<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 27, 1993)
$500,000,000
THE WALT DISNEY COMPANY
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
---------------------
The Walt Disney Company ("Disney") may offer from time to time Medium-Term
Notes (the "Notes") having an aggregate principal amount of up to $500,000,000
or the equivalent thereof in one or more foreign or composite currencies or
currency units. 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, and may
be subject to redemption or repurchase by Disney, in whole or in part, prior to
its Stated Maturity, as set forth therein and specified in a pricing supplement
hereto (each, a "Pricing Supplement"). Each Note will be denominated in U.S.
dollars or in one or more foreign or composite currencies or currency units as
set forth in an applicable Pricing Supplement to this Prospectus Supplement. See
"Important Currency Information" and "Currency Risks." Each Note will bear
interest at either a fixed rate (a "Fixed Rate Note"), 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 a floating rate (a "Floating Rate
Note") as set forth in the applicable Pricing Supplement. See "Description of
the Notes" herein and "Description of the Debt Securities" in the accompanying
Prospectus. 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. The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually, and interest on each
Floating Rate Note will accrue from its date of issue and will be payable in
arrears monthly, quarterly, semiannually or annually, in each case as set forth
therein and specified in the applicable Pricing Supplement, and at Maturity. If
provided in an applicable Pricing Supplement, the Notes may be subject to
redemption, in whole or in part, at the option of Disney. In addition, unless
specified in an applicable Pricing Supplement, the Notes will not be subject to
repurchase by Disney at the option of the Holder thereof. See Description of the
Notes -- Redemption or Repurchase.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), as set forth in the applicable
Pricing Supplement. Each Book-Entry Note will be represented by a global
security deposited with or on behalf of The Depository Trust Company (or such
other depositary as is identified in an applicable Pricing Supplement) (the
"Depository") and registered in the name of the Depository's nominee. Interests
in Book-Entry Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository and its participants.
Book-Entry Notes will not be issuable as Definitive Notes except under the
limited circumstances described herein. See "Description of the Notes --
Book-Entry Notes."
--------------------------
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' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
-------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Per Note............................................... 100% .125%-.750% 99.875%-99.250%
Total (4).............................................. $500,000,000 $625,000-$3,750,000 $499,375,000-$496,250,000
<FN>
- --------------------------
(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) Disney will pay a commission, ranging from .125% to .750% of the principal
amount (or in the case of a Note issued with original issue discount, the
price to public) of Notes with a term of less than 30 years sold through an
Agent (as defined below), to such Agent and may 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, in either case
as determined by such Agent or, if so agreed, at a fixed public offering
price. Commissions with respect to sales of Notes with a Stated Maturity of
30 years or more will be agreed to by Disney and the applicable Agent at
the time of such sale. Disney has agreed to indemnify the Agents against,
and to provide contribution with respect to, 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 $275,000.
(4) Or the equivalent thereof in one or more foreign or composite currencies or
currency units.
</TABLE>
--------------------------
The Notes are being offered on a continuing basis by Disney through the
Agents, who have agreed to use their reasonable best efforts to solicit offers
to purchase the Notes. Disney may also sell Notes to an Agent, as principal, for
resale to investors or other purchasers and 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.
--------------------------
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
----------------------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS SEPTEMBER 14, 1994.
<PAGE>
USE OF PROCEEDS
Disney intends to use the net proceeds from the sale of the Notes (estimated
to be from approximately $496 million to approximately $499 million) for general
corporate purposes, including, without limitation, the repayment of commercial
paper and other borrowings outstanding from time to time, capital expenditures
and the repurchase from time to time of outstanding shares of Disney's common
stock. Commercial paper outstanding as of June 30, 1994 had a weighted average
interest rate of 3.80 percent per annum.
DESCRIPTION OF THE NOTES
The Notes will be issued as a series of senior debt securities under an
Indenture, dated as of November 30, 1990 (the "Indenture"), between Disney and
Bankers Trust Company, 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, a copy
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 Foreign Currency Information," "Foreign Currency Risks"
and "Certain United States Tax Consequences to Foreign Currency Note Holders and
to Foreign Purchasers."
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 $2,000,000,000 aggregate principal amount
of Securities authorized under the Indenture as of the date of this Prospectus
Supplement, of which $1,471,700,000 aggregate principal amount has heretofore
been issued and $745,000,000 remains outstanding (including $50,000,000
principal amount of Notes which Disney entered into contracts to sell but the
closing has not yet occurred). The aggregate outstanding principal amount of
consolidated indebtedness of Disney and its subsidiaries as of June 30, 1994 is
$2,550,900,000. The Indenture does not limit Disney's or Disney's subsidiaries'
ability to incur additional indebtedness in the future.
