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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, 1993 Commission File Number 1-4083
THE WALT DISNEY COMPANY
Incorporated in Delaware I.R.S. Employer Identification No.
500 South Buena Vista Street, Burbank, 95-0684440
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, 1993, the aggregate market value of registrant's common
stock held by non-affiliates (based on the closing price of such date as
reported on the New York Stock Exchange- Composite Transactions) was $19.8
billion. All executive officers and directors of registrant and all persons
filing a Schedule 13D with the Securities and Exchange Commission in respect
of registrant's common stock have been deemed, solely for the purpose of the
foregoing calculation, to be "affiliates" of the registrant.
There were 536,533,389 shares of common stock outstanding as of December 15,
1993.
Documents Incorporated by Reference
Portions of the Proxy Statement for the 1994 Annual Meeting of Stockholders
are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
The Walt Disney Company, together with its subsidiary companies (the
"Company"), is a diversified international entertainment company with
operations in three business segments: Theme Parks and Resorts, Filmed
Entertainment 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
13 of the Notes to Consolidated Financial Statements included in Item 8
hereof. The Company employs approximately 62,000 people.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World(R) destination resort in Florida
and the Disneyland(R) theme park and 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 greater part of their
business is in the spring and summer seasons, with other peak periods during
Christmas, Easter and other holidays.
WALT DISNEY WORLD DESTINATION RESORT
The Walt Disney World destination resort is located on approximately 29,000
acres of land owned by the Company 15 miles southwest of Orlando, Florida. The
resort includes three theme parks: the Magic Kingdom, Epcot Center 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 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.
The 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, refreshments stands and
merchandise shops.
Epcot Center - Epcot Center, 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 featuring energy, communication, 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
restaurants, refreshments stands and merchandise shops.
The Disney-MGM Studios Theme Park - The Disney-MGM Studios Theme Park opened
in 1989 and consists of a theme park and a production facility. The theme park
portion of the project is centered 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 portion of the park consists of three
sound stages, shops and a back lot area. Both feature film and television
productions are currently taking place.
Resort Facilities - As of September 30, 1993, the Company owned and operated
nine resort hotels and a complex of villas and suites at the Walt Disney World
destination resort, with a total of approximately 10,000 rooms. Recreational
activities 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. Several of the resort
hotels contain conference centers and related facilities.
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In addition, Disney's Fort Wilderness camping and recreational area has
approximately 1,200 sites and a water park, River Country. Two additional
resort hotels, Disney's Wilderness Lodge and Disney's All-Star Sports Resort,
are expected to open in 1994 with a combined capacity of more than 2,600 rooms.
The occupancy rates for the Company's resort hotels and villas and Disney's
Fort Wilderness are significantly higher than industry averages.
The Company has also developed approximately 1,200 acres known as Disney
Village Marketplace, which includes the Disney Village Resort, a shopping
facility, a complete clubhouse facility and a conference center. Pleasure
Island, an evening entertainment center which opened in 1989, is adjacent to
Disney Village Marketplace and includes restaurants, night clubs and shopping
facilities. Near Pleasure Island is Typhoon Lagoon, a themed water park.
At 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 operated on property leased from the
Company near Epcot Center.
DISNEY VACATION CLUB
Sales have commenced and construction is continuing on a 529-unit Disney
Vacation Club at Lake Buena Vista. In addition, during 1993, the Company
acquired property in Vero Beach, Florida on which it plans to construct a 120-
room inn and 60 time-share vacation villas. Both facilities are intended to be
sold under a vacation ownership plan and be operated partially as rental
property until the units are completely sold. The Company is also exploring
development opportunities at a hotel site recently acquired near St. Tropez in
the south of France.
DISNEYLAND PARK
The Company owns 330 acres and has under long-term lease an additional 39
acres of land in Anaheim, California. Disneyland Park, which opened in 1955,
consists of eight principal areas: Toontown, Fantasyland, Adventureland,
Frontierland, Tomorrowland, New Orleans Square, Main Street and Critter
Country. Each of these areas features themed rides and attractions,
restaurants, refreshment stands and merchandise shops. A number of the
Disneyland Park attractions are sponsored by corporate participants. The
Company markets new attractions as well as the entire Disneyland Park through
national and local advertising and promotional activities. The Company owns and
operates the 1,100-room Disneyland Hotel near Disneyland Park.
TOKYO DISNEYLAND
The Company earns royalties on certain revenues generated by the Tokyo
Disneyland theme park, which is owned and operated by Oriental Land Co., Ltd.,
an unrelated Japanese corporation, pursuant to a license agreement between
Oriental Land Co., Ltd. and the Company. The park, which opened in 1983, is
similar in size and concept to Disneyland Park 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
research and 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.
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FILMED ENTERTAINMENT
The Company produces 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 provides programming for and operates The
Disney Channel, a pay television programming service, and KCAL-TV, a Los
Angeles, California television station.
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 and
Hollywood Pictures. In addition, the Company distributes films acquired by
Miramax Film Corp. ("Miramax"), which was purchased in 1993, as well as films
produced or acquired by Caravan Pictures, Cinergi Productions, 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 60 feature films each year
under the total Walt Disney Company banner. The Company seeks to produce
several live-action family feature films each year and one to two full-length
animated films every twelve months under the Walt Disney Pictures name,
together with fifteen to twenty teenage and adult films each year under each
of the Touchstone Pictures and Hollywood Pictures names. The Company expects
that Miramax will acquire and produce up to 20 films per year. In addition,
the Company periodically reissues animated films from the Company's library.
The Company's film library at September 30, 1993 included 257 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. As of
September 30, 1993, approximately 384 titles, including 177 feature films and
207 cartoon and animated features, were available to the home entertainment
market.
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 and
Dinosaurs. 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: The Little Mermaid and Marsupilami. 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 Park 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 subsidiary, Buena Vista Television, 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.
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PAY TELEVISION AND TELEVISION SYNDICATION (CONT.)
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 syndication programming, including Siskel
& Ebert, a weekly half-hour motion picture review program; The Crusaders, a
weekly one-hour investigative news show; Countdown at the Neon Armadillo, a
weekly half-hour country and western dance review; Bill Nye, The Science Guy, a
weekly half-hour educational program for children; Goof Troop, Darkwing Duck,
Bonkers, DuckTales and Tail Spin, all of which are animated cartoon series
airing five days a week; and Live with Regis and Kathie Lee, a one-hour daily
talk show.
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 DISNEY CHANNEL
The Disney Channel, which has more than 7 million subscribers, is the
Company's nationwide pay television programming service. New shows developed
solely 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
Park. 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, a 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.
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's pay television programming
service) 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. 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.
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 four 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, and sells educational toys, play
equipment and classroom furniture for children.
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MERCHANDISING 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. 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.
PUBLISHING
The Company has continued to expand its publishing activities in many parts
of the United States and Europe. It has book imprints in the United States
offering trade books for children (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
magazine for children Disney Adventures, the general science magazine Discover
and the family entertainment magazine FamilyFun.
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 1993 the Company opened 48 new Disney Stores in
the United States and Canada, 9 in Europe and 5 in Japan, bringing the total
number to 239 as of September 30, 1993. The Company expects to open additional
stores in the future in selected markets throughout the country, as well as in
Japan and other European, Asian and Latin American countries.
AUDIO PRODUCTS AND MUSIC PUBLISHING
The Company produces and distributes records, audio cassettes and compact
discs for the children's markets in the United States and France and licenses
the creation of similar products throughout the rest of the world. The Company
publishes printed music exploiting the song copyrights created for the
Company's records, film and television programs and develops new songs.
Domestic retail sales of records, 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 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.
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.
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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, as well as entertainment
and other licensed properties. 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 producer/distributor
of children's audio products, as well as the largest licensor of character-
based merchandise in the world.
HOLLYWOOD RECORDS
The Company formed Hollywood Records in 1990 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. Current artists
include Yothu Yindi, Brian May (of Queen) and Brian Setzer (formerly of The
Stray Cats). During 1990, the Company signed Queen, a group known worldwide
since the 1970's, and acquired the U.S. and Canadian distribution rights to
their 16-album catalog. In 1993, the North American rights to release material
from The Dave Clark Five catalog, a 1960's British pop act, were also
acquired. Distribution is handled by Elektra Entertainment, a division of
Warner Communications, Inc.
Hollywood Records competes in its audio business with other record labels
for talent and exposure of its product. Many of its competitors are
substantially larger than Hollywood Records, with greater financial resources,
larger catalogues and rosters of well known and previously successful talent.
The success of its products is dependent upon public taste, which is
unpredictable, and upon the division's success in attracting talent.
DISNEY SPORTS ENTERPRISES
The Company formed Disney Sports Enterprises in 1993 to provide management
and development services for the Company's National Hockey League franchise,
the Mighty Ducks of Anaheim. Most of its competitors in the National Hockey
League are established franchises that include rosters of well-known and
previously successful talent. The Company also competes with all forms of
entertainment and other sports franchises to obtain advertiser support,
broadcast rights and creative talents which are essential to the success of
the franchise.
EURO DISNEY
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 is being 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 49% equity interest and which is managed by a subsidiary of the Company.
The project's first phase involved the construction of the Euro Disneyland
theme park, which opened in April 1992. The park 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 with a variety of retail, dining and show facilities and
a 595-space camping site. The complex is served by direct rail transport to
Paris and, beginning in 1994, by high-speed TGV train service.
The Company receives royalties with respect to various intellectual property
rights licensed by the Company to Euro Disney S.C.A. in connection with the
project. In addition, the subsidiary of the Company that manages Euro Disney
S.C.A. earns management fees based on the revenues and incentive fees based on
cash flows of Euro Disney S.C.A. The Company agreed to defer its base
management fees relating to 1992 and 1993. Repayment of the deferred amount
will be contingent upon Euro Disney attaining profitability. (See Management's
Discussion and Analysis on page 13 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.
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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.
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,
Wells, Disney, Murphy and Shapiro have been employed by the Company as
executive officers for more than five years.
At September 30, 1993, the executive officers were as follows.
<TABLE>
<CAPTION>
Executive
Name Age Title Officer Since
- ---------------- --- ------------------------------------------- -------------
<S> <C> <C> <C>
Michael D. Eisner 51 Chairman of the Board and Chief Executive
Officer 1984
Frank G. Wells 61 President and Chief Operating Officer 1984
Roy E. Disney 63 Vice Chairman of the Board 1984
Lawrence P. Murphy 41 Executive Vice President-Strategic Planning
and Development 1985
Sanford M. Litvack 57 Executive Vice President-Law and Human
Resources/1/ 1991
Joe Shapiro 47 Executive Vice President 1985
Richard D. Nanula 33 Senior Vice President and Chief Financial
Officer/2/ 1990
John J. Garand 46 Vice President-Planning and Control/3/ 1992
</TABLE>
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/1/ Mr. Litvack joined the Company as Senior Vice President-General Counsel in
1991. He was named to his present position in 1992. 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. Prior to that, Mr. Litvack
was a partner in the law firm of Donovan Leisure Newton & Irvine, serving
as chairman of the executive committee from 1983 until December 1986.
/2/ 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 to his present position in August 1991.
/3/ 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, adjusted to reflect
the four-for-one split of the common stock effective April 20, 1992.
<TABLE>
<CAPTION>
Sales Price
---------------
High Low
------- -------
1992
<S> <C> <C>
1stQuarter............................................... $30 3/8 $25 7/8
2ndQuarter............................................... 39 3/8 28 1/2
3rdQuarter............................................... 41 1/8 34 5/8
4thQuarter............................................... 37 1/2 32 3/4
<CAPTION>
1993
<S> <C> <C>
1stQuarter............................................... $45 1/4 $33 1/4
2ndQuarter............................................... 47 7/8 41 3/4
3rdQuarter............................................... 45 1/8 38 1/4
4thQuarter............................................... 41 3/8 36
</TABLE>
The Company declared one quarterly dividend of $.0525 per share and three
quarterly dividends of $.0625 per share in 1993, and in 1992 declared one
quarterly dividend of $.04375 per share and three quarterly dividends of
$.0525.
As of September 30, 1993, the approximate number of record holders of the
Company's common stock was 408,000.
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ITEM 6. SELECTED FINANCIAL DATA
(In millions, except per share data)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Statement of Income
Revenues $ 8,529.2 $ 7,504.0 $6,112.0 $5,757.3 $4,593.8
Operating income 1,724.5 1,435.3 1,094.5 1,339.1 1,228.5
Income before cumulative effect
of accounting changes 671.3 816.7 636.6 824.0 703.3
Cumulative effect of accounting changes (371.5)
Net income 299.8 816.7 636.6 824.0 703.3
Per Share
Earnings before cumulative effect of
accounting changes $ 1.23 $ 1.52 $ 1.20 $ 1.50 $ 1.27
Cumulative effect of accounting changes (.68)
Earnings .55 1.52 1.20 1.50 1.27
Cash dividends .24 .20 .17 .14 .12
Balance Sheet
Total assets $11,751.1 $10,861.7 $9,428.5 $8,022.3 $6,657.2
Borrowings 2,385.8 2,222.4 2,213.8 1,584.6 860.6
Stockholders' equity 5,030.5 4,704.6 3,871.3 3,488.6 3,044.0
Statement of Cash Flows
Cash flow $ 2,145.2 $ 1,838.1 $1,496.7 $1,358.9 $1,275.6
Investing activities (2,659.7) (1,923.7) (1,726.3) (1,181.9) (1,729.2)
Financing activities 112.7 (35.7) 295.9 262.0 406.4
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OPERATIONS
1993 vs. 1992: Revenues increased in 1993 by 14% to $8.5 billion from 1992
levels. The increase resulted primarily from successful domestic home video
releases, increased international theatrical distribution activities, the
continued expansion of The Disney Stores worldwide and increased licensing
activities. Revenues of $1.8 billion from foreign operations in all business
segments increased by 25% and represented 21% of total revenues, an increase
of 2 percentage points over 1992.
Operating income for 1993 increased by 20% to $1.7 billion from $1.4 billion
in 1992. The increase was due to the successful domestic and international
home video and international theatrical release of Beauty and the Beast, the
strong worldwide theatrical release of Aladdin, 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 domestic theme park per capita spending and
higher occupied rooms at the 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.
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
reflects the impact of a charge of $350.0 million 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 3 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 adoption of 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, 7, 8 and 12 to Consolidated
Financial Statements.)
Net income after the cumulative effect of accounting changes in 1993
decreased by 63% to $299.8 million from $816.7 million in 1992 and earnings
per share fell 64% from $1.52 to $.55.
1992 vs. 1991: In 1992, the Company generated a record $7.5 billion in
revenues, an increase of 23% over 1991. The increase was driven by strong
performance in all three of the Company's business segments: successful home
video and theatrical releases, higher theme park attendance and resort
occupancy and increased merchandise licensing. Foreign-sourced revenues of
$1.5 billion accounted for 19% of total revenues compared with 21% or $1.3
billion in 1991.
Operating income increased 31% to $1.4 billion from $1.1 billion in 1991.
The increase resulted primarily from the success of home video release of
library product and strong performances from certain theatrical releases.
Consumer Products operating income grew as a result of continued demand for
Disney licensed products in worldwide markets and the expansion of the
Company's publishing business in Europe. Theme Parks and Resorts results
reflected increased park attendance and sharply higher occupied room nights at
the Florida resorts.
Net income for 1992 increased to $816.7 million or 28% over 1991 while
earnings per share of $1.52 increased 27% over the $1.20 reported in 1991.
