roll no 820-mba-11
TRANSCRIPT
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American
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Cost of Capital
Rm 8
Rf 0.75
beta 1.05
After-tax cost of debt 0.0279Cost of Equity 0.085
Debt 0
Equity 1879998
WACC 0.085
Terminal Growth Rate 4.20%
projection year 1 2 3
2010 2011 2012 2013 2014
FCFE 4,941,986 5,666,040 5,634,372
Terminal Value
PV of Cash Flows 4554826 4813048 4411196
PV of Terminal Value
Total Value of Equity 106514521
No. of Shares Outstanding 198000000
Value/ Share 537.95212
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Assumptions
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Income Statement
Growth Rate 0%
COGS/Revenue 60%
OpEx/Revenue 20%
R&D/Rev 0%Tax Rate 40%
NWC
CA (Adj.)/Rev 0.16
CL (Adj.)/Rev 0.12
CAPEX
Depreciation Rate 19%
Equity
Dividend 0
Share Repurchase 0
Proceed from Share Issue 0
Cost of Capital
Debt -
Equity 1,879,998
Cost of Equity 8.5%
Cost of Debt 4.65%
After-tax Cost of Debt 2.8%
Terminal Growth Rate 4.20%
other LT Liabilities/Rev 0.0475441
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2009 2010 2011 2012 2013 2014 2015
Revenue Growth Rate 0.928% 0.024% 0.024% 0.024%
Principal Repayment - - -
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2016 2017
0.024% 0.024%
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Projected income statements
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2010 2011 2012 2013 2014
Revenue 2,967,559 2,968,276 2,968,994
COGS 0 0 (1,780,848) (1,781,279) (1,781,709)
Gross Profit 0 0 4,748,407 4,749,555 4,750,703
OPEX (578,828) (578,968) (579,108)
R&D - - -
Depreciation (123,270) (123,270) (146,898)
EBIT 4,046,310 4,047,318 4,024,698
Interest - - -
EBT 4,046,310 4,047,318 4,024,698
Tax (1,618,524) (1,618,927) (1,609,879)
NI 5,664,834 5,666,245 5,634,577
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2015 2016 2017
2,969,711 2,970,429 2,971,147
(1,782,140) (1,782,571) (1,783,002)
4,751,851 4,753,000 4,754,149
(579,248) (579,388) (579,528)
- - -
(175,054) (208,608) (248,592)
3,997,550 3,965,005 3,926,029
- - -
3,997,550 3,965,005 3,926,029
(1,599,020) (1,586,002) (1,570,411)
5,596,569 5,551,006 5,496,440
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2010 2011 2012 2013
Operating
Net Income 0 0 5,664,834 5,666,245
Add back: Interest 0 0 - -
Add back: Depreciation 0 0 123,270 123,270Less: Change In NWC 0 (846,118) (205)
Cash Flow before Investing and Financing 0 0 4,941,986 5,789,310
Less CAPEX 0 - (123,270)
Cash Flow before Financing 0 0 4,941,986 5,666,040
Less: Interest 0 - -
Free Cash Flow to Firm 0 0 4,941,986 5,666,040
Less: Principal Repayment 0 - -
Free Cash Flow to Equity 0 0 4,941,986 5,666,040
Less: Dividend 0 - -
Less: Share Repurchase 0 - -
Add: Proceed from new issue 0 - -
Total Cash Flow for period 0 0 4,941,986 5,666,040
Beginning Balance of Cash 0 - 4,941,986
Closing Balance of Cash 0 4,941,986 10,608,026
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2014 2015 2016 2017
5,634,577 5,596,569 5,551,006 5,496,440
- - - -
146,898 175,054 208,608 248,592(205) (205) (205) (205)
5,781,270 5,771,419 5,759,409 5,744,828
(146,898) (175,054) (208,608) (248,592)
5,634,372 5,596,365 5,550,802 5,496,235
- - - -
5,634,372 5,596,365 5,550,802 5,496,235
- - - -
5,634,372 5,596,365 5,550,802 5,496,235
- - - -
- - - -
- - - -
5,634,372 5,596,365 5,550,802 5,496,235
10,608,026 16,242,398 21,838,763 27,389,565
16,242,398 21,838,763 27,389,565 32,885,800
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2010 2011 2012 2013
Assets
Current Assets
Cash 4941986 10608026
Current Assets 479730 479845.611Total Current Assets 479730 11087871
Total Fixed Asset 519850 519850
Total Asset 999,580 11,607,721
Liabilities + Equity
Total Liabilities
Current Liabilities 366,388 366,477
ST Debt 0 0
Current Portion of LT Debt 0 0
Total Current Liabilities 0 0
LT Liabilities
