Hi, please find attached pictures. Could really use some assistance.
Attached please find Income Statement, Balance Sheet, and footnote 3 on Debt from Chesapeake Energy's 2015 Annual Report. Answer the following questions. Note that "Carrying Amount" is NBV, and "Principal Amount" is Par. All rates in the footnote are coupon rates. Assume annual compounding. 1. Calculate the firm's ratio of income before income taxes divided by Total Equity. 2. The effective r% on the 8.00% senior secured second lien notes due 2022 (row 1 1 in the table) is 3.5%. What is these bonds carrying amount at December 31, 2016? 3. 861 (1,500-639) of the 4.875% senior notes due 2022 (row 10) was swapped at year end for 700 NBV of the new 8.0% bonds (row 11). That's why the NBV (and Par value) of the 4.875% Senior Notes decreased from 1,500 to 639. Recalculate the entry in #1 without the swap. Ignore taxes. 4. Had the 6.625% senior notes due 2020 included a conversion option, the coupon rate and effective rate on these bonds would have been 5.0%. Assume no change in the cash coupon. Recalculate the ratio in #1 if these bonds had a conversion option. Assume the standard accounting (i.e., ignoring the conversion option). 5. Redo #4 correctly accounting for the equity value of the conversion option.CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2015 2014 ($ in millions) CURRENT ASSETS: Cash and cash equivalents ($1 and $1 attributable to our VIE) .......... $ 825 $ 4.108 Restricted cash .. 38 Accounts receivable, net. 1,129 2,236 Short-term derivative assets ($0 and $16 attributable to our VIE) 366 879 Other current assets ... 160 207 Total Current Assets.... 2,480 7,468 PROPERTY AND EQUIPMENT: Oil and natural gas properties, at cost based on full cost accounting: Proved oil and natural gas properties ($488 and $488 attributable to our VIE) 63,843 58,594 Unproved properties ... 6,798 9,788 Other property and equipment ..... 2,927 3,083 Total Property and Equipment, at Cost. 73,568 71,465 Less: accumulated depreciation, depletion and amortization (($428) and ($251) attributable to our VIE) ..... (59,365) (39,043) Property and equipment held for sale, net . 95 93 Total Property and Equipment, Net . 14,298 32,515 LONG-TERM ASSETS: 136 265 Long-term derivative assets ........... 246 6 Other long-term assets 197 497 TOTAL ASSETS $ 17,357 $ 40,751CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - (Continued) December 31, 2015 2014 CURRENT LIABILITIES: Accounts payable 944 $ 2,049 Current maturities of long-term debt, net 381 381 Accrued interest ..... 101 150 Short-term derivative liabilities . 40 15 Other current liabilities ($8 and $15 attributable to our VIE) 2,219 3,061 Total Current Liabilities.... 3,685 5,656 LONG-TERM LIABILITIES: Long-term debt, net . 10,354 11,154 Deferred income tax liabilities . 4,392 Long-term derivative liabilities 60 218 Asset retirement obligations, net of current portion 452 447 Other long-term liabilities ... 409 679 Total Long-Term Liabilities.... 11,275 16,890 CONTINGENCIES AND COMMITMENTS (Note 4) EQUITY: Chesapeake Stockholders' Equity: Preferred stock, $0.01 par value, 20,000,000 shares authorized: 7,251,515 shares outstanding ..... 3,062 3,062 Common stock, $0.01 par value, 1,000,000,000 shares authorized: 664,795,509 and 664,944,232 shares issued ....... 7 Paid-in capital 12,403 12,531 Retained earnings (accumulated deficit) . (13,202) 1,483 Accumulated other comprehensive loss . (99) (143) Less: treasury stock, at cost; 1,437,724 and 1,614,312 common shares .. (33) (37) Total Chesapeake Stockholders' Equity. 2,138 16,903 Noncontrolling interests 259 1,302 Total Equity 2,397 18,205 TOTAL LIABILITIES AND EQUITY .. 17,357 40,751CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2016 2014 2013 ($ in millions except por share data] REVENUES: Oil, natural gas and NGL ....mmmmmm $ 5,301 $ 10,354 S 8,626 Marketing, gathering and compression ....... 7,373 12,225 9.569 Oilfield services ........ 548 995 Tolal Revenues ........- 12,764 23,125 19,080 OPERATING EXPENSES: Oil, natural gas and NGL production ... 1.046 1,208 1,159 Oil, natural gas and NGL gathering. processing and transportation......... 2,119 2,174 1,674 Production taxes .. 99 232 229 Marketing, gathering and compression ...mmmmmm 7,130 12 236 9,461 Dilfield services mmmmmmunusual 431 738 General and administrative 235 322 457 Restructuring and other termination costs 36 7 240 Provision for legal contingencies .....mmmmmm 353 234 Dil, natural gas and NGL depreciation, depletion and amortization... 2,098 2 683 2,589 Depreciation and amortization of other assets 130 232 314 Impairment of oil and natural gas properties .....mummummum 18,238 Impairments of fixed assets and other ......... 194 98 546 Net (gains) losses on sales of fixed assets (199) (302) Total Operating Expenses....- 31,683 19,848 17,011 INCOME (LOSS) FROM OPERATIONS (18,919) 3,477 2,089 OTHER INCOME (EXPENSE): Interest expense . (317) (89) (227) Losses on investments .. (85) (75) (216) Impairments of investments (53) (5) (10) Net gain (loss) on sales of investments .. 67 (7) Gains (losses) on purchases or exchanges of debt... 279 (197) (193) Other income ....... 22 26 Total Other Expense .. 179) (277) (827) INCOME (LOSS) BEFORE INCOME TAXES (19 098) 3,200 1.442 INCOME TAX EXPENSE (BENEFIT): Current income taxes (36) 47 22 Deferred Income taxes .......-. 4.427) 1,097 126 Total Income Tax Expense (Benefit)...... (4 463) 1,144 546 NET INCOME (LOSS) ..... ..SIX (14,635) 2,056 894 Net income attributable to noncontrolling interests .........- (50) (138) (170) NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE ... (14,685) 1,917 724 Preferred stock dividends ..........41310151419131801 91510 1012041 151INITIAL (171) (171) (171) Repurchase of preferred shares of CHK Utica .....mama (447) Earnings allocated to participating securities .......... (26) (10) NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS....... $ (14,856) 1,273 474 EARNINGS (LOSS) PER COMMON SHARE: Basic m. $ (22.43) $ 1.03 $ 0.72 $ (22.43) 1.87 $ 0.73 CASH DIVIDEND DECLARED PER COMMON SHARE .. $ 0.0875 0.35 $ 0.35 WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (In millions): Basic 862 859 653 Diluted ........... 862 772 653 The accompanying notes are an integral part of these consolidated financial statements. 77