(Earnings per share amounts reflected the Company's four-for-one stock split
in April 1992.) (See Note 9 to Consolidated Financial Statements.)
THEME PARKS AND RESORTS
1993 vs. 1992: Revenues for 1993 of $3.4 billion were 4% higher than 1992.
This increase was primarily attributable to higher per capita spending at the
theme parks and the increased number of
10
<PAGE>
occupied rooms at the Florida resorts. 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. Per capita spending was higher than the prior year period
due to price increases. The increase in occupied rooms resulted from the
absorption of additional capacity from the Dixie Landings resort.
Operating income of $746.9 million in 1993 was 16% higher than the $644.0
million generated in the prior year. The increase was driven by increased per
capita spending at the parks, the increased number of occupied rooms and
higher room rates at the Florida resorts and continued development and sales
of ownership interests at the Disney Vacation Club. Decreased current year
development spending at Walt Disney Imagineering and increased royalties at
Tokyo Disneyland also contributed to higher operating income. Year-over-year
comparisons were also positively impacted by the prior-year charge relating to
the termination of the lease on the Queen Mary hotel and attraction.
1992 vs. 1991: Revenues of $3.3 billion increased 18% from $2.8 billion in
1991. Results reflected increased theme park attendance and higher per capita
spending primarily due to price increases. An increase in occupied room nights
at the Florida resorts, primarily due to additional capacity from the opening
of the 1,008-room Port Orleans resort in May 1991 and the 2,048-room Dixie
Landings resort in February 1992, also contributed to the increase in
revenues.
Operating income increased 18% to $644.0 million from the $546.6 million
achieved in the prior year. Increased attendance, driven by the 20th
Anniversary Celebration at the Magic Kingdom in the Walt Disney World Resort,
sharply higher occupied room nights and increased resort occupancy,
contributed to the increase in 1992. Partially offsetting these results were
higher design and development costs. Additionally, results reflected a charge
relating to the termination of the lease on the Queen Mary hotel and
attraction and expenses for the 20th Anniversary Celebration.
1992 attendance at Tokyo Disneyland did not change significantly from 1991
levels.
FILMED ENTERTAINMENT
1993 vs. 1992: Revenues of $3.7 billion were 18% higher and operating income
of $622.2 million was 22% higher in 1993 than the $3.1 billion and the $508.3
million, respectively, reported in 1992. Operating income benefited primarily
from the growth in home video and international theatrical and television
distribution. Successful home video releases in 1993 included Beauty and the
Beast and Pinocchio domestically and Beauty and the Beast and Cinderella
internationally. Theatrical revenues and operating income in 1993 were driven
by the worldwide release of Aladdin (excluding Europe) and the international
release of Beauty and the Beast, Sister Act and The Jungle Book, offset by the
disappointing domestic theatrical performances of certain live-action
releases. Pay television and worldwide syndication revenues and operating
income were also higher, reflecting increased activity as more product was
made available to those markets. Results also included the positive impact of
continued growth in The Disney Channel subscriber base.
1992 vs. 1991: Revenues of $3.1 billion increased 20% from $2.6 billion in
1992, reflecting the worldwide success of the Company's animated products in
home video, theatrical and television markets. Significant home video sell-
through releases in 1992 included Fantasia worldwide and 101 Dalmatians, The
Rescuers and The Great Mouse Detective domestically. Theatrical revenues in
1992 were driven by the worldwide release of Beauty and the Beast, Father of
the Bride and The Hand That Rocks the Cradle. Also included were the
successful releases of Sister Act domestically and Rescuers Down Under and
Snow White internationally. Domestic television revenues reflected the
continued growth in network television and syndication.
Operating income increased 60% to $508.3 million from the $318.1 million
generated in the prior year. Results benefited primarily from the success of
the home video release of the library titles Fantasia and 101 Dalmatians.
Library titles generate higher operating margins because most production and
distribution costs have already been amortized. Improved domestic theatrical
results reflected the successes of Beauty and the Beast, Sister Act and The
Hand That Rocks the Cradle. Higher domestic
11
<PAGE>
syndication television sales and continuing subscriber growth at The Disney
Channel also contributed to the growth in operating income. Partially
offsetting these results were the disappointing domestic theatrical
performances of certain other live-action releases.
CONSUMER PRODUCTS
1993 vs. 1992: Revenues of $1.4 billion were 31% higher than the $1.1
billion generated in 1992. Increased revenues reflected the impact of the
worldwide expansion of The Disney Stores from 177 to 239 in 1993 and
substantial same store sales increases, combined with higher revenues in
domestic licensing, publications and records and audio entertainment.
Licensing activity in Europe and the Asia/Pacific region, in addition to
increased catalog circulation, also contributed to the growth.
Operating income of $355.4 million was 26% greater than the $283.0 million
generated in the prior year. Strong sales of Aladdin and Beauty and the Beast
merchandise contributed to the growth in operating income generated by
domestic publications, records and audio entertainment and The Disney Stores
domestically. Additionally, increased sales of both film and standard
character properties contributed to the favorable results in domestic and
international licensing. Start-up costs associated with international
expansion of The Disney Stores negatively impacted results.
1992 vs. 1991: Revenues of $1.1 billion increased 49% from $724.0 million in
1991. At September 30, 1992, there were 177 Disney Stores compared to 113 a
year earlier. The expansion of The Disney Stores, together with the continued
strength of domestic licensed product sales in apparel, toys and publications
and growth in European businesses, contributed significantly to the increase
in worldwide revenues.
Operating income increased 23% to $283.0 million from the $229.8 million
generated in the prior year. Strong sales of The Little Mermaid, 101
Dalmatians and Beauty and the Beast merchandise contributed to the growth in
operating income in 1992. As expected, operating margins declined, reflecting
further expansion into lower margin businesses of direct publishing, catalog
merchandising and The Disney Stores. Start-up costs associated with new
initiatives in publishing negatively impacted results.
CORPORATE ACTIVITIES
GENERAL AND ADMINISTRATIVE EXPENSES
1993 vs. 1992: General and administrative expenses for 1993 were $164.2
million, representing an 11% increase from the 1992 total of $148.2 million.
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.
1992 vs. 1991: General and administrative expenses for 1992 were $148.2
million, representing an 8% decrease from the 1991 total of $160.8 million.
The decrease reflected reduced operating losses at Hollywood Records due to
the success of the Queen catalog.
INVESTMENT AND INTEREST INCOME AND INTEREST EXPENSE
1993 vs. 1992: Total investment and interest income for 1993 was $186.1
million, representing a 43% increase over the 1992 total of $130.3 million.
The increase reflected higher investment balances, gains on termination of
interest rate swap agreements and the favorable impact of leveraged leasing
activities in the current year.
Interest expense increased 24% to $157.7 million in 1993, primarily due to
the write-off of unamortized issuance costs on the Company's 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, which reduces interest expense, was flat compared to the prior year.
1992 vs. 1991: Total investment and interest income for 1992 was $130.3
million, representing a 9% increase over the 1991 total of $119.4 million. The
increase reflected the favorable impact of interest rate swaps and leveraged
leasing activities in the current year, partially offset by prior year gains
on sales of certain marketable securities.
12
<PAGE>
Interest expense increased 21% to $126.8 million in 1992, primarily due to
increased average borrowings. The average borrowing rate increased from 6.5%
in 1991 to 7.2% in 1992. Capitalized interest, which reduces interest expense,
decreased in 1992 due to the lower average balances on projects in progress,
also contributing to the higher level of interest expense.
INVESTMENT IN EURO DISNEY
1993 vs. 1992: For the year, the Company's investment in Euro Disney
resulted in a loss of $514.7 million, 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.
Euro Disney, its principal lenders and the Company are exploring a financial
restructuring for Euro Disney. Throughout 1994, Euro Disney will require
significant funding. 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. Should the financial restructuring not be
completed, Euro Disney would face a liquidity problem. 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. Because of
this, 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
its investment.
1992 vs. 1991: The Euro Disney resort, under construction since 1987,
commenced operations on April 12, 1992. The Company's investment in Euro
Disney contributed income of $11.2 million in 1992 compared to income from the
investment of $63.8 million in 1991. Although Euro Disney incurred a loss for
fiscal 1992, the Company's equity share of the net loss was offset by
royalties and gain amortization related to its investment. Income from the
investment in 1991 represented the Company's equity share of interest earnings
and gain amortization.
LIQUIDITY AND CAPITAL RESOURCES
The Company generates significant cash from operations. Cash flow from
operating activities amounted to $2.1 billion in 1993, an increase of 17% over
1992. In addition, during fiscal 1993, the Company raised approximately $400
million from the issuance of senior participating notes with interest
partially tied to the performances of live-action feature films, $300 million
from the issuance of 100-year senior debentures and $231 million from the
issuance of medium-term notes.
In 1993, the Company used $1 billion of funds to redeem the Company's zero
coupon subordinated notes and $173 million of funds to settle matured medium-
term notes. In addition, the Company used $794 million to further develop the
theme parks and new resort properties, primarily construction in process on
Disney's Wilderness Lodge, Disney's All Star Resorts and the Twilight Zone
Tower of Terror attraction at Walt Disney World and completion of Mickey's
Toontown at Disneyland. The Company also used $1.3 billion of funds in
development and production of film and television properties. In previous
years, a portion of the funding for film production was generated by off-
balance-sheet financing.
The Company's financial condition remains strong and the Company has the
resources necessary to meet future anticipated funding requirements. In
addition to cash flow from operations, the Company has sufficient unused debt
capacity, including an unused $300 million line of credit, to finance its
ongoing capital investment program and to take advantage of internal and
external development and acquisition opportunities.
In order to reduce the Company's exposure to risks from foreign currency and
interest rate fluctuations, management has adopted an extensive hedging
program and it continually monitors the status of its hedging activities. (See
Notes 1, 2 and 5 to Consolidated Financial Statements.)
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Supplemental Data on page 20.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
14
<PAGE>
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 1994 Annual Meeting of
Stockholders (the "1994 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 1994 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 1994 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 1994 Proxy Statement is hereby
incorporated by reference.
15
<PAGE>
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 20.
(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, filed as Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended September
30, 1992, is hereby incorporated by reference.
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) (i) Credit Agreement, dated as of November 22, 1991, among the
Company, Citicorp U.S.A., Inc., as Agent, and certain financial
institutions, filed as Exhibit 1 to the Company's Quarterly
Report on Form 10-Q for the period ended December 31, 1991, and
(ii) First Amendment thereto, dated as of February 16, 1993,
filed as Exhibit 4 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1993, are hereby incorporated by
reference.
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.
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
16
<PAGE>
(2) Exhibits (cont.)
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, filed as Exhibit 10(m) to the
Company's Annual Report on Form 10-K for the year ended September
30, 1989, is hereby incorporated by reference.
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 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.
17
<PAGE>
(2) Exhibits (cont.)
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(a) Consent of Price Waterhouse, the Company's independent
accountants, is included herein at page 21.
23(b) Consent of PSAudit, independent accountants of Euro Disney
S.C.A., is included herein at page 46.
28 Financial statements required by Form 11-K with respect to the
Disney Salaried Savings and Investment Plan for the year ended
December 31, 1992, filed as Exhibit 28 to the Annual Report on
Form 10-K for the year ended September 30, 1992, as amended by
Amendment No. 1 on Form 10-K/A dated June 29, 1993, are hereby
incorporated by reference.
(b)Reports on Form 8-K
(1) The Company filed a Current Report on Form 8-K, dated July 8, 1993,
with respect to a press release of Euro Disney S.C.A. dated July 8,
1993.
(2) The Company filed a Current Report on Form 8-K, dated July 29, 1993,
with respect to adoption of the methods of accounting prescribed by
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 the change in method of accounting
for project-related pre-opening costs. As a result of these changes,
the Company filed amendments on Form 10-Q/A to its Quarterly Reports on
Form 10-Q for the fiscal quarters ended December 31, 1992 and March 31,
1993, reflecting these changes.
18
<PAGE>
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 17, 1993 By: MICHAEL D. EISNER
-----------------------------------------------------
(Michael D. Eisner, Chairman and Chief Executive
Officer)
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Principal Executive Officers
MICHAEL D. EISNER Chairman of the Board and
- ------------------------------- Chief Executive Officer December 17, 1993
(Michael D. Eisner)
FRANK G. WELLS President and Chief
- ------------------------------- Operating Officer December 17, 1993
(Frank G. Wells)
Principal Financial and Accounting Officers
RICHARD D. NANULA Senior Vice President
- ------------------------------- and Chief Financial Officer December 17, 1993
(Richard D. Nanula)
JOHN J. GARAND Vice President - Planning
- ------------------------------- and Control December 17, 1993
(John J. Garand)
Directors
REVETA F. BOWERS Director December 17, 1993
- -------------------------------
(Reveta F. Bowers)
ROY E. DISNEY Director December 17, 1993
- -------------------------------
(Roy E. Disney)
MICHAEL D. EISNER Director December 17, 1993
- -------------------------------
(Michael D. Eisner)
STANLEY P. GOLD Director December 17, 1993
- -------------------------------
(Stanley P. Gold)
IGNACIO E. LOZANO, JR. Director December 17, 1993
- -------------------------------
(Ignacio E. Lozano, Jr.)
RICHARD A. NUNIS Director December 17, 1993
- -------------------------------
(Richard A. Nunis)
IRWIN E. RUSSELL Director December 17, 1993
- -------------------------------
(Irwin E. Russell)
ROBERT A.M. STERN Director December 17, 1993
- -------------------------------
(Robert A.M. Stern)
E. CARDON WALKER Director December 17, 1993
- -------------------------------
(E. Cardon Walker)
RAYMOND L. WATSON Director December 17, 1993
- -------------------------------
(Raymond L. Watson)
FRANK G. WELLS Director December 17, 1993
- -------------------------------
(Frank G. Wells)
SAMUEL L. WILLIAMS Director December 17, 1993
- -------------------------------
(Samuel L. Williams)
GARY L. WILSON Director December 17, 1993
- -------------------------------
(Gary L. Wilson)
</TABLE>
19
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
Report of Independent Accountants and Consent of Independent Accountants. 21
Consolidated Financial Statements of The Walt Disney Company and
Subsidiaries
Consolidated Statement of Income
for the Years Ended September 30, 1993, 1992 and 1991................. 22
Consolidated Balance Sheet as of September 30, 1993 and 1992........... 23
Consolidated Statement of Cash Flows
for Years Ended September 30, 1993, 1992 and 1991..................... 24
Notes to Consolidated Financial Statements............................. 25
Quarterly Financial Summary............................................ 38
</TABLE>
Financial Statement Schedules
<TABLE>
<C> <S> <C>
I. Marketable Securities - Other Investments....................... 39
II. Amounts Receivable from Related Parties and Underwriters,
Promoters and Employees Other than Related Parties............. 40
V. Property, Plant and Equipment................................... 41
VI. Accumulated Depreciation of Property, Plant and Equipment....... 42
IX. Short-term Borrowings........................................... 43
X. Supplementary Income Statement Information...................... 44
</TABLE>
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.
