Darden - Analysis

Sales growth (7998.7/7500.2) - 1 0.0665 0.0665

Short-term debt 262.7 185.5

Current portion of long-term debt 349.9 --

Long-term debt, less current portion 1,453.7 1,407.3

Obligations under capital leases, net of current installments 54.4 56.0

Cash and cash equivalents (70.5) (70.5)

NNO 2,050.2 1,578.3

Total assets 5,944.2 5,466.6

Total liabilities (4,102.2) (3,530.4)

NNO 2,050.2 1,578.3

NOA 3,892.2 3,514.5

NOAT (next year) 8530.3/3892.2 2.1916

NOPAT Net earnings + (1-tax) x Interest, net

476.5 + 0.625 x 101.6 540.0

Profit Margin (PM) 540/7998.7 0.0675

AfTax Interest rate 101.6 x 0.625/1578.3 0.0402

Share CostEquity 0.7650 0.1053 0.0806

Debt 0.2350 0.0402 0.0095

WACC 0.0900

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May last Sunday 2012 2013 2014 2015 2016 2017

Sales growth 0.0665 0.0665 0.0665 0.0665 0.0400Sales 7,998.7 8,530.3 9,097.3 9,702.0 10,346.8 10,760.7

NOAT 2.1916 2.1916 2.1916 2.1916 2.1916NOA beg (Sales/NOAT) 3,892.2 4,150.9 4,426.8 4,721.0 4,909.9

Profit Margin (PM) 0.0675 0.0675 0.0675 0.0675 0.0675 0.0675RNOA (NOAT x PM) 0.1480 0.1480 0.1480 0.1480 0.1480

NOPAT (RNOA x NOA) 575.9 614.2 655.0 698.5 726.5

Capital charge = 0.09 x NOA 350.3 373.6 398.4 424.9 441.9

ROPI 225.6 240.6 256.6 273.6 284.6

FV of rerminal ROPI = 284.6/(0.09-0.04) 5,692.0

Discount factor [1 / (1+rw)t ] 0.9174 0.8417 0.7722 0.7084 0.7084

PV of horizon ROPI 207.0 202.5 198.1 193.8 4,032.4

Cum PV of horizon ROPI 801.4 Equity

PV of terminal ROPI 4,032.4 Now 0.7647 0.1053

NOA 3,892.2 D to Eq 0.6947 0.1028

Total firm value 8,726.0

Less NNO 2,050.2 0.2350 0.0402 0.0095

Firm equity value 6,675.8 0.7650 0.1053 0.0805

Shares outstanding (mill) 129.0 1.0000 0.0900 0.0900

Stock value per share 51.8 0.0900

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Darden - Analysis

Question d

Total firm value 8,726.0

Less NNO 3,050.2 1,000 0.3496 0.0402 0.0141

Firm equity value 5,675.8 0.6504 0.6504 0.1053 0.0685

Shares outstanding (mill) 112.1 (16.9) 1.0000 0.0900 0.0826

Stock value per share 59.1150

59.1150 0.0848

0.0849

Capital charge = 0.0849 x NOA 330.4 352.4 375.8 400.8 416.8

ROPI 245.4 261.8 279.2 297.7 309.6

FV of rerminal ROPI = 309.6/(0.0849-0.04) 6,895.3

Discount factor [1 / (1+rw)t ] 0.9217 0.8456 0.7758 0.7118 0.7118

PV of horizon ROPI 226.2 221.3 216.6 211.9 4,907.8

Cum PV of horizon ROPI 876.0 Equity

PV of terminal ROPI 4,907.8 Now 0.7647 0.1053

NOA 3,892.2 D to Eq 0.6947 0.1028

Total firm value 9,676.0

Less NNO 3,050.2 0.3152 0.0402 0.0127

Firm equity value 6,625.8 0.6848 0.1053 0.0721

Buybacks 1,000.0 1.0000 0.0900 0.0848

7,625.8

Shares outstanding (mill) 129.0

Stock value per share 59.1150

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Stock value per share 59.1150

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