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Euro Disney under fire again

The French market watchdog agency has received a letter from Euro Disney SCA minority shareholders asking it to look into the French theme park company’s recent decision to change accounting methods.

A group representing minority shareholders complained to the Commission des Operations de Bourse, or COB, that a failure to notify them earlier about the accounting change was counter to their interests.

Euro Disney reported a steeper-than-expected loss of 5.3 billion francs ($ 906 million at the time) in the fiscal year ended Sept. 30, a chunk of which came from a charge of 3.2 billion francs ($ 547 million at the time) from the accounting change.

The company, which had been amortizing startup costs for some items over five years, switched methods to expense those costs as they occurred.

That charge and Euro Disney’s overall lackluster performance sank the company’s stock.

Parental problem

Euro Disney, which built and operates the theme park and resort near Paris, is 49% owned by Walt Disney Co.

Because of that arm’s-length distance between the two companies, Disney declined to comment on the complaint.

“That’s a Euro Disney matter and we’re not going to comment at all,” said Disney company spokesman Ken Green.

While the complaint may prove fruitless — a COB spokeswoman said it was too soon to say if the agency will look into the matter — the news is another in a series of headaches for the beleaguered theme park company.

The COB already has an official inquiry under way examining the movements of Euro Disney stock this fall.

The agency is looking into Euro Disney’s share price movements after the group’s 1992-93 results were released Nov. 10, as well as movements later that month, when Euro Disney shares lost 17% of their value on Nov. 24 to hit new lows.

A week ago, the company’s auditors echoed recent statements from the company, saying Euro Disney “might be unable to continue as a going concern” if the company and its banks fail to agree on a restructuring plan.

Eisner disappointed

In his letter to shareholders in Disney’s annual report released Tuesday, chairman Michael Eisner also called Euro Disney “our first real financial disappointment.”

“Some would call it dreadful, and in a financial sense, I would be forced to agree,” Eisner wrote.

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