S-2
<PAGE>
The Notes offered pursuant hereto are limited to $500,000,000 aggregate
principal amount or the equivalent thereof in one or more foreign or composite
currencies or currency units. 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 not bear
interest. 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 formulae 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.
Each Note will be a Book-Entry Note or a Definitive Note, in the
denomination of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000. Book-Entry Notes may be transferred or exchanged only
through a participating member of the Depository. 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 2.09, 3.06 or 9.05 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 amount in excess
thereof which is an integral multiple of 1,000 units of such Denominated
Currency, 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.
Payments of principal of and interest, if any, on Book-Entry Notes will be
made by Disney through the Trustee to the Depository. 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 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 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
S-3
<PAGE>
banking institutions are authorized or required by law 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 Security" 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 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
as defined in the accompanying Prospectus under "Description of the Debt
Securities -- Events of Default."
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 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.
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.
S-4
<PAGE>
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 REPURCHASE
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 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 the
Purchase Date; PROVIDED, HOWEVER, that installments of interest payable is 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 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 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).
S-5
<PAGE>
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-l 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.
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 the interest rate features of the Notes, they may be issued with
original issue discount for United States Federal income tax purposes. See
"Certain United States Tax Consequences to Foreign Currency Note Holders and to
Foreign Purchasers" herein and "United States Taxation" in the accompanying
Prospectus.
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
S-6
<PAGE>
"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 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 applicable to such Floating Rate Note by which
said Base Rate or Rates are 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"), 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,
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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
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
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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 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." 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." 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
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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.
"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>
Money Market Yield = D X 360 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
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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 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.
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
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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 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 NYMF Page (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 NYMF Page for such Prime Rate
Interest Determination Date, or if fewer than four such rates appear on the
Reuters Screen NYMF Page
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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 NYMF Page" means the display
designated as "NYMF" on the Reuters Monitor Money Rates Service (or such other
page as may replace the NYMF 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 not 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 and/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 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 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 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
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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 third 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
The Company 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 and/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 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
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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," resulting in the Notes being
treated as issued with original issue discount for United States Federal income
tax purposes. See "Certain United States Tax Consequences to Foreign Currency
Note Holders and to Foreign Purchasers" herein and "United States Taxation" in
the accompanying Prospectus. Discount Notes may bear no interest, except in the
case of a 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 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.
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
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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 possible 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 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. Certain United States Federal
income tax considerations applicable to any Discount Notes are described in the
accompanying Prospectus and any 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 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 Tax
Consequences to Foreign Currency Note Holders and to Foreign Purchasers."
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 unit) (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 shall be identified in the applicable Pricing Supplement. In addition,
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the fixed amount of the Indexed Currency to which the principal of the CLS is
linked shall 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 unit) (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 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) (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) (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) (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
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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 the 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.
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 relevant 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
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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 the 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 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 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 $150,000,000 in aggregate principal amount, one Global Security will be
issued to represent each $150,000,000 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 Depository. Except as set forth below, a Global
Security may not be transferred except as a whole by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any nominee to a successor of
the Depository or a nominee of such successor.
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The Depository Trust Company, New York, New York ("DTC") will be the initial
Depository 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 Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities of its participants and to facilitate the
settlement of securities transactions, such as transfers and pledges, among its
participants in such securities through electronic computerized book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. DTC's participants include
securities brokers and dealers (including the Agents), banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may beneficially own
securities held by DTC only through participants.
Upon the issuance by Disney of Book-Entry Notes represented by a Global
Security, the Depository will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Book-Entry Notes
represented by such Global Security to the accounts of participants. The
accounts to be credited shall be designated by the Agents or underwriters of
such Book-Entry Notes, or Disney, if such Book-Entry Notes are offered and sold
directly by Disney, as the case may be. Ownership of beneficial interests in a
Global Security will be limited to participants or persons that hold interests
through participants. Ownership of beneficial interests in Book-Entry Notes
represented by a Global Security or Securities will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depository (with respect to interests of participants in the Depository), or
by participants in the Depository or persons that may hold interests through
such participants (with respect to persons other than participants in the
Depository). 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 transfer beneficial interests in
a Global Security.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of the Global Security, the Depository 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, owners of beneficial interests in Book-Entry Notes
represented by 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.
Payments of principal of and interest, if any, on the Book-Entry Notes
represented by a Global Security registered in the name of the Depository or its
nominee will be made by Disney through the Trustee to the Depository or its
nominee, as the case may be, as the registered owner of a Global Security. None
of Disney, the Trustee, the Paying Agent or the Registrar 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. Disney expects that the Depository, upon receipt
of any payment of principal or interest in respect of a Global Security, will
immediately credit the accounts of the related 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 the
Depository. Disney also expects that payments by participants to owners of
beneficial interests in a Global Security will be governed by standing customer
instructions and customary practices, as is now 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.
