Euro Disney S.C.A 1

Introduction

In the heart of Europe, Euro Disney S.C.A. and its subsidiaries operate Disneyland Paris. The Disneyland Park presents 42 attractions in five different themed lands - Adventureland, Discoveryland, Fantasyland, Frontierland and Main Street USA.Ranking as Europe's leading tourist destination, Disneyland Paris also offers a choice of seven themed hotels celebrations classic American locations, two convention centers and a 27 -hole golf facility.At Disney village, leisure activities and fine food are readily available. Themed restaurants, nightclub and shops in addition to a 15 screen cinema complex an two live shows welcome resort guests as well as local and Parisian residents.In addition, the new Val d’Europe International shopping Center opened in October of 2000, offering shoppers and visitors a wide range of stores and dining experiences.Euro Disney S.C.A is building a second theme park, Disney Studios, dedicated to the world of movies, television and animation.In fiscal year 2000, Euro Disney S.C.A reported higher net income, resulting primarily from increased guest spending at both the Disneyland Park and the hotels, growth in operating performance at Disney Village, contributions from real estate development activities and savings in lease and net financial charges.With the introduction of a new entertainment programs the constructions of the second theme park, the building of the Val d'Europe town centre and the launch of additional real estate development projects, Euro Disney S.C.A is building the Euro Disney of the future.

Products and services

Disneyland Paris has attained its prominence as a tourist destination largely owing to the continued expansion of attractions, parades, live stages shows and special events at the Disneyland Park. In fiscal year 2000, the park entertainment offer was enhanced by three new guest experiences: The Tarzan Encounter stage show, a new Adventureland and attraction, Indiana Jones and the Temple of Peril, and a new, fully themed children's playground Pirates's Beach. The year also saw the successful implementation of FastPass, the company's new attraction reservation system, the greatest innovation introduced in the industry.

The Eurodisney growth policy

Euro Disney S.C.A. focuses on improving access, service, hotel capacity and its entertainment offer. The two main projects are:

a) Disney Studios

The group is constructing Disney Studios, Euro Disney S.C.A.'s second theme park. Celebrating the world of the movies, television and animation, the new park is scheduled to open in the spring of 2002. Disney studios will employ approximately 1.500 cast Members and will be a live -action, animation and television studio, where

1 Case written by Ana Paula Tepedino, with the collaboration of Oriol Amat, Universitat Pompeu Fabra.

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guests will experience movies and television both from behind the scene and in front of the cameras. Guests of the park will discover the world of cinema, see how movies are made today and step into the future old movies making. The current construction budget for Disney Studios is approximately 610 millions of Euros, excluding interest charges that will be capitalized as part as the cost of the completed assets. The project is being financed by the proceeds of the December 1999 equity offering and a new 381 million of Euros subordinated credit agreement executed with the Caisse des Dépôts et Consignations on September 30, 1999 (CDC loans)2.

b) Val d'Europe

Val d'Europe is an urban development project conceived by French public authorities and Euro Disney S.C.A. to create a new city near Disneyland Paris. The goal is to strike a balance between modernity and tradition while promoting quality living and respect for the environment. The project involves buildings a major shopping center, an international business park, offices, apartments, individual homes and hotels.Three highly specialized property developers, Féréal CGIS, Meunier Promotion and Bouygues immobilier, have begun the construction of a complex of 600 quality apartments in the Quartier de la Gare. In addition, in the same district Euro Disney S.C.A. and Etoiles d'Europe S.A.S. have signed an agreement relating to the construction of three office buildings, This neighborhood will be built around a large square with restaurants, bars and convenience stores.

Financial data

Euro Disney belongs to the strongest group of entertainment in the world. Nevertheless in the first years had great losses. After several market studies and studies about cultural differences. The company began a process of restructuring and adequacy to the European style, since the European are 90% of the park’s clients. The error was trying to reproduce the American model. The changes were deep, beginning with the room’s hotel conception. Since then, the company is having positive results with a policy that starts by the consideration that the greatest asset is dedication enthusiasm and energies of the cast members. An aggressive policy of infra-structure and a better service efficiency. During the last year, the net profit of Euro Disney S.C.A. increased a lot. Improvements resulted primarily from increased guest spending at both the theme park and the hotels (figure 1), growth in the operating performance of Disney Village and contributions from real estate development activities. Net income also grew due to savings in lease and net financial charges. The storm of December 26th, one of the worst in recent French history, had a significant impact on the operations of the group during the first semester of fiscal year 2000. The increase in others revenues reflected the insurance reimbursement for operating losses resulting from the storm.

