
approximately $1 billion. As a result of the offering, the Company's share of
the net assets of Euro Disney exceeded its investment by approximately $375
million. Through 1993, the Company recognized this gain ratably using an eight-
year amortization period, which represented the Company's contractual obligation
to manage the development and operation of the complex and maintain an ownership
interest of at least 17%. Subsequent to the Company fully reserving its
outstanding receivables and funding commitment during the fourth quarter of
1993, the Company discontinued recognition of gain amortization. As a result of
the Company's participation in the Euro Disney financial restructuring, no
further gain amortization will be recognized by the Company.
-32-
In addition to recording its equity share of Euro Disney's operating results
and amortization of the gain, the Company earned $36.3 and $32.9 million of
royalties in 1993 and 1992, respectively, under agreements with Euro Disney. The
Company agreed to defer its base management fees for 1993 and 1992. As part of
the Euro Disney financial restructuring, the Company permanently waived receipt
of deferred base management fees.
Euro Disney's consolidated financial statements are prepared in accordance
with accounting principles generally accepted in France ("French GAAP"). Under
French GAAP, Euro Disney incurred a 1994 net loss of FF 1.8 billion, a net loss
of FF 5.3 billion in 1993 (FF 2.1 billion before the cumulative effect of an
accounting change) and a net loss of FF 188 million in 1992. During 1993, Euro
Disney changed its method of accounting for project-related pre-opening costs.
Under the new method, such costs are expensed as incurred. The cumulative effect
of the change in method on prior years was a charge against income of FF 3.2
billion. The effect of the change in 1993 was to decrease the loss before the
cumulative effect of accounting change by FF 338 million.
U.S. generally accepted accounting principles ("U.S. GAAP") differ in
certain significant respects from French GAAP applied by Euro Disney,
principally as they relate to accounting for leases and the calculation of
interest expense relating to the debt affected by Euro Disney's financial
restructuring. In addition, the U.S. GAAP treatment of receivables due from Euro
Disney and canceled by the Company in connection with Euro Disney's financial
restructuring differs significantly from French GAAP applied by Euro Disney. The
summarized consolidated financial statements for Euro Disney set forth below are
stated in U.S. dollars in accordance with U.S. GAAP.
[Download Table]
Balance Sheet 1994 1993
------------------------------------------------------------------------------
Cash and investments $ 289 $ 211
Receivables 227 268
Fixed assets, net 3,791 3,704
Other assets 137 214
--------- ---------
Total Assets $ 4,444 $ 4,397
--------- ---------
--------- ---------
Accounts payable and other liabilities $ 560 $ 647
Borrowings 3,051 3,683
Stockholders' equity 833 67
--------- ---------
Total Liabilities and Stockholders' Equity $ 4,444 $ 4,397
--------- ---------
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[Enlarge/Download Table]
Statement of Operations 1994 1993 1992
-----------------------------------------------------------------------------------------
Revenues $ 751 $ 873 $ 738
Costs and expenses 1,198 1,114 808
Net interest expense 280 287 95
--------- --------- ---------
Loss before income taxes and cumulative
effect of accounting change (727) (528) (165)
Income tax benefit - - 30
--------- --------- ---------
Loss before cumulative effect of accounting
change (727) (528) (135)
Cumulative effect of change in accounting for
pre-opening costs - (578) -
--------- --------- ---------
Net Loss $ (727) $ (1,106) $ (135)
--------- --------- ---------
--------- --------- ---------
Pro forma amount assuming the change in
accounting method is applied retroactively $ (528) $ (418)
--------- ---------
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3 Film and Television Costs
[Enlarge/Download Table]
1994 1993
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Theatrical Film Costs
Released, less amortization $ 436.7 $ 329.0
In process 627.1 548.5
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1,063.8 877.5
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Television Costs
Released, less amortization 281.9 230.0
In process 124.7 130.1
--------- ---------
406.6 360.1
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Television Broadcast Rights 125.8 123.3
--------- ---------
$ 1,596.2 $ 1,360.9
--------- ---------
--------- ---------
Based on management's total gross revenue estimates as of September 30,
1994, approximately 88% of unamortized production costs applicable to released
theatrical and television productions are expected to be amortized during the
next three years.
4 Borrowings
[Enlarge/Download Table]
Fiscal
Effective Year
Interest Rate Maturity 1994 1993
------------------------------------------------------------------------------------------------------
Medium-term notes (a) 5.9% 1995-2093 $ 948.0 $ 783.7
Senior participating notes (a) (b) 6.0 2000-2001 722.8 312.5
Commercial paper (c) 4.9 1995 609.1 520.0
Japanese yen bonds (d) 4.8 1998 285.4 -
Securities sold under agreements to
repurchase (e) 7.0 1995 57.5 437.5
Other (d) 8.4 1995-2013 314.1 332.1
--------- ---------
5.9% $ 2,936.9 $ 2,385.8
--------- ---------
--------- ---------
<FN>
(a) The effective interest rate reflects the effect of interest rate swaps
entered into with respect to certain of these borrowings.
(b) The average coupon rate is 3% on $875 million face value amount of notes.
Additional interest may be paid based on the performance of designated
portfolios of films.
(c) The Company has available through 2000 an unsecured revolving line of bank
credit of up to $525 million for general corporate purposes, including the
support of commercial paper borrowings. The Company has the option to
borrow at various interest rates.
