Provided below are excerpts from The Walt Disney Company Form 10-K for the fiscal year ended October 3, 2015 Description of the Business and Segment Information The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in the following business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive DESCRIPTION OF THE BUSINESS Media Networks The Company operates cable programming services including the ESPN, Disney Channels, ABC Family and UTV/Bindass networks, broadcast businesses, which include the ABC TV Network and eight owned television stations, radio businesses consisting of the ESPN Radio Network, including 4 owned ESPN radio stations, and the Radio Disney Network, which operates from an owned radio station in Los Angeles. The ABC TV and ESPN Radio Networks have affiliated stations providing coverage to consumers throughout the U.S. The Company also produces original live-action and animated television programming, which may be sold in network, first-run syndication and other television markets worldwide, through online services and on DVD and Blu-ray formats. The Company has interests in media businesses that are accounted for under the equity method including A&E Television Networks LLC (A&E), Seven TV, CTV Specialty Television, Inc., Hulu LLC and Fusion Media Networks LLC. Our Media Networks business also operates branded internet sites Parks and Resorts The Company owns and operates the Walt Disney World Resort in Florida and the Disneyland Resort. in California. The Walt Disney World Resort includes four theme parks (the Magic Kingdom, Epcot, Disney's Hollywood Studios and Disney's Animal Kingdom); 18 resort hotels; a retail, dining and entertainment complex; a sports complex, conference centers; campgrounds; water parks; and other recreational facilities. The Disneyland Resort includes two theme parks (Disneyland and Disney California Adventure), three resort hotels and a retail, dining and entertainment complex. Internationally, the Company manages and has an 81% (85% as of October 3, 2015) effective ownership interest in Disneyland Paris (see Disneyland Paris recapitalization in Note 6), which includes two theme parks (Disneyland Park and Walt Disney Studios Park); seven themed hotels; two convention centers; a shopping, dining andentertainment complex, and a 27-hole golf facility. The Company manages and has a 47% ownership interest in Hong Kong Disneyland Resort (HKDL), which includes one theme park and two resort hotels. The Company has a 43% ownership interest in Shanghai Disney Resort, which is currently under construction, and a 70% ownership interest in the management company of Shanghai Disney Resort. The Company also earns royalties on revenues generated by the Tokyo Disneyland Resort, which includes two theme parks (Tokyo Disneyland and Tokyo DisneySea) and three Disney-branded hotels, and is owned and operated by an unrelated Japanese corporation. The Company manages and markets vacation club ownership interests through the Disney Vacation Club; operates the Disney Cruise Line; the Adventures by Disney guided group vacations business; and Aulani, a hotel and vacation club resort. in Hawaii. The Company's Walt Disney Imagineering unit designs and develops theme park concepts and attractions as well as resort properties Studio Entertainment The Company produces and acquires live-action and animated motion pictures for worldwide distribution to the theatrical, home entertainment and television markets. The Company distributes these products through its own distribution and marketing companies in the U.S. and both directly and through independent companies and joint ventures in foreign markets primarily under the Walt Disney Pictures, Pixar, Marvel, Lucasfilm, Touchstone and UTV banners. We distribute certain motion pictures for DreamWorks Studios under our Touchstone Pictures banner. The Company also produces stage plays and musical recordings, licenses and produces live entertainment events and provides visual and audio effects and other post-production services Consumer Products The Company licenses its trade names, characters and visual and literary properties to various retailers and publishers throughout the world. The Company also engages in