Disney Q4 and Full Year Earnings for 2020

[OKW Lover]

Not an expert on how this computes into ongoing quarterly results, but how does those like me who paid a one time fee of $165 for three years show up? Does the income just show up on the quarter they receive the money or is it somehow spread out thru out over the 12 quarters.

For proper accounting, it would be booked as a liability when you signed up and then taken into income over the length of your subscription.

 

[Blairblair]

Not an expert on how this computes into ongoing quarterly results, but how does those like me who paid a one time fee of $165 for three years show up? Does the income just show up on the quarter they receive the money or is it somehow spread out thru out over the 12 quarters. If I am not mistaken, there were something like 20 million who took advantage of that 3 year deal at roll out.

On the cash statement, you would be recognized when you paid. For the P&L statement, your cash would be held as a liability until Disney delivered the service you paid for. So if you paid $120 for 12 months of service, month 1 Disney would show you as $10 of revenue on the P&L and $110 of liability left on the balance sheet. Month 2, recognize $10 more and $100 left on the balance sheet.

 

[CastAStone]

In a normal accounting world, that revenue would hit when its received. In a fuzzy world, you will still be counted as a "paying" subscriber on day 363 in year 3.

GAAP standards are what OKW Lover noted (Quoted below), it’s not revenue if you haven’t yet provided the service, and the service is provided monthly. If Disney shut down D+ tomorrow they’d provide prorated refunds, hence, it can’t be booked as revenue.

For proper accounting, it would be booked as a liability when you signed up and then taken into income over the length of your subscription.

 

[CastAStone]

At this cash burn rate, Disney will run out of money decades after I’m dead. Can we put the Disney is going bankrupt narrative to bed forever now?

After reading the longer quarterly report, they actually had positive cash flow from operations minus capital, and only had negative overall cash flow because they *paid down $6bn in debt*.

 

[YesterDark]

Too many smart people in this thread teaching me things and doing the math.

 

[tlmadden73]

Agree, except if a vaccine is rolled out. Than all bets are off as to what the capacity will look like.

Still .. even if a vaccine was announced and started rolling out tomorrow, who knows when Disney would drop their safety restrictions and when more people would be comfortable going back. Obviously there is still a market for touristy things .. just not like there was in 2019.

Who knows .. Disney may run its parks at lower capacity for the near future *shrug*

I just hope beyond ALL hope that Disney does not pull a Ticketmaster and require proof of vaccination to get into the parks.

 

[YesterDark]

I hope they do require proof of vaccination.

 

[afan]

I hope they do require proof of vaccination.

I think a lot of places will, not just within the US but other countries people want to vacation etc.

 

[Br'er Rabbit is the Best]

In a normal accounting world, that revenue would hit when its received. In a fuzzy world, you will still be counted as a "paying" subscriber on day 363 in year 3.

A few other people have commented on this being backwards, but I wanted to give a little more insight as a public accountant. Basically, the idea is you are recognizing revenue as you earn it. If someone prepays you for 3 years of a service, and you only provide 1 year of service and then stop then you didn’t fulfill the contract and they are likely entitled to get 2/3 of their money back. If you recognized that entire income on day 1 as revenue instead of 1/3 revenue and 2/3 liability, then people looking at your financial statements would have a much more inaccurate picture of what’s going on. They wouldn’t know you still have to provide that person with service for 2 more years while they won’t be paying you a penny more. Doing what you suggested and recognizing revenue immediately is actually the fuzzy way of doing accounting and part of how we have scandals like Enron. Hope that helps.

 

[AvidDisReader]

Still .. even if a vaccine was announced and started rolling out tomorrow, who knows when Disney would drop their safety restrictions and when more people would be comfortable going back. Obviously there is still a market for touristy things .. just not like there was in 2019.

Who knows .. Disney may run its parks at lower capacity for the near future *shrug*

I just hope beyond ALL hope that Disney does not pull a Ticketmaster and require proof of vaccination to get into the parks.

You make good points. From a simply selfish point, I hope they do require proof of vaccine if that is what it takes to get rid of the mask requirement.

 

[TheMaxRebo]

I hope they do require proof of vaccination.

definitely coming from a place out of my depth but does that get into issues with hipaa laws?

I wonder if instead they just follow CDC and others guidance and when it is deemed there is sufficient usage of the vaccine then they will ease restrictions.

At least with a vaccine if you choose to get it or not you are impacting your own health - now, the masks are so important for how they impact others health. If you choose not to get a vaccine (that is proven effective of course) and then catch it, then Disney can say that is on you, not them

 

[TheMaxRebo]

I hope they do require proof of vaccination.

definitely coming from a place out of my depth but does that get into issues with hipaa laws?

