The Walt Disney Company Reports First Quarter Earnings for Fiscal 2022
The Walt Disney Company (NYSE: DIS) reported a strong first fiscal quarter for 2022, showcasing diluted EPS from continuing operations of $0.63, up from $0.02 a year ago. Excluding certain items, EPS rose to $1.06 from $0.32. Revenues reached $21.8 billion, a 34% increase year-over-year, with operating income from parks and resorts significantly rising. However, free cash flow declined to -$1.19 billion from -$685 million, and cash used in operations was -$209 million, highlighting ongoing financial challenges. The total streaming subscriptions also increased to 196.4 million.
- Diluted EPS from continuing operations increased to $0.63 from $0.02 YoY.
- Total revenues increased by 34% to $21.8 billion.
- Operating income from parks and resorts grew significantly, reflecting recovering attendance and guest spending.
- Streaming subscriptions rose to 196.4 million, with 11.8 million Disney+ subscribers added in Q1.
- Free cash flow declined to -$1.19 billion from -$685 million YoY.
- Cash used in operations was -$209 million compared to cash provided of $75 million in the prior year.
“We’ve had a very strong start to the fiscal year, with a significant rise in earnings per share, record revenue and operating income at our domestic parks and resorts, the launch of a new franchise with Encanto, and a significant increase in total subscriptions across our streaming portfolio to 196.4 million, including 11.8 million Disney+ subscribers added in the first quarter,” said
The following table summarizes the first quarter results for fiscal 2022 and 2021 (in millions, except per share amounts):
|
Quarter Ended |
|
|
|||
|
|
|
|
|
Change |
|
Revenues |
|
|
|
|
34 % |
|
Income from continuing operations before income taxes |
|
|
|
|
>100 % |
|
Total segment operating income(1) |
|
|
|
|
>100 % |
|
Net income from continuing operations(2) |
|
|
|
|
>100 % |
|
Diluted EPS from continuing operations(2) |
|
|
|
|
>100 % |
|
Diluted EPS excluding certain items(1) |
|
|
|
|
>100 % |
|
Cash (used in) provided by continuing operations |
|
|
|
|
nm |
|
Free cash flow(1) |
|
|
|
|
(74) % |
|
(1) |
Diluted EPS excluding certain items, total segment operating income and free cash flow are non-GAAP financial measures. The most comparable GAAP measures are diluted EPS from continuing operations, income from continuing operations before income taxes, and cash provided by continuing operations, respectively. See the discussion on page 2 and on pages 11 through 13 for how we define and calculate these measures and a reconciliation thereof to the most directly comparable GAAP measures. |
(2) |
Reflects amounts attributable to shareholders of |
SEGMENT RESULTS
The Company evaluates the performance of its operating segments based on segment operating income, and management uses total segment operating income as a measure of the performance of operating businesses separate from non-operating factors. The Company believes that information about total segment operating income assists investors by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing separate insight into both operations and other factors that affect reported results.
The following is a reconciliation of income from continuing operations before income taxes to total segment operating income (in millions):
|
Quarter Ended |
|
|
|||
|
|
|
|
|
Change |
|
Income from continuing operations before income taxes |
|
|
|
|
>100 % |
|
Add (subtract): |
|
|
|
|
|
|
Corporate and unallocated shared expenses |
228 |
|
232 |
|
2 % |
|
Restructuring and impairment charges |
— |
|
113 |
|
100 % |
|
Other expense, net |
436 |
|
— |
|
nm |
|
Interest expense, net |
311 |
|
324 |
|
4 % |
|
Amortization of |
595 |
|
617 |
|
4 % |
|
Total segment operating income |
|
|
|
|
>100 % |
|
Since early 2020 the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) and its variants. COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at the Disney Parks, Experiences and Products segment where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. These operations resumed at various points since
In fiscal 2022, our domestic parks and experiences are generally operating without significant mandatory COVID-19-related capacity restrictions, such as those that were in place in the prior-year quarter; however, we continue to manage capacity to address ongoing COVID-19 considerations with respect to guest and cast health and safety. Certain of our international operations continue to be impacted by mandatory COVID-19-related capacity and travel restrictions. At the
We have incurred, and will continue to incur, costs to address government regulations and the safety of our employees, guests and talent, of which certain costs are capitalized and will be amortized over future periods.
