ABC, INC. SAVINGS & INVESTMENT
PLAN
REPORT ON FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefit
as of December 31, 1999 and 1998
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1999
Notes to Financial Statements
Other schedules required by the Department of Labor Rules and Regulations for
Reporting and Disclosure under ERISA have been omitted because they are either
not applicable or have been filed directly with the Department of Labor as part
of the Master Trust filing.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and the Employee
Benefits Committee of the ABC, Inc. Savings & Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the ABC, Inc. Savings & Investment Plan (the "Plan") at December 31, 1999 and
1998, and the changes in net assets available for benefits for the year ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, CA
June 21, 2000
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In thousands)
[CAPTION]
<TABLE>
<S> <C> <C>
December 31,
1999 1998
---- ----
Assets
Investments:
At fair value
The Walt Disney Company Common Stock Fund*,** $ 465,112 $ 511,769
Shares of registered investment companies:
Fidelity Retirement Money Market Portfolio Fund* 134,557 136,875
Fidelity Inst. Short-Inter Gov't Portfolio Fund 20,390 18,311
Fidelity Asset Manager Fund* 69,132 65,533
Fidelity Growth & Income Portfolio Fund* 195,197 188,509
Fidelity Magellan Fund* 177,035 110,396
Participant Loans 12,810 13,202
------ ------
Total investments 1,074,233 1,044,595
--------- ---------
Receivables:
Participants' contributions 1,432 6,021
Employer's contribution 504 857
--------- --------
Total receivables 1,936 6,878
--------- --------
Net assets available for benefits $1,076,169 $1,051,473
========== ==========
</TABLE>
* Investment balance represents 5% or more of the Plan's net assets available
for benefits.
** Nonparticipant-directed
The accompanying notes are an integral part of these financial statements.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(In thousands)
[CAPTION]
<TABLE>
<S> <C>
For the Year Ended
December 31,
1999
-------------------
Additions to net assets attributed to:
Investment income:
Dividends $ 42,900
Interest 1,149
Net appreciation in fair value of investments 15,513
-------
59,562
-------
Contributions:
Participant 31,582
Employer 11,622
---------
43,204
---------
Total additions 102,766
---------
Deductions from net assets attributed to:
Benefits paid to participants 77,962
Administrative expenses 108
--------
Total deductions 78,070
--------
Net increase 24,696
Net assets available for benefits:
Beginning of year 1,051,473
---------
End of year $1,076,169
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Tabular dollars in thousands)
1. Description of the Plan
General
The ABC, Inc. Savings & Investment Plan (the "Plan") is a defined contribution
plan designed to provide participating employees the opportunity to accumulate
retirement funds through a tax-deferred contribution arrangement pursuant to
Section 401(k) and after-tax contributions pursuant to Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). In addition to the Code,
the Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). For further information regarding the Plan, refer to the
Summary Plan Description and fund prospectus.
Administration of the Plan
On February 9, 1996, The Walt Disney Company acquired ABC, Inc. (the "Company")
(previously called "Capital Cities/ABC, Inc."). The Company appointed the
Employee Benefits Committee (the "Committee" or "Plan Administrator") to
administer the Plan, interpret its provisions and resolve all issues arising in
the administration of the Plan.
The assets of the Plan are administered under a trust agreement between the
Company and Fidelity Institutional Retirement Services Company ("Fidelity" or
the "Trustee"). Pursuant to the trust agreement, Fidelity executes most of the
day-to-day activities of administration.
Participation
Participation in the Plan is available to qualified employees of the Company and
those other subsidiaries and divisions of ABC, Inc. which were a part of, or
affiliates of the American Broadcasting Companies, Inc. ("ABC") (an indirect
wholly-owned subsidiary of ABC, Inc.) prior to January 1, 1989. Individuals who
became employees of the corporate and other broadcasting properties of ABC, Inc.
subsequent to 1988 also are eligible to participate in the Plan as are employees
of certain properties within the Company's Publishing Group not part of ABC,
Inc. prior to January 1, 1989.
Effective April 1, 1998, certain employees of the corporate and broadcasting
operations of the Company hired prior to January 1, 1989 who were previously
ineligible for the Plan and participating in the Employee Profit Sharing Plan of
ABC, Inc. became eligible to participate in the Plan.
