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Reprinted from the Walt Disney Company Press Release,
January 27, 1998.
Record Revenues and Earnings for First Quarter 1998
FOR IMMEDIATE RELEASE
January 27, 1998
BURBANK, CA -- The Walt Disney Company today reported record revenues and earnings for
the quarter ended December 31, 1997.
Compared to prior-year pro forma amounts, revenues for the quarter increased 6% to $6.3
billion and operating income increased 9% to $1.5 billion. Net income for the quarter
increased 18% to $755 million and diluted and basic earnings per share increased 18% to
$1.10 and $1.12, respectively.
Michael D. Eisner, Chairman and Chief Executive Officer, said, "I am extremely
pleased with Disney’s strong operating performance for the quarter to which every
segment of the Company contributed. Theme Parks and Resorts results were especially
noteworthy, breaking the prior-year quarter’s record performance and setting the
stage for the spring opening of our largest theme park, Disney’s Animal Kingdom, as
well as the launch of our first cruise ship, Disney Magic."
During fiscal 1997, the Company disposed of certain ABC publishing assets, finalized
the ABC purchase price allocation and sold KCAL, a Los Angeles television station. To
enhance comparability, the operating results for the quarter ended December 31, 1996 are
discussed on a pro forma basis, which assumes these events all occurred at the beginning
of fiscal 1997.
During the quarter ended December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 Earnings Per Share (SFAS 128), which specifies the
method of computation, presentation and disclosure for earnings per share
("EPS"). SFAS 128 requires the presentation of two EPS amounts, basic and
diluted. Basic EPS is calculated by dividing net income by average common shares
outstanding for the period. Diluted EPS includes the dilution that would occur if
outstanding stock options were exercised and is comparable to the EPS the Company has
historically reported.
Theme Parks and Resorts posted record operating results for the quarter. Revenues for
the quarter increased 10% to $1.3 billion and operating income grew 21% to $287 million.
Theme Parks and Resorts results for the quarter reflected increased guest spending,
increased occupied room nights and record attendance levels at the Walt Disney World
Resort. Increased occupied room nights at the Walt Disney World Resort reflected higher
occupancy as well as an increase in available rooms resulting from the addition of
Disney's Coronado Springs Resort, which opened in August 1997. Attendance gains at the
Walt Disney World Resort were driven by increased domestic tourist visitation attributable
to the final months of the 25th Anniversary Celebration.
Creative Content revenues for the quarter increased 2% to $3.0 billion and operating
income increased 5% to $700 million.
Creative Content results for the quarter reflected the theatrical release of Flubber
and Scream 2 domestically and the performance of Hercules and Air Force
One internationally as well as the domestic home video release of Belle's Enchanted
Christmas, The Jungle Book and George of the Jungle. The quarter
benefited from increased results at The Disney Store due to an increase in comparative
store sales in North America and Europe, driven by strong holiday sales, and continued
worldwide expansion. The results also reflected growth in domestic merchandise licensing
driven by Winnie the Pooh and in the distribution of film and television product in the
worldwide television market. Results were partially offset by difficult comparisons to the
prior year, which benefited in the domestic theatrical market from Ransom and 101
Dalmatians and in the home video market from Pocahontas, internationally, and Toy
Story, worldwide.
Broadcasting revenues for the quarter increased 10% to $2.1 billion and operating
income increased 8% to $505 million.
Broadcasting results for the quarter reflected strong cable network performance driven
by increased advertising revenues at ESPN due to a strong advertising market and an
increase in affiliate fees driven by rate increases, as well as increased affiliate fees
at Disney Channel due to subscriber growth. In addition, the owned television and radio
stations also benefited from stronger demand for advertising. Results at the television
network reflected the impact of higher program amortization, primarily due to a reduction
in benefits arising from the ABC acquisition, and lower broadcast network ratings,
partially offset by increased revenues due to improved advertising rates.
Results for the current quarter also reflect a 22% decrease in net interest expense,
due primarily to gains realized on the sale of certain investments and lower average debt
balances.
Compared with prior-year as reported results, revenues during the quarter increased 1%,
operating income decreased 4%, net income increased 1% and diluted and basic earnings per
share increased 1%.
Separately, Disney's Board of Directors announced it will increase the Company's
quarterly cash dividend from 13.25 to 15.75 cents per share.
The dividend, payable May 22 to shareholders of record April 9, represents an increase
of approximately 19 percent.
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