s Continuing operations Discontinued operations (2.61) $ 0.79 s 6.00 0.18 $ S $ (1.17) (0.02) (1.19) 0.22 s (2.61) $ 0.98 $ 6.22 Weighted average number of common and common equivalent shares outstanding Diluted Basic Total may not equal the sum of the column due to rounding. 1.809 1,809 1,814 1,802 1.807 1,807 1,616 1,607 THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions, except per share data) June 27, 2020 September 28, 2019 $ s 23,115 12,622 1.559 3,135 ASSETS Current assets Cash and cash equivalents Receivables Inventories Licensed content costs and advances Other current assets Total current assets Produced and licensed content costs Investments Parks, resorts and other property Attractions, buildings and equipment Accumulated depreciation 5,418 15,481 1.649 4,597 979 28.124 22,810 3.224 899 41,330 25,560 3,611 61,130 (34,639) 26,491 4,380 1,020 31,891 19,589 77,233 8,435 207,649 58.589 (32,415) 26,174 4,264 1.165 31,603 Projects in progress Land Intangible assets, net Goodwill 23,215 80,293 4,715 193.984 Other assets Total assets s S 16,986 10,224 3,707 30,917 54,197 7,055 15,855 17,762 8,857 4,722 31,341 38,129 7,902 13,760 LIABILITIES AND EQUITY Current liabilities Accounts payable and other accrued liabilities Current portion of borrowings Deferred revenue and other Total current liabilities Borrowings Deferred income taxes Other long-term liabilities Commitments and contingencies Redeemable noncontrolling interests Equity Preferred stock Common stock, 50.01 par value, Authorized - 4.6 billion shares, Issued 1.8 billion shares Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 19 million shares Total Disney Shareholders' equity Noncontrolling interests Total equity Total liabilities and equity 9,162 8,963 54,386 39,004 (6,617) (907) 85,866 4,597 90,463 207 649 53,907 42,494 (6,617) (907) 88,877 5,012 93.889 193.984 $ Nine Months Ended June 27. June 29, 2020 2019 $ S 9.991 2,866 (1,813) 4,010 4,953 (370) (548) (545) 567 (1.483) 16 388 471 (4,719) 1,716 234 548 59 OPERATING ACTIVITIES Net income (loss) from continuing operations Depreciation and amortization Goodwill and intangible asset impairments Net gain on acquisition and investments Deferred income taxes Equity in the income) loss of investees Cash distributions received from equity investees Net change in produced and licensed content costs and advances Net change in operating lease right of use assets/ liabilities Equity-based compensation Other Changes in operating assets and liabilities, net of business acquisitions: Receivables Inventories Other assets Accounts payable and other liabilities Income taxes Cash provided by operations - continuing operations INVESTING ACTIVITIES Investments in parks, resorts and other property Acquisitions Other Cash used in investing activities. continuing operations 591 83 2.100 86 8 (1,428) (96) 450 219 (6,248) 4,266 (1.986) 95 5.949 (3,293) (3.567) (9,901) (317) (13,785) (27) (3.320) 1,373 18,030 (2,297) (1,587) 238 2,973 31,348 (19,039) (1,310) 278 544 (1,430) (831) 12,533 (838) 14,919 FINANCING ACTIVITIES Commercial paper borrowings, net Borrowings Reduction of borrowings Dividends Proceeds from exercise of stock options Contributions from / sales of noncontrolling interests Acquisition of noncontrolling and redeemable noncontrolling interests Other Cash provided by financing activities - continuing operations CASH FLOWS FROM DISCONTINUED OPERATIONS Cash provided by operations - discontinued operations Cash provided by investing activities - discontinued operations Cash used in financing activities - discontinued operations Cash provided by discontinued operations Impact of exchange rates on cash, cash equivalents and restricted cash Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period 320 2 198 (179) 141 200 (49) 47 17,699 5,455 23,154 3,202 4,155 7,357 17 Disney has been particularly visible during the COVID-19 crisis because of its park shutdowns, the launch of Disney+, etc. Take some time to read their recent earnings report to get an idea of how management believes they have (and have not) been impacted by this crisis. Then, use the financial statements located on pages 15 through 17 of that earnings report to perform the following analyses: 1. Calculate the 13 significant financial ratios for both 2019 and 2020. Interpret your results, including changes between the two years. (Where applicable, use "quarter ended" numbers instead of "nine months ended") 2. Calculate and interpret the BV Per Share, the PE Ratio, and the PB Ratio for 2020. Interpret your results. (1.8 billion common shares outstanding, no preferred stock, translate your Book Value to millions before you do your BV Per Share calculation.) (You can use the quote lookup for your stock price.) 