<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 6, 1998)
$5,000,000,000
[LOGO]
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
----------------
The Walt Disney Company ("Disney" or the "Company") may offer from time to
time Medium-Term Notes (the "Notes") having an aggregate initial offering price
of up to $5,000,000,000 or an equivalent amount in one or more foreign or
composite currencies or currency units. The terms and conditions of the Notes
will include the following, as more fully set forth in this Prospectus
Supplement and as specified in the applicable pricing supplement relating to
each series of Notes (each, a "Pricing Supplement"):
- CURRENCY DENOMINATION: Each Note will be denominated in U.S. dollars or in
one or more foreign or composite currencies or currency units.
- MATURITY: Each Note will mature on a Business Day nine months or more from
the date of issue, as selected by the purchaser and agreed to by Disney.
- INTEREST RATE: Each Note will bear interest at either (i) a fixed rate,
which may be zero in the case of certain Notes issued at a price
representing a discount from the principal amount payable at maturity, or
(ii) a floating rate that is reset daily, weekly, monthly, quarterly,
semiannually or annually.
- INTEREST ACCRUAL AND PAYMENT: Interest on fixed rate notes will accrue
from their date of issue and, unless otherwise specified in the applicable
Pricing Supplement, will be payable semiannually in arrears on February 1
and August 1 of each year and at maturity. Interest on floating rate notes
will accrue from their date of issue and, as specified in the applicable
Pricing Supplement, will be payable in arrears monthly, quarterly,
semiannually or annually and at final maturity.
- REDEMPTION AND REPURCHASE: The Notes may be subject to redemption at
Disney's option, in whole or in part, prior to their stated maturity, if
so provided in the applicable Pricing Supplement. Unless otherwise
provided in the applicable Pricing Supplement, the Notes will not be
subject to repurchase by Disney at the option of the holder of the Notes.
- FORM OF NOTES: Each Note will be issued in fully registered book-entry
form or definitive form. Each book-entry Note will be represented by a
global security deposited with or on behalf of The Depository Trust
Company (or another depositary identified in the applicable Pricing
Supplement) and registered in the name of the depositary's nominee.
Interests in book-entry Notes will be shown on, and transfers of
book-entry Notes will be effected only through, records maintained by the
depositary and its participants. Book-entry Notes will not be issuable as
definitive Notes except under the limited circumstances described in this
Prospectus Supplement.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR
ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC (1) AND COMMISSIONS (2) COMPANY (2)(3)
<S> <C> <C> <C>
Per Note............... 100% .125%-.750% 99.875%-99.250%
Total (4).............. $5,000,000,000 $6,250,000-$37,500,000 $4,993,750,000-$4,962,500,000
</TABLE>
(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The commission payable to an Agent for each Note sold through the Agent will
range from .125% to .750% of the principal amount of the Note or, in the
case of a Note issued with original issue discount, of the price to the
public of the Note, provided that commissions for Notes maturing in 30 years
or greater will be negotiated. Disney may also sell Notes to an Agent, as
principal, for resale to investors or other purchasers at varying prices
related to prevailing market prices at the time of resale or, if so agreed,
at a fixed public offering price. Disney has agreed to indemnify the Agents
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Plan of Distribution."
(3) Before deducting expenses payable by Disney estimated at $900,000.
(4) Or an equivalent amount in one or more foreign or composite currencies or
currency units.
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The Notes are being offered on a continuing basis by Disney through the
Agents, who have agreed to act as agents for Disney in soliciting offers to
purchase the Notes. Disney may also sell Notes to an Agent, as principal, for
resale to investors or other purchasers, and Disney has reserved the right to
sell Notes to or through others and directly to investors on its own behalf.
Disney reserves the right to cancel or modify the offer made hereby without
notice. No termination date has been established for the offering of the Notes.
Disney or an Agent, if it solicits the offer, may reject any offer to purchase
Notes in whole or in part. See "Plan of Distribution." The Notes will not be
listed on any securities exchange, and there can be no assurance that the Notes
offered by this Prospectus Supplement will be sold or that there will be a
secondary market for the Notes.
------------------------------
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
--------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 6, 1998.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT(S) MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF NOTES.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF NOTES TO COVER
SHORT POSITIONS OF SUCH AGENT(S). FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"PLAN OF DISTRIBUTION."
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USE OF PROCEEDS
Disney intends to use the net proceeds from the sale of the Notes (estimated
to be approximately $4.963 billion to $4.994 billion) for general corporate
purposes.
DESCRIPTION OF THE NOTES
The Notes will be issued as a series of senior debt securities under an
Indenture, dated as of March 7, 1996 (the "Indenture"), between Disney and
Citibank, N.A., a national banking association, as trustee (the "Trustee"). The
following summary of certain provisions of the Notes and of the Indenture does
not purport to be complete and is qualified in its entirety by reference to the
Indenture, the form of which has been incorporated by reference as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus are a part. Capitalized terms used but not defined
herein or in the accompanying Prospectus have the meanings given to them in the
Indenture. The term "Securities," as used under this caption, refers to all
Securities issued and issuable from time to time under the Indenture and
includes the Notes. The following description will apply to the Notes unless
otherwise specified in a Pricing Supplement.
Each Note will be denominated either in U.S. dollars or in one or more
foreign or composite currencies or currency units (a "Denominated Currency").
The applicable Pricing Supplement will specify such Denominated Currency and the
currency, which may be U.S. dollars or one or more foreign or composite
currencies or currency units (such as the European Currency Unit or "ECU"), in
which the principal and interest with respect to such Note shall be paid (the
"Payment Currency"). The Denominated Currency and the Payment Currency may be
the same currency or different currencies. If the Denominated Currency or the
Payment Currency is not U.S. dollars, the applicable Pricing Supplement shall
also include any other terms relating to such currency or currencies, including
exchange rates as against the U.S. dollar at selected times during the last five
years, and any exchange controls affecting such Denominated Currency or Payment
Currency. See "Important Currency Information," "Foreign Currency Risks" and
"Certain United States Federal Tax Considerations."
References herein to "U.S. dollars," "U.S. $" or "$" are to the currency of
the United States of America.
GENERAL
All Securities, including the Notes, issued and to be issued under the
Indenture will be senior unsecured obligations of Disney and will rank PARI
PASSU with all other senior unsecured indebtedness of Disney from time to time
outstanding. The Indenture does not limit the aggregate principal amount of
Securities which may be issued thereunder and Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by
Disney for each series. Disney may, from time to time, without the consent of
the holders of the Notes, provide for the issuance of Notes or other Securities
under the Indenture in addition to the Notes offered hereby.
The Notes are obligations exclusively of Disney. The operations of Disney
are conducted almost entirely through subsidiaries. Accordingly, the cash flow
and the consequent ability to service debt of Disney, including the Notes, are
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to Disney, whether by dividends, loans or otherwise. The payment of
dividends and the making of loans and advances to Disney by its subsidiaries may
be subject to statutory or contractual restrictions, are contingent upon the
earnings of those subsidiaries and are subject to various business
considerations. Any right of Disney to receive assets of any of its subsidiaries
upon their liquidation or reorganization (and the consequent right of the
holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that Disney is itself recognized as a creditor
of such subsidiary, in which case the claims of Disney
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would still be subordinate to any security interests in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by
Disney. As of March 31, 1998, Disney's subsidiaries would have had approximately
$8.8 billion of indebtedness outstanding (including accounts and taxes payable,
accrued liabilities and other recorded liabilities). The Indenture does not
limit Disney's or Disney's subsidiaries' ability to incur additional
indebtedness in the future.
The Notes offered pursuant hereto are part of a series currently limited to
$6,700,000,000 aggregate initial offering price or the equivalent thereof in one
or more foreign or composite currencies or currency units, of which
$1,700,000,000 aggregate initial principal amount of Notes have been issued. The
aggregate principal amount of Notes that may be issued may be increased at any
time by Disney and may be reduced to the extent that Disney issues any
securities, other than Notes offered hereby, under the registration statement of
which this Prospectus Supplement constitutes a part. The Notes will be offered
on a continuing basis and will mature on a Business Day (as defined herein) nine
months or more from the date of issue, as selected by the purchaser and agreed
to by Disney. Interest-bearing Notes will bear interest at either a fixed rate
("Fixed Rate Notes"), or a rate determined by reference to one or more Base
Rates (as defined herein), which may be adjusted by a Spread or Spread
Multiplier (as defined herein) ("Floating Rate Notes"). In no event will the
rate of interest payable on any Fixed Rate Note or Floating Rate Note be in
excess of the maximum rate of interest permitted by applicable law. Discount
Notes (as defined herein) may be issued at significant discounts from their
principal amount payable at Stated Maturity and some Discount Notes may be zero
coupon Notes which will bear no interest, except in the case of default in
payment of principal upon acceleration or redemption (if applicable), or may
bear no interest for a specified period following the date of issue. Unless
otherwise specified in an applicable Pricing Supplement, the Notes will be
denominated and will be payable in U.S. dollars.
Interest rates, interest rate formulas and other variable terms of the Notes
are subject to change by Disney from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by Disney. Interest rates offered by Disney with respect to the Notes
may differ, depending upon, among other things, the aggregate principal amount
of the Notes purchased in any single transaction.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), in denominations of $1,000 or
any integral multiple of $1,000. Each Book-Entry Note will be represented by a
global security deposited with or on behalf of The Depository Trust Company (or
another depositary identified in the applicable Pricing Supplement) (the
"Depositary") and registered in the name of the Depositary's nominee. Book-Entry
Notes may be transferred or exchanged only through a participating member of the
Depositary. See "Book-Entry Notes." Registration of transfers of Definitive
Notes will be made at the Corporate Trust Office of the Trustee. No service
charge will be made by Disney, the Trustee or the Registrar for any such
registration of transfer or exchange of Notes, but Disney may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith (other than exchanges pursuant to Sections 2.9, 3.6 or 9.5
of the Indenture, not involving any transfer).
Notes denominated in a Denominated Currency other than U.S. dollars will be
issued in denominations of the equivalent of U.S. $1,000 or any integral
multiple of the equivalent of U.S. $1,000, as determined by reference to the
noon U.S. dollar buying rate in New York City for cable transfers of such
Denominated Currency published by the Federal Reserve Bank of New York (the
"Market Exchange Rate") for the Business Day immediately preceding the date of
issuance; PROVIDED, HOWEVER, in the case of ECUs, the Market Exchange Rate shall
be the rate of exchange determined by the Commission of the European Communities
(or any successor thereto) as published in the Official Journal of the European
Communities, or any successor publication, for the Business Day immediately
preceding the date of issuance.
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Payments of principal of and interest, if any, on Book-Entry Notes will be
made by Disney through the Trustee to the Depositary. See "Book-Entry Notes." In
the case of Definitive Notes, payment of principal at the Stated Maturity of
each Definitive Note (or on any prior date on which the principal or an
installment of principal of such Definitive Note becomes due and payable,
whether by declaration of acceleration, call for redemption, put for repurchase,
or otherwise) (each such date, a "Maturity"), will be made upon presentation of
the Definitive Note at the Corporate Trust Office of the Trustee in the Borough
of Manhattan, The City of New York, or at such other place as Disney may
designate. Payment of interest due at Maturity will be made to the person to
whom payment of the principal of the Definitive Note shall be made. Payment of
interest due on Definitive Notes other than at Maturity will be made at the
Corporate Trust Office of the Trustee or, at the option of Disney, may be made
by check mailed to the address of the Person entitled thereto as such address
shall appear in the register of Securities.
The Indenture does not afford holders of the Notes protection in the event
of a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction involving Disney that may adversely affect holders of the
Notes.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York; PROVIDED, HOWEVER, that with respect to Notes the payment of
which is to be made in a Denominated Currency other than U.S. dollars, such day
is also not a day on which banking institutions are authorized or required by
law, regulation or executive order to close in the principal financial center of
the country of such Denominated Currency (or, in the case of ECUs, is not a day
designated as an ECU Non-Settlement Day by the ECU Banking Association or
otherwise generally regarded in the ECU interbank market as a day on which
payments in ECU's shall not be made); PROVIDED, HOWEVER, that, with respect to
LIBOR Notes, such day is also a London Business Day (as defined below). "London
Business Day" means any day (i) if the Index Currency (as defined below) is
other than ECU, on which dealings in such Index Currency are transacted in the
London interbank market or (ii) if the Index Currency is ECU, that is not
designated as an ECU Non-Settlement Day by the ECU Banking Association or
otherwise generally regarded in the ECU interbank market as a day on which
payments in ECUs shall not be made.
"Discount Note" means any Security which provides for an amount less than
the principal amount thereof to be due and payable upon declaration of
acceleration of the Stated Maturity thereof.
PAYMENT CURRENCY
If the applicable Pricing Supplement provides for payments of interest and
principal on non-U.S. dollar denominated Notes to be made in U.S. dollars,
conversion of the Payment Currency into U.S. dollars will be effected in the
manner set forth in the applicable Pricing Supplement.
Except as set forth below, if the principal of, or interest on, any Note is
payable in a Payment Currency other than U.S. dollars and such Payment Currency
is not available to Disney for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the control of Disney, or is no
longer used by the government of the country issuing such currency or for the
settlement of transactions by public institutions within the international
banking community, then Disney will be entitled to satisfy its obligations to
Holders of such Notes by making such payment in U.S. dollars on the basis of the
Market Exchange Rate on the date of such payment or, if the Market Exchange Rate
is not then available, as of the most recent practicable date. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
Payment Currency other than U.S. dollars will not constitute an Event of
Default.
Except as set forth in the following paragraph, if payment on a Note is
required to be made in ECUs and ECUs are unavailable due to imposition of
exchange controls or other circumstances beyond the control of Disney, or are no
longer used in the European Monetary System, all payments in respect of such
Notes shall be made in U.S. dollars until the ECUs are available or are so used.
The amount of each
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payment in U.S. dollars shall be computed on the basis of the equivalent of the
ECU in U.S. dollars, determined by Disney or its agent as described below, as of
the second Business Day prior to the date on which such payment is due. The
component currencies of the ECU (the "Components") for purposes of such
computation shall be those currencies which were components of the ECU as of the
most recent date on which the ECU was used in the European Monetary System. The
equivalent of the ECU in U.S. dollars shall be calculated by aggregating the
U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of
the Components shall be determined by Disney or its agent on the basis of the
most recently available Market Exchange Rate for each such Component.
Pursuant to Article 109g of the Treaty establishing the European
Communities, as amended by the Treaty on European Union (the "Treaty"), the
third stage of European economic and monetary union will begin on January 1,
1999 and on that date the value of the ECU as against the currencies of the
member states participating in the third stage will be irrevocably fixed and the
ECU will become a currency in its own right. Pursuant to Council Regulation (EC)
No. 1103/97, the name of that currency will be the EURO and, in accordance with
the Treaty, substitution of the EURO for the ECU will be at the rate of one EURO
for one ECU. Upon substitution of the ECU by the EURO, all payments in respect
of the Notes payable in ECUs will be payable in EUROs at the rate of one EURO
for one ECU and all references in this Prospectus Supplement to ECUs shall be
deemed to refer to EUROs.
If the official unit of any Component is altered by way of combination or
subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any Component is divided into two or more
currencies, the amount of that currency as a Component shall be replaced by
amounts of such two or more currencies, each of which shall have a value on the
date of division equal to the amount of the former component currency divided by
the number of currencies into which that currency was divided.
All determinations referred to above made by Disney or any of its agents
shall be at its sole discretion and, in the absence of manifest error, shall be
conclusive for all purposes and binding on Holders of the Notes.
REDEMPTION OR PURCHASE
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If provided in an applicable Pricing
Supplement, the Notes may be subject to redemption, in whole or in part, prior
to their Stated Maturity at the option of Disney or through operation of a
mandatory or optional sinking fund or analogous provisions. Such Pricing
Supplement will set forth the detailed terms of such redemption, including, but
not limited to, the dates after or on which and the price or prices (including
premium, if any) at which such Notes may be redeemed.
Unless otherwise specified in an applicable Pricing Supplement, Notes will
not be subject to purchase by Disney at the option of the Holder thereof. If a
purchase date or dates (each, a "Purchase Date") with respect to a Note is
specified in an applicable Pricing Supplement, on each such Purchase Date so
specified, Disney will become obligated to purchase, at the option of the
Holder, all or a portion of such Note for which a written notice (a "Purchase
Notice") has been delivered by the Holder to the Trustee, at any time from the
opening of business on the date that is 60 days prior to such Purchase Date
until the close of business on the date that is 30 days prior to such Purchase
Date, subject to certain additional conditions described below. The delivery to
the Trustee of a Purchase Notice is irrevocable.
Each Purchase Notice must state (i) the CUSIP numbers of the Notes to be
delivered by the Holder thereof for purchase by Disney; (ii) the portion of the
principal amount of Notes to be purchased, which portion must be an integral
multiple of $1,000; and (iii) that such Notes are to be purchased by Disney
pursuant to the applicable provisions of the Notes. Any Note which is to be
purchased by Disney only in
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part must be surrendered at a Place of Payment therefor, and Disney will
execute, and the Trustee will authenticate and deliver to the Holder of such
Note without service charge, a new Note or Notes of like tenor, of any
authorized denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unpurchased portion of the principal of
the Note so surrendered.
The price payable on any Purchase Date with respect to any applicable Note
will be equal to the applicable purchase price (the "Purchase Price") specified
in the applicable Pricing Supplement, together with accrued interest to but
excluding the Purchase Date; PROVIDED, HOWEVER, that installments of interest
payable prior to the Purchase Date will be payable to the Holders of such Notes,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Regular Record Dates, all according to the provisions
of the Indenture.
If a Purchase Notice has been given with respect to an applicable Note, from
and after the Purchase Date with respect to which such Purchase Notice relates
(unless Disney defaults in payment of the Purchase Price and accrued interest),
such Note (or portion thereof to be purchased) will cease to bear interest and
all other rights of the Holder (other than the right to receive the Purchase
Price, together with accrued interest to but excluding the Purchase Date, upon
the delivery of the Note in accordance with its terms) will terminate. Payment
of the Purchase Price, together with accrued interest to but excluding the
Purchase Date, for a Note for which a Purchase Notice has been delivered is
conditioned upon delivery of such Note (with, if Disney or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to Disney and the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing) to the Trustee at its Corporate Trust
Office in the Borough of Manhattan, The City of New York, or at any other Place
of Payment designated by Disney for such purpose, at any time (whether prior to,
on or after the Purchase Date) after delivery of such Purchase Notice. Payment
of the Purchase Price for such Note (or portion thereof to be purchased),
together with accrued interest to the Purchase Date, will be made on the later
of the Purchase Date or promptly following the time of delivery of such Note.
No Notes may be purchased if there has occurred and is continuing an Event
of Default (other than a default in payment of the Purchase Price, together with
accrued interest, with respect to such Notes).
Disney will not be required to (i) issue, register the transfer of or
exchange any Note having a Purchase Date specified therein during a period
beginning at the opening of business 15 days before the first date any Purchase
Notice may be delivered to the Trustee with respect thereto and ending at the
close of business on the last date a Purchase Notice may be delivered to the
Trustee with respect thereto or (ii) register the transfer of or exchange any
Note, or portion thereof, for which a Purchase Notice has been delivered to the
Trustee, except the portion of any such Note for which the Purchase Notice has
not been delivered to the Trustee.
Disney will comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable
securities laws or regulations in connection with any such repurchase.
Disney may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by Disney may be held or resold or, at
the discretion of Disney, may be surrendered to the Trustee for cancellation.
For all purposes of this Prospectus Supplement, any applicable Pricing
Supplement and the Indenture, unless the context otherwise requires, all
provisions relating to the redemption or purchase by Disney of Notes shall
relate, in the case of any Notes redeemed or purchased or to be redeemed or
purchased by Disney only in part, to the portion of the principal amount of such
Notes which has been or is to be so redeemed or purchased.
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INTEREST
GENERAL
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of original issue at the rate per annum, or, in
the case of a Floating Rate Note, pursuant to the interest rate formula, stated
therein, until the principal thereof is paid or made available for payment.