The following table summarizes the first quarter segment revenue and segment operating income (loss) for fiscal 2022 and 2021 (in millions):
|
Quarter Ended |
|
|
|||
|
|
|
|
|
Change |
|
Revenues: |
|
|
|
|
|
|
Disney Media and Entertainment Distribution |
|
|
|
|
15 % |
|
Disney Parks, Experiences and Products |
7,234 |
|
3,588 |
|
>100 % |
|
Total Revenues |
|
|
|
|
34 % |
|
Segment operating income (loss): |
|
|
|
|
||
Disney Media and Entertainment Distribution |
|
|
|
|
(44) % |
|
Disney Parks, Experiences and Products |
2,450 |
|
(119) |
|
nm |
|
Total Segment Operating Income |
|
|
|
|
>100 % |
|
Disney Media and Entertainment Distribution
Revenue and operating results for the Disney Media and Entertainment Distribution segment are as follows (in millions):
|
Quarter Ended |
|
Change |
|||
|
|
|
|
|
||
Revenues: |
|
|
|
|
|
|
Linear Networks |
|
|
|
|
— % |
|
Direct-to-Consumer |
4,690 |
|
3,504 |
|
34 % |
|
Content Sales/Licensing and Other |
2,433 |
|
1,702 |
|
43 % |
|
Elimination of Intrasegment Revenue(1) |
(244) |
|
(238) |
|
(3) % |
|
|
|
|
|
|
15 % |
|
Operating income (loss): |
|
|
|
|
|
|
Linear Networks |
|
|
|
|
(13) % |
|
Direct-to-Consumer |
(593) |
|
(466) |
|
(27) % |
|
Content Sales/Licensing and Other |
(98) |
|
188 |
|
nm |
|
|
|
|
|
|
(44) % |
|
(1) Reflects fees received by the Linear Networks from other DMED businesses for the right to air our Linear Networks and related services.
Linear Networks
Linear Networks revenues for the quarter were essentially flat to the prior-year quarter at
|
Quarter Ended |
|
Change |
|||
|
|
|
|
|
||
Supplemental revenue detail |
|
|
|
|
|
|
Domestic Channels |
|
|
|
|
1 % |
|
International Channels |
1,554 |
|
1,623 |
|
(4) % |
|
|
|
|
|
|
— % |
|
Supplemental operating income detail |
|
|
|
|
|
|
Domestic Channels |
|
|
|
|
(21) % |
|
International Channels |
369 |
|
375 |
|
(2) % |
|
Equity in the income of investees |
242 |
|
234 |
|
3 % |
|
|
|
|
|
|
(13) % |
|
Domestic Channels
Domestic Channels revenues for the quarter increased
The decrease at Cable was primarily due to higher programming and production costs and increased marketing spending, partially offset by growth in advertising and affiliate revenue. The increase in programming and production costs was driven by higher costs for the College Football Playoffs (CFP), NFL and MLB programming and an increase in sports production costs due to the cancellation of events in the prior-year quarter. The increases in CFP and NFL programming costs were due to higher contractual rates. The increase in costs for MLB programming was due to airing one playoff game in the current quarter, compared to airing no games in the prior-year quarter. These increases were partially offset by lower costs for NBA and golf programming. In the prior-year quarter as a result of COVID-19, certain NBA games and the Masters shifted out of fiscal 2020 and into the first quarter of fiscal 2021. Advertising revenue growth was due to higher impressions, partially offset by a decrease in rates. The increase in impressions reflected more units delivered and higher average viewership. Higher affiliate revenue was due to an increase in contractual rates, partially offset by fewer subscribers.
