Delaware
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001-38842
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83-0940635
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(State or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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500 South Buena Vista Street
Burbank, California
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91521
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(Address of principal executive offices) | (Zip Code) |
☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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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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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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||
Common Stock, $0.01 par value
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DIS
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New York Stock Exchange
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Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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Item 8.01.
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Other Events.
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Item 9.01.
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Financial Statements and Exhibits.
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THE WALT DISNEY COMPANY | ||||
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By:
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/s/ Brent A. Woodford | ||
Name: | Brent A. Woodford | |||
Title: | Executive Vice President, Controllership, Financial Planning and Tax | |||
Disney/Legacy
Disney
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RemainCo
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Pro Forma
Adjustments
|
Divestitures (c)
|
Combined
|
||||||||||||||||||||
Revenues
|
$
|
59,434
|
$
|
20,721
|
$
|
1,662
|
a1
|
$
|
(4,658
|
)
|
$
|
76,380
|
||||||||||||
(498
|
)
|
a2
|
||||||||||||||||||||||
(281
|
)
|
a15
|
||||||||||||||||||||||
Operating expenses
|
(32,726
|
)
|
(13,731
|
)
|
(2,084
|
)
|
a1
|
2,476
|
(46,700
|
)
|
||||||||||||||
459
|
a2
|
|||||||||||||||||||||||
(1,094
|
)
|
a5
|
||||||||||||||||||||||
Selling, general, administrative and other
|
(8,860
|
)
|
(2,798
|
)
|
(1,046
|
)
|
a1
|
147
|
(12,431
|
)
|
||||||||||||||
48
|
a2
|
|||||||||||||||||||||||
(21
|
)
|
a7
|
||||||||||||||||||||||
99
|
a11
|
|||||||||||||||||||||||
Depreciation and amortization
|
(3,011
|
)
|
(426
|
)
|
(69
|
)
|
a1
|
158
|
(5,135
|
)
|
||||||||||||||
(1,787
|
)
|
a6
|
||||||||||||||||||||||
Restructuring and impairment and Other income
|
568
|
(679
|
)
|
—
|
(5
|
)
|
(116
|
)
|
||||||||||||||||
Interest expense, net
|
(574
|
)
|
(1,146
|
)
|
(616
|
)
|
a3
|
45
|
(2,094
|
)
|
||||||||||||||
166
|
a4
|
|||||||||||||||||||||||
31
|
a11
|
|||||||||||||||||||||||
Equity in the income (loss) of investees, net
|
(102
|
)
|
(625
|
)
|
1,026
|
a1
|
—
|
236
|
||||||||||||||||
(63
|
)
|
a13
|
||||||||||||||||||||||
Income from continuing operations before income taxes
|
14,729
|
1,316
|
(4,068
|
)
|
(1,837
|
)
|
10,140
|
|||||||||||||||||
Income taxes from continuing operations
|
(1,663
|
)
|
227
|
845
|
b
|
|
551
|
(40
|
)
|
|||||||||||||||
Net Income from continuing operations
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13,066
|
1,543
|
(3,223
|
)
|
(1,286
|
)
|
10,100
|
|||||||||||||||||
Less: Net income from continuing operations attributable to noncontrolling interests
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(468
|
)
|
(97
|
)
|
886
|
a1
|
—
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321
|
||||||||||||||||
Net income from continuing operations attributable to Disney
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$
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12,598
|
$
|
1,446
|
$
|
(2,337
|
)
|
$
|
(1,286
|
)
|
$
|
10,421
|
||||||||||||
Earnings per share from continuing operations attributable to Disney:
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||||||||||||||||||||||||
Diluted
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$
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8.36
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$
|
5.74
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||||||||||||||||||||
Basic
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$
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8.40
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$