Interest will be payable in arrears on each date specified in a Note on which an
installment of interest is due and payable (an "Interest Payment Date") and at
Maturity. Each interest payment shall be the amount of interest accrued from and
including the most recent Interest Payment Date in respect of which interest has
been paid or duly provided for (or from and including the date of original issue
if no interest has been paid or duly provided for with respect to such Note) to
but excluding the next succeeding Interest Payment Date (an "Interest Accrual
Period"). The first payment of interest on any Note originally issued between a
Regular Record Date and the related Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding Regular Record
Date to the registered holder on such next succeeding Regular Record Date. As a
result of certain interest rate characteristics of the Notes, they may be issued
with original issue discount for United States Federal income tax purposes.
Certain United States Federal tax considerations and other considerations
applicable to any Notes may be described in an applicable Pricing Supplement.
See "Certain United States Federal Tax Considerations."
Interest rates offered by Disney with respect to the Notes may differ
depending upon, among other factors, the aggregate principal amount of Notes
purchased in any single transaction. Notes with different variable terms other
than interest rates may also be offered concurrently to different investors.
Interest rates or formulas and other terms of Notes are subject to change by
Disney from time to time, but no such change will affect any Note previously
issued or as to which an offer to purchase has been accepted by Disney.
FIXED RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, the Interest
Payment Dates with respect to any Fixed Rate Note will be February 1 and August
1 of each year, and the Regular Record Dates in respect of such Interest Payment
Dates will be the immediately preceding January 15 and July 15 (whether or not a
Business Day), respectively. If any Interest Payment Date or Maturity of a Fixed
Rate Note falls on a day that is not a Business Day with respect to such Fixed
Rate Note, the payment due on such Interest Payment Date or at Maturity will be
made on the following day that is a Business Day with respect to such Fixed Rate
Note as if it were made on the date such payment was due and no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be. Interest on each Fixed Rate Note
will be computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
GENERAL. Unless otherwise specified in an applicable Pricing Supplement,
Floating Rate Notes will be issued as described below. Interest on Floating Rate
Notes will be determined by reference to a "Base Rate," which may be one or more
of the following: (a) the Commercial Paper Rate (as defined below), in which
case such Note will be a "Commercial Paper Rate Note;" (b) LIBOR (as defined
below), in which case such Note will be a "LIBOR Note;" (c) the CD Rate (as
defined below), in which case such Note will be a "CD Rate Note;" (d) the
Federal Funds Rate (as defined below), in which case such Note will be a
"Federal Funds Rate Note;" (e) the Treasury Rate (as defined below), in which
case such Note will be a "Treasury Rate Note;" (f) the Prime Rate (as defined
below), in which case such Note will be a "Prime Rate Note;" (g) the CMT Rate
(as defined below), in which case such Note will be a "CMT Rate Note;" or (h)
such other Base Rate or interest rate formula as may be set forth in the
applicable Pricing Supplement. In addition, a Floating Rate Note may bear
interest calculated by reference to the lowest of two or more
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Base Rates determined in the same manner as the Base Rates are determined for
the types of Notes described above. Each Floating Rate Note and the applicable
Pricing Supplement will specify the Base Rate or Rates applicable thereto.
INTEREST RATE CALCULATION. The interest rate on each Floating Rate Note will
be calculated by reference to the specified Base Rate or the lowest of two or
more specified Base Rates, in either case plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis
points to be added to or subtracted from the related Base Rate or Rates
applicable to such Floating Rate Note. The "Spread Multiplier" is the percentage
of the related Base Rate or Rates to be multiplied to determine the applicable
interest rate on such Floating Rate Note. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the related Base
Rate or Rates are calculated. Each Floating Rate Note and the applicable Pricing
Supplement will specify the Index Maturity and the Spread or Spread Multiplier,
if any, applicable thereto.
Each Floating Rate Note and the applicable Pricing Supplement will specify
whether the rate of interest on such Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually (each, an "Interest Reset
Period") and the date on which such interest rate will be reset (each, an
"Interest Reset Date"). Unless otherwise specified in a Floating Rate Note and
the applicable Pricing Supplement, the Interest Reset Date will be, in the case
of a Floating Rate Note which resets (a) daily, each Business Day; (b) weekly,
the Wednesday of each week (with the exception of weekly reset Treasury Rate
Notes, which reset the Tuesday of each week, except as specified below); (c)
monthly, the third Wednesday of each month; (d) quarterly, the third Wednesday
of March, June, September and December of each year; (e) semiannually, the third
Wednesday of each of the two months specified in such Pricing Supplement; and
(f) annually, the third Wednesday of the month specified in such Pricing
Supplement. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date will be
postponed to the next succeeding day that is a Business Day, except that in the
case of a LIBOR Note (or a Note for which LIBOR is the applicable Base Rate), if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the last Business Day in the preceding month.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date or Dates with respect to such Interest Reset Period will be
the rate determined on the applicable "Interest Determination Date." Unless
otherwise specified in an applicable Pricing Supplement, the Interest
Determination Date with respect to a Commercial Paper Rate Note (the "Commercial
Paper Interest Determination Date"), a CD Rate Note (the "CD Interest
Determination Date"), a Federal Funds Rate Note (the "Federal Funds Interest
Determination Date"), a Prime Rate Note (the "Prime Rate Interest Determination
Date"), and a CMT Rate Note (the "CMT Interest Determination Date") will be the
second Business Day preceding each Interest Reset Date, and the Interest
Determination Date with respect to a LIBOR Note (the "LIBOR Interest
Determination Date") will be the second London Business Day preceding each
Interest Reset Date. Unless otherwise specified in an applicable Pricing
Supplement, the Interest Determination Date with respect to a Treasury Rate Note
(the "Treasury Rate Interest Determination Date") will be the day in the week in
which the Interest Reset Date falls on which day Treasury Bills normally would
be auctioned (Treasury Bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday, except that such auction may be held on the
preceding Friday) or, if no such auction is held for a particular week, the
first Business Day of that week; PROVIDED, HOWEVER, that if, as a result of a
legal holiday, an auction is held on the Friday of the week preceding the
Interest Reset Date, the related Interest Determination Date shall be such
preceding Friday; and PROVIDED, FURTHER, that if an auction shall fall on any
Interest Reset Date, then the Interest Reset Date shall instead be the first
Business Day immediately following such auction. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Determination Date pertaining to
a Note the interest rate of which is determined with reference to two or more
Base Rates will be the first Business Day which is at least two Business Days
prior to such Interest
S-9
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Reset Date for such Note on which each Base Rate shall be determinable. Each
Base Rate shall be determined and compared on such date, and the applicable
interest rate shall take effect on the related Interest Reset Date.
Any Floating Rate Note and the applicable Pricing Supplement may also
specify either or both a maximum limit and a minimum limit on the rate at which
interest may accrue during any Interest Accrual Period. In addition to any
maximum interest rate which may be applicable to any Floating Rate Note pursuant
to the above provisions, the interest rate on Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application. Under present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
This limit may not apply to Floating Rate Notes in which $2,500,000 or more has
been invested.
The interest rate in effect with respect to a Floating Rate Note on each day
that is not an Interest Reset Date will be the interest rate determined as of
the Interest Determination Date pertaining to the immediately preceding Interest
Reset Date and the interest rate in effect on any day that is an Interest Reset
Date will be the interest rate determined as of the Interest Determination Date
pertaining to such Interest Reset Date, subject in either case to applicable
provisions of law and any maximum or minimum interest rate limitation referred
to above; PROVIDED, HOWEVER, that the interest rate in effect with respect to a
Floating Rate Note for the period from the date of original issue to the first
Interest Reset Date will be the rate specified as such therein and in the
applicable Pricing Supplement (the "Initial Interest Rate").
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued interest
factor is computed by adding the interest factor calculated for each day from
the date of issue, or from the last date to which interest has been paid or duly
provided for, to the date for which accrued interest is being calculated. The
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate Notes, LIBOR
Notes, CD Rate Notes, Federal Funds Rate Notes and Prime Rate Notes, and by the
actual number of days in the year, in the case of Treasury Rate Notes and CMT
Rate Notes. Unless otherwise specified in an applicable Pricing Supplement, the
interest factor for Notes for which the interest rate is calculated with
reference to two or more Base Rates will be calculated in each period in the
same manner as if only the lowest of the applicable Base Rates applied.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) will be rounded upward to 9.87655% (or .0987655)), and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent (with one-half cent being rounded
upward).
Unless otherwise specified in an applicable Pricing Supplement, the Trustee
will be the "Calculation Agent" with respect to all Floating Rate Notes. Upon
the request of the holder of any Floating Rate Note, the Trustee will provide
the interest rate then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next Interest Reset
Date with respect to such Floating Rate Note. If at any time the Trustee is not
the Calculation Agent, Disney will notify the Trustee of each determination of
the interest rate applicable to any such Floating Rate Note promptly after such
determination is made by any successor Calculation Agent. The "Calculation
Date," where applicable, pertaining to any Interest Determination Date is the
date by which the applicable interest rate must be calculated and will be the
earlier of (a) the tenth calendar day after such Interest Determination Date,
or, if any such day is not a Business Day, the next succeeding Business Day and
(b) the Business Day preceding the applicable Interest Payment Date or Maturity
Date, as the case may be.
INTEREST PAYMENT DATE. Except as provided below or in the applicable Pricing
Supplement, the Interest Payment Date will be, in the case of a Floating Rate
Note which resets (a) daily, weekly or monthly, on the third Wednesday of each
month or on the third Wednesday of each March, June, September and
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December of each year, as specified therein and in the applicable Pricing
Supplement; (b) quarterly, on the third Wednesday of March, June, September and
December of each year; (c) semiannually, on the third Wednesday of each of the
two months specified therein and in the applicable Pricing Supplement; and (d)
annually, on the third Wednesday of the month specified therein and in the
applicable Pricing Supplement; and, in each case, at Maturity.
If any Interest Payment Date (other than an Interest Payment Date occurring
on the Maturity Date) for a Floating Rate Note falls on a day that is not a
Business Day with respect to such Note, such Interest Payment Date will be
postponed to the following day that is a Business Day with respect to such Note,
except that, in the case of a LIBOR Note (or a Note for which LIBOR is the
applicable Base Rate), if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding day that is
a Business Day with respect to such Note. If the Maturity of a Floating Rate
Note falls on a day that is not a Business Day with respect to such Note, the
payment of principal and interest may be made on the next succeeding Business
Day with respect to such Note, and no interest on such payment shall accrue for
the period from and after the Maturity. Unless otherwise specified in a Floating
Rate Note and the applicable Pricing Supplement, the Regular Record Date or
Dates for interest payable on such Floating Rate Note will be the fifteenth day
(whether or not a Business Day) immediately preceding the related Interest
Payment Date or Dates.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Reset Date will be the Initial Interest
Rate. The interest rate for each subsequent Interest Reset Date will be
determined by the Calculation Agent as follows:
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in such Commercial Paper Rate Notes and in an
applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("Release H.15(519)") under the heading "Commercial
Paper--Nonfinancial." In the event that such rate is not published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Commercial Paper
Interest Determination Date, then the Commercial Paper Rate will be the Money
Market Yield on such Commercial Paper Interest Determination Date of the rate
for commercial paper of the Index Maturity specified in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Commercial Paper--Nonfinancial." If such rate is not published in
either Release H.15(519) or the Composite Quotations by 3:00 P.M., New York City
time, on such Calculation Date, then the Commercial Paper Rate will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates, as of approximately 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date, of three
leading dealers of commercial paper in New York, New York (which may include one
or more of the Agents) selected by the Calculation Agent (after consultation
with Disney) for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating agency; PROVIDED, HOWEVER, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the rate of interest in effect for the applicable
period will be the same as the interest rate in effect on such Commercial Paper
Interest Determination Date.
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"Money Market Yield" shall be a yield (expressed as a percentage rounded, if
necessary, to the nearest one hundred-thousandth of a percent) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C> <C>
Money Market D X 360
Yield = -------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in
such LIBOR Notes and in an applicable Pricing Supplement. Unless otherwise
specified in an applicable Pricing Supplement, "LIBOR" means the rate determined
by the Calculation Agent in accordance with the following provisions:
(a) With respect to a LIBOR Interest Determination Date, LIBOR will be,
as specified in the applicable Pricing Supplement, either: (i) the
arithmetic mean of the offered rates for deposits in the Index Currency
having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appear on the Designated Reuters
LIBOR Page (as defined below) as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date, if at least two such offered rates appear on
the Designated Reuters LIBOR Page ("LIBOR Reuters"), or (ii) the rate for
deposits in the Index Currency having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date, that appears
on the Designated Telerate LIBOR Page (as defined below) as of 11:00 A.M.,
London time, on that LIBOR Interest Determination Date ("LIBOR Telerate").
"Designated Reuters LIBOR Page" means the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency. "Designated Telerate LIBOR
Page" means the display on the Dow Jones Telerate Service for the purpose of
displaying London interbank rates of major banks for the applicable Index
Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified in the
applicable Pricing Supplement, LIBOR for the applicable Index Currency will
be determined as if LIBOR Telerate (and, if the U.S. dollar is the Index
Currency, Page 3750) had been specified. If fewer than two offered rates
appear on the Designated Reuters LIBOR Page, or if no rate appears on the
Designated Telerate LIBOR Page, as applicable, LIBOR in respect of that
LIBOR Interest Determination Date will be determined as if the parties had
specified the rate described in (b) below.
(b) If fewer than two offered rates appear on the Designated Reuters
LIBOR Page, or if no rate appears on the Designated Telerate LIBOR Page, as
applicable, LIBOR will be determined as of approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date on the basis of the rate at
which deposits in the applicable Index Currency having the Index Maturity
specified in the applicable Pricing Supplement are offered to prime banks in
the London interbank market by four major banks in the London interbank
market selected by the Calculation Agent (after consultation with Disney)
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date and in a principal amount equal to an
amount that is representative for a single transaction in such market at
such time. The Calculation Agent will request the principal London office of
each of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two quotations
are provided, LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted as of approximately 11:00 A.M. in the
applicable Principal Financial Center, on such LIBOR Interest Determination
Date by three
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major banks in such Principal Financial Center, selected by the Calculation
Agent (after consultation with Disney) for loans in the applicable Index
Currency to leading European banks, having the specified Index Maturity, and
in a principal amount equal to an amount of not less than $1,000,000 (or the
equivalent in the Index Currency, if the Index Currency is not the U.S.
dollar) and that is representative for a single transaction in such market
at such time; PROVIDED, HOWEVER, that if the banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
rate of interest in effect for the applicable period will be the same as the
interest rate in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and ECUs,
the Principal Financial Center shall be The City of New York, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in such CD Rate Notes and in an applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published in Release H.15(519) under the
caption "CDs (Secondary Market)" or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such CD Interest Determination
Date, the CD Rate will be the rate on such CD Interest Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Pricing Supplement set forth in the Composite Quotations under the
caption "Certificates of Deposit." If by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CD Interest Determination Date such rate is
not yet published in either Release H.15(519) or the Composite Quotations, then
the CD Rate on such CD Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Interest
Determination Date, of three leading non-bank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York (which may include one or more
of the Agents) selected by the Calculation Agent (after consultation with
Disney) for negotiable certificates of deposit of major United States money
market banks (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement in a denomination of $5,000,000; PROVIDED, HOWEVER, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
set forth above, the rate of interest in effect for the applicable period will
be the same as the interest rate in effect on such CD Interest Determination
Date.
CD RATE NOTES, LIKE OTHER NOTES, ARE NOT DEPOSIT OBLIGATIONS OF A BANK AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any) specified in such Federal Funds Rate Notes and in an
applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on such date for Federal Funds as published in Release H.15(519)
under the heading "Federal Funds (Effective)" or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Federal
Funds Interest Determination Date, the Federal Funds Rate will be the rate on
such Federal Funds Interest Determination Date as published in the Composite
Quotations under the column "Effective Rate" under the heading "Federal Funds."
If, by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date such rate is not yet published in
either Release H.15(519) or the Composite Quotations, the Federal Funds Rate for
such Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged by three leading dealers of
Federal Funds transactions in The City of New York, which dealers have been
selected by the Calculation Agent (after consultation with Disney), as of 9:00
A.M., New York City time, on such Federal Funds Interest Determination Date;
PROVIDED, HOWEVER, that, if the dealers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the rate of interest in effect for the
applicable period will be the same as the interest rate in effect on such
Federal Funds Interest Determination Date.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in such Treasury Rate Notes and in an applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Rate Interest Determination Date, the
rate applicable to the most recent auction of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified in the applicable
Pricing Supplement, as such rate is published in Release H.15(519) under the
heading "Treasury Bills-- auction average (investment)" or, if not published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Treasury Rate Interest Determination Date, the auction average rate (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having the specified Index Maturity are not reported as provided
by 3:00 P.M., New York City time, on such Calculation Date, or if no such
auction is held in a particular week, then the Treasury Rate shall be calculated
by the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date, of three leading primary United States government securities
dealers (which may include one or more of the Agents) selected by the
Calculation Agent (after consultation with Disney), for the issue of Treasury
Bills with a remaining maturity closest to the specified Index Maturity;
PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as set forth in this sentence, the rate of interest in
effect for the applicable period will be the same as the interest rate in effect
on such Treasury Rate Interest Determination Date.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in such Prime Rate Notes and in an applicable Pricing Supplement,
except that the initial interest rate for each Prime Rate Note will be the rate
specified in the applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, "Prime Rate"
means, with respect to any Prime Rate Interest Determination Date, the rate set
forth in Release H.15(519) for such date opposite the caption "Bank Prime Loan."
If such rate is not so published by 9:00 A.M., New York City
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<PAGE>
time, on the Calculation Date, the Prime Rate for such Prime Rate Interest
Determination Date will be the arithmetic mean of the rates of interest publicly
announced by each bank named on the Reuters Screen USPRIME1 (as defined below)
as such bank's prime rate or base lending rate as in effect for such Prime Rate
Interest Determination Date as quoted on the Reuters Screen USPRIME1 for such
Prime Rate Interest Determination Date, or if fewer than four such rates appear
on the Reuters Screen USPRIME1 for such Prime Rate Interest Determination Date,
the rate shall be the arithmetic mean of the prime rates quoted on the basis of
the actual number of days in the year divided by 360 as of the close of business
on such Prime Rate Interest Determination Date by at least two of the three
major money center banks in The City of New York selected by the Calculation
Agent (after consultation with Disney) from which quotations are requested. If
fewer than two quotations are provided, the Prime Rate shall be calculated by
the Calculation Agent and shall be determined as the arithmetic mean on the
basis of the prime rates in The City of New York by the appropriate number of
substitute banks or trust companies organized and doing business under the laws
of the United States, or any State thereof, in each case having total equity
capital of at least U.S. $500 million and being subject to supervision or
examination by Federal or State authority selected by the Calculation Agent
(after consultation with Disney) to quote such rate or rates. Unless otherwise
specified in the applicable Pricing Supplement, "Reuters Screen USPRIME1" means
the display designated as "USPRIME1" on the Reuters Monitor Money Rates Service
(or such other page as may replace the USPRIME1 page on that service for the
purpose of displaying prime rates or base lending rates of major United States
banks).
If in any month the Prime Rate is not published in Release H.15(519) and the
banks or trust companies selected as aforesaid are not quoting as mentioned in
the preceding paragraph, the "Prime Rate" for such Interest Reset Period will be
the same as the Prime Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the Prime Rate Notes for which the Prime Rate is being determined shall be the
Initial Interest Rate).
CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any) specified
in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Interest Determination Date relating to a CMT
Rate Note or any Floating Rate Note for which the interest rate is determined
with reference to the CMT Rate, the rate displayed on the Designated CMT
Telerate Page (as defined below) under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined
below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding the
week, or the month, as applicable, in which the related CMT Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Interest Determination Date
will be such treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519). If such rate is no longer
published, or if not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Interest Determination Date
will be such treasury constant maturity rate for the Designated CMT Maturity
Index (or other United States Treasury rate for the Designated CMT Maturity
Index) for the CMT Interest Determination Date with respect to such Interest
Reset Date as may then be published by either the Board of Governors of the
Federal Reserve System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly displayed on
the Designated CMT Telerate Page and published in the relevant H.15(519). If
such information is not provided by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for the
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CMT Interest Determination date will be calculated by the Calculation Agent and
will be a yield to maturity, based on the arithmetic mean of the secondary
market closing offer side prices as of approximately 3:30 P.M., New York City
time, on the CMT Interest Determination Date reported, according to their
written records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York (which may include
any Agent or its affiliates) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent (after consultation with
Disney) and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on the CMT Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent (after consultation with Disney) and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at least $100
million. If three or four (and not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; PROVIDED, HOWEVER, that if fewer than three Reference
Dealers selected by the Calculation Agent (after consultation with Disney) are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
CMT Interest Determination Date. If two Treasury Notes with an original maturity
as described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in
the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
RENEWABLE NOTES
Disney may also issue from time to time variable rate renewable notes (the
"Renewable Notes") that will bear interest at the interest rate (calculated with
reference to a Base Rate and the Spread or Spread Multiplier, if any) specified
in the Renewable Notes and in the applicable Pricing Supplement.
The Renewable Notes will mature on an Interest Payment Date as specified in
the applicable Pricing Supplement (the "Initial Maturity Date"), unless the
maturity of all or any portion of the principal amount thereof is extended in
accordance with the procedures described below. On the Interest Payment Dates
specified in the applicable Pricing Supplement (each such Interest Payment Date,
an "Election Date"), the maturity of the Renewable Notes will be extended to the
Interest Payment Date occurring twelve months after such Election Date, unless
the Holder thereof elects to terminate the automatic extension of the
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maturity of the Renewable Notes or of any portion thereof having a principal
amount of $1,000 or any multiple of $1,000 in excess thereof by delivering a
notice of such effect to the Trustee not less than nor more than a number of
days to be specified in the applicable Pricing Supplement prior to such Election
Date. If no such notice period is specified in the applicable Pricing
Supplement, such notice shall be given no less than 30 days nor more than 60
days prior to such Election Date. Such option may be exercised with respect to
less than the entire principal amount of the Renewable Notes; provided that the
principal amount for which such option is not exercised is at least $1,000 or
any larger amount that is an integral multiple of $1,000. Notwithstanding the
foregoing, the maturity of the Renewable Notes may not be extended beyond the
Final Maturity Date, as specified in the applicable Pricing Supplement (the
"Final Maturity Date"). If the Holder elects to terminate the automatic
extension of the maturity of any portion of the principal amount of the
Renewable Notes and such election is not revoked as described below, such
portion will become due and payable on the Interest Payment Date falling six
months (unless another period is specified in the applicable Pricing Supplement)
after the Election Date prior to which the Holder made such election.
An election to terminate the automatic extension of maturity may be revoked
as to any portion of the Renewable Notes having a principal amount of $1,000 or
any multiple of $1,000 in excess thereof by delivering a notice to such effect
to the Trustee on any day following the effective date of the election to
terminate the automatic extension of maturity and prior to the date 15 days
before the date on which such portion would otherwise mature. Such a revocation
may be made for less than the entire principal amount of the Renewable Notes for
which the automatic extension of maturity has been terminated; provided that the
principal amount of the Renewable Notes for which the automatic extension of
maturity has been terminated and for which such a revocation has not been made
is at least $1,000 or any larger amount that is an integral multiple of $1,000.
Notwithstanding the foregoing, a revocation may not be made during the period
from and including a Record Date to but excluding the immediately succeeding
Interest Payment Date.
An election to terminate the automatic extension of the maturity of the
Renewable Notes, if not revoked as described above by the Holder making the
election or any subsequent Holder, will be binding upon such subsequent Holder.
The Renewable Notes may be redeemed in whole or in part at the option of
Disney on the Interest Payment Dates in each year specified in the applicable
Pricing Supplement, commencing with the Interest Payment Date specified in the
applicable Pricing Supplement, at a redemption price as stated in the applicable
Pricing Supplement, together with accrued and unpaid interest to the date of
redemption. Notwithstanding anything to the contrary in this Prospectus
Supplement, notice of redemption will be provided by mailing a notice of such
redemption to each Holder by first class mail, postage prepaid, at least 180
days (unless otherwise specified in the applicable Pricing Supplement) prior to
the date fixed for redemption.
DISCOUNT NOTES
Discount Notes, and possibly other Notes, may be issued at a price less than
their "stated redemption price at maturity" or may have certain interest payment
characteristics that may result in the Notes being treated as issued with
original issue discount for United States Federal income tax purposes. See
"Certain United States Federal Tax Considerations." Discount Notes may bear no
interest, except in the case of a default in payment of principal upon
acceleration, redemption, or repurchase (if applicable), or may bear no interest
for a specified period following the date of issue or may bear interest at a
rate that at the time of issuance is below market rates. If any Maturity of a
Discount Note which bears no interest falls on a day that is not a Business Day
with respect to such Discount Note, the payment due at such Maturity will be
made on the following day that is a Business Day with respect to such Discount
Note as if it were made on the date such payment was due and no interest shall
accrue on the amount so payable for the period from and after such Maturity.
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In the case of a default in payment of principal upon acceleration or
redemption (if applicable) or at Stated Maturity, the Accreted Value (as defined
below) of Discount Notes at the date of such default in payment shall bear
interest at the "Yield to Maturity" specified in the applicable Note (to the
extent that the payment of such interest shall be legally enforceable), which
shall accrue from the date of such default in payment to the date payment of
such principal has been made or duly provided for. Such interest will be
computed on the basis of a 360-day year of twelve 30-day months, compounded
semi-annually.
The "Accreted Value" of a Discount Note at any date shall be equal to (i)
the original issue price of the Note plus (ii) the accrued amortization of
original issue discount of the Note attributable ratably on a daily basis to the
period from and including the original issue date to but excluding such date.
The calculation of accrual of original issue discount will be computed on the
basis of a 360-day year of twelve 30-day months, compounded semi-annually.
If an Event of Default with respect to a Discount Note shall occur and be
continuing, a portion of the principal of the Note may be declared due and
payable in the manner and to the effect provided in the Indenture. Such portion
shall be equal to the Accreted Value of the Note at the time of such
declaration. Upon payment (i) of such Accreted Value and (ii) of interest on any
overdue Accreted Value (to the extent that the payment of such interest shall be
legally enforceable), all of Disney's obligations in respect of the payment of
the principal of and interest, if any, on the Note shall terminate.
If a bankruptcy case is commenced by or against Disney under the United
States Bankruptcy Code (the "Bankruptcy Code"), it is likely that a portion of
the face amount of a Discount Note would be treated as interest and the
unamortized portion thereof would be treated as unmatured interest under Section
502(b)(2) of the Bankruptcy Code. Unmatured interest is not allowable as part of
a claim under Section 502(b)(2) of the Bankruptcy Code. Although it is
impossible to predict accurately what portion, if any, of the face amount of a
Discount Note would be treated as unmatured interest, one possible result is
that the bankruptcy court might determine the amount of unmatured interest on
such Note by reference to the amount of amortized original issue discount of
such Note for tax purposes or the unamortized debt discount of such Note for
financial accounting purposes. Each method may yield a substantially different
result.
Holders of Notes issued with original issue discount will be required to
include the amount of original issue discount in income in accordance with
applicable provisions of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder. See "Certain United States Federal
Tax Considerations." Certain United States Federal tax considerations and other
considerations applicable to any Discount Notes may be described in an
applicable Pricing Supplement.
CURRENCY INDEXED NOTES
Notes may be issued, from time to time, with the principal amount payable on
any principal payment date, or the amount of interest payable on any Interest
Payment Date, to be determined by reference to the value of one or more
currencies (or composite currencies or currency units). Information as to the
one or more currencies (or composite currencies or currency units) to which the
principal amount payable on any principal payment date or the amount of interest
payable on any Interest Payment Date is indexed, the Denominated Currency of the
Note, the Payment Currency of the Note, any material currency risks relating to
the specific currencies selected, and certain additional tax considerations, if
any, will be set forth in the applicable Pricing Supplement. The Denominated
Currency and the Payment Currency may be the same currency or different
currencies. Unless otherwise specified in the applicable Pricing Supplement,
interest on currency indexed Notes shall be paid in the Denominated Currency
based on the face amount of the Note at the rate per annum and on the dates set
forth in the applicable Pricing Supplement. Currency indexed Notes may include,
but are not limited to, Notes of the types described below. An investment in a
currency indexed Note involves special tax considerations. See "Certain United
States
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Federal Tax Considerations." Certain United States Federal tax considerations
and other considerations applicable to any Currency Indexed Notes may be
described in an applicable Pricing Supplement.
CURRENCY LINKED SECURITIES ("CLS")
CLS are Notes pursuant to which the principal amount payable at Stated
Maturity equals the Payment Currency equivalent at Stated Maturity of a fixed
amount of a designated currency (or composite currency or currency units) (the
"Indexed Currency"). Generally, the fixed amount of Indexed Currency to which
the principal of a CLS will be linked will be approximately equal in value to
the face amount of the CLS in the Denominated Currency based on the exchange
rate between the Indexed Currency and the Denominated Currency in effect at the
time of pricing. The Denominated Currency, the Indexed Currency and the Payment
Currency will be identified in the applicable Pricing Supplement. In addition,
the fixed amount of the Indexed Currency to which the principal of the CLS is
linked will be set forth in the applicable Pricing Supplement for a specific
representative face amount of the CLS as well as for the aggregate face amount
of all CLS forming part of the same issue (the "Conversion Reference Amount").
Holders of CLS may receive an amount of principal greater than, less than or
equal in value to the face amount of CLS, depending on the change, if any, from
the issue date to the date which is two Exchange Rate Days (as defined below)
prior to Stated Maturity, in the relative exchange rates of the Denominated
Currency, the Payment Currency and the Indexed Currency.
If the Payment Currency and the Indexed Currency are not the same, the
Payment Currency equivalent of the Indexed Currency amount on any date shall be
determined in the manner specified in the applicable Pricing Supplement.
REVERSE CURRENCY LINKED SECURITIES ("REVERSE CLS")
Reverse CLS are Notes pursuant to which the principal amount payable at
Stated Maturity equals the Payment Currency equivalent at Stated Maturity of a
fixed amount of a designated currency (or composite currencies or currency
units) (the "First Indexed Currency") minus the amount of the Payment Currency
equivalent at Stated Maturity of a fixed amount of another designated currency
(or composite currency or currency units) (the "Second Indexed Currency");
PROVIDED, HOWEVER, that the minimum principal amount payable at Stated Maturity
shall be zero. Generally, the fixed amount of the First Indexed Currency to
which the principal of a Reverse CLS will be linked will be approximately equal
in value to twice the face amount of the Reverse CLS in the Denominated
Currency, and the fixed amount of the Second Indexed Currency to which the
principal of a Reverse CLS will be linked will be approximately equal in value
to the face amount of the Reverse CLS in the Denominated Currency, in each case
based on the exchange rate between each Indexed Currency and the Denominated
Currency in effect at the time of pricing.
Holders of Reverse CLS may receive an amount of principal greater than, less
than (with a minimum of zero) or equal in value to the face amount of the
Reverse CLS, depending on the change, if any, from the issue date to the date
which is two Exchange Rate Days prior to Stated Maturity in the relative
exchange rates of the Denominated Currency, the Payment Currency and the First
and Second Indexed Currencies.
The Denominated Currency, the First and Second Indexed Currencies and the
Payment Currency will be identified in the applicable Pricing Supplement. In
addition, the fixed amounts of the First and Second Indexed Currencies to which
the principal of the Reverse CLS is linked shall be set forth in the applicable
Pricing Supplement for a specific representative face amount of the Reverse CLS
as well as for the aggregate face amount of all Reverse CLS forming part of the
same issue (respectively, the "First Conversion Reference Amount" and the
"Second Conversion Reference Amount").
If the Payment Currency and the First Indexed Currency or the Second Indexed
Currency are not the same, the Payment Currency equivalent of the First Indexed
Currency amount or the Second Indexed
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Currency amount, as the case may be, on any date shall be determined in the
manner specified in the applicable Pricing Supplement.
MULTICURRENCY CURRENCY LINKED SECURITIES ("MULTICURRENCY CLS")
Multicurrency CLS are Notes pursuant to which the principal amount payable
at Stated Maturity equals the Payment Currency equivalent at Stated Maturity of
a fixed amount of a designated currency (or composite currency or currency
units) (the "First Indexed Currency") plus or minus the Payment Currency
equivalent at Stated Maturity of a fixed amount of a second designated currency
(or composite currency or currency units) (the "Second Indexed Currency") plus
or minus the Payment Currency equivalent at Stated Maturity of a fixed amount of
a third designated currency (or composite currency or currency units)(the "Third
Indexed Currency"); PROVIDED, HOWEVER, that the minimum principal amount payable
at Stated Maturity shall be zero. Generally, the added and subtracted fixed
amounts of the First, Second and Third Indexed Currencies (each, an "Indexed
Currency") to which the principal of a Multicurrency CLS will be linked will
have an aggregate value approximately equal to the face amount of the
Multicurrency CLS in the Denominated Currency based on exchange rates between
each Indexed Currency and the Denominated Currency in effect at the time of
pricing.
Holders of Multicurrency CLS may receive an amount of principal greater
than, less than (with a minimum of zero) or equal in value to the face amount of
the Multicurrency CLS, depending on the change, if any, from the issue date to
the date which is two Exchange Rate Days prior to Maturity in the relative
exchange rates for the Denominated Currency, the Payment Currency and the First,
Second and Third Indexed Currencies.
The Denominated Currency, each Indexed Currency, the Payment Currency and
whether the fixed amounts of the Second and Third Indexed Currencies are to be
added or subtracted to determine the principal amount payable at Stated Maturity
of the Multicurrency CLS shall be set forth in the applicable Pricing
Supplement. In addition, the fixed amounts of the First, Second and Third
Indexed Currencies to which the principal of the Multicurrency CLS is linked
shall be set forth in the applicable Pricing Supplement for a specific
representative face amount of the Multicurrency CLS as well as for the aggregate
face amount of all Multicurrency CLS forming part of the same issue
(respectively, the "First Conversion Reference Amount," the "Second Conversion
Reference Amount" and the "Third Conversion Reference Amount," each a
"Conversion Reference Amount"). As used herein, "Added Indexed Currency" means
the First Indexed Currency and any other Indexed Currency that is added to
determine the principal amount payable at Maturity of the Multicurrency CLS and
a "Subtracted Indexed Currency" means an Indexed Currency that is subtracted to
determine the principal amount payable at Stated Maturity of the Multicurrency
CLS.
If any Added Indexed Currency or Subtracted Index Currency is not the same
as the Payment Currency, the Payment Currency equivalent of such Added Indexed
Currency amount or Subtracted Index Currency amount, as the case may be, on any
date shall be determined in the manner specified in the applicable Pricing
Supplement.
PAYMENTS UPON ACCELERATION OF MATURITY
If the principal amount payable at the Stated Maturity of any CLS, Reverse
CLS or Multicurrency CLS shall be declared due and payable prior to such Stated
Maturity, the amount payable with respect to such Note will be paid in the
Denominated Currency and will equal the face amount of such Note plus accrued
interest to but excluding the date of payment.
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NOTES LINKED TO COMMODITY PRICES, EQUITY INDICES OR OTHER FACTORS
Notes may be issued, from time to time, with the principal amount payable on
any principal payment date, or the amount of interest payable on any Interest
Payment Date, to be determined by reference to one or more commodity prices,
equity indices or other factors and on such other terms as may be set forth in
the applicable Pricing Supplement.
PAYMENTS ON AMORTIZING NOTES
Notes may be issued from time to time as Amortizing Notes (as defined
below). "Amortizing Notes" are Notes for which payments of principal and
interest are made in equal installments over the life of the Note. Interest on
each Amortizing Note will be computed on the basis of a 360-day year of twelve
30-day months. Payments with respect to Amortizing Notes will be applied first
to interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information in respect
of each Amortizing Note will be provided to the original purchaser and will be
available, upon request, to subsequent holders.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether Disney
has the option to extend the Stated Maturity of such Note for one or more whole
year periods (each an "Extension Period") up to but not beyond the date (the
"Final Maturity Date") set forth in such Pricing Supplement and the basis or
formula, if any, for setting the interest rate or the Spread or Spread
Multiplier, as the case may be, applicable to any such Extension Period.
Disney may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity of such Note in effect prior to the exercise of such option (the
"Original Stated Maturity Date"). No later than 40 days prior to the Original
Stated Maturity Date, the Trustee will mail to the holder of such Note a notice
(the "Extension Notice") relating to such Extension Period, first class, postage
prepaid, setting forth (i) the election of Disney to extend the Stated Maturity
of such Note, (ii) the new Stated Maturity, (iii) in the case of a Fixed Rate
Note, the interest rate applicable to the Extension Period or, in the case of a
Floating Rate Note, the Spread or Spread Multiplier applicable to the Extension
Period, and (iv) the provisions, if any, for redemption during the Extension
Period, including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during the
Extension Period. Upon the mailing by the Trustee of an Extension Notice to the
holder of a Note, the Stated Maturity of such Note shall be extended
automatically as set forth in the Extension Notice, and, except as modified by
the Extension Notice and as described in the next paragraph, such Note will have
the same terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity Date for a Note, Disney may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in
the case of a Floating Rate Note, provided for in the Extension Notice and
establish a higher interest rate, in the case of a Fixed Rate Note, or a higher
Spread or Spread Multiplier, in the case of a Floating Rate Note, for the
Extension Period by mailing or causing the Trustee to mail notice of such higher
interest rate or higher Spread or Spread Multiplier, as the case may be, first
class, postage prepaid, to the holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the Original Stated Maturity Date
is extended will bear such higher interest rate, in the case of a Fixed Rate
Note, or higher Spread or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period.
If Disney elects to extend the Stated Maturity of a Note, the Holder of such
Note may, if provided for in the applicable Pricing Supplement, have the option
to elect repurchase of such Note by Disney on the Original Stated Maturity Date
at a price equal to the principal amount thereof plus any accrued interest to
such date. In order for a Note to be so repurchased on the Original Stated
Maturity Date, the Holder
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thereof must follow the procedures set forth above under "Redemption and
Repurchase" for repurchase at the option of the Holder, except that the period
for delivery of such Note or notification to the Trustee shall be at least 30
but not more than 35 Business Days prior to the Original Stated Maturity Date
and except that a Holder who has tendered a Note for Repurchase pursuant to an
Extension Notice may, by written notice to the Trustee, revoke any such tender
for repayment until the close of business on the tenth day prior to the Original
Stated Maturity Date.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same original issue date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a "Global Security"); PROVIDED,
HOWEVER, that if by reason of the foregoing, a single Global Security would
exceed $200,000,000 in aggregate principal amount, one Global Security will be
issued to represent each $200,000,000 of aggregate principal amount and an
additional Global Security will be issued to represent any remaining principal
amount. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary. Except as set forth below, a Global
Security may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any nominee to a successor of
the Depositary or a nominee of such successor.
The Depository Trust Company, New York, New York ("DTC") will be the initial
Depositary with respect to the Book-Entry Notes. DTC has advised Disney and the
Agents that it is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Commercial Code, and a "clearing agency" registered
pursuant to the provision of Section 17A of the Exchange Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates settlement of securities transactions among its Participants, such
as transfers and pledges in deposited securities through electronic computerized
book-entry changes in accounts of the Participants, thereby eliminating the need
for physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, including the Agents. DTC is owned by a number
of Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of the Securities Dealers,
Inc. Access to DTC's book-entry system is also available to others, such as
banks, securities brokers and dealers and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants").
Purchases of Book-Entry Notes under DTC's book-entry system must be made by
or through Direct Participants, which will receive a credit for the Notes on the
records of DTC. The ownership interest of each actual purchaser of each
Book-Entry Note (the "Beneficial Owner") is in turn to be recorded on the Direct
Participants' or Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Book-Entry Notes will be
effected only through entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Book-Entry Notes, except in the
event that use of the book-entry system for the Book-Entry Notes is
discontinued. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, transfer or pledge
beneficial interests in a Global Security.