(d) The effective interest rate reflects the effect of cross-currency swaps
entered into with respect to certain of these borrowings.
(e) Securities sold under agreements to repurchase are collateralized by
certain marketable securities.
Borrowings, excluding commercial paper and securities sold under agreements
to repurchase, have the following scheduled maturities.
[Download Table]
1995 $163.1
1996 116.1
1997 108.0
1998 411.1
1999 0.4
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The Company capitalizes interest on assets constructed for its theme parks,
resorts and other property, and on theatrical and television productions in
process. In 1994, 1993 and 1992, respectively, total interest costs incurred
were $171.9, $183.7 and $152.1 million, of which $52.0, $26.0 and $25.3 million
were capitalized.
5 Unearned Royalty and Other Advances
[Enlarge/Download Table]
1994 1993
------------------------------------------------------------------------------------------------------
Tokyo Disneyland royalty advances $ 466.6 $ 490.9
Other 233.3 349.8
--------- ---------
$ 699.9 $ 840.7
--------- ---------
--------- ---------
In 1988, the Company monetized a substantial portion of its royalties
through 2008 from certain Tokyo Disneyland operations. The Company has certain
ongoing obligations under its contract with the owner and operator of Tokyo
Disneyland, and accordingly, royalty advances are being amortized through 2008.
The maximum amount the Company may be required to fund under certain recourse
provisions of the monetization agreement is $145 million. The Company does not
anticipate funding any significant amount under this agreement.
6 Income Taxes
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1994 1993 1992
------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES
Domestic (including U.S. exports) $ 1,514.5 $ 931.4 $ 1,178.9
Foreign subsidiaries 188.6 142.6 122.9
--------- --------- ---------
$ 1,703.1 $ 1,074.0 $ 1,301.8
--------- --------- ---------
--------- --------- ---------
INCOME TAX PROVISION
Current
Federal $ 117.3 $ 217.3 $ 225.8
State 29.9 47.1 40.3
Foreign subsidiaries 84.1 63.3 46.1
Other foreign 78.7 65.1 48.3
--------- --------- ---------
310.0 392.8 360.5
--------- --------- ---------
Deferred
Federal 259.6 17.0 109.9
State 23.1 (7.1) 14.7
--------- --------- ---------
282.7 9.9 124.6
--------- --------- ---------
$ 592.7 $ 402.7 $ 485.1
--------- --------- ---------
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-35-
[Enlarge/Download Table]
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES 1994 1993
---------------------------------------------------------------------------------------------------
Deferred tax assets:
Accrued liabilities $ (221.3) $ (142.3)
Investment in Euro Disney (133.3) (204.6)
State income taxes (72.9) (71.4)
Pension and other benefit programs (26.2) (27.0)
--------- ---------
Total deferred tax assets (453.7) (445.3)
--------- ---------
Deferred tax liabilities:
Theme parks, resorts and other property 954.8 753.6
Licensing revenues capitalized 66.1 65.7
Interest and property taxes 73.8 52.8
Purchase accounting adjustments 49.6 51.0
Leveraged leases 175.1 111.5
Other 23.5 33.9
--------- ---------
Total deferred tax liabilities 1,342.9 1,068.5
--------- ---------
Net deferred tax liability before valuation allowance 889.2 623.2
Valuation allowance 49.8 49.8
--------- ---------
Net deferred tax liability $ 939.0 $ 673.0
--------- ---------
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[Enlarge/Download Table]
RECONCILIATION OF EFFECTIVE INCOME TAX RATE 1994 1993 1992
---------------------------------------------------------------------------------------------------------------
Federal income tax rate 35.0% 34.8% 34.0%
State income taxes, net of Federal income tax benefit 2.1 2.2 2.8
Effect of increase in statutory tax rate on deferred taxes - 1.6 -
Other (2.3) (1.1) 0.5
--- --- ---
34.8% 37.5% 37.3%
--- --- ---
--- --- ---
As discussed in Note 1, the Company adopted SFAS 109 during the quarter
ended June 30, 1993, retroactive to October 1, 1992. The adoption of SFAS 109
changed the Company's method of accounting for income taxes from the deferred
method to the asset and liability method. SFAS 109 requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the financial statements or tax returns.
Under this method, deferred tax assets and liabilities are determined based on
the difference between the financial statement carrying amounts and tax bases of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Differences between financial reporting
and tax bases arise most frequently from differences in timing of income and
expense recognition and as a result of business acquisitions. Prior year
financial statements have not been restated to apply the provisions of SFAS 109.
-36-
As a result of adoption, the Company recognized a benefit in 1993 of $30.0
million, or $.06 per share, representing the cumulative effect of the change on
results for years prior to October 1, 1992. The cumulative effect represented
the adjustment of previously recorded deferred tax assets and liabilities to
reflect the lower prevailing tax rates and the establishment of previously
unrecorded deferred tax liabilities. The adoption had no effect on pre-tax
income in 1993.
In 1994 and 1993, income tax benefits of $12.6 and $144.7 million,
respectively, were allocated to stockholders' equity. Such benefits were
attributable to employee stock option transactions.