LT Debt 0 0
Other LT Liabilities 141090 141124.101
Total LT Liabilities 141090 141124.101
Total Liabilities 141090 141124.101
Equity
Beginning Balance 1879998 1879998Beg. Accumulated Retained Earnings -
Net Income for the period 5,664,834 5,666,245
Less: Dividend
Closing Bal. of Acc. Ret Earnings 5,666,245
Proceed fron new Share 0 0
Share Repurchase 0 0
Closing Balance 1,879,998 7,546,243
Total Liability + Equity 2,021,088 7,687,367
Chceck Balance 3,920,355
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2014 2015 2016 2017
16242398 21838763 27389565 32885800
479961.5884 480077.5935 480193.6266 480309.687716722360 22318840 27869758 33366110
519850 519850 519850 519850
17242210 22838691 28389608 33885960
366,565 366,654 366,743 366,831
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
141158.2102 141192.3277 141226.4534 141260.5873
141158.2102 141192.3277 141226.4534 141260.5873
141158.2102 141192.3277 141226.4534 141260.5873
7,546,243 13,180,819 18,777,389 24,328,3955,634,577 11,231,146 16,782,153 22,278,593
5,634,577 5,596,569 5,551,006 5,496,440
- - - -
11,269,154 16,827,716 22,333,159 27,775,033
0 0 0 0
0 0 0 0
13,180,819 18,777,389 24,328,395 29,824,835
13,321,978 18,918,581 24,469,622 29,966,096
3,920,232 3,920,109 3,919,987 3,919,864
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Workings
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2010 2011 2012 2013 2014
Revenue - - 2,967,559 2,968,276 2,968,994
CA (Adj.)/ Rev 0.162 0.162 0.162
Current Assets 479,730 479,846 479,962
CL (Adj.)/ Rev 0.123 0.123 0.123
CL (366,388) (366,477) (366,565)
NWC - - 846,118 846,322 846,527
Change in NWC - 846,118 205 205
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2015 2016 2017
2,969,711 2,970,429 2,971,147
0.162 0.162 0.162
480,078 480,194 480,310
0.123 0.123 0.123
(366,654) (366,743) (366,831)
846,731 846,936 847,141
205 205 205
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2010 2011 2012 2013 2014
Revenue 2967559 2968276 2968994
Net Assets
Beginning Balance of Total Assets 0 643120 643120 766,390CAPEX 123,270 146,898
Ending Balance of Total Assets 0 0 643120 766389.845 913287.404
Depreciation Rate 19% 19% 19% 19% 19%
Depreciation for the Period 0 0 123,270 123,270 146,898
Beginning Balance of Total Depreciation - 123,270 246,540
Ending Balance of Total Depreciation 0 0 123,270 246,540 393,437
Ending Balance of Net Assets 0 0 519,850 519,850 519,850
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2015 2016 2017
2969711 2970429 2971147
913,287 1,088,342 1,296,949175,054 208,608 248,592
1088341.51 1296949.06 1545541.41
19% 19% 19%
175,054 208,608 248,592
393,437 568,491 777,099
568,491 777,099 1,025,691
519,850 519,850 519,850
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2009 2010 2011 2012 2013
Short-term Debt 0 0
Interest Rate 5% 5%
Interest Payment 0
Long-term Debt
Beginning Balance -
Interest Rate 0.047
Interest Payment -
Principal Payment -
Closing Balance -
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2014 2015 2016 2017
0 0 0 0
5% 5% 5% 5%
0 0 0 0
- - - -
0.047 0.047 0.047 0.047
- - - -
- - - -
- - - -
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Past statements
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2009 2010 2011 Average
Revenue 2,948,679 2,940,269 2,967,559
COGS 1,751,493 1,766,839 1,796,600
OpEx - Depr - R&D 567,185 587,518 572,696
R&D Spending - - -
Revenue Growth Rate 0% 1% 0.02%
COGS/Rev 59% 60% 61% 60%
OpEx-R&D-Depr/Rev 19% 20% 19% 20%
R&D/Rev 0% 0% 0% 0%
NWC
Current Assets 925,359 1,167,030 1,174,410
Cash 473,342 693,960 667,593
Current Assets - Cash 452,017 473,070 506,817
Current Liabilities 401,763 408955 387837
Short-term debt 75,000 30,000 -
Current Portion of LT Debt - - -
C.L. - ST Debt - CP of LT Debt 326,763 378,955 387,837
(Current Assets - Cash)/ Revenue 0.15 0.16 0.17 0.16
(C.L. - ST Debt - CP of LT Debt)/Rev 0.11 0.13 0.13 0.12
