UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
December 30, 2005
December 30, 2005
Delaware
(State or other jurisdiction of incorporation)
(State or other jurisdiction of incorporation)
| 1-11605 (Commission File Number) |
No. 95-4545390 I.R.S. Employer Identification No. |
500 South Buena Vista Street
Burbank, California 91521
(818) 560-1000
Burbank, California 91521
(818) 560-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
1
Item 2.02 Results of Operations and Financial Condition.
Item 8.01 Other Events.
The Registrant announced today that beginning with the first quarter of fiscal year 2006 it
will report the performance of its operating segments including equity in the income of investees
to align with how management will report and measure segment performance for internal management
purposes. Previously, equity in the income of investees was reported as a reconciling item between
segment operating income and income before income taxes, minority interests and the cumulative
effect of accounting changes.
The following tables reconcile segment operating income for fiscal years 2005, 2004 and 2003
under the historical reporting method to segment operating income as it will be reported when
equity in the income of investees is included in segment operating income starting in the first
quarter of fiscal 2006. Table 1 – As Reported, plus Table 2 – Equity in the Income of Investees,
equals Table 3 – As Adjusted.
Fiscal 2005
| Table 1 – As Reported | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Jan. 1, | Apr. 2, | July 2, | Oct. 1, | Year Ended | ||||||||||||||||
| 2005 | 2005 | 2005 | 2005 | Oct. 1, 2005 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks |
$ | 444 | $ | 700 | $ | 973 | $ | 632 | $ | 2,749 | ||||||||||
Parks and Resorts |
249 | 183 | 437 | 309 | 1,178 | |||||||||||||||
Studio Entertainment |
323 | 241 | (44 | ) | (313 | ) | 207 | |||||||||||||
Consumer Products |
226 | 106 | 56 | 132 | 520 | |||||||||||||||
| Table 2 - Equity in the Income of Investees | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Jan. 1, | Apr. 2, | July 2, | Oct. 1, | Year Ended | ||||||||||||||||
| 2005 | 2005 | 2005 | 2005 | Oct. 1, 2005 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks (1) |
$ | 121 | $ | 106 | $ | 119 | $ | 114 | $ | 460 | ||||||||||
Parks and Resorts |
— | — | — | — | — | |||||||||||||||
Studio Entertainment |
— | — | — | — | — | |||||||||||||||
Consumer Products |
4 | 7 | 6 | 6 | 23 | |||||||||||||||
| Table 3 – As Adjusted | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Jan. 1, | Apr. 2, | July 2, | Oct. 1, | Year Ended | ||||||||||||||||
| 2005 | 2005 | 2005 | 2005 | Oct. 1, 2005 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks |
$ | 565 | $ | 806 | $ | 1,092 | $ | 746 | $ | 3,209 | ||||||||||
Parks and Resorts |
249 | 183 | 437 | 309 | 1,178 | |||||||||||||||
Studio Entertainment |
323 | 241 | (44 | ) | (313 | ) | 207 | |||||||||||||
Consumer Products |
230 | 113 | 62 | 138 | 543 | |||||||||||||||
2
Fiscal 2004
| Table 1 - As Reported | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Dec. 31, | Mar. 31, | June 30, | Sept. 30, | Year Ended | ||||||||||||||||
| 2003 | 2004 | 2004 | 2004 | Sept. 30, 2004 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks |
$ | 344 | $ | 704 | $ | 673 | $ | 448 | $ | 2,169 | ||||||||||
Parks and Resorts (2) |
232 | 188 | 421 | 282 | 1,123 | |||||||||||||||
Studio Entertainment |
458 | 153 | 28 | 23 | 662 | |||||||||||||||
Consumer Products |
237 | 75 | 76 | 146 | 534 | |||||||||||||||
| Table 2 - Equity in the Income of Investees | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Dec. 31, | Mar. 31, | June 30, | Sept. 30, | Year Ended | ||||||||||||||||
| 2003 | 2004 | 2004 | 2004 | Sept. 30, 2004 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks (1) |
$ | 107 | $ | 109 | $ | 122 | $ | 67 | $ | 405 | ||||||||||
Parks and Resorts (2) |
(12 | ) | (34 | ) | — | — | (46 | ) | ||||||||||||
Studio Entertainment |
— | — | — | — | — | |||||||||||||||
Consumer Products |
2 | 2 | 4 | 5 | 13 | |||||||||||||||
| Table 3 - As Adjusted | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Dec. 31, | Mar. 31, | June 30, | Sept. 30, | Year Ended | ||||||||||||||||