7 Pension and Other Benefit Programs
The Company contributes to various pension plans under union and
industry-wide agreements. Contributions are based upon the hours worked or gross
wages paid to covered employees. In 1994, 1993 and 1992, the costs recognized
under these plans were $13.1, $16.1 and $14.7 million, respectively. The
Company's share of the unfunded liability, if any, related to these
multi-employer plans is not material.
The Company also maintains pension plans covering most of its domestic
salaried and hourly employees not covered by union or industry-wide pension
plans and a non-qualified, unfunded retirement plan for key employees.
With respect to its qualified defined benefit pension plans, the Company's
policy is to fund, at a minimum, the amount necessary on an actuarial basis to
provide for benefits in accordance with the requirements of ERISA. Benefits are
generally based on years of service and/or compensation.
Net pension cost is summarized as follows.
[Enlarge/Download Table]
1994 1993 1992
-----------------------------------------------------------------------------------------------
Service cost of current period $ 35.1 $ 29.5 $ 23.1
Interest cost on projected benefit obligations 35.5 31.0 25.9
Gain on plan assets (12.1) (54.7) (43.3)
Net amortization and deferral of unrecognized gain
on plan assets (22.0) 26.2 19.1
--------- --------- ---------
Net pension cost $ 36.5 $ 32.0 $ 24.8
--------- --------- ---------
--------- --------- ---------
The weighted average discount rate was 8.5% for 1994 and 1993 and 9.5% for
1992, and the expected long-term rate of return on plan assets was 9.5% for
1994, 1993 and 1992. The assumed rate of increase in compensation for the
salaried plans was 6.3% for 1994, 6.8% for 1993 and 7.0% for 1992. The mortality
table used is the 1983 Group Annuity Mortality Table for Males and Females.
-37-
The funded status of the plans and the amounts included in the Company's
consolidated balance sheet are as follows.
[Enlarge/Download Table]
1994 1993
---------------------------------------------------------------------------------------------------
Plan assets at fair value, primarily publicly traded stocks and
bonds $ 484.8 $ 428.9
Actuarial present value of projected benefit obligations
Accumulated benefit obligations
Vested (383.2) (344.6)
Non-vested (20.3) (23.0)
Provision for future salary increases (72.2) (65.1)
--------- ---------
Excess (deficiency) of plan assets versus projected benefit
obligations 9.1 (3.8)
Unrecognized net loss 82.3 53.8
Unrecognized prior service cost (benefit) (10.6) 3.2
Unrecognized net obligation 3.7 4.0
--------- ---------
Prepaid pension cost $ 84.5 $ 57.2
--------- ---------
--------- ---------
The Company sponsors a plan to provide postretirement medical benefits to
most of its domestic salaried and hourly employees, and contributes to
multi-employer welfare plans to provide similar benefits to certain employees
under collective bargaining agreements. In 1993, employees who had 20 years of
service and attained the age of 62 were eligible to participate in the
postretirement benefit plan. Effective March 1, 1994, benefits commence at age
65 for employees who have completed 20 qualifying years of service, worked until
age 55, and who have commenced receiving monthly retirement benefits.
The Company funds its postretirement health benefit liability on a
discretionary basis.
As discussed in Note 1, the Company adopted SFAS 106 during the quarter
ended June 30, 1993, retroactive to October 1, 1992. SFAS 106 required accrual
of postretirement benefit costs to actuarially allocate such costs to the years
during which employees render qualifying service. Previously, such costs were
expensed as actual claims were paid. SFAS 106 also required recognition of the
unfunded and previously unrecognized accumulated postretirement benefit
obligation ("transition obligation") for all participants in the
Company-sponsored plan. The Company elected to immediately recognize the
transition obligation, which resulted in a charge against income of $130.3
million, or $.24 per share, after related income tax benefit of $71.7 million,
which represented the cumulative effect of the change in accounting on results
prior to October 1, 1992. Under the provisions of SFAS 106, postretirement
benefit expense in 1993 exceeded the amount under the previous accounting method
by $17.0 million after-tax, or $.03 per share.
Net postretirement benefit cost is summarized as follows.
[Enlarge/Download Table]
1994 1993
---------------------------------------------------------------------------------------------------
Service cost of current period $ 13.5 $ 13.9
Interest cost on accumulated postretirement benefit obligation 17.0 20.5
Actual return on plan assets (1.1) (8.5)
Net amortization and deferral of unrecognized gain or loss on plan
assets (15.5) 3.9
--------- ---------
Net postretirement benefit cost $ 13.9 $ 29.8
--------- ---------
--------- ---------
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.5% for 1994 and 1993. The expected long
term rate of return on plan assets was 9.5% for 1994 and 1993.
-38-
The annual rate of increase in the per capita cost of covered health care
benefits was assumed to be 7% in 1994 and 1993. The health care cost trend rate
has a significant effect on the amounts reported. An increase in the assumed
health care cost trend rate of 1% for each year would increase the
postretirement benefit obligation as of September 30, 1994 and 1993 by $39.2 and
$53.3 million, respectively, and the net service and interest cost components of
net postretirement benefit cost for 1994 and 1993 by $7.1 and $8.1 million,
respectively.
The funded status of the plan and the amounts included in the Company's
consolidated balance sheet are as follows.