If the Depository with respect to any Global Security or Securities is at
any time unwilling or unable to continue as Depository and a successor
Depository is not appointed by Disney within 90 days, Disney will issue
Definitive Notes in exchange for the Book-Entry Notes represented by such Global
Security or
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Securities. In addition, Disney may at any time and in its sole discretion
determine not to have a Global Security or Securities, and, in such event, will
issue Definitive Notes in exchange for the Book-Entry Notes represented by such
Global Security or Securities.
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 fifth 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
EXCHANGE RATES AND EXCHANGE CONTROLS
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 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.
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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.
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. A recent amendment to 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.
S-22
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES TO FOREIGN
CURRENCY NOTE HOLDERS AND TO FOREIGN PURCHASERS
Set forth below is a summary of certain United States Federal income tax
consequences to United States Holders (Holders who are not United States Aliens
as defined below) of the ownership and disposition of Notes that are denominated
in a Denominated Currency other than U.S. dollars or as to which the Payment
Currency is other than U.S. dollars ("Foreign Currency Notes") and to Holders of
the Notes who are United States Aliens (as defined below). For a summary of
certain other Federal income tax consequences to the original purchasers of the
Notes, such as the required inclusion of any original issue discount in income,
see "United States Taxation" in the accompanying Prospectus. This summary does
not discuss all of the aspects of Federal income taxation which may be relevant
to particular investors in light of their personal investment circumstances,
such as Notes held by an investor as a hedge or hedged against currency risks,
or to investors subject to special rules. In addition, this summary does not
discuss any foreign, state or local income or other tax considerations. This
summary is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, administrative rulings and judicial
decisions that are in effect as of the date of this Prospectus Supplement, all
of which are subject to change. The discussion below generally deals only with
Notes held as capital assets (generally, property held for investment) by an
original purchaser. Prospective investors should consult their tax advisors
regarding the Federal, state, local or foreign income and other tax consequences
of purchasing, holding and disposing of the Notes.
For purposes of this summary, "United States Alien" means any person who,
for Federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust or a
foreign partnership one or more of the members of which is, for Federal income
tax purposes, a foreign corporation, a nonresident alien individual or a
nonresident alien fiduciary of a foreign estate or trust.
FOREIGN CURRENCY NOTES
For purposes of the following discussion, it is assumed that the functional
currency of a United States Holder is the U.S. dollar.
INTEREST PAYMENTS AND ORIGINAL ISSUE DISCOUNT
Interest on a Foreign Currency Note paid in a specified foreign currency
will generally be taxable to a United States Holder in accordance with such
Holder's method of accounting for 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 to 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 any 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, which gain or loss is attributable to fluctuations in currency exchange
rates ("Exchange Gain or Loss") between the dates of accrual and receipt, 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, both accrual and cash basis taxpayers will be required to
include in income Exchange Gain or Loss on the receipt of payments
S-23
<PAGE>
made in a foreign currency attributable to accrued but unpaid interest or
original issue discount upon the sale, exchange or retirement of a Foreign
Currency Note. Any such Exchange Gain or Loss will be treated as ordinary income
or loss.
PURCHASE, SALE AND RETIREMENT 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 discount
on the Foreign Currency Note which 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, exchange or retirement
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 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 or retirement 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 accrues or at the time of sale or retirement. Any
gain or loss recognized on a sale or other disposition of the foreign currency
will be ordinary income or loss.
HOLDERS WHO ARE UNITED STATES ALIENS
Under present 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 United States Alien Holder will not be subject to 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 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 a United States trade or business;
(b) a Holder of a Note who is a United States Alien will not be subject
to 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 who has a tax home in the United States, or (2) the gain is effectively
connected with a United States trade or business of the Holder;
(c) a Note held by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to Federal
estate tax as a result of such individual's death unless (1) the income from
the Note is effectively connected with a United States trade or business of
the Holder, or (2) the individual actually or constructively owns 10% or
more of the total combined voting power of all classes of stock of Disney
entitled to vote.
