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Disney

Disney. Frank Perry Cockerham II ACG 2021 .006. Executive Summary.

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Disney

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  1. Disney Frank Perry Cockerham II ACG 2021 .006

  2. Executive Summary • The entertainment industry is an ever growing field. Movies are always being made and released, people watch thousands of hours of TV and yearly trips are made to amusement parks. For decades the Disney franchise and name has been a forerunner in this industry. However, recent internal strife and questionable leadership has begun to tie the companies hands. One of its larger stockholders (Calpers) has started a movement to replace Michael Eisner, the long time CEO of Disney, and this movement seems to be gaining strength. Other stockholders have begun to jump on the bandwagon and question whether or not its time for a change at the top. Their claims have some weight behind it too, due to the fact that the companies stock, while experiencing growth right now, is at a five year low. But even with all this negativity Disney is still Disney. The company has been around for over 50 years and I don’t think this short period of internal struggles will cause any major problems for them. Maybe for Michael Eisner, but not the company in the long run. • http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B7DB446C3%2D9A71%2D454C%2D9233%2D509F195DFFA4%7D • http://disney.go.com/corporate/investors/financials/annual/2003/index.html

  3. Intro • Michael D. Eisner Chairman of the Board and Chief Executive Officer The Walt Disney Company • Home office: 500 South Buena Vista Street • Burbank, CA 91521 Fiscal Year ends: September 30 Main geographic area of operation: United States of America Principle products/services: Media Networks, Amusement parks, studio entertainment, Consumer products

  4. Audit Report • Name of auditors: Pricewaterhousecoopers LLP, Los Angeles • Their report stated that they found that the companies financial statements and claims were accurate. And that they conformed with the accounting principles accepted in the United States.

  5. Stock Market Information • Recent stock price: 25.99 • 12 month trading range: 16.30-25.99 • Dividends per share:.21 (.81%) • Date of info: 2/25/04 • My opinion: If I owned this stock right now I would hold onto it. Historically Disney has been a pretty strong stock and its value has been steadily increasing over the past couple years. However I would not suggest buying any right now with the internal conflicts going with Michael Eisner and Comcast. I think this will cause some temporary harm to the companies stock and would suggest buying some when the price fell a little more.

  6. Industry Situation and Company Plans • http://disney.go.com/corporate/investors/financials/annual/2003/i/lts/lts_ep.html • Disney’s cable and television division looks bright. They own a few of the largest and most popular stations (ABC, ESPN, The Disney Channel) and a few lesser known yet popular stations (Toon Disney, ABC Family). These stations were reported to have all experienced growth and higher ratings. Especially ESPN which has not only had marvelous ratings, but also begun to generate consumer products (ESPN the magazine, shirts, hats, ext…) that Disney believes will increase revenues. • Disney’s consumer products division didn’t do as well this year. With the lagging economy and increased unemployment the retail sector was hit pretty universally. They decided to sell their Disney stores in Japan and are in the process of trying to sell the ones in Europe and America. They did report, however, that a few lines of merchandising had experienced major growth. Their Mickey, Pooh, and Princess line has grown from 100 million dollar sales worldwide in 2000 to 1.3 billion worldwide in 2003. The book series W.I.T.C.H, Artemis Fowl, and Cheetah Girls has proven to be best sellers and the company has used these to generate more income by using there popularity to make some TV movies. Disney also hopes to jump into the digital age redoing their films and offering a service they call MovieBeam which will allow subscribers to have access to 100 digital quality movies in their homes.

  7. Income Statement • Multi or Single: Single step statement • Net Income: 1267000 (03), 1236000 (02) • Gross Profit: 27,061,000 (03) 25,329,000 (02) • Operating Income: 2713000 (03) 2418000 (02) • Since all these key numbers are increasing, it can be said that this company is still profitable. Its making money in a economy that is just starting to get back on its feet and increasing its income and profitability.

  8. Balance Sheet In the last year the assets decreased by 67 million dollars. This seems to be caused in a big way in the loss of a great deal of “other” current assets. The past couple years have also seen Disney’s Liabilities out grow its Stockholders Equity which is not a good sign. To their credit though the gap is closing.

  9. Statement of Cash Flows • Cash flows more than net income?: The cash flows from operations is more that net income. • I company growing from investment activities: No the amount has actually spent in this area has fallen from 3,176,000 to 1,034,000. • The main source of financing for Disney is to borrow money. • Over the past two years cash has decreased by almost half.

  10. Accounting Policies • Revenue recognition: • Broadcasting revenues are recognized when commercials are aired. Revenues from television subscription services are recognized as services are provided. Revenues from advance theme park ticket sales are recognized when the tickets are used. Revenues from movies are recognized when motion pictures are exhibited. Revenues from video sales are recognized on the date that they are made widely available for sale by retailers. Direct marketing and Internet-based merchandise revenues are recognized upon shipment to customer. • Cash: • Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less. • Inventories: • Carrying amounts of merchandise, materials and supplies inventories are generally determined on a moving average cost basis and are stated at the lower of cost or market. • Parks, resorts, property: • Parks, resorts and other property are carried at historical cost.

  11. Notes on financial statements: • Note 1) Description of the business and segment information. • Note 2) Summary of significant accounting policies. • Note 3) Significant acquisitions and dispositions • Note 4) Investments • Note5) Film and television costs • Note 6) Goodwill and intangible assets • Note 7) Borrowings • Note8) Income Taxes • Note 9) Pension and other benefit programs • Note 10) Shareholders Equity • Note 11) Stock incentive plans • Note 12) Detail of certain balance sheet accounts • Note 13) Financial instruments • Note 14) Commitments and Contingencies • Note 15) Restructuring and Impairment charges

  12. Financial AnalysisLiquidity Ratios • Working Capital: -355,000 • Current Ratio: 1.055 • Receivable Turnover:27061000/(4,912,000-4,673,000) = 1.02 • Average sales uncollected:365/1.02 = 357.8 • Inventory turnover N/A • Average days inventory on hand: N/A

  13. Financial AnalysisProfitability Ratios • Profit Margin: 7.30% • Asset Turnover: .54 • Return on Assets: 4.10% • Return on Equity: 8.09%

  14. Financial AnalysisSolvency Ratio • Debt to Equity: 1.10

  15. Financial AnalysisMarket Strength Ratios • Price/Earnings per share:$.21 • Dividend yield: .80%

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