[Enlarge/Download Table]
1994 1993
---------------------------------------------------------------------------------------------------
Actuarial present value of accumulated postretirement benefit
obligation
Retirees $ 46.9 $ 40.4
Fully eligible active plan participants 57.8 75.7
Other active plan participants 77.7 132.0
--------- ---------
182.4 248.1
Plan assets at fair value, primarily publicly traded stocks and
bonds (78.1) (66.8)
Unrecognized net (gain) loss (23.1) 30.2
Unrecognized prior service cost 129.0 -
--------- ---------
Accrued postretirement benefit cost $ 210.2 $ 211.5
--------- ---------
--------- ---------
In November 1992, the Financial Accounting Standards Board issued SFAS 112
EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS. The Company currently plans
to adopt SFAS 112 in 1995 and does not anticipate that the impact will be
material to its financial condition or results of operations.
8 Stockholders' Equity
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Common Paid-in Retained
(Shares in millions) Shares Stock Capital Earnings
-------------------------------------------------------------------------------------------
Balance at September 30, 1991 548.6 $ 13.7 $ 536.0 $ 3,950.5
Exercise of stock options, net 3.6 0.1 70.1 -
Dividends ($.20125 per share) - - - (105.3)
Net income - - - 816.7
----- ----- ----------- -----------
Balance at September 30, 1992 552.2 13.8 606.1 4,661.9
Exercise of stock options, net 12.4 0.3 256.2 -
Dividends ($.24 per share) - - - (128.6)
Net income - - - 299.8
----- ----- ----------- -----------
Balance at September 30, 1993 564.6 14.1 862.3 4,833.1
Exercise of stock options, net 2.4 0.1 68.8 -
Dividends ($.2875 per share) - - - (153.2)
Net income - - - 1,110.4
----- ----- ----------- -----------
Balance at September 30, 1994 567.0 $ 14.2 $ 931.1 $ 5,790.3
----- ----- ----------- -----------
----- ----- ----------- -----------
On February 18, 1992, the Board of Directors approved a four-for-one stock
split of the Company's common stock, which was approved by the Company's
stockholders and became effective on April 20, 1992. All share and per share
data have been restated for all periods presented to reflect the stock split.
-39-
In June 1989, the Company adopted a stockholders' rights plan. The plan
becomes operative in certain events involving the acquisition of 25% or more of
the Company's common stock by any person or group in a transaction not approved
by the Company's Board of Directors. Upon the occurrence of such an event, each
right, unless redeemed by the Board, entitles its holder to purchase for $350 an
amount of common stock of the Company, or in certain circumstances the acquiror,
having a market value of twice the purchase price. In connection with the rights
plan, 7.2 million shares of preferred stock were reserved.
At September 30, 1994, and 1993, the Company's cumulative foreign currency
translation adjustments were $59.1 and $36.7 million, net of deferred taxes of
$27.5 and $25.0 million, respectively.
Treasury stock activity for the three years ended September 30, 1994 was as
follows.
[Enlarge/Download Table]
Treasury
(Shares in millions) Shares Stock
------------------------------------------------------------------------------------------
Balance at September 30, 1991 and 1992 27.8 $ 664.1
Common stock repurchases 0.9 31.6
Common stock trade-ins on exercised options 0.4 20.0
--- -----------
Balance at September 30, 1993 29.1 715.7
Common stock repurchases 13.8 570.7
--- -----------
Balance at September 30, 1994 42.9 $ 1,286.4
--- -----------
--- -----------
In November 1984, the Company adopted a program to repurchase up to 56
million shares. In December 1990, the Company increased the authorized share
repurchase amount to 90 million shares. Under this program, the Company
purchased 13.8 million shares during the year ended September 30, 1994, and
repurchased an additional 8.9 million shares through November 21, 1994. Since
adoption of the program, a total of 75.5 million shares have been repurchased at
prevailing market prices. On November 21, 1994, the Company increased the
authorized share repurchase amount by 90 million.
9 Stock Incentive Plans
Under various plans, the Company may grant stock option and other awards to
key executive, management and creative personnel. Transactions under the various
stock option and incentive plans for the periods indicated were as follows.
[Enlarge/Download Table]
(Shares in millions) 1994 1993 1992
---------------------------------------------------------------------------------------------
Outstanding at beginning of year 36.4 44.3 44.8
Awards cancelled (1.6) (1.1) (1.2)
Awards granted 6.5 5.6 4.3
Awards exercised (2.5) (12.4) (3.6)
--- --------- ---
Outstanding at September 30 38.8 36.4 44.3
--- --------- ---
--- --------- ---
Exercisable at September 30 17.5 13.4 18.8
--- --------- ---
--- --------- ---
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Stock option awards are granted at prices equal to at least market price on
the date of grant. Options outstanding at September 30, 1994 and 1993 ranged in
price from $3.61 to $47.31 and $3.23 to $44.06 per share, respectively. Options
exercised ranged in price from $3.23 to $41.00 per share in 1994, from $3.23 to
$33.35 per share in 1993, and from $3.23 to $32.66 per share in 1992. Shares
available for future option grants at September 30, 1994 were 18.8 million.