S-24
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current Federal income tax law, information reporting and a 31% backup
withholding tax are required with respect to certain interest and principal
payments made to, and the proceeds of sales before maturity received by, certain
United States Holders if such persons fail to supply taxpayer identification
numbers and other information. Interest paid with respect to a Note, and payment
of the proceeds from a sale of a Note to or through the United States office of
a broker, received by a United States Alien will not be subject to information
reporting and backup withholding if the payor has received the appropriate
certification statements (noted above). The appropriate certification procedures
require that the Holder certify as to its status as a United States Alien and
provide its name and address. In addition, payments of the proceeds from the
sale of a Note to or through a foreign office of a broker or the foreign office
of a custodian, nominee or other agent acting on behalf of such beneficial owner
of a Note will not be subject to information reporting or backup withholding,
except that if the broker, custodian, nominee or other agent is a United States
person, a controlled foreign corporation for Federal income tax purposes or a
foreign person 50% or more of whose gross income is from a United States trade
or business, information reporting may be required with respect to payments made
to the owner. Under proposed regulations, however, backup withholding will not
apply unless such broker, custodian, nominee or other agent has actual knowledge
that the owner is a United States person.
Any amounts withheld under the backup withholding rules from a payment to a
Holder would be allowed as a refund or a credit against such Holder's Federal
income tax liability, provided that the required information is furnished to the
Internal Revenue Service.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by Disney through
CS First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers, Lehman
Brothers Inc. (including its affiliate, Lehman Government Securities Inc.),
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Morgan Stanley & Co. Incorporated (each, an "Agent," and collectively, the
"Agents"), who have agreed to use their reasonable best efforts to solicit
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 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.
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.
S-25
<PAGE>
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
indemnity 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 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 Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California. Gibson, Dunn & Crutcher will act as counsel for
the Agents. Skadden, Arps, Slate, Meagher & Flom has from time to time
represented, and continue to represent, certain of the Agents in connection with
certain legal matters. Gibson, Dunn & Crutcher has from time to time
represented, and anticipates that it may continue to represent, Disney on
certain unrelated matters.
S-26
<PAGE>
PROSPECTUS
THE WALT DISNEY COMPANY
SENIOR DEBT SECURITIES
The Walt Disney Company ("Disney") may offer from time to time its senior
unsecured debt securities consisting of notes, debentures or other evidences of
indebtedness (the "Debt Securities"), at an aggregate initial offering price of
not more than $1,000,000,000 or, if applicable, the equivalent thereof in any
other currency, composite currency or currency unit, based on the applicable
exchange rate in effect at the time of the sale of such Debt Securities. The
Debt Securities may be offered as a single series or as two or more separate
series in amounts, at prices and on terms to be determined in light of market
conditions at the time of sale and to be set forth in an accompanying Prospectus
Supplement.
The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized denominations,
maturity, rate or rates and time or times of payment of any interest, any terms
for optional or mandatory redemption or payment of additional amounts or any
sinking fund provisions, any initial public offering price, the proceeds to
Disney and any other specific terms in connection with the offering and sale of
such series will be set forth in a Prospectus Supplement or Prospectus
Supplements. As used herein, Debt Securities shall include securities
denominated in United States dollars or, at the option of Disney if so specified
in an applicable Prospectus Supplement, in any other currency, composite
currencies, currency units or in amounts determined by reference to an index.
The Debt Securities may be sold directly by Disney, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any agents of Disney or any underwriters are involved in
the sale of any Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to Disney from such sale also will be set forth in a Prospectus
Supplement.
For a discussion of certain United States Federal income tax consequences to
holders of Debt Securities, see "United States Taxation."
------------------------
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 DATE OF THIS PROSPECTUS IS AUGUST 27, 1993.
<PAGE>
AVAILABLE INFORMATION
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 statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
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 Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. 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 and other
information concerning Disney can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York and the Pacific Stock
Exchange, 115 Sansome Street, Suite 1104, San Francisco, California.
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. For further information pertaining to Disney and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be examined without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of which may be obtained from the Commission
upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by Disney under the Exchange Act
with the Commission are hereby incorporated herein by reference: (i) Annual
Report on Form 10-K for the fiscal year ended September 30, 1992; (ii) Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 1992, as amended
by Amendment No. 1 thereto filed on Form 10-Q/A dated July 29, 1993; (iii)
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1993, as
amended by Amendment No. 1 thereto filed on Form 10-Q/A dated July 29, 1993; and
(iv) Current Reports on Form 8-K dated July 8, 1993 and July 29, 1993.
All documents filed by Disney pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated in this Prospectus by reference 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 of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document that also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
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 in this Prospectus by reference 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: Vice
President and 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>
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, Disney
intends to use the net proceeds from the sale of the Debt Securities for general
corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
each of the years in the five-year period ended September 30, 1992 and for the
six months periods ended March 31, 1993 and 1992:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MARCH
31, YEAR ENDED SEPTEMBER 30
- -------------- --------------------------------------
1993 1992 1992 1991 1990 1989 1988
- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
7x 7x 8x 6x 11x 12x 15x
</TABLE>
For the purpose of this ratio, 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 (income) recognized with respect to equity
investments (including Euro Disney). Fixed charges consist of interest on
borrowings and that portion of rental expense that represents interest.
