INDIVIDUAL LEARNING 55 QUESTION FORM
1. What is the name of your corporation?
The Walt Disney Co
2. Where are the corporate headquarters?
3. What is the corporation’s fiscal year end?
4. What are the primary products or services of the corporation?
Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive
5. Graph the high and low price of the company’s stock for each quarter of the last two years. What was the high and what was the low?
6. Who is the company’s transfer agent and where are they located?
Disney Shareholder Services and they are located in California
7. Who are your company’s competitors?
News Corporation, Time Warner Inc and NBCUniversal Media, LLC
8. On which stock exchange is your corporation’s stock traded?
New York Stock Exchange
9. What is the current market price of their stock?
10. What is the ticker symbol used to identify your corporation on the stock exchange?
11. What is the Internet address of your corporation? Be sure it appears as a hyperlink.
12. Is the corporation’s Annual Report online?
13. Are its financial statements on-line?
14. Is your company listed on Annualreports.com?
15. How long is your company’s 10-K report at the Securities and Exchange Commission website (Edgar Database)?
115 pager long
Cash Flow and Retained Earnings:
16. List the amount of cash flows from each of the 3 activities: Operating, Investing, and Financing for the 2 most recent years. What was the increase or decrease in cash for each of these years?
2012 2011 Increase/(Decrease)
$(Millions) $(Millions) $(Millions)
Cash provided by operations 7,966 6,994 972
Cash used in investing activities 4,759 3,286 1473
Cash used in financing activities 2,985 3,233 (248)
17. Were there any Non-Cash Investing/Financing Transactions? Describe the type and amount.
18. What is the dollar difference between accrual net income and Cash provided by Operations?
The difference difference between accrual net income and Cash provided by Operations is $1,793 million.
19. What investing activity provided the largest inflow of cash in the current year?
The investing activity provided the largest inflow of cash in the current year is Proceeds from dispositions of Miramax Film NY, LLC.
20. What investing activity used the largest amount of cash in the current year?
The investing activity used the largest amount of cash in the current year is Investments in parks, resorts and other property.
21. What financing activity provided the largest inflow of cash in the current year?
The financing activity provided the largest inflow of cash in the current year is Borrowings.
22. What financing activity used the largest amount of cash in the current year?
The financing activity used the largest amount of cash in the current year is Reduction of borrowings.
23. Does the company have sufficient cash inflows from the appropriate category? Describe any problems the company many experience with cash flow from your analysis of the cash flow statement.
The company has sufficient cash flows in order to carry out its operations. There are certain indications which cannot be ignored and can pose serious cash flow problems. The company is undergoing investment and acquisitions resulting in major outflow of cash. Additionally the cash is tied up in borrowing which is a need to support investment and acquisition activities. The previously borrowings are due and interest is being paid uniformly. All these facts need to be considered to identify any problems the company could face.
24. Show the change in Retained. Earnings for the 2 most recent years. What was net income for each year? How much was paid out in dividends each year?
Retained Earning 42,965 38,375
Net Income 6,173 5,258
Dividend 1,076 756
25. Were the dividends on common stock and/or preferred stock? What was the amount of each?
The dividend were only on common stock which amounts to $1,076 million
26. Did Retained Earnings change for any reasons other than net income or dividends? Explain.
No, the Retained Earnings did not change for reasons other than net income or dividends. The percentage of net earnings not paid out as dividends, but retained by the company in order to invest them into areas where the company can create growth opportunities, such as buying new machinery or spending the money on more research and development. The net income is added to the beginning retained earnings and subtracting any dividends paid to shareholders
27. What classes of stock does your company have?
The company has preferred and common stock.
28. How many shares of each class of stock are authorized, how many are issued, and how many are outstanding?
Authorized preferred stock : 100 million shares
Authorized common stock: 4.6 billion shares
Issued common stock : 2.8 billion shares
29. Does your company have any treasury stock? How many shares and what dollar amount?
Yes Walt Disney Co has treasury stock at $1 billion shares with total amount of $31,671 million
30. What is the par or stated value of each of your company’s stocks?
$.01 par value
31. How many footnote disclosures does your company have?
The company has 14 footnote disclosures.
32. How many significant accounting policies are listed under its Summary of Significant Accounting Policies?
There are 19 significant accounting policies that are listed under Summary of Significant Accounting Policies.
33. What does it include as Cash and Cash Equivalents?
Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less.
34. What method does it use to value Inventory?
Inventory primarily includes vacation timeshare units, merchandise, materials, and supplies. Carrying amounts of vacation ownership units are recorded at the lower of cost or net realizable value. Carrying amounts of merchandise, materials, and supplies inventories are generally determined on a moving average cost basis and are recorded at the lower of cost or market.
35. What method(s) does it use to depreciate its assets?
Depreciation is computed on the straight-line method over estimated useful lives of the assets.
36. Does it have any leased assets? If yes, describe them.
Yes the company has leased assets. In the Downtown Disney Resort area, seven independently-operated hotels are situated on property leased from the Company.
These hotels include approximately 3,700 rooms. Additionally, the Walt Disney World Swan and the Walt Disney World Dolphin hotels, which have approximately 2,300 total rooms, are independently operated on property leased from the Company near Epcot.
The Company owns 461 acres and has the rights under long-term lease for use of an additional 49 acres of land in Anaheim, California.