Transfer of Assets
Effective May 19, 1998, $1,042,000 of employee after-tax contributions of
certain employees of Fairchild Publishing Inc. were transferred into the Plan
from the Fairchild Publishing Inc. Publishing Pension Plan.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
1. Description of the Plan (continued)
Contributions
Participants are permitted to authorize contributions in whole percentages, up
to 10 percent of their base compensation on a pre-tax or after-tax basis,
through payroll deductions. A participant's total contributions and the
Company's matching contributions, in any Plan year, cannot exceed the limits
provided under Sections 401(k), 401(a) and 415 of the Code.
The Company currently contributes a matching amount equal to 50 percent of the
first 5 percent a participant contributes to the Plan. The Company may make
matching contributions either in cash, which is invested exclusively in the
common stock of The Walt Disney Company, or directly in shares of the common
stock of The Walt Disney Company and, at its discretion, the Company may change
the level of matching contributions or cease making matching contributions.
Participants may not transfer matched company contributions from The Walt Disney
Company Common Stock Fund. However, participants are allowed to transfer matched
contributions made prior to the merger of ABC, Inc. with The Walt Disney Company
into any fund of their choice.
Vesting
Participants are immediately 100 percent vested with respect to all
contributions made by the participant. Effective January 1, 1995, once the
participant completes five years of service, matching employer contributions are
immediately 100 percent vested. Prior to completion of the fifth year of
service, matching employer contributions vest 50 percent at the end of the Plan
year for which the contributions are made, and the remaining 50 percent at the
end of the subsequent Plan year. Additionally, a participant's account is
considered fully vested upon attaining age 65, or death while in active service,
or upon termination of service because of permanent and total disability.
Forfeitures
Nonvested employer contributions are forfeited upon termination and revert to
the Company. These amounts are used to reduce future employer contributions.
Investments
Participants may direct the investment of their contributions in any one or more
investment funds established for the Plan. Participants may elect to change the
investment of their contributions or to transfer all or part of their account
balances among the various investment funds. Such elections may be made as often
as once each month, in whole dollars or percentages.
All funds are maintained on a unit basis. Unit value is determined daily by
dividing the total assets of the fund by the total number of units allocated to
participants' accounts.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
1. Description of the Plan (continued)
Investments (continued)
Brokerage commissions and stock transfer taxes in connection with the purchase
or sale of securities are absorbed within the net asset value of each investment
fund on each business day. All other costs and expenses incurred in connection
with the administration of the Plan will be charged to the participants'
accounts.
Benefits, Distributions and Withdrawals
A participant's entire vested account balance, adjusted for investment gains or
losses, is available for immediate distribution upon termination of employment.
Participant account balances under $5,000 are automatically distributed within
60 days following the participant's severance date or as soon as possible,
thereafter. All amounts must be distributed when the terminated participant
reaches age 65.
Under Section 401(k) of the Code, in service withdrawals of tax-deferred
contributions by participants are available only in amounts necessary to satisfy
a financial hardship and will be made if the Committee determines that the
reason for the hardship complies with applicable requirements under the Code.
Under Section 401(a) of the Code, in service withdrawals of the value of
after-tax contributions by participants can be made at any time, for any reason.
In compliance with the Code, active participants who have reached age 70 and
one-half must (unless exempt) take an annual minimum required distribution
commencing not later than April 1, of the year following the year they attain
age 70 and one-half.
Loans
Participants are permitted to borrow from their accounts subject to certain
limitations and conditions established to comply with the current requirements
of the Code. All loans made to participants are secured by their accounts with a
right of off-set. Participants may borrow up to 50 percent of their vested
account balance not to exceed $50,000 in any consecutive twelve month period. A
participant may only have one loan outstanding.
Loans may have a term of up to five years. The interest rate on loans is
currently Chase Manhattan Bank of New York's prime rate plus 1 percent.