Figure 1: Euro Disney S.C.A. Key operating indicators

Theme Park Hotels

2 CDC loan– Pursuant to the original credit agreement and the financial restructuring, the company borrowed from the CDC 40,6 million of euros senior debt and 128,3 million subordinated debt. The senior debt is seccured by the Theme Park, Disneyland Hotel, David Crockett Ranch, and other related facilities and the underlying land there of. The subordinated debt is unsecured.

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Fiscal year Total guests (in millions)

Spending per guest (€)

Occupancy rate Spending per room (€)

2000 12.0 42.2 82.9% 180,31999 12.5 40.7 82.6% 177.31998 12.5 39.3 80.9% 173.81997 12.6 38.3 78.0% 158.91996 11.7 37.8 72.2% 155.2

Figure 2: Euro Disney S.C.A. revenues

2000 1999 Percent changeTheme Park 459.5 460.2 -0.2%

Hotels and Disney Village 370.3 352.0 5.2%

Theme Park, Hotels and Disney Village Revenues 829.8 812.2 2.2%Other 129.4 108.0 19.8%Total Disneyland Paris Revenues 959.2 920.2 4.2%

The company did huge investments during the year 2000 primarily related to the construction of the Disney Studios Theme Park and investments related to current operations.The group future liquidity will depend upon, among other things, improvements in operating performance sufficient to finance on going capital expenditures requirements and debt repayment. The group owns the Disneyland hotels, the David Crockett Ranch, the golf course, the underlying land thereof and the land on which the other five hotels and Disney Village are located, and leases substantially all of the remaining operating assets. Pursuant to options available under French accounting principles, the group has not capitalized these leases and has accounted for them as operating leases.The quantity of debt decreased a lot primarily as a result of repayments and the early repurchase of 2,3 million of the 6,75% convertible bonds which will mature on October 1, 2001. The terms of the loans (CDC) were modified so as to reduce the fixed interest rate from 7.85% to 5.15%.Shareholder’s equity increased in the year 2000 as a result of net income for fiscal year 2000 and the net proceeds of the issuance of new shares. The company is exposed to the impact of interest and foreign currency exchange rate changes. In the normal course of business, the company employs established policies and procedures to manage their exposure to changes in interest and foreign currency exchange rates using primarily swaps and forward agreements.The company showed a continued improvement in operating performance and this is the company policy to success. Taking into account the impact of unseasonable weather, fiscal year 2000 attendance was below their expectations. In order to re-vitalize attendance growth, the company is strengthening its marketing programs, developing their entertainment offer to guests and further expanding the Fast Pass system. The strategy of the company in improving operating performance is increased attendance, occupancy and guest spending.

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Figure 3: Euro Disney S.C.A. Balance sheets2000 1999 1998

Fixed AssetsIntangible assets 11,4 13,6 12,7 Tangible assets 658,3 493,9 466,9 Long-term receivables 1.414,9 1.435,2 1.449,2

2.084,6 1.942,7 1.928,8 Current AssetsInventories 36,1 33,8 32,9 Accounts receivable:Trade 81,1 75,1 62,2 Other 120,6 107,2 96,8 Short term investments 387,7 273,2 246,7 Cash 20,4 29,3 20,4

645,9 518,6 459,0 Deferred charges 63,3 57,5 57,8

Total assets 2.793,8 2.518,8 2.445,6

Shareholders equityShare capital 804,8 585,2 585,1 Share premium 288,9 288,9 288,7 Retained earnings 153,8 266,7 243,3

1.247,5 1.140,8 1.117,1 Quasi equity 152,8 1,1 1,1 Provisions for risk and charges 21,8 13,3 22,6 Borrowings 916,8 983,3 978,3

