-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tqebrjQCZFKUz2+/jlVz6d9SH71dUNAL/JLGKDUzoKYTseaencz3sCwVXFJcG5gm GZGJFzYL6dZPz7pUvC6OiA== 0000029082-94-000003.txt : 19940210 0000029082-94-000003.hdr.sgml : 19940210 ACCESSION NUMBER: 0000029082-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DISNEY WALT CO CENTRAL INDEX KEY: 0000029082 STANDARD INDUSTRIAL CLASSIFICATION: 7990 IRS NUMBER: 950684440 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-04083 FILM NUMBER: 94505184 BUSINESS ADDRESS: STREET 1: 500 S BUENA VISTA ST CITY: BURBANK STATE: CA ZIP: 91521 BUSINESS PHONE: 8185601000 FORMER COMPANY: FORMER CONFORMED NAME: DISNEY WALT PRODUCTIONS DATE OF NAME CHANGE: 19860221 10-Q 1 1994 Q1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended December 31, 1993 Commission File Number: 1-4083 THE WALT DISNEY COMPANY Incorporated in Delaware I.R.S. Employer Identification No. 95-0684440 500 South Buena Vista Street, Burbank, California 91521 (818) 560-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES...X..... NO............ There were 536,971,398 shares of Common Stock, $.025 par value, outstanding as of February 4, 1994. PART I. FINANCIAL INFORMATION THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME In millions, except per share data (unaudited)
Three Months Ended December 31 1993 1992 REVENUES Theme parks and resorts $ 768.9 $ 745.1 Filmed entertainment 1,426.4 1,209.2 Consumer products 532.0 437.1 2,727.3 2,391.4 COSTS AND EXPENSES Theme parks and resorts 630.8 608.4 Filmed entertainment 1,086.2 973.8 Consumer products 385.9 312.6 2,102.9 1,894.8 OPERATING INCOME Theme parks and resorts 138.1 136.7 Filmed entertainment 340.2 235.4 Consumer products 146.1 124.5 624.4 496.6 CORPORATE ACTIVITIES General and administrative expenses 43.6 43.2 Net investment and interest income (4.2) (5.2) 39.4 38.0 LOSS FROM INVESTMENT IN EURO DISNEY (32.1) INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 585.0 426.5 Income taxes 216.4 151.4 INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 368.6 275.1 CUMULATIVE EFFECT OF ACCOUNTING CHANGES Pre-opening costs (271.2) Postretirement benefits (130.3) Income taxes 30.0 NET INCOME (LOSS) $ 368.6 $ (96.4)
THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME (continued) In millions, except per share data (unaudited)
Three Months Ended December 31 1993 1992 AMOUNTS PER COMMON SHARE EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ .68 $ .50 CUMULATIVE EFFECT OF ACCOUNTING CHANGES Pre-opening costs (.50) Postretirement benefits (.24) Income taxes .06 EARNINGS (LOSS) PER SHARE $ .68 $ (.18) AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 545.3 543.4
THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED BALANCE SHEET In millions
December 31, September 30, 1993 1993 (unaudited) ASSETS Cash and cash equivalents $ 685.1 $ 363.0 Investments 1,802.4 1,888.5 Receivables 1,782.7 1,390.3 Merchandise inventories 473.6 608.9 Film and television costs 1,446.5 1,360.9 Theme parks, resorts and other property, net of accumulated depreciation of 5,380.7 5,228.2 $2,355.9 and $2,286.4 Other assets 1,029.3 911.3 $ 12,600.3 $ 11,751.1 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts and taxes payable and other $ 2,974.1 $ 2,821.1 accrued liabilities Borrowings 2,654.4 2,385.8 Unearned royalty and other advances 874.9 840.7 Deferred income taxes 689.3 673.0 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 - 565.8 million and 564.6 million shares 911.4 876.4 Retained earnings 5,168.1 4,833.1 Cumulative translation adjustments 43.8 36.7 6,123.3 5,746.2 Less treasury shares, at cost 29.1 million shares 715.7 715.7 5,407.6 5,030.5 $ 12,600.3 $ 11,751.1
THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS In millions (unaudited)
Three Months Ended December 31 1993 1992 CASH PROVIDED BY OPERATIONS BEFORE INCOME TAXES $ 655.8 $ 318.4 Income taxes paid 25.1 90.4 CASH PROVIDED BY OPERATIONS 630.7 228.0 INVESTING ACTIVITIES Theme parks, resorts and other 237.6 222.1 property, net Film and television costs 349.8 272.8 Investments (86.1) 401.3 Euro Disney investment and advances (16.3) Other 74.1 (5.1) 575.4 874.8 FINANCING ACTIVITIES Borrowings, net 268.6 582.4 Dividends (33.5) (28.1) Other 31.7 60.9 266.8 615.2 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 322.1 (31.6) Cash and cash equivalents, beginning of period 363.0 764.8 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 685.1 $ 733.2 The difference between Income Before Income Taxes and Cumulative Effect of Accounting Changes as shown on the Condensed Consolidated Statement of Income and Cash Provided by Operations Before Income Taxes is explained as follows: INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 585.0 $ 426.5 CUMULATIVE EFFECT OF ACCOUNTING CHANGES (514.2) CHARGES TO INCOME NOT REQUIRING CASH OUTLAYS Depreciation 85.1 74.8 Amortization of film and television 264.2 151.6 costs Other 6.2 63.5 CHANGES IN Receivables (392.4) (543.9) Merchandise inventories 135.3 59.3 Other assets (50.1) 194.5 Accounts payable and other accrued (11.7) 395.2 liabilities Unearned royalty and other advances 34.2 11.1 70.8 (108.1) CASH PROVIDED BY OPERATIONS BEFORE INCOME TAXES $ 655.8 $ 318.4 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 21.9 $ 9.7