I wonder if instead they just follow CDC and others guidance and when it is deemed there is sufficient availability and usage of the vaccine then they will ease restrictions.

At least with a vaccine if you choose to get it or not you are impacting your own health - now, the masks are so important for how they impact others health. If you choose not to get a vaccine (that is proven effective of course) and then catch it, then Disney can say that is on you, not them

 

[YesterDark]

Probably.

I'm not an expert.

 

[Eric Smith]

definitely coming from a place out of my depth but does that get into issues with hipaa laws?

I wonder if instead they just follow CDC and others guidance and when it is deemed there is sufficient usage of the vaccine then they will ease restrictions.

At least with a vaccine if you choose to get it or not you are impacting your own health - now, the masks are so important for how they impact others health. If you choose not to get a vaccine (that is proven effective of course) and then catch it, then Disney can say that is on you, not them

Hipaa doesn’t apply here. HIPAA only really affects medical professionals and insurance companies. Disney could legally make you provide proof of vaccination to get on to property.

 

[afan]

definitely coming from a place out of my depth but does that get into issues with hipaa laws?

I wonder if instead they just follow CDC and others guidance and when it is deemed there is sufficient usage of the vaccine then they will ease restrictions.

At least with a vaccine if you choose to get it or not you are impacting your own health - now, the masks are so important for how they impact others health. If you choose not to get a vaccine (that is proven effective of course) and then catch it, then Disney can say that is on you, not them

I would imagine it's no different than having to show your kids shot record to enroll/keep them in school for kindergarten or college. Years back at a job we had some guys potentially exposed to I think it was measles. They could either show their vaccination record or get a new shot, they were all able to find/provide their records. I know I have mine in my lockbox from when I had to show it to my university back in the late 90's. Pretty sure it's even notarized to make it official.

 

[sullivan.kscott]

definitely coming from a place out of my depth but does that get into issues with hipaa laws?

I wonder if instead they just follow CDC and others guidance and when it is deemed there is sufficient availability and usage of the vaccine then they will ease restrictions.

At least with a vaccine if you choose to get it or not you are impacting your own health - now, the masks are so important for how they impact others health. If you choose not to get a vaccine (that is proven effective of course) and then catch it, then Disney can say that is on you, not them

Because you are voluntarily entering a theme park, they are well with if their rights to ask for proof. Whether or not they do I think has more to do with how quickly they’ll want to turn the page on restrictions and increase capacity in a meaningful way.
Short term, I see them pushing for their CM to get it and maybe even to move up a tier in FL’s distribution plan (I don’t know how France operates but I don’t see CA budging on this as they haven’t anywhere else).
Also more than parks, I can see them (and others) trying to implement a cruise vaccination “bubble” as a way to meaningfully return to business once widely available. At least for populations for which it’s approved (12+ is the current study age). As much as I love cruising, there are just too many hurdles without one.

 

[tlmadden73]

I guess I don't understand the stock market's optimism in Disney right now - the stock is now up another 4% today -- at pre-COVID levels, but not quite at its all time high.

This is a stock that hasn't given a dividend for almost a year now and has a huge portion of its business just simply not running.

Crazy .. but .. that's why I am NOT a huge stock investor. What do I know? heh.

 

[anthony2k7]

I guess I don't understand the stock market's optimism in Disney right now - the stock is now up another 4% today -- at pre-COVID levels, but not quite at its all time high.

This is a stock that hasn't given a dividend for almost a year now and has a huge portion of its business just simply not running.

Crazy .. but .. that's why I am NOT a huge stock investor. What do I know? heh.

Me neither.

Cases back above 10000 per day in FL a week before many families will have non socially distance get togethers.

Plus cases rising rapidly in Japan.

I wouldnt be at all surprised if wdw or Tokyo disneyland closed down again for a while in January.

I'm not saying its going to happen, just that I won't be surprised if it does.

 

[rteetz]

I guess I don't understand the stock market's optimism in Disney right now - the stock is now up another 4% today -- at pre-COVID levels, but not quite at its all time high.

This is a stock that hasn't given a dividend for almost a year now and has a huge portion of its business just simply not running.

Crazy .. but .. that's why I am NOT a huge stock investor. What do I know? heh.

It’s due to the Moderna vaccine trial results this morning.

 

[anthony2k7]

It’s due to the Moderna vaccine trial results this morning.

Which are completely meaningless until we know how long the immunity lasts.