1. This if for "you know what prep" please share screen shots of all excel files used and explain any equations or functions you used to get these answers, Thank you for your help Ill be sure to upvote! \ \ Jun-04 Dec-03 Dec-02\ Assets \ Unrestricted Cash and Cash Equivalents 1,377 1,640 886\ Restricted Cash 838 679 462\ Short-term Investments 11 78 388\ Other Current Assets 1,863 1,627 1,643\ Total Current Assets $4,089 $4,024 $3,379 \ \ Operating Property and Equipment 17,906 18,005 19,588\ Less: Accumulated Depreciation 5,398 5,132 5,306\ Net Operating Property and Equipment $12,508 $12,873 $14,282 \ \ Capital Leases 2,720 2,720 2,573\ Less: Accumulated Depreciation 605 555 494\ Net Capital Leases $2,115 $2,165 $2,079 \ \ Other Long Term Assets 2,853 2,917 3,916\ Total Assets $21,565 $21,979 $23,656 \ \ Liabilities (Not Subject to Compromise) \ Long-term Debt maturing within one year 460 663 0\ Current Obligations under Capital Leases 0 26 0\ Other Current Liabilities 5,780 5,423 3,991\ Total Current Liabilities $6,240 $6,112 $3,991 \ \ Long-term debt 172 0 700\ Long-term obligations under capital leases 154 163 0\ Deferred pension liabilitya 4,988 4,747 4,661\ Postretirement benefit liabilityb 1,999 1,924 1,809\ Other 983 985 1,143\ Total Long Term Liabilities $8,296 $7,819 $8,313 \ \ Liabilities Subject to Compromise 13,653 13,964 13,833\ \ Capital Stock 307 309 936\ Retained Earnings -6,931 -6,225 -3,417\ Total Liabilities and Shareholders' Equity $21,565 $21,979 $23,656 \ \ \ Exhibit 2 UAL Corporation, Income and Cash Flows ($ millions) \ \ 6 Months Ending 12 Months Endinga\ Jun-04 Jun-03 Dec-03 Dec-02\ Income Statement \ Passenger Revenues 6,826 5,173 11,642 11,872\ Other Revenues 947 1,120 2,082 2,414\ Total Revenue $7,773 $6,293 $13,724 $14,286 \ \ Salaries and Related Costs 2,457 2,935 5,264 7,029\ Aircraft Fuel 1,296 1,023 2,072 1,921\ Other 4,224 3,579 7,748 8,173\ Total Operating Expenses $7,977 $7,537 $15,084 $17,123 \ Operating Income -204 -1,244 -1,360 -2,837\ Interest Expense 221 235 469 505\ Other 281 487 979 -137\ Earnings Before Tax ($706) ($1,966) ($2,808) ($3,205)\ Taxes 0 0 0 0\ Net Income ($706) ($1,966) ($2,808) ($3,205)\ \ Statement of Cash Flows \ Net Income -2,808 -3,202\ Depreciation & Amortization 938 970\ Pension funding less than (greater than) expense 610 451\ Deferred postretirement benefit expense 367 339\ Other Non-Cash Items (Including Reorg. Expenses) 1,327 799\ Change in Working Capital 385 -496\ Cash From Operations $360 $567 $819 ($1,139)\ \ Additions to property and equipment -150 -56 -150 -157\ Proceeds on sale of prop. and equip. 13 67 123 364\ Other -141 -59 298 -136\ Cash From Investing Activities ($278) ($48) $271 $71 \ \ Proceeds from long-term debt issued 0 950\ Proceeds from DIP financing 10 123 252 700\ Repayment of long-term debt -89 -59 -257 -1,338\ Repayment of DIP financing -241 -153 -289 0\ Principal payments under capital leases -185 -72 -270 -220\ Other 160 28 228 174\ Cash From Financing Activities ($345) ($133) ($336) $266 \ \ Net Change in Cash ($263) $386 $754 ($802)\ \ Source: UAL Corporation SEC Filings. \ \ aThe fiscal year ended 2003 reflected a portion of UALs expense saving initiatives. Operating expenses decreased by $2 billion. $1.4 billion of these savings were due to lower volumes (available seat miles decreased by 8.2% in 2003). Thus, the 2003 results included real expense reductions of $600 million. Excluding the increase in fuel expense, operating expense reductions totaled approximately $750 million. (Source: Casewriter estimates)\ \ Based on Exhibit 1 and 2 answer the following questions\ \ 1. Compute the Z-score for December 2003. Based on the Z-score do you predict bankruptcy for United?\ \ \ 2. What is flow based and stock based insolvency? Does United suffer from Flow based or Stock based insolvency or both? Explain.\ \ \ 3. What are DIP loans? Where do you DIP loans fall in the APR?\ \ \ 4. Is there any strategic reason for United to carry a lot of debt in its capital structur\ \ \ 5. Why do so many firms like United file for legal bankruptcy when private workouts are so much less expensive?