retail, online and wholesale distribution of products through The Disney Store, DisneyStore.com and MarvelStore com. We operate The Disney Store in North America, Europe and Japan. The Company publishes entertainment and educational books and magazines and comic books for children and families and operates English language learning centers in China Interactive The Company creates and distributes branded entertainment. and lifestyle content for interactive media platforms. The primary operations include the production and distribution of multi-platform games, the licensing of our properties for games and mobile devices, and the development of branded online services SEGMENT INFORMATION The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, other expense, interest income/(expense), income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees. Corporate and unallocated shared expenses principally consist of corporate functions executive management and certain unallocated administrative support functions Equity in the income of investees included in segment operating results is as follows 2014 2015 2013 Media Networks Cable Networks Broadcasting $ 896 (82) $ 895 (39) $ 788 (46) Parks and Resorts Equity in the income of investees included in S 814 854 $ 742 segment operating income In fiscal 2013, the Company recorded a $55 million charge for our share of expense related to an equity redemption at Hulu LLC (Hulu Equity Redemption). This charge is recorded in Equity in the income of investees in the Consolidated Statement of Income but has been excluded from segment operating income. See Note 3 for further discussion of the transaction The following segment results include allocations of certain costs, including information technology, pension, legal and other shared services costs, which are allocated based on metrics designed to correlate with consumption. These allocations are agreed-upon amounts between the businesses and may differ from amounts that would be negotiated in arm's length designed to correlate with consumption. These allocations are agreed-upon amounts between the businesses and may differ from amounts that would be negotiated in arm's length transactions. In addition, all significant intersegment transactions have been eliminated except that Studio Entertainment revenues and operating income include an allocation of Consumer Products and Interactive revenues, which is meant to reflect royalties on revenue generated by Consumer Products and Interactive on merchandise based on intellectual property from certain Studio Entertainment films 2015 2014 2013 Kevenues Media Networks Parks and Resorts Studio Entertainment Third parties Intersegment $ 23,264 16,162 $ 21,152 15,099 S 20,356 14,087 6.838 528 7,366 6,988 290 7.278 5,721 258 5,979 Consumer Products Third parties Intersegment 5,027 4,499 1,174 3,811 (256) 3,555 4,274 (289) 3,985 (528) Interactive Third parties Intersegment 1,300 1,066 1,299 $ 48,813 1,064 $ 45,041 1,174 $ 52.465 Total consolidated revenues Segment operating income (loss) Media Networks Parks and Resorts Studio Entertainment Consumer Products $ 7.793 3,031 1,973 1,752 $ 7,321 2,663 1,549 1,356 $ 6,818 2.220 661 1,112 2015 2014 2013 Kevenues Media Networks Parks and Resorts Studio Entertainment Third parties Intersegment S 20,356 14,087 23,264 16,162 21,152 15,099 6,838 528 7,366 6,988 290 7,278 5,721 258 5,979 Consumer Products Third parties Intersegment 4,274 (289) 3,985 3,811 (256) 3,555 5,027 (528) 4,499 Interactive Third parties Intersegment 1,300 1,066 1,174 1,299 48,813 1,174 $ 52.465 1,064 $ 45,041 Total consolidated revenues Segment operating income (loss) Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive $ 7.793 3,031 1,973 1,752 132 $14,681 $ 7,321 2,663 1,549 1,356 116 $ 13,005 $ 6,818 2.220 661 1,112 (87) $ 10,724 Total segment operating income Reconciliation of segment operating income to income before income taxes Segment operating income Corporate and unallocated shared expenses Restructuring and impairment charges Other expense, net Interest income/(expense), net 13,005 (611) (140) (31) 23 $ 14,681 (643) (53) $ 10.724 (531) (214) (69) (235) (117) before income taxes Segment operating income Corporate and unallocated shared