<TABLE>
<S> <C>
EURO DISNEY S.C.A. AND SUBSIDIARIES
Report of Independent Accountants...................................... 45
Consent of Independent Accountants..................................... 46
Consolidated Financial Statements of Euro Disney S.C.A. and Subsidiaries
Consolidated Statement of Income
for the Years Ended September 30, 1993, 1992 and 1991................... 47
Consolidated Balance Sheet as of September 30, 1993 and 1992............. 49
Consolidated Statement of Cash Flows
for Years Ended September 30, 1993, 1992 and 1991....................... 50
Notes to Consolidated Financial Statements............................... 51
Financial Statement Schedules
Report of Independent Accountants on Financial Statement Schedules..... 66
</TABLE>
<TABLE>
<C> <S> <C>
II. Amounts Receivable from Related Parties and Underwriters,
Promoters and Employees Other than Related Parties............. 67
V. Property, Plant and Equipment................................... 68
VI. Accumulated Depreciation of Property, Plant and Equipment....... 69
X. Supplementary Income Statement Information...................... 70
</TABLE>
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.
20
<PAGE>
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, 1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 1993, 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, 7, 8 and 12 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
Los Angeles, California
November 22, 1993
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 22, 1993 which appears above.
PRICE WATERHOUSE
Los Angeles, California
December 17, 1993
21
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share data)
<TABLE>
<CAPTION>
Year ended September 30
----------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Theme parks and resorts......................... $3,440.7 $3,306.9 $2,794.3
Filmed entertainment............................ 3,673.4 3,115.2 2,593.7
Consumer products............................... 1,415.1 1,081.9 724.0
-------- -------- --------
8,529.2 7,504.0 6,112.0
-------- -------- --------
COSTS AND EXPENSES
Theme parks and resorts......................... 2,693.8 2,662.9 2,247.7
Filmed entertainment............................ 3,051.2 2,606.9 2,275.6
Consumer products............................... 1,059.7 798.9 494.2
-------- -------- --------
6,804.7 6,068.7 5,017.5
-------- -------- --------
OPERATING INCOME
Theme parks and resorts......................... 746.9 644.0 546.6
Filmed entertainment............................ 622.2 508.3 318.1
Consumer products............................... 355.4 283.0 229.8
-------- -------- --------
1,724.5 1,435.3 1,094.5
-------- -------- --------
CORPORATE ACTIVITIES
General and administrative expenses............. 164.2 148.2 160.8
Interest expense................................ 157.7 126.8 105.0
Investment and interest income.................. (186.1) (130.3) (119.4)
-------- -------- --------
135.8 144.7 146.4
-------- -------- --------
INCOME (LOSS) FROM INVESTMENT IN EURO DISNEY..... (514.7) 11.2 63.8
-------- -------- --------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES.......... 1,074.0 1,301.8 1,011.9
Income taxes..................................... 402.7 485.1 375.3
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES......................................... 671.3 816.7 636.6
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs............................... (271.2) -- --
Postretirement benefits......................... (130.3) -- --
Income taxes.................................... 30.0 -- --
-------- -------- --------
NET INCOME....................................... $ 299.8 $ 816.7 $ 636.6
======== ======== ========
AMOUNTS PER COMMON SHARE
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES......................................... $ 1.23 $ 1.52 $ 1.20
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs............................... (.50) -- --
Postretirement benefits......................... (.24) -- --
Income taxes.................................... .06 -- --
-------- -------- --------
EARNINGS PER SHARE............................... $ .55 $ 1.52 $ 1.20
======== ======== ========
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING.............................. 544.5 536.8 532.7
======== ======== ========
PRO FORMA AMOUNTS ASSUMING THE NEW ACCOUNTING
METHOD FOR PRE-OPENING COSTS IS APPLIED
RETROACTIVELY
Net Income...................................... $ 571.0 $ 672.7 $ 564.8
======== ======== ========
Earnings Per Share.............................. $ 1.05 $ 1.25 $ 1.06
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
22
<PAGE>
CONSOLIDATED BALANCE SHEET
(In millions)
<TABLE>
<CAPTION>
September 30,
--------------------
1993 1992
--------- ---------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 363.0 $ 764.8
Investments.............................................. 1,888.5 1,407.0
Receivables.............................................. 1,390.3 1,179.3
Merchandise inventories.................................. 608.9 462.8
Film and television costs................................ 1,360.9 760.5
Theme parks, resorts and other property, at cost
Attractions, buildings and equipment.................... 6,732.1 6,285.3
Accumulated depreciation................................ (2,286.4) (1,999.6)
--------- ---------
4,445.7 4,285.7
Projects in progress.................................... 688.2 440.1
Land.................................................... 94.3 72.9
--------- ---------
5,228.2 4,798.7
Investment in and advances to Euro Disney................ -- 659.1
Other assets............................................. 911.3 829.5
--------- ---------
$11,751.1 $10,861.7
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other accrued liabilities........... $ 2,530.1 $ 1,791.9
Income taxes payable..................................... 291.0 381.0
Borrowings............................................... 2,385.8 2,222.4
Unearned royalty and other advances...................... 840.7 872.8
Deferred income taxes.................................... 673.0 889.0
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--564.6 million shares and 552.2 million shares.. 876.4 619.9
Retained earnings....................................... 4,833.1 4,661.9
Cumulative translation adjustments...................... 36.7 86.9
--------- ---------
5,746.2 5,368.7
Less treasury stock, at cost--29.1 million shares and
27.8 million shares..................................... 715.7 664.1
--------- ---------
5,030.5 4,704.6
--------- ---------
$11,751.1 $10,861.7
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
23
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Year ended September 30,
-----------------------------
1993 1992 1991
--------- -------- --------
<S> <C> <C> <C>
Cash Provided by Operations Before Income Taxes. $ 2,453.9 $2,132.0 $1,757.9
Income taxes paid.............................. (308.7) (293.9 ) (261.2 )
--------- -------- --------
2,145.2 1,838.1 1,496.7
--------- -------- --------
INVESTING ACTIVITIES
Theme parks, resorts and other property, net... 793.7 544.4 924.6
Film and television costs...................... 1,264.6 606.0 486.8
Euro Disney investment and advances............ 140.1 68.3 50.6
Investments, net............................... 481.5 624.5 194.3
Other.......................................... (20.2) 80.5 70.0
--------- -------- --------
2,659.7 1,923.7 1,726.3
--------- -------- --------
FINANCING ACTIVITIES
Borrowings..................................... 1,256.0 182.8 641.9
Reduction of borrowings........................ (1,119.2) (184.6) (124.6)
Repurchases of common stock.................... (31.6) -- (181.1)
Cash dividends................................. (128.6) (105.3) (87.2)
Other.......................................... 136.1 71.4 46.9
--------- -------- --------
112.7 (35.7 ) 295.9
--------- -------- --------
Increase (Decrease) in Cash and Cash Equiva-
lents.......................................... (401.8) (121.3) 66.3
Cash and Cash Equivalents, Beginning of Year.... 764.8 886.1 819.8
--------- -------- --------
Cash and Cash Equivalents, End of Year.......... $ 363.0 $ 764.8 $ 886.1
========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
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.
<S> <C> <C> <C>
Income Before Income Taxes and Cumulative Effect
of Accounting Changes.......................... $ 1,074.0 $1,301.8 $1,011.9
--------- -------- --------
Cumulative Effect of Accounting Changes......... (514.2) -- --
Charges to Income Not Requiring Cash Outlays
Depreciation................................... 364.2 317.3 263.5
Amortization of film and television costs...... 664.2 442.3 531.0
Euro Disney.................................... 350.0 -- --
Other.......................................... 163.5 155.4 29.7
Changes in
Receivables.................................... (211.0) (161.5) (266.8)
Merchandise inventories........................ (146.1) (151.2) (42.4)
Prepaid expenses and other assets.............. 197.0 (121.3) (46.9)
Accounts payable and other accrued liabilities. 544.4 335.9 280.1
Unearned royalty and other advances............ (32.1) 13.3 (2.2)
--------- -------- --------
1,379.9 830.2 746.0
--------- -------- --------
Cash Provided by Operations Before Income Taxes. $ 2,453.9 $2,132.0 $1,757.9
========= ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.................................. $ 77.3 $ 62.5 $ 32.4
========= ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share amounts)
NOTE 1 DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The Walt Disney Company, together with its subsidiary companies (the
"Company"), is a diversified international entertainment company with
operations in the following businesses.
THEME PARKS AND RESORTS: The Company owns and operates the Disneyland(R)
theme park and Disneyland Hotel in California and the Walt Disney World(R)
destination resort in Florida. The Walt Disney World destination resort
includes the Magic Kingdom, Epcot Center, the Disney-MGM Studios Theme Park,
nine hotels and a complex of villas, a nighttime entertainment complex, a
shopping village, conference centers, campgrounds, golf courses, water parks
and other recreational facilities. The Company earns royalties on certain
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 529-unit Disney Vacation Club under
construction at Lake Buena Vista in Florida. In addition, during 1993, the
Company acquired property in Vero Beach, Florida on which it plans to construct
a 120-room inn and 60 time-share vacation villas.
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 television station.
CONSUMER PRODUCTS: The Company licenses the name Walt Disney, its characters,
visual and literary properties and songs and music to various consumer
manufacturers, retailers and publishers. The Company produces audio and
computer software for the children's market, as well as film and video products
for the educational market. The Company also operates several catalog
businesses primarily for the children's market. Licensed products are
distributed throughout the world.
The Company also has direct publishing operations in the United States in
both the children's and adult markets, and in Europe primarily in the
children's market. In addition, the Company owns and operates The Disney
Stores, which are retail outlets for the Company's merchandise, in selected
markets throughout the United States and in Great Britain, Japan, Canada,
Puerto Rico and France.
INVESTMENT IN EURO DISNEY: The Company is an equity investor in the Euro
Disney Resort (see Note 3).
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 generally 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/sponsors at the theme parks are generally recorded
over the period of the applicable agreements commencing with the opening of the
attraction.
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.
25
<PAGE>
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.
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 production and participation costs for each
production 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 being amortized over periods ranging
from two to forty years.
Hedging Contracts: In the normal course of business, the Company employs a
variety of off-balance-sheet financial instruments to reduce its exposure to
fluctuations in interest and foreign currency exchange rates, including
interest rate swap agreements and foreign currency forward exchange contracts,
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 foreign currency forward exchange
contracts and options are recognized in income as offsets of gains and losses
resulting from the underlying hedged transactions.
At September 30, 1993 and 1992, the Company had $2.0 billion and $2.2
billion (notional amount), respectively, of foreign currency hedge contracts
outstanding, consisting principally of option strategies providing for the
sale of foreign currencies. The contracts serve primarily to hedge probable,
but not firmly committed, French franc, German mark, Japanese yen and other
foreign currency revenues over periods extending up to five years. The fair
value of foreign currency hedge contracts, determined by obtaining quotes from
brokers, was immaterial at September 30, 1993.
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.
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.
Accounting Changes: During the quarter ended June 30, 1993, the Company
adopted SFAS No. 106 Employers' Accounting for Postretirement Benefits Other
Than Pensions (see Note 8) and SFAS No. 109 Accounting for Income Taxes (see
Note 7) and changed its method of accounting for pre-opening costs (see Note
12). 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 and 1991 results.
Reclassifications: Certain reclassifications have been made in the 1992 and
1991 financial statements to conform to the 1993 presentation.
26
<PAGE>
NOTE 2 CASH, CASH EQUIVALENTS AND INVESTMENTS
At September 30, 1993, the cost and market value of marketable equity
securities were $314.1 million and $329.4 million, respectively. At September
30, 1992, the cost and market value of marketable equity securities were
$186.6 million and $205.3 million, respectively. For both 1993 and 1992, cost
approximated market value for marketable securities other than marketable
equity securities.
At September 30, 1993 and 1992, interest rate swap agreements related to
certain foreign currency denominated investments converted $356.5 million and
$244.7 million, respectively, of fixed rate securities to variable rate
investments. At September 30, 1993, the Company received interest under these
agreements at the three- or six-month lira LIBOR rate and paid interest at a
weighted average rate of 10.8%. The agreements expire in two to eight years.
At September 30, 1993 and 1992, the Company had outstanding interest rate
swaps on its investments with notional amounts totaling $350.0 million and
$600.0 million, respectively, which effectively converted variable rate
investment securities to fixed rate instruments. Under these swap agreements,
which expire in two to three years, the Company received interest at a
weighted average fixed rate of 8.4% and paid interest at the one-month
commercial paper rate at September 30, 1993.
The carrying amount of cash and cash equivalents approximated fair value
because of the short maturity of these instruments.
The fair values of debt and equity securities were based primarily on quoted
market prices for those or similar instruments. The fair value of interest
rate swaps was the estimated amount that the Company would receive or pay to
terminate the swap agreements, taking into account current interest rates and
the current creditworthiness of the swap counterparties. The fair value of
investments and related interest rate swaps approximated carrying value as of
September 30, 1993.
NOTE 3 INVESTMENT IN EURO DISNEY
Euro Disney S.C.A. ("Euro Disney"), a publicly traded French company,
operates a 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 October 1989, Euro Disney completed a 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. The Company is recognizing this gain ratably over an eight-year
period, which represents the Company's contractual obligation to manage the
development and operation of the complex and maintain an ownership interest of
at least 17%.
In addition to recording its equity in Euro Disney's operating results and
amortization of the gain, the Company earned $36.3 million and $32.9 million
of royalties in 1993 and 1992, respectively, under certain agreements with
Euro Disney. The Company agreed to defer its base management fees for 1992 and
1993. Payment of the deferred amounts will be contingent upon Euro Disney
achieving profitability.
Euro Disney, its principal lenders and the Company are exploring a financial
restructuring for Euro Disney. Throughout fiscal 1994, Euro Disney will
require significant funding. 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. Should the financial restructuring not be
completed, Euro Disney would face a liquidity problem. Additionally, during
the fourth quarter, Euro Disney's operating results were lower than expected
due in part to the European recession affecting Euro Disney's largest markets.
The operating results and the need for a financial restructuring have created
uncertainty regarding the Company's ability to collect its current receivables
and the funding commitment to Euro Disney. Because of this, the Company
recorded a $350.0 million charge to income in the fourth quarter to fully
reserve its current receivables and funding commitment.
27
<PAGE>
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 1993 net loss of FF 5.3 billion (FF 2.1
billion before the cumulative effect of accounting change), a net loss of FF
188 million in 1992 and net income of FF 249 million in 1991. 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 on the year ended September
30, 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. The summarized consolidated financial
statements for Euro Disney set forth below are stated in U.S. dollars in
accordance with U.S. GAAP.
<TABLE>
<CAPTION>
1993 1992
BALANCE SHEET ------ ------
<S> <C> <C>
Cash and investments...................................... $ 211 $ 479
Receivables............................................... 268 459
Fixed assets, net......................................... 3,704 4,346
Other assets.............................................. 214 873
------ ------
Total Assets.............................................. $4,397 $6,157
====== ======
Accounts payable and other liabilities.................... $ 647 $ 797
Borrowings................................................ 3,683 3,960
Common stock.............................................. 1,042 1,042
Retained earnings (deficit)............................... (975) 358
------ ------
Total Liabilities and Stockholders' Equity................ $4,397 $6,157
====== ======
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
STATEMENT OF OPERATIONS ------- ----- ----
<S> <C> <C> <C>
Revenues........................................... $ 873 $ 738 $--
Costs and expenses................................. 1,114 808 --
------- ----- ----
Operating loss..................................... (241) (70) --
Net interest income (expense)...................... (287) (95) 76
------- ----- ----
Income (loss) before income taxes
and cumulative effect of accounting change........ (528) (165) 76
Income taxes....................................... -- 30 (28)
------- ----- ----
Income (loss) before cumulative effect
of accounting change.............................. (528) (135) 48
Cumulative effect of change in
accounting for pre-opening costs.................. (578) -- --
------- ----- ----
Net Income (Loss).................................. $(1,106) $(135) $ 48
======= ===== ====
Pro forma amount assuming the change in accounting
method is applied retroactively................... $ (528) $(418) $(87)
======= ===== ====
</TABLE>
28
<PAGE>
NOTE 4 FILM AND TELEVISION COSTS
<TABLE>
<CAPTION>
1993 1992
-------- ------
<S> <C> <C>
Theatrical Film Costs
Released, less amortization............................ $ 329.0 $ 64.8
In process............................................. 548.5 209.1
-------- ------
877.5 273.9
-------- ------
Television Costs
Released, less amortization............................ 230.0 190.4
In process............................................. 130.1 131.0
-------- ------
360.1 321.4
-------- ------
Television Broadcast Rights.............................. 123.3 165.2
-------- ------
$1,360.9 $760.5
======== ======
</TABLE>
Based on management's total gross revenue estimates as of September 30,
1993, approximately 84% of unamortized film production costs applicable to
released theatrical and television productions are expected to be amortized
during the next three years.