Current liabilitiesPayable to related companies 77,0 57,9 41,6 Account payable and accrued liabilities 302,6 256,4 239,8

379,6 314,3 281,4

Deferred Revenue 75,3 66,0 44,8

Total shareholders equity and liabilities 2.793,8 2.518,8 2.445,3

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Figure 4: Euro Disney S.C.A. Profit and loss accounts

2000 1999 1998Gross income 959,2 920,2 897,9 Costs and expenses -783,4 -754,0 -721,4 Income before lease financial charges 175,8 166,2 176,5

Lease rental expenses -151,1 -131,1 -125,5 Financial income 74,8 54,6 61,0 Financial expenses -62,0 -68,5 -71,9

-138,3 -145,0 -136,4 Income before exceptional items 37,5 21,2 40,1 Exceptional income, net 1,2 2,4 4,1 Net income 38,7 23,6 44,2

Figure 5: Euro Disney S.C.A. Selected financial ratios.

Liquidity Ratio 2000 1999 1998Current Assets/ Current liabilities 1.70 1.65 1.63Cash, short term investments and debtors / Current liabilities 1.61 1.54 1.51

Debt RatiosDebt quality (Current Liabilities/ Total debt) 29.3% 24.2% 22.3%Debt quantity (Total debt/ Total debt+Equity) 48.1% 53.2% 53.0%Debt cost (Interests/ Total debt) 3.9% 4.4% 4.6%

Assets ManagementAsset Turnover (Sales/ Assets) 0.31 0.33 0.33Fixed Asset Turnover (Sales/ Fixed assets) 0.41 0.43 0.42Current Assets Turnover ( Sales/ Current assets) 1.33 1.62 1.78

ExpensesOperating costs/ Total Sales 62.0% 59.8%Marketing general and administration/ Total Assets 6.1% 6.8%Total expenses and costs/ Total sales 91.4% 89.7%

Margin and profitabilityROS Return on sales (Net profit/ Sales) 4% 3% 5%ROE Return on equity (Net profit/ Equity) 3% 2% 4%ROI Return on Investments (EBIT/ Assets) 3% 2% 3%Earnings per share before depreciation and provisions after income taxes 8% 7% 11%

Earnings per share after income taxes and depreciation and provisions 4% 3% 5%

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Stock market performance

At the end of 2000, the stock market capitalization of Euro Disney S.C.A. was 591 millions of Euros.Shares of Euro Disney S.C.A. are traded on the Paris, Brussels and London stock exchanges. In 2000, the performance of Euro Disney S.C.A. shares should be viewed in light of the volatile stock market environment which characterized the period. Euro Disney S.C.A. nevertheless remains one of the top ten companies cited by active young shareholders (TLB Europlace study).A 6,75% convertible bond was also traded in Paris.

Evolución bursátilA finales de 2000, la capitalización bursátil de Euro Disney SCA fue 591 millones de Euros.Las acciones de Euro Disney S.C.A. se negocian en las bolsas de París, Bruselas y Londres. En 2000, eldesempeño de Euro Disney S.C.A. acciones deben ser vistas a la luz del entorno volátil mercado de valores quecaracterizado el período. Euro Disney S.C.A. sin embargo, sigue siendo una de las diez principales compañías citadas por activoaccionistas jóvenes (estudio Europlace TLB).Un bono convertible 6,75% también fue cambiado en París.

Figure 5: Euro Disney S.C.A Stock exchange activity

Price at the end of 2000

Average daily volume during the year 2000

Share

Paris 0,56 1,756.388London 0,40(pounds) 79.538

Brussels 0,54 80.800

Convertible Bond Paris 24,89 18.150

Warrant Paris 0,02 128479

Figura5: Actividad bursátil Euro Disney S.C.A

Precio a finales de 2000

Volumen medio diario durante el año 2000

Cuota

Paris 0,56 1,756.388London 0,40(libras) 79.538

Brussels 0,54 80.800

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Convertible Bono Paris 24,89 18.150

garantia Paris 0,02 128479

Figure 6: Euro Disney S.C.A Market Capitalisation

2000 1999 1998Number of shares (in millions) 1.056 768 768Market Capitalization (in millions of euros) 591 1.052 960Share PriceHigh (in euros) 1.27 1.47 1.80Low(in euros) 0.56 0.96 0.97

Figure 6: Euro Disney S.C.A Capitalización bursátil

2000 1999 1998Número de acciones (en millones) 1.056 768 768Capitalización bursátil (en millones de euros)

591 1.052 960

Precio de las accionesAlto (en euros) 1.27 1.47 1.80Bajo (en euros) 0.56 0.96 0.97

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Information from a competitor

In order to prepare a benchmarking, some data from a competitor will be provided. The competitor is Wall's Park and some ratios are provided in figure 7.