The decrease at Broadcasting was due to lower results at the owned television stations primarily due to lower political advertising revenue, partially offset by higher affiliate revenue, which reflected an increase in contractual rates. Results at
International Channels
International Channels revenues for the quarter decreased
Growth in channels that operated for the entire current and prior-year quarters was due to an increase in advertising revenue driven by higher rates. Programming and production costs were comparable to the prior-year quarter, as an increase in sports programming costs was offset by lower costs for general entertainment programming driven by a lower cost mix of programming in the current year. The increase in sports programming costs was due to higher costs for cricket programming, partially offset by lower costs for soccer programming reflecting fewer games in the current quarter. Higher costs for cricket programming were driven by the airing of
Direct-to-Consumer
Direct-to-Consumer revenues for the quarter increased
Lower results at Disney+ reflected higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue. Higher subscription revenue was due to subscriber growth and increases in retail pricing. The increases in costs and subscribers reflected growth in existing markets and to a lesser extent, expansion to new markets.
Lower results at ESPN+ were driven by higher sports programming costs, partially offset by subscription revenue growth and higher income from
The increase at Hulu was due to subscription revenue growth, partially offset by higher programming and production costs. Subscription revenue growth was due to an increase in subscribers and higher rates driven by increases in retail pricing for the Hulu Live TV + SVOD service. The increase in programming and production costs was primarily due to higher subscriber-based fees for programming the Live TV service due to rate increases and the carriage of more networks.
The following tables present additional information about our Disney+, ESPN+ and Hulu Direct-to-Consumer (DTC) product offerings(1).
Paid subscribers(2) as of:
(in millions) |
|
|
|
|
Change |
Disney+ |
|
|
|
|
|
Domestic ( |
42.9 |
|
36.3 |
|
18 % |
International (excluding Disney+ Hotstar)(3) |
41.1 |
|
29.4 |
|
40 % |
Disney+ (excluding Disney+ Hotstar)(4) |
84.0 |
|
65.7 |
|
28 % |
Disney+ Hotstar |
45.9 |
|
29.2 |
|
57 % |
Total Disney+(4) |
129.8 |
|
94.9 |
|
37 % |
|
|
|
|
|
|
ESPN+ |
21.3 |
|
12.1 |
|
76 % |
|
|
|
|
|
|
Hulu |
|
|
|
|
|
SVOD Only |
40.9 |
|
35.4 |
|
16 % |
Live TV + SVOD |
4.3 |
|
4.0 |
|
8 % |
Total Hulu(4) |
45.3 |
|
39.4 |
|
15 % |
Average Monthly Revenue Per Paid Subscriber(5) for the quarter ended:
|
|
|
|
|
Change |
Disney+ |
|
|
|
|
|
Domestic ( |
|
|
|
|
15 % |
International (excluding Disney+ Hotstar)(3) |
|
|
|
|
26 % |
Disney+ (excluding Disney+ Hotstar) |
|
|
|
|
18 % |
Disney+ Hotstar |
|
|
|
|
5 % |
Disney+ |
|
|
|
|
9 % |
|
|
|
|
|
|
ESPN+ |
|
|
|
|
15 % |
|
|
|
|
|
|
Hulu |
|
|
|
|
|
SVOD Only |
|
|
|
|
(4) % |
Live TV + SVOD |
|
|
|
|
16 % |
(1) |
In the |
(2) |
Reflects subscribers for which we recognized subscription revenue. Subscribers cease to be a paid subscriber as of their effective cancellation date or as a result of a failed payment method. Subscribers to the SVOD Bundle are counted as a paid subscriber for each service included in the SVOD Bundle and subscribers to the old Hulu Live TV + SVOD offering and new Hulu Live TV + SVOD offering are counted as one paid subscriber for each of the Hulu Live TV + SVOD, Disney+ and ESPN+ offerings. Subscribers include those who receive a service through wholesale arrangements including those for which we receive a fee for the distribution of the service to each subscriber of an existing content distribution tier. In |
(3) |
Includes the Disney+ service outside the |
(4) |
Total may not equal the sum of the column due to rounding. |
(5) |
