Notes to Consolidated
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the accounts of
the Company and all subsidiaries. Investments in companies
representing 20% to 50% interests are accounted for under the
equity method. All material intercompany transactions and balances have been eliminated.
The consolidated financial statements include net assets of
foreign subsidiaries and affiliates of $60,755,000 at December
28,1979 and $56,574,000 at December 29,1978. Foreign sales
and net income after interest, intercompany charges and foreign
taxes, as a percent of consolidated sales and net income, were
9% and 18% in 1979 and 8% and 17% in 1978, respectively.
Foreign exchange translation losses were $13,000 in 1979 and
$302,000 in 1978.
Theme park costs incurred during the off-season are deferred
(included in prepaid expenses) and charged to expense during
the operating,season based on budgeted sales.
Property and Equipment:
Depreciation and amortization are calculated on the straight-
line method for financial statement purposes as follows:
Buildings and improvements—25 to 45 years
Leasehold improvements —shorter of life of lease or asset
Furniture and equipment —2 to 15 years
Cruise Ships —20 years
Maintenance and repairs are expensed. New unit costs include interest, rent charges and real estate taxes incurred during
construction. Replacements and improvements, including most
costs of converting units, are capitalized.
Upon sale or retirement of property and equipment (excluding normal sales or retirements of theme park rides and equipment), the costs less accumulated depreciation and salvage are
charged or credited to income. Theme park rides and equipment
are depreciated under the composite method and no gain or loss
is recognized on normal sales or retirements.
Cost In Excess of Net Assets of Businesses Acquired:
Of the cost in excess of net assets of businesses acquired,
$12,936,000 relates to acquisitions prior to October 31,1970
(at which time amortization became mandatory) and is not being
amortized because in the opinion of management it has continuing value. The remaining $6,170,000 at December 28,1979 is
being amortized over periods of up to 40 years.
Costs incurred prior to opening are deferred and amortized
over three years for hotels, five years for theme parks and one
year for other major operations. Similar costs for all other operations are expensed as incurred.
United States and foreign income taxes are based on reported
income. Deferred income taxes are provided for timing differences between book and taxable income, principally depreciation,
interest and stock compensation. Investment tax credits are
accounted for using the "flow-through" method.
Provision for United States taxes has not been made on unremitted earnings of foreign subsidiaries because management
considers these earnings to be permanently invested. Total unremitted earnings were $25,611,000 as of December 28,1979.
Computations of Earnings Per Share:
Primary earnings per share are based on the weighted average number of shares outstanding during each year, adjusted for
the dilutive effect of employee stock options and deferred stock
compensation and the conversion of convertible debentures
which are common stock equivalents. Fully diluted earnings per
share also assumes the conversion of all convertible debt. Primary and fully diluted shares totaled 36,435,693 and 36,757,983,
respectively, in 1979.
The Company's investments in and advances to less than 50%
owned affiliates include the following:
Sun Line Greece Special Shipping Company
The Company has interests in four ventures that own hotels
operated by the Company under long-term agreements. Rental
payments by the Company to the ventures are based solely on
profits of the hotels. At December 28,1979, combined assets
and liabilities of these hotel ventures were $188,080,000 and
$143,655,000, including mortgages of $130,857,000. The mortgages are secured solely by venture assets without recourse to
the Company. The Company also has investments in five other
ventures presently constructing hotels that will be operated by
At November 30,1979, Sun Line Greece Special Shipping
Company had total assets of $22,520,000 and liabilities of
$11,357,000, including $6,075,000 of debt. The Company has
guaranteed 45% of this debt.
The excess of the Company's investment over its equity in the
underlying net assets of less than 50% owned affiliates is
$2,523,000 and is being amortized over periods up to 40 years.
Current—U.S. and State
Investment tax credit
Salaried Employee Stock Ownership
Jobs tax credit
Provision for income taxes
The deferred provision is primarily attributable to the tax
effect of excess tax over book depreciation which amounted to
$9,529,000 and $11,304,000 in 1979 and 1978, respectively.