To facilitate subsequent transfers, all Book-Entry Notes deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Book-Entry Notes with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has
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no knowledge of the actual Beneficial Owners of the Book-Entry Notes; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Book-Entry Notes are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the Book-Entry Notes represented by such Global Security for all
purposes under the Indenture. Except as provided below, Beneficial Owners of a
Global Security or Securities will not be entitled to have Book-Entry Notes
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Book-Entry Notes in definitive
form and will not be considered the owners or Holders thereof under the
Indenture. Accordingly, each person owning a beneficial interest in a Global
Security must rely on the procedures of DTC and, if such person is not a
Participant, on the procedures of the Participants through which such Person
owns its interest, to exercise any rights of a holder under the Indenture.
Disney understands that under existing industry practices, in the event that
Disney requests any action of holders or that an owner of a beneficial interest
in such Global Security desires to give or take any action which a holder is
entitled to give or take under the Indenture, DTC would authorize the
Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize Beneficial Owners owning through
such Participants to give or to take such action or would otherwise act upon the
instructions of Beneficial Owners. Conveyance of notices and other
communications by DTC to Participants, by Participants to Indirect Participants,
and by Participants and Indirect Participants to Beneficial Owners, will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payments of principal of and interest, if any, on the Book-Entry Notes
represented by a Global Security will be made to DTC. None of Disney, the
Trustee, or any other agent of Disney or agent of the Trustee will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. DTC's practice is to credit the accounts of the
Direct Participants with payment in amounts proportionate to their respective
holdings in principal amount of beneficial interest in such Global Security as
shown on the records of DTC, unless DTC has reason to believe that it will not
receive payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such Participants.
Redemption notices shall be sent to Cede & Co. If less than all of the Notes
within an issue are being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Direct Participant in such issue to be redeemed.
DTC may discontinue providing its services as securities Depositary, with
respect to the Notes, at any time by giving reasonable notice to the Company. If
at any time: (i) DTC is unwilling or unable to continue as Depositary and a
successor Depositary is not appointed by Disney within 90 days, or (ii) Disney
determines in its discretion not to have the Book-Entry Notes represented by the
Global Security or Securities and delivers to the Trustee an order to such
effect, then the Global Security or Securities will be exchangeable for
Definitive Notes of like tenor and of an equal aggregate principal amount, in
denominations of $1,000 and integral multiples thereof. Such Definitive Notes
shall be registered in such name or names as DTC shall instruct the Trustee. It
is expected that such instructions may be based upon directions received by DTC
from Participants with respect to ownership of beneficial interests in Global
Securities.
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GOVERNING LAW AND FOREIGN CURRENCY JUDGMENTS
The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York. An action based upon an obligation
denominated in a Denominated Currency other than U.S. dollars can be brought in
courts in the United States. However, courts in the United States have not
customarily rendered judgments for money damages denominated in any currency
other than the U.S. dollar. The Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at a rate of exchange prevailing on
the date of the entry of the judgment or decree.
IMPORTANT CURRENCY INFORMATION
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for Notes in the applicable Denominated Currency in
immediately available funds. Currently, there are limited facilities in the
United States for conversion of U.S. dollars into foreign currencies, composite
currencies, or currency units and vice versa, and few banks offer non-U.S.
dollar checking or savings account facilities in the United States. However, if
requested by a prospective purchaser of Notes denominated in a Denominated
Currency other than U.S. dollars, the Agent soliciting the offer to purchase
will use reasonable efforts to arrange for the conversion of U.S. dollars into
such Denominated Currency to enable the purchaser to pay for such Notes. Such
requests must be made on or before the third Business Day preceding the date of
delivery of the Notes, or by such other date as determined by such Agent. Each
such conversion will be made by the relevant Agent on such terms and subject to
such conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practice. All costs of
exchange will be borne by purchasers of the Notes.
For purposes of determining whether the Holders of the requisite principal
amount of outstanding Securities have taken or authorized any action under the
Indenture, the principal amount of a Note denominated in a currency other than
the U.S. dollar at any time outstanding shall be deemed to be the U.S. dollar
equivalent, determined on the basis of the Market Exchange Rate as of the date
of the original issuance of such Note, of the principal amount of such Note.
FOREIGN CURRENCY RISKS
An investment in Notes that are denominated in a Denominated Currency other
than U.S. dollars, or in respect of which the Payment Currency is other than
U.S. dollars, entails significant risks (over which Disney has no control) that
are not associated with a similar investment in a security denominated, and with
respect to which principal and interest are payable, in U.S. dollars. Such risks
include, without limitation, the possibility of significant changes in the rate
of exchange between the U.S. dollar and the applicable Denominated Currency and
Payment Currency and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments,
which risks generally depend on economic and political events. In recent years,
rates of exchange between the U.S. dollar and certain foreign currencies have
been highly volatile and such volatility may occur in the future. The exchange
rate between the U.S. dollar and a foreign currency, composite currency or
currency unit is at any moment a result of the supply and demand for such
currency or the currencies comprising such composite currency or currency unit,
and changes in the rate result over time from the interaction of many factors,
among which are rates of inflation, interest rate levels, balances of payments
and the extent of governmental surpluses or deficits in the countries of such
currencies. These factors are in turn sensitive to the monetary, fiscal and
trade policies pursued by such governments and those of other countries
important to international trade and finance. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any Note.
Depreciation against the U.S. dollar of the Payment Currency of a Note would
result in a decrease in the effective yield of such Note below its coupon rate
and, in certain
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circumstances, could result in a loss to the investor on a U.S. dollar basis. In
addition, depending on the specific terms of a currency linked Note, changes in
exchange rates relating to any of the currencies involved may result in a
decrease in its effective yield and, in some circumstances, could result in a
loss of all or a substantial portion of the principal of a Note to the investor.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are residents of the United States and Disney
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to matters that may
affect the purchase, holding or receipt of payments of principal of, premium, if
any, and interest on the Notes. Persons who are not residents of the United
States should consult their own legal advisors with regard to such matters.
INDEXED NOTES RISKS
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at maturity may be less than the original purchase price of such
Note if allowed pursuant to the terms of such Note, including the possibility
that no principal will be paid. The secondary market for such Notes will be
affected by a number of factors, independent of the creditworthiness of the
issuer and the value of the applicable currency, commodity or interest rate
index, including the volatility of the applicable currency, commodity or
interest rate index, the time remaining to the maturity of such Notes, the
amount outstanding of such Notes and market interest rates. The value of the
applicable currency, commodity or interest rate index depends on a number of
interrelated factors, including economic, financial and political events, over
which Disney has no control. Additionally, if the formula used to determine the
principal amount or interest payable with respect to such Notes contains a
multiple or leverage factor, the effect of any change in the applicable
currency, commodity or interest rate index will be increased. The historical
experience of the relevant currencies, commodities or interest rate indices
should not be taken as an indication of future performance of such currencies,
commodities or interest rate indices during the term of any Note. The credit
ratings assigned to Disney's medium-term note program are a reflection of
Disney's credit status and in no way are a reflection of the potential impact of
the factors discussed above, or any other factors, on the market value of the
Notes. Accordingly, prospective investors should consult their own financial and
legal advisors as to the risks entailed by an investment in such Notes and the
suitability of such Notes in light of their particular circumstances.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS
RELATED TO THE VALUE OF, A FOREIGN CURRENCY OR A COMPOSITE CURRENCY OR CURRENCY
UNIT OR NOTES INDEXED TO CURRENCY VALUES, COMMODITIES OR INTEREST RATE INDICES
AND DISNEY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH
RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR
FINANCIAL, LEGAL AND TAX ADVISORS AS TO THE RISKS ENTAILED IN AN INVESTMENT IN
FOREIGN CURRENCY NOTES OR INDEXED NOTES. SUCH NOTES ARE NOT AN APPROPRIATE
INVESTMENT FOR PROSPECTIVE PURCHASERS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY OR INDEXED TRANSACTIONS.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States Federal tax
considerations of the acquisition, ownership, and disposition of the Notes by
original purchasers of the Notes. This summary is based on existing United
States Federal tax law, which is subject to change, possibly retroactively. This
discussion does not address all aspects of United States Federal taxation which
may be relevant to a particular holder in light of its personal investment
circumstances, such as holders who hold the Notes as a position in a "straddle"
or "hedge" for United States Federal income tax purposes, holders who have a
functional currency other than the U.S. dollar, or holders subject to special
treatment under the United States Federal income tax laws (for example,
financial institutions, insurance companies, tax exempt organizations, and
broker-dealers), and it does not discuss any aspects of foreign, state, or local
tax laws. This summary assumes that purchasers will hold the Notes as "capital
assets" (generally, property held for investment) under the Internal Revenue
Code of 1986, as amended (the "Code"). Prospective investors are urged to
consult their tax advisors regarding the United States Federal tax consequences
of acquiring, holding, and disposing of the Notes, as well as any tax
consequences that may arise under the laws of any foreign, state, local, or
other taxing jurisdiction.
For purposes of this summary, the term "United States Holder" means a
beneficial owner of a Note that is, for United States Federal income tax
purposes, a citizen or resident of the United States, a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof, an estate
whose income is includible in gross income for United States Federal income tax
purposes regardless of its source, or a trust whose administration is subject to
the primary supervision of a United States court and which has one or more
United States persons who have the authority to control all substantial
decisions of the trust. As used herein, the term "Non-United States Holder"
means a holder of a Note that is not a United States Holder.
UNITED STATES HOLDERS
ORIGINAL ISSUE DISCOUNT
Notes with a term greater than one year may be issued with original issue
discount for United States Federal income tax purposes. Original issue discount
will arise if the stated principal amount at maturity of a Note exceeds its
issue price by more than a DE MINIMIS amount, or if a Note has certain interest
payment characteristics (e.g., interest payable less frequently than annually,
interest holidays, interest payable in additional Notes, certain stepped rates,
or certain rates based on multiple indices). If a Note is issued with original
issue discount, the holder of the Note will be required to include amounts in
gross income for United States Federal income tax purposes in advance of the
receipt of the cash payment to which such income is attributable. The amount of
original issue discount to be included in income in any tax period will be
determined using a constant yield to maturity method, which will result in a
greater portion of such discount being included in income in the later part of
the term of the Notes. Any amounts included in income as original issue discount
will increase a holder's adjusted tax basis in the Note. The treatment of Notes
with contingent payments, such as indexed notes, will be different and is
described below. Additional information with respect to such treatment may be
set forth in the applicable Pricing Supplement.
Disney will report annually to the Internal Revenue Service and to each
holder of such Note the amount of original issue discount accrued with respect
to the Note. Prospective purchasers are advised to consult their tax advisors
with respect to the particular original issue discount characteristics of the
Note that is being purchased.
ACQUISITION DISCOUNT
Notes that have a fixed maturity of one year or less may be issued with
acquisition discount. Acquisition discount may arise under the circumstances set
forth above with respect to original issue discount. Accrual basis taxpayers,
taxpayers in certain specified classes, and cash basis taxpayers making an
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appropriate election to accrue acquisition discount under the Code would be
required to include acquisition discount in income currently in an amount and
manner similar to that applicable to original issue discount. A cash basis
holder who makes such an election cannot revoke such accrual election without
the consent of the Internal Revenue Service, and such election applies to all
short-term obligations acquired by the holder in the taxable year in which the
election is made and in all subsequent taxable years. Individuals and other
non-electing cash basis taxpayers holding Notes with acquisition discount are
not required to include accrued acquisition discount in income until the cash
payments attributable to such amounts are received, which amounts will be
treated as ordinary income. A holder who does not recognize acquisition discount
currently may also be subject to limitations on the deductibility of interest on
indebtedness incurred to purchase or, in certain circumstances, carry such a
Note.
DISPOSITION OF NOTES
In general, and subject to the foregoing discussion of acquisition discount,
a holder of a Note will recognize gain or loss on the sale, redemption, exchange
or other disposition of the Note in an amount equal to the difference between
the amount realized (except to the extent attributable to accrued interest) and
the holder's adjusted tax basis in the Note.
FOREIGN CURRENCY NOTES
INTEREST PAYMENTS AND ORIGINAL ISSUE DISCOUNT
A United States Holder will be subject to tax on interest on Notes that are
denominated in, or determined by reference to, a currency or currencies other
than the U.S. dollar ("Foreign Currency Notes") in accordance with such holder's
method of accounting for United States Federal income tax purposes, and any
original issue discount must be included in income as it accrues. Regardless of
whether an interest payment is in fact converted into U.S. dollars, the amount
of interest income (including any original issue discount) required to be
included in income (the "Includible Amount") will generally be (i) in the case
of a cash basis taxpayer, the U.S. dollar value of the foreign currency interest
payment based on the exchange rate in effect on the date of receipt of the
payment plus the amount of any accrued original issue discount, as described
below, and (ii) in the case of an accrual basis taxpayer, the average U.S.
dollar value of the accrued amounts based on the average exchange rate in effect
during the interest accrual period (unless an election is made pursuant to
Treasury regulations to use a different exchange rate). Such U.S. dollar value
will be the holder's tax basis in the foreign currency. The amount of original
issue discount on a Foreign Currency Note required to be included in income will
be computed for each accrual period in the relevant foreign currency and then
translated into a U.S. dollar value based on the average exchange rate in effect
during such accrual period.
An accrual basis taxpayer will be required to recognize gain or loss upon
the receipt of interest payments in a foreign currency on a Foreign Currency
Note as a result of fluctuations in currency exchange rates between the dates of
accrual and receipt ("Exchange Gain or Loss"), which gain or loss will be equal
to the U.S. dollar value of the foreign currency payment based on the exchange
rate in effect on the date of receipt of such payment less the Includible
Amount. Similarly, upon the sale, exchange or retirement of a Foreign Currency
Note, a holder who receives proceeds in a foreign currency which are
attributable to original issue discount or, in the case of an accrual basis
taxpayer, accrued but unpaid interest, will be required to recognize Exchange
Gain or Loss. Any such Exchange Gain or Loss will be treated as ordinary income
or loss.
PURCHASE AND DISPOSITION OF THE FOREIGN CURRENCY NOTES
A United States Holder's tax basis in a Foreign Currency Note will be the
U.S. dollar value of the foreign currency amount paid for such Foreign Currency
Note based on the exchange rate in effect on the date of purchase of the Foreign
Currency Note, plus the U.S. dollar value of any accrued original issue
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discount on the Foreign Currency Note that the holder has included in gross
income. A holder who converts U.S. dollars to a foreign currency and immediately
uses that currency to purchase a Foreign Currency Note denominated in the same
currency will ordinarily not recognize Exchange Gain or Loss in connection with
such conversion and purchase. If a holder purchases a Foreign Currency Note with
previously owned foreign currency, the holder will recognize Exchange Gain or
Loss in an amount equal to the difference, if any, between such holder's tax
basis in the foreign currency and the U.S. dollar fair market value of the
Foreign Currency Note based on the exchange rate in effect on the date of
purchase. Gain or loss will be recognized upon the sale, redemption, exchange or
other disposition of a Foreign Currency Note equal to the U.S. dollar value of
the foreign currency received upon such disposition less the U.S. dollar tax
basis in the Foreign Currency Note. Such gain or loss that is recognized will be
ordinary income or loss to the extent it is Exchange Gain or Loss. Any gain or
loss recognized in excess of the Exchange Gain or Loss will be treated as
capital gain or loss.
EXCHANGE OF THE FOREIGN CURRENCY
Foreign currency received or accrued as interest on a Foreign Currency Note
or on the sale, redemption, exchange or other disposition of a Foreign Currency
Note will have a tax basis equal to its U.S. dollar value based on the exchange
rate in effect at the time such interest is received or accrued or at the time
of such disposition. Any gain or loss recognized on a sale or other disposition
of the foreign currency will be ordinary income or loss.
MULTICURRENCY NOTES
The treatment of Multicurrency Notes may be subject to special rules which
will be set forth in the applicable Pricing Supplement.
VARIABLE RATE NOTES
A Floating Rate Note will generally be governed by the Treasury regulations
with respect to Variable Rate Notes. A "Variable Rate Note" is generally a debt
instrument (i) with an issue price that does not exceed the sum of the
noncontingent principal payments to be made on the Note by more than a specified
amount, and (ii) that provides for stated interest unconditionally payable at
least annually at the current value of (A) one or more qualified floating rates,
(B) a single fixed rate and one or more qualified floating rates, (C) a single
objective rate, or (D) a single fixed rate and a qualified inverse floating
rate. A qualified floating rate is a rate that can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds. An
objective rate is a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective financial
or economic information. A qualified inverse floating rate is a rate equal to a
fixed rate minus a qualified floating rate whose variations can reasonably be
expected to inversely reflect contemporaneous variations in the qualified
floating rate. Disney will provide notice in the applicable Pricing Supplement
when it determines that a particular Floating Rate Note will be a Variable Rate
Note because certain types of Floating Rate Notes will not be subject to the
rules described in this section. A Variable Rate Note issued for a price equal
to its stated principal amount will generally not be subject to the original
issue discount rules described above.
A Variable Rate Note may be subject to the rules described above in
"Original Issue Discount" if, among other circumstances, it is issued at a price
less than its stated principal amount. To determine the amount of original issue
discount to be included in income, if any, the Variable Rate Note must be
converted into a fixed rate debt instrument by substituting an appropriate fixed
rate for the variable rate or rates, and then the rules under "Original Issue
Discount" must be applied. In certain circumstances, if the interest actually
accrued or paid during an accrual period is greater or less than the interest
assumed to be accrued or paid under the equivalent fixed rate debt instrument,
appropriate adjustments must be made to the original issue discount allocable to
the period.
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CONTINGENT PAYMENT NOTES
Certain Notes issued by Disney, such as indexed notes, may be treated as
Contingent Payment Notes. Disney will provide notice in the applicable Pricing
Supplement when it determines that a particular Note will be a Contingent
Payment Note.
Interest on Notes that are treated as Contingent Payment Notes will accrue
under the constant yield method based upon a "Projected Payment Schedule," to be
established by Disney in accordance with Treasury Regulations and reported by
Disney to Holders. The Projected Payment Schedule for the Notes will consist of
all stated principal payments and a projected amount and time for each
Contingent Interest payment. Because the yield of the Notes for Federal income
tax purposes will be determined assuming that the projected payments are made at
definite dates, a Holder's income inclusions may be accelerated in comparison to
the time when payments under the Notes are in fact made. The yield, timing and
amounts set forth in the Projected Payment Schedule are for Federal income tax
purposes only and are not assurances by Disney with respect to any aspect of the
Notes. Holders will generally be bound by the Projected Payment Schedule.
Nevertheless, the Internal Revenue Service can disregard a Projected Payment
Schedule it determines to be unreasonable.
If the actual amount of a Contingent Interest payment differs from the
projected amount of the payment, the difference will result in either a positive
or a negative adjustment to be taken into account by the Holder. These
adjustments will generally increase or decrease the amount includible in income
as interest on the Notes. If the actual amount of a Contingent Interest payment
is greater than the projected amount of the payment, the difference will be a
positive adjustment. If the projected amount of a Contingent Interest payment is
greater than the actual amount of the payment, the difference will be a negative
adjustment. Positive and negative adjustments for a taxable year will be netted.
A net positive adjustment for the taxable year will be treated by the Holder
as additional interest for the year. A net negative adjustment for the taxable
year will be taken into account as follows: (a) first, the net negative
adjustment for the taxable year will offset the interest that would have accrued
on the Notes for the taxable year based on the Projected Payment Schedule; (b)
second, if the net negative adjustment exceeds the amount of interest that
accrued on the Notes for the taxable year, the excess will be treated as an
ordinary loss by the Holder to the extent of all prior interest (including
positive adjustments) accrued on the Notes (net of all prior negative
adjustments); (c) third, the excess will be treated as a negative adjustment
that occurs on the first day of the succeeding taxable year; and (d) fourth, any
unused net negative adjustment will reduce the amount realized by the Holder on
the sale, exchange or other taxable disposition of the Notes.