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5.77
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||||||||||||||||||||
Weighted average number of common and common equivalent shares outstanding:
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||||||||||||||||||||||||
Diluted
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1,507
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310
|
a14
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1,817
|
||||||||||||||||||||
Basic
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1,499
|
307
|
a14
|
1,806
|
Disney/Legacy
Disney(1)
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RemainCo(2)
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Pro Forma
Adjustments
|
Divestitures (c)
|
Combined
|
||||||||||||||||||||
Revenues
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$
|
50,470
|
$
|
9,606
|
$
|
1,320
|
a1
|
$
|
(2,102
|
)
|
$
|
59,017
|
||||||||||||
(285
|
)
|
a2
|
||||||||||||||||||||||
8
|
a15
|
|||||||||||||||||||||||
Operating expenses
|
(30,196
|
)
|
(6,633
|
)
|
(1,388
|
)
|
a1
|
1,112
|
(37,396
|
)
|
||||||||||||||
264
|
a2
|
|||||||||||||||||||||||
(555
|
)
|
a5
|
||||||||||||||||||||||
Selling, general, administrative and other
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(7,844
|
)
|
(1,399
|
)
|
(512
|
)
|
a1
|
61
|
(9,497
|
)
|
||||||||||||||
22
|
a2
|
|||||||||||||||||||||||
17
|
a7
|
|||||||||||||||||||||||
158
|
a11
|
|||||||||||||||||||||||
Depreciation and amortization
|
(2,864
|
)
|
(209
|
)
|
(44
|
)
|
a1
|
63
|
(3,892
|
)
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||||||||||||||
(838
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)
|
a6
|
||||||||||||||||||||||
Restructuring and impairment and Other income
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3,971
|
135
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(4,794
|
)
|
a10
|
20
|
305
|
|||||||||||||||||
262
|
a9
|
|||||||||||||||||||||||
608
|
a8
|
|||||||||||||||||||||||
103
|
a12
|
|||||||||||||||||||||||
Interest expense, net
|
(617
|
)
|
(354
|
)
|
(290
|
)
|
a3
|
20
|
(1,063
|
)
|
||||||||||||||
78
|
a4
|
|||||||||||||||||||||||
100
|
a11
|
|||||||||||||||||||||||
Equity in the income (loss) of investees, net
|
(234
|
)
|
(277
|
)
|
483
|
a1
|
—
|
(57
|
)
|
|||||||||||||||
(29
|
)
|
a13
|
||||||||||||||||||||||
Income from continuing operations before income taxes
|
12,686
|
869
|
(5,312
|
)
|
(826
|
)
|
7,417
|
|||||||||||||||||
Income taxes from continuing operations
|
(2,687
|
)
|
(287
|
)
|
1,139
|
b
|
|
261
|
(1,574
|
)
|
||||||||||||||
Net Income from continuing operations
|
9,999
|
582
|
(4,173
|
)
|
(565
|
)
|
5,843
|
|||||||||||||||||
Less: Net income from continuing operations attributable to noncontrolling interests
|
(343
|
)
|
(35
|
)
|
364
|
a1
|
—
|
(14
|
)
|
|||||||||||||||
Net income from continuing operations attributable to Disney
|
$
|
9,656
|
$
|
547
|
$
|
(3,809
|
)
|
$
|
(565
|
)
|
$
|
5,829
|
||||||||||||
Earnings per share from continuing operations attributable to Disney:
|
||||||||||||||||||||||||
Diluted
|
$
|
5.98
|
$
|
3.06
|
||||||||||||||||||||
Basic
|
$
|
6.01
|
$
|
3.07
|
||||||||||||||||||||
Weighted average number of common and common equivalent shares outstanding:
|
||||||||||||||||||||||||
Diluted
|
1,616
|
291
|
a14
|
1,907
|
||||||||||||||||||||
Basic
|
1,607
|
290
|
a14
|
1,897
|
|
(1) |
Net income from continuing operations excludes the financial results of the RSNs and the Brazil and Mexico sports media operations as they were included in Income (loss) from discontinued operations since the date of the Acquisition in
Disney’s (or Legacy Disney’s, as applicable) unaudited consolidated statements of income for the nine months ended June 29, 2019.
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(2) |
Unaudited statements of income of RemainCo for the period of October 1, 2018 through March 19, 2019 (the day prior to the Acquisition).
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(a1)
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The Disney Pro Forma Statements of Income have been adjusted to consolidate the historical financial results of Hulu, net of adjustments to eliminate transactions between Hulu on the one hand and Disney (or Legacy Disney, as applicable)
or RemainCo on the other hand. In addition, the Disney Pro Forma Statements of Income have been adjusted to eliminate equity losses of Hulu and to record an allocation of Hulu’s losses to noncontrolling interest holders.
