By SHIRLEY A. LAZO
Animal spirits ran high at Walt Disney (Barron's, March 23) Wednesday. It was opening day in Florida for Walt Disney World's fourth theme park, the 500-acre Animal Kingdom, home to 1,000 exotic animals, and visitors lined up in the wee small hours of the morning to charge the gates. Much later in the day, Disney posted second-fiscal-quarter profits that surpassed Wall Street estimates. It also announced a 3-for-1 stock split and another share buyback.
Animal Kingdom is Disney's first new park to open in the Sunshine State since Disney-MGM Studios in 1989. The Magic Kingdom debuted in 1971, and Epcot followed in 1982. The four parks encompass 43 square miles. Theme parks in general are such cash cows that the entertainment giant is expected to rapidly recoup its initial $800 million investment in Animal Kingdom.
Even though all the financial news wasn't disclosed until after the Big Board's closing bell, Disney shares rocketed 5 1/4 points Wednesday, closing at a 52-week high of 122.
The stock split is subject to holder approval of a tripling in authorized common shares, to 3.6 billion. If all goes as planned, it will be effected in early July. There currently are some 680 million common shares outstanding, about half of which are owned by institutions. This would be Disney's seventh split since August 1956. The most recent division was a 4-for-1 in May 1992.
Said Disney CEO Michael D. Eisner: "We have enjoyed such growth in the company's common stock price since our last stock split that it has become desirable once again to return the per-share price to levels that are more affordable for our smaller shareholders."
Disney also increased its pre-split share-repurchase authorization to 133.3 million shares (400 million, post-split), bringing the total to 20% of its outstanding common; that's consistent with previous programs. Prior to this one, Disney had remaining authorization to buy back around 87.8 million shares. Since 1985, the company has repurchased 93.2 million at an average cost of $30 a share, investing $2.8 billion, which would be worth $11 billion at current market prices.
Disney boosted its quarterly cash payout on common shares by 19% in January. Dividends, paid continuously since 1957, have been hiked every year since 1986.
"The first-quarter results are disappointing and reinforce the urgency to accelerate actions that will return the corporation to appropriate levels of growth and profitability," said a statement issued by Toronto-based Moore Corp.'s management Wednesday. To that end, the manufacturer of business forms is slashing its quarterly common dividend by 79%, to a nickel a share (U.S.) from the 23.5 cents it had been paying since 1990.
Disbursement of the first reduced payout will take place July 2 to stockholders of record June 5. The company said it "has carefully evaluated the outlook for the next three years and decided this change is in the best interest of shareholders." It added that 1998 "will be a year of restructuring. Current dividend policy must reflect this reality."
The two problems plaguing Moore since the early 1990s, asserts Value Line, have been "a shrinking market for traditional business forms and a relatively weak showing, compared to its main rivals, in garnering forms-management accounts from large entities." Earnings in 1997 of 59 cents a share were roughly half the 1996 level. According to a compilation of analysts' estimates by First Call, profits are expected to be flat this year but to recover to $1.10 in 1999.
J.M. Smucker of Orrville, Ohio, is a family-run, debt-free business not often followed by Wall Street. But its jams, jellies, preserves, ice-cream toppings and natural peanut butter can be found in homes and restaurants the world over. As Standard & Poor's tells it, Jerome M. Smucker first pressed cider at a mill he opened in 1897. He subsequently offered apple butter in crocks bearing a handsigned seal. The business took off from there.
Dividends hadn't been sweetened since 1995's second quarter, but Tuesday the company declared an 8% increase on both its Class A and B stock, to 14 cents a share from 13 cents, payable June 1 to investors on the books May 18. The Smucker family controls 20% of the Class A (these one-vote shares increase to 10 votes apiece after being held more than four years) and 18% of the nonvoting Class B. Traded on the Big Board, Smucker currently changes hands a half-dozen points below its 52-week high of 30, set last October. It earned $1.22 a share in fiscal 1997, ended April 30; $1.36 is Wall Street's consensus guess on fiscal '98.