Disney 2015

Net Income ($M) 8382

Equity ($M) 48655
EBIT ($M) 13224
Pretax Income ($M) 13868
Income Tax Expense ($M) 5016
Effective Tax Rate 36.170%
Return On Equity
Total Equity ($M) 48655
Equity/Value (E/D+E) 73.70%
Debt ($M) 17363
Debt/Value (D/D+E) 26.30%
Stock Price ($) 103
Number of Shares ($M) 1,687.86
Market Value (Stock Price X Number of Shares) ($M) 173849.36473
FCFF ($M) 6813.15056
Growth Rate 9.4141%
Risk Free Rate (assuming constant 3%) 3.0000%
Market Risk Premium 3.1976%
Beta 1.01
Cost of Equity (re) 6.2295%
Cost of Debt (rd) * (1-tc) 18.4400%
WACC 9.4409%
Horizon Value
Present Value of Disney
Present Value of FCFF
 2016 2017 2018
9391 8980 12598
47323 46152 53955
14358 13873 14837
14868 13788 14729
5078 4422 1663
34.154% 32.071% 11.291%

47323 46152 53955

70.09% 64.59% 72.09%
20190 25303 20886
29.91% 35.41% 27.91%
92.86 98.57 116.94
1,607.10 1,543.48 1,487.24
149235.41706056 152140.91833 173918.1492
8596.09524 9064.39817 10434.99776
8.2405% 8.0509% 7.6350%
3.0000% 3.0000% 3.0000%
1.7076% 3.1119% 5.9022%
1.02 1.03 1.02
4.7418% 6.2052% 9.0203%
16.5610% 11.8713% 7.0633%
8.2764% 8.2117% 8.4741%
20559208.3286923 5777402.9571 1162662.852
 Charter Communications 2015 2016
Net Income ($M) -271 3522
Equity ($M) -46.0 50,366.0
EBIT ($M) 1,114.0 2,456.0
Pretax Income ($M) -331.0 820.0
Income Tax Expense ($M) -60.0 -2,925.0
Effective Tax Rate 18.127% 0.000%
Return On Equity
Total Equity ($M) -46.0 50,366.0
Equity/Value (E/(E+D) -0.13% 44.92%
Debt 35,723.00 61,747.00
Debt/Value (D/(E+D) 100.13% 55.08%
Stock Price ($) 202.50 287.92
Number of Shares ($M) 101.30 270.67
Market Value (Stock Price X Number of Shares) ($M) 20512.31149 77929.983408
FCFF ($M) $ 519.00 $ 2,716.00
Growth Rate -5.8618% 4.4845%
Risk Free Rate (Assuming 3%) 3.0000% 3.0000%
` Market Risk Premium - 13.8703%
Beta 1.18 1.21
Cost of Equity (re) - 19.7830%
Cost of Debt (rd) * (1-tc) -0.1375% -4.7371%
WACC 5.0821% 6.2784%
Horizon Value $ 158,191.40
Present Value of Charter
Present Value of FCFF
 2017 2018
9895 1230
47,531.0 44,272.0
4,106.0 5,221.0
1,028.0 1,686.0
-9,087.0 180.0
0.000% 10.676%

47,531.0 44,272.0
40.36% 37.81%
70,231.00 72,827.00
59.64% 62.19%
335.96 284.97
248.61 228.92
83523.1614066 65234.674689
$ 3,273.00 $ 2,642.00
6.3421% 5.1320%
3.0000% 3.0000%
26.9708% 9.3070%
1.2 1.2
35.3650% 14.1684%
-12.9387% 0.2208%
6.5576% 5.4940%
$1,615,604.77 $ 767,398.24
 Disney Capital Structure 2016

In millions of U.S dollars

except per share
Input Data: Capital Structure
Tax Rate 34.1539% Market Value of Equity $ 149,235.4171
Debt 20190 Total Value (V = D + S) $ 168,766.0000
Number of Shares (M) 1607.101 % Financed with Debt (wd =D/V) 11.9633%
Stock Price ($P) 92.86 % Financed with Stock (ws =S/V) 88.0367%
NOPAT 9421.185
Free Cash Flow (FCFF) 8596.095
Growth Rate in FCFF 8.24%
Value of Stock (S) 148576
Cost of Capital: Estimated Intrinisic Value
WACC 8.2764% Value of Operations $ 7,939.0318
Short Term Investments $ -
Estimated Total Intrinsic Value $ 7,939.0318
Debt $ 20,190.0000
Estimated Intrinisic Value of Equity $ (12,250.9682)
Number of Shares (M) 1607.101196
Estimated Intrinsic Price per Share $ (7.6230)
Gains Attributed To This
Capital Structure $ 1,671.00

