THE ENTERTAINMENT COMPANY
The Walt Disney Company—2008 Annual Report*
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CONSOLIDATED BALANCE SHEETS (In millions, except per share data) |
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ASSETS |
September 27, |
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2008 |
2007 |
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Current Assets |
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Cash and cash equivalents |
3,001 |
3,670 |
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Receivables |
5,373 |
5,032 |
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Inventories |
1,124 |
641 |
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Television costs |
541 |
559 |
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Deferred income taxes |
1,024 |
862 |
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Other current assets |
603 |
550 |
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Total Current Assets |
11,666 |
11,314 |
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Film and television costs |
5,394 |
5,123 |
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Investments |
1,563 |
995 |
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Parks, resorts and other property, at cost |
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Attractions, buildings and equipment |
31,493 |
30,260 |
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Accumulated depreciation |
(16,310) |
(15,145) |
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15,183 |
15,115 |
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Projects in progress |
1,169 |
1,147 |
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Land |
1,180 |
1,171 |
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17,532 |
17,433 |
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Intangible assets, net |
2,428 |
2,494 |
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Goodwill |
22,151 |
22,085 |
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Other assets |
1,763 |
1,484 |
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62,497 |
60,928 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable and other accrued liabilities |
5,980 |
5,949 |
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Current portion of borrowings |
3,529 |
3,280 |
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Unearned royalties and other advances |
2,082 |
2,162 |
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Total current liabilities |
11,591 |
11,391 |
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Borrowings |
11,110 |
11,892 |
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Deferred income taxes |
2,350 |
2,573 |
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Other long term liabilities |
3,779 |
3,024 |
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Minority interests |
1,344 |
1,295 |
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Commitments and contingencies (note 14) |
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Shareholders’ equity |
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Preferred stock, $.01 par value Authorized—100 million shares, |
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Issued—none |
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Common stock, $.01 par value Authorized—3.6 billion shares, |
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Issued—2.6 billion shares |
26,546 |
24,207 |
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Retained earnings |
28,413 |
24,805 |
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Accumulated other comprehensive loss |
(81) |
(157) 48,855 |
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54,878 |
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Treasury stock, at cost, 777.1 million shares at September 27, 2008 and 637.8 million shares at September 29, 2007 |
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(22,555) |
(18,102) |
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32,323 |
30,753 |
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62,497 |
60,928 |
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.
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12. Detail of Certain Balance Sheet Accounts |
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September 27, 2008 |
September 29, 2007 |
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Current receivables |
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Accounts receivable |
5,207 |
4,724 |
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Other |
414 |
424 |
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Allowance for doubtful amounts |
(248) |
(116) |
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5,373 |
5,032 |
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Other current assets |
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Prepaid expenses |
478 |
446 |
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Other |
125 |
104 |
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603 |
550 |
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Parks, resorts and other property, at cost |
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Attractions, buildings, and improvements |
15,444 |
14,857 |
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Leasehold improvements |
553 |
500 |
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Furniture, fixtures and equipment |
11,739 |
11,272 |
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Land improvements |
3,757 |
3,631 |
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31,493 |
30,260 |
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Accumulated depreciation |
(16,310) |
(15,145) |
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Projects in progress |
1,169 |
1,147 |
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Land |
1,180 |
1,171 |
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17,532 |
17,433 |
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Intangible assets |
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Copyrights |
357 |
357 |
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Other amortizable intangible assets |
282 |
255 |
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Accumulated amortization |
(198) |
(143) |
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Net amortizable intangible assets |
441 |
469 |
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FCC licenses |
858 |
897 |
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Trademarks |
1,109 |
1,108 |
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Other indefinite lived intangible assets |
20 |
20 |
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2,428 |
2,494 |
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Other noncurrent assets |
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Receivables |
801 |
571 |
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Pension related assets |
215 |
275 |
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Prepaid expenses |
128 |
120 |
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Other |
619 |
518 |
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1,763 |
1,484 |
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Accounts payable and other accrued liabilities |
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Accounts payable |
4,355 |
4,429 |
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Payroll and employee benefits |
1,376 |
1,290 |
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Other |
249 |
230 |
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5,980 |
5,949 |
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Other long term liabilities |
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Deferred revenues |
320 |
369 |
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Capital lease obligations |
241 |
274 |
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Program licenses and rights |
223 |
288 |
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Participation and residual liabilities |
378 |
239 |
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Pension and postretirement medical plan liabilities |
1,157 |
966 |
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Other1 |
1,460 3,779 |
888 3,024 |
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Required
a. The statement is entitled ‘‘Consolidated Balance Sheets.’’ What does it mean to have a consolidated balance sheet?
b. 1. What is the gross amount of current receivables at September 27, 2008?
2. What is the allowance for doubtful accounts and September 27, 2008?
3. Why are some receivables classified as other noncurrent assets?
c. 1. Parks, resorts, and other property, at cost—what is the total cost amount at September 27, 2008? (Do not include projects in progress or land).
2. Are projects in progress and land depreciated?
d. 1. Intangible assets—why are some amortized and some not amortized?
2. What is the accumulated amortization at September 27, 2008?
e. 1. What is the amount of total assets at September 27, 2008?
2. What are the total current assets at September 27, 2008?
3. What is the total inventory at September 27, 2008? Does the inventory method appear to be conservative? Comment.
f. 1. Comment on the use of estimates.
g. 1. Why are advertising expenses expensed as incurred?
h. 1. Are cash and cash equivalents presented conservatively? Comment.
i. Revenue recognition; comment on the following:
1. Broadcast advertising revenues
2. Revenues from advance theme park ticket sales
3. Revenues from the theatrical distribution of motion pictures
4. Merchandise licensing advances and guarantee royalty payments
5. Why the use of several revenue recognition methods?
6. Are the revenue recognition methods industry specific?