3. Calculate and interpret the Degree of Financial Leverage for 2019 and 2020 (DFL.). 4. Review the Statement of Cash flows. What sticks out to you as the largest sources and uses of cash in 2019 and 2020? 5. Based on your analyses from parts 1 through 4, would you recommend that a client purchase this stock? Back up your recommendation with specific results from your analyses. Additionally, comment on how you believe Disney has fared with the COVID-19 crisis. Do you agree or disagree with the views that management gave in the earnings report (back up your views with specific results from your analyses)? . Assumptions: When financial statements say there are "in millions", you can multiply that number by 1,000,000 to get the real $ amount (and if they are "in thousands", you can multiply by 1,000). Assume lease costs are 10% of the "costs and expenses" line of the income Statement. EBIT (or operating profit) is not spelled out on these statements. Use "income from continuing operations before income taxes" and add back interest expense. For example, for 2019 EBIT would be 4,840+412=5,252. For EPS, use Basic EPS Attributable to Disney. To find total liabilities, you will need to use the Total Liabilities and Equity line, then back out the equity subtotal For example, 2020 total liabilities would be 207,649-90,463=117,186. For Net Income, use Net Income Attributable to Walt Disney Company. Sales = Revenues = Credit Sales Fixed Assets = use the "Parks, resorts, and other property" total. For example, 2020 would be 31,891. . s Continuing operations Discontinued operations (2.61) $ 0.79 s 6.00 0.18 $ S $ (1.17) (0.02) (1.19) 0.22 s (2.61) $ 0.98 $ 6.22 Weighted average number of common and common equivalent shares outstanding Diluted Basic Total may not equal the sum of the column due to rounding. 1.809 1,809 1,814 1,802 1.807 1,807 1,616 1,607 THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions, except per share data) June 27, 2020 September 28, 2019 $ s 23,115 12,622 1.559 3,135 ASSETS Current assets Cash and cash equivalents Receivables Inventories Licensed content costs and advances Other current assets Total current assets Produced and licensed content costs Investments Parks, resorts and other property Attractions, buildings and equipment Accumulated depreciation 5,418 15,481 1.649 4,597 979 28.124 22,810 3.224 899 41,330 25,560 3,611 61,130 (34,639) 26,491 4,380 1,020 31,891 19,589 77,233 8,435 207,649 58.589 (32,415) 26,174 4,264 1.165 31,603 Projects in progress Land Intangible assets, net Goodwill 23,215 80,293 4,715 193.984 Other assets Total assets s S 16,986 10,224 3,707 30,917 54,197 7,055 15,855 17,762 8,857 4,722 31,341 38,129 7,902 13,760 LIABILITIES AND EQUITY Current liabilities Accounts payable and other accrued liabilities Current portion of borrowings Deferred revenue and other Total current liabilities Borrowings Deferred income taxes Other long-term liabilities Commitments and contingencies Redeemable noncontrolling interests Equity Preferred stock Common stock, 50.01 par value, Authorized - 4.6 billion shares, Issued 1.8 billion shares Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 19 million shares Total Disney Shareholders' equity Noncontrolling interests Total equity Total liabilities and equity 9,162 8,963 54,386 39,004 (6,617) (907) 85,866 4,597 90,463 207 649 53,907 42,494 (6,617) (907) 88,877 5,012 93.889 193.984 $ Nine Months Ended June 27. June 29, 2020 2019 $ S 9.991 2,866 (1,813) 4,010 4,953 (370) (548) (545) 567 (1.483) 16 388 471 (4,719) 1,716 234 548 59 OPERATING ACTIVITIES Net income (loss) from continuing operations Depreciation and