MATABALAO, FHERDAWZIA N.

SAGLAYAN, JANNEFAH IRISH H.

Fiscal Year 2018 Annual Financial Report

 CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)

2018 2017 2016

Revenues:
Services $ 50,869 $ 46,843 $ 47,130

Products 8,565 8,294 8,502

Total revenues 59,434 55,137 55,632

Costs and expenses:

Cost of services (exclusive of depreciation and amortization) (27,528) (25,320) (24,653)

Cost of products (exclusive of depreciation and amortization) (5,198) (4,986) (5,340)

Selling, general, administrative and other (8,860) (8,176) (8,754)

Depreciation and amortization (3,011) (2,782) (2,527)

Total costs and expenses (44,597) (41,264) (41,274)

Restructuring and impairment charges (33) (98) (156)

Other income, net 601 78 —

Interest expense, net (574) (385) (260)

Equity in the income (loss) of investees, net (102) 320 926

Income before income taxes 14,729 13,788 14,868

Income taxes (1,663) (4,422) (5,078)

Net income 13,066 9,366 9,790

Less: Net income attributable to noncontrolling interests (468) (386) (399)

Net income attributable to The Walt Disney Company (Disney) $ 12,598 $ 8,980 $ 9,391

Earnings per share attributable to Disney:

Diluted $ 8.36 $ 5.69 $ 5.73

Basic $ 8.40 $ 5.73 $ 5.76

Weighted average number of common and common equivalent

shares outstanding:
Diluted $ 1,507 $ 1,578 $ 1,639

Basic $ 1,499 $ 1,568 $ 1,629

Dividends declared per share $ 1.68 $ 1.56 $ 1.42

See Notes to Consolidated Financial Statements

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(in millions)

2018 2017 2016

Net Income $ 13,066 $ 9,366 $ 9,790

Other comprehensive income/(loss), net of tax:

Market value adjustments for investments 7 (18) 13

Market value adjustments for hedges 207 (37) (359)

Pension and postretirement medical plan adjustments 434 584 (1,154)

Foreign currency translation and other (289) (103) (156)

Other comprehensive income/(loss) 359 426 (1,656)

Comprehensive income 13,425 9,792 8,134

Net income attributable to noncontrolling interests, (468) (386) (399)

including redeemable noncontrolling interests
Other comprehensive loss attributable to noncontrolling interests 72 25 98
Comprehensive income attributable to Disney $ 13,029 $ 9,431 $ 7,833

See Notes to Consolidated Financial Statements

 CONSOLIDATED BALANCE
SHEETS
(in millions, except per share data)

September September 30,

29,
2018
ASSETS
Current assets
Cash and cash equivalents $ 4,150 $ 4,017
Receivables 9,334 8,633
Inventories 1,392 1,373
Television costs and advances 1,314 1,278
Other current assets 635 588
Total current assets 16,825 15,889
Film and television costs 7,888 7,481
Investments 2,899 3,202
Parks, resorts and other property
Attractions, buildings and equipment 55,238 54,043
Accumulated depreciation (30,764) (29,037)
24,474 25,006
Projects in progress 3,942 2,145
Land 1,124 1,255
29,540 28,406
Intangible assets, net 6,812 6,995
Goodwill 31,269 31,426
Other assets 3,365 2,390
Total assets $ 98,598 $ 95,789
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued liabilities $ 9,479 $ 8,855
Current portion of borrowings 3,790 6,172
Deferred revenue and other 4,591 4,568
Total current liabilities 17,860 19,595
Borrowings 17,084 19,119
Deferred income taxes 3,109 4,480
Other long-term liabilities 6,590 6,443
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests 1,123 1,148
Equity
Preferred stock — —
Common stock, $.01 par value, Authorized – 4.6 billion shares,
Issued – 2.9 billion shares 36,779 36,248
Retained earnings 82,679 72,606
Accumulated other comprehensive loss (3,097) (3,528)
116,361 105,326
Treasury stock, at cost, 1.4 billion shares (67,588) (64,011)
Total Disney Shareholders’ equity 48,773 41,315
Noncontrolling interests 4,059 3,689
Total equity 52,832 45,004
Total liabilities and equity $ 98,598 $ 95,789