10 Detail of Certain Balance Sheet Accounts
[Enlarge/Download Table]
1994 1993
-------------------------------------------------------------------------------------------------
RECEIVABLES
Trade, net of allowances $ 1,328.4 $ 1,180.7
Other 342.1 209.6
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$ 1,670.5 $ 1,390.3
--------- ---------
--------- ---------
OTHER ASSETS
Intangibles $ 311.0 $ 380.3
Other 625.8 531.0
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$ 936.8 $ 911.3
--------- ---------
--------- ---------
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES
Accounts payable $ 1,771.8 $ 1,755.4
Payroll and employee benefits 638.6 661.9
Other 64.4 112.8
--------- ---------
$ 2,474.8 $ 2,530.1
--------- ---------
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11 Pre-Opening Costs
As discussed in Note 1, during 1993 the Company changed its method of
accounting for pre-opening costs. In years prior to 1993, project-related
pre-opening costs were capitalized and amortized on a straight-line basis over
periods of up to five years. Under the new method, project-related pre-opening
costs are expensed as incurred. The cumulative effect of the change in method on
prior years was a charge against income of $271.2 million, or $.50 per share,
after related income tax benefit of $71.0 million, of which $233.0 million
related to the impact of the accounting change on the Company's investment in
Euro Disney. The effect of the change was to increase income in 1993 by $40.2
million after-tax, or $.07 per share.
-41-
12 Segments
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BUSINESS SEGMENTS 1994 1993 1992
-------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Filmed entertainment $ 100.7 $ 130.2 $ 76.7
Theme parks and resorts 846.4 593.4 393.6
Consumer products 61.1 36.3 80.6
Corporate 17.9 54.0 48.2
--------- --------- ---------
$ 1,026.1 $ 813.9 $ 599.1
--------- --------- ---------
--------- --------- ---------
DEPRECIATION EXPENSE
Filmed entertainment $ 49.1 $ 38.5 $ 29.5
Theme parks and resorts 289.2 269.2 249.8
Consumer products 38.3 26.2 16.8
Corporate 33.1 30.3 21.2
--------- --------- ---------
$ 409.7 $ 364.2 $ 317.3
--------- --------- ---------
--------- --------- ---------
IDENTIFIABLE ASSETS
Filmed entertainment $ 3,791.5 $ 3,417.5
Theme parks and resorts 5,706.9 5,216.0
Consumer products 845.3 707.5
Corporate 1,852.7 2,410.1
Investment in Euro Disney 629.9 -
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
SUPPLEMENTAL REVENUE DATA
Filmed entertainment
Theatrical product $ 3,734.2 $ 2,764.4 $ 2,251.7
Theme parks and resorts
Admissions 1,179.6 1,215.6 1,193.3
Merchandise, food and beverage 1,238.1 1,232.7 1,223.1
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[Enlarge/Download Table]
GEOGRAPHIC SEGMENTS 1994 1993 1992
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DOMESTIC REVENUES
United States $ 7,697.6 $ 6,710.8 $ 6,047.7
United States export 458.0 399.8 406.0
INTERNATIONAL REVENUES
Europe 1,344.8 984.6 763.1
Rest of world 554.7 434.0 287.2
--------- --------- ---------
$10,055.1 $ 8,529.2 $ 7,504.0
--------- --------- ---------
--------- --------- ---------
OPERATING INCOME
United States $ 1,392.7 $ 1,591.7 $ 1,402.7
Europe 405.0 121.8 39.1
Rest of world 226.0 82.5 48.4
Unallocated expenses (58.0) (71.5) (54.9)
--------- --------- ---------
$ 1,965.7 $ 1,724.5 $ 1,435.3
--------- --------- ---------
--------- --------- ---------
IDENTIFIABLE ASSETS
United States $11,306.1 $11,084.5
Europe 1,237.8 519.7
Rest of world 282.4 146.9
--------- ---------
$12,826.3 $11,751.1
--------- ---------
--------- ---------
13 Financial Instruments
INTEREST RATE RISK MANAGEMENT
The Company uses interest rate swaps and other instruments to manage net
exposure to interest rate changes related to its portfolio of investments and
borrowings and to lower its overall borrowing costs. The Company's objective is
to manage the impact of interest rate changes on earnings and on the market
value of its investments and borrowings. Significant interest rate risk
management instruments held by the Company at September 30, 1994 and 1993 are
described below.
INTEREST RATE RISK MANAGEMENT TRANSACTIONS - INVESTMENTS
At September 30, 1994 and 1993, the Company had outstanding interest rate
swaps on its investments with notional amounts totaling $131.3 and $456.5
million, respectively, which effectively converted certain fixed rate securities
to variable rate instruments. Under these swap agreements, which expire in two
to ten years, the Company received interest at LIBOR-based rates and paid
interest at a weighted average fixed rate of 7.4% at September 30, 1994.
At September 30, 1993, the Company had outstanding interest rate swaps on
its U.S. dollar investments with notional amounts totaling $350.0 million, which
effectively converted variable rate securities to fixed rate instruments. These
swap agreements were terminated during 1994.
At September 30, 1994 and 1993, the Company had outstanding spreadlock
contracts with notional amounts totaling $250.0 and $50.0 million, respectively.
Under these interest rate contracts, which expire within one year, the Company
will receive payments if interest rate swap spreads rise above certain levels
and will make payments if interest rate swap spreads fall below certain levels.
-43-
At September 30, 1994 and 1993, the Company held positions in certain
investment securities through the use of futures and forward contracts, which it
hedged with interest rate swaps. The aggregate notional amounts of such futures,
forwards, and interest rate swaps were $263.5 and $273.2 million, respectively.
The contracts expire in one to eight years.