Disney Capital Structure 2017

In millions of U.S dollars

except per share
Input Data: Capital Structure
Tax Rate 32.0714% Market Value of Equity $ 152,140.9183
Debt 25303 Total Value (V = D + S) $ 173,158.0000
Number of Shares (M) 1,543.48 % Financed with Debt (wd =D/V) 14.6127%
Stock Price ($P) 98.57 % Financed with Stock (ws =S/V) 85.3873%
NOPAT 9413.739
Free Cash Flow (FCFF) 9064.398
Growth Rate in FCFF 8.05%
Value of Stock (S) 147855
Cost of Capital: Estimated Intrinisic Value
WACC 8.2117% Value of Operations $ 8,376.5450
Short Term Investments $ -
Estimated Total Intrinsic Value $ 8,376.5450
Debt $ 25,303.0000
 Estimated Intrinisic Value of Equity $ (16,926.4550)
Number of Shares (M) 1543.480961
Estimated Intrinsic Price per Share $ (10.9664)
Gains Attributed To This
Capital Structure $ 2,077.80

Disney Capital Structure 2018

In millions of U.S dollars
except per share

Input Data: Capital Structure

Tax Rate 11.2907% Market Value of Equity $ 173,918.1492
Debt 20886 Total Value (V = D + S) $ 168,741.0000
Number of Shares (M) 1,487.24 % Financed with Debt (wd =D/V) 12.3775%
Stock Price ($P) 116.94 % Financed with Stock (ws =S/V) 87.6225%
NOPAT 13110.81
Free Cash Flow (FCFF) 10435
Growth Rate in FCFF 7.63%
Value of Stock (S) 147855
Cost of Capital: Estimated Intrinisic Value
WACC 8.4741% Value of Operations $ 9,619.8044
Short Term Investments $ -
Estimated Total Intrinsic Value $ 9,619.8044
Debt $ 20,886.0000
Estimated Intrinisic Value of Equity $ (11,266.1956)
Number of Shares (M) 1487.242596
Estimated Intrinsic Price per Share $ (7.5752)
Gains Attributed To This
Capital Structure $ 1,769.90
 Charter Capital Structure 2016
In millions of U.S
dollars except per
share
Input Data: Capital Structure
Tax Rate 0.0000% Market Value of Equity
Debt 61,747.00 Total Value (V = D + S)
Number of Shares (M) 270.67 % Financed with Debt (wd =D/V)
Stock Price ($P) 287.92 % Financed with Stock (ws =S/V)
NOPAT 3909.4
Free Cash Flow (FCFF) $ 2,716.00
Growth Rate in FCFF 4.48%
Value of Stock (S) 77421.05227
Cost of Capital: Estimated Intrinisic Value
WACC 6.2784% Value of Operations
Short Term Investments
Estimated Total Intrinsic Value
Debt
Estimated Intrinisic Value of Equity
Number of Shares (M)
Estimated Intrinsic Price per Share
Gains Attributed To
This Capital Structure $ 3,876.74

Charter Capital Structure 2017

In millions of U.S
dollars except per
share
Input Data: Capital Structure
Tax Rate 0.0000% Market Value of Equity
Debt 70,231.00 Total Value (V = D + S)
Number of Shares (M) 248.61 % Financed with Debt (wd =D/V)
Stock Price ($P) 335.96 % Financed with Stock (ws =S/V)
NOPAT 12114.7
Free Cash Flow (FCFF) $ 3,273.00
Growth Rate in FCFF 6.34%
Value of Stock (S) 80128.49592
Cost of Capital: Estimated Intrinisic Value
WACC 6.5576% Value of Operations
Short Term Investments
Estimated Total Intrinsic Value
Debt
 Estimated Intrinisic Value of Equity
Number of Shares (M)
Estimated Intrinsic Price per Share
Gains Attributed To
This Capital Structure $ 4,605.45