Plan Amendment or Termination
The Company reserves the right to amend or modify, at any time, the provisions
of the Plan. Although the Company expects to continue the Plan indefinitely, the
Board of Directors of the Company may terminate the Plan for any reason. If the
Plan is terminated each participant will receive, as prescribed by ERISA and its
related regulations, and in the form and manner determined by the Committee, a
payment equal to the value of the participant's vested account at the time of
liquidation.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared using the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying
disclosures. Actual results could differ from those estimates.
Contribution Policy
Contributions are recorded in the period during which the Company makes payroll
deductions from the employees' earnings. Company contributions are recorded in
the same period.
Investment Valuation and Income Recognition
Investments in securities traded on national security exchanges are valued on
the basis of the closing price on the last trading day of the year. Investments
in commingled funds are valued at the redemption prices established by the
Trustee, which are based on the market value of the fund assets. Participant
loans are valued at cost which approximates fair value. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date.
Net Appreciation/Depreciation in Fair Value of Investments
The net appreciation or depreciation in the fair value of investments
disclosed in the Statement of Changes in Net Assets Available for Benefits
consists of realized gains or losses and unrealized appreciation
(depreciation) on investments.
Payment of Benefits
Benefits are recorded when paid.
Reclassifications
Certain reclassifications have been made to the prior year amounts to conform to
the current year presentation.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
3. Investments
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$15,513 as follows:
<TABLE>
<S> <C>
The Walt Disney Company Common Stock Fund $(10,245)
Shares of registered investment companies 25,758
------
$ 15,513
======
</TABLE>
4. Nonparticipant-Directed Investments
Information about the significant components of the changes in net assets
relating to the nonparticipant-directed investment (The Walt Disney Company
Common Stock Fund) is as follows:
<TABLE>
<CAPTION>
<S> <C>
Year Ended
December 31,
1999
------------
Changes in Net Assets
Contributions $ 25,572
Dividends 3,360
Net depreciation (10,245)
Benefits paid to participants (30,911)
Administrative expenses (16)
Net transfers to participant-directed
investments (34,417)
-------
$(46,657)
=======
</TABLE>
5. Income Taxes
The Company received an Internal Revenue Service determination letter dated
March 28, 1996, stating that the Plan, as currently amended, qualifies under
Section 401(a) of the Code and is therefore exempt from Federal income tax under
Section 501(a) of the Code. Since the Plan is qualified under Section 401(a) of
the Code, under applicable state law it is also exempt from state income taxes.
The Plan Administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the Code. Accordingly, no provision for income taxes is made in
the accompanying financial statements.
6. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity.
Fidelity is the trustee as defined by the Plan, and, therefore, these
transactions qualify the Trustee as a party-in-interest for which a statutory
exemption exists. Fees paid by the Plan to the Trustee amounted to $107,469 for
the year ended December 31, 1999.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits according
to the financial statements to Form 5500:
<TABLE>
<CAPTION>
<S> <C> <C>
December 31,
------------------
1999 1998
------ ------
Net assets available for benefits per the
financial statements $1,076,169 $1,051,473
Amounts allocated to withdrawing participants (1,232) (322)
--------- ---------
Net assets available for benefits per
Form 5500 $1,074,937 $1,051,151
========= =========
</TABLE>
The following is a reconciliation of benefits paid to participants according to
the financial statements to Form 5500:
<TABLE>
<S> <C>
For the Year Ended
December 31,
1999
------------------
Benefits paid to participants per the
financial statements $77,962
Add: Amounts allocated to withdrawing participants
at December 31, 1999 1,232
Less: Amounts allocated to withdrawing participants
at December 31, 1998 (322)
------
Benefits paid to participants per Form 5500 $78,872
======
</TABLE>
Amounts allocated to withdrawing participants are recorded on Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 1999 but not yet paid as of that date.
8. Investment in Master Trust
The Plan's investments are held in a Master Trust along with the assets of the
Employee Profit Sharing Plan of ABC, Inc., a defined contribution plan sponsored
by the Company. Each participating plan has a specific interest in the Master
Trust. Assets of the Master Trust are allocated to the participating plans
according to the elections of participants within each plan. At December 31,
1999 and 1998, the Plan's interest in the net assets of the Master Trust was
approximately 82.8% and 80.5%, respectively. Investment income of the Master
Trust is allocated based upon each Plan's interest within each of the investment
funds held by the Master Trust.