NON-UNITED STATES HOLDERS
Under present United States Federal income and estate tax law, assuming
certain certification requirements are satisfied (which include identification
of the beneficial owner of the instrument), and subject to the discussion of
backup withholding below:
(a) payments of interest (including any original issue discount) on the
Notes to any Non-United States Holder will not be subject to United States
Federal income or withholding tax, provided that (1) the holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Disney entitled to vote, (2) the holder is
not (i) a foreign tax exempt organization or a foreign private foundation
for United States Federal income tax purposes, (ii) a bank receiving
interest pursuant to a loan agreement entered into in the ordinary course of
its trade or business, or (iii) a controlled foreign corporation that is
related to Disney through stock ownership, and (3) such interest payments
are not effectively connected with the conduct of a United States trade or
business of the holder;
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(b) a holder of a Note who is a Non-United States Holder will not be
subject to United States Federal income tax on gain realized on the sale,
exchange, retirement or other disposition of a Note, unless (1) such holder
is an individual who is present in the United States for 183 days or more
during the taxable year and certain other requirements are met, or (2) the
gain is effectively connected with the conduct of a United States trade or
business of the holder;
(c) if interest on the Notes is exempt from withholding of United States
Federal income tax under the rules described above, the Notes will not be
included in the estate of a deceased Non-United States Holder for United
States Federal estate tax purposes.
The certification referred to above may be made on an Internal Revenue
Service Form W-8 or substantially similar substitute form.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In the case of payments of interest to Non-United States Holders, current
Treasury regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or an
exemption has otherwise been established; provided that neither Disney nor its
payment agent has actual knowledge that the holder is a United States person or
that the conditions of any other exemption are not in fact satisfied. Under
current Treasury regulations, these information reporting and backup withholding
requirements will apply, however, to the gross proceeds paid to a Non-United
States Holder on the disposition of the Notes by or through a United States
office of a United States or foreign broker, unless the holder certifies to the
broker under penalties of perjury as to its name, address, and status as a
foreign person or the holder otherwise establishes an exemption. Information
reporting requirements, but not backup withholding, will also apply to a payment
of the proceeds of a disposition of the Notes by or through a foreign office of
a United States broker or foreign brokers with certain types of relationships to
the United States. Neither information reporting nor backup withholding will
generally apply to a payment of the proceeds of a disposition of the Notes by or
through a foreign office of a foreign broker not subject to the preceding
sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
Recently, the Treasury Department has promulgated final regulations (the
"Final Regulations"), which are generally effective for payments made after
December 31, 1999, subject to certain transition rules, regarding the
withholding and information reporting rules discussed above. In general, the
Final Regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify reliance standards. Under the Final Regulations, special
rules apply which permit the shifting of primary responsibility for withholding
to certain financial intermediaries acting on behalf of beneficial owners.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by Disney through
Bear, Stearns & Co. Inc., Credit Suisse First Boston Corporation, Goldman, Sachs
& Co., Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, J.P. Morgan Securities Inc. and Morgan Stanley & Co.
Incorporated (each, an "Agent," and collectively, the "Agents"), who have agreed
to act as agents for Disney in the solicitation of offers to purchase the Notes.
Disney will pay the Agent through which a Note has been sold a commission which,
depending on the Stated Maturity of such Note or, in the case of Notes which are
subject to repurchase by Disney at the option of the Holder, the period of time
until the first purchase date specified in the applicable Note, will range from
.125% to .750% of the principal amount (or in the case of a Discount Note, the
price to public) of such Note, except that in the
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case of a Note with a Stated Maturity 30 years or more from the date of issuance
such commission shall be determined by Disney and the relevant Agents.
Disney may also sell Notes to an Agent, as principal, for resale to
investors or other purchasers. In addition, the Agents may offer the Notes they
have purchased as principal to other dealers. The Agents may sell Notes to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by such Agent from Disney. Unless otherwise indicated in
the applicable Pricing Supplement, any Notes sold to an Agent as principal will
be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to any agency sale
of a Note of identical maturity, and may be resold by the Agent to investors and
other purchasers from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale by such Agent or may be resold to certain dealers
as described above. After the initial public offering of Notes to be resold to
investors and other purchasers, the public offering price (in the case of Notes
to be resold at a fixed public offering price), the concession and discount may
be changed. Disney has agreed to reimburse the Agents for certain expenses.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the case may be, a short position in Notes, i.e., if it sells or they sell Notes
in an aggregate principal amount exceeding that set forth in the applicable
Pricing Supplement, such Agent(s) may reduce that short position by purchasing
Notes in the open market. In general, purchases of Notes for the purpose of
stabilization or to reduce a short position could cause the price of Notes to be
higher than it might be in the absence of such purchases.
Neither Disney nor any of the Agents makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
in the immediately preceding paragraph may have on the price of Notes. In
addition, neither Disney nor any of the Agents makes any representation that the
Agents will engage in any such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Disney reserves the right to sell Notes to or through others and to sell
Notes directly on its own behalf in those jurisdictions where it is authorized
to do so or through additional agents, acting either as agent or principal. Any
other agent or underwriter will be identified in an applicable Pricing
Supplement. No commission will be allowed or be payable on any sales made
directly by Disney.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York on the date of settlement.
Disney reserves the right to withdraw, cancel or modify the offer made
hereby without notice and has the sole right to accept offers to purchase Notes
and may reject any proposed purchase of Notes in whole or in part. An Agent will
have the right, in its discretion reasonably exercised, to reject in whole or in
part any offer to purchase Notes received by it.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Disney has agreed to
indemnify the Agents against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Agents may be required to
make in respect thereof.
There is no established trading market for the Notes and the Notes will not
be listed on any securities exchange. The Agents have advised Disney that they
may from time to time purchase and sell Notes in the secondary market, as
permitted by applicable laws and regulations. The Agents are not obligated,
however, to make any such purchases and sales and any such purchases and sales
may be discontinued at any time
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without notice at the sole discretion of the Agents. There can be no assurance
that there will be a secondary market for the Notes or liquidity in the
secondary market if one develops.
LEGAL MATTERS
Certain legal matters with respect to the legality of the securities being
offered hereby will be passed upon for Disney by O'Melveny & Myers LLP, Los
Angeles, California. Brown & Wood LLP, Los Angeles, California, will act as
counsel for the Agents. O'Melveny & Myers LLP has from time to time represented,
and continues to represent, each of the Agents in connection with certain legal
matters.
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PROSPECTUS
THE WALT DISNEY COMPANY
SECURITIES
----------------
The Walt Disney Company may offer from time to time the following types of
securities ("Securities"):
- debt securities, which may be senior debt securities, senior subordinated
debt securities or subordinated debt securities, in each case consisting
of notes or other unsecured evidences of indebtedness;
- shares of preferred stock, which may be issued in the form of depositary
receipts representing a fraction of a share of preferred stock;
- shares of common stock; or
- warrants to purchase debt securities, preferred stock or common stock.
The Securities will have an aggregate initial offering price of up to
$5,000,000,000 or an equivalent amount in U.S. dollars if any Securities are
denominated in a currency other than U.S. dollars. The Securities may be offered
separately or together in any combination and as separate series. The amounts,
prices, form, designation, specific terms and offering terms of each issuance of
Securities will be determined at the time of sale and will be set forth in a
Prospectus Supplement. Where applicable, the Prospectus Supplement will also
contain information about certain material United States Federal income tax
considerations relating to the Securities and any listing of the Securities on a
national securities exchange.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
The Securities may be sold directly, through agents designated from time to
time or to or through underwriters or dealers. See "Plan of Distribution." If
any agents or underwriters are involved in the sale of any Securities, their
names and any applicable commissions or discounts will be set forth in a
Prospectus Supplement. The net proceeds to the issuer from the sale of
Securities also will be set forth in a Prospectus Supplement.
------------------------
AUGUST 6, 1998
<PAGE>
AVAILABLE INFORMATION
The Walt Disney Company ("Disney") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy and information
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such reports, proxy and information statements and other
information may also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005 and the Pacific Exchange, 115 Sansome
Street, Suite 1104, San Francisco, California 94104. In addition, the Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants, such as
Disney, that file electronically with the Commission.
Disney has filed with the Commission in Washington, D.C. a registration
statement on Form S-3 (including all amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Such additional information is available for inspection and
copying at the offices of the Commission. Statements contained in this
Prospectus, in any Prospectus Supplement or in any document incorporated by
reference herein or therein as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Disney (File No. 1-11605) with
the Commission under the Exchange Act are incorporated herein by reference:
(a) Disney's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997 (as amended by two Form 10-K/As filed June 29, 1998); and
(b) Disney's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997 and March 31, 1998.
All documents filed by Disney pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the termination of the offering of the Securities
made hereby, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any statement
so modified or superseded shall not be deemed to constitute a part hereof except
as so modified or superseded.
Disney will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus other than exhibits to such
documents, unless such exhibits are also specifically incorporated by reference
herein. Requests for such copies should be directed to The Walt Disney Company,
500 South Buena Vista Street, Burbank, California 91521, Attention: Corporate
Secretary; telephone number (818) 560-1000.
------------------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars" or "U.S.$").
------------------------
2
<PAGE>
THE COMPANY
The Walt Disney Company, a Delaware corporation ("Disney" or the "Company"),
is a diversified international entertainment company with operations in the
businesses of Creative Content, Broadcasting and Theme Parks and Resorts. On
February 9, 1996, the Company completed its acquisition of ABC, Inc. ("ABC"),
which resulted in a new parent company, with the name "The Walt Disney Company",
replacing the old parent company of the same name. For convenience, unless the
context otherwise requires, the terms "Company" and "Disney" are used in this
Prospectus to refer to both the old and the new parent company and to refer
collectively to the parent company and the subsidiaries through which its
various businesses are actually conducted.
The Company's principal executive offices are located at 500 South Buena
Vista Street, Burbank, California 91521, and its telephone number is (818)
560-1000.
CREATIVE CONTENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, home video and television markets. The
Company also produces original television programming for the network and
first-run syndication markets. The Company distributes its filmed product
through its own distribution and marketing companies in the United States and
most foreign markets. The success of the Company's Creative Content operations
is heavily dependent upon public taste, which is unpredictable and subject to
change. In addition, filmed entertainment operating results fluctuate due to the
timing and performance of theatrical and home video releases. Release dates are
determined by several factors, including timing of vacation and holiday periods
and competition.
The Company licenses the name "Walt Disney," as well as the Company's
characters, visual and literary properties and songs and music, to various
consumer manufacturers, retailers, show promoters and publishers throughout the
world. The Company also engages in direct retail distribution principally
through The Disney Stores, and produces books and magazines for the general
public in the United States and Europe. In addition, the Company produces audio
products for all markets, as well as film, video and computer software products
for the educational marketplace. Operating results for the licensing and retail
distribution business are influenced by seasonal consumer purchasing behavior
and by the timing and performance of animated theatrical releases.
BROADCASTING
The Company operates the ABC Television Network, which has affiliated
stations providing coverage to U.S. television households. The Company also owns
television and radio stations, most of which are affiliated with the ABC
Television Network and the ABC Radio Networks. The Company's cable and
international broadcast operations are principally involved in the production
and distribution of cable television programming, the licensing of programming
to domestic and international markets and investing in joint ventures in
foreign-based television operations and television production and distribution
entities. The primary domestic cable programming services, which operate
principally through joint ventures, are ESPN, the A&E Television Networks,
Lifetime Television and E! Entertainment Television. The Company provides
programming for and operates Disney Channel, a cable and satellite television
programming service.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World Resort-Registered Trademark- in
Florida, and Disneyland Park-Registered Trademark-, the Disneyland Hotel and the
Disneyland Pacific Hotel in California. The Walt Disney World Resort includes
the Magic Kingdom, Epcot and the Disney-MGM Studios, thirteen resort hotels and
a complex of villas and suites, a nighttime entertainment complex, a shopping
village, conference centers, campgrounds, golf courses, water parks and other
recreational facilities. The Company earns royalties generated by the Tokyo
Disneyland-Registered Trademark- theme park near Tokyo, Japan, which is owned
and operated by an unrelated Japanese corporation. The Company also has an
investment in Euro Disney S.C.A., a publicly held French corporation that
operates Disneyland Paris. The Company's Walt Disney Imagineering unit designs
and develops new theme park concepts and attractions, as well as resort
properties. The Company also manages and markets vacation ownership interests in
the Disney Vacation Club. Included in Theme Parks and Resorts are the Company's
National Hockey League franchise, the
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<PAGE>
Mighty Ducks of Anaheim, and its ownership interest in the Anaheim Angels, a
Major League Baseball team. Historically, the theme parks and resorts business
experiences fluctuations in park attendance and resort occupancy resulting from
the nature of vacation travel. Peak attendance and resort occupancy generally
occur during the summer months when school vacations occur and during
early-winter and spring holiday periods.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, Disney
intends to use the net proceeds from the sale of the Securities for general
corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the consolidated ratios of earnings to fixed charges for
Disney for the six-month periods ended March 31, 1998 and 1997 and for each of
the years in the five-year period ended September 30, 1997:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED
MARCH 31, SEPTEMBER 30,
-------------------- ------------------------------------------
1998 1997 1997 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (1)(2)(3)...................... 5X 5X 5X 4X 9X 9X
<CAPTION>
1993
---------
<S> <C>
Ratio of Earnings to Fixed Charges (1)(2)(3)...................... 7X
</TABLE>
- ------------------------
(1) For purposes of these ratios, earnings are calculated by adding to
(subtracting from) income from continuing operations before income taxes and
cumulative effect of accounting changes, the following: fixed charges,
excluding capitalized interest; and losses and (undistributed earnings)
recognized with respect to less than 50% owned equity investments. Fixed
charges consist of interest on borrowings, that portion of rental expense
that approximates interest and amortized debt expense, if any.
(2) The Company's acquisition of ABC was consummated on February 9, 1996.
Accordingly, the ratios set forth above for periods before and after the
acquisition are not comparable.
(3) Disney's ratios of earnings to combined fixed charges and preferred stock
dividends for the periods indicated above is the same as the ratios of
earnings to fixed charges set forth above because Disney had no shares of
preferred stock outstanding during the periods indicated and currently has
no such shares outstanding.
4
<PAGE>
CERTAIN FINANCIAL INFORMATION
The following table sets forth selected historical consolidated financial
information of Disney and has been derived from and should be read in
conjunction with Disney's audited consolidated financial statements and
unaudited interim consolidated financial statements, including the notes
thereto, which are incorporated by reference in this Prospectus. Unaudited
interim data reflect, in the opinion of Disney's management, all adjustments
considered necessary for a fair presentation of results for such interim
periods. Results of operations for unaudited interim periods are not necessarily
indicative of results which may be expected for any other interim or annual
period. During the quarter ended June 30, 1998, Disney effected a three-for-one
stock split by means of a stock dividend. All per share data have been restated
to reflect the stock split.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
-------------------- -----------------------------------------------------
1998 1997(1) 1997(1) 1996(2) 1995 1994 1993(3)
--------- --------- --------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................. $ 11,581 $ 11,759 $ 22,473 $ 18,739 $ 12,151 $ 10,090 $ 8,531
Operating income.......................... 2,341 2,426 4,447 3,033 2,466 1,972 1,722
Income before cumulative effect of
accounting changes...................... 1,139 1,082 1,966 1,214 1,380 1,110 671
Earnings per share before cumulative
effect of accounting changes(4)
Diluted................................. 0.55 0.53 0.95 0.65 0.87 0.68 0.41
Basic................................... 0.56 0.53 0.97 0.66 0.88 0.69 0.42
Cash dividends per share.................. 0.10 0.08 0.17 0.14 0.12 0.10 0.08
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.............................. $ 39,317 $ 39,137 $ 37,776 $ 36,626 $ 14,606 $ 12,826 $ 11,751
Borrowings................................ 11,450 12,848 11,068 12,342 2,984 2,937 2,386
Stockholders' equity...................... 18,626 16,857 17,285 16,086 6,651 5,508 5,031
Book value per share...................... 9.14 8.34 8.59 7.96 4.23 3.50 3.13
</TABLE>
- ------------------------
(1) 1997 results include a $135 million gain from the Company's sale of KCAL-TV.
The diluted earnings per share impact of the gain was $0.04.
(2) 1996 results include a $300 million non-cash charge pertaining to the
implementation of SFAS 121 ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, and a $225 million
charge for costs related to the acquisition of ABC. The diluted earnings per
share impacts of these charges were $0.10 and $0.07, respectively.
(3) In 1993, the Company changed its accounting policy for project-related
pre-opening costs, adopted SFAS 106 EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSION and adopted SFAS 109 ACCOUNTING FOR INCOME
TAXES. The cumulative effect of these accounting changes on the 1993 results
follows:
<TABLE>
<CAPTION>
DILUTED EARNINGS BASIC EARNINGS
NET INCOME PER SHARE PER SHARE
----------- ----------------- ---------------
<S> <C> <C> <C>
Expense pre-opening costs as incurred................. $ (271) $ (.17) $ (.17)
Adopt SFAS 106........................................ (130) (.08) (.08)
Adopt SFAS 109........................................ 30 .02 .02
----- ----- -----
$ (371) $ (.23) $ (.23)
----- ----- -----
----- ----- -----
</TABLE>
Operating and net income for 1993 also reflect a $350 million charge to
fully reserve the Company's outstanding receivables from Euro Disney S.C.A.
and the Company's commitment to provide certain financing to Euro Disney
S.C.A. for a limited period. The diluted earnings per share impact of the
charge, net of income tax benefit, was $.13.
(4) During the quarter ended December 31, 1997, earnings per share for each
fiscal year presented were restated for the adoption of SFAS 128 EARNINGS
PER SHARE.
In addition, in compliance with the rules and regulations of the Commission
pertaining to the provision of separate financial statements of significant
acquired businesses, Disney hereby incorporates by reference its Current Report
on Form 8-K dated March 30, 1996 that was previously filed with the Commission,
which report contains the audited consolidated financial statements of Capital
Cities/ABC, Inc. for the three years ended December 31, 1995.
5
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the debt securities (the "Debt Securities") of Disney to which any Prospectus
Supplement may relate. The particular terms of the Debt Securities offered by
any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered will be described in the
Prospectus Supplement relating to such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series,
and will constitute either senior debt securities (the "Senior Debt
Securities"), senior subordinated debt securities (the "Senior Subordinated Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"). Senior Debt Securities may be issued from time to time under the
Indenture, dated as of March 7, 1996 (the "Senior Debt Securities Indenture"),
between Disney and Citibank, N.A., a national banking association, as trustee
(the "Senior Debt Securities Trustee"). Senior Subordinated Debt Securities may
be issued from time to time under an Indenture (the "Senior Subordinated Debt
Securities Indenture") to be entered into between Disney and Chase Manhattan
Bank and Trust Company, National Association, as trustee (the "Senior
Subordinated Debt Securities Trustee"). Subordinated Debt Securities may be
issued from time to time under an Indenture (the "Subordinated Debt Securities
Indenture") to be entered into between Disney and The First National Bank of
Chicago, as trustee (the "Subordinated Debt Securities Trustee").
The Senior Debt Securities Indenture, the Senior Subordinated Debt
Securities Indenture, and the Subordinated Debt Securities Indenture are
referred to herein individually as an "Indenture" and, collectively, as the
"Indentures," and the Senior Debt Securities Trustee, the Senior Subordinated
Debt Securities Trustee and the Subordinated Debt Securities Trustee are
referred to herein individually as the "Trustee" and collectively as the
"Trustees." The forms of the Indentures are filed, or incorporated by reference,
as exhibits to the Registration Statement. Capitalized terms used in this
section which are not otherwise defined in this Prospectus shall have the
meanings set forth in the Indentures to which they relate. The following
summaries of certain provisions of the Debt Securities and the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by express reference to, all the provisions of the Indentures, including the
definitions therein of certain terms. As used in this section of the Prospectus,
"Disney" does not include its subsidiaries.
GENERAL
The Debt Securities will be direct, unsecured obligations of Disney.
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt Securities may be
issued thereunder from time to time in one or more series.
Under the Indentures, Disney will have the ability to issue Debt Securities
with terms different from, or the same as, those of Debt Securities previously
issued, without the consent of the holders of previously issued series of Debt
Securities, in an aggregate principal amount determined by Disney.