THE WALT DISNEY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. These condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter are not necessarily indicative of the results that may be expected for the year ending September 30, 1994. Certain reclassifications have been made in the 1993 financial statements to conform to the 1994 presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 1993. 2. Cash dividends per share for the quarters ended December 31, 1993 and 1992 were $.0625 and $.0525, respectively. THE WALT DISNEY COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's business is materially affected by seasonal factors and, therefore, interim results are comparable only if similar periods are reviewed. In addition, results of operations for the prior year quarter have been restated to reflect the 1993 adoption of 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 a change in the method of accounting for pre-opening costs, all retroactive to October 1, 1992. The reader is encouraged to read the Company's 1993 Annual Report on Form 10-K in conjunction with this interim report. RESULTS OF OPERATIONS For the Quarter Ended December 31, 1993 Theme Parks and Resorts Revenues and operating income increased slightly, reflecting an increase in occupied room nights and room rates at the Florida resorts compared to the prior year period. Per capita spending increased in California and Florida, driven primarily by price increases, partially offset by lower attendance in Florida. Filmed Entertainment Results reflected the successful domestic home video and the expanded international theatrical release of Aladdin. Revenues and operating income also included the impact of the international home video release of The Jungle Book. Prior year results included the successful domestic home video and international theatrical release of Beauty and the Beast and Sister Act together with the international home video release of Cinderella. The domestic theatrical release of Aladdin also had a positive impact on prior year results. Consumer Products Increased revenues and operating income were driven by the worldwide success of character merchandise, including traditional Disney characters and newly-created film properties, including Aladdin. The Disney Stores also contributed to earnings growth, with 258 locations worldwide compared to 193 in the prior year and higher same-store sales performance. Prior year results reflected the success of Aladdin and Beauty and the Beast soundtracks. THE WALT DISNEY COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Corporate Activities General and administrative expenses increased slightly, partially offset by lower losses incurred by Hollywood Records. In addition, Disney Sports Enterprises (The Mighty Ducks of Anaheim) had operating income for the period vs. no operations in the corresponding prior- year period. Net interest and investment income reflected lower current year levels of borrowings and interest rates, partially offset by lower investment balances. Investment in Euro Disney As a result of the charge of $350 million in the fourth quarter of the prior year to fully reserve its receivables and limited funding commitment to Euro Disney, the Company has not reported any activity in its first quarter results related to its investment in Euro Disney. In the prior year quarter, the impact of the Company's share of Euro Disney's loss recorded under the equity method was partially offset by royalties and gain amortization related to the investment. As previously announced, Euro Disney, its principal lenders and the Company are exploring a financial restructuring for Euro Disney. The Company has agreed to help fund Euro Disney for a limited period, to afford Euro Disney time to attempt a financial restructuring by spring 1994. Discussions among the parties are at a preliminary stage, and their outcome is uncertain. Should the financial restructuring not be completed, Euro Disney has stated that it would face a liquidity problem. Income Taxes The effective income tax rate was 37.0% for the current period and 35.5% for the comparable period in the prior year. The increase resulted primarily from the increase in the Federal income tax rate enacted in August 1993. THE WALT DISNEY COMPANY PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (4) Amendment, dated as of December 27, 1993, between the