Disney Warns It Will Book Q4 Charge of $68 Million on Delta Bankruptcy

Sep 23, 2005  •  Post A Comment

The Walt Disney Co. said late Friday that it would book a one-time after tax charge of $68 million related to an investment the media giant made in the Delta airline, which filed for federal bankruptcy protection earlier this month.

Disney has a $100 million investment in the airline that is tied to airplane leases. Because Delta filed for bankruptcy, on Sept. 14, Disney said it determined that its investment in the leases was fully impaired, which resulted in the tax charge.

The company also warned that if any lease terms are altered, the company could be forced to accelerate tax payments on the $100 million investment, which is currently accounted for as a deferred tax liability.

Earlier this month Disney warned that flops at its film division would result in the division losing up to $300 million in the fiscal fourth quarter, which ends Sept. 30. However, the company still said it was on track to post double-digit earnings growth for the period on the strength of its cable and broadcast assets.