La información de un competidorCon el fin de preparar una evaluación comparativa, se proporcionarán algunos datos de un competidor. El competidor es Park y Wall y algunas relaciones se proporcionan en la figura 7.

Figure 7: Wall’s Park. Selected financial ratios.

Liquidity Ratio 2000 1999Current Assets/ Current liabilities 1.13 1.08Cash, short term investments and debtors / Current liabilities 1.08 1.02

Debt RatiosDebt quality (Current Liabilities/ Total debt) 24% 21%Debt quantity (Total debt/ Total debt+Equity) 93% 97%Cash flow/ Loans

Assets ManagementAsset Turnover (Sales/ Assets) 0.16 0.27Fixed asset Turnover (Sales/ Fixed assets) 0.34 0.33Current asset Turnover (Sales/ Current assets) 1.04 1.21

Margin and profitabilityROS Return on sales (Net profit/ Sales) -7.72% -5.94%ROE Return on equity (Net profit/ Equity) -27.80% -58.78%ROI Return on investments (EBIT/Assets) 3.31% 5.28%

Figure 7: Wall’s Park. Seleccionado ratios financieros.

Liquidity Ratio 2000 1999Activo Circulante / Pasivo corriente 1.13 1.08Dinero en efectivo, inversiones a corto plazo y deudores / Pasivo corriente

1.08 1.02

Indicadores de Deuda

Calidad de la deuda (pasivo circulante / Deuda total) 24% 21%La cantidad de la deuda (deuda total / Patrimonio neto total de la deuda)

93% 97%

Flujos de efectivo / Préstamos

Gestión de Activos

Rotación de activos (Ventas / Activos) 0.16 0.27Rotación de activos fijos (Ventas / Activo fijo) 0.34 0.33Facturación activo actual (Ventas / Activo circulante) 1.04 1.21

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Margen y rentabilidad

ROS Rentabilidad sobre ventas (beneficio neto / ventas) -7.72% -5.94%ROE Retorno sobre el patrimonio neto (beneficio neto / Patrimonio)

-27.80% -58.78%

ROI Retorno de la inversión (EBIT / Activo) 3.31% 5.28%

Questions:

1. Analyse the strenghts and weaknesses of Euro Disney from a financial and economic point of view.

2. As a banker: If you had to choose, to which of the two companies you would give a loan? Why?

3. As as shareholder: If you had to choose, from which company would yo prefer to buy shares? Why?

Preguntas:

1. Analizar las fortalezas y debilidades de Euro Disney, desde un punto de vista financiero y económico.

2. Como banquero: Si tuvieras que elegir, ¿a cuál de las dos compañías que le darán un préstamo? ¿Por qué?

3. Como accionista: Si tuvieras que elegir, a partir del cual la empresa preferiría comprar acciones? ¿Por qué?

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EURO DISNEY S.C.A. 3

TEACHING NOTES

1. Analyse the strenghts and weaknesses of Euro Disney from a financial and economic point of view.

The main strenghts and weaknesses from a financial and economic point of view are the following:-Strenghts:

-All indicators are much better than the one’s of Wall’s Park.-Liquidity.-Debt quantity and quality.-Sales increase (but not too much).-Ocupancy rates.

-Weaknesses:

-Asset management.-ROI and ROE .

NOTAS DE ENSEÑANZA

1. Las principales fortalezas y debilidades desde el punto de vista financiero y económico, son los siguientes:-Puntos fuertes:

-Todos los indicadores son mucho mejor que la del Parque de la Muralla.-Liquidez.-Deuda cantidad y calidad.-Sales aumento (pero no demasiado).-Ocupación tarifas.

