Disney (DIS) beats consensus, driven by DVD sales and theme park attendance

The Walt Disney company (ticker: DIS) reported results for its fiscal second quarter 2005 on May 11, 2005. Here are some details:

Results 1Q05 vs. 1Q04:

• EPS: $0.33 vs. $0.26 (+27%)
• Consensus EPS was $0.32
• Revenue: $7.83B vs. $7.19B (+9%)
• Consensus revenue was $7.81B
• Operating income: $1.28B vs. $1.12B (+14%)
• Operating margin: 16.4% vs. 15.6% (+80bps)
• Net income: $698.0M vs. $537.0M (+30%)
• Net margin: 8.9% vs. 7.5% (+140bps)
• Cash: $1.94B vs. $2.04B (-5%)
• Debt: $13.19B vs. $13.49B (-2%)
• Free cash flow: $376.0M vs. $2,036.0M (-82%)

Media & Networks 1Q05 vs. 1Q04:

• Revenues: $22.1M vs. $16.0M (+38%)
• Operating income: $4.9M vs. $4.5M (+10%)
• Operating margin: 22.4% vs. 28% (-560bps)

Parks & Resorts 1Q05 vs. 1Q04:

• Revenues: $2,096.0M vs. $1,669.0M (+26%)
• Operating income: $193.0M vs. $188.0M (+3%)
• Operating margin: 9.2% vs. 11.3% (-210bps)

Studio Entertainment 1Q05 vs. 1Q04:

• Revenues: $2,260.0M vs. $2,162.0M (+5%)
• Operating income: $253.0M vs. $153.0M (+65%)
• Operating margin: 11.2% vs. 7.1% (+410bps)

Consumer Products 1Q05 vs. 1Q04:

• Revenues: $465.0M vs. $512.0M (-9%)
• Operating income: $111.0M vs. $75.0M (+48%)
• Operating margin: 23.9% vs. 14.6% (+930bps)

Quick comments:

• Results were released more than an hour early after an internal email was mistakenly sent out
• Guidance: On track to deliver double-digit earnings growth this year; reiterated goal of average double-digit growth through 2007 from a 2004 base
• Happiest Celebration on Earth: Last week, DIS launched its 18 month long celebration commemorating 50 years of Disney theme parks
• Key events during the quarter: named Robert Iger as its new CEO; came to terms with Miramax founders Bob and Harvey Weinstein; and signed an agreement with the NFL to move Monday Night Football to EPSN from ABC
• Share Repurchase: DIS repurchased 15.1 million shares in he quarter at a cost of $433 million; as of 4/2/05, DIS was authorized to repurchase 300 million shares
• Euro Disney: On 2/23/05, Euro Disney completed a rights offering bringing DIS's ownership stake to 51%; as a result Euro Disney was required to adjust certain senior debt to market value resulting in a $61M gain for DIS
• Online revenues: up 25% in the quarter; online advertising was up 40%
• Disney mobile: content is available in 31 countries through 60 carriers and distributors; in fiscal '05, Disney mobile entered 6 new markets and signed 14 new distribution deals
• Movie Hits:  The Pacifier unexpectedly grossed more than $100M; The Incredibles is the number one selling DVD title this year
• Theme Parks: Excluding the impact of consolidated Euro Disney and Hong Kong Disney, revenues grew 7%, operating profit increased 26%, and margins increased by nearly 2 percentage points
• Disneyland attendance was down 3% due to heavy rain in Southern California; per capita spending was up double-digits; occupancy was at 80% (1% below last year); and per room spending was up 6%
• Walt Disney World: attendance was up mid-single digits versus a strong 2Q04; international attendance +20%; per capita spending +10%; hotel occupancy +7%; occupied room nights +9%; and per roon spening -1%
• Home Video: The Incredibles, Bambi and Ladder 49 sold almost 28 million combined units during the quarter; worldwide DVD sales were 88 million unit, a 25% year-over-year increase
• Consumer products:  Helped by the absence of $20 million in losses from the Disney Stores, which were sold to the Children's Place (ticker: PLCE); and from license guanrantee revenues from Mattel (ticker: MAT)