Securities may be issued as Discount Securities, which may be sold at a
discount below their principal amount. Even if Securities are not issued at a
discount below their principal amount, such Securities may, for United States
Federal income tax purposes, be deemed to have been issued with "original issue
discount" ("OID") because of certain interest payment characteristics. Special
United States Federal income tax considerations applicable to Securities issued
with original issue discount, including Discount Securities, will be described
in more detail in any applicable Prospectus Supplement. In addition, special
United States Federal tax considerations or other restrictions or terms
applicable to any Debt Securities which are issuable in bearer form, offered
exclusively to Non-United States Holders or denominated in a currency other than
United States dollars will be set forth in a Prospectus Supplement relating
thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities offered
thereby (the "Offered Debt Securities"):
(a) the title of the Offered Debt Securities;
(b) any limit on the aggregate principal amount of the Offered Debt
Securities;
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<PAGE>
(c) whether the Offered Debt Securities are to be issuable as registered
securities or bearer securities or both and whether the Offered Debt
Securities may be represented initially by a Debt Security in temporary
or permanent global form, and if so, the initial Depositary with respect
to such temporary or permanent global Debt Security and whether and the
circumstances under which beneficial owners of interests in any such
temporary or permanent global Debt Security may exchange such interests
for Debt Securities of such series and of like tenor of any authorized
form and denomination;
(d) the price or prices at which the Offered Debt Securities will be issued;
(e) the person to whom any interest will be payable on any Offered Debt
Security that is a registered security, if other than the person in whose
name the Offered Debt Security is registered at the close of business on
the Regular Record Date for the payment of such interest;
(f) the manner in which, or the person to whom, any interest on any Offered
Debt Security that is a bearer security will be payable, if other than
upon presentation and surrender of the coupons appertaining thereto, and
the extent to which, or the manner in which, any interest payable on a
temporary or definitive global security on an Interest Payment Date will
be paid;
(g) the date or dates on which the principal of the Offered Debt Securities
is payable or the method of determination thereof;
(h) the rate or rates at which the Offered Debt Securities will bear
interest or the method of calculating such rate or rates, if any, the
date or dates from which such interest, if any, will accrue, the Stated
Maturities (as defined below) of installments of interest (the "Interest
Payment Dates"), if any, on which any interest on the Offered Debt
Securities will be payable and the Regular Record Dates for any interest
payable on any Offered Debt Securities which are registered securities;
(i) the place or places where and the manner in which the principal of and
premium, if any, and interest, if any, on such Offered Debt Securities
will be payable and the place or places where such Offered Debt
Securities may be presented for transfer and, if applicable, conversion
or exchange and notices and demands to or upon Disney in respect of the
Offered Debt Securities may be served;
(j) the period or periods within which, the price or prices at which and the
terms and conditions upon which, Offered Debt Securities may be redeemed,
in whole or in part, at the option of Disney;
(k) the obligation, if any, of Disney to redeem or purchase Offered Debt
Securities pursuant to any sinking fund or analogous provisions or at the
option of a holder thereof, the conditions, if any, giving rise to such
obligation, and the period or periods within which, the price or prices
at which and the terms and conditions upon which Offered Debt Securities
shall be redeemed or purchased, in whole or part, and any provisions for
the remarketing of such Offered Debt Securities;
(l) the denominations in which any Offered Debt Security that is a
registered security shall be issuable, if other than denominations of
$1,000 and any integral multiple thereof, and the denominations in which
any Offered Debt Security that is a bearer security shall be issuable, if
other than denominations of $5,000 and $100,000;
(m) the currency or currencies, including composite currencies, of payment
of principal of and interest, if any, on the Offered Debt Securities, if
other than U.S. dollars, and, if other than U.S. dollars, whether the
Offered Debt Securities may be satisfied and discharged other than as
provided in the Indenture;
(n) if the amount of payments of principal of and interest, if any, on the
Offered Debt Securities is to be determined by reference to an index,
formula or other method, or based on a coin or currency or currency unit
other than that in which the Offered Debt Securities are stated to be
payable, the manner in which such amounts are to be determined and the
calculation agent, if any, with respect thereto;
(o) if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities which will be payable upon
declaration or acceleration of the maturity thereof pursuant to an Event
of Default;
(p) whether such Offered Debt Securities are convertible or exchangeable
into other debt or equity securities, and, if so, the terms and
conditions upon which such conversion or exchange will be effected
including the initial conversion or exchange price or rate and any
adjustments thereto, the conversion or exchange period and other
conversion or exchange provisions;
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<PAGE>
(q) any terms applicable to such Offered Debt Securities issued at an issue
price below their stated principal amount, including the issue price
thereof and the rate or rates at which such original issue discount will
accrue;
(r) any deletions from, modifications of or additions to the Events of
Default or covenants of Disney with respect to such Offered Debt
Securities, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(s) any special United States Federal income tax considerations applicable
to the Offered Debt Securities;
(t) if the Offered Debt Securities may be issued or delivered (whether upon
original issuance or upon exchange of a temporary Security of such series
or otherwise), or any installment of principal or any interest is payable
only, upon receipt of certain certificates or other documents or
satisfaction of other conditions in addition to those specified in the
Indenture, the form and terms of such certificates, documents or
conditions;
(u) if Disney has agreed to pay any additional amounts on any of the Offered
Debt Securities to any holder who is a United States Alien in respect of
any tax, assessment or governmental charge withheld or deducted, the
circumstances and procedures under which such payments will be made; and
(v) any other terms of the Offered Debt Securities not inconsistent with the
provisions of the applicable Indenture.
The applicable Prospectus Supplement will also describe the following terms
of any series of Subordinated or Senior Subordinated Debt Securities offered
hereby in respect of which this Prospectus is being delivered:
(i) the rights, if any, to defer payments of interest on the Subordinated or
Senior Subordinated Debt Securities of such series by extending the
interest payment period, and the duration of such extension; and
(ii) the subordination terms of the Subordinated or Senior Subordinated Debt
Securities of such series.
The foregoing is not intended to be an exclusive list of the terms that may
be applicable to any Offered Debt Securities and shall not limit in any respect
the ability of Disney to issue Debt Securities with terms different from or in
addition to those described above or elsewhere in this Prospectus provided that
such terms are not inconsistent with the applicable Indenture. Any such
Prospectus Supplement will also describe any special provisions for the payment
of additional amounts with respect to the Offered Debt Securities.
CONSEQUENCES OF HOLDING COMPANY STATUS
The operations of Disney are conducted almost entirely through subsidiaries.
Accordingly, the cash flow and the consequent ability to service debt of Disney,
including the Debt Securities, are dependent upon the earnings of its
subsidiaries and the distribution of those earnings to Disney, whether by
dividends, loans or otherwise. The payment of dividends and the making of loans
and advances to Disney by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries
and are subject to various business considerations. Any right of Disney to
receive assets of any of its subsidiaries upon their liquidation or
reorganization (and the consequent right of the holders of the Debt Securities
to participate in those assets) will be effectively subordinated to the claims
of that subsidiary's creditors (including trade creditors), except to the extent
that Disney is itself recognized as a creditor of such subsidiary, in which case
the claims of Disney would still be subordinate to any security interests in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by Disney.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered
securities, solely as bearer securities (with or without coupons attached) or as
both registered securities and bearer securities. Debt Securities of a series
may be issuable in whole or in part in the form of one or more global Debt
Securities, as described below under "Global Debt Securities." Unless otherwise
indicated in an applicable Prospectus Supplement, registered securities will be
issuable in denominations of $1,000 and integral multiples thereof, and bearer
securities will be issuable in denominations of $5,000 and $100,000.
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<PAGE>
Registered securities of any series will be exchangeable for other
registered securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both registered securities and as bearer securities,
at the option of the holder, subject to the terms of the applicable Indenture,
bearer securities (accompanied by all unmatured coupons, except as provided
below, and all matured coupons in default) of such series will be exchangeable
for registered securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest will be surrendered without the
coupon relating to such date for payment of interest and interest will not be
payable in respect of the registered security issued in exchange for such bearer
security, but will be payable only to the holder of such coupon when due in
accordance with the terms of the applicable Indenture. Bearer securities may not
be issued in exchange for registered securities.
Debt Securities may be presented for exchange as provided above, and unless
otherwise indicated in an applicable Prospectus Supplement, registered
securities may be presented for registration of transfer, at the office or
agency of Disney designated as registrar or co-registrar with respect to any
series of Debt Securities, without service charge and upon payment of any taxes,
assessments or other governmental charges as described in the applicable
Indenture. Such transfer or exchange will be effected on the books of the
registrar or any other transfer agent appointed by Disney upon such registrar or
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. Disney intends to initially
appoint the Trustee as registrar and the name of any different or additional
registrar designated by Disney with respect to the Offered Debt Securities will
be included in the Prospectus Supplement relating thereto. If a Prospectus
Supplement refers to any transfer agents (in addition to the registrar)
designated by Disney with respect to any series of Debt Securities, Disney may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that,
if Debt Securities of a series are issuable only as registered securities,
Disney will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable as bearer
securities, Disney will be required to maintain (in addition to the registrar) a
transfer agent in a Place of Payment for such series located outside the United
States. Disney may at any time designate additional transfer agents with respect
to any series of Debt Securities.
In the event of any partial redemption of Debt Securities of any series,
Disney will not be required to (i) issue, register the transfer of or exchange
Debt Securities of that series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on (a) if Debt Securities of the
series are issuable only as registered securities, the day of mailing of the
relevant notice of redemption, and (b) if Debt Securities of the series are
issuable as bearer securities, the day of the first publication of the relevant
notice of redemption or, if Debt Securities of the series are also issuable as
registered securities and there is no publication, the mailing of the relevant
notice of redemption; (ii) register the transfer of or exchange any registered
security, or portion thereof, called for redemption, except the unredeemed
portion of any registered security being redeemed in part; or (iii) exchange any
bearer security called for redemption, except to exchange such bearer security
for a registered security of that series and of like tenor and principal amount
that is immediately surrendered for redemption.
COVENANTS
Unless otherwise indicated in an applicable Prospectus Supplement, the
Indentures do not include covenants limiting the amount of indebtedness that may
be incurred or otherwise restricting Disney's ability to enter into a highly
leveraged transaction, including a reorganization, restructuring, merger or
similar transaction involving Disney that may adversely affect the holders of
the Debt Securities, if such transaction is a permissible consolidation, merger
or similar transaction. In addition, unless otherwise specified in an applicable
Prospectus Supplement, the Indentures do not afford the holders of the Debt
Securities the right to require Disney to repurchase or redeem the Debt
Securities in the event of a highly leveraged transaction. See "Mergers and Sale
of Assets."
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PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on registered securities will be made at
the office of such paying agent or paying agents as Disney may designate from
time to time, except that at the option of Disney payment of principal or
interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on registered securities will be made to
the person in whose name such registered security is registered at the close of
business on the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on bearer securities will be payable,
subject to any applicable laws and regulations, at the offices of such paying
agents outside the United States as Disney may designate from time to time, or
by check or by transfer to an account maintained by the payee outside the United
States. Unless otherwise indicated in an applicable Prospectus Supplement, any
payment of interest on any bearer securities will be made only against surrender
of the coupon relating to such interest installment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as Disney's sole paying agent for payments with
respect to Debt Securities which are issuable solely as registered securities
and as Disney's paying agent in the Borough of Manhattan, The City of New York,
for payments with respect to Debt Securities (subject to any limitations
described in any applicable Prospectus Supplement) which are issuable as bearer
securities. Any paying agents outside the United States and any other paying
agents in the United States initially designated by Disney for the Offered Debt
Securities will be named in an applicable Prospectus Supplement. Disney may at
any time designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts, except that, if Debt Securities of a series are issuable only as
registered securities, Disney will be required to maintain a paying agent in
each Place of Payment for such series and, if Debt Securities of a series are
issuable as bearer securities, Disney will be required to maintain (i) a paying
agent in the Borough of Manhattan, The City of New York for payments with
respect to any registered securities of the series (and for payments with
respect to bearer securities of the series in the circumstances described in the
Indenture, but not otherwise), and (ii) a paying agent in a Place of Payment
located outside the United States where Debt Securities of such series and any
related coupons may be presented and surrendered for payment.
All moneys paid by Disney to a paying agent for the payment of principal of
or interest, if any, on any Debt Security which remains unclaimed at the end of
two years after such principal or interest shall have become due and payable
will be repaid to Disney, and the holder of such Debt Security or any coupon
will thereafter look only to Disney for payment thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole to the Depositary for such Debt Security or to a
nominee or successor of such Depositary. If any Debt Securities of a series are
issuable in global form, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
global Debt Security may exchange such interests for definitive Debt Securities
of such series and of like tenor and principal amount in any authorized form and
denomination, the manner of payment of principal of and interest, if any, on any
such global Debt Security and the specific terms of the depositary arrangement
with respect to any such global Debt Security.
MERGERS AND SALES OF ASSETS
Each Indenture provides that Disney may not consolidate with or merge into
any other person or convey, transfer or lease its properties and assets
substantially as an entirety to another person, unless, among other things, (i)
the resulting, surviving or transferee person (if other than Disney) is a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia
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and such person expressly assumes all obligations of Disney under the applicable
Debt Securities and the Indenture, and (ii) immediately after giving effect to
such transaction, no event which is, or after notice or passage of time or both
would be, an Event of Default (any such event, a "Default") or Event of Default
shall have occurred or be continuing under the Indenture. Upon the assumption of
Disney's obligations by a person to whom such properties or assets are conveyed
or transferred, Disney shall be discharged from all obligations under the
applicable Debt Securities and the applicable Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Debt
Securities outstanding thereunder individually, the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Debt
Securities of such series may declare the principal amount (or, if any of the
Debt Securities of such series are Discount Securities, such portion of the
principal amount of such Debt Securities as may be specified by the terms
thereof) of the Debt Securities of such series to be immediately due and
payable. Under certain circumstances, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series may rescind
such a declaration.
Under each Indenture, an Event of Default is defined as, with respect to
each series of Debt Securities outstanding thereunder individually, any of the
following: (i) default in payment of the principal of any Debt Security of such
series; (ii) default in payment of any interest on any Debt Security of such
series when due, continuing for 30 days; (iii) failure by Disney to comply with
its other agreements in the Debt Securities of such series or such Indenture for
the benefit of the holders of Debt Securities of such series upon the receipt by
Disney of notice of such Default by the Trustee or the holders of at least 25%
in aggregate principal amount of the outstanding Debt Securities of such series
and Disney's failure to cure such Default within 60 days after receipt by Disney
of such notice; (iv) certain events of bankruptcy or insolvency; and (v) any
other Event of Default set forth in an applicable Prospectus Supplement.
The Trustee shall give notice to holders of the Debt Securities of any
continuing Default known to the Trustee within 90 days after the occurrence
thereof; PROVIDED, that the Trustee may withhold such notice, as to any Default
other than a payment Default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of such
series; PROVIDED that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of Debt Securities, no holder will have any right to
pursue any remedy with respect to the Indenture or the Debt Securities, unless
(i) such holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of such series;
(ii) the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series shall have made a written request to
the Trustee to pursue such remedy; (iii) such holder or holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of such series have not given the Trustee a direction inconsistent with such
request within 60 days after receipt of such request; and (v) the Trustee shall
have failed to comply with the request within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt Security
or coupon to receive payment of the principal of and interest in respect of such
Debt Security or payment of such coupon on the date specified in such Debt
Security or coupon representing such installment of interest as the fixed date
on which an amount equal to the principal of such Debt Security or an
installment of principal thereof or interest thereon is due and payable (the
"Stated Maturity" or "Stated Maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a
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majority in aggregate principal amount of the outstanding Debt Securities of any
series may waive an existing Default with respect to such series and its
consequences, other than (i) any Default in any payment of the principal of, or
interest on, any Debt Security of such series or (ii) any Default in respect of
certain covenants or provisions in the Indenture which may not be modified
without the consent of the holder of each outstanding Debt Security of such
series affected as described in "Modification and Waiver," below.
Each Indenture provides that Disney shall deliver to the Trustee within 120
days after the end of each fiscal year of Disney an officers' certificate
stating whether or not the signers know of any Default that occurred during such
period.
MODIFICATION AND WAIVER
Disney and the applicable Trustee may execute a supplemental indenture
without the consent of the holders of the Debt Securities or any related coupons
(i) to add to the covenants, agreements and obligations of Disney for the
benefit of the holders of all the Debt Securities of any series or to surrender
any right or power conferred in the applicable Indenture upon Disney; (ii) to
evidence the succession of another corporation to Disney and the assumption by
it of the obligations of Disney under the applicable Indenture and the Debt
Securities; (iii) to provide that bearer securities may be registrable as to
principal, to change or eliminate any restrictions (including restrictions
relating to payment in the United States) on the payment of principal of or
interest, if any, on bearer securities, to permit bearer securities to be issued
in exchange for registered securities, to permit bearer securities to be issued
in exchange for bearer securities of other authorized denominations or to permit
the issuance of Debt Securities in uncertificated form; (iv) to establish the
form or terms of Debt Securities of any series or coupons as permitted by the
applicable Indenture; (v) to provide for the acceptance of appointment under the
applicable Indenture of a successor Trustee with respect to the Debt Securities
of one or more series and to add to or change any provisions of such Indenture
as shall be necessary to provide for or facilitate the administration of the
trusts by more than one Trustee; (vi) to cure any ambiguity, defect or
inconsistency; (vii) to add to, change or eliminate any provisions (which
addition, change or elimination may apply to one or more series of Debt
Securities), PROVIDED that any such addition, change or elimination neither (a)
applies to any Debt Security of any series created prior to the execution of
such supplemental indenture and is entitled to the benefit of such provision nor
(b) modifies the rights of the holder of any such Debt Security with respect to
such provision; (viii) to secure the Debt Securities; or (ix) to make any other
change that does not adversely affect the rights of any Securityholder.
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of the series affected by such supplemental indenture, Disney and the Trustee
may also execute a supplemental indenture to add provisions to, or change in any
manner or eliminate any provisions of, the Indenture with respect to such series
of Debt Securities or modify in any manner the rights of the holders of the Debt
Securities of such series and any related coupons under such Indenture; PROVIDED
that no such supplemental indenture will, without the consent of the holder of
each such outstanding Debt Security affected thereby (i) change the stated
maturity of the principal of, or any installment of principal or interest on,
any such Debt Security or any premium payable upon redemption thereof, or reduce
the amount of principal of any Debt Security that is a Discount Security and
that would be due and payable upon declaration of acceleration of maturity
thereof; (ii) reduce the principal amount of, or the rate of interest on, any
such Debt Security; (iii) change the place or currency of payment of principal
or interest, if any, on any such Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any such
Debt Security; (v) reduce the above-stated percentage of holders of Debt
Securities of any series necessary to modify or amend such Indenture; (vi)
modify the foregoing requirements or reduce the percentage in principal amount
of outstanding Debt Securities of any series necessary to waive any covenant or
past default; or (vii) in the case of Senior Subordinated or Subordinated Debt
Securities, amend or modify any of the provisions of such Indenture relating to
subordination of the Debt Securities in any manner adverse to the holders of
such Debt Securities. Holders of not less than a majority in principal amount of
the outstanding Debt Securities of any series may waive certain past Defaults
and may waive compliance by Disney with certain of the restrictive covenants
described above with respect to the Debt Securities of such series.