expenses Restructuring and impairment charges Other expense, net Interest income/(expense), net Hulu Equity Redemption charge Income before income taxes S 13.005 (611) (140) (31) 23 $ 14.681 (643) (53) S 10,724 (531) (214) (69) (235) (55) $ 9,620 (117) $ 13,868 $ 12,246 Capital expenditure Media Networks Cable Networks Broadcasting Parks and Resorts Domestic S 176 87 $ 127 71 S 172 1,140 970 78 45 13 1,457 2.147 107 76 1,184 1,504 43 252 Studio Entertainment Consumer Products Interactive Corporate Total capital expenditures 269 $ 4,265 $ 3,311 $ 2,796 Depreciation expense Media Networks Parks and Resorts Domestic International Studio Entertainment Consumer Products Interactive Corporate Total depreciation expense $ 245 $ 238 $ 238 1,041 327 54 57 1,117 353 48 59 1,169 345 57 12 249 $2,132 239 $ 2,064 $ 1,957 2015 2014 2013 Amortization of intangible assets Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive 21 $12 $ 107 89 24 102 12 109 S 235 Total amortization of intangible assets 222 $ 224 ldentifiable assets) Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive $30,638 25,510 15,334 7,591 2,081 7,022 88,182 29,566 15,162 7,526 2,199 6,391 $ 84,141 Total consolidated assets Supplemental revenue datoa Affiliate Fees Advertising Retail merchandise, food and beverage Theme park admissions Revenues United States and Canada $12,029 8,499 5,986 5,483 S 10,632 8,094 5,598 5,114 S 10,018 8,006 5,185 4.704 $40,320 6,507 3,958 1,080 $52,465 36,769 S 34,021 6,181 3,333 1,506 S 45,041 3,930 1,609 Asia Paciflc Latin America and Other $ 48,81 Segment operating income United States and Canada $ 10,820 1,964 1,365 $ 9.594 1,581 1.342 $ 7.871 1,361 1,016 Asia Pacific Segment operating income United States and Canada Europe Asia Pacific Latin America and Other $10,820 1,964 1,365 532 $ 14,681 $ 9.594 1,581 1,342 488 S 13.005 $ 7.871 1,361 1,016 476 S 10,724 (1) ldentifiable assets include amounts associated with equity method investments, goodwill and intangible assets. Equity method investments by segment are as follows 2015 2014 Media Networks Parks and Resorts Studio Entertainment S 2,454 2,321 28 Interactive 124 17 S 2,483 S 2,476 Goodwill and intangible assets by segment are as follows: 2015 2014 Media Networks Parks and Resorts Studio Entertainment S 18,186 376 8,538 6.118 1.650 130 S 34,998 S 18,270 379 8,679 6.187 1,670 130 S 35,315 Interactive (2) Primarily fixed assets, cash and cash equivalents, deferred tax assets and investments 2015 2014 Long-lived assets) 53 076 2015 2014 Long-lived assets United States and Canada Europe Asia Pacific Latin America and Other 52,909 8,733 5,084 217 $ 53,976 8,254 6,817 182 69,229 $ 66,943) Required All questions relate to Fiscal 2015 unless stated otherwise 1. Disney states that the Chief Executive Officer evaluates the financial information of each segment separately. What is the significance of this statement with regard to Disclosure requirements under U.S. GAAP? 2. Which business segment contributes the most (least) external revenue for Disney? Compute the percentage of segment external revenue to total segments external revenue for these two segments 3. Which business segment contributes the most (least) pre-tax income for Disney? Compute the percentage of segment pre-tax income to total segments pre-tax income for these two segments 4. Which business segment had the highest (lowest) percentage growth (year-to-year change) in total revenue from 2014 to 2015? 5. Which business segment had the highest (lowest) percentage growth (year-to-year change) in operating income from 2014 to 2015? 6. Which segment had the highest (lowest) operating income margin? 7. How would analysts use the business segment data related to the income statement? 8. What percentage of Disney's revenue is earned in the United States? 