BUSINESS OF DISNEY
Disney is a diversified international entertainment company. Through its
theme parks and resorts segment, Disney operates Disneyland-R- Park and the
Disneyland Hotel in California and the Walt Disney World-R- destination resort
in Florida and receives royalties on revenues from Tokyo Disneyland. For the
year ended September 30, 1992, the theme parks and resorts segment accounted for
approximately 44% of Disney's total revenues.
Disney's filmed entertainment segment produces and acquires live-action and
animated motion pictures for distribution in the domestic and international
theatrical, television and home video markets under the names Walt Disney
Pictures, Touchstone Pictures and Hollywood Pictures. Disney also develops,
produces and distributes television programming for the network and syndication
markets and operates The Disney Channel, a pay television programming service,
and KCAL-TV, a television station in Los Angeles, California. For the year ended
September 30, 1992, the filmed entertainment segment accounted for approximately
42% of Disney's total revenues.
Disney's consumer products segment licenses the Walt Disney name and Disney
characters, literary properties and songs and music to consumer manufacturers,
retailers, printers and publishers throughout the world. Disney also has direct
publishing operations in the United States in both the adult and children's
markets, and in Europe primarily in the children's market. In addition, Disney
engages in direct retail distribution through The Disney Stores and several
consumer catalogues. In addition, Disney produces audio and computer software
for the children's market, as well as film and video products for the
educational market place, and sells educational toys, play equipment and
classroom furniture for children. For the year ended September 30, 1992, the
consumer products segment accounted for approximately 14% of Disney's total
revenues.
In addition, Disney holds a 49% interest in and manages the Euro Disney
Resort near Paris, France, from which it earns royalties and other fees.
Disney's Hollywood Records unit distributes recordings across the spectrum of
popular music. A Disney subsidiary operates the Mighty Ducks, a National Hockey
League team.
Disney is a Delaware corporation organized in 1986 as a successor to a
California corporation organized in 1938. As used herein, unless otherwise
specified or unless the context otherwise requires,
3
<PAGE>
the term "Disney" includes The Walt Disney Company and its subsidiaries.
Disney's principal executive offices are located at 500 South Buena Vista
Street, Burbank, California 91521, and its telephone number is (818) 560-1000.
DESCRIPTION OF THE DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Securities") and the extent
to which such general provisions may apply to the Offered Securities will be
described in a Prospectus Supplement relating to such Offered Securities.
The Debt Securities are to be issued under an indenture dated as of November
30, 1990 (the "Indenture"), between Disney and Bankers Trust Company, as trustee
(the "Trustee"). The terms of the Debt Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and holders of
the Debt Securities are referred to the Indenture and the Trust Indenture Act
for a statement thereof. A copy of the Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Debt Securities and the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Debt Securities and the Indenture,
including the definitions therein of certain terms which are not otherwise
defined in this Prospectus. Wherever particular provisions or defined terms of
the Indenture are referred to, such provisions or defined terms are incorporated
herein by reference. References herein are to sections in the Indenture. As used
in this "Description of the Debt Securities," "Disney" refers to The Walt Disney
Company and does not include its subsidiaries. The term "Securities," as used
under this caption, refers to all Securities issued or issuable from time to
time under the Indenture and includes the Debt Securities.
GENERAL
The Indenture will 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. As of
the date of this Prospectus, Disney has authorized the issuance under the
Indenture of up to $2,000,000,000 aggregate public offering price of debt
securities.
The Securities will be senior unsecured obligations exclusively of Disney.