<PAGE>
ABC, INC. SAVINGS & INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
8. Investment in Master Trust (continued)
Investments held by the Master Trust are as follows:
<TABLE>
<S> <C> <C>
December 31,
----------------------
1999 1998
----------- ----------
Investments, at fair value:
The Walt Disney Company Common Stock Fund $ 465,112 $ 511,769
Shares of registered investment companies 817,276 770,361
Loans 14,622 14,917
----------- ----------
Total $1,297,010 $1,297,047
=========== ==========
</TABLE>
The investment income of the Master Trust is as follows:
<TABLE>
<S> <C>
For the Year Ended
December 31, 1999
------------------
Investment Income:
Interest and dividends $58,297
Net depreciation (13,045)
--------
Total $45,252
========
</TABLE>
The net (depreciation)/appreciation (including net realized gains/losses) in the
fair value of the investments held by the Master Trust is as follows:
<TABLE>
<S> <C>
For the Year Ended
December 31, 1999
------------------
Net (Depreciation)/Appreciation:
The Walt Disney Company Common Stock Fund $(10,245)
Shares of registered investment companies (2,800)
------------------
Total $(13,045)
==================
</TABLE>
9. Subsequent Events
Effective April 1, 2000, the current Master Trust agreement was terminated. The
Plan's investments were transferred into the Disney 401k Master Trust, along
with the assets of the Employee Profit Sharing Plan of ABC, Inc., the Disney
Salaried Savings & Investment Plan, the Go.com Savings and Investment Plan, and
the Disney Hourly Savings and Investment Plan. All plans in the Master Trust are
defined contribution plans sponsored by the Company. Each participating plan has
a specific interest in the Master Trust. Assets of the Master Trust are
allocated to the participating plans according to the elections of participants
within each plan. Investment income of the Master Trust is allocated based upon
each Plan's interest within each of the investment funds held by the Master
Trust.
Effective after June 1, 2000, the Employee Profit Sharing Plan of ABC, Inc., a
defined contribution plan, will be merged into the Plan. Total net assets to be
transferred amount to approximately $217,332,681.
During 1999, the Company sold certain Publishing Group properties. In
accordance with the terms and conditions of the sales, total net assets
amounting to $25,508,676 were transferred to successor trustees on January 3,
2000.
<PAGE>
DISNEY SALARIED SAVINGS AND
INVESTMENT PLAN
REPORT ON FINANCIAL STATEMENTS
AND
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1999 AND 1998
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1999 AND 1998
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1999
Notes to Financial Statements
Supplemental Schedules
Schedule I - Schedule of Assets Held for
Investment Purposes
Schedule II - Schedule of Reportable Transactions
Other schedules required by the Department of Labor Rules and Regulations for
Reporting and Disclosure under ERISA have been omitted because they were not
applicable.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Investment and
Administrative Committee for
the Disney Salaried Savings and Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Disney Salaried Savings and Investment Plan (the "Plan") at December 31,
1999 and 1998 and the changes in net assets available for benefits for the year
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. These supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, CA
June 21, 2000
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In thousands)
[CAPTION]
<TABLE>
<S> <C> <C>
December 31,
--------------------
1999 1998
------- -------
Assets
Investments
At fair value:
The Walt Disney Company Common Stock Fund*,** $383,635 $383,655
Shares of registered investment companies:
Fidelity Inst. Short-Int. Govt Portfolio Fund 36,657 34,761
Fidelity Magellan Fund* 164,824 115,352
PIMCO Total Return Fund 13,418 11,946
Fidelity Growth & Income Fund* 121,203 102,549
Sequoia Fund* 32,965 36,665
Fidelity Diversified International Fund 15,875 6,658
Putnam New Opportunities Fund 30,646 11,031
Participant Loans 16,194 15,034
------- -------
Total investments 815,417 717,651
------- -------
Receivables:
Participants' contributions 2,584 1,215
Employer's contribution 646 280
Interest income 50 26
------- -------
Total receivables 3,280 1,521
------- -------
Net assets available for benefits $818,697 $719,172
======= =======
</TABLE>
* Investment balance represents 5% or more of the Plan's net assets available
for benefits.
