Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

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50Free Cash Flows(Amounts in millions of dollars except per share data)2004 2005 2006 2007 2008 2009 2010 2011 2012Cash Flow from Operations 260.2 268.0 276.1 284.4 292.9 301.7 310.7 320.1Cash Provided (Used) by InvestingActivities 86.6 (86.7) (109.3) (122.1) (133.2) (145.2) (141.7) (153.4)Free Cash Flow (to firm) 347 181 167 162 160 156 169 167discount rate (4.78% WACC) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000Present Value of Free Cash Flows -0.076 0.000 0.000 0.000 0.000 0.000 0.000 0.000Total Present Value of Annual Cash Flows -$0.08Continuing (Terminal) Value (assume nogrowth)Present Value of Continuing (Terminal)Value $0.00Value of the Firm (end of 2004) -$0.08Book Value of Debt and Preferred Stock $848.00Value of Equity (end of 2004) -$848.08Estimated Value per Share at end 2004 -$8.15Estimated Value per Share on April 1 -$8.26Earnings Per Share 1.614 1.663 1.713 1.764 1.817 1.872 1.928 1.985Dividends per share $0.20 $0.20 $0.25 $0.25 $0.30 $0.30 $0.35 $0.35Book Value Per Share $13.67Actual Price per share $38.39Kd= 3.68% ke= 5.44%total assets $2,270,241.00 CL $501,130.00 SE $1,422,073.00LTL $277,345.00(Amounts in millions of dollars except per share data)2004 -1134.467041 -1363.6 -1391.7 -1406.6188 -1419.2 -1433 -1425.975102 -1439.2Cash Flow from Operations (2093.7) (2410.0) (2449.9) (2471.6) (2490.3) (2510.6) (2502.3) (2521.9)= -4543.53437WACC = -454353.44%
51Polo Ralph Lauren Corp.As Reported Annual BalanceSheet 4/3/2004 3/29/2003 3/30/2002 3/31/2001 4/1/2000Currency USD USD USD USD USDAuditor StatusNotQualifiedNotQualifiedNotQualifiedNotQualifiedNotQualifiedConsolidated Yes Yes Yes Yes YesScale Thousands Thousands Thousands Thousands ThousandsCash & cash equivalents 343,477 343,606 238,774 51,498 164,571Marketable securities - - - 50,721 -Accounts receivable, gross 472,260 393,454 366,783 281,100 221,078Allowances 30,536 17,631 13,175 12,090 16,631Accounts receivable, net 441,724 375,823 353,608 269,010 204,447Raw materials 5,516 4,214 3,874 7,024 13,649Work-in-process 4,669 4,536 5,469 6,251 6,337Finished goods 353,506 355,021 340,475 412,319 370,967Inventories 363,691 363,771 349,818 425,594 390,953Deferred tax assets 21,565 15,735 17,897 31,244 40,378Prepaid expenses & other currentassets 100,862 67,072 47,960 73,654 52,542Total current assets 1,271,319 1,166,007 1,008,057 901,721 852,891Land & improvements 3,725 3,725 3,720 3,408 3,108Buildings 18,540 18,490 17,250 10,178 10,178Furniture & fixtures 345,668 308,300 258,816 229,824 192,444Machinery & equipment 180,138 133,835 105,136 56,833 49,807Leasehold improvements 329,186 298,449 318,734 304,681 350,367Gross property & equipment 877,257 762,799 703,656 604,924 605,904Less accumulated depreciation &amortization 479,929 407,803 359,820 275,995 232,927Property & equipment, net 397,328 354,996 343,836 328,929 372,977Deferred tax assets 61,579 54,386 58,127 61,056 11,068Goodwill, gross - - 297,048 263,291 -Less: Accumulated amortization -goodwill - - 23,700 13,900 -Goodwill, net 341,603 315,559 273,348 249,391 277,822Intangibles, net 17,640 11,400 - - -Equity interest investment 57,766 47,631 - - -Officers' life insurance 50,250 48,826 - - -Other long-term assets 72,756 40,017 - - -Other assets 180,772 136,474 - - -Other assets - - 66,129 84,996 105,804Total assets 2,270,241 2,038,822 1,749,497 1,626,093 1,620,562Short-term bank borrowings - 100,943 32,988 86,112 86,131Accounts payable 187,355 181,392 177,472 178,293 151,281Income taxes payable 77,736 55,501 52,819 - -Deferred tax liabilities 1,821 - - - -Accrued operating expenses 174,574 103,670 74,537 108,441 90,467Accrued payroll & benefits 38,217 33,630 25,124 37,760 26,621Accrued restructuring charge 12,835 15,817 17,644 13,886 12,283Deferred rent obligation 8,592 9,394 - - -Accrued acquisition obligation - - - - 21,637Accrued shop-within-shops - - 11,187 15,085 17,808Accrued expenses & other currentliabilities 234,218 162,511 128,492 175,172 168,816
Page 1 and 2: Business Valuation of Polo Ralph La
Page 3 and 4: Executive SummaryThe objective of t
Page 5 and 6: Industry Overview and Analysis.Comp
Page 7 and 8: Products and Services:Polo Ralph La
Page 9 and 10: Company-operated a total of 3,022 s
Page 11 and 12: Ralph Lauren lifestyle through new
Page 13 and 14: Lauren must remain a respected inno
Page 15: Net Accounts ReceivableA reserve fo
Page 18 and 19: offset by the increase in selling s
Page 20 and 21: Evaluation of the Quality of Disclo
Page 22 and 23: Ratio Analysis of Polo Ralph Lauren
Page 24 and 25: for the company. The Times Interest
Page 26 and 27: average of this ratio, with the exc
Page 28 and 29: (In millions of dollars)Annual Bala
Page 30 and 31: Based on the Comparable forward P/E
Page 32 and 33: occurred because their Book Value a
Page 34 and 35: Sensitivity Analysisg0 0.02 0.03 0.
Page 36 and 37: on those obligations. This valuatio
Page 38 and 39: AppendixCross Sectional (Benchmark)
Page 40 and 41: Net Profit Margin 4/3/2004 3/29/200
Page 42 and 43: Return on Equity (ROE) 4/3/2004 3/2
Page 44 and 45: Quick Ratio 4/3/2004 3/29/2003 3/30
Page 46 and 47: Discounted Dividends (Amounts in mi
Page 48: Residual Income 1 2 3 4 5 6 7 8 9 1
Page 54 and 55: 54Polo Ralph Lauren Corp.As Reporte

Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

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