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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 49831  
Subject: 1Q13 Earnings Date: 2/5/2013 4:55 PM
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The Walt Disney Company today reported earnings for its first quarter ended December 29, 2012. Diluted earnings per share (EPS) for the quarter was $0.77, but excluding certain items affecting comparability EPS was $0.79 compared to $0.80 in the prior-year quarter.

“After delivering another record year of growth in 2012, we're off to a solid start in Fiscal 2013,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “Our ongoing success is driven by our long-term strategy, the strength of our brands and businesses, and our high quality family entertainment.”

The following table summarizes the first quarter results for fiscal 2013 and 2012 (in millions, except per share amounts):

				Quarter Ended 

December 29, 2012 December 31, 2011 Change
Revenues $ 11,341 $ 10,779 5 %
Segment operating income $ 2,380 $ 2,444 (3) %
Net income $ 1,382 $ 1,464 (6) %
Diluted EPS $ 0.77 $ 0.80 (4) %
Cash provided by operations $ 1,144 $ 1,734 (34)%
Free cash flow $ 599 $ 1,100 (46)%


EPS for the current quarter includes charges related to the Celador litigation ($321 million) and our share of expense associated with an equity redemption at Hulu LLC (Hulu Equity Redemption) ($55 million), a gain on the sale of our 50% interest in ESPN STAR Sports ($219 million) and a tax benefit related to prior-year foreign earnings ($64 million). Collectively, these items had a net adverse impact on EPS of $0.02.

SEGMENT RESULTS
The following table summarizes the first quarter segment operating results for fiscal 2013 and 2012 (in millions):

					Quarter Ended
December 29,2012 December 31, 2011 Change
Revenues:
Media Networks $ 5,101 $ 4,779 7 %
Parks and Resorts 3,391 3,155 7 %
Studio Entertainment 1,545 1,618 (5) %
Consumer Products 1,013 948 7 %
Interactive 291 279 4 %
----------------------------------------------------------------------------------------
Total $ 11,341 $ 10,779 5 %

Segment operating income (loss):
Media Networks $ 1,214 $ 1,193 2 %
Parks and Resorts 577 553 4 %
Studio Entertainment 234 413 (43) %
Consumer Products 346 313 11 %
Interactive 9 (28) nm
----------------------------------------------------------------------------------------
Total $ 2,380 $ 2,444 (3) %


Media Networks
Media Networks revenues for the quarter increased 7% to $5.1 billion and segment operating income increased 2% to $1.2 billion. The following table provides further detail of the Media Networks results (in millions):

					Quarter Ended
December 29, 2012 December 31, 2011 Change
Revenues:
Cable Networks $ 3,538 $ 3,309 7 %
Broadcasting 1,563 1,470 6 %
----------------------------------------------------------------------------------------
Total $ 5,101 $ 4,779 7 %

Segment operating income:
Cable Networks $ 952 $ 967 (2) %
Broadcasting 262 226 16 %
----------------------------------------------------------------------------------------
Total $ 1,214 $ 1,193 2 %


Cable Networks
Operating income at Cable Networks decreased $15 million to $952 million for the quarter due to a decrease at ESPN, partially offset by growth at the domestic Disney Channels, ABC Family and A&E Television Networks (AETN). The decrease at ESPN was driven by higher programming and production costs, partially offset by higher affiliate revenue. The increase in programming and production costs reflected contractual rate increases for college football and the NFL and an increase in the number of NBA
games due to the lockout in the prior year. The increase in affiliate revenue was due to contractual rate 3 increases and a reduction in revenue deferrals related to annual programming commitments. During the quarter we deferred $154 million of revenue compared to $190 million in the prior-year quarter.

The decrease in revenue deferrals was due to changes in the provisions related to annual programming commitments in certain affiliate contracts. At the domestic Disney Channels, growth was driven by higher affiliate revenue due to contractual rate increases. The improvement at ABC Family was driven by higher advertising sales reflecting higher units sold and lower marketing costs. Higher equity income from AETN reflected higher affiliate and advertising revenues, partially offset by higher marketing costs, along with the benefit of the increase in the Company's ownership from 42% to 50%.