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(a2)
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The Disney Pro Forma Statements of Income have been adjusted to eliminate transactions between Disney (or Legacy Disney, as applicable) and RemainCo. Transactions include licensing of film and television content and advertising revenue.
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(a3)
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The Disney Pro Forma Statements of Income have been adjusted to reflect interest expense on Disney borrowings to finance the 21CF Merger consideration, assuming an estimated weighted average interest rate of 3.3% based on Disney’s use of
short-term debt. Disney expects to refinance and/or repay such short-term debt in whole or in part with the proceeds from the divestiture of the RSNs and/or long-term debt, such as senior notes. A 12.5 bps change in interest rates would
have a $23 million impact on annual interest expense.
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(a4)
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The Disney Pro Forma Statements of Income have been adjusted to reflect lower interest expense using an effective interest method to adjust RemainCo’s long-term debt to preliminary fair value.
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(a5)
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The Disney Pro Forma Statements of Income have been adjusted to reflect the preliminary estimate of incremental amortization as a result of recording film and television programing and production costs at fair value.
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(a6)
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The Disney Pro Forma Statements of Income have been adjusted to reflect the preliminary estimate of incremental amortization as a result of recording finite lived intangible assets at fair value.
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(a7)
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The Disney Pro Forma Statements of Income have been adjusted to reflect the impact of a multi-year executive compensation arrangement that was contingent on the completion of the Acquisition. Disney increased selling, general,
administrative and other expense for the twelve months ended September 29, 2018 and decreased selling, general, administrative and other expense for the nine months ended June 29, 2019.
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(a8)
|
The Disney Pro Forma Statements of Income for the nine months ended June 29, 2019 have been adjusted to eliminate severance and related costs in connection with a restructuring and integration plan as a part of its initiative to realize
previously announced cost synergies from the acquisition of 21CF.
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(a9)
|
The Disney Pro Forma Statements of Income for the nine months ended June 29, 2019 have been adjusted to eliminate equity based compensation primarily for 21CF awards that were accelerated and vested upon the closing of the 21CF
acquisition.
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(a10)
|
The Disney Pro Forma Statements of Income for the nine months ended June 29, 2019 have been adjusted to eliminate a one-time gain from remeasuring our initial 30% interest in Hulu to its estimated fair value.
|
(a11)
|
The Disney Pro Forma Statements of Income have been adjusted to eliminate transaction costs and financing fees incurred in connection with the Acquisition.
|
(a12)
|
The Disney Pro Forma Statements of Income have been adjusted to eliminate RemainCo transaction costs incurred in connection with the Acquisition.
|
(a13)
|
The Disney Pro Forma Statements of Income have been adjusted to reflect the preliminary estimate of amortization as a result of remeasuring our initial interest in our equity method investments to their estimated fair value.
|
(a14)
|
The weighted average shares have been increased to reflect the issuance of 307 million shares of Disney common stock for purposes of calculating basic earnings per share.
|
(a15)
|
The Disney Pro Forma Statements of Income have been adjusted to reflect the preliminary estimated reduction to revenue (and the related amortization expense) from the deferred revenue obligations assumed, reflecting the difference
between prepayments related to the arrangements and the fair value of the assumed performance obligations as they are satisfied.
|
(b)
|
The Disney Pro Forma Statements of Income have been adjusted to reflect the estimated income tax effect of the aggregate pre-tax pro forma adjustments. The aggregate pre-tax effect of these adjustments is taxed at an estimated rate of
26.5% for the twelve months ended September 29, 2018 and 23.05% for the nine months ended June 29, 2019. The twelve month and nine month rates reflect the impact of new federal income tax legislation that was signed into law in December
2017. Certain pro forma adjustments are allocated to noncontrolling interest on a pre-tax basis.
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(c)
|
The Disney Pro Forma Statements of Income have been adjusted to reflect the elimination of revenues and expenses of the RSNs and the Brazil and Mexico sports media operations, which for the period prior to March 20, 2019 are included in
RemainCo results.
|