NOTE 5 BORROWINGS
<TABLE>
<CAPTION>
Effective Fiscal Year
Interest Rate Maturity 1993 1992
------------- ----------- -------- --------
<S> <C> <C> <C> <C>
Subordinated notes (a)............. --% $ -- $1,041.4
Medium-term notes (b).............. 4.8 1994-2093 783.7 426.0
Commercial paper (c)............... 3.4 1994 520.0 181.4
Securities sold under agreements to
repurchase (d).................... 8.1 1994 437.5 231.2
Senior participating notes (e)..... 2.9 2000 312.5 --
Other (f).......................... 8.5 1994-2013 332.1 342.4
-------- --------
5.4% $2,385.8 $2,222.4
======== ========
</TABLE>
- --------
(a) In March 1993, the Company called the subordinated notes at their issuance
price plus accrued interest for an aggregate redemption price of $1
billion. The redemption was funded by issuance of medium-term notes and
sales of securities.
(b) The Company has executed interest rate swap agreements to convert $464
million of medium-term notes to commercial paper-based floating rate
instruments. The effect of these swaps has been reflected in the effective
interest rate.
(c) The Company has available through 1996 an unsecured revolving line of bank
credit of up to $300 million for general corporate purposes, including the
support of commercial paper borrowings. The Company has the option to
borrow at various interest rates.
(d) Securities sold under agreements to repurchase are collateralized by
certain marketable securities.
(e) The notes pay fixed interest of 7.5% through April 1994 and 1.5%
thereafter. Additional interest may be paid based on the performance of a
designated portfolio of films. The Company has executed interest rate swap
agreements to convert the notes to LIBOR-based floating rate instruments.
The effect of these swaps has been reflected in the effective interest
rate.
(f) Foreign currency swaps effectively converted $120 million and $137 million
at September 30, 1993 and 1992, respectively, of foreign debt issuances to
Japanese yen or dollar obligations. The effect of these swaps has been
reflected in the effective interest rate. The Company hedges the
obligations converted to yen borrowings with a portion of its yen royalty
receipts.
29
<PAGE>
Borrowings, excluding commercial paper and securities sold under agreements
to repurchase which mature in 1994, have the following scheduled maturities.
<TABLE>
<S> <C>
1994 $297.8
1995 133.1
1996 116.1
1997 108.0
1998 117.5
</TABLE>
For commercial paper and securities sold under agreements to repurchase, the
carrying amount is a reasonable estimate of fair value. The fair value of
other borrowings and associated interest rate swaps approximated carrying
value at September 30, 1993. The fair value of the Company's other borrowings
is based on quoted market prices for the same or similar issues or on current
rates offered to the Company for the same remaining maturities. The fair value
of interest rate swaps is the estimated amount that the Company would receive
or pay to terminate the swap agreements, taking into account current interest
rates and the current creditworthiness of the swap counterparties.
The Company capitalizes interest on assets constructed for its theme parks,
resorts and other developments, and on theatrical and television productions
in process. In 1993, 1992 and 1991, respectively, total interest costs
incurred were $183.7, $152.1 and $142.4 million, of which $26.0, $25.3 and
$37.4 million were capitalized.
NOTE 6 UNEARNED ROYALTY AND OTHER ADVANCES
<TABLE>
<CAPTION>
1993 1992
------ ------
<S> <C> <C>
Tokyo Disneyland royalty advances.......................... $490.9 $522.3
Other...................................................... 349.8 350.5
------ ------
$840.7 $872.8
====== ======
</TABLE>
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.
NOTE 7 INCOME TAXES
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Domestic (including U.S. exports).................. $ 931.4 $1,178.9 $ 945.8
Foreign subsidiaries............................... 142.6 122.9 66.1
-------- -------- --------
$1,074.0 $1,301.8 $1,011.9
======== ======== ========
INCOME TAX PROVISION
Current
Federal........................................... $ 217.3 $ 225.8 $ 241.7
State............................................. 47.1 40.3 34.0
Foreign subsidiaries.............................. 63.3 46.1 30.5
Other foreign..................................... 65.1 48.3 44.5
-------- -------- --------
392.8 360.5 350.7
-------- -------- --------
Deferred
Federal........................................... 17.0 109.9 10.5
State............................................. (7.1) 14.7 14.1
-------- -------- --------
9.9 124.6 24.6
-------- -------- --------
$ 402.7 $ 485.1 $ 375.3
======== ======== ========
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
1993
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES --------
<S> <C>
Deferred tax assets:
Accrued liabilities.............................................. $ (142.3)
Investment in Euro Disney........................................ (204.6)
State income taxes............................................... (71.4)
Pension and other benefit programs............................... (27.0)
--------
Total deferred tax assets....................................... (445.3)
--------
Deferred tax liabilities:
Property and equipment........................................... 753.6
Licensing revenues capitalized................................... 65.7
Interest and property taxes...................................... 52.8
Purchase accounting adjustments.................................. 51.0
Leveraged leases................................................. 111.5
Other............................................................ 33.9
--------
Total deferred tax liabilities.................................. 1,068.5
--------
Net deferred tax liability before valuation allowance............. 623.2
Valuation allowance............................................... 49.8
--------
Net deferred tax liability........................................ $ 673.0
========
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
RECONCILIATION OF EFFECTIVE INCOME TAX RATE ---- ---- ----
<S> <C> <C> <C>
Federal income tax rate................................. 34.8% 34.0% 34.0%
State income taxes, net of Federal income tax benefit... 2.2 2.8 3.3
Effect of increase in statutory tax rate on deferred
taxes.................................................. 1.6
Other................................................... (1.1) 0.5 (0.2)
---- ---- ----
37.5% 37.3% 37.1%
==== ==== ====
</TABLE>
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 liabilities and assets for the expected future tax consequences
of events that have been recognized in the financial statements or tax
returns. Under this method, deferred tax liabilities and assets 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 years' financial statements have not been restated to
apply the provisions of SFAS 109.
As a result of adoption, the Company recognized a benefit 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 for the year ended September 30, 1993.
For the year ended September 30, 1993, income tax benefits of $144.7 million
were allocated to stockholders' equity. Such benefits are attributable to
employee stock option transactions.
NOTE 8 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 1993, 1992 and 1991, the cost recognized under
these plans was $16.1, $14.7 and $12.9 million, respectively. The Company's
share of the unfunded liability, if any, related to these multi-employer plans
is not material.
31
<PAGE>
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 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.
Pension cost is summarized as follows.
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Service cost of current period............................ $29.5 $23.1 $18.9
Interest cost on projected benefit obligations............ 31.0 25.9 21.5
Gain on plan assets....................................... (54.7) (43.3) (18.2)
Net amortization and deferral of unrecognized gain on plan
assets................................................... 26.2 19.1 (1.4)
----- ----- -----
Net pension cost.......................................... $32.0 $24.8 $20.8
===== ===== =====
</TABLE>
The weighted average discount rate was 9% for 1993 and 9.5% for 1992 and
1991, and the expected long-term rate of return on plan assets was 9.5% for
1993, 1992 and 1991. The assumed rate of increase in compensation for the
salaried plans was 6.8% for 1993, 7% for 1992 and 6.6% for 1991.
The funded status of the plans and the amounts included in the Company's
consolidated balance sheets are as follows.
<TABLE>
<CAPTION>
1993 1992
------ ------
<S> <C> <C>
Plan assets at fair value, primarily publicly traded stocks and
bonds......................................................... $428.9 $348.0
Actuarial present value of projected benefit obligations
Accumulated benefit obligations
Vested..................................................... (344.6) (279.8)
Non-vested................................................. (23.0) (20.1)
Provision for future salary increases........................ (65.1) (57.8)
------ ------
Deficiency in plan assets versus projected benefit obligations. (3.8) (9.7)
Unrecognized net loss.......................................... 53.8 51.5
Unrecognized prior service cost................................ 3.2 3.4
Unrecognized net obligation.................................... 4.0 4.2
------ ------
Prepaid pension cost........................................... $ 57.2 $ 49.4
====== ======
</TABLE>
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. Employees who have 20 years of service and
attain age 62 are currently eligible to participate in the postretirement
benefit plan.
As discussed in Note 1, the Company adopted SFAS 106 during the quarter
ended June 30, 1993, retroactive to October 1, 1992. SFAS 106 requires 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 requires 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, the current period
expense exceeded the amount under the previous accounting method by $17.0
million after-tax or $.03 per share for the year ended September 30, 1993.
32
<PAGE>
The status of the plan at September 30, 1993 was as follows.
<TABLE>
<CAPTION>
1993
------
<S> <C>
Actuarial present value of accumulated postretirement benefit obliga-
tion
Retirees............................................................... $ 40.4
Fully eligible active plan participants................................ 75.7
Other active plan participants......................................... 132.0
------
248.1
Plan assets at fair value, primarily U.S. stocks and bonds.............. (66.8)
Unrecognized net gain................................................... 30.2
------
Accrued postretirement benefit cost..................................... $211.5
======
</TABLE>
The net periodic postretirement benefit cost for the year ended September
30, 1993 included the following components.
<TABLE>
<S> <C>
Service cost - benefits attributed to service in the period.............. $13.9
Interest cost on accumulated postretirement benefit obligation........... 20.5
Actual return on plan assets............................................. (4.6)
-----
Net periodic postretirement benefit cost................................. $29.8
=====
</TABLE>
The annual rate of increase in the per capita cost of covered health care
benefits was assumed to be 7%. 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 by $53.3 million and the net service and interest cost
components of the net periodic postretirement benefit cost for the year by
$8.1 million.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.5%. The expected long term rate of
return on plan assets was 9.5%.
The Company funds its postretirement health benefit liability on a
discretionary basis.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112 Employers' Accounting for
Postemployment Benefits (SFAS 112). The Company currently plans to adopt SFAS
112 in fiscal 1995 and does not anticipate the impact will be material.
33
<PAGE>
NOTE 9 STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Paid-In Retained
Shares Stock Capital Earnings
(Shares in millions) ------ ------ ------- --------
<S> <C> <C> <C> <C>
Balance at
September 30, 1990............................. 546.9 $13.6 $489.2 $3,401.1
Exercise of stock options, net................. 1.7 .1 46.8 --
Dividends ($.1675 per share)................... -- -- -- (87.2)
Net income..................................... -- -- -- 636.6
----- ----- ------ --------
Balance at
September 30, 1991............................. 548.6 13.7 536.0 3,950.5
Exercise of stock options, net................. 3.6 .1 70.1 --
Dividends ($.20125 per share).................. -- -- -- (105.3)
Net income..................................... -- -- -- 816.7
----- ----- ------ --------
Balance at September 30, 1992................... 552.2 13.8 606.1 4,661.9
Exercise of stock options, net................. 12.4 .3 256.2 --
Dividends ($.24 per share)..................... -- -- -- (128.6)
Net income..................................... -- -- -- 299.8
----- ----- ------ --------
Balance at September 30, 1993................... 564.6 $14.1 $862.3 $4,833.1
===== ===== ====== ========
</TABLE>
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. The new shares were
distributed on May 15, 1992 to holders of record on April 20, 1992. All share
and per share data have been restated for all periods presented to reflect the
stock split.
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.
In 1993 and 1992, the Company recorded cumulative foreign currency
translation adjustments of $36.7 million and $86.9 million, net of deferred
taxes of $25.0 million and $50.4 million, respectively.
Treasury stock activity for the three years ended September 30, 1993 was as
follows.
<TABLE>
<CAPTION>
Treasury
Shares Stock
(Shares in millions) ------ --------
<S> <C> <C>
Balance at September 30, 1990................................... 19.9 $483.0
Common stock repurchases....................................... 7.9 181.1
---- ------
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
==== ======
</TABLE>
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
repurchased 853,000 shares during the year ended September 30, 1993. Since
adoption of the program, a total of 52.8 million shares have been repurchased
at prevailing market prices.
34
<PAGE>
NOTE 10 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 during 1993 were as follows.
<TABLE>
<CAPTION>
1993 1992 1991
(Shares in millions) ----- ---- ----
<S> <C> <C> <C>
Outstanding at beginning of year............................. 44.3 44.8 43.2
Awards cancelled............................................. (1.1) (1.2) (0.7)
Awards granted............................................... 5.6 4.3 4.0
Awards exercised............................................. (12.4) (3.6) (1.7)
----- ---- ----
Outstanding at September 30.................................. 36.4 44.3 44.8
===== ==== ====
Exercisable at September 30.................................. 13.4 18.8 17.8
===== ==== ====
</TABLE>
Stock option awards are granted at prices equal to at least market price on
the date of grant. Options outstanding at September 30, 1993 and 1992 ranged
in price from $3.23 to $44.06 and $3.23 to $37.39 per share, respectively.
Options exercised during the period ranged in price from $3.23 to $33.35 per
share in 1993, from $3.23 to $32.66 per share in 1992, and from $3.14 to
$30.75 per share in 1991. Shares available for future option grants at
September 30, 1993 were 24.0 million.
NOTE 11 DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
RECEIVABLES
Trade, net of allowances.................................... $1,180.7 $1,033.3
Other....................................................... 209.6 146.0
-------- --------
$1,390.3 $1,179.3
======== ========
OTHER ASSETS
Intangibles................................................. $ 380.3 $ 384.5
Other....................................................... 531.0 445.0
-------- --------
$ 911.3 $ 829.5
======== ========
ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES
Accounts payable............................................ $1,755.4 $1,382.4
Payroll and employee benefits............................... 661.9 320.9
Other....................................................... 112.8 88.6
-------- --------
$2,530.1 $1,791.9
======== ========
</TABLE>
NOTE 12 PRE-OPENING COSTS
As discussed in Note 1, during 1993 the Company changed its method of
accounting for pre-opening costs. In the past, 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 on the year ended September 30, 1993 was to
increase income by $40.2 million after-tax, or $.07 per share.