Charter Capital Structure 2018

In millions of U.S
dollars except per
share
Input Data: Capital Structure
Tax Rate 10.6762% Market Value of Equity
Debt 72,827.00 Total Value (V = D + S)
Number of Shares (M) 228.92 % Financed with Debt (wd =D/V)
Stock Price ($P) 284.97 % Financed with Stock (ws =S/V)
NOPAT 4471.597865
Free Cash Flow (FCFF) $ 2,642.00
Growth Rate in FCFF 5.13%
Value of Stock (S) 64219.07467
Cost of Capital: Estimated Intrinisic Value
WACC 5.4940% Value of Operations
Short Term Investments
Estimated Total Intrinsic Value
Debt
Estimated Intrinisic Value of Equity
Number of Shares (M)

Estimated Intrinsic Price per Share

Gains Attributed To
This Capital Structure $ 4,001.11
$ 77,929.9834
$ 139,168.0523
44.3687%
55.6313%

$ 2,555.5517
$ -
$ 2,555.5517
$ 61,747.0000
$ (59,191.4483)
270.665405
$ (218.6886)

3,876.74

$ 83,523.1614
$ 150,359.4959
46.7087%
53.2913%

$ 3,071.5790
$ -
$ 3,071.5790
$ 70,231.0000
$ (67,159.4210)
248.610434
$ (270.1392)

4,605.45

$ 65,234.6747
$ 137,046.0747
53.1405%
46.8595%

$ 2,504.4079
$ -
$ 2,504.4079
$ 72,827.0000
$ (70,322.5921)
228.917692

$ (307.1960)

4,001.11
 Steps involved in the calculation of APV mode
1- Calculate the Unlevered cost of equity rSU using the pre-merger leveraged cost of equity and pre-merger cap
Beta 1.2
wd 0.531405223954713
ws 0.468594776045287
rrf (assumed) 7%
Total debt $72,827.00
Interest Expense $3,540.00
cost of debt rd 4.86%
Risk premium (assumed) 4%
rsL becomes 11.80%
rsU 8.11%

2-Calculate the Horizon value of the un-leveraged firm as the present value of the free cash flows after the horiz
Unlevered Horizon Value (2018 FCFF)(1+g)/(rsU-g)
3-Calculate the horizon value of the tax shields as the present value of the interest tax shields after the horizon
Tax Shield EBIT(Tax Rate)
Tax Shield Horizon Value
4- Calculate the value of the unleveraged firm as the present value of the horizon value of the unleveraged firm
value of the free cash flows until the horizon, discounted ar rsU
Unlevered Value of Operations
5-Calculate the value of the tax shields as the present value of the horizon value of the tax shields plus the pres
tax shields until the horizon, discounted ar rSU
Value of Tax Shields
6-Add the value of the Unlevered firm to the value of the tax shields to get the value of operations.
Value of Operations
7-Add any the value of any non-operating assets and subtract the value of all debt to get the current equity valu
Non-Operating Asset
Value of all Debt
Current Equity Value
Market Value of Charter Communications
Case 1
If merger takes place at Value of Equity then no gain to either Charter or Disney
Case 2
If merger takes place at Value less than that of value of Equity then stockholders of Disney will gain.
Case 3
If merger takes place at Value greater than the of Equity then Charters stockholders gain
Value of Stock Stock Value/Number of Shares
Non-Operating Assets + Value of Operations
equity value of the target acquirer
current value of equity
merger premium
Merger premium per Share
 Steps involved in the calculation of APV model
U using the pre-merger leveraged cost of equity and pre-merger capital structure of Charter Communications

Using CAPM/SML Equation

Using WACC equation

eraged firm as the present value of the free cash flows after the horizon discounted ar rsU

elds as the present value of the interest tax shields after the horizon discounted at rsU
$ 557.40
$19,661.78
rm as the present value of the horizon value of the unleveraged firm plus the present
n, discounted ar rsU
$95,698.23
he present value of the horizon value of the tax shields plus the present value of the
rSU
-$11,882.83
e value of the tax shields to get the value of operations.
$83,815.40
ssets and subtract the value of all debt to get the current equity value.
$64,680.00
$72,827.00
$75,668.40
65234.67468924

n no gain to either Charter or Disney

t of value of Equity then stockholders of Disney will gain.