INTEREST RATE RISK MANAGEMENT TRANSACTIONS - BORROWINGS
At September 30, 1994 and 1993, the Company had outstanding interest rate
swaps on its borrowings with notional amounts totaling $985.0 and $1,058.7
million, respectively, which effectively converted medium-term notes and senior
participating notes to commercial paper or LIBOR-based variable rate
instruments. These swap agreements expire in one to 15 years.
SUMMARY OF INTEREST RATE RISK MANAGEMENT TRANSACTIONS
Following is a reconciliation of the notional or contractual amounts of the
Company's interest rate contracts.
[Enlarge/Download Table]
Balance at Balance at
September 30, Maturities/ September 30,
1993 Additions Expirations Terminations 1994
------------------------------------------------------------------------------------------
Pay floating swaps $ 1,431.7 $ 1,047.4 $ (590.7) $ (851.0) $ 1,037.4
Pay fixed swaps 717.6 141.8 - (646.3) 213.1
Spreadlock contracts 50.0 300.0 - (100.0) 250.0
Forward contracts 212.1 96.5 - (207.9) 100.7
Futures contracts 18.7 824.3 (5.3) (571.3) 266.4
Option contracts 65.8 727.6 (147.6) (551.4) 94.4
------------- ----------- ----------- ------------ -------------
$ 2,495.9 $ 3,137.6 $ (743.6) $ (2,927.9) $ 1,962.0
------------- ----------- ----------- ------------ -------------
------------- ----------- ----------- ------------ -------------
The notional amounts above reflect incremental changes in the Company's
investments in each class of financial instrument. Rollforward activity, which
represented renewal of existing positions, is excluded.
FOREIGN EXCHANGE RISK MANAGEMENT
The Company enters into foreign exchange hedging contracts to protect
against changes in the value of its existing foreign currency assets and
liabilities and its future foreign currency revenues. The primary focus of the
Company's foreign exchange risk management program is to reduce earnings
volatility. By policy, the Company maintains hedge coverages between minimum and
maximum percentages of its anticipated foreign exchange exposures for each of
the next five years. Most foreign exchange hedging contracts are option
strategies providing for the sale of foreign currencies which hedge probable,
but not firmly committed, revenues. The principal hedge currencies are Japanese
yen, French francs, German marks and British pounds.
FOREIGN EXCHANGE RISK MANAGEMENT TRANSACTIONS
At September 30, 1994 and 1993, the Company had foreign currency hedging
contracts with notional amounts of $7.4 and $4.0 billion, respectively, net of
notional amounts of contracts with counterparties against which the Company has
a legal right of offset, which effectively hedged $3.3 and $2.0 billion,
respectively, of the Company's foreign exchange exposure. Foreign exchange
contracts mature over one to five years.
At September 30, 1994 and 1993, the Company had $334.6 and $49.2 million,
respectively, of borrowings denominated in yen, and $77.2 and $119.5 million,
respectively, of borrowings converted to yen borrowings through cross-currency
swaps. Cross-currency swaps, which expire in one to four years, effectively
converted $297.9 and $54.8 million, respectively, of yen borrowings to U.S.
dollar LIBOR-based variable rate instruments. The remaining yen borrowings are
hedged by certain of the Company's yen royalty receipts.
-44-
IMPACT OF RISK MANAGEMENT TRANSACTIONS
The impact of risk management activities on income in 1994, 1993 and 1992
and the amount of deferred gains and losses from interest rate and foreign
currency risk management as of September 30, 1994 and 1993 were not material.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At September 30, 1994 and 1993, the Company's financial instruments included
cash, cash equivalents, investments, borrowings, interest rate swap agreements
and other interest rate contracts, cross currency swap agreements, and foreign
exchange forward contracts and options. The fair values of cash and cash
equivalents, commercial paper, and securities sold under agreements to
repurchase approximated carrying values because of the short maturities of these
instruments.
The fair values of the Company's marketable equity securities, other
investments, and other borrowings approximated carrying values and the fair
value of each class of hedging instruments was not material, based on broker
quotes or quoted market prices or rates for the same or similar instruments.
CREDIT CONCENTRATIONS
The Company continually monitors its positions with, and the credit quality
of, the financial institutions which are counterparties to its off-balance-sheet
financial instruments and does not anticipate nonperformance by the
counterparties. The Company would not realize a material loss in the event of
nonperformance by counterparties. The Company enters into off-balance-sheet
transactions only with financial institution counterparties which have a credit
rating of single A-or better. The Company's current policy in agreements with
financial institution counterparties is generally to require collateral in the
event credit ratings fall below single A-. At September 30, 1994, neither the
Company nor the counterparties were required to collateralize their respective
obligations under these off-balance-sheet financial instruments.
The Company's trade receivables and investments do not represent significant
concentrations of credit risk at September 30, 1994, due to the wide variety of
customers and markets into which the Company's products are sold, as well as
their dispersion across many geographic areas, and due to the diversification of
the Company's portfolio among instruments and issuers. (See Note 2 for a
discussion of the Company's investment in Euro Disney.)
14 Commitments and Contingencies
The Company, together with, in some instances, certain of its directors and
officers, is a defendant or co-defendant in various legal actions involving
copyright, breach of contract and various other claims incident to the conduct
of its businesses. Management does not expect the Company to suffer any material
liability by reason of such actions, nor does it expect that such actions will
have a material effect on the Company's liquidity or operating results as of
September 30, 1994.