9. The revenue in United States and Canada grew by about 10% from 2014 to 2015, However, revenue growth in the rest of the world was almost flat. What might explain the lack of growth? Do people outside the United States not like Frozen, Star Wars, and Winnie the Pooh anymore? Provided below are excerpts from The Walt Disney Company Form 10-K for the fiscal year ended October 3, 2015 Description of the Business and Segment Information The Walt Disney Company, together with the subsidiaries through which businesses are conducted (the Company), is a diversified worldwide entertainment company with operations in the following business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive DESCRIPTION OF THE BUSINESS Media Networks The Company operates cable programming services including the ESPN, Disney Channels, ABC Family and UTV/Bindass networks, broadcast businesses, which include the ABC TV Network and eight owned television stations, radio businesses consisting of the ESPN Radio Network, including 4 owned ESPN radio stations, and the Radio Disney Network, which operates from an owned radio station in Los Angeles. The ABC TV and ESPN Radio Networks have affiliated stations providing coverage to consumers throughout the U.S. The Company also produces original live-action and animated television programming, which may be sold in network, first-run syndication and other television markets worldwide, through online services and on DVD and Blu-ray formats. The Company has interests in media businesses that are accounted for under the equity method including A&E Television Networks LLC (A&E), Seven TV, CTV Specialty Television, Inc., Hulu LLC and Fusion Media Networks LLC. Our Media Networks business also operates branded internet sites Parks and Resorts The Company owns and operates the Walt Disney World Resort in Florida and the Disneyland Resort. in California. The Walt Disney World Resort includes four theme parks (the Magic Kingdom, Epcot, Disney's Hollywood Studios and Disney's Animal Kingdom); 18 resort hotels; a retail, dining and entertainment complex; a sports complex, conference centers; campgrounds; water parks; and other recreational facilities. The Disneyland Resort includes two theme parks (Disneyland and Disney California Adventure), three resort hotels and a retail, dining and entertainment complex. Internationally, the Company manages and has an 81% (85% as of October 3, 2015) effective ownership interest in Disneyland Paris (see Disneyland Paris recapitalization in Note 6), which includes two theme parks (Disneyland Park and Walt Disney Studios Park); seven themed hotels; two convention centers; a shopping, dining andentertainment complex, and a 27-hole golf facility. The Company manages and has a 47% ownership interest in Hong Kong Disneyland Resort (HKDL), which includes one theme park and two resort hotels. The Company has a 43% ownership interest in Shanghai Disney Resort, which is currently under construction, and a 70% ownership interest in the management company of Shanghai Disney Resort. The Company also earns royalties on revenues generated by the Tokyo Disneyland Resort, which includes two theme parks (Tokyo Disneyland and Tokyo DisneySea) and three Disney-branded hotels, and is owned and operated by an unrelated Japanese corporation. The Company manages and markets vacation club ownership interests through the Disney Vacation Club; operates the Disney Cruise Line; the Adventures by Disney guided group vacations business; and Aulani, a hotel and vacation club resort. in Hawaii. The Company's Walt Disney Imagineering unit designs and develops theme park concepts and attractions as well as resort properties Studio Entertainment The Company produces and acquires live-action and animated motion pictures for worldwide distribution to the theatrical, home entertainment and television markets. The Company distributes these products through its own distribution and marketing companies in the U.S. and both directly and through independent companies and joint ventures in foreign markets primarily under the Walt Disney Pictures, Pixar, Marvel, Lucasfilm, Touchstone and UTV banners. We distribute certain motion pictures for DreamWorks Studios under our Touchstone Pictures banner. The Company also produces stage plays and musical recordings, licenses and produces live entertainment events and provides visual and audio effects and other post-production services Consumer Products The Company licenses its trade names, characters and visual and literary properties to various retailers and publishers throughout the world. The Company also engages in retail, online and wholesale distribution of products