Company and The Bank of New York, as successor Rights Agent, to the Rights Agreement, dated as of June 21, 1989 (the "Rights Agreement"), between the Company and Security Pacific National Bank (the Rights Agreement having heretofore been filed as Exhibit 1 to the Company's Current Report on Form 8-K, dated June 21, 1989). (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter. THE WALT DISNEY COMPANY SIGNATURE Pursuant to the requirements 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) By /s/ Richard D. Nanula Richard D. Nanula Senior Vice President and Chief Financial Officer February 8, 1994 Burbank, California EX-1 2 AMENDMENT TO RIGHTS AGREEMENT AMENDMENT TO RIGHTS AGREEMENT This Amendment, dated as of December 27, 1993, is between The Walt Disney Company, a Delaware corporation (the "Company"), and The Bank of New York, a New York banking corporation (the "Successor Rights Agent"), and amends the Rights Agreement, dated as of June 21, 1989 (the "Rights Agreement"), between the Company and Security Pacific National Bank ("SP"). RECITALS A. Bank of America, as successor in interest to SP (the "Resigning Rights Agent") are currently parties to the Rights Agreement, under which the Resigning Rights Agents serves as Rights Agent. B. The Resigning Rights Agent has heretofore delivered to the Company notice of its intent to resign as Rights Agent; the company intends to appoint the Successor Rights Agent to Succeed the Resigning Rights Agent as Rights Agent; the Successor Rights Agent wishes to accept appointment as Successor Rights Agent; and the parties hereto wish to make certain changes to the Rights Agreement to facilitate this succession. NOW, THEREFORE, the Company and the Successor Rights Agent agree as follows: 1. Resigning Rights Agent Pursuant to Section 21 of the Rights Agreement, parties acknowledge that the Resigning Rights Agent is resigning as Rights Agent under the Rights Agreement, effective as of 12:00 am, New York time, December 27, 1993. The Company hereby confirms its acceptance of the resignation of the Resigning Rights Agent as Rights Agent and waives the requirement that 30 days notice in writing of such resignation be provided by the Resigning Rights Agent. 2. Appointment of Successor Rights Agent The Company hereby appoints the Successor Rights Agent as successor Rights Agent under the Rights Agreement, effective as of 12:01 a.m. New York time, December 28, 1993, and the Successor Rights Agent hereby accepts such appointment, subject to all the terms and conditions of the Rights Agreement as amended hereby. 3. Amendments to Rights Agreement The parties hereto agree that the Rights Agreement shall be amended as provided below, effective as of the date of this Amendment except as may otherwise be provided below: (a) From and after the time that the appointment of the Successor Rights Agent as successor Rights Agent is effective, all references in the Rights Agreement (including all exhibits thereto) to the Resigning Rights Agent as Rights Agent shall be deemed to refer to the Successor Rights Agent as successor Rights Agent. From and after the effective dated of this Amendment, all references in the Rights Agreement to the Rights Agreement shall be deemed to refer to the Rights Agreement as amended by this Amendment. (b) Section 29 of the Rights Agreement is amended by adding the following word at the end thereof: "provided, however, that the rights and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York". (c) The addresses for notice as set forth in Section 25 of the Rights Agreement are hereby amended to read as follows. (i) The Walt Disney Company 500 South Buena Vista Street Burbank, California 91521 Attention: Sanford M. Litvak Executive Vice President - Law and Human Resources (ii) Bank of New York Stock Transfer Administration 12th Floor West 101 Barclay Street New York, New York 10286 Attention: Susan McFarland 4. Miscellaneous (a) Except as otherwise expressly provided or unless the context otherwise requires, all terms used herein have the meanings assigned to them in the Rights Agreement. (b) Each part hereto waives any requirement under the Rights Agreement that any additional notice be provided to it pertaining to the matters covered by this Agreement. (c) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which counterparts shall together constitute but one and the same document. IN WITNESS WHEREOF, the parties have caused this amendment to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first written above. ATTEST: [SEAL] By /s/ Susan A. McFarland By /s/Mario Tassudetti Its Assistant Treasurer Its Vice President BANK OF NEW YORK ATTEST: [SEAL] By /s/ Marsha L. Reed By /s/ David K. Thompson Its Corporate Secretary Its VP - Asst General Counsel THE WALT DISNEY COMPANY -----END PRIVACY-ENHANCED MESSAGE-----