Since the operations of Disney are currently conducted in significant part
through subsidiaries, the cash flow and the consequent ability to service debt
of Disney, including the Securities, are dependent, in part, 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 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.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Offered Securities: (i)
the title of the Offered Securities; (ii) any limit on the aggregate principal
amount of the Offered Securities; (iii) whether the Offered Securities are to be
issuable as Registered Securities or Bearer Securities or both and whether the
Offered Securities may be represented by a Security in temporary or permanent
global form, and if so, the initial Depositary with respect to such temporary or
permanent global Security and whether and the
4
<PAGE>
circumstances under which beneficial owners of interests in any such temporary
or permanent global Security may exchange such interests for Securities of such
series and of like tenor of any authorized form and denomination; (iv) the price
or prices at which the Offered Securities will be issued; (v) the date or dates
on which the principal of the Offered Securities is payable or the method of
determination thereof; (vi) the rate or rates at which the Offered Securities
will bear interest, or the method of calculating such rate or rates, if any, and
the date or dates from which such interest, if any, will accrue; (vii) the
Interest Payment Dates, if any, on which any interest on the Offered Securities
will be payable, and the Regular Record Date for any interest payable on any
Offered Securities which are Registered Securities; (viii) the right or
obligation, if any, of Disney to redeem or purchase Securities of the series
pursuant to any sinking fund or analogous provisions or at the option of a
holder thereof, the conditions, if any, giving rise to such right or obligation,
and the period or periods within which, and the price or prices at which and the
terms and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or part, and any provisions for the remarketing of such
Securities; (ix) the currency or currencies, including composite currencies or
currency units, of payment of principal of and interest, if any, on the Offered
Securities, if other than U.S. dollars, and if other than U.S. dollars, whether
the Offered Securities may be satisfied and discharged other than as provided in
Article Eight of the Indenture; (x) if the amount of payments of principal of
and interest, if any, on the Offered 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 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; (xi) if other than the principal amount thereof,
the portion of the principal amount of the Offered Securities which will be
payable upon declaration or acceleration of the Maturity thereof pursuant to an
Event of Default; and (xii) any other terms of the Offered Securities not
inconsistent with the provisions of the Indenture. (Section 2.03(a).) Any such
Prospectus Supplement will also describe any special provisions for the payment
of additional amounts with respect to the Offered Securities. (Sections 2.03(a)
and 4.06.)
Securities may be issued as Discount Securities, which may be sold at a
discount below their principal amount. Special United States Federal income tax
considerations applicable to Securities issued with original issue discount,
including Discount Securities, are generally described under "United States
Taxation -- Original Issue Discount" and may 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 Offered
Securities which are issuable in bearer form, offered exclusively to United
States Aliens or denominated in a currency other than United States dollars will
be set forth in a Prospectus Supplement relating thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The 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. (Section 2.03.) Securities of a
series may be issuable in whole or part in the form of one or more global
Securities, as described below under "Global Securities." (Sections 2.01, 2.02
and 2.03.) 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. (Section 2.03(b).)
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 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 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
5
<PAGE>
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 Indenture. Bearer
Securities may not be issued in exchange for Registered Securities. (Section
2.08.)
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 Securities and referred to in an applicable Prospectus Supplement,
without service charge and upon payment of any taxes, assessments or other
governmental charges as described in the 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.
(Section 2.05.) If a Prospectus Supplement refers to any transfer agents (in
addition to the Registrar) designated by Disney with respect to any series of
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 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 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 Securities. (Section 4.05.)
In the event of any partial redemption of Securities of any series, Disney
will not be required to (i) issue, register the transfer of or exchange
Securities of that series during a period beginning at the opening of business
15 days before any selection of Securities of that series to be redeemed and
ending at the close of business on (a) if Securities of the series are issuable
only as Registered Securities, the day of mailing of the relevant notice of
redemption, and (b) if Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if 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. (Section 2.08.)
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. (Section 4.01.) 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. (Section 2.13.)
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. (Section 4.05.) 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. (Section
4.01.)
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<PAGE>
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as Disney's sole Paying Agent for payments with
respect to 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 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 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 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 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 Securities
of such series and any related coupons may be presented and surrendered for
payment (Section 4.05.)
All moneys paid by Disney to a Paying Agent for the payment of principal of
or interest, if any, on any 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 Security or any coupon will thereafter
look only to Disney for payment thereof. (Section 8.02.)
GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in global form.
(Section 2.01.) A 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 Security may be issued in either registered or bearer form
and in either temporary or permanent form. (Section 2.03.) A Security in global
form may not be transferred except as a whole to the Depositary for such
Security or to a nominee or successor of such Depositary. (Section 2.08.) If any
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 Security may exchange such interests for
definitive 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 Security and the specific terms of the
depositary arrangement with respect to any such global Security. (Section 2.03.)
MERGERS AND SALES OF ASSETS BY DISNEY
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 organized and existing under the
laws of the United States, any state thereof or the District of Columbia and
such person expressly assumes all obligations of Disney under the Securities and
the Indenture, and (ii) Disney or such successor person shall not immediately
thereafter be in Default under the Indenture. Upon the assumption of Disney's
obligations by such a person in such circumstances, subject to certain
exceptions, Disney shall be discharged from all obligations under the Securities
and the Indenture. (Section 5.01.)
EVENTS OF DEFAULT
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Securities
individually, the Trustee or the holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of such series may declare the
principal amount (or, if any of the Securities of such series are Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) of the Securities of
7
<PAGE>
such series to be immediately due and payable. Under certain circumstances, the
holders of a majority in aggregate principal amount of the Outstanding
Securities of such series may rescind such a declaration. (Section 6.02.)