-Debilidades:

Gestión de activos.-ROI y ROE.

1.

2. As a banker: If you had to choose, to which of the two companies you would give a loan? Why?

3 Written by Ana Paula Tepedino, with the collaboration of Oriol Amat, Universitat Pompeu Fabra.

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The two companies in the case are the same: Euro Disney S.C.A. The differences between the two come from the accounting principles adopted by the group and the USA GAAP (Generally Accepted Accounting Principles).

2. Las dos empresas en el caso son los mismos: Euro Disney SCA Las diferencias entre los dos provienen de los principios contables adoptados por el grupo y los EE.UU. GAAP (Principios de Contabilidad Generalmente Aceptados).

Figure 8: Wall’s Park S.A Balance sheets

2000 1999Cash and short term investments 452.90 347.60Receivables 203.20 184.60Fixed assets 2,493.30 2,455.50Other assets 169.40 161.40Total assets 3,318.80 3,149.10

Accounts payable and other liabilities 730.90 644.80Borrowings 2,349.80 2,419.40Shareholders' equity 238.10 84.90Total liabilities and equity 3,318.80 3,149.10

Figure 8: Wall’s Park S.A Balances

2000 1999Efectivo e inversiones a corto plazo 452.90 347.60Cuentas a cobrar 203.20 184.60Los activos fijos 2,493.30 2,455.50Otros activos 169.40 161.40Activos totales 3,318.80 3,149.10

Cuentas por pagar y otros pasivos 730.90 644.80Préstamos 2,349.80 2,419.40El patrimonio neto 238.10 84.90Total del pasivo y patrimonio neto 3,318.80 3,149.10

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Figure 9: Wall’s Park. Profit and loss accounts

2000 1999Gross income 959,2 920,2 Cost and expenses -783,4 -754,0 Income before lease financial charges 175,8 166,2

Lease rental espenses -151,1 -131,1 Financial income 74,8 54,6 Financial expenses -62,0 -68,5

-138,3 -145,0 Income before exceptional items 37,5 21,2

Exceptional income, net 1,2 2,4

Net income after exceptional items 38,7 23,6

Lease and interest adjustments -106 -74.5

Other 1 1.0

Net loss -66.2 -49.9

Figure 9: Wall’s Park. De pérdidas y ganancias cuentas

2000 1999El ingreso bruto 959,2 920,2 Costos y gastos -783,4 -754,0 Utilidad antes de gastos financieros de arrendamiento 175,8 166,2

Arrendamiento gastos de alquiler -151,1 -131,1 Ingresos financieros 74,8 54,6 Gastos financieros -62,0 -68,5

-138,3 -145,0 Utilidad antes de partidas extraordinarias 37,5 21,2

Ingresos excepcionales, neto 1,2 2,4

El beneficio neto después de partidas extraordinarias 38,7 23,6

Lease and interest adjustments -106 -74.5

Other 1 1.0

Pérdida neta -66.2 -49.9

The consolidated financial statements of Euro Disney S.C.A. have been prepared in accordance with accounting principles generally accepted in France (French GAAP). French GAAP varies in certain significant aspects in relation to U.S. GAAP, particularly for leases of assets, which are accounted for as operating leases in accordance with one of the options allowed by French GAAP, rather than being

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capitalized. Additionally, in connection with the financial restructuring, the company's computation of interest expenses under French GAAP differs significantly from U.S GAAP.In the profit and loss account the company had a loss of 66,2 in 2000 and a loss of 49.9 in 1999. Lease and interest adjustments cause this big difference between the profit and loss account under French GAAP and US GAAP. The group leases substantially all of its operating assets under various agreements. Under French GAAP the group doesn’t not capitalize these leases and account for them as operating leases. Under U.S. GAAP, the underlying assets and liabilities and related depreciation and interest expenses are reflected in the Group's financial statements.Under U.S. GAAP all interest charges relating to debt instruments whose interest rates are scheduled to change or have interest "holidays" or forgiven in periods are required to be calculated in accordance with the "effective interest method" This method calculates the estimated interest charges over the life of the debt, and allocates this amount over the term of the debt using an effective yield. This adjustment resulted in less interest expenses in the year 2000 and additional interest expenses in the year 1999, as interest expenses calculated using this method differs from the actual interest paid. In addition, the 1999 adjustment includes a 52,1 million of euro. This modification implied a substantial modification of the debt and was accounted for as extinguishments of the existing debt, which requires that the difference between the fair value of the new debt and the caring value of the existing debt to be recorded as a gain or loss as a result of the extinguishments. The excess of interest accrued under the effective interest method over the interest contractually due, as of the data of the modification, was reverse and debt issue costs related to the extinguished debt were written–off. Under French GAAP, the effect of the modification will be accounted prospectively based on the contractual terms of the revised agreement.