35
<PAGE>
NOTE 13 SEGMENTS
<TABLE>
<CAPTION>
1993 1992 1991
BUSINESS SEGMENTS --------- --------- --------
<S> <C> <C> <C>
CAPITAL EXPENDITURES
Theme parks and resorts.......................... $ 593.4 $ 380.9 $ 790.1
Filmed entertainment............................. 130.2 76.7 50.1
Consumer products................................ 36.3 38.6 35.5
Corporate........................................ 54.0 48.2 48.9
--------- --------- --------
$ 813.9 $ 544.4 $ 924.6
========= ========= ========
DEPRECIATION EXPENSE
Theme parks and resorts.......................... $ 269.2 $ 249.8 $ 213.2
Filmed entertainment............................. 38.5 29.5 23.9
Consumer products................................ 26.2 16.8 12.4
Corporate........................................ 30.3 21.2 14.0
--------- --------- --------
$ 364.2 $ 317.3 $ 263.5
========= ========= ========
IDENTIFIABLE ASSETS
Theme parks and resorts.......................... $ 5,216.0 $ 4,957.2
Filmed entertainment............................. 3,417.5 2,370.9
Consumer products................................ 707.5 642.8
Corporate........................................ 2,410.1 2,231.7
Investment in Euro Disney........................ 659.1
--------- ---------
$11,751.1 $10,861.7
========= =========
SUPPLEMENTAL REVENUE AND OTHER DATA
Theme parks and resorts
Admissions...................................... $ 1,215.6 $ 1,193.3 $ 795.8
Merchandise, food and beverage.................. 1,232.7 1,223.1 1,048.0
Filmed entertainment
Theatrical product.............................. 2,764.4 2,251.7 1,776.9
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991
GEOGRAPHIC SEGMENTS --------- --------- --------
<S> <C> <C> <C>
DOMESTIC REVENUES
United States.................................. $ 6,710.8 $ 6,047.7 $4,844.0
United States export........................... 399.8 406.0 471.4
INTERNATIONAL REVENUES
Europe......................................... 994.4 785.9 574.7
Rest of world.................................. 441.6 295.1 241.3
TRANSFERS
Europe......................................... (9.8) (22.8) (13.8)
Rest of world.................................. (7.6) (7.9) (5.6)
--------- --------- --------
$ 8,529.2 $ 7,504.0 $6,112.0
========= ========= ========
OPERATING INCOME
United States.................................. $ 1,591.7 $ 1,402.7 $1,120.5
Europe......................................... 121.8 39.1 (32.1)
Rest of world.................................. 82.5 48.4 35.2
Unallocated expenses........................... (71.5) (54.9) (29.1)
--------- --------- --------
$ 1,724.5 $ 1,435.3 $1,094.5
========= ========= ========
IDENTIFIABLE ASSETS
United States.................................. $11,084.5 $10,456.6
Europe......................................... 519.7 333.8
Rest of world.................................. 146.9 71.3
--------- ---------
$11,751.1 $10,861.7
========= =========
</TABLE>
The Company records transfers between geographic areas in accordance with
written contracts based upon total revenues or costs as specified in the
applicable contracts.
NOTE 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
antitrust, 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.
37
<PAGE>
QUARTERLY FINANCIAL SUMMARY
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
December 31 March 31 June 30 September 30
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
Revenues............................ $2,391.4 $2,026.4 $1,936.8 $2,174.6
Operating income.................... 496.6 401.4 469.9 356.7
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)
1992
Revenues............................ $1,916.4 $1,629.2 $1,883.3 $2,075.1
Operating income.................... 348.4 271.8 419.3 395.8
Net income.......................... 208.1 164.1 220.8 223.7
Earnings per share.................. .39 .31 .41 .42
</TABLE>
38
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
SCHEDULE I--MARKETABLE SECURITIES--OTHER INVESTMENTS
SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
Cost/Carrying Market
Principal Value Value
--------- ------------- --------
(In millions)
<S> <C> <C> <C>
Secured investments............................ $183.9 $ 185.4 $ 192.8
Other investments:
Foreign government securities................ 389.2 385.1 432.1
U.S. government and agency securities........ 344.6 354.4 358.7
Other government securities.................. 318.5 323.0 324.0
Equity securities............................ 337.8 342.1
Other........................................ 302.8 304.6
-------- --------
$1,888.5 $1,954.3
======== ========
</TABLE>
39
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Balance at Balance at
beginning end of
of year Additions Deductions year
---------- --------- ---------- ----------
(In millions)
<S> <C> <C> <C> <C>
1993
J. Forsgren/1/....................... $.5 $.5
=== ===
1992
J. Forsgren/1/....................... $.5 $.5
=== ===
1991
J. Forsgren/1/....................... $.5 $.5
=== ===
</TABLE>
- --------
/1/Loan secured by a pledge of shares acquired pursuant to the exercise of
stock options; interest payable at 6% on $.3 million, with principal and
interest due upon sale of the shares.
40
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Balance at Balance
beginning Retirements at end
of year Additions or sales Transfers of year
---------- --------- ----------- --------- --------
(In millions)
<S> <C> <C> <C> <C> <C>
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
======== ====== ===== ====== ========
1991
Rides and attractions...... $1,802.1 $ 4.7 $105.5 $1,902.9
Buildings.................. 1,233.4 $ 10.1 1.2 381.8 1,624.1
Equipment, furniture and
fixtures.................. 1,053.1 97.2 12.4 247.8 1,385.7
Land improvements.......... 510.0 0.3 4.0 101.8 608.1
Leasehold improvements..... 56.0 3.8 3.8 51.3 107.3
-------- ------ ----- ------ --------
4,654.6 111.4 26.1 888.2 5,628.1
Projects in progress....... 594.0 835.1 (888.2) 540.9
Land....................... 67.0 7.9 4.5 70.4
-------- ------ ----- ------ --------
$5,315.6 $954.4 $30.6 $ -- $6,239.4
======== ====== ===== ====== ========
</TABLE>
41
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Balance
at Balance
beginning Retirements Other* at end
of year Additions or sales Changes of year
--------- --------- ----------- ------- --------
(In millions)
<S> <C> <C> <C> <C> <C>
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
======== ====== ===== ====== ========
1991
Rides and attractions......... $ 565.5 $ 60.3 $ 0.1 $ 8.3 $ 634.0
Buildings..................... 244.5 42.8 0.1 (15.0) 272.2
Equipment, furniture and
fixtures..................... 422.6 127.6 0.5 (7.0) 542.7
Land improvements............. 156.3 23.4 2.6 182.3
Leasehold improvements........ 16.2 9.4 0.1 11.1 36.6
-------- ------ ----- ------ --------
$1,405.1 $263.5 $ 0.8 $ -- $1,667.8
======== ====== ===== ====== ========
</TABLE>
- --------
* Amounts reclassified to conform to presentation of related assets.
42
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
SCHEDULE IX--SHORT-TERM BORROWINGS
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
(c)
At end of period (b) Weighted
---------------- (a) Maximum Average average
Weighted amount amount interest
average outstanding outstanding rate
interest during during during
Balance rate the period the period the period
------- -------- ----------- ----------- ----------
(In millions)
<S> <C> <C> <C> <C> <C>
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%
====== ====== ======
1991
Commercial paper........... $128.9 5.7% $643.8 $269.1 7.4%
====== ====== ======
Securities sold under
agreements to repurchase.. $127.3 11.2% $127.3 $ 89.7 10.9%
====== ====== ======
</TABLE>
- --------
(a) Maximum amount outstanding at any month-end during the period.
(b) 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.
(c) Average interest rate for the year is computed by dividing interest expense
by the average amount outstanding.
43
<PAGE>
THE WALT DISNEY COMPANY AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(In millions)
<S> <C> <C> <C>
Maintenance and repairs................................... $227.3 $220.2 $196.0
Taxes, other than payroll and income taxes:
Property................................................. 87.0 79.4 69.2
Advertising costs......................................... 963.7 859.6 677.7
</TABLE>
44
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
EURO DISNEY S.C.A.
We have audited the consolidated balance sheets of Euro Disney S.C.A. and
its subsidiaries at September 30, 1993 and 1992, and the related consolidated
statements of income and of cash flows, expressed in French francs, for each
of the three years in the period ended September 30, 1993, prepared in
conformity with accounting principles generally accepted in France (French
GAAP) as set out on pages 47 to 65 inclusive. 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 in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements audited by us present
fairly, in all material respects, the financial position of Euro Disney S.C.A.
and its subsidiaries at September 30, 1993 and 1992, and the results of their
operations and their cash flows, expressed in French francs, for each of the
three years in the period ended September 30, 1993, in conformity with
accounting principles generally accepted in France.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for pre-opening and start-up costs in 1993.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company will require significant funding in fiscal
year 1994 and is currently exploring a financial restructuring which, if not
completed, will result in liquidity problems. If the financial restructuring
is not completed, there would be substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Accounting principles generally accepted in France vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of the latter would have affected
the determination of the consolidated net income, expressed in French francs,
for each of the three years in the period ended September 30, 1993, and the
determination of the consolidated shareholders' equity and consolidated
financial position, also expressed in French francs, at September 30, 1993 and
1992, as summarized on the consolidated statements of income and balance
sheets and in Note 28 to the consolidated financial statements.
PSAudit
Member of Price Waterhouse
Pradeep Narain
Paris, France
November 15, 1993
45
<PAGE>
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 reports dated November 15, 1993 which appear on pages 45 and 66.
PSAudit
Member of Price Waterhouse
Pradeep Narain
Paris, France
December 17, 1993
46
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
RECONCILED TO REFLECT U.S. GAAP
<TABLE>
<CAPTION>
Year ended September 30,
---------------------------
1993 1992 1991
-------- -------- --------
(FF in millions,
except per share data)
<S> <C> <C> <C>
Revenues........................................... 5,725 8,463 6,201
Costs and expenses................................. 6,190 7,984 6,215
Depreciation and amortization...................... 239 316 --
General and administrative expenses................ 1,113 845 --
-------- ------- -------
Operating Loss..................................... (1,817) (682) (14)
Net interest income................................ 104 234 406
Exceptional income (expense)....................... (3,624) 109 4
-------- ------- -------
Income (Loss) Before Income Taxes.................. (5,337) (339) 396
Income taxes....................................... -- 151 (147)
-------- ------- -------
Net income (loss) on French GAAP basis............. (5,337) (188) 249
-------- ------- -------
U.S. GAAP Adjustments:
Lease-related adjustments......................... (794) (350) --
Pre-opening costs................................. -- (125) --
Other............................................. (32) (36) 17
Reversal of cumulative effect of accounting
change........................................... 3,213 -- --
-------- ------- -------
Income (Loss) Before Cumulative Effect of
Accounting Change................................. (2,950) (699) 266
Cumulative effect of change in accounting method
for pre-opening and start-up costs................ (3,177) -- --
-------- ------- -------
Net Income (Loss) on a U.S. GAAP Basis............. (6,127) (699) 266
======== ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
47
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
RECONCILED TO REFLECT U.S. GAAP
<TABLE>
<CAPTION>
Year ended September 30,
----------------------------
1993 1992 1991
-------- -------- --------
(FF in millions,
except per share data)
<S> <C> <C> <C>
Earnings (Loss) Per Share Before Cumulative Effect
of Accounting Change............................. (17.35) (4.11) 1.56
Cumulative effect of change in accounting method
for pre-opening and start-up costs............... (18.69) -- --
-------- -------- -------
Earnings (Loss) Per Share......................... (36.04) (4.11) 1.56
======== ======== =======
Average Number of Common Shares Outstanding (in
millions)........................................ 170 170 170
======== ======== =======
Pro Forma Amounts Assuming the New Accounting
Method for Pre-opening and Start-up Costs is
Applied Retroactively
Net Loss......................................... (2,950) (2,255) (489)
======== ======== =======
Loss Per Share................................... (17.35) (13.26) (2.88)
======== ======== =======
</TABLE>
See Notes to Consolidated Financial Statements
48
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
RECONCILED TO REFLECT U.S. GAAP
<TABLE>
<CAPTION>
SEPTEMBER 30, September 30,
----------------------- -----------------------
1993 1992
----------------------- -----------------------
U.S. U.S.
FRENCH GAAP U.S. French GAAP U.S.
GAAP ADJUSTED GAAP GAAP Adjusted GAAP
------ -------- ------ ------ -------- ------
(FF in millions)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and short-term
investments................ 1,204 -- 1,204 2,286 -- 2,286
Receivables................. 6,502 (4,975) 1,527 6,277 (4,087) 2,190
Inventories................. 221 -- 221 387 -- 387
Theme parks, resorts and
other property, at cost
and and secondary
infrastructure............ 1,274 1,767 3,041 1,349 236 1,585
Attractions, buildings and
equipment................. 2,725 15,275 18,000 2,605 15,988 18,593
Accumulated depreciation... (378) (1,034) (1,412) (175) (276) (451)
------ ------ ------ ------ ------ ------
3,621 16,008 19,629 3,779 15,948 19,727
Projects in progress....... 1,490 -- 1,490 1,009 -- 1,009
------ ------ ------ ------ ------ ------
5,111 16,008 21,119 4,788 15,948 20,736
Intangible assets, net...... 173 14 187 1,491 -- 1,491
Deferred charges............ 510 303 813 2,001 289 2,290
------ ------ ------ ------ ------ ------
13,721 11,350 25,071 17,230 12,150 29,380
====== ====== ====== ====== ====== ======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable and other
accrued liabilities........ 3,926 (238) 3,688 3,981 (178) 3,803
Borrowings.................. 8,278 12,721 20,999 6,222 12,671 18,893
Stockholders' equity
Common stock............... 6,580 -- 6,580 6,580 -- 6,580
Retained earnings
(deficit)................. (5,063) (1,133) (6,196) 447 (343) 104
------ ------ ------ ------ ------ ------
1,517 (1,133) 384 7,027 (343) 6,684
------ ------ ------ ------ ------ ------
13,721 11,350 25,071 17,230 12,150 29,380
====== ====== ====== ====== ====== ======
</TABLE>
See Notes to Consolidated Financial Statements
49
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended September 30,
----------------------------
1993 1992 1991
-------- -------- --------
(FF in millions)
<S> <C> <C> <C>
Cash flow from (used in)
operating activities..... (716) 1,228 1,984
-------- -------- --------
Cash flow used in
investing activities
Intangible assets........ 16 1,607 54
Tangible assets.......... 534 2,187 1,464
Increase in deferred
charges................. 424 345 654
Investment in initial
inventories............. -- 345 41
-------- -------- --------
Cash flow used in
investing activities..... 974 4,484 2,213
-------- -------- --------
Cash flow from (used in)
financing activities
Long-term borrowings..... 2,016 1,949 4,226
Long-term loans to
financing companies..... (1,235) (2,423) (1,566)
Cash dividends........... (173) -- --
-------- -------- --------
Cash flow from (used in)
financing activities..... 608 (474) 2,660
-------- -------- --------
Change in Cash and Cash
Equivalents.............. (1,082) (3,730) 2,431
Cash and Cash Equivalents,
Beginning of Year........ 2,286 6,016 3,585
-------- -------- --------
Cash and Cash Equivalents,
End of Year.............. 1,204 2,286 6,016
======== ======== ========
<CAPTION>
The difference between Net Income as shown on the Consolidated Statement of
Income and Cash Provided By Operations is explained as follows.
<S> <C> <C> <C>
Net income (loss)......... (5,337) (188) 249
Cumulative effect of
accounting change....... 3,213 -- --
Deferred income tax
provision (benefit)..... -- (151) 147
Depreciation and
amortization............ 227 363 48
Amortization of debt
issue costs............. 12 13 13
Bond redemption premium.. 40 47 --
Changes in
Receivables............. 996 1,540 (1,482)
Accounts payable and
other accrued
liabilities............ 25 (396) 2,422
Other................... 108 -- 587
-------- -------- --------
Cash flow from (used in)
operating activities..... (716) 1,228 1,984
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
50
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
Euro Disney S.C.A. (the "Company") and its wholly owned subsidiaries
(collectively, the "Group") commenced operations on April 12, 1992, with the
official opening of the Euro Disney Resort (the "Opening"). The Group operates
the Euro Disney Resort which includes the Euro Disneyland theme park (the
"Theme Park"), six hotels, the Festival Disney entertainment center, the Davy
Crockett Ranch and a golf course (collectively, the "Resorts") at Marne-la-
Vallee, France. In addition, the Group manages the real estate development and
expansion of the related infrastructure of the property. The Group owns the
Disneyland Hotel, ranch, golf course and land for the hotels and leases the
Theme Park and Phase 1B facilities from the Financing Companies (see terms
defined below).
