International Theme Park Investments

At July 2, 2016, the Company had an 81% effective ownership interest in the operations of Disneyland Paris, a 47% ownership interest in the operations of HKDL and a 43% ownership interest in the operations of Shanghai Disney Resort, all of which are VIEs consolidated in the Company’s financial statements. See Note 1 for the Company’s policy on consolidating VIEs.

The following tables present summarized balance sheet information for the Company as of July 2, 2016 and October 3, 2015, reflecting the impact of consolidating the International Theme Parks balance sheets.



	As of July 2, 2016
	Before International Theme Parks Consolidation		International Theme Parks and Adjustments			Total
Cash and cash equivalents	$	4,249	$	978		$	5,227
Other current assets	12,031		359			12,390
Total current assets	16,280		1,337			17,617
Investments/Advances	8,141		(4,913		)	3,228
Parks, resorts and other property	17,775		9,090			26,865
Other assets	43,118		86			43,204
Total assets	$	85,314	$	5,600		$	90,914

Current portion of borrowings	$	5,312	$	—		$	5,312
Other current liabilities	11,373		1,387			12,760
Total current liabilities	16,685		1,387			18,072
Borrowings	14,088		1,041			15,129
Deferred income taxes and other long-term liabilities	9,341		226			9,567
Equity	45,200		2,946			48,146
Total liabilities and equity	$	85,314	$	5,600		$	90,914



	As of October 3, 2015
	Before International Theme Parks Consolidation		International Theme Parks and Adjustments			Total
Cash and cash equivalents	$	3,488	$	781		$	4,269
Other current assets	12,237		252			12,489
Total current assets	15,725		1,033			16,758
Investments/Advances	7,505		(4,862		)	2,643
Parks, resorts and other property	17,431		7,748			25,179
Other assets	43,540		62			43,602
Total assets	$	84,201	$	3,981		$	88,182

Current portion of borrowings	$	4,562	$	1		$	4,563
Other current liabilities	11,331		440			11,771
Total current liabilities	15,893		441			16,334
Borrowings	12,454		319			12,773
Deferred income taxes and other long-term liabilities	10,225		195			10,420
Equity	45,629		3,026			48,655
Total liabilities and equity	$	84,201	$	3,981		$	88,182

The following table presents summarized income statement information of the Company for the nine months ended July 2, 2016, reflecting the impact of consolidating the International Theme Parks income statements.



	Before International Theme Parks Consolidation⁽¹⁾			International Theme Parks and Adjustments			Total
Revenues	$	41,013		$	1,477		$	42,490
Cost and expenses	(29,049		)	(1,944		)	(30,993		)
Restructuring and impairment charges	(125		)	—			(125		)
Interest expense, net	(121		)	(40		)	(161		)
Equity in the income of investees	443			333			776
Income before income taxes	12,161			(174		)	11,987
Income taxes	(4,089		)	—			(4,089		)
Net income	$	8,072		$	(174	)	$	7,898


⁽¹⁾	In the nine months ended July 2, 2016, royalty and management fees from the International Theme Parks totaling $108 million are included in Revenues, and our share of the net income/(loss) of the International Theme Parks is included in Equity in the income of investees.

The following table presents summarized cash flow statement information of the Company for the nine months ended July 2, 2016, reflecting the impact of consolidating the International Theme Parks cash flow statements.



	Before International Theme Parks Consolidation			International Theme Parks and Adjustments			Total
Cash provided by operations	$	9,161		$	225		$	9,386
Investments in parks, resorts and other property	(2,002		)	(1,689		)	(3,691		)
Cash (used in)/provided by other investing activities	(1,353		)	818			(535		)
Cash (used in)/provided by financing activities	(4,946		)	855			(4,091		)
Impact of exchange rates on cash and cash equivalents	(99		)	(12		)	(111		)
Change in cash and cash equivalents	761			197			958
Cash and cash equivalents, beginning of period	3,488			781			4,269
Cash and cash equivalents, end of period	$	4,249		$	978		$	5,227

Disneyland Paris

During calendar 2015, Disneyland Paris completed a recapitalization consisting of the following:


•	In February 2015, Disneyland Paris completed a €0.4 billion equity rights offering of which the Company funded €0.2 billion. The Company purchased shares that were unsubscribed by other Disneyland Paris shareholders, which increased the Company’s effective ownership by approximately four percentage points.

•

In February 2015, the Company converted €0.6 billion of its loans to Disneyland Paris into equity at a conversion price of €1.25 per share. The conversion increased the Company’s effective ownership by an additional 23 percentage points. In addition, Disneyland Paris repaid €0.3 billion that was outstanding under then existing lines of credit from the Company. These lines of credit have been replaced by a new €0.4 billion line of credit from the Company bearing interest at EURIBOR plus 2% and maturing in 2023. There is €40 million outstanding under the new line of credit at July 2, 2016. As of July 2, 2016, the total outstanding balance of loans provided by the Company to Disneyland Paris was €1.0 billion.


•	In September 2015, the Company completed a mandatory tender offer to the other Disneyland Paris shareholders and acquired €0.1 billion in shares at €1.25 per share, which increased the Company’s effective ownership by an additional eight percentage points.


•	In November 2015, to offset the dilution caused by the loan conversion Disneyland Paris shareholders purchased €0.05 billion in shares from the Company at €1.25 per share, which decreased the Company’s effective ownership by four percentage points.

As of July 2, 2016, the Company had an 81% effective ownership interest in Disneyland Paris.

Hong Kong Disneyland Resort

At July 2, 2016, the Government of the Hong Kong Special Administrative Region (HKSAR) and the Company had 53% and 47% equity interests in HKDL, respectively. HKSAR holds a right to receive additional shares over time to the extent HKDL exceeds certain return on asset performance targets. The amount of additional shares HKSAR can receive is capped on both an annual and cumulative basis and could decrease the Company’s equity interest by up to an additional seven percentage points over a period no shorter than 16 years.

HKDL is building a third hotel at the resort, which is expected to open in 2017 and cost approximately $550 million. To fund the construction, the Company contributed $219 million of equity and HKSAR converted an equal amount of its outstanding loan to HKDL into equity. Additionally, the Company and HKSAR will provide shareholder loans of up to approximately $149 million and $104 million, respectively. The loans will mature on dates from fiscal 2022 through fiscal 2025 and bear interest at a rate of three month HIBOR plus 2%. At July 2, 2016, the outstanding balances of these loans provided by the Company and HKSAR were $62 million and $41 million, respectively.

Shanghai Disney Resort

On June 16, 2016, Shanghai Disney Resort opened in the Pudong district of Shanghai. The resort includes a theme park, two hotels and a retail, dining and entertainment complex.

Shanghai Disney Resort is owned through two joint venture companies, in which Shanghai Shendi (Group) Co., Ltd (Shendi) owns 57% and the Company owns 43%. A management company, in which the Company has a 70% interest and Shendi a 30% interest, is responsible for operating Shanghai Disney Resort. The investment in Shanghai Disney Resort has been funded in accordance with each shareholder’s ownership percentage, with approximately 67% from equity contributions and 33% from shareholder loans. As of July 2, 2016, the outstanding balance of loans provided by the Company and Shendi to Shanghai Disney Resort were 5.0 billion yuan ($747 million) and 6.3 billion yuan ($954 million), respectively.