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DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
Indenture provides that Disney may satisfy and discharge obligations thereunder
with respect to the Debt Securities of any series by delivering to the Trustee
for cancellation all outstanding Debt Securities of such series or depositing
with the Trustee, after such outstanding Debt Securities have become due and
payable, cash sufficient to pay at Stated Maturity all of the outstanding Debt
Securities of such series and paying all other sums payable under the Indenture
with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that: Disney (a) shall be discharged from
its obligations in respect of the Debt Securities of such series ("defeasance
and discharge"), or (b) may cease to comply with certain restrictive covenants
("covenant defeasance") including those described under "Mergers and Sales of
Assets" and any such omission shall not be an Event of Default with respect to
the Debt Securities of such series, in each case at any time prior to the Stated
Maturity or redemption thereof, when Disney has irrevocably deposited with the
Trustee, in trust, (i) sufficient funds in the currency or currency unit in
which the Debt Securities are denominated to pay the principal of (and premium,
if any) and interest to Stated Maturity (or redemption) on, the Debt Securities
of such series, or (ii) such amount of direct obligations of, or obligations the
principal of (and premium, if any) and interest on which are fully guaranteed
by, the government which issued the currency in which the Debt Securities are
denominated, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any) and interest to Stated Maturity (or
redemption) on, the Debt Securities of such series. Such defeasance and
discharge and covenant defeasance are conditioned upon, among other things,
Disney's delivery of an opinion of counsel to the effect that (i) in the case of
covenant defeasance, the holders of the Debt Securities of such series will not
recognize income, gain or loss for United States Federal income tax purposes as
a result of such defeasance, and will be subject to tax in the same manner as if
no covenant defeasance had occurred and (ii) in the case of defeasance and
discharge, either the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or there has been a change in applicable
federal income tax law, and based thereon, the holders of the Debt Securities of
such series will not recognize income, gain or loss for United States Federal
income tax purposes as a result of such defeasance. Upon such defeasance and
discharge, the holders of the Debt Securities of such series shall no longer be
entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the Debt Securities of such series and
replacement of lost, stolen or mutilated Debt Securities and shall look only to
such deposited funds or obligations for payment.
THE TRUSTEES
The Senior Debt Securities Trustee is a national banking association, is a
participating lender under various credit arrangements with Disney's subsidiary,
Disney Enterprises, Inc., and its subsidiaries and is also the fiscal agent with
respect to certain debt securities of Disney Enterprises, Inc. The Senior Debt
Securities Trustee is also an affiliate of the administrative agent under
Disney's credit agreements. Each of the Trustees is a lender under Disney's
credit agreements. Each Trustee will be permitted to engage in other
transactions with Disney, Disney Enterprises, Inc., and each of their respective
subsidiaries; HOWEVER, if any Trustee acquires any conflicting interest, it must
eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
Disney may issue, from time to time, shares of one or more series or classes
of its preferred stock (the "Preferred Stock"). The following description sets
forth certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of any series of
Preferred Stock and the extent, if any, to which such general provisions may
apply to the series of Preferred Stock so offered will be described in the
Prospectus Supplement relating to such Preferred Stock. The following summary of
certain provisions of the Preferred Stock does not purport to be complete and is
subject to, and is qualified in its entirety by express reference to, the
provisions of Disney's Restated Certificate of Incorporation (the "Disney
Certificate of Incorporation") and the Certificate of Designation relating to a
specific series of the Preferred Stock (the "Certificate of Designation"), which
will be in the form filed as an exhibit to, or incorporated by
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reference in, the Registration Statement of which this Prospectus is a part at
or prior to the time of issuance of such series of Preferred Stock.
GENERAL
Under the Disney Certificate of Incorporation, Disney has the authority to
issue 100,000,000 shares of Preferred Stock. As of the date hereof, there have
been reserved for issuance 7,000,000 shares of Preferred Stock designated as
Series R Preferred Stock that may be issued solely pursuant to the Disney Rights
Plan. See "Description of Common Stock--Rights Plan." No shares of Series R
Preferred Stock are currently outstanding.
The Board of Directors of Disney is authorized to issue shares of Preferred
Stock, in one or more series or classes, and to fix for each such series voting
powers and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions as are
permitted by the Delaware General Corporation Law.
The Board of Directors of Disney shall be authorized to determine for each
series of Preferred Stock, and the Prospectus Supplement shall set forth with
respect to such series: (i) the designation of such shares and the number of
shares that constitute such series, (ii) the dividend rate (or the method of
calculation thereof), if any, on the shares of such series and the priority as
to payment of dividends with respect to other classes or series of capital stock
of Disney, (iii) the dividend periods (or the method of calculation thereof),
(iv) the voting rights of the shares, (v) the liquidation preference and the
priority as to payment of such liquidation preference with respect to other
classes or series of capital stock of Disney and any other rights of the shares
of such series upon any liquidation or winding-up of Disney, (vi) whether or not
and on what terms the shares of such series will be subject to redemption or
repurchase at the option of Disney, (vii) whether and on what terms the shares
of such series will be convertible into or exchangeable for other debt or equity
securities, (viii) whether depositary shares representing shares of such series
of Preferred Stock will be offered and, if so, the fraction of a share of such
series of Preferred Stock represented by each depositary share (see "Description
of Depositary Shares" below), (ix) whether the shares of such series of
Preferred Stock will be listed on a securities exchange, (x) any special United
States Federal income tax considerations applicable to such series, and (xi) the
other rights and privileges and any qualifications, limitations or restrictions
of such rights or privileges of such series.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors of Disney out of funds of Disney legally
available therefor, an annual cash dividend payable at such dates and at such
rates, if any, per share per annum as set forth in the applicable Prospectus
Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock will rank junior as to dividends to any preferred
stock that may be issued in the future that is expressly senior as to dividends
to such Preferred Stock. If at any time Disney has failed to pay accrued
dividends on any such senior shares at the time such dividends are payable,
Disney may not pay any dividend on the junior Preferred Stock or redeem or
otherwise repurchase shares of junior Preferred Stock until such accumulated but
unpaid dividends on such senior shares have been paid or set aside for payment
in full by Disney.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in common stock or other capital stock ranking junior to
the Preferred Stock of any series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment, nor shall any other distribution be
declared or made upon the common stock, or any other capital stock of Disney
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends, nor shall any common stock or any other capital stock of Disney
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by Disney (except by conversion into or exchange
for other capital stock of Disney ranking junior to the Preferred Stock of such
series as to dividends) unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on the Preferred Stock of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for all past dividend periods
and the then current dividend period and (ii) if such series of Preferred Stock
does not have a cumulative dividend, full dividends on the Preferred Stock of
such series have
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been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period; provided, however, that any monies theretofore deposited in any sinking
fund with respect to any preferred stock in compliance with the provisions of
such sinking fund may thereafter be applied to the purchase or redemption of
such preferred stock in accordance with the terms of such sinking fund,
regardless of whether at the time of such application full cumulative dividends
upon shares of the Preferred Stock outstanding on the last dividend payment date
shall have been paid or declared and set apart for payment; and provided,
further, that any such junior or parity preferred stock or common stock may be
converted into or exchanged for stock of Disney ranking junior to the Preferred
Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable Prospectus
Supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable Prospectus Supplement.
LIQUIDATION RIGHTS
Unless otherwise set forth in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of Disney, the holders of
shares of each series of Preferred Stock are entitled to receive out of assets
of Disney available for distribution to stockholders, before any distribution of
assets is made to holders of (i) any other shares of preferred stock ranking
junior to such series of Preferred Stock as to rights upon liquidation,
dissolution or winding up and (ii) shares of common stock, liquidating
distributions per share in the amount of the liquidation preference specified in
the applicable Prospectus Supplement for such series of Preferred Stock plus any
dividends accrued and accumulated but unpaid to the date of final distribution;
but the holders of each series of Preferred Stock will not be entitled to
receive the liquidating distribution of, plus such dividends on, such shares
until the liquidation preference of any shares of Disney's capital stock ranking
senior to such series of the Preferred Stock as to the rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. If upon any liquidation, dissolution
or winding up of Disney, the amounts payable with respect to the Preferred
Stock, and any other Preferred Stock ranking as to any such distribution on a
parity with the Preferred Stock are not paid in full, the holders of the
Preferred Stock and such other parity preferred stock will share ratably in any
such distribution of assets in proportion to the full respective preferential
amount to which they are entitled. Unless otherwise specified in a Prospectus
Supplement for a series of Preferred Stock, after payment of the full amount of
the liquidating distribution to which they are entitled, the holders of shares
of Preferred Stock will not be entitled to any further participation in any
distribution of assets by Disney. Neither a consolidation or merger of Disney
with another corporation nor a sale of securities shall be considered a
liquidation, dissolution or winding up of Disney.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting right except as set
forth below or in the applicable Prospectus Supplement or as otherwise from time
to time required by law. Whenever dividends on any applicable series of
Preferred Stock shall be in arrears for the equivalent of six quarterly dividend
periods, whether or not consecutive, the holders of shares of such series of
Preferred Stock (voting separately as a class with all other series of preferred
stock then entitled to such voting rights) will be entitled to vote for the
election of two of the authorized number of directors of Disney at the next
annual meeting of stockholders and at each subsequent meeting until all
dividends accumulated on such series of Preferred Stock shall have been fully
paid or set apart for payment. The term of office of all directors elected by
the holders of such Preferred Stock shall
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terminate immediately upon the termination of the right of the holders of such
Preferred Stock to vote for directors. Unless otherwise set forth in the
applicable Prospectus Supplement, holders of shares of Preferred Stock will have
one vote for each share held.
So long as any shares of any series of Preferred Stock remain outstanding,
Disney shall not, without the consent of holders of at least two-thirds of the
shares of such series of Preferred Stock outstanding at the time, voting
separately as a class with all other series of preferred stock of Disney upon
which like voting rights have been conferred and are exercisable, (i) issue or
increase the authorized amount of any class or series of capital stock ranking
prior to the outstanding Preferred Stock as to dividends or upon liquidation or
(ii) amend, alter or repeal the provisions of Disney's Certificate of
Incorporation or of the resolutions contained in the Certificate of Designation
relating to such series of Preferred Stock, whether by merger, consolidation or
otherwise, so as to materially adversely affect any power, preference or special
right of such series of Preferred Stock or the holders thereof; PROVIDED,
HOWEVER, that any increase in the amount of the authorized common stock or
authorized preferred stock or any increase or decrease in the number of shares
of any series of preferred stock or the creation and issuance of other series of
common stock or preferred stock ranking on a parity with or junior to Preferred
Stock as to dividends and upon liquidation, dissolution or winding up shall not
be deemed to materially adversely affect such powers, preferences or special
rights.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. Shares of Preferred Stock redeemed or otherwise
reacquired by Disney shall resume the status of authorized and unissued shares
of preferred stock undesignated as to series, and shall be available for
subsequent issuance. There are no restrictions on repurchase or redemption of
the Preferred Stock while there is any arrearage on sinking fund installments
except as may be set forth in an applicable Prospectus Supplement. Payment of
dividends on any series of Preferred Stock may be restricted by loan agreements,
indentures and other transactions entered into by Disney. Any material
contractual restrictions on dividend payments will be described or incorporated
by reference in the applicable Prospectus Supplement.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement, the Disney
Certificate of Incorporation or the applicable Certificate of Designation or as
otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock will be
designated in the applicable Prospectus Supplement.
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DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Disney may, at its option, elect to offer fractional shares rather than full
shares of the Preferred Stock of a series. In the event such option is
exercised, Disney will issue receipts for Depositary Shares, each of which will
represent a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under one or more Deposit Agreements (each, a "Deposit
Agreement") among Disney, a depositary to be named in the applicable Prospectus
Supplement (the "Depositary"), and the holders from time to time of depositary
receipts issued thereunder. Subject to the terms of the applicable Deposit
Agreement, each holder of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including, as applicable, dividend, voting, redemption,
subscription and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of the
related series of Preferred Stock.
The following description sets forth certain general terms and provisions of
the Depositary Shares to which any Prospectus Supplement may relate. The
particular terms of the Depositary Shares to which any Prospectus Supplement may
relate and the extent, if any, to which such general provisions may apply to the
Depositary Shares so offered will be described in the applicable Prospectus
Supplement. The forms of Deposit Agreement and Depositary Receipt are or will be
filed as exhibits to the Registration Statement. The following summary of
certain provisions of the Depositary Shares and Deposit Agreement does not
purport to be complete and is subject to, and is qualified in its entirety by
express reference to, all the provisions of the Deposit Agreement and the
applicable Prospectus Supplement, including the definitions therein of certain
terms.
Immediately following Disney's issuance of shares of a series of Preferred
Stock that will be offered as fractional shares, Disney will deposit such shares
with the Depositary, which will then issue and deliver the Depositary Receipts
to the purchasers thereof. Depositary Receipts will only be issued evidencing
whole Depositary Shares. A Depositary Receipt may evidence any number of whole
Depositary Shares.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of Disney, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared thereafter
without unreasonable delay, and such temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at Disney's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the related series of Preferred Stock to
the record holders of Depositary Shares relating to such series of Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto in proportion to the number of Depositary Shares owned by such
holders, unless the Depositary determines that such distribution cannot be made
proportionately among such holders or that it is not feasible to make such
distributions, in which case the Depositary may, with the approval of Disney,
adopt such method as it deems equitable and practicable for the purpose of
effecting such distribution, including the sale (at public or private sale) of
the securities or property thus received, or any part thereof, at such place or
places and upon such terms as it may deem proper.
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by Disney or the Depositary on account of taxes
or other governmental charges.
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REDEMPTION OF DEPOSITARY SHARES
If any series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from any redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The redemption
price per Depositary Share will be equal to the applicable fraction of the
redemption price per share payable with respect to such series of the Preferred
Stock. If Disney redeems shares of a series of Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of Depositary Shares representing the shares of Preferred Stock so redeemed. If
less than all the Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by lot or substantially equivalent method
determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption, upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares. Any funds deposited by Disney with the Depositary for any
Depositary Shares that the holders thereof fail to redeem will be returned to
Disney after a period of two years from the date such funds are so deposited.
VOTING THE UNDERLYING PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
the Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such series of Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same date as the
record date for the related series of Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the number of shares of the series of Preferred Stock represented by such
holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote or cause to be voted the number of shares of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, provided the Depositary receives such instructions sufficiently in
advance of such meeting to enable it to so vote or cause to be voted the shares
of Preferred Stock, and Disney will agree to take all reasonable action that may
be deemed necessary by the Depositary in order to enable the Depositary to do
so. The Depositary will abstain from voting shares of the Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing such Preferred Stock.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary and upon payment of the taxes, charges and fees provided for in
the Deposit Agreement and subject to the terms thereof, the holder of the
Depositary Shares evidenced thereby is entitled to delivery at such office, to
or upon his or her order, of the number of whole shares of the related series of
Preferred Stock and any money or other property, if any, represented by such
Depositary Shares. Holders of Depositary Shares will be entitled to receive
whole shares of the related series of Preferred Stock, but holders of such whole
shares of Preferred Stock will not thereafter be entitled to deposit such shares
of Preferred Stock with the Depositary or to receive Depositary Shares therefor.
If the Depositary Receipts delivered by the holder evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of the related series of Preferred Stock to be withdrawn,
the Depositary will deliver to such holder or upon his or her order at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares of any
series and any provision of the applicable Deposit Agreement may at any time and
from time to time be amended by agreement between Disney and the Depositary.
However, any amendment that materially adversely alters the rights of the
holders of Depositary Shares of any series will not be effective unless such
amendment has been approved by the holders of
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at least a majority of the Depositary Shares of such series then outstanding.
Every holder of a Depositary Receipt at the time such amendment becomes
effective will be deemed, by continuing to hold such Depositary Receipt, to be
bound by the Deposit Agreement as so amended. Notwithstanding the foregoing, in
no event may any amendment impair the right of any holder of any Depositary
Shares, upon surrender of the Depositary Receipts evidencing such Depositary
Shares and subject to any conditions specified in the Deposit Agreement, to
receive shares of the related series of Preferred Stock and any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law. The Deposit Agreement may be terminated by Disney
at any time upon not less than 60 days prior written notice to the Depositary,
in which case, on a date that is not later than 30 days after the date of such
notice, the Depositary shall deliver or make available for delivery to holders
of Depositary Shares, upon surrender of the Depositary Receipts evidencing such
Depositary Shares, such number of whole or fractional shares of the related
series of Preferred Stock as are represented by such Depositary Shares. The
Deposit Agreement shall automatically terminate after all outstanding Depositary
Shares have been redeemed or there has been a final distribution in respect of
the related series of Preferred Stock in connection with any liquidation,
dissolution or winding up of Disney and such distribution has been distributed
to the holders of Depositary Shares.
CHARGES OF DEPOSITARY
Disney will pay all transfer and other taxes and the governmental charges
arising solely from the existence of the depositary arrangements. Disney will
pay the charges of the Depositary, including charges in connection with the
initial deposit of the related series of Preferred Stock and the initial
issuance of the Depositary Shares and all withdrawals of shares of the related
series of Preferred Stock, except that holders of Depositary Shares will pay
transfer and other taxes and governmental charges and such other charges as are
expressly provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Disney written notice
of its election to do so, and Disney may at any time remove the Depositary, any
such resignation or removal to take effect upon the appointment of a successor
Depositary, which successor Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from Disney that are delivered to the Depositary and which
Disney is required to furnish to the holders of the related Preferred Stock.
The Depositary's corporate trust office will be identified in the applicable
Prospectus Supplement. Unless otherwise set forth in the applicable Prospectus
Supplement, the Depositary will act as transfer agent and registrar for
Depositary Receipts and if shares of a series of Preferred Stock are redeemable,
the Depositary will act as redemption agent for the corresponding Depositary
Receipts.
DESCRIPTION OF COMMON STOCK
Disney may issue, from time to time, shares of its common stock (the "Common
Stock"), the general terms and provisions of which are summarized below. This
summary does not purport to be complete and is subject to, and is qualified in
its entirety by express reference to, the provisions of the Disney Certificate
of Incorporation, Disney's Bylaws and the applicable Prospectus Supplement.
AUTHORIZED SHARES
Under the Disney Certificate of Incorporation, Disney has the authority to
issue 3,600,000,000 shares of Common Stock.
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DIVIDENDS
Subject to any preferential rights of any series of preferred stock, holders
of shares of Common Stock will be entitled to receive dividends on such stock
out of assets legally available for distribution when, as and if authorized and
declared by Disney's Board of Directors. The payment of dividends on the Common
Stock will be a business decision to be made by Disney's Board of Directors from
time to time based upon the results of operations and financial condition of
Disney and such other factors as Disney's Board of Directors considers relevant.
Payment of dividends on the Common Stock may be restricted by loan agreements,
indentures and other transactions entered into by Disney from time to time. The
applicable Prospectus Supplement will describe any material contractual
restrictions on dividend payments.
VOTING RIGHTS
Holders of Common Stock are entitled to one vote per share on all matters
voted on generally by the stockholders, including the election of directors,
and, except as otherwise required by law or except as provided with respect to
any series of preferred stock, the holders of such shares possess all voting
power. The Disney Certificate of Incorporation does not provide for cumulative
voting for the election of directors. As a result, under the Delaware General
Corporation Law, the holders of more than one-half of the outstanding shares of
Common Stock generally will be able to elect all the directors of Disney then
standing for election and holders of the remaining shares will not be able to
elect any director.
LIQUIDATION RIGHTS
Subject to any preferential rights of any series of preferred stock, holders
of shares of Common Stock are entitled to share ratably in the assets of Disney
legally available for distribution to its stockholders in the event of its
liquidation, dissolution or winding up.
ABSENCE OF OTHER RIGHTS
Holders of Common Stock have no preferences, preemptive, conversion or
exchange rights.
MISCELLANEOUS
The Common Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable.
TRANSFER AGENT AND REGISTRAR
The principal transfer agent and registrar for the Common Stock is Disney.
RIGHTS PLAN
In November 1995, Disney adopted a stockholders' rights plan (the "Disney
Rights Plan") and, in connection therewith, entered into a Rights Agreement
dated as of November 8, 1995, between Disney and The Bank of New York, as rights
agent (the "Disney Rights Agreement"). To implement the Disney Rights Plan,
Disney's Board of Directors authorized the issuance of one Disney Right (as
defined below) (one-third of one Disney Right following the stock split effected
by Disney in June 1998) for each share of Common Stock issued at or following
the effective time of the Company's acquisition of ABC, Inc. and until the
earlier of the Distribution Date (as defined below) or the date on which the
Disney Rights expire or are redeemed. Each "Disney Right" entitles the
registered holder thereof to purchase from Disney one one-hundredth (1/100) of a
share of Disney's Series R Preferred Stock at an initial purchase price of
$350.00, subject to adjustment. All terms and conditions of the Disney Rights
and the Series R Preferred Stock are contained in the Disney Rights Agreement
and the Disney Certificate of Incorporation.
