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Disney's 2Q roars
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April 22, 1998: 7:10 p.m. ET
Media firm cites theme parks and resorts for gain, sets 3-for-1 stock split
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NEW YORK (CNNfn) - Walt Disney Co. reported a 21.5 percent rise in fiscal second-quarter profits, reflecting booming attendance at its theme parks and resorts.
The Burbank, Calif.-based media firm also declared a 3-for-1 stock split and increased its stock repurchase program to 133.3 million shares, or 400 million shares, on a post-split basis.
"Our theme parks and resorts division continued to lead the company forward during the second quarter," said Michael Eisner, chairman and chief executive.
(Click here to see how Disney's shares have fared over the last three years)
For the quarter ended March 31, Disney reported net income of $384 million, or 55 cents a share, up from a pro forma profit of $316 million, or 46 cents a share, a year earlier. Revenue was flat at $5.2 billion.
The latest results include a one-time gain of 3 cents a share from the sale of the company's interest in Scandinavian Broadcasting System. Excluding that gain, Disney just topped analysts' consensus estimate of 51 cents.
The year-ago proforma results exclude income from former operations, such as the ABC publishing assets and a Los Angeles television station, both of which were sold last year.
Shares of Disney (DIS) rose to 121 in after-hours trading after closing at 116-1/16 on the New York Stock Exchange Wednesday.
Second quarter financial results, however, weren't all a fairytale story.
Disney reported a 4 percent drop in creative content operating income, which includes profits from movies, videos and Disney Store sales. Its broadcasting division also posted flat operating income.
"We were not expecting a lot from the broadcast side, but the fact that creative content was down that much was a little surprising," said Collins & Co. analyst Brian Eisenbarth.
In the year-ago quarter, Disney's creative content division was buoyed by the release of the movies "101 Dalmations" and "Ransom". The company last year also enjoyed the success of its "Toy Story" and "Aladdin and the King of Theives" video release.
Smith Barney analyst Jill Krutick said the dip in creative division operating income was more than made up for in other divisions.
"We were expecting both [the creative content and broadcasting] to be flat so the mild downturn in creative was more than offset by the theme parks," she said.
Krutick expects Disney's year-end earnings to reach $3.17 per share.
Disney's theme parks have been a consistent money maker for the company in the last few years and the company is investing heavily to maintain its lead over rival theme park operators.
On Wednesday, Disney added yet another attraction to its theme park empire -- the Animal Kingdom in Orlando, Fla.
The $800 million zoo contains more than 200 animal species including elephants, wildebeests and baboons.
Within two hours of the opening of the park Wednesday, the gates to the park had to be temporarily shut down because of the sellout crowd.
Industry analysts said the Animal Kingdom should be a winner for Disney.
"So far it looks terrific and they'll make a tremendous return for their investment," John Tinker, media analyst at NationsBanc Montgomery Securities.
The stock split -- the seventh in Disney's history - is payable in early July to shareholders of record May 1. The company last declared a split in April 1992, when the stock was adjusted on a 4-for-1 basis.
The increase in the stock buyback program brings the total to 20 percent of Disney's outstanding stock. Prior to the board's action, the company was authorized to repurchase 87.8 million shares.
Disney has about 680 million shares outstanding.
For the first six months of 1998, the company reported net income of $1.14 billion, or $1.65 a share, compared with a pro forma $957 million, or $1.40 a share, in the year-ago period.
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