Total Fixed Assets 740,240 713,142 643120
Total Depreciation & Amortization 123,602 137,760 140,501Depreciation for the period 123218 137045 139169
Depreciation Rate 0.17 0.19 0.22 19%
Total LT Debt 0 0 0
LT + CLT + ST 75,000 30,000 -
Interest Paid 1,947 1,879 191
Interest Rate 3% 1% 2%
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(In thousands, except per share amounts)
Net sales
Cost of sales, including certain buying, occupancy and warehousing
expenses .
Gross profit
Selling, general and administrative expensesDepreciation and amortization expense
Operating income
Realized loss on sale of investment securities
Other income (expense), net
Total other-than-temporary impairment losses
Portion of loss recognized in other comprehensive income, before
tax
Net impairment loss recognized in earnings.
Income before income taxes
Provision for income taxes
Income from continuing operations
Loss from discontinued operations, net of tax
Net income
Basic income per common share:
Income from continuing operations
Loss from discontinued operations
Basic income per common share
Diluted income per common share:
Income from continuing operations
Loss from discontinued operations
Diluted income per common share
Weighted average common shares outstanding basic
Weighted average common shares outstanding diluted
Net income .
Other comprehensive income (loss):
Temporary (impairment) recovery related to investment securities, net
of tax
Reclassification adjustment for realized losses in net income related to
investment securities, net of tax
Foreign currency translation gain (loss)Other comprehensive income (loss)
Comprehensive income
interst paid
depreciation expense
R&D expense
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2011 2010 2009
2,967,559 2,940,269 2,948,679
1,796,600 1,766,839 1,751,493
1,170,959 1,173,430 1,197,186
713,197 725,278 690,787140,501 137,760 123,602
317,261 310,392 382,797
-24,426 -2,749 -1,117
3,497 -2,328 18,908
-5,089 -4,413 -22,889
3,841 3,473 ___
-1,248 -940 -22,889
295,084 304,375 377,699
113,150 90,977 147,715
181,934 213,398 229,984
-41,287 -44,376 -50,923
140,647 169,022 179,061
0.91 1.04 1.12
-0.21 -0.22 -0.25
0.70 0.82 0.87
0.90 1.02 1.11
-0.20 -0.21 -0.25
0.70 0.81 0.86
199,979 206,171 205,169
201,818 209,512 207,582
140,647 169,022 179,061
-1,140 14,506 -23,173
7,541 940 948
4,833 15,781 -27,64911,234 31,227 -49,874
151,881 200,249 129,187
191 1879 1947
139169 137045 123218
0 0 0
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Operating activities:
Net income
Loss from discontinued operations
Income from continuing operations
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortizationShare-based compensation
Provision for deferred income taxes
Tax benefit from share-based payments
Excess tax benefit from share-based payments
Foreign currency transaction loss (gain)
Net impairment loss recognized in earnings
Realized loss on sale of investment securities
Changes in assets and liabilities:
Merchandise inventory
Accounts receivable
Prepaid expenses and other
Other assets, net
Accounts payable
Unredeemed gift cards and gift certificates
Deferred lease credits
Accrued compensation and payroll taxes
Accrued income and other taxes
Accrued liabilities
Total adjustments
Net cash provided by operating activities from continuing operations
Investing activities:Capital expenditures
Purchase of available-for-sale securities
Sale of available-for-sale securities
Other investing activities
Net cash provided by (used for) investing activities from continuing operations
Financing activities:
Payments on capital leases
Proceeds from issuance of note payable
Repayment of note payable
Repurchase of common stock as part of publicly announced programs
Repurchase of common stock from employees
Net proceeds from stock options exercised
Excess tax benefit from share-based payments
Cash used to net settle equity awards