| 2003 | 2004 | 2004 | 2004 | Sept. 30, 2004 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks |
$ | 451 | $ | 813 | $ | 795 | $ | 515 | $ | 2,574 | ||||||||||
Parks and Resorts (2) |
220 | 154 | 421 | 282 | 1,077 | |||||||||||||||
Studio Entertainment |
458 | 153 | 28 | 23 | 662 | |||||||||||||||
Consumer Products |
239 | 77 | 80 | 151 | 547 | |||||||||||||||
3
Fiscal 2003
| Table 1 - As Reported | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Dec. 31, | Mar. 31, | June 30, | Sept. 30, | Year Ended | ||||||||||||||||
| 2002 | 2003 | 2003 | 2003 | Sept. 30, 2003 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks |
$ | (71 | ) | $ | 400 | $ | 586 | $ | 298 | $ | 1,213 | |||||||||
Parks and Resorts (2) |
225 | 155 | 352 | 225 | 957 | |||||||||||||||
Studio Entertainment |
138 | 206 | 71 | 205 | 620 | |||||||||||||||
Consumer Products |
190 | 53 | 39 | 102 | 384 | |||||||||||||||
| Table 2 - Equity in the Income of Investees | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Dec. 31, | Mar. 31, | June 30, | Sept. 30, | Year Ended | ||||||||||||||||
| 2002 | 2003 | 2003 | 2003 | Sept. 30, 2003 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks (1) |
$ | 97 | $ | 75 | $ | 92 | $ | 80 | $ | 344 | ||||||||||
Parks and Resorts (2) |
(7 | ) | (24 | ) | 11 | 9 | (11 | ) | ||||||||||||
Studio Entertainment |
— | — | — | — | — | |||||||||||||||
Consumer Products |
— | — | 3 | 2 | 5 | |||||||||||||||
| Table 3 - As Adjusted | ||||||||||||||||||||
| (in millions) | Quarter Ended | |||||||||||||||||||
| Dec. 31, | Mar. 31, | June 30, | Sept. 30, | Year Ended | ||||||||||||||||
| 2002 | 2003 | 2003 | 2003 | Sept. 30, 2003 | ||||||||||||||||
Segment Operating Income: |
||||||||||||||||||||
Media Networks |
$ | 26 | $ | 475 | $ | 678 | $ | 378 | $ | 1,557 | ||||||||||
Parks and Resorts (2) |
218 | 131 | 363 | 234 | 946 | |||||||||||||||
Studio Entertainment |
138 | 206 | 71 | 205 | 620 | |||||||||||||||
Consumer Products |
190 | 53 | 42 | 104 | 389 | |||||||||||||||
| (1) | Substantially all of these amounts relate to investments at Cable Networks. An immaterial amount relates to Broadcasting. | ||
| (2) | Includes equity in the income/(loss) of Euro Disney and Hong Kong Disneyland for the first two quarters of fiscal 2004 and the full year of fiscal 2003, prior to the consolidation of the results of operations of these businesses beginning with the third quarter of fiscal 2004 as a result of the implementation of FASB Interpretation No. 46R, Consolidation of Variable Interest Entities. |
4
The following presents the tables included in the Segment Information section of Note 1
to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for
the fiscal year ended October 1, 2005 (2005 Annual Report) revised to reflect how they will be
reported when equity in the income of investees is included in segment operating income. This
presentation also corrects a transposition of two digits in the Supplemental Revenue Data section
relating to fiscal year 2005 Media Networks advertising revenue, which was originally reported in
this table in the Company’s 2005 Annual Report as $7,721. This transposition did not affect any
other financial information included in the Company’s 2005 Annual Report.
SEGMENT INFORMATION
(in millions)
(in millions)
| 2005 | 2004 | 2003 | ||||||||||
Revenues |
||||||||||||
Media Networks |
$ | 13,207 | $ | 11,778 | $ | 10,941 | ||||||
Parks and Resorts |
9,023 | 7,750 | 6,412 | |||||||||
Studio Entertainment |
||||||||||||
Third parties |
7,499 | 8,637 | 7,312 | |||||||||
Intersegment |
88 | 76 | 52 | |||||||||
| 7,587 | 8,713 | 7,364 | ||||||||||
Consumer Products |
||||||||||||
Third parties |
2,215 | 2,587 | 2,396 | |||||||||
Intersegment |
(88 | ) | (76 | ) | (52 | ) | ||||||
| 2,127 | 2,511 | 2,344 | ||||||||||
Total consolidated revenues |
$ | 31,944 | $ | 30,752 | $ | 27,061 | ||||||
Segment operating income |
||||||||||||
Media Networks |
$ | 3,209 | $ | 2,574 | $ | 1,557 | ||||||
Parks and Resorts |
1,178 | 1,077 | 946 | |||||||||
Studio Entertainment |
207 | 662 | 620 | |||||||||
Consumer Products |
543 | 547 | 389 | |||||||||
Total segment operating income |
$ | 5,137 | $ | 4,860 | $ | 3,512 | ||||||