The Company, a publicly held French company, is owned 49% by EDL Holding
Company and managed by Euro Disney S.A. (the Company's Gerant), both wholly-
owned, indirect subsidiaries of The Walt Disney Company.
Entities included in the consolidated financial statements and their primary
operations/activities are as follows:
<TABLE>
<CAPTION>
COMPANY PRIMARY OPERATING ACTIVITY
------- --------------------------
<C> <S>
Euro Disney S.C.A. Operator of the Euro Disneyland Theme Park,
Disneyland Hotel, Davy Crockett Ranch and
Euro Disney golf course, and
manager of real estate development
EDL Hotels S.C.A. Operator of the Phase 1B hotels and Festival
Disney entertainment center
Centre de Divertissements S.A. Special purpose leasing companies, all
Newport Bay Club S.A. wholly owned subsidiaries of EDL Hotels
Cheyenne Hotel S.A. S.C.A., which were created in connection
Hotel New York S.A. with the leasing and financing of the Phase
Sequoia Lodge S.A. 1B Facilities
Hotel Santa Fe S.A.
EDL Services S.A. Management company of the Phase 1B Financing
Companies
EDL Hotels Participations S.A. General Partner of EDL Hotels S.C.A., ED
Resort S.C.A., ED Resort Services S.C.A.
Euro Disney Vacances S.A. Tour operator that sells holiday packages to
the Euro Disney Resort, principally to
guests from Germany, Italy and The Nether-
lands
Euro Disney Vacaciones S.A.* Wholly owned subsidiary of Euro Disney
Vacances S.A., functioning as a tour
operator in Spain
Euro Disney Finances S.A.* Companies created for anticipated Phase II
ED Resort S.C.A.* financing (see below)
ED Resort Services S.A.*
ED Resort Services S.C.A.*
S.E.T.E.M.O. Imagineering Planning and construction company for the
S.A.R.L.* anticipated second theme park
Debit de Tabac S.N.C.+ Distributor of tobacco at Festival Disney
</TABLE>
- --------
* Created in 1992
+ Created in 1993
51
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
The Group has various arrangements with Euro Disneyland S.N.C. for the
financing of Phase 1A, and with the six companies (S.N.C.'s) that were
established for the financing of Phase 1B of the Euro Disney Resort (the
"Phase 1B Financing Companies"), as described below. The Group has no
ownership interest in these S.N.C.'s. Reference to the "Financing Companies"
includes Euro Disneyland S.N.C. and the Phase 1B Financing Companies.
PHASE I FINANCING
Phase 1A
In November 1989, various agreements were signed between the Company and
Euro Disneyland S.N.C. for the development and financing of the Theme Park.
Pursuant to a sale-leaseback agreement, the assets of the Theme Park were sold
by the Company to Euro Disneyland S.N.C. and are being leased back to the
Company.
Phase 1B
In March 1991, various agreements were signed for the development and
financing of five hotels and the entertainment center (the "Phase 1B
Facilities"). Pursuant to sale-leaseback agreements, the Phase 1B Facilities
were sold by the Company to the Phase 1B Financing Companies and are being
leased back indirectly through special purpose leasing companies to the
operator, EDL Hotels S.C.A.
PHASE II DEVELOPMENT
The second development phase of the Euro Disney Resort primarily consists of
a second theme park, Disney MGM Studio Europe ("DMSE"). In view of its
operating results and the overall economic environment, the Company decided in
fiscal year 1993 to delay its expansion plans, for the time being.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The Group's consolidated financial statements are prepared in conformity
with accounting principles generally accepted in France. In order to comply
with generally accepted accounting principles in the United States, certain
adjustments (particularly those related to the assets of the Theme Park and
the Phase 1B Facilities, which are being financed under leaseback arrangements
and are accounted for as operating leases in accordance with French accounting
principles rather than capitalized) and supplemental disclosures to the
consolidated financial statements have been made, as described in Note 28.
LIQUIDITY
The Group, its principal lenders and The Walt Disney Company are exploring a
financial restructuring for Euro Disney. Throughout fiscal year 1994, the
Group will require significant funding. Should the financial restructuring not
be completed, the Group would face a liquidity problem. The Walt Disney
Company has agreed to help fund the Group for a limited period, to afford Euro
Disney time to attempt a financial restructuring by spring 1994.
CHANGE IN ACCOUNTING METHOD FOR PRE-OPENING AND START-UP COSTS
In September 1993, the Group changed its method of accounting for pre-
opening and start-up costs. Effective October 1, 1992, project-related pre-
opening and start-up costs are expensed as incurred. In the past, such costs
were capitalized and amortized on a straight line basis over 5 or 20 years.
52
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
The Group's new management has adopted revised business strategies and
believes that the new accounting method is more appropriate in this context.
In addition, it corresponds to a similar change in accounting method recently
adopted by The Walt Disney Company.
The cumulative effect of the change in method as of October 1, 1992, was FF
3,213 million and has been included as exceptional expense in 1993. The impact
of the change for the year ended September 30, 1993 on operating income was to
reduce the loss before exceptional income by FF 338 million. Assuming the
change was applied retroactively to prior years, the 1992 consolidated net
loss would have increased by FF 1,705 million and the 1991 consolidated net
income would have decreased by FF 755 million. These include pre-opening and
start-up costs of FF 1,893 million capitalized in 1992 and FF 755 million
capitalized in 1991 offset by FF 188 million of pre-opening and start-up costs
amortization recorded in 1992.
FIXED ASSETS
Intangible assets are carried at cost. Amortization is computed on the
straight-line method over two to ten years.
Tangible fixed assets are carried at cost. Depreciation is computed on the
straight-line method based upon estimated useful lives, as follows:
<TABLE>
<S> <C>
. Buildings................................................ 20 to 33 years
. Infrastructure and leasehold improvements................ 10 to 33 years
. Furniture, fixtures and equipment........................ 4 to 10 years
</TABLE>
Interest costs incurred for the construction of tangible fixed assets and
the acquisition and development of land are capitalized. Projects under
development are capitalized to the extent technical and economic feasibility
has been established.
DEBT ISSUE COSTS
Direct costs of the issuance of debt are capitalized and amortized on a
straight-line basis over the life of the debt. Upon conversion of convertible
debt, the pro-rata amount of unamortized issue costs is offset against the
share premium arising from the issuance of the related shares.
INVENTORIES
Inventories are stated at the lower of cost or market value, on a weighted-
average cost basis.
SHORT-TERM INVESTMENTS AND CASH
Cash and cash equivalents consist of cash on hand and short-term investments
with original maturities of three months or less. Short-term investments are
stated at the lower of cost or market value.
INCOME TAXES
The Group files a consolidated tax return. The Group provides for deferred
income taxes on temporary differences between financial and tax reporting. The
Group uses the liability method under which deferred taxes are calculated
applying legislated tax rates expected to be in effect when the temporary
differences will reverse.
PARTICIPANT REVENUE
Fees billed to companies ("Participants") which enter into long-term
marketing agreements with the Group for the sponsorship of attractions are
recognized as revenue over the period of the applicable agreements commencing
with the opening of the attraction. Fees billed to Participants prior to
Opening were recognized as revenue over fiscal years 1992 and 1993, reflecting
the high marketing costs incurred during this period.
53
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
CONVERTIBLE BOND REDEMPTION PREMIUM
The liability for the convertible bond redemption premium is provided for on
a straight-line basis over the term of the bonds, depending on the probability
that the premium will be paid.
FINANCIAL INSTRUMENTS
In the normal course of business, the Group employs a variety of off-
balance-sheet financial instruments to reduce its exposure to fluctuations in
interest and foreign currency exchange rates, including interest rate swap
agreements, forward rate agreements, options on swaps, foreign currency
forward exchange contracts and foreign exchange options. The Group designates
interest rate instruments as hedges of debt and lease obligations, 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 foreign
currency instruments are deferred and recognized in income as offsets of gains
and losses resulting from underlying hedged transactions.
The Group continually monitors its positions with, and the credit quality
of, major international financial institutions which are counterparties to its
off-balance-sheet financial instruments and does not anticipate non-
performance.
FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currencies are recorded in French francs
at the exchange rate prevailing at the month-end prior to the transaction
date. Receivables and liabilities denominated in foreign currencies are stated
at their equivalent value in French francs at the exchange rate prevailing at
the balance sheet date. Net exchange gains or losses resulting from the
translation of assets and liabilities in foreign currencies at the balance
sheet date are deferred as translation adjustments. Provision is made for all
unrealized exchange losses to the extent not hedged.
RECLASSIFICATIONS
Certain reclassifications to the 1992 and 1991 comparative amounts have been
made to conform to the 1993 presentation of the consolidated financial
statements.
2. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1993 1992
-------- ---------
(FF in millions)
<S> <C> <C>
Start-up costs....................................... -- 1,458
Software and other................................... 256 240
------- ---------
256 1,698
Accumulated amortization............................. (83) (207)
------- ---------
173 1,491
======= =========
</TABLE>
Between January 1, 1992 and Opening, the Group incurred start-up costs for
the marketing of the Euro Disney Resort, recruiting and training of new cast
members hired for operations, as well as testing of facilities and computer
systems. These costs were capitalized and amortized over 5 years. As described
in Note 1, the Group changed its method of accounting for start-up costs in
fiscal year 1993. Effective October 1, 1992, start-up costs are expensed as
incurred.
54
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Balance at
beginning Balance at
of year Additions Deductions end of year
---------- --------- ---------- -----------
(FF in millions)
<S> <C> <C> <C> <C>
1993
Land and infrastructure............ 1,349 278 (353) 1,274
Buildings.......................... 1,832 389 (482) 1,739
Leasehold improvements, furniture
and fixtures...................... 374 226 (3) 597
Other.............................. 399 28 (38) 389
Construction in progress........... 1,009 1,103 (622) 1,490
----- ----- ------ -----
4,963 2,024 (1,498) 5,489
Accumulated depreciation........... (175) (227) 24 (378)
----- ----- ------ -----
4,788 1,797 (1,474) 5,111
===== ===== ====== =====
1992
Land and infrastructure............ 883 466 -- 1,349
Buildings.......................... -- 1,837 (5) 1,832
Leasehold improvements, furniture
and fixtures...................... 212 168 (6) 374
Other.............................. 200 201 (2) 399
Construction in progress........... 1,481 1,290 (1,762) 1,009
----- ----- ------ -----
2,776 3,962 (1,775) 4,963
Accumulated depreciation........... (54) (121) -- (175)
----- ----- ------ -----
2,722 3,841 (1,775) 4,788
===== ===== ====== =====
</TABLE>
Fixed assets include capitalized interest costs of FF 314 million and FF 212
million, at September 30, 1993 and 1992, respectively. At September 30, 1993,
construction in progress primarily represents Disney MGM Studio Europe costs
(FF 1,120 million) and Euro Disneyland park expansion construction costs (FF
208 million). At September 30, 1992, construction in progress included Phase
II planning and design costs (FF 848 million) and the Euro Disney golf course
(FF 126 million) which opened October 3, 1992.
Following a revision of the development agreement between the Company and
Euro Disneyland S.N.C., FF 781 million of assets, capitalized in the Company's
records at September 30, 1992, were sold at cost to Euro Disneyland S.N.C. in
July 1993.
4. LONG-TERM RECEIVABLES
Included in receivables are the following amounts:
<TABLE>
<CAPTION>
1993 1992
----- -----
(FF in
millions)
<S> <C> <C>
Euro Disneyland S.N.C.(a)..................................... 3,849 2,508
Phase 1B Financing Companies(b)............................... 1,238 1,468
VAT--long-term receivable(c).................................. 128 --
Deposits...................................................... 8 12
----- -----
5,223 3,988
===== =====
</TABLE>
- --------
(a) Euro Disneyland S.N.C.
Pursuant to the Theme Park financing agreements, the Group has provided
long-term subordinated loans of FF 3.8 billion, including FF 1.6 billion
during 1993, to Euro Disneyland S.N.C. bearing interest at a rate of 3-
month PIBOR (Paris Interbank Offering Rate) which, in 1993, averaged
10.34%. The loans will be repaid during the 20-year Theme Park lease period
and are pledged as a guarantee for future lease payments. At September 30,
1992, accrued interest receivable on the loans was FF 308 million and is
included above.
55
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. LONG-TERM RECEIVABLES--(CONTINUED)
(b) Phase 1B Financing Companies
Pursuant to the Phase 1B financing agreements, the Group has provided long-
term loans of FF 1.45 billion, to the Phase 1B Financing Companies, bearing
interest at 11% from the contractual completion date of the Phase 1B
Facilities. FF 228 million was repaid during the year-ended September 30,
1993. The remaining loans are due over approximately 9 years, beginning in
2001. At September 30, 1993 and 1992, accrued interest receivable on these
loans was FF 16 million and FF 18 million, respectively, and is included
above.
(c) V.A.T.--Long-term Receivable
Following a change in the tax law relating to the Value-Added Tax, the
Group has recorded a long-term receivable due from the tax authorities.
This receivable is due over a period not exceeding 20 years and bears
interest at a maximum rate of 4.5%.
5. INVENTORIES
<TABLE>
<CAPTION>
1993 1992
-------- --------
(FF in millions)
<S> <C> <C>
Merchandise, food and beverage...................... 195 293
Supplies............................................ 99 109
-------- --------
294 402
Allowance........................................... (73) (15)
-------- --------
221 387
======== ========
</TABLE>
6. ACCOUNTS RECEIVABLE FROM FINANCING COMPANIES
Included in receivables at September 30, 1992, was FF 585 million,
representing amounts owed to the Group by the Financing Companies for
construction sales. These amounts were paid in fiscal year 1993.
7. TRADE ACCOUNTS RECEIVABLE
Included in receivables at September 30, 1993 and 1992, are trade accounts
receivable of FF 313 million and FF 456 million, respectively, which are due
primarily from tour operators, agents and travel groups, arising from sales of
theme park entrance tickets, hotel rooms and amenities, as well as billings for
participant fees. At September 30, 1993 and 1992, FF 34 million and FF 20
million, respectively, were provided for uncollectible accounts. All amounts
are due within one year.
8. OTHER ACCOUNTS RECEIVABLE
Included in receivables at September 30, 1993 and 1992, are other accounts
receivable of FF 966 million and FF 1,248 million, respectively. These amounts
are due within one year and consist primarily of recoverable value-added taxes
and advances to suppliers.
9. SHORT-TERM INVESTMENTS
Short-term investments include money market instruments and certificates of
deposit, carried at cost, which approximated market value at September 30, 1993
and 1992. At September 30, 1993 and 1992, FF 30 million and FF 60 million,
respectively was pledged pursuant to the Group's financing agreements as
guarantees for future construction payments, land acquisitions, and other
financial transactions.
56
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. DEFERRED CHARGES
<TABLE>
<CAPTION>
1993 1992
-------- ---------
(FF in millions)
<S> <C> <C>
Pre-opening costs(a).................................... -- 1,896
Financial contributions to public infrastructure(b)..... 394 --
Debt issue costs(c)..................................... 88 100
Foreign currency translation adjustments................ 28 5
------- ---------
510 2,001
======= =========
</TABLE>
- --------
(a) Costs incurred prior to January 1, 1992, to establish the organization and
operating structure of the Group, were deferred and amortized over 20
years. As described in Note 1, the Group changed its method of accounting
for pre-opening costs in fiscal year 1993. Effective October 1, 1992, pre-
opening costs are expensed as incurred.