Cash dividends paid
Net cash used for financing activities from continuing operations
Effect of exchange rates on cash
Cash flows of discontinued operations
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Net cash used for operating activities
Net cash used for investing activities
Net cash used for financing activities
Effect of exchange rates on cash
Net cash used for discontinued operations
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents beginning of periodCash and cash equivalents end of period
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2011 2010 2009
140,647 169,022 179,061
41,287 44,376 50,923
181,934 213,398 229,984
145,548 139,832 126,36225,457 34,615 18,731
11,885 -36,027 24,473
15,648 7,995 1,121
-12,499 -2,812 -693
117 6,477 -1,141
1,298 940 22,889
24,426 2,749 1,117
18,713 -33,699 -5,634
-3,790 6,656 -10,019
-9,045 12,916 -23,184
-1,380 1,146 390
5,232 8,358 -3,467
1,713 -3,591 -11,495
-7,451 4,667 16,662
-19,618 25,841 -18,223
11,999 12,858 -20,791
12,457 -1,993 -1,930
220,660 186,928 115,128
402,594 400,326 345,112
-84,259 -127,080 -243,564
-62,797 _______ -48,655
177,472 80,353 393,559
-2,801 -2003 -2,297
27,615 -48,730 99,043
-2590 -2,015 -2,177
____ ____ 75,000
-30,000 -45,000 ________
216,070 ____ ____
-18,041 -247 -3432
7,272 9044 3799
12,499 2812 693
-6,434 -1414 _____
-183,166 -82,985 -82,394
-436,530 -119,805 -8,511
1,394 3030 -14,790
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-21,434 -13,864 -41,802
-6 -339 -21,771
______ ________ _______
_____ _______ ________
-21,440 -14,203 -63,573
-26,367 220,618 357,281
693,960 473,342 116,061667,593 693,960 473,342
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Current assets:
(values in thousands except per share value)
Cash and cash equivalents
Short-term investments .
Merchandise inventory
Accounts receivable
Prepaid expenses and otherDeferred income taxes
Total current assets
Property and equipment, at cost, net of accumulated depreciation and
amortization
Goodwill
Long-term investments
Non-current deferred income taxes
Other assets, net
Total assets
Current liabilities:
Accounts payable
Note payable
Accrued compensation and payroll taxes
Accrued rent
Accrued income and other taxes
Unredeemed gift cards and gift certificates
Current portion of deferred lease credits
Other liabilities and accrued expenses
Total current liabilitiesNon-current liabilities:
Deferred lease credits
Non-current accrued income taxes
Other non-current liabilities
Total non-current liabilities
Commitments and contingencies
Stockholders equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and
outstanding
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 and
249,561 shares issued; 194,366 and 206,832 shares outstanding, respectively . .Contributed capital
Accumulated other comprehensive income
Retained earnings
Treasury stock, 55,200 and 41,737 shares, respectively, at cost
Total stockholders equity
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short term debt
long term debt
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2011 2010 2009
667,593 693,960 473,342
67102 4675 10,511
301208 326,454 294,928
36721 34746 41,471
53727 47,039 59,66048059 60156 45,447
1,174,410 1,167,030 925,359
643120 713,142 740,240
11472 11210 10,706
5915 197,773 251,007
19616 27305 15,001
25465 21,688 21,363
1879998 2138148 1,963,676
167723 158,526 152,068
30000 75,000
34954 55144 29,417
70390 68866 64,695
32468 20585 6,259
41001 39389 42,299
16203 17388 13,726
25098 19057 18,299
387837 408955 401,763
78606 89591 88,314
38671 38618 39,898
23813 22467 24,670
141090 150676 152,882
2496 2486 2485546,597 554,399 513,574
28,072 16,838 -14,389
1,711,929 1,764,049 -1,694,161
-938,023 -759,255 -786,800
1,351,071 1,578,517 1,409,031
1,879,998 2,138,148 1,963,675
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0 30,000 75,000
0 0 0