Revenue per paid subscriber is calculated based on the average of the monthly average paid subscribers for each month in the period. The monthly average paid subscribers is calculated as the sum of the beginning of the month and end of the month paid subscriber count, divided by two. Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the period. Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses) and premium and feature add-on revenue but excludes Premier Access and Pay-Per-View revenue. The average revenue per paid subscriber is net of discounts on the SVOD Bundle or other offerings that carry more than one service. Revenue is allocated to each service based on the relative retail price of each service on a standalone basis. Starting in |
The average monthly revenue per paid subscriber for domestic Disney+ increased from
The average monthly revenue per paid subscriber for international Disney+ (excluding Disney+ Hotstar) increased from
The average monthly revenue per paid subscriber for Disney+ Hotstar increased from
The average monthly revenue per paid subscriber for ESPN+ increased from
The average monthly revenue per paid subscriber for the Hulu SVOD Only service decreased from
The average monthly revenue per paid subscriber for the Hulu Live TV + SVOD service increased from
Content Sales/Licensing and Other
Content Sales/Licensing and Other revenues for the quarter increased
The decrease in theatrical distribution results was due to losses on titles released in the current quarter, partially offset by income from the co-production of Marvel’s Spider-Man: No Way Home. Titles released in the quarter included West Side Story, Encanto, The King’s Man, Eternals,
Higher TV/SVOD distribution results were due to higher sales of both episodic television and film content. The increase in episodic television content sales reflected more significant titles sold in the current quarter. Higher sales of film content was driven by an increase in sales of library content and more title availabilities in the free television window.
Disney Parks, Experiences and Products
Disney Parks, Experiences and Products revenues for the quarter increased to
Operating income growth at our domestic parks and experiences was due to higher volumes and, to a lesser extent, increased guest spending, partially offset by higher costs. Higher volumes were due to increases in attendance, occupied room nights and cruise ship sailings. Cruise ships operated at reduced capacities in the current quarter while sailings were suspended in the prior-year quarter. Guest spending growth was due to an increase in average per capita ticket revenue, higher average daily hotel room rates and an increase in food, beverage and merchandise spending. The increase in average per capita ticket revenue was due to attendance mix and the introduction of Genie+ and
The increased operating income at our international parks and resorts was due to growth at
Lower results at our consumer products business were due to the closure of a substantial number of
The following table presents supplemental revenue and operating income (loss) detail for the Disney Parks, Experiences and Products segment:
|
Quarter Ended |
|
% Change Better (Worse) |
||
(in millions) |
|
|
|
|
|
Supplemental revenue detail |
|
|
|
|
|
Parks & Experiences |
|
|
|
|
|
Domestic |
|
|
|
|
>100 % |
International |
861 |
|
378 |
|
>100 % |
Consumer Products |
1,573 |
|
1,721 |
|
(9) % |
|
|
|
|
|
>100 % |
Supplemental operating income (loss) detail |
|
|
|
|
|
Parks & Experiences |
|
|
|
|
|
Domestic |
|
|
|
|
nm |
International |
21 |
|
(262) |
|
nm |
Consumer Products |
874 |
|
941 |
|
(7) % |
|
|
|
|
|
nm |
OTHER FINANCIAL INFORMATION
Restructuring and Impairment Charges
During the prior-year quarter, the Company recorded charges totaling
Other Expense, net
Other expense, net was as follows (in millions):
|
Quarter Ended |
|
|
||
|
|
|
|
|
Change |
DraftKings loss |
|
|
|
|
>(100) % |
fuboTV gain |
— |
|
186 |
|
(100) % |
Other |
(4) |
|
— |
|
nm |
Other expense, net |
|
|
$ — |
|
nm |
In the current and prior-year quarters, the Company recognized a non-cash loss to adjust its investment in DraftKings, Inc. (DraftKings) to fair value. In the prior-year quarter, the Company recognized a non-cash gain to adjust its investment in fuboTV, Inc. (fuboTV) to fair value.