Reconciliation of segment operating income to income before income
taxes, minority interests and the cumulative effect of accounting
changes |
||||||||||||
Segment operating income |
$ | 5,137 | $ | 4,860 | $ | 3,512 | ||||||
Corporate and unallocated shared expenses |
(536 | ) | (428 | ) | (447 | ) | ||||||
Amortization of intangible assets |
(11 | ) | (12 | ) | (18 | ) | ||||||
Gain on sale of businesses and restructuring and impairment charges |
(6 | ) | (64 | ) | — | |||||||
Net interest expense |
(597 | ) | (617 | ) | (793 | ) | ||||||
Income before income taxes, minority interests and the cumulative
effect of accounting changes |
$ | 3,987 | $ | 3,739 | $ | 2,254 | ||||||
Capital expenditures |
||||||||||||
Media Networks |
$ | 228 | $ | 221 | $ | 203 | ||||||
Parks and Resorts |
||||||||||||
Domestic |
726 | 719 | 577 | |||||||||
International (1) |
711 | 289 | — | |||||||||
Studio Entertainment |
37 | 39 | 49 | |||||||||
Consumer Products |
10 | 14 | 44 | |||||||||
Corporate |
111 | 145 | 176 | |||||||||
Total consolidated capital expenditures |
$ | 1,823 | $ | 1,427 | $ | 1,049 | ||||||
5
| 2005 | 2004 | 2003 | ||||||||||
Depreciation expense |
||||||||||||
Media Networks |
$ | 182 | $ | 172 | $ | 169 | ||||||
Parks and Resorts |
||||||||||||
Domestic |
756 | 710 | 681 | |||||||||
International (1) |
207 | 95 | — | |||||||||
Studio Entertainment |
26 | 22 | 39 | |||||||||
Consumer Products |
25 | 44 | 63 | |||||||||
Corporate |
132 | 155 | 107 | |||||||||
Total consolidated depreciation expense |
$ | 1,328 | $ | 1,198 | $ | 1,059 | ||||||
Identifiable assets |
||||||||||||
Media Networks (2)(3) |
$ | 26,926 | $ | 26,193 | ||||||||
Parks and Resorts |
15,807 | 15,221 | ||||||||||
Studio Entertainment |
5,965 | 6,954 | ||||||||||
Consumer Products |
877 | 1,037 | ||||||||||
Corporate (4) |
3,583 | 4,497 | ||||||||||
Total consolidated assets |
$ | 53,158 | $ | 53,902 | ||||||||
Supplemental revenue data |
||||||||||||
Media Networks |
||||||||||||
Advertising |
$ | 7,271 | $ | 6,611 | $ | 6,319 | ||||||
Affiliate Fees |
5,098 | 4,408 | 3,682 | |||||||||
Parks and Resorts |
||||||||||||
Merchandise, food and beverage |
2,879 | 2,429 | 1,987 | |||||||||
Admissions |
2,771 | 2,547 | 1,887 | |||||||||
Revenues |
||||||||||||
United States and Canada |
$ | 24,806 | $ | 24,012 | $ | 22,124 | ||||||
Europe |
5,207 | 4,721 | 3,171 | |||||||||
Asia Pacific |
1,451 | 1,547 | 1,331 | |||||||||
Latin America and Other |
480 | 472 | 435 | |||||||||
| $ | 31,944 | $ | 30,752 | $ | 27,061 | |||||||
Segment operating income |
||||||||||||
United States and Canada |
$ | 3,963 | $ | 3,307 | $ | 2,432 | ||||||
Europe |
738 | 868 | 595 | |||||||||
Asia Pacific |
386 | 582 | 525 | |||||||||
Latin America and Other |
50 | 103 | (40 | ) | ||||||||
| $ | 5,137 | $ | 4,860 | $ | 3,512 | |||||||
Identifiable assets |
||||||||||||
United States and Canada |
$ | 45,809 | $ | 46,788 | ||||||||
Europe |
5,120 | 5,370 | ||||||||||
Asia Pacific |
2,110 | 1,622 | ||||||||||
Latin America and Other |
119 | 122 | ||||||||||
| $ | 53,158 | $ | 53,902 | |||||||||
| (1) | Represents 100% of Euro Disney and Hong Kong Disneyland’s capital expenditures and depreciation expense for all periods beginning April 1, 2004. For fiscal 2005, Hong Kong Disneyland’s capital expenditures totaled $591 million compared to the prior year amount of $251 million, which included only six months of activity. Our equity partner contributed $147 million in fiscal 2005 and $66 million in the second half of fiscal 2004, which are included as sources of cash in financing activities. | |
| (2) | Identifiable assets include amounts associated with equity method investments, including notes and other receivables of $1,039 and $951 in 2005 and 2004, respectively. | |
| (3) | Includes goodwill and other intangible assets totaling $19,284 and $19,341 in 2005 and 2004, respectively. | |
| (4) | Primarily deferred tax assets, investments, fixed and other assets. |
6
Signatures
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 hereunto duly authorized.
| The Walt Disney Company |
||||
| By: | /s/ Thomas O. Staggs | |||
| Thomas O. Staggs | ||||
| Senior Executive Vice President and Chief Financial Officer | ||||
Dated: December 30, 2005
7