Under the Indenture, an Event of Default is defined as, with respect to each
series of Securities individually, any of the following: (i) default in payment
of the principal of any Security of such series; (ii) default in payment of any
interest on any Security of such series when due, continuing for 30 days; (iii)
failure by Disney to comply with its other agreements in the Securities of such
series or the Indenture for the benefit of the holders of 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
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. (Section 6.01.)
The Trustee shall give notice to holders of the 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. (Section 7.05.)
The holders of a majority in principal amount of the Outstanding 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 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. (Section 6.05.) 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.
(Sections 6.06 and 7.01.) With respect to each series of Securities, no holder
will have any right to pursue any remedy with respect to the Indenture or the
Securities, unless (i) such holder shall have previously given the Trustee
written notice of a continuing Event of Default with respect to the Securities
of such series; (ii) the holders of at least 25% in aggregate principal amount
of the Outstanding 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
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.
(Section 6.06.)
Notwithstanding the foregoing, the right of any holder of any Security or
coupon to receive payment of the principal of and interest in respect of such
Security or payment of such coupon on the Stated Maturity or Maturities
expressed in such Security or coupon or to institute suit for the enforcement of
any such payments shall not be impaired or adversely affected without such
holder's consent. (Section 6.07.) The holders of at least a majority in
aggregate principal amount of the Outstanding Securities of any series of
Securities 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 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 Security of such series
affected as described in "Modification and Waiver," below. (Section 6.04.)
MODIFICATION AND WAIVER
Disney and the Trustee may execute a supplemental indenture without the
consent of the holders of the 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 Securities of any series or to surrender any right or power
conferred in the 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 Indenture and the Securities; (iii) to provide that Bearer
Securities may be registrable as to principal, to change or eliminate
8
<PAGE>
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
Securities in uncertificated form; (iv) to establish the form or terms of
Securities of any series and any related coupons as permitted by Sections 2.01
and 2.03(a) of the Indenture; (v) to provide for the acceptance of appointment
under the Indenture of a successor Trustee with respect to the Securities of one
or more series and to add to or change any provisions of the 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 Securities), PROVIDED that any
such addition, change or elimination neither (a) applies to any 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 Security with respect to such provision; (viii) to secure the
Securities; or (ix) to make any other change that does not adversely affect the
rights of any Securityholder. (Section 9.01.)
With the consent of the holders of not less than a majority in aggregate
principal amount of the Outstanding 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 Securities or modify
in any manner the rights of the holders of the Securities of such series and any
related coupons under the Indenture, PROVIDED that no such supplemental
indenture will, without the consent of the holder of each such Outstanding
Security affected thereby (i) change the stated maturity of the principal of, or
any installment of principal or interest on, any such Security or any premium
payable upon redemption thereof, or reduce the amount of principal of any
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 Security, (iii) change the place
or currency of payment of principal or interest, if any, on any such Security,
(iv) impair the right to institute suit for the enforcement of any payment on or
with respect to any such Security, (v) reduce the above-stated percentage of
holders of Securities of any series necessary to modify or amend the Indenture,
or (vi) modify the foregoing requirements or reduce the percentage in principal
amount of Outstanding Securities of any series necessary to waive any covenant
or past default. Holders of not less than a majority in principal amount of the
Outstanding 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 Securities of such series. (Section 9.02.)
DISCHARGE
Unless otherwise indicated in an applicable Prospectus Supplement, Disney
may satisfy and discharge obligations under the Indenture with respect to the
Securities of any series by delivering to the Trustee for cancellation all
Outstanding Securities of such series or depositing with the Trustee, after such
Outstanding Securities have become due and payable, cash sufficient to pay at
Stated Maturity all of the Outstanding Securities of such series and paying all
other sums payable under the Indenture with respect to such series. (Section
8.01.)
THE TRUSTEE
The Trustee is a New York banking corporation. The Trustee is a
participating lender under various credit arrangements with Disney and its
subsidiaries. The Trustee will be permitted to engage in other transactions with
Disney and its subsidiaries; HOWEVER, if the Trustee acquires any conflicting
interest, it must eliminate such conflict or resign. (Section 7.10.)
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UNITED STATES TAXATION
GENERAL
Set forth below is a summary of certain United States Federal income tax
considerations of importance to the original purchasers of the Debt Securities.
The summary does not discuss all of the aspects of Federal income taxation which
may be relevant to particular investors in light of their personal investment
circumstances, nor does it discuss any foreign, state or local income or other
tax considerations. The summary is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), and on regulations, rulings and decisions that are in
effect as of the date of this Prospectus, all of which are subject to change.