-45-
QUARTERLY FINANCIAL SUMMARY
(In millions, except per share data)
(Unaudited)
[Enlarge/Download Table]
December 31 March 31 June 30 September 30
---------------------------------------------------------------------------------------
1994
Revenues $ 2,727.3 $ 2,275.8 $ 2,353.6 $ 2,698.4
Operating income 624.4 410.0 492.6 438.7
Net income 368.6 248.4 267.5 225.9
Earnings per share .68 .45 .49 .42
1993
Revenues $ 2,391.4 $ 2,026.4 $ 1,936.8 $ 2,174.6
Operating income 496.5 401.4 469.9 356.7
Income (loss) before cumulative
effect of accounting changes 275.1 214.8 259.1 (77.7)
Net income (loss) (96.4) 214.8 259.1 (77.7)
Earnings (loss) per share before
cumulative effect of accounting
changes .50 .39 .48 (.15)
Earnings (loss) per share (.18) .39 .48 (.15)
-46-
SCHEDULE II - AMOUNTS RECEIVABLE FROM
RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
[Enlarge/Download Table]
Balance at
beginning of Balance at
year Additions Deductions end of year
------------- ------------- --------------- -----------
1994
H. Weinstein(1) $ 4.8 $ 0.2 $ 5.0
R. Weinstein(1) 4.8 0.2 5.0
P. Sissman(2) 0.2 0.2
J. Rizzo(3) 0.1 0.1
--- --- -----
Total............................... $ 9.6 $ 0.7 $ 10.3
--- --- -----
--- --- -----
1993
H. Weinstein(1) $ 4.8 $ 4.8
R. Weinstein(1) 4.8 4.8
J. Forsgren(4) $ 0.5 $ 0.5
--- --- --- -----
Total............................... $ 0.5 $ 9.6 $ 0.5 $ 9.6
--- --- --- -----
--- --- --- -----
1992
J. Forsgren(4).......................... $ 0.5 $ 0.5
--- -----
--- -----
--------
<FN>
(1) Two unsecured notes: $2.5 million, interest payable at 6%, principal and
interest payable monthly commencing October 1994, due January 1997; $2.3
million, non-interest bearing, payable monthly beginning January 1997, due not
later than October 1998.
(2) Unsecured loan; interest payable at 5%, with annual payments of interest only
for two years, and annual payments of principal and interest thereafter, due
October 2001.
(3) Non-interest bearing demand loan, secured by real property.
(4) Loan secured by a pledge of shares acquired pursuant to the exercise of stock
options; interest payable at 6% on $0.3 million, with principal and interest
due upon sale of the shares.
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SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
[Enlarge/Download Table]
Balance at Balance
beginning Retirements at end
of year Additions or sales Transfers of year
------------ ----------- ------------ ------------ ------------
1994
Rides and attractions. . . . . . . . . . . . . . $ 2,084.9 $ (33.8) $ 213.6 $ 2,264.7
Buildings. . . . . . . . . . . . . . . . . . . . 1,935.3 $ 0.2 (2.6) 180.5 2,113.4
Equipment, furniture and fixtures. . . . . . . . 1,854.1 129.5 (53.4) 178.1 2,108.3
Land improvements. . . . . . . . . . . . . . . . 720.0 0.1 (2.0) 77.1 795.2
Leasehold improvements . . . . . . . . . . . . . 137.8 11.2 (3.7) 23.5 168.8
-------- -------- ----- ------ --------
6,732.1 141.0 (95.5) 672.8 7,450.4
Projects in progress . . . . . . . . . . . . . . 688.2 863.7 (672.8) 879.1
Land . . . . . . . . . . . . . . . . . . . . . . 94.3 21.4 (3.6) 112.1
-------- -------- ----- ------ --------
$ 7,514.6 $ 1,026.1 $ (99.1) $ -- $ 8,441.6
-------- -------- ----- ------ --------
-------- -------- ----- ------ --------
1993
Rides and attractions. . . . . . . . . . . . . . $ 2,013.8 $ 13.2 $ 84.3 $ 2,084.9
Buildings. . . . . . . . . . . . . . . . . . . . 1,784.1 $ 99.2 2.7 54.7 1,935.3
Equipment, furniture and fixtures. . . . . . . . 1,656.6 90.7 45.2 152.0 1,854.1
Land improvements. . . . . . . . . . . . . . . . 693.9 2.8 0.6 23.9 720.0
Leasehold improvements . . . . . . . . . . . . . 136.9 14.1 30.1 16.9 137.8
-------- -------- ----- ------ --------
6,285.3 206.8 91.8 331.8 6,732.1
Projects in progress . . . . . . . . . . . . . . 440.1 579.9 (331.8) 688.2
Land . . . . . . . . . . . . . . . . . . . . . . 72.9 27.2 5.8 94.3
-------- -------- ----- ------ --------
$ 6,798.3 $ 813.9 $ 97.6 $ -- $ 7,514.6
-------- -------- ----- ------ --------
-------- -------- ----- ------ --------
1992
Rides and attractions. . . . . . . . . . . . . . $ 1,902.9 $ 8.4 $ 119.3 $ 2,013.8
Buildings. . . . . . . . . . . . . . . . . . . . 1,624.1 $ 2.8 2.3 159.5 1,784.1
Equipment, furniture and fixtures. . . . . . . . 1,385.7 71.4 26.8 226.3 1,656.6
Land improvements. . . . . . . . . . . . . . . . 608.1 0.2 85.6 693.9
Leasehold improvements . . . . . . . . . . . . . 107.3 15.8 2.7 16.5 136.9