…

Los estados financieros consolidados de Euro Disney SCA han sido preparados de acuerdo con principios de contabilidad generalmente aceptados en Francia ( normas francesas) . Francés GAAP varía en ciertos aspectos significativos en relación con los PCGA de EE.UU. , en particular para los arrendamientos de activos , que se contabilizan como ingresos operativos de acuerdo con una de las opciones permitidas por las normas francesas , en lugar de ser capitalizados . Además, en relación con la reestructuración financiera , el cómputo de los gastos por intereses según las normas francesas de la empresa difiere significativamente de los PCGA de EE.UU. .En la cuenta de pérdidas y ganancias de la empresa tuvo una pérdida de 66,2 en 2000 y una pérdida de 49,9 en 1999. Ajustes de alquileres y servicios de interés hacen que esta gran diferencia entre la cuenta de resultados según las normas francesas y EE.UU. GAAP. El Grupo arrienda sustancialmente todos sus activos operativos en virtud de diversos acuerdos. Según las normas francesas el grupo no no capitaliza estos arrendamientos y dar cuenta de ellos como arrendamientos operativos. Bajo los PCGA de EE.UU. , los activos y pasivos subyacentes y las amortizaciones correspondientes y los gastos por intereses se reflejan en los estados financieros del Grupo.Bajo los PCGA de EE.UU. se requiere que todos los cargos por intereses relativas a los instrumentos de deuda con tasas de interés se han programado para cambiar o tener interés "vacaciones" o perdonado en los períodos que se calculará de acuerdo con el " método de interés efectivo " Este método calcula los cargos por intereses estimados a lo largo del vida de la deuda , y asigna los fondos en el plazo de la deuda de acuerdo con un rendimiento efectivo . Este ajuste se tradujo en menores gastos por intereses en el

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año 2000 y los intereses adicionales en el año 1999 , ya que los gastos por intereses calculados utilizando este método difiere del interés real pagado . Además , el ajuste 1999 incluye un 52,1 millones de euros . Esta modificación implica una modificación sustancial de la deuda y se contabilizó como extinciones de la deuda existente , que requiere que la diferencia entre el valor razonable de la nueva deuda y el valor de cuidar de la deuda existente que se contabiliza como una ganancia o una pérdida en cuanto un resultado de las extinciones . El exceso de los intereses devengados por el método de interés efectivo durante el interés debido por contrato , a partir de los datos de la modificación, fue inversa y los costos de emisión de deuda relacionados con la deuda extinguida fueron dados de baja . Según las normas francesas , el efecto de la modificación se contabilizará de forma prospectiva en los términos contractuales del acuerdo revisado .

Figure -10: Euro Disney reconciliation of net income

In millions 2000 1999Net income as reported under French GAAP 38.7 23.6Lease and interest adjustments -106.0 -74.5Other 1.1 1.0Net loss under U.S.GAAP -66.2 -49.9Source: Euro Disney 2000 report

Figure -10: Euro Disney conciliación de la utilidad neta

In millions 2000 1999La utilidad neta informada de conformidad a las normas francesas

38.7 23.6

Ajustes de alquileres y servicios de interés

-106.0 -74.5

Otro 1.1 1.0Pérdida neta bajo U.S.GAAP -66.2 -49.9

Extraordinary items:Under French GAAP the definition of exceptional items differs significantly from the U.S. GAAP definition of extraordinary items. As a result, none of the items reported in exceptional income or losses under French GAAP in 2000 and 1999, would be classified as extraordinary under U.S.GAAP. In addition, in 1999 U.S GAAP net loss includes 9.0 millions of Euros loss relating to the write–off of debt issued costs related to the extinguished CDC debt which would be reported as extraordinary under U.S. GAAP.