Interest Expense, net
Interest expense, net was as follows (in millions):
|
Quarter Ended |
|
|
||
|
|
|
|
|
Change |
Interest expense |
|
|
|
|
11 % |
Interest, investment income (loss) and other |
50 |
|
80 |
|
(38) % |
Interest expense, net |
|
|
|
|
4 % |
The decrease in interest expense was primarily due to lower average debt balances and higher capitalized interest.
The decrease in interest income, investment income (loss) and other was due to lower investment gains, partially offset by a favorable comparison of pension and postretirement benefit costs, other than service cost, which was a net benefit in the current quarter and an expense in the prior-year quarter.
Equity in the Income of Investees
Equity in the income of investees was as follows (in millions):
|
Quarter Ended |
|
|
||
|
|
|
|
|
Change |
Amounts included in segment results: |
|
|
|
|
|
Disney Media and Entertainment Distribution |
|
|
|
|
4 % |
Disney Parks, Experiences and Products |
(3) |
|
(8) |
|
63 % |
Amortization of |
(3) |
|
(3) |
|
— % |
Equity in the income of investees |
|
|
|
|
7 % |
Income Taxes
The effective income tax rate was as follows:
|
Quarter Ended |
||
|
|
|
|
Income from continuing operations before income taxes |
|
|
|
Income tax expense on continuing operations |
488 |
|
16 |
Effective income tax rate - continuing operations |
28.9 % |
|
34.8 % |
The effective income tax rate in the current quarter was higher than the
Noncontrolling Interests
Net income attributable to noncontrolling interests was as follows (in millions):
|
Quarter Ended |
|
|
||
|
|
|
|
|
Change |
Net income from continuing operations attributable to noncontrolling interests |
|
|
|
|
>(100) % |
The increase in net income from continuing operations attributable to noncontrolling interests was driven by lower losses at
Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable.
FULL YEAR CASH FLOW STATEMENT INFORMATION
Cash Flow
Cash provided by operations and free cash flow were as follows (in millions):
|
Quarter Ended |
|
|
||
|
|
|
|
|
Change |
Cash (used in) provided by operations |
|
|
|
|
|
Investments in parks, resorts and other property |
(981) |
|
(760) |
|
(221) |
Free cash flow(1) |
|
|
|
|
|
| (1) | Free cash flow is not a financial measure defined by GAAP. See the discussion on pages 11 through 13. |
Cash used in operations was
Capital Expenditures and Depreciation Expense
Investments in parks, resorts and other property were as follows (in millions):
|
Quarter Ended |
||
|
|
|
|
Disney Media and Entertainment Distribution |
|
|
|
Disney Parks, Experiences and Products |
|
|
|
Domestic |
457 |
|
336 |
International |
202 |
|
183 |
Total Disney Parks, Experiences and Products |
659 |
|
519 |
Corporate |
153 |
|
64 |
Total investments in parks, resorts and other property |
|
|
|
Capital expenditures increased from
Depreciation expense was as follows (in millions):
|
Quarter Ended |
||
|
|
|
|
Disney Media and Entertainment Distribution |
|
|
|
Disney Parks, Experiences and Products |
|
|
|
Domestic |
398 |
|
388 |
International |
168 |
|
176 |
Total Disney Parks, Experiences and Products |
566 |
|
564 |
Corporate |
48 |
|
46 |
Total depreciation expense |
|
|
|
NON-GAAP FINANCIAL MEASURES
This earnings release presents free cash flow, diluted EPS excluding certain items, and total segment operating income, all of which are important financial measures for the Company, but are not financial measures defined by GAAP.
These measures should be reviewed in conjunction with the most comparable GAAP financial measures and are not presented as alternative measures of cash provided by continuing operations, diluted EPS or income from continuing operations before income taxes as determined in accordance with GAAP. Free cash flow, diluted EPS excluding certain items and total segment operating income as we have calculated them may not be comparable to similarly titled measures reported by other companies. See further discussion of total segment operating income on page 2.
Free cash flow
The Company uses free cash flow (cash provided by continuing operations less investments in parks, resorts and other property), among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures. Management believes that information about free cash flow provides investors with an important perspective on the cash available to service debt obligations, make strategic acquisitions and investments and pay dividends or repurchase shares.