-------- -------- ----- ------ --------
5,628.1 90.2 40.2 607.2 6,285.3
Projects in progress . . . . . . . . . . . . . . 540.9 506.4 (607.2) 440.1
Land . . . . . . . . . . . . . . . . . . . . . . 70.4 2.5 72.9
-------- -------- ----- ------ --------
$ 6,239.4 $ 599.1 $ 40.2 $ -- $ 6,798.3
-------- -------- ----- ------ --------
-------- -------- ----- ------ --------
-48-
SCHEDULE VI - ACCUMULATED DEPRECIATION
OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
[Enlarge/Download Table]
Balance at Balance
beginning Retirements Other at end
of year Additions or sales changes(1) of year
------------ ----------- ------------ ------------ ------------
1994
Rides and attractions. . . . . . . . . . . . . . $ 763.1 $ 87.3 $ 22.0 $ 828.4
Buildings. . . . . . . . . . . . . . . . . . . . 363.5 73.8 0.9 436.4
Equipment, furniture and fixtures. . . . . . . . 858.4 218.4 42.5 1,034.3
Land improvements. . . . . . . . . . . . . . . . 237.2 29.6 1.3 265.5
Leasehold improvements . . . . . . . . . . . . . 64.2 0.6 2.3 62.5
---------- ---------- ---------- ----------
$ 2,286.4 $ 409.7 $ 69.0 $ 2,627.1
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1993
Rides and attractions. . . . . . . . . . . . . . $ 695.7 $ 79.6 $ 12.2 $ 763.1
Buildings. . . . . . . . . . . . . . . . . . . . 311.1 59.6 7.2 363.5
Equipment, furniture and fixtures. . . . . . . . 731.9 181.7 55.2 858.4
Land improvements. . . . . . . . . . . . . . . . 209.3 28.2 0.3 237.2
Leasehold improvements . . . . . . . . . . . . . 51.6 15.1 2.5 64.2
---------- ---------- ---------- ----------
$ 1,999.6 $ 364.2 $ 77.4 $ 2,286.4
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1992
Rides and attractions. . . . . . . . . . . . . . $ 634.0 $ 66.4 $ 4.7 $ 695.7
Buildings. . . . . . . . . . . . . . . . . . . . 272.2 51.1 12.2 311.1
Equipment, furniture and fixtures. . . . . . . . 542.7 159.1 10.4 $ 40.5 731.9
Land improvements. . . . . . . . . . . . . . . . 182.3 27.1 0.1 209.3
Leasehold improvements . . . . . . . . . . . . . 36.6 13.6 1.4 51.6
---------- ---------- ---------- ----------
$ 1,667.8 $ 317.3 $ 27.4 $ 41.9 $ 1,999.6
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
<FN>
-------
(1) Amounts reclassified to conform to presentation of related assets.
-49-
SCHEDULE IX - SHORT-TERM BORROWINGS
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
(In millions)
[Enlarge/Download Table]
At end of period
---------------------------
Weighted
Maximum Average average
Weighted amount amount interest
average outstanding outstanding rate
interest during during during
Balance rate the period(1) the period(2) the period(3)
------------ ------------ ------------ ------------ ------------
1994
Commercial paper . . . . . . . . . . . . . . . . $ 609.1 4.9% $ 609.1 $ 263.9 3.5%
-------- -------- --------
-------- -------- --------
Securities sold under
agreements to
repurchase . . . . . . . . . . . . . . . . . . $ 57.5 7.0% $ 640.5 $ 385.8 7.3%
-------- -------- --------
-------- -------- --------
1993
Commercial paper . . . . . . . . . . . . . . . . $ 520.0 3.4% $ 897.0 $ 473.2 3.1%
-------- -------- --------
-------- -------- --------
Securities sold under
agreements to
repurchase . . . . . . . . . . . . . . . . . . $ 437.5 8.1% $ 473.3 $ 363.9 10.7%
-------- -------- --------
-------- -------- --------
1992
Commercial paper . . . . . . . . . . . . . . . . $ 181.4 3.2% $ 198.6 $ 115.5 4.0%
-------- -------- --------
-------- -------- --------
Securities sold under
agreements to
repurchase . . . . . . . . . . . . . . . . . . $ 231.2 15.6% $ 272.0 $ 244.5 11.7%
-------- -------- --------
-------- -------- --------
<FN>
-----------
(1) Maximum amount outstanding at any month-end during the period.
(2) Average amount outstanding during the period is computed by dividing the total outstanding at
each month-end by the number of months outstanding during the year.
(3) Weighted average interest rate during the period is computed by dividing interest expense by the
average amount outstanding.
-50-
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(In millions)
[Download Table]
1994 1993 1992
--------------------------------------------------------------------------------
Maintenance and repairs $ 228.4 $ 227.3 $ 220.2
Taxes, other than payroll and income taxes:
Property 92.0 87.0 79.4
Advertising costs 1,273.5 963.7 859.6
-51-
Dates Referenced Herein and Documents Incorporated by Reference
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