through The Disney Store, DisneyStore.com and MarvelStore com. We operate The Disney Store in North America, Europe and Japan. The Company publishes entertainment and educational books and magazines and comic books for children and families and operates English language learning centers in China Interactive The Company creates and distributes branded entertainment. and lifestyle content for interactive media platforms. The primary operations include the production and distribution of multi-platform games, the licensing of our properties for games and mobile devices, and the development of branded online services SEGMENT INFORMATION The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance Segment operating results reflect earnings before corporate and unallocated shared expenses, restructuring and impairment charges, other expense, interest income/(expense), income taxes and noncontrolling interests. Segment operating income includes equity in the income of investees. Corporate and unallocated shared expenses principally consist of corporate functions executive management and certain unallocated administrative support functions Equity in the income of investees included in segment operating results is as follows 2014 2015 2013 Media Networks Cable Networks Broadcasting $ 896 (82) $ 895 (39) $ 788 (46) Parks and Resorts Equity in the income of investees included in S 814 854 $ 742 segment operating income In fiscal 2013, the Company recorded a $55 million charge for our share of expense related to an equity redemption at Hulu LLC (Hulu Equity Redemption). This charge is recorded in Equity in the income of investees in the Consolidated Statement of Income but has been excluded from segment operating income. See Note 3 for further discussion of the transaction The following segment results include allocations of certain costs, including information technology, pension, legal and other shared services costs, which are allocated based on metrics designed to correlate with consumption. These allocations are agreed-upon amounts between the businesses and may differ from amounts that would be negotiated in arm's length designed to correlate with consumption. These allocations are agreed-upon amounts between the businesses and may differ from amounts that would be negotiated in arm's length transactions. In addition, all significant intersegment transactions have been eliminated except that Studio Entertainment revenues and operating income include an allocation of Consumer Products and Interactive revenues, which is meant to reflect royalties on revenue generated by Consumer Products and Interactive on merchandise based on intellectual property from certain Studio Entertainment films 2015 2014 2013 Kevenues Media Networks Parks and Resorts Studio Entertainment Third parties Intersegment $ 23,264 16,162 $ 21,152 15,099 S 20,356 14,087 6.838 528 7,366 6,988 290 7.278 5,721 258 5,979 Consumer Products Third parties Intersegment 5,027 4,499 1,174 3,811 (256) 3,555 4,274 (289) 3,985 (528) Interactive Third parties Intersegment 1,300 1,066 1,299 $ 48,813 1,064 $ 45,041 1,174 $ 52.465 Total consolidated revenues Segment operating income (loss) Media Networks Parks and Resorts Studio Entertainment Consumer Products $ 7.793 3,031 1,973 1,752 $ 7,321 2,663 1,549 1,356 $ 6,818 2.220 661 1,112 2015 2014 2013 Kevenues Media Networks Parks and Resorts Studio Entertainment Third parties Intersegment S 20,356 14,087 23,264 16,162 21,152 15,099 6,838 528 7,366 6,988 290 7,278 5,721 258 5,979 Consumer Products Third parties Intersegment 4,274 (289) 3,985 3,811 (256) 3,555 5,027 (528) 4,499 Interactive Third parties Intersegment 1,300 1,066 1,174 1,299 48,813 1,174 $ 52.465 1,064 $ 45,041 Total consolidated revenues Segment operating income (loss) Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive $ 7.793 3,031 1,973 1,752 132 $14,681 $ 7,321 2,663 1,549 1,356 116 $ 13,005 $ 6,818 2.220 661 1,112 (87) $ 10,724 Total segment operating income Reconciliation of segment operating income to income before income taxes Segment operating income Corporate and unallocated shared expenses Restructuring and impairment charges Other expense, net Interest income/(expense), net 13,005 (611) (140) (31) 23 $ 