** Nonparticipant-directed
The accompanying notes are an integral part of these financial statements.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(In thousands)
[CAPTION]
<TABLE>
<S> <C>
For the Year Ended
December 31,
1999
------------------
Additions to net assets attributed to:
Investment income:
Dividends $ 31,145
Interest 1,374
Net appreciation in fair value of
investments 14,589
--------
47,108
--------
Contributions:
Participant 76,492
Employer 17,409
--------
93,901
--------
Total additions 141,009
--------
Deductions from net assets attributed to:
Benefits paid to participants 41,518
Administrative expenses 55
-------
Total deductions 41,573
-------
Net increase 99,436
Transfer of assets from the Jumbo Pictures
Inc. 401(k) Plan (Note 1) 89
-------
Net increase including transfer 99,525
-------
Net assets available for benefits:
Beginning of year 719,172
-------
End of year $818,697
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Tabular dollars in thousands)
1. Description of the Plan
General
The Walt Disney Company (the "Company") implemented the Disney Salaried Savings
and Investment Plan (the "Plan") on January 1, 1985. The Plan is a defined
contribution plan designed to provide participating employees the opportunity to
accumulate retirement funds through a tax-deferred contribution arrangement
pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). In addition to the Code, the Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). For further
information regarding the Plan, refer to the Summary Plan Description.
Administration of the Plan
The Board of Directors of the Company has appointed the Investment and
Administrative Committee of The Walt Disney Company Sponsored Qualified Benefit
Plans and Key Employees Deferred Compensation and Retirement Plan (the
"Committee" or "Plan Administrator") to administer the Plan, interpret its
provisions and resolve all issues arising in the administration of the
Plan.
The assets of the Plan are administered under a trust agreement between the
Company and Fidelity Institutional Retirement Services Company ("Fidelity" or
the "Trustee"). Pursuant to the trust agreement, Fidelity executes most of the
day-to-day activities of administration.
Administrative expenses of the Plan, such as benefit plan consultation fees
(exclusive of brokerage commissions on the purchase or sale of Company stock)
may be paid from the assets of the Plan unless the Company, at its discretion,
pays such expenses. Investment expenses incurred by the investment funds are
charged to the respective funds.
Participation
Participation in the Plan is available to all domestic salaried employees of the
Company and its subsidiaries participating in the Plan who are regularly
scheduled to work 1,000 hours or more during a year. To be eligible, employees
must be age 18 or older and have completed one year of employment during which
they must also work at least 1,000 hours.
The Plan accepts direct cash rollovers from other qualified plans regardless of
whether the employee has met the one-year eligibility requirement. However, such
funds are not available for hardship distributions or loans until after the
employee has met the one-year eligibility requirement and has become a
participant of the Plan.
Transfer of Assets
Effective November 1, 1999, $89,640 was transferred into the Plan from the Jumbo
Pictures, Inc. 401(k) Plan.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
1. Description of the Plan (continued)
Contributions
Participants are permitted to authorize income deferrals in whole percentages,
up to 15 percent of their base compensation on a pre-tax basis, through weekly
payroll deductions. A participant's total tax-deferred contributions and the
Company's matching contributions, in any Plan year, cannot exceed the limits
provided under Section 415 of the Code.
Effective January 1, 1987, the Plan ceased to accept voluntary post-tax
contributions. Post-tax contributions made prior to January 1, 1987 may remain
in the Plan and continue to share in the Plan's investment results on a
tax-deferred basis. Income earned on voluntary contributions is not taxable for
Federal income tax purposes until withdrawal and such post-tax contributions are
recovered tax free when withdrawn or distributed.
The Company currently contributes a matching amount equal to 50 percent of a
participant's pre-tax contributions up to a maximum of 2 percent of such
participant's base compensation. The Company may make matching contributions
either in cash, which is invested exclusively in the Company's common stock, or
directly in shares of the Company's common stock and, at its discretion, the
Company may change the level of matching contributions or cease making matching
contributions.
Participants are fully vested immediately in all contributions including the
Company's matching contributions made to the Plan and all earnings thereon.
Investments
Participants may direct the investment of their contributions in any one or more
investment funds established for the Plan. Participants may elect to change the
investment of their contributions or to transfer all or part of their account
balances among the various investment funds. Such elections must be made in 1
percent increments.