Partidas extraordinarias:Según las normas francesas de la definición de partidas extraordinarias difiere significativamente de la definición de los PCGA de EE.UU.partidas extraordinarias. Como resultado de ello, ninguno de los elementos registrados en los ingresos excepcionales o pérdidas derivadas de las normas francesas en2000 y 1999, se clasificarían como extraordinaria bajo USGAAP. Además, en 1999 U.S pérdida neta GAAPincluye 9,0 millones de euros de pérdida en relación con la amortización de los costos de deuda emitidos relacionados con la deuda extinguida CDCque sería reportado como extraordinaria bajo los PCGA de EE.UU..

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Figure - 11: Euro Disney reconciliation of shareholders equity

In millions € 2000 1999Shareholder’s equity, as reported under French GAAP 1,247.5 1,140.8Cumulative lease and interest adjustments -1,172.9 -1,067.0Effect of revaluing sale/lease back transactions 178.1 26.7Others -14.9 -15.6Shareholders’ equity under U.S. GAAP 238.1 84.9Source: Euro Disney 2000 report

Figure - 11: Euro Disney conciliación del patrimonio neto

En millones € 2000 1999Patrimonio Neto, según ha informado en normas francesas

1,247.5 1,140.8

Ajustes de arrendamiento e intereses acumulados -1,172.9 -1,067.0

Efecto de la revaluación de la venta / lease back transacciones

178.1 26.7

Otros -14.9 -15.6El patrimonio según los PCGA de EE.UU. 238.1 84.9

Borrowings

The group has not capitalized the leases of its operating assets but has accounted for them as operating leases. Under U.S. GAAP, the underlying assets and liabilities are reflected in the group’s balance sheet.

Préstamos

El grupo no ha capitalizado los arrendamientos de sus activos operativos, pero ha representado para ellos como arrendamientos operativos. BajoEE.UU. GAAP, los activos y pasivos subyacentes se reflejan en el balance del grupo.

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Figure - 12: Euro Disney reconciliation of borrowings

In millions € 2000 1999Total borrowings, as reported under French GAAP 873.8 941.9Unconsolidated debt 1,245.4 1,249.6Lease financing arrangements 236.9 236.9Borrowings including unconsolidated financing companies 2,356.1 2,427.9U.S.GAAP adjustments to revalue lease financing arrangements -6.3 -8.5Total U.S. GAAP borrowings 2.349.8 2,419.4Font: Euro Disney 2000 report

Euro Disney looks better than Wall’s Park. From the point of view of a banker the analysis of the company’s rating should be accompanied by studying other factors, such as assets, liquidity position,...We have seen that the company has a good liquidity position, this means a good short term position (very good to consider a short term loan, for example).The debt position is also good, but with a strong use of lease and other debt instruments. The asset position of the company is extremely high in fixed assets with a very low assets turnover ratio (very weak point, the company need to do changes in the asset management.Considering all this factors and also all the banks which Euro Disney in the new investments, a banker would see this company as a strong candidate to get a loan.

3. As as shareholder: If you had to choose, from which company would yo prefer to buy shares? Why?

When making an investment decision, one firstly has to analyze a number of issues not directly referring to the company. We would have to approximate the state of the economy, the financial resources of the investor, his risk taking approach and many other important insights.Euro Disney is making losses if U.S GAAP are used but if French GAAP are used, the company obtains a small profit. Because of this, Euro Disney looks better than Wall’s Park.Euro Disney share price has decreased during the last years but this performance should be viewed in light of the volatile stock market environment which characterized the period. There is a rule ”Sell high, buy cheap” and this should imply some positive tendencies. At Euro Disney the restructuring plan, which is being realized by the new cast will bring positive changes. Taken into consideration internal and external factors and the reality of restructuring would take time and imply additional costs. We could invest in the company. From the companies, Euro Disney looks more interesting for shareholders.

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