14,681 (643) (53) $ 10.724 (531) (214) (69) (235) (117) before income taxes Segment operating income Corporate and unallocated shared expenses Restructuring and impairment charges Other expense, net Interest income/(expense), net Hulu Equity Redemption charge Income before income taxes S 13.005 (611) (140) (31) 23 $ 14.681 (643) (53) S 10,724 (531) (214) (69) (235) (55) $ 9,620 (117) $ 13,868 $ 12,246 Capital expenditure Media Networks Cable Networks Broadcasting Parks and Resorts Domestic S 176 87 $ 127 71 S 172 1,140 970 78 45 13 1,457 2.147 107 76 1,184 1,504 43 252 Studio Entertainment Consumer Products Interactive Corporate Total capital expenditures 269 $ 4,265 $ 3,311 $ 2,796 Depreciation expense Media Networks Parks and Resorts Domestic International Studio Entertainment Consumer Products Interactive Corporate Total depreciation expense $ 245 $ 238 $ 238 1,041 327 54 57 1,117 353 48 59 1,169 345 57 12 249 $2,132 239 $ 2,064 $ 1,957 2015 2014 2013 Amortization of intangible assets Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive 21 $12 $ 107 89 24 102 12 109 S 235 Total amortization of intangible assets 222 $ 224 ldentifiable assets) Media Networks Parks and Resorts Studio Entertainment Consumer Products Interactive $30,638 25,510 15,334 7,591 2,081 7,022 88,182 29,566 15,162 7,526 2,199 6,391 $ 84,141 Total consolidated assets Supplemental revenue datoa Affiliate Fees Advertising Retail merchandise, food and beverage Theme park admissions Revenues United States and Canada $12,029 8,499 5,986 5,483 S 10,632 8,094 5,598 5,114 S 10,018 8,006 5,185 4.704 $40,320 6,507 3,958 1,080 $52,465 36,769 S 34,021 6,181 3,333 1,506 S 45,041 3,930 1,609 Asia Paciflc Latin America and Other $ 48,81 Segment operating income United States and Canada $ 10,820 1,964 1,365 $ 9.594 1,581 1.342 $ 7.871 1,361 1,016 Asia Pacific Segment operating income United States and Canada Europe Asia Pacific Latin America and Other $10,820 1,964 1,365 532 $ 14,681 $ 9.594 1,581 1,342 488 S 13.005 $ 7.871 1,361 1,016 476 S 10,724 (1) ldentifiable assets include amounts associated with equity method investments, goodwill and intangible assets. Equity method investments by segment are as follows 2015 2014 Media Networks Parks and Resorts Studio Entertainment S 2,454 2,321 28 Interactive 124 17 S 2,483 S 2,476 Goodwill and intangible assets by segment are as follows: 2015 2014 Media Networks Parks and Resorts Studio Entertainment S 18,186 376 8,538 6.118 1.650 130 S 34,998 S 18,270 379 8,679 6.187 1,670 130 S 35,315 Interactive (2) Primarily fixed assets, cash and cash equivalents, deferred tax assets and investments 2015 2014 Long-lived assets) 53 076 2015 2014 Long-lived assets United States and Canada Europe Asia Pacific Latin America and Other 52,909 8,733 5,084 217 $ 53,976 8,254 6,817 182 69,229 $ 66,943) Required All questions relate to Fiscal 2015 unless stated otherwise 1. Disney states that the Chief Executive Officer evaluates the financial information of each segment separately. What is the significance of this statement with regard to Disclosure requirements under U.S. GAAP? 2. Which business segment contributes the most (least) external revenue for Disney? Compute the percentage of segment external revenue to total segments external revenue for these two segments 3. Which business segment contributes the most (least) pre-tax income for Disney? Compute the percentage of segment pre-tax income to total segments pre-tax income for these two segments 4. Which business segment had the highest (lowest) percentage growth (year-to-year change) in total revenue from 2014 to 2015? 5. Which business segment had the highest (lowest) percentage growth (year-to-year change) in operating income from 2014 to 2015? 6. Which segment had the highest (lowest) operating income margin? 7. How would analysts use the business segment data related to the income statement? 8. What percentage of Disney's revenue is earned in the United States? 9. The revenue in United States and Canada grew by about 10% from 2014 to 2015, However, revenue growth in the rest of the world was almost flat. What might explain the lack of growth? Do people outside the United States not like Frozen, Star Wars, and Winnie the Pooh anymore
