The Walt Disney
Company |
|||||
As Reported |
Pro Forma |
% |
|||
| 2002 | 2001 | 2002 | 2001 | Change | |
| Revenues: | |||||
| Media Networks | $ 7,298 | $ 7,394 | $ 7,328 | $ 7,866 | (7)% |
| Parks and Resorts | 4,805 | 5,320 | 4,805 | 5,320 | (10)% |
| Studio Entertainment | 4,693 | 4,694 | 4,693 | 4,694 | - |
| Consumer Products | 1,871 | 1,978 | 1,872 | 2,003 | (7)% |
| $18,667 | $19,386 | $18,698 | $ 19,883 | (6)% | |
| Segment operating income: (1) | |||||
| Media Networks | $ 839 | $ 1,410 | $ 843 | $ 1,577 | (47)% |
| Parks and Resorts | 934 | 1,273 | 934 | 1,273 | (27)% |
| Studio Entertainment | 198 | 381 | 198 | 381 | (48)% |
| Consumer Products | 312 | 314 | 312 | 330 | (5)% |
| $ 2,283 | $ 3,378 | $ 2,287 | $ 3,561 | (36)% | |
| The Company evaluates the performance of its operating segments based on segment operating income. A reconciliation of segment operating income to income before income taxes, minority interests and the cumulative effect of accounting changes is as follows: | |||||
As Reported |
Pro Forma |
||||
| 2002 | 2001 | 2002 | 2001 | ||
| Segment operating income | $ 2,283 | $ 3,378 | $ 2,287 | $ 3,561 | |
| Corporate and unallocated shared expenses | (277) | (284) | (277) | (284) | |
| Amortization of intangible assets | (14) | (622) | (14) | (18) | |
| Gain on sale of business | 34 | 22 | 34 | 22 | |
| Net interest expense and other | (288) | (287) | (300) | (450) | |
| Equity in the income of investees | 163 | 234 | 163 | 241 | |
| Restructuring and impairment charges | - | (1,328) | - | (466) | |
| Income before income taxes, minority interests and the cumulative effect of accounting changes | $ 1,901 | $ 1,113 | $ 1,893 | $ 2,606 | |
| (1) Segment EBITDA is as follows: | |||||
| As Reported | Pro Forma | ||||
| 2002 | 2001 | 2002 | 2001 | ||
| Media Networks | $ 976 | $ 1,542 | $ 981 | $ 1,715 | |
| Parks and Resorts | 1,418 | 1,726 | 1,418 | 1,726 | |
| Studio Entertainment | 232 | 416 | 232 | 416 | |
| Consumer Products | 356 | 383 | 356 | 399 | |
| $ 2,982 | $ 4,067 | $ 2,987 | $ 4,256 | ||
MEDIA NETWORKS |
|||
Pro Forma |
|||
| Quarter Ended June 30 | 2002 | 2001 | % Change |
| Revenues: | |||
| Broadcasting | $ 1,203 | $ 1,432 | (16)% |
| Cable Networks | 923 | 918 | 1% |
| $ 2,126 | $ 2,350 | (10)% | |
| Segment operating income: | |||
| Broadcasting | $ 76 | $ 242 | (69)% |
| Cable Networks | 212 | 241 | (12)% |
| $ 288 | $ 483 | (40)% | |
Pro Forma |
|||
| Nine Months Ended June 30 | 2002 | 2001 | % Change |
| Revenues: | |||
| Broadcasting | $ 3,913 | $ 4,747 | (18)% |
| Cable Networks | 3,415 | 3,119 | 9% |
| $ 7,328 | $ 7,866 | (7)% | |
| Segment operating (loss) income: | |||
| Broadcasting | $ (13) | $ 696 | n/m |
| Cable Networks | 856 | 881 | (3)% |
| $ 843 | $ 1,577 | (47)% | |
CABLE TELEVISION
ACTIVITIES |
|||
| Pro Forma | |||
| Quarter Ended June 30 | 2002 | 2001 | % Change |
| Operating income: | |||
| Cable Networks | $ 212 | $ 241 | (12)% |
| Equity investments: | |||
| A&E, Lifetime and E! Entertainment Television | 168 | 207 | (19)% |
| Other | 15 | 54 | (72)% |
| 395 | 502 | (21)% | |
| Partner share of operating income | (161) | (192) | 16% |
| Disney share of operating income | $ 234 | $ 310 | (25)% |
| Pro Forma | |||
| Nine months Ended June 30 | 2002 | 2001 | % Change |
| Operating income: | |||
| Cable Networks | $ 856 | $ 881 | (3)% |
| Equity investments: A&E, Lifetime and E! Entertainment Television | 462 | 563 | (18)% |
| Other | 116 | 176 | (34)% |
| 1,434 | 1,620 | (11)% | |
| Partner share of operating income | (489) | (588) | 17% |
| Disney share of operating income | $ 945 | $ 1,032 | (8)% |
| Note: Amounts presented in this table represent 100% of the operating income for all of the Company's cable businesses. The Disney share of operating income represents the Company's ownership interest in cable television operating income. Cable networks are reported in "Segment operating income" in the consolidated statements of income. Equity investments are accounted for under the equity method and the Company's proportionate share of the net income of its cable equity investments is reported in "Equity in the income of investees" in the consolidated statements of income. | |||