See Notes to Consolidated Financial Statements

 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

2018 2017 2016

OPERATING ACTIVITIES
Net income $ 13,066 $ 9,366 $ 9,790
Depreciation and amortization 3,011 2,782 2,527
Gains on acquisitions and dispositions (560) (289) (26)
Deferred income taxes (1,573) 334 1,214
Equity in the (income) loss of investees 102 (320) (926)
Cash distributions received from equity investees 775 788 799
Net change in film and television costs and advances (523) (1,075) (101)
Equity-based compensation 393 364 393
Other 441 503 674
Changes in operating assets and liabilities:
Receivables (720) 107 (393)
Inventories (17) (5) 186
Other assets (927) (52) (443)
Accounts payable and other accrued liabilities 235 (368) 40
Income taxes 592 208 (598)
Cash provided by operations 14,295 12,343 13,136

INVESTING ACTIVITIES
Investments in parks, resorts and other property (4,465) (3,623) (4,773)
Acquisitions (1,581) (417) (850)
Other 710 (71) (135)
Cash used in investing activities (5,336) (4,111) (5,758)

FINANCING ACTIVITIES
Commercial paper borrowings/(payments), net (1,768) 1,247 (920)
Borrowings 1,056 4,820 6,065
Reduction of borrowings (1,871) (2,364) (2,205)
Dividends (2,515) (2,445) (2,313)
Repurchases of common stock (3,577) (9,368) (7,499)
Proceeds from exercise of stock options 210 276 259
Contributions from noncontrolling interest holders 399 17 —
Other (777) (1,142) (607)
Cash used in financing activities (8,843) (8,959) (7,220)

Impact of exchange rates on cash, cash equivalents and restricted

cash (25) 31 (123)

Change in cash, cash equivalents and restricted cash 91 (696) 35

Cash, cash equivalents and restricted cash, beginning of year 4,064 4,760 4,725
Cash, cash equivalents and restricted cash, end of year $ 4,155 $ 4,064 $ 4,760

Supplemental disclosure of cash flow information:

Interest paid $ 631 $ 466 $ 395
Income taxes paid $ 2,503 $ 3,801 $ 4,133

See Notes to Consolidated Financial Statements

 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
EQUITY
(in millions)

Accumulated Other
Shares Common Retained Comprehensive Treasury Stock Total Non- Total Equity
Stock Earnings Income Disney controlling
Equity Interest

Balance at October 3, 2015 1,661 $ 35,122 $ 59,028 $ (2,421) $ (47,204) $ 44,525 $ 4,130 $ 48,655

Comprehensive income — — 9,391 (1,558) — 7,833 301 8,134

Equity compensation activity 10 726 — — — 726 — 726

Common stock repurchases (74) — — — (7,499) (7,499) — (7,499)

Dividends — 15 (2,328) — — (2,313) — (2,313)

Distributions and other — (4) (3) — — (7) (373) (380)

Balance at October 1, 2016 1,597 $ 35,859 $ 66,088 $ (3,979) $ (54,703) $ 43,265 $ 4,058 $ 47,323

Comprehensive income — — 8,980 451 — 9,431 361 9,792

Equity compensation activity 8 529 — — — 529 — 529

Common stock repurchases (89) — — — (9,368) (9,368) — (9,368)

Dividends — 13 (2,458) — — (2,445) — (2,445)

Contributions — — — — — — 17 17

Distributions and other 1 (153) (4) — 60 (97) (747) (844)

Balance at September 30, 2017 1,517 $ 36,248 $ 72,606 $ (3,528) $ (64,011) $ 41,315 $ 3,689 $ 45,004

Comprehensive income — — 12,598 431 — 13,029 425 13,454

Equity compensation activity 6 518 — — — 518 — 518

Common stock repurchases (35) — — — (3,577) (3,577) — (3,577)

Dividends — 14 (2,529) — — (2,515) — (2,515)

Contributions — — — — — — 488 488

Distributions and other — (1) 4 — — 3 (543) (540)

Balance at September 29, 2018 1,488 $ 36,779 $ 82,679 $ (3,097) $ (67,588) $ 48,773 $ 4,059 $ 52,832

Equity Attributable to Disney

(1) Excludes redeemable non-controlling interest.

See Notes to Consolidated Financial Statements