The following table presents a summary of the Company’s consolidated cash flows (in millions):
|
Quarter Ended |
||||
|
|
|
|
||
Cash (used in) provided by operations - continuing operations |
|
) |
|
|
|
Cash used in investing activities - continuing operations |
(987 |
) |
|
(732 |
) |
Cash used in financing activities - continuing operations |
(280 |
) |
|
(333 |
) |
Cash provided by operations - discontinued operations |
8 |
|
|
9 |
|
Cash used in financing activities - discontinued operations |
(12 |
) |
|
— |
|
Impact of exchange rates on cash, cash equivalents and restricted cash |
(35 |
) |
|
139 |
|
Change in cash, cash equivalents and restricted cash |
(1,515 |
) |
|
(842 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
16,003 |
|
|
17,954 |
|
Cash, cash equivalents and restricted cash, end of period |
|
|
|
|
|
The following table presents a reconciliation of the Company’s consolidated cash provided by operations to free cash flow (in millions):
|
Quarter Ended |
|
|
|||||
|
|
|
|
|
Change |
|||
Cash (used in) provided by operations - continuing operations |
|
) |
|
|
|
|
|
) |
Investments in parks, resorts and other property |
(981 |
) |
|
(760 |
) |
|
(221 |
) |
Free cash flow |
|
) |
|
|
) |
|
|
) |
Diluted EPS excluding certain items
The Company uses diluted EPS excluding (1) certain items affecting comparability of results from period to period and (2) amortization of
The Company believes that providing diluted EPS exclusive of certain items impacting comparability is useful to investors, particularly where the impact of the excluded items is significant in relation to reported earnings and because the measure allows for comparability between periods of the operating performance of the Company’s business and allows investors to evaluate the impact of these items separately.
The Company further believes that providing diluted EPS exclusive of amortization of
The following table reconciles reported diluted EPS from continuing operations to diluted EPS excluding certain items for the first quarter:
(in millions except EPS) |
Pre-Tax Income/ Loss |
|
Tax Benefit/ Expense(1) |
|
After-Tax Income/ Loss(2) |
|
Diluted EPS(3) |
|
Change vs. prior year period |
|
Quarter Ended |
|
|
|
|
|
|
|
|
|
|
As reported |
|
|
|
) |
|
|
|
|
|
>100 % |
Exclude: |
|
|
|
|
|
|
|
|
|
|
Other expense, net(4) |
436 |
|
(102 |
) |
|
334 |
|
0.18 |
|
|
Amortization of |
595 |
|
(139 |
) |
|
456 |
|
0.24 |
|
|
Excluding certain items |
|
|
|
) |
|
|
|
|
|
>100 % |
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
|
|
|
|
|
|
|
As reported |
|
|
|
) |
|
|
|
|
|
|
Exclude: |
|
|
|
|
|
|
|
|
|
|
Amortization of |
617 |
|
(144 |
) |
|
473 |
|
0.25 |
|
|
Restructuring and impairment charges(6) |
113 |
|
(28 |
) |
|
85 |
|
0.05 |
|
|
Excluding certain items |
|
|
|
) |
|
|
|
|
|
|
(1) |
Tax benefit/expense is determined using the tax rate applicable to the individual item. |
(2) |
Before noncontrolling interest share. |
(3) |
Net of noncontrolling interest share, where applicable. Total may not equal the sum of the column due to rounding. |
(4) |
In the current quarter, other expense, net was due to a loss from adjusting the Company’s investment in DraftKings, Inc. to fair value ( |
(5) |
For the current quarter, intangible asset amortization was |
(6) |
Charges for the prior-year quarter were primarily due to severance costs. |
CONFERENCE CALL INFORMATION
In conjunction with this release,
FORWARD-LOOKING STATEMENTS
Certain statements and information in this earnings release may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements such as future performance, expected or estimated costs or impacts of certain items; the future impact of COVID-19 on our businesses; future business management; expected growth; the future of our business or Company; and other statements that are not historical in nature. These statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made. Management does not undertake any obligation to update these statements.
Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments, asset acquisitions or dispositions, new or expanded business lines or cessation of certain operations) or other business decisions, as well as from developments beyond the Company’s control, including:
- further changes in domestic and global economic conditions;
- changes in or pressures from competitive conditions and consumer preferences;
- health concerns and their impact on our businesses and productions;
- international, regulatory, political, or military developments;
- technological developments;
- labor markets and activities;
- adverse weather conditions or natural disasters; and
- availability of content;
each such risk includes the current and future impacts of, and is amplified by, COVID-19 and related mitigation efforts.
Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things, affect (or further affect, as applicable):
- demand for our products and services;
- the performance of the Company’s theatrical and home entertainment releases and other content;
- the advertising market for programming;
- construction;
- expenses of providing medical and pension benefits;
- income tax expense; and
- performance of some or all Company businesses either directly or through their impact on those who distribute our products.
Additional factors are set forth in the Company’s Annual Report on Form 10-K for the year ended
The terms “Company,” “we,” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited; in millions, except per share data) |
|||||
|
Quarter Ended |
||||
|
|
|
|
||
Revenues |
|
|
|
|
|
Costs and expenses |
(19,623 |
) |
|
(15,990 |
) |
Restructuring and impairment charges |
— |
|
|
(113 |
) |
Other expense, net |
(436 |
) |
|
— |
|
Interest expense, net |
(311 |
) |
|
(324 |
) |
Equity in the income of investees |
239 |
|
|
224 |
|
Income from continuing operations before income taxes |
1,688 |
|
|
46 |
|
Income taxes on continuing operations |
(488 |
) |
|
(16 |
) |
Net income from continuing operations |
1,200 |
|
|
30 |
|
Loss from discontinued operations, net of income tax benefit of |
(48 |
) |
|
(12 |
) |
Net income |
1,152 |
|
|
18 |
|
Net income from continuing operations attributable to noncontrolling interests |
(48 |
) |
|
(1 |
) |
Net income attributable to |
|
|
|
|
|
|
|
|
|
||
Earnings (loss) per share attributable to |
|
|
|
||
Diluted |
|
|
|
||
Continuing operations |
|
|
|
|
|
Discontinued operations |
(0.03 |
) |
|
(0.01 |
) |
|
|
|
|
|
|
Basic |
|
|
|
||
Continuing operations |
|
|
|
|
|
Discontinued operations |
(0.03 |
) |
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
||
Weighted average number of common and common equivalent shares outstanding: |
|
|
|
||
Diluted |
1,828 |
|
|
1,823 |
|
Basic |
1,819 |
|
|
1,812 |
|
| (1) | Total may not equal the sum of the column due to rounding. |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions, except per share data) |
|||||
|
|
|
|
||
ASSETS |
|
|
|
||
Current assets |
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
Receivables, net |
14,882 |
|
|
13,367 |
|
Inventories |
1,345 |
|
|
1,331 |
|
Content advances |
1,125 |
|
|
2,183 |
|
Other current assets |
1,117 |
|
|
817 |
|
Total current assets |
32,913 |
|
|
33,657 |
|
Produced and licensed content costs |
30,669 |
|
|
29,549 |
|
Investments |
3,549 |
|
|
3,935 |
|
Parks, resorts and other property |
|
|
|
||
Attractions, buildings and equipment |
65,257 |
|
|
64,892 |
|
Accumulated depreciation |
(38,505 |
) |
|
(37,920 |
) |
|
26,752 |
|
|
26,972 |
|
Projects in progress |
4,808 |
|
|
4,521 |
|
Land |
1,121 |