the of Equity then Charters stockholders gain

$ 280.53
$160,378.23
$87,551.23
$ 64,219.07
$ 19,596.32
$ 85.60
ommunications

###
Charter Communications Inc (CHTR US) - Liquidity
In Millions of USD except Per Share FY 2015 FY 2016
12 Months Ending 12/31/201512/31/2016
Cash Ratio 0.00 0.16
Current Ratio 0.17 0.34
Quick Ratio 0.14 0.31
CFO/Avg Current Liab 1.31 1.39
Common Equity/Total Assets -0.12 26.93

Long-Term Debt/Equity — 118.57

Long-Term Debt/Capital 100.13 53.27
Long-Term Debt/Total Assets 90.86 40.06

Total Debt/Equity — 122.60

Total Debt/Capital 100.13 55.08
Total Debt/Total Assets 90.86 41.42

CFO/Total Liabilities 5.99 8.15

CFO/CapEx 1.28 1.51

Charter Communications Inc (CHTR US) - Working Capital

In Millions of USD except Per Share FY 2015 FY 2016
12 Months Ending 12/31/201512/31/2016
Accounts Receivable Turnover 34.59 33.90
Days Sales Outstanding 10.55 10.80
Accounts Payable Turnover 46.91 46.97
Accounts Payable Turnover Days 7.78 7.79

Charter Communications Inc (CHTR US) - DuPont Analysis

In Millions of USD except Per Share FY 2015 FY 2016
12 Months Ending 12/31/201512/31/2016
Tax Burden
Net Inc to Comn/Pre-Tax Profit % 81.87 429.51
Adjustment Factor
Normlzd Net Inc/Net Inc to Cmn — 1.21
Interest Burden
Pre-Tax Profit/EBIT % -33.95 24.71
Operating Margin
EBIT/Revenue % 10.00 11.44
Asset Turnover
 Revenue/Avg Assets 0.31 0.31
Leverage Ratio
Avg Assets/Avg Equity 637.04 4.70

Charter Communications Inc (CHTR US) - Credit

In Millions of USD except Per Share FY 2015 FY 2016
12 Months Ending 12/31/201512/31/2016
Total Debt/T12M EBITDA 11.03 6.59
Net Debt/EBITDA 11.03 6.43

Total Debt/EBIT 32.07 25.14

Net Debt/EBIT 32.06 24.52

EBITDA to Interest Expense 2.48 3.75

EBITDA-CapEx/Interest Expense 1.07 1.62
EBIT to Interest Expense 0.85 0.98

EBITDA/Cash Interest Paid 3.04 3.49

EBITDA-CapEx/Cash Interest Paid 1.31 1.50
EBIT/Cash Interest Paid 1.05 0.91

Common Equity/Total Assets -0.12 26.93

Long-Term Debt/Equity — 118.57
Long-Term Debt/Capital 100.13 53.27
Long-Term Debt/Total Assets 90.86 40.06

Total Debt/Equity — 122.60

Total Debt/Capital 100.13 55.08
Total Debt/Total Assets 90.86 41.42

Net Debt/Equity — 119.55

Net Debt/Capital 100.13 54.45
 FY 2017 FY 2018
12/31/201712/31/2018
0.06 0.05
0.23 0.24
0.20 0.19
1.16 1.02
26.66 24.83

143.46 157.07
57.90 59.38
46.50 47.59

147.76 164.50
59.64 62.19
47.90 49.84

12.06 11.55
1.38 1.29

FY 2017 FY 2018
12/31/201712/31/2018
27.12 25.91
13.46 14.09
33.32 28.05
10.95 13.01

FY 2017 FY 2018
12/31/201712/31/2018

962.55 72.95

0.09 1.22

24.96 32.26

9.90 11.98
 0.28 0.30

3.73 3.88

FY 2017 FY 2018
12/31/201712/31/2018
4.78 4.69
4.74 4.65

17.10 13.95
16.95 13.84

4.76 4.39
1.95 1.81
1.33 1.47

4.30 4.02
1.76 1.66
1.20 1.35

26.66 24.83
143.46 157.07
57.90 59.38
46.50 47.59

147.76 164.50
59.64 62.19
47.90 49.84

146.45 163.25
59.42 62.01
Walt Disney Co/The (DIS US) - Liquidity
In Millions of USD except Per Share FY 2015 FY 2016 FY 2017
12 Months Ending 10/03/2015 10/01/2016 09/30/2017
Cash Ratio 0.26 0.27 0.21
Current Ratio 1.03 1.01 0.81
Quick Ratio 0.73 0.78 0.59
CFO/Avg Current Liab 0.74 0.79 0.68
Common Equity/Total Assets 50.49 47.01 43.13