| The following table provides a reconciliation of as-reported earnings per share attributed to Disney common stock to pro forma earnings per share before the cumulative effect of accounting changes, excluding the investment gain in fiscal 2002 and restructuring and impairment charges and gain on the sale of business (unaudited). | ||||
| Three Months | Nine months | |||
| Ended June 30 | Ended June 30 | |||
| 2001 | 2002 | 2001 | 2002 | |
| As-reported earnings (loss) per share attributed to Disney common stock | $ 0.18 | $ 0.19 | $ 0.52 | $ (0.04) |
| Adjustment to attribute 100% of Internet Group operating results to Disney common stock (72% included in as-reported amounts) | -- | -- | -- | (0.06) |
| Adjustment to exclude GO.com restructuring and impairment charges | -- | -- | -- | 0.40 |
| Adjustment to exclude pre-closure GO.com portal operating results and amortization of intangible assets | -- | -- | -- | 0.09 |
| Adjustment to reflect the impact of the new SFAS 142 accounting rules | -- | 0.06 | -- | 0.19 |
| Adjustment to exclude the cumulative effect of accounting changes | -- | -- | -- | 0.13 |
| Pro forma earnings per share before the cumulative effect of accounting changes | 0.18 | 0.25 | 0.52 | 0.71 |
| Adjustment to exclude restructuring and impairment charges | -- | 0.04 | -- | 0.14 |
| Adjustment to exclude gain on the sale of business | (0.01) | -- | (0.01) | -- |
| Adjustment to exclude fiscal 2002 investment gain | -- | -- | (0.07) | -- |
| Pro forma earnings per share before the cumulative effect of accounting changes, excluding the investment gain in fiscal 2002, restructuring and impairment charges and gain on the sale of business | $ 0.17 | $ 0.29 | $ 0.44 | $ 0.85 |
| The impact on fiscal 2001 of the gain on sale of business and the pro forma impact of ABC Family had less than a $0.01 impact. | ||||
| The following table reflects pro forma net income and earnings (loss) per share had the Company elected to adopt the fair value approach of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (in millions, except for per share data): | ||||
| Three Months Ended | Nine Months Ended | |||
| June 30 | June 30 | |||
| 2002 | 2001 | 2002 | 2001 | |
| Net income (loss) attributed to Disney Common stock: As reported | $ 364 | $ 392 | $ 1,061 | $ (94) |
| Pro forma after option expense | 284 | 315 | 837 | (302) |
| Diluted earnings (loss) per share attributed to Disney common stock: As reported | 0.18 | 0.19 | 0.52 | (0.04) |
| Pro forma after option expense | 0.14 | 0.15 | 0.41 | (0.14) |
| These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years. The pro forma amounts assume that the Company had been following the fair value approach since the beginning of fiscal 1996. If the Company had adopted the fair value approach at the beginning of fiscal 2002 under current rules, the impact to earnings per share for both the quarter and nine months would have been $0.01. | ||||
| Fully diluted shares outstanding and diluted earnings per share include the effect of in-the-money stock options calculated based on the average share price for the period. The dilution from employee options increases as the Company's share price increases, as shown below: | ||||
| Disney Share Price |
Total In-the-Money Options |
Incremental Diluted Shares(1) |
Percentage of Average Shares Outstanding |
Hypothetical Q3 2002 EPS Impact (3) |
| $22.79 | 96 mil | -- (2) | $ 0.00 | |
| 25.00 | 103 mil | 5 mil | 0.24% | 0.00 |
| 30.00 | 135 mil | 16 mil | 0.78% | 0.00 |
| 40.00 | 210 mil | 41 mil | 2.00% | (0.01) |
| 50.00 | 218 mil | 60 mil | 2.93% | (0.01) |
| (1) Represents the incremental impact on fully diluted shares outstanding assuming the average share prices indicated, using the treasury stock method. Under the treasury stock method, the tax effected proceeds that would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares | ||||
| (2) Fully diluted shares outstanding for the quarter ended June 30, 2002 total 2,046 million and include the dilutive impact of in-the-money options at the average share price for the period of $22.79. At the average share price of $22.79, the dilutive impact of in-the-money options was 5 million shares for the quarter. | ||||
| (3) Based upon Q3 2002 earnings of $364 or $0.18 per share | ||||