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Disney's Net Leaps 159% in Quarter; Arvida Unit Cited

January 22, 1987|KATHRYN HARRIS | Times Staff Writer

Walt Disney Co. on Wednesday reported a whopping 159% increase in its net income for the quarter ended Dec. 31, and a 50% jump in revenue. The Burbank-based entertainment company said its net income rose to $89.8 million on revenue of $755.5 million.

Disney's Arvida community development unit showed the largest percentage gain, with a 184% increase in operating income. The unit's profit rose to $31.4 million from $11.1 million in the same period a year ago.

A portion of the Arvida results came from the sale of its 50% interest in Town Center mall in Boca Raton, Fla.

Disney's press release made no mention of the sale of Town Center, a mall rated by its owners in 1984 as among the top 10% nationwide in sales volume.

But Disney Chief Financial Officer Gary L. Wilson confirmed the transaction, in response to a reporter's question. Wilson declined to disclose the terms and said the buyer asked that its identify not be disclosed.

May Be Sold

One East Coast source who has intimate knowledge of Arvida and Disney affairs identified the buyer as JMB Realty, the Chicago firm that controlled the other 50%-stake in the giant mall.

Earlier this week, the Wall Street Journal reported that Disney has discussed selling all of Arvida to the Chicago firm. However, the source refuted that report, saying: "The only thing we're doing with JMB is Town Center."

Arvida appears earmarked for sale in a master limited partnership that would allow Disney to continue to control the company by acting as the general partner. Disney has never confirmed press reports of this plan, but sources said this week that the proposal might be readied in the next 45 days.

In its earnings release, Disney singled out its giant theme park division as a significant contributor to the dramatic gain. Operating income for the unit rose 97% to $77.5 million from $39.2 million a year ago. The company cited increased attendance and greater spending by guests at its theme parks, and higher hotel occupancy at Walt Disney World in Florida.

Operating income for the filmed entertainment unit rose 134% to $53.7 million from $22.9 million, "reflecting improvements in the television and home-video businesses," the company said.

The consumer products group reported operating income of $23.4 million, up 20%.

The community development unit was formed after Arvida's acquisition 2 1/2 years ago for $214 million. At the time, a previous Disney management was fighting a takeover attempt by New York financier Saul Steinberg, and the transaction was criticized by some as an anti-takeover ploy.

Although Disney Chairman Michael Eisner said last March that Arvida was ahead of projections in its performance, the uneven earnings of a real estate company continue to annoy Wall Street analysts who prefer steady--and predictable--growth. Arvida's sale has long been considered a possibility, heightened by reports that Arvida's chief executive chafes under Disney's corporate rein.

When Town Center changed hands in early 1985, Federated Department Stores said it sold the mall for $62.2 million to a joint venture composed of Center Partners Ltd., an affiliate of JMB Realty, and an Arvida subsidiary.

Although Disney's Wilson said he would not divulge the mall's most recent sale price, he noted that "the asset was expanded and there was substantial leverage, or debt, put into the partnership. Therefore, when Disney sold its 50% interest in the partnership, the net equity value was substantially less because of the leverage put on it."

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