ch7 - Chapter 7 Long-Term Debt-Paying Ability TO THE NET 1....

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Unformatted text preview: Chapter 7 Long-Term Debt-Paying Ability TO THE NET 1. a. SIC 7990 Services Miscellaneous Amusement and Recreation b. Item 1 Business The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in four business segments. c. There are legal proceedings relating to Walt Disney rights to use Winnie the Pooh. Management believes that it is not currently possible to estimate the impact, if any, that the ultimate resolution of these matters will have on the Companys results of operations, financial position or cash flows. d. Changes in and Disagreements on Accounting and Financial Disclosure None e. On May 5, 2006 (the closing date), the Company completed on all stock acquisition of Pixar. f. Executive compensation incorporated by reference in the proxy statement. 2. a. Net Periodic Cost (in millions) Pension Plans U.S. $253 Non-U.S. 151 Other benefits 210 614 (a) Net sales $20,258 (b) (a) (b) 3.03% At 3.03%, net periodic cost does not appear to be material in relation to net sales. (Loss) income before income taxes and cumulative effect of accounting change is a loss of $224. Net periodic cost would appear to be material in relation to this number. 185 b. Total benefit obligation at December 31, 2006 (in millions) Pension Plans U.S. $5,41 7 Non-U.S. 2,999 Other benefits 2,478 $10,8 94 Total in plan assets at December 31, 2006 (in millions) Pension Plans U.S. $4,0 50 Non-U.S. 1,92 2 Other benefits 4 $5,9 76 Total net funded status at December 31, 2006 (in millions) Pension Plans U.S. $(1,36 7) Non-U.S. (1,077 ) Other benefits (2,474 ) $(4,91 8) Total net funded status at December 31, 2006 $4,918 Total liabilities at December 31, 2006 $17,787 Net funded status appears to be significant in relation to total liabilities. c. Total amounts recognized in the balance sheets at December 31, 2006 for pension and other post retirement benefits (in millions). Pension Plans (in millions) U.S. Current Liabilities $ (19) Noncurrent liabilities (1,348) 186 Non-U.S. Current Liabilities (23) Noncurrent liabilities (1,089) Other benefits Current liabilities (231) Noncurrent liabilities (2,243) $ (4,953) Total liabilities at December 31, 2006 $17,787 Amount recognized is significant in relation to total liabilities at December 31, 2006. Net funded status at December 31, 2006 $(4,918) Amount recognized is significant in relation to net funded status at December 31, 2006. 3. a. Times interest earned Recurring Earnings, Excluding Interest Expense, Tax Expense, Equity Earnings, and Minority Earnings Interest Expense, Including Capitalized Interest December 30, 2006 $123,439,000 + $4,923,000 $4,923,000 + 0 $128,362,000 $4,923,000 26.07 times interest earned b. Debt ratio Total Liabilities Total Assets $185,242,000 + $79,126,000 + 73,489,000 + $5,870,000 $906,590,000 $343,727,000 = 37.91 % $906,590,000 c. Operating cash flow / total debt 187 $151,276,000 = 44.01 % $343,727,000 d. Times interest earned is very goodd....
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ch7 - Chapter 7 Long-Term Debt-Paying Ability TO THE NET 1....

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