ITEM 8 .                FINANCIAL INFORMATION

 

A.                           CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

 

A.1.                 Financial statements

 

Please See Item 17 “Financial Statements” for a list of all financial statements filed as part of this Annual Report.

 

A.2.                Legal proceedings

 

The Group is party to various legal proceedings in France involving some remaining claims related to the construction of Disneyland Resort Paris and certain other litigation arising in connection with the operation of the Resort.  Management believes that the Group has made appropriate provisions with respect to these legal proceedings, and that such proceedings, either individually or in the aggregate, will not have a material adverse impact on its financial position business or results.

 

A.3.                 Dividends

 

The payment of dividends on common stock from distributable profits may be recommended by the Management Company for approval by the shareholders at the annual general meeting, which must be held within six months after the end of the fiscal year.  No dividends were declared or paid in respect of the fiscal years ended September 30, 1997 through 2004 and the Company does not expect to pay dividends for a substantial period of time.

 

The ability of the Company to pay dividends in the future is dependent upon the availability of distributable profits and liquidity of the Company.  During the coming years, the Company’s priority will be to implement the investment plan authorized by the Restructuring and to reduce the level of its debt via scheduled principal repayments.  Additionally, under certain circumstances, including the event of payment default, certain of the Group’s debt agreements prohibit the payment of dividends.

 

The distributable profit consists of the profit for the fiscal year, reduced by the prior losses together with the amounts that are to be allocated to the reserves required by law or the by-laws and increased by the profits carried forward.  At least 5% of net income each year, if any, must be put into a legal reserve.  This transfer shall cease to be required when the cumulative legal reserve reaches one-tenth of the share capital.  The legal reserve is distributable only upon the Company’s liquidation.  The Management Company may propose to the shareholders’ general meeting, prior to the distribution of dividends to shareholders, the allocation of all or part of the profits of a fiscal year to other reserve accounts, to the extent and under the conditions determined by law.

 

In addition, the Company’s by-laws provide that 0.5% of net income each year be paid to the General Partner. Thereafter, distributable profits shall be allocated in the following order:

 

(i)     the amount, if any, that the annual ordinary general meeting, upon the proposal of the Management Company, shall decide to allocate to reserves or to be carried forward as retained earnings; and

 

(ii)    the balance of distributable profits remaining, if any, to the shareholders pro-rata in proportion to their respective holdings of shares of common stock.

 

Dividends must be paid within nine months of the end of the fiscal year and are payable to holders, on the date of payment, of shares of common stock outstanding at the time such dividends were approved for distribution by the shareholders.  Dividends not claimed within five years of the date of payment are forfeited to the Republic of France.  The shareholders have the right in an ordinary general meeting to authorize the grant to each shareholder of an option to receive all or part of any annual or interim dividends in either cash or shares of common stock.

 

B.                                     SIGNIFICANT CHANGES

 

At the Combined General Meeting of Shareholder’s held on December 17, 2004, the shareholders approved the resolutions required to implement the Restructuring .

 

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