Prospective investors are advised to consult with their tax advisors regarding
the Federal, state, local and foreign income and other tax consequences of
purchasing, holding and disposing of the Debt Securities. Special Federal tax
considerations or other restrictions or terms applicable to any Debt Securities
which are issuable in bearer form, offered exclusively to United States Aliens
(as defined below) or denominated in a currency other than United States dollars
will be set forth in a Prospectus Supplement relating thereto. "United States
Alien" means any person who, for Federal income tax purposes, is a foreign
corporation, a non-resident alien individual, a non-resident alien fiduciary of
a foreign estate or trust, or a foreign partnership one or more of the members
of which is, for Federal income tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident alien fiduciary of a foreign
estate or trust.
ORIGINAL ISSUE DISCOUNT
Debt Securities with a term greater than one year may be issued with
original issue discount for Federal income tax purposes. Original issue discount
will arise if the stated principal amount at maturity of a Debt Security exceeds
its issue price by more than a DE MINIMIS amount, or if a Debt Security has
certain interest payment characteristics (E.G., interest holidays, interest
payable in additional Debt Securities, certain stepped rates or certain rates
based on multiple indices). If a Debt Security is issued with original issue
discount, the holder of the Debt Security will be required to include amounts in
gross income for 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 that will result in the allocation of less
original issue discount to the earlier years of the term of the Debt Securities
and more original issue discount to the later years. Any amounts included in
income as original issue discount will increase a holder's tax basis in the Debt
Security.
Disney will report annually to the Internal Revenue Service (the "IRS") and
to each holder of such Debt Security the original issue discount accrued with
respect to the Debt Security. Prospective holders are advised to consult their
tax advisors with respect to the particular original issue discount
characteristics of the Debt Security that is being purchased.
ACQUISITION DISCOUNT
Debt Securities 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 appropriate election 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 election without the consent of the IRS, 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 Debt Securities
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 Debt Security.
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DISPOSITION OF DEBT SECURITIES
In general, and subject to the foregoing discussion of acquisition discount,
an original holder of a Debt Security will recognize gain or loss on the sale,
redemption, exchange or other disposition of the Debt Security, which gain or
loss will be measured by the difference between the amount of cash received
(except to the extent attributable to accrued interest) and the holder's
adjusted tax basis in the Debt Security.
PLAN OF DISTRIBUTION
Disney may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Offered Securities will be named in an applicable Prospectus Supplement.
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 Disney's 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. Underwriters may sell Offered Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions (which may
be changed from time to time) from the purchasers for whom they may act as
agent.
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 Disney's 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 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. Contracts will not be subject to any conditions except (i)
the purchase by an institution of the Offered Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Offered Securities are being sold to underwriters, Disney shall have sold
to such underwriters the total principal amount of the Offered Securities less
the principal amount thereof covered by Contracts. Agents and underwriters will
have no responsibility in respect of the delivery or performance of Contracts.
The Debt 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 the Debt Securities.
11
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the legality of the Securities being
offered hereby will be passed upon for Disney by Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California.
EXPERTS
The consolidated financial statements and related schedules of Disney
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended September 30, 1992, have been so incorporated in reliance on
the report of Price Waterhouse, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
Any financial statements and schedules hereafter filed by Disney pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and incorporated by
reference in this Prospectus that have been examined and are the subject of a
report by independent accountants will be so incorporated by reference in
reliance upon such reports and upon the authority of such firms as experts in
accounting and auditing to the extent covered by consents filed with the
Commission.
------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY DISNEY OR
ANY UNDERWRITER OR AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
12
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE 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-2
Description of the Notes...................... S-2
Important Currency Information................ S-21
Foreign Currency Risks........................ S-21
Indexed Notes Risks........................... S-22
Certain United States Tax Consequences to
Foreign Currency Note Holders and to Foreign
Purchasers................................... S-23
Plan of Distribution.......................... S-25
Legal Matters................................. S-26
PROSPECTUS
Available Information......................... 2
Incorporation of Certain
Documents by Reference....................... 2
Use of Proceeds............................... 3
Ratios of Earnings to Fixed Charges........... 3
Business of Disney............................ 3
Description of the Debt Securities............ 4
United States Taxation........................ 10
Plan of Distribution.......................... 11
Legal Matters................................. 12
Experts....................................... 12
</TABLE>
$500,000,000
THE WALT DISNEY COMPANY
MEDIUM-TERM NOTES
----------------------
PROSPECTUS SUPPLEMENT
----------------------------
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SEPTEMBER 14, 1994
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