|
|
1,131 |
|
|
32,681 |
|
|
32,624 |
|
Intangible assets, net |
16,574 |
|
|
17,115 |
|
|
78,052 |
|
|
78,071 |
|
Other assets |
8,873 |
|
|
8,658 |
|
Total assets |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
||
Current liabilities |
|
|
|
||
Accounts payable and other accrued liabilities |
|
|
|
|
|
Current portion of borrowings |
6,783 |
|
|
5,866 |
|
Deferred revenue and other |
4,545 |
|
|
4,317 |
|
Total current liabilities |
30,037 |
|
|
31,077 |
|
Borrowings |
47,349 |
|
|
48,540 |
|
Deferred income taxes |
8,124 |
|
|
7,246 |
|
Other long-term liabilities |
14,208 |
|
|
14,522 |
|
Commitments and contingencies |
|
|
|
||
Redeemable noncontrolling interests |
9,283 |
|
|
9,213 |
|
Equity |
|
|
|
||
Preferred stock |
— |
|
|
— |
|
Common stock, |
55,500 |
|
|
55,471 |
|
Retained earnings |
41,547 |
|
|
40,429 |
|
Accumulated other comprehensive loss |
(6,276 |
) |
|
(6,440 |
) |
|
(907 |
) |
|
(907 |
) |
Total Disney Shareholders’ equity |
89,864 |
|
|
88,553 |
|
Noncontrolling interests |
4,446 |
|
|
4,458 |
|
Total equity |
94,310 |
|
|
93,011 |
|
Total liabilities and equity |
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in millions) |
|||||
|
Quarter Ended |
||||
|
|
|
|
||
OPERATING ACTIVITIES |
|
|
|
||
Net income from continuing operations |
|
|
|
|
|
Depreciation and amortization |
1,269 |
|
|
1,298 |
|
Net (gain) loss on investments |
436 |
|
|
(80 |
) |
Deferred income taxes |
726 |
|
|
(105 |
) |
Equity in the income of investees |
(239 |
) |
|
(224 |
) |
Cash distributions received from equity investees |
223 |
|
|
193 |
|
Net change in produced and licensed content costs and advances |
507 |
|
|
771 |
|
Equity-based compensation |
196 |
|
|
134 |
|
Pension and postretirement medical benefit cost amortization |
155 |
|
|
194 |
|
Other, net |
(7 |
) |
|
(68 |
) |
Changes in operating assets and liabilities: |
|
|
|
||
Receivables |
(1,401 |
) |
|
(1,324 |
) |
Inventories |
(14 |
) |
|
94 |
|
Other assets |
(115 |
) |
|
(136 |
) |
Accounts payable and other liabilities |
(2,579 |
) |
|
(642 |
) |
Income taxes |
(566 |
) |
|
(60 |
) |
Cash (used in) provided by operations - continuing operations |
(209 |
) |
|
75 |
|
|
|
|
|
||
INVESTING ACTIVITIES |
|
|
|
||
Investments in parks, resorts and other property |
(981 |
) |
|
(760 |
) |
Other, net |
(6 |
) |
|
28 |
|
Cash used in investing activities - continuing operations |
(987 |
) |
|
(732 |
) |
|
|
|
|
||
FINANCING ACTIVITIES |
|
|
|
||
Commercial paper payments, net |
(124 |
) |
|
(179 |
) |
Borrowings |
33 |
|
|
1 |
|
Reduction of borrowings |
— |
|
|
(139 |
) |
Proceeds from exercise of stock options |
33 |
|
|
209 |
|
Other, net |
(222 |
) |
|
(225 |
) |
Cash used in financing activities - continuing operations |
(280 |
) |
|
(333 |
) |
|
|
|
|
||
CASH FLOWS FROM DISCONTINUED OPERATIONS |
|
|
|
||
Cash provided by operations - discontinued operations |
8 |
|
|
9 |
|
Cash used in financing activities - discontinued operations |
(12 |
) |
|
— |
|
Cash (used in) provided by discontinued operations |
(4 |
) |
|
9 |
|
|
|
|
|
||
Impact of exchange rates on cash, cash equivalents and restricted cash |
(35 |
) |
|
139 |
|
|
|
|
|
||
Change in cash, cash equivalents and restricted cash |
(1,515 |
) |
|
(842 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
16,003 |
|
|
17,954 |
|
Cash, cash equivalents and restricted cash, end of period |
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220209006042/en/
Corporate Communications
818-560-4832
Investor Relations
562-889-2715
Source:
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