Long-Term Debt/Equity 26.25 34.83 41.43

Long-Term Debt/Capital 19.35 24.41 26.76
Long-Term Debt/Total Assets 14.48 17.91 19.96

Total Debt/Equity 35.69 42.66 54.83

Total Debt/Capital 26.30 29.91 35.41
Total Debt/Total Assets 19.69 21.94 26.42

CFO/Total Liabilities 27.60 29.38 24.87

CFO/CapEx 2.56 2.75 3.41

Walt Disney Co/The (DIS US) - Working Capital

In Millions of USD except Per Share FY 2015 FY 2016 FY 2017
12 Months Ending 10/03/2015 10/01/2016 09/30/2017
Accounts Receivable Turnover 6.98 6.92 6.86
Days Sales Outstanding 53.18 52.58 53.04
Inventory Turnover 18.04 20.26 21.94
Days Inventory Outstanding 20.57 17.97 16.59
Accounts Payable Turnover 5.22 4.82 4.60
Accounts Payable Turnover Days 71.13 75.48 79.11

Cash Conversion Cycle 2.62 -4.94 -9.47

Inventory to Cash Days 73.75 70.54 69.63

Walt Disney Co/The (DIS US) - DuPont Analysis

In Millions of USD except Per Share FY 2015 FY 2016 FY 2017
12 Months Ending 10/03/2015 10/01/2016 09/30/2017
Tax Burden
Net Inc to Comn/Pre-Tax Profit % 60.44 63.16 65.13
Adjustment Factor
Normlzd Net Inc/Net Inc to Cmn 1.05 1.00 1.00
Interest Burden
 Pre-Tax Profit/EBIT % 98.12 97.67 96.45
Operating Margin
EBIT/Revenue % 26.94 27.36 25.93
Asset Turnover
Revenue/Avg Assets 0.61 0.62 0.59
Leverage Ratio
Avg Assets/Avg Equity 1.93 2.05 2.22

Walt Disney Co/The (DIS US) - Credit

In Millions of USD except Per Share FY 2015 FY 2016 FY 2017
12 Months Ending 10/03/2015 10/01/2016 09/30/2017

Total Debt/T12M EBITDA 1.11 1.20 1.52

Net Debt/EBITDA 0.84 0.92 1.28

Total Debt/EBIT 1.31 1.41 1.82

Net Debt/EBIT 0.99 1.09 1.53

EBITDA to Interest Expense 58.78 47.70 32.85

EBITDA-CapEx/Interest Expense 30.17 24.57 21.94
EBIT to Interest Expense 49.90 40.56 27.36

EBITDA/Cash Interest Paid 49.61 42.75 35.74

EBITDA-CapEx/Cash Interest Paid 36.03 30.66 27.97
EBIT/Cash Interest Paid 42.11 36.35 29.77

Common Equity/Total Assets 50.49 47.01 43.13

Long-Term Debt/Equity 26.25 34.83 41.43
Long-Term Debt/Capital 19.35 24.41 26.76
Long-Term Debt/Total Assets 14.48 17.91 19.96

Total Debt/Equity 35.69 42.66 54.83

Total Debt/Capital 26.30 29.91 35.41
Total Debt/Total Assets 19.69 21.94 26.42

Net Debt/Equity 26.91 32.92 46.12

Net Debt/Capital 21.21 24.77 31.56
 FY 2018
09/29/2018
0.23
0.94
0.70
0.76
49.47

31.66
22.83
17.33

38.71
27.91
21.18

32.02
3.20

FY 2018
09/29/2018
7.49
48.62
23.67
15.38
5.11
71.19

-7.19
64.00

FY 2018
09/29/2018

85.53

0.83
 95.57

25.93

0.61

2.16

FY 2018
09/29/2018

1.17
0.94

1.41
1.13

26.17
16.58
21.76

28.29
21.21
23.51

49.47
31.66
22.83
17.33

38.71
27.91
21.18

31.02
23.67