amortization Goodwill and intangible asset impairments Net gain on acquisition and investments Deferred income taxes Equity in the income) loss of investees Cash distributions received from equity investees Net change in produced and licensed content costs and advances Net change in operating lease right of use assets/ liabilities Equity-based compensation Other Changes in operating assets and liabilities, net of business acquisitions: Receivables Inventories Other assets Accounts payable and other liabilities Income taxes Cash provided by operations - continuing operations INVESTING ACTIVITIES Investments in parks, resorts and other property Acquisitions Other Cash used in investing activities. continuing operations 591 83 2.100 86 8 (1,428) (96) 450 219 (6,248) 4,266 (1.986) 95 5.949 (3,293) (3.567) (9,901) (317) (13,785) (27) (3.320) 1,373 18,030 (2,297) (1,587) 238 2,973 31,348 (19,039) (1,310) 278 544 (1,430) (831) 12,533 (838) 14,919 FINANCING ACTIVITIES Commercial paper borrowings, net Borrowings Reduction of borrowings Dividends Proceeds from exercise of stock options Contributions from / sales of noncontrolling interests Acquisition of noncontrolling and redeemable noncontrolling interests Other Cash provided by financing activities - continuing operations CASH FLOWS FROM DISCONTINUED OPERATIONS Cash provided by operations - discontinued operations Cash provided by investing activities - discontinued operations Cash used in financing activities - discontinued operations Cash provided by discontinued operations Impact of exchange rates on cash, cash equivalents and restricted cash Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period 320 2 198 (179) 141 200 (49) 47 17,699 5,455 23,154 3,202 4,155 7,357 17 Disney has been particularly visible during the COVID-19 crisis because of its park shutdowns, the launch of Disney+, etc. Take some time to read their recent earnings report to get an idea of how management believes they have (and have not) been impacted by this crisis. Then, use the financial statements located on pages 15 through 17 of that earnings report to perform the following analyses: 1. Calculate the 13 significant financial ratios for both 2019 and 2020. Interpret your results, including changes between the two years. (Where applicable, use "quarter ended" numbers instead of "nine months ended") 2. Calculate and interpret the BV Per Share, the PE Ratio, and the PB Ratio for 2020. Interpret your results. (1.8 billion common shares outstanding, no preferred stock, translate your Book Value to millions before you do your BV Per Share calculation.) (You can use the quote lookup for your stock price.) 3. Calculate and interpret the Degree of Financial Leverage for 2019 and 2020 (DFL.). 4. Review the Statement of Cash flows. What sticks out to you as the largest sources and uses of cash in 2019 and 2020? 5. Based on your analyses from parts 1 through 4, would you recommend that a client purchase this stock? Back up your recommendation with specific results from your analyses. Additionally, comment on how you believe Disney has fared with the COVID-19 crisis. Do you agree or disagree with the views that management gave in the earnings report (back up your views with specific results from your analyses)? . Assumptions: When financial statements say there are "in millions", you can multiply that number by 1,000,000 to get the real $ amount (and if they are "in thousands", you can multiply by 1,000). Assume lease costs are 10% of the "costs and expenses" line of the income Statement. EBIT (or operating profit) is not spelled out on these statements. Use "income from continuing operations before income taxes" and add back interest expense. For example, for 2019 EBIT would be 4,840+412=5,252. For EPS, use Basic EPS Attributable to Disney. To find total liabilities, you will need to use the Total Liabilities and Equity line, then back out the equity subtotal For example, 2020 total liabilities would be 207,649-90,463=117,186. For Net Income, use Net Income Attributable to Walt Disney Company. Sales = Revenues = Credit Sales Fixed Assets = use the "Parks, resorts, and other property" total. For example, 2020 would be 31,891