Benefits, Distributions and Withdrawals
A participant's entire account balance, adjusted for investment gains or losses,
is available for immediate distribution upon termination of employment.
Participants' account balances under $5,000 are automatically distributed within
90 days following the participant's severance date. The participant has 60 days
following the participant's severance date to elect whether or not to rollover
the funds into an IRA or another qualified plan. If no election is made, the
funds will be dispersed to the participant less 20 percent for federal
withholding tax. Participants with account balances of $5,000 or more may elect
a distribution at anytime following termination, before age 65. All amounts must
be distributed when the participant reaches age 65.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
1. Description of the Plan (continued)
Benefits, Distributions and Withdrawals (continued)
Under Section 401(k) of the Code, in service withdrawals of tax-deferred
contributions by participants are available only in amounts necessary to satisfy
a financial hardship and will be made if the Committee determines that the
reason for the hardship complies with applicable requirements under the Code. A
participant may withdraw his or her post-tax contributions twice each Plan year.
The minimum amount of each post-tax contribution withdrawal is $500.
Loans
Participants are permitted to borrow from their accounts subject to certain
limitations and conditions established to comply with the current requirements
of the Code. All loans made to participants are secured by their accounts with a
right of off-set. Voluntary post-tax contributions and any earnings thereon are
not available for loans. Participants may borrow up to 50 percent of their
account balance not to exceed $50,000 in any consecutive twelve month period. A
participant may only have one loan outstanding.
Loans may have a term of up to four years. However, the term can be extended to
ten years if the loan is used to acquire or construct a principal residence of
the participant. The interest rate on loans is currently prime plus 1 percent.
Plan Amendment or Termination
The Company reserves the right to amend or modify, at any time, the provisions
of the Plan. Although the Company expects to continue the Plan indefinitely, the
Board of Directors of the Company may terminate the Plan for any reason. If the
Plan is terminated each participant will receive, as prescribed by ERISA and its
related regulations, and in the form and manner determined by the Committee, a
payment equal to the value of the participant's account at the time of
liquidation.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared using the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying
disclosures. Actual results could differ from those estimates.
Contribution Policy
Contributions are recorded in the period during which the Company makes payroll
deductions from the employees' earnings. Company contributions are recorded in
the same period.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
2. Summary of Significant Accounting Policies (continued)
Investment Valuation and Income Recognition
Investments in securities traded on national security exchanges are valued on
the basis of the closing price on the last trading day of the year. Investments
in commingled funds are valued at the redemption prices established by the
Trustee, which are based on the market value of the fund assets. Participant
loans are valued at cost which approximates fair value. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date.
Net Appreciation/Depreciation in Fair Value of Investments
The net appreciation or depreciation in the fair value of investments
disclosed in the Statement of Changes in Net Assets Available for Benefits
consists of realized gains or losses and unrealized appreciation
(depreciation) on investments.
Payment of Benefits
Benefits are recorded when paid.
3. Investments
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$14,589 as follows:
<TABLE>
<S> <C>
The Walt Disney Company Common Stock Fund $(8,619)
Shares of registered investment companies 23,208
------
$14,589
======
</TABLE>
4. Nonparticipant-Directed Investments
Information about the significant components of the changes in net assets
relating to the nonparticipant-directed investment (The Walt Disney Company
Common Stock Fund) is as follows:
<TABLE>
<S> <C>
Year Ended
December 31,
1999
-------------
Changes in Net Assets
Contributions $ 41,210
Dividends 2,707
Net depreciation (8,619)
Benefits paid to participants (18,303)
Administrative expenses (12)
Net transfers to participant-directed
investments (17,003)
-------
$ (20)
=======
</TABLE>
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
5. Income Taxes
The Company has received an Internal Revenue Service determination letter dated
June 18, 1996 stating that the Plan qualifies under Section 401(a) of the Code
and is therefore exempt from Federal income tax under Section 501(a) of the
Code. Since the Plan is qualified under Section 401(a) of the Code, under
applicable state law it is also exempt from state income taxes. The Plan
Administrator and the Plan's tax counsel believe that the Plan is designed and
is currently being operated in compliance with the applicable requirements of
the Code. Accordingly, no provision for income taxes is made in the accompanying
financial statements.
6. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity.
Fidelity is the trustee as defined by the Plan, and, therefore, these
transactions qualify the Trustee as a party-in-interest for which a statutory
exemption exists. Fees paid by the Plan to the Trustee amounted to $54,754 for
the year ended December 31, 1999.
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits according
to the financial statements to Form 5500:
<TABLE>
<S> <C> <C>
December 31,
-----------------
1999 1998
------ ------
Net assets available for benefits per the
financial statements $818,697 $719,172
Amounts allocated to withdrawing
participants (292) (440)
------- -------
Net assets available for benefits per
Form 5500 $818,405 $718,732
======= =======
</TABLE>
The following is a reconciliation of benefits paid to participants according to
the financial statements to Form 5500:
<TABLE>
<S> <C>
Year Ended
December 31,
1999
-------------
Benefits paid to participants per the
financial statements $41,518
Add: Amounts allocated to withdrawing participants
at December 31, 1999 292
Less: Amounts allocated to withdrawing participants
at December 31, 1998 (440)
------
Benefits paid to participants per Form 5500 $41,370
======
</TABLE>
Amounts allocated to withdrawing participants are recorded on Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 1999 but not yet paid as of that date.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
8. Subsequent Event
Effective April 1, 2000, the trust agreement between the Company and Trustee was
converted to a Master Trust agreement. The Plan's investments are held in the
Disney 401k Master Trust, along with the assets of the ABC, Inc. Savings &
Investment Plan, the Employee Profit Sharing Plan of ABC, Inc., the Go.com
Savings and Investment Plan, and the Disney Hourly Savings and Investment Plan.
All plans in the Master Trust are defined contribution plans sponsored by the
Company. Each participating plan has a specific interest in the Master Trust.
Assets of the Master Trust are allocated to the participating plans according to
the elections of participants within each plan. Investment income of the Master
Trust is allocated based upon each Plan's interest within each of the investment
funds held by the Master Trust.
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
SCHEDULE I
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT
DECEMBER 31, 1999
(DOLLARS ARE NOT IN THOUSANDS)
[CAPTION]
<TABLE>
<S> <C> <C>
CURRENT
DESCRIPTION OF INVESTMENTS COST** VALUE
------------ ------------
* The Walt Disney Company Common Stock Fund $202,213,969 $383,634,801
* Fidelity Inst. Short-Inter
Gov't Portfolio Fund 36,657,570
* Fidelity Magellan Fund 164,824,486
PIMCO Total Return Fund 13,418,045
* Fidelity Growth & Income Fund 121,202,812
Sequoia Fund 32,964,961
* Fidelity Diversified International Fund 15,874,580
Putnam New Opportunities Fund 30,646,488
Participant Loans
(Maturities go through 2009
Interest rates range from
7.00% to 10.00%) 16,193,825
-----------
$815,417,568
===========
</TABLE>
* Parties-in-interest
** Disclosed for nonparticipant-directed investments only
<PAGE>
DISNEY SALARIED SAVINGS AND INVESTMENT PLAN
SCHEDULE II
SCHEDULE OF REPORTABLE TRANSACTIONS**
FOR THE YEAR ENDED DECEMBER 31, 1999
(DOLLARS ARE NOT IN THOUSANDS)
<TABLE>
<S> <C> <C> <C> <C>
Identity Selling/
of party Description Number of Purchase distribution
involved of assets Transactions Price Price
-------- ------------ ------------ -------- ------------
The Walt The Walt Disney 250 $57,395,793
Disney Company Common 250 $48,795,469
Company* Stock Fund
Current
Cost of value of asset
Lease Expense assets sold/ on transaction Net
rental incurred distributed date gain
---------- -------------- ------------- -------------- -----------
$31,450,251 $17,345,218
</TABLE>
* Parties-in-interest
** Transactions or series of transactions in excess of 5 percent of the
current value of the Plan's assets as of December 31, 1998 as defined in 29
CFR 2520.103-6 of the Department of Labor Rules and Regulations for
Reporting and Disclosure under ERISA.
