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TheStreet Open House

The Walt Disney Company Reports First Quarter Earnings For Fiscal 2014

The Walt Disney Company (NYSE: DIS) today reported record earnings for its first fiscal quarter ended December 28, 2013. Diluted earnings per share (EPS) for the first quarter increased 34% to $1.03 from $0.77 in the prior-year quarter. Certain items affecting comparability had a $0.01 and $0.02 net adverse impact on the current and prior-year quarters, respectively. Excluding these items, EPS for the quarter increased 32% to $1.04 from $0.79 in the prior-year quarter.

“We had an incredibly strong first quarter, delivering a 32% increase in adjusted earnings per share and double-digit increases in operating income in all business segments,” said Robert A. Iger, Chairman and CEO, The Walt Disney Company. “These results reflect the strength of our unprecedented portfolio of brands, a constant focus on creativity and innovation, and the continued success of our long-term strategy.”

The following table summarizes the first quarter results for fiscal 2014 and 2013 (in millions, except per share amounts):

  Quarter Ended  

December 28,2013

 

December 29,2012

Change
Revenues $ 12,309 $ 11,341 9 %
Segment operating income (1) $ 3,020 $ 2,380 27 %
Net income (2) $ 1,840 $ 1,382 33 %
Diluted EPS (2) $ 1.03 $ 0.77 34 %
Cash provided by operations $ 1,212 $ 1,144 6 %
Free cash flow (1) $ 554 $ 599 (8

)

%

 

(1)

Aggregate segment operating income and free cash flow are non-GAAP financial measures. See the discussion of non-GAAP financial measures that follows.

(2)

Reflects amounts attributable to shareholders of The Walt Disney Company, i.e. after deduction of noncontrolling interests.

 

SEGMENT RESULTS

The following table summarizes the first quarter segment operating results for fiscal 2014 and 2013 (in millions):

  Quarter Ended  
December 28,2013   December 29,2012 Change  
Revenues:
Media Networks $ 5,290 $ 5,101 4 %
Parks and Resorts 3,597 3,391 6 %
Studio Entertainment 1,893 1,545 23 %
Consumer Products 1,126 1,013 11 %
Interactive 403   291   38 %
$ 12,309   $ 11,341   9 %
Segment operating income:
Media Networks $ 1,455 $ 1,214 20 %
Parks and Resorts 671 577 16 %
Studio Entertainment 409 234 75 %
Consumer Products 430 346 24 %
Interactive 55   9  

>100

%

$ 3,020   $ 2,380   27 %

Media Networks

Media Networks revenues for the quarter increased 4% to $5.3 billion and segment operating income increased 20% to $1.5 billion. The following table provides further detail of the Media Networks results (in millions):

  Quarter Ended  

December 28,2013

 

December 29,2012

Change
Revenues:
Cable Networks $ 3,759 $ 3,538 6 %
Broadcasting 1,531   1,563   (2

)

%

$ 5,290   $ 5,101   4 %
Segment operating income:
Cable Networks $ 1,277 $ 952 34 %
Broadcasting 178   262   (32

)

%

$ 1,455   $ 1,214   20 %

Cable Networks

Operating income at Cable Networks increased $325 million to $1.3 billion for the quarter due to growth at ESPN, higher equity income from A&E Television Networks (AETN) and, to a lesser extent, an improvement at the domestic Disney Channels. Higher operating income at ESPN was due to increased affiliate and advertising revenues and the absence of equity losses as a result of the prior-year sale of our interest in the ESPN STAR Sports joint venture. The increase in affiliate revenue was driven by contractual rate increases, partially offset by a decrease as a result of the sale of ESPN UK in the fourth quarter of the prior year. Growth in ESPN advertising revenues was due to an increase in rates and units delivered, partially offset by lower ratings. Programming and production costs were comparable to the prior year as an increase due to higher contractual rates for NFL and college football was largely offset by a decrease due to the sale of ESPN UK. Higher equity income from AETN reflected lower programming and marketing costs and higher advertising revenues. Growth at the domestic Disney Channels was primarily due to higher affiliate revenues from contractual rate increases.

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