Broadcasting

Operating income at Broadcasting increased $36 million to $262 million driven by increased advertising revenues at the ABC Television Network and owned television stations and higher program sales, partially offset by higher primetime network programming costs. The increase in network advertising revenues was primarily due to higher advertising rates and higher online advertising, partially offset by lower ratings and fewer units sold. Higher advertising revenue at the owned television stations
reflected increased political advertising. Program sales growth was driven by Revenge and Once Upon A Time. Higher programming costs were due to more hours of first run original scripted programming in the current quarter.

Parks and Resorts
Parks and Resorts revenues for the quarter increased 7% to $3.4 billion and segment operating income increased 4% to $577 million. Results for the quarter were driven by an increase at our domestic operations, partially offset by a decrease at our international operations.

Higher operating income at our domestic operations was primarily due to increased guest spending at both Walt Disney World Resort and Disneyland Resort, the addition of the Disney Fantasy cruise ship which launched in March 2012, attendance growth at Disneyland Resort, and higher occupied room nights at Walt Disney World Resort. These increases were partially offset by higher operating costs and lower average cruise ship ticket prices driven by a cruise itinerary out of a new port location for the Disney
Magic.

Increased guest spending reflected higher average ticket prices, daily hotel room rates and food, beverage and merchandise spending. Higher operating costs were due to resort expansion and new guest offerings, including the addition of the Disney Fantasy and investments in systems infrastructure at Walt Disney World Resort, as well as labor and other cost inflation.

Lower results from our international operations reflect higher costs due to new guest offerings and labor cost inflation at Disneyland Paris and start up costs at Shanghai Disney Resort, partially offset by increased guest spending at Hong Kong Disneyland Resort.

Studio Entertainment
Studio Entertainment revenues decreased 5% to $1.5 billion and segment operating income decreased 43% to $234 million.

Lower operating income for the quarter was driven by decreases in home entertainment and theatrical distribution, partially offset by an increase in television and subscription video on demand (TV/SVOD) distribution.

The decrease at home entertainment was due to lower unit sales reflecting the strong performance of The Lion King Diamond Release in the prior-year quarter compared to the Cinderella Diamond Release in the current quarter. Additionally, the prior-year quarter included Cars 2, which had lower production cost 4 amortization given the strength of its merchandise licensing revenues, compared to Brave in the current quarter.

The decline in theatrical distribution was driven by marketing and distribution costs for Lincoln and Monsters, Inc. 3D in the current quarter, the continuing strong performance in the prior year of The Lion King 3D, which was released in Q4 2011, and one additional new Disney theatrical title in wide release in the current quarter. Key new Disney titles in wide release in the current quarter were Wreck-it Ralph and Frankenweenie, while The Muppets was released in the prior-year quarter.

The operating income increase in TV/SVOD distribution was primarily due to a domestic SVOD sale of library titles in the current quarter and higher international sales driven by the timing of title availabilities.

Consumer Products
Consumer Products revenues increased 7% to $1.0 billion and segment operating income increased 11% to $346 million. Higher operating income was due to increases at Merchandise Licensing and at our retail business.

The increase at Merchandise Licensing was due to lower revenue share with the Studio Entertainment segment which reflected a higher mix of revenues from properties subject to the revenue share in the prior-year quarter driven by sales of Cars merchandise.

At our retail business, higher operating income was driven by higher comparable store sales in Japan and growth in North America which benefited from higher online sales, comparable store sales growth and store format changes.

Interactive
Interactive revenues for the quarter increased 4% to $291 million and segment operating results improved from a loss of $28 million to income of $9 million. Higher operating results were driven by lower acquisition accounting impacts at our social games business which were adverse in the prior-year quarter and growth at our Japan mobile business from a new licensing agreement for Disney branded mobile phones and content.

The complete earnings report can be found here:

http://thewaltdisneycompany.com/sites/default/files/reports/...

Fuskie
Who is awaiting the conference call and hopes to get you a real time semi-accurate transcript later tonight...
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