(b) This primarily represents a payment of FF 232 million made by the Group to
the S.N.C.F. (Societe Nationale de Chemins de Fer Francais), the French
national railway company, as part of its financial commitment to the
construction of the T.G.V. (Train a Grande Vitesse) railway station
located within the Euro Disney Resort. This contribution will be amortized
over twenty years, commencing with the opening of the T.G.V. station
planned during fiscal year 1995. Other contributions to public
infrastructure, which are being amortized over 20 years, are stated net of
accumulated amortization of FF 8 million at September 30, 1993.
(c) Debt issue costs are stated net of accumulated amortization of FF 38
million and FF 26 million at September 30, 1993 and 1992, respectively.
11. STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Retained
Shares Share Share Earnings
(in thousands) Capital Premium (Deficit)
-------------- ------- ------- ---------
(FF in millions)
<S> <C> <C> <C> <C>
Balance at September 30, 1990... 170,000 1,700 4,884 389
Share offering costs............ -- -- (6) --
Net income...................... -- -- -- 249
Allocation to general partner... -- -- -- (2)
------- ----- ----- ------
Balance at September 30, 1991... 170,000 1,700 4,878 636
Conversion of 7,308 bonds....... 7 -- 2 --
Net loss........................ -- -- -- (188)
Allocation to general partner... -- -- -- (1)
------- ----- ----- ------
Balance at September 30, 1992... 170,007 1,700 4,880 447
Conversion of 904 bonds......... 1 -- -- --
Net loss........................ -- -- -- (5,337)
Dividends....................... -- -- -- (173)
------- ----- ----- ------
Balance at September 30, 1993... 170,008 1,700 4,880 (5,063)
======= ===== ===== ======
</TABLE>
Share capital consists of ordinary shares with a FF 10 par value. The numbers
of shares above represent the Company's authorized, issued and outstanding
shares, at the respective dates.
At September 30, 1993, the Company's retained earnings include a legal
reserve of FF 32 million, which is not available for distribution.
Dividends of FF 173 million were paid in February 1993 related to fiscal year
1992.
57
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. PROVISIONS FOR RISKS AND CHARGES
Included in accounts payable and other accrued liabilities at September 30,
1993 and 1992, are provisions and allowances of FF 601 million and FF 234
million, respectively. These amounts primarily include the estimated cost of
reorganization, including the implementation of a staff reduction program and
the cost of the consolidation of all staff at one site.
13. LONG-TERM BORROWINGS
<TABLE>
<CAPTION>
Interest
Rate 1993 1992
-------- ----- -----
(FF in
millions)
<S> <C> <C> <C>
Convertible bonds(a)................................. 6.75% 4,327 4,343
Caisse des Depots et Consignations loan(b)........... 7.85% 1,442 1,442
Phase 1A credit facility(c).......................... 9.75% 2,071 --
Phase 1B credit facility(d).......................... 11.34% 403 402
Credit Foncier de France(e).......................... 10.04% 35 35
----- -----
8,278 6,222
===== =====
</TABLE>
At September 30, 1993 and 1992, total long-term borrowings include accrued
interest of FF 360 million and FF 369 million, respectively.
(a) Convertible bonds
On July 15, 1991, the Company issued 28,350,000 unsecured convertible bonds
in the aggregate principal amount of FF 3,969 million, at par of FF 140.
Interest is payable annually beginning October 1, 1992. At September 30,
1993 and 1992, the above amounts include accrued interest of FF 272 million
and FF 328 million, respectively. Each bond is convertible into one share
of the Company. Through September 30, 1993, 8,212 bonds were converted. No
bonds were purchased and canceled by the Company during fiscal year 1993.
There were 28,341,788 bonds outstanding at September 30, 1993. Unless
previously converted, redeemed or purchased by the Company, the bonds will
be redeemed at 110% of their principal amount on October 1, 2001. FF 87
million and FF 47 million of the redemption premium was accrued and is
included in the accounts at September 30, 1993 and 1992, respectively.
(b) Caisse des Depots et Consignations loan
In May 1992, the Company borrowed FF 1,403 million from the Caisse des
Depots et Consignations (C.D.C.), of which 40% is senior debt and 60% is
"prets participatifs" (subordinated debt), maturing 20 years from the
drawing date. This loan bears interest at a weighted average rate of 7.85%.
The senior debt is secured by the underlying land of the Theme Park and
campground. The subordinated debt is unsecured. Principal repayments begin
six years from the drawing date.
(c) Phase 1A credit facility
In December 1992, Euro Disney S.C.A. borrowed FF 1,295 million pursuant to
a credit agreement in order to finance costs associated with the Phase 1A
facilities. This borrowing bears interest at PIBOR plus 1% for FF 1,025
million and 8.35% for FF 270 million. Principal repayments begin in 1998,
through 2006. In March 1993, Euro Disney S.C.A. borrowed FF 730 million
under the same credit agreement, bearing interest at PIBOR plus 1.1%.
Principal repayments begin in 1997 through 2006. The credit agreement
contains covenants by the Company relating primarily to the use of the
revenue proceeds, dividend payment restrictions, additional indebtedness,
asset and revenue pledges, and other provisions including an interest
coverage ratio.
(d) Phase 1B credit facility
Credit agreements entered into by EDL Hotels S.C.A. in 1991 provide for
floating-rate borrowings of up to FF 600 million, secured by Phase 1B
assets. At September 30, 1993, FF 400 million was outstanding bearing
interest at 2 or 3-month PIBOR plus 1%. Principal repayments commence in
1995 through 2009. The credit agreements contain covenants by EDL Hotels
S.C.A. relating primarily to additional indebtedness and asset and revenue
pledges.
(e) Credit Foncier de France
In June 1992, the Company borrowed FF 35 million from the Credit Foncier de
France for the construction of cast member housing, secured by the related
assets, bearing interest at a rate of 3-month PIBOR minus 0.3%. Principal
repayments begin in 1995 through 2017.
58
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. LONG-TERM BORROWINGS--(CONTINUED)
Borrowings have the following scheduled maturities:
<TABLE>
<CAPTION>
(FF in millions)
<S> <C>
1 to 5 years............ 364
More than 5 years....... 7,467
</TABLE>
Fixed assets with a book value of FF 1,785 million at September 30, 1993, are
mortgaged as security under Phase 1A, Phase 1B, and other loan agreements.
14. PAYABLE TO RELATED COMPANIES
Included in accounts payable and other accrued liabilities are the following
amounts:
<TABLE>
<CAPTION>
1993 1992
--------- --------
(FF in millions)
<S> <C> <C>
Euro Disney S.A.(a).................................... 990 356
The Walt Disney Company (Netherlands) B.V.(b).......... 83 148
Financing Companies(c)................................. 444 283
Other.................................................. 8 9
--------- -------
1,525 796
========= =======
</TABLE>
(a) Represents amounts incured on behalf of the Group, primarily for
construction and reimbursement of operating costs. In 1993 and 1992, Euro
Disney S.A. incurred reimbursable costs of FF 1.48 billion and FF 1.76
billion, respectively.
(b) Represents royalties payable to The Walt Disney Company (Netherlands) B.V.
pursuant to a license agreement governing intellectual property rights
owned by The Walt Disney Company.
(c) Represents rent due pursuant to the Theme Park and Phase 1B Facilities
leases (see Note 24).
All amounts are due within one year.
15. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Included in accounts payable and other accrued liabilities are the following
amounts:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(FF in millions)
<S> <C> <C>
Suppliers............................................... 1,046 1,779
Payroll and employee benefits........................... 249 326
Value-added taxes payable............................... 113 279
Other................................................... 232 251
-------- --------
1,640 2,635
======== ========
</TABLE>
All amounts are due within one year.
16. DEFERRED REVENUES
Included in accounts payable and other accrued liabilities are deferred
revenues of FF 160 million and FF 316 million as of September 30, 1993 and
1992, respectively. These consist primarily of land grants and a gain on sale
of assets, recognized as income over the term which the assets are leased back
to the Group.
17. CONSTRUCTION SALES AND RELATED SERVICES
During the years ended September 30, 1993 and 1992, assets of the Theme Park
were sold to Euro Disneyland S.N.C. for FF 781 million and FF 3 billion,
respectively. The Phase 1B Facilities were sold to the Phase 1B Financing
Companies in 1992 for FF 1.64 billion.
59
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. EXCEPTIONAL INCOME AND LOSS
<TABLE>
<CAPTION>
1993 1992 1991
------ ---- ----
(FF in millions)
<S> <C> <C> <C>
Cumulative effect of the change in accounting(a)....... (3,213) -- --
Provisions for risks and charges(b).................... (464) -- --
Base management fee deferral(c)........................ 145 113 --
Other.................................................. (92) (4) 4
------ --- ---
(3,624) 109 4
====== === ===
</TABLE>
(a) As described in Note 1, this represents the cumulative effect of the
change in accounting for pre-opening and start-up costs as of October 1,
1992.
(b) This primarily represents reorganization costs.
(c) The Company is committed to pay Euro Disney S.A. an annual base
management fee for services rendered, equal to 3% of the Group's annual
total net revenues as defined in the Company's Charter. For the years
ended September 30, 1993 and 1992, this fee, included in direct operating
expenses, was FF 145 million and FF 113 million, respectively. Euro
Disney S.A. has agreed to defer its base management fees for 1992 and
1993. Payment of the deferred amount will not commence before 1994 and
will be contingent upon the Group achieving profitability. This amount,
therefore, represents a contingent liability which may be payable in
future years.
19. INCOME TAXES
In 1992, the deferred tax liability of FF 151 million which was provided in
1991 was eliminated, as a credit to income tax expense, to reflect the
expected future benefits of existing tax loss carryforwards. At September 30,
1993, unused and unrecognized tax loss carryforwards were FF 5.5 billion. Most
of these carryforwards expire between 1994 and 1998.
20. BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Loss from
Revenues operations Total assets
----------- ------------ -------------
1993 1992 1993 1992 1993 1992
----- ----- ------ ---- ------ ------
(FF in millions)
<S> <C> <C> <C> <C> <C> <C>
Resort Operations....................... 4,874 3,819 (1,822) (682) 11,822 11,256
Construction............................ 851 4,644 5 -- 1,899 5,974
----- ----- ------ ---- ------ ------
5,725 8,463 (1,817) (682) 13,721 17,230
===== ===== ====== ==== ====== ======
</TABLE>
Resort operations comprise the operating activity of the Theme Park, six
hotels, entertainment center, ranch and golf course. Construction includes the
development and financing of capital assets for sale or use.
21. EXPOSURE TO INTEREST RATE RISK
Since the Group's lease payments primarily correspond to the Financing
Companies' related debt service payments, variation in the interest rates of
the floating rate elements of that debt, which were FF 9.6 billion and FF 8.3
billion at September 30, 1993 and 1992, respectively, impact lease payments.
At September 30, 1993 and 1992, the Group's exposure to the interest rate risk
from borrowings and lease payments was partially hedged by interest rate swaps
expiring through July 1996 of FF 5.3 billion and FF 1.1 billion, respectively,
and Forward Rate Agreements and other hedging instruments expiring through
June 1999 of FF 3.7 billion and FF 1 billion, respectively.
Under interest rate swaps, the Group pays interest at a weighted average
rate of 7.62% which includes fixed and LIBOR based variable rates, and
receives interest at PIBOR based rates. Under Forward Rate Agreements, the
Group pays interest at a weighted average rate of 7.29% and receives PIBOR
based variable rates.
60
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. EXPOSURE TO CURRENCY RISK
The Group's policy is to protect itself to the extent practical from the
effects of fluctuations in the foreign exchange markets. The Group's exposure
to foreign currency risk relates primarily to variations in the value of the
U.S. dollar, as certain liabilities and commitments to a wholly-owned
subsidiary of The Walt Disney Company are denominated in this currency.
At September 30, 1993 and 1992, the Group had FF 1,615 million and FF 734
million, respectively of foreign currency hedge contracts outstanding,
consisting principally of forward exchange contracts and written options
expiring primarily between October 1993 and August 1995.
23. COMMITMENTS AND CONTINGENCIES
There are various legal proceedings and claims against the Group related to
construction and other activities incident to the conduct of its business.
Management does not expect the Group to suffer any material liability by
reason of such actions.
The Company is jointly liable for all Euro Disneyland S.N.C. obligations
under the Phase 1A credit agreement with a syndicate of international banks
consisting of a main facility of FF 4.35 billion. At September 30, 1993, Euro
Disneyland S.N.C. had drawn FF 4.35 billion on the main facility.
EDL Hotels S.C.A. has guaranteed all of the obligations of the Phase 1B
Financing Companies under the Phase 1B senior credit facility with a syndicate
of banks, consisting of a main facility of FF 2.3 billion. At September 30,
1993, the Phase 1B Financing Companies had drawn FF 2.29 billion on the main
facility.
24. LEASED ASSETS
The Group has leaseback agreements with the Financing Companies for the
Theme Park and the Phase 1B Facilities. In conformity with French accounting
principles, the Group has elected not to capitalize these leases and to
account for them as operating leases. The rental expense under these leases
approximates the Financing Companies' related debt service payments, which
fluctuate with variable interest rate changes and principal repayments.
The leases commenced April 12, 1992 and end when the underlying borrowings
and interest are repaid in full by the Financing Companies or, at the latest,
December 31, 2030, for the Theme Park and February 5, 2011, for the Phase 1B
Facilities.
Rental expense was FF 1,712 million and FF 716 million in 1993 and 1992,
respectively.
Future minimum rental commitments under the capital leases are as follows:
<TABLE>
<CAPTION>
Phase 1B
Theme Park(/1/) Facilities(/1/) Total
--------------- --------------- ------
(FF in millions)
<S> <C> <C> <C>
1994............................... 1,036 372 1,408
1995............................... 1,019 378 1,397
1996............................... 1,024 396 1,420
1997............................... 1,044 413 1,457
1998............................... 1,175 430 1,605
Beyond 1998........................ 19,765 7,219 26,984
------ ----- ------
Total.............................. 25,063 9,208 34,271
====== ===== ======
Purchase Option.................... 1 1 2
====== ===== ======
</TABLE>
- --------
(/1/This)information is not analyzed by asset category as the leases comprise
the Theme Park and Phase 1B Facilities as a whole and not their specific
assets.
Rental commitments are based on an estimated interest rate of 7%.
61
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24. LEASED ASSETS--(CONTINUED)
As operating leases, the cost and depreciation of the assets and underlying
borrowings are not included in the Group's consolidated financial statements.
These amounts, which are carried by the Financing Companies, are summarized as
follows:
<TABLE>
<CAPTION>
Accumulated Net Book Value at Estimated
Cost Depreciation September 30, 1993 Useful Lives
------ ------------ ------------------ --------------
(FF in millions)
<S> <C> <C> <C> <C>
Land and infrastructure. 1,839 (130) 1,709 10 to 25 years
Buildings, rides and at-
tractions.............. 12,675 (900) 11,775 25 to 33 years
Furniture, fixtures &
equipment.............. 909 (105) 804 4 to 10 years
------ ------ ------
15,423 (1,135) 14,288
====== ====== ======
</TABLE>
Depreciation is computed on the straight-line method based upon estimated
useful lives. Depreciation expense was FF 751 million and FF 384 million in
1993 and 1992, respectively.
At September 30, 1993, borrowings and accrued interest specific to these
assets were FF 17.7 billion, including FF 5.1 billion due to the Group.
The Group has other operating leases, primarily for office space, office and
computer equipment and vehicles, for which total rental expense was FF 208
million, FF 152 million and FF 51 million in 1993, 1992 and 1991,
respectively. Future minimum rental commitments under non-cancelable operating
leases are as follows:
<TABLE>
<CAPTION>
(FF in millions)
<S> <C>
1994.................... 90
1995.................... 71
1996.................... 55
1997.................... 47
1998.................... 31
Thereafter.............. 36
</TABLE>
25. EMPLOYEES
At September 30, the number of cast members employed by the Group was:
<TABLE>
<CAPTION>
1993 1992
------ ------
<S> <C> <C>
Cadre..................... 2,016 1,810
Non-Cadre................. 9,849 10,678
------ ------
11,865 12,488
====== ======
</TABLE>
Total employee costs for 1993, 1992 and 1991 were FF 2,108 million, FF 1,971
million and FF 341 million, respectively.
PENSION AND RETIREMENT BENEFITS
All cast members participate in pension plans in accordance with French laws
and regulations. Cadre cast members also participate in a supplemental defined
contribution pension plan. Contributions to all plans, which are shared by the
cast member and the Group, are based on gross wages and are expensed as
incurred. The Group has no future commitments with respect to these plans.
A retirement indemnity is paid to cast members who retire from the Group
after completing a defined number of service years, in an amount not to exceed
1.5 months of gross wages. No provision in this respect was recorded in 1993
or 1992 as any amounts eventually due are considered to be insignificant.
26. DIRECTORS' FEES
In 1993, 1992 and 1991, fees paid to members of the Company's Supervisory
Board were FF 1,000,000, FF 925,000 and FF 775,000, respectively.
62
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
27. SUBSEQUENT EVENT
On October 25, 1993, Management submitted proposals for the suppression of
950 positions in mainly administrative and management functions to the
employees' representatives committee. Discussions surrounding these proposals
are expected to continue until December 1993. The costs related to this
reorganization have been provided for in provisions for risks and charges, as
mentioned in Note 12.
28. SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES ADOPTED BY THE
COMPANY AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE U.S. AND
SUPPLEMENTAL DISCLOSURES
I. RECONCILIATION TO U.S. GAAP
As explained in the summary of significant accounting policies, the
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in France ("French GAAP"). These
accounting principles differ in certain significant respects from those
generally accepted in the United States ("U.S. GAAP") and therefore, the
consolidated financial statements have been adjusted to reflect U.S. GAAP.
The following is a summary of the adjustments to the consolidated financial
statements for years ended September 30, 1993, 1992 and 1991 which would be
required if U.S. GAAP had been applied instead of French GAAP.
A. LEASE-RELATED ADJUSTMENTS
The Theme Park and Phase 1B Facilities are leased to the Group by the
Financing Companies. The Group has elected not to capitalize these
leases and is accounting for them as operating leases. Under U.S. GAAP,
the underlying assets and liabilities and related depreciation and
interest expense are reflected in the Group's financial statements.
B. PRE-OPENING COSTS
Prior to October 1, 1992, the Group amortized certain pre-opening costs
over a twenty-year life. Under U.S. GAAP, such costs were subject to
five-year amortization, resulting in an adjustment to amortization
expense for U.S. GAAP purposes.
II. CHANGE IN ACCOUNTING FOR PRE-OPENING COSTS
Effective October 1, 1992, the accounting method under U.S. GAAP and French
GAAP was changed to reflect a preferable method for project-related pre-
opening and start-up costs, which is to expense these costs as they are
incurred. The cumulative effect of the change on prior years under U.S. GAAP
was FF 3,177 million and has been included in the net loss for the year ended
September 30, 1993. The effect of the change in accounting method was to
reduce the U.S. GAAP loss before the cumulative effect of the change for the
year ended September 30, 1993, by FF 646 million.
Pro forma amounts on the face of the income statement reflect the effect of
retroactively expensing pre-opening costs.
III. THEME PARK AND RESORT ASSETS
Under French GAAP, the Theme Park and Resort assets are depreciated under
the straight-line method over their useful lives of two to thirty-three years.
For U.S. GAAP, the equivalent useful lives range between two and forty years.
IV. CONSOLIDATED STATEMENTS OF CASH FLOWS
The information in the following Consolidated Statements of Cash Flows is
presented in accordance with the requirements of Statement of Financial
Accounting Standards No. 95 ("SFAS 95") and is based on U.S. GAAP adjusted
amounts.
63
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
28. SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES ADOPTED BY THE
COMPANY AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE U.S. AND
SUPPLEMENTAL DISCLOSURES--(CONTINUED)
CONSOLIDATED STATEMENT OF CASH FLOWS
IN ACCORDANCE WITH U.S. GAAP
<TABLE>
<CAPTION>
Year ended September
30,
----------------------
1993 1992 1991
------ ------ ------
(FF in millions)
<S> <C> <C> <C>
Cash Provided By (Used In) Operations.................. (1,177) 47 1,245
------ ------ ------
INVESTING ACTIVITIES
Theme parks, resorts and other property, net.......... 1,344 7,573 7,783
Intangible assets..................................... 16 1,607 45
Other................................................. 438 727 792
------ ------ ------
1,798 9,907 8,620
------ ------ ------
FINANCING ACTIVITIES
Borrowings............................................ 2,066 6,130 9,806
Cash dividends........................................ (173) -- --
------ ------ ------
1,893 6,130 9,806
------ ------ ------
Increase (Decrease) in Cash and Cash Equivalents....... (1,082) (3,730) 2,431
Cash and Cash Equivalents, Beginning of Year........... 2,286 6,016 3,585
------ ------ ------
Cash and Cash Equivalents, End of Year................. 1,204 2,286 6,016
====== ====== ======
<CAPTION>
The difference between Net Income (Loss) as shown on the Consolidated
Statement of Income and Cash Provided By (Used In) Operations is explained as
follows:
<S> <C> <C> <C>
Income (Loss) Before Cumulative Effect of Accounting
Change................................................ (2,950) (699) 266
------ ------ ------
Cumulative Effect of Accounting Change................. (3,177) -- --
Charges to Income Not Requiring Cash Outlays
Deferred income taxes................................. -- (156) 156
Depreciation and amortization......................... 1,019 832 --
Changes in
Receivables........................................... 663 520 (1,450)
Intangible assets..................................... 1,316 -- --
Deferred charges...................................... 1,860 -- --
Accounts payable and other accrued liabilities........ (115) (557) 2,273
Other................................................. 207 107 --
------ ------ ------
1,773 746 979
------ ------ ------
Cash Provided By (Used In) Operations.................. (1,177) 47 1,245
====== ====== ======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid......................................... 2,265 912 516
====== ====== ======
</TABLE>
V. DEFERRED TAXES
Deferred taxes at September 30, 1991, were based on U.S. GAAP and were
calculated at an effective tax rate of 37% on U.S. GAAP income. Deferred taxes
were reversed at September 30, 1992, and have not been reinstated since the
Group generated losses for both of the years ended September 30, 1992 and
1993.
64
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
28. SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES ADOPTED BY THE COMPANY
AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE U.S. AND SUPPLEMENTAL
DISCLOSURES--(CONTINUED)
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109 ("SFAS 109") Accounting for Income
Taxes. The standard changes the method of accounting for income taxes to an
asset and liability approach. The standard was adopted in 1993, retroactive to
October 1, 1992. Under SFAS 109, the Group's net operating loss carryforwards
generate deferred tax assets of FF 1.8 billion. The Group has established a
100% valuation allowance against these assets due to the uncertainty of
ultimate realization of tax benefits. The Group has net operating loss
carryforwards of FF 5.5 billion expiring through 1998.
VI. FINANCIAL INSTRUMENTS
At September 30, 1993, the estimated cost to the Group to terminate its
interest rate hedging instruments, taking into account current interest rates
and creditworthiness of counterparties, is FF 159 million. The estimated cost
to terminate the Group's FF 5.1 billion of hedging contracts providing for the
purchase and sale of foreign currencies, based upon quotes from brokers, is FF
77 million.
The fair values of the Group's short-term investments and convertible bonds
approximate carrying values based upon the short maturity of the instruments
and market quotes at September 30, 1993, respectively. In view of the Group's
operating results and potential liquidity problems if a financial restructuring
is not completed in 1994, it is not practicable to estimate the fair value of
borrowings that are not publicly traded at September 30, 1993.
VII. LONG-TERM DEBT
As noted earlier, the Group has elected not to capitalize the leases of the
Theme Park and the Phase 1B Facilities, but rather to account for them as
operating leases. Under U.S. GAAP, the leases would be capitalized. Set out
below is a schedule of the long-term debt of the Financing Companies relating
to the assets underlying these leases.
<TABLE>
<CAPTION>
September 30,
-------------------------------
Interest
Rate Maturity 1993 1992
-------- -------- ------ ------
(FF millions)
<S> <C> <C> <C> <C>
Bank loan(a)............................ 11.25% 2006 4,355 4,355
C.D.C. loan(b).......................... 7.85 2012 3,000 3,000
Bank loan (c)........................... 11.43 2009 2,290 2,250
Subordinated partners' advances(d)...... 10.34 2011 2,000 2,000
Partners' advances(e)................... 10.09 2011 800 800
------ ------
12,445 12,405
====== ======
</TABLE>
(a) Drawn against a facility of FF 4,500 million. Collateralized by a mortgage
on the Theme Park and Disneyland Hotel. The Company is a co-obligor on this
facility. Quarterly repayments commence in 1994.
(b) Loan consists of 40% senior debt and 60% subordinated debt. Senior debt is
collateralized by the land of the Theme Park and campground. Annual
repayments commence in 1995.
(c) Drawn against a facility of FF 2.3 billion from a syndicate of banks and
secured by the five Phase 1B hotels and entertainment center. Quarterly
repayments commence in 1995.
(d) Related to Phase 1A assets. Principal repayments commence in 2005.
(e) Senior debt related to Phase 1B assets collateralized by Phase 1B buildings
and fixtures. Principal repayments commence in 2003. Amount includes FF 288
million of bank borrowings.
The borrowings have the following scheduled maturities:
<TABLE>
<S> <C>
1994.............................. 0
1995.............................. 44
1996.............................. 161
1997.............................. 236
1998.............................. 415
Thereafter........................ 11,589
------
Total......................... 12,445
======
</TABLE>
65
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL
STATEMENT SCHEDULES
To the Board of Directors and Shareholders of
EURO DISNEY S.C.A.
Our audits of the consolidated financial statements of Euro Disney S.C.A.
referred to in our report dated November 15, 1993 appearing on page 45 of this
10-K as of September 30, 1993 and 1992 and for each of the three years in the
period ended September 30, 1993 also included an audit of the Financial
Statement Schedules in this 10-K on pages 67 through 70, inclusive. In our
opinion, the Financial Statement Schedules present fairly, in all material
respects, the information set forth therein in accordance with accounting
principles generally accepted in the United States of America when read in
conjunction with the related consolidated financial statements.
PSAudit
Member of Price Waterhouse
Pradeep Narain
Paris, France
November 15, 1993
66
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEARS ENDED SEPTEMBER 30, 1993 AND 1992
<TABLE>
<CAPTION>
Balance at Balance
beginning at end
of year Additions Deductions of year
---------- --------- ---------- -------
(FF in millions)
<S> <C> <C> <C> <C>
1993
The Walt Disney Company Portugal,
Lda. ................................. 13 -- 13 --
The Walt Disney Company Limited........ 4 -- 4 --
Other.................................. -- 23 -- 23
--- --- --- ---
17 23 17 23
=== === === ===
1992
The Walt Disney Company Portugal,
Lda. ................................. -- 30 17 13
The Walt Disney Company Limited........ -- 21 17 4
--- --- ---
51 34 17
=== === ===
</TABLE>
67
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Balance at
beginning Retirements Balance at
of year Additions or sales Transfers end of year
---------- --------- ----------- --------- -----------
(FF in millions)
<S> <C> <C> <C> <C> <C>
1993
Buildings and equipment. 18,593 257 58 (792) 18,000
Projects in progress.... 1,009 1,103 101 (521) 1,490
Land and secondary
infrastructure......... 1,585 143 -- 1,313 3,041
------ ----- --- ------- ------
21,187 1,503 159 -- 22,531
====== ===== === ======= ======
1992
Buildings and equipment. 2,618 13 15,988 18,593
Projects in progress.... 12,588 4,409 -- (15,988) 1,009
Land and secondary
infrastructure......... 1,026 559 -- -- 1,585
------ ----- --- ------- ------
13,614 7,586 13 -- 21,187
====== ===== === ======= ======
1991
Buildings and equipment. 170 242 -- (412) --
Projects in progress.... 4,763 7,413 -- 412 12,588
Land and secondary
infrastructure......... 898 128 -- -- 1,026
------ ----- --- ------- ------
5,831 7,783 -- -- 13,614
====== ===== === ======= ======
</TABLE>
68
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Balance at Balance
beginning Retirements at end
of year Additions or sales of year
---------- --------- ----------- -------
(FF in millions)
<S> <C> <C> <C> <C>
1993
Buildings and equipment............... 451 910 13 1,348
Land and secondary infrastructure..... -- 64 -- 64
--- --- --- -----
451 974 13 1,412
=== === === =====
1992
Buildings and equipment............... -- 451 -- 451
=== === === =====
1991
Leasehold improvements, equipment,
furniture and fixtures............... -- -- -- --
=== === === =====
</TABLE>
69
<PAGE>
EURO DISNEY S.C.A. AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
(FF in
millions)
<S> <C> <C> <C>
Maintenance and repairs.......................................... 53 66 10
Taxes, other than payroll and income taxes....................... 63 71 32
Advertising costs................................................ 204 280 5
</TABLE>
70
<PAGE>
EXHIBIT 21
THE WALT DISNEY COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Name of subsidiary State of Incorporation
------------------ ----------------------
<S> <C>
Buena Vista Home Video, Inc. California
Buena Vista International, Inc. California
Buena Vista Pictures Distribution, Inc. California
Buena Vista Television California
Buena Vista Worldwide Services, Inc. California
C. A. Productions, Inc. Wyoming
Disney Book Publishing, Inc. California
Disney Consumer Products International, Inc. California
Disney Development Company Florida
Disney Direct Response Publishing, Inc. California
Disney Educational Products California
Disney Incorporated California
Disney Magazine Publishing, Inc. California
Disney Sports Enterprises, Inc. California
Disney Worldwide Services, Inc. Florida
Disneyland International California
Earth Star, Inc. California
Hollywood Records, Inc. California
Indian Warrior Productions, Inc. California
KCAL-TV, Inc. California
KHJ-TV, Inc. Ohio
Lake Buena Vista Communities, Inc. Delaware
Madeira Land Company, Inc. Delaware
Reedy Creek Energy Services, Inc. Florida
Swing Kids Productions, Inc. California
The Disney Channel California
The Disney Store, Inc. California
The Walt Disney Catalog, Inc. California
Toon Town Inc. California
Vista Communications, Inc. Florida
Walt Disney Imagineering California
Walt Disney Pictures and Television California
Walt Disney Travel Co., Inc. Delaware
Walt Disney World Co. Delaware
Wanderlust Productions, Inc. Wyoming
WCO Parent Corporation Delaware
WED Transportation Systems, Inc. Florida
</TABLE>