37. What policies does it have in regard to Foreign Currency Translations?
The Company hedges its forecasted foreign currency transactions for
periods generally not to exceed four years within an established minimum and maximum range of annual exposure. The gains and losses on these contracts offset changes in the U.S. dollar equivalent value of the related forecasted transaction, asset, liability or firm commitment. The principal currencies hedged are the euro, Japanese yen, Canadian dollar and British pound. Cross-currency swaps are used to effectively convert foreign currency-denominated borrowings into U.S. dollar denominated borrowings.
38. Describe any pending lawsuits in which it is involved.
Celador International Ltd. v. The Walt Disney Company. On May 19, 2004, an affiliate of the creator and licensor of the television program, ?Who Wants to be a Millionaire, filed an action against the Company and certain of its subsidiaries, including American Broadcasting Companies, Inc. and Buena Vista Television, LLC, alleging it was damaged by defendants improperly engaging in certain intra-company transactions and charging merchandise distribution expenses, resulting in an underpayment to the plaintiff.
On July 7, 2010, the jury returned a verdict for breach of contract against certain subsidiaries of the Company, awarding plaintiff damages of $269.4 million. The Company has stipulated with the plaintiff to an award of prejudgment interest of $50 million, which amount will be reduced prorata should the Court of Appeals reduce the damages amount. On December 21, 2010, the Company’s alternative motions for a new trial and for judgment as a matter of law were denied. Although theultimate outcome of this lawsuit cannot be predicted, the Company believes the jury’s verdict is in error and intends to vigorously pursue its position on appeal, notice of which was filed by the Company on January 14, 2011. On or about January 28, 2011, plaintiff filed a notice of cross-appeal. The Company has
determined that it does not have a probable loss under the applicable accounting standard relating to probability of loss for recording a reserve with respect to this litigation and therefore has not recorded a
39. Provide its Earnings per Share for the 2 most recent years?
Diluted EPS $ 3.13 $ 2.52
Basic EPS $ 3.17 $ 2.56
Report of the Independent Auditor(s):
40. Who is/are your company’s auditor(s)?
41. Where are they located?
42. Does the auditor(s) give a qualified opinion, an unqualified opinion, a disclaimer of opinion, or an adverse opinion? What does that opinion mean? Is it good?
The auditor has given an unqualified opinion. It is good which means that in auditor’s opinion the financial statements of the company present fairly, in all material respects
43. What is the auditor’s responsibility in regard to the financial statements?
The auditor’s responsibility is to express opinions on the financial
statements and on the Company’s internal control over financial reporting based on their integrated audits.
44. What is management’s responsibility in regard to the financial statements?
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.
45. What financial statements were included in the auditor’s opinion?
The financial statements which were included in the auditor’s opinion are consolidated balance sheets and the related consolidated statements of income, statements of comprehensive income, shareholders’ equity and cash flows
46. Did the auditor believe that the statements were presented fairly?
Yes, the auditor believe that the statements present fairly, in all material respects.
47. Who bears the responsibility for the integrity and the objectivity of the financial statements?
Management bears the responsibility for the integrity and the objectivity of the financial statements.
48. What does management say they are doing to assure the public that the financial information is reliable?
Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles
49. What is the responsibility of the Audit Committee of the Board of Directors?
The responsibility of the Audit Committee of the Board of Directors includes:
• Overseeing the financial reporting and disclosure process.
• Monitoring choice of accounting policies and principles.
• Oversight of regulatory compliance, ethics, and whistleblower hotlines.
• Monitoring the internal control process.
• Discussing risk management policies and practices with management.
Analysis: (use Excel to complete this section)
50. Provide common-size analysis of your company’s income statement and balance sheet for the 2 most recent years (must be done using Excel with formulas).
51. Provide horizontal analysis of your company’s income statement and balance sheet, showing the dollar amount and percent of change using the 2 most recent years (you must use an Excel spreadsheet with formulas).
52. Perform ratio analysis on your company using the ratios listed on page 705 of your text (these must be in an Excel spreadsheet, using formulas to calculate the ratios). You should present them in a similar format as the text: group by category, list name of ratio, formula in words, and the ratio calculation. Give a short explanation of your conclusions about your company after each category of ratios (i.e. How liquid is your company? How efficiently is it using its assets? etc.).
53. Are you optimistic or pessimistic regarding the future of your chosen corporation? Explain.
Company’s financial statements indicate a great future prospect for an investor. Net income continued to increase sharply in the current period by 17.4% with significant cash inflows generated from operations showing a healthy cash flow position. Company is currently having low financial risk characteristics due to its low financial gearing and increase in interest cover. Owing to strong financial position and performance of the company I am optimistic regarding its future.
54. Would you invest in the stock of the company? Explain.
Yes. Company’s net income has sharply increased by 17.4% from the prior period. Based on higher net income company has increased its dividend payment by 42.55% ((1092-766)/766). Share price is likely to grow in the future providing higher return to shareholder in terms of dividend payment and capital appreciation.
55. Would you invest in the bonds of the company? Explain.
Yes. Company is currently having low gearing of25.49% showing a slight decline from prior period and an increase in interest cover up to 26.09, which indicates a low credit risk that the company will not be able to make interest or capital repayment on time.