The Distribution Date is defined as the earlier to occur of (i) the tenth
day following a public announcement that a person or group of affiliated or
associated persons (each, an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 25% or more of the outstanding Common
Stock (the "Stock Acquisition Date") or (ii) a date fixed by Disney's Board of
Directors which is not later than
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the nineteenth business day after the commencement by any person or group of, or
the first public announcement of the intent of any person or group to commence,
a tender or exchange offer which would result in that person or group owning 25%
or more of the outstanding Common Stock.
Until the close of business on the Distribution Date, the Disney Rights will
be represented by and transferred only with the Common Stock, and the Disney
Rights are not exercisable until the Distribution Date. The Disney Rights will
expire at the close of business on June 30, 1999, unless redeemed earlier as
described below.
The Series R Preferred Stock will be nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of Preferred
Stock, subordinate to all other series of Preferred Stock. The Series R
Preferred Stock may not be issued except upon exercise of the Disney Rights.
Each share of Series R Preferred Stock will be entitled to receive, when, as and
if declared by Disney's Board of Directors, (i) a cash dividend in an amount per
share equal to 400 times the aggregate per share amount of all cash dividends
declared or paid on the Common Stock and (ii) a quarterly dividend in an amount
equal to $1.00 per share less the per share amount of all cash dividends
declared on the Series R Preferred Stock pursuant to the preceding clause (i)
since the last quarterly dividend. In addition, the Series R Preferred Stock is
entitled to 400 times any other cash or non-cash distribution declared on the
Common Stock (other than cash dividends payable pursuant to the immediately
preceding sentence and distributions of Disney's equity securities or debt
securities convertible into equity securities of Disney), payable to the holders
of Series R Preferred Stock in like kind. In the event of liquidation, the
holders of Series R Preferred Stock will be entitled to receive a liquidation
payment in an amount equal to the greater of $100.00 per share (plus an amount
equal to accumulated and unpaid dividends and distributions) and 400 times the
liquidation payment made per share of Common Stock. Each share of Series R
Preferred Stock will have 400 votes and shall be entitled to vote together with
the Common Stock and not as a separate class unless otherwise required by law or
the Disney Certificate of Incorporation. In the event of any merger,
consolidation or other transaction in which common shares are exchanged, each
share of Series R Preferred Stock will be entitled to receive 400 times, subject
to adjustment, the amount received per share of Common Stock.
The rights of the Series R Preferred Stock as to dividends, voting rights
and liquidation are protected by antidilution provisions. In addition, the
Purchase Price payable and the number of shares of Series R Preferred Stock or
other securities or property issuable upon exercise of the Disney Rights are
subject to adjustment from time to time to prevent dilution in the event of a
stock dividend on, or a subdivision, split, reverse split, combination,
consolidation or reclassification of, the Series R Preferred Stock.
If (i) any person becomes the beneficial owner of 25% or more of the then
outstanding shares of Common Stock, other than pursuant to a purchase or series
of related purchases of shares of Common Stock that Disney's Board of Directors,
taking into account the long-term value of Disney and all other factors that
Disney's Board of Directors considers relevant, determines to be fair and
otherwise in the best interests of the holders of Common Stock (a "Permitted
Transaction"), or (ii) any Acquiring Person or any of its affiliates or
associates engages in one or more "self-dealing" transactions as described in
the Disney Rights Agreement, then each holder of a Disney Right, other than the
Acquiring Person, will have the right to receive, upon payment of the Purchase
Price, in lieu of Series R Preferred Stock, a number of shares of Common Stock
having a market value equal to twice the Purchase Price. To the extent that
insufficient shares of Common Stock are available for the exercise in full of
the Disney Rights, holders of Disney Rights will receive upon exercise shares of
Common Stock to the extent available and then cash, assets or other securities
of Disney (which may be accompanied by a reduction in the Purchase Price), in
proportions determined by Disney, so that the aggregate net value received is
equal to twice the Purchase Price. Disney Rights are not exercisable following
the acquisition of shares of Common Stock by an Acquiring Person as described in
this paragraph until the expiration of the period during which the Disney Rights
may be redeemed as described below. In addition, after the occurrence of an
event described in the first sentence of this paragraph, Disney Rights that are
(or, under certain circumstances, Disney Rights that were) beneficially owned by
an Acquiring Person will be null and void.
Unless the Disney Rights are redeemed earlier, if, after the Stock
Acquisition Date, Disney is acquired in a merger or other business combination
(in which Disney is not the surviving corporation or in which any shares of
Common Stock are converted or exchanged) or more than 50% of the assets or
earning power of Disney and its
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subsidiaries (taken as a whole) are sold or transferred in one transaction or a
series of related transactions, the Disney Rights Agreement provides that proper
provision shall be made so that each holder of record of a Disney Right will
from and after that time have the right to receive, upon payment of the Purchase
Price, that number of shares of common stock of the acquiring company which has
a market value at the time of such transaction equal to twice the Purchase
Price.
Fractions of shares of Series R Preferred Stock may, at the election of
Disney, be evidenced by depositary receipts. Disney may also issue cash in lieu
of fractional shares of Series R Preferred Stock which are not integral
multiples of one one-hundredth of a share.
At any time until ten days following the Stock Acquisition Date (subject to
extension by Disney's Board of Directors), Disney's Board of Directors may cause
Disney to redeem the Disney Rights in whole, but not in part, at a price of $.01
per Disney Right, subject to adjustment to reflect any stock split, stock
dividend or similar transaction. Immediately upon the action of Disney's Board
of Directors authorizing redemption of the Disney Rights, the right to exercise
the Disney Rights will terminate, and the holders of the Disney Rights will only
be entitled to receive the redemption price without any interest thereon.
As long as the Disney Rights are redeemable, Disney may, except with respect
to the redemption price, the number of one one-hundredths of a share of Series R
Preferred Stock for which a Disney Right is exercisable, or the date of
expiration of the Disney Rights, amend the Disney Rights in any manner,
including an amendment to extend the time period in which the Disney Rights may
be redeemed. At any time when the Disney Rights are not redeemable, subject to
the foregoing exceptions and except for certain limitations regarding amendments
of time periods (including the time period during which the Disney Rights may be
redeemed), Disney may amend the Disney Rights in any manner that does not
adversely affect the interests of holders of the Disney Rights as such.
Until a Disney Right is exercised, the holder, as such, will have no rights
as a stockholder of Disney, including, without limitation, the right to vote or
to receive dividends.
The foregoing description of the Disney Rights does not purport to be
complete and is qualified in its entirety by reference to the Disney Rights
Agreement, which is incorporated by reference as an exhibit to the Registration
Statement of which this Prospectus is a part.
CERTAIN ANTI-TAKEOVER EFFECTS
GENERAL. Certain provisions of the Disney Certificate of Incorporation and
the Delaware General Corporation Law (the "DGCL") may have the effect of
impeding the acquisition of control of Disney by means of a tender offer, a
proxy fight, open market purchases or otherwise in a transaction not approved by
Disney's Board of Directors. The provisions described below have the effect of
reducing the vulnerability of Disney to an unsolicited proposal for the
restructuring or sale of all or substantially all of the assets of Disney or an
unsolicited takeover attempt which is unfair to Disney stockholders. The summary
of such provisions set forth below does not purport to be complete and is
qualified in its entirety by reference to the Disney Certificate of
Incorporation and the DGCL.
Disney's Board of Directors has no present intention to introduce additional
measures that might have an anti-takeover effect; however, Disney's Board of
Directors expressly reserves the right to introduce such measures in the future.
CLASSIFIED BOARD UNTIL 2001. The Disney Certificate of Incorporation
provides that Disney's Board of Directors shall consist of not less than nine
nor more than 21 directors, with the exact number of directors to be determined
from time to time by Disney's Board of Directors. Disney's Board of Directors is
currently divided into three classes, and each director who was elected during
the annual meeting of Disney's stockholders in 1998 or prior thereto will serve
for the full three-year term for which he or she was elected. Following the
annual meeting of Disney's stockholders in 1998, however, the Disney Certificate
of Incorporation provides that each newly elected director shall serve only
until the first annual meeting following the annual meeting at which he or she
is elected, which will have the effect of phasing out the classification of
Disney's Board of Directors. Commencing with the annual meeting of Disney's
stockholders in 2001, Disney's Certificate of Incorporation
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provides that the foregoing classification of Disney's Board of Directors shall
cease, and all directors shall be of one class.
BUSINESS COMBINATIONS. Section 203 of the DGCL restricts a wide range of
transactions ("business combinations") between a corporation and an interested
stockholder. An "interested stockholder" is, generally, any person who
beneficially owns, directly or indirectly, 15% or more of the corporation's
outstanding voting stock. Business combinations are broadly defined to include
(i) mergers or consolidations with, (ii) sales or other dispositions of more
than 10% of the corporation's assets to, (iii) certain transactions resulting in
the issuance or transfer of any stock of the corporation or any subsidiary to,
(iv) certain transactions resulting in an increase in the proportionate share of
stock of the corporation or any subsidiary owned by, or (v) receipt of the
benefit (other than proportionately as a stockholder) of any loans, advances or
other financial benefits by, an interested stockholder. Section 203 provides
that an interested stockholder may not engage in a business combination with the
corporation for a period of three years from the time of becoming an interested
stockholder unless (a) the board of directors approved either the business
combination or the transaction which resulted in the person becoming an
interested stockholder prior to the time such person became an interested
stockholder; (b) upon consummation of the transaction which resulted in the
person becoming an interested stockholder, that person owned at least 85% of the
corporation's voting stock (excluding shares owned by persons who are directors
and also officers and shares owned by certain employee stock plans); or (c) the
business combination is approved by the board of directors and authorized by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder. The restrictions on business combinations with
interested stockholders contained in Section 203 of the DGCL do not apply to a
corporation whose certificate of incorporation contains a provision expressly
electing not to be governed by the statute; however, the Disney Certificate does
not contain a provision electing to "opt-out" of Section 203.
SUPERMAJORITY REQUIREMENTS. In addition to the requirements of Section 203
of the DGCL, the Disney Certificate of Incorporation provides that the
affirmative vote of four-fifths of the outstanding stock of Disney entitled to
vote shall be required for (i) any merger or consolidation to which Disney, or
any of its subsidiaries, and an Interested Person (as defined below) are
parties; (ii) any sale or other disposition by Disney, or any of its
subsidiaries, of all or substantially all of its assets to an Interested Person;
(iii) any purchase or other acquisition by Disney, or any of its subsidiaries,
of all or substantially all of the assets or stock of an Interested Person; and
(iv) any other transaction with an Interested Person which requires the approval
of the stockholders of Disney under the DGCL; except that the foregoing shall
not apply to any transaction if (a) such transaction is authorized by a
resolution of Disney's Board of Directors, provided that a majority of the
members of Disney's Board of Directors voting for the approval of such
transaction were duly elected and acting members of Disney's Board of Directors
prior to the date that the person, firm or corporation, or any group thereof,
with whom such transaction is proposed, became an Interested Person, or (b) the
provision of a vote in excess of that required by the DGCL for such transaction
violates the express provisions of the DGCL. An "Interested Person" is any
person, firm or corporation, or any group thereof, acting or intending to act in
concert, including any person directly or indirectly controlling or controlled
by or under direct or indirect common control with such person, firm or
corporation or group, which owns of record or beneficially, directly or
indirectly, 5% or more of any class of voting securities of Disney.
SPECIAL MEETINGS. Pursuant to the DGCL, a special meeting of stockholders
may be called by the board of directors or by any other person authorized to do
so in the certificate of incorporation or the bylaws. The Disney Certificate of
Incorporation provides that special meetings of stockholders may only be called
by Disney's Board of Directors, the Chairman of Disney's Board of Directors, or
the President of Disney.
RIGHTS PLAN. The Disney Rights issued under the Disney Rights Plan have
certain anti-takeover effects because they will result in substantial dilution
to a person or group that attempts to acquire, or merge with, Disney without
conditioning the offer on the Disney Rights being rendered inapplicable. See
"Description of Common Stock--Rights Plan."
ADDITIONAL AUTHORIZED SHARES OF CAPITAL STOCK. The additional shares of
authorized Common Stock and Preferred Stock available for issuance under the
Disney Certificate of Incorporation could be issued at such times, under such
circumstances and with such terms and conditions as to impede a change in
control of Disney.
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DESCRIPTION OF WARRANTS
Disney may issue, together with other Securities or separately, warrants for
the purchase of (i) Debt Securities ("Debt Warrants"), (ii) Preferred Stock
("Preferred Stock Warrants"), or (iii) Common Stock ("Common Stock Warrants"
and, together with the Debt Warrants and the Preferred Stock Warrants, the
"Warrants").
The Warrants will be issued under Warrant Agreements (as defined below) to
be entered into between Disney and a bank or trust company, as warrant agent
(the "Warrant Agent"), all to be set forth in the applicable Prospectus
Supplement relating to any or all Warrants in respect of which this Prospectus
is being delivered. Copies of the form of agreement for each Warrant (each a
"Debt Securities Warrant Agreement", a "Preferred Stock Warrant Agreement" or a
"Common Stock Warrant Agreement", as the case may be, or collectively the
"Warrant Agreements"), including the forms of certificates representing the
Warrants (the "Debt Warrant Certificates", the "Preferred Stock Warrant
Certificates" or the "Common Stock Warrant Certificates", as the case may be, or
collectively, the "Warrant Certificates"), and reflecting the provisions to be
included in such agreements that will be entered into with respect to the
particular offerings of each type of warrant, are or will be filed as exhibits
to the Registration Statement of which this Prospectus forms a part.
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular terms
of the Warrants to which any Prospectus Supplement may relate and the extent, if
any, to which such general provisions may apply to the Warrants so offered will
be described in the applicable Prospectus Supplement. The following summary of
certain provisions of the Warrants, Warrant Agreements and Warrant Certificates
does not purport to be complete and is subject to, and is qualified in its
entirety by express reference to, all the provisions of the Warrant Agreements
and Warrant Certificates, including the definitions therein of certain terms.
GENERAL
The Prospectus Supplement shall set forth the terms of the Warrants in
respect of which this Prospectus is being delivered as well as the related
Warrant Agreement and Warrant Certificates, including the following, where
applicable: (a) the principal amount of Debt Securities and/or the number of
shares of Preferred Stock or Common Stock, as the case may be, purchasable upon
exercise of the Warrants; (b) the designation and terms of the Debt Securities
or Preferred Stock, as the case may be, purchasable upon exercise thereof and of
any related Debt Securities or Preferred Stock with which such Warrants are
issued; (c) the procedures and conditions relating to the exercise of the
Warrants; (d) the date, if any, on and after which such Warrants and the related
Debt Securities or Preferred Stock, as the case may be, will be separately
transferable; (e) the offering price of the Warrants, if any; (f) the principal
amount of Debt Securities or the number of shares of Preferred Stock or Common
Stock, as the case may be, purchasable upon exercise of each Warrant and the
initial price at which such principal amount of Debt Securities or shares of
Preferred Stock or Common Stock, as the case may be, may be purchased upon such
exercise; (g) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (h) a discussion of any
material United States federal income tax considerations applicable to the
exercise of the Warrants; (i) whether the Warrants represented by the Warrant
Certificates will be issued in registered or bearer form, and, if registered,
where they may be transferred and registered; (j) call provisions of the
Warrants, if any; (k) antidilution provisions of the Warrants, if any; and (l)
any other material terms of the Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities or such number of shares of Preferred Stock or Common
Stock, as the case may be, at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the applicable Prospectus
Supplement relating to the Warrants offered thereby. Unless otherwise specified
in the applicable Prospectus Supplement, Warrants may be exercised at the
corporate trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement at any time up to 5:00 p.m. New York City time
on the expiration date set forth in the applicable Prospectus Supplement. After
5:00 p.m. New York City time on the expiration date, unexercised Warrants will
become void. Upon receipt of payment and the Warrant Certificate properly
completed and duly
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executed, Disney will, as soon as practicable, issue the Debt Securities,
Preferred Stock or Common Stock, as the case may be, purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of Warrants.
NO RIGHTS OF SECURITY HOLDER PRIOR TO EXERCISE
Prior to the exercise of their Warrants, holders of Warrants will not have
any of the rights of holders of the Debt Securities, Preferred Stock or Common
Stock, as the case may be, purchasable upon such exercise and will not be
entitled to (i) in the case of Debt Warrants, payments of principal of (and
premium, if any) or interest, if any, on the Debt Securities purchasable upon
such exercise or (ii) in the case of Preferred Stock Warrants and Common Stock
Warrants, the right to vote or to receive dividend payments on the Preferred
Stock or Common Stock, as the case may be, purchasable upon such exercise.
EXCHANGE OF WARRANT CERTIFICATES
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement.
PLAN OF DISTRIBUTION
Disney may sell Securities to one or more underwriters for public offering
and sale by them or may sell Securities to investors directly or through agents
or dealers. Any such underwriter or agent involved in the offer and sale of the
Securities will be named in the applicable Prospectus Supplement. Securities
offered pursuant to a particular Prospectus Supplement are referred to herein as
"Offered Securities." The Company may also sell Offered Securities to an agent
as principal.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Disney also may, from time to time, authorize underwriters
acting as its agents to offer and sell the Offered Securities upon the terms and
conditions set forth in any Prospectus Supplement. In connection with the sale
of Offered Securities, underwriters may be deemed to have received compensation
from Disney in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, Disney will sell such Offered Securities to
such dealer, as principal. The dealer may then resell such Offered Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
Any underwriting compensation paid by Disney to underwriters or agents in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters under the Securities Act, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled under
agreements with Disney to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by Disney for certain expenses.
If so indicated in an applicable Prospectus Supplement, Disney will
authorize dealers acting as its agents to solicit offers by certain institutions
to purchase Offered Securities from Disney at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount or offering price of Offered Securities sold
pursuant to Contracts shall not be less nor more than, the respective amounts
stated in such Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but will in all cases be subject to the
approval of Disney.
25
<PAGE>
Offered Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company. Any remarketing firm will be identified
and the terms of its agreement, if any, with the Company and its compensation
will be described in the Prospectus Supplement. Remarketing firms may be deemed
to be underwriters in connection with the Offered Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
The Securities may or may not be listed on a national securities exchange or
a foreign securities exchange. No assurances can be given that there will be a
market for any of the Securities.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Securities being
offered hereby will be passed upon for Disney by O'Melveny & Myers LLP, Los
Angeles, California.
EXPERTS
The consolidated financial statements and related schedules of Disney
incorporated in this Prospectus by reference to Disney's Annual Report on Form
10-K for the year ended September 30, 1997 have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Capital Cities/ABC, Inc.
incorporated by reference in this Prospectus from Disney's Current Report on
Form 8-K dated March 30, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements referred to above
are incorporated herein by reference in reliance upon such report, given upon
the authority of such firm as experts in accounting and auditing.
26
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE HEREIN, IN CONNECTION WITH THIS OFFER AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS
PROSPECTUS AND PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THESE SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT AT ANY
TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THEIR RESPECTIVE DATES.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Use of Proceeds................................ S-3
Description of the Notes....................... S-3
Important Currency Information................. S-24
Foreign Currency Risks......................... S-24
Indexed Notes Risks............................ S-25
Certain United States Federal Tax
Considerations............................... S-26
Plan of Distribution........................... S-30
Legal Matters.................................. S-32
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 3
Use of Proceeds................................ 4
Ratios of Earnings to Fixed Charges............ 4
Certain Financial Information.................. 5
Description of the Debt Securities............. 6
Description of Preferred Stock................. 13
Description of Depositary Shares............... 17
Description of Common Stock.................... 19
Description of Warrants........................ 24
Plan of Distribution........................... 25
Legal Matters.................................. 26
Experts........................................ 26
</TABLE>
$5,000,000,000
[LOGO]
MEDIUM-TERM NOTES
------------------------------
PROSPECTUS SUPPLEMENT
------------------------------
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
AUGUST 6, 1998
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