In: Accounting
The segment footnote in The Walt Disney Company 2014 annual report follows (in millions):
SEGMENT INFORMATION
The operating segments reported below are the segments of the
Company for which separate financial information is available and
for which segment results are evaluated regularly by the Chief
Executive Officer in deciding how to allocate resources and in
assessing performance.
2014 | 2013 | 2012 | ||||
---|---|---|---|---|---|---|
Revenues | ||||||
Media Networks | $21,152 | $20,356 | $19,436 | |||
Parks and Resorts | 15,099 | 14,087 | 12,920 | |||
Studio Entertainment | ||||||
Third parties | 6,988 | 5,721 | 5,566 | |||
Intersegment | 290 | 258 | 259 | |||
7,278 | 5,979 | 5,825 | ||||
Consumer Products | ||||||
Third parties | 4,274 | 3,811 | 3,499 | |||
Intersegment | (289) | (256) | (247) | |||
3,985 | 3,555 | 3,252 | ||||
Interactive | ||||||
Third parties | 1,300 | 1,066 | 857 | |||
Intersegment | (1) | (2) | (12) | |||
1,299 | 1,064 | 845 | ||||
Total consolidated revenues | $48,813 | $45,041 | $42,278 | |||
Segment operating income (loss) | ||||||
Media Networks | $7,321 | $6,818 | $6,619 | |||
Parks and Resorts | 2,663 | 2,220 | 1,902 | |||
Studio Entertainment | 1,549 | 661 | 722 | |||
Consumer Products | 1,356 | 1,112 | 937 | |||
Interactive | 116 | (87) | (216) | |||
Total segment operating income | $13,005 | $10,724 | $9,964 | |||
Reconciliation of segment operating income | ||||||
to income before income taxes | ||||||
Segment operating income | $13,005 | $10,724 | $9,964 | |||
Corporate and unallocated shared expenses | (611) | (531) | (474) | |||
Restructuring and impairment charges | (140) | (214) | (100) | |||
Other income/(expense), net | (31) | (69) | 239 | |||
Interest income/(expense), net | 23 | (235) | (369) | |||
Hulu equity redemption charge | - | (55) | - | |||
Income before income taxes | $12,246 | $9,620 | $9,260 | |||
Capital expenditures | ||||||
Media Networks | ||||||
Cable Networks | $172 | $176 | $170 | |||
Broadcasting | 88 | 87 | 85 | |||
Parks and Resorts | ||||||
Domestic | 1,184 | 1,140 | 2,242 | |||
International | 1,504 | 970 | 641 | |||
Studio Entertainment | 63 | 78 | 79 | |||
Consumer Products | 43 | 45 | 69 | |||
Interactive | 5 | 13 | 27 | |||
Corporate | 252 | 287 | 471 | |||
Total capital expenditures | $3,311 | $2,796 | $3,784 | |||
Depreciation expense | ||||||
Media Networks | $238 | $238 | $241 | |||
Parks and Resorts | ||||||
Domestic | 1,117 | 1,041 | 927 | |||
International | 353 | 327 | 314 | |||
Studio Entertainment | 48 | 54 | 48 | |||
Consumer Products | 59 | 57 | 55 | |||
Interactive | 10 | 20 | 17 | |||
Corporate | 239 | 220 | 182 | |||
Total depreciation expense | $2,064 | $1,957 | $1,784 | |||
Amortization of intangible assets | ||||||
Media Networks | $12 | $13 | $17 | |||
Parks and Resorts | 2 | 2 | - | |||
Studio Entertainment | 88 | 107 | 94 | |||
Consumer Products | 109 | 89 | 60 | |||
Interactive | 13 | 24 | 32 | |||
Corporate | - | - | - | |||
Total amortization of intangible assets | $224 | $235 | $203 | |||
Identifiable assets | ||||||
Media Networks | $29,887 | $28,627 | ||||
Parks and Resorts | 23,335 | 22,056 | ||||
Studio Entertainment | 15,155 | 14,750 | ||||
Consumer Products | 7,526 | 7,506 | ||||
Interactive | 2,259 | 2,311 | ||||
Corporate | 6,024 | 5,991 | ||||
Total consolidated assets | $84,186 | $81,241 |
a. Confirm that each of Disney’s segments exceeds one or more of
the quantitative thresholds.
Calculate the quantitative threshold tests for 2014 and 2013.
Round answers to one decimal place (ex: 0.2345 = 23.5%). Use negative signs with answers, when appropriate.
% revenues | 2014 | 2013 | ||||
---|---|---|---|---|---|---|
Media Networks | Answer % | Answer % | ||||
Parks and Resorts | Answer % | Answer % | ||||
Studio Entertainment | Answer % | Answer % | ||||
Consumer Products | Answer % | Answer % | ||||
Interactive Media | Answer % | Answer % |
% operating profit | 2014 | 2013 | ||||
---|---|---|---|---|---|---|
Media Networks | Answer % | Answer % | ||||
Parks and Resorts | Answer % | Answer % | ||||
Studio Entertainment | Answer % | Answer % | ||||
Consumer Products | Answer % | Answer % | ||||
Interactive Media | Answer % | Answer % |
% assets | 2014 | 2013 | ||||
---|---|---|---|---|---|---|
Media Networks | Answer % | Answer % | ||||
Parks and Resorts | Answer % | Answer % | ||||
Studio Entertainment | Answer % | Answer % | ||||
Consumer Products | Answer % | Answer % | ||||
Interactive Media | Answer % | Answer % |
Using 2014 calculations only, indicate whether the segment exceeds
each quantitative threshold test or not. Select Yes or No using the
drop-down answer menu.
Operating Profit | Revenues | Assets | |
---|---|---|---|
Media Networks | AnswerYesNo | AnswerYesNo | AnswerYesNo |
Parks and Resorts | AnswerYesNo | AnswerYesNo | AnswerYesNo |
Studio Entertainment | AnswerYesNo | AnswerYesNo | AnswerYesNo |
Consumer Products | AnswerYesNo | AnswerYesNo | AnswerYesNo |
Interactive Media | AnswerYesNo | AnswerYesNo | AnswerYesNo |
c. Compute a rough DuPont analysis over the past three years of the operating segments (i.e., profit/ revenues, revenues/total assets, and return on assets as the product of the profit and turnover ratios).
Round profit margin answers to one decimal place (ex: 0.2345 = 23.5%). Use negative signs with answers, when appropriate.
Profit margin | 2014 | 2013 | ||||
---|---|---|---|---|---|---|
Media Networks | Answer % | Answer % | ||||
Parks and Resorts | Answer % | Answer % | ||||
Studio Entertainment | Answer % | Answer % | ||||
Consumer Products | Answer % | Answer % | ||||
Interactive Media | Answer % | Answer % |
Round asset turnover answers to two decimal places.
Asset turnover | 2014 | 2013 | ||||
---|---|---|---|---|---|---|
Media Networks | Answer | Answer | ||||
Parks and Resorts | Answer | Answer | ||||
Studio Entertainment | Answer | Answer | ||||
Consumer Products | Answer | Answer | ||||
Interactive Media | Answer | Answer |
Use rounded figures from above to calculate.
Round answers to one decimal place (ex: 0.2345 = 23.5%).
Use negative signs with answers, when appropriate.
Return on Assets | 2014 | 2013 | ||||
---|---|---|---|---|---|---|
Media Networks | Answer % | Answer % | ||||
Parks and Resorts | Answer % | Answer % | ||||
Studio Entertainment | Answer % | Answer % | ||||
Consumer Products | Answer % | Answer % | ||||
Interactive Media | Answer % | Answer % |
d. Compute the free cash flow for each operating segment over the
three-year period using the following definition: free cash flow =
operating profit + depreciation and amortization - capital
expenditures.
Use negative signs with answers, when appropriate.
Free cash flow | 2014 | 2013 | 2012 | ||||||
---|---|---|---|---|---|---|---|---|---|
Media Networks | $Answer | $Answer | $Answer | ||||||
Parks and Resorts | Answer | Answer | Answer | ||||||
Studio Entertainment | Answer | Answer | Answer | ||||||
Consumer Products | Answer | Answer | Answer | ||||||
Interactive Media | Answer | Answer | Answer | ||||||
Total | $Answer | $Answer | $Answer |
Ans (a). | 2014 | 2013 | |
Segment Revenue | |||
Media Networks | 43.3 | 45.2 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Parks & Resorts | 30.9 | 31.3 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Studio Entertainment | 14.9 | 13.3 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Consumer Products | 8.2 | 7.9 | Does not exceed the quantitative threshhold of 10%. Hence not a reportable segment. |
Interactive Media | 2.7 | 2.4 | Does not exceed the quantitative threshhold of 10%. Hence not a reportable segment. |
Operating Profit | |||
Media Networks | 56.3 | 63.6 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Parks & Resorts | 20.5 | 20.7 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Studio Entertainment | 11.9 | 6.2 | Exceeds the quantitative threshhold of 10% in 2014. Hence a reportable segment |
Consumer Products | 10.4 | 10.4 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Interactive Media | 0.9 | 100.0 | Does not exceed the quantitative threshhold of 10%. Hence not a reportable segment in 2014. However can be considered as a reportable segment in 2013 as the only loss making segment |
Assets | |||
Media Networks | 35.5 | 35.2 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Parks & Resorts | 27.7 | 27.1 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Studio Entertainment | 18.0 | 18.2 | Exceeds the quantitative threshhold of 10%. Hence a reportable segment |
Consumer Products | 8.9 | 9.2 | Does not exceed the quantitative threshhold of 10%. Hence not a reportable segment. |
Interactive Media | 2.7 | 2.8 | Does not exceed the quantitative threshhold of 10%. Hence not a reportable segment. |
Ans (b). | Segment Revenue | Operating Profit | Assets |
Media Networks | Y | Y | Y |
Parks & Resorts | Y | Y | Y |
Studio Entertainment | Y | Y | Y |
Consumer Products | N | Y | N |
Interactive Media | N | N | N |
Ans (c). | 2014 | 2013 | |
Profit Margin | |||
Media Networks | 34.6 | 33.5 | Operating income/Revenue X 100 |
Parks & Resorts | 17.6 | 15.8 | Operating income/Revenue X 100 |
Studio Entertainment | 21.3 | 11.1 | Operating income/Revenue X 100 |
Consumer Products | 34.0 | 59.5 | Operating income/Revenue X 100 |
Interactive Media | 8.9 | -8.2 | Operating income/Revenue X 100 |
Asset Turnover Ratio | |||
Media Networks | 70.8 | 71.1 | Turnover/Gross Assets |
Parks & Resorts | 64.7 | 63.9 | Turnover/Gross Assets |
Studio Entertainment | 48.0 | 40.5 | Turnover/Gross Assets |
Consumer Products | 52.9 | 47.4 | Turnover/Gross Assets |
Interactive Media | 21.6 | 17.8 | Turnover/Gross Assets |
Return on assets | |||
Media Networks | 24.5 | 23.8 | Profit Margin * Asset Turnover Ratio/100 |
Parks & Resorts | 11.4 | 10.1 | Profit Margin * Asset Turnover Ratio/100 |
Studio Entertainment | 10.2 | 4.5 | Profit Margin * Asset Turnover Ratio/100 |
Consumer Products | 18.0 | 28.2 | Profit Margin * Asset Turnover Ratio/100 |
Interactive Media | 1.9 | -1.5 | Profit Margin * Asset Turnover Ratio/100 |
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