UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 1993 Commission File Number: 1-4083
THE WALT DISNEY COMPANY
Incorporated in Delaware I.R.S. Employer Identification
No. 95-0684440
500 South Buena Vista Street, Burbank, California 91521
(818) 560-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES...X..... NO............
There were 536,971,398 shares of Common Stock, $.025 par value,
outstanding as of February 4, 1994.
<PAGE>
PART I. FINANCIAL INFORMATION
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
In millions, except per share data (unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
December 31
<S> 1993 1992
REVENUES <C> <C>
Theme parks and resorts $ 768.9 $ 745.1
Filmed entertainment 1,426.4 1,209.2
Consumer products 532.0 437.1
2,727.3 2,391.4
COSTS AND EXPENSES
Theme parks and resorts 630.8 608.4
Filmed entertainment 1,086.2 973.8
Consumer products 385.9 312.6
2,102.9 1,894.8
OPERATING INCOME
Theme parks and resorts 138.1 136.7
Filmed entertainment 340.2 235.4
Consumer products 146.1 124.5
624.4 496.6
CORPORATE ACTIVITIES
General and administrative expenses 43.6 43.2
Net investment and interest income (4.2) (5.2)
39.4 38.0
LOSS FROM INVESTMENT IN
EURO DISNEY (32.1)
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES 585.0 426.5
Income taxes 216.4 151.4
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES 368.6 275.1
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES
Pre-opening costs (271.2)
Postretirement benefits (130.3)
Income taxes 30.0
NET INCOME (LOSS) $ 368.6 $ (96.4)
</TABLE>
<PAGE>
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (continued)
In millions, except per share data (unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
December 31
<S> 1993 1992
<C> <C>
AMOUNTS PER COMMON SHARE
EARNINGS BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES $ .68 $ .50
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Pre-opening costs (.50)
Postretirement benefits (.24)
Income taxes .06
EARNINGS (LOSS) PER SHARE $ .68 $ (.18)
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 545.3 543.4
</TABLE>
<PAGE>
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
In millions
<TABLE>
<CAPTION>
December 31, September 30,
1993 1993
<S> (unaudited)
ASSETS <C> <C>
Cash and cash equivalents $ 685.1 $ 363.0
Investments 1,802.4 1,888.5
Receivables 1,782.7 1,390.3
Merchandise inventories 473.6 608.9
Film and television costs 1,446.5 1,360.9
Theme parks, resorts and other property,
net of accumulated depreciation of 5,380.7 5,228.2
$2,355.9 and $2,286.4
Other assets 1,029.3 911.3
$ 12,600.3 $ 11,751.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts and taxes payable and other $ 2,974.1 $ 2,821.1
accrued liabilities
Borrowings 2,654.4 2,385.8
Unearned royalty and other advances 874.9 840.7
Deferred income taxes 689.3 673.0
Stockholders' equity
Preferred stock, $.10 par value
Authorized - 100.0 million shares
Issued - none
Common stock, $.025 par value
Authorized - 1.2 billion shares
Issued - 565.8 million and
564.6 million shares 911.4 876.4
Retained earnings 5,168.1 4,833.1
Cumulative translation adjustments 43.8 36.7
6,123.3 5,746.2
Less treasury shares, at cost
29.1 million shares 715.7 715.7
5,407.6 5,030.5
$ 12,600.3 $ 11,751.1
</TABLE>
<PAGE>
THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
In millions (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31
<S> 1993 1992
CASH PROVIDED BY OPERATIONS BEFORE <C> <C>
INCOME TAXES $ 655.8 $ 318.4
Income taxes paid 25.1 90.4
CASH PROVIDED BY OPERATIONS 630.7 228.0
INVESTING ACTIVITIES
Theme parks, resorts and other 237.6 222.1
property, net
Film and television costs 349.8 272.8
Investments (86.1) 401.3
Euro Disney investment and advances (16.3)
Other 74.1 (5.1)
575.4 874.8
FINANCING ACTIVITIES
Borrowings, net 268.6 582.4
Dividends (33.5) (28.1)
Other 31.7 60.9
266.8 615.2
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 322.1 (31.6)
Cash and cash equivalents, beginning
of period 363.0 764.8
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 685.1 $ 733.2
The difference between Income Before Income Taxes and Cumulative
Effect of Accounting Changes as shown on the Condensed Consolidated
Statement of Income and Cash Provided by Operations Before Income
Taxes is explained as follows:
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 585.0 $ 426.5
CUMULATIVE EFFECT OF ACCOUNTING CHANGES (514.2)
CHARGES TO INCOME NOT REQUIRING CASH
OUTLAYS
Depreciation 85.1 74.8
Amortization of film and television 264.2 151.6
costs
Other 6.2 63.5
CHANGES IN
Receivables (392.4) (543.9)
Merchandise inventories 135.3 59.3
Other assets (50.1) 194.5
Accounts payable and other accrued (11.7) 395.2
liabilities
Unearned royalty and other advances 34.2 11.1
70.8 (108.1)
CASH PROVIDED BY OPERATIONS BEFORE
INCOME TAXES $ 655.8 $ 318.4
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 21.9 $ 9.7
</TABLE>
<PAGE>
THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. These condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating
results for the quarter are not necessarily indicative of the
results that may be expected for the year ending September 30,
1994. Certain reclassifications have been made in the 1993
financial statements to conform to the 1994 presentation. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1993.
2. Cash dividends per share for the quarters ended December 31, 1993
and 1992 were $.0625 and $.0525, respectively.
<PAGE>
THE WALT DISNEY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's business is materially affected by seasonal factors and,
therefore, interim results are comparable only if similar periods are
reviewed. In addition, results of operations for the prior year
quarter have been restated to reflect the 1993 adoption of Statement
of Financial Accounting Standards (SFAS) No. 106 Employers' Accounting
for Postretirement Benefits Other Than Pensions and SFAS No. 109
Accounting for Income Taxes and a change in the method of accounting
for pre-opening costs, all retroactive to October 1, 1992. The reader
is encouraged to read the Company's 1993 Annual Report on Form 10-K in
conjunction with this interim report.
RESULTS OF OPERATIONS
For the Quarter Ended December 31, 1993
Theme Parks and Resorts
Revenues and operating income increased slightly, reflecting an
increase in occupied room nights and room rates at the Florida resorts
compared to the prior year period. Per capita spending increased in
California and Florida, driven primarily by price increases, partially
offset by lower attendance in Florida.
Filmed Entertainment
Results reflected the successful domestic home video and the expanded
international theatrical release of Aladdin. Revenues and operating
income also included the impact of the international home video
release of The Jungle Book. Prior year results included the successful
domestic home video and international theatrical release of Beauty and
the Beast and Sister Act together with the international home video
release of Cinderella. The domestic theatrical release of Aladdin
also had a positive impact on prior year results.
Consumer Products
Increased revenues and operating income were driven by the worldwide
success of character merchandise, including traditional Disney
characters and newly-created film properties, including Aladdin. The
Disney Stores also contributed to earnings growth, with 258 locations
worldwide compared to 193 in the prior year and higher same-store
sales performance. Prior year results reflected the success of
Aladdin and Beauty and the Beast soundtracks.
<PAGE>
THE WALT DISNEY COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Corporate Activities
General and administrative expenses increased slightly, partially
offset by lower losses incurred by Hollywood Records. In addition,
Disney Sports Enterprises (The Mighty Ducks of Anaheim) had operating
income for the period vs. no operations in the corresponding prior-
year period.
Net interest and investment income reflected lower current year levels
of borrowings and interest rates, partially offset by lower investment
balances.
Investment in Euro Disney
As a result of the charge of $350 million in the fourth quarter of the
prior year to fully reserve its receivables and limited funding
commitment to Euro Disney, the Company has not reported any activity
in its first quarter results related to its investment in Euro Disney.
In the prior year quarter, the impact of the Company's share of Euro
Disney's loss recorded under the equity method was partially offset by
royalties and gain amortization related to the investment.
As previously announced, Euro Disney, its principal lenders and the
Company are exploring a financial restructuring for Euro Disney. The
Company has agreed to help fund Euro Disney for a limited period, to
afford Euro Disney time to attempt a financial restructuring by spring
1994. Discussions among the parties are at a preliminary stage, and
their outcome is uncertain. Should the financial restructuring not be
completed, Euro Disney has stated that it would face a liquidity
problem.
Income Taxes
The effective income tax rate was 37.0% for the current period and
35.5% for the comparable period in the prior year. The increase
resulted primarily from the increase in the Federal income tax rate
enacted in August 1993.
<PAGE>
THE WALT DISNEY COMPANY
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(4) Amendment, dated as of December 27, 1993, between the Company
and The Bank of New York, as successor Rights Agent, to the
Rights Agreement, dated as of June 21, 1989 (the "Rights
Agreement"), between the Company and Security Pacific National
Bank (the Rights Agreement having heretofore been filed as
Exhibit 1 to the Company's Current Report on Form 8-K, dated
June 21, 1989).
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter.
<PAGE>
THE WALT DISNEY COMPANY
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE WALT DISNEY COMPANY
(Registrant)
By /s/ Richard D. Nanula
Richard D. Nanula
Senior Vice President and
Chief Financial Officer
February 8, 1994
Burbank, California
AMENDMENT TO RIGHTS AGREEMENT
This Amendment, dated as of December 27, 1993, is between The Walt
Disney Company, a Delaware corporation (the "Company"), and The Bank
of New York, a New York banking corporation (the "Successor Rights
Agent"), and amends the Rights Agreement, dated as of June 21, 1989
(the "Rights Agreement"), between the Company and Security Pacific
National Bank ("SP").
RECITALS
A. Bank of America, as successor in interest to SP (the "Resigning
Rights Agent") are currently parties to the Rights Agreement, under
which the Resigning Rights Agents serves as Rights Agent.
B. The Resigning Rights Agent has heretofore delivered to the
Company notice of its intent to resign as Rights Agent; the company
intends to appoint the Successor Rights Agent to Succeed the Resigning
Rights Agent as Rights Agent; the Successor Rights Agent wishes to
accept appointment as Successor Rights Agent; and the parties hereto
wish to make certain changes to the Rights Agreement to facilitate
this succession.
NOW, THEREFORE, the Company and the Successor Rights Agent agree as
follows:
1. Resigning Rights Agent
Pursuant to Section 21 of the Rights Agreement, parties acknowledge
that the Resigning Rights Agent is resigning as Rights Agent under the
Rights Agreement, effective as of 12:00 am, New York time, December
27, 1993. The Company hereby confirms its acceptance of the
resignation of the Resigning Rights Agent as Rights Agent and waives
the requirement that 30 days notice in writing of such resignation be
provided by the Resigning Rights Agent.
2. Appointment of Successor Rights Agent
The Company hereby appoints the Successor Rights Agent as successor
Rights Agent under the Rights Agreement, effective as of 12:01 a.m.
New York time, December 28, 1993, and the Successor Rights Agent
hereby accepts such appointment, subject to all the terms and
conditions of the Rights Agreement as amended hereby.
3. Amendments to Rights Agreement
The parties hereto agree that the Rights Agreement shall be amended
as provided below, effective as of the date of this Amendment except
as may otherwise be provided below:
(a) From and after the time that the appointment of the Successor
Rights Agent as successor Rights Agent is effective, all references in
the Rights Agreement (including all exhibits thereto) to the Resigning
Rights Agent as Rights Agent shall be deemed to refer to the Successor
Rights Agent as successor Rights Agent. From and after the effective
dated of this Amendment, all references in the Rights Agreement to the
Rights Agreement shall be deemed to refer to the Rights Agreement as
amended by this Amendment.
(b) Section 29 of the Rights Agreement is amended by adding the
following word at the end thereof: "provided, however, that the
rights and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York".
(c) The addresses for notice as set forth in Section 25 of the
Rights Agreement are hereby amended to read as follows.
(i) The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Attention: Sanford M. Litvak
Executive Vice President - Law and Human Resources
(ii) Bank of New York
Stock Transfer Administration
12th Floor West
101 Barclay Street
New York, New York 10286
Attention: Susan McFarland
4. Miscellaneous
(a) Except as otherwise expressly provided or unless the context
otherwise requires, all terms used herein have the meanings assigned
to them in the Rights Agreement.
(b) Each part hereto waives any requirement under the Rights
Agreement that any additional notice be provided to it pertaining to
the matters covered by this Agreement.
(c) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
counterparts shall together constitute but one and the same document.
IN WITNESS WHEREOF, the parties have caused this amendment to be
duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first written above.
ATTEST: [SEAL]
By /s/ Susan A. McFarland By /s/Mario Tassudetti
Its Assistant Treasurer Its Vice President
BANK OF NEW YORK
ATTEST: [SEAL]
By /s/ Marsha L. Reed By /s/ David K. Thompson
Its Corporate Secretary Its